<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 20, 1996
1933 ACT FILE NO. 2-22019
1940 ACT FILE NO. 811-1241
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933 [X]
POST-EFFECTIVE AMENDMENT NO. 65 [X]
AND
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 38 [X]
EATON VANCE GROWTH TRUST
------------------------
(FORMERLY EATON VANCE GROWTH FUND)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
24 FEDERAL STREET, BOSTON, MASSACHUSETTS 02110
----------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
617-482-8260
------------
(REGISTRANT'S TELEPHONE NUMBER)
ALAN R. DYNNER
24 FEDERAL STREET, BOSTON, MASSACHUSETTS 02110
----------------------------------------------
(NAME AND ADDRESS OF AGENT FOR SERVICE)
It is proposed that this filing will become effective pursuant to rule 485
(check appropriate box):
<TABLE>
<S> <C>
[ ] immediately upon filing pursuant to paragraph (b) [ ] on (date) pursuant to paragraph (a)(1)
[X] on December 31, 1996 pursuant to paragraph (b) [ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] 60 days after filing pursuant to paragraph (a)(1) [ ] on (date) pursuant to paragraph (a)(2).
</TABLE>
If appropriate, check the following box:
[ ] this post effective amendment designates a new effective date for a
previously filed post-effective amendment.
Asian Small Companies Portfolio, Greater China Growth Portfolio, Growth
Portfolio and Information Age Portfolio have also executed this Registration
Statement.
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
==============================================================================================================
AMOUNT OF PROPOSED MAXIMUM PROPOSED AGGREGATE AMOUNT OF
TITLE OF SECURITIES SHARES BEING OFFERING PRICE MAXIMUM REGISTRATION
BEING REGISTERED REGISTERED PER SHARE OFFERING PRICE FEE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares of Beneficial Interest 4,881,113 $15.48(1) $75,559,629(2) $100
==============================================================================================================
(1) Computed under Rule 457(d) on the basis of the maximum aggregate offering price per share at the
close of business on December 13, 1996.
(2) Registrant elects to calculate the maximum aggregate offering price pursuant to Rule 24e-2 for those
series with a fiscal year end of August 31, 1996. $274,898,320 of shares were redeemed during the
fiscal year ended August 31, 1996. $119,668,691 of shares were used for reductions pursuant to
Paragraph (c) of Rule 24f-2 during such fiscal year. $75,229,629 of shares redeemed are being used
for the reduction of the registration fee in this Amendment. While no fee is required for the
$75,229,629 of shares, the Registrant has elected to register, for $100, an additional $330,000 of
shares.
</TABLE>
The Registrant has filed a Declaration pursuant to Rule 24f-2, and on
October 24, 1996, filed its "Notice" as required by that Rule for the fiscal
year ended August 31, 1996. Registrant continues its election to register an
indefinite number of shares of beneficial interest pursuant to Rule 24f-2.
================================================================================
<PAGE>
This Amendment to the registration statement on Form N-1A consists of the
following documents and papers:
Cross Reference Sheet required by Rule 481(a) under the Securities Act of
1933
Part A -- The Prospectuses of:
EV Marathon Asian Small Companies Fund
EV Traditional Asian Small Companies Fund
EV Classic Greater China Growth Fund
EV Marathon Greater China Growth Fund
EV Traditional Greater China Growth Fund
EV Classic Growth Fund
EV Marathon Growth Fund
EV Traditional Growth Fund
EV Classic Information Age Fund
EV Marathon Information Age Fund
EV Traditional Information Age Fund
EV Marathon Gold & Natural Resources Fund
Part B -- The Statements of Additional Information of:
EV Marathon Asian Small Companies Fund
EV Traditional Asian Small Companies Fund
EV Classic Greater China Growth Fund
EV Marathon Greater China Growth Fund
EV Traditional Greater China Growth Fund
EV Classic Growth Fund
EV Marathon Growth Fund
EV Traditional Growth Fund
EV Classic Information Age Fund
EV Marathon Information Age Fund
EV Traditional Information Age Fund
EV Marathon Gold & Natural Resources Fund
Part C -- Other Information
Signatures
Exhibit Index Required by Rule 483(a) under the Securities Act of 1933
Exhibits
This Amendment is not intended to amend the Prospectuses and Statements of
Additional Information of any Series of the Registrant not identified above.
<PAGE>
EATON VANCE GROWTH TRUST
EV MARATHON ASIAN SMALL COMPANIES FUND
EV TRADITIONAL ASIAN SMALL COMPANIES FUND
CROSS REFERENCE SHEET
ITEMS REQUIRED BY FORM N-1A
<TABLE>
<CAPTION>
PART A
ITEM NO. ITEM CAPTION PROSPECTUS CAPTION
- -------- ------------ -------------------------------------------------------
<S> <C> <C>
1. .............. Cover Page Cover Page
2. .............. Synopsis Shareholder and Fund Expenses
3. .............. Condensed Financial Information Not Applicable
4. .............. General Description of Registrant The Fund's Investment Objective; Investment
Opportunities in the Asian Region; Investment
Policies and Risks; Organization of the Fund and the
Portfolio
5. .............. Management of the Fund Management of the Fund and the Portfolio
5A............... Management's Discussion of Fund Not Applicable
Performance
6. .............. Capital Stock and Other Securities Organization of the Fund and the Portfolio; Reports to
Shareholders; The Lifetime Investing Account/
Distribution Options; Distributions and Taxes
7. .............. Purchase of Securities Being Offered Valuing Fund Shares; How to Buy Fund Shares;
Distribution Plan; The Lifetime Investing Account/
Distribution Options; The Eaton Vance Exchange
Privilege; Eaton Vance Shareholder Services
8. .............. Redemption or Repurchase How to Redeem Fund Shares
9. .............. Pending Legal Proceedings Not Applicable
PART B
ITEM NO. ITEM CAPTION STATEMENT OF ADDITIONAL INFORMATION CAPTION
- ------ -------- -------------------------------------------------------
10. .............. Cover Page Cover Page
11. .............. Table of Contents Table of Contents
12. .............. General Information and History Other Information
13. .............. Investment Objective and Policies Additional Information about Investment Policies;
Investment Restrictions
14. .............. Management of the Fund Trustees and Officers; Fees and Expenses
15. .............. Control Persons and Principal Holders Control Persons and Principal Holders of Securities
of Securities
16. .............. Investment Advisory and Other Management of the Fund; Distribution Plan; Custodian;
Services Independent Certified Public Accountants; Fees and
Expenses
17. .............. Brokerage Allocation and Other Portfolio Security Transactions; Fees and Expenses
Practices
18. .............. Capital Stock and Other Securities Not Applicable
19. .............. Purchase, Redemption and Pricing of Determination of Net Asset Value; Service for
Securities Being Offered Withdrawal; Services for Accumulation (for
Traditional Fund only); Principal Underwriter;
Distribution Plan; Fees and Expenses
20. .............. Tax Status Taxes
21. .............. Underwriters Principal Underwriter; Fees and Expenses
22. .............. Calculation of Performance Data Investment Performance
23. .............. Financial Statements Financial Statements
</TABLE>
<PAGE>
EATON VANCE GROWTH TRUST
EV CLASSIC GREATER CHINA GROWTH FUND
EV MARATHON GREATER CHINA GROWTH FUND
EV TRADITIONAL GREATER CHINA GROWTH FUND
CROSS REFERENCE SHEET
ITEMS REQUIRED BY FORM N-1A
<TABLE>
<CAPTION>
PART A
ITEM NO. ITEM CAPTION PROSPECTUS CAPTION
- -------- ------------ -------------------------------------------------------
<S> <C> <C>
1. .............. Cover Page Cover Page
2. .............. Synopsis Shareholder and Fund Expenses
3. .............. Condensed Financial Information The Fund's Financial Highlights
4. .............. General Description of Registrant The Fund's Investment Objective; Investment Policies
and Risks; Investment Opportunities in the China
Region; Organization of the Fund and the Portfolio
5. .............. Management of the Fund Management of the Fund and the Portfolio
5A............... Management's Discussion of Fund Not Applicable
Performance
6. .............. Capital Stock and Other Securities Organization of the Fund and the Portfolio; Reports to
Shareholders; The Lifetime Investing Account/
Distribution Options; Distributions and Taxes
7. .............. Purchase of Securities Being Offered Valuing Fund Shares; How to Buy Fund Shares;
Distribution Plan; The Lifetime Investing Account/
Distribution Options; The Eaton Vance Exchange
Privilege; Eaton Vance Shareholder Services
8. .............. Redemption or Repurchase How to Redeem Fund Shares
9. .............. Pending Legal Proceedings Not Applicable
PART B
ITEM NO. ITEM CAPTION STATEMENT OF ADDITIONAL INFORMATION CAPTION
- ------ ------------ -------------------------------------------------------
10. .............. Cover Page Cover Page
11. .............. Table of Contents Table of Contents
12. .............. General Information and History Other Information
13. .............. Investment Objective and Policies Additional Information about Investment Policies;
Investment Restrictions
14. .............. Management of the Fund Trustees and Officers; Fees and Expenses
15. .............. Control Persons and Principal Holders Control Persons and Principal Holders of Securities
of Securities
16. .............. Investment Advisory and Other Management of the Fund; Distribution Plan; Custodian;
Services Independent Certified Public Accountants; Fees and
Expenses
17. .............. Brokerage Allocation and Other Portfolio Security Transactions; Fees and Expenses
Practices
18. .............. Capital Stock and Other Securities Not Applicable
19. .............. Purchase, Redemption and Pricing of Determination of Net Asset Value; Service for
Securities Being Offered Withdrawal; Services for Accumulation (for
Traditional Fund only); Principal Underwriter;
Distribution Plan; Fees and Expenses
20. .............. Tax Status Taxes
21. .............. Underwriters Principal Underwriter; Fees and Expenses
22. .............. Calculation of Performance Data Investment Performance; Performance Information
23. .............. Financial Statements Financial Statements
</TABLE>
<PAGE>
EATON VANCE GROWTH TRUST
EV CLASSIC GROWTH FUND
EV MARATHON GROWTH FUND
EV TRADITIONAL GROWTH FUND
CROSS REFERENCE SHEET
ITEMS REQUIRED BY FORM N-1A
<TABLE>
<CAPTION>
PART A
ITEM NO. ITEM CAPTION PROSPECTUS CAPTION
- -------- ------------ -------------------------------------------------------
<S> <C> <C>
1. .............. Cover Page Cover Page
2. .............. Synopsis Shareholder and Fund Expenses
3. .............. Condensed Financial Information The Fund's Financial Highlights
4. .............. General Description of Registrant The Fund's Investment Objective; Investment Policies
and Risks; Organization of the Fund and the Portfolio
5. .............. Management of the Fund Management of the Fund and the Portfolio
5A............... Management's Discussion of Fund Not Applicable
Performance
6. .............. Capital Stock and Other Securities Organization of the Fund and the Portfolio; Reports to
Shareholders; The Lifetime Investing Account/
Distribution Options; Distributions and Taxes
7. .............. Purchase of Securities Being Offered Valuing Fund Shares; How to Buy Fund Shares;
Distribution Plan (for Classic and Marathon Funds);
Service Plan (for Traditional Fund); The Lifetime
Investing Account/Distribution Options; The Eaton
Vance Exchange Privilege; Eaton Vance Shareholder
Services
8. .............. Redemption or Repurchase How to Redeem Fund Shares
9. .............. Pending Legal Proceedings Not Applicable
PART B
ITEM NO. ITEM CAPTION STATEMENT OF ADDITIONAL INFORMATION CAPTION
- ------ -------- -------------------------------------------------------
10. .............. Cover Page Cover Page
11. .............. Table of Contents Table of Contents
12. .............. General Information and History Other Information
13. .............. Investment Objective and Policies Additional Information about Investment Policies;
Investment Restrictions
14. .............. Management of the Fund Trustees and Officers; Fees and Expenses
15. .............. Control Persons and Principal Holders Control Persons and Principal Holders of Securities
of Securities
16. .............. Investment Advisory and Other Investment Adviser and Administrator; Distribution Plan
Services (for Classic and Marathon Funds); Service Plan (for
Traditional Fund); Custodian; Independent
Accountants; Fees and Expenses
17. .............. Brokerage Allocation and Other Portfolio Security Transactions; Fees and Expenses
Practices
18. .............. Capital Stock and Other Securities Not Applicable
19. .............. Purchase, Redemption and Pricing of Determination of Net Asset Value; Service for
Securities Being Offered Withdrawal; Services for Accumulation (for
Traditional Fund only); Principal Underwriter;
Distribution Plan (for Classic and Marathon Funds);
Service Plan (for Traditional Fund); Fees and
Expenses
20. .............. Tax Status Taxes
21. .............. Underwriters Principal Underwriter; Fees and Expenses
22. .............. Calculation of Performance Data Investment Performance; Performance Information
23. .............. Financial Statements Financial Statements
</TABLE>
<PAGE>
EATON VANCE GROWTH TRUST
EV CLASSIC INFORMATION AGE FUND
EV MARATHON INFORMATION AGE FUND
EV TRADITIONAL INFORMATION AGE FUND
CROSS REFERENCE SHEET
ITEMS REQUIRED BY FORM N-1A
<TABLE>
<CAPTION>
PART A
ITEM NO. ITEM CAPTION PROSPECTUS CAPTION
- -------- ------------ -------------------------------------------------------
<S> <C> <C>
1. .............. Cover Page Cover Page
2. .............. Synopsis Shareholder and Fund Expenses
3. .............. Condensed Financial Information The Fund's Financial Highlights
4. .............. General Description of Registrant The Fund's Investment Objective; The Portfolio's
Investments; Investment Policies and Risks;
Organization of the Fund and the Portfolio
5. .............. Management of the Fund Management of the Fund and the Portfolio
5A............... Management's Discussion of Fund Not Applicable
Performance
6. .............. Capital Stock and Other Securities Organization of the Fund and the Portfolio; Reports to
Shareholders; The Lifetime Investing Account/
Distribution Options; Distributions and Taxes
7. .............. Purchase of Securities Being Offered Valuing Fund Shares; How to Buy Fund Shares;
Distribution Plan; The Lifetime Investing Account/
Distribution Options; The Eaton Vance Exchange
Privilege; Eaton Vance Shareholder Services
8. .............. Redemption or Repurchase How to Redeem Fund Shares
9. .............. Pending Legal Proceedings Not Applicable
PART B
ITEM NO. ITEM CAPTION STATEMENT OF ADDITIONAL INFORMATION CAPTION
- -------- ------------ -------------------------------------------------------
10. .............. Cover Page Cover Page
11. .............. Table of Contents Table of Contents
12. .............. General Information and History Other Information
13. .............. Investment Objective and Policies Additional Information about Investment Policies;
Investment Restrictions
14. .............. Management of the Fund Trustees and Officers; Fees and Expenses
15. .............. Control Persons and Principal Holders Control Persons and Principal Holders of Securities
of Securities
16. .............. Investment Advisory and Other Management of the Fund and the Portfolio; Distribution
Services Plan; Custodian; Independent Accountants; Fees and
Expenses
17. .............. Brokerage Allocation and Other Portfolio Security Transactions; Fees and Expenses
Practices
18. .............. Capital Stock and Other Securities Not Applicable
19. .............. Purchase, Redemption and Pricing of Determination of Net Asset Value; Service for
Securities Being Offered Withdrawal; Services for Accumulation (for
Traditional Fund only); Principal Underwriter;
Distribution Plan; Fees and Expenses
20. .............. Tax Status Taxes
21. .............. Underwriters Principal Underwriter; Fees and Expenses
22. .............. Calculation of Performance Data Investment Performance; Performance Information
23. .............. Financial Statements Financial Statements
</TABLE>
<PAGE>
EATON VANCE GROWTH TRUST
EV MARATHON GOLD & NATURAL RESOURCES FUND
CROSS REFERENCE SHEET
ITEMS REQUIRED BY FORM N-1A
<TABLE>
<CAPTION>
PART A
ITEM NO. ITEM CAPTION PROSPECTUS CAPTION
- -------- ------------ -------------------------------------------------------
<S> <C> <C>
1. .............. Cover Page Cover Page
2. .............. Synopsis Shareholder and Fund Expenses
3. .............. Condensed Financial Information The Fund's Financial Highlights
4. .............. General Description of Registrant The Fund's Investment Objective; Investment Policies
and Risks; Organization of the Fund
5. .............. Management of the Fund Management of the Fund
5A............... Management's Discussion of Fund Not Applicable
Performance
6. .............. Capital Stock and Other Securities Organization of the Fund; Reports to Shareholders; The
Lifetime Investing Account/Distribution Options;
Distributions and Taxes
7. .............. Purchase of Securities Being Offered Valuing Fund Shares; How to Buy Fund Shares;
Distribution Plan; The Lifetime Investing Account/
Distribution Options; The Eaton Vance Exchange
Privilege; Eaton Vance Shareholder Services
8. .............. Redemption or Repurchase How to Redeem Fund Shares
9. .............. Pending Legal Proceedings Not Applicable
PART B
ITEM NO. ITEM CAPTION STATEMENT OF ADDITIONAL INFORMATION CAPTION
- -------- ------------ -------------------------------------------------------
10. .............. Cover Page Cover Page
11. .............. Table of Contents Table of Contents
12. .............. General Information and History Other Information
13. .............. Investment Objective and Policies Additional Information about Investment Policies;
Investment Restrictions
14. .............. Management of the Fund Trustees and Officers
15. .............. Control Persons and Principal Holders Control Persons and Principal Holders of Securities
of Securities
16. .............. Investment Advisory and Other Investment Adviser; Distribution Plan; Custodian;
Services Independent Certified Public Accountants
17. .............. Brokerage Allocation and Other Portfolio Security Transactions
Practices
18. .............. Capital Stock and Other Securities Not Applicable
19. .............. Purchase, Redemption and Pricing of Determination of Net Asset Value; Service for
Securities Being Offered Withdrawal; Principal Underwriter; Distribution Plan
20. .............. Tax Status Taxes
21. .............. Underwriters Principal Underwriter
22. .............. Calculation of Performance Data Investment Performance
23. .............. Financial Statements Financial Statements
</TABLE>
<PAGE>
Part A
Information Required in a Prospectus
EV MARATHON
ASIAN SMALL COMPANIES FUND
- ------------------------------------------------------------------------------
EV MARATHON ASIAN SMALL COMPANIES FUND (THE "FUND") IS A MUTUAL FUND SEEKING
CAPITAL GROWTH THROUGH INVESTMENT IN SECURITIES OF SMALLER COMPANIES BASED IN
ASIA. THE FUND INVESTS ITS ASSETS IN ASIAN SMALL COMPANIES PORTFOLIO (THE
"PORTFOLIO"), A DIVERSIFIED OPEN-END INVESTMENT COMPANY HAVING THE SAME
INVESTMENT OBJECTIVE AS THE FUND, RATHER THAN BY DIRECTLY INVESTING IN AND
MANAGING ITS OWN PORTFOLIO OF SECURITIES. MOST OF THE PORTFOLIO WILL BE
INVESTED IN ASIAN SECURITIES MARKETS, INCLUDING THOSE OF AUSTRALIA, CHINA,
HONG KONG, INDIA, INDONESIA, JAPAN, MALAYSIA, PAKISTAN, THE PHILIPPINES,
SINGAPORE, SOUTH KOREA, SRI LANKA, TAIWAN AND THAILAND. THE FUND IS A SEPARATE
SERIES OF EATON VANCE GROWTH TRUST (THE "TRUST").
Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, any bank or other insured depository institution, and are not
federally insured by the Federal Deposit Insurance Corporation, the Federal
Reserve Board or any other government agency. Shares of the Fund involve
investment risks, including fluctuations in value and the possible loss of
some or all of the principal investment.
This Prospectus is designed to provide you with information you should know
before investing. Please retain this document for future reference. A
Statement of Additional Information dated January 1, 1997 for the Fund, 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 (the "Manager"). The
Portfolio's investment adviser is Lloyd George Investment Management (Bermuda)
Limited (the "Adviser"). The principal business address of the Adviser is 3808
One Exchange Square, Central, Hong Kong.
- ------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE PAGE
<S> <C> <C> <C>
Shareholder and Fund Expenses .......................... 2 How to Buy Fund Shares ............................. 13
Investment Opportunities in the Asian Region ........... 3 How to Redeem Fund Shares........................... 14
The Fund's Investment Objective ........................ 3 Reports to Shareholders ............................ 15
Investment Policies and Risks .......................... 3 The Lifetime Investing Account/Distribution Options 16
Organization of the Fund and the Portfolio ............. 8 The Eaton Vance Exchange Privilege ................. 16
Management of the Fund and the Portfolio ............... 9 Eaton Vance Shareholder Services ................... 17
Distribution Plan ...................................... 11 Distributions and Taxes ............................ 18
Valuing Fund Shares..................................... 12 Performance Information ............................ 19
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
PROSPECTUS DATED JANUARY 1, 1997
<PAGE>
SHAREHOLDER AND FUND EXPENSES
- ------------------------------------------------------------------------------
<TABLE>
SHAREHOLDER TRANSACTION EXPENSES
-----------------------------------------------------------------------------------------------------
<S> <C>
Sales Charges Imposed on Purchases of Shares None
Sales Charges Imposed on Reinvested Distributions None
Fees to Exchange Shares None
Range of Declining Contingent Deferred Sales Charges Imposed on Redemption
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)
-----------------------------------------------------------------------------------------------------
Management Fees 1.25%
Rule 12b-1 Distribution (and Service) Fees 0.75%
Other Expenses 0.75%
----
Total Operating Expenses 2.75%
====
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS
------ -------
<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: $78 $125
An investor would pay the following expenses on the same investment,
assuming (a) 5% annual return and (b) no redemptions: $28 $ 85
</TABLE>
NOTES:
The table and Example 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. The
Management Fees and Other Expenses set out in the table and the information in
the Example is estimated, since the Fund is only recently organized.
Management Fees include 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.
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 "Management of the Fund and the Portfolio" and "How
to Redeem Fund Shares." 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. See "Distribution
Plan".
No contingent deferred sales charge is imposed on (a) shares purchased more
than six years prior to redemption, (b) shares acquired through the
reinvestment of distributions or (c) any appreciation in value of other shares
in the account (see "How to Redeem Fund Shares"), and no such charge is
imposed on exchanges of Fund shares for one or more other funds listed under
"The Eaton Vance Exchange Privilege".
The Fund invests exclusively in the Portfolio. Other investment companies and
investors with different distribution arrangements are investing in the
Portfolio and others may do so in the future. See "Organization of the Fund
and the Portfolio".
<PAGE>
INVESTMENT OPPORTUNITIES IN THE ASIAN REGION
- --------------------------------------------------------------------------------
Over the past 20 years the performance of the major Asian securities markets
has generally been better than that of markets in Europe and the United
States. In the past five years, the newly emerging securities markets of the
Asian Region have demonstrated significant growth in market capitalization, in
numbers of listed securities and in the volume of transactions. Over the same
period, the underlying economies of the region have grown against a background
of the high savings rates characteristic of many Asian societies and generally
moderate inflation. There is continuing economic integration among the
countries in the Asian Region.
ASIAN SMALL COMPANIES ARE AN ATTRACTIVE INVESTMENT OPPORTUNITY. Although Asian
securities markets have become progressively more accessible to U.S. investors
through either direct investment or through Asian (or Pacific Basin)
investment companies, obstacles to investing in smaller companies have
remained. Information to research these companies is not easily obtainable.
The Adviser is strategically located in Hong Kong and has substantial
experience with Asian small companies. Also, in many existing Asian mutual
funds, only a small portion of the portfolio is invested in smaller companies.
The Adviser believes that soundly managed smaller companies in the Asian
Region are well positioned to take advantage of the rapid changes in the
underlying economic and social structures that have been taking place over the
past decade. Smaller companies are generally able to react swiftly to changing
trading conditions and the Adviser believes that such companies offer the
potential for high capital growth rates, particularly in a period of economic
recovery. The Adviser believes that smaller Asian companies offering superior
returns exist in newly created industries, as well as more traditional
economic sectors in expanding markets.
See Appendix A to the Statement of Additional Information for further
information about the economic characteristics of and risks associated with
investing in Asian Region countries.
THE FUND'S INVESTMENT OBJECTIVE
- ------------------------------------------------------------------------------
THE FUND'S INVESTMENT OBJECTIVE IS TO SEEK CAPITAL GROWTH. It currently seeks
to meet its investment objective by investing its assets in the Asian Small
Companies Portfolio (the "Portfolio"), a separate registered investment
company which invests primarily in equity securities of smaller companies
based in Asia. Most of the Portfolio's assets will be invested in securities
markets in the Asian region, including Australia, China, Hong Kong, India,
Indonesia, Japan, Malaysia, Pakistan, the Philippines, Singapore, South Korea,
Sri Lanka, Taiwan and Thailand. (collectively, the "Asian Region").
Investments in the Asian Region can involve significant risks that are
generally not involved with investments in U.S. companies. The Fund is
intended for long-term investors who can accept international investment risk
and little or no current income. The Fund is not intended to be a complete
investment program. A prospective investor should take into account personal
objectives and other investments when considering the purchase of Fund shares.
The Fund cannot assure achievement of its investment objective. The investment
objective of the Fund and the Portfolio are nonfundamental. Asian Region
investments may offer higher potential for gains and losses than investments
in the United States. See "Investment Policies and Risks" for further
information.
INVESTMENT POLICIES AND RISKS
- ------------------------------------------------------------------------------
THE PORTFOLIO SEEKS TO ACHIEVE ITS OBJECTIVE THROUGH INVESTING IN A CAREFULLY
SELECTED AND CONTINUOUSLY MANAGED PORTFOLIO CONSISTING PRIMARILY OF EQUITY
SECURITIES OF SMALLER COMPANIES BASED IN ASIA. Most of the Portfolio's assets
will be invested in Asian securities markets. The Adviser will consider
companies that it believes have all or most of the following characteristics:
sound and well-established management; producers of goods or services for
which a clear, continuing and long-term demand can be identified within the
context of national, regional and global development; a history of earnings
growth; financial strength; a consistent or progressive dividend policy; and
undervalued securities.
The Portfolio will, under normal market conditions, invest at least 65% of its
total assets in equity securities of Asian small companies. Such companies
will (a) have a market capitalization equivalent to less than $600 million and
(b) be located in or have securities which are principally traded in an Asian
Region country. Such securities are typically listed on stock exchanges or
traded in the over-the-counter markets in countries in the Asian Region. In
addition, the Portfolio may invest up to 10% of its total assets in direct
investments. The principal offices of these companies, however, may be located
outside these countries. The Portfolio may invest 25% or more of its total
assets in the securities of issuers located in any one country, and may retain
securities of a company with market capitalization that grows over the $600
million level. While there is no minimum or maximum limitation on assets that
may be invested in a single country, the Adviser currently anticipates Hong
Kong will represent more than 25% of total assets.
Equity securities, for purposes of the 65% policy, will be limited to common and
preferred stocks; equity interests in trusts, partnerships, joint ventures and
other unincorporated entities or enterprises; special classes of shares
available only to foreign investors in markets that restrict the ownership by
foreign investors to certain classes of equity securities; convertible preferred
stocks; and other convertible investment grade debt instruments. A debt security
is investment grade if it is rated BBB or above by Standard & Poor's Ratings
Group ("S&P") or Baa or above by Moody's Investors Service, Inc. ("Moody's") or
determined to be of comparable quality by the Adviser. Debt securities rated BBB
by S&P or Baa by Moody's have speculative characteristics and changes in
economic conditions or other circumstances are more likely to lead to a weakened
capacity to make principal and interest payments than is the case with higher
grade debt securities. The Portfolio will consider disposition of any
convertible debt instrument which is rated or determined by the Adviser to be
below investment grade subsequent to acquisition by the Portfolio and it is
expected such securities will be less than 5% of assets.
In addition to its investments in equity securities, the Portfolio may invest
up to 5% of its net assets in options on equity securities and up to 5% of its
net assets in warrants, including options and warrants traded in over-the-
counter markets. The Portfolio may, under normal market conditions, invest up
to 35% of its total assets in equity securities other than Asian small company
investments, warrants, options on securities and indices, options on currency,
futures contracts and options on futures, forward foreign currency exchange
contracts, currency swaps and any other non-equity investments. The Portfolio
will not purchase debt securities, other than investment grade convertible
debt instruments.
The Portfolio may, for temporary defensive purposes, invest some or all of its
total assets in high grade debt securities of foreign and United States
companies, foreign governments and the U.S. Government, and their respective
agencies, instrumentalities, political subdivisions and authorities, as well
as in high quality money market instruments denominated in U.S. dollars or a
foreign currency.
INVESTING IN FOREIGN SECURITIES. Investing in securities issued by foreign
companies and governments involves considerations and possible risks not
typically associated with investing in securities issued by the U.S.
Government and domestic corporations. The values of foreign investments are
affected by changes in currency or exchange control regulations, application
of foreign tax laws, including withholding taxes, changes in governmental
administration or economic or monetary policy (in this country or abroad) or
changed circumstances in dealings between nations. Because investment in Asian
companies will usually involve currencies of foreign countries, the value of
assets of the Portfolio as measured by U.S. dollars may be adversely affected
by changes in currency exchange rates. Such rates may fluctuate significantly
over short periods of time causing the Portfolio's net asset value to
fluctuate as well. Costs are incurred in connection with conversions between
various currencies. In addition, foreign brokerage commissions, custody fees
and other costs of investing are generally higher than in the United States,
and foreign securities markets may be less liquid, more volatile and less
subject to governmental supervision than in the United States. Investments in
foreign issuers could be affected by other factors not present in the United
States, including expropriation, armed conflict, confiscatory taxation, lack
of uniform accounting and auditing standards and potential difficulties in
enforcing contractual obligations. Transactions in the securities of foreign
issuers could be subject to settlement delays and risk of loss.
More than 25% of the Portfolio's total assets, adjusted to reflect currency
transactions and positions, may be denominated in any single currency.
Concentration in a particular currency will increase the Portfolio's exposure
to adverse developments affecting the value of such currency. An issuer of
securities purchased by the Portfolio may be domiciled in a country other than
the country in whose currency the securities are denominated.
Since the Portfolio will, under normal market conditions, invest at least 65%
of its total assets in small companies based in Asia, its investment
performance will be especially affected by events affecting Asian Region
companies. The value and liquidity of investments may be affected favorably or
unfavorably by political, economic, fiscal, regulatory or other developments
in the Asian Region or neighboring regions. The extent of economic
development, political stability and market depth of different countries in
the Asian Region varies widely. Certain countries, including China,
Indonesia, Malaysia, the Philippines and Thailand, are either comparatively
underdeveloped or in the process of becoming developed. Asian investments
typically involve greater potential for gain or loss than investments in
securities of issuers in developed countries. In comparison to the United
States and other developed countries, such as Japan, developing countries may
have relatively unstable governments and economies based on only a few
industries. Given the Portfolio's investments, the Portfolio will likely be
particularly sensitive to changes in the economies of such countries as the
result of any reversals of economic liberalization, political unrest or
changes in trading status.
SECURITIES TRADING MARKETS. The securities markets in the Asian Region are
substantially smaller, less liquid and more volatile than the major securities
markets in the United States. A high proportion of the shares of many issuers
may be held by a limited number of persons and financial institutions, which
may limit the number of shares available for investment by the Portfolio. The
prices at which the Portfolio may acquire investments may be affected by
trading by persons with material non-public information and by securities
transactions by brokers in anticipation of transactions by the Portfolio in
particular securities. Similarly, volume and liquidity in the bond markets in
the Asian Region are less than in the United States and, at times, price
volatility can be greater than in the United States. The limited liquidity of
these securities markets may also affect the Portfolio's ability to acquire or
dispose of securities at the price and time it wishes to do so. In addition,
Asian Region securities markets are susceptible to being influenced by large
investors trading significant blocks of securities. All of these risks are
heightened when securities of smaller companies are involved.
The stock markets in the Asian Region are undergoing a period of growth and
change which may result in trading volatility and difficulties in the
settlement and recording of transactions, and in interpreting and applying the
relevant law and regulations. The securities industry in these countries is
comparatively underdeveloped, and stockbrokers and other intermediaries may
not perform as well as their counterparts in the United States and other more
developed securities markets.
ASIAN COUNTRY CONSIDERATIONS. Political and economic structures in many Asian
countries are undergoing significant evolution and rapid development, and such
countries may lack the social, political and economic stability characteristic
of the United States. Certain of such countries have, in the past, failed to
recognize private property rights and have at times nationalized or
expropriated the assets of private companies. As a result, the risks described
above, including the risks of nationalization or expropriation of assets, may
be heightened. In addition, unanticipated political or social developments may
affect the values of the Portfolio's investments in those countries and the
availability to the Portfolio of additional investments in those countries.
The laws of countries in the region relating to limited liability of corporate
shareholders, fiduciary duties of officers and directors, and the bankruptcy
of state enterprises are generally less well developed than or different from
such laws in the United States. It may be more difficult to obtain a judgement
in the courts of these countries than it is in the United States. Monsoons and
natural disasters also can affect the value of Portfolio investments.
Economies of countries in the Asian Region may differ favorably or unfavorably
from the U.S. economy in such respects as rate of growth of gross national
product, rate of inflation, capital reinvestment, resource self-sufficiency
and balance of payments position. As export-driven economies, the economies of
many countries in the Asian Region are affected by developments in the
economies of their principal trading partners. For example, revocation by the
United States of China's "Most Favored Nation" trading status, which the U.S.
President and Congress reconsider annually, would adversely affect the trade
and economic development of China and Hong Kong. Because the Portfolio is
likely, from time to time, to concentrate investments in Hong Kong, investors
should be aware that there has been significant growing economic integration
between Hong Kong and Southern China which is likely to continue. These two
countries have agreed to political integration after 1997, and the actual or
perceived success of this process will affect investments in Hong Kong and
elsewhere.
The Fund and the Portfolio each intend to conduct its respective affairs in
such a manner to avoid taxation. Nevertheless, certain countries may require
withholding on dividends paid on portfolio securities and on realized capital
gains. In the past, these taxes have sometimes been substantial. There can be
no assurance that in the future the Portfolio will be able to repatriate its
income, gains or initial capital from these countries.
DIRECT INVESTMENTS AND SMALLER COMPANIES. The Portfolio may invest up to 10%
of its total assets in direct investments in smaller companies based in Asia.
Direct investments include (i) the private purchase from an enterprise of an
equity interest in the enterprise in the form of shares of common stock or
equity interests in trusts, partnerships, joint ventures or similar
enterprises, and (ii) the purchase of such an equity interest in an enterprise
from a principal investor in the enterprise. In each case, the Portfolio will,
at the time of making the investment, enter into a shareholder or similar
agreement with the enterprise and one or more other holders of equity
interests in the enterprise. The Adviser anticipates that these agreements
will, in appropriate circumstances, provide the Portfolio with the ability to
appoint a representative to the board of directors or similar body of the
enterprise and for eventual disposition of the Portfolio's investment in the
enterprise. Such a representative of the Portfolio will be expected to provide
the Portfolio with the ability to monitor its investment and protect its
rights in the investment and will not be appointed for the purpose of
exercising management or control of the enterprise.
The Portfolio's investments will include investments in smaller, less seasoned
companies for which there is less publicly available information than larger,
more established companies. The securities of these companies, which may
include legally restricted securities, are generally subject to greater price
fluctuations, limited liquidity, higher transaction costs and higher
investment risk. These companies may have limited product lines, markets or
financial resources, or they may be dependent on a limited management group.
Investments in smaller companies may involve a high degree of business and
financial risk that can result in substantial losses. Because of the absence
of any public trading market for some of these investments, the Portfolio may
take longer to liquidate these positions at fair value than would be the case
for publicly traded securities. Furthermore, issuers whose securities are not
publicly traded may not be subject to investor protection requirements
applicable to publicly traded securities.
DERIVATIVE INSTRUMENTS. The Portfolio may purchase or sell derivative
instruments (which are instruments that derive their value from another
instrument, security, index or currency) to enhance return (which may be
considered speculative), to hedge against fluctuations in securities prices,
interest rates or currency exchange rates, or as a substitute for the purchase
or sale of securities or currencies. The Portfolio's transactions in
derivative instruments may be in the U.S. or abroad and may include the
purchase or sale of futures contracts on securities, securities indices, other
indices, other financial instruments or currencies; options on futures
contracts; exchange-traded and over-the-counter options on securities, indices
or currencies; and forward foreign currency exchange contracts. The
Portfolio's transactions in derivative instruments involve a risk of loss or
depreciation due to: unanticipated adverse changes in securities prices,
interest rates, the other financial instruments' prices or currency exchange
rates; the inability to close out a position; default by the counterparty;
imperfect correlation between a position and the desired hedge; tax
constraints on closing out positions; and portfolio management constraints on
securities subject to such transactions. The loss on derivative instruments
(other than purchased options) may substantially exceed the Portfolio's
initial investment in these instruments. In addition, the Portfolio may lose
the entire premium paid for purchased options that expire before they can be
profitably exercised by the Portfolio. The Portfolio incurs transaction costs
in opening and closing positions in derivative instruments. There can be no
assurance that the Adviser's use of derivative instruments will be
advantageous to the Portfolio.
The Portfolio may purchase call and put options on any securities in which the
Portfolio may invest or options on any securities index composed of securities
in which the Portfolio may invest. The Portfolio does not intend to write a
covered option on any security if after such transaction more than 15% of its
net assets, as measured by the aggregate value of the securities underlying
all covered calls and puts written by the Portfolio, would be subject to such
options. The Portfolio does not intend to purchase an option on any security
if, after such transaction, more than 5% of its net assets, as measured by the
aggregate of all premiums paid for all such options held by the Portfolio,
would be so invested.
To the extent that the Portfolio enters into futures contracts, options on
futures contracts and options on foreign currencies traded on an exchange
regulated by the Commodity Futures Trading Commission ("CFTC"), in each case
that are not for bona fide hedging purposes (as defined by the CFTC), the
aggregate initial margin and premiums required to establish these positions
(excluding the amount by which options are "in-the-money") may not exceed 5%
of the liquidation value of the Portfolio's investments, after taking into
account unrealized profits and unrealized losses on any contracts the
Portfolio has entered into.
Forward contracts are individually negotiated and privately traded by currency
traders and their customers. A forward contract involves an obligation to
purchase or sell a specific currency (or basket of currencies) for an agreed
price at a future date, which may be any fixed number of days from the date of
the contract. The Portfolio may engage in cross-hedging by using forward
contracts in one currency (or basket of currencies) to hedge against
fluctuations in the value of securities denominated in a different currency if
the Adviser determines that there is an established historical pattern of
correlation between the two currencies (or the basket of currencies and the
underlying currency). Use of a different foreign currency magnifies the
Portfolio's exposure to foreign currency exchange rate fluctuations. The
Portfolio may also use forward contracts to shift its exposure to foreign
currency exchange rate changes from one currency to another.
The Portfolio may enter into currency swaps for both hedging and non-hedging
purposes. Currency swaps involve the exchange of rights to make or receive
payments in specified currencies. Since currency swaps are individually
negotiated, the Portfolio expects to achieve an acceptable degree of
correlation between its portfolio investments and its currency swap positions.
Currency swaps usually involve the delivery of the entire principal value of
one designated currency in exchange for the other designated currency.
Therefore, the entire principal value of a currency swap is subject to the
risk that the other party to the swap will default on its contractual delivery
obligations. The use of currency swaps is a highly specialized activity which
involves special investment techniques and risks. If the Adviser is incorrect
in its forecasts of market values and currency exchange rates, the Portfolio's
performance will be adversely affected.
REPURCHASE AGREEMENTS. The Portfolio may enter into repurchase agreements (the
purchase of a security coupled with an agreement to resell) with respect to
its permitted investments, but currently intends to do so only with member
banks of the Federal Reserve System or with primary dealers in U.S. Government
securities. In the event of the bankruptcy of the other party to a repurchase
agreement, the Portfolio might experience delays in recovering its cash. To
the extent that, in the meantime, the value of the securities the Portfolio
purchased may have decreased, the Portfolio could experience a loss. At no
time will the Portfolio commit more than 15% of its net assets to repurchase
agreements which mature in more than seven days and other illiquid securities.
OTHER INVESTMENT COMPANIES. The Portfolio reserves the right to invest up to
10% of its total assets, calculated at the time of purchase, in the securities
of other investment companies unaffiliated with the Adviser or the Manager
that have the characteristics of closed-end investment companies. The
Portfolio will indirectly bear its proportionate share of any management fees
paid by investment companies in which it invests in addition to the advisory
fee paid by the Portfolio. The value of closed-end investment company
securities, which are usually traded on an exchange, is affected by demand for
the securities themselves, independent of the demand for the underlying
portfolio assets and, accordingly, such securities can trade at a discount
from their net asset values.
INVESTMENT LIMITATIONS. The Fund and the Portfolio have adopted certain
fundamental investment restrictions and policies which are enumerated in
detail in the Statement of Additional Information and which may not be changed
unless authorized by a shareholder vote and an investor vote, respectively.
Among these fundamental restrictions, neither the Fund nor the Portfolio may
(1) borrow money except as permitted by the Investment Company Act of 1940
(the "1940 Act"); (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); or (3) 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. Investment restrictions are
considered at the time of acquisition of assets; the sale of portfolio assets
generally is not required in the event of a subsequent change in
circumstances. As a matter of fundamental policy the Portfolio will not invest
25% or more of its total assets in the securities of issuers in any one
industry.
Except for the fundamental investment restrictions and policies specifically
identified above and those enumerated in the Statement of Additional
Information, the investment objective and policies of the Fund and the
Portfolio are not fundamental policies and accordingly may be changed by the
Trustees of the Trust and the Portfolio without obtaining the approval of the
shareholders of the Fund or the investors in the Portfolio, as the case may
be. As a matter of nonfundamental policy, neither the Fund nor the Portfolio
(i) may purchase any securities if, at the time of such purchase, permitted
borrowings exceed 5% of the value of its total assets, or (ii) may invest more
than 15% of its net assets in over-the-counter options, repurchase agreements
maturing in more than seven days and other illiquid securities. Nevertheless,
the Portfolio may temporarily borrow up to 5% of the value of its total assets
to satisfy redemption requests or settle securities transactions. The
Portfolio may lend portfolio securities and engage in repurchase agreements
and reverse repurchase agreements but the Adviser has no current intention to
do so.
Under the 1940 Act and the rules promulgated thereunder, the Portfolio's
investments in the securities of any company that, in its most recent fiscal
year, derived more than 15% of its gross revenues from securities-related
activities is limited to 5% of any class of the issuer's equity securities and
10% of the outstanding principal amount of the issuer's debt securities,
provided that the Portfolio's aggregate investments in the securities of any
such issuer do not exceed 5% of the Portfolio's total assets. Some of the
companies available for investment in the Asian Region, including enterprises
being privatized by such countries, may be financial services businesses that
engage in securities-related activities. The Portfolio's ability to invest in
such enterprises may thus be limited.
ORGANIZATION OF THE FUND AND THE PORTFOLIO
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THE FUND IS A DIVERSIFIED SERIES OF EATON VANCE GROWTH TRUST (THE "TRUST"), A
BUSINESS TRUST ESTABLISHED UNDER MASSACHUSETTS LAW PURSUANT TO A DECLARATION
OF TRUST DATED MAY 25, 1989. THE TRUST IS A MUTUAL FUND -- AN OPEN-END
MANAGEMENT INVESTMENT COMPANY. The Trustees of the Trust are responsible for
the overall management and supervision of its affairs. The Trust may issue an
unlimited number of shares of beneficial interest (no par value per share) in
one or more series (such as the Fund). 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.
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, affords the potential for economies of scale for the Fund (at least
when the assets of the Portfolio exceed $500 million) and may over time result
in lower expenses for the Fund.
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.
Information regarding other pooled investment entities or funds which invest
in the Portfolio may be obtained by contacting the Principal Underwriter, 24
Federal Street, Boston, MA 02110 (617) 482-8260.
Whenever the Fund as an investor in the Portfolio is requested to vote on
matters pertaining to the Portfolio (other than the termination of the
Portfolio's business, which may be determined by the Trustees of the Portfolio
without investor approval), the Fund will hold a meeting of Fund shareholders
and will vote its interest in the Portfolio for or against such matters
proportionately to the instructions to vote for or against such matters
received from Fund shareholders. The Fund shall vote shares for which it
receives no voting instructions in the same proportion as the shares for which
it receives voting instructions. Other investors in the Portfolio may alone or
collectively acquire sufficient voting interests in the Portfolio to control
matters relating to the operation of the Portfolio, which may require the Fund
to withdraw its investment in the Portfolio or take other appropriate action.
Any such withdrawal could result in a distribution "in kind" of portfolio
securities (as opposed to a cash distribution from the Portfolio). If
securities are distributed, the Fund could incur brokerage, tax or other
charges in converting the securities to cash. In addition, the distribution in
kind may result in a less diversified portfolio of investments or adversely
affect the liquidity of the Fund. Notwithstanding the above, there are other
means for meeting shareholder redemption requests, such as borrowing.
The Fund may withdraw (completely redeem) all its assets from the Portfolio at
any time if the Board of Trustees of the Trust determines that it is in the
best interest of the Fund to do so. In the event the Fund withdraws all of its
assets from the Portfolio, or the Board of Trustees of the Trust determines
that the investment objective of the Portfolio is no longer consistent with
the investment objective of the Fund, such Trustees would consider what action
might be taken, including investing the assets of the Fund in another pooled
investment entity or retaining an investment adviser to manage the Fund's
assets in accordance with its investment objective. The Fund's investment
performance may be affected by a withdrawal of all its assets from the
Portfolio.
MANAGEMENT OF THE FUND AND THE PORTFOLIO
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EATON VANCE MANAGEMENT ("EATON VANCE") ACTS AS THE SPONSOR AND MANAGER OF THE
FUND AND THE ADMINISTRATOR OF THE PORTFOLIO. THE PORTFOLIO HAS ENGAGED LLOYD
GEORGE INVESTMENT MANAGEMENT (BERMUDA) LIMITED (THE "ADVISER") AS ITS
INVESTMENT ADVISER. The Adviser, acting under the general supervision of the
Portfolio's Trustees, manages the Portfolio's investments and affairs. The
Portfolio is co-managed by Robert Lloyd George and Scobie Dickinson Ward.
The Adviser is registered as an investment adviser with the Securities and
Exchange Commission (the "Commission"). The Adviser is a subsidiary of Lloyd
George Management (B.V.I.) Limited ("LGM"). LGM and its subsidiaries act as
investment adviser to various individual and institutional clients with total
assets under management of approximately $1.5 billion. Eaton Vance's parent,
Eaton Vance Corp., owns 24% of the Class A shares issued by LGM.
LGM was established in 1991 to provide investment management services with
respect to equity securities of companies trading in Asian securities markets,
especially those of emerging markets. LGM currently manages Pacific Basin and
Asian portfolios for both private clients and institutional investors seeking
long-term capital growth. LGM's core investment team consists of nine
experienced investment professionals, based in Hong Kong, who have worked
together over a number of years successfully managing client portfolios in
Pacific Basin and Asian stock markets. LGM also has offices in Bombay, India
and London, England. The team has a unique knowledge of, and experience with,
Pacific Basin and Asian emerging markets. LGM is ultimately controlled by the
Hon. Robert J.D. Lloyd George, President and Trustee of the Portfolio and
Chairman and Chief Executive Officer of the Adviser. LGM's only activity is
portfolio management.
LGM and the Adviser have adopted a disciplined management style, providing a
blend of Asian and multinational expertise with the most rigorous
international standards of fundamental security analysis. Although focused
primarily in Asia, LGM and the Adviser maintain a network of international
contacts in order to monitor international economic and stock market trends
and offer clients a global management service. Personnel of the Adviser
include the following:
THE HONOURABLE ROBERT LLOYD GEORGE. Chairman. Born in London in 1952 and
educated at Eton College, where he was a King's Scholar, and at Oxford
University. Prior to founding LGM, Mr. Lloyd George was Managing Director of
Indosuez Asia Investment Services Ltd. Previously, he spent four years with
Fiduciary Trust Company of New York researching international securities, in
the United States and Europe, for the United Nations Pension Fund. Mr. Lloyd
George is the author of numerous published articles and three books -- "A
Guide to Asian Stock Markets" (Longmans, Hong Kong, 1989), "The East West
Pendulum" (Woodhead - Faulkner, Cambridge, 1991) and "North South -- an
Emerging Markets Handbook" (Probus, England, 1994).
WILLIAM WALTER RALEIGH KERR. Finance Director and Chief Operating
Officer. Born in 1950 and educated at Ampleforth and Oxford. Mr. Kerr
qualified as a Chartered Accountant at Thomson McLintock & Co. before joining
The Oldham Estate Company plc as Financial Controller. Prior to joining LGM,
Mr. Kerr was a Director of Banque Indosuez's corporate finance subsidiary,
Financiere Indosuez Limited, in London. Prior to that Mr. Kerr worked for
First Chicago Limited.
SCOBIE DICKINSON WARD. Director. Born in 1966 and a cum laude graduate of both
Phillips Academy Andover, and Harvard University. Mr. Ward joined Indosuez
Asia Investment Services in 1989, where he managed the $100 million Himalayan
Fund, and the Indosuez Tasman Fund, investing in Australia and New Zealand.
Messrs. Ward and Lloyd George manage Eaton Vance's Emerging Markets Portfolio
and South Asia Portfolio (which invests in India and the Indian subcontinent).
M. F. TANG. Director. Born in 1946 and educated in Hong Kong. Mr. Tang is a
Fellow of the Chartered Association of Certified Accountants. Mr. Tang joined
LGM having worked for Australian Mutual Provident Society in Sydney where he
was a Portfolio Manager responsible for Asian Equities. Prior thereto Mr. Tang
worked for Barclays Australia Investment Services Ltd. From 1978 to 1986 Mr.
Tang worked for Barings International Investment Management and prior to that
he spent six years with Peat Marwick Mitchell & Co. Mr. Tang is fluent in the
Cantonese and Mandarin dialects of the Chinese language.
Pamela Chan. Director. Born in Hong Kong in 1957 and graduated from Mills
College in Oakland, California. She was an investment executive for Jardine
Fleming from 1982-1984 before moving to Australia where she worked as a Fund
Manager for Rothschild and Aetna. She joined Sun Life Assurance Society PLC in
England in 1987 where she was the head of South East Asian Equities and a
Director. She joined LGM in April 1994 where she is a portfolio manager.
Adaline Mang-Yee Ko. Director. Born in 1943 and educated at University of
Birmingham, England and at London Business School where she received her MBA.
Ms. Ko has over 13 years experience working with Far East Asian equities. From
1982-1988, she worked at Save & Prosper Group Ltd. as an investment manager. In
1988, Ms. Ko transferred to Robert Fleming & Co. Ltd. In 1990, she was promoted
to Director of Fleming Investment Management Ltd. In 1992, she was promoted to
Head of the Pacific Region Portfolios Group where she supervised a team of 5
with responsibility for over $1.5 billion in assets under management. Ms. Ko
manages Eaton Vance's Greater China Growth Portfolio. Ms. Ko joined LGM in 1995.
While the Portfolio is a New York trust, the Adviser, together with certain
Trustees and officers of the Portfolio, are not residents of the United
States, and substantially all of their respective assets may be located
outside of the United States. It may be difficult for investors to effect
service of process within the United States upon the individuals identified
above, or to realize judgments of courts of the United States predicated upon
civil liabilities of the Adviser and such individuals under the federal
securities laws of the United States. The Portfolio has been advised that
there is substantial doubt as to the enforceability in the countries in which
the Adviser and such individuals reside of such civil remedies and criminal
penalties as are afforded by the federal securities laws of the United States.
Under its investment advisory agreement with the Portfolio, the Adviser
receives a monthly advisory fee of 0.0625% (equivalent to 0.75% annually) of
the average daily net assets of the Portfolio up to $500 million, which fee
declines at intervals above $500 million.
The Adviser also furnishes for the use of the Portfolio office space and all
necessary office facilities, equipment and personnel for servicing the
investments of the Portfolio. The Adviser places the portfolio securities
transactions of the Portfolio with many broker-dealer firms and uses its best
efforts to obtain execution of such transactions at prices which are
advantageous to the Portfolio and at reasonably competitive commission rates.
Subject to the foregoing, the Adviser may consider sales of shares of the Fund
as a factor in the selection of firms to execute portfolio transactions. The
Fund, the Portfolio and the Adviser have adopted Codes of Ethics relating to
personal securities transactions. The Codes permit Eaton Vance personnel to
invest in securities (including securities that may be purchased or held by
the Portfolio) for their own accounts, subject to certain reporting and other
restrictions and procedures contained in such Codes.
EATON VANCE, ITS AFFILIATES AND ITS PREDECESSOR COMPANIES HAVE BEEN MANAGING
ASSETS OF INDIVIDUALS AND INSTITUTIONS SINCE 1924 AND MANAGING INVESTMENT
COMPANIES SINCE 1931. EATON VANCE ACTS AS INVESTMENT ADVISER TO INVESTMENT
COMPANIES AND VARIOUS INDIVIDUAL AND INSTITUTIONAL CLIENTS WITH ASSETS UNDER
MANAGEMENT OF OVER $16 BILLION. Eaton Vance is a wholly-owned subsidiary of
Eaton Vance Corp., a publicly-held holding company which through its
subsidiaries and affiliates engages primarily in investment management,
administration and marketing activities. The Principal Underwriter is a
wholly-owned subsidiary of Eaton Vance.
Eaton Vance, acting under the general supervision of the Boards of Trustees of
the Trust and the Portfolio, manages and administers the business affairs of
the Fund and the Portfolio. Eaton Vance's services include monitoring and
providing reports to the Trustees of the Trust and the Portfolio concerning
the investment performance achieved by the Adviser for the Portfolio,
recordkeeping, preparation and filing of documents required to comply with
federal and state securities laws, supervising the activities of the transfer
agent of the Fund and the custodian of the Portfolio, providing assistance in
connection with Trustees' and shareholders' meetings and other management and
administrative services necessary to conduct the business of the Fund and the
Portfolio. Eaton Vance also furnishes for the use of the Fund and the
Portfolio office space and all necessary office facilities, equipment and
personnel for managing and administering the business affairs of the Fund and
the Portfolio. Eaton Vance does not provide any investment management or
advisory services to the Portfolio or the Fund.
Under its management contract with the Fund, Eaton Vance receives a monthly
fee in the amount of 1/48 of 1% (equal to 0.25% annually) of the average
daily net assets of the Fund up to $500 million, which fee declines at
intervals above $500 million. In addition, under its administration agreement
with the Portfolio, Eaton Vance receives a monthly fee in the amount of 1/48
of 1% (equal to 0.25% annually) of the average daily net assets of the
Portfolio up to $500 million, which fee declines at intervals above $500
million. The combined advisory, management and administration fees payable by
the Fund and the Portfolio are higher than similar fees charged by most other
investment companies.
The Fund and the Portfolio, as the case may be, will each be responsible for
all respective costs and expenses not expressly stated to be payable by the
Adviser under the investment advisory agreement, by Eaton Vance under the
management contract or the administration agreement or by the Principal
Underwriter under the distribution agreement. Such costs and expenses to be
borne by the Portfolio and the Fund, as the case may be, include, without
limitation: custody and transfer agency fees and expenses, including those
incurred for determining net asset value and keeping accounting books and
records; expenses of pricing and valuation services; the cost of share
certificates; membership dues in investment company organizations; expenses
of acquiring, holding and disposing of securities and other investments; fees
and expenses of registering under the securities laws and governmental fees;
expenses of reporting to shareholders and investors; proxy statements and
other expenses of shareholders' or investors' meetings; insurance premiums;
printing and mailing expenses; interest, taxes and corporate fees; legal and
accounting expenses; compensation and expenses of Trustees not affiliated with
the Adviser or Eaton Vance; and investment advisory, management and
administration fees. The Portfolio or the Fund, as the case may be, will also
each bear expenses incurred in connection with any litigation in which the
Portfolio or the Fund, as the case may be, is a party and any legal obligation
to indemnify its respective officers and Trustees with respect thereto, to the
extent not covered by insurance.
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 and all
amounts theretofore paid to the Principal Underwriter by the Adviser in
consideration of the former's distribution efforts. 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 and from the Adviser
in consideration of the distribution efforts, 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 commissions attributable to a sale of Fund shares to be
accrued and paid by the Fund to the Principal Underwriter in fiscal years
subsequent to the year in which such shares were sold. This spreading of sales
commissions payments under the Plan over an extended period would result in
the incurrence and payment of increased distribution fees under the Plan.
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 this provision of 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 for each fiscal year
based on the value of Fund shares sold by such persons and remaining
outstanding for at least twelve months. As permitted by the NASD Rule, such
payments are made for personal services and/or the maintenance of shareholder
accounts. Service fees are separate and distinct from the sales commissions
and distribution fees payable by the Fund to the Principal Underwriter, and as
such are not subject to automatic discontinuance when there are no outstanding
Uncovered Distribution Charges of the Principal Underwriter. The Fund expects
to begin accruing for its service fee payments one year after the commencement
of its operations.
The Principal Underwriter may, from time to time, at its own expense, provide
additional incentives to Authorized Firms which employ registered
representatives who sell Fund shares and/or shares of other funds distributed
by the Principal Underwriter. In some instances, such additional incentives
may be offered only to certain Authorized Firms whose representatives sell or
are expected to sell significant amounts of shares. In addition, the Principal
Underwriter may from time to time increase or decrease the sales commissions
payable to Authorized Firms.
Distribution of Fund shares by the Principal Underwriter will also be
encouraged by the payment by the Adviser to the Principal Underwriter of
amounts equivalent to .15% of the Fund's annual average daily net assets. Such
payments will be made from the Adviser's own resources, not Fund assets. The
aggregate amounts of such payments are a deduction in calculating the
outstanding Uncovered Distribution Charges of the Principal Underwriter under
the Plan and, therefore, will benefit Fund shareholders when such charges
exist. Such payments will be made in consideration of the Principal
Underwriter's distribution efforts.
The Fund may, in its absolute discretion, suspend, discontinue or limit the
offering of its shares at any time. In determining whether any such action
should be taken, the Fund's management intends to consider all relevant
factors, including without limitation the size of the Fund, the investment
climate and market conditions, the volume of sales and redemptions of Fund
shares, and the amount of Uncovered Distribution Charges of the Principal
Underwriter. The Plan may continue in effect and payments may be made under
the Plan following any such suspension, discontinuance or limitation of the
offering of Fund shares; however, the Fund is not contractually obligated to
continue the Plan for any particular period of time. Suspension of the
offering of Fund shares would not, of course, affect a shareholder's ability
to redeem shares.
VALUING FUND SHARES
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THE FUND VALUES ITS SHARES ONCE ON EACH DAY THE NEW YORK STOCK EXCHANGE (THE
"EXCHANGE") IS OPEN FOR TRADING, as of the close of regular trading on the
Exchange (normally 4:00 p.m. New York time). The Fund's net asset value per
share is determined by its custodian, Investors Bank & Trust Company ("IBT")
(as agent for the Fund) in the manner authorized by the Trustees of the Trust.
Net asset value is computed by dividing the value of the Fund's total assets,
less its liabilities, by the number of shares outstanding. Because the Fund
invests its assets in an interest in the Portfolio, the Fund's net asset value
will reflect the value of its interest in the Portfolio (which, in turn,
reflects the underlying value of the Portfolio's assets and liabilities).
Authorized Firms must communicate an investor's order to the Principal
Underwriter prior to the close of the Principal Underwriter's business day to
receive that day's net asset value per Fund share. It is the Authorized Firms'
responsibility to transmit orders promptly to the Principal Underwriter.
The Portfolio's net asset value is also determined as of the close of regular
trading on the Exchange by IBT (as custodian and agent for the Portfolio)
based on market or fair value in the manner authorized by the Trustees of the
Portfolio. Exchange listed securities generally are valued at closing sale
prices. Net asset value is computed by subtracting the liabilities of the
Portfolio from the value of its total assets. For further information
regarding the valuation of the Portfolio's assets, see "Determination of Net
Asset Value" in the Statement of Additional Information.
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 net asset value per share of the Fund next determined after an
order is effective. An Authorized Firm may charge its customers a fee in
connection with transactions executed by that Firm. The 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: First
Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123. The
$1,000 minimum initial investment is waived for Bank Automated Investing
accounts, which may be established with an investment of $50 or more. See
"Eaton Vance Shareholder Services".
In connection with employee benefit or other continuous group purchase plans
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 on the day of their receipt or as soon thereafter as
possible. The number of Fund shares to be issued in exchange for securities
will be the aggregate proceeds from the sale of such securities, divided by
the applicable net asset value per Fund share on the day such proceeds are
received. Eaton Vance will use reasonable efforts to obtain the then current
market price for such securities, but does not guarantee the best available
price. Eaton Vance will absorb any transaction costs, such as commissions, on
the sale of the securities.
Securities determined to be acceptable should be transferred via book entry or
physically delivered, in proper form for transfer, through an Authorized Firm,
together with a completed and signed Letter of Transmittal in approved form
(available from Authorized Firms), as follows:
IN THE CASE OF BOOK ENTRY:
Deliver through Depository Trust Co.
Broker #2212
Investors Bank & Trust Company
For A/C EV Marathon Asian Small Companies Fund
IN THE CASE OF PHYSICAL DELIVERY:
Investors Bank & Trust Company
Attention: EV Marathon Asian Small Companies Fund
Physical Securities Processing Settlement Area
89 South Street
Boston, MA 02111
Investors who are contemplating an exchange of securities for shares of the
Fund, or their representatives, must contact Eaton Vance to determine whether
the securities are acceptable before forwarding such securities. Eaton Vance
reserves the right to reject any securities. Exchanging securities for Fund
shares may create a taxable gain or loss. Each investor should consult his or
her tax adviser with respect to the particular federal, state and local tax
consequences of exchanging securities for Fund shares.
IF YOU DON'T HAVE AN AUTHORIZED FIRM, EATON VANCE CAN RECOMMEND ONE.
HOW TO REDEEM FUND SHARES
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A SHAREHOLDER MAY REDEEM FUND SHARES IN ONE OF THREE WAYS -- BY MAIL, BY
TELEPHONE OR THROUGH AN AUTHORIZED FIRM. The redemption price will be based on
the net asset value per Fund share next computed after a redemption request is
received in the proper form as described below.
REDEMPTION BY MAIL: Shares may be redeemed by delivering to the Transfer
Agent, First Data Investor Services Group, P.O. Box 5123, Westborough, MA
01581-5123, during its business hours a written request for redemption in good
order, plus any share certificates with executed stock powers. Good order
means that all relevant documents must be endorsed by the record owner(s)
exactly as the shares are registered and the signature(s) must be guaranteed
by a member of either the Securities Transfer Association's STAMP program or
the New York Stock Exchange's Medallion Signature Program, or certain banks,
savings and loan institutions, credit unions, securities dealers, securities
exchanges, clearing agencies and registered securities associations as
required by a regulation of the Commission and acceptable to the Transfer
Agent. In addition, in some cases, good order may require the furnishing of
additional documents such as where shares are registered in the name of a
corporation, partnership or fiduciary.
REDEMPTION BY TELEPHONE: Shares may be redeemed by telephone provided the
investor has not disclaimed in writing the use of the privilege. Such
redemptions can be effected by calling the Transfer Agent at 800-262-1122,
Monday through Friday, 9:00 a.m. to 4:00 p.m. (Eastern Standard Time). The
proceeds of a telephone redemption may be no greater than the maximum amount
established by the Principal Underwriter (currently $50,000) and may be mailed
only to the account address of record. Shares held by corporations, trusts or
certain other entities, or subject to fiduciary arrangements, may not be
redeemed by telephone. Neither the Fund, the Principal Underwriter nor the
Transfer Agent will be responsible for the authenticity of redemption
instructions received by telephone, provided that reasonable procedures to
confirm that instructions communicated by telephone are genuine have been
followed. Telephone instructions will be tape recorded. In times of drastic
economic or market changes, a telephone redemption may be difficult to
implement.
REDEMPTION THROUGH AN AUTHORIZED FIRM: To sell shares at their net asset
value through an Authorized Firm (a repurchase), a shareholder can place a
repurchase order with the Authorized Firm, which may charge a fee. The value
of such shares is based upon the net asset value calculated after the
Principal Underwriter, as the Fund's agent, receives the order. It is the
Authorized Firm's responsibility to transmit promptly repurchase orders to the
Principal Underwriter. Throughout this Prospectus, the word "redemption" is
generally meant to include a repurchase.
Within seven days after receipt of a redemption request by the Transfer Agent,
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 applicable
contingent deferred sales charge (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.
If shares were recently purchased, the proceeds of a redemption will not be
sent until the check (including a certified or cashier's check) received for
the shares purchased has cleared. Payment for shares tendered for redemption
may be delayed up to 15 days from the purchase date when the purchase check
has not yet cleared. Redemptions may result in a taxable gain or loss.
Due to the high cost of maintaining small accounts, the Fund reserves the
right to redeem accounts with balances of less than $750. Prior to such a
redemption, shareholders will be given 60 days' written notice to make an
additional purchase. However, no such redemption would be required by the 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
("CDSC"). A CDSC is imposed on any redemption the amount of which exceeds the
aggregate value at the time of redemption of (a) all shares in the account
purchased more than six years prior to the redemption, (b) all shares in the
account acquired through reinvestment of distributions and (c) the increase,
if any, in the value of all other shares in the account (namely those
purchased within the six years preceding the redemption) over the purchase
price of such shares. Redemptions are processed in a manner to maximize the
amount of redemption proceeds which will not be subject to a CDSC. That is,
each redemption will be assumed to have been made first from the exempt
amounts referred to in clauses (a), (b) and (c) above, and second through
liquidation of those shares in the account referred to in clause (c) on a
first-in-first-out basis. As described under "Distribution Plan", the CDSC
will be paid to the Principal Underwriter or the Fund. Any CDSC which is
required to be imposed on share redemptions will be made in accordance with
the following schedule:
YEAR OF REDEMPTION AFTER PURCHASE CDSC
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First or Second 5%
Third 4%
Fourth 3%
Fifth 2%
Sixth 1%
Seventh and following 0%
In calculating the CDSC upon the redemption of Fund shares acquired in an
exchange for shares of a fund currently listed under "The Eaton Vance Exchange
Privilege", the CDSC schedule applicable to the shares at the time of purchase
will apply and the purchase of Fund shares acquired in the exchange is deemed
to have occurred at the time of the original purchase of exchanged shares.
No CDSC will be imposed on shares of the Fund which have been sold to Eaton
Vance, its affiliates, or to their respective employees or clients. The CDSC
will also be waived for shares redeemed (1) pursuant to a Withdrawal Plan (see
"Eaton Vance Shareholder Services"), (2) as part of a required distribution
from a tax-sheltered retirement plan or (3) following the death of all
beneficial owners of such shares, provided the redemption is requested within
one year of death (a death certificate and other applicable documents may be
required). In addition, shares acquired as a result of a merger or liquidation
of another Eaton Vance sponsored fund will have a CDSC imposed at the same
rate as would have been imposed in the prior fund.
THE FOLLOWING EXAMPLE ILLUSTRATES THE OPERATION OF THE CDSC. 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 CDSC. IF THE INVESTOR SHOULD
REDEEM $3,000 OF SHARES, A CDSC 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 CDSC WOULD BE $50.
REPORTS TO SHAREHOLDERS
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THE FUND WILL ISSUE TO ITS SHAREHOLDERS SEMI-ANNUAL AND ANNUAL REPORTS
CONTAINING FINANCIAL STATEMENTS. Financial statements included in annual
reports are audited by the Fund's independent certified public accountants.
Shortly after the end of each calendar year, the Fund will furnish its
shareholders with information necessary for preparing federal and state income
tax returns.
THE LIFETIME INVESTING ACCOUNT/DISTRIBUTION OPTIONS
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AFTER AN INVESTOR MAKES AN INITIAL PURCHASE OF FUND SHARES, THE TRANSFER AGENT
WILL SET UP A LIFETIME INVESTING ACCOUNT FOR THE INVESTOR ON THE FUND'S
RECORDS. This account is a complete record of all transactions between the
investor and the Fund which at all times shows the balance of shares owned.
The Fund will not issue share certificates except upon request.
Each time a transaction takes place in a shareholder's account, the shareholder
will receive a statement showing complete details of the transaction and the
current balance in the account. (Under certain investment plans, statements may
be sent only quarterly). THE LIFETIME INVESTING ACCOUNT ALSO PERMITS A
SHAREHOLDER TO MAKE ADDITIONAL INVESTMENTS IN SHARES BY SENDING A CHECK FOR $50
OR MORE to the Transfer Agent.
Any questions concerning a shareholder's account or services available may
also be directed by telephone to EATON VANCE SHAREHOLDER SERVICES at
800-225-6265, extension 2, or in writing to the Transfer Agent, First Data
Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123 (please
provide the name of the shareholder, the Fund and the account number).
THE FOLLOWING DISTRIBUTION OPTIONS WILL BE AVAILABLE TO ALL LIFETIME INVESTING
ACCOUNTS and may be changed as often as desired by written notice to the
Fund's dividend disbursing agent, First Data Investor Services Group, P.O. Box
5123, Westborough, MA 01581-5123. The currently effective option will appear
on each account statement.
Share Option -- Dividends and capital gains will be reinvested in additional
shares.
Income Option -- Dividends will be paid in cash and capital gains will be
reinvested in additional shares.
Cash Option -- Dividends and capital gains will be paid in cash.
The Share Option will be assigned if no other option is specified.
Distributions, including those reinvested, will be reduced by any withholding
required under the federal income tax laws.
If the Income Option or Cash Option has been selected, dividend and/or capital
gains distribution checks which are returned by the United States Postal
Service as not deliverable or which remain uncashed for six months or more
will be reinvested in the account in shares at the then current net asset
value. Furthermore, the distribution option on the account will be
automatically changed to the Share Option until such time as the shareholder
selects a different option.
DISTRIBUTION INVESTMENT OPTION. In addition to the distribution options set
forth above, dividends and/or capital gains may be invested in additional
shares of another Eaton Vance fund. Before selecting this option, a
shareholder should obtain a prospectus of the other Eaton Vance fund and
consider its objectives and policies carefully.
"STREET NAME" ACCOUNTS. If shares of a Fund are held in a "street name"
account with an Authorized Firm, all recordkeeping, transaction processing and
payments of distributions relating to the beneficial owner's account will be
performed by the Authorized Firm, and not by the Fund and its Transfer Agent.
Since the Fund will have no record of the beneficial owner's transactions, a
beneficial owner should contact the Authorized Firm to purchase, redeem or
exchange shares, to make changes in or give instructions concerning the
account, or to obtain information about the account. The transfer of shares in
a "street name" account to an account with another dealer or to an account
directly with 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.
THE EATON VANCE EXCHANGE PRIVILEGE
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Shares of the Fund currently may be exchanged for shares of one or more other
funds in the Eaton Vance Marathon Group of Funds (including Class I shares of
any EV Marathon Limited Maturity Fund) or Eaton Vance Money Market Fund, which
are subject to a CDSC. Shares of the Fund may also be exchanged for shares of
Eaton Vance Prime Rate Reserves, which are subject to an early withdrawal
charge, and shares of a money market fund sponsored by an Authorized Firm and
approved by the Principal Underwriter (an "Authorized Firm fund"). Any such
exchange will be made on the basis of the net asset value per share of each
fund at the time of the exchange. 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 Transfer Agent 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 Transfer Agent for additional information concerning the
exchange privilege. Applications and prospectuses of other funds are available
from Authorized Firms or the Principal Underwriter. The prospectus for each
fund describes its investment objectives and policies, and shareholders should
obtain a prospectus and consider these objectives and policies carefully
before requesting an exchange.
No CDSC is imposed on exchanges. For purposes of calculating the CDSC upon
redemption of shares acquired in an exchange, the CDSC schedule applicable to
the shares at the time of purchase will apply and the purchase of shares
acquired in one or more exchanges is deemed to have occurred at the time of
the original purchase of the exchanged shares, except that time during which
shares are held in an Authorized Firm fund will not be credited toward
completion of the CDSC period. For the CDSC schedule applicable to the Eaton
Vance Marathon Group of Funds (except EV Marathon Strategic Income Fund, Eaton
Vance Prime Rate Reserves and Class I shares of any EV Marathon Limited
Maturity Fund), see "How to Redeem Fund Shares." The CDSC or early withdrawal
charge schedule applicable to EV Marathon Strategic Income Fund, Eaton Vance
Prime Rate Reserves 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 funds listed above 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 Transfer Agent provided that the
investor has not disclaimed in writing the use of the privilege. To effect
such exchanges, call the Transfer Agent at 800-262-1122, Monday through
Friday, 9:00 a.m. to 4:00 p.m. (Eastern Standard Time). Shares acquired by
telephone exchange must be registered in the same name(s) and with the same
address as the shares being exchanged. Neither the Fund, the Principal
Underwriter nor the Transfer Agent will be responsible for the authenticity of
exchange instructions received by telephone; provided that reasonable
procedures to confirm that instructions communicated are genuine have been
followed. Telephone instructions will be tape recorded. In times of drastic
economic or market changes, a telephone exchange may be difficult to
implement. An exchange may result in a taxable gain or loss.
EATON VANCE SHAREHOLDER SERVICES
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THE FUND OFFERS THE FOLLOWING SERVICES WHICH ARE VOLUNTARY, INVOLVE NO EXTRA
CHARGE, AND MAY BE CHANGED OR DISCONTINUED WITHOUT PENALTY AT ANY TIME. Full
information on each of the services described below and an application, where
required, are available from Authorized Firms or the Principal Underwriter.
The cost of administering such services for the benefit of shareholders who
participate in them is borne by the Fund as an expense to all shareholders.
INVEST-BY-MAIL -- FOR PERIODIC SHARE ACCUMULATION: Once the $1,000 minimum
investment has been made, checks of $50 or more payable to the order of EV
Marathon Asian Small Companies Fund may be mailed directly to the Transfer
Agent, First Data Investor Services Group, P.O. Box 5123, Westborough, MA
01581-5123 at any time -- whether or not distributions are reinvested. The
name of the shareholder, the Fund and the account number should accompany each
investment.
BANK AUTOMATED INVESTING -- FOR REGULAR SHARE ACCUMULATION: Cash investments
of $50 or more may be made automatically each month or quarter from a
shareholder's bank account. The $1,000 minimum initial investment and small
account redemption policy are waived for these accounts.
WITHDRAWAL PLAN: A shareholder may draw on shareholdings systematically with
monthly or quarterly checks 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 CDSC. See "How to Redeem Fund Shares". A
minimum deposit of $5,000 in shares is required.
REINVESTMENT PRIVILEGE: A shareholder who has redeemed shares may reinvest,
with credit for any CDSCs paid on the redeemed shares, any portion or all of
the redemption proceeds (plus that amount necessary to acquire a fractional
share to round off the purchase to the nearest full share) in shares of the
Fund, provided that the reinvestment is effected within 60 days after such
redemption and the privilege has not been used more than once in the prior 12
months. Shares are sold to a reinvesting shareholder at the next determined
net asset value following timely receipt of a written purchase order by the
Principal Underwriter or by the Fund (or by the Fund's Transfer Agent). To the
extent that any shares are sold at a loss and the proceeds are reinvested in
shares of the Fund (or other shares of the Fund are acquired) within the
period beginning 30 days before and ending 30 days after the date of 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.
DISTRIBUTIONS AND TAXES
- ------------------------------------------------------------------------------
DISTRIBUTIONS. It is the present policy of the Fund to make (A) at least one
distribution annually (normally in December) of all or substantially all of
the investment income allocated to the Fund by the Portfolio (less the Fund's
direct and allocated expenses), and (B) at least one distribution annually of
all or substantially all of the net realized capital gains (if any) allocated
to the Fund by the Portfolio (reduced by any available capital loss
carryforwards from prior years). Shareholders may reinvest all distributions
in shares of the Fund without a sales charge at the per share net asset value
as of the close of business on the record date.
The Fund's investment income consists of the Fund's allocated share of the net
investment income of the Portfolio, less all actual and accrued expenses of
the Fund determined in accordance with generally accepted accounting
principles. The Portfolio's net investment income consists of all income
accrued on the Portfolio's assets, less all actual and accrued expenses of the
Portfolio determined in accordance with generally accepted accounting
principles. The Fund's net realized capital gains, if any, consist of the net
realized capital gains (if any) allocated to the Fund by the Portfolio for tax
purposes, after taking into account any available capital loss carryovers.
TAXES. Distributions by the Fund which are derived from the Fund's allocated
share of the Portfolio's net investment income, net short-term capital gains
and certain foreign exchange gains are taxable to shareholders as ordinary
income, whether received in cash or reinvested in additional shares of the
Fund. The Fund's distributions will generally not qualify for the dividends-
received deduction for corporate shareholders. The Fund anticipates that for
federal tax purposes the entire distribution will constitute ordinary income
to the shareholders. Shareholders reinvesting such distributions should treat
the entire amount of the distribution as the tax basis of the additional
shares acquired by reason of such reinvestment.
Capital gains referred to in clause (B) above, if any, realized by the
Portfolio and allocated to the Fund for the Fund's fiscal year, which ends on
August 31, will usually be distributed by the Fund prior to the end of
December. Distributions by the Fund of long-term capital gains allocated to
the Fund by the Portfolio are taxable to shareholders as long-term capital
gains, whether paid in cash or reinvested in additional shares of the Fund and
regardless of the length of time Fund shares have been owned by the
shareholder.
If shares are purchased shortly before the record date of a distribution, the
shareholder will pay the full price for the shares and then receive some
portion of the price back as a taxable distribution. The amount, timing and
character of the Fund's distributions to shareholders may be affected by
special tax rules governing the Portfolio's activities in options, futures and
forward foreign currency exchange transactions or certain other investments.
Certain distributions, if declared by the Fund in October, November or
December and paid the following January will be taxable to shareholders as if
received on December 31 of the year in which they are declared.
The Fund intends to qualify as a regulated investment company under the Code
and to satisfy all requirements relating to the sources of its income, the
distribution of its income, and the diversification of its assets. In
satisfying these requirements, the Fund will treat itself as owning its
proportionate share of each of the Portfolio's assets and as entitled to the
income of the Portfolio properly attributable to such share.
As a regulated investment company under the Code, the Fund does not pay
federal income or excise taxes to the extent that it distributes to
shareholders its net investment income and net realized capital gains in
accordance with the timing requirements imposed by the Code. As a partnership
under the Code, the Portfolio does not pay federal income or excise taxes.
Income realized by the Portfolio from certain instruments and allocated to the
Fund may be subject to foreign income taxes, and the Fund may make an election
under Section 853 of the Code that would allow shareholders to claim a credit
or deduction on their federal income tax returns for (and treated as
additional amounts distributed to them) their pro rata portion of the Fund's
allocated share of qualified taxes paid by the Portfolio to foreign countries.
This election may be made only if more than 50% of the assets of the Fund,
including its allocable share of the Portfolio's assets, at the close of the
Fund's taxable year consists of securities in foreign corporations. The Fund
will send a written notice of any such election (not later than 60 days after
the close of its taxable year) to each shareholder indicating the amount to be
treated as the shareholder's proportionate share of such taxes. Availability
of foreign tax credits or deductions for shareholders is subject to certain
additional restrictions and limitations under the Code.
The Fund will provide its shareholders annually with tax information notices
and Forms 1099 to assist in the preparation of their federal and state tax
returns for the prior calendar year's distributions, proceeds from the
redemption or exchange of Fund shares, and federal income tax (if any)
withheld by the Fund's Transfer Agent.
Shareholders should consult with their tax advisors concerning the
applicability of state, local or other taxes to an investment in the Fund.
PERFORMANCE INFORMATION
- ------------------------------------------------------------------------------
FROM TIME TO TIME, THE FUND MAY ADVERTISE ITS AVERAGE ANNUAL TOTAL RETURN. The
Fund's average annual total return is determined by multiplying a hypothetical
initial purchase 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 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 CDSC at the end of the period. The Fund may also publish annual and
cumulative total return figures from time to time. The Fund may use such total
return figures, together with comparisons with the Consumer Price Index,
various domestic and foreign securities indices and performance studies
prepared by independent organizations, in advertisements and in information
furnished to present or prospective shareholders. The Fund may also quote
total return for the period prior to commencement of operations which would
reflect the Portfolio's total return (or that of its predecessor) adjusted to
reflect any applicable Fund sales charge.
The Fund may also publish total return figures which do not take into account
any CDSC which may be imposed upon redemptions at the end of the specified
period. Any performance figure which does not take into account the CDSC 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.
<PAGE>
[Logo]
EATON VANCE
================
Mutual Funds
EV MARATHON
ASIAN SMALL
COMPANIES FUND
PROSPECTUS
JANUARY 1, 1997
EV MARATHON ASIAN
SMALL COMPANIES FUND
24 FEDERAL STREET
BOSTON, MA 02110
- --------------------------------------------------------------------------------
SPONSOR AND MANAGER OF EV MARATHON ASIAN SMALL COMPANIES FUND
ADMINISTRATOR OF ASIAN SMALL COMPANIES PORTFOLIO
Eaton Vance Management, 24 Federal Street, Boston, MA 02110
ADVISER OF ASIAN SMALL COMPANIES PORTFOLIO
Lloyd George Investment Management (Bermuda) Limited,
3808 One Exchange Square, Central, Hong Kong
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc., 24 Federal Street,
Boston, MA 02110 (800) 225-6265
CUSTODIAN
Investors Bank & Trust Company, 89 South Street, Boston, MA 02111
TRANSFER AGENT
First Data Investor Services Group, P.O. Box 5123,
Westborough, MA 01581-5123 (800) 262-1122
AUDITORS
Deloitte & Touche LLP, 125 Summer Street, Boston, MA 02110
M-ACP
<PAGE>
PART A
INFORMATION REQUIRED IN A PROSPECTUS
EV TRADITIONAL
ASIAN SMALL COMPANIES FUND
- ------------------------------------------------------------------------------
EV TRADITIONAL ASIAN SMALL COMPANIES FUND (THE "FUND") IS A MUTUAL FUND
SEEKING CAPITAL GROWTH THROUGH INVESTMENT IN SECURITIES OF SMALLER COMPANIES
BASED IN ASIA. THE FUND INVESTS ITS ASSETS IN ASIAN SMALL COMPANIES PORTFOLIO
(THE "PORTFOLIO"), A DIVERSIFIED OPEN-END INVESTMENT COMPANY HAVING THE SAME
INVESTMENT OBJECTIVE AS THE FUND, RATHER THAN BY DIRECTLY INVESTING IN AND
MANAGING ITS OWN PORTFOLIO OF SECURITIES. MOST OF THE PORTFOLIO WILL BE
INVESTED IN ASIAN SECURITIES MARKETS, INCLUDING THOSE OF AUSTRALIA, CHINA,
HONG KONG, INDIA, INDONESIA, JAPAN, MALAYSIA, PAKISTAN, THE PHILIPPINES,
SINGAPORE, SOUTH KOREA, SRI LANKA, TAIWAN AND THAILAND. THE FUND IS A SEPARATE
SERIES OF EATON VANCE GROWTH TRUST (THE "TRUST").
Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, any bank or other insured depository institution, and are not
federally insured by the Federal Deposit Insurance Corporation, the Federal
Reserve Board or any other government agency. Shares of the Fund involve
investment risks, including fluctuations in value and the possible loss of
some or all of the principal investment.
This Prospectus is designed to provide you with information you should know
before investing. Please retain this document for future reference. A
Statement of Additional Information dated January 1, 1997 for the Fund, 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 (the "Manager"). The
Portfolio's investment adviser is Lloyd George Investment Management (Bermuda)
Limited (the "Adviser"). The principal business address of the Adviser is 3808
One Exchange Square, Central, Hong Kong.
- ------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE PAGE
<S> <C> <C> <C>
Shareholder and Fund Expenses ......................... 2 How to Buy Fund Shares ............................. 12
Investment Opportunities in the Asian Region ........... 3 How to Redeem Fund Shares .......................... 14
The Fund's Investment Objective ....................... 3 Reports to Shareholders ........................... 15
Investment Policies and Risks .......................... 3 The Lifetime Investing Account/Distribution Options 16
Organization of the Fund and the Portfolio ............ 8 The Eaton Vance Exchange Privilege ................. 17
Management of the Fund and the Portfolio .............. 9 Eaton Vance Shareholder Services ................... 17
Distribution Plan ..................................... 11 Distributions and Taxes ............................ 18
Valuing Fund Shares .................................... 11 Performance Information ............................ 20
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
PROSPECTUS DATED JANUARY 1, 1997
<PAGE>
SHAREHOLDER AND FUND EXPENSES
- ------------------------------------------------------------------------------
<TABLE>
SHAREHOLDER TRANSACTION EXPENSES
--------------------------------------------------------------------------------------------------------
<S> <C>
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
ANNUAL FUND AND ALLOCATED PORTFOLIO OPERATING EXPENSES (as a percentage of average daily net assets)
----------------------------------------------------------------------------------------------------------
Management Fees 1.25%
Rule 12b-1 Distribution (and Service) Fees 0.50%
Other Expenses 0.75%
----
Total Operating Expenses 2.50%
====
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS
------ -------
<S> <C> <C>
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: $72 $122
</TABLE>
NOTES:
The table and Example 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. The
Management Fees and Other Expenses set out in the table and the information in
the Example is estimated, since the Fund is only recently organized.
Management Fees include 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.
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 "Management of the Fund and the Portfolio" and "How
to Redeem Fund Shares". 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. See "Distribution
Plan".
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 12
months of purchase. See "How to Buy Fund Shares" and "How to Redeem Fund
Shares".
The Fund invests exclusively in the Portfolio. Other investment companies and
investors with different distribution arrangements are investing in the
Portfolio and others may do so in the future. See "Organization of the Fund
and the Portfolio".
<PAGE>
INVESTMENT OPPORTUNITIES IN THE ASIAN REGION
- -------------------------------------------------------------------------------
Over the past 20 years the performance of the major Asian securities markets
has generally been better than that of markets in Europe and the United
States. In the past five years, the newly emerging securities markets of the
Asian Region have demonstrated significant growth in market capitalization, in
numbers of listed securities and in the volume of transactions. Over the same
period, the underlying economies of the region have grown against a background
of the high savings rates characteristic of many Asian societies and generally
moderate inflation. There is continuing economic integration among the
countries in the Asian Region.
ASIAN SMALL COMPANIES ARE AN ATTRACTIVE INVESTMENT OPPORTUNITY. Although Asian
securities markets have become progressively more accessible to U.S. investors
through either direct investment or through Asian (or Pacific Basin)
investment companies, obstacles to investing in smaller companies have
remained. Information to research these companies is not easily obtainable.
The Adviser is strategically located in Hong Kong and has substantial
experience with Asian small companies. Also, in many existing Asian mutual
funds, only a small portion of the portfolio is invested in smaller companies.
The Adviser believes that soundly managed smaller companies in the Asian
Region are well positioned to take advantage of the rapid changes in the
underlying economic and social structures that have been taking place over the
past decade. Smaller companies are generally able to react swiftly to changing
trading conditions and the Adviser believes that such companies offer the
potential for high capital growth rates, particularly in a period of economic
recovery. The Adviser believes that smaller Asian companies offering superior
returns exist in newly created industries, as well as more traditional
economic sectors in expanding markets.
See Appendix A to the Statement of Additional Information for further
information about the economic characteristics of and risks associated with
investing in Asian Region countries.
THE FUND'S INVESTMENT OBJECTIVE
- ------------------------------------------------------------------------------
THE FUND'S INVESTMENT OBJECTIVE IS TO SEEK CAPITAL GROWTH. It currently seeks
to meet its investment objective by investing its assets in the Asian Small
Companies Portfolio (the "Portfolio"), a separate registered investment
company which invests primarily in equity securities of smaller companies
based in Asia. Most of the Portfolio's assets will be invested in securities
markets in the Asian region, including Australia, China, Hong Kong, India,
Indonesia, Japan, Malaysia, Pakistan, the Philippines, Singapore, South Korea,
Sri Lanka, Taiwan and Thailand (collectively, the "Asian Region").
Investments in the Asian Region can involve risks that are generally not
involved with investments in the securities of U.S. companies. The Fund is
intended for long-term investors who can accept international investment risk
and little or no current income. The Fund is not intended to be a complete
investment program. A prospective investor should take into account personal
objectives and other investments when considering the purchase of Fund shares.
The Fund cannot assure achievement of its investment objective. The investment
objective of the Fund and the Portfolio are nonfundamental. See "Organization
of the Fund and the Portfolio -- Special Information on the Fund/Portfolio
Investment Structure" for further information. Asian Region investments may
offer higher potential for gains and losses than investments in the United
States. See "Investment Policies and Risks" for further information.
INVESTMENT POLICIES AND RISKS
- ------------------------------------------------------------------------------
THE PORTFOLIO SEEKS TO ACHIEVE ITS OBJECTIVE THROUGH INVESTING IN A CAREFULLY
SELECTED AND CONTINUOUSLY MANAGED PORTFOLIO CONSISTING PRIMARILY OF EQUITY
SECURITIES OF SMALLER COMPANIES BASED IN ASIA. Most of the Portfolio's assets
will be invested in Asian securities markets. The Adviser will consider
companies that it believes have all or most of the following characteristics:
sound and well-established management; producers of goods or services for
which a clear, continuing and long-term demand can be identified within the
context of national, regional and global development; a history of earnings
growth; financial strength; a consistent or progressive dividend policy; and
undervalued securities.
The Portfolio will, under normal market conditions, invest at least 65% of its
total assets in equity securities of Asian small companies. Such companies
will (a) have a market capitalization equivalent to less than $600 million and
(b) be located in or have securities which are principally traded in an Asian
Region country. Such securities are typically listed on stock exchanges or
traded in the over-the-counter markets in countries in the Asian Region. In
addition, the Portfolio may invest up to 10% of its total assets in direct
investments. The principal offices of these companies, however, may be located
outside these countries. The Portfolio may invest 25% or more of its total
assets in the securities of issuers located in any one country, and may retain
securities of a company with market capitalization that grows over the $600
million level. While there is no minimum or maximum limitation on assets that
may be invested in a single country, the Adviser currently anticipates Hong
Kong will represent more than 25% of total assets.
Equity securities, for purposes of the 65% policy, will be limited to common
and preferred stocks; equity interests in trusts, partnerships, joint ventures
and other unincorporated entities or enterprises; special classes of shares
available only to foreign investors in markets that restrict the ownership by
foreign investors to certain classes of equity securities; convertible
preferred stocks; and other convertible investment grade debt instruments. A
debt security is investment grade if it is rated BBB or above by Standard &
Poor's Ratings Group ("S&P") or Baa or above by Moody's Investors Service,
Inc. ("Moody's") or determined to be of comparable quality by the Adviser.
Debt securities rated BBB by S&P or Baa by Moody's have speculative
characteristics and changes in economic conditions or other circumstances are
more likely to lead to a weakened capacity to make principal and interest
payments than is the case with higher grade debt securities. The Portfolio
will consider disposition of any convertible debt instrument which is rated or
determined by the Adviser to be below investment grade subsequent to
acquisition by the Portfolio and it is expected such securities will be less
than 5% of assets.
In addition to its investments in equity securities, the Portfolio may invest
up to 5% of its net assets in options on equity securities and up to 5% of its
net assets in warrants, including options and warrants traded in over-the-
counter markets. The Portfolio may, under normal market conditions, invest up
to 35% of its total assets in equity securities other than Asian small company
investments, warrants, options on securities and indices, options on currency,
futures contracts and options on futures, forward foreign currency exchange
contracts, currency swaps and any other non-equity investments. The Portfolio
will not purchase debt securities, other than investment grade convertible
debt instruments.
The Portfolio may, for temporary defensive purposes, invest some or all of its
total assets in high grade debt securities of foreign and United States
companies, foreign governments and the U.S. Government, and their respective
agencies, instrumentalities, political subdivisions and authorities, as well
as in high quality money market instruments denominated in U.S. dollars or a
foreign currency.
INVESTING IN FOREIGN SECURITIES. Investing in securities issued by foreign
companies and governments involves considerations and possible risks not
typically associated with investing in securities issued by the U.S.
Government and domestic corporations. The values of foreign investments are
affected by changes in currency exchange control regulations, application of
foreign tax laws, including withholding taxes, changes in governmental
administration or economic or monetary policy (in this country or abroad) or
changed circumstances in dealings between nations. Because investment in Asian
companies will usually involve currencies of foreign countries, the value of
assets of the Portfolio as measured by U.S. dollars may be adversely affected
by changes in currency exchange rates. Such rates may fluctuate significantly
over short periods of time causing the Portfolio's net asset value to
fluctuate as well. Costs are incurred in connection with conversions between
various currencies. In addition, foreign brokerage commissions and other costs
of investing are generally higher than in the United States, and foreign
securities markets may be less liquid, more volatile and less subject to
governmental supervision than in the United States. Investments in foreign
issuers could be affected by other factors not present in the United States,
including expropriation, armed conflict, confiscatory taxation, lack of
uniform accounting and auditing standards and potential difficulties in
enforcing contractual obligations. Transactions in the securities of foreign
issuers could be subject to settlement delays and risk of loss.
More than 25% of the Portfolio's total assets, adjusted to reflect currency
transactions and positions, may be denominated in any single currency.
Concentration in a particular currency will increase the Portfolio's exposure
to adverse developments affecting the value of such currency. An issuer of
securities purchased by the Portfolio may be domiciled in a country other than
the country in whose currency the securities are denominated.
Since the Portfolio will, under normal market conditions, invest at least 65%
of its total assets in small companies based in Asia, its investment
performance will be especially affected by events affecting Asian Region
companies. The value and liquidity of investments may be affected favorably or
unfavorably by political, economic, fiscal, regulatory or other developments
in the Asian Region or neighboring regions. The extent of economic
development, political stability and market depth of different countries in
the Asian Region varies widely. Certain countries, including China, Indonesia,
Malaysia, the Philippines and Thailand, are either comparatively
underdeveloped or in the process of becoming developed. Asian investments
typically involve greater potential for gain or loss than investments in
securities of issuers in developed countries. In comparison to the United
States and other developed countries, such as Japan, developing countries may
have relatively unstable governments and economies based on only a few
industries. Given the Portfolio's investments, the Portfolio will likely be
particularly sensitive to changes in the economies of such countries as the
result of any reversals of economic liberalization, political unrest or
changes in trading status.
SECURITIES TRADING MARKETS. The securities markets in the Asian Region are
substantially smaller, less liquid and more volatile than the major securities
markets in the United States. A high proportion of the shares of many issuers
may be held by a limited number of persons and financial institutions, which
may limit the number of shares available for investment by the Portfolio. The
prices at which the Portfolio may acquire investments may be affected by
trading by persons with material non-public information and by securities
transactions by brokers in anticipation of transactions by the Portfolio in
particular securities. Similarly, volume and liquidity in the bond markets in
the Asian Region are less than in the United States and, at times, price
volatility can be greater than in the United States. The limited liquidity of
these securities markets may also affect the Portfolio's ability to acquire or
dispose of securities at the price and time it wishes to do so. In addition,
Asian Region securities markets are susceptible to being influenced by large
investors trading significant blocks of securities. All of these risks are
heightened when securities of smaller companies are involved.
The stock markets in the Asian Region are undergoing a period of growth and
change which may result in trading volatility and difficulties in the
settlement and recording of transactions, and in interpreting and applying the
relevant law and regulations. The securities industry in these countries is
comparatively underdeveloped, and stockbrokers and other intermediaries may
not perform as well as their counterparts in the United States and other more
developed securities markets.
ASIAN COUNTRY CONSIDERATIONS. Political and economic structures in many Asian
countries are undergoing significant evolution and rapid development, and such
countries may lack the social, political and economic stability characteristic
of the United States. Certain of such countries have, in the past, failed to
recognize private property rights and have at times nationalized or
expropriated the assets of private companies. As a result, the risks described
above, including the risks of nationalization or expropriation of assets, may
be heightened. In addition, unanticipated political or social developments may
affect the values of the Portfolio's investments in those countries and the
availability to the Portfolio of additional investments in those countries.
The laws of countries in the region relating to limited liability of corporate
shareholders, fiduciary duties of officers and directors, and the bankruptcy
of state enterprises are generally less well developed than or different from
such laws in the United States. It may be more difficult to obtain a judgement
in the courts of these countries than it is in the United States. Monsoons and
natural disasters also can affect the value of Portfolio investments.
Economies of countries in the Asian Region may differ favorably or unfavorably
from the U.S. economy in such respects as rate of growth of gross national
product, rate of inflation, capital reinvestment, resource self-sufficiency
and balance of payments position. As export-driven economies, the economies of
many countries in the Asian Region are affected by developments in the
economies of their principal trading partners. For example, revocation by the
United States of China's "Most Favored Nation" trading status, which the U.S.
President and Congress reconsider annually, would adversely affect the trade
and economic development of China and Hong Kong. Because the Portfolio is
likely, from time to time, to concentrate investments in Hong Kong, investors
should be aware that there has been significant growing economic integration
between Hong Kong and Southern China which is likely to continue. These two
countries have agreed to political integration after 1997, and the actual or
perceived success of this process will affect investments in Hong Kong and
elsewhere.
The Fund and the Portfolio each intend to conduct its respective affairs in
such a manner to avoid taxation. Nevertheless, certain countries may require
withholding on dividends paid on portfolio securities and on realized capital
gains. In the past, these taxes have sometimes been substantial. There can be
no assurance that in the future the Portfolio will be able to repatriate its
income, gains or initial capital from these countries.
DIRECT INVESTMENTS AND SMALLER COMPANIES. The Portfolio may invest up to 10%
of its total assets in direct investments in smaller companies based in Asia.
Direct investments include (i) the private purchase from an enterprise of an
equity interest in the enterprise in the form of shares of common stock or
equity interests in trusts, partnerships, joint ventures or similar
enterprises, and (ii) the purchase of such an equity interest in an enterprise
from a principal investor in the enterprise. In each case, the Portfolio will,
at the time of making the investment, enter into a shareholder or similar
agreement with the enterprise and one or more other holders of equity
interests in the enterprise. The Adviser anticipates that these agreements
will, in appropriate circumstances, provide the Portfolio with the ability to
appoint a representative to the board of directors or similar body of the
enterprise and for eventual disposition of the Portfolio's investment in the
enterprise. Such a representative of the Portfolio will be expected to provide
the Portfolio with the ability to monitor its investment and protect its
rights in the investment and will not be appointed for the purpose of
exercising management or control of the enterprise.
The Portfolio's investments will include investments in smaller, less seasoned
companies for which there is less publicly available information than larger,
more established companies. The securities of these companies, which may
include legally restricted securities, are generally subject to greater price
fluctuations, limited liquidity, higher transaction costs and higher
investment risk. These companies may have limited product lines, markets or
financial resources, or they may be dependent on a limited management group.
Investments in smaller companies may involve a high degree of business and
financial risk that can result in substantial losses. Because of the absence
of any public trading market for some of these investments, the Portfolio may
take longer to liquidate these positions at fair value than would be the case
for publicly traded securities. Furthermore, issuers whose securities are not
publicly traded may not be subject to investor protection requirements
applicable to publicly traded securities.
DERIVATIVE INSTRUMENTS. The Portfolio may purchase or sell derivative
instruments (which are instruments that derive their value from another
instrument, security, index or currency) to enhance return (which may be
considered speculative), to hedge against fluctuations in securities prices,
interest rates or currency exchange rates, or as a substitute for the purchase
or sale of securities or currencies. The Portfolio's transactions in derivative
instruments may be in the U.S. or abroad and may include the purchase or sale of
futures contracts on securities, securities indices, other indices, other
financial instruments or currencies; options on futures contracts;
exchange-traded and over-the-counter options on securities, indices or
currencies; and forward foreign currency exchange contracts. The Portfolio's
transactions in derivative instruments involve a risk of loss or depreciation
due to: unanticipated adverse changes in securities prices, interest rates, the
other financial instruments' prices or currency exchange rates; the inability to
close out a position; default by the counterparty; imperfect correlation between
a position and the desired hedge; tax constraints on closing out positions; and
portfolio management constraints on securities subject to such transactions. The
loss on derivative instruments (other than purchased options) may substantially
exceed the Portfolio's initial investment in these instruments. In addition, the
Portfolio may lose the entire premium paid for purchased options that expire
before they can be profitably exercised by the Portfolio. The Portfolio incurs
transaction costs in opening and closing positions in derivative instruments.
There can be no assurance that the Adviser's use of derivative instruments will
be advantageous to the Portfolio.
The Portfolio may purchase call and put options on any securities in which the
Portfolio may invest or options on any securities index composed of securities
in which the Portfolio may invest. The Portfolio does not intend to write a
covered option on any security if after such transaction more than 15% of its
net assets, as measured by the aggregate value of the securities underlying
all covered calls and puts written by the Portfolio, would be subject to such
options. The Portfolio does not intend to purchase an option on any security
if, after such transaction, more than 5% of its net assets, as measured by the
aggregate of all premiums paid for all such options held by the Portfolio,
would be so invested.
To the extent that the Portfolio enters into futures contracts, options on
futures contracts and options on foreign currencies traded on an exchange
regulated by the Commodity Futures Trading Commission ("CFTC"), in each case
that are not for bona fide hedging purposes (as defined by the CFTC), the
aggregate initial margin and premiums required to establish these positions
(excluding the amount by which options are "in-the-money") may not exceed 5%
of the liquidation value of the Portfolio's investments, after taking into
account unrealized profits and unrealized losses on any contracts the
Portfolio has entered into.
Forward contracts are individually negotiated and privately traded by currency
traders and their customers. A forward contract involves an obligation to
purchase or sell a specific currency (or basket of currencies) for an agreed
price at a future date, which may be any fixed number of days from the date of
the contract. The Portfolio may engage in cross-hedging by using forward
contracts in one currency (or basket of currencies) to hedge against
fluctuations in the value of securities denominated in a different currency if
the Adviser determines that there is an established historical pattern of
correlation between the two currencies (or the basket of currencies and the
underlying currency). Use of a different foreign currency magnifies the
Portfolio's exposure to foreign currency exchange rate fluctuations. The
Portfolio may also use forward contracts to shift its exposure to foreign
currency exchange rate changes from one currency to another.
The Portfolio may enter into currency swaps for both hedging and non-hedging
purposes. Currency swaps involve the exchange of rights to make or receive
payments in specified currencies. Since currency swaps are individually
negotiated, the Portfolio expects to achieve an acceptable degree of
correlation between its portfolio investments and its currency swap positions.
Currency swaps usually involve the delivery of the entire principal value of
one designated currency in exchange for the other designated currency.
Therefore, the entire principal value of a currency swap is subject to the
risk that the other party to the swap will default on its contractual delivery
obligations. The use of currency swaps is a highly specialized activity which
involves special investment techniques and risks. If the Adviser is incorrect
in its forecasts of market values and currency exchange rates, the Portfolio's
performance will be adversely affected.
REPURCHASE AGREEMENTS. The Portfolio may enter into repurchase agreements (the
purchase of a security coupled with an agreement to resell) with respect to
its permitted investments, but currently intends to do so only with member
banks of the Federal Reserve System or with primary dealers in U.S. Government
securities. In the event of the bankruptcy of the other party to a repurchase
agreement, the Portfolio might experience delays in recovering its cash. To
the extent that, in the meantime, the value of the securities the Portfolio
purchased may have decreased, the Portfolio could experience a loss. At no
time will the Portfolio commit more than 15% of its net assets to repurchase
agreements which mature in more than seven days and other illiquid securities.
OTHER INVESTMENT COMPANIES. The Portfolio reserves the right to invest up to
10% of its total assets, calculated at the time of purchase, in the securities
of other investment companies unaffiliated with the Adviser or the Manager
that have the characteristics of closed-end investment companies. The
Portfolio will indirectly bear its proportionate share of any management fees
paid by investment companies in which it invests in addition to the advisory
fee paid by the Portfolio. The value of closed-end investment company
securities, which are usually traded on an exchange, is affected by demand for
the securities themselves, independent of the demand for the underlying
portfolio assets and, accordingly, such securities can trade at a discount
from their net asset values.
INVESTMENT LIMITATIONS. The Fund and the Portfolio have adopted certain
fundamental investment restrictions and policies which are enumerated in
detail in the Statement of Additional Information and which may not be changed
unless authorized by a shareholder vote and an investor vote, respectively.
Among these fundamental restrictions, neither the Fund nor the Portfolio may
(1) borrow money except as permitted by the Investment Company Act of 1940
(the "1940 Act"); (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); or (3) 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. Investment restrictions are
considered at the time of acquisition of assets; the sale of portfolio assets
generally is not required in the event of a subsequent change in
circumstances. As a matter of fundamental policy the Portfolio will not invest
25% or more of its total assets in the securities of issuers in any one
industry.
Except for the fundamental investment restrictions and policies specifically
identified above and those enumerated in the Statement of Additional
Information, the investment objective and policies of the Fund and the
Portfolio are not fundamental policies and accordingly may be changed by the
Trustees of the Trust and the Portfolio without obtaining the approval of the
shareholders of the Fund or the investors in the Portfolio, as the case may
be. As a matter of nonfundamental policy, neither the Fund nor the Portfolio
(i) may purchase any securities if, at the time of such purchase, permitted
borrowings exceed 5% of the value of its total assets, or (ii) may invest more
than 15% of its net assets in over-the-counter options, repurchase agreements
maturing in more than seven days and other illiquid securities. Nevertheless,
the Portfolio may temporarily borrow up to 5% of the value of its total assets
to satisfy redemption requests or settle securities transactions. The
Portfolio may lend portfolio securities and engage in repurchase agreements
and reverse repurchase agreements but the Adviser has no current intention to
do so.
Under the 1940 Act and the rules promulgated thereunder, the Portfolio's
investments in the securities of any company that, in its most recent fiscal
year, derived more than 15% of its gross revenues from securities-related
activities is limited to 5% of any class of the issuer's equity securities and
10% of the outstanding principal amount of the issuer's debt securities,
provided that the Portfolio's aggregate investments in the securities of any
such issuer do not exceed 5% of the Portfolio's total assets. Some of the
companies available for investment in the Asian Region, including enterprises
being privatized by such countries, may be financial services businesses that
engage in securities-related activities. The Portfolio's ability to invest in
such enterprises may thus be limited.
ORGANIZATION OF THE FUND AND THE PORTFOLIO
- ------------------------------------------------------------------------------
THE FUND IS A DIVERSIFIED SERIES OF EATON VANCE GROWTH TRUST (THE "TRUST"), A
BUSINESS TRUST ESTABLISHED UNDER MASSACHUSETTS LAW PURSUANT TO A DECLARATION
OF TRUST DATED MAY 25, 1989. THE TRUST IS A MUTUAL FUND -- AN OPEN-END
MANAGEMENT INVESTMENT COMPANY. The Trustees of the Trust are responsible for
the overall management and supervision of its affairs. The Trust may issue an
unlimited number of shares of beneficial interest (no par value per share) in
one or more series (such as the Fund). 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.
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, affords the potential for economies of scale for the Fund (at least
when the assets of the Portfolio exceed $500 million) and may over time result
in lower expenses for the Fund.
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.
Information regarding other pooled investment entities or funds which invest
in the Portfolio may be obtained by contacting the Principal Underwriter, 24
Federal Street, Boston, MA 02110 (617) 482-8260.
Whenever the Fund as an investor in the Portfolio is requested to vote on
matters pertaining to the Portfolio (other than the termination of the
Portfolio's business, which may be determined by the Trustees of the Portfolio
without investor approval), the Fund will hold a meeting of Fund shareholders
and will vote its interest in the Portfolio for or against such matters
proportionately to the instructions to vote for or against such matters
received from Fund shareholders. The Fund shall vote shares for which it
receives no voting instructions in the same proportion as the shares for which
it receives voting instructions. Other investors in the Portfolio may alone or
collectively acquire sufficient voting interests in the Portfolio to control
matters relating to the operation of the Portfolio, which may require the Fund
to withdraw its investment in the Portfolio or take other appropriate action.
Any such withdrawal could result in a distribution "in kind" of portfolio
securities (as opposed to a cash distribution from the Portfolio). If
securities are distributed, the Fund could incur brokerage, tax or other
charges in converting the securities to cash. In addition, the distribution in
kind may result in a less diversified portfolio of investments or adversely
affect the liquidity of the Fund. Notwithstanding the above, there are other
means for meeting shareholder redemption requests, such as borrowing.
The Fund may withdraw (completely redeem) all its assets from the Portfolio at
any time if the Board of Trustees of the Trust determines that it is in the
best interest of the Fund to do so. In the event the Fund withdraws all of its
assets from the Portfolio, or the Board of Trustees of the Trust determines
that the investment objective of the Portfolio is no longer consistent with
the investment objective of the Fund, such Trustees would consider what action
might be taken, including investing the assets of the Fund in another pooled
investment entity or retaining an investment adviser to manage the Fund's
assets in accordance with its investment objective. The Fund's investment
performance may be affected by a withdrawal of all its assets from the
Portfolio.
MANAGEMENT OF THE FUND AND THE PORTFOLIO
- ------------------------------------------------------------------------------
EATON VANCE MANAGEMENT ("EATON VANCE") ACTS AS THE SPONSOR AND MANAGER OF THE
FUND AND THE ADMINISTRATOR OF THE PORTFOLIO. THE PORTFOLIO HAS ENGAGED LLOYD
GEORGE INVESTMENT MANAGEMENT (BERMUDA) LIMITED (THE "ADVISER") AS ITS INVESTMENT
ADVISER. The Adviser, acting under the general supervision of the Portfolio's
Trustees, manages the Portfolio's investments and affairs. The Portfolio is
co-managed by Robert Lloyd George and Scobie Dickinson Ward.
The Adviser is registered as an investment adviser with the Securities and
Exchange Commission (the "Commission"). The Adviser is a subsidiary of Lloyd
George Management (B.V.I.) Limited ("LGM"). LGM and its subsidiaries act as
investment adviser to various individual and institutional clients with total
assets under management of approximately $1.5 billion. Eaton Vance's parent,
Eaton Vance Corp., owns 24% of the Class A shares issued by LGM.
LGM was established in 1991 to provide investment management services with
respect to equity securities of companies trading in Asian securities markets,
especially those of emerging markets. LGM currently manages Pacific Basin and
Asian portfolios for both private clients and institutional investors seeking
long-term capital growth. LGM's core investment team consists of nine
experienced investment professionals, based in Hong Kong, who have worked
together over a number of years successfully managing client portfolios in
Pacific Basin and Asian stock markets. LGM also has offices in Bombay, India
and London, England. The team has a unique knowledge of, and experience with,
Pacific Basin and Asian emerging markets. LGM is ultimately controlled by the
Hon. Robert J.D. Lloyd George, President of the Portfolio and Chairman and
Chief Executive Officer of the Adviser. LGM's only activity is portfolio
management.
LGM and the Adviser have adopted a disciplined management style, providing a
blend of Asian and multinational expertise with the most rigorous
international standards of fundamental security analysis. Although focused
primarily in Asia, LGM and the Adviser maintain a network of international
contacts in order to monitor international economic and stock market trends
and offer clients a global management service. Personnel of the Adviser
include the following:
THE HONOURABLE ROBERT LLOYD GEORGE. Chairman. Born in London in 1952 and
educated at Eton College, where he was a King's Scholar, and at Oxford
University. Prior to founding LGM, Mr. Lloyd George was Managing Director of
Indosuez Asia Investment Services Ltd. Previously, he spent four years with
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 three books --
"A Guide to Asian Stock Markets" (Longmans, Hong Kong, 1989), "The East West
Pendulum" (Woodhead - Faulkner, Cambridge, 1991) and "North South -- an
Emerging Markets Handbook (Probus, England, 1994).
WILLIAM WALTER RALEIGH KERR. Finance Director and Chief Operating Officer.
Born in 1950 and educated at Ampleforth and Oxford. Mr. Kerr qualified as a
Chartered Accountant at Thomson McLintock & Co. before joining The Oldham
Estate Company plc as Financial Controller. Prior to joining LGM, Mr. Kerr was
a Director of Banque Indosuez's corporate finance subsidiary, Financiere
Indosuez Limited, in London. Prior to that Mr. Kerr worked for First Chicago
Limited.
SCOBIE DICKINSON WARD. Director. Born in 1966 and a cum laude graduate of both
Phillips Academy Andover, and Harvard University. Mr. Ward joined Indosuez
Asia Investment Services in 1989, where he managed the $100 million Himalayan
Fund, and the Indosuez Tasman Fund, investing in Australia and New Zealand.
Messrs. Ward and Lloyd George manage Eaton Vance's Emerging Markets Portfolio
and South Asia Portfolio (which invests in India and the Indian subcontinent).
M. F. TANG. Director. Born in 1946 and educated in Hong Kong. Mr. Tang is a
Fellow of the Chartered Association of Certified Accountants. Mr. Tang joined
LGM having worked for Australian Mutual Provident Society in Sydney where he
was a Portfolio Manager responsible for Asian Equities. Prior thereto Mr. Tang
worked for Barclays Australia Investment Services Ltd. From 1978 to 1986 Mr.
Tang worked for Barings International Investment Management and prior to that
he spent six years with Peat Marwick Mitchell & Co. Mr. Tang is fluent in the
Cantonese and Mandarin dialects of the Chinese language.
PAMELA CHAN. Director. Born in Hong Kong in 1957 and graduated from Mills
College in Oakland, California. She was an investment executive for Jardine
Fleming from 1982-1984 before moving to Australia where she worked as a Fund
Manager for Rothschild and Aetna. She joined Sun Life Assurance Society PLC in
England in 1987 where she was the head of South East Asian Equities and a
Director. She joined LGM in April 1994 where she is a portfolio manager.
ADALINE MANG-YEE KO. Director. Born in 1943 and educated at University of
Birmingham, England and at London Business School where she received her MBA.
Ms. Ko has over 13 years experience working with Far East Asian equities. From
1982-1988, she worked at Save & Prosper Group Ltd. as an investment manager. In
1988, Ms. Ko transferred to Robert Fleming & Co. Ltd. In 1990, she was promoted
to Director of Fleming Investment Management Ltd. In 1992, she was promoted to
Head of the Pacific Region Portfolios Group where she supervised a team of 5
with responsibility for over $1.5 billion in assets under management. Ms. Ko
manages Eaton Vance's Greater China Growth Portfolio. Ms. Ko joined LGM in 1995.
While the Portfolio is a New York trust, the Adviser, together with certain
Trustees and officers of the Portfolio, are not residents of the United
States, and substantially all of their respective assets may be located
outside of the United States. It may be difficult for investors to effect
service of process within the United States upon the individuals identified
above, or to realize judgments of courts of the United States predicated upon
civil liabilities of the Adviser and such individuals under the federal
securities laws of the United States. The Portfolio has been advised that
there is substantial doubt as to the enforceability in the countries in which
the Adviser and such individuals reside of such civil remedies and criminal
penalties as are afforded by the federal securities laws of the United States.
Under its investment advisory agreement with the Portfolio, the Adviser
receives a monthly advisory fee of 0.0625% (equivalent to 0.75% annually) of
the average daily net assets of the Portfolio up to $500 million, which fee
declines at intervals above $500 million.
The Adviser also furnishes for the use of the Portfolio office space and all
necessary office facilities, equipment and personnel for servicing the
investments of the Portfolio. The Adviser places the portfolio securities
transactions of the Portfolio with many broker-dealer firms and uses its best
efforts to obtain execution of such transactions at prices which are
advantageous to the Portfolio and at reasonably competitive commission rates.
Subject to the foregoing, the Adviser may consider sales of shares of the Fund
as a factor in the selection of firms to execute portfolio transactions. The
Fund, the Portfolio and the Adviser have adopted Codes of Ethics relating to
personal securities transactions. The Codes permit Eaton Vance personnel to
invest in securities (including securities that may be purchased or held by
the Portfolio) for their own accounts, subject to certain reporting and other
restrictions and procedures contained in such Codes.
EATON VANCE, ITS AFFILIATES AND ITS PREDECESSOR COMPANIES HAVE BEEN MANAGING
ASSETS OF INDIVIDUALS AND INSTITUTIONS SINCE 1924 AND MANAGING INVESTMENT
COMPANIES SINCE 1931. EATON VANCE ACTS AS INVESTMENT ADVISER TO INVESTMENT
COMPANIES AND VARIOUS INDIVIDUAL AND INSTITUTIONAL CLIENTS WITH ASSETS UNDER
MANAGEMENT OF OVER $16 BILLION. Eaton Vance is a wholly-owned subsidiary of
Eaton Vance Corp., a publicly-held holding company which through its
subsidiaries and affiliates engages primarily in investment management,
administration and marketing activities. The Principal Underwriter is a
wholly-owned subsidiary of Eaton Vance.
Eaton Vance, acting under the general supervision of the Boards of Trustees of
the Trust and the Portfolio, manages and administers the business affairs of
the Fund and the Portfolio. Eaton Vance's services include monitoring and
providing reports to the Trustees of the Trust and the Portfolio concerning
the investment performance achieved by the Adviser for the Portfolio,
recordkeeping, preparation and filing of documents required to comply with
federal and state securities laws, supervising the activities of the transfer
agent of the Fund and the custodian of the Portfolio, providing assistance in
connection with Trustees" and shareholders' meetings and other management and
administrative services necessary to conduct the business of the Fund and the
Portfolio. Eaton Vance does not provide any investment management or advisory
services to the Portfolio or the Fund. Eaton Vance also furnishes for the use
of the Fund and the Portfolio office space and all necessary office
facilities, equipment and personnel for managing and administering the
business affairs of the Fund and the Portfolio.
Under its management contract with the Fund, Eaton Vance receives a monthly
fee in the amount of 1/48 of 1% (equal to 0.25% annually) of the average
daily net assets of the Fund up to $500 million, which fee declines at
intervals above $500 million. In addition, under its administration agreement
with the Portfolio, Eaton Vance receives a monthly fee in the amount of 1/48
of 1% (equal to 0.25% annually) of the average daily net assets of the
Portfolio up to $500 million, which fee declines at intervals above $500
million. The combined advisory, management and administration fees payable by
the Fund and the Portfolio are higher than similar fees charged by most other
investment companies.
The Fund and the Portfolio, as the case may be, will each be responsible for
all respective costs and expenses not expressly stated to be payable by the
Adviser under the investment advisory agreement, by Eaton Vance under the
management contract or the administration agreement or by the Principal
Underwriter under the distribution agreement. Such costs and expenses to be
borne by the Portfolio and the Fund, as the case may be, include, without
limitation: custody and transfer agency fees and expenses, including those
incurred for determining net asset value and keeping accounting books and
records; expenses of pricing and valuation services; the cost of share
certificates; membership dues in investment company organizations; expenses of
acquiring, holding and disposing of securities and other investments; fees and
expenses of registering under the securities laws and governmental fees;
expenses of reporting to shareholders and investors; proxy statements and
other expenses of shareholders' or investors' meetings; insurance premiums;
printing and mailing expenses; interest, taxes and corporate fees; legal and
accounting expenses; compensation and expenses of Trustees not affiliated with
the Adviser or Eaton Vance; and investment advisory, management and
administration fees. The Portfolio or the Fund, as the case may be, will also
each bear expenses incurred in connection with any litigation in which the
Portfolio or the Fund, as the case may be, is a party and any legal obligation
to indemnify its respective officers and Trustees with respect thereto, to the
extent not covered by insurance.
DISTRIBUTION PLAN
- ------------------------------------------------------------------------------
IN ADDITION TO MANAGEMENT FEES AND OTHER EXPENSES, THE FUND PAYS FOR CERTAIN
EXPENSES PURSUANT TO A DISTRIBUTION PLAN (THE "PLAN") DESIGNED TO MEET THE
REQUIREMENTS OF RULE 12B-1 UNDER THE 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 financial service firms ("Authorized Firms"), as
compensation for providing personal services and/or the maintenance of
shareholder accounts, with respect to shares sold by such Firms which have
remained outstanding for more than one year. The Trustees of the Trust have
implemented the Plan by authorizing the Fund to make quarterly service fee
payments to the Principal Underwriter not to exceed on an annual basis .25% of
that portion of the Fund's average daily net assets for any fiscal year which
is attributable to shares of the Fund which have remained outstanding for more
than one year. Service fee payments to Authorized Firms will be in addition to
sales charges on Fund shares which are reallowed to such Firms. To the extent
that the entire amount of such service fee payments are not paid to such
Firms, the balance will serve as compensation for personal and account
maintenance services furnished by the Principal Underwriter. The Principal
Underwriter may realize a profit from these arrangements. If the Plan is
terminated or not continued in effect, the Fund has no obligation to reimburse
the Principal Underwriter for amounts expended by the Principal Underwriter in
distributing shares of the Fund. The Fund expects to begin accruing for its
service fee payments one year after the commencement of its operations.
VALUING FUND SHARES
- ------------------------------------------------------------------------------
THE FUND VALUES ITS SHARES ONCE ON EACH DAY THE NEW YORK STOCK EXCHANGE (THE
"EXCHANGE") IS OPEN FOR TRADING, as of the close of regular trading on the
Exchange (normally 4:00 P.M. New York time). The Fund's net asset value per
share is determined by its custodian, Investors Bank & Trust Company ("IBT")
(as agent for the Fund), in the manner authorized by the Trustees of the
Trust. Net asset value is computed by dividing the value of the Fund's total
assets, less its liabilities, by the number of shares outstanding. Because the
Fund invests its assets in an interest in the Portfolio, the Fund's net asset
value will reflect the value of its interest in the Portfolio (which, in turn,
reflects the underlying value of the Portfolio's assets and liabilities).
Authorized Firms must communicate an investor's order to the Principal
Underwriter prior to the close of the Principal Underwriter's business day to
receive that day's net asset value per Fund share. It is the Authorized Firms'
responsibility to transmit orders promptly to the Principal Underwriter.
The Portfolio's net asset value is also determined as of the close of regular
trading on the Exchange by IBT (as custodian and agent for the Portfolio)
based on market or fair value in the manner authorized by the Trustees of the
Portfolio. Exchange listed securities generally are valued at closing sale
prices. Net asset value is computed by subtracting the liabilities of the
Portfolio from the value of its total assets. For further information
regarding the valuation of the Portfolio's assets, see "Determination of Net
Asset Value" in the Statement of Additional Information.
SHAREHOLDERS MAY DETERMINE THE VALUE OF THEIR INVESTMENT BY MULTIPLYING
THE NUMBER OF FUND SHARES OWNED BY THE CURRENT NET ASSET VALUE PER SHARE.
HOW TO BUY FUND SHARES
- ------------------------------------------------------------------------------
SHARES OF THE FUND MAY BE PURCHASED FOR CASH OR MAY BE ACQUIRED IN EXCHANGE
FOR SECURITIES. Investors may purchase shares of the Fund through Authorized
Firms at the 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. An Authorized Firm may charge
its customers a fee in connection with transactions executed by that Firm. 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 from the
Principal Underwriter.
The current sales charges and dealer commissions are:
<TABLE>
<CAPTION>
SALES CHARGE SALES CHARGE DEALER DISCOUNT
AS PERCENTAGE OF AS PERCENTAGE OF AS PERCENTAGE OF
AMOUNT OF PURCHASE OFFERING PRICE AMOUNT INVESTED OFFERING PRICE
------------------ -------------- --------------- --------------
<S> <C> <C> <C>
Under $100,000 4.75% 4.99% 4.00%
$100,000 but less than $250,000 3.75% 3.90% 3.15%
$250,000 but less than $500,000 2.75% 2.83% 2.30%
$500,000 but less than $1,000,000 2.00% 2.04% 1.70%
$1,000,000 or more 0.00%* 0.00%* See Below**
</TABLE>
*No sales charge is payable at the time of purchase on investments of $1
million or more or 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. A contingent deferred sales charge
("CDSC") of 1% will be imposed on such investments, in the event of certain
redemptions within 12 months of purchase. The CDSC will be waived on
redemptions by employee retirement plans organized under the Internal
Revenue Code of 1986, as amended (the "Code") relating to distributions to
plan participants or beneficiaries upon retirement, disability or death.
Such purchases made before January 1, 1997 will be subject to a CDSC of
0.50% in the event of such redemptions.
**A commission on sales of $1 million or more will be paid as follows: 1.00%
on amounts of $1 million or more but less than $3 million, plus 0.50% on
amounts from $3 million but less than $5 million, plus 0.25% on amounts from
$5 million or more. Purchases of $1 million or more will be aggregated over
a 12-month period for purposes of determining the commission to be paid.
The Principal Underwriter may at times allow discounts up to the full sales
charge. During periods when the discount includes the full sales charge,
Authorized Firms may be deemed to be underwriters as that term is defined in
the Securities Act of 1933. The Principal Underwriter may, from time to time,
at its own expense, provide additional incentives to Authorized Firms which
employ registered representatives who sell Fund shares and/or shares of other
funds distributed by the Principal Underwriter. In some instances, such
additional incentives may be offered only to certain Authorized Firms whose
representatives sell or are expected to sell significant amounts of shares.
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: First
Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123. The
$1,000 minimum initial investment is waived for Bank Automated Investing
accounts, which may be established with an investment of $50 or more. See
"Eaton Vance Shareholder Services".
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
clients and current and retired officers and employees of Eaton Vance, its
affiliates and other investment advisers of Eaton Vance sponsored funds; to
registered representatives and employees of Authorized Firms; to officers and
employees of IBT and the Transfer Agent; and 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) to investment advisors, financial planners or
other intermediaries who place trades for their own accounts or the accounts
of their clients and who charge a management, consulting or other fee for
their services; clients of such investment advisors, financial planners or
other intermediaries who place trades for their own accounts if the accounts
are linked to the master account of such investment advisor, financial planner
or other intermediary on the books and records of the broker or agent; and
retirement and deferred compensation plans and trusts used to fund those
plans, including, but not limited to, those defined in Section 401(a), 403(b)
or 457 of the Code ("Eligible Plans") and "rabbi trusts." 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.
No sales charge is payable at the time of purchase where the amount invested
represents redemption proceeds from a mutual fund unaffiliated with Eaton
Vance if the redemption occurred no more than 60 days prior to the purchase of
Fund shares and the redeemed shares were subject to a sales charge. A CDSC of
0.50% will be imposed on such investments in the event of certain redemptions
within 12 months of purchase and the Authorized Firm will be paid a commission
on such sales of 0.50% of the amount invested.
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 determined above. The
minimum value of securities (or securities and cash) accepted for deposit is
$5,000. Securities accepted will be sold on the day of their receipt or as
soon thereafter as possible. The number of Fund shares to be issued in
exchange for securities will be the aggregate proceeds from the sale of such
securities, divided by the applicable public offering price per Fund share on
the day such proceeds are received. Eaton Vance will use reasonable efforts to
obtain the then current market price for such securities but does not
guarantee the best available price. Eaton Vance will absorb any transaction
costs, such as commissions, on the sale of the securities.
Securities determined to be acceptable should be transferred via book entry or
physically delivered, in proper form for transfer, through an Authorized Firm,
together with a completed and signed Letter of Transmittal in approved form
(available from Authorized Firms), as follows:
IN THE CASE OF BOOK ENTRY:
Deliver through Depository Trust Co.
Broker #2212
Investors Bank & Trust Company
For A/C EV Traditional Asian Small Companies Fund
IN THE CASE OF PHYSICAL DELIVERY:
Investors Bank & Trust Company
Attention: EV Traditional Asian Small Companies Fund
Physical Securities Processing Settlement Area
89 South Street
Boston, MA 02111
Investors who are contemplating an exchange of securities for shares of the
Fund, or their representatives, must contact Eaton Vance to determine whether
the securities are acceptable before forwarding such securities. 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.
STATEMENT OF INTENTION AND ESCROW AGREEMENT. If the investor, on an
application, makes a Statement of Intention to invest a specified amount over
a thirteen month period, then out of the initial purchase (or subsequent
purchases if necessary) 5% of the dollar amount specified on the application
shall be held in escrow by the escrow agent in the form of shares (computed to
the nearest full share at the public offering price applicable to the initial
purchase hereunder) registered in the investor's name. All income dividends
and capital gains distributions on escrowed shares will be paid to the
investor's order. When the minimum investment so specified is completed, the
escrowed shares will be delivered to the investor. If the investor has an
accumulation account the shares will remain on deposit under the investor's
account.
If total purchases under this Statement of Intention are less than the amount
specified, the investor will promptly remit to the Principal Underwriter any
difference between the sales charge on the amount specified and on the amount
actually purchased. If the investor does not within 20 days after written
request by the Principal Underwriter or the Authorized Firm pay such
difference in sales charge, the escrow agent will redeem an appropriate number
of the escrowed shares in order to realize such difference. Full shares
remaining after any such redemption together with any excess cash proceeds of
the shares so redeemed will be delivered to the investor or to the investor's
order by the escrow agent.
If total purchases made under this Statement are large enough to qualify for a
lower sales charge than that applicable to the amount specified, all
transactions will be computed at the expiration date of this Statement to give
effect to the lower charge. Any difference in sales charge will be refunded to
the investor in cash, or applied to the purchase of additional shares at the
lower charge if specified by the investor. This refund will be made by the
Authorized Firm and by the Principal Underwriter. If at the time of the
recomputation 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 investor's account.
IF YOU DON'T HAVE AN AUTHORIZED FIRM, EATON VANCE CAN RECOMMEND ONE.
HOW TO REDEEM FUND SHARES
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A SHAREHOLDER MAY REDEEM FUND SHARES IN ONE OF THREE WAYS -- BY MAIL, BY
TELEPHONE OR THROUGH AN AUTHORIZED FIRM. The redemption price will be based on
the net asset value per Fund share next computed after a redemption request is
received in the proper form as described below.
REDEMPTION BY MAIL: Shares may be redeemed by delivering to the Transfer
Agent, First Data Investor Services Group, P.O. Box 5123, Westborough, MA
01581-5123, during its business hours a written request for redemption in good
order, plus any share certificates with executed stock powers. Good order
means that all relevant documents must be endorsed by the record owner(s)
exactly as the shares are registered and the signature(s) must be guaranteed
by a member of either the Securities Transfer Association's STAMP program or
the New York Stock Exchange's Medallion Signature Program, or certain banks,
savings and loan institutions, credit unions, securities dealers, securities
exchanges, clearing agencies and registered securities associations as
required by a regulation of the Commission and acceptable to the Transfer
Agent. In addition, in some cases, good order may require the furnishing of
additional documents such as where shares are registered in the name of a
corporation, partnership or fiduciary.
REDEMPTION BY TELEPHONE: Shares may be redeemed by telephone provided the
investor has not disclaimed in writing the use of the privilege. Such
redemptions can be effected by calling the Transfer Agent at 800-262-1122,
Monday through Friday, 9:00 a.m. to 4:00 p.m. (Eastern Standard Time). The
proceeds of a telephone redemption may be no greater than the maximum amount
established by the Principal Underwriter (currently $50,000) and may be mailed
only to the account address of record. Shares held by corporations, trusts or
certain other entities, or subject to fiduciary arrangements, may not be
redeemed by telephone. Neither the Fund, the Principal Underwriter nor the
Transfer Agent will be responsible for the authenticity of redemption
instructions received by telephone, provided that reasonable procedures to
confirm that instructions communicated by telephone are genuine and have been
followed. Telephone instructions will be tape recorded. In times of drastic
economic or market changes, a telephone redemption may be difficult to
implement.
REDEMPTION THROUGH AN AUTHORIZED FIRM: To sell shares at their net asset
value through an Authorized Firm (a repurchase), a shareholder can place a
repurchase order with the Authorized Firm, which may charge a fee. The value
of such shares is based upon the net asset value calculated after the
Principal Underwriter, as the Fund's agent, receives the order. It is the
Authorized Firm's responsibility to transmit promptly repurchase orders to the
Principal Underwriter. Throughout this Prospectus, the word "redemption" is
generally meant to include a repurchase.
Within seven days after receipt of a redemption request in good order by the
Transfer Agent, the 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.
If shares were recently purchased, the proceeds of redemption will not be sent
until the check (including a certified or cashier's check) received for the
shares purchased has cleared. Payment for shares tendered for redemption may
be delayed up to 15 days from the purchase date when the purchase check has
not yet cleared. Redemptions may result in a taxable gain or loss.
Due to the high cost of maintaining small accounts, the Fund reserves the
right to redeem Fund accounts with balances of less than $750. Prior to such a
redemption, shareholders will be given 60 days' written notice to make an
additional purchase. However, no such redemption would be required if the
cause of the low account balance was a reduction in the net asset value of
Fund shares.
If shares have been purchased at net asset value with no initial sales charge
by virtue of the purchase having been in the amount of $1 million or more and
are redeemed within 12 months of purchase, a CDSC of 1% will be imposed on
such redemption. (Such purchases made before January 1, 1997 will be subject
to a CDSC of 0.50% in the event of certain redemptions made within 12 months
of purchase). If shares have been purchased at net asset value because the
amount invested represents redemption proceeds from a mutual fund unaffiliated
with Eaton Vance (as described under "How to Buy Fund Shares") and are
redeemed within 12 months of purchase, a CDSC of 0.50% will be imposed on such
redemption. The CDSC will be imposed on an amount equal to the lesser of the
current market value or the original purchase price of the shares redeemed.
Accordingly, no CDSC will be imposed on increases in account value above the
initial purchase price, including any distributions that have been reinvested
in additional shares. In determining whether a CDSC is applicable to a
redemption, the calculation will be made in a manner that results in the
lowest possible rate being charged. It will be assumed that redemptions are
made first from any shares in the shareholder's account that are not subject
to a CDSC. The CDSC will be retained by the Principal Underwriter.
The CDSC is waived for redemptions involving certain liquidation, merger or
acquisition transactions involving other investment companies. If a
shareholder reinvests redemption proceeds within a 60-day period and in
accordance with the conditions set forth under "Eaton Vance Shareholder
Services -- Reinvestment Privilege", the shareholder's account will be
credited with the amount of any CDSC paid on such redeemed shares.
REPORTS TO SHAREHOLDERS
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THE FUND WILL ISSUE TO ITS SHAREHOLDERS SEMI-ANNUAL AND ANNUAL REPORTS
CONTAINING FINANCIAL STATEMENTS. Financial statements included in annual
reports are audited by the Fund's independent certified public accountants.
Shortly after the end of each calendar year, the Fund will furnish its
shareholders with information necessary for preparing federal and state income
tax returns. Consistent with applicable law, duplicate mailings of shareholder
reports and certain other Fund information to shareholders residing at the
same address may be eliminated.
THE LIFETIME INVESTING ACCOUNT/DISTRIBUTION OPTIONS
- ------------------------------------------------------------------------------
AFTER AN INVESTOR MAKES AN INITIAL PURCHASE OF FUND SHARES, THE TRANSFER AGENT
WILL SET UP A LIFETIME INVESTING ACCOUNT FOR THE INVESTOR ON THE FUND'S
RECORDS. This account is a complete record of all transactions between the
investor and the Fund which at all times shows the balance of shares owned.
The Fund will not issue share certificates except upon request.
Each time a transaction takes place in a shareholder's account, the
shareholder will receive a statement showing complete details of the
transaction and the current balance in the account. (Under certain investment
plans, statements may be sent only quarterly.) THE LIFETIME INVESTING ACCOUNT
ALSO PERMITS A SHAREHOLDER TO MAKE ADDITIONAL INVESTMENTS IN SHARES BY SENDING
A CHECK FOR $50 OR MORE to the Transfer Agent.
Any questions concerning a shareholder's account or services available may be
directed by telephone to EATON VANCE SHAREHOLDER SERVICES at 800-225-6265,
extension 2, or in writing to the Transfer Agent, First Data Investor Services
Group, P.O. Box 5123 Westborough, MA 01581-5123 (please provide the name of
the shareholder, the Fund and the account number).
THE FOLLOWING DISTRIBUTION OPTIONS WILL BE AVAILABLE TO ALL LIFETIME INVESTING
ACCOUNTS and may be changed as often as desired by written notice to the
Fund's dividend disbursing agent, First Data Investor Services Group, P.O. Box
5123 Westborough, MA 01581-5123. The currently effective option will appear on
each account statement.
Share Option -- Dividends and capital gains will be reinvested in additional
shares.
Income Option -- Dividends will be paid in cash and capital gains will be
reinvested in additional shares.
Cash Option -- Dividends and capital gains will be paid in cash.
The Share Option will be assigned if no other option is specified.
Distributions, including those reinvested, will be reduced by any withholding
required under the federal income tax laws.
If the Income Option or Cash Option has been selected, dividend and/or capital
gains distribution checks which are returned by the United States Postal
Service as not deliverable or which remain uncashed for six months or more
will be reinvested in the account in shares at the then current net asset
value. Furthermore, the distribution option on the account will be
automatically changed to the Share Option until such time as the shareholder
selects a different option.
DISTRIBUTION INVESTMENT OPTION. In addition to the distribution options set
forth above, dividends and/or capital gains may be invested in additional
shares of another Eaton Vance fund. Before selecting this option, a
shareholder should obtain a prospectus of the other Eaton Vance fund and
consider its objectives and policies carefully.
"STREET NAME" ACCOUNTS. If shares of a Fund are held in a "street name"
account with an Authorized Firm, all recordkeeping, transaction processing and
payments of distributions relating to the beneficial owner's account will be
performed by the Authorized Firm, and not by the Fund and its Transfer Agent.
Since the Fund will have no record of the beneficial owner's transactions, a
beneficial owner should contact the Authorized Firm to purchase, redeem or
exchange shares, to make changes in or give instructions concerning the
account, or to obtain information about the account. The transfer of shares in
a "street name" account to an account with another dealer or to an account
directly with 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.
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 (plus, in
the case of an exchange made within six months of the date of purchase of
shares subject to an initial sales charge, an amount equal to the difference,
if any, between the sales charge previously paid on the shares being exchanged
and the sales charge payable on the shares being acquired). Exchange offers
are available only in states where shares of the fund being acquired may be
legally sold.
Each exchange must involve shares which have a net asset value of at least
$1,000. The exchange privilege may be changed or discontinued without penalty.
Shareholders will be given sixty (60) days' notice prior to any termination or
material amendment of the exchange privilege. The Fund does not permit the
exchange privilege to be used for "Market Timing" and may terminate the
exchange privilege for any shareholder account engaged in Market Timing
activity. Any shareholder account for which more than two round-trip exchanges
are made within any twelve month period will be deemed to be engaged in Market
Timing. Furthermore, a group of unrelated accounts for which exchanges are
entered contemporaneously by a financial intermediary will be considered to be
engaged in Market Timing.
Shares of the Fund which are subject to a CDSC may be exchanged into any of
the above funds without incurring the CDSC. The shares acquired in an exchange
may be subject to a CDSC upon redemption. For purposes of computing the CDSC
payable upon redemption of shares acquired in an exchange, the holding period
of the original shares is added to the holding period of the shares acquired
in the exchange.
The Transfer Agent 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 Transfer Agent for additional information concerning the
exchange privilege. Applications and prospectuses of other funds are available
from Authorized Firms or the Principal Underwriter. The prospectus for each
fund describes its investment objectives and policies, and shareholders should
obtain a prospectus and consider these objectives and policies carefully
before requesting an exchange.
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 exchange, (plus, in the
case of an exchange made within six months of the date of purchase of shares
subject to an initial sales charge, an amount equal to the difference, if any,
between the sales charge previously paid on the shares being exchanged and the
sales charge payable on the 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 Transfer Agent provided that the
investor has not disclaimed in writing the use of the privilege. To effect
such exchanges, call the Transfer Agent at 800-262-1122, Monday through
Friday, 9:00 a.m. to 4:00 p.m. (Eastern Standard Time). Shares acquired by
telephone exchange must be registered in the same name(s) and with the same
address as the shares being exchanged. Neither the Fund, the Principal
Underwriter nor the Transfer Agent will be responsible for the authenticity of
exchange instructions received by telephone; provided that reasonable
procedures to confirm that instructions communicated are genuine have been
followed. Telephone instructions will be tape recorded. In times of drastic
economic or market changes, a telephone exchange may be difficult to
implement. An exchange may result in a taxable gain or loss.
EATON VANCE SHAREHOLDER SERVICES
- ------------------------------------------------------------------------------
THE 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 Asian Small Companies Fund may be mailed directly to the Transfer
Agent, First Data Investor Services Group, P.O. Box 5123 Westborough, MA
01581-5123 at any time -- whether or not dividends are reinvested. The name of
the shareholder, the Fund and the account number should accompany each
investment.
BANK AUTOMATED INVESTING -- FOR REGULAR SHARE ACCUMULATION: Cash investments
of $50 or more may be made automatically each month or quarter from a
shareholder's bank account. The $1,000 minimum initial investment and small
account redemption policy are waived for these accounts.
STATEMENT OF INTENTION: Purchases of $100,000 or more made over a 13-month
period are eligible for reduced sales charges. See "How to Buy Fund Shares --
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
listed 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 redeemed shares may reinvest at
net asset value any portion or all of the redemption proceeds (plus that
amount necessary to acquire a fractional share to round off the purchase to
the nearest full share), in shares of the Fund or, provided that the shares
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
redemption, and the privilege has not been used more than once in the prior 12
months. Shares are sold to a reinvesting shareholder at the next determined
net asset value following timely receipt of a written purchase order by the
Principal Underwriter or by the fund the shares of which are being purchased
(or by such fund's transfer agent). The privilege is also available to
shareholders of the funds listed under "The Eaton Vance Exchange Privilege"
who wish to reinvest such redemption 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. 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 certain tax-sheltered retirement plans. Detailed
information concerning these plans, including certain exceptions to minimum
investment requirements, and copies of the plans are available from the
Principal Underwriter. This information should be read carefully and
consultation with an attorney or tax adviser may be advisable. The information
sets forth the service fee charged for retirement plans and describes the
federal income tax consequences of establishing a plan. Participant accounting
services (including trust fund reconciliation services) will be offered only
through third party recordkeepers and not by the Principal Underwriter. Under
all plans, dividends and distributions will be automatically reinvested in
additional shares.
DISTRIBUTIONS AND TAXES
- ------------------------------------------------------------------------------
DISTRIBUTIONS. It is the present policy of the Fund to make (A) at least one
distribution annually (normally in December) of all or substantially all of
the investment income allocated to the Fund by the Portfolio (less the Fund's
direct and allocated expenses), and (B) at least one distribution annually of
all or substantially all of the net realized capital gains (if any) allocated
to the Fund by the Portfolio (reduced by any available capital loss
carryforwards from prior years). Shareholders may reinvest all distributions
in shares of the Fund without a sales charge at the per share net asset value
as of the close of business on the record date.
The Fund's 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 from 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 that the Fund designates as from its long-term capital
gains 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 a sales
charge is reduced or eliminated in a subsequent acquisition of shares of the
Fund or of another fund pursuant to the Fund's reinvestment or exchange
privilege. Any disregarded or disallowed amounts will result in an adjustment
to the shareholder's tax basis in some or all of any other shares acquired.
The Fund intends to qualify as a regulated investment company under the Code,
and to satisfy all requirements relating to the sources of its income, the
distribution of its income, and the diversification of its assets. In
satisfying these requirements, the Fund will treat itself as owning its
proportionate share of each of the Portfolio's assets and as entitled to the
income of the Portfolio properly attributable to such share.
As a regulated investment company under the Code, the Fund does not pay
federal income or excise tax to the extent that it distributes to shareholders
its net investment income and net realized capital gains in accordance with
the timing requirements imposed by the Code. As a partnership under the Code,
the Portfolio also does not pay federal income or excise tax.
Income or gain realized by the Portfolio from certain investments may be
subject to foreign income taxes, and the Fund may make an election under
Section 853 of the Code that would allow shareholders to claim a credit or
deduction on their federal income tax returns for (and treated as additional
amounts distributed to them) their pro rata portion of the Fund's allocated
share of qualified taxes paid by the Portfolio to foreign countries. This
election may be made only if more than 50% of the assets of the Fund,
including its allocable share of the Portfolio's assets, at the close of the
Fund's taxable year consists of stock or securities in foreign corporations.
The Fund will send a written notice of any such election (not later than 60
days after the close of its taxable year) to each shareholder indicating the
amount to be treated as the shareholder's proportionate share of such taxes.
Availability of foreign tax credits or deductions for shareholders is subject
to certain additional restrictions and limitations under the Code.
The Fund will provide its shareholders annually with tax information notices
and Forms 1099 to assist in the preparation of their federal and state tax
returns for the prior calendar year's distributions, proceeds from the
redemption or exchange of Fund shares, and federal income tax (if any)
withheld by the Fund's Transfer Agent.
Shareholders should consult with their tax advisors concerning the
applicability of state, local or other taxes to an investment in the Fund.
PERFORMANCE INFORMATION
- ------------------------------------------------------------------------------
FROM TIME TO TIME, THE FUND MAY ADVERTISE ITS AVERAGE ANNUAL TOTAL RETURN. The
Fund's average annual total return is determined by the average annual
percentage change in value of $1,000 invested at the maximum public offering
price (which includes the maximum sales charge) for specified periods,
assuming reinvestment of all distributions. 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 quote
total return for the period prior to commencement of operations which would
reflect the Portfolio's total return (or that of its predecessor) adjusted to
reflect any applicable Fund sales charge.
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 lower if a sales
charge were taken into account. The Fund's performance may be compared in
publications to the performance of various indices and investments for which
reliable data is available, and to averages, performance rankings, or other
information prepared by recognized mutual fund statistical services.
Investors should note that 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.
<PAGE>
[Logo]
EATON VANCE
================
Mutual Funds
EV TRADITIONAL
ASIAN SMALL
COMPANIES FUND
PROSPECTUS
JANUARY 1, 1997
EV TRADITIONAL ASIAN
SMALL COMPANIES FUND
24 FEDERAL STREET
BOSTON, MA 02110
- --------------------------------------------------------------------------------
SPONSOR AND MANAGER OF EV TRADITIONAL ASIAN SMALL COMPANIES FUND
ADMINISTRATOR OF ASIAN SMALL COMPANIES PORTFOLIO
Eaton Vance Management, 24 Federal Street, Boston, MA 02110
ADVISER OF ASIAN SMALL COMPANIES PORTFOLIO
Lloyd George Investment Management (Bermuda) Limited
3808 One Exchange Square, Central, Hong Kong
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc., 24 Federal Street,
Boston, MA 02110 (800) 225-6265
CUSTODIAN
Investors Bank & Trust Company, 89 South Street, Boston, MA 02111
TRANSFER AGENT
First Data Investor Services Group, P.O. Box 5123,
Westborough, MA 01581-5123 (800) 262-1122
AUDITORS
Deloitte & Touche LLP, 125 Summer Street, Boston, MA 02110
T-ACP
<PAGE>
PART A
INFORMATION REQUIRED IN A PROSPECTUS
EV CLASSIC
GREATER CHINA GROWTH FUND
- ------------------------------------------------------------------------------
EV CLASSIC GREATER CHINA GROWTH FUND (THE "FUND") IS A MUTUAL FUND SEEKING
LONG-TERM CAPITAL APPRECIATION THROUGH INVESTMENT IN EQUITY SECURITIES OF
COMPANIES WHICH, IN THE OPINION OF THE INVESTMENT ADVISER, WILL BENEFIT FROM
THE ECONOMIC DEVELOPMENT AND GROWTH OF THE PEOPLE'S REPUBLIC OF CHINA. THE
FUND INVESTS ITS ASSETS IN GREATER CHINA GROWTH PORTFOLIO (THE "PORTFOLIO"), A
DIVERSIFIED OPEN-END INVESTMENT COMPANY HAVING THE SAME INVESTMENT OBJECTIVE
AS THE FUND, RATHER THAN BY DIRECTLY INVESTING IN AND MANAGING ITS OWN
PORTFOLIO OF SECURITIES. A SIGNIFICANT PERCENTAGE OF THE PORTFOLIO WILL BE
INVESTED IN THE SECURITIES MARKETS OF COUNTRIES IN THE CHINA REGION, INCLUDING
HONG KONG, CHINA, TAIWAN, SOUTH KOREA, SINGAPORE, MALAYSIA, THAILAND,
INDONESIA AND THE PHILIPPINES. THE FUND IS A SEPARATE SERIES OF EATON VANCE
GROWTH TRUST (THE "TRUST").
Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, any bank or other insured depository institution, and are not
federally insured by the Federal Deposit Insurance Corporation, the Federal
Reserve Board or any other government agency. Shares of the Fund involve
investment risks, including fluctuations in value and the possible loss of
some or all of the principal investment.
This Prospectus is designed to provide you with information you should know
before investing. Please retain this document for future reference. A
Statement of Additional Information for the Fund dated January 1, 1997, 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 (the "Manager"). The
Portfolio's investment adviser is Lloyd George Investment Management (Bermuda)
Limited (the "Adviser"). The principal business address of the Adviser is 3808
One Exchange Square, Central, Hong Kong.
- ------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE PAGE
<S> <C> <C> <C>
Shareholder and Fund Expenses .......................... 2 How to Buy Fund Shares ............................. 17
The Fund's Financial Highlights ........................ 3 How to Redeem Fund Shares .......................... 18
Investment Opportunities in the China Region ........... 5 Reports to Shareholders ............................ 19
The Fund's Investment Objective ........................ 6 The Lifetime Investing Account/Distribution
Investment Policies and Risks .......................... 7 Options .......................................... 19
Organization of the Fund and the Portfolio ............. 11 The Eaton Vance Exchange Privilege ................. 20
Management of the Fund and the Portfolio ............... 12 Eaton Vance Shareholder Services ................... 21
Distribution Plan ...................................... 14 Distributions and Taxes ............................ 21
Valuing Fund Shares .................................... 16 Performance Information ............................ 22
- ------------------------------------------------------------------------------------------------------------------------
PROSPECTUS DATED JANUARY 1, 1997
</TABLE>
<PAGE>
SHAREHOLDER AND FUND EXPENSES
- ------------------------------------------------------------------------------
<TABLE>
SHAREHOLDER TRANSACTION EXPENSES
-------------------------------------------------------------------------------------------------------
<S> <C>
Sales Charges Imposed on Purchases of Shares None
Sales Charges Imposed on Reinvested Distributions None
Fees to Exchange Shares None
Contingent Deferred Sales Charge Imposed on Redemption During the First Year (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 1.24%
Rule 12b-1 Distribution (and Service) Fees 1.00%
Other Expenses 0.80%
----
Total Operating Expenses 3.04%
====
</TABLE>
<TABLE>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
An investor would pay the following expenses (including a
contingent deferred sales charge in the case of redemption
during the first year after purchase) on a $1,000 investment,
assuming (a) 5% annual return and (b) redemption at the end of
each period: $41 $94 $160 $336
</TABLE>
NOTES:
The table and Example 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. Information
for the Fund is based on its expenses for the most recent fiscal year.
Management Fees include management fees paid by the Fund and investment
advisory and administration fees paid by the Portfolio of 0.25%, 0.74% and
0.25%, respectively).
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 "The Fund's Financial Highlights", "Management of
the Fund and the Portfolio", and "How to Redeem Fund Shares". 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. See "Distribution Plan".
No contingent deferred sales charge is imposed on (a) shares purchased more
than one year prior to redemption, (b) shares acquired through the
reinvestment of distributions or (c) any appreciation in value of other shares
in the account (see "How to Redeem Fund Shares"), and no such charge is
imposed on exchanges of Fund shares for shares of one or more other funds
listed under "The Eaton Vance Exchange Privilege." In the Example above,
expenses would be $10 less in the first year if there was no redemption.
The Fund invests exclusively in the Portfolio. 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".
<PAGE>
THE FUND'S FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
The following information should be read in conjunction with the audited
financial statements included in the Fund's annual report to shareholders
which is incorporated by reference into the Statement of Additional
Information in reliance upon the report of Deloitte & Touche LLP, independent
certified public accountants, as experts in accounting and auditing. Further
information regarding the performance of the Fund is contained in its annual
report to shareholders which may be obtained without charge by contacting the
Principal Underwriter.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEAR ENDED AUGUST 31,
-----------------------------------------------------------
1996 1995 1994*
---- ---- -----
<S> <C> <C> <C>
NET ASSET VALUE, beginning of year $ 8.120 $ 9.030 $10.000
------- ------- -------
Income (loss) from investment operations:
Net investment loss $(0.092) $(0.037) $(0.033)
Net realized and unrealized gain (loss) on investments 0.432 (0.853) (0.937)
------- ------- -------
Total income (loss) from operations $ 0.340 $(0.890) $(0.970)
------- ------- -------
Less distributions:
In excess of net investment income(4) $ -- $(0.020) $ --
------- ------- -------
NET ASSET VALUE, end of year $ 8.460 $ 8.120 $ 9.030
======= ======= =======
TOTAL RETURN(1) 4.19% (9.85)% (9.70)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000 omitted) $18,802 $21,208 $26,430
Ratio of net expenses to average daily net assets(2)(3) 3.03% 3.04% 2.75%+
Ratio of net expenses to average daily net assets after
custodian fee reduction(2)(3) 2.97% -- --
Ratio of net investment loss to average daily net assets (0.91)% (0.59)% (0.74)%+
* For the period from December 28, 1993 (start of business) to August 31, 1994.
+ Computed on an annualized basis.
(1) Total return is calculated assuming a purchase at the net asset value on the first day and a sale at the net asset
value on the last day of each period reported. Distributions, if any, are assumed to be reinvested at the net asset
value on the record date. Total return is computed on a non-annualized basis.
(2) Includes the Fund's share of the Portfolio's allocated expenses.
(3) The expense ratios for the year ended August 31, 1996 have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require the Fund, as well as the Portfolio, to increase its expense
ratio by the effect of any expense offset arrangements with its service providers. The expense ratios for each of
the periods ended on or before August 31, 1995 have not been adjusted to reflect this change.
(4) The Fund has followed the Statement of Position (SOP) 93-2: Determination, Disclosure and Financial Statement
Presentation of Income, Capital Gain, and Return of Capital Distribution by Investment Companies. The SOP requires
that differences in the recognition or classification of income between the financial statements and tax earnings
and profits that result in temporary over-distributions for financial statement purposes, are classified as
distributions in excess of net investment income or accumulated net realized gains.
</TABLE>
<PAGE>
THE --------------------------------------------
CHINA
REGION
[MAP]
--------------------------------------------
CHINA'S --------------------------------------------
SPECIAL
ECONOMIC
ZONES
[MAP]
--------------------------------------------
<PAGE>
INVESTMENT OPPORTUNITIES IN THE CHINA REGION
- --------------------------------------------------------------------------------
THE FOLLOWING IS A GENERAL DISCUSSION OF THE ECONOMIES AND SECURITIES MARKETS
IN WHICH THE PORTFOLIO MAY INVEST. There can be no assurance that the
Portfolio will be able to capitalize on the factors described herein. Opinions
expressed herein are the good faith opinions of the Portfolio's Adviser, Lloyd
George Investment Management (Bermuda) Limited. Unless otherwise indicated,
all amounts are expressed in United States dollars.
Over the past twenty years the performance of the major Asian securities
markets has generally been better than that of markets in Europe and the
United States. For over the past five years, the newly emerging securities
markets of the China Region have demonstrated significant growth in market
capitalization, in numbers of listed securities and in the volume of
transactions. Over the same period, the underlying economies of the region
have grown against a background of the high savings rates characteristic of
many Asian societies and generally moderate inflation. According to the Asian
Development Bank forecasts, the economies of Southeast Asia, excluding Japan,
are forecast to grow by 7.6% in 1997. The following graph shows the average
growth in gross domestic product ("GDP") from 1990 to 1996 for the main
countries in Southeast Asia, compared with the United States.
AVERAGE GROSS DOMESTIC PRODUCT GROWTH (1990-1996)
-------------------------------------------------
THAILAND 8.81%
CHINA 10.13%
MALAYSIA 8.77%
SINGAPORE 8.41%
SOUTH KOREA 7.80%
INDONESIA 7.90%
TAIWAN 6.47%
HONG KONG 5.10%
PHILIPPINES 2.79%
UNITED STATES 1.95%
-------------------------------------------------
SOURCE: LLOYD GEORGE MANAGEMENT (HONG KONG) LIMITED
A PARTICULARLY SIGNIFICANT FACTOR WITHIN THE REGION FOR MORE THAN A DECADE HAS
BEEN THE INCREASING INFLUENCE WHICH CHINA HAS HAD IN THE DETERMINATION OF THE
ECONOMIC DEVELOPMENT OF CERTAIN COUNTRIES. The links between China and Hong
Kong, between China and Taiwan and between China and other countries within
the region, where there is a significant Chinese element of the population,
have by now been strengthened to a degree which makes a reversal unlikely.
Moreover, although these links have been developed to a stage where economic
co-operation in trade operates smoothly, the full potential of the market,
both in terms of domestic consumption and of export growth, has hardly begun
to be realized. This potential presents investment opportunity for the Fund
and the Portfolio.
CHINA'S POPULATION, ESTIMATED AT 1.3 BILLION, IS THE HIGHEST OF ANY COUNTRY IN
THE WORLD. China has had for many centuries a well deserved reputation for
being closed to foreigners, with trade with the outside world being carried on
under terms of extreme restriction and under central control. Such conditions
were maintained in the first thirty years of the Communist regime which began
in 1949; however there have been several stages of evolution, from the
institution of an industrialization program in the 1950s to a modernization
policy commencing in 1978 which combined economic development with the
beginnings of opening the country to foreign investment and commerce. The
economic plans covering the last decade of the century include objectives to
quadruple the country's 1980 industrial and agricultural output by the year
2000, to increase the export element of the economy and to continue to open
the country with further development of the designated special investment
areas.
In order to attract foreign investment China has since 1978 designated certain
areas of the country where overseas investors can receive special investment
incentives and tax concessions. There are five Special Economic Zones
(Shenzhen, Shantou and Zhuhai in Guangdong Province, Xiamen in Fujian Province
and Hainan Island, which itself is a province). Fourteen coastal cities have
been designated as "open cities" and certain Open Economic Zones have been
established in coastal areas. Shanghai has established the Pudong New Area.
Twenty-seven High and New Technology Industrial Development Zones have been
approved where preferential treatment is given to enterprises which are
confirmed as technology intensive. As a result, foreign direct investment in
China has increased substantially in the last decade. The realized value of
foreign direct investment in China was over $37 billion in 1995.
AS A TRADE ENTREPOT AND FINANCE CENTER, HONG KONG'S VIABILITY HAS BEEN
INEXORABLY LINKED TO MAINLAND CHINA SINCE THE ESTABLISHMENT OF THE COLONY IN
1841. HONG KONG REMAINS CHINA'S LARGEST TRADE PARTNER AND ITS LEADING FOREIGN
INVESTOR. In 1995, visible trade between Hong Kong and China exceeded $980
billion. In recent years large numbers of Hong Kong based companies have set
up factories in the southern Chinese province of Guangdong, where it is
estimated that Hong Kong companies employ more than 2.5 million workers.
There also has been considerable growth in Chinese investment in Hong Kong
over the last decade, particularly in banking property, manufacturing and
infrastructure projects. In view of the growing economic interaction between
Hong Kong and Southern China, it is increasingly meaningful to consider the
concept of a Greater Hong Kong economy consisting of Hong Kong and Guangdong
Province, with a combined population of 72 million. The Basic Law, the outline
for Hong Kong's government post 1997, calls for Hong Kong's capitalist system
to remain intact for an additional fifty years after 1997 and sets out details
for the integration of Hong Kong into China after 1997.
TAIWAN HAS ALSO BENEFITTED FROM CHINA'S ECONOMIC LIBERALIZATION, GIVEN ITS
GEOGRAPHIC PROXIMITY AND ITS CULTURAL AND ETHNIC TIES. Taiwan companies
continue to be attracted by China's low labor costs, inexpensive land and less
rigid environmental rules. It is estimated that accumulated Taiwanese
investment in China exceeds $3 billion. Taiwanese listed companies include a
number which invested indirectly in China, primarily in the textiles, food and
rubber industries.
THE ADVISER BELIEVES THAT OTHER COUNTRIES IN THE CHINA REGION WILL ALSO
BENEFIT FROM THE REGION'S ECONOMIC GROWTH. Listed companies throughout Asia
are becoming increasingly active in China. There has also been considerable
foreign investment by Japanese companies in the Northeastern Provinces of
Liaoning, Jilin, and Heilongiang. As the major trading partner of these
provinces, Japan is primarily manufacturing light industrial products for re-
export. Major Japanese projects have been set up in the electronics and
natural resources sectors in China. While Thailand has been traditionally
known as a recipient of foreign investment, Chinese-managed listed companies
in the banking, textiles and packaging sectors have indicated their intention
of expanding into China. In Singapore, shipping, construction and hotel
companies have been the first sectors to do business in China while several
Malaysian companies in the manufacturing sector have invested in joint
ventures in China. The Adviser believes that growing China exposure will
enhance the earnings growth of such companies, making them attractive for
investment.
See Appendix A to the Statement of Additional Information for further
information about the economic characteristics of and risks associated with
investing in China Region countries.
THE FUND'S INVESTMENT OBJECTIVE
- ------------------------------------------------------------------------------
THE FUND'S INVESTMENT OBJECTIVE IS TO SEEK LONG-TERM CAPITAL APPRECIATION. It
currently seeks to meet its investment objective by investing its assets in
the Greater China Growth Portfolio (the "Portfolio"), a separate registered
investment company which invests primarily in equity securities of companies
which, in the opinion of the Adviser, will benefit from the economic
development and growth of the People's Republic of China ("China"). A
significant percentage of the Portfolio's assets will be invested in the
securities markets of countries in the China region, consisting of Hong Kong,
China, Taiwan, South Korea, Singapore, Malaysia, Thailand, Indonesia and the
Philippines (collectively, the "China Region").
Investments in the China Region can involve significant risks that are
generally not involved with investments in U.S. companies. The Fund is
intended for long-term investors who can accept international investment risk
and little or no current income. The Fund is not intended to be a complete
investment program. A prospective investor should take into account personal
objectives and other investments when considering the purchase of Fund shares.
The Fund cannot assure achievement of its investment objective. The investment
objective of the Fund and the Portfolio are nonfundamental. China Region
investments may offer higher potential for gains and losses than investments
in the United States. See "Investment Policies and Risks" for further
information.
INVESTMENT POLICIES AND RISKS
- ------------------------------------------------------------------------------
THE PORTFOLIO SEEKS TO ACHIEVE ITS OBJECTIVE THROUGH INVESTING IN A CAREFULLY
SELECTED AND CONTINUOUSLY MANAGED PORTFOLIO CONSISTING PRIMARILY OF EQUITY
SECURITIES OF COMPANIES WHICH, IN THE OPINION OF THE ADVISER, WILL BENEFIT
FROM THE ECONOMIC DEVELOPMENT AND GROWTH OF CHINA ("CHINA GROWTH COMPANIES").
A significant percentage of the Portfolio's assets will be invested in the
securities markets of countries in the China Region (or Greater China). The
Portfolio will, under normal market conditions, invest at least 65% of its
total assets in equity securities of China growth companies ("Greater China
investments"). However, it is expected that substantially all of the
Portfolio's assets will normally be invested in equity securities, warrants
and equity options. China growth companies consist of companies that (a) are
located in or whose securities are principally traded in a China Region
country, (b)(i) have at least 50% of their assets in one or more China Region
countries or (ii) derive at least 50% of their gross sales revenues or profits
from providing goods or services to or from within one or more China Region
countries and (c)(i) have at least 35% of their assets in China, or (ii)
derive at least 35% of their gross sales revenues or profits from providing
goods or services to or from within China or (iii) have manufacturing or other
operations in China that are significant to such companies. Greater China
investments are typically listed on stock exchanges or traded in the over-the-
counter markets in countries in the China Region. The principal offices of
these companies, however, may be located outside these countries. The
Portfolio may invest 25% or more of its total assets in the securities of
issuers located in any one country in the China Region. The Portfolio has
invested more than 25% of its total assets in issuers located in Hong Kong,
but the Adviser currently expects the Portfolio ordinarily will not invest
more than 15% of its total assets in any other country.
Equity securities, for purposes of the 65% policy, will be limited to common
and preferred stocks; equity interests in trusts, partnerships, joint ventures
and other unincorporated entities or enterprises; special classes of shares
available only to foreign investors in markets that restrict the ownership by
foreign investors to certain classes of equity securities; convertible
preferred stocks; and other convertible investment grade debt instruments. A
debt security is investment grade if it is rated BBB or above by Standard &
Poor's Ratings Group ("S&P") or Baa or above by Moody's Investors Service,
Inc. ("Moody's") or determined to be of comparable quality by the Adviser.
Debt securities rated BBB by S&P or Baa by Moody's have speculative
characteristics and changes in economic conditions or other circumstances are
more likely to lead to a weakened capacity to make principal and interest
payments than is the case with higher grade debt securities. The Portfolio
will promptly dispose of any convertible debt instrument which is rated or
determined by the Adviser to be below investment grade subsequent to
acquisition by the Portfolio. Direct investments in China growth companies
will not exceed 10% of the Portfolio's total assets.
In addition to its investments in equity securities, the Portfolio may invest
up to 5% of its net assets in options on equity securities and up to 5% of its
net assets in warrants, including options and warrants traded in over-the-
counter markets. The Portfolio will not, under normal market conditions,
invest more than 35% of its total assets in equity securities other than
Greater China investments, warrants, options on securities and indices,
options on currency, futures contracts and options on futures, forward foreign
currency exchange contracts, currency swaps and any other non-equity
investments. The Portfolio will not invest in debt securities, other than
investment grade convertible debt instruments. The Portfolio will not invest
more than 10% of its assets in the securities of issuers in any country
outside the China Region.
The Portfolio may, for temporary defensive purposes, invest some or all of its
total assets in high grade debt securities of foreign and United States
companies, foreign governments and the U.S. Government, and their respective
agencies, instrumentalities, political subdivisions and authorities, as well
as in high quality money market instruments denominated in U.S. dollars or a
foreign currency.
INVESTING IN FOREIGN SECURITIES. Investing in securities issued by foreign
companies and governments involves considerations and possible risks not
typically associated with investing in securities issued by the U.S.
Government and domestic corporations. The values of foreign investments are
affected by changes in currency or exchange control regulations, application
of foreign tax laws, including withholding taxes, changes in governmental
administration or economic or monetary policy (in this country or abroad) or
changed circumstances in dealings between nations. Because investment in China
Region companies will usually involve currencies of foreign countries, the
value of assets of the Portfolio as measured by U.S. dollars may be adversely
affected by changes in currency exchange rates. Such rates may fluctuate
significantly over short periods of time causing the Portfolio's net asset
value to fluctuate as well. Costs are incurred in connection with conversions
between various currencies. In addition, foreign brokerage commissions,
custody fees and other costs of investing are generally higher than in the
United States, and foreign securities markets may be less liquid, more
volatile and less subject to governmental supervision than in the United
States. Investments in foreign issuers could be affected by other factors not
present in the United States, including expropriation, armed conflict,
confiscatory taxation, lack of uniform accounting and auditing standards and
potential difficulties in enforcing contractual obligations. Transactions in
the securities of foreign issuers could be subject to settlement delays and
risk of loss.
More than 25% of the Portfolio's total assets, adjusted to reflect currency
transactions and positions, may be denominated in any single currency.
Concentration in a particular currency will increase the Portfolio's exposure
to adverse developments affecting the value of such currency. An issuer of
securities purchased by the Portfolio may be domiciled in a country other than
the country in whose currency the securities are denominated.
Since the Portfolio will, under normal market conditions, invest at least 65%
of its total assets in Greater China investments, its investment performance
will be especially affected by events affecting China Region companies. The
value and liquidity of Greater China investments may be affected favorably or
unfavorably by political, economic, fiscal, regulatory or other developments
in the China Region or neighboring regions. The extent of economic
development, political stability and market depth of different countries in
the China Region varies widely. Certain China Region countries, including
China, Indonesia, Malaysia, the Philippines and Thailand, are either
comparatively underdeveloped or in the process of becoming developed. Greater
China investments typically involve greater potential for gain or loss than
investments in securities of issuers in developed countries. In comparison to
the United States and other developed countries, developing countries may have
relatively unstable governments and economies based on only a few industries.
Given the Portfolio's investments, the Portfolio will likely be particularly
sensitive to changes in China's economy as the result of any reversals of
economic liberalization, political unrest or changes in China's trading
status.
SECURITIES TRADING MARKETS. The securities markets in the China Region are
substantially smaller, less liquid and more volatile than the major securities
markets in the United States. A high proportion of the shares of many issuers
may be held by a limited number of persons and financial institutions, which
may limit the number of shares available for investment by the Portfolio. The
prices at which the Portfolio may acquire investments may be affected by
trading by persons with material non-public information and by securities
transactions by brokers in anticipation of transactions by the Portfolio in
particular securities. Similarly, volume and liquidity in the bond markets in
the China Region are less than in the United States and, at times, price
volatility can be greater than in the United States. The limited liquidity of
securities markets in the China Region may also affect the Portfolio's ability
to acquire or dispose of securities at the price and time it wishes to do so.
In addition, China Region securities markets are susceptible to being
influenced by large investors trading significant blocks of securities.
China Region stock markets are undergoing a period of growth and change which
may result in trading volatility and difficulties in the settlement and
recording of transactions, and in interpreting and applying the relevant law
and regulations. In particular, the securities industry in China is not well
developed. China has no securities laws of nationwide applicability. Municipal
securities regulations governing the Shanghai and Shenzhen securities
exchanges are very new. Stockbrokers and other intermediaries in the China
Region may not perform as well as their counterparts in the United States and
other more developed securities markets.
CHINA REGION COUNTRY CONSIDERATIONS. The Portfolios will invest in China
Region countries with emerging economies or securities markets. Political and
economic structures in many of such countries are undergoing significant
evolution and rapid development, and such countries may lack the social,
political and economic stability characteristic of the United States. Certain
of such countries may have, in the past, failed to recognize private property
rights and have at times nationalized or expropriated the assets of private
companies. As a result, the risks described above, including the risks of
nationalization or expropriation of assets, may be heightened. In addition,
unanticipated political or social developments may affect the values of the
Portfolio's investments in those countries and the availability to the
Portfolio of additional investments in those countries.
The laws of countries in the region relating to limited liability of corporate
shareholders, fiduciary duties of officers and directors, and the bankruptcy
of state enterprises are generally less well developed than or different from
such laws in the United States. It may be more difficult to obtain a judgement
in the courts of these countries than it is in the United States. Monsoons and
natural disasters also can affect the value of Portfolio investments.
Economies of countries in the China Region may differ favorably or unfavorably
from the U.S. economy in such respects as rate of growth of gross national
product, rate of inflation, capital reinvestment, resource self-sufficiency
and balance of payments position. As export-driven economies, the economies of
countries in the China Region are affected by developments in the economies of
their principal trading partners. For example revocation by the United States
of China's "Most Favored Nation" trading status, which the U.S. President and
Congress reconsider annually, would adversely affect the trade and economic
development of China and Hong Kong. Political control of Hong Kong will vest
in China in mid-1997, and the actual or perceived success of this process will
affect investments in Hong Kong and elsewhere.
China governmental actions can have a significant effect on the economic
conditions in the China Region, which could adversely affect the value and
liquidity of the Portfolio's investments. Although the Chinese Government has
recently begun to institute legal and economic reform policies, there can be
no assurances that it will continue to pursue such policies or, if it does,
that such policies will succeed. China does not have a comprehensive system of
laws and some laws are not even publicly available.
The Fund and the Portfolio each intend to conduct its respective affairs in
such a manner to avoid taxation. Nevertheless, certain countries may require
withholding on dividends paid on portfolio securities and on realized capital
gains. In the past, these taxes have sometimes been substantial. There can be
no assurance that in the future the Portfolio will be able to repatriate its
income, gains or initial capital from these countries.
DIRECT INVESTMENTS. The Portfolio may invest up to 10% of its total assets in
direct investments in China growth companies. Direct investments include (i)
the private purchase from an enterprise of an equity interest in the
enterprise in the form of shares of common stock or equity interests in
trusts, partnerships, joint ventures or similar enterprises, and (ii) the
purchase of such an equity interest in an enterprise from a principal investor
in the enterprise. In each case, the Portfolio will, at the time of making the
investment, enter into a shareholder or similar agreement with the enterprise
and one or more other holders of equity interests in the enterprise. The
Adviser anticipates that these agreements will, in appropriate circumstances,
provide the Portfolio with the ability to appoint a representative to the
board of directors or similar body of the enterprise and for eventual
disposition of the Portfolio's investment in the enterprise. Such a
representative of the Portfolio will be expected to provide the Portfolio with
the ability to monitor its investment and protect its rights in the investment
and will not be appointed for the purpose of exercising management or control
of the enterprise.
Certain of the Portfolio's direct investments, particularly in China, will
probably include investments in smaller, less seasoned companies. These
companies may have limited product lines, markets or financial resources, or
they may be dependent on a limited management group. The Adviser does not
anticipate making direct investments in start-up operations, although it is
expected that in some cases the Portfolio's direct investments will fund new
operations for an enterprise which itself is engaged in similar operations or
is affiliated with an organization that is engaged in similar operations. Such
direct investments may be made in entities that are reasonably expected in the
foreseeable future to become China growth companies, either by expanding
current operations or establishing significant operations in China. Direct
investments may involve a high degree of business and financial risk that can
result in substantial losses. Because of the absence of any public trading
market for these investments, the Portfolio may take longer to liquidate these
positions at fair value than would be the case for publicly traded securities.
Furthermore, issuers whose securities are not publicly traded may not be
subject to public disclosure and other investor protection requirements
applicable to publicly traded securities.
DERIVATIVE INSTRUMENTS. The Portfolio may purchase or sell derivative
instruments (which are instruments that derive their value from another
instrument, security, index or currency) to enhance return (which may be
considered speculative), to hedge against fluctuations in securities prices,
interest rates or currency exchange rates, or as a substitute for the purchase
or sale of securities or currencies. The Portfolio's transactions in
derivative instruments may be in the U.S. or abroad and may include the
purchase or sale of futures contracts on securities, securities indices, other
indices, other financial instruments or currencies; options on futures
contracts; exchange-traded and over-the-counter options on securities, indices
or currencies; and forward foreign currency exchange contracts. The
Portfolio's transactions in derivative instruments involve a risk of loss or
depreciation due to: unanticipated adverse changes in securities prices,
interest rates, the other financial instruments' prices or currency exchange
rates; the inability to close out a position; default by the counterparty;
imperfect correlation between a position and the desired hedge; tax
constraints on closing out positions; and portfolio management constraints on
securities subject to such transactions. The loss on derivative instruments
(other than purchased options) may substantially exceed the Portfolio's
initial investment in these instruments. In addition, the Portfolio may lose
the entire premium paid for purchased options that expire before they can be
profitably exercised by the Portfolio. The Portfolio incurs transaction costs
in opening and closing positions in derivative instruments. There can be no
assurance that the Adviser's use of derivative instruments will be
advantageous to the Portfolio.
The Portfolio may purchase call and put options on any securities in which the
Portfolio may invest or options on any securities index composed of securities
in which the Portfolio may invest. The Portfolio does not intend to write a
covered option on any security if after such transaction more than 15% of its
net assets, as measured by the aggregate value of the securities underlying
all covered calls and puts written by the Portfolio, would be subject to such
options. The Portfolio does not intend to purchase an option on any security
if, after such transaction, more than 5% of its net assets, as measured by the
aggregate of all premiums paid for all such options held by the Portfolio,
would be so invested.
To the extent that the Portfolio enters into futures contracts, options on
futures contracts and options on foreign currencies traded on an exchange
regulated by the Commodity Futures Trading Commission ("CFTC"), in each case
that are not for bona fide hedging purposes (as defined by the CFTC), the
aggregate initial margin and premiums required to establish these positions
(excluding the amount by which options are "in-the-money") may not exceed 5%
of the liquidation value of the Portfolio's investments, after taking into
account unrealized profits and unrealized losses on any contracts the
Portfolio has entered into.
Forward contracts are individually negotiated and privately traded by currency
traders and their customers. A forward contract involves an obligation to
purchase or sell a specific currency (or basket of currencies) for an agreed
price at a future date, which may be any fixed number of days from the date of
the contract. The Portfolio may engage in cross-hedging by using forward
contracts in one currency (or basket of currencies) to hedge against
fluctuations in the value of securities denominated in a different currency if
the Adviser determines that there is an established historical pattern of
correlation between the two currencies (or the basket of currencies and the
underlying currency). Use of a different foreign currency magnifies the
Portfolio's exposure to foreign currency exchange rate fluctuations. The
Portfolio may also use forward contracts to shift its exposure to foreign
currency exchange rate changes from one currency to another.
The Portfolio may enter into currency swaps for both hedging and non-hedging
purposes. Currency swaps involve the exchange of rights to make or receive
payments in specified currencies. Since currency swaps are individually
negotiated, the Portfolio expects to achieve an acceptable degree of
correlation between its portfolio investments and its currency swap positions.
Currency swaps usually involve the delivery of the entire principal value of
one designated currency in exchange for the other designated currency.
Therefore, the entire principal value of a currency swap is subject to the
risk that the other party to the swap will default on its contractual delivery
obligations. The use of currency swaps is a highly specialized activity which
involves special investment techniques and risks. If the Adviser is incorrect
in its forecasts of market values and currency exchange rates, the Portfolio's
performance will be adversely affected.
REPURCHASE AGREEMENTS. The Portfolio may enter into repurchase agreements (the
purchase of a security coupled with an agreement to resell) with respect to
its permitted investments, but currently intends to do so only with member
banks of the Federal Reserve System or with primary dealers in U.S. Government
securities. In the event of the bankruptcy of the other party to a repurchase
agreement, the Portfolio might experience delays in recovering its cash. To
the extent that, in the meantime, the value of the securities the Portfolio
purchased may have decreased, the Portfolio could experience a loss. At no
time will the Portfolio commit more than 15% of its net assets to repurchase
agreements which mature in more than seven days and other illiquid securities.
OTHER INVESTMENT COMPANIES. The Portfolio reserves the right to invest up to
10% of its total assets, calculated at the time of purchase, in the securities
of other investment companies unaffiliated with the Adviser or the Manager
that have the characteristics of closed-end investment companies. The
Portfolio will indirectly bear its proportionate share of any management fees
paid by investment companies in which it invests in addition to the advisory
fee paid by the Portfolio. The value of closed-end investment company
securities, which are usually traded on an exchange, is affected by demand for
the securities themselves, independent of the demand for the underlying
portfolio assets and, accordingly, such securities can trade at a discount
from their net asset values.
INVESTMENT LIMITATIONS. The Fund and the Portfolio have adopted certain
fundamental investment restrictions and policies which are enumerated in
detail in the Statement of Additional Information and which may not be changed
unless authorized by a shareholder vote and an investor vote, respectively.
Among these fundamental restrictions, neither the Fund nor the Portfolio may
(1) borrow money except from banks or through reverse repurchase agreements
and in an amount not exceeding one-third of its total assets; or (2) with
respect to 75% of its total assets, invest more than 5% of its total assets in
the securities of any one issuer, other than U.S. Government securities or, in
the case of the Fund, interests in the Portfolio, or acquire more than 10% of
the outstanding voting securities of any one issuer. Except with respect to
the Portfolio's borrowing limitation, investment restrictions are considered
at the time of acquisition of assets; the sale of portfolio assets generally
is not required in the event of a subsequent change in circumstances. As a
matter of fundamental policy the Portfolio will invest less than 25% of its
total assets in the securities, other than U.S. Government securities, of
issuers in any one industry. However, the Portfolio is permitted to invest 25%
or more of its total assets in (i) the securities of issuers located in any
one country in the China Region and (ii) assets denominated in the currency of
any one country.
Except for the fundamental investment restrictions and policies specifically
identified above and those enumerated in the Statement of Additional
Information, the investment objective and policies of the Fund and the
Portfolio are not fundamental policies and accordingly may be changed by the
Trustees of the Trust and the Portfolio without obtaining the approval of the
shareholders of the Fund or the investors in the Portfolio, as the case may
be. As a matter of nonfundamental policy, neither the Fund nor the Portfolio
(i) intends to borrow for leverage purposes or may purchase any securities if,
at the time of such purchase, permitted borrowings exceed 5% of the value of
the Portfolio's or the Fund's total assets, as the case may be, or (ii) is
permitted to invest more than 15% of its net assets in unmarketable
securities, over-the-counter options, repurchase agreements maturing in more
than seven days and other illiquid securities. Nevertheless, the Portfolio may
termporarily borrow up to 5% of the value of its total assets to satisfy
redemption requests or settle securities transactions. The Portfolio may lend
portfolio securities and engage in repurchase agreements and reverse
repurchase agreements but the Adviser has no current intention to do so.
Under the Investment Company Act of 1940 (the "1940 Act") and the rules
promulgated thereunder, the Portfolio's investments in the securities of any
company that, in its most recent fiscal year, derived more than 15% of its
gross revenues from securities-related activities is limited to 5% of any
class of the issuer's equity securities and 10% of the outstanding principal
amount of the issuer's debt securities, provided that the Portfolio's
aggregate investments in the securities of any such issuer do not exceed 5% of
the Portfolio's total assets. Some of the companies available for investment
in the China Region, including enterprises being privatized by such countries,
may be financial services businesses that engage in securities-related
activities. The Portfolio's ability to invest in such enterprises may thus be
limited.
ORGANIZATION OF THE FUND AND THE PORTFOLIO
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THE FUND IS A DIVERSIFIED SERIES OF EATON VANCE GROWTH TRUST (THE "TRUST"), A
BUSINESS TRUST ESTABLISHED UNDER MASSACHUSETTS LAW PURSUANT TO A DECLARATION
OF TRUST DATED MAY 25, 1989, AS AMENDED. THE TRUST IS A MUTUAL FUND -- AN
OPEN-END MANAGEMENT INVESTMENT COMPANY. The Trustees of the Trust are
responsible for the overall management and supervision of its affairs. The
Trust may issue an unlimited number of shares of beneficial interest (no par
value per share) in one or more series (such as the Fund). 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.
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, affords the potential for economies of scale for the Fund (at least
when the assets of the Portfolio exceed $500 million) and may over time result
in lower expenses for the Fund.
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.
Information regarding other pooled investment entities or funds which invest
in the Portfolio may be obtained by contacting the Principal Underwriter, 24
Federal Street, Boston, MA 02110 (617) 482-8260.
Whenever the Fund as an investor in the Portfolio is requested to vote on
matters pertaining to the Portfolio (other than the termination of the
Portfolio's business, which may be determined by the Trustees of the Portfolio
without investor approval), the Fund will hold a meeting of Fund shareholders
and will vote its interest in the Portfolio for or against such matters
proportionately to the instructions to vote for or against such matters
received from Fund shareholders. The Fund shall vote shares for which it
receives no voting instructions in the same proportion as the shares for which
it receives voting instructions. Other investors in the Portfolio may alone or
collectively acquire sufficient voting interests in the Portfolio to control
matters relating to the operation of the Portfolio, which may require the Fund
to withdraw its investment in the Portfolio or take other appropriate action.
Any such withdrawal could result in a distribution "in kind" of portfolio
securities (as opposed to a cash distribution from the Portfolio). If
securities are distributed, the Fund could incur brokerage, tax or other
charges in converting the securities to cash. In addition, the distribution in
kind may result in a less diversified portfolio of investments or adversely
affect the liquidity of the Fund. Notwithstanding the above, there are other
means for meeting shareholder redemption requests, such as borrowing.
The Fund may withdraw (completely redeem) all its assets from the Portfolio at
any time if the Board of Trustees of the Trust determines that it is in the
best interest of the Fund to do so. In the event the Fund withdraws all of its
assets from the Portfolio, or the Board of Trustees of the Trust determines
that the investment objective of the Portfolio is no longer consistent with
the investment objective of the Fund, such Trustees would consider what action
might be taken, including investing the assets of the Fund in another pooled
investment entity or retaining an investment adviser to manage the Fund's
assets in accordance with its investment objective. The Fund's investment
performance may be affected by a withdrawal of all its assets from the
Portfolio.
MANAGEMENT OF THE FUND AND THE PORTFOLIO
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EATON VANCE MANAGEMENT ("EATON VANCE") ACTS AS THE SPONSOR AND MANAGER OF THE
FUND AND THE ADMINISTRATOR OF THE PORTFOLIO. THE PORTFOLIO HAS ENGAGED LLOYD
GEORGE MANAGEMENT (HONG KONG) LIMITED ("LGM-HK") AS ITS INVESTMENT ADVISER.
Pursuant to a service agreement effective on January 1, 1996 between LGM-HK
and its affiliate Lloyd George Investment Management (Bermuda) Limited ("LGIM-
B"), LGIM-B, acting under the general supervision of the Portfolio's Trustees,
manages the Portfolio's investments and affairs. LGM-HK supervises LGIM-B's
performance of this function and retains its contractual obligations under its
investment advisory agreement with the Portfolio. LGM-HK and LGIM-B are
referred to collectively as the Advisers. The Portfolio is managed by Adaline
Mang-Yee Ko.
Each Adviser is registered as an investment adviser with the Securities and
Exchange Commission (the "Commission"). Each Adviser is a subsidiary of Lloyd
George Management (B.V.I.) Limited ("LGM"). LGM and its subsidiaries act as
investment adviser to various individual and institutional clients with total
assets under management of approximately $1.5 billion. Eaton Vance's parent,
Eaton Vance Corp., owns 24% of the Class A shares issued by LGM.
LGM was established in 1991 to provide investment management services with
respect to equity securities of companies trading in Asian securities markets,
especially those of emerging markets. LGM currently manages Pacific Basin and
Asian portfolios for both private clients and institutional investors seeking
long-term capital growth. LGM's core investment team consists of nine
experienced investment professionals, based in Hong Kong, who have worked
together over a number of years successfully managing client portfolios in
Pacific Basin and Asian stock markets. LGM also has offices in Bombay, India
and London, England. The team has a unique knowledge of, and experience with,
Pacific Basin and Asian emerging markets. LGM is ultimately controlled by the
Hon. Robert J.D. Lloyd George, President and Trustee of the Portfolio and
Chairman and Chief Executive Officer of the Advisers. LGM's only activity is
portfolio management.
LGM and the Advisers have adopted a disciplined management style, providing a
blend of Asian and multinational expertise with the most rigorous
international standards of fundamental security analysis. Although focused
primarily in Asia, LGM and the Advisers maintain a network of international
contacts in order to monitor international economic and stock market trends
and offer clients a global management service. Personnel of the Advisers
include the following:
THE HONOURABLE ROBERT LLOYD GEORGE. Chairman. Born in London in 1952 and
educated at Eton College, where he was a King's Scholar, and at Oxford
University. Prior to founding LGM, Mr. Lloyd George was Managing Director of
Indosuez Asia Investment Services Ltd. Previously, he spent four years with
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 three books --
"A Guide to Asian Stock Markets" (Longmans, Hong Kong, 1989), "The East West
Pendulum" (Woodhead-Faulkner, Cambridge, 1991) and "North South - an Emerging
Markets Handbook" (Probus, England, 1994).
WILLIAM WALTER RALEIGH KERR. Finance Director and Chief Operating Officer.
Born in 1950 and educated at Ampleforth and Oxford. Mr. Kerr qualified as a
Chartered Accountant at Thomson McLintock & Co. before joining The Oldham
Estate Company plc as Financial Controller. Prior to joining LGM, Mr. Kerr was
a Director of Banque Indosuez's corporate finance subsidiary, Financiere
Indosuez Limited, in London. Prior to that Mr. Kerr worked for First Chicago
Limited.
SCOBIE DICKINSON WARD. Director. Born in 1966 and a cum laude graduate of both
Phillips Academy Andover, and Harvard University. Mr. Ward joined Indosuez
Asia Investment Services in 1989, where he managed the $100 million Himalayan
Fund, and the Indosuez Tasman Fund, investing in Australia and New Zealand.
Messrs. Ward and Lloyd George manage Eaton Vance's Emerging Markets Portfolio
and South Asia Portfolio (which invests in India and the Indian subcontinent).
M. F. TANG. Director. Born in 1946 and educated in Hong Kong. Mr. Tang is a
Fellow of the Chartered Association of Certified Accountants. Mr. Tang joined
LGM having worked for Australian Mutual Provident Society in Sydney where he
was a Portfolio Manager responsible for Asian Equities. Prior thereto Mr. Tang
worked for Barclays Australia Investment Services Ltd. From 1978 to 1986 Mr.
Tang worked for Barings International Investment Management and prior to that
he spent six years with Peat Marwick Mitchell & Co. Mr. Tang is fluent in the
Cantonese and Mandarin dialects of the Chinese language.
PAMELA CHAN. Director. Born in Hong Kong in 1957 and graduated from Mills
College in Oakland, California. She was an investment executive for Jardine
Fleming from 1982-1984 before moving to Australia where she worked as a Fund
Manager for Rothschild and Aetna. She joined Sun Life Assurance Society PLC in
England in 1987 where she was the head of South East Asian Equities and a
Director. She joined LGM in April 1994 where she is a portfolio manager and a
member of the Pension Management Committee.
ADALINE MANG-YEE KO. Director. Born in 1943 and educated at University of
Birmingham, England and at London Business School where she received her MBA.
Ms. Ko has over 13 years experience working with Far East Asian equities. From
1982-1988, she worked at Save & Prosper Group Ltd. as an investment manager.
In 1988, Ms. Ko transferred to Robert Fleming & Co. Ltd. In 1990, she was
promoted to Director of Fleming Investment Management Ltd. In 1992, she was
promoted to Head of the Pacific Region Portfolios Group where she supervised a
team of 5 with responsibility for over $1.5 billion in assets under
management. Ms. Ko joined LGM in 1995.
While the Portfolio is a New York trust, the Advisers, together with certain
Trustees and officers of the Portfolio, are not residents of the United
States, and substantially all of their respective assets may be located
outside of the United States. It may be difficult for investors to effect
service of process within the United States upon the individuals identified
above, or to realize judgments of courts of the United States predicated upon
civil liabilities of the Advisers and such individuals under the federal
securities laws of the United States. The Portfolio has been advised that
there is substantial doubt as to the enforceability in the countries in which
the Adviser and such individuals reside of such civil remedies and criminal
penalties as are afforded by the federal securities laws of the United States.
Since January 1, 1996, LGM-HK pays to LGIM-B the entire amount of the advisory
fee payable by the Portfolio under its investment advisory agreement with LGM-
HK. Under this agreement, LGM-HK is entitled to receive a monthly advisory fee
of 0.0625% (equivalent to 0.75% annually) of the average daily net assets of
the Portfolio up to $500 million, which fee declines at intervals above $500
million. As at August 31, 1996, the Portfolio had net assets of $510,297,559.
For the fiscal year ended August 31, 1996, the Portfolio paid LGM-HK advisory
fees equivalent to 0.74% of the Portfolio's average daily net assets for such
period.
LGIM-B also furnishes for the use of the Portfolio office space and all
necessary office facilities, equipment and personnel for servicing the
investments of the Portfolio. LGIM-B places the portfolio securities
transactions of the Portfolio with many broker-dealer firms and uses its best
efforts to obtain execution of such transactions at prices which are
advantageous to the Portfolio and at reasonably competitive commission rates.
Subject to the foregoing, LGIM-B may consider sales of shares of the Fund as a
factor in the selection of firms to execute portfolio transactions. The Fund,
the Portfolio and the Advisers have adopted Codes of Ethics relating to
personal securities transactions. The Codes permit Eaton Vance personnel to
invest in securities (including securities that may be purchased or held by
the Portfolio) for their own accounts, subject to certain reporting and other
restrictions and procedures contained in such Codes.
EATON VANCE, ITS AFFILIATES AND ITS PREDECESSOR COMPANIES HAVE BEEN MANAGING
ASSETS OF INDIVIDUALS AND INSTITUTIONS SINCE 1924, AND MANAGING INVESTMENT
COMPANIES SINCE 1931. EATON VANCE ACTS AS INVESTMENT ADVISER TO INVESTMENT
COMPANIES AND VARIOUS INDIVIDUAL AND INSTITUTIONAL CLIENTS WITH ASSETS UNDER
MANAGEMENT OF OVER $16 BILLION. Eaton Vance is a wholly-owned subsidiary of
Eaton Vance Corp., a publicly-held holding company which through its
subsidiaries and affiliates engages primarily in investment management,
administration and marketing activities. The Principal Underwriter is a
wholly-owned subsidiary of Eaton Vance.
Eaton Vance, acting under the general supervision of the Boards of Trustees of
the Trust and the Portfolio, manages and administers the business affairs of
the Fund and the Portfolio. Eaton Vance's services include monitoring and
providing reports to the Trustees of the Trust and the Portfolio concerning
the investment performance achieved by the Adviser for the Portfolio,
recordkeeping, preparation and filing of documents required to comply with
federal and state securities laws, supervising the activities of the transfer
agent of the Fund and the custodian of the Portfolio, providing assistance in
connection with Trustees' and shareholders' meetings and other management and
administrative services necessary to conduct the business of the Fund and the
Portfolio. Eaton Vance also furnishes for the use of the Fund and the
Portfolio office space and all necessary office facilities, equipment and
personnel for managing and administering the business affairs of the Fund and
the Portfolio. Eaton Vance does not provide any investment management or
advisory services to the Portfolio or the Fund.
Under its management contract with the Fund, Eaton Vance receives a monthly
fee in the amount of 1/48 of 1% (equal to 0.25% annually) of the average
daily net assets of the Fund up to $500 million, which fee declines at
intervals above $500 million. As of August 31, 1996, the Fund had net assets
of $18,802,394. For the fiscal year ended August 31, 1996, Eaton Vance earned
management fees equivalent to 0.25% of the Fund's average daily net assets for
such period. In addition, under its administration agreement with the
Portfolio, Eaton Vance receives a monthly fee in the amount of 1/48 of 1%
(equal to 0.25% annually) of the average daily net assets of the Portfolio up
to $500 million, which fee declines at intervals above $500 million. For the
fiscal year ended August 31, 1996, Eaton Vance earned administration fees from
the Portfolio equivalent to 0.25% of the Portfolio's average daily net assets
for such period.
The Fund and the Portfolio, as the case may be, will each be responsible for
all respective costs and expenses not expressly stated to be payable by the
Advisers under the investment advisory agreement and Eaton Vance under the
management contract or the administration agreement or by the Principal
Underwriter under the distribution agreement.
DISTRIBUTION 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
6.25% 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. On sales of shares made prior to January 30, 1995, the Principal
Underwriter currently pays monthly sales commissions to a financial service
firm (an "Authorized Firm") in amounts anticipated to be equivalent to .75%,
annualized, of the assets maintained in the Fund by the customers of such
Firm. On sales of shares made on January 30, 1995 and thereafter, the
Principal Underwriter currently expects to pay to an Authorized Firm (a) sales
commissions (except on exchange transactions and reinvestments) at the time of
sale equal to .75% of the purchase price of the shares sold by such Firm, and
(b) monthly sales commissions approximately equivalent to 1/12 of .75% of the
value of shares sold by such Firm and remaining outstanding for at least one
year. The Plan is designed to permit an investor to purchase Fund shares
through an Authorized Firm without incurring an initial sales charge and at
the same time permit the Principal Underwriter to compensate Authorized Firms
in connection with the sale of Fund shares.
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 and less
all amounts theretofore paid to the Principal Underwriter by LGIM-B in
consideration of the former's distribution efforts. 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 made to the Principal
Underwriter pursuant to the Plan and from LGIM-B in consideration of the
distribution efforts, 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 commissions attributable to a sale of Fund shares to be
accrued and paid by the Fund to the Principal Underwriter in fiscal years
subsequent to the year in which such shares were sold. This spreading of sales
commissions payments under the Plan over an extended period would result in
the incurrence and payment of increased distribution fees under the Plan.
During the fiscal year ended August 31, 1996, the Fund paid or accrued sales
commissions under the Plan equivalent to .75% (annualized) of the Fund's
average daily net assets. As at August 31, 1996, the outstanding Uncovered
Distribution Charges of the Principal Underwriter calculated under the Plan
amounted to approximately $2,909,000 (which amount was equivalent to 15.5% of
the Fund's net assets on such day).
THE PLAN ALSO AUTHORIZES THE FUND TO MAKE PAYMENTS OF SERVICE FEES TO THE
PRINCIPAL UNDERWRITER, AUTHORIZED FIRMS AND OTHER PERSONS IN AMOUNTS NOT
EXCEEDING .25% OF THE FUND'S AVERAGE DAILY NET ASSETS FOR EACH FISCAL YEAR.
The Trustees of the Trust have initially implemented this provision of the
Plan by authorizing the Fund to make monthly service fee payments to the
Principal Underwriter in amounts not expected to exceed .25% of the Fund's
average daily net assets for each fiscal year. The Fund accrues the service
fee daily at the rate of 1/365 of .25% of the Fund's net assets. On sales of
shares made prior to January 30, 1995, the Principal Underwriter currently
makes monthly service fee payments to an Authorized Firm in amounts
anticipated to be equivalent to .25%, annualized, of the assets maintained in
the Fund by the customers of such Firm. On sales of shares made on January 30,
1995 and thereafter, the Principal Underwriter currently expects to pay to an
Authorized Firm (a) a service fee (except on exchange transactions and
reinvestments) at the time of sale equal to .25% of the purchase price of the
shares sold by such Firm, and (b) monthly service fees approximately
equivalent to 1/12 of .25% of the value of shares sold by such Firm and
remaining outstanding for at least one year. During the first year after a
purchase of Fund shares, the Principal Underwriter will retain the service fee
as reimbursement for the service fee payment made to the Authorized Firm at
the time of sale. As permitted by the NASD Rule, all service fee payments are
made for personal services and/or the maintenance of shareholder accounts.
Service fees are separate and distinct from the sales commissions and
distribution fees payable by the Fund to the Principal Underwriter, and as
such are not subject to automatic discontinuance when there are no outstanding
Uncovered Distribution Charges of the Principal Underwriter. For the fiscal
year ended August 31, 1996, the Fund paid or accrued service fees under the
Plan equivalent to 0.25% (annualized) of the Fund's average daily net assets
for such period.
The Principal Underwriter may, from time to time, at its own expense, provide
additional incentives to Authorized Firms which employ registered
representatives who sell Fund shares and/or shares of other funds distributed
by the Principal Underwriter. In some instances, such additional incentives
may be offered only to certain Authorized Firms whose representatives sell or
are expected to sell significant amounts of shares. In addition, the Principal
Underwriter may from time to time increase or decrease the sales commissions
payable to Authorized Firms.
Distribution of Fund shares by the Principal Underwriter will also be
encouraged by the payment by LGIM-B to the Principal Underwriter of amounts
equivalent to .125% of the Fund's annual average daily net assets. Such
payments will be made from LGIM-B's own resources, not Fund assets. The
aggregate amounts of such payments are a deduction in calculating the
outstanding Uncovered Distribution Charges of the Principal Underwriter under
the Plan and, therefore, will benefit Fund shareholders when such charges
exist. Such payments will be made in consideration of the Principal
Underwriter's distribution efforts.
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, and the volume of sales and redemptions of Fund
shares and the amount of Uncovered Distribution Charges of the Principal
Underwriter. The Plan may continue in effect and payments may be made under
the Plan following any such suspension, discontinuance or limitation of the
offering of Fund shares; however, the Fund is not contractually obligated to
continue the Plan for any particular period of time. Suspension of the
offering of Fund shares would not, of course, affect a shareholder's ability
to redeem shares.
VALUING FUND SHARES
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THE FUND VALUES ITS SHARES ONCE ON EACH DAY THE NEW YORK STOCK EXCHANGE (THE
"EXCHANGE") IS OPEN FOR TRADING, as of the close of regular trading on the
Exchange (normally 4:00 p.m. New York time). The Fund's net asset value per
share is determined by its custodian, Investors Bank & Trust Company ("IBT"),
(as agent for the Fund), in the manner authorized by the Trustees of the
Trust. Net asset value is computed by dividing the value of the Fund's total
assets, less its liabilities, by the number of shares outstanding. Because the
Fund invests its assets in an interest in the Portfolio, the Fund's net asset
value will reflect the value of its interest in the Portfolio (which, in turn,
reflects the underlying value of the Portfolio's assets and liabilities).
Authorized Firms must communicate an investor's order to the Principal
Underwriter prior to the close of the Principal Underwriter's business day to
receive that day's net asset value per share and the public offering price
based thereon. It is the Authorized Firms' responsibility to transmit orders
promptly to the Principal Underwriter.
The Portfolio's net asset value is also determined as of the close of regular
trading on the Exchange by IBT (as custodian and agent for the Portfolio)
based on market or fair value in the manner authorized by the Trustees of the
Portfolio. Exchange listed securities generally are valued at closing sale
prices. Net asset value is computed by subtracting the liabilities of the
Portfolio from the value of its total assets. For further information
regarding the valuation of the Portfolio's assets, see "Determination of Net
Asset Value" in the Statement of Additional Information.
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 net asset value per share of the Fund next determined after an
order is effective. An Authorized Firm may charge its customers a fee in
connection with transactions executed by that Firm. The 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: First
Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123. The
$1,000 minimum initial investment is waived for Bank Automated Investing
accounts, which may be established with an investment of $50 or more. See
"Eaton Vance Shareholder Services".
In connection with employee benefit or other continuous group purchase plans
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 on the day of their receipt or as soon thereafter as
possible. The number of Fund shares to be issued in exchange for securities
will be the aggregate proceeds from the sale of such securities, divided by
the applicable net asset value per Fund share on the day such proceeds are
received. Eaton Vance will use reasonable efforts to obtain the then current
market price for such securities, but does not guarantee the best available
price. Eaton Vance will absorb any transaction costs, such as commissions, on
the sale of the securities.
Securities determined to be acceptable should be transferred via book entry or
physically delivered, in proper form for transfer, through an Authorized Firm,
together with a completed and signed Letter of Transmittal in approved form
(available from Authorized Firms), as follows:
IN THE CASE OF BOOK ENTRY:
Deliver through Depository Trust Co.
Broker #2212
Investors Bank &Trust Company
For A/C EV Classic Greater China Growth Fund
IN THE CASE OF PHYSICAL DELIVERY:
Investors Bank & Trust Company
Attention: EV Classic Greater China Growth Fund
Physical Securities Processing Settlement Area
89 South Street
Boston, MA 02111
Investors who are contemplating an exchange of securities for shares of the
Fund, or their representatives, must contact Eaton Vance to determine whether
the securities are acceptable before forwarding such securities. Eaton Vance
reserves the right to reject any securities. Exchanging securities for Fund
shares may create a taxable gain or loss. Each investor should consult his or
her tax adviser with respect to the particular federal, state and local tax
consequences of exchanging securities for Fund shares.
IF YOU DON'T HAVE AN AUTHORIZED FIRM, EATON VANCE CAN RECOMMEND ONE.
HOW TO REDEEM FUND SHARES
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A SHAREHOLDER MAY REDEEM FUND SHARES IN ONE OF THREE WAYS - BY MAIL, BY
TELEPHONE OR THROUGH AN AUTHORIZED FIRM. The redemption price will be based on
the net asset value per Fund share next computed after a redemption request is
received in the proper form as described below.
REDEMPTION BY MAIL: Shares may be redeemed by delivering to the Transfer
Agent, First Data Investor Services Group, P.O. Box 5123, Westborough, MA
01581-5123, during its business hours a written request for redemption in good
order, plus any share certificates with executed stock powers. Good order
means that all relevant documents must be endorsed by the record owner(s)
exactly as the shares are registered and the signature(s) must be guaranteed
by a member of either the Securities Transfer Association's STAMP program or
the New York Stock Exchange's Medallion Signature Program, or certain banks,
savings and loan institutions, credit unions, securities dealers, securities
exchanges, clearing agencies and registered securities associations as
required by a regulation of the Commission and acceptable to the Transfer
Agent. In addition, in some cases, good order may require the furnishing of
additional documents such as where shares are registered in the name of a
corporation, partnership or fiduciary.
REDEMPTION BY TELEPHONE: Shares may be redeemed by telephone provided the
investor has not disclaimed in writing the use of the privilege. Such
redemptions can be effected by calling the Transfer Agent at 800-262-1122,
Monday through Friday, 9:00 a.m. to 4:00 p.m. (Eastern Standard Time). The
proceeds of a telephone redemption may be no greater than the maximum amount
established by the Principal Underwriter (currently $50,000) and may be mailed
only to the account address of record. Shares held by corporations, trusts or
certain other entities, or subject to fiduciary arrangements, may not be
redeemed by telephone. Neither the Fund, the Principal Underwriter nor the
Transfer Agent will be responsible for the authenticity of redemption
instructions received by telephone, provided that reasonable procedures to
confirm that instructions communicated by telephone are genuine have been
followed. Telephone instructions will be tape recorded. In times of drastic
economic or market changes, a telephone redemption may be difficult to
implement.
REDEMPTION THROUGH AN AUTHORIZED FIRM: To sell shares at their net asset value
through an Authorized Firm (a repurchase), a shareholder can place a
repurchase order with the Authorized Firm, which may charge a fee. The value
of such shares is based upon the net asset value calculated after the
Principal Underwriter, as the Fund's agent, receives the order. It is the
Authorized Firm's responsibility to transmit promptly repurchase orders to the
Principal Underwriter. Throughout this Prospectus, the word "redemption" is
generally meant to include a repurchase.
Within seven days after receipt of a redemption request in good order by the
Transfer Agent, the 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 charge (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.
If shares were recently purchased, the proceeds of a redemption will not be
sent until the check (including a certified or cashier's check) received for
the shares purchased has cleared. Payment for shares tendered for redemption
may be delayed up to 15 days from the purchase date when the purchase check
has not yet cleared. Redemptions may result in a taxable gain or loss.
Due to the high cost of maintaining small accounts, the Fund reserves the
right to redeem accounts with balances of less than $750. Prior to such a
redemption, shareholders will be given 60 days' written notice to make
additional purchases. However, no such 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 year of
their purchase (except shares acquired through the reinvestment of
distributions) generally will be subject to a contingent deferred sales charge
("CDSC") equal to 1% of the net asset value of the redeemed shares. This CDSC
is imposed on any redemption, the amount of which exceeds the aggregate value
at the time of redemption of (a) all shares in the account purchased more than
one year prior to the redemption, (b) all shares in the account acquired
through reinvestment of distributions and (c) the increase, if any, of value
in the other shares in the account (namely those purchased within the year
preceding the redemption) over the purchase price of such shares. Redemptions
are processed in a manner to maximize the amount of redemption proceeds which
will not be subject to a CDSC. That is, each redemption will be assumed to
have been made first from the exempt amounts referred to in clauses (a), (b)
and (c) above, and second through liquidation of those shares in the account
referred to in clause (c) on a first-in-first-out basis. As described under
"Distribution Plan," the CDSC will be paid to the Principal Underwriter or the
Fund.
In calculating the CDSC upon the redemption of Fund shares acquired in an
exchange for shares of a fund currently listed under "The Eaton Vance Exchange
Privilege," the purchase of Fund shares acquired in the exchange is deemed to
have occurred at the time of the original purchase of exchanged shares.
No CDSC will be imposed on shares of the Fund which have been sold to Eaton
Vance or its affiliates, or to their respective employees or clients. The CDSC
will also be waived for shares redeemed (1) pursuant to a Withdrawal Plan (see
"Eaton Vance Shareholder Services"), (2) as part of a distribution from a
retirement plan qualified under Section 401, 403(b) or 457 of the Internal
Revenue Code of 1986, as amended (the "Code"), or (3) as part of a minimum
required distribution from other tax-sheltered retirement plans.
REPORTS TO SHAREHOLDERS
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THE FUND WILL ISSUE TO ITS SHAREHOLDERS SEMI-ANNUAL AND ANNUAL REPORTS
CONTAINING FINANCIAL STATEMENTS. Financial statements included in annual
reports are audited by the Fund's independent certified public accountants.
Shortly after the end of each calendar year, the Fund will furnish its
shareholders with information necessary for preparing federal and state income
tax returns.
THE LIFETIME INVESTING ACCOUNT/DISTRIBUTION OPTIONS
- ------------------------------------------------------------------------------
AFTER AN INVESTOR MAKES AN INITIAL PURCHASE OF FUND SHARES, THE TRANSFER AGENT
WILL SET UP A LIFETIME INVESTING ACCOUNT FOR THE INVESTOR ON THE FUND'S
RECORDS. This account is a complete record of all transactions between the
investor and the Fund which at all times shows the balance of shares owned.
The Fund will not issue share certificates except upon request.
Each time a transaction takes place in a shareholder's account, the
shareholder will receive a statement showing complete details of the
transaction and the current balance in the account. (Under certain investment
plans, statements may be sent only quarterly). THE LIFETIME INVESTING ACCOUNT
ALSO PERMITS A SHAREHOLDER TO MAKE ADDITIONAL INVESTMENTS IN SHARES BY SENDING
A CHECK FOR $50 OR MORE to the Transfer Agent.
Any questions concerning a shareholder's account or services available may be
directed by telephone to EATON VANCE SHAREHOLDER SERVICES at 800-225-6265,
extension 2, or in writing to the Transfer Agent, First Data Investor Services
Group, P.O. Box 5123, Westborough, MA 01581-5123 (please provide the name of
the shareholder, the Fund and the account number).
THE FOLLOWING DISTRIBUTION OPTIONS WILL BE AVAILABLE TO ALL LIFETIME INVESTING
ACCOUNTS and may be changed as often as desired by written notice to the
Fund's dividend disbursing agent, First Data Investor Services Group, P.O. Box
5123, Westborough, MA 01581-5123. The currently effective option will appear
on each account statement.
Share Option -- Dividends and capital gains will be reinvested in additional
shares.
Income Option -- Dividends will be paid in cash, and capital gains will be
reinvested in additional shares.
Cash Option -- Dividends and capital gains will be paid in cash.
The Share Option will be assigned if no other option is specified.
Distributions, including those reinvested, will be reduced by any withholding
required under the federal income tax laws.
If the Income Option or Cash Option has been selected, dividend and/or capital
gains distribution checks which are returned by the United States Postal
Service as not deliverable or which remain uncashed for six months or more
will be reinvested in the account in shares at the then current net asset
value. Furthermore, the distribution option on the account will be
automatically changed to the Share Option until such time as the shareholder
selects a different option.
DISTRIBUTION INVESTMENT OPTION. In addition to the distribution options set
forth above, dividends and/or capital gains may be invested in additional
shares of another Eaton Vance fund. Before selecting this option, a
shareholder should obtain a prospectus of the other Eaton Vance fund and
consider its objectives and policies carefully.
"STREET NAME" ACCOUNTS. If shares of a Fund are held in a "street name"
account with an Authorized Firm, all recordkeeping, transaction processing and
payments of distributions relating to the beneficial owner's account will be
performed by the Authorized Firm, and not by the Fund and its Transfer Agent.
Since the Fund will have no record of the beneficial owner's transactions, a
beneficial owner should contact the Authorized Firm to purchase, redeem or
exchange shares, to make changes in or give instructions concerning the
account, or to obtain information about the account. The transfer of shares in
a "street name" account to an account with another dealer or to an account
directly with 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.
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 Classic Group of Funds or Eaton Vance Money Market
Fund, which are distributed subject to a CDSC (or equivalent early withdrawal
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 Transfer Agent 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 Transfer Agent for additional information concerning the
exchange privilege. Applications and prospectuses of other funds are available
from Authorized Firms or the Principal Underwriter. The prospectus for each
fund describes its investment objectives and policies, and shareholders should
obtain a prospectus and consider these objectives and policies carefully
before requesting an exchange.
No CDSC is imposed on exchanges. For purposes of calculating the CDSC upon the
redemption of shares acquired in an exchange, the 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.
Shares of the other funds in the Eaton Vance Classic Group of Funds (and
shares of Eaton Vance Money Market Fund acquired as the result of an exchange
from an EV Classic fund) may be exchanged for Fund shares on the basis of the
net asset values 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 Transfer Agent provided that the
investor has not disclaimed in writing the use of the privilege. To effect
such exchanges, call the Transfer Agent at 800-262-1122. Monday through
Friday, 9:00 a.m. to 4:00 p.m. (Eastern Standard Time). Shares acquired by
telephone exchange must be registered in the same name(s) and with the same
address as the shares being exchanged. Neither the Fund, the Principal
Underwriter nor the Transfer Agent will be responsible for the authenticity of
exchange instructions received by telephone, provided that reasonable
procedures to confirm that instructions communicated are genuine have been
followed. Telephone instructions will be tape recorded. In times of drastic
economic or market changes, a telephone exchange may be difficult to
implement. An exchange may result in a taxable gain or loss.
EATON VANCE SHAREHOLDER SERVICES
- ------------------------------------------------------------------------------
THE 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
Classic Greater China Growth Fund may be mailed directly to the Transfer
Agent, First Data Investor Services Group, P.O. Box 5123, Westborough, MA
01581-5123 at any time -- whether or not distributions are reinvested. The
name of the shareholder, the Fund and the account number should accompany each
investment.
BANK AUTOMATED INVESTING -- FOR REGULAR SHARE ACCUMULATION: Cash investments
of $50 or more may be made automatically each month or quarter from a
shareholder's bank account. The $1,000 minimum initial investment and small
account redemption policy are waived for these accounts.
WITHDRAWAL PLAN: A shareholder may draw on shareholdings systematically with
monthly or quarterly checks 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 CDSC. See "How to Redeem Fund Shares." A
minimum deposit of $5,000 in shares is required.
REINVESTMENT PRIVILEGE: A shareholder who has redeemed shares may reinvest,
with credit for any CDSCs paid on the redeemed shares, any portion or all of
the redemption proceeds (plus that amount necessary to acquire a fractional
share to round off the purchase to the nearest full share) in shares of the
Fund, provided that the reinvestment is effected within 60 days after such
redemption, and the privilege has not been used more than once in the prior 12
months. Shares are sold to a reinvesting shareholder at the next determined
net asset value following timely receipt of a written purchase order by the
Principal Underwriter or by the 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 certain tax-sheltered retirement plans. Detailed
information concerning these plans, including certain exceptions to minimum
investment requirements, and copies of the plans are available from the
Principal Underwriter. This information should be read carefully and
consultation with an attorney or tax adviser may be advisable. The information
sets forth the service fee charged for retirement plans and describes the
federal income tax consequences of establishing a plan. Participant accounting
services (including trust fund reconciliation services) will be offered only
through third party record keepers and not by the Principal Underwriter. Under
all plans, dividends and distributions will be automatically reinvested in
additional shares.
DISTRIBUTIONS AND TAXES
- ------------------------------------------------------------------------------
DISTRIBUTIONS. It is the present policy of the Fund to make (A) at least one
distribution annually (normally in December) of all or substantially all of
the investment income allocated to the Fund by the Portfolio (less the Fund's
direct and allocated expenses), and (B) at least one distribution annually of
all or substantially all of the net realized capital gains (if any) allocated
to the Fund by the Portfolio (reduced by any available capital loss
carryforwards from prior years). Shareholders may reinvest all distributions
in shares of the Fund without a sales charge at the per share net asset value
as of the close of business on the record date.
The Fund's investment income consists of the Fund's allocated share of the net
investment income of the Portfolio, less all actual and accrued expenses of
the Fund determined in accordance with generally accepted accounting
principles. The Portfolio's net investment income consists of all income
accrued on the Portfolio's assets, less all actual and accrued expenses of the
Portfolio determined in accordance with generally accepted accounting
principles. The Fund's net realized capital gains, if any, consist of the net
realized capital gains (if any) allocated to the Fund by the Portfolio for tax
purposes, after taking into account any available capital loss carryovers.
TAXES. Distributions by the Fund from 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 that the Fund designates as from its net long-term
capital gains 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 relating to the sources of its income, the
distribution of its income, and the diversification of its assets. In
satisfying these requirements, the Fund will treat itself as owning its
proportionate share of each of the Portfolio's assets and as entitled to the
income of the Portfolio properly attributable to such share.
As a regulated investment company under the Code, the Fund does not pay
federal income or excise tax 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 tax.
Income or gain realized by the Portfolio from certain investments 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 the
Fund's taxable year consists of stock or securities in foreign corporations.
The Fund will send a written notice of any such election (not later than 60
days after the close of its taxable year) to each shareholder indicating the
amount to be treated as the shareholder's proportionate share of such taxes.
Availability of foreign tax credits or deductions for shareholders is subject
to certain additional restrictions and limitations under the Code.
The Fund will provide its shareholders annually with tax information notices
and Forms 1099 to assist in the preparation of their federal and state tax
returns for the prior calendar year's distributions, proceeds from the
redemption or exchange of Fund shares, and federal income tax (if any)
withheld by the Fund's Transfer Agent.
Shareholders should consult with their tax advisors concerning the
applicability of state, local or other taxes to an investment in the Fund.
PERFORMANCE INFORMATION
- ------------------------------------------------------------------------------
FROM TIME TO TIME, THE FUND MAY ADVERTISE ITS AVERAGE ANNUAL TOTAL RETURN.
The Fund's average annual total return is determined by multiplying a
hypothetical initial purchase 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 distributions paid
and reinvested) for the stated period and annualizing the result. The average
annual total return calculation assumes that all distributions are reinvested
at net asset value on the reinvestment dates during the period. The average
annual total return calculation assumes a complete redemption of the
investment and the deduction of any CDSC at the end of the period. The Fund
may also publish annual and cumulative total return figures from time to time.
The Fund may use such total return figures, together with comparisons with the
Consumer Price Index, various domestic and foreign securities indices and
performance studies prepared by independent organizations, in advertisements
and in information furnished to present or prospective shareholders. The Fund
may also quote total return for the period prior to commencement of operations
which would reflect the Portfolio's total return (or that of its predecessor)
adjusted to reflect any applicable Fund sales charge.
The Fund may also publish total return figures which do not take into account
any CDSC which may be imposed upon redemptions at the end of the specified
period. Any performance figure which does not take into account the CDSC 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.
The following chart reflects the annual investment returns of the Fund for one
year periods ending August 31 and does not take into account the CDSC which
investors may bear. The total return for the period prior to the Fund's
commencement of operations on December 28, 1993 reflects the total return of
the Portfolio (or that of its predecessor) which had different operating
expenses.
LIFE OF FUND AVERAGE ANNUAL TOTAL RETURN -- 10.75%
1993(1) 24.50%
1994 26.58%
1995 (9.85)%
1996 4.19%
(1) From the start of business, October 28, 1992, to August 31, 1993
<PAGE>
[Logo]
EATON VANCE EV CLASSIC GREATER CHINA
================
Mutual Funds GROWTH FUND
- --------------------------------------------------------------------------------
PROSPECTUS
JANUARY 1, 1997
EV CLASSIC GREATER CHINA
GROWTH FUND
24 FEDERAL STREET
BOSTON, MA 02110
- --------------------------------------------------------------------------------
SPONSOR AND MANAGER OF EV CLASSIC GREATER CHINA GROWTH FUND
ADMINISTRATOR OF GREATER CHINA GROWTH PORTFOLIO
Eaton Vance Management, 24 Federal Street, Boston, MA 02110
ADVISER OF GREATER CHINA GROWTH PORTFOLIO
Lloyd George Investment Management (Bermuda) Limited, 3808 One Exchange Square,
Central, Hong Kong
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc., 24 Federal Street,
Boston, MA 02110 (800) 225-6265
CUSTODIAN
Investors Bank & Trust Company, 89 South Street, Boston, MA 02111
TRANSFER AGENT
First Data Investor Services Group, P.O. Box 5123,
Westborough, MA 01581-5123 (800) 262-1122
AUDITORS
Deloitte & Touche LLP, 125 Summer Street, Boston, MA 02110
C-CGP
<PAGE>
Part A
Information Required in a Prospectus
EV MARATHON
GREATER CHINA GROWTH FUND
- ------------------------------------------------------------------------------
EV MARATHON GREATER CHINA GROWTH FUND (THE "FUND") IS A MUTUAL FUND SEEKING
LONG-TERM CAPITAL APPRECIATION THROUGH INVESTMENT IN EQUITY SECURITIES OF
COMPANIES WHICH, IN THE OPINION OF THE INVESTMENT ADVISER, WILL BENEFIT FROM THE
ECONOMIC DEVELOPMENT AND GROWTH OF THE PEOPLE'S REPUBLIC OF CHINA. THE FUND
INVESTS ITS ASSETS IN GREATER CHINA GROWTH PORTFOLIO (THE "PORTFOLIO"), A
DIVERSIFIED OPEN-END INVESTMENT COMPANY HAVING THE SAME INVESTMENT OBJECTIVE AS
THE FUND, RATHER THAN BY DIRECTLY INVESTING IN AND MANAGING ITS OWN PORTFOLIO OF
SECURITIES. A SIGNIFICANT PERCENTAGE OF THE PORTFOLIO WILL BE INVESTED IN THE
SECURITIES MARKETS OF COUNTRIES IN THE CHINA REGION, INCLUDING HONG KONG, CHINA,
TAIWAN, SOUTH KOREA, SINGAPORE, MALAYSIA, THAILAND, INDONESIA AND THE
PHILIPPINES. THE FUND IS A SEPARATE SERIES OF EATON VANCE GROWTH TRUST (THE
"TRUST").
Shares of the Fund are not deposits or obligations of, or guaranteed or endorsed
by, any bank or other insured depository institution, and are not federally
insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board
or any other government agency. Shares of the Fund involve investment risks,
including fluctuations in value and the possible loss of some or all of the
principal investment.
This Prospectus is designed to provide you with information you should know
before investing. Please retain this document for future reference. A Statement
of Additional Information for the Fund, dated January 1, 1997, 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 (the "Manager"). The Portfolio's investment adviser is Lloyd
George Investment Management (Bermuda) Limited (the "Adviser"). The principal
business address of the Adviser is 3808 One Exchange Square, Central, Hong Kong.
- ------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE PAGE
<S> <C> <C> <C>
Shareholder and Fund Expenses .......................... 2 How to Buy Fund Shares ............................. 16
The Fund's Financial Highlights ........................ 3 How to Redeem Fund Shares........................... 17
Investment Opportunities in the China Region ........... 5 Reports to Shareholders ............................ 19
The Fund's Investment Objective ........................ 6 The Lifetime Investing Account/Distribution
Investment Policies and Risks .......................... 7 Options .......................................... 19
Organization of the Fund and the Portfolio ............. 11 The Eaton Vance Exchange Privilege ................. 20
Management of the Fund and the Portfolio ............... 12 Eaton Vance Shareholder Services ................... 21
Distribution Plan ...................................... 14 Distributions and Taxes ............................ 22
Valuing Fund Shares..................................... 16 Performance Information ............................ 23
</TABLE>
- ------------------------------------------------------------------------------
PROSPECTUS DATED JANUARY 1, 1997
<PAGE>
SHAREHOLDER AND FUND EXPENSES
- ------------------------------------------------------------------------------
<TABLE>
SHAREHOLDER TRANSACTION EXPENSES
-----------------------------------------------------------------------------------------------------
<S> <C>
Sales Charges Imposed on Purchases of Shares None
Sales Charges Imposed on Reinvested Distributions None
Fees to Exchange Shares None
Range of Declining Contingent Deferred Sales Charges Imposed on Redemption
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)
-----------------------------------------------------------------------------------------------------
Management Fees 1.24%
Rule 12b-1 Distribution (and Service) Fees 0.97%
Other Expenses 0.42%
----
Total Operating Expenses 2.63%
====
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <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: $77 $122 $160 $296
An investor would pay the following expenses on the
same investment, assuming (a) 5% annual return and
(b) no redemptions: $27 $ 82 $140 $296
</TABLE>
NOTES:
The table and Example 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. Information
for the Fund is based on its expenses for the most recent fiscal year.
Management Fees include management fees paid by the Fund and investment advisory
and administration fees paid by the Portfolio of 0.25%, 0.74% and 0.25%,
respectively).
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 "The Fund's Financial Highlights", "Management of the Fund and the
Portfolio" and "How to Redeem Fund Shares." 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. See
"Distribution Plan".
No contingent deferred sales charge is imposed on (a) shares purchased more than
six years prior to redemption, (b) shares acquired through the reinvestment of
distributions or (c) any appreciation in value of other shares in the account
(see "How to Redeem Fund Shares"), and no such charge is imposed on exchanges of
Fund shares for one or more other funds listed under "The Eaton Vance Exchange
Privilege".
The Fund invests exclusively in the Portfolio. Other investment companies and
investors with different distribution arrangements are investing in the
Portfolio and others may do so in the future. See "Organization of the Fund
and the Portfolio".
<PAGE>
FUND'S FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------------
The following information should be read in conjunction with the audited
financial statements included in the Fund's annual report to shareholders which
is incorporated by reference into the Statement of Additional Information in
reliance upon the report of Deloitte & Touche LLP, independent certified public
accountants, as experts in accounting and auditing. Further information
regarding the performance of the Fund is contained in its annual report to
shareholders which may be obtained without charge by contacting the Principal
Underwriter.
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
--------------------------------------------------------------
1996 1995 1994 1993*
------ ------ ------ ------
<S> <C> <C> <C> <C>
NET ASSET VALUE, beginning of year $ 11.890 $ 13.160 $ 10.540 $10.000
-------- -------- -------- -------
Income (loss) from operations --
Net investment loss $ (0.087) $ (0.038) $ (0.039) $(0.015)
Net realized and unrealized gain
(loss) on investments 0.647 (1.157) 2.684 0.555
-------- -------- -------- -------
Total income (loss) from operations $ 0.560 $ (1.195) $ 2.645 $ 0.540
Less distributions --
In excess of net investment income(4) $ -- $ (0.065) $ -- $ --
In excess of net realized gain on
investment transactions -- (0.010) (0.025) --
-------- -------- -------- -------
Total distributions $ -- $ (0.075) $ (0.025) $ --
-------- -------- -------- -------
NET ASSET VALUE, end of year $ 12.450 $ 11.890 $ 13.160 $10.540
======== ======== ======== =======
TOTAL RETURN(1) 4.71% (9.06)% 25.08% 5.40%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $284,575 $324,258 $392,479 $63,672
Ratio of net expenses to average daily net
assets(2)(3) 2.63% 2.47% 2.38% 2.21%+
Ratio of net expenses to average daily net
assets after custodian fee reduction(2)(3) 2.57% -- -- --
Ratio of net investment loss to average
daily average net assets (0.51)% (0.02)% (0.55)% (1.44)%!
* For the period from the start of business, June 7, 1993, to August 31, 1993.
+ Computed on an annualized basis.
(1) Total return is calculated assuming a purchase at the net asset value on the first day and a sale at the net asset
value on the last day of each period reported. Distributions, if any, are assumed to be reinvested at the net
asset value on the record date. Total return is computed on a non-annualized basis.
(2) Includes the Fund's share of the Portfolio's allocated expenses.
(3) The expense ratios for the year ended August 31, 1996 have been adjusted to reflect a change in reporting requirements.
The new reporting guidelines require the Fund, as well as the Portfolio, to increase its expense ratio by the effect of any
expense offset arrangements with its service providers. The expense ratios for each of the periods ended on or before
August 31, 1995 have not been adjusted to reflect this change.
(4) The Fund has followed the Statement of Position (SOP) 93-2: Determination, Disclosure and Financial Statement Presentation
of Income, Capital Gain, and Return of Capital Distribution by Investment Companies. The SOP requires that differences in
the recognition or classification of income between the financial statements and tax earnings and profits that result
in temporary over-distributions for financial statement purposes, are classified as distributions in excess of net investment
income or accumulated net realized gains.
</TABLE>
<PAGE>
THE --------------------------------------------
CHINA
REGION
[MAP]
--------------------------------------------
CHINA'S --------------------------------------------
SPECIAL
ECONOMIC
ZONES
[MAP]
--------------------------------------------
<PAGE>
INVESTMENT OPPORTUNITIES IN THE CHINA REGION
- ------------------------------------------------------------------------------
THE FOLLOWING IS A GENERAL DISCUSSION OF THE ECONOMIES AND SECURITIES MARKETS IN
WHICH THE PORTFOLIO MAY INVEST. There can be no assurance that the Portfolio
will be able to capitalize on the factors described herein. Opinions expressed
herein are the good faith opinions of the Portfolio's Adviser, Lloyd George
Investment Management (Bermuda) Limited. Unless otherwise indicated, all amounts
are expressed in United States dollars.
Over the past twenty years the performance of the major Asian securities markets
has generally been better than that of markets in Europe and the United States.
For over five years, the newly emerging securities markets of the China Region
have demonstrated significant growth in market capitalization, in numbers of
listed securities and in the volume of transactions. Over the same period, the
underlying economies of the region have grown against a background of the high
savings rates characteristic of many Asian societies and generally moderate
inflation. According to the Asian Development Bank forecasts, the economies of
Southeast Asia, excluding Japan, are forecast to grow by 7.6% in 1997. The
following graph shows the average growth in gross domestic product ("GDP") from
1990 to 1996 for the main countries in Southeast Asia, compared with the United
States.
AVERAGE GROSS DOMESTIC PRODUCT GROWTH (1990-1996)
-------------------------------------------------
THAILAND 8.81%
CHINA 10.13%
MALAYSIA 8.77%
SINGAPORE 8.41%
SOUTH KOREA 7.80%
INDONESIA 7.90%
TAIWAN 6.47%
HONG KONG 5.10%
PHILIPPINES 2.79%
UNITED STATES 1.95%
-------------------------------------------------
SOURCE: LLOYD GEORGE MANAGEMENT (HONG KONG) LIMITED
A PARTICULARLY SIGNIFICANT FACTOR WITHIN THE REGION FOR MORE THAN A DECADE HAS
BEEN THE INCREASING INFLUENCE WHICH CHINA HAS HAD IN THE DETERMINATION OF THE
ECONOMIC DEVELOPMENT OF CERTAIN COUNTRIES. The links between China and Hong
Kong, between China and Taiwan and between China and other countries within the
region, where there is a significant Chinese element of the population, have by
now been strengthened to a degree which makes a reversal unlikely. Moreover,
although these links have been developed to a stage where economic co-operation
in trade operates smoothly, the full potential of the market, both in terms of
domestic consumption and of export growth, has hardly begun to be realized. This
potential presents investment opportunity for the Fund and the Portfolio.
CHINA'S POPULATION, ESTIMATED AT 1.3 BILLION, IS THE HIGHEST OF ANY COUNTRY IN
THE WORLD. China has had for many centuries a well deserved reputation for being
closed to foreigners, with trade with the outside world being carried on under
terms of extreme restriction and under central control. Such conditions were
maintained in the first thirty years of the Communist regime which began in
1949; however there have been several stages of evolution, from the institution
of an industrialization program in the 1950s to a modernization policy
commencing in 1978 which combined economic development with the beginnings of
opening the country to foreign investment and commerce. The economic plans
covering the last decade of the century include objectives to quadruple the
country's 1980 industrial and agricultural output by the year 2000, to increase
the export element of the economy and to continue to open the country with
further development of the designated special investment areas.
In order to attract foreign investment China has since 1978 designated certain
areas of the country where overseas investors can receive special investment
incentives and tax concessions. There are five Special Economic Zones (Shenzhen,
Shantou and Zhuhai in Guangdong Province, Xiamen in Fujian Province and Hainan
Island, which itself is a province). Fourteen coastal cities have been
designated as "open cities" and certain Open Economic Zones have been
established in coastal areas. Shanghai has established the Pudong New Area.
Twenty-seven High and New Technology Industrial Development Zones have been
approved where preferential treatment is given to enterprises which are
confirmed as technology intensive. As a result, foreign direct investment in
China has increased substantially in the last decade. The realized value of
foreign investment in China was over $37 billion in 1995.
AS A TRADE ENTREPOT AND FINANCE CENTER, HONG KONG'S VIABILITY HAS BEEN
INEXORABLY LINKED TO MAINLAND CHINA SINCE THE ESTABLISHMENT OF THE COLONY IN
1841. HONG KONG REMAINS CHINA'S LARGEST TRADE PARTNER AND ITS LEADING FOREIGN
INVESTOR. In 1995, visible trade between Hong Kong and China exceeded $980
billion. In recent years large numbers of Hong Kong based companies have set up
factories in the southern Chinese province of Guangdong, where it is estimated
that Hong Kong companies employ more than 2.5 million workers. There also has
been considerable growth in Chinese investment in Hong Kong over the last
decade, particularly in banking property, manufacturing and infrastructure
projects. In view of the growing economic interaction between Hong Kong and
Southern China, it is increasingly meaningful to consider the concept of a
Greater Hong Kong economy consisting of Hong Kong and Guangdong Province, with a
combined population of 72 million. The Basic Law, the outline for Hong Kong's
government post 1997, calls for Hong Kong's capitalist system to remain intact
for an additional fifty years after 1997 and sets out details for the
integration of Hong Kong into China after 1997.
TAIWAN HAS ALSO BENEFITTED FROM CHINA'S ECONOMIC LIBERALIZATION, GIVEN ITS
GEOGRAPHIC PROXIMITY AND ITS CULTURAL AND ETHNIC TIES. Taiwan companies continue
to be attracted by China's low labor costs, inexpensive land and less rigid
environmental rules. It is estimated that accumulated Taiwanese investment in
China exceeds $3 billion. Taiwanese listed companies include a number which
invested indirectly in China, primarily in the textiles, food and rubber
industries.
THE ADVISER BELIEVES THAT OTHER COUNTRIES IN THE CHINA REGION WILL ALSO BENEFIT
FROM THE REGION'S ECONOMIC GROWTH. Listed companies throughout Asia are becoming
increasingly active in China. There has also been considerable foreign
investment by Japanese companies in the Northeastern Provinces of Liaoning,
Jilin, and Heilongiang. As the major trading partner of these provinces, Japan
is primarily manufacturing light industrial products for reexport. Major
Japanese projects have been set up in the electronics and natural resources
sectors in China. While Thailand has been traditionally known as a recipient of
foreign investment, Chinese-managed listed companies in the banking, textiles
and packaging sectors have indicated their intention of expanding into China. In
Singapore, shipping, construction and hotel companies have been the first
sectors to do business in China while several Malaysian companies in the
manufacturing sector have invested in joint ventures in China. The Adviser
believes that growing China exposure will enhance the earnings growth of such
companies, making them attractive for investment.
See Appendix A to the Statement of Additional Information for further
information about the economic characteristics of and risks associated with
investing in China Region countries.
THE FUND'S INVESTMENT OBJECTIVE
- ------------------------------------------------------------------------------
THE FUND'S INVESTMENT OBJECTIVE IS TO SEEK LONG-TERM CAPITAL APPRECIATION. It
currently seeks to meet its investment objective by investing its assets in the
Greater China Growth Portfolio (the "Portfolio"), a separate registered
investment company which invests primarily in equity securities of companies
which, in the opinion of the Adviser, will benefit from the economic development
and growth of the People's Republic of China ("China"). A significant percentage
of the Portfolio's assets will be invested in the securities markets of
countries in the China region, consisting of Hong Kong, China, Taiwan, South
Korea, Singapore, Malaysia, Thailand, Indonesia and the Philippines
(collectively, the "China Region").
Investments in the China Region can involve significant risks that are generally
not involved with investments in U.S. companies. The Fund is intended for
long-term investors who can accept international investment risk and little or
no current income. The Fund is not intended to be a complete investment program.
A prospective investor should take into account personal objectives and other
investments when considering the purchase of Fund shares. The Fund cannot assure
achievement of its investment objective. The investment objective of the Fund
and the Portfolio are nonfundamental. China Region investments may offer higher
potential for gains and losses than investments in the United States. See
"Investment Policies and Risks" for further information.
INVESTMENT POLICIES AND RISKS
- ------------------------------------------------------------------------------
THE PORTFOLIO SEEKS TO ACHIEVE ITS OBJECTIVE THROUGH INVESTING IN A CAREFULLY
SELECTED AND CONTINUOUSLY MANAGED PORTFOLIO CONSISTING PRIMARILY OF EQUITY
SECURITIES OF COMPANIES WHICH, IN THE OPINION OF THE ADVISER, WILL BENEFIT FROM
THE ECONOMIC DEVELOPMENT AND GROWTH OF CHINA ("CHINA GROWTH COMPANIES"). A
significant percentage of the Portfolio's assets will be invested in the
securities markets of countries in the China Region (or Greater China). The
Portfolio will, under normal market conditions, invest at least 65% of its total
assets in equity securities of China growth companies ("Greater China
investments"). However, it is expected that substantially all of the Portfolio's
assets will normally be invested in equity securities, warrants and equity
options. China growth companies consist of companies that (a) are located in or
whose securities are principally traded in a China Region country, (b)(i) have
at least 50% of their assets in one or more China Region countries or (ii)
derive at least 50% of their gross sales revenues or profits from providing
goods or services to or from within one or more China Region countries and
(c)(i) have at least 35% of their assets in China, or (ii) derive at least 35%
of their gross sales revenues or profits from providing goods or services to or
from within China or (iii) have manufacturing or other operations in China that
are significant to such companies. Greater China investments are typically
listed on stock exchanges or traded in the over-the-counter markets in countries
in the China Region. The principal offices of these companies, however, may be
located outside these countries. The Portfolio may invest 25% or more of its
total assets in the securities of issuers located in any one country in the
China Region. The Portfolio has invested more than 25% of its total assets in
issuers located in Hong Kong, but the Adviser currently expects the Portfolio
ordinarily will not invest more than 15% of its total assets in any other
country.
Equity securities, for purposes of the 65% policy, will be limited to common and
preferred stocks; equity interests in trusts, partnerships, joint ventures and
other unincorporated entities or enterprises; special classes of shares
available only to foreign investors in markets that restrict the ownership by
foreign investors to certain classes of equity securities; convertible preferred
stocks; and other convertible investment grade debt instruments. A debt security
is investment grade if it is rated BBB or above by Standard & Poor's Ratings
Group ("S&P") or Baa or above by Moody's Investors Service, Inc. ("Moody's") or
determined to be of comparable quality by the Adviser. Debt securities rated BBB
by S&P or Baa by Moody's have speculative characteristics and changes in
economic conditions or other circumstances are more likely to lead to a weakened
capacity to make principal and interest payments than is the case with higher
grade debt securities. The Portfolio will promptly dispose of any convertible
debt instrument which is rated or determined by the Adviser to be below
investment grade subsequent to acquisition by the Portfolio. Direct investments
in China growth companies will not exceed 10% of the Portfolio's total assets.
In addition to its investments in equity securities, the Portfolio may invest up
to 5% of its net assets in options on equity securities and up to 5% of its net
assets in warrants, including options and warrants traded in over-the-counter
markets. The Portfolio will not, under normal market conditions, invest more
than 35% of its total assets in equity securities other than Greater China
investments, warrants, options on securities and indices, options on currency,
futures contracts and options on futures, forward foreign currency exchange
contracts, currency swaps and any other non-equity investments. The Portfolio
will not invest in debt securities, other than investment grade convertible debt
instruments. The Portfolio will not invest more than 10% of its assets in the
securities of issuers in any country outside the China Region.
The Portfolio may, for temporary defensive purposes, invest some or all of its
total assets in high grade debt securities of foreign and United States
companies, foreign governments and the U.S. Government, and their respective
agencies, instrumentalities, political subdivisions and authorities, as well as
in high quality money market instruments denominated in U.S. dollars or a
foreign currency.
INVESTING IN FOREIGN SECURITIES. Investing in securities issued by foreign
companies and governments involves considerations and possible risks not
typically associated with investing in securities issued by the U.S. Government
and domestic corporations. The values of foreign investments are affected by
changes in currency or exchange control regulations, application of foreign tax
laws, including withholding taxes, changes in governmental administration or
economic or monetary policy (in this country or abroad) or changed circumstances
in dealings between nations. Because investment in China Region companies will
usually involve currencies of foreign countries, the value of assets of the
Portfolio as measured by U.S. dollars may be adversely affected by changes in
currency exchange rates. Such rates may fluctuate significantly over short
periods of time causing the Portfolio's net asset value to fluctuate as well.
Costs are incurred in connection with conversions between various currencies. In
addition, foreign brokerage commissions, custody fees and other costs of
investing are generally higher than in the United States, and foreign securities
markets may be less liquid, more volatile and less subject to governmental
supervision than in the United States. Investments in foreign issuers could be
affected by other factors not present in the United States, including
expropriation, armed conflict, confiscatory taxation, lack of uniform accounting
and auditing standards and potential difficulties in enforcing contractual
obligations. Transactions in the securities of foreign issuers could be subject
to settlement delays and risk of loss.
More than 25% of the Portfolio's total assets, adjusted to reflect currency
transactions and positions, may be denominated in any single currency.
Concentration in a particular currency will increase the Portfolio's exposure to
adverse developments affecting the value of such currency. An issuer of
securities purchased by the Portfolio may be domiciled in a country other than
the country in whose currency the securities are denominated.
Since the Portfolio will, under normal market conditions, invest at least 65% of
its total assets in Greater China investments, its investment performance will
be especially affected by events affecting China Region companies. The value and
liquidity of Greater China investments may be affected favorably or unfavorably
by political, economic, fiscal, regulatory or other developments in the China
Region or neighboring regions. The extent of economic development, political
stability and market depth of different countries in the China Region varies
widely. Certain China Region countries, including China, Indonesia, Malaysia,
the Philippines and Thailand, are either comparatively underdeveloped or in the
process of becoming developed. Greater China investments typically involve
greater potential for gain or loss than investments in securities of issuers in
developed countries. In comparison to the United States and other developed
countries, developing countries may have relatively unstable governments and
economies based on only a few industries. Given the Portfolio's investments, the
Portfolio will likely be particularly sensitive to changes in China's economy as
the result of any reversals of economic liberalization, political unrest or
changes in China's trading status.
SECURITIES TRADING MARKETS. The securities markets in the China Region are
substantially smaller, less liquid and more volatile than the major securities
markets in the United States. A high proportion of the shares of many issuers
may be held by a limited number of persons and financial institutions, which may
limit the number of shares available for investment by the Portfolio. The prices
at which the Portfolio may acquire investments may be affected by trading by
persons with material non-public information and by securities transactions by
brokers in anticipation of transactions by the Portfolio in particular
securities. Similarly, volume and liquidity in the bond markets in the China
Region are less than in the United States and, at times, price volatility can be
greater than in the United States. The limited liquidity of securities markets
in the China Region may also affect the Portfolio's ability to acquire or
dispose of securities at the price and time it wishes to do so. In addition,
China Region securities markets are susceptible to being influenced by large
investors trading significant blocks of securities.
China Region stock markets are undergoing a period of growth and change which
may result in trading volatility and difficulties in the settlement and
recording of transactions, and in interpreting and applying the relevant law and
regulations. In particular, the securities industry in China is not well
developed. China has no securities laws of nationwide applicability. Municipal
securities regulations governing the Shanghai and Shenzhen securities exchanges
are very new. Stockbrokers and other intermediaries in the China Region may not
perform as well as their counterparts in the United States and other more
developed securities markets.
CHINA REGION COUNTRY CONSIDERATIONS. The Portfolio will invest in China Region
countries with emerging economies or securities markets. Political and economic
structures in many of such countries are undergoing significant evolution and
rapid development, and such countries may lack the social, political and
economic stability characteristic of the United States. Certain of such
countries may have, in the past, failed to recognize private property rights and
have at times nationalized or expropriated the assets of private companies. As a
result, the risks described above, including the risks of nationalization or
expropriation of assets, may be heightened. In addition, unanticipated political
or social developments may affect the values of the Portfolio's investments in
those countries and the availability to the Portfolio of additional investments
in those countries.
The laws of countries in the region relating to limited liability of corporate
shareholders, fiduciary duties of officers and directors, and the bankruptcy of
state enterprises are generally less well developed than or different from such
laws in the United States. It may be more difficult to obtain a judgement in the
courts of these countries than it is in the United States. Monsoons and natural
disasters also can affect the value of Portfolio investments.
Economies of countries in the China Region may differ favorably or unfavorably
from the U.S. economy in such respects as rate of growth of gross national
product, rate of inflation, capital reinvestment, resource self-sufficiency and
balance of payments position. As export-driven economies, the economies of
countries in the China Region are affected by developments in the economies of
their principal trading partners. For example, revocation by the United States
of China's "Most Favored Nation" trading status, which the U.S. President and
Congress reconsider annually, would adversely affect the trade and economic
development of China and Hong Kong. Political control of Hong Kong will vest in
China in mid-1997, and the actual or perceived success of this process will
affect investments in Hong Kong and elsewhere.
China governmental actions can have a significant effect on the economic
conditions in the China Region, which could adversely affect the value and
liquidity of the Portfolio's investments. Although the Chinese Government has
recently begun to institute legal and economic reform policies, there can be no
assurances that it will continue to pursue such policies or, if it does, that
such policies will succeed. China does not have a comprehensive system of laws
and some laws are not even publicly available.
The Fund and the Portfolio each intend to conduct its respective affairs in such
a manner to avoid taxation. Nevertheless, certain countries may require
withholding on dividends paid on portfolio securities and on realized capital
gains. In the past, these taxes have sometimes been substantial. There can be no
assurance that in the future the Portfolio will be able to repatriate its
income, gains or initial capital from these countries.
DIRECT INVESTMENTS. The Portfolio may invest up to 10% of its total assets in
direct investments in China growth companies. Direct investments include (i) the
private purchase from an enterprise of an equity interest in the enterprise in
the form of shares of common stock or equity interests in trusts, partnerships,
joint ventures or similar enterprises, and (ii) the purchase of such an equity
interest in an enterprise from a principal investor in the enterprise. In each
case, the Portfolio will, at the time of making the investment, enter into a
shareholder or similar agreement with the enterprise and one or more other
holders of equity interests in the enterprise. The Adviser anticipates that
these agreements will, in appropriate circumstances, provide the Portfolio with
the ability to appoint a representative to the board of directors or similar
body of the enterprise and for eventual disposition of the Portfolio's
investment in the enterprise. Such a representative of the Portfolio will be
expected to provide the Portfolio with the ability to monitor its investment and
protect its rights in the investment and will not be appointed for the purpose
of exercising management or control of the enterprise.
Certain of the Portfolio's direct investments, particularly in China, will
probably include investments in smaller, less seasoned companies. These
companies may have limited product lines, markets or financial resources, or
they may be dependent on a limited management group. The Adviser does not
anticipate making direct investments in start-up operations, although it is
expected that in some cases the Portfolio's direct investments will fund new
operations for an enterprise which itself is engaged in similar operations or is
affiliated with an organization that is engaged in similar operations. Such
direct investments may be made in entities that are reasonably expected in the
foreseeable future to become China growth companies, either by expanding current
operations or establishing significant operations in China. Direct investments
may involve a high degree of business and financial risk that can result in
substantial losses. Because of the absence of any public trading market for
these investments, the Portfolio may take longer to liquidate these positions at
fair value than would be the case for publicly traded securities. Furthermore,
issuers whose securities are not publicly traded may not be subject to public
disclosure and other investor protection requirements applicable to publicly
traded securities.
DERIVATIVE INSTRUMENTS. The Portfolio may purchase or sell derivative
instruments (which are instruments that derive their value from another
instrument, security, index or currency) to enhance return (which may be
considered speculative), to hedge against fluctuations in securities prices,
interest rates or currency exchange rates, or as a substitute for the purchase
or sale of securities or currencies. The Portfolio's transactions in derivative
instruments may be in the U.S. or abroad and may include the purchase or sale of
futures contracts on securities, securities indices, other indices, other
financial instruments or currencies; options on futures contracts;
exchange-traded and over-the-counter options on securities, indices or
currencies; and forward foreign currency exchange contracts. The Portfolio's
transactions in derivative instruments involve a risk of loss or depreciation
due to: unanticipated adverse changes in securities prices, interest rates, the
other financial instruments' prices or currency exchange rates; the inability to
close out a position; default by the counterparty; imperfect correlation between
a position and the desired hedge; tax constraints on closing out positions; and
portfolio management constraints on securities subject to such transactions. The
loss on derivative instruments (other than purchased options) may substantially
exceed the Portfolio's initial investment in these instruments. In addition, the
Portfolio may lose the entire premium paid for purchased options that expire
before they can be profitably exercised by the Portfolio. The Portfolio incurs
transaction costs in opening and closing positions in derivative instruments.
There can be no assurance that the Adviser's use of derivative instruments will
be advantageous to the Portfolio.
The Portfolio may purchase call and put options on any securities in which the
Portfolio may invest or options on any securities index composed of securities
in which the Portfolio may invest. The Portfolio does not intend to write a
covered option on any security if after such transaction more than 15% of its
net assets, as measured by the aggregate value of the securities underlying all
covered calls and puts written by the Portfolio, would be subject to such
options. The Portfolio does not intend to purchase an option on any security if,
after such transaction, more than 5% of its net assets, as measured by the
aggregate of all premiums paid for all such options held by the Portfolio, would
be so invested.
To the extent that the Portfolio enters into futures contracts, options on
futures contracts and options on foreign currencies traded on an exchange
regulated by the Commodity Futures Trading Commission ("CFTC"), in each case
that are not for bona fide hedging purposes (as defined by the CFTC), the
aggregate initial margin and premiums required to establish these positions
(excluding the amount by which options are "in-the-money") may not exceed 5% of
the liquidation value of the Portfolio's investments, after taking into account
unrealized profits and unrealized losses on any contracts the Portfolio has
entered into.
Forward contracts are individually negotiated and privately traded by currency
traders and their customers. A forward contract involves an obligation to
purchase or sell a specific currency (or basket of currencies) for an agreed
price at a future date, which may be any fixed number of days from the date of
the contract. The Portfolio may engage in cross-hedging by using forward
contracts in one currency (or basket of currencies) to hedge against
fluctuations in the value of securities denominated in a different currency if
the Adviser determines that there is an established historical pattern of
correlation between the two currencies (or the basket of currencies and the
underlying currency). Use of a different foreign currency magnifies the
Portfolio's exposure to foreign currency exchange rate fluctuations. The
Portfolio may also use forward contracts to shift its exposure to foreign
currency exchange rate changes from one currency to another.
The Portfolio may enter into currency swaps for both hedging and non-hedging
purposes. Currency swaps involve the exchange of rights to make or receive
payments in specified currencies. Since currency swaps are individually
negotiated, the Portfolio expects to achieve an acceptable degree of correlation
between its portfolio investments and its currency swap positions. Currency
swaps usually involve the delivery of the entire principal value of one
designated currency in exchange for the other designated currency. Therefore,
the entire principal value of a currency swap is subject to the risk that the
other party to the swap will default on its contractual delivery obligations.
The use of currency swaps is a highly specialized activity which involves
special investment techniques and risks. If the Adviser is incorrect in its
forecasts of market values and currency exchange rates, the Portfolio's
performance will be adversely affected.
REPURCHASE AGREEMENTS. The Portfolio may enter into repurchase agreements (the
purchase of a security coupled with an agreement to resell) with respect to its
permitted investments, but currently intends to do so only with member banks of
the Federal Reserve System or with primary dealers in U.S. Government
securities. In the event of the bankruptcy of the other party to a repurchase
agreement, the Portfolio might experience delays in recovering its cash. To the
extent that, in the meantime, the value of the securities the Portfolio
purchased may have decreased, the Portfolio could experience a loss. At no time
will the Portfolio commit more than 15% of its net assets to repurchase
agreements which mature in more than seven days and other illiquid securities.
OTHER INVESTMENT COMPANIES. The Portfolio reserves the right to invest up to 10%
of its total assets, calculated at the time of purchase, in the securities of
other investment companies unaffiliated with the Adviser or the Manager that
have the characteristics of closed-end investment companies. The Portfolio will
indirectly bear its proportionate share of any management fees paid by
investment companies in which it invests in addition to the advisory fee paid by
the Portfolio. The value of closed-end investment company securities, which are
usually traded on an exchange, is affected by demand for the securities
themselves, independent of the demand for the underlying portfolio assets and,
accordingly, such securities can trade at a discount from their net asset
values.
INVESTMENT LIMITATIONS. The Fund and the Portfolio have adopted certain
fundamental investment restrictions and policies which are enumerated in detail
in the Statement of Additional Information and which may not be changed unless
authorized by a shareholder vote and an investor vote, respectively. Among these
fundamental restrictions, neither the Fund nor the Portfolio may (1) borrow
money except from banks or through reverse repurchase agreements and in an
amount not exceeding one-third of its total assets; or (2) with respect to 75%
of its total assets, invest more than 5% of its total assets in the securities
of any one issuer, other than U.S. Government securities or, in the case of the
Fund, interests in the Portfolio, or acquire more than 10% of the outstanding
voting securities of any one issuer. Except with respect to the Portfolio's
borrowing limitation, investment restrictions are considered at the time of
acquisition of assets; the sale of portfolio assets generally is not required in
the event of a subsequent change in circumstances. As a matter of fundamental
policy the Portfolio will invest less than 25% of its total assets in the
securities, other than U.S. Government securities, of issuers in any one
industry. However, the Portfolio is permitted to invest 25% or more of its total
assets in (i) the securities of issuers located in any one country in the China
Region and (ii) assets denominated in the currency of any one country.
Except for the fundamental investment restrictions and policies specifically
identified above and those enumerated in the Statement of Additional
Information, the investment objective and policies of the Fund and the Portfolio
are not fundamental policies and accordingly may be changed by the Trustees of
the Trust and the Portfolio without obtaining the approval of the shareholders
of the Fund or the investors in the Portfolio, as the case may be. As a matter
of nonfundamental policy, neither the Fund nor the Portfolio (i) intends to
borrow for leverage purposes or may purchase any securities if, at the time of
such purchase, permitted borrowings exceed 5% of the value of the Portfolio's or
the Fund's total assets, as the case may be, or (ii) is permitted to invest more
than 15% of its net assets in unmarketable securities, over-the-counter options,
repurchase agreements maturing in more than seven days and other illiquid
securities. Nevertheless, the Portfolio may temporarily borrow up to 5% of the
value of its total assets to satisfy redemption requests or settle securities
transactions. The Portfolio may lend portfolio securities and engage in
repurchase agreements and reverse repurchase agreements but the Adviser has no
current intention to do so.
Under the Investment Company Act of 1940 (the "1940 Act") and the rules
promulgated thereunder, the Portfolio's investments in the securities of any
company that, in its most recent fiscal year, derived more than 15% of its gross
revenues from securities-related activities is limited to 5% of any class of the
issuer's equity securities and 10% of the outstanding principal amount of the
issuer's debt securities, provided that the Portfolio's aggregate investments in
the securities of any such issuer do not exceed 5% of the Portfolio's total
assets. Some of the companies available for investment in the China Region,
including enterprises being privatized by such countries, may be financial
services businesses that engage in securities-related activities. The
Portfolio's ability to invest in such enterprises may thus be limited.
ORGANIZATION OF THE FUND AND THE PORTFOLIO
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THE FUND IS A DIVERSIFIED SERIES OF EATON VANCE GROWTH TRUST (THE "TRUST"), A
BUSINESS TRUST ESTABLISHED UNDER MASSACHUSETTS LAW PURSUANT TO A DECLARATION OF
TRUST DATED MAY 25, 1989, AS AMENDED. THE TRUST IS A MUTUAL FUND -- AN OPEN-END
MANAGEMENT INVESTMENT COMPANY. The Trustees of the Trust are responsible for the
overall management and supervision of its affairs. The Trust may issue an
unlimited number of shares of beneficial interest (no par value per share) in
one or more series (such as the Fund). 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.
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,
affords the potential for economies of scale for the Fund (at least when the
assets of the Portfolio exceed $500 million) and may over time result in lower
expenses for the Fund.
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. Information regarding
other pooled investment entities or funds which invest in the Portfolio may be
obtained by contacting the Principal Underwriter, 24 Federal Street, Boston, MA
02110 (617) 482-8260.
Whenever the Fund as an investor in the Portfolio is requested to vote on
matters pertaining to the Portfolio (other than the termination of the
Portfolio's business, which may be determined by the Trustees of the Portfolio
without investor approval), the Fund will hold a meeting of Fund shareholders
and will vote its interest in the Portfolio for or against such matters
proportionately to the instructions to vote for or against such matters received
from Fund shareholders. The Fund shall vote shares for which it receives no
voting instructions in the same proportion as the shares for which it receives
voting instructions. Other investors in the Portfolio may alone or collectively
acquire sufficient voting interests in the Portfolio to control matters relating
to the operation of the Portfolio, which may require the Fund to withdraw its
investment in the Portfolio or take other appropriate action. Any such
withdrawal could result in a distribution "in kind" of portfolio securities (as
opposed to a cash distribution from the Portfolio). If securities are
distributed, the Fund could incur brokerage, tax or other charges in converting
the securities to cash. In addition, the distribution in kind may result in a
less diversified portfolio of investments or adversely affect the liquidity of
the Fund. Notwithstanding the above, there are other means for meeting
shareholder redemption requests, such as borrowing.
The Fund may withdraw (completely redeem) all its assets from the Portfolio at
any time if the Board of Trustees of the Trust determines that it is in the best
interest of the Fund to do so. In the event the Fund withdraws all of its assets
from the Portfolio, or the Board of Trustees of the Trust determines that the
investment objective of the Portfolio is no longer consistent with the
investment objective of the Fund, such Trustees would consider what action might
be taken, including investing the assets of the Fund in another pooled
investment entity or retaining an investment adviser to manage the Fund's assets
in accordance with its investment objective. The Fund's investment performance
may be affected by a withdrawal of all its assets from the Portfolio.
MANAGEMENT OF THE FUND AND THE PORTFOLIO
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EATON VANCE MANAGEMENT ("EATON VANCE") ACTS AS THE SPONSOR AND MANAGER OF THE
FUND AND THE ADMINISTRATOR OF THE PORTFOLIO. THE PORTFOLIO HAS ENGAGED LLOYD
GEORGE MANAGEMENT (HONG KONG) LIMITED ("LGM-HK") AS ITS INVESTMENT ADVISER.
Pursuant to a service agreement effective on January 1, 1996 between LGM-HK and
its affiliate, Lloyd George Investment Management (Bermuda) Limited ("LGIM-B"),
LGIM-B, acting under the general supervision of the Portfolio's Trustees,
manages the Portfolio's investments and affairs. LGM-HK supervises LGIM-B's
performance of this function and retains its contractual obligations under its
investment advisory agreement with the Portfolio. LGM-HK and LGIM-B are referred
to collectively as the Advisers. The Portfolio is managed by Adaline
Mang-Yee Ko.
Each Adviser is registered as an investment adviser with the Securities and
Exchange Commission (the "Commission"). Each Adviser is a subsidiary of Lloyd
George Management (B.V.I.) Limited ("LGM"). LGM and its subsidiaries act as
investment adviser to various individual and institutional clients with total
assets under management of approximately $1.5 billion. Eaton Vance's parent,
Eaton Vance Corp., owns 24% of the Class A shares issued by LGM.
LGM was established in 1991 to provide investment management services with
respect to equity securities of companies trading in Asian securities markets,
especially those of emerging markets. LGM currently manages Pacific Basin and
Asian portfolios for both private clients and institutional investors seeking
long-term capital growth. LGM's core investment team consists of nine
experienced investment professionals, based in Hong Kong, who have worked
together over a number of years successfully managing client portfolios in
Pacific Basin and Asian stock markets. LGM also has offices in Bombay, India and
London, England. The team has a unique knowledge of, and experience with,
Pacific Basin and Asian emerging markets. LGM is ultimately controlled by the
Hon. Robert J.D. Lloyd George, President and Trustee of the Portfolio and
Chairman and Chief Executive Officer of the Advisers. LGM's only activity is
portfolio management.
LGM and the Advisers have adopted a disciplined management style, providing a
blend of Asian and multinational expertise with the most rigorous international
standards of fundamental security analysis. Although focused primarily in Asia,
LGM and the Advisers maintain a network of international contacts in order to
monitor international economic and stock market trends and offer clients a
global management service. Personnel of the Advisers include the following:
THE HONOURABLE ROBERT LLOYD GEORGE. Chairman. Born in London in 1952 and
educated at Eton College, where he was a King's Scholar, and at Oxford
University. Prior to founding LGM, Mr. Lloyd George was Managing Director of
Indosuez Asia Investment Services Ltd. Previously, he spent four years with
Fiduciary Trust Company of New York researching international securities, in the
United States and Europe, for the United Nations Pension Fund. Mr. Lloyd George
is the author of numerous published articles and three books -- "A Guide to
Asian Stock Markets" (Longmans, Hong Kong, 1989), "The East West Pendulum"
(Woodhead - Faulkner, Cambridge, 1991) and "North South -- an Emerging Markets
Handbook" (Probus, England, 1994).
WILLIAM WALTER RALEIGH KERR. Finance Director and Chief Operating
Officer. Born in 1950 and educated at Ampleforth and Oxford. Mr. Kerr
qualified as a Chartered Accountant at Thomson McLintock & Co. before joining
The Oldham Estate Company plc as Financial Controller. Prior to joining LGM,
Mr. Kerr was a Director of Banque Indosuez's corporate finance subsidiary,
Financiere Indosuez Limited, in London. Prior to that Mr. Kerr worked for
First Chicago Limited.
SCOBIE DICKINSON WARD. Director. Born in 1966 and a cum laude graduate of both
Phillips Academy Andover, and Harvard University. Mr. Ward joined Indosuez
Asia Investment Services in 1989, where he managed the $100 million Himalayan
Fund, and the Indosuez Tasman Fund, investing in Australia and New Zealand.
Messrs. Ward and Lloyd George manage Eaton Vance's Emerging Markets Portfolio
and South Asia Portfolio (which invests in India and the Indian subcontinent).
M. F. TANG. Director. Born in 1946 and educated in Hong Kong. Mr. Tang is a
Fellow of the Chartered Association of Certified Accountants. Mr. Tang joined
LGM having worked for Australian Mutual Provident Society in Sydney where he
was a Portfolio Manager responsible for Asian Equities. Prior thereto Mr. Tang
worked for Barclays Australia Investment Services Ltd. From 1978 to 1986 Mr.
Tang worked for Barings International Investment Management and prior to that
he spent six years with Peat Marwick Mitchell & Co. Mr. Tang is fluent in the
Cantonese and Mandarin dialects of the Chinese language.
PAMELA CHAN. Director. Born in Hong Kong in 1957 and graduated from Mills
College in Oakland, California. She was an investment executive for Jardine
Fleming from 1982-1984 before moving to Australia where she worked as a Fund
Manager for Rothschild and Aetna. She joined Sun Life Assurance Society PLC in
England in 1987 where she was the head of South East Asian Equities and a
Director. She joined LGM in April 1994 where she is a portfolio manager and a
member of the Pension Management Committee.
ADALINE MANG-YEE KO. Director. Born in 1943 and educated at University of
Birmingham, England and at London Business School where she received her MBA.
Ms. Ko has over 13 years experience working with Far East Asian equities. From
1982-1988, she worked at Save & Prosper Group Ltd. as an investment manager.
In 1988, Ms. Ko transferred to Robert Fleming & Co. Ltd. In 1990, she was
promoted to Director of Fleming Investment Management Ltd. In 1992, she was
promoted to Head of the Pacific Region Portfolios Group where she supervised a
team of 5 with responsibility for over $1.5 billion in assets under
management. Ms. Ko joined LGM in 1995.
While the Portfolio is a New York trust, the Advisers, together with certain
Trustees and officers of the Portfolio, are not residents of the United States,
and substantially all of their respective assets may be located outside of the
United States. It may be difficult for investors to effect service of process
within the United States upon the individuals identified above, or to realize
judgments of courts of the United States predicated upon civil liabilities of
the Advisers and such individuals under the federal securities laws of the
United States. The Portfolio has been advised that there is substantial doubt as
to the enforceability in the countries in which the Adviser and such individuals
reside of such civil remedies and criminal penalties as are afforded by the
federal securities laws of the United States.
Since January 1, 1996, LGM-HK pays to LGIM-B the entire amount of the advisory
fee payable by the Portfolio under its investment advisory agreement with LGM-
HK. Under this agreement, LGM-HK is entitled to receive a monthly advisory fee
of 0.0625% (equivalent to 0.75% annually) of the average daily net assets of the
Portfolio up to $500 million, which fee declines at intervals above $500
million. As at August 31, 1996, the Portfolio had net assets of $510,297,559.
For the fiscal year ended August 31, 1996, the Portfolio paid LGM-HK advisory
fees equivalent to 0.74% of the Portfolio's average daily net assets for such
period.
LGIM-B also furnishes for the use of the Portfolio office space and all
necessary office facilities, equipment and personnel for servicing the
investments of the Portfolio. LGIM-B places the portfolio securities
transactions of the Portfolio with many broker-dealer firms and uses its best
efforts to obtain execution of such transactions at prices which are
advantageous to the Portfolio and at reasonably competitive commission rates.
Subject to the foregoing, LGIM-B may consider sales of shares of the Fund as a
factor in the selection of firms to execute portfolio transactions. The Fund,
the Portfolio and the Advisers have adopted Codes of Ethics relating to personal
securities transactions. The Codes permit Eaton Vance personnel to invest in
securities (including securities that may be purchased or held by the Portfolio)
for their own accounts, subject to certain reporting and other restrictions and
procedures contained in such Codes.
EATON VANCE, ITS AFFILIATES AND ITS PREDECESSOR COMPANIES HAVE BEEN MANAGING
ASSETS OF INDIVIDUALS AND INSTITUTIONS SINCE 1924 AND MANAGING INVESTMENT
COMPANIES SINCE 1931. EATON VANCE ACTS AS INVESTMENT ADVISER TO INVESTMENT
COMPANIES AND VARIOUS INDIVIDUAL AND INSTITUTIONAL CLIENTS WITH ASSETS UNDER
MANAGEMENT OF OVER $16 BILLION. Eaton Vance is a wholly-owned subsidiary of
Eaton Vance Corp., a publicly-held holding company which through its
subsidiaries and affiliates engages primarily in investment management,
administration and marketing activities. The Principal Underwriter is a
wholly-owned subsidiary of Eaton Vance.
Eaton Vance, acting under the general supervision of the Boards of Trustees of
the Trust and the Portfolio, manages and administers the business affairs of the
Fund and the Portfolio. Eaton Vance's services include monitoring and providing
reports to the Trustees of the Trust and the Portfolio concerning the investment
performance achieved by the Adviser for the Portfolio, recordkeeping,
preparation and filing of documents required to comply with federal and state
securities laws, supervising the activities of the transfer agent of the Fund
and the custodian of the Portfolio, providing assistance in connection with
Trustees' and shareholders' meetings and other management and administrative
services necessary to conduct the business of the Fund and the Portfolio. Eaton
Vance also furnishes for the use of the Fund and the Portfolio office space and
all necessary office facilities, equipment and personnel for managing and
administering the business affairs of the Fund and the Portfolio. Eaton Vance
does not provide any investment management or advisory services to the Portfolio
or the Fund.
Under its management contract with the Fund, Eaton Vance receives a monthly fee
in the amount of 1/48 of 1% (equal to 0.25% annually) of the average daily net
assets of the Fund up to $500 million, which fee declines at intervals above
$500 million. As of August 31, 1996, the Fund had net assets of $284,574,696.
For the fiscal year ended August 31, 1996, Eaton Vance earned management fees
equivalent to 0.25% of the Fund's average daily net assets for such period. In
addition, under its administration agreement with the Portfolio, Eaton Vance
receives a monthly fee in the amount of 1/48 of 1% (equal to 0.25% annually) of
the average daily net assets of the Portfolio up to $500 million, which fee
declines at intervals above $500 million. For the fiscal year ended August 31,
1996, Eaton Vance earned administration fees from the Portfolio equivalent to
0.25% of the Portfolio's average daily net assets for such period.
The Fund and the Portfolio, as the case may be, will each be responsible for all
respective costs and expenses not expressly stated to be payable by the Advisers
under the investment advisory agreement and Eaton Vance under the management
contract or the administration agreement or by the Principal Underwriter under
the distribution agreement.
DISTRIBUTION 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 and all amounts
theretofore paid to the Principal Underwriter by LGIM-B in consideration of the
former's distribution efforts. 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 and from LGIM-B in consideration of the distribution
efforts, 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 commissions attributable to a sale of Fund shares to be
accrued and paid by the Fund to the Principal Underwriter in fiscal years
subsequent to the year in which such shares were sold. This spreading of sales
commissions payments under the Plan over an extended period would result in the
incurrence and payment of increased distribution fees under the Plan. During the
fiscal year ended August 31, 1996, the Fund paid sales commissions under its
Plan equivalent to .75% of the Fund's average daily net assets. As of August 31,
1996, the outstanding Uncovered Distribution Charges of the Principal
Underwriter calculated under the Plan amounted to approximately $10,789,000
(equivalent to 3.8% of the Fund's net assets on such day).
THE PLAN ALSO AUTHORIZES THE FUND TO MAKE PAYMENTS OF SERVICE FEES TO THE
PRINCIPAL UNDERWRITER, AUTHORIZED FIRMS AND OTHER PERSONS IN AMOUNTS NOT
EXCEEDING .25% OF THE FUND'S AVERAGE DAILY NET ASSETS FOR EACH FISCAL YEAR. The
Trustees of the Trust have initially implemented this provision of 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 for each fiscal year based on the
value of Fund shares sold by such persons and remaining outstanding for at least
twelve months. As permitted by the NASD Rule, such payments are made for
personal services and/or the maintenance of shareholder accounts. Service fees
are separate and distinct from the sales commissions and distribution fees
payable by the Fund to the Principal Underwriter, and as such are not subject to
automatic discontinuance when there are no outstanding Uncovered Distribution
Charges of the Principal Underwriter. For the fiscal year ended August 31, 1996,
the Fund made service fee payments under the Plan equivalent to 0.22% of the
Fund's average daily net assets.
The Principal Underwriter may, from time to time, at its own expense, provide
additional incentives to Authorized Firms which employ registered
representatives who sell Fund shares and/or shares of other funds distributed by
the Principal Underwriter. In some instances, such additional incentives may be
offered only to certain Authorized Firms whose representatives sell or are
expected to sell significant amounts of shares. In addition, the Principal
Underwriter may from time to time increase or decrease the sales commissions
payable to Authorized Firms.
Distribution of Fund shares by the Principal Underwriter will also be encouraged
by the payment by LGIM-B to the Principal Underwriter of amounts equivalent to
.15% of the Fund's annual average daily net assets. Such payments will be made
from LGIM-B's own resources, not Fund assets. The aggregate amounts of such
payments are a deduction in calculating the outstanding Uncovered Distribution
Charges of the Principal Underwriter under the Plan and, therefore, will benefit
Fund shareholders when such charges exist. Such payments will be made in
consideration of the Principal Underwriter's distribution efforts.
The Fund may, in its absolute discretion, suspend, discontinue or limit the
offering of its shares at any time. In determining whether any such action
should be taken, the Fund's management intends to consider all relevant factors,
including without limitation the size of the Fund, the investment climate and
market conditions, the volume of sales and redemptions of Fund shares, and the
amount of Uncovered Distribution Charges of the Principal Underwriter. The Plan
may continue in effect and payments may be made under the Plan following any
such suspension, discontinuance or limitation of the offering of Fund shares;
however, the Fund is not contractually obligated to continue the Plan for any
particular period of time. Suspension of the offering of Fund shares would not,
of course, affect a shareholder's ability to redeem shares.
VALUING FUND SHARES
- ------------------------------------------------------------------------------
THE FUND VALUES ITS SHARES ONCE ON EACH DAY THE NEW YORK STOCK EXCHANGE (THE
"EXCHANGE") IS OPEN FOR TRADING, as of the close of regular trading on the
Exchange (normally 4:00 p.m. New York time). The Fund's net asset value per
share is determined by its custodian, Investors Bank & Trust Company ("IBT") (as
agent for the Fund) in the manner authorized by the Trustees of the Trust. Net
asset value is computed by dividing the value of the Fund's total assets, less
its liabilities, by the number of shares outstanding. Because the Fund invests
its assets in an interest in the Portfolio, the Fund's net asset value will
reflect the value of its interest in the Portfolio (which, in turn, reflects the
underlying value of the Portfolio's assets and liabilities).
Authorized Firms must communicate an investor's order to the Principal
Underwriter prior to the close of the Principal Underwriter's business day to
receive that day's net asset value per share and the public offering price based
thereon. It is the Authorized Firms' responsibility to transmit orders promptly
to the Principal Underwriter.
The Portfolio's net asset value is also determined as of the close of regular
trading on the Exchange by IBT (as custodian and agent for the Portfolio) based
on market or fair value in the manner authorized by the Trustees of the
Portfolio. Exchange listed securities generally are valued at closing sale
prices. Net asset value is computed by subtracting the liabilities of the
Portfolio from the value of its total assets. For further information regarding
the valuation of the Portfolio's assets, see "Determination of Net Asset Value"
in the Statement of Additional Information.
SHAREHOLDERS MAY DETERMINE THE VALUE OF THEIR INVESTMENT BY MULTIPLYING THE
NUMBER OF FUND SHARES OWNED BY THE CURRENT NET ASSET VALUE PER SHARE.
HOW TO BUY FUND SHARES
- ------------------------------------------------------------------------------
SHARES OF THE FUND MAY BE PURCHASED FOR CASH OR MAY BE ACQUIRED IN EXCHANGE FOR
SECURITIES. Investors may purchase shares of the Fund through Authorized Firms
at the net asset value per share of the Fund next determined after an order is
effective. An Authorized Firm may charge its customers a fee in connection with
transactions executed by that Firm. 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: First
Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123. The
$1,000 minimum initial investment is waived for Bank Automated Investing
accounts, which may be established with an investment of $50 or more. See "Eaton
Vance Shareholder Services".
In connection with employee benefit or other continuous group purchase plans
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 on the day of their receipt or as soon thereafter as
possible. The number of Fund shares to be issued in exchange for securities will
be the aggregate proceeds from the sale of such securities, divided by the
applicable net asset value per Fund share on the day such proceeds are received.
Eaton Vance will use reasonable efforts to obtain the then current market price
for such securities, but does not guarantee the best available price. Eaton
Vance will absorb any transaction costs, such as commissions, on the sale of the
securities.
Securities determined to be acceptable should be transferred via book entry or
physically delivered, in proper form for transfer, through an Authorized Firm,
together with a completed and signed Letter of Transmittal in approved form
(available from Authorized Firms), as follows:
IN THE CASE OF BOOK ENTRY:
Deliver through Depository Trust Co.
Broker #2212
Investors Bank & Trust Company
For A/C EV Marathon Greater China Growth Fund
IN THE CASE OF PHYSICAL DELIVERY:
Investors Bank & Trust Company
Attention: EV Marathon Greater China Growth Fund
Physical Securities Processing Settlement Area
89 South Street
Boston, MA 02111
Investors who are contemplating an exchange of securities for shares of the
Fund, or their representatives, must contact Eaton Vance to determine whether
the securities are acceptable before forwarding such securities. Eaton Vance
reserves the right to reject any securities. Exchanging securities for Fund
shares may create a taxable gain or loss. Each investor should consult his or
her tax adviser with respect to the particular federal, state and local tax
consequences of exchanging securities for Fund shares.
IF YOU DON'T HAVE AN AUTHORIZED FIRM, EATON VANCE CAN RECOMMEND ONE.
HOW TO REDEEM FUND SHARES
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A SHAREHOLDER MAY REDEEM FUND SHARES IN ONE OF THREE WAYS -- BY MAIL, BY
TELEPHONE OR THROUGH AN AUTHORIZED FIRM. The redemption price will be based on
the net asset value per Fund share next computed after a redemption request is
received in the proper form as described below.
REDEMPTION BY MAIL: Shares may be redeemed by delivering to the Transfer Agent,
First Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123,
during its business hours a written request for redemption in good order, plus
any share certificates with executed stock powers. Good order means that all
relevant documents must be endorsed by the record owner(s) exactly as the shares
are registered and the signature(s) must be guaranteed by a member of either the
Securities Transfer Association's STAMP program or the New York Stock Exchange's
Medallion Signature Program, or certain banks, savings and loan institutions,
credit unions, securities dealers, securities exchanges, clearing agencies and
registered securities associations as required by a regulation of the Commission
and acceptable to the Transfer Agent. In addition, in some cases, good order may
require the furnishing of additional documents such as where shares are
registered in the name of a corporation, partnership or fiduciary.
REDEMPTION BY TELEPHONE: Shares may be redeemed by telephone provided the
investor has not disclaimed in writing the use of the privilege. Such
redemptions can be effected by calling the Transfer Agent at 800-262-1122,
Monday through Friday, 9:00 a.m. to 4:00 p.m. (Eastern Standard Time). The
proceeds of a telephone redemption may be no greater than the maximum amount
established by the Principal Underwriter (currently $50,000) and may be mailed
only to the account address of record. Shares held by corporations, trusts or
certain other entities, or subject to fiduciary arrangements, may not be
redeemed by telephone. Neither the Fund, the Principal Underwriter nor the
Transfer Agent will be responsible for the authenticity of redemption
instructions received by telephone, provided that reasonable procedures to
confirm that instructions communicated by telephone are genuine have been
followed. Telephone instructions will be tape recorded. In times of drastic
economic or market changes, a telephone redemption may be difficult to
implement.
REDEMPTION THROUGH AN AUTHORIZED FIRM: To sell shares at their net asset value
through an Authorized Firm (a repurchase), a shareholder can place a repurchase
order with the Authorized Firm, which may charge a fee. The value of such shares
is based upon the net asset value calculated after the Principal Underwriter, as
the Fund's agent, receives the order. It is the Authorized Firm's responsibility
to transmit promptly repurchase orders to the Principal Underwriter. Throughout
this Prospectus, the word "redemption" is generally meant to include a
repurchase.
Within seven days after receipt of a redemption request in good order by the
Transfer Agent, the 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 charge (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.
If shares were recently purchased, the proceeds of a redemption will not be sent
until the check (including a certified or cashier's check) received for the
shares purchased has cleared. Payment for shares tendered for redemption may be
delayed up to 15 days from the purchase date when the purchase check has not yet
cleared. Redemptions may result in a taxable gain or loss.
Due to the high cost of maintaining small accounts, the Fund reserves the right
to redeem accounts with balances of less than $750. Prior to such a redemption,
shareholders will be given 60 days' written notice to make additional purchases.
However, no such 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
("CDSC"). A CDSC is imposed on any redemption the amount of which exceeds the
aggregate value at the time of redemption of (a) all shares in the account
purchased more than six years prior to the redemption, (b) all shares in the
account acquired through reinvestment of distributions and (c) the increase, if
any, in the value of all other shares in the account (namely those purchased
within the six years preceding the redemption) over the purchase price of such
shares. Redemptions are processed in a manner to maximize the amount of
redemption proceeds which will not be subject to a CDSC. That is, each
redemption will be assumed to have been made first from the exempt amounts
referred to in clauses (a), (b) and (c) above, and second through liquidation of
those shares in the account referred to in clause (c) on a first-in-first-out
basis. As described under "Distribution Plan," the CDSC will be paid to the
Principal Underwriter or the Fund. Any CDSC which is required to be imposed on
share redemptions will be made in accordance with the following schedule:
YEAR OF REDEMPTION AFTER PURCHASE CDSC
----------------------------------------------------------------------
First or Second 5%
Third 4%
Fourth 3%
Fifth 2%
Sixth 1%
Seventh and following 0%
In calculating the CDSC upon the redemption of Fund shares acquired in an
exchange for shares of a fund currently listed under "The Eaton Vance Exchange
Privilege", the CDSC schedule applicable to the shares at the time of purchase
will apply and the purchase of Fund shares acquired in the exchange is deemed to
have occurred at the time of the original purchase of exchanged shares.
No CDSC will be imposed on shares of the Fund which have been sold to Eaton
Vance or its affiliates, or to their respective employees or clients. The CDSC
will also be waived for shares redeemed (1) pursuant to a Withdrawal Plan (see
"Eaton Vance Shareholder Services"), (2) as part of a required distribution from
a tax-sheltered retirement plan or (3) following the death of all beneficial
owners of such shares, provided the redemption is requested within one year of
death (a death certificate and other applicable documents may be required). In
addition, shares acquired as a result of a merger or liquidation of another
Eaton Vance sponsored fund will have a CDSC imposed at the same rate as would
have been imposed in the prior fund.
THE FOLLOWING EXAMPLE ILLUSTRATES THE OPERATION OF THE CDSC. 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 CDSC. 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 CDSC WOULD BE $50.
REPORTS TO SHAREHOLDERS
- ------------------------------------------------------------------------------
THE FUND WILL ISSUE TO ITS SHAREHOLDERS SEMI-ANNUAL AND ANNUAL REPORTS
CONTAINING FINANCIAL STATEMENTS. Financial statements included in annual reports
are audited by the Fund's independent certified public accountants. Shortly
after the end of each calendar year, the Fund will furnish its shareholders with
information necessary for preparing federal and state income tax returns.
THE LIFETIME INVESTING ACCOUNT/DISTRIBUTION OPTIONS
- ------------------------------------------------------------------------------
AFTER AN INVESTOR MAKES AN INITIAL PURCHASE OF FUND SHARES, THE TRANSFER AGENT
WILL SET UP A LIFETIME INVESTING ACCOUNT FOR THE INVESTOR ON THE FUND'S RECORDS.
This account is a complete record of all transactions between the investor and
the Fund which at all times shows the balance of shares owned. The Fund will not
issue share certificates except upon request.
Each time a transaction takes place in a shareholder's account, the shareholder
will receive a statement showing complete details of the transaction and the
current balance in the account. (Under certain investment plans, statements may
be sent only quarterly). THE LIFETIME INVESTING ACCOUNT ALSO PERMITS A
SHAREHOLDER TO MAKE ADDITIONAL INVESTMENTS IN SHARES BY SENDING A CHECK FOR $50
OR MORE to the Transfer Agent.
Any questions concerning a shareholder's account or services available may be
directed by telephone to EATON VANCE SHAREHOLDER SERVICES at 800-225-6265,
extension 2, or in writing to the Transfer Agent, First Data Investor Services
Group, P.O. Box 5123, Westborough, MA 01581-5123 (please provide the name of the
shareholder, the Fund and the account number).
THE FOLLOWING DISTRIBUTION OPTIONS WILL BE AVAILABLE TO ALL LIFETIME INVESTING
ACCOUNTS and may be changed as often as desired by written notice to the Fund's
dividend disbursing agent, First Data Investor Services Group, P.O. Box 5123,
Westborough, MA 01581-5123. The currently effective option will appear on each
account statement.
SHARE OPTION -- Dividends and capital gains will be reinvested in additional
shares.
INCOME OPTION -- Dividends will be paid in cash and capital gains will be
reinvested in additional shares.
CASH OPTION -- Dividends and capital gains will be paid in cash.
The SHARE OPTION will be assigned if no other option is specified.
Distributions, including those reinvested, will be reduced by any withholding
required under the federal income tax laws.
If the INCOME OPTION or CASH OPTION has been selected, dividend and/or capital
gains distribution checks which are returned by the United States Postal Service
as not deliverable or which remain uncashed for six months or more will be
reinvested in the account in shares at the then current net asset value.
Furthermore, the distribution option on the account will be automatically
changed to the SHARE OPTION until such time as the shareholder selects a
different option.
DISTRIBUTION INVESTMENT OPTION. In addition to the distribution options set
forth above, dividends and/or capital gains may be invested in additional shares
of another Eaton Vance fund. Before selecting this option, a shareholder should
obtain a prospectus of the other Eaton Vance fund and consider its objectives
and policies carefully.
"STREET NAME" ACCOUNTS. If shares of a Fund are held in a "street name" account
with an Authorized Firm, all recordkeeping, transaction processing and payments
of distributions relating to the beneficial owner's account will be performed by
the Authorized Firm, and not by the Fund and its Transfer Agent. Since the Fund
will have no record of the beneficial owner's transactions, a beneficial owner
should contact the Authorized Firm to purchase, redeem or exchange shares, to
make changes in or give instructions concerning the account, or to obtain
information about the account. The transfer of shares in a "street name" account
to an account with another dealer or to an account directly with 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.
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 (including Class I shares of
any EV Marathon Limited Maturity Fund) or Eaton Vance Money Market Fund, which
are subject to a CDSC. Shares of the Fund may also be exchanged for shares of
Eaton Vance Prime Rate Reserves, which are subject to an early withdrawal
charge, and shares of a money market fund sponsored by an Authorized Firm and
approved by the Principal Underwriter (an "Authorized Firm fund"). Any such
exchange will be made on the basis of the net asset value per share of each fund
at the time of the exchange. 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 Transfer Agent 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 Transfer Agent for additional information concerning the exchange
privilege. Applications and prospectuses of other funds are available from
Authorized Firms or the Principal Underwriter. The prospectus for each fund
describes its investment objectives and policies, and shareholders should obtain
a prospectus and consider these objectives and policies carefully before
requesting an exchange.
No CDSC is imposed on exchanges. For purposes of calculating the CDSC upon the
redemption of shares acquired in an exchange, the CDSC schedule applicable to
the shares at the time of purchase will apply and the purchase of shares
acquired in one or more exchanges is deemed to have occurred at the time of the
original purchase of the exchanged shares, except that time during which shares
are held in an Authorized Firm fund will not be credited toward completion of
the CDSC period. For the CDSC schedule applicable to the Eaton Vance Marathon
Group of Funds (except EV Marathon Strategic Income Fund, Eaton Vance Prime Rate
Reserves and Class I shares of any EV Marathon Limited Maturity Fund), see "How
to Redeem Fund Shares." The CDSC or early withdrawal charge schedule applicable
to EV Marathon Strategic Income Fund, Eaton Vance Prime Rate Reserves 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 funds listed above 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 Transfer Agent provided that the
investor has not disclaimed in writing the use of the privilege. To effect such
exchanges, call the Transfer Agent at 800-262-1122, Monday through Friday, 9:00
a.m. to 4:00 p.m. (Eastern Standard Time). Shares acquired by telephone exchange
must be registered in the same name(s) and with the same address as the shares
being exchanged. Neither the Fund, the Principal Underwriter nor the Transfer
Agent will be responsible for the authenticity of exchange instructions received
by telephone, provided that reasonable procedures to confirm that instructions
communicated are genuine have been followed. Telephone instructions will be tape
recorded. In times of drastic economic or market changes, a telephone exchange
may be difficult to implement. An exchange may result in a taxable gain or loss.
EATON VANCE SHAREHOLDER SERVICES
- ------------------------------------------------------------------------------
THE 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 Greater China Growth Fund may be mailed directly to the Transfer Agent,
First Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123 at
any time -- whether or not distributions are reinvested. The name of the
shareholder, the Fund and the account number should accompany each investment.
BANK AUTOMATED INVESTING -- FOR REGULAR SHARE ACCUMULATION: Cash investments of
$50 or more may be made automatically each month or quarter from a shareholder's
bank account. The $1,000 minimum initial investment and small account redemption
policy are waived for these accounts.
WITHDRAWAL PLAN: A shareholder may draw on shareholdings systematically with
monthly or quarterly checks 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 CDSC. See "How to Redeem Fund Shares". A
minimum deposit of $5,000 in shares is required.
REINVESTMENT PRIVILEGE: A shareholder who has redeemed shares may reinvest, with
credit for any CDSCs paid on the redeemed shares, any portion or all of the
redemption proceeds (plus that amount necessary to acquire a fractional share to
round off the purchase to the nearest full share) in shares of the Fund,
provided that the reinvestment is effected within 60 days after such redemption
and the privilege has not been used more than once in the prior 12 months.
Shares are sold to a reinvesting shareholder at the next determined net asset
value following timely receipt of a written purchase order by the Principal
Underwriter or by the Fund (or by the Fund's Transfer Agent). To the extent that
any shares are sold at a loss and the proceeds are reinvested in shares of the
Fund (or other shares of the Fund are acquired) within the period beginning 30
days before and ending 30 days after the date of 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.
DISTRIBUTIONS AND TAXES
- ------------------------------------------------------------------------------
DISTRIBUTIONS. It is the present policy of the Fund to make (A) at least one
distribution annually (normally in December) of all or substantially all of the
investment income allocated to the Fund by the Portfolio (less the Fund's direct
and allocated expenses), and (B) at least one distribution annually of all or
substantially all of the net realized capital gains (if any) allocated to the
Fund by the Portfolio (reduced by any available capital loss carryforwards from
prior years). Shareholders may reinvest all distributions in shares of the Fund
without a sales charge at the per share net asset value as of the close of
business on the record date.
The Fund's investment income consists of the Fund's allocated share of the net
investment income of the Portfolio, less all actual and accrued expenses of the
Fund determined in accordance with generally accepted accounting principles. The
Portfolio's net investment income consists of all income accrued on the
Portfolio's assets, less all actual and accrued expenses of the Portfolio
determined in accordance with generally accepted accounting principles. The
Fund's net realized capital gains, if any, consist of the net realized capital
gains (if any) allocated to the Fund by the Portfolio for tax purposes, after
taking into account any available capital loss carryovers.
TAXES. Distributions by the Fund which are derived from the Fund's allocated
share of the Portfolio's net investment income, net short-term capital gains and
certain foreign exchange gains are taxable to shareholders as ordinary income,
whether received in cash or reinvested in additional shares of the Fund. The
Fund's distributions will generally not qualify for the dividends-received
deduction for corporate shareholders. The Fund anticipates that for federal tax
purposes the entire distribution will constitute ordinary income to the
shareholders. Shareholders reinvesting such distributions should treat the
entire amount of the distribution as the tax basis of the additional shares
acquired by reason of such reinvestment.
Capital gains referred to in clause (B) above, if any, realized by the Portfolio
and allocated to the Fund for the Fund's fiscal year, which ends on August 31,
will usually be distributed by the Fund prior to the end of December.
Distributions by the Fund of long-term capital gains allocated to the Fund by
the Portfolio are taxable to shareholders as long-term capital gains, whether
paid in cash or reinvested in additional shares of the Fund and regardless of
the length of time Fund shares have been owned by the shareholder.
If shares are purchased shortly before the record date of a distribution, the
shareholder will pay the full price for the shares and then receive some portion
of the price back as a taxable distribution. The amount, timing and character of
the Fund's distributions to shareholders may be affected by special tax rules
governing the Portfolio's activities in options, futures and forward foreign
currency exchange transactions or certain other investments.
Certain distributions, if declared by the Fund in October, November or December
and paid the following January will be taxable to shareholders as if received on
December 31 of the year in which they are declared.
The Fund intends to qualify as a regulated investment company under the Code and
to satisfy all requirements relating to the sources of its income, the
distribution of its income, and the diversification of its assets. In satisfying
these requirements, the Fund will treat itself as owning its proportionate share
of each of the Portfolio's assets and as entitled to the income of the Portfolio
properly attributable to such share.
As a regulated investment company under the Code, the Fund does not pay federal
income or excise taxes to the extent that it distributes to shareholders its net
investment income and net realized capital gains in accordance with the timing
requirements imposed by the Code. As a partnership under the Code, the Portfolio
does not pay federal income or excise taxes.
Income realized by the Portfolio from certain instruments and allocated to the
Fund may be subject to foreign income taxes, and the Fund may make an election
under Section 853 of the Code that would allow shareholders to claim a credit or
deduction on their federal income tax returns for (and treated as additional
amounts distributed to them) their pro rata portion of the Fund's allocated
share of qualified taxes paid by the Portfolio to foreign countries. This
election may be made only if more than 50% of the assets of the Fund, including
its allocable share of the Portfolio's assets, at the close of the Fund's
taxable year consists of securities in foreign corporations. The Fund will send
a written notice of any such election (not later than 60 days after the close of
its taxable year) to each shareholder indicating the amount to be treated as the
shareholder's proportionate share of such taxes. Availability of foreign tax
credits or deductions for shareholders is subject to certain additional
restrictions and limitations under the Code.
The Fund will provide its shareholders annually with tax information notices and
Forms 1099 to assist in the preparation of their federal and state tax returns
for the prior calendar year's distributions, proceeds from the redemption or
exchange of Fund shares, and federal income tax (if any) withheld by the Fund's
Transfer Agent.
Shareholders should consult with their tax advisors concerning the applicability
of state, local or other taxes to an investment in the Fund.
PERFORMANCE INFORMATION
- ------------------------------------------------------------------------------
FROM TIME TO TIME, THE FUND MAY ADVERTISE ITS AVERAGE ANNUAL TOTAL RETURN. The
Fund's average annual total return is determined by multiplying a hypothetical
initial purchase 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 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 CDSC at
the end of the period. The Fund may also publish annual and cumulative total
return figures from time to time. The Fund may use such total return figures,
together with comparisons with the Consumer Price Index, various domestic and
foreign securities indices and performance studies prepared by independent
organizations, in advertisements and in information furnished to present or
prospective shareholders. The Fund may also quote total return for the period
prior to commencement of operations which would reflect the Portfolio's total
return (or that of its predecessor) adjusted to reflect any applicable Fund
sales charge.
The Fund may also publish total return figures which do not take into account
any CDSC which may be imposed upon redemptions at the end of the specified
period. Any performance figure which does not take into account the CDSC 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.
The following chart reflects the annual investment returns of the Fund for one
year periods ending August 31 and does not take into account the CDSC which
investors may bear. The total return for the period prior to the Fund's
commencement of operations on June 7, 1993 reflects the total return of the
Portfolio (or that of its predecessor) which had different operating expenses.
LIFE OF FUND AVERAGE ANNUAL TOTAL RETURN -- 11.28%
1993(1) 26.58%
1994 25.08%
1995 (9.06%)
1996 4.71%
(1) From the start of business, October 28, 1992, to August 21, 1993
<PAGE>
[Logo]
EATON VANCE
================
Mutual Funds
- ----------------------------------------------------------------------------
EV MARATHON
GREATER CHINA
GROWTH FUND
PROSPECTUS
JANUARY 1, 1997
EV MARATHON GREATER CHINA
GROWTH FUND
24 FEDERAL STREET
BOSTON, MA 02110
- --------------------------------------------------------------------------------
SPONSOR AND MANAGER OF EV MARATHON GREATER CHINA GROWTH FUND
ADMINISTRATOR OF GREATER CHINA GROWTH PORTFOLIO
Eaton Vance Management, 24 Federal Street, Boston, MA 02110
ADVISER OF GREATER CHINA GROWTH PORTFOLIO
Lloyd George Investment Management (Bermuda) Limited, 3808 One Exchange Square,
Central, Hong Kong
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc., 24 Federal Street, Boston, MA 02110
(800) 225-6265
CUSTODIAN
Investors Bank & Trust Company, 89 South Street, Boston, MA 02111
TRANSFER AGENT
First Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123
(800) 262-1122
AUDITORS
Deloitte & Touche LLP, 125 Summer Street, Boston, MA 02110
M-CGP
<PAGE>
PART A
INFORMATION REQUIRED IN A PROSPECTUS
EV TRADITIONAL
GREATER CHINA GROWTH FUND
- ------------------------------------------------------------------------------
EV TRADITIONAL GREATER CHINA GROWTH FUND (THE "FUND") IS A MUTUAL FUND SEEKING
LONG-TERM CAPITAL APPRECIATION THROUGH INVESTMENT IN EQUITY SECURITIES OF
COMPANIES WHICH, IN THE OPINION OF THE INVESTMENT ADVISER, WILL BENEFIT FROM
THE ECONOMIC DEVELOPMENT AND GROWTH OF THE PEOPLE'S REPUBLIC OF CHINA. THE
FUND INVESTS ITS ASSETS IN GREATER CHINA GROWTH PORTFOLIO (THE "PORTFOLIO"), A
DIVERSIFIED OPEN-END INVESTMENT COMPANY HAVING THE SAME INVESTMENT OBJECTIVE
AS THE FUND, RATHER THAN BY DIRECTLY INVESTING IN AND MANAGING ITS OWN
PORTFOLIO OF SECURITIES. A SIGNIFICANT PERCENTAGE OF THE PORTFOLIO WILL BE
INVESTED IN THE SECURITIES MARKETS OF COUNTRIES IN THE CHINA REGION, INCLUDING
HONG KONG, CHINA, TAIWAN, SOUTH KOREA, SINGAPORE, MALAYSIA, THAILAND,
INDONESIA AND THE PHILIPPINES. THE FUND IS A SEPARATE SERIES OF EATON VANCE
GROWTH TRUST (THE "TRUST").
Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, any bank or other insured depository institution, and are not
federally insured by the Federal Deposit Insurance Corporation, the Federal
Reserve Board or any other government agency. Shares of the Fund involve
investment risks, including fluctuations in value and the possible loss of
some or all of the principal investment.
This Prospectus is designed to provide you with information you should know
before investing. Please retain this document for future reference. A
Statement of Additional Information for the Fund dated January 1, 1997, 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 (the "Manager"). The
Portfolio's investment adviser is Lloyd George Investment Management (Bermuda)
Limited (the "Adviser"). The principal business address of the Adviser is 3808
One Exchange Square, Central, Hong Kong.
- ------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PAGE PAGE
Shareholder and Fund Expenses .......................... 2 How to Buy Fund Shares ............................. 15
The Fund's Financial Highlights ........................ 3 How to Redeem Fund Shares .......................... 18
Investment Opportunities in the China Region ........... 5 Reports to Shareholders ............................ 19
The Fund's Investment Objective ........................ 6 The Lifetime Investing Account/Distribution
Investment Policies and Risks .......................... 7 Options .......................................... 19
Organization of the Fund and the Portfolio ............. 11 The Eaton Vance Exchange Privilege ................. 20
Management of the Fund and the Portfolio ............... 12 Eaton Vance Shareholder Services ................... 21
Distribution Plan ...................................... 14 Distributions and Taxes ............................ 22
Valuing Fund Shares .................................... 15 Performance Information ............................ 23
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
PROSPECTUS DATED JANUARY 1, 1997
<PAGE>
SHAREHOLDER AND FUND EXPENSES
- ------------------------------------------------------------------------------
<TABLE>
SHAREHOLDER TRANSACTION EXPENSES
-------------------------------------------------------------------------------------------------------
<S> <C>
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
ANNUAL FUND AND ALLOCATED PORTFOLIO OPERATING EXPENSES (as a percentage of average daily net assets)
-------------------------------------------------------------------------------------------------------
Management Fees 1.24%
Rule 12b-1 Distribution (and Service) Fees 0.50%
Other Expenses 0.41%
----
Total Operating Expenses 2.15%
====
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
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: $68 $112 $157 $284
</TABLE>
NOTES:
The table and Example 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. Information
for the Fund is based on its expenses for the most recent fiscal year.
Management Fees include management fees paid by the Fund and investment
advisory and administration fees paid by the Portfolio of 0.25%, 0.74% and
0.25%, respectively.
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 "The Fund's Financial Highlights", "Management of
the Fund and the Portfolio" and "How to Redeem Fund Shares". 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. See "Distribution Plan".
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 12
months of purchase. See "How to Buy Fund Shares" and "How to Redeem Fund
Shares".
The Fund invests exclusively in the Portfolio. Other investment companies and
investors with different distribution arrangements are investing in the
Portfolio and others may do so in the future. See "Organization of the Fund
and the Portfolio".
<PAGE>
THE FUND'S FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
The following information should be read in conjunction with the audited
financial statements included in the Fund's annual report to shareholders
which is incorporated by reference into the Statement of Additional
Information in reliance upon the report of Deloitte & Touche LLP, independent
certified public accountants, as experts in accounting and auditing. Further
information regarding the performance of the Fund is contained in its annual
report to shareholders which may be obtained without charge by contacting the
Principal Underwriter.
<TABLE>
- ------------------------------------------------------------------------------------------------------
<CAPTION>
FOR THE YEAR ENDED AUGUST 31,
--------------------------------------------------------
1996 1995 1994 1993*
-------- -------- -------- --------
<S> <C> <C> <C> <C>
NET ASSET VALUE, beginning of year $ 14.230 $ 15.710 $ 12.450 $ 10.000
-------- -------- -------- --------
Income (loss)from operations --
Net investment income (loss) $ (0.040) $ 0.051 $ (0.026) $ (0.029)
Net realized and unrealized gain (loss)
on investments 0.790 (1.441) 3.336 2.479
-------- -------- -------- --------
Total income (loss) from operations $ 0.750 $ (1.390) $ 3.310 $ 2.450
-------- -------- -------- --------
Less distributions --
From net investment income $ -- $ (0.051) $ -- $ --
In excess of net investment income(4) -- (0.004) -- --
From net realized gain on investment
transactions -- -- (0.050) --
In excess of net realized gain on
investment transactions -- (0.035) -- --
-------- -------- -------- --------
Total distributions $ -- $ (0.090) $ (0.050) $ --
-------- -------- -------- --------
NET ASSET VALUE, end of year $ 14.980 $ 14.230 $ 15.710 $ 12.450
======== ======== ======== ========
TOTAL RETURN(1) 5.27% (8.82)% 26.56% 24.50%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $205,476 $242,901 $316,229 $154,317
Ratio of net expenses to average
daily net assets(2)(3) 2.15% 2.08% 2.12% 2.47%+
Ratio of net expenses to average daily
net assets after custodian fee
reduction(2)(3) 2.09% -- -- --
Ratio of net investment loss to average
daily net assets (0.02)% (0.38)% (0.28)% (0.69)%+
+ Computed on an annualized basis.
* For the period from the start of business, October 28, 1992, to August 31, 1993.
(1) Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Distributions, if any, are assumed to be reinvested at
the net asset value on the record date. Total return is computed on a
non-annualized basis.
(2) Includes the Fund's share of the Portfolio's allocated expenses.
(3) The expense ratios for the year ended August 31, 1996 have been adjusted
to reflect a change in reporting requirements. The new reporting
guidelines require the Fund, as well as the Portfolio, to increase its
expense ratio by the effect of any expense offset arrangements with its
service providers. The expense ratios for each of the periods ended on or
before August 31, 1995 have not been adjusted to reflect this change.
(4) The Fund has followed the Statement of Position (SOP) 93-2: Determination,
Disclosure and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distribution by Investment Companies. The SOP
requires that differences in the recognition or classification of income
between the financial statements and tax earnings and profits that result
in temporary over-distributions for financial statement purposes, are
classified as distributions in excess of net investment income or
accumulated net realized gains.
</TABLE>
<PAGE>
THE --------------------------------------------
CHINA
REGION
[MAP]
--------------------------------------------
CHINA'S --------------------------------------------
SPECIAL
ECONOMIC
ZONES
[MAP]
--------------------------------------------
<PAGE>
INVESTMENT OPPORTUNITIES IN THE CHINA REGION
- -------------------------------------------------------------------------------
THE FOLLOWING IS A GENERAL DISCUSSION OF THE ECONOMIES AND SECURITIES MARKETS
IN WHICH THE PORTFOLIO MAY INVEST. There can be no assurance that the
Portfolio will be able to capitalize on the factors described herein. Opinions
expressed herein are the good faith opinions of the Portfolio's Adviser, Lloyd
George Investment Management (Bermuda) Limited. Unless otherwise indicated,
all amounts are expressed in United States dollars.
Over the past twenty years the performance of the major Asian securities
markets has generally been better than that of markets in Europe and the
United States. For over five years, the newly emerging securities markets of
the China Region have demonstrated significant growth in market
capitalization, in numbers of listed securities and in the volume of
transactions. Over the same period, the underlying economies of the region
have grown against a background of the high savings rates characteristic of
many Asian societies and generally moderate inflation. According to the Asian
Development Bank forecasts, the economies of Southeast Asia, excluding Japan,
are forecast to grow by 7.6% in 1997. The following graph shows the average
growth in gross domestic product ("GDP") from 1990 to 1996 for the main
countries in Southeast Asia, compared with the United States.
AVERAGE GROSS DOMESTIC PRODUCT GROWTH (1990-1996)
-------------------------------------------------
THAILAND 8.81%
CHINA 10.13%
MALAYSIA 8.77%
SINGAPORE 8.41%
SOUTH KOREA 7.80%
INDONESIA 7.90%
TAIWAN 6.47%
HONG KONG 5.10%
PHILIPPINES 2.79%
UNITED STATES 1.95%
-------------------------------------------------
SOURCE: LLOYD GEORGE MANAGEMENT (HONG KONG) LIMITED
A PARTICULARLY SIGNIFICANT FACTOR WITHIN THE REGION FOR MORE THAN A DECADE HAS
BEEN THE INCREASING INFLUENCE WHICH CHINA HAS HAD IN THE DETERMINATION OF THE
ECONOMIC DEVELOPMENT OF CERTAIN COUNTRIES. The links between China and Hong
Kong, between China and Taiwan and between China and other countries within
the region, where there is a significant Chinese element of the population,
have by now been strengthened to a degree which makes a reversal unlikely.
Moreover, although these links have been developed to a stage where economic
co-operation in trade operates smoothly, the full potential of the market,
both in terms of domestic consumption and of export growth, has hardly begun
to be realized. This potential presents investment opportunity for the Fund
and the Portfolio.
CHINA'S POPULATION, ESTIMATED AT 1.3 BILLION, IS THE HIGHEST OF ANY COUNTRY IN
THE WORLD. China has had for many centuries a well deserved reputation for
being closed to foreigners, with trade with the outside world being carried on
under terms of extreme restriction and under central control. Such conditions
were maintained in the first thirty years of the Communist regime which began
in 1949; however there have been several stages of evolution, from the
institution of an industrialization program in the 1950s to a modernization
policy commencing in 1978 which combined economic development with the
beginnings of opening the country to foreign investment and commerce. The
economic plans covering the last decade of the century include objectives to
quadruple the country's 1980 industrial and agricultural output by the year
2000, to increase the export element of the economy and to continue to open
the country with further development of the designated special investment
areas.
In order to attract foreign investment China has since 1978 designated certain
areas of the country where overseas investors can receive special investment
incentives and tax concessions. There are five Special Economic Zones
(Shenzhen, Shantou and Zhuhai in Guangdong Province, Xiamen in Fujian Province
and Hainan Island, which itself is a province). Fourteen coastal cities have
been designated as "open cities" and certain Open Economic Zones have been
established in coastal areas. Shanghai has established the Pudong New Area.
Twenty-seven High and New Technology Industrial Development Zones have been
approved where preferential treatment is given to enterprises which are
confirmed as technology intensive. As a result, foreign direct investment in
China has increased substantially in the last decade. The realized value of
foreign direct investment in China was over $37 billion in 1995.
AS A TRADE ENTREPOT AND FINANCE CENTER, HONG KONG'S VIABILITY HAS BEEN
INEXORABLY LINKED TO MAINLAND CHINA SINCE THE ESTABLISHMENT OF THE COLONY IN
1841. HONG KONG REMAINS CHINA'S LARGEST TRADE PARTNER AND ITS LEADING FOREIGN
INVESTOR. In 1995, visible trade between Hong Kong and China exceeded $980
billion. In recent years large numbers of Hong Kong based companies have set
up factories in the southern Chinese province of Guangdong, where it is
estimated that Hong Kong companies employ more than 2.5 million workers.
There also has been considerable growth in Chinese investment in Hong Kong
over the last decade, particularly in banking property, manufacturing and
infrastructure projects. In view of the growing economic interaction between
Hong Kong and Southern China, it is increasingly meaningful to consider the
concept of a Greater Hong Kong economy consisting of Hong Kong and Guangdong
Province, with a combined population of 72 million. The Basic Law, the outline
for Hong Kong's government post 1997, calls for Hong Kong's capitalist system
to remain intact for an additional fifty years after 1997 and sets out details
for the integration of Hong Kong into China after 1997.
TAIWAN HAS ALSO BENEFITTED FROM CHINA'S ECONOMIC LIBERALIZATION, GIVEN ITS
GEOGRAPHIC PROXIMITY AND ITS CULTURAL AND ETHNIC TIES. Taiwan companies
continue to be attracted by China's low labor costs, inexpensive land and less
rigid environmental rules. It is estimated that accumulated Taiwanese
investment in China exceeds $3 billion. Taiwanese listed companies include a
number which invested indirectly in China, primarily in the textiles, food and
rubber industries.
THE ADVISER BELIEVES THAT OTHER COUNTRIES IN THE CHINA REGION WILL ALSO
BENEFIT FROM THE REGION'S ECONOMIC GROWTH. Listed companies throughout Asia
are becoming increasingly active in China. There has also been considerable
foreign investment by Japanese companies in the Northeastern Provinces of
Liaoning, Jilin, and Heilongiang. As the major trading partner of these
provinces, Japan is primarily manufacturing light industrial products for re-
export. Major Japanese projects have been set up in the electronics and
natural resources sectors in China. While Thailand has been traditionally
known as a recipient of foreign investment, Chinese-managed listed companies
in the banking, textiles and packaging sectors have indicated their intention
of expanding into China. In Singapore, shipping, construction and hotel
companies have been the first sectors to do business in China while several
Malaysian companies in the manufacturing sector have invested in joint
ventures in China. The Adviser believes that growing China exposure will
enhance the earnings growth of such companies, making them attractive for
investment.
See Appendix A to the Statement of Additional Information for further
information about the economic characteristics of and risks associated with
investing in China Region countries.
THE FUND'S INVESTMENT OBJECTIVE
- ------------------------------------------------------------------------------
THE FUND'S INVESTMENT OBJECTIVE IS TO SEEK LONG-TERM CAPITAL APPRECIATION. It
currently seeks to meet its investment objective by investing its assets in
the Greater China Growth Portfolio (the "Portfolio"), a separate registered
investment company which invests primarily in equity securities of companies
which, in the opinion of the Adviser, will benefit from the economic
development and growth of the People's Republic of China ("China"). A
significant percentage of the Portfolio's assets will be invested in the
securities markets of countries in the China region, consisting of Hong Kong,
China, Taiwan, South Korea, Singapore, Malaysia, Thailand, Indonesia and the
Philippines (collectively, the "China Region").
Investments in the China Region can involve significant risks that are
generally not involved with investments in U.S. companies. The Fund is
intended for long-term investors who can accept international investment risk
and little or no current income. The Fund is not intended to be a complete
investment program. A prospective investor should take into account personal
objectives and other investments when considering the purchase of Fund shares.
The Fund cannot assure achievement of its investment objective. The investment
objective of the Fund and the Portfolio are nonfundamental. China Region
investments may offer higher potential for gains and losses than investments
in the United States. See "Investment Policies and Risks" for further
information.
INVESTMENT POLICIES AND RISKS
- ------------------------------------------------------------------------------
THE PORTFOLIO SEEKS TO ACHIEVE ITS OBJECTIVE THROUGH INVESTING IN A CAREFULLY
SELECTED AND CONTINUOUSLY MANAGED PORTFOLIO CONSISTING PRIMARILY OF EQUITY
SECURITIES OF COMPANIES WHICH, IN THE OPINION OF THE ADVISER, WILL BENEFIT
FROM THE ECONOMIC DEVELOPMENT AND GROWTH OF CHINA ("CHINA GROWTH COMPANIES").
A significant percentage of the Portfolio's assets will be invested in the
securities markets of countries in the China Region (or Greater China). The
Portfolio will, under normal market conditions, invest at least 65% of its
total assets in equity securities of China growth companies ("Greater China
investments"). However, it is expected that substantially all of the
Portfolio's assets will normally be invested in equity securities, warrants
and equity options. China growth companies consist of companies that (a) are
located in or whose securities are principally traded in a China Region
country, (b)(i) have at least 50% of their assets in one or more China Region
countries or (ii) derive at least 50% of their gross sales revenues or profits
from providing goods or services to or from within one or more China Region
countries and (c)(i) have at least 35% of their assets in China, or (ii)
derive at least 35% of their gross sales revenues or profits from providing
goods or services to or from within China or (iii) have manufacturing or other
operations in China that are significant to such companies. Greater China
investments are typically listed on stock exchanges or traded in the over-the-
counter markets in countries in the China Region. The principal offices of
these companies, however, may be located outside these countries. The
Portfolio may invest 25% or more of its total assets in the securities of
issuers located in any one country in the China Region. The Portfolio has
invested more than 25% of its total assets in issuers located in Hong Kong,
but the Adviser currently expects the Portfolio ordinarily will not invest
more than 15% of its total assets in any other country.
Equity securities, for purposes of the 65% policy, will be limited to common
and preferred stocks; equity interests in trusts, partnerships, joint ventures
and other unincorporated entities or enterprises; special classes of shares
available only to foreign investors in markets that restrict the ownership by
foreign investors to certain classes of equity securities; convertible
preferred stocks; and other convertible investment grade debt instruments. A
debt security is investment grade if it is rated BBB or above by Standard &
Poor's Ratings Group ("S&P") or Baa or above by Moody's Investors Service,
Inc. ("Moody's") or determined to be of comparable quality by the Adviser.
Debt securities rated BBB by S&P or Baa by Moody's have speculative
characteristics and changes in economic conditions or other circumstances are
more likely to lead to a weakened capacity to make principal and interest
payments than is the case with higher grade debt securities. The Portfolio
will promptly dispose of any convertible debt instrument which is rated or
determined by the Adviser to be below investment grade subsequent to
acquisition by the Portfolio. Direct investments in China growth companies
will not exceed 10% of the Portfolio's total assets.
In addition to its investments in equity securities, the Portfolio may invest
up to 5% of its net assets in options on equity securities and up to 5% of its
net assets in warrants, including options and warrants traded in over-the-
counter markets. The Portfolio will not, under normal market conditions,
invest more than 35% of its total assets in equity securities other than
Greater China investments, warrants, options on securities and indices,
options on currency, futures contracts and options on futures, forward foreign
currency exchange contracts, currency swaps and any other non-equity
investments. The Portfolio will not invest in debt securities, other than
investment grade convertible debt instruments. The Portfolio will not invest
more than 10% of its assets in the securities of issuers in any country
outside the China Region.
The Portfolio may, for temporary defensive purposes, invest some or all of its
total assets in high grade debt securities of foreign and United States
companies, foreign governments and the U.S. Government, and their respective
agencies, instrumentalities, political subdivisions and authorities, as well
as in high quality money market instruments denominated in U.S. dollars or a
foreign currency.
INVESTING IN FOREIGN SECURITIES. Investing in securities issued by foreign
companies and governments involves considerations and possible risks not
typically associated with investing in securities issued by the U.S.
Government and domestic corporations. The values of foreign investments are
affected by changes in currency rates or exchange control regulations,
application of foreign tax laws, including withholding taxes, changes in
governmental administration or economic or monetary policy (in this country or
abroad) or changed circumstances in dealings between nations. Because
investment in China Region countries will usually involve currencies of
foreign countries, the value of assets of the Portfolio as measured by U.S.
dollars may be adversely affected by changes in currency exchange rates. Such
rates may fluctuate significantly over short periods of time causing the
Portfolio's net asset value to fluctuate as well. Costs are incurred in
connection with conversions between various currencies. In addition, foreign
brokerage commissions and other costs of investing are generally higher than
in the United States, and foreign securities markets may be less liquid, more
volatile and less subject to governmental supervision than in the United
States. Investments in foreign issuers could be affected by other factors not
present in the United States, including expropriation, armed conflict,
confiscatory taxation, lack of uniform accounting and auditing standards and
potential difficulties in enforcing contractual obligations. Transactions in
the securities of foreign issuers could be subject to settlement delays and
risk of loss.
More than 25% of the Portfolio's total assets, adjusted to reflect currency
transactions and positions, may be denominated in any single currency.
Concentration in a particular currency will increase the Portfolio's exposure
to adverse developments affecting the value of such currency. An issuer of
securities purchased by the Portfolio may be domiciled in a country other than
the country in whose currency the securities are denominated.
Since the Portfolio will, under normal market conditions, invest at least 65%
of its total assets in Greater China investments, its investment performance
will be especially affected by events affecting China Region companies. The
value and liquidity of Greater China investments may be affected favorably or
unfavorably by political, economic, fiscal, regulatory or other developments
in the China Region or neighboring regions. The extent of economic
development, political stability and market depth of different countries in
the China Region varies widely. Certain China Region countries, including
China, Indonesia, Malaysia, the Philippines and Thailand, are either
comparatively underdeveloped or in the process of becoming developed. Greater
China investments typically involve greater potential for gain or loss than
investments in securities of issuers in developed countries. In comparison to
the United States and other developed countries, developing countries may have
relatively unstable governments and economies based on only a few industries.
Given the Portfolio's investments, the Portfolio will likely be particularly
sensitive to changes in China's economy as the result of any reversals of
economic liberalization, political unrest or changes in China's trading
status.
SECURITIES TRADING MARKETS. The securities markets in the China Region are
substantially smaller, less liquid and more volatile than the major securities
markets in the United States. A high proportion of the shares of many issuers
may be held by a limited number of persons and financial institutions, which
may limit the number of shares available for investment by the Portfolio. The
prices at which the Portfolio may acquire investments may be affected by
trading by persons with material non-public information and by securities
transactions by brokers in anticipation of transactions by the Portfolio in
particular securities. Similarly, volume and liquidity in the bond markets in
the China Region are less than in the United States and, at times, price
volatility can be greater than in the United States. The limited liquidity of
securities markets in the China Region may also affect the Portfolio's ability
to acquire or dispose of securities at the price and time it wishes to do so.
In addition, China Region securities markets are susceptible to being
influenced by large investors trading significant blocks of securities.
China Region stock markets are undergoing a period of growth and change which
may result in trading volatility and difficulties in the settlement and
recording of transactions, and in interpreting and applying the relevant law
and regulations. In particular, the securities industry in China is not well
developed. China has no securities laws of nationwide applicability. The
Municipal securities regulations governing the Shanghai and Shenzhen
securities exchanges are very new. Stockbrokers and other intermediaries in
the China Region may not perform as well as their counterparts in the United
States and other more developed securities markets.
CHINA REGION COUNTRY CONSIDERATIONS. The Portfolio will invest in China Region
countries with emerging economies or securities markets. Political and
economic structures in many of such countries may be undergoing significant
evolution and rapid development, and such countries may lack the social,
political and economic stability characteristic of the United States. Certain
of such countries may have, in the past, failed to recognize private property
rights and have at times nationalized or expropriated the assets of private
companies. As a result, the risks described above, including the risks of
nationalization or expropriation of assets, may be heightened. In addition,
unanticipated political or social developments may affect the values of the
Portfolio's investments in those countries and the availability to the
Portfolio of additional investments in those countries.
The laws of countries in the region relating to limited liability of corporate
shareholders, fiduciary duties of officers and directors, and the bankruptcy
of state enterprises are generally less well developed than or different from
such laws in the United States. It may be more difficult to obtain a judgement
in the courts of these countries than it is in the United States. Monsoons and
natural disasters also can affect the value of Portfolio investments.
Economies of countries in the China Region may differ favorably or unfavorably
from the U.S. economy in such respects as rate of growth of gross national
product, rate of inflation, capital reinvestment, resource self-sufficiency
and balance of payments position. As export-driven economies, the economies of
countries in the China Region are affected by developments in the economies of
their principal trading partners. Revocation by the United States of China's
"Most Favored Nation" trading status, which the U.S. President and Congress
reconsider annually, would adversely affect the trade and economic development
of China and Hong Kong. Political control of Hong Kong will vest in China in
mid-1997, and the actual or perceived success of this process will affect
investments in Hong Kong and elsewhere.
China governmental actions can have a significant effect on the economic
conditions in the China Region, which could adversely affect the value and
liquidity of the Portfolio's investments. Although the Chinese Government has
recently begun to institute legal and economic reform policies, there can be
no assurances that it will continue to pursue such policies or, if it does,
that such policies will succeed. China does not have a comprehensive system of
laws and some laws are not even publicly available.
The Fund and the Portfolio each intend to conduct its respective affairs in
such a manner to avoid taxation. Nevertheless, certain countries may require
withholding on dividends paid on portfolio securities and on realized capital
gains. In the past, these taxes have sometimes been substantial. There can be
no assurance that in the future the Portfolio will be able to repatriate its
income, gains or initial capital from these countries.
DIRECT INVESTMENTS. The Portfolio may invest up to 10% of its total assets in
direct investments in China growth companies. Direct investments include (i)
the private purchase from an enterprise of an equity interest in the
enterprise in the form of shares of common stock or equity interests in
trusts, partnerships, joint ventures or similar enterprises, and (ii) the
purchase of such an equity interest in an enterprise from a principal investor
in the enterprise. In each case, the Portfolio will, at the time of making the
investment, enter into a shareholder or similar agreement with the enterprise
and one or more other holders of equity interests in the enterprise. The
Adviser anticipates that these agreements will, in appropriate circumstances,
provide the Portfolio with the ability to appoint a representative to the
board of directors or similar body of the enterprise and for eventual
disposition of the Portfolio's investment in the enterprise. Such a
representative of the Portfolio will be expected to provide the Portfolio with
the ability to monitor its investment and protect its rights in the investment
and will not be appointed for the purpose of exercising management or control
of the enterprise.
Certain of the Portfolio's direct investments, particularly in China, will
probably include investments in smaller, less seasoned companies. These
companies may have limited product lines, markets or financial resources, or
they may be dependent on a limited management group. The Adviser does not
anticipate making direct investments in start-up operations, although it is
expected that in some cases the Portfolio's direct investments will fund new
operations for an enterprise which itself is engaged in similar operations or
is affiliated with an organization that is engaged in similar operations. Such
direct investments may be made in entities that are reasonably expected in the
foreseeable future to become China growth companies, either by expanding
current operations or establishing significant operations in China. Direct
investments may involve a high degree of business and financial risk that can
result in substantial losses. Because of the absence of any public trading
market for these investments, the Portfolio may take longer to liquidate these
positions at fair value than would be the case for publicly traded securities.
Furthermore, issuers whose securities are not publicly traded may not be
subject to public disclosure and other investor protection requirements
applicable to publicly traded securities.
DERIVATIVE INSTRUMENTS. The Portfolio may purchase or sell derivative
instruments (which are instruments that derive their value from another
instrument, security, index or currency) to enhance return (which may be
considered speculative), to hedge against fluctuations in securities prices,
interest rates or currency exchange rates, or as a substitute for the purchase
or sale of securities or currencies. The Portfolio's transactions in
derivative instruments may be in the U.S. or abroad and may include the
purchase or sale of futures contracts on securities, securities indices, other
indices, other financial instruments or currencies; options on futures
contracts; exchange-traded and over-the-counter options on securities, indices
or currencies; and forward foreign currency exchange contracts. The
Portfolio's transactions in derivative instruments involve a risk of loss or
depreciation due to: unanticipated adverse changes in securities prices,
interest rates, the other financial instruments' prices or currency exchange
rates; the inability to close out a position; default by the counterparty;
imperfect correlation between a position and the desired hedge; tax
constraints on closing out positions; and portfolio management constraints on
securities subject to such transactions. The loss on derivative instruments
(other than purchased options) may substantially exceed the Portfolio's
initial investment in these instruments. In addition, the Portfolio may lose
the entire premium paid for purchased options that expire before they can be
profitably exercised by the Portfolio. The Portfolio incurs transaction costs
in opening and closing positions in derivative instruments. There can be no
assurance that the Adviser's use of derivative instruments will be
advantageous to the Portfolio.
The Portfolio may purchase call and put options on any securities in which the
Portfolio may invest or options on any securities index composed of securities
in which the Portfolio may invest. The Portfolio does not intend to write a
covered option on any security if after such transaction more than 15% of its
net assets, as measured by the aggregate value of the securities underlying
all covered calls and puts written by the Portfolio, would be subject to such
options. The Portfolio does not intend to purchase an option on any security
if, after such transaction, more than 5% of its net assets, as measured by the
aggregate of all premiums paid for all such options held by the Portfolio,
would be so invested.
To the extent that the Portfolio enters into futures contracts, options on
futures contracts and options on foreign currencies traded on an exchange
regulated by the Commodity Futures Trading Commission ("CFTC"), in each case
that are not for bona fide hedging purposes (as defined by the CFTC), the
aggregate initial margin and premiums required to establish these positions
(excluding the amount by which options are "in-the-money") may not exceed 5%
of the liquidation value of the Portfolio's investments, after taking into
account unrealized profits and unrealized losses on any contracts the
Portfolio has entered into.
Forward contracts are individually negotiated and privately traded by currency
traders and their customers. A forward contract involves an obligation to
purchase or sell a specific currency (or basket of currencies) for an agreed
price at a future date, which may be any fixed number of days from the date of
the contract. The Portfolio may engage in cross-hedging by using forward
contracts in one currency (or basket of currencies) to hedge against
fluctuations in the value of securities denominated in a different currency if
the Adviser determines that there is an established historical pattern of
correlation between the two currencies (or the basket of currencies and the
underlying currency). Use of a different foreign currency magnifies the
Portfolio's exposure to foreign currency exchange rate fluctuations. The
Portfolio may also use forward contracts to shift its exposure to foreign
currency exchange rate changes from one currency to another.
The Portfolio may enter into currency swaps for both hedging and non-hedging
purposes. Currency swaps involve the exchange of rights to make or receive
payments in specified currencies. Since currency swaps are individually
negotiated, the Portfolio expects to achieve an acceptable degree of
correlation between its portfolio investments and its currency swap positions.
Currency swaps usually involve the delivery of the entire principal value of
one designated currency in exchange for the other designated currency.
Therefore, the entire principal value of a currency swap is subject to the
risk that the other party to the swap will default on its contractual delivery
obligations. The use of currency swaps is a highly specialized activity which
involves special investment techniques and risks. If the Adviser is incorrect
in its forecasts of market values and currency exchange rates, the Portfolio's
performance will be adversely affected.
REPURCHASE AGREEMENTS. The Portfolio may enter into repurchase agreements (the
purchase of a security coupled with an agreement to resell) with respect to
its permitted investments, but currently intends to do so only with member
banks of the Federal Reserve System or with primary dealers in U.S. Government
securities. In the event of the bankruptcy of the other party to a repurchase
agreement, the Portfolio might experience delays in recovering its cash. To
the extent that, in the meantime, the value of the securities the Portfolio
purchased may have decreased, the Portfolio could experience a loss. At no
time will the Portfolio commit more than 15% of its net assets to repurchase
agreements which mature in more than seven days and other illiquid securities.
OTHER INVESTMENT COMPANIES. The Portfolio reserves the right to invest up to
10% of its total assets, calculated at the time of purchase, in the securities
of other investment companies unaffiliated with the Adviser or the Manager
that have the characteristics of closed-end investment companies. The
Portfolio will indirectly bear its proportionate share of any management fees
paid by investment companies in which it invests in addition to the advisory
fee paid by the Portfolio. The value of closed-end investment company
securities, which are usually traded on an exchange, is affected by demand for
the securities themselves, independent of the demand for the underlying
portfolio assets and, accordingly, such securities can trade at a discount
from their net asset values.
INVESTMENT LIMITATIONS. The Fund and the Portfolio have adopted certain
fundamental investment restrictions and policies which are enumerated in
detail in the Statement of Additional Information and which may not be changed
unless authorized by a shareholder vote and an investor vote, respectively.
Among these fundamental restrictions, neither the Fund nor the Portfolio may
(1) borrow money except from banks or through reverse repurchase agreements
and in an amount not exceeding one-third of its total assets; or (2) with
respect to 75% of its total assets, invest more than 5% of its total assets in
the securities of any one issuer, other than U.S. Government securities or, in
the case of the Fund, interests in the Portfolio, or acquire more than 10% of
the outstanding voting securities of any one issuer. Except with respect to
the Portfolio's borrowing limitation, investment restrictions are considered
at the time of acquisition of assets; the sale of portfolio assets generally
is not required in the event of a subsequent change in circumstances. As a
matter of fundamental policy the Portfolio will invest less than 25% of its
total assets in the securities, other than U.S. Government securities, of
issuers in any one industry. However, the Portfolio is permitted to invest 25%
or more of its total assets in (i) the securities of issuers located in any
one country in the China Region and (ii) assets denominated in the currency of
any one country.
Except for the fundamental investment restrictions and policies specifically
identified above and those enumerated in the Statement of Additional
Information, the investment objective and policies of the Fund and the
Portfolio are not fundamental policies and accordingly may be changed by the
Trustees of the Trust and the Portfolio without obtaining the approval of the
shareholders of the Fund or the investors in the Portfolio, as the case may
be. As a matter of nonfundamental policy, neither the Fund nor the Portfolio
(i) intends to borrow for leverage purposes or may purchase any securities if,
at the time of such purchase, permitted borrowings exceed 5% of the value of
the Portfolio's or the Fund's total assets, as the case may be, or (ii) is
permitted to invest more than 15% of its net assets in unmarketable
securities, over-the-counter options, repurchase agreements maturing in more
than seven days and other illiquid securities. Nevertheless, the Portfolio may
temporarily borrow up to 5% of the value of its total assets to satisfy
redemption requests or settle securities transactions. The Portfolio may lend
portfolio securities and engage in repurchase agreements and reverse
repurchase agreements but the Adviser has no current intention to do so.
Under the Investment Company Act of 1940 (the "1940 Act") and the rules
promulgated thereunder, the Portfolio's investments in the securities of any
company that, in its most recent fiscal year, derived more than 15% of its
gross revenues from securities-related activities is limited to 5% of any
class of the issuer's equity securities and 10% of the outstanding principal
amount of the issuer's debt securities, provided that the Portfolio's
aggregate investments in the securities of any such issuer do not exceed 5% of
the Portfolio's total assets. Some of the companies available for investment
in the China Region, including enterprises being privatized by such countries,
may be financial services businesses that engage in securities-related
activities. The Portfolio's ability to invest in such enterprises may thus be
limited.
ORGANIZATION OF THE FUND AND THE PORTFOLIO
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THE FUND IS A DIVERSIFIED SERIES OF EATON VANCE GROWTH TRUST (THE "TRUST"), A
BUSINESS TRUST ESTABLISHED UNDER MASSACHUSETTS LAW PURSUANT TO A DECLARATION
OF TRUST DATED MAY 25, 1989, AS AMENDED. THE TRUST IS A MUTUAL FUND -- AN
OPEN-END MANAGEMENT INVESTMENT COMPANY. The Trustees of the Trust are
responsible for the overall management and supervision of its affairs. The
Trust may issue an unlimited number of shares of beneficial interest (no par
value per share) in one or more series (such as the Fund). 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.
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, affords the potential for economies of scale for the Fund (at least
when the assets of the Portfolio exceed $500 million) and may over time result
in lower expenses for the Fund.
In addition to selling an interest to the Fund, the Portfolio may sell
interests to other affiliated and non-affiliated mutual funds or institutional
investors. Such investors will invest in the Portfolio on the same terms and
conditions and will pay a proportionate share of the Portfolio's expenses.
However, the other investors investing in the Portfolio are not required to
sell their shares at the same public offering price as the Fund due to
variations in sales commissions and other operating expenses. Therefore, these
differences may result in differences in returns experienced by investors in
the various funds that invest in the Portfolio. Such differences in returns
are also present in other mutual fund structures, including funds that have
multiple classes of shares. Information regarding other pooled investment
entities or funds which invest in the Portfolio may be obtained by contacting
the Principal Underwriter, 24 Federal Street, Boston, MA 02110 (617) 482-8260.
Whenever the Fund as an investor in the Portfolio is requested to vote on
matters pertaining to the Portfolio (other than the termination of the
Portfolio's business, which may be determined by the Trustees of the Portfolio
without investor approval), the Fund will hold a meeting of Fund shareholders
and will vote its interest in the Portfolio for or against such matters
proportionately to the instructions to vote for or against such matters
received from Fund shareholders. The Fund shall vote shares for which it
receives no voting instructions in the same proportion as the shares for which
it receives voting instructions. Other investors in the Portfolio may alone or
collectively acquire sufficient voting interests in the Portfolio to control
matters relating to the operation of the Portfolio, which may require the Fund
to withdraw its investment in the Portfolio or take other appropriate action.
Any such withdrawal could result in a distribution "in kind" of portfolio
securities (as opposed to a cash distribution from the Portfolio). If
securities are distributed, the Fund could incur brokerage, tax or other
charges in converting the securities to cash. In addition, the distribution in
kind may result in a less diversified portfolio of investments or adversely
affect the liquidity of the Fund. Notwithstanding the above, there are other
means for meeting shareholder redemption requests, such as borrowing.
The Fund may withdraw (completely redeem) all its assets from the Portfolio at
any time if the Board of Trustees of the Trust determines that it is in the
best interest of the Fund to do so. In the event the Fund withdraws all of its
assets from the Portfolio, or the Board of Trustees of the Trust determines
that the investment objective of the Portfolio is no longer consistent with
the investment objective of the Fund, such Trustees would consider what action
might be taken, including investing the assets of the Fund in another pooled
investment entity or retaining an investment adviser to manage the Fund's
assets in accordance with its investment objective. The Fund's investment
performance may be affected by a withdrawal of all its assets from the
Portfolio.
MANAGEMENT OF THE FUND AND THE PORTFOLIO
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EATON VANCE MANAGEMENT ("EATON VANCE") ACTS AS THE SPONSOR AND MANAGER OF THE
FUND AND THE ADMINISTRATOR OF THE PORTFOLIO. THE PORTFOLIO HAS ENGAGED LLOYD
GEORGE MANAGEMENT (HONG KONG) LIMITED ("LGM-HK") AS ITS INVESTMENT ADVISER.
Pursuant to a service agreement effective on January 1, 1996 between LGM-HK
and its affiliate Lloyd George Investment Management (Bermuda) Limited ("LGIM-
B"), LGIM-B, acting under the general supervision of the Portfolio's Trustees,
manages the Portfolio's investments and affairs. LGM-HK supervises LGIM-B's
performance of this function and retains its contractual obligations under its
investment advisory agreement with the Portfolio. LGM-HK and LGIM-B are
referred to collectively as the Advisers. The Portfolio is managed by Adaline
Mang-Yee Ko.
Each Adviser is registered as an investment adviser with the Securities and
Exchange Commission the ("Commission"). Each Adviser is a subsidiary of Lloyd
George Management (B.V.I.) Limited ("LGM"). LGM and its subsidiaries act as
investment adviser to various individual and institutional clients with total
assets under management of approximately $1.5 billion. Eaton Vance's parent,
Eaton Vance Corp., owns 24% of the Class A shares issued by LGM.
LGM was established in 1991 to provide investment management services with
respect to equity securities of companies trading in Asian securities markets,
especially those of emerging markets. LGM currently manages Pacific Basin and
Asian portfolios for both private clients and institutional investors seeking
long-term capital growth. LGM's core investment team consists of nine
experienced investment professionals, based in Hong Kong, who have worked
together over a number of years successfully managing client portfolios in
Pacific Basin and Asian stock markets. LGM also has offices in Bombay, India
and London, England. The team has a unique knowledge of, and experience with,
Pacific Basin and Asian emerging markets. LGM is ultimately controlled by the
Hon. Robert J.D. Lloyd George, President and Trustee of the Portfolio and
Chairman and Chief Executive Officer of the Advisers. LGM's only activity is
portfolio management.
LGM and the Advisers have adopted a disciplined management style, providing a
blend of Asian and multinational expertise with the most rigorous
international standards of fundamental security analysis. Although focused
primarily in Asia, LGM and the Advisers maintain a network of international
contacts in order to monitor international economic and stock market trends
and offer clients a global management service. Personnel of the Advisers
include the following:
THE HONOURABLE ROBERT LLOYD GEORGE. Chairman. Born in London in 1952 and
educated at Eton College, where he was a King's Scholar, and at Oxford
University. Prior to founding LGM, Mr. Lloyd George was Managing Director of
Indosuez Asia Investment Services Ltd. Previously, he spent four years with
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 three books --
"A Guide to Asian Stock Markets" (Longmans, Hong Kong, 1989), "The East West
Pendulum" (Woodhead - Faulkner, Cambridge, 1991) and "North South -- an
Emerging Markets Handbook (Probus, England, 1994).
WILLIAM WALTER RALEIGH KERR. Finance Director and Chief Operating Officer.
Born in 1950 and educated at Ampleforth and Oxford. Mr. Kerr qualified as a
Chartered Accountant at Thomson McLintock & Co. before joining The Oldham
Estate Company plc as Financial Controller. Prior to joining LGM, Mr. Kerr was
a Director of Banque Indosuez's corporate finance subsidiary, Financiere
Indosuez Limited, in London. Prior to that Mr. Kerr worked for First Chicago
Limited.
SCOBIE DICKINSON WARD. Director. Born in 1966 and a cum laude graduate of both
Phillips Academy Andover, and Harvard University. Mr. Ward joined Indosuez
Asia Investment Services in 1989, where he managed the $100 million Himalayan
Fund, and the Indosuez Tasman Fund, investing in Australia and New Zealand.
Messrs. Ward and Lloyd George manage Eaton Vance's Emerging Markets Portfolio
and South Asia Portfolio (which invests in India and the Indian subcontinent).
M. F. TANG. Director. Born in 1946 and educated in Hong Kong. Mr. Tang is a
Fellow of the Chartered Association of Certified Accountants. Mr. Tang joined
LGM having worked for Australian Mutual Provident Society in Sydney where he
was a Portfolio Manager responsible for Asian Equities. Prior thereto Mr. Tang
worked for Barclays Australia Investment Services Ltd. From 1978 to 1986 Mr.
Tang worked for Barings International Investment Management and prior to that
he spent six years with Peat Marwick Mitchell & Co. Mr. Tang is fluent in the
Cantonese and Mandarin dialects of the Chinese language.
PAMELA CHAN. Director. Born in Hong Kong in 1957 and graduated from Mills
College in Oakland, California. She was an investment executive for Jardine
Fleming from 1982-1984 before moving to Australia where she worked as a Fund
Manager for Rothschild and Aetna. She joined Sun Life Assurance Society PLC in
England in 1987 where she was the head of South East Asian Equities and a
Director. She joined LGM in April 1994 where she is a portfolio manager and a
member of the Pension Management Committee.
ADALINE MANG-YEE KO. Director. Born in 1943 and educated at University of
Birmingham, England and at London Business School where she received her MBA.
Ms. Ko has over 13 years experience working with Far East Asian equities. From
1982-1988, she worked at Save & Prosper Group Ltd. as an investment manager.
In 1988, Ms. Ko transferred to Robert Fleming & Co. Ltd. In 1990, she was
promoted to Director of Fleming Investment Management Ltd. In 1992, she was
promoted to Head of the Pacific Region Portfolios Group where she supervised a
team of 5 with responsibility for over $1.5 billion in assets under
management. Ms. Ko joined LGM in 1995.
While the Portfolio is a New York trust, the Advisers, together with certain
Trustees and officers of the Portfolio, are not residents of the United
States, and substantially all of their respective assets may be located
outside of the United States. It may be difficult for investors to effect
service of process within the United States upon the individuals identified
above, or to realize judgments of courts of the United States predicated upon
civil liabilities of the Advisers and such individuals under the federal
securities laws of the United States. The Portfolio has been advised that
there is substantial doubt as to the enforceability in the countries in which
the Adviser and such individuals reside of such civil remedies and criminal
penalties as are afforded by the federal securities laws of the United States.
Since January 1, 1996, LGM-HK pays to LGIM-B the entire amount of the advisory
fee payable by the Portfolio under its investment advisory agreement with LGM-
HK. Under this agreement, LGM-HK is entitled to receive a monthly advisory fee
of 0.0625% (equivalent to 0.75% annually) of the average daily net assets of
the Portfolio up to $500 million, which fee declines at intervals above $500
million. As at August 31, 1996, the Portfolio had net assets of $510,297,559.
For the fiscal year ended August 31, 1996, the Portfolio paid LGM-HK advisory
fees equivalent to 0.74% of the Portfolio's average daily net assets for such
period.
LGIM-B also furnishes for the use of the Portfolio office space and all
necessary office facilities, equipment and personnel for servicing the
investments of the Portfolio. LGIM-B places the portfolio securities
transactions of the Portfolio with many broker-dealer firms and uses its best
efforts to obtain execution of such transactions at prices which are
advantageous to the Portfolio and at reasonably competitive commission rates.
Subject to the foregoing, LGIM-B may consider sales of shares of the Fund as a
factor in the selection of firms to execute portfolio transactions. The Fund,
the Portfolio and the Advisers have adopted Codes of Ethics relating to
personal securities transactions. The Codes permit Eaton Vance personnel to
invest in securities (including securities that may be purchased or held by
the Portfolio) for their own accounts, subject to certain reporting and other
restrictions and procedures contained in such Codes.
EATON VANCE, ITS AFFILIATES AND ITS PREDECESSOR COMPANIES HAVE BEEN MANAGING
ASSETS OF INDIVIDUALS AND INSTITUTIONS SINCE 1924 AND MANAGING INVESTMENT
COMPANIES SINCE 1931. EATON VANCE ACTS AS INVESTMENT ADVISER TO INVESTMENT
COMPANIES AND VARIOUS INDIVIDUAL AND INSTITUTIONAL CLIENTS WITH ASSETS UNDER
MANAGEMENT OF OVER $16 BILLION. Eaton Vance is a wholly-owned subsidiary of
Eaton Vance Corp., a publicly-held holding company which through its
subsidiaries and affiliates engages primarily in investment management,
administration and marketing activities. The Principal Underwriter is a
wholly-owned subsidiary of Eaton Vance.
Eaton Vance, acting under the general supervision of the Boards of Trustees of
the Trust and the Portfolio, manages and administers the business affairs of
the Fund and the Portfolio. Eaton Vance's services include monitoring and
providing reports to the Trustees of the Trust and the Portfolio concerning
the investment performance achieved by the Adviser for the Portfolio,
recordkeeping, preparation and filing of documents required to comply with
federal and state securities laws, supervising the activities of the transfer
agent of the Fund and the custodian of the Portfolio, providing assistance in
connection with Trustees" and shareholders' meetings and other management and
administrative services necessary to conduct the business of the Fund and the
Portfolio. Eaton Vance also furnishes for the use of the Fund and the
Portfolio office space and all necessary office facilities, equipment and
personnel for managing and administering the business affairs of the Fund and
the Portfolio. Eaton Vance does not provide any investment management or
advisory services to the Portfolio or the Fund.
Under its management contract with the Fund, Eaton Vance receives a monthly
fee in the amount of 1/48 of 1% (equal to 0.25% annually) of the average
daily net assets of the Fund up to $500 million, which fee declines at
intervals above $500 million. As of August 31, 1996, the Fund had net assets
of $205,476,253. For the fiscal year ended August 31, 1996, Eaton Vance earned
management fees equivalent to 0.25% (annualized) of the Fund's average daily
net assets for such period. In addition, under its administration agreement
with the Portfolio, Eaton Vance receives a monthly fee in the amount of 1/48
of 1% (equal to 0.25% annually) of the average daily net assets of the
Portfolio up to $500 million, which fee declines at intervals above $500
million. For the fiscal year ended August 31, 1996, Eaton Vance earned
administration fees from the Portfolio equivalent to 0.25% (annualized) of the
Portfolio's average daily net assets for such period.
The Fund and the Portfolio, as the case may be, will each be responsible for
all respective costs and expenses not expressly stated to be payable by the
Advisers under the investment advisory agreement or Eaton Vance under the
management contract or the administration agreement or by the Principal
Underwriter under the distribution agreement.
DISTRIBUTION PLAN
- ------------------------------------------------------------------------------
IN ADDITION TO MANAGEMENT FEES AND OTHER EXPENSES, THE FUND PAYS FOR CERTAIN
EXPENSES PURSUANT TO A DISTRIBUTION PLAN (THE "PLAN") DESIGNED TO MEET THE
REQUIREMENTS OF RULE 12B-1 UNDER THE 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. During the fiscal year ended August
31, 1996, the Fund paid distribution fees under the Plan to the Principal
Underwriter representing 0.26% of the Fund's average daily net assets for such
year.
The Plan also provides that the Fund will pay a quarterly service fee to the
Principal Underwriter in an amount equal on an annual basis to .25% of that
portion of the Fund's average daily net assets for any fiscal year which is
attributable to shares of the Fund which have remained outstanding for more
than one year; from such service fee the Principal Underwriter expects to pay
a quarterly service fee to financial service firms ("Authorized Firms"), as
compensation for providing personal services and/or the maintenance of
shareholder accounts, with respect to shares sold by such Firms which have
remained outstanding for more than one year. The Trustees of the Trust have
implemented the Plan by authorizing the Fund to make quarterly service fee
payments to the Principal Underwriter not to exceed on an annual basis .25% of
that portion of the Fund's average daily net assets for any fiscal year which
is attributable to shares of the Fund which have remained outstanding for more
than one year. Service fee payments to Authorized Firms will be in addition to
sales charges on Fund shares which are reallowed to Authorized Firms. 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. During the fiscal year ended
August 31, 1996, the Fund made service fee payments under the Plan equivalent
to 0.24% of the Fund's average daily net assets for such year.
VALUING FUND SHARES
- ------------------------------------------------------------------------------
THE FUND VALUES ITS SHARES ONCE ON EACH DAY THE NEW YORK STOCK EXCHANGE (THE
"EXCHANGE") IS OPEN FOR TRADING, as of the close of regular trading on the
Exchange (normally 4:00 P.M. New York time). The Fund's net asset value per
share is determined by its custodian, Investors Bank & Trust Company ("IBT")
(as agent for the Fund), in the manner authorized by the Trustees of the
Trust. Net asset value is computed by dividing the value of the Fund's total
assets, less its liabilities, by the number of shares outstanding. Because the
Fund invests 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.
The Portfolio's net asset value is also determined as of the close of regular
trading on the Exchange by IBT (as custodian and agent for the Portfolio)
based on market or fair value in the manner authorized by the Trustees of the
Portfolio. Exchange listed securities generally are valued at closing sale
prices. Net asset value is computed by subtracting the liabilities of the
Portfolio from the value of its total assets. For further information
regarding the valuation of the Portfolio's assets, see "Determination of Net
Asset Value" in the Statement of Additional Information.
SHAREHOLDERS MAY DETERMINE THE VALUE OF THEIR INVESTMENT BY MULTIPLYING
THE NUMBER OF FUND SHARES OWNED BY THE CURRENT NET ASSET VALUE PER SHARE.
HOW TO BUY FUND SHARES
- ------------------------------------------------------------------------------
SHARES OF THE FUND MAY BE PURCHASED FOR CASH OR MAY BE ACQUIRED IN EXCHANGE
FOR SECURITIES. Investors may purchase shares of the Fund through Authorized
Firms at the 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. An Authorized Firm may charge
its customers a fee in connection with transactions executed by that Firm. 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 from the
Principal Underwriter.
The current sales charges and dealer commissions are:
<TABLE>
<CAPTION>
SALES CHARGE SALES CHARGE DEALER DISCOUNT
AS PERCENTAGE OF AS PERCENTAGE OF AS PERCENTAGE OF
AMOUNT OF PURCHASE AMOUNT INVESTED OFFERING PRICE OFFERING PRICE
------------------ --------------- -------------- --------------
<S> <C> <C> <C>
Under $100,000 4.99% 4.75% 4.00%
$100,000 but less than $250,000 3.90% 3.75% 3.15%
$250,000 but less than $500,000 2.83% 2.75% 2.30%
$500,000 but less than $1,000,000 2.04% 2.00% 1.70%
$1,000,000 or more 0.00%* 0.00%* See Below**
</TABLE>
* No sales charge is payable at the time of purchase on investments of $1
million or more or 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. A contingent deferred sales charge
("CDSC") of 1% will be imposed on such investments in the event of certain
redemptions within 12 months of purchase. Such purchases made before January
1, 1997 will be subject to a CDSC of 0.50% in the event of such redemptions.
The CDSC will be waived on redemptions by employee retirement plans organized
under the Internal Revenue Code of 1986, as amended (the "Code") relating to
distributions to plan participants or beneficiaries upon retirement,
disability or death.
** A commission on sales of $1 million or more will be paid as follows: 1.00% on
amounts of $1 million or more but less than $3 million, plus 0.50% on amounts
from $3 million but less than $5 million, plus 0.25% on amounts from $5
million or more. Purchases of $1 million or more will be aggregated over a
12-month period for purposes of determining the commission to be paid.
The Principal Underwriter may at times allow discounts up to the full sales
charge. During periods when the discount includes the full sales charge,
Authorized Firms may be deemed to be underwriters as that term is defined in
the Securities Act of 1933. The Principal Underwriter may, from time to time,
at its own expense, provide additional incentives to Authorized Firms which
employ registered representatives who sell Fund shares and/or shares of other
funds distributed by the Principal Underwriter. In some instances, such
additional incentives may be offered only to certain Authorized Firms whose
representatives sell or are expected to sell significant amounts of shares.
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: First
Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123. The
$1,000 minimum initial investment is waived for Bank Automated Investing
accounts, which may be established with an investment of $50 or more. See
"Eaton Vance Shareholder Services".
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
clients and current and retired officers and employees of Eaton Vance, its
affiliates and other investment advisers of Eaton Vance sponsored funds; to
registered representatives and employees of Authorized Firms; to bank
employees who refer customers to registered representatives of Authorized
Firms; to officers and employees of IBT and the Transfer Agent; and to such
persons' spouses and children under the age of 21 and their beneficial
accounts. 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) to investment advisors, financial planners or
other intermediaries who place trades for their own accounts or the accounts
of their clients and who charge a management, consulting or other fee for
their services; clients of such investment advisors, financial planners or
other intermediaries who place trades for their own accounts if the accounts
are linked to the master account of such investment advisor, financial planner
or other intermediary on the books and records of the broker or agent; and
retirement and deferred compensation plans and trusts used to fund those
plans, including, but not limited to, those defined in Section 401(a), 403(b)
or 457 of the Code (" Eligible Plans") and "rabbi trusts." 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.
No sales charge is payable at the time of purchase where the amount invested
represents redemption proceeds from a mutual fund unaffiliated with Eaton
Vance if the redemption occurred no more than 60 days prior to the purchase of
Fund shares and the redeemed shares were subject to a sales charge. A CDSC of
0.50% will be imposed on such investments in the event of certain redemptions
within 12 months of purchase and the Authorized Firm will be paid a commission
on such sales of 0.50% of the amount invested.
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 determined above. The
minimum value of securities (or securities and cash) accepted for deposit is
$5,000. Securities accepted will be sold on the day of their receipt or as
soon thereafter as possible. The number of Fund shares to be issued in
exchange for securities will be the aggregate proceeds from the sale of such
securities, divided by the applicable public offering price per Fund share on
the day such proceeds are received. Eaton Vance will use reasonable efforts to
obtain the then current market price for such securities but does not
guarantee the best available price. Eaton Vance will absorb any transaction
costs, such as commissions, on the sale of the securities.
Securities determined to be acceptable should be transferred via book entry or
physically delivered, in proper form for transfer, through an Authorized Firm,
together with a completed and signed Letter of Transmittal in approved form
(available from Authorized Firms), as follows:
IN THE CASE OF BOOK ENTRY:
Deliver through Depository Trust Co.
Broker #2212
Investors Bank & Trust Company
For A/C EV Traditional Greater China Growth Fund
IN THE CASE OF PHYSICAL DELIVERY:
Investors Bank & Trust Company
Attention: EV Traditional Greater China Growth Fund
Physical Securities Processing Settlement Area
89 South Street
Boston, MA 02111
Investors who are contemplating an exchange of securities for shares of the
Fund, or their representatives, must contact Eaton Vance to determine whether
the securities are acceptable before forwarding such securities. 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.
STATEMENT OF INTENTION AND ESCROW AGREEMENT. If the investor, on an
application, makes a Statement of Intention to invest a specified amount over
a thirteen-month period, 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 the Principal Underwriter any
difference between the sales charge on the amount specified and on the amount
actually purchased. If the investor does not within 20 days after written
request by the Principal Underwriter or the Authorized Firm pay such
difference in sales charge, the escrow agent will redeem an appropriate number
of the escrowed shares in order to realize such difference. Full shares
remaining after any such redemption together with any excess cash proceeds of
the shares so redeemed will be delivered to the investor or to the investor's
order by the escrow agent.
If total purchases made under this Statement are large enough to qualify for a
lower sales charge than that applicable to the amount specified, all
transactions will be computed at the expiration date of this Statement to give
effect to the lower charge. Any difference in sales charge will be refunded to
the investor in cash, or applied to the purchase of additional shares at the
lower charge if specified by the investor. This refund will be made by the
Authorized Firm and by the Principal Underwriter. If at the time of the
recomputation 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 investor's account.
IF YOU DON'T HAVE AN AUTHORIZED FIRM, EATON VANCE CAN RECOMMEND ONE.
HOW TO REDEEM FUND SHARES
- -------------------------------------------------------------------------------
A SHAREHOLDER MAY REDEEM FUND SHARES IN ONE OF THREE WAYS - BY MAIL, BY
TELEPHONE OR THROUGH AN AUTHORIZED FIRM. The redemption price will be based on
the net asset value per Fund share next computed after a redemption request is
received in the proper form as described below.
REDEMPTION BY MAIL: Shares may be redeemed by delivering to the Transfer
Agent, First Data Investor Services Group, P.O. Box 5123, Westborough, MA
01581-5123, during its business hours a written request for redemption in good
order, plus any share certificates with executed stock powers. Good order
means that all relevant documents must be endorsed by the record owner(s)
exactly as the shares are registered and the signature(s) must be guaranteed
by a member of either the Securities Transfer Association's STAMP program or
the New York Stock Exchange's Medallion Signature Program, or certain banks,
savings and loan institutions, credit unions, securities dealers, securities
exchanges, clearing agencies and registered securities associations as
required by a regulation of the Commission and acceptable to the Transfer
Agent. In addition, in some cases, good order may require the furnishing of
additional documents such as where shares are registered in the name of a
corporation, partnership or fiduciary.
REDEMPTION BY TELEPHONE: Shares may be redeemed by telephone provided the
investor has not disclaimed in writing the use of the privilege. Such
redemptions can be effected by calling the Transfer Agent at 800-262-1122,
Monday through Friday, 9:00 a.m. to 4:00 p.m. (Eastern Standard Time). The
proceeds of a telephone redemption may be no greater than the maximum amount
established by the Principal Underwriter (currently $50,000) and may be mailed
only to the account address of record. Shares held by corporations, trusts or
certain other entities, or subject to fiduciary arrangements, may not be
redeemed by telephone. Neither the Fund, the Principal Underwriter nor the
Transfer Agent will be responsible for the authenticity of redemption
instructions received by telephone, provided that reasonable procedures to
confirm that instructions communicated by telephone are genuine have been
followed. Telephone instructions will be tape recorded. In times of drastic
economic or market changes, a telephone redemption may be difficult to
implement.
REDEMPTION THROUGH AN AUTHORIZED FIRM: To sell shares at their net asset value
through an Authorized Firm (a repurchase), a shareholder can place a
repurchase order with the Authorized Firm, which may charge a fee. The value
of such shares is based upon the net asset value calculated after the
Principal Underwriter, as the Fund's agent, receives the order. It is the
Authorized Firm's responsibility to transmit promptly repurchase orders to the
Principal Underwriter. Throughout this Prospectus, the word "redemption" is
generally meant to include a repurchase.
Within seven days after receipt of a redemption request in good order by the
Transfer Agent, the 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
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.
If shares were recently purchased, the proceeds of a redemption will not be
sent until the check (including a certified or cashier's check) received for
the shares purchased has cleared. Payment for shares tendered for redemption
may be delayed up to 15 days from the purchase date when the purchase check
has not yet cleared. Redemptions may result in a taxable gain or loss.
Due to the high cost of maintaining small accounts, the Fund reserves the
right to redeem Fund accounts with balances of less than $750. Prior to such a
redemption, shareholders will be given 60 days' written notice to make
additional purchases. However, no such redemption would be required if the
cause of the low account balance was a reduction in the net asset value of
Fund shares.
If shares have been purchased at net asset value with no initial sales charge
by virtue of the purchase having been in the amount of $1 million or more and
are redeemed within 12 months of purchase, a CDSC of 1% will be imposed on
such redemption. (Such purchases made before January 1, 1997, will be subject
to a CDSC of 0.50% in the event of certain redemptions made within 12 months
of purchase.) If shares have been purchased at net asset value because the
amount invested represents redemption proceeds from a mutual fund unaffiliated
with Eaton Vance (as described under "How to Buy Fund Shares") and are
redeemed within 12 months of purchase, a CDSC of 0.50% will be imposed on such
redemption. The CDSC will be imposed on an amount equal to the lesser of the
current market value or the original purchase price of the shares redeemed.
Accordingly, no CDSC will be imposed on increases in account value above the
initial purchase price, including any distributions that have been reinvested
in additional shares. In determining whether a CDSC is applicable to a
redemption, the calculation will be made in a manner that results in the
lowest possible rate being charged. It will be assumed that redemptions are
made first from any shares in the shareholder's account that are not subject
to a CDSC. The CDSC will be retained by the Principal Underwriter.
The CDSC is waived for redemptions involving certain liquidation, merger or
acquisition transactions involving other investment companies. If a
shareholder reinvests redemption proceeds within a 60-day period and in
accordance with the conditions set forth under "Eaton Vance Shareholder
Services -- Reinvestment Privilege", the shareholder's account will be
credited with the amount of any CDSC paid on such redeemed shares.
REPORTS TO SHAREHOLDERS
- ------------------------------------------------------------------------------
THE FUND WILL ISSUE TO ITS SHAREHOLDERS SEMI-ANNUAL AND ANNUAL REPORTS
CONTAINING FINANCIAL STATEMENTS. Financial statements included in annual
reports are audited by the Fund's independent certified public accountants.
Shortly after the end of each calendar year, the Fund will furnish its
shareholders with information necessary for preparing federal and state income
tax returns. Consistent with applicable law, duplicate mailings of shareholder
reports and certain other Fund information to shareholders residing at the
same address may be eliminated.
THE LIFETIME INVESTING ACCOUNT/DISTRIBUTION OPTIONS
- ------------------------------------------------------------------------------
AFTER AN INVESTOR MAKES AN INITIAL PURCHASE OF FUND SHARES, THE TRANSFER AGENT
WILL SET UP A LIFETIME INVESTING ACCOUNT FOR THE INVESTOR ON THE FUND'S
RECORDS. This account is a complete record of all transactions between the
investor and the Fund which at all times shows the balance of shares owned.
The Fund will not issue share certificates except upon request.
Each time a transaction takes place in a shareholder's account, the
shareholder will receive a statement showing complete details of the
transaction and the current balance in the account. (Under certain investment
plans, statements may be sent only quarterly). THE LIFETIME INVESTING ACCOUNT
ALSO PERMITS A SHAREHOLDER TO MAKE ADDITIONAL INVESTMENTS IN SHARES BY SENDING
A CHECK FOR $50 OR MORE to the Transfer Agent.
Any questions concerning a shareholder's account or services available may be
directed by telephone to EATON VANCE SHAREHOLDER SERVICES at 800-225-6265,
extension 2, or in writing to the Transfer Agent, First Data Investor Services
Group, P.O. Box 5123, Westborough, MA 01581-5123 (please provide the name of
the shareholder, the Fund and the account number).
THE FOLLOWING DISTRIBUTION OPTIONS WILL BE AVAILABLE TO ALL LIFETIME INVESTING
ACCOUNTS and may be changed as often as desired by written notice to the
Fund's dividend disbursing agent, First Data Investor Services Group, P.O. Box
5123, Westborough, MA 01581-5123. The currently effective option will appear
on each account statement.
Share Option -- Dividends and capital gains will be reinvested in additional
shares.
Income Option -- Dividends will be paid in cash and capital gains will be
reinvested in additional shares.
Cash Option -- Dividends and capital gains will be paid in cash.
The Share Option will be assigned if no other option is specified.
Distributions, including those reinvested, will be reduced by any withholding
required under the federal income tax laws.
If the Income Option or Cash Option has been selected, dividend and/or capital
gains distribution checks which are returned by the United States Postal
Service as not deliverable or which remain uncashed for six months or more
will be reinvested in the account in shares at the then current net asset
value. Furthermore, the distribution option on the account will be
automatically changed to the Share Option until such time as the shareholder
selects a different option.
DISTRIBUTION INVESTMENT OPTION. In addition to the distribution options set
forth above, dividends and/or capital gains may be invested in additional
shares of another Eaton Vance fund. Before selecting this option, a
shareholder should obtain a prospectus of the other Eaton Vance fund and
consider its objectives and policies carefully.
"STREET NAME" ACCOUNTS. If shares of a Fund are held in a "street name"
account with an Authorized Firm, all recordkeeping, transaction processing and
payments of distributions relating to the beneficial owner's account will be
performed by the Authorized Firm, and not by the Fund and its Transfer Agent.
Since the Fund will have no record of the beneficial owner's transactions, a
beneficial owner should contact the Authorized Firm to purchase, redeem or
exchange shares, to make changes in or give instructions concerning the
account, or to obtain information about the account. The transfer of shares in
a "street name" account to an account with another dealer or to an account
directly with 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.
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 (plus, in
the case of an exchange made within six months of the date of purchase of
shares subject to an initial sales charge, an amount equal to the difference,
if any, between the sales charge previously paid on the shares being exchanged
and the sales charge payable on the shares being acquired). Exchange offers
are available only in states where shares of the fund being acquired may be
legally sold.
Each exchange must involve shares which have a net asset value of at least
$1,000. The exchange privilege may be changed or discontinued without penalty.
Shareholders will be given sixty (60) days' notice prior to any termination or
material amendment of the exchange privilege. The Fund does not permit the
exchange privilege to be used for "Market Timing" and may terminate the
exchange privilege for any shareholder account engaged in Market Timing
activity. Any shareholder account for which more than two round-trip exchanges
are made within any twelve month period will be deemed to be engaged in Market
Timing. Furthermore, a group of unrelated accounts for which exchanges are
entered contemporaneously by a financial intermediary will be considered to be
engaged in Market Timing.
Shares of the Fund which are subject to a CDSC may be exchanged into any of
the above funds without incurring the CDSC. The shares acquired in an exchange
may be subject to a CDSC upon redemption. For purposes of computing the CDSC
payable upon redemption of shares acquired in an exchange, the holding period
of the original shares is added to the holding period of the shares acquired
in the exchange.
The Transfer Agent 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 Transfer Agent for additional information concerning the
exchange privilege. Applications and prospectuses of other funds are available
from Authorized Firms or the Principal Underwriter. The prospectus for each
fund describes its investment objectives and policies, and shareholders should
obtain a prospectus and consider these objectives and policies carefully
before requesting an exchange.
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 exchange (plus, in the case
of an exchange made within six months of the date of purchase of shares
subject to an initial sales charge, an amount equal to the difference, if any,
between the sales charge previously paid on the shares being exchanged and the
sales charge payable on the 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 Transfer Agent provided that the
investor has not disclaimed in writing the use of the privilege. To effect
such exchanges, call the Transfer Agent at 800-262-1122, Monday through
Friday, 9:00 a.m. to 4:00 p.m. (Eastern Standard Time). Shares acquired by
telephone exchange must be registered in the same name(s) and with the same
address as the shares being exchanged. Neither the Fund, the Principal
Underwriter nor the Transfer Agent will be responsible for the authenticity of
exchange instructions received by telephone, provided that reasonable
procedures to confirm that instructions communicated are genuine have been
followed. Telephone instructions will be tape recorded. In times of drastic
economic or market changes, a telephone exchange may be difficult to
implement. An exchange may result in a taxable gain or loss.
EATON VANCE SHAREHOLDER SERVICES
- ------------------------------------------------------------------------------
THE 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 Greater China Growth Fund may be mailed directly to the Transfer
Agent, First Data Investor Services Group, P.O. Box 5123, Westborough MA
01581-5123 at any time -- whether or not dividends are reinvested. The name of
the shareholder, the Fund and the account number should accompany each
investment.
BANK AUTOMATED INVESTING -- FOR REGULAR SHARE ACCUMULATION: Cash investments
of $50 or more may be made automatically each month or quarter from a
shareholder's bank account. The $1,000 minimum initial investment and small
account redemption policy are waived for these accounts.
STATEMENT OF INTENTION: Purchases of $100,000 or more made over a 13-month
period are eligible for reduced sales charges. See "How to Buy Fund Shares --
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
listed 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 redeemed shares may reinvest at
net asset value any portion or all of the redemption proceeds (plus that
amount necessary to acquire a fractional share to round off the purchase to
the nearest full share), in shares of the Fund or, provided that the shares
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
redemption, and the privilege has not been used more than once in the prior 12
months. Shares are sold to a reinvesting shareholder at the next determined
net asset value following timely receipt of a written purchase order by the
Principal Underwriter or by the fund the shares of which are being purchased
(or by such fund's transfer agent). The privilege is also available to
shareholders of the funds listed under "The Eaton Vance Exchange Privilege"
who wish to reinvest such redemption 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. 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 certain tax-sheltered retirement plans. Detailed
information concerning these plans, including certain exceptions to minimum
investment requirements, and copies of the plans are available from the
Principal Underwriter. This information should be read carefully and
consultation with an attorney or tax adviser may be advisable. The information
sets forth the service fee charged for retirement plans and describes the
federal income tax consequences of establishing a plan. Participant accounting
services (including trust fund reconciliation services) will be offered only
through third party recordkeepers and not by the Principal Underwriter. Under
all plans, dividends and distributions will be automatically reinvested in
additional shares.
DISTRIBUTIONS AND TAXES
- ------------------------------------------------------------------------------
DISTRIBUTIONS. It is the present policy of the Fund to make (A) at least one
distribution annually (normally in December) of all or substantially all of
the investment income allocated to the Fund by the Portfolio (less the Fund's
direct and allocated expenses), and (B) at least one distribution annually of
all or substantially all of the net realized capital gains (if any) allocated
to the Fund by the Portfolio (reduced by any available capital loss
carryforwards from prior years). Shareholders may reinvest all distributions
in shares of the Fund without a sales charge at the per share net asset value
as of the close of business on the record date.
The Fund's 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 from 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 that the Fund designates as from its net long-term
capital gains 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 a sales
charge is reduced or eliminated in a subsequent acquisition of shares of the
Fund or of another fund pursuant to the Fund's reinvestment or exchange
privilege. Any disregarded or disallowed amounts will result in an adjustment
to the shareholder's tax basis in some or all of any other shares acquired.
The Fund intends to qualify as a regulated investment company under the Code,
and to satisfy all requirements relating to the sources of its income, the
distribution of its income, and the diversification of its assets. In
satisfying these requirements, the Fund will treat itself as owning its
proportionate share of each of the Portfolio's assets and as entitled to the
income of the Portfolio properly attributable to such share.
As a regulated investment company under the Code, the Fund does not pay
federal income or excise tax to the extent that it distributes to shareholders
its net investment income and net realized capital gains in accordance with
the timing requirements imposed by the Code. As a partnership under the Code,
the Portfolio also does not pay federal income or excise tax.
Income or gain realized by the Portfolio from certain investments may be
subject to foreign income taxes, and the Fund may make an election under
Section 853 of the Code that would allow shareholders to claim a credit or
deduction on their federal income tax returns for (and treated as additional
amounts distributed to them) their pro rata portion of the Fund's allocated
share of qualified taxes paid by the Portfolio to foreign countries. This
election may be made only if more than 50% of the assets of the Fund,
including its allocable share of the Portfolio's assets, at the close of the
Fund's taxable year consists of stock or securities in foreign corporations.
The Fund will send a written notice of any such election (not later than 60
days after the close of its taxable year) to each shareholder indicating the
amount to be treated as the shareholder's proportionate share of such taxes.
Availability of foreign tax credits or deductions for shareholders is subject
to certain additional restrictions and limitations under the Code.
The Fund will provide its shareholders annually with tax information notices
and Forms 1099 to assist in the preparation of their federal and state tax
returns for the prior calendar year's distributions, proceeds from the
redemption or exchange of Fund shares, and federal income tax (if any)
withheld by the Fund's Transfer Agent.
Shareholders should consult with their tax advisors concerning the
applicability of state, local or other taxes to an investment in the Fund.
PERFORMANCE INFORMATION
- ------------------------------------------------------------------------------
FROM TIME TO TIME, THE FUND MAY ADVERTISE ITS AVERAGE ANNUAL TOTAL RETURN. The
Fund's average annual total return is determined by the average annual
percentage change in value of $1,000 invested at the maximum public offering
price (which includes the maximum sales charge) for specified periods,
assuming reinvestment of all distributions. 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 lower if a sales
charge were taken into account. The Fund's performance may be compared in
publications to the performance of various indices and investments for which
reliable data is available, and to averages, performance rankings, or other
information prepared by recognized mutual fund statistical services.
Investors should note that 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.
<PAGE>
The following chart reflects the annual investment returns of the Fund for one
year periods ending August 31 and does not take into account the CDSC which
investors may bear.
LIFE OF FUND AVERAGE ANNUAL TOTAL RETURN -- 11.38%
1993(1) 24.50%
1994 26.56%
1995 (8.83%)
1996 5.27%
(1) From the start of business, October 28, 1992, to August 31, 1993
<PAGE>
EV TRADITIONAL
GREATER CHINA
GROWTH FUND
PROSPECTUS
JANUARY 1, 1997
EV TRADITIONAL GREATER
CHINA GROWTH FUND
24 FEDERAL STREET
BOSTON, MA 02110
- ----------------------------------------------------------------------------
SPONSOR AND MANAGER OF EV TRADITIONAL GREATER CHINA GROWTH FUND
ADMINISTRATOR OF GREATER CHINA GROWTH PORTFOLIO
Eaton Vance Management, 24 Federal Street, Boston, MA 02110
ADVISER OF GREATER CHINA GROWTH PORTFOLIO
Lloyd George 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, 89 South Street, Boston, MA 02111
TRANSFER AGENT
First Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123
(800) 262-1122
AUDITORS
Deloitte & Touche LLP, 125 Summer Street, Boston, MA 02110
T-CGP
<PAGE>
PART A
INFORMATION REQUIRED IN A PROSPECTUS
EV CLASSIC
GROWTH FUND
- ------------------------------------------------------------------------------
EV CLASSIC GROWTH FUND (THE "FUND") IS A MUTUAL FUND SEEKING GROWTH OF CAPITAL.
THE FUND INVESTS ITS ASSETS IN GROWTH PORTFOLIO (THE "PORTFOLIO"), A DIVERSIFIED
OPEN-END INVESTMENT COMPANY HAVING THE SAME INVESTMENT OBJECTIVE AS THE FUND,
RATHER THAN BY DIRECTLY INVESTING IN AND MANAGING ITS OWN PORTFOLIO OF
SECURITIES. THE FUND IS A SERIES OF EATON VANCE GROWTH TRUST (THE "TRUST").
Shares of the Fund are not deposits or obligations of, or guaranteed or endorsed
by, any bank or other insured depository institution, and are not federally
insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board
or any other government agency. Shares of the Fund involve investment risks,
including fluctuations in value and the possible loss of some or all of the
principal investment.
This Prospectus is designed to provide you with information you should know
before investing. Please retain this document for future reference. A
Statement of Additional Information dated January 1, 1997 for the Fund, as
supplemented from time to time, has been filed with the Securities and
Exchange Commission and is incorporated herein by reference. This Statement of
Additional Information is available without charge from the Fund's principal
underwriter, Eaton Vance Distributors, Inc. (the "Principal Underwriter"), 24
Federal Street, Boston, MA 02110 (telephone (800) 225-6265). The Portfolio's
investment adviser is Boston Management and Research (the "Investment
Adviser"), a wholly-owned subsidiary of Eaton Vance Management, and Eaton
Vance Management is the administrator (the "Administrator") of the Fund. The
offices of the Investment Adviser and the Administrator are located at 24
Federal Street, Boston, MA 02110.
- ------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
PAGE PAGE
<S> <C> <C> <C>
Shareholder and Fund Expenses ................... 2 How to Buy Fund Shares ............................. 9
The Fund's Financial Highlights ................. 3 How to Redeem Fund Shares .......................... 10
The Fund's Investment Objective ................. 4 Reports to Shareholders ............................ 11
Investment Policies and Risks ................... 4 The Lifetime Investing Account/Distribution Options 11
Organization of the Fund and the Portfolio ...... 5 The Eaton Vance Exchange Privilege ................. 12
Management of the Fund and the Portfolio ........ 6 Eaton Vance Shareholder Services ................... 13
Distribution Plan ............................... 7 Distributions and Taxes ............................ 13
Valuing Fund Shares ............................. 8 Performance Information ............................ 14
- --------------------------------------------------------------------------------------------------------------------------
PROSPECTUS JANUARY 1, 1997
</TABLE>
<PAGE>
SHAREHOLDER AND FUND EXPENSES
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES
-------------------------------------------------------------------------------------------------------
<S> <C>
Sales Charges Imposed on Purchases of Shares None
Sales Charges Imposed on Reinvested Distributions None
Fees to Exchange Shares None
Contingent Deferred Sales Charge Imposed on Redemption during the First Year
(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)
-------------------------------------------------------------------------------------------------------
Investment Adviser Fee 0.625%
Rule 12b-1 Distribution (and Service) Fees 1.000%
Other Expenses (after expense allocation) 1.885%
-----
Total Operating Expenses (after allocation) 3.510%
=====
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
An investor would pay the following expenses (including a
contingent deferred sales charge in the case of redemption
during the first year after purchase) on a $1,000 investment,
assuming (a) 5% annual return and (b) redemption at the end
of each period: $45 $108 $182 $378
</TABLE>
NOTES:
The table and Example 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. Information
for the Fund is based on its expenses for the most recent fiscal year. Absent an
expense allocation, Other Expenses and Total Operating Expenses would have been
7.065% and 8.690%, respectively.
The Example should not be considered a representation of past or future expenses
and actual expenses may be greater or less than those shown. Federal regulations
require the Example to assume a 5% annual return, but actual return may vary.
For further information regarding the expenses of both the Fund and the
Portfolio see "The Fund's Financial Highlights", "Management of the Fund and the
Portfolio" and "How to Redeem Fund Shares". 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. See
"Distribution Plan".
No contingent deferred sales charge is imposed on (a) shares purchased more than
one year prior to redemption, (b) shares acquired through the reinvestment of
distributions or (c) any appreciation in value of other shares in the account
(see "How to Redeem Fund Shares"), and no such charge is imposed on exchanges of
Fund shares for shares of one or more other funds listed under "The Eaton Vance
Exchange Privilege." In the Example above, expenses would be $10 less in the
first year if there was no redemption.
The Fund invests exclusively in the Portfolio. Other investment companies with
different distribution arrangements and fees are investing in the Portfolio and
others may do so in the future. See "Organization of the Fund and the
Portfolio".
<PAGE>
THE FUND'S FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------------
The following information should be read in conjunction with the audited
financial statements included in the Fund's annual report to shareholders which
is incorporated by reference into the Statement of Additional Information in
reliance upon the report of Coopers & Lybrand L.L.P., independent certified
public accountants, as experts in accounting and auditing. Further information
regarding the performance of the Fund is contained in its annual report to
shareholders which may be obtained without charge by contacting the Principal
Underwriter.
- ------------------------------------------------------------------------------
YEAR ENDED AUGUST 31,
--------------------------
1996 1995++
------- -------
NET ASSET VALUE, beginning of year $11.680 $10.000
------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss $(0.241) $(0.214)
Net realized and unrealized gain on
investments 1.551 1.894
------- -------
Total income from investment operations $ 1.310 $ 1.680
------- -------
LESS DISTRIBUTIONS:
From net realized gain on investments (0.510) --
------- -------
NET ASSET VALUE, end of year $12.480 $11.680
======= =======
TOTAL RETURN(1) 11.68% 16.80%
RATIOS/SUPPLEMENTAL DATA (as a percentage of average daily net assets):*
Expenses(2) 3.51% 3.47% +
Net investment loss (2.15%) (2.17%)+
NET ASSETS, END OF YEAR (000'S OMITTED) $ 968 $ 601
*The expenses related to the operation of the Fund reflect an allocation
of expenses to the Administrator. Had such action not been taken, net
investment income per share and the ratios would have been as follows:
NET INVESTMENT INCOME PER SHARE $(0.823) $(0.648)
======= =======
RATIOS (to average daily net assets)
Expenses(2) 8.69% 12.21% +
Net investment loss (7.33%) (10.90%)+
+Computed on an annualized basis.
++For the period from the start of business, November 7, 1994, to August
31, 1995.
(1)Total return is calculated assuming a purchase at the net asset value
on the first day and a sale at the net asset value on the last day of
the period reported. Distributions, if any, are assumed to be
reinvested at the net asset value on the record date. Total return is
computed on a non-annualized basis.
(2)Includes the Fund's share of the Portfolio's allocated expenses.
<PAGE>
THE FUND'S INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
THE FUND'S INVESTMENT OBJECTIVE IS TO ACHIEVE CAPITAL GROWTH. The Fund currently
seeks to meet its investment objective by investing its assets in the Growth
Portfolio, a separate registered investment company, which has the same
investment objective as the Fund. While income is a subordinate consideration to
capital growth, the Portfolio will earn dividend or interest income to the
extent that it receives dividends or interest from its investments.
The Fund's and the Portfolio's investment objectives are nonfundamental and may
be changed when authorized by a vote of the Trustees of the Trust or the
Portfolio without obtaining the approval of the Fund's shareholders or the
investors in the Portfolio, as the case may be. The Trustees of the Trust have
no present intention to change the Fund's objective and intend to submit any
proposed material change in the investment objective to shareholders in advance
for their approval.
INVESTMENT POLICIES AND RISKS
- --------------------------------------------------------------
THE PORTFOLIO INVESTS IN A CAREFULLY SELECTED AND CONTINUOUSLY MANAGED PORTFOLIO
CONSISTING PRIMARILY OF DOMESTIC AND FOREIGN EQUITY SECURITIES. It may invest in
all kinds of companies. The Portfolio invests primarily in common stocks or
securities convertible into common stocks (including convertible debt). It may
also invest in other securities and obligations of all kinds. These include
preferred stocks, rights, warrants, bonds, repurchase agreements and other
evidences of indebtedness. The Portfolio may also invest in money market
instruments.
Investing in foreign securities entails considerations and possible risks not
typically associated with investing in securities issued by the U.S. Government
and domestic corporations. The values of foreign investments are affected by
changes in currency rates or exchange control regulations, application of
foreign tax laws (including withholding tax), changes in governmental
administration or economic or monetary policy (in this country or abroad), or
changed circumstances in dealings between nations. Because investment in foreign
issuers will usually involve currencies of foreign countries, the value of the
assets of the Portfolio as measured in U.S. dollars may be adversely affected by
changes in foreign currency exchange rates. Such rates may fluctuate
significantly over short periods of time causing the Portfolio's net asset value
to fluctuate as well. Costs are incurred in connection with conversions between
various currencies. In addition, foreign brokerage commissions, custody fees and
other costs of investing are generally higher than in the United States, and
foreign securities markets may be less liquid, more volatile and less subject to
governmental supervision than in the United States. Investments in foreign
issuers could be adversely affected by other factors not present in the United
States, including expropriation, confiscatory taxation, lack of uniform
accounting and auditing standards and potential difficulties in enforcing
contractual obligations. Currently, the Fund does not intend to invest more than
25% of its net assets in foreign securities.
The Portfolio may purchase and sell exchange-traded futures contracts on stock
indices and options thereon to hedge against fluctuations in securities prices
or as a substitute for the purchase or sale of securities. Such transactions
involve a risk of loss or depreciation due to: unanticipated adverse changes in
securities prices, interest rates, the other financial instruments' prices or
currency exchange rates; the inability to close out a position; default by the
counterparty; imperfect correlation between a position and the desired hedge;
tax constraints on closing out positions; and portfolio management constraints
on securities subject to such transactions. The loss on such transactions (other
than purchased options) may substantially exceed the Portfolio's initial
investment in these instruments. In addition, the Portfolio may lose the entire
premium paid for purchased options that expire before they can be profitably
exercised by the Portfolio. The Portfolio incurs transaction costs in opening
and closing positions in futures and options thereon. There can be no assurance
that the Adviser's use of such instruments will be advantageous to the
Portfolio.
The Fund may sell a security short if it owns at least an equal amount of the
security sold short or another security convertible or exchangeable for an equal
amount of the security sold short without payment of further compensation (a
short sale against-the-box). Under current tax law, short sales against-the-box
enable the Fund to hedge its exposure to securities that it holds without
selling the securities and recognizing gains. A short sale against-the-box
requires that the short seller absorb certain costs so long as the position is
open. In a short sale against-the-box, the short seller is exposed to the risk
of being forced to deliver appreciated stock to close the position if the
borrowed stock is called in, causing a taxable gain to be recognized. The Fund
expects normally to close its short sales against-the-box by delivering
newly-acquired stock.
An investment in the Fund entails the risk that the principal value of Fund
shares may not increase or may decline. The Portfolio's investments in equity
securities are subject to the risk of adverse developments affecting particular
companies or industries and the stock market generally. The Portfolio may
temporarily borrow up to 5% of the value of its total assets to satisfy
redemption requests or settle securities transactions.
The Fund and the Portfolio have adopted certain fundamental investment
restrictions which are enumerated in detail in the Statement of Additional
Information and which may not be changed unless authorized by a shareholder vote
and an investor vote, respectively. Except for such enumerated restrictions and
as otherwise indicated in this Prospectus, the investment objective and policies
of the Fund and the Portfolio are not fundamental policies and accordingly may
be changed by the Trustees of the Trust and the Portfolio without obtaining the
approval of the Fund's shareholders or the investors in the Portfolio, as the
case may be.
THE FUND IS NOT INTENDED TO BE A COMPLETE INVESTMENT PROGRAM, AND PROSPECTIVE
INVESTORS SHOULD TAKE INTO ACCOUNT THEIR OBJECTIVES AND OTHER INVESTMENTS WHEN
CONSIDERING THE PURCHASE OF FUND SHARES. THE FUND CANNOT ASSURE ACHIEVEMENT OF
ITS CAPITAL GROWTH OBJECTIVE.
ORGANIZATION OF THE FUND AND THE PORTFOLIO
- ------------------------------------------------------------------------------
The Fund is a diversified series of Eaton Vance Growth Trust, a business trust
established under Massachusetts law pursuant to a Declaration of Trust dated May
25, 1989 and organized as the successor to a Massachusetts corporation which
commenced its investment company operations in 1954. THE TRUSTEES OF THE TRUST
ARE RESPONSIBLE FOR THE OVERALL MANAGEMENT AND SUPERVISION OF ITS AFFAIRS. The
Trust may issue an unlimited number of shares of beneficial interest (no par
value per share) in one or more series (such as the Fund). 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.
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,
affords the potential for economies of scale for the Fund (at least when the
assets of the Portfolio exceed $300 million) and may over time result in lower
expenses for the Fund.
In addition to selling an interest to the Fund, the Portfolio may sell interests
to other affiliated and non-affiliated mutual funds or institutional investors.
Such investors will invest in the Portfolio on the same terms and conditions and
will pay a proportionate share of the Portfolio's expenses. However, the other
investors investing in the Portfolio are not required to sell their shares at
the same public offering price as the Fund due to variations in sales
commissions and other operating expenses. Therefore these differences may result
in differences in returns experienced by investors in the various funds that
invest in the Portfolio. Such differences in returns are also present in other
mutual fund structures, including funds that have multiple classes of shares.
Information regarding other pooled investment entities or funds which invest in
the Portfolio may be obtained by contacting the Principal Underwriter, 24
Federal Street, Boston, MA 02110, (617) 482-8260.
Whenever the Fund as an investor in the Portfolio is requested to vote on
matters pertaining to the Portfolio (other than the termination of the
Portfolio's business, which may be determined by the Trustees of the Portfolio
without investor approval), the Fund will hold a meeting of Fund shareholders
and will vote its interest in the Portfolio for or against such matters
proportionately to the instructions to vote for or against such matters received
from Fund shareholders. The Fund shall vote shares for which it receives no
voting instructions in the same proportion as the shares for which it receives
voting instructions. Other investors in the Portfolio may alone or collectively
acquire sufficient voting interests in the Portfolio to control matters relating
to the operation of the Portfolio, which may require the Fund to withdraw its
investment in the Portfolio or take other appropriate action. Any such
withdrawal could result in a distribution "in kind" of portfolio securities (as
opposed to a cash distribution from the Portfolio). If securities are
distributed, the Fund could incur brokerage, tax or other charges in converting
the securities to cash. In addition, the distribution in kind may result in a
less diversified portfolio of investments or adversely affect the liquidity of
the Fund. Notwithstanding the above, there are other means for meeting
shareholder redemption requests, such as borrowing.
The Fund may withdraw (completely redeem) all its assets from the Portfolio at
any time if the Board of Trustees of the Trust determines that it is in the best
interest of the Fund to do so. In the event the Fund withdraws all of its assets
from the Portfolio, or the Board of Trustees of the Trust determines that the
investment objective of the Portfolio is no longer consistent with the
investment objective of the Fund, such Trustees would consider what action might
be taken, including investing the assets of the Fund in another pooled
investment entity or retaining an investment adviser to manage the Fund's assets
in accordance with its investment objective. The Fund's investment performance
may be affected by a withdrawal of all its assets from the Portfolio.
MANAGEMENT OF THE FUND AND THE PORTFOLIO
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THE PORTFOLIO ENGAGES BOSTON MANAGEMENT AND RESEARCH ("BMR"), A WHOLLY-OWNED
SUBSIDIARY OF EATON VANCE MANAGEMENT ("EATON VANCE"), AS ITS INVESTMENT ADVISER.
EATON VANCE, ITS AFFILIATES AND ITS PREDECESSOR COMPANIES HAVE BEEN MANAGING
ASSETS OF INDIVIDUALS AND INSTITUTIONS SINCE 1924 AND MANAGING INVESTMENT
COMPANIES SINCE 1931.
Acting under the general supervision of the Board of Trustees of the Portfolio,
BMR manages the Portfolio's investments and affairs. BMR also furnishes for the
use of the Portfolio office space and all necessary office facilities, equipment
and personnel for servicing the investments of the Portfolio. Under its
investment advisory agreement with the Portfolio, BMR receives a monthly
advisory fee of 5/96 of 1% (equivalent to 0.625% annually) of the average daily
net assets of the Portfolio up to and including $300 million, and 1/24 of 1%
(equivalent to 0.50% annually) of the average daily net assets over $300
million. For the fiscal year ended August 31, 1996, the Portfolio paid BMR
advisory fees equivalent to 0.625% of the Portfolio's average daily net assets
for such year.
BMR OR EATON VANCE ACTS AS INVESTMENT ADVISER TO INVESTMENT COMPANIES AND
VARIOUS INDIVIDUAL AND INSTITUTIONAL CLIENTS WITH ASSETS UNDER MANAGEMENT OF
OVER $16 BILLION. Eaton Vance is a wholly-owned subsidiary of Eaton Vance Corp.,
a publicly-held holding company, which through its subsidiaries and affiliates
engages primarily in investment management, administration and marketing
activities. The Principal Underwriter is a wholly-owned subsidiary of Eaton
Vance.
Thomas E. Faust, Jr. has acted as the portfolio manager of the Portfolio since
April 1, 1996. Mr. Faust has been a Vice President of Eaton Vance since 1985
and of BMR since 1992.
BMR places the portfolio transactions of the Portfolio with many broker-dealer
firms and uses its best efforts to obtain execution of such transactions at
prices which are advantageous to the Portfolio and at reasonably competitive
commission rates. Subject to the foregoing, BMR may consider sales of shares of
the Fund or of other investment companies sponsored by BMR or Eaton Vance as a
factor in the selection of broker-dealer firms to execute portfolio
transactions. The Fund, the Portfolio and BMR have adopted Codes of Ethics
relating to personal securities transactions. The Codes permit Eaton Vance
personnel to invest in securities (including securities that may be purchased or
held by a Portfolio) for their own accounts, subject to certain pre- clearance,
reporting and other restrictions and procedures contained in such Codes.
The Trust has retained the services of Eaton Vance to act as Administrator of
the Fund. The Trust has not retained the services of an investment adviser since
the Trust seeks to achieve the investment objective of the Fund by investing the
Fund's assets in the Portfolio. As Administrator, Eaton Vance provides the Fund
with general office facilities and supervises the overall administration of the
Fund. For these services Eaton Vance currently receives no compensation. The
Trustees of the Trust may determine, in the future, to compensate Eaton Vance
for such services.
The Portfolio and the Fund, as the case may be, will each be responsible for all
respective costs and expenses not expressly stated to be payable by BMR under
the investment advisory agreement, by Eaton Vance under the administrative
services agreement, or by the Principal Underwriter under the distribution
agreement.
DISTRIBUTION PLAN
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THE FUND FINANCES DISTRIBUTION ACTIVITIES AND HAS ADOPTED A DISTRIBUTION PLAN
(THE "PLAN") PURSUANT TO RULE 12B-1 UNDER THE INVESTMENT COMPANY ACT OF 1940, AS
AMENDED (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 6.25% 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. On sales
of shares made prior to January 30, 1995, the Principal Underwriter currently
pays monthly sales commissions to a financial service firm (an "Authorized
Firm") in amounts anticipated to be equivalent to .75%, annualized, of the
assets maintained in the Fund by the customers of such Firm. On sales of shares
made on January 30, 1995 and thereafter, the Principal Underwriter currently
expects to pay to an Authorized Firm (a) sales commissions (except on exchange
transactions and reinvestments) at the time of sale equal to .75% of the
purchase price of the shares sold by such Firm and (b) monthly sales commissions
approximately equivalent to 1/12 of .75% of the value of shares sold by such
Firm and remaining outstanding for at least one year. The Plan is designed to
permit an investor to purchase Fund shares through an Authorized Firm without
incurring an initial sales charge and at the same time permit the Principal
Underwriter to compensate Authorized Firms in connection with the sale of Fund
shares.
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 made to the Principal
Underwriter 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. For the
fiscal year ended August 31, 1996, the Fund paid or accrued sales commissions
under the Plan equivalent to .75% of the Fund's average daily net assets for
such year. As at August 31 1996, the Uncovered Distribution Charges of the
Principal Underwriter calculated under the Plan amounted to approximately
$134,817 (equivalent to 13.9% of the Fund's net assets on such day).
THE PLAN ALSO AUTHORIZES THE FUND TO MAKE PAYMENTS OF SERVICE FEES TO THE
PRINCIPAL UNDERWRITER, AUTHORIZED FIRMS AND OTHER PERSONS IN AMOUNTS NOT
EXCEEDING .25% OF THE FUND'S AVERAGE DAILY NET ASSETS FOR EACH FISCAL YEAR. The
Trustees of the Trust have initially implemented this provision of the Plan by
authorizing the Fund to make monthly service fee payments to the Principal
Underwriter in amounts not expected to exceed .25% of the Fund's average daily
net assets for any fiscal year. The Fund accrues the service fee daily at the
rate of 1/365 of .25% of the Fund's net assets. On sales of shares made prior to
January 30, 1995, the Principal Underwriter currently makes monthly service fee
payments to an Authorized Firm in amounts anticipated to be equivalent to .25%,
annualized, of the assets maintained in the Fund by the customers of such Firm.
On sales of shares made on January 30, 1995 and thereafter, the Principal
Underwriter currently expects to pay to an Authorized Firm (a) a service fee
(except on exchange transactions and reinvestments) at the time of sale equal to
.25% of the purchase price of the shares sold by such Firm, and (b) monthly
service fees approximately equivalent to 1/12 of .25% of the value of shares
sold by such Firm and remaining outstanding for at least one year. During the
first year after a purchase of Fund shares, the Principal Underwriter will
retain the service fee as reimbursement for the service fee payment made to the
Authorized Firm at the time of sale. As permitted by the NASD Rule, all service
fee payments are made for personal services and/or the maintenance of
shareholder accounts. Service fees are separate and distinct from the sales
commissions and distribution fees payable by the Fund to the Principal
Underwriter, and as such are not subject to automatic discontinuance when there
are no outstanding Uncovered Distribution Charges of the Principal Underwriter.
For the fiscal year ended August 31, 1996, the Fund paid or accrued service fees
under the Plan equivalent to .25% of the Fund's average daily net assets for
such year.
The Principal Underwriter may, from time to time, at its own expense, provide
additional incentives to Authorized Firms which employ registered
representatives who sell Fund shares and/or shares of other funds distributed by
the Principal Underwriter. In some instances, such additional incentives may be
offered only to certain Authorized Firms whose representatives sell or are
expected to sell significant amounts of shares. In addition, the Principal
Underwriter may from time to time increase or decrease the sales commissions
payable to Authorized Firms.
The Fund may, in its absolute discretion, suspend, discontinue or limit the
offering of its shares at any time. In determining whether any such action
should be taken, the Fund's management intends to consider all relevant factors,
including without limitation the size of the Fund, the investment climate and
market conditions, the volume of sales and redemptions of Fund shares, and the
amount of Uncovered Distribution Charges of the Principal Underwriter. The Plan
may continue in effect and payments may be made under the Plan following any
such suspension, discontinuance or limitation of the offering of Fund shares;
however, the Fund is not contractually obligated to continue the Plan for any
particular period of time. Suspension of the offering of Fund shares would not,
of course, affect a shareholder's ability to redeem shares.
VALUING FUND SHARES
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THE FUND VALUES ITS SHARES ONCE ON EACH DAY THE NEW YORK STOCK EXCHANGE (THE
"EXCHANGE") IS OPEN FOR TRADING, as of the close of regular trading on the
Exchange (normally 4:00 p.m. New York time). The Fund's net asset value per
share is determined by its custodian, Investors Bank & Trust Company ("IBT"),
(as agent for the Fund) in the manner authorized by the Trustees of the Trust.
Net asset value is computed by dividing the value of the Fund's total assets,
less its liabilities, by the number of shares outstanding. Because the Fund
invests its assets in an interest in the Portfolio, the Fund's net asset value
will reflect the value of its interest in the Portfolio (which, in turn,
reflects the underlying value of the Portfolio's assets and liabilities).
Authorized Firms must communicate an investor's order to the Principal
Underwriter prior to the close of the Principal Underwriter's business day to
receive that day's net asset value per Fund share. It is the Authorized Firms'
responsibility to transmit orders promptly to the Principal Underwriter.
The Portfolio's net asset value is also determined as of the close of regular
trading on the Exchange by IBT (as custodian and agent for the Portfolio) in the
manner authorized by the Trustees of the Portfolio. Net asset value is computed
by subtracting the liabilities of the Portfolio from the value of its total
assets. For further information regarding the valuation of the Portfolio's
assets, see "Determination of Net Asset Value" in the Statement of Additional
Information.
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 net asset value per share of the Fund next determined after an order is
effective. An Authorized Firm may charge its customers a fee in connection with
transactions executed by that Firm. The 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: First
Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123. The
$1,000 minimum initial investment is waived for Bank Automated Investing
accounts, which may be established with an investment of $50 or more. See
"Eaton Vance Shareholder Services."
In connection with employee benefit or other continuous group purchase plans
under which the average initial purchase by a participant of the plan is $1,000
or more, the Fund may accept initial investments of less than $1,000 on the part
of an individual participant. In the event a shareholder who is a participant of
such a plan terminates participation in the plan, his or her shares will be
transferred to a regular individual account. However, such account will be
subject to the right of redemption by the Fund as described under "How to Redeem
Fund Shares."
ACQUIRING FUND SHARES IN EXCHANGE FOR SECURITIES. IBT, as escrow agent, will
receive securities acceptable to Eaton Vance, as Administrator, in exchange for
Fund shares at their net asset value as determined above. The minimum value of
securities (or securities and cash) accepted for deposit is $5,000. Securities
accepted will be sold on the day of their receipt or as soon thereafter as
possible. The number of Fund shares to be issued in exchange for securities will
be the aggregate proceeds from the sale of such securities, divided by the
applicable net asset value per Fund share on the day such proceeds are received.
Eaton Vance will use reasonable efforts to obtain the then current market price
for such securities but does not guarantee the best available price. Eaton Vance
will absorb any transaction costs, such as commissions, on the sale of the
securities.
Securities determined to be acceptable should be transferred via book entry or
physically delivered, in proper form for transfer, through an Authorized Firm,
together with a completed and signed Letter of Transmittal in approved form
(available from Authorized Firms), as follows:
IN THE CASE OF BOOK ENTRY:
Deliver through Depository Trust Co.
Broker #2212
Investors Bank & Trust Company
For A/C EV Classic Growth Fund
IN THE CASE OF PHYSICAL DELIVERY:
Investors Bank & Trust Company
Attention: EV Classic Growth Fund
Physical Securities Processing Settlement Area
89 South Street
Boston, MA 02111
Investors who are contemplating an exchange of securities for shares of the
Fund, or their representatives, must contact Eaton Vance to determine whether
the securities are acceptable before forwarding such securities. Eaton Vance
reserves the right to reject any securities. Exchanging securities for Fund
shares may create a taxable gain or loss. Each investor should consult his or
her tax adviser with respect to the particular federal, state and local tax
consequences of exchanging securities for Fund shares.
IF YOU DON'T HAVE AN AUTHORIZED FIRM, EATON VANCE CAN RECOMMEND ONE.
HOW TO REDEEM FUND SHARES
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A SHAREHOLDER MAY REDEEM FUND SHARES IN ONE OF THREE WAYS -- BY MAIL, BY
TELEPHONE OR THROUGH AN AUTHORIZED FIRM. The redemption price will be based on
the net asset value per Fund share next computed after a redemption request is
received in the proper form as described below.
REDEMPTION BY MAIL: Shares may be redeemed by delivering to the Transfer Agent,
First Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123,
during its business hours a written request for redemption in good order, plus
any share certificates with executed stock powers. Good order means that all
relevant documents must be endorsed by the record owner(s) exactly as the shares
are registered and the signature(s) must be guaranteed by a member of either the
Securities Transfer Association's STAMP program or the New York Stock Exchange's
Medallion Signature Program, or certain banks, savings and loan institutions,
credit unions, securities dealers, securities exchanges, clearing agencies and
registered securities associations as required by a regulation of the Securities
and Exchange Commission (the "Commission") and acceptable to the Transfer Agent.
In addition, in some cases, good order may require the furnishing of additional
documents such as where shares are registered in the name of a corporation,
partnership or fiduciary.
REDEMPTION BY TELEPHONE: Shares may be redeemed by telephone provided the
investor has not disclaimed in writing the use of the privilege. Such
redemptions can be effected by calling the Transfer Agent at 800-262-1122,
Monday through Friday, 9:00 a.m. to 4:00 p.m. (Eastern Standard Time). The
proceeds of a telephone redemption may be no greater than the maximum amount
established by the Principal Underwriter (currently $50,000) and may be mailed
only to the account address of record. Shares held by corporations, trusts or
certain other entities, or subject to fiduciary arrangements, may not be
redeemed by telephone. Neither the Fund, the Principal Underwriter nor the
Transfer Agent will be responsible for the authenticity of redemption
instructions received by telephone, provided that reasonable procedures to
confirm that instructions communicated by telephone are genuine have been
followed. Telephone instructions will be tape recorded. In times of drastic
economic or market changes, a telephone redemption may be difficult to
implement.
REDEMPTION THROUGH AN AUTHORIZED FIRM: To sell shares at their net asset value
through an Authorized Firm (a repurchase), a shareholder can place a repurchase
order with the Authorized Firm, which may charge a fee. The value of such shares
is based upon the net asset value calculated after the Principal Underwriter, as
the Fund's agent, receives the order. It is the Authorized Firm's responsibility
to transmit promptly repurchase orders to the Principal Underwriter. Throughout
this Prospectus, the word "redemption" is generally meant to include a
repurchase.
Within seven days after receipt of a redemption request in good order by the
Transfer Agent, the 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.
If shares were recently purchased, the proceeds of redemption (or repurchase)
will not be sent until the check (including a certified or cashier's check)
received for the shares purchased has cleared. Payment for shares tendered for
redemption may be delayed up to 15 days from the purchase date when the purchase
check has not yet cleared. Redemptions or repurchases may result in a taxable
gain or loss.
Due to the high cost of maintaining small accounts, the Fund reserves the right
to redeem accounts with balances of less than $750. Prior to such a redemption,
shareholders will be given 60 days' written notice to make an additional
purchase. However, no such redemption would be required by the 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 year of their
purchase (except shares acquired through the reinvestment of distributions)
generally will be subject to a contingent deferred sales charge ("CDSC") equal
to 1% of the net asset value of the redeemed shares. This CDSC is imposed on any
redemption the amount of which exceeds the aggregate value at the time of
redempton of (a) all shares in the account purchased more than one year prior to
the redemption, (b) all shares in the account acquired through reinvestment of
distributions, and (c) the increase, if any, in the value of all other shares in
the account (namely those purchased within the year preceding the redemption)
over the purchase price of such shares. Redemptions are processed in a manner to
maximize the amount of redemption proceeds which will not be subject to a CDSC.
That is, each redemption will be assumed to have been made first from the exempt
amounts referred to in clauses (a), (b) and (c) above, and second through
liquidation of those shares in the account referred to in clause (c) on a
first-in-first-out basis. As described under "Distribution Plan," the CDSC will
be paid to the Principal Underwriter or the Fund.
In calculating the CDSC upon the redemption of Fund shares acquired in an
exchange for shares of a fund currently listed under "The Eaton Vance Exchange
Privilege," 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.
No CDSC will be imposed on Fund shares which have been sold to Eaton Vance or
its affiliates, or to their respective employees or clients. The CDSC will also
be waived for shares redeemed (1) pursuant to a Withdrawal Plan (see "Eaton
Vance Shareholder Services"), (2) as part of a distribution from a retirement
plan qualified under Section 401, 403(b) or 457 of the Internal Revenue Code of
1986, as amended (the "Code"), or (3) as part of a minimum required distribution
from other tax-sheltered retirement plans.
REPORTS TO SHAREHOLDERS
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THE FUND WILL ISSUE TO ITS SHAREHOLDERS SEMI-ANNUAL AND ANNUAL REPORTS
CONTAINING FINANCIAL STATEMENTS. Financial statements included in annual reports
are audited by the Fund's independent accountants. Shortly after the end of each
calendar year, the Fund will furnish all shareholders with information necessary
for preparing federal and state tax returns.
THE LIFETIME INVESTING ACCOUNT/DISTRIBUTION OPTIONS
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AFTER AN INVESTOR MAKES AN INITIAL PURCHASE OF FUND SHARES, THE TRANSFER AGENT
WILL SET UP A LIFETIME INVESTING ACCOUNT FOR THE INVESTOR ON THE FUND'S RECORDS.
This account is a complete record of all transactions between the investor and
the Fund which at all times shows the balance of shares owned. The Fund will not
issue share certificates except upon request.
Each time a transaction takes place in a shareholder's account, the shareholder
will receive a statement showing complete details of the transaction and the
current balance in the account. (Under certain plans, statements may be sent
only quarterly). THE LIFETIME INVESTING ACCOUNT ALSO PERMITS A SHAREHOLDER TO
MAKE ADDITIONAL INVESTMENTS IN SHARES BY SENDING A CHECK FOR $50 OR MORE to the
Transfer Agent.
Any questions concerning a shareholder's account or services available may be
directed by telephone to EATON VANCE SHAREHOLDER SERVICES at 800-225-6265,
extension 2, or in writing to First Data Investor Services Group, P.O. Box 5123,
Westborough, MA 01581-5123 (please provide the name of the shareholder, the Fund
and the account number).
THE FOLLOWING DISTRIBUTION OPTIONS WILL BE AVAILABLE TO ALL LIFETIME INVESTING
ACCOUNTS and may be changed as often as desired by written notice to the Fund's
dividend disbursing agent, First Data Investor Services Group, P.O. Box 5123,
Westborough, MA 01581-5123. The currently effective option will appear on each
acount 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.
THE EATON VANCE EXCHANGE PRIVILEGE
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Shares of the Fund currently may be exchanged for shares of one or more other
funds in the Eaton Vance Classic Group of Funds or Eaton Vance Money Market
Fund, which are subject to a CDSC (or equivalent early withdrawal charge), on
the basis of the net asset value per share of each fund at the time of the
exchange. Exchange offers are available only in states where shares of such 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 Transfer Agent 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 Transfer Agent for additional information concerning the exchange
privilege. Applications and prospectuses of other funds are available from
Authorized Firms or the Principal Underwriter. The prospectus for each fund
describes its investment objectives and policies, and shareholders should obtain
a prospectus and consider these objectives and policies carefully before
requesting an exchange.
No CDSC is imposed on exchanges. For purposes of calculating the CDSC upon the
redemption of Fund shares acquired in an exchange, 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.
Shares of the other funds in the Eaton Vance Classic Group of Funds (and shares
of Eaton Vance Money Market Fund acquired as a result of an exchange from an EV
Classic fund) may be exchanged for Fund shares on the basis of the net asset
value per share of each fund at the time of the exchange, but subject to any
restrictions or qualifications set forth in a current prospectus of any such
fund.
Telephone exchanges are accepted by the Transfer Agent, provided the investor
has not disclaimed in writing the use of the privilege. To effect such
exchanges, call the Transfer Agent at 800-262-1122, Monday through Friday, 9:00
a.m. to 4:00 p.m. (Eastern Standard Time). Shares acquired by telephone exchange
must be registered in the same name(s) and with the same address as the shares
being exchanged. Neither the Fund, the Principal Underwriter nor the Transfer
Agent will be responsible for the authenticity of exchange instructions received
by telephone, provided that reasonable procedures to confirm that instructions
communicated are genuine have been followed. Telephone instructions will be tape
recorded. In times of drastic economic or market changes, a telephone exchange
may be difficult to implement. An exchange may result in a taxable gain or loss.
EATON VANCE SHAREHOLDER SERVICES
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THE FUND OFFERS THE FOLLOWING SERVICES, WHICH ARE VOLUNTARY, INVOLVE NO EXTRA
CHARGE, AND MAY BE CHANGED OR DISCONTINUED WITHOUT PENALTY AT ANY TIME. Full
information on each of the services described below and an application, where
required, are available from Authorized Firms or the Principal Underwriter. The
cost of administering such services for the benefit of shareholders who
participate in them is borne by the Fund as an expense to all shareholders.
INVEST-BY-MAIL -- FOR PERIODIC SHARE ACCUMULATION: Once the $1,000 minimum
investment has been made, checks of $50 or more payable to the order of EV
Classic Growth Fund may be mailed directly to the Transfer Agent, First Data
Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123 at any time
- -- whether or not distributions are reinvested. The name of the shareholder, the
Fund and the account number should accompany each investment.
BANK AUTOMATED INVESTING -- FOR REGULAR SHARE ACCUMULATION: Cash investments of
$50 or more may be made automatically each month or quarter from a shareholder's
bank account. The $1,000 minimum initial investment and small account redemption
policy are waived for these accounts.
WITHDRAWAL PLAN: A shareholder may draw on shareholdings systematically with
monthly or quarterly checks 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 redeemed shares may reinvest, with
credit for any CDSCs paid on the redeemed shares, any portion or all of the
redemption proceeds (plus that amount necessary to acquire a fractional share to
round off the purchase to the nearest full share) in shares of the Fund,
provided that the reinvestment is effected within 60 days after such redemption
and the privilege has not been used more than once in the prior 12 months.
Shares are sold to a reinvesting shareholder at the next determined net asset
value following timely receipt of a written purchase order by the Principal
Underwriter or by the 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 certain tax-sheltered retirement plans. Detailed information
concerning these plans, including certain exceptions to minimum investment
requirements, and copies of the plans are available from the Principal
Underwriter. This information should be read carefully and consultation with an
attorney or tax adviser may be advisable. The information sets forth the service
fee charged for retirement plans and describes the federal income tax
consequences of establishing a plan. Participant accounting services (including
trust fund reconciliation services) will be offered only through third party
recordkeepers and not by the Principal Underwriter. Under all plans, dividends
and distributions will be automatically reinvested in additional shares.
DISTRIBUTIONS AND TAXES
- ------------------------------------------------------------------------------
The Fund's present policy is to distribute semi-annually substantially all of
the net investment income allocated to the Fund by the Portfolio, less the
Fund's direct and allocated expenses, and to distribute at least annually any
net realized capital gains. A portion of distributions from net investment
income may be eligible for the dividends-received deduction for corporations.
The Fund's distributions from its net investment income, net short-term capital
gains, and certain net foreign exchange gains will be taxable to shareholders as
ordinary income, whether received in cash or reinvested in additional shares of
the Fund. Distributions that the Fund designates as from its net long-term
capital gains are taxable to shareholders as long-term capital gains, whether
received in cash or reinvested in additional shares of the Fund and regardless
of the length of time shares have been owned by shareholders. If shares are
purchased shortly before the record date of a distribution, the shareholder will
pay the full price for the shares and then receive some portion of the price
back as a taxable distribution. Certain distributions, if declared in October,
November or December and paid the following January, will be taxed to
shareholders as if received on December 31 of the year in which they are
declared.
Shareholders will receive annually tax information notices and Forms 1099 to
assist in the preparation of their federal and state tax returns for the prior
calendar year's distributions, proceeds from the redemption or exchange of Fund
shares, and federal income tax withheld (if any) by the Fund's Transfer Agent.
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 distributed 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.
Shareholders should consult with their tax advisors concerning the applicability
of state, local or other taxes to an investment in the Fund.
PERFORMANCE INFORMATION
- ------------------------------------------------------------------------------
FROM TIME TO TIME, THE FUND MAY ADVERTISE ITS AVERAGE ANNUAL TOTAL RETURN. The
Fund's average annual total return is determined by computing the average annual
percentage change in value of $1,000 invested at the maximum public offering
price (net asset value) for specified periods, assuming reinvestment of all
distributions. The average annual total return calculation assumes a complete
redemption of the investment and the deduction of any applicable CDSC at the end
of the period. The Fund may also publish annual and cumulative total return
figures from time to time. The Fund may also quote total return for the period
prior to commencement of operations which would reflect the Portfolio's total
return (or that of its predecessor) adjusted to reflect any applicable Fund
sales charge.
The Fund may also publish total return figures which do not take into account
any CDSC which may be imposed upon redemptions at the end of the specified
period. Any performance figure which does not take into account the CDSC 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. If the expenses of the Fund
or the Portfolio are allocated to Eaton Vance, the Fund's performance will be
higher.
The following chart reflects the annual investment returns of the Fund for one
year periods ending August 31 and does not take into account the CDSC which
investors may bear. The total return for the period prior to the Fund's
commencement of operations on November 7, 1994 reflects the total return of the
portfolio (or that of its predecessor) which had different operating expenses.
5 YEAR AVERAGE ANNUAL TOTAL RETURN -- 8.06%
10 YEAR AVERAGE ANNUAL TOTAL RETURN -- 9.82%
1987 34.03%
1988 (18.96%)
1989 32.90%
1990 (2.65%)
1991 23.24%
1992 7.22%
1993 7.63%
1994 (0.50%)
1995 14.89%
1996* 11.68%
*If a portion of the expenses of the Fund had not been allocated to the
Administrator, the Fund would have had lower returns.
<PAGE>
[Logo]
EATON VANCE
- -----------------
Mutual Funds
EV CLASSIC
GROWTH FUND
- --------------------------------------------------------------------------------
PROSPECTUS
JANUARY 1, 1997
EV CLASSIC
GROWTH FUND
24 FEDERAL STREET
BOSTON, MA 02110
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INVESTMENT ADVISER OF GROWTH PORTFOLIO
Boston Management and Research, 24 Federal Street, Boston, MA 02110
ADMINISTRATOR OF EV CLASSIC GROWTH FUND
Eaton Vance Management, 24 Federal Street, Boston, MA 02110
PRINCIPAL UNDERWRITER
Eaton Vance distributors, Inc., 24 Federal Street, Boston, MA 02110
(800) 225-6265
CUSTODIAN
Investors Bank & Trust Company, 89 South Street, Boston, MA 02111
TRANSFER AGENT
First Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123
(800) 262-1122
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P., One Post Office Square, Boston, MA 02109
C-GFP
<PAGE>
Part A
Information Required in a Prospectus
EV MARATHON
GROWTH FUND
- ------------------------------------------------------------------------------
EV MARATHON GROWTH FUND (THE "FUND") IS A MUTUAL FUND SEEKING GROWTH OF
CAPITAL. THE FUND INVESTS ITS ASSETS IN GROWTH PORTFOLIO (THE "PORTFOLIO"), A
DIVERSIFIED OPEN-END INVESTMENT COMPANY HAVING THE SAME INVESTMENT OBJECTIVE
AS THE FUND, RATHER THAN BY DIRECTLY INVESTING IN AND MANAGING ITS OWN
PORTFOLIO OF SECURITIES. THE FUND IS A SERIES OF EATON VANCE GROWTH TRUST (THE
"TRUST").
Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, any bank or other insured depository institution, and are not
federally insured by the Federal Deposit Insurance Corporation, the Federal
Reserve Board or any other government agency. Shares of the Fund involve
investment risks, including fluctuations in value and the possible loss of
some or all of the principal investment.
This Prospectus is designed to provide you with information you should know
before investing. Please retain this document for future reference. A
Statement of Additional Information dated January 1, 1997 for the Fund, as
supplemented from time to time, has been filed with the Securities and
Exchange Commission and is incorporated herein by reference. This Statement of
Additional Information is available without charge from the Fund's principal
underwriter, Eaton Vance Distributors, Inc. (the "Principal Underwriter"), 24
Federal Street, Boston, MA 02110 (telephone (800) 225-6265). The Portfolio's
investment adviser is Boston Management and Research (the "Investment
Adviser"), a wholly-owned subsidiary of Eaton Vance Management, and Eaton
Vance Management is the administrator (the "Administrator") of the Fund. The
offices of the Investment Adviser and the Administrator are located at 24
Federal Street, Boston, MA 02110.
- ------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE PAGE
<S> <C> <C> <C>
Shareholder and Fund Expenses .............. 2 How to Buy Fund Shares ........................ 9
The Fund's Financial Highlights ............ 3 How to Redeem Fund Shares...................... 10
The Fund's Investment Objective ............ 4 Reports to Shareholders ....................... 11
Investment Policies and Risks .............. 4 The Lifetime Investing Account/Distribution 11
Organization of the Fund and the Portfolio . 5 Options ..................................... 11
Management of the Fund and the Portfolio ... 6 The Eaton Vance Exchange Privilege ............ 12
Distribution Plan .......................... 7 Eaton Vance Shareholder Services .............. 13
Valuing Fund Shares......................... 8 Distributions and Taxes ....................... 14
Performance Information ....................... 14
- ---------------------------------------------------------------------------------------------------------
</TABLE>
PROSPECTUS DATED JANUARY 1, 1997
<PAGE>
<TABLE>
<CAPTION>
SHAREHOLDER AND FUND EXPENSES
- -----------------------------------------------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES
---------------------------------------------------------------------------------------------------
<S> <C>
Sales Charges Imposed on Purchases of Shares None
Sales Charges Imposed on Reinvested Distributions None
Fees to Exchange Shares None
Range of Declining Contingent Deferred Sales Charges Imposed on Redemptions
during the First Seven Years (as a percentage of redemption proceeds
exclusive of all reinvestments and capital appreciation in the account) 5.00% - 0%
ANNUAL FUND AND ALLOCATED PORTFOLIO OPERATING EXPENSES (as a percentage of average daily net assets)
---------------------------------------------------------------------------------------------
Investment Adviser Fee 0.625%
Rule 12b-1 Distribution (and Service) Fees 0.900%
Other Expenses (after expense allocation) 0.075%
-----
Total Operating Expenses (after allocation) 1.600%
=====
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
An investor would pay the following contingent deferred $66 $90 $107 $190
sales charge and expenses on a $1,000 investment,
assuming (a) 5% annual return and (b) redemption at
the end of each period:
An investor would pay the following expenses on the same $16 $50 $87 $190
investment, assuming (a) 5% annual return and (b) no
redemptions:
</TABLE>
NOTES:
The table and Example 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. Information
for the Fund is based on its expenses for the most recent fiscal year. Absent
an expense allocation, Other Expenses and Total Operating Expenses would have
been 1.345% and 2.870%, respectively.
The Example should not be considered a representation of past or future
expenses and actual expenses may be greater or less than those shown. Federal
regulations require the Example to assume a 5% annual return, but actual
return may vary. For further information regarding the expenses of both the
Fund and the Portfolio see "The Fund's Financial Highlights", "Management of
the Fund and the Portfolio" and "How to Redeem Fund Shares". 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. See "Distribution Plan".
No contingent deferred sales charge is imposed on (a) shares purchased more
than six years prior to the redemption, (b) shares acquired through the
reinvestment of distributions or (c) any appreciation in value of other shares
in the account (see "How to Redeem Fund Shares"), and no such charge is
imposed on exchanges of Fund shares for shares of one or more other funds
listed under "The Eaton Vance Exchange Privilege".
The Fund invests exclusively in the Portfolio. Other investment companies with
different distribution arrangements and fees are investing in the Portfolio
and others may do so in the future. See "Organization of the Fund and the
Portfolio".
<PAGE>
THE FUND'S FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
The following information should be read in conjunction with the audited
financial statements included in the Fund's annual report to shareholders
which is incorporated by reference into the Statement of Additional
Information in reliance upon the report of Coopers & Lybrand L.L.P.,
independent certified public accountants, as experts in accounting and
auditing. Further information regarding the performance of the Fund is
contained in its annual report to shareholders which may be obtained without
charge by contacting the Principal Underwriter.
- ------------------------------------------------------------------------------
YEAR ENDED AUGUST 31,
---------------------
1996 1995++
---- ------
NET ASSET VALUE -- Beginning of year $11,680 $10.000
------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss $(0.010) $(0.074)
Net realized and unrealized gain on investments 1.725 1.754
------- -------
Total income from investment operations $ 1.715 $ 1.680
------- -------
LESS DISTRIBUTIONS:
From net realized gain on investments (0.075) --
------- -------
NET ASSET VALUE, end of year $13.320 $11.680
======= =======
TOTAL RETURN(1) 14.75% 16.80%
RATIOS/SUPPLEMENTAL DATA (as a percentage of average daily net
assets):*
Expenses(2) 1.52% 2.82%+
Net investment loss (0.12)% (1.59)%+
NET ASSETS AT END OF YEAR (000'S OMITTED) $ 7,509 $ 2,240
* The expenses related to the operation of the Fund reflect an allocation of
expenses to the Administrator. Had such action not been taken, net
investment income per share and the ratios would have been as follows:
NET INVESTMENT INCOME PER SHARE $(0.126) $ 0.167
RATIOS (to average daily net assets)
Expenses(2) 2.87% 8.01%+
Net investment loss (1.47)% (6.79)%+
+ Computed on an annualized basis.
++ For the period from the start of business, September 13, 1994, to August
31, 1995.
(1) Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of the
period reported. Distributions, if any, are assumed to be reinvested at
the net asset value on the record date. Total return is computed on a
non-annualized basis.
(2) Includes the Fund's share of the Portfolio's allocated expenses.
<PAGE>
THE FUND'S INVESTMENT OBJECTIVE
- -------------------------------------------------------------------------------
THE FUND'S INVESTMENT OBJECTIVE IS TO ACHIEVE CAPITAL GROWTH. The Fund
currently seeks to meet its investment objective by investing its assets in
the Growth Portfolio, a separate registered investment company, which has the
same investment objective as the Fund. While income is a subordinate
consideration to capital growth, the Portfolio will earn dividend or interest
income to the extent that it receives dividends or interest from its
investments.
The Fund's and the Portfolio's investment objectives are nonfundamental and
may be changed when authorized by a vote of the Trustees of the Trust or the
Portfolio without obtaining the approval of the Fund's shareholders or the
investors in the Portfolio, as the case may be. The Trustees of the Trust have
no present intention to change the Fund's objective and intend to submit any
proposed material change in the investment objective to shareholders in
advance for their approval.
INVESTMENT POLICIES AND RISKS
- -------------------------------------------------------------------------------
THE PORTFOLIO INVESTS IN A CAREFULLY SELECTED AND CONTINUOUSLY MANAGED
PORTFOLIO CONSISTING PRIMARILY OF DOMESTIC AND FOREIGN EQUITY SECURITIES. It
may invest in all kinds of companies. The Portfolio invests primarily in
common stocks or securities convertible into common stocks (including
convertible debt). It may also invest in other securities and obligations of
all kinds. These include preferred stocks, rights, warrants, bonds, repurchase
agreements and other evidences of indebtedness.The Portfolio may also invest
in money market instruments.
Investing in foreign securities entails considerations and possible risks not
typically associated with investing in securities issued by the U.S.
Government and domestic corporations. The values of foreign investments are
affected by changes in currency rates or exchange control regulations,
application of foreign tax laws (including withholding tax), changes in
governmental administration or economic or monetary policy (in this country or
abroad), or changed circumstances in dealings between nations. Because
investment in foreign issuers will usually involve currencies of foreign
countries, the value of the assets of the Portfolio as measured in U.S.
dollars may be adversely affected by changes in foreign currency exchange
rates. Such rates may fluctuate significantly over short periods of time
causing the Portfolio's net asset value to fluctuate as well. Costs are
incurred in connection with conversions between various currencies. In
addition, foreign brokerage commissions, custody fees and other costs of
investing are generally higher than in the United States, and foreign
securities markets may be less liquid, more volatile and less subject to
governmental supervision than in the United States. Investments in foreign
issuers could be adversely affected by other factors not present in the United
States, including expropriation, confiscatory taxation, lack of uniform
accounting and auditing standards and potential difficulties in enforcing
contractual obligations. Currently, the Fund does not intend to invest more
than 25% of its net assets in foreign securities.
The Portfolio may purchase and sell exchange-traded futures contracts on stock
indices and options thereon to hedge against fluctuations in securities prices
or as a substitute for the purchase or sale of securities. Such transactions
involve a risk of loss or depreciation due to: unanticipated adverse changes in
securities prices, interest rates, the other financial instruments' prices or
currency exchange rates; the inability to close out a position; default by the
counterparty; imperfect correlation between a position and the desired hedge;
tax constraints on closing out positions; and portfolio management constraints
on securities subject to such transactions. The loss on such transactions (other
than purchased options) may substantially exceed the Portfolio's initial
investment in these instruments. In addition, the Portfolio may lose the entire
premium paid for purchased options that expire before they can be profitably
exercised by the Portfolio. The Portfolio incurs transaction costs in opening
and closing positions in future and options thereon. There can be no assurance
that the Adviser's use of such instruments will be advantageous to the
Portfolio.
The Fund may sell a security short if it owns at least an equal amount of the
security sold short or another security convertible or exchangeable for an
equal amount of the security sold short without payment of further
compensation (a short sale against-the-box). Under current tax law, short
sales against-the-box enable the Fund to hedge its exposure to securities that
it holds without selling the securities and recognizing gains. A short sale
against-the-box requires that the short seller absorb certain costs so long as
the position is open. In a short sale against-the-box, the short seller is
exposed to the risk of being forced to deliver appreciated stock to close the
position if the borrowed stock is called in, causing a taxable gain to be
recognized. The Fund expects normally to close its short sales against-the-box
by delivering newly-acquired stock.
An investment in the Fund entails the risk that the principal value of Fund
shares may not increase or may decline. The Portfolio's investments in equity
securities are subject to the risk of adverse developments affecting
particular companies or industries and the stock market generally. The
Portfolio may temporarily borrow up to 5% of the value of its total assets to
satisfy redemption requests or settle securities transactions.
The Fund and the Portfolio have adopted certain fundamental investment
restrictions which are enumerated in detail in the Statement of Additional
Information and which may not be changed unless authorized by a shareholder
vote and an investor vote, respectively. Except for such enumerated
restrictions and as otherwise indicated in this Prospectus, the investment
objective and policies of the Fund and the Portfolio are not fundamental
policies and accordingly may be changed by the Trustees of the Trust and the
Portfolio without obtaining the approval of the Fund's shareholders or the
investors in the Portfolio, as the case may be.
THE FUND IS NOT INTENDED TO BE A COMPLETE INVESTMENT PROGRAM, AND
PROSPECTIVE INVESTORS SHOULD TAKE INTO ACCOUNT THEIR OBJECTIVES AND OTHER
INVESTMENTS WHEN CONSIDERING THE PURCHASE OF FUND SHARES. THE FUND CANNOT
ASSURE ACHIEVEMENT OF ITS CAPITAL GROWTH OBJECTIVE.
ORGANIZATION OF THE FUND AND THE PORTFOLIO
- ------------------------------------------------------------------------------
The Fund is a diversified series of Eaton Vance Growth Trust, a business trust
established under Massachusetts law pursuant to a Declaration of Trust dated May
25, 1989 and organized as the successor to a Massachusetts corporation which
commenced its investment company operations in 1954. THE TRUSTEES OF THE TRUST
ARE RESPONSIBLE FOR THE OVERALL MANAGEMENT AND SUPERVISION OF ITS AFFAIRS. The
Trust may issue an unlimited number of shares of beneficial interest (no par
value per share) in one or more series (such as the Fund). 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.
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,
affords the potential for economies of scale for the Fund (at least when the
assets of the Portfolio exceed $300 million) and may over time result in lower
expenses for the Fund.
In addition to selling an interest to the Fund, the Portfolio may sell interests
to other affiliated and non-affiliated mutual funds or institutional investors.
Such investors will invest in the Portfolio on the same terms and conditions and
will pay a proportionate share of the Portfolio's expenses. However, the other
investors investing in the Portfolio are not required to sell their shares at
the same public offering price as the Fund due to variations in sales
commissions and other operating expenses. Therefore these differences may result
in differences in returns experienced by investors in the various funds that
invest in the Portfolio. Such differences in returns are also present in other
mutual fund structures, including funds that have multiple classes of shares.
Information regarding other pooled investment entities or funds which invest in
the Portfolio may be obtained by contacting the Principal Underwriter, 24
Federal Street, Boston, MA 02110, (617) 482-8260.
Whenever the Fund as an investor in the Portfolio is requested to vote on
matters pertaining to the Portfolio (other than the termination of the
Portfolio's business, which may be determined by the Trustees of the Portfolio
without investor approval), the Fund will hold a meeting of Fund shareholders
and will vote its interest in the Portfolio for or against such matters
proportionately to the instructions to vote for or against such matters received
from Fund shareholders. The Fund shall vote shares for which it receives no
voting instructions in the same proportion as the shares for which it receives
voting instructions. Other investors in the Portfolio may alone or collectively
acquire sufficient voting interests in the Portfolio to control matters relating
to the operation of the Portfolio, which may require the Fund to withdraw its
investment in the Portfolio or take other appropriate action. Any such
withdrawal could result in a distribution "in kind" of portfolio securities (as
opposed to a cash distribution from the Portfolio). If securities are
distributed, the Fund could incur brokerage, tax or other charges in converting
the securities to cash. In addition, the distribution in kind may result in a
less diversified portfolio of investments or adversely affect the liquidity of
the Fund. Notwithstanding the above, there are other means for meeting
shareholder redemption requests, such as borrowing.
The Fund may withdraw (completely redeem) all its assets from the Portfolio at
any time if the Board of Trustees of the Trust determines that it is in the best
interest of the Fund to do so. In the event the Fund withdraws all of its assets
from the Portfolio, or the Board of Trustees of the Trust determines that the
investment objective of the Portfolio is no longer consistent with the
investment objective of the Fund, such Trustees would consider what action might
be taken, including investing the assets of the Fund in another pooled
investment entity or retaining an investment adviser to manage the Fund's assets
in accordance with its investment objective. The Fund's investment performance
may be affected by a withdrawal of all its assets from the Portfolio.
MANAGEMENT OF THE FUND AND THE PORTFOLIO
- ------------------------------------------------------------------------------
THE PORTFOLIO ENGAGES BOSTON MANAGEMENT AND RESEARCH ("BMR"), A WHOLLY- OWNED
SUBSIDIARY OF EATON VANCE MANAGEMENT ("EATON VANCE"), AS ITS INVESTMENT ADVISER.
EATON VANCE, ITS AFFILIATES AND ITS PREDECESSOR COMPANIES HAVE BEEN MANAGING
ASSETS OF INDIVIDUALS AND INSTITUTIONS SINCE 1924 AND MANAGING INVESTMENT
COMPANIES SINCE 1931.
Acting under the general supervision of the Board of Trustees of the Portfolio,
BMR manages the Portfolio's investments and affairs. BMR also furnishes for the
use of the Portfolio office space and all necessary office facilities, equipment
and personnel for servicing the investments of the Portfolio. Under its
investment advisory agreement with the Portfolio, BMR receives a monthly
advisory fee of 5/96 of 1% (equivalent to 0.625% annually) of the average daily
net assets of the Portfolio up to and including $300 million, and 1/24 of 1%
(equivalent to 0.50% annually) of the average daily net assets over $300
million. For the fiscal year ended August 31, 1996, the Portfolio paid BMR
advisory fees equivalent to 0.625% of the Portfolio's average daily net assets
for such year.
BMR OR EATON VANCE ACTS AS INVESTMENT ADVISER TO INVESTMENT COMPANIES AND
VARIOUS INDIVIDUAL AND INSTITUTIONAL CLIENTS WITH ASSETS UNDER MANAGEMENT OF
OVER $16 BILLION. Eaton Vance is a wholly-owned subsidiary of Eaton Vance Corp.,
a publicly-held holding company which through its subsidiaries and affiliates
engages primarily in investment management, administration and marketing
activities. The Principal Underwriter is a wholly-owned subsidiary of Eaton
Vance.
Thomas E. Faust, Jr. has acted as the portfolio manager of the Portfolio since
April 1, 1996. Mr. Faust has been a Vice President of Eaton Vance since 1985 and
of BMR since 1992.
BMR places the portfolio transactions of the Portfolio with many broker- dealer
firms and uses its best efforts to obtain execution of such transactions at
prices which are advantageous to the Portfolio and at reasonably competitive
commission rates. Subject to the foregoing, BMR may consider sales of shares of
the Fund or of other investment companies sponsored by BMR or Eaton Vance as a
factor in the selection of broker- dealer firms to execute portfolio
transactions. The Fund, the Portfolio and BMR have adopted Codes of Ethics
relating to personal securities transactions. The Codes permit Eaton Vance
personnel to invest in securities (including securities that may be purchased or
held by a Portfolio) for their own accounts, subject to certain pre-clearance,
reporting and other restrictions and procedures contained in such Codes.
The Trust has retained the services of Eaton Vance to act as Administrator of
the Fund. The Trust has not retained the services of an investment adviser since
the Trust seeks to achieve the investment objective of the Fund by investing the
Fund's assets in the Portfolio. As Administrator, Eaton Vance provides the Fund
with general office facilities and supervises the overall administration of the
Fund. For these services Eaton Vance currently receives no compensation. The
Trustees of the Trust may determine, in the future, to compensate Eaton Vance
for such services.
The Portfolio and the Fund, as the case may be, will each be responsible for all
respective costs and expenses not expressly stated to be payable by BMR under
the investment advisory agreement, by Eaton Vance under the administrative
services agreement, or by the Principal Underwriter under the distribution
agreement.
DISTRIBUTION PLAN
- ------------------------------------------------------------------------------
THE FUND FINANCES DISTRIBUTION ACTIVITIES AND HAS ADOPTED A DISTRIBUTION PLAN
(THE "PLAN") PURSUANT TO RULE 12B-1 UNDER THE INVESTMENT COMPANY ACT OF 1940, AS
AMENDED (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. For the
fiscal year ended August 31, 1996, the Fund paid sales commissions under the
Plan equivalent to .75% of the Fund's average daily net assets for such year. As
at August 31, 1996, the Uncovered Distribution Charges of the Principal
Underwriter calculated under the Plan amounted to approximately $172,156
(equivalent to 2.2% of the Fund's net assets on such day).
THE PLAN ALSO AUTHORIZES THE FUND TO MAKE PAYMENTS OF SERVICE FEES TO THE
PRINCIPAL UNDERWRITER, AUTHORIZED FIRMS AND OTHER PERSONS IN AMOUNTS NOT
EXCEEDING .25% OF THE FUND'S AVERAGE DAILY NET ASSETS FOR EACH FISCAL YEAR. The
Trustees of the Trust have initially implemented this provision of the Plan by
authorizing the Fund to make quarterly payments of service fees to the Principal
Underwriter and Authorized Firms in amounts not expected to exceed .25% of the
Fund's average daily net assets for any fiscal year based on the value of Fund
shares sold by such persons and remaining outstanding for at least twelve
months. As permitted by the NASD Rule, such payments are made for personal
services and/or the maintenance of shareholder accounts. Service fees are
separate and distinct from the sales commissions and distribution fees payable
by the Fund to the Principal Underwriter, and as such are not subject to
automatic discontinuance when there are no outstanding Uncovered Distribution
Charges of the Principal Underwriter. For the fiscal year ended August 31, 1996,
the Fund paid or accrued service fees under the Plan equivalent to 0.07% of the
Fund's average daily net assets for such year.
The Principal Underwriter may, from time to time, at its own expense, provide
additional incentives to Authorized Firms which employ registered
representatives who sell Fund shares and/or shares of other funds distributed by
the Principal Underwriter. In some instances, such additional incentives may be
offered only to certain Authorized Firms whose representatives sell or are
expected to sell significant amounts of shares. In addition, the Principal
Underwriter may from time to time increase or decrease the sales commissions
payable to Authorized Firms.
The Fund may, in its absolute discretion, suspend, discontinue or limit the
offering of its shares at any time. In determining whether any such action
should be taken, the Fund's management intends to consider all relevant factors,
including without limitation the size of the Fund, the investment climate and
market conditions, the volume of sales and redemptions of Fund shares, and the
amount of Uncovered Distribution Charges of the Principal Underwriter. The Plan
may continue in effect and payments may be made under the Plan following any
such suspension, discontinuance or limitation of the offering of Fund shares;
however, the Fund is not contractually obligated to continue the Plan for any
particular period of time. Suspension of the offering of Fund shares would not,
of course, affect a shareholder's ability to redeem shares.
VALUING FUND SHARES
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THE FUND VALUES ITS SHARES ONCE ON EACH DAY THE NEW YORK STOCK EXCHANGE (THE
"EXCHANGE") IS OPEN FOR TRADING, as of the close of regular trading on the
Exchange (normally 4:00 p.m. New York time).The Fund's net asset value per share
is determined by its custodian, Investors Bank & Trust Company ("IBT"), (as
agent for the Fund) in the manner authorized by the Trustees of the Trust. Net
asset value is computed by dividing the value of the Fund's total assets, less
its liabilities, by the number of shares outstanding. Because the Fund invests
its assets in an interest in the Portfolio, the Fund's net asset value will
reflect the value of its interest in the Portfolio (which, in turn, reflects the
underlying value of the Portfolio's assets and liabilities).
Authorized Firms must communicate an investor's order to the Principal
Underwriter prior to the close of the Principal Underwriter's business day to
receive that day's net asset value per Fund share. It is the Authorized Firms'
responsibility to transmit orders promptly to the Principal Underwriter.
The Portfolio's net asset value is also determined as of the close of regular
trading on the Exchange by IBT (as custodian and agent for the Portfolio) in the
manner authorized by the Trustees of the Portfolio. Net asset value is computed
by subtracting the liabilities of the Portfolio from the value of its total
assets. For further information regarding the valuation of the Portfolio's
assets, see "Determination of Net Asset Value" in the Statement of Additional
Information.
SHAREHOLDERS MAY DETERMINE THE VALUE OF THEIR INVESTMENT BY MULTIPLYING THE
NUMBER OF FUND SHARES OWNED BY THE CURRENT NET ASSET VALUE PER SHARE.
HOW TO BUY FUND SHARES
- ------------------------------------------------------------------------------
SHARES OF THE FUND MAY BE PURCHASED FOR CASH OR MAY BE ACQUIRED IN EXCHANGE FOR
SECURITIES. Investors may purchase shares of the Fund through Authorized Firms
at the net asset value per share of the Fund next determined after an order is
effective. An Authorized Firm may charge its customers a fee in connection with
transactions executed by that Firm. 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: First
Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123. The
$1,000 minimum initial investment is waived for Bank Automated Investing
accounts, which may be established with an investment of $50 or more. See "Eaton
Vance Shareholder Services".
In connection with employee benefit or other continuous group purchase plans
under which the average initial purchase by a participant of the plan is $1,000
or more, the Fund may accept initial investments of less than $1,000 on the part
of an individual participant. In the event a shareholder who is a participant of
such a plan terminates participation in the plan, his or her shares will be
transferred to a regular individual account. However, such account will be
subject to the right of redemption by the Fund as described under "How to Redeem
Fund Shares."
ACQUIRING FUND SHARES IN EXCHANGE FOR SECURITIES. IBT, as escrow agent, will
receive securities acceptable to Eaton Vance, as Administrator, in exchange for
Fund shares at their net asset value as determined above. The minimum value of
securities (or securities and cash) accepted for deposit is $5,000. Securities
accepted will be sold on the day of their receipt or as soon thereafter as
possible. The number of Fund shares to be issued in exchange for securities will
be the aggregate proceeds from the sale of such securities, divided by the
applicable net asset value per Fund share on the day such proceeds are received.
Eaton Vance will use reasonable efforts to obtain the then current market price
for such securities but does not guarantee the best available price. Eaton Vance
will absorb any transaction costs, such as commissions, on the sale of the
securities.
Securities determined to be acceptable should be transferred via book entry or
physically delivered, in proper form for transfer, through an Authorized Firm,
together with a completed and signed Letter of Transmittal in approved form
(available from Authorized Firms), as follows:
IN THE CASE OF BOOK ENTRY:
Deliver through Depository Trust Co.
Broker #2212
Investors Bank & Trust Company
For A/C EV Marathon Growth Fund
IN THE CASE OF PHYSICAL DELIVERY:
Investors Bank & Trust Company
Attention: EV Marathon Growth Fund
Physical Securities Processing Settlement Area
89 South Street
Boston, MA 02111
Investors who are contemplating an exchange of securities for shares of the
Fund, or their representatives, must contact Eaton Vance to determine whether
the securities are acceptable before forwarding such securities. Eaton Vance
reserves the right to reject any securities. Exchanging securities for Fund
shares may create a taxable gain or loss. Each investor should consult his or
her tax adviser with respect to the particular federal, state and local tax
consequences of exchanging securities for Fund shares.
IF YOU DON'T HAVE AN AUTHORIZED FIRM, EATON VANCE CAN RECOMMEND ONE.
HOW TO REDEEM FUND SHARES
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A SHAREHOLDER MAY REDEEM FUND SHARES IN ONE OF THREE WAYS -- BY MAIL, BY
TELEPHONE OR THROUGH AN AUTHORIZED FIRM. The redemption price will be based on
the net asset value per Fund share next computed after a redemption request is
received in the proper form as described below.
REDEMPTION BY MAIL: Shares may be redeemed by delivering to the Transfer Agent,
First Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123,
during its business hours a written request for redemption in good order, plus
any share certificates with executed stock powers. Good order means that all
relevant documents must be endorsed by the record owner(s) exactly as the shares
are registered and the signature(s) must be guaranteed by a member of either the
Securities Transfer Association's STAMP program or the New York Stock Exchange's
Medallion Signature Program, or certain banks, savings and loan institutions,
credit unions, securities dealers, securities exchanges, clearing agencies and
registered securities associations as required by a regulation of the Securities
and Exchange Commission (the "Commission") and acceptable to the Transfer Agent.
In addition, in some cases, good order may require the furnishing of additional
documents such as where shares are registered in the name of a corporation,
partnership or fiduciary.
REDEMPTION BY TELEPHONE: Shares may be redeemed by telephone provided the
investor has not disclaimed in writing the use of the privilege. Such
redemptions can be effected by calling the Transfer Agent at 800-262-1122,
Monday through Friday, 9:00 a.m. to 4:00 p.m. (Eastern Standard Time). The
proceeds of a telephone redemption may be no greater than the maximum amount
established by the Principal Underwriter (currently $50,000) and may be mailed
only to the account address of record. Shares held by corporations, trusts or
certain other entities, or subject to fiduciary arrangements, may not be
redeemed by telephone. Neither the Fund, the Principal Underwriter nor the
Transfer Agent will be responsible for the authenticity of redemption
instructions received by telephone, provided that reasonable procedures to
confirm that instructions communicated by telephone are genuine have been
followed. Telephone instructions will be tape recorded. In times of drastic
economic or market changes, a telephone redemption may be difficult to
implement.
REDEMPTION THROUGH AN AUTHORIZED FIRM: To sell shares at their net asset value
through an Authorized Firm (a repurchase), a shareholder can place a repurchase
order with the Authorized Firm, which may charge a fee. The value of such shares
is based upon the net asset value calculated after the Principal Underwriter, as
the Fund's agent, receives the order. It is the Authorized Firm's responsibility
to transmit promptly repurchase orders to the Principal Underwriter. Throughout
this Prospectus, the word "redemption" is generally meant to include a
repurchase.
Within seven days after receipt of a redemption request in good order by the
Transfer Agent, the 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.
If shares were recently purchased, the proceeds of redemption (or repurchase)
will not be sent until the check (including a certified or cashier's check)
received for the shares purchased has cleared. Payment for shares tendered for
redemption may be delayed up to 15 days from the purchase date when the purchase
check has not yet cleared. Redemptions or repurchases may result in a taxable
gain or loss.
Due to the high cost of maintaining small accounts, the Fund reserves the right
to redeem accounts with balances of less than $750. Prior to such a redemption,
shareholders will be given 60 days' written notice to make an additional
purchase. However, no such redemption would be required by the 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
("CDSC"). This CDSC is imposed on any redemption the amount of which exceeds the
aggregate value at the time of redemption of (a) all shares in the account
purchased more than six years prior to the redemption, (b) all shares in the
account acquired through reinvestment of distributions, and (c) the increase, if
any, in the value of all other shares in the account (namely those purchased
within the six years preceding the redemption) over the purchase price of such
shares. Redemptions are processed in a manner to maximize the amount of
redemption proceeds which will not be subject to a CDSC. That is, each
redemption will be assumed to have been made first from the exempt amounts
referred to in clauses (a), (b) and (c) above, and second through liquidation of
those shares in the account referred to in clause (c) on a first-in-first- out
basis. As described under "Distribution Plan", the CDSC will be paid to the
Principal Underwriter or the Fund. Any CDSC which is required to be imposed on
share redemptions will be made in accordance with the following schedule:
YEAR OF REDEMPTION AFTER PURCHASE CDSC
-----------------------------------------------------------------------
First or Second ............................................... 5%
Third ......................................................... 4%
Fourth ........................................................ 3%
Fifth ......................................................... 2%
Sixth ......................................................... 1%
Seventh and following ......................................... 0%
In calculating the CDSC upon the redemption of Fund shares acquired in an
exchange for shares of a fund currently listed under "The Eaton Vance Exchange
Privilege", the CDSC schedule applicable to the shares at the time of purchase
will apply and the purchase of shares acquired in the exchange is deemed to have
occurred at the time of the original purchase of the exchanged shares.
No CDSC will be imposed on Fund shares which have been sold to Eaton Vance or
its affiliates, or to their respective employees or clients. The CDSC will also
be waived for shares redeemed (1) pursuant to a Withdrawal Plan (see "Eaton
Vance Shareholder Services"), (2) as part of a required distribution from a
tax-sheltered retirement plan, or (3) following the death of all beneficial
owners of such shares, provided the redemption is requested within one year of
death (a death certificate and other applicable documents may be required). In
addition, shares acquired as a result of a merger or liquidation of another
Eaton Vance sponsored fund will have a CDSC imposed at the same rate as would
have been imposed in the prior fund.
THE FOLLOWING EXAMPLE ILLUSTRATES THE OPERATION OF THE CDSC. ASSUME THAT AN
INVESTOR PURCHASES $10,000 OF THE FUND'S SHARES AND THAT 16 MONTHS LATER THE
VALUE OF THE ACCOUNT HAS GROWN THROUGH INVESTMENT PERFORMANCE AND REINVESTMENT
OF DISTRIBUTIONS TO $12,000. THE INVESTOR THEN MAY REDEEM UP TO $2,000 OF SHARES
WITHOUT INCURRING A CDSC. IF THE INVESTOR SHOULD REDEEM $3,000 OF SHARES, A CDSC
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 CDSC
WOULD BE $50.
REPORTS TO SHAREHOLDERS
- ------------------------------------------------------------------------------
THE FUND WILL ISSUE TO ITS SHAREHOLDERS SEMI-ANNUAL AND ANNUAL REPORTS
CONTAINING FINANCIAL STATEMENTS. Financial statements included in annual reports
are audited by the Fund's independent accountants. Shortly after the end of each
calendar year, the Fund will furnish all shareholders with information necessary
for preparing federal and state tax returns.
THE LIFETIME INVESTING ACCOUNT/DISTRIBUTION OPTIONS
- ------------------------------------------------------------------------------
AFTER AN INVESTOR MAKES AN INITIAL PURCHASE OF FUND SHARES, THE TRANSFER AGENT,
WILL SET UP A LIFETIME INVESTING ACCOUNT FOR THE INVESTOR ON THE FUND'S RECORDS.
This account is a complete record of all transactions between the investor and
the Fund which at all times shows the balance of shares owned. The Fund will not
issue share certificates except upon request.
Each time a transaction takes place in a shareholder's account, the shareholder
will receive a statement showing complete details of the transaction and the
current balance in the account. (Under certain plans, statements may be sent
only quarterly). THE LIFETIME INVESTING ACCOUNT ALSO PERMITS A SHAREHOLDER TO
MAKE ADDITIONAL INVESTMENTS IN SHARES BY SENDING A CHECK FOR $50 OR MORE to the
Transfer Agent.
Any questions concerning a shareholder's account or services available may be
directed by telephone to EATON VANCE SHAREHOLDER SERVICES at 800-225-6265,
extension 2, or in writing to First Data Investor Services Group, P.O. Box 5123,
Westborough, MA 01581-5123 (please provide the name of the shareholder, the Fund
and the account number).
THE FOLLOWING DISTRIBUTION OPTIONS WILL BE AVAILABLE TO ALL LIFETIME INVESTING
ACCOUNTS and may be changed as often as desired by written notice to the Fund's
dividend disbursing agent, First Data Investor Services Group, P.O. Box 5123,
Westborough, MA 01581-5123. The currently effective option will appear on each
account statement.
Share Option -- Dividends and capital gains will be reinvested in additional
shares.
Income Option -- Dividends will be paid in cash, and capital gains will be
reinvested in additional shares.
Cash Option -- Dividends and capital gains will be paid in cash.
The Share Option will be assigned if no other option is specified.
Distributions, including those reinvested, will be reduced by any withholding
required under federal income tax laws.
If the Income Option or Cash Option has been selected, dividend and/or capital
gains distribution checks which are returned by the United States Postal Service
as not deliverable or which remain uncashed for six months or more will be
reinvested in the account in shares at the then current net asset value.
Furthermore, the distribution option on the account will be automatically
changed to the Share Option until such time as the shareholder selects a
different option.
DISTRIBUTION INVESTMENT OPTION. In addition to the distribution options set
forth above, dividends and/or capital gains may be invested in additional shares
of another Eaton Vance fund. Before selecting this option, a shareholder should
obtain a prospectus of the other Eaton Vance fund and consider its objectives
and policies carefully.
"STREET NAME" ACCOUNTS. If shares 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.
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 (including Class I shares of
any EV Marathon Limited Maturity fund) or Eaton Vance Money Market Fund, which
are subject to a CDSC. Shares of the Fund may also be exchanged for shares of
Eaton Vance Prime Rate Reserves, which are subject to an early withdrawal
charge, and shares of a money market fund sponsored by an Authorized Firm and
approved by the Principal Underwriter (an "Authorized Firm fund"). Any such
exchange will be made on the basis of the net asset value per share of each fund
at the time of the o i b e oe suchtohoexchange. 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 Transfer Agent 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 Transfer Agent for additional information concerning the exchange
privilege. Applications and prospectuses of other funds are available from
Authorized Firms or the Principal Underwriter. The prospectus for each fund
describes its investment objectives and policies, and shareholders should obtain
a prospectus and consider these objectives and policies carefully before
requesting an exchange.
No CDSC is imposed on exchanges. For purposes of calculating the CDSC upon the
redemption of shares acquired in an exchange, the CDSC schedule applicable to
the shares at the time of purchase will apply and the purchase of shares
acquired in one or more exchanges is deemed to have occurred at the time of the
original purchase of the exchanged shares, except that time during which shares
are held in an Authorized Firm fund will not be credited toward completion of
the CDSC period. For the CDSC schedule applicable to the Eaton Vance Marathon
Group of Funds (except EV Marathon Strategic Income Fund, Eaton Vance Prime Rate
Reserves and Class I shares of any EV Marathon Limited Maturity Fund), see "How
to Redeem Fund Shares." The CDSC or early withdrawal charge schedule applicable
to EV Marathon Strategic Income Fund, Eaton Vance Prime Rate Reserves 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 funds listed above may be exchanged for Fund shares on the basis
of the net asset value per share of each fund at the time of the exchange, but
subject to any restrictions or qualifications set forth in a current prospectus
of any such fund.
Telephone exchanges are accepted by the Transfer Agent provided the investor has
not disclaimed in writing the use of the privilege. To effect such exchanges,
call the Transfer Agent at 800-262-1122, Monday through Friday, 9:00 a.m. to
4:00 p.m. (Eastern Standard Time). Shares acquired by telephone exchange must be
registered in the same name(s) and with the same address as the shares being
exchanged. Neither the Fund, the Principal Underwriter nor the Transfer Agent
will be responsible for the authenticity of exchange instructions received by
telephone, provided that reasonable procedures to confirm that instructions
communicated are genuine have been followed. Telephone instructions will be tape
recorded. In times of drastic economic or market changes, a telephone exchange
may be difficult to implement. An exchange may result in a taxable gain or loss.
EATON VANCE SHAREHOLDER SERVICES
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THE FUND OFFERS THE FOLLOWING SERVICES, WHICH ARE VOLUNTARY, INVOLVE NO EXTRA
CHARGE, AND MAY BE CHANGED OR DISCONTINUED WITHOUT PENALTY AT ANY TIME. Full
information on each of the services described below and an application, where
required, are available from Authorized Firms or the Principal Underwriter. The
cost of administering such services for the benefit of shareholders who
participate in them is borne by the Fund as an expense to all shareholders.
INVEST-BY-MAIL -- FOR PERIODIC SHARE ACCUMULATION: Once the $1,000 minimum
investment has been made, checks of $50 or more payable to the order of EV
Marathon Growth Fund may be mailed directly to the Transfer Agent First Data
Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123 at any time
- -- whether or not distributions are reinvested. The name of the shareholder, the
Fund and the account number should accompany each investment.
BANK AUTOMATED INVESTING -- FOR REGULAR SHARE ACCUMULATION: Cash investments of
$50 or more may be made automatically each month or quarter from a shareholder's
bank account. The $1,000 minimum initial investment and small account redemption
policy are waived for these accounts.
WITHDRAWAL PLAN: A shareholder may draw on shareholdings systematically with
monthly or quarterly checks 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 redeemed shares may reinvest, with
credit for any CDSCs paid on the repurchased shares, any portion or all of the
redemption proceeds (plus that amount necessary to acquire a fractional share to
round off the purchase to the nearest full share) in shares of the Fund,
provided that the reinvestment is effected within 60 days after such redemption
and the privilege has not been used more than once in the prior 12 months.
Shares are sold to a reinvesting shareholder at the 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.
DISTRIBUTIONS AND TAXES
- ------------------------------------------------------------------------------
The Fund's present policy is to distribute semi-annually substantially all of
the net investment income allocated to the Fund by the Portfolio, less the
Fund's direct and allocated expenses, and to distribute at least annually any
net realized capital gains. A portion of distributions from net investment
income may be eligible for the dividends-received deduction for corporations.
The Fund's distributions from its net investment income, net short-term capital
gains, and certain net foreign exchange gains will be taxable to shareholders as
ordinary income, whether received in cash or reinvested in additional shares of
the Fund. Distributions that the Fund designates as from its net long-term
capital gains are taxable to shareholders as long-term capital gains, whether
received in cash or reinvested in additional shares of the Fund and regardless
of the length of time shares have been owned by shareholders. If shares are
purchased shortly before the record date of a distribution, the shareholder will
pay the full price for the shares and then receive some portion of the price
back as a taxable distribution. Certain distributions, if declared in October,
November or December and paid the following January, will be taxed to
shareholders as if received on December 31 of the year in which they are
declared.
Shareholders will receive annually tax information notices and Forms 1099 to
assist in the preparation of their federal and state tax returns for the prior
calendar year's distributions, proceeds from the redemption or exchange of Fund
shares, and federal income tax withheld (if any) by the Fund's Transfer Agent.
The Fund intends to qualify as a regulated investment company under the Internal
Revenue Code of 1986, as amended (the "Code"), and to satisfy all requirements
necessary to be relieved of federal taxes on income and gains it distributed 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.
Shareholders should consult with their tax advisors concerning the applicability
of state, local or other taxes to an investment in the Fund.
PERFORMANCE INFORMATION
- ------------------------------------------------------------------------------
FROM TIME TO TIME, THE FUND MAY ADVERTISE ITS AVERAGE ANNUAL TOTAL RETURN. The
Fund's average annual total return is determined by computing the average annual
percentage change in value of $1,000 invested at the maximum public offering
price (net asset value) for specified periods, assuming reinvestment of all
distributions. The average annual total return calculation assumes a complete
redemption of the investment and the deduction of any applicable CDSC at the end
of the period. The Fund may also publish annual and cumulative total return
figures from time to time. The Fund may also quote total return for the period
prior to commencement of operations which would reflect the Portfolio's total
return (or that of its predecessor) adjusted to reflect any applicable Fund
sales charge.
The Fund may also publish total return figures which do not take into account
any CDSC which may be imposed upon redemptions at the end of the specified
period. Any performance figure which does not take into account the CDSC 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. If the expenses of the Fund
or the Portfolio are allocated to Eaton Vance, the Fund's performance will be
higher.
The following chart reflects the annual investment returns of the Fund for one
year periods ending August 31 and does not take into account the CDSC which
investors may bear. The total return for the period prior to the Fund's
commencement of operations on September 13, 1994 reflects the total return of
the Portfolio (or that of its predecessor) which had different operating
expenses.
<PAGE>
5 YEAR AVERAGE ANNUAL TOTAL RETURN -- 8.73%
10 YEAR AVERAGE ANNUAL TOTAL RETURN -- 10.16%
1987 34.03%
1988 (18.96%)
1989 32.90%
1990 (2.65%)
1991 23.24%
1992 7.22%
1993 7.63%
1994 (0.50%)
1995 15.33%
1996* 14.75%
* If a portion of the Fund's expenses had not been allocated to the
Administrator, the Fund would have had lower returns.
<PAGE>
[Logo]
EATON VANCE
================
Mutual Funds
EV MARATHON
GROWTH
FUND
PROSPECTUS
JANUARY 1, 1997
EV MARATHON
GROWTH FUND
24 FEDERAL STREET
BOSTON, MA 02110
- --------------------------------------------------------------------------------
INVESTMENT ADVISER OF GROWTH PORTFOLIO
Boston Management and Research, 24 Federal Street, Boston, MA 02110
ADMINISTRATOR OF EV MARATHON GROWTH FUND
Eaton Vance Management, 24 Federal Street, Boston, MA 02110
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc., 24 Federal Street, Boston, MA 02110
(800) 225-6265
CUSTODIAN
Investors Bank & Trust Company, 89 South Street, Boston, MA 02111
TRANSFER AGENT
First Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123
(800) 262-1122
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P., One Post Office Square, Boston, MA 02109
M-GFP
<PAGE>
PART A
INFORMATION REQUIRED IN A PROSPECTUS
EV TRADITIONAL
GROWTH FUND
- ------------------------------------------------------------------------------
EV TRADITIONAL GROWTH FUND (THE "FUND") IS A MUTUAL FUND SEEKING CAPITAL GROWTH.
THE FUND INVESTS ITS ASSETS IN GROWTH PORTFOLIO (THE "PORTFOLIO"), A DIVERSIFIED
OPEN-END INVESTMENT COMPANY HAVING THE SAME INVESTMENT OBJECTIVE AS THE FUND,
RATHER THAN BY DIRECTLY INVESTING IN AND MANAGING ITS OWN PORTFOLIO OF
SECURITIES. THE FUND IS A SERIES OF EATON VANCE GROWTH TRUST (THE "TRUST").
Shares of the Fund are not deposits or obligations of, or guaranteed or endorsed
by, any bank or other insured depository institution, and are not federally
insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board
or any other government agency. Shares of the Fund involve investment risks,
including fluctuations in value and the possible loss of some or all of the
principal investment.
This Prospectus is designed to provide you with information you should know
before investing. Please retain this document for future reference. A
Statement of Additional Information dated January 1, 1997 for the Fund, as
supplemented from time to time, has been filed with the Securities and
Exchange Commission and is incorporated herein by reference. This Statement of
Additional Information is available without charge from the Fund's principal
underwriter, Eaton Vance Distributors, Inc. (the "Principal Underwriter"), 24
Federal Street, Boston, MA 02110 (telephone (800) 225-6265). The Portfolio's
investment adviser is Boston Management and Research (the "Investment
Adviser"), a wholly-owned subsidiary of Eaton Vance Management, and Eaton
Vance Management is the administrator (the "Administrator") of the Fund. The
offices of the Investment Adviser and the Administrator are located at 24
Federal Street, Boston, MA 02110.
- ------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE PAGE
<S> <C> <C> <C>
Shareholder and Fund Expenses ........................ 2 How to Buy Fund Shares ............................ 7
The Fund's Financial Highlights ...................... 3 How to Redeem Fund Shares ......................... 10
The Fund's Investment Objective ...................... 4 Reports to Shareholders .......................... 11
Investment Policies and Risks ......................... 4 The Lifetime Investing Account/Distribution
Organization of the Fund and the Portfolio ........... 5 Options ......................................... 11
Management of the Fund and the Portfolio ............. 6 The Eaton Vance Exchange Privilege ............... 12
Service Plan ......................................... 7 Eaton Vance Shareholder Services ................. 13
Valuing Fund Shares ................................... 7 Distributions and Taxes .......................... 14
Performance Information .......................... 14
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
PROSPECTUS DATED JANUARY 1, 1997
<PAGE>
SHAREHOLDER AND FUND EXPENSES
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES
-------------------------------------------------------------------------------------------------------
<S> <C>
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
ANNUAL FUND AND ALLOCATED PORTFOLIO OPERATING EXPENSES (as a percentage of average daily net assets)
-------------------------------------------------------------------------------------------------------
Investment Adviser Fee 0.625%
Other Expenses (including Service Plan Fees) 0.355%
-----
Total Operating Expenses 0.980%
=====
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
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: $57 $77 $99 $162
</TABLE>
NOTES:
The table and Example 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. Information
for the Fund is based on its expenses for the most recent fiscal year.
The Example should not be considered a representation of past or future
expenses, and actual expenses may be greater or less than those shown. Federal
regulations require the Example to assume a 5% annual return, but actual return
may vary. For further information regarding the expenses of both the Fund and
the Portfolio see "The Fund's Financial Highlights", "Management of the Fund and
the Portfolio" and "How to Redeem Fund Shares".
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 12 months of
purchase. See "How to Buy Fund Shares" and "How to Redeem Fund Shares".
The Fund invests exclusively in the Portfolio. Other investment companies with
different distribution arrangements and fees are investing in the Portfolio and
others may do so in the future. See "Organization of the Fund and the
Portfolio".
<PAGE>
THE FUND'S FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------
The following information should be read in conjunction with the audited
financial statements included in the Fund's annual report to shareholders
which is incorporated by reference into the Statement of Additional
Information in reliance upon the report of Coopers & Lybrand L.L.P.,
independent accountants, as experts in accounting and auditing. The financial
highlights for each of the six years in the period ended August 31, 1992 were
audited by other auditors whose report dated September 30, 1992, expressed an
unqualified opinion on such financial highlights. Further information
regarding the performance of the Fund is contained in its annual report to
shareholders which may be obtained without charge by contacting the Fund's
Principal Underwriter.
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
--------------------------------------------------------------------------------------------------------
1996 1995 1994 1993(1) 1992* 1991* 1990* 1989* 1988* 1987*
------- ------- ------- ------- ------- ------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
beginning of year $ 8.330 $ 7.960 $ 8.070 $ 8.520 $ 8.450 $ 7.750 $ 8.560 $ 6.730 $ 9.670 $ 8.130
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income $ 0.043 $ 0.024 $ 0.052 $ 0.030 $ 0.046 $ 0.101 $ 0.109 $ 0.150 $ 0.114 $ 0.115
Net realized and
unrealized gain
(loss) on
investments 1.202 1.086 (0.092) 0.660 0.544 1.499 (0.319) 1.980 (1.764) 2.335
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total income (loss)
from investment
operations $ 1.245 $ 1.110 $(0.040) $ 0.690 $ 0.590 $ 1.600 $(0.210) $ 2.130 $(1.650) $ 2.450
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
From net investment
income $(0.035) $(0.032) $(0.060) $ -- $(0.040) $(0.080) $(0.110) $(0.080) $(0.060) $(0.110)
In excess of net
investment income(4) -- (0.018) -- -- -- -- -- -- -- --
From net realized
gains on investments (0.300) (0.083) (0.010) (1.140) (0.480) (0.820) (0.490) (0.220) (1.230) (0.800)
In excess of net
realized gains on
investments(4) -- (0.607) -- -- -- -- -- -- -- --
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total
distributions $(0.335) $(0.740) $(0.070) $(1.140) $(0.520) $(0.900) $(0.600) $(0.300) $(1.290) $(0.910)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
NET ASSET VALUE, end
of year $ 9.240 $ 8.330 $ 7.960 $ 8.070 $ 8.520 $ 8.450 $ 7.750 $ 8.560 $ 6.730 $ 9.670
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
TOTAL RETURN(2) 15.38% 15.95% (0.50)% 7.63% 7.22% 23.24% (2.65)% 32.90% (18.96)% 34.03%
RATIOS/SUPPLEMENTAL DATA:
Ratio of net expenses
to average daily
net assets(1) 0.98% 0.98% 0.95% 0.89% 0.87% 0.92% 0.96% 0.98% 1.00% 0.92%
Ratio of net
investment income
to average daily
net assets 0.48% 0.42% 0.61% 0.56% 0.53% 1.35% 1.38% 2.04% 1.66% 1.42%
PORTFOLIO TURNOVER(3) -- -- 89% 84% 68% 73% 66% 54% 55% 57%
NET ASSETS, END OF
YEAR (000'S OMITTED) $138,252 $130,966 $130,269 $143,264 $143,695 $143,090 $80,582 $92,448 $84,667 $112,843
<FN>
* Audited by previous auditors.
(1) Includes the Fund's share of the Portfolio's allocated expenses subsequent to August 2, 1994.
(2) Total return is calculated assuming a purchase at the net asset value on the first day and a sale at the net asset value
on the last day of each period reported. Distributions, if any, are assumed to be reinvested at the net asset value on the
record date. Total return is computed on a non-annualized basis.
(3) Portfolio turnover represents the rate of portfolio activity for the period while the Fund was making investments directly
in securities. The portfolio turnover for the period since the Fund transferred substantially all of its assets to the
Portfolio is shown in the Portfolio's financial statements which are incorporated by reference into the Statement of
Additional Information.
(4) The Fund has followed the Statement of Position (SOP) 93-2: Determination, Disclosure and Financial Statement Presentation of
Income, Capital Gain, and Return of Capital Distribution by Investment Companies. The SOP requires that differences in the
recognition or classification of income between the financial statements and tax earnings and profits that result in
temporary over-distributions for financial statement purposes, are classified as distributions in excess of net investment
income or accumulated net realized gains.
</TABLE>
<PAGE>
THE FUND'S INVESTMENT OBJECTIVE
- -----------------------------------------------------------------------------
THE FUND'S INVESTMENT OBJECTIVE IS TO ACHIEVE CAPITAL GROWTH. The Fund currently
seeks to meet its investment objective by investing its assets in the Growth
Portfolio, a separate registered investment company, which has the same
investment objective as the Fund. While income is a subordinate consideration to
capital growth, the Portfolio will earn dividend or interest income to the
extent that it receives dividends or interest from its investments.
The Fund's and the Portfolio's investment objective is nonfundamental and may be
changed when authorized by a vote of the Trustees of the Trust or the Portfolio
without obtaining the approval of the Fund's shareholders or the investors in
the Portfolio, as the case may be. The Trustees of the Trust have no present
intention to change the Fund's objective and intend to submit any proposed
material change in the investment objective to shareholders in advance for their
approval.
INVESTMENT POLICIES AND RISKS
- ------------------------------------------------------------------------------
THE PORTFOLIO INVESTS IN A CAREFULLY SELECTED AND CONTINUOUSLY MANAGED PORTFOLIO
CONSISTING PRIMARILY OF DOMESTIC AND FOREIGN EQUITY SECURITIES. It may invest in
all kinds of companies. The Portfolio invests primarily in common stocks or
securities convertible into common stocks (including convertible debt). It may
also invest in other securities and obligations of all kinds. These include
preferred stocks, rights, warrants, bonds, repurchase agreements and other
evidences of indebtedness. The Portfolio may also invest in money market
instruments.
Investing in foreign securities entails considerations and possible risks not
typically associated with investing in securities issued by the U.S. Government
and domestic corporations. The values of foreign investments are affected by
changes in currency rates or exchange control regulations, application of
foreign tax laws (including withholding tax), changes in governmental
administration or economic or monetary policy (in this country or abroad), or
changed circumstances in dealings between nations. Because investment in foreign
issuers will usually involve currencies of foreign countries, the value of the
assets of the Portfolio as measured in U.S. dollars may be adversely affected by
changes in foreign currency exchange rates. Such rates may fluctuate
significantly over short periods of time causing the Portfolio's net asset value
to fluctuate as well. Costs are incurred in connection with conversions between
various currencies. In addition, foreign brokerage commissions, custody fees and
other costs of investing are generally higher than in the United States, and
foreign securities markets may be less liquid, more volatile and less subject to
governmental supervision than in the United States. Investments in foreign
issuers could be adversely affected by other factors not present in the United
States, including expropriation, confiscatory taxation, lack of uniform
accounting and auditing standards and potential difficulties in enforcing
contractual obligations. Currently, the Fund does not intend to invest more than
25% of its net assets in foreign securities.
The Portfolio may purchase and sell exchange-traded futures contracts on stock
indices and options thereon to hedge against fluctuations in securities prices
or as a substitute for the purchase or sale of securities. Such transactions
involve a risk of loss or depreciation due to: unanticipated adverse changes in
securities prices, interest rates, the other financial instruments' prices or
currency exchange rates; the inability to close out a position; default by the
counterparty; imperfect correlation between a position and the desired hedge;
tax constraints on closing out positions; and portfolio management constraints
on securities subject to such transactions. The loss on such transactions (other
than purchased options) may substantially exceed the Portfolio's initial
investment in these instruments. In addition, the Portfolio may lose the entire
premium paid for purchased options that expire before they can be profitably
exercised by the Portfolio. The Portfolio incurs transaction costs in opening
and closing positions in futures and options thereon. There can be no assurance
that the Adviser's use of such instruments will be advantageous to the
Portfolio.
The Fund may sell a security short if it owns at least an equal amount of the
security sold short or another security convertible or exchangeable for an equal
amount of the security sold short without payment of further compensation (a
short sale against-the-box). Under current tax law, short sales against-the-box
enable the Fund to hedge its exposure to securities that it holds without
selling the securities and recognizing gains. A short sale against-the-box
requires that the short seller absorb certain costs so long as the position is
open. In a short sale against-the-box, the short seller is exposed to the risk
of being forced to deliver appreciated stock to close the position if the
borrowed stock is called in, causing a taxable gain to be recognized. The Fund
expects normally to close its short sales against-the-box by delivering
newly-acquired stock.
An investment in the Fund entails the risk that the principal value of Fund
shares may not increase or may decline. The Portfolio's investments in equity
securities are subject to the risk of adverse developments affecting particular
companies or industries and the stock market generally. The Portfolio may
temporarily borrow up to 5% of the value of its total assets to satisfy
redemption requests or settle securities transactions.
The Fund and the Portfolio have adopted certain fundamental investment
restrictions which are enumerated in detail in the Statement of Additional
Information and which may not be changed unless authorized by a shareholder vote
and an investor vote, respectively. Except for such enumerated restrictions and
as otherwise indicated in this Prospectus, the investment objective and policies
of the Fund and the Portfolio are not fundamental policies and accordingly may
be changed by the Trustees of the Trust and the Portfolio without obtaining the
approval of the Fund's shareholders or the investors in the Portfolio, as the
case may be.
THE FUND IS NOT INTENDED TO BE A COMPLETE INVESTMENT PROGRAM, AND PROSPECTIVE
INVESTORS SHOULD TAKE INTO ACCOUNT THEIR OBJECTIVES AND OTHER INVESTMENTS WHEN
CONSIDERING THE PURCHASE OF FUND SHARES. THE FUND CANNOT ASSURE ACHIEVEMENT OF
ITS CAPITAL GROWTH OBJECTIVE.
ORGANIZATION OF THE FUND AND THE PORTFOLIO
- ------------------------------------------------------------------------------
The Fund is a diversified series of Eaton Vance Growth Trust, a business trust
established under Massachusetts law pursuant to a Declaration of Trust dated May
25, 1989 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 (such as the Fund). 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.
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,
affords the potential for economies of scale for the Fund (at least when the
assets of the Portfolio exceed $300 million) and may over time result in lower
expenses for the Fund.
In addition to selling an interest to the Fund, the Portfolio may sell interests
to other affiliated and non-affiliated mutual funds or institutional investors.
Such investors will invest in the Portfolio on the same terms and conditions and
will pay a proportionate share of the Portfolio's expenses. However, the other
investors investing in the Portfolio are not required to sell their shares at
the same public offering price as the Fund due to variations in sales
commissions and other operating expenses. Therefore, these differences may
result in differences in returns experienced by investors in the various funds
that invest in the Portfolio. Such differences in returns are also present in
other mutual fund structures, including funds that have multiple classes of
shares. Information regarding other pooled investment entities or funds which
invest in the Portfolio may be obtained by contacting the Principal Underwriter,
24 Federal Street, Boston, MA 02110, (617) 482-8260.
Whenever the Fund as an investor in the Portfolio is requested to vote on
matters pertaining to the Portfolio (other than the termination of the
Portfolio's business, which may be determined by the Trustees of the Portfolio
without investor approval), the Fund will hold a meeting of Fund shareholders
and will vote its interest in the Portfolio for or against such matters
proportionately to the instructions to vote for or against such matters received
from Fund shareholders. The Fund shall vote shares for which it receives no
voting instructions in the same proportion as the shares for which it receives
voting instructions. Other investors in the Portfolio may alone or collectively
acquire sufficient voting interests in the Portfolio to control matters relating
to the operation of the Portfolio, which may require the Fund to withdraw its
investment in the Portfolio or take other appropriate action. Any such
withdrawal could result in a distribution "in kind" of portfolio securities (as
opposed to a cash distribution from the Portfolio). If securities are
distributed, the Fund could incur brokerage, tax or other charges in converting
the securities to cash. In addition, the distribution in kind may result in a
less diversified portfolio of investments or adversely affect the liquidity of
the Fund. Notwithstanding the above, there are other means for meeting
shareholder redemption requests, such as borrowing.
The Fund may withdraw (completely redeem) all its assets from the Portfolio at
any time if the Board of Trustees of the Trust determines that it is in the best
interest of the Fund to do so. In the event the Fund withdraws all of its assets
from the Portfolio, or the Board of Trustees of the Trust determines that the
investment objective of the Portfolio is no longer consistent with the
investment objective of the Fund, such Trustees would consider what action might
be taken, including investing the assets of the Fund in another pooled
investment entity or retaining an investment adviser to manage the Fund's assets
in accordance with its investment objective. The Fund's investment performance
may be affected by a withdrawal of all its assets from the Portfolio.
MANAGEMENT OF THE FUND AND THE PORTFOLIO
- ------------------------------------------------------------------------------
THE PORTFOLIO ENGAGES BOSTON MANAGEMENT AND RESEARCH ("BMR"), A WHOLLY-OWNED
SUBSIDIARY OF EATON VANCE MANAGEMENT ("EATON VANCE"), AS ITS INVESTMENT ADVISER.
EATON VANCE, ITS AFFILIATES AND ITS PREDECESSOR COMPANIES HAVE BEEN MANAGING
ASSETS OF INDIVIDUALS AND INSTITUTIONS SINCE 1924 AND MANAGING INVESTMENT
COMPANIES SINCE 1931.
Acting under the general supervision of the Board of Trustees of the Portfolio,
BMR manages the Portfolio's investments and affairs. BMR also furnishes for the
use of the Portfolio office space and all necessary office facilities, equipment
and personnel for servicing the investments of the Portfolio. Under its
investment advisory agreement with the Portfolio, BMR receives a monthly
advisory fee of 5/96 of 1% (equivalent to 0.625% annually) of average daily net
assets of the Portfolio up to and including $300 million and 1/24 of 1%
(equivalent to 0.50% annually) of average daily net assets over $300 million.
For the fiscal year ended August 31, 1996, the Portfolio paid BMR advisory fees
equivalent to 0.625% of the Portfolio's average daily net assets for such year.
BMR OR EATON VANCE ACTS AS INVESTMENT ADVISER TO INVESTMENT COMPANIES AND
VARIOUS INDIVIDUAL AND INSTITUTIONAL CLIENTS WITH ASSETS UNDER MANAGEMENT OF
OVER $16 BILLION. Eaton Vance is a wholly-owned subsidiary of Eaton Vance Corp.,
a publicly-held holding company, which through its subsidiaries and affiliates
engages primarily in investment management, administration and marketing
activities. The Principal Underwriter is a wholly-owned subsidiary of Eaton
Vance.
Thomas E. Faust, Jr. has acted as the portfolio manager of the Portfolio since
April 1, 1996. Mr. Faust has been a Vice President of Eaton Vance since 1985
and of BMR since 1992.
BMR places the portfolio transactions of the Portfolio with many broker-dealer
firms and uses its best efforts to obtain execution of such transactions at
prices which are advantageous to the Portfolio and at reasonably competitive
commission rates. Subject to the foregoing, BMR may consider sales of shares of
the Fund or of other investment companies sponsored by BMR or Eaton Vance as a
factor in the selection of broker-dealer firms to execute portfolio
transactions. The Fund, the Portfolio and BMR have adopted Codes of Ethics
relating to personal securities transactions. The Codes permit Eaton Vance
personnel to invest in securities (including securities that may be purchased or
held by a Portfolio) for their own accounts, subject to certain pre- clearance,
reporting and other restrictions and procedures contained in such Codes.
The Trust has retained the services of Eaton Vance to act as Administrator of
the Fund. The Trust has not retained the services of an investment adviser since
the Trust seeks to achieve the investment objective of the Fund by investing the
Fund's assets in the Portfolio. As Administrator, Eaton Vance provides the Fund
with general office facilities and supervises the overall administration of the
Fund. For these services Eaton Vance currently receives no compensation. The
Trustees of the Trust may determine, in the future, to compensate Eaton Vance
for such services.
The Portfolio and the Fund, as the case may be, will each be responsible for all
respective costs and expenses not expressly stated to be payable by BMR under
the investment advisory agreement, by Eaton Vance under the administrative
services agreement, or by the Principal Underwriter under the distribution
agreement.
SERVICE PLAN
- ------------------------------------------------------------------------------
In addition to advisory fees and other expenses, the Fund pays service fees
pursuant to a Service Plan (the "Plan") designed to meet the requirements of
Rule 12b-1 under the Investment Company Act of 1940, as amended (the "1940 Act")
and the service fee requirements of the revised sales charge rule of the
National Association of Securities Dealers, Inc. THE PLAN PROVIDES THAT THE FUND
MAY MAKE SERVICE FEE PAYMENTS FOR PERSONAL SERVICES AND/OR THE MAINTENANCE OF
SHAREHOLDER ACCOUNTS TO THE PRINCIPAL UNDERWRITER, FINANCIAL SERVICE FIRMS
("AUTHORIZED FIRMS") AND OTHER PERSONS IN AMOUNTS NOT EXCEEDING .25% OF THE
FUND'S AVERAGE DAILY NET ASSETS FOR ANY FISCAL YEAR. The Trustees of the Trust
have 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% of that portion of the Fund's average daily net assets
for any fiscal year which is attributable to shares of the Fund sold on or after
July 1, 1989 and remaining outstanding for at least twelve months. During the
fiscal year ended August 31, 1996, the Fund made payments under the Plan to the
Principal Underwriter and Authorized Firms equivalent to 0.089% of the Fund's
average daily net assets for such year.
VALUING FUND SHARES
- ------------------------------------------------------------------------------
THE FUND VALUES ITS SHARES ONCE ON EACH DAY THE NEW YORK STOCK EXCHANGE (THE
"EXCHANGE") IS OPEN FOR TRADING, as of the close of regular trading on the
Exchange (normally 4:00 p.m. New York time). The Fund's net asset value per
share is determined by its custodian, Investors Bank & Trust Company ("IBT"),
(as agent for the Fund) in the manner authorized by the Trustees of the Trust.
Net asset value is computed by dividing the value of the Fund's total assets,
less its liabilities, by the number of shares outstanding. Because the Fund
invests 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 an interest in 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 and the public offering price
based thereon. It is the Authorized Firms' responsibility to transmit orders
promptly to the Principal Underwriter.
The Portfolio's net asset value is also determined as of the close of regular
trading on the Exchange by IBT (as custodian and agent for the Portfolio) in the
manner authorized by the Trustees of the Portfolio. Net asset value is computed
by subtracting the liabilities of the Portfolio from the value of its total
assets. For further information regarding the valuation of the Portfolio's
assets, see "Determination of Net Asset Value" in the Statement of Additional
Information.
SHAREHOLDERS MAY DETERMINE THE VALUE OF THEIR INVESTMENT BY MULTIPLYING THE
NUMBER OF FUND SHARES OWNED BY THE CURRENT NET ASSET VALUE PER SHARE.
HOW TO BUY FUND SHARES
- ------------------------------------------------------------------------------
SHARES OF THE FUND MAY BE PURCHASED FOR CASH OR MAY BE ACQUIRED IN EXCHANGE FOR
SECURITIES. Investors may purchase shares of the Fund through Authorized Firms
at the 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. An Authorized Firm may charge its customers
a fee in connection with transactions executed by that Firm. 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 from the Principal
Underwriter.
The current sales charges and dealer commissions are:
<TABLE>
<CAPTION>
SALES CHARGE SALES CHARGE DEALER COMMISSION
AS PERCENTAGE OF AS PERCENTAGE OF AS PERCENTAGE OF
AMOUNT OF PURCHASE OFFERING PRICE AMOUNT INVESTED OFFERING PRICE
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $100,000 4.75% 4.99% 4.00%
$100,000 but less than $250,000 3.75 3.90 3.15
$250,000 but less than $500,000 2.75 2.83 2.30
$500,000 but less than $1,000,000 2.00 2.04 1.70
$1,000,000 or more 0.00* 0.00* See Below**
<FN>
* 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 in the event of certain redemptions within 12 months of purchase. Such
purchases made before January 1, 1997 will be subject to a CDSC of 0.50% in the event of such redemptions.
** A commission on sales of $1 million or more will be paid as follows: 1.00% on amounts of $1 million or more but less than $3
million, plus 0.50% on amounts from $3 million but less than $5 million, plus 0.25% on amounts from $5 million or more.
Purchases of $1 million or more will be aggregated over a 12-month period for purposes of determining the commission to be
paid.
</TABLE>
The Principal Underwriter may at times allow discounts up to the full sales
charge. During periods when the discount includes the full sales charge,
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 Fund shares and/or shares of other funds
distributed by the Principal Underwriter. In some instances, such additional
incentives may be offered only to certain Authorized Firms whose representatives
sell or are expected to sell significant amounts of shares.
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: First
Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123. The
$1,000 minimum initial investment is waived for Bank Automated Investing
accounts, which may be established with an investment of $50 or more. See "Eaton
Vance Shareholder Services".
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 clients
and current and retired officers and employees of Eaton Vance, its affiliates
and other investment advisers of Eaton Vance sponsored funds; to registered
representatives and employees of Authorized Firms; and bank employees who refer
customers to registered representatives of Authorized Firms; to officers and
employees of IBT and the Transfer Agent; and to such persons' spouses and
children under the age of 21 and their beneficial accounts. 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 the Investment Adviser provides
multiple investment services, such as management, brokerage and custody, and (3)
to investment advisors, financial planners or other intermediaries who place
trades for their own accounts or the accounts of their clients and who charge a
management, consulting or other fee for their services; clients of such
investment advisors, financial planners or other intermediaries who place trades
for their own accounts if the accounts are linked to the master account of such
investment advisor, financial planner or other intermediary on the books and
records of the broker or agent; and retirement and deferred compensation plans
and trusts used to fund those plans, including, but not limited to, those
defined in Section 401 (a), 403(b) or 457 of the Internal Revenue Code of 1986,
as amended (the "Code") ("Eligible Plans") and "rabbi trusts." The Fund's
Principal Underwriter may pay commissions to Authorized Firms who initiate and
are responsible for purchases of shares of the Fund by Eligible Plans of up to
1.00% of the amount invested in such shares.
No sales charge is payable at the time of purchase where the amount invested
represents redemption proceeds from a mutual fund unaffiliated with Eaton Vance
if the redemption occurred no more than 60 days prior to the purchase of Fund
shares and the redeemed shares were subject to a sales charge. A CDSC of 0.50%
will be imposed on such investments in the event of certain redemptions within
12 months of purchase and the Authorized Firm will be paid a commission on such
sales of 0.50% of the amount invested.
ACQUIRING FUND SHARES IN EXCHANGE FOR SECURITIES. IBT, as escrow agent, will
receive securities acceptable to Eaton Vance, as Administrator, in exchange for
Fund shares at the applicable public offering price as determined above. The
minimum value of securities (or securities and cash) accepted for deposit is
$5,000. Securities accepted will be sold on the day of their receipt or as soon
thereafter as possible. The number of Fund shares to be issued in exchange for
securities will be the aggregate proceeds from the sale of such securities,
divided by the applicable public offering price per Fund share on the day such
proceeds are received. Eaton Vance will use reasonable efforts to obtain the
then current market price for such securities but does not guarantee the best
available price. Eaton Vance will absorb any transaction costs, such as
commissions, on the sale of the securities.
Securities determined to be acceptable should be transferred via book entry or
physically delivered, in proper form for transfer, through an Authorized Firm,
together with a completed and signed Letter of Transmittal in approved form
(available from Authorized Firms), as follows:
IN THE CASE OF BOOK ENTRY:
Deliver through Depository Fund Co.
Broker #2212
Investors Bank & Trust Company
For A/C EV Traditional Growth Fund
IN THE CASE OF PHYSICAL DELIVERY:
Investors Bank & Trust Company
Attention: EV Traditional Growth Fund
Physical Securities Processing Settlement Area
89 South Street
Boston, MA 02111
Investors who are contemplating an exchange of securities for shares of the
Fund, or their representatives, must contact Eaton Vance to determine whether
the securities are acceptable before forwarding such securities. 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.
STATEMENT OF INTENTION AND ESCROW AGREEMENT. If the investor, on an application,
makes a Statement of Intention to invest a specified amount over a
thirteen-month period, 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 the Principal Underwriter any
difference between the sales charge on the amount specified and on the amount
actually purchased. If the investor does not within 20 days after written
request by the Principal Underwriter or the Authorized Firm pay such difference
in sales charge, the escrow agent will redeem an appropriate number of the
escrowed shares in order to realize such difference. Full shares remaining after
any such redemption together with any excess cash proceeds of the shares so
redeemed will be delivered to the investor or to the investor's order by the
escrow agent.
If total purchases made under this Statement are large enough to qualify for a
lower sales charge than that applicable to the amount specified, all
transactions will be computed at the expiration date of 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 the Principal Underwriter. 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.
IF YOU DON'T HAVE AN AUTHORIZED FIRM, EATON VANCE CAN RECOMMEND ONE.
HOW TO REDEEM FUND SHARES
- ----------------------------------------------------------------------------
A SHAREHOLDER MAY REDEEM FUND SHARES IN ONE OF THREE WAYS -- BY MAIL, BY
TELEPHONE OR THROUGH AN AUTHORIZED FIRM. The redemption price will be based on
the net asset value per Fund share next computed after a redemption request is
received in the proper form as described below.
REDEMPTION BY MAIL: Shares may be redeemed by delivering to the Transfer Agent,
First Data Investor Services Group, P.O. Box 5123, Westborough, Massachusetts
01581-5123, during its business hours a written request for redemption in good
order, plus any share certificates with executed stock powers. Good order means
that all relevant documents must be endorsed by the record owner(s) exactly as
the shares are registered and the signature(s) must be guaranteed by a member of
either the Securities Transfer Association's STAMP program or the New York Stock
Exchange's Medallion Signature Program, or certain banks, savings and loan
institutions, credit unions, securities dealers, securities exchanges, clearing
agencies and registered securities associations as required by a regulation of
the Securities and Exchange Commission (the "Commission") and acceptable to the
Transfer Agent. In addition, in some cases, good order may require the
furnishing of additional documents such as where shares are registered in the
name of a corporation, partnership or fiduciary.
REDEMPTION BY TELEPHONE: Shares may be redeemed by telephone provided the
investor has not disclaimed in writing the use of the privilege. Such
redemptions can be effected by calling the Transfer Agent at 800-262-1122,
Monday through Friday, 9:00 a.m. to 4:00 p.m. (Eastern Standard Time). The
proceeds of a telephone redemption may be no greater than the maximum amount
established by the Principal Underwriter (currently $50,000) and may be mailed
only to the account address of record. Shares held by corporations, trusts or
certain other entities, or subject to fiduciary arrangements, may not be
redeemed by telephone. Neither the Fund, the Principal Underwriter nor the
Transfer Agent will be responsible for the authenticity of redemption
instructions received by telephone, provided that reasonable procedures to
confirm that instructions communicated by telephone are genuine have been
followed. Telephone instructions will be tape recorded. In times of drastic
economic or market changes, a telephone redemption may be difficult to
implement.
REDEMPTION THROUGH AN AUTHORIZED FIRM: To sell shares at their net asset value
through an Authorized Firm (a repurchase), a shareholder can place a repurchase
order with the Authorized Firm, which may charge a fee. The value of such shares
is based upon the net asset value calculated after the Principal Underwriter, as
the Fund's agent, receives the order. It is the Authorized Firm's responsibility
to transmit promptly repurchase orders to the Principal Underwriter. Throughout
this Prospectus, the word "redemption" is generally meant to include a
repurchase.
Within seven days after receipt of a redemption request in good order by the
Transfer Agent, the 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 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.
If shares were recently purchased, the proceeds of a redemption will not be sent
until the check (including a certified or cashier's check) received for the
shares purchased has cleared. Payment for shares tendered for redemption may be
delayed up to 15 days from the purchase date when the purchase check has not yet
cleared. Redemptions may result in a taxable gain or loss.
Due to the high cost of maintaining small accounts, the Fund reserves the right
to redeem Fund accounts with balances of less than $750. Prior to such a
redemption, shareholders will be given 60 days' written notice to make an
additional purchase. However, no such redemption would be required by the Fund
if the cause of the low account balance was a reduction in the net asset value
of Fund shares.
If shares have been purchased at net asset value with no initial sales charge by
virtue of the purchase having been in the amount of $1 million or more and are
redeemed within 12 months of purchase, a CDSC of 1% will be imposed on such
redemption. (Such purchases made before January 1, 1997 will be subject to a
CDSC of 0.50% in the event of certain redemptions made within 12 months of
purchase.) If shares have been purchased at net asset value because the amount
invested represents redemption proceeds from a mutual fund unaffiliated with
Eaton Vance (as described under "How to Buy Fund Shares") and are redeemed
within 12 months of purchase, a CDSC of 0.50% will be imposed on such
redemption. The CDSC will be imposed on an amount equal to the lesser of the
current market value or the original purchase price of the shares redeemed.
Accordingly, no CDSC will be imposed on increases in account value above the
initial purchase price, including any dividends or distributions that have been
reinvested in additional shares. It will be assumed that redemptions are made
first from any shares in the shareholder's account that are not subject to a
CDSC. The CDSC will be retained by the Principal Underwriter.
The CDSC is waived for redemptions involving certain liquidation, merger or
acquisition transactions involving other investment companies. If a shareholder
reinvests redemption proceeds within a 60-day period and in accordance with the
conditions set forth under "Eaton Vance Shareholder Services -- Reinvestment
Privilege," the shareholder's account will be credited with the amount of any
CDSC paid on such redeemed shares.
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 income tax returns.
Consistent with applicable law, duplicate mailings of shareholder reports and
certain other Fund information to shareholders residing at the same address may
be eliminated.
THE LIFETIME INVESTING ACCOUNT/DISTRIBUTION OPTIONS
- ------------------------------------------------------------------------------
AFTER AN INVESTOR MAKES AN INITIAL PURCHASE OF FUND SHARES, THE TRANSFER AGENT,
WILL SET UP A LIFETIME INVESTING ACCOUNT FOR THE INVESTOR ON THE FUND'S RECORDS.
This account is a complete record of all transactions between the investor and
the Fund which at all times shows the balance of shares owned. The Fund will not
issue share certificates except upon request.
Each time a transaction takes place in a shareholder's account, the shareholder
will receive a statement showing complete details of the transaction and the
current share balance in the account. (Under certain investment plans,
statements may be sent only quarterly.) THE LIFETIME INVESTING ACCOUNT ALSO
PERMITS A SHAREHOLDER TO MAKE ADDITIONAL INVESTMENTS BY SENDING A CHECK FOR $50
OR MORE to the Transfer Agent.
Any questions concerning a shareholder's account or services available may be
directed by telephone to EATON VANCE SHAREHOLDER SERVICES at 800-225-6265,
extension 2, or in writing to First Data Investor Services Group, P.O. Box 5123,
Westborough, MA 01581-5123 (please provide the name of the shareholder, the Fund
and the account number).
THE FOLLOWING DISTRIBUTION OPTIONS WILL BE AVAILABLE TO ALL LIFETIME INVESTING
ACCOUNTS and may be changed as often as desired by written notice to the Fund's
dividend disbursing agent, First Data Investor Services Group, P.O. Box 5123,
Westborough, MA 01581-5123. The currently effective option will appear on each
account statement.
SHARE OPTION -- Dividends and capital gains will be reinvested in additional
shares.
INCOME OPTION -- Dividends will be paid in cash, and capital gains will be
reinvested in additional shares.
CASH OPTION -- Dividends and capital gains will be paid in cash.
The SHARE OPTION will be assigned if no other option is specified.
Distributions, including those reinvested, will be reduced by any withholding
required under the federal income tax laws.
If the INCOME OPTION or CASH OPTION has been selected, dividend and/or capital
gains distribution checks which are returned by the United States Postal Service
as not deliverable or which remain uncashed for six months or more will be
reinvested in the account 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.
THE EATON VANCE EXCHANGE PRIVILEGE
- ------------------------------------------------------------------------------
Shares of the Fund may currently be exchanged for shares of any of the following
funds: Eaton Vance Cash Management Fund, Eaton Vance Income Fund of Boston,
Eaton Vance Municipal Bond Fund L.P., Eaton Vance Tax Free Reserves and any fund
in the Eaton Vance Traditional Group of Funds on the basis of 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 shares being acquired). 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 $1,000. The
exchange privilege may be changed or discontinued without penalty. Shareholders
will be given sixty (60) days' notice prior to any termination or material
amendment of the exchange privilege. The Fund does not permit the exchange
privilege to be used for "Market Timing" and may terminate the exchange
privilege for any shareholder account engaged in Market Timing activity. Any
shareholder account for which more than two round-trip exchanges are made within
any twelve month period will be deemed to be engaged in Market Timing.
Furthermore, a group of unrelated accounts for which exchanges are entered
contemporaneously by a financial intermediary will be considered to be engaged
in Market Timing.
Shares of the Fund which are subject to a CDSC may be exchanged into any of the
above funds without incurring the CDSC. The shares acquired in an exchange may
be subject to a CDSC upon redemption. For purposes of computing the CDSC payable
upon redemption of shares acquired in an exchange, the holding period of the
original shares is added to the holding period of the shares acquired in the
exchange.
The Transfer Agent 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 Transfer Agent for additional information concerning the exchange
privilege. Applications and prospectuses of the other funds are available from
Authorized Firms or the Principal Underwriter. The prospectus for each fund
describes its investment objectives and policies, and shareholders should obtain
a prospectus and consider these objectives and policies carefully before
requesting an exchange.
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 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 shares being acquired), but
subject to any restrictions or qualifications set forth in the current
prospectus of any such fund.
Telephone exchanges are accepted by the Transfer Agent provided the investor has
not disclaimed in writing the use of the privilege. To effect such exchanges,
call the Transfer Agent at 800-262-1122, Monday through Friday, 9:00 a.m. to
4:00 p.m. (Eastern Standard Time). Shares acquired by telephone exchange must be
registered in the same name(s) and with the same address as the shares being
exchanged. Neither the Fund, the Principal Underwriter nor the Transfer Agent
will be responsible for the authenticity of exchange instructions received by
telephone; provided that reasonable procedures to confirm that instructions
communicated are genuine have been followed. Telephone instructions will be tape
recorded. In times of drastic economic or market changes, a telephone exchange
may be difficult to implement. An exchange may result in a taxable gain or loss.
EATON VANCE SHAREHOLDER SERVICES
- ------------------------------------------------------------------------------
THE FUND OFFERS THE FOLLOWING SERVICES, WHICH ARE VOLUNTARY, INVOLVE NO EXTRA
CHARGE, AND MAY BE CHANGED OR DISCONTINUED WITHOUT PENALTY AT ANY TIME. Full
information on each of the services described below and an application, where
required, are available from Authorized Firms or the Principal Underwriter. The
cost of administering such services for the benefit of shareholders who
participate in them is borne by the Fund as an expense to all shareholders.
INVEST-BY-MAIL -- FOR PERIODIC SHARE ACCUMULATION: Once the $1,000 minimum
investment has been made, checks of $50 or more payable to the order of the Fund
may be mailed directly to the Transfer Agent, First Data Investor Services
Group, P.O. Box 5123, Westborough, MA 01581-5123 at any time -- whether or not
dividends are reinvested. The name of the shareholder, the Fund and the account
number should accompany each investment.
BANK AUTOMATED INVESTING -- FOR REGULAR SHARE ACCUMULATION: Cash investments of
$50 or more may be made automatically each month or quarter from a shareholder's
bank account. The $1,000 minimum initial investment and small account redemption
policy are waived for these accounts.
STATEMENT OF INTENTION: Purchases of $100,000 or more made over a 13-month
period are eligible for reduced sales charges. See "How to Buy Fund Shares --
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 listed
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 redeemed shares may reinvest any
portion or all of the redemption proceeds (plus that amount necessary to acquire
a fractional share to round off the purchase to the nearest full share) in
shares of the Fund, or, provided that the shares 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 redemption, and the privilege has not been
used more than once in the prior 12 months. Shares are sold to a reinvesting
shareholder at the next determined net asset value following timely receipt of a
written purchase order by the Principal Underwriter or by the fund the shares of
which are being purchased (or by such fund's transfer agent). The privilege is
also available to shareholders of the funds listed under "The Eaton Vance
Exchange Privilege" who wish to reinvest such redemption 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. 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 certain tax-sheltered retirement plans. Detailed information
concerning these plans, including certain exceptions to minimum investment
requirements, and copies of the plans are available from the Principal
Underwriter. This information should be read carefully and consultation with an
attorney or tax adviser may be advisable. The information sets forth the service
fee charged for retirement plans and describes the federal income tax
consequences of establishing a plan. Participant accounting services (including
trust fund reconciliation services) will be offered only through third party
recordkeepers and not by the Principal Underwriter. Under all plans, dividends
distributions will be automatically reinvested in additional shares.
DISTRIBUTIONS AND TAXES
- ------------------------------------------------------------------------------
The Fund's present policy is to distribute semi-annually substantially all of
the net investment income allocated to the Fund by the Portfolio, less the
Fund's direct and allocated expenses, and to distribute at least annually any
realized net capital gains. A portion of distributions from net investment
income may be eligible for the dividends-received deduction for corporations.
The Fund's distributions from its net investment income, net short-term capital
gains, and certain net foreign exchange gains will be taxable to shareholders as
ordinary income, whether received in cash or reinvested in additional shares of
the Fund. Distributions that the Fund designates as from its net long-term
capital gains are taxable to shareholders as long-term capital gains, whether
received in cash or reinvested in additional shares of the Fund and regardless
of the length of time shares have been owned by shareholders. If shares are
purchased shortly before the record date of a distribution, the shareholder will
pay the full price for the shares and then receive some portion of the price
back as a taxable distribution. Certain distributions, if declared in October,
November or December and paid the following January, will be taxed to
shareholders as if received on December 31 of the year in which they are
declared.
Sales charges paid upon a purchase of 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 a sales charge
is reduced or eliminated in a subsequent acquisition of shares of the Fund or of
another fund pursuant to the Fund's reinvestment or exchange privilege. In
addition, losses realized on a redemption of Fund shares may be disallowed under
certain "wash sale" rules if within a period beginning 30 days before and ending
30 days after the date of redemption other shares of the Fund are acquired. Any
disregarded or disallowed amounts will result in an adjustment to the
shareholder's tax basis in some or all of any other shares acquired.
Shareholders will receive annually tax information notices and Forms 1099 to
assist in the preparation of reporting on their federal and state income tax
returns for the prior calendar year's distributions, proceeds from the
redemption or exchange of Fund shares, and federal income tax withheld (if any)
by the Fund's Transfer Agent.
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 distributed 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.
Shareholders should consult with their tax advisors concerning the applicability
of state, local or other taxes to an investment in the Fund.
PERFORMANCE INFORMATION
- ------------------------------------------------------------------------------
FROM TIME TO TIME, THE FUND MAY ADVERTISE ITS AVERAGE ANNUAL TOTAL RETURN. The
Fund's average annual total return is determined by the average annual
percentage change in value of $1,000 invested at the maximum public offering
price (which includes the maximum sales charge) for specified periods, assuming
reinvestment of all distributions. The Fund may publish annual and cumulative
total return figures from time to time.
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 lower if a sales charge
were taken into account. The Fund's performance may be compared in publications
to the performance of various indices and investments for which reliable data is
available, and to averages, performance rankings, or other information prepared
by recognized mutual fund statistical services.
Investors should note that the investment results of the Fund will fluctuate
over time, and any presentation of the Fund's total return for any prior period
should not be considered a representation of what an investment may earn or what
an investor's total return may be in any future period.
The following chart reflects the annual investment returns of the Fund for one
year periods ending August 31 and does not take into account the CDSC which
investors may bear:
5 YEAR AVERAGE ANNUAL TOTAL RETURN -- 8.96%
10 YEAR AVERAGE ANNUAL TOTAL RETURN -- 10.28%
1987 34.03%
1988 (18.96%)
1989 32.90%
1990 (2.65%)
1991 23.24%
1992 7.22%
1993 7.63%
1994 (0.50%)
1995 15.95%
1996 15.37%
<PAGE>
[Logo]
EATON VANCE
================
Mutual Funds
- ----------------------------------------------------------------------------
EV TRADITIONAL
GROWTH
FUND
PROSPECTUS
JANUARY 1, 1997
EV TRADITIONAL
GROWTH FUND
24 FEDERAL STREET
BOSTON, MA 02110
- --------------------------------------------------------------------------------
INVESTMENT ADVISER OF GROWTH PORTFOLIO
Boston Management and Research, 24 Federal Street, Boston, MA 02110
ADMINISTRATOR OF EV TRADITIONAL GROWTH FUND
Eaton Vance Management, 24 Federal Street, Boston, MA 02110
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc., 24 Federal Street, Boston, MA 02110
(800) 225-6265
CUSTODIAN
Investors Bank & Trust Company, 89 South Street, Boston, MA 02111
TRANSFER AGENT
First Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123
(800) 262-1122
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P., One Post Office Square, Boston, MA 02109
T-GFP
<PAGE>
PART A
INFORMATION REQUIRED IN A PROSPECTUS
EV CLASSIC
INFORMATION AGE FUND
- ------------------------------------------------------------------------------
EV CLASSIC 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. THE FUND
IS A SERIES OF EATON VANCE GROWTH TRUST (THE "TRUST").
Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, any bank or other insured depository institution, and are not
federally insured by the Federal Deposit Insurance Corporation, the Federal
Reserve Board or any other government agency. Shares of the Fund involve
investment risks, including fluctuations in value and the possible loss of
some or all of the principal investment.
This Prospectus is designed to provide you with information you should know
before investing in the Fund. Please retain this document for future
reference. A Statement of Additional Information for the Fund dated January 1,
1997, 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 Eaton Vance and 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.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
PAGE PAGE
<S> <C> <C> <C>
Shareholder and Fund Expenses ................ 2 How to Buy Fund Shares ............................... 12
The Fund's Financial Highlights .............. 3 How to Redeem Fund Shares ............................ 13
The Fund's Investment Objective .............. 4 Reports to Shareholders .............................. 14
The Portfolio's Investments .................. 4 The Lifetime Investing Account/Distribution
Investment Policies and Risks ................ 5 Options ............................................ 14
Organization of the Fund and the Portfolio ... 7 The Eaton Vance Exchange Privilege ................... 15
Management of the Fund and the Portfolio ..... 8 Eaton Vance Shareholder Services ..................... 16
Distribution Plan ............................ 10 Distributions and Taxes .............................. 16
Valuing Fund Shares .......................... 11 Performance Information .............................. 18
- -------------------------------------------------------------------------------------------------------------------------
PROSPECTUS DATED JANUARY 1, 1997
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SHAREHOLDER AND FUND EXPENSES
- ------------------------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES
-------------------------------------------------------------------------------------------------------
<S> <C>
Sales Charges Imposed on Purchases of Shares None
Sales Charges Imposed on Reinvested Distributions None
Fees to Exchange Shares None
Contingent Deferred Sales Charges Imposed on Redemptions During the
First Year (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 1.25%
Rule 12b-1 Distribution (and Service) Fees 1.00
Other Expenses (after expense allocation) 0.63
----
Total Operating Expenses (after allocation) 2.88%
====
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS
<S> <C> <C>
An investor would pay the following expenses (including a contingent deferred sales
charge in the case of redemption during the first year after purchase) on a $1,000
investment, assuming (a) 5% annual return and (b) redemption at the end of each
period: $39 $89
</TABLE>
NOTES:
The table and Example 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. Information
for the Fund is based on its expenses for the most recent fiscal year.
Management Fees includes 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. Absent an expense allocation, Other Expenses and Total
Operating Expenses would have been 5.84% and 8.09%, respectively.
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 the Fund
and the Portfolio see "The Fund's Financial Highlights," "Management of the
Fund and the Portfolio" and "How to Redeem Fund Shares." 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. See "Distribution Plan."
No contingent deferred sales charge is imposed on (a) shares purchased more
than one year 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." In the Example above, expenses would be $10 less in the first year
if there was no redemption.
The Fund invests exclusively in the Portfolio. 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."
<PAGE>
THE FUND'S FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------------
The following information should be read in conjunction with the audited
financial statements included in the Fund's annual report to shareholders
which is incorporated by reference into the Statement of Additional
Information in reliance upon the report of Coopers & Lybrand, L.L.P.,
independent accountants, as experts in accounting and auditing. Further
information regarding the performance of the Fund is contained in its annual
report to shareholders which may be obtained without charge by contacting the
Principal Underwriter.
- ------------------------------------------------------------------------------
FOR THE PERIOD FROM THE START OF BUSINESS,
NOVEMBER 22, 1995, TO AUGUST 31, 1996:
NET ASSET VALUE, beginning of period $10.000
-------
INCOME FROM OPERATIONS:
Net investment loss $(0.114)
Net realized and unrealized gain on investments 0.774
-------
Total income from operations $ 0.660
------
NET ASSET VALUE, end of period $10.660
=======
TOTAL RETURN(1) 6.60%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $ 1,390
Ratio of net expenses to average net assets(2) 2.88%+
Ratio of net investment loss to average net assets (1.39%)+
The operating expenses of the Fund reflect an allocation of expenses to the
Administrator. Had such action not been taken, net investment loss per share and
the ratios would have been as follows:
Net investment loss per share $(0.541)
=======
Ratios (as a percentage of average daily net assets):
Expenses(2) 8.09%+
Net investment loss (6.60%)+
+Annualized.
(1)Total investment return is calculated assuming a purchase at the net asset
value on the first day and a sale at the net asset value on the last day of
each period reported. Distributions, if any, are assumed to be reinvested at
the net asset value on the payable date. Total return is computed on a
non-annualized basis.
(2)Includes the Fund's share of the Portfolio's allocated expenses.
<PAGE>
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 exists. 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 Portfolio
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. As of the date of this Prospectus, the Advisers
expect to invest between approximately 40% and 60% 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; default by
the counterparty; imperfect correlation between a position and the desired
hedge; tax constraints on closing out positions; and portfolio management
constraints on securities subject to such transactions. The loss on derivative
instruments (other than purchased options) may substantially exceed the
Portfolio's initial investment in these instruments. In addition, the
Portfolio may lose the entire premium paid for purchased options that expire
before they can be profitably exercised by the Portfolio. The Portfolio incurs
transaction costs in opening and closing positions in derivative instruments.
There can be no assurance that 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.
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.
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.
RESTRICTED SECURITIES. Securities that are not freely tradeable or which are
subject to restrictions on sale under the Securities Act of 1933 are considered
restricted. Such securities are illiquid and may be difficult to properly value.
The Portfolio's holdings of illiquid securities may not exceed 15% of its net
assets. Illiquid securities include securities legally restricted as to resale,
and securities eligible for resale pursuant to Rule 144A under the Securities
Act of 1933. Rule 144A securities may, however, be treated as liquid by the
Investment Adviser pursuant to procedures adopted by the Trustees, which require
consideration of factors such as trading activity, availability of market
quotations and number of dealers willing to purchase the security. Moreover,
liquid Rule 144A securities may increase the level of fund illiquidity to the
extent qualified institutional buyers become uninterested in purchasing such
securities.
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 generally 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.
ORGANIZATION OF THE FUND AND THE PORTFOLIO
- ------------------------------------------------------------------------------
The Fund is a diversified series of Eaton Vance Growth Trust, a business trust
established under Massachusetts law pursuant to a Declaration of Trust dated
May 25, 1989. The Trustees of the Trust are responsible for the overall
management and supervision of its affairs. The Trust may issue an unlimited
number of shares of beneficial interest (no par value per share) in one or
more series (such as the Fund). 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.
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, affords the potential for economies of scale for the Fund (at least
when the assets of the Portfolio exceed $500 million) and may over time result
in lower expenses for the Fund.
In addition to selling an interest to the Fund, the Portfolio may sell
interests to other affiliated and non-affiliated mutual funds or institutional
investors. Such investors will invest in the Portfolio on the same terms and
conditions and will pay a proportionate share of the Portfolio's expenses.
However, the other investors investing in the Portfolio are not required to
sell their shares at the same public offering price as the Fund due to
variations in sales commissions and other operating expenses. Therefore, these
differences may result in differences in returns experienced by investors in
the various funds that invest in the Portfolio. Such differences in returns
are also present in other mutual fund structures, including funds that have
multiple classes of shares. Information regarding other pooled investment
entities or funds which invest in the Portfolio may be obtained by contacting
the Principal Underwriter, 24 Federal Street, Boston, MA 02110 (617) 482-8260.
Whenever the Fund as an investor in the Portfolio is requested to vote on
matters pertaining to the Portfolio (other than the termination of the
Portfolio's business, which may be determined by the Trustees of the Portfolio
without investor approval), the Fund will hold a meeting of Fund shareholders
and will vote its interest in the Portfolio for or against such matters
proportionately to the instructions to vote for or against such matters
received from Fund shareholders. The Fund shall vote shares for which it
receives no voting instructions in the same proportion as the shares for which
it receives voting instructions. Other investors in the Portfolio may alone or
collectively acquire sufficient voting interests in the Portfolio to control
matters relating to the operation of the Portfolio, which may require the Fund
to withdraw its investment in the Portfolio or take other appropriate action.
Any such withdrawal could result in a distribution "in kind" of portfolio
securities (as opposed to a cash distribution from the Portfolio). If
securities are distributed, the Fund could incur brokerage, tax or other
charges in converting the securities to cash. In addition, the distribution in
kind may result in a less diversified portfolio of investments or adversely
affect the liquidity of the Fund. Notwithstanding the above, there are other
means for meeting shareholder redemption requests, such as borrowing.
The Fund may withdraw (completely redeem) all its assets from the Portfolio at
any time if the Board of Trustees of the Trust determines that it is in the
best interest of the Fund to do so. In the event the Fund withdraws all of its
assets from the Portfolio, or the Board of Trustees of the Trust determines
that the investment objective of the Portfolio is no longer consistent with
the investment objective of the Fund, such Trustees would consider what action
might be taken, including investing the assets of the Fund in another pooled
investment entity or retaining an investment adviser to manage the Fund's
assets in accordance with its investment objective. The Fund's investment
performance may be affected by a withdrawal of all its assets from the
Portfolio.
MANAGEMENT OF THE FUND AND THE PORTFOLIO
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EATON VANCE MANAGEMENT ("EATON VANCE") ACTS AS THE SPONSOR AND MANAGER OF THE
FUND AND 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 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 over $16 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 which through its subsidiaries and affiliates engages
primarily in investment management, administration and marketing activities.
The Principal Underwriter is a wholly-owned subsidiary of Eaton Vance. Eaton
Vance Corp. owns 24% 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).
While the Portfolio is a New York trust, Lloyd George, together with Mr. Lloyd
George and Edward K.Y. Chen (a Trustee of the Portfolio), are not residents of
the United States and substantially all of their respective assets may be
located outside of the United States. It may be difficult for investors to
effect service of process within the United States upon the individuals
identified above, or to realize judgments of courts of the United States
predicated upon civil liabilities of Lloyd George and such individuals under
the federal securities laws of the United States. The Portfolio has been
advised that there is substantial doubt as to the enforceability in the
countries in which Lloyd George and such individuals reside of such civil
remedies and criminal penalties as are afforded by the federal securities laws
of the United States.
Acting under the general supervision of the Board of Trustees of the
Portfolio, the Advisers manage the investment of the Portfolio's assets. The
Advisers also furnish for the use of the Portfolio office space and all
necessary office facilities, equipment and personnel for servicing the
investments of the Portfolio. 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. As of August 31, 1996, the Portfolio had net assets of
$42,703,385. For the period from the start of business, September 18, 1995, to
August 31, 1996, the Portfolio paid the Advisers advisory fees equivalent to
0.75% (annualized) of the Portfolio's average daily net assets for such
period, which amount was divided equally between them.
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. The Fund, the Portfolio and the Advisers have
adopted Codes of Ethics relating to personal securities transactions. The
Codes permit Eaton Vance personnel to invest in securities (including
securities that may be purchased or held by the Portfolio) for their own
accounts, subject to certain reporting and other restrictions and procedures
contained in such Codes.
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. As of August 31, 1996, the Fund had net assets
of $1,390,057. For the period from the Fund's start of business, November 22,
1995, to August 31, 1996, Eaton Vance earned management fees equivalent to
0.25% (annualized) of the Fund's average daily net assets for such period. In
addition, under its administration agreement with the Portfolio, Eaton Vance
receives a monthly 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. For the period
from the Portfolio's start of business, September 18, 1995, to August 31,
1996, Eaton Vance earned administration fees equivalent to 0.25% (annualized)
of the Portfolio's average daily net assets for such period.
The 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 the Principal
Underwriter under the distribution agreement. Such costs and expenses to be
borne by each of the Fund or the Portfolio, as the case may be, include,
without limitation: custody and transfer agency fees and expenses, including
those incurred for determining net asset value and keeping accounting books
and records; expenses of pricing and valuation services; the cost of share
certificates; membership dues in investment company organizations; brokerage
commissions and fees; fees and expenses of registering under the securities
laws; expenses of reports to shareholders and investors; proxy statements, and
other expenses of shareholders' or investors' meetings; insurance premiums,
printing and mailing expenses; interest, taxes and corporate fees; legal and
accounting expenses; compensation and expenses of Trustees not affiliated with
Eaton Vance or an Adviser; 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 any litigation in which the
Fund or the Portfolio, as the case may be, is a party and any legal obligation
to indemnify its respective officers and Trustees with respect thereto, to the
extent not covered by insurance.
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
6.25% 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 to an
Authorized Firm (a) sales commissions (except on exchange transactions and
reinvestments) at the time of sale equal to .75% of the purchase price of the
shares sold by such Firm, and (b) monthly sales commissions approximately
equivalent to 1/12 of .75% of the value of shares sold by such Firm and
remaining outstanding for at least one year. The Plan is designed to permit an
investor to purchase Fund shares through an Authorized Firm without incurring
an initial sales charge and at the same time permit the Principal Underwriter
to compensate Authorized Firms in connection with the sale of Fund shares.
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 made to the
Principal Underwriter 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.
During the period from the start of business, November 22, 1995, to August 31,
1996, the Fund paid sales commissons under the Plan equivalent to 0.75%
(annualized) of the Fund's average daily net assets for such period. As at
August 31, 1996, the outstanding Uncovered Distribution Charges of the
Principal Underwriter calculated under the Plan amounted to approximately
$75,000 (which amount was equivalent to 5.4% of the Fund's net assets on such
day).
THE PLAN ALSO AUTHORIZES THE FUND TO MAKE PAYMENTS OF SERVICE FEES TO THE
PRINCIPAL UNDERWRITER, AUTHORIZED FIRMS AND OTHER PERSONS IN AMOUNTS NOT
EXCEEDING .25% OF THE FUND'S AVERAGE DAILY NET ASSETS FOR EACH FISCAL YEAR.
The Trustees of the Trust have initially implemented this provision of the
Plan by authorizing the Fund to make monthly service fee payments to the
Principal Underwriter and Authorized Firms in amounts not expected to exceed
.25% of the Fund's average daily net assets for any fiscal year. The Fund
accrues the service fee daily at the rate of 1/365 of .25% of the Fund's net
assets. The Principal Underwriter currently expects to pay to an Authorized
Firm (a) a service fee (except on exchange transactions and reinvestments) at
the time of sale equal to .25% of the purchase price of the shares sold by
such Firm, and (b) monthly service fees approximately equivalent to 1/12 of
.25% of the value of shares sold by such Firm and remaining outstanding for at
least one year. During the first year after a purchase of Fund shares, the
Principal Underwriter will retain the service fee as reimbursement for the
service fee payment made to the Authorized Firm at the time of sale. As
permitted by the NASD Rule, all service fee 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. During the period from the start of
business, November 22, 1995, to August 31, 1996, the Fund made service fee
payments equivalent to 0.25% (annualized) of the Fund's average daily net
assets for such period.
The Principal Underwriter may, from time to time, at its own expense, provide
additional incentives to Authorized Firms which employ registered
representatives who sell Fund shares and/or shares of other funds distributed
by the Principal Underwriter. In some instances, such additional incentives
may be offered only to certain Authorized Firms whose representatives sell or
are expected to sell significant amounts of shares. In addition, the Principal
Underwriter may from time to time increase or decrease the sales commissions
payable to Authorized Firms.
The Fund may, in its absolute discretion, suspend, discontinue or limit the
offering of its shares at any time. In determining whether any such action
should be taken, the Fund's management intends to consider all relevant
factors, including without limitation the size of the Fund, the investment
climate and market conditions, the volume of sales and redemptions of Fund
shares, and the amount of Uncovered Distribution Charges of the Principal
Underwriter. The Plan may continue in effect and payments may be made under
the Plan following any such suspension, discontinuance or limitation of the
offering of Fund shares; however, the Fund is not contractually obligated to
continue the Plan for any particular period of time. Suspension of the
offering of Fund shares would not, of course, affect a shareholder's ability
to redeem shares.
VALUING FUND SHARES
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THE FUND VALUES ITS SHARES ONCE ON EACH DAY THE NEW YORK STOCK EXCHANGE (THE
"EXCHANGE") IS OPEN FOR TRADING, as of the close of regular trading on the
Exchange (normally 4:00 p.m. New York time). The Fund's net asset value per
share is determined by 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.
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.
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 net asset value per share of the Fund next determined after an
order is effective. An Authorized Firm may charge its customers a fee in
connection with transactions executed by that Firm. The 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: First
Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123. The
$1,000 minimum initial investment is waived for Bank Automated Investing
accounts, which may be established with an investment of $50 or more. See
"Eaton Vance Shareholder Services."
In connection with employee benefit or other continuous group purchase plans
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 on the day of their receipt or as soon thereafter as
possible. The number of Fund shares to be issued in exchange for securities
will be the aggregate proceeds from the sale of such securities, divided by
the applicable net asset value 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 Classic Information Age Fund
IN THE CASE OF PHYSICAL DELIVERY:
Investors Bank & Trust Company
Attention: EV Classic 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, must contact Eaton Vance to determine whether
the securities are acceptable before forwarding such securities. Eaton Vance
reserves the right to reject any securities. Exchanging securities for Fund
shares may create a taxable gain or loss. Each investor should consult his or
her tax adviser with respect to the particular federal, state and local tax
consequences of exchanging securities for Fund shares.
IF YOU DON'T HAVE AN AUTHORIZED FIRM, EATON VANCE CAN RECOMMEND ONE.
HOW TO REDEEM FUND SHARES
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A SHAREHOLDER MAY REDEEM FUND SHARES IN ONE OF THREE WAYS -- BY MAIL, BY
TELEPHONE OR THROUGH AN AUTHORIZED FIRM. The redemption price will be based
on the net asset value per Fund share next computed after a redemption request
is received in the proper form as described below.
REDEMPTION BY MAIL: Shares may be redeemed by delivering to the Transfer
Agent, First Data Investor Services Group, P.O. Box 5123, Westborough, MA
01581-5123, during its business hours a written request for redemption in good
order, plus any share certificates with executed stock powers. Good order
means that all relevant documents must be endorsed by the record owner(s)
exactly as the shares are registered and the signature(s) must be guaranteed
by a member of either the Securities Transfer Association's STAMP program or
the New York Stock Exchange's Medallion Signature Program, or certain banks,
savings and loan institutions, credit unions, securities dealers, securities
exchanges, clearing agencies and registered securities associations as
required by a regulation of the Securities and Exchange Commission and
acceptable to the Transfer Agent. In addition, in some cases, good order may
require the furnishing of additional documents such as where shares are
registered in the name of a corporation, partnership or fiduciary.
REDEMPTION BY TELEPHONE: Shares may be redeemed by telephone provided the
investor has not disclaimed in writing the use of the privilege. Such
redemptions can be effected by calling the Transfer Agent at 800-262-1122,
Monday through Friday, 9:00 a.m. to 4:00 p.m. (Eastern Standard Time). The
proceeds of a telephone redemption may be no greater than the maximum amount
established by the Principal Underwriter (currently $50,000) and may be mailed
only to the account address of record. Shares held by corporations, trusts or
certain other entities, or subject to fiduciary arrangements, may not be
redeemed by telephone. Neither the Fund, the Principal Underwriter nor the
Transfer Agent will be responsible for the authenticity of redemption
instructions received by telephone, provided that reasonable procedures to
confirm that instructions communicated by telephone are genuine have been
followed. Telephone instructions will be tape recorded. In times of drastic
economic or market changes, a telephone redemption may be difficult to
implement.
REDEMPTION THROUGH AN AUTHORIZED FIRM: To sell shares at their net asset value
through an Authorized Firm (a repurchase), a shareholder can place a
repurchase order with the Authorized Firm, which may charge a fee. The value
of such shares is based upon the net asset value calculated after the
Principal Underwriter, as the Fund's agent, receives the order. It is the
Authorized Firm's responsibility to transmit promptly repurchase orders to the
Principal Underwriter. Throughout this Prospectus, the word "redemption" is
generally meant to include a repurchase.
Within seven days after receipt of a redemption request in good order by the
Transfer Agent, the 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.
If shares were recently purchased, the proceeds of a redemption will not be
sent until the check (including a certified or cashier's check) received for
the shares purchased has cleared. Payment for shares tendered for redemption
may be delayed up to 15 days from the purchase date when the purchase check
has not yet cleared. Redemptions may result in a taxable gain or loss.
Due to the high cost of maintaining small accounts, the Fund reserves the
right to redeem accounts with balances of less than $750. Prior to such a
redemption, shareholders will be given 60 days' written notice to make an
additional purchase. However, no such redemption would be required by the 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 year of
their purchase (except shares acquired through the reinvestment of
distributions) generally will be subject to a contingent deferred sales charge
("CDSC") equal to 1% of the net asset value of the redeemed shares. This CDSC
is imposed on any redemption the amount of which exceeds the aggregate value
at the time of redemption of (a) all shares in the account purchased more than
one year prior to the redemption, (b) all shares in the account acquired
through reinvestment of distributions, and (c) the increase, if any, of value
in the other shares in the account (namely those purchased within the year
preceding the redemption) over the purchase price of such shares. Redemptions
are processed in a manner to maximize the amount of redemption proceeds which
will not be subject to a CDSC. That is, each redemption will be assumed to
have been made first from the exempt amounts referred to in clauses (a), (b)
and (c) above, and second through liquidation of those shares in the account
referred to in clause (c) on a first-in-first-out basis. As described under
"Distribution Plan," the CDSC will be paid to the Principal Underwriter or the
Fund.
In calculating the CDSC upon the redemption of Fund shares acquired in an
exchange for shares of a fund currently listed under "The Eaton Vance Exchange
Privilege," 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.
No CDSC will be imposed on Fund shares which have been sold to Eaton Vance or
its affiliates, or to their respective employees or clients. The CDSC will
also be waived for shares redeemed (1) pursuant to a Withdrawal Plan (see
"Eaton Vance Shareholder Services"), (2) as part of a distribution from a
retirement plan qualified under Section 401, 403(b) or 457 of the Internal
Revenue Code of 1986, as amended (the "Code"), or (3) as part of a minimum
required distribution from other tax-sheltered retirement plans.
REPORTS TO SHAREHOLDERS
- ------------------------------------------------------------------------------
THE FUND WILL ISSUE TO ITS SHAREHOLDERS SEMI-ANNUAL AND ANNUAL REPORTS
CONTAINING FINANCIAL STATEMENTS. Financial statements included in annual
reports are audited by the Fund's independent certified public accountants.
Shortly after the end of each calendar year, the Fund will furnish all
shareholders with information necessary for preparing federal and state tax
returns.
THE LIFETIME INVESTING ACCOUNT/DISTRIBUTION OPTIONS
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AFTER AN INVESTOR MAKES AN INITIAL PURCHASE OF FUND SHARES, THE TRANSFER AGENT
WILL SET UP A LIFETIME INVESTING ACCOUNT FOR THE INVESTOR ON THE 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 Transfer Agent.
Any questions concerning a shareholder's account or services available may be
directed by telephone to EATON VANCE SHAREHOLDER SERVICES at 800-225-6265,
extension 2, or in writing to the Transfer Agent, First Data Investor Services
Group, P.O. Box 5123, Westborough, MA 01581-5123 (please provide the name of
the shareholder, the Fund and the account number).
THE FOLLOWING DISTRIBUTION OPTIONS WILL BE AVAILABLE TO ALL LIFETIME INVESTING
ACCOUNTS and may be changed as often as desired by written notice to the
Fund's dividend disbursing agent, First Data Investor Services Group, P.O. Box
5123, Westborough, MA 01581-5123. The currently effective option will appear
on each account statement.
Share Option -- Dividends and capital gains will be reinvested in additional
shares.
Income Option -- Dividends will be paid in cash, and capital gains will be
reinvested in additional shares.
Cash Option -- Dividends and capital gains will be paid in cash.
The Share Option will be assigned if no other option is specified.
Distributions, including those reinvested, will be reduced by any withholding
required under federal income tax laws.
If the Income Option or Cash Option has been selected, dividend and/or capital
gains distribution checks which are returned by the United States Postal
Service as not deliverable or which remain uncashed for six months or more
will be reinvested in the account in shares at the then current net asset
value. Furthermore, the distribution option on the account will be
automatically changed to the Share Option until such time as the shareholder
selects a different option.
DISTRIBUTION INVESTMENT OPTION. In addition to the distribution options set
forth above, dividends and/or capital gains may be invested in additional
shares of another Eaton Vance fund. Before selecting this option, a
shareholder should obtain a prospectus of the other Eaton Vance fund and
consider its objectives and policies carefully.
"STREET NAME" ACCOUNTS. If shares 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.
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 Classic Group of Funds or Eaton Vance Money Market
Fund, which are distributed subject to a CDSC (or equivalent early withdrawal
charge), on the basis of the net asset value per share of each fund at the
time of the exchange. 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 Transfer Agent 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 Transfer Agent for additional information concerning the
exchange privilege. Applications and prospectuses of other funds are available
from Authorized Firms or the Principal Underwriter. The prospectus for each
fund describes its investment objectives and policies, and shareholders should
obtain a prospectus and consider these objectives and policies carefully
before requesting an exchange.
No CDSC is imposed on exchanges. For purposes of calculating the CDSC upon the
redemption of shares acquired in an exchange, the 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.
Shares of the other funds in the Eaton Vance Classic Group of Funds (and
shares of Eaton Vance Money Market Fund acquired as a result of an exchange
from an EV Classic 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 Transfer Agent provided that the
investor has not disclaimed in writing the use of the privilege. To effect
such exchanges, call the Transfer Agent at 800-262-1122, Monday through
Friday, 9:00 a.m. to 4:00 p.m. (Eastern Standard Time). Shares acquired by
telephone exchange must be registered in the same name(s) and with the same
address as the shares being exchanged. Neither the Fund, the Principal
Underwriter nor the Transfer Agent will be responsible for the authenticity of
exchange instructions received by telephone, provided that reasonable
procedures to confirm that instructions communicated are genuine have been
followed. Telephone instructions will be tape recorded. In times of drastic
economic or market changes, a telephone exchange may be difficult to
implement. An exchange may result in a taxable gain or loss.
EATON VANCE SHAREHOLDER SERVICES
- ------------------------------------------------------------------------------
THE 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
Classic Information Age Fund may be mailed directly to the Transfer Agent,
First Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123
at any time -- whether or not distributions are reinvested. The name of the
shareholder, the Fund and 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 CDSC. See "How to Redeem Fund Shares." A
minimum deposit of $5,000 in shares is required.
REINVESTMENT PRIVILEGE: A shareholder who has redeemed shares may reinvest,
with credit for any CDSC paid on the redeemed shares, any portion or all of
the redemption proceeds (plus that amount necessary to acquire a fractional
share to round off the purchase to the nearest full share) in shares of the
Fund, provided that the reinvestment is effected within 60 days after such
redemption, and the privilege has not been used more than once in the prior 12
months. Shares are sold to a reinvesting shareholder at the 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 certain tax-sheltered retirement plans. Detailed
information concerning these plans, including certain exceptions to minimum
investment requirements, and copies of the plans are available from the
Principal Underwriter. This information should be read carefully and
consultation with an attorney or tax adviser may be advisable. The information
sets forth the service fee charged for retirement plans and describes the
federal income tax consequences of establishing a plan. Participant accounting
services (including trust fund reconciliation services) will be offered only
through third party recordkeepers and not by the Principal Underwriter. Under
all plans, dividends and distributions will be automatically reinvested in
additional shares.
DISTRIBUTIONS AND TAXES
- ------------------------------------------------------------------------------
DISTRIBUTIONS. 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.
Shareholders should consult with their tax advisors concerning the
applicability of state, local or other taxes to an investment in the Fund.
PERFORMANCE INFORMATION
- ------------------------------------------------------------------------------
FROM TIME TO TIME, THE FUND MAY ADVERTISE ITS AVERAGE ANNUAL TOTAL RETURN. The
Fund's average annual total return is determined by computing the average
annual percentage change in the value of $1,000 invested at the maximum public
offering price (net asset value) for specified periods, assuming reinvestment
of all distributions. The average annual total return calculation assumes a
complete redemption of the investment and the deduction of any CDSC at the end
of the period. The Fund may also publish annual and cumulative total return
figures from time to time. The Fund may quote total return for the period
prior to commencement of operations which would reflect the Portfolio's total
return (or that of its predecessor) adjusted to reflect any applicable Fund
sales charge.
The Fund may also publish total return figures which do not take into account
any CDSC which may be imposed upon redemptions at the end of the specified
period. Any performance figure which does not take into account the CDSC 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 of the Fund or the Portfolio
are allocated to Eaton Vance, the Fund's performance will be higher.
<PAGE>
[Logo]
EATON VANCE
================
Mutual Funds
- --------------------------------------------------------------------------------
SPONSOR AND MANAGER OF
EV CLASSIC 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
89 South Street
Boston, MA 02111
TRANSFER AGENT
First Data Investor Services Group
P.O. Box 5123
Westborough, MA 01581-5123
(800) 262-1122
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand, L.L.P.
One Post Office Square
Boston, MA 02109
EV CLASSIC
INFORMATION
AGE FUND
[Graphic Omitted]
PROSPECTUS
JANUARY 1, 1997
EV CLASSIC INFORMATION AGE FUND
24 FEDERAL STREET
BOSTON, MA 02110
C-IAP
<PAGE>
PART A
INFORMATION REQUIRED IN A PROSPECTUS
EV MARATHON
INFORMATION AGE FUND
- ------------------------------------------------------------------------------
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. THE FUND
IS A SERIES OF EATON VANCE GROWTH TRUST (THE "TRUST").
Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, any bank or other insured depository institution, and are not
federally insured by the Federal Deposit Insurance Corporation, the Federal
Reserve Board or any other government agency. Shares of the Fund involve
investment risks, including fluctuations in value and the possible loss of
some or all of the principal investment.
This Prospectus is designed to provide you with information you should know
before investing in the Fund. Please retain this document for future
reference. A Statement of Additional Information for the Fund dated January 1,
1997, 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 Eaton Vance and 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.
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE PAGE
<S> <C> <C> <C>
Shareholder and Fund Expenses .............. 2 How to Buy Fund Shares ..................... 11
The Fund's Financial Highlights ............ 3 How to Redeem Fund Shares .................. 12
The Fund's Investment Objective ............ 4 Reports to Shareholders .................... 14
The Portfolio's Investments ................ 4 The Lifetime Investing Account/Distribution
Investment Policies and Risks .............. 5 Options .................................. 14
Organization of the Fund and the Portfolio . 7 The Eaton Vance Exchange Privilege ......... 15
Management of the Fund and the Portfolio ... 8 Eaton Vance Shareholder Services ........... 16
Distribution Plan .......................... 9 Distributions and Taxes .................... 17
Valuing Fund Shares ........................ 11 Performance Information .................... 18
- --------------------------------------------------------------------------------------------------------
</TABLE>
PROSPECTUS DATED JANUARY 1, 1997
<PAGE>
SHAREHOLDER AND FUND EXPENSES
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES
-----------------------------------------------------------------------------------------------------
<S> <C>
Sales Charges Imposed on Purchases of Shares None
Sales Charges Imposed on Reinvested Distributions None
Fees to Exchange Shares None
Range of Declining Contingent Deferred Sales Charges Imposed on Redemptions
during the First Seven Years (as a percentage of redemption proceeds exclusive of
all reinvestments and capital appreciation in the account) 5.00%-0%
ANNUAL FUND AND ALLOCATED PORTFOLIO OPERATING EXPENSES (as a percentage of average daily net assets)
----------------------------------------------------------------------------------------------------
Management Fees 1.25%
Rule 12b-1 Distribution (and Service) Fees 0.80
Other Expenses 0.96
----
Total Operating Expenses 3.01%
====
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------- ------ ------- ------- --------
<S> <C> <C> <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: $80 $133 $178 $333
An investor would pay the following expenses on the same
investment, assuming (a) 5% annual return and (b) no
redemptions: $30 $ 93 $158 $333
</TABLE>
NOTES:
The table and Example 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. Information
for the Fund is based on its expenses for the most recent fiscal year, except
that the Service Plan Fees have been estimated. Management Fees includes
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.
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 the Fund
and the Portfolio see "The Fund's Financial Highlights," "Management of the
Fund and the Portfolio" and "How to Redeem Fund Shares." 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. See "Distribution Plan."
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."
The Fund invests exclusively in the Portfolio. 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."
<PAGE>
THE FUND'S FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------------
The following information should be read in conjunction with the audited
financial statements included in the Fund's annual report to shareholders
which is incorporated by reference into the Statement of Additional
Information in reliance upon the report of Coopers & Lybrand, L.L.P.,
independent accountants, as experts in accounting and auditing. Further
information regarding the performance of the Fund is contained in its annual
report to shareholders which may be obtained without charge by contacting the
Principal Underwriter.
- ------------------------------------------------------------------------------
FOR THE PERIOD FROM THE START OF BUSINESS, SEPTEMBER 18, 1995, TO
AUGUST 31, 1996:
NET ASSET VALUE, beginning of period $10.000
-------
INCOME FROM OPERATIONS:
Net investment loss $(0.134)
Net realized and unrealized gain on investments 1.178
-------
Total income from operations 1.040
-------
NET ASSET VALUE, end of period $11.040
=======
TOTAL RETURN(1) 10.40%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $21,800
Ratio of net expenses to average net assets(2) 2.96%+
Ratio of net investment loss to average net assets (1.34%)+
+ Annualized.
(1) Total investment return is calculated assuming a purchase at the net asset
value on the first day and a sale at the net asset value on the last day
of each period reported. Distributions, if any, are assumed to be
reinvested at the net asset value on the payable date. Total return is
computed on a non-annualized basis.
(2) Includes the Fund's share of the Portfolio's allocated expenses.
Note: The above per share information is computed based on average
shares outstanding.
<PAGE>
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 exists. 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 Portfolio
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. As of the date of this Prospectus, the Advisers
expect to invest between approximately 40% and 60% 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; default by
the counterparty; imperfect correlation between a position and the desired
hedge; tax constraints on closing out positions; and portfolio management
constraints on securities subject to such transactions. The loss on derivative
instruments (other than purchased options) may substantially exceed the
Portfolio's initial investment in these instruments. In addition, the
Portfolio may lose the entire premium paid for purchased options that expire
before they can be profitably exercised by the Portfolio. The Portfolio incurs
transaction costs in opening and closing positions in derivative instruments.
There can be no assurance that 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.
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.
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.
RESTRICTED SECURITIES. Securities that are not freely tradeable or which are
subject to restrictions on sale under the Securities Act of 1933 are considered
restricted. Such securities are illiquid and may be difficult to properly value.
The Portfolio's holdings of illiquid securities may not exceed 15% of its net
assets. Illiquid securities include securities legally restricted as to resale,
and securities eligible for resale pursuant to Rule 144A under the Securities
Act of 1933. Rule 144A securities may, however, be treated as liquid by the
Investment Adviser pursuant to procedures adopted by the Trustees, which require
consideration of factors such as trading activity, availability of market
quotations and number of dealers willing to purchase the security. Moreover,
liquid Rule 144A securities may increase the level of fund illiquidity to the
extent qualified institutional buyers become uninterested in purchasing such
securities.
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 generally 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.
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. The Trustees of the Trust are responsible for the overall
management and supervision of its affairs. The Trust may issue an unlimited
number of shares of beneficial interest (no par value per share) in one or
more series (such as the Fund). 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.
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, affords the potential for economies of scale for the Fund (at least
when the assets of the Portfolio exceed $500 million) and may over time result
in lower expenses for the Fund.
In addition to selling an interest to the Fund, the Portfolio may sell
interests to other affiliated and non-affiliated mutual funds or institutional
investors. Such investors will invest in the Portfolio on the same terms and
conditions and will pay a proportionate share of the Portfolio's expenses.
However, the other investors investing in the Portfolio are not required to
sell their shares at the same public offering price as the Fund due to
variations in sales commissions and other operating expenses. Therefore, these
differences may result in differences in returns experienced by investors in
the various funds that invest in the Portfolio. Such differences in returns
are also present in other mutual fund structures, including funds that have
multiple classes of shares. Information regarding other pooled investment
entities or funds which invest in the Portfolio may be obtained by contacting
the Principal Underwriter, 24 Federal Street, Boston, MA 02110 (617) 482-8260.
Whenever the Fund as an investor in the Portfolio is requested to vote on
matters pertaining to the Portfolio (other than the termination of the
Portfolio's business, which may be determined by the Trustees of the Portfolio
without investor approval), the Fund will hold a meeting of Fund shareholders
and will vote its interest in the Portfolio for or against such matters
proportionately to the instructions to vote for or against such matters
received from Fund shareholders. The Fund shall vote shares for which it
receives no voting instructions in the same proportion as the shares for which
it receives voting instructions. Other investors in the Portfolio may alone or
collectively acquire sufficient voting interests in the Portfolio to control
matters relating to the operation of the Portfolio, which may require the Fund
to withdraw its investment in the Portfolio or take other appropriate action.
Any such withdrawal could result in a distribution "in kind" of portfolio
securities (as opposed to a cash distribution from the Portfolio). If
securities are distributed, the Fund could incur brokerage, tax or other
charges in converting the securities to cash. In addition, the distribution in
kind may result in a less diversified portfolio of investments or adversely
affect the liquidity of the Fund. Notwithstanding the above, there are other
means for meeting shareholder redemption requests, such as borrowing.
The Fund may withdraw (completely redeem) all its assets from the Portfolio at
any time if the Board of Trustees of the Trust determines that it is in the
best interest of the Fund to do so. In the event the Fund withdraws all of its
assets from the Portfolio, or the Board of Trustees of the Trust determines
that the investment objective of the Portfolio is no longer consistent with
the investment objective of the Fund, such Trustees would consider what action
might be taken, including investing the assets of the Fund in another pooled
investment entity or retaining an investment adviser to manage the Fund's
assets in accordance with its investment objective. The Fund's investment
performance may be affected by a withdrawal of all its assets from the
Portfolio.
MANAGEMENT OF THE FUND AND THE PORTFOLIO
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EATON VANCE MANAGEMENT ("EATON VANCE") ACTS AS THE SPONSOR AND MANAGER OF THE
FUND AND 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 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 over $16 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 which through its subsidiaries and affiliates engages
primarily in investment management, administration and marketing activities.
The Principal Underwriter is a wholly-owned subsidiary of Eaton Vance. Eaton
Vance Corp. owns 24% 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).
While the Portfolio is a New York trust, Lloyd George, together with Mr. Lloyd
George and Edward K.Y. Chen (a Trustee of the Portfolio), are not residents of
the United States and substantially all of their respective assets may be
located outside of the United States. It may be difficult for investors to
effect service of process within the United States upon the individuals
identified above, or to realize judgments of courts of the United States
predicated upon civil liabilities of Lloyd George and such individuals under
the federal securities laws of the United States. The Portfolio has been
advised that there is substantial doubt as to the enforceability in the
countries in which Lloyd George and such individuals reside of such civil
remedies and criminal penalties as are afforded by the federal securities laws
of the United States.
Acting under the general supervision of the Board of Trustees of the
Portfolio, the Advisers manage the investment of the Portfolio's assets. The
Advisers also furnish for the use of the Portfolio office space and all
necessary office facilities, equipment and personnel for servicing the
investments of the Portfolio. 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. As of August 31, 1996, the Portfolio had net assets of
$42,703,385. For the period from the start of business, September 18, 1995, to
August 31, 1996, the Portfolio paid the Advisers advisory fees equivalent to
0.75% (annualized) of the Portfolio's average daily net assets for such
period, which amount was divided equally between them.
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. The Fund, the Portfolio and the Advisers have
adopted Codes of Ethics relating to personal securities transactions. The
Codes permit Eaton Vance personnel to invest in securities (including
securities that may be purchased or held by the Portfolio) for their own
accounts, subject to certain reporting and other restrictions and procedures
contained in such Codes.
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. As of August 31, 1996, the Fund had net assets
of $21,800,478. For the period from the Fund's start of business, September
18, 1995, to August 31, 1996, Eaton Vance earned management fees equivalent to
0.25% (annualized) of the Fund's average daily net assets for such period. In
addition, under its administration agreement with the Portfolio, Eaton Vance
receives a monthly 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. For the period
from the Portfolio's start of business, September 18, 1995, to August 31,
1996, Eaton Vance earned administration fees equivalent to 0.25% (annualized)
of the Portfolio's average daily net assets for such period.
The 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 the Principal
Underwriter under the distribution agreement.
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.
During the period from the start of business, September 18, 1995, to August
31, 1996, the Fund paid sales commissions under the Plan equivalent to 0.75%
(annualized) of the Fund's average daily net assets for such period. As at
August 31, 1996, the outstanding Uncovered Distribution Charges of the
Principal Underwriter calculated under the Plan amounted to approximately
$923,000 (which amount was equivalent to 4.2% of the Fund's net assets on such
day).
THE PLAN ALSO AUTHORIZES THE FUND TO MAKE PAYMENTS OF SERVICE FEES TO THE
PRINCIPAL UNDERWRITER, AUTHORIZED FIRMS AND OTHER PERSONS IN AMOUNTS NOT
EXCEEDING .25% OF THE FUND'S AVERAGE DAILY NET ASSETS FOR EACH FISCAL YEAR.
The Trustees of the Trust have initially implemented this provision of 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 began 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 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 sell or are expected to sell significant amounts of shares. In
addition, the Principal Underwriter may from time to time increase or decrease
the sales commissions payable to Authorized Firms.
The Fund may, in its absolute discretion, suspend, discontinue or limit the
offering of its shares at any time. In determining whether any such action
should be taken, the Fund's management intends to consider all relevant
factors, including without limitation the size of the Fund, the investment
climate and market conditions, the volume of sales and redemptions of Fund
shares, and the amount of Uncovered Distribution Charges of the Principal
Underwriter. The Plan may continue in effect and payments may be made under
the Plan following any such suspension, discontinuance or limitation of the
offering of Fund shares; however, the Fund is not contractually obligated to
continue the Plan for any particular period of time. Suspension of the
offering of Fund shares would not, of course, affect a shareholder's ability
to redeem shares.
VALUING FUND SHARES
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THE FUND VALUES ITS SHARES ONCE ON EACH DAY THE NEW YORK STOCK EXCHANGE (THE
"EXCHANGE") IS OPEN FOR TRADING, as of the close of regular trading on the
Exchange (normally 4:00 p.m. New York time). The Fund's net asset value per
share is determined by 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.
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.
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 net asset value per share of the Fund next determined after an
order is effective. An Authorized Firm may charge its customers a fee in
connection with transactions executed by that Firm. The 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: First
Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123. The
$1,000 minimum initial investment is waived for Bank Automated Investing
accounts, which may be established with an investment of $50 or more. See
"Eaton Vance Shareholder Services."
In connection with employee benefit or other continuous group purchase plans
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 on the day of their receipt or as soon thereafter as
possible. The number of Fund shares to be issued in exchange for securities
will be the aggregate proceeds from the sale of such securities, divided by
the applicable net asset value 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, must contact Eaton Vance to determine whether
the securities are acceptable before forwarding such securities. Eaton Vance
reserves the right to reject any securities. Exchanging securities for Fund
shares may create a taxable gain or loss. Each investor should consult his or
her tax adviser with respect to the particular federal, state and local tax
consequences of exchanging securities for Fund shares.
IF YOU DON'T HAVE AN AUTHORIZED FIRM, EATON VANCE CAN RECOMMEND ONE.
HOW TO REDEEM FUND SHARES
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A SHAREHOLDER MAY REDEEM FUND SHARES IN ONE OF THREE WAYS -- BY MAIL, BY
TELEPHONE OR THROUGH AN AUTHORIZED FIRM. The redemption price will be based on
the net asset value per Fund share next computed after a redemption request is
received in the proper form as described below.
REDEMPTION BY MAIL: Shares may be redeemed by delivering to the Transfer
Agent, First Data Investor Services Group, P.O. Box 5123, Westborough, MA
01581-5123, during its business hours a written request for redemption in good
order, plus any share certificates with executed stock powers. Good order
means that all relevant documents must be endorsed by the record owner(s)
exactly as the shares are registered and the signature(s) must be guaranteed
by a member of either the Securities Transfer Association's STAMP program or
the New York Stock Exchange's Medallion Signature Program, or certain banks,
savings and loan institutions, credit unions, securities dealers, securities
exchanges, clearing agencies and registered securities associations as
required by a regulation of the Securities and Exchange Commission and
acceptable to the Transfer Agent. In addition, in some cases, good order may
require the furnishing of additional documents such as where shares are
registered in the name of a corporation, partnership or fiduciary.
REDEMPTION BY TELEPHONE: Shares may be redeemed by telephone provided the
investor has not disclaimed in writing the use of the privilege. Such
redemptions can be effected by calling the Transfer Agent at 800-262-1122,
Monday through Friday, 9:00 a.m. to 4:00 p.m. (Eastern Standard Time). The
proceeds of a telephone redemption may be no greater than the maximum amount
established by the Principal Underwriter (currently $50,000) and may be mailed
only to the account address of record. Shares held by corporations, trusts or
certain other entities, or subject to fiduciary arrangements, may not be
redeemed by telephone. Neither the Fund, the Principal Underwriter nor the
Transfer Agent will be responsible for the authenticity of redemption
instructions received by telephone, provided that reasonable procedures to
confirm that instructions communicated by telephone are genuine have been
followed. Telephone instructions will be tape recorded. In times of drastic
economic or market changes, a telephone redemption may be difficult to
implement.
REDEMPTION THROUGH AN AUTHORIZED FIRM: To sell shares at their net asset value
through an Authorized Firm (a repurchase), a shareholder can place a
repurchase order with the Authorized Firm, which may charge a fee. The value
of such shares is based upon the net asset value calculated after the
Principal Underwriter, as the Fund's agent, receives the order. It is the
Authorized Firm's responsibility to transmit promptly repurchase orders to the
Principal Underwriter. Throughout this Prospectus, the word "redemption" is
generally meant to include a repurchase.
Within seven days after receipt of a redemption request in good order by the
Transfer Agent, the 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.
If shares were recently purchased, the proceeds of a redemption will not be
sent until the check (including a certified or cashier's check) received for
the shares purchased has cleared. Payment for shares tendered for redemption
may be delayed up to 15 days from the purchase date when the purchase check
has not yet cleared. Redemptions may result in a taxable gain or loss.
Due to the high cost of maintaining small accounts, the Fund reserves the
right to redeem accounts with balances of less than $750. Prior to such a
redemption, shareholders will be given 60 days' written notice to make an
additional purchase. However, no such redemption would be required by the 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
("CDSC"). This CDSC is imposed on any redemption the amount of which exceeds
the aggregate value at the time of redemption of (a) all shares in the account
purchased more than six years prior to the redemption, (b) all shares in the
account acquired through reinvestment of distributions, and (c) the increase,
if any, in the value 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 CDSC. That is,
each redemption will be assumed to have been made first from the exempt
amounts referred to in clauses (a), (b) and (c) above, and second through
liquidation of those shares in the account referred to in clause (c) on a
first-in-first-out basis. As described under "Distribution Plan," the CDSC
will be paid to the Principal Underwriter or the Fund. Any CDSC which is
required to be imposed on share redemptions will be made in accordance with
the following schedule:
YEAR OF REDEMPTION
AFTER PURCHASE CDSC
--------------------------------------------------------
First or Second 5%
Third 4%
Fourth 3%
Fifth 2%
Sixth 1%
Seventh and following 0%
In calculating the CDSC upon the redemption of Fund shares acquired in an
exchange for shares of a fund currently listed under "The Eaton Vance Exchange
Privilege," the CDSC schedule applicable to the shares at the time of purchase
will apply and the purchase of Fund shares acquired in the exchange is deemed
to have occurred at the time of the original purchase of the exchanged shares.
No CDSC will be imposed on Fund shares which have been sold to Eaton Vance or
its affiliates, or to their respective employees or clients. The CDSC will
also be waived for shares redeemed (1) pursuant to a Withdrawal Plan (see
"Eaton Vance Shareholder Services"), (2) as part of a required distribution
from a tax-sheltered retirement plan, or (3) following the death of all
beneficial owners of such shares, provided the redemption is requested within
one year of death (a death certificate and other applicable documents may be
required). In addition, shares acquired as a result of a merger or liquidation
of another Eaton Vance sponsored fund will have a CDSC imposed at the same
rate as would have been imposed in the prior fund.
THE FOLLOWING EXAMPLE ILLUSTRATES THE OPERATION OF THE CDSC. 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 CDSC. IF THE INVESTOR SHOULD
REDEEM $3,000 OF SHARES, A CHARGE WOULD BE IMPOSED ON $1,000 OF THE
REDEMPTION. THE RATE WOULD BE 5% BECAUSE THE REDEMPTION WAS MADE IN THE
SECOND YEAR AFTER THE PURCHASE WAS MADE AND THE CHARGE WOULD BE $50.
REPORTS TO SHAREHOLDERS
- ------------------------------------------------------------------------------
THE FUND WILL ISSUE TO ITS SHAREHOLDERS SEMI-ANNUAL AND ANNUAL REPORTS
CONTAINING FINANCIAL STATEMENTS. Financial statements included in annual
reports are audited by the Fund's independent 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 TRANSFER AGENT
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 Transfer Agent.
Any questions concerning a shareholder's account or services available may be
directed by telephone to EATON VANCE SHAREHOLDER SERVICES at 800-225-6265,
extension 2, or in writing to the Transfer Agent, First Data Investor Services
Group, P.O. Box 5123, Westborough, MA 01581-5123 (please provide the name of
the shareholder, the Fund and the account number).
THE FOLLOWING DISTRIBUTION OPTIONS WILL BE AVAILABLE TO ALL LIFETIME INVESTING
ACCOUNTS and may be changed as often as desired by written notice to the
Fund's dividend disbursing agent, First Data Investor Services Group, P.O. Box
5123, Westborough, MA 01581-5123. The currently effective option will appear
on each account statement.
Share Option -- Dividends and capital gains will be reinvested in additional
shares.
Income Option -- Dividends will be paid in cash, and capital gains will be
reinvested in additional shares.
Cash Option -- Dividends and capital gains will be paid in cash.
The Share Option will be assigned if no other option is specified.
Distributions, including those reinvested, will be reduced by any withholding
required under federal income tax laws.
If the Income Option or Cash Option has been selected, dividend and/or capital
gains distribution checks which are returned by the United States Postal
Service as not deliverable or which remain uncashed for six months or more
will be reinvested in the account in shares at the then current net asset
value. Furthermore, the distribution option on the account will be
automatically changed to the Share Option until such time as the shareholder
selects a different option.
DISTRIBUTION INVESTMENT OPTION. In addition to the distribution options set
forth above, dividends and/or capital gains may be invested in additional
shares of another Eaton Vance fund. Before selecting this option, a
shareholder should obtain a prospectus of the other Eaton Vance fund and
consider its objectives and policies carefully.
"STREET NAME" ACCOUNTS. If shares 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.
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 (including Class I shares of
any EV Marathon Limited Maturity fund) or Eaton Vance Money Market Fund, which
are subject to a CDSC. Shares of the Fund may also be exchanged for shares of
Eaton Vance Prime Rate Reserves, which are subject to an early withdrawal
charge, and shares of a money market fund sponsored by an Authorized Firm and
approved by the Principal Underwriter (an "Authorized Firm fund"). Any such
exchange will be made on the basis of the net asset value per share of each
fund at the time of the exchange. 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 Transfer Agent 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 Transfer Agent for additional information concerning the
exchange privilege. Applications and prospectuses of other funds are available
from Authorized Firms or the Principal Underwriter. The prospectus for each
fund describes its investment objectives and policies, and shareholders should
obtain a prospectus and consider these objectives and policies carefully
before requesting an exchange.
No CDSC is imposed on exchanges. For purposes of calculating the CDSC upon the
redemption of shares acquired in an exchange, the CDSC schedule applicable to
the shares at the time of purchase will apply and the purchase of shares
acquired in one or more exchanges is deemed to have occurred at the time of
the original purchase of the exchanged shares, except that time during which
shares are held in an Authorized Firm fund will not be credited toward
completion of the CDSC period. For the CDSC schedule applicable to the Eaton
Vance Marathon Group of Funds (except EV Marathon Strategic Income Fund, Eaton
Vance Prime Rate Reserves and Class I shares of any EV Marathon Limited
Maturity Fund), see "How to Redeem Fund Shares." The CDSC or early withdrawal
charge schedule applicable to EV Marathon Strategic Income Fund, Eaton Vance
Prime Rate Reserves 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 funds listed above 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 Transfer Agent provided that the
investor has not disclaimed in writing the use of the privilege. To effect
such exchanges, call the Transfer Agent at 800-262-1122, Monday through
Friday, 9:00 a.m. to 4:00 p.m. (Eastern Standard Time). Shares acquired by
telephone exchange must be registered in the same name(s) and with the same
address as the shares being exchanged. Neither the Fund, the Principal
Underwriter nor the Transfer Agent will be responsible for the authenticity of
exchange instructions received by telephone, provided that reasonable
procedures to confirm that instructions communicated are genuine have been
followed. Telephone instructions will be tape recorded. In times of drastic
economic or market changes, a telephone exchange may be difficult to
implement. An exchange may result in a taxable gain or loss.
EATON VANCE SHAREHOLDER SERVICES
- ------------------------------------------------------------------------------
THE 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 Transfer Agent,
First Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123
at any time -- whether or not distributions are reinvested. The name of the
shareholder, the Fund and 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 redeemed shares may reinvest,
with credit for any CDSC paid on the redeemed shares, any portion or all of
the redemption proceeds (plus that amount necessary to acquire a fractional
share to round off the purchase to the nearest full share) in shares of the
Fund, provided that the reinvestment is effected within 60 days after such
redemption, and the privilege has not been used more than once in the prior 12
months. Shares are sold to a reinvesting shareholder at the 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.
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.
Shareholders should consult with their tax advisors concerning the
applicability of state, local or other taxes to an investment in the Fund.
PERFORMANCE INFORMATION
- ------------------------------------------------------------------------------
FROM TIME TO TIME, THE FUND MAY ADVERTISE ITS AVERAGE ANNUAL TOTAL RETURN. The
Fund's average annual total return is determined by computing the average
annual percentage change in the value of $1,000 invested at the maximum public
offering price (net asset value) for specified periods, assuming reinvestment
of all distributions. The average annual total return calculation assumes a
complete redemption of the investment and the deduction of any CDSC at the end
of the period. The Fund may also publish annual and cumulative total return
figures from time to time.
The Fund may also publish total return figures which do not take into account
any CDSC which may be imposed upon redemptions at the end of the specified
period. Any performance figure which does not take into account the CDSC 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 of the Fund or the Portfolio
are allocated to Eaton Vance, the Fund's performance will be higher.
<PAGE>
[Logo]
EATON VANCE
================
Mutual Funds
- --------------------------------------------------------------------------------
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
89 South Street
Boston, MA 02111
TRANSFER AGENT
First Data Investor Services Group
P.O. Box 5123
Westborough, MA 01581-5123
(800) 262-1122
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand, L.L.P.
One Post Office Square
Boston, MA 02109
EV MARATHON
INFORMATION
AGE FUND
[Graphic Omitted]
PROSPECTUS
JANUARY 1, 1997
EV MARATHON INFORMATION AGE FUND
24 FEDERAL STREET
BOSTON, MA 02110 M-IAP
<PAGE>
PART A
INFORMATION REQUIRED IN A PROSPECTUS
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. THE FUND IS
A SERIES OF EATON VANCE GROWTH TRUST (THE "TRUST").
Shares of the Fund are not deposits or obligations of, or guaranteed or endorsed
by, any bank or other insured depository institution, and are not federally
insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board
or any other government agency. Shares of the Fund involve investment risks,
including fluctuations in value and the possible loss of some or all of the
principal investment.
This Prospectus is designed to provide you with information you should know
before investing in the Fund. Please retain this document for future
reference. A Statement of Additional Information for the Fund dated January 1,
1997, 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 Eaton Vance and 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.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
PAGE PAGE
<S> <C> <C>
Shareholder and Fund Expenses ................ 2 How to Buy Fund Shares ............................... 11
The Fund's Financial Highlights .............. 3 How to Redeem Fund Shares ............................ 13
The Fund's Investment Objective .............. 4 Reports to Shareholders .............................. 14
The Portfolio's Investments .................. 4 The Lifetime Investing Account/Distribution
Investment Policies and Risks ................ 5 Options ............................................ 14
Organization of the Fund and the Portfolio ... 7 The Eaton Vance Exchange Privilege ................... 15
Management of the Fund and the Portfolio ..... 8 Eaton Vance Shareholder Services ..................... 16
Distribution Plan ............................ 9 Distributions and Taxes .............................. 17
Valuing Fund Shares .......................... 10 Performance Information .............................. 18
- -------------------------------------------------------------------------------------------------------------------------
PROSPECTUS DATED JANUARY 1, 1997
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SHAREHOLDER AND FUND EXPENSES
- ---------------------------------------------------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES
-------------------------------------------------------------------------------------------------------
<S> <C>
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
ANNUAL FUND AND ALLOCATED PORTFOLIO OPERATING EXPENSES (as a
percentage of average daily net assets)
- ---------------------------------------------------------------------------------------------------------
Management Fees 1.25%
Rule 12b-1 Distribution (and Service) Fees 0.50
Other Expenses 1.12
----
Total Operating Expenses 2.87%
====
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 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: $75 $132 $192 $352
</TABLE>
NOTES:
The table and Example 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. Information
for the Fund is based on its expenses for the most recent fiscal year.
Management Fees includes 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.
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 the Fund and the
Portfolio see "The Fund's Financial Highlights," "Management of the Fund and the
Portfolio" and "How to Redeem Fund Shares." 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. See
"Distribution Plan."
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 12 months of
purchase. See "How to Buy Fund Shares" and "How to Redeem Fund Shares."
The Fund invests exclusively in the Portfolio. 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."
<PAGE>
THE FUND'S FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------------
The following information should be read in conjunction with the audited
financial statements included in the Fund's annual report to shareholders
which is incorporated by reference into the Statement of Additional
Information in reliance upon the report of Coopers & Lybrand, L.L.P.,
independent accountants, as experts in accounting and auditing. Further
information regarding the performance of the Fund is contained in its annual
report to shareholders which may be obtained without charge by contacting the
Principal Underwriter.
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD FROM THE START OF BUSINESS, SEPTEMBER 18, 1995, TO AUGUST 31, 1996:
<S> <C>
NET ASSET VALUE, beginning of period $10.000
------
INCOME FROM OPERATIONS:
Net investment loss $(0.127)
Net realized and unrealized gain on investments 1.187
------
Total income from operations $ 1.060
------
NET ASSET VALUE, end of period $11.060
=======
TOTAL RETURN(1) 10.60%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $12,003
Ratio of net expenses to average daily net assets(2) 2.87%+
Ratio of net investment loss to average daily net assets (1.22%)+
</TABLE>
+Annualized.
(1)Total investment return is calculated assuming a purchase at the net asset
value on the first day and a sale at the net asset value on the last day of
each period reported. Distributions, if any, are assumed to be reinvested at
the net asset value on the payable date. Total return is computed on a
non-annualized basis.
(2)Includes the Fund's share of the Portfolio's allocated expenses.
Note: The above per share information has been computed based on average shares
outstanding.
<PAGE>
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
- ------------------------------------------------------------------------------
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 exists. 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 Portfolio 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. As of the date of this Prospectus, the Advisers expect
to invest between approximately 40% and 60% 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; default by the
counterparty; imperfect correlation between a position and the desired hedge;
tax constraints on closing out positions; and portfolio management constraints
on securities subject to such transactions. The loss on derivative instruments
(other than purchased options) may substantially exceed the Portfolio's initial
investment in these instruments. In addition, the Portfolio may lose the entire
premium paid for purchased options that expire before they can be profitably
exercised by the Portfolio. The Portfolio incurs transaction costs in opening
and closing positions in derivative instruments. There can be no assurance that
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.
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.
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.
RESTRICTED SECURITIES. Securities that are not freely tradeable or which are
subject to restrictions on sale under the Securities Act of 1933 are considered
restricted. Such securities are illiquid and may be difficult to properly value.
The Portfolio's holdings of illiquid securities may not exceed 15% of its net
assets. Illiquid securities include securities legally restricted as to resale,
and securities eligible for resale pursuant to Rule 144A under the Securities
Act of 1933. Rule 144A securities may, however, be treated as liquid by the
Investment Adviser pursuant to procedures adopted by the Trustees, which require
consideration of factors such as trading activity, availability of market
quotations and number of dealers willing to purchase the security. Moreover,
liquid Rule 144A securities may increase the level of fund illiquidity to the
extent qualified institutional buyers become uninterested in purchasing such
securities.
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 generally 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.
ORGANIZATION OF THE FUND AND THE PORTFOLIO
- ------------------------------------------------------------------------------
The Fund is a diversified series of Eaton Vance Growth Trust, a business trust
established under Massachusetts law pursuant to a Declaration of Trust dated May
25, 1989. The Trustees of the Trust are responsible for the overall management
and supervision of its affairs. The Trust may issue an unlimited number of
shares of beneficial interest (no par value per share) in one or more series
(such as the Fund). 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.
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,
affords the potential for economies of scale for the Fund (at least when the
assets of the Portfolio exceed $500 million) and may over time result in lower
expenses for the Fund.
In addition to selling an interest to the Fund, the Portfolio may sell interests
to other affiliated and non-affiliated mutual funds or institutional investors.
Such investors will invest in the Portfolio on the same terms and conditions and
will pay a proportionate share of the Portfolio's expenses. However, the other
investors investing in the Portfolio are not required to sell their shares at
the same public offering price as the Fund due to variations in sales
commissions and other operating expenses. Therefore, these differences may
result in differences in returns experienced by investors in the various funds
that invest in the Portfolio. Such differences in returns are also present in
other mutual fund structures, including funds that have multiple classes of
shares. Information regarding other pooled investment entities or funds which
invest in the Portfolio may be obtained by contacting the Principal Underwriter,
24 Federal Street, Boston, MA 02110 (617) 482-8260.
Whenever the Fund as an investor in the Portfolio is requested to vote on
matters pertaining to the Portfolio (other than the termination of the
Portfolio's business, which may be determined by the Trustees of the Portfolio
without investor approval), the Fund will hold a meeting of Fund shareholders
and will vote its interest in the Portfolio for or against such matters
proportionately to the instructions to vote for or against such matters received
from Fund shareholders. The Fund shall vote shares for which it receives no
voting instructions in the same proportion as the shares for which it receives
voting instructions. Other investors in the Portfolio may alone or collectively
acquire sufficient voting interests in the Portfolio to control matters relating
to the operation of the Portfolio, which may require the Fund to withdraw its
investment in the Portfolio or take other appropriate action. Any such
withdrawal could result in a distribution "in kind" of portfolio securities (as
opposed to a cash distribution from the Portfolio). If securities are
distributed, the Fund could incur brokerage, tax or other charges in converting
the securities to cash. In addition, the distribution in kind may result in a
less diversified portfolio of investments or adversely affect the liquidity of
the Fund. Notwithstanding the above, there are other means for meeting
shareholder redemption requests, such as borrowing.
The Fund may withdraw (completely redeem) all its assets from the Portfolio at
any time if the Board of Trustees of the Trust determines that it is in the best
interest of the Fund to do so. In the event the Fund withdraws all of its assets
from the Portfolio, or the Board of Trustees of the Trust determines that the
investment objective of the Portfolio is no longer consistent with the
investment objective of the Fund, such Trustees would consider what action might
be taken, including investing the assets of the Fund in another pooled
investment entity or retaining an investment adviser to manage the Fund's assets
in accordance with its investment objective. The Fund's investment performance
may be affected by a withdrawal of all its assets from the Portfolio.
MANAGEMENT OF THE FUND AND THE PORTFOLIO
- ------------------------------------------------------------------------------
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 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 over $16 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 which through its subsidiaries and affiliates engages primarily
in investment management, administration and marketing activities. The Principal
Underwriter is a wholly-owned subsidiary of Eaton Vance. Eaton Vance Corp. owns
24% 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).
While the Portfolio is a New York trust, Lloyd George, together with Mr. Lloyd
George and Edward K.Y. Chen (a Trustee of the Portfolio), are not residents of
the United States and substantially all of their respective assets may be
located outside of the United States. It may be difficult for investors to
effect service of process within the United States upon the individuals
identified above, or to realize judgments of courts of the United States
predicated upon civil liabilities of Lloyd George and such individuals under the
federal securities laws of the United States. The Portfolio has been advised
that there is substantial doubt as to the enforceability in the countries in
which Lloyd George and such individuals reside of such civil remedies and
criminal penalties as are afforded by the federal securities laws of the United
States.
Acting under the general supervision of the Board of Trustees of the Portfolio,
the Advisers manage the investment of the Portfolio's assets. The Advisers also
furnish for the use of the Portfolio office space and all necessary office
facilities, equipment and personnel for servicing the investments of the
Portfolio. 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. As of August 31, 1996, the Portfolio had net assets of $42,703,385. For
the period from the start of business, September 18, 1995, to August 31, 1996,
the Portfolio paid the Advisers advisory fees equivalent to 0.75% (annualized)
of the Portfolio's average daily net assets for such period, which amount was
divided equally between them.
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. The Fund, the Portfolio and the Advisers have adopted Codes of
Ethics relating to personal securities transactions. The Codes permit Eaton
Vance personnel to invest in securities (including securities that may be
purchased or held by the Portfolio) for their own accounts, subject to certain
reporting and other restrictions and procedures contained in such Codes.
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. As of August 31, 1996, the Fund had net assets of
$12,002,567. For the period from the Fund's start of business, September 18,
1995, to August 31, 1996, Eaton Vance earned management fees equivalent to 0.25%
(annualized) of the Fund's average daily net assets for such period. In
addition, under its administration agreement with the Portfolio, Eaton Vance
receives a monthly 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. For the period from the
Portfolio's start of business, September 18, 1995, to August 31, 1996, Eaton
Vance earned administration fees equivalent to 0.25% (annualized) of the
Portfolio's average daily net assets for such period.
The 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 the Principal Underwriter under
the distribution agreement.
DISTRIBUTION PLAN
- ------------------------------------------------------------------------------
IN ADDITION TO MANAGEMENT FEES AND OTHER EXPENSES, THE FUND PAYS FOR CERTAIN
EXPENSES PURSUANT TO A DISTRIBUTION PLAN (THE "PLAN") DESIGNED TO MEET THE
REQUIREMENTS OF RULE 12B-1 UNDER THE 1940 ACT. The Plan provides that the Fund
will pay a monthly distribution fee to the Principal Underwriter in an amount
equal to the aggregate of (a) .50% of that portion of the Fund's average daily
net assets for any fiscal year which is attributable to shares of the Fund which
have remained outstanding for less than one year and (b) .25% of that portion of
the Fund's average daily net assets for any fiscal year which is attributable to
shares of the Fund which have remained outstanding for more than one year.
Aggregate payments to the Principal Underwriter under the Plan are limited to
those permissible pursuant to a rule of the National Association of Securities
Dealers, Inc. For the period from the start of business, September 18, 1995, to
August 31, 1996, the Fund paid distribution fees under the Plan to the Principal
Underwriter representing 0.50% of the Fund's average daily net assets.
The Plan also provides that the Fund will pay a quarterly service fee to the
Principal Underwriter in an amount equal on an annual basis to .25% of that
portion of the Fund's average daily net assets for any fiscal year which is
attributable to shares of the Fund which have remained outstanding for more than
one year; from such service fee the Principal Underwriter expects to pay a
quarterly service fee to 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 this provision of 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. 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 began making service fee payments during the quarter ending
September 30, 1996.
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 share and the public offering price based
thereon. It is the Authorized Firms' responsibility to transmit orders promptly
to the Principal Underwriter.
The Portfolio's net asset value is also determined as of the close of regular
trading on the Exchange by IBT 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.
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. An Authorized Firm may charge its customers
a fee in connection with transactions executed by that Firm. 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 OFFERING PRICE AMOUNT INVESTED OFFERING PRICE
Less than $100,000 .. 4.75% 4.99% 4.00%
$100,000 but less
than $250,000 ....... 3.75 3.90 3.15
$250,000 but less
than $500,000 ....... 2.75 2.83 2.30
$500,000 but less
than $1,000,000 ..... 2.00 2.04 1.70
$1,000,000 or more .. 0.00* 0.00* See Below**
*No sales charge is payable at the time of purchase on investments of $1
million or more. A contingent deferred sales charge ("CDSC") of 1% will be
imposed on such investments in the event of certain redemptions within 12
months of purchase. Such purchases made before January 1, 1997 will be subject
to a CDSC of 0.50% in the event of such redemptions.
**A commission on sales of $1 million or more will be paid as follows: 1.00% on
amounts of $1 million or more but less than $3 million, plus 0.50% on amounts
from $3 million but less than $5 million, plus 0.25% on amounts from $5
million or more. Purchases of $1 million or more will be aggregated over a
12-month period for purposes of determining the commission to be paid.
The Principal Underwriter may at times allow discounts up to the full sales
charge. During periods when the discount includes the full sales charge,
Authorized Firms may be deemed to be underwriters as that term is defined in the
Securities Act of 1933. The Principal Underwriter may, from time to time, at its
own expense, provide additional incentives to Authorized Firms which employ
registered representatives who sell Fund shares and/or shares of other funds
distributed by the Principal Underwriter. In some instances, such additional
incentives may be offered only to certain Authorized Firms whose representatives
sell or are expected to sell significant amounts of shares. In addition, the
Principal Underwriter may from time to time increase or decrease the 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: First
Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123. The
$1,000 minimum initial investment is waived for Bank Automated Investing
accounts, which may be established with an investment of $50 or more. See
"Eaton Vance Shareholder Services."
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 clients
and current and retired officers and employees of Eaton Vance, its affiliates
and other investment advisers of Eaton Vance sponsored funds; to registered
representatives and employees of Authorized Firms; to bank employees who refer
customers to registered representatives of Authorized Firms; to officers and
employees of IBT and the Transfer Agent; and to such persons' spouses and
children under the age of 21 and their beneficial accounts. 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) to
investment advisors, financial planners or other intermediaries who place trades
for their own accounts or the accounts of their clients and who charge a
management, consulting or other fee for their services; clients of such
investment advisors, financial planners or other intermediaries who place trades
for their own accounts if the accounts are linked to the master account of such
investment advisor, financial planner or other intermediary on the books and
records of the broker or agent; and retirement and deferred compensation plans
and trusts used to fund those plans, including, but not limited to, those
defined in Section 401(a), 403(b) or 457 of the Internal Revenue Code of 1986,
as amended (the "Code") ("Eligible Plans") and "rabbi trusts." 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.
No sales charge is payable at the time of purchase where the amount invested
represents redemption proceeds from a mutual fund unaffiliated with Eaton Vance
if the redemption occurred no more than 60 days prior to the purchase of Fund
shares and the redeemed shares were subject to a sales charge. A CDSC of 0.50%
will be imposed on such investments in the event of certain redemptions within
12 months of purchase and the Authorized Firm will be paid a commission on such
sales of 0.50% of the amount invested.
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 determined above. The minimum
value of securities (or securities and cash) accepted for deposit is $5,000.
Securities accepted will be sold on the day of their receipt or as soon
thereafter as possible. The number of Fund shares to be issued in exchange for
securities will be the aggregate proceeds from the sale of such securities,
divided by the applicable public offering price 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, must contact Eaton Vance to determine whether
the securities are acceptable before forwarding such securities. Eaton Vance
reserves the right to reject any securities. Exchanging securities for 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.
STATEMENT OF INTENTION AND ESCROW AGREEMENT. If the investor, on an application,
makes a Statement of Intention to invest a specified amount over a
thirteen-month period, 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 the Principal Underwriter any
difference between the sales charge on the amount specified and on the amount
actually purchased. If the investor does not within 20 days after written
request by the Principal Underwriter or the Authorized Firm pay such difference
in sales charge, the escrow agent will redeem an appropriate number of the
escrowed shares in order to realize such difference. Full shares remaining after
any such redemption together with any excess cash proceeds of the shares so
redeemed will be delivered to the investor or to the investor's order by the
escrow agent.
If total purchases made under this Statement are large enough to qualify for a
lower sales charge than that applicable to the amount specified, all
transactions will be computed at the expiration date of this Statement to give
effect to the lower charge. Any difference in sales charge will be refunded to
the investor in cash, or applied to the purchase of additional shares at the
lower charge if specified by the investor. This refund will be made by the
Authorized Firm and by the Principal Underwriter. If at the time of the
recomputation 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 investor's account.
IF YOU DON'T HAVE AN AUTHORIZED FIRM, EATON VANCE CAN RECOMMEND ONE.
HOW TO REDEEM FUND SHARES
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A SHAREHOLDER MAY REDEEM FUND SHARES IN ONE OF THREE WAYS -- BY MAIL, BY
TELEPHONE OR THROUGH AN AUTHORIZED FIRM. The redemption price will be based on
the net asset value per Fund share next computed after a redemption request is
received in the proper form as described below.
REDEMPTION BY MAIL: Shares may be redeemed by delivering to the Transfer Agent,
First Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123,
during its business hours a written request for redemption in good order, plus
any share certificates with executed stock powers. Good order means that all
relevant documents must be endorsed by the record owner(s) exactly as the shares
are registered and the signature(s) must be guaranteed by a member of either the
Securities Transfer Association's STAMP program or the New York Stock Exchange's
Medallion Signature Program, or certain banks, savings and loan institutions,
credit unions, securities dealers, securities exchanges, clearing agencies and
registered securities associations as required by a regulation of the Securities
and Exchange Commission and acceptable to the Transfer Agent. In addition, in
some cases, good order may require the furnishing of additional documents such
as where shares are registered in the name of a corporation, partnership or
fiduciary.
REDEMPTION BY TELEPHONE: Shares may be redeemed by telephone provided the
investor has not disclaimed in writing the use of the privilege. Such
redemptions can be effected by calling the Transfer Agent at 800-262-1122,
Monday through Friday, 9:00 a.m. to 4:00 p.m. (Eastern Standard Time). The
proceeds of a telephone redemption may be no greater than the maximum amount
established by the Principal Underwriter (currently $50,000) and may be mailed
only to the account address of record. Shares held by corporations, trusts or
certain other entities, or subject to fiduciary arrangements, may not be
redeemed by telephone. Neither the Fund, the Principal Underwriter nor the
Transfer Agent will be responsible for the authenticity of redemption
instructions received by telephone, provided that reasonable procedures to
confirm that instructions communicated by telephone are genuine have been
followed. Telephone instructions will be tape recorded. In times of drastic
economic or market changes, a telephone redemption may be difficult to
implement.
REDEMPTION THROUGH AN AUTHORIZED FIRM: To sell shares at their net asset value
through an Authorized Firm (a repurchase), a shareholder can place a repurchase
order with the Authorized Firm, which may charge a fee. The value of such shares
is based upon the net asset value calculated after the Principal Underwriter, as
the Fund's agent, receives the order. It is the Authorized Firm's responsibility
to transmit promptly repurchase orders to the Principal Underwriter. Throughout
this Prospectus, the word "redemption" is generally meant to include a
repurchase.
Within seven days after receipt of a redemption request in good order by the
Transfer Agent, the 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.
If shares were recently purchased, the proceeds of a redemption will not be sent
until the check (including a certified or cashier's check) received for the
shares purchased has cleared. Payment for shares tendered for redemption may be
delayed up to 15 days from the purchase date when the purchase check has not yet
cleared. Redemptions may result in a taxable gain or loss.
Due to the high cost of maintaining small accounts, the Fund reserves the right
to redeem accounts with balances of less than $750. Prior to such a redemption,
shareholders will be given 60 days' written notice to make an additional
purchase. However, no such redemption would be required by the Fund if the cause
of the low account balance was a reduction in the net asset value of Fund
shares.
If shares have been purchased at net asset value with no initial sale charge by
virtue of the purchase having been in the amount of $1 million or more and are
redeemed within 12 months of purchase, a CDSC of 1% will be imposed on such
redemption. (Such purchases made before January 1, 1997 will be subject to a
CDSC of 0.50% in the event of certain redemptions made within 12 months of
purchase.) If shares have been purchased at net asset value because the amount
invested represents redemption proceeds from a mutual fund unaffiliated with
Eaton Vance (as described under "How to Buy Fund Shares") and are redeemed
within 12 months of purchase, a CDSC of 0.50% will be imposed on such
redemption. The CDSC will be imposed on an amount equal to the lesser of the
current market value or the original purchase price of the shares redeemed.
Accordingly, no CDSC will be imposed on increases in account value above the
initial purchase price, including any distributions that have been reinvested in
additional shares. In determining whether a CDSC is applicable to a redemption,
the calculation will be made in a manner that results in the lowest possible
rate being charged. It will be assumed that redemptions are made first from any
shares in the shareholder's account that are not subject to a CDSC. The CDSC
will be retained by the Principal Underwriter.
The CDSC is waived for redemptions involving certain liquidation, merger or
acquisition transactions involving other investment companies. If a shareholder
reinvests redemption proceeds within a 60-day period and in accordance with the
conditions set forth under "Eaton Vance Shareholder Services -- Reinvestment
Privilege," the shareholder's account will be credited with the amount of any
CDSC paid on such redeemed shares.
REPORTS TO SHAREHOLDERS
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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. Consistent
with applicable law, duplicate mailings of shareholder reports and certain other
Fund information to shareholders residing at the same address may be eliminated.
THE LIFETIME INVESTING ACCOUNT/DISTRIBUTION OPTIONS
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AFTER AN INVESTOR MAKES AN INITIAL PURCHASE OF FUND SHARES, THE TRANSFER AGENT
WILL SET UP A LIFETIME INVESTING ACCOUNT FOR THE INVESTOR ON THE 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
Transfer Agent.
Any questions concerning a shareholder's account or services available may be
directed by telephone to EATON VANCE SHAREHOLDER SERVICES at 800-225-6265,
extension 2, or in writing to the Transfer Agent, First Data Investor Services
Group, P.O. Box 5123, Westborough, MA 01581-5123 (please provide the name of the
shareholder, the Fund and the account number).
THE FOLLOWING DISTRIBUTION OPTIONS WILL BE AVAILABLE TO ALL LIFETIME INVESTING
ACCOUNTS and may be changed as often as desired by written notice to the Fund's
dividend disbursing agent, First Data Investor Services Group, P.O. Box 5123,
Westborough, MA 01581-5123. The currently effective option will appear on each
account statement.
Share Option -- Dividends and capital gains will be reinvested in additional
shares.
Income Option -- Dividends will be paid in cash, and capital gains will be
reinvested in additional shares.
Cash Option -- Dividends and capital gains will be paid in cash.
The Share Option will be assigned if no other option is specified.
Distributions, including those reinvested, will be reduced by any withholding
required under federal income tax laws.
If the Income Option or Cash Option has been selected, dividend and/or capital
gains distribution checks which are returned by the United States Postal Service
as not deliverable or which remain uncashed for six months or more will be
reinvested in the account in shares at the then current net asset value.
Furthermore, the distribution option on the account will be automatically
changed to the Share Option until such time as the shareholder selects a
different option.
DISTRIBUTION INVESTMENT OPTION. In addition to the distribution options set
forth above, dividends and/or capital gains may be invested in additional shares
of another Eaton Vance fund. Before selecting this option, a shareholder should
obtain a prospectus of the other Eaton Vance fund and consider its objectives
and policies carefully.
"STREET NAME" ACCOUNTS. If shares 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.
THE EATON VANCE EXCHANGE PRIVILEGE
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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 (plus, in the case of
an exchange made within six months of the date of purchase of shares subject to
an initial sales charge, an amount equal to the difference, if any, between the
sales charge previously paid on the shares being exchanged and the sales charge
payable on the shares being acquired). Exchange offers are available only in
states where shares of the fund being acquired may be legally sold.
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 Transfer Agent 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 Transfer Agent for additional information concerning the exchange
privilege. Applications and prospectuses of other funds are available from
Authorized Firms or the Principal Underwriter. The prospectus for each fund
describes its investment objectives and policies, and shareholders should obtain
a prospectus and consider these objectives and policies carefully before
requesting an exchange.
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 Transfer Agent provided that the
investor has not disclaimed in writing the use of the privilege. To effect such
exchanges, call the Transfer Agent at 800-262-1122, Monday through Friday, 9:00
a.m. to 4:00 p.m. (Eastern Standard Time). Shares acquired by telephone exchange
must be registered in the same name(s) and with the same address as the shares
being exchanged. Neither the Fund, the Principal Underwriter nor the Transfer
Agent will be responsible for the authenticity of exchange instructions received
by telephone, provided that reasonable procedures to confirm that instructions
communicated are genuine have been followed. Telephone instructions will be tape
recorded. In times of drastic economic or market changes, a telephone exchange
may be difficult to implement. An exchange may result in a taxable gain or loss.
EATON VANCE SHAREHOLDER SERVICES
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THE FUND OFFERS THE FOLLOWING SERVICES, WHICH ARE VOLUNTARY, INVOLVE NO EXTRA
CHARGE, AND MAY BE CHANGED OR DISCONTINUED WITHOUT PENALTY AT ANY TIME. Full
information on each of the services described below and an application, where
required, are available from Authorized Firms or the Principal Underwriter. The
cost of administering such services for the benefit of shareholders who
participate in them is borne by the Fund as an expense to all shareholders.
INVEST-BY-MAIL -- FOR PERIODIC SHARE ACCUMULATION: Once the $1,000 minimum
investment has been made, checks of $50 or more payable to the order of EV
Traditional Information Age Fund may be mailed directly to the Transfer Agent,
P.O. Box 5123, Westborough, MA 01581-5123 at any time -- whether or not
distributions are reinvested. The name of the shareholder, the Fund and 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 "How to Buy Fund Shares --
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 listed 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 redeemed shares may reinvest any
portion or all of the redemption proceeds (plus that amount necessary to acquire
a fractional share to round off the purchase to the nearest full share) in
shares of the Fund, or, provided that the shares 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 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 the shares of
which are to be purchased (or by such fund's transfer agent). The privilege is
also available to shareholders of the Funds listed under "The Eaton Vance
Exchange Privilege" who wish to reinvest such redemption 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. 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 certain tax-sheltered retirement plans. Detailed information
concerning these plans, including certain exceptions to minimum investment
requirements, and copies of the plans are available from the Principal
Underwriter. This information should be read carefully and consultation with an
attorney or tax adviser may be advisable. The information sets forth the service
fee charged for retirement plans and describes the federal income tax
consequences of establishing a plan. Participant accounting services (including
trust fund reconciliation services) will be offered only through third party
recordkeepers and not by the Principal Underwriter. Under all plans, dividends
and distributions will be automatically reinvested in additional shares.
DISTRIBUTIONS AND TAXES
- ------------------------------------------------------------------------------
DISTRIBUTIONS. 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 a sales charge
is reduced or eliminated in a subsequent acquisition of shares of the Fund or of
another fund pursuant to the Fund's reinvestment or exchange privilege. Any
disregarded 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.
Shareholders should consult with their tax advisors concerning the applicability
of state, local or other taxes to an investment in the Fund.
PERFORMANCE INFORMATION
- ------------------------------------------------------------------------------
FROM TIME TO TIME, THE FUND MAY ADVERTISE ITS AVERAGE ANNUAL TOTAL RETURN. The
Fund's average annual total return is determined by computing the average annual
percentage change in value of $1,000 invested at the maximum public offering
price (which includes the maximum sales charge) for specified periods, assuming
reinvestment of all distributions. The Fund may also publish annual and
cumulative total return figures from time to time. The Fund may use 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 lower if a sales charge
were taken into account. The Fund's performance may be compared in publications
to the performance of various indices and investments for which reliable data is
available, and to averages, performance rankings, or other information prepared
by recognized mutual fund statistical services.
Investors should note that 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 of the Fund or the Portfolio are allocated to Eaton
Vance, the Fund's performance will be higher.
<PAGE>
[Logo]
EATON VANCE
================
Mutual Funds
- --------------------------------------------------------------------------------
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
89 South Street
Boston, MA 02111
TRANSFER AGENT
First Data Investor Services Group
P.O. Box 5123,
Westborough, MA 01581-5123
(800) 262-1122
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand, L.L.P.
One Post Office Square
Boston, MA 02109
EV TRADITIONAL
INFORMATION
AGE FUND
[Graphic Omitted]
PROSPECTUS
JANUARY 1, 1997
EV TRADITIONAL INFORMATION AGE FUND
24 FEDERAL STREET
BOSTON, MA 02110
T-IAP
<PAGE>
PART A
INFORMATION REQUIRED IN A PROSPECTUS
EV MARATHON
GOLD & NATURAL RESOURCES FUND
- ------------------------------------------------------------------------------
EV MARATHON GOLD & NATURAL RESOURCES FUND (THE "FUND") IS A MUTUAL FUND SEEKING
CAPITAL APPRECIATION AND PROTECTION OF PURCHASING POWER THROUGH NATURAL RESOURCE
RELATED INVESTMENTS. THE FUND IS A SERIES OF EATON VANCE GROWTH TRUST (THE
"TRUST").
Shares of the Fund are not deposits or obligations of, or guaranteed or endorsed
by, any bank or other insured depository institution, and are not federally
insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board
or any other government agency. Shares of the Fund involve investment risks,
including fluctuations in value and the possible loss of some or all of the
principal investment.
This Prospectus is designed to provide you with information you should know
before investing. Please retain this document for future reference. A Statement
of Additional Information dated January 1, 1997 for the Fund, as supplemented
from time to time, has been filed with the Securities and Exchange Commission
and is incorporated herein by reference. This Statement of Additional
Information is available without charge from the Fund's principal underwriter,
Eaton Vance Distributors, Inc. (the "Principal Underwriter") 24 Federal Street,
Boston, MA 02110 (telephone (800) 225-6265). The Fund's investment adviser is
Eaton Vance Management (the "Investment Adviser") which is located at the same
address.
- ------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
PAGE PAGE
<S> <C> <C>
Shareholder and Fund Expenses ................ 2 How to Buy Fund Shares ............................... 10
The Fund's Financial Highlights .............. 3 How to Redeem Fund Shares ............................ 11
The Fund's Investment Objective .............. 4 Reports to Shareholders .............................. 12
Investment Policies and Risks ................ 4 The Lifetime Investing Account/Distribution Options .. 12
Organization of the Fund ..................... 7 The Eaton Vance Exchange Privilege ................... 13
Management of the Fund ....................... 7 Eaton Vance Shareholder Services ..................... 14
Distribution Plan ............................ 8 Distributions and Taxes .............................. 15
Valuing Fund Shares .......................... 9 Performance Information .............................. 16
- -------------------------------------------------------------------------------------------------------------------------
PROSPECTUS DATED JANUARY 1, 1997
</TABLE>
<PAGE>
SHAREHOLDER AND FUND EXPENSES
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES
----------------------------------------------------------------------------------------------------------
<S> <C>
Sales Charges Imposed on Purchases of Shares None
Sales Charges Imposed on Reinvested Distributions None
Fees to Exchange Shares None
Range of Declining Contingent Deferred Sales Charges Imposed on Redemption
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 OPERATING EXPENSES (as a percentage of average daily net assets)
---------------------------------------------------------------------------------------------------------
Investment Adviser Fee 0.75%
Rule 12b-1 Distribution (and Service) Fees 0.92%
Other Expenses 0.82%
----
Total Operating Expenses 2.49%
====
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <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 $153 $283
An investor would pay the following expenses on the same
investment, assuming (a) 5% annual return and (b) no redemptions: $25 $ 78 $133 $283
</TABLE>
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. Information for the Fund is
based on its expenses for the most recent fiscal year.
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 annual return will
vary. For further information regarding the expenses of the Fund, see "The
Fund's Financial Highlights", "Management of the Fund" and "How to Redeem Fund
Shares." 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. See "Distribution Plan."
No contingent deferred sales charge is imposed on (a) shares purchased more than
six years prior to redemption, (b) shares acquired through the reinvestment of
dividends and distributions or (c) any appreciation in value of other shares in
the account (see "How to Redeem Fund Shares"), and no such charge is imposed on
exchanges of Fund shares for shares of one or more other funds listed under "The
Eaton Vance Exchange Privilege."
<PAGE>
THE FUND'S FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------------
The following information should be read in conjunction with the audited
financial statements included in the Fund's annual report to shareholders
which is incorporated by reference into the Statement of Additional
Information in reliance upon the report of Deloitte & Touche LLP, independent
certified public accountants, as experts in accounting and auditing. Further
information regarding the performance of the Fund is contained in its annual
report to shareholders which may be obtained without charge by contacting the
Principal Underwriter.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED AUGUST 31, YEAR ENDED SEPTEMBER 30,
--------------------- -----------------------------------------------------------
1996 1995++ 1994 1993 1992 1991 1990 1989 1988**
---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, beginning of year .............. $16.420 $14.890 $13.240 $11.850 $11.140 $12.140 $13.460 $11.420 $10.000+
------- ------- ------- ------- ------- ------- ------- ------- -------
INCOME FROM OPERATIONS:
Net investment income (loss) .................. $(0.261) (0.100)(3) (0.050) (0.090) (0.083) $ 0.020 $ 0.069 $ 0.060 $ 0.134
Net realized and unrealized gain
(loss) on investments ....................... 6.371 1.630 (3) 2.650 1.480 1.103 (0.570) (0.009) 2.480 1.406
------- ------- ------- ------- ------- ------- ------- ------- -------
Total income (loss) from investment
operations ................................ $ 6.110 $ 1.530 $ 2.600 $ 1.390 $ 1.020 $(0.550) $ 0.060 $ 2.540 $ 1.540
------- ------- ------- ------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
From net investment income .................... -- -- -- -- -- (0.020) (0.069) (0.074) (0.120)
In excess of net investment income(1)(4) ...... -- -- (0.020) -- (0.250) (0.110) (0.091) (0.146) --
From net realized gain on investments ......... (0.950) -- -- -- (0.060) (0.320) (1.220) (0.280) --
In excess of realized gain on investments ..... -- -- (0.930) -- -- -- -- -- --
------- ------- ------- ------- ------- ------- ------- ------- -------
Total distributions $(0.950) -- (0.950) -- (0.310) (0.450) (1.380) (0.500) (0.120)
------- ------- ------- ------- ------- ------- ------- ------- -------
NET ASSET VALUE, end of year .................... $21.580 $16.420 $14.890 $13.240 $11.850 $11.140 $12.140 $13.460 $11.420
======= ======= ======= ======= ======= ======= ======= ======= =======
TOTAL RETURN(2) ................................. 39.69% 10.28% 20.47% 11.73% 9.44% (4.36)% 0.01% 22.96% 15.39%
RATIOS/SUPPLEMENTAL DATA*:
Net assets, end of year (000's omitted) ....... $20,129 $15,259 $13,055 $ 5,792 $ 3,775 $ 4,042 $ 4,391 $ 2,999 $ 2,424
======= ======= ======= ======= ======= ======= ======= ======= =======
Ratio of net expenses to average daily net
assets(6) ................................... 2.49% 2.43%+ 2.64% 3.15% 3.26% 3.29% 2.50% 1.62% 0.99%+
Ratio of net expenses to average daily net
assets after custodian fee reduction(6) ..... 2.47% -- -- -- -- -- -- -- --
Ratio of net investment income (loss) to
average daily net assets .................... (1.60%) (0.74)%+ (0.96)% (0.92)% (0.67)% 0.17% 0.33% 0.45% 0.83%+
PORTFOLIO TURNOVER ..... 86% 49% 17% 57% 32% 27% 35% 53% 25%
AVERAGE COMMISSION RATE PAID(5) ................. $0.0382 -- -- -- -- -- -- -- --
*For the six years ended September 30, 1993, the operating expenses of the Fund reflect a reduction of the investment adviser fee,
an allocation of expenses to the Investment Adviser, or both. Had such actions not been taken, net investment loss per share and
the ratios would have been as follows:
NET INVESTMENT LOSS PER SHARE ................... $(0.210) $(0.240) $(0.110) $(0.300) $(0.600) $(0.980)
======= ======= ======= ======= ======= ========
RATIOS (As a percentage of average daily net assets):
Expenses ..................................... 3.90% 4.65% 4.42% 5.23% 6.87% 7.90%+
Net investment loss .......................... (1.67)% (2.06)% (0.96)% (2.40)% (4.80)% (6.08)%+
**For the period from the start of business, October 21, 1987, to September 30, 1988.
+Computed on an annualized basis.
++For the eleven months ended August 31, 1995.
(1)Distributions from paid-in capital for the years ended September 30, 1992 and for the years prior thereto have been restated to
conform with the treatment under current financial reporting standards.
(2)Total return is calculated assuming a purchase at the net asset value on the first day and a sale at the net asset value on the
last day of each period. Distributions, if any, are assumed to be reinvested at the net asset value on the reinvestment date.
(3)Per share data is based on average shares outstanding.
(4)The Fund has followed the Statement of Position (SOP) 93-2: Determination, Disclosure and Financial Statement Presentation of
Income, Capital Gain, and Return of Capital Distribution by Investment Companies. The SOP requires that differences in the
recognition or classification of income between the financial statements and tax earnings and profits that result in temporary
over-distributions for financial statement purposes, are classified as distributions in excess of net investment income or
accumulated net realized gains.
(5)Average commission rate paid is computed by dividing the total dollar amount of commissions paid during the fiscal year by the
total number of shares purchased and sold during the fiscal year for which commissions were charged. For fiscal years beginning
on or after September 1, 1995, a Fund is required to disclose its average commission rate per share for security trades on
which commissions are charged.
(6)The expense ratios for the year ended August 31, 1996 have been adjusted to reflect a change in reporting requirements. The new
reporting guidelines require the Fund to increase its expense ratio by the effect of any expense offset arrangements with its
service providers. The expense ratios for each of the periods ended on or before August 31, 1995 have not been adjusted to
reflect this change.
</TABLE>
<PAGE>
THE FUND'S INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
THE FUND'S INVESTMENT OBJECTIVE IS CAPITAL APPRECIATION AND PROTECTION OF THE
PURCHASING POWER OF THE SHAREHOLDER'S CAPITAL. The Fund will concentrate its
assets in natural resource related investments. There can be no assurance that
the Fund will achieve its investment objective.
The Fund will be subject to the volatile markets in which natural resource
investments are traded. Numerous worldwide economic, financial and political
factors can affect the Fund's holdings. The Fund is intended for long-term
investors who can withstand share price fluctuations.
Except as otherwise indicated in this Prospectus, the investment objective and
policies of the Fund may be changed by the Trustees of the Trust without
shareholder approval, although the Trustees intend to submit material changes in
the investment objective to shareholders for their approval.
INVESTMENT POLICIES AND RISKS
- ------------------------------------------------------------------------------
The Fund seeks to achieve its investment objective through a portfolio of
domestic and foreign natural resource related investments. Under normal
investment conditions, the Fund will invest primarily in common stocks, but it
may also hold convertible bonds, convertible preferred stocks, warrants,
preferred stocks and debt securities if the Fund's investment adviser, Eaton
Vance Management ("Eaton Vance"), believes such investments would help to
achieve the Fund's investment objective. The Fund may also invest in debt,
preferred or convertible securities, the value of which is related in part to
the market value of some natural resource asset ("asset-related securities").
The Fund under normal circumstances will maintain at least 65% of its total
assets in natural resource related investments or in asset-related securities.
In making investments for the Fund, Eaton Vance will seek to identify companies
or asset-related securities it believes are attractively priced relative to the
intrinsic value of the underlying natural resource assets, revenues or profits
or are especially well positioned to benefit during particular periods of
investment or inflationary cycles. The Fund may also from time to time invest to
a limited extent in natural resource-related direct placement securities and
venture capital companies and in gold or silver bullion, strategic metals, and
gold or silver coins.
During temporary defensive periods, the Fund may invest in U.S. Government
securities and money market securities, including repurchase agreements, or hold
a portion of its assets in cash or cash equivalents. The Fund may also hold a
portion of its assets in cash or money market instruments, including repurchase
agreements and cash equivalents, for liquidity purposes. In addition, under
certain circumstances, the Fund may invest a majority of its assets in
gold-related investments. See below.
NATURAL RESOURCE RELATED INVESTMENTS. These investments include securities
issued by companies engaged in exploring for, developing, processing,
fabricating, producing, distributing, dealing in or owning natural resources,
companies engaged in the creation or development of technologies for the
production or use of natural resources, and companies engaged in the furnishing
of technology, equipment, supplies or services to the natural resource
investment sector. Eaton Vance currently deems a company to be in the natural
resource investment sector if (a) at least 50% of the non-current assets,
capitalization, gross revenues or operating profit of the company in the most
recent or current fiscal year are involved in or result from (whether directly
or indirectly through affiliates) any of the foregoing activities or (b) in
Eaton Vance's judgment the company's natural resource assets, revenues or profit
are of such magnitude, when compared with the total non-current assets,
capitalization, gross revenues or operating profit of the company, that
favorable changes in the value of such assets or level of its natural resource
revenues or profit could favorably affect the market value of the equity
securities of the company.
Natural resources include substances, materials and energy derived from natural
sources which have economic value. Examples of natural resources include
precious metals (e.g., gold, silver and platinum), ferrous and nonferrous metals
(e.g., iron, aluminum and copper), strategic metals (e.g., titanium, chromium,
vanadium and niobium), energy resources (coal, oil, natural gas, oil shale and
uranium), timberland, undeveloped real property and agricultural and other
commodities.
Eaton Vance will seek to identify securities of companies in this investment
sector which, in its judgment, are undervalued relative to the value of their
natural resource assets, revenues or profits in light of current and anticipated
economic or financial conditions. Eaton Vance believes that the market value of
securities of companies that have different kinds of natural resource assets,
revenues or profits may move relatively independently of one another during
different stages of investment and inflationary cycles. Eaton Vance's flexible
investment approach enables it to change the Fund's investment emphasis to
various subsectors within the large natural resource investment sector depending
upon Eaton Vance's outlook as to developments and trends which may affect the
value of and prospects for different types of natural resource related
investments. Emphasis on underperforming sectors can result in substantial
losses.
In reviewing natural resource related investments available to the Fund, Eaton
Vance will consider, among other investments, domestic and foreign companies
which may
* EXPLORE FOR, FINANCE, DEVELOP, PRODUCE OR HOLD PRECIOUS METALS. Eaton Vance
will give special emphasis in this subsector to efficiently managed, low cost
gold producers which are able to operate profitably at the current level of
gold prices, thereby benefiting from any future increase in gold prices.
* EXPLORE FOR, FINANCE, DEVELOP OR PRODUCE ENERGY RESOURCES. In this subsector,
Eaton Vance will stress low cost producers whose reserves will allow expansion
of production and those companies with established earnings records in both
rising and falling energy markets.
* EXPLORE FOR, FINANCE, DEVELOP, PRODUCE OR HOLD STRATEGIC METALS.
* CREATE AND DEVELOP NEW GEOCHEMICAL TECHNOLOGY OR PROPRIETARY METHODS FOR
DETECTING, DEVELOPING, PRODUCING OR PROCESSING MINERAL DEPOSITS AND OTHER
NATURAL RESOURCES.
* OWN, LEASE OR HAVE RIGHTS TO HOLDINGS OF TIMBER AND TIMBERLANDS. This would
include those companies which manufacture or process pulp, paper, wood
products and other specialty products.
* PROVIDE NATURAL RESOURCE TRANSPORTATION, DISTRIBUTION AND PROCESSING SERVICES,
SUCH AS PIPELINES AND REFINING.
DIRECT PLACEMENT SECURITIES, VENTURE CAPITAL INVESTMENTS AND SMALLER COMPANIES.
The Fund may make natural resource related investments in "direct placement
securities" issued by a company directly to the Fund. The Fund is also empowered
to make natural resource related investments in "venture capital companies" --
companies, the securities of which have no public market at the time of
investment. The Fund's direct placement securities and venture capital
investments are considered speculative in nature and are not readily marketable.
The Fund's investments will include securities of smaller, less seasoned
companies. Such securities, are generally subject to greater price fluctuations,
limited liquidity, higher transaction costs and higher investment risk. Smaller
companies may have limited product lines, markets or financial resources, or
they may be dependent on a limited management group. There is generally less
publicly available information about such companies than larger, more
established companies. Because of the absence of any public trading market for
some of these investments (such as those that are legally restricted) it, may
take longer to liquidate these positions at fair value than would be the case
for publicly traded securities. The Fund may not invest more than 10% of its
total assets, taken at market value at the time of investment, in certain
securities issued by venture capital companies, certain over-the-counter
options, unmarketable securities, and repurchase agreements maturing in more
than seven days.
METALS INVESTMENTS. The Fund may invest up to 10% of its portfolio in gold or
silver bullion, strategic metals, and gold or silver coins ("Metals
Investments"). The Fund will invest only in metals that are readily marketable,
and in coins only if there is an active quoted market for the coins in question.
Coins will not be purchased for their numismatic value. Prices of precious
metals may fluctuate sharply over short periods due to various events, such as
changes in actual or anticipated inflation, currency fluctuations, metal sales
by governments, central banks or international agencies, investment speculation,
changes in demand, or governmental restrictions on private ownership.
GOLD-RELATED INVESTMENTS. Based on historic experience, during periods of
economic or political instability the securities of gold-related companies may
be subject to wide price fluctuations, reflecting the high volatility of gold
prices during such periods. In addition, the instability of gold prices may
result in volatile earnings of gold-related companies which, in turn, may affect
adversely the financial condition of such companies. Gold mining companies also
are subject to the risks generally associated with mining operations. The major
producers of gold include the Republic of South Africa, the United States,
Russia, Australia, China and Canada. Sales of gold by Russia are largely
unpredictable and often relate to political and economic considerations rather
than to market forces. Economic, social and political developments within South
Africa, including civil unrest, may affect significantly South African gold
production.
WHEN EATON VANCE ANTICIPATES SIGNIFICANT ECONOMIC OR POLITICAL INSTABILITY, SUCH
AS HIGH INFLATION OR TURMOIL IN THE FOREIGN CURRENCY EXCHANGE MARKETS, THE FUND,
IN SEEKING TO PROTECT THE PURCHASING POWER OF SHAREHOLDERS' CAPITAL, MAY INVEST
A MAJORITY OF ITS ASSETS IN COMPANIES THAT EXPLORE FOR, EXTRACT, PROCESS OR DEAL
IN GOLD OR IN ASSET-RELATED SECURITIES INDEXED TO THE VALUE OF SOME NATURAL
RESOURCE SUCH AS GOLD BULLION. Such a change in investment strategy could
require the Fund to liquidate portfolio assets and incur transaction costs.
There can be no assurance that any such change in investment strategy will be
successful.
CONCENTRATION. The Fund has adopted a fundamental policy which requires it
during normal market conditions to concentrate at least 25% of its total assets
in the natural resource group of industries. As a result, the value of the
Fund's shares could be adversely affected by a single economic, political or
regulatory occurrence or other development affecting this investment sector and
may fluctuate more widely than the value of shares of a mutual fund which
invests in a broader range of industries. The Fund should, therefore, not be
considered a balanced or complete investment program.
NON-DIVERSIFICATION. The Fund is a "non-diversified" investment company, and so
may invest its assets in a more limited number of issuers than if it were a
diversified investment company. Under applicable tax requirements, the Fund may
not invest more than 25% of its assets in obligations of any one issuer (other
than U.S. Government obligations) and, with respect to 50% of its total assets,
the Fund may not invest more than 5% of its total assets in the securities of
any one issuer (except U.S. Government securities). Thus, the Fund may invest up
to 25% of its total assets in the securities of each of any two issuers. This
practice involves an increased risk of loss to the Fund. To mitigate this risk,
the Fund has adopted a fundamental policy that it will not purchase more than
10% of the total outstanding voting securities of an issuer, except when
significant economic, political or financial instability is anticipated.
BORROWING AND LEVERAGE. The Fund may borrow money to invest in additional
portfolio securities. This practice, known as "leverage," increases the Fund's
market exposure and its risk. The interest the Fund must pay on borrowed money
will reduce the amount of any potential gains or increase any losses. The extent
to which the Fund will borrow money, and the amount it may borrow, depend on
market conditions and interest rates. Successful use of leverage depends on
Eaton Vance's ability to predict market movements correctly. The Fund may at
times borrow money by means of reverse repurchase agreements. Reverse repurchase
agreements generally involve the sale by the Fund of securities held by it and
an agreement to repurchase the securities at an agreed-upon price, date, and
interest payment. Reverse repurchase agreements will increase the Fund's overall
investment exposure and may result in losses. The amount of money borrowed by
the Fund for leverage may generally not exceed one-third of the Fund's assets
(including the amount borrowed).
FOREIGN INVESTMENTS. Investing in securities issued by foreign companies
(including depository receipts) involves considerations and possible risks not
typically associated with investing in securities issued by 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. Foreign currency exchange rates may fluctuate
significantly over short periods of time causing the Fund'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, delays in settlements of transactions, less
publicly-available financial and other information, armed conflict and potential
difficulties in enforcing contractual obligations. In addition to investing in
foreign companies of countries which represent established and developed
economies, the Fund may also invest in the emerging economies of lesser
developed countries, including those in Africa, the Far East, Latin America and
Eastern Europe. Consistent with its investment objective, the Fund 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, more than 55% of
the Fund's assets were comprised of foreign securities.
DERIVATIVE INSTRUMENTS. From time to time, the Fund 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 or commodity prices, interest rates or
currency exchange rates, or as a substitute for the purchase or sale of
securities, commodities or currency. The Fund's transactions in derivative
instruments may include the purchase or sale of futures contracts on securities
or commodities, securities indices, other indices, other financial instruments
or currencies; options on futures contracts; exchange-traded and
over-the-counter options on securities, indices or currency; and forward foreign
currency exchange contracts.
The Fund's transactions in derivative instruments involve a risk of loss or
depreciation due to: unanticipated adverse changes in interest rates, securities
prices, the other financial instruments' prices or currency exchange rates; the
inability to close out a position; or default by the counterparty; imperfect
correlation between a position and the desired hedge; tax constraints on closing
out positions; and portfolio management constraints on securities subject to
such transactions. The loss on derivative instruments (other than purchased
options) may substantially exceed the Fund's initial investment in these
instruments. In addition, the Fund may lose the entire premium paid for
purchased options that expire before they can be profitably exercised by the
Fund. The Fund incurs transaction costs in opening and closing positions in
derivative instruments. There can be no assurance that Eaton Vance's use of
derivative instruments will be advantageous to the Fund.
To the extent that the Fund 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 market value of
the Fund's investments, after taking into account unrealized profits and
unrealized losses on any contracts the Fund has entered into.
Forward contracts are individually negotiated and privately traded by currency
traders and their customers. A forward contract involves an obligation to
purchase or sell a specific currency (or basket of currencies) for an agreed
price at a future date, which may be any fixed number of days from the date of
the contract. The Fund 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 Eaton Vance
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 Fund's exposure to
foreign currency exchange rate fluctuations. The Fund may also use forward
contracts to shift its exposure to foreign currency exchange rate changes from
one currency to another.
CERTAIN INVESTMENT RESTRICTIONS AND POLICIES. The Fund has adopted certain
fundamental investment restrictions and policies, in addition to the
concentration policy set forth above, which are enumerated in detail in the
Statement of Additional Information and which may not be changed unless
authorized by a shareholder vote. Except for such restrictions and policies, the
investment objective and policies of the Fund are not fundamental policies and
accordingly may be changed by the Trustees of the Trust without obtaining the
approval of the Fund's shareholders.
ORGANIZATION OF THE FUND
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THE FUND IS A SERIES OF EATON VANCE GROWTH TRUST, A BUSINESS TRUST ESTABLISHED
UNDER MASSACHUSETTS LAW PURSUANT TO A DECLARATION OF TRUST DATED MAY 25, 1989,
AS AMENDED. THE TRUST IS A MUTUAL FUND -- AN OPEN-END MANAGEMENT INVESTMENT
COMPANY. The Fund changed its name from Eaton Vance Natural Resources Trust to
EV Marathon Gold & Natural Resources Fund on April 1, 1994. The Trustees of the
Trust are responsible for the overall management and supervision of the affairs
of the Fund. The Trust may issue an unlimited number of shares of beneficial
interest (no par value per share) in one or more series (such as the Fund). 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.
MANAGEMENT OF THE FUND
- ------------------------------------------------------------------------------
THE TRUST ENGAGES EATON VANCE MANAGEMENT ("EATON VANCE") AS THE FUND'S
INVESTMENT ADVISER. EATON VANCE, ITS AFFILIATES AND ITS PREDECESSOR COMPANIES
HAVE BEEN MANAGING ASSETS OF INDIVIDUALS AND INSTITUTIONS SINCE 1924 AND
MANAGING INVESTMENT COMPANIES SINCE 1931.
Acting under the general supervision of the Board of Trustees of the Trust,
Eaton Vance manages the Fund's investments and affairs. Under its investment
advisory agreement with the Trust on behalf of the Fund, Eaton Vance receives a
monthly advisory fee of .0625% (equivalent to .75 of 1% annually) of the average
daily net assets of the Fund up to $500 million; the fee will be reduced at
various asset levels over $500 million. For the fiscal year ended August 31,
1996, the Fund paid Eaton Vance advisory fees equivalent to .75% of the Fund's
average daily net assets for such year.
Eaton Vance also furnishes for the use of the Fund office space and all
necessary office facilities, equipment and personnel for servicing the
investments of the Fund. The Fund is responsible for the payment of all expenses
other than those expressly stated to be payable by Eaton Vance under the
investment advisory agreement.
EATON VANCE OR ITS AFFILIATES ACTS AS INVESTMENT ADVISER TO INVESTMENT COMPANIES
AND VARIOUS INDIVIDUAL AND INSTITUTIONAL CLIENTS WITH ASSETS UNDER MANAGEMENT OF
OVER $16 BILLION. Eaton Vance is a wholly-owned subsidiary of Eaton Vance Corp.,
a publicly-held holding company which through its subsidiaries and affiliates
engages primarily in investment management, administration and marketing
activities. Eaton Vance Distributors, Inc. (the "Principal Underwriter" or
"EVD"), 24 Federal Street, Boston, MA 02110, a wholly-owned subsidiary of Eaton
Vance, acts as Principal Underwriter to the Fund.
William D. Burt and Barclay Tittmann are the co-portfolio managers of the
Fund. Mr. Burt joined Eaton Vance as a Vice President in November, 1994. Prior
to joining Eaton Vance, he was a Vice President of The Boston Company
(1990-1994) and a Vice President of Baring America Asset Management
(1979-1990). Mr. Tittmann joined Eaton Vance as a Vice President in October,
1993. He was a Vice President, portfolio manager and analyst with Invesco
Management and Research (formerly Gardner and Preston Moss) from 1970-1993.
Eaton Vance places the Fund's portfolio security transactions for execution with
many broker-dealer firms and uses its best efforts to obtain execution of such
transactions at prices which are advantageous to the Fund and at reasonably
competitive commission rates. Subject to the foregoing, Eaton Vance may consider
sales of shares of the Fund or of other investment companies sponsored by Eaton
Vance as a factor in the selection of firms to execute portfolio transactions.
The Fund and Eaton Vance have adopted Codes of Ethics relating to personal
securities transactions. The Codes permit Eaton Vance personnel to invest in
securities (including securities that may be purchased or held by the Fund) for
their own accounts, subject to certain pre-clearance, reporting and other
restrictions and procedures contained in such Codes.
DISTRIBUTION PLAN
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THE FUND FINANCES DISTRIBUTION ACTIVITIES AND HAS ADOPTED A DISTRIBUTION PLAN
(THE "PLAN") PURSUANT TO RULE 12B-1 UNDER THE INVESTMENT COMPANY ACT OF 1940
(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 commissions attributable to a sale of Fund shares to be
accrued and paid by the Fund to the Principal Underwriter in fiscal years
subsequent to the year in which such shares were sold. This spreading of sales
commissions payments under the Plan over an extended period would result in the
incurrence and payment of increased distribution fees under the Plan. During the
fiscal year ended August 31, 1996, the Fund paid sales commissions under the
Plan equivalent to .75% of the Fund's average daily net assets. As at August 31,
1996, the outstanding Uncovered Distribution Charges of the Principal
Underwriter on such day calculated under the Plan amounted to approximately
$449,702 (which amount was equivalent to 2.2% of the Fund's net assets on such
day).
THE PLAN ALSO AUTHORIZES THE FUND TO MAKE PAYMENTS OF SERVICE FEES TO THE
PRINCIPAL UNDERWRITER, AUTHORIZED FIRMS AND OTHER PERSONS IN AMOUNTS NOT
EXCEEDING .25% OF THE FUND'S AVERAGE DAILY NET ASSETS FOR EACH FISCAL YEAR. The
Trustees of the Trust have initially implemented this provision of the Plan by
authorizing the Fund to make quarterly payments of service fees to the Principal
Underwriter and Authorized Firms in amounts not expected to exceed .25% of the
Fund's average daily net assets for each fiscal year based on the value of Fund
shares sold by such persons and remaining outstanding for at least twelve
months. As permitted by the NASD Rule, such payments are made for personal
services and/or the maintenance of shareholder accounts. Service fees are
separate and distinct from the sales commissions and distribution fees payable
by the Fund to the Principal Underwriter, and as such are not subject to
automatic discontinuance when there are no outstanding Uncovered Distribution
Charges of the Principal Underwriter. For the fiscal year ended August 31, 1996,
the Fund paid or accrued service fees equivalent to .17% of the Fund's average
daily net assets for such year.
The Principal Underwriter may, from time to time, at its own expense, provide
additional incentives to Authorized Firms which employ registered
representatives who sell 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
sell or are expected to sell significant amounts of shares. In addition, the
Principal Underwriter may from time to time increase or decrease the sales
commissions payable to Authorized Firms.
The Fund may, in its absolute discretion, suspend, discontinue or limit the
offering of its shares at any time. In determining whether any such action
should be taken, the Fund's management intends to consider all relevant factors,
including without limitation the size of the Fund, the investment climate and
market conditions, the volume of sales and redemptions of Fund shares, and the
amount of Uncovered Distribution Charges of the Principal Underwriter. The Plan
may continue in effect and payments may be made under the Plan following any
such suspension, discontinuance or limitation of the offering of Fund shares;
however, the Fund is not contractually obligated to continue the Plan for any
particular period of time. Suspension of the offering of Fund shares would not,
of course, affect a shareholder's ability to redeem shares.
VALUING FUND SHARES
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THE FUND VALUES ITS SHARES ONCE ON EACH DAY THE NEW YORK STOCK EXCHANGE (THE
"EXCHANGE") IS OPEN FOR TRADING, as of the close of regular trading on the
Exchange (normally 4:00 p.m. New York time). The Fund's net asset value per
share is determined by its custodian, Investors Bank & Trust Company ("IBT"),
(as agent for the Fund) in the manner authorized by the Trustees of the Trust.
Net asset value is computed by dividing the value of the Fund's total assets,
less its liabilities, by the number of shares outstanding. Securities traded on
stock exchanges are generally valued at their closing sale price.
Authorized Firms must communicate an investor's order to the Principal
Underwriter prior to the close of the Principal Underwriter's business day to
receive that day's net asset value per share. It is the Authorized Firms'
responsibility to transmit orders promptly to the Principal Underwriter.
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 net asset value per share of the Fund next determined after an order is
effective. An Authorized Firm may charge its customers a fee in connection with
transactions executed by that Firm. The 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: First
Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123. The
$1,000 minimum initial investment is waived for Bank Automated Investing
accounts, which may be established with an investment of $50 or more. See "Eaton
Vance Shareholder Services".
In connection with employee benefit or other continuous group purchase plans
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 Investment Adviser, in exchange
for Fund shares at their net asset value as determined above. The minimum value
of securities (or securities and cash) accepted for deposit is $5,000.
Securities accepted will be sold on the day of their receipt or as soon
thereafter as possible. The number of Fund shares to be issued in exchange for
securities will be the aggregate proceeds from the sale of such securities,
divided by the applicable net asset value per Fund share on the day such
proceeds are received. Eaton Vance will use reasonable efforts to obtain the
then current market price for such securities but does not guarantee the best
available price. Eaton Vance will absorb any transaction costs, such as
commissions, on the sale of the securities.
Securities determined to be acceptable should be transferred via book entry or
physically delivered, in proper form for transfer, through an Authorized Firm,
together with a completed and signed Letter of Transmittal in approved form
(available from Authorized Firms), as follows:
IN THE CASE OF BOOK ENTRY:
Deliver through Depository Trust Co.
Broker #2212
Investors Bank & Trust Company
For A/C EV Marathon Gold & Natural Resources Fund
IN THE CASE OF PHYSICAL DELIVERY:
Investors Bank & Trust Company
Attention: EV Marathon Gold & Natural Resources Fund
Physical Securities Processing Settlement Area
89 South Street
Boston, MA 02111
Investors who are contemplating an exchange of securities for shares of the
Fund, or their representatives, must contact Eaton Vance to determine whether
the securities are acceptable before forwarding such securities. Eaton Vance
reserves the right to reject any securities. Exchanging securities for Fund
shares may create a taxable gain or loss. Each investor should consult his or
her tax adviser with respect to the particular federal, state and local tax
consequences of exchanging securities for Fund shares.
IF YOU DON'T HAVE AN AUTHORIZED FIRM, EATON VANCE CAN RECOMMEND ONE.
HOW TO REDEEM FUND SHARES
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A SHAREHOLDER MAY REDEEM FUND SHARES IN ONE OF THREE WAYS -- BY MAIL, BY
TELEPHONE OR THROUGH AN AUTHORIZED FIRM. The redemption price will be based on
the net asset value per Fund share next computed after a redemption request is
received in the proper form as described below.
REDEMPTION BY MAIL: Shares may be redeemed by delivering to the Transfer Agent,
First Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123,
during its business hours a written request for redemption in good order, plus
any share certificates with executed stock powers. Good order means that all
relevant documents must be endorsed by the record owner(s) exactly as the shares
are registered and the signature(s) must be guaranteed by a member of either the
Securities Transfer Association's STAMP program or the New York Stock Exchange's
Medallion Signature Program, or certain banks, savings and loan institutions,
credit unions, securities dealers, securities exchanges, clearing agencies and
registered securities associations as required by a regulation of the Securities
and Exchange Commission (the "Commission") and acceptable to the Transfer Agent.
In addition, in some cases, good order may require the furnishing of additional
documents such as where shares are registered in the name of a corporation,
partnership or fiduciary.
REDEMPTION BY TELEPHONE: Shares may be redeemed by telephone provided the
investor has not disclaimed in writing the use of the privilege. Such
redemptions can be effected by calling the Transfer Agent at 800-262-1122,
Monday through Friday, 9:00 a.m. to 4:00 p.m. (Eastern Standard Time). The
proceeds of a telephone redemption may be no greater than the maximum amount
established by the Principal Underwriter (currently $50,000) and may be mailed
only to the account address of record. Shares held by corporations, trusts or
certain other entities, or subject to fiduciary arrangements, may not be
redeemed by telephone. Neither the Fund, the Principal Underwriter nor the
Transfer Agent will be responsible for the authenticity of redemption
instructions received by telephone, provided that reasonable procedures to
confirm that instructions communicated by telephone are genuine have been
followed. Telephone instructions will be tape recorded. In times of drastic
economic or market changes, a telephone redemption may be difficult to
implement.
REDEMPTION THROUGH AN AUTHORIZED FIRM: To sell shares at their net asset value
through an Authorized Firm (a repurchase), a shareholder can place a repurchase
order with the Authorized Firm, which may charge a fee. The value of such shares
is based upon the net asset value calculated after the Principal Underwriter, as
the Fund's agent, receives the order. It is the Authorized Firm's responsibility
to transmit promptly repurchase orders to the Principal Underwriter. Throughout
this Prospectus, the word "redemption" is generally meant to include a
repurchase.
Within seven days after receipt of a redemption request in good order by the
Transfer Agent, the 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.
If shares were recently purchased, the proceeds of redemption will not be sent
until the check (including a certified or cashier's check) received for the
shares purchased has cleared. Payment for shares tendered for redemption may be
delayed up to 15 days from the purchase date when the purchase check has not yet
cleared. Redemptions may result in a taxable gain or loss.
Due to the high cost of maintaining small accounts, the Fund reserves the right
to redeem Fund accounts with balances of less than $750. Prior to such a
redemption, shareholders will be given 60 days' written notice to make an
additional purchase. However, no such redemption would be required by the 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
("CDSC"). This CDSC is imposed on any redemption, the amount of which exceeds
the aggregate value at the time of redemption of (a) all shares in the account
purchased more than six years prior to the redemption, (b) all shares in the
account acquired through reinvestment of distributions, and (c) the increase, if
any, in the value of all other shares in the account (namely those purchased
within the six years preceding the redemption) over the purchase price of such
shares. Redemptions are processed in a manner to maximize the amount of
redemption proceeds which will not be subject to a CDSC. That is, each
redemption will be assumed to have been made first from the exempt amounts
referred to in clauses (a), (b) and (c) above, and second through liquidation of
those shares in the account referred to in clause (c) on a first-in-first-out
basis. As described under "Distribution Plan", the CDSC will be paid to the
Principal Underwriter or the Fund. Any CDSC which is required to be imposed on
share redemptions will be made in accordance with the following schedule:
YEAR OF
REDEMPTION
AFTER PURCHASE CDSC
-----------------------------------------------------------------------
First or Second .......................................... 5%
Third .................................................... 4%
Fourth ................................................... 3%
Fifth .................................................... 2%
Sixth .................................................... 1%
Seventh and following .................................... 0%
In calculating the CDSC upon the redemption of Fund shares acquired in an
exchange of shares of a fund currently listed under "The Eaton Vance Exchange
Privilege", the CDSC schedule applicable to the shares at the time of purchase
will apply and the purchase of Fund shares acquired in the exchange is deemed to
have occurred at the time of the original purchase of exchanged shares.
No CDSC will be imposed on shares of the Fund which have been sold to Eaton
Vance or its affiliates, or to their respective employees or clients. The CDSC
will also be waived for shares redeemed (1) pursuant to a Withdrawal Plan (see
"Eaton Vance Shareholder Services"), (2) as part of a required distribution from
a tax-sheltered retirement plan or (3) following the death of all beneficial
owners of such shares, provided the redemption is requested within one year of
death (a death certificate and other applicable documents may be required). In
addition, shares acquired as a result of a merger or liquidation of another
Eaton Vance sponsored fund will have a CDSC imposed at the same rate as would
have been imposed in the prior fund.
THE FOLLOWING EXAMPLE ILLUSTRATES THE OPERATION OF THE CDSC. ASSUME THAT AN
INVESTOR PURCHASES $10,000 OF THE FUND'S SHARES AND THAT 16 MONTHS LATER THE
VALUE OF THE ACCOUNT HAS GROWN THROUGH INVESTMENT PERFORMANCE AND REINVESTMENT
OF DISTRIBUTIONS TO $12,000. THE INVESTOR THEN MAY REDEEM UP TO $2,000 OF
SHARES WITHOUT INCURRING A CDSC. IF THE INVESTOR SHOULD REDEEM $3,000 OF
SHARES, A CHARGE WOULD BE IMPOSED ON $1,000 OF THE REDEMPTION. THE RATE WOULD
BE 5% BECAUSE THE REDEMPTION WAS MADE IN THE SECOND YEAR AFTER THE PURCHASE
WAS MADE AND THE CHARGE WOULD BE $50.
REPORTS TO SHAREHOLDERS
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THE FUND WILL ISSUE TO ITS SHAREHOLDERS SEMI-ANNUAL AND ANNUAL REPORTS
CONTAINING FINANCIAL STATEMENTS. Financial statements included in annual reports
are audited by the Fund's independent certified public accountants. Shortly
after the end of each calendar year, the Fund will furnish its shareholders with
information necessary for preparing federal and state tax returns.
THE LIFETIME INVESTING ACCOUNT/DISTRIBUTION OPTIONS
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AFTER AN INVESTOR MAKES AN INITIAL PURCHASE OF FUND SHARES, THE TRANSFER AGENT
WILL SET UP A LIFETIME INVESTING ACCOUNT FOR THE INVESTOR ON THE FUND'S RECORDS.
This account is a complete record of all transactions between the investor and
the Fund which at all times shows the balance of shares owned. The Fund will not
issue share certificates except upon request.
Each time a transaction takes place in a shareholder's account, the shareholder
will receive a statement showing complete details of the transaction and the
current share balance in the account. (Under certain investment plans,
statements may be sent only quarterly). THE LIFETIME INVESTING ACCOUNT ALSO
PERMITS A SHAREHOLDER TO MAKE ADDITIONAL INVESTMENTS IN SHARES BY SENDING A
CHECK FOR $50 OR MORE TO the Transfer Agent.
Any questions concerning a shareholder's account or services available may be
directed by telephone to EATON VANCE SHAREHOLDER SERVICES at 800-225-6265,
extension 2, or in writing to the Transfer Agent, First Data Investor Services
Group, P.O. Box 5123, Westborough, MA 01581-5123 (please provide the name of the
shareholder, the Fund and the account number).
THE FOLLOWING DISTRIBUTION OPTIONS WILL BE AVAILABLE TO ALL LIFETIME INVESTING
ACCOUNTS and may be changed as often as desired by written notice to the Fund's
dividend disbursing agent, First Data Investor Services Group, P.O. Box 5123,
Westborough, MA 01581-5123. The currently effective option will appear on each
account statement.
Share Option -- Dividends and capital gains will be reinvested in additional
shares.
Income Option -- Dividends will be paid in cash, and capital gains will be
reinvested in additional shares.
Cash Option -- Dividends and capital gains will be paid in cash.
The Share Option will be assigned if no other option is specified.
Distributions, including those reinvested, will be reduced by any withholding
required under the federal income tax laws.
If the Income Option or Cash Option has been selected, dividend and/or capital
gains distribution checks which are returned by the United States Postal Service
as not deliverable or which remain uncashed for six months or more will be
reinvested in the account in shares at the then current net asset value.
Furthermore, the distribution option on the account will be automatically
changed to the Share Option until such time as the shareholder selects a
different option.
DISTRIBUTION INVESTMENT OPTION. In addition to the distribution options set
forth above, dividends and/or capital gains may be invested in additional shares
of another Eaton Vance fund. Before selecting this option, a shareholder should
obtain a prospectus of the other Eaton Vance fund and consider its objectives
and policies carefully.
"STREET NAME" ACCOUNTS. If shares 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.
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 (including Class I shares of
any EV Marathon Limited Maturity Fund) or Eaton Vance Money Market Fund, which
are subject to a CDSC. Shares of the Fund may also be exchanged for shares of
Eaton Vance Prime Rate Reserves, which are subject to an early withdrawal
charge, and shares of a money market fund sponsored by an Authorized Firm and
approved by the Principal Underwriter (an "Authorized Firm fund"). Any exchange
will be made on the basis of the net asset value per share of each fund at the
time of the exchange. Exchange offers are available only in states where shares
of such 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 Transfer Agent 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 Transfer Agent for additional information concerning the exchange
privilege. Applications and prospectuses of the other funds are available from
Authorized Firms or the Principal Underwriter. The prospectus for each fund
describes its investment objectives and policies, and shareholders should obtain
a prospectus and consider these objectives and policies carefully before
requesting an exchange.
No CDSC is imposed on exchanges. For purposes of calculating the CDSC upon
redemption of shares acquired in an exchange, the CDSC applicable to the shares
at the time of purchase will apply and the purchase of shares acquired in one or
more exchanges is deemed to have occurred at the time of the original purchase
of the exchanged shares, except that time during which shares are held in an
Authorized Firm fund will not be credited toward completion of the CDSC period.
For the CDSC schedule applicable to the Eaton Vance Marathon Group of Funds
(except EV Marathon Strategic Income Fund, Eaton Vance Prime Rate Reserves and
Class I shares of any EV Marathon Limited Maturity Fund), see "How to Redeem
Fund Shares". The CDSC schedule applicable to EV Marathon Strategic Income Fund,
Eaton Vance Prime Rate Reserves 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 listed above may be exchanged for Fund shares on the
basis of the net asset value per share of each fund at the time of exchange, but
subject to any restrictions or qualifications set forth in the current
prospectus of any such fund.
Telephone exchanges are accepted by the Transfer Agent provided the investor has
not disclaimed in writing the use of the privilege. To effect such exchanges,
call the Transfer Agent at 800-262-1122, Monday through Friday, 9:00 a.m. to
4:00 p.m. (Eastern Standard Time). Shares acquired by telephone exchange must be
registered in the same name(s) and with the same address as the shares being
exchanged. Neither the Fund, the Principal Underwriter nor the Transfer Agent,
will be responsible for the authenticity of exchange instructions received by
telephone, provided that reasonable procedures to confirm that instructions
communicated are genuine have been followed. Telephone instructions will be tape
recorded. In times of drastic economic or market changes, a telephone exchange
may be difficult to implement. An exchange may result in a taxable gain or loss.
EATON VANCE SHAREHOLDER SERVICES
- ------------------------------------------------------------------------------
THE 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 Gold & Natural Resources Fund may be mailed directly to the Transfer
Agent, First Data Investor Services Group, P.O. Box 5123, Westborough, MA
01581-5123 at any time -- whether or not distributions are reinvested. The name
of the shareholder, the Fund and 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 CDSC. See "How to Redeem Fund Shares". A
minimum deposit of $5,000 in shares is required.
REINVESTMENT PRIVILEGE: A shareholder who has redeemed shares may reinvest, with
credit for any CDSCs paid on the redeemed shares, any portion or all of the
redemption proceeds (plus that amount necessary to acquire a fractional share to
round off the purchase to the nearest full share) in shares of the Fund,
provided that the reinvestment is effected within 60 days after such redemption,
and the privilege has not been used more than once in the prior 12 months.
Shares are sold to a reinvesting shareholder at the next determined net asset
value following timely receipt of a written purchase order by the Principal
Underwriter or by the 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 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.
DISTRIBUTIONS AND TAXES
- ------------------------------------------------------------------------------
DISTRIBUTIONS. It is the present policy of the Fund to make (A) at least one
distribution annually (normally in December) of all or substantially all of its
investment income earned, less its expenses, and (B) at least one distribution
(normally in December) of all or substantially all of the net capital gains
(reduced by any available capital loss carryforwards from prior years) realized
by the Fund, if any.
Shareholders may reinvest all distributions in shares of the Fund at net asset
value per share as of the close of business on the record date.
TAXES. The Fund intends to qualify as a regulated investment company under the
Code and consequently will not be required to pay any federal income or excise
taxes to the extent that it distributes to its shareholders its net investment
income and net realized capital gains in the manner required by the Code.
Distributions of the Fund from its net investment income, net short-term capital
gains and certain foreign exchange gains are taxable to shareholders as ordinary
income, whether received in cash or reinvested in additional shares. A portion
of distributions from the Fund's net investment income may qualify for the
dividends-received deduction for corporate shareholders.
Capital gains referred to in clause (B) above, if any, realized on sales of
investments and on options, futures and certain forward foreign currency
exchange transactions during the fiscal year, which ends on August 31, will
usually be distributed prior to the end of December. Distributions from the
Fund's net long-term capital gains are taxable to shareholders as long-term
capital gains, whether paid in cash or additional shares of the Fund and
regardless of the length of time Fund shares have been owned by the shareholder.
If shares are purchased shortly before the record date of a distribution, the
shareholder will pay the full price for the shares and then receive some portion
of the price back as a taxable distribution. The amount, timing and character of
distributions to shareholders may be affected by special tax rules governing the
Fund's activities in options, futures and forward foreign currency exchange
transactions.
Certain distributions declared in October, November or December and paid the
following January will be taxable to shareholders as if received on December 31
of the year in which they are declared.
The Fund may be required to pay foreign taxes with respect to income (possibly
including, in some cases, capital gains) that it derives from investments in
foreign securities. If more than 50% of the value of the Fund's total assets at
the close of its taxable year (August 31) consists of securities in foreign
corporations, the Fund may make an election under Section 853 of the Code to
pass through to its shareholders the right to take the credit or deduction for
qualifying foreign taxes paid by the Fund during such year. The Fund will send a
written notice of any such election (not later than 60 days after the close of
its taxable year) to each shareholder indicating the amount to be treated as the
proportionate share of such taxes paid to each foreign country or U.S.
possession and the portion of the distribution which represents income derived
from sources within each country or U.S. possession. Each shareholder will
include in gross income (in addition to taxable distributions received from the
Fund) the proportionate share of such taxes, and can treat such amount as paid
by such shareholder for purposes of the deduction or credit for foreign taxes on
the shareholders own federal income tax return. Availability of the deduction or
credit for foreign taxes is subject to certain tax restrictions.
Shareholders will receive annually tax information notices and Forms 1099 to
assist in preparation of their federal and state tax returns for the prior
calendar year's distributions, proceeds from the redemption or exchange of Fund
shares, and federal income tax (if any) withheld by the Fund's Transfer Agent.
Shareholders should consult with their tax advisers concerning the applicability
of state, local or other taxes to an investment in the Fund.
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.
PERFORMANCE INFORMATION
- ------------------------------------------------------------------------------
FROM TIME TO TIME, THE FUND MAY ADVERTISE ITS YIELD AND/OR AVERAGE ANNUAL TOTAL
RETURN. The Fund's current yield is calculated by dividing the net investment
income per share earned during a recent 30-day period by the maximum offering
price per share (net asset value) of the Fund on the last day of the period and
annualizing the resulting figure. The Fund's average annual total return is
determined by computing the average annual percentage change in value of $1,000
invested at the maximum public offering price (net asset value) for specified
periods, assuming reinvestment of all distributions. The average annual total
return calculation assumes a complete redemption of the investment and the
deduction of any applicable CDSC at the end of the period. The Fund may publish
annual and cumulative total return figures from time to time.
The Fund may also publish total return figures which do not take into account
any CDSC which may be imposed upon redemptions at the end of the specified
period. Any performance figure which does not take into account the CDSC 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 yield or total return for any
prior period should not be considered a representation of what an investment may
earn or what the Fund's yield or total return may be in any future period.
The following chart reflects the annual investment returns of the Fund for one
year periods ending September 30 and does not take into account the CDSC which
investors may bear:
5 YEAR AVERAGE ANNUAL TOTAL RETURN -- 17.13%
LIFE OF FUND AVERAGE ANNUAL TOTAL RETURN -- 13.52%
1988(1) 15.39%
1989 22.96%
1990 0.01%
1991 (4.36)%
1992 9.44%
1993 11.73%
1994 20.47%
1995 7.66%
1996 45.67%
(1) From the start of business, October 21, 1987, to September 30, 1988
<PAGE>
[logo]
EATON VANCE
==================
Mutual Funds
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EV MARATHON GOLD &
NATURAL RESOURCES FUND
PROSPECTUS
JANUARY 1, 1997
EV MARATHON GOLD &
NATURAL RESOURCES FUND
24 FEDERAL STREET
BOSTON, MA 02110
- --------------------------------------------------------------------------------
INVESTMENT ADVISER
Eaton Vance Management
24 Federal Street
Boston, MA 02110
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc.
24 Federal Street
Boston, MA 02110
(800) 225-6265
CUSTODIAN
Investors Bank & Trust Company
89 South Street
Boston, MA 02111
TRANSFER AGENT
First Data Investor Services Group
P.O. Box 5123
Westborough, MA 01581-5123
(800) 262-1122
AUDITORS
Deloitte & Touche LLP
125 Summer Street
Boston, MA 02110
NRP
<PAGE>
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
STATEMENT OF
ADDITIONAL INFORMATION
January 1, 1997
EV MARATHON ASIAN SMALL COMPANIES FUND
24 Federal Street
Boston, Massachusetts 02110
(800) 225-6265
This Statement of Additional Information consists of two parts. Part I
provides general information about EV Marathon Asian Small Companies Fund (the
"Fund"), Asian Small Companies Portfolio (the "Portfolio") and certain other
series of Eaton Vance Growth Trust (the "Trust"). The Fund's Part II (the "Part
II") provides information solely about the Fund. Where appropriate, Part I
includes cross-references to the relevant sections of Part II that provide
additional Fund-specific information. This Statement of Additional Information
is sometimes referred to herein as the "SAI."
TABLE OF CONTENTS
PART I
Additional Information about Investment Policies ..................... 1
Investment Restrictions .............................................. 4
Trustees and Officers ................................................ 5
Management of the Fund ............................................... 7
Custodian ............................................................ 10
Service for Withdrawal ............................................... 11
Determination of Net Asset Value ..................................... 11
Investment Performance ............................................... 12
Taxes ................................................................ 13
Portfolio Security Transactions ...................................... 15
Other Information .................................................... 16
Independent Certified Public Accountants ............................. 17
Financial Statements ................................................. 18
Appendix A -- Asian Region Countries ................................. 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 JANUARY 1, 1997, AS SUPPLEMENTED FROM
TIME TO TIME, WHICH IS INCORPORATED HEREIN BY REFERENCE. THIS STATEMENT OF
ADDITIONAL INFORMATION SHOULD BE READ IN CONJUNCTION WITH SUCH PROSPECTUS, A
COPY OF WHICH MAY BE OBTAINED WITHOUT CHARGE BY CONTACTING EATON VANCE
DISTRIBUTORS, INC. (THE "PRINCIPAL UNDERWRITER") (SEE BACK COVER FOR ADDRESS AND
PHONE NUMBER).
<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 SAI 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.
Physical delivery of securities in small lots generally is required in India
and a shortage of vault capacity and trained personnel has existed among
qualified custodial Indian and Pakistani banks. The Portfolio may be unable to
sell securities where the registration process is incomplete and may experience
delays in receipt of dividends. If trading volume is limited by operational
difficulties, the ability of the Portfolio to invest its assets may be impaired.
Settlement of securities transactions in the Indian subcontinent may be delayed
and is generally less frequent than in the United States, which could affect the
liquidity of the Portfolio's assets. In addition, disruptions due to work
stoppages and trading improprieties in these securities markets have caused such
markets to close. If extended closings were to occur in stock markets where the
Portfolio was heavily invested, the Fund's ability to redeem Fund shares could
become correspondingly impaired.
The Adviser intends, as of the date of this SAI, not to invest in issuers
located in Vietnam, Cambodia, Laos or former Burma and to invest no more than 1%
of total assets in Bangladesh issuers.
FOREIGN CURRENCY TRANSACTIONS. The value of the assets of the Portfolio as
measured in U.S. dollars may be affected favorably or unfavorably by changes in
foreign currency exchange rates and exchange control regulations. Currency
exchange rates can also be affected unpredictably by intervention by U.S. or
foreign governments or central banks, or the failure to intervene, or by
currency controls or political developments in the U.S. or abroad. The Portfolio
may conduct its foreign currency exchange transactions on a spot (i.e., cash)
basis at the spot rate prevailing in the foreign currency exchange market or
through entering into swaps, forward contracts, options or futures on currency.
In spot transactions, foreign exchange dealers do not charge a fee for
conversion, but they do realize a profit based on the difference (the "spread")
between the prices at which they are buying and selling various currencies.
Thus, a dealer may offer to sell a foreign currency to the Portfolio at one
rate, while offering a lesser rate of exchange should the Portfolio desire to
resell that currency to the dealer.
Currency swaps require maintenance of a segregated account as described
under "Asset Coverage Requirements" below. The Portfolio will not enter into any
currency swap unless the credit quality of the unsecured senior debt or the
claims-paying ability of the other party thereto is considered to be investment
grade by the Adviser.
The Portfolio may enter into forward foreign currency exchange contracts in
several circumstances. First, when the Portfolio enters into a contract for the
purchase or sale of a security denominated in a foreign currency, or when the
Portfolio anticipates the receipt in a foreign currency of dividend or interest
payments on such a security which it holds, the Portfolio may desire to "lock
in" the U.S. dollar price of the security or the U.S. dollar equivalent of such
dividend or interest payment, as the case may be. By entering into a forward
contract for the purchase or sale, for a fixed amount of dollars, of the amount
of foreign currency involved in the underlying transactions, the Portfolio will
attempt to protect itself against an adverse change in the relationship between
the U.S. dollar and the subject foreign currency during the period between the
date on which the security is purchased or sold, or on which the dividend or
interest payment is declared, and the date on which such payments are made or
received.
Additionally, when management of the Portfolio believes that the currency of
a particular foreign country may suffer a substantial decline against the U.S.
dollar, it may enter into a forward contract to sell, for a fixed amount of
dollars, the amount of foreign currency approximating the value of some or all
of the securities held by the Portfolio denominated in such foreign currency.
The precise matching of the forward contract amounts and the value of the
securities involved will not generally be possible because the future value of
such securities in foreign currencies will change as a consequence of market
movements in the value of those securities between the date on which the
contract is entered into and the date it matures. The precise projection of
short-term currency market movements is not possible, and short-term hedging
provides a means of fixing the dollar value of only a portion of the Portfolio's
foreign assets.
RISKS ASSOCIATED WITH DERIVATIVE INSTRUMENTS. Entering into a derivative
instrument involves a risk that the applicable market will move against the
Portfolio's position and that the Portfolio will incur a loss. For derivative
instruments other than purchased options, this loss may exceed the amount of the
initial investment made or the premium received by the Portfolio. Derivative
instruments may sometimes increase or leverage the Portfolio's exposure to a
particular market risk. Leverage enhances the Portfolio's exposure to the price
volatility of derivative instruments it holds. The Portfolio's success in using
derivative instruments to hedge portfolio assets depends on the degree of price
correlation between the derivative instruments and the hedged asset. Imperfect
correlation may be caused by several factors, including temporary price
disparities among trading markets for the derivative instrument, the assets
underlying the derivative instrument and the Portfolio assets. Over-the-counter
("OTC") derivative instruments involve an enhanced risk that the issuer or
counterparty will fail to perform its contractual obligations. Some derivative
instruments are not readily marketable or may become illiquid under adverse
market conditions. In addition, during periods of market volatility, a commodity
exchange may suspend or limit trading in an exchange-traded derivative
instrument, which may make the contract temporarily illiquid and difficult to
price. Commodity exchanges may also establish daily limits on the amount that
the price of a futures contract or futures option can vary from the previous
days settlement price. Once the daily limit is reached, no trades may be made
that day at a price beyond the limit. This may prevent the Portfolio from
closing out positions and limiting its losses. The staff of the Commission takes
the position that certain purchased OTC options, and assets used as cover for
written OTC options, are subject to the Portfolio's 15% limit on illiquid
investments. The Portfolio's ability to terminate OTC derivative instruments may
depend on the cooperation of the counterparties to such contracts. For thinly
traded derivative instruments, the only source of price quotations may be the
selling dealer or counterparty. In addition, certain provisions of the Code,
limit the extent to which the Portfolio may purchase and sell derivative
instruments. The Portfolio will engage in transactions in futures contracts and
related options only to the extent such transactions are consistent with the
requirements of the Code for maintaining the qualification of the Fund as a
regulated investment company for federal income tax purposes. See "Taxes."
ASSET COVERAGE REQUIREMENTS. Transactions involving reverse repurchase
agreements, the lending of Portfolio securities, currency swaps, forward
contracts or futures contracts and options (other than options that the
Portfolio has purchased) expose the Portfolio to an obligation to another party.
The Portfolio will not enter into any such transactions unless it owns either
(1) an offsetting ("covered") position in securities, currencies, or other
options, futures contracts or forward contracts, or (2) cash or liquid
securities with a value sufficient at all times to cover its potential
obligations not covered as provided in (1) above. The Portfolio will comply with
Commission guidelines regarding cover for these instruments and, if the
guidelines so require, set aside cash or liquid securities in a segregated
account with its custodian in the prescribed amount. The securities in the
segregated account will be marked to market daily.
Assets used as cover or held in a segregated account cannot be sold while
the position requiring coverage or segregation is outstanding unless they are
replaced with other appropriate assets. As a result, the commitment of a large
portion of the Portfolio's assets to segregated accounts or to cover could
impede portfolio management or the Portfolio's ability to meet redemption
requests or other current obligations.
LIMITATIONS ON FUTURES CONTRACTS AND OPTIONS. The Portfolio does not intend to
write a covered option on any security if after such transaction more than 15%
of its net assets, as measured by the aggregate value of the securities
underlying all covered calls and puts written by the Portfolio, would be subject
to such options. The Portfolio will only write a put option on a security which
it intends to ultimately acquire for its portfolio. The Portfolio does not
intend to purchase any options if after such transaction more than 5% of its net
assets, as measured by the aggregate of all premiums paid for all such options
held by the Portfolio, would be so invested. The Portfolio may enter into
futures contracts (and options thereon) traded on a foreign exchange if it is
determined by the Adviser that trading on such exchange does not subject the
Portfolio to risks, including credit and liquidity risks, that are materially
greater than the risks associated with trading on United States exchanges
regulated by the CFTC.
REPURCHASE AGREEMENTS. Under a repurchase agreement the Portfolio buys a
security at one price and simultaneously promises to sell that same security
back to the seller at a higher price. At no time will the Portfolio commit more
than 15% of its net assets to repurchase agreements which mature in more than
seven days and other illiquid securities. The Portfolio's repurchase agreements
will provide that the value of the collateral underlying the repurchase
agreement will always be at least equal to the repurchase price, including any
accrued interest earned on the repurchase agreement, and will be marked to
market daily. The Portfolio may enter into repurchase agreements with respect to
its permitted investments, but currently would 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.
REVERSE REPURCHASE AGREEMENTS. The Portfolio may enter into reverse repurchase
agreements. Under a reverse repurchase agreement, the Portfolio temporarily
transfers possession of a portfolio instrument to another party, such as a bank
or broker-dealer, in return for cash. At the same time, the Portfolio agrees to
repurchase the instrument at an agreed upon time (normally within seven days)
and price, which reflects an interest payment. The Portfolio expects that it
will enter into reverse repurchase agreements when it is able to invest the cash
so acquired at a rate higher than the cost of the agreement, which would
increase the income earned by the Portfolio. The Portfolio could also enter into
reverse repurchase agreements as a means of raising cash to satisfy redemption
requests without the necessity of selling portfolio assets.
When the Portfolio enters into a reverse repurchase agreement, any
fluctuations in the market value of either the securities transferred to another
party or the securities in which the proceeds may be invested would affect the
market value of the Portfolio's assets. As a result, such transactions may
increase fluctuations in the market value of the Portfolio's assets. While there
is a risk that large fluctuations in the market value of the Portfolio's assets
could affect the Portfolio's net asset value, this risk is not significantly
increased by entering into reverse repurchase agreements, in the opinion of the
Adviser. Because reverse repurchase agreements may be considered to be the
practical equivalent of borrowing funds, they constitute a form of leverage. If
the Portfolio reinvests the proceeds of a reverse repurchase agreement at a rate
lower than the cost of the agreement, entering into the agreement will lower the
Portfolio's yield.
PORTFOLIO TURNOVER. The Portfolio cannot accurately predict its portfolio
turnover rate, but it is anticipated that the annual turnover rate will
generally not exceed 100% (excluding turnover of securities having a maturity of
one year or less). A 100% annual turnover rate would occur, for example, if all
the securities in the portfolio were replaced once in a period of one year. A
high turnover rate (100% or more) necessarily involves greater expenses to the
Portfolio. The Portfolio engages in portfolio trading (including short-term
trading) if it believes that a transaction including all costs will help in
achieving its investment objective either by increasing income or by enhancing
the Portfolio's net asset value. Short-term trading may be advisable in light of
a change in circumstances of a particular company or within a particular
industry, or in light of general market, economic or political conditions. High
portfolio turnover may also result in the realization of substantial net
short-term capital gains. 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 and
certain other investments (including its share of gains from the sale of
securities and certain other investments held by the Portfolio) held for less
than three months.
LENDING PORTFOLIO SECURITIES. The Portfolio may seek to increase its income by
lending portfolio securities to broker-dealers or other institutional borrowers.
Under present regulatory policies of the Commission, such loans are required to
be secured continuously by collateral maintained on a current basis at an amount
at least equal to market value of the securities loaned, which will be marked to
market daily. The financial condition of the borrower will be monitored by the
Adviser on an ongoing basis. The Portfolio would continue to receive the
equivalent of the interest or dividends paid by the issuer on the securities
loaned and would also receive a fee, or all or a portion of the interest on
investment of the collateral. The Portfolio would have the right to call a loan
and obtain the securities loaned at any time on up to five business days'
notice. The Portfolio would not have the right to vote any securities having
voting rights during the existence of a loan, but could call the loan in
anticipation of an important vote to be taken among holders of the securities or
the giving or holding of their consent on a material matter affecting the
investment. If the Adviser decides to make securities loans, it is intended that
the value of the securities loaned would not exceed one-third of the Portfolio's
total assets. As with other extensions of credit there are risks of delay in
recovery or even loss of rights in the securities loaned if the borrower of the
securities fails financially. However, the loans will be made only to
organizations deemed by the Adviser to be sufficiently creditworthy and when, in
the judgment of the Adviser, the consideration which can be earned from
securities loans of this type justifies the attendant risk. Securities lending
involves administration expenses including finders fees.
INVESTMENT RESTRICTIONS
The following investment restrictions of the Fund are designated as
fundamental and as such cannot be changed without the approval by the holders of
a majority of the Fund's outstanding voting securities, which as used in this
SAI means the lesser of (a) 67% or more of the outstanding voting securities of
the Fund present or represented by proxy at a meeting if the holders of more
than 50% of the shares are present or represented at the meeting or (b) more
than 50% of the shares of the Fund. Accordingly, the Fund may not:
(1) 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 1940 Act.
The Portfolio has adopted substantially the same fundamental investment
restrictions as the foregoing investment restrictions adopted by the Fund; such
restrictions cannot be changed without the approval of a "majority of the
outstanding voting securities" of the Portfolio.
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 and
commercial paper issued pursuant to Section 4(2) of said Act that the Board of
Trustees of the Trust or the Portfolio, or their delegate, determines to be
liquid. There is no current intention to purchase Rule 144A securities. 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). The 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. Neither the Fund nor the Portfolio will
purchase warrants if, as a result of such purchase, more than 5% of the
Portfolio's or the Fund's net assets, as the case may be (taken at current
value), would be invested in warrants, and the value of such warrants which are
not listed on the New York or American Stock Exchange may not exceed 2% of the
Portfolio's or the Fund's net assets; this policy does not apply to or restrict
warrants acquired by the Portfolio or the Fund in units or attached to
securities, inasmuch as such warrants are deemed to be without value. Neither
the Fund nor the Portfolio will purchase any securities if at the time of such
purchase, permitted borrowings under investment restriction (1) above exceed 5%
of the value of the Portfolio's or the Fund's total assets, as the case may be.
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).
Whenever an investment policy or investment restriction set forth in the
Prospectus or this SAI states a maximum percentage of assets that may be
invested in any security or other asset or describes a policy regarding quality
standards, such percentage limitation or standard shall be determined
immediately after and as a result of the Fund's or the Portfolio's acquisition
of such security or other asset. Accordingly, any later increase or decrease
resulting from a change in values, assets or other circumstances, other than a
subsequent rating change below investment grade made by a rating service, will
not compel the Fund or the Portfolio, as the case may be, to dispose of such
security or other asset. Nevertheless, under normal market conditions the Fund
and the Portfolio must take actions necessary to comply with its policy of
investing at least 65% of total assets in equity securities of Asian small
companies. Moreover, the Fund and the Portfolio must always be in compliance
with its borrowing policy set forth above.
Although permissible under the Fund's investment restrictions, the Fund has
no present intention during the coming fiscal year to: borrow money; pledge its
assets; underwrite securities issued by other persons; or make loans to other
persons.
TRUSTEES AND OFFICERS
The Trustees and officers of the Trust and the Portfolio are listed below.
Except as indicated, each individual has held the office shown or other offices
in the same company for the last five years. Unless otherwise noted, the
business address of each Trustee and officer is 24 Federal Street, Boston,
Massachusetts 02110, which is also the address of the Fund's sponsor and
manager, Eaton Vance Management ("Eaton Vance"), of Eaton Vance's wholly-owned
subsidiary, Boston Management and Research ("BMR"), of Eaton Vance's parent,
Eaton Vance Corp. ("EVC"), and of Eaton Vance's trustee, Eaton Vance, Inc.
("EV"). Eaton Vance and EV are both wholly-owned subsidiaries of EVC. The
business address of the Adviser is 3808 One Exchange Square, Central, Hong Kong.
Those Trustees who are "interested persons" of the Trust, the Portfolio, 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, the Portfolio, Eaton Vance, BMR, EVC or EV,
are indicated by an asterisk (*).
TRUSTEES OF THE TRUST AND THE PORTFOLIO
JAMES B. HAWKES (55), President of the Trust, Vice President of the Portfolio
and Trustee*
President and Chief Executive Officer of Eaton Vance, BMR, EVC and EV, and a
Director of EVC and EV. Director or Trustee and officer of various
investment companies managed by Eaton Vance or BMR. Director of Lloyd George
Management (B.V.I.) Limited.
HON. EDWARD K.Y. CHEN (51), Trustee of the Portfolio
President of Lingnan College in Hong Kong. Professor and Director of Centre of
Asian Studies at the University of Hong Kong from 1979-1995. Director of First
Pacific Company and a Board Member of the Mass Transit Railway Corporation.
Member of the Executive Council of the Hong Kong Government since 1992 and
Chairman of the Consumer Council since 1991.
Address: President's Office, Lingnan College, Tuen Mun, Hong Kong
DONALD R. DWIGHT (65), 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 (61), Trustee
Jacob H. Schiff Professor of Investment Banking, Harvard University Graduate
School of Business Administration. Director or Trustee of various investment
companies managed by Eaton Vance or BMR.
Address: Harvard University Graduate School of Business Administration,
Soldiers Field Road, Boston, Massachusetts 02134
NORTON H. REAMER (61), Trustee
President and Director, United Asset Management Corporation (a holding company
owning institutional investment management firms); Chairman, President and
Director, UAM Funds (mutual funds). Director or Trustee of various investment
companies managed by Eaton Vance or BMR.
Address: One International Place, Boston, Massachusetts 02110
JOHN L. THORNDIKE (70), Trustee
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 (66), Trustee
Investment Adviser and Consultant. Director or Trustee of various investment
companies managed by Eaton Vance or BMR.
Address: 504 Via Almar, Palos Verdes Estates, California 90274
OFFICERS OF THE TRUST AND THE PORTFOLIO
HON. ROBERT LLOYD GEORGE (44), President of the Portfolio
Chairman and Chief Executive of Lloyd George Management (B.V.I.) Limited.
Chairman and Chief Executive Officer of the Advisers. Managing Director of
Indosuez Asia Investment Services, Ltd. from 1984 to 1991.
Address: 3808 One Exchange Square, Central, Hong Kong
WILLIAM D. BURT (58), Vice President of the Trust
Vice President of Eaton Vance, BMR and EV since November 1994; formerly Vice
President of The Boston Company (1990-1994). Mr. Burt was elected Vice
President of the Trust on June 19, 1995.
M. DOZIER GARDNER (63), Vice President of the Trust
Vice Chairman of Eaton Vance, BMR, EVC and EV, and Director of EVC and EV.
Director or Trustee and officer of various investment companies managed by
Eaton Vance or BMR.
BARCLAY TITTMANN (64), Vice President of the Trust
Vice President of Eaton Vance, BMR and EV since October 1993; formerly Vice
President of Invesco Management and Research (1970-1993). Mr. Tittmann was
elected Vice President of the Trust on June 19, 1995.
SCOBIE DICKINSON WARD (31), Vice President, Assistant Secretary and Assistant
Treasurer of the Portfolio
Director of Lloyd George Management (B.V.I.) Limited. Director of the
Advisers. Investment Manager of Indosuez Asia Investment Services, Ltd. from
1990 to 1991.
Address: 3808 One Exchange Square, Central, Hong Kong
WILLIAM WALTER RALEIGH KERR (46), Vice President, Secretary and Assistant
Treasurer of the Portfolio
Director, Finance Director and Chief Operating Officer of the Advisers.
Director of Lloyd George Management (B.V.I.) Limited.
Address: 3808 One Exchange Square, Central, Hong Kong
JAMES L. O'CONNOR (51), Vice President of the Portfolio and Treasurer
Vice President of Eaton Vance, BMR and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
THOMAS OTIS (65), Vice President of the Portfolio and 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 (61), Assistant Treasurer and Assistant Secretary
Vice President of Eaton Vance, BMR and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
A. JOHN MURPHY (34), Assistant Secretary
Assistant Vice President of Eaton Vance, BMR and EV since March 1, 1994;
employee of Eaton Vance since March 1993. State Regulations Supervisor, The
Boston Company (1991-1993). Officer of various investment companies managed by
Eaton Vance or BMR. Mr. Murphy was elected Assistant Secretary of the Trust on
March 27, 1995.
ERIC G. WOODBURY (39), Assistant Secretary
Vice President of Eaton Vance, BMR and EV since February 1993; formerly,
associate attorney at Dechert, Price & Rhoads and Gaston & Snow. Officer of
various investment companies managed by Eaton Vance or BMR. Mr. Woodbury was
elected Assistant Secretary of the Trust on June 19, 1995.
Messrs. Hayes (Chairman), Reamer and Thorndike, are members of the Special
Committee of the Board of Trustees of the Trust. The purpose of the Special
Committee is to consider, evaluate and make recommendations to the full Board of
Trustees concerning (i) all contractual arrangements with service providers to
the Fund, including administrative services, transfer agency, custodial and fund
accounting and distribution services, and (ii) all other matters in which Eaton
Vance or its affiliates has any actual or potential conflict of interest with
the Fund or its shareholders.
The Nominating Committee is comprised of four Trustees who are not
"interested persons" as that term is defined under the 1940 Act ("noninterested
Trustees"). The Committee has four-year staggered terms, with one member
rotating off the Committee to be replaced by another noninterested Trustee of
the Trust. The purpose of the Committee is to recommend to the Board nominees
for the position of noninterested Trustee and to assure that at least a majority
of the Board of Trustees is independent of Eaton Vance and its affiliates.
Messrs. Treynor (Chairman) and Dwight are members of the Audit Committee of
the Board of Trustees. 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 trading and brokerage
policies and practices, accounting and auditing practices and procedures,
accounting records, internal accounting controls, and the functions performed by
the custodian, transfer agent and dividend disbursing agent of the Trust.
Trustees of the Portfolio (except Mr. Chen) who are not affiliated with
Eaton Vance may elect to defer receipt of all or a percentage of their annual
fees in accordance with the terms of a Trustees Deferred Compensation Plan (the
"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. Neither the Fund nor
the Portfolio has a retirement Plan for its Trustees. For information concerning
the compensation earned by the Trustees of the Trust and the Portfolio, see
"Fees and Expenses" in Part II.
The Adviser is a subsidiary of Lloyd George Management (B.V.I.) Limited,
which is ultimately controlled by the Hon. Robert J.D. Lloyd George, President
of the Portfolio and Chairman and Chief Executive Officer of the Adviser. Mr.
Hawkes is a Trustee and officer of the Trust and an officer of the Fund's
sponsor and manager. Mr. Hayes is a Trustee of the Trust.
MANAGEMENT OF THE FUND
Eaton Vance acts as the sponsor and manager of the Fund and the
administrator of the Portfolio. The Portfolio has engaged Lloyd George
Investment Management (Bermuda) Limited (the "Adviser") as its investment
adviser.
THE ADVISER
As investment adviser to the Portfolio, the Adviser manages the Portfolio's
investments, subject to the supervision of the Board of Trustees of the
Portfolio. The Adviser is 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
Adviser is entitled to receive a monthly advisory fee computed by applying the
annual asset rate applicable to that portion of the average daily net assets of
the Portfolio throughout the month in each Category as indicated below:
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 Adviser under the Investment Advisory Agreement, see
"Fees and Expenses" in Part II.
Eaton Vance is among the oldest mutual funds organizations in the country.
As an experienced mutual fund provider, Eaton Vance has contributed to making
the securities market more widely accessible to investors. Eaton Vance equity
funds provide a way to take advantage of the potentially higher returns of
individual stocks. Eaton Vance has a staff of more than 25 investment
professionals specializing in security analysis and equity management.
The Eaton Vance investment process stresses intensive fundamental research.
Portfolios are built on a stock-by-stock basis and the process includes visits
to companies under consideration. The process also focuses on well-managed
companies with the following characteristics: strong underlying value or
franchise; solid earnings growth; steady cash flow, strong balance sheet;
innovative products or services; potential for sustained growth; seasoned,
creative management; or ability to survive variable market conditions.
By investing in diversified portfolios and employing prudent and
professional management, Eaton Vance mutual funds can provide attractive return,
while exposing shareholders to less risk than if they were to build investment
portfolios on their own. Eaton Vance employs rigorous buy and sell disciplines.
For instance, purchases are made with an eye to both relative and absolute
growth rates and price/earning ratios, and sales are made when a stock is fully
valued, fundamentals deteriorate, management fails to execute its strategy, or
more attractive alternatives are available.
LGM specializes in providing investment management services with respect to
equity securities of companies trading in Asian securities markets, especially
those of emerging markets. LGM currently manages portfolios for both private
clients and institutional investors seeking long-term capital growth and has
advised Eaton Vance's international equity funds since 1992. LGM's core
investment team consists of nine experienced investment professionals who have
worked together over a number of years successfully managing client portfolios
in non-U.S. stock markets. The team has a unique knowledge of, and experience
with, Asian emerging markets. LGM analysts cover East Asia, the India
subcontinent, Russia and Eastern Europe, Latin America, Australia and New
Zealand from offices in Hong Kong, London and Bombay. LGM is ultimately
controlled by the Hon. Robert J.D. Lloyd George, President of the Portfolio and
Chairman and Chief Executive Officer of the Adviser. LGM's only business is
portfolio management. Eaton Vance's parent is a shareholder of LGM.
The Adviser and LGM have adopted a conservative management style, providing
a blend of Asian and multinational expertise with the most rigorous
international standards of fundamental security analysis. Although focused
primarily in Asia, the Adviser 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 the Adviser are the Honourable Robert Lloyd George, William
Walter Raleigh Kerr, M.F. Tang, Scobie Dickinson Ward, Pamela Chan, Adaline
Mang-Yee Ko, Peter Bubenzer and Judith Collis. The Hon. Robert J.D. Lloyd George
is Chairman and Chief Executive Officer of the Adviser and Mr. Kerr is an
officer of the Adviser. The business address of the first six individuals is
3808 One Exchange Square, Central, Hong Kong and of the last two is Cedar House,
41 Cedar Avenue, Hamilton HM12, Bermuda.
Mr. Lloyd George was born in London in 1952 and educated at Eton College,
where he was a King's Scholar, and at Oxford University. Prior to founding LGM,
Mr. Lloyd George was Managing Director of Indosuez Asia Investment Services Ltd.
In 1983 Mr. Lloyd George launched and managed the Henderson Japan Special
Situations Trust. Prior to that he spent four years with the Fiduciary Trust
Company of New York researching international securities, in the United States
and Europe, for the United Nations Pension Fund.
Eaton Vance and the Adviser follow a common investment philosophy, striving
to identify companies with outstanding management and earnings growth potential
by following a disciplined management style, adhering to the most rigorous
international standards of fundamental security analysis, placing heavy emphasis
on research, visiting every company owned, and closely monitoring political and
economic developments.
Eaton Vance mutual funds are distributed by Eaton Vance Distributors both
within the United States and offshore. Eaton Vance Distributors believes that an
investment professional can provide valuable services to you to help you reach
your investment goals. Meeting investment goals requires time, objectivity and
investment savvy. Before making an investment recommendation, a representative
can help you carefully consider your short- and long-term financial goals, your
tolerance for investment risk, your investment time frame, and other investments
you may already own. Your professional investment representatives are
knowledgeable about financial markets, as well as the wide range of investment
opportunities available. A representative can provide you with tailored
financial advice and help you decide when to buy, sell or persevere with your
investments.
The Portfolio's investment advisory agreement with the Adviser remains in
effect until February 28, 1998 and may be continued indefinitely thereafter so
long as such continuance is approved at least annually (i) by the vote of a
majority of the Trustees of the Portfolio who are not interested persons of the
Portfolio 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 Adviser 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
the Adviser, the Adviser shall not be liable to the Portfolio or to any
shareholder for any act or omission in the course of or connected with rendering
services or for any losses sustained in the purchase, holding or sale of any
security.
MANAGER, SPONSOR AND ADMINISTRATOR
See "Management of the Fund and the Portfolio" in the Fund's current
Prospectus for a description of the services Eaton Vance performs as the manager
and sponsor of the Fund and the administrator of the Portfolio. Under Eaton
Vance's management contract with the Fund and administration agreement with the
Portfolio, Eaton Vance receives a monthly management fee from the Fund and a
monthly administration fee from the Portfolio. Each fee is computed by applying
the annual asset rate applicable to that portion of the average daily net assets
of the Fund or the Portfolio throughout the month in each Category as indicated
below:
ANNUAL
CATEGORY AVERAGE DAILY NET ASSETS ASSET RATE
1 less than $500 million ............................ 0.25%
2 $500 million but less than $1 billion ............. 0.23333
3 $1 billion but less than $1.5 billion ............. 0.21667
4 $1.5 billion but less than $2 billion ............. 0.20
5 $2 billion but less than $3 billion ............... 0.18333
6 $3 billion and over ............................... 0.16667
For the administration and the management fees that the Portfolio and the
Fund paid to Eaton Vance, see "Fees and Expenses" in Part II.
Eaton Vance's management contract with the Fund and administration agreement
with the Portfolio will each remain in effect until February 28, 1998. Each
agreement may be continued from year to year thereafter 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 on
February 21, 1996 of the Trust and the Portfolio.
The Fund and the Portfolio, as the case may be, will each be responsible for
all of its respective costs and expenses not expressly stated to be payable by
Eaton Vance under the management contract or the administration agreement. Such
costs and expenses to be borne by each of the Fund or the Portfolio, as the case
may be, include, without limitation, custody and transfer agency fees and
expenses, including those incurred for determining net asset value and keeping
accounting books and records, expenses of pricing and valuation services; the
cost of share certificates; membership dues in investment company organizations;
brokerage commissions and fees; fees and expenses of registering under the
securities laws; expenses of reports to shareholders and investors; proxy
statements, and other expenses of shareholders' or investors' meetings;
insurance premiums, printing and mailing expenses; interest, taxes and corporate
fees; legal and accounting expenses; compensation and expenses of Trustees not
affiliated with Eaton Vance; distribution and service fees payable by the Fund
under its Rule 12b-1 distribution plan; and investment advisory, management and
administration fees. The Fund or the Portfolio will also each bear expenses
incurred in connection with litigation in which the Fund or the Portfolio, as
the case may be, is a party and any legal obligation to indemnify its respective
officers and Trustees with respect thereto, to the extent not covered by
insurance.
Eaton Vance and EV are both wholly-owned subsidiaries of EVC. BMR is a
wholly-owned subsidiary of Eaton Vance. Eaton Vance and BMR are both
Massachusetts business trusts, and EV is the trustee of Eaton Vance and BMR. The
Directors of EV are Landon T. Clay, M. Dozier Gardner, James B. Hawkes and
Benjamin A. Rowland, Jr. The Directors of EVC consist of the same persons and
John G.L. Cabot and Ralph Z. Sorenson. Mr. Clay is chairman, Mr. Gardner is vice
chairman and Mr. Hawkes is president and chief executive officer of EVC, Eaton
Vance, BMR and EV. All of the issued and outstanding shares of Eaton Vance and
of EV are owned by EVC. All of the issued and outstanding shares of BMR are
owned by Eaton Vance. All shares of the outstanding Voting Common Stock of EVC
are deposited in a Voting Trust which expires December 31, 1997, the Voting
Trustees of which are Messrs. Clay, Gardner, Hawkes and Rowland and Thomas E.
Faust, Jr. The Voting Trustees have unrestricted voting rights for the election
of Directors of EVC. All of the outstanding voting trust receipts issued under
said Voting Trust are owned by certain of the officers of Eaton Vance and BMR
who are also officers or officers and Directors of EVC and EV. As of January 1,
1997, Messrs. Clay, Gardner and Hawkes each owned 24% of such voting trust
receipts, and Messrs. Roland and Faust owned 15% and 13%, respectively, of such
voting trust receipts. Messrs. Gardner, Hawkes and Otis, who are officers and/or
Trustees of the Trust, are members of the EVC, Eaton Vance, BMR and EV
organizations. Messrs. Burt, Murphy, O'Connor, Otis, Tittmann and Woodbury and
Ms. Sanders, are officers of the Trust and/or the Portfolio, and are also
members of the Eaton Vance, BMR and EV organizations. Eaton Vance will receive
the fees paid under the management agreement.
EVC owns all of the stock of Energex Energy Corporation, which is engaged in
oil and gas exploration and development. In addition, Eaton Vance owns all the
stock of Northeast Properties, Inc., which is engaged in real estate investment.
EVC also owns 24% of the Class A shares issued by the parent of the Adviser. EVC
owns all the stock of Fulcrum Management, Inc. and MinVen, Inc., which are
engaged in precious metal mining, venture investment and management. EVC, Eaton
Vance, BMR and EV may also enter into other businesses.
EVC and its affiliates and their officers and employees from time to time
have transactions with various banks, including the custodian of the Fund and
the Portfolio, Investors Bank & Trust Company. It is Eaton Vance's opinion that
the terms and conditions of such transactions were not and will not be
influenced by existing or potential custodial or other relationships between the
Fund and such banks.
CUSTODIAN
Investors Bank & Trust Company ("IBT"), 89 South Street, Boston,
Massachusetts, acts as custodian for the Fund and the Portfolio. IBT has the
custody of all cash and securities of the Fund and all securities of the
Portfolio purchased in the United States, maintains the Fund's and the
Portfolio's general ledger and computes the daily net asset value of interests
in the Portfolio and the net asset value of shares of the Fund. In such
capacities, IBT attends to details in connection with the sale, exchange,
substitution, transfer or other dealings with the Fund's and the Portfolio's
respective investments, receives and disburses all funds, and performs various
other ministerial duties upon receipt of proper instructions from the Fund and
the Portfolio, respectively.
Portfolio securities, if any, purchased by the Portfolio in the U.S. are
maintained in the custody of IBT or of other domestic banks or depositories.
Portfolio securities purchased outside of the U.S. are maintained in the custody
of foreign banks and trust companies that are members of IBT's Global Custody
Network, or foreign depositories used by such foreign banks and trust companies.
Each of the domestic and foreign custodial institutions holding portfolio
securities has been approved by the Board of Trustees of the Portfolio in
accordance with regulations under the 1940 Act.
IBT charges fees which are competitive within the industry. These fees for
the Portfolio relate to: (1) custody services based upon a percentage of the
market values of Portfolio securities; (2) bookkeeping and valuation services
provided at an annual rate; (3) activity charges, primarily the result of the
number of portfolio transactions; and (4) reimbursement of out-of-pocket
expenses. These fees are then reduced by a credit for cash balances of the
Portfolio at the custodian equal to 75% of the 91-day U.S. Treasury Bill auction
rate applied to the Portfolio's average daily collected balances. The portion of
the fee for the Fund related to bookkeeping and pricing services is based upon a
percentage of the Fund's net assets and the portion of the fee related to
financial statement preparation is a fixed amount. IBT also provides services in
connection with the preparation of shareholder reports and the electronic filing
of such reports with the Commission, for which it receives a separate fee.
Landon T. Clay, a Director of EVC and an officer, Trustee or Director of other
entities in the Eaton Vance organization, owns approximately 13% of the voting
stock of Investors Financial Services Corp., the holding company parent of IBT.
Management believes that such ownership does not create an affiliated person
relationship between the Fund or the Portfolio and IBT under the 1940 Act.
SERVICE FOR WITHDRAWAL
The Transfer Agent will send to the shareholder regular monthly or quarterly
payments of any permitted amount designated by the shareholder (see "Eaton Vance
Shareholder Services -- Withdrawal Plan" in the Fund's current Prospectus) based
upon the value of the shares held. The checks will be drawn from share
redemptions and hence, although they are a return of principal may require the
recognition of taxable gain or loss. Income dividends and capital gains
distributions in connection with withdrawal accounts will be credited at net
asset value as of the record date for each distribution. Continued withdrawals
in excess of current income will eventually use up principal, particularly in a
period of declining market prices. A shareholder may not have a withdrawal plan
in effect at the same time he or she has authorized Bank Automated Investing or
is otherwise making regular purchases of Fund shares. The shareholder, 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, 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 (such prices may not be used, however, where an active
over-the-counter market in an exchange listed security better reflects current
market value). Unlisted or listed securities for which closing sale prices are
not available are valued at the mean between the latest bid and asked prices. An
option is valued at the last sale price as quoted on the principal exchange or
board of trade on which such option or contract is traded, or in the absence of
a sale, the mean between the last bid and asked price. Futures positions on
securities or currencies are generally valued at closing settlement prices. All
other securities are valued at fair value as determined in good faith by or
pursuant to procedures established by the Trustees of the Portfolio.
Short term debt securities with a remaining maturity of 60 days or less are
valued at amortized cost. If securities were acquired with a remaining maturity
of more than 60 days, their amortized cost value will be based on their value on
the sixty-first day prior to maturity. Other fixed income and debt securities,
including listed securities and securities for which price quotations are
available, will normally be valued on the basis of valuations furnished by a
pricing service.
Generally, trading in the foreign securities owned by the Portfolio is
substantially completed each day at various times prior to the close of the
Exchange. The values of these securities used in determining the net asset value
of the Portfolio's shares are computed as of such times. Occasionally, events
affecting the value of foreign securities may occur between such times and the
close of the Exchange which will not be reflected in the computation of the
Portfolio's net asset value (unless the Portfolio deems that such events would
materially affect its net asset value, in which case an adjustment would be made
and reflected in such computation). Foreign securities and currency held by the
Portfolio will be valued in U.S. dollars; such values will be computed by the
custodian based on foreign currency exchange rate quotations.
Each investor in the Portfolio, including the Fund, may add to or reduce its
investment in the Portfolio on each day the New York Stock Exchange (the
"Exchange") is open for trading ("Portfolio Business Day") as of the close of
regular trading on the Exchange (the "Portfolio Valuation Time"). The value of
each investor's interest in the Portfolio will be determined by multiplying the
net asset value of the Portfolio by the percentage, determined on the prior
Portfolio Business Day, which represented that investor's share of the aggregate
interests in the Portfolio on such prior day. Any additions or withdrawals for
the current Portfolio Business Day will then be recorded. Each investor's
percentage of the aggregate interest in the Portfolio will then be recomputed as
the percentage equal to a fraction (i) the numerator of which is the value of
such investor's investment in the Portfolio as of the close of Portfolio
Valuation Time on the prior Portfolio Business Day plus or minus, as the case
may be, that amount of any additions to or withdrawals from the investor's
investment in the Portfolio on the current Portfolio Business Day, and (ii) the
denominator of which is the aggregate net asset value of the Portfolio as of the
Portfolio Valuation Time on the prior Portfolio Business Day plus or minus, as
the case may be, the amount of the net additions to or withdrawals from the
aggregate investment in the Portfolio on the current Portfolio Business Day by
all investors in the Portfolio. The percentage so determined will then be
applied to determine the value of the investor's interest in the Portfolio for
the current Portfolio Business Day.
INVESTMENT PERFORMANCE
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 results. The calculation
assumes that all distributions are reinvested at net asset value on the
reinvestment dates during the period, and either (i) the deduction of the
maximum sales charge from the initial $1,000 purchase order or (ii) a complete
redemption of the investment and, if applicable, the deduction of the CDSC at
the end of the period.
Total return may be compared to relevant indices, such as 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, Morgan
Stanley Pacific (Excluding Japan) Hang Seng, and FT Pacific (Excluding Japan).
The Fund's total return and comparisons with these indices may be used in
advertisements and in information furnished to present or prospective
shareholders. The Fund's performance may differ from that of other investors in
the Portfolio, including any other investment companies.
Information used in advertisements and in materials furnished to present or
prospective shareholders may include statistics, data and performance studies
prepared by independent organizations (e.g. Ibbotson Associates, Standard &
Poor's Ratings Group, Merrill Lynch, Pierce, Fenner & Smith, Inc., Bloomberg,
L.P., Dow Jones & Company, Inc., and The Federal Reserve Board) or included in
various publications (e.g. The Wall Street Journal, Barron's and The Decade:
Wealth of Investments in U.S. Stocks, Bonds, Bills & Inflation) reflecting the
investment performance or return achieved by various classes and types of
investments (e.g. common stocks, small company stocks, long-term corporate
bonds, long-term government bonds, intermediate-term government bonds, U.S.
Treasury bills) over various periods of time. This information may be used to
illustrate the benefits of long-term investments in common stocks. Information
about the portfolio allocation, portfolio turnover and holdings of the Portfolio
may be included in advertisements and other material furnished to present and
prospective shareholders.
From time to time, evaluations of the Fund's performance or rankings of
mutual funds (which include the Fund) made by independent sources (e.g., Lipper
Analytical Services, Inc., CDA/Weisenberger and Morningstar, Inc.) may be used
in advertisements and in information furnished to present or prospective
shareholders. Information, charts and illustrations showing the effect of
compounding interest or relating to inflation and taxes (including their effects
on the dollar and the return on stocks and other investment vehicles) may also
be included in advertisements and materials furnished to present and prospective
investors.
Information used in advertisements and materials furnished to present and
prospective investors may include statements or illustrations relating to the
appropriateness of certain types of securities and/or mutual funds to meet
specific financial goals. Such information may address:
-- cost associated with aging parents;
-- funding a college education (including its actual and estimated cost);
-- health care expenses (including actual and projected expenses);
-- long-term disabilities (including the availability of, and coverage
provided by, disability insurance); and
-- retirement (including the availability of social security benefits, the
tax treatment of such benefits and statistics and other information
relating to maintaining a particular standard of living and outliving
existing assets).
Such information may also address different methods for saving money and the
results of such methods, as well as the benefits of investing in equity
securities. Such information may describe: the potential for growth; the
performance of equities as compared to other investment vehicles; and the value
of investing as early as possible and regularly, as well as staying invested.
The benefits of investing in equity securities by means of a mutual fund may
also be included (such benefits may include diversification, professional
management and the variety of equity mutual fund products).
Information in advertisements and materials furnished to present and
prospective investors may include profiles of different types of investors
(i.e., investors with different goals and assets) and different investment
strategies for meeting specific financial goals. Such information may provide
hypothetical illustrations which include: results of various investment
strategies; performance of an investment in the Fund over various time periods;
and results of diversifying assets among serveral investments with varying
performance. Information in advertisements and materials furnished to present
and prospective investors may also include quotations (including editorial
comments) and statistics concerning investing in securities, as well as
investing in particular types of securities and the performance of such
securities.
The Fund may provide information about Eaton Vance, its affiliates and other
investment advisers to the funds in the Eaton Vance Family of Funds in sales
material or advertisements provided to investors or prospective investors. Such
material or advertisements may also provide information on the use of investment
professionals by such investors.
TAXES
See also "Distributions 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, the Portfolio's net investment income, net realized capital gains, and any
other items of income, gain, loss, deduction or credit. The Portfolio will make
allocations to the Fund in a manner intended to comply with the Code and
applicable regulations and will make moneys available for withdrawal at
appropriate times and in sufficient amounts to enable the Fund to satisfy the
tax distribution requirements that apply to the Fund and that must be satisfied
in order to avoid federal income and/or excise tax on the Fund. For purposes of
applying the requirements of the Code regarding qualification as a RIC, the Fund
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 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 paid no federal income tax.
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.
Certain foreign exchange gains and losses realized by the Portfolio and
allocated to the Fund in connection with the Portfolio's investments in foreign
securities and foreign currency related options, futures or forward contracts or
foreign currency may be treated as ordinary income and losses under special tax
rules. Certain options, futures or forward contracts of the Portfolio may be
required to be marked to market (i.e., treated as if closed out) on the last day
of each taxable year, and any gain or loss realized with respect to these
contracts may be required to be treated as 60% long-term and 40% short-term gain
or loss or, in the case of certain contracts relating to foreign currency, as
ordinary income or loss. Positions of the Portfolio in securities and offsetting
options, futures or forward contracts may be treated as "straddles", which are
subject to tax rules that may cause deferral of Portfolio losses, adjustments in
the holding periods of Portfolio securities, and other changes in the short-term
or long-term characterization of capital gains and losses, the effect of which
may be to change the amount, timing and character of the Fund's distributions to
shareholders. Certain uses of foreign currency and foreign currency derivatives
such as options, futures, forward contracts and swaps and investment by the
Portfolio in certain "passive foreign investment companies" may be limited or a
tax election may be made, if available, in order to preserve the Fund's ability
to qualify as a RIC or avoid imposition of a tax on the Fund.
The Portfolio anticipates that it will be subject to foreign taxes on its
income (including, in some cases, capital gains) from foreign securities. Tax
conventions between certain countries and the U.S. may reduce or eliminate such
taxes in some cases. If more than 50% of the Fund's total assets, taking into
account its allocable share of the Portfolio's total assets, at the close of any
taxable year of the Fund consists of stock or securities of foreign
corporations, the Fund may file an election with the Internal Revenue Service
pursuant to which shareholders of the Fund will be required to (i) include in
ordinary gross income (in addition to dividends and distributions actually
received) their pro rata shares of foreign income taxes paid by the Portfolio
and allocated to the Fund even though not actually received by them, and (ii)
treat such respective pro rata portions as foreign income taxes paid by them.
Shareholders may then deduct such pro rata portions of foreign income taxes in
computing their taxable incomes, or, alternatively, use them as foreign tax
credits, subject to applicable limitations, against their U.S. income taxes.
Shareholders who do not itemize deductions for federal income tax purposes will
not, however, be able to deduct their pro rata portion of foreign taxes deemed
paid by the Fund, although such shareholders will be required to include their
shares of such taxes in gross income. Shareholders who claim a foreign tax
credit for such foreign taxes may be required to treat a portion of dividends
received from the Fund as a separate category of income for purposes of
computing the limitations on the foreign tax credit. Tax-exempt shareholders
will ordinarily not benefit from this election. Each year that the Fund files
the election described above, its shareholders will be notified of the amount of
(i) each shareholder's pro rata share of foreign income taxes paid by the
Portfolio and allocated to the Fund and (ii) the portion of Fund dividends which
represents income from each foreign country. If the Fund does not make this
election, it may deduct its allocated share of such taxes in computing the
income it is required to distribute.
The Portfolio will allocate at least annually to the Fund and its other
investors their respective distributive shares of any net investment income and
net capital gains which have been recognized for federal income tax purposes
(including unrealized gains at the end of the Portfolio's fiscal year on certain
options and futures transactions that are required to be marked-to-market). Such
amounts will be distributed by the Fund to its shareholders in cash or
additional shares, as they elect. Shareholders of the Fund will be advised of
the nature of the distributions.
Distributions by the Fund of the excess of net long-term capital gain over
net short-term capital loss earned by the Portfolio and allocated to the Fund,
taking into account any capital loss carryforwards that may be available 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 of the Fund with
a tax holding period of 6 months or less will be treated as a long-term capital
loss to the extent of any distribution of net long-term capital gains with
respect to such shares. All or a portion of a loss realized upon a redemption or
other disposition of Fund shares may be disallowed under "wash sale" rules if
other Fund shares are purchased (whether through reinvestment of dividends or
otherwise) within 30 days before or after the disposition. Any disallowed loss
will result in an adjustment to the shareholder's tax basis in some or all of
the other shares acquired.
Special tax rules apply to Individual Retirement Accounts ("IRAs") and other
retirement plans and shareholders investing through IRAs or such plans should
consult their tax advisers for more information.
Amounts paid by the Fund to individuals and certain other shareholders who
have not provided the Fund with their correct taxpayer identification number and
certain certifications required by the Internal Revenue Service (the "IRS"), as
well as shareholders with respect to whom the Fund has received notification
from the IRS or a broker, may be subject to "backup" withholding of federal
income tax 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, foreign corporations and certain other
foreign entities generally will be subject to a U.S. withholding tax at a rate
of 30% on the Fund's distributions from its ordinary income and the excess of
its net short-term capital gain over its net long-term capital loss, unless the
tax is reduced or eliminated by an applicable tax treaty. Distributions from the
excess of the Fund's net long-term capital gain over its net short-term capital
loss received by such shareholders and any gain from the sale or other
disposition of shares of the Fund generally will not be subject to U.S. federal
income taxation, provided that non-resident alien status has been certified by
the shareholder. Different U.S. tax consequences may result if the shareholder
is engaged in a trade or business in the United States, is present in the United
States for a sufficient period of time during a taxable year to be treated as a
U.S. resident, or fails to provide any required certifications regarding status
as a non-resident alien investor. Foreign shareholders should consult their tax
advisers regarding the U.S. and foreign tax consequences of an investment in the
Fund.
The foregoing discussion does not address the special tax rules applicable
to certain classes of investors, such as IRAs and other retirement plans,
tax-exempt entities, insurance companies and financial institutions.
Shareholders should consult their own tax advisers with respect to 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 the Adviser.
The Adviser places the portfolio security transactions of the Portfolio and
of certain other accounts managed by the Adviser for execution with many firms.
The Adviser uses its best efforts to obtain execution of portfolio transactions
at prices which are advantageous to the Portfolio and (when a disclosed
commission is being charged) at reasonably competitive commission rates. In
seeking such execution, the Adviser will use its best judgment in evaluating the
terms of a transaction, and will give consideration to various relevant factors,
including without limitation the size and type of the transaction, the general
execution and operational capabilities of the broker-dealer, the nature and
character of the market for the security, the confidentiality, speed and
certainty of effective execution required for the transaction, the reputation,
reliability, experience and financial condition of the broker-dealer, the value
and quality of services rendered by the broker-dealer in other transactions, and
the reasonableness of the commission, if any. Transactions on stock exchanges
and other agency transactions involve the payment by the Portfolio of negotiated
brokerage commissions. Such commissions vary among different broker-dealer
firms, and a particular broker-dealer may charge different commissions according
to such factors as the difficulty and size of the transaction and the volume of
business done with such broker-dealer. Transactions in foreign securities
usually involve the payment of fixed brokerage commissions, which are generally
higher than those in the United States. There is generally no stated commission
in the case of securities traded in the over-the-counter markets, but the price
paid or received by the Portfolio usually includes an undisclosed dealer markup
or markdown. In an underwritten offering the price paid by the Portfolio
includes a disclosed fixed commission or discount retained by the underwriter or
dealer. Although commissions paid on portfolio transactions will, in the
judgment of the Adviser, be reasonable in relation to the value of the services
provided, commissions exceeding those which another firm might charge may be
paid to broker-dealers who were selected to execute transactions on behalf of
the Portfolio and the Adviser's other clients in part for providing brokerage
and research services to the Adviser.
As authorized in Section 28(e) of the Securities Exchange Act of 1934, a
broker or dealer who executes a portfolio transaction on behalf of the Portfolio
may receive a commission which is in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction if the
Adviser determines in good faith that such commission was reasonable in relation
to the value of the brokerage and research services provided. This determination
may be made on the basis of either that particular transaction or on the basis
of the overall responsibilities which the Adviser and its affiliates have for
accounts over which they exercise investment discretion. In making any such
determination, the Adviser will not attempt to place a specific dollar value on
the brokerage and research services provided or to determine what portion of the
commission should be related to such services. Brokerage and research services
may include advice as to the value of securities, the advisability of investing
in, purchasing, or selling securities, and the availability of securities or
purchasers or sellers of securities; furnishing analyses and reports concerning
issuers, industries, securities, economic factors and trends, portfolio strategy
and the performance of accounts; and effecting securities transactions and
performing functions incidental thereto (such as clearance and settlement); and
the "Research Services" referred to in the next paragraph.
It is a common practice in the investment advisory industry for the advisers
of investment companies, institutions and other investors to receive research,
statistical and quotation services, data, information and other services,
products and materials which assist such advisers in the performance of their
investment responsibilities ("Research Services") from broker-dealers which
execute portfolio transactions for the clients of such advisers and from third
parties with which such broker-dealers have arrangements. Consistent with this
practice, the Adviser may receive Research Services from broker-dealer firms
with which the Adviser places the portfolio transactions of the Portfolio and
from third parties with which these broker-dealers have arrangements. These
Research Services may include such matters as general economic and market
reviews, industry and company reviews, evaluations of securities and portfolio
strategies and transactions and recommendations as to the purchase and sale of
securities and other portfolio transactions, financial, industry and trade
publications, news and information services, pricing and quotation equipment and
services, and research oriented computer hardware, software, data bases and
services. Any particular Research Service obtained through a broker-dealer may
be used by the Adviser in connection with client accounts other than those
accounts which pay commissions to such broker-dealer. Any such Research Service
may be broadly useful and of value to the Adviser in rendering investment
advisory services to all or a significant portion of its clients, or may be
relevant and useful for the management of only one client's account or of a few
clients' accounts, or may be useful for the management of merely a segment of
certain clients' accounts, regardless of whether any such account or accounts
paid commissions to the broker-dealer through which such Research Service was
obtained. The advisory fee paid by the Portfolio is not reduced because the
Adviser receives such Research Services. The Adviser evaluates the nature and
quality of the various Research Services obtained through broker-dealer firms
and attempts to allocate sufficient commissions to such firms to ensure the
continued receipt of Research Services which the Adviser believes are useful or
of value to it in rendering investment advisory services to its clients.
Subject to the requirement that the Adviser shall use its best efforts to
seek to execute portfolio security transactions of the Portfolio at advantageous
prices and at reasonably competitive commission rates or spreads, the Adviser is
authorized to consider as a factor in the selection of any broker-dealer firm
with whom Portfolio orders may be placed the fact that such firm has sold or is
selling shares of the Fund or of other investment companies sponsored by Eaton
Vance. This policy is not inconsistent with a rule of the 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 the Adviser or its
affiliates. The Adviser will attempt to alocate in a manner it deems equitable
portfolio security transactions among the Portfolio and the portfolios of its
other investment accounts whenever decisions are made to purchase or sell
securities by the Portfolio and one or more of such other accounts
simultaneously. In making such allocations, the main factors to be considered
are the respective investment objectives of the Portfolio and such other
accounts, the relative size of portfolio holdings of the same or comparable
securities, the availability of cash for investment by the Portfolio and such
accounts, the size of investment commitments generally held by the Portfolio and
such accounts and the opinions of the persons responsible for recommending
investments to the Portfolio and such accounts. However, there may be instances
when the Portfolio will not participate in a securities transaction that is
allocated among other accounts. While these procedures could have a detrimental
effect on the price or amount of the securities available to the Portfolio from
time to time, it is the opinion of the Trustees of the Trust and the Portfolio
that the benefits available from the Adviser's organization outweigh any
disadvantage that may arise from exposure to simultaneous transactions. For the
brokerage commissions paid by the Portfolio on portfolio transactions, see "Fees
and Expenses" in Part II.
OTHER INFORMATION
On August 18, 1992, the Trust changed its name from Eaton Vance Growth Fund
to Eaton Vance Growth Trust. The Trust is a Massachusetts business trust
established in 1989 as the successor to Eaton Vance Growth Fund, Inc., a
Massachusetts corporation. Eaton Vance, pursuant to its agreement with the
Trust, controls the use of the words "Eaton Vance" or "EV" in the Fund's name
and may use the words "Eaton Vance" and "EV" in other connections and for other
purposes.
The Declaration of Trust may be amended by the Trustees when authorized by
vote of a majority of the outstanding voting securities of the Trust affected by
the amendment. The Trustees may also amend the Declaration of Trust without the
vote or consent of shareholders to change the name of the Trust or 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 applicable federal laws or regulations. The
Trust's By-laws provide that the Trust will indemnify its Trustees and officers
against liabilities and expenses incurred in connection with any litigation or
proceeding in which they may be involved because of their offices with the
Trust. However, no indemnification will be provided to any Trustee or officer
for any liability to the Trust or its shareholders by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.
Under Massachusetts law, if certain conditions prevail, shareholders of a
Massachusetts business trust (such as the Trust) could be deemed to have
personal liability for the obligations of the Trust. Numerous investment
companies registered under the 1940 Act have been formed as Massachusetts
business trusts, and management is not aware of an instance where such liability
has been imposed. The Trust's Declaration of Trust contains an express
disclaimer of liability on the part of the Fund shareholders and the Trust's
By-laws provide that the Trust shall assume the defense on behalf of any Fund
shareholder. Moreover, the Trust's By-laws also provide for indemnification out
of the property of the Fund of any shareholder held personally liable solely by
reason of being or having been a shareholder for all loss or expense arising
from such liability. The assets of the Fund are readily marketable and will
ordinarily substantially exceed its liabilities. In light of the nature of the
Fund's business and the nature of its assets, management believes that the
possibility of the Fund's liabilities exceeding its assets, and therefore the
shareholder's risk of personal liability, is extremely remote.
As permitted by Massachusetts law, there will normally be no meetings of
shareholders for the purpose of electing Trustees unless and until such time as
less than a majority of the Trustees of the Trust holding office have been
elected by shareholders. In such an event the Trustees then in office will call
a shareholder's meeting for the election of Trustees. Except for the foregoing
circumstances and unless removed by action of the shareholders in accordance
with the Trust's By-Laws, the Trustees shall continue to hold office and may
appoint successor Trustees.
The Trust's By-Laws provide that no person shall serve as a Trustee if
shareholders holding two-thirds of the outstanding shares have removed him from
that office either by a written declaration filed with the Trust's custodian or
by votes cast at a meeting called for that purpose. The By-Laws further provide
that under certain circumstances the shareholders may call a meeting to remove a
Trustee and that the Trust is required to provide assistance in communicating
with shareholders about such a meeting.
In accordance with the Declaration of Trust of the Portfolio, there will
normally be no meetings of the investors for the purpose of electing Trustees
unless and until such time as less than a majority of the Trustees holding
office have been elected by investors. In such an event the Trustees of the
Portfolio then in office will call an investors' meeting for the election of
Trustees. Except for the foregoing circumstances and unless removed by action of
the investors in accordance with the Portfolio's Declaration of Trust, the
Trustees shall continue to hold office and may appoint successor Trustees.
The Declaration of Trust of the Portfolio provides that no person shall
serve as a Trustee if investors holding two-thirds of the outstanding interests
have removed him from that office either by a written declaration filed with the
Portfolio's custodian or by votes cast at a meeting called for that purpose. The
Declaration of Trust further provides that under certain circumstances the
investors may call a meeting to remove a Trustee and that the Portfolio is
required to provide assistance in communicating with investors about such a
meeting.
The Portfolio's Declaration of Trust provides that the Portfolio will
terminate 120 days after the complete withdrawal of the Fund or any other
investor in the Portfolio, unless either the remaining investors, by unanimous
vote at a meeting of such investors, or a majority of the Trustees of the
Portfolio, by written instrument consented to by all investors, agree to
continue the business of the Portfolio. This provision is consistent with
treatment of the Portfolio as a partnership for federal income tax purposes.
The right to redeem shares of the Fund can be suspended and the payment of
the redemption price deferred when the Exchange is closed (other than for
customary weekend and holiday closings), during periods when trading on the
Exchange is restricted as determined by the Commission, or during any emergency
as determined by the Commission which makes it impracticable for the Portfolio
to dispose of its securities or value its assets, or during any other period
permitted by order of the Commission for the protection of investors.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Deloitte & Touche LLP, 125 Summer Street, Boston, Massachusetts, are the
independent certified public accountants of the Fund and the Portfolio,
providing audit services, tax return preparation, and assistance and
consultation with respect to the preparation of filings with the Commission.
<PAGE>
FINANCIAL STATEMENTS
ASIAN SMALL COMPANIES PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1996
ASSETS:
Cash ............................................... $100,030
Deferred organization expenses ..................... 7,000
--------
Total assets ................................... $107,030
LIABILITIES:
Accrued organization expenses ...................... 7,000
--------
NET ASSETS ............................................. $100,030
========
NOTES:
(1) 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.
(2) 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.
(3) Asian Small Companies Portfolio (the "Portfolio") was organized as a New
York Trust on January 19, 1996 and has been inactive since that date, except
for matters relating to its organization and registration as an investment
company under the Investment Company Act of 1940 and the sale of interests
therein at the purchase price of $100,000 to Eaton Vance Management, $10 to
Boston Management & Research, $10 to EV Marathon Asian Small Companies Fund
and $10 to EV Traditional Asian Small Companies Fund (the "Initial
Interests").
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Trustees and Investors of Asian Small Companies Portfolio:
We have audited the accompanying statement of assets and liabilities of
Asian Small Companies Portfolio (a New York Trust) as of August 31, 1996. 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 Asian Small Companies Portfolio
as of August 31, 1996, in conformity with generally accepted accounting
principles.
Deloitte & Touche LLP
Boston, Massachusetts
September 5, 1996
<PAGE>
APPENDIX A
ASIAN REGION COUNTRIES
The information set forth in this Appendix has been extracted from various
government and private publications. The Trust's Board of Trustees make no
representation as to the accuracy of the information, nor has the Board of
Trustees attempted to verify it.
AUSTRALIA
The Commonwealth of Australia comprises an area of about 2,773,000 square
miles -- almost the same as that of the United States, excluding Alaska. In June
1992. Australia's population was estimated to be 17 million people.
The Commonwealth of Australia was formed as a federal union in 1901, when
six British colonies of New South Wales, Victoria, Queensland, South Australia
and Tasmania were united as states in a "Federal Commonwealth" under the
authority of the Commonwealth of Australia Constitution Act enacted by the
British Parliament.
Prior to World War II, the Australian economy was highly dependent on the
rural sector. The 1950s and 1960 saw strong growth in the economy and
diversification through developments in the mining sector. There have been some
significant structural changes in the past 20 years, with the tertiary and
mining sectors growing strongly. The rural sector now accounts for approximately
4% of Gross Domestic Product ("GDP"), 6% of employment and 23% of exports by
value. The mining sector accounts for approximately 8% of GDP and 1% of
employment. Exports of mining commodities (including basic metal products)
account for approximately 42% of exports by value. The tertiary sector accounts
for approximately 71% of GDP, approximately 78% of employment and around 20% of
exports by value.
As of December 31, 1993, the total market capitalization of Australian
listed equities was U.S. $118 billion, which ranks behind Japan, Hong Kong and
Malaysia in Asia.
PEOPLE'S REPUBLIC OF CHINA
China is the world's third largest country occupying a region of 9.6 million
square kilometers.China is the world's most populous nation, consisting of more
than one-fifth of the human race. The estimated population is approximately 1.3
billion.
In 1949, the Communist Party established the People's Republic of China. The
Communist government engaged in numerous campaigns to industrialize the country
with various programs. The failure of the Communist Party to achieve substantive
economic reform eventually led to political domination by the army. In the
1970's, the Chinese government, which had remained isolated from the world,
opened its doors by encouraging foreign investment and expertise inside its
borders.
In 1989, a growing dissatisfaction with the Communist government led to
anti-government student protests culminating in what is known as the Tiananmen
Square incident. The government's use of the military to suppress a peaceful
demonstration resulted in world-wide criticism. Currently, the leadership under
Deng Xiaoping remains committed to basic economic reforms but continues to
reject liberalization from the domination of the Communist Party in the
political decision-making process. Investment in China still entails significant
political risk of nationalization or expropriation.
Over the past decade, China has achieved annual growth in real gross
domestic product (GDP) averaging in excess of 10%. GDP in 1995 had increased to
over 4 times the GDP in 1980 in real terms.
The economy in China consists of three sectors: state, cooperative, and
private. The state sector, though decreasing from 76% of GDP in 1980 to
approximately 50% in 1991, continues to constitute the bulk of the economy. In
recent years, however, the economy has been significantly restructured through
the abolition of the commune system in rural areas and the relaxing of
government authority in the day to day operations in both agricultural and
industrial enterprises. As the government assumes more of a regulatory and
supervisory role and less of a direct management role, market forces have been
allowed to operate. This has resulted in increased productivity and rising
incomes.
In 1990, industry accounted for 45.8% of China's National Income. In the
first three decades under Communist rule, China placed great emphasis on heavy
industry. Since the reform program began in 1978, a much greater emphasis has
been placed on light industry. Considerable industrial growth has come from
industrial enterprises in rural townships which are engaged in the processing
and assembly of consumer goods. These operations are concentrated in southern
China, where a major light industrial base has developed. Industrial output has
grown rapidly and is increasingly important to the Chinese economy. China's
current industrial policy also places emphasis on high-technology industries
supported by foreign technology, such as micro-electronics and
telecommunications. However, overstocking and poor economic results continue to
plague Chinese industry. Continued growth has been hampered by problems of
access to raw materials and energy supplies.
Inflationary pressures are a major concern in the Chinese economy. In light
of the on-going reforms of price subsidies and continued growth, relatively high
inflation should be expected. In addition, persistent fiscal deficits have been
a macroeconomic management problem in China in recent years. The deficit for
1995 was 70 billion RMB.
Textiles and garments together form the single largest export category,
representing 25% of total export values. China's trade balance has fluctuated
over the last five years. In 1995, China's foreign trade yielded a surplus of
U.S. $17.60 billion. Hong Kong is the leading destination for Chinese exports,
accounting for over 40% of total export volume. Hong Kong is also a major
reexport center for Chinese goods. Other large export markets for China include
Japan, the United States, and Germany. Over the past few years, China's imports
have continued to expand and diversify. Hong Kong, Japan and the United States
are China's top three suppliers. Other major suppliers include Germany and
Italy.
China has traditionally adopted a policy of self-reliance when financing
development; overseas borrowings have been minimal. The country has remained a
conservative borrower but, since the early 1980s, has been making greater use of
foreign capital and financing, including government-assisted facilities and
project and trade financing. The primary sources of foreign capital for China,
in order of importance, are: (1) International Monetary Fund and World Bank
loans and credits; (2) government low interest loans and credits; and (3)
commercial loans and credits.
There is centralized control and unified management of foreign exchange in
China. The renminbi has been devalued progressively in recent years,
depreciating by almost 70% against the U.S. dollar between 1981 and 1990.
There currently are two officially recognized exchanges in China, the
Shanghai Securities Exchange ("SHSE"), which commenced trading on December 19,
1990, and the Shenzhen Stock Exchange ("SZSE"), which commenced trading on July
3, 1991. "B" shares are offered exclusively for investment by foreign investors,
and their total market capitalization in December 1996 was over $23 billion. A
number of organized securities markets exist in other cities in China, but these
are primarily over-the-counter markets. China has not yet promulgated a national
securities law. At the local level, however, many cities and provinces have
promulgated securities rules and regulations.
HONG KONG
As a trade entrepot and finance center, Hong Kong's viability has been
inexorably linked to mainland China since the establishment of the Colony in
1841. Hong Kong remains China's largest trade partner and its leading foreign
investor. In 1995, imports from China amounted to $69.8 billion, exports and
re-exports to $57.9 billion. In recent years large numbers of Hong Kong based
companies have set up factories in the southern province of Guangdong, where it
is estimated that Hong Kong companies employ between 2.5 and 3 million workers.
There also has been considerable growth in Chinese investment in Hong Kong over
the last decade and particularly in the last five years. In contrast to Japanese
investment, Chinese investment in Hong Kong typically involves the purchase of
stakes in existing companies. This has traditionally been in the banking and
import/export sectors. Recently, investment in property, manufacturing and
infrastructure projects has increased. In view of the growing economic
interaction between Hong Kong and Southern China, it is increasingly meaningful
to consider the concept of a Greater Hong Kong economy consisting of Hong Kong
and Guangdong Province, with a combined population of pver 75 million. To
sustain the growth of the Guangdong economy, the Hong Kong government in 1989
unveiled PADS, the Port and Airport Development Strategy. The project, estimated
to cost $21 billion, is designed to allow Hong Kong's cargo handling capacity to
increase by four times between 1988 and 2011 and its air traffic handling
capacity to increase from 15 million passengers in 1988 to 50 million in 2011.
In the past, political considerations have hindered closer economic
integration between Hong Kong and China. It was largely in response to the
United Nations embargo on trade with China in the 1950s and 1960s that Hong Kong
developed a significant manufacturing base. In the last several years, however,
there has been an improvement in relations. The Basic Law, the outline for Hong
Kong's government post 1997, calls for Hong Kong's capitalist system to remain
intact for an additional fifty years after 1997 and sets out details for the
integration of Hong Kong into China after 1997. This integration process will
directly affect the value of Hong Kong investments.
In the last two decades there has been a structural change in Hong Kong's
economy, with growth in the services sector outpacing manufacturing growth. With
more and more labor intensive manufacturing relocating to Southern China, Hong
Kong has developed its services sector, which in 1995 contributed 81.7% of GDP.
The Stock Exchange of Hong Kong Ltd. ("HKSE"), commenced trading on April 2,
1986. The HKSE, with a total market capitalization as of November, 1996 of
approximately H.K. $3,409 billion (approximately U.S. $440 billion), is now the
second largest stock market in Asia, measured by market capitalization, behind
only that of Japan. As of that date, 575 companies and 1,219 securities were
listed on the Hong Kong Stock Exchange.
There are no regulations governing foreign investment in Hong Kong. There
are no exchange control regulations and investors have total flexibility in the
movement of capital and the repatriation of profits. Funds invested in Hong Kong
can be repatriated at will; dividends and interest are freely remittable.
INDIA
India is the seventh largest country in the world, covering an area of
approximately 3,300,000 square kilometers. The Indian population is comprised of
diverse religious and linguistic groups. Despite this diversity, India is the
world's largest democracy and has had one of the more stable political systems
among the world's developing nations. However, periodic sectarian conflict among
India's religious and linguistic groups could adversely affect Indian
businesses, temporarily close stock exchanges or other institutions, or
undermine or distract from government efforts to liberalize the Indian economy.
India became independent from the United Kingdom in 1947. Since 1991, the
government of Prime Minister Narasimha Rao has introduced far-reaching measures
with the goal of reducing government intervention in the economy, strengthening
India's industrial base, expanding exports and increasing economic efficiency.
Elections in May 1996 could result in a change of government and reversal of
policies.
In India, Foreign Institutional Investors ("FIIs") may predominately invest
in exchange-traded securities (and securities to be listed, or those approved on
the over-the counter exchange of India) subject to the conditions specified in
the Guidelines for Direct Foreign Investment by FIIs in India, (the
"Guidelines") published in a Press Note dated September 14, 1992, issued by the
Government of India, Ministry of Finance, Investment Division. FIIs have to
apply for registration to the Securities and Exchange Board of India ("SEBI")
and to the Reserve Bank of India for permission to trade in Indian securities.
The Guidelines require SEBI to take into account the track record of the FII,
its professional competence, financial soundness, experience and other relevant
criteria. SEBI must also be satisfied that suitable custodial arrangements are
in place for the Indian securities. The Adviser is a registered FII and the
inclusion of the Portfolio in the Adviser's registration was approved by SEBI.
FIIs are required to observe certain investment restrictions, including an
account ownership ceiling of 5% of the total issued share capital of any one
company. In addition, the shareholdings of all registered FIIS, together with
the shareholdings of non-resident Indian individuals and foreign bodies
corporate substantially owned by non-resident Indians, may not exceed 24% of the
issued share capital of any one company. Only registered FIIS and non-Indian
mutual funds that comply with certain statutory conditions may make direct
portfolio investments in exchange-traded Indian securities. Income, gains and
initial capital with respect to such investments are freely repatriable, subject
to payment of applicable Indian taxes.
India currently imposes 20% withholding tax on interest and dividends.
Withholding tax of 10% is currently imposed on gains from sales of shares held
one year or more and 30% on gains from sales of shares held less than one year.
The withholding rate on gains from sales of deb securities is currently 10% if
the securities have been held three years or more and 30% if the securities have
been held less than three years. (Rates are higher for non-FII transactions.)
Investment through a Republic of Maturities entity may be made to reduce taxes,
but there can be no assurance of its success.
INDONESIA
There have been only two rulers of Indonesia since independence was gained
from the Dutch in 1948 -- Sukarno and Suharto. However, independence and the
1965 revolution were unusually violent episodes in the life of any country. The
stability which Indonesia has enjoyed during the past twenty-five years under
Suharto should, therefore, be placed against this background.
The question of monarchical or presidential succession remains perhaps the
major political risk confronted by the foreign investor as so many aspects of
the business life of the country relate directly to Suharto or his immediate
family. The role of the army in Indonesia is a great deal more clear cut. There
have been no attempted military coups since 1966. The army remains wholly in
support of Suharto.
The huge Indonesian archipelago will have, by the year 2000, a population of
over 200 million. Fundamentalism is on the rise, as also in Malaysia, and
politicians with fundamentalist Islamic beliefs and supporters are likely to
take a more active role. However, the social question, which one cannot ignore,
concerns the role of the minority and non-Muslim peoples in Indonesia, in
particular the Chinese community in Java. Although the total Chinese population
is less than 5 million, or around 3 percent of the total, 80 percent of the
commerce and much of the capital wealth remains in the hands of this small but
tight-knit Chinese community.
Indonesia began the 1980s principally as an oil exporter. During the 1970s
it had a high rate of inflation but also a very rapid economic growth on the
back of the oil boom. The fall in oil prices in the early 1980s, which became
precipitate in the spring of 1986, therefore, forced a review of their
priorities. Reducing inflation, diversifying the economy away from oil and
maintaining a stable growth in the economy were selected as the main objectives.
Inflation was brought from 20 percent, at the beginning of the decade, to around
6 percent in 1989-90. Economic growth, having fallen to 2.5 percent in 1985
regained the level of 7.4 percent by 1990. The rupiah, which had undergone a 30
percent once-and-for-all evaluation in the autumn of 1985, had stabilized on a
"crawling peg" system with an annual devaluation of around 5 percent. The trade
surplus continued at a healthy US $4-5 billion annually and the inflow of
foreign capital more than offset Indonesia's foreign debt position. Therefore,
it is possible to conclude that the good macroeconomic management, which was
achieved by the small group of technocrats employed by Suharto to direct the
economy, had been very successful in reducing the economic risk of the country.
The future path of the Indonesian economy will, therefore, depend as much on the
development of low wage manufacturing and the inflow of Japanese capital, on the
liberalization of the banking system and the capital market, as on the price of
basic commodities.
JAPAN
The Japanese archipelago stretches for 1,300 miles in the western Pacific
Ocean. The total area of all the islands is about equal to the size of
California. Only one third of the land is suitable for agriculture, housing,
industry, and commerce.
Japan has a population of about 125 million people, roughly half that of the
United States and twice that of England or Germany. Life expectancy is the
highest in the world. The literacy rate in Japan approaches 100%. The high level
of education, combined with the Confucian work ethic, has created a motivated
work force which boasts a very high savings rate.
Japan is evolving into a post-industrial society and economy as we approach
the 21st century. Japan's postwar growth was phenomenal. By 1970, Japan's Gross
National Product (GNP) had surpassed those of the United Kingdom and the former
Soviet Union. The Japanese economy is now the second largest in the world; its
per capita GNP is the highest among large industrial countries.
During the era of high economic growth in the 1960s and early 1970s,
Japanese expansion focused on the development of heavy industries such as steel,
shipbuilding, and chemicals. In the 1970s, Japan's industrial structure shifted
toward assembly industries with a strong emphasis on exports. In that decade,
Japan became a major producer and exporter of automobiles and consumer
electronics. In the 1980s, Japan gradually stepped toward a post-industrial
society. This evolution had been characterized by an increased reliance on
services, a per capita income which is the highest in the world, rapidly
changing lifestyles influenced by the younger generation, a greater dependence
on domestic markets, a comparative advantage in high technology, and active
participation in the high-growth economies of East Asia, including China.
Japan has had low inflation in recent years. In the past 10 years, the rate
of inflation has ranged between 2% and 3% per year, making it one of the lowest
rates in the world. This remarkable achievement was made possible by gains in
productivity, which exceeded wage increases, and by a strong yen, which reduced
imported raw material costs.
Japan's stock exchanges comprise over 25% of the world's equity market. Like
other stock markets, the Japanese stock market can be volatile. For example, the
Japanese stock market, as measured by the Tokyo Stock Price Index (TOPIX),
increased by over 500% during the ten-year period ended December 31, 1989,
reaching its high of 2884.80 on December 18, 1989, and it has declined by over
45% since that time, falling to 1559.09 on December 30, 1994. This decline has
had an adverse effect on the availability of credit and on the value of the
substantial stock holdings of Japanese companies, in particular, Japanese banks,
insurance companies and other financial institutions. This in turn has
contributed to the recent weakness in Japan's economy. A continuation or
recurrence of a Japanese stock market decline could have an adverse impact
throughout Japan's economy.
KOREA
Political volatility has characterized the history of South Korea (referred
to as Korea throughout this section) during the past forty years, while at the
same time an extraordinary economic boom has occurred. Rigid discipline has been
characteristic of the military government under President Park during the 1960s
and 1970s, which were the most successful decades in economic terms particularly
in the growth of Korea's exports and in the per capita income. It is important
to remember how completely the cities and transport system of the southern part
of the Korean peninsula had been destroyed in the civil war of the 1950s. The
effort of reconstruction was, therefore, enormous. Living standards in the 1960s
were extremely low. The threat from North Korea has exerted a continuous
military pressure on the South in the past forty years which is probably unique
to any country in the world, even including West Germany or Taiwan. Seoul is
only 30 kilometers from the demilitarized zone and, therefore, lives in a
continuous state of tension and fear of an imminent invasion. This very real
threat is also translated into a very high percentage of military spending in
the national budget. If Korea is compared with Japan, the Koreans have had to
spend ten times more of their national income on defense than the Japanese and
yet have succeeded in recording higher rates of economic growth.
Inflation in Korea has been higher than in Japan or Taiwan. In the 1970s,
Korea experienced an annual average inflation rate of nearly 15 percent.
Beginning in 1982, however, the tight monetary policy succeeded in bringing this
annual consumer price index down to single digits until 1990 when the rate
jumped again to 8.6 percent.
MALAYSIA
The central dilemma in assessing Malaysia's political risk is the perennial
question of relations between the Malay and Chinese communities representing as
they do about 60 percent and 30 percent of the population respectively. Since
the 1969 anti-Chinese riots in Kuala Lumpur the country has been unruffled by
any serious inter-racial violence and during this period a great deal has been
accomplished in transforming the economy and in transferring the wealth of the
country from foreign and Chinese hands into the hands of the bumiputra (or the
sons of the soil), which is the dominant Malay majority. The success of this New
Economic Policy is unquestioned and has given a great deal of legitimacy to the
continued run of the United Malay National Organisation (UMNO) under its
successive prime ministers and most recently under Dr. Mahathir Mohammed who has
now held power for more than a decade. This economic success has also done much
to defuse the threat from the Islamic fundamentalists who have tended to get
co-opted into the ruling party. The Chinese community has also done well in
economic terms although the political disunity in the Malay Chinese Association
(MCA) has left them somewhat leaderless in the political sphere.
Malaysia has a kingship which is shared on a five-year revolving basis among
the sultans of the various states of the federation. Malaysia's relations with
its neighbours are good. Singapore, remains the largest investor in the country.
Malaysia, along with Singapore, experienced a sharp recession in 1985-6 owing to
an excessive tight monetary policy in both countries. Since 1987 Malaysia has,
however, returned to the path of high growth and low inflation. The change in
the past five years has also been accompanied by an accelerated shift into
manufacturing and away from the old dependence on the plantation sector. This
manufacturing growth has been led by investment from Japan and Taiwan and
notable national projects such as the Proton car. Malaysia is attempting to move
up market into the new product areas such as electronics, car assembly and
consumer goods. It has a literate and trainable workforce.
As manufactured goods assume a larger importance in the composition of
exports compared with crude oil, rubber and palm oil, Malaysia's trade position
should gradually become steadier. For an investor, Malaysia remains vulnerable
to external shocks either in terms of commodity prices or in a fall in export
demand in its principal markets.
PAKISTAN
Pakistan is the world's ninth most populous country. The population is
currently estimated at approximately 130 million, with an annual population
growth rate of 3.0%. Pakistan was created in 1947 in response to the demands of
Indian Muslims for an independent homeland, by the partition from British India
of two Muslim majority areas. In 1971, a civil war in East Pakistan culminated
in independence for East Pakistan (now Bangladesh). Over the past 45 years,
Pakistan and India have gone to war two times and intermittent border exchanges
occur at times. In particular, relations with India remain unfriendly over the
disputed territory of Kashmir, with its majority Muslim population.
Pakistan has a federal parliamentary system in which its provinces enjoy
considerable autonomy. The military has been, and continues to be, an important
factor in Pakistani government and politics and the civilian government
continues to rely on the support of the army. Ethnic unrest and troubled
relations with India are also continuing problems. Violence and political unrest
made Pakistan a less attractive destination in 1995.
The government of Pakistan has been heavily involved in the economy through
ownership of financial and industrial enterprises, investment policies and
incentives and taxation programs established in the five-year economic plans.
Recent governments, however, have announced various liberalization measures
including banking reforms and a number of measures designed to encourage the
private sector. The government has also embarked on a major privatization
program and, as of July 1994, a large number of public sector entities have been
offered for sale.
In Pakistan, the Portfolio may invest in the shares of issuers listed on any
of the stock exchanges in the country provided that the purchase price as
certified by a local stock exchange broker is paid in foreign exchange
transferred into Pakistan through a commercial bank and in the case of an
off-exchange sale of listed shares, that the sale price is not less than the
price quoted on any of the local stock exchanges on the date of the sale. In
addition, the issuer's shares held by the Portfolio must be registered with the
State Bank of Pakistan for purposes of repatriation of income, gains and initial
capital. The Portfolio may also invest in the shares of unlisted and
closely-held manufacturing companies provided that the sale price is certified
by a Pakistani chartered accountant to be not less than the break-up value of
the shares and is paid in foreign exchange transferred into Pakistan through a
commercial bank. If local procedures are complied with, income, gains, and
initial capital are freely repatriable after payment of any applicable Pakistani
withholding taxes.
Pakistan currently imposes a withholding tax on dividends at a rate of 10%
and on interest at a rate of 43%. Under current law, the withholding rate on
interest is to be reduced by three percentage points per year through 1998.
There is currently no withholding tax on capital gains from listed shares. This
exemption will expire in June 1998. As regards the shares of unlisted and
closely held manufacturing companies, withholding tax on capital gains is
currently imposed at a rate of 43%, reduced to 27 1/2% (or 25% for small
amounts) if the shares are held for 12 months or more.
The Federal Shariat Court, a constitutionally established body which has
exclusive jurisdiction to determine whether any law in Pakistan violates the
principals of Islam (the official State religion), ruled in November 1991 that a
number of legal provisions in Pakistan violated Islamic principles relating to
Riba (an Islamic term generally accepted as being analogous to interest) and
instructed the government of Pakistan to conform these provisions to Islamic
principles. It is believed that strict conformity with the ruling of the Shariat
Court would substantially disrupt a variety of commercial relationships in
Pakistan involving the payment of interest, although the extent and nature of
any such disruption on the Pakistani economy, or any segment thereof (other than
the banking system), is uncertain. The ruling of the Shariat Court has been
appealed and will have no effect until the Shariat Appellate Bench of the
Supreme Court of Pakistan renders a decision on the appeal. A hearing on the
appeal was held in November 1993 but, in early 1994 at the request of the
government of Pakistan, the appeal is still continuing. In addition, pursuant to
the Enforcement of Shariat Act, 1991 (the "Shariat Act"), the government of
Pakistan has appointed a commission to recommend steps to be taken to introduce
suitable alternatives by which an economic system in Pakistan conforming to
Islamic principles could be established. This commission may be in a position to
propose a pragmatic approach to the requirements of the Constitution and the
Shariat Act with a view to avoiding any substantial disruption to the economy of
Pakistan. There can be no assurance, however, that the commission will propose
such an approach or that implementation of the steps recommended by the
commission or the effect of the ultimate decision of the courts in Pakistan on
this issue will not adversely affect the economy in Pakistan.
THE PHILIPPINES
The question most investors raise is whether the Philippines is capable of
responsible government and economic planning which would give it a GNP growth
rate approaching that of its Asian tiger neighbours. Many observers dismiss this
prospect out of hand citing the endemic problems of corruption, political
in-fighting and the lack of Confucian work ethic present in North Asia. However,
there is no doubt that the Philippines possesses enormous natural advantages and
it would be wrong to generalize about the whole archipelago of 7,000 islands
from the political life of Manila alone. The island of Cebu, for example, has
seen a successful economic transformation in the past twenty years.
Manufacturing investment has grown and has begun to replace agriculture as a
principal source of employment. The Philippines has a very high rate of literacy
and the work ethic cannot be doubted by anyone who has employed Filipino
domestic workers overseas. Their earnings are an important source of remittance
back to the Philippines each year. The Filipino population in the United States
is now the largest Asian ethnic group in that country approaching 2 million,
mainly in California. Both natural resources, therefore, and an intelligent,
hardworking population favour the country. Unfortunately, the political system
has never been able to maintain the long-term stability for its promise to be
fulfilled.
SINGAPORE
"The silent success", in the words of a Singapore government minister, of
this region is based on a high literacy rate and a well-educated and trainable
workforce. The investment in human capital has proven to be more important to a
lasting economic growth success story than the availability of finance or
technology. Singapore is the de facto financial centre of the Association of
South East Asian Nations (ASEAN) region. Singapore is a small Chinese island
surrounded by a sea of Muslims. Singapore is aiming its investment at Johore in
Malaysia and Batam Island in Indonesia. This is the so-called growth triangle.
One aspect of political risk is the handover of political power from one
generation to another. Although Lee Kwan Yew stepped down as Prime Minister in
1990, he continues to wield a large influence and power behind the scenes. His
son, Lee Hsien Loong may not take up the post of Prime Minister for three to
five years. In any case, the question of dynastic succession in a parliamentary
democracy, even within a limited Confucian Chinese democracy, is, to say the
least, a questionable one. Many of the elder Lee's policies, such as imposing
the Mandarin Chinese language on the Singapore educational system, have aroused
fierce opposition among the older, anti-communist generation of Singapore
Chinese. The tight control of the media and the suppression of all political
opposition or criticism of the government, the People's Action Party or the
Prime Minister himself, has also aroused criticism both at home and
internationally.
The Singapore economy has been characterized by the highest degree of
government involvement and intervention outside of the socialist world.
Nevertheless, the growth rate has been quite impressive, averaging around 7-8
percent, except during the 1985-6 recession, and even more impressive has been
the tight control of inflation which, along with that of Japan, has remained
extremely low at below 3 percent for the past decade. Being a small island state
it is very sensitive to developments in its two main neighbours, Indonesia and
Malaysia, with their large commodity-based economies. Thus, Singapore runs a
regular trade deficit of around US $5 billion per annum. Singapore's foreign
reserves held by the Monetary Authority of Singapore (MAS) and the Government
Investment Corporation of Singapore (GICS) are estimated to be in excess of US
$50 billion.
SRI LANKA
Sri Lanka, historically known as Ceylon, is an island about 65,000 square
kilometers, situated off the southeast coast of India. It has a relatively
well-educated population, with nearly 25% of the 17 million Sri Lankans speaking
English and a literacy rate (in Sinhalese and Tamil) of nearly 90%.
A former British colony, Ceylon became an independent Commonwealth in 1948
and became the Democratic Socialist Republic of Sri Lanka in 1972. Sri Lanka is
governed by a popularly elected President and unicameral Parliament.
Insurrection and political violence among Sri Lanka's ethnic groups
including terrorist actions by the Tamil Tigers, a separatist organization, have
in the past disrupted Sri Lanka's government and economy. The current government
has accorded top priority for settling the ethnic conflict with the Tamils in
the north and has initiated peace talks with the LTTE. Nevertheless, armed
conflict was increasing in early 1996. Although Sri Lanka's government is
currently fairly stable, there can be no assurance that such stability will
continue.
The Sri Lankan government recently has reviewed and revised laws,
regulations and procedures to promote a competitive business environment, remove
distortions and reduce unnecessary government regulation. The government has
liberalized trade and encourages private ownership including foreign investment.
Laws pertaining to tax, labor standards, customs and environmental norms have
been designed to attract more investment. There are now few exchange controls, a
fairly stable currency and many incentives for private investors. With guidance
from the World Bank, IMF and U.S. advisers, government enterprises area being
privatized, financial services liberalized, manufacturing for exports
encouraged, a stock exchange formed and foreign investment actively sought.
About 80% of the land in Sri Lanka is still owned by the government including
most tea, rubber and coconut plantations. The government did privatize the
management of these estates recently, however.
Sri Lanka's economy is primarily agricultural, but the manufacturing and
service sectors have grown greatly in the past decade, partly in response to the
Sri Lankan government's efforts to diversify and liberalize its economy. In
1991, gross foreign exchange earnings from apparel exports exceeded earnings
from the entire agricultural sector (tea, rubber and coconut) for the first
time.
The financial system is reasonably sophisticated and basic legislation for
private corporations is in place. Commercial banks are the principal source of
finance. However, the increase in net government borrowing (because of budget
deficits) has reduced credit to the private sector. Inflation, which was about
21% in 1990, has come down to approximately 10-11% but remains a concern.
Sri Lanka is actively working to improve its basic infrastructure. A $500
million expansion of the telecommunications network has begun. The Colombo
Container Port - the 25th busiest in the world - is expected to increase its
capacity soon, and new dry dock services are under construction.
In Sri Lanka, the Portfolio may invest in the shares of exchange-listed
issuers, subject to certain limitations for specific sectors of the economy. Sri
Lanka imposes 15% withholding tax on dividends and interest but does not impose
withholding tax on capital gains of listed shares. Unlisted shares are subject
to a maximum capital gains tax of 35%.
TAIWAN
The basic geopolitical fact about Taiwan is that it sits under the shadow of
mainland China and under the threat of reunification, whether peaceful or by
military means. Taiwan is dependent on its close relationship with the United
States and its very successful diplomacy and public relations campaign which,
ever since Madame Chiang Kai-Shek's days in the 1940s has sustained a high level
of sympathy in Washington for the Nationalist regime. Taiwan also has close
relations with South Africa, from which it buys essential raw materials such as
coal, and also with Israel, with whom it has had military as well as trade
links. Taiwan remains a free capitalist enclave with some very successful
entrepreneurial and export-oriented companies. The government's role in the
economy is relatively small.
Nevertheless, economic integration between the Chinese communities of China
and Taiwan has increased in recent years. China has low labor costs, inexpensive
land, natural resources and less rigid environmental rules. Taiwan has capital,
technology and trained entrepreneurs. Over 30 percent of Taiwan's trade is with
mainland China and the total investment from Taiwan to China may approach US $5
billion or even US $10 billion. A shortage of skilled labour, the high cost of
labour and the strong New Taiwan dollar, has impelled many Taiwanese
businesspeople to shift their production to Thailand, the Philippines, and
Malaysia as well as China. Taiwan has over US $90 billion of foreign exchange
reserves. However, Chinese military exercises in 1996 suggest that there could
be a renewed cold war across the Taiwan Straits, a cut off of business and
cultural links, and a potential military conflict.
Between 1960 and 1994, Taiwan's GNP grew from less than $2 billion to over
$240 billion. The economic growth has been accompanied by a transformation of
domestic production from labor intensive to capital intensive industries in the
1970s and finally to higher technology industries in the 1980s. The Taiwan Stock
Exchange Corp. is viewed as a highly priced and highly volatile securities
market with very weak regulations and poor accounting standards.
Many listed companies may be technically bankrupt.
Taiwan has a purely Chinese culture and way of life which affects the legal
and commercial systems. Legal contracts or agreements may not be enforceable.
Even more than in China, Taiwan depends on the personal contact and trust
between the two individuals involved. The legal system is undeveloped.
THAILAND
Thailand is unique in South East Asia in that it has escaped the colonial
experience and maintained its freedom and independence. The monarchy plays a key
role in maintaining the country's political stability and independence.
Nevertheless, since the absolute monarchy was ended in 1932 there have been
twenty-one coup d'etats, of which twelve have been successful. Thailand in the
1990s may remain democratic but the King and the army will continue to play a
role.
Thailand has a free and independent peasant population which has, on the
whole, enjoyed a higher standard of living than their neighbours and, therefore,
the communist movement has never made much headway among the rural people. On
the other hand again, Thailand's extraordinary economic growth in the 1980s
(averaging 10 percent per annum) has put great strains not only on the urban
environment because of traffic jams and pollution, but also on the social and
family system. Many rural families have been forced to send their teenage
children to the cities to find employment. The contrast of living standards
between Bangkok and the north east provinces (an estimated per capital income
would be perhaps US $2,500 per annum for the former and less than US $500 per
annum for the latter) must eventually create social tensions and potential
unrest. Buddhism must also be counted as a major factor of political stability.
Thailand's economy has been the fastest growing in the world for the past
three years. The take-off really began in 1986-7 with the flood of new foreign
investment into the country, largely from Japan and Taiwan. There has been a
large shift away from agriculture towards manufacturing. As recently as 1980, 50
percent of Thailand's exports consisted of rice and tapioca and other
agricultural products. By 1990, 75 percent of the total volume of exports were
manufactured goods, mainly from the newly established assembly plants in Bangkok
and the south. This has resulted in large changes in employment and moves of
populations.
It is surprising, considering the very high rate of economic growth that the
economy has experienced, that prices, as measured by the consumer price index,
have been kept under control. The last serious bout of inflation in Thailand
occurred during the two oil crises, first in 1973-4 when the CPI touched 24
percent and then again in 1980-1 when there was a resurgence of inflation to
nearly 20 percent. In the later 1980s, and thanks largely to a more stable oil
price, inflation has been held in single digits and has not exceeded 6 percent.
Nevertheless, the boom of the past three years, particularly in Bangkok, has led
to a rapid escalation of real estate values and rents.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
PART II
This Part II provides information about EV MARATHON ASIAN SMALL COMPANIES
FUND. The Fund became a series of the Trust on March 1, 1996.
FEES AND EXPENSES
ADVISER
No fees paid to date.
MANAGER AND ADMINISTRATOR
No fees paid to date.
DISTRIBUTION PLAN
The Distribution Plan and Distribution Agreement remain in effect until
April 28, 1997 and may be continued as described under "Distribution Plan" in
this Part II. The Fund has not made any sales commission payments to the
Principal Underwriter to date. The Fund expects to begin accruing for its
service fee payments one year after the commencement of operations.
PRINCIPAL UNDERWRITER
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. There have
been 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 of the Portfolio who are members of
the Eaton Vance organization receive no compensation from the Fund or the
Portfolio.) For the fiscal year ending August 31, 1997, it is estimated that the
noninterested Trustees of the Trust and the Portfolio will receive the following
compensation in their capacities as Trustees from the Fund and the Portfolio,
and, for the year ended September 30, 1996, earned the following compensation in
their capacities as Trustees of the funds in the Eaton Vance fund complex(1):
ESTIMATED ESTIMATED
AGGREGATE AGGREGATE TOTAL COMPENSATION
COMPENSATION COMPENSATION FROM TRUST AND
NAME FROM FUND FROM PORTFOLIO FUND COMPLEX
Donald R. Dwight ....... $8 $80 142,500(2)
Samuel L. Hayes, III ... 8 80 153,750(3)
Norton H. Reamer ....... 8 80 142,500
John L. Thorndike ...... 8 80 147,500
Jack L. Treynor ........ 8 80 147,500
- ----------
(1) The Eaton Vance fund complex consists of 228 registered investment companies
or series thereof.
(2) Includes $42,500 of deferred compensation.
(3) Includes $37,500 of deferred compensation.
PRINCIPAL UNDERWRITER
Under the Distribution Agreement the Principal Underwriter acts as principal
in selling shares of the Fund. The expenses of printing copies of prospectuses
used to offer shares to financial service firms or investors and other selling
literature and of advertising is borne by the Principal Underwriter. The fees
and expenses of qualifying and registering and maintaining qualifications and
registrations of the Fund and its shares under federal and state securities laws
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.
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 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 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 CDSCs and will make no
payments to the Principal Underwriter in respect of any day on which there are
no outstanding Uncovered Distribution Charges of the Principal Underwriter.
CDSCs and accrued amounts will be paid by the Fund to the Principal Underwriter
whenever there exist Uncovered Distribution Charges under the Plan.
Periods with a high level of sales of Fund shares accompanied by a low level
of early redemptions of Fund shares resulting in the imposition of CDSCs 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 CDSCs 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 CDSCs theretofore
paid or payable to the Principal Underwriter less all amounts theretofore paid
or payable to the Principal Underwriter by the Adviser in consideration of the
former's distribution efforts, 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 CDSC will be imposed, the level and timing of redemptions of Fund shares upon
which no CDSC will be imposed (including redemptions involving exchanges of Fund
shares pursuant to the exchange privilege which result in a reduction of
Uncovered Distribution Charges), changes in the level of the net assets of the
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 commissions and service
fee payments made by the Fund and the outstanding Uncovered Distribution Charges
of the Principal Underwriter, see "Fees and Expenses -- Distribution Plan" in
this Part II. The Fund believes that the combined rate of all these payments may
be higher than the rate of payments made under distribution plans adopted by
other investment companies pursuant to Rule 12b-1. Although the Principal
Underwriter will use its own funds (which may be borrowed from banks) to pay
sales commissions at the time of sale, it is anticipated that the Eaton Vance
organization will profit by reason of the operation of the Plan through an
increase in the Fund's assets (thereby increasing the management fee payable to
Eaton Vance by the Fund and the administration fees payable to Eaton Vance by
the Portfolio) resulting from sale of Fund shares and through amounts paid to
the Principal Underwriter, including CDSCs pursuant to the Plan. The Eaton Vance
organization may be considered to have realized a profit under the Plan if at
any point in time the aggregate amounts theretofore received by the Principal
Underwriter pursuant to the Plan and from CDSCs 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.
Pursuant to Rule 12b-1, the Plan has been approved by the Fund's initial
sole shareholder (Eaton Vance) and by the Board of Trustees of the Trust,
including the Rule 12b-1 Trustees. The Plan provides that it shall continue in
effect for so long as such continuance is approved at least annually by the vote
of both a majority of (i) the Trustees of the Trust who are not interested
persons of the Trust and who have no direct or indirect financial interest in
the operation of the Plan or any agreements related to the Plan (the "Rule 12b-1
Trustees") and (ii) all of the Trustees then in office, and the Distribution
Agreement contains a similar provision. The Plan and Distribution Agreement may
be terminated at any time by a 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. 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. Under the Plan the President or a Vice President of the Trust shall
provide to the Trustees for their review, and the Trustees shall review at least
quarterly, a written report of the amount expended under the Plan and the
purposes for which such expenditures were made. The Plan may not be amended to
increase materially the payments described therein without approval of the
shareholders of the Fund, and all material amendments of the Plan must also be
approved by the Trustees as required by Rule 12b-1. So long as the Plan is in
effect, the selection and nomination of the 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 believe that the Plan will be a significant factor in the
expected growth of the Fund's assets, resulting in increased investment
flexibility and advantages which will benefit the Fund and its shareholders.
Payments for sales commissions and distribution fees made to the Principal
Underwriter under the Plan will compensate the Principal Underwriter for its
services and expenses in distributing shares of the Fund. Service fee payments
made to the Principal Underwriter and Authorized Firms under the Plan provide
incentives to provide continuing personal services to investors and the
maintenance of shareholder accounts. By providing incentives to the Principal
Underwriter and Authorized Firms, the Plan is expected to result in the
maintenance of, and possible future growth in, the assets of the Fund. Based on
the foregoing and other relevant factors, the Trustees 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 November 30, 1996, 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>
EV MARATHON ASIAN SMALL COMPANIES FUND
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1996
ASSETS:
Investment in Asian Small Companies Portfolio, at cost and value ... $ 10
Deferred organization expenses (Note 2) ............................ 28,500
-------
Total assets ................................................... $28,510
LIABILITIES:
Accrued organization expenses ...................................... 28,500
-------
Net assets (applicable to 1 share of beneficial interest issued
and outstanding) ................................................. $ 10
=======
Net asset value and offering price per share ....................... $ 10
=======
NOTES:
(1) Eaton Vance Growth Trust, a Massachusetts business trust (the Trust),
established and designated the EV Marathon Asian Small Companies Fund (the
Fund) as a separate series on March 1, 1996. The Fund has been inactive
since that date, except for matters relating to the Fund's establishment,
the designation and the registration under the Securities Act of 1933 of the
Fund's shares of beneficial interest (Shares), the sale of one Share
(Initial Share) of the Fund to Eaton Vance Management, and the investment of
the proceeds of such Initial Share in Asian Small Companies Portfolio (the
Portfolio). The value of such investment reflects the Fund's proportionate
interest in the net assets of the Portfolio.
(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 Fund's initial offering of its shares. The amount paid
by the Fund on any withdrawal by the holders of the initial share 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.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Trustees and Shareholder of EV Marathon Asian Small Companies Fund:
We have audited the accompanying statement of assets and liabilities of EV
Marathon Asian Small Companies Fund (one of the series constituting Eaton Vance
Growth Trust) as of August 31, 1996. 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 EV Marathon Asian Small
Companies Fund as of August 31, 1996, in conformity with generally accepted
accounting principles.
Deloitte & Touche LLP
Boston, Massachusetts
September 5, 1996
<PAGE>
[LOGO]
EV MARATHON
ASIAN SMALL
COMPANIES FUND
STATEMENT OF ADDITIONAL INFORMATION
JANUARY 1, 1997
EV MARATHON ASIAN SMALL
COMPANIES FUND
24 FEDERAL STREET
BOSTON, MA 02110
- --------------------------------------------------------------------------------
SPONSOR AND MANAGER OF
EV MARATHON ASIAN SMALL COMPANIES FUND
ADMINISTRATOR OF ASIAN SMALL
COMPANIES PORTFOLIO
Eaton Vance Management
24 Federal Street
Boston, MA 02110
ADVISER OF ASIAN SMALL
COMPANIES PORTFOLIO
Lloyd George Investment Management
(Bermuda) Limited, 3808 One Exchange Square
Central, Hong Kong
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc.
24 Federal Street
Boston, MA 02110
(800) 225-6265
CUSTODIAN
Investors Bank & Trust Company
89 South Street
Boston, MA 02111
TRANSFER AGENT
First Data Investor Services Group
P.O. Box 5123
Westborough, MA 01581-5123
(800) 262-1122
AUDITORS
Deloitte & Touche LLP
125 Summer Street
Boston, MA 02110
M-ACSAI
<PAGE>
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
STATEMENT OF
ADDITIONAL INFORMATION
January 1, 1997
EV TRADITIONAL ASIAN SMALL COMPANIES FUND
24 Federal Street
Boston, Massachusetts 02110
(800) 225-6265
This Statement of Additional Information consists of two parts. Part I
provides general information about EV Traditional Asian Small Companies Fund
(the "Fund"), Asian Small Companies Portfolio (the "Portfolio") and certain
other series of Eaton Vance Growth Trust (the "Trust"). The Fund's Part II
(the "Part II") provides information solely about the Fund. Where appropriate,
Part I includes cross-references to the relevant sections of Part II that
provide additional, Fund-specific information. This Statement of Additional
Information is sometimes referred to herein as the "SAI".
TABLE OF CONTENTS Page
PART I
Additional Information about Investment Policies ................ 1
Investment Restrictions ......................................... 4
Trustees and Officers ........................................... 5
Management of the Fund .......................................... 7
Custodian ....................................................... 10
Service for Withdrawal .......................................... 11
Determination of Net Asset Value ................................ 11
Investment Performance .......................................... 12
Taxes ........................................................... 13
Portfolio Security Transactions ................................. 15
Other Information ............................................... 16
Independent Certified Public Accountants ........................ 17
Financial Statements ............................................ 18
Appendix A -- Asian Region Countries ............................ 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 JANUARY 1, 1997, AS SUPPLEMENTED
FROM TIME TO TIME, WHICH IS INCORPORATED HEREIN BY REFERENCE. THIS STATEMENT
OF ADDITIONAL INFORMATION SHOULD BE READ IN CONJUNCTION WITH SUCH PROSPECTUS,
A COPY OF WHICH MAY BE OBTAINED WITHOUT CHARGE BY CONTACTING EATON VANCE
DISTRIBUTORS, INC. (THE "PRINCIPAL UNDERWRITER") (SEE BACK COVER FOR ADDRESS
AND PHONE NUMBER).
FOR EDGAR FILING PURPOSES ONLY: REGISTRANT INCORPORATES BY REFERENCE FOR
EV TRADITIONAL ASIAN SMALL COMPANIES FUND THE PART I FOUND IN THE STATEMENT OF
ADDITIONAL INFORMATION OF EV MARATHON ASIAN SMALL COMPANIES FUND CONTAINED IN
THIS AMENDMENT.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
PART II
This Part II provides information about EV TRADITIONAL ASIAN SMALL
COMPANIES FUND. The Fund became a series of the Trust on March 1, 1996.
FEES AND EXPENSES
ADVISER
No fees paid to date.
MANAGER AND ADMINISTRATOR
No fees paid to date.
DISTRIBUTION PLAN
The Fund has not paid any distribution fees to the Principal Underwriter
to date. The Fund expects to begin accruing for its service fee payments one
year after the commencement of operations.
PRINCIPAL UNDERWRITER
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. There
have been no fees paid to date.
BROKERAGE
No fees 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 Fund
or the Portfolio.) For the fiscal year ending August 31, 1997, it is estimated
that the noninterested Trustees of the Trust and the Portfolio will receive
the following compensation in their capacities as Trustees from the Fund and
the Portfolio, and, for the year ended September 30, 1996, earned the
following compensation in their capacities as Trustees of the funds in the
Eaton Vance fund complex(1):
ESTIMATED ESTIMATED
AGGREGATE AGGREGATE TOTAL COMPENSATION
COMPENSATION COMPENSATION FROM TRUST AND
NAME FROM FUND FROM PORTFOLIO FUND COMPLEX
- ---- --------- -------------- ------------------
Donald R. Dwight .......... $8 $80 $142,500(2)
Samuel L. Hayes, III ...... 8 80 153,750(3)
Norton H. Reamer .......... 8 80 142,500
John L. Thorndike ......... 8 80 147,500
Jack L. Treynor ........... 8 80 147,500
- ----------
(1) The Eaton Vance fund complex consists of 228 registered investment
companies or series thereof.
(2) Includes $42,500 of deferred compensation.
(3) Includes $37,500 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 current Prospectus of the Fund will be purchased within a
13-month period, a Statement of Intention should be signed so that shares may
be obtained at the same reduced sales charge as though the total quantity were
invested in one lump sum. Shares held under Right of Accumulation (see below)
as of the date of the Statement will be included toward the completion of the
Statement. The Statement authorizes the Transfer Agent to hold in escrow
sufficient shares (5% of the dollar amount specified in the Statement) which
can be redeemed to make up any difference in sales charge on the amount
intended to be invested and the amount actually invested. Execution of a
Statement does not obligate the shareholder to purchase or the Fund to sell
the full amount indicated in the Statement, and should the amount actually
purchased during the 13-month period be more or less than that indicated on
the Statement, price adjustments will be made. For sales charges and other
information on quantity purchases, see "How to Buy Fund Shares" in the Fund's
current 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 current
Prospectus of the Fund for which Eaton Vance acts as investment adviser or
administrator at the time of purchase. The sales charge on the shares being
purchased will then be at the rate applicable to the aggregate. For example,
if the shareholder owned shares valued at $80,000 in 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 Fund's current Prospectus. Shares purchased (i) by an
individual, his or her spouse and their children under the age of twenty-one,
and (ii) by a trustee, guardian or other fiduciary of a single trust estate or
a single fiduciary account, will be combined for the purpose of determining
whether a purchase will qualify for the Right of Accumulation and if
qualifying, the applicable sales charge level.
For any such discount to be made available, at the time of purchase a
purchaser or his or her Authorized Firm must provide the Principal Underwriter
(in the case of a purchase made through an Authorized Firm) or the Transfer
Agent (in the case of an investment made by mail) with sufficient information
to permit verification that the purchase order qualifies for the accumulation
privilege. Confirmation of the order is subject to such verification. The
Right of Accumulation privilege may be amended or terminated at any time as to
purchases occurring thereafter.
PRINCIPAL UNDERWRITER
Shares of the Fund may be continuously purchased at the public offering
price through Authorized Firms which have agreements with the Principal
Underwriter. 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 Fund's current Prospectus (see "How to Buy Fund
Shares"). Such table is applicable to purchases of the Fund alone or in
combination with purchases of the other funds offered by the Principal
Underwriter, made at a single time by (i) an individual, or an individual, his
spouse and their children under the age of twenty-one, purchasing shares for
his or their own account, and (ii) a trustee or other fiduciary purchasing
shares for a single trust estate or a single fiduciary account.
The table is also presently applicable to (1) purchases of 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 is 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 Trust reserves the right to suspend or limit the offering of shares of
the Fund to the public at any time.
The Principal Underwriter acts as principal in selling shares of the Fund
under the Distribution Agreement with the Trust on behalf of the Fund. The
Distribution Agreement is renewable annually by the Board of Trustees of the
Trust (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 Fund's current Prospectus for the discounts allowed to
Authorized Firms. The Principal Underwriter may allow, upon notice to all
Authorized Firms, with whom it has agreements, discounts up to the full sales
charge during the periods specified in the notice. During periods when the
discount includes the full sales charge, such Authorized Firms may be deemed
to be underwriters as that term is defined in the Securities Act of 1933.
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 designed to meet the requirements of Rule 12b-1 under the
1940 Act (the "Plan").
Pursuant to such Rule, the Plan has been approved by the sole initial
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 amount expended under the Plan and the
purposes for which such expenditures were made. The Plan remains in effect
through April 28, 1997 and from year to year thereafter, provided such
continuance is approved 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 November 30, 1996, 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>
EV TRADITIONAL ASIAN SMALL COMPANIES FUND
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1996
ASSETS:
Investment in Asian Small Companies Portfolio,
at cost and value ............................................ $ 10
Deferred organization expenses (Note 2) ........................ 30,000
------
Total assets ............................................... $30,010
LIABILITIES:
Accrued organization expenses .................................. 30,000
------
Net assets (applicable to 1 share of beneficial
interest issued and outstanding) ............................ $ 10.00
=======
Net asset value and repurchase price per share ................. $ 10.00
=======
Offering price per share (100 / 95.25 of $10.00)
On sales of $50,000 or more, the offering price is reduced ... $ 10.50
=======
NOTES:
(1) Eaton Vance Growth Trust, a Massachusetts business trust (the Trust),
established and designated the EV Traditional Asian Small Companies Fund
(the Fund) as a separate series on March 1, 1996. The Fund has been
inactive since that date, except for matters relating to the Fund's
establishment, the designation and the registration under the Securities
Act of 1933 of the Fund's shares of beneficial interest (Shares), the sale
of one Share (Initial Share) of the Fund to Eaton Vance Management, and
the investment of the proceeds of such Initial Share in Asian Small
Companies Portfolio (the Portfolio). The value of such investment reflects
the Fund's proportionate interest in the net assets of the Portfolio.
(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 Fund's initial offering of its shares. The
amount paid by the Fund on any withdrawal by the holders of the initial
share 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.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Trustees and Shareholder of EV Traditional Asian Small Companies Fund:
We have audited the accompanying statement of assets and liabilities of EV
Traditional Asian Small Companies Fund (one of the series constituting Eaton
Vance Growth Trust) as of August 31, 1996. 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 EV Traditional Asian Small
Companies Fund as of August 31, 1996, in conformity with generally accepted
accounting principles.
Deloitte & Touche LLP
Boston, Massachusetts
September 5, 1996
<PAGE>
[LOGO]
EV TRADITIONAL
ASIAN SMALL
COMPANIES FUND
STATEMENT OF ADDITIONAL INFORMATION
JANUARY 1, 1997
EV TRADITIONAL ASIAN SMALL
COMPANIES FUND
24 FEDERAL STREET
BOSTON, MA 02110
- --------------------------------------------------------------------------------
SPONSOR AND MANAGER OF EV TRADITIONAL ASIAN SMALL COMPANIES FUND
ADMINISTRATOR OF ASIAN SMALL COMPANIES PORTFOLIO
Eaton Vance Management, 24 Federal Street, Boston, MA 02110
ADVISER OF ASIAN SMALL COMPANIES PORTFOLIO
Lloyd George Investment Management (Bermuda) Limited
3808 One Exchange Square, Central, Hong Kong
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc., 24 Federal Street, Boston, MA 02110
(800) 225-6265
CUSTODIAN
Investors Bank & Trust Company, 89 South Street, Boston, MA 02111
TRANSFER AGENT
First Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123
(800) 262-1122
AUDITORS
Deloitte & Touche LLP, 125 Summer Street, Boston, MA 02110
T-ACSAI
<PAGE>
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
STATEMENT OF
ADDITIONAL INFORMATION
January 1, 1997
EV CLASSIC GREATER CHINA GROWTH FUND
24 Federal Street
Boston, Massachusetts 02110
(800) 225-6265
This Statement of Additional Information consists of two parts. Part I
provides general information about EV Classic Greater China Growth Fund (the
"Fund"), Greater China Growth Portfolio (the "Portfolio") and certain other
series of Eaton Vance Growth Trust (the "Trust"). Part II provides information
solely about the Fund. Where appropriate, Part I includes cross-references to
the relevant sections of Part II, that provide additional Fund-specific
information. This Statement of Additional Information is sometimes referred to
herein as the "SAI".
TABLE OF CONTENTS
PART I
Additional Information about Investment Policies ...................... 1
Investment Restrictions ............................................... 3
Trustees and Officers ................................................. 6
Management of the Fund ................................................ 8
Custodian ............................................................. 11
Service for Withdrawal ................................................ 12
Determination of Net Asset Value ...................................... 12
Investment Performance ................................................ 13
Taxes ................................................................. 14
Portfolio Security Transactions ....................................... 16
Other Information ..................................................... 17
Independent Certified Public Accountants .............................. 18
Financial Statements .................................................. 19
Appendix A -- China Region Countries .................................. 20
Appendix B -- Statistical Information ................................. 26
PART II
Fees and Expenses ..................................................... a-1
Principal Underwriter ................................................. a-2
Distribution Plan ..................................................... a-2
Performance Information ............................................... a-4
Control Persons and Principal Holders of Securities ................... 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 JANUARY 1, 1997, AS SUPPLEMENTED FROM
TIME TO TIME, WHICH IS INCORPORATED HEREIN BY REFERENCE. THIS STATEMENT OF
ADDITIONAL INFORMATION SHOULD BE READ IN CONJUNCTION WITH SUCH PROSPECTUS, A
COPY OF WHICH MAY BE OBTAINED WITHOUT CHARGE BY CONTACTING EATON VANCE
DISTRIBUTORS, INC. (THE "PRINCIPAL UNDERWRITER") (SEE BACK COVER FOR ADDRESS AND
PHONE NUMBER).
<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 SAI 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. The value of the assets of the Portfolio as
measured in U.S. dollars may be affected favorably or unfavorably by changes in
foreign currency exchange rates and exchange control regulations. Currency
exchange rates can also be affected unpredictably by intervention by U.S. or
foreign governments or central banks, or the failure to intervene, or by
currency controls or political developments in the U.S. or abroad. The Portfolio
may conduct its foreign currency exchange transactions on a spot (i.e., cash)
basis at the spot rate prevailing in the foreign currency exchange market or
through entering into swaps, forward contracts, options or futures on currency.
In spot transactions, foreign exchange dealers do not charge a fee for
conversion, but they do realize a profit based on the difference (the "spread")
between the prices at which they are buying and selling various currencies.
Thus, a dealer may offer to sell a foreign currency to the Portfolio at one
rate, while offering a lesser rate of exchange should the Portfolio desire to
resell that currency to the dealer.
Currency swaps require maintenance of a segregated account as described
under "Asset Coverage Requirements" below. The Portfolio will not enter into any
currency swap unless the credit quality of the unsecured senior debt or the
claims-paying ability of the other party thereto is considered to be investment
grade by the Advisers.
The Portfolio may enter into forward foreign currency exchange contracts in
several circumstances. First, when the Portfolio enters into a contract for the
purchase or sale of a security denominated in a foreign currency, or when the
Portfolio anticipates the receipt in a foreign currency of dividend or interest
payments on such a security which it holds, the Portfolio may desire to "lock
in" the U.S. dollar price of the security or the U.S. dollar equivalent of such
dividend or interest payment, as the case may be. By entering into a forward
contract for the purchase or sale, for a fixed amount of dollars, of the amount
of foreign currency involved in the underlying transactions, the Portfolio will
attempt to protect itself against an adverse change in the relationship between
the U.S. dollar and the subject foreign currency during the period between the
date on which the security is purchased or sold, or on which the dividend or
interest payment is declared, and the date on which such payments are made or
received.
Additionally, when management of the Portfolio believes that the currency of
a particular foreign country may suffer a substantial decline against the U.S.
dollar, it may enter into a forward contract to sell, for a fixed amount of
dollars, the amount of foreign currency approximating the value of some or all
of the securities held by the Portfolio denominated in such foreign currency.
The precise matching of the forward contract amounts and the value of the
securities involved will not generally be possible because the future value of
such securities in foreign currencies will change as a consequence of market
movements in the value of those securities between the date on which the
contract is entered into and the date it matures. The precise projection of
short-term currency market movements is not possible, and short-term hedging
provides a means of fixing the dollar value of only a portion of the Portfolio's
foreign assets.
RISKS ASSOCIATED WITH DERIVATIVE INSTRUMENTS. Entering into a derivative
instrument involves a risk that the applicable market will move against the
Portfolio's position and that the Portfolio will incur a loss. For derivative
instruments other than purchased options, this loss may exceed the amount of the
initial investment made or the premium received by the Portfolio. Derivative
instruments may sometimes increase or leverage the Portfolio's exposure to a
particular market risk. Leverage enhances the Portfolio's exposure to the price
volatility of derivative instruments it holds. The Portfolio's success in using
derivative instruments to hedge portfolio assets depends on the degree of price
correlation between the derivative instruments and the hedged asset. Imperfect
correlation may be caused by several factors, including temporary price
disparities among trading markets for the derivative instrument, the assets
underlying the derivative instrument and the Portfolio assets. Over-the-counter
("OTC") derivative instruments involve an enhanced risk that the issuer or
counterparty will fail to perform its contractual obligations. Some derivative
instruments are not readily marketable or may become illiquid under adverse
market conditions. In addition, during periods of market volatility, a commodity
exchange may suspend or limit trading in an exchange-traded derivative
instrument, which may make the contract temporarily illiquid and difficult to
price. Commodity exchanges may also establish daily limits on the amount that
the price of a futures contract or futures option can vary from the previous
days settlement price. Once the daily limit is reached, no trades may be made
that day at a price beyond the limit. This may prevent the Portfolio from
closing out positions and limiting its losses. The staff of the Commission takes
the position that certain purchased OTC options, and assets used as cover for
written OTC options, are subject to the Portfolio's 15% limit on illiquid
investments. The Portfolio's ability to terminate OTC derivative instruments may
depend on the cooperation of the counterparties to such contracts. For thinly
traded derivative instruments, the only source of price quotations may be the
selling dealer or counterparty. In addition, certain provisions of the Code,
limit the extent to which the Portfolio may purchase and sell derivative
instruments. The Portfolio will engage in transactions in futures contracts and
related options only to the extent such transactions are consistent with the
requirements of the Code for maintaining the qualification of the Fund as a
regulated investment company for federal income tax purposes. See "Taxes."
ASSET COVERAGE REQUIREMENTS. Transactions involving reverse repurchase
agreements, the lending of Portfolio securities, currency swaps, forward
contracts or futures contracts and options (other than options that the
Portfolio has purchased) expose the Portfolio to an obligation to another party.
The Portfolio will not enter into any such transactions unless it owns either
(1) an offsetting ("covered") position in securities, currencies, or other
options, futures contracts or forward contracts, or (2) cash or liquid
securities with a value sufficient at all times to cover its potential
obligations not covered as provided in (1) above. The Portfolio will comply with
Commission guidelines regarding cover for these instruments and, if the
guidelines so require, set aside cash or liquid securities in a segregated
account with its custodian in the prescribed amount. The securities in the
segregated account will be marked to market daily.
Assets used as cover or held in a segregated account cannot be sold while
the position requiring coverage or segregation is outstanding unless they are
replaced with other appropriate assets. As a result, the commitment of a large
portion of the Portfolio's assets to segregated accounts or to cover could
impede portfolio management or the Portfolio's ability to meet redemption
requests or other current obligations.
LIMITATIONS ON FUTURES CONTRACTS AND OPTIONS. The Portfolio does not intend to
write a covered option on any security if after such transaction more than 15%
of its net assets, as measured by the aggregate value of the securities
underlying all covered calls and puts written by the Portfolio, would be subject
to such options. The Portfolio will only write a put option on a security which
it intends to ultimately acquire for its portfolio. The Portfolio does not
intend to purchase any options if after such transaction more than 5% of its net
assets, as measured by the aggregate of all premiums paid for all such options
held by the Portfolio, would be so invested. The Portfolio may enter into
futures contracts (and options thereon) traded on a foreign exchange if it is
determined by the Adviser that trading on such exchange does not subject the
Portfolio to risks, including credit and liquidity risks, that are materially
greater than the risks associated with trading on United States exchanges
regulated by the CFTC.
REPURCHASE AGREEMENTS. Under a repurchase agreement the Portfolio buys a
security at one price and simultaneously promises to sell that same security
back to the seller at a higher price. At no time will the Portfolio commit more
than 15% of its net assets to repurchase agreements which mature in more than
seven days and other illiquid securities. The Portfolio's repurchase agreements
will provide that the value of the collateral underlying the repurchase
agreement will always be at least equal to the repurchase price, including any
accrued interest earned on the repurchase agreement, and will be marked to
market daily.
REVERSE REPURCHASE AGREEMENTS. The Portfolio may enter into reverse repurchase
agreements. Under a reverse repurchase agreement, the Portfolio temporarily
transfers possession of a portfolio instrument to another party, such as a bank
or broker-dealer, in return for cash. At the same time, the Portfolio agrees to
repurchase the instrument at an agreed upon time (normally within seven days)
and price, which reflects an interest payment. The Portfolio expects that it
will enter into reverse repurchase agreements when it is able to invest the cash
so acquired at a rate higher than the cost of the agreement, which would
increase the income earned by the Portfolio. The Portfolio could also enter into
reverse repurchase agreements as a means of raising cash to satisfy redemption
requests without the necessity of selling portfolio assets.
When the Portfolio enters into a reverse repurchase agreement, any
fluctuations in the market value of either the securities transferred to another
party or the securities in which the proceeds may be invested would affect the
market value of the Portfolio's assets. As a result, such transactions may
increase fluctuations in the market value of the Portfolio's assets. While there
is a risk that large fluctuations in the market value of the Portfolio's assets
could affect the Portfolio's net asset value, this risk is not significantly
increased by entering into reverse repurchase agreements, in the opinion of the
Adviser. Because reverse repurchase agreements may be considered to be the
practical equivalent of borrowing funds, they constitute a form of leverage. If
the Portfolio reinvests the proceeds of a reverse repurchase agreement at a rate
lower than the cost of the agreement, entering into the agreement will lower the
Portfolio's yield.
PORTFOLIO TURNOVER. The Portfolio cannot accurately predict its portfolio
turnover rate, but it is anticipated that the annual turnover rate will
generally not exceed 100% (excluding turnover of securities having a maturity of
one year or less). A 100% annual turnover rate would occur, for example, if all
the securities in the portfolio were replaced once in a period of one year. A
high turnover rate (100% or more) necessarily involves greater expenses to the
Portfolio. The Portfolio engages in portfolio trading (including short-term
trading) if it believes that a transaction including all costs will help in
achieving its investment objective either by increasing income or by enhancing
the Portfolio's net asset value. Short-term trading may be advisable in light of
a change in circumstances of a particular company or within a particular
industry, or in light of general market, economic or political conditions. High
portfolio turnover may also result in the realization of substantial net
short-term capital gains. 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 and
certain other investments (including its share of gains from the sale of
securities and certain other investments held by the Portfolio) held for less
than three months.
LENDING PORTFOLIO SECURITIES. The Portfolio may seek to increase its income by
lending portfolio securities to broker-dealers or other institutional borrowers.
Under present regulatory policies of the Commission, such loans are required to
be secured continuously by collateral maintained on a current basis at an amount
at least equal to market value of the securities loaned, which will be marked to
market daily. The financial condition of the borrower will be monitored by the
Adviser on an ongoing basis. The Portfolio would continue to receive the
equivalent of the interest or dividends paid by the issuer on the securities
loaned and would also receive a fee, or all or a portion of the interest on
investment of the collateral. The Portfolio would have the right to call a loan
and obtain the securities loaned at any time on up to five business days'
notice. The Portfolio would not have the right to vote any securities having
voting rights during the existence of a loan, but could call the loan in
anticipation of an important vote to be taken among holders of the securities or
the giving or holding of their consent on a material matter affecting the
investment. If the Adviser decides to make securities loans, it is intended that
the value of the securities loaned would not exceed one-third of the Portfolio's
total assets. As with other extensions of credit there are risks of delay in
recovery or even loss of rights in the securities loaned if the borrower of the
securities fails financially. However, the loans will be made only to
organizations deemed by the Adviser to be sufficiently creditworthy and when, in
the judgment of the Adviser, the consideration which can be earned from
securities loans of this type justifies the attendant risk. Securities lending
involves administration expenses including finders fees.
INVESTMENT RESTRICTIONS
The following investment restrictions of the Fund are designated as
fundamental and as such cannot be changed without the approval by the holders of
a majority of the Fund's outstanding voting securities, which as used in this
SAI means the lesser of (a) 67% or more of the outstanding voting securities of
the Fund present or represented by proxy at a meeting if the holders of more
than 50% of the shares are present or represented at the meeting or (b) more
than 50% of the shares of the Fund. Accordingly, the Fund may not:
(1) issue senior securities (as defined in the Investment Company Act of
1940 and rules thereunder) or borrow money, except that the Fund or the
Portfolio may borrow:
(i) from banks to purchase or carry securities, commodities,
commodities contracts or other investments;
(ii) from banks for temporary or emergency purposes not in excess
of 10% of its gross assets taken at market value; or
(iii) by entering into reverse repurchase agreements,
if, immediately after any such borrowing, the value of the Fund's or
Portfolio's total assets, including all borrowings then outstanding, is
equal to at least 300% of the aggregate amount of borrowings then
outstanding. Any such borrowings may be secured or unsecured. The Portfolio
or the Fund may issue securities (including senior securities) appropriate
to evidence such indebtedness, including reverse repurchase agreements.
(2) Pledge its assets, except that the Portfolio or the Fund may pledge
not more than one-third of its total assets (taken at current value) to
secure borrowings made in accordance with investment restriction (1) above;
for the purpose of this restriction the deposit of assets in a segregated
account with the Portfolio's or the Fund's custodian, as the case may be, in
connection with any of the Portfolio's or the Fund's respective investment
transactions is not considered to be a pledge.
(3) Purchase securities on margin (but the Portfolio or the Fund may
obtain such short-term credits as may be necessary for the clearance of
purchases and sales of securities).
(4) Make short sales of securities or maintain a short position, unless
at all times when a short position is open the Portfolio or the Fund either
owns an equal amount of such securities or owns securities convertible into
or exchangeable, without the payment of any additional consideration, for
securities of the same issue as, and equal in amount to, the securities sold
short.
(5) Purchase securities issued by any other open-end investment company
or investment portfolio, except as they may be acquired as part of a merger,
consolidation or acquisition of assets, except that the Fund may invest all
or substantially all of its assets in either the Portfolio or any other
registered investment company having substantially the same investment
objective as the Fund and except as otherwise permitted by the Investment
Company Act of 1940.
(6) Purchase or retain in its portfolio any securities issued by an
issuer any of whose officers, directors, trustees or security holders is an
officer or Trustee of the Portfolio or the Trust or is a member, officer,
director or trustee of any investment adviser of the Portfolio or the Fund,
if after the purchase of the securities of such issuer by the Portfolio or
the Fund one or more of such persons owns beneficially more than 1/2 of 1%
of the shares or securities or both (all taken at current value) of such
issuer and such persons owning more than 1/2 of 1% of such shares or
securities together own beneficially more than 5% of such shares or
securities or both (all taken at current value); provided, however, that the
Fund may invest all or substantially all of its assets in either the
Portfolio or any other registered investment company having substantially
the same investment objective as the Fund and having any officers,
directors, trustees or security holders who are officers or Trustees of the
Trust.
(7) Underwrite securities issued by other persons, except insofar as the
Fund or the Portfolio may technically be deemed to be an underwriter under
the Securities Act of 1933 in selling or disposing of a portfolio security,
and except that the Fund may invest all or substantially all of its assets
in either the Portfolio or any other registered investment company having
substantially the same investment objective as the Fund.
(8) Make loans to other persons, except by (a) the acquisition of money
market instruments, debt securities and other obligations in which the
Portfolio or the Fund is authorized to invest in accordance with their
respective investment objective and policies, (b) entering into repurchase
agreements and (c) lending their respective portfolio securities.
(9) Purchase the securities of any one issuer (other than obligations
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, with respect to 75% of its total assets and as a
result of such purchase (a) more than 5% of the total assets of the
Portfolio or the Fund, as the case may be (taken at current value), would be
invested in the securities of such issuer, or (b) the Fund or the Portfolio
would hold more than 10% of the outstanding voting securities of that
issuer, except that the Fund may invest all or substantially all of its
assets in, and may acquire up to 100% of the outstanding voting securities
of either the Portfolio or any other registered investment company having
substantially the same investment objectives as the Fund.
(10) Purchase any security if, as a result of such purchase, 25% or more
of the total assets of the Portfolio or the Fund, as the case may be (taken
at current value) would be invested in the securities of issuers having
their principal business activities in the same industry (the electric, gas
and telephone utility industries being treated as separate industries for
the purpose of this restriction); provided that there is no limitation with
respect to obligations issued or guaranteed by the U.S. Government or any of
its agencies or instrumentalities and except that the Fund may invest all or
substantially all of its assets in either the Portfolio or any other
registered investment company having substantially the same investment
objective as the Fund.
(11) Invest for the purpose of gaining control of a company's
management.
(12) Purchase or sell real estate, although the Fund or the Portfolio
may purchase and sell securities which are secured by interests in real
estate, securities of issuers which invest or deal in real estate and real
estate that is acquired as the result of the ownership of securities.
(13) Purchase or sell physical commodities (other than currency) or
contracts for the purchase or sale of physical commodities (other than
currency).
(14) Buy investment securities from or sell them to any of the
respective officers or Trustees of the Trust or the Portfolio, the
Portfolio's investment adviser or the Fund's principal underwriter, as
principal; provided, however, that any such person or firm may be employed
as a broker upon customary terms and that this restriction does not apply to
the Fund's investments in either the Portfolio or any other registered
investment company having substantially the same investment objective as the
Fund.
(15) Purchase oil, gas or other mineral leases or purchase partnership
interests in oil, gas or other mineral exploration or development programs.
The Portfolio has adopted substantially the same fundamental investment
restrictions as the foregoing investment restrictions adopted by the Fund; such
restrictions cannot be changed without the approval of a "majority of the
outstanding voting securities" of the Portfolio.
For the purpose of investment restrictions (1), (2) and (3), the
arrangements (including escrow, margin and collateral arrangements) made by the
Portfolio or the Fund with respect to their respective transactions in all types
of options, futures contracts, options on futures contracts, forward contracts,
currencies, and commodities and options thereon shall not be considered to be
(i) a borrowing of money or the issuance of securities (including senior
securities) by the Portfolio or the Fund, as the case may be, (ii) a pledge of
its assets or (iii) the purchase of a security on margin.
The Fund and the Portfolio have 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 and
commercial paper issued pursuant to Section 4(2) of said Act that the Board of
Trustees of the Trust or the Portfolio, or its delegate, determines to be
liquid. Neither the Fund nor the Portfolio intends to invest in Rule 144A
securities or make short sales of securities during the coming year. Neither the
Fund nor the Portfolio will purchase warrants if, as a result of such purchase,
more than 5% of the Portfolio's or the Fund's net assets, as the case may be
(taken at current value), would be invested in warrants, and the value of such
warrants which are not listed on the New York or American Stock Exchange may not
exceed 2% of the Portfolio's or the Fund's net assets; this policy does not
apply to or restrict warrants acquired by the Portfolio or the Fund in units or
attached to securities, inasmuch as such warrants are deemed to be without
value. Neither the Fund nor the Portfolio will purchase any securities if at the
time of such purchase, permitted borrowings under investment restriction (1)
above exceed 5% of the value of the Portfolio's or the Fund's total assets, as
the case may be.
Whenever an investment policy or investment restriction set forth in the
Prospectus or this SAI states a maximum percentage of assets that may be
invested in any security or other asset or describes a policy regarding quality
standards, such percentage limitation or standard shall be determined
immediately after and as a result of the Fund's or the Portfolio's acquisition
of such security or other asset. Accordingly, any later increase or decrease
resulting from a change in values, assets or other circumstances, other than a
subsequent rating change below investment grade made by a rating service, will
not compel the Fund or the Portfolio, as the case may be, to dispose of such
security or other asset. Nevertheless, under normal market conditions the Fund
and the Portfolio must take actions necessary to comply with its policy of
investing at least 65% of total assets in equity securities of China growth
companies. Moreover, the Fund and the Portfolio must always be in compliance
with its borrowing policy set forth above.
Although permissible under the Fund's investment restrictions, the Fund has
no present intention during the coming fiscal year to: borrow money; pledge its
assets; underwrite securities issued by other persons; or make loans to other
persons.
TRUSTEES AND OFFICERS
The Trustees and officers of the Trust and the Portfolio are listed below.
Except as indicated, each individual has held the office shown or other offices
in the same company for the last five years. Unless otherwise noted, the
business address of each Trustee and officer is 24 Federal Street, Boston,
Massachusetts 02110, which is also the address of the Fund's sponsor and
manager, Eaton Vance Management ("Eaton Vance"), of Eaton Vance's wholly-owned
subsidiary, Boston Management and Research ("BMR"), of Eaton Vance's parent,
Eaton Vance Corp. ("EVC"), and of Eaton Vance's trustee, Eaton Vance, Inc.
("EV"). Eaton Vance and EV are both wholly-owned subsidiaries of EVC. The
business address of the Advisers is 3808 One Exchange Square, Central, Hong
Kong. Those Trustees who are "interested persons" of the Trust, the Portfolio,
the Advisers, 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, the Portfolio, the
Advisers, Eaton Vance, BMR, EVC or EV, are indicated by an asterisk (*).
TRUSTEES OF THE TRUST AND THE PORTFOLIO
JAMES B. HAWKES (55), President of the Trust, Vice President of the Portfolio
and Trustee*
President and Chief Executive Officer of Eaton Vance, BMR, EVC and EV, and a
Director of EVC and EV. Director or Trustee and officer of various
investment companies managed by Eaton Vance or BMR. Director of Lloyd George
Management (B.V.I.) Limited.
HON. ROBERT LLOYD GEORGE (43), President of the Portfolio and Trustee of the
Portfolio*
Chairman and Chief Executive of Lloyd George Management (B.V.I.) Limited.
Chairman and Chief Executive Officer of the Advisers. Managing Director of
Indosuez Asia Investment Services, Ltd. from 1984 to 1991.
Address: 3808 One Exchange Square, Central, Hong Kong
HON. EDWARD K.Y. CHEN (51), Trustee of the Portfolio
President of Lingnan College in Hong Kong. Professor and Director of Centre of
Asian Studies at the University of Hong Kong from 1979-1995. Director of First
Pacific Company and a Board Member of the Mass Transit Railway Corporation.
Member of the Executive Council of the Hong Kong Government since 1992 and
Chairman of the Consumer Council since 1991.
Address: President's Office, Lingnan College, Tuen Mun, Hong Kong
DONALD R. DWIGHT (65), 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 (61), Trustee
Jacob H. Schiff Professor of Investment Banking, Harvard University Graduate
School of Business Administration. Director or Trustee of various investment
companies managed by Eaton Vance or BMR.
Address: Harvard University Graduate School of Business Administration,
Soldiers Field Road, Boston, Massachusetts 02134
NORTON H. REAMER (61), Trustee
President and Director, United Asset Management Corporation (a holding company
owning institutional investment management firms); Chairman, President and
Director, UAM Funds (mutual funds). Director or Trustee of various investment
companies managed by Eaton Vance or BMR.
Address: One International Place, Boston, Massachusetts 02110
JOHN L. THORNDIKE (70), Trustee of the Trust
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 (66), Trustee of the Trust
Investment Adviser and Consultant. Director or Trustee of various investment
companies managed by Eaton Vance or BMR.
Address: 504 Via Almar, Palos Verdes Estates, California 90274
OFFICERS OF THE TRUST AND THE PORTFOLIO
WILLIAM D. BURT (58), Vice President of the Trust
Vice President of Eaton Vance, BMR and EV since November 1994; formerly Vice
President of The Boston Company (1990-1994). Mr. Burt was elected Vice
President of the Trust on June 19, 1995.
M. DOZIER GARDNER (63), Vice President of the Trust
Vice Chairman of Eaton Vance, BMR, EVC and EV, and Director of EVC and EV.
Director or Trustee and officer of various investment companies managed by
Eaton Vance or BMR.
BARCLAY TITTMANN (64), Vice President of the Trust
Vice President of Eaton Vance, BMR and EV since October 1993; formerly Vice
President of Invesco Management and Research (1970-1993). Mr. Tittmann was
elected Vice President of the Trust on June 19, 1995.
SCOBIE DICKINSON WARD (31), Vice President, Assistant Secretary and Assistant
Treasurer of the Portfolio
Director of Lloyd George Management (B.V.I.) Limited. Director of the
Advisers. Investment Manager of Indosuez Asia Investment Services, Ltd. from
1990 to 1991.
Address: 3808 One Exchange Square, Central, Hong Kong
WILLIAM WALTER RALEIGH KERR (46), Vice President, Secretary and Assistant
Treasurer of the Portfolio
Director, Finance Director and Chief Operating Officer of the Advisers.
Director of Lloyd George Management (B.V.I.) Limited.
Address: 3808 One Exchange Square, Central, Hong Kong
JAMES L. O'CONNOR (51), Treasurer
Vice President of Eaton Vance, BMR and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
THOMAS OTIS (65), 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 (61), Assistant Treasurer and Assistant Secretary
Vice President of Eaton Vance, BMR and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
A. JOHN MURPHY (34), Assistant Secretary
Assistant Vice President of Eaton Vance, BMR and EV since March 1, 1994;
employee of Eaton Vance since March 1993. State Regulations Supervisor, The
Boston Company (1991-1993). Officer of various investment companies managed by
Eaton Vance or BMR. Mr. Murphy was elected Assistant Secretary of the Trust on
March 27, 1995.
ERIC G. WOODBURY (39), Assistant Secretary
Vice President of Eaton Vance, BMR and EV since February 1993; formerly,
associate attorney at Dechert, Price & Rhoads and Gaston & Snow. Officer of
various investment companies managed by Eaton Vance or BMR. Mr. Woodbury was
elected Assistant Secretary of the Trust on June 19, 1995.
Messrs. Hayes (Chairman), Reamer and Thorndike, are members of the Special
Committee of the Board of Trustees of the Trust. The purpose of the Special
Committee is to consider, evaluate and make recommendations to the full Board of
Trustees concerning (i) all contractual arrangements with service providers to
the Fund, including administrative services, transfer agency, custodial and fund
accounting and distribution services, and (ii) all other matters in which Eaton
Vance or its affiliates has any actual or potential conflict of interest with
the Fund or its shareholders.
The Nominating Committee is comprised of four Trustees who are not
"interested persons" as that term is defined under the 1940 Act ("noninterested
Trustees"). The Committee has four-year staggered terms, with one member
rotating off the Committee to be replaced by another noninterested Trustee of
the Trust. The purpose of the Committee is to recommend to the Board nominees
for the position of noninterested Trustee and to assure that at least a majority
of the Board of Trustees is independent of Eaton Vance and its affiliates.
Messrs. Treynor (Chairman) and Dwight are members of the Audit Committee of
the Board of Trustees. 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 trading and brokerage
policies and practices, accounting and auditing practices and procedures,
accounting records, internal accounting controls, and the functions performed by
the custodian, transfer agent and dividend disbursing agent of the Trust.
Trustees of the Portfolio (except Mr. Chen) who are not affiliated with
Eaton Vance may elect to defer receipt of all or a percentage of their annual
fees in accordance with the terms of a Trustees Deferred Compensation Plan (the
"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. Neither the Portfolio
nor the Fund has a retirement plan for its Trustees. For information concerning
the compensation earned by the Trustees of the Trust and the Portfolio, see
"Fees and Expenses" in Part II.
The Advisers are subsidiaries of Lloyd George Management (B.V.I.) Limited,
which is ultimately controlled by the Hon. Robert J.D. Lloyd George, President
and Trustee of the Portfolio and Chairman and Chief Executive Officer of the
Advisers. Mr. Hawkes is a Trustee and officer of the Trust and an officer of
the Fund's sponsor and manager. Mr. Hayes is a Trustee of the Trust.
MANAGEMENT OF THE FUND
Eaton Vance acts as the sponsor and manager of the Fund and the
administrator of the Portfolio. The Portfolio has engaged Lloyd George
Management (Hong Kong) Limited ("LGM-HK") as its investment adviser. Pursuant to
a service agreement effective on January 1, 1996 between LGM-HK and its
affiliate, Lloyd George Investment Management (Bermuda) Limited ("LGIM-B"),
LGIM-B, acting under the general supervision of the Portfolio's Board of
Trustees, is responsible for managing the Portfolio's investments. LGM-HK
supervises LGIM-B's performance of this function and retains its contractual
obligations under its investment advisory agreement with the Portfolio. LGM-HK
and LGIM-B are both referred to separately as an Adviser or together as the
Advisers.
THE ADVISER
LGIM-B is responsible for effecting all security transactions on behalf of
the Portfolio, including the allocation of principal transactions and portfolio
brokerage and the negotiation of commissions. See "Portfolio Security
Transactions." Under the investment advisory agreement, LGM-HK is entitled to
receive a monthly advisory fee computed by applying the annual asset rate
applicable to that portion of the average daily net assets of the Portfolio
throughout the month in each Category as indicated below:
ANNUAL
CATEGORY AVERAGE DAILY NET ASSETS ASSET RATE
- -------- ------------------------ ----------
1 less than $500 million ....................... 0.75%
2 $500 million but less than $1 billion ........ 0.70
3 $1 billion but less than $1.5 billion ........ 0.65
4 $1.5 billion but less than $2 billion ........ 0.60
5 $2 billion but less than $3 billion .......... 0.55
6 $3 billion and over .......................... 0.50
Since January 1, 1996, LGM-HK pays to LGIM-B the entire amount of the
advisory fee payable by the Portfolio under its investment advisory agreement
with LGM-HK.
As of August 31, 1996, the Portfolio had net assets of $510,297,559. For the
fiscal years ended August 31, 1996, 1995, and 1994, LGM-HK earned advisory fees
of $4,211,398, $4,763,655 and $4,100,334, respectively, (equivalent to 0.74% of
the Portfolio's average daily net assets for each such year).
Eaton Vance is among the oldest mutual funds organizations in the country.
As an experienced mutual fund provider, Eaton Vance has contributed to making
the securities market more widely accessible to investors. Eaton Vance equity
funds provide a way to take advantage of the potentially higher returns of
individual stocks. Eaton Vance has a staff of more than 25 investment
professionals specializing in security analysis and equity management.
The Eaton Vance investment process stresses intensive fundamental research.
Portfolios are built on a stock-by-stock basis and the process includes visits
to companies under consideration. The process also focuses on well-managed
companies with the following characteristics: strong underlying value or
franchise; solid earnings growth; steady cash flow, strong balance sheet;
innovative products or services; potential for sustained growth; seasoned,
creative management; or ability to survive variable market conditions.
By investing in diversified portfolios and employing prudent and
professional management, Eaton Vance mutual funds can provide attractive return,
while exposing shareholders to less risk than if they were to build investment
portfolios on their own. Eaton Vance employs rigorous buy and sell disciplines.
For instance, purchases are made with an eye to both relative and absolute
growth rates and price/earning ratios, and sales are made when a stock is fully
valued, fundamentals deteriorate, management fails to execute its strategy, or
more attractive alternatives are available.
LGM specializes in providing investment management services with respect to
equity securities of companies trading in Asian securities markets, especially
those of emerging markets. LGM currently manages portfolios for both private
clients and institutional investors seeking long-term capital growth and has
advised Eaton Vance's international equity funds since 1992. LGM's core
investment team consists of nine experienced investment professionals who have
worked together over a number of years successfully managing client portfolios
in non-U.S. stock markets. The team has a unique knowledge of, and experience
with, Asian emerging markets. LGM analysts cover East Asia, the India
subcontinent, Russia and Eastern Europe, Latin America, Australia and New
Zealand from offices in Hong Kong, London and Bombay. LGM is ultimately
controlled by the Hon. Robert J.D. Lloyd George, President of the Portfolio and
Chairman and Chief Executive Officer of the Adviser. LGM's only business is
portfolio management. Eaton Vance's parent is a shareholder of LGM.
The Advisers and LGM have adopted a conservative management style, providing
a blend of Asian and multinational expertise with the most rigorous
international standards of fundamental security analysis. Although focused
primarily in Asia, the Advisers and LGM maintain a network of international
contacts in order to monitor international economic and stock market trends and
offer clients a global management service.
The directors of LGM-HK are the Honourable Robert Lloyd George, William
Walter Raleigh Kerr, M.F. Tang and Scobie Dickinson Ward. The Hon. Robert J.D.
Lloyd George is Chairman and Chief Executive Officer of each Adviser and Mr.
Kerr is an officer of each Adviser. The directors of LGIM-B are the Honorable
Robert Lloyd George, William Walter Raleigh Kerr, Scobie Dickinson Ward, M.F.
Tang, Pamela Chan, Adaline Mang-Yee Ko, Peter Bubenzer and Judith Collis. The
business address of the first six individuals is 3808 One Exchange Square,
Central, Hong Kong and of the last two is Cedar House, 41 Cedar Avenue,
Hamilton HM 12, Bermuda.
Mr. Lloyd George was born in London in 1952 and educated at Eton College,
where he was a King's Scholar, and at Oxford University. Prior to founding LGM,
Mr. Lloyd George was Managing Director of Indosuez Asia Investment Services Ltd.
In 1983 Mr. Lloyd George launched and managed the Henderson Japan Special
Situations Trust. Prior to that he spent four years with the Fiduciary Trust
Company of New York researching international securities, in the United States
and Europe, for the United Nations Pension Fund.
Eaton Vance and the Advisers follow a common investment philosophy, striving
to identify companies with outstanding management and earnings growth potential
by following a disciplined management style, adhering to the most rigorous
international standards of fundamental security analysis, placing heavy emphasis
on research, visiting every company owned, and closely monitoring political and
economic developments.
Eaton Vance mutual funds are distributed by Eaton Vance Distributors both
within the United States and offshore. Eaton Vance Distributors believes that an
investment professional can provide valuable services to you to help you reach
your investment goals. Meeting investment goals requires time, objectivity and
investment savvy. Before making an investment recommendation, a representative
can help you carefully consider your short- and long-term financial goals, your
tolerance for investment risk, your investment time frame, and other investments
you may already own. Your professional investment representatives are
knowledgeable about financial markets, as well as the wide range of investment
opportunities available. A representative can provide you with tailored
financial advice and help you decide when to buy, sell or persevere with your
investments.
The Portfolio's investment advisory agreement with LGM-HK remains in effect
until February 28, 1997 and may be continued indefinitely thereafter so long as
such continuance is approved at least annually (i) by the vote of a majority of
the Trustees of the Portfolio who are not interested persons of the Portfolio
cast in person at a meeting specifically called for the purpose of voting on
such approval and (ii) by the Board of Trustees of the Portfolio or by vote of a
majority of the outstanding voting securities of the Portfolio. The agreement
may be terminated at any time without penalty on sixty days' written notice by
the Board of Trustees of either party or by vote of the majority of the
outstanding voting securities of the Portfolio, and the agreement will terminate
automatically in the event of its assignment. The agreement provides that the
LGM-HK may render services to others. The agreement also provides that, in the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties under the agreement on the part of LGM-HK,
LGM-HK shall not be liable to the Portfolio or to any shareholder for any act or
omission in the course of or connected with rendering services or for any losses
sustained in the purchase, holding or sale of any security.
MANAGER, SPONSOR AND ADMINISTRATOR
See "Management of the Fund and the Portfolio" in the Fund's current
Prospectus for a description of the services Eaton Vance performs as the manager
and sponsor of the Fund and the administrator of the Portfolio. Under Eaton
Vance's management contract with the Fund and administration agreement with the
Portfolio, Eaton Vance receives a monthly management fee from the Fund and a
monthly administration fee from the Portfolio. Each fee is computed by applying
the annual asset rate applicable to that portion of the average daily net assets
of the Fund or the Portfolio throughout the month in each Category as indicated
below:
ANNUAL
CATEGORY AVERAGE DAILY NET ASSETS ASSET RATE
- -------- ------------------------ ----------
1 less than $500 million .................... 0.25%
2 $500 million but less than $1 billion ..... 0.23333
3 $1 billion but less than $1.5 billion ..... 0.21667
4 $1.5 billion but less than $2 billion ..... 0.20
5 $2 billion but less than $3 billion ....... 0.18333
6 $3 billion and over ....................... 0.16667
As of August 31, 1996 the Portfolio had net assets of $510,297,559. For the
fiscal years ended August 31, 1996, 1995, and 1994, Eaton Vance earned
administration fees of $1,404,681, $1,571,184 and $1,383,471, respectively,
(equivalent to 0.25%, 0.24% and 0.25%, respectively, of the Portfolio's average
daily net assets for each such year).
For the management fees that the Fund paid to Eaton Vance, see "Fees and
Expenses" in Part II.
Eaton Vance's management contract with the Fund and administration agreement
with the Portfolio will each remain in effect until February 28, 1997. Each
agreement may be continued from year to year thereafter 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 on
September 8, 1992 and on October 8, 1992, respectively, of the Trust and the
Portfolio.
The Fund and the Portfolio, as the case may be, will each be responsible for
all of its respective costs and expenses not expressly stated to be payable by
Eaton Vance under the management contract or the administration agreement. Such
costs and expenses to be borne by each of the Fund or the Portfolio, as the case
may be, include, without limitation, custody and transfer agency fees and
expenses, including those incurred for determining net asset value and keeping
accounting books and records, expenses of pricing and valuation services; the
cost of share certificates; membership dues in investment company organizations;
brokerage commissions and fees; fees and expenses of registering under the
securities laws; expenses of reports to shareholders and investors; proxy
statements, and other expenses of shareholders' or investors' meetings;
insurance premiums, printing and mailing expenses; interest, taxes and corporate
fees; legal and accounting expenses; compensation and expenses of Trustees not
affiliated with Eaton Vance; distribution and service fees payable by the Fund
under its Rule 12b-1 distribution plan; and investment advisory, management and
administration fees. The Fund or the Portfolio will also each bear expenses
incurred in connection with litigation in which the Fund or the Portfolio, as
the case may be, is a party and any legal obligation to indemnify its respective
officers and Trustees with respect thereto, to the extent not covered by
insurance.
Eaton Vance and EV are both wholly-owned subsidiaries of EVC. BMR is a
wholly-owned subsidiary of Eaton Vance. Eaton Vance and BMR are both
Massachusetts business trusts, and EV is the trustee of Eaton Vance and BMR. The
Directors of EV are Landon T. Clay, M. Dozier Gardner, James B. Hawkes and
Benjamin A. Rowland, Jr. The Directors of EVC consist of the same persons and
John G.L. Cabot and Ralph Z. Sorenson. Mr. Clay is chairman, Mr. Gardner is vice
chairman and Mr. Hawkes is president and chief executive officer of EVC, Eaton
Vance, BMR and EV. All of the issued and outstanding shares of Eaton Vance and
of EV are owned by EVC. All of the issued and outstanding shares of BMR are
owned by Eaton Vance. All shares of the outstanding Voting Common Stock of EVC
are deposited in a Voting Trust which expires December 31, 1997, the Voting
Trustees of which are Messrs. Clay, Gardner, Hawkes and Rowland and Thomas E.
Faust, Jr. The Voting Trustees have unrestricted voting rights for the election
of Directors of EVC. All of the outstanding voting trust receipts issued under
said Voting Trust are owned by certain of the officers of Eaton Vance and BMR
who are also officers or officers and Directors of EVC and EV. As of January 1,
1997, Messrs. Clay, Gardner and Hawkes each owned 24% of such voting trust
receipts, and Messrs. Roland and Faust owned 15% and 13%, respectively, of such
voting trust receipts. Messrs. Gardner, Hawkes and Otis, who are officers and/or
Trustees of the Trust, are members of the EVC, Eaton Vance, BMR and EV
organizations. Messrs. Burt, Murphy, O'Connor, Otis, Tittmann and Woodbury and
Ms. Sanders, are officers of the Trust and/or the Portfolio, and are also
members of the Eaton Vance, BMR and EV organizations. Eaton Vance will receive
the fees paid under the management agreement.
EVC owns all of the stock of Energex Energy Corporation, which is engaged in
oil and gas exploration and development. In addition, Eaton Vance owns all of
the stock of Northeast Properties, Inc., which is engaged in real estate
investment. EVC also owns 24% of the Class A shares issued by the parent of each
Adviser. EVC owns all the stock of Fulcrum Management, Inc. and MinVen, Inc.,
which are engaged in precious metal mining, venture investment and management.
EVC, Eaton Vance, BMR and EV may also enter into other businesses.
EVC and its affiliates and their officers and employees from time to time
have transactions with various banks, including the custodian of the Fund and
the Portfolio, Investors Bank & Trust Company. It is Eaton Vance's opinion that
the terms and conditions of such transactions were not and will not be
influenced by existing or potential custodial or other relationships between the
Fund and such banks.
CUSTODIAN
Investors Bank & Trust Company ("IBT"), 89 South Street, Boston,
Massachusetts, acts as custodian for the Fund and the Portfolio. IBT has the
custody of all cash and securities of the Fund and all securities of the
Portfolio purchased in the United States, maintains the Fund's and the
Portfolio's general ledger and computes the daily net asset value of interests
in the Portfolio and the net asset value of shares of the Fund. In such
capacities, IBT attends to details in connection with the sale, exchange,
substitution, transfer or other dealings with the Fund's and the Portfolio's
respective investments, receives and disburses all funds, and performs various
other ministerial duties upon receipt of proper instructions from the Fund and
the Portfolio, respectively.
Portfolio securities, if any, purchased by the Portfolio in the U.S. are
maintained in the custody of IBT or of other domestic banks or depositories.
Portfolio securities purchased outside of the U.S. are maintained in the custody
of foreign banks and trust companies that are members of IBT's Global Custody
Network, or foreign depositories used by such foreign banks and trust companies.
Each of the domestic and foreign custodial institutions holding portfolio
securities has been approved by the Board of Trustees of the Portfolio in
accordance with regulations under the 1940 Act.
IBT charges fees which are competitive within the industry. These fees for
the Portfolio relate to: (1) custody services based upon a percentage of the
market values of Portfolio securities; (2) bookkeeping and valuation services
provided at an annual rate; (3) activity charges, primarily the result of the
number of portfolio transactions; and (4) reimbursement of out-of-pocket
expenses. These fees are then reduced by a credit for cash balances of the
Portfolio at the custodian equal to 75% of the 91-day U.S. Treasury Bill auction
rate applied to the Portfolio's average daily collected balances. The portion of
the fee for the Fund related to bookkeeping and pricing services is based upon a
percentage of the Fund's net assets and the portion of the fee related to
financial statement preparation is a fixed amount. IBT also provides services in
connection with the preparation of shareholder reports and the electronic filing
of such reports with the Commission, for which it receives a separate fee.
Landon T. Clay, a Director of EVC and an officer, Trustee or Director of other
entities in the Eaton Vance organization, owns approximately 13% of the voting
stock of Investors Financial Services Corp., the holding company parent of IBT.
Management believes that such ownership does not create an affiliated person
relationship between the Fund or the Portfolio and IBT under the 1940 Act.
SERVICE FOR WITHDRAWAL
The Transfer Agent will send to the shareholder regular monthly or quarterly
payments of any permitted amount designated by the shareholder (see "Eaton Vance
Shareholder Services -- Withdrawal Plan" in the Fund's current Prospectus) based
upon the value of the shares held. The checks will be drawn from share
redemptions and hence, although they are a return of principal, may require the
recognition of taxable gain or loss. Income dividends and capital gains
distributions in connection with withdrawal accounts will be credited at net
asset value as of the record date for each distribution. Continued withdrawals
in excess of current income will eventually use up principal, particularly in a
period of declining market prices. A shareholder may not have a withdrawal plan
in effect at the same time he or she has authorized Bank Automated Investing or
is otherwise making regular purchases of Fund shares. The shareholder, 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, 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 (such prices may not be used, however, where an active
over-the-counter market in an exchange listed security better reflects current
market value). Unlisted or listed securities for which closing sale prices are
not available are valued at the mean between the latest bid and asked prices. An
option is valued at the last sale price as quoted on the principal exchange or
board of trade on which such option or contract is traded, or in the absence of
a sale, the mean between the last bid and asked price. Futures positions on
securities or currencies are generally valued at closing settlement prices. All
other securities are valued at fair value as determined in good faith by or
pursuant to procedures established by the Trustees of the Portfolio.
Short term debt securities with a remaining maturity of 60 days or less are
valued at amortized cost. If securities were acquired with a remaining maturity
of more than 60 days, their amortized cost value will be based on their value on
the sixty-first day prior to maturity. Other fixed income and debt securities,
including listed securities and securities for which price quotations are
available, will normally be valued on the basis of valuations furnished by a
pricing service.
Each investor in the Portfolio, including the Fund, may add to or reduce its
investment in the Portfolio on each day the New York Stock Exchange (the
"Exchange") is open for trading ("Portfolio Business Day") as of the close of
regular trading on the Exchange (the "Portfolio Valuation Time"). The value of
each investor's interest in the Portfolio will be determined by multiplying the
net asset value of the Portfolio by the percentage, determined on the prior
Portfolio Business Day, which represented that investor's share of the aggregate
interests in the Portfolio on such prior day. Any additions or withdrawals for
the current Portfolio Business Day will then be recorded. Each investor's
percentage of the aggregate interest in the Portfolio will then be recomputed as
the percentage equal to a fraction (i) the numerator of which is the value of
such investor's investment in the Portfolio as of the close of Portfolio
Valuation Time on the prior Portfolio Business Day plus or minus, as the case
may be, that amount of any additions to or withdrawals from the investor's
investment in the Portfolio on the current Portfolio Business Day, and (ii) the
denominator of which is the aggregate net asset value of the Portfolio as of the
Portfolio Valuation Time on the prior Portfolio Business Day plus or minus, as
the case may be, the amount of the net additions to or withdrawals from the
aggregate investment in the Portfolio on the current Portfolio Business Day by
all investors in the Portfolio. The percentage so determined will then be
applied to determine the value of the investor's interest in the Portfolio for
the current Portfolio Business Day.
Generally, trading in the foreign securities owned by the Portfolio is
substantially completed each day at various times prior to the close of the
Exchange. The values of these securities used in determining the net asset value
of the Portfolio's shares are computed as of such times. Occasionally, events
affecting the value of foreign securities may occur between such times and the
close of the Exchange which will not be reflected in the computation of the
Portfolio's net asset value (unless the Portfolio deems that such events would
materially affect its net asset value, in which case an adjustment would be made
and reflected in such computation). Foreign securities and currency held by the
Portfolio will be valued in U.S. dollars; such values will be computed by the
custodian based on foreign currency exchange rate quotations supplied by Reuters
Information Service.
INVESTMENT PERFORMANCE
Average annual total return is determined by multiplying a hypothetical
initial purchase order of $1,000 by the average annual compound rate of return
(including capital appreciation/depreciation, and distributions paid and
reinvested) for the stated period and annualizing the results. The calculation
assumes that all distributions are reinvested at net asset value on the
reinvestment dates during the period, and either (i) the deduction of the
maximum sales charge from the initial $1,000 purchase order or (ii) a complete
redemption of the investment and, if applicable, the deduction of the CDSC at
the end of the period. For information concerning the total return of the Fund,
see "Performance Information" in Part II.
Total return may be compared to relevant indices, such as 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, Morgan
Stanley Pacific (Excluding Japan) Hang Seng, and FT Pacific (Excluding Japan).
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, Pierce, Fenner & Smith, Inc., Bloomberg,
L.P., Dow Jones & Company, Inc., and The Federal Reserve Board) or included in
various publications (e.g. The Wall Street Journal, Barron's and The Decade:
Wealth of Investments in U.S. Stocks, Bonds, Bills & Inflation) reflecting the
investment performance or return achieved by various classes and types of
investments (e.g. common stocks, small company stocks, long-term corporate
bonds, long-term government bonds, intermediate-term government bonds, U.S.
Treasury bills) over various periods of time. This information may be used to
illustrate the benefits of long-term investments in common stocks.
From time to time, information about the portfolio allocation, portfolio
turnover and holdings of 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 or rankings of
mutual funds (which include the Fund) made by independent sources (e.g., Lipper
Analytical Services, Inc., CDA/Weisenberger and Morningstar, Inc.) may be used
in advertisements and in information furnished to present or prospective
shareholders. Information, charts and illustrations showing the effect of
compounding interest or relating to inflation and taxes (including their effects
on the dollar and the return on stocks and other investment vehicles) may also
be included in advertisements and materials furnished to present and prospective
investors.
Information used in advertisements and materials furnished to present and
prospective investors may include statements or illustrations relating to the
appropriateness of certain types of securities and/or mutual funds to meet
specific financial goals. Such information may address:
-- cost associated with aging parents;
-- funding a college education (including its actual and estimated cost);
-- health care expenses (including actual and projected expenses);
-- long-term disabilities (including the availability of, and coverage
provided by, disability insurance); and
-- retirement (including the availability of social security benefits, the
tax treatment of such benefits and statistics and other information
relating to maintaining a particular standard of living and outliving
existing assets).
Such information may also address different methods for saving money and the
results of such methods, as well as the benefits of investing in equity
securities. Such information may describe: the potential for growth; the
performance of equities as compared to other investment vehicles; and the value
of investing as early as possible and regularly, as well as staying invested.
The benefits of investing in equity securities by means of a mutual fund may
also be included (such benefits may include diversification, professional
management and the variety of equity mutual fund products).
Information in advertisements and materials furnished to present and
prospective investors may include profiles of different types of investors
(i.e., investors with different goals and assets) and different investment
strategies for meeting specific financial goals. Such information may provide
hypothetical illustrations which include: results of various investment
strategies; performance of an investment in the Fund over various time periods;
and results of diversifying assets among several investments with varying
performance. Information in advertisements and materials furnished to present
and prospective investors may also include quotations (including editorial
comments) and statistics concerning investing in securities, as well as
investing in particular types of securities and the performance of such
securities.
The Fund may provide information about Eaton Vance, its affiliates and other
investment advisers to the funds in the Eaton Vance Family of Funds in sales
material or advertisements provided to investors or prospective investors. Such
material or advertisements may also provide information on the use of investment
professionals by such investors.
TAXES
See also "Distributions 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 has elected to be
treated, and intends to qualify each year as a regulated investment company
("RIC") under the Code. Accordingly, the Fund intends to satisfy certain
requirements relating to sources of its income and diversification of its assets
and to distribute 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, the Portfolio's net investment income, net realized capital
gains, and any other items of income, gain, loss, deduction or credit. The
Portfolio will make allocations to the Fund in a manner intended to comply with
the Code and applicable regulations and will make moneys available for
withdrawal at appropriate times and in sufficient amounts to enable the Fund to
satisfy the tax distribution requirements that apply to the Fund and that must
be satisfied in order to avoid federal income and/or excise tax on the Fund. For
purposes of applying the requirements of the Code regarding qualification as a
RIC, the Fund 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 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 paid no federal income tax.
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.
Certain foreign exchange gains and losses realized by the Portfolio and
allocated to the Fund in connection with the Portfolio's investments in foreign
securities and foreign currency related options, futures or forward contracts or
foreign currency may be treated as ordinary income and losses under special tax
rules. Certain options, futures or forward contracts of the Portfolio may be
required to be marked to market (i.e., treated as if closed out) on the last day
of each taxable year, and any gain or loss realized with respect to these
contracts may be required to be treated as 60% long-term and 40% short-term gain
or loss or, in the case of certain contracts relating to foreign currency, as
ordinary income or loss. Positions of the Portfolio in securities and offsetting
options, futures or forward contracts may be treated as "straddles", which are
subject to tax rules that may cause deferral of Portfolio losses, adjustments in
the holding periods of Portfolio securities, and other changes in the short-term
or long-term characterization of capital gains and losses, the effect of which
may be to change the amount, timing and character of the Fund's distributions to
shareholders. Certain uses of foreign currency and foreign currency derivatives
such as options, futures, forward contracts and swaps and investment by the
Portfolio in certain "passive foreign investment companies" may be limited or a
tax election may be made, if available, in order to preserve the Fund's ability
to qualify as a RIC or avoid imposition of a tax on the Fund.
The Portfolio anticipates that it will be subject to foreign taxes on its
income (including, in some cases, capital gains) from foreign securities. Tax
conventions between certain countries and the U.S. may reduce or eliminate such
taxes in some cases. If more than 50% of the Fund's total assets, taking into
account its allocable share of the Portfolio's total assets, at the close of any
taxable year of the Fund consists of stock or securities of foreign
corporations, the Fund may file an election with the Internal Revenue Service
pursuant to which shareholders of the Fund will be required to (i) include in
ordinary gross income (in addition to dividends and distributions actually
received) their pro rata shares of foreign income taxes paid by the Portfolio
and allocated to the Fund even though not actually received by them, and (ii)
treat such respective pro rata portions as foreign income taxes paid by them.
Shareholders may then deduct such pro rata portions of foreign income taxes in
computing their taxable incomes, or, alternatively, use them as foreign tax
credits, subject to applicable limitations, against their U.S. income taxes.
Shareholders who do not itemize deductions for federal income tax purposes will
not, however, be able to deduct their pro rata portion of foreign taxes deemed
paid by the Fund, although such shareholders will be required to include their
shares of such taxes in gross income. Shareholders who claim a foreign tax
credit for such foreign taxes may be required to treat a portion of dividends
received from the Fund as a separate category of income for purposes of
computing the limitations on the foreign tax credit. Tax-exempt shareholders
will ordinarily not benefit from this election. Each year that the Fund files
the election described above, its shareholders will be notified of the amount of
(i) each shareholder's pro rata share of foreign income taxes paid by the
Portfolio and allocated to the Fund and (ii) the portion of Fund dividends which
represents income from each foreign country. If the Fund does not make this
election, it may deduct its allocated share of such taxes in computing the
income it is required to distribute.
The Portfolio will allocate at least annually to the Fund and its other
investors their respective distributive shares of any net investment income and
net capital gains which have been recognized for federal income tax purposes
(including unrealized gains at the end of the Portfolio's fiscal year on certain
options and futures transactions that are required to be marked-to-market). Such
amounts will be distributed by the Fund to its shareholders in cash or
additional shares, as they elect. Shareholders of the Fund will be advised of
the nature of the distributions.
Distributions by the Fund of the excess of net long-term capital gain over
net short-term capital loss earned by the Portfolio and allocated to the Fund,
taking into account any capital loss carryforwards that may be available, are
taxable to shareholders of the Fund as long-term capital gains, whether received
in cash or in additional shares and regardless of the length of time their
shares have been held. Certain distributions, if declared in October, November
or December and paid the following January, will be taxed to shareholders as if
received on December 31 of the year in which they are declared.
Any loss realized upon the redemption or exchange of shares of the Fund with
a tax holding period of 6 months or less will be treated as a long-term capital
loss to the extent of any distribution of net long-term capital gains with
respect to such shares. All or a portion of a loss realized upon a redemption or
other disposition of Fund shares may be disallowed under "wash sale" rules if
other Fund shares are purchased (whether through reinvestment of dividends or
otherwise) within 30 days before or after the disposition. Any disallowed loss
will result in an adjustment to the shareholder's tax basis in some or all of
the other shares acquired.
Special tax rules apply to Individual Retirement Accounts ("IRAs") and other
retirement plans and shareholders investing through IRAs, or such plans should
consult their tax advisers for more information.
Amounts paid by the Fund to individuals and certain other shareholders who
have not provided the Fund with their correct taxpayer identification number and
certain certifications required by the Internal Revenue Service (the "IRS"), as
well as shareholders with respect to whom the Fund has received notification
from the IRS or a broker, may be subject to "backup" withholding of federal
income tax 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, foreign corporations and certain other
foreign entities generally will be subject to a U.S. withholding tax at a rate
of 30% on the Fund's distributions from its ordinary income and the excess of
its net short-term capital gain over its net long-term capital loss, unless the
tax is reduced or eliminated by an applicable tax treaty. Distributions from the
excess of the Fund's net long-term capital gain over its net short-term capital
loss received by such shareholders and any gain from the sale or other
disposition of shares of the Fund generally will not be subject to U.S. federal
income taxation, provided that non-resident alien status has been certified by
the shareholder. Different U.S. tax consequences may result if the shareholder
is engaged in a trade or business in the United States, is present in the United
States for a sufficient period of time during a taxable year to be treated as a
U.S. resident, or fails to provide any required certifications regarding status
as a non-resident alien investor. Foreign shareholders should consult their tax
advisers regarding the U.S. and foreign tax consequences of an investment in the
Fund.
The foregoing discussion does not address the special tax rules applicable
to certain classes of investors, such as IRAs and other retirement plans,
tax-exempt entities, insurance companies and financial institutions.
Shareholders should consult their own tax advisers with respect to 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 the Adviser.
The Adviser places the portfolio security transactions of the Portfolio and
of certain other accounts managed by the Adviser for execution with many firms.
The Adviser uses its best efforts to obtain execution of portfolio transactions
at prices which are advantageous to the Portfolio and (when a disclosed
commission is being charged) at reasonably competitive commission rates. In
seeking such execution, the Adviser will use its best judgment in evaluating the
terms of a transaction, and will give consideration to various relevant factors,
including without limitation the size and type of the transaction, the general
execution and operational capabilities of the broker-dealer, the nature and
character of the market for the security, the confidentiality, speed and
certainty of effective execution required for the transaction, the reputation,
reliability, experience and financial condition of the broker-dealer, the value
and quality of services rendered by the broker-dealer in other transactions, and
the reasonableness of the commission, if any. Transactions on stock exchanges
and other agency transactions involve the payment by the Portfolio of negotiated
brokerage commissions. Such commissions vary among different broker-dealer
firms, and a particular broker-dealer may charge different commissions according
to such factors as the difficulty and size of the transaction and the volume of
business done with such broker-dealer. Transactions in foreign securities
usually involve the payment of fixed brokerage commissions, which are generally
higher than those in the United States. There is generally no stated commission
in the case of securities traded in the over-the-counter markets, but the price
paid or received by the Portfolio usually includes an undisclosed dealer markup
or markdown. In an underwritten offering the price paid by the Portfolio
includes a disclosed fixed commission or discount retained by the underwriter or
dealer. Although commissions paid on portfolio transactions will, in the
judgment of the Adviser, be reasonable in relation to the value of the services
provided, commissions exceeding those which another firm might charge may be
paid to broker-dealers who were selected to execute transactions on behalf of
the Portfolio and the Adviser's other clients in part for providing brokerage
and research services to the Adviser.
As authorized in Section 28(e) of the Securities Exchange Act of 1934, a
broker or dealer who executes a portfolio transaction on behalf of the Portfolio
may receive a commission which is in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction if the
Adviser determines in good faith that such commission was reasonable in relation
to the value of the brokerage and research services provided. This determination
may be made on the basis of either that particular transaction or on the basis
of the overall responsibilities which the Adviser and its affiliates have for
accounts over which they exercise investment discretion. In making any such
determination, the Adviser will not attempt to place a specific dollar value on
the brokerage and research services provided or to determine what portion of the
commission should be related to such services. Brokerage and research services
may include advice as to the value of securities, the advisability of investing
in, purchasing, or selling securities, and the availability of securities or
purchasers or sellers of securities; furnishing analyses and reports concerning
issuers, industries, securities, economic factors and trends, portfolio strategy
and the performance of accounts; and effecting securities transactions and
performing functions incidental thereto (such as clearance and settlement); and
the "Research Services" referred to in the next paragraph.
It is a common practice in the investment advisory industry for the advisers
of investment companies, institutions and other investors to receive research,
statistical and quotation services, data, information and other services,
products and materials which assist such advisers in the performance of their
investment responsibilities ("Research Services") from broker-dealers which
execute portfolio transactions for the clients of such advisers and from third
parties with which such broker-dealers have arrangements. Consistent with this
practice, the Adviser may receive Research Services from broker-dealer firms
with which the Adviser places the portfolio transactions of the Portfolio and
from third parties with which these broker-dealers have arrangements. These
Research Services may include such matters as general economic and market
reviews, industry and company reviews, evaluations of securities and portfolio
strategies and transactions and recommendations as to the purchase and sale of
securities and other portfolio transactions, financial, industry and trade
publications, news and information services, pricing and quotation equipment and
services, and research oriented computer hardware, software, data bases and
services. Any particular Research Service obtained through a broker-dealer may
be used by the Adviser in connection with client accounts other than those
accounts which pay commissions to such broker-dealer. Any such Research Service
may be broadly useful and of value to the Adviser in rendering investment
advisory services to all or a significant portion of its clients, or may be
relevant and useful for the management of only one client's account or of a few
clients' accounts, or may be useful for the management of merely a segment of
certain clients' accounts, regardless of whether any such account or accounts
paid commissions to the broker-dealer through which such Research Service was
obtained. The advisory fee paid by the Portfolio is not reduced because the
Adviser receives such Research Services. The Adviser evaluates the nature and
quality of the various Research Services obtained through broker-dealer firms
and attempts to allocate sufficient commissions to such firms to ensure the
continued receipt of Research Services which the Adviser believes are useful or
of value to it in rendering investment advisory services to its clients.
Subject to the requirement that the Adviser shall use its best efforts to
seek to execute portfolio security transactions of the Portfolio at advantageous
prices and at reasonably competitive commission rates or spreads, the Adviser is
authorized to consider as a factor in the selection of any broker-dealer firm
with whom Portfolio orders may be placed the fact that such firm has sold or is
selling shares of the Fund or of other investment companies sponsored by Eaton
Vance. This policy is not inconsistent with a rule of the 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 the Adviser or its
affiliates. The Adviser will attempt to allocate in a manner it deems equitable
portfolio security transactions among the Portfolio and the portfolios of its
other investment accounts whenever decisions are made to purchase or sell
securities by the Portfolio and one or more of such other accounts
simultaneously. In making such allocations, the main factors to be considered
are the respective investment objectives of the Portfolio and such other
accounts, the relative size of portfolio holdings of the same or comparable
securities, the availability of cash for investment by the Portfolio and such
accounts, the size of investment commitments generally held by the Portfolio and
such accounts and the opinions of the persons responsible for recommending
investments to the Portfolio and such accounts. However, there may be instances
when the Portfolio will not participate in a securities transaction that is
allocated among other accounts. While these procedures could have a detrimental
effect on the price or amount of the securities available to the Portfolio from
time to time, it is the opinion of the Trustees of the Trust and the Portfolio
that the benefits available from the Adviser's organization outweigh any
disadvantage that may arise from exposure to simultaneous transactions.
For the fiscal years ended August 31, 1996 and 1995, the Portfolio paid
brokerage commissions of $2,802,590 and $2,608,520, respectively, with respect
to portfolio transactions. Of this amount, approximately $2,342,231 and
$2,341,272 was paid in respect of portfolio security transactions aggregating
approximately $366,522,257 and $387,659,617, respectively, to firms which
provided some Research Services to the Adviser's organization. For the fiscal
year ended August 31, 1994, the Portfolio paid brokerage commissions of
$4,177,780 with respect to portfolio transactions. All of such amount was paid
in respect of portfolio security transactions aggregating approximately
$814,062,509 to firms which provided some Research Services to the Adviser's
organization (although many such firms may have been selected in any particular
transaction primarily because of their execution capabilities).
OTHER INFORMATION
On August 18, 1992 the Trust changed its name from Eaton Vance Growth Fund
to Eaton Vance Growth Trust. The Trust is a Massachusetts business trust
established in 1989 as the successor to Eaton Vance Growth Fund, Inc., a
Massachusetts corporation. Eaton Vance, pursuant to its agreement with the
Trust, controls the use of the words "Eaton Vance" or "EV" in the Fund's name
and may use the words "Eaton Vance" and "EV" in other connections and for other
purposes.
The Declaration of Trust may be amended by the Trustees when authorized by
vote of a majority of the outstanding voting securities of the Trust affected by
the amendment. The Trustees may also amend the Declaration of Trust without the
vote or consent of shareholders to change the name of the Trust or 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 applicable federal laws or regulations. The
Trust's By-laws provide that the Trust will indemnify its Trustees and officers
against liabilities and expenses incurred in connection with any litigation or
proceeding in which they may be involved because of their offices with the
Trust. However, no indemnification will be provided to any Trustee or officer
for any liability to the Trust or its shareholders by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.
Under Massachusetts law, if certain conditions prevail, shareholders of a
Massachusetts business trust (such as the Trust) could be deemed to have
personal liability for the obligations of the Trust. Numerous investment
companies registered under the 1940 Act have been formed as Massachusetts
business trusts, and management is not aware of an instance where such liability
has been imposed. The Trust's Declaration of Trust contains an express
disclaimer of liability on the part of the Fund shareholders and the Trust's
By-laws provide that the Trust shall assume the defense on behalf of any Fund
shareholder. Moreover, the Trust's By-laws also provide for indemnification out
of the property of the Fund of any shareholder held personally liable solely by
reason of being or having been a shareholder for all loss or expense arising
from such liability. The assets of the Fund are readily marketable and will
ordinarily substantially exceed its liabilities. In light of the nature of the
Fund's business and the nature of its assets, management believes that the
possibility of the Fund's liabilities exceeding its assets, and therefore the
shareholder's risk of personal liability, is extremely remote.
As permitted by Massachusetts law, there will normally be no meetings of
shareholders for the purpose of electing Trustees unless and until such time as
less than a majority of the Trustees of the Trust holding office have been
elected by shareholders. In such an event the Trustees then in office will call
a shareholder's meeting for the election of Trustees. Except for the foregoing
circumstances and unless removed by action of the shareholders in accordance
with the Trust's By-Laws, the Trustees shall continue to hold office and may
appoint successor Trustees.
The Trust's By-Laws provide that no person shall serve as a Trustee if
shareholders holding two-thirds of the outstanding shares have removed him from
that office either by a written declaration filed with the Trust's custodian or
by votes cast at a meeting called for that purpose. The By-Laws further provide
that under certain circumstances the shareholders may call a meeting to remove a
Trustee and that the Trust is required to provide assistance in communicating
with shareholders about such a meeting.
In accordance with the Declaration of Trust of the Portfolio, there will
normally be no meetings of the investors for the purpose of electing Trustees
unless and until such time as less than a majority of the Trustees holding
office have been elected by investors. In such an event the Trustees of the
Portfolio then in office will call an investors' meeting for the election of
Trustees. Except for the foregoing circumstances and unless removed by action of
the investors in accordance with the Portfolio's Declaration of Trust, the
Trustees shall continue to hold office and may appoint successor Trustees.
The Declaration of Trust of the Portfolio provides that no person shall
serve as a Trustee if investors holding two-thirds of the outstanding interests
have removed him from that office either by a written declaration filed with the
Portfolio's custodian or by votes cast at a meeting called for that purpose. The
Declaration of Trust further provides that under certain circumstances the
investors may call a meeting to remove a Trustee and that the Portfolio is
required to provide assistance in communicating with investors about such a
meeting.
The Portfolio's Declaration of Trust provides that the Portfolio will
terminate 120 days after the complete withdrawal of the Fund or any other
investor in the Portfolio, unless either the remaining investors by unanimous
vote at a meeting of such investors, or a majority of the Trustees of the
Portfolio, by written instrument consented to by all investors, agree to
continue the business of the Portfolio. This provision is consistent with
treatment of the Portfolio as a partnership for federal income tax purposes.
The right to redeem shares of the Fund can be suspended and the payment of
the redemption price deferred when the Exchange is closed (other than for
customary weekend and holiday closings), during periods when trading on the
Exchange is restricted as determined by the Commission, or during any emergency
as determined by the Commission which makes it impracticable for the Portfolio
to dispose of its securities or value its assets, or during any other period
permitted by order of the Commission for the protection of investors.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Deloitte & Touche LLP, 125 Summer Street, Boston, Massachusetts, are the
independent certified public accountants of the Fund and the Portfolio,
providing audit services, tax return preparation, and assistance and
consultation with respect to the preparation of filings with the Commission.
<PAGE>
FINANCIAL STATEMENTS
The financial statements of the Fund and the Portfolio, which are included
in the Fund's Annual Report to Shareholders, are incorporated by reference into
this Statement of Additional Information and have been so incorporated in
reliance on the report of Deloitte & Touche LLP, independent certified public
accountants, as experts in accounting and auditing. A copy of the Fund's most
recent Annual Report accompanies this SAI.
Registrant incorporates by reference the audited financial information for
the Funds and the Portfolio listed below for the fiscal year ended August 31,
1996 as previously filed electronically with the Commission:
EV Classic Greater China Growth Fund
Greater China Growth Portfolio
(Accession No. 0000928816-96-000327)
EV Marathon Greater China Growth Fund
Greater China Growth Portfolio
(Accession No. 0000928816-96-000318)
EV Traditional Greater China Growth Fund
Greater China Growth Portfolio
(Accession No. 0000928816-96-000317)
<PAGE>
APPENDIX A
CHINA REGION COUNTRIES
The information set forth in this Appendix has been extracted from various
government and private publications. The Trust's Board of Trustees make no
representation as to the accuracy of the information, nor has the Board of
Trustees attempted to verify it.
PEOPLE'S REPUBLIC OF CHINA
China is the world's third largest country occupying a region of 9.6 million
square kilometers.China is the world's most populous nation, consisting of more
than one-fifth of the human race. The estimated population is approximately 1.3
billion.
In 1949, the Communist Party established the People's Republic of China. The
Communist government engaged in numerous campaigns to industrialize the country
with various programs. The failure of the Communist Party to achieve substantive
economic reform eventually led to political domination by the army. In the
1970's, the Chinese government, which had remained isolated from the world,
opened its doors by encouraging foreign investment and expertise inside its
borders.
In 1989, a growing dissatisfaction with the Communist government led to
anti-government student protests culminating in what is known as the Tiananmen
Square incident. The government's use of the military to suppress a peaceful
demonstration resulted in world-wide criticism. Currently, the leadership under
Deng Xiaoping remains committed to basic economic reforms but continues to
reject liberalization from the domination of the Communist Party in the
political decision-making process. Investment in China still entails significant
political risk of nationalization or expropriation.
Over the past decade, China has achieved annual growth in real gross
domestic product (GDP) averaging in excess of 10%. GDP in 1995 had increased to
over 4 times the GDP in 1980 in real terms.
The economy in China consists of three sectors: state, cooperative, and
private. The state sector, though decreasing from 76% of GDP in 1980 to
approximately 50% in 1991, continues to constitute the bulk of the economy. In
recent years, however, the economy has been significantly restructured through
the abolition of the commune system in rural areas and the relaxing of
government authority in the day to day operations in both agricultural and
industrial enterprises. As the government assumes more of a regulatory and
supervisory role and less of a direct management role, market forces have been
allowed to operate. This has resulted in increased productivity and rising
incomes.
In 1990, industry accounted for 45.8% of China's National Income. In the
first three decades under Communist rule, China placed great emphasis on heavy
industry. Since the reform program began in 1978, a much greater emphasis has
been placed on light industry. Considerable industrial growth has come from
industrial enterprises in rural townships which are engaged in the processing
and assembly of consumer goods. These operations are concentrated in southern
China, where a major light industrial base has developed. Industrial output has
grown rapidly and is increasingly important to the Chinese economy. China's
current industrial policy also places emphasis on high-technology industries
supported by foreign technology, such as micro-electronics and
telecommunications. However, overstocking and poor economic results continue to
plague Chinese industry. Continued growth has been hampered by problems of
access to raw materials and energy supplies.
Inflationary pressures are a major concern in the Chinese economy. In light
of the on-going reforms of price subsidies and continued growth, relatively high
inflation should be expected. In addition, persistent fiscal deficits have been
a macroeconomic management problem in China in recent years. The deficit for
1995 was 70 billion RMB.
Textiles and garments together form the single largest export category,
representing 25% of total export values. China's trade balance has fluctuated
over the last five years. In 1995, China's foreign trade yielded a surplus of
U.S. $17.60 billion. Hong Kong is the leading destination for Chinese exports,
accounting for over 40% of total export volume. Hong Kong is also a major
reexport center for Chinese goods. Other large export markets for China include
Japan, the United States, and Germany. Over the past few years, China's imports
have continued to expand and diversify. Hong Kong, Japan and the United States
are China's top three suppliers. Other major suppliers include Germany and
Italy.
China has traditionally adopted a policy of self-reliance when financing
development; overseas borrowings have been minimal. The country has remained a
conservative borrower but, since the early 1980s, has been making greater use of
foreign capital and financing, including government-assisted facilities and
project and trade financing. The primary sources of foreign capital for China,
in order of importance, are: (1) International Monetary Fund and World Bank
loans and credits; (2) government low interest loans and credits; and (3)
commercial loans and credits.
There is centralized control and unified management of foreign exchange in
China. The renminbi has been devalued progressively in recent years,
depreciating by almost 70% against the U.S. dollar between 1981 and 1990.
There currently are two officially recognized exchanges in China, the
Shanghai Securities Exchange ("SHSE"), which commenced trading on December 19,
1990, and the Shenzhen Stock Exchange ("SZSE"), which commenced trading on July
3, 1991. "B" shares are offered exclusively for investment by foreign investors,
and their total market capitalization in December 1996 was over $3 billion. A
number of organized securities markets exist in other cities in China, but these
are primarily over-the-counter markets. China has not yet promulgated a national
securities law. At the local level, however, many cities and provinces have
promulgated securities rules and regulations.
HONG KONG
As a trade entrepot and finance center, Hong Kong's viability has been
inexorably linked to mainland China since the establishment of the Colony in
1841. Hong Kong remains China's largest trade partner and its leading foreign
investor. In 1995, imports from China amounted to $69.8 billion, exports and
re-exports to $57.9 billion. In recent years large numbers of Hong Kong based
companies have set up factories in the southern province of Guangdong, where it
is estimated that Hong Kong companies employ between 2.5 and 3 million workers.
There also has been considerable growth in Chinese investment in Hong Kong over
the last decade and particularly in the last five years. In contrast to Japanese
investment, Chinese investment in Hong Kong typically involves the purchase of
stakes in existing companies. This has traditionally been in the banking and
import/export sectors. Recently, investment in property, manufacturing and
infrastructure projects has increased. In view of the growing economic
interaction between Hong Kong and Southern China, it is increasingly meaningful
to consider the concept of a Greater Hong Kong economy consisting of Hong Kong
and Guangdong Province, with a combined population of over 75 million. To
sustain the growth of the Guangdong economy, the Hong Kong government in 1989
unveiled PADS, the Port and Airport Development Strategy. The project, estimated
to cost $21 billion, is designed to allow Hong Kong's cargo handling capacity to
increase by four times between 1988 and 2011 and its air traffic handling
capacity to increase from 15 million passengers in 1988 to 50 million in 2011.
In the past, political considerations have hindered closer economic
integration between Hong Kong and China. It was largely in response to the
United Nations embargo on trade with China in the 1950s and 1960s that Hong Kong
developed a significant manufacturing base. In the last several years, however,
there has been an improvement in relations. The Basic Law, the outline for Hong
Kong's government post 1997, calls for Hong Kong's capitalist system to remain
intact for an additional fifty years after 1997 and sets out details for the
integration of Hong Kong into China after 1997. This integration process will
directly affect the value of Hong Kong investments.
In the last two decades there has been a structural change in Hong Kong's
economy, with growth in the services sector outpacing manufacturing growth. With
more and more labor intensive manufacturing relocating to Southern China, Hong
Kong has developed its services sector, which in 1995 contributed 81.7% of GDP.
The Stock Exchange of Hong Kong Ltd. ("HKSE"), commenced trading on April 2,
1986. The HKSE, with a total market capitalization as of November, 1996 of
approximately H.K. $3,406 billion (approximately U.S. $440 billion), is now the
second largest stock market in Asia, measured by market capitalization, behind
only that of Japan. As of that date, 575 companies and 1,219 securities were
listed on the Hong Kong Stock Exchange.
There are no regulations governing foreign investment in Hong Kong. There
are no exchange control regulations and investors have total flexibility in the
movement of capital and the repatriation of profits. Funds invested in Hong Kong
can be repatriated at will; dividends and interest are freely remittable.
TAIWAN
The basic geopolitical fact about Taiwan is that it sits under the shadow of
mainland China and under the threat of reunification, whether peaceful or by
military means. Taiwan is dependent on its close relationship with the United
States and its very successful diplomacy and public relations campaign which,
ever since Madame Chiang Kai-Shek's days in the 1940s has sustained a high level
of sympathy in Washington for the Nationalist regime. Taiwan also has close
relations with South Africa, from which it buys essential raw materials such as
coal, and also with Israel, with whom it has had military as well as trade
links. Taiwan remains a free capitalist enclave with some very successful
entrepreneurial and export-oriented companies. The government's role in the
economy is relatively small.
Nevertheless, economic integration between the Chinese communities of China
and Taiwan has increased in recent years. China has low labor costs, inexpensive
land, natural resources and less rigid environmental rules. Taiwan has capital,
technology and trained entrepreneurs. Over 30 percent of Taiwan's trade is with
mainland China and the total investment from Taiwan to China may approach US $5
billion or even US $10 billion. A shortage of skilled labour, the high cost of
labour and the strong New Taiwan dollar, has impelled many Taiwanese
businesspeople to shift their production to Thailand, the Philippines, and
Malaysia as well as China. Taiwan has over US $90 billion of foreign exchange
reserves. However, Chinese military exercises in 1996 suggest that there could
be a renewed cold war across the Taiwan Straits, a cut off of business and
cultural links, and a potential military conflict.
Between 1960 and 1994, Taiwan's GNP grew from less than $2 billion to over
$240 billion. The economic growth has been accompanied by a transformation of
domestic production from labor intensive to capital intensive industries in the
1970s and finally to higher technology industries in the 1980s. The Taiwan Stock
Exchange Corp. is viewed as a highly priced and highly volatile securities
market with very weak regulations and poor accounting standards.
Many listed companies may be technically bankrupt.
Taiwan has a purely Chinese culture and way of life which affects the legal
and commercial systems. Legal contracts or agreements may not be enforceable.
Even more than in China, Taiwan depends on the personal contact and trust
between the two individuals involved. The legal system is undeveloped.
KOREA
Political volatility has characterized the history of South Korea (referred
to as Korea throughout this section) during the past forty years, while at the
same time an extraordinary economic boom has occurred. Rigid discipline has been
characteristic of the military government under President Park during the 1960s
and 1970s, which were the most successful decades in economic terms particularly
in the growth of Korea's exports and in the per capita income. It is important
to remember how completely the cities and transport system of the southern part
of the Korean peninsula had been destroyed in the civil war of the 1950s. The
effort of reconstruction was, therefore, enormous. Living standards in the 1960s
were extremely low. The threat from North Korea has exerted a continuous
military pressure on the South in the past forty years which is probably unique
to any country in the world, even including West Germany or Taiwan. Seoul is
only 30 kilometers from the demilitarized zone and, therefore, lives in a
continuous state of tension and fear of an imminent invasion. This very real
threat is also translated into a very high percentage of military spending in
the national budget. If Korea is compared with Japan, the Koreans have had to
spend ten times more of their national income on defense than the Japanese and
yet have succeeded in recording higher rates of economic growth.
Inflation in Korea has been higher than in Japan or Taiwan. In the 1970s,
Korea experienced an annual average inflation rate of nearly 15 percent.
Beginning in 1982, however, the tight monetary policy succeeded in bringing this
annual consumer price index down to single digits until 1990 when the rate
jumped again to 8.6 percent.
THAILAND
Thailand is unique in South East Asia in that it has escaped the colonial
experience and maintained its freedom and independence. The monarchy plays a key
role in maintaining the country's political stability and independence.
Nevertheless, since the absolute monarchy was ended in 1932 there have been
twenty-one coup d'etats, of which twelve have been successful. Thailand in the
1990s may remain democratic but the King and the army will continue to play a
role.
Thailand has a free and independent peasant population which has, on the
whole, enjoyed a higher standard of living than their neighbours and, therefore,
the communist movement has never made much headway among the rural people. On
the other hand again, Thailand's extraordinary economic growth in the 1980s
(averaging 10 percent per annum) has put great strains not only on the urban
environment because of traffic jams and pollution, but also on the social and
family system. Many rural families have been forced to send their teenage
children to the cities to find employment. The contrast of living standards
between Bangkok and the north east provinces (an estimated per capital income
would be perhaps US $2,500 per annum for the former and less than US $500 per
annum for the latter) must eventually create social tensions and potential
unrest. Buddhism must also be counted as a major factor of political stability.
Thailand's economy has been the fastest growing in the world for the past
three years. The take-off really began in 1986-7 with the flood of new foreign
investment into the country, largely from Japan and Taiwan. There has been a
large shift away from agriculture towards manufacturing. As recently as 1980, 50
percent of Thailand's exports consisted of rice and tapioca and other
agricultural products. By 1990, 75 percent of the total volume of exports were
manufactured goods, mainly from the newly established assembly plants in Bangkok
and the south. This has resulted in large changes in employment and moves of
populations.
It is surprising, considering the very high rate of economic growth that the
economy has experienced, that prices, as measured by the consumer price index,
have been kept under control. The last serious bout of inflation in Thailand
occurred during the two oil crises, first in 1973-4 when the CPI touched 24
percent and then again in 1980-1 when there was a resurgence of inflation to
nearly 20 percent. In the later 1980s, and thanks largely to a more stable oil
price, inflation has been held in single digits and has not exceeded 6 percent.
Nevertheless, the boom of the past three years, particularly in Bangkok, has led
to a rapid escalation of real estate values and rents.
MALAYSIA
The central dilemma in assessing Malaysia's political risk is the perennial
question of relations between the Malay and Chinese communities representing as
they do about 60 percent and 30 percent of the population respectively. Since
the 1969 anti-Chinese riots in Kuala Lumpur the country has been unruffled by
any serious inter-racial violence and during this period a great deal has been
accomplished in transforming the economy and in transferring the wealth of the
country from foreign and Chinese hands into the hands of the bumiputra (or the
sons of the soil), which is the dominant Malay majority. The success of this New
Economic Policy is unquestioned and has given a great deal of legitimacy to the
continued run of the United Malay National Organisation (UMNO) under its
successive prime ministers and most recently under Dr. Mahathir Mohammed who has
now held power for more than a decade. This economic success has also done much
to defuse the threat from the Islamic fundamentalists who have tended to get
co-opted into the ruling party. The Chinese community has also done well in
economic terms although the political disunity in the Malay Chinese Association
(MCA) has left them somewhat leaderless in the political sphere.
Malaysia has a kingship which is shared on a five-year revolving basis among
the sultans of the various states of the federation. Malaysia's relations with
its neighbours are good. Singapore, remains the largest investor in the country.
Malaysia, along with Singapore, experienced a sharp recession in 1985-6 owing to
an excessive tight monetary policy in both countries. Since 1987 Malaysia has,
however, returned to the path of high growth and low inflation. The change in
the past five years has also been accompanied by an accelerated shift into
manufacturing and away from the old dependence on the plantation sector. This
manufacturing growth has been led by investment from Japan and Taiwan and
notable national projects such as the Proton car. Malaysia is attempting to move
up market into the new product areas such as electronics, car assembly and
consumer goods. It has a literate and trainable workforce.
As manufactured goods assume a larger importance in the composition of
exports compared with crude oil, rubber and palm oil, Malaysia's trade position
should gradually become steadier. For an investor, Malaysia remains vulnerable
to external shocks either in terms of commodity prices or in a fall in export
demand in its principal markets.
SINGAPORE
"The silent success", in the words of a Singapore government minister, of
this region is based on a high literacy rate and a well-educated and trainable
workforce. The investment in human capital has proven to be more important to a
lasting economic growth success story than the availability of finance or
technology. Singapore is the de facto financial centre of the Association of
South East Asian Nations (ASEAN) region. Singapore is a small Chinese island
surrounded by a sea of Muslims. Singapore is aiming its investment at Johore in
Malaysia and Batam Island in Indonesia. This is the so-called growth triangle.
One aspect of political risk is the handover of political power from one
generation to another. Although Lee Kwan Yew stepped down as Prime Minister in
1990, he continues to wield a large influence and power behind the scenes. His
son, Lee Hsien Loong may not take up the post of Prime Minister for three to
five years. In any case, the question of dynastic succession in a parliamentary
democracy, even within a limited Confucian Chinese democracy, is, to say the
least, a questionable one. Many of the elder Lee's policies, such as imposing
the Mandarin Chinese language on the Singapore educational system, have aroused
fierce opposition among the older, anti-communist generation of Singapore
Chinese. The tight control of the media and the suppression of all political
opposition or criticism of the government, the People's Action Party or the
Prime Minister himself, has also aroused criticism both at home and
internationally.
The Singapore economy has been characterized by the highest degree of
government involvement and intervention outside of the socialist world.
Nevertheless, the growth rate has been quite impressive, averaging around 7-8
percent, except during the 1985-6 recession, and even more impressive has been
the tight control of inflation which, along with that of Japan, has remained
extremely low at below 3 percent for the past decade. Being a small island state
it is very sensitive to developments in its two main neighbours, Indonesia and
Malaysia, with their large commodity-based economies. Thus, Singapore runs a
regular trade deficit of around US $5 billion per annum. Singapore's foreign
reserves held by the Monetary Authority of Singapore (MAS) and the Government
Investment Corporation of Singapore (GICS) are estimated to be in excess of US
$50 billion.
INDONESIA
There have been only two rulers of Indonesia since independence was gained
from the Dutch in 1948 -- Sukarno and Suharto. However, independence and the
1965 revolution were unusually violent episodes in the life of any country. The
stability which Indonesia has enjoyed during the past twenty-five years under
Suharto should, therefore, be placed against this background.
The question of monarchical or presidential succession remains perhaps the
major political risk confronted by the foreign investor as so many aspects of
the business life of the country relate directly to Suharto or his immediate
family. The role of the army in Indonesia is a great deal more clear cut. There
have been no attempted military coups since 1966. The army remains wholly in
support of Suharto.
The huge Indonesian archipelago will have, by the year 2000, a population of
over 200 million. Fundamentalism is on the rise, as also in Malaysia, and
politicians with fundamentalist Islamic beliefs and supporters are likely to
take a more active role. However, the social question, which one cannot ignore,
concerns the role of the minority and non-Muslim peoples in Indonesia, in
particular the Chinese community in Java. Although the total Chinese population
is less than 5 million, or around 3 percent of the total, 80 percent of the
commerce and much of the capital wealth remains in the hands of this small but
tight-knit Chinese community.
Indonesia began the 1980s principally as an oil exporter. During the 1970s
it had a high rate of inflation but also a very rapid economic growth on the
back of the oil boom. The fall in oil prices in the early 1980s, which became
precipitate in the spring of 1986, therefore, forced a review of their
priorities. Reducing inflation, diversifying the economy away from oil and
maintaining a stable growth in the economy were selected as the main objectives.
Inflation was brought from 20 percent, at the beginning of the decade, to around
6 percent in 1989-90. Economic growth, having fallen to 2.5 percent in 1985
regained the level of 7.4 percent by 1990. The rupiah, which had undergone a 30
percent once-and-for-all evaluation in the autumn of 1985, had stabilized on a
"crawling peg" system with an annual devaluation of around 5 percent. The trade
surplus continued at a healthy US $4-5 billion annually and the inflow of
foreign capital more than offset Indonesia's foreign debt position. Therefore,
it is possible to conclude that the good macroeconomic management, which was
achieved by the small group of technocrats employed by Suharto to direct the
economy, had been very successful in reducing the economic risk of the country.
The future path of the Indonesian economy will, therefore, depend as much on the
development of low wage manufacturing and the inflow of Japanese capital, on the
liberalization of the banking system and the capital market, as on the price of
basic commodities.
THE PHILIPPINES
The question most investors raise is whether the Philippines is capable of
responsible government and economic planning which would give it a GNP growth
rate approaching that of its Asian tiger neighbours. Many observers dismiss this
prospect out of hand citing the endemic problems of corruption, political
in-fighting and the lack of Confucian work ethic present in North Asia. However,
there is no doubt that the Philippines possesses enormous natural advantages and
it would be wrong to generalize about the whole archipelago of 7,000 islands
from the political life of Manila alone. The island of Cebu, for example, has
seen a successful economic transformation in the past twenty years.
Manufacturing investment has grown and has begun to replace agriculture as a
principal source of employment. The Philippines has a very high rate of literacy
and the work ethic cannot be doubted by anyone who has employed Filipino
domestic workers overseas. Their earnings are an important source of remittance
back to the Philippines each year. The Filipino population in the United States
is now the largest Asian ethnic group in that country approaching 2 million,
mainly in California. Both natural resources, therefore, and an intelligent,
hardworking population favour the country. Unfortunately, the political system
has never been able to maintain the long-term stability for its promise to be
fulfilled.
<PAGE>
APPENDIX B
[LOGO]
EATON VANCE
MUTUAL FUNDS
INVEST IN ONE OF THE WORLD'S
FASTEST GROWING ECONOMIES
EATON VANCE
GREATER
CHINA
GROWTH FUNDS
[GRAPHIC OMITTED]
EV TRADITIONAL GREATER CHINA GROWTH FUND ("A")
EV MARATHON GREATER CHINA GROWTH FUND ("B")
EV CLASSIC GREATER CHINA GROWTH FUND ("C")
GLOBAL MANAGEMENT-GLOBAL DISTRIBUTION
[LOGO]
Lloyd George Management
(Bermuda) Limited
<PAGE>
CHINA: ONE OF THE WORLD'S
FASTEST GROWING ECONOMIES
The People's Republic of China ("China") and the surrounding countries of the
China region have become one of the most exciting and potentially profitable
areas for investors seeking capital appreciation. In recent years, in fact,
China has undergone remarkable change, having embraced economic reforms that
have turned it into one of the world's most spectacularly growing economies.
Leading China's transformation from central planning toward a market economy are
the "overseas" Chinese - those living outside China - who supply capital and
management expertise to complement the low-cost labor and land resources of
mainland China. Eaton Vance estimates that 75% of all trade in the China region
goes through firms controlled by overseas Chinese. By far, the largest part of
foreign contracted investment (presently about $90.5 billion annually) is coming
from overseas Chinese. It is this direct foreign investment - with its
technology, management skills and export potential - that is transforming
China's economy, leading many to believe that China will assume leadership in
Asia within 20 years.
FOREIGN INVESTMENT IS SOARING IN
THE GREATER CHINA REGION
Growth of Foreign Investment 1990-1995 ($US billions)
(horizontal bar chart)
95 38
94 34
93 27
92 11
91 4
90 3
Source: Lloyd George Management
SIGNIFICANT GROWTH POTENTIAL
* With 1.2 billion people, China houses 25% of the world's population and is
forecast to become the world's largest economy early in the 21st century.
* The Greater China region has registered annual growth of 7.3% in Gross
Domestic Product (GDP) during the past six years.
* China's savings rate is 40% of Gross National Product.
* China's international trade now accounts for approximately 40% of its total
economy.
* China's exports have been rising since 1988 and are forecast to be over U.S.
$125 billion at year-end 1995.
Lloyd George Management; The Wall Street Journal.
GREATER CHINA AND
CHINA'S SPECIAL ECONOMIC ZONES
In addition to low-cost labor and a wealth of resources, China offers another
attraction for foreign investment. In 1978, precisely to attract foreign
investment, China designated five Special Economic Zones where overseas
investors can receive special investment incentives and tax concessions.
In addition, 14 coastal cities are designated "open cities," and certain Open
Economic Zones have been established in coastal areas. Shanghai has established
the Pudong New Area. There are 27 High and New Technology Industrial Development
Zones where preferential treatment is given to enterprises confirmed as
technology-related.
China's plans call for further development of the designated special investment
areas during the remainder of the decade.
"On a scale that the rest of the world is just starting to comprehend,
China is extending its Industrial Revolution."
- The Wall Street Journal, March, 1995
[MAPS OMITTED]
KEEP IN MIND, FUND SHARES ARE NOT INSURED BY THE FDIC AND ARE NOT DEPOSITS OF,
OR GUARANTEED BY, ANY DEPOSITORY INSTITUTION. SHARES ARE SUBJECT TO INVESTMENT
RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL INVESTED.
<PAGE>
THE CHINA REGION STOCK MARKETS
Over the past 20 years, the performance of the China region stock markets has
generally been better than those in the United States and Europe. In the past
five years, these newly emerging securities markets have demonstrated
significant growth in market capitalization, in the numbers of listed securities
and the volume of transactions.
THE GROWTH OF THE
CHINA REGION'S EMERGING MARKETS
Percent change in market capitalization 1985-1995
(HORIZONTAL BAR CHART)
Indonesia 83,250%
Philippines 9,500
Thailand 7,545
Korea 2,388
Taiwan 1,602
Hong Kong 878
Malaysia 586
Singapore 472
Source: Lloyd George Management
"China has exploded into a global export power."
- The Wall Street Journal, November, 1995
[GRAPHIC OMITTED]
THE GROWTH IN NUMBER
OF LISTED DOMESTIC COMPANIES 1986-1995
1986 1995
South Korea 355 721
Malaysia 233 529
Hong Kong 248 518
Thailand 98 416
Taiwan 130 347
China -- 323
Indonesia 24 238
Singapore 122 212
Philippines 130 205
Source: International Finance Corporation, Emerging Stock Markets Factbook 1996
ABOUT RISK
Of course, while Eaton Vance believes that the opportunities for long-term
capital appreciation are excellent, investors should consider carefully the
risks involved in committing a portion of their assets to the Greater China
Growth Funds. Such risks, for example, may include fluctuations in foreign
exchange rates, political or economic instability in the country in which the
security's issuer is located, and the possible imposition of exchange controls
or other laws or restrictions. In addition, foreign securities markets may be
less liquid, more volatile and subject to less government supervision than those
in the United States. Further, there is no guarantee that the economy or stock
market of China will continue to grow as they have in the past, or that Greater
China Growth Funds will benefit from such growth.
THE OPINIONS AND STATISTICS QUOTED IN THIS PUBLICATION ARE FROM SOURCES BELIEVED
TO BE RELIABLE BUT CANNOT BE GUARANTEED AS TO ACCURACY OR CORRECTNESS.
<PAGE>
EV GREATER
CHINA GROWTH FUNDS
HOW THE EATON VANCE FUNDS WORK
While the allure of the greater China region is powerful, capturing the
investment opportunity is challenging. The investment objective of EV Greater
China Growth Funds is long-term capital appreciation through investment in the
equity securities of companies that, in the opinion of the investment adviser,
will benefit from the economic development and growth of China. The Funds invest
in interests in the Greater China Growth Portfolio. The Portfolio invests
primarily in equities of companies traded on the securities markets in the China
region, consisting of Hong Kong, China (including the two stock exchanges in
China itself), Singapore, South Korea, Indonesia, Taiwan, Malaysia, Thailand and
the Philippines. It may invest in common and preferred stocks of companies that
provide goods or services to, or from within, the People's Republic of China, or
have manufacturing or other operations in China.
"China is committed to a policy of growth and has ambitions to be
a dominant economic power in Asia within a decade."
- Lloyd George Management
[Graphic Omitted]
HANDS-ON EXPERIENCE IN
THE CHINA REGION
To be successful, any international portfolio, be it a start-up portfolio or a
billion-dollar institutional account, requires in-depth knowledge of markets,
products, management styles and, to the extent possible, a keen sense of
economic and political trends - past, current and future.
Lloyd George Management, the Portfolio's investment adviser, features a group of
highly qualified and experienced investment professionals. Individually and
collectively, they have extensive hands-on experience in securities markets
around the world, including the management of several regional mutual funds
focusing on emerging markets. There are relatively few advisers dedicated to the
emerging markets of the China region.
Based in Hong Kong, and with offices in London and Mumbai (formerly Bombay),
Lloyd George Management is ideally situated to monitor the pulse of the China
region, select the securities for the Portfolio and manage its assets on a
day-to-day basis.
<PAGE>
A DIVERSE PORTFOLIO
TEN LARGEST HOLDINGS AS OF 7/31/96*
Hutchinson Whampoa (Hong Kong) ................................... 5.2%
Cheung Kong Holdings Ltd. (Hong Kong) ............................ 5.0
Hong Kong & Shanghai Banking Corp. (Hong Kong) ................... 4.8
New World Development (Hong Kong) ................................ 3.6
Sun Hung Kai Properties Ltd. (Hong Kong) ......................... 2.7
Electricity Generating (Thailand) ................................ 2.6
Siam Commercial Bank (Thailand) .................................. 2.5
National Mutual Ltd. (Hong Kong) ................................. 2.4
Korea Exchange Bank (Korea) ...................................... 2.3
Korea Electric Power Corp. (Korea) ............................... 2.2
* by market value
GEOGRAPHIC DISTRIBUTION 7/31/96*
Hong Kong ....................................................... 44.5%
Thailand ........................................................ 11.3
Malaysia ........................................................ 10.4
Korea ........................................................... 7.9
Singapore ....................................................... 7.8
Taiwan .......................................................... 6.7
Philippines ..................................................... 6.5
Indonesia ....................................................... 1.9
China ........................................................... 0.9
Cash & New Subscriptions ........................................ 2.1
* by market value
SECTOR DISTRIBUTION 7/31/96*
Industrial/Manufacturing .......................................... 24.1%
Banks ............................................................. 21.0
Diversified Trading ............................................... 18.2
Properties ........................................................ 15.0
Utilities ......................................................... 4.6
Telecommunications ................................................ 4.4
Transportation .................................................... 2.7
Consumer/Retail ................................................... 2.4
Other ............................................................. 5.5
Cash & New Subscriptions .......................................... 2.1
* by market value
THE BENEFITS OF GLOBAL INVESTING
When you invest globally, you diversify not just by industry and company, but
also by country and continent. That added diversification can help reduce
volatility and risk.
Growth opportunities are everywhere. There are a number of countries worldwide
that are growing faster than the United States as a result of a much changed
political landscape, falling trade barriers, increased foreign investment, and a
freer flow of capital across once-restricted borders. As the global market
continued to expand, the U.S. portion has continued to shrink from 70% of the
world's total market capitalization in 1969 to 41% at the end of 1995.* To
ignore non-U.S. markets is to ignore over half of the total world market.
The growth rates experienced by other countries are naturally reflected in the
performance of their stock markets, whose returns have outpaced those of the
U.S. over the last several years. As evidenced by the table, the United States
stock market has not been the leader based on 10 year average annual returns
ending December 31, 1995.
*Source: Morgan Stanley Capital International
AVERAGE ANNUAL STOCK MARKET RETURNS
FOR THE 10 YEARS ENDED DECEMBER 31, 1995
(horizontal bar chart)
Hong Kong 23.83%
Belgium 20.67
Singapore/Malaysia 20.21
Sweden 19.43
Netherlands 19.33
Switzerland 17.06
France 15.30
United Kingdom 15.02
United States 14.82
Denmark 13.70
Japan 12.82
Germany 10.66
Italy 7.78
Source: Lipper Analytical Services, Inc.
"The World Bank forecasts that for the next decade Asia's developing
economies will keep racing ahead by nearly 8% a year,
on average-roughly three times the pace of GDP
growth in the U.S., Europe and Japan."
-Fortune, October, 1995
<PAGE>
GLOBAL MANAGEMENT - GLOBAL DISTRIBUTION
EATON VANCE IS THE FUNDS' SPONSOR AND ADMINISTRATOR
In 1992, Eaton Vance joined forces with Lloyd George Management to harness the
investment potential of today's global markets.
With a history dating to 1924, Eaton Vance is a Boston-based investment
management firm. Lloyd George Management is an international investment adviser
with offices in Hong Kong, London and Mumbai.
Together, the firms manage over $18 billion in assets and offer individual and
institutional investors a roster of mutual funds focusing on international
equities, domestic equities, and on tax-free, government and corporate bonds.
Eaton Vance Distributors, Inc. markets these funds both within the United States
and offshore.
IT PAYS TO SEEK PROFESSIONAL ADVICE
You have crucial investment goals - your children's education, retirement,
financial independence. Or all three. Meeting those goals requires time,
objectivity and investment savvy. Most people do not hesitate to consult a
professional for advice in other important areas of their lives. With your
financial future at stake, why not seek the help of a professional investment
representative!
YOUR REPRESENTATIVE CAN HELP YOU CONSIDER SEVERAL FACTORS
BEFORE MAKING AN INVESTMENT RECOMMENDATION
* Short- and long-term financial goals * Investment time frame
* Tolerance for investment risk * Other investments you may already own
Your professional investment representative is knowledgeable about financial
markets, as well as the wide range of investment opportunities available. Your
representative can help you decide when to buy, sell or persevere with your
investments. With your professional investment representative, you have someone
you can depend on for tailored financial advice - today, tomorrow and in the
years to come. Talk to your financial adviser to learn how you may benefit from
Eaton Vance's overseas expertise.
SHAREHOLDER BENEFITS
* Investment minimum, $1,000; subsequent investments of $50 or more.
* Dividends and capital gains distributions may be taken in cash, or reinvested
at net asset value in additional shares automatically.
* Free exchange of your shares for those of other Eaton Vance Funds (with the
same distribution plan) with the ease of a phone call. The exchange privilege
may be changed or discontinued at any time.
* Bank draft investing for automatic monthly or quarterly investments from a
bank checking account.
* Tax-sheltered retirement plans. Purchase shares of the Funds in an Individual
Retirement Account, 401(k) Plan, Pension or Profit-Sharing Plan or a 403(b)
Retirement Plan.
* Systematic withdrawal plans for automatic periodic withdrawals from a fund
account.
Please see a prospectus for more information about any of these services.
[Graphic Omitted]
ASK YOUR INVESTMENT ADVISER HOW EV TRADITIONAL, MARATHON, OR CLASSIC GREATER
CHINA GROWTH FUND MIGHT FIT INTO YOUR PORTFOLIO.
EV TRADITIONAL GREATER CHINA GROWTH FUND (EVCGX) CUSIP: 277902201
EV MARATHON GREATER CHINA GROWTH FUND (EMCGX) CUSIP: 277902300
EV CLASSIC GREATER CHINA GROWTH FUND (ECCGX) CUSIP: 277902409
For more complete information about any of the EV Greater China Growth Funds or
any other Eaton Vance Fund, including distribution plans, charges and expenses,
please write or call your financial adviser for a prospectus, as well as for
details of the performance of EV Traditional, Marathon or Classic Greater China
Growth Fund. Read the prospectus(es) carefully before you invest or send money.
- -------------------------------------------------------------------------------
(C) Eaton Vance Distributors, Inc., 24 Federal Street, Boston, MA 02110
2-179-8/96 CGCB
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
PART II
This Part II provides information about EV CLASSIC GREATER CHINA GROWTH
FUND. The Fund currently seeks to achieve its investment objective by investing
its assets in the Portfolio.
FEES AND EXPENSES
MANAGER
As of August 31, 1996, the Fund had net assets of $18,802,394. For the
fiscal years ended August 31, 1996 and August 31, 1995, Eaton Vance earned
management fees of $50,917 and $57,931, respectively, (equivalent to 0.25% of
the Fund's average daily net assets for each such year). For the period from the
start of business, December 28, 1993, to the fiscal year ended August 31, 1994,
Eaton Vance earned management fees of $32,972 (equivalent to 0.25% (annualized)
of the Fund's average daily net assets for such period).
DISTRIBUTION PLAN
During the fiscal year ended August 31, 1996, the Principal Underwriter paid
to Authorized Firms sales commissions of $127,542 on sales of shares of the
Fund. During the same period, the Fund made sales commission payments under the
Plan to the Principal Underwriter aggregating $152,748 and the Principal
Underwriter received approximately $2,512 in CDSCs which were imposed on early
redeeming shareholders. These sales commissions and CDSC payments reduced
Uncovered Distribution Charges under the Plan. As at August 31, 1996, the
outstanding Uncovered Distribution Charges of the Principal Underwriter
calculated under the Plan amounted to approximately $2,909,000 (which amount was
equivalent to 15.5% of the Fund's net assets on such day). During the fiscal
year ended August 31, 1996, the Fund made service fee payments to the Principal
Underwriter and Authorized Firms aggregating $50,916, of which $42,059 was paid
to Authorized Firms and the balance of which was retained by the Principal
Underwriter.
PRINCIPAL UNDERWRITER
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. For the
fiscal year ended August 31, 1996, the Fund paid the Principal Underwriter
$1,475.00 for repurchase transactions handled by the Principal Underwriter.
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 of the Portfolio who are members of
the Eaton Vance organization receive no compensation from the Fund or the
Portfolio.) During the fiscal year ended August 31, 1996, the noninterested
Trustees of the Trust and the Portfolio received the following compensation in
their capacities as Trustees from the Fund and the Portfolio, and, for the year
ended September 30, 1996, earned the following compensation in their capacities
as Trustees of the funds in the Eaton Vance fund complex (1):
AGGREGATE AGGREGATE TOTAL COMPENSATION
COMPENSATION COMPENSATION FROM TRUST AND
NAME FROM FUND FROM PORTFOLIO FUND COMPLEX
---- --------- -------------- ------------
Hon. Edward K.Y. Chen .... $-- $16,250 $ 16,850
Donald R. Dwight ......... 34 -- 142,500(2)
Samuel L. Hayes, III ..... 32 5,000 153,750(3)
Norton H. Reamer ......... 31 -- 142,500
John L. Thorndike ........ 32 -- 147,500
Jack L. Treynor .......... 34 -- 147,500
- ----------
(1) The Eaton Vance fund complex consists of 228 registered investment companies
or series thereof.
(2) Includes $42,500 of deferred compensation.
(3) Includes $37,500 of deferred compensation.
PRINCIPAL UNDERWRITER
Under the Distribution Agreement the Principal Underwriter acts as principal
in selling shares of the Fund. The expenses of printing copies of prospectuses
used to offer shares to Authorized Firms or investors and other selling
literature and of advertising is borne by the Principal Underwriter. The fees
and expenses of qualifying and registering and maintaining qualifications and
registrations of the Fund and its shares under federal and state securities laws
is borne by the Fund. In addition, the Fund makes payments to the Principal
Underwriter pursuant to its Distribution Plan as described in the Fund's current
Prospectus; the provisions of the Fund's Distribution 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.
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 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 CDSCs and will make no
payments to the Principal Underwriter in respect of any day on which there are
no outstanding Uncovered Distribution Charges of the Principal Underwriter.
CDSCs and accrued amounts will be paid by the Fund to the Principal Underwriter
whenever there exist Uncovered Distribution Charges under the Fund's 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 CDSCs 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 CDSCs 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 CDSCs theretofore
paid or payable to the Principal Underwriter less all amounts theretofore paid
or payable to the Principal Underwriter by the Adviser in consideration of the
former's distribution efforts will be subtracted from such distribution charges;
if the result of such subtraction is positive, a distribution fee (computed at
1% over the prime rate then reported in The Wall Street Journal) will be
computed on such amount and added thereto, with the resulting sum constituting
the amount of outstanding Uncovered Distribution Charges with respect to such
day. The amount of outstanding Uncovered Distribution Charges of the Principal
Underwriter calculated on any day does not constitute a liability recorded on
the financial statements of the Fund.
The amount of Uncovered Distribution Charges of the Principal Underwriter at
any particular time depends upon various changing factors, including the level
and timing of sales of Fund shares, the nature of such sales (i.e., whether they
result from exchange transactions, reinvestments or from cash sales through
Authorized Firms), the level and timing of redemptions of Fund shares upon which
a CDSC will be imposed, the level and timing of redemptions of Fund shares upon
which no CDSC will be imposed (including redemptions involving exchanges of Fund
shares pursuant to the exchange privilege which result in a reduction of
Uncovered Distribution Charges), changes in the level of the net assets of the
Fund, and changes in the interest rate used in the calculation of the
distribution fee under the Plan. (For shares sold prior to January 30, 1995,
Plan payments are as follows: the Principal Underwriter pays monthly sales
commissions and service fee payments to Authorized Firms equivalent to
approximately .75% and .25%, respectively, annualized of the assets maintained
in the Fund by their customers beginning at the time of sale. No payments were
made at the time of sale and there is no CDSC.)
As currently implemented by the Trustees, the Fund's Plan authorizes
payments of sales commissions and distribution fees to the Principal Underwriter
and service fees to the Principal Underwriter and Authorized Firms which may be
equivalent, on an aggregate basis during any fiscal year of the Fund, to 1% of
the Fund's average daily net assets for such year. For the sales commission and
service fee payments made by the Fund and the outstanding Uncovered Distribution
Charges of the Principal Underwriter, see "Fees and Expenses -- Distribution
Plan" in this Part II. The Fund believes that the combined rate of all these
payments may be higher than the rate of payments made under distribution plans
adopted by other investment companies pursuant to Rule 12b-1. Although the
Principal Underwriter will use its own funds (which may be borrowed from banks)
to pay sales commissions at the time of sale, it is anticipated that the Eaton
Vance organization will profit by reason of the operation of the Plan through an
increase in the Fund's assets (thereby increasing the management fees payable to
Eaton Vance by the Fund and the administration fees payable to Eaton Vance by
the Portfolio) resulting from the sale of Fund shares and through the amounts
paid to the Principal Underwriter, including CDSCs, pursuant to the Plan. The
Eaton Vance organization may be considered to have realized a profit under the
Plan if at any point in time the aggregate amounts therefore received by the
Principal Underwriter pursuant to the Plan and from CDSCs 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.
Pursuant to Rule 12b-1, the Plan has been approved by the Fund's initial
sole shareholder (Eaton Vance) and by the Board of Trustees of the Trust, as
required by Rule 12b-1. The Plan continues in effect through and including April
28, 1997, and shall continue in effect indefinitely thereafter for so long as
such continuance is approved at least annually by the vote of both a majority of
(i) the Trustees of the Trust who are not interested persons of the Trust and
who have no direct or indirect financial interest in the operation of the Plan
or any agreements related to the Plan (the "Rule 12b-1 Trustees") and (ii) all
of the Trustees then in office, and the Distribution Agreement contains a
similar provision. The Plan and Distribution Agreement may be terminated at any
time by a 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. 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. Under the Plan
the President or a Vice President of the Trust shall provide to the Trustees for
their review, and the Trustees shall review at least quarterly, a written report
of the amount expended under the Plan and the purposes for which such
expenditures were made. The Plan may not be amended to increase materially the
payments described therein without approval of the shareholders of the Fund, and
all material amendments of the Plan must also be approved by the Trustees as
required by Rule 12b-1. So long as the Plan is in effect, the selection and
nomination of Trustees who are not interested persons of the Trust shall be
committed to the discretion of the Trustees who are not such interested persons.
The Trustees of the Trust believe that the Plan will be a significant factor
in the expected growth of the Fund's assets, resulting in increased investment
flexibility and advantages which have benefited and will continue to benefit the
Fund and its shareholders. Payments for sales commissions and distribution fees
made to the Principal Underwriter under the Plan will compensate the Principal
Underwriter for its services and expenses in distributing shares of the Fund.
Service fee payments made to the Principal Underwriter and Authorized Firms
under the Plan provide incentives to provide continuing personal services to
investors and the maintenance of shareholder accounts. By providing incentives
to the Principal Underwriter and Authorized Firms, the Plan is expected to
result in the maintenance of, and possible future growth in, the assets of the
Fund. Based on the foregoing and other relevant factors, the Trustees have
determined that in their judgment there is a reasonable likelihood that the Plan
will benefit the Fund and its shareholders.
PERFORMANCE INFORMATION
The table below indicates the cumulative and average annual total return on
a hypothetical investment of $1,000 in the Fund from October 28, 1992 through
August 31, 1996 and for the one-year period ended August 31, 1996. The total
return for the period prior to the Fund's commencement of operations on December
28, 1993 reflects the Portfolio's total return (or that of its predecessor)
adjusted to reflect any applicable Fund CDSC. Total return for this time period
has not been adjusted to reflect the Fund's distribution and/ or service fees
and certain other expenses. If such an adjustment were made, the performance
would be lower.
<TABLE>
<CAPTION>
VALUE OF A $1,000 INVESTMENT
VALUE BEFORE VALUE AFTER TOTAL RETURN BEFORE TOTAL RETURN AFTER
DEDUCTING THE DEDUCTING THE DEDUCTING THE CDSC DEDUCTING THE CDSC*
INVESTMENT INVESTMENT AMOUNT OF CDSC CDSC* -------------------------- --------------------------
PERIOD DATE INVESTMENT ON 8/31/96 ON 8/31/96 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- -------------- ------------ ----------- --------------- --------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Life of
the Fund 10/28/92 $1,000 $1,480.21 $1,480.21 48.02% 10.75% 48.02% 10.75%
1 Year
Ended
8/31/96 8/31/95 $1,000 $1,041.87 $1,031.87 4.19% 4.19% 3.19% 3.19%
Past performance is not indicative of future results. Investment return and principal value will fluctuate; shares, when
redeemed, may be worth more or less than their original cost.
<FN>
- ----------
* No CDSC is imposed on certain redemptions. See the Fund's current Prospectus.
</FN>
</TABLE>
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As at November 30, 1996, the Trustees and officers of the Trust, as a group,
owned in the aggregate less than 1% of the outstanding shares of the Fund. As of
November 30, 1996, Merrill Lynch, Pierce, Fenner & Smith, Inc., Jacksonville, FL
was the record owner of approximately 34.7% of the outstanding shares, which it
held on behalf of its customers who are the beneficial owners of such shares,
and as to which they had voting power under certain limited circumstances. In
addition, as of the same date, PaineWebber FBO World Development Foundation,
Coral Gables, FL 33134-2129 was the record owner of approximately 8.5% of the
outstanding shares. To the knowledge of the Trust, no other person owned of
record or beneficially 5% or more of the Fund's outstanding shares as of such
date.
<PAGE>
[logo]
EV CLASSIC GREATER CHINA
GROWTH FUND
STATEMENT OF ADDITIONAL INFORMATION
JANUARY 1, 1997
EV CLASSIC GREATER CHINA
GROWTH FUND
24 FEDERAL STREET
BOSTON, MA 02110
- --------------------------------------------------------------------------------
SPONSOR AND MANAGER OF EV CLASSIC GREATER CHINA GROWTH FUND
ADMINISTRATOR OF GREATER CHINA GROWTH PORTFOLIO
Eaton Vance Management, 24 Federal Street, Boston, MA 02110
ADVISER OF GREATER CHINA GROWTH PORTFOLIO
Lloyd George Investment Management (Bermuda) Limited,
3808 One Exchange Square, Central, Hong Kong
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc., 24 Federal Street, Boston, MA 02110
(800) 225-6265
CUSTODIAN
Investors Bank & Trust Company, 89 South Street, Boston, MA 02111
TRANSFER AGENT
First Data Investor Services Group, P.O. Box 5123, Westborough, MA 01586-5123
(800) 262-1122
AUDITORS
Deloitte & Touche LLP, 125 Summer Street, Boston, MA 02110
C-CGSAI
<PAGE>
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
STATEMENT OF
ADDITIONAL INFORMATION
January 1, 1997
EV MARATHON GREATER CHINA GROWTH FUND
24 Federal Street
Boston, Massachusetts 02110
(800) 225-6265
This Statement of Additional Information consists of two parts. Part I
provides general information about EV Marathon Greater China Growth Fund (the
"Fund"), Greater China Growth Portfolio (the "Portfolio") and certain other
series of Eaton Vance Growth Trust (the "Trust"). Part II provides information
solely about the Fund. Where appropriate, Part I includes cross-references to
the relevant sections of Part II, that provide additional Fund-specific
information. This Statement of Additional Information is sometimes referred to
herein as the "SAI".
TABLE OF CONTENTS
PART I
Additional Information about Investment Policies ................. 1
Investment Restrictions .......................................... 3
Trustees and Officers ............................................ 6
Management of the Fund ........................................... 8
Custodian ........................................................ 11
Service for Withdrawal ........................................... 12
Determination of Net Asset Value ................................. 12
Investment Performance ........................................... 13
Taxes ............................................................ 14
Portfolio Security Transactions .................................. 16
Other Information ................................................ 17
Independent Certified Public Accountants ......................... 18
Financial Statements ............................................. 19
Appendix A -- China Region Countries ............................. 20
Appendix B -- Statistical Information ............................ 26
PART II
Fees and Expenses ................................................ a-1
Principal Underwriter ............................................ a-2
Distribution Plan ................................................ a-2
Performance Information .......................................... a-4
Control Persons and Principal Holders of Securities .............. 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 JANUARY 1, 1997, AS SUPPLEMENTED FROM
TIME TO TIME, WHICH IS INCORPORATED HEREIN BY REFERENCE. THIS STATEMENT OF
ADDITIONAL INFORMATION SHOULD BE READ IN CONJUNCTION WITH SUCH PROSPECTUS, A
COPY OF WHICH MAY BE OBTAINED WITHOUT CHARGE BY CONTACTING EATON VANCE
DISTRIBUTORS, INC. (THE "PRINCIPAL UNDERWRITER") (SEE BACK COVER FOR ADDRESS AND
PHONE NUMBER).
FOR EDGAR FILING PURPOSES ONLY: REGISTRANT INCORPORATES BY REFERENCE FOR EV
MARATHON GREATER CHINA GROWTH FUND THE PART I FOUND IN THE STATEMENT OF
ADDITIONAL INFORMATION OF EV CLASSIC GREATER CHINA GROWTH FUND CONTAINED IN THIS
AMENDMENT.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
PART II
This Part II provides information about EV MARATHON GREATER CHINA GROWTH
FUND. The Fund currently seeks to achieve its investment objective by investing
its assets in the Portfolio.
FEES AND EXPENSES
MANAGER
As of August 31, 1996, the Fund had net assets of $284,574,696. For the
fiscal years ended August 31, 1996, 1995 and 1994, Eaton Vance earned management
fees of $782,873, $876,239 and $698,780, respectively (equivalent to 0.25% of
the Fund's average daily net assets for each such year).
DISTRIBUTION PLAN
1996, the Principal Underwriter paid to Authorized Firms sales commissions
of $533,818 on sales of Fund shares. During the same period, the Fund made sales
commission payments under the Plan to the Principal Underwriter aggregating
$2,348,619 and the Principal Underwriter received approximately $2,462,891 in
CDSCs imposed on early redeeming shareholders. These sales commissions and CDSC
payments reduced Uncovered Distribution Charges under the Plan. As at August 31,
1996, the outstanding Uncovered Distribution Charges of the Principal
Underwriter calculated under the Plan amounted to approximately $10,789,000
(which amount was equivalent to 3.8% of the Fund's net assets on such day).
During the fiscal year ended August 31, 1996, the Fund made service fee payments
to the Principal Underwriter and Authorized Firms aggregating $693,928, of which
$687,456 was paid to Authorized Firms and the balance of which was retained by
the Principal Underwriter.
PRINCIPAL UNDERWRITER
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. For the
fiscal year ended August 31, 1996, the Fund paid the Principal Underwriter
$17,465.00 for repurchase transactions handled by the Principal Underwriter.
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 of the Portfolio who are members of
the Eaton Vance organization receive no compensation from the Fund or the
Portfolio.) During the fiscal year ended August 31, 1996, the noninterested
Trustees of the Trust and the Portfolio received the following compensation in
their capacities as Trustees from the Fund and the Portfolio, and, for the year
ended September 30, 1996, earned the following compensation in their capacities
as Trustees of the funds in the Eaton Vance fund complex(1) :
AGGREGATE AGGREGATE TOTAL COMPENSATION
COMPENSATION COMPENSATION FROM TRUST AND
NAME FROM FUND FROM PORTFOLIO FUND COMPLEX
---- --------- -------------- ------------
Hon. Edward K.Y. Chen ..... $-- $16,250 $ 16,850
Donald R. Dwight .......... 687 -- 142,500(2)
Samuel L. Hayes, III ...... 632 5,000 153,750(3)
Norton H. Reamer .......... 628 -- 142,500
John L. Thorndike ......... 636 -- 147,500
Jack L. Treynor 681 -- 147,500
- ----------
(1) The Eaton Vance fund complex consists of 228 registered investment companies
or series thereof.
(2) Includes $42,500 of deferred compensation.
(3) Includes $37,500 of deferred compensation.
PRINCIPAL UNDERWRITER
Under the Distribution Agreement the Principal Underwriter acts as principal
in selling shares of the Fund. The expenses of printing copies of prospectuses
used to offer shares to Authorized Firms or investors and other selling
literature and of advertising is borne by the Principal Underwriter. The fees
and expenses of qualifying and registering and maintaining qualifications and
registrations of the Fund and its shares under federal and state securities laws
is borne by the Fund. In addition, the Fund makes payments to the Principal
Underwriter pursuant to its Distribution Plan as described in the Fund's current
Prospectus; the provisions of the Fund's Distribution 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.
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 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 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 CDSCs and will make no
payments to the Principal Underwriter in respect of any day on which there are
no outstanding Uncovered Distribution Charges of the Principal Underwriter.
CDSCs and accrued amounts will be paid by the Fund to the Principal Underwriter
whenever there exist Uncovered Distribution Charges under the Plan.
Periods with a high level of sales of Fund shares accompanied by a low level
of early redemptions of Fund shares resulting in the imposition of CDSCs 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 CDSCs 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 CDSCs theretofore
paid or payable to the Principal Underwriter less all amounts theretofore paid
or payable to the Principal Underwriter by the Adviser in consideration of the
former's distribution efforts, 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 CDSC will be imposed, the level and timing of redemptions of Fund shares upon
which no CDSC will be imposed (including redemptions involving exchanges of Fund
shares pursuant to the exchange privilege which result in a reduction of
Uncovered Distribution Charges), changes in the level of the net assets of the
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 Fund's Plan authorizes
payments of sales commissions and distribution fees to the Principal Underwriter
and service fees to the Principal Underwriter and Authorized Firms which may be
equivalent, on an aggregate basis during any fiscal year of the Fund, to 1% of
the Fund's average daily net assets for such year. For the sales commission and
service fee payments made by the Fund and the outstanding Uncovered Distribution
Charges of the Principal Underwriter, see "Fees and Expenses -- Distribution
Plan" in this Part II. The Fund believes that the combined rate of all these
payments may be higher than the rate of payments made under distribution plans
adopted by other investment companies pursuant to Rule 12b-1. Although the
Principal Underwriter will use its own funds (which may be borrowed from banks)
to pay sales commissions at the time of sale, it is anticipated that the Eaton
Vance organization will profit by reason of the operation of the Plan through an
increase in the Fund's assets (thereby increasing the management fee payable to
Eaton Vance by the Fund and the administration fees payable to Eaton Vance by
the Portfolio) resulting from sale of Fund shares and through amounts paid to
the Principal Underwriter, including CDSCs pursuant to the Plan. The Eaton Vance
organization may be considered to have realized a profit under the Plan if at
any point in time the aggregate amounts theretofore received by the Principal
Underwriter pursuant to the Plan and from CDSCs 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.
Pursuant to Rule 12b-1, the Plan has been approved by the Fund's initial
shareholder (Eaton Vance) and by the Board of Trustees of the Trust, as required
by Rule 12b-1. The Plan continues in effect through and including April 28,
1997, and shall continue in effect indefinitely thereafter for so long as such
continuance is approved at least annually by the vote of both a majority of (i)
the Trustees of the Trust who are not interested persons of the Trust and who
have no direct or indirect financial interest in the operation of the Plan or
any agreements related to the Plan (the "Rule 12b-1 Trustees") and (ii) all of
the Trustees then in office, and the Distribution Agreement contains a similar
provision. The Plan and Distribution Agreement may be terminated at any time by
a 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. 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. Under the Plan the President
or a Vice President of the Trust shall provide to the Trustees for their review,
and the Trustees shall review at least quarterly, a written report of the amount
expended under the Plan and the purposes for which such expenditures were made.
The Plan may not be amended to increase materially the payments described
therein without approval of the shareholders of the Fund, and all material
amendments of the Plan must also be approved by the Trustees as required by Rule
12b-1. So long as the Plan is in effect, the selection and nomination of the
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, resulting in increased investment
flexibility and advantages which have benefitted and will continue to benefit
the Fund and its shareholders. Payments for sales commissions and distribution
fees made to the Principal Underwriter under the Plan will compensate the
Principal Underwriter for its services and expenses in distributing shares of
the Fund. Service fee payments made to the Principal Underwriter and Authorized
Firms under the Plan provide incentives to provide continuing personal services
to investors and the maintenance of shareholder accounts. By providing
incentives to the Principal Underwriter and Authorized Firms, the Plan is
expected to result in the maintenance of, and possible future growth in, the
assets of the Fund. Based on the foregoing and other relevant factors, the
Trustees have determined that in their judgment there is a reasonable likelihood
that the Plan will benefit the Fund and its shareholders.
PERFORMANCE INFORMATION
The table below indicates the cumulative and average annual total return on
a hypothetical investment of $1,000 in the Fund from October 28, 1992 through
August 31, 1996 and for the one-year period ended August 31, 1996. The total
return for the period prior to the Fund's commencement of operations on June 7,
1993 reflects the Portfolio's total return (or that of its predecessor) adjusted
to reflect any applicable Fund CDSC. Total return for this time period has not
been adjusted to reflect the Fund's distribution and/ or service fees and
certain other expenses. If such an adjustment were made, the performance would
be lower.
VALUE OF A $1,000 INVESTMENT
<TABLE>
<CAPTION>
VALUE OF INVEST- VALUE OF INVEST-
MENT BEFORE DE- MENT AFTER DE- TOTAL RETURN BEFORE TOTAL RETURN AFTER
DUCTING THE DUCTING THE DEDUCTING THE CDSC DEDUCTING THE CDSC*
INVESTMENT INVESTMENT AMOUNT OF CDSC CDSC* ------------------------ ------------------------
PERIOD DATE INVESTMENT ON 8/31/96 ON 8/31/96 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
------ ---- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Life of the
Fund 10/28/92 $1,000 $1,507.72 $1,477.72 50.77% 11.28% 47.77% 10.70%
1 Year Ended
8/31/96 8/31/95 $1,000 $1,047.09 $ 997.09 4.71% 4.71% - 0.29% - 0.29%
</TABLE>
Past performance is not indicative of future results. Investment return and
principal value will fluctuate; shares, when redeemed, may be worth more or less
than their original cost.
- ----------
* No CDSC is imposed on certain redemptions. See the Fund's current
Prospectus.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As at November 30, 1996, the Trustees and officers of the Trust, as a
group, owned in the aggregate less than 1% of the outstanding shares of the
Fund. As of November 30, 1996, Merrill Lynch, Pierce, Fenner & Smith, Inc.,
Jacksonville, FL was the record owner of approximately 32.9% of the outstanding
shares, which it held on behalf of its customers who are the beneficial owners
of such shares, and as to which they had voting power under certain limited
circumstances. To the knowledge of the Trust, no other person owned of record or
beneficially 5% or more of the Fund's outstanding shares as of such date.
<PAGE>
[Logo]
EATON VANCE
================
Mutual Funds
- ----------------------------------------------------------------------------
EV MARATHON
GREATER CHINA
GROWTH FUND
STATEMENT OF ADDITIONAL INFORMATION
JANUARY 1, 1997
EV MARATHON GREATER
CHINA GROWTH FUND
24 FEDERAL STREET
BOSTON, MA 02110
- --------------------------------------------------------------------------------
SPONSOR AND MANAGER OF EV MARATHON GREATER CHINA GROWTH FUND
ADMINISTRATOR OF GREATER CHINA GROWTH PORTFOLIO
Eaton Vance Management, 24 Federal Street, Boston, MA 02110
ADVISER OF GREATER CHINA GROWTH PORTFOLIO
Lloyd George Investment Management (Bermuda) Limited, 3808 One Exchange Square,
Central, Hong Kong
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc., 24 Federal Street, Boston, MA 02110
(800) 225-6265
CUSTODIAN
Investors Bank & Trust Company, 89 South Street, Boston, MA 02111
TRANSFER AGENT
First Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123
(800) 262-1122
AUDITORS
Deloitte & Touche LLP, 125 Summer Street, Boston, MA 02110
M-CGSAI
<PAGE>
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
STATEMENT OF
ADDITIONAL INFORMATION
January 1, 1997
EV TRADITIONAL GREATER CHINA GROWTH FUND
24 Federal Street
Boston, Massachusetts 02110
(800) 225-6265
This Statement of Additional Information consists of two parts. Part I
provides general information about EV Traditional Greater China Growth Fund
(the "Fund"), Greater China Growth Portfolio (the "Portfolio") and certain
other series of Eaton Vance Growth Trust (the "Trust"). Part II provides
information solely about the Fund. Where appropriate, Part I includes cross-
references to the relevant sections of Part II, that provide additional Fund-
specific information. This Statement of Additional Information is sometimes
referred to herein as the "SAI".
TABLE OF CONTENTS
Page
PART I
Additional Information about Investment Policies .................. 1
Investment Restrictions ........................................... 3
Trustees and Officers ............................................. 6
Management of the Fund ............................................ 8
Custodian ......................................................... 11
Service for Withdrawal ............................................ 12
Determination of Net Asset Value .................................. 12
Investment Performance ............................................ 13
Taxes ............................................................. 14
Portfolio Security Transactions ................................... 16
Other Information ................................................. 17
Independent Certified Public Accountants .......................... 18
Financial Statements .............................................. 19
Appendix A -- China Region Countries .............................. 20
Appendix B -- Statistical Information ............................. 26
PART II
Fees and Expenses ................................................. a-1
Services for Accumulation ......................................... a-1
Principal Underwriter ............................................. a-2
Distribution Plan ................................................. a-3
Performance Information ........................................... a-4
Control Persons and Principal Holders of Securities ............... 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 JANUARY 1, 1997, AS SUPPLEMENTED
FROM TIME TO TIME, WHICH IS INCORPORATED HEREIN BY REFERENCE. THIS STATEMENT
OF ADDITIONAL INFORMATION SHOULD BE READ IN CONJUNCTION WITH SUCH PROSPECTUS,
A COPY OF WHICH MAY BE OBTAINED WITHOUT CHARGE BY CONTACTING EATON VANCE
DISTRIBUTORS, INC. (THE "PRINCIPAL UNDERWRITER") (SEE BACK COVER FOR ADDRESS
AND PHONE NUMBER).
FOR EDGAR FILING PURPOSES ONLY: REGISTRANT INCORPORATES BY REFERENCE FOR
EV TRADITIONAL GREATER CHINA GROWTH FUND THE PART I FOUND IN THE STATEMENT OF
ADDITIONAL INFORMATION OF EV CLASSIC GREATER CHINA GROWTH FUND CONTAINED IN
THIS AMENDMENT.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
PART II
This Part II provides information about EV TRADITIONAL GREATER CHINA
GROWTH FUND. On December 17, 1993, the Fund changed its name from Eaton Vance
Greater China Growth Fund to EV Traditional Greater China Growth Fund. The
Fund currently seeks to achieve its investment objective by investing its
assets in the Portfolio.
FEES AND EXPENSES
MANAGER
As of August 31, 1996, the Fund had net assets of $205,476,253. For the
fiscal years ended August 31, 1996, 1995 and 1994, Eaton Vance earned
management fees of $577,521, $674,475 and $674,153, respectively, (equivalent
to 0.25% of the Fund's average daily net assets for each such year).
DISTRIBUTION PLAN
During the fiscal year ended August 31, 1996, the Fund paid distribution
fees under the Plan to the Principal Underwriter aggregating $594,493. During
the fiscal year ended August 31, 1996, the Fund made service fee payments
under the Plan aggregating $555,879, of which $530,358 was paid to Authorized
Firms and the balance of which was retained by the Principal Underwriter.
PRINCIPAL UNDERWRITER
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. For the
fiscal year ended August 31, 1996, the Fund paid the Principal Underwriter
$13,822.50 for repurchase transactions handled by the Principal Underwriter.
The total sales charges for sales of shares of the Fund for the fiscal
years ended August 31, 1996, 1995 and 1994 were $444,518, $753,142, and
$7,694,629, respectively, of which $67,118, $120,206 and $1,213,734,
respectively, was received by the Principal Underwriter and Authorized Firms
received $377,400, $632,936 and $6,480,894, respectively.
TRUSTEES
The fees and expenses of those Trustees of the Trust and of the Portfolio
who are not members of the Eaton Vance organization (the noninterested Trustees)
are paid by the Fund (and the other series of the Trust) and the Portfolio,
respectively. (The Trustees of the Trust and the Portfolio who are members of
the Eaton Vance organization receive no compensation from the Fund or the
Portfolio.) During the fiscal year ended August 31, 1996, the noninterested
Trustees of the Trust and the Portfolio received the following compensation in
their capacities as Trustees from the Fund and the Portfolio, and, for the year
ended September 30, 1996, earned the following compensation in their capacities
as Trustees of the funds in the Eaton Vance fund complex(1):
ESTIMATED ESTIMATED
AGGREGATE AGGREGATE TOTAL COMPENSATION
COMPENSATION COMPENSATION FROM TRUST AND
NAME FROM FUND FROM PORTFOLIO FUND COMPLEX
- ---- ------------ -------------- ------------------
Hon. Edward K. Y. Chen .... $-- $16,250 $ 16,850
Donald R. Dwight .......... 687 -- 142,500(2)
Samuel L. Hayes, III ...... 632 5,000 153,750(3)
Norton H. Reamer .......... 627 -- 142,500
John L. Thorndike ......... 636 -- 147,500
Jack L. Treynor ........... 682 -- 147,500
- ----------
(1) The Eaton Vance fund complex consists of 228 registered investment
companies or series thereof.
(2) Includes $42,500 of deferred compensation.
(3) Includes $37,500 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 current Prospectus of the Fund will be purchased within a
13-month period, a Statement of Intention should be signed so that shares may
be obtained at the same reduced sales charge as though the total quantity were
invested in one lump sum. Shares held under Right of Accumulation (see below)
as of the date of the Statement will be included toward the completion of the
Statement. The Statement authorizes the Transfer Agent to hold in escrow
sufficient shares (5% of the dollar amount specified in the Statement) which
can be redeemed to make up any difference in sales charge on the amount
intended to be invested and the amount actually invested. Execution of a
Statement does not obligate the shareholder to purchase or the Fund to sell
the full amount indicated in the Statement, and should the amount actually
purchased during the 13-month period be more or less than that indicated on
the Statement, price adjustments will be made. For sales charges and other
information on quantity purchases, see "How to Buy Fund Shares" in the Fund's
current 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 current
Prospectus of the Fund for which Eaton Vance acts as investment adviser or
administrator at the time of purchase. The sales charge on the shares being
purchased will then be at the rate applicable to the aggregate. For example,
if the shareholder owned shares valued at $80,000 in 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 Fund's current Prospectus. Shares purchased (i) by an
individual, his or her spouse and their children under the age of twenty-one,
and (ii) by a trustee, guardian or other fiduciary of a single trust estate or
a single fiduciary account, will be combined for the purpose of determining
whether a purchase will qualify for the Right of Accumulation and if
qualifying, the applicable sales charge level.
For any such discount to be made available, at the time of purchase a
purchaser or his or her Authorized Firm must provide the Principal Underwriter
(in the case of a purchase made through an Authorized Firm) or the Transfer
Agent (in the case of an investment made by mail) with sufficient information
to permit verification that the purchase order qualifies for the accumulation
privilege. Confirmation of the order is subject to such verification. The
Right of Accumulation privilege may be amended or terminated at any time as to
purchases occurring thereafter.
PRINCIPAL UNDERWRITER
Shares of the Fund may be continuously purchased at the public offering
price through Authorized Firms which have agreements with the Principal
Underwriter. 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 Fund's current Prospectus (see "How to Buy Fund
Shares"). Such table is applicable to purchases of the Fund alone or in
combination with purchases of the other funds offered by the Principal
Underwriter, made at a single time by (i) an individual, or an individual, his
spouse and their children under the age of twenty-one, purchasing shares for
his or their own account, and (ii) a trustee or other fiduciary purchasing
shares for a single trust estate or a single fiduciary account.
The table is also presently applicable to (1) purchases of 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 is 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 Trust reserves the right to suspend or limit the offering of shares of
the Fund to the public at any time.
The Principal Underwriter acts as principal in selling shares of the Fund
under the Distribution Agreement with the Trust on behalf of the Fund. The
expenses of printing copies of prospectuses used to offer shares to Authorized
Firms or investors and other selling literature and of advertising are borne
by the Principal Underwriter. The fees and expenses of qualifying and
registering and maintaining qualifications and registrations of the Fund and
its shares under federal and state securities laws are borne by the Fund. 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 Fund's current Prospectus for the discounts allowed to
Authorized Firms on the sale of Fund shares. The Principal Underwriter may
allow, upon notice to all Authorized Firms, with whom it has agreements,
discounts up to the full sales charge during the periods specified in the
notice. During periods when the discount includes the full sales charge, such
Authorized Firms may be deemed to be underwriters as that term is defined in
the Securities Act of 1933. For the amount of sales charges for sales of Fund
shares paid to the Principal Underwriter (and Authorized Firms), see "Fees and
Expenses" in this Part II.
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 designed to meet the requirements of Rule 12b-1 under the
1940 Act (the "Plan").
Pursuant to such Rule, the Plan has been approved by the sole initial
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 amount expended under the Plan and the
purposes for which such expenditures were made. The Plan remains in effect
through April 28, 1997 and from year to year thereafter, 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.
PERFORMANCE INFORMATION
The table below indicates the total return (capital changes plus
reinvestment of all distributions) on a hypothetical investment of $1,000 in
the Fund covering the life of the Fund from October 28, 1992 through August
31, 1996 and for the one-year period ended August 31, 1996.
<TABLE>
<CAPTION>
VALUE OF $1,000 INVESTMENT
TOTAL RETURN TOTAL RETURN
EXCLUDING MAXIMUM INCLUDING MAXIMUM
VALUE OF SALES CHARGE SALES CHARGE
INVESTMENT INVESTMENT AMOUNT OF INVESTMENT ---------------------------- ----------------------------
PERIOD DATE INVESTMENT** ON 8/31/96 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
---------- ---------- ---------- ---------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Life of the Fund* 10/28/92 $952.38 $1,440.34 51.24% 11.38% 44.03% 9.97%
1 Year Ended
8/31/96 8/31/95 $952.47 $1,002.67 5.27% 5.27% 0.27% 0.27%
Past performance is not indicative of future results. Investment return and principal value will fluctuate; shares, when
redeemed, may be worth more or less than their original cost.
<FN>
- ------------
*Investment operations began on October 28, 1992.
**Investment less the current maximum sales charge of 4.75%.
</FN>
</TABLE>
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As at November 30, 1996, the Trustees and officers of the Trust, as a
group, owned in the aggregate less than 1% of the outstanding shares of the
Fund. As of November 30, 1996, Merrill Lynch, Pierce, Fenner & Smith, Inc.,
Jacksonville, FL was the record owner of approximately 35.1% of the
outstanding shares, which it held on behalf of its customers who are the
beneficial owners of such shares, and as to which they had voting power under
certain limited circumstances. To the knowledge of the Trust, no other person
owned of record or beneficially 5% or more of the Fund's outstanding shares as
of such date.
<PAGE>
[logo]
EV TRADITIONAL
GREATER CHINA
GROWTH FUND
STATEMENT OF ADDITIONAL INFORMATION
JANUARY 1, 1997
EV TRADITIONAL GREATER CHINA
GROWTH FUND
24 FEDERAL STREET
BOSTON, MA 02110
- --------------------------------------------------------------------------------
SPONSOR AND MANAGER OF EV TRADITIONAL GREATER CHINA GROWTH FUND
ADMINISTRATOR OF GREATER CHINA GROWTH PORTFOLIO
Eaton Vance Management, 24 Federal Street, Boston, MA 02110
ADVISER OF GREATER CHINA GROWTH PORTFOLIO
Lloyd George 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, 89 South Street, Boston, MA 02111
TRANSFER AGENT
First Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123
(800) 262-1122
AUDITORS
Deloitte & Touche LLP, 125 Summer Street, Boston, MA 02110
T-CGSAI
<PAGE>
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
STATEMENT OF
ADDITIONAL INFORMATION
January 1, 1997
EV CLASSIC GROWTH FUND
24 Federal Street
Boston, Massachusetts 02110
(800) 225-6265
This Statement of Additional Information consists of two parts. Part I
provides information about EV Classic Growth Fund (the "Fund"), Growth
Portfolio (the "Portfolio") and certain other series of Eaton Vance Growth
Trust (the "Trust"). The Fund's Part II (the "Part II") provides information
solely about the Fund. Where appropriate, Part I includes cross-references to
the relevant sections of Part II that provide additional, Fund-specific
information. This Statement of Additional Information is sometimes referred to
herein as the "SAI".
- ------------------------------------------------------------------------------
TABLE OF CONTENTS
PART I
Additional Information about Investment Policies ................ 1
Investment Restrictions ......................................... 3
Trustees and Officers ........................................... 4
Investment Adviser and Administrator ............................ 6
Custodian ....................................................... 9
Service for Withdrawal .......................................... 9
Determination of Net Asset Value ................................ 9
Investment Performance .......................................... 10
Taxes ........................................................... 11
Portfolio Security Transactions ................................. 13
Other Information ............................................... 15
Independent Accountants ......................................... 16
Financial Statements ............................................ 16
PART II
Fees and Expenses ............................................... a-1
Principal Underwriter ........................................... a-2
Distribution Plan ............................................... a-2
Performance Information ......................................... a-4
Control Persons and Principal Holders of Securities ............. 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 CURRENT PROSPECTUS OF EV CLASSIC GROWTH FUND DATED JANUARY 1,
1997, AS SUPPLEMENTED FROM TIME TO TIME, WHICH IS INCORPORATED HEREIN BY
REFERENCE. THIS STATEMENT OF ADDITIONAL INFORMATION SHOULD BE READ IN
CONJUNCTION WITH SUCH PROSPECTUS, A COPY OF WHICH MAY BE OBTAINED WITHOUT CHARGE
BY CONTACTING EATON VANCE DISTRIBUTORS, INC. (THE "PRINCIPAL UNDERWRITER") (SEE
BACK COVER FOR ADDRESS AND PHONE NUMBER).
<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 SAI 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 SECURITIES. Investing in securities issued by companies whose principal
business activities are outside the United States may involve significant risks
not present in domestic investments. For example, there is generally less
publicly available information about foreign companies, particularly those not
subject to the disclosure and reporting requirements of the United States
securities laws. Foreign issuers are generally not bound by uniform accounting,
auditing, and financial reporting requirements and standards of practice
comparable to those applicable to domestic issuers. Investments in foreign
securities also involve the risk of possible adverse changes in investment or
exchange control regulations, expropriation or confiscatory taxation, limitation
on the removal of funds or other assets of the Portfolio, political or financial
instability or diplomatic and other developments which could affect such
investments. Furthermore, economies of particular countries or areas of the
world may differ favorably or unfavorably from the economy of the United States.
It is anticipated that in most cases the best available market for foreign
securities will be on exchanges or in over-the-counter markets located outside
of the United States. Foreign stock markets, while growing in volume and
sophistication, are generally not as developed as those in the United States,
and securities of some foreign issuers (particularly those located in developing
countries) may be less liquid and more volatile than securities of comparable
U.S. companies. In addition, foreign brokerage commissions are generally higher
than commissions on securities traded in the United States and may be
non-negotiable. In general, there is less overall governmental supervision and
regulation of foreign securities markets, broker-dealers, and issuers than in
the United States.
FOREIGN CURRENCY TRANSACTIONS. Because investments in companies whose principal
business activities are located outside of the United States will frequently
involve currencies of foreign countries, and because assets of the Portfolio may
temporarily be held in bank deposits in foreign currencies during the completion
of investment programs, the value of the assets of the Portfolio as measured in
U.S. dollars may be affected favorably or unfavorably by changes in foreign
currency exchange rates and exchange control regulations. Currency exchange
rates can also be affected unpredictably by intervention by U.S. or foreign
governments or central banks, or the failure to intervene, or by currency
controls or political developments in the U.S. or abroad. The Portfolio may
conduct its foreign currency exchange transactions on a spot (i.e., cash) basis
at the spot rate prevailing in the foreign currency exchange market or through
entering into swaps, forward contracts, options or futures on currency. On spot
transactions, foreign exchange dealers do not charge a fee for conversion, but
they do realize a profit based on the difference (the "spread") between the
prices at which they are buying and selling various currencies. Thus, a dealer
may offer to sell a foreign currency to the Portfolio at one rate, while
offering a lesser rate of exchange should the Portfolio desire to resell that
currency to the dealer.
FORWARD FOREIGN CURRENCY EXCHANGE TRANSACTIONS. The Portfolio may enter into
forward foreign currency exchange contracts in several circumstances. First,
when the Portfolio enters into a contract for the purchase or sale of a security
denominated in a foreign currency, or when the Portfolio anticipates the receipt
in a foreign currency of dividend or interest payments on such a security which
it holds, the Portfolio may desire to "lock in" the U.S. dollar price of the
security or the U.S. dollar equivalent of such dividend or interest payment, as
the case may be. By entering into a forward contract for the purchase or sale,
for a fixed amount of dollars, of the amount of foreign currency involved in the
underlying transactions, the Portfolio will attempt to protect itself against an
adverse change in the relationship between the U.S. dollar and the subject
foreign currency during the period between the date on which the security is
purchased or sold, or on which the dividend or interest payment is declared, and
the date on which such payments are made or received.
Additionally, when management of the Portfolio believes that the currency of
a particular foreign country may suffer a substantial decline against the U.S.
dollar, it may enter into a forward contract to sell, for a fixed amount of
dollars, the amount of foreign currency approximating the value of some or all
of the securities held by the Portfolio denominated in such foreign currency.
The precise matching of the forward contract amounts and the value of the
securities involved will not generally be possible because the future value of
such securities in foreign currencies will change as a consequence of market
movements in the value of those securities between the date on which the
contract is entered into and the date it matures. The precise projection of
short-term currency market movements is not possible, and short-term hedging
provides a means of fixing the dollar value of only a portion of the Portfolio's
foreign assets.
SPECIAL RISKS ASSOCIATED WITH CURRENCY TRANSACTIONS. Transactions in forward
contracts are subject to the risk of governmental actions affecting trading in
or the prices of currencies underlying such contracts, which could restrict or
eliminate trading and could have a substantial adverse effect on the value of
positions held by the Portfolio. In addition, the value of such positions could
be adversely affected by a number of other complex political and economic
factors applicable to the countries issuing the underlying currencies.
Furthermore, unlike trading in most other types of instruments, there is no
systematic reporting of last sale information with respect to the foreign
currencies underlying forward contracts, futures contracts and options. As a
result, the available information on which the Portfolio's trading systems will
be based may not be as complete as the comparable data on which the Portfolio
makes investment and trading decisions in connection with securities and other
transactions. Moreover, because the foreign currency market is a global,
twenty-four hour market, events could occur on that market which will not be
reflected in the forward, futures or options markets until the following day,
thereby preventing the Portfolio from responding to such events in a timely
manner.
Settlements of over-the-counter forward contracts or of the exercise of
foreign currency options generally must occur within the country issuing the
underlying currency, which in turn requires parties to such contracts to accept
or make delivery of such currencies in conformity with any United States or
foreign restrictions and regulations regarding the maintenance of foreign
banking relationships, fees, taxes or other charges.
Unlike currency futures contracts and exchange-traded options, forward
contracts are not traded on contract markets regulated by the CFTC or (with the
exception of certain foreign currency options) the Securities and Exchange
Commission (the "Commission"). To the contrary, such instruments are traded
through financial institutions acting as market-makers. In an over-the-counter
trading environment, many of the protections associated with transactions on
exchanges will not be available. For example, there are no daily price
fluctuation limits, and adverse market movements could therefore continue to an
unlimited extent over a period of time. There is no limit on the amount of
potential losses on forward contracts to which the Portfolio is a party.
In addition, over-the-counter transactions can only be entered into with a
financial institution willing to take the opposite side, as principal, of the
Portfolio's position unless the institution acts as broker and is able to find
another counterparty willing to enter into the transaction with the Portfolio.
Where no such counterparty is available, it will not be possible to enter into a
desired transaction. There also may be no liquid secondary market in the trading
of over-the-counter contacts, and the Portfolio may be unable to close out
forward contracts entered into until their exercise, expiration or maturity.
This in turn could limit the Portfolio's ability to realize profits or to reduce
losses on open positions and could result in greater losses.
Furthermore, over-the-counter transactions are not backed by the guarantee
of an exchange's clearing corporation. The Portfolio will therefore be subject
to the risk of default by, or the bankruptcy of, the financial institution
serving as its counterparty. One or more of such institutions also may decide to
discontinue its role as market-maker in a particular currency, thereby
restricting the Portfolio's ability to enter into desired hedging transactions.
The Portfolio will enter into over-the-counter transactions only with parties
whose creditworthiness has been reviewed and found satisfactory by an Adviser.
FUTURES CONTRACTS ON STOCK INDICES. Entering into a derivative instrument
involves a risk that the applicable market will move against the Portfolio's
position and that the Portfolio will incur a loss. This loss may exceed the
amount of the initial investment made or the premium received by the Portfolio.
Derivative instruments may sometimes increase or leverage the Portfolio's
exposure to a particular market risk. Leverage enhances the Portfolio's exposure
to the price volatility of derivative instruments it holds. The Portfolio's
success in using derivative instruments to hedge portfolio assets depends on the
degree of price correlation between the derivative instruments and the hedged
asset. Imperfect correlation may be caused by several factors, including
temporary price disparities among the trading markets for the derivative
instrument, the assets underlying the derivative instrument and the Portfolio's
assets. During periods of market volatility, a commodity exchange may suspend or
limit trading in an exchange-traded derivative instrument, which may make the
contract temporarily illiquid and difficult to price. Commodity exchanges may
also establish daily limits on the amount that the price of a futures contract
or futures can vary from the previous day's settlement price. Once the daily
limit is reached, no trades may be made that day at a price beyond the limit.
This may prevent the Portfolio from closing out positions and limiting its
losses. Certain provisions of the Code limit the extent to which the Portfolio
may purchase and sell derivative instruments. The Portfolio will engage in
transactions in futures contracts and related options only to the extent such
transactions are consistent with the requirements of the Code for maintaining
the qualification of the Fund as a regulated investment company ("RIC") for
federal income tax purposes.
To the extent that the Portfolio enters into futures contracts and options
thereon traded on an exchange regulated by the Commodity Futures Trading
Commission (the "CFTC"), in each case that are not for bona fide hedging
purposes (as defined by the CFTC), the aggregate initial margin and premiums
required to establish these positions (excluding the amount by which options are
"in-the-money") may not exceed 5% of the liquidation value of the Portfolio's
investments, after taking into account unrealized profits and unrealized losses
on any contracts the Portfolio has entered into.
ASSET COVERAGE REQUIREMENTS. Transactions using forward contracts, futures
contracts and options thereon (other than options that the Portfolio has
purchased) expose the Portfolio to an obligation to another party. The Portfolio
will not enter into any such transactions unless it owns either (1) an
offsetting ("covered") position in securities, currencies, forward contracts or
futures contracts, or (2) cash or liquid securities with a value sufficient at
all times to cover its potential obligations not covered as provided in (1)
above. The Portfolio will comply with Commission guidelines regarding cover for
these instruments and, if the guidelines so require, set aside cash or liquid
securities in a segregated account with its custodian in the prescribed amount.
Assets used as cover or held in a segregated account cannot be sold while
the position in the corresponding futures contract or option is open, unless
they are replaced with other appropriate assets. As a result, the commitment of
a large portion of the Portfolio's assets to cover or segregated accounts could
impede portfolio management or the Portfolio's ability to meet redemption
requests or other current obligations.
The Portfolio may enter into futures contracts, and options on futures
contracts, traded on an exchange regulated by the CFTC and on foreign exchanges,
but, with respect to foreign exchange-traded futures contracts and options on
such futures contracts, only if the Investment Adviser determined that trading
on each such foreign exchange does not subject the Portfolio to risks, including
credit and liquidity risks, that are materially greater then the risks
associated with trading on CFTC-regulated exchanges.
REPURCHASE AGREEMENTS. The Portfolio may purchase U.S. Government securities and
concurrently enter into repurchase agreements with the seller under which the
seller agrees to repurchase such securities at the Portfolio's cost plus
interest within a specified time (normally one day). While repurchase agreements
involve certain risks not associated with direct investments in U.S. Government
securities, the Portfolio follows procedures designed to minimize such risks.
These procedures include effecting repurchase transactions only with large,
well-capitalized banks. In addition, the Portfolio's repurchase agreements will
provide that the value of the collateral underlying the repurchase agreement
will always be at least equal to the repurchase price, including any accrued
interest earned on the repurchase agreement. In the event of a default or
bankruptcy by a selling bank, the Portfolio will seek to liquidate such
collateral. However, the exercise of the Portfolio's right to liquidate such
collateral could involve certain costs or delays and, to the extent that
proceeds from any sale upon a default of the obligation to repurchase are less
than the repurchase price, the Portfolio could suffer a loss.
INVESTMENT RESTRICTIONS
The following investment restrictions of the Fund and the Portfolio are
designated as fundamental policies and as such cannot be changed without the
approval of the holders of a majority of the Fund's or Portfolio's outstanding
voting securities, which as used in this SAI means the lesser of (a) 67% or more
of the outstanding voting securities of the Fund 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 investors of the Portfolio. Neither the Fund
nor the Portfolio may:
(1) With respect to 75% of its total assets, purchase the securities of any
issuer if such purchase at the time thereof would cause more than 5% of its
total assets (taken at market value) to be invested in the securities of such
issuer, or purchase securities of any issuer if such purchase at the time
thereof would cause more than 10% of the total voting securities of such issuer
to be held by the Fund or Portfolio, except obligations issued or guaranteed by
the U.S. Government, its agencies or instrumentalities and except securities of
other investment companies;
(2) Borrow money or issue senior securities except as permitted by the
Investment Company Act of 1940;
(3) Purchase securities on margin (but the Fund may obtain such short-term
credits as may be necessary for the clearance of purchase and sales of
securities);
(4) Underwrite or participate in the marketing of securities of others;
(5) Make an investment in any one industry if such investment would cause
investments in such industry to exceed 25% of the Fund's total assets, at market
value at the time of such investment (other than securities issued or guaranteed
by the U.S. Government or its agencies or instrumentalities);
(6) Purchase or sell real estate, although it may purchase and sell
securities which are secured by real estate and securities of companies which
invest or deal in real estate;
(7) Purchase or sell commodities or commodity contracts for the purchase or
sale of physical commodities; or
(8) Make loans to any person except by (a) the acquisition of debt
securities and making portfolio investments (b) entering into repurchase
agreements or (c) lending portfolio securities.
Notwithstanding the investment policies and restrictions of the Fund, the
Fund may invest its assets in an open-end management investment company with
substantially the same investment objective, policies and restrictions as the
Fund.
The Fund will not issue bonds, debentures or senior equity securities, and
this policy will not be changed unless authorized by a vote of the shareholders
of the Fund.
The Fund and the Portfolio have each adopted the following investment
policies which may be changed by the Trust with respect to the Fund without
approval by the Fund's shareholders or by the Portfolio with respect to the
Portfolio without approval by the Fund or its other investors. As a matter of
nonfundamental policy, the Fund and the Portfolio will not: (a) purchase or
retain in its portfolio any securities issued by an issuer any of whose
officers, directors, trustees or security holders is an officer or trustee of
the Trust or the Portfolio or is a member, officer, director or trustee of any
investment adviser of the Trust or the Portfolio, if after the purchase of the
securities of such issuer by the Fund or the Portfolio one or more of such
persons owns beneficially more than 1/2 of 1% of the shares or securities or
both (all taken at market value) of such issuer and such persons owning more
than 1/2 of 1% of such shares or securities together own beneficially more than
5% of such shares or securities or both (all taken at market value); (b) sell or
contract to sell any security which it does not own unless by virtue of its
ownership of other securities it has at the time of sale a right to obtain
securities equivalent in kind and amount to the securities sold and provided
that if such right is conditional the sale is made upon the same conditions; or
(c) invest more than 15% of net assets in investments which are not readily
marketable, including restricted securities and repurchase agreements maturing
in more than seven days. Restricted securities for the purposes of this
limitation do not include securities eligible for resale pursuant to Rule 144A
of the Securities Act of 1933 and commercial paper issued pursuant to Section
4(2) of said Act that the Board of Trustees of the Trust or the Portfolio, or
their delegate, determines to be liquid.
Whenever an investment policy or investment restriction set forth in the
Prospectus or this SAI states a maximum percentage of assets that may be
invested in any security or other asset, such percentage limitation shall be
determined immediately after and as a result of the Fund's or the Portfolio's
acquisition of such security or asset. Accordingly, any later increase or
decrease resulting from a change in values, assets or other circumstances, will
not compel the Fund or the Portfolio, as the case may be, to dispose of such
security or other asset. Notwithstanding the foregoing, the Fund and Portfolio
must always be in compliance with the borrowing policies set forth above.
TRUSTEES AND OFFICERS
The Trustees and officers of the Trust and the Portfolio are listed below.
Except as indicated, each individual has held the office shown or other offices
in the same company for the last five years. Unless otherwise noted, the
business address of each Trustee and officer is 24 Federal Street, Boston,
Massachusetts 02110, which is also the address of the Fund's investment adviser,
Boston Management and Research ("BMR"), a wholly-owned subsidiary of Eaton Vance
Management ("Eaton Vance"); of Eaton Vance's parent, Eaton Vance Corp. ("EVC");
and of BMR's and Eaton Vance's trustee, Eaton Vance, Inc. ("EV"). Eaton Vance
and EV are both wholly-owned subsidiaries of EVC. Those Trustees who are
"interested persons" of the Trust, the Portfolio, BMR, Eaton Vance, EVC or EV as
defined in the 1940 Act by virtue of their affiliation with any one or more of
the Trust, the Portfolio, BMR, Eaton Vance, EVC or EV, are indicated by an
asterisk (*).
TRUSTEES OF THE TRUST AND THE PORTFOLIO
JAMES B. HAWKES (55), President and Trustee*
President and Chief Executive Officer of BMR, Eaton Vance, EVC and EV, and a
Director of EVC and EV. Director or Trustee and officer of various investment
companies managed by Eaton Vance or BMR.
DONALD R. DWIGHT (65), 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 (61), Trustee
Jacob H. Schiff Professor of Investment Banking, Harvard University Graduate
School of Business Administration. Director or Trustee of various investment
companies managed by Eaton Vance or BMR.
Address: Harvard University Graduate School of Business Administration,
Soldiers Field Road, Boston, Massachusetts 02163
NORTON H. REAMER (61), Trustee
President and Director, United Asset Management Corporation (a holding company
owning institutional investment management firms); Chairman, President and
Director, UAM Funds (mutual funds). Director or Trustee of various investment
companies managed by Eaton Vance or BMR.
Address: One International Place, Boston, Massachusetts 02110
JOHN L. THORNDIKE (70), Trustee
Director of Fiduciary Company Incorporated. Director or Trustee of various
investment companies managed by Eaton Vance or BMR.
Address: 175 Federal Street, Boston, Massachusetts 02110
JACK L. TREYNOR (66), Trustee
Investment Adviser and Consultant. Director or Trustee of various investment
companies managed by Eaton Vance or BMR.
Address: 504 Via Almar, Palos Verdes Estates, California 90274
OFFICERS OF THE TRUST AND THE PORTFOLIO
M. DOZIER GARDNER (63), Vice President
Executive Vice President of BMR, Eaton Vance, EVC and EV, and Director of EVC
and EV. Director or Trustee and officer of various investment companies
managed by Eaton Vance or BMR.
WILLIAM D. BURT (58), Vice President
Vice President of Eaton Vance, BMR and EV since November 1994; formerly Vice
President of The Boston Company (1990-1994). Mr. Burt was elected Vice
President of the Trust on June 19, 1995.
BARCLAY TITTMANN (64), Vice President
Vice President of Eaton Vance, BMR and EV since October 1993; formerly Vice
President of Invesco Management and Research (1970-1993). Mr. Tittmann was
elected Vice President of the Trust on June 19, 1995.
THOMAS E. FAUST, JR. (38), Vice President of the Portfolio
Vice President of BMR, Eaton Vance and EV. Officer of various investment
companies managed by Eaton Vance or BMR. Mr. Faust was elected Vice
President of the Portfolio on March 18, 1996.
JAMES L. O'CONNOR (51), Treasurer
Vice President of BMR, Eaton Vance, and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
WILLIAM J. AUSTIN, JR. (45), Assistant Treasurer
Assistant Vice President of BMR, Eaton Vance and EV. Officer of various
investment companies managed by Eaton Vance or BMR.
THOMAS OTIS (65), Secretary
Vice President and Secretary of BMR, Eaton Vance, EVC and EV. Officer of various
investment companies managed by Eaton Vance or BMR.
JANET E. SANDERS (61), Assistant Treasurer and Assistant Secretary
Vice President of BMR, Eaton Vance and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
A. JOHN MURPHY (34), Assistant Secretary
Assistant Vice President of BMR, Eaton Vance and EV since March 1, 1994;
employee of Eaton Vance since March 1993. State Regulations Supervisor, The
Boston Company (1991-1993). Officer of various investment companies managed by
Eaton Vance or BMR. Mr. Murphy was elected Assistant Secretary of the Trust
and the Portfolio on March 27, 1995.
ERIC G. WOODBURY (39), Assistant Secretary
Vice President of Eaton Vance, BMR and EV since February 1993; formerly,
associate attorney at Dechert, Price & Rhoades. Officer of various investment
companies managed by Eaton Vance or BMR. Mr. Woodbury was elected Assistant
Secretary of the Trust and the Portfolio on June 19, 1995.
Messrs. Hayes (Chairman), Reamer and Thorndike are members of the Special
Committee of the Board of Trustees of the Trust and of the Portfolio. The
purpose of the Special Committee is to consider, evaluate and make
recommendations to the full Board of Trustees concerning (i) all contractual
arrangements with service providers to the Fund, including administrative
services, transfer agency, custodial and fund accounting and distribution
services, and (ii) all other matters in which Eaton Vance or its affiliates has
any actual or potential conflict of interest with the Fund or its shareholders.
The Nominating Committee is comprised of four Trustees who are not
"interested persons" as that term is defined under the Investment Company Act of
1940, as amended ("noninterested Trustees"). The Committee has four-year
staggered terms, with one member rotating off the Committee to be replaced by
another noninterested Trustee of the Trust. The purpose of the Committee is to
recommend to the Board nominees for the position of noninterested Trustee and to
assure that at least a majority of the Board of Trustees is independent of Eaton
Vance and its affiliates.
Messrs. Treynor (Chairman) and Dwight are members of the Audit Committee of
the Board of Trustees of the Trust and of the Portfolio. The Audit Committee's
functions include making recommendations to the Trustees regarding the selection
of the independent accountants, and reviewing with such accountants and the
Treasurer of the Trust and of the Portfolio matters relative to trading and
brokerage policies and practices, accounting and auditing practices and
procedures, accounting records, internal accounting controls, and the functions
performed by the custodian and transfer agent of the Trust and of the Portfolio.
Trustees of the Portfolio who are not affiliated with the Investment Adviser
may elect to defer receipt of all or a percentage of their annual fees in
accordance with the terms of a Trustees Deferred Compensation Plan (the "Plan").
Under the Plan, an eligible Trustee may elect to have his deferred fees invested
by the Portfolio in the shares of one or more funds in the Eaton Vance Family of
Funds, and the amount paid to the Trustees under the Plan will be determined
based upon the performance of such investments. Deferral of Trustees' fees in
accordance with the Plan will have a negligible effect on the Portfolio's
assets, liabilities, and net income per share, and will not obligate the
Portfolio to retain the services of any Trustee or obligate the Portfolio to pay
any particular level of compensation to the Trustee. Neither the Portfolio nor
the Fund has a retirement plan for its Trustees.
The fees and expenses of those Trustees of the Trust and 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. For the compensation earned by the noninterested Trustees of the
Trust and the Portfolio, see "Fees and Expenses" in the Fund's Part II.
INVESTMENT ADVISER AND ADMINISTRATOR
The Portfolio engages BMR as its investment adviser pursuant to an
Investment Advisory Agreement dated August 1, 1994. BMR or Eaton Vance acts as
investment adviser to investment companies and various individual and
institutional clients with combined assets under management of over $16 billion.
Eaton Vance, its affiliates and its predecessor companies have been managing
assets of individuals and institutions since 1924 and managing investment
companies since 1931. They maintain a large staff of experienced fixed-income
and equity investment professionals to service the needs of its clients. The
fixed-income division focuses on all kinds of taxable investment-grade and
high-yield securities, tax-exempt investment-grade and high-yield securities,
and U.S. Government securities. The equity division covers stocks ranging from
blue chip to emerging growth companies.
Eaton Vance and its affiliates act as adviser to over 150 mutual funds,
individual and various institutional accounts, including corporations,
hospitals, retirement plans, universities, foundations and trusts. Eaton Vance
mutual funds feature international equities, domestic equities, tax-free
municipal bonds, and U.S. government and corporate bonds. Lloyd George
Management has advised Eaton Vance's international equity funds since 1992.
Founded in 1991, Lloyd George is headquartered in Hong Kong with offices in
London and Mumbai, India. It has established itself as a leader in investment
management in Asian equities and other global markets. Lloyd George features an
experienced team of investment professionals that began working together in the
mid-1980s. Lloyd George's staff includes 11 highly qualified investment
professionals who manage U.S. $1.3 billion. Lloyd George analysts cover East
Asia, the India subcontinent, Russia and Eastern Europe, Latin America,
Australia and New Zealand from offices in Hong Kong, London and Mumbai. Together
Eaton Vance and Lloyd George manage over $18 billion in assets. Eaton Vance
mutual funds are distributed by Eaton Vance Distributors both within the United
States and offshore.
Eaton Vance Distributors believes that an investment professional can
provide valuable services to you to help you reach your investment goals.
Meeting investment goals requires time, objectivity and investment savvy. Before
making an investment recommendation, a representative can help you carefully
consider your "short-term" and "long-term" financial goals, your tolerance for
investment risk, your investment time frame, and other investments you may
already own. Your professional investment representatives are knowledgeable
about financial markets, as well as the wide range of investment opportunities
available. A representative can provide you with tailored financial advice and
help you decide when to buy, sell or persevere with your investments.
BMR manages the investments and affairs of the Portfolio subject to the
supervision of the Portfolio's Board of Trustees. BMR furnishes to the Portfolio
investment research, advice and supervision, furnishes an investment program and
determines what securities will be purchased, held or sold by the Portfolio and
what portion, if any, of the Portfolio's assets will be held uninvested. The
Investment Advisory Agreement requires BMR to pay the salaries and fees of all
officers and Trustees of the Portfolio who are members of the BMR organization
and all personnel of BMR performing services relating to research and investment
activities. The Portfolio is responsible for all expenses not expressly stated
to be payable by BMR under the Investment Advisory Agreement, including, without
implied limitation, (i) expenses of maintaining the Portfolio and continuing its
existence, (ii) registration of the Portfolio under the 1940 Act, (iii)
commissions, fees and other expenses connected with the acquisition, holding and
disposition of securities and other investments, (iv) auditing, accounting and
legal expenses, (v) taxes and interest, (vi) governmental fees, (vii) expenses
of issue, sale and redemption of interests in the Portfolio, (viii) expenses of
registering and qualifying the Portfolio and interests in the Portfolio under
federal and state securities laws and of preparing and printing registration
statements or other offering statements or memoranda for such purposes and for
distributing the same to investors, and fees and expenses of registering and
maintaining registrations of the Portfolio and of the Portfolio's placement
agent as broker-dealer or agent under state securities laws, (ix) expenses of
reports and notices to investors and of meetings of investors and proxy
solicitations therefor, (x) expenses of reports to governmental officers and
commissions, (xi) insurance expenses, (xii) association membership dues, (xiii)
fees, expenses and disbursements of custodians and subcustodians for all
services to the Portfolio (including without limitation safekeeping of funds,
securities and other investments, keeping of books, accounts and records, and
determination of net asset values, book capital account balances and tax capital
account balances), (xiv) fees, expenses and disbursements of transfer agents,
dividend disbursing agents, investor servicing agents and registrars for all
services to the Portfolio, (xv) expenses for servicing the accounts of
investors, (xvi) any direct charges to investors approved by the Trustees of the
Portfolio, (xvii) compensation and expenses of Trustees of the Portfolio who are
not members of BMR's organization, and (xviii) such non-recurring items as may
arise, including expenses incurred in connection with litigation, proceedings
and claims and any legal obligation of the Portfolio to indemnify its Trustees,
officers and investors with respect thereto, to the extent not covered by
insurance.
For a description of the compensation that the Portfolio pays BMR under the
Investment Advisory Agreement, see the Fund's current Prospectus.
INVESTMENT ADVISER
As of August 31, 1996, the Portfolio had net assets of $146,731,890. For the
fiscal year ended August 31, 1996, the Portfolio paid BMR advisory fees of
$897,686 (equivalent to 0.625% of the Portfolio's average daily net assets for
such year). For the fiscal year ended August 31, 1995, the Portfolio paid BMR
advisory fees of $786,194 (equivalent to 0.625% of the Portfolio's average daily
net assets for such year). For the period from the Portfolio's start of
business, August 2, 1994 to the fiscal year ended August 31, 1994, the Portfolio
paid BMR advisory fees of $64,233 (equivalent to 0.61% (annualized) of the
Portfolio's average daily net assets for such period).
The Investment Advisory Agreement with BMR remains in effect until February
28, 1997. It may be continued indefinitely thereafter so long as such
continuance is approved at least annually (i) by the vote of a majority of the
Trustees of the Portfolio who are not interested persons of the Portfolio or of
BMR cast in person at a meeting specifically called for the purpose of voting on
such approval and (ii) by the Board of Trustees of the Portfolio or by vote of a
majority of the outstanding voting securities of the Portfolio. The Agreement
may be terminated at any time without penalty on sixty days' written notice by
the Board of Trustees of either party or by vote of the majority of the
outstanding voting securities of the Portfolio, and the Agreement will terminate
automatically in the event of its assignment. The Agreement provides that BMR
may render services to others. The Agreement also provides that BMR shall not be
liable for any loss incurred in connection with the performance of its duties,
or action taken or omitted under that Agreement, in the absence of willful
misfeasance, bad faith, gross negligence in the performance of its duties or by
reason of its reckless disregard of its obligations and duties thereunder, or
for any losses sustained in the acquisition, holding or disposition of any
security or other investment.
As indicated in the Prospectus, Eaton Vance serves as Administrator of the
Fund, but currently receives no compensation for providing administrative
services to the Fund. Under its agreement with the Fund, Eaton Vance has been
engaged to administer the Fund's affairs, subject to the supervision of the
Trustees of the Trust, and shall furnish for the use of the Fund office space
and all necessary office facilities, equipment and personnel for administering
the affairs of the Fund. For additional information about the Administrator, see
"Fees and Expenses" in the Fund's Part II.
The Fund pays all of its own expenses including, without limitation, (i)
expenses of maintaining the Fund and continuing its existence, (ii) registration
of the Trust under the 1940 Act, (iii) commissions, fees and other expenses
connected with the purchase or sale of securities and other investments, (iv)
auditing, accounting and legal expenses, (v) taxes and interest, (vi)
governmental fees, (vii) expenses of issue, sale, repurchase and redemption of
shares, (viii) expenses of registering and qualifying the Fund and its shares
under federal and state securities laws and of preparing and printing
prospectuses for such purposes and for distributing the same to shareholders and
investors, and fees and expenses of registering and maintaining registrations of
the Fund and of the Fund's principal underwriter, if any, as broker-dealer or
agent under state securities laws, (ix) expenses of reports and notices to
shareholders and of meetings of shareholders and proxy solicitations therefor,
(x) expenses of reports to governmental officers and commissions, (xi) insurance
expenses, (xii) association membership dues, (xiii) fees, expenses and
disbursements of custodians and subcustodians for all services to the Fund
(including without limitation safekeeping of funds, securities and other
investments, keeping of books and accounts and determination of net asset
values), (xiv) fees, expenses and disbursements of transfer agents, dividend
disbursing agents, shareholder servicing agents and registrars for all services
to the Fund, (xv) expenses for servicing shareholder accounts, (xvi) any direct
charges to shareholders approved by the Trustees of the Trust, (xvii)
compensation and expenses of Trustees of the Trust who are not members of the
Eaton Vance organization, and (xviii) such non-recurring items as may arise,
including expenses incurred in connection with litigation, proceedings and
claims and any legal obligation of the Trust to indemnify its Trustees and
officers with respect thereto, to the extent not covered by insurance.
BMR is a wholly-owned subsidiary of Eaton Vance. Eaton Vance and EV are
both wholly-owned subsidiaries of EVC. BMR and Eaton Vance are both
Massachusetts business trusts, and EV is the trustee of BMR and Eaton Vance.
The Directors of EV are Landon T. Clay, M. Dozier Gardner, James B. Hawkes and
Benjamin A. Rowland, Jr. The Directors of EVC consist of the same persons and
John G. L. Cabot and Ralph Z. Sorenson. Mr. Clay is chairman, Mr. Gardner is
Vice Chairman and Mr. Hawkes is president and chief executive officer, of EVC,
BMR, Eaton Vance and EV. All of the issued and outstanding shares of Eaton
Vance and of EV are owned by EVC. All of the issued and outstanding shares of
BMR are owned by Eaton Vance. All shares of the outstanding Voting Common
Stock of EVC are deposited in a Voting Trust, which expires December 31, 1997,
the Voting Trustees of which are Messrs. Clay, Gardner, Hawkes, Rowland and
Thomas E. Faust, Jr. The Voting Trustees have unrestricted voting rights for
the election of Directors of EVC. All of the outstanding voting trust receipts
issued under said Voting Trust are owned by certain of the officers of BMR and
Eaton Vance who are also officers or officers and Directors of EVC and EV. As
of January 1, 1997, Messrs. Clay, Gardner and Hawkes each owned 24% of such
voting trust receipts, and Messrs. Rowland and Faust owned 15% and 13%,
respectively, of such voting trust receipts. Messrs. Clay, Gardner, Hawkes and
Otis, who are officers or Trustees of the Trust and the Portfolio, are members
of the EVC, Eaton Vance, BMR and EV organizations. Messrs. Austin, Burt,
Faust, Murphy, O'Connor, Tittmann and Woodbury, and Ms. Sanders are officers
of the Trust and the Portfolio and all are also members of the BMR, Eaton
Vance and EV organizations. BMR will receive the fees paid under the
Investment Advisory Agreement.
Eaton Vance owns all of the stock of Energex Energy Corporation, which
engages in oil and gas exploration and development. In addition, Eaton Vance
owns all of the stock of Northeast Properties, Inc., which is engaged in real
estate investment. EVC also owns 24% of the Class A shares of Lloyd George
Management (B.V.I.) Limited, a registered investment adviser. EVC owns all the
stock of Fulcrum Management, Inc. and MinVen, Inc., which are engaged in the
development of precious metal mining, venture investment and management. EVC,
BMR, Eaton Vance and EV may also enter into other businesses.
EVC and its affiliates and their officers and employees from time to time
have transactions with various banks, including the custodian of the Fund and
the Portfolio, Investors Bank & Trust Company. It is Eaton Vance's opinion that
the terms and conditions of such transactions were not and will not be
influenced by existing or potential custodial or other relationships between the
Fund or the Portfolio and such banks.
CUSTODIAN
Investors Bank & Trust Company ("IBT"), 89 South Street, Boston,
Massachusetts acts as custodian for the Fund and the Portfolio. IBT has the
custody of all cash and securities representing the Fund's interest in the
Portfolio, has custody of all the Portfolio's assets, maintains the general
ledger of the Portfolio and the Fund, and computes the daily net asset value of
interests in the Portfolio and the net asset value of shares of the Fund. In
such capacity it attends to details in connection with the sale, exchange,
substitution, transfer or other dealings with the Portfolio's investments,
receives and disburses all funds, and performs various other ministerial duties
upon receipt of proper instructions from the Fund and the Portfolio. IBT charges
fees which are believed to be competitive within the industry. A portion of the
fee relates to custody, bookeeping and valuation services and is based upon a
percentage of Fund and Portfolio net assets and a portion of the fee relates to
activity charges, primarily the number of portfolio transactions. These fees are
then reduced by a credit for cash balances of the particular investment company
at the custodian equal to 75% of the 91-day, U.S. Treasury Bill auction rate
applied to the particular investment company's average daily collected balances
for the week. Landon T. Clay, a Director of EVC and an officer, Trustee or
Director of other entities in the Eaton Vance organization, owns approximately
13% of the voting stock of Investors Financial Services Corp., the holding
company parent of IBT. Management believes that such ownership does not create
an affiliated person relationship between the Fund or the Portfolio and IBT
under the 1940 Act.
IBT also provides services in connection with the preparation of shareholder
reports and the electronic filing of such reports with the Commission for which
it receives a separate fee.
SERVICE FOR WITHDRAWAL
The Transfer Agent will send to the shareholder regular monthly or quarterly
payments of any permitted amount designated by the shareholder (see "Eaton Vance
Shareholder Services -- Withdrawal Plan" in the Fund's current Prospectus) based
upon the value of the shares held. The checks will be drawn from share
redemptions and hence, although they are a return of principal, may require the
recognition of taxable gain or loss. Income dividends and capital 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. A shareholder may not have a withdrawal plan
in effect at the same time he or she has authorized Bank Automated Investing or
is otherwise making regular purchases of Fund shares. Either the shareholder,
the Transfer Agent or the Principal Underwriter will be able to terminate the
withdrawal plan at any time without penalty.
DETERMINATION OF NET ASSET VALUE
The net asset value of the shares of the Fund is determined by IBT (as agent
and custodian for the Fund) in the manner described under "Valuing Fund Shares"
in the Fund's current Prospectus. The Fund and the Portfolio will be closed for
business and will not price their respective shares or interests on the
following business holidays: New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
The Trustees of the Portfolio have established the following procedures for
the fair valuation of the Portfolio's assets under normal market conditions.
Securities listed on foreign or U.S. securities exchanges or in the NASDAQ
National Market System generally are valued at closing sale prices or, if there
were no sales, at the mean between the closing bid and asked prices therefor on
the exchange where such securities are principally traded or on such National
Market System. Unlisted or listed securities for which closing sale prices are
not available are valued at the mean between the latest bid and asked prices. An
option is valued at the last sale price as quoted on the principal exchange or
board of trade on which such option or contract is traded, or in the absence of
a sale, at the mean between the last bid and asked prices. Futures positions on
securities or currencies are generally valued at closing settlement prices.
Short-term debt securities with a remaining maturity of 60 days or less are
valued at amortized cost. If securities were acquired with a remaining maturity
of more than 60 days, their amortized cost value will be based on their value on
the sixty-first day prior to maturity. Other fixed income and debt securities,
including listed securities and securities for which price quotations are
available, will normally be valued on the basis of valuations furnished by a
pricing service. All other securities are valued at fair value as determined in
good faith by or at the direction of the Trustees.
Each investor in the Portfolio, including the Fund, may add to or reduce its
investment in the Portfolio on each day the New York Stock Exchange (the
"Exchange") is open for trading ("Portfolio Business Day") as of the close of
regular trading on the Exchange (the "Portfolio Valuation Time"). The value of
each investor's interest in the Portfolio will be determined by multiplying the
net asset value of the Portfolio by the percentage, determined on the prior
Portfolio Business Day, which represents that investor's share of the aggregate
interests in the Portfolio on such prior day. Any additions or withdrawals for
the current Portfolio Business Day will then be recorded. Each investor's
percentage of the aggregate interest in the Portfolio will then be recomputed as
a percentage equal to a fraction (i) the numerator of which is the value of such
investor's investment in the Portfolio as of the Portfolio Valuation Time on the
prior Portfolio Business Day plus or minus, as the case may be, that amount of
any additions to or withdrawals from the investor's investment in the Portfolio
on the current Portfolio Business Day and (ii) the denominator of which is the
aggregate net asset value of the Portfolio as of the Portfolio Valuation Time on
the prior Portfolio Business Day plus or minus, as the case may be, the amount
of the net additions to or withdrawals from the aggregate investment in the
Portfolio on the current Portfolio Business Day by all investors in the
Portfolio. The percentage so determined will then be applied to determine the
value of the investor's interest in the Portfolio for the current Portfolio
Business Day.
Generally, trading in the foreign securities owned by the Portfolio is
substantially completed each day at various times prior to the close of the
Exchange. The values of these securities used in determining the net asset value
of the Portfolio's share are computed as of such times. Occasionally, events
affecting the value of foreign securities may occur between such times and the
close of the Exchange which will not be reflected in the computation of the
Portfolio's net asset value (unless the Portfolio deems that such events would
materially affect its net asset value, in which case an adjustment would be made
and reflected in such computation). Foreign securities and currency held by the
Portfolio will be valued in U.S. dollars; such values will be computed by the
custodian based on foreign currency exchange rate quotations supplied by Reuters
Information Service.
INVESTMENT PERFORMANCE
Average annual total return is determined by multiplying a hypothetical
initial purchase order of $1,000 by the average annual compound rate of return
(including capital appreciation/depreciation, and dividends and distributions
paid and reinvested) for the stated period and, if necessary, annualizing the
result. The calculation assumes that all distributions are reinvested at net
asset value on the reinvestment dates during the period and either (i) the
deduction of the maximum sales charge from the initial $1,000 purchase order, or
(ii) a complete redemption of the investment and, if applicable, the deduction
of any CDSC at the end of the period. For information concerning the total
return of the Fund, see "Performance Information" in the Fund's Part II.
The Fund's total return may be compared to relevant indices, such as the
Consumer Price Index and various domestic securities indices, for example:
Standard & Poor's 400 Stock Index, Standard & Poor's 500 Stock Index, Merrill
Lynch U.S. Treasury (15-year plus) Index, Lehman Brothers Government/Corporate
Bond Index, and the Dow Jones Industrial Average. The Fund's total return and
comparisons with these indices may be used in advertisements and in information
furnished to present or prospective shareholders. The Fund's performance may
differ from that of other investors in the Portfolio, including any other
investment companies. From time to time, evaluations of the Fund's performance
or rankings of mutual funds (which include the Fund) made by independent sources
(e.g., Lipper Analytical Services, Inc., CDA/ Wiesenberger and Morningstar,
Inc.) may be used in advertisements and in information furnished to present or
prospective shareholders. Information, charts and illustrations showing the
effect of compounding interest or relating to inflation and taxes (including
their effects on the dollar and the return on stocks and other investment
vehicles) may also be included in advertisements and material furnished to
present and prospective investors.
Information used in advertisements and in materials furnished to present or
prospective shareholders may include statistics, data and performance studies
prepared by independent organizations, (e.g., Ibbotson Associates, Standard &
Poor's Ratings Group, Merrill Lynch, Pierce, Fenner & Smith, Inc., Bloomberg,
L.P., Dow Jones & Company, Inc., and The Federal Reserve Board) or included in
various publications (e.g., The Wall Street Journal, Barron's and The Decade:
Wealth of Investments in U.S. Stocks, Bonds, Bills & Inflation) reflecting the
investment performance or return achieved by various classes and types of
investments (e.g., common stocks, small company stocks, long-term corporate
bonds, long-term government bonds, intermediate-term government bonds, U.S.
Treasury bills) over various periods of time. This information may be used to
illustrate the benefits of long-term investments in common stocks. Information
about the portfolio allocation, portfolio turnover and holdings of the Portfolio
may be included in advertisements and other material furnished to present and
prospective shareholders.
Information used in advertisements and materials furnished to present and
prospective investors may include statements or illustrations relating to the
appropriateness of certain types of securities and/or mutual funds to meet
specific financial goals. Such information may address:
-- costs associated with aging parents;
-- funding a college education (including its actual and estimated cost);
-- health care expenses (including actual and projected expenses);
-- long-term disabilities (including the availability of, and coverage
provided by, disability insurance); and
-- retirement (including the availability of social security benefits, the
tax treatment of such benefits and statistics and other information
relating to maintaining a particular standard of living and outliving
existing assets).
Such information may also address different methods for saving money and the
results of such methods, as well as the benefits of investing in equity
securities. Such information may describe: the potential for growth; the
performance of equities as compared to other investment vehicles; and the value
of investing as early as possible and regularly, as well as staying invested.
The benefits of investing in equity securities by means of a mutual fund may
also be included (such benefits may include diversification, professional
management and the variety of equity mutual fund products).
Information in advertisements and materials furnished to present and
prospective investors may include profiles of different types of investors
(i.e., investors with different goals and assets) and different investment
strategies for meeting specific financial goals. Such information may provide
hypothetical illustrations which include: results of various investment
strategies; performance of an investment in the Fund over various time periods;
and results of diversifying assets among several investments with varying
performance. Information in advertisements and materials furnished to present
and prospective investors may also include quotations (including editorial
comments) and statistics concerning investing in securities, as well as
investing in particular types of securities and the performance of such
securities.
The Fund may provide information about Eaton Vance, its affiliates and other
investment advisers to the funds in the Eaton Vance Family of Funds in sales
material or advertisements provided to investors or prospective investors. Such
material or advertisements may also provide information on the use of investment
professionals by such investors.
TAXES
See "Distributions and Taxes" in the Fund's current Prospectus.
Each series of the Trust is treated as a separate entity for federal income
tax purposes. The Fund has elected to be treated, has qualified, and intends to
qualify each year as a RIC under the Code. Accordingly, the Fund intends to
satisfy certain requirements relating to sources of its income and
diversification of its assets and to distribute its net investment income and
net realized capital gains in accordance with the timing requirements imposed by
the Code, so as to avoid any federal income or excise tax to the Fund. The Fund
so qualified for its fiscal year ended August 31, 1996 (see the Notes to the
Financial Statements incorporated by reference into this Statement of Additional
Information). Because the Fund invests its assets in the Portfolio, the
Portfolio normally must satisfy the applicable source of income and
diversification requirements in order for the Fund to satisfy them. The
Portfolio will allocate at least annually among its investors, including the
Fund, the Portfolio's net investment income, net realized capital gains, and any
other items of income, gain, loss, deduction or credit. The Portfolio will make
allocations to the Fund in a manner intended to comply with the Code and
applicable regulations and will make moneys available for withdrawal at
appropriate times and in sufficient amounts to enable the Fund to satisfy the
tax distribution requirements that apply to the Fund and that must be satisfied
in order to avoid federal income and/or excise tax on the Fund. For purposes of
applying the requirements of the Code regarding qualification as a RIC, the Fund
will be deemed (i) to own its proportionate share of each of the assets of the
Portfolio and (ii) to be entitled to the gross income of the Portfolio
attributable to such share.
In order to avoid federal excise tax, the Code requires that the Fund
distribute (or be deemed to have distributed) by December 31 of each calendar
year at least 98% of its ordinary income (not including tax-exempt income) for
such year, and at least 98% of the excess of its realized capital gains over its
realized capital losses, generally computed on the basis of the one-year period
ending on October 31 of such year, after reduction by any available capital loss
carryforwards, and 100% of any income from the prior year (as previously
computed) that was not paid out during such year and on which the Fund paid no
federal income tax. Under current law, provided 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.
Certain foreign exchange gains and losses realized by the Portfolio in
connection with investments in foreign securities and forward contracts may be
treated as ordinary income and losses under special tax rules. Certain forward
contracts of the Portfolio may be required to be marked to market (i.e., treated
as if closed out) on the last day of each taxable year, and any gain or loss
realized with respect to these contracts generally will be treated as ordinary
income or loss. Certain options and futures contracts are also subject to these
mark to market rules, except that gains or losses on these contracts, in
connection with a marking to market or an actual disposition, will generally be
treated as 60% long-term and 40% short-term capital gain or loss. Positions of
the Portfolio in securities and offsetting options, futures or forward contracts
may be treated as "straddles", which are subject to tax rules that may cause
deferral of Portfolio losses, adjustments in the holding periods of Portfolio
securities, and other changes in the short-term or long-term characterization of
capital gains and losses, the effect of which may be to change the amount,
timing and character of the Fund's distributions to shareholders. The Portfolio
intends to limit its options and futures transactions and its activities in
foreign currency and related forward contracts to the extent necessary to
preserve the Fund's ability to qualify as a RIC.
The Portfolio may be subject to foreign withholding or other foreign taxes
with respect to income (possibly including, in some cases, capital gains) on
certain foreign securities. These taxes may be reduced or eliminated under the
terms of an applicable U.S. income tax treaty. As it is not expected that more
than 50% of the value of the total assets of the Fund, taking into account its
allocable share of the Portfolio's total assets, at the close of any taxable
year of the Fund will consist of securities issued by foreign corporations, the
Fund will not be eligible to pass through to shareholders their proportionate
share of any foreign taxes paid by the Portfolio and allocated to the Fund, with
the result that shareholders will not include in income, and will not be
entitled to take any foreign tax credits or deductions for, foreign taxes paid
by the Portfolio and allocated to the Fund. Certain uses of foreign currency and
investments by the Portfolio in the stock of certain "passive foreign investment
companies" may be limited or a tax election may be made, if available, in order
to preserve the Fund's qualification as a RIC and/or to avoid imposition of a
tax on the Fund.
A portion of distributions made by the Fund which are derived from dividends
received by the Portfolio from domestic corporations and allocated to the Fund
may qualify for the dividends-received deduction for corporations. The
dividends-received deduction for corporate shareholders is reduced to the extent
the shares of the Fund with respect to which the dividends are received are
treated as debt-financed under the federal income tax law and is eliminated if
the shares are deemed to have been held for less than a minimum period,
generally 46 days. Receipt of certain distributions qualifying for the deduction
may result in reduction of the tax basis of the corporate shareholder's shares
or increase liability, if any, for the corporate alternative minimum tax.
Distributions of the excess of net long-term capital gain over net
short-term capital loss (including any capital losses carried forward from prior
years) earned by the Portfolio and allocated to the Fund are taxable to
shareholders of the Fund as long-term capital gains, whether received in cash or
in additional shares and regardless of the length of time their shares have been
held. Certain distributions declared in October, November or December and paid
the following January will be taxed to shareholders as if received on December
31 of the year in which they are declared.
Any loss realized upon the redemption or exchange of shares of the Fund with
a tax holding period of 6 months or less will be treated as a long-term capital
loss to the extent of any distribution of net long-term capital gains with
respect to such shares. In addition, all or a portion of a loss realized on a
redemption or other disposition of Fund shares may be disallowed under "wash
sale" rules if other Fund shares are acquired (whether through reinvestment of
dividends or otherwise) within a period beginning 30 days before and ending 30
days after the date of such redemption or other disposition. Any disallowed loss
will result in an adjustment to the shareholder's tax basis in some or all of
the other shares acquired.
Special tax rules apply to Individual Retirement Accounts ("IRAs") and other
retirement plans and persons investing through IRAs or such plans should consult
their tax advisers for more information.
Amounts paid by the Fund to individuals and certain other shareholders who
have not provided the Fund with their correct taxpayer identification number and
certain certifications required by the Internal Revenue Service (the "IRS"), as
well as shareholders with respect to whom the Fund has received notification
from the IRS or a broker, may be subject to "backup" withholding of federal
income tax 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, foreign corporations and certain other
foreign entities generally will be subject to a U.S. withholding tax at a rate
of 30% on the Fund's distributions from its ordinary income and the excess of
its net short-term capital gain over its net long-term capital loss, unless the
tax is reduced or eliminated by an applicable tax treaty. Distributions from the
excess of the Fund's net long-term capital gain over its net short-term capital
loss received by such shareholders and any gain from the sale or other
disposition of shares of the Fund generally will not be subject to U.S. federal
income taxation, provided that non-resident alien status has been certified by
the shareholder. Different U.S. tax consequences may result if the shareholder
is engaged in a trade or business in the United States, is present in the United
States for a sufficient period of time during a taxable year to be treated as a
U.S. resident, or fails to provide any required certifications regarding status
as a non-resident alien investor. Foreign shareholders should consult their tax
advisers regarding the U.S. and foreign tax consequences of an investment in the
Fund.
The foregoing discussion does not address the special tax rules applicable
to certain classes of investors, such as IRAs and other retirement plans,
tax-exempt entities, insurance companies and financial institutions.
Shareholders should consult their own tax advisers with respect to special tax
rules that may apply in their particular situations, as well as the state, local
or foreign tax consequences of investing in the Fund.
PORTFOLIO SECURITY TRANSACTIONS
Decisions concerning the execution of portfolio security transactions of the
Portfolio, including the selection of the market and the broker-dealer firm, are
made by BMR. BMR is also responsible for the execution of transactions for all
other accounts managed by it.
BMR places the security transactions of the Portfolio and of all other
accounts managed by it for execution with many broker-dealer firms. BMR uses its
best efforts to obtain execution of portfolio transactions at prices which are
advantageous to the Portfolio and (when a disclosed commission is being charged)
at reasonably competitive commission rates. In seeking such execution, BMR will
use its best judgment in evaluating the terms of a transaction, and will give
consideration to various relevant factors, including without limitation the size
and type of the transaction, the general execution and operational capabilities
of the broker-dealer, the nature and character of the market for the security,
the confidentiality, speed and certainty of effective execution required for the
transaction, the reputation, reliability, experience and financial condition of
the broker-dealer, the value and quality of services rendered by the
broker-dealer in other transactions, and the reasonableness of the commission,
if any. Transactions on United States stock exchanges and other agency
transactions involve the payment by the Portfolio of negotiated brokerage
commissions. Such commissions vary among different broker-dealer firms, and a
particular broker-dealer may charge different commissions according to such
factors as the difficulty and size of the transaction and the volume of business
done with such broker-dealer. Transactions in foreign securities usually involve
the payment of fixed brokerage commissions, which are generally higher than
those in the United States. There is generally no stated commission in the case
of securities traded in the over-the-counter markets, but the price paid or
received by the Portfolio usually includes an undisclosed dealer markup or
markdown. In an underwritten offering the price paid by the Portfolio often
includes a disclosed fixed commission or discount retained by the underwriter or
dealer. Although commissions paid on portfolio security transactions will, in
the judgment of BMR, be reasonable in relation to the value of the services
provided, commissions exceeding those which another firm might charge may be
paid to broker-dealers who were selected to execute transactions on behalf of
the Portfolio and BMR's other clients in part for providing brokerage and
research services to BMR.
As authorized in Section 28(e) of the Securities Exchange Act of 1934, a
broker or dealer who executes a portfolio transaction on behalf of the Portfolio
may receive a commission which is in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction if BMR
determines in good faith that such commission was reasonable in relation to the
value of the brokerage and research services provided. This determination may be
made on the basis of either that particular transaction or on the basis of the
overall responsibilities which BMR and its affiliates have for accounts over
which they exercise investment discretion. In making any such determination, BMR
will not attempt to place a specific dollar value on the brokerage and research
services provided or to determine what portion of the commission should be
related to such services. Brokerage and research services may include advice as
to the value of securities, the advisability of investing in, purchasing, or
selling securities, and the availability of securities or purchasers or sellers
of securities; furnishing analyses and reports concerning issuers, industries,
securities, economic factors and trends, portfolio strategy and the performance
of accounts; and effecting securities transactions and performing functions
incidental thereto (such as clearance and settlement); and the "Research
Services" referred to in the next paragraph.
It is a common practice in the investment advisory industry for the advisers
of investment companies, institutions and other investors to receive research,
statistical and quotation services, data, information and other services,
products and materials which assist such advisers in the performance of their
investment responsibilities ("Research Services") from broker-dealer firms which
execute portfolio transactions for the clients of such advisers and from third
parties with which these broker-dealers have arrangements. Consistent with this
practice, BMR receives Research Services from many broker-dealer firms with
which BMR places the Portfolio transactions and from third parties with which
these broker-dealers have arrangements. These Research Services include such
matters as general economic and market reviews, industry and company reviews,
evaluations of securities and portfolio strategies and transactions,
recommendations as to the purchase and sale of securities and other portfolio
transactions, financial, industry and trade publications, news and information
services, pricing and quotation equipment and services, and research oriented
computer hardware, software, data bases and services. Any particular Research
Service obtained through a broker-dealer may be used by BMR in connection with
client accounts other than those accounts which pay commissions to such
broker-dealer. Any such Research Service may be broadly useful and of value to
BMR in rendering investment advisory services to all or a significant portion of
its clients, or may be relevant and useful for the management of only one
client's account or of a few clients' accounts, or may be useful for the
management of merely a segment of certain clients' accounts, regardless of
whether any such account or accounts paid commissions to the broker-dealer
through which such Research Service was obtained. The advisory fee paid by the
Portfolio is not reduced because BMR receives such Research Services. BMR
evaluates the nature and quality of the various Research Services obtained
through broker-dealer firms and attempts to allocate sufficient commissions to
such firms to ensure the continued receipt of Research Services which BMR
believes are useful or of value to it in rendering investment advisory services
to its clients.
Subject to the requirement that BMR shall use its best efforts to seek to
execute Portfolio security transactions at advantageous prices and at reasonably
competitive commission rates or spreads, BMR is authorized to consider as a
factor in the selection of any broker-dealer firm with whom Portfolio orders may
be placed the fact that such firm has sold or is selling shares of the Fund or
of other investment companies sponsored by BMR or Eaton Vance. This policy is
not inconsistent with a rule of the NASD, which rule provides that no firm which
is a member of the NASD shall favor or disfavor the distribution of shares of
any particular investment company or group of investment companies on the basis
of brokerage commissions received or expected by such firm from any source.
Securities considered as investments for the Portfolio may also be
appropriate for other investment accounts managed by BMR or its affiliates. BMR
will attempt to allocate in a manner it deems equitable portfolio security
transactions among the Portfolio and the portfolios of its other investment
accounts whenever decisions are made to purchase or sell securities by the
Portfolio and one or more of such other accounts simultaneously. In making such
allocations, the main factors to be considered are the respective investment
objectives of the Portfolio and such other accounts, the relative size of
portfolio holdings of the same or comparable securities, the availability of
cash for investment by the Portfolio and such accounts, the size of investment
commitments generally held by the Portfolio and such accounts and the opinions
of the persons responsible for recommending investments to the Portfolio and
such accounts. However, there may be instances when the Portfolio will not
participate in a securities transaction that is allocated among other accounts.
While there procedures could have a detrimental effect on the price or amount of
the securities available to the Portfolio from time to time, it is the opinion
of the Trustees of the Trust and the Portfolio that the benefits available from
the BMR organization outweigh any disadvantage that may arise from exposure to
simultaneous transactions.
For the fiscal year ended August 31, 1996, the Portfolio paid brokerage
commissions of $231,498 on portfolio security transactions, of which
approximately $203,868 was paid in respect of portfolio security transactions
aggregating approximately $143,902,804 to firms which provided some Research
Services to Eaton Vance. For the fiscal year ended August 31, 1995, the
Portfolio paid brokerage commissions of $272,785 on portfolio security
transactions, of which approximately $221,260 was paid in respect of portfolio
security transactions aggregating approximately $140,204,754 to firms which
provided some Research Services to Eaton Vance. For the period from the
Portfolio's start of business, August 2, 1994 to the fiscal year ended August
31, 1994, the Portfolio paid brokerage commissions of $33,546 on portfolio
security transactions, of which approximately $27,546 was paid in respect of
portfolio security transactions aggregating approximately $13,421,460 to firms
which provided some Research Services to Eaton Vance (although many of such
firms may have been selected in any particular transaction primarily because of
their execution capabilities).
OTHER INFORMATION
On August 18, 1992, the Trust changed its name from Eaton Vance Growth Fund
to Eaton Vance Growth Trust. The Trust is a Massachusetts business trust
established in 1989 as the successor to Eaton Vance Growth Fund, Inc., a
Massachusetts corporation. Eaton Vance, pursuant to its agreement with the
Trust, controls the use of the words "Eaton Vance" or "EV" in the Fund's name
and may use the words "Eaton Vance" and "EV" in other connections and for other
purposes.
The Declaration of Trust may be amended by the Trustees when authorized by
vote of a majority of the outstanding voting securities of the Trust affected by
the amendment. The Trustees may also amend the Declaration of Trust without the
vote or consent of shareholders to change the name of the Trust or to make such
other changes as do not have a materially adverse effect on the rights or
interests of shareholders or if they deem it necessary to conform the
Declaration to the requirements of applicable federal laws or regulations. The
Trust's By-laws provide that the Fund will indemnify its Trustees and officers
against liabilities and expenses incurred in connection with any litigation or
proceeding in which they may be involved because of their offices with the
Trust. However, no indemnification will be provided to any Trustee or officer
for any liability to the Trust or its shareholders by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.
Under Massachusetts law, if certain conditions prevail, shareholders of a
Massachusetts business trust (such as the Trust) could be deemed to have
personal liability for the obligations of the Trust. Numerous investment
companies registered under the 1940 Act have been formed as Massachusetts
business trusts, and management is not aware of an instance where such liability
has been imposed. The Trust's Declaration of Trust contains an express
disclaimer of liability on the part of the Fund shareholders and the Trust's
By-laws provide that the Trust shall assume the defense on behalf of any Fund
shareholders. Moreover, the Trust's By-laws also provide for indemnification out
of the property of the Fund of any shareholder held personally liable solely by
reason of being or having been a shareholder for all loss or expense arising
from such liability. The assets of the Fund are readily marketable and will
ordinarily substantially exceed its liabilities. In light of the nature of the
Fund's business and the nature of its assets, management believes that the
possibility of the Fund's liability exceeding its assets, and therefore the
shareholder's risk of personal liability, is extremely remote.
As permitted by Massachusetts law, there will normally be no meetings of
shareholders for the purpose of electing Trustees unless and until such time as
less than a majority of the Trustees of the Trust holding office have been
elected by shareholders. In such an event the Trustees then in office will call
a shareholders' meeting for the election of Trustees. Except for the foregoing
circumstances and unless removed by action of the shareholders in accordance
with the Trust's By-laws, the Trustees shall continue to hold office and may
appoint successor Trustees.
The Trust's By-laws provide that no person shall serve as a Trustee if
shareholders holding two-thirds of the outstanding shares have removed him from
that office either by a written declaration filed with the Trust's custodian or
by votes cast at a meeting called for that purpose. The By-laws further provide
that under certain circumstances the shareholders may call a meeting to remove a
Trustee and that the Trust is required to provide assistance in communicating
with shareholders about such a meeting.
In accordance with the Declaration of Trust of the Portfolio, there will
normally be no meetings of the investors for the purpose of electing Trustees
unless and until such time as less than a majority of the Trustees holding
office have been elected by investors. In such an event the Trustees of the
Portfolio then in office will call an investors' meeting for the election of
Trustees. Except for the foregoing circumstances and unless removed by action of
the investors in accordance with the Portfolio's Declaration of Trust, the
Trustees shall continue to hold office and may appoint successor Trustees.
The Declaration of Trust of the Portfolio provides that no person shall
serve as a Trustee if investors holding two-thirds of the outstanding interest
have removed him from that office either by a written declaration filed with the
Portfolio's custodian or by votes cast at a meeting called for that purpose. The
Declaration of Trust further provides that under certain circumstances the
investors may call a meeting to remove a Trustee and that the Portfolio is
required to provide assistance in communicating with investors about such a
meeting.
The Portfolio's Declaration of Trust provides that the Portfolio will
terminate 120 days after the complete withdrawal of the Fund or any other
investor in the Portfolio, unless either the remaining investors, by unanimous
vote at a meeting of such investors, or a majority of the Trustees of the
Portfolio, by written instrument consented to by all investors, agree to
continue the business of the Portfolio. This provision is consistent with
treatment of the Portfolio as a partnership for federal income tax purposes.
The right to redeem shares of the Fund can be suspended and the payment of
the redemption price deferred when the Exchange is closed (other than for
customary weekend and holiday closings), during periods when trading on the
Exchange is restricted as determined by the Commission, or during any emergency
as determined by the Commission which makes it impracticable for the Portfolio
to dispose of its securities or value its assets, or during any other period
permitted by order of the Commission for the protection of investors.
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P., One Post Office Square, Boston, Massachusetts, are
the independent accountants for the Fund and the Portfolio, providing audit
services, tax return preparation, and assistance and consultation with respect
to the preparation of filings with the Commission.
FINANCIAL STATEMENTS
The financial statements of the Fund and the Portfolio, which are included
in the Fund's Annual Report to Shareholders, are incorporated by reference into
this SAI and have been so incorporated in reliance on the report of Coopers &
Lybrand L.L.P., independent certified public accountants, as experts in
accounting and auditing. A copy of the Annual Report accompanies this SAI.
Registrant incorporates by reference the audited financial information for
the Funds and the Portfolio listed below for the fiscal year ended August 31,
1996 as previously filed electronically with the Commission:
EV Classic Growth Fund
Growth Portfolio
(Accession No. 0000950156-96-000844)
EV Marathon Growth Fund
Growth Portfolio
(Accession No. 0000950156-96-000843)
EV Traditional Growth Fund
Growth Portfolio
(Accession No. 0000950156-96-000841)
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
PART II
This Part II provides information about EV CLASSIC GROWTH FUND. The Fund
became a series of the Trust on July 27, 1994.
FEES AND EXPENSES
ADMINISTRATOR
As stated under "Investment Adviser and Administrator" in Part I of this
SAI, the Administrator currently receives no compensation for providing
administrative services to the Fund. For the fiscal year ended August 31, 1996
and for the period from the start of business, November 7, 1994, to the fiscal
year ended August 31, 1995, $45,088 and $44,320, respectively, of the Fund's
operating expenses were allocated to the Administrator.
DISTRIBUTION PLAN
During the fiscal year ended August 31, 1996, the Principal Underwriter paid
to Authorized Firms sales commissions of $4,672 on sales of Fund shares. During
the same period, the Fund paid sales commission payments under the Plan to the
Principal Underwriter aggregating $6,524 and the Principal Underwriter received
approximately $262 in CDSCs imposed on early redeeming shareholders. These sales
commissions and CDSCs paid to the Principal Underwriter reduced Uncovered
Distribution Charges under the Plan. As at August 31, 1996, the outstanding
Uncovered Distribution Charges of the Principal Underwriter calculated under the
Plan amounted to approximately $134,817 (which amount was equivalent to 13.9% of
the Fund's net assets on such date). During the fiscal year ended August 31,
1996, the Fund paid or accrued service fees under the Plan aggregating $2,175,
of which $548 was paid to Authorized Firms and the balance of which was retained
by the Principal Underwriter.
PRINCIPAL UNDERWRITER
The Fund has authorized the Principal Underwriter to act as its agent in
repurchasing shares at the rate of $2.50 for each repurchase transaction handled
by the Principal Underwriter. The Principal Underwriter estimates that the
expenses incurred by it in acting as repurchase agent for the Fund will exceed
the amounts paid therefor by the Fund. For the fiscal year ended August 31,
1996, the Fund paid the Principal Underwriter $10.00 for repurchase transactions
handled by the Principal Underwriter.
TRUSTEES
The fees and expenses of those Trustees of the Trust and of the Portfolio
who are not members of the Eaton Vance organization (the noninterested Trustees)
are paid by the Fund (and the other series of the Trust) and the Portfolio,
respectively. (The Trustees of the Trust and the Portfolio who are members of
the Eaton Vance organization receive no compensation from the Fund or the
Portfolio.) During the fiscal year ended August 31, 1996, the noninterested
Trustees of the Trust and the Portfolio earned the following compensation in
their capacities as Trustees from the Fund and the Portfolio, and, for the year
ended September 30, 1996, earned the following compensation in their capacities
as Trustees of the funds in the Eaton Vance fund complex (1):
AGGREGATE AGGREGATE TOTAL COMPENSATION
COMPENSATION COMPENSATION FROM TRUST AND
NAME FROM FUND FROM PORTFOLIO FUND COMPLEX
- ---- ------------ -------------- ------------------
Donald R. Dwight .......... -- 0 -- $1,542(2) $142,500(4)
Samuel L. Hayes, III ...... -- 0 -- 1,687(3) 153,750(5)
Norton H. Reamer .......... -- 0 -- 1,645 142,500
John L. Thorndike ......... -- 0 -- 1,729 147,500
Jack L. Treynor ........... -- 0 -- 1,683 147,500
- ----------
(1) The Eaton Vance fund complex consists of 228 registered investment companies
or series thereof.
(2) Includes $578 of deferred compensation.
(3) Includes $570 of deferred compensation.
(4) Includes $42,500 of deferred compensation.
(5) Includes $37,500 of deferred compensation.
PRINCIPAL UNDERWRITER
Under the Distribution Agreement the Principal Underwriter acts as principal
in selling shares of the Fund. The expenses of printing copies of prospectuses
used to offer shares to Authorized Firms or investors and other selling
literature and of advertising is borne by the Principal Underwriter. The fees
and expenses of qualifying and registering and maintaining qualifications and
registrations of the Fund and its shares under federal and state securities laws
is borne by the Fund. In addition, the Fund makes payments to the Principal
Underwriter pursuant to its Distribution Plan as described in the Fund's current
Prospectus; the provisions of the plan relating to such payments are included in
the Distribution Agreement. The Distribution Agreement is renewable annually by
the Trust's Board of Trustees (including a majority of its Trustees who are not
interested persons of the Trust and who have no direct or indirect financial
interest in the operation of the Fund's Distribution Plan or the Distribution
Agreement), may be terminated on sixty days' notice either by such Trustees or
by vote of a majority of the outstanding voting securities of the Fund or on six
months' notice by the Principal Underwriter and is automatically terminated upon
assignment. The Principal Underwriter distributes Fund shares on a "best
efforts" basis under which it is required to take and pay for only such shares
as may be sold.
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 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 CDSCs and will make no
payments to the Principal Underwriter in respect of any day on which there are
no outstanding Uncovered Distribution Charges of the Principal Underwriter.
CDSCs and accrued amounts will be paid by the Fund to the Principal Underwriter
whenever there exist Uncovered Distribution Charges under the Fund's 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 CDSCs 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 CDSCs 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 CDSCs theretofore
paid or payable to the Principal Underwriter will be subtracted from such
distribution charges; if the result of such subtraction is positive, a
distribution fee (computed at 1% over the prime rate then reported in The Wall
Street Journal) will be computed on such amount and added thereto, with the
resulting sum constituting the amount of outstanding Uncovered Distribution
Charges with respect to such day. The amount of outstanding Uncovered
Distribution Charges of the Principal Underwriter calculated on any day does not
constitute a liability recorded on the financial statements of the Fund.
The amount of Uncovered Distribution Charges of the Principal Underwriter at
any particular time depends upon various changing factors, including the level
and timing of sales of 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 CDSC will be imposed, the level and timing of redemptions of Fund shares upon
which no CDSC will be imposed (including redemptions involving exchanges of Fund
shares for shares of another fund in the Eaton Vance Classic Group of Funds
which result in a reduction of Uncovered Distribution Charges), changes in the
level of the net assets of the Fund, and changes in the interest rate used in
the calculation of the distribution fee under the Plan. (For shares sold prior
to January 30, 1995, Plan payments are as follows: the Principal Underwriter
pays monthly sales commissions and service fee payments to Authorized Firms
equivalent to approximately .75% and .25%, respectively, annualized of the
assets maintained in the Fund by their customers beginning at the time of sale.
No payments were made at the time of sale and there is no CDSC.)
As currently implemented by the Trustees, the Plan authorizes payments of
sales commissions, distribution fees and service fees to the Principal
Underwriter which may by equivalent, on an aggregate basis during any fiscal
year of the Fund, to 1% of the Fund's average daily net assets for such year.
For the sales commission and service fee payments made by the Fund and the
outstanding uncovered distribution charges of the Principal Underwriter, see
"Fees and Expenses -- Distribution Plan" in this Part II. The Fund believes that
the combined rate of all these payments may be higher than the rate of payments
made under distribution plans adopted by other investment companies pursuant to
Rule 12b-1. Although the Principal Underwriter will use its own funds (which may
be borrowed from banks) to pay sales commissions and service fees at the time of
sale, it is anticipated that the Eaton Vance organization will profit by reason
of the operation of the Plan through an increase in the Fund's assets (thereby
increasing the advisory fee payable to BMR by the Portfolio) resulting from sale
of Fund shares and through the amounts paid to the Principal Underwriter,
including CDSCs, pursuant to the Plan. The Eaton Vance organization may be
considered to have realized a profit under the Plan if at any point in time the
aggregate amounts theretofore received by the Principal Underwriter under the
Plan and from CDSCs 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 Plan provides that it shall continue in effect for so long as such
continuance is approved at least annually by the vote of both a majority of (i)
the Trustees of the Trust who are not interested persons of the Trust and who
have no direct or indirect financial interest in the operation of the Plan or
any agreements related to the Plan (the "Rule 12b-1 Trustees") and (ii) all of
the Trustees then in office, and the Distribution Agreement contains a similar
provision. The Plan and Distribution Agreement may be terminated at any time by
vote of a majority of the Rule 12b-1 Trustees or by vote of a majority of the
outstanding voting securities of the Fund. The provisions of the Plan relating
to payments of sales commissions and distribution fees to the Principal
Underwriter are also included in the Distribution Agreement between the Trust on
behalf of the Fund and the Principal Underwriter. Pursuant to Rule 12b-1, the
Plan has been approved by the Fund's initial sole shareholder (Eaton Vance) and
by the Board of Trustees of the Trust as required by Rule 12b-1. Under the Plan
the President or a Vice President of the Trust shall provide to the Trustees for
their review, and the Trustees shall review at least quarterly, a written report
of the amount expended under the Plan and the purposes for which such
expenditures were made. The Plan may not be amended to increase materially the
payments described therein without approval of the shareholders of the Fund, and
all material amendments of the Plan must also be approved by the Trustees as
required by Rule 12b-1. So long as the Plan is in effect, the selection and
nomination of Trustees who are not interested persons of the Trust shall be
committed to the discretion of the Trustees who are not such interested persons.
The Trustees of the Trust believe that the Plan will be a significant factor
in the expected growth of the Fund's assets, and will result in increased
investment flexibility and advantages which will benefit the Fund and its
shareholders. Payments for sales commissions and distribution fees made to the
Principal Underwriter under the Plan will compensate the Principal Underwriter
for its services and expenses in distributing shares of the Fund. Service fee
payments made to the Principal Underwriter and Authorized Firms under the Plan
provide incentives to provide continuing personal services to investors and the
maintenance of shareholder accounts. By providing incentives to the Principal
Underwriter and Authorized Firms, the Plan is expected to result in the
maintenance of, and possible future growth in, the assets of the Fund. Based on
the foregoing and other relevant factors, the Trustees of the Trust have
determined that in their judgment there is a reasonable likelihood that the Plan
will benefit the Fund and its shareholders.
PERFORMANCE INFORMATION
The table below indicates the cumulative and average annual total return on
a hypothetical investment of $1,000 in the Fund covering the 1, 5 and 10 year
periods ended August 31, 1996. The total return for the period prior to the
Fund's commencement of operations on November 7, 1994 reflects the Portfolio's
total return (or that of its predecessor) adjusted to reflect any applicable
Fund CDSC. The total return for such prior period has not been adjusted to
reflect the Fund's distribution fees and certain other expenses. If such an
adjustment were made, the performance would be lower.
<TABLE>
<CAPTION>
VALUE OF A $1,000 INVESTMENT
VALUE BEFORE VALUE AFTER TOTAL RETURN BEFORE DEDUCTING TOTAL RETURN AFTER DEDUCTING
DEDUCTING THE DEDUCTING THE THE CDSC THE CDSC*
INVESTMENT INVESTMENT CDSC ON CDSC* ON ------------------------------ ------------------------------
PERIOD DATE 8/31/96 8/31/96 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ---------------- ------------- ---------------- ---------------- --------------- ------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
10 Years
Ended
08/31/96 08/31/86 $2,551.79 $2,551.79 155.18% 9.82% 155.18% 9.82%
5 Years
Ended
08/31/96 08/31/91 $1,473.28 $1,473.28 47.33% 8.06% 47.33% 8.06%
1 Year
Ended
08/31/96** 08/31/95 $1,116.84 $1,106.84 11.68% 11.68% 11.68% 11.68%
Past performance is not indicative of future results. Investment return and principal value will fluctuate; shares, when
redeemed, may be worth more or less than their original cost.
<FN>
- ----------
*No CDSC is imposed on certain redemptions. See the Fund's current Prospectus.
**If a portion of the expenses related to the operation of the Fund had not been allocated to Eaton Vance, the Fund would have had
lower returns.
</FN>
</TABLE>
<PAGE>
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of November 30, 1996, the Trustees and officers of the Trust, as a group,
owned in the aggregate less than 1% of the outstanding shares of the Fund. As of
November 30, 1996, Eaton Vance owned 13.38% of the outstanding shares of the
Fund; Eaton Vance is a Massachusetts business trust and a wholly-owned
subsidiary of EVC. In addition, the following shareholders owned beneficially
and of record the percentages of outstanding shares of the Fund indicated after
their names: Frontier Trust Co., FBO Guthy Renker Corporation, 401(k) Savings &
Retirement Plan, c/o The Barclay Group, Ambler, PA (17.64%); Frontier Trust Co.,
FBO Alliance Systems, Inc., 401(k) Savings and Retirement Plan, c/o The Barclay
Group, Ambler, PA (13.26%); Frontier Trust Co., FBO Mindich Enterprise, 401(k)
Savings & Retirement Plan, c/o The Barclay Group, Ambler, PA (11.06%); and
Painewebber FBO Marshall E. Bein, M.D., Weehawken, NJ (6.64%). To the knowledge
of the Trust, no other person owned of record or beneficially 5% or more of the
Fund's outstanding shares as of such date.
<PAGE>
[logo]
EV CLASSIC GROWTH FUND
- --------------------------------------------------------------------------------
STATEMENT OF
ADDITIONAL INFORMATION
JANUARY 1, 1997
EV CLASSIC
GROWTH FUND
24 FEDERAL STREET
BOSTON, MA 02110
- --------------------------------------------------------------------------------
INVESTMENT ADVISER OF GROWTH PORTFOLIO
Boston Management and Research, 24 Federal Street, Boston, MA 02110
FUND ADMINISTRATOR
Eaton Vance Management, 24 Federal Street, Boston, MA 02110
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc., 24 Federal Street, Boston, MA 02110
(800) 225-6265
CUSTODIAN
Investors Bank & Trust Company, 89 South Street, Boston, MA 02111
TRANSFER AGENT
First Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123
(800) 262-1122
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand LLP, One Post Office Square, Boston, MA 02109
C-CFSAI
<PAGE>
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
STATEMENT OF
ADDITIONAL INFORMATION
January 1, 1997
EV MARATHON GROWTH FUND
24 Federal Street
Boston, Massachusetts 02110
(800) 225-6265
This Statement of Additional Information consists of two parts. Part I
provides information about EV Marathon Growth Fund (the "Fund"), Growth
Portfolio (the "Portfolio") and certain other series of Eaton Vance Growth
Trust (the "Trust"). The Fund's Part II (the "Part II") provides information
solely about the Fund. Where appropriate, Part I includes cross-references to
the relevant sections of Part II that provide additional Fund-specific
information. This Statement of Additional Information is sometimes referred to
herein as the "SAI".
- ------------------------------------------------------------------------------
TABLE OF CONTENTS
PART I
Additional Information about Investment Policies ................... 1
Investment Restrictions ............................................ 3
Trustees and Officers .............................................. 4
Investment Adviser and Administrator ............................... 6
Custodian .......................................................... 9
Service for Withdrawal ............................................. 9
Determination of Net Asset Value ................................... 9
Investment Performance ............................................. 10
Taxes .............................................................. 11
Portfolio Security Transactions .................................... 13
Other Information .................................................. 15
Independent Accountants ............................................ 16
Financial Statements ............................................... 16
PART II
Fees and Expenses .................................................. a-1
Principal Underwriter .............................................. a-2
Distribution Plan .................................................. a-2
Performance Information ............................................ a-4
Control Persons and Principal Holders of Securities ................ 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 CURRENT PROSPECTUS OF EV MARATHON GROWTH FUND DATED JANUARY
1, 1997, AS SUPPLEMENTED FROM TIME TO TIME, WHICH IS INCORPORATED HEREIN BY
REFERENCE. THIS STATEMENT OF ADDITIONAL INFORMATION SHOULD BE READ IN
CONJUNCTION WITH SUCH PROSPECTUS, A COPY OF WHICH MAY BE OBTAINED WITHOUT CHARGE
BY CONTACTING EATON VANCE DISTRIBUTORS, INC. (THE "PRINCIPAL UNDERWRITER") (SEE
BACK COVER FOR ADDRESS AND PHONE NUMBER).
FOR EDGAR FILING PURPOSES ONLY: REGISTRANT INCORPORATES BY REFERENCE FOR EV
MARATHON GROWTH FUND THE PART I FOUND IN THE STATEMENT OF ADDITIONAL INFORMATION
OF EV CLASSIC GROWTH FUND CONTAINED IN THIS AMENDMENT.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
PART II
This Part II provides information about EV MARATHON GROWTH FUND. The Fund
became a series of the Trust on July 27, 1994.
FEES AND EXPENSES
ADMINISTRATOR
As stated under "Investment Adviser and Administrator" in Part I of this
Statement of Additional Information, the Administrator currently receives no
compensation for providing administrative services to the Fund. For the fiscal
year ended August 31, 1996 and for the period from the start of business,
September 13, 1994, to the fiscal year ended August 31, 1995, $65,405 and
$46,134, respectively, of the Fund's operating expenses were allocated to the
Administrator.
DISTRIBUTION PLAN
During the fiscal year ended August 31, 1996, the Principal Underwriter paid
to Authorized Firms sales commissions of $27,085 on sales of Fund shares. During
the same period, the Fund made sales commission and distribution fee payments
under the Plan to the Principal Underwriter aggregating $36,379 and the
Principal Underwriter received approximately $22,219 in CDSCs imposed on early
redeeming shareholders. These sales commissions and CDSCs paid to the Principal
Underwriter reduced Uncovered Distribution Charges. As at August 31, 1996, the
outstanding Uncovered Distribution Charges of the Principal Underwriter
calculated under the Plan amounted to approximately $172,156 (which amount was
equivalent to 2.3% of the Fund's net assets on such date). During the fiscal
year ended August 31, 1996, the Fund paid or accrued service fee payments under
the Plan aggregating $3,196, of which $3,126 was paid or payable to Authorized
Firms and the balance of which was retained by the Principal Underwriter.
PRINCIPAL UNDERWRITER
The Fund has authorized the Principal Underwriter to act as its agent in
repurchasing shares at the rate of $2.50 for each repurchase transaction handled
by the Principal Underwriter. The Principal Underwriter estimates that the
expenses incurred by it in acting as repurchase agent for the Fund will exceed
the amounts paid therefor by the Fund. For the fiscal year ended August 31,
1996, the Fund paid the Principal Underwriter $136.00 for repurchase
transactions handled.
TRUSTEES
The fees and expenses of those Trustees of the Trust and of the Portfolio
who are not members of the Eaton Vance organization (the noninterested Trustees)
are paid by the Fund (and the other series of the Trust) and the Portfolio,
respectively. (The Trustees of the Trust and the Portfolio who are members of
the Eaton Vance organization receive no compensation from the Fund or the
Portfolio.) During the fiscal year ended August 31, 1996, the noninterested
Trustees of the Trust and the Portfolio earned the following compensation in
their capacities as Trustees from the Fund and the Portfolio, and, for the year
ended September 30, 1996, earned the following compensation in their capacities
as Trustees of the funds in the Eaton Vance fund complex (1):
AGGREGATE AGGREGATE TOTAL COMPENSATION
COMPENSATION COMPENSATION FROM TRUST AND
NAME FROM FUND FROM PORTFOLIO FUND COMPLEX
- ---- ------------ -------------- ------------------
Donald R. Dwight .......... $-0- $1,542(2) $142,500(4)
Samuel L. Hayes, III ...... -0- 1,687(3) 153,750(5)
Norton H. Reamer .......... -0- 1,645 142,500
John L. Thorndike ......... -0- 1,729 147,500
Jack L. Treynor ........... -0- 1,683 147,500
- ----------
(1) The Eaton Vance fund complex consists of 228 registered investment companies
or series thereof.
(2) Includes $578 of deferred compensation.
(3) Includes $570 of deferred compensation.
(4) Includes $42,500 of deferred compensation.
(5) Includes $37,500 of deferred compensation.
PRINCIPAL UNDERWRITER
Under the Distribution Agreement the Principal Underwriter acts as principal
in selling shares of the Fund. The expenses of printing copies of prospectuses
used to offer shares to Authorized Firms or investors and other selling
literature and of advertising is borne by the Principal Underwriter. The fees
and expenses of qualifying and registering and maintaining qualifications and
registrations of the Fund and its shares under federal and state securities laws
is borne by the Fund. In addition, the Fund makes payments to the Principal
Underwriter pursuant to its Distribution Plan as described in the Fund's current
Prospectus; the provisions of the plan relating to such payments are included in
the Distribution Agreement. The Distribution Agreement is renewable annually by
the Trust's Board of Trustees (including a majority of its Trustees who are not
interested persons of the Trust and who have no direct or indirect financial
interest in the operation of the Fund's Distribution Plan or the Distribution
Agreement), may be terminated on sixty days' notice either by such Trustees or
by vote of a majority of the outstanding voting securities of the Fund or on six
months' notice by the Principal Underwriter and is automatically terminated upon
assignment. The Principal Underwriter distributes Fund shares on a "best
efforts" basis under which it is required to take and pay for only such shares
as may be sold.
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 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 CDSCs and will make no
payments to the Principal Underwriter in respect of any day on which there are
no outstanding Uncovered Distribution Charges of the Principal Underwriter.
CDSCs and accrued amounts will be paid by the Fund to the Principal Underwriter
whenever there exist Uncovered Distribution Charges under the Plan.
Periods with a high level of sales of Fund shares accompanied by a low level
of early redemptions of Fund shares resulting in the imposition of CDSCs 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 CDSCs 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 CDSCs theretofore
paid or payable to the Principal Underwriter will be subtracted from such
distribution charges; if the result of such subtraction is positive, a
distribution fee (computed at 1% over the prime rate then reported in The Wall
Street Journal) will be computed on such amount and added thereto, with the
resulting sum constituting the amount of outstanding Uncovered Distribution
Charges with respect to such day. The amount of outstanding Uncovered
Distribution Charges of the Principal Underwriter calculated on any day does not
constitute a liability recorded on the financial statements of the Fund.
The amount of Uncovered Distribution Charges of the Principal Underwriter at
any particular time depends upon various changing factors, including the level
and timing of sales of 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 CDSC will be imposed, the level and timing of redemptions of Fund shares upon
which no CDSC will be imposed (including redemptions involving exchanges of Fund
shares for shares of another fund in the Eaton Vance Marathon Group of Funds
which result in a reduction of Uncovered Distribution Charges), changes in the
level of the net assets of the Fund, and changes in the interest rate used in
the calculation of the distribution fee under the Plan.
As currently implemented by the Trustees, the Plan authorizes payments of
sales commissions and distribution fees to the Principal Underwriter and service
fees to the Principal Underwriter and Authorized Firms which may be equivalent,
on an aggregate basis during any fiscal year of the Fund, to 1% of the Fund's
average daily net assets for such year. For the sales commission and service fee
payments made by the Fund and the outstanding uncovered distribution charges of
the Principal Underwriter, see "Fees and Expenses -- Distribution Plan" in this
Part II. The Fund believes that the combined rate of all these payments may be
higher than the rate of payments made under distribution plans adopted by other
investment companies pursuant to Rule 12b-1. Although the Principal Underwriter
will use its own funds (which may be borrowed from banks) to pay sales
commissions at the time of sale, it is anticipated that the Eaton Vance
organization will profit by reason of the operation of the Plan through an
increase in the Fund's assets (thereby increasing the advisory fee payable to
BMR by the Portfolio) resulting from sale of Fund shares and through the amounts
paid to the Principal Underwriter, including CDSCs, pursuant to the Plan. The
Eaton Vance organization may be considered to have realized a profit under the
Plan if at any point in time the aggregate amounts theretofore received by the
Principal Underwriter pursuant to the Plan and from CDSCs 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 Plan provides that it shall continue in effect for so long as such
continuance is approved at least annually by the vote of both a majority of (i)
the Trustees of the Trust who are not interested persons of the Trust and who
have no direct or indirect financial interest in the operation of the Plan or
any agreements related to the Plan (the "Rule 12b-1 Trustees") and (ii) all of
the Trustees then in office, and the Distribution Agreement contains a similar
provision. The Plan and Distribution Agreement may be terminated at any time by
vote of a majority of the Rule 12b-1 Trustees or by a vote of a majority of the
outstanding voting securities of the Fund. The provisions of the Plan relating
to payments of sales commissions and distribution fees to the Principal
Underwriter are also included in the Distribution Agreement between the Trust on
behalf of the Fund and the Principal Underwriter. Pursuant to Rule 12b-1, the
Plan has been approved by the Fund's initial sole shareholder (Eaton Vance) and
by the Board of Trustees of the Trust as required by Rule 12b-1. Under the Plan
the President or a Vice President of the Trust shall provide to the Trustees for
their review, and the Trustees shall review at least quarterly, a written report
of the amount expended under the Plan and the purposes for which such
expenditures were made. The Plan may not be amended to increase materially the
payments described therein without approval of the shareholders of the Fund, and
all material amendments of the Plan must also be approved by the Trustees as
required by Rule 12b-1. So long as the Plan is in effect, the selection and
nomination of Trustees who are not interested persons of the Trust shall be
committed to the discretion of the Trustees who are not such interested persons.
The Trustees of the Trust believe that the Plan will be a significant factor
in the expected growth of the Fund's assets, and will result in increased
investment flexibility and advantages which will benefit the Fund and its
shareholders. Payments for sales commissions and distribution fees made to the
Principal Underwriter under the Plan will compensate the Principal Underwriter
for its services and expenses in distributing shares of the Fund. Service fee
payments made to the Principal Underwriter and Authorized Firms under the Plan
provide incentives to provide continuing personal services to investors and the
maintenance of shareholder accounts. By providing incentives to the Principal
Underwriter and Authorized Firms, the Plan is expected to result in the
maintenance of, and possible future growth in, the assets of the Fund. Based on
the foregoing and other relevant factors, the Trustees of the Trust have
determined that in their judgment there is a reasonable likelihood that the Plan
will benefit the Fund and its shareholders.
PERFORMANCE INFORMATION
The table below indicates the cumulative and average annual total return on
a hypothetical investment of $1,000 in the Fund covering the 1, 5 and 10 year
periods ended August 31, 1995. The total return for the period prior to the
Fund's commencement of operations on September 13, 1994 reflects the Portfolio's
total return (or that of its predecessor) adjusted to reflect any applicable
Fund CDSC. The total return for such prior period has not been adjusted to
reflect the Fund's distribution fees and certain other expenses. If such an
adjustment were made, the performance would be lower.
<TABLE>
<CAPTION>
VALUE OF A $1,000 INVESTMENT
VALUE BEFORE VALUE AFTER TOTAL RETURN BEFORE TOTAL RETURN AFTER
DEDUCTING THE DEDUCTING THE DEDUCTING THE CDSC DEDUCTING THE CDSC*
INVESTMENT INVESTMENT CDSC ON CDSC* ON -------------------------- --------------------------
PERIOD DATE 8/31/96 8/31/96 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ---------------------- ---------- ------------- -------------- ------------ ---------- ------------- ----------
<C> <C> <C> <C> <C> <C> <C> <C>
10 Years ended
8/31/96 8/31/86 $2,631.94 $2,631.94 $163.19 10.16% 163.19% 10.16%
5 Years ended
8/31/96 8/31/91 $1,519.56 $1,499.56 51.96% 8.73% 51.96% 8.73%
1 Year ended
8/31/96** 8/31/95 $1,147.52 $1,097.52 14.75% 14.75% 14.75% 14.75%
Past performance is not indicative of future results. Investment return and principal value will fluctuate; shares, when
redeemed, may be worth more or less than their original cost.
<FN>
- ----------
* No CDSC is imposed on certain redemptions. See the Fund's current Prospectus.
** If a portion of the expenses related to the operation of the Fund had not been allocated to Eaton Vance, the Fund would have
had lower returns.
</FN>
</TABLE>
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of November 30, 1996, the Trustees and officers of the Trust, as a group,
owned in the aggregate less than 1% of the outstanding shares of the Fund. As of
November 30, 1996, Merrill Lynch, Pierce, Fenner & Smith, Inc., Jacksonville, FL
was the record owner of approximately 18.33% of the outstanding shares, which
were held on behalf of its customers who are the beneficial owners of such
shares, and as to which it had voting power under certain limited circumstances.
To the knowledge of the Trust, no other person owned of record or beneficially
5% or more of the Fund's outstanding shares as of such date.
<PAGE>
[logo]
EV MARATHON GROWTH FUND
- --------------------------------------------------------------------------------
STATEMENT OF
ADDITIONAL INFORMATION
JANUARY 1, 1997
EV MARATHON
GROWTH FUND
24 FEDERAL STREET
BOSTON, MA 02110
- --------------------------------------------------------------------------------
INVESTMENT ADVISER OF GROWTH PORTFOLIO
Boston Management and Research, 24 Federal Street, Boston, MA 02110
FUND ADMINISTRATOR
Eaton Vance Management, 24 Federal Street, Boston, MA 02110
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc., 24 Federal Street, Boston, MA 02110
(800) 225-6265
CUSTODIAN
Investors Bank & Trust Company, 89 South Street, Boston, MA 02111
TRANSFER AGENT
First Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123
(800) 262-1122
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand LLP, One Post Office Square, Boston, MA 02109
M-GFSAI
<PAGE>
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
STATEMENT OF
ADDITIONAL INFORMATION
January 1, 1997
EV TRADITIONAL GROWTH FUND
24 Federal Street
Boston, Massachusetts 02110
(800) 225-6265
This Statement of Additional Information consists of two parts. Part I
contains information that relates generally to EV Traditional Growth Fund (the
"Fund"), Growth Portfolio (the "Portfolio") and certain other series of Eaton
Vance Growth Trust (the "Trust"). The Fund's Part II (the "Part II") contains
information that relates specifically to the Fund. Where appropriate Part I
includes cross-references to the relevant sections of Part II that provide
additional, Fund-specific information. This Statement of Additional
Information is sometimes referred to herein as the "SAI".
TABLE OF CONTENTS
Page
PART I
Additional Information about Investment Policies ....................... 1
Investment Restrictions ................................................ 3
Trustees and Officers .................................................. 4
Investment Adviser and Administrator ................................... 6
Custodian .............................................................. 9
Service for Withdrawal ................................................. 9
Determination of Net Asset Value ....................................... 9
Investment Performance ................................................. 10
Taxes .................................................................. 11
Portfolio Security Transactions ........................................ 13
Other Information ...................................................... 15
Independent Accountants ................................................ 16
Financial Statements ................................................... 16
PART II
Fees and Expenses ...................................................... a-1
Services for Accumulation .............................................. a-2
Principal Underwriter .................................................. a-2
Service Plan ........................................................... a-3
Performance Information ................................................ a-4
Control Persons and Principal Holders of Securities .................... 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 CURRENT PROSPECTUS OF EV TRADITIONAL GROWTH FUND DATED
JANUARY 1, 1997, AS SUPPLEMENTED FROM TIME TO TIME, WHICH IS INCORPORATED
HEREIN BY REFERENCE. THIS STATEMENT OF ADDITIONAL INFORMATION SHOULD BE READ
IN CONJUNCTION WITH SUCH PROSPECTUS, A COPY OF WHICH MAY BE OBTAINED WITHOUT
CHARGE BY CONTACTING EATON VANCE DISTRIBUTORS, INC. (THE "PRINCIPAL
UNDERWRITER") (SEE BACK COVER FOR ADDRESS AND PHONE NUMBER).
FOR EDGAR FILING PURPOSES ONLY: REGISTRANT INCORPORATES BY REFERENCE FOR
EV TRADITIONAL GROWTH FUND THE PART I FOUND IN THE STATEMENT OF ADDITIONAL
INFORMATION OF EV CLASSIC GROWTH FUND CONTAINED IN THIS AMENDMENT.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
PART II
This Part II provides information about EV TRADITIONAL GROWTH FUND. On
July 27, 1994 the Fund changed its name from Eaton Vance Growth Fund to EV
Traditional Growth Fund.
FEES AND EXPENSES
INVESTMENT ADVISER
Prior to the close of business on August 1, 1994 (when the Fund
transferred substantially all of its assets to the Portfolio in exchange for
an interest in the Portfolio), the Fund retained Eaton Vance as its investment
adviser. For the period from September 1, 1993 to August 1, 1994, the Fund
paid Eaton Vance advisory fees of $777,308 (equivalent to 0.63% (annualized)
of the Fund's average daily net assets for such period).
SERVICE PLAN
During the fiscal year ended August 31, 1996, the Fund made service fee
payments under the Plan aggregating $122,884, of which $76,642 was paid to
Authorized Firms and the balance of which was retained by the Principal
Underwriter.
PRINCIPAL UNDERWRITER
The total sales charges for sales of shares of the Fund during the fiscal
years ended August 31, 1996, 1995 and 1994, were $17,636, $24,651 and $61,320,
respectively, of which $2,826, $3,924 and $7,156, respectively, was received
by the Principal Underwriter. For the fiscal years ended August 31, 1996, 1995
and 1994, Authorized Firms received $14,810, $20,727 and $54,164,
respectively, from the total sales charges.
The Fund has authorized the Principal Underwriter to act as its agent in
repurchasing shares at the rate of $2.50 for each repurchase transaction
handled by the Principal Underwriter. The Principal Underwriter estimates that
the expenses incurred by it in acting as repurchase agent for the Fund will
exceed the amounts paid therefor by the Fund. For the fiscal year ended August
31, 1996, the Fund paid the Principal Underwriter $634.00 for repurchase
transactions handled by the Principal Underwriter (being $2.50 for each
repurchase transaction handled by the Principal Underwriter).
BROKERAGE COMMISSIONS
During the period from September 1, 1993 to August 1, 1994 (when the Fund
transferred its assets to the Portfolio in exchange for an interest in the
Portfolio), the Fund paid brokerage commissions of $275,173 on portfolio
security transactions, of which approximately $261,973 was paid in respect of
portfolio security transactions aggregating approximately $174,390,224 to
firms which provided some Research Services to Eaton Vance. During the fiscal
year ended August 31, 1993 the Fund paid brokerage commissions of $279,600 on
portfolio security transactions, of which approximately $258,744 was paid in
respect of portfolio security transactions aggregating approximately
$172,838,057 to firms which provided some research services to Eaton Vance
(although many of such firms may have been selected in any particular
transaction primarily because of their execution capabilities).
TRUSTEES
The fees and expenses of those Trustees of the Trust and of the Portfolio
who are not members of the Eaton Vance organization (the noninterested Trustees)
are paid by the Fund (and the other series of the Trust) and the Portfolio,
respectively. (The Trustees of the Trust and the Portfolio who are members of
the Eaton Vance organization receive no compensation from the Fund or the
Portfolio.) During the fiscal year ended August 31, 1996, the noninterested
Trustees of the Trust and the Portfolio earned the following compensation in
their capacities as Trustees from the Fund and the Portfolio, and, for the year
ended September 30, 1996, earned the following compensation in their capacities
as Trustees of the funds in the Eaton Vance fund complex (1):
AGGREGATE
AGGREGATE COMPENSATION TOTAL COMPENSATION
COMPENSATION FROM FROM TRUST AND
NAME FROM FUND PORTFOLIO FUND COMPLEX
- ---- ------------ ------------ ------------------
Donald R. Dwight .......... $687 $1,542(2) $142,500(4)
Samuel L. Hayes, III ...... 632 1,687(3) 153,750(5)
Norton H. Reamer .......... 628 1,645 142,500
John L. Thorndike ......... 636 1,729 147,500
Jack L. Treynor ........... 681 1,683 147,500
- ----------
(1) The Eaton Vance fund complex consists of 228 registered investment
companies or series thereof.
(2) Includes $578 of deferred compensation.
(3) Includes $570 of deferred compensation.
(4) Includes $42,500 of deferred compensation.
(5) Includes $37,500 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 current Prospectus of the Fund will be purchased within a 13-month period,
a Statement of Intention should be signed so that shares may be obtained at
the same reduced sales charge as though the total quantity were invested in
one lump sum. Shares held under Right of Accumulation (see below) as of the
date of the Statement will be included toward the completion of the Statement.
The Statement authorizes the Transfer Agent to hold in escrow sufficient
shares (5% of the dollar amount specified in the Statement) which can be
redeemed to make up any difference in sales charge on the amount intended to
be invested and the amount actually invested. Execution of a Statement does
not obligate the shareholder to purchase or the Fund to sell the full amount
indicated in the Statement, and should the amount actually purchased during
the 13-month period be more or less than that indicated on the Statement,
price adjustments will be made. For sales charges and other information on
quantity purchases, see "How to Buy Fund Shares" in the Fund's current
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 account(s) in the Fund and in the other continuously offered open-end
funds listed under "The Eaton Vance Exchange Privilege" in the current
Prospectus of the Fund for which Eaton Vance acts as adviser or administrator
at the time of purchase. The sales charge on the shares being purchased will
then be at the rate applicable to the aggregate. For example, if the
shareholder owned shares valued at $80,000 in EV Traditional Investors 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 Fund's current Prospectus. Shares purchased (i) by an
individual, his spouse and their children under the age of twenty-one, and
(ii) by a trustee, guardian or other fiduciary of a single trust estate or a
single fiduciary account, will be combined for the purpose of determining
whether a purchase will qualify for the Right of Accumulation and if
qualifying, the applicable sales charge level.
For any such discount to be made available, at the time of purchase a
purchaser or his Authorized Firm must provide the Principal Underwriter (in
the case of a purchase made through an Authorized Firm) or the Transfer Agent
(in the case of an investment made by mail) with sufficient information to
permit verification that the purchase order qualifies for the accumulation
privilege. Corfirmation 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 which have agreements with the Principal
Underwriter. 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 the other funds offered by
the Principal Underwriter, made at a single time by (i) an individual, or an
individual, his spouse and their children under the age of twenty-one,
purchasing shares for his or their own account; and (ii) a trustee or other
fiduciary purchasing shares for a single trust estate or a single fiduciary
account.
The table is also presently applicable to (1) purchases of 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 first purchase pursuant to a written Statement of Intention, in the form
provided by the Underwriter, which includes provisions for a price adjustment
depending upon the amount actually purchased within such period (a purchase
not made pursuant to such Statement may be included thereunder if the
Statement is filed within 90 days of such purchase); or (2) purchases of 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 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 of the Fund may also be sold at net asset value to registered
representatives and employees of certain Authorized Firms and to such persons'
spouses and children under the age of 21 and their beneficial accounts.
The Trust reserves the right to suspend or limit the offering of shares of
the Fund to the public at any time.
The Principal Underwriter acts as principal in selling shares of the Fund
under the distribution agreement with the Trust on behalf of the Fund. The
expenses of printing copies of prospectuses used to offer shares to financial
service firms or investors and other selling literature and of advertising are
borne by the Principal Underwriter. The fees and expenses of qualifying and
registering and maintaining qualifications and registrations of the Fund and
its shares under federal and state securities laws are borne by the Fund. The
distribution agreement is renewable annually by the Board of Trustees of the
Trust (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 Firms. See "How to Buy Fund
Shares" in the current Prospectus for the discounts allowed to Authorized
Firms. The Principal Underwriter may allow, upon notice to all Authorized
Firms with whom it has agreements, discounts up to the full sales charge
during the periods specified in the notice. During periods when the discount
includes the full sales charge, such Firms may be deemed to be underwriters as
that term is defined in the Securities Act of 1933.
SERVICE PLAN
The Trust on behalf of the Fund has adopted a Service Plan (the "Plan")
designed to meet the service fee requirements of the revised sale charge rule
of the National Association of Securities Dealers, Inc. (Management believes
service fee payments are not distribution expenses governed by Rule 12b-1
under the 1940 Act, but has chosen to have the Plan approved as if that Rule
were applicable.) The following supplements the discussion of the Plan
contained in the Fund's Prospectus.
The Plan remains in effect from year to year provided such continuance is
approved by a vote of both a majority of (i) the 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 any agreements related to it (the
"Non-interested Trustees") and (ii) all of the Trustees then in office, cast
in person at a meeting (or meetings) called for the purpose of voting on this
Plan. The Plan may be terminated any time by vote of the Non-interested
Trustees or by vote of a majority of the outstanding voting securities of the
Fund. Pursuant to the Rule, the Plan has been approved by the Board of
Trustees of the Trust, including the Non-interested Trustees.
Under the Plan, the President or Vice President of the Trust shall provide
to the Trustees for their review, and the Trustees shall review at least
quarterly, a written report of the amount expended under the Plan and the
purposes for which such expenditures were made. The Plan may not be amended to
increase materially the payments described herein without approval of the
shareholders of the Fund, and all material amendments of the Plan must also be
approved by the Trustees of the Trust as prescribed by the Rule. 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 shareholder. For the service fees paid by the Fund
under the Plan, see "Fees and Expenses" in this Part II.
PERFORMANCE INFORMATION
The table below indicates the cumulative and average annual total return
on a hypothetical investment of $1,000 in the Fund covering the ten, five and
one year periods ended August 31, 1996.
VALUE OF A $1,000 INVESTMENT
<TABLE>
<CAPTION>
TOTAL RETURN TOTAL RETURN
VALUE OF EXCLUDING SALES CHARGE INCLUDING SALES CHARGE
INVESTMENT INVESTMENT AMOUNT OF INVESTMENT ---------------------------- ----------------------------
PERIOD DATE INVESTMENT* ON 8/31/96 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
10 Years Ended
8/31/96 8/31/86 $951.99 $2,532.72 166.04% 10.28% 153.27% 9.74%
5 Years Ended
8/31/96 8/31/91 $952.65 $1,463.29 53.60% 8.96% 46.33% 7.91%
1 Year Ended
8/31/96 8/31/95 $952.00 $1,098.36 15.38% 15.38% 9.84% 9.84%
</TABLE>
Past performance is not indicative of future results. Investment return
and principal value will fluctuate; shares, when redeemed, may be worth more
or less than their original cost.
*Initial investment less current maximum sales charge of 4.75%
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of November 30, 1996, the Trustees and officers of the Trust, as a
group, owned in the aggregate less than 1% of the outstanding shares of the
Fund. To the knowledge of the Trust, no person owned of record or beneficially
5% or more of the Fund's outstanding shares as of such date.
<PAGE>
[logo]
EV TRADITIONAL
GROWTH
FUND
STATEMENT OF
ADDITIONAL INFORMATION
JANUARY 1, 1997
EV TRADITIONAL
GROWTH FUND
24 FEDERAL STREET
BOSTON, MA 02110
- --------------------------------------------------------------------------------
INVESTMENT ADVISER OF GROWTH PORTFOLIO
Boston Management and Research, 24 Federal Street, Boston, MA 02110
FUND ADMINISTRATOR
Eaton Vance Management, 24 Federal Street, Boston, MA 02110
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc., 24 Federal Street, Boston, MA 02110
(800) 225-6265
CUSTODIAN
Investors Bank & Trust Company, 89 South Street, Boston, MA 02111
TRANSFER AGENT
First Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123
(800) 262-1122
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand LLP, One Post Office Square, Boston, MA 02109
T-GFSAI
<PAGE>
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
STATEMENT OF
ADDITIONAL INFORMATION
January 1, 1997
EV CLASSIC 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 Classic Information Age Fund (the "Fund"),
Information Age Portfolio (the "Portfolio") and certain other series of Eaton
Vance Growth Trust (the "Trust"). The Fund's Part II (the "Part II") provides
information solely about the Fund. Where appropriate, Part I includes
cross-references to the relevant sections of Part II that provide additional,
Fund-specific information. This Statement of Additional Information is sometimes
referred to herein as the "SAI."
TABLE OF CONTENTS
Page
PART I
Additional Information About Investment Policies ................. 1
Investment Restrictions .......................................... 5
Trustees and Officers ............................................ 6
Management of the Fund and the Portfolio ......................... 9
Custodian ........................................................ 13
Service for Withdrawal ........................................... 13
Determination of Net Asset Value ................................. 13
Investment Performance ........................................... 14
Taxes ............................................................ 15
Portfolio Security Transactions .................................. 17
Other Information ................................................ 19
Independent Accountants .......................................... 20
Financial Statements ............................................. 20
PART II
Fees and Expenses ................................................ a-1
Principal Underwriter ............................................ a-2
Distribution Plan ................................................ a-2
Performance Information .......................................... a-4
Control Persons and Principal Holders of Securities .............. 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 JANUARY 1, 1997, AS SUPPLEMENTED FROM
TIME TO TIME, WHICH IS INCORPORATED HEREIN BY REFERENCE. THIS STATEMENT OF
ADDITIONAL INFORMATION SHOULD BE READ IN CONJUNCTION WITH SUCH PROSPECTUS, A
COPY OF WHICH MAY BE OBTAINED WITHOUT CHARGE BY CONTACTING EATON VANCE
DISTRIBUTORS, INC. (THE "PRINCIPAL UNDERWRITER") (SEE BACK COVER FOR ADDRESS AND
PHONE NUMBER).
<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 SAI 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. 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 from responding to such events in a timely
manner.
Settlements of over-the-counter forward contracts or of the exercise of
foreign currency options generally must occur within the country issuing the
underlying currency, which in turn requires parties to such contracts to accept
or make delivery of such currencies in conformity with any United States or
foreign restrictions and regulations regarding the maintenance of foreign
banking relationships, fees, taxes or other charges.
Unlike currency futures contracts and exchange-traded options, options on
foreign currencies and forward contracts are not traded on contract markets
regulated by the CFTC or (with the exception of certain foreign currency
options) the Securities and Exchange Commission (the "Commission"). To the
contrary, such instruments are traded through financial institutions acting as
market-makers. (Foreign currency options are also traded on the Philadelphia
Stock Exchange subject to Commission regulation). In an over-the-counter trading
environment, many of the protections associated with transactions on exchanges
will not be available. For example, there are no daily price fluctuation limits,
and adverse market movements could therefore continue to an unlimited extent
over a period of time. Although the purchaser of an option cannot lose more than
the amount of the premium plus related transaction costs, this entire amount
could be lost. Moreover, an option writer could lose amounts substantially in
excess of its initial investment due to the margin and collateral requirements
associated with such option positions. Similarly, there is no limit on the
amount of potential losses on forward contracts to which 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."
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.
The Portfolio may purchase call and put options, subject to the Asset
Coverage Requirements set forth below. 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.
While an Adviser does not consider reverse repurchase agreements to involve
a traditional borrowing of money, reverse repurchase agreements will be included
within the aggregate limitation on "borrowings" contained in the Portfolio's
investment restriction (1) set forth below.
Lending Portfolio Securities. If 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. The financial condition of the
borrower will be monitored by an Adviser on an ongoing basis. The Portfolio
would continue to receive the equivalent of the interest or dividends paid by
the issuer on the securities loaned and would also receive a fee, or all or a
portion of the interest on investment of the collateral. The Portfolio would
have the right to call a loan and obtain the securities loaned at any time on up
to five business days' notice. The Portfolio would not have the right to vote
any securities having voting rights during the existence of a loan, but could
call the loan in anticipation of an important vote to be taken among holder of
the securities or the giving or holding of their consent on a material matter
affecting the investment. Securities lending involves administrative expenses,
including finders' fees. If an Adviser decides to make securities loans, it is
intended that the value of the securities loaned would not exceed 1/3 of the
Portfolio's total assets.
Asset Coverage Requirements. Transactions involving reverse repurchase
agreements, the lending of Portfolio securities, 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, futures
contracts or forward contracts, or (2) cash or liquid securities with a value
sufficient at all times to cover its potential obligations not covered as
provided in (1) above. The Portfolio will comply with Commission guidelines
regarding cover for these instruments and, if the guidelines so require, set
aside cash or liquid securities in a segregated account with its custodian in
the prescribed amount. The securities in the segregated account will be marked
to market daily.
Assets used as cover or held in a segregated account cannot be sold while
the position requiring coverage or segregation is outstanding unless they are
replaced with other appropriate assets. As a result, the commitment of a large
portion of the Portfolio's assets to segregated accounts or to cover could
impede portfolio management or the Portfolio's ability to meet redemption
requests or other current obligations.
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.
INVESTMENT RESTRICTIONS
Whenever an investment policy or investment restriction set forth in the
Prospectus or this SAI states a maximum percentage of assets that may be
invested in any security or other asset or describes a policy regarding quality
standards, such percentage limitation or standard shall be determined
immediately after and as a result of the Fund's or the Portfolio's acquisition
of such security or other asset. Accordingly, any later increase or decrease
resulting from a change in values, assets or other circumstances, other than a
subsequent rating change below investment grade made by a rating service, will
not compel the Fund or the Portfolio, as the case may be, to dispose of such
security or other asset.
The following investment restrictions of the Fund are designated as
fundamental policies and as such cannot be changed without the approval of the
holders of a majority of the Fund's outstanding voting securities, which as used
in this SAI means the lesser of (a) 67% of the shares of the Fund present or
represented by proxy at a meeting if the holders of more than 50% of the shares
are present or represented at the meeting or (b) more than 50% of the shares of
the Fund. Accordingly, the Fund may not:
(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 Portfolio has adopted substantially the same fundamental investment
restrictions as the foregoing investment restrictions adopted by the Fund, such
restrictions cannot be changed without the approval of a "majority of the
outstanding voting securities" of the Portfolio.
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 and
commercial paper issued pursuant to Section 4(2) of said Act that the Board of
Trustees of the Trust or the Portfolio, or their delegate, determines to be
liquid. 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 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). Neither the Fund nor the
Portfolio will purchase an option on a security if, after such transaction, more
than 5% of its net assets, measured by the aggregate of all premiums paid for
all such options held by the Portfolio, would be so invested.
Whenever an investment policy or investment restriction set forth in the
Prospectus or this SAI states a maximum percentage of assets that may be
invested in any security or other asset, such percentage limitation shall be
determined immediately after and as a result of the Fund's or the Portfolio's
acquisition of such security or asset. Accordingly, any later increase or
decrease resulting from a change in values, assets or other circumstances, will
not compel the Fund or the Portfolio, as the case may be, to dispose of such
security or other asset. Notwithstanding the foregoing, under normal market
conditions the Fund and the Portfolio must take actions necessary to comply with
the policy of investing at least 65% of its assets in securities of information
age companies. Moreover, the Fund and Portfolio must always be in compliance
with the borrowing policy set forth above.
Although permissible under the Fund's investment restrictions, the Fund has
no present intention during the coming fiscal year to: borrow money; pledge its
assets; 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 (55), President and Trustee*
President and Chief Executive Officer of Eaton Vance, BMR, EVC and EV, and a
Director of EVC and EV. Director of Lloyd George Management (B.V.I.) Limited
("LGM"). Director or Trustee and officer of various investment companies
managed by Eaton Vance or BMR.
DONALD R. DWIGHT (65), 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 (61), Trustee
Jacob H. Schiff Professor of Investment Banking, Harvard University Graduate
School of Business Administration. Director or Trustee of various investment
companies managed by Eaton Vance or BMR.
Address: Harvard University Graduate School of Business Administration,
Soldiers Field Road, Boston, Massachusetts 02163
NORTON H. REAMER (61), Trustee
President and Director, United Asset Management Corporation, (a holding company
owning institutional investment management firms); Chairman, President and
Director, UAM Funds (mutual funds). Director or Trustee of various investment
companies managed by Eaton Vance or BMR.
Address: One International Place, Boston, Massachusetts 02110
JOHN L. THORNDIKE (70), Trustee
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 (66), 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 (58), Vice President
Vice President of Eaton Vance since November, 1994. Vice President of The
Boston Company prior thereto.
M. DOZIER GARDNER (63), Vice President
Vice Chairman of BMR, Eaton Vance, EVC and EV, and a Director of EVC and EV.
Director or Trustee and officer of various investment companies managed by
Eaton Vance or BMR.
BARCLAY TITTMANN (64), Vice President
Vice President of Eaton Vance since September, 1993. Vice President of INVESCO
prior thereto.
JAMES L. O'CONNOR (51), Treasurer
Vice President of Eaton Vance, BMR and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
THOMAS OTIS (65), 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 (61), Assistant Treasurer and Assistant Secretary
Vice President of Eaton Vance, BMR and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
A. JOHN MURPHY (34), Assistant Secretary
Assistant Vice President of 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 (39), Assistant Secretary
Vice President of Eaton Vance since February 1993; formerly, associate
attorney at Dechert, Price & Rhoads and Gaston & Snow. Officer of various
investment companies managed by Eaton Vance or BMR. Mr. Woodbury was elected
Assistant Secretary of the Trust on June 19, 1995.
Messrs. Hayes (Chairman), Reamer and Thorndike are members of the Special
Committee of the Board of Trustees of the Trust and of the Portfolio. The
purpose of the Special Committee is to consider, evaluate and make
recommendations to the full Board concerning (i) all contractual arrangements
with service providers to the Fund or Portfolio, including administrative
services, transfer agency, custodial and fund accounting and distribution
services, and (ii) all other matters in which Eaton Vance or its affiliates has
any actual or potential conflict of interest with the Fund or Portfolio or its
shareholders or interestholders.
The Nominating Committee is comprised of four Directors who are not
"interested persons" as that term is defined under the Investment Company Act of
1940 ("noninterested Directors"). The Committee has four-year staggered terms,
with one member rotating off the Committee to be replaced by another
noninterested Director of the Fund. The purpose of the Committee is to recommend
to the Board nominees for the position of noninterested Director and to assure
that at least a majority of the Board of Directors is independent of Eaton Vance
and its affiliates.
Messrs. Treynor (Chairman) and Dwight are members of the Audit Committee of
the Board of Trustees of the Trust and of the Portfolio. The Audit Committee's
functions include making recommendations to the 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 trading and
brokerage policies and practices, accounting and auditing practices and
procedures, accounting records, internal accounting controls, and the functions
performed by the custodian, transfer agent and dividend disbursing agent of the
Trust.
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. Neither the Portfolio nor the
Fund has a retirement plan for its Trustees.
The fees and expenses of those Trustees of the Fund and of the Portfolio who
are not members of the Eaton Vance organization (the noninterested Trustees) are
paid by the Fund and the Portfolio, respectively. For the compensation earned by
the noninterested Trustees of the Trust and the Portfolio, see "Fees and
Expenses" in Part II.
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. Unless otherwise indicated, the address of
each officer and Trustee is 24 Federal Street, Boston, Massachusetts 02110.
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
HON. EDWARD K.Y. CHEN (51), Trustee
President of Lingnan College in Hong Kong. Professor and Director of Centre of
Asian Studies at the University of Hong Kong from 1979-1995. Director of First
Pacific Company and a Board Member of the Mass Transit Railway Corporation.
Member of the Executive Council of the Hong Kong Government since 1992 and
Chairman of the Consumer Council since 1991.
Address: President's Office, Lingnan College, Tuen Mun, Hong Kong
DONALD R. DWIGHT (65), 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
HON. ROBERT LLOYD GEORGE (44), Vice President and Trustee
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
JAMES B. HAWKES (55), President and Trustee*
President and Chief Executive Officer of Eaton Vance, BMR, EVC and EV, and a
Director of EVC and EV. Director of LGM. Director or Trustee and officer of
various investment companies managed by Eaton Vance or BMR.
SAMUEL L. HAYES, III (61), Trustee
Jacob H. Schiff Professor of Investment Banking, Harvard University Graduate
School of Business Administration. Director or Trustee of various investment
companies managed by Eaton Vance or BMR.
Address: Harvard University Graduate School of Business Administration,
Soldiers Field Road, Boston, Massachusetts 02163
NORTON H. REAMER (61), Trustee
President and Director, United Asset Management Corporation, (a holding company
owning institutional investment management firms); Chairman, President and
Director, UAM Funds (mutual funds). Director or Trustee of various investment
companies managed by Eaton Vance or BMR.
Address: One International Place, Boston, Massachusetts 02110
JOHN L. THORNDIKE (70), Trustee
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 (66), 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 (36), 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 (45), 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 (34), 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.
DUNCAN W. RICHARDSON (39), 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.
JAMES L. O'CONNOR (51), Treasurer
Vice President of Eaton Vance, BMR, and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
THOMAS OTIS (65), 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 (61), Assistant Secretary and Assistant Treasurer
Vice President of Eaton Vance, BMR and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
A. JOHN MURPHY (34), Assistant Secretary
Assistant Vice President of 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.
ERIC G. WOODBURY (39), Assistant Secretary
Vice President of Eaton Vance since February 1993; formerly, associate attorney
at Dechert, Price & Rhoads and Gaston & Snow. Officer of various
investment companies managed by Eaton Vance or BMR.
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.
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 BMR, 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 are entitled to receive a monthly advisory fee computed by applying the
annual asset rate applicable to that portion of the average daily net assets of
the Portfolio throughout the month in each Category as indicated below:
ANNUAL
CATEGORY AVERAGE DAILY NET ASSETS ASSET RATE
-------- ------------------------ ----------
1 less than $500 million .................. 0.75%
2 $500 million but less than $1 billion ... 0.70
3 $1 billion but less than $1.5 billion ... 0.65
4 $1.5 billion but less than $2 billion ... 0.60
5 $2 billion but less than $3 billion ..... 0.55
6 $3 billion and over ..................... 0.50
As of August 31, 1996, the Portfolio had net assets of $42,703,385. For the
period from the start of business, September 18, 1995, to August 31, 1996, the
Advisers earned advisory fees of $199,131 (equivalent to 0.75% (annualized) of
the Portfolio's average daily net assets for such period). Such advisory fee was
divided equally between Lloyd George and BMR.
Eaton Vance is among the oldest mutual funds organizations in the country.
As an experienced mutual fund provider, Eaton Vance has contributed to making
the securities market more widely accessible to investors. Eaton Vance equity
funds provide a way to take advantage of the potentially higher returns of
individual stocks. Eaton Vance has a staff of more than 25 investment
professionals specializing in security analysis and equity management.
The Eaton Vance investment process stresses intensive fundamental research.
Portfolios are built on a stock-by-stock basis and the process includes visits
to companies under consideration. The process also focuses on well-managed
companies with the following characteristics: strong underlying value or
franchise; solid earnings growth; steady cash flow, strong balance sheet;
innovative products or services; potential for sustained growth; seasoned,
creative management; or ability to survive variable market conditions.
By investing in diversified portfolios and employing prudent and
professional management, Eaton Vance mutual funds can provide attractive return,
while exposing shareholders to less risk than if they were to build investment
portfolios on their own. Eaton Vance employs rigorous buy and sell disciplines.
For instance, purchases are made with an eye to both relative and absolute
growth rates and price/earning ratios, and sales are made when a stock is fully
valued, fundamentals deteriorate, management fails to execute its strategy, or
more attractive alternatives are available.
LGM specializes in providing investment management services with respect to
equity securities of companies trading in Asian securities markets, especially
those of emerging markets. LGM currently manages portfolios for both private
clients and institutional investors seeking long-term capital growth and has
advised Eaton Vance's international equity funds since 1992. LGM's core
investment team consists of nine experienced investment professionals who have
worked together over a number of years successfully managing client portfolios
in non-U.S. stock markets. The team has a unique knowledge of, and experience
with, Asian emerging markets. LGM analysts cover East Asia, the India
subcontinent, Russia and Eastern Europe, Latin America, Australia and New
Zealand from offices in Hong Kong, London and Bombay. 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, Scobie Dickinson Ward, Pamela Chan
and Adaline Mang-Yee Ko. 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 three books -- "A Guide to Asian Stock
Markets" (Longmans, Hong Kong, 1989), "The East West Pendulum" (Woodhead -
Faulkner, Cambridge, 1991) and "North South-An Emerging Markets Handbook"
(Probus England, 1994).
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.
Eaton Vance mutual funds are distributed by Eaton Vance Distributors both
within the United States and offshore. Eaton Vance Distributors believes that an
investment professional can provide valuable services to you to help you reach
your investment goals. Meeting investment goals requires time, objectivity and
investment savvy. Before making an investment recommendation, a representative
can help you carefully consider your short- and long-term financial goals, your
tolerance for investment risk, your investment time frame, and other investments
you may already own. Your professional investment representatives are
knowledgeable about financial markets, as well as the wide range of investment
opportunities available. A representative can provide you with tailored
financial advice and help you decide when to buy, sell or persevere with your
investments.
The Portfolio's investment advisory agreement with the Advisers remains in
effect until February 28, 1997; it may be continued indefinitely thereafter so
long as such continuance 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: Category Asset Rate
ANNUAL
CATEGORY AVERAGE DAILY NET ASSETS ASSET RATE
- ---------- ---------------- ----------
1 less than $500 million ............................... 0.25%
2 $500 million but less than $1 billion ................ 0.23333
3 $1 billion but less than $1.5 billion ................ 0.21667
4 $1.5 billion but less than $2 billion ................ 0.20
5 $2 billion but less than $3 billion .................. 0.18333
6 $3 billion and over .................................. 0.1667
For the period from the start of business, September 18, 1995, to August 31,
1996, Eaton Vance earned administration fees of $66,210 (equivalent to 0.25%
(annualized) of the Portfolio's average daily net assets for such period). For
the management fees that the Fund paid to Eaton Vance, see "Fees and Expenses"
in Part II.
Eaton Vance's management contract with the Fund will remain in effect until
February 28, 1997, and its administration agreement with the Portfolio will
remain in effect until February 28, 1997. Each agreement may be continued from
year to year, so long as such continuance is approved annually by the vote of a
majority of the Trustees of the Trust or the 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.
To the extent necessary to comply with U.S. tax law, Eaton Vance has
employed IBT 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, to the extent not covered by
insurance.
Eaton Vance and EV are both wholly-owned subsidiaries of EVC. BMR is a
wholly-owned subsidiary of Eaton Vance. Eaton Vance and BMR are both
Massachusetts business trusts, and EV is the trustee of Eaton Vance and BMR. The
Directors of EV are Landon T. Clay, M. Dozier Gardner, James B. Hawkes and
Benjamin A. Rowland, Jr. The Directors of EVC consist of the same persons and
John G.L. Cabot and Ralph Z. Sorenson. Mr. Clay is chairman, Mr. Gardner is vice
chairman and Mr. Hawkes is president and chief executive officer of EVC, Eaton
Vance, BMR and EV. All of the issued and outstanding shares of Eaton Vance and
of EV are owned by EVC. All of the issued and outstanding shares of BMR are
owned by Eaton Vance. All shares of the outstanding Voting Common Stock of EVC
are deposited in a Voting Trust which expires December 31, 1997, the Voting
Trustees of which are Messrs. Clay, Gardner, Hawkes and Rowland and Thomas E.
Faust, Jr. The Voting Trustees have unrestricted voting rights for the election
of Directors of EVC. All of the outstanding voting trust receipts issued under
said Voting Trust are owned by certain of the officers of Eaton Vance and BMR
who are also officers or officers and Directors of EVC and EV. As of January 1,
1997, Messrs. Clay, Gardner and Hawkes each owned 24% of such voting trust
receipts and Messrs. Rowland and Faust owned 15% and 13%, respectively, of such
voting trust receipts. Messrs. Gardner 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. 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.
EVC owns all of the stock of Energex Energy Corporation, which engages in
oil and gas exploration and development. In addition, Eaton Vance owns all the
stock of Northeast Properties, Inc., which is engaged in real estate investment.
EVC also owns 24% of the Class A shares issued by the parent of Lloyd George.
EVC owns all the stock of Fulcrum Management, Inc. and MinVen, Inc., which are
engaged in precious metal mining venture investment and management. EVC, BMR,
Eaton Vance 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"), 89 South Street, Boston,
Massachusetts, 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 charges fees which are competitive within the industry. These fees for
the Portfolio relate to (1) custody services based upon a percentage of the
market values of Portfolio securities; (2) bookkeeping and valuation services
provided at an annual rate; (3) activity charges, primarily the result of the
number of portfolio transactions; and (4) reimbursement of out-of-pocket
expenses. These fees are then reduced by a credit for cash balances of the
Portfolio at the custodian equal to 75% of the 91-day U.S. Treasury Bill auction
rate applied to the Portfolio's average daily collected balances. The portion of
the fee for the Fund related to bookkeeping and pricing services is based upon a
percentage of the Fund's net assets and the portion of the fee related to
financial statement preparation is a fixed amount. Landon T. Clay, a Director of
EVC and an officer, Trustee or Director of other entities in the Eaton Vance
organization, owns approximately 13% of the voting stock of Investors Financial
Services Corp., the holding company parent of IBT. Management believes that such
ownership does not create an affiliated person relationship between the Fund or
Portfolio and IBT under the 1940 Act.
IBT also provides services in connection with the preparation of shareholder
reports and the electronic filing of such reports with the Commission, for which
it receives a separate fee.
SERVICE FOR WITHDRAWAL
The Transfer Agent will send to the shareholder regular monthly or quarterly
payments of any permitted amount designated by the shareholder (see "Eaton Vance
Shareholder Services - Withdrawal Plan" in the Fund's current Prospectus) based
upon the value of the shares held. The checks will be drawn from share
redemptions and hence, although they are a return of principal may require the
recognition of taxable gain or loss. Income dividends and capital 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. A shareholder may not have a withdrawal plan
in effect at the same time he or she has authorized Bank Automated Investing or
is otherwise making regular purchases of Fund shares. Either the shareholder,
the Transfer Agent or the Principal Underwriter will be able to terminate the
withdrawal plan at any time without penalty.
DETERMINATION OF NET ASSET VALUE
The Fund and Portfolio will be closed for business and will not price their
shares on the following business holidays: New Year's Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day.
The Trustees of the Portfolio have established the following procedures for
the fair valuation of the Portfolio's assets under normal market conditions.
Securities listed on foreign or U.S. securities exchanges or in the NASDAQ
National Market System generally are valued at closing sale prices or, if there
were no sales, at the mean between the closing bid and asked prices therefor on
the exchange where such securities are principally traded or on such National
Market System. Unlisted or listed securities for which closing sale prices are
not available are valued at the mean between the latest bid and asked prices. An
option is valued at the last sale price as quoted on the principal exchange or
board of trade on which such option or contract is traded, or in the absence of
a sale, at the mean between the last bid and asked prices. Futures positions on
securities or currencies are generally valued at closing settlement prices.
Short-term debt securities with a remaining maturity of 60 days or less are
valued at amortized cost. If securities were acquired with a remaining maturity
of more than 60 days, their amortized cost value will based on their value on
the sixty-first day prior to maturity. Other fixed income and debt securities,
including listed securities and securities for which price quotations are
available, will normally be valued on the basis of valuations furnished by a
pricing service. All other securities are valued at fair value as determined in
good faith by or at the direction of the Trustees.
Generally, trading in the foreign securities owned by the Portfolio is
substantially completed each day at various times prior to the close of the
Exchange. The values of these securities used in determining the net asset value
of the Portfolio's share are computed as of such times. Occasionally, events
affecting the value of foreign securities may occur between such times and the
close of the Exchange which will not be reflected in the computation of the
Portfolio's net asset value (unless the Portfolio deems that such events would
materially affect its net asset value, in which case an adjustment would be made
and reflected in such computation). Foreign securities and currency held by the
Portfolio will be valued in U.S. dollars; such values will be computed by the
custodian based on foreign currency exchange rate quotations.
Each investor in the Portfolio, including the Fund, may add to or reduce its
investment in the Portfolio on each day the New York Stock Exchange (the
"Exchange") is open for trading ("Portfolio Business Day") as of the close of
regular trading on the Exchange. The value of each investor's interest in the
Portfolio will be determined by multiplying the net asset value of the Portfolio
by the percentage, determined on the prior Portfolio Business Day, which
represents that investor's share of the aggregate interests in the Portfolio on
such prior day. 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 for the current Portfolio
Business Day.
INVESTMENT PERFORMANCE
Average annual total return is determined by multiplying a hypothetical
initial purchase order of $1,000 by the average annual compound rate of return
(including capital appreciation/depreciation, and dividends and distributions
paid and reinvested) for the stated period and annualizing the result. The
calculation assumes that all dividends from net investment income and capital
gain distributions are reinvested at net asset value on the reinvestment dates
during the period, and either (i) the deduction of the maximum sales charge from
the initial $1,000 purchase order or (ii) a complete redemption of the
investment and, if applicable, the deduction of the contingent deferred sales
charge at the end of the period. For information concerning the total return of
the Fund, see "Performance Information" in Part II.
Total return may be compared to relevant indices, such as the Consumer Price
Index and various domestic and foreign securities indices, for example: Standard
& Poor's 400 Midcap Index, Standard & Poor's 500 Stock Index, 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.
Information about the portfolio allocation, portfolio turnover and holdings
of the Portfolio may be included in advertisements and other material furnished
to present and prospective shareholders. From time to time, evaluations of the
Fund's performance or rankings of mutual funds (which include the Fund) made by
independent sources (e.g., Lipper Analytical Services, Inc., CDA/Weisenberger
and Morningstar, Inc.) may be used in advertisements and in information
furnished to present or prospective shareholders. Information, charts and
illustrations showing the effect of compounding interest or relating to
inflation and taxes (including their effects on the dollar and the return on
stocks and other investment vehicles) may also be included in advertisements and
materials furnished to present and prospective investors.
Information used in advertisements and materials furnished to present and
prospective investors may include statements or illustrations relating to the
appropriateness of certain types of securities and/or mutual funds to meet
specific financial goals. Such information may address:
- cost associated with aging parents;
- funding a college education (including its actual and estimated
cost);
- health care expenses (including actual and projected expenses);
- long-term disabilities (including the availability of, and coverage
provided by, disability insurance); and
- retirement (including the availability of social security benefits,
the tax treatment of such benefits and statistics and other
information relating to maintaining a particular standard of living
and outliving existing assets).
Such information may also address different methods for saving money and the
results of such methods, as well as the benefits of investing in equity
securities. Such information may describe: the potential for growth; the
performance of equities as compared to other investment vehicles; and the value
of investing as early as possible and regularly, as well as staying invested.
The benefits of investing in equity securities by means of a mutual fund may
also be included (such benefits may include diversification, professional
management and the variety of equity mutual fund products).
Information in advertisements and materials furnished to present and
prospective investors may include profiles of different types of investors
(i.e., investors with different goals and assets) and different investment
strategies for meeting specific financial goals. Such information may provide
hypothetical illustrations which include: results of various investment
strategies; performance of an investment in the Fund over various time periods;
and results of diversifying assets among several investments with varying
performance. Information in advertisements and materials furnished to present
and prospective investors may also include quotations (including editorial
comments) and statistics concerning investing in securities, as well as
investing in particular types of securities and the performance of such
securities.
The 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.
The Fund may provide information about Eaton Vance, its affiliates and other
investment advisers to the funds in the Eaton Vance Family of Funds in sales
material or advertisements provided to investors or prospective investors. Such
material or advertisements may also provide information on the use of investment
professionals by such investors.
TAXES
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 certifications required by the Internal
Revenue Service ("IRS"), as well as shareholders with respect to whom the Fund
has received notification from the IRS or a broker, may be subject to "backup"
withholding of federal income tax from the Fund's taxable 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, foreign corporations and certain other
foreign entities generally will be subject to a U.S. withholding tax at a rate
of 30% on the Fund's distributions from its ordinary income and the excess of
its net short-term capital gain over its net long-term capital loss, unless the
tax is reduced or eliminated by an applicable tax 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. (the "NASD"), which rule provides that no firm which
is a member of the NASD shall favor or disfavor the distribution of shares of
any particular investment company or group of investment companies on the basis
of brokerage commissions received or expected by such firm from any source.
Securities considered as investments for the Portfolio may also be
appropriate for other investment accounts managed by 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 period from the Portfolio's start of
business, September 18, 1995, to August 31, 1996, the Portfolio paid brokerage
commissions of $241,041 with respect to portfolio transactions. Of this amount,
approximately $211,697 was paid in respect of portfolio security transactions
aggregating approximately $64,655,820 to firms which provided some Research
Services to the Adviser's organization (although many such firms may have been
selected in any particular transaction primarily because of their execution
capabilities).
OTHER INFORMATION
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. Eaton Vance, pursuant to its agreement with the
Trust, controls the use of the words "Eaton Vance" or "EV" in the Fund's name
and may use the words "Eaton Vance" and "EV" in other connections and for other
purposes.
The Declaration of Trust may be amended by the Trustees when authorized by a
vote of 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 Trust will indemnify its Trustees and officers against
liabilities and expenses incurred in connection with any litigation or
proceeding in which they may be involved because of their offices with the
Trust. However, no indemnification will be provided to any Trustee or officer
for any liability to the Trust or its shareholders by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.
Under Massachusetts law, if certain conditions prevail, shareholders of a
Massachusetts business trust (such as the Trust) could be deemed to have
personal liability for the obligations of the Trust. Numerous investment
companies registered under the 1940 Act have been formed as Massachusetts
business trusts, and management is not aware of an instance where such liability
has been imposed. The Trust's Declaration of Trust contains an express
disclaimer of liability on the part of the Fund shareholders and the Trust's
By-Laws provide that the Trust shall assume the defense on behalf of any Fund
shareholders. Moreover, the Trust's By-Laws also provide for indemnification out
of the property of the Fund of any shareholder held personally liable solely by
reason of being or having been a shareholder for all loss or expense arising
from such liability. The assets of the Fund are readily marketable and will
ordinarily substantially exceed its liabilities. In light of the nature of the
Fund's business and the nature of its assets, management believes that the
possibility of the Fund's liabilities exceeding its assets, and therefore the
shareholders's risk of personal liability, is extremely remote.
As permitted by Massachusetts law, there will normally be no meetings of
shareholders for the purpose of electing Trustees unless and until such time as
less than a majority of the Trustees of the Trust holding office have been
elected by shareholders. In such an event the Trustees then in office will call
a shareholder's meeting for the election of Trustees. Except for the foregoing
circumstances and unless removed by action of the shareholders in accordance
with the Trust's By-Laws, the Trustees shall continue to hold office and may
appoint successor Trustees.
The Trust's By-Laws provide that no person shall serve as a Trustee if
shareholders holding two-thirds of the outstanding shares have removed him from
that office either by a written declaration filed with the Trust's custodian or
by votes cast at a meeting called for that purpose. The By-Laws further provide
that under certain circumstances the shareholders may call a meeting to remove a
Trustee and that the Trust is required to provide assistance in communicating
with shareholders about such a meeting.
In accordance with the Declaration of Trust of the Portfolio, there will
normally be no meetings of the investors for the purpose of electing Trustees
unless and until such time as less than a majority of the Trustees holding
office have been elected by investors. In such an event the Trustees of the
Portfolio then in office will call an investors' meeting for the election of
Trustees. Except for the foregoing circumstances and unless removed by action of
the investors in accordance with the Portfolio's Declaration of Trust, the
Trustees shall continue to hold office and may appoint successor Trustees.
The Declaration of Trust of the Portfolio provides that no person shall
serve as a Trustee if investors holding two-thirds of the outstanding interest
have removed him from that office either by a written declaration filed with the
Portfolio's custodian or by votes cast at a meeting called for that purpose. The
Declaration of Trust further provides that under certain circumstances the
investors may call a meeting to remove a Trustee and that the Portfolio is
required to provide assistance in communicating with investors about such a
meeting.
The Portfolio's Declaration of Trust provides that the Portfolio will
terminate 120 days after the complete withdrawal of the Fund or any other
investor in the Portfolio, unless either the remaining investors, by unanimous
vote at a meeting of such investors, or a majority of the Trustees of the
Portfolio, by written instrument consented to by all investors, agree to
continue the business of the Portfolio. This provision is consistent with
treatment of the Portfolio as a partnership for federal income tax purposes.
The right to redeem shares of the Fund can be suspended and the payment of
the redemption price deferred when the Exchange is closed (other than for
customary weekend and holiday closings), during periods when trading on the
Exchange is restricted as determined by the Commission, or during any emergency
as determined by the Commission which makes it impracticable for the Portfolio
to dispose of its securities or value its assets, or during any other period
permitted by order of the Commission for the protection of investors.
INDEPENDENT ACCOUNTANTS
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 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.
FINANCIAL STATEMENTS
The financial statements of the Fund and the Portfolio, which are included
in the Fund's Annual Report to Shareholders, are incorporated by reference into
this SAI and have been so incorporated in reliance on the report of Coopers &
Lybrand, L.L.P., independent accountants, as experts in accounting and auditing.
A copy of the Fund's most recent annual report accompanies this SAI.
Registrant incorporates by reference the audited financial information for
the Funds and Portfolio listed below for the fiscal year ended August 31, 1996,
as previously filed electronically with the Commission:
EV Classic Information Age Fund
Information Age Portfolio
(Accession No. 0000928816-96-000323)
EV Marathon Information Age Fund
Information Age Portfolio
(Accession No. 0000928816-96-000325)
EV Traditional Information Age Fund
Information Age Portfolio
(Accession No. 0000928816-96-000320)
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
PART II
This Part II provides information about EV CLASSIC INFORMATION AGE FUND. The
Fund became a series of the Trust on October 23, 1995.
FEES AND EXPENSES
MANAGER
As of August 31, 1996, the Fund had net assets of $1,390,057. For the period
from the start of business, November 22, 1995, to August 31, 1996, Eaton Vance
earned management fees of $1,729 (equivalent to 0.25% (annualized) of the Fund's
average daily net assets for such period). For the period from the start of
business, November 22, 1995, to August 31, 1996, $36,455 of the Fund's operating
expenses were allocated to Eaton Vance.
DISTRIBUTION PLAN
During the period from the start of business, November 22, 1995, to August
31, 1996, the Principal Underwriter paid to Authorized Firms sales commissions
of $3,738 on sales of shares of the Fund. During the same period, the Fund made
sales commission payments under the Plan to the Principal Underwriter
aggregating $5,186 and the Principal Underwriter received $100 in CDSCs imposed
on early redeeming shareholders. These sales commissions and CDSCs paid to the
Principal Underwriter reduced Uncovered Distribution Charges under the Plan. As
at August 31, 1996, the outstanding Uncovered Distribution Charges of the
Principal Underwriter calculated under the Plan amounted to approximately
$75,000 (which amount was equivalent to 5.4% of the Fund's net assets on such
day). During the period from the start of business, November 22, 1995, to August
31, 1996, the Fund paid or accrued service fees aggregating $1,729, of which
$1,247 was paid to Authorized Firms and the balance of which was retained by the
Principal Underwriter.
PRINCIPAL UNDERWRITER
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. For the
period from the start of business, November 22, 1995, to August 31, 1996, the
Fund paid the Principal Underwriter $12.50 for repurchase transactions handled
by the Principal Underwriter.
TRUSTEES
The fees and expenses of those Trustees of the Trust and of the Portfolio
who are not members of the Eaton Vance organization (the noninterested Trustees)
are paid by the Fund (and the other series of the Trust) and the Portfolio,
respectively. (The Trustees of the Trust and the Portfolio who are members of
the Eaton Vance organization receive no compensation from the Fund or the
Portfolio.) During the fiscal year ended August 31, 1996, the noninterested
Trustees of the Trust and the Portfolio received the following compensation in
their capacities as Trustees from the Fund and the Portfolio and, during the
year ended September 30, 1996, the noninterested Trustees of the Trust and the
Portfolio earned the following compensation in their capacities as Trustees of
the 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 ............ $0 $97(2) $142,500(4)
Samuel L. Hayes, III ........ 0 87(3) 153,750(5)
Norton H. Reamer ............ 0 86 142,500
John L. Thorndike ........... 0 87 147,500
Jack L. Treynor ............. 0 94 147,500
(1) The Eaton Vance fund complex consists of 228 registered investment companies
or series thereof.
(2) Includes $46 of deferred compensation.
(3) Includes $3 of deferred compensation.
(4) Includes $42,500 of deferred compensation.
(5) Includes $37,500 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.
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 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 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 CDSCs and will make no
payments to the Principal Underwriter in respect of any day on which there are
no outstanding Uncovered Distribution Charges of the Principal Underwriter.
CDSCs and accrued amounts will be paid by the 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 CDSCs 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 CDSCs 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 CDSCs theretofore
paid or payable to the Principal Underwriter will be subtracted from such
distribution charges; if the result of such subtraction is positive, a
distribution fee (computed at 1% over the prime rate then reported in The Wall
Street Journal) will be computed on such amount and added thereto, with the
resulting sum constituting the amount of 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 CDSC will be imposed, the level and timing of redemptions of Fund shares upon
which no CDSC will be imposed (including redemptions involving exchanges of Fund
shares pursuant to the exchange privilege which result in a reduction of
Uncovered Distribution Charges), changes in the level of the net assets of the
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, distribution fees and service fees to the Principal
Underwriter 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 and service
fees 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,
distribution fees and CDSCs 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 CDSCs
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 Plan provides that it shall continue in effect 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. The provisions of the
Plan relating to payments of sales commissions and distribution fees to the
Principal Underwriter are also included in the Distribution Agreement between
the Trust on behalf of the Fund and the Principal Underwriter. Pursuant to Rule
12b-1, the Plan has been approved by the Fund's initial sole shareholder (Eaton
Vance) and by the Board of Trustees of the Trust, including the Rule 12b-1
Trustees. 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.
PERFORMANCE INFORMATION
The table below indicates the cumulative and average annual total return on a
hypothetical investment of $1,000 in the Fund covering the period from September
18, 1995 through August 31, 1996. The total return for the period prior to the
Fund's commencement of operations on November 22, 1995 reflects the Portfolio's
total return (or that of its predecessor) adjusted to reflect any applicable
Fund CDSC. Total return for this time period has not been adjusted to reflect
the Fund's distribution and service fees and certain other expenses. If such an
adjustment were made, the performance would be lower.
<TABLE>
<CAPTION>
VALUE OF A $1,000 INVESTMENT
VALUE AFTER TOTAL RETURN BEFORE TOTAL RETURN AFTER
VALUE BEFORE DEDUCTING DEDUCTING CDSC DEDUCTING CDSC*
INVESTMENT INVESTMENT AMOUNT OF DEDUCTING CDSC CDSC* -------------------------- --------------------------
PERIOD DATE INVESTMENT ON 8/31/96 ON 8/31/96 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- -------------- ------------ ----------- --------------- --------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Life of
the Fund** 9/18/95*** $1,000 $1,100.11 $1,090.11 10.01% -- 9.01% --
Past performance is not indicative of future results. Investment return and principal value will fluctuate; shares, when
redeemed, may be worth more or less than their original cost.
- ----------
*No CDSC is imposed on certain redemptions. See the Fund's current Prospectus.
**If a portion of the Fund's expenses had not been subsidized, the Fund would have had lower returns.
***Investment operations began November 22, 1995.
</TABLE>
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As at November 30, 1996, the Trustees and officers of the Trust, as a group,
owned in the aggregate less than 1% of the outstanding shares of the Fund. As of
November 30, 1996, Merrill Lynch, Pierce, Fenner & Smith, Inc., Jacksonville, FL
32246 was the record owner of approximately 61.3% of the outstanding shares,
which were held on behalf of its customers who are the beneficial owners of such
shares, and as to which it had voting power under certain limited circumstances.
In addition, as of the same date the following shareholder owned of record the
percentage of outstanding shares of the Fund indicated after its name: Hin Wai
Law, New York, NY 10013 (5.9%). To the knowledge of the Trust, no other person
owned of record or beneficially 5% or more of the Fund's outstanding shares as
of such date.
<PAGE>
[Logo]
EATON VANCE
================
Mutual Funds
EV CLASSIC
INFORMATION AGE FUND
STATEMENT OF ADDITIONAL INFORMATION
JANUARY 1, 1997
EV CLASSIC
INFORMATION AGE FUND
24 FEDERAL STREET
BOSTON, MA 02110
- --------------------------------------------------------------------------------
SPONSOR AND MANAGER OF EV CLASSIC INFORMATION AGE FUND
ADMINISTRATOR OF INFORMATION AGE PORTFOLIO
Eaton Vance Management and Research, 24 Federal Street, Boston, MA 02110
Lloyd George Investment Management (Bermuda) Limited, 3808 One Exchange Square,
Central, Hong Kong
CO-ADVISERS OF INFORMATION AGE PORTFOLIO
Boston Management and Research, 24 Federal Street, Boston, MA 02110
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc., 24 Federal Street,
Boston, MA 02110 (800) 225-6265
CUSTODIAN
Investors Bank & Trust Company, 89 South Street, Boston, MA 02111
TRANSFER AGENT
First Data Investor Services Group, P.O. Box 5123,
Westborough, MA 01581-5123 (800) 262-1122
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand, L.L.P., One Post Office Square, Boston, MA 02109
C-IASAI
<PAGE>
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
STATEMENT OF
ADDITIONAL INFORMATION
January 1, 1997
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"),
Information Age Portfolio (the "Portfolio") and certain other series of Eaton
Vance Growth Trust (the "Trust"). The Fund's Part II (the "Part II") provides
information solely about the Fund. Where appropriate, Part I includes cross-
references to the relevant sections of Part II that provide additional, Fund-
specific information. This Statement of Additional Information is sometimes
referred to herein as the "SAI."
TABLE OF CONTENTS
Page
PART I
Additional Information About Investment Policies .................. 1
Investment Restrictions ........................................... 5
Trustees and Officers ............................................. 6
Management of the Fund and the Portfolio .......................... 9
Custodian ......................................................... 13
Service for Withdrawal ............................................ 13
Determination of Net Asset Value .................................. 13
Investment Performance ............................................ 14
Taxes ............................................................. 15
Portfolio Security Transactions ................................... 17
Other Information ................................................. 19
Independent Accountants ........................................... 20
Financial Statements .............................................. 20
PART II
Fees and Expenses ................................................. a-1
Principal Underwriter ............................................. a-1
Distribution Plan ................................................. a-2
Performance Information ........................................... a-4
Control Persons and Principal Holders of Securities ............... 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 JANUARY 1, 1997, AS SUPPLEMENTED
FROM TIME TO TIME, WHICH IS INCORPORATED HEREIN BY REFERENCE. THIS STATEMENT
OF ADDITIONAL INFORMATION SHOULD BE READ IN CONJUNCTION WITH SUCH PROSPECTUS,
A COPY OF WHICH MAY BE OBTAINED WITHOUT CHARGE BY CONTACTING EATON VANCE
DISTRIBUTORS, INC. (THE "PRINCIPAL UNDERWRITER") (SEE BACK COVER FOR ADDRESS
AND PHONE NUMBER).
FOR EDGAR FILING PURPOSES ONLY: REGISTRANT INCORPORATES BY REFERENCE FOR
EV MARATHON INFORMATION AGE FUND THE PART I FOUND IN THE STATEMENT OF
ADDITIONAL INFORMATION OF EV CLASSIC INFORMATION AGE FUND CONTAINED IN THIS
AMENDMENT.
<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
MANAGER
As of August 31, 1996, the Fund had net assets of $21,800,478. For the
period from the start of business, September 18, 1995, to August 31, 1996,
Eaton Vance earned management fees of $34,782 (equivalent to 0.25%
(annualized) of the Fund's average daily net assets for such period).
DISTRIBUTION PLAN
For the period from the start of business, September 18, 1995, to August
31, 1996, the Principal Underwriter paid to Authorized Firms sales commissions
of $12,669 on sales of shares of the Fund. During the same period, the Fund
made sales commission payments under the Plan to the Principal Underwriter
aggregating $104,346 and the Principal Underwriter received approximately
$41,000 in CDSCs imposed on early redeeming shareholders. These sales
commissions and CDSCs paid to the Principal Underwriter reduced Uncovered
Distribution Charges under the Plan. At August 31, 1996, the outstanding
Uncovered Distribution Charges of the Principal Underwriter calculated under
the Plan amounted to approximately $923,000 (which amount was equivalent to
4.2% of the Fund's net assets on such day). The Fund began making service fee
payments during the quarter ending September 30, 1996.
PRINCIPAL UNDERWRITER
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. For the
period from the start of business, September 18, 1995, to August 31, 1996, the
Fund paid the Principal Underwriter $287 for repurchase transactions handled
by the Principal Underwriter.
TRUSTEES
The fees and expenses of those Trustees of the Trust and of the Portfolio
who are not members of the Eaton Vance organization (the noninterested
Trustees) are paid by the Fund (and the other series of the Trust) and the
Portfolio, respectively. (The Trustees of the Trust and the Portfolio who are
members of the Eaton Vance organization receive no compensation from the Fund
or the Portfolio.) During the fiscal year ended August 31, 1996, the
noninterested Trustees of the Trust and the Portfolio received the following
compensation in their capacities as Trustees from the Fund and the Portfolio
and, during the year ended September 30, 1996, 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 ........... $18 $97(2) $142,500(4)
Samuel L. Hayes, III ....... 16 87(3) 153,750(5)
Norton H. Reamer ........... 16 86 142,500
John L. Thorndike .......... 16 87 147,500
Jack L. Treynor ............ 17 94 147,500
(1) The Eaton Vance fund complex consists of 228 registered investment
companies or series thereof.
(2) Includes $46 of deferred compansation.
(3) Includes $3 of deferred compensation.
(4) Includes $42,500 of deferred compensation.
(5) Includes $37,500 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.
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
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 CDSCs and will make no
payments to the Principal Underwriter in respect of any day on which there are
no outstanding Uncovered Distribution Charges of the Principal Underwriter.
CDSCs and accrued amounts will be paid by the 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 CDSCs
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 CDSCs 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 CDSCs
theretofore paid or payable to the Principal Underwriter will be subtracted
from such distribution charges; if the result of such subtraction is positive,
a distribution fee (computed at 1% over the prime rate then reported in The
Wall Street Journal) will be computed on such amount and added thereto, with
the resulting sum constituting the amount of 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 CDSC will be imposed, the level and timing of redemptions
of Fund shares upon which no CDSC will be imposed (including redemptions
involving exchanges of Fund shares pursuant to the exchange privilege which
result in a reduction of Uncovered Distribution Charges), changes in the level
of the net assets of the 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." 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 CDSCs 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 CDSCs 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.
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 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. 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. 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.
PERFORMANCE INFORMATION
The table below indicates the cumulative and average total return on a
hypothetical investment of $1,000 in the Fund covering the life of the Fund
from September 18, 1995 through August 31, 1996.
<TABLE>
<CAPTION>
VALUE OF A $1,000 INVESTMENT
VALUE OF VALUE OF
INVEST- INVEST-
MENT BEFORE MENT AFTER TOTAL RETURN BEFORE TOTAL RETURN AFTER
DEDUCTING THE DEDUCTING THE DEDUCTING THE CDSC DEDUCTING THE CDSC**
INVESTMENT INVESTMENT AMOUNT OF CDSC ON CDSC** ON -------------------------- --------------------------
PERIOD DATE INVESTMENT 8/31/96 8/31/96 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- -------------- ------------ ----------- --------------- --------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Life of the
Fund 9/18/95* $1,000 $1,104.00 $1,054.00 10.40% -- 5.40% --
Past performance is not indicative of future results. Investment return and principal value will fluctuate; shares, when
redeemed, may be worth more or less than their original cost.
- ----------
*Investment operations began on September 18, 1995.
**No CDSC is imposed on certain redemptions. See the Fund's current
Prospectus.
</TABLE>
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As at November 30, 1996, the Trustees and officers of the Trust, as a
group, owned in the aggregate less than 1% of the outstanding shares of the
Fund. As of November 30, 1996, Merrill Lynch, Pierce, Fenner & Smith, Inc.,
Jacksonville, FL 32246 was the record owner of approximately 29.8% of the
outstanding shares, which were held on behalf of its customers who are the
beneficial owners of such shares, and as to which it had voting power under
certain limited circumstances. To the knowledge of the Trust, no other person
owned of record or beneficially 5% or more of the Fund's outstanding shares as
of such date.
<PAGE>
[Logo]
EATON VANCE
================
Mutual Funds
- ------------------------------------------------------------------------------
EV MARATHON
INFORMATION
AGE FUND
STATEMENT OF
ADDITIONAL INFORMATION
JANUARY 1, 1997
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, 89 South Street, Boston, MA 02111
TRANSFER AGENT
First Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123
(800) 262-1122
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P., One Post Office Square, Boston, MA 02109
M-IASAI
<PAGE>
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
STATEMENT OF
ADDITIONAL INFORMATION
January 1, 1997
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"),
Information Age Portfolio (the "Portfolio") and certain other series of Eaton
Vance Growth Trust (the "Trust"). The Fund's Part II (the "Part II") provides
information solely about the Fund. Where appropriate, Part I includes cross-
references to the relevant sections of Part II that provide additional, Fund-
specific information. This Statement of Additional Information is sometimes
referred to herein as the "SAI."
TABLE OF CONTENTS
Page
PART I
Additional Information About Investment Policies ..................... 1
Investment Restrictions .............................................. 5
Trustees and Officers ................................................ 6
Management of the Fund and the Portfolio ............................. 9
Custodian ............................................................ 13
Service for Withdrawal ............................................... 13
Determination of Net Asset Value ..................................... 13
Investment Performance ............................................... 14
Taxes ................................................................ 15
Portfolio Security Transactions ...................................... 17
Other Information .................................................... 19
Independent Accountants .............................................. 20
Financial Statements ................................................. 20
PART II
Fees and Expenses .................................................... a-1
Services for Accumulation ............................................ a-1
Principal Underwriter ................................................ a-2
Distribution Plan .................................................... a-3
Performance Information .............................................. a-4
Control Persons and Principal Holders of Securities .................. 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 JANUARY 1, 1997, AS SUPPLEMENTED
FROM TIME TO TIME, WHICH IS INCORPORATED HEREIN BY REFERENCE. THIS STATEMENT
OF ADDITIONAL INFORMATION SHOULD BE READ IN CONJUNCTION WITH SUCH PROSPECTUS,
A COPY OF WHICH MAY BE OBTAINED WITHOUT CHARGE BY CONTACTING EATON VANCE
DISTRIBUTORS, INC. (THE "PRINCIPAL UNDERWRITER") (SEE BACK COVER FOR ADDRESS
AND PHONE NUMBER).
FOR EDGAR FILING PURPOSES ONLY: REGISTRANT INCORPORATES BY REFERENCE FOR
EV TRADITIONAL INFORMATION AGE FUND THE PART I FOUND IN THE STATEMENT OF
ADDITIONAL INFORMATION OF EV CLASSIC INFORMATION AGE FUND CONTAINED IN THIS
AMENDMENT.
<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
MANAGER
As of August 31, 1996, the Fund had net assets of $12,002,567. For the
period from the start of business, September 18, 1995, to August 31, 1996,
Eaton Vance earned management fees of $20,802 (equivalent to 0.25%
(annualized) of the Fund's average daily net assets for such period).
DISTRIBUTION PLAN
For the period from the start of business, September 18, 1995, to August
31, 1996, the Fund paid distribution fees under the Plan to the Principal
Underwriter aggregating $41,605. The Fund began making service fee payments
during the quarter ending September 30, 1996.
PRINCIPAL UNDERWRITER
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. For the
period from the start of business, September 18, 1995, to August 31, 1996, the
Fund paid the Principal Underwriter $261.00 for repurchase transactions
handled by the Principal Underwriter.
The total sales charges for sales of shares of the Fund during the period
from the start of business, September 18, 1995, to August 31, 1996, was
$409,516, of which $40,334 was received by the Principal Underwriter and
Authorized Firms received $369,182.
TRUSTEES
The fees and expenses of those Trustees of the Trust and of the Portfolio
who are not members of the Eaton Vance organization (the noninterested
Trustees) are paid by the Fund (and the other series of the Trust) and the
Portfolio, respectively. (The Trustees of the Trust and the Portfolio who are
members of the Eaton Vance organization receive no compensation from the Fund
or the Portfolio.) During the fiscal year ended August 31, 1996, the
noninterested Trustees of the Trust and the Portfolio received the following
compensation in their capacities as Trustees from the Fund and the Portfolio
and, during the year ended September 30, 1996, 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):
<TABLE>
<CAPTION>
AGGREGATE AGGREGATE TOTAL COMPENSATION
COMPENSATION COMPENSATION FROM TRUST AND
NAME FROM FUND FROM PORTFOLIO FUND COMPLEX
---- ------------ -------------- ------------------
<S> <C> <C> <C>
Donald R. Dwight .............................. $18 $97(2) $142,500(4)
Samuel L. Hayes, III .......................... 16 87(3) 153,750(5)
Norton H. Reamer .............................. 16 86 142,500
John L. Thorndike ............................. 16 87 147,500
Jack L. Treynor ............................... 17 94 147,500
- ----------
(1) The Eaton Vance fund complex consists of 228 registered investment
companies or series thereof.
(2) Includes $46 of deferred compensation.
(3) Includes $3 of deferred compensation.
(4) Includes $42,500 of deferred compensation.
(5) Includes $37,500 of deferred compensation.
</TABLE>
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 Authorized Firm which has an agreement with 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 which have agreements with the Principal
Underwriter. 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.
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.
PERFORMANCE INFORMATION
The table below indicates the cumulative and average annual total return
on a hypothetical investment of $1,000 in the Fund covering the life of the
Fund from September 18, 1995 through August 31, 1996.
<TABLE>
<CAPTION>
VALUE OF A $1,000 INVESTMENT
TOTAL RETURN EXCLUDING TOTAL RETURN INCLUDING
VALUE OF VALUE OF MAXIMUM SALES CHARGE MAXIMUM SALES CHARGE
INVESTMENT INVESTMENT INITIAL INVESTMENT ------------------------------ ------------------------------
PERIOD DATE INVESTMENT* ON 8/31/96 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
---------- ---------- ----------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Life of
the Fund 9/18/95 $952.38 $1,053.33 10.60% -- 5.33% --
Past performance is not indicative of future results. Investment return and principal value will fluctuate; shares, when
redeemed, may be worth more or less than their original cost.
<FN>
- ----------
*Initial investment less the maximum sales charge of 4.75%.
</FN>
</TABLE>
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As at November 30, 1996, the Trustees and officers of the Trust, as a
group, owned in the aggregate less than 1% of the outstanding shares of the
Fund. As of November 30, 1996, Merrill Lynch, Pierce, Fenner & Smith, Inc.,
Jacksonville, FL 32246, was the record owner of approximately 21.9% of the
outstanding shares, which were held on behalf of its customers who are the
beneficial owners of such shares, and as to which it had voting power under
certain limited circumstances. In addition, as of the same date the following
shareholder owned of record the percentage of outstanding shares of the Fund
indicated after its name: Profit Sharing Retirement Plan of Eaton Vance
Management, Inc., Boston, MA 02110 (9.0%). To the knowledge of the Trust, no
other person owned of record or beneficially 5% or more of the Fund's
outstanding shares as of such date.
<PAGE>
[Logo]
EATON VANCE
================
Mutual Funds
EV TRADITIONAL
INFORMATION
AGE FUND
STATEMENT OF
ADDITIONAL INFORMATION
JANUARY 1, 1997
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, 89 South Street, Boston, MA 02111
TRANSFER AGENT
First Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123
(800) 262-1122
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P., One Post Office Square, Boston, MA 02109
T-IASAI
<PAGE>
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
STATEMENT OF
ADDITIONAL INFORMATION
January 1, 1997
EV MARATHON GOLD & NATURAL RESOURCES FUND
24 Federal Street
Boston, Massachusetts 02110
(800) 225-6265
- ------------------------------------------------------------------------------
TABLE OF CONTENTS Page
Additional Information about Investment Policies ....................... 2
Investment Restrictions ................................................ 6
Trustees and Officers .................................................. 8
Control Persons and Principal Holders of Securities .................... 10
Investment Adviser ..................................................... 10
Custodian .............................................................. 13
Service for Withdrawal ................................................. 13
Determination of Net Asset Value ....................................... 13
Investment Performance ................................................. 14
Taxes .................................................................. 15
Principal Underwriter .................................................. 17
Distribution Plan ...................................................... 17
Portfolio Security Transactions ........................................ 19
Other Information ...................................................... 21
Independent Certified Public Accountants ............................... 22
Financial Statements ................................................... 22
- ------------------------------------------------------------------------------
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR
ACCOMPANIED BY THE PROSPECTUS OF EV MARATHON GOLD & NATURAL RESOURCES FUND (THE
"FUND") DATED JANUARY 1, 1997, AS SUPPLEMENTED FROM TIME TO TIME, WHICH IS
INCORPORATED BY REFERENCE. THIS STATEMENT OF ADDITIONAL INFORMATION SHOULD BE
READ IN CONJUNCTION WITH SUCH PROSPECTUS, A COPY OF WHICH MAY BE OBTAINED
WITHOUT CHARGE BY CONTACTING EATON VANCE DISTRIBUTORS, INC. (THE "PRINCIPAL
UNDERWRITER") (SEE BACK COVER FOR ADDRESS AND PHONE NUMBER).
<PAGE>
ADDITIONAL INFORMATION ABOUT INVESTMENT POLICIES
Capitalized terms used in this Statement of Additional Information ("SAI")
and not otherwise defined have the meanings given them in the Fund's Prospectus.
PORTFOLIO TURNOVER
The Fund's investment adviser, Eaton Vance will change the Fund's
investments whenever it believes a change may be appropriate, without regard to
how long a particular investment may have been held. Changes in investments
generally involve expenses to the Fund, which may include brokerage commissions
or dealer mark-ups and other transaction costs on the disposition of investments
and reinvestment of the proceeds in other investments, and may result in net
capital gains distributions of which will be subject to tax. The Fund's
investment policies and strategies may result in a higher portfolio turnover
rate than that experienced by other mutual funds. The Fund's portfolio turnover
rate will not be a limiting factor when Eaton Vance considers a change in the
Fund's investment portfolio, and in any fiscal year such rate could exceed 100%.
ASSET-RELATED SECURITIES
The Fund's investment adviser will evaluate the creditworthiness of the
issuer of an asset-related security. If the asset-related security is backed by
a bank letter of credit or other similar facility, the investment adviser may
take such backing into consideration in determining the creditworthiness of the
issuer.
While the market prices for an asset-related security and the related
natural resource asset generally are expected to move in the same direction,
there may not be perfect correlation in the two price movements. Asset- related
securities may not necessarily be secured by a security interest in or claim on
the underlying natural resource asset.
The Fund will not acquire asset-related securities for which no trading
market exists if at the time of acquisition more than 10% of its total assets
are invested in securities which are not readily marketable. The Fund may invest
in asset-related securities without limit when it has the option to put such
securities to the issuer or a stand-by bank or broker and receive the principal
amount or redemption price thereof less transaction costs on no more than seven
days notice or when the Fund has the right to convert or exchange such
securities into a readily marketable security in which it could otherwise invest
upon not less than seven days notice.
The asset-related securities in which the Fund may invest may bear interest
or pay preferred dividends at below market (or even relatively nominal) rates.
The Fund's holdings of such securities therefore may not generate appreciable
current income, and the return from such securities primarily will be from any
profit on the sale, maturity or conversion thereof at a time when the price of
the related asset is higher than it was when the Fund purchased such securities.
As an example, assume gold is selling at a market price of $300 per ounce and an
issuer sells a $1,000 face amount gold related note with a seven year maturity,
payable at maturity at the greater of either $1,000 in cash or the then market
price of three ounces of gold. If at maturity, the market price of gold is $400
per ounce, the amount payable on the note would be $1,200. Certain asset-related
securities may be payable at maturity in cash at the stated principal amount, or
at the option of the holder, directly in a stated amount of the asset to which
it is related. In such instance the Fund may sell the asset-related security in
the secondary market, to the extent one exists, prior to the maturity if the
value of the stated amount of the asset exceeds the stated principal amount and
thereby realize the appreciation in the underlying asset.
METALS INVESTMENTS
In making direct investments in bullion or metals, the Fund normally will
not take possession of the bullion or metals, but instead will obtain receipts
or certificates representing ownership. In the event the Fund does take
possession, the bullion or metals would be delivered to and held by a
non-affiliated sub-custodian in a segregated account. When it purchases bullion
or metals, either by purchasing receipts or certificates or by having a
sub-custodian physically hold such metals, the Fund will pay for the metals only
upon actual receipt. Although the Fund would incur storage, shipping and other
costs by owning bullion or metals, such costs should be minimized by the use of
receipts or certificates.
FOREIGN INVESTMENTS
Investing in foreign issuers involves certain special considerations,
including those set forth below, which are not typically associated with
investing in U.S. issuers. Since investments in foreign issuers may involve
currencies of foreign countries, and since the Fund may temporarily hold funds
in bank deposits in foreign currencies during completion of investment programs,
the Fund may be affected favorably or unfavorably by changes in currency rates
and in exchange control regulations and may incur costs in connection with
conversions between various currencies.
Since foreign companies are not generally subject to uniform accounting,
auditing and financial reporting standards, practices and requirements
comparable to those applicable to U.S. companies, there may be less publicly
available information about a foreign company than about a domestic company.
Foreign stock markets, while growing in volume of trading activity, have
substantially less volume than the Exchange, and securities of some foreign
companies are less liquid and more volatile than securities of comparable U.S.
companies. Similarly, volume and liquidity in most foreign bond markets is less
than in the United States and, at times, volatility of price can be greater than
in the United States. Fixed commissions on foreign stock exchanges are generally
higher than negotiated commissions on U.S. exchanges, although the Fund
endeavors to achieve the most favorable net results on its portfolio
transactions. There is generally less government supervision and regulation of
stock exchanges, brokers and listed companies than in the United States. Mail
service between the United States and foreign countries may be slower or less
reliable than within the United States, thus increasing the risk of delayed
settlements of portfolio transactions or loss of certificates for portfolio
securities. In addition, with respect to certain foreign countries, there is the
possibility of expropriation or confiscatory taxation, political or social
instability, or diplomatic developments which could affect the Fund's
investments in those countries. Moreover, individual foreign economies may
differ favorably or unfavorably from the U.S. economy in such respects as growth
of gross national product, rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payments position. In some countries delayed
settlements are customary, which increases the risk of loss.
Depository receipts are not necessarily denominated in the same currency as
the securities into which they may be converted. American Depository Receipts
("ADRs") are receipts typically issued by a U.S. banking institution evidencing
ownership of the underlying securities; European Depository Receipts ("EDRs")
are receipts evidencing a similar arrangement with a European banking
institution. Generally ADRs, in registered form, are designed for use in U.S.
securities markets and EDRs, in bearer form, are designed for use in European
securities markets. Such securities may or may not be listed on a foreign
securities exchange.
FOREIGN CURRENCY TRANSACTIONS
The value of the assets of the Fund 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 Fund may conduct its foreign currency exchange
transactions on a spot (i.e., cash) basis at the spot rate prevailing in the
foreign currency exchange market or through entering into swaps, forward
contracts, options or futures on currency. In spot transactions, foreign
exchange dealers do not charge a fee for conversion, but they do realize a
profit based on the difference (the "spread") between the prices at which they
are buying and selling various currencies. Thus, a dealer may offer to sell a
foreign currency to the Fund at one rate, while offering a lesser rate of
exchange should the Fund desire to resell that currency to the dealer.
Currency swaps require maintenance of a segregated account as described
under "Asset Coverage Requirements" below. The Fund 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 Eaton Vance.
The Fund may enter into forward foreign currency exchange contracts in
several circumstances. First, when the Fund enters into a contract for the
purchase or sale of a security denominated in a foreign currency, or when the
Fund anticipates the receipt in a foreign currency of dividend or interest
payments on such a security which it holds, the Fund may desire to "lock in" the
U.S. dollar price of the security or the U.S. dollar equivalent of such dividend
or interest payment, as the case may be. By entering into a forward contract for
the purchase or sale, for a fixed amount of dollars, of the amount of foreign
currency involved in the underlying transactions, the Fund will attempt to
protect itself against an adverse change in the relationship between the U.S.
dollar and the subject foreign currency during the period between the date on
which the security is purchased or sold, or on which the dividend or interest
payment is declared, and the date on which such payments are made or received.
Additionally, when management of the Fund believes that the currency of a
particular foreign country may suffer a substantial decline against the U.S.
dollar, it may enter into a forward contract to sell, for a fixed amount of
dollars, the amount of foreign currency approximating the value of some or all
of the Fund's portfolio securities denominated in such foreign currency. The
precise matching of the forward contract amounts and the value of the securities
involved will not generally be possible because the future value of such
securities in foreign currencies will change as a consequence of market
movements in the value of those securities between the date on which the
contract is entered into and the date it matures. The precise projection of
short-term currency market movements is not possible, and short-term hedging
provides a means of fixing the dollar value of only a portion of the Fund's
foreign assets. The Fund will not enter into forward contracts or maintain a net
exposure to such contracts where the consummation of the contracts would
obligate the Fund to deliver an amount of foreign currency in excess of the
value of the Fund's portfolio securities or other assets denominated in that
currency. The Fund generally will not enter into a forward contract with a term
of greater than one year.
RISKS ASSOCIATED WITH DERIVATIVE INSTRUMENTS
Entering into a derivative instrument involves a risk that the applicable
market will move against the Fund's position and that the Fund 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
Fund. Derivative instruments may sometimes increase or leverage the Fund's
exposure to a particular market risk. Leverage enhances the Fund's exposure to
the price volatility of derivative instruments it holds. The Fund'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 Fund's 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 Fund from closing out
positions and limiting its losses. The staff of the Commission takes the
position that certain purchased OTC options, and assets used as cover for
written OTC options, are subject to the Fund's 10% limit on illiquid
investments. The Fund's ability to terminate OTC derivative instruments may
depend on the cooperation of the counterparties to such contracts. For thinly
traded derivative instruments, the only source of price quotations may be the
selling dealer or counterparty. In addition, certain provisions of the Code,
limit the extent to which the Fund may purchase and sell derivative instruments.
The Fund will engage in transactions in futures contracts and related options
only to the extent such transactions are consistent with the requirements of the
Code for maintaining the qualification of the Fund as a regulated investment
company for federal income tax purposes.
See "Taxes".
LIMITATIONS ON FUTURES CONTRACTS AND OPTIONS FUND
The Fund may enter into futures contracts (and options thereon) traded on a
foreign exchange if it is determined by Eaton Vance that trading on such
exchange does not subject the Fund to risks, including credit and liquidity
risks, that are materially greater than the risks associated with trading on
United States exchanges regulated by the CFTC.
The Fund does not intend to write a covered option on any security if after
such transaction more than 15% of its net assets, as measured by the aggregate
value of the securities underlying all covered calls and puts written by the
Fund, would be subject to such options. The Fund will only write a put option on
a security which it intends to ultimately acquire for its portfolio. The Fund
does not intend to purchase any options if after such transaction more than 5%
of its net assets, as measured by the aggregate of all premiums paid for all
such options held by the Fund, would be so invested.
REPURCHASE AGREEMENTS
The Fund may enter into repurchase agreements with respect to its permitted
investments with member banks of the Federal Reserve System or with primary
dealers in U.S. Government securities. Under a repurchase agreement the Fund
buys a security at one price and simultaneously promises to sell that same
security back to the seller at a higher price. The repurchase date is usually
within seven days of the original purchase date. At no time will the Fund commit
more than 10% of its assets to repurchase agreements which mature in more than
seven days. Repurchase agreements are deemed to be loans under the 1940 Act. In
all cases Eaton Vance must be satisfied with the creditworthiness of the other
party to the agreement before entering into a repurchase agreement. In the event
of the bankruptcy of the other party to a repurchase agreement, the Fund might
experience delays in recovering its cash. To the extent that, in the meantime,
the value of the securities the Fund purchased may have decreased, the Fund
could experience a loss. The Fund's repurchase agreements will provide that the
value of the collateral underlying the repurchase agreement will always be at
least equal to the repurchase price, including any accrued interest earned on
the repurchase agreement, and will be marked to market daily.
REVERSE REPURCHASE AGREEMENTS
The Fund may enter into reverse repurchase agreements. Under a reverse
repurchase agreement, the Fund temporarily transfers possession of a portfolio
instrument to another party, such as a bank or broker-dealer, in return for
cash. At the same time, the Fund agrees to repurchase the instrument at an
agreed upon time (normally within seven days) and price, which reflects an
interest payment. The Fund expects that it will enter into reverse repurchase
agreements when it is able to invest the cash so acquired at a rate higher than
the cost of the agreement, which would increase the income earned by the Fund.
The Fund could also enter into reverse repurchase agreements as a means of
raising cash to satisfy redemption requests without the necessity of selling
portfolio assets.
When the Fund enters into a reverse repurchase agreement, any fluctuations
in the market value of either the securities transferred to another party or the
securities in which the proceeds may be invested would affect the market value
of the Fund's assets. As a result, such transactions may increase fluctuations
in the market value of the Fund's assets. While there is a risk that large
fluctuations in the market value of the Fund's assets could affect the Fund's
net asset value per share, this risk is not significantly increased by entering
into reverse repurchase agreements, in the opinion of Eaton Vance. Because
reverse repurchase agreements may be considered to be the practical equivalent
of borrowing funds, they constitute a form of leverage. If the Fund reinvests
the proceeds of a reverse repurchase agreement at a rate lower than the cost of
the agreement, entering into the agreement will lower the Fund's yield. Reverse
repurchase agreements will be included within the aggregate limitation on
"borrowings" contained in the Fund's investment restriction (1) set forth below.
LEVERAGE THROUGH BORROWING
The Fund will not always borrow money for additional investments. The Fund's
willingness to borrow money, and the amount it will borrow, will depend on many
factors, the most important of which are market conditions and interest rates.
The 1940 Act requires the Fund to maintain continuous asset coverage of not
less than 300% with respect to its borrowings. This allows the Fund to borrow
for leverage purposes an amount equal to as much as 50% of the value of its net
assets (not including such borrowings). If such asset coverage should decline to
less than 300% due to market fluctuations or other reasons, the Fund may be
required to sell some of its portfolio holdings within three days in order to
reduce the Fund's debt and restore the 300% asset coverage, even though it may
be disadvantageous from an investment standpoint to sell such holdings at that
time. The practice of leveraging to enhance investment return may be viewed as a
speculative activity. Leveraging will exaggerate any increase or decrease in the
market value of the Fund's portfolio. Money borrowed for leveraging will be
subject to interest costs which may or may not exceed the income from the
investments acquired with the borrowed funds. The Fund may also be required to
maintain minimum average balances in connection with such borrowing or to pay a
commitment or other fee to maintain a line of credit; either of these
requirements will increase the cost of borrowing over the stated interest rate.
The Fund, like many other investment companies, may also borrow money for
temporary or emergency purposes, but such borrowings may not exceed 10% of the
value of the Fund's gross assets when the loan is made.
ASSET COVERAGE REQUIREMENTS
Transactions involving reverse repurchase agreements, forward contracts or
futures contracts and options (other than options that the Fund has purchased)
expose the Fund to an obligation to another party. The Fund will not enter into
any such transactions unless it owns either (1) an offsetting ("covered")
position in securities or other options, forward contracts or futures contracts,
or (2) cash or liquid securities with a value sufficient at all times to cover
its potential obligations not covered as provided in (1) above. The Fund will
comply with Commission guidelines regarding cover for these instruments and, if
the guidelines so require, set aside cash or liquid securities in a segregated
account with its custodian in the prescribed amount. The securities in the
segregated account will be marked to market daily.
Assets used as cover or held in a segregated account cannot be sold while
the position requiring coverage or segregation is outstanding unless they are
replaced with other appropriate assets. As a result, the commitment of a large
portion of the Fund's assets to segregated accounts or to cover could impede
portfolio management or the Fund's ability to meet redemption requests or other
current obligations.
CONVERTIBLE SECURITIES
The Fund may from time to time invest a portion of its assets in debt
securities and preferred stocks which are convertible into, or carry the right
to purchase, common stock or other equity securities. The debt security or
preferred stock (such as Canadian special warrants) may itself be convertible
into or exchangeable for equity securities, or the purchase right may be
evidenced by warrants attached to the security or acquired as part of a unit
with the security. Convertible securities may be purchased for their
appreciation potential when they yield more than the underlying securities at
the time of purchase or when they are considered to present less risk of
principal loss than the underlying securities. Generally speaking, the interest
or dividend yield of a convertible security is somewhat less than that of a
non-convertible security of similar quality issued by the same company.
WARRANTS
Warrants are an option to purchase equity securities at a specific price
valid for a specific period of time. They do not represent ownership of the
securities, but only the right to buy them. The prices of warrants do not
necessarily move parallel to the prices of the underlying securities. Warrants
may become valueless if not sold or exercised prior to their expiration.
(Canadian special warrants issued in private placements prior to a public
offering are not considered warrants for purposes of the Fund's investment
restrictions).
INVESTMENT RESTRICTIONS
The following investment restrictions (1) through (14) are designated as
fundamental policies and as such cannot be changed without the approval of the
holders of a majority of the Fund's outstanding voting securities, which as used
in this SAI means the lesser of (a) 67% of the shares of the Fund present or
represented by proxy at a meeting if the holders of more than 50% of the shares
are present or represented at the meeting or (b) more than 50% of the shares of
the Fund. Accordingly, the Fund may not:
(1) Borrow money, except that it may borrow
(i) from banks to purchase or carry securities, commodities,
commodities contracts or other investments, or
(ii) from banks for temporary or emergency purposes not in excess of
10% of its gross assets taken at market value, or
(iii) by entering into reverse repurchase agreements,
if, immediately after any such borrowing, the value of the Fund's assets,
including all borrowings then outstanding, less its liabilities, is equal to at
least 300% of the aggregate amount of borrowings then outstanding (for the
purpose of determining the 300% asset coverage, the Fund's liabilities will not
include amounts borrowed). Any such borrowings may be secured or unsecured. The
Fund may issue securities (including senior securities) appropriate to evidence
the indebtedness, including reverse repurchase agreements, which the Fund is
permitted to incur.
(2) Pledge its assets, except that the Fund may pledge not more than
one-third of its total assets (taken at current value) to secure borrowings made
in accordance with investment restriction (1) above; for the purpose of this
restriction the deposit of cash, cash equivalents, portfolio securities or other
assets in a segregated account with the Fund's custodian in connection with any
of the Fund's investment transactions is not considered to be a pledge.
(3) Purchase securities on margin (but the Fund may obtain such short-term
credits as may be necessary for the clearance of purchases and sales of
securities).
(4) Make short sales of securities, unless at all times when a short sale
position is open the Fund either owns an equal amount of such securities or owns
securities convertible into or exchangeable for securities of the same issue as,
and equal in amount to, the securities sold short.
(5) Purchase securities of any issuer if such purchase, at the time thereof,
would cause more than 10% of the total outstanding voting securities of such
issuer to be held by the Fund; this restriction will not apply during periods
when management of the Fund anticipates significant economic, political or
financial instability.
(6) Purchase securities issued by any other investment company, except in
connection with a merger, consolidation, acquisition of assets or
reorganization, or by purchase in the open market of securities of closed-end
investment companies where no underwriter's or dealer's commission or profit,
other than customary broker's commission, is involved and only if immediately
thereafter not more than 10% of the Fund's total assets (taken at current value)
would be invested in such securities.
(7) Purchase or retain in its portfolio any securities issued by an issuer
any of whose officers, directors, trustees or security holders is an officer or
Trustee of the Trust or is a member, officer, director or trustee of any
investment adviser of the Fund, if after the purchase of the securities of such
issuer by the Fund one or more of such persons owns beneficially more than 1/2
of 1% of the shares or securities or both (all taken at current value) of such
issuer and such persons owning more than 1/2 of 1% of such shares or securities
together own beneficially more than 5% of such shares or securities or both (all
taken at current value).
(8) Underwrite securities issued by other persons, except insofar as it may
technically be deemed to be an underwriter under the Securities Act of 1933 in
selling or disposing of a portfolio security.
(9) Make loans to other persons, except by (a) the acquisition of money
market instruments, debt securities and other obligations in which the Fund is
authorized to invest in accordance with its investment objective and policies,
(b) entering into repurchase agreements and (c) lending its portfolio
securities.
(10) Invest for the purpose of gaining control of a company's management.
(11) Purchase or sell real estate, although it may purchase and sell
securities which are secured by interests in real estate or interests therein
and securities of issuers (including real estate investment trusts) which invest
or deal in real estate or interests therein.
(12) Buy investment securities from or sell them to any of its officers or
Trustees, its investment adviser or its principal underwriter, as principal;
provided, however, that any such person or firm may be employed as a broker upon
customary terms.
(13) Purchase oil, gas or other mineral leases or purchase partnership
interests in oil, gas or other mineral exploration or development programs; this
restriction shall not be deemed to limit or restrict the Fund's investments in
securities issued by companies that engage in oil, gas or other mineral
exploration or development activities.
(14) Knowingly (i) purchase a security issued by a Venture Capital Company
(a company the securities of which have no public market at the time the
investment is made) or which at the time of purchase cannot be readily resold
because of legal or contractual restrictions or for which at the time of
purchase there is clearly no readily available market, (ii) invest in options on
foreign currencies which are not traded on an exchange or board of trade or
(iii) enter into a repurchase agreement maturing in more than seven days if, as
a result, more than 10% of the Fund's total assets (taken at current value)
would be invested in such securities, options and repurchase agreements. The
following securities are not subject to this restriction: securities which the
Fund has a right to convert or exchange into a readily marketable security in
which it could otherwise invest upon not less than seven days notice; securities
which the Fund has the option to put to the issuer or a stand-by bank or broker
and receive the principal amount of redemption price less transaction costs on
not more than seven days notice; and securities (purchased by the Fund at a time
when the issuer was a Venture Capital Company) of a company which has ceased to
be a Venture Capital Company provided that such securities are readily
marketable.
For the purpose of investment restrictions (1), (2) and (3), the
arrangements (including escrow, margin and collateral arrangements) made by the
Fund with respect to its transactions in all types of options, futures
contracts, options on futures contracts, forward contracts, currencies, coins,
bullion, and commodities and options thereon shall not be considered to be (i) a
borrowing of money or the issuance of securities (including senior securities)
by the Fund, (ii) a pledge of its assets, or (iii) the purchase of a security on
margin.
In connection with investment restriction (9) above, the Fund has no present
intention of lending its portfolio securities. The Fund would lend its portfolio
securities to increase its income only if and when the Trustees determine such
activity to be appropriate, and such loans would be subject to such policies and
conditions as the Trustees may impose to safeguard the Fund's assets. The
Prospectus and SAI of the Fund will be amended to describe Fund lending policies
prior to the lending of portfolio securities, except to the extent repurchase
agreements may be deemed to be loans of securities.
The Fund has adopted the following additional fundamental investment
policies which may not be changed without the approval of the holders of a
majority of the Fund's outstanding voting securities:
(A) During normal market conditions the Fund will invest at least 25% of
its total assets in the natural resource group of industries, except when
such percentage is reduced as a result of a decrease in value of the assets
so invested or during such times when management believes that the assets so
invested should be redeployed for defensive purposes or during such times
when management believes that the assets so invested should be redeployed in
obligations or other securities, the principal amount, redemption terms or
conversion terms of which are related to the market price of some natural
resource asset such as gold bullion; the Fund may invest more than 25% of
its total assets in any industry in the natural resource group of
industries; and the Fund may invest up to 25% of its total assets, taken at
market value at the time of each investment, in any other industry. For the
purposes of this policy, an investment by the Fund in gold or silver
bullion, other precious metals, strategic metals, or gold or silver coins,
or in securities issued by companies deemed by the Fund's investment adviser
to be engaged in the natural resource investment sector (as from time to
time described in the Fund's Prospectus), shall be considered as an
investment in the natural resource group of industries.
(B) The Fund may purchase and sell commodities and commodities contracts
(including without limitation futures contracts and options on futures
contracts) of all types and kinds.
In connection with investment policy (B) above, the Fund's present
intentions with respect to its investments in commodities and commodities
contracts are set forth in the Fund's Prospectus and elsewhere in this SAI. The
Fund would make other types of investments in commodities and commodities
contracts only if and when the Trustees determine such activity is appropriate;
any such additional investment activity will be disclosed in the Fund's
Prospectus or SAI or in an amendment to either of them.
The Fund has adopted the following policies which may be changed without
shareholder approval. The Fund currently does not intend to purchase the
securities of any one issuer (other than securities or obligations issued or
guaranteed by the U.S. Government or any of its agencies or instrumentalities)
if, as a result of such purchase, more than 10% of the Fund's total assets
(taken at current value) would be invested in the securities of such issuer;
this policy does not apply to or limit the Fund's investments in certificates of
deposit, bankers' acceptances or time deposits of banking and thrift
institutions. The Fund may not invest more than 15% of its net assets in
investments which are not readily marketable, including restricted securities
and repurchase agreements with a maturity longer than seven days. Restricted
securities for the purposes of this limitation do not include securities
eligible for resale pursuant to Rule 144A under the Securities Act of 1933 and
commercial paper issued pursuant to Section 4(2) of said Act that the Board of
Trustees of the Trust, or their delegate, determines to be liquid. The Fund will
not purchase warrants if, as a result of such purchase, more than 5% of the
Fund's net assets, taken at current value, would be invested in warrants, and
the value of such warrants which are not listed on the New York or American
Stock Exchange may not exceed 2% of the Fund's net assets; this policy does not
apply to or restrict warrants acquired by the Fund in units or attached to
securities, inasmuch as such warrants are deemed to be without value. The Fund
will not purchase or sell real property (including limited partnership
interests, but excluding readily marketable interests in real estate investment
trusts or readily marketable securities of companies which invest in real
estate).
Whenever an investment policy or investment restriction set forth in the
Prospectus or this SAI states a maximum percentage of the Fund's assets that may
be invested in any security or other asset, or describes a policy regarding
quality standards, such percentage limitation or standard shall be determined
immediately after and as a result of the Fund's acquisition of such security or
other asset. Accordingly, any later increase or decrease resulting from a change
in values, assets or other circumstances or any subsequent rating change made by
a rating service will not compel the Fund to dispose of such security or other
asset. Notwithstanding the foregoing, under normal circumstances the Fund will
maintain at least 65% of its total assets in natural resource related
investments or in asset-related securities. Moreover, the Fund must always be in
compliance with the borrowing policies set forth above.
TRUSTEES AND OFFICERS
The Trustees and officers of the Trust are listed below. Except as
indicated, each individual has held the office shown or other offices in the
same company for the last five years. Unless otherwise noted, the business
address of each Trustee and officer is 24 Federal Street, Boston, Massachusetts
02110, which is also the address of Eaton Vance Management; Eaton Vance's
wholly-owned subdisiary, Boston Management and Research ("BMR"); Eaton Vance's
parent, Eaton Vance Corp. ("EVC"); and of Eaton Vance's and BMR's trustee, Eaton
Vance, Inc. ("EV"). Eaton Vance and EV are both wholly-owned subsidiaries of
EVC. Those Trustees who are "interested persons" of the Fund, Eaton Vance, BMR,
EVC or EV, as defined in the 1940 Act, by virtue of their affiliation with any
one or more of the Fund, Eaton Vance, BMR, EVC or EV, are indicated by an
asterisk(*).
JAMES B. HAWKES (55), President and Trustee*
President and Chief Executive Officer of Eaton Vance, BMR, EVC and EV, and a
Director of EVC and EV. Director, Trustee and officer of various investment
companies managed by Eaton Vance or BMR.
DONALD R. DWIGHT (65), 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 (61), Trustee
Jacob H. Schiff Professor of Investment Banking, Harvard University Graduate
School of Business Administration. Director or Trustee of various investment
companies managed by Eaton Vance or BMR.
Address: Harvard University Graduate School of Business Administration,
Soldiers Field Road, Boston, Massachusetts 02134
NORTON H. REAMER (61), Trustee
President and Director, United Asset Management Corporation, a holding company
owning institutional investment management firms. Chairman, President and
Director, UAM Funds (mutual funds). Director or Trustee of various investment
companies managed by Eaton Vance or BMR.
Address: One International Place, Boston, Massachusetts 02110
JOHN L. THORNDIKE (70), Trustee
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 (66), 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
WILLIAM D. BURT (58), Vice President
Vice President of Eaton Vance, BMR and EV since November 1994; formerly Vice
President of The Boston Company (1990-1994). Mr. Burt was elected Vice
President of the Trust on June 19, 1995.
M. DOZIER GARDNER (63), Vice President
President and Chief Executive Officer of Eaton Vance, BMR, EVC and EV, and a
Director of EVC and EV. Director or Trustee and officer of various investment
companies managed by Eaton Vance or BMR.
BARCLAY TITTMANN (64), Vice President
Vice President of Eaton Vance, BMR and EV since October 1993; formerly Vice
President of Invesco Management and Research (1970-1993). Mr. Tittmann was
elected Vice President of the Trust on June 19, 1995.
THOMAS OTIS (65), Secretary
Vice President and Secretary of Eaton Vance, BMR, EVC and EV. Officer of various
investment companies managed by Eaton Vance or BMR.
JAMES L. O'CONNOR (51), Treasurer
Vice President of Eaton Vance, BMR and EV. Officer of various other investment
companies managed by Eaton Vance or BMR.
JANET E. SANDERS (61), Assistant Treasurer and Assistant Secretary
Vice President of Eaton Vance, BMR and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
A. JOHN MURPHY (34), Assistant Secretary
Assistant Vice President of Eaton Vance, BMR and EV since March 1, 1994;
employee of Eaton Vance since March 1993. State Regulations Supervisor, The
Boston Company (1991-1993). Officer of various investment companies managed by
Eaton Vance or BMR. Mr. Murphy was elected Assistant Secretary of the Trust on
March 27, 1995.
ERIC G. WOODBURY (39), Assistant Secretary
Vice President of Eaton Vance, BMR and EV since February 1993; formerly,
associate attorney at Dechert, Price & Rhoads and Gaston & Snow. Officer of
various investment companies managed by Eaton Vance or BMR. Mr. Woodbury was
elected Assistant Secretary of the Trust on June 19, 1995.
Messrs. Hayes (Chairman), Reamer and Thorndike are members of the Special
Committee of the Board of Trustees of the Trust. The purpose of the Special
Committee is to consider, evaluate and make recommendations to the full Board of
Trustees concerning (i) all contractual arrangements with service providers to
the Fund, including administrative services, transfer agency, custodial and fund
accounting and distribution services, and (ii) all other matters in which Eaton
Vance or its affiliates has any actual or potential conflict of interest with
the Fund or its shareholders.
The Nominating Committee is comprised of four Trustees who are not
"interested persons" as that term is defined under the 1940 Act ("noninterested
Trustees"). The Committee has four-year staggered terms, with one member
rotating off the Committee to be replaced by another noninterested Trustee of
the Trust. The purpose of the Committee is to recommend to the Board nominees
for the position of noninterested Trustee and to assure that at least a majority
of the Board of Trustees is independent of Eaton Vance and its affiliates.
Messrs. Treynor (Chairman) and Dwight are members of the Audit Committee of
the Board of Trustees of the Trust. The Audit Committee's functions include
making recommendations to the Trustees regarding the selection of the
independent certified public accountants, and reviewing with such accountants
and the Treasurer of the Trust matters relative to trading and brokerage
policies and practices, accounting and auditing practices and procedures,
accounting records, internal accounting controls, and the functions performed by
the custodian, transfer agent and dividend disbursing agent of the Fund.
The fees and expenses of those Trustees of the Trust who are not members of
the Eaton Vance organization (the noninterested Trustees) are paid by the Fund
(and the other series of the Trust). (The Trustees of the Trust who are members
of the Eaton Vance organization receive no compensation from the Fund.) During
the fiscal year ended August 31, 1996, the noninterested Trustees of the Trust
received the following compensation in their capacities as Trustees from the
Fund and, for the year ended September 30, 1996 earned the following
compensation in their capacities as Trustees of the other funds in the Eaton
Vance fund complex(1) :
AGGREGATE TOTAL COMPENSATION
COMPENSATION FROM TRUST AND
NAME FROM FUND FUND COMPLEX
- ---- ------------ ------------------
Donald R. Dwight ............... $34(2) $142,500(4)
Samuel L. Hayes, III ........... 32(3) 153,750(5)
Norton H. Reamer ............... 31 142,500
John L. Thorndike .............. 32 147,500
Jack L. Treynor ................ 34 147,500
(1) The Eaton Vance fund complex consists of 228 registered investment companies
or series thereof.
(2) Includes $13 of deferred compensation.
(3) Includes $10 of deferred compensation.
(4) Includes $42,500 of deferred compensation.
(5) Includes $37,500 of deferred compensation.
Trustees of the Trust that are not affiliated with the Investment Adviser
may elect to defer receipt of all or a percentage of their annual fees in
accordance with the terms of a Trustees Deferred Compensation Plan (the "Plan").
Under the Plan, an eligible Trustee may elect to have his deferred fees invested
by the Trust in the shares of one or more funds in the Eaton Vance Family of
Funds, and the amount paid to the Trustees under the Plan will be determined
based upon the performance of such investments. Deferral of Trustees' fees in
accordance with the Plan will have a negligible effect on the Fund's assets,
liabilities, and net income per share, and will not obligate the Fund to retain
the services of any Trustee or obligate the Fund to pay any particular level of
compensation to the Trustee. The Trust does not have a retirement plan for its
Trustees.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As at November 30, 1996, the Trustees and officers of the Trust, as a
group, owned in the aggregate less than 1% of the outstanding shares of the
Fund. As of November 30, 1996, Merrill Lynch, Pierce, Fenner & Smith, Inc.,
Jacksonville, FL was the record owner of approximately 17.1% of the outstanding
shares, which were held on behalf of its customers who are the beneficial owners
of such shares, and as to which it had voting power under certain limited
circumstances. To the knowledge of the Trust, no other person owned of record or
beneficially 5% or more of the Fund's outstanding shares as of such date.
INVESTMENT ADVISER
The Trust on behalf of the Fund engages Eaton Vance as investment adviser
pursuant to an Investment Advisory Agreement (the "Agreement") originally made
on October 21, 1987 and re-executed on November 1, 1990. Eaton Vance or its
affiliates acts as investment adviser to investment comanies and various
individual and institutional clients with combined assets under management of
over $16 billion. Eaton Vance is a wholly-owned subsidiary of EVC, a publicly
held holding company.
Eaton Vance, its affiliates and its predecessor companies have been managing
assets of individuals and institutions since 1924 and managing investment
companies since 1931. They maintain a large staff of experienced fixed-income
and equity investment professionals to service the needs of their clients. The
fixed-income division focuses on all kinds of taxable investment- grade and
high-yield securities, tax-exempt investment-grade and high-yield securities,
and U.S. Government securities. The equity division covers stocks ranging from
blue chip to emerging growth companies.
Eaton Vance is among the oldest mutual funds organizations in the country.
As an experienced mutual fund provider, Eaton Vance has contributed to making
the securities market more widely accessible to investors. Eaton Vance equity
funds provide a way to take advantage of the potentially higher returns of
individual stocks. Eaton Vance has a staff of more than 25 investment
professionals specializing in security analysis and equity management.
The Eaton Vance investment process stresses intensive fundamental research.
Portfolios are built on a stock-by-stock basis and the process includes visits
to companies under consideration. The process also focuses on well-managed
companies with the following characteristics: strong underlying value or
franchise; solid earnings growth; steady cash flow, strong balance sheet;
innovative products or services; potential for sustained growth; seasoned,
creative management; or ability to survive variable market conditions.
By investing in diversified portfolios and employing prudent and
professional management, Eaton Vance mutual funds can provide attractive return,
while exposing shareholders to less risk than if they were to build investment
portfolios on their own. Eaton Vance employs rigorous buy and sell disciplines.
For instance, purchases are made with an eye to both relative and absolute
growth rates and price-earning ratios, and sales are made when a stock is fully
valued, fundamentals deteriorate, management fails to execute its strategy, or
more attractive alternatives are available.
Eaton Vance and its affiliates act as adviser to over 150 mutual funds,
individual and various institutional accounts, including corporations,
hospitals, retirement plans, universities, foundations and trusts. Eaton Vance
mutual funds feature international equities, domestic equities, tax-free
municipal bonds, and U.S. government and corporate bonds. Lloyd George
Management has advised Eaton Vance's international equity funds since 1992.
Founded in 1991, Lloyd George is headquartered in Hong Kong with offices in
London and Mumbai, India. It has established itself as a leader in investment
management in Asian equities and other global markets. Lloyd George features an
experience team of investment professionals that began working together in the
mid-1980s. Lloyd George analysts cover East Asia, the India subcontinent, Russia
and Eastern Europe, Latin America, Australia and New Zealand from offices in
Hong Kong, London and Bombay. Together Eaton Vance and Lloyd George manage over
$18 billion in assets. Eaton Vance mutual funds are distributed by Eaton Vance
Distributors both within the United States and offshore.
Eaton Vance Distributors believes that an investment professional can
provide valuable services to you to help you reach your investment goals.
Meeting investment goals requires time, objectivity and investment savvy. Before
making an investment recommendation, a representative can help you carefully
consider your short- and long-term financial goals, your tolerance for
investment risk, your investment time frame, and other investments you may
already own. Your professional investment representatives are knowledgeable
about financial markets, as well as the wide range of investment opportunities
available. A representative can help you decide when to buy, sell or persevere
with your investments. A professional investment representative can provide you
with tailored financial advice.
Eaton Vance manages the investments and affairs of the Fund subject to the
supervision of the Trust's Board of Trustees. Eaton Vance furnishes to the Fund
investment advice and assistance, administrative services, office space,
equipment and clerical personnel, and investment advisory, statistical and
research facilities, and has arranged for certain members of the Eaton Vance
organization to serve without salary as officers or Trustees of the Trust. The
Fund is responsible for all expenses not expressly stated to be payable by Eaton
Vance under the Investment Advisory Agreement, including, without limitation,
the fees and expenses of its custodian and transfer agent, including those
incurred for determining the Fund's net asset value and keeping its books; the
cost of share certificates; membership dues in investment company organizations;
brokerage commissions and fees; fees and expenses of registering its shares;
expenses of reports to shareholders, proxy statements, and other expenses of
shareholders' meetings; insurance premiums; printing and mailing expenses;
interest, taxes and corporate fees; legal and accounting expenses; and
compensation and expenses of Trustees not affiliated with Eaton Vance. The Fund
will also bear expenses incurred in connection with litigation in which the Fund
is a party and any legal obligation the Fund may have to indemnify the Trust's
officers and Trustees with respect thereto, to the extent not covered by
insurance.
The Fund pays Eaton Vance as compensation under the Agreement a monthly fee
based on average daily net assets as follows:
AVERAGE DAILY NET ANNUALIZED FEE RATE MONTHLY FEE RATE
ASSETS FOR THE MONTH (FOR EACH LEVEL) (FOR EACH LEVEL)
-------------------- ------------------- ----------------
Up to $500 million ...................... 0.7500% 1/16 of 1%
$500 million but less than $1 billion ... 0.6875% 11/192 of 1%
$1 billion but less than $1.5 billion ... 0.6250% 5/96 of 1%
$1.5 billion but less than $2 billion ... 0.5625% 3/64 of 1%
$2 billion but less than $3 billion ..... 0.5000% 1/24 of 1%
$3 billion and over ..................... 0.4375% 7/192 of 1%
As at August 31, 1996, the Fund had net assets of $20,128,782. For the
fiscal year ended August 31, 1996, the Fund paid Eaton Vance advisory fees of
$114,803 (equivalent to 0.75% of the Fund's average daily net assets for such
year). For the fiscal year ended August 31, 1995, the Fund paid Eaton Vance
advisory fees of $92,809 (equivalent to 0.75% (annualized) of the Fund's average
daily net assets for such period). For the fiscal year ended September 30, 1994,
the Fund paid Eaton Vance advisory fees of $70,439 (equivalent to 0.75% of the
Fund's average daily net assets for such year).
The Agreement with Eaton Vance remains in effect until February 28, 1997. It
may be continued indefinitely thereafter so long as such continuance is approved
at least annually (i) by the vote of a majority of the Trustees who are not
interested persons of the Trust or of Eaton Vance cast in person at a meeting
specifically called for the purpose of voting on such approval and (ii) by the
Board of Trustees of the Trust or by vote of a majority of the outstanding
voting securities of the Fund. The Agreement may be terminated at any time
without penalty on sixty (60) days' written notice by the Board of Trustees of
either party, or by vote of the majority of the outstanding voting securities of
the Fund, and the Agreement will terminate automatically in the event of its
assignment. The Agreement provides that Eaton Vance may render services to
others. The Agreement also provides that, in the absence of willful misfeasance,
bad faith, gross negligence or reckless disregard of obligations or duties under
the Agreement on the part of Eaton Vance, Eaton Vance shall not be liable to the
Fund or to any shareholder for any act or omission in the course of or connected
with rendering services or for any losses sustained in the purchase, holding or
sale of any security.
Eaton Vance and EV are both wholly-owned subsidiaries of EVC. BMR is a
wholly-owned subsidiary of Eaton Vance. Eaton Vance and BMR are both
Massachusetts business trusts, and EV is the trustee of Eaton Vance and BMR.
The Directors of EV are Landon T. Clay, M. Dozier Gardner, James B. Hawkes and
Benjamin A. Rowland, Jr. The Directors of EVC consist of the same persons and
John G. L. Cabot and Ralph Z. Sorenson. Mr. Clay is chairman, Mr. Gardner is
vice chairman and Mr. Hawkes is president and chief executive officer of EVC,
Eaton Vance, BMR and EV. All of the issued and outstanding shares of Eaton
Vance and EV are owned by EVC. All of the issued and outstanding shares of BMR
are owned by Eaton Vance. All shares of the outstanding Voting Common Stock of
EVC are deposited in a Voting Trust which expires on December 31, 1997, the
Voting Trustees of which are Messrs. Clay, Gardner, Hawkes, Rowland and Thomas
E. Faust, Jr. The Voting Trustees have unrestricted voting rights for the
election of Directors of EVC. All of the outstanding voting trust receipts
issued under said Voting Trust are owned by certain of the officers of Eaton
Vance and BMR who are also officers or officers and Directors of EVC and EV.
As of January 1, 1997, Messrs. Clay, Gardner and Hawkes each owned 24% of such
voting trust receipts, and Messrs. Rowland and Faust owned 15% and 13%,
respectively, of such voting trust receipts. Messrs. Gardner, Hawkes and Otis
who are officers or Trustees of the Trust are members of the EVC, Eaton Vance,
BMR and EV organizations. Messrs. Burt, Murphy, O'Connor, Tittmann and
Woodbury, and Ms. Sanders, are officers of the Trust, and are also members of
the Eaton Vance, BMR and EV organizations. Eaton Vance will receive the fees
paid under the Agreement.
EVC owns all of the stock of Energex Energy Corporation, which engages in
oil and gas exploration and development. Eaton Vance owns all the stock of
Northeast Properties, Inc., which is engaged in real estate investment. EVC owns
all the stock of Fulcrum Management, Inc. and MinVen, Inc., which are engaged in
precious metal mining venture investment and management. EVC also owns 24% of
the Class A shares of Lloyd George Management (B.V.I.) Limited, a registered
investment adviser. EVC, Eaton Vance, BMR and EV may also enter into other
businesses.
EVC and its affiliates and their officers and employees from time to time
have transactions with various banks, including the Fund's custodian, IBT. It is
Eaton Vance's opinion that the terms and conditions of such transactions were
not and will not be influenced by existing or potential custodial or other
relationships between the Fund and such banks.
CUSTODIAN
IBT, 89 South Street, Boston, Massachusetts acts as custodian for the Fund.
IBT has the custody of all cash and securities of the Fund, maintains the Fund's
general ledger and computes the daily per share net asset value. In such
capacity it attends to details in connection with the sale, exchange,
substitution, transfer or other dealings with the Fund's investments, receives
and disburses all funds and performs various other ministerial duties upon
receipt of proper instructions from the Fund. IBT charges fees which are
competitive within the industry. A portion of the fee relates to custody,
bookkeeping and valuation services and is based upon a percentage of Fund net
assets and a portion of the fee relates to activity charges, primarily the
number of portfolio transactions. These fees are then reduced by a credit for
the cash balances of the particular investment company at the custodian equal to
75% of the 91-day, U.S. Treasury Bill auction rate applied to the particular
investment company's average daily collected balances for the week. IBT also
provides services in connection with the preparation of shareholder reports and
the electronic filing of such reports with the Commission, for which it receives
a separate fee. Landon T. Clay, a Director of EVC and an officer, Trustee or
Director of other entities in the Eaton Vance organization, owns approximately
13% of the voting stock of Investors Financial Services Corp., the holding
company parent of IBT. Management believes that such ownership does not create
an affiliated person relationship between the Fund and IBT under the 1940 Act.
SERVICE FOR WITHDRAWAL
The Transfer Agent will send to the shareholder regular monthly or quarterly
payments of any permitted amount designated by the shareholder (see "Eaton Vance
Shareholder Services -- Withdrawal Plan" in the Fund's current Prospectus) based
upon the value of the shares held. The checks will be drawn from share
redemptions and hence, although they are a return of principal, may require the
recognition of taxable gain or loss. Income dividends and capital gains
distributions in connection with withdrawal plan accounts will be credited at
net asset value as of the record for each distribution. Continued withdrawals in
excess of current income will eventually use up principal, particularly in a
period of declining market prices. A shareholder may not have a withdrawal plan
in effect at the same time he or she has authorized Bank Automated Investing or
is otherwise making regular purchases of Fund shares. The shareholder, the
Transfer Agent or the Principal Underwriter will be able to terminate the
withdrawal plan at any time without penalty.
DETERMINATION OF NET ASSET VALUE
Shares of the Fund are offered and sold at their net asset value. For a
description of how the Fund values its shares, see "Valuing Fund Shares" in the
Fund's current Prospectus. The Fund will be closed for business and will not
price its shares on the following business holidays: New Year's Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day.
The Trustees of the Trust have established the following procedures for the
valuation of the Fund's assets. Marketable securities listed on securities
exchanges or in the NASDAQ National Market System are valued at closing sale
prices or if there were no sales at the mean between the closing bid and asked
prices therefor on such exchanges or System. Unlisted or listed securities for
which closing sale prices are not available are valued at the mean between the
latest bid and asked prices. An option contract is valued at last sale price as
quoted on the principal exchange or board of trade on which such option or
contract is traded, or in the absence of a sale, the mean between the last bid
and asked price. Futures positions on securities or currencies are generally
valued at closing settlement prices. Direct placement securities and securities
of venture capital companies, except as provided below, are taken at fair value
as determined in good faith by or pursuant to procedures established by the
Trustees. Direct placement securities and securities of former venture capital
companies which are readily marketable are considered marketable securities.
Short term debt securities are valued at amortized cost, which approximates
value. Other fixed income and debt securities, including listed securities and
securities for which price quotations are available, will normally be valued on
the basis of valuations furnished by a pricing service.
Generally, trading in the foreign securities owned by the Fund is
substantially completed each day at various times prior to the close of the
Exchange. The values of these securities used in determining the net asset value
of the Fund's shares are computed as of such times. Occasionally, events
affecting the value of foreign securities may occur between such times and the
close of the Exchange which will not be reflected in the computation of the
Fund's net asset value (unless the Fund deems that such events would materially
affect its net asset value, in which case an adjustment would be made and
reflected in such computation). Foreign securities and currency held by the Fund
will be valued in U.S. dollars.
Physical commodities, including bullion, will generally be valued at fair
value based on prevailing market prices.
INVESTMENT PERFORMANCE
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, a complete redemption of the investment
and the deduction of the CDSC at the end of the period.
Yield is computed pursuant to a standardized formula by dividing the net
investment income per share earned during a recent thirty-day period by the
maximum offering price (net asset value) per share on the last day of the period
and annualizing the resulting figure. Net investment income per share is equal
to the dividends and interest earned during the period, reduced by accrued
expenses for the period with the resulting number being divided by the average
daily number of Fund shares outstanding and entitled to receive distributions
during the period. This yield figure does not reflect the deduction of any CDSCs
which are imposed upon certain redemptions at the rates set forth under "How to
Redeem Fund Shares" in the Fund's current Prospectus.
The table below indicates the cumulative and average annual total return on
a hypothetical investment of $1,000 in the Fund covering the life of the Fund
from October 21, 1987 through August 31, 1996, and the one- and five-year
periods ended August 31, 1996.
VALUE OF A $1,000 INVESTMENT
<TABLE>
<CAPTION>
VALUE BEFORE VALUE AFTER TOTAL RETURN BEFORE TOTAL RETURN AFTER
DEDUCTING THE DEDUCTING THE DEDUCTING THE MAXIMUM CDSC DEDUCTING THE MAXIMUM CDSC**
INVESTMENT INVESTMENT AMOUNT OF MAXIMUM CDSC MAXIMUM CDSC -------------------------- ----------------------------
PERIOD DATE INVESTMENT ON 8/31/96 ON 8/31/96** CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
---------- ---------- ---------- ------------- ------------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Life of
the Fund*** 10/21/87* $1,000 $3,079.66 $3,079.66 207.97% 13.52% 207.97% 13.52%
5 Years
Ended
8/31/96*** 8/31/91 $1,000 $2,204.29 $2,184.29 120.43% 17.13% 118.43% 16.91%
1 Year
Ended
8/31/96 8/31/95 $1,000 $1,396.87 $1,346.87 39.69% 39.69% 34.69% 34.69%
Past performance is not indicative of future results. Investment return and principal value will fluctuate and shares, when
redeemed, may be worth more or less than their original cost.
<FN>
- ----------
* Investment operations began on October 21, 1987.
** No CDSC is imposed on certain redemptions. See the Fund's current Prospectus.
*** If a portion of the Fund's expenses had not been subsidized, the Fund would have had lower returns.
</TABLE>
The Fund's total return may be compared to relevant indices, such as the
Consumer Price Index and various domestic securities indices. The Fund's total
return and comparisons with these indices may be used in advertisements and in
information furnished to present or prospective shareholders. In addition,
evaluations of the Fund's performance made by independent sources may be used in
advertisements and in information furnished to present or prospective
shareholders. The Fund may also include information about the Fund's portfolio
allocation and holdings in such advertisements and other material.
Information (including charts and illustrations) relating to inflation and
the effects of inflation on the dollar may be included in advertisements and
other material furnished to present and prospective shareholders. Such
information may reflect the change in the net asset value of a hypothetical
investment in the Fund over a specified time period and compare it to an
inflationary measure, such as the Consumer Price Index (which is computed by the
Bureau of Labor Statistics of the U.S. Department of Labor).
Information used in advertisements and materials furnished to present and
prospective investors may include statements or illustrations relating to the
appropriateness of certain types of securities and/or mutual funds to meet
specific financial goals. Such information may address:
- cost associated with aging parents;
- funding a college education (including its actual and estimated
cost);
- health care expenses (including actual and projected expenses);
- long-term disabilities (including the availability of, and coverage
provided by, disability insurance); and
- retirement (including the availability of social security benefits,
the tax treatment of such benefits and statistics and other
information relating to maintaining a particular standard of living
and outliving existing assets).
Such information may also address different methods for saving money and the
results of such methods, as well as the benefits of investing in equity
securities. Such information may describe: the potential for growth; the
performance of equities as compared to other investment vehicles; and the value
of investing as early as possible and regularly, as well as staying invested.
The benefits of investing in equity securities by means of a mutual fund may
also be included (such benefits may include diversification, professional
management and the variety of equity mutual fund products).
Information in advertisements and materials furnished to present and
prospective investors may include profiles of different types of investors
(i.e., investors with different goals and assets) and different investment
strategies for meeting specific financial goals. Such information may provide
hypothetical illustrations which include: results of various investment
strategies; performance of an investment in the Fund over various time periods;
and results of diversifying assets among several investments with varying
performance. Information in advertisements and materials furnished to present
and prospective investors may also include quotations (including editorial
comments) and statistics concerning investing in securities, as well as
investing in particular types of securities and the performance of such
securities.
The Fund may provide information about Eaton Vance, its affiliates and other
investment advisers to the funds in the Eaton Vance Family of Funds in sales
material or advertisements provided to investors or prospective investors. Such
material or advertisements may also provide information on the use of investment
professionals by such investors.
TAXES
FEDERAL INCOME TAXES
See "Distributions and Taxes" in the Fund's current Prospectus.
Each series of the Trust is treated as a separate entity for federal income
tax purposes. The Fund has elected to be treated, has qualified, and intends to
continue 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 its
net investment income (including tax-exempt income) and net realized capital
gains in accordance with the timing requirements imposed by the Code, so as to
avoid any federal income or excise tax on the Fund. The Fund so qualified for
its fiscal year ended August 31, 1996.
In order to avoid Federal excise tax, the Code requires that the Fund
distribute (or be deemed to have distributed) by December 31 of each calendar
year at least 98% of its ordinary income (not including tax-exempt income) for
such year, at least 98% of the excess of its realized capital gains over its
realized capital losses, generally computed on the basis of the one-year period
ending on October 31 of such year, after reduction by any available capital loss
carryforwards, and 100% of any income from the prior year (as previously
computed) that was not paid out during such year and on which the Fund paid no
federal income tax. Under current law, provided the Fund qualifies as a RIC for
federal income tax purposes, the Fund is not liable for any income, corporate
excise or franchise tax in the Commonwealth of Massachusetts.
The Fund's transactions in options, futures contracts, forward contracts and
certain other transactions involving foreign exchange gain or loss will be
subject to special tax rules, the effect of which may be to accelerate income to
the Fund, defer Fund losses, cause adjustments in the holding periods of Fund
securities, convert capital gain into ordinary income and convert short-term
capital losses into long-term capital losses. For example, the tax treatment of
many types of options, futures contracts and forward contracts entered into by
the Fund will be governed by Section 1256 of the Code. Absent a tax election for
"mixed straddles" (see below), each such position held by the Fund on the last
business day of each taxable year will be marked to market (i.e., treated as if
it were closed out on such day), and any resulting gain or loss, except for
certain currency-related positions, will generally be treated as 60% long-term
and 40% short-term capital gain or loss, with subsequent adjustments made to any
gain or loss realized upon an actual disposition of such positions. When the
Fund holds an option or contract governed by Section 1256 which substantially
diminishes the Fund's risk of loss with respect to another position of the Fund
not governed by Section 1256 (as might occur in some hedging transactions), this
combination of positions could be a "mixed straddle" which is generally subject
to special tax rules requiring deferral of losses and other adjustments in
addition to being subject in part to Section 1256. The Fund may make certain tax
elections for its "mixed straddles" which could alter certain effects of these
rules. In order to qualify as a RIC for federal income tax purposes, the Fund
must derive less than 30% of its annual gross income from the sale or other
disposition of securities and certain other investments held for less than three
months and will limit its activities in options, futures contracts and forward
contracts to the extent necessary to comply with this requirement.
The Fund may be subject to foreign withholding or other foreign taxes with
respect to income (possibly including, in some cases, capital gains) derived
from securities of foreign issuers and may be able to pass such taxes through to
shareholders along with foreign tax credits or deductions relating to these
taxes. These taxes may be reduced or eliminated under the terms of an applicable
U.S. income tax treaty. Certain foreign exchange gains and losses realized by
the Fund will be treated as ordinary income and losses. Certain uses of foreign
currency and options, futures or forward contracts thereon and investment by the
Fund in the stock of certain "passive foreign investment companies" may be
limited or a tax election may be made, if available, in order to avoid
imposition of a tax on the Fund.
The Fund's investments, if any, in securities issued with original issue
discount (possibly including certain asset-related securities) or securities
acquired at a market discount (if an election is made to include accrued market
discount in current income) will cause it to realize income prior to the receipt
of cash payments with respect to these securities. In order to distribute this
income and avoid a tax on the Fund, the Fund may be required to liquidate
portfolio securities that it might otherwise have continued to hold.
The portion of distributions made by the Fund which is attributable to
dividends received by the Fund from U.S. domestic corporations may qualify for
the dividends-received deduction for corporations. The dividends-received
deduction is reduced to the extent the shares with respect to which the
dividends are received are treated as debt-financed under the Federal income tax
law and is eliminated if the shares are deemed to have been held for less than a
minimum period, generally 46 days. Receipt of certain distributions qualifying
for the deduction may result in reduction of the tax basis of the corporate
shareholder's shares. Distributions eligible for the dividends-received
deduction may give rise to (or increase) an alternative minimum tax for
corporations depending upon the shareholder's particular tax situation.
Distributions by the Fund of net investment income, the excess of net
short-term capital gain over net long-term capital loss, and certain foreign
exchange gains are taxable to shareholders as ordinary income, whether received
in cash or reinvested in additional shares. Distributions of the excess of net
long-term capital gain over net short-term capital loss (including any capital
losses carried forward from prior years) are taxable to shareholders as
long-term capital gains, whether received in cash or in additional shares and
regardless of the length of time their shares of the Fund have been held.
Any loss realized upon the redemption or exchange of shares with a tax
holding period of 6 months or less will be treated as a long-term capital loss
to the extent of any distribution of net long-term capital gains with respect to
such shares. All or a portion of a loss realized upon a redemption or other
disposition of Fund shares may be disallowed under "wash sale" rules if other
shares of the Fund are purchased (whether through reinvestment of dividends or
otherwise) within the 30 days before or after such disposition.
Amounts paid by the Fund to individuals and certain other shareholders who
have not provided the Fund with their correct taxpayer identification number and
certain certifications required by the Internal Revenue Service (the "IRS"), as
well as shareholders with respect to whom the Fund has received notification
from the IRS or a broker, may be subject to "backup" withholding of federal
income tax 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, foreign corporations and certain other
foreign entities generally will be subject to a U.S. withholding tax at a rate
of 30% on the Fund's distributions from its ordinary income and the excess of
its net short-term capital gain over its net long-term capital loss, unless the
tax is reduced or eliminated by an applicable tax treaty. Distributions from the
excess of the Fund's net long-term capital gain over its net short-term capital
loss received by such shareholders and any gain from the sale or other
disposition of shares of the Fund generally will not be subject to U.S. federal
income taxation, provided that non-resident alien status has been certified by
the shareholder. Different U.S. tax consequences may result if the shareholder
is engaged in a trade or business in the United States, is present in the United
States for a sufficient period of time during a taxable year to be treated as a
U.S. resident, or fails to provide any required certifications regarding status
as a non-resident alien investor. Foreign shareholders should consult their tax
advisers regarding the U.S. and foreign tax consequences of an investment in the
Fund.
Special tax rules apply to Individual Retirement Accounts ("IRAs") and other
retirement plans and persons investing through such plans should consult their
tax advisers for more information. The deductibility of such contributions may
be restricted or eliminated for particular shareholders.
The foregoing discussion does not address the special tax rules applicable
to certain classes of investors, such as retirement plans, tax-exempt entities,
insurance companies and financial institutions. Shareholders should consult
their own tax advisers with respect to special tax rules that may apply in their
particular situations, as well as the state, local or foreign tax consequences
of investing in the Fund.
PRINCIPAL UNDERWRITER
Under the Distribution Agreement the Principal Underwriter acts as principal
in selling shares of the Fund. The expenses of printing copies of prospectuses
used to offer shares to Authorized Firms or investors and other selling
literature and of advertising is borne by the Principal Underwriter. The fees
and expenses of qualifying and registering and maintaining qualifications and
registrations of the Fund and its shares under federal and state securities laws
are borne by the Fund. In addition, the Fund makes payments to the Principal
Underwriter pursuant to its Distribution Plan as described in the Fund's current
Prospectus; the provisions of the plan relating to such payments are included in
the Distribution Agreement. The Distribution Agreement is renewable annually by
the Trust's Board of Trustees (including a majority of its Trustees who are not
interested persons of the Trust and who have no direct or indirect financial
interest in the operation of the Fund's Distribution Plan or the Distribution
Agreement), may be terminated on sixty days' notice either by such Trustees or
by vote of a majority of the outstanding voting securities of the Fund or on six
months' notice by the Principal Underwriter and is automatically terminated upon
assignment. The Principal Underwriter distributes Fund shares on a "best
efforts" basis under which it is required to take and pay for only such shares
as may be sold. The Fund has authorized the Principal Underwriter to act as its
agent in repurchasing shares and paid the Principal Underwriter $587.50 for the
fiscal year ended August 31, 1996 (being $2.50 for each repurchase transaction
handled by the Principal Underwriter). The Principal Underwriter estimates that
the expenses incurred by it in acting as repurchase agent for the Fund will
exceed the amounts paid therefor by the Fund.
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 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 Fund, the
expenses of the Fund accrued on such day, income on portfolio investments of the
Fund accrued on such day, and any dividends and distributions declared 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 CDSCs and will make no
payments to the Principal Underwriter in respect of any day on which there are
no outstanding Uncovered Distribution Charges of the Principal Underwriter.
CDSCs and accrued amounts will be paid by the Fund to the Principal Underwriter
whenever there exist Uncovered Distribution Charges under the Fund's 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 CDSCs 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 CDSCs 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 CDSCs theretofore
paid or payable to the Principal Underwriter will be subtracted from such
distribution charges; if the result of such subtraction is positive, a
distribution fee (computed at 1% over the prime rate then reported in The Wall
Street Journal) will be computed on such amount and added thereto, with the
resulting sum constituting the amount of outstanding Uncovered Distribution
Charges with respect to such day. The amount of outstanding Uncovered
Distribution Charges of the Principal Underwriter calculated on any day does not
constitute a liability recorded on the financial statements of the Fund.
The amount of Uncovered Distribution Charges of the Principal Underwriter at
any particular time depends upon various changing factors, including the level
and timing of sales of 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 CDSC will be imposed, the level and timing of redemptions of Fund shares upon
which no CDSC will be imposed (including redemptions involving exchanges of Fund
shares pursuant to the exchange privilege which result in a reduction of
Uncovered Distribution Charges), changes in the level of the net assets of the
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 Fund's 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. The Fund believes that the
combined rate of all these payments may be higher than the rate of payments made
under distribution plans adopted by other investment companies pursuant to Rule
12b-1. Although the Principal Underwriter will use its own funds (which may be
borrowed from banks) to pay sales commissions at the time of sale, it is
anticipated that the Eaton Vance organization will profit by reason of the
operation of the Plan through an increase in the Fund's assets (thereby
increasing the advisory fee payable to Eaton Vance) resulting from sale of Fund
shares and through amounts paid to the Principal Underwriter, including CDSCs,
pursuant to the Plan. The Eaton Vance organization may be considered to have
realized a profit under the Plan if at any point in time the aggregate amounts
theretofore received by the Principal Underwriter pursuant to the Plan and from
CDSCs 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.
During the fiscal year ended August 31, 1996, the Principal Underwriter paid
to Authorized Firms sales commissions of $148,206 on sales of Fund shares.
During the same period, the Fund made sales commission payments under the Plan
to the Principal Underwriter aggregating $114,803 and the Principal Underwriter
received approximately $109,300 in CDSCs imposed on early redeeming
shareholders. The sales commissions and CDSCs paid to the Principal Underwriter
reduced Uncovered Distribution Charges under the Plan. As at August 31, 1996,
the outstanding Uncovered Distribution Charges of the Principal Underwriter
calculated under the Plan amounted to approximately $449,702 (which amount was
equivalent to 2.2% of the Fund's net assets on such date). During the fiscal
year ended August 31, 1996, the Fund paid or accrued service fees under the Plan
aggregating $25,896, of which $25,392 was paid to Authorized Firms and the
balance of which was retained by the Principal Underwriter.
The Plan continues in effect through and including April 28, 1997, and shall
continue in effect indefinitely thereafter for so long as such continuance is
approved at least annually by the vote of both a majority of (i) the Trustees of
the Trust who are not interested persons of the Trust and who have no direct or
indirect financial interest in the operation of the Plan or any agreements
related to the Plan (the "Rule 12b-1 Trustees") and (ii) all of the Trustees
then in office, and the Distribution Agreement contains a similar provision. The
Plan and Distribution Agreement may be terminated at any time by vote of a
majority of the Rule 12b-1 Trustees or by a vote of a majority of the
outstanding voting securities of the Fund. The provisions of the Plan relating
to payments of sales commissions and distribution fees to the Principal
Underwriter are also included in the Distribution Agreement between the Trust on
behalf of the Fund and the Principal Underwriter. Pursuant to Rule 12b-1, the
Plan has been approved by the Fund's initial sole shareholder (Eaton Vance) and
by the Board of Trustees of the Trust, including the Rule 12b-1 Trustees. Under
the Plan, the President or a Vice President of the Trust shall provide to the
Trustees for their review, and the Trustees shall review at least quarterly, a
written report of the amount expended under the Plan and the purposes for which
such expenditures were made. The Plan may not be amended to increase materially
the payments described therein without approval of the shareholders of the Fund,
and all material amendments of the Plan must also be approved by the Trustees as
required by Rule 12b-1. So long as the Plan is in effect, the selection and
nomination of Trustees who are not interested persons of the Trust shall be
committed to the discretion of the Trustees who are not such interested persons.
The Trustees of the Trust believe that the Plan will be a significant factor
in the growth of the Fund's assets, resulting in increased investment
flexibility and advantages which have benefitted and will continue to benefit
the Fund and its shareholders. Payments for sales commissions and distribution
fees made to the Principal Underwriter under the Plan will compensate the
Principal Underwriter for its services and expenses in distributing shares of
the Fund. Service fee payments made to the Principal Underwriter and Authorized
Firms under the Plan provide incentives to provide continuing personal services
to investors and the maintenance of shareholder accounts. By providing
incentives to the Principal Underwriter and Authorized Firms, the Plan is
expected to result in the maintenance of, and possible future growth in, the
assets of the Fund. Based on the foregoing and other relevant factors, the
Trustees have determined that in their judgment there is a reasonable likelihood
that the Plan will benefit the Fund and its shareholders.
PORTFOLIO SECURITY TRANSACTIONS
Decisions concerning the execution of Fund portfolio security
transactions, including the selection of the market and the broker-dealer firm,
are made by Eaton Vance. Eaton Vance is also responsible for the execution of
transactions for all other accounts managed by it.
Eaton Vance places the portfolio transactions of the Fund and of all other
accounts managed by it for execution with many broker-dealer firms. Eaton Vance
uses its best efforts to obtain execution of portfolio transactions at prices
which are advantageous to the Fund and (when a disclosed commission is being
charged) at reasonably competitive commission rates. In seeking such execution,
Eaton Vance will use its best judgment in evaluating the terms of a transaction,
and will give consideration to various relevant factors, including without
limitation the size and type of the transaction, the general execution and
operational capabilities of the broker-dealer, the nature and character of the
market for the security, the confidentiality, speed and certainty of effective
execution required for the transaction, the reputation, reliability, experience
and financial condition of the broker-dealer, the value and quality of the
services rendered by the broker-dealer in other transactions, and the
reasonableness of the commission or spread, if any. Transactions on United
States stock exchanges and other agency transactions involve the payment by the
Fund of negotiated brokerage commissions. Such commissions vary among different
broker-dealer firms, and a particular broker-dealer may charge different
commissions according to such factors as the difficulty and size of the
transaction and the volume of business done with such broker-dealer.
Transactions in foreign securities usually involve the payment of fixed
brokerage commissions, which are generally higher than those in the United
States. There is generally no stated commission in the case of securities traded
in the over-the-counter markets, but the price paid or received by the Fund
usually includes an undisclosed dealer markup or markdown. In an underwritten
offering, the price paid by the Fund often includes a disclosed fixed commission
or discount retained by the underwriter or dealer. Although commissions paid on
portfolio security transactions will, in the judgment of Eaton Vance, be
reasonable in relation to the value of the services provided, commissions
exceeding those which another firm might charge may be paid to broker-dealers
who were selected to execute transactions on behalf of the Fund and Eaton
Vance's other clients for providing brokerage and research services to Eaton
Vance.
As authorized in Section 28(e) of the Securities Exchange Act of 1934, a
broker or dealer who executes a portfolio transaction on behalf of the Fund may
receive a commission which is in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction if Eaton
Vance determines in good faith that such compensation was reasonable in relation
to the value of the brokerage and research services provided. This determination
may be made on the basis of either that particular transaction or on the basis
of overall responsibilities which Eaton Vance and its affiliates have for
accounts over which they exercise investment discretion. In making any such
determination, Eaton Vance will not attempt to place a specific dollar value on
the brokerage and research services provided or to determine what portion of the
commission should be related to such services. Brokerage and research services
may include advice as to the value of securities, the advisability of investing
in, purchasing, or selling securities, and the availability of securities or
purchasers or sellers of securities; furnishing analyses and reports concerning
issuers, industries, securities, economic factors and trends, portfolio strategy
and the performance of accounts; effecting securities transactions and
performing functions incidental thereto (such as clearance and settlement) and
the "Research Services" referred to in the next paragraph.
It is a common practice in the investment advisory industry for the advisers
of investment companies, institutions and other investors to receive research,
statistical and quotation services, data, information and other services,
products and materials which assist such advisers in the performance of their
investment responsibilities ("Research Services") from broker-dealer firms which
execute portfolio transactions for the clients of such advisers and from third
parties with which such broker-dealers have arrangements. Consistent with this
practice, Eaton Vance receives Research Services from many broker-dealer firms
with which Eaton Vance places the Fund's portfolio transactions and from third
parties with which these broker-dealers have arrangements. These Research
Services include such matters as general economic and market reviews, industry
and company reviews, evaluations of securities and portfolio strategies and
transactions, recommendations as to the purchase and sale of securities and
other portfolio transactions, financial, industry and trade publications, news
and information services, pricing and quotation equipment and services, and
research oriented computer hardware, software, data bases and services. Any
particular Research Service obtained through a broker-dealer may be used by
Eaton Vance in connection with client accounts other than those accounts which
pay commissions to such broker-dealer. Any such Research Service may be broadly
useful and of value to Eaton Vance in rendering investment advisory services to
all or a significant portion of its clients, or may be relevant and useful for
the management of only one client's account or of a few clients' accounts, or
may be useful for the management of merely a segment of certain clients'
accounts, regardless of whether any such account or accounts paid commissions to
the broker-dealer through which such Research Service was obtained. The advisory
fee paid by the Fund is not reduced because Eaton Vance receives such Research
Services. Eaton Vance evaluates the nature and quality of the various Research
Services obtained through broker-dealer firms and attempts to allocate
sufficient commissions to such firms to ensure the continued receipt of Research
Services which Eaton Vance believes are useful or of value to it in rendering
investment advisory services to its clients.
Subject to the requirement that Eaton Vance shall use its best efforts to
seek to execute Fund portfolio security transactions at advantageous prices and
at reasonably competitive commission rates or spreads, Eaton Vance is authorized
to consider as a factor in the selection of any broker-dealer firm with whom
Fund portfolio orders may be placed the fact that such firm has sold or is
selling shares of the Fund or of other investment companies sponsored by Eaton
Vance. This policy is not inconsistent with a rule of the NASD, which rule
provides that no firm which is a member of the NASD shall favor or disfavor the
distribution of shares of any particular investment company or group of
investment companies on the basis of brokerage commissions received or expected
by such firm from any source.
Securities considered as investments for the Fund may also be appropriate
for other investment accounts managed by Eaton Vance or its affiliates. Eaton
Vance will attempt to allocate in a manner it deems equitable portfolio security
transactions among the Fund and the portfolios of its other investment accounts
whenever decisions are made to purchase or sell securities by the Fund and one
or more of such other accounts simultaneously. In making such allocations, the
main factors to be considered are the respective investment objectives of the
Fund and such other accounts, the relative size of portfolio holdings of the
same or comparable securities, the availability of cash for investment by the
Fund and such accounts, the size of investment commitments generally held by the
Fund and such accounts and the opinions of the persons responsible for
recommending investments to the Fund and such accounts. However, there may be
instances when the Fund will not participate in a securities transaction that is
allocated among other accounts. While these procedures could have a detrimental
effect on the price or amount of the securities available to the Fund from time
to time, it is the opinion of the Trustees of the Trust that the benefits
available from the Eaton Vance organization outweigh any disadvantage that may
arise from exposure to simultaneous transactions.
During the fiscal year ended August 31, 1996 the Fund paid brokerage
commissions of $53,969, on portfolio security transactions, of which
approximately $34,051 was paid in respect of portfolio security transactions
aggregating approximately $9,449,706 to firms which provided some research
services to Eaton Vance or its affiliates (although many of such firms may have
been selected in any particular transactions primarily because of their
execution capabilities). During the fiscal years ended August 31, 1995 and
September 30, 1994, the Fund paid brokerage commissions of $30,126 and $19,482,
respectively.
OTHER INFORMATION
On August 18, 1992 the Trust changed its name from Eaton Vance Growth Fund
to Eaton Vance Growth Trust. The Trust is a Massachusetts business trust
established in 1989 as the successor to Eaton Vance Growth Fund, Inc., a
Massachusetts corporation. On August 31, 1995, the Fund was reorganized as a
series of the Trust. Prior thereto, the Fund was a Massachusetts business trust
established in 1987, originally called Eaton Vance Natural Resources Trust. The
Fund changed its name to EV Marathon Gold & Natural Resources Fund on April 1,
1994.
Eaton Vance, pursuant to the Investment Advisory Agreement, controls the use
of the words "Eaton Vance" or "EV" in the Fund's name and may use the words
"Eaton Vance" and "EV" in other connections and for other purposes. Eaton Vance
may require the Fund to cease using such words in its name if Eaton Vance or any
other subsidiary or affiliate of Eaton Vance ceases to act as investment adviser
of the Fund.
The Declaration of Trust may be amended by the Trustees when authorized by
vote of a majority of the outstanding voting securities of the Trust affected by
the amendment. The Trustees may also amend the Declaration of Trust without the
vote or consent of shareholders to change the name of the Trust or 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 Trust will indemnify its Trustees and officers against
liabilities and expenses incurred in connection with any litigation or
proceeding in which they may be involved because of their offices with the
Trust. However, no indemnification will be provided to any Trustee or officer
for any liability to the Trust or its shareholders by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.
Under Massachusetts law, if certain conditions prevail, shareholders of a
Massachusetts business trust (such as the Trust) could be deemed to have
personal liability for the obligations of the Trust. Numerous investment
companies registered under the 1940 Act have been formed as Massachusetts
business trusts, and management is not aware of an instance where such liability
has been imposed. The Trust's Declaration of Trust contains an express
disclaimer of liability on the part of the Fund shareholders, and the Trust's
By-Laws provide that the Trust shall assume the defense on behalf of any Fund
shareholders. 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.
The right to redeem shares of the Fund can be suspended and the payment of
the redemption price deferred when the Exchange is closed (other than for
customary weekend and holiday closings), during periods when trading on the
Exchange is restricted as determined by the Commission, or during any emergency
as determined by the Commission which makes it impracticable for the Portfolio
to dispose of its securities or value its assets, or during any other period
permitted by order of the Commission for the protection of investors.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Deloitte & Touche LLP, 125 Summer Street, Boston, Massachusetts, are the
independent certified public accountants of the Fund, providing audit services,
tax return preparation, and assistance and consultation with respect to the
preparation of filings with the SAI. An Internal Revenue Service ruling requires
that sales commissions paid by the Fund pursuant to its Distribution Plan be
expensed for tax purposes (rather than charged to paid-in capital as the Fund
has done in the past). The Fund changed its tax accounting practice to conform
to the ruling on November 16, 1994. The change will have no effect on the Fund's
current yield or total return.
FINANCIAL STATEMENTS
The financial statements of the Fund, which are included in the Fund's
Annual Report to Shareholders, are incorporated by reference into this SAI and
have been so incorporated in reliance on the report of Deloitte & Touche LLP,
independent certified public accountants, as experts in accounting and auditing.
A copy of the Fund's most recent Annual Report accompanies this SAI.
Registrant incorporates by reference the audited financial information for
the Fund for the fiscal year ended August 31, 1996, as previously filed with the
Commission (Accession No. 0000950135-96-000833).
<PAGE>
[Logo]
================
EATON VANCE
Mutual Funds
EV MARATHON GOLD &
NATURAL RESOURCES FUND
STATEMENT OF ADDITIONAL INFORMATION
JANUARY 1, 1997
EV MARATHON GOLD &
NATURAL RESOURCES FUND
24 FEDERAL STREET
BOSTON, MA 02110
- --------------------------------------------------------------------------------
INVESTMENT ADVISER
Eaton Vance Management, 24 Federal Street, Boston, MA 02110
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc., 24 Federal Street,
Boston, MA 02110 (800) 225-6265
CUSTODIAN
Investors Bank & Trust Company, 89 South Street, Boston, MA 02111
TRANSFER AGENT
First Data Investor Services Group, P.O. Box 5123
Westborough, MA 01581-5123 (800) 262-1122
AUDITORS
Deloitte & Touche LLP, 125 Summer Street, Boston, MA 02110
NRSAI
<PAGE>
PART C
OTHER INFORMATION
<TABLE>
<CAPTION>
ITEM 24: FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS
INCLUDED IN PART A FOR THE FUNDS LISTED BELOW ARE "FINANCIAL HIGHLIGHTS"
FROM THE DATE INDICATED TO THE FISCAL YEAR ENDED AUGUST 31, 1996:
<S> <C>
EV Classic Greater China Growth Fund (start of business December 28, 1993)
EV Marathon Greater China Growth Fund (start of business June 7, 1993)
EV Traditional Greater China Growth Fund (start of business October 28, 1992)
EV Classic Growth Fund (start of business November 7, 1994)
EV Marathon Growth Fund (start of business September 13, 1994)
EV Traditional Growth Fund (ten years ended August 31, 1996)
EV Classic Information Age Fund (start of business November 22, 1995)
EV Marathon Information Age Fund (start of business September 18, 1995)
EV Traditional Information Age Fund (start of business September 18, 1995)
EV Marathon Gold & Natural Resources Fund (start of business October 21, 1987)
<CAPTION>
INCORPORATED BY REFERENCE INTO PART B ARE THE FINANCIAL STATEMENTS CONTAINED
IN THE ANNUAL REPORTS FOR THE FUNDS LISTED BELOW, EACH DATED AUGUST 31,
1996 (WHICH WERE PREVIOUSLY FILED ELECTRONICALLY PURSUANT TO SECTION 30(B)
(2) OF THE INVESTMENT COMPANY ACT OF 1940):
<S> <C>
EV Classic Greater China Growth Fund EV Traditional Growth Fund
(Accession No. 0000928816-96-000327) (Accession No. 0000950156-96-000841)
EV Marathon Greater China Growth Fund EV Classic Information Age Fund
(Accession No. 0000928816-96-000318) (Accession No. 0000928816-96-000323)
EV Traditional Greater China Growth Fund EV Marathon Information Age Fund
(Accession No. 0000928816-96-000317) (Accession No. 0000928816-96-000325)
EV Classic Growth Fund EV Traditional Information Age Fund
(Accession No. 0000950156-96-000844) (Accession No. 0000928816-96-000320)
EV Marathon Growth Fund EV Marathon Gold & Natural Resources Fund
(Accession No. 0000950156-96-000843) (Accession No. 0000950156-96-000833)
THE FINANCIAL STATEMENTS CONTAINED IN EACH FUND'S ANNUAL REPORT ARE AS FOLLOWS:
Portfolio of Investments (for EV Marathon Gold & Natural Resources Fund only)
Statement of Assets and Liabilities
Statement of Operations
Statements of Changes in Net Assets
Financial Highlights
Notes to Financial Statements
Independent Auditors' Report
ALSO INCORPORATED BY REFERENCE INTO PART B ARE THE FOLLOWING FINANCIAL STATEMENTS OF GREATER
CHINA GROWTH PORTFOLIO, GROWTH PORTFOLIO AND INFORMATION AGE PORTFOLIO, WHICH ARE CONTAINED IN
THE ANNUAL REPORTS DATED AUGUST 31, 1996 OF THE CORRESPONDING FUNDS:
THE FINANCIAL STATEMENTS FOR EACH PORTFOLIO CONTAINED IN EACH FUND'S ANNUAL REPORT ARE AS
FOLLOWS:
Portfolio of Investments
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
Supplementary Data
Notes to Financial Statements
Independent Auditors' Report
ALSO INCLUDED IN PART B OF THE ASIAN SMALL COMPANIES FUNDS ARE THE FOLLOWING FINANCIAL
STATEMENTS:
For EV Marathon Asian Small Companies Fund:
Statement of Assets and Liabilities as of August 31, 1996
Independent Auditors' Report
For EV Traditional Asian Small Companies Fund:
Statement of Assets and Liabilities as of August 31, 1996
Independent Auditors' Report
For Asian Small Companies Portfolio:
Statement of Assets and Liabilities as of August 31, 1996
Independent Auditors' Report
<CAPTION>
(B) EXHIBITS:
<S> <C>
(1)(a) Declaration of Trust dated May 25, 1989 filed as Exhibit (1)(a) to Post-Effective
Amendment No. 59 and incorporated herein by reference.
(b) Amendment to the Declaration of Trust dated August 18, 1992 filed as Exhibit (1)(b) to
Post-Effective Amendment No. 59 and incorporated herein by reference.
(c) Amendment and Restatement of Establishment and Designation of Series of Shares dated
June 24, 1996 filed herewith.
(2)(a) By-Laws filed as Exhibit (2)(a) to Post-Effective Amendment No. 59 and incorporated
herein by reference.
(b) Amendment to By-Laws dated December 13, 1993 filed as Exhibit (2)(b) to Post-Effective
Amendment No. 59 and incorporated herein by reference.
(3) Not applicable
(4) Not applicable
(5)(a) Investment Advisory Agreement with Eaton Vance Management for EV Marathon Gold &
Natural Resources Fund dated August 15, 1995 filed as Exhibit (5)(a) to Post-Effective
Amendment No. 59 and incorporated herein by reference.
(b) Management Contract with Eaton Vance Management for Eaton Vance Greater China Growth
Fund filed as Exhibit (5)(b) to Post-Effective Amendment No. 59 and incorporated
herein by reference.
(c) Management Contract with Eaton Vance Management for EV Marathon Greater China Growth
Fund dated June 7, 1993 filed as Exhibit (5)(c) to Post-Effective Amendment No. 59 and
incorporated herein by reference.
(d) Management Contract with Eaton Vance Management for EV Classic Greater China Growth
Fund dated December 17, 1993 filed as Exhibit (5)(d) to Post-Effective Amendment No.
59 and incorporated herein by reference.
(e) Management Contract with Eaton Vance Management for EV Marathon Information Age Fund
filed as Exhibit (5)(e) to Post-Effective Amendment No. 61 and incorporated herein by
reference.
(f) Management Contract with Eaton Vance Management for EV Traditional Information Age
Fund filed as Exhibit (5)(f) to Post-Effective Amendment No. 61 and incorporated
herein by reference.
(g) Management Contract with Eaton Vance Management for EV Classic Information Age Fund
filed as Exhibit (5)(g) to Post-Effective Amendment No. 61 and incorporated herein by
reference.
(h) Management Contract with Eaton Vance Management for EV Marathon Asian Small Companies
Fund filed as Exhibit (5)(h) to Post-Effective Amendment No. 64 and incorporated
herein by reference.
(i) Management Contract with Eaton Vance Management for EV Traditional Asian Small
Companies Fund filed as Exhibit (5)(i) to Post-Effective Amendment No. 64 and
incorporated herein by reference.
(j) Management Contract with Eaton Vance Management for EV Marathon Worldwide Health
Sciences Fund filed as Exhibit (5)(j) to Post-Effective Amendment No. 64 and
incorporated herein by reference.
(6)(a)(1) Distribution Agreement between Eaton Vance Growth Trust (on behalf of its Classic
series) and Eaton Vance Distributors, Inc. effective November 1, 1996 (with attached
Schedule A effective November 1, 1996) filed herewith.
(a)(2) Distribution Agreement between Eaton Vance Growth Trust (on behalf of its Marathon
series) and Eaton Vance Distributors, Inc. effective November 1, 1996 (with attached
Schedule A effective November 1, 1996) filed herewith.
(a)(3) Distribution Agreement between Eaton Vance Growth Trust (on behalf of its Traditional
series) and Eaton Vance Distributors, Inc. effective November 1, 1996 (with attached
Schedule A effective November 1, 1996) filed herewith.
(b) Selling Group Agreements between Eaton Vance Distributors, Inc. and Authorized Firms
filed as Exhibit (6)(b) to Post-Effective Amendment No. 61 and incorporated herein by
reference.
(c) Schedule of Dealer Discounts and Sales Charges filed as Exhibit (6)(c) to Post-
Effective Amendment No. 59 and incorporated herein by reference.
(7) The Securities and Exchange Commission has granted the Registrant an exemptive order
that permits the Registrant to enter into deferred compensation arrangements with its
independent Trustees. See in the Matter of Capital Exchange Fund, Inc., Release No.
IC-20671 (November 1, 1994).
(8)(a) Custodian Agreement with Investors Bank & Trust Company dated November 7, 1994 filed
as Exhibit (8) to Post-Effective Amendment No. 59 and incorporated herein by
reference.
(b) Amendment to Custodian Agreement witn Investors Bank & Trust Company dated October 23,
1995 filed as Exhibit (8)(b) to Post-Effective Amendment No. 61 and incorporated
herein by reference.
(9)(a) Administrative Services Agreement with Eaton Vance Management for EV Traditional
Growth Fund filed as Exhibit (9)(a) to Post-Effective Amendment No. 59 and
incorporated herein by reference.
(b) Administrative Services Agreement with Eaton Vance Management for EV Classic Growth
Fund filed as Exhibit (9)(b) to Post-Effective Amendment No. 59 and incorporated
herein by reference.
(c) Administrative Services Agreement with Eaton Vance Management for EV Marathon Growth
Fund filed as Exhibit (9)(c) to Post-Effective Amendment No. 59 and incorporated
herein by reference.
(d) Transfer Agency Agreement dated June 7, 1989 filed herewith.
(e) Amendment to Transfer Agency Agreement dated February 1, 1993 filed herewith.
(10) Opinion of Counsel filed herewith.
(11)(a) Consent of Independent Auditors for EV Marathon Asian Small Companies Fund filed herewith.
(b) Consent of Independent Auditors for EV Traditional Asian Small Companies Fund filed herewith.
(c) Consent of Independent Auditors for EV Classic Greater China Growth Fund filed herewith.
(d) Consent of Independent Auditors for EV Marathon Greater China Growth Fund filed herewith.
(e) Consent of Independent Auditors for EV Traditional Greater China Growth Fund filed herewith.
(f) Consent of Independent Accountants for EV Classic Growth Fund filed herewith.
(g) Consent of Independent Accountants for EV Marathon Growth Fund filed herewith.
(h) Consent of Independent Accountants for EV Traditional Growth Fund filed herewith.
(i) Consent of Independent Accountants for EV Classic Information Age Fund filed herewith.
(j) Consent of Independent Accountants for EV Marathon Information Age Fund filed herewith.
(k) Consent of Independent Accountants for EV Traditional Information Age Fund filed herewith.
(l) Consent of Chartered Accountants for Information Age Portfolio filed herewith.
(m) Consent of Independent Auditors for EV Marathon Gold & Natural Resources Fund filed herewith.
(12) Not applicable
(13) Not applicable
(14) (1) Vance, Sanders Profit Sharing Retirement Plan for Self-Employed Persons with Adoption
Agreement and instructions filed as Exhibit (8)(b)(1) to Post-Effective Amendment No.
28 and incorporated herein by reference.
(2) Eaton & Howard, Vance Sanders Defined Contribution Prototype Plan and Trust with
Adoption Agreements: (1) Basic Profit-Sharing Retirement Plan; (2) Basic Money
Purchase Pension Plan; (3) Thrift Plan Qualifying as Profit-Sharing Plan; (4) Thrift
Plan Qualifying as Money Purchase Plan; (5) Integrated Profit-Sharing Retirement Plan
and (6) Integrated Money Purchase Pension Plan filed as Exhibit (14)(2) to Post-
Effective Amendment No. 29 and incorporated herein by reference.
(3) Individual Retirement Custodian Account (Form 5305A) and Instructions filed as Exhibit
18 to Post-Effective Amendment No. 24 on Form S-5, File #2-22019 and incorporated
herein by reference.
(15)(a) Service Plan dated July 7, 1993 pursuant to Rule 12b-1 under the Investment Company
Act of 1940 for EV Traditional Growth Fund filed as Exhibit (15)(a) to Post-Effective
Amendment No. 59 and incorporated herein by reference.
(b) Distribution Plan pursuant to Rule 12b-1 under the Investment Company Act of 1940 for
Eaton Vance Greater China Growth Fund filed as Exhibit (15)(b) to Post-Effective
Amendment No. 59 and incorporated herein by reference.
(c) Distribution Plan pursuant to Rule 12b-1 under the Investment Company Act of 1940 for
EV Marathon Greater China Growth Fund dated June 7, 1993 filed as Exhibit (15)(c) to
Post-Effective Amendment No. 59 and incorporated herein by reference.
(d) Distribution Plan pursuant to Rule 12b-1 under the Investment Company Act of 1940 for
EV Classic Greater China Growth Fund filed as Exhibit (15)(d) to Post-Effective
Amendment No. 59 and incorporated herein by reference.
(e) Distribution Plan for EV Classic Growth Fund pursuant to Rule 12b-1 under the
Investment Company Act of 1940 filed as Exhibit (15)(e) to Post-Effective Amendment
No. 59 and incorporated herein by reference.
(f) Distribution Plan for EV Marathon Growth Fund pursuant to Rule 12b-1 under the
Investment Company Act of 1940 filed as Exhibit (15)(f) to Post-Effective Amendment
No. 59 and incorporated herein by reference.
(g) Distribution Plan pursuant to Rule 12b-1 under the Investment Company Act of 1940, for
EV Marathon Information Age Fund filed as Exhibit (15)(g) to Post-Effective Amendment
No. 61 and incorporated herein by reference.
(h) Distribution Plan pursuant to Rule 12b-1 under the Investment Company Act of 1940 for
EV Traditional Information Age Fund filed as Exhibit (15)(h) to Post-Effective
Amendment No. 61 and incorporated herein by reference.
(i) Distribution Plan pursuant to Rule 12b-1 under the Investment Company Act of 1940 for
EV Marathon Gold & Natural Resources Fund dated June 19, 1995 filed as Exhibit (15)(i)
to Post-Effective Amendment No. 59 and incorporated herein by reference.
(j) Distribution Plan pursuant to Rule 12b-1 under the Investment Company Act of 1940 for
EV Classic Information Age Fund filed as Exhibit (15)(j) to Post-Effective Amendment
No. 61 and incorporated herein by reference.
(k) Distribution Plan pursuant to Rule 12b-1 under the Investment Company Act of 1940 for
EV Marathon Asian Small Companies Fund filed as Exhibit (15)(k) to Post-Effective
Amendment No. 65 and incorporated herein by reference.
(l) Distribution Plan pursuant to Rule 12b-1 under the Investment Company Act of 1940 for
EV Traditional Asian Small Companies Fund filed as Exhibit (15)(l) to Post-Effective
Amendment No. 65 and incorporated herein by reference.
(m) Distribution Plan pursuant to Rule 12b-1 under the Investment Company Act of 1940 for
EV Marathon Worldwide Health Sciences Fund filed as Exhibit (15)(m) to Post-Effective
Amendment No. 65 and incorporated herein by reference.
(n) Amendment to Distribution Plan of Eaton Vance Growth Trust on behalf of EV Marathon
Asian Small Companies Fund adopted June 24, 1996 filed herewith.
(o) Amendment to Distribution Plan of Eaton Vance Growth Trust on behalf of EV Traditional
Asian Small Companies Fund adopted June 24, 1996 filed herewith.
(p) Amendment to Distribution Plan of Eaton Vance Growth Trust on behalf of EV Marathon
Gold & Natural Resources Fund adopted June 24, 1996 filed herewith.
(q) Amendment to Distribution Plan of Eaton Vance Growth Trust on behalf of EV Classic
Greater China Growth Fund adopted June 24, 1996 filed herewith.
(r) Amendment to Distribution Plan of Eaton Vance Growth Trust on behalf of EV Marathon
Greater China Growth Fund adopted June 24, 1996 filed herewith.
(s) Amendment to Distribution Plan of Eaton Vance Growth Trust on behalf of EV Traditional
Greater China Growth Fund adopted June 24, 1996 filed herewith.
(t) Amendment to Distribution Plan of Eaton Vance Growth Trust on behalf of EV Classic
Growth Fund adopted June 24, 1996 filed herewith.
(u) Amendment to Distribution Plan of Eaton Vance Growth Trust on behalf of EV Marathon
Growth Fund adopted June 24, 1996 filed herewith.
(v) Amendment to Service Plan of Eaton Vance Growth Trust on behalf of EV Traditional
Growth Fund adopted June 24, 1996 filed herewith.
(w) Amendment to Distribution Plan of Eaton Vance Growth Trust on behalf of EV Classic
Information Age Fund adopted June 24, 1996 filed herewith.
(x) Amendment to Distribution Plan of Eaton Vance Growth Trust on behalf of EV Marathon
Information Age Fund adopted June 24, 1996 filed herewith.
(y) Amendment to Distribution Plan of Eaton Vance Growth Trust on behalf of EV Traditional
Information Age Fund adopted June 24, 1996 filed herewith.
(z) Amendment to Distribution Plan of Eaton Vance Growth Trust on behalf of EV Marathon
Worldwide Health Sciences Fund adopted June 24, 1996 filed herewith.
(16) Schedules for Computation of Performance Quotations filed herewith.
(17)(a) Power of Attorney dated August 7, 1995 for Eaton Vance Growth Trust filed as Exhibit
(17)(a) to Post-Effective Amendment No. 59 and incorporated herein by reference.
(b) Power of Attorney dated August 7, 1995 for Growth Portfolio filed as Exhibit (17)(b)
to Post-Effective Amendment No. 59 and incorporated herein by reference.
(c) Power of Attorney dated June 24, 1996 for Information Age Portfolio filed herewith.
(d) Power of Attorney dated June 24, 1996 for Asian Small Companies Portfolio filed as
Exhibit (17)(d) to Post-Effective Amendment No. 64 and incorporated herein by
reference.
(e) Power of Attorney dated June 24, 1996 for Greater China Growth Portfolio filed as
Exhibit (17)(e) to Post-Effective Amendment No. 64 and incorporated herein by
reference.
(f) Power of Attorney dated June 24, 1996 for Worldwide Health Sciences Portfolio filed as
Exhibit (17)(f) to Post-Effective Amendment No. 64 and incorporated herein by
reference.
</TABLE>
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Not applicable
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
(2)
NUMBER OF RECORD
(1) HOLDERS AS OF
TITLE OF CLASS NOVEMBER 29, 1996
-------------- -----------------
Shares of beneficial interest without par value
EV Marathon Asian Small Companies Fund 2
EV Traditional Asian Small Companies Fund 2
EV Classic Greater China Growth Fund 1,208
EV Marathon Greater China Growth Fund 23,564
EV Traditional Greater China Growth Fund 15,878
EV Classic Growth Fund 59
EV Marathon Growth Fund 519
EV Traditional Growth Fund 10,281
EV Marathon Gold & Natural Resources Fund 1,478
EV Classic Information Age Fund 79
EV Marathon Information Age Fund 1,916
EV Traditional Information Age Fund 1,062
EV Marathon Worldwide Health Sciences Fund 544
ITEM 27. INDEMNIFICATION
Article XIV of the Trust's Declaration of Trust, dated May 25, 1989, as
amended, permits Trustee and officer indemnification by By-law, contract and
vote. Article XI of the By-laws contains indemnification provisions.
Registrant's Trustees and officers are insured under a standard mutual fund
errors and omissions insurance policy covering loss incurred by reason of
negligent errors and omissions committed in their capacities as such.
The distribution agreements of the Trust also provide for reciprocal
indemnity of the principal underwriter on the one hand, and the Trustees and
officers, on the other.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Reference is made to the information set forth under the caption "Investment
Adviser and Administrator", "Management of the Fund and the Portfolio",
"Management of the Fund" or "Investment Adviser" in the Statement of Additional
Information, which information is incorporated herein by reference.
<PAGE>
<TABLE>
<CAPTION>
ITEM 29. PRINCIPAL UNDERWRITER
(A) Registrant's principal underwriter, Eaton Vance Distributors, Inc., a
wholly-owned subsidiary of Eaton Vance Management, is the principal
underwriter for each of the investment companies named below:
<S> <C>
EV Classic California Municipals Fund EV Marathon Georgia Municipals Fund
EV Classic Connecticut Municipals Fund EV Marathon Gold & Natural Resources Fund
EV Classic Florida Insured Municipals Fund EV Marathon Government Obligations Fund
EV Classic Florida Limited Maturity EV Marathon Greater China Growth Fund
Municipals Fund EV Marathon Greater India Fund
EV Classic Florida Municipals Fund EV Marathon Growth Fund
EV Classic Government Obligations Fund EV Marathon Hawaii Municipals Fund
EV Classic Greater China Growth Fund EV Marathon High Income Fund
EV Classic Growth Fund EV Marathon High Yield Municipals Fund
EV Classic High Income Fund EV Marathon Information Age Fund
EV Classic Information Age Fund EV Marathon Investors Fund
EV Classic Investors Fund EV Marathon Kansas Municipals Fund
EV Classic Massachusetts Limited Maturity EV Marathon Kentucky Municipals Fund
Municipals Fund EV Marathon Louisiana Municipals Fund
EV Classic National Limited Maturity EV Marathon Maryland Municipals Fund
Municipals Fund EV Marathon Massachusetts Limited Maturity
EV Classic National Municipals Fund Municipals Fund
EV Classic New Jersey Municipals Fund EV Marathon Massachusetts Municipals Fund
EV Classic New York Limited Maturity EV Marathon Michigan Limited Maturity
Municipals Fund Municipals Fund
EV Classic New York Municipals Fund EV Marathon Michigan Municipals Fund
EV Classic Pennsylvania Limited EV Marathon Minnesota Municipals Fund
Maturity Municipals Fund EV Marathon Mississippi Municipals Fund
EV Classic Pennsylvania Municipals Fund EV Marathon Missouri Municipals Fund
EV Classic Senior Floating-Rate Fund EV Marathon National Limited Maturity
EV Classic Strategic Income Fund Municipals Fund
EV Classic Special Equities Fund EV Marathon National Municipals Fund
EV Classic Stock Fund EV Marathon New Jersey Limited Maturity
EV Classic Total Return Fund Municipals Fund
EV Marathon Alabama Municipals Fund EV Marathon New Jersey Municipals Fund
EV Marathon Arizona Municipals Fund EV Marathon New York Limited Maturity
EV Marathon Arkansas Municipals Fund Municipals Fund
EV Marathon Asian Small Companies Fund EV Marathon New York Municipals Fund
EV Marathon California Limited Maturity EV Marathon North Carolina Municipals Fund
Municipals Fund EV Marathon Ohio Limited Maturity
EV Marathon California Municipals Fund Municipals Fund
EV Marathon Colorado Municipals Fund EV Marathon Ohio Municipals Fund
EV Marathon Connecticut Limited Maturity EV Marathon Oregon Municipals Fund
Municipals Fund EV Marathon Pennsylvania Limited Maturity
EV Marathon Connecticut Municipals Fund Municipals Fund
EV Marathon Emerging Markets Fund EV Marathon Pennsylvania Municipals Fund
EV Marathon Florida Insured Municipals Fund EV Marathon Rhode Island Municipals Fund
EV Marathon Florida Limited Maturity EV Marathon Strategic Income Fund
Municipals Fund EV Marathon South Carolina Municipals Fund
EV Marathon Florida Municipals Fund EV Marathon Special Equities Fund
<PAGE>
EV Marathon Stock Fund EV Traditional Michigan Municipals Fund
EV Marathon Tax-Managed Growth Fund EV Traditional Minnesota Municipals Fund
EV Marathon Tennessee Municipals Fund EV Traditional Mississippi Municipals Fund
EV Marathon Texas Municipals Fund EV Traditional Missouri Municipals Fund
EV Marathon Total Return Fund Eaton Vance Municipal Bond Fund L.P.
EV Marathon Virginia Municipals Fund EV Traditional National Limited Maturity
EV Marathon West Virginia Municipals Fund Municipals Fund
EV Marathon Worldwide Health Sciences Fund EV Traditional National Municipals Fund
EV Traditional Alabama Municipals Fund EV Traditional New Jersey Limited Maturity
EV Traditional Arizona Municipals Fund Municipals Fund
EV Traditional Arkansas Municipals Fund EV Traditional New Jersey Municipals Fund
EV Traditional Asian Small Companies Fund EV Traditional New York Limited Maturity
EV Traditional California Limited Maturity Municipals Fund
Municipals Fund EV Traditional New York Municipals Fund
EV Traditional California Municipals Fund EV Traditional North Carolina Municipals Fund
EV Traditional Colorado Municipals Fund EV Traditional Ohio Limited Maturity
EV Traditional Connecticut Limited Maturity Municipals Fund
Municipals Fund EV Traditional Ohio Municipals Fund
EV Traditional Connecticut Municipals Fund EV Traditional Oregon Municipals Fund
EV Traditional Emerging Markets Fund EV Traditional Pennsylvania Municipals Fund
EV Traditional Florida Insured Municipals Fund EV Traditional Rhode Island Municipals Fund
EV Traditional Florida Limited Maturity EV Traditional South Carolina Municipals Fund
Municipals Fund EV Traditional Special Equities Fund
EV Traditional Florida Municipals Fund EV Traditional Stock Fund
EV Traditional Georgia Municipals Fund EV Traditional Tax-Managed Growth Fund
EV Traditional Government Obligations Fund EV Traditional Tennessee Municipals Fund
EV Traditional Greater China Growth Fund EV Traditional Texas Municipals Fund
EV Traditional Greater India Fund EV Traditional Total Return Fund
EV Traditional Growth Fund EV Traditional Virginia Municipals Fund
EV Traditional Hawaii Municipals Fund EV Traditional West Virginia Municipals Fund
EV Traditional High Yield Municipals Fund EV Traditional Worldwide Health
Eaton Vance Income Fund of Boston Sciences Fund, Inc.
EV Traditional Information Age Fund Eaton Vance Cash Management Fund
EV Traditional Investors Fund Eaton Vance Liquid Assets Fund
EV Traditional Kansas Municipals Fund Eaton Vance Money Market Fund
EV Traditional Kentucky Municipals Fund Eaton Vance Prime Rate Reserves
EV Traditional Louisiana Municipals Fund Eaton Vance Short-Term Treasury Fund
EV Traditional Maryland Municipals Fund Eaton Vance Tax Free Reserves
EV Traditional Massachusetts Municipals Fund Massachusetts Municipal Bond Portfolio
EV Traditional Michigan Limited Maturity
Municipals Fund
</TABLE>
(b)
<TABLE>
<CAPTION>
(1) (2) (3)
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICE
BUSINESS ADDRESS* WITH PRINCIPAL UNDERWRITER WITH REGISTRANT
----------------- -------------------------- ---------------
<S> <C> <C>
James B. Hawkes Vice President and Director President and Trustee
William M. Steul Vice President and Director None
Wharton P. Whitaker President and Director None
Chris Berg Vice President None
Kate Bradshaw Vice President None
Susan W. Bukima Vice President None
Jeffrey W. Butterfield Vice President None
David B. Carle Vice President None
James S. Comforti Vice President None
Raymond Cox Vice President None
Mark P. Doman Vice President None
Alan R. Dynner Vice President None
James Foley Vice President None
Michael A. Foster Vice President None
William M. Gillen Vice President None
Hugh S. Gilmartin Vice President None
Perry D. Hooker Vice President None
Brian Jacobs Senior Vice President None
Thomas P. Luka Vice President None
John Macejka Vice President None
Timothy D. McCarthy Vice President None
Joseph T. McMenamin Vice President None
Morgan C. Mohrman Senior Vice President None
James A. Naughton Vice President None
Mark D. Nelson Vice President None
Linda D. Newkirk Vice President None
James L. O'Connor Vice President Treasurer
Thomas Otis Secretary and Clerk Secretary
George D. Owen, II Vice President None
F. Anthony Robinson Vice President None
Jay S. Rosoff Vice President None
Benjamin A. Rowland, Jr. Vice President, None
Treasurer and Director
John P. Rynne Vice President None
Kevin Schrader Vice President None
George V.F. Schwab, Jr. Vice President None
Cornelius J. Sullivan Vice President None
David M. Thill Vice President None
Chris Volf Vice President None
Sue Wilder Vice President None
- ----------
*Address is 24 Federal Street, Boston, MA 02110
</TABLE>
(c) Not applicable
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
All applicable accounts, books and documents required to be maintained by
the Registrant by Section 31(a) of the Investment Company Act of 1940 and the
Rules promulgated thereunder are in the possession and custody of the
Registrant's custodian, Investors Bank & Trust Company, 89 South Street,
Boston, MA 02111, and its transfer agent, First Data Investor Services Group,
4400 Computer Drive, Westborough, MA 01581-5120, with the exception of certain
corporate documents and portfolio trading documents which are in the
possession and custody of Eaton Vance Management, 24 Federal Street, Boston,
MA 02110. Certain corporate documents of Information Age Portfolio and
Worldwide Health Sciences Portfolio (each a "Portfolio") are also maintained
by IBT Trust Company (Cayman), Ltd., The Bank of Nova Scotia Building, P.O.
Box 501, George Town, Grand Cayman, Cayman Islands, British West Indies, and
certain investor account, Portfolio and the Registrant's accounting records
are held by IBT Fund Services (Canada) Inc., 1 First Canadian Place, King
Street West, Suite 2800, P.O. Box 231, Toronto, Ontario, Canada M5X 1C8.
Registrant is informed that all applicable accounts, books and documents
required to be maintained by registered investment advisers are in the custody
and possession of Eaton Vance Management.
ITEM 31. MANAGEMENT SERVICES
Not applicable
ITEM 32. UNDERTAKINGS
The Registrant undertakes to file a Post-Effective Amendment on behalf of
EV Marathon Asian Small Companies Fund and EV Traditional Asian Small
Companies Fund, using financial statements which need not be certified, within
four to six months from the effective date of Post-Effective Amendment No. 62
(and the commencement of their operations) and on behalf of EV Marathon
Worldwide Health Sciences Fund, using financial statements which need not be
certified, within four to six months from the effective date of Post-Effective
Amendment No. 64.
The Registrant undertakes to furnish to each person to whom a prospectus
is delivered a copy of the latest annual report to shareholders, upon request
and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of the Amendment to the Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has
duly caused this Amendment to its Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Boston,
and Commonwealth of Massachusetts, on the 17th day of December, 1996.
EATON VANCE GROWTH TRUST
By /s/ JAMES B. HAWKES
--------------------------------------
JAMES B. HAWKES, President
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
President, Principal Executive
/s/ JAMES B. HAWKES Officer and Trustee December 17, 1996
- ------------------------------------
JAMES B. HAWKES
Treasurer and Principal
Financial and Accounting
/s/ JAMES L. O'CONNOR Officer December 17, 1996
- ------------------------------------
JAMES L. O'CONNOR
DONALD R. DWIGHT* Trustee December 17, 1996
- ------------------------------------
DONALD R. DWIGHT
SAMUEL L. HAYES, III* Trustee December 17, 1996
- ------------------------------------
SAMUEL L. HAYES, III
NORTON H. REAMER* Trustee December 17, 1996
- ------------------------------------
NORTON H. REAMER
JOHN L. THORNDIKE* Trustee December 17, 1996
- ------------------------------------
JOHN L. THORNDIKE
JACK L. TREYNOR* Trustee December 17, 1996
- ------------------------------------
JACK L. TREYNOR
*By: /s/ H. DAY BRIGHAM, JR.
--------------------------------------------------------
As Attorney-in-fact
</TABLE>
<PAGE>
SIGNATURES
Asian Small Companies Portfolio has duly caused this Amendment to the
Registration Statement on Form N-1A of Eaton Vance Growth Trust (File No.
2-22019) to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Boston, Commonwealth of Massachusetts on the 17th
day of December, 1996.
ASIAN SMALL COMPANIES PORTFOLIO
By HON. ROBERT LLOYD GEORGE*
--------------------------------------
HON. ROBERT LLOYD GEORGE, President
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
President, Principal Executive
HON. ROBERT LLOYD GEORGE* Officer and Trustee December 17, 1996
- ------------------------------------
HON. ROBERT LLOYD GEORGE
Treasurer and Principal
Financial and Accounting
/s/ JAMES L. O'CONNOR Officer and Trustee December 17, 1996
- ------------------------------------
JAMES L. O'CONNOR
HON. EDWARD K.Y. CHEN* Trustee December 17, 1996
- ------------------------------------
HON. EDWARD K.Y. CHEN
DONALD R. DWIGHT* Trustee December 17, 1996
- ------------------------------------
DONALD R. DWIGHT
/s/ JAMES B. HAWKES Trustee December 17, 1996
- ------------------------------------
JAMES B. HAWKES
SAMUEL L. HAYES, III* Trustee December 17, 1996
- ------------------------------------
SAMUEL L. HAYES, III
NORTON H. REAMER* Trustee December 17, 1996
- ------------------------------------
NORTON H. REAMER
JOHN L. THORNDIKE* Trustee December 17, 1996
- ------------------------------------
JOHN L. THORNDIKE
JACK L. TREYNOR* Trustee December 17, 1996
- ------------------------------------
JACK L. TREYNOR
*By: /s/ H. DAY BRIGHAM, JR.
- ------------------------------------
As Attorney-in-fact
</TABLE>
<PAGE>
SIGNATURES
Greater China Growth Portfolio has duly caused this Amendment to the
Registration Statement on Form N-1A of Eaton Vance Growth Trust (File No.
2-22019) to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Boston, Commonwealth of Massachusetts on the 17th
day of December, 1996.
GREATER CHINA GROWTH PORTFOLIO
By HON. ROBERT LLOYD GEORGE*
--------------------------------------
HON. ROBERT LLOYD GEORGE, President
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
President, Principal Executive
HON. ROBERT LLOYD GEORGE* Officer and Trustee December 17, 1996
- ------------------------------------
HON. ROBERT LLOYD GEORGE
Treasurer and Principal
Financial and Accounting
/s/ JAMES L. O'CONNOR Officer and Trustee December 17, 1996
- ------------------------------------
JAMES L. O'CONNOR
HON. EDWARD K.Y. CHEN* Trustee December 17, 1996
- ------------------------------------
HON. EDWARD K.Y. CHEN
DONALD R. DWIGHT* Trustee December 17, 1996
- ------------------------------------
DONALD R. DWIGHT
/s/ JAMES B. HAWKES Trustee December 17, 1996
- ------------------------------------
JAMES B. HAWKES
SAMUEL L. HAYES, III* Trustee December 17, 1996
- ------------------------------------
SAMUEL L. HAYES, III
NORTON H. REAMER* Trustee December 17, 1996
- ------------------------------------
NORTON H. REAMER
*By: /s/ H. DAY BRIGHAM, JR.
- ------------------------------------
As Attorney-in-fact
</TABLE>
<PAGE>
SIGNATURES
Growth Portfolio has duly caused this Amendment to the Registration
Statement on Form N-1A of Eaton Vance Growth Trust (File No. 2-22019) to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Boston, Commonwealth of Massachusetts on the 17th day of December, 1996.
GROWTH PORTFOLIO
By /s/ JAMES B. HAWKES
--------------------------------------
JAMES B. HAWKES, President
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
President, Principal Executive
/s/ JAMES B. HAWKES Officer and Trustee December 17, 1996
- ------------------------------------
JAMES B. HAWKES
Treasurer and Principal
Financial and Accounting
/s/ JAMES L. O'CONNOR Officer and Trustee December 17, 1996
- ------------------------------------
JAMES L. O'CONNOR
DONALD R. DWIGHT* Trustee December 17, 1996
- ------------------------------------
DONALD R. DWIGHT
SAMUEL L. HAYES, III* Trustee December 17, 1996
- ------------------------------------
SAMUEL L. HAYES, III
NORTON H. REAMER* Trustee December 17, 1996
- ------------------------------------
NORTON H. REAMER
JOHN L. THORNDIKE* Trustee December 17, 1996
- ------------------------------------
JOHN L. THORNDIKE
JACK L. TREYNOR* Trustee December 17, 1996
- ------------------------------------
JACK L. TREYNOR
*By: /s/ H. DAY BRIGHAM, JR.
- ------------------------------------
As Attorney-in-fact
</TABLE>
<PAGE>
SIGNATURES
Information Age Portfolio has duly caused this Amendment to the
Registration Statement on Form N-1A of Eaton Vance Growth Trust (File No.
2-22019) to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Hamilton, Bermuda on the 18th day of October, 1996.
INFORMATION AGE PORTFOLIO
By /s/ JAMES B. HAWKES
--------------------------------------
JAMES B. HAWKES, President
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
President, Principal Executive
JAMES B. HAWKES Officer and Trustee October 18, 1996
- ------------------------------------
JAMES B. HAWKES
Treasurer and Principal
Financial and Accounting
JAMES L. O'CONNOR* Officer and Trustee October 18, 1996
- ------------------------------------
JAMES L. O'CONNOR
HON. EDWARD K.Y. CHEN* Trustee October 18, 1996
- ------------------------------------
HON. EDWARD K.Y. CHEN
DONALD R. DWIGHT* Trustee October 18, 1996
- ------------------------------------
DONALD R. DWIGHT
HON. ROBERT LLOYD GEORGE* Trustee October 18, 1996
- ------------------------------------
HON. ROBERT LLOYD GEORGE
SAMUEL L. HAYES, III* Trustee October 18, 1996
- ------------------------------------
SAMUEL L. HAYES, III
NORTON H. REAMER* Trustee October 18, 1996
- ------------------------------------
NORTON H. REAMER
JOHN L. THORNDIKE* Trustee October 18, 1996
- ------------------------------------
JOHN L. THORNDIKE
JACK L. TREYNOR* Trustee October 18, 1996
- ------------------------------------
JACK L. TREYNOR
*By: /s/ JAMES B. HAWKES
- ------------------------------------
As Attorney-in-fact
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PAGE IN
SEQUENTIAL
NUMBERING
EXHIBIT NO. DESCRIPTION SYSTEM
- ----------- ----------- ----------
<S> <C>
(1)(c) Amendment and Restatement of Establishment and Designation of Series
dated June 24,1996.
(6)(a)(1) Distribution Agreement between Eaton Vance Growth Trust (on behalf of
its Classic series) and Eaton Vance Distributors, Inc. effective
November 1, 1996.
(6)(a)(2) Distribution Agreement between Eaton Vance Growth Trust (on behalf of
its Marathon series) and Eaton Vance Distributors, Inc. effective
November 1, 1996.
(6)(a)(3) Distribution Agreement between Eaton Vance Growth Trust (on behalf of
its Traditional series) and Eaton Vance Distributors, Inc. effective
November 1, 1996.
(9)(d) Transfer Agency Agreement dated June 7, 1989.
(9)(e) Amendment to Transfer Agency Agreement dated February 1, 1993.
(10) Opinion of Counsel.
(11)(a) Consent of Independent Auditors for EV Marathon Asian Small Companies Fund.
(11)(b) Consent of Independent Auditors for EV Traditional Asian Small Companies Fund.
(11)(c) Consent of Independent Auditors for EV Classic Greater China Growth Fund.
(11)(d) Consent of Independent Auditors for EV Marathon Greater China Growth Fund.
(11)(e) Consent of Independent Auditors for EV Traditional Greater China Growth Fund.
(11)(f) Consent of Independent Accountants for EV Classic Growth Fund.
(11)(g) Consent of Independent Accountants for EV Marathon Growth Fund.
(11)(h) Consent of Independent Accountants for EV Traditional Growth Fund.
(11)(i) Consent of Independent Accountants for EV Classic Information Age Fund.
(11)(j) Consent of Independent Accountants for EV Marathon Information Age Fund.
(11)(k) Consent of Independent Accountants for EV Traditional Information Age Fund.
(11)(l) Consent of Chartered Accountants for Information Age Portfolio.
(11)(m) Consent of Independent Auditors for EV Marathon Gold & Natural Resources Fund.
(15)(n) Amendment to Distribution Plan of Eaton Vance Growth Trust on behalf
of EV Marathon Asian Small Companies Fund adopted June 24, 1996.
(15)(o) Amendment to Distribution Plan of Eaton Vance Growth Trust on behalf
of EV Traditional Asian Small Companies Fund adopted June 24, 1996.
(15)(p) Amendment to Distribution Plan of Eaton Vance Growth Trust on behalf
of EV Marathon Gold & Natural Resources Fund adopted June 24, 1996.
(15)(q) Amendment to Distribution Plan of Eaton Vance Growth Trust on behalf
of EV Classic Greater China Growth Fund adopted June 24, 1996.
(15)(r) Amendment to Distribution Plan of Eaton Vance Growth Trust on behalf
of EV Marathon Greater China Growth Fund adopted June 24, 1996.
(15)(s) Amendment to Distribution Plan of Eaton Vance Growth Trust on behalf
of EV Traditional Greater China Growth Fund adopted June 24, 1996.
(15)(t) Amendment to Distribution Plan of Eaton Vance Growth Trust on behalf
of EV Classic Growth Fund adopted June 24, 1996.
(15)(u) Amendment to Distribution Plan of Eaton Vance Growth Trust on behalf
of EV Marathon Growth Fund adopted June 24, 1996.
(15)(v) Amendment to Service Plan of Eaton Vance Growth Trust on behalf of EV
Traditional Growth Fund adopted June 24, 1996.
(15)(w) Amendment to Distribution Plan of Eaton Vance Growth Trust on behalf
of EV Classic Information Age Fund adopted June 24, 1996.
(15)(x) Amendment to Distribution Plan of Eaton Vance Growth Trust on behalf
of EV Marathon Information Age Fund adopted June 24, 1996.
(15)(y) Amendment to Distribution Plan of Eaton Vance Growth Trust on behalf
of EV Traditional Information Age Fund adopted June 24, 1996.
(15)(z) Amendment to Distribution Plan of Eaton Vance Growth Trust on behalf
of EV Marathon Worldwide Health Sciences Fund adopted June 24, 1996.
(16) Schedules for Computation of Performance Quotations.
(17)(c) Power of Attorney dated June 24, 1996 for Information Age Portfolio.
</TABLE>
<PAGE>
EXHIBIT 1(C)
EATON VANCE GROWTH TRUST
Amendment and Restatement
of
Establishment and Designation of Series of Shares
of Beneficial Interest, Without Par Value
(as amended and restated June 24, 1996)
WHEREAS, the Trustees of Eaton Vance Growth Trust, a Massachusetts
business trust (the "Trust"), have previously designated separate series (or
"Funds"); and
WHEREAS, the Trustees now desire to change the names of two of the
previously designated series, i.e., EV Marathon Global Health Sciences Fund to
EV Marathon Worldwide Health Sciences Fund, and EV Traditional Global Health
Sciences Fund to EV Traditional Worldwide Health Sciences Fund pursuant to
Section 2 of Article VI of the Trust's Amended and Restated Declaration of Trust
dated May 25, 1989, as further amended August 18, 1992 (the "Declaration of
Trust");
NOW, THEREFORE, the undersigned, being at least a majority of the duly
elected and qualified Trustees presently in office of the Trust, hereby divide
the shares of beneficial interest of the Trust into fourteen separate series
("Funds"), each Fund to have the following special and relative rights:
1. The Funds shall be designated as follows:
EV Classic Information Age Fund
EV Marathon Information Age Fund
EV Traditional Information Age Fund
EV Marathon Gold & Natural Resources Fund
EV Classic Greater China Growth Fund
EV Marathon Greater China Growth Fund
EV Traditional Greater China Growth Fund
EV Classic Growth Fund
EV Marathon Growth Fund
EV Traditional Growth Fund
EV Marathon Asian Small Companies Fund
EV Traditional Asian Small Companies Fund
EV Marathon Worldwide Health Sciences Fund
EV Traditional Worldwide Health Sciences Fund
2. Each Fund shall be authorized to invest in cash, securities,
instruments and other property as from time to time described in the Trust's
then currently effective registration statements under the Securities Act of
1933 and the Investment Company Act of 1940. Each share of beneficial interest
of each Fund ("share") shall be redeemable, shall be entitled to one vote (or
fraction thereof in respect of a fractional share) on matters on which shares of
that Fund shall be entitled to vote and shall represent a pro rata beneficial
interest in the assets allocated to that Fund, all as provided in the
Declaration of Trust. The proceeds of sales of shares of each Fund, together
with any income and gain thereon, less any diminution or expenses thereof, shall
irrevocably belong to such Fund, unless otherwise required by law. Each share of
a Fund shall be entitled to receive its pro rata share of net assets of that
Fund upon liquidation of that Fund.
3. Shareholders of each Fund shall vote separately as a class to the
extent provided in Rule 18f-2, as from time to time in effect, under the
Investment Company Act of 1940.
4. The assets and liabilities of the Trust shall be allocated among the
above-referenced Funds as set forth in Section 2 of Article VI of the
Declaration of Trust, except as provided below:
(a) Costs incurred by each Fund in connection with its organization and
start-up, including Federal and state registration and qualification fees and
expenses of the initial public offering of such Fund's shares, shall (if
applicable) be borne by such Fund and deferred and amortized over the five year
period beginning on the date that such Fund commences operations.
(b) Reimbursement required under any expense limitation applicable to
the Trust shall be allocated among those Funds whose expense ratios exceed such
limitation on the basis of the relative expense ratios of such Funds.
(c) The liabilities, expenses, costs, charges and reserves of the Trust
(other than the management and investment advisory fees or the organizational
expenses paid by the Trust) which are not readily identifiable as belonging to
any particular Fund shall be allocated among the Funds on an equitable basis as
determined by the Trustees.
5. The Trustees (including any successor Trustees) shall have the right
at any time and from time to time to reallocate assets and expenses or to change
the designation of any Fund now or hereafter created, or to otherwise change the
special and relative rights of any such Fund, and to terminate any Fund or add
additional Funds as provided in the Declaration of Trust.
6. Any Fund may merge or consolidate with any other corporation,
association, trust or other organization or may sell, lease or exchange all or
substantially all of its property, including its good will, upon such terms and
conditions and for such consideration when and as authorized by the Trustees;
and any such merger, consolidation, sale, lease or exchange shall be deemed for
all purposes to have been accomplished under and pursuant to the statutes of the
Commonwealth of Massachusetts. The Trustees may also at any time sell and
convert into money all the assets of any Fund. Upon making provision for the
payment of all outstanding obligations, taxes and other liabilities, accrued or
contingent, of such Fund, the Trustees shall distribute the remaining assets of
such Fund ratably among the holders of the outstanding shares. Upon completion
of the distribution of the remaining proceeds or the remaining assets as
provided in this paragraph 6, the Fund shall terminate and the Trustees shall be
discharged of any and all further liabilities and duties hereunder with respect
to such Fund and the right, title and interest of all parties with respect to
such Fund shall be cancelled and discharged.
7. It is anticipated that the Declaration of Trust may be revised to
authorize the Trustees to divide each Fund and any other series of shares into
two or more classes and to fix and determine the relative rights and preferences
as between, and all provisions applicable to, each of the different classes so
established and designated by the Trustees. The establishment and designation of
any class of any Fund or other series of shares shall be effective upon the
execution by a majority of the then Trustees of an instrument setting forth such
establishment and designation and the 41relative rights and preferences, and
provisions applicable to, such class, or as otherwise provided in such
instrument.
Dated: June 24, 1996
/s/ Donald R. Dwight /s/ Samuel L. Hayes, III
- ---------------------------- ----------------------------
Donald R. Dwight Samuel L. Hayes, III
/s/ James B. Hawkes /s/ Norton H. Reamer
- ---------------------------- ----------------------------
James B. Hawkes Norton H. Reamer
/s/ Jack L. Treynor /s/ John L. Thorndike
- ---------------------------- ----------------------------
Jack L. Treynor John L. Thorndike
<PAGE>
EXHIBIT 6(A)(1)
EATON VANCE GROWTH TRUST
DISTRIBUTION AGREEMENT
(CLASSIC FUNDS)
AGREEMENT effective November 1, 1996 between EATON VANCE GROWTH TRUST,
a Massachusetts business trust having its principal place of business in Boston
in the Commonwealth of Massachusetts, hereinafter called the "Trust," on behalf
of each of its series listed on Schedule A (the "Funds"), and EATON VANCE
DISTRIBUTORS, INC., a Massachusetts corporation having its principal place of
business in said Boston and formerly named EV Distributors, Inc., hereinafter
sometimes called the "Principal Underwriter."
IN CONSIDERATION of the mutual promises and undertakings herein
contained, the parties hereto agree:
1. The Trust grants to the Principal Underwriter the right to purchase
shares of the Fund upon the terms hereinbelow set forth during the term of this
Agreement. While this Agreement is in force, the Principal Underwriter agrees to
use its best efforts to find purchasers for shares of the Fund.
The Principal Underwriter shall have the right to buy from the Fund the
shares needed, but not more than the shares needed (except for clerical errors
and errors of transmission) to fill unconditional orders for shares of the Fund
placed with the Principal Underwriter by financial service firms or investors as
set forth in the current Prospectus relating to shares of the Fund. The price
which the Principal Underwriter shall pay for the shares so purchased shall be
equal to the price paid by investors upon purchasing such shares. The Principal
Underwriter shall notify Investors Bank & Trust Company, Custodian of the Fund
("IBT"), and First Data Investor Services Group, Transfer Agent of the Fund
("First Data"), or a successor transfer agent, at the end of each business day,
or as soon thereafter as the orders placed with it have been compiled, of the
number of shares and the prices thereof which the Principal Underwriter is to
purchase as principal for resale. The Principal Underwriter shall take down and
pay for shares ordered from the Fund on or before the eleventh business day
(excluding Saturdays) after the shares have been so ordered.
The right granted to the Principal Underwriter to buy shares from the
Fund shall be exclusive, except that said exclusive right shall not apply to
shares issued in connection with the merger or consolidation of any other
investment company or personal holding company with the Fund or the acquisition
by purchase or otherwise of all (or substantially all) the assets or the
outstanding shares of any such company, by the Fund; nor shall it apply to
shares, if any, issued by the Fund in distribution of income or realized capital
gains of the Fund payable in shares or in cash at the option of the shareholder.
2. The shares may be resold by the Principal Underwriter to or through
financial service firms having agreements with the Principal Underwriter, and to
investors, upon the following terms and conditions.
The public offering price, i.e., the price per share at which the
Principal Underwriter or financial service firm purchasing shares from the
Principal Underwriter may sell shares to the public, shall be equal to the net
asset value at which the Principal Underwriter is to purchase the shares.
The net asset value of shares of the Fund shall be determined by the
Trust or IBT, as the agent of the Fund, as of the close of regular trading on
the New York Stock Exchange on each business day on which said Exchange is open,
or as of such other time on each such business day as may be determined by the
Trustees of the Trust, in accordance with the methodology and procedures for
calculating such net asset value authorized by the Trustees. The Trust may also
cause the net asset value to be determined in substantially the same manner or
estimated in such manner and as of such other time or times as may from time to
time be agreed upon by the Trust and Principal Underwriter. The Trust will
notify the Principal Underwriter each time the net asset value of the Fund's
shares is determined and when such value is so determined it shall be applicable
to transactions as set forth in the current Prospectus and Statement of
Additional Information (hereafter the "Prospectus") relating to the Fund's
shares.
No shares of the Fund shall be sold by the Fund during any period when
the determination of net asset value is suspended pursuant to the Declaration of
Trust, except to the Principal Underwriter, in the manner and upon the terms
above set forth to cover contracts of sale made by the Principal Underwriter
with its customers prior to any such suspension, and except as provided in the
last paragraph of paragraph 1 hereof. The Trust shall also have the right to
suspend the sale of the Fund's shares if in the judgment of the Trust conditions
obtaining at any time render such action advisable. The Principal Underwriter
shall have the right to suspend sales at any time, to refuse to accept or
confirm any order from an investor or financial service firm, or to accept or
confirm any such order in part only, if in the judgment of the Principal
Underwriter such action is in the best interests of the Fund.
3. The Trust agrees that it will, from time to time, but subject to the
necessary approval of the Fund's shareholders, take such steps as may be
necessary to register the Fund's shares under the federal Securities Act of
1933, as amended from time to time (the "1933 Act"), to the end that there will
be available for sale such number of shares as the Principal Underwriter may
reasonably be expected to sell. The Trust agrees to indemnify and hold harmless
the Principal Underwriter and each person, if any, who controls the Principal
Underwriter within the meaning of Section 15 of the 1933 Act against any loss,
liability, claim, damages or expense (including the reasonable cost of
investigating or defending any alleged loss, liability, claim, damages or
expense and reasonable counsel fees incurred in connection therewith), arising
by reason of any person acquiring any shares of the Fund, which may be based
upon the 1933 Act or on any other statute or at common law, on the ground that
the Registration Statement or Prospectus, as from time to time amended and
supplemented, includes an untrue statement of a material fact or omits to state
a material fact required to be stated therein or necessary in order to make the
statements therein not misleading, unless such statement or omission was made in
reliance upon, and in conformity with, information furnished in writing to the
Trust in connection therewith by or on behalf of the Principal Underwriter;
provided, however, that in no case (i) is the indemnity of the Trust in favor of
the Principal Underwriter and any such controlling person to be deemed to
protect such Principal Underwriter or any such controlling person against any
liability to the Trust or the Fund or its security holders to which such
Principal Underwriter or any such controlling person would otherwise be subject
by reason of willful misfeasance, bad faith, or gross negligence in the
performance of its duties or by reason of its reckless disregard of its
obligations and duties under this Agreement, or (ii) is the Trust or the Fund to
be liable under its indemnity agreement contained in this paragraph with respect
to any claim made against the Principal Underwriter or any such controlling
person unless the Principal Underwriter or any such controlling person, as the
case may be, shall have notified the Trust in writing within a reasonable time
after the summons or other first legal process giving information of the nature
of the claim shall have been served upon the Principal Underwriter or such
controlling person (or after such Principal Underwriter or such controlling
person shall have received notice of such service on any designated agent), but
failure to notify the Trust of any such claim shall not relieve it from any
liability which the Fund may have to the person against whom such action is
brought otherwise than on account of its indemnity agreement contained in this
paragraph. The Trust shall be entitled to participate, at the expense of the
Fund, in the defense, or, if the Trust so elects, to assume the defense of any
suit brought to enforce any such liability, but if the Trust elects to assume
the defense, such defense shall be conducted by counsel chosen by it and
satisfactory to the Principal Underwriter or controlling person or persons,
defendant or defendants in the suit. In the event the Trust elects to assume the
defense of any such suit and retains such counsel, the Principal Underwriter or
controlling person or persons, defendant or defendants in the suit, shall bear
the fees and expenses of any additional counsel retained by them, but, in case
the Trust does not elect to assume the defense of any such suit, the Fund shall
reimburse the Principal Underwriter or controlling person or persons, defendant
or defendants in the suit, for the reasonable fees and expenses of any counsel
retained by them. The Trust agrees promptly to notify the Principal Underwriter
of the commencement of any litigation or proceedings against it or any of its
officers or Trustees in connection with the issuance or sale of any of the
Fund's shares.
4. The Principal Underwriter covenants and agrees that, in selling the
shares of the Fund, it will use its best efforts in all respects duly to conform
with the requirements of all state and federal laws relating to the sale of such
shares, and will indemnify and hold harmless the Trust and each of its Trustees
and officers and each person, if any, who controls the Trust within the meaning
of Section 15 of the 1933 Act, against any loss, liability, damages, claim or
expense (including the reasonable cost of investigating or defending any alleged
loss, liability, damages, claim or expense and reasonable counsel fees incurred
in connection therewith), arising by reason of any person acquiring any shares
of the Fund, which may be based upon the 1933 Act or any other statute or at
common law, on account of any wrongful act of the Principal Underwriter or any
of its employees (including any failure to conform with any requirement of any
state or federal law relating to the sale of such shares) or on the ground that
the Registration Statement or Prospectus, as from time to time amended and
supplemented, includes an untrue statement of a material fact or omits to state
a material fact required to be stated therein or necessary in order to make the
statements therein not misleading, insofar as any such statement or omission was
made in reliance upon, and in conformity with information furnished in writing
to the Fund in connection therewith by or on behalf of the Principal
Underwriter, provided, however, that in no case (i) is the indemnity of the
Principal Underwriter in favor of any person indemnified to be deemed to protect
the Fund or any such person against any liability to which the Fund or any such
person would otherwise be subject by reason of willful misfeasance, bad faith,
or gross negligence in the performance of its or his duties or by reason of its
or his reckless disregard of its obligations and duties under this Agreement, or
(ii) is the Principal Underwriter to be liable under its indemnity agreement
contained in this paragraph with respect to any claim made against the Fund or
any person indemnified unless the Trust or such person, as the case may be,
shall have notified the Principal Underwriter in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon the Trust, the Fund or upon such
person (or after the Trust or such person shall have received notice of such
service on any designated agent), but failure to notify the Principal
Underwriter of any such claim shall not relieve it from any liability which it
may have to the Fund or any person against whom such action is brought otherwise
than on account of its indemnity agreement contained in this paragraph. The
Principal Underwriter shall be entitled to participate, at its own expense, in
the defense, or, if it so elects, to assume the defense of any suit brought to
enforce any such liability, but if the Principal Underwriter elects to assume
the defense, such defense shall be conducted by counsel chosen by it and
satisfactory to the Trust, or to its officers or Trustees, or to any controlling
person or persons, defendant or defendants in the suit. In the event that the
Principal Underwriter elects to assume the defense of any such suit and retains
such counsel, the Fund or such officers or Trustees or controlling person or
persons, defendant or defendants in the suit, shall bear the fees and expenses
of any additional counsel retained by them or the Trust, but, in case the
Principal Underwriter does not elect to assume the defense of any such suit, it
shall reimburse the Fund, any such officers and Trustees or controlling person
or persons, defendant or defendants in such suit, for the reasonable fees and
expenses of any counsel retained by them or the Trust. The Principal Underwriter
agrees promptly to notify the Trust of the commencement of any litigation or
proceedings against it in connection with the issue and sale of any of the
Fund's shares.
Neither the Principal Underwriter nor any financial service firm nor
any other person is authorized by the Trust to give any information or to make
any representations, other than those contained in the Registration Statement or
Prospectus filed with the Securities and Exchange Commission (the "Commission")
under the 1933 Act, (as said Registration Statement and Prospectus may be
amended or supplemented from time to time), covering the shares of the Fund.
Neither the Principal Underwriter nor any financial service firm nor any other
person is authorized to act as agent for the Trust or the Fund in connection
with the offering or sale of shares of the Fund to the public or otherwise. All
such sales made by the Principal Underwriter shall be made by it as principal,
for its own account. The Principal Underwriter may, however, act as agent in
connection with the repurchase of shares as provided in paragraph 6 below, or in
connection with "exchanges" between investment companies for which the Principal
Underwriter acts as Principal Underwriter or for which an affiliate of the
Principal Underwriter acts as investment adviser.
5(a). The Fund will pay, or cause to be paid -
(i) all the costs and expenses of the Fund, including fees and
disbursements of its counsel, in connection with the preparation and filing of
any required Registration Statement and/or Prospectus under the 1933 Act, or the
Investment Company Act of 1940, as amended from time to time (the "1940 Act"),
covering its shares and all amendments and supplements thereto, and preparing
and mailing periodic reports to shareholders (including the expense of setting
up in type any such Registration Statement, Prospectus or periodic report);
(ii) the cost of preparing temporary and permanent share
certificates (if any) for shares of the Fund;
(iii) the cost and expenses of delivering to the Principal
Underwriter at its office in Boston, Massachusetts, all shares of the Fund
purchased by it as principal hereunder; and
(iv) all the federal and state (if any) issue and/or transfer
taxes payable upon the issue by or (in the case of treasury shares) transfer
from the Fund to the Principal Underwriter of any and all shares of the Fund
purchased by the Principal Underwriter hereunder.
(b) The Principal Underwriter agrees that, after the Prospectus (other
than to existing shareholders of the Fund) and periodic reports have been set up
in type, it will bear the expense of printing and distributing any copies
thereof which are to be used in connection with the offering of shares of the
Fund to financial service firms or investors. The Principal Underwriter further
agrees that it will bear the expenses of preparing, printing and distributing
any other literature used by the Principal Underwriter or furnished by it for
use by financial service firms in connection with the offering of the shares of
the Fund for sale to the public and any expenses of advertising in connection
with such offering. The Fund agrees to pay the expenses of registration and
maintaining registration of its shares for sale under federal and state
securities laws, and, if necessary or advisable in connection therewith, of
qualifying the Trust or the Fund as a dealer or broker, in such states as shall
be selected by the Principal Underwriter and the fees payable to each such state
for continuing the qualification therein until the Principal Underwriter
notifies the Trust that it does not wish such qualification continued.
(c) In addition, the Trust agrees, in accordance with the Fund's
Distribution Plan (the "Plan"), adopted pursuant to Rule 12b-1 under the 1940
Act with respect to shares, to make certain payments as follows. The Principal
Underwriter shall be entitled to be paid by the Fund a sales commission equal to
an amount not exceeding 6.25% of the price received by the Fund for each sale of
shares (excluding reinvestment of dividends and distributions), such payment to
be made in the manner set forth in this paragraph 5. The Principal Underwriter
shall also be entitled to be paid by the Fund a separate distribution fee
(calculated in accordance with paragraph 5(d)), such payment to be made in the
manner set forth and subject to the terms of this paragraph 5.
(d) The sales commissions and distribution fees referred to in paragraph
5(c) shall be accrued and paid by the Fund in the following manner. The Fund
shall accrue daily an amount calculated at the rate of .75% per annum of the
daily net assets of the Fund, which net assets shall be computed as described in
paragraph 2. The daily amounts so accrued throughout the month shall be paid to
the Principal Underwriter on the last day of each month. The amount of such
daily accrual, as so calculated, shall first be applied and charged to all
unpaid sales commissions, and the balance, if any, shall then be applied and
charged to all unpaid distribution fees. No amount shall be accrued with respect
to any day on which there exist no outstanding uncovered distribution charges of
the Principal Underwriter. The amount of such uncovered distribution charges
shall be calculated daily. For purposes of this calculation, distribution
charges of the Principal Underwriter shall include (a) the aggregate of all
sales commissions which the Principal Underwriter (and Prior Principal
Underwriter) has been paid pursuant to this paragraph (d) (and pursuant to
paragraph (d) of the Prior Agreements) plus all sales commissions which it is
entitled to be paid pursuant to paragraph 5(c) (and pursuant to paragraph 5(c)
of the Prior Agreements) since inception of the Prior Agreements through and
including the day next preceding the date of calculation, and (b) an amount
equal to the aggregate of all distribution fees referred to below which the
Principal Underwriter (and Prior Principal Underwriter) has been paid pursuant
to this paragraph (d) (and pursuant to paragraph (d) of the Prior Agreements)
plus all such fees which it is entitled to be paid pursuant to paragraph 5(c)
(and pursuant to paragraph 5(c) of the Prior Agreements) since inception of the
Prior Agreements through and including the day next preceding the date of
calculation. From this sum (distribution charges) there shall be subtracted (i)
the aggregate amount paid or payable to the Principal Underwriter (and Prior
Principal Underwriter) pursuant to this paragraph (d) (and pursuant to paragraph
(d) of the Prior Agreements) since inception of the Prior Agreements through and
including the day next preceding the date of calculation, (ii) the aggregate
amount of all contingent deferred sales charges paid or payable to the Principal
Underwriter (and Prior Principal Underwriter) since inception of the Prior
Agreements through and including the day next preceding the date of calculation,
and (iii) the aggregate of all amounts paid or payable to the Principal
Underwriter (or any affiliate thereof) by any party other than the Fund with
respect to the sale of shares of the Fund since inception of the Prior
Agreements through and including the day next preceding the date of calculation.
If the result of such subtraction is a positive amount, a distribution fee
[computed at the rate of 1% per annum above the prime rate (being the base rate
on corporate loans posted by at least 75% of the nation's 30 largest banks) then
being reported in the Eastern Edition of The Wall Street Journal or if such
prime rate is not so reported such other rate as may be designated from time to
time by vote or other action of a majority of (i) those Trustees of the Trust
who are not "interested persons" of the Trust (as defined in the 1940 Act) and
have no direct or indirect financial interest in the operation of the Plan or
any agreements related to it (the "Rule 12b-1 Trustees") and (ii) all of the
Trustees then in office] shall be computed on such amount and added to such
amount, with the resulting sum constituting the amount of outstanding uncovered
distribution charges of the Principal Underwriter with respect to such day for
all purposes of this Agreement. If the result of such subtraction is a negative
amount, there shall exist no outstanding uncovered distribution charges of the
Principal Underwriter with respect to such day and no amount shall be accrued or
paid to the Principal Underwriter with respect to such day. The aggregate
amounts accrued and paid pursuant to this paragraph (d) during any fiscal year
of the Fund shall not exceed .75% of the average daily net assets of the Fund
for such year.
(e) The Principal Underwriter shall be entitled to receive all contingent
deferred sales charges paid or payable with respect to any day on which there
exist outstanding uncovered distribution charges of the Principal Underwriter.
The Fund shall be entitled to receive all remaining contingent deferred sales
charges paid or payable by shareholders with respect to any day on which there
exist no outstanding uncovered distribution charges of the Principal
Underwriter, provided that no such sales charge which would cause the Fund to
exceed the maximum applicable cap imposed thereon by paragraph (2) of subsection
(d) of Section 26 of Article III of the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. shall be imposed.
(f) The persons authorized to direct the disposition of monies paid or
payable on behalf of the Fund pursuant to the Plan or this Agreement shall be
the President or any Vice President of the Trust. Such persons shall provide to
the Trust's Trustees and the Trustees shall review, at least quarterly, a
written report of the amounts so expended and the purposes for which such
expenditures were made.
(g) In addition to the payments to the Principal Underwriter provided for
in paragraph 5(d), the Fund may make payments of service fees to the Principal
Underwriter, Authorized Firms and other persons. The aggregate of such payments
during any fiscal year of the Fund shall not exceed .25% of the Fund's average
daily net assets for such year.
6. The Trust hereby authorizes the Principal Underwriter to repurchase,
upon the terms and conditions set forth in written instructions given by the
Trust to the Principal Underwriter from time to time, as agent of the Fund and
for its account, such shares of the Fund as may be offered for sale to the Fund
from time to time.
(a) The Principal Underwriter shall notify in writing IBT and First Data
at the end of each business day, or as soon thereafter as the repurchases in
each pricing period have been compiled, of the number of shares repurchased for
the account of the Fund since the last previous report, together with the prices
at which such repurchases were made, and upon the request of any officer or
Trustee of the Trust shall furnish similar information with respect to all
repurchases made up to the time of the request on any day.
(b) The Trust reserves the right to suspend or revoke the foregoing
authorization at any time; unless otherwise stated, any such suspension or
revocation shall be effective forthwith upon receipt of notice thereof by an
officer of the Principal Underwriter, by telegraph or by written instrument from
an officer of the Trust duly authorized by its Trustees. In the event that the
authorization of the Principal Underwriter is, by the terms of such notice,
suspended for more than twenty-four hours or until further notice, the
authorization given by this paragraph 6 shall not be revived except by action of
a majority of the Trustees of the Trust.
(c) The Principal Underwriter shall have the right to terminate the
operation of this paragraph 6 upon giving to the Trust thirty (30) days' written
notice thereof.
(d) The Trust agrees to authorize and direct IBT to pay, for the account
of the Fund, the purchase price of any shares so repurchased against delivery of
the certificates in proper form for transfer to the Fund or for cancellation by
the Fund.
(e) The Principal Underwriter shall receive no commission in respect of
any repurchase of shares under the foregoing authorization and appointment as
agent, except for any sales commission, distribution fee or contingent deferred
sales charges payable under paragraph 5.
(f) The Trust agrees that the Fund will reimburse the Principal
Underwriter, from time to time on demand, for any reasonable expenses incurred
in connection with the repurchase of shares of the Fund pursuant to this
paragraph 6.
7. If, at any time during the existence of this Agreement, the Trust
shall deem it necessary or advisable in the best interests of the Fund that any
amendment of this Agreement be made in order to comply with the recommendations
or requirements of the Commission or other governmental authority or to obtain
any advantage under Massachusetts or federal tax laws, and shall notify the
Principal Underwriter of the form of amendment which it deems necessary or
advisable and the reasons therefor, and, if the Principal Underwriter declines
to assent to such amendment, the Trust may terminate this Agreement forthwith by
written notice to the Principal Underwriter. If, at any time during the
existence of its agreement upon request by the Principal Underwriter, the Trust
fails (after a reasonable time) to make any changes in its Declaration of Trust,
as amended, or in its methods of doing business which are necessary in order to
comply with any requirement of Federal law or regulations of the Commission or
of a national securities association of which the Principal Underwriter is or
may be a member, relating to the sale of the shares of the Fund, the Principal
Underwriter may terminate this Agreement forthwith by written notice to the
Trust.
8. The term "net asset value" as used in this Agreement with reference to
the shares of the Fund shall have the same meaning as used in the Declaration of
Trust, as amended, and calculated in the manner referred to in paragraph 2
above.
9(a). The Principal Underwriter is a corporation in the United States
organized under the laws of Massachusetts and holding membership in the National
Association of Securities Dealers, Inc., a securities association registered
under Section 15A of the Securities Exchange Act of 1934, as amended from time
to time, and during the life of this Agreement will continue to be so resident
in the United States, so organized and a member in good standing of said
Association. The Principal Underwriter will comply with the Trust's Declaration
of Trust and By-Laws, and the 1940 Act and the rules promulgated thereunder,
insofar as they are applicable to the Principal Underwriter.
(b) The Principal Underwriter shall maintain in the United States and
preserve therein for such period or periods as the Commission shall prescribe by
rules and regulations applicable to it as Principal Underwriter of an open-end
investment company registered under the 1940 Act such accounts, books and other
documents as are necessary or appropriate to record its transactions with the
Fund. Such accounts, books and other documents shall be subject at any time and
from time to time to such reasonable periodic, special and other examinations by
the Commission or any member or representative thereof as the Commission may
prescribe. The Principal Underwriter shall furnish to the Commission within such
reasonable time as the Commission may prescribe copies of or extracts from such
records which may be prepared without effort, expense or delay as the Commission
may by order require.
10. This Agreement shall continue in force indefinitely until terminated
as in this Agreement above provided, except that:
(a) this Agreement shall remain in effect through and including April
28, 1997 (or, if applicable, the next April 28 which follows the day on which
the Fund has become a party hereto by amendment of Schedule A subsequent to
April 28, 1997), and shall continue in full force and effect indefinitely
thereafter, but only so long as such continuance is specifically approved at
least annually (i) by the vote of a majority of the Rule 12b-1 Trustees cast in
person at a meeting called for the purpose of voting on such approval, and (ii)
by the Trustees of the Trust or by vote of a majority of the outstanding voting
securities of the Fund;
(b) this Agreement may be terminated at any time by vote of a majority
of the Rule 12b-1 Trustees or by vote of a majority of the outstanding voting
securities of the Fund on not more than sixty (60) days' notice to the Principal
Underwriter. The Principal Underwriter shall be entitled to receive all
contingent deferred sales charges paid or payable with respect to any day
subsequent to the termination of this Agreement;
(c) the Principal Underwriter shall have the right to terminate this
Agreement on six (6) months' written notice thereof given in writing to the
Fund;
(d) the Trust shall have the right to terminate this Agreement
forthwith in the event that it shall have been established by a court of
competent jurisdiction that the Principal Underwriter or any director or officer
of the Principal Underwriter has taken any action which results in a breach of
the covenants set out in paragraph 9 hereof; and
(e) additional series of the Trust will become parties hereto upon
approval by the Trustees of the Trust and amendment of Schedule A.
11. In the event of the assignment of this Agreement by the Principal
Underwriter, this Agreement shall automatically terminate.
12. Any notice under this Agreement shall be in writing, addressed and
delivered, or mailed postage paid, to the other party, at such address as such
other party may designate for the receipt of such notices. Until further notice
to the other party, it is agreed that the record address of the Trust and that
of the Principal Underwriter, shall be 24 Federal Street, Boston, Massachusetts
02110.
13. The services of the Principal Underwriter to the Fund hereunder are
not to be deemed to be exclusive, the Principal Underwriter being free to (a)
render similar service to, and to act as principal underwriter in connection
with the distribution of shares of, other series of the Trust or other
investment companies, and (b) engage in other business and activities from time
to time.
14. The terms "vote of a majority of the outstanding voting securities,"
"assignment" and "interested persons," when used herein, shall have the
respective meanings specified in the 1940 Act, subject, however, to such
exemptions as may be granted by the Commission by any rule, regulation or order.
15. The Principal Underwriter expressly acknowledges the provision in the
Trust's Declaration of Trust limiting the personal liability of the shareholders
of the Fund or the Trustees of the Trust. The Principal Underwriter hereby
agrees that it shall have recourse to the Trust or the Fund for payment of
claims or obligations as between the Trust or the Fund and the Principal
Underwriter arising out of this Agreement and shall not seek satisfaction from
the shareholders or any shareholder of the Trust or from the Trustees or any
Trustee of the Trust. The Fund shall not be responsible for obligations of any
other series of the Trust.
16. The term "Prior Principal Underwriter" means Eaton Vance
Distributors, Inc., a separate Massachusetts corporation that has served as
principal underwriter prior to the effective date of this Agreement. All
references in this Agreement to the "Prior Agreements" shall mean the
distribution agreements referenced on Schedule A hereto between the Trust on
behalf of the Fund and the Prior Principal Underwriter. Such references shall
not be applicable to any additional series of the Trust which becomes a Fund
hereunder by amendment of Schedule A hereafter.
17. This Agreement shall amend, replace and be substituted for the Prior
Agreements as of the opening of business on November 1, 1996, and this Agreement
shall be effective as of such time. The outstanding uncovered distribution
charges of the Prior Principal Underwriter calculated under the Prior Agreements
as of the close of business on October 31, 1996 shall be the outstanding
uncovered distribution charges of the Principal Underwriter calculated under
this Agreement as of the opening of business on November 1, 1996.
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement
on the 18th day of October, 1996.
EATON VANCE GROWTH TRUST
By /s/ James B. Hawkes
---------------------------
President
EATON VANCE DISTRIBUTORS, INC.
By /s/ H. Day Brigham, Jr.
---------------------------
Vice President
<PAGE>
SCHEDULE A
EATON VANCE GROWTH TRUST
DISTRIBUTION AGREEMENT
(CLASSIC FUNDS)
EFFECTIVE NOVEMBER 1, 1996
Name of Fund Inception Date of Prior Agreements
EV Classic Greater China Growth Fund December 17, 1993/January 27, 1995
EV Classic Growth Fund August 1, 1994/January 27, 1995
EV Classic Information Age Fund November 10, 1995
<PAGE>
EXHIBIT 6(A)(2)
EATON VANCE GROWTH TRUST
DISTRIBUTION AGREEMENT
(MARATHON FUNDS)
AGREEMENT effective November 1, 1996 between EATON VANCE GROWTH TRUST,
a Massachusetts business trust having its principal place of business in Boston
in the Commonwealth of Massachusetts, hereinafter called the "Trust," on behalf
of each of its series listed on Schedule A (the "Funds"), and EATON VANCE
DISTRIBUTORS, INC., a Massachusetts corporation having its principal place of
business in said Boston and formerly named EV Distributors, Inc., hereinafter
sometimes called the "Principal Underwriter."
IN CONSIDERATION of the mutual promises and undertakings herein
contained, the parties hereto agree:
1. The Trust grants to the Principal Underwriter the right to purchase
shares of the Fund upon the terms hereinbelow set forth during the term of this
Agreement. While this Agreement is in force, the Principal Underwriter agrees to
use its best efforts to find purchasers for shares of the Fund.
The Principal Underwriter shall have the right to buy from the Fund the
shares needed, but not more than the shares needed (except for clerical errors
and errors of transmission) to fill unconditional orders for shares of the Fund
placed with the Principal Underwriter by financial service firms or investors as
set forth in the current Prospectus relating to shares of the Fund. The price
which the Principal Underwriter shall pay for the shares so purchased shall be
equal to the price paid by investors upon purchasing such shares. The Principal
Underwriter shall notify Investors Bank & Trust Company, Custodian of the Fund
("IBT"), and First Data Investor Services Group, Transfer Agent of the Fund
("First Data"), or a successor transfer agent, at the end of each business day,
or as soon thereafter as the orders placed with it have been compiled, of the
number of shares and the prices thereof which the Principal Underwriter is to
purchase as principal for resale. The Principal Underwriter shall take down and
pay for shares ordered from the Fund on or before the eleventh business day
(excluding Saturdays) after the shares have been so ordered.
The right granted to the Principal Underwriter to buy shares from the
Fund shall be exclusive, except that said exclusive right shall not apply to
shares issued in connection with the merger or consolidation of any other
investment company or personal holding company with the Fund or the acquisition
by purchase or otherwise of all (or substantially all) the assets or the
outstanding shares of any such company, by the Fund; nor shall it apply to
shares, if any, issued by the Fund in distribution of income or realized capital
gains of the Fund payable in shares or in cash at the option of the shareholder.
2. The shares may be resold by the Principal Underwriter to or through
financial service firms having agreements with the Principal Underwriter, and to
investors, upon the following terms and conditions.
The public offering price, i.e., the price per share at which the
Principal Underwriter or financial service firm purchasing shares from the
Principal Underwriter may sell shares to the public, shall be equal to the net
asset value at which the Principal Underwriter is to purchase the shares.
The net asset value of shares of the Fund shall be determined by the
Trust or IBT, as the agent of the Fund, as of the close of regular trading on
the New York Stock Exchange on each business day on which said Exchange is open,
or as of such other time on each such business day as may be determined by the
Trustees of the Trust, in accordance with the methodology and procedures for
calculating such net asset value authorized by the Trustees. The Trust may also
cause the net asset value to be determined in substantially the same manner or
estimated in such manner and as of such other time or times as may from time to
time be agreed upon by the Trust and Principal Underwriter. The Trust will
notify the Principal Underwriter each time the net asset value of the Fund's
shares is determined and when such value is so determined it shall be applicable
to transactions as set forth in the current Prospectus and Statement of
Additional Information (hereafter the "Prospectus") relating to the Fund's
shares.
No shares of the Fund shall be sold by the Fund during any period when
the determination of net asset value is suspended pursuant to the Declaration of
Trust, except to the Principal Underwriter, in the manner and upon the terms
above set forth to cover contracts of sale made by the Principal Underwriter
with its customers prior to any such suspension, and except as provided in the
last paragraph of paragraph 1 hereof. The Trust shall also have the right to
suspend the sale of the Fund's shares if in the judgment of the Trust conditions
obtaining at any time render such action advisable. The Principal Underwriter
shall have the right to suspend sales at any time, to refuse to accept or
confirm any order from an investor or financial service firm, or to accept or
confirm any such order in part only, if in the judgment of the Principal
Underwriter such action is in the best interests of the Fund.
3. The Trust agrees that it will, from time to time, but subject to the
necessary approval of the Fund's shareholders, take such steps as may be
necessary to register the Fund's shares under the federal Securities Act of
1933, as amended from time to time (the "1933 Act"), to the end that there will
be available for sale such number of shares as the Principal Underwriter may
reasonably be expected to sell. The Trust agrees to indemnify and hold harmless
the Principal Underwriter and each person, if any, who controls the Principal
Underwriter within the meaning of Section 15 of the 1933 Act against any loss,
liability, claim, damages or expense (including the reasonable cost of
investigating or defending any alleged loss, liability, claim, damages or
expense and reasonable counsel fees incurred in connection therewith), arising
by reason of any person acquiring any shares of the Fund, which may be based
upon the 1933 Act or on any other statute or at common law, on the ground that
the Registration Statement or Prospectus, as from time to time amended and
supplemented, includes an untrue statement of a material fact or omits to state
a material fact required to be stated therein or necessary in order to make the
statements therein not misleading, unless such statement or omission was made in
reliance upon, and in conformity with, information furnished in writing to the
Trust in connection therewith by or on behalf of the Principal Underwriter;
provided, however, that in no case (i) is the indemnity of the Trust in favor of
the Principal Underwriter and any such controlling person to be deemed to
protect such Principal Underwriter or any such controlling person against any
liability to the Trust or the Fund or its security holders to which such
Principal Underwriter or any such controlling person would otherwise be subject
by reason of willful misfeasance, bad faith, or gross negligence in the
performance of its duties or by reason of its reckless disregard of its
obligations and duties under this Agreement, or (ii) is the Trust or the Fund to
be liable under its indemnity agreement contained in this paragraph with respect
to any claim made against the Principal Underwriter or any such controlling
person unless the Principal Underwriter or any such controlling person, as the
case may be, shall have notified the Trust in writing within a reasonable time
after the summons or other first legal process giving information of the nature
of the claim shall have been served upon the Principal Underwriter or such
controlling person (or after such Principal Underwriter or such controlling
person shall have received notice of such service on any designated agent), but
failure to notify the Trust of any such claim shall not relieve it from any
liability which the Fund may have to the person against whom such action is
brought otherwise than on account of its indemnity agreement contained in this
paragraph. The Trust shall be entitled to participate, at the expense of the
Fund, in the defense, or, if the Trust so elects, to assume the defense of any
suit brought to enforce any such liability, but if the Trust elects to assume
the defense, such defense shall be conducted by counsel chosen by it and
satisfactory to the Principal Underwriter or controlling person or persons,
defendant or defendants in the suit. In the event the Trust elects to assume the
defense of any such suit and retains such counsel, the Principal Underwriter or
controlling person or persons, defendant or defendants in the suit, shall bear
the fees and expenses of any additional counsel retained by them, but, in case
the Trust does not elect to assume the defense of any such suit, the Fund shall
reimburse the Principal Underwriter or controlling person or persons, defendant
or defendants in the suit, for the reasonable fees and expenses of any counsel
retained by them. The Trust agrees promptly to notify the Principal Underwriter
of the commencement of any litigation or proceedings against it or any of its
officers or Trustees in connection with the issuance or sale of any of the
Fund's shares.
4. The Principal Underwriter covenants and agrees that, in selling the
shares of the Fund, it will use its best efforts in all respects duly to conform
with the requirements of all state and federal laws relating to the sale of such
shares, and will indemnify and hold harmless the Trust and each of its Trustees
and officers and each person, if any, who controls the Trust within the meaning
of Section 15 of the 1933 Act, against any loss, liability, damages, claim or
expense (including the reasonable cost of investigating or defending any alleged
loss, liability, damages, claim or expense and reasonable counsel fees incurred
in connection therewith), arising by reason of any person acquiring any shares
of the Fund, which may be based upon the 1933 Act or any other statute or at
common law, on account of any wrongful act of the Principal Underwriter or any
of its employees (including any failure to conform with any requirement of any
state or federal law relating to the sale of such shares) or on the ground that
the registration statement or Prospectus, as from time to time amended and
supplemented, includes an untrue statement of a material fact or omits to state
a material fact required to be stated therein or necessary in order to make the
statements therein not misleading, insofar as any such statement or omission was
made in reliance upon, and in conformity with information furnished in writing
to the Fund in connection therewith by or on behalf of the Principal
Underwriter, provided, however, that in no case (i) is the indemnity of the
Principal Underwriter in favor of any person indemnified to be deemed to protect
the Fund or any such person against any liability to which the Fund or any such
person would otherwise be subject by reason of willful misfeasance, bad faith,
or gross negligence in the performance of its or his duties or by reason of its
or his reckless disregard of its obligations and duties under this Agreement, or
(ii) is the Principal Underwriter to be liable under its indemnity agreement
contained in this paragraph with respect to any claim made against the Fund or
any person indemnified unless the Trust or such person, as the case may be,
shall have notified the Principal Underwriter in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon the Trust, the Fund or upon such
person (or after the Trust or such person shall have received notice of such
service on any designated agent), but failure to notify the Principal
Underwriter of any such claim shall not relieve it from any liability which it
may have to the Fund or any person against whom such action is brought otherwise
than on account of its indemnity agreement contained in this paragraph. The
Principal Underwriter shall be entitled to participate, at its own expense, in
the defense, or, if it so elects, to assume the defense of any suit brought to
enforce any such liability, but if the Principal Underwriter elects to assume
the defense, such defense shall be conducted by counsel chosen by it and
satisfactory to the Trust, or to its officers or Trustees, or to any controlling
person or persons, defendant or defendants in the suit. In the event that the
Principal Underwriter elects to assume the defense of any such suit and retains
such counsel, the Fund or such officers or Trustees or controlling person or
persons, defendant or defendants in the suit, shall bear the fees and expenses
of any additional counsel retained by them or the Trust, but, in case the
Principal Underwriter does not elect to assume the defense of any such suit, it
shall reimburse the Fund, any such officers and Trustees or controlling person
or persons, defendant or defendants in such suit, for the reasonable fees and
expenses of any counsel retained by them or the Trust. The Principal Underwriter
agrees promptly to notify the Trust of the commencement of any litigation or
proceedings against it in connection with the issue and sale of any of the
Fund's shares.
Neither the Principal Underwriter nor any financial service firm nor
any other person is authorized by the Trust to give any information or to make
any representations, other than those contained in the Registration Statement or
Prospectus filed with the Securities and Exchange Commission (the "Commission")
under the 1933 Act, (as said Registration Statement and Prospectus may be
amended or supplemented from time to time), covering the shares of the Fund.
Neither the Principal Underwriter nor any financial service firm nor any other
person is authorized to act as agent for the Trust or the Fund in connection
with the offering or sale of shares of the Fund to the public or otherwise. All
such sales made by the Principal Underwriter shall be made by it as principal,
for its own account. The Principal Underwriter may, however, act as agent in
connection with the repurchase of shares as provided in paragraph 6 below, or in
connection with "exchanges" between investment companies for which the Principal
Underwriter acts as Principal Underwriter or for which an affiliate of the
Principal Underwriter acts as investment adviser.
5(a). The Fund will pay, or cause to be paid -
(i) all the costs and expenses of the Fund, including fees and
disbursements of its counsel, in connection with the preparation and filing of
any required Registration Statement and/or Prospectus under the 1933 Act, or the
Investment Company Act of 1940, as amended from time to time (the "1940 Act"),
covering its shares and all amendments and supplements thereto, and preparing
and mailing periodic reports to shareholders (including the expense of setting
up in type any such Registration Statement, Prospectus or periodic report);
(ii) the cost of preparing temporary and permanent share
certificates (if any) for shares of the Fund;
(iii) the cost and expenses of delivering to the Principal
Underwriter at its office in Boston, Massachusetts, all shares of the Fund
purchased by it as principal hereunder; and
(iv) all the federal and state (if any) issue and/or transfer
taxes payable upon the issue by or (in the case of treasury shares) transfer
from the Fund to the Principal Underwriter of any and all shares of the Fund
purchased by the Principal Underwriter hereunder.
(b) The Principal Underwriter agrees that, after the Prospectus and
periodic reports have been set up in type, it will bear the expense of printing
and distributing any copies thereof which are to be used in connection with the
offering of shares of the Fund to financial service firms or investors. The
Principal Underwriter further agrees that it will bear the expenses of
preparing, printing and distributing any other literature used by the Principal
Underwriter or furnished by it for use by financial service firms in connection
with the offering of the shares of the Fund for sale to the public and any
expenses of advertising in connection with such offering. The Fund agrees to pay
the expenses of registration and maintaining registration of its shares for sale
under federal and state securities laws, and, if necessary or advisable in
connection therewith, of qualifying the Trust or the Fund as a dealer or broker,
in such states as shall be selected by the Principal Underwriter and the fees
payable to each such state for continuing the qualification therein until the
Principal Underwriter notifies the Trust that it does not wish such
qualification continued.
(c) In addition, the Trust agrees, in accordance with the Fund's
Distribution Plan (the "Plan"), adopted pursuant to Rule 12b-1 under the 1940
Act with respect to shares, to make certain payments as follows. The Principal
Underwriter shall be entitled to be paid by the Fund a sales commission equal to
an amount not exceeding 5% of the price received by the Fund for each sale of
shares (excluding reinvestment of dividends and distributions), such payment to
be made in the manner set forth in this paragraph 5. The Principal Underwriter
shall also be entitled to be paid by the Fund a separate distribution fee
(calculated in accordance with paragraph 5(d)), such payment to be made in the
manner set forth and subject to the terms of this paragraph 5.
(d) The sales commissions and distribution fees referred to in
paragraph 5(c) shall be accrued and paid by the Fund in the following manner.
The Fund shall accrue daily an amount calculated at the rate of .75% per annum
of the daily net assets of the Fund, which net assets shall be computed as
described in paragraph 2. The daily amounts so accrued throughout the month
shall be paid to the Principal Underwriter on the last day of each month. The
amount of such daily accrual, as so calculated, shall first be applied and
charged to all unpaid sales commissions, and the balance, if any, shall then be
applied and charged to all unpaid distribution fees. No amount shall be accrued
with respect to any day on which there exist no outstanding uncovered
distribution charges of the Principal Underwriter. The amount of such uncovered
distribution charges shall be calculated daily. For purposes of this
calculation, distribution charges of the Principal Underwriter shall include (a)
the aggregate of all sales commissions which the Principal Underwriter (and
Prior Principal Underwriter) has been paid pursuant to this paragraph (d) (and
pursuant to paragraph 5(d) of the Prior Agreements) plus all sales commissions
which it is entitled to be paid pursuant to paragraph 5(c) (and pursuant to
paragraph 5(c) of the Prior Agreements) since inception of the Prior Agreements
through and including the day next preceding the date of calculation, and (b) an
amount equal to the aggregate of all distribution fees referred to below which
the Principal Underwriter (and Prior Principal Underwriter) has been paid
pursuant to this paragraph (d) (and pursuant to paragraph 5(d) of the Prior
Agreements) plus all such fees which it is entitled to be paid pursuant to
paragraph 5(c) (and pursuant to paragraph 5(c) of the Prior Agreements) since
inception of the Prior Agreements through and including the day next preceding
the date of calculation. From this sum (distribution charges) there shall be
subtracted (i) the aggregate amount paid or payable to the Principal Underwriter
(and Prior Principal Underwriter) pursuant to this paragraph (d) (and pursuant
to paragraph 5(d) of the Prior Agreements) since inception of the Prior
Agreements through and including the day next preceding the date of calculation,
(ii) the aggregate amount of all contingent deferred sales charges paid or
payable to the Principal Underwriter (and Prior Principal Underwriter) since
inception of the Prior Agreements through and including the day next preceding
the date of calculation, and (iii) the aggregate of all amounts paid or payable
to the Principal Underwriter (or any affiliate thereof) by any party other than
the Fund with respect to the sale of shares of the Fund since inception of the
Prior Agreements through and including the day next preceding the date of
calculation. If the result of such subtraction is a positive amount, a
distribution fee [computed at the rate of 1% per annum above the prime rate
(being the base rate on corporate loans posted by at least 75% of the nation's
30 largest banks) then being reported in the Eastern Edition of The Wall Street
Journal or if such prime rate is not so reported such other rate as may be
designated from time to time by vote or other action of a majority of (i) those
Trustees of the Trust who are not "interested persons" of the Trust (as defined
in the 1940 Act) and have no direct or indirect financial interest in the
operation of the Plan or any agreements related to it (the "Rule 12b-1
Trustees") and (ii) all of the Trustees then in office] shall be computed on
such amount and added to such amount, with the resulting sum constituting the
amount of outstanding uncovered distribution charges of the Principal
Underwriter with respect to such day for all purposes of this Agreement. If the
result of such subtraction is a negative amount, there shall exist no
outstanding uncovered distribution charges of the Principal Underwriter with
respect to such day and no amount shall be accrued or paid to the Principal
Underwriter with respect to such day. The aggregate amounts accrued and paid
pursuant to this paragraph (d) during any fiscal year of the Fund shall not
exceed .75% of the average daily net assets of the Fund for such year.
(e) The Principal Underwriter shall be entitled to receive all
contingent deferred sales charges paid or payable with respect to any day on
which there exist outstanding uncovered distribution charges of the Principal
Underwriter. The Fund shall be entitled to receive all remaining contingent
deferred sales charges paid or payable by shareholders with respect to any day
on which there exist no outstanding uncovered distribution charges of the
Principal Underwriter, provided that no such sales charge which would cause the
Fund to exceed the maximum applicable cap imposed thereon by paragraph (2) of
subsection (d) of Section 26 of Article III of the Rules of Fair Practice of the
National Association of Securities Dealers, Inc. shall be imposed.
(f) The persons authorized to direct the disposition of monies paid or
payable on behalf of the Fund pursuant to the Plan or this Agreement shall be
the President or any Vice President of the Trust. Such persons shall provide to
the Trust's Trustees and the Trustees shall review, at least quarterly, a
written report of the amounts so expended and the purposes for which such
expenditures were made.
(g) In addition to the payments to the Principal Underwriter provided
for in paragraph 5(d), the Fund may make payments of service fees to the
Principal Underwriter, Authorized Firms and other persons. The aggregate of such
payments during any fiscal year of the Fund shall not exceed .25% of the Fund's
average daily net assets for such year.
6. The Trust hereby authorizes the Principal Underwriter to repurchase,
upon the terms and conditions set forth in written instructions given by the
Trust to the Principal Underwriter from time to time, as agent of the Fund and
for its account, such shares of the Fund as may be offered for sale to the Fund
from time to time.
(a) The Principal Underwriter shall notify in writing IBT and First
Data at the end of each business day, or as soon thereafter as the repurchases
in each pricing period have been compiled, of the number of shares repurchased
for the account of the Fund since the last previous report, together with the
prices at which such repurchases were made, and upon the request of any officer
or Trustee of the Trust shall furnish similar information with respect to all
repurchases made up to the time of the request on any day.
(b) The Trust reserves the right to suspend or revoke the foregoing
authorization at any time; unless otherwise stated, any such suspension or
revocation shall be effective forthwith upon receipt of notice thereof by an
officer of the Principal Underwriter, by telegraph or by written instrument from
an officer of the Trust duly authorized by its Trustees. In the event that the
authorization of the Principal Underwriter is, by the terms of such notice,
suspended for more than twenty-four hours or until further notice, the
authorization given by this paragraph 6 shall not be revived except by action of
a majority of the Trustees of the Trust.
(c) The Principal Underwriter shall have the right to terminate the
operation of this paragraph 6 upon giving to the Trust thirty (30) days' written
notice thereof.
(d) The Trust agrees to authorize and direct IBT to pay, for the
account of the Fund, the purchase price of any shares so repurchased against
delivery of the certificates in proper form for transfer to the Fund or for
cancellation by the Fund.
(e) The Principal Underwriter shall receive no commission in
respect of any repurchase of shares under the foregoing authorization and
appointment as agent, except for any sales commission, distribution fee or
contingent deferred sales charges payable under paragraph 5.
(f) The Trust agrees that the Fund will reimburse the Principal
Underwriter, from time to time on demand, for any reasonable expenses incurred
in connection with the repurchase of shares of the Fund pursuant to this
paragraph 6.
7. If, at any time during the existence of this Agreement, the Trust
shall deem it necessary or advisable in the best interests of the Fund that any
amendment of this Agreement be made in order to comply with the recommendations
or requirements of the Commission or other governmental authority or to obtain
any advantage under Massachusetts or federal tax laws, and shall notify the
Principal Underwriter of the form of amendment which it deems necessary or
advisable and the reasons therefor, and, if the Principal Underwriter declines
to assent to such amendment, the Trust may terminate this Agreement forthwith by
written notice to the Principal Underwriter. If, at any time during the
existence of its agreement upon request by the Principal Underwriter, the Trust
fails (after a reasonable time) to make any changes in its Declaration of Trust,
as amended, or in its methods of doing business which are necessary in order to
comply with any requirement of federal law or regulations of the Commission or
of a national securities association of which the Principal Underwriter is or
may be a member, relating to the sale of the shares of the Fund, the Principal
Underwriter may terminate this Agreement forthwith by written notice to the
Trust.
8. The term "net asset value" as used in this Agreement with reference
to the shares of the Fund shall have the same meaning as used in the Declaration
of Trust, as amended, and calculated in the manner referred to in paragraph 2
above.
9(a). The Principal Underwriter is a corporation in the United States
organized under the laws of Massachusetts and holding membership in the National
Association of Securities Dealers, Inc., a securities association registered
under Section 15A of the Securities Exchange Act of 1934, as amended from time
to time, and during the life of this Agreement will continue to be so resident
in the United States, so organized and a member in good standing of said
Association. The Principal Underwriter will comply with the Trust's Declaration
of Trust and By-Laws, and the 1940 Act and the rules promulgated thereunder,
insofar as they are applicable to the Principal Underwriter.
(b) The Principal Underwriter shall maintain in the United States and
preserve therein for such period or periods as the Commission shall prescribe by
rules and regulations applicable to it as Principal Underwriter of an open-end
investment company registered under the 1940 Act such accounts, books and other
documents as are necessary or appropriate to record its transactions with the
Fund. Such accounts, books and other documents shall be subject at any time and
from time to time to such reasonable periodic, special and other examinations by
the Commission or any member or representative thereof as the Commission may
prescribe. The Principal Underwriter shall furnish to the Commission within such
reasonable time as the Commission may prescribe copies of or extracts from such
records which may be prepared without effort, expense or delay as the Commission
may by order require.
10. This Agreement shall continue in force indefinitely until
terminated as in this Agreement above provided, except that:
(a) this Agreement shall remain in effect through and including April
28, 1997 (or, if applicable, the next April 28 which follows the day on which
the Fund has become a party hereto by amendment of Schedule A subsequent to
April 28, 1997) and shall continue in full force and effect indefinitely
thereafter, but only so long as such continuance is specifically approved at
least annually (i) by the vote of a majority of the Trustees of the Trust who
are not "interested persons" of the Trust and who have no direct or indirect
interest in the operation of the Plan or this Agreement (the "Rule 12b-1
Trustees") cast in person at a meeting called for the purpose of voting on such
approval, and (ii) by the Trustees of the Trust or by vote of a majority of the
outstanding voting securities of the Fund;
(b) this Agreement may be terminated at any time by vote of a
majority of the Rule 12b-1 Trustees or by vote of a majority of the outstanding
voting securities of the Fund on not more than sixty days' notice to the
Principal Underwriter. The Principal Underwriter shall be entitled to receive
all contingent deferred sales charges paid or payable with respect to any day
subsequent to the termination of this Agreement;
(c) the Principal Underwriter shall have the right to terminate this
Agreement on six (6) months' written notice thereof given in writing to the
Fund;
(d) the Trust shall have the right to terminate this Agreement
forthwith in the event that it shall have been established by a court of
competent jurisdiction that the Principal Underwriter or any director or officer
of the Principal Underwriter has taken any action which results in a breach of
the covenants set out in paragraph 9 hereof; and
(e) additional series of the Trust will become parties hereto upon
approval by the Trustees of the Trust and Amendment of Schedule A.
11. In the event of the assignment of this Agreement by the Principal
Underwriter, this Agreement shall automatically terminate.
12. Any notice under this Agreement shall be in writing, addressed and
delivered, or mailed postage paid, to the other party, at such address as such
other party may designate for the receipt of such notices. Until further notice
to the other party, it is agreed that the record address of the Trust and that
of the Principal Underwriter, shall be 24 Federal Street, Boston, Massachusetts
02110.
13. The services of the Principal Underwriter to the Fund hereunder are
not to be deemed to be exclusive, the Principal Underwriter being free to (a)
render similar service to, and to act as principal underwriter in connection
with the distribution of shares of, other series of the Trust or other
investment companies, and (b) engage in other business and activities from time
to time.
14. The terms "vote of a majority of the outstanding voting securities,"
"assignment" and "interested persons," when used herein, shall have the
respective meanings specified in the 1940 Act, subject, however, to such
exemptions as may be granted by the Commission by any rule, regulation or order.
15. The Principal Underwriter expressly acknowledges the provision in
the Trust's Declaration of Trust limiting the personal liability of the
shareholders of the Fund or the Trustees of the Trust. The Principal Underwriter
hereby agrees that it shall have recourse to the Trust or the Fund for payment
of claims or obligations as between the Trust or the Fund and the Principal
Underwriter arising out of this Agreement and shall not seek satisfaction from
the shareholders or any shareholder of the Trust or from the Trustees or any
Trustee of the Trust. The Fund shall not be responsible for obligations of any
other series of the Trust.
16. The term "Prior Principal Underwriter" means Eaton Vance
Distributors, Inc., a separate Massachusetts corporation that has served as
principal underwriter prior to the effective date of this Agreement. All
references in this Agreement to the "Prior Agreements" shall mean the
distribution agreements referenced on Schedule A hereto between the Trust on
behalf of the Fund and the Prior Principal Underwriter. Such references shall
not be applicable to any additional series of the Trust which becomes a Fund
hereunder by amendment of Schedule A hereafter.
17. This Agreement shall replace and be substituted for the Prior
Agreements as of the opening of business on November 1, 1996, and this Agreement
shall be effective as of such time. The outstanding uncovered distribution
charges of the Prior Principal Underwriter calculated under the Prior Agreements
as of the close of business on October 31, 1996 shall be the outstanding
uncovered distribution charges of the Principal Underwriter calculated under
this Agreement as of the opening of business on November 1, 1996.
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement
on this 18th day of October, 1996.
EATON VANCE GROWTH TRUST
By /s/ James B. Hawkes
--------------------------------
President
EATON VANCE DISTRIBUTORS, INC.
By /s/ H. Day Brigham, Jr.
--------------------------------
Vice President
<PAGE>
SCHEDULE A
EATON VANCE GROWTH TRUST
DISTRIBUTION AGREEMENT
(MARATHON FUNDS)
EFFECTIVE NOVEMBER 1, 1996
Name of Fund Inception Date of Prior Agreements
EV Marathon Asian Small Companies Fund March 1, 1996
EV Marathon Gold & Natural Resources Fund* October 21, 1987/July 7, 1993/
September 1, 1995
EV Marathon Greater China Growth Fund June 7, 1993
EV Marathon Growth Fund August 1, 1994
EV Marathon Information Age Fund August 23, 1995
EV Marathon Worldwide Health Sciences Fund July 17, 1996
- -------------------------
*The fund is a successor in operations to a fund which was reorganized,
effective September 1, 1995, and the outstanding uncovered distribution charges
of the predecessor fund were assumed by the above fund.
<PAGE>
EXHIBIT 6(A)(3)
EATON VANCE GROWTH TRUST
DISTRIBUTION AGREEMENT
(TRADITIONAL FUNDS)
AGREEMENT effective November 1, 1996 between EATON VANCE GROWTH TRUST,
hereinafter called the "Trust," a Massachusetts business trust having its
principal place of business in Boston in the Commonwealth of Massachusetts, on
behalf of each of its series listed on Schedule A (the "Funds"), and EATON VANCE
DISTRIBUTORS, INC., a Massachusetts corporation having its principal place of
business in said Boston and formerly named EV Distributors, Inc., hereinafter
sometimes called the "Principal Underwriter."
IN CONSIDERATION of the mutual promises and undertakings herein
contained, the parties hereto agree:
1. The Trust grants to the Principal Underwriter the right to purchase
shares of the Fund upon the terms hereinbelow set forth during the term of this
Agreement. While this Agreement is in force, the Principal Underwriter agrees to
use its best efforts to find purchasers for shares of the Fund.
The Principal Underwriter shall have the right to buy from the Fund the
shares needed, but not more than the shares needed (except for clerical errors
and errors of transmission) to fill unconditional orders for shares of the Fund
placed with the Principal Underwriter by financial service firms or investors as
set forth in the current Prospectus relating to shares of the Fund. The price
which the Principal Underwriter shall pay for the shares so purchased shall be
the net asset value used in determining the public offering price on which such
orders were based. The Principal Underwriter shall notify Investors Bank & Trust
Company, Custodian of the Fund ("IBT"), and First Data Investor Services Group,
Transfer Agent of the Fund ("First Data"), or a successor transfer agent, at the
end of each business day, or as soon thereafter as the orders placed with it
have been compiled, of the number of shares and the prices thereof which the
Principal Underwriter is to purchase as principal for resale. The Principal
Underwriter shall take down and pay for shares ordered from the Fund on or
before the eleventh business day (excluding Saturdays) after the shares have
been so ordered.
The right granted to the Principal Underwriter to buy shares from the
Fund shall be exclusive, except that said exclusive right shall not apply to
shares issued in connection with the merger or consolidation of any other
investment company or personal holding company with the Fund or the acquisition
by purchase or otherwise of all (or substantially all) the assets or the
outstanding shares of any such company, by the Fund; nor shall it apply to
shares, if any, issued by the Fund in distribution of income or realized capital
gains of the Fund payable in shares or in cash at the option of the shareholder.
2. The shares may be resold by the Principal Underwriter to or through
financial service firms having agreements with the Principal Underwriter, and to
investors, upon the following terms and conditions.
The public offering price, i.e., the price per share at which the
Principal Underwriter or financial service firm purchasing shares from the
Principal Underwriter may sell shares to the public, shall be the public
offering price as set forth in the current Prospectus relating to said shares,
but not to exceed the net asset value at which the Principal Underwriter is to
purchase the shares, plus a sales charge not to exceed 7.25% of the public
offering price (the net asset value divided by .9275). If the resulting public
offering price does not come out to an even cent, the public offering price
shall be adjusted to the nearer cent.
The Principal Underwriter may also sell shares at the net asset value
at which the Principal Underwriter is to purchase such shares, provided such
sales are not inconsistent with the provisions of Section 22(d) of the
Investment Company Act of 1940, as amended from time to time (the "1940 Act"),
and the rules thereunder, including any applicable exemptive orders or
administrative interpretations or "no-action" positions with respect thereto.
The net asset value of shares of the Fund shall be determined by the
Trust or IBT, as the agent of the Fund, as of the close of regular trading on
the New York Stock Exchange on each business day on which said Exchange is open,
or as of such other time on each such business day as may be determined by the
Trustees of the Trust, in accordance with the methodology and procedures for
calculating such net asset value authorized by the Trustees. The Trust may also
cause the net asset value to be determined in substantially the same manner or
estimated in such manner and as of such other time or times as may from time to
time be agreed upon by the Trust and Principal Underwriter. The Trust will
notify the Principal Underwriter each time the net asset value of the Fund's
shares is determined and when such value is so determined it shall be applicable
to transactions as set forth in the current Prospectus and Statement of
Additional Information (hereafter the "Prospectus") relating to the Fund's
shares.
No shares of the Fund shall be sold by the Fund during any period when
the determination of net asset value is suspended pursuant to the Declaration of
Trust, except to the Principal Underwriter, in the manner and upon the terms
above set forth to cover contracts of sale made by the Principal Underwriter
with its customers prior to any such suspension, and except as provided in the
last paragraph of paragraph 1 hereof. The Trust shall also have the right to
suspend the sale of the Fund's shares if in the judgment of the Trust conditions
obtaining at any time render such action advisable. The Principal Underwriter
shall have the right to suspend sales at any time, to refuse to accept or
confirm any order from an investor or financial service firm, or to accept or
confirm any such order in part only, if in the judgment of the Principal
Underwriter such action is in the best interests of the Fund.
3. The Trust covenants and agrees that it will, from time to time, but
subject to the necessary approval of the Fund's shareholders, take such steps as
may be necessary to register the Fund's shares under the federal Securities Act
of 1933, as amended from time to time (the "1933 Act"), to the end that there
will be available for sale such number of shares as the Principal Underwriter
may reasonably be expected to sell. The Trust covenants and agrees to indemnify
and hold harmless the Principal Underwriter and each person, if any, who
controls the Principal Underwriter within the meaning of Section 15 of the 1933
Act against any loss, liability, claim, damages or expense (including the
reasonable cost of investigating or defending any alleged loss, liability,
claim, damages or expense and reasonable counsel fees incurred in connection
therewith), arising by reason of any person acquiring any shares of the Fund,
which may be based upon the 1933 Act or on any other statute or at common law,
on the ground that the Registration Statement or Prospectus, as from time to
time amended and supplemented, includes an untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, unless such statement or
omission was made in reliance upon, and in conformity with, information
furnished in writing to the Trust in connection therewith by or on behalf of the
Principal Underwriter; provided, however, that in no case (i) is the indemnity
of the Trust in favor of the Principal Underwriter and any such controlling
person to be deemed to protect such Principal Underwriter or any such
controlling person against any liability to the Trust or the Fund or its
security holders to which such Principal Underwriter or any such controlling
person would otherwise be subject by reason of willful misfeasance, bad faith,
or gross negligence in the performance of its duties or by reason of its
reckless disregard of its obligations and duties under this Agreement, or (ii)
is the Trust or the Fund to be liable under its indemnity agreement contained in
this paragraph with respect to any claim made against the Principal Underwriter
or any such controlling person unless the Principal Underwriter or any such
controlling person, as the case may be, shall have notified the Trust in writing
within a reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon the Principal
Underwriter or such controlling person (or after such Principal Underwriter or
such controlling person shall have received notice of such service on any
designated agent), but failure to notify the Trust of any such claim shall not
relieve it from any liability which the Fund may have to the person against whom
such action is brought otherwise than on account of its indemnity agreement
contained in this paragraph. The Trust shall be entitled to participate, at the
expense of the Fund, in the defense, or, if the Trust so elects, to assume the
defense of any suit brought to enforce any such liability, but if the Trust
elects to assume the defense, such defense shall be conducted by counsel chosen
by it and satisfactory to the Principal Underwriter or controlling person or
persons, defendant or defendants in the suit. In the event the Trust elects to
assume the defense of any such suit and retains such counsel, the Principal
Underwriter or controlling person or persons, defendant or defendants in the
suit, shall bear the fees and expenses of any additional counsel retained by
them, but, in case the Trust does not elect to assume the defense of any such
suit, the Fund shall reimburse the Principal Underwriter or controlling person
or persons, defendant or defendants in the suit, for the reasonable fees and
expenses of any counsel retained by them. The Trust agrees promptly to notify
the Principal Underwriter of the commencement of any litigation or proceedings
against it or any of its officers or Trustees in connection with the issuance or
sale of any of the Fund's shares.
4. The Principal Underwriter covenants and agrees that, in selling the
shares of the Fund, it will use its best efforts in all respects duly to conform
with the requirements of all state and federal laws relating to the sale of such
shares, and will indemnify and hold harmless the Trust and each of its Trustees
and officers and each person, if any, who controls the Trust within the meaning
of Section 15 of the 1933 Act, against any loss, liability, damages, claim or
expense (including the reasonable cost of investigating or defending any alleged
loss, liability, damages, claim or expense and reasonable counsel fees incurred
in connection therewith), arising by reason of any person acquiring any shares
of the Fund, which may be based upon the 1933 Act or any other statute or at
common law, on account of any wrongful act of the Principal Underwriter or any
of its employees (including any failure to conform with any requirement of any
state or federal law relating to the sale of such shares) or on the ground that
the registration statement or Prospectus, as from time to time amended and
supplemented, includes an untrue statement of a material fact or omits to state
a material fact required to be stated therein or necessary in order to make the
statements therein not misleading, insofar as any such statement or omission was
made in reliance upon, and in conformity with information furnished in writing
to the Trust in connection therewith by or on behalf of the Principal
Underwriter, provided, however, that in no case (i) is the indemnity of the
Principal Underwriter in favor of any person indemnified to be deemed to protect
the Fund or any such person against any liability to which the Fund or any such
person would otherwise be subject by reason of willful misfeasance, bad faith,
or gross negligence in the performance of its or his duties or by reason of its
or his reckless disregard of its obligations and duties under this Agreement, or
(ii) is the Principal Underwriter to be liable under its indemnity agreement
contained in this paragraph with respect to any claim made against the Fund or
any person indemnified unless the Trust or such person, as the case may be,
shall have notified the Principal Underwriter in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon the Trust, the Fund or upon such
person (or after the Trust, the Fund or such person shall have received notice
of such service on any designated agent), but failure to notify the Principal
Underwriter of any such claim shall not relieve it from any liability which it
may have to the Fund or any person against whom such action is brought otherwise
than on account of its indemnity agreement contained in this paragraph. The
Principal Underwriter shall be entitled to participate, at its own expense, in
the defense, or, if it so elects, to assume the defense of any suit brought to
enforce any such liability, but if the Principal Underwriter elects to
assume the defense, such defense shall be conducted by counsel chosen by it and
satisfactory to the Trust, or to its officers or Trustees, or to any controlling
person or persons, defendant or defendants in the suit. In the event that the
Principal Underwriter elects to assume the defense of any such suit and retains
such counsel, the Fund or such officers or Trustees or controlling person or
persons, defendant or defendants in the suit, shall bear the fees and expenses
of any additional counsel retained by them or the Trust, but, in case the
Principal Underwriter does not elect to assume the defense of any such suit, it
shall reimburse the Fund, any such officers and Trustees or controlling person
or persons, defendant or defendants in such suit, for the reasonable fees and
expenses of any counsel retained by them or the Trust. The Principal Underwriter
agrees promptly to notify the Trust of the commencement of any litigation or
proceedings against it in connection with the issue and sale of any of the
Fund's shares.
Neither the Principal Underwriter nor any financial service firm nor
any other person is authorized by the Trust to give any information or to make
any representations, other than those contained in the Registration Statement or
Prospectus filed with the Securities and Exchange Commission (the "Commission")
under the 1933 Act (as said Registration Statement and Prospectus may be amended
or supplemented from time to time), covering the shares of the Fund. Neither the
Principal Underwriter nor any financial service firm nor any other person is
authorized to act as agent for the Trust or the Fund in connection with the
offering or sale of shares of the Fund to the public or otherwise. All such
sales made by the Principal Underwriter shall be made by it as principal, for
its own account. The Principal Underwriter may, however, act as agent in
connection with the repurchase of shares as provided in paragraph 6 below, or in
connection with "exchanges" between investment companies for which the Principal
Underwriter (or an affiliate thereof) acts as principal underwriter or
investment adviser.
5(a). The Fund will pay, or cause to be paid -
(i) all the costs and expenses of the Fund, including fees and
disbursements of its counsel, in connection with the preparation and filing of
any required Registration Statement and/or Prospectus under the 1933 Act, or the
1940 Act, covering its shares and all amendments and supplements thereto, and
preparing and distributing periodic reports to shareholders (including the
expense of setting up in type any such Registration Statement, Prospectus or
periodic report);
(ii) the cost of preparing temporary and permanent share
certificates (if any) for shares of the Fund;
(iii) the cost and expenses of delivering to the Principal
Underwriter at its office in Boston, Massachusetts, all shares of the Fund
purchased by it as principal hereunder;
(iv) all the federal and state (if any) issue and/or transfer
taxes payable upon the issue by or (in the case of treasury shares) transfer
from the Fund to the Principal Underwriter of any and all shares of the Fund
purchased by the Principal Underwriter hereunder;
(v) the fees, costs and expenses of the registration or
qualification of shares of the Fund for sale in the various states, territories
or other jurisdictions (including without limitation the registering or
qualifying the Fund as a broker or dealer or any officer of the Fund as agent or
salesman in any state, territory or other jurisdiction); and
(vi) all payments to be made by the Fund pursuant to any written
plan approved in accordance with Rule 12b-1 under the 1940 Act or any written
service plan.
(b) The Principal Underwriter agrees that, after the Prospectus (other
than to existing shareholders of the Fund) and periodic reports have been set up
in type, it will bear the expense of printing and distributing any copies
thereof which are to be used in connection with the offering of shares of the
Fund to financial service firms or investors. The Principal Underwriter further
agrees that it will bear the expenses of preparing, printing and distributing
any other literature used by the Principal Underwriter or furnished by it for
use by financial service firms in connection with the offering of the shares of
the Fund for sale to the public and any expenses of advertising in connection
with such offering.
(c) The Principal Underwriter shall be entitled to receive all
contingent deferred sales charges imposed in accordance with the Prospectus on
early redemptions of Fund shares.
6. The Trust hereby authorizes the Principal Underwriter to repurchase,
upon the terms and conditions set forth in written instructions given by the
Trust to the Principal Underwriter from time to time, as agent of the Fund and
for its account, such shares of the Fund as may be offered for sale to the Fund
from time to time.
(a) The Principal Underwriter shall notify in writing IBT and First
Data, at the end of each business day, or as soon thereafter as the repurchases
in each pricing period have been compiled, of the number of shares repurchased
for the account of the Fund since the last previous report, together with the
prices at which such repurchases were made, and upon the request of any officer
or Trustee of the Trust shall furnish similar information with respect to all
repurchases made up to the time of the request on any day.
(b) The Trust reserves the right to suspend or revoke the foregoing
authorization at any time; unless otherwise stated, any such suspension or
revocation shall be effective forthwith upon receipt of notice thereof by an
officer of the Principal Underwriter, by telegraph or by written instrument from
an officer of the Trust duly authorized by its Trustees. In the event that the
authorization of the Principal Underwriter is, by the terms of such notice,
suspended for more than twenty-four hours or until further notice, the
authorization given by this paragraph 6 shall not be revived except by action of
a majority of the Trustees of the Trust.
(c) The Principal Underwriter shall have the right to terminate the
operation of this paragraph 6 upon giving to the Trust thirty (30) days' written
notice thereof.
(d) The Trust agrees to authorize and direct IBT, to pay, for the
account of the Fund, the purchase price of any shares so repurchased against
delivery of the certificates in proper form for transfer to the Fund or for
cancellation by the Fund.
(e) The Principal Underwriter shall receive no commission in respect
of any repurchase of shares under the foregoing authorization and appointment as
agent, except contingent deferred sales charges.
(f) The Trust agrees that the Fund will reimburse the Principal
Underwriter, from time to time on demand, for any reasonable expenses incurred
in connection with the repurchase of shares of the Fund pursuant to this
paragraph 6.
7. If, at any time during the existence of this Agreement, the Trust
shall deem it necessary or advisable in the best interests of the Fund that any
amendment of this Agreement be made in order to comply with the recommendations
or requirements of the Commission or other governmental authority or to obtain
any advantage under Massachusetts or federal tax laws, and shall notify the
Principal Underwriter of the form of amendment which it deems necessary or
advisable and the reasons therefor, and, if the Principal Underwriter declines
to assent to such amendment, the Trust may terminate this Agreement forthwith by
written notice to the Principal Underwriter. If, at any time during the
existence of this Agreement upon request by the Principal Underwriter, the Trust
fails (after a reasonable time) to make any changes in its Declaration of Trust,
as amended, or in its methods of doing business which are necessary in order to
comply with any requirement of federal law or regulations of the Commission or
of a national securities association of which the Principal Underwriter is or
may be a member, relating to the sale of the shares of the Fund, the Principal
Underwriter may terminate this Agreement forthwith by written notice to the
Trust.
8(a). The Principal Underwriter is a corporation in the United States
organized under the laws of Massachusetts and holding membership in the National
Association of Securities Dealers, Inc., a securities association registered
under Section 15A of the Securities Exchange Act of 1934, as amended from time
to time, and during the life of this Agreement will continue to be so resident
in the United States, so organized and a member in good standing of said
Association. The Principal Underwriter covenants that it and its officers and
directors will comply with the Trust's Declaration of Trust and By-Laws, and the
1940 Act and the rules promulgated thereunder, insofar as they are applicable to
the Principal Underwriter.
(b) The Principal Underwriter shall maintain in the United States and
preserve therein for such period or periods as the Commission shall prescribe by
rules and regulations applicable to it as Principal Underwriter of an open-end
investment company registered under the 1940 Act such accounts, books and other
documents as are necessary or appropriate to record its transactions with the
Fund. Such accounts, books and other documents shall be subject at any time and
from time to time to such reasonable periodic, special and other examinations by
the Commission or any member or representative thereof as the Commission may
prescribe. The Principal Underwriter shall furnish to the Commission within such
reasonable time as the Commission may prescribe copies of or extracts from such
records which may be prepared without effort, expense or delay as the Commission
may by order require.
9. This Agreement shall continue in force indefinitely until
terminated as in this Agreement above provided, except that:
(a) this Agreement shall remain in effect through and including April
28, 1997 (or, if applicable, the next April 28 which follows the day on which
the Fund has become a party hereto by amendment of Schedule A subsequent to
April 28, 1997), and shall continue in full force and effect indefinitely
thereafter, but only so long as such continuance is specifically approved at
least annually (i) by the vote of a majority of the Trustees of the Trust who
are not interested persons of the Trust or of the Principal Underwriter cast in
person at a meeting called for the purpose of voting on such approval, and (ii)
by the Trustees of the Trust or by vote of a majority of the outstanding voting
securities of the Fund;
(b) that either party shall have the right to terminate this
Agreement on six (6) months' written notice thereof given in writing to the
other; and
(c) additional series of the Trust will become parties hereto upon
approval by the Trustees of the Trust and amendment of Schedule A.
10. In the event of the assignment of this Agreement by the Principal
Underwriter, this Agreement shall automatically terminate.
11. Any notice under this Agreement shall be in writing, addressed and
delivered, or mailed postage paid, to the other party, at such address as such
other party may designate for the receipt of such notices. Until further notice
to the other party, it is agreed that the record address of the Trust and that
of the Principal Underwriter, shall be 24 Federal Street, Boston, Massachusetts
02110.
12. The services of the Principal Underwriter to the Fund hereunder are
not to be deemed to be exclusive, the Principal Underwriter being free to (a)
render similar services to, and to act as principal underwriter in connection
with the distribution of shares of, other series of the Trust or other
investment companies, and (b) engage in other business and activities from time
to time.
13. The terms "vote of a majority of the outstanding voting
securities," "assignment" and "interested persons," when used herein, shall have
the respective meanings specified in the 1940 Act, subject, however, to such
exemptions as may be granted by the Commission by any rule, regulation or order.
14. The Principal Underwriter expressly acknowledges the provision in
the Trust's Declaration of Trust limiting the personal liability of the
shareholders of the Fund or the Trustees of the Trust. The Principal Underwriter
hereby agrees that it shall have recourse only to the assets of the Fund for
payment of claims or obligations as between the Trust on behalf of the Fund, and
the Principal Underwriter arising out of this Agreement and shall not seek
satisfaction from any shareholders of the Trust or from the Trustees or any
Trustee of the Trust. The Fund shall not be responsible for obligations of any
other series of the Trust.
15. The term "Prior Principal Underwriter" means Eaton Vance
Distributors, Inc., a separate Massachusetts corporation that has served as
principal underwriter prior to the effective date of this Agreement. All
references in this Agreement to the "Prior Agreements" shall mean the
distribution agreements referenced on Schedule A hereto between the Trust on
behalf of the Fund and the Prior Principal Underwriter. Such references shall
not be applicable to any additional series of the Trust which becomes a Fund
hereunder by amendment of Schedule A hereafter.
16. This Agreement shall replace and be substituted for the Prior
Agreements as of the opening of business on November 1, 1996, and this Agreement
shall be effective as of such time.
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement
this 18th day of October, 1996.
EATON VANCE GROWTH TRUST
By /s/ James B. Hawkes
-----------------------------------
President
EATON VANCE DISTRIBUTORS, INC.
By /s/ H. Day Brigham, Jr.
----------------------------------
Vice President
<PAGE>
SCHEDULE A
EATON VANCE GROWTH TRUST
DISTRIBUTION AGREEMENT
(TRADITIONAL FUNDS)
EFFECTIVE NOVEMBER 1, 1996
Name of Fund Inception Date of Prior Agreements
EV Traditional Asian Small Companies Fund March 1, 1996
EV Traditional Greater China Growth Fund October 27, 1992
EV Traditional Growth Fund December 15, 1982/
August 30, 1989
EV Traditional Information Age Fund August 23, 1995
<PAGE>
EXHIBIT (9)(d)
TRANSFER AGENCY AGREEMENT
AGREEMENT dated as of June 7, 1989, between Eaton Vance Growth Fund,
Inc. (the "Fund"), having its principal office and place of business at 24
Federal Street, Boston, Massachusetts 02110 and BOSTON SAFE DEPOSIT AND TRUST
COMPANY (the "Transfer Agent"), a Massachusetts corporation with principal
offices at One Boston Place, Boston, Massachusetts 02108.
W I T N E S S E T H:
That for and in consideration of the mutual promises hereinafter set
forth, the Fund and the Transfer Agent agree as follows:
1. Definitions. Whenever used in this Agreement, the following words
and phrases, unless the context otherwise requires, shall have the following
meanings:
(a) "Articles of Organization" shall mean the Articles of
Organization of the Fund as the same may be amended from time to time;
(b) "Authorized Person" shall be deemed to include the President,
any Vice President, the Secretary and Treasurer of the Fund, the persons listed
in Appendix A hereto, and any other person, whether or not such person is an
Officer or employee of the Fund, duly authorized to give Oral Instructions or
Written Instructions on behalf of the Fund as indicated in a certificate
furnished to the Transfer Agent pursuant to Section 5(d) or 5(e) hereof as may
be received by the Transfer Agent from time to time;
(c) "Commission" shall have the meaning given it in the 1940 Act;
(d) "Custodian" refers to the custodian and any sub-custodian of all
securities and other property which the Fund may from time to time deposit, or
cause to be deposited or held under the name or account of such custodian
(pursuant to the Custodian Agreement between the Fund and Investors Bank & Trust
Company);
(e) "Directors" or "Board of Directors" refers to the duly elected
Directors of the Fund;
(f) "Portfolio" refers to the Depositors Fund or any such other
separate and distinct Portfolio as may from time to time be established and
designated by the Fund in accordance with the provisions of the Articles of
Organization.
(g) "Officer" shall mean the President, any Vice President,
Secretary and Treasurer;
(h) "Oral Instructions" shall mean instructions, other than written
instructions, actually received by the Transfer Agent from a person reasonably
believed by the Transfer Agent to be an Authorized Person;
(i) "Prospectus" shall mean the Fund's current prospectus and
statement of additional information relating to the registration of the Fund's
Shares under the Securities Act of 1933, as amended, and the 1940 Act;
(j) "Shares" refers to the Shares of Common Stock of the Fund;
(k) "Shareholder" means a record owner of Shares;
(l) "Written Instructions" shall mean written communication signed
by an Authorized Person and actually received by the Transfer Agent; and
(m) The "1940 Act" refers to the Investment Company Act of 1940 and
the Rules and regulations promulgated thereunder, all as amended from time to
time.
2. Appointment of the Transfer Agent. The Fund hereby appoints
and constitutes the Transfer Agent as transfer agent for its Shares and as
shareholder servicing agent for the Fund, and the Transfer Agent accepts such
appointment and agrees to perform the duties hereinafter set forth. If the Board
of Directors, pursuant to the Articles of Incorporation, hereafter establishes
and designates a new Portfolio, the Transfer Agent agrees that it will act as
transfer agent and shareholder servicing agent for such new Portfolio in
accordance with the terms set forth herein. The Directors shall cause a written
notice to be sent to the Transfer Agent to the effect that it has established a
new Portfolio and that it appoints the Transfer Agent as transfer agent and
shareholder servicing agent for the new Portfolio. Such written notice must be
recieved by the Transfer Agent in a reasonable period of time prior to the
commencement of operations of the new Portfolio to allow the Transfer Agent, in
the ordinary course of its business, to prepare to perform its duties for such
new Portfolio.
3. Compensation
(a) The Fund will compensate the Transfer Agent for the performance
of its obligations hereunder in accordance with the fees set forth in the
written schedule of fees annexed hereto as Schedule A and incorporated herein.
Schedule A does not include out-of-pocket disbursements of the Transfer Agent
for which the Transfer Agent shall be entitled to bill the Fund separately.
The Transfer Agent will bill the Fund as soon as practicable after
the end of each calendar month, and said billings will be detailed in accordance
with the Schedule A. The Fund will promptly pay to the Transfer Agent the amount
of such billing.
Out-of-pocket disbursements shall mean the items specified in the
written schedule of out-of-pocket charges annexed hereto as Schedule B and
incorporated herein. Reimbursement by the Fund for such out-of-pocket
disbursements incurred by the Transfer Agent in any month shall be made as soon
as practicable after the receipt of an itemized bill from the Transfer Agent.
Reimbursement by the Fund for expenses other than those specified in Schedule B
shall be upon mutual agreement of the parties as provided in Schedule B.
(b) Any compensation agreed to hereunder may be adjusted from time
to time by attaching to Schedule A of this Agreement a revised Fee Schedule,
dated and signed by an Officer of each party hereto.
4. Documents. In connection with the appointment of the Transfer
Agent, the Fund shall upon request, on or before the date this Agreement goes
into effect, but in any case within a reasonable period of time for the Transfer
Agent to prepare to perform its duties hereunder, furnish the Transfer Agent
with the following documents.
(a) A certified copy of the Articles of Organization of the Fund, as
amended;
(b) A copy of the resolution of the Directors authorizing the
execution and delivery of this Agreement;
(c) If applicable, a specimen of the certificate for Shares of the
Fund in the form approved by the Directors, with a certificate of an Officer of
the Fund as to such approval;
d) All account application forms and other documents relating to
Shareholder accounts or to any plan, program or service offered by the Fund;
(e) A signature card bearing the signatures of any Officer of the
Fund or other Authorized Person who will sign Written Instructions.
5. Further Documentation. The Fund will also furnish from time to
time the following documents:
(a) Certified copies of each vote of the Directors designating
Authorized Persons;
(b) The current Prospectus and Statement of Additional Information
of the Fund.
(c) Certificates as to any change in any Officer or Director of the
Fund.
6. Representations of the Fund. The Fund represents to the Transfer
Agent that all outstanding Shares are validly issued, fully paid and
non-assessable by the Fund. When Shares are hereafter issued in accordance with
the terms of the Fund's Articles of Organization and its Prospectus, such Shares
shall be validly issued, fully paid and non-assessable by the Fund.
In the event that the Board of Directors shall declare a
distribution payable in Shares, the Fund shall deliver to the Transfer Agent
written notice of such declaration signed on behalf of the Fund by an Officer
thereof, upon which the Transfer Agent shall be entitled to rely for all
purposes, certifying (i) the number of Shares involved and (ii) that all
appropriate action has been taken.
7. Duties of the Transfer Agent. The Transfer Agent shall be
responsible for administering and/or performing transfer agent functions; for
acting as service agent in connection with dividend and distribution functions;
and for performing shareholder account and administrative agent functions in
connection with the issuance, transfer and redemption or repurchase (including
coordination with the Custodian) of Shares. The operating standards and
procedures to be followed shall be determined from time to time by agreement
between the Transfer Agent and the Fund and shall be expressed in a written
schedule of duties of the Transfer Agent annexed hereto as Schedule C and
incorporated herein.
8. Recordkeeping and Other Information. The Transfer Agent shall
create and maintain all necessary records in accordance with all applicable
laws, rules and regulations, including but not limited to records required by
Section 31 (a) of the 1940 Act, as amended, and the Rules thereunder, as the
same may be amended from time to time, and those records pertaining to the
various functions performed by it hereunder which are set forth in Schedule C
and Exhibit 1 to Schedule C attached hereto. All records and other data
established and maintained by the Transfer Agent pursuant to this Agreement
shall be the property of the Fund, shall be available for inspection and use by
the Fund and shall be surrendered promptly upon request. Where applicable, such
records shall be maintained by the Transfer Agent for the periods and in the
places required by Rule 31a-2 under the 1940 Act, as the same may be amended
from time to time. Disposition of such records after such prescribed periods
shall be as mutually agreed upon from time to time by the Fund and the Transfer
Agent.
9. Audit, Inspection and Visitation. The Transfer Agent shall make
available during regular business hours all records and other data created and
maintained pursuant to this Agreement for reasonable audit and inspection by the
Fund, or any person retained by the Fund. Upon reasonable notice by the Fund,
the Transfer Agent shall make available during regular business hours its
facilities and premises employed in connection with its performance of this
Agreement for reasonable visitation by the Fund, or any person retained by the
Fund, to inspect its operating capabilities or for any other reason.
10. Confidentiality of Records. The Transfer Agent agrees to treat
all records and other information relative to the Fund and its prior, present or
potential Shareholders in confidence except that, after prior notification to
and approval in writing by the Fund, which approval shall not be unreasonably
withheld and may not be withheld where the Transfer Agent may be exposed to
civil or criminal contempt proceedings for failure to comply, when requested to
divulge such information by duly constituted authorities, or when so requested
by the Fund.
11. Reliance by the Transfer Agent; Instructions
(a) The Transfer Agent will be protected in acting upon Written or
Oral Instructions which it may reasonably have believed to have been executed or
orally communicated by an Authorized Person and will not be held to have any
notice of any change of authority or any person until receipt of a Written
Instruction thereof from the Fund. The Transfer Agent will also be protected in
processing Share certificates which it reasonably believes to bear the proper
manual or facsimile signatures of the Officers of the Fund and the proper
countersignature of the Transfer Agent.
(b) At any time the Transfer Agent may apply to any Authorized
Person of the Fund for Written Instructions and may, after obtaining prior oral
or written approval by an Authorized Person, seek advice from legal counsel for
the Fund, or its own legal counsel, with respect to any matter arising in
connection with this Agreement, and it shall not be liable for any action taken
or not taken or suffered by it in good faith in accordance with such Written
Instructions or in accordance with the opinion of counsel for the Fund or for
the Transfer Agent. Written Instructions requested by the Transfer Agent will be
provided by the Fund within a reasonable period of time. In addition, the
Transfer Agent, its Officers, agents or employees, shall accept Oral
Instructions or Written Instructions given to them by any person representing or
acting on behalf of the Fund only if said representative is known by the
Transfer Agent, or its Officers, agents or employees, to be an Authorized
Person. The Transfer Agent shall have no duty or obligation to inquire into, nor
shall the Transfer Agent be responsible for, the legality of any act done by it
upon the request or direction of an Authorized Person.
(c) Notwithstanding any of the foregoing provisions of this
Agreement, the Transfer Agent shall be under no duty or obligation to inquire
into, and shall not be liable for: (i) the legality of the issuance or sale of
any Shares or the sufficiency of the amount to be received therefor; (ii) the
propriety of the amount per share to be paid on any redemption; (iii) the
legality of the declaration of any dividend by the Directors, or the legality of
the issuance of any Shares in payment of any dividend; or (iv) the legality of
any recapitalization or readjustment of the Shares.
12. Acts of God, etc. The Transfer Agent will not be liable or
responsible for delays or errors by reason or circumstances beyond its control,
including acts of civil or military authority, national emergencies, fire,
mechanical breakdown beyond its control, flood, acts of God, insurrection, war,
riots, and loss of communication or power supply.
13. Duty of Care and Indemnification. The Fund will indemnify the
Transfer Agent against and hold it harmless from any and all losses, claims,
damages, liabilities or expenses (including reasonable counsel fees and
expenses) resulting from any claim, demand, action or suit not resulting from
the bad faith or negligence of the Transfer Agent, and arising out of, or in
connection with, its duties on behalf of the Fund hereunder. In addition, the
Fund will indemnify the Transfer Agent against and hold it harmless from any and
all losses, claims, damages, liabilities or expenses (including reasonable
counsel fees and expenses) resulting from any claim, demand action or suit as a
result of: (i) any action taken in accordance with Written or Oral Instructions,
or any other instructions, or share certificates reasonably believed by the
Transfer Agent to be genuine and to be signed, countersigned or executed, or
orally communicated by an Authorized Person; (ii) any action taken in accordance
with written or oral advice reasonably believed by the Transfer Agent to have
been given by counsel for the Fund or its own counsel; or (iii) any action taken
as a result of any error or omission in any record which the Transfer Agent had
no reason to believe was inaccurate (including but not limited to magnetic
tapes, computer printouts, hard copies and microfilm copies) and was delivered,
or caused to be delivered, by the Fund to the Transfer Agent in connection with
this Agreement.
In any case in which the Fund may be asked to indemnify or hold the
Transfer Agent harmless, the Fund shall be advised of all pertinent facts
concerning the situation in question and the Transfer Agent shall notify the
Fund promptly concerning any situation which presents or appears likely to
present a claim for indemnification against the Fund. The Fund shall have the
option to defend the Transfer Agent against any claim which may be the subject
of this indemnification and, in the event that the Fund so elects, such defense
shall be conducted by counsel chosen by the Fund, and thereupon the Fund shall
take over complete defense of the claim and the Transfer Agent shall sustain no
further legal or other expenses in such situation for which it seeks
indemnification under this Section 13. The Transfer Agent will not confess any
claim or make any compromise in any case in which the Fund will be asked to
provide indemnification, except with the Fund's prior written consent. The
obligations of the parties hereto under this Section shall survive the
termination of this Agreement.
14. Terms and Termination. This Agreement shall become effective on
the date first set forth above (the "Effective Date") and shall continue in
effect from year to year thereafter as the parties may mutually agree; provided,
however, that either party hereto may terminate this Agreement by giving to the
other party a notice in writing specifying the date of such termination, which
shall not be less than 60 days after the date of receipt of such notice. In the
event such notice is given by the Fund, it shall be accompanied by a resolution
of the Board of Directors, certified by a Secretary, electing to terminate this
Agreement and designating a successor transfer agent or transfer agents. Upon
such termination the Transfer Agent will deliver to such successor a certified
list of shareholders of the Fund (with names, addresses and taxpayer
identification or Social Security numbers and such other federal tax information
as the Transfer Agent may be required to maintain), an historical record of the
account of each shareholder and the status thereof, and all other relevant
books, records, correspondence, and other data established or maintained by the
Transfer Agent under this Agreement in the form reasonably acceptable to the
Fund, and will cooperate in the transfer of such duties and responsibilities,
including provisions for assistance from the Transfer Agent's personnel in the
establishment of books, records and other data by such successor or successors.
If this Agreement is terminated, the Transfer Agent shall deliver
all records and data established or maintained under this Agreement without
compensation or other fees except that the Transfer Agent shall be entitled to
incidental out-of-pocket expenses as limited by and provided for in Schedule B
to this Agreement incurred in the delivery of such records and data.
15. Amendment. This Agreement may not be amended or modified in any
manner except by a written agreement executed by both parties.
16. Subcontracting. The Fund agrees that the Transfer Agent may, in
its discretion, subcontract for certain of the services described under this
Agreement or the Schedules hereto; provided that the appointment of any such
Agent shall not relieve the Transfer Agent of its responsibilities hereunder and
provided that the Transfer Agent has given 30 days prior written notice to an
Authorized Person.
17. Use of Transfer Agent's Name. The Transfer Agent shall approve
all reasonable uses of its name which merely refer in accurate terms to its
appointment hereunder or which are required by the Commission or a state
securities commission.
18. Use of the Fund's Name. The Transfer Agent shall not use the
name of the Fund or material relating to the Fund on any documents or forms for
other than internal use in a manner not approved prior thereto in writing;
provided, that the Fund shall approve all reasonable uses of its name which
merely refer in accurate terms to the appointment of the Transfer Agent or which
are required by the Commission or a state securities commission.
19. Security. The Transfer Agent represents and warrants that, to
best of its knowledge, the various procedures and systems which the Transfer
Agent has implemented or will implement with regard to safeguarding from loss or
damage attributable to fire, theft or any other cause (including provision for
24 hours-a-day restricted access) of the Fund's records and other data and the
Transfer Agent's records, data, equipment, facilities and other property used in
the performance of its obligations hereunder are adequate and that it will make
such changes therein from time to time as in its judgement are required for the
secure performance of its obligations hereunder. The parties shall review such
systems and procedures on a periodic basis.
20. Insurance. The Transfer Agent shall notify the Fund should any
of its insurance coverage as set forth in Schedule D attached hereto be changed
for any reason. Such notification shall include the date of change and reason or
reasons therefor. The Transfer Agent shall notify the Fund of any claims against
it whether or not they may be covered by insurance and shall notify the Fund
from time to time as may be appropriate, and at least within 30 days following
the end of each fiscal year of the Transfer Agent, of the total outstanding
claims made by the Transfer Agent under its insurance coverage.
21. Miscellaneous
(a) Any notice or other instrument authorized or required by this
Agreement to be given in writing to the Fund or the Transfer Agent, shall be
sufficiently given if addressed to that party and received by it at its office
set forth below or at such other place as it may from time to time designate in
writing.
To the Fund:
Eaton Vance Growth Fund, Inc.
24 Federal Street
Boston, Massachusetts 02110
Attention: H. Day Brigham, Jr., Esq.
To the Transfer Agent:
Boston Safe Deposit and Trust Company
One Boston Place
Boston, Massachusetts 02108
Attn: Susan Mann
(b) This Agreement shall extend to and shall be binding upon the
parties hereto, and their respective successors and assigns; provided, however,
that this Agreement shall be assignable without the written consent of the other
party.
(c) This Agreement shall be construed in accordance with the laws of
the Commonwealth of Massachusetts.
(d) This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original; but such counterparts shall,
together, constitute only one instrument.
(e) The captions of this Agreement are included for convenience or
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
22. Liability of Directors, Officers and Shareholders. The execution
and delivery of this Agreement have been authorized by the Directors of the Fund
and signed by an authorized Officer of the Fund, acting as such, and neither
such authorization by such Directors nor such execution and delivery by such
Officer shall be deemed to have been made by any of them individually or to
impose any liability on any of them personally, and the obligations of this
Agreement are not binding upon any of the Directors or shareholders of the Fund,
but bind only the property of the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective Officers thereunder duly authorized as of the day
and year first above written.
Eaton Vance Growth Fund, Inc.
Attest: /s/ Paul D. Wallace, Jr. By: /s/ James L. O'Connor
BOSTON SAFE DEPOSIT AND
TRUST COMPANY
Attest: By: /s/ Susan Mann
<PAGE>
Appendix A
AUTHORIZED PERSONS
Benjamin A. Rowland, Jr.
Richard E. Houghton
Daniel A. MacLellan
Robert A. Chisholm
<PAGE>
Schedule A
SCHEDULE OF FEES
Transfer Agent Fees are computed and paid monthly based on month end net assets
and the following annual rates:
First $250,000,000 8 basis points
$250,000,001 - $500,000,000 7 basis points
$500,000,001 and over 6 basis points
<PAGE>
Schedule B
OUT-OF-POCKET EXPENSES
The Fund shall reimburse the Transfer Agent monthly for the following
out-of-pocket expenses:
o postage and mailing
o forms
o outgoing wire charges
o telephone
o if applicable, magnetic tape and freight
o retention of records
o microfilm/microfiche
o stationery
o if applicable, terminals, transmitting lines and
any expenses incurred in connection with such
terminals and lines
The Fund agrees that an estimate of the postage and mailing expenses of
the Transfer Agent will be paid on the day of or prior to a mailing if requested
reasonably in advance by the Transfer Agent. In addition, the Fund will
reimburse the Transfer Agent for other expenses incurred by the Transfer Agent
which the Fund and the Transfer Agent agree are not otherwise properly borne by
the Transfer Agent as part of its duties and obligations under the Agreement.
<PAGE>
Schedule C
DUTIES OF THE TRANSFER AGENT (See Exhibit 1 for Summary of Services)
1. Shareholder Information. The Transfer Agent shall maintain a
record of the number of Shares held by each holder of record which shall include
their addresses and taxpayer identification numbers and which shall indicate
whether such Shares are held in certificated or uncertificated form.
2. Shareholder Services. The Transfer Agent will investigate all
Shareholder inquiries relating to Shareholder accounts and will answer all
correspondence from Shareholders and others relating to its duties hereunder
between the Transfer Agent and the Fund. The Transfer Agent shall keep records
of Shareholder correspondence and replies thereto, and of the lapse of time
between the receipt of such correspondence and the mailing of such replies.
3. State Registration Reports. The Transfer Agent shall furnish the
Fund, on a state-by-state basis, sales reports, such periodic and special
reports as the Fund may reasonably request, and such other information,
including Shareholder lists and statistical information concerning accounts, as
may be agreed upon from time to time between the Fund and the Transfer Agent.
4. Share Certificates
(a) At the expenses of the Fund, the Transfer Agent shall maintain
an adequate supply of blank Share certificates to meet the Transfer Agent's
requirements therefor. Such Share certificates shall be properly signed by
facsimile. The Fund agrees that, notwithstanding the death, resignation, or
removal of any Officer of the Fund whose signature appears on such certificates,
the Transfer Agent may continue to countersign certificates which bear such
signatures until otherwise directed by the Fund.
(b) The Transfer Agent shall issue replacement Share certificates in
lieu of certificates which have been lost, stolen or destroyed without any
further action by the Board of Directors or any Officer of the Fund, upon
receipt by the Transfer Agent of properly executed affidavits and lost
certificate bonds, in form satisfactory to the Transfer Agent, with the Fund and
the Transfer Agent as obligees under the bond.
(c) The Transfer Agent shall also maintain a record of each
certificate issued, the number of Shares represented thereby and the holder of
record. With respect to Shares held in open accounts or uncertificated forms,
i.e., no certificate being issued with respect thereto, the Transfer Agent shall
maintain comparable records of the record holders thereof, including their
names, addresses and taxpayer identification numbers. The Transfer Agent shall
further maintain separately for the Fund a stop transfer record on lost and/or
replaced certificates.
5. Mailing Communications to Shareholders; Proxy Materials. The
Transfer Agent will address and mail to Shareholders of the Fund all reports to
Shareholders, dividend and distribution notices and proxy material for the
Fund's meetings of Shareholders, and such other communications as the Fund may
authorize. In connection with meetings of Shareholders, the Transfer Agent will
prepare Shareholder lists, mail and certify as to the mailing of proxy
materials, process and tabulate returned proxy cards, report on proxies voted
prior to meetings, act as inspector of election at meetings and certify Shares
voted at meetings.
6. Sales of Shares
(a) Processing of Investment Checks or Other Investments. Upon
receipt of any check or other instrument drawn or endorsed to it as agent for,
or identified as being for the account of, the Fund, or drawn or endorsed to the
Distributor of the Fund's Shares for the purchase of Shares, the Transfer Agent
shall stamp the check with the date of receipt, shall forthwith process the same
for collection and shall record the number of Shares sold, the trade date and
price per Share, and the amount of money to be delivered to the Custodian of the
Fund for the sale of such Shares.
Upon receipt of an order to purchase shares from a broker or dealer
pursuant to procedures approved by the Fund, the Transfer Agent shall record the
number of Shares sold for the account of such broker or dealer, the trade date
and price per share, the amount of money to be delivered to the Custodian of the
Fund for the sale of such Shares, and shall confirm such order and amount to the
broker or dealer promptly in accordance with good industry practice.
(b) Issuance of Shares. Upon receipt of notification that the
Custodian has received the amount of money specified in the first paragraph of
section (a) above, the Transfer Agent shall issue to and hold in the account of
the purchaser/Shareholder, or if no account is specified therein, in a new
account established in the name of the purchaser, the number of Shares such
purchaser is entitled to receive, as determined in accordance with applicable
Federal law or regulation.
(c) Confirmation. The Transfer Agent shall send to the
purchaser/Shareholder a confirmation of each purchase which will show the new
share balance, the Shares held under a particular plan, if any, for withdrawing
investments, the amount invested and the price paid for the newly purchased
Shares, or will be in such other form as the Fund and the Transfer Agent may
agree from time to time.
(d) Suspension of Sales of Shares. The Transfer Agent shall not be
required to issue any Shares of the Fund where it has received a Written
Instruction from the Fund or written notice from any appropriate Federal or
state authority that the sale of the Shares of the Fund has been suspended or
discontinued, and the Transfer Agent shall be entitled to rely upon such Written
Instructions or written notification.
(e) Taxes in Connection with Issuance of Shares. Upon the issuance
of any Shares in accordance with the foregoing provisions of this Section, the
Transfer Agent shall not be responsible for the payment of any original issue or
other taxes required to be paid in connection with such issuance.
(f) Returned Checks. In the event that any check or other order for
the payment of money is returned unpaid for any reason, the Transfer Agent will:
(i) give prompt notice of such return to the Fund or its designee; (ii) place a
stop transfer order against all Shares issued as a result of such check or
order; and (iii) take such actions as the Transfer Agent may from time to time
deem appropriate.
7. Redemptions
(a) Requirements for transfer or Redemption of Shares. The Transfer
Agent shall process all requests from Shareholders to transfer or redeem Shares
in accordance with the procedures set forth in the Fund's Prospectus, or as
authorized by the Fund pursuant to Written Instructions, including, but not
limited to, all requests from Shareholders to redeem Shares, all determinations
of the number of Shares required to be redeemed to fund designated monthly
payments and automatic payments or any such distribution or withdrawal plan.
The Transfer Agent reserves the right to refuse to transfer or
redeem Shares until it is satisfied that the instructions to do so are valid and
genuine, in accordance with procedures set forth in the Fund's Prospectus. The
Transfer Agent shall incur no liability for the refusal, in good faith, to make
transfer or redemptions which the Transfer Agent, in its good judgment deems
improper or unauthorized based upon such procedures, or until it is reasonably
satisfied that there is no basis for any claim adverse to such transfer or
redemption.
The Transfer Agent may in effecting transactions, rely upon the
provisions of the Uniform Act for the Simplification of Fiduciary Security
Transfers or the provisions of Article 8 of the Uniform Commercial Code, as the
same may be amended from time to time in the Commonwealth of Massachusetts,
which in the opinion of legal counsel for the Fund or of its own legal counsel
protect it in not requiring certain documents in connection with the transfer or
redemption of Shares. The Fund may authorize the Transfer Agent to waive the
signature guarantee in certain cases by Written Instructions.
For the purpose of the redemption of Shares of the Fund which have
been purchased within 15 days of a redemption request, the Fund shall provide
the Transfer Agent with written Instructions (see Exhibit 2 hereto) concerning
the time within which such requests may be honored.
(b) Notice to Custodian. When Shares are redeemed, the Transfer
Agent shall, upon receipt of the instructions and documents in proper form,
deliver to the Custodian a notification setting forth the number of Shares to be
redeemed. Such redemptions shall be reflected on appropriate accounts maintained
by the Transfer Agent reflecting outstanding Shares of the Fund and Shares
attributed to individual accounts and, if applicable, any individual withdrawal
or distribution plan.
(c) Payment of Redemption Proceeds. The Transfer Agent shall, upon
receipt of the money paid to it by the Custodian for the redemption of Shares,
pay to the Shareholder, or his authorized agent or legal representative, such
moneys as are received from the Custodian, all in accordance with the redemption
procedures described in the Fund's Prospectus; provided, however, that the
Transfer Agent shall pay the proceeds of any redemption of Shares purchased
within a period of time agreed upon in writing by the Transfer Agent and the
Fund only in accordance with procedures agreed to in writing by the Transfer
Agent and the Fund for determining that good funds have been collected for the
purchase of such Shares, such written procedures being attached to this Schedule
as Exhibit 2. The Fund shall indemnify the Transfer Agent for any payment of
redemption proceeds or refusal or make such payment if the payment or refusal to
pay is in accordance with said written procedures.
The Transfer Agent shall not process or effect any redemptions
pursuant to a plan of distribution or redemption or in accordance with any other
Shareholder request upon the receipt by the Transfer Agent of notification of
the suspension of the determination of the Fund's net asset value.
(d) The Transfer Agent shall send to the Shareholder a confirmation
of each redemption showing the amount (and price) of shares redeemed, the new
Share balance, and such other information as the Fund may request from time to
time.
8. Dividends
(a) Notice to Transfer Agent and Custodian. Upon the declaration of
each dividend and each capital gains distribution by the Board of Directors of
the Fund with respect to its Shares, the Fund shall furnish to the Transfer
Agent Written Instructions setting forth, with respect to Shares the date of the
declaration of such dividend or distribution, the ex-dividend date, the date of
payment thereof, the record date as of which Shareholders entitled to payment
shall be determined, the amount payable per Share to the Shareholders of record
as of that date, the total amount payable to the Transfer Agent on the payment
date and whether such dividend or distribution is to be paid in Shares of such
class at net asset value.
On or before the payment date specified in such resolution of the
Board of Directors, the Fund will cause the Custodian of the Fund to pay to the
Transfer Agent sufficient cash to make payment to the Shareholders of record as
of such payment date.
(b) Payment of Dividends by the Transfer Agent. The Transfer Agent
will, on the designated payment date, automatically reinvest all dividends in
additional Shares at net asset value (determined on the record date of such
dividend with respect to Shareholders who have elected such reinvestment), and
promptly mail to each Shareholder at his address of record, or such other
address as the Shareholder may have designated, a statement showing the number
of full and fractional Shares (rounded to three decimal places) then currently
owned by the Shareholder and the net asset value of the Shares so credited to
the Shareholder's account. All other dividends shall be paid in cash, or by
check, to Shareholders of their designees, for shareholders who have so elected.
(c) Insufficient Funds for Payments. If the Transfer Agent does not
receive sufficient cash from the Custodian to make total dividend and/or
distribution payments to all Shareholders of the Fund as of the record date, the
Transfer Agent will, upon notifying the Fund, withhold payment to all
Shareholders of record as of the record date until such sufficient cash is
provided to the Transfer Agent.
(d) Information Returns. It is understood that the Transfer Agent
shall file in a timely manner such appropriate information returns concerning
the payment of dividends, return of capital, capital gains distributions and
special information returns for retirement plan accounts with the proper
Federal, state, local and other authorities as are required by law to be filed
and shall be responsible for the withholding of taxes, if any, due on such
dividends or distributions to Shareholders when required to withhold taxes under
applicable law. The Transfer Agent shall also mail copies of such information
returns to the appropriate Shareholders.
<PAGE>
Exhibit 1
to
Schedule C
Summary of Services
The services to be performed by the Transfer Agent shall be as follows;
A. DAILY RECORDS
Maintain daily on disk, tape or other magnetic media the following
information with respect to each shareholder account as received:
o Name and Address (Zip Code)
o Balance of Shares held by Transfer Agent
o State of residence code
o Beneficial owner code: i.e, male, female, joint tenant, etc.
o Dividend code (reinvestment)
o Number of Shares held in certificate form
o Tax information (certified tax identification number, any TEFRA and
backup withholding)
o Other special coding for retirement plan accounts
B. OTHER DAILY ACTIVITY
o Answer written inquiries relating to Shareholder accounts (matters
relating to portfolio management, distribution of Shares and other
management policy questions will be referred to the Fund).
o Furnish a Statement of Additional Information to any Shareholder
who requests (in writing or by telephone) such statement from the
Transfer Agent.
o Examine and process Share purchase applications in accordance with
the Prospectus.
o Furnish Forms W-9 to all shareholders whose initial subscriptions
for Shares did not include certified taxpayer identification
numbers.
o Process additional payments into established Shareholder accounts
in accordance with the Prospectus.
o Upon receipt of proper instructions and all required documentation,
process requests for redemption of Shares.
o In accordance with procedures outlined in the Fund's Prospectus,
process and effect telephone exchanges among funds with similar
distribution plans.
o Maintain records of Letter of Intent escrow shares.
o Maintain records necessary to properly invoke the contingent
deferred sales charge.
o Identify redemption requests made with respect to accounts in which
Shares have been purchased within an agreed-upon period of time for
determining whether good funds have been collected with respect to
such purchase and process as agreed by the Transfer Agent and the
Fund in accordance with written procedures set forth in the Fund's
Prospectus.
o Examine and process all transfers of Shares, ensuring that all
transfer requirements and legal documents have been supplied.
o Issue and mail replacement checks.
o Maintain and execute share purchases with respect to Rights of
Accumulation.
C. SPECIAL REQUIREMENTS WITH RESPECT TO DAILY FUNDING
The Transfer Agent shall provide the Custodian on or before 9:30 A.M.
each day reports summarizing the previous day's transaction activity,
subtotaled by transaction type and trade date, and showing the balance
of the Fund's shares outstanding and other pertinent information. These
reports shall indicate all cash amounts to be paid or received by the
Fund for such purposes as settling sales and redemption of Fund Shares
or making distributions to Shareholders. Providing that the Transfer
Agent has reported the daily settlement amounts in a timely manner with
appropriate back-up documentation, the Fund will cause to be wired
monies due the Transfer Agent by the Fund on or before the close of
business that day. All monies due the Fund from the Transfer agent
shall be wired by the Transfer Agent on or before 2:00 P.M.
D. REPORTS PROVIDED TO THE FUND AND/OR THE CUSTODIAN
Furnish the following reports to the Fund:
o Daily financial totals
o Monthly form N-SAR information (sales/redemptions)
o Monthly report of outstanding Shares
o Monthly analysis of accounts by beneficial owner code
o Monthly analysis of accounts by share range
o Bi-monthly analysis of sales by state; provide a "warning system"
that informs the Fund when sales of Shares in certain states are
within a specified percentage of the Shares registered in the
state.
E. DIVIDEND AND REDEMPTION ACTIVITY
o Calculate and process Share dividends and distributions as
instructed by the Fund.
o Compute; prepare and mail all necessary reports to Shareholders,
federal and/or state authorities as requested by the Fund.
o On the payable date of a distribution to shareholders, the Transfer
Agent shall deliver to the Custodian a complete dividend
reconciliation, including the record date shares, total amount
distributed, amount reinvested and cash due the Transfer Agent.
Payment of the cash by the Custodian upon receipt of the
reconciliation shall be contingent upon the Custodian's assent that
the figures in such reconciliation appear to be reasonable.
o The Transfer Agent shall deliver a final dividend reconciliation to
the Custodian no later than 30 days after the payable date which
will reflect any adjustments made subsequent to the payable date.
After the final dividend reconciliation is prepared, no further
adjustments shall be made to affect the total amount of the
distribution without the written approval of the Fund.
F. MEETINGS OF SHAREHOLDERS
o Cause to be mailed proxy and related material for all meetings of
Shareholders. Tabulate returned proxies (proxies must be adaptable
to mechanical equipment of the Transfer Agent or its agents) and
supply daily reports when sufficient proxies have been received.
o Prepare and submit to the Fund an Affidavit of Mailing.
o At the time of the meeting, if requested, furnish a certified list
of Shareholders in hard copy, microfilm or microfiche and
Inspectors of Election.
G. PERIODIC ACTIVITIES
o Cause to be mailed reports, Prospectuses, and any other enclosures
requested by the Fund (material must be adaptable to the mechanical
equipment of Transfer Agent or its agents).
o Produce and mail periodic statements as requested to Shareholders
and broker/dealers.
H. AS OF TRANSACTIONS
o The Transfer Agent shall make every effort to minimize the
occurrence of "as of" transactions. For those that do occur, the
Transfer Agent shall maintain records as to the reason for the
delay in processing. In the event the delayed processing is the
fault of the Transfer Agent, and the Fund sustains a loss, the Fund
shall be entitled to compensation from the Transfer Agent.
<PAGE>
Exhibit 2
to
Schedule C
It is hereby agreed between the Fund and the Transfer Agent that Shares
purchased by personal check may be redeemed only after they are deemed to have
been collected in accordance with the attached check-aging schedule. The
check-aging schedule, which is based upon a Shareholder's address of record,
designates the number of days between the receipt of an investment check by the
Transfer Agent and the date on which funds provided by such checks will be
deemed to have been collected.
<PAGE>
CHECK-AGING SCHEDULE
STATE STATE NUMBER
CODE ABBREV. STATE DESCRIPTION OF DAYS
- ---- ------- ----------------- -------
01 AL Alabama 9
02 AK Alaska 15
03 AZ Arizona 12
04 AR Arkansas 9
05 CA California 13
06 CO Colorado 11
07 CT Connecticut 7
08 DE Delaware 7
09 DC District of Columbia 8
10 FL Florida 9
11 GA Georgia 9
12 HI Hawaii 15
13 ID Idaho 11
14 IL Illinois 10
15 IN Indiana 10
16 IA Iowa 10
17 KS Kansas 10
18 KY Kentucky 9
19 LA Louisiana 9
20 ME Maine 7
21 MD Maryland 8
22 MA Massachusetts 7
23 MI Michigan 10
24 MN Minnesota 10
25 MS Mississippi 10
26 MO Missouri 10
27 MT Montana 11
28 NE Nebraska 10
29 NV Nevada 11
30 NH New Hampshire 7
31 NJ New Jersey 8
32 NM New Mexico 11
33 NY New York 8
34 NC North Carolina 9
35 ND North Dakota 11
36 OH Ohio 10
37 OK Oklahoma 11
38 OR Oregon 12
39 PA Pennsylvania 8
40 RI Rhode Island 7
41 SC South Carolina 9
42 SD South Dakota 11
43 TN Tennessee 9
44 TX Texas 11
45 UT Utah 12
46 VT Vermont 7
47 VA Virginia 9
48 WA Washington 12
49 WV West Virginia 9
50 WI Wisconsin 10
51 WY Wyoming 11
52 PR Puerto Rico 16
53 53 APO, FPO New York
54 54 APO, FPO California
55 55 Other U.S. Possessions
56 56 Foreign Addresses
<PAGE>
SCHEDULE D
SCHEDULE OF INSURANCE COVERAGE
Boston Safe Deposit and Trust Company ("Boston Safe"), and its New York clearing
facility, Boston Safe Clearing Corporation, are named insureds under the
following insurance policies presently in force covering assets held in custody
at either company.
BANKERS BLANKET BOND
Basic Coverage: $22,500,000
Carrier: Continental Insurance Company #BND1619079, et al., policy
dated April 7, 1985 and effective until cancelled.
Deductible: $250,000
This coverage relates to any dishonest act of any employee of Boston
Safe and to any loss by burglary or mysterious unexplainable
disappearance of securities. The bond provides coverage for forgery
losses up to $2,500,000 and losses for Boston Safe's acceptance of
counterfeited securities in good faith up to $1,000,000.
Additional Coverage;
In addition, both companies are named insureds for $57,500,000 of
excess bond coverage through American Express, bringing the total
blanket bond coverage to $80,000,000
Also, through American Express, Boston Safe has $245,000,000 of Lost
Instrument Bond coverage in addition to the $80.0 million blanket bond
coverage.
ERRORS AND OMISSIONS & FIDUCIARY LIABILITY INSURANCE POLICY
Coverage: $5,000,000
Carrier: First State Insurance Company, policy dated November 14,
1988, and effective until November 14, 1989
Deductible: $250,000
Protection under the Errors and Omissions Policy for an account would
be in the area of any alleged negligent act, error, or omission
committed by Boston Safe in the course of its performance of its duties
as Custodian.
As a participant in the Depository Trust Company ("DTC"), Boston Safe is insured
under policies made available by DTC with respect to securities deposited.
<PAGE>
EXHIBIT (9)(e)
AMENDMENT TO THE TRANSFER AGENCY AGREEMENT
This Agreement, dated as of February 1, 1993, is made to the Transfer
Agency Agreement (the "Agreements") dated June 7, 1989 between each of the EATON
VANCE HIGH YIELD MUNICIPALS TRUST (now Eaton Vance Municipals Trust); EATON
VANCE CALIFORNIA MUNICIPALS FUND (now Eaton Vance Investment Trust); EATON VANCE
LIQUID ASSETS TRUST; EATON VANCE HIGH INCOME TRUST; EATON VANCE NATURAL
RESOURCES TRUST; EATON VANCE EQUITY-INCOME TRUST; THE EXCHANGE FUND OF BOSTON,
INC.; SECOND FIDUCIARY EXCHANGE FUND, INC.; FIDUCIARY EXCHANGE FUND, INC.;
DEPOSITORS FUND OF BOSTON, INC.; CAPITAL EXCHANGE FUND, INC.; VANCE SANDERS
EXCHANGE FUND, L.P.; DIVERSIFICATION FUND, INC.; EATON VANCE MUNICIPAL BOND FUND
L.P.; EATON VANCE INVESTORS FUND, INC. (now Eaton Vance Investors Fund); EATON
VANCE GROWTH FUND, INC. (now Eaton Vance Investors Fund); EATON VANCE GROWTH
FUND, INC. (now Eaton Vance Growth Trust); EATON VANCE STOCK FUND; EATON VANCE
TAX-FREE RESERVES; EATON VANCE GOVERNMENT OBLIGATIONS TRUST; EATON VANCE TOTAL
RETURN TRUST; EATON VANCE INCOME FUND OF BOSTON, INC. (now Eaton Vance Income
Fund of Boston); and dated November 2, 1992, between each of EATON VANCE PRIME
RATE RESERVES and EATON VANCE SHORT-TERM GLOBAL INCOME FUND, INC. (collectively,
the "Funds") and THE SHAREHOLDER SERVICES GROUP, INC. (the "Transfer Agent"),
being a successor in interest to Boston Safe Deposit and Trust Company.
The Funds and the Transfer Agent agree that the Agreements shall, as of
February 1, 1993, be amended as follows:
1. The Transfer Agent will maintain its registration as a transfer
agent as provided in Section 17A(c) of the Securities Act of 1934, as amended,
(the "1934 Act") and shall comply with all applicable provisions of Section 17A
of the 1934 Act and the rules promulgated thereunder, as may be amended from
time to time, including rules relating to record retention.
2. The references to "legal counsel" and "counsel" in Section 11(b) and
13 of the Agreement and the third paragraph of Section 7(a) of Schedule C of the
Agreement shall be limited to (a) outside legal counsel of the Fund in its
capacity as such, and (b) outside legal counsel of the Transfer Agent if such
counsel has been specifically authorized by an Authorized Person of the Fund to
render its opinion on the matter that has arisen.
3. Section 12 of the Agreement is amended by adding the following
clause after the word "supply": ", provided, however, that the Transfer Agent
shall have acted in accordance with its Disaster Recovery Plan attached hereto
as Schedule F, which Schedule may be amended from time to time by agreement of
the Trust and the Transfer Agent.
4. Section 13 of the Agreement is deleted in its entirety and replaced
with the following paragraphs:
(a) Each party shall fulfill its obligations hereunder by
acting with reasonable care and in good faith;
(b) The Fund will indemnify the Transfer Agent against and hold it
harmless from any and all losses, claims, damages, liabilities or expenses
(including reasonable counsel fees and expenses) resulting from any claim,
demand, action or suit not resulting from the bad faith or negligence of the
Transfer Agent, and arising out of, or in connection with, its duties on behalf
of the Trust hereunder. In addition, the Fund will indemnify the Transfer Agent
against and hold it harmless from any and all losses, claims, damages,
liabilities or expenses (including reasonable counsel fees and expenses)
resulting from any claim, demand action or suit as a result of: (i) any action
taken in accordance with Written or Oral Instructions, or share certificates
reasonable believed by the Transfer Agent to be genuine and to be signed,
countersigned or executed, or orally communicated by an Authorized Person; (ii)
any action taken in accordance with written or oral advise reasonably believed
by the Transfer Agent to have been given by counsel for the Fund; or (iii) any
action taken as a result of any error or omission in any record which the
Transfer Agent had no reasonable basis to believe was inaccurate (including but
not limited to magnetic tapes, computer printouts, hard copies and microfilm
copies) and was delivered, or caused to be delivered, by the Fund to the
Transfer Agent in connection with this Agreement;
(c) The Transfer Agent will indemnify the Fund against and hold it
harmless from any and all losses, claims, damages, liabilities or expenses
(including reasonable counsel fees and expenses) resulting from any claim,
demand, action or suit not resulting from the bad faith or negligence of the
Fund, or arising out of, or in connection with, the Transfer Agent's breach of
this Agreement;
(d) In any case in which a party may be asked to indemnify or hold
the other party harmless, the indemnifying party shall be advised of all
pertinent facts concerning the situation in question and the party seeking
indemnification shall notify the indemnifying party promptly concerning any
situation which presents or appears likely to present a claim for
indemnification. The indemnifying party shall have the option to defend against
any claim which may be the subject of this indemnification and, in the event
that the indemnifying party so elects, such defense shall be conducted by
counsel chosen by the indemnifying party, and thereupon the indemnifying party
shall take over complete defense of the claim and the party seeking
indemnification shall sustain no further legal or other expenses in such
situation for which it seeks indemnification. The party seeking indemnification
will not confess any claim or make any compromise in any case in which the
indemnifying party will be asked to provide indemnification, except with the
indemnifying party's prior written consent; and
(e) The obligations of the parties hereto under this Section shall
survive the termination of this Agreement.
5. The second paragraph of Section 7(a) of Schedule C of the Agreement
is amended by deleting the second sentence, and the third paragraph of such
Section 7(a) of Schedule C is amended by deleting the first sentence.
6. Section 14 of each Agreement is deleted in its entirety and replaced
with the following paragraphs:
(a) Either party may terminate this Agreement without cause on
or after January 31, 1998 by giving 180 days written notice to the other party;
(b) Either party may terminate this Agreement if the other
party has materially breached the Agreement by giving the defaulting party 30
days written notice and the defaulting party has failed to cure the breach
within 60 days thereafter; and
(c) Any written notice of termination shall specify the date of
termination. The Fund shall provide notice of the successor transfer agent
within 30 days of the termination date. Upon termination, the Transfer Agent
will deliver to such successor a certified list of shareholders of the Fund
(with names, addresses and taxpayer identification of Social Security numbers
and such other federal tax information as the Transfer Agent may be required to
maintain), an historical record of the account of each shareholder and the
status thereof, and all other relevant books, records, correspondence, and other
data established or maintained by the books, records, correspondence, and other
data established or maintained by the Transfer Agent under this Agreement in the
form reasonably acceptable to the Fund, and will cooperate in the transfer of
such duties and responsibilities, including provisions for assistance from the
Transfer Agent's personnel in the establishment of books, records and other data
by such successor or successors. The Transfer Agent shall be entitled to its
out-of-pocket expenses set forth in Schedule B incurred in the delivery of such
records net of the fees owed to the Transfer Agent for the last month of service
if this Agreement is terminated pursuant to paragraph (b) immediately above.
7. The following paragraph is added to Section 15 of the Agreement:
The Fund and the Transfer Agent agree to renegotiate the terms of
this Agreement if an independent party acceptable to both parties,
after notice to and a hearing with both Fund management and
representatives of the Transfer Agent, determines that the
performance of the Transfer Agent has been adverse to the interests
of the Fund shareholders and if such negotiations do not result in a
mutually acceptable amendment then the Fund may terminate this
Agreement on 60 days written notice.
8. The following sentence shall be added at the end of Section 17 of
the Agreements:
Notwithstanding the foregoing, any reference to the Transfer
Agent shall include a statement to the effect that it is a
wholly owned subsidiary of First Data Corporation.
9. The name and address of the transfer agent in Section 21(a) of the
Agreements shall be deleted and replaced with the following:
The Shareholder Services Group, Inc.
One Exchange Place
53 State Street
Boston, Massachusetts 02109
Attention: Robert F. Radin, President
with a copy to TSSG Counsel
10. Section 21(b) of the Agreements shall be deleted in its entirety
and replaced with the following:
(b) This Agreement shall extend to and shall be binding upon the
parties hereto, and their respective successors and assigns; provided, however,
that any assignment of this Agreement to an entity shall require the written
consent of the other party.
11. The following paragraphs shall be added to Schedule A of the
Agreements:
For all funds serviced by Eaton Vance Management for which the
Transfer Agent commences service as transfer agent after
February 1, 1993 (the "New Funds"), the Transfer Agent shall
waive per account fees for the initial 90 days of service.
After the initial 90 days, New Funds that impose a 12b-1 Trail
Commission or service fee shall pay the Transfer Agent a monthly
fee based on month-end net assets at an annual rate of 8 basis
points. After the initial 90 days, New funds that do not impose a
12b-1 Trail Commission or service fee shall pay the Transfer Agent
a monthly fee based on month-end net assets at an annual rate of 7
basis points.
If a New Fund's net assets exceed $250 million for a calendar month,
the fees due the Transfer Agent for that month shall be reduced by
one-twelfth of one basis point, for those assets in excess on that
breakpoint.
If a New Fund's net assets exceed $500 million for a calendar month,
the fees due the Transfer Agent for that month shall be reduced by
one-twelfth of two basis points, for those assets in excess of that
breakpoint. If a New Fund's net assets exceed $750 million for a
calendar month, the fees due the Transfer Agent for that month shall
be reduced by one-twelfth of three basis points, for those assets in
excess of that breakpoint. If a New Fund's net assets exceed $1
billion for a calendar month, the fees due the Transfer Agent for
that month shall be reduced by one-twelfth of four basis points, for
those assets in excess of that breakpoint. In addition to these
breakpoints, if Eaton Vance National Municipals Trust's net assets
exceed $1.5 Billion for a calendar month, the fees due the Transfer
Agent for the month shall be reduced by one-twelfth of four basis
points, for those assets in excess of that breakpoint. If Eaton
Vance National Municipals Trust's net assets exceed $2 Billion for a
calendar month, the fees due the Transfer Agent for the month shall
be reduced by one-twelfth of three basis points, for those assets in
excess of that breakpoint. No other breakpoints in fees shall apply.
12. Schedule B of the Transfer Agency Agreements is deleted and replaced
by Schedule B attached hereto.
13. Schedule E, attached hereto, will be added to the Agreements.
14. This Amendment contains the entire understanding among the parties
with respect to the transactions contemplated hereby. To the extent that any
provision of this amendment modifies or is otherwise inconsistent with any
provision of the Agreement and related agreements, this Amendment shall control,
but the Agreement and all related documents shall otherwise remain in full force
and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their duly authorized officers, as of the day and year first above
written.
EATON VANCE MUNICIPALS TRUST
EATON VANCE INVESTMENT TRUST
EATON VANCE LIQUID ASSETS TRUST
EATON VANCE HIGH INCOME TRUST
EATON VANCE NATURAL RESOURCES TRUST
EATON VANCE EQUITY-INCOME TRUST
THE EXCHANGE FUND OF BOSTON, INC.
SECOND FIDUCIARY EXCHANGE FUND, INC.
FIDUCIARY EXCHANGE FUND, INC.
DEPOSITORS FUND OF BOSTON, INC.
CAPITAL EXCHANGE FUND, INC.
VANCE SANDERS EXCHANGE FUND, L.P.
DIVERSIFICATION FUND, INC.
EATON VANCE MUNICIPAL BOND FUND L.P.
EATON VANCE INVESTORS FUND
EATON VANCE GROWTH TRUST
EATON VANCE STOCK FUND
EATON VANCE SPECIAL INVESTMENT TRUST
EATON VANCE CASH MANAGEMENT FUND
EATON VANCE TAX FREE RESERVES
EATON VANCE GOVERNMENT OBLIGATIONS TRUST
EATON VANCE TOTAL RETURN TRUST
EATON VANCE INCOME FUND OF BOSTON
EATON VANCE PRIME RATE RESERVES
EATON VANCE SHORT-TERM GLOBAL INCOME
FUND, INC.
By: /s/ Barry Rowland Jr.
-------------------------------------
Title: V.P. Eaton Vance Management
/s/ James L. O'Connor
---------------------------------
Treasurer
THE SHAREHOLDER SERVICES GROUP, INC.
By: /s/ Jack P. Kutner
-------------------------------------
Title: EVP-COO
<PAGE>
B-1
Schedule B
OUT-OF-POCKET EXPENSES
The Fund shall reimburse the Transfer Agent monthly for applicable
out-of-pocket expenses, including, but not limited to the following items:
- Microfiche/microfilm production
- Magnetic media tapes and freight
- Stock costs, including certificates, envelopes, checks,
stationery, confirmations and statements
- Postage (bulk, pre-sort, ZIP+4, barcoding, first class) direct
pass through to the Fund
- Due diligence mailings
- Telephone and telecommunications costs, including all lease,
maintenance and line costs
- Proxy solicitations, mailings and tabulations
- Daily & Distribution advice mailings
- Shipping, Certified and Overnight mail and insurance
- Year-end form production and mailings
- Terminals, communication lines, printers and other equipment
and any expenses incurred in connection with such terminals
and lines as pre-approved by the Fund
- Duplicating services, as pre-approved by the Fund
- Courier services
- Banking charges, including without limitation incoming @ $6.00
and outgoing wire charges @ $8.00 per wire
- Federal Reserve charges for check clearance
- Record retention, retrieval and destruction costs, including,
but not limited to exit fees charged by third party record
keeping vendors
- The Transfer Agent shall provide the Funds with an aggregate
credit of 1,000 system programming hours at no cost during
each calendar year.
- Certificate Insurance
<PAGE>
B-2
The Fund agrees that postage and mailing expenses will be paid on the
day of or prior to mailing. In addition, the Fund will promptly reimburse the
Transfer Agent for any other unscheduled expenses incurred by the Transfer Agent
whenever the Fund and the Transfer Agent mutually agree that such expenses are
not otherwise properly borne by the Transfer Agent as part of its duties and
obligations under the Agreement.
<PAGE>
E-1
Schedule E
Transfer Agent Performance Standards
1. SCOPE
The Transfer Agent agrees to meet or exceed the processing standards set forth
in this schedule for those items received by the Transfer Agent in the proper
condition, form and order to permit the Transfer Agent to process the item
within the requirements of this Agreement.
"Turnaround", for the purposes of the Schedule, shall be tracked by the Transfer
Agent and shall consist of the date the Transfer Agent receives the item in good
order ("R") and such additional business days (e.g. R=1, R=2) as designated. For
the purpose of this Schedule, "business days" shall be the calendar days on
which the New York Stock Exchange is opened and such other days as agreed to in
writing by the Transfer Agent and the Fund. The Transfer Agent shall track the
processing of items on a calendar month basis and shall report to the Fund the
percentage of the total number of items received and the percentage of items
that were processed within the specific Turnaround period by the 20th of the
following month.
The Transfer Agent shall also track the number of Funds shareholders who contact
the Transfer Agent to complain that their transactions were not processed
correctly. The Transfer Agent shall report to the Funds, on a monthly basis, no
later than the 20th of the following month, the transactions and the total
number of shareholder complaints received by the Transfer Agent from Funds
shareholders, which arose solely from processing errors by the Transfer Agent.
With respect to these turnaround and error standards, the Transfer Agent shall
be responsible for its own conduct only and shall not be held responsible for
delays and other problems arising from the actions or omissions of the Fund,
other agents of the Fund or third parties not affiliated with the Transfer
Agent. In addition, the Fund agrees that these performance standards shall be
waived for any calendar month in which the processing exceeds by more than 20%
the average monthly number of items received by the Transfer Agent during the
six month period prior to that calendar month.
2. CORRECTIVE ACTION
If performance standards are not met for any type of transaction for a given
monthly period, the Transfer Agent shall report to the Fund by the 20th of the
following month the reason for the deficiency and the corrective action being
taken by the Transfer Agent.
The Fund may terminate this Agreement if either: (i) One quarter or more of the
performance standards listed in this Schedule are not met by the Transfer Agent
for four consecutive months, or (ii) any one performance standard is not met by
the Transfer Agent for any six months during a 12 month period. Unless the Fund
provides the Transfer Agent with notice of the Fund's intent to exercise this
option within 60 days of the occurrence, the Fund shall have waived its option
to terminate under this provision. Termination is not the sole remedy of the
Fund for failure to meet the performance standards.
3. PERFORMANCE STANDARDS
The Transfer Agent will use a statistical sampling defined below as a percentage
of transactions processed through the transaction processing and quality control
units of the Transfer Agent providing services to the Fund and will track and
report to the Fund on the accuracy of the transactions processed. Examining the
sampling against predetermined Transfer Agent criteria for accuracy, the
Transfer Agent will provide an accuracy rate as represented by "percent",
measured to the last Friday of each month from the last Friday of the previous
month. The Fund reserves the right to inspect, or have a third party inspect,
the Quality Assurance procedures and documentation and all documents reviewed
and considered in determining the accuracy of processing.
<TABLE>
<CAPTION>
I. Transaction Processing
Turnaround QA Statistical Accuracy
R R+1-R+7 Sampling % Standard
---------- ---------- --------
<S> <C> <C> <C> <C>
A1. New Accounts 15%
- Purchases R 98%
- Exchanges R 98%
- Transfer R+3 98%
B. Purchases 5%
- Directs (Money Market Funds) R+1 98%
- Directs (All Other Funds R 98%
- Wire Orders (Placement) R 98%
- Wire Orders (Settlement) R+1 98%
C. Redemptions 10%
- Direct R 98%
- Wire Orders R 98%
D. Exchanges R 5-10% 98%
E. Transfers R+3 10% 98%
F. Adjustments 10%
- Priority R+1 98%
- Non-Priority R+4 98%
- OCF Cancel/Rebill R+1 98%
II. Shareholder Services
A. Research 5%
- Priority R+2 95%
- Non-Priority R+4 95%
- Transcripts R+9 95%
B. Telephone Responsiveness R 2% 98%
(excluding calls abandoned
within 20 seconds)
C. Correspondence 10%
- Priority (Financial) R+3 98%
- Non Priority (Other) R+5 98%
III. Administration
A. Duplicate Confirmation R+2 2% 98%
Mailed
B. Certificates Mailed R+3 10% 98%
C. Daily Checks Mailed R+1 5% 98%
(includes redemptions, SWP's
and replacements)
D. Periodic Checks Mailed R+2 Client 98%
Specific
Sampling
</TABLE>
IV. Data Center Services
A. Response Time
An average of 98% of all CICS entries on Business Days from 8:00 p.m. EST
("Business Hours") during a calendar month will have a response time of three
(3) seconds or less.
An average of 98% of all CICS entries during Business hours in a calendar month
will have a response item of five (5) seconds or less.
B. On-Line Systems Availability
The On-Line System will be available for inquiry and data entry at least 96% of
the time during Business Day and from 8:00 a.m. to 8:00 p.m. EST (Business
Hours), measured on a calendar month basis.
V. Quality Assurance
TSSG will use a statistical sampling defined categorically in Section I-III of
transaction processed through the transaction processing and the quality control
units of TSSG providing services to the Funds and will track and report to the
Funds on the accuracy of the transaction processed. Examining the sampling
against pre-determined TSSG criteria for accuracy, TSSG will provide a 98%
accuracy rate, measured monthly by their independent Quality Assurance
Department and reported to the Fund by the 20th of the following month.
<PAGE>
Exhibit 10
Eaton Vance Management
24 Federal Street
Boston, MA 02110
(617) 482-8260
December 16, 1996
Eaton Vance Growth Trust
24 Federal Street
Boston, MA 02110
Gentlemen:
Eaton Vance Growth Trust (the "Trust") is a Massachusetts business
trust created under a Declaration of Trust dated May 25, 1989, as amended,
executed and delivered in Boston, Massachusetts. I am of the opinion that all
legal requirements have been complied with in the creation of the Trust, and
that said Declaration of Trust is legal and valid.
The Trustees of the Trust have the powers set forth in the Declaration
of Trust, subject to the terms, provisions and conditions therein provided. As
provided in the Declaration of Trust, the interest of shareholders is divided
into shares of beneficial interest without par value, and the number of shares
that may be issued is unlimited. The Trustees may from time to time issue and
sell or cause to be issued and sold shares for cash or for property. All such
shares, when so issued, shall be fully paid and nonassessable by the Trust.
By votes duly adopted, the Trustees of the Trust have authorized the
issuance of shares of beneficial interest, without par value. The Trust intends
to register under the Securities Act of 1933, as amended, 4,881,113 of its
shares of beneficial interest with Post-Effective Amendment No. 65 to its
Registration Statement on Form N-1A (the "Amendment") with the Securities and
Exchange Commission.
I have examined originals, or copies, certified or otherwise identified
to my satisfaction, of such certificates, records and other documents as I have
deemed necessary or appropriate for the purpose of this opinion, including the
Declaration of Trust and votes adopted by the Trustees. Based upon the
foregoing, and with respect to Massachusetts law (other than the Massachusetts
Uniform Securities Act), only to the extent that Massachusetts law may be
applicable and without reference to the laws of the other several states or of
the United States of America, I am of the opinion that under existing law:
1. The Trust is a trust with transferable shares of beneficial interest
organized in compliance with the laws of The Commonwealth of Massachusetts, and
the Declaration of Trust is legal and valid under the laws of The Commonwealth
of Massachusetts.
<PAGE>
Eaton Vance Growth Trust
December 16, 1996
Page 2
2. Shares of beneficial interest registered by the Amendment may be
legally and validly issued in accordance with the Declaration of Trust upon
receipt by the Trust of payment in compliance with the Declaration of Trust and,
when so issued and sold, will be fully paid and nonassessable by the Trust.
I am a member of the Massachusetts and New York bars, and I hereby
consent to the filing of this opinion with the Securities and Exchange
Commission as an exhibit thereto.
Very truly yours,
/s/ H. Day Brigham, Jr.
H. Day Brigham, Jr., Esq.
Vice President, Eaton Vance Management
a:growth.opn
<PAGE>
EXHIBIT (11)(A)
CONSENT OF INDEPENDENT AUDITORS
We consent to the use in this Post-Effective Amendment No. 65 to the
Registration Statement of Eaton Vance Growth Trust (1933 Act File No. 2-22019)
on behalf of EV Marathon Asian Small Companies Fund of our report dated
September 5, 1996, relating to EV Marathon Asian Small Companies Fund, and of
our report dated September 5, 1996, relating to Asian Small Companies
Portfolio, which reports are included in the Statement of Additional
Information, which is part of such Registration Statement.
We also consent to the reference to our Firm under the caption
"Independent Certified Public Accountants" in the Statement of Additional
Information of the Registration Statement.
/s/ DELOITTE & TOUCHE LLP
--------------------------------------
DELOITTE & TOUCHE LLP
December 17, 1996
Boston, Massachusetts
<PAGE>
EXHIBIT (11)(B)
CONSENT OF INDEPENDENT AUDITORS
We consent to the use in this Post-Effective Amendment No. 65 to the
Registration Statement of Eaton Vance Growth Trust (1933 Act File No. 2-22019)
on behalf of EV Traditional Asian Small Companies Fund of our report dated
September 5, 1996, relating to EV Traditional Asian Small Companies Fund, and
of our report dated September 5, 1996, relating to Asian Small Companies
Portfolio, which reports are included in the Statement of Additional
Information, which is part of such Registration Statement.
We also consent to the reference to our Firm under the caption
"Independent Certified Public Accountants" in the Statement of Additional
Information of the Registration Statement.
/s/ DELOITTE & TOUCHE LLP
--------------------------------------
DELOITTE & TOUCHE LLP
December 17, 1996
Boston, Massachusetts
<PAGE>
EXHIBIT (11)(C)
CONSENT OF INDEPENDENT AUDITORS
We consent to the use in this Post-Effective Amendment No. 65 to the
Registration Statement of Eaton Vance Growth Trust (1933 Act File No. 2-22019)
on behalf of EV Classic Greater China Growth Fund of our report dated October
4, 1996, relating to EV Classic Greater China Growth Fund, and of our report
dated October 4, 1996, relating to Greater China Growth Portfolio, which
reports are included in the Annual Report to Shareholders for the year ended
August 31, 1996 which is incorporated by reference in the Statement of
Additional Information, which is part of such Registration Statement.
We also consent to the reference to our Firm under the heading "The Fund's
Financial Highlights" in the Prospectus and under the captions "Independent
Certified Public Accountants" and "Financial Statements" in the Statement of
Additional Information of the Registration Statement.
/s/ DELOITTE & TOUCHE LLP
--------------------------------------
DELOITTE & TOUCHE LLP
December 17, 1996
Boston, Massachusetts
<PAGE>
EXHIBIT (11)(D)
CONSENT OF INDEPENDENT AUDITORS
We consent to the use in this Post-Effective Amendment No. 65 to the
Registration Statement of Eaton Vance Growth Trust (1933 Act File No. 2-22019)
on behalf of EV Marathon Greater China Growth Fund of our report dated October
4, 1996, relating to EV Marathon Greater China Growth Fund, and of our report
dated October 4, 1996, relating to Greater China Growth Portfolio, which
reports are included in the Annual Report to Shareholders for the year ended
August 31, 1996 which is incorporated by reference in the Statement of
Additional Information, which is part of such Registration Statement.
We also consent to the reference to our Firm under the heading "The Fund's
Financial Highlights" in the Prospectus and under the captions "Independent
Certified Public Accountants" and "Financial Statements" in the Statement of
Additional Information of the Registration Statement.
/s/ DELOITTE & TOUCHE LLP
--------------------------------------
DELOITTE & TOUCHE LLP
December 17, 1996
Boston, Massachusetts
<PAGE>
EXHIBIT (11)(E)
CONSENT OF INDEPENDENT AUDITORS
We consent to the use in this Post-Effective Amendment No. 65 to the
Registration Statement of Eaton Vance Growth Trust (1933 Act File No. 2-22019)
on behalf of EV Traditional Greater China Growth Fund of our report dated
October 4, 1996, relating to EV Traditional Greater China Growth Fund, and of
our report dated October 4, 1996, relating to Greater China Growth Portfolio,
which reports are included in the Annual Report to Shareholders for the year
ended August 31, 1996 which is incorporated by reference in the Statement of
Additional Information, which is part of such Registration Statement.
We also consent to the reference to our Firm under the heading "The Fund's
Financial Highlights" in the Prospectus and under the captions "Independent
Certified Public Accountants" and "Financial Statements" in the Statement of
Additional Information of the Registration Statement.
/s/ DELOITTE & TOUCHE LLP
--------------------------------------
DELOITTE & TOUCHE LLP
December 17, 1996
Boston, Massachusetts
<PAGE>
EXHIBIT (11)(F)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the use in this Post-Effective Amendment No. 65 to the
Registration Statement of Eaton Vance Growth Trust (1933 Act File No. 2-22019)
on behalf of EV Classic Growth Fund of our report dated September 30, 1996,
relating to EV Classic Growth Fund, and of our report dated September 30,
1996, relating to Growth Portfolio, which reports are included in the Annual
Report to Shareholders for the year ended August 31, 1996 which is
incorporated by reference in the Statement of Additional Information, which is
part of such Registration Statement.
We also consent to the reference to our Firm under the heading "The Fund's
Financial Highlights" in the Prospectus and under the captions "Independent
Accountants" and "Financial Statements" in the Statement of Additional
Information of the Registration Statement.
/s/ COOPERS & LYBRAND L.L.P.
--------------------------------------
COOPERS & LYBRAND L.L.P.
December 17, 1996
Boston, Massachusetts
<PAGE>
EXHIBIT (11)(G)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the use in this Post-Effective Amendment No. 65 to the
Registration Statement of Eaton Vance Growth Trust (1933 Act File No. 2-22019)
on behalf of EV Marathon Growth Fund of our report dated September 30, 1996,
relating to EV Marathon Growth Fund, and of our report dated September 30,
1996, relating to Growth Portfolio, which reports are included in the Annual
Report to Shareholders for the year ended August 31, 1996 which is
incorporated by reference in the Statement of Additional Information, which is
part of such Registration Statement.
We also consent to the reference to our Firm under the heading "The Fund's
Financial Highlights" in the Prospectus and under the captions "Independent
Accountants" and "Financial Statements" in the Statement of Additional
Information of the Registration Statement.
/s/ COOPERS & LYBRAND L.L.P.
--------------------------------------
COOPERS & LYBRAND L.L.P.
December 17, 1996
Boston, Massachusetts
<PAGE>
EXHIBIT (11)(H)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the use in this Post-Effective Amendment No. 65 to the
Registration Statement of Eaton Vance Growth Trust (1933 Act File No. 2-22019)
on behalf of EV Traditional Growth Fund of our report dated September 30,
1996, relating to EV Traditional Growth Fund, and of our report dated
September 30, 1996, relating to Growth Portfolio, which reports are included
in the Annual Report to Shareholders for the year ended August 31, 1996 which
is incorporated by reference in the Statement of Additional Information, which
is part of such Registration Statement.
We also consent to the reference to our Firm under the heading "The Fund's
Financial Highlights" in the Prospectus and under the captions "Independent
Accountants" and "Financial Statements" in the Statement of Additional
Information of the Registration Statement.
/s/ COOPERS & LYBRAND L.L.P.
--------------------------------------
COOPERS & LYBRAND L.L.P.
December 17, 1996
Boston, Massachusetts
<PAGE>
EXHIBIT (11)(I)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the use in this Post-Effective Amendment No. 65 to the
Registration Statement of Eaton Vance Growth Trust (1933 Act File No. 2-22019)
on behalf of EV Classic Information Age Fund of our report dated October 4,
1996, relating to EV Classic Information Age Fund, which report is included in
the Annual Report to Shareholders for the year ended August 31, 1996 which is
incorporated by reference in the Statement of Additional Information, which is
part of such Registration Statement.
We also consent to the reference to our Firm under the heading "The Fund's
Financial Highlights" in the Prospectus and under the captions "Independent
Accountants" and "Financial Statements" in the Statement of Additional
Information of the Registration Statement.
/s/ COOPERS & LYBRAND L.L.P.
--------------------------------------
COOPERS & LYBRAND L.L.P.
December 17, 1996
Boston, Massachusetts
<PAGE>
EXHIBIT (11)(J)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the use in this Post-Effective Amendment No. 65 to the
Registration Statement of Eaton Vance Growth Trust (1933 Act File No. 2-22019)
on behalf of EV Marathon Information Age Fund of our report dated October 4,
1996, relating to EV Marathon Information Age Fund, which report is included
in the Annual Report to Shareholders for the year ended August 31, 1996 which
is incorporated by reference in the Statement of Additional Information, which
is part of such Registration Statement.
We also consent to the reference to our Firm under the heading "The Fund's
Financial Highlights" in the Prospectus and under the captions "Independent
Accountants" and "Financial Statements" in the Statement of Additional
Information of the Registration Statement.
/s/ COOPERS & LYBRAND L.L.P.
--------------------------------------
COOPERS & LYBRAND L.L.P.
December 17, 1996
Boston, Massachusetts
<PAGE>
EXHIBIT (11)(K)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the use in this Post-Effective Amendment No. 65 to the
Registration Statement of Eaton Vance Growth Trust (1933 Act File No. 2-22019)
on behalf of EV Traditional Information Age Fund of our report dated October
4, 1996, relating to EV Traditional Information Age Fund, which report is
included in the Annual Report to Shareholders for the year ended August 31,
1996 which is incorporated by reference in the Statement of Additional
Information, which is part of such Registration Statement.
We also consent to the reference to our Firm under the heading "The Fund's
Financial Highlights" in the Prospectus and under the captions "Independent
Accountants" and "Financial Statements" in the Statement of Additional
Information of the Registration Statement.
/s/ COOPERS & LYBRAND L.L.P.
--------------------------------------
COOPERS & LYBRAND L.L.P.
December 17, 1996
Boston, Massachusetts
<PAGE>
EXHIBIT (11)(L)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in Post-Effective Amendment
No. 65 to the Registration Statement of Eaton Vance Growth Trust (1933 Act
File No. 2-22019) on behalf of EV Classic Information Age Fund, EV Marathon
Information Age Fund and EV Traditional Information Age Fund of our report
relating to Information Age Portfolio dated October 4, 1996, in the Statement
of Additional Information, which is part of such Registration Statement.
/s/ COOPERS & LYBRAND
--------------------------------------
COOPERS & LYBRAND
Chartered Accountants
December 17, 1996
Toronto, Canada
<PAGE>
EXHIBIT (11)(M)
CONSENT OF INDEPENDENT AUDITORS
We consent to the use in this Post-Effective Amendment No. 65 to the
Registration Statement of Eaton Vance Growth Trust (1933 Act File No. 2-22019)
on behalf of EV Marathon Gold & Natural Resources Fund of our report dated
October 4, 1996, relating to EV Marathon Gold & Natural Resources Fund, which
report is included in the Annual Report to Shareholders for the year ended
August 31, 1996 which is incorporated by reference in the Statement of
Additional Information, which is part of such Registration Statement.
We also consent to the reference to our Firm under the heading "The Fund's
Financial Highlights" in the Prospectus and under the captions "Independent
Certified Public Accountants" and "Financial Statements" in the Statement of
Additional Information of the Registration Statement.
/s/ DELOITTE & TOUCHE LLP
--------------------------------------
DELOITTE & TOUCHE LLP
December 17, 1996
Boston, Massachusetts
<PAGE>
Exhibit 15(n)
EATON VANCE GROWTH TRUST
AMENDMENT TO
DISTRIBUTION PLAN
ON BEHALF OF
EV MARATHON ASIAN SMALL COMPANIES FUND
Whereas Eaton Vance Distributors, Inc. (the "prior principal
underwriter") has served as the Principal Underwriter of Trust shares prior to
the effective date of this Amendment, and whereas Eaton Vance Distributors, Inc.
(currently named EV Distributors, Inc.) a separate Massachusetts corporation
(the "successor principal underwriter") is succeeding to the business of the
prior principal underwriter on November 1, 1996, the Trust hereby amends its
Distribution Plan of the above fund, by substituting the successor principal
underwriter for the prior principal underwriter in the Plan effective November
1, 1996. The uncovered distribution charges as of the close of business on
October 31, 1996 shall be the uncovered distribution charges of the successor
principal underwriter as of the opening of business on November 1, 1996.
ADOPTED: June 24, 1996
<PAGE>
Exhibit 15(o)
EATON VANCE GROWTH TRUST
AMENDMENT TO
DISTRIBUTION PLAN
ON BEHALF OF
EV TRADITIONAL ASIAN SMALL COMPANIES FUND
Whereas Eaton Vance Distributors, Inc. (the "prior principal
underwriter") has served as the Principal Underwriter of Trust shares prior to
the effective date of this Amendment, and whereas Eaton Vance Distributors, Inc.
(currently named EV Distributors, Inc.) a separate Massachusetts corporation
(the "successor principal underwriter") is succeeding to the business of the
prior principal underwriter on November 1, 1996, the Trust hereby amends its
Distribution Plan of the above fund, by substituting the successor principal
underwriter for the prior principal underwriter in the Plan effective November
1, 1996.
ADOPTED: June 24, 1996
<PAGE>
Exhibit 15(p)
EATON VANCE GROWTH TRUST
AMENDMENT TO
DISTRIBUTION PLAN
ON BEHALF OF
EV MARATHON GOLD & NATURAL RESOURCES FUND
Whereas Eaton Vance Distributors, Inc. (the "prior principal
underwriter") has served as the Principal Underwriter of Trust shares prior to
the effective date of this Amendment, and whereas Eaton Vance Distributors, Inc.
(currently named EV Distributors, Inc.) a separate Massachusetts corporation
(the "successor principal underwriter") is succeeding to the business of the
prior principal underwriter on November 1, 1996, the Trust hereby amends its
Distribution Plan of the above fund, by substituting the successor principal
underwriter for the prior principal underwriter in the Plan effective November
1, 1996. The uncovered distribution charges as of the close of business on
October 31, 1996 shall be the uncovered distribution charges of the successor
principal underwriter as of the opening of business on November 1, 1996.
ADOPTED: June 24, 1996
<PAGE>
Exhibit 15(q)
EATON VANCE GROWTH TRUST
AMENDMENT TO
AMENDED DISTRIBUTION PLAN
ON BEHALF OF
EV CLASSIC GREATER CHINA GROWTH FUND
Whereas Eaton Vance Distributors, Inc. (the "prior principal
underwriter") has served as the Principal Underwriter of Trust shares prior to
the effective date of this Amendment, and whereas Eaton Vance Distributors, Inc.
(currently named EV Distributors, Inc.) a separate Massachusetts corporation
(the "successor principal underwriter") is succeeding to the business of the
prior principal underwriter on November 1, 1996, the Trust hereby amends its
Amended Distribution Plan of the above fund, by substituting the successor
principal underwriter for the prior principal underwriter in the Plan effective
November 1, 1996. The uncovered distribution charges as of the close of business
on October 31, 1996 shall be the uncovered distribution charges of the successor
principal underwriter as of the opening of business on November 1, 1996.
ADOPTED: June 24, 1996
<PAGE>
Exhibit 15(r)
EATON VANCE GROWTH TRUST
AMENDMENT TO
DISTRIBUTION PLAN
ON BEHALF OF
EV MARATHON GREATER CHINA GROWTH FUND
Whereas Eaton Vance Distributors, Inc. (the "prior principal
underwriter") has served as the Principal Underwriter of Trust shares prior to
the effective date of this Amendment, and whereas Eaton Vance Distributors, Inc.
(currently named EV Distributors, Inc.) a separate Massachusetts corporation
(the "successor principal underwriter") is succeeding to the business of the
prior principal underwriter on November 1, 1996, the Trust hereby amends its
Distribution Plan of the above fund, by substituting the successor principal
underwriter for the prior principal underwriter in the Plan effective November
1, 1996. The uncovered distribution charges as of the close of business on
October 31, 1996 shall be the uncovered distribution charges of the successor
principal underwriter as of the opening of business on November 1, 1996.
ADOPTED: June 24, 1996
<PAGE>
Exhibit 15(s)
EATON VANCE GROWTH TRUST
AMENDMENT TO
DISTRIBUTION PLAN
ON BEHALF OF
EV TRADITIONAL GREATER CHINA GROWTH FUND
Whereas Eaton Vance Distributors, Inc. (the "prior principal
underwriter") has served as the Principal Underwriter of Trust shares prior to
the effective date of this Amendment, and whereas Eaton Vance Distributors, Inc.
(currently named EV Distributors, Inc.) a separate Massachusetts corporation
(the "successor principal underwriter") is succeeding to the business of the
prior principal underwriter on November 1, 1996, the Trust hereby amends its
Distribution Plan of the above fund, by substituting the successor principal
underwriter for the prior principal underwriter in the Plan effective November
1, 1996.
ADOPTED: June 24, 1996
<PAGE>
Exhibit 15(t)
EATON VANCE GROWTH TRUST
AMENDMENT TO
AMENDED DISTRIBUTION PLAN
ON BEHALF OF
EV CLASSIC GROWTH FUND
Whereas Eaton Vance Distributors, Inc. (the "prior principal
underwriter") has served as the Principal Underwriter of Trust shares prior to
the effective date of this Amendment, and whereas Eaton Vance Distributors, Inc.
(currently named EV Distributors, Inc.) a separate Massachusetts corporation
(the "successor principal underwriter") is succeeding to the business of the
prior principal underwriter on November 1, 1996, the Trust hereby amends its
Amended Distribution Plan of the above fund, by substituting the successor
principal underwriter for the prior principal underwriter in the Plan effective
November 1, 1996. The uncovered distribution charges as of the close of business
on October 31, 1996 shall be the uncovered distribution charges of the successor
principal underwriter as of the opening of business on November 1, 1996.
ADOPTED: June 24, 1996
<PAGE>
Exhibit 15(u)
EATON VANCE GROWTH TRUST
AMENDMENT TO
DISTRIBUTION PLAN
ON BEHALF OF
EV MARATHON GROWTH FUND
Whereas Eaton Vance Distributors, Inc. (the "prior principal
underwriter") has served as the Principal Underwriter of Trust shares prior to
the effective date of this Amendment, and whereas Eaton Vance Distributors, Inc.
(currently named EV Distributors, Inc.) a separate Massachusetts corporation
(the "successor principal underwriter") is succeeding to the business of the
prior principal underwriter on November 1, 1996, the Trust hereby amends its
Distribution Plan of the above fund, by substituting the successor principal
underwriter for the prior principal underwriter in the Plan effective November
1, 1996. The uncovered distribution charges as of the close of business on
October 31, 1996 shall be the uncovered distribution charges of the successor
principal underwriter as of the opening of business on November 1, 1996.
ADOPTED: June 24, 1996
<PAGE>
Exhibit 15(v)
EATON VANCE GROWTH TRUST
AMENDMENT TO
SERVICE PLAN
ON BEHALF OF
EV TRADITIONAL GROWTH FUND
Whereas Eaton Vance Distributors, Inc. (the "prior principal
underwriter") has served as the Principal Underwriter of Trust shares prior to
the effective date of this Amendment, and whereas Eaton Vance Distributors, Inc.
(currently named EV Distributors, Inc.) a separate Massachusetts corporation
(the "successor principal underwriter") is succeeding to the business of the
prior principal underwriter on November 1, 1996, the Trust hereby amends its
Service Plan of the above fund, by substituting the successor principal
underwriter for the prior principal underwriter in the Plan effective November
1, 1996.
ADOPTED: June 24, 1996
<PAGE>
Exhibit 15(w)
EATON VANCE GROWTH TRUST
AMENDMENT TO
DISTRIBUTION PLAN
ON BEHALF OF
EV CLASSIC INFORMATION AGE FUND
Whereas Eaton Vance Distributors, Inc. (the "prior principal
underwriter") has served as the Principal Underwriter of Trust shares prior to
the effective date of this Amendment, and whereas Eaton Vance Distributors, Inc.
(currently named EV Distributors, Inc.) a separate Massachusetts corporation
(the "successor principal underwriter") is succeeding to the business of the
prior principal underwriter on November 1, 1996, the Trust hereby amends its
Distribution Plan of the above fund, by substituting the successor principal
underwriter for the prior principal underwriter in the Plan effective November
1, 1996. The uncovered distribution charges as of the close of business on
October 31, 1996 shall be the uncovered distribution charges of the successor
principal underwriter as of the opening of business on November 1, 1996.
ADOPTED: June 24, 1996
<PAGE>
Exhibit 15(x)
EATON VANCE GROWTH TRUST
AMENDMENT TO
DISTRIBUTION PLAN
ON BEHALF OF
EV MARATHON INFORMATION AGE FUND
Whereas Eaton Vance Distributors, Inc. (the "prior principal
underwriter") has served as the Principal Underwriter of Trust shares prior to
the effective date of this Amendment, and whereas Eaton Vance Distributors, Inc.
(currently named EV Distributors, Inc.) a separate Massachusetts corporation
(the "successor principal underwriter") is succeeding to the business of the
prior principal underwriter on November 1, 1996, the Trust hereby amends its
Distribution Plan of the above fund, by substituting the successor principal
underwriter for the prior principal underwriter in the Plan effective November
1, 1996. The uncovered distribution charges as of the close of business on
October 31, 1996 shall be the uncovered distribution charges of the successor
principal underwriter as of the opening of business on November 1, 1996.
ADOPTED: June 24, 1996
<PAGE>
Exhibit 15(y)
EATON VANCE GROWTH TRUST
AMENDMENT TO
DISTRIBUTION PLAN
ON BEHALF OF
EV TRADITIONAL INFORMATION AGE FUND
Whereas Eaton Vance Distributors, Inc. (the "prior principal
underwriter") has served as the Principal Underwriter of Trust shares prior to
the effective date of this Amendment, and whereas Eaton Vance Distributors, Inc.
(currently named EV Distributors, Inc.) a separate Massachusetts corporation
(the "successor principal underwriter") is succeeding to the business of the
prior principal underwriter on November 1, 1996, the Trust hereby amends its
Distribution Plan of the above fund, by substituting the successor principal
underwriter for the prior principal underwriter in the Plan effective November
1, 1996.
ADOPTED: June 24, 1996
<PAGE>
Exhibit 15(z)
EATON VANCE GROWTH TRUST
AMENDMENT TO
DISTRIBUTION PLAN
ON BEHALF OF
EV MARATHON WORLDWIDE HEALTH SCIENCES FUND
Whereas Eaton Vance Distributors, Inc. (the "prior principal
underwriter") has served as the Principal Underwriter of Trust shares prior to
the effective date of this Amendment, and whereas Eaton Vance Distributors, Inc.
(currently named EV Distributors, Inc.) a separate Massachusetts corporation
(the "successor principal underwriter") is succeeding to the business of the
prior principal underwriter on November 1, 1996, the Trust hereby amends its
Distribution Plan of the above fund, by substituting the successor principal
underwriter for the prior principal underwriter in the Plan effective November
1, 1996. The uncovered distribution charges as of the close of business on
October 31, 1996 shall be the uncovered distribution charges of the successor
principal underwriter as of the opening of business on November 1, 1996.
ADOPTED: June 24, 1996
<PAGE>
EXHIBIT 99.16
<TABLE>
INVESTMENT PERFORMANCE -- EV CLASSIC GREATER CHINA GROWTH FUND
The table below indicates the total return (capital changes plus reinvestment of all distributions) on a hypothetical investment of
$1,000 in the Fund covering the period from October 28, 1992 through August 31, 1996 and for the 1 year period ended
August 31, 1996. Total return for the period prior to the Fund's commencement of operations is for the Portfolio (or its
predecessor) adjusted for the Fund's sales charge.
<CAPTION>
VALUE OF A $1,000 INVESTMENT
VALUE OF VALUE OF
INVESTMENT INVESTMENT TOTAL RETURN TOTAL RETURN
INVESTMENT INVESTMENT BEFORE CDSC AFTER CDSC BEFORE DEDUCTING CDSC AFTER DEDUCTING CDSC
PERIOD DATE ON 08/31/96 ON 08/31/96 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
<S> <C> <C> <C> <C> <C> <C> <C>
LIFE OF
FUND 10/28/92 $1,480.21 $1,480.21 48.02% 10.75% 48.02% 10.75%
1 YEAR ENDED
08/31/96 08/31/95 $1,041.87 $1,031.87 4.19% 4.19% 3.19% 3.19%
Average annual total return is calculated using the following formula:
n
P(1+T) = ERV
where P = an initial investment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of $1,000 initial investment at the end of the period after
deducting the CDSC *
Cumulative total return is calculated using the following formula:
T = ( ERV / P ) - 1
where T = cumulative total return including the maximum sales charge
ERV = ending redeemable value of $1,000 initial investment at the end of the period after
deducting the CDSC **
P = an initial investment of $1,000
* The average annual total return not including the CDSC is calculated based on the ending investment value
before deducting the CDSC.
** The cumulative total return not including the CDSC is calculated based on the ending investment value before
deducting the CDSC.
</TABLE>
<PAGE>
<TABLE>
INVESTMENT PERFORMANCE -- EV MARATHON GREATER CHINA GROWTH FUND
The table below indicates the total return (capital changes plus reinvestment of all distributions) on a hypothetical investment of
$1,000 in the Fund covering the period from October 28, 1992 through August 31, 1996 and for the 1 year period ended
August 31, 1996. Total return for the period prior to the Fund's commencement of operations is for the Portfolio (or its
predecessor) adjusted for the Fund's sales charge.
<CAPTION>
VALUE OF A $1,000 INVESTMENT
VALUE OF VALUE OF
INVESTMENT INVESTMENT TOTAL RETURN TOTAL RETURN
INVESTMENT INVESTMENT BEFORE CDSC AFTER CDSC BEFORE DEDUCTING CDSC AFTER DEDUCTING CDSC
PERIOD DATE ON 08/31/96 ON 08/31/96 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
<S> <C> <C> <C> <C> <C> <C> <C>
LIFE OF
FUND 10/28/92 $1,507.72 $1,477.72 50.77% 11.28% 47.77% 10.70%
1 YEAR ENDED
08/31/96 08/31/95 $1,047.09 $997.09 4.71% 4.71% -0.29% -0.29%
Average annual total return is calculated using the following formula:
n
P(1+T) = ERV
where P = an initial investment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of $1,000 initial investment at the end of the period after
deducting the CDSC *
Cumulative total return is calculated using the following formula:
T = ( ERV / P ) - 1
where T = cumulative total return including the maximum sales charge
ERV = ending redeemable value of $1,000 initial investment at the end of the period after
deducting the CDSC **
P = an initial investment of $1,000
* The average annual total return not including the CDSC is calculated based on the ending investment value
before deducting the CDSC.
** The cumulative total return not including the CDSC is calculated based on the ending investment value before
deducting the CDSC.
</TABLE>
<PAGE>
<TABLE>
INVESTMENT PERFORMANCE -- EV TRADITIONAL GREATER CHINA GROWTH FUND
The table below indicates the total return (capital changes plus reinvestment of all distributions) on a hypothetical investment of
$1,000 in the Fund covering the period from October 28, 1992 through August 31, 1996 and for the 1 year period ended
August 31, 1996.
<CAPTION>
VALUE OF A $1,000 INVESTMENT
VALUE OF VALUE OF TOTAL RETURN TOTAL RETURN
INVESTMENT INVESTMENT INITIAL INVESTMENT EXCLUDING SALES CHARGE INCLUDING SALES CHARGE
PERIOD DATE INVESTMENT* ON 08/31/96 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
<S> <C> <C> <C> <C> <C> <C> <C>
LIFE OF
FUND 10/28/92 $952.38 $1,440.34 51.24% 11.38% 44.03% 9.97%
1 YEAR ENDED
08/31/96 08/31/95 $952.47 $1,002.67 5.27% 5.27% 0.27 0.27%
Average annual total return is calculated using the following formula:
n
P(1+T) = ERV
where P = an initial investment of $1,000 **
T = average annual total return
n = number of years
ERV = ending redeemable value of $1,000 initial investment at the end of the period
Cumulative total return is calculated using the following formula:
T = ( ERV / P ) - 1
where T = cumulative total return including the maximum sales charge
ERV = ending redeemable value of $1,000 initial investment at the end of the period
P = an initial investment of $1,000 ***
* Initial investment less the current maximum sales charge of 4.75%.
** The average annual total return including the sales charge is calculated based on an initial investment of $1,000 less the
maximum initial sales charge of 4.75%.
*** The cumulative total return including the sales charge is calculated based on an initial investment of $1,000 less
maximum initial sales charge of 4.75%.
</TABLE>
<PAGE>
<TABLE>
INVESTMENT PERFORMANCE -- EV MARATHON GOLD & NATURAL RESOURCES FUND
The table below indicates the total return (capital changes plus reinvestment of all distributions) on a hypothetical investment of
$1,000 in the Fund covering the period from October 21, 1987 through August 31, 1996 and for the 1 and 5 year periods ended
August 31, 1996.
<CAPTION>
VALUE OF A $1,000 INVESTMENT
VALUE OF VALUE OF
INVESTMENT INVESTMENT TOTAL RETURN TOTAL RETURN
INVESTMENT INVESTMENT BEFORE CDSC AFTER CDSC BEFORE DEDUCTING CDSC AFTER DEDUCTING CDSC
PERIOD DATE ON 08/31/96 ON 08/31/96 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
<S> <C> <C> <C> <C> <C> <C> <C>
LIFE OF
FUND 10/21/87 $3,079.66 $3,079.66 207.97% 13.52% 207.97% 13.52%
5 YEARS ENDED
08/31/96 08/31/91 $2,204.29 $2,184.29 120.43% 17.13% 118.43% 16.91%
1 YEAR ENDED
08/31/96 08/31/95 $1,396.87 $1,346.87 39.69% 39.69% 34.69% 34.69%
Average annual total return is calculated using the following formula:
n
P(1+T) = ERV
where P = an initial investment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of $1,000 initial investment at the end of the period after
deducting the CDSC *
Cumulative total return is calculated using the following formula:
T = ( ERV / P ) - 1
where T = cumulative total return including the maximum sales charge
ERV = ending redeemable value of $1,000 initial investment at the end of the period after
deducting the CDSC **
P = an initial investment of $1,000
* The average annual total return not including the CDSC is calculated based on the ending investment value
before deducting the CDSC.
** The cumulative total return not including the CDSC is calculated based on the ending investment value before
deducting the CDSC.
</TABLE>
<PAGE>
<TABLE>
INVESTMENT PERFORMANCE -- EV CLASSIC INFORMATION AGE FUND
The table below indicates the total return (capital changes plus reinvestment of all distributions) on a hypothetical investment of
$1,000 in the Fund covering the period from September 18, 1995 through August 31, 1996. Total return for the period prior to
the commencement of operations is for the Portfolio (or its predecessor) adjusted for the Fund's sales charge.
<CAPTION>
VALUE OF A $1,000 INVESTMENT
VALUE OF VALUE OF
INVESTMENT INVESTMENT TOTAL RETURN TOTAL RETURN
INVESTMENT INVESTMENT BEFORE CDSC AFTER CDSC BEFORE DEDUCTING CDSC AFTER DEDUCTING CDSC
PERIOD DATE ON 08/31/96 ON 08/31/96 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
<S> <C> <C> <C> <C> <C> <C> <C>
LIFE OF
FUND 09/18/95 $1,100.11 $1,090.11 10.01% NA 9.01% NA
Average annual total return is calculated using the following formula:
n
P(1+T) = ERV
where P = an initial investment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of $1,000 initial investment at the end of the period after
deducting the CDSC *
Cumulative total return is calculated using the following formula:
T = ( ERV / P ) - 1
where T = cumulative total return including the maximum sales charge
ERV = ending redeemable value of $1,000 initial investment at the end of the period after
deducting the CDSC **
P = an initial investment of $1,000
* The average annual total return not including the CDSC is calculated based on the ending investment value
before deducting the CDSC.
** The cumulative total return not including the CDSC is calculated based on the ending investment value before
deducting the CDSC.
</TABLE>
<PAGE>
<TABLE>
INVESTMENT PERFORMANCE -- EV MARATHON INFORMATION AGE FUND
The table below indicates the total return (capital changes plus reinvestment of all distributions) on a hypothetical investment of
$1,000 in the Fund covering the period from September 18, 1995 through August 31, 1996.
<CAPTION>
VALUE OF A $1,000 INVESTMENT
VALUE OF VALUE OF
INVESTMENT INVESTMENT TOTAL RETURN TOTAL RETURN
INVESTMENT INVESTMENT BEFORE CDSC AFTER CDSC BEFORE DEDUCTING CDSC AFTER DEDUCTING CDSC
PERIOD DATE ON 08/31/96 ON 08/31/96 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
<S> <C> <C> <C> <C> <C> <C> <C>
LIFE OF
FUND 09/18/95 $1,104.00 $1,054.00 10.40% NA 5.40% NA
Average annual total return is calculated using the following formula:
n
P(1+T) = ERV
where P = an initial investment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of $1,000 initial investment at the end of the period after
deducting the CDSC *
Cumulative total return is calculated using the following formula:
T = ( ERV / P ) - 1
where T = cumulative total return including the maximum sales charge
ERV = ending redeemable value of $1,000 initial investment at the end of the period after
deducting the CDSC **
P = an initial investment of $1,000
* The average annual total return not including the CDSC is calculated based on the ending investment value
before deducting the CDSC.
** The cumulative total return not including the CDSC is calculated based on the ending investment value before
deducting the CDSC.
</TABLE>
<PAGE>
<TABLE>
INVESTMENT PERFORMANCE -- EV TRADITIONAL INFORMATION AGE FUND
The table below indicates the total return (capital changes plus reinvestment of all distributions) on a hypothetical investment of
$1,000 in the Fund covering the period from September 18, 1995 through August 31, 1996.
<CAPTION>
VALUE OF A $1,000 INVESTMENT
VALUE OF VALUE OF TOTAL RETURN TOTAL RETURN
INVESTMENT INVESTMENT INITIAL INVESTMENT EXCLUDING SALES CHARGE INCLUDING SALES CHARGE
PERIOD DATE INVESTMENT* ON 08/31/96 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
<S> <C> <C> <C> <C> <C> <C> <C>
LIFE OF
FUND 09/18/95 $952.38 $1,053.33 10.60% NA 5.33% NA
Average annual total return is calculated using the following formula:
n
P(1+T) = ERV
where P = an initial investment of $1,000 **
T = average annual total return
n = number of years
ERV = ending redeemable value of $1,000 initial investment at the end of the period
Cumulative total return is calculated using the following formula:
T = ( ERV / P ) - 1
where T = cumulative total return including the maximum sales charge
ERV = ending redeemable value of $1,000 initial investment at the end of the period
P = an initial investment of $1,000 ***
* Initial investment less the current maximum sales charge of 4.75%.
** The average annual total return including the sales charge is calculated based on an initial investment of $1,000 less the
maximum initial sales charge of 4.75%.
*** The cumulative total return including the sales charge is calculated based on an initial investment of $1,000 less
maximum initial sales charge of 4.75%.
</TABLE>
<PAGE>
<TABLE>
INVESTMENT PERFORMANCE -- EV CLASSIC GROWTH FUND
The table below indicates the total return (capital changes plus reinvestment of all distributions) on a hypothetical investment of
$1,000 in the Fund covering the 1, 5, and 10 year periods ended August 31, 1996. Total return for the period prior to the
Fund's commencement of operations is for the Portfolio (or its predecessor) adjusted for the Fund's sales charge.
<CAPTION>
VALUE OF A $1,000 INVESTMENT
VALUE OF VALUE OF
INVESTMENT INVESTMENT TOTAL RETURN TOTAL RETURN
INVESTMENT INVESTMENT BEFORE CDSC AFTER CDSC BEFORE DEDUCTING CDSC AFTER DEDUCTING CDSC
PERIOD DATE ON 08/31/96 ON 08/31/96 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
<S> <C> <C> <C> <C> <C> <C> <C>
10 YEARS ENDED
08/31/96 08/31/86 $2,551.79 $2,551.79 155.18% 9.82% 155.18% 9.82%
5 YEARS ENDED
08/31/96 08/31/91 $1,473.28 $1,473.28 47.33% 8.06% 47.33% 8.06%
1 YEAR ENDED
08/31/96 08/31/95 $1,116.84 $1,106.84 11.68% 11.68% 11.68% 11.68%
Average annual total return is calculated using the following formula:
n
P(1+T) = ERV
where P = an initial investment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of $1,000 initial investment at the end of the period after
deducting the CDSC *
Cumulative total return is calculated using the following formula:
T = ( ERV / P ) - 1
where T = cumulative total return including the maximum sales charge
ERV = ending redeemable value of $1,000 initial investment at the end of the period after
deducting the CDSC **
P = an initial investment of $1,000
* The average annual total return not including the CDSC is calculated based on the ending investment value
before deducting the CDSC.
** The cumulative total return not including the CDSC is calculated based on the ending investment value before
deducting the CDSC.
</TABLE>
<PAGE>
<TABLE>
INVESTMENT PERFORMANCE -- EV MARATHON GROWTH FUND
The table below indicates the total return (capital changes plus reinvestment of all distributions) on a hypothetical investment of
$1,000 in the Fund covering the 1, 5, and 10 year periods ended August 31, 1996. Total return for the period prior to the
Fund's commencement of operations is for the Portfolio (or its predecessor) adjusted for the Fund's sales charge.
<CAPTION>
VALUE OF A $1,000 INVESTMENT
VALUE OF VALUE OF
INVESTMENT INVESTMENT TOTAL RETURN TOTAL RETURN
INVESTMENT INVESTMENT BEFORE CDSC AFTER CDSC BEFORE DEDUCTING CDSC AFTER DEDUCTING CDSC
PERIOD DATE ON 08/31/96 ON 08/31/96 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
<S> <C> <C> <C> <C> <C> <C> <C>
10 YEARS ENDED
08/31/96 08/31/86 $2,631.94 $2,631.94 163.19% 10.16% 163.19% 10.16%
5 YEARS ENDED
08/31/96 08/31/91 $1,519.56 $1,499.56 51.96% 8.73% 51.96% 8.73%
1 YEAR ENDED
08/31/96 08/31/95 $1,147.52 $1,097.52 14.75% 14.75% 14.75% 14.75%
Average annual total return is calculated using the following formula:
n
P(1+T) = ERV
where P = an initial investment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of $1,000 initial investment at the end of the period after
deducting the CDSC *
Cumulative total return is calculated using the following formula:
T = ( ERV / P ) - 1
where T = cumulative total return including the maximum sales charge
ERV = ending redeemable value of $1,000 initial investment at the end of the period after
deducting the CDSC **
P = an initial investment of $1,000
* The average annual total return not including the CDSC is calculated based on the ending investment value
before deducting the CDSC.
** The cumulative total return not including the CDSC is calculated based on the ending investment value before
deducting the CDSC.
</TABLE>
<PAGE>
<TABLE>
INVESTMENT PERFORMANCE -- EV TRADITIONAL GROWTH FUND
The table below indicates the total return (capital changes plus reinvestment of all distributions) on a hypothetical investment of
$1,000 in the Fund covering the 1, 5, and 10 year periods ended August 31, 1996.
<CAPTION>
VALUE OF A $1,000 INVESTMENT
VALUE OF VALUE OF TOTAL RETURN TOTAL RETURN
INVESTMENT INVESTMENT INITIAL INVESTMENT EXCLUDING SALES CHARGE INCLUDING SALES CHARGE
PERIOD DATE INVESTMENT* ON 08/31/96 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
<S> <C> <C> <C> <C> <C> <C> <C>
10 YEARS ENDED
08/31/96 08/31/86 $951.99 $2,532.72 166.04% 10.28% 153.27% 9.74%
5 YEARS ENDED
08/31/96 08/31/91 $952.65 $1,463.29 53.60% 8.96% 46.33% 7.91%
1 YEAR ENDED
08/31/96 08/31/95 $952.00 $1,098.36 15.38% 15.38% 9.84% 9.84%
Average annual total return is calculated using the following formula:
n
P(1+T) = ERV
where P = an initial investment of $1,000 **
T = average annual total return
n = number of years
ERV = ending redeemable value of $1,000 initial investment at the end of the period
Cumulative total return is calculated using the following formula:
T = ( ERV / P ) - 1
where T = cumulative total return including the maximum sales charge
ERV = ending redeemable value of $1,000 initial investment at the end of the period
P = an initial investment of $1,000 ***
* Initial investment less the current maximum sales charge of 4.75%.
** The average annual total return including the sales charge is calculated based on an initial investment of $1,000 less the
maximum initial sales charge of 4.75%.
*** The cumulative total return including the sales charge is calculated based on an initial investment of $1,000 less
maximum initial sales charge of 4.75%.
</TABLE>
<PAGE>
Exhibit 17(c)
POWER OF ATTORNEY
We, the undersigned officers and Trustees of Information Age Portfolio,
a New York trust, do hereby severally constitute and appoint H. Day Brigham,
Jr., James B. Hawkes and M. Dozier Gardner, or any of them, to be true,
sufficient and lawful attorneys, or attorney for each of us, to sign for each of
us, in the name of each of us in the capacities indicated below, any and all
amendments (including post-effective amendments) to the Registration Statement
on Form N-1A filed by Eaton Vance Growth Trust with the Securities and Exchange
Commission in respect of shares of beneficial interest and other documents and
papers relating thereto.
IN WITNESS WHEREOF we have hereunto set our hands on the dates set
opposite our respective signatures.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
President, Principal
Executive Officer
/s/ James B. Hawkes and Trustee June 24, 1996
- ---------------------------------------------
James B. Hawkes
Treasurer and Principal
Financial and
Accounting Officer
/s/ James L. O'Connor and Trustee June 24, 1996
- ---------------------------------------------
James L. O'Connor
/s/ Edward K.Y. Chen Trustee June 24, 1996
- ---------------------------------------------
Edward K.Y. Chen
/s/ Donald R. Dwight Trustee June 24, 1996
- ---------------------------------------------
Donald R. Dwight
/s/ Robert Lloyd George Trustee June 24, 1996
- ---------------------------------------------
Robert Lloyd George
/s/ Samuel L. Hayes, III Trustee June 24, 1996
- ---------------------------------------------
Samuel L. Hayes, III
/s/ Norton H. Reamer Trustee June 24, 1996
- ---------------------------------------------
Norton H. Reamer
/s/ John L. Thorndike Trustee June 24, 1996
- ---------------------------------------------
John L. Thorndike
/s/ Jack L. Treynor Trustee June 24, 1996
- ---------------------------------------------
Jack L. Treynor
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000102816
<NAME> EATON VANCE GROWTH TRUST
<SERIES>
<NUMBER> 7
<NAME> EV MARATHON GOLD & NATURAL RESOURCES FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
<INVESTMENTS-AT-COST> 15,058,926
<INVESTMENTS-AT-VALUE> 19,924,076
<RECEIVABLES> 958,544
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 465
<TOTAL-ASSETS> 20,883,085
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 754,303
<TOTAL-LIABILITIES> 754,303
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 12,228,865
<SHARES-COMMON-STOCK> 932,892
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3,034,767
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4,865,150
<NET-ASSETS> 20,128,782
<DIVIDEND-INCOME> 123,116
<INTEREST-INCOME> 11,692
<OTHER-INCOME> 0
<EXPENSES-NET> 378,270
<NET-INVESTMENT-INCOME> (243,462)
<REALIZED-GAINS-CURRENT> 3,284,714
<APPREC-INCREASE-CURRENT> 2,237,334
<NET-CHANGE-FROM-OPS> 5,278,586
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 821,177
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 409,901
<NUMBER-OF-SHARES-REDEEMED> 448,638
<SHARES-REINVESTED> 42,310
<NET-CHANGE-IN-ASSETS> 412,640
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 114,803
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 380,943
<AVERAGE-NET-ASSETS> 15,324,574
<PER-SHARE-NAV-BEGIN> 16.42
<PER-SHARE-NII> (0.261)
<PER-SHARE-GAIN-APPREC> 6.371
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0.950
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 21.58
<EXPENSE-RATIO> 3.90
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000102816
<NAME> EATON VANCE GROWTH TRUST
<SERIES>
<NUMBER> 4
<NAME> EV CLASSIC GREATER CHINA GROWTH FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
<INVESTMENTS-AT-COST> 17,115,339
<INVESTMENTS-AT-VALUE> 18,800,618
<RECEIVABLES> 57,588
<ASSETS-OTHER> 23,360
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 18,881,566
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 79,172
<TOTAL-LIABILITIES> 79,172
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 21,069,525
<SHARES-COMMON-STOCK> 2,222,320
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> (384,264)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (3,568,146)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,685,279
<NET-ASSETS> 18,802,394
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 191,113
<EXPENSES-NET> 375,801
<NET-INVESTMENT-INCOME> (184,688)
<REALIZED-GAINS-CURRENT> (215,241)
<APPREC-INCREASE-CURRENT> 1,317,029
<NET-CHANGE-FROM-OPS> 917,100
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,541,301
<NUMBER-OF-SHARES-REDEEMED> 1,930,989
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (2,405,252)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 375,801
<AVERAGE-NET-ASSETS> 20,341,077
<PER-SHARE-NAV-BEGIN> 8.12
<PER-SHARE-NII> (0.092)
<PER-SHARE-GAIN-APPREC> 0.432
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.46
<EXPENSE-RATIO> 3.03
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000102816
<NAME> EATON VANCE GROWTH TRUST
<SERIES>
<NUMBER> 3
<NAME> EV MARATHON GREATER CHINA GROWTH FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
<INVESTMENTS-AT-COST> 248,197,179
<INVESTMENTS-AT-VALUE> 285,050,107
<RECEIVABLES> 61,250
<ASSETS-OTHER> 17,355
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 285,128,712
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 554,016
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 279,616,783
<SHARES-COMMON-STOCK> 22,863,196
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> (5,128,545)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (26,766,470)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 36,852,928
<NET-ASSETS> 284,574,696
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 2,933,791
<EXPENSES-NET> 4,525,043
<NET-INVESTMENT-INCOME> (1,591,252)
<REALIZED-GAINS-CURRENT> 3,565,445
<APPREC-INCREASE-CURRENT> 13,290,138
<NET-CHANGE-FROM-OPS> 15,264,331
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7,688,643
<NUMBER-OF-SHARES-REDEEMED> 12,102,374
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (39,683,075)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4,525,043
<AVERAGE-NET-ASSETS> 312,749,266
<PER-SHARE-NAV-BEGIN> 11.89
<PER-SHARE-NII> (0.087)
<PER-SHARE-GAIN-APPREC> 0.647
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.45
<EXPENSE-RATIO> 2.63
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000102816
<NAME> EATON VANCE GROWTH TRUST
<SERIES>
<NUMBER> 2
<NAME> EV TRADITIONAL GREATER CHINA GROWTH FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
<INVESTMENTS-AT-COST> 170,916,288
<INVESTMENTS-AT-VALUE> 205,911,258
<RECEIVABLES> 53,589
<ASSETS-OTHER> 31,491
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 205,996,338
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 520,085
<TOTAL-LIABILITIES> 520,085
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 166,872,828
<SHARES-COMMON-STOCK> 13,719,654
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> (3,108,822)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 6,717,277
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 34,994,970
<NET-ASSETS> 205,476,253
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 2,172,212
<EXPENSES-NET> 2,225,442
<NET-INVESTMENT-INCOME> (53,230)
<REALIZED-GAINS-CURRENT> 10,430,806
<APPREC-INCREASE-CURRENT> 2,011,547
<NET-CHANGE-FROM-OPS> 12,389,123
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,678,332
<NUMBER-OF-SHARES-REDEEMED> 5,022,518
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (37,424,280)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,225,442
<AVERAGE-NET-ASSETS> 230,690,327
<PER-SHARE-NAV-BEGIN> 14.23
<PER-SHARE-NII> (0.040)
<PER-SHARE-GAIN-APPREC> 0.790
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.98
<EXPENSE-RATIO> 2.15
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000892885
<NAME> GREATER CHINA GROWTH PORTFOLIO
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
<INVESTMENTS-AT-COST> 425,476,900
<INVESTMENTS-AT-VALUE> 499,084,843
<RECEIVABLES> 1,642,814
<ASSETS-OTHER> 34,515
<OTHER-ITEMS-ASSETS> 10,782,146
<TOTAL-ASSETS> 511,544,318
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,246,759
<TOTAL-LIABILITIES> 1,246,759
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 436,707,543
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 73,590,016
<NET-ASSETS> 510,297,559
<DIVIDEND-INCOME> 11,539,535
<INTEREST-INCOME> 116,558
<OTHER-INCOME> 0
<EXPENSES-NET> 6,354,568
<NET-INVESTMENT-INCOME> 5,301,525
<REALIZED-GAINS-CURRENT> 13,787,497
<APPREC-INCREASE-CURRENT> 16,641,291
<NET-CHANGE-FROM-OPS> 35,730,313
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (80,119,499)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4,211,398
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 6,701,436
<AVERAGE-NET-ASSETS> 565,512,902
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 1.19
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000102816
<NAME> EATON VANCE GROWTH TRUST
<SERIES>
<NUMBER> 5
<NAME> EV CLASSIC GROWTH FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 932,570
<RECEIVABLES> 45,150
<ASSETS-OTHER> 28,147
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,005,867
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 38,167
<TOTAL-LIABILITIES> 38,167
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 768,211
<SHARES-COMMON-STOCK> 77,517
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 45,163
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 154,326
<NET-ASSETS> 967,700
<DIVIDEND-INCOME> 10,118
<INTEREST-INCOME> 1,793
<OTHER-INCOME> (6,041)
<EXPENSES-NET> 24,549
<NET-INVESTMENT-INCOME> (18,679)
<REALIZED-GAINS-CURRENT> 79,134
<APPREC-INCREASE-CURRENT> 28,593
<NET-CHANGE-FROM-OPS> 89,048
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 32,944
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 60,508
<NUMBER-OF-SHARES-REDEEMED> 36,725
<SHARES-REINVESTED> 2,294
<NET-CHANGE-IN-ASSETS> 367,001
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 69,637
<AVERAGE-NET-ASSETS> 870,504
<PER-SHARE-NAV-BEGIN> 11.68
<PER-SHARE-NII> (0.241)
<PER-SHARE-GAIN-APPREC> 1.551
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.510)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.48
<EXPENSE-RATIO> 3.51
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000102816
<NAME> EATON VANCE GROWTH TRUST
<SERIES>
<NUMBER> 6
<NAME> EV MARATHON GROWTH FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 7,455,919
<RECEIVABLES> 84,353
<ASSETS-OTHER> 22,151
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 7,562,423
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 53,231
<TOTAL-LIABILITIES> 53,231
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 6,841,117
<SHARES-COMMON-STOCK> 563,920
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 149,580
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 518,495
<NET-ASSETS> 7,509,192
<DIVIDEND-INCOME> 58,148
<INTEREST-INCOME> 10,076
<OTHER-INCOME> (34,709)
<EXPENSES-NET> 39,389
<NET-INVESTMENT-INCOME> (5,874)
<REALIZED-GAINS-CURRENT> 133,650
<APPREC-INCREASE-CURRENT> 323,262
<NET-CHANGE-FROM-OPS> 451,038
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 21,890
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 651,594
<NUMBER-OF-SHARES-REDEEMED> 281,036
<SHARES-REINVESTED> 1,676
<NET-CHANGE-IN-ASSETS> 5,269,532
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 104,794
<AVERAGE-NET-ASSETS> 4,862,172
<PER-SHARE-NAV-BEGIN> 11.68
<PER-SHARE-NII> (0.010)
<PER-SHARE-GAIN-APPREC> 1.725
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.075)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.32
<EXPENSE-RATIO> 1.52
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000102816
<NAME> EATON VANCE GROWTH TRUST
<SERIES>
<NUMBER> 1
<NAME> EV TRADITIONAL GROWTH FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 138,343,401
<RECEIVABLES> 13,560
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 138,356,961
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 105,126
<TOTAL-LIABILITIES> 105,126
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 96,744,362
<SHARES-COMMON-STOCK> 14,958,024
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 260,273
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 11,513,207
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 29,733,993
<NET-ASSETS> 138,251,835
<DIVIDEND-INCOME> 1,697,549
<INTEREST-INCOME> 302,137
<OTHER-INCOME> (992,849)
<EXPENSES-NET> 351,118
<NET-INVESTMENT-INCOME> 655,719
<REALIZED-GAINS-CURRENT> 14,862,253
<APPREC-INCREASE-CURRENT> 4,038,278
<NET-CHANGE-FROM-OPS> 19,556,250
<EQUALIZATION> 0
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
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<NAME> GROWTH PORTFOLIO
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<PAGE>
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<NAME> EATON VANCE GROWTH TRUST
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<NUMBER> 10
<NAME> EV CLASSIC INFORMATION AGE FUND
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<NAME> EATON VANCE GROWTH TRUST
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<NAME> EV MARATHON INFORMATION AGE FUND
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<TABLE> <S> <C>
<PAGE>
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<NAME> EATON VANCE GROWTH TRUST
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<NUMBER> 9
<NAME> EV TRADITIONAL INFORMATION AGE FUND
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
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<CIK> 0000946464
<NAME> INFORMATION AGE PORTFOLIO
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<TABLE> <S> <C>
<PAGE>
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<SERIES>
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<NAME> EV MARATHON ASIAN SMALL COMPANIES FUND
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<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 11
<NAME> EV TRADITIONAL ASIAN SMALL COMPANIES FUND
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