<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 27, 1997
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. 67 [X]
AND
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 40 [X]
EATON VANCE GROWTH TRUST
-------------------------------------------
(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):
[ ] immediately upon filing [ ] on (date) pursuant
pursuant to paragraph (b) to paragraph (a)(1)
[X] on April 1, 1997 [ ] 75 days after filing
pursuant to paragraph (b) pursuant to paragraph (a)(2)
[ ] 60 days after filing [ ] on (date) pursuant
pursuant to paragraph (a)(1) to paragraph (a)(2).
If appropriate, check the following box:
[ ] this post effective amendment designates a new effective
date for a previously filed post-effective amendment.
Worldwide Developing Resources Portfolio and Worldwide Health
Sciences Portfolio have also executed this Registration
Statement.
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 Worldwide Developing Resources Fund
EV Traditional Worldwide Developing Resources Fund
EV Marathon Worldwide Health Sciences Fund
Part B -- The Statements of Additional Information of:
EV Marathon Worldwide Developing Resources Fund
EV Traditional Worldwide Developing Resources Fund
EV Marathon Worldwide Health Sciences 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 WORLDWIDE DEVELOPING RESOURCES FUND
EV TRADITIONAL WORLDWIDE DEVELOPING 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 (for Marathon Fund
only)
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 Marathon Fund); 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
</TABLE>
<TABLE>
<CAPTION>
PART B
ITEM NO. ITEM CAPTION STATEMENT OF ADDITIONAL INFORMATION CAPTION
- ------ ------------ -------------------------------------------------------
<S> <C> <C>
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 (for Marathon Fund); Service Plan (for
Traditional Fund); Custodian; 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 (for Marathon Fund); 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 MARATHON WORLDWIDE HEALTH SCIENCES 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; Performance
Information
4. .............. General Description of Registrant The Fund's Investment Objective; Health Science
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
</TABLE>
<TABLE>
<CAPTION>
PART B
ITEM NO. ITEM CAPTION STATEMENT OF ADDITIONAL INFORMATION CAPTION
- ------ ------------ -------------------------------------------------------
<S> <C> <C>
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; 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>
PART A
INFORMATION REQUIRED IN A PROSPECTUS
EV MARATHON
WORLDWIDE DEVELOPING RESOURCES FUND
- --------------------------------------------------------------------------------
EV MARATHON WORLDWIDE DEVELOPING RESOURCES FUND (THE "FUND") IS A MUTUAL FUND
SEEKING CAPITAL APPRECIATION AND PROTECTION OF PURCHASING POWER THROUGH NATURAL
RESOURCE RELATED INVESTMENTS. THE FUND INVESTS ITS ASSETS IN WORLDWIDE
DEVELOPING RESOURCES PORTFOLIO (THE "PORTFOLIO"), A NON-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 April 1, 1997 for the Fund, as supplemented from
time to time, has been filed with the Securities and Exchange Commission (the
"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 ............................. 11
The Fund's Financial Highlights .............. 3 How to Redeem Fund Shares .......................... 12
The Fund's Investment Objective .............. 4 Reports to Shareholders ............................ 14
Investment Policies and Risks ................ 4 The Lifetime Investing Account/Distribution Options 14
Organization of the Fund and the Portfolio ... 7 The Eaton Vance Exchange Privilege ................. 15
Management of the Fund and the Portfolio ..... 9 Eaton Vance Shareholder Services ................... 16
Distribution Plan ............................ 10 Distributions and Taxes ............................ 16
Valuing Fund Shares .......................... 11 Performance Information ............................ 17
- -------------------------------------------------------------------------------------------------------------
</TABLE>
PROSPECTUS DATED APRIL 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%
<CAPTION>
ANNUAL FUND AND ALLOCATED PORTFOLIO OPERATING EXPENSES (as a percentage of average daily net assets)
- -------------------------------------------------------------------------------------------------------
<S> <C>
Investment Adviser Fee 0.75%
Rule 12b-1 Distribution (and Service) Fees 0.91%
Other Expenses 0.67%
----
Total Operating Expenses 2.33%
====
<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: $74 $113 $145 $267
An investor would pay the following expenses on the same
investment, assuming (a) 5% annual return and (b) no
redemptions: $24 $ 73 $125 $267
</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 fees and
expenses included in the table and Example are an estimate based on the Fund's
and the Portfolio's projected fees for the fiscal year ending August 31, 1997,
and reflect the Fund's current policy of investing its assets in the Portfolio.
The Example should not be considered a representation of past or future expenses
and actual expenses may be greater or less than those shown. Federal regulations
require the Example to assume a 5% annual return, but actual annual 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 shares of one or more other funds listed under "The Eaton Vance
Exchange Privilege".
As of the close of business on March 31, 1997, the Fund transferred its assets
to the Portfolio in exchange for an interest in the Portfolio. Prior to such
date, the Fund retained Eaton Vance as its investment adviser. 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 that appear in the Fund's annual report to shareholders.
The Fund's financial statements have been audited by Deloitte & Touche LLP,
independent certified public accountants, as experts in accounting and
auditing. The Fund's financial statements and the independent auditors' report
are incorporated by reference into the Statement of Additional Information.
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.
Note: During each of the fiscal years shown above the Fund invested directly in securities. As of the close of business on March
31, 1997, the Fund transferred its assets to the Portfolio in exchange for an interest in the Portfolio (unaudited).
</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 currently seeks to meet
its investment objective by investing its assets in the Worldwide Developing
Resources Portfolio, a separate registered investment company, which has the
same investment objective as the Fund. The Portfolio will concentrate its assets
in natural resource related investments. There can be no assurance that the Fund
will achieve its investment objective.
The Portfolio will be subject to the volatile markets in which natural resource
investments are traded. Numerous worldwide economic, financial and political
factors can affect the Portfolio'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 and the Portfolio are the same and may be changed by 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 seeks to achieve its investment objective by investing in domestic
and foreign natural resource related investments. Under normal investment
conditions, the Portfolio will invest primarily in common stocks, but it may
also hold convertible bonds, convertible preferred stocks, warrants, preferred
stocks and debt securities if the Investment Adviser believes such investments
would help to achieve the Portfolio's investment objective. The Portfolio 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 Portfolio 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
Portfolio, the Investment Adviser 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 Portfolio 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, such as during abnormal market or economic
conditions, the Portfolio 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 Portfolio 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 Portfolio 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. The Investment Adviser 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 the Investment Adviser'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.
The Investment Adviser 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. The Investment Adviser 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.
The Investment Adviser's flexible investment approach enables it to change the
Portfolio's investment emphasis to various subsectors within the large natural
resource investment sector depending upon the Investment Adviser'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, the
Investment Adviser will consider, among other investments, domestic and foreign
companies which may
o EXPLORE FOR, FINANCE, DEVELOP, PRODUCE OR HOLD PRECIOUS METALS. The
Investment Adviser 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.
o EXPLORE FOR, FINANCE, DEVELOP OR PRODUCE ENERGY RESOURCES. In this
subsector, the Investment Adviser 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.
o EXPLORE FOR, FINANCE, DEVELOP, PRODUCE OR HOLD STRATEGIC METALS.
o CREATE AND DEVELOP NEW GEOCHEMICAL TECHNOLOGY OR PROPRIETARY METHODS FOR
DETECTING, DEVELOPING, PRODUCING OR PROCESSING MINERAL DEPOSITS AND OTHER
NATURAL RESOURCES.
o 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.
o PROVIDE NATURAL RESOURCE TRANSPORTATION, DISTRIBUTION AND PROCESSING
SERVICES, SUCH AS PIPELINES AND REFINING.
DIRECT PLACEMENT SECURITIES, VENTURE CAPITAL INVESTMENTS AND SMALLER COMPANIES.
The Portfolio may make natural resource related investments in "direct placement
securities" issued by a company directly to the Portfolio. The Portfolio 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 Portfolio's direct placement securities and venture
capital investments are considered speculative in nature and are not readily
marketable. The Portfolio'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 Portfolio may invest up to 15% of its net assets in illiquid securities.
Illiquid securities include securities legally restricted as to resale such as
commercial paper issued pursuant to Section 4(2) of the Securities Act of 1933
and securities eligible for resale pursuant to Rule 144A thereunder. Section 4
(2) and Rule 144A securities may, however, be treated as liquid by the
Investment Adviser pursuant to procedures adopted by the Trustees of the
Portfolio, which require consideration of factors such as trading activity,
availability of market quotations and number of dealers willing to purchase the
security. Such securities may increase the level of Portfolio illiquidity to the
extent qualified institutional buyers become uninterested in purchasing such
securities.
METALS INVESTMENTS. The Portfolio may invest up to 10% of its portfolio in gold
or silver bullion, strategic metals, and gold or silver coins. The Portfolio
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. Economic, social and political developments
within South Africa, Russia and China, including civil unrest, may significantly
affect gold production and values.
WHEN THE INVESTMENT ADVISER ANTICIPATES SIGNIFICANT ECONOMIC OR POLITICAL
INSTABILITY, SUCH AS HIGH INFLATION OR TURMOIL IN THE FOREIGN CURRENCY EXCHANGE
MARKETS, THE PORTFOLIO, 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 Portfolio 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 Portfolio 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. Therefore, the Portfolio could be
adversely affected by a single economic, political or regulatory occurrence or
other development affecting this investment sector. As the Portfolio's
concentration increases, so does the potential for fluctuation in the value of
the Fund's shares. The value of the Fund's shares 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 Portfolio 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
Portfolio 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 Portfolio may not invest more than 5% of its total assets in
the securities of any one issuer (except U.S. Government securities). Thus, the
Portfolio 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
Portfolio. To mitigate this risk, the Portfolio has adopted an investment 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 Portfolio may borrow money to invest in additional
portfolio securities. This practice, known as "leverage," increases the
Portfolio's market exposure and its risk. The interest the Portfolio must pay on
borrowed money will reduce the amount of any potential gains or increase any
losses. The extent to which the Portfolio will borrow money, and the amount it
may borrow, depend on market conditions and interest rates. Successful use of
leverage depends on the Investment Adviser's ability to predict market movements
correctly. The Portfolio may at times borrow money by means of reverse
repurchase agreements. Reverse repurchase agreements generally involve the sale
by the Portfolio 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 Portfolio's overall investment exposure
and may result in losses. The amount of money borrowed by the Portfolio for
leverage may generally not exceed one-third of the Portfolio's assets (including
the amount borrowed).
FOREIGN INVESTMENTS. Under normal market conditions, the Portfolio will hold
securities of issuers in at least three countries. 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 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, 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 Portfolio 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 Portfolio is not limited in the percentage of assets it may
invest in such securities. The relative risk and cost of investing in the
securities of companies in such emerging economies may be higher than an
investment in securities of companies in more developed countries. As of March
15, 1997 (prior to the Fund's investment in the Portfolio), more than 57% of the
Fund's assets were comprised of foreign securities.
DERIVATIVE INSTRUMENTS. From time to time, 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 or commodity prices, interest rates or
currency exchange rates, or as a substitute for the purchase or sale of
securities, commodities or currency. The Portfolio'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 Portfolio'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 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
Investment 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 is not for bona fide hedging purposes (as defined by the CFTC), the
aggregate initial margin and premiums required to establish the position
(excluding the amount by which options are "in-the-money") may not exceed 5% of
the market 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 Investment 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
Fund'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.
CERTAIN INVESTMENT RESTRICTIONS AND POLICIES. The Fund and the Portfolio have
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 and an investor vote, respectively. Such
Statement also contains nonfundamental investment policies; for example, 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 may also invest in other registered investment companies in the Eaton
Vance group of funds in addition to or in lieu of the Portfolio, if such other
funds invest in securities that the Fund can invest in and the Trustees of the
Trust determine it is in the best interests of the Fund to do so. Any other
registered investment company in which the Fund invests is likely to be
organized and to operate in the manner described under "Organization of the Fund
and the Portfolio".
ORGANIZATION OF THE FUND AND THE PORTFOLIO
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THE FUND IS A NON-DIVERSIFIED SERIES OF EATON VANCE GROWTH TRUST, A BUSINESS
TRUST ESTABLISHED UNDER MASSACHUSETTS LAW PURSUANT TO A DECLARATION OF TRUST
DATED MAY 25, 1989, AS AMENDED. THE TRUST IS A MUTUAL FUND -- AN OPEN-END
INVESTMENT MANAGEMENT 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". There are no annual meetings of shareholders,
but special meetings may be held as required by law to elect Trustees and
consider other matters. 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 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, the 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 (or the assets of another
investor in the Portfolio) 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 will receive a monthly
advisory fee of .0625% (equivalent to .75 of 1% annually) of the average daily
net assets of the Portfolio up to $500 million; the fee will be reduced at
various asset levels over $500 million. Prior to March 31, 1997 (when the Fund
transferred its assets to the Portfolio in exchange for an interest in the
Portfolio), the Fund retained Eaton Vance as its investment adviser. 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.
BMR OR EATON VANCE ACTS AS INVESTMENT ADVISER TO INVESTMENT COMPANIES AND
VARIOUS INDIVIDUAL AND INSTITUTIONAL CLIENTS WITH ASSETS UNDER MANAGEMENT OF
OVER $17 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.
William D. Burt and Barclay Tittmann are the co-portfolio managers of the
Portfolio since inception. Mr. Burt joined Eaton Vance and BMR 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 and BMR 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.
BMR places the portfolio transactions of the Portfolio 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 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 the Portfolio) for their own accounts, subject to certain pre-clearance,
reporting and other restrictions and procedures contained in such Codes.
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. Such costs and expenses to be borne by 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 BMR or Eaton Vance; and investment advisory fees, and, if any,
administrative services 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.
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.
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 for such year. As
at August 31, 1996, the outstanding Uncovered Distribution Charges of the
Principal Underwriter calculated under the Plan amounted to approximately
$449,702 (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 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 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 under the Plan 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 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 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) 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,
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 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 Worldwide Developing Resources Fund
IN THE CASE OF PHYSICAL DELIVERY:
Investors Bank & Trust Company
Attention: EV Marathon Worldwide Developing 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
- --------------------------------------------------------------------------------
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 Commission regulation 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 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 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 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 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
- --------------------------------------------------------------------------------
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 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 Authorized Firm 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 Authorized Firm, or transferring the account to another
Authorized Firm, an investor wishing to reinvest distributions should determine
whether the Authorized 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 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, Class I shares of any EV Marathon
Limited Maturity Fund and Eaton Vance Prime Rate Reserves), see "How to Redeem
Fund Shares". The CDSC or early withdrawal charge schedule applicable to EV
Marathon Strategic Income Fund, Class I shares of any EV Marathon Limited
Maturity Fund and Eaton Vance Prime Rate Reserves 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 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 Worldwide Developing 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 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 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 the
net investment income allocated to the Fund by the Portfolio (less the Fund's
direct and allocated expenses) and (b) at least one distribution (normally in
December) of all or substantially all of the net capital gains and net gains
from foreign currency transactions (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 at net
asset value per share as of the close of business on the record date.
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. A
portion of distributions from the Fund's net investment income may qualify for
the dividends-received deduction for corporate shareholders.
Distributions by the Fund of net long-term capital gains allocated to the Fund
by the Portfolio are taxable to shareholders as long-term capital gains, whether
paid in cash or additional shares of the Fund 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. Certain distributions declared by the Fund in
October, November or December and paid the following January will be taxable to
shareholders as if received on December 31 of the year in which they are
declared.
The Fund intends to continue 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
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 and foreign currency 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.
Shareholders will receive annually 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 Transfer Agent.
Shareholders should consult with their tax advisers 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 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 any sales charge
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.
* If a portion of the Fund's expenses had not been subsidized, the Fund would
have had lower returns.
<PAGE>
[logo]
EATON VANCE
- -----------------
Mutual Funds
EV MARATHON WORLDWIDE
DEVELOPING RESOURCES FUND
PROSPECTUS
APRIL 1, 1997
EV MARATHON WORLDWIDE
DEVELOPING RESOURCES FUND
24 FEDERAL STREET
BOSTON, MA 02110
- --------------------------------------------------------------------------------
INVESTMENT ADVISER OF WORLDWIDE DEVELOPING RESOURCES PORTFOLIO
Boston Management and Research, 24 Federal Street, Boston, MA 02110
ADMINISTRATOR OF EV MARATHON WORLDWIDE DEVELOPING RESOURCES 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
AUDITORS
Deloitte & Touche, LLP, 125 Summer Street, Boston, MA 02110
M-DRP
<PAGE>
PART A
INFORMATION REQUIRED IN A PROSPECTUS
EV TRADITIONAL
WORLDWIDE DEVELOPING RESOURCES FUND
- --------------------------------------------------------------------------------
EV TRADITIONAL WORLDWIDE DEVELOPING RESOURCES FUND (THE "FUND") IS A MUTUAL FUND
SEEKING CAPITAL APPRECIATION AND PROTECTION OF PURCHASING POWER THROUGH NATURAL
RESOURCE RELATED INVESTMENTS. THE FUND INVESTS ITS ASSETS IN WORLDWIDE
DEVELOPING RESOURCES PORTFOLIO (THE "PORTFOLIO"), A NON-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 April 1, 1997 for the Fund, as supplemented from
time to time, has been filed with the Securities and Exchange Commission (the
"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>
- ------------------------------------------------------------------------------------------------------------
PAGE PAGE
<S> <C> <C> <C>
Shareholder and Fund Expenses ................ 2 How to Redeem Fund Shares ......................... 12
The Fund's Investment Objective .............. 3 Reports to Shareholders ........................... 13
Investment Policies and Risks ................ 3 The Lifetime Investing Account/Distribution Options 13
Organization of the Fund and the Portfolio ... 6 The Eaton Vance Exchange Privilege ................ 14
Management of the Fund and the Portfolio ..... 8 Eaton Vance Shareholder Services .................. 15
Service Plan ................................ 9 Distributions and Taxes ........................... 16
Valuing Fund Shares ......................... 9 Performance Information ........................... 17
How to Buy Fund Shares ....................... 9
- ------------------------------------------------------------------------------------------------------------
</TABLE>
PROSPECTUS DATED APRIL 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
<CAPTION>
ANNUAL FUND AND ALLOCATED PORTFOLIO OPERATING EXPENSES (as a percentage of average daily net assets)
- ---------------------------------------------------------------------------------------------------------
<S> <C>
Investment Adviser Fee 0.75%
Other Expenses (including Service Plan Fees) 0.82%
----
Total Operating Expenses 1.57%
====
<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: $63 $95
</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. Other expenses
are estimated for the current fiscal year because the Fund has only recently
organized.
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 both the Fund and the
Portfolio, see "Management of the Fund and the Portfolio" and "Service 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".
For shares sold by Authorized Firms and remaining outstanding for at least one
year, the Fund will pay service fees not exceeding .25% per annum of its average
daily net assets. The Fund expects to begin making service fee payments during
the quarter ending September 30, 1998. After such date, Other Expenses will be
higher. See "Service Plan".
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 INVESTMENT OBJECTIVE
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THE FUND'S INVESTMENT OBJECTIVE IS CAPITAL APPRECIATION AND PROTECTION OF THE
PURCHASING POWER OF THE SHAREHOLDER'S CAPITAL. The Fund currently seeks to meet
its investment objective by investing its assets in the Worldwide Developing
Resources Portfolio, a separate registered investment company, which has the
same investment objective as the Fund. The Portfolio will concentrate its assets
in natural resource related investments. There can be no assurance that the Fund
will achieve its investment objective.
The Portfolio will be subject to the volatile markets in which natural resource
investments are traded. Numerous worldwide economic, financial and political
factors can affect the Portfolio'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 and the Portfolio are the same and may be changed by 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
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The Portfolio seeks to achieve its investment objective by investing in domestic
and foreign natural resource related investments. Under normal investment
conditions, the Portfolio will invest primarily in common stocks, but it may
also hold convertible bonds, convertible preferred stocks, warrants, preferred
stocks and debt securities if the Investment Adviser believes such investments
would help to achieve the Portfolio's investment objective. The Portfolio 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 Portfolio 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
Portfolio, the Investment Adviser 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 Portfolio 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, such as during abnormal market or economic
conditions, the Portfolio 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 Portfolio 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 Portfolio 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. The Investment Adviser 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 the Investment Adviser'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.
The Investment Adviser 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. The Investment Adviser 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.
The Investment Adviser's flexible investment approach enables it to change the
Portfolio's investment emphasis to various subsectors within the large natural
resource investment sector depending upon the Investment Adviser'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, the
Investment Adviser will consider, among other investments, domestic and foreign
companies which may
o EXPLORE FOR, FINANCE, DEVELOP, PRODUCE OR HOLD PRECIOUS METALS. The
Investment Adviser 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.
o EXPLORE FOR, FINANCE, DEVELOP OR PRODUCE ENERGY RESOURCES. In this
subsector, the Investment Adviser 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.
o EXPLORE FOR, FINANCE, DEVELOP, PRODUCE OR HOLD STRATEGIC METALS.
o CREATE AND DEVELOP NEW GEOCHEMICAL TECHNOLOGY OR PROPRIETARY METHODS FOR
DETECTING, DEVELOPING, PRODUCING OR PROCESSING MINERAL DEPOSITS AND
OTHER NATURAL RESOURCES.
o 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.
o PROVIDE NATURAL RESOURCE TRANSPORTATION, DISTRIBUTION AND PROCESSING
SERVICES, SUCH AS PIPELINES AND REFINING.
DIRECT PLACEMENT SECURITIES, VENTURE CAPITAL INVESTMENTS AND SMALLER COMPANIES.
The Portfolio may make natural resource related investments in "direct placement
securities" issued by a company directly to the Portfolio. The Portfolio 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 Portfolio's direct placement securities and venture
capital investments are considered speculative in nature and are not readily
marketable. The Portfolio'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 Portfolio may invest up to 15% of its net assets in illiquid securities.
Illiquid securities include securities legally restricted as to resale such as
commercial paper issued pursuant to Section 4(2) of the Securities Act of 1933
and securities eligible for resale pursuant to Rule 144A thereunder. Section 4
(2) and Rule 144A securities may, however, be treated as liquid by the
Investment Adviser pursuant to procedures adopted by the Trustees of the
Portfolio, which require consideration of factors such as trading activity,
availability of market quotations and number of dealers willing to purchase the
security. Such securities may increase the level of Portfolio illiquidity to the
extent qualified institutional buyers become uninterested in purchasing such
securities.
METALS INVESTMENTS. The Portfolio may invest up to 10% of its portfolio in gold
or silver bullion, strategic metals, and gold or silver coins. The Portfolio
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. Economic, social and political developments
within South Africa, Russia and China, including civil unrest, may significantly
affect gold production and values.
WHEN THE INVESTMENT ADVISER ANTICIPATES SIGNIFICANT ECONOMIC OR POLITICAL
INSTABILITY, SUCH AS HIGH INFLATION OR TURMOIL IN THE FOREIGN CURRENCY EXCHANGE
MARKETS, THE PORTFOLIO, 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 Portfolio 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 Portfolio 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. Therefore, the Portfolio could be
adversely affected by a single economic, political or regulatory occurrence or
other development affecting this investment sector. As the Portfolio's
concentration increases, so does the potential for fluctuation in the value of
the Fund's shares. The value of the Fund's shares 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 Portfolio 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
Portfolio 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 Portfolio may not invest more than 5% of its total assets in
the securities of any one issuer (except U.S. Government securities). Thus, the
Portfolio 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
Portfolio. To mitigate this risk, the Portfolio has adopted an investment 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 Portfolio may borrow money to invest in additional
portfolio securities. This practice, known as "leverage," increases the
Portfolio's market exposure and its risk. The interest the Portfolio must pay on
borrowed money will reduce the amount of any potential gains or increase any
losses. The extent to which the Portfolio will borrow money, and the amount it
may borrow, depend on market conditions and interest rates. Successful use of
leverage depends on the Investment Adviser's ability to predict market movements
correctly. The Portfolio may at times borrow money by means of reverse
repurchase agreements. Reverse repurchase agreements generally involve the sale
by the Portfolio 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 Portfolio's overall investment exposure
and may result in losses. The amount of money borrowed by the Portfolio for
leverage may generally not exceed one-third of the Portfolio's assets (including
the amount borrowed).
FOREIGN INVESTMENTS. Under normal market conditions, the Portfolio will hold
securities of issuers in at least three countries. 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 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, 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 Portfolio 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 Portfolio is not limited in the percentage of assets it may
invest in such securities. The relative risk and cost of investing in the
securities of companies in such emerging economies may be higher than an
investment in securities of companies in more developed countries. As of the
date of this Prospectus, more than 57% of the Portfolio's assets were comprised
of foreign securities.
DERIVATIVE INSTRUMENTS. From time to time, 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 or commodity prices, interest rates or
currency exchange rates, or as a substitute for the purchase or sale of
securities, commodities or currency. The Portfolio'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 Portfolio'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 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
Investment 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 is not for bona fide hedging purposes (as defined by the CFTC), the
aggregate initial margin and premiums required to establish the position
(excluding the amount by which options are "in-the-money") may not exceed 5% of
the market 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 Investment 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
Fund'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.
CERTAIN INVESTMENT RESTRICTIONS AND POLICIES. The Fund and the Portfolio have
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 and an investor vote, respectively. Such
Statement also contains nonfundamental investment policies; for example, 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 may also invest in other registered investment companies in the Eaton
Vance group of funds in addition to or in lieu of the Portfolio, if such other
funds invest in securities that the Fund can invest in and the Trustees of the
Trust determine it is in the best interests of the Fund to do so. Any other
registered investment company in which the Fund invests is likely to be
organized and to operate in the manner described under "Organization of the Fund
and the Portfolio".
ORGANIZATION OF THE FUND AND THE PORTFOLIO
- --------------------------------------------------------------------------------
THE FUND IS A NON-DIVERSIFIED SERIES OF EATON VANCE GROWTH TRUST, A BUSINESS
TRUST ESTABLISHED UNDER MASSACHUSETTS LAW PURSUANT TO A DECLARATION OF TRUST
DATED MAY 25, 1989, AS AMENDED. THE TRUST IS A MUTUAL FUND -- AN OPEN-END
INVESTMENT MANAGEMENT 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". There are no annual meetings of shareholders,
but special meetings may be held as required by law to elect Trustees and
consider other matters. 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 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, the 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 (or the assets of another
investor in the Portfolio) 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 will receive a monthly
advisory fee of .0625% (equivalent to .75 of 1% annually) of the average daily
net assets of the Portfolio up to $500 million; the fee will be reduced at
various asset levels over $500 million.
BMR OR EATON VANCE ACTS AS INVESTMENT ADVISER TO INVESTMENT COMPANIES AND
VARIOUS INDIVIDUAL AND INSTITUTIONAL CLIENTS WITH ASSETS UNDER MANAGEMENT OF
OVER $17 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.
William D. Burt and Barclay Tittmann are the co-portfolio managers of the
Portfolio since inception. Mr. Burt joined Eaton Vance and BMR 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 and BMR 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.
BMR places the portfolio transactions of the Portfolio 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 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 the Portfolio) for their own accounts, subject to certain pre-clearance,
reporting and other restrictions and procedures contained in such Codes.
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. Such costs and expenses to be borne by 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 BMR or Eaton Vance; and investment advisory fees, and, if any,
administrative services 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.
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.
SERVICE PLAN
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In addition to advisory fees and other expenses, the Fund pays service fees
pursuant to a Service Plan (the "Plan") designed to meet the service fee
requirements of the 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 initially implemented the Plan
by authorizing the Fund to make quarterly service fee payments to the Principal
Underwriter and Authorized Firms in amounts not expected to exceed .25% 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. The Fund expects to begin making service fee payments during the quarter
ending September 30, 1998.
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 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 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) 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 sale 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.
<TABLE>
The current sales charges and dealer commissions are:
<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**
*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.
**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 of $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, 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 potentially 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 Trust Co.
Broker #2212
Investors Bank & Trust Company
For A/C EV Traditional Worldwide Developing Resources Fund
IN THE CASE OF PHYSICAL DELIVERY:
Investors Bank & Trust Company
Attention: EV Traditional Worldwide Developing 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.
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 an Authorized 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, 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 Commission regulation 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 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. 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
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 the 60-day period and in accordance with
the conditions set forth under "Eaton Vance Shareholder Services -- Reinvestment
Privilege", the shareholder's account will be credited with the amount of any
CDSC paid on such redeemed shares.
REPORTS TO SHAREHOLDERS
- --------------------------------------------------------------------------------
THE FUND WILL ISSUE TO ITS SHAREHOLDERS SEMI-ANNUAL AND ANNUAL REPORTS
CONTAINING FINANCIAL STATEMENTS. Financial statements included in annual reports
are audited by the Fund's independent certified public accountants. Shortly
after the end of each calendar year, the Fund will furnish its 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
- --------------------------------------------------------------------------------
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 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 Authorized Firm 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 Authorized Firm, or transferring the account to another
Authorized Firm, an investor wishing to reinvest distributions should determine
whether the Authorized 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 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 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 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 Worldwide Developing 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.
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,
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
net investment income allocated to the Fund by the Portfolio (less the Fund's
direct and allocated expenses) and (b) at least one distribution (normally in
December) of all or substantially all of the net capital gains and net gains
from foreign currency transactions (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 at net
asset value per share as of the close of business on the record date.
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. A
portion of distributions from the Fund's net investment income may qualify for
the dividends-received deduction for corporate shareholders.
Distributions by the Fund of net long-term capital gains allocated to the Fund
by the Portfolio are taxable to shareholders as long-term capital gains, whether
paid in cash or additional shares of the Fund 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. Certain distributions declared by the Fund in
October, November or December and paid the following January will be taxable to
shareholders as if received on December 31 of the year in which they are
declared.
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 and foreign currency 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.
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 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 Transfer Agent.
Shareholders should consult with their tax advisers 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 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 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 (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 quote total return for the period prior to the 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 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. If
the expenses of the Fund 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 September 30 and does not take into account any sales charge
which investors may bear. The total return for the period prior to the Fund's
commencement of operations on April 1, 1997 reflects the total return of the
Portfolio (or that of its predecessor) which had different operating expenses.
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.
* If a portion of the predecessor fund's expenses had not been subsidized,
returns would have been lower.
<PAGE>
[logo]
EATON VANCE
-----------------
Mutual Funds
EV TRADITIONAL
WORLDWIDE DEVELOPING
RESOURCES FUND
PROSPECTUS
APRIL 1, 1997
EV TRADITIONAL WORLDWIDE
DEVELOPING RESOURCES FUND
24 FEDERAL STREET
BOSTON, MA 02110
- --------------------------------------------------------------------------------
INVESTMENT ADVISER OF WORLDWIDE DEVELOPING RESOURCES PORTFOLIO
Boston Management and Research, 24 Federal Street, Boston, MA 02110
ADMINISTRATOR OF EV TRADITIONAL WORLDWIDE DEVELOPING RESOURCES 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
AUDITORS
Deloitte & Touche LLP, 125 Summer Street, Boston, MA 02110
T-DRP
<PAGE>
PART A
INFORMATION REQUIRED IN A PROSPECTUS
EV MARATHON
WORLDWIDE HEALTH SCIENCES FUND
- --------------------------------------------------------------------------------
EV MARATHON WORLDWIDE HEALTH SCIENCES FUND (THE "FUND") IS A MUTUAL FUND
SEEKING LONG-TERM CAPITAL GROWTH BY INVESTING IN A GLOBAL AND DIVERSIFIED
PORTFOLIO OF SECURITIES OF HEALTH SCIENCE COMPANIES. THE FUND INVESTS ITS
ASSETS IN WORLDWIDE HEALTH SCIENCES 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 April 1,
1997, as supplemented from time to time, has been filed with the Securities
and Exchange Commission (the "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 adviser is Mehta
and Isaly Asset Management, Inc. ("M&I" or the "Adviser"). The principal
business address of the Adviser is 41 Madison Avenue, 40th Floor, New York, NY
10010-2202.
- ------------------------------------------------------------------------------
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
Health Science Investments ............................ 4 Reports to Shareholders ............................... 14
The Fund's Investment Objective ....................... 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 ............................... 17
Valuing Fund Shares ................................... 11 Performance Information ............................... 18
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
PROSPECTUS DATED APRIL 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 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%
<CAPTION>
ANNUAL FUND AND ALLOCATED PORTFOLIO OPERATING EXPENSES (as a percentage of average daily net assets)
- ----------------------------------------------------------------------------------------------------------
<S> <C>
Management Fees 1.37%
Rule 12b-1 Distribution (and Service) Fees 0.75
Other Expenses 0.50
----
Total Operating Expenses 2.62%
====
<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: $77 $121
An investor would pay the following expenses on the same investment,
assuming (a) 5% annual return and (b) no redemptions: $27 $ 81
</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. Expenses are
estimated for the current fiscal year. Management Fees includes estimated
management fees paid by the Fund and investment advisory and administration
fees paid by the Portfolio of 0.25%, 0.87% and 0.25%, respectively. The
advisory fee is subject to a performance adjustment after September 1, 1997.
See "Management of the Fund and the Portfolio."
The Example should not be considered a representation of past or future
expenses, and actual expenses may be greater or less than those shown. Federal
regulations require the Example to assume a 5% annual return, but actual
return will vary. For further information regarding the expenses of 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."
For shares sold by Authorized Firms and remaining outstanding for at least one
year, the Fund will pay service fees not exceeding .25% per annum of its
average daily net assets. The Fund expects to begin making service fee
payments during the quarter ending September 30, 1997. Therefore, expenses
after year one will be higher. See "Distribution Plan."
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 unaudited
financial statements included in the Statement of Additional Information.
Further information regarding the performance of the Fund will be contained in
its semi-annual report to shareholders which may be obtained without charge by
contacting the Principal Underwriter.
- ------------------------------------------------------------------------------
<TABLE>
FOR THE PERIOD FROM THE START OF BUSINESS, SEPTEMBER 23, 1996, TO FEBRUARY 28, 1997 (UNAUDITED):
<S> <C>
NET ASSET VALUE, beginning of period $10.000
-------
INCOME (LOSS) FROM OPERATIONS:
Net investment loss $(0.051)
Net realized and unrealized gain on investments 1.191
-------
Total income from operations $ 1.140
-------
NET ASSET VALUE, end of period $11.140
=======
TOTAL RETURN(2) 11.4%
RATIOS/SUPPLEMENTAL DATA:
Net assets end of period (000's omitted) $22,286
Ratio of net expenses to average net assets(1) 2.90%+
Ratio of net expenses to average net assets after custodian fee reduction(1) 2.84%+
Ratio of net investment (loss) to average net assets (2.75)%+
+Annualized.
(1)Includes the Fund's share of Worldwide Health Sciences Portfolio's allocated expenses.
(2)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 record date. Total return
is computed on a non-annualized basis.
</TABLE>
<PAGE>
HEALTH SCIENCE INVESTMENTS
- --------------------------------------------------------------------------------
Markets for health sciences products and services have undergone significant
growth over the last 25 years. In the U.S., the Department of Health and Human
Services estimates health care expenditures alone could increase to over 16%
of gross national product by the year 2000, compared to 7.6%, 10.3% and 14.0%
in 1972, 1982 and 1992, respectively. Outside the U.S., most developed
countries are seeing similar growth in health care expenditures. In emerging
markets, health care spending is increasing as standards of living are
improving and as revenues become available to fund government and private
programs to address basic health needs. Factors contributing to this growth
include demographic shifts tending to a higher world population and a larger
elderly population in industrialized nations, technological advances, and
popular acceptance of and worldwide familiarity with health care products,
resulting in high consumer demand. In addition to increased demand for health
science products and services, substantial public and private expenditures on
basic medical research and advances in technology have accelerated the pace of
medical discoveries. The Adviser believes that the rate of change may
accelerate in the future, causing certain segments of the business to decline
and others to experience growth. Favorable investment opportunities may be
found in companies that provide products or services designed for the
prevention, diagnosis and treatment of physical and mental disorders.
In making portfolio selections, in addition to evaluating trends in corporate
revenues, earnings and dividends, the Adviser generally considers the amount
of capital currently being expended on research and development, and the
nature thereof. The Adviser believes that dollars invested in research and
development today frequently have significant bearing on future growth.
Portfolio securities generally will be selected from companies in the
following groups:
Biotechnology -- Companies which are producing or plan to produce as a result
of current research, therapeutic drugs, vaccines and diagnostic systems and
reagents based on genetic engineering and the use of monoclonal antibodies or
on recombinant DNA; also, specialty companies catering to the unique
requirements of biotechnology companies such as those providing enzymes, media
and purification equipment.
Diagnostics -- Private organizations that develop or maintain sophisticated
diagnostic equipment such as CAT scanners and Magnetic Resonance Imaging as
well as urological and serological assays.
Managed Healthcare -- Operators of investor-owned hospital chains (including
acute care psychiatric hospitals), nursing centers for the elderly, health
maintenance organizations, and rehabilitation clinics which seek to deliver
hospital care on an efficient cost basis.
Medical Equipment and Supplies -- Companies engaged in the manufacture of
inpatient and outpatient medical (and dental), surgical, laboratory and
diagnostic products (ranging from cotton swabs through kidney dialysis
equipment to CAT scanners).
Pharmaceuticals -- Companies involved with new types of drugs and their
delivery systems.
By focusing on companies such as the foregoing, the Adviser believes 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.
THE FUND'S INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
THE FUND'S INVESTMENT OBJECTIVE IS TO SEEK LONG-TERM CAPITAL GROWTH BY
INVESTING IN A GLOBAL AND DIVERSIFIED PORTFOLIO OF SECURITIES OF HEALTH
SCIENCE COMPANIES. It currently seeks to meet its investment objective by
investing its assets in the Portfolio, a separate registered investment
company which has the same investment objective and policies as the Fund.
The Fund is intended for long-term investors who can accept international
investment risk and little or no current income. Because the Fund concentrates
its investments in medical research and the health care industry, 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.
INVESTMENT POLICIES AND RISKS
- --------------------------------------------------------------------------------
The Portfolio invests in a global and diversified portfolio of securities of
health science companies. These companies principally are engaged in the
development, production or distribution of products or services related to
scientific advances in health care, including biotechnology, diagnostics,
managed health care and medical equipment and supplies, and pharmaceuticals.
At the time the Fund makes an investment, 50% or more of such a company's
sales, earnings or assets will arise from or will be dedicated to the
application of scientific advances related to health care. The Portfolio may
invest in securities of both established and emerging companies, some of which
may be denominated in foreign currencies.
Under normal market conditions, the Portfolio will invest at least 65% of its
assets in securities of health science companies, including common and
preferred stocks; equity interests in partnerships; 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 the 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 below investment grade, debt
securities will not exceed 20% of total assets. For temporary defensive
purposes, such as during abnormal market or economic conditions, the Portfolio
may invest without limit 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. In addition,
the Portfolio may temporarily borrow up to 5% of the value of its total assets
to satisfy redemption requests or settle securities transactions.
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,
the health science industries and securities markets generally. The value of
Fund shares may fluctuate more than shares invested in a broader range of
industries. Many health science companies are subject to substantial
governmental regulations that can affect their prospects. Changes in
governmental policies, such as reductions in the funding of third-party
payment programs, may have a material effect on the demand for particular
health care products and services. Regulatory approvals (often entailing
lengthy application and testing procedures) are also generally required before
new drugs and certain medical devices and procedures may be introduced. Many
of the products and services of companies engaged in medical research and
health care are also subject to relatively high risks of rapid obsolescence
caused by progressive scientific and technological advances. The enforcement
of patent, trademark and other intellectual property laws will affect the
value of many such companies. The Portfolio will invest in securities of
emerging growth health science companies, which may offer limited products or
services or which are at the research and developmental stage with no
marketable or approved products or technologies.
INVESTING IN FOREIGN SECURITIES. Under normal market conditions, the
Portfolio will hold securities of at least three countries. Investing in such
securities (including depository receipts) 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.
Foreign currency exchange rates may fluctuate significantly over short periods
of time causing the Portfolio's net asset value to fluctuate as well. Costs
are incurred in connection with conversions between various currencies. In
addition, foreign brokerage commissions, custody fees and other costs of
investing are generally higher than in the United States, and foreign
securities markets may be less liquid, more volatile and less subject to
governmental supervision than in the United States. Investments in foreign
issuers could be adversely affected by other factors not present in the United
States, including expropriation, confiscatory taxation, lack of uniform
accounting and auditing standards and potential difficulties in enforcing
contractual obligations. In addition to investing in foreign companies of
countries which represent established and developed economies, the Portfolio
may also invest some of its assets in the emerging economies of lesser
developed countries such as China and India, and countries located in Latin
America and Eastern Europe. Consistent with its investment objective, the
Portfolio is not limited in the percentage of assets it may invest in such
securities but the number of health science issuers in less developed
countries is relatively small. 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, approximately 50% of the Portfolio's assets were
comprised of 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; currency swaps; options on futures contracts; exchange-traded and
over-the-counter covered call options on securities, indices or currencies
(and closing transactions); 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.
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.
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. 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
such as commercial paper issued pursuant to Section 4 (2) of the Securities Act
of 1933 and securities eligible for resale pursuant to Rule 144A thereunder.
Section 4(2) and Rule 144A securities may, however, be treated as liquid by the
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. Such
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 the 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 of issuers in any one
industry, other than U.S. Government securities and securities of health
science companies. 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. Please refer
to the Statement of Additional Information for further information regarding
the investment policies and risks of the Fund and Portfolio.
ORGANIZATION OF THE FUND AND THE PORTFOLIO
- --------------------------------------------------------------------------------
THE FUND IS A DIVERSIFIED SERIES OF EATON VANCE GROWTH TRUST, A BUSINESS TRUST
ESTABLISHED UNDER MASSACHUSETTS LAW PURSUANT TO A DECLARATION OF TRUST DATED
MAY 25, 1989, AS AMENDED. The Trust is a mutual fund -- an open-end investment
management 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." There are no annual meetings of shareholders, but
special meetings may be held as required by law to elect Trustees and consider
certain other matters. 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 a 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 (or the assets
of another investor in the Portfolio) 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
MEHTA AND ISALY ASSET MANAGEMENT, INC. ("M&I"), LOCATED AT 41 MADISON AVENUE,
40TH FLOOR, NEW YORK, NEW YORK 10010-2202 AS ITS INVESTMENT ADVISER (THE
"ADVISER"). M&I was incorporated in Delaware on February 24, 1989 and is
principally owned by Samuel D. Isaly, who serves as the President of M&I. The
Portfolio is the only investment company registered under the Investment
Company Act of 1940 (the "1940 Act") advised by M&I, which formerly was named
G/A Capital Management, Inc.
Investment decisions for the Portfolio are made by the portfolio manager,
Samuel D. Isaly, who has acted as the portfolio manager since it commenced
operations. Mr. Isaly has been active in international and health care
investing throughout his career, beginning at Chase Manhattan Bank in New York
in 1968. He studied international economics, mathematics and econometrics at
Princeton and the London School of Economics. His company, Gramercy
Associates, was the first to develop an integrated worldwide system of
analysis on the 100 leading worldwide pharmaceutical companies, with
investment recommendations conveyed to 50 leading financial institutions in
the United States and Europe beginning in 1982. Gramercy Associates was
absorbed into S.G. Warburg & Company Inc. in 1986, where Mr. Isaly became a
Senior Vice President. In July of 1989, Mr. Isaly joined with Mr. Viren Mehta
to found the partnership of Mehta and Isaly. The operations of the combined
effort are (1) to provide investment ideas to institutional investors on the
subject of worldwide health care, (2) to undertake cross-border merger and
acquisition projects in the industry and (3) to provide investment management
services to selected investors. The latter activity is undertaken primarily
through the legal entity Mehta and Isaly Asset Management, Inc., which is an
investment advisory firm registered with the Commission.
For its services, M&I receives a fee computed daily and payable monthly at an
annual rate of 1.00% of the Portfolio's average daily net assets up to $30
million of such assets, 0.90% of the next $20 million of such assets, and
0.75% on such assets in excess of $50 million. The fee rate declines for net
assets at $500 million and greater. After September 1, 1997, M&I may receive a
performance based adjustment of up to 0.25% of the average daily net assets of
the Portfolio based upon investment performance of the Portfolio compared to
the Standard & Poor's Index of 500 Common Stocks over specified periods. M&I
has agreed to pay the Principal Underwriter the equivalent of one-third of its
advisory fee receipts out of M&I's own resources for the Principal
Underwriter's activities as placement agent of the Portfolio. For the period
from the start of business, September 1, 1996, to February 28, 1997, the
Portfolio paid M&I advisory fees equivalent to 0.91% of the Portfolio's
average daily net assets for such period.
The Adviser furnishes for the use of the Portfolio office space and all
necessary office facilities, equipment and personnel for servicing the
investments of the Portfolio. The Adviser places the portfolio securities
transactions of the Portfolio with many broker-dealer firms and uses its best
efforts to obtain execution of such transactions at prices which are
advantageous to the Portfolio and at reasonably competitive commission rates.
Subject to the foregoing, the Adviser may consider sales of shares of the Fund
as a factor in the selection of firms to execute portfolio transactions.
Eaton Vance, its affiliates and its predecessor companies have been managing
assets of individuals and institutions since 1924 and managing investment
companies since 1931. Eaton Vance acts as investment adviser to investment
companies and various individual and institutional clients with assets under
management of over $17 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, respectively. 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.
The Fund, the Portfolio and M&I have adopted Codes of Ethics relating to
personal securities transactions. The Codes permit M&I personnel to invest in
securities (including securities that may be purchased or held by the
Portfolio) for their own accounts, subject to certain restrictions and
reporting procedures.
Under its management contract with the Fund, Eaton Vance receives a monthly
management 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. For the period from the start of business,
September 23, 1996, to February 28, 1997, the Fund paid Eaton Vance 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
period from the start of business, September 1, 1996, to February 28, 1997,
the Portfolio paid Eaton Vance 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 the
Adviser under the investment advisory agreement, Eaton Vance under the
management contract or the administration agreement, or 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 the 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 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 23, 1996, to February
28, 1997, 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
February 28, 1997, the outstanding Uncovered Distribution Charges of the
Principal Underwriter calculated under the Plan amounted to approximately
$924,000 (which amount was equivalent to 4.1% 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 expects to begin making service
fee payments during the quarter ending September 30, 1997.
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
- --------------------------------------------------------------------------------
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. Exchange traded equity securities generally are
valued at their last sale price. 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,
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 Worldwide Health Sciences Fund
IN THE CASE OF PHYSICAL DELIVERY:
Investors Bank & Trust Company
Attention: EV Marathon Worldwide Health Sciences 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 Commission regulation 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
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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 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 on 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 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 Authorized Firm 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 Authorized Firm, or transferring the account to another
Authorized Firm, an investor wishing to reinvest distributions should
determine whether the Authorized 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 Worldwide Health Sciences 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 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.
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 (if any) 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 generally will 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. 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.
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.
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
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 advisers 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 order of $1,000 invested at the maximum public offering price
(net asset value) by the average annual compounded rate of return (including
capital appreciation/depreciation, and 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 total
return figures, together with comparisons with the Consumer Price Index,
various domestic and foreign securities indices and performance studies
prepared by independent organizations, in advertisements and in information
furnished to present or prospective shareholders.
The Fund may also publish total return figures which do not take into account
any 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 for the six months ended February 28,
1997, and does not take into account any sales charge which investors may
bear. The total return for the period prior to the Fund's commencement of
operations on September 23, 1996 reflects the total return of the Portfolio
(or that of its predecessor) which had different operating expenses.
5 Year Average Annual Total Return -- 19.31%*
10 Year Average Annual Total Return -- 15.45%*
1985 0.80%
1986 36.04%
1987 19.81%
1988 (25.30%)
1989 31.32%
1990 11.13%
1991 30.61%
1992 12.04%
1993 21.37%
1994 2.68%
1995 38.13%
1996 31.04%
1997(1) 12.13%
(1) For the six months ended February 28, 1997.
* Average annual total return figures based on the periods ended
February 28, 1997.
Absent an expense reduction, the Fund would have had lower returns.
<PAGE>
[logo]
EATON VANCE
====================
Mutual Funds
EV MARATHON
WORLDWIDE HEALTH
SCIENCES FUND
PROSPECTUS
APRIL 1, 1997
EV MARATHON WORLDWIDE
HEALTH SCIENCES FUND
24 FEDERAL STREET
BOSTON, MA 02110
- --------------------------------------------------------------------------------
SPONSOR AND MANAGER OF EV MARATHON WORLDWIDE HEALTH SCIENCES FUND
ADMINISTRATOR OF WORLDWIDE HEALTH SCIENCES PORTFOLIO
Eaton Vance Management, 24 Federal Street, Boston, MA 02110
ADVISER OF WORLDWIDE HEALTH SCIENCES PORTFOLIO
Mehta and Isaly Asset Management, Inc., 41 Madison Avenue,
New York, NY 10010-2202
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-HSP
<PAGE>
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
STATEMENT OF
ADDITIONAL INFORMATION
April 1, 1997
EV MARATHON
WORLDWIDE DEVELOPING RESOURCES 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 Developing Worldwide Resources Fund (the
"Fund"), Worldwide Developing Resources 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 ............................................ 5
Trustees and Officers .............................................. 6
Management of the Fund and the Portfolio ........................... 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 ........................... 19
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
Taxes .............................................................. a-4
Other Information .................................................. a-5
Financial Statements ............................................... a-5
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 APRIL 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>
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
PORTFOLIO TURNOVER
The Investment Adviser will change the Portfolio'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 Portfolio, 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 Portfolio's investment
policies and strategies may result in a higher portfolio turnover rate than that
experienced by other mutual funds. The Portfolio's turnover rate will not be a
limiting factor when the Investment Adviser considers a change in the
Portfolio's investment portfolio, and in any fiscal year such rate could exceed
100%.
ASSET-RELATED SECURITIES
The Portfolio'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 Portfolio 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 Portfolio 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 Portfolio may invest may bear
interest or pay preferred dividends at below market (or even relatively nominal)
rates. The Portfolio'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 Portfolio
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
Portfolio 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 Portfolio normally
will not take possession of the bullion or metals, but instead will obtain
receipts or certificates representing ownership. In the event the Portfolio 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 Portfolio will pay for the metals
only upon actual receipt. Although the Portfolio 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 Portfolio may temporarily hold
funds in bank deposits in foreign currencies during completion of investment
programs, the Portfolio 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 Portfolio
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 Portfolio'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 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 Investment 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. The Portfolio will not enter into forward contracts or maintain
a net exposure to such contracts where the consummation of the contracts would
obligate the Portfolio to deliver an amount of foreign currency in excess of the
value of the securities held by the Portfolio or other assets denominated in
that currency. The Portfolio 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 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'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 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".
LIMITATIONS ON FUTURES CONTRACTS AND OPTIONS
The Portfolio may enter into futures contracts (and options thereon) traded
on a foreign exchange if it is determined by the Investment 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.
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.
REPURCHASE AGREEMENTS
The Portfolio 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
Portfolio 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
Portfolio commit more than 15% of its net assets to repurchase agreements which
mature in more than seven days (and other illiquid investments). Repurchase
agreements are deemed to be loans under the 1940 Act. In all cases the
Investment Adviser 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 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'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
Investment 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. Reverse repurchase agreements will
be included within the aggregate limitation on "borrowings" contained in the
Portfolio's investment restriction (1) set forth below.
LEVERAGE THROUGH BORROWING
The Portfolio will not always borrow money for additional investments. The
Portfolio'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 Portfolio to maintain continuous asset coverage of
not less than 300% with respect to its borrowings. This allows the Portfolio 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
Portfolio may be required to sell some of its portfolio holdings within three
days in order to reduce the Portfolio'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 securities held
by the 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 Portfolio 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.
ASSET COVERAGE REQUIREMENTS
Transactions involving reverse repurchase agreements, 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 or other options, forward
contracts or futures contracts, or (2) cash or liquid securities (such as
readily marketable obligations or common stocks and money market instruments)
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 maintained by the
Portfolio's custodian 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.
CONVERTIBLE SECURITIES
The Portfolio 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 Portfolio's investment
restrictions).
INVESTMENT RESTRICTIONS
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.
As a matter of fundamental policy, the Fund may not:
(1) Borrow money or issue senior securities except as permitted by the
Investment Company Act of 1940;
(2) 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);
(3) 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;
(4) 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; or
(5) Make loans to other persons, except by (a) the acquisition of debt
securities and making portfolio investments, (b) entering into repurchase
agreements and (c) lending portfolio securities.
In addition, as a matter of fundamental policy:
(6) 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; and
(7) 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.
Notwithstanding the investment policies and restrictions of the Fund; the
Fund may invest its assets in an open-end management investment company (a
Portfolio) with substantially the same investment objectives, policies and
restrictions as the Fund; moreover, subject to Trustee approval the Fund may
invest its investable assets in other open-end management investment companies
in the same group of investment companies with the same investment adviser as
the Portfolio (or an affiliate) if, with respect to such assets, the other
companies' permitted investments are substantially the same as those of the
Fund.
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 adopted the following investment policies
which may be changed with respect to the Fund by the Trustees of the Trust
without approval by the Fund's shareholders or with respect to the Portfolio by
the Trustees of 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) 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; (b) make short sales of
securities, unless at all times when a short sale position is open the Fund or
the Portfolio 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; (c) purchase securities of any issuer
(other than securities or obligations issued or guaranteed by the U.S.
Government or any of its agencies or instrumentalities) 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 or the Portfolio; this
restriction will not apply (i) during periods when management of the Fund
anticipates significant economic, political or financial instability or (ii) to
investments in certificates of deposit, bankers' acceptances or time deposits of
banking and thrift institutions; (d) invest for the purpose of gaining control
of a company's management; (e) purchase warrants if, as a result of such
purchase, more than 5% of the Fund's or the Portfolio'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 Fund's or the Portfolio's net assets; this policy does
not apply to or restrict warrants acquired by the Fund or the Portfolio in units
or attached to securities, inasmuch as such warrants are deemed to be without
value; (f) purchase an option on a 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 it, would be so invested; (g) 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 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).
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 or any
subsequent rating change 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.
Notwithstanding the foregoing, under normal circumstances the Fund and the
Portfolio will maintain at least 65% of its total assets in natural resource
related investments or in asset-related securities. Moreover, the Fund and the
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 Investment Adviser, BMR, a
wholly-owned subsidiary of 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 or the Portfolio, as defined in the 1940
Act, by virtue of their affiliation with 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 (66), Trustee
President of Dwight Partners, Inc. (a corporate relations and communications
company); Chairman of the Board of Newspapers of New England, Inc. 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 (62), 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
Former 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 (67), 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
WILLIAM D. BURT (58), Vice President of the Portfolio
Vice President of BMR, Eaton Vance and EV since November 1994; formerly Vice
President of The Boston Company (1990-1994).
WILLIAM CHISHOLM (36), Vice President of the Portfolio
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.
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.
MICHEL NORMANDEAU (45), Vice President of the Portfolio
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 of the Portfolio
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.
BARCLAY TITTMANN (65), Vice President of the Portfolio
Vice President of BMR, Eaton Vance and EV since October 1993; formerly Vice
President of Invesco Management and Research (1970-1993).
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.
JAMES L. O'CONNOR (51), Treasurer
Vice President of BMR, Eaton Vance 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 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 on
March 27, 1995.
ERIC G. WOODBURY (39), Assistant Secretary
Vice President of BMR, Eaton Vance and EV since February 1993; formerly,
associate attorney at Dechert, Price & Rhoads. 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 of Trustees concerning (i) all contractual
arrangements with service providers to the Fund and the Portfolio, including
investment advisory (Portfolio only), administrative, 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, the Portfolio or investors therein.
The Nominating Committee of the Board of Trustees of the Trust and the
Portfolio 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. 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 certified public accountants, and reviewing 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 and of the Portfolio.
Trustees of the Portfolio 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
"Trustees" Plan"). Under the Trustees' 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 Trustees' Plan will be determined based upon the performance of such
investments. Deferral of Trustees' fees in accordance with the Trustees' 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 Trust has a
retirement plan for its Trustees.
The fees and expenses of the noninterested Trustees of the Trust and the
Portfolio 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 Part II.
Messrs. Chisholm, Normandeau and O'Neill are not U.S. residents. It may be
difficult to effect service of process within the U.S. or to realize judgments
of U.S. courts upon them. It is uncertain whether courts in other countries
would entertain original actions against them.
MANAGEMENT OF THE FUND AND THE PORTFOLIO
The Portfolio engages BMR as its investment adviser pursuant to an
Investment Advisory Agreement dated February 14, 1997. BMR or Eaton Vance acts
as investment adviser to investment comanies and various individual and
institutional clients with combined assets under management of over $17 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 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, and
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 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 the Principal
Underwriter both within the United States and offshore.
The Principal Underwriter 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.
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.
The Portfolio pays BMR as compensation under the Agreement a monthly fee
based on average daily net assets as follows:
<TABLE>
<CAPTION>
AVERAGE DAILY NET ANNUALIZED FEE RATE MONTHLY FEE RATE
ASSETS FOR THE MONTH (FOR EACH LEVEL) (FOR EACH LEVEL)
-------------------- ------------------- ----------------
<S> <C> <C>
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%
</TABLE>
The Investment Advisory Agreement with BMR continues in effect from year to
year so long as such continuance is approved at least annually (i) by the vote
of a majority of the noninterested Trustees 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 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.
To the extent necessary to comply with U.S. tax law, Eaton Vance has
employed IBT Trust Company (Cayman) Ltd. to serve as the 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.
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.
The Fund pays all of its own expenses including, without limitation, (i)
expenses of maintaining the Fund and continuing its existence, (ii) its pro rata
share of the Trust's registration 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 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 BMR and
Eaton Vance who are also officers or officers and Directors of EVC and EV. As
of March 31, 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 and the Portfolio are members of the
EVC, BMR, Eaton Vance and EV organizations. Messrs. Burt, Murphy, O'Connor,
Tittmann and Woodbury, and Ms. Sanders, are officers of the Trust and or the
Portfolio, and are also members of the BMR, Eaton Vance and EV organizations.
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. BMR , EVC, 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, 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 or the Portfolio and such
banks.
CUSTODIAN
IBT 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. 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 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 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
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 valuation of the Portfolio'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
market. 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 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.
Physical commodities, including bullion, will generally be valued at fair
value based on prevailing market prices.
Each investor in the Portfolio, including the Fund, may add to or reduce its
investment in the Portfolio on each day 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 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 interests 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.
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 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 Part II.
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 (including, if applicable, the maximum sales charge) 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 Fund 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 (if applicable) are imposed upon
certain redemptions at the rates set forth under "How to Redeem Fund Shares" in
the Fund's current Prospectus. Yield calculations assume the current maximum
sales charge (if applicable) set forth under "How to Buy Fund Shares" in the
Fund's current Prospectus. (Actual yield may be affected by variations in sales
charges on investments). For the yield of the Fund, see "Performance
Information" in Part II.
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 or rankings of mutual funds (which include
the Fund) made by independent sources may be used in advertisements and in
information furnished to present or prospective shareholders. Information about
the portfolio allocation and holdings of the Portfolio may also be included in
advertisements and other material furnished to present prospective shareholders.
The Fund's performance may differ from that of other investors in the Portfolio,
including other investment companies.
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
Each series of the Trust is treated as a separate entity for federal income
tax purposes and will elect or has elected 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 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. 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 taxes 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 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 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.
For federal income tax purposes the Portfolio will be treated as a
partnership that is not a "publicly traded partnership". As a result, it will
not be subject to federal income tax; instead, the Fund, as an investor in the
Portfolio, will be required to take into account in determining its federal
income tax liability its share of the Portfolio's income, gains, losses,
deductions, and credits, without regard to whether it has received any cash
distributions from the Portfolio. Because the Fund will be deemed to own a
proportionate share of the Portfolio's assets, and to earn a proportionate share
of the Portfolio's income, for purposes of determining whether the Fund
satisfies the requirements to qualify as a RIC, the Portfolio intends to conduct
its operations so that the Fund will be able to satisfy all those requirements.
The Portfolio'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 Portfolio, defer Portfolio losses, cause adjustments in the
holding periods of Portfolio 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 Portfolio will be governed by Section 1256
of the Code. Absent a tax election for "mixed straddles" (see below), each such
position held by the Portfolio 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 Portfolio 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 Portfolio 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 Portfolio 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
the Portfolio will limit its activities in options, futures contracts and
forward contracts to the extent necessary to enable the Fund to comply with this
requirement.
The Portfolio 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 the Fund may be able to pass its
proportionate share of such taxes through to its 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 Portfolio and allocated to 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
Portfolio in the stock of certain "passive foreign investment companies"
("PFIC") 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 avoid imposition of a tax on
the Fund.
The Portfolio'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
enable the Fund to distribute its proprotionate share of this income and avoid a
tax payable by the Fund, the Portfolio may be required to liquidate portfolio
securities that it might otherwise have continued to hold in order to generate
cash that the Fund may withdraw from the Portfolio for subsequent distribution
to Fund shareholders.
Investment in gold, platinum and silver bullion and coins may cause an
investment company to fail certain income or asset tests that must be satisfied
to qualify as a regulated investment company under the Code. Accordingly, the
Investment Adviser will endeavor to manage the Portfolio's assets so that: (1)
income and gains derived from investments in bullion and coins (and any other
"non-qualified" income) will not exceed 10% of the Funds' gross annual income;
and (2) less than 50% of the value of the Fund's total assets as of the close of
each quarter of its taxable year will be invested in bullion and coins (and any
other "non-qualified assets"). If the Fund did not qualify for taxation as a
regulated investment company, it would be required to pay federal income tax on
its net income, which would reduce the amount available for distribution to
shareholders.
The portion of distributions made by the Fund which are derived from
dividends received by the Portfolio from U.S. domestic corporations and
allocated to the Fund may qualify for the dividends-received deduction for
corporations. The dividends-received deduction is reduced to the extent the
shares of the Fund with respect to which the dividends are received are treated
as debt-financed under the federal income tax law and is eliminated if the
shares are deemed to have been held for less than a minimum period, generally 46
days. Receipt of certain distributions qualifying for the deduction may result
in reduction of the tax basis of the corporate shareholder's shares.
Distributions 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.
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 shares of the Fund are purchased (whether through reinvestment of
dividends or otherwise) within the 30 days before or after such disposition.
Amounts payable by the Fund to individuals and certain other non-corporate
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 other
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.
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 portfolio 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 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
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 other clients 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 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 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; 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, BMR receives Research Services from many broker-dealer firms with
which BMR places the portfolio transactions of the Portfolio and from third
parties with which these broker-dealers have arrangements. These Research
Services include such matters as general economic and market reviews, industry
and company reviews, evaluations of securities and portfolio strategies and
transactions, recommendations as to the purchase and sale of securities and
other portfolio transactions, financial, industry and trade publications, news
and information services, pricing and quotation equipment and services, and
research oriented computer hardware, software, data bases and services. Any
particular Research Service obtained through a broker-dealer may be used by BMR
in connection with client accounts other than those accounts which pay
commissions to such broker-dealer. Any such Research Service may be broadly
useful and of value to BMR in rendering investment advisory services to all or a
significant portion of its clients, or may be relevant and useful for the
management of only one client's account or of a few clients' accounts, or may be
useful for the management of merely a segment of certain clients' accounts,
regardless of whether any such account or accounts paid commissions to the
broker-dealer through which such Research Service was obtained. The advisory fee
paid by the Portfolio is not reduced because BMR receives such Research
Services. BMR evaluates the nature and quality of the various Research Services
obtained through broker-dealer firms and attempts to allocate sufficient
commissions to such firms to ensure the continued receipt of Research Services
which BMR believes are useful or of value to it in rendering investment advisory
services to its clients.
Subject to the requirement that BMR shall use its best efforts to seek to
execute portfolio security transactions at advantageous prices and at reasonably
competitive commission rates or spreads, BMR is authorized to consider as a
factor in the selection of any broker-dealer firm with whom Portfolio orders may
be placed the fact that such firm has sold or is selling shares of the Fund or
of other investment companies sponsored by BMR or Eaton Vance. This policy is
not inconsistent with a rule of the National Association of Securities Dealers,
Inc. (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.
Whenever decisions are made to buy or sell securities by the Portfolio and one
or more of such other accounts simultaneously, BMR will allocate the security
transactions (including "hot" issues) in a manner which it believes to be
equitable under the circumstances. As a result of such allocations, there may be
instances where the Portfolio will not participate in a transaction that is
allocated among other accounts. If an aggregated order cannot be filled
completely, allocations will generally be made on a pro rata basis. An order may
not be allocated on a pro rata basis where, for example: (i) consideration is
given to portfolio managers who have been instrumental in developing or
negotiating a particular investment; (ii) consideration is given to an account
with specialized investment policies that coincide with the particulars of a
specific investment; (iii) pro rata allocation would result in odd-lot or de
minimis amounts being allocated to a portfolio or other client; or (iv) where
BMR reasonably determines that departure from a pro rata allocation is
advisable. While these aggregation and allocation policies 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 from the BMR organization outweigh any
disadvantage that may arise from exposure to simultaneous transactions.
OTHER INFORMATION
The Trust is a Massachusetts business trust established in 1989 as the
successor to Eaton Vance Growth Fund, Inc., a Massachusetts corporation. On
August 18, 1992, the Trust changed its name from Eaton Vance Growth Fund to
Eaton Vance Growth Trust. 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 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.
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 majority
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, providing audit services,
tax return preparation, and assistance and consultation with respect to the
preparation of filings with the Commission. Deloitte & Touche, Grand Cayman,
Cayman Islands, British West Indies are the independent certified public
accountants of the Portfolio.
<PAGE>
FINANCIAL STATEMENTS
WORLDWIDE DEVELOPING RESOURCES PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
MARCH 17, 1997
ASSETS:
Cash ....................................................... $100,020
Deferred organization expenses ............................. 7,000
--------
Total assets ........................................... $107,020
LIABILITIES:
Accrued organization expenses .............................. 7,000
--------
NET ASSETS ..................................................... $100,020
========
NOTED:
(1) Worldwide Developing Resources Portfolio (the "Portfolio") was organized as
a New York Trust on February 14, 1997 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 EV Marathon Worldwide
Developing Resources Fund and the sale of interests therein at the purchase
price of $10 to Eaton Vance Management and $10 to Boston Management and
Research (the "Initial Interests").
(2) Organization expenses are being deferred and will be amortized on a
straight-line basis over a period not to exceed five years, commencing on
the effective date of the Portfolio's initial offering of its interests. The
amount paid by the Portfolio on any withdrawal by the holders of the Initial
Interests of any of the respective Initial Interests will be reduced by a
portion of any unamortized organization expenses, determined by the
proportion of the amount of the Initial Interests withdrawn to the Initial
Interests then outstanding.
(3) At 4:00 p.m., New York City time, on each business day of the Portfolio, the
value of an investor's interest in the Portfolio is equal to the product of
(i) the aggregate net asset value of the Portfolio multiplied by (ii) the
percentage representing that investor's share of the aggregate interest in
the Portfolio effective for that day.
<PAGE>
REPORT OF INDEPENDENT AUDITORS'
To the Trustees and Investors of
Worldwide Developing Resources Portfolio:
We have audited the accompanying statement of assets and liabilities of
Worldwide Developing Resources Portfolio (a New York Trust) as of March 17,
1997. This financial statement is the responsibility of the Portfolio'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, the financial statement referred to above presents fairly,
in all material respects, the financial position of Worldwide Developing
Resources Portfolio as of March 17, 1997, in conformity with generally accepted
accounting principles.
Deloitte & Touche
Grand Cayman, Cayman Islands
British West Indies
March 18, 1997
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
PART II
This Part II provides information about EV MARATHON WORLDWIDE DEVELOPING
RESOURCES FUND.
FEES AND EXPENSES
INVESTMENT ADVISER
Prior to the close of business on March 31, 1997 (when the Fund transferred
its assets to the Portfolio in exchange for an interest in the Portfolio), the
Fund retained Eaton Vance as its investment adviser. 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).
DISTRIBUTION PLAN
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. 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 $449,702. 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.
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 $587.50 for repurchase
transactions handled by the Principal Underwriter.
BROKERAGE
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.
TRUSTEES
The fees and expenses of the noninterested Trustees of the Trust and of the
Portfolio 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 of the Trust and the
Portfolio and, during the year ended December 31, 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):
ESTIMATED ESTIMATED
AGGREGATE AGGREGATE TOTAL COMPENSATION
COMPENSATION COMPENSATION FROM TRUST AND
NAME FROM FUND* FROM PORTFOLIO FUND COMPLEX
- ---- ------------ -------------- ------------------
Donald R. Dwight ......... $32 $32 $142,500(2)
Samuel L. Hayes, III ..... 32 32 157,500(3)
Norton H. Reamer ......... 32 32 145,000
John L. Thorndike ........ 32 32 150,000(4)
Jack L. Treynor .......... 32 32 150,000
- ----------
(1) The Eaton Vance fund complex consists of 212 registered investment companies
or series thereof.
(2) Includes $42,500 of deferred compensation.
(3) Includes $20,429 of deferred compensation.
(4) Includes $28,125 of deferred compensation.
*For the fiscal year ended August 31, 1996 the Trustees received the following
compensation as Trustees of the Fund: Dwight: $34 (includes $13 of deferred
compensation; Hayes: $32 (includes $10 of deferred compensation); Reamer:
$31; Thorndike: $32; and Treynor: $34.
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 the noninterested
Trustees 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 by the Fund 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 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" 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 continues in effect from year to year for so long as such
continuance is approved at least annually by the vote of both a majority of (i)
the noninterested Trustees of the Trust 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. 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 noninterested
Trustees.
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 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 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 life of the Fund
from October 21, 1987 through August 31, 1996, and the one- and five-year
periods ended August 31, 1996.
<TABLE>
VALUE OF A $1,000 INVESTMENT
<CAPTION>
VALUE BEFORE VALUE AFTER TOTAL RETURN BEFORE TOTAL RETURN AFTER DEDUCTING
DEDUCTING THE DEDUCTING THE DEDUCTING THE MAXIMUM CDSC 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.
- ----------
*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>
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of February 28, 1997, the Trustees and officers of the Trust, as a group,
owned in the aggregate less than 1% of the outstanding shares of the Fund. As of
February 28, 1997, Merrill Lynch, Pierce, Fenner & Smith, Inc., Jacksonville, FL
was the record owner of approximately 15.7% 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.
TAXES
As of the close of business, March 31, 1997, the Fund contributed
substantially all of its assets to the Portfolio in exchange for an interest in
the Portfolio. The Fund has obtained an opinion of tax counsel to the effect
that, although there is no judicial authority directly on point, this
contribution will not result in the recognition of gain or loss by the Fund for
federal income tax purposes. If it were determined that this contribution by the
Fund was a taxable transaction, the Fund could be required to recognize gain on
the transfer of its assets to the Portfolio and to make additional distributions
to its shareholders in order to avoid Fund-level federal income taxes, and any
such distributions would be taxable to the shareholders who receive them; and in
such case, the Fund might also be required to pay penalties and/or interest to
the Internal Revenue Service.
OTHER INFORMATION
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 and to EV Marathon
Worldwide Developing Resources Fund on January 15, 1997.
FINANCIAL STATEMENTS
The audited financial statements of, and the independent auditors' report
for, the Fund appear in the Fund's most recent annual report to shareholders and
are incorporated by reference into this SAI. A copy of the 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 WORLDWIDE
DEVELOPING RESOURCES FUND
STATEMENT OF ADDITIONAL INFORMATION
APRIL 1, 1997
EV MARATHON WORLDWIDE
DEVELOPING RESOURCES FUND
24 FEDERAL STREET
BOSTON, MA 02110
- --------------------------------------------------------------------------------
INVESTMENT ADVISER OF WORLDWIDE DEVELOPING RESOURCES PORTFOLIO
Boston Management and Research, 24 Federal Street, Boston, MA 02110
ADMINISTRATOR OF EV MARATHON WORLDWIDE DEVELOPING RESOURCES 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
AUDITORS
Deloitte & Touche, LLP, 125 Summer Street, Boston, MA 02110
M-DRSAI
<PAGE>
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
STATEMENT OF
ADDITIONAL INFORMATION
April 1, 1997
EV TRADITIONAL
WORLDWIDE DEVELOPING RESOURCES 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 Worldwide Developing Resources Fund
(the "Fund"), Worldwide Developing Resources 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 .............................................. 5
Trustees and Officers ................................................ 6
Management of the Fund and the Portfolio ............................. 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 ............................. 19
Financial Statements ................................................. 20
PART II
Fees and Expenses .................................................... a-1
Services for Accumulation ............................................ a-1
Principal Underwriter ................................................ a-2
Service Plan ......................................................... a-3
Performance Information .............................................. a-3
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 APRIL 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).
FOR EDGAR FILING PURPOSES ONLY: REGISTRANT INCORPORATES BY REFERENCE FOR
EV TRADITIONAL WORLDWIDE DEVELOPING RESOURCES FUND THE PART I FOUND IN THE
STATEMENT OF ADDITIONAL INFORMATION OF EV MARATHON WORLDWIDE DEVELOPING
RESOURCES FUND CONTAINED IN THIS AMENDMENT.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
PART II
This Part II provides information about EV TRADITIONAL WORLDWIDE DEVELOPING
RESOURCES FUND. The Fund became a series of the Trust on January 10, 1997.
FEES AND EXPENSES
INVESTMENT ADVISER
No fees paid to date.
SERVICE PLAN
No fees paid to date.
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. No fees or sales charges have been paid
to date.
BROKERAGE COMMISSIONS
No fees paid to date.
TRUSTEES
The fees and expenses of the noninterested Trustees of the Trust and of the
Portfolio 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 of the Trust and the
Portfolio and, during the year ended December 31, 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):
ESTIMATED ESTIMATED
AGGREGATE AGGREGATE TOTAL COMPENSATION
COMPENSATION COMPENSATION FROM TRUST AND
NAME FROM FUND FROM PORTFOLIO FUND COMPLEX
Donald R. Dwight ........ $32 $32 $142,500(2)
Samuel L. Hayes, III .... 32 32 157,500(3)
Norton H. Reamer ........ 32 32 145,000
John L. Thorndike ....... 32 32 150,000(4)
Jack L. Treynor ......... 32 32 150,000
- ----------
(1) The Eaton Vance fund complex consists of 212 registered investment companies
or series thereof.
(2) Includes $42,500 of deferred compensation.
(3) Includes $20,429 of deferred compensation.
(4) Includes $28,125 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. The sales charge on the shares being purchased will then be at the
rate applicable to the aggregate. 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 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. 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 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 certain 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 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 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 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 Board of Trustees of the Trust (including
a majority of the noninterested Trustees) 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
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 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.
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 sales charge rule of the
NASD. (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 continues in effect from year to year for so long as such
continuance is approved by a vote of both a majority of (i) the noninterested
Trustees who have no direct or indirect financial interest in the operation of
the Plan or any agreements related to it (the "Plan 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 Plan Trustees or by vote of a majority of the outstanding voting
securities of the Fund.
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 life of the Fund
from October 21, 1987 through August 31, 1996 and for the one-and five-year
periods ended August 31, 1996. The total return for the period prior to the
Fund's commencement of operations reflects the Portfolio's total return (or that
of its predecessor) adjusted to reflect any applicable Fund sales charge. The
total return for such prior period has not been adjusted to reflect the Fund's
distribution and/or service fees and certain other expenses.
<TABLE>
VALUE OF A $1,000 INVESTMENT
<CAPTION>
TOTAL RETURN EXCLUDING TOTAL RETURN INCLUDING
VALUE OF MAXIMUM SALES CHARGE MAXIMUM 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** 10/21/87 $952.38 $2,933.00 207.97% 13.52% 193.30% 12.90%
5 Years Ended
8/31/96** 8/31/91 $952.78 $2,100.21 120.43% 17.13% 110.02% 16.00%
1 Year Ended
8/31/96 8/31/95 $952.44 $1,330.45 39.69% 39.69% 33.04% 33.04%
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%
**If a portion of the Fund's expenses had not been subsidized, the Fund would have lower returns.
</TABLE>
<PAGE>
[logo]
EATON VANCE
-----------------
Mutual Funds
EV TRADITIONAL
WORLDWIDE DEVELOPING
RESOURCES FUND
STATEMENT OF ADDITIONAL INFORMATION
APRIL 1, 1997
EV TRADITIONAL WORLDWIDE
DEVELOPING RESOURCES FUND
24 FEDERAL STREET
BOSTON, MA 02110
- --------------------------------------------------------------------------------
INVESTMENT ADVISER OF WORLDWIDE DEVELOPING RESOURCES PORTFOLIO
Boston Management and Research, 24 Federal Street, Boston, MA 02110
ADMINISTRATOR OF EV TRADITIONAL WORLDWIDE DEVELOPING RESOURCES 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
AUDITORS
Deloitte & Touche, LLP, 125 Summer Street, Boston, MA 02110
T-DRSAI
<PAGE>
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
STATEMENT OF
ADDITIONAL INFORMATION
April 1, 1997
EV MARATHON
WORLDWIDE HEALTH SCIENCES 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 Worldwide Health Sciences Fund (the
"Fund"), Worldwide Health Sciences 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 ...................................... 5
Management of the Fund and the Portfolio ..................... 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
Appendix ..................................................... 16
PART II
Fees and Expenses ............................................ a-1
Trustees and Officers ........................................ a-1
Principal Underwriter ........................................ a-4
Distribution Plan ............................................ a-4
Performance Information ...................................... a-5
Other Information ............................................ a-6
Control Persons and Principal Holders of Securities .......... a-7
Independent Accountants ...................................... a-7
Financial Statements ......................................... a-8
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 APRIL 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. Under normal market conditions, the Portfolio will invest
in securities of issuers located in at least three different countries.
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 the Adviser. If there is a default by the
other party to such a transaction, the Portfolio will have contractual remedies
pursuant to the agreements related to the transaction. The swap market has grown
substantially in recent years with a large number of banks and investment
banking firms acting both as principals and as agents utilizing standardized
swap documentation. As a result, the swap market has become relatively liquid in
comparison with the markets for other similar instruments which are traded in
the interbank market.
Forward Foreign Currency Exchange Transactions. The Portfolio may enter into
forward foreign currency exchange contracts in several circumstances. First,
when the Portfolio enters into a contract for the purchase or sale of a security
denominated in a foreign currency, or when the Portfolio anticipates the receipt
in a foreign currency of dividend or interest payments on such a security which
it holds, the Portfolio may desire to "lock in" the U.S. dollar price of the
security or the U.S. dollar equivalent of such dividend or interest payment, as
the case may be. By entering into a forward contract for the purchase or sale,
for a fixed amount of dollars, of the amount of foreign currency involved in the
underlying transactions, the Portfolio will attempt to protect itself against an
adverse change in the relationship between the U.S. dollar and the subject
foreign currency during the period between the date on which the security is
purchased or sold, or on which the dividend or interest payment is declared, and
the date on which such payments are made or received.
Additionally, when management of the Portfolio believes that the currency of
a particular foreign country may suffer a substantial decline against the U.S.
dollar, it may enter into a forward contract to sell, for a fixed amount of
dollars, the amount of foreign currency approximating the value of some or all
of the securities held by the Portfolio denominated in such foreign currency.
The precise matching of the forward contract amounts and the value of the
securities involved will not generally be possible because the future value of
such securities in foreign currencies will change as a consequence of market
movements in the value of those securities between the date on which the
contract is entered into and the date it matures. The precise projection of
short-term currency market movements is not possible, and short-term hedging
provides a means of fixing the dollar value of only a portion of the Portfolio's
foreign assets.
Special Risks Associated With Currency Transactions. Transactions in forward
contracts, as well as futures and options on foreign currencies, are subject to
the risk of governmental actions affecting trading in or the prices of
currencies underlying such contracts, which could restrict or eliminate trading
and could have a substantial adverse effect on the value of positions held by
the Portfolio. In addition, the value of such positions could be adversely
affected by a number of other complex political and economic factors applicable
to the countries issuing the underlying currencies.
Furthermore, unlike trading in most other types of instruments, there is no
systematic reporting of last sale information with respect to the foreign
currencies underlying forward contracts, futures contracts and options. As a
result, the available information on which the Portfolio's trading systems will
be based may not be as complete as the comparable data on which the Portfolio
makes investment and trading decisions in connection with securities and other
transactions. Moreover, because the foreign currency market is a global,
twenty-four hour market, events could occur on that market which will not be
reflected in the forward, futures or options markets until the following day,
thereby preventing the Portfolio 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 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 the 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 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 the Adviser 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 the 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.
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 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. While the 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.
Asset Coverage for Derivative Instruments. Transactions involving reverse
repurchase agreements, currency swaps, the lending of Portfolio securities or
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 or other options or futures
contracts, or (2) cash or liquid securities (such as readily marketable common
stock and money market instruments) with a value sufficient at all times to
cover its potential obligations not covered as provided in (1) above. (Only the
net obligations of a swap will be covered.) 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 maintained by the
Portfolio's custodian 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. For the
period from the start of business, September 1, 1996, to February 28, 1997, the
Portfolio's portfolio turnover rate was 15%.
Lending Portfolio Securities. If the 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 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 holder of
the securities or the giving or holding of their consent on a material matter
affecting the investment. Securities lending involves administration expenses,
including finders' fees. If the 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. Securities lending involves administrative expenses
including finders' fees. As of the present time, the Trustees of the Portfolio
have not made a determination to engage in this activity, and have no present
intention of making such a determination during the current fiscal year.
INVESTMENT RESTRICTIONS
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 any senior securities except as permitted by the
Investment Company Act of 1940;
(2) Purchase any securities on margin except that the Fund 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);
(5) Purchase or sell commodities or commodity contacts with respect to
physical commodities;
(6) 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;
(7) With respect to 75% of its total assets, invest more than 5% of its
assets in the securities of any one issuer (except securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities), or invest
in the securities of any issuer if as a result the Fund holds more than 10% of
the outstanding voting securities of such issuer;
(8) Sell securities short unless at all times when a short position is open
the Fund either owns an equal amount of such securities or owns securities
convertible into or exchangeable, without payment of any further consideration,
for securities of the same issue as, and equal in amount to, the securities sold
short; or
(9) Invest in the securities of any one industry, except the medical
research and health care industry (and except securities issued or guaranteed by
the U.S. Government, its agencies or instrumentalities) if as a result more than
25% of the Fund's total assets would be invested in the securities of such
industry.
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 numbered investment restrictions adopted by the
Fund; such restrictions cannot be changed without the approval of a "majority of
the outstanding voting securities" of the Portfolio.
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 (i) invest more than 15% of its net assets in
securities which are not readily marketable, including repurchase agreements
with remaining maturities in excess of seven days and restricted securities.
(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 the Fund or Portfolio, or their delegate, determines to be liquid);
(ii) invest in warrants if as a result more than 2% of the value of the Fund's
or Portfolio's total assets would be invested in warrants which are not listed
on a recognized stock exchange, or more than 5% of the Fund's or the Portfolio's
total assets, as the case may be, would be invested in warrants regardless of
whether listed on such exchanges; (iii) purchase or retain the securities of any
issuer if to the knowledge of the Fund or Portfolio any officer, director or
trustee of the Fund, the Portfolio or of its investment adviser own beneficially
more than 1/2 of 1% of the outstanding securities of such issuer and together
they own beneficially more than 5% of the securities of such issuer; (iv) invest
in companies for the purpose of exercising control or management; or (v) invest
in or sell put options, call options, straddles, spreads or any combination
thereof, except that the Fund may write covered call options or enter into
closing purchase transactions and except that the Fund may enter into futures
contracts and related options.
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, 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 securities of health science
companies. Moreover, the Fund and the Portfolio must always be in compliance
with its borrowing policy set forth below.
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.
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 M&I 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." The advisory fee rate on average daily net
assets is reduced to .70% on assets of $500 million but less than $1 billion, to
.65% on assets of $1 billion but less than $1.5 billion, to .60% on assets of
$1.5 billion but less than $2 billion, to .55% on assets of $2 billion but less
than $3 billion and .50% on assets of $3 billion and over.
As of February 28, 1997, the Portfolio had net assets of $89,078,180. For
the period from the start of business, September 1, 1996, to February 28, 1997,
the Adviser earned advisory fees of $294,731 (equivalent to 0.91% (annualized)
of the Portfolio's average daily net assets for such period).
The performance fee adjustment to the advisory fee is as follows: After 12
months, the basic advisory fee is subject to upward or downward adjustment
depending upon whether, and to what extent, the investment performance of the
Portfolio differs by at least one percentage point from the record of the
Standard & Poor's Index of 500 Common Stocks over the same period. Each
percentage point difference is multiplied by a performance adjustment rate of
0.025%. The maximum adjustment plus/minus is 0.25%. One twelfth (1/12) of this
adjustment is applied each month to the average daily net assets of the
Portfolio over the entire performance period. This adjustment shall be based on
a rolling period of up to and including the most recent 36 months. Portfolio
performance shall be total return as computed under Rule 482 under the
Securities Act of 1933.
The Portfolio's investment advisory agreement with the Adviser continues in
effect from year to year 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
Eaton Vance, its affiliates and its predecessor companies have been managing
assets of individuals and institutions since 1924 and managing investment
companies since 1931. They maintain a large staff of experienced fixed-income
and equity investment professionals to service the needs of their clients. The
fixed-income division focuses on all kinds of taxable investment-grade and
high-yield securities, tax-exempt investment-grade and high-yield securities,
and U.S. Government securities. The equity division, with a staff of
approximately 30 professionals, covers stocks ranging from blue chip to emerging
growth companies. Eaton Vance manages more than 150 mutual funds, as well as
retirement plans, pension funds and endowments.
See "Management of the Fund and the Portfolio" in the Prospectus for a
description of the services Eaton Vance performs as the manager and sponsor of
the Fund and the administrator of the Portfolio. Under Eaton Vance's management
contract with the Fund and administration agreement with the Portfolio, Eaton
Vance receives a monthly management fee from the Fund and a monthly
administration fee from the Portfolio. Each fee is computed by applying the
annual asset rate applicable to that portion of the average daily net assets of
the Fund or the Portfolio throughout the month in each Category as indicated
below:
ANNUAL
CATEGORY AVERAGE DAILY NET ASSETS ASSET RATE
- -------- ------------------------ ----------
1 less than $500 million ......................... 0.25%
2 $500 million but less than $1 billion .......... 0.23333
3 $1 billion but less than $1.5 billion .......... 0.21667
4 $1.5 billion but less than $2 billion .......... 0.20
5 $2 billion but less than $3 billion ............ 0.18333
6 $3 billion and over ............................ 0.1667
For the period from the start of business, September 1, 1996, to February
28, 1997, the Portfolio paid Eaton Vance administration fees of $80,887
(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 and its administration
agreement with the Portfolio will remain in effect from year to year, so long as
such continuance is approved annually by the vote of a majority of the Board of
the Fund or the Trustees of the Portfolio, as the case may be. Each agreement
may be terminated at any time without penalty on sixty days' written notice by
the relevant Board 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 Boards, including the non-interested members, 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 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 Directors or 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 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 Directors or 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 March 31,
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. Mr. Otis, who is an officer, Director or Trustee of the
Fund and/or the Portfolio, is a member of the EVC, Eaton Vance, BMR and EV
organizations. Messrs. Murphy, O'Connor, Richardson and Woodbury and Ms. Sanders
are officers of the Fund 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 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 precious metal mining
venture investment and management. EVC, BMR, Eaton Vance and EV may also enter
into other businesses.
Eaton Vance mutual funds are distributed by the Principal Underwriter both
within the United States and offshore. The Principal Underwriter 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.
CUSTODIAN
IBT 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 Fund's transfer agent or the Principal Underwriter will be able to terminate
the withdrawal plan at any time without penalty.
DETERMINATION OF NET ASSET VALUE
The Fund and the 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 Portfolio's net asset value also will be determined on
any day in which there is sufficient trading in its portfolio securities that
the net asset value might be affected materially, but only if on any such day
the Portfolio is required to sell or redeem shares. The net asset value per
share is computed by dividing the value of the securities held by the Portfolio
plus any cash or other assets (including any accrued interest and dividends
receivable but not yet received) minus all liabilities (including accrued
expenses) by the total number of Portfolio shares outstanding at such time.
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.
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.
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 Exchange is open for trading
("Portfolio Business Day") as of the close of regular trading on the Exchange
(normally 4:00 p.m., New York time) (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,
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 Portfolio Valuation Time
on the prior Portfolio Business Day plus or minus, as the case may be, the
amount of any additions to or withdrawals from the investor's investment in the
Portfolio on the current Portfolio Business Day, and (ii) the denominator of
which is the aggregate net asset value of the Portfolio as of the Portfolio
Valuation Time on the prior Portfolio Business Day plus or minus, as the case
may be, the amount of the net additions to or withdrawals from the aggregate
investment in the Portfolio on the current Portfolio Business Day by all
investors in the Portfolio. The percentage so determined will then be applied to
determine the value of the investor's interest in the Portfolio for the current
Portfolio Business Day.
INVESTMENT PERFORMANCE
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 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, such as the Standard
& Poor's Index 500 Stock Index. In addition, the Fund's total return may be
compared to indices 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. In addition, evaluations of the Fund's performance or ranking of
mutual funds (which include the Fund) made by independent sources 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, 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 in materials furnished to present or
prospective shareholders may include statistics, data and performance studies
prepared by independent organizations or included in various publications
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:
- 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
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 or State of Maryland.
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 or Maryland 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 (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 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 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
broker-dealer 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 or
spread, 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 OTC 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 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 the Adviser and its affiliates
have for accounts over which it exercises 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 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, 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. ("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.
Whenever decisions are made to buy or sell securities by the Portfolio and one
or more of such other accounts simultaneously, BMR will allocate the security
transactions (including "hot" issues) in a manner which it believes to be
equitable under the circumstances. As a result of such allocations, there may be
instances where the Portfolio will not participate in a transaction that is
allocated among other accounts. If an aggregate order cannot be filled
completely, allocations will generally be made on a pro rata basis. An order may
not be allocated on a pro rata basis where, for example: (i) consideration is
given to portfolio managers who have been instrumental in developing or
negotiating a particular investment; (ii) consideration is given to an account
with specialized investment policies that coincide with the particulars of a
specific investment; (iii) pro rata allocation would result in odd-lot or de
minimis amounts being allocated to a portfolio or other client; or (iv) where
BMR reasonably determines that departure from a pro rata allocation is
advisable. While these aggregation and allocation policies 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 from the BMR organization outweigh any
disadvantage that may arise from exposure to simultaneous transactions. For the
period from the start of business, September 1, 1996, to February 28, 1997, the
Portfolio paid brokerage commissions of $45,925 on portfolio transactions. Of
this amount, approximately $21,562 was paid in respect of portfolio security
transactions aggregating approximately $9,109,484 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
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.
<PAGE>
Appendix
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EATON VANCE
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MUTUAL FUNDS
[medical graphic]
EATON VANCE
WORLDWIDE HEALTH
SCIENCES FUNDS
Participate in the Accelerating Revolution in Global Health Sciences
EV TRADITIONAL WORLDWIDE HEALTH SCIENCES FUND ("A")
EV MARATHON WORLDWIDE HEALTH SCIENCES FUND ("B")
[globe graphic]
EATON VANCE
GLOBAL MANAGEMENT--GLOBAL DISTRIBUTION
<PAGE>
[logo]
EATON VANCE
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MUTUAL FUNDS
THE CASE FOR HEALTH SCIENCES
THE ACCELERATING REVOLUTION
In no other discipline has innovation been more dramatic--or critical to human
existence--than in the field of health sciences, which embraces both medical
research and health care. Indeed, the health sciences industry is in the midst
of a revolution that began in this century and is accelerating as we approach
its close.
o The discovery of penicillin in the late 1920s was the catalyst for the modern
health care revolution. That discovery fostered the realization that disease
could be cured with drugs and was the foundation for today's
multi-billion-dollar pharmaceutical industry.
o More recently, technological breakthroughs like computerized axial tomography
(CAT scans), magnetic resonance imaging (MRI) and ultrasound have
revolutionized diagnostic capabilities, while heart-lung machines, kidney
dialysis and pacemakers are among the many devices that complement drugs and
surgery in treating illness.
o The discovery of the structure of DNA and the cracking of the genetic code
are perhaps the most notable breakthroughs. Not only have they produced
exciting recombinant/cloning therapies, they have opened new research
frontiers that are transforming health sciences even today.
o Today, all over the world, new drugs and treatments are in some stage of
development. Within the next few years, we will witness some startling
discoveries and, within many of our lifetimes, the health sciences industry
will achieve breakthroughs, so revolutionary, that none of us now can even
imagine.
The large and small companies engaged in the pursuit of tomorrow's innovations
(and those who invest in them) have the potential to profit handsomely.
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THE HEALTH SCIENCES UNIVERSE
[medical graphic]
The health sciences universe includes companies principally engaged in the
development, production or distribution of products and services related to
health care.
Biotechnology: Companies producing or planning to produce diagnostic and
therapeutic drugs using recombinant and molecular biology and rational drug
design platforms to treat and cure diseases.
Pharmaceuticals: Companies involved in large-scale, global discovery and
development of innovative prescription drugs and diagnostics,
over-the-counter products, delivery systems, nutrition, animal health and
sometimes chemical and agricultural products.
[microscope graphic]
Diagnostics: Companies that develop or maintain sophisticated diagnostic
equipment such as CAT scanners and Magnetic Resonance Imaging, as well as
urological and serological assays.
Managed Health Care: Operations of investor-owned hospital chains (including
acute care psychiatric hospitals), nursing centers, health maintenance
organizations, and rehabilitation clinics which seek to deliver hospital care
on an efficient cost basis.
Medical Equipment and Supplies: Companies engaged in the manufacture of
inpatient and outpatient medical (and dental), surgical, laboratory and
diagnostic products (ranging from cotton swabs through kidney dialysis
equipment to CAT scanners).
[beakers with solution graphic]
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- --------------------------------------------------------------------------------
FUND SHARES ARE NOT INSURED BY THE FDIC AND ARE NOT DEPOSITS OR OTHER
OBLIGATIONS OF, OR GUARANTEED BY, ANY DEPOSITORY INSTITUTION. SHARES ARE
SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL INVESTED.
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<PAGE>
WORLD DEMOGRAPHICS ARGUE FOR A
COMING EXPLOSION IN HEALTH CARE
The health sciences industry knows no borders or political frontiers. In the
U.S. and the developed countries of Europe and Asia, as well as in emerging
countries, demographics are at work that should push demand steadily upward.
IN THE MATURE ECONOMIES
The mature economies of the world house 14% of the earth's population, yet
account for 80% of all health care expenditures. What's more, individuals over
age 65 account for a substantially greater proportion of spending than younger
age groups, and that trend should continue as the populations of the world's
mature economies age.
Sources: PSMI International Data Bases; Central Intelligence Agency
o In 1900 in the U.S., for example, there were 3.1 million people age 65 or
older. By 1993, there were 32.8 million, or 10 times as many.*
o In the U.S., the 75-and-over age group is growing at the fastest pace, soon
to be replaced by those 85 and older. By the year 2050, it is projected that
the over-85 population will exceed 18 million people.*
* Source: U.S. Bureau of the Census
o The oldest of the "baby boomers" turned 50 in 1996. As this generation ages,
its demand for health care and, hence, its health care expenditures, should
escalate dramatically.
o Over the past two decades, health care expenditures have been increasing in
many countries throughout the world. In the U.S., for example, heath care
costs amounted to $884.2 billion in 1993, or 13.9% of Gross Domestic Product
(GDP), compared to only 5.9% of GDP in 1965.
Source: U.S. Department of Labor
AGING AMERICA
Population Growth 1900-2050
(in millions)
85 and older 65 and older
1900 0.1 3.1
1920 0.2 4.9
1940 0.4 9.0
1960 0.9 16.7
1980 2.2 25.7
1990 3.0 30.0
2000 4.3 35.3
2010 5.7 40.1
2020 6.5 53.3
2030 8.4 70.2
2050 18.2 78.9
Source: U.S. Bureau of the Census
IN THE EMERGING ECONOMIES
o Presently, the emerging markets account for 86% of the world's population,
but only 20% of global health care expenditures. But the potential lies in
how much they WILL spend. Where the per capita spending per year is $270 in
the west, it is only $15 in the emerging markets.
Sources: PSMI International Data Bases; Central Intelligence Agency
o It is estimated that over 10% of the emerging market population -- a consumer
group similar in size to the population of established economies -- can now
afford western prices. And the percentage will surely increase as
liberalization in these markets produces a growing middle class.
Source: Mehta and Isaly
ADVANCES CREATE DEMAND
Beyond demographics, the very innovations within the health sciences industry
create demand for products and services that improve our quality of life in a
highly cost-effective manner.
For example, if you were diagnosed with a peptic ulcer, surgery was the
accepted treatment. Then came Tagamet(TM), Zantac(TM) and Prilosec(TM).
Today, ulcers are more treatable than the common cold. (According to the
August 5, 1996 edition of FORTUNE, Zantac(TM) is the most successful drug
ever produced, generating over $27 billion in worldwide sales since it was
introduced in 1981.)
There are numerous unmet needs that the health sciences industry will seek to
answer in the future.
[Beakers with solutions graphic]
HISTORY OF STRONG PERFORMANCE
Although past performance cannot guarantee future results, over the past 10
years, the health and biotechnology sector has outperformed both the Standard &
Poor's 500 Index and the Morgan Stanley Capital International Index.
A HISTORY OF STRONG PERFORMANCE
HEALTH/BIOTECH FUNDS VERSUS WORLD MARKETS
Growth of $100, 12/31/85 - 6/30/96
MSCI S&P LIPPER HEALTH/
WORLD INDEX 500 BIOTECH FUNDS
1986 100 100 100
1987 142.800003 118.660004 116.599998
1988 166.729996 124.900002 117.650002
1989 206.669998 145.639999 132.160004
1990 242.210007 191.800003 191.080002
1991 202.199997 185.850006 232.880005
1992 240.550003 242.479996 398.51001
1993 229.339996 260.959991 329.130005
1994 284.440002 276.380005 344.709991
1995 312.170013 319.399994 422.700012
1996 376.820007 421.929993 611.02002
Sources: Lipper Analytical Services, Inc.; Standard & Poor's; MSCI.
The Lipper Health/Biotechnology Funds Average is composed of open-end mutual
funds that invest at least 65% of their equity portfolios in shares of companies
engaged in health care, medicine and biotechnology. The Standard & Poor's 500
Composite Index is an unmanaged index of 500 capitalization-weighted common
stocks and is commonly used as a measure of U.S. stock market performance. The
Morgan Stanley Capital International World Index is an unmanaged,
capitalization-weighted index composed of a sample of companies representative
of the market structure of 22 world markets, including the U.S., which are
generally open to foreign investments.
NOW EATON VANCE OFFERS YOU AN EASY, AFFORDABLE WAY TO PARTICIPATE IN THE GROWTH
POTENTIAL OF HEALTH SCIENCES ... THE EV WORLDWIDE HEALTH SCIENCES FUNDS.
THE CASE FOR
EV WORLDWIDE HEALTH SCIENCES FUNDS
INVESTMENT OBJECTIVE
The objective of the Eaton Vance Worldwide Health Sciences Funds is long-term
capital growth. The Funds seek to achieve their objective by investing in the
Worldwide Health Sciences Portfolio* (the "Portfolio"). The Portfolio is a
diversified, open-end investment company having the same investment objective as
the Funds.
* Formerly the Medical Research Investment Fund, Inc.
INVESTMENT STRATEGY
Recognizing that health sciences is truly a global industry and that knowledge
is not confined to any one region, the Funds' adviser, Mehta and Isaly Asset
Management, Inc., takes a worldwide investment perspective. Its current
investment strategy is...
o All investments are selected for their long-term potential.
o Generally, between 20% and 40% of the Portfolio assets are invested in 10 to
15 major pharmaceutical companies with market capitalizations greater than $2
billion. The selection of major companies is based on potential to increase
market share.
o The remaining 60% to 80% of assets are invested in 15 to 20 smaller
biotechnology and speciality health care companies. Selection is based on
Portfolio potential to achieve above-average growth.
o Portfolio holdings are distributed between the United States, Europe and the
Far East, which includes Australia.
o The goal is to achieve a high level of capital growth with controlled risk.
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GEOGRAPHICAL ALLOCATION OF PORTFOLIO ASSETS
AS OF 7/31/96
WORLDWIDE DATASTREAM WORLD
HEALTH SCIENCES PORTFOLIO PHARMACEUTICALS INDEX
BIG CAP 42%* BIG CAP 94%*
FAR EAST 36% FAR EAST 29%
AMERICAS 16% AMERICAS 36%
EUROPE 48% EUROPE 35%
SMALLER CAP 56% SMALLER CAP 6%
FAR EAST 25% FAR EAST 27%
AMERICAS 48% AMERICAS 13%
EUROPE 27% EUROPE 60%
CASH: 2%
* market capitalization of $2 billion or more
In assembling the Portfolio, The Funds' adviser has focussed on smaller cap
companies, which account for two-thirds of all research being undertaken in the
worldwide health sciences industry. This weighting contrasts sharply with the
makeup of the Datastream World Pharmaceuticals Index, whose composition includes
94% large cap companies.
Source: Datastream; Mehta and Isaly
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INVESTMENT UNIVERSE
According to a 1993 study by Hoffmann-La Roche (which the Funds' adviser
believes is the most current), the 20 largest research and development companies
in the world, with market capitalizations of $2 billion and up, had about 1,100
drugs in various stages of research. The small firms, of which there are
hundreds, had over 2,300 drugs in research. In other words, the smaller
companies are undertaking over two-thirds of the scientific research, and, in
the opinion of the Funds' adviser, this is where there is the greatest potential
for dramatic appreciation on investment.
FIRMS ARE EVALUATED DIFFERENTLY
o THE LARGE COMPANIES: Here, the Funds' adviser looks for future increase in
market share, which correlates well with the stock price.
o THE SMALLER COMPANIES: Here the focus is to look for "promise," -- for truly
innovate therapies that go beyond treating just the symptoms. The realization
of such promise will determine a company's future market share and so, just
as with the larger firms, will determine its future earnings and stock price.
All the new compounds (drugs) that will be on the market in the year 2000 are in
development now, and the Funds' investment adviser believes it knows about each
through its extensive investment research activities.
[hand holding test tube graphic]
THE CASE FOR
MEHTA AND ISALY ASSET MANAGEMENT, INC.
Mehta and Isaly Asset Management, Inc. (formerly G/A Capital Management, Inc.),
a New York-based investment advisory company founded in 1989, brings a unique
combination of scientific and financial expertise to the management of the
Funds. The firm includes 10 professional and 5 support staff who specialize in
pharmaceutical, biotechnology and health care analysis with a global
perspective.
At least four important differences distinguish Mehta and Isaly from other
investment management firms.
o First, all 10 professionals are analysts. The Funds' Portfolio averages 30
holdings at any one time. Probably no other management company has such a high
ratio of analysts to portfolio holdings.
o Second, four of the analysts hold Ph.D. degrees in scientific disciplines.
This means they are able to evaluate the viability of drugs and technologies
under development in the biotech sector.
o Third, analysts cover the health sciences industry from a global perspective.
This enables the firm to "buy the best there is," wherever it is. Every
portfolio acquisition is examined in a worldwide, not a country-by-country,
perspective.
o Fourth, the Portfolio is managed to remain fully invested. Reason:there are
always exciting opportunities; the question is which ones, and at which time,
will best serve the Portfolio's objective?
In addition to serving as investment adviser to the Funds, Mehta and Isaly
provides advice to 15 pharmaceutical companies worldwide and 80 institutional
investors in the U.S., Europe and Japan. Total assets under management are over
$250 million.
HOW THE ADVISER SEEKS TO CONTROL RISK
In Mehta and Isaly's view, there are two principal forms of risk associated with
investment in health sciences:technological risk and financial risk.
While there is a large component of chance in technological risk, (i.e.,
assessing the viability of products, therapies and technologies under
development) the firm strives to reduce that risk by carrying out an intensive
valuation process. This is where the team of scientific analysts proves
invaluable.
Mehta and Isaly focuses on 11 smaller-company research and therapeutic
subsectors. Then, working across the global spectrum of firms engaged in the
same pursuits, it evaluates competition, market potential and probabilities of
achieving a major breakthrough.
In addition, Mehta and Isaly seeks to control financial risk by diversifying the
Portfolio both geographically and by market capitalization, as well as thorough
painstaking financial analysis and field trips to targeted Portfolio companies.
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HOW PORTFOLIO HOLDINGS ARE SELECTED
1) Mehta and Isaly keeps 300 companies on computer file
o 200 based in United States
o 100 based in Europe and Far East
2) Staff does initial screening on products and valuation
3) 200 companies are chosen for firm's assignment list
o Staff meets with company management
o Acquires in-depth perspective
o Does valuation screens
o Evaluates products and therapies
o Assesses markets
o Determines financial position
4) List is further narrowed to 100 companies
o Intensive contact with management
5) 25 to 30 companies are selected for Portfolio
o Staff closely monitors each one
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ABOUT EATON VANCE
With a history that dates to 1924, Eaton Vance is a Boston-based investment
management firm. The company serves as the Funds' sponsor and administrator.
Eaton Vance features...
o Over seven decades of investment management expertise in U.S. equities
o More than 25 professionals specializing in security analysis and equity
management
o Over $17 billion in assets under management
o More than 150 mutual funds, as well as retirement plans, pension funds and
endowments
ABOUT RISK
Eaton Vance and Mehta and Isaly believe opportunities for long-term growth of
capital are excellent for many health sciences companies. The Funds, however,
should not be considered a complete investment program due to lack of industry
diversification.
The health sciences industry generally is subject to substantial government
regulation. Accordingly, changes in government policies or regulation could have
a material effect on the demand for products and services offered by health
science companies and, therefore, could affect the performance of the Funds.
Enforcement of intellectual property laws will effect the value of many
companies. It should be recognized that foreign securities and markets in which
the Portfolio invests pose different and greater risks than those customarily
associated with domestic securities and their markets. Furthermore, investors
should consider other risks associated with a portfolio which contains
international securities, including fluctuations in foreign currency exchange
rates and political and economic instability. In addition, the Portfolio may
invest up to 20% of its total assets in below investment grade securities and up
to 100% of its assets in the securities of emerging companies. Emerging
companies, especially foreign emerging companies, may not be as liquid as larger
domestic companies. The net asset value of Fund shares will fluctuate over time
and investors may experience losses.
SHAREHOLDER SERVICES
o Investment minimum, $1,000; subsequent investments of $50 or more.
o Reinvest fund distributions automatically.
o 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.
o Bank draft investing for automatic monthly or quarterly investments from a
checking account.
o 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.
o Systematic withdrawal plans for automatic periodic withdrawals from a fund
account.
Withdrawals from Marathon Fund outside an allowed systematic withdrawal plan may
be subject to a contingent deferred sales charge. See prospectus for details.
IT PAYS TO SEEK PROFESSIONAL ADVICE
You have crucial investment goals -- your children's education, a comfortable
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! Before making an investment recommendation, your representative
can help you carefully consider --
o your short- and long-term financial goals
o your tolerance for investment risk
o your investment time frame
o the other investments you may already own
Your 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, and during the years to come.
Take a closer look at the Eaton Vance Worldwide Health Sciences Funds. We think
you'll agree they represent an exciting global investment opportunity. Your
professional investment adviser and Eaton Vance are there to help you capture
the growth potential of the world's health sciences industry.
For more complete information about EV Marathon Worldwide Health Siences Fund,
EV Traditional Worldwide Health Sciences Fund or any other Eaton Vance fund,
including distribution plans, charges and expenses, please write or call your
financial adviser for a prospectus(es). Read the prospectus(es) carefully before
you invest or send money. The Funds' objective and certain policies are
nonfundamental and may be changed without shareholder approval. The Funds are
intended for long-term investors and are not meant to be a complete investment
program.
Ask your investment adviser how EV Marathon Worldwide Health Sciences Fund or EV
Traditional Worldwide Health Sciences Fund, Inc. might fit into your portfolio.
[logo]
EATON VANCE
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MUTUAL FUNDS
(C) 1996 EATON VANCE DISTRIBUTORS. INC., 24 Federal Street, Boston, MA 02110
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
PART II
This Part II provides information about EV MARATHON WORLDWIDE HEALTH
SCIENCES FUND. The Fund became a series of Eaton Vance Growth Trust on March
20, 1996.
FEES AND EXPENSES
MANAGER
As of February 28, 1997, the Fund had net assets of $22,285,966. For the
period from the start of business, September 23, 1996, to February 28, 1997, the
Fund paid Eaton Vance management fees of $9,253 (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 23, 1996, to February
28, 1997, the Principal Underwriter paid to Authorized Firms sales commissions
of $718,055 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 $27,758 and the Principal Underwriter received $4,500 in CDSCs
imposed on early redeeming shareholders. These sales commissions and CDSC
payments reduced Uncovered Distribution Charges under the Plan. As at February
28, 1997, the outstanding Uncovered Distribution Charges of the Principal
Underwriter calculated under the Plan amounted to approximately $924,000. The
Fund expects to begin making service fee payments during the quarter ending
September 30, 1997.
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 period from the start of
business, September 23, 1996, to February 28, 1997, the Fund paid the Principal
Underwriter $65 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.) For the fiscal year ending August 31, 1997, it is estimated that the
noninterested Trustees of the Fund and the Portfolio will receive the following
compensation in their capacities as Trustees of the Trust and the Portfolio and,
during the year ended December 31, 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):
ESTIMATED ESTIMATED
AGGREGATE AGGREGATE TOTAL COMPENSATION
COMPENSATION COMPENSATION FROM TRUST AND
NAME FROM FUND FROM PORTFOLIO FUND COMPLEX
- ---- ------------ -------------- --------------
Donald R. Dwight ........ $0 $306 $145,000(2)
Samuel L. Hayes, III .... 0 370 157,500(3)
Norton H. Reamer ........ 0 350 145,000
John L. Thorndike ....... 0 386 150,000(4)
Jack L. Treynor ......... 0 368 150,000
(1) The Eaton Vance fund complex consists of 212 registered investment companies
or series thereof.
(2) Includes $35,000 of deferred compensation.
(3) Includes $20,429 of deferred compensation.
(4) Includes $28,125 of deferred compensation.
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 or the Portfolio as defined in the 1940 Act by virtue of their
affiliation with 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 (66), Trustee
President of Dwight Partners, Inc. (a corporate relations and communications
company). Chairman of the Board of Newspapers of New England, Inc. 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 (62), 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
Former 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 (67), 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 (65), 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). Officer of various investment companies managed
by Eaton Vance or BMR. Mr. Murphy was elected Assistant Secretary 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. Officer of various investment companies managed by
Eaton Vance or BMR. Mr. Woodbury was elected Assistant Secretary of the Trust
on June 19, 1995.
OFFICERS AND TRUSTEES OF THE PORTFOLIO
The Trustees and officers of the Portfolio are identical to the Trustees and
officers of the Trust, except Mr. Burt, Mr. Gardner and Mr. Tittman are not
officers of the Portfolio and the following are additional officers of the
Portfolio:
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
SAMUEL D. ISALY (52), Vice President
President of Mehta and Isaly Asset Management, Inc. since 1989; Senior Vice
President of S.G. Warburg & Co., Inc. from 1986 through 1989; and President
of Gramercy Associates, a health care industry consulting firm, from 1983
through 1986.
Address: Mehta and Isaly Asset Management, Inc., 41 Madison Avenue, 40th
Floor, New York, NY 10010-2202
VIREN MEHTA, (47), Vice President
Chairman of Mehta and Isaly Asset Management, Inc. since 1989; Analyst of S.G.
Warburg & Co., Inc. from 1987 through 1989; Analyst of Wood MacKenzie &
Company Inc. from 1986 through 1987; and Manager of Merck & Co. from 1963
through 1986.
Address: Mehta and Isaly Asset Management, Inc., 41 Madison Avenue, 40th Floor,
New York, NY 10010-2202
MICHEL NORMANDEAU (45), Vice President
Assistant Manager - Trust Services, The Bank of Novia 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 Corporation Management Limited,
Warwick, Bermuda (1991-1994). Officer, The Bank of Bermuda limited, Hamilton,
Bermuda (1987-1991).
Address: Earlsfort Terrace, Dublin 2, Ireland
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 and the Portfolio, including
investment advisory (Portfolio only), administrative, 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, the Portfolio or investors therein.
The Nominating Committee of the Board of Trustees of the Trust and the
Portfolio 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. 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 certified public accountants, and reviewing 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 and of the Portfolio.
Trustees of the Portfolio who are not affiliated with the 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 "Trustees" Plan"). Under
the Trustees' 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 Trustees' Plan
will be determined based upon the performance of such investments. Deferral of
Trustees' fees in accordance with the Trustees' 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 Trust has a retirement plan for its
Trustees.
The fees and expenses of the noninterested Trustees of the Trust and the
Portfolio are paid by the Fund (and the other series of the Trust) and the
Portfolio, respectively. For the compensation earned by the noninterested
Trustees, see "Fees and Expenses."
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 ("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 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 the noninterested Trustees 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.
The Plan continues from year to year 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 annual total return on
a hypothetical investment of $1,000 in the Fund covering the 1-, 5-, and 10-year
periods ended February 28, 1997. The total return for the period prior to the
Fund's commencement of operations on September 23, 1996 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 and/or service fees and certain other expenses.
<TABLE>
VALUE OF $1,000 INVESTMENT
<CAPTION>
VALUE OF VALUE OF
INVESTMENT INVESTMENT TOTAL RETURN TOTAL RETURN
INVESTMENT BEFORE CDSC AFTER CDSC* BEFORE DEDUCTING CDSC AFTER DEDUCTING CDSC*
INVESTMENT PERIOD DATE ON 2/28/97 ON 2/28/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ----------------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
10 years ended
2/28/97 2/28/87 $4,206.23 $4,206.23 320.62% 15.45% 320.62% 15.45%
5 years ended
2/28/97 2/28/92 $2,417.66 $2,397.66 141.77% 19.31% 139.77% 19.11%
1 year ended
2/28/97 2/28/96 $1,200.22 $1,150.22 20.02% 20.02% 15.02% 15.02%
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.
</TABLE>
OTHER INFORMATION
The Trust is a Massachusetts business trust established in 1989 as the
successor to Eaton Vance Growth Fund, Inc., a Massachusetts corporation. On
August 18, 1992, the Trust changed its name from Eaton Growth Fund to Eaton
Vance Growth Trust. 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.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As at February 28, 1997, the Trustees and officers of the Trust, as a group,
owned in the aggregate less than 1% of the outstanding shares of the Fund. As of
February 28, 1997, Merrill Lynch, Pierce, Fenner & Smith, Inc., For the Sole
Benefit of its Customers, Jacksonville, FL 32246 was the record owner of
approximately 21.07% of the outstanding shares of the Fund, 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.
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P., One Post Office Square, Boston, Massachusetts, are
the independent accountants for the Fund, providing audit services, tax return
preparation, and assistance and consultation with respect to the preparation of
filings with the Commission. Coopers & Lybrand Chartered Accountants, Toronto,
Canada, are the independent accountants for the Portfolio.
<PAGE>
-----------------------------------
EV MARATHON WORLDWIDE HEALTH SCIENCES FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
February 28, 1997 (Unaudited)
- --------------------------------------------------------------------------------
ASSETS:
Investment in Worldwide Health Sciences Portfolio, at
value (Note 1A) (identified cost, $20,990,051) $21,954,529
Receivable for Fund shares sold 316,555
Deferred organization expenses (Note 1E) 38,115
-----------
Total assets $22,309,199
-----------
LIABILITIES:
Payable for Fund shares redeemed $ 325
Accrued expenses 22,908
-----------
Total liabilities $ 23,233
-----------
NET ASSETS for 1,999,939 shares of beneficial interest
outstanding $22,285,966
===========
SOURCES OF NET ASSETS:
Paid-in capital $21,204,747
Accumulated net realized gain on investments and foreign
currency transactions (computed on basis of identified
cost) 218,389
Accumulated net investment loss (101,648)
Net unrealized appreciation of investments and foreign
currency transactions (computed on basis of identified
cost) 964,478
-----------
Total $22,285,966
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE (NOTE 6)
($22,285,966 / 1,999,939 shares of beneficial interest
outstanding) $11.14
======
See notes to financial statements
<PAGE>
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
For the Period from the Start of Business,
September 23, 1996, to February 28, 1997 (Unaudited)
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividend income allocated from Portfolio (net of foreign
taxes, $26) $ 3,283
Expenses allocated from Portfolio (41,941)
------------
Total loss $ (38,658)
------------
Expenses --
Management fee (Note 3) $ 9,253
Distribution fees (Note 5) 27,758
Transfer and dividend disbursing agent fees 13,939
Registration costs 7,467
Amortization of organization expenses (Note 1E) 1,885
Printing and postage 688
Legal and accounting services 500
Custodian fee 224
Miscellaneous 1,276
------------
Total expenses $ 62,990
------------
Net investment loss $ (101,648)
------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM PORTFOLIO:
Net realized gain (loss) --
Investment transactions (identified cost basis) $ 216,445
Foreign currency transactions 1,944
------------
Net realized gain $ 218,389
------------
Change in unrealized appreciation (depreciation) --
Investment transactions $ 963,465
Foreign currency transactions 1,013
------------
Net change in unrealized appreciation $ 964,478
------------
Net realized and unrealized gain on investments $ 1,182,867
------------
Net increase in net assets from operations $ 1,081,219
============
See notes to financial statements
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
For the Period from the Start of Business,
September 23, 1996, to February 28, 1997 (Unaudited)
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income (loss) $ (101,648)
Net realized gain on investments 218,389
Change in unrealized appreciation (depreciation) 964,478
-----------
Net increase in net assets resulting from operations $ 1,081,219
-----------
Transactions in shares of beneficial interest --
Proceeds from sale of shares $21,913,181
Cost of shares redeemed (708,434)
-----------
Net increase in net assets from Fund share transactions $21,204,747
-----------
Net increase in net assets $22,285,966
NET ASSETS:
At beginning of period --
-----------
At end of period (including accumulated net investment loss
of $101,648) $22,285,966
===========
See notes to financial statements
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
For the Period from the Start of Business,
September 23, 1996, to February 28, 1997 (Unaudited)
- --------------------------------------------------------------------------------
NET ASSET VALUE, beginning of period $10.000
-------
INCOME (LOSS) FROM OPERATIONS:
Net investment loss $(0.051)
Net realized and unrealized gain on investments 1.191
-------
Total income from operations $ 1.140
-------
NET ASSET VALUE, end of period $11.140
=======
TOTAL RETURN(2) 11.4%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000 omitted) $22,286
Ratio of net expenses to average net assets(1) 2.90%+
Ratio of net expenses to average net assets after custodian fee
reduction(1) 2.84%+
Ratio of net investment (loss) to average net assets (2.75)%+
+Annualized.
(1) Includes the Fund's share of Worldwide Health Sciences Portfolio's allocated
expenses.
(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. Dividends and distributions, if any, are assumed to be reinvested
at the net asset value on the record date. Total return is not computed on
an annualized basis.
See notes to financial statements
<PAGE>
-----------------------------------
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES
EV Marathon Worldwide Health Sciences Fund (the Fund) is a diversified series of
Eaton Vance Growth Trust (the Trust). The Trust is an entity of the type
commonly known as Massachusetts business trust and is registered under the
Investment Company Act of 1940, as amended, as an open-end management investment
company. The Fund invests all of its investable assets in interests in the
Worldwide Health Sciences Portfolio (the Portfolio), a New York Trust, having
the same investment objective as the Fund. The value of the Fund's investment in
the Portfolio reflects the Fund's proportionate interest in the net assets of
the Portfolio (24.6% at February 28, 1997). The performance of the Fund is
directly affected by the performance of the Portfolio. The financial statements
of the Portfolio, including the portfolio of investments, are included elsewhere
in this report and should be read in conjunction with the Fund's financial
statements. The following is a summary of the significant accounting policies
consistently followed by the Fund in the preparation of its financial
statements. The policies are in conformity with generally accepted accounting
principles.
A. INVESTMENT VALUATIONS -- Valuation of securities by the Portfolio is
discussed in Note 1A of the Portfolio's Notes to Financial Statements which are
included elsewhere in this report.
B. INCOME -- The Fund's net investment income consists of the Fund's pro rata
share of the net investment income of the Portfolio, less all actual and accrued
expenses of the Fund determined in accordance with generally accepted accounting
principles.
C. EXPENSE REDUCTION -- Investors Bank & Trust Company (IBT) serves as custodian
to the Fund and the Portfolio. Pursuant to the respective custodian agreements,
IBT receives a fee reduced by credits which are determined based on the average
daily cash balance the Fund or the Portfolio maintain with IBT. Any significant
credit balance used to reduce the Fund's custodian fee is reported as a
reduction of expenses on the Statement of Operations.
D. FEDERAL TAXES -- The Fund's policy is to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute to shareholders each year all of its net investment income, if any,
and any net realized capital gains. Accordingly, no provision for federal income
or excise tax is necessary.
E. DEFERRED ORGANIZATION EXPENSES -- Costs incurred by the Fund in connection
with its organization, including registration costs, are being amortized on the
straight-line basis over five years.
F. USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenue and expense during the reporting period. Actual results could differ
from those estimates.
G. OTHER -- Investment transactions are accounted for on a trade date basis.
H. INTERIM FINANCIAL INFORMATION -- The interim financial statements relating to
February 28, 1997 and for the period then ended have not been audited by
independent certified public accountants, but in the opinion of the Fund's
management, reflect all adjustments, consisting of normal recurring adjustments,
necessary for the fair presentation of the financial statements.
- --------------------------------------------------------------------------------
(2) DISTRIBUTIONS TO SHAREHOLDERS
It is the present policy of the Fund to make 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 at least one distribution annually of all or substantially all of
the net realized capital gains (reduced by any available capital loss
carryforwards from prior years) allocated by the Portfolio to the Fund, if any.
Shareholders may reinvest all distributions in shares of the Fund at the per
share net asset value as of the close of business on the record date.
The Fund distinguishes between distributions on a tax basis and a financial
reporting basis. Generally accepted accounting principles require that only
distributions in excess of tax basis earnings and profits be reported in the
financial statements as a return of capital. Differences in the recognition or
classification of income between the financial statements and tax earnings and
profits which result in over distributions for financial statement purposes are
classified as distributions in excess of net investment income or accumulated
net realized gains. Permanent differences between book and tax accounting
relating to distributions are reclassified to paid-in capital.
- --------------------------------------------------------------------------------
(3) MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The management fee is earned by Eaton Vance Management (EVM) as compensation for
management and administration of the business affairs of the Fund. The fee is
based on a percentage of average daily net assets. For the period from the start
of business, September 23, 1996, to February 28,1997, the fee was equivalent to
0.25% of the Fund's average daily net assets for such period and amounted to
$9,253. Except as to Trustees of the Fund and the Portfolio who are not members
of EVM's organization, officers and Trustees receive remuneration for their
services to the Fund out of such management fee. Certain officers and Trustees
of the Fund and the Portfolio are officers and directors/trustees of the above
organization. In addition, administrative fees are paid by the Portfolio to EVM.
See Note 2 of the Portfolio's Notes to Financial Statements which are included
elsewhere in this report.
- --------------------------------------------------------------------------------
(4) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in Fund shares for the period from the start of business, September
23, 1996, to February 28, 1997 were as follows:
Shares sold 2,065,899
Shares redeemed (65,960)
---------
Net Increase 1,999,939
=========
- --------------------------------------------------------------------------------
(5) DISTRIBUTION PLAN
The Fund has adopted a distribution plan (the "Plan") pursuant to Rule 12b-1
under the Investment Company Act of 1940. The Plan requires the Fund to pay the
Principal Underwriter, Eaton Vance Distributors, Inc. (EVD) amounts equal to
1/365 of 0.75% of the Fund's daily net assets, for providing ongoing
distribution services and facilities to the Fund. The Fund will automatically
discontinue payments to EVD during any period in which there are no outstanding
Uncovered Distribution Charges, which are equivalent to the sum of (i) 5% of the
aggregate amount received by the Fund for the shares sold plus, (ii)
distribution fees calculated by applying the rate of 1% over the prevailing
prime rate to the outstanding balance of Uncovered Distribution Charges of EVD
reduced by the aggregate amount of contingent deferred sales charges (see Note
6) and daily amounts theretofore paid to EVD. The amount payable to EVD with
respect to each day is accrued on such day as a liability of the Fund and,
accordingly, reduces the Fund's net assets. The Fund paid or accrued $27,758 to
or payable to EVD for the period from the start of business September 23, 1996,
to February 28, 1997, representing 0.75% (annualized) of average daily net
assets. At February 28, 1997, the amount of Uncovered Distributions Charges of
EVD calculated under the Plan was approximately $924,000.
In addition, the Plan authorizes the Fund to make payments of service fees to
the Principal Underwriter, Authorized Firms and other persons in amounts not
exceeding 0.25% of the Fund's average daily net assets for each fiscal year. The
Trustees have implemented the Plan by authorizing the Fund to make quarterly
payments of service fees to the Principal Underwriter and Authorized Firms in
amounts not expected to exceed 0.25% 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. Service fee payments will be made for
personal services and/or the maintenance of shareholder accounts. Service fees
are separate and distinct from the sales commissions and distribution fees
payable by the Fund to EVD, and, as such, are not subject to automatic
discontinuance where there are no outstanding Uncovered Distribution Charges of
EVD. The Fund expects to begin accruing for its service fee payments during the
quarter ended September 30, 1997.
Certain of the officers and Trustees of the Fund are officers or directors of
EVD.
- --------------------------------------------------------------------------------
(6) CONTINGENT DEFERRED SALES CHARGE
A contingent deferred sales charge (CDSC) is imposed on any redemption of Fund
shares made within six years of purchase. Generally, the CDSC is based upon the
lower of the net asset value at date of redemption or date of purchase. No
charge is levied on shares acquired by reinvestment of dividends or capital gain
distributions. The CDSC is imposed at declining rates that begin at 5% in the
first and second year of redemption after purchase, declining one percentage
point each year thereafter. No CDSC is levied on shares which have been sold to
EVM or its affiliates or to their respective employees or clients. CDSC charges
are paid to EVD to reduce the amount of Uncovered Distribution Charges
calculated under the Fund's Distribution Plan. CDSC charges received when no
Uncovered Distribution Charges exist will be retained by the Fund. EVD received
approximately $4,500 of CDSC paid by shareholders for the period from the start
of business, September 23, 1996, to February 28, 1997.
- --------------------------------------------------------------------------------
(7) INVESTMENT TRANSACTIONS
Increases and decreases in the Fund's investment in the Portfolio aggregated
$21,604,471 and $794,152, respectively.
<PAGE>
<TABLE>
-------------------------------
WORLDWIDE HEALTH SCIENCES PORTFOLIO
PORTFOLIO OF INVESTMENTS
FEBRUARY 28, 1997
(UNAUDITED)
<CAPTION>
- ------------------------------------------------------------------------------------------------------
COMMON STOCKS AND WARRANTS - 95.26%
- ------------------------------------------------------------------------------------------------------
MARKET
VALUE PERCENTAGE OF
SECURITY SHARES (NOTE 1-A) NET ASSETS
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MAJOR CAPITALIZATION - NORTH AMERICA - 11.52%
Centocor, Inc. (a) 90,000 $ 3,408,750 3.83%
Genzyme (a) 90,000 2,317,500 2.60
Pharmacia & Upjohn (a) 50,000 1,843,750 2.07
Warner-Lambert Co. 32,000 2,688,000 3.02
----------- ------
10,258,000 11.52
----------- ------
SPECIALTY CAPITALIZATION - NORTH AMERICA - 32.63%
Agouron Pharmaceuticals, Inc. (a) 30,000 2,640,000 2.96
Alexion Pharmaceuticals, Inc. (a) 150,000 1,706,250 1.92
Arris Pharmaceutical Corp. (a) 130,000 1,706,250 1.92
Aviron (a) 125,000 1,281,250 1.44
Cambridge Neuroscience, Inc. (a) 110,000 1,375,000 1.54
CytoTherapeutics, Inc. (a) 120,000 1,020,000 1.15
Immnunex Corp. (a) 25,000 706,250 0.79
Incyte Pharmaceuticals, Inc. (a) 30,000 1,590,000 1.78
Isis Pharmaceuticals, Inc. (a) 150,000 2,906,250 3.26
Millennium Pharmaceuticals (a) 92,500 1,549,375 1.74
Neurocrine BioScience (a) 100,000 1,150,000 1.29
Pharmacopeia, Inc. (a) 100,000 1,737,500 1.95
Premier Research Worldwide (a) 70,000 1,548,750 1.74
SangStat Medical Corp. (a) 100,000 3,200,000 3.59
Sequana Therapeutics, Inc. (a) 60,000 915,000 1.03
Tularik, Inc. (a) 80,000 800,000 0.90
Vertex Pharmaceuticals, Inc. (a) 70,000 3,237,500 3.63
----------- ------
29,069,375 32.63
----------- ------
MAJOR CAPITALIZATION - EUROPE - 15.32%
Altana 4,500 3,817,858 4.29
Ares-Serono 4,000 4,126,650 4.63
Novartis 5,000 5,701,003 6.40
----------- ------
13,645,511 15.32
----------- ------
SPECIALTY CAPITALIZATION - EUROPE - 11.31%
Cambridge Antibody Technology, Ltd. (a) (Note 5) 61,408 1,412,384 1.59
Cambridge Antibody Technology, Ltd. - Warrants (a) 3,100 31,000 0.03
Ciba Spec. Chemical - Rights (a) 5,000 316,806 0.35
Celltech (a) 225,000 2,382,851 2.68
Ethical Holdings ADR (a) 150,000 750,000 0.84
Swiss Serum Institute (a) 700 5,190,552 5.82
----------- ------
10,083,593 11.31
----------- ------
MAJOR CAPITALIZATION - FAR EAST - 15.70%
Banyu Pharmaceutical Co. 200,000 2,925,410 3.28
Eisai Co. Ltd. 156,000 2,930,064 3.29
Fujisawa Pharmaceutical 335,000 2,923,333 3.28
Sankyo Co. Ltd. 100,000 2,792,437 3.13
Takeda Chemical Industries 120,000 2,413,464 2.72
----------- ------
13,984,708 15.70
----------- ------
SPECIALTY CAPITALIZATION - FAR EAST - 8.78%
Amrad (a) 1,000,000 1,444,941 1.62
Biota Holdings Limited (a) 644,640 2,298,620 2.58
Biota Holdings Limited - Warrants (a) 78,738 190,231 0.21
Rohto Pharmaceutical 191,000 1,793,725 2.01
Teikoku Hormone Manufacturing 160,000 2,087,679 2.36
----------- ------
7,815,196 8.78
----------- ------
TOTAL INVESTMENTS (identified cost, $69,134,232) 84,856,383 95.26
OTHER ASSETS, LESS LIABILITIES 4,221,797 4.74
----------- ------
NET ASSETS $89,078,180 100.00%
=========== ======
(a) Non-income producing security.
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
-------------------------------
FINANCIAL STATEMENTS
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
- ------------------------------------------------------------------------------------------------
February 28, 1997 (Unaudited)
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS:
Investments, at value (Note 1A) (identified cost basis, $69,134,232) $84,856,383
Cash 5,936,387
Foreign currency, at value (identified cost, $654,434) 650,638
Dividends receivable 12,160
Deferred organization expenses 11,973
-----------
Total assets $91,467,541
LIABILITIES:
Payable for investments purchased $2,377,080
Payable for open forward foreign currency contracts (Note 1H) 10,422
Payable to affiliate for Trustees' fees 1,190
Accrued expenses 669
----------
Total liabilities 2,389,361
-----------
NET ASSETS applicable to investors' interest in Portfolio $89,078,180
===========
SOURCES OF NET ASSETS:
Net proceeds from capital contributions and withdrawals $73,350,237
Net unrealized appreciation of investments and foreign
currency (computed on the basis of identified cost) 15,727,943
-----------
Total $89,078,180
===========
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------------------------
For the six months ended February 28, 1997 (Unaudited)
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign taxes, $5,157) $ 52,422
Expenses --
Investment adviser fee (Note 2) $ 294,731
Administration fee (Note 2) 80,887
Compensation of Trustees not members of the
Administrator's organization 2,971
Custodian fee (Note 1D) 21,013
Legal and accounting services 3,602
Amortization of organization expenses (Note 1E) 1,250
Miscellaneous 11,194
----------
Total expenses $ 415,648
Less reduction of custodian fee (Note 1D) 20,562
----------
Net expenses 395,086
----------
Net investment loss $ (342,664)
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) --
Investment transactions (identified cost basis) $1,655,953
Foreign currency transactions 23,867
----------
Net realized gain on investment transactions $1,679,820
Change in unrealized appreciation (depreciation) --
Investments (identified cost basis) $6,668,950
Foreign currency transactions 5,792
----------
Net change in unrealized appreciation of investments 6,674,742
----------
Net realized and unrealized gain on investments $8,354,562
----------
Net increase in net assets from operations $8,011,898
==========
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------------------
SIX MONTHS ENDED
FEBRUARY 28, 1997
(UNAUDITED)
-----------------
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment loss $ (342,664)
Net realized gain on investments and foreign currency transactions 1,679,820
Change in unrealized appreciation (depreciation) 6,674,742
------------
Net increase in net assets resulting from operations $ 8,011,898
------------
Capital transactions --
Contributions $ 98,319,216
Withdrawals (17,352,934)
------------
Net increase in net assets resulting from capital transactions $ 80,966,282
------------
Net increase in net assets $ 88,978,180
NET ASSETS:
At beginning of period 100,000
------------
At end of period $ 89,078,180
============
<CAPTION>
- -------------------------------------------------------------------------------------------
SUPPLEMENTARY DATA
- -------------------------------------------------------------------------------------------
SIX MONTHS ENDED
FEBRUARY 28, 1997
(UNAUDITED)
-----------------
<S> <C>
RATIOS (to average daily net assets):
Expenses 1.28%+
Net expenses, after custodian fee reduction 1.22%+
Net investment loss (1.06)%+
PORTFOLIO TURNOVER 15%
NET ASSETS, end of period (000s omitted) $89,078
AVERAGE COMMISSION RATE (PER SHARE)(1) $0.0400
+ Annualized.
(1) Average commission rate paid is computed by dividing the total dollar amount of
commissions paid during the period by the total number of shares purchased and sold
during the period for which commissions were charged.
</TABLE>
See notes to financial statements
<PAGE>
-------------------------------
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES
Worldwide Health Sciences Portfolio (the Portfolio) is registered under the
Investment Company Act of 1940 as a diversified, open-end management
investment company. The Portfolio, which was organized as a trust under the
laws of the State of New York on March 26, 1996, seeks to provide long-term
growth of capital by investing primarily in common stocks, and securities
convertible into common stock, of domestic and foreign companies engaged in
medical research and the health care industry. The Declaration of Trust
permits the Trustees to issue interests in the Portfolio. Investment
operations began on September 1, 1996, with the acquisition of securities with
a value of $51,528,696, including unrealized appreciation of $9,053,201, in
exchange for interest in the Portfolio by one of the Portfolio's investors.
The following is a summary of significant accounting policies of the
Portfolio. The policies are in conformity with generally accepted accounting
principles.
A. INVESTMENT VALUATIONS -- Securities listed on a recognized stock exchange,
whether U.S. or foreign, are valued at the last reported sale price on that
exchange prior to the time when assets are valued or prior to the close of
trading on the New York Stock Exchange. In the event there are no sales, the
last available sale price will be used. If a security is traded on more than
one exchange, the security is valued at the last sale price on the exchange
where the stock is primarily traded. Securities for which market quotations
are not readily available and other assets are valued on a consistent basis at
fair value as determined in good faith by or under the supervision of the
Portfolio's officers in a manner specifically authorized by the Board of
Directors.
B. INCOME -- Dividend income is recorded on the ex-dividend date, except that
certain dividends from foreign securities are recorded on the ex-dividend date
or as soon thereafter as the Portfolio is informed of the dividend.
C. FEDERAL TAXES -- The Portfolio has elected to be treated as a partnership
for federal tax purposes. No provision is made by the Portfolio for federal or
state taxes on any taxable income of the Portfolio because each investor in
the Portfolio is ultimately responsible for the payment of any taxes. Since
some of the Portfolio's investors are regulated investment companies that
invest all or substantially all of their assets in the Portfolio, the
Portfolio must satisfy the applicable source of income and diversification
requirements (under the Code) in order for its investors to satisfy them. The
Portfolio will allocate at least annually among its investors 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.
D. EXPENSE REDUCTION -- Investors Bank & Trust Company (IBT) serves as
custodian of the Portfolio. Pursuant to the custodian agreement, IBT receives
a fee reduced by the credits which are determined based on the average daily
cash balances the Portfolio maintains with IBT. Any significant credit balance
used to reduce the Portfolio's custodian fee is reflected as a reduction of
operating expenses on the Statement of Operations.
E. DEFERRED ORGANIZATION EXPENSES -- Costs incurred by the Portfolio in
connection with its organization are being amortized on the straight-line
basis over five years.
F. USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts
of revenue and expense during the reporting period. Actual results could
differ from those estimates.
G. FOREIGN CURRENCY TRANSLATION -- Investment valuations, other assets, and
liabilities initially expressed in foreign currencies are converted each
business day into U.S. dollars based upon current exchange rates. Purchases
and sales of foreign investment securities and income and expenses are
converted into U.S. dollars based upon currency exchange rates prevailing on
the respective dates of such transactions. Recognized gains or losses on
investment transactions attributable to foreign currency rates are
recorded for financial statement purposes as net realized gains and losses on
investments. That portion of unrealized gains and losses on investments that
result from fluctuations in foreign currency exchange rates are not separately
disclosed.
H. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS -- The Portfolio may enter into
forward foreign currency exchange contracts for the purchase or sale of a
specific foreign currency at a fixed price on a future date. Risks may arise
upon entering these contracts from the potential inability of counterparties to
meet the terms of their contracts and from movements in the value of a foreign
currency relative to the U.S. dollar. The Portfolio will enter into forward
contracts for hedging purposes as well as non-hedging purposes. The forward
foreign currency exchange contracts are adjusted by the daily exchange rate of
the underlying currency and any gains and losses are recorded for financial
statement purposes as unrealized until such time as the contracts have been
closed.
I. OTHER -- Investment transactions are accounted for on a trade date basis.
J. INTERIM FINANCIAL INFORMATION -- The interim financial statements relating to
February 28, 1997 and for the six month period then ended have not been audited
by independent certified public accountants, but in the opinion of the
Portfolio's management, reflect all adjustments, consisting of normal recurring
adjustments, necessary for the fair presentation of the financial statements.
- --------------------------------------------------------------------------------
(2) INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Pursuant to the Advisory Agreement, Mehta and Isaly Asset Management, Inc.
("M&I"), formerly G/A Capital Management, Inc., serve as the investment adviser
of the Portfolio. Under this agreement M&I receive a monthly fee at the annual
rate of 1% of the Portfolio's first $30 million in average net assets, 0.90% of
the next $20 million in average net assets, and 0.75% of average net assets in
excess of $50 million. The fee rate declines for net assets of $500 million and
greater. Beginning September 1, 1997, M&I may receive a performance based
adjustment of up to 0.25% of the average daily net assets of the Portfolio based
upon the investment performance of the Portfolio compared to the Standard &
Poor's Index of 500 Common Stocks over specified periods. For the six months
ended February 28, 1997, the fee was equivalent to 0.91% (annualized) of the
Portfolio's average daily net assets and amounted to $294,731.
Under an Administration Agreement between the Portfolio and its
Administrator, Eaton Vance Management (EVM), EVM manages and administers the
affairs of the Portfolio. EVM earns a monthly fee in the amount of 1/48th of
1% (equal to 0.25% annually) of the average daily net assets of the Portfolio
up to $500,000,000, and at reduced rates as daily net assets exceed that
level. For the six months ended February 28, 1997, the administration fee was
0.25% of average net assets.
Except as to Trustees of the Portfolio who are not members of the Adviser or
EVM's organization, officers and Trustees receive remuneration for their
services to the Portfolio out of such investment adviser and administrative
fees. Certain of the officers and Trustees of the Portfolio are also officers
or directors/trustees of the above organizations. Trustees of the Portfolio
that are not affiliated with the Investment Adviser or Administrator may elect
to defer receipt of all or a portion of their annual fees in accordance with
the terms of the Trustees Deferred Compensation Plan. For the six months ended
February 28, 1997, no significant amounts have been deferred.
- --------------------------------------------------------------------------------
(3) INVESTMENTS
Purchases and sales of investments other than U.S. Government securities and
short-term obligations aggregated $34,490,900 and $9,523,741, respectively.
- --------------------------------------------------------------------------------
(4) FEDERAL INCOME TAX BASIS OF INVESTMENTS
The cost and unrealized appreciation/depreciation in value of the investments
owned at February 28, 1997, as computed on a federal income tax basis, were as
follows:
Aggregate cost $69,134,232
===========
Gross unrealized appreciation $17,576,664
Gross unrealized depreciation (1,854,513
-----------
Net unrealized appreciation $15,722,151
===========
- --------------------------------------------------------------------------------
(5) RESTRICTED SECURITIES
In February 1993, the Portfolio acquired 9,000 shares of common stock of
Cambridge Antibody Technology Limited ("CAT") at a cost of $297,000 by entering
into a Subscription Agreement between the Portfolio, CAT and Peptide Technology
Limited ("Peptech"). The Subscription Agreement granted to the Portfolio an
option to require Peptech, the major shareholder of CAT, to purchase up to 85%
of the CAT shares owned by the Portfolio on September 1, 1995 (the "Put
Option"), subject to certain conditions. The Put Option was exercised by the
Portfolio, but was canceled in December 1995 when the Portfolio received an
additional 4,734 shares of CAT from Peptech in exchange for the Portfolio's
withdrawal of the Put Options. In separate transactions that occurred in
December 1995, August 1996 and October 1996, the Portfolio acquired an
additional 47,674 shares of CAT, bringing the total number of shares owned by
the Portfolio to 61,408. The value of the CAT shares and warrants at February
28, 1997 is $1,443,384, representing 1.6% of the Portfolio's net assets.
Management has valued the common stock at $23 per share and $10 per warrant,
which reflects recent market activity. Valuation of the security is continually
monitored and is reviewed by the Board of Directors.
- --------------------------------------------------------------------------------
(6) RISKS ASSOCIATED WITH 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. 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 general, there is less
overall governmental supervision and regulation of foreign securities markets,
broker-dealers, and issuers than in the United States.
- --------------------------------------------------------------------------------
(7) FINANCIAL INSTRUMENTS
The Portfolio regularly trades in financial instruments with off-balance sheet
risk in the normal course of its investing activities to assist in managing
exposure to various market risks. These financial instruments include written
options, forward foreign currency exchange contracts and financial futures
contracts and may involve, to a varying degree, elements of risk in excess of
the amounts recognized for financial statement purposes. The notional or
contractual amounts of these instruments represent the investment the Portfolio
has in particular classes of financial instruments and does not necessarily
represent the amounts potentially subject to risk. The measurement of the risks
associated with these instruments is meaningful only when all related and
offsetting transactions are considered.
A summary of obligations under these financial instruments at February 28,
1997 is as follows:
<TABLE>
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACT
PURCHASES
- --------
<CAPTION>
DELIVER
SETTLEMENT (IN UNITED STATES NET UNREALIZED
DATE IN EXCHANGE FOR DOLLARS) DEPRECIATION
- ------ --------------- ----------------- --------------
<C> <C> <C> <C>
3/3/97 Swiss Franc 1,766,463 $1,209,740 $10,422
========== =======
</TABLE>
- --------------------------------------------------------------------------------
(8) LINE OF CREDIT
The Portfolio participates with other portfolios and funds managed by EVM and
its affiliates in a $120 million unsecured line of credit with a bank.
Borrowings will be made by the Portfolio or Fund solely to facilitate the
handling of unusual and/or unanticipated short-term cash requirements. Interest
is charged to each participating portfolio or fund based on its borrowings at
the bank's base rate or at an amount above either the banks' adjusted
certificate of deposit rate, Eurodollar rate or federal funds effective rate. In
addition, a fee computed at an annual rate of 0.15% on the daily unused portion
of the facility is allocated among the participating portfolios and funds at the
end of each quarter. The Portfolio did not have any significant borrowings or
allocated fees during the six months ended February 28, 1997.
<PAGE>
<TABLE>
---------------------------------
INVESTMENT MANAGEMENT
<S> <C> <C>
EV MARATHON OFFICERS DIRECTORS
WORLDWIDE HEALTH JAMES B. HAWKES DONALD R. DWIGHT
SCIENCES FUND, INC. President, Director President, Dwight Partners, Inc.
24 Federal Street Chairman, Newspapers of
Boston, MA 02110 M. DOZIER GARDNER New England, Inc.
Vice President
SAMUEL L. HAYES, III
JAMES L. O'CONNOR Jacob H. Schiff Professor of
Treasurer Investment Banking, Harvard
University Graduate School of
THOMAS OTIS Business Administration
Secretary
NORTON H. REAMER
President and Director, United Asset
Management Corporation
JOHN L. THORNDIKE
Formerly Director, Fiduciary Company
Incorporated
JACK L. TREYNOR
Investment Adviser and
Consultant
---------------------------------------------------------------
WORLDWIDE HEALTH OFFICERS INDEPENDENT TRUSTEES
SCIENCES PORTFOLIO JAMES B. HAWKES DONALD R. DWIGHT
24 Federal Street President, Trustee President, Dwight Partners, Inc.
Boston, MA 02110 Chairman, Newspapers of
SAMUEL D. ISALY New England, Inc.
Vice President and
Portfolio Manager SAMUEL L. HAYES, III
Jacob H. Schiff Professor of
VIREN MEHTA Investment Banking, Harvard
Vice President University Graduate School of
Business Administration
WILLIAM CHISHOLM
Vice President NORTON H. REAMER
President and Director, United Asset
RAYMOND O'NEILL Management Corporation
Vice President
JOHN L. THORNDIKE
MICHEL NORMANDEAU Formerly Director, Fiduciary Company
Vice President Incorporated
JAMES L. O'CONNOR JACK L. TREYNOR
Treasurer Investment Adviser and
Consultant
THOMAS OTIS
Secretary
</TABLE>
<PAGE>
[Logo]
Eaton Vance
================
Mutual Funds
EV MARATHON WORLDWIDE
HEALTH SCIENCES FUND
STATEMENT OF
ADDITIONAL INFORMATION
APRIL 1, 1997
EV MARATHON WORLDWIDE
HEALTH SCIENCES FUND
24 FEDERAL STREET
BOSTON, MA 02110
- --------------------------------------------------------------------------------
SPONSOR AND MANAGER OF EV MARATHON WORLDWIDE HEALTH SCIENCES FUND
ADMINISTRATOR OF WORLDWIDE HEALTH SCIENCES PORTFOLIO
Eaton Vance Management, 24 Federal Street, Boston, MA 02110
ADVISER OF WORLDWIDE HEALTH SCIENCES PORTFOLIO
Mehta and Isaly Asset Management, Inc., 41 Madison Avenue,
New York, NY 10010-2202
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-HSSAI
<PAGE>
PART C
OTHER INFORMATION
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 FOR EV MARATHON WORLDWIDE DEVELOPING
RESOURCES FUND AND TO FEBRUARY 28, 1997 FOR EV MARATHON
WORLDWIDE HEALTH SCIENCES FUND:
EV Marathon Worldwide Developing Resources Fund (start of
business October 21, 1987)
EV Marathon Worldwide Health Sciences Fund (start of
business September 23, 1996)
INCORPORATED BY REFERENCE INTO PART B ARE THE FINANCIAL
STATEMENTS FOR EV MARATHON WORLDWIDE DEVELOPING RESOURCES
FUND CONTAINED IN ITS ANNUAL REPORT DATED AUGUST 31, 1996
(WHICH WAS PREVIOUSLY FILED ELECTRONICALLY PURSUANT TO
SECTION 30(B)(2) OF THE INVESTMENT COMPANY ACT OF 1940)
(ACCESSION NO. 0000950156-96-000833)
THE FINANCIAL STATEMENTS CONTAINED IN THE FUND'S ANNUAL REPORT
ARE AS FOLLOWS:
Portfolio of Investments
Statement of Assets and Liabilities
Statement of Operations
Statements of Changes in Net Assets
Financial Highlights
Notes to Financial Statements
Independent Auditors' Report
ALSO INCLUDED IN PART B OF THE WORLDWIDE DEVELOPING RESOURCES
FUNDS ARE THE FOLLOWING FINANCIAL STATEMENTS FOR WORLDWIDE
DEVELOPING RESOURCES PORTFOLIO:
Statement of Assets and Liabilities as of
March 17, 1997
Report of Independent Auditors'
ALSO INCLUDED IN PART B OF EV MARATHON WORLDWIDE HEALTH
SCIENCES FUND ARE THE FOLLOWING FINANCIAL STATEMENTS FOR THE
FUND FROM THE START OF BUSINESS, SEPTEMBER 23, 1996, TO
FEBRUARY 28, 1997 (UNAUDITED):
Statement of Assets and Liabilities
Statement of Operations
Statements of Changes in Net Assets
Financial Highlights
Notes to Financial Statements
ALSO INCLUDED IN PART B OF EV MARATHON WORLDWIDE HEALTH
SCIENCES FUND ARE THE FOLLOWING FINANCIAL STATEMENTS FOR
WORLDWIDE HEALTH SCIENCES PORTFOLIO FROM THE START OF
BUSINESS, SEPTEMBER 1, 1996, TO FEBRUARY 28, 1997
(UNAUDITED):
Portfolio of Investments
Statement of Assets and Liabilities
Statement of Operations
Statements of Changes in Net Assets
Supplementary Data
Notes to Financial Statements
(B) EXHIBITS:
(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 January 10,
1997 filed as Exhibit (1)(c) to Post-Effective
Amendment No. 66 and incorporated herein by
reference.
(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) 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.
(b) 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.
(c) 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.
(d) 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.
(e) 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.
(f) 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.
(g) 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.
(h) 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.
(i) 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 as Exhibit (6)(a)(1) to Post-Effective
Amendment No. 65 and incorporated herein by
reference.
(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 as Exhibit (6)(a)(2) to Post-Effective
Amendment No. 65 and incorporated herein by
reference.
(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 as Exhibit (6)(a)(3) to Post-Effective
Amendment No. 65 and incorporated herein by
reference.
(a) Amended Schedule A effective April 1, 1997 to the
Distribution Agreement (on behalf of its Traditional
Series) (filed as Exhibit (6)(a)(3)) 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) Form of Amended Administrative Services Agreement
between Eaton Vance Growth Trust (on behalf of
certain series) with Eaton Vance Management dated ,
1997 with attached Schedule A filed as Exhibit
(9)(a) to Post-Effective Amendment No. 66 and
incorporated herein by reference.
(b) Transfer Agency Agreement dated June 7, 1989 filed
as Exhibit (9)(b) to Post-Effective Amendment No. 65
and incorporated herein by reference.
(c) Amendment to Transfer Agency Agreement dated
February 1, 1993 filed as Exhibit (9)(e) to
Post-Effective Amendment No. 65 and incorporated
herein by reference.
(10) Not applicable.
(11)(a) Consent of Independent Auditors for EV Marathon
Worldwide Developing Resources Fund (formerly EV
Marathon Gold & Natural Resources Fund) filed
herewith.
(b) Consent of Independent Auditors for Worldwide
Developing Resources Portfolio filed herewith.
(c) Consent of Independent Accountants for EV Marathon
Worldwide Health Sciences Fund filed herewith.
(d) Consent of Independent Accountants for Worldwide
Health Sciences Portfolio 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) Service Plan adopted February 14, 1997 pursuant to
Rule 12b-1 under the Investment Company Act of 1940
for EV Traditional Worldwide Developing Resources
Fund filed herewith.
(o) Amendment to Distribution Plan of Eaton Vance Growth
Trust on behalf of EV Marathon Asian Small Companies
Fund adopted June 24, 1996 filed as Exhibit (15)(n)
to Post- Effective Amendment No. 65 and incorporated
herein by reference.
(p) Amendment to Distribution Plan of Eaton Vance Growth
Trust on behalf of EV Traditional Asian Small
Companies Fund adopted June 24, 1996 filed as
Exhibit (15)(o) to Post- Effective Amendment No. 65
and incorporated herein by reference.
(q) Amendment to Distribution Plan of Eaton Vance Growth
Trust on behalf of EV Marathon Gold & Natural
Resources Fund adopted June 24, 1996 filed as
Exhibit (15)(p) to Post- Effective Amendment No. 65
and incorporated herein by reference.
(r) Amendment to Distribution Plan of Eaton Vance Growth
Trust on behalf of EV Classic Greater China Growth
Fund adopted June 24, 1996 filed as Exhibit (15)(q)
to Post- Effective Amendment No. 65 and incorporated
herein by reference.
(s) Amendment to Distribution Plan of Eaton Vance Growth
Trust on behalf of EV Marathon Greater China Growth
Fund adopted June 24, 1996 filed as Exhibit (15)(r)
to Post- Effective Amendment No. 65 and incorporated
herein by reference.
(t) Amendment to Distribution Plan of Eaton Vance Growth
Trust on behalf of EV Traditional Greater China
Growth Fund adopted June 24, 1996 filed as Exhibit
(15)(s) to Post- Effective Amendment No. 65 and
incorporated herein by reference.
(u) Amendment to Distribution Plan of Eaton Vance Growth
Trust on behalf of EV Classic Growth Fund adopted
June 24, 1996 filed as Exhibit (15)(t) to
Post-Effective Amendment No. 65 and incorporated
herein by reference.
(v) Amendment to Distribution Plan of Eaton Vance Growth
Trust on behalf of EV Marathon Growth Fund adopted
June 24, 1996 filed as Exhibit (15)(u) to
Post-Effective Amendment No. 65 and incorporated
herein by reference.
(w) Amendment to Service Plan of Eaton Vance Growth
Trust on behalf of EV Traditional Growth Fund
adopted June 24, 1996 filed as Exhibit (15)(v) to
Post-Effective Amendment No. 65 and incorporated
herein by reference.
(x) Amendment to Distribution Plan of Eaton Vance Growth
Trust on behalf of EV Classic Information Age Fund
adopted June 24, 1996 filed as Exhibit (15)(w) to
Post-Effective Amendment No. 65 and incorporated
herein by reference.
(y) Amendment to Distribution Plan of Eaton Vance Growth
Trust on behalf of EV Marathon Information Age Fund
adopted June 24, 1996 filed as Exhibit (15)(x) to
Post-Effective Amendment No. 65 and incorporated
herein by reference.
(z) Amendment to Distribution Plan of Eaton Vance Growth
Trust on behalf of EV Traditional Information Age
Fund adopted June 24, 1996 filed as Exhibit (15)(y)
to Post-Effective Amendment No. 65 and incorporated
herein by reference.
(aa) Amendment to Distribution Plan of Eaton Vance Growth
Trust on behalf of EV Marathon Worldwide Health
Sciences Fund adopted June 24, 1996 filed as Exhibit
(15)(z) to Post- Effective Amendment No. 65 and
incorporated herein by reference.
(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 as Exhibit (17)(c)
to Post-Effective Amendment No. 65 and incorporated
herein by reference.
(d) Power of Attorney dated February 14, 1997 for Asian
Small Companies Portfolio filed herewith.
(e) Power of Attorney dated February 14, 1997 for
Greater China Growth Portfolio filed herewith.
(f) Power of Attorney dated February 14, 1997 for
Worldwide Health Sciences Portfolio filed herewith.
(g) Power of Attorney dated February 14, 1997 for
Worldwide Developing Resources Portfolio filed
herewith.
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 FEBRUARY 28, 1997
-------------- -----------------
Shares of beneficial interest without par value
EV Marathon Asian Small Companies Fund 1
EV Traditional Asian Small Companies Fund 1
EV Classic Greater China Growth Fund 1,149
EV Marathon Greater China Growth Fund 22,562
EV Traditional Greater China Growth Fund 15,081
EV Classic Growth Fund 65
EV Marathon Growth Fund 564
EV Traditional Growth Fund 10,010
EV Classic Information Age Fund 86
EV Marathon Information Age Fund 2,037
EV Traditional Information Age Fund 1,086
EV Marathon Worldwide Developing Resources Fund 1,982
EV Traditional Worldwide Developing Resources Fund 0
EV Marathon Worldwide Health Sciences Fund 1,651
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.
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:
<TABLE>
<CAPTION>
<S> <C>
EV Classic California Municipals Fund EV Classic Information Age Fund
EV Classic Connecticut Municipals Fund EV Classic Investors Fund
EV Classic Florida Insured Municipals Fund EV Classic Massachusetts Limited Maturity
EV Classic Florida Limited Maturity Municipals Fund
Municipals Fund EV Classic National Limited Maturity
EV Classic Florida Municipals Fund Municipals Fund
EV Classic Government Obligations Fund EV Classic National Municipals Fund
EV Classic Greater China Growth Fund EV Classic New Jersey Municipals Fund
EV Classic Growth Fund EV Classic New York Limited Maturity
EV Classic High Income Fund Municipals Fund
<PAGE>
EV Classic New York Municipals Fund EV Marathon New York Municipals Fund
EV Classic Pennsylvania Limited EV Marathon North Carolina Municipals Fund
Maturity Municipals Fund EV Marathon Ohio Limited Maturity
EV Classic Pennsylvania Municipals Fund Municipals Fund
EV Classic Senior Floating-Rate Fund EV Marathon Ohio Municipals Fund
EV Classic Strategic Income Fund EV Marathon Oregon Municipals Fund
EV Classic Special Equities Fund EV Marathon Pennsylvania Limited Maturity
EV Classic Stock Fund Municipals Fund
EV Classic Total Return Fund EV Marathon Pennsylvania Municipals Fund
EV Marathon Alabama Municipals Fund EV Marathon Rhode Island Municipals Fund
EV Marathon Arizona Municipals Fund EV Marathon Strategic Income Fund
EV Marathon Arkansas Municipals Fund EV Marathon South Carolina Municipals Fund
EV Marathon Asian Small Companies Fund EV Marathon Special Equities Fund
EV Marathon California Limited Maturity EV Marathon Stock Fund
Municipals Fund EV Marathon Tax-Managed Growth Fund
EV Marathon California Municipals Fund EV Marathon Tennessee Municipals Fund
EV Marathon Colorado Municipals Fund EV Marathon Texas Municipals Fund
EV Marathon Connecticut Limited Maturity EV Marathon Total Return Fund
Municipals Fund EV Marathon Virginia Municipals Fund
EV Marathon Connecticut Municipals Fund EV Marathon West Virginia Municipals Fund
EV Marathon Emerging Markets Fund EV Marathon Worldwide Developing
EV Marathon Florida Insured Municipals Fund Resources Fund
EV Marathon Florida Limited Maturity EV Marathon Worldwide Health
Municipals Fund Sciences Fund
EV Marathon Florida Municipals Fund EV Traditional Alabama Municipals Fund
EV Marathon Georgia Municipals Fund EV Traditional Arizona Municipals Fund
EV Marathon Government Obligations Fund EV Traditional Arkansas Municipals Fund
EV Marathon Greater China Growth Fund EV Traditional Asian Small Companies Fund
EV Marathon Greater India Fund EV Traditional California Limited Maturity
EV Marathon Growth Fund Municipals Fund
EV Marathon Hawaii Municipals Fund EV Traditional California Municipals Fund
EV Marathon High Income Fund EV Traditional Colorado Municipals Fund
EV Marathon High Yield Municipals Fund EV Traditional Connecticut Limited Maturity
EV Marathon Information Age Fund Municipals Fund
EV Marathon Investors Fund EV Traditional Connecticut Municipals Fund
EV Marathon Kansas Municipals Fund EV Traditional Emerging Growth Fund
EV Marathon Kentucky Municipals Fund EV Traditional Emerging Markets Fund
EV Marathon Louisiana Municipals Fund EV Traditional Florida Insured Municipals Fund
EV Marathon Maryland Municipals Fund EV Traditional Florida Limited Maturity
EV Marathon Massachusetts Limited Maturity Municipals Fund
Municipals Fund EV Traditional Florida Municipals Fund
EV Marathon Massachusetts Municipals Fund EV Traditional Georgia Municipals Fund
EV Marathon Michigan Limited Maturity EV Traditional Government Obligations Fund
Municipals Fund EV Traditional Greater China Growth Fund
EV Marathon Michigan Municipals Fund EV Traditional Greater India Fund
EV Marathon Minnesota Municipals Fund EV Traditional Growth Fund
EV Marathon Mississippi Municipals Fund EV Traditional Hawaii Municipals Fund
EV Marathon Missouri Municipals Fund EV Traditional High Yield Municipals Fund
EV Marathon National Limited Maturity Eaton Vance Income Fund of Boston
Municipals Fund EV Traditional Information Age Fund
EV Marathon National Municipals Fund EV Traditional Investors Fund
EV Marathon New Jersey Limited Maturity EV Traditional Kansas Municipals Fund
Municipals Fund EV Traditional Kentucky Municipals Fund
EV Marathon New Jersey Municipals Fund EV Traditional Louisiana Municipals Fund
EV Marathon New York Limited Maturity EV Traditional Maryland Municipals Fund
Municipals Fund EV Traditional Massachusetts Municipals Fund
<PAGE>
EV Traditional Michigan Limited Maturity EV Traditional Rhode Island Municipals Fund
Municipals Fund EV Traditional South Carolina
EV Traditional Michigan Municipals Fund Municipals Fund
EV Traditional Minnesota Municipals Fund EV Traditional Special Equities Fund
EV Traditional Mississippi Municipals Fund EV Traditional Stock Fund
EV Traditional Missouri Municipals Fund EV Traditional Tax-Managed Growth Fund
Eaton Vance Municipal Bond Fund L.P. EV Traditional Tennessee Municipals Fund
EV Traditional National Limited Maturity EV Traditional Texas Municipals Fund
Municipals Fund EV Traditional Total Return Fund
EV Traditional National Municipals Fund EV Traditional Virginia Municipals Fund
EV Traditional New Jersey Limited Maturity EV Traditional West Virginia Municipals Fund
Municipals Fund EV Traditional Worldwide Developing
EV Traditional New Jersey Municipals Fund Resources Fund
EV Traditional New York Limited Maturity EV Traditional Worldwide Health
Municipals Fund Sciences Fund, Inc.
EV Traditional New York Municipals Fund Eaton Vance Cash Management Fund
EV Traditional North Carolina Municipals Fund Eaton Vance Liquid Assets Fund
EV Traditional Ohio Limited Maturity Eaton Vance Money Market Fund
Municipals Fund Eaton Vance Prime Rate Reserves
EV Traditional Ohio Municipals Fund Eaton Vance Short-Term Treasury Fund
EV Traditional Oregon Municipals Fund Eaton Vance Tax Free Reserves
EV Traditional Pennsylvania Municipals Fund Massachusetts Municipal Bond Portfolio
</TABLE>
(b)
(1) (2) (3)
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICE
BUSINESS ADDRESS* WITH PRINCIPAL UNDERWRITER WITH REGISTRANT
------------------ ------------------------- --------------------
James B. Hawkes Vice President and Director President and Trustee
William M. Steul Vice President and Director None
Wharton P. Whitaker President and Director None
Chris Berg Vice President None
Kate Bradshaw 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 Senior 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
Andy Ogren Vice President None
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
(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, Worldwide Developing
Resources 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 Traditional Worldwide
Developing Resources Fund, using financial statements which need not be
certified, within four to six months from the effective date of Post- Effective
Amendment No. 66.
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 24th day of March, 1997.
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.
SIGNATURE TITLE DATE
--------- ----- ----
President, Principal
Executive Officer and
/s/ JAMES B. HAWKES Trustee March 24, 1997
- -------------------------------
JAMES B. HAWKES
Treasurer and Principal
Financial and
/s/ JAMES L. O'CONNOR Accounting Officer March 24, 1997
- -------------------------------
JAMES L. O'CONNOR
DONALD R. DWIGHT* Trustee March 24, 1997
- -------------------------------
DONALD R. DWIGHT
SAMUEL L. HAYES, III* Trustee March 24, 1997
- -------------------------------
SAMUEL L. HAYES, III
NORTON H. REAMER* Trustee March 24, 1997
- -------------------------------
NORTON H. REAMER
JOHN L. THORNDIKE* Trustee March 24, 1997
- -------------------------------
JOHN L. THORNDIKE
JACK L. TREYNOR* Trustee March 24, 1997
- -------------------------------
JACK L. TREYNOR
*By: /s/ JAMES B. HAWKES
- -------------------------------
As Attorney-in-fact
<PAGE>
SIGNATURES
Worldwide Developing Resources 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 14th day of February, 1997.
WORLDWIDE DEVELOPING RESOURCES
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.
SIGNATURE TITLE DATE
--------- ----- ----
President, Principal
Executive Officer and
/s/ JAMES B. HAWKES Trustee February 14, 1997
- -------------------------------
JAMES B. HAWKES
Treasurer and Principal
Financial and
JAMES L. O'CONNOR* Accounting Officer February 14, 1997
- -------------------------------
JAMES L. O'CONNOR
DONALD R. DWIGHT* Trustee February 14, 1997
- -------------------------------
DONALD R. DWIGHT
SAMUEL L. HAYES, III* Trustee February 14, 1997
- -------------------------------
SAMUEL L. HAYES, III
Trustee February 14, 1997
- -------------------------------
NORTON H. REAMER
JOHN L. THORNDIKE* Trustee February 14, 1997
- -------------------------------
JOHN L. THORNDIKE
JACK L. TREYNOR* Trustee February 14, 1997
- -------------------------------
JACK L. TREYNOR
*By: /s/ ERIC G. WOODBURY
- -------------------------------
ERIC G. WOODBURY
As Attorney-in-fact
<PAGE>
SIGNATURES
Worldwide Health Sciences 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 Hamilton, Bermuda on the 14th day of February, 1997.
WORLDWIDE HEALTH SCIENCES 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.
SIGNATURE TITLE DATE
--------- ----- ----
President, Principal
Executive Officer and
/s/ JAMES B. HAWKES Trustee February 14, 1997
- -------------------------------
JAMES B. HAWKES
Treasurer and Principal
Financial and
JAMES L. O'CONNOR* Accounting Officer February 14, 1997
- -------------------------------
JAMES L. O'CONNOR
/s/ DONALD R. DWIGHT Trustee February 14, 1997
- -------------------------------
DONALD R. DWIGHT
/s/ SAMUEL L. HAYES, III Trustee February 14, 1997
- -------------------------------
SAMUEL L. HAYES, III
Trustee February 14, 1997
- -------------------------------
NORTON H. REAMER
/s/ JOHN L. THORNDIKE Trustee February 14, 1997
- -------------------------------
JOHN L. THORNDIKE
/s/ JACK L. TREYNOR Trustee February 14, 1997
- -------------------------------
JACK L. TREYNOR
*By: /s/ JAMES B. HAWKES
- -------------------------------
JAMES B. HAWKES
As Attorney-in-fact
<PAGE>
EXHIBIT INDEX
PAGE IN
SEQUENTIAL
NUMBERING
EXHIBIT NO. DESCRIPTION SYSTEM
- ----------- ----------- ---------
(6)(a)(3)(a) Amended Schedule A effective April 1, 1997 to the Distribution
Agreement between Eaton Vance Growth Trust (on behalf of its
Traditional series) and Eaton Vance Distributors, Inc. (filed as
Exhibit
(6)(a)(3)).
(11)(a) Consent of Independent Auditors for EV Marathon
Worldwide Developing Resources Fund (formerly EV
Marathon Gold & Natural Resources Fund).
(11)(b) Consent of Independent Auditors for Worldwide
Developing Resources Portfolio.
(11)(c) Consent of Independent Accountants for EV Marathon
Worldwide Health Sciences Fund.
(11)(d) Consent of Independent Accountants for Worldwide
Health Sciences Portfolio.
(15)(n) Service Plan adopted February 14, 1997 for EV
Traditional Worldwide Developing Resources Fund.
(16) Schedules for Computation of Performance
Quotations.
(17)(d) Power of Attorney dated February 14, 1997 for Asian Small
Companies Portfolio filed herewith.
(17)(e) Power of Attorney dated February 14, 1997 for Greater China
Growth Portfolio filed herewith.
(17)(f) Power of Attorney dated February 14, 1997 for
Worldwide Health Sciences Portfolio filed
herewith.
(17)(g) Power of Attorney dated February 14, 1997 for
Worldwide Developing Resources Portfolio.
<PAGE>
EXHIBIT 99.(6)(A)(3)(A)
AMENDED SCHEDULE A
EATON VANCE GROWTH TRUST
DISTRIBUTION AGREEMENT
(TRADITIONAL FUNDS)
EFFECTIVE APRIL 1, 1997
<TABLE>
<S> <C>
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
EV Traditional Worldwide Developing Resources Fund n/a
</TABLE>
<PAGE>
EXHIBIT (11)(A)
CONSENT OF INDEPENDENT AUDITORS
We consent to the use in this Post-Effective Amendment No. 67 to the
Registration Statement of Eaton Vance Growth Trust (1933 Act File No. 2-22019)
on behalf of EV Marathon Worldwide Developing Resources Fund (formerly named EV
Marathon Gold & Natural Resources Fund) (the "Fund") of our report dated October
4, 1996, relating to the 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 Fund's 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 Fund's Statement
of Additional Information of the Registration Statement.
/s/ DELOITTE & TOUCHE LLP
----------------------------------
DELOITTE & TOUCHE LLP
March 24, 1997
Boston, Massachusetts
<PAGE>
EXHIBIT (11)(B)
CONSENT OF INDEPENDENT AUDITORS
We consent to the inclusion of Post-Effective Amendment No. 67 to the
Registration Statement on Form N-1A of Eaton Vance Growth Trust (1933 Act File
No. 2-22019) on behalf of EV Marathon Worldwide Developing Resources Fund and EV
Traditional Worldwide Developing Resources Fund (the "Funds") of our report
dated March 18, 1997, relating to Worldwide Developing Resources Portfolio
appearing in the Funds' Statements of Additional Information which are part of
such Registration Statement.
We also consent to the reference to our Firm under the captions
"Independent Certified Public Accountants" and "Financial Statements" in the
Funds' Statements of Additional Information of the Registration Statement.
/s/ DELOITTE & TOUCHE
----------------------------------
DELOITTE & TOUCHE
March 24, 1997
Grand Cayman, Cayman Islands
British West Indies
<PAGE>
EXHIBIT (11)(C)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the reference to our firm under the caption "Independent
Accountants" in the Statement of Additional Information of EV Marathon
Worldwide Health Sciences Fund in Post-Effective Amendment No. 67 to the
Registration Statement on Form N-1A (1933 Act File No. 2-22019) of Eaton Vance
Growth Trust.
/s/ COOPERS & LYBRAND L.L.P.
-----------------------------
COOPERS & LYBRAND L.L.P.
March 24, 1997
Boston, Massachusetts
<PAGE>
EXHIBIT (11)(D)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in Post-Effective Amendment No. 67 to the
Registration Statement on Form N-1A of Eaton Vance Growth Trust (1933 Act File
No. 2-22019) of EV Marathon Worldwide Health Sciences Fund of the reference to
our firm relating to Worldwide Health Sciences Portfolio under the caption
"Independent Accountants" in the Statement of Additional Information which is
part of such Registration Statement.
/s/ COOPERS & LYBRAND CHARTERED ACCOUNTANTS
---------------------------------------
COOPERS & LYBRAND CHARTERED ACCOUNTANTS
March 24, 1997
Toronto, Canada
<PAGE>
EXHIBIT 99.(15)(N)
EATON VANCE GROWTH TRUST
SERVICE PLAN
ON BEHALF OF
EV TRADITIONAL WORLDWIDE DEVELOPING RESOURCES FUND
WHEREAS, Eaton Vance Growth Trust (the "Trust") engages in business as
an open-end management investment company with multiple series and is registered
as such under the Investment Company Act of 1940, as amended (the "Act");
WHEREAS, the Trust on behalf of its series EV Traditional Worldwide
Developing Resources Fund (the "Fund") desires to adopt a Service Plan pursuant
to which the Fund intends to pay service fees as contemplated in paragraphs (b)
and (d) of Rule 2830 of the Conduct Rules of the National Association of
Securities Dealers, Inc. (the "NASD Rules");
WHEREAS, the Trust employs Eaton Vance Distributors, Inc. to act as
Principal Underwriter (as defined in the Act) of the shares of the Fund; and
WHEREAS, the Trustees of the Trust have determined that there is a
reasonable likelihood that adoption of this Service Plan will benefit the Fund
and its shareholders.
NOW, THEREFORE, the Trust hereby adopts this Service Plan (the "Plan")
in accordance with Rule 12b-1 under the Act and containing the following terms
and conditions:
1. 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. Appropriate adjustment of service fee payments
shall be made whenever necessary to ensure that no such payment shall cause the
Fund to exceed the applicable maximum cap imposed thereon by paragraph (d)(5) of
Rule 2830 of the NASD Rules.
2. This Plan shall not take effect until after it has been approved by
both a majority of (i) those Trustees of the Trust who are not "interested
persons" of the Trust (as defined in the Act) and have no direct or indirect
financial interest in the operations of this Plan or any agreements related to
it (the "Rule 12b-1 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.
3. Any agreements between the Trust on behalf of the Fund and any
person relating to this Plan shall be in writing and shall not take effect until
approved in the manner provided for Trustee approval of this Plan in Section 2.
4. This Plan shall continue in effect for so long as such continuance
is specifically approved at least annually in the manner provided for Trustee
approval of this Plan in Section 2.
5. The persons authorized to direct the disposition of monies paid or
payable by the Trust pursuant to this Plan or any related agreement made by the
Trust on behalf of Fund shall be the President or any Vice President of the
Trust. One or more of such persons shall provide to the Trustees of the Trust
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.
6. This Plan 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.
7. This Plan may not be amended to increase materially the payments to
be made by the Fund as provided in Section 1 unless such amendment, if required
by law, is approved by a vote of at least a majority of the outstanding voting
securities of the Fund. In addition, all material amendments to this Plan shall
be approved in the manner provided for in Section 2.
8. While this Plan is in effect, the selection and nomination of the
Rule 12b-1 Trustees shall be committed to the discretion of the Rule 12b-1
Trustees.
9. The Trust shall preserve copies of this Plan and any related
agreements made by the Trust on behalf of the Fund and all reports made pursuant
to Section 5, for a period of not less than six years from the date of this
Plan, or of the agreements or of such report, as the case may be, the first two
years in an easily accessible place.
10. Consistent with the limitation of shareholder, officer and Trustee
liability as set forth in the Trust's Declaration of Trust, any obligations
assumed by the Fund pursuant to this Plan shall be limited in all cases to the
assets of the Fund and no person shall seek satisfaction thereof from the
shareholders of the Fund or officers or Trustees of the Trust.
11. When used in this Plan, the term "service fees" shall have the same
meaning as such term has in paragraphs (b) and (d) of Rule 2830 of the NASD
Rules. When used in this Plan, the term "vote of a majority of the outstanding
voting securities" shall mean the vote of the lesser of (a) 67 per centum or
more of the shares of the Fund present or represented by proxy at the meeting if
the holders of more than 50 per centum of the outstanding shares of the Fund are
present or represented by proxy at the meeting, or (b) more than 50 per centum
of the outstanding shares of the Fund.
12. If any provision of this Plan shall be held or made invalid by a
court decision, statute, rule or regulation of the Securities and Exchange
Commission or otherwise, the remainder of this Plan shall not be affected
thereby.
Adopted February 14, 1997
* * *
<PAGE>
<TABLE>
EXHIBIT 99.16
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 TRADITIONAL WORLDWIDE DEVELOPING 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. 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 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 10/21/87 $952.38 $2,933.00 207.97% 13.52% 193.30% 12.90%
5 YEARS ENDED
08/31/96 08/31/91 $952.78 $2,100.21 120.43% 17.13% 110.02% 16.00%
1 YEAR ENDED
08/31/96 08/31/95 $952.44 $1,330.45 39.69% 39.69% 33.04% 33.04%
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 WORLDWIDE HEALTH SCIENCES 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 February 28, 1997. 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 02/28/97 ON 02/28/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
<S> <C> <C> <C> <C> <C> <C> <C>
10 YEARS ENDED
02/28/97 02/28/87 $4,206.23 $4,206.23 320.62% 15.45% 320.62% 15.45%
5 YEARS ENDED
02/28/97 02/28/92 $2,417.66 $2,397.66 141.77% 19.31% 139.77% 19.11%
1 YEAR ENDED
02/28/97 02/28/96 $1,200.22 $1,150.22 20.02% 20.02% 15.02% 15.02%
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>
EXHIBIT (17)(D)
POWER OF ATTORNEY
We, the undersigned officers and Trustees of Asian Small Companies
Portfolio, a New York trust, do hereby severally constitute and appoint Alan R.
Dynner, James B. Hawkes and Eric G. Woodbury, 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, in Hamilton, Bermuda,
on the dates set opposite our respective signatures.
Signature Title Date
--------- ----- ----
/s/ Robert Lloyd George President, Principal February 14, 1997
- -------------------------- Executive Officer and
Robert Lloyd George Trustee
(executed in Hong Kong)
/s/ James L. O'Connor Treasurer and Principal February 14, 1997
- -------------------------- Financial and Accounting
James L. O'Connor Officer
/s/ Edward K. Y Chen Trustee February 14, 1997
- --------------------------
Edward K. Y. Chen
/s/ James B. Hawkes Trustee February 14, 1997
- --------------------------
James B. Hawkes
/s/ Donald R. Dwight Trustee February 14, 1997
- --------------------------
Donald R. Dwight
/s/ Samuel L. Hayes, III Trustee February 14, 1997
- --------------------------
Samuel L. Hayes, III
/s/ Norton H. Reamer Trustee February 14, 1997
- --------------------------
Norton H. Reamer
/s/ John L. Thorndike Trustee February 14, 1997
- --------------------------
John L. Thorndike
/s/ Jack L. Treynor Trustee February 14, 1997
- --------------------------
Jack L. Treynor
<PAGE>
EXHIBIT (17)(E)
POWER OF ATTORNEY
We, the undersigned officers and Trustees of Greater China Growth
Portfolio, a New York trust, do hereby severally constitute and appoint Alan R.
Dynner, James B. Hawkes and Eric G. Woodbury, 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, in Hamilton, Bermuda,
on the dates set opposite our respective signatures.
Signature Title Date
--------- ----- ----
/s/ Robert Lloyd George President, Principal
- -------------------------- Executive Officer
Robert Lloyd George and Trustee February 14, 1997
(executed in Hong Kong)
/s/ James L. O'Connor Treasurer and Principal
- -------------------------- Financial and
James L. O'Connor Accounting Officer February 14, 1997
/s/ Edward K. Y. Chen Trustee February 14, 1997
- --------------------------
Edward K.Y. Chen
/s/ Donald R. Dwight Trustee February 14, 1997
- --------------------------
Donald R. Dwight
/s/ James B. Hawkes Trustee February 14, 1997
- --------------------------
James B. Hawkes
/s/ Samuel L. Hayes, III Trustee February 14, 1997
- --------------------------
Samuel L. Hayes, III
/s/ Norton H. Reamer Trustee February 14, 1997
- --------------------------
Norton H. Reamer
<PAGE>
EXHIBIT (17)(F)
POWER OF ATTORNEY
We, the undersigned officers and Trustees of Worldwide Health Sciences
Portfolio, a New York trust, do hereby severally constitute and appoint Alan R.
Dynner, James B. Hawkes and Eric G. Woodbury, 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, in Hamilton, Bermuda,
on the dates set opposite our respective signatures.
Signature Title Date
--------- ----- ----
/s/ James B. Hawkes President, Principal
- -------------------------- Executive Officer and
James B. Hawkes Trustee February 14, 1997
James L. O'Connor* Treasurer and Principal
- -------------------------- Financial and
James L. O'Connor Accounting Officer February 14, 1997
/s/ Donald R. Dwight Trustee February 14, 1997
- --------------------------
Donald R. Dwight
/s/ Samuel L. Hayes, III Trustee February 14, 1997
- --------------------------
Samuel L. Hayes, III
- -------------------------- Trustee February 14, 1997
Norton H. Reamer
/s/ John L. Thorndike Trustee February 14, 1997
- --------------------------
John L. Thorndike
/s/ Jack L. Treynor Trustee February 14, 1997
- --------------------------
Jack L. Treynor
<PAGE>
EXHIBIT (17)(G)
POWER OF ATTORNEY
We, the undersigned officers and Trustees of Worldwide Developing
Resources Portfolio, a New York trust, do hereby severally constitute and
appoint Alan R. Dynner, James B. Hawkes and Eric G. Woodbury, 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 in Hamilton, Bermuda
on the dates set opposite our respective signatures.
Signature Title Date
/s/ James B. Hawkes President and Trustee February 14, 1997
- --------------------------
James B. Hawkes
/s/ Donald R. Dwight Trustee February 14, 1997
- --------------------------
Donald R. Dwight
/s/ Samuel L. Hayes, III Trustee February 14, 1997
- --------------------------
Samuel L. Hayes, III
- -------------------------- Trustee February 14, 1997
Norton H. Reamer
/s/ John L. Thorndike Trustee February 14, 1997
- --------------------------
John L. Thorndike
/s/ Jack L. Treynor Trustee February 14, 1997
- --------------------------
Jack L. Treynor
/s/ James L. O'Connor Treasurer and Principal
- -------------------------- Financial and
James L. O'Connor Accounting Officer February 14, 1997
<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
<SERIES>
<NUMBER> 11
<NAME> EV MARATHON WORLDWIDE HEALTH SCIENCES FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-START> SEP-02-1996
<PERIOD-END> FEB-28-1997
<INVESTMENTS-AT-COST> 20990
<INVESTMENTS-AT-VALUE> 21955
<RECEIVABLES> 317
<ASSETS-OTHER> 38
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 22309
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 23
<TOTAL-LIABILITIES> 23
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 21215
<SHARES-COMMON-STOCK> 2000
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> (102)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 218
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 964
<NET-ASSETS> 22286
<DIVIDEND-INCOME> 3
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 63
<NET-INVESTMENT-INCOME> (102)
<REALIZED-GAINS-CURRENT> 218
<APPREC-INCREASE-CURRENT> 964
<NET-CHANGE-FROM-OPS> 1081
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2066
<NUMBER-OF-SHARES-REDEEMED> 66
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 22286
<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> 105
<AVERAGE-NET-ASSETS> 8689
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> (0.051)
<PER-SHARE-GAIN-APPREC> 1.191
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.14
<EXPENSE-RATIO> 2.79
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-START> SEP-02-1996
<PERIOD-END> FEB-28-1997
<INVESTMENTS-AT-COST> 69134
<INVESTMENTS-AT-VALUE> 84856
<RECEIVABLES> 12
<ASSETS-OTHER> 6587
<OTHER-ITEMS-ASSETS> 12
<TOTAL-ASSETS> 91467
<PAYABLE-FOR-SECURITIES> 2377
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 12
<TOTAL-LIABILITIES> 2389
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 73350
<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> 15728
<NET-ASSETS> 89078
<DIVIDEND-INCOME> 52
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 395
<NET-INVESTMENT-INCOME> (343)
<REALIZED-GAINS-CURRENT> 1680
<APPREC-INCREASE-CURRENT> 15728
<NET-CHANGE-FROM-OPS> 17065
<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> 89078
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 295
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 416
<AVERAGE-NET-ASSETS> 65420
<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> 1.22
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
