AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 19, 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. 70 [X]
AND
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 43 [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)
<TABLE>
<CAPTION>
It is proposed that this filing will become effective pursuant to rule 485 (check appropriate box):
<S> <C>
[ ] immediately upon filing pursuant to paragraph (b) [ ] on (date) pursuant to paragraph (a)(1)
[X] on December 31, 1997 pursuant to paragraph (b) [ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] 60 days after filing pursuant to paragraph (a)(1) [ ] on (date) pursuant to paragraph (a)(2).
If appropriate, check the following box:
[ ] this post effective amendment designates a new effective date for a previously filed post-effective amendment.
</TABLE>
TITLE OF SECURITIES BEING REGISTERED: Shares of Beneficial Interest.
Asian Small Companies Portfolio, Greater China Growth Portfolio, Growth
Portfolio, Information Age Portfolio, Worldwide Developing Resources Portfolio
and Worldwide Health Sciences Portfolio have also executed this Registration
Statement.
================================================================================
<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 combined Prospectus of:
Eaton Vance Information Age Fund
Eaton Vance Worldwide Developing Resources Fund
Eaton Vance Worldwide Health Sciences Fund
The Prospectuses of:
Eaton Vance Asian Small Companies Fund
Eaton Vance Greater China Growth Fund
Eaton Vance Growth Fund
Part B -- The combined Statement of Additional Information of:
Eaton Vance Information Age Fund
Eaton Vance Worldwide Developing Resources Fund
Eaton Vance Worldwide Health Sciences Fund
The Statements of Additional Information of:
Eaton Vance Asian Small Companies Fund
Eaton Vance Greater China Growth Fund
Eaton Vance Growth 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
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 (or Funds') Financial Highlights; Performance
Information
4. ............... General Description of Registrant The Fund's (or Funds') Investment Objective; Investment
Policies and Risks; Investment Opportunities in the
Asian Region (for Asian Fund only); Investment
Opportunities in the China Region (for China Fund
only); Organization of the Fund and the Portfolio (or
Organization of the Funds and the Portfolios)
5. ............... Management of the Fund Management of the Fund and the Portfolio (or Management
of Funds and the Portfolios)
5A................ Management's Discussion of Fund Not Applicable
Performance
6. ............... Capital Stock and Other Securities Organization of the Fund and the Portfolio (or
Organization of the Funds and the Portfolios); Reports
to Shareholders; The Lifetime Investing Account/
Distribution Options; Distributions and Taxes
7. ............... Purchase of Securities Being Offered Valuing Shares; How to Buy Shares; Distribution and
Service Plans; The Lifetime Investing Account/
Distribution Options; The Eaton Vance Exchange
Privilege; Eaton Vance Shareholder Services
8. ............... Redemption or Repurchase How to Redeem Shares
9. ............... Pending Legal Proceedings Not Applicable
PART B
ITEM NO. ITEM CAPTION STATEMENT OF ADDITIONAL INFORMATION CAPTION
- ------ -------- --------------------------------------------------------
10. ............... Cover Page Cover Page
11. ............... Table of Contents Table of Contents
12. ............... General Information and History Other Information
13. ............... Investment Objective and Policies Additional Information about Investment Policies;
Investment Restrictions
14. ............... Management of the Fund Trustees and Officers
15. ............... Control Persons and Principal Holders Control Persons and Principal Holders of Securities
of Securities
16. ............... Investment Advisory and Other Services Investment Adviser and Administrator (Growth Fund only);
Management of the Funds and the Portfolios; Service
Plan -- Class A Shares (Growth and Developing
Resources Funds only); Distribution Plans -- Class A,
Class B and Class C Shares; Custodian; Independent
Accountants (for Growth and Health Sciences Funds);
Independent Certified Public Accountants (for Asian,
China, Information Age and Developing Resources
Funds); Other Information
17. ............... Brokerage Allocation and Other Portfolio Security Transactions
Practices
18. ............... Capital Stock and Other Securities Other Information
19. ............... Purchase, Redemption and Pricing of Determination of Net Asset Value; Principal Underwriter;
Securities Being Offered Services for Accumulation -- Class A Shares; Service
for Withdrawal; Service Plan -- Class A Shares (Growth
and Developing Resources Funds only); Distribution
Plans -- Class A, Class B and Class C Shares
20. ............... Tax Status Taxes
21. ............... Underwriters Principal Underwriter
22. ............... Calculation of Performance Data Investment Performance
23. ............... Financial Statements Financial Statements
</TABLE>
<PAGE>
PART A
INFORMATION REQUIRED IN A PROSPECTUS
[GRAPHIC OMITTED]
Eaton Vance Worldwide Developing Resources Fund
Eaton Vance Worldwide Health Sciences Fund
Eaton Vance Information Age Fund
EATON VANCE WORLDWIDE DEVELOPING RESOURCES FUND (the "Developing Resources
Fund") is a mutual fund seeking capital appreciation and protection of
purchasing power through natural resource related investments.
EATON VANCE WORLDWIDE HEALTH SCIENCES FUND (the "Health Sciences Fund") is a
mutual fund seeking long-term capital growth by investing in a global and
diversified portfolio of health sciences companies.
EATON VANCE INFORMATION AGE FUND (the "Information Age Fund") is a mutual fund
seeking long-term capital growth by investing in a global and diversified
portfolio of securities of information age companies.
Each Fund invests its assets in a corresponding open-end investment company (a
"Portfolio") having the same investment objective as the Fund, rather than by
directly investing in and managing its own portfolio of securities. Each Fund
is a series of Eaton Vance Growth Trust (the "Trust").
SHARES OF THE FUNDS 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 FUNDS INVOLVE
INVESTMENT RISKS, INCLUDING FLUCTUATIONS IN VALUE AND THE POSSIBLE LOSS OF SOME
OR ALL OF THE PRINCIPAL INVESTMENT.
This combined Prospectus is designed to provide you with information you should
know before investing. Please retain this document for future reference. A
combined Statement of Additional Information dated January 1, 1998 for the
Funds, 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
Funds' principal underwriter, Eaton Vance Distributors, Inc. (the "Principal
Underwriter") 24 Federal Street, Boston, MA 02110 (telephone (800) 225-6265).
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>
CONTENTS
Page Page
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Shareholder and Fund Expenses 2 How to Buy Shares 18
The Funds' Financial Highlights 4 How to Redeem Shares 20
The Funds' Investment Objectives 7 Reports to Shareholders 22
Investment Profiles 7 The Lifetime Investing Account/Distribution Options 22
Investment Policies and Risks 9 The Eaton Vance Exchange Privilege 22
Organization of the Funds and the Portfolios 13 Eaton Vance Shareholder Services 23
Management of the Funds and the Portfolios 14 Distributions and Taxes 24
Distribution and Service Plans 16 Performance Information 25
Valuing Shares 18
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Prospectus dated January 1, 1998
<PAGE>
SHAREHOLDER AND FUND EXPENSES
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
Class A Class B Class C
Shares Shares Shares
- -------------------------------------------------------------------------------------------------------------------
<S> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 5.75% None None
Sales Charges Imposed on Reinvested Distributions None None None
Fees to Exchange Shares None None None
Maximum Contingent Deferred Sales Charge None 5.00% 1.00%
</TABLE>
ANNUAL FUND AND ALLOCATED PORTFOLIO OPERATING EXPENSES (AS A
PERCENTAGE OF AVERAGE DAILY NET ASSETS)
<TABLE>
<CAPTION>
Investment Rule 12b-1
Adviser or Distribution Total
Management and/or Other Operating
Fees Service Fees Expenses Expenses
- ----------------------------------------------------------------------------------------------------------
Developing Resources Fund
<S> <C> <C> <C> <C>
Class A shares* 0.75% 0.00% 0.80% 1.55%
Class B shares 0.75 0.89 0.80 2.44
Health Sciences Fund
Class A shares 1.36% 0.25% 0.39% 2.00%
Class B shares 1.36 0.85 0.39 2.60
Class C shares 1.36 1.00 0.39 2.75
Information Age Fund
Class A shares 1.25% 0.50% 0.99% 2.74%
Class B shares 1.25 0.95 0.99 3.19
Class C shares 1.25 1.00 0.99 3.24
</TABLE>
*Payment of the Developing Resources Class A service fee will commence in
the third quarter of 1998. See note below.
EXAMPLE
An investor would pay the following expenses and, in the case of Class A
shares, maximum initial sales charge, or, in the case of Class B and Class C
shares, the applicable contingent deferred sales charge on a $1,000
investment, assuming (a) 5% annual return and (b) redemption at the end of
each period (and, for Class B and Class C, no redemption):
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
- ----------------------------------------------------------------------------------------------------------
Developing Resources Fund
<S> <C> <C> <C> <C>
Class A shares $72 $104 $137 $231
Class B shares 75 116 150 278
Class B (no redemption) 25 76 130 278
Health Sciences Fund
Class A shares $77 $117 $159 $277
Class B shares 76 121 158 293
Class B (no redemption) 26 81 138 293
Class C shares 38 85 145 308
Class C (no redemption) 28 85 145 308
Information Age Fund
Class A shares $84 $138 $194 $347
Class B shares 82 138 187 349
Class B shares (no redemption) 32 98 167 349
Class C shares 43 100 169 354
Class C shares (no redemption) 33 100 169 354
</TABLE>
NOTES: The table and Examples summarize the aggregate expenses of the Portfolios
and each class of shares of the Funds and are designed to help investors
understand the costs and expenses they will bear, directly or indirectly, by
investing in a Fund. Information for Class B shares of the Information Age and
Developing Resources Funds is based on expenses for the most recent fiscal year
except that service fees have been estimated. Information for Class A shares of
Developing Resources Fund and Class A and Class C shares of Information Age Fund
is estimated based upon the most recent fiscal year of its predecessor fund
adjusted for the multiple-class structure. Information for Class A shares of the
Health Sciences Fund is based on its most recent fiscal year, except that
Management Fees have been estimated for the current fiscal year. Information for
Class B and Class C shares of the Health Sciences Fund is estimated based upon
the most recent fiscal year of its predecessor fund adjusted for the
multiple-class structure. Management Fees for the Information Age Fund include
management fees paid by the Fund and investment advisory and administration fees
paid by the Portfolio of 0.25%, 0.75% and 0.25%, respectively. Management Fees
for the Health Sciences Fund include management fees paid by the Fund and
investment advisory and administration fees paid by the Portfolio of 0.25%,
0.86% and 0.25%, respectively. The advisory fee is subject to a performance
adjustment after September 1, 1997. See "Management of the Funds and the
Portfolios." Eaton Vance has agreed to waive its fee and/or reimburse the Fund
for operating expenses to maintain an annual expense ratio for the Class A
shares of 2.00% or less until August 31, 1999.
Each Fund offers multiple classes of shares. Class A shares are sold subject to
a sales charge imposed at the time of purchase. No sales charge is payable at
the time of purchase on investments in Class A shares of $1 million or more.
However, 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. Class B shares are sold subject to a declining CDSC (5% maximum) if
redeemed within six years of purchase and Class C shares are sold subject to a
1% CDSC if redeemed within one year of purchase. The CDSC does not apply in
certain circumstances. See "How to Buy Shares" and "How to Redeem Shares."
THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. Federal
regulations require the Examples to assume a 5% annual return, but actual annual
return will vary. Long-term shareholders in Class B and Class C shares 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. For
further information regarding the expenses of both the Funds and the Portfolios,
see "The Funds" Financial Highlights," "Management of the Funds and the
Portfolios," "Distribution and Service Plans" and "How to Redeem Shares."
For Developing Resources Fund Class A 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 Developing
Resources Fund expects to begin making service fee payments during the quarter
ending September 30, 1998. After such date, Total Operating Expenses will be
higher. See "Distribution and Service Plans."
Each Fund invests exclusively in its corresponding Portfolio. Other investment
companies and investors with different distribution arrangements and fees are
investing in the Portfolios and others may do so in the future. See
"Organization of the Funds and the Portfolios."
<PAGE>
THE FUNDS' FINANCIAL HIGHLIGHTS
The following information should be read in conjunction with the audited
financial statements that appear in the Funds' annual reports to shareholders.
The Developing Resources Fund's financial statements have been audited by
Deloitte & Touche LLP, independent accountants, and the Health Sciences Fund's
and Information Age Fund's financial statements have been audited by Coopers &
Lybrand L.L.P., independent accountants, as experts in accounting and auditing.
The financial statements and the independent auditors' reports are incorporated
by reference into the Statement of Additional Information. The Financial
Highlights for Health Sciences Fund for the nine years ended August 31, 1996
were audited by other auditors whose report dated September 20, 1996 expressed
an unqualified opinion on such Financial Highlights. Further information
regarding the performance of a Fund is contained in its annual report to
shareholders which may be obtained without charge by contacting the Principal
Underwriter. The financial information for each of the periods presented in the
Funds' Financial Highlights are for a Fund prior to reclassification as a
separate Class of shares on September 1, 1997. Information for the new Classes
of shares is not presented because these classes did not exist prior to
September 1, 1997. The Financial Highlights for the new Classes will differ due
to the different fees borne by them.
<TABLE>
<CAPTION>
Developing Resources Fund (Class B Shares)
-----------------------------------------------------------------------------------------------------------
Year Ended August 31, Year Ended September 30,
------------------------------ ----------------------------------------------------------------------
1997 1996 1995++ 1994 1993 1992 1991 1990 1989 1988**
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF YEAR $21.580 $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) $ (0.248) $(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 (2.427) 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 $ (2.675) $ 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 (3.335) (0.950) -- -- -- (0.060) (0.320) (1.220) (0.280) --
In excess of
realized gain on
investments -- -- -- (0.930) -- -- -- -- -- --
-------- ------- -------- -------- -------- ------- ------- ------- ------- -------
Total
distributions $ (3.335) $(0.950) $ -- $ (0.950) $ -- $(0.310) $(0.450) $(1.380) $(0.500) $(0.120)
-------- ------- -------- -------- -------- ------- ------- ------- ------- -------
NET ASSET VALUE, end
of year $ 15.570 $21.580 $ 6.420 $ 14.890 $13.240 $11.850 $11.140 $12.140 $13.460 $11.420
======== ======= ======== ======== ======= ======= ======= ======= ======= =======
TOTAL RETURN(2) (14.49)% 39.69% 10.28% 20.47% 11.73% 9.44% (4.36)% 0.01% 22.96% 15.39%
Ratios/Supplemental Data*:
Net assets, end of
year (000's omitted)$ 22,664 $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) 2.44% 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) 2.40% 2.47% -- -- -- -- -- -- -- --
Ratio of net
investment income
(loss) to average
daily net assets (1.92)% (1.60)% (0.74)% + (0.96)% (0.92)% (0.67)% 0.17% 0.33% 0.45% 0.83%+
PORTFOLIO TURNOVER(8) -- 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)%+
</TABLE>
(See footnotes on page 6.)
<PAGE>
THE FUNDS' FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
Health Sciences Fund (Class A Shares)
-----------------------------------------------------------------------------------------------------------
Year Ended August 31,
----------------------------------------------------------------------------------------------------------
1997 1996(3) 1995(3) 1994(3) 1993(3) 1992(3) 1991(3) 1990(3) 1989(3) 1988(3)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
beginning of year $ 13.540 $ 11.710 $ 9.150 $ 9.640 $ 8.970 $ 8.570 $ 7.350 $ 6.960 $ 5.300 $ 7.630
--------- -------- -------- -------- -------- -------- ------- ------- ------- --------
INCOME (LOSS) FROM
OPERATIONS
Net investment loss $ (0.133) $ (0.230) $ (0.170) $ (0.160) $ (0.130) $ (0.130) $(0.120) $(0.160) $(0.430) $ (0.230)
Net realized and
unrealized gain on
investments 1.818 3.460 3.410 0.430 1.860 1.150 2.150 0.910 2.090 (1.580)
--------- -------- -------- -------- -------- -------- ------- ------- ------- --------
Total income from
operations $ 1.685 $ 3.230 $ 3.240 $ 0.270 $ 1.730 $ 1.020 $ 2.030 0.750 $ 1.660 $ (1.810)
--------- -------- -------- -------- -------- -------- ------- ------- ------- --------
LESS DISTRIBUTIONS
From net realized gain
on investments $ (0.295) $ 1.400 $ 0.680 $ 0.760 $ 1.060 $ 0.620 $ 0.810 $ 0.360 $ -- $ 0.520
--------- -------- -------- -------- -------- -------- ------- ------- ------- --------
Total distributions $ (0.295) $ 1.400 $ 0.680 $ 0.760 $ 1.060 $ 0.620 $ 0.810 $ 0.360 $ -- $ 0.520
--------- -------- -------- -------- -------- -------- ------- ------- ------- --------
NET ASSET VALUE, end
of year $ 14.930 $ 13.540 $ 11.710 $ 9.150 $ 9.640 $ 8.970 $ 8.570 $ 7.350 $ 6.960 $ 5.300
========= ======== ======== ======== ======== ======== ======= ======= ======= ========
TOTAL RETURN(2) 17.67% 31.04% 38.13% 2.69% 21.37% 12.04% 30.60% 11.13% 31.32% (25.30)%
RATIOS/SUPPLEMENTAL DATA*:
Net assets, end of
year (000 omitted) $ 88,349 $ 55,016 $ 17,690 $ 13,231 $ 10,223 $ 11,415 $ 6,955 $ 3,771 $ 2,754 $ 2,819
Ratio of net expenses
to average net
assets(6)(7) 2.07% 2.21% 2.44% 2.50% 2.50% 2.48% 2.50% 3.51% 5.27% 5.59%
Ratio of net
expenses to
average net assets
after custodian fee
reduction(6)(7) 2.00% 2.19% -- -- -- -- -- -- -- --
Ratio of net
investment loss to
average net assets (1.60)% (1.81)% (1.80)% (1.65)% (1.53)% (1.45)% (1.47)% (2.26)% (3.73)% (4.00)%
PORTFOLIO TURNOVER(8) -- 66% 45% 49% 77% 71% 81% 143% 75% 59%
AVERAGE COMMISSION
RATE(5) $ -- $ 0.0864 $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ --
*The operating expenses of the Fund and the Portfolio may reflect a
reduction of the Investment Adviser fee, an allocation of expenses to the
Manager/Administrator, or both. Had such actions not been taken, the ratios
and net investment income (loss) per share would have been as follows:
RATIOS (As a percentage of average daily net assets):
Expenses(6)(7) 2.29% -- -- 2.67% 2.87% 2.59% 3.74% 4.77% 5.54% 5.71%
Expenses after
custodian fee
reduction(6)(7) 2.22% -- -- -- -- -- -- -- -- --
Net investment loss (1.82)% -- -- (1.82)% (1.90)% (1.56)% (2.71)% (3.51)% (4.00)% (4.37)%
Net investment loss
per share $ (0.151) -- -- $ (0.188) $ (0.161) $ (0.140) $(0.221) $(0.248) $(0.461) $ (0.251)
</TABLE>
(See footnotes on page 6.)
<PAGE>
THE FUNDS' FINANCIAL HIGHLIGHTS (CONTINUED)
Information Age Fund (Class B Shares)
-------------------------------------
Year Ended August 31,
---------------------
1997 1996**
- ------------------------------------------------------------------------------
NET ASSET VALUE, beginning of period $ 11.040 $ 10.000
-------- --------
Income from operations:
Net investment loss $ (0.178)(3) $ (0.134)
Net realized and unrealized gain on investments 2.490 (3) 1.174
-------- --------
Total income from operations $ 2.312 $ 1.040
-------- --------
LESS DISTRIBUTIONS FROM:
Net realized gain on investments $ (1.042) $ --
-------- --------
Total distributions (1.042) $ --
-------- --------
NET ASSET VALUE, end of period $ 12.310 $ 11.040
======== =========
Total Return(2) 20.79% 10.40%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $ 29,037 $ 21,800
Ratio of net expenses to average net assets(7) 3.19% 2.96%+
Ratio of net investment loss to average net assets (1.67)% (1.34)%+
**For the Developing Resources Fund, for the period from the start of
business, October 21, 1987, to September 30, 1988 and for the
Information Age Fund for the period from the start of business,
September 18, 1995, to August 31, 1996.
+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 ex-dividend date. Total return is computed on a
non-annualized basis.
(3)Computed using 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. Average commission
rate for the period since a Fund transferred substantially all of its
investable assets to a Portfolio is shown in the Portfolio's financial
statements.
(6)The expense ratios for the years ended August 31, 1997 and 1996 have
been adjusted to reflect a change in reporting requirements. The new
reporting guidelines require a Fund to increase its expense ratio by the
effect of any expense offset arrangements with its service providers.
The expense ratios for the prior periods have not been adjusted to
reflect this change.
(7)Includes the Fund's share of the Portfolio's allocated expenses.
(8)Portfolio turnover represents the rate of portfolio activity for the
period while the Fund was making investments directly in securities. The
portfolio turnover for the period since the Fund transferred
substantially all of its assets to the Portfolio is shown in the
Portfolio's financial statements which are incorporated by reference
into the Statement of Additional Information.
<PAGE>
THE FUNDS' INVESTMENT OBJECTIVES
The investment objective(s) of each Fund are set forth below. Each Fund
currently seeks to meet its investment objective(s) by investing its assets in a
separate corresponding open-end management investment company (a "Portfolio").
Each Portfolio has the same investment objective(s) as its corresponding Fund.
EATON VANCE WORLDWIDE DEVELOPING RESOURCES FUND ("DEVELOPING RESOURCES FUND")
SEEKS TO PROVIDE CAPITAL APPRECIATION AND PROTECTION OF THE PURCHASING POWER OF
THE SHAREHOLDER'S CAPITAL. Developing Resources Fund invests its assets in
Worldwide Developing Resources Portfolio ("Developing Resources Portfolio"),
which invests in natural resources related investments.
EATON VANCE WORLDWIDE HEALTH SCIENCES FUND ("HEALTH SCIENCES FUND") SEEKS
LONG-TERM CAPITAL GROWTH BY INVESTING IN A GLOBAL AND DIVERSIFIED PORTFOLIO OF
HEALTH SCIENCES COMPANIES. Health Sciences Fund invests its assets in
Worldwide Health Sciences Portfolio ("Health Sciences Portfolio"), which
invests in securities of health sciences companies.
EATON VANCE INFORMATION AGE FUND ("INFORMATION AGE FUND") SEEKS LONG-TERM
CAPITAL GROWTH. Information Age Fund invests its assets in Information Age
Portfolio, which invests in securities of information age companies.
Unless otherwise indicated in this Prospectus, the investment objective and
policies of each Fund and its corresponding 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 any
Fund's objective and intend to submit any proposed material change in investment
objective to shareholders for their approval.
Each Fund is intended for long-term investors who can withstand share price
fluctuations and can accept international risks and little or no current income.
Prospective investors should take into account their objectives and other
investments when considering the purchase of Fund shares. No Fund is a complete
investment program and each Fund poses special risks. The Information Age
Portfolio is exposed to technology orientated companies, the Worldwide Health
Sciences Portfolio concentrates its investments in medical research and the
health care industry, and the Worldwide Developing Resources Portfolio is
subject to the volatile market in which natural resource investments are traded.
Numerous worldwide economic, financial and political factors can affect a
Portfolio's holdings. No Fund can assure achievement of its investment
objective.
Boston Management and Research ("BMR") serves as investment adviser to
Developing Resources Portfolio. Information Age Portfolio is co-advised by BMR
and Lloyd George Investment Management (Bermuda) Limited ("Lloyd George"). Mehta
and Isaly Asset Management, Inc. ("M&I") serves as investment adviser to Health
Sciences Portfolio. BMR, Lloyd George and M&I are each sometimes referred to
herein as an "Adviser" or collectively as the "Advisers." The sponsor and
manager of the Funds and the administrator of the Portfolios is Eaton Vance
Management, 24 Federal Street, Boston, MA 02110 ("Eaton Vance" or the
"Manager"). BMR is a wholly-owned subsidiary of Eaton Vance.
INVESTMENT PROFILES
NATURAL RESOURCE OPPORTUNITIES
The Adviser to the Developing Resources Portfolio, BMR, 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.
BMR 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. BMR's flexible investment approach enables it to change
the Developing Resources Portfolio's investment emphasis to various subsectors
within the large natural resource investment sector depending upon it's outlook
as to developments and trends which may affect the value of and prospects for
different types of natural resource related investments.
In reviewing natural resource related investments available to the Developing
Resources Portfolio, BMR will consider, among other investments, domestic and
foreign companies which may
EXPLORE FOR, FINANCE, DEVELOP, PRODUCE OR HOLD PRECIOUS METALS. BMR will give
special emphasis in this subsector to efficiently managed, low cost gold
producers which are able to operate profitably at the current level of gold
prices, thereby benefiting from any future increase in gold prices.
EXPLORE FOR, FINANCE, DEVELOP OR PRODUCE ENERGY RESOURCES. In this subsector,
BMR will stress low cost producers whose reserves will allow expansion of
production and those companies with established earnings records in both rising
and falling energy markets.
EXPLORE FOR, FINANCE, DEVELOP, PRODUCE OR HOLD STRATEGIC METALS.
CREATE AND DEVELOP NEW GEOCHEMICAL TECHNOLOGY OR PROPRIETARY METHODS FOR
DETECTING, DEVELOPING, PRODUCING OR PROCESSING MINERAL DEPOSITS AND OTHER
NATURAL RESOURCES.
OWN, LEASE OR HAVE RIGHTS TO HOLDINGS OF TIMBER AND TIMBERLANDS. This would
include those companies which manufacture or process pulp, paper, wood products
and other specialty products.
PROVIDE NATURAL RESOURCE TRANSPORTATION, DISTRIBUTION AND PROCESSING SERVICES,
SUCH AS PIPELINES AND REFINING.
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 populaton 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 of the Health Sciences Portfolio, M&I, 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, M&I generally considers the amount of capital
currently being expended on research and development, and the nature thereof.
M&I 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, diagnostic and therapeutic drugs 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 dialyses equipment
to CAT scanners).
PHARMACEUTICALS -- Companies involved with new types of drugs and their delivery
systems.
THE INFORMATION AGE
In recent years, a number of technological advances have facilitated the global
dissemination of information of all types including text, voice, images, moving
pictures and digital data streams. These technological advances may be likened
to the dynamic process of invention and application of new technology in the
eighteenth and nineteenth centuries that has come to be known as the Industrial
Revolution, ushering in the Industrial Age. In the same way, the Advisers to the
Information Age Portfolio, BMR and Lloyd George, believe that the current pace
of technological change in the dissemination and use of information will be
looked upon as the Information Revolution and will usher in the Information Age.
The leading equity investments of the Information Age may be those companies,
referred to as information age companies, developing and successfully adopting
these new technologies to meet the needs of the rapidly changing information
marketplace. The global dissemination of information and information processing
technologies has enhanced economic growth in the developed economies of the
world and is contributing to the rapid modernization of the world's newly
developing economies. BMR and Lloyd George believe that the pace and scope of
these technological developments are likely to increase and that their economic
impact will become increasingly important. The Advisers believe that investment
in companies participating in these developments both as producers and as
beneficiaries of new technologies is likely to produce favorable returns. These
industries are dynamic and the Advisers will endeavor to keep abreast of changes
in information products, services and technologies. The Advisers may consider
investment in companies that benefit from:
EMERGING AND ESTABLISHED TECHNOLOGIES THAT WILL ENHANCE THE PROCESSING AND
TRANSFER OF INFORMATION. These may include digital technologies, such as
computer hardware, software and networks; mobile telephony and established
telecommunications networks of all sorts; fiber optic communications equipment;
and developing methods of utilizing electromagnetic spectrum for communications.
PRIVATIZATION AND DEREGULATION OF STATE OWNED BUSINESSES, such as
telecommunication, television and other information media companies both in the
developed economies and the emerging economies where these companies may reach
new markets and expand their business opportunities.
WIDER ACCESS TO INFORMATION AND ENTERTAINMENT MEDIA BY PEOPLES AROUND THE GLOBE,
including broadcasters; cable television networks; producers and publishers of
entertainment, news, literature and scholarly information; owners of libraries
and data bases of all kinds; advertising agencies and in some cases advertisers
who can capitalize on rising demand due to broader consumer awareness,
particularly in new markets.
DEVELOPMENT OF NEW INFORMATION INFRASTRUCTURE IN DEVELOPING COUNTRIES, such as
producers and developers of communication network equipment and managers of
sophisticated communication networks.
AFFORDABILITY OF, AND RISING DEMAND FOR, INFORMATION INDUSTRIES' CONSUMER
PRODUCTS AND SERVICES particularly in the emerging economies such as China,
India, Africa, Latin America, and Eastern Europe where penetration of these
products and services is low by world standards.
INVESTMENT POLICIES AND RISKS
DEVELOPING RESOURCES PORTFOLIO. The Developing Resources Portfolio seeks to
achieve its investment objective by investing in domestic and foreign natural
resource related investments. Under normal investment conditions, the Developing
Resources Portfolio will invest primarily in common stocks, but it may also hold
convertible bonds, convertible preferred stocks, warrants, preferred stocks and
debt securities if BMR 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, BMR 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. Emphasis on underperforming investment sectors can
result in substantial losses.
Natural resource related 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. BMR 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 BMR'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 Developing Resources Fund may also invest in other registered investment
companies in the Eaton Vance group of funds in addition to or in lieu of the
Developing Resources 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
such Fund invests is likely to be organized and to operate in the manner
described under "Organization of the Funds and the Portfolios."
HEALTH SCIENCES PORTFOLIO. The Health Sciences 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 Portfolio 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 Health Sciences 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 Health Sciences 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 M&I 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 Health Sciences 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.
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
Health Sciences 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.
INFORMATION AGE PORTFOLIO. The Information Age Portfolio invests in a global and
diversified portfolio of securities of information age companies. Information
age companies are companies that may be engaged in providing information
services, such as telephone, broadcasting, cable or satellite television,
publishing, advertising, producing information and entertainment media, data
processing, networking of data processing and communication systems, or
providing consumer interconnection to computer communication networks. In
addition, such companies may be engaged in the development, manufacture, sale,
or servicing of information age products, such as computer hardware, software
and networking equipment, mobile telephony devices, telecommunications network
switches and equipment, television and radio broadcasting and receiving
equipment, or news and information media of all types. The Information Age
Portfolio may invest in securities of both established and emerging companies
operating in developed and emerging economies.
Under normal market conditions, the Information Age Portfolio will invest at
least 65% of its assets in securities of information age companies. Securities
eligible for purchase include common and preferred stocks; equity interests in
trusts, partnerships, joint ventures and other unincorporated entities or
enterprises; special classes of shares available only to foreign investors in
markets that restrict ownership by foreign investors to certain classes of
equity securities; convertible preferred stocks; and other convertible
instruments. Convertible debt instruments generally will be rated below
investment grade (i.e., rated lower than Baa by Moody's Investors Service, Inc.
or lower than BBB by Standard & Poor's Ratings Group) or, if unrated, determined
by an Adviser to be of equivalent quality. Convertible debt securities so rated
are commonly called "junk bonds" and have risks similar to equity securities;
they are speculative and changes in economic conditions or other circumstances
are more likely to lead to a weakened capacity to make principal and interest
payments than is the case with higher grade debt securities. Such debt
securities will not exceed 20% of total assets. For temporary defensive
purposes, the Information Age Portfolio may invest without limit in debt
securities of foreign and United States companies, foreign governments and the
U.S. Government, and their respective agencies, instrumentalities, political
subdivisions and authorities, as well as in high quality money market
instruments.
Many information age companies are subject to substantial governmental
regulations that can affect their prospects. The enforcement of patent,
trademark and other intellectual property laws will affect the value of many of
such companies.
AN INVESTMENT IN A FUND ENTAILS THE RISK THAT THE PRINCIPAL VALUE OF FUND SHARES
MAY NOT INCREASE OR MAY DECLINE. EACH PORTFOLIO'S INVESTMENTS ARE SUBJECT TO THE
RISK OF ADVERSE DEVELOPMENTS AFFECTING PARTICULAR COMPANIES OR INDUSTRIES AND
SECURITIES MARKETS GENERALLY.
ADDITIONAL INVESTMENT POLICIES AND RISKS FOR THE DEVELOPING RESOURCES FUND:
METALS INVESTMENTS. The Developing Resources 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 BMR ANTICIPATES SIGNIFICANT ECONOMIC OR POLITICAL INSTABILITY, SUCH AS HIGH
INFLATION OR TURMOIL IN THE FOREIGN CURRENCY EXCHANGE MARKETS, THE DEVELOPING
RESOURCES 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.
NON-DIVERSIFICATION. The Developing Resources 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 mitigate this risk, the Developing Resources 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 Developing Resources 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 BMR'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).
COMMON INVESTMENT POLICIES AND RISKS:
INVESTING IN FOREIGN SECURITIES. Each Portfolio may invest in foreign
securities, and under normal market conditions the Health Sciences and
Developing Resources Portfolios will each hold securities of issuers in at least
three countries. Investing in securities issued by foreign companies (i.e.,
companies domiciled outside the United States) and governments (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. Because investment in foreign issuers
will usually involve currencies of foreign countries, the value of the assets of
a Portfolio as measured in U.S. dollars may be adversely affected by changes in
foreign currency exchange rates. Such rates may fluctuate significantly over
short periods of time causing a 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 Health
Sciences 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, and the Developing Resources Portfolio may
invest in Africa, the Far East, Latin America and Eastern Europe. Consistent
with its investment objective, a Portfolio is not limited in the percentage of
assets it may invest in such securities; however, 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 62%, 42% and 50%,
respectively, of the Developing Resources, Health Sciences and Information Age
Portfolios' assets were comprised of foreign securities.
DERIVATIVE INSTRUMENTS. Each 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
commodity prices for Developing Resources Portfolio), or as a substitute for the
purchase or sale of securities or currencies (or commodities for Developing
Resources Portfolio). A Portfolio's transactions in derivative instruments may
be in the U.S. or abroad and may include the purchase or sale of futures
contracts on securities, securities indices, other indices, other financial
instruments or currencies; options on futures contracts; exchange-traded and
over-the-counter options on securities, indices or currencies; and forward
foreign currency exchange contracts. A 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 a
Portfolio's initial investment in these instruments. In addition, a Portfolio
may lose the entire premium paid for purchased options that expire before they
can be profitably exercised by a Portfolio. A Portfolio incurs transaction costs
in opening and closing positions in derivative instruments. Under regulations of
the Commodity Futures Trading Commission the use of futures transactions for
nonhedging purposes is limited. There can be no assurance that a Portfolio's
Adviser's use of derivative instruments will be advantageous to the Portfolio.
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. Each 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 Portfolio's 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 a
Portfolio's exposure to foreign currency exchange rate fluctuations. Each
Portfolio may also use forward contracts to shift its exposure to foreign
currency exchange rate changes from one currency to another.
CURRENCY SWAPS. A 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 an Adviser is incorrect in its
forecasts of market values and currency exchange rates, the Portfolio's
performance will be adversely affected.
REPURCHASE AGREEMENTS. Each 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 a Portfolio purchased
may have decreased, the Portfolio could experience a loss. The Portfolios do not
expect to invest more than 5% of their respective 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.
Each 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 under the
Securities Act of 1933. Section 4(2) and Rule 144A securities may, however, be
treated as liquid by an 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
Rule 144A securities may increase the level of fund illiquidity to the extent
qualified institutional buyers become uninterested in purchasing such
securities.
DIRECT PLACEMENT SECURITIES, VENTURE CAPITAL INVESTMENTS AND SMALLER COMPANIES.
The Developing Resources and Health Sciences Portfolios may make natural
resource related investments in "direct placement securities" issued by a
company directly to the Portfolio. The Developing Resources and Health Sciences
Portfolios are 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 Developing Resources and Health Sciences
Portfolios' direct placement securities and venture capital investments are
considered speculative in nature and are not readily marketable. Each
Portfolio's investments may 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.
CONCENTRATION. The Developing Resources 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 resources group of industries. The Health
Sciences Portfolio, as a matter of fundamental policy, 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.
Therefore, either Portfolio could be adversely affected by a single economic,
political or regulatory occurrence or other development affecting its investment
sector. As a Portfolio's concentration increases, so does the potential for
fluctuation in the value of shares of a mutual fund which invests in a broader
range of industries. (The Information Age Portfolio may not invest 25% or more
of its total assets in the securities, other than U.S. Government securities, of
issuers in any one industry.) NO FUND SHOULD BE CONSIDERED A BALANCED OR
COMPLETE INVESTMENT PROGRAM.
OTHER INVESTMENT COMPANIES. Each Portfolio reserves the right to invest up to
10% of its total assets in the securities of other investment companies
unaffiliated with the Portfolio's Adviser that have the characteristics of
closed-end investment companies. A 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 a 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 Funds and the Portfolios have adopted certain
fundamental investment restrictions and policies, in addition to their
concentration policies 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. In addition, the
Statement of Additional Information contains nonfundamental investment policies;
for example, each Portfolio may temporarily borrow up to 5% of the value of its
total assets to satisfy redemption requests or settle securities transactions.
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.
ORGANIZATION OF THE FUNDS AND THE PORTFOLIOS
THE INFORMATION AGE AND HEALTH SCIENCES FUNDS ARE EACH DIVERSIFIED SERIES AND
THE DEVELOPING RESOURCES 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 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 Funds). The Trustees of the
Trust have divided the shares of each Fund into multiple classes, including
Class A, Class B and Class C shares. Each class represents an interest in a
Fund, but is subject to different expenses, rights and privileges. See
"Distribution and Service Plans" and "How to Buy Shares." The Trustees have the
authority under the Declaration of Trust to create additional classes of shares
with differing rights and privileges. As a result of a reorganization with
separate series of the Trust, the Funds commenced offering Class A, Class B and,
for the Information Age Fund, Class C shares on September 1, 1997. Health
Sciences Fund commenced offering Class C shares on January 1, 1998.
When issued and outstanding, the shares are fully paid and nonassessable by the
Trust and redeemable as described under "How to Redeem 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 of a Fund will be voted together except that only
shareholders of a particular class may vote on matters affecting only that
class. Shares have no preemptive or conversion rights and are freely
transferable. In the event of the liquidation of a Fund, shareholders of each
class are entitled to share pro rata in the net assets attributable to that
class available for distribution to shareholders.
The Trustees of the Trust have considered the advantages and disadvantages of
investing the assets of each Fund in its corresponding Portfolio, as well as the
advantages and disadvantages of the two-tier format. The Trustees believe that
the structure offers opportunities for growth in the assets of the Portfolios,
may afford the potential for economies of scale for each Fund and may over time
result in lower expenses for a Fund.
EACH 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. In addition
to selling an interest to its corresponding Fund, a Portfolio may sell interests
to other affiliated and non-affiliated mutual funds or institutional investors.
Such investors will invest in a Portfolio on the same terms and conditions and
will pay a proportionate share of the Portfolio's expenses. However, the other
investors investing in a Portfolio are not required to sell their shares at the
same public offering price as the corresponding 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 its corresponding 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 a Portfolio may be obtained by contacting the Principal
Underwriter, 24 Federal Street, Boston, MA 02110 (617) 482-8260.
Whenever a Fund as an investor in a 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. A 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 a 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 corresponding Fund to withdraw
its investment in the Portfolio or take other appropriate action. Any such
withdrawal could result in a distribution "in kind" of portfolio securities (as
opposed to a cash distribution from the Portfolio). If securities are
distributed, a Fund could incur brokerage, tax or other charges in converting
the securities to cash. In addition, the distribution in kind may result in a
less diversified portfolio of investments or adversely affect the liquidity of a
Fund. Notwithstanding the above, there are other means for meeting shareholder
redemption requests, such as borrowing.
A Fund may withdraw (completely redeem) all its assets from its corresponding
Portfolio at any time if the Board of Trustees of the Trust determines that it
is in the best interest of that Fund to do so. In the event a Fund withdraws all
of its assets from its corresponding Portfolio, or the Board of Trustees of the
Trust determines that the investment objective of such 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 such Fund
in another pooled investment entity or retaining an investment adviser to manage
the Fund's assets in accordance with its investment objective. A Fund's
investment performance may be affected by a withdrawal of all its assets (or the
assets of another investor in the Portfolio) from its corresponding Portfolio.
Although each Fund offers only its own shares of beneficial interest, it is
possible that a Fund or class might become liable for a misstatement or omission
in the Prospectus regarding another Fund or class because the Funds use this
combined Prospectus. The Trustees of the Trust have considered this factor in
approving the use of a combined Prospectus.
MANAGEMENT OF THE FUNDS AND THE PORTFOLIOS
Eaton Vance Management ("Eaton Vance") acts as the sponsor and manager of the
Health Sciences and Information Age Funds and as the administrator of the Health
Sciences and Information Age Portfolios and the Developing Resources Fund. The
Developing Resources Portfolio has engaged BMR as its investment adviser. The
Information Age Portfolio has engaged Eaton Vance and Lloyd George as investment
advisers, with the Portfolio's non-U.S. assets managed by Lloyd George and its
U.S. assets managed by Eaton Vance. The Health Sciences Portfolio has engaged
M&I 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. BMR OR EATON VANCE ACTS AS INVESTMENT ADVISER TO
INVESTMENT COMPANIES AND VARIOUS INDIVIDUAL AND INSTITUTIONAL CLIENTS WITH
ASSETS UNDER MANAGEMENT OF APPROXIMATELY $20 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 Corp. owns
approximately 21% of the Class A Shares issued by Lloyd George Management
(B.V.I.) Limited ("LGM"), the parent of Lloyd George.
William D. Burt and Barclay Tittmann are the co-portfolio managers of the
Developing Resources 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). Mr. Tittmann joined Eaton
Vance and BMR as a Vice President in October 1993. Prior to joining Eaton Vance,
he was a Vice President, portfolio manager and analyst with Invesco Management
and Research (formerly Gardner and Preston Moss) (1970-1993).
Duncan W. Richardson has acted as a co-portfolio manager of the Information
Age Portfolio since it commenced operations. Mr. Richardson is a Vice
President of Eaton Vance and of BMR and manages other Eaton Vance portfolios.
Lloyd George, which maintains offices in Hong Kong, London, England and Mumbai,
India, is a corporation formed on October 29, 1991 under the laws of Bermuda.
Lloyd George is registered as an investment adviser with the Commission. Lloyd
George is a subsidiary of LGM. LGM and its subsidiaries act as investment
adviser to various individual and institutional clients with total assets under
management of approximately $1.5 billion. Jacob Rees-Mogg has acted as a
co-portfolio manager of the Information Age Portfolio since it commenced
operations. He is an Investment Manager for Lloyd George. Prior to joining Lloyd
George, he was an Analyst at J. Rothschild Investment Management (1991-1993).
While the Information Age Portfolio is a New York trust, Lloyd George, together
with Mr. Lloyd George and Edward K.Y. Chen (a Trustee of the Information Age
Portfolio), are not residents of the United States and substantially all of
their respective assets may be located outside of the United States. It may be
difficult for investors to effect service of process within the United States
upon the individuals identified above, or to realize judgments of courts of the
United States predicated upon civil liabilities of Lloyd George and such
individuals under the federal securities laws of the United States. The
Information Age Portfolio has been advised that there is substantial doubt as to
the enforceability in the countries in which Lloyd George and such individuals
reside of such civil remedies and criminal penalties as are afforded by the
federal securities laws of the United States.
Investment decisions for the Health Sciences Portfolio are made by the portfolio
manager, Samuel D. Isaly. 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.
Each Adviser, acting under the general supervision of the Board of Trustees of a
Portfolio, manages a Portfolio's investments and affairs pursuant to an
investment advisory agreement. The Advisers also furnish for the use of the
respective Portfolios office space and all necessary office facilities,
equipment and personnel for servicing the investments of the Portfolio.
Under its investment advisory agreement with the Developing Resources Portfolio,
BMR receives a monthly advisory fee of .0625% (equivalent to .75% 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. For the period from the
Portfolio's start of business, April 10, 1997, to August 31, 1997, the Portfolio
paid BMR advisory fees equivalent to .75% (annualized) of the Fund's average
daily net assets for such period.
Under the investment advisory agreement with the Information Age Portfolio, BMR
and Lloyd George receive a monthly advisory fee, to be divided equally between
them, of .0625% (equivalent to .75% annually) of the average daily net assets of
the Portfolio up to $500 million, which fee declines at intervals above $500
million. As of August 31, 1997, the Portfolio had net assets of $51,373,944. For
the fiscal year ended August 31, 1997, the Portfolio paid advisory fees
equivalent to 0.75% of the Portfolio's average daily net assets.
Under the investment advisory agreement with the Health Sciences Portfolio, 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 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 fiscal year ended August
31, 1997, M&I received an advisory fee of 0.86% of average daily net assets. 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.
The Advisers place the portfolio transactions of the Portfolios for execution
with many broker-dealer firms and use their best efforts to obtain execution of
such transactions at prices which are advantageous to a Portfolio and at
reasonably competitive commission rates. Subject to the foregoing, the Advisers
may consider sales of shares of a Fund as a factor in the selection of
broker-dealer firms to execute portfolio transactions. The Funds, the Portfolios
and the Advisers have adopted Codes of Ethics relating to personal securities
transactions. The Codes permit personnel of the Advisers to invest in securities
(including securities that may be purchased or held by a Portfolio) for their
own accounts, subject to certain reporting and other restrictions and procedures
contained in such Codes.
Eaton Vance, acting under the general supervision of the Boards of Trustees,
manages and administers the business affairs of the Information Age and Health
Sciences Funds and the Information Age and Health Sciences Portfolios. Eaton
Vance's services include monitoring and providing reports to the Trustees of the
Trust and the Portfolios concerning the investment performance achieved by the
Advisers for the Portfolios, recordkeeping, preparation and filing of documents
required to comply with federal and state securities laws, supervising the
activities of the transfer agent of the Trust and the custodian of the
Portfolios, providing assistance in connection with Trustees' and shareholders'
meetings and other management and administrative services necessary to conduct
the business of the Funds and the Portfolios. Eaton Vance also furnishes for the
use of the Funds and the Portfolios office space and all necessary office
facilities, equipment and personnel for managing and administering the business
affairs of the Funds and the Portfolios. Eaton Vance does not provide any
investment management or advisory services to the Portfolios or the Funds.
Under its management contract with the Information Age and Health Sciences
Funds, 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 each Fund up to
$500 million, which fee declines at intervals above $500 million. Under its
administration agreement with the Information Age and Health Sciences
Portfolios, Eaton Vance receives a monthly administration fee in the amount of
1/48 of 1% (equal to .25% annually) of the average daily net assets of each
Portfolio up to $500 million, which fee declines at intervals above $500
million.
For the fiscal year ended August 31, 1997, Eaton Vance earned management fees
equivalent to 0.25% of each of the Information Age and Health Sciences Funds'
average daily net assets for such period. In addition, for the fiscal year ended
August 31, 1997, Eaton Vance earned administration fees equivalent to 0.25% of
each such Portfolio's average daily net assets.
Eaton Vance has agreed to waive its fee and/or reimburse Health Sciences Fund
for operating expenses to maintain an annual expense ratio for the Class A
shares of 2.00% or less until August 31, 1999.
The Trust has retained the services of Eaton Vance to act as Administrator of
the Developing Resources 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 Developing Resources Portfolio.
As Administrator, Eaton Vance provides the Developing Resources Fund with
general office facilities and supervises the overall administration of the Fund.
For these services Eaton Vance currently receives no compensation. The Trustees
of the Trust may determine, in the future, to compensate Eaton Vance for such
services.
The Portfolios and the Funds, as the case may be, will each be responsible for
all respective costs and expenses not expressly stated to be payable by an
Adviser under the investment advisory agreements, by Eaton Vance under the
management contracts or the administration agreements, or by the Principal
Underwriter under the distribution agreements.
DISTRIBUTION AND SERVICE PLANS
The Trust has adopted a Distribution Plan (the "Class A Plan") for the Class A
shares of Health Sciences Fund and Information Age Fund pursuant to Rule 12b-1
under the 1940 Act. THE CLASS A PLAN FOR THE INFORMATION AGE FUND PROVIDES FOR
THE PAYMENT OF A MONTHLY DISTRIBUTION FEE TO THE PRINCIPAL UNDERWRITER IN AN
AMOUNT EQUAL TO THE AGGREGATE OF (a) .50% OF THAT PORTION OF CLASS A AVERAGE
DAILY NET ASSETS FOR ANY FISCAL YEAR WHICH IS ATTRIBUTABLE TO SHARES WHICH HAVE
REMAINED OUTSTANDING FOR LESS THAN ONE YEAR AND (b) .25% OF THAT PORTION OF
CLASS A AVERAGE DAILY NET ASSETS FOR ANY FISCAL YEAR WHICH IS ATTRIBUTABLE TO
SHARES WHICH HAVE REMAINED OUTSTANDING FOR MORE THAN ONE YEAR. THE CLASS A PLAN
FOR THE HEALTH SCIENCES FUND PROVIDES FOR THE PAYMENT OF A MONTHLY DISTRIBUTION
FEE TO THE PRINCIPAL UNDERWRITER IN AN AMOUNT EQUAL TO 0.25% OF CLASS A AVERAGE
DAILY NET ASSETS. The Principal Underwriter intends to use at least part of such
fees from the Health Sciences Fund to compensate Authorized Firms, including
M&I, for personal services rendered to Health Sciences Fund shareholders and/or
the maintenance of shareholder accounts. Aggregate payments to the Principal
Underwriter under the Class A Plan are limited to those permissible pursuant to
a rule of the National Association of Securities Dealers, Inc. For the fiscal
year ended August 31, 1997, Class A shares of Health Sciences Fund paid
distribution fees representing 0.25% of the average daily net assets of the
Fund.
The Information Age Fund Class A Plan also provides that Class A will pay a
quarterly service fee to the Principal Underwriter in an amount equal on an
annual basis to .25% of that portion of average daily net assets for any fiscal
year which is attributable to Class A shares which have remained outstanding for
more than one year; from such service fee the Principal Underwriter expects to
pay a quarterly service fee to Authorized Firms, as compensation for providing
personal services and/or the maintenance of shareholder accounts, with respect
to shares sold by such Firms which have remained outstanding for more than one
year. Service fee payments to Authorized Firms will be in addition to sales
charges on Class A shares which are reallowed to Authorized Firms. If the Class
A Plan is terminated or not continued in effect, the Class has no obligation to
reimburse the Principal Underwriter for amounts expended by the Principal
Underwriter in distributing Class A shares.
The Trust has adopted a Service Plan (the "Class A Service Plan") for the
Developing Resources Fund's Class A shares that is designed to meet the service
fee requirements of the sales charge rule of the National Association of
Securities Dealers, Inc. THE CLASS A SERVICE PLAN PROVIDES THAT CLASS A MAY MAKE
SERVICE FEE PAYMENTS FOR PERSONAL SERVICES AND/OR THE MAINTENANCE OF SHAREHOLDER
ACCOUNTS TO THE PRINCIPAL UNDERWRITER, AUTHORIZED FIRMS AND OTHER PERSONS IN
AMOUNTS NOT EXCEEDING .25% OF ITS AVERAGE DAILY NET ASSETS FOR ANY FISCAL YEAR.
The Trustees of the Trust have initially implemented the Class A Service Plan by
authorizing the Class A to make quarterly service fee payments to the Principal
Underwriter and Authorized Firms in amounts not expected to exceed .25% of its
average daily net assets for any fiscal year which is based on the value of
Class A shares sold by such persons and remaining outstanding for at least
twelve months. Developing Resources Fund expects to begin making Class A service
fee payments during the quarter ending September 30, 1998.
The Trust has also adopted Distribution Plans ("Class B Plan" and "Class C
Plan") pursuant to Rule 12b-1 under the 1940 Act for each Fund's Class B shares
and Health Science Fund's and Information Age Fund's Class C shares. Each Plan
is designed to permit an investor to purchase shares through an Authorized Firm
without incurring an initial sales charge and at the same time permit the
Principal Underwriter to compensate Authorized Firms in connection therewith.
UNDER SUCH PLANS, CLASS B AND CLASS C EACH PAYS THE PRINCIPAL UNDERWRITER A FEE,
ACCRUED DAILY AND PAID MONTHLY, AT AN ANNUAL RATE NOT EXCEEDING .75% OF ITS
AVERAGE DAILY NET ASSETS TO FINANCE THE DISTRIBUTION OF ITS SHARES. Such fees
compensate the Principal Underwriter for sales commissions paid by it to
Authorized Firms on the sale of Class B and Class C shares and for interest
expenses. Under each Class B Plan, the Principal Underwriter uses its own funds
to pay sales commissions (except on exchange transactions and reinvestments) to
Authorized Firms at the time of sale equal to 4% of the purchase price of the
Class B shares sold by such Firms. Under the Class C Plan, the Principal
Underwriter currently expects to pay to an Authorized Firm (a) sales commissions
(except on exchange transactions and reinvestments) at the time of sale equal to
.75% of the purchase price of the Class C shares sold by such Firm, and (b)
monthly sales commissions approximately equivalent to 1/12 of .75% of the value
of Class C shares sold by such Firm and remaining outstanding for at least one
year. During the first year after a purchase of Class C shares, the Principal
Underwriter will retain the sales commission as reimbursement for the sales
commissions made to Authorized Firms at the time of sale. CDSCs paid to the
Principal Underwriter will be used to reduce amounts owed to it. Because
payments to the Principal Underwriter under the two Plans are limited, uncovered
distribution charges (sales commissions due the Principal Underwriter plus
interest, less the above fees and CDSCs received by it) may exist indefinitely.
During the fiscal year ended August 31, 1997, each Class B (which were then
separate series funds) paid or accrued sales commissions equivalent to .75% of
average daily net assets. As at August 31, 1997, the outstanding uncovered
distribution charges calculated under the Developing Resources, Health Sciences
and Information Age Class B Plans amounted to approximately $882,000, $2,871,000
and $982,000, respectively (equivalent to 3.9%, 4.4% and 3.4%, respectively, of
net assets on such day).
THE CLASS B AND CLASS C PLANS ALSO AUTHORIZE EACH SUCH CLASS TO MAKE PAYMENTS OF
SERVICE FEES TO THE PRINCIPAL UNDERWRITER, AUTHORIZED FIRMS AND OTHER PERSONS IN
AMOUNTS NOT EXCEEDING .25% OF ITS AVERAGE DAILY NET ASSETS FOR PERSONAL
SERVICES, AND/OR THE MAINTENANCE OF SHAREHOLDER ACCOUNTS. Under the Class B
Plan, this fee is paid quarterly in arrears based on the value of Class B shares
sold by such persons and remaining outstanding for at least twelve months. Under
the Class C Plan, the Principal Underwriter currently expects to pay to an
Authorized Firm (a) a service fee (except on exchange transactions and
reinvestments) at the time of sale equal to .25% of the purchase price of the
Class C shares sold by such Firm, and (b) monthly service fees approximately
equivalent to 1/12 of .25% of the value of Class C shares sold by such Firm and
remaining outstanding for at least one year. During the first year after a
purchase of Class C shares, the Principal Underwriter will retain the service
fee as reimbursement for the service fee payment made to Authorized Firms at the
time of sale. For the fiscal year ended August 31, 1997, Developing Resources
and Information Age Funds Class B paid or accrued service fees under its Plan
equivalent to 0.16% and 0.17%, respectively, of 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 Principal Underwriter may at times allow
discounts on the sale of Class A shares 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 Trust may, in its absolute discretion, suspend, discontinue or limit the
offering of one or more of its classes of shares at any time. In determining
whether any such action should be taken, the Trust's management intends to
consider all relevant factors, including (without limitation) the size of the
Fund or class, the investment climate and market conditions, the volume of sales
and redemptions of shares, and in the case of Class B and Class C shares, the
amount of uncovered distribution charges of the Principal Underwriter. The Plans
may continue in effect and payments may be made under the Plans following any
such suspension, discontinuance or limitation of the offering of shares;
however, there is no contractual obligation to continue any Plan for any
particular period of time. Suspension of the offering of shares would not, of
course, affect a shareholder's ability to redeem shares.
VALUING SHARES
EACH 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). Each Class's net asset value per
share is determined by IBT Fund Services (Canada) Inc. (as agent for the Trust)
in the manner authorized by the Trustees of the Trust. IBT Fund Services
(Canada) Inc. is a subsidiary of Investors Bank & Trust ("IBT"), the Trust's
custodian. The net asset value of each Class is computed by dividing the value
of that Class's pro rata share of each Fund's total assets, less its
liabilities, by the number of shares of that Class outstanding. Because each
Fund invests its assets in an interest in its corresponding Portfolio, each
Class's net asset value will reflect the value of each Fund's 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 by a specific time each day to receive that day's public offering
price per share. It is the Authorized Firms' responsibility to transmit orders
promptly to the Principal Underwriter. Each Fund has approved the acceptance of
purchase and redemption orders as of the time of their receipt by certain
Authorized Firms (or their designated intermediaries).
Each 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 a Portfolio from the value
of its total assets.
SHAREHOLDERS MAY DETERMINE THE VALUE OF THEIR INVESTMENT BY MULTIPLYING THE
NUMBER OF SHARES OWNED BY THE CURRENT NET ASSET VALUE PER SHARE.
HOW TO BUY SHARES
SHARES OF A FUND MAY BE PURCHASED FOR CASH OR MAY BE ACQUIRED IN EXCHANGE FOR
ACCEPTABLE SECURITIES. Class A shares are purchased at the effective public
offering price, which price is based on the effective net asset value per share
plus the applicable sales charge. The sales charge is divided between the
Authorized Firm and the Principal Underwriter. Class B and Class C shares are
purchased at the net asset value per share 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 Trust may suspend the offering of shares
at any time and may refuse an order for the purchase of shares.
An initial investment 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 Trust'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 Trust as described below under "How to
Redeem Shares."
CLASS A SHARES. The sales charge may vary depending on the size of the purchase
and the number of shares of Class A 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 or Right
of Accumulation are available from Authorized Firms or the Principal
Underwriter.
The current sales charges and dealer commissions are:
Sales Charge Sales Charge Dealer Commission
as Percentage of as Percentage of as Percentage of
Amount of Purchase Offering Price Amount Invested Offering Price
- --------------------------------------------------------------------------------
Less than $50,000 5.75% 6.10% 5.00%
$50,000 but less than 4.75 4.99
$100,000 4.00
$100,000 but less 3.75 3.90
than $250,000 3.00
$250,000 but less 3.00 3.09
than $500,000 2.50
$500,000 but less 2.00 2.04
than $1,000,000 1.75
$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 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.
Class A shares may be sold at net asset value to shareholders of the Health
Sciences Fund who were shareholders on August 30, 1996 that have maintained
their account until the subsequent purchase; to current and retired Directors
and Trustees of Eaton Vance funds, including the Portfolio; to clients and
current and retired officers and employees of Eaton Vance, its affiliates and
other investment advisers of Eaton Vance sponsored funds; to registered
representatives and employees of Authorized Firms and bank employees who refer
customers to registered representatives of Authorized Firms; to officers and
employees of IBT and the Transfer Agent; and to such persons' spouses and
children under the age of 21 and their beneficial accounts. Class A shares may
also be issued at net asset value (1) in connection with the merger of an
investment company or series thereof 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 Trust's Principal Underwriter may pay commissions to
Authorized Firms who initiate and are responsible for purchases of Class A
shares of the Fund by Eligible Plans of up to 1.00% of the amount invested in
such shares.
Until March 31, 1998, 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 Class A 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.
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 in Class A shares, 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 such
shares (computed to the nearest full share at the public offering price
applicable to the initial purchase hereunder) registered in the investor's name.
All income dividends and capital gains distributions on escrowed shares will be
paid to the investor or to the investor's order. When the minimum investment so
specified is completed, the escrowed shares will be delivered to the investor.
If the investor has an accumulation account the shares will remain on deposit
under the investor's account.
If total purchases under this Statement of Intention are less than the amount
specified, the investor will promptly remit to the Principal Underwriter any
difference between the sales charge on the amount specified and on the amount
actually purchased. If the investor does not within 20 days after written
request by the Principal Underwriter or the Authorized Firm pay such difference
in sales charge, the escrow agent will redeem an appropriate number of the
escrowed shares in order to realize such difference. Full shares remaining after
any such redemption together with any excess cash proceeds of the shares so
redeemed will be delivered to the investor or to the investor's order by the
escrow agent.
If total purchases made under this Statement are large enough to qualify for a
lower sales charge than that applicable to the amount specified, all
transactions will be computed at the expiration date of this Statement to give
effect to the lower charge. Any difference in sales charge will be refunded to
the investor in cash, or applied to the purchase of additional shares at the
lower charge if specified by the investor. This refund will be made by the
Authorized Firm and by the Principal Underwriter. If at the time of the
recomputation 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 investor's account.
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. 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 of Class A
shares or net asset value of Class B and Class C shares 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:
<TABLE>
<CAPTION>
<S> <C>
IN THE CASE OF BOOK ENTRY: IN THE CASE OF PHYSICAL DELIVERY:
Deliver through Depository Trust Co. Investors Bank & Trust Company
Broker #2212 Attention: Eaton Vance [indicate Fund name and
Investors Bank & Trust Company Class]
For A/C Eaton Vance [indicate Fund name and Class] Physical Securities Processing Settlement Area
200 Clarendon Street
Boston, MA 02116
</TABLE>
Investors who are contemplating an exchange of securities for shares, 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 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.
IF YOU DON'T HAVE AN AUTHORIZED FIRM, EATON VANCE CAN RECOMMEND ONE.
HOW TO REDEEM SHARES
A SHAREHOLDER MAY REDEEM 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 share next computed after a redemption request is received in the
proper form as described below. Within seven days after receipt of a redemption
request in good order by the Transfer Agent, the Trust 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 CDSC (described below) and any federal income
tax required to be withheld.
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 Trust, 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 order is deemed to be
received by the Trust or the Principal Underwriter, as the Trust's agent. 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.
While normally payments will be made 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 a Fund, either totally or partially, by a
distribution in kind of readily marketable securities withdrawn from its
corresponding 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 Trust 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 if the cause of the low
account balance was a reduction in the net asset value of shares. No CDSC will
be imposed with respect to such involuntary redemptions.
CONTINGENT DEFERRED SALES CHARGE. Each class of shares is subject to a CDSC on
certain redemptions. The CDSC is calculated based on the lower of the net asset
value at the time of purchase or the time of redemption. Shares acquired through
the reinvestment of distributions are exempt. Redemptions are made first from
shares in the account which are not subject to a CDSC.
In calculating a CDSC upon the redemption of shares acquired in an exchange, the
shares are deemed to have been acquired at the time of the original purchase of
the exchanged shares and, in the case of Class B shares, the CDSC schedule
applicable to the exchanged shares will apply to the acquired shares. No CDSC is
imposed on shares sold to Eaton Vance or its affiliates, or to their respective
employees or clients. Shares acquired as the result of a merger or liquidation
of another Eaton Vance sponsored fund generally will be subject to the same CDSC
rate imposed by the prior fund.
CLASS A SHARES. If Class A shares are purchased at net asset value because the
purchase amount is $1 million or more, they will be subject to a 1% CDSC if
redeemed within 12 months of purchase. If Class A shares are purchased prior to
April 1, 1998 at net asset value because the amount invested represents
redemption proceeds from an unaffiliated mutual fund (as described under "How to
Buy Shares"), they will be subject to a .50% CDSC if redeemed within 12 months
of purchase.
CLASS B SHARES. Class B shares will be subject to the following CDSC schedule:
<TABLE>
<CAPTION>
Year of
Redemption
After Purchase CDSC
- --------------------------------------------------------------------------------------------------------
<S> <C>
First or Second 5%
Third 4%
Fourth 3%
Fifth 2%
Sixth 1%
Seventh and following 0%
</TABLE>
The Class B CDSC is waived for redemptions (1) pursuant to a Withdrawal Plan
(see "Eaton Vance Shareholder Services"), (2) as part of a required minimum
distribution from a tax-sheltered retirement plan, or (3) following the death of
all beneficial owners of shares, provided the redemption is requested within one
year of death (a death certificate and other applicable documents may be
required).
CLASS C SHARES. Class C shares will be subject to a 1% CDSC if redeemed within
12 months of purchase. The Class C CDSC is waived for redemptions (1) pursuant
to a Withdrawal Plan (see "Eaton Vance Shareholder Services"), (2) as part of a
distribution from a retirement plan qualified under Section 401, 403(b) or 457
of the Code, or (3) as part of a required minimum distribution from other
tax-sheltered retirement plans.
REPORTS TO SHAREHOLDERS
EACH FUND WILL ISSUE TO ITS SHAREHOLDERS SEMI-ANNUAL AND ANNUAL REPORTS
CONTAINING FINANCIAL STATEMENTS. Financial statements included in annual reports
are audited by the independent accountants. Shortly after the end of each
calendar year, shareholders will be furnished 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 SHARES, THE TRANSFER AGENT WILL
SET UP A LIFETIME INVESTING ACCOUNT FOR THE INVESTOR ON THE TRUST'S RECORDS.
This account is a complete record of all transactions which at all times shows
the balance of shares owned. The Trust 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 Trust'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 shareholder communications are returned by the United States Postal Service
or other delivery service as not deliverable, the distribution option on the
account will be automatically changed to the SHARE OPTION until such time as the
shareholder selects a different option. No interest will accrue on amounts
represented by uncashed distribution or redemption checks.
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 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 Trust and its Transfer Agent. Since the
Trust 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
Trust 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 each Fund currently may be exchanged for shares of the same class of
one or more other funds in the Eaton Vance Group of Funds. Class A shares may
also be exchanged for shares of Eaton Vance Cash Management Fund, Eaton Vance
Income Fund of Boston and Eaton Vance Tax Free Reserves. Class B shares may also
be exchanged for shares of Eaton Vance Prime Rate Reserves, which are subject to
an early withdrawal charge, or shares of Eaton Vance Money Market Fund, which
are subject to a CDSC, and shares of a money market fund sponsored by an
Authorized Firm and approved by the Principal Underwriter (an "Authorized Firm
fund"). Class C shares may also be exchanged for shares of Eaton Vance Money
Market Fund and EV Classic Senior Floating-Rate Fund. Any such exchange will be
made on the basis of the net asset value per share of each fund/class at the
time of the exchange (plus, in the case of an exchange made within six months of
the date of purchase of Class A 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. Exchanges are subject to any restrictions or
qualifications set forth in the current prospectus of any such fund.
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 Trust 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 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 Class B shares (except Class B shares of the
Limited Maturity Funds and Prime Rate Reserves), see "How to Redeem Shares." The
CDSC or early withdrawal charge schedule applicable to Class B shares of the
Limited Maturity Funds and 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.
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 Trust, 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 TRUST 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 applicable Fund or Class as an expense to
all shareholders.
INVEST-BY-MAIL -- FOR PERIODIC SHARE ACCUMULATION: Once the $1,000 minimum
investment has been made, checks of $50 or more payable to the order of the Fund
and specifying the Class being purchased 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 Class 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. For Class B and Class C shares, any such
withdrawals may not in the aggregate exceed 12% annually of the account balance
at the time the plan is established. Such amount will not be subject to the
Class B or Class C CDSC. See "How to Redeem Shares." A minimum deposit of $5,000
in shares is required. The maintenance of a withdrawal plan concurrently with
purchases of additional Class A shares would be disadvantageous because of the
sales charge included in such purchase.
STATEMENT OF INTENTION: Purchases of $50,000 or more of Class A shares made
over a 13-month period are eligible for reduced sales charges. See "How to Buy
Shares -- Statement of Intention and Escrow Agreement."
RIGHT OF ACCUMULATION: Purchases may qualify for reduced sales charges on Class
A shares when the current market value of holdings (shares at current offering
price), plus new purchases, reaches $50,000 or more. Class A 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.
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 the same shares (or for
Class A shares in Class A shares of any other Eaton Vance 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 Trust (or by the Trust's Transfer Agent). To the extent
that any shares are sold at a loss and the proceeds are reinvested in shares (or
other shares 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.
TAX-SHELTERED RETIREMENT PLANS: Class A and Class C shares of each Fund are
available for purchase in connection with certain tax-sheltered retirement
plans. Detailed information concerning these plans, including certain exceptions
to minimum investment requirements, and copies of the plans are available from
the Principal Underwriter. This information should be read carefully and
consultation with an attorney or tax adviser may be advisable. The information
sets forth the service fee charged for retirement plans and describes the
federal income tax consequences of establishing a plan. Participant accounting
services (including trust fund reconciliation services) will be offered only
through third party recordkeepers and not by the Principal Underwriter. Under
all plans, dividends and distributions will be automatically reinvested in
additional shares.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. It is the present policy of each Fund to make (A) at least one
distribution annually (normally in December) of all or substantially all of the
net investment income (if any) allocated to a Fund by its corresponding
Portfolio (less the Funds' direct and allocated expenses and class-specific
expenses) and (B) at least one distribution annually of all or substantially all
of the net realized capital gains (if any) and net gains from foreign currency
transactions (if any) allocated to a Fund by its corresponding Portfolio
(reduced by any available capital loss carryforwards from prior years).
Shareholders may reinvest all distributions in shares of a Fund at net asset
value per share as of the close of business on the ex-dividend date.
Each Fund's net investment income consists of a Fund's allocated share of the
net investment income of its corresponding Portfolio, less all actual and
accrued expenses of the Fund and net realized capital gains, if any, consist of
the net realized capital gains (if any) allocated to a Fund by its corresponding
Portfolio for tax purposes, after taking into account any available capital loss
carryovers. Each Portfolio's net investment income consists of all income
accrued on a Portfolio's assets, less all actual and accrued expenses of the
Portfolio determined in accordance with generally accepted accounting
principles.
TAXES. Distributions by a Fund which are derived from the Fund's allocated share
of its corresponding 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 a Fund. A
portion of distributions from a Fund's net investment income may qualify for the
dividends-received deduction for corporate shareholders.
Capital gains referred to in clause (B) above, if any, realized by a Portfolio
and allocated to a Fund for the Fund's fiscal year, which ends on August 31,
will usually be distributed by a Fund prior to the end of December.
Distributions by a Fund of net long-term capital gains allocated to a Fund by
its corresponding 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.
Sales charges paid upon a purchase of Class A shares 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 a Fund or
another fund pursuant to a Fund's reinvestment or exchange privilege. Any
disregarded or disallowed amounts will result in an adjustment to the
shareholder's tax basis in some or all of any other shares acquired.
Each Fund intends to qualify as a regulated investment company under the Code
and to satisfy all requirements necessary to avoid paying federal income taxes
on the part of its investment company taxable income (consisting of taxable net
investment income and net short-term capital gains) and net capital gains that
it distributes to shareholders. In satisfying these requirements, each Fund will
treat itself as owning its proportionate share of each of its corresponding
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, each Fund does not pay federal
income or excise taxes to the extent that it distributes to shareholders
substantially all of its ordinary income and capital gain net income in
accordance with the timing requirements imposed by the Code. As partnerships
under the Code, the Portfolios do not pay federal income or excise taxes.
Income realized by a Portfolio from certain investments and allocated to a Fund
may be subject to foreign income taxes, and a 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 a Fund's allocated share
of qualified taxes paid by its corresponding Portfolio to foreign countries.
This election may be made only if more than 50% of the assets of a Fund,
including its allocable share of its corresponding Portfolio's assets, at the
close of a taxable year consists of securities in foreign corporations. Each
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 a Fund.
PERFORMANCE INFORMATION
FROM TIME TO TIME, AVERAGE ANNUAL TOTAL RETURN MAY BE ADVERTISED. Average annual
total return is determined separately for each Class by computing the average
annual percentage change in value of $1,000 invested at the maximum public
offering price (including maximum sales charge for Class A shares; net asset
value for Class B and Class C shares) for specified periods, assuming
reinvestment of all distributions. Total return may be quoted for the period
prior to commencement of operations which would reflect the Class's total return
(or that of its predecessor) adjusted to reflect any applicable sales charge.
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.
Each Fund may publish annual and cumulative total return figures from time to
time.
Each Fund may also publish total return figures for each Class which do not take
into account any sales charge. Any performance figure which does not take into
account a sales charge would be reduced to the extent such charge is imposed. A
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 investment results will fluctuate over time, and any
presentation of total return for any prior period should not be considered a
representation of what an investment may earn or what the total return may be in
any future period.
The following chart reflects the annual investment returns of CLASS B SHARES
OF THE DEVELOPING RESOURCES FUND for one-year periods ending August 31 and
does not take into account any sales charge which investors may bear. The
performance of Class A shares will be different.
[Graphic Omitted]
The following chart reflects the annual investment returns of the predecessor to
the CLASS A SHARES OF THE HEALTH SCIENCES FUND for one-year periods ending
August 31 and does not take into account any sales charge which investors may
bear. The performance of Class B and Class C shares will be different.
[Graphic Omitted]
5 YEAR AVERAGE ANNUAL TOTAL RETURN - 11.95%
10 YEAR AVERAGE ANNUAL TOTAL RETURN - 10.32%*
1988(1)* 16.81%
1989* 21.19%
1990* 3.71%
1991* (4.83)%
1992* 7.21%
1993* 17.32%
1994 16.26%
1995 13.79%
1996 39.69%
1997 (14.49)%
(1)From the start of business, October 21, 1987, to August 31, 1988.
*If a portion of the Fund's expenses had not been subsidized, the
Fund would have had lower returns.
The following chart reflects the annual investment returns of the predecessor to
the CLASS A SHARES OF THE HEALTH SCIENCES FUND for one-year periods ending
August 31 and does not take into account any sales charge which investors may
bear. The performance of Class B and Class C shares will be different.
[Graphic Omitted]
5 YEAR AVERAGE ANNUAL TOTAL RETURN - 21.56%
10 YEAR AVERAGE ANNUAL TOTAL RETURN - 15.53%*
1988 (25.30%)
1989 31.32%
1990 11.13%
1991 30.60%
1992 12.04%
1993 21.37%
1994 2.69%
1995 38.13%
1996 31.04%
1997 17.67%
*If a portion of the Fund's expenses had not been subsidized, the
Fund would have had lower returns.
<PAGE>
[LOGO] Investing
EATON VANCE for the
===========
Mutual Funds 21st
Century
- --------------------------------------------------------------------------------
Eaton Vance Worldwide Developing Resources Fund
Eaton Vance Worldwide Health Sciences Fund
Eaton Vance Information Age Fund
PROSPECTUS
JANUARY 1, 1998
- --------------------------------------------------------------------------------
Portfolio Investment Advisers
Boston Management and Research, 24 Federal Street, Boston, MA 02110
Lloyd George Investment Management (Bermuda) Limited, 3808 One Exchange Square,
Central Hong Kong Mehta and Isaly Asset Management, Inc., 41 Madison Avenue,
New York, NY 10010-2202
Fund Sponsor and Manager or Administrator
Eaton Vance Management, 24 Federal Street, Boston, MA 02110
Principal Underwriter
Eaton Vance Distributors, Inc., 24 Federal Street, Boston, MA 02110
(800) 225-6265
Custodian
Investors Bank & Trust Company, 200 Clarendon Street, Boston, MA 02116
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
Coopers &Lybrand, L.L.P., One Post Office Square, Boston, MA 02109
1/1 COMBP
<PAGE>
PART A
INFORMATION REQUIRED IN A PROSPECTUS
[GRAPHIC OMITTED]
Eaton Vance
Asian Small Companies Fund
Eaton Vance Asian Small Companies Fund (the "Fund") is a mutual fund seeking
capital growth through investment in securities of smaller companies based in
Asia. The Fund invests its assets in Asian Small Companies Portfolio (the
"Portfolio"), a diversified open-end investment company having the same
investment objective as the Fund, rather than by directly investing in and
managing its own portfolio of securities. Most of the Portfolio will be invested
in Asian securities markets, including those of Australia, China, Hong Kong,
India, Indonesia, Japan, Malaysia, Pakistan, the Philippines, Singapore, South
Korea, Sri Lanka, Taiwan and Thailand. The Fund is a separate series of Eaton
Vance Growth Trust (the "Trust").
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK OR OTHER INSURED DEPOSITORY INSTITUTION, AND ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD
OR ANY OTHER GOVERNMENT AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS,
INCLUDING FLUCTUATIONS IN VALUE AND THE POSSIBLE LOSS OF SOME OR ALL OF THE
PRINCIPAL INVESTMENT.
This Prospectus is designed to provide you with information you should know
before investing. Please retain this document for future reference. A Statement
of Additional Information dated January 1, 1998 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 sponsor and
manager of the Fund and the administrator of the Portfolio is Eaton Vance
Management, 24 Federal Street, Boston, MA 02110 (the "Manager"). The Portfolio's
investment adviser is Lloyd George Investment Management (Bermuda) Limited (the
"Adviser"). The principal business address of the Adviser is 3808 One Exchange
Square, Central, Hong Kong.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
CONTENTS
<TABLE>
<CAPTION>
Page Page
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Shareholder and Fund Expenses 2 How to Buy Shares 11
Investment Opportunities in the Asian Region 3 How to Redeem Shares 13
The Fund's Investment Objective 3 Reports to Shareholders 14
Investment Policies and Risks 3 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 8 Eaton Vance Shareholder Services 16
Distribution Plans 9 Distributions and Taxes 17
Valuing Shares 10 Performance Information 17
- ----------------------------------------------------------------------------------------------------------------------
Prospectus dated January 1, 1998
</TABLE>
<PAGE>
SHAREHOLDER AND FUND EXPENSES
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
Class A Class B
Shares Shares
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price) 5.75% None
Sales Charges Imposed on Reinvested Distributions None None
Fees to Exchange Shares None None
Maximum Contingent Deferred Sales Charge None 5.00%
Annual Fund and Allocated Portfolio Operating Expenses (as a percentage of
average daily net assets)
Class A Class B
Shares Shares
- -------------------------------------------------------------------------------------------------------------
Management Fees 1.25% 1.25%
Rule 12b-1 Distribution and or Service Fees 0.50 0.75
Other Expenses 0.75 0.75
---- ----
Total Operating Expenses 2.50 2.75
==== ====
EXAMPLE
An investor would pay the following expenses and, in the case of Class A
shares, maximum initial sales charge or, in the case of Class B shares, the
applicable contingent deferred sales charge on a $1,000 investment, assuming
(a) 5% annual return and (b) redemption at the end of each period:
Class A Class B
Shares Shares
- -------------------------------------------------------------------------------------------------------------
1 Year $ 81 $ 78
3 Years 131 125
An investor would pay the following expenses on the same investment,
assuming (a) 5% annual return and (b) no redemptions:
Class A Class B
Shares Shares
- -------------------------------------------------------------------------------------------------------------
1 Year $ 81 $ 28
3 Years 131 85
</TABLE>
NOTES: The table and Example summarize the aggregate expenses of the Portfolio
and each Class of shares of the Fund and are designed to help investors
understand the costs and expenses they will bear, directly or indirectly, by
investing in the Fund. The Management Fees and Other Expenses set out in the
table and the information in the Example is estimated for each Class, since the
Fund is only recently organized. Management Fees include management fees paid by
the Fund and investment advisory and administration fees paid by the Portfolio
of 0.25%, 0.75% and 0.25%, respectively.
The Fund offers two classes of shares. Class A shares are sold subject to a
sales charge imposed at the time of purchase. No sales charge is payable at the
time of purchase on investments in Class A shares of $1 million or more.
However, 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. Class B shares are sold subject to a declining CDSC (5% maximum) if
redeemed within six years of purchase. The CDSC does not apply in certain
circumstances. See "How to Buy Shares" and "How to Redeem Shares."
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.
Long-term holders of Class B shares 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. For further information regarding the
expenses of both the Fund and the Portfolio see "Management of the Fund and the
Portfolio", "Distribution Plans", and "How to Redeem Shares."
The Fund invests exclusively in the Portfolio. Other investment companies and
investors with different distribution arrangements are investing in the
Portfolio and others may do so in the future. See "Organization of the Fund and
the Portfolio".
INVESTMENT OPPORTUNITIES IN THE ASIAN REGION
Despite volatility in late 1997, over the past 20 years the performance of the
major Asian securities markets has generally been better than that of markets in
Europe and the United States. In the past five years, the newly emerging
securities markets of the Asian Region have demonstrated significant growth in
market capitalization, in numbers of listed securities and in the volume of
transactions. Over the same period, the underlying economies of the region have
grown against a background of the high savings rates characteristic of many
Asian societies and generally moderate inflation. There is continuing economic
integration among the countries in the Asian Region.
ASIAN SMALL COMPANIES ARE AN ATTRACTIVE INVESTMENT OPPORTUNITY. Although Asian
securities markets have become progressively more accessible to U.S. investors
through either direct investment or through Asian (or Pacific Basin) investment
companies, obstacles to investing in smaller companies have remained.
Information to research these companies is not easily obtainable. The Adviser is
strategically located in Hong Kong and has substantial experience with Asian
small companies. Also, in many existing Asian mutual funds, only a small portion
of the portfolio is invested in smaller companies. The Adviser believes that
soundly managed smaller companies in the Asian Region are well positioned to
take advantage of the rapid changes in the underlying economic and social
structures that have been taking place over the past decade. Smaller companies
are generally able to react swiftly to changing trading conditions and the
Adviser believes that such companies offer the potential for high capital growth
rates, particularly in a period of economic recovery. The Adviser believes that
smaller Asian companies offering superior returns exist in newly created
industries, as well as more traditional economic sectors in expanding markets.
See Appendix B to the Statement of Additional Information for further
information about the economic characteristics of and risks associated with
investing in Asian Region countries.
THE FUND'S INVESTMENT OBJECTIVE
THE FUND'S INVESTMENT OBJECTIVE IS TO SEEK CAPITAL GROWTH. It currently seeks to
meet its investment objective by investing its assets in the Asian Small
Companies Portfolio (the "Portfolio"), a separate registered investment company
which invests primarily in equity securities of smaller companies based in Asia.
Most of the Portfolio's assets will be invested in securities markets in the
Asian region, including Australia, China, Hong Kong, India, Indonesia, Japan,
Malaysia, Pakistan, the Philippines, Singapore, South Korea, Sri Lanka, Taiwan
and Thailand. (collectively, the "Asian Region").
Investments in the Asian Region can involve significant risks that are generally
not involved with investments in U.S. companies. The Fund is intended for
long-term investors who can accept international investment risk and little or
no current income. The Fund is not intended to be a complete investment program.
A prospective investor should take into account personal objectives and other
investments when considering the purchase of Fund shares. The Fund cannot assure
achievement of its investment objective. The investment objective of the Fund
and the Portfolio are nonfundamental. Asian Region investments may offer higher
potential for gains and losses than investments in the United States. See
"Investment Policies and Risks" for further information.
INVESTMENT POLICIES AND RISKS
THE PORTFOLIO SEEKS TO ACHIEVE ITS OBJECTIVE THROUGH INVESTING IN A CAREFULLY
SELECTED AND CONTINUOUSLY MANAGED PORTFOLIO CONSISTING PRIMARILY OF EQUITY
SECURITIES OF SMALLER COMPANIES BASED IN ASIA. Most of the Portfolio's assets
will be invested in Asian securities markets. The Adviser will consider
companies that it believes have all or most of the following characteristics:
sound and well-established management; producers of goods or services for which
a clear, continuing and long-term demand can be identified within the context of
national, regional and global development; a history of earnings growth;
financial strength; a consistent or progressive dividend policy; and undervalued
securities.
The Portfolio will, under normal market conditions, invest at least 65% of its
total assets in equity securities of Asian small companies. Such companies will
(a) have a market capitalization equivalent to less than $600 million and (b) be
located in or have securities which are principally traded in an Asian Region
country. Such securities are typically listed on stock exchanges or traded in
the over-the-counter markets in countries in the Asian Region. In addition, the
Portfolio may invest up to 10% of its total assets in direct investments. The
principal offices of these companies, however, may be located outside these
countries. The Portfolio may invest 25% or more of its total assets in the
securities of issuers located in any one country, and may retain securities of a
company with market capitalization that grows over the $600 million level. While
there is no minimum or maximum limitation on assets that may be invested in a
single country, the Adviser currently anticipates Hong Kong will represent more
than 25% of total assets.
Equity securities, for purposes of the 65% policy, will be limited to common and
preferred stocks; equity interests in trusts, partnerships, joint ventures and
other unincorporated entities or enterprises; special classes of shares
available only to foreign investors in markets that restrict the ownership by
foreign investors to certain classes of equity securities; convertible preferred
stocks; and other convertible investment grade debt instruments. A debt security
is investment grade if it is rated BBB or above by Standard & Poor's Ratings
Group ("S&P") or Baa or above by Moody's Investors Service, Inc. ("Moody's") or
determined to be of comparable quality by the Adviser. Debt securities rated BBB
by S&P or Baa by Moody's have speculative characteristics and changes in
economic conditions or other circumstances are more likely to lead to a weakened
capacity to make principal and interest payments than is the case with higher
grade debt securities. The Portfolio will consider disposition of any
convertible debt instrument which is rated or determined by the Adviser to be
below investment grade subsequent to acquisition by the Portfolio and it is
expected such securities will be less than 5% of assets.
In addition to its investments in equity securities, the Portfolio may invest up
to 5% of its net assets in options on equity securities and up to 5% of its net
assets in warrants, including options and warrants traded in over-the-counter
markets. The Portfolio may, under normal market conditions, invest up to 35% of
its total assets in equity securities other than Asian small company
investments, warrants, options on securities and indices, options on currency,
futures contracts and options on futures, forward foreign currency exchange
contracts, currency swaps and any other non-equity investments. The Portfolio
will not purchase debt securities, other than investment grade convertible debt
instruments.
The Portfolio may, for temporary defensive purposes, such as during abnormal
market or economic conditions, invest some or all of its total assets in high
grade debt securities of foreign and United States companies, foreign
governments and the U.S. Government, and their respective agencies,
instrumentalities, political subdivisions and authorities, as well as in high
quality money market instruments denominated in U.S. dollars or a foreign
currency. The Portfolio may also borrow up to 5% of the value of its total
assets to satisfy redemption requests or settle securities transactions.
INVESTING IN FOREIGN SECURITIES. Investing in securities issued by foreign
companies and governments involves considerations and possible risks not
typically associated with investing in securities issued by the U.S. Government
and domestic corporations. The values of foreign investments are affected by
changes in currency rates or exchange control regulations, application of
foreign tax laws (including withholding tax), changes in governmental
administration or economic or monetary policy (in this country or abroad) or
changed circumstances in dealings between nations. Because investment in Asian
companies will usually involve currencies of foreign countries, the value of
assets of the Portfolio as measured by U.S. dollars may be adversely affected by
changes in currency exchange rates. Such rates may fluctuate significantly over
short periods of time causing the Portfolio's net asset value to fluctuate as
well. Costs are incurred in connection with conversions between various
currencies. In addition, foreign brokerage commissions, custody fees and other
costs of investing are generally higher than in the United States, and foreign
securities markets may be less liquid, more volatile and less subject to
governmental supervision than in the United States. Investments in foreign
issuers could be affected by other factors not present in the United States,
including expropriation, armed conflict, confiscatory taxation, lack of uniform
accounting and auditing standards, less publicly available financial and other
information, and potential difficulties in enforcing contractual obligations.
Transactions in the securities of foreign issuers could be subject to settlement
delays and risk of loss.
More than 25% of the Portfolio's total assets, adjusted to reflect currency
transactions and positions, may be denominated in any single currency.
Concentration in a particular currency will increase the Portfolio's exposure to
adverse developments affecting the value of such currency. An issuer of
securities purchased by the Portfolio may be domiciled in a country other than
the country in whose currency the securities are denominated.
Since the Portfolio will, under normal market conditions, invest at least 65% of
its total assets in small companies based in Asia, its investment performance
will be especially affected by events affecting Asian Region companies. The
value and liquidity of investments may be affected favorably or unfavorably by
political, economic, fiscal, regulatory or other developments in the Asian
Region or neighboring regions. The extent of economic development, political
stability and market depth of different countries in the Asian Region varies
widely. Certain countries, including China, Indonesia, Malaysia, the Philippines
and Thailand, are either comparatively underdeveloped or in the process of
becoming developed. Asian investments typically involve greater potential for
gain or loss than investments in securities of issuers in developed countries.
In comparison to the United States and other developed countries, such as Japan,
developing countries may have relatively unstable governments and economies
based on only a few industries. Given the Portfolio's investments, the Portfolio
will likely be particularly sensitive to changes in the economies of such
countries as the result of any reversals of economic liberalization in those
countries, political unrest or changes in trading status.
SECURITIES TRADING MARKETS. The securities markets in the Asian Region are
substantially smaller, less liquid and more volatile than the major securities
markets in the United States. A high proportion of the shares of many issuers
may be held by a limited number of persons and financial institutions, which may
limit the number of shares available for investment by the Portfolio. The prices
at which the Portfolio may acquire investments may be affected by trading by
persons with material non-public information and by securities transactions by
brokers in anticipation of transactions by the Portfolio in particular
securities. Similarly, volume and liquidity in the bond markets in the Asian
Region are less than in the United States and, at times, price volatility can be
greater than in the United States. The limited liquidity of these securities
markets may also affect the Portfolio's ability to acquire or dispose of
securities at the price and time it wishes to do so. In addition, Asian Region
securities markets are susceptible to being influenced by large investors
trading significant blocks of securities. All of these risks are heightened when
securities of smaller companies are involved.
The stock markets in the Asian Region are undergoing a period of growth and
change which may result in trading volatility and difficulties in the settlement
and recording of transactions, and in interpreting and applying the relevant law
and regulations. The securities industry in these countries is comparatively
underdeveloped, and stockbrokers and other intermediaries may not perform as
well as their counterparts in the United States and other more developed
securities markets.
ASIAN COUNTRY CONSIDERATIONS. Political and economic structures in many Asian
countries are undergoing significant evolution and rapid development, and such
countries may lack the social, political and economic stability characteristic
of the United States. Certain of such countries have, in the past, failed to
recognize private property rights and have at times nationalized or expropriated
the assets of private companies. As a result, the risks described above,
including the risks of nationalization or expropriation of assets, may be
heightened. In addition, unanticipated political or social developments may
affect the values of the Portfolio's investments in those countries and the
availability to the Portfolio of additional investments in those countries.
The laws of countries in the region relating to limited liability of corporate
shareholders, fiduciary duties of officers and directors, and the bankruptcy of
state enterprises are generally less well developed than or different from such
laws in the United States. It may be more difficult to obtain a judgement in the
courts of these countries than it is in the United States. Monsoons and natural
disasters also can affect the value of Portfolio investments.
Economies of countries in the Asian Region may differ favorably or unfavorably
from the U.S. economy in such respects as rate of growth of gross national
product, rate of inflation, capital reinvestment, resource self-sufficiency and
balance of payments position. As export-driven economies, the economies of many
countries in the Asian Region are affected by developments in the economies of
their principal trading partners. For example, revocation by the United States
of China's "Most Favored Nation" trading status, which the U.S. President and
Congress reconsider annually, would adversely affect the trade and economic
development of China and Hong Kong. Because the Portfolio is likely, from time
to time, to concentrate investments in Hong Kong, investors should be aware that
there has been significant growing economic integration between Hong Kong and
Southern China which is likely to continue. The political integration of these
two countries occurred in 1997, and the actual or perceived success of this
process will affect investments in Hong Kong and elsewhere.
The Fund and the Portfolio each intend to conduct its respective affairs in such
a manner to avoid taxation. Nevertheless, certain countries may require
withholding on dividends paid on portfolio securities and on realized capital
gains. In the past, these taxes have sometimes been substantial. There can be no
assurance that in the future the Portfolio will be able to repatriate its
income, gains or initial capital from these countries.
DIRECT INVESTMENTS AND SMALLER COMPANIES. The Portfolio may invest up to 10% of
its total assets in direct investments in smaller companies based in Asia.
Direct investments include (i) the private purchase from an enterprise of an
equity interest in the enterprise in the form of shares of common stock or
equity interests in trusts, partnerships, joint ventures or similar enterprises,
and (ii) the purchase of such an equity interest in an enterprise from a
principal investor in the enterprise. In each case, the Portfolio will, at the
time of making the investment, enter into a shareholder or similar agreement
with the enterprise and one or more other holders of equity interests in the
enterprise. The Adviser anticipates that these agreements will, in appropriate
circumstances, provide the Portfolio with the ability to appoint a
representative to the board of directors or similar body of the enterprise and
for eventual disposition of the Portfolio's investment in the enterprise. Such a
representative of the Portfolio will be expected to provide the Portfolio with
the ability to monitor its investment and protect its rights in the investment
and will not be appointed for the purpose of exercising management or control of
the enterprise.
The Portfolio's investments will include investments in smaller, less seasoned
companies for which there is less publicly available information than larger,
more established companies. The securities of these companies, which may include
legally restricted securities, are generally subject to greater price
fluctuations, limited liquidity, higher transaction costs and higher investment
risk. These companies may have limited product lines, markets or financial
resources, or they may be dependent on a limited management group. Investments
in smaller companies may involve a high degree of business and financial risk
that can result in substantial losses. Because of the absence of any public
trading market for some of these investments, the Portfolio may take longer to
liquidate these positions at fair value than would be the case for publicly
traded securities. Furthermore, issuers whose securities are not publicly traded
may not be subject to investor protection requirements applicable to publicly
traded securities.
DERIVATIVE INSTRUMENTS. The Portfolio may purchase or sell derivative
instruments (which are instruments that derive their value from another
instrument, security, index or currency) to enhance return (which may be
considered speculative), to hedge against fluctuations in securities prices,
interest rates or currency exchange rates, or as a substitute for the purchase
or sale of securities or currencies. The Portfolio's transactions in derivative
instruments may be in the U.S. or abroad and may include the purchase or sale of
futures contracts on securities, securities indices, other indices, other
financial instruments or currencies; options on futures contracts;
exchange-traded and over-the-counter options on securities, indices or
currencies; and forward foreign currency exchange contracts. The Portfolio's
transactions in derivative instruments involve a risk of loss or depreciation
due to: unanticipated adverse changes in securities prices, interest rates, the
other financial instruments' prices or currency exchange rates; the inability to
close out a position; default by the counterparty; imperfect correlation between
a position and the desired hedge; tax constraints on closing out positions; and
portfolio management constraints on securities subject to such transactions. The
loss on derivative instruments (other than purchased options) may substantially
exceed the Portfolio's initial investment in these instruments. In addition, the
Portfolio may lose the entire premium paid for purchased options that expire
before they can be profitably exercised by the Portfolio. The Portfolio incurs
transaction costs in opening and closing positions in derivative instruments.
The use of futures for nonhedging purposes is limited by regulations of the
Commodity Futures Trading Commission. There can be no assurance that the
Adviser's use of derivative instruments will be advantageous to the Portfolio.
The Portfolio may purchase call and put options on any securities in which the
Portfolio may invest or options on any securities index composed of securities
in which the Portfolio may invest. The Portfolio does not intend to write a
covered option on any security if after such transaction more than 15% of its
net assets, as measured by the aggregate value of the securities underlying all
covered calls and puts written by the Portfolio, would be subject to such
options. The Portfolio does not intend to purchase an option on any security if,
after such transaction, more than 5% of its net assets, as measured by the
aggregate of all premiums paid for all such options held by the Portfolio, would
be so invested.
Forward foreign currency exchange contracts are individually negotiated and
privately traded by currency traders and their customers. A forward contract
involves an obligation to purchase or sell a specific currency (or basket of
currencies) for an agreed price at a future date, which may be any fixed number
of days from the date of the contract. The Portfolio may engage in cross-hedging
by using forward contracts in one currency (or basket of currencies) to hedge
against fluctuations in the value of securities denominated in a different
currency if the Adviser determines that there is an established historical
pattern of correlation between the two currencies (or the basket of currencies
and the underlying currency). Use of a different foreign currency magnifies the
Portfolio's exposure to foreign currency exchange rate fluctuations. The
Portfolio may also use forward contracts to shift its exposure to foreign
currency exchange rate changes from one currency to another.
The Portfolio may enter into currency swaps for both hedging and non-hedging
purposes. Currency swaps involve the exchange of rights to make or receive
payments in specified currencies. Since currency swaps are individually
negotiated, the Portfolio expects to achieve an acceptable degree of correlation
between its portfolio investments and its currency swap positions. Currency
swaps usually involve the delivery of the entire principal value of one
designated currency in exchange for the other designated currency. Therefore,
the entire principal value of a currency swap is subject to the risk that the
other party to the swap will default on its contractual delivery obligations.
The use of currency swaps is a highly specialized activity which involves
special investment techniques and risks. If the Adviser is incorrect in its
forecasts of market values and currency exchange rates, the Portfolio's
performance will be adversely affected.
REPURCHASE AGREEMENTS. The Portfolio may enter into repurchase agreements (the
purchase of a security coupled with an agreement to resell at a higher price)
with respect to its permitted investments, but currently intends to do so only
with member banks of the Federal Reserve System or with primary dealers in U.S.
Government securities. In the event of the bankruptcy of the other party to a
repurchase agreement, the Portfolio might experience delays in recovering its
cash. To the extent that, in the meantime, the value of the securities the
Portfolio purchased may have decreased, the Portfolio could experience a loss.
At no time will the Portfolio commit more than 15% of its net assets to
repurchase agreements which mature in more than seven days and other illiquid
securities.
OTHER INVESTMENT COMPANIES. The Portfolio reserves the right to invest up to 10%
of its total assets, calculated at the time of purchase, in the securities of
other investment companies unaffiliated with the Adviser or the Manager that
have the characteristics of closed-end investment companies. The Portfolio will
indirectly bear its proportionate share of any management fees paid by
investment companies in which it invests in addition to the advisory fee paid by
the Portfolio. The value of closed-end investment company securities, which are
usually traded on an exchange, is affected by demand for the securities
themselves, independent of the demand for the underlying portfolio assets and,
accordingly, such securities can trade at a discount from their net asset
values.
INVESTMENT POLICIES. The Fund and the Portfolio have adopted certain fundamental
investment restrictions and policies which are enumerated in detail in the
Statement of Additional Information and which may not be changed unless
authorized by a shareholder vote and an investor vote, respectively. Investment
restrictions are considered at the time of acquisition of assets; the sale of
portfolio assets generally is not required in the event of a subsequent change
in circumstances. As a matter of fundamental policy the Portfolio will not
invest 25% or more of its total assets in the securities of issuers in any one
industry.
Except for the fundamental investment restrictions and policies specifically
identified above and those enumerated in the Statement of Additional
Information, the investment objective and policies of the Fund and the Portfolio
are not fundamental policies and accordingly may be changed by the Trustees of
the Trust and the Portfolio without obtaining the approval of the shareholders
of the Fund or the investors in the Portfolio, as the case may be. The Portfolio
may lend portfolio securities and engage in repurchase agreements and reverse
repurchase agreements but the Adviser has no current intention to do so.
Under the Investment Company Act of 1940 (the "1940 Act") and the rules
promulgated thereunder, the Portfolio's investments in the securities of any
company that, in its most recent fiscal year, derived more than 15% of its gross
revenues from securities-related activities is limited to 5% of any class of the
issuer's equity securities and 10% of the outstanding principal amount of the
issuer's debt securities, provided that the Portfolio's aggregate investments in
the securities of any such issuer do not exceed 5% of the Portfolio's total
assets. Some of the companies available for investment in the Asian Region,
including enterprises being privatized by such countries, may be financial
services businesses that engage in securities-related activities. The
Portfolio's ability to invest in such enterprises may thus be limited.
ORGANIZATION OF THE FUND AND THE PORTFOLIO
THE FUND IS A DIVERSIFIED SERIES OF EATON VANCE GROWTH TRUST (THE "TRUST"), A
BUSINESS TRUST ESTABLISHED UNDER MASSACHUSETTS LAW PURSUANT TO A DECLARATION OF
TRUST DATED MAY 25, 1989. The 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). The Trustees of the Trust have divided
the shares of the Fund into multiple classes, including Class A and Class B
shares. Each class represents an interest in the Fund, but is subject to
different expenses, rights and privileges. See "Distribution Plans" and "How to
Buy Shares." The Trustees have the authority under the Declaration of Trust to
create additional classes of shares with differing rights and privileges. As a
result of a reorganization with separate series of the Trust, the Fund commenced
offering Class A and B shares on September 1, 1997.
When issued and outstanding, the shares are fully paid and nonassessable by the
Trust and redeemable as described under "How to Redeem 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 of the Fund will be voted together except that only
shareholders of a particular class may vote on matters affecting only that
class. Shares have no preemptive or conversion rights and are freely
transferable. In the event of the liquidation of the Fund, shareholders of each
class are entitled to share pro rata in the net assets attributable to that
class available for distribution to shareholders.
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 growth in the assets of the Portfolio, may afford the
potential for economies of scale for the Fund (at least when the assets of the
Portfolio exceed $500 million) and may over time result in lower expenses for
the Fund.
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. 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. 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
EATON VANCE MANAGEMENT ("EATON VANCE") ACTS AS THE SPONSOR AND MANAGER OF THE
FUND AND THE ADMINISTRATOR OF THE PORTFOLIO. THE PORTFOLIO HAS ENGAGED LLOYD
GEORGE INVESTMENT MANAGEMENT (BERMUDA) LIMITED (THE "ADVISER") AS ITS INVESTMENT
ADVISER. The Adviser, acting under the general supervision of the Portfolio's
Trustees, manages the Portfolio's investments and affairs.
The Adviser is registered as an investment adviser with the Commission and is a
subsidiary of Lloyd George Management (B.V.I.) Limited ("LGM"). LGM and its
subsidiaries act as investment adviser to various individual and institutional
clients with total assets under management of approximately $1.5 billion. Eaton
Vance's parent, Eaton Vance Corp., owns approximately 21% of the Class A shares
issued by LGM.
LGM was established in 1991 to provide investment management services with
respect to equity securities of companies trading in Asian securities markets,
especially those of emerging markets. LGM currently manages Pacific Basin and
Asian portfolios for both private clients and institutional investors seeking
long-term capital growth. LGM's core investment team consists of twelve
experienced investment professionals, based in Hong Kong, London and Mumbai, who
have worked together over a number of years successfully managing client
portfolios in Pacific Basin and Asian stock markets. The team has a unique
knowledge of, and experience with, Pacific Basin and Asian emerging markets. LGM
is ultimately controlled by the Hon. Robert J.D. Lloyd George, President and
Trustee of the Portfolio and Chairman and Chief Executive Officer of the
Adviser. LGM's only activity is portfolio management.
LGM and the Adviser have adopted a disciplined management style, providing a
blend of Asian and multinational expertise with the most rigorous international
standards of fundamental security analysis. Although focused primarily in Asia,
LGM and the Adviser maintain a network of international contacts in order to
monitor international economic and stock market trends and offer clients a
global management service. The Portfolio is co-managed by Robert Lloyd George
and Scobie Dickinson Ward.
THE HONOURABLE ROBERT LLOYD GEORGE. Chairman. Born in London in 1952 and
educated at Eton College, where he was a King's Scholar, and at Oxford
University. Prior to founding LGM, Mr. Lloyd George was Managing Director of
Indosuez Asia Investment Services Ltd. Previously, he spent four years with
Fiduciary Trust Company of New York researching international securities, in the
United States and Europe, for the United Nations Pension Fund. Mr. Lloyd George
is the author of numerous published articles and three books -- "A Guide to
Asian Stock Markets" (Longmans, Hong Kong, 1989), "The East West Pendulum"
(Woodhead - Faulkner, Cambridge, 1991) and "North South -- an Emerging Markets
Handbook" (Probus, England, 1994).
SCOBIE DICKINSON WARD. Director. Born in 1966 and a cum laude graduate of both
Phillips Academy Andover, and Harvard University. Mr. Ward joined Indosuez
Asia Investment Services in 1989, where he managed the $100 million Himalayan
Fund, and the Indosuez Tasman Fund, investing in Australia and New Zealand.
Messrs. Ward and Lloyd George manage Eaton Vance's Emerging Markets Portfolio
and South Asia Portfolio (which invests in India and the Indian subcontinent).
While the Portfolio is a New York trust, the Adviser, together with certain
Trustees and officers of the Portfolio, are not residents of the United States,
and substantially all of their respective assets may be located outside of the
United States. It may be difficult for investors to effect service of process
within the United States upon the individuals identified above, or to realize
judgments of courts of the United States predicated upon civil liabilities of
the Adviser and such individuals under the federal securities laws of the United
States. The Portfolio has been advised that there is substantial doubt as to the
enforceability in the countries in which the Adviser and such individuals reside
of such civil remedies and criminal penalties as are afforded by the federal
securities laws of the United States.
Under its investment advisory agreement with the Portfolio, the Adviser receives
a monthly advisory fee of 0.0625% (equivalent to 0.75% annually) of the average
daily net assets of the Portfolio up to $500 million, which fee declines at
intervals above $500 million.
The Adviser also furnishes for the use of the Portfolio office space and all
necessary office facilities, equipment and personnel for servicing the
investments of the Portfolio. The Adviser places the portfolio securities
transactions of the Portfolio with many broker-dealer firms and uses its best
efforts to obtain execution of such transactions at prices which are
advantageous to the Portfolio and at reasonably competitive commission rates.
Subject to the foregoing, the Adviser may consider sales of shares of the Fund
as a factor in the selection of firms to execute portfolio transactions. The
Fund, the Portfolio and the Adviser have adopted Codes of Ethics relating to
personal securities transactions. The Codes permit Eaton Vance personnel to
invest in securities (including securities that may be purchased or held by the
Portfolio) for their own accounts, subject to certain reporting and other
restrictions and procedures contained in such Codes.
EATON VANCE, ITS AFFILIATES AND ITS PREDECESSOR COMPANIES HAVE BEEN MANAGING
ASSETS OF INDIVIDUALS AND INSTITUTIONS SINCE 1924 AND MANAGING INVESTMENT
COMPANIES SINCE 1931. EATON VANCE ACTS AS INVESTMENT ADVISER TO INVESTMENT
COMPANIES AND VARIOUS INDIVIDUAL AND INSTITUTIONAL CLIENTS WITH ASSETS UNDER
MANAGEMENT OF APPROXIMATELY $20 BILLION. Eaton Vance is a wholly-owned
subsidiary of Eaton Vance Corp., a publicly-held holding company which through
its subsidiaries and affiliates engages primarily in investment management,
administration and marketing activities. The Principal Underwriter is a
wholly-owned subsidiary of Eaton Vance.
Eaton Vance, acting under the general supervision of the Boards of Trustees of
the Trust and the Portfolio, manages and administers the business affairs of the
Fund and the Portfolio. Eaton Vance's services include monitoring and providing
reports to the Trustees of the Trust and the Portfolio concerning the investment
performance achieved by the Adviser for the Portfolio, recordkeeping,
preparation and filing of documents required to comply with federal and state
securities laws, supervising the activities of the transfer agent of the Fund
and the custodian of the Portfolio, providing assistance in connection with
Trustees' and shareholders' meetings and other management and administrative
services necessary to conduct the business of the Fund and the Portfolio. Eaton
Vance also furnishes for the use of the Fund and the Portfolio office space and
all necessary office facilities, equipment and personnel for managing and
administering the business affairs of the Fund and the Portfolio. Eaton Vance
does not provide any investment management or advisory services to the Portfolio
or the Fund.
Under its management contract with the Trust on behalf of the Fund, Eaton Vance
receives a monthly fee in the amount of 1/48 of 1% (equal to 0.25% annually) of
the average daily net assets of the Fund up to $500 million, which fee declines
at intervals above $500 million. In addition, under its administration agreement
with the Portfolio, Eaton Vance receives a monthly fee in the amount of 1/48 of
1% (equal to 0.25% annually) of the average daily net assets of the Portfolio up
to $500 million, which fee declines at intervals above $500 million. The
combined advisory, management and administration fees payable by the Fund and
the Portfolio are higher than similar fees charged by most other investment
companies.
The Fund and the Portfolio, as the case may be, will each be responsible for all
respective costs and expenses not expressly stated to be payable by the Adviser
under the investment advisory agreement, by Eaton Vance under the management
contract or the administration agreement or by the Principal Underwriter under
the distribution agreement. Such costs and expenses to be borne by the Portfolio
and the Fund, as the case may be, include, without limitation: custody and
transfer agency fees and expenses, including those incurred for determining net
asset value and keeping accounting books and records; expenses of pricing and
valuation services; the cost of share certificates; membership dues in
investment company organizations; expenses of acquiring, holding and disposing
of securities and other investments; fees and expenses of registering under the
securities laws and governmental fees; expenses of reporting to shareholders and
investors; proxy statements and other expenses of shareholders' or investors'
meetings; insurance premiums; printing and mailing expenses; interest, taxes and
corporate fees; legal and accounting expenses; compensation and expenses of
Trustees not affiliated with the Adviser or Eaton Vance; and investment
advisory, management and administration fees. The Portfolio or the Fund, as the
case may be, will also each bear expenses incurred in connection with any
litigation in which the Portfolio or the Fund, as the case may be, is a party
and any legal obligation to indemnify its respective officers and Trustees with
respect thereto, to the extent not covered by insurance.
DISTRIBUTION PLANS
The Trust has adopted a Distribution Plan (the "Class A Plan") for the Fund's
Class A shares that is designed to meet the requirements of Rule 12b-1 under the
1940 Act. THE CLASS A PLAN PROVIDES FOR THE PAYMENT OF A MONTHLY DISTRIBUTION
FEE TO THE PRINCIPAL UNDERWRITER IN AN AMOUNT EQUAL TO THE AGGREGATE OF (a) .50%
OF THAT PORTION OF CLASS A AVERAGE DAILY NET ASSETS FOR ANY FISCAL YEAR WHICH IS
ATTRIBUTABLE TO ITS SHARES WHICH HAVE REMAINED OUTSTANDING FOR LESS THAN ONE
YEAR AND (b) .25% OF THAT PORTION OF CLASS A AVERAGE DAILY NET ASSETS FOR ANY
FISCAL YEAR WHICH IS ATTRIBUTABLE TO ITS SHARES WHICH HAVE REMAINED OUTSTANDING
FOR MORE THAN ONE YEAR. Aggregate payments to the Principal Underwriter under
the Class A Plan are limited to those permissible, pursuant to a rule of the
National Association of Securities Dealers, Inc.
The Class A Plan also provides that the Class will pay a quarterly service fee
to the Principal Underwriter in an amount equal on an annual basis to .25% of
that portion of its average daily net assets for any fiscal year which is
attributable to Class A shares which have remained outstanding for more than one
year; from such service fee the Principal Underwriter expects to pay a quarterly
service fee to Authorized Firms, as compensation for providing personal services
and/or the maintenance of shareholder accounts, with respect to shares sold by
such Firms which have remained outstanding for more than one year. Service fee
payments to Authorized Firms will be in addition to sales charges on Class A
shares which are reallowed to Authorized Firms. If the Class A Plan is
terminated or not continued in effect, the Class has no obligation to reimburse
the Principal Underwriter for amounts expended by the Principal Underwriter in
distributing Class A shares. Class A expects to begin accruing for its service
fee payments one year after the commencement of its operations.
The Trust has also adopted a Distribution Plan ("Class B Plan") pursuant to Rule
12b-1 under the 1940 Act for the Fund's Class B shares. The Plan is designed to
permit an investor to purchase shares through an Authorized Firm without
incurring an initial sales charge and at the same time permit the Principal
Underwriter to compensate Authorized Firms in connection therewith. UNDER SUCH
PLAN, CLASS B PAYS THE PRINCIPAL UNDERWRITER A FEE, ACCRUED DAILY AND PAID
MONTHLY, AT AN ANNUAL RATE NOT EXCEEDING .75% OF ITS AVERAGE DAILY NET ASSETS TO
FINANCE THE DISTRIBUTION OF ITS SHARES. Such fees compensate the Principal
Underwriter for sales commissions paid by it to Authorized Firms on the sale of
Class B shares and for interest expenses. The Principal Underwriter uses its own
funds to pay sales commissions (except on exchange transactions and
reinvestments) to Authorized Firms at the time of sale equal to 4% of the
purchase price of the Class B shares sold by such Firms. CDSCs paid to the
Principal Underwriter will be used to reduce amounts owed to it. Because
payments to the Principal Underwriter under the Class B Plan are limited,
uncovered distribution charges (sales commissions due the Principal Underwriter
plus interest, less the above fees and CDSCs and Adviser distribution payments
received by it) may exist indefinitely.
THE CLASS B PLAN ALSO AUTHORIZES EACH CLASS B TO MAKE PAYMENTS OF SERVICE FEES
TO THE PRINCIPAL UNDERWRITER, AUTHORIZED FIRMS AND OTHER PERSONS IN AMOUNTS NOT
EXCEEDING .25% OF ITS AVERAGE DAILY NET ASSETS FOR PERSONAL SERVICES, AND/ OR
THE MAINTENANCE OF SHAREHOLDER ACCOUNTS. This fee is paid quarterly in arrears
based on the value of Class B shares sold by such persons and remaining
outstanding for at least twelve months. Class B expects to begin accruing for
its service fee payments one year after the commencement of its operations.
Distribution of Class B shares by the Principal Underwriter will also be
encouraged by the payment by the Adviser to the Principal Underwriter of an
amount equivalent to .15% of Class B's annual average daily net assets. Such
payments will be made from the Adviser's own resources, not Class assets, in
consideration of the Principal Underwriter's distribution efforts.
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 Principal Underwriter may at times allow
discounts on the sale of Class A shares 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 Trust may, in its absolute discretion, suspend, discontinue or limit the
offering of one or more of its classes of shares at any time. In determining
whether any such action should be taken, the Trust's management intends to
consider all relevant factors, including (without limitation) the size of the
Fund or class, the investment climate and market conditions, the volume of sales
and redemptions of shares, and in the case of Class B shares, the amount of
uncovered distribution charges of the Principal Underwriter. The Plans may
continue in effect and payments may be made under the Plans following any such
suspension, discontinuance or limitation of the offering of shares; however,
there is no contractual obligation to continue any Plan for any particular
period of time. Suspension of the offering of shares would not, of course,
affect a shareholder's ability to redeem shares.
VALUING 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). Each Class's net asset value per
share is determined by the Trust's custodian, Investors Bank & Trust Company
("IBT") (as agent for the Trust) in the manner authorized by the Trustees of the
Trust. The net asset value of each Class is computed by dividing the value of
that Class's pro rata share of the Fund's total assets, less its liabilities, by
the number of shares of that Class outstanding. Because the Fund invests its
assets in an interest in the Portfolio, each Class's net asset value will
reflect the value of the Fund's 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 by a specific time each day to receive that day's public offering
price per share. It is the Authorized Firms' responsibility to transmit orders
promptly to the Principal Underwriter. The Fund has approved the acceptance of
purchase and redemption orders as of the time of their receipt by certain
Authorized Firms (or their designated intermediaries).
The Portfolio's net asset value is also determined as of the close of regular
trading on the Exchange by IBT (as custodian and agent for the Portfolio) based
on market or fair value in the manner authorized by the Trustees of the
Portfolio. Exchange listed securities generally are valued at closing sale
prices. Net asset value is computed by subtracting the liabilities of the
Portfolio from the value of its total assets.
SHAREHOLDERS MAY DETERMINE THE VALUE OF THEIR INVESTMENT BY MULTIPLYING THE
NUMBER OF SHARES OWNED BY THE CURRENT NET ASSET VALUE PER SHARE.
HOW TO BUY SHARES
SHARES OF THE FUND MAY BE PURCHASED FOR CASH OR MAY BE ACQUIRED IN EXCHANGE FOR
ACCEPTABLE SECURITIES. Class A shares are purchased at the effective public
offering price, which price is based on the effective net asset value per share
plus the applicable sales charge. The sales charge is divided between the
Authorized Firm and the Principal Underwriter. Class B shares are purchased at
the net asset value per share 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 Trust may suspend the offering of shares at any time
and may refuse an order for the purchase of shares.
An initial investment 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 Trust'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 Trust 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 Trust as described under "How to
Redeem Shares."
CLASS A SHARES. The sales charge may vary depending on the size of the purchase
and the number of Class A 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 or Right of Accumulation
are available from Authorized Firms or the Principal Underwriter.
The current sales charges and dealer commissions are:
Sales Charge Sales Charge Dealer Commission
as Percentage of as Percentage of as Percentage of
Amount of Purchase Offering Price Amount Invested Offering Price
- --------------------------------------------------------------------------------
Less than $50,000 5.75% 6.10% 5.00%
$50,000 but less than 4.75 4.99
$100,000 4.00
$100,000 but less 3.75 3.90
than $250,000 3.00
$250,000 but less 3.00 3.09
than $500,000 2.50
$500,000 but less 2.00 2.04
than $1,000,000 1.75
$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 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.
Class A shares may be sold at net asset value to current and retired Directors
and Trustees of Eaton Vance funds, including the Portfolio; to clients and
current and retired officers and employees of Eaton Vance, its affiliates and
other investment advisers of Eaton Vance sponsored funds; to registered
representatives and employees of Authorized Firms and bank employees who refer
customers to registered representatives of Authorized Firms; to officers and
employees of IBT and the Transfer Agent; and to such persons' spouses and
children under the age of 21 and their beneficial accounts. Class A shares may
also be issued at net asset value (1) in connection with the merger of an
investment company or series thereof 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 Trust's Principal Underwriter may pay commissions to
Authorized Firms who initiate and are responsible for purchases of Class A
shares of the Fund by Eligible Plans of up to 1.00% of the amount invested in
such shares.
Until March 31, 1998, 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 Class A 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.
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 in Class A shares, 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 such shares (computed
to the nearest full share at the public offering price applicable to the initial
purchase hereunder) registered in the investor's name. All income dividends and
capital gains distributions on escrowed shares will be paid to the investor or
to the investor's order. When the minimum investment so specified is completed,
the escrowed shares will be delivered to the investor. If the investor has an
accumulation account the shares will remain on deposit under the investor's
account.
If total purchases under this Statement of Intention are less than the amount
specified, the investor will promptly remit to the Principal Underwriter any
difference between the sales charge on the amount specified and on the amount
actually purchased. If the investor does not within 20 days after written
request by the Principal Underwriter or the Authorized Firm pay such difference
in sales charge, the escrow agent will redeem an appropriate number of the
escrowed shares in order to realize such difference. Full shares remaining after
any such redemption together with any excess cash proceeds of the shares so
redeemed will be delivered to the investor or to the investor's order by the
escrow agent.
If total purchases made under this Statement are large enough to qualify for a
lower sales charge than that applicable to the amount specified, all
transactions will be computed at the expiration date of this Statement to give
effect to the lower charge. Any difference in sales charge will be refunded to
the investor in cash, or applied to the purchase of additional shares at the
lower charge if specified by the investor. This refund will be made by the
Authorized Firm and by the Principal Underwriter. If at the time of the
recomputation 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 investor's account.
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. 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 of Class B shares or
public offering price of Class A shares 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: IN THE CASE OF PHYSICAL DELIVERY:
Deliver through Depository Trust Co. Investors Bank & Trust Company
Broker #2212 Attention: Eaton Vance Asian Small
Investors Bank & Trust Company Companies Fnd (and Class)
For A/C Eaton Vance Asian Physical Securities Processing
Small Companies Fund (and Class) Settlement Area
200 Clarendon Street
Boston, MA 02116
Investors who are contemplating an exchange of securities for shares, 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 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.
IF YOU DON'T HAVE AN AUTHORIZED FIRM, EATON VANCE CAN RECOMMEND ONE.
HOW TO REDEEM 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 share next computed after a redemption request is
received in the proper form as described below. Within seven days after receipt
of a redemption request in good order by the Transfer Agent, the Trust 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 CDSC (described below), and any
federal income tax required to be withheld.
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 Trust, 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 order is deemed to be
received by the Trust or the Principal Underwriter, as the Trust'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.
While normally payments will be made 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 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 Trust 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 Trust if the
cause of the low account balance was a reduction in the net asset value of
shares. No CDSC will be imposed with respect to such involuntary redemptions.
CONTINGENT DEFERRED SALES CHARGE. Each class of shares is subject to a CDSC on
certain redemptions. The CDSC is calculated based on the lower of the net asset
value at the time of purchase or the time of redemption. Shares acquired through
the reinvestment of distributions are exempt. Redemptions are made first from
shares in the account which are not subject to a CDSC.
In calculating a CDSC upon the redemption of shares acquired in an exchange, the
shares are deemed to have been acquired at the time of the original purchase of
the exchanged shares and, in the case of Class B shares, the CDSC schedule
applicable to the exchanged shares will apply to the acquired shares. No CDSC is
imposed on shares sold to Eaton Vance or its affiliates, or to their respective
employees or clients. Shares acquired as the result of a merger or liquidation
of another Eaton Vance sponsored fund generally will be subject to the same CDSC
rate imposed by the prior fund.
CLASS A SHARES. If Class A shares are purchased at net asset value because the
purchase amount is $1 million or more, they will be subject to a 1% CDSC if
redeemed within 12 months of purchase. If Class A shares are purchased prior to
April 1, 1998 at net asset value because the amount invested represents
redemption proceeds from an unaffiliated mutual fund (as described under "How to
Buy Shares"), they will be subject to a .50% CDSC if redeemed within 12 months
of purchase.
CLASS B SHARES. Class B shares will be subject to the following CDSC schedule:
Year of
Redemption
After Purchase CDSC
- --------------------------------------------------------------------------------
First or Second 5%
Third 4%
Fourth 3%
Fifth 2%
Sixth 1%
Seventh and following 0%
The Class B CDSC is waived for redemptions (1) pursuant to a Withdrawal Plan
(see "Eaton Vance Shareholder Services"), (2) as part of a required minimum
distribution from a tax-sheltered retirement plan, or (3) following the death of
all beneficial owners of shares, provided the redemption is requested within one
year of death (a death certificate and other applicable documents may be
required).
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 independent accountants. Shortly after the end of each
calendar year, shareholders will be furnished with information necessary for
preparing federal and state income tax returns. Consistent with applicable law,
duplicate mailings of shareholder reports and certain other Fund information to
shareholders residing at the same address may be eliminated.
THE LIFETIME INVESTING ACCOUNT/DISTRIBUTION OPTIONS
AFTER AN INVESTOR MAKES AN INITIAL PURCHASE OF SHARES, THE TRANSFER AGENT WILL
SET UP A LIFETIME INVESTING ACCOUNT FOR THE INVESTOR ON THE TRUST'S RECORDS.
This account is a complete record of all transactions which at all times shows
the balance of shares owned. The Trust 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 Class 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 Trust'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 shareholder communications are returned by the United States Postal Service
or other delivery service as not deliverable, the distribution option on the
account will be automatically changed to the SHARE OPTION until such time as the
shareholder selects a different option. No interest will accrue on amounts
represented by uncashed distribution or redemption checks.
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 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 Trust and its Transfer Agent. Since the
Trust 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
Trust 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 the same class of
one or more other funds in the Eaton Vance Group of Funds. Class A shares may
also be exchanged for shares of Eaton Vance Cash Management Fund, Eaton Vance
Income Fund of Boston and Eaton Vance Tax Free Reserves. Class B shares may also
be exchanged for shares of Eaton Vance Prime Rate Reserves, which are subject to
an early withdrawal charge, or shares of Eaton Vance Money Market Fund, which
are subject to a CDSC, 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/class at the time of the exchange (plus, in the case of an
exchange made within six months of the date of purchase of Class A 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. Exchanges are subject to any restrictions or qualifications set forth in
the current prospectus of any such fund.
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 Trust 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 Shares").
Consult the Transfer Agent for additional information concerning the exchange
privilege. Applications and prospectuses of other funds are available from
Authorized Firms or the Principal Underwriter. The prospectus for each fund
describes its investment objectives and policies, and shareholders should obtain
a prospectus and consider these objectives and policies carefully before
requesting an exchange.
No CDSC is imposed on exchanges. For purposes of calculating the CDSC upon
redemption of shares acquired in an exchange, the CDSC schedule applicable to
the shares at the time of purchase will apply and the purchase of shares
acquired in one or more exchanges is deemed to have occurred at the time of the
original purchase of the exchanged shares, except that time during which shares
are held in an Authorized Firm fund will not be credited toward completion of
the CDSC period. For the CDSC schedule applicable to Class B shares (except
Prime Rate Reserves and Class B shares of the Limited Maturity Funds), see "How
to Redeem Shares." The CDSC or early withdrawal charge schedule applicable to
Prime Rate Reserves and Class B shares of the Limited Maturity Funds 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.
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 Trust, 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 TRUST 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 applicable Fund or Class as an expense to
all shareholders.
INVEST-BY-MAIL -- FOR PERIODIC SHARE ACCUMULATION: Once the $1,000 minimum
investment has been made, checks of $50 or more payable to the order of the Fund
and specifying the Class being purchased 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 Class and the account number should accompany
each investment.
BANK AUTOMATED INVESTING -- FOR REGULAR SHARE ACCUMULATION: Cash investments of
$50 or more may be made automatically each month or quarter from a shareholder's
bank account. The $1,000 minimum initial investment and small account redemption
policy are waived for these accounts.
WITHDRAWAL PLAN: A shareholder may draw on shareholdings systematically with
monthly or quarterly checks. For Class B shares, any such withdrawals may not in
the aggregate exceed 12% annually of the account balance at the time the plan is
established. Such amount will not be subject to the Class B CDSC. See "How to
Redeem Shares." A minimum deposit of $5,000 in shares is required. The
maintenance of a withdrawal plan concurrently with purchases of additional Class
A shares would be disadvantageous because of the sales charge included in such
purchase.
STATEMENT OF INTENTION: Purchases of $50,000 or more of Class A shares made
over a 13-month period are eligible for reduced sales charges. See "How to Buy
Shares -- Statement of Intention and Escrow Agreement."
RIGHT OF ACCUMULATION: Purchases may qualify for reduced sales charges on Class
A shares when the current market value of holdings (shares at current offering
price), plus new purchases, reaches $50,000 or more. Class A 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.
TAX-SHELTERED RETIREMENT PLANS: Class A shares of the Fund are available for
purchase in connection with certain tax-sheltered retirement plans. Detailed
information concerning these plans, including certain exceptions to minimum
investment requirements, and copies of the plans are available from the
Principal Underwriter. This information should be read carefully and
consultation with an attorney or tax adviser may be advisable. The information
sets forth the service fee charged for retirement plans and describes the
federal income tax consequences of establishing a plan. Participant accounting
services (including trust fund reconciliation services) will be offered only
through third party recordkeepers and not by the Principal Underwriter. Under
all plans, dividends and distributions will be automatically reinvested in
additional shares.
REINVESTMENT PRIVILEGE: A shareholder who has redeemed shares may reinvest, with
credit for any CDSCs paid on the redeemed shares, any portion or all of the
redemption proceeds (plus that amount necessary to acquire a fractional share to
round off the purchase to the nearest full share) in the same shares (or for
Class A shares in Class A shares of any other Eaton Vance 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 Trust (or by the Trust's Transfer Agent). To the extent
that any shares are sold at a loss and the proceeds are reinvested in shares (or
other shares 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
It is the present policy of the Fund to make (A) at least one distribution
annually (normally in December) of all or substantially all of the investment
income (if any) allocated to the Fund by the Portfolio (less the Fund's direct
and allocated expenses and Class-specific expenses), and (B) at least one
distribution annually of all or substantially all of the net realized capital
gains (if any) allocated to the Fund by the Portfolio (reduced by any available
capital loss carryforwards from prior years). Shareholders may reinvest all
distributions in shares of the Fund without a sales charge at the per share net
asset value as of the close of business on the ex-dividend date.
The Fund intends to distribute each year substantially all of its net investment
company taxable income (consisting generally of taxable net investment income),
net short-term capital gain and net gains from certain foreign currency
transactions and net capital gains.The Fund's distributions will generally not
qualify for the dividends-received deduction for corporations.
Distributions of investment company taxable income are taxable to shareholders
as ordinary income, whether paid in cash or additional shares. Distributions of
net capital gain are taxable to shareholders as long-term capital gain, whether
paid in cash or additional shares and regardless of the length of time shares
have been owned by the shareholder. Long-term capital gain is separated into
different tax rate groups depending on the length of time the asset is held by
the Portfolio prior to sale. Current IRS rules permit the Fund to designate net
capital gain distributions as "28% rate gain distributions" or "20% rate gain
distributions," and require shareholders to treat such distributions
accordingly.
Investors who purchase shares shortly before the record date of a distribution
will pay the full price for the shares and then receive some portion of the
price back as a taxable distribution. Certain distributions paid in January will
be taxable to shareholders as if received on December 31 of the prior year.
The redemption of shares of the Fund may result in a taxable gain or loss to the
redeeming shareholder, depending on whether the amount received is greater or
less than such shareholder's adjusted tax basis in the shares redeemed. An
exchange of shares of the Fund for shares of another Eaton Vance fund generally
will have similar tax consequences.
Sales charges paid upon a purchase of Class A shares 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 such shares of the Fund
or of another fund pursuant to the Fund's reinvestment or exchange privilege.
Any disregarded or disallowed amounts will result in an adjustment to the
shareholder's tax basis in some or all of any other shares acquired.
Taxable distributions to certain shareholders, including those who have not
provided the Fund with their correct taxpayer identification number and other
required certifications, may be subject to "backup" federal tax withholding of
31%.
Shareholders will receive one or more 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.
The foregoing only summarizes some of the federal tax consequences to
shareholders of investing in shares of the Fund, and does not address special
tax rules applicable to certain types of investors, such as corporate and
foreign investors, individual retirement accounts and other retirement plans.
Investors should consult their tax advisers.
PERFORMANCE INFORMATION
FROM TIME TO TIME, AVERAGE ANNUAL TOTAL RETURN MAY BE ADVERTISED. Average annual
total return is determined separately for each Class by computing the average
annual percentage change in value of $1,000 invested at the maximum public
offering price (including maximum sales charge for Class A shares; net asset
value for Class B shares) for specified periods, assuming reinvestment of all
distributions. The average annual total return calculation assumes a complete
redemption of the investment and the deduction of any applicable CDSC at the end
of the period. The Fund may also publish annual and cumulative total return
figures from time to time.
The Fund may also publish total return figures for each Class which do not take
into account any sales charge. Any performance figure which does not take into
account a sales charge would be reduced to the extent such charge is imposed.
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 investment results will fluctuate over time, and any
presentation of the total return for any prior period should not be considered a
representation of what an investment may earn or what the total return may be in
any future period. The Fund's investment results are based on many factors,
including market conditions, the composition of the security holdings of the
Portfolio and the operating expenses of the Fund and the Portfolio. Investment
results also often reflect the risks associated with the particular investment
objective and policies of the Fund and the Portfolio. Among others, these
factors should be considered when comparing the Fund's investment results to
those of other mutual funds and other investment vehicles.
<PAGE>
[LOGO] Investing
EATON VANCE for the
===========
Mutual Funds 21st
Century
- --------------------------------------------------------------------------------
Eaton Vance
Asian Small Companies Fund
PROSPECTUS
JANUARY 1, 1998
- --------------------------------------------------------------------------------
Sponsor and Manager of Eaton Vance Asian Small Companies Fund
Administrator of Asian Small Companies Portfolio
Eaton Vance Management, 24 Federal Street, Boston, MA 02110
Adviser of Asian Small Companies Portfolio
Lloyd George Investment Management (Bermuda) Limited, 3808 One Exchange Square,
Central, Hong Kong
Principal Underwriter
Eaton Vance Distributors, Inc., 24 Federal Street,
Boston, MA 02110 (800) 225-6265
Custodian
Investors Bank & Trust Company, 200 Clarendon Street, Boston, MA 02116
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
ACP
<PAGE>
PART A
INFORMATION REQUIRED IN A PROSPECTUS
[GRAPHIC OMITTED]
Eaton Vance
Greater China Growth Fund
Eaton Vance Greater China Growth Fund (the "Fund") is a mutual fund seeking
long-term capital appreciation through investment in equity securities of
companies which, in the opinion of the investment adviser, will benefit from the
economic development and growth of the People's Republic of China. The Fund
invests its assets in Greater China Growth Portfolio (the "Portfolio"), a
diversified open-end investment company having the same investment objective as
the Fund, rather than by directly investing in and managing its own portfolio of
securities. A significant percentage of the Portfolio will be invested in the
securities markets of countries in the China region, including Hong Kong, China,
Taiwan, South Korea, Singapore, Malaysia, Thailand, Indonesia and the
Philippines. The Fund is a separate series of Eaton Vance Growth Trust (the
"Trust").
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK OR OTHER INSURED DEPOSITORY INSTITUTION, AND ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD
OR ANY OTHER GOVERNMENT AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS,
INCLUDING FLUCTUATIONS IN VALUE AND THE POSSIBLE LOSS OF SOME OR ALL OF THE
PRINCIPAL INVESTMENT.
This Prospectus is designed to provide you with information you should know
before investing. Please retain this document for future reference. A Statement
of Additional Information for the Fund, dated January 1, 1998, 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 sponsor and
manager of the Fund and the administrator of the Portfolio is Eaton Vance
Management, 24 Federal Street, Boston, MA 02110 (the "Manager"). The Portfolio's
investment adviser is Lloyd George Investment Management (Bermuda) Limited (the
"Adviser"). The principal business address of the Adviser is 3808 One Exchange
Square, Central, Hong Kong.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
CONTENTS
<TABLE>
<CAPTION>
Page Page
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<S> <C> <C>
Shareholder and Fund Expenses 2 How to Buy Shares 14
The Fund's Financial Highlights 3 How to Redeem Shares 16
Investment Opportunities in the China Region 5 Reports to Shareholders 18
The Fund's Investment Objective 6 The Lifetime Investing Account/Distribution Options 18
Investment Policies and Risks 6 The Eaton Vance Exchange Privilege 19
Organization of the Fund and the Portfolio 10 Eaton Vance Shareholder Services 19
Management of the Fund and the Portfolio 11 Distributions and Taxes 20
Distribution Plans 13 Performance Information 21
Valuing Shares 14
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
Prospectus dated January 1, 1998
<PAGE>
Shareholder and Fund Expenses
Shareholder Transaction Expenses
<TABLE>
<CAPTION>
Class A Class B Class C
Shares Shares Shares
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases of Shares (as a percentage of
offering price) 5.75% None None
Sales Charges Imposed on Reinvested Distributions None None None
Fees to Exchange Shares None None None
Maximum Contingent Deferred Sales Charge None 5.00% 1.00%
Annual Fund and Allocated Portfolio Operating Expenses (as a percentage of
average daily net assets)
Class A Class B Class C
Shares Shares Shares
- ---------------------------------------------------------------------------------------------------------------
Management Fees 1.25% 1.25% 1.25%
Rule 12b-1 Distribution and Service Fees 0.50 0.98 1.00
Other Expenses 0.42 0.42 0.42
==== ==== ====
Total Operating Expenses 2.17 2.65 2.67
==== ==== ====
Example
An investor would pay the following expenses and, in the case of Class A shares,
maximum initial sales charge or, in the case of Class B and Class C shares, the
applicable contingent deferred sales charge on a $1,000 investment, assuming (a)
5% annual return and (b) redemption at the end of each period:
Class A Class B Class C
Shares Shares Shares
- ---------------------------------------------------------------------------------------------------------------
1 Year $ 78 $ 77 $ 37
3 Years 122 122 83
5 Years 167 161 141
10 Years 293 298 300
An investor would pay the following expenses on the same investment, assuming
(a) 5% annual return and (b) no redemptions:
Class A Class B Class C
Shares Shares Shares
- ---------------------------------------------------------------------------------------------------------------
1 Year $ 78 $ 27 $ 27
3 Years 122 82 83
5 Years 167 141 141
10 Years 293 298 300
</TABLE>
NOTES: The table and Example summarize the aggregate expenses of the Portfolio
and each Class of shares of the Fund and are designed to help investors
understand the costs and expenses they will bear, directly or indirectly, by
investing in the Fund. Information for Class B shares is based on its expenses
for the most recent fiscal year. Information for Class A and Class C shares is
estimated based upon the most recent fiscal year of its predecessor fund
adjusted for the multiple-class structure. Management Fees include management
fees paid by each Class and investment advisory and administration fees paid by
the Portfolio of 0.25%, 0.75% and 0.25%, respectively.
The Fund offers three classes of shares. Class A shares are sold subject to a
sales charge imposed at the time of purchase. No sales charge is payable at the
time of purchase on investments in Class A shares of $1 million or more.
However, 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. Class B shares are sold subject to a declining CDSC (5% maximum) if
redeemed within six years of purchase and Class C shares are sold subject to a
1% CDSC if redeemed within one year of purchase. The CDSC does not apply in
certain circumstances. See "How to Buy Shares" and "How to Redeem Shares".
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.
Long-term holders of Class B and Class C shares 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. 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", "Distribution
Plans" and "How to Redeem Shares."
The Fund invests exclusively in the Portfolio. Other investment companies and
investors with different distribution arrangements are investing in the
Portfolio and others may do so in the future. See "Organization of the Fund and
the Portfolio".
<PAGE>
THE FUND'S FINANCIAL HIGHLIGHTS
The following information should be read in conjunction with the audited
financial statements 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 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. The financial information for each of the periods presented in the
Fund's Financial Highlights are for the Fund prior to reclassification of its
shares as Class B shares on September 1, 1997. Information for Class A and Class
C shares are not presented because these classes did not exist prior to
September 1, 1997. The Financial Highlights for Class A and Class C shares will
differ from the Financial Highlights for Class B shares due to the different
fees imposed on Class A and Class C shares.
<TABLE>
<CAPTION>
Year Ended August 31,
-------------------------------------------------------------------------------
1997 1996 1995 1994 1993*
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, beginning
of year $ 12.450 $ 11.890 $ 13.160 $ 10.540 $10.000
-------- -------- -------- -------- -------
INCOME (LOSS) FROM OPERATIONS --
Net investment loss $ (0.181) $ (0.087) $ (0.038) $ (0.039) $ (0.015)
Net realized and
unrealized gain (loss)
on investments 3.921 0.647 (1.157) 2.684 0.555
-------- -------- -------- -------- --------
Total income (loss)
from operations $ 3.740 $ 0.560 $ (1.195) $ 2.645 $ 0.540
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS --
In excess of net
investment income(4) $ (0.060) $ -- $ (0.065) $ -- $ --
In excess of net
realized gain on
investments -- -- (0.010) (0.025) --
-------- --------- -------- -------- --------
Total distributions $ (0.060) $ -- $ (0.075) $ (0.025) $ --
-------- --------- -------- -------- --------
NET ASSET VALUE, end of year $ 16.130 $ 12.450 $ 11.890 $ 13.160 $10.540
======== ======== ======== ======== =======
TOTAL RETURN(1) 30.15% 4.71% (9.06)% 25.08% 5.40%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of
period (000 omitted) $296,586 $284,575 $324,258 $392,479 $63,672
Ratio of net expenses to
average daily net assets(2)(3) 2.66% 2.63% 2.47% 2.38% 2.21%+
Ratio of net expenses to
average daily net
assets after custodian
fee reduction(2)(3) 2.63% 2.57% -- -- --
Ratio of net investment
loss to average daily
average net assets (0.75)% (0.51)% (0.02)% (0.55)% (1.44)%+
*For the period from the start of business, June 7, 1993, to August 31, 1993.
+Computed on an annualized basis.
(1)Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Distributions, if any, are assumed to be reinvested at
the net asset value on the ex- dividend date. Total return is computed
on a non-annualized basis.
(2)Includes the Fund's share of the Portfolio's allocated expenses.
(3)The expense ratios for the year ended August 31, 1996 and the periods
thereafter 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.
(4)The Fund has followed the Statement of Position (SOP) 93-2:
Determination, Disclosure and Financial Statement Presentation of
Income, Capital Gain, and Return of Capital Distribution by Investment
Companies. The SOP requires that differences in the recognition or
classification of income between the financial statements and tax
earnings and profits that result in temporary over-distributions for
financial statement purposes, are classified as distributions in excess
of net investment income or accumulated net realized gains.
</TABLE>
<PAGE>
[MAP PAGE]
[GRAPHIC OMITTED]
<PAGE>
INVESTMENT OPPORTUNITIES IN THE CHINA REGION
THE FOLLOWING IS A GENERAL DISCUSSION OF THE ECONOMIES AND SECURITIES MARKETS IN
WHICH THE PORTFOLIO MAY INVEST. There can be no assurance that the Portfolio
will be able to capitalize on the factors described herein. Opinions expressed
herein are the good faith opinions of the Portfolio's Adviser, Lloyd George
Investment Management (Bermuda) Limited. Unless otherwise indicated, all amounts
are expressed in United States dollars.
Despite volatility in late 1997, over the past twenty years the performance of
the major Asian securities markets has generally been better than that of
markets in Europe and the United States. For over five years, the newly emerging
securities markets of the China Region have demonstrated significant growth in
market capitalization, in numbers of listed securities and in the volume of
transactions. Over the same period, the underlying economies of the region have
grown against a background of the high savings rates characteristic of many
Asian societies and generally moderate inflation. The economies of Southeast
Asia, excluding Japan, are forecast to grow by approximately 3.5% in 1998. The
following graph shows the average growth in gross domestic product ("GDP") from
1992 to 1998 for the main countries in Southeast Asia, compared with the United
States.
AVERAGE GROSS DOMESTIC PRODUCT GROWTH (1992-1998)
Thailand ................................................. 5.8%
China .................................................... 10.4%
Malaysia ................................................. 7.4%
Singapore ................................................ 7.1%
South Korea .............................................. 6.2%
Indonesia ................................................ 6.1%
Taiwan ................................................... 6.0%
Hong Kong ................................................ 5.1%
Philippines .............................................. 3.5%
United States ............................................ 4.4%
Source: Lloyd George Management (Hong Kong) Limited
A PARTICULARLY SIGNIFICANT FACTOR WITHIN THE REGION FOR MORE THAN A DECADE HAS
BEEN THE INCREASING INFLUENCE WHICH CHINA HAS HAD IN THE DETERMINATION OF THE
ECONOMIC DEVELOPMENT OF CERTAIN COUNTRIES. The links between China and Hong
Kong, between China and Taiwan and between China and other countries within the
region, where there is a significant Chinese element of the population, have by
now been strengthened to a degree which makes a reversal unlikely. Moreover,
although these links have been developed to a stage where economic co-operation
in trade operates smoothly, the full potential of the market, both in terms of
domestic consumption and of export growth, has hardly begun to be realized. This
potential presents investment opportunity for the Fund and the Portfolio.
CHINA'S POPULATION, ESTIMATED AT 1.3 BILLION, IS THE HIGHEST OF ANY COUNTRY IN
THE WORLD. China has had for many centuries a well deserved reputation for being
closed to foreigners, with trade with the outside world being carried on under
terms of extreme restriction and under central control. Such conditions were
maintained in the first thirty years of the Communist regime which began in
1949; however there have been several stages of evolution, from the institution
of an industrialization program in the 1950s to a modernization policy
commencing in 1978 which combined economic development with the beginnings of
opening the country to foreign investment and commerce. The economic plans
covering the last decade of the century include objectives to quadruple the
country's 1980 industrial and agricultural output by the year 2000, to increase
the export element of the economy and to continue to open the country with
further development of the designated special investment areas.
In order to attract foreign investment China has since 1978 designated certain
areas of the country where overseas investors can receive special investment
incentives and tax concessions. There are five Special Economic Zones (Shenzhen,
Shantou and Zhuhai in Guangdong Province, Xiamen in Fujian Province and Hainan
Island, which itself is a province). Fourteen coastal cities have been
designated as "open cities" and certain Open Economic Zones have been
established in coastal areas. Shanghai has established the Pudong New Area.
Twenty-seven High and New Technology Industrial Development Zones have been
approved where preferential treatment is given to enterprises which are
confirmed as technology intensive. As a result, foreign direct investment in
China has increased substantially in the last decade.
AS A TRADE ENTREPOT AND FINANCE CENTER, HONG KONG'S VIABILITY HAS BEEN
INEXORABLY LINKED TO MAINLAND CHINA SINCE THE ESTABLISHMENT OF THE COLONY IN
1841. Hong Kong remains China's largest trade partner and its leading foreign
investor. In 1995, visible trade between Hong Kong and China exceeded $980
billion. In recent years large numbers of Hong Kong based companies have set up
factories in the southern Chinese province of Guangdong, where it is estimated
that Hong Kong companies employ more than 2.5 million workers. There also has
been considerable growth in Chinese investment in Hong Kong over the last
decade, particularly in banking, property, manufacturing and infrastructure
projects. In view of the growing economic interaction between Hong Kong and
Southern China, it is increasingly meaningful to consider the concept of a
Greater Hong Kong economy consisting of Hong Kong and Guangdong Province, with a
combined population of 72 million. The Basic Law, the outline for Hong Kong's
government post 1997, calls for Hong Kong's capitalist system to remain intact
for an additional fifty years after 1997 and sets out details for the
integration of Hong Kong into China.
TAIWAN HAS ALSO BENEFITTED FROM CHINA'S ECONOMIC LIBERALIZATION, GIVEN ITS
GEOGRAPHIC PROXIMITY AND ITS CULTURAL AND ETHNIC TIES. Taiwan companies continue
to be attracted by China's low labor costs, inexpensive land and less rigid
environmental rules. It is estimated that accumulated Taiwanese investment in
China exceeds $3 billion. Taiwanese listed companies include a number which
invested indirectly in China, primarily in the textiles, food and rubber
industries.
THE ADVISER BELIEVES THAT OTHER COUNTRIES IN THE CHINA REGION WILL ALSO BENEFIT
FROM THE REGION'S ECONOMIC GROWTH. Listed companies throughout Asia are becoming
increasingly active in China. There has also been considerable foreign
investment by Japanese companies in the Northeastern Provinces of Liaoning,
Jilin, and Heilongiang. As the major trading partner of these provinces, Japan
is primarily manufacturing light industrial products for reexport. Major
Japanese projects have been set up in the electronics and natural resources
sectors in China. While Thailand has been traditionally known as a recipient of
foreign investment, Chinese-managed listed companies in the banking, textiles
and packaging sectors have indicated their intention of expanding into China. In
Singapore, shipping, construction and hotel companies have been the first
sectors to do business in China while several Malaysian companies in the
manufacturing sector have invested in joint ventures in China. The Adviser
believes that growing China exposure will enhance the earnings growth of such
companies, making them attractive for investment.
See the Statement of Additional Information for further information about the
economic characteristics of and risks associated with investing in China Region
countries.
THE FUND'S INVESTMENT OBJECTIVE
THE FUND'S INVESTMENT OBJECTIVE IS TO SEEK LONG-TERM CAPITAL APPRECIATION. It
currently seeks to meet its investment objective by investing its assets in the
Greater China Growth Portfolio (the "Portfolio"), a separate registered
investment company which invests primarily in equity securities of companies
which, in the opinion of the Adviser, will benefit from the economic development
and growth of the People's Republic of China ("China"). A significant percentage
of the Portfolio's assets will be invested in the securities markets of
countries in the China region, consisting of Hong Kong, China, Taiwan, South
Korea, Singapore, Malaysia, Thailand, Indonesia and the Philippines
(collectively, the "China Region"). Despite the political integration of Hong
Kong and China which began in 1997, they are treated herein as separate.
Investments in the China Region can involve significant risks that are generally
not involved with investments in U.S. companies. The Fund is intended for
long-term investors who can accept international investment risk and little or
no current income. The Fund is not intended to be a complete investment program.
A prospective investor should take into account personal objectives and other
investments when considering the purchase of Fund shares. The Fund cannot assure
achievement of its investment objective. The investment objective of the Fund
and the Portfolio are nonfundamental. China Region investments may offer higher
potential for gains and losses than investments in the United States. See
"Investment Policies and Risks" for further information.
INVESTMENT POLICIES AND RISKS
THE PORTFOLIO SEEKS TO ACHIEVE ITS OBJECTIVE THROUGH INVESTING IN A CAREFULLY
SELECTED AND CONTINUOUSLY MANAGED PORTFOLIO CONSISTING PRIMARILY OF EQUITY
SECURITIES OF COMPANIES WHICH, IN THE OPINION OF THE ADVISER, WILL BENEFIT FROM
THE ECONOMIC DEVELOPMENT AND GROWTH OF CHINA ("CHINA GROWTH COMPANIES"). A
significant percentage of the Portfolio's assets will be invested in the
securities markets of countries in the China Region (or Greater China). The
Portfolio will, under normal market conditions, invest at least 65% of its total
assets in equity securities of China growth companies ("Greater China
investments"). However, it is expected that substantially all of the Portfolio's
assets will normally be invested in equity securities, warrants and equity
options. China growth companies consist of companies that (a) are located in or
whose securities are principally traded in a China Region country, (b)(i) have
at least 50% of their assets in one or more China Region countries or (ii)
derive at least 50% of their gross sales revenues or profits from providing
goods or services to or from within one or more China Region countries and
(c)(i) have at least 35% of their assets in China, or (ii) derive at least 35%
of their gross sales revenues or profits from providing goods or services to or
from within China or (iii) have manufacturing or other operations in China that
are significant to such companies. Greater China investments are typically
listed on stock exchanges or traded in the over-the-counter markets in countries
in the China Region. The principal offices of these companies, however, may be
located outside these countries. The Portfolio may invest 25% or more of its
total assets in the securities of issuers located in any one country in the
China Region. The Portfolio has invested more than 25% of its total assets in
issuers located in Hong Kong, but the Adviser currently expects the Portfolio
ordinarily will not invest more than 15% of its total assets in any other
country.
Equity securities, for purposes of the 65% policy, will be limited to common and
preferred stocks; equity interests in trusts, partnerships, joint ventures and
other unincorporated entities or enterprises; special classes of shares
available only to foreign investors in markets that restrict the ownership by
foreign investors to certain classes of equity securities; convertible preferred
stocks; and other convertible investment grade debt instruments. A debt security
is investment grade if it is rated BBB or above by Standard & Poor's Ratings
Group ("S&P") or Baa or above by Moody's Investors Service, Inc. ("Moody's") or
determined to be of comparable quality by the Adviser. Debt securities rated BBB
by S&P or Baa by Moody's have speculative characteristics and changes in
economic conditions or other circumstances are more likely to lead to a weakened
capacity to make principal and interest payments than is the case with higher
grade debt securities. The Portfolio will promptly dispose of any convertible
debt instrument which is rated or determined by the Adviser to be below
investment grade subsequent to acquisition by the Portfolio. Direct investments
in China growth companies will not exceed 10% of the Portfolio's total assets.
In addition to its investments in equity securities, the Portfolio may invest up
to 5% of its net assets in options on equity securities and up to 5% of its net
assets in warrants, including options and warrants traded in over-the-counter
markets. The Portfolio will not, under normal market conditions, invest more
than 35% of its total assets in equity securities other than Greater China
investments, warrants, options on securities and indices, options on currency,
futures contracts and options on futures, forward foreign currency exchange
contracts, currency swaps and any other non-equity investments. The Portfolio
will not invest in debt securities, other than investment grade convertible debt
instruments. The Portfolio will not invest more than 10% of its assets in the
securities of issuers in any country outside the China Region.
The Portfolio may, for temporary defensive purposes, such as during abnormal
market or economic conditions, invest some or all of its total assets in high
grade debt securities of foreign and United States companies, foreign
governments and the U.S. Government, and their respective agencies,
instrumentalities, political subdivisions and authorities, as well as in high
quality money market instruments denominated in U.S. dollars or a foreign
currency. The Portfolio may temporarily borrow up to 5% of the value of its
total assets to satisfy redemption requests or settle securities transactions.
INVESTING IN FOREIGN SECURITIES. Investing in securities issued by foreign
companies and governments involves considerations and possible risks not
typically associated with investing in securities issued by the U.S. Government
and domestic corporations. The values of foreign investments are affected by
changes in currency rates or exchange control regulations, application of
foreign tax laws (including withholding tax) changes in governmental
administration or economic or monetary policy (in this country or abroad) or
changed circumstances in dealings between nations. Because investment in China
Region companies will usually involve currencies of foreign countries, the value
of assets of the Portfolio as measured by U.S. dollars may be adversely affected
by changes in currency exchange rates. Such rates may fluctuate significantly
over short periods of time causing the Portfolio's net asset value to fluctuate
as well. Costs are incurred in connection with conversions between various
currencies. In addition, foreign brokerage commissions, custody fees and other
costs of investing are generally higher than in the United States, and foreign
securities markets may be less liquid, more volatile and less subject to
governmental supervision than in the United States. Investments in foreign
issuers could be affected by other factors not present in the United States,
including expropriation, armed conflict, confiscatory taxation, lack of uniform
accounting and auditing standards, less publicly available financial and other
information and potential difficulties in enforcing contractual obligations.
Transactions in the securities of foreign issuers could be subject to settlement
delays and risk of loss.
More than 25% of the Portfolio's total assets, adjusted to reflect currency
transactions and positions, may be denominated in any single currency.
Concentration in a particular currency will increase the Portfolio's exposure to
adverse developments affecting the value of such currency. An issuer of
securities purchased by the Portfolio may be domiciled in a country other than
the country in whose currency the securities are denominated.
Since the Portfolio will, under normal market conditions, invest at least 65% of
its total assets in Greater China investments, its investment performance will
be especially affected by events affecting China Region companies. The value and
liquidity of Greater China investments may be affected favorably or unfavorably
by political, economic, fiscal, regulatory or other developments in the China
Region or neighboring regions. The extent of economic development, political
stability and market depth of different countries in the China Region varies
widely. Certain China Region countries, including China, Indonesia, Malaysia,
the Philippines and Thailand, are either comparatively underdeveloped or in the
process of becoming developed. Greater China investments typically involve
greater potential for gain or loss than investments in securities of issuers in
developed countries. In comparison to the United States and other developed
countries, developing countries may have relatively unstable governments and
economies based on only a few industries. Given the Portfolio's investments, the
Portfolio will likely be particularly sensitive to changes in China's economy as
the result of any reversals of economic liberalization, political unrest or
changes in China's trading status.
SECURITIES TRADING MARKETS. The securities markets in the China Region are
substantially smaller, less liquid and more volatile than the major securities
markets in the United States. A high proportion of the shares of many issuers
may be held by a limited number of persons and financial institutions, which may
limit the number of shares available for investment by the Portfolio. The prices
at which the Portfolio may acquire investments may be affected by trading by
persons with material non-public information and by securities transactions by
brokers in anticipation of transactions by the Portfolio in particular
securities. Similarly, volume and liquidity in the bond markets in the China
Region are less than in the United States and, at times, price volatility can be
greater than in the United States. The limited liquidity of securities markets
in the China Region may also affect the Portfolio's ability to acquire or
dispose of securities at the price and time it wishes to do so. In addition,
China Region securities markets are susceptible to being influenced by large
investors trading significant blocks of securities.
China Region stock markets are undergoing a period of growth and change which
may result in trading volatility and difficulties in the settlement and
recording of transactions, and in interpreting and applying the relevant law and
regulations. In particular, the securities industry in China is not well
developed. China has no securities laws of nationwide applicability. Municipal
securities regulations governing the Shanghai and Shenzhen securities exchanges
are new. Stockbrokers and other intermediaries in the China Region may not
perform as well as their counterparts in the United States and other more
developed securities markets.
CHINA REGION COUNTRY CONSIDERATIONS. The Portfolio will invest in China Region
countries with emerging economies or securities markets. Political and economic
structures in many of such countries are undergoing significant evolution and
rapid development, and such countries may lack the social, political and
economic stability characteristic of the United States. Certain of such
countries may have, in the past, failed to recognize private property rights and
have at times nationalized or expropriated the assets of private companies. As a
result, the risks described above, including the risks of nationalization or
expropriation of assets, may be heightened. In addition, unanticipated political
or social developments may affect the values of the Portfolio's investments in
those countries and the availability to the Portfolio of additional investments
in those countries.
The laws of countries in the region relating to limited liability of corporate
shareholders, fiduciary duties of officers and directors, and the bankruptcy of
state enterprises are generally less well developed than or different from such
laws in the United States. It may be more difficult to obtain a judgement in the
courts of these countries than it is in the United States. Monsoons and natural
disasters also can affect the value of Portfolio investments.
Economies of countries in the China Region may differ favorably or unfavorably
from the U.S. economy in such respects as rate of growth of gross national
product, rate of inflation, capital reinvestment, resource self-sufficiency and
balance of payments position. As export-driven economies, the economies of
countries in the China Region are affected by developments in the economies of
their principal trading partners. For example, revocation by the United States
of China's "Most Favored Nation" trading status, which the U.S. President and
Congress reconsider annually, would adversely affect the trade and economic
development of China and Hong Kong. Political control of Hong Kong has been
transferred to China in mid-1997, and the success of one country two systems
will affect investments in Hong Kong and elsewhere.
China governmental actions can have a significant effect on the economic
conditions in the China Region, which could adversely affect the value and
liquidity of the Portfolio's investments. Although the Chinese Government has
recently begun to institute legal and economic reform policies, there can be no
assurances that it will continue to pursue such policies or, if it does, that
such policies will succeed. China does not have a comprehensive system of laws
and some laws are not even publicly available.
The Fund and the Portfolio each intend to conduct its respective affairs in such
a manner to avoid taxation. Nevertheless, certain countries may require
withholding on dividends paid on portfolio securities and on realized capital
gains. In the past, these taxes have sometimes been substantial. There can be no
assurance that in the future the Portfolio will be able to repatriate its
income, gains or initial capital from these countries.
DIRECT INVESTMENTS. The Portfolio may invest up to 10% of its total assets in
direct investments in China growth companies. Direct investments include (i) the
private purchase from an enterprise of an equity interest in the enterprise in
the form of shares of common stock or equity interests in trusts, partnerships,
joint ventures or similar enterprises, and (ii) the purchase of such an equity
interest in an enterprise from a principal investor in the enterprise. In each
case, the Portfolio will, at the time of making the investment, enter into a
shareholder or similar agreement with the enterprise and one or more other
holders of equity interests in the enterprise. The Adviser anticipates that
these agreements will, in appropriate circumstances, provide the Portfolio with
the ability to appoint a representative to the board of directors or similar
body of the enterprise and for eventual disposition of the Portfolio's
investment in the enterprise. Such a representative of the Portfolio will be
expected to provide the Portfolio with the ability to monitor its investment and
protect its rights in the investment and will not be appointed for the purpose
of exercising management or control of the enterprise.
Certain of the Portfolio's direct investments, particularly in China, will
probably include investments in smaller, less seasoned companies. These
companies may have limited product lines, markets or financial resources, or
they may be dependent on a limited management group. The Adviser does not
anticipate making direct investments in start-up operations, although it is
expected that in some cases the Portfolio's direct investments will fund new
operations for an enterprise which itself is engaged in similar operations or is
affiliated with an organization that is engaged in similar operations. Such
direct investments may be made in entities that are reasonably expected in the
foreseeable future to become China growth companies, either by expanding current
operations or establishing significant operations in China. Direct investments
may involve a high degree of business and financial risk that can result in
substantial losses. Because of the absence of any public trading market for
these investments, the Portfolio may take longer to liquidate these positions at
fair value than would be the case for publicly traded securities. Furthermore,
issuers whose securities are not publicly traded may not be subject to public
disclosure and other investor protection requirements applicable to publicly
traded securities.
DERIVATIVE INSTRUMENTS. The Portfolio may purchase or sell derivative
instruments (which are instruments that derive their value from another
instrument, security, index or currency) to enhance return (which may be
considered speculative), to hedge against fluctuations in securities prices,
interest rates or currency exchange rates, or as a substitute for the purchase
or sale of securities or currencies. The Portfolio's transactions in derivative
instruments may be in the U.S. or abroad and may include the purchase or sale of
futures contracts on securities, securities indices, other indices, other
financial instruments or currencies; options on futures contracts;
exchange-traded and over-the-counter options on securities, indices or
currencies; and forward foreign currency exchange contracts. The Portfolio's
transactions in derivative instruments involve a risk of loss or depreciation
due to: unanticipated adverse changes in securities prices, interest rates, the
other financial instruments' prices or currency exchange rates; the inability to
close out a position; default by the counterparty; imperfect correlation between
a position and the desired hedge; tax constraints on closing out positions; and
portfolio management constraints on securities subject to such transactions. The
loss on derivative instruments (other than purchased options) may substantially
exceed the Portfolio's initial investment in these instruments. In addition, the
Portfolio may lose the entire premium paid for purchased options that expire
before they can be profitably exercised by the Portfolio. The Portfolio incurs
transaction costs in opening and closing positions in derivative instruments.
The use of futures for nonhedging purposes is limited by regulations of the
Commodity Futures Trading Commission. There can be no assurance that the
Adviser's use of derivative instruments will be advantageous to the Portfolio.
The Portfolio may purchase call and put options on any securities in which the
Portfolio may invest or options on any securities index composed of securities
in which the Portfolio may invest. The Portfolio does not intend to write a
covered option on any security if after such transaction more than 15% of its
net assets, as measured by the aggregate value of the securities underlying all
covered calls and puts written by the Portfolio, would be subject to such
options. The Portfolio does not intend to purchase an option on any security if,
after such transaction, more than 5% of its net assets, as measured by the
aggregate of all premiums paid for all such options held by the Portfolio, would
be so invested.
Forward foreign currency exchange contracts are individually negotiated and
privately traded by currency traders and their customers. A forward contract
involves an obligation to purchase or sell a specific currency (or basket of
currencies) for an agreed price at a future date, which may be any fixed number
of days from the date of the contract. The Portfolio may engage in cross-hedging
by using forward contracts in one currency (or basket of currencies) to hedge
against fluctuations in the value of securities denominated in a different
currency if the Adviser determines that there is an established historical
pattern of correlation between the two currencies (or the basket of currencies
and the underlying currency). Use of a different foreign currency magnifies the
Portfolio's exposure to foreign currency exchange rate fluctuations. The
Portfolio may also use forward contracts to shift its exposure to foreign
currency exchange rate changes from one currency to another.
The Portfolio may enter into currency swaps for both hedging and non-hedging
purposes. Currency swaps involve the exchange of rights to make or receive
payments in specified currencies. Since currency swaps are individually
negotiated, the Portfolio expects to achieve an acceptable degree of correlation
between its portfolio investments and its currency swap positions. Currency
swaps usually involve the delivery of the entire principal value of one
designated currency in exchange for the other designated currency. Therefore,
the entire principal value of a currency swap is subject to the risk that the
other party to the swap will default on its contractual delivery obligations.
The use of currency swaps is a highly specialized activity which involves
special investment techniques and risks. If the Adviser is incorrect in its
forecasts of market values and currency exchange rates, the Portfolio's
performance will be adversely affected.
REPURCHASE AGREEMENTS. The Portfolio may enter into repurchase agreements (the
purchase of a security coupled with an agreement to resell at a higher price)
with respect to its permitted investments, but currently intends to do so only
with member banks of the Federal Reserve System or with primary dealers in U.S.
Government securities. In the event of the bankruptcy of the other party to a
repurchase agreement, the Portfolio might experience delays in recovering its
cash. To the extent that, in the meantime, the value of the securities the
Portfolio purchased may have decreased, the Portfolio could experience a loss.
At no time will the Portfolio commit more than 15% of its net assets to
repurchase agreements which mature in more than seven days and other illiquid
securities.
OTHER INVESTMENT COMPANIES. The Portfolio reserves the right to invest up to 10%
of its total assets, calculated at the time of purchase, in the securities of
other investment companies unaffiliated with the Adviser or the Manager that
have the characteristics of closed-end investment companies. The Portfolio will
indirectly bear its proportionate share of any management fees paid by
investment companies in which it invests in addition to the advisory fee paid by
the Portfolio. The value of closed-end investment company securities, which are
usually traded on an exchange, is affected by demand for the securities
themselves, independent of the demand for the underlying portfolio assets and,
accordingly, such securities can trade at a discount from their net asset
values.
INVESTMENT POLICIES. The Fund and the Portfolio have adopted certain fundamental
investment restrictions and policies which are enumerated in detail in the
Statement of Additional Information and which may not be changed unless
authorized by a shareholder vote and an investor vote, respectively. Except with
respect to the Portfolio's borrowing limitation, investment restrictions are
considered at the time of acquisition of assets; the sale of portfolio assets
generally is not required in the event of a subsequent change in circumstances.
As a matter of fundamental policy the Portfolio will invest less than 25% of its
total assets in the securities, other than U.S. Government securities, of
issuers in any one industry. However, the Portfolio is permitted to invest 25%
or more of its total assets in (i) the securities of issuers located in any one
country in the China Region and (ii) assets denominated in the currency of any
one country.
Except for the fundamental investment restrictions and policies specifically
identified above and those enumerated in the Statement of Additional
Information, the investment objective and policies of the Fund and the Portfolio
are not fundamental policies and accordingly may be changed by the Trustees of
the Trust and the Portfolio without obtaining the approval of the shareholders
of the Fund or the investors in the Portfolio, as the case may be. The Portfolio
may lend portfolio securities and engage in repurchase agreements and reverse
repurchase agreements but the Adviser has no current intention to do so.
Under the Investment Company Act of 1940 (the "1940 Act") and the rules
promulgated thereunder, the Portfolio's investments in the securities of any
company that, in its most recent fiscal year, derived more than 15% of its gross
revenues from securities-related activities is limited to 5% of any class of the
issuer's equity securities and 10% of the outstanding principal amount of the
issuer's debt securities, provided that the Portfolio's aggregate investments in
the securities of any such issuer do not exceed 5% of the Portfolio's total
assets. Some of the companies available for investment in the China Region,
including enterprises being privatized by such countries, may be financial
services businesses that engage in securities-related activities. The
Portfolio's ability to invest in such enterprises may thus be limited.
ORGANIZATION OF THE FUND AND THE PORTFOLIO
THE FUND IS A DIVERSIFIED SERIES OF EATON VANCE GROWTH TRUST (THE "TRUST"), A
BUSINESS TRUST ESTABLISHED UNDER MASSACHUSETTS LAW PURSUANT TO A DECLARATION OF
TRUST DATED MAY 25, 1989, AS AMENDED. The 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). The Trustees of the Trust have divided
the shares of the Fund into multiple classes, including Class A, Class B and
Class C shares. Each class represents an interest in the Fund, but is subject to
different expenses, rights and privileges. See "Distribution Plans" and "How to
Buy Shares". The Trustees have the authority under the Declaration of Trust to
create additional classes of shares with differing rights and privileges. As a
result of a reorganization with separate series of the Trust, the Fund commenced
offering Class A, B and C shares on September 1, 1997.
When issued and outstanding, the shares are fully paid and nonassessable by the
Trust and redeemable as described under "How to Redeem 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 of the Fund will be voted together except that only
shareholders of a particular class may vote on matters affecting only that
class. Shares have no preemptive or conversion rights and are freely
transferable. In the event of the liquidation of the Fund, shareholders of each
class are entitled to share pro rata in the net assets attributable to that
class available for distribution to shareholders.
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 growth in the assets of the Portfolio, may afford the
potential for economies of scale for the Fund (at least when the assets of the
Portfolio exceed $500 million) and may over time result in lower expenses for
the Fund.
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. 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. 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
EATON VANCE MANAGEMENT ("EATON VANCE") ACTS AS THE SPONSOR AND MANAGER OF THE
FUND AND THE ADMINISTRATOR OF THE PORTFOLIO. THE PORTFOLIO HAS ENGAGED LLOYD
GEORGE MANAGEMENT (HONG KONG) LIMITED ("LGM-HK") AS ITS INVESTMENT ADVISER.
Pursuant to a service agreement effective on January 1, 1996 between LGM-HK and
its affiliate, Lloyd George Investment Management (Bermuda) Limited ("LGIM-B"),
LGIM-B, acting under the general supervision of the Portfolio's Trustees,
manages the Portfolio's investments and affairs. LGM-HK supervises LGIM-B's
performance of this function and retains its contractual obligations under its
investment advisory agreement with the Portfolio. LGM-HK and LGIM-B are referred
to collectively as the Advisers.
Each Adviser is registered as an investment adviser with the Commission and is a
subsidiary of Lloyd George Management (B.V.I.) Limited ("LGM"). LGM and its
subsidiaries act as investment adviser to various individual and institutional
clients with total assets under management of approximately $1.5 billion. Eaton
Vance's parent, Eaton Vance Corp., owns approximately 21% of the Class A shares
issued by LGM.
LGM was established in 1991 to provide investment management services with
respect to equity securities of companies trading in Asian securities markets,
especially those of emerging markets. LGM currently manages Pacific Basin and
Asian portfolios for both private clients and institutional investors seeking
long-term capital growth. LGM's core investment team consists of twelve
experienced investment professionals, based in Hong Kong, London and Mumbai, who
have worked together over a number of years successfully managing client
portfolios in Pacific Basin and Asian stock markets. The team has a unique
knowledge of, and experience with, Pacific Basin and Asian emerging markets. LGM
is ultimately controlled by the Hon. Robert J.D. Lloyd George, President and
Trustee of the Portfolio and Chairman and Chief Executive Officer of the
Advisers. LGM's only activity is portfolio management.
LGM and the Advisers have adopted a disciplined management style, providing a
blend of Asian and multinational expertise with the most rigorous international
standards of fundamental security analysis. Although focused primarily in Asia,
LGM and the Advisers maintain a network of international contacts in order to
monitor international economic and stock market trends and offer clients a
global management service. The Portfolio is managed by Adaline Mang-Yee Ko.
ADALINE MANG-YEE KO. Director of the Adviser. Born in 1943 and educated at
University of Birmingham, England and at London Business School where she
received her MBA. Ms. Ko has over 14 years experience working with Far East
Asian equities. From 1982-1988, she worked at Save & Prosper Group Ltd. as an
investment manager. In 1988, Ms. Ko transferred to Robert Fleming & Co. Ltd.
In 1990, she was promoted to Director of Fleming Investment Management Ltd. In
1992, she was promoted to Head of the Pacific Region Portfolios Group where
she supervised a team of 5 with responsibility for over $1.5 billion in assets
under management. Ms. Ko joined LGM in 1995.
While the Portfolio is a New York trust, the Advisers, together with certain
Trustees and officers of the Portfolio, are not residents of the United States,
and substantially all of their respective assets may be located outside of the
United States. It may be difficult for investors to effect service of process
within the United States upon the individuals identified above, or to realize
judgments of courts of the United States predicated upon civil liabilities of
the Advisers and such individuals under the federal securities laws of the
United States. The Portfolio has been advised that there is substantial doubt as
to the enforceability in the countries in which the Adviser and such individuals
reside of such civil remedies and criminal penalties as are afforded by the
federal securities laws of the United States.
Since January 1, 1996, LGM-HK pays to LGIM-B the entire amount of the advisory
fee payable by the Portfolio under its investment advisory agreement with LGM-
HK. Under this agreement, LGM-HK is entitled to receive a monthly advisory fee
of 0.0625% (equivalent to 0.75% annually) of the average daily net assets of the
Portfolio up to $500 million, which fee declines at intervals above $500
million. As at August 31, 1997, the Portfolio had net assets of $537,781,878.
For the fiscal year ended August 31, 1997, the Portfolio paid LGM-HK advisory
fees equivalent to 0.75% of the Portfolio's average daily net assets for such
period.
LGIM-B also furnishes for the use of the Portfolio office space and all
necessary office facilities, equipment and personnel for servicing the
investments of the Portfolio. LGIM-B places the portfolio securities
transactions of the Portfolio with many broker-dealer firms and uses its best
efforts to obtain execution of such transactions at prices which are
advantageous to the Portfolio and at reasonably competitive commission rates.
Subject to the foregoing, LGIM-B may consider sales of shares of the Fund as a
factor in the selection of firms to execute portfolio transactions. The Trust,
the Portfolio and the Advisers have adopted Codes of Ethics relating to personal
securities transactions. The Codes permit personnel of the Advisers to invest in
securities (including securities that may be purchased or held by the Portfolio)
for their own accounts, subject to certain reporting and other restrictions and
procedures contained in such Codes.
EATON VANCE, ITS AFFILIATES AND ITS PREDECESSOR COMPANIES HAVE BEEN MANAGING
ASSETS OF INDIVIDUALS AND INSTITUTIONS SINCE 1924 AND MANAGING INVESTMENT
COMPANIES SINCE 1931. EATON VANCE ACTS AS INVESTMENT ADVISER TO INVESTMENT
COMPANIES AND VARIOUS INDIVIDUAL AND INSTITUTIONAL CLIENTS WITH ASSETS UNDER
MANAGEMENT OF APPROXIMATELY $20 BILLION. Eaton Vance is a wholly-owned
subsidiary of Eaton Vance Corp., a publicly-held holding company which through
its subsidiaries and affiliates engages primarily in investment management,
administration and marketing activities. The Principal Underwriter is a
wholly-owned subsidiary of Eaton Vance.
Eaton Vance, acting under the general supervision of the Boards of Trustees of
the Trust and the Portfolio, manages and administers the business affairs of the
Fund and the Portfolio. Eaton Vance's services include monitoring and providing
reports to the Trustees of the Trust and the Portfolio concerning the investment
performance achieved by the Adviser for the Portfolio, recordkeeping,
preparation and filing of documents required to comply with federal and state
securities laws, supervising the activities of the transfer agent of the Fund
and the custodian of the Portfolio, providing assistance in connection with
Trustees' and shareholders' meetings and other management and administrative
services necessary to conduct the business of the Fund and the Portfolio. Eaton
Vance also furnishes for the use of the Fund and the Portfolio office space and
all necessary office facilities, equipment and personnel for managing and
administering the business affairs of the Fund and the Portfolio. Eaton Vance
does not provide any investment management or advisory services to the Portfolio
or the Fund.
Under its management contract with the Trust on behalf of the Fund, Eaton Vance
receives a monthly fee in the amount of 1/48 of 1% (equal to 0.25% annually) of
the average daily net assets of the Fund up to $500 million, which fee declines
at intervals above $500 million. For the fiscal year ended August 31, 1997,
Eaton Vance earned management fees equivalent to 0.25% of the Fund's average
daily net assets for such period. In addition, under its administration
agreement with the Portfolio, Eaton Vance receives a monthly fee in the amount
of 1/48 of 1% (equal to 0.25% annually) of the average daily net assets of the
Portfolio up to $500 million, which fee declines at intervals above $500
million. For the fiscal year ended August 31, 1997, Eaton Vance earned
administration fees from the Portfolio equivalent to 0.25% of the Portfolio's
average daily net assets for such period.
The Fund and the Portfolio, as the case may be, will each be responsible for all
respective costs and expenses not expressly stated to be payable by the Advisers
under the investment advisory agreement and Eaton Vance under the management
contract or the administration agreement or by the Principal Underwriter under
the distribution agreement.
DISTRIBUTION PLANS
The Trust has adopted a Distribution Plan (the "Class A Plan") for the Fund's
Class A shares that is designed to meet the requirements of Rule 12b-1 under the
1940 Act. THE CLASS A PLAN PROVIDES FOR THE PAYMENT OF A MONTHLY DISTRIBUTION
FEE TO THE PRINCIPAL UNDERWRITER IN AN AMOUNT EQUAL TO THE AGGREGATE OF (a) .50%
OF THAT PORTION OF CLASS A AVERAGE DAILY NET ASSETS FOR ANY FISCAL YEAR WHICH IS
ATTRIBUTABLE TO ITS SHARES WHICH HAVE REMAINED OUTSTANDING FOR LESS THAN ONE
YEAR AND (b) .25% OF THAT PORTION OF CLASS A AVERAGE DAILY NET ASSETS FOR ANY
FISCAL YEAR WHICH IS ATTRIBUTABLE TO ITS SHARES WHICH HAVE REMAINED OUTSTANDING
FOR MORE THAN ONE YEAR. Aggregate payments to the Principal Underwriter under
the Class A Plan are limited to those permissible, pursuant to a rule of the
National Association of Securities Dealers, Inc.
The Class A Plan also provides that the Class will pay a quarterly service fee
to the Principal Underwriter in an amount equal on an annual basis to .25% of
that portion of its average daily net assets for any fiscal year which is
attributable to Class A shares which have remained outstanding for more than one
year; from such service fee the Principal Underwriter expects to pay a quarterly
service fee to Authorized Firms, as compensation for providing personal services
and/or the maintenance of shareholder accounts, with respect to shares sold by
such Firms which have remained outstanding for more than one year. Service fee
payments to Authorized Firms will be in addition to sales charges on Class A
shares which are reallowed to Authorized Firms. If the Class A Plan is
terminated or not continued in effect, the Class has no obligation to reimburse
the Principal Underwriter for amounts expended by the Principal Underwriter in
distributing Class A shares.
The Trust has also adopted Distribution Plans ("Class B Plan" and "Class C
Plan") pursuant to Rule 12b-1 under the 1940 Act for the Fund's Class B and
Class C shares. Each Plan is designed to permit an investor to purchase shares
through an Authorized Firm without incurring an initial sales charge and at the
same time permit the Principal Underwriter to compensate Authorized Firms in
connection therewith. UNDER SUCH PLANS, CLASS B AND CLASS C EACH PAYS THE
PRINCIPAL UNDERWRITER A FEE, ACCRUED DAILY AND PAID MONTHLY, AT AN ANNUAL RATE
NOT EXCEEDING .75% OF ITS AVERAGE DAILY NET ASSETS TO FINANCE THE DISTRIBUTION
OF ITS SHARES. Such fees compensate the Principal Underwriter for sales
commissions paid by it to Authorized Firms on the sale of Class B and Class C
shares and for interest expenses. Under the Class B Plan, the Principal
Underwriter uses its own funds to pay sales commissions (except on exchange
transactions and reinvestments) to Authorized Firms at the time of sale equal to
4% of the purchase price of the Class B shares sold by such Firms. Under the
Class C Plan, the Principal Underwriter currently expects to pay to an
Authorized Firm (a) sales commissions (except on exchange transactions and
reinvestments) at the time of sale equal to .75% of the purchase price of the
Class C shares sold by such Firm, and (b) monthly sales commissions
approximately equivalent to 1/12 of .75% of the value of Class C shares sold by
such Firm and remaining outstanding for at least one year. During the first year
after a purchase of Class C shares, the Principal Underwriter will retain the
sales commission as reimbursement for the sales commissions made to Authorized
Firms at the time of sale. CDSCs paid to the Principal Underwriter will be used
to reduce amounts owed to it. Because payments to the Principal Underwriter
under the Plans are limited, uncovered distribution charges (sales commissions
due the Principal Underwriter plus interest, less the above fees and CDSCs and
Adviser distribution payments received by it) may exist indefinitely. During the
fiscal year ended August 31, 1997, Class B (which was then a separate series
fund) paid or accrued sales commissions equivalent to .75% of average daily net
assets. As at August 31, 1997, the outstanding uncovered distribution charges of
the Principal Underwriter on such day calculated under the Class B Plan amounted
to approximately $6,284,000 (equivalent to 2.1% of net assets on such day). For
more information see the Statement of Additional Information.
THE CLASS B AND CLASS C PLANS ALSO AUTHORIZE EACH SUCH CLASS TO MAKE PAYMENTS OF
SERVICE FEES TO THE PRINCIPAL UNDERWRITER, AUTHORIZED FIRMS AND OTHER PERSONS IN
AMOUNTS NOT EXCEEDING .25% OF ITS AVERAGE DAILY NET ASSETS FOR PERSONAL
SERVICES, AND/OR THE MAINTENANCE OF SHAREHOLDER ACCOUNTS. Under the Class B
Plan, this fee is paid quarterly in arrears based on the value of Class B shares
sold by such persons and remaining outstanding for at least twelve months. Under
the Class C Plan, the Principal Underwriter currently expects to pay to an
Authorized Firm (a) a service fee (except on exchange transactions and
reinvestments) at the time of sale equal to .25% of the purchase price of the
Class C shares sold by such Firm, and (b) monthly service fees approximately
equivalent to 1/12 of .25% of the value of Class C shares sold by such Firm and
remaining outstanding for at least one year. During the first year after a
purchase of Class C shares, the Principal Underwriter will retain the service
fee as reimbursement for the service fee payment made to Authorized Firms, at
the time of sale. For the fiscal year ended August 31, 1997, Class B paid or
accrued service fees under its Plan equivalent to .23% of average daily net
assets for such year.
Distribution of Class B and Class C shares by the Principal Underwriter will
also be encouraged by the payment by LGIM-B to the Principal Underwriter of
amounts equivalent to .15% and .125%, respectively of Class B and Class C's
annual average daily net assets. Such payments will be made from LGIM-B's own
resources, not Class assets, in consideration of the Principal Underwriter's
distribution efforts.
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 Principal Underwriter may at times allow
discounts on the sale of Class A shares 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 Trust may, in its absolute discretion, suspend, discontinue or limit the
offering of one or more of its classes of shares at any time. In determining
whether any such action should be taken, the Trust's management intends to
consider all relevant factors, including (without limitation) the size of the
Fund or class, the investment climate and market conditions, the volume of sales
and redemptions of shares, and in the case of Class B and Class C shares, the
amount of uncovered distribution charges of the Principal Underwriter. The Plans
may continue in effect and payments may be made under the Plans following any
such suspension, discontinuance or limitation of the offering of shares;
however, there is no contractual obligation to continue any Plan for any
particular period of time. Suspension of the offering of shares would not, of
course, affect a shareholder's ability to redeem shares.
VALUING SHARES
THE FUND VALUES ITS SHARES ONCE 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). Each Class's net asset value per
share is determined by the Trust's custodian, Investors Bank & Trust Company
("IBT") (as agent for the Trust) in the manner authorized by the Trustees of the
Trust. The net asset value of each Class is computed by dividing the value of
that Class's pro rata share of the Fund's total assets, less its liabilities, by
the number of shares of that Class outstanding. Because the Fund invests its
assets in an interest in the Portfolio, each Class's net asset value will
reflect the value of the Fund's 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 by a specific time each day to receive that day's public offering
per share. It is the Authorized Firms' responsibility to transmit orders
promptly to the Principal Underwriter. The Fund has approved the acceptance of
purchase and redemption orders as of the time of their receipt by certain
Authorized Firms (or their designated intermediaries).
The Portfolio's net asset value is also determined as of the close of regular
trading on the Exchange by IBT (as custodian and agent for the Portfolio) based
on market or fair value in the manner authorized by the Trustees of the
Portfolio. Exchange listed securities generally are valued at closing sale
prices. Net asset value is computed by subtracting the liabilities of the
Portfolio from the value of its total assets.
SHAREHOLDERS MAY DETERMINE THE VALUE OF THEIR INVESTMENT BY MULTIPLYING THE
NUMBER OF SHARES OWNED BY THE CURRENT NET ASSET VALUE PER SHARE.
HOW TO BUY SHARES
SHARES OF THE FUND MAY BE PURCHASED FOR CASH OR MAY BE ACQUIRED IN EXCHANGE FOR
ACCEPTABLE SECURITIES. Class A shares are purchased at the effective public
offering price, which price is based on the effective net asset value per share
plus the applicable sales charge. The sales charge is divided between the
Authorized Firm and the Principal Underwriter. Class B and Class C shares are
purchased at the net asset value per share 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 Trust may suspend the offering of shares
at any time and may refuse an order for the purchase of shares.
An initial investment 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 Trust'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 Trust 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 Trust as described below under "How to
Redeem Shares."
CLASS A SHARES. The sales charge may vary depending on the size of the purchase
and the number of Class A 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 or Right of Accumulation
are available from Authorized Firms or the Principal Underwriter.
The current sales charges and dealer commissions are:
<TABLE>
<CAPTION>
Sales Charge Sales Charge Dealer Commission
as Percentage of as Percentage of as Percentage of
Amount of Purchase Offering Price Amount Invested Offering Price
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $50,000 5.75% 6.10% 5.00%
$50,000 but less than $100,000 4.75 4.99 4.00
$100,000 but less than $250,000 3.75 3.90 3.00
$250,000 but less than $500,000 3.00 3.09 2.50
$500,000 but less than $1,000,000 2.00 2.04 1.75
$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 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>
Class A shares may be sold at net asset value to current and retired Directors
and Trustees of Eaton Vance funds, including the Portfolio; to clients and
current and retired officers and employees of Eaton Vance, its affiliates and
other investment advisers of Eaton Vance sponsored funds; to registered
representatives and employees of Authorized Firms and bank employees who refer
customers to registered representatives of Authorized Firms; to officers and
employees of IBT and the Transfer Agent; and to such persons' spouses and
children under the age of 21 and their beneficial accounts. Class A shares may
also be issued at net asset value (1) in connection with the merger of an
investment company or series thereof with the Fund, (2) to investors making an
investment as part of a fixed fee program whereby an entity unaffiliated with
the Principal Underwriter 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 Trust's Principal Underwriter may pay commissions to
Authorized Firms who initiate and are responsible for purchases of Class A
shares of the Fund by Eligible Plans of up to 1.00% of the amount invested in
such shares.
Until March 31, 1998, 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 Class A 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.
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 in Class A shares, 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 such
shares (computed to the nearest full share at the public offering price
applicable to the initial purchase hereunder) registered in the investor's name.
All income dividends and capital gains distributions on escrowed shares will be
paid to the investor or to the investor's order. When the minimum investment so
specified is completed, the escrowed shares will be delivered to the investor.
If the investor has an accumulation account the shares will remain on deposit
under the investor's account.
If total purchases under this Statement of Intention are less than the amount
specified, the investor will promptly remit to the Principal Underwriter any
difference between the sales charge on the amount specified and on the amount
actually purchased. If the investor does not within 20 days after written
request by the Principal Underwriter or the Authorized Firm pay such difference
in sales charge, the escrow agent will redeem an appropriate number of the
escrowed shares in order to realize such difference. Full shares remaining after
any such redemption together with any excess cash proceeds of the shares so
redeemed will be delivered to the investor or to the investor's order by the
escrow agent.
If total purchases made under this Statement are large enough to qualify for a
lower sales charge than that applicable to the amount specified, all
transactions will be computed at the expiration date of this Statement to give
effect to the lower charge. Any difference in sales charge will be refunded to
the investor in cash, or applied to the purchase of additional shares at the
lower charge if specified by the investor. This refund will be made by the
Authorized Firm and by the Principal Underwriter. If at the time of the
recomputation 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 investor's account.
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. 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 of Class A shares or
net asset value of Class B and Class C shares 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:
<TABLE>
<S> <C>
IN THE CASE OF BOOK ENTRY: IN THE CASE OF PHYSICAL DELIVERY:
Deliver through Depository Trust Co. Investors Bank & Trust Company
Broker #2212 Attention: Eaton Vance Greater China Growth Fund
Investors Bank & Trust Company (and Class)
For A/C Eaton Vance Greater China Growth Fund Physical Securities Processing Settlement Area
(and Class) 200 Clarendon Street
Boston, MA 02116
</TABLE>
Investors who are contemplating an exchange of securities for shares, 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 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.
IF YOU DON'T HAVE AN AUTHORIZED FIRM, EATON VANCE CAN RECOMMEND ONE.
HOW TO REDEEM 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 share next computed after a redemption request is
received in the proper form as described below. Within seven days after receipt
of a redemption request in good order by the Transfer Agent, the Trust 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 CDSC (described below) and any
federal income tax required to be withheld.
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 Trust, 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 order is deemed to be
received by the Trust or the Principal Underwriter, as the Trust'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.
While normally payments will be made 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 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 Trust reserves the right
to redeem accounts with balances of less than $750. Prior to such a redemption,
shareholders will be given 60 days' written notice to make additional purchases.
However, no such redemptions would be required by the Trust if the cause of the
low account balance was a reduction in the net asset value of shares. No CDSC
will be imposed with respect to such involuntary redemptions.
CONTINGENT DEFERRED SALES CHARGE. Each class of shares is subject to a CDSC on
certain redemptions. The CDSC is calculated based on the lower of the net asset
value at the time of purchase or the time of redemption. Shares acquired through
the reinvestment of distributions are exempt. Redemptions are made first from
shares in the account which are not subject to a CDSC.
In calculating a CDSC upon the redemption of shares acquired in an exchange, the
shares are deemed to have been acquired at the time of the original purchase of
the exchanged shares and, in the case of Class B shares, the CDSC schedule
applicable to the exchanged shares will apply to the acquired shares. No CDSC is
imposed on shares sold to Eaton Vance or its affiliates, or to their respective
employees or clients. Shares acquired as the result of a merger or liquidation
of another Eaton Vance sponsored fund generally will be subject to the same CDSC
rate imposed by the prior fund.
CLASS A SHARES. If Class A shares are purchased at net asset value because the
purchase amount is $1 million or more, they will be subject to a 1% CDSC if
redeemed within 12 months of purchase. If Class A shares are purchased prior to
April 1, 1998 at net asset value because the amount invested represents
redemption proceeds from an unaffiliated mutual fund (as described under "How to
Buy Shares"), they will be subject to a .50% CDSC if redeemed within 12 months
of purchase.
CLASS B SHARES. Class B shares will be subject to the following CDSC
schedule:
Year of
Redemption
After Purchase CDSC
- --------------------------------------------------------------------------------
First or Second 5%
Third 4%
Fourth 3%
Fifth 2%
Sixth 1%
Seventh and following 0%
The Class B CDSC is waived for redemptions (1) pursuant to a Withdrawal Plan
(see "Eaton Vance Shareholder Services"), (2) as part of a required minimum
distribution from a tax-sheltered retirement plan, or (3) following the death of
all beneficial owners of shares, provided the redemption is requested within one
year of death (a death certificate and other applicable documents may be
required).
CLASS C SHARES. Class C shares will be subject to a 1% CDSC if redeemed within
12 months of purchase. The Class C CDSC is waived for redemptions (1) pursuant
to a Withdrawal Plan (see "Eaton Vance Shareholder Service"), (2) as part of a
distribution from a retirement plan qualified under Section 401, 403(b) or 457
of the Code, or (3) as part of a required minimum distribution from other
tax-sheltered retirement plans.
REPORTS TO SHAREHOLDERS
THE FUND WILL ISSUE TO ITS SHAREHOLDERS SEMI-ANNUAL AND ANNUAL REPORTS
CONTAINING FINANCIAL STATEMENTS. Financial statements included in annual reports
are audited by the independent accountants. Shortly after the end of each
calendar year, shareholders will be furnished with information necessary for
preparing federal and state income tax returns. Consistent with applicable law,
duplicate mailings of shareholder reports and certain other Fund information to
shareholders residing at the same address may be eliminated.
THE LIFETIME INVESTING ACCOUNT/DISTRIBUTION OPTIONS
AFTER AN INVESTOR MAKES AN INITIAL PURCHASE OF SHARES, THE TRANSFER AGENT WILL
SET UP A LIFETIME INVESTING ACCOUNT FOR THE INVESTOR ON THE TRUST'S RECORDS.
This account is a complete record of all transactions which at all times shows
the balance of shares owned. The Trust 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 Class 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 Trust'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 shareholder communications are returned by the United States Postal Service
or other delivery service as not deliverable, the distribution option on the
account will be automatically changed to the SHARE OPTION until such time as the
shareholder selects a different option. No interest will accrue on amounts
represented by uncashed distribution or redemption checks.
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 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 Trust and its Transfer Agent. Since the
Trust 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
Trust 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 the same class of
one or more other funds in the Eaton Vance Group of Funds. Class A shares may
also be exchanged for shares of Eaton Vance Cash Management Fund, Eaton Vance
Income Fund of Boston, and Eaton Vance Tax Free Reserves. Class B shares may
also be exchanged for shares of Eaton Vance Prime Rate Reserves, which are
subject to an early withdrawal charge, or shares of Eaton Vance Money Market
Fund, which are subject to a CDSC, and shares of a money market fund sponsored
by an Authorized Firm and approved by the Principal Underwriter (an "Authorized
Firm fund"). Class C shares may also be exchanged for shares of Eaton Vance
Money Market Fund and EV Classic Senior Floating-Rate Fund. Any such exchange
will be made on the basis of the net asset value per share of each fund/class at
the time of the exchange (plus, in the case of an exchange made within six
months of the date of purchase of Class A 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. Exchanges are subject to
any restrictions or qualifications set forth in the current prospectus of any
such fund.
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 Trust 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 Shares").
Consult the Transfer Agent for additional information concerning the exchange
privilege. Applications and prospectuses of other funds are available from
Authorized Firms or the Principal Underwriter. The prospectus for each fund
describes its investment objectives and policies, and shareholders should obtain
a prospectus and consider these objectives and policies carefully before
requesting an exchange.
No CDSC is imposed on exchanges. For purposes of calculating the CDSC upon
redemption of shares acquired in an exchange, the CDSC schedule applicable to
the shares at the time of purchase will apply and the purchase of shares
acquired in one or more exchanges is deemed to have occurred at the time of the
original purchase of the exchanged shares, except that time during which shares
are held in an Authorized Firm fund will not be credited toward completion of
the CDSC period. For the CDSC schedule applicable to Class B shares (except
Prime Rate Reserves and Class B shares of the Limited Maturity Funds), see "How
to Redeem Shares." The CDSC or early withdrawal charge schedule applicable to
Prime Rate Reserves and Class B shares of the Limited Maturity Funds 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.
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 Trust, 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 TRUST 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 or Class 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 the Fund
and specifying the Class being purchased 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 Class and the account number should accompany
each investment.
BANK AUTOMATED INVESTING -- FOR REGULAR SHARE ACCUMULATION: Cash investments of
$50 or more may be made automatically each month or quarter from a shareholder's
bank account. The $1,000 minimum initial investment and small account redemption
policy are waived for these accounts.
WITHDRAWAL PLAN: A shareholder may draw on shareholdings systematically with
monthly or quarterly checks. For Class B and Class C shares, any such
withdrawals may not in the aggregate exceed 12% annually of the account balance
at the time the plan is established. Such amount will not be subject to the
Class B or Class C CDSC. See "How to Redeem Shares." A minimum deposit of $5,000
in shares is required. The maintenance of a withdrawal plan concurrently with
purchases of additional Class A shares would be disadvantageous because of the
sales charge included in such purchase.
STATEMENT OF INTENTION: Purchases of $50,000 or more of Class A shares made
over a 13-month period are eligible for reduced sales charges. See "How to Buy
Shares -- Statement of Intention and Escrow Agreement."
RIGHT OF ACCUMULATION: Purchases may qualify for reduced sales charges on Class
A shares when the current market value of holdings (shares at current offering
price), plus new purchases, reaches $50,000 or more. Class A 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.
REINVESTMENT PRIVILEGE: A shareholder who has redeemed shares may reinvest, with
credit for any CDSCs paid on the redeemed shares, any portion or all of the
redemption proceeds (plus that amount necessary to acquire a fractional share to
round off the purchase to the nearest full share) in the same shares (or for
Class A shares in Class A shares of any other Eaton Vance 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 Trust (or by the Trust's Transfer Agent). To the extent
that any shares are sold at a loss and the proceeds are reinvested in shares (or
other shares 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: Class A and Class C shares of the Fund are
available for purchase in connection with certain tax-sheltered retirement
plans. Detailed information concerning these plans, including certain exceptions
to minimum investment requirements, and copies of the plans are available from
the Principal Underwriter. This information should be read carefully and
consultation with an attorney or tax adviser may be advisable. The information
sets forth the service fee charged for retirement plans and describes the
federal income tax consequences of establishing a plan. Participant accounting
services (including trust fund reconciliation services) will be offered only
through third party recordkeepers and not by the Principal Underwriter. Under
all plans, dividends and distributions will be automatically reinvested in
additional shares.
DISTRIBUTIONS AND TAXES
It is the present policy of the Fund to make (A) at least one distribution
annually (normally in December) of all or substantially all of the investment
income (if any) allocated to the Fund by the Portfolio (less the Fund's direct
and allocated expenses and class-specific expenses), and (B) at least one
distribution annually of all or substantially all of the net realized capital
gains (if any) allocated to the Fund by the Portfolio (reduced by any available
capital loss carryforwards from prior years). Shareholders may reinvest all
distributions in shares of the Fund without a sales charge at the per share net
asset value as of the close of business on the ex-dividend date.
The Fund intends to distribute each year substantially all of its net investment
company taxable income (consisting generally of taxable net investment income),
net short-term capital gain and net gains from certain foreign currency
transactions and net capital gains. The Fund's distributions will generally not
qualify for the dividends-received deduction for corporations.
Distributions of investment company taxable income are taxable to shareholders
as ordinary income, whether paid in cash or additional shares. Distributions of
net capital gain are taxable to shareholders as long-term capital gain, whether
paid in cash or additional shares and regardless of the length of time shares
have been owned by the shareholder. Long-term capital gain is separated into
different tax rate groups depending on the length of time the asset is held by
the Portfolio prior to sale. Current IRS rules permit the Fund to designate net
capital gain distributions as "28% rate gain distributions" or "20% rate gain
distributions," and require shareholders to treat such distributions
accordingly.
Investors who purchase shares shortly before the record date of a distribution
will pay the full price for the shares and then receive some portion of the
price back as taxable distribution. Certain distributions paid in January will
be taxable to shareholders as if received on December 31 of the prior year.
The redemption of shares of the Fund may result in a taxable gain or loss to the
redeeming shareholder, depending on whether the amount received is greater or
less than such shareholder's adjusted tax basis in the shares redeemed. An
exchange of shares of the Fund for shares of another Eaton Vance fund generally
will have similar tax consequences.
Sales charges paid upon a purchase of Class A shares cannot be taken into
account for purposes of determining gain or loss on a redemption or exchange of
the shares before the 91st day after their purchase to the extent a sales charge
is reduced or eliminated in a subsequent acquisition of shares of the Fund or of
another fund pursuant to the Fund's reinvestment or exchange privilege. Any
disregarded or disallowed amounts will result in an adjustment to the
shareholder's tax basis in some or all of any other shares acquired.
Taxable distributions to certain shareholders, including those who have not
provided the Fund with their correct taxpayer identification number and other
required certifications, may be subject to "backup" federal tax withholding of
31%.
Shareholders will receive one or more 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 shares, and federal income tax (if
any) withheld by the Transfer Agent.
The foregoing only summarizes some of the federal tax consequences to
shareholders of investing in shares of the Fund, and does not address special
tax rules applicable to certain types of investors, such as corporate and
foreign investors, individual retirement accounts and other retirement plans.
Investors should consult their tax advisers.
PERFORMANCE INFORMATION
FROM TIME TO TIME, AVERAGE ANNUAL TOTAL RETURN MAY BE ADVERTISED. Average annual
total return is determined separately for each Class by computing the average
annual percentage change in value of $1,000 invested at the maximum public
offering price (including maximum sales charge for Class A shares; net asset
value for Class B and Class C shares) 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. Total return may be quoted for the
period prior to commencement of operations which would reflect the Class' total
return (or that of its predecessor) adjusted to reflect any applicable sales
charge.
The Fund may also publish total return figures for each Class which do not take
into account any sales charge. Any performance figure which does not take into
account a sales charge would be reduced to the extent such charge is imposed.
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 investment results will fluctuate over time, and any
presentation of the total return for any prior period should not be considered a
representation of what an investment may earn or what the total return may be in
any future period. 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 investment results to those of other mutual funds and
other investment vehicles.
The following chart reflects the annual investment returns of Class B of the
Fund for one year periods ending August 31 and does not take into account any
sales charge which investors may bear. Total return for the period prior to the
Fund's commencement of operations on June 7, 1993, reflects the total return of
another class that invests in the Portfolio. The performance of the predecessor
funds of Class A and Class C was different.
LIFE OF FUND AVERAGE ANNUAL TOTAL RETURN -- 14.94%
1993 ......................... 26.58%
1994 ......................... 25.08%
1995 ......................... (9.06%)
1996 ......................... 4.71%
1997 ......................... 30.15%
<PAGE>
[LOGO] Investing
EATON VANCE for the
===========
Mutual Funds 21st
Century
- --------------------------------------------------------------------------------
Eaton Vance
Greater China Growth Fund
PROSPECTUS
JANUARY 1, 1998
- --------------------------------------------------------------------------------
Sponsor and Manager of Eaton Vance Greater China Growth Fund
Administrator of Greater China Growth Portfolio
Eaton Vance Management, 24 Federal Street, Boston, MA 02110
Adviser of Greater China Growth Portfolio
Lloyd George Investment Management (Bermuda) Limited, 3808 One Exchange Square,
Central, Hong Kong
Principal Underwriter
Eaton Vance Distributors, Inc., 24 Federal Street, Boston, MA 02110
(800) 225-6265
Custodian
Investors Bank & Trust Company, 200 Clarendon Street, Boston, MA 02116
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
CGP
<PAGE>
PART A
INFORMATION REQUIRED IN A PROSPECTUS
[GRAPHIC OMITTED]
EATON VANCE
GROWTH FUND
Eaton Vance Growth Fund (the "Fund") is a mutual fund seeking growth of capital.
The Fund invests its assets in Growth Portfolio (the "Portfolio"), a diversified
open-end investment company having the same investment objective as the Fund,
rather than by directly investing in and managing its own portfolio of
securities. The Fund is a series of Eaton Vance Growth Trust (the "Trust").
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK OR OTHER INSURED DEPOSITORY INSTITUTION, AND ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD
OR ANY OTHER GOVERNMENT AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS,
INCLUDING FLUCTUATIONS IN VALUE AND THE POSSIBLE LOSS OF SOME OR ALL OF THE
PRINCIPAL INVESTMENT.
This Prospectus is designed to provide you with information you should know
before investing. Please retain this document for future reference. A Statement
of Additional Information dated January 1, 1998 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>
CONTENTS
Page Page
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Shareholder and Fund Expenses 2 How to Buy Shares 7
The Fund's Financial Highlights 3 How to Redeem Shares 9
The Fund's Investment Objective 4 Reports to Shareholders 11
Investment Policies and Risks 4 The Lifetime Investing Account/Distribution Options 11
Organization of the Fund and the Portfolio 5 The Eaton Vance Exchange Privilege 12
Management of the Fund and the Portfolio 5 Eaton Vance Shareholder Services 13
Distribution and Service Plans 6 Distributions and Taxes 13
Valuing Shares 7 Performance Information 14
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Prospectus dated January 1, 1998
<PAGE>
SHAREHOLDER AND FUND EXPENSES
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
Class A Class B Class C
Shares Shares Shares
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 5.75% None None
Sales Charges Imposed on Reinvested Distributions None None None
Fees to Exchange Shares None None None
Maximum Contingent Deferred Sales Charge None 5.00% 1.00%
</TABLE>
ANNUAL FUND AND ALLOCATED PORTFOLIO OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS)
<TABLE>
<CAPTION>
Class A Class B Class C
Shares Shares Shares
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment Adviser Fee 0.625% 0.625% 0.625%
Rule 12b-1 Distribution and/or Service Fees 0.107 0.945 1.000
Other Expenses 0.278 0.278 0.278
----- ----- -----
Total Operating Expenses 1.010% 1.848% 1.903%
===== ===== =====
</TABLE>
EXAMPLE
An investor would pay the following expenses and, in the case of Class A
shares, maximum initial sales charge or, in the case of Class B and Class C
shares, the applicable contingent deferred sales charge on a $1,000
investment, assuming (a) 5% annual return and (b) redemption at the end of
each period:
<TABLE>
<CAPTION>
Class A Class B Class C
Shares Shares Shares
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 Year $ 67 $ 69 $ 29
3 Years 88 98 60
5 Years 110 120 103
10 Years 174 217 223
An investor would pay the following expenses on the same investment,
assuming (a) 5% annual return and (b) no redemptions:
</TABLE>
<TABLE>
<CAPTION>
Class A Class B Class C
Shares Shares Shares
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 Year $ 67 $ 19 $ 19
3 Years 88 58 60
5 Years 110 100 103
10 Years 174 217 223
</TABLE>
NOTES: The table and Examples summarize the aggregate expenses of the Portfolio
and each Class of shares of the Fund and are designed to help investors
understand the costs and expenses they will bear, directly or indirectly, by
investing in the Fund. Information for Class A shares is for the most recent
fiscal year. Information for Class B and Class C shares is estimated based upon
the most recent fiscal year of its predecessor fund adjusted for the
multiple-class structure.
The Fund offers three classes of shares. Class A shares are sold subject to a
sales charge imposed at the time of purchase. No sales charge is payable at the
time of purchase on investments in Class A shares of $1 million or more.
However, 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. Class B shares are sold subject to a declining CDSC (5% maximum) if
redeemed within six years of purchase and Class C shares are sold subject to a
1% CDSC if redeemed within one year of purchase. The CDSC does not apply in
certain circumstances. See "How to Buy Shares" and "How to Redeem Shares."
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. Federal regulations
require the Example to assume a 5% annual return, but actual return may vary.
Long-term holders of Class B and Class C shares 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. 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," "Distribution
and Service Plans," and "How to Redeem Shares."
The Fund invests exclusively in the Portfolio. Other investors with different
distribution arrangements and fees may invest in the Portfolio 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 Coopers & Lybrand L.L.P.,
independent accountants, as experts in accounting and auditing. The 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. The
financial information for each of the periods presented in the Fund's Financial
Highlights are for the Fund prior to reclassification of its shares as Class A
shares on September 1, 1997. Information for Class B and Class C shares is not
presented because these classes did not exist prior to September 1, 1997. The
Financial Highlights for Class B and Class C shares will differ from the
Financial Highlights for Class A shares due to the different fees imposed on
Class B and Class C shares.
<TABLE>
<CAPTION>
Year Ended August 31,
------------------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992* 1991* 1990* 1989* 1988*
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
beginning of year $ 9.240 $ 8.330 $ 7.960 $ 8.070 $ 8.520 $ 8.450 $ 7.750 $ 8.560 $ 6.730 $ 9.670
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income $ 0.020 $ 0.043 $ 0.024 $ 0.052 $ 0.030 $ 0.046 $ 0.101 $ 0.109 $ 0.150 $ 0.114
Net realized and
unrealized gain
(loss) on
investments 2.845 1.202 1.086 (0.092) 0.660 0.544 1.499 (0.319) 1.980 (1.764)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total income
(loss) from
investment
operations $ 2.865 $ 1.245 $ 1.110 $(0.040) $ 0.690 $ 0.590 $ 1.600 $(0.210) $ 2.130 $(1.650)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
From net investment
income $(0.019) $(0.035) $(0.032) $(0.060) $ -- $(0.040) $(0.080) $(0.110) $(0.080) $(0.060)
In excess of net
investment income(4) (0.018) -- (0.018) -- -- -- -- -- -- --
From net realized
gains on investments (0.890) (0.300) (0.083) (0.010) (1.140) (0.480) (0.820) (0.490) (0.220) (1.230)
In excess of net
realized gains on
investments(4) (0.762) -- (0.607) -- -- -- -- -- -- --
Paid in capital (0.056) -- -- -- -- -- -- -- -- --
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total
distributions $(1.745) $(0.335) $(0.740) $(0.070) $(1.140) $(0.520) $(0.900) $(0.600) $(0.300) $(1.290)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
NET ASSET VALUE,
end of year $10.360 $ 9.240 $ 8.330 $ 7.960 $ 8.070 $ 8.520 $ 8.450 $ 7.750 $ 8.560 $ 6.73
======= ======= ======= ======= ======= ======= ======= ======= ======= ======
TOTAL RETURN(2) 33.01% 15.38% 15.95% (0.75)% 7.63% 7.22% 23.24% (2.65)% 32.90% (18.96)%
RATIOS/SUPPLEMENTAL DATA:
Ratio of net
expenses to
average daily net
assets(1) 1.01% 0.98% 0.98% 0.95% 0.89% 0.87% 0.92% 0.96% 0.98% 1.00%
Ratio of net
investment income
to average daily
net assets 0.19% 0.48% 0.42% 0.61% 0.56% 0.53% 1.35% 1.38% 2.04% 1.66%
PORTFOLIO TURNOVER(3) 28% 62% 84% 89% 84% 68% 73% 66% 54% 55%
NET ASSETS, END
OF YEAR
(000'S OMITTED) $165,676 $138,252 $130,966 $130,269 $143,264 $143,695 $143,090 $80,582 $92,448 $84,667
* Audited by previous auditors.
(1) Includes the Fund's share of the Portfolio's allocated expenses subsequent to August 2, 1994.
(2) Total return is calculated assuming a purchase at the net asset value on the first day and a sale at the net asset value on the
last day of each period reported. Distributions, if any, are assumed to be reinvested at the net asset value on the ex-dividend
date. Total return is computed on a non-annualized basis.
(3) Portfolio Turnover represents the rate of portfolio activity for the period while the Fund was making investments directly in
securities. The portfolio turnover shown for the period since the Fund transferred substantially all of its assets to the
Portfolio is that of the Portfolio.
(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-distribu tions for financial statement purposes, are classified as distributions in excess of net investment income or
accumulated net realized gains.
</TABLE>
<PAGE>
THE FUND'S INVESTMENT OBJECTIVE
THE FUND'S INVESTMENT OBJECTIVE IS TO ACHIEVE CAPITAL GROWTH. The Fund currently
seeks to meet its investment objective by investing its assets in the Growth
Portfolio (the "Portfolio"), a separate registered investment company, which has
the same investment objective as the Fund. While income is a subordinate
consideration to capital growth, the Portfolio will earn dividend or interest
income to the extent that it receives dividends or interest from its
investments.
The Fund's and the Portfolio's investment objective and policies are
nonfundamental and may be changed when authorized by a vote of the Trustees of
the Trust or the Portfolio without obtaining the approval of the Fund's
shareholders or the investors in the Portfolio, as the case may be. The Trustees
of the Trust have no present intention to change the Fund's objective and intend
to submit any proposed material change in the investment objective to
shareholders in advance for their approval.
The Fund cannot assure achievement of its capital growth objective. The Fund is
not intended to be a complete investment program, and prospective investors
should take into account their objectives and other investments when considering
the purchase of Fund shares.
INVESTMENT POLICIES AND RISKS
THE PORTFOLIO INVESTS IN A CAREFULLY SELECTED AND CONTINUOUSLY MANAGED PORTFOLIO
CONSISTING PRIMARILY OF DOMESTIC AND FOREIGN EQUITY SECURITIES. It may invest in
all kinds of companies. The Portfolio invests primarily in common stocks or
securities convertible into common stocks (including convertible debt). It may
also invest in other securities and obligations of all kinds. These include
preferred stocks, rights, warrants, bonds, repurchase agreements and other
evidences of indebtedness. The Portfolio may also invest in money market
instruments.
Investing in foreign securities entails considerations and possible risks not
typically associated with investing in securities issued by the U.S. Government
and domestic corporations. The values of foreign investments are affected by
changes in currency rates or exchange control regulations, application of
foreign tax laws (including withholding tax), changes in governmental
administration or economic or monetary policy (in this country or abroad), or
changed circumstances in dealings between nations. Because investment in foreign
issuers will usually involve currencies of foreign countries, the value of the
assets of the Portfolio as measured in U.S. dollars may be adversely affected by
changes in foreign currency exchange rates. Such rates may fluctuate
significantly over short periods of time causing the Portfolio's net asset value
to fluctuate as well. Costs are incurred in connection with conversions between
various currencies. In addition, foreign brokerage commissions, custody fees and
other costs of investing are generally higher than in the United States, and
foreign securities markets may be less liquid, more volatile and less subject to
governmental supervision than in the United States. Investments in foreign
issuers could be adversely affected by other factors not present in the United
States, including expropriation, confiscatory taxation, lack of uniform
accounting and auditing standards and potential difficulties in enforcing
contractual obligations. Currently, the Portfolio does not intend to invest more
than 25% of its net assets in foreign securities.
The Portfolio may purchase and sell exchange-traded futures contracts on stock
indices and options thereon to hedge against fluctuations in securities prices
or as a substitute for the purchase or sale of securities. Such transactions
involve a risk of loss or depreciation due to: unanticipated adverse changes in
securities prices, interest rates, the other financial instruments' prices or
currency exchange rates; the inability to close out a position; default by the
counterparty; imperfect correlation between a position and the desired hedge;
tax constraints on closing out positions; and portfolio management constraints
on securities subject to such transactions. The loss on such transactions (other
than purchased options) may substantially exceed the Portfolio's initial
investment in these instruments. In addition, the Portfolio may lose the entire
premium paid for purchased options that expire before they can be profitably
exercised by the Portfolio. The Portfolio incurs transaction costs in opening
and closing positions in future and options thereon. There can be no assurance
that the Investment Adviser's use of such instruments will be advantageous to
the Portfolio.
The Portfolio may sell a security short if it owns at least an equal amount of
the security sold short or another security convertible or exchangeable for an
equal amount of the security sold short without payment of further compensation
(a short sale against-the-box). A short sale against-the-box requires that the
short seller absorb certain costs so long as the position is open. In a short
sale against-the-box, the short seller is exposed to the risk of being forced to
deliver appreciated stock to close the position if the borrowed stock is called
in. The Portfolio expects normally to close its short sales against-the-box by
delivering newly-acquired stock.
An investment in the Fund entails the risk that the principal value of Fund
shares may not increase or may decline. The Portfolio's investments in equity
securities are subject to the risk of adverse developments affecting particular
companies or industries and the stock market generally. The Portfolio may
temporarily borrow up to 5% of the value of its total assets to satisfy
redemption requests or settle securities transactions.
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 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). The Trustees of the Trust have divided the shares of
the Fund into multiple classes, including Class A, Class B and Class C shares.
Each class represents an interest in the Fund, but is subject to different
expenses, rights and privileges. See "Distribution and Service Plans" and "How
to Buy Shares." The Trustees have the authority under the Declaration of Trust
to create additional classes of shares with differing rights and privileges. As
a result of a reorganization with separate series of the Trust, the Fund
commenced offering Class A, B and C shares on September 1, 1997.
When issued and outstanding, the shares are fully paid and nonassessable by the
Trust and redeemable as described under "How to Redeem 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 of the Fund will be voted together except that only
shareholders of a particular class may vote on matters affecting only that
class. Shares have no preemptive or conversion rights and are freely
transferable. In the event of the liquidation of the Fund, shareholders of each
class are entitled to share pro rata in the net assets attributable to that
class available for distribution to shareholders.
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
may offer opportunities for growth in the assets of the Portfolio, may afford
the potential for economies of scale for the Fund and may over time result in
lower expenses for the Fund.
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. 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. 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
THE PORTFOLIO ENGAGES BOSTON MANAGEMENT AND RESEARCH ("BMR"), A WHOLLY-OWNED
SUBSIDIARY OF EATON VANCE MANAGEMENT ("EATON VANCE"), AS ITS INVESTMENT ADVISER.
EATON VANCE, ITS AFFILIATES AND ITS PREDECESSOR COMPANIES HAVE BEEN MANAGING
ASSETS OF INDIVIDUALS AND INSTITUTIONS SINCE 1924 AND MANAGING INVESTMENT
COMPANIES SINCE 1931.
Acting under the general supervision of the Board of Trustees of the Portfolio,
BMR manages the Portfolio's investments and affairs. BMR also furnishes for the
use of the Portfolio office space and all necessary office facilities, equipment
and personnel for servicing the investments of the Portfolio. Under its
investment advisory agreement with the Portfolio, BMR receives a monthly
advisory fee of 5/96 of 1% (equivalent to 0.625% annually) of the average daily
net assets of the Portfolio up to and including $300 million, and 1/24 of 1%
(equivalent to 0.50% annually) of the average daily net assets over $300
million. For the fiscal year ended August 31, 1997, the Portfolio paid BMR
advisory fees equivalent to 0.625% of the Portfolio's average daily net assets
for such year.
BMR OR EATON VANCE ACTS AS INVESTMENT ADVISER TO INVESTMENT COMPANIES AND
VARIOUS INDIVIDUAL AND INSTITUTIONAL CLIENTS WITH ASSETS UNDER MANAGEMENT OF
APPROXIMATELY $20 BILLION. Eaton Vance is a wholly-owned subsidiary of Eaton
Vance Corp., a publicly-held holding company which through its subsidiaries and
affiliates engages primarily in investment management, administration and
marketing activities. The Principal Underwriter is a wholly-owned subsidiary of
Eaton Vance.
Thomas E. Faust, Jr. has acted as the portfolio manager of the Portfolio since
April 1, 1996. Mr. Faust is a Vice President of Eaton Vance and of BMR and
manages other Eaton Vance portfolios.
BMR places the portfolio transactions of the Portfolio with many broker-dealer
firms and uses its best efforts to obtain execution of such transactions at
prices which are advantageous to the Portfolio and at reasonably competitive
commission rates. Subject to the foregoing, BMR may consider sales of shares of
the Fund or of other investment companies sponsored by BMR or Eaton Vance as a
factor in the selection of broker-dealer firms to execute portfolio
transactions. The Trust, 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 Trust has retained the services of Eaton Vance to act as Administrator of
the Fund. The Trust has not retained the services of an investment adviser since
the Trust seeks to achieve the investment objective of the Fund by investing the
Fund's assets in the Portfolio. As Administrator, Eaton Vance provides the Fund
with general office facilities and supervises the overall administration of the
Fund. For these services Eaton Vance currently receives no compensation. The
Trustees of the Trust may determine, in the future, to compensate Eaton Vance
for such services.
The Portfolio and the Fund, as the case may be, will each be responsible for all
respective costs and expenses not expressly stated to be payable by BMR under
the investment advisory agreement, by Eaton Vance under the administrative
services agreement, or by the Principal Underwriter under the distribution
agreement.
DISTRIBUTION AND SERVICE PLANS
The Trust has adopted a Service Plan (the "Class A Plan") for the Fund's Class A
shares that is designed to meet the service fee requirements of the sales charge
rule of the National Association of Securities Dealers, Inc. THE CLASS A PLAN
PROVIDES THAT CLASS A 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 ITS AVERAGE DAILY NET ASSETS FOR ANY FISCAL YEAR. The Trustees of the
Trust have initially implemented the Class A Plan by authorizing Class A to make
quarterly service fee payments to the Principal Underwriter and Authorized Firms
in amounts not expected to exceed .25% of its average daily net assets for any
fiscal year which is based on the value of Class A shares sold by such persons
and remaining outstanding for at least twelve months. During the fiscal year
ended August 31, 1997, Class A shares paid or accrued service fees equivalent to
0.107% of average daily net assets.
The Trust has also adopted Distribution Plans ("Class B Plan" and "Class C
Plan") pursuant to Rule 12b-1 under the Investment Company Act of 1940 ("1940
Act") for the Fund's Class B and Class C shares. Each Plan is designed to permit
an investor to purchase shares through an Authorized Firm without incurring an
initial sales charge and at the same time permit the Principal Underwriter to
compensate Authorized Firms in connection therewith. UNDER SUCH PLANS, CLASS B
AND CLASS C EACH PAYS THE PRINCIPAL UNDERWRITER A FEE, ACCRUED DAILY AND PAID
MONTHLY, AT AN ANNUAL RATE NOT EXCEEDING .75% OF ITS AVERAGE DAILY NET ASSETS TO
FINANCE THE DISTRIBUTION OF ITS SHARES. Such fees compensate the Principal
Underwriter for sales commissions paid by it to Authorized Firms on the sale of
Class B and Class C shares and for interest expenses. Under the Class B Plan,
the Principal Underwriter uses its own funds to pay sales commissions (except on
exchange transactions and reinvestments) to Authorized Firms at the time of sale
equal to 4% of the purchase price of the Class B shares sold by such Firms.
Under the Class C Plan, the Principal Underwriter currently expects to pay to an
Authorized Firm (a) sales commissions (except on exchange transactions and
reinvestments) at the time of sale equal to .75% of the purchase price of the
shares sold by such Firm, and (b) monthly sales commissions approximately
equivalent to 1/12 of .75% of the value of shares sold by such Firm and
remaining outstanding for at least one year. During the first year after a
purchase of Class C shares, the Principal Underwriter will retain the sales
commission as reimbursement for the sales commissions paid to Authorized Firms
at the time of sale. CDSCs paid to the Principal Underwriter will be used to
reduce amounts owed to it. Because payments to the Principal Underwriter under
the two Plans are limited, uncovered distribution charges (sales commissions due
the Principal Underwriter plus interest, less the above fees and CDSCs received
by it) may exist indefinitely.
THE CLASS B AND CLASS C PLANS ALSO AUTHORIZE EACH CLASS TO MAKE PAYMENTS OF
SERVICE FEES TO THE PRINCIPAL UNDERWRITER, AUTHORIZED FIRMS AND OTHER PERSONS IN
AMOUNTS NOT EXCEEDING .25% OF ITS AVERAGE DAILY NET ASSETS FOR PERSONAL
SERVICES, AND/OR THE MAINTENANCE OF SHAREHOLDER ACCOUNTS. Under the Class B
Plan, this fee is paid quarterly in arrears based on the value of Class B shares
sold by such persons and remaining outstanding for at least twelve months. Under
the Class C Plan, the Principal Underwriter currently expects to pay to an
Authorized Firm (a) a service fee (except on exchange transactions and
reinvestments) at the time of sale equal to .25% of the purchase price of the
Class C shares sold by such Firm, and (b) monthly service fees approximately
equivalent to 1/12 of .25% of the value of Class C shares sold by such Firm and
remaining outstanding for at least one year. During the first year after a
purchase of Class C shares, the Principal Underwriter will retain the service
fee as reimbursement for the service fee payment made to Authorized Firms at the
time of sale.
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 Principal Underwriter may at times allow
discounts on the sale of Class A shares 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 Trust may, in its absolute discretion, suspend, discontinue or limit the
offering of one or more of its classes of its shares at any time. In determining
whether any such action should be taken, the Trust's management intends to
consider all relevant factors, including (without limitation) the size of the
Fund or class, the investment climate and market conditions, the volume of sales
and redemptions of shares, and, in the case of Class B and Class C shares, the
amount of uncovered distribution charges of the Principal Underwriter. The Plans
may continue in effect and payments may be made under the Plans following any
such suspension, discontinuance or limitation of the offering of shares;
however, there is no contractual obligation to continue any Plan for any
particular period of time. Suspension of the offering of shares would not, of
course, affect a shareholder's ability to redeem shares.
VALUING SHARES
THE FUND VALUES ITS SHARES ONCE 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). Each Class's net asset value per
share is determined by the Trust's custodian, Investors Bank & Trust Company
("IBT"), (as agent for the Trust) in the manner authorized by the Trustees of
the Trust. The net asset value of each Class is computed by dividing the value
of that Class's pro rata share of the Fund's total assets, less its liabilities,
by the number of shares of that class outstanding. Because the Fund invests its
assets in an interest in the Portfolio, each Class's net asset value will
reflect the value of the Fund's 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 by a specific time each day to receive that day's public offering
price per share. It is the Authorized Firms' responsibility to transmit orders
promptly to the Principal Underwriter. The Fund has approved the acceptance of
purchase and redemption orders as of the time of their receipt by certain
Authorized Firms (or their designated intermediaries).
The Portfolio's net asset value is also determined as of the close of regular
trading on the Exchange by IBT (as custodian and agent for the Portfolio) based
on market or fair value in the manner authorized by the Trustees of the
Portfolio. Net asset value is computed by subtracting the liabilities of the
Portfolio from the value of its total assets.
SHAREHOLDERS MAY DETERMINE THE VALUE OF THEIR INVESTMENT BY MULTIPLYING THE
NUMBER OF SHARES OWNED BY THE CURRENT NET ASSET VALUE PER SHARE.
HOW TO BUY SHARES
SHARES OF THE FUND MAY BE PURCHASED FOR CASH OR MAY BE ACQUIRED IN EXCHANGE FOR
ACCEPTABLE SECURITIES. Class A shares are purchased at the effective public
offering price, which price is based on the effective net asset value per share
plus the applicable sales charge. The sales charge is divided between the
Authorized Firm and the Principal Underwriter. Class B and Class C shares are
purchased at the net asset value per share 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 Trust may suspend the offering of shares
at any time and may refuse an order for the purchase of shares.
An initial investment 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 Trust'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 Trust 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 Trust as described under "How to
Redeem Shares."
CLASS A SHARES. The sales charge may vary depending on the size of the purchase
and the number of Class A 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 or Right of Accumulation
are available from Authorized Firms or the Principal Underwriter.
The current sales charges and dealer commissions are:
<TABLE>
<CAPTION>
Dealer
Sales Charge Sales Charge Commission
as Percentage of as Percentage of as Percentage of
Amount of Purchase Offering Price Amount Invested Offering Price
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Less than $50,000 5.75% 6.10% 5.00%
$50,000 but less than $100,000 4.75 4.99 4.00
$100,000 but less than $250,000 3.75 3.90 3.00
$250,000 but less than $500,000 3.00 3.09 2.50
$500,000 but less than $1,000,000 2.00 2.04 1.75
$1,000,000 or more 0.00* 0.00* See Below**
</TABLE>
*No sales charge is payable at the time of purchase on investments of $1 million
or more. A 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.
Class A shares may be sold at net asset value to current and retired Directors
and Trustees of Eaton Vance funds, including the Portfolio; to clients and
current and retired officers and employees of Eaton Vance, its affiliates and
other investment advisers of Eaton Vance sponsored funds; to registered
representatives and employees of Authorized Firms and bank employees who refer
customers to registered representatives of Authorized Firms; to officers and
employees of IBT and the Transfer Agent; and to such persons' spouses and
children under the age of 21 and their beneficial accounts. Class A shares may
also be issued at net asset value (1) in connection with the merger of an
investment company or series thereof 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") and "rabbi trusts."
The Trust's Principal Underwriter may pay commissions to Authorized Firms who
initiate and are responsible for purchases of Class A shares of the Fund by
Eligible Plans of up to 1.00% of the amount invested in such shares.
Until March 31, 1998, 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 Class A 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.
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 in Class A shares, 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 such
shares (computed to the nearest full share at the public offering price
applicable to the initial purchase hereunder) registered in the investor's name.
All income dividends and capital gains distributions on escrowed shares will be
paid to the investor or to the investor's order. When the minimum investment so
specified is completed, the escrowed shares will be delivered to the investor.
If the investor has an accumulation account the shares will remain on deposit
under the investor's account.
If total purchases under this Statement of Intention are less than the amount
specified, the investor will promptly remit to the Principal Underwriter any
difference between the sales charge on the amount specified and on the amount
actually purchased. If the investor does not within 20 days after written
request by the Principal Underwriter or the Authorized Firm pay such difference
in sales charge, the escrow agent will redeem an appropriate number of the
escrowed shares in order to realize such difference. Full shares remaining after
any such redemption together with any excess cash proceeds of the shares so
redeemed will be delivered to the investor or to the investor's order by the
escrow agent.
If total purchases made under this Statement are large enough to qualify for a
lower sales charge than that applicable to the amount specified, all
transactions will be computed at the expiration date of this Statement to give
effect to the lower charge. Any difference in sales charge will be refunded to
the investor in cash, or applied to the purchase of additional shares at the
lower charge if specified by the investor. This refund will be made by the
Authorized Firm and by the Principal Underwriter. If at the time of the
recomputation 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 investor's account.
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. 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 of Class A
shares or net asset value of Class B and Class C shares 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:
<TABLE>
<S> <C>
IN THE CASE OF BOOK ENTRY: IN THE CASE OF PHYSICAL DELIVERY:
Deliver through Depository Trust Co. Investors Bank & Trust Company
Broker #2212 Attention: Eaton Vance Growth Fund (and Class)
Investors Bank & Trust Company Physical Securities Processing Settlement Area
For A/C Eaton Vance Growth Fund (and Class) 200 Clarendon Street
Boston, MA 02116
</TABLE>
Investors who are contemplating an exchange of securities for shares, 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 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.
IF YOU DON'T HAVE AN AUTHORIZED FIRM, EATON VANCE CAN RECOMMEND ONE.
HOW TO REDEEM SHARES
A SHAREHOLDER MAY REDEEM 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 share next computed after a redemption request is received in the
proper form as described below. Within seven days after receipt of a redemption
request in good order by the Transfer Agent, the Trust 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 CDSC (described below) and any federal income
tax required to be withheld.
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 Trust, 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 order is deemed to be
received by the Trust or the Principal Underwriter, as the Trust's agent. 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.
While normally payments will be made 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 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 Trust 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 Trust if the
cause of the low account balance was a reduction in the net asset value of
shares. No CDSC will be imposed with respect to involuntary redemptions.
CONTINGENT DEFERRED SALES CHARGE. Each class of shares is subject to a CDSC on
certain redemptions. The CDSC is calculated based on the lower of the net asset
value at the time of purchase or the time of redemption. Shares acquired through
the reinvestment of distributions are exempt. Redemptions are made first from
shares in the account which are not subject to a CDSC.
In calculating a CDSC upon the redemption of shares acquired in an exchange, the
shares are deemed to have been acquired at the time of the original purchase of
the exchanged shares and, in the case of Class B shares, the CDSC schedule
applicable to the exchanged shares will apply to the acquired shares. No CDSC is
imposed on shares sold to Eaton Vance or its affiliates, or to their respective
employees or clients. Shares acquired as the result of a merger or liquidation
of another Eaton Vance sponsored fund generally will be subject to the same CDSC
rate imposed by the prior fund.
CLASS A SHARES. If Class A shares are purchased at net asset value because the
purchase amount is $1 million or more, they will be subject to a 1% CDSC if
redeemed within 12 months of purchase. If Class A shares are purchased prior to
April 1, 1998 at net asset value because the amount invested represents
redemption proceeds from an unaffiliated mutual fund (as described under "How to
Buy Shares"), they will be subject to a .50% CDSC if redeemed within 12 months
of purchase.
CLASS B SHARES. Class B shares will be subject to the following CDSC schedule:
Year of Redemption After Purchase CDSC
- --------------------------------------------------------------------------------
First or Second 5%
Third 4%
Fourth 3%
Fifth 2%
Sixth 1%
Seventh and following 0%
The Class B CDSC is waived for redemptions (1) pursuant to a Withdrawal Plan
(see "Eaton Vance Shareholder Services"), (2) as part of a required minimum
distribution from a tax-sheltered retirement plan, or (3) following the death of
all beneficial owners of shares, provided the redemption is requested within one
year of death (a death certificate and other applicable documents may be
required).
CLASS C SHARES. Class C Shares will be subject to a 1% CDSC if redeemed within
12 months of purchase. The Class C CDSC is waived for redemptions (1) pursuant
to a Withdrawal Plan (see "Eaton Vance Shareholder Services"), (2) as part of a
distribution from a retirement plan qualified under Section 401, 403(b) or 457
of the Code, or (3) as part of a required minimum distribution from other
tax-sheltered retirement plans.
REPORTS TO SHAREHOLDERS
THE FUND WILL ISSUE TO ITS SHAREHOLDERS SEMI-ANNUAL AND ANNUAL REPORTS
CONTAINING FINANCIAL STATEMENTS. Financial statements included in annual reports
are audited by the independent accountants. Shortly after the end of each
calendar year, shareholders will be furnished 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 SHARES, THE TRANSFER AGENT WILL
SET UP A LIFETIME INVESTING ACCOUNT FOR THE INVESTOR ON THE TRUST'S RECORDS.
This account is a complete record of all transactions which at all times shows
the balance of shares owned. The Trust will not issue share certificates except
upon request.
Each time a transaction takes place in a shareholder's account, the shareholder
will receive a statement showing complete details of the transaction and the
current balance in the account. (Under certain plans, statements may be sent
only quarterly). THE LIFETIME INVESTING ACCOUNT ALSO PERMITS A SHAREHOLDER TO
MAKE ADDITIONAL INVESTMENTS IN SHARES BY SENDING A CHECK FOR $50 OR MORE to the
Transfer Agent.
Any questions concerning a shareholder's account or services available may be
directed by telephone to EATON VANCE SHAREHOLDER SERVICES at 800-225-6265,
extension 2, or in writing to 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 Class 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 Trust'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 shareholder communications are returned by the United States Postal Service
or other delivery service as not deliverable, the distribution option on the
account will be automatically changed to the SHARE OPTION until such time as the
shareholder selects a different option. No interest will accrue on amounts
represented by uncashed distribution or redemption checks.
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 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 Trust and its Transfer Agent. Since the
Trust 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
Trust 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 the same class of
one or more other funds in the Eaton Vance Group of Funds. Class A shares may
also be exchanged for shares of Eaton Vance Cash Management Fund, Eaton Vance
Income Fund of Boston and Eaton Vance Tax Free Reserves. Class B shares may also
be exchanged for shares of Eaton Vance Prime Rate Reserves, which are subject to
an early withdrawal charge, or shares of Eaton Vance Money Market Fund, which
are subject to a CDSC, and shares of a money market fund sponsored by an
Authorized Firm and approved by the Principal Underwriter (an "Authorized Firm
fund"). Class C shares may also be exchanged for shares of Eaton Vance Money
Market Fund and EV Classic Senior Floating-Rate Fund. Any such exchange will be
made on the basis of the net asset value per share of each fund/class at the
time of the exchange (plus, in the case of an exchange made within six months of
the date of purchase of Class A 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. Exchanges are subject to any restrictions or
qualifications set forth in the current prospectus of any such fund.
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 Trust 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 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 Class B shares (except
Prime Rate Reserves and Class B shares of the Limited Maturity Funds), see "How
to Redeem Shares." The CDSC or early withdrawal charge schedule applicable to
Prime Rate Reserves and Class B shares of the Limited Maturity Funds 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.
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 Trust, 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 TRUST 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 applicable Fund or Class as an expense to
all shareholders.
INVEST-BY-MAIL -- FOR PERIODIC SHARE ACCUMULATION: Once the $1,000 minimum
investment has been made, checks of $50 or more payable to the order of the Fund
and specifying the Class being purchased may be mailed directly to the Transfer
Agent, First Data Investor Services Group, P.O. Box 5123, Westborough, MA
01581-5123 at any time -- whether or not dividends are reinvested. The name of
the shareholder, the Fund and Class and the account number should accompany each
investment.
BANK AUTOMATED INVESTING -- FOR REGULAR SHARE ACCUMULATION: Cash investments of
$50 or more may be made automatically each month or quarter from a shareholder's
bank account. The $1,000 minimum initial investment and small account redemption
policy are waived for these accounts.
WITHDRAWAL PLAN: A shareholder may draw on shareholdings systematically with
monthly or quarterly checks. For Class B and Class C shares, any such
withdrawals may not in the aggregate exceed 12% annually of the account balance
at the time the plan is established. Such amount will not be subject to the
Class B or Class C CDSC. See "How to Redeem Shares." A minimum deposit of $5,000
in shares is required. The maintenance of a withdrawal plan concurrently with
purchases of additional Class A shares would be disadvantageous because of the
sales charge included in such purchase.
STATEMENT OF INTENTION: Purchases of $50,000 or more of Class A shares made
over a 13-month period are eligible for reduced sales charges. See "How to Buy
Shares -- Statement of Intention and Escrow Agreement."
RIGHT OF ACCUMULATION: Purchases may qualify for reduced sales charges on Class
A shares when the current market value of holdings (shares at current offering
price), plus new purchases, reaches $50,000 or more. Class A 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.
REINVESTMENT PRIVILEGE: A shareholder who has redeemed shares may reinvest, with
credit for any CDSCs paid on the redeemed shares, any portion or all of the
redemption proceeds (plus that amount necessary to acquire a fractional share to
round off the purchase to the nearest full share) in the same shares (or for
Class A shares in Class A shares of any other Eaton Vance 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 Trust (or by the Trust's Transfer Agent). To the extent
that any shares are sold at a loss and the proceeds are reinvested in shares (or
other shares 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: Class A and Class C shares of the Fund are
available for purchase in connection with certain tax-sheltered retirement
plans. Detailed information concerning these plans, including certain exceptions
to minimum investment requirements, and copies of the plans are available from
the Principal Underwriter. This information should be read carefully and
consultation with an attorney or tax adviser may be advisable. The information
sets forth the service fee charged for retirement plans and describes the
federal income tax consequences of establishing a plan. Participant accounting
services (including trust fund reconciliation services) will be offered only
through third party recordkeepers and not by the Principal Underwriter. Under
all plans, dividends and distributions will be automatically reinvested in
additional shares.
DISTRIBUTIONS AND TAXES
The Fund's present policy is to distribute semi-annually substantially all of
the net investment income allocated to the Fund by the Portfolio, less the
Fund's direct and allocated expenses and class-specific expenses, and to
distribute at least annually any net realized capital gains. A portion of
distributions from net investment income may be eligible for the
dividends-received deduction for corporations. The Fund's distributions from its
net investment income, net short-term capital gains, and certain net foreign
exchange gains will be taxable to shareholders as ordinary income, whether
received in cash or reinvested in additional shares. Distributions that the Fund
designates as from its net long-term capital gains are taxable to shareholders
as long-term capital gains, whether received in cash or reinvested in additional
shares of the Fund and regardless of the length of time shares have been owned
by shareholders. If shares are purchased shortly before the record date of a
distribution, the shareholder will pay the full price for the shares and then
receive some portion of the price back as a taxable distribution. Certain
distributions, if declared in October, November or December and paid the
following January, will be taxed to shareholders as if received on December 31
of the year in which they are declared.
Sales charges paid upon a purchase of Class A shares 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 such 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 Class A 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 or any other shares acquired.
Shareholders will receive annually tax information notices and Forms 1099 to
assist in the preparation of their federal and state tax returns for the prior
calendar year's distributions, proceeds from the redemption or exchange of
shares, and federal income tax withheld (if any) by the Transfer Agent.
The Fund intends to qualify as a regulated investment company under the Code and
to satisfy all requirements necessary to avoid paying federal income taxes on
the part of its investment company taxable income (consisting generally of net
investment income and net short-term capital gain) and net capital gains that 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
substantially all of its ordinary income and capital gain net income in
accordance with the timing requirements imposed by the Code. As a partnership
under the Code, the Portfolio does not pay federal income or excise taxes.
Shareholders should consult with their tax advisers concerning the applicability
of state, local or other taxes to an investment in the Fund.
PERFORMANCE INFORMATION
FROM TIME TO TIME, AVERAGE ANNUAL TOTAL RETURN MAY BE ADVERTISED. Average annual
total return is determined separately for each Class of the Fund by computing
the average annual percentage change in value of $1,000 invested at the maximum
public offering price (including maximum sales charge for Class A shares; net
asset value for Class B and Class C shares) for specified periods, assuming
reinvestment of all distributions. Total return may be quoted for the period
prior to commencement of operations which would reflect the Class's total return
(or that of its predecessor) adjusted to reflect any applicable sales charge.
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 for each Class which do not take
into account any sales charge. Any performance figure which does not take into
account a sales charge would be reduced to the extent such charge is imposed.
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 investment results will fluctuate over time, and any
presentation of the total return for any prior period should not be considered a
representation of what an investment may earn or what the total return may be in
any future period.
The following chart reflects the annual investment returns of Class A of the
Fund for one-year periods ending August 31 and does not take into account any
sales charge which investors may bear. The performance of the predecessor funds
of Class B and Class C was lower.
5 YEAR AVERAGE ANNUAL TOTAL RETURN -- 13.76%
10 YEAR AVERAGE ANNUAL TOTAL RETURN -- 10.19%
1988 ............................... (18.96%)
1989 ............................... 32.90%
1990 ............................... (2.65%)
1991 ............................... 23.24%
1992 ............................... 7.23%
1993 ............................... 7.63%
1994 ............................... (0.51%)
1995 ............................... 15.95%
1996 ............................... 15.38%
1997 ............................... 33.01%
<PAGE>
[LOGO] Investing
EATON VANCE for the
===========
Mutual Funds 21st
Century
- -------------------------------------------------------------------------------
Eaton Vance Growth Fund
PROSPECTUS
JANUARY 1, 1998
- -------------------------------------------------------------------------------
Investment Adviser of Growth Portfolio
Boston Management and Research, 24 Federal Street, Boston, MA 02110
Administrator of Eaton Vance Growth Fund
Eaton Vance Management, 24 Federal Street, Boston, MA 02110
Principal Underwriter
Eaton Vance Distributors, Inc., 24 Federal Street, Boston, MA 02110
(800) 225-6265
Custodian
Investors Bank & Trust Company, 200 Clarendon Street, Boston, MA 02116
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
GFP
<PAGE>
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
STATEMENT OF
ADDITIONAL INFORMATION
January 1, 1998
EATON VANCE WORLDWIDE DEVELOPING RESOURCES FUND
EATON VANCE WORLDWIDE HEALTH SCIENCES FUND
EATON VANCE INFORMATION AGE FUND
24 Federal Street
Boston, Massachusetts 02110
(800) 225-6265
This Statement of Additional Information provides general information about
the Funds listed above and their corresponding Portfolios. This Statement of
Additional Information is sometimes referred to herein as the "SAI."
TABLE OF CONTENTS
Page
Additional Information about Investment Policies ............. 2
Investment Restrictions ...................................... 7
Trustees and Officers ........................................ 10
Management of the Funds and the Portfolios ................... 13
Custodian .................................................... 17
Services for Accumulation -- Class A Shares .................. 18
Service for Withdrawal ....................................... 18
Determination of Net Asset Value ............................. 18
Investment Performance ....................................... 19
Taxes ........................................................ 20
Principal Underwriter ........................................ 23
Service Plan -- Class A Shares ............................... 24
Distribution Plan -- Class A Shares .......................... 24
Distribution Plans -- Class B and Class C Shares ............. 25
Portfolio Security Transactions .............................. 27
Other Information ............................................ 28
Independent Certified Public Accountants ..................... 30
Financial Statements ......................................... 30
Appendix A: Class A Shares ................................... a-1
Appendix B: Class B Shares ................................... b-1
Appendix C: Class C Shares ................................... c-1
Although each Fund offers only its shares of beneficial interest, it is
possible that a Fund (or Class) might become liable for a misstatement or
omission in this Statement of Additional Information regarding another Fund (or
Class) because the Funds use this combined Statement of Additional Information.
The Trustees of the Trust have considered this factor in approving the use of a
combined Statement of Additional Information.
THIS COMBINED STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR
ACCOMPANIED BY THE FUNDS' PROSPECTUS DATED JANUARY 1, 1998, AS SUPPLEMENTED FROM
TIME TO TIME, WHICH IS INCORPORATED HEREIN BY REFERENCE. THIS COMBINED 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>
This SAI provides information about the Funds and the Portfolios.
Capitalized terms used in this SAI and not otherwise defined have the meanings
given them in the Prospectus. The Funds are subject to the same investment
policies as those of the Portfolios. Each Fund currently seeks to achieve its
objective by investing in its corresponding Portfolio.
ADDITIONAL INFORMATION ABOUT INVESTMENT POLICIES
Foreign Investments. Investing in securities issued by companies whose principal
business activities are outside the United States may involve significant risks
not present in domestic investments. For example, there is generally less
publicly available information about foreign companies, particularly those not
subject to the disclosure and reporting requirements of the U.S. securities
laws. Foreign issuers are generally not bound by uniform accounting, auditing,
and financial reporting requirements and standards of practice comparable to
those applicable to domestic issuers. Investments in foreign securities also
involve the risk of possible adverse changes in investment or exchange control
regulations, expropriation or confiscatory taxation, limitation on the removal
of funds or other assets of a 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. 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. 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 a Portfolio may
temporarily be held in bank deposits in foreign currencies during the completion
of investment programs, the value of the assets of a 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. A 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 a 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, a 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. Each
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. Each 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 a 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 a Portfolio's
foreign assets. The Developing Resources 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 Developing
Resources Portfolio or other assets denominated in that currency. In addition,
the Developing Resources Portfolio generally will not enter into a forward
contract with a term of greater than one year.
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 a 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 a Portfolio from responding to such events in a timely
manner.
Settlements of over-the-counter forward contracts or of the exercise of
foreign currency options generally must occur within the country issuing the
underlying currency, which in turn requires parties to such contracts to accept
or make delivery of such currencies in conformity with any United States or
foreign restrictions and regulations regarding the maintenance of foreign
banking relationships, fees, taxes or other charges.
Unlike currency futures contracts and exchange-traded options, options on
foreign currencies and forward contracts are not traded on contract markets
regulated by the CFTC or (with the exception of certain foreign currency
options) the Securities and Exchange Commission (the "Commission"). To the
contrary, such instruments are traded through financial institutions acting as
market-makers. (Foreign currency options are also traded on the Philadelphia
Stock Exchange subject to Commission regulation). In an over-the-counter trading
environment, many of the protections associated with transactions on exchanges
will not be available. For example, there are no daily price fluctuation limits,
and adverse market movements could therefore continue to an unlimited extent
over a period of time. Although the purchaser of an option cannot lose more than
the amount of the premium plus related transaction costs, this entire amount
could be lost. Moreover, an option writer could lose amounts substantially in
excess of its initial investment due to the margin and collateral requirements
associated with such option positions. Similarly, there is no limit on the
amount of potential losses on forward contracts to which a 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 a
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 a 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 a 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. A 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 a Portfolio's ability to enter into desired hedging transactions. A
Portfolio will enter into over-the-counter transactions only with parties whose
creditworthiness has been reviewed and found satisfactory by an Adviser.
The purchase and sale of exchange-traded foreign currency options, however,
are subject to the risks of the availability of a liquid secondary market
described above, as well as the risks regarding adverse market movements,
margining of options written, the nature of the foreign currency market,
possible intervention by governmental authorities and the effect of other
political and economic events. In addition, exchange-traded options on foreign
currencies involve certain risks not presented by the over-the-counter market.
For example, exercise and settlement of such options must be made exclusively
through the Options Clearing Corporation ("OCC"), which has established banking
relationships in applicable foreign countries for this purpose. As a result, the
OCC may, if it determines that foreign governmental restrictions or taxes would
prevent the orderly settlement of foreign currency option exercises, or would
result in undue burdens on the OCC or its clearing member, impose special
procedures for exercise and settlement, such as technical changes in the
mechanics of delivery of currency, the fixing of dollar settlement prices or
prohibitions on exercise.
Risks Associated With Derivative Instruments. Entering into a derivative
instrument involves a risk that the applicable market will move against a
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 a Portfolio. Derivative
instruments may sometimes increase or leverage a Portfolio's exposure to a
particular market risk. Leverage enhances the Portfolio's exposure to the price
volatility of derivative instruments it holds. A 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 a 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 a Portfolio's 15% limit on illiquid
investments. A 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. A 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 its corresponding
Fund as a regulated investment company for federal income tax purposes. See
"Taxes."
The Developing Resources 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
Developing Resources Portfolio will only write a put option on a security which
it intends to ultimately acquire for its portfolio.
Each 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 a Portfolio's 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, a
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 a Portfolio's 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.
A Portfolio may purchase call and put options, subject to the Asset Coverage
Requirements set forth above. A Portfolio may only write a put option on a
security that it intends to acquire for its investment portfolio.
To the extent that a 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.
Repurchase Agreements. Under a repurchase agreement a 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 a Portfolio commit more than 15% of
its net assets to repurchase agreements which mature in more than seven days and
other illiquid securities. A 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. Each Portfolio may enter into reverse repurchase
agreements. Under a reverse repurchase agreement, a 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 a Portfolio enters into a reverse repurchase agreement, any
fluctuations in the market value of either the securities transferred to another
party or the securities in which the proceeds may be invested would affect the
market value of the Portfolio's assets. As a result, such transactions may
increase fluctuations in the market value of the Portfolio's assets. While there
is a risk that large fluctuations in the market value of the Portfolio's assets
could affect the Portfolio's net asset value, this risk is not significantly
increased by entering into reverse repurchase agreements, in the opinion of an
Adviser. Because reverse repurchase agreements may be considered to be the
practical equivalent of borrowing funds, they constitute a form of leverage. If
a Portfolio reinvests the proceeds of a reverse repurchase agreement at a rate
lower than the cost of the agreement, entering into the agreement will lower the
Portfolio's yield.
While an Adviser does not consider reverse repurchase agreements to involve
a traditional borrowing of money, reverse repurchase agreements will be included
within the aggregate limitation on "borrowings" contained in the Portfolio's
investment restriction (1) set forth below.
Lending Portfolio Securities. If the relevant Adviser decides to make securities
loans, each of the Information Age and Health Sciences Portfolio may seek to
increase its income by lending portfolio securities to broker-dealers or other
institutional borrowers. The financial condition of the borrower will be
monitored by an Adviser on an ongoing basis. The Portfolio would continue to
receive the equivalent of the interest or dividends paid by the issuer on the
securities loaned and would also receive a fee, or all or a portion of the
interest on investment of the collateral. The Portfolio would have the right to
call a loan and obtain the securities loaned at any time on up to five business
days' notice. The Portfolio would not have the right to vote any securities
having voting rights during the existence of a loan, but could call the loan in
anticipation of an important vote to be taken among holder of the securities or
the giving or holding of their consent on a material matter affecting the
investment. Securities lending involves administrative expenses, including
finders' fees. If an Adviser decides to make securities loans, it is intended
that the value of the securities loaned would not exceed 1/3 of a Portfolio's
total assets.
Asset Coverage Requirements. Transactions involving reverse repurchase
agreements, currency swaps, forward contracts, futures contracts and options
(other than options that the Portfolio has purchased) expose a Portfolio to an
obligation to another party. A Portfolio will not enter into any such
transactions unless it owns either (1) an offsetting ("covered") position in
securities, currencies or other options, futures contracts or forward contracts,
or (2) cash or liquid securities with a value sufficient at all times to cover
its potential obligations not covered as provided in (1) above. (Only the net
obligations of a swap will be covered.) Each 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 a 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.
Asset-Related Securities. The Developing Resources Portfolio's investment
adviser, BMR, 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, BMR 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 Developing Resources 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 Developing Resources Portfolio may
invest may bear interest or pay preferred dividends at below market (or even
relatively nominal) rates. The Developing Resources 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 Developing Resources 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
Developing Resources Portfolio normally will not take possession of the bullion
or metals, but instead will obtain receipts or certificates representing
ownership. In the event the Developing Resources 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 Developing Resources 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.
Leverage Through Borrowing. The Developing Resources 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 Developing Resources Portfolio to maintain
continuous asset coverage of not less than 300% with respect to its borrowings.
This allows the Developing Resources 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 Developing Resources 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 Developing
Resources 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.
Convertible Securities. The Developing Resources 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).
Portfolio Turnover. A 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% turnover rate could occur if all the securities held by a
Portfolio are sold and either repurchased or replaced within one year. A high
turnover rate (100% or more) necessarily involves greater expenses to a
Portfolio. A 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. For the portfolio
turnover rate of each Portfolio in prior fiscal years, see "Supplementary Data"
in the "Financial Statements."
INVESTMENT RESTRICTIONS
The following investment restrictions of the Funds are designated as
fundamental policies and as such cannot be changed without the approval of the
holders of a majority of the Funds' 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.
With respect to the the Information Age Fund, the Developing Resources Fund
and the Health Sciences Fund, a Fund may not:
(1) Borrow money or issue senior securities except as permitted by the
United States Investment Company Act of 1940, as amended (the "1940 Act");
(2) Purchase any 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); or
(3) 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;
With respect to the Information Age Fund and the Health Sciences Fund, a
Fund may not:
(4) With respect to 75% of its total assets, invest more than 5% of its
total assets (taken at current value) in the securities of any one issuer, or
invest in more than 10% of the outstanding voting securities of any one issuer,
except obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities and except securities of other investment companies.
(5) Underwrite securities of other issuers; or
(6) Invest in real estate including interests in real estate limited
partnerships (although it may purchase and sell securities which are secured by
real estate and securities of companies which invest or deal in real estate) or
in commodities or commodity contracts for the purchase or sale of physical
commodities.
With respect to the Information Age Fund, the Fund may not:
(7) Concentrate its investments in any particular industry, but, if deemed
appropriate for the Fund's objective, up to 25% of the value of its assets may
be invested in securities of companies in any one industry (although more than
25% may be invested in securities issued or guaranteed by the U.S. Government or
its agencies or instrumentalities).
With respect to the Health Sciences Fund, the Fund may not:
(8) 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 25% or
more of the Fund's total assets would be invested in the securities of such
industry.
With respect to the Developing Resources Fund, the Fund may not:
(9) 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;
(10) 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.
In addition, the Developing Resources Fund will:
(11) 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
(12) 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 Developing
Resources 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.
Notwithstanding the investment policies and restrictions of the Information
Age Fund and the Health Sciences Fund, each Fund may invest its assets in an
open-end management company with substantially the same investment objective,
policies and restrictions as the Fund. Notwithstanding the investment policies
and restrictions of the Information Age Portfolio and the Health Sciences
Portfolio, each Portfolio may invest part of its assets in another investment
company consistent with the 1940 Act.
Each Portfolio has adopted substantially the same fundamental investment
restrictions as the foregoing investment restrictions adopted by each Fund; such
restrictions cannot be changed without the approval of a "majority of the
outstanding voting securities" of a Portfolio.
For as long as a feeder fund of the Portfolio has registered shares in Hong
Kong, the Portfolio may not (i) invest more than 10% of its net assets in the
securities of any one issuer or, purchase more than 10% of any class of security
of any one issuer, provided, however, up to 30% of the Portfolio's net asset
value may be invested in Government and public securities of the same issue; and
the Portfolio may invest all of its assets in Government and other public
securities in at least six different issues, (ii) invest more than 15% of net
assets in securities which are not listed or quoted on any stock exchange,
over-the-counter market or other organized securities market that is open to the
international public and on which such securities are regularly traded (a
"Market"), (iii) invest more than 15% of net assets in warrants and options for
non-hedging purposes, (iv) write call options on Portfolio investments exceeding
25% of its total net asset value in terms of exercise price, (v) enter into
futures contracts on an unhedged basis where the net total aggregate value of
contract prices, whether payable by or to the Portfolio under all outstanding
futures contracts, together with the aggregate value of holdings under (vi)
below exceeds 20% of the net total asset value of the Portfolio, (vi) invest in
physical commodities (including gold, silver, platinum or other bullion) and
commodity based investments (other than shares in companies engaged in
producing, processing or trading in commodities) which value together with the
net aggregate value of the holdings described in (v) above, exceeds 20% of the
Portfolio's net asset value, (vii) purchase shares of other investment companies
exceeding 10% of net assets. In addition, the investment objective of any scheme
in which any Portfolio invests must not be to invest in investments prohibited
by this undertaking and where the scheme's investment objective is to invest
primarily in investments which are restricted by this undertaking, such holdings
must not be in contravention of the relevant limitation, (viii) borrow more than
25% of its net assets (provided that for the purposes of this paragraph, back to
back loans are not to be categorized as borrowings),(ix) write uncovered
options, (x) invest in real estate (including options, rights or interests
therein but excluding shares in real estate companies), (xi) assume, guarantee,
endorse or otherwise become directly or contingently liable for, or in
connection with, any obligation or indebtedness of any person in respect of
borrowed money without the prior written consent of the custodian of the
Portfolio, (xii) engage in short sales involving a liability to deliver
securities exceeding 10% of its net assets provided that any security which a
Portfolio does sell short must be actively traded on a market, (xiii) subject to
paragraph (v) above, purchase an investment with unlimited liability or (xiv)
purchase any nil or partly- paid securities unless any call thereon could be met
in full out of cash or near cash held by it in the amount of which has not
already been taken into account for the purposes of (ix) above.
The following non-fundamental investment policies of the Funds are
substantially similar to such policies of their respective Portfolios and may be
changed by the respective Trustees of the Portfolios without Fund or Portfolio
investor approval.
With respect to each of the Information Age Fund and the Health Sciences Fund, a
Fund may 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 and commercial paper issued
pursuant to Section 4(2) of said Act that the Trustees of the Trust, or their
delegate, determine to be liquid; (b) purchase any securities if at the time of
such purchase, permitted borrowings under investment restriction (1) above
exceed 5% of the value of the Fund's total assets, as the case may be
(Information Age Fund only); (c) purchase an option on a security if, after such
transaction, more than 5% of its net assets, measured by the aggregate of all
premiums paid for all such options held by the Portfolio, would be so invested
(Health Sciences Fund only); or (d) 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 of the Portfolio or is
a member, officer, director or trustee of any investment adviser of the Fund or
the Portfolio if after the purchase of the security of such issuer by the Fund
or the Portfolio one or more of such persons owns beneficially more than 1/2 of
1% of the shares or securities or both (all taken at market value) of such
issuer and such persons owning more than 1/2 of 1% of such shares or securities
together own beneficially more than 5% of such shares or securities or both (all
taken at market value). Neither the Portfolio nor the Fund intends to make short
sales of securities during the coming year.
With respect to the Developing Resources Fund, the Fund may 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 and commercial paper issued pursuant to Section 4(2) of said Act
that the Trustees of the Trust, 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 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; 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 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 net assets; this policy does not apply to or restrict warrants acquired
by the Fund in units or attached to securities, inasmuch as such warrants are
deemed to be without value; (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 Developing
Resources Fund and Portfolio will maintain at least 65% of its total assets in
natural resource related investments or in asset-related securities, the
Information Age Fund and Portfolio will maintain at least 65% of its total
assets in securities of information age companies, and the Health Sciences Fund
and Portfolio will maintain at least 65% of its total assets in securities of
health science companies and not investing more than 15% of net assets in
illiquid 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 Portfolios 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 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. The business address of Lloyd George is 3808
One Exchange Square, Central, Hong Kong. Those Trustees who are "interested
persons" of the Trust or the Portfolios, as defined in the 1940 Act, by virtue
of their affiliation with an Adviser, Eaton Vance, EVC or EV, are indicated by
an asterisk(*).
TRUSTEES OF THE TRUST AND THE PORTFOLIOS
JAMES B. HAWKES (56), 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.
EDWARD K.Y. CHEN (52), Trustee of Information Age Portfolio
President of Lingnan College in Hong Kong. Professor and Director of Centre of
Asian Studies at the University of Hong Kong from 1979-1995. Director of First
Pacific Company, Asia Satellite Telecommunications Holdings Ltd., and a Board
Member of the Mass Transit Railway Corporation. Member of the Executive
Council of the Hong Kong Government from 1992-1997 and Chairman of the
Consumer Council from 1991-1997.
Address: President's Office, Lingnan College, Tuen Mun, Hong Kong
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
HON. ROBERT LLOYD GEORGE (45), Trustee and Vice President of Information Age
Portfolio*
Chairman and Chief Executive Officer of LGM. Chairman and Chief Executive
Officer of the Advisers.
Address: 3808 One Exchange Square, Central, Hong Kong
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 (62), 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 (71), 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 PORTFOLIOS
WILLIAM D. BURT (59), Vice President of the Trust and Developing Resources
Portfolio
Vice President of BMR, Eaton Vance and EV since November 1994; formerly Vice
President of The Boston Company (1990-1994).
WILLIAM CHISHOLM (37), Vice President of the Portfolios
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 (64), Vice President of the Trust and Developing Resources
Portfolio 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.
SAMUEL D. ISALY (52), Vice President of Health Sciences Portfolio
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 of Health Sciences Portfolio
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 1983 through 1986.
Address: Mehta and Isaly Asset Management, Inc., 41 Madison Avenue, 40th
Floor, New York, NY 10010-2202
MICHEL NORMANDEAU (46), Vice President of the Portfolios
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 (35), Vice President of the Portfolios
Managing Director of IBT Trust and Custodian Services (Ireland) Limited since
January, 1995. Vice President, Atlantic Corporate Management Limited,
Warwick, Bermuda (1991-1994). Officer, The Bank of Bermuda Limited,
Hamilton, Bermuda (1987-1991).
Address: Earlsfort Terrace, Dublin 2, Ireland.
DUNCAN W. RICHARDSON (40), Vice President of Information Age Portfolio
Vice President of Eaton Vance, BMR and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
BARCLAY TITTMANN (65), Vice President of the Trust and Developing Resources
Portfolio Vice President of BMR, Eaton Vance and EV since October 1993; formerly
Vice
President of Invesco Management and Research (1970-1993).
JAMES L. O'CONNOR (52), Treasurer
Vice President of BMR, Eaton Vance and EV. Officer of various other investment
companies managed by Eaton Vance or BMR.
ALAN R. DYNNER (57), Secretary
Vice President and Chief Legal Officer of BMR, Eaton Vance, EVC and EV since
November 1, 1996. Previously, he was a Partner of the law firm of Kirkpatrick
& Lockhart LLP, New York and Washington, D.C., and was Executive Vice
President of Neuberger & Berman Management, Inc., a mutual fund management
company. Officer of various investment companies managed by Eaton Vance or
BMR. Mr. Dynner was elected Secretary of the Trust and the Portfolios on June
23, 1997.
JANET E. SANDERS (62), 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 (35), 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 (40), 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 Portfolios. 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 Funds and the Portfolios, 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 Funds, the Portfolios or investors therein.
The Nominating Committee of the Board of Trustees of the Trust and the
Portfolios 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 Portfolios. 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 Portfolios.
Trustees of the Information Age and Developing Resources Portfolios that are
not affiliated with an Adviser may elect to defer receipt of all or a percentage
of their annual fees in accordance with the terms of a Trustees Deferred
Compensation Plan (the "Trustees" Plan"). Under the Trustees' Plan, an eligible
Trustee may elect to have his deferred fees invested by a 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 Portfolios' assets,
liabilities, and net income per share, and will not obligate a Portfolio to
retain the services of any Trustee or obligate a Portfolio to pay any particular
level of compensation to the Trustee. Neither the Portfolios nor the Trust has a
retirement plan for its Trustees.
The fees and expenses of the noninterested Trustees of the Trust and the
Portfolios are paid by the Funds (and the other series of the Trust) and the
Portfolios, respectively. (The Trustees of the Trust and the Portfolios who are
members of an Adviser's organization receive no compensation from the Trust or
the Portfolios). Messrs. Chen, Lloyd George, 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. During the fiscal
year ended August 31, 1997, the noninterested Trustees of the Trust and the
Portfolios received the following compensation in their capacities as Trustees
from the Trust, the Portfolios and the funds in the Eaton Vance fund complex(1):
<TABLE>
<CAPTION>
EDWARD DONALD R. SAMUEL L. NORTON H. JOHN L. JACK L.
SOURCE OF COMPENSATION K.Y. CHEN DWIGHT(3) HAYES, III(4) REAMER THORNDIKE(5) TREYNOR
<S> <C> <C> <C> <C> <C> <C>
Trust(2) $ 0 $ 2,600 $ 2,378 $ 2,355 $ 2,439 $ 2,625
Information Age Portfolio $ 5,000 $ 346 $ 316 $ 313 $ 324 $ 349
Developing Resources Portfolio $ 0 $ 113 $ 104 $ 102 $ 106 $ 114
Health Sciences Portfolio $ 0 $ 882 $ 1,127 $ 1,006 $ 1,087 $ 1,075
Trust and Fund Complex $ 23,300 $145,000(6) $152,500(7) $145,000 $147,500(8) $150,000
- ----------
(1) As of January 1, 1998, the Eaton Vance fund complex consists of 159 registered investment companies or series thereof.
(2) The Trust consisted of 14 Funds as of August 31, 1997. (3) Mr. Dwight received deferred compensation from each Portfolio
as follows: Information Age - $148; Developing Resources - $50.
(4) Mr. Hayes received deferred compensation from each Portfolio as follows:
Information Age - $80; Developing Resources - $33.
(5) Mr. Thorndike received deferred compensation from each Portfolio as follows: Information Age - $240;
Developing Resources - $97.
(6) Includes $45,000 of deferred compensation.
(7) Includes $28,750 of deferred compensation.
(8) Includes $82,384 of deferred compensation.
</TABLE>
MANAGEMENT OF THE FUNDS AND THE PORTFOLIOS
Eaton Vance acts as the sponsor and manager of the Information Age and
Health Sciences Funds and the administrator of the Information Age and Health
Sciences Portfolios. The Information Age Portfolio has engaged BMR and Lloyd
George as its investment advisers, the Health Sciences Portfolio has engaged M&I
as its investment adviser and the Developing Resources Portfolio has engaged BMR
as its investment adviser.
THE ADVISERS
As investment advisers to the Portfolios each Adviser manages a
Portfolio's investments, subject to the supervision of the Board of Trustees
of each Portfolio. The Advisers are also responsible for effecting all
security transactions on behalf of the Portfolios, including the allocation of
principal transactions and portfolio brokerage and the negotiation of
commissions. See "Portfolio Security Transactions."
Under the investment advisory agreement with the Information Age Portfolio,
BMR and Lloyd George are entitled to receive a monthly advisory fee computed by
applying the annual asset rate applicable to that portion of the average daily
net assets of the Portfolio throughout the month in each Category as indicated
below:
ANNUAL
CATEGORY AVERAGE DAILY NET ASSETS ASSET RATE
1 less than $500 million .......................... 0.75%
2 $500 million but less than $1 billion ........... 0.70
3 $1 billion but less than $1.5 billion ........... 0.65
4 $1.5 billion but less than $2 billion ........... 0.60
5 $2 billion but less than $3 billion ............. 0.55
6 $3 billion and over ............................. 0.50
As of August 31, 1997, the Information Age Portfolio had net assets of
$51,373,944. For the fiscal year ended August 31, 1997, BMR and Lloyd George
earned advisory fees of $362,172 (equivalent to 0.75% of the Portfolio's average
daily net assets). Such advisory fee was divided equally between Lloyd George
and BMR.
For a description of the compensation that Health Sciences Portfolio pays
M&I, see the Prospectus. As of August 31, 1997, the Health Sciences Portfolio
had net assets of $152,716,988. For the fiscal year ended August 31, 1997, M&I
earned advisory fees of $800,167 (equivalent to 0.86% of the Portfolio's average
daily net assets).
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
Health Sciences 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.
Under the investment advisory agreement with the Developing Resources
Portfolio, BMR receives a monthly fee based on average daily net assets as
follows:
AVERAGE DAILY NET ANNUALIZED FEE RATE MONTHLY FEE RATE
ASSETS FOR THE MONTH (FOR EACH LEVEL) (FOR EACH LEVEL)
Up to $500 million .................... 0.7500% 1/16 of 1%
$500 million but less than $1 billion.. 0.6875% 11/192 of 1%
$1 billion but less than $1.5 billion.. 0.6250% 5/96 of 1%
$1.5 billion but less than $2 billion.. 0.5625% 3/64 of 1%
$2 billion but less than $3 billion ... 0.5000% 1/24 of 1%
$3 billion and over ................... 0.4375% 7/192 of 1%
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 a family of 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. 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
$21 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 Developing Resources
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.
Each Investment Advisory Agreement 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 a 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 a Portfolio or by vote of a majority of the
outstanding voting securities of a Portfolio. Each 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 a Portfolio, and each Agreement will terminate automatically in
the event of its assignment. Each Agreement provides that an Adviser may render
services to others. Each Agreement also provides that an Adviser 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
Portfolios. The sub-administrator maintains the Portfolios' principal office and
certain records and provides administrative assistance in connection with
meetings of the Portfolios' Trustees and interestholders.
MANAGER, SPONSOR AND ADMINISTRATOR
See "Management of the Funds and the Portfolios" in the Prospectus for a
description of the services Eaton Vance performs as the manager and sponsor of
the Information Age and Health Sciences Funds and the administrator of the
Information Age and Health Sciences Portfolios. Under Eaton Vance's management
contract with the Information Age and Health Sciences Funds and administration
agreement with the Information Age and Health Sciences Portfolios, Eaton Vance
receives a monthly management fee from the Funds and a monthly administration
fee from the Portfolios. 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 fiscal year ended August 31, 1997, Eaton Vance earned administration
fees of $231,722 and $120,758, respectively (each equivalent to 0.25% of the
Health Sciences and Information Age Portfolios' average daily net assets for
such period).
As of August 31, 1997, the Information Age Fund had net assets of
$29,036,818. For the fiscal year ended August 31, 1997 and for the period from
the start of business, September 18, 1995, to August 31, 1996, Eaton Vance
earned management fees of $64,015 and $34,782, respectively (equivalent to 0.25%
(annualized) of the Fund's average daily net assets for such periods).
As of August 31, 1997, the Health Sciences Fund had net assets of
$88,349,219. For the fiscal year ended August 31, 1997, Eaton Vance earned
management fees of $169,792 (equivalent to 0.25% of the Fund's average daily net
assets for such year), of which $138,464 was waived by Eaton Vance.
Eaton Vance's management contract with the Information Age and Health
Sciences Funds, and its administration agreement with the Information Age and
Health Sciences Portfolios will continue in effect from year to year, so long as
such continuance is approved annually by the vote of a majority of the Trustees
of the Trust or the Portfolios, as the case may be. Each agreement may be
terminated at any time without penalty on sixty days' written notice by the
Board of Trustees of either party thereto, or by a vote of a majority of the
outstanding voting securities of the Funds or the Portfolios, 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 Information Age and Health Sciences Funds or the
Information Age and Health Sciences Portfolios under such contract or agreement,
Eaton Vance will not be liable to the Funds or the Portfolios for any loss
incurred. Each agreement was initially approved by the Trustees, including the
non-interested Trustees, of the Trust or the Portfolios.
As indicated in the Prospectus, Eaton Vance serves as Administrator of the
Developing Resources 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 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 Trustees not affiliated with
Eaton Vance or an Adviser; distribution and service fees payable by the Fund
under its Rule 12b-1 distribution plan; and investment advisory, management and
administration fees. The Fund and the Portfolio, as the case may be, will also
each bear expenses incurred in connection with litigation in which the Fund or
the Portfolio, as the case may be, is a party and any legal obligation to
indemnify its respective officers and Trustees with respect thereto, to the
extent not covered by insurance.
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 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. Hawkes is chairman and Mr. Gardner is vice
chairman. 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, the Voting Trustees of which are Messrs.
Gardner, Hawkes, Rowland, Alan R. Dynner, Thomas E. Faust, Jr., William Steul
and Wharton P. Whitaker. 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 December 31, 1997, Messrs. Gardner and Hawkes each owned 24% of
such voting trust receipts, Messrs. Rowland and Faust owned 15% and 13%,
respectively, and Messrs. Dynner, Steul and Whitaker each own 8%. Messrs.
Dynner, Gardner and Hawkes who are officers or Trustees of the Trust and the
Portfolios are members of the EVC, BMR, Eaton Vance and EV organizations.
Messrs. Burt, Murphy, O'Connor, Richardson, Tittmann and Woodbury, and Ms.
Sanders, are officers of the Trust and or the Portfolios, and are also members
of the BMR, Eaton Vance and EV organizations.
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 approximately 21% 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 Funds and
the Portfolios, 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 Funds or the Portfolios
and such banks.
CUSTODIAN
IBT acts as custodian for the Trust and the Portfolios. IBT has the custody
of all cash and securities of the Funds and all securities of the Portfolios
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 Funds' and the Portfolios' general ledger and computes the daily
net asset value of interests in the Portfolios and the net asset value of shares
of the Funds. In such capacities, IBT attends to details in connection with the
sale, exchange, substitution, transfer or other dealings with the Funds' and the
Portfolios' respective investments, receives and disburses all funds, and
performs various other ministerial duties upon receipt of proper instructions
from the Trust and the Portfolios, respectively.
Portfolio securities, if any, purchased by a 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 each Portfolio in
accordance with regulations under the 1940 Act.
IBT charges fees which are competitive within the industry. These fees for
the Portfolios 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
particular investment company at the custodian equal to 75% of the 91-day U.S.
Treasury Bill auction rate applied to the particular investment company average
daily collected balances. The portion of the fee for a 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.
SERVICES FOR ACCUMULATION -- CLASS A SHARES
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 $50,000 or more of Class A shares and shares of the other continuously
offered open-end funds listed under "The Eaton Vance Exchange Privilege" in the
Prospectus will be purchased within a 13-month period, a Statement of Intention
should be signed so that shares may be obtained at the same reduced sales charge
as though the total quantity were invested in one lump sum. Shares held under
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 Shares" in the
Prospectus. Any investor considering signing a Statement of Intention should
read it carefully.
Right of Accumulation -- Cumulative Quantity Discount. The applicable sales
charge level for the purchase of Class A shares is calculated by taking the
dollar amount of the current purchase and adding it to the value (calculated at
the maximum current offering price) of the shares the shareholder owns in his or
her account(s) in the Fund and in the other continuously offered open-end funds
listed under "The Eaton Vance Exchange Privilege" in the Prospectus for which
Eaton Vance acts as adviser or administrator at the time of purchase. The sales
charge on the shares being purchased will then be at the rate applicable to the
aggregate. For sales charges on quantity purchases, see "How to Buy Shares" in
the Prospectus. Shares purchased (i) by an individual, his or her spouse and
their children under the age of twenty-one, and (ii) by a trustee, guardian or
other fiduciary of a single trust estate or a single fiduciary account, will be
combined for the purpose of determining whether a purchase will qualify for the
Right of Accumulation and if qualifying, the applicable sales charge level.
For any such discount to be made available, at the time of purchase a
purchaser or his or her Authorized Firm must provide the Principal Underwriter
(in the case of a purchase made through an Authorized Firm) or the Transfer
Agent (in the case of an investment made by mail) with sufficient information to
permit verification that the purchase order qualifies for the accumulation
privilege. Confirmation of the order is subject to such verification. The Right
of Accumulation privilege may be amended or terminated at any time as to
purchases occurring thereafter.
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 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 date for each distribution. Continued withdrawals in excess of current
income will eventually use up principal, particularly in a period of declining
market prices. A shareholder may not have a withdrawal plan in effect at the
same time he or she has authorized Bank Automated Investing or is otherwise
making regular purchases of Fund shares. The shareholder, 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 Trustees of each Portfolio have established the following procedures for
the valuation of the Portfolio's assets. Marketable securities listed on foreign
or U.S. 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
the last sale price as quoted on the principal exchange or board of trade on
which such option or contract is traded, or in the absence of a sale, the mean
between the last bid and asked prices. 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 with a remaining maturity of 60 days of 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 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.
Physical commodities, including bullion, will generally be valued at fair
value based on prevailing market prices.
Each investor in a 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 "Portfolio Valuation Time"). The value of each investor's interest in the
Portfolio will be determined by multiplying the net asset value of the Portfolio
by the percentage, determined on the prior Portfolio Business Day, which
represented that investor's share of the aggregate interests in the Portfolio on
such prior day. Any additions or withdrawals for the current Portfolio Business
Day will then be recorded. Each investor's percentage of the aggregate interest
in the Portfolio will then be recomputed as a percentage equal to a fraction (i)
the numerator of which is the value of such investor's investment in the
Portfolio as of the Portfolio Valuation Time on the prior Portfolio Business Day
plus or minus, as the case may be, 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.
Each Fund and Portfolio will be closed for business and will not price their
shares on the following business holidays: New Year's Day, Martin Luther King,
Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day.
INVESTMENT PERFORMANCE
Average annual total return is determined separately for each Class of a
Fund 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 (i) that all distributions are
reinvested at net asset value on the reinvestment dates during the period, (ii)
the deduction of the maximum sales charge from the initial $1,000 purchase order
for Class A shares, (iii) a complete redemption of the investment and (iv) the
deduction of any CDSC at the end of the period. For information concerning the
total return of the Classes of a Fund, see Appendix A, Appendix B and Appendix
C.
Total return may be compared to relevant indices, such as the Consumer Price
Index and various domestic and foreign securities indices. A 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 a Fund's performance or rankings of mutual funds (which include a
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 a Portfolio may also be included in
advertisements and other material furnished to present prospective shareholders.
A Fund's performance may differ from that of other investors in its
corresponding 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 a 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 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 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 Trust (or Principal Underwriter) 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.
Information used in advertisements for Health Sciences Fund may include
information about medical, pharmaceutical and technological developments and
innovations, as well as demographical information relating to health care
expenditures. Advertisements may also contain historical information on the
performance of health science stocks. Information may also be provided about
M&I, including descriptions of: its personnel; staffing techniques; evaluation
and analysis procedures; and stock selection process.
The Trust (or Principal Underwriter) 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. Each Fund has elected to be treated and intends to qualify each
year as a regulated investment company ("RIC") under the Code. Accordingly, each
Fund intends to satisfy certain requirements relating to sources of its income
and diversification of its assets and to distribute substantially all of its
ordinary income (including tax-exempt income, if applicable) and net income in
accordance with the timing requirements imposed by the Code, so as to maintain
its RIC status and to avoid paying any federal income or excise tax. Because
each Fund invests its assets in a Portfolio, the Portfolio normally must satisfy
the applicable source of income and diversification requirements in order for
the Fund to also satisfy these requirements. Each Portfolio will allocate at
least annually among its investors, including a Fund, the Portfolio's net
investment income, net realized capital gains, and any other items of income,
gain, loss, deduction or credit. Each Portfolio will make allocations to a 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 a 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, each Fund will be deemed (i) to own its
proportionate share of each of the assets of the corresponding Portfolio and
(ii) to be entitled to the gross income of that Portfolio attributable to such
share.
In order to avoid incurring a federal excise tax obligation, the Code
requires that each 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, if applicable) for such year, at least 98% of its
capital gain net income (which is 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 (i) any available
capital loss carryforwards and (ii) 100% of any income from the prior year (as
previously computed) that was not paid out during such year and on which the
Fund paid no federal income tax. Under current law, provided that a Fund
qualifies as a RIC and a Portfolio is treated as a partnership for Massachusetts
and federal tax purposes, neither the Fund nor the Portfolio should be liable
for any income, corporate excise or franchise tax in the Commonwealth of
Massachusetts.
For federal income tax purposes each 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 corresponding 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.
A 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 a 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. A Portfolio may make certain tax elections for its "mixed straddles" which
could alter certain effects of these rules.
Foreign exchange gains and losses realized by a Portfolio and allocated to a
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.
Each 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 a Fund's total assets, taking into account its
allocable share of a 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.
A 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
corresponding 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, BMR
will endeavor to manage the Developing Resources 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 Developing Resources 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 Developing
Resources Fund did not qualify for taxation as a RIC, 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 a 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 with a tax
holding period of 6 months or less will be treated as a long-term capital loss
to the extent of any distribution of net long-term capital gains with respect to
such shares. All or a portion of a loss realized upon a redemption or other
disposition of Fund shares may be disallowed under "wash sale" rules if other
Fund shares are purchased (whether through reinvestment of dividends or
otherwise) within the 30 days before or after such disposition. Any disallowed
loss will result in an adjustment to the shareholder's tax basis in some or all
of the other shares acquired.
Amounts paid by a Fund to individuals and certain other shareholders who
have not provided the Fund with their correct taxpayer identification number
("TIN") 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 arising from the Fund's dividends and other distributions as
well as the proceeds of redemption transactions (including repurchases and
exchanges), at a rate of 31%. An individual's TIN 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 a 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 convention treaty. Distributions
from the excess of a 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 arise if: (i) the
shareholder is engaged in a trade or business in the United States; (ii) the
shareholder is present in the United States for a sufficient period of time
during a taxable year to be treated as a U.S. resident, (generally 180 days or
more); or (iii) the shareholder fails to provide any required certifications
regarding its status as a non-resident alien investor. Foreign shareholders
should consult their tax advisers regarding the U.S. and foreign tax
consequences of an investment in the Fund.
The foregoing discussion does not address the special tax rules applicable
to certain classes of investors, such as 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 and, when applicable, foreign
tax consequences of investing in a Fund.
PRINCIPAL UNDERWRITER
The Trust 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 Trust will exceed
the amounts paid therefor. For the amount paid by the Trust to the Principal
Underwriter for acting as repurchase agent, see Appendix A and Appendix B.
CLASS A SHARES. Class A shares of a Fund may be continuously purchased at
the public offering price through Authorized Firms which have agreements with
the Principal Underwriter. The Trust reserves the right to suspend or limit the
offering of its shares to the public at any time. The public offering price is
the net asset value next computed after receipt of the order, plus, where
applicable, a variable percentage (sales charge) depending upon the amount of
purchase as indicated by the sales charge table set forth in the Prospectus (see
"How to Buy Shares"). Such table is applicable to purchases of a 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 Class A shares,
alone or in combination with purchases of any of the other funds offered by the
Principal Underwriter, through one dealer aggregating $50,000 or more made by
any of the persons enumerated above within a thirteen-month period starting with
the first purchase pursuant to a written Statement of Intention, in the form
provided by the Principal Underwriter, which includes provisions for a price
adjustment depending upon the amount actually purchased within such period (a
purchase not made pursuant to such Statement may be included thereunder if the
Statement is filed within 90 days of such purchase); or (2) purchases of Class A
shares 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 Trust may issue
Class A 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 Class. Normally no
sales charges will be paid in connection with an exchange of Class A shares for
the assets of such investment company. Class A shares may be sold at net asset
value to any officer, director, trustee, general partner or employee of the
Trust, a 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. Class A shares may also be sold at net asset value to registered
representatives and employees of Authorized Firms and to the spouses and
children under the age of 21 and beneficial accounts of such persons.
The Principal Underwriter acts as principal in selling Class A shares under
a Distribution Agreement with the Trust. 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 a 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 Class A shares on a "best efforts" basis under which it
is required to take and pay for only such shares as may be sold. The Principal
Underwriter allows Authorized Firms discounts from the applicable public
offering price which are alike for all Authorized Firms. The Principal
Underwriter may allow, upon notice to all Authorized Firms with whom it has
agreements, discounts up to the full sales charge during the periods specified
in the notice. During periods when the discount includes the full sales charge,
such Authorized Firms may be deemed to be underwriters as that term is defined
in the Securities Act of 1933.
CLASS B AND CLASS C SHARES. Under a Distribution Agreement, the Principal
Underwriter acts as principal in selling Class B and Class C shares. 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 a Fund and its shares under
federal and state securities laws are borne by the Fund. In addition, each Class
B and Class C makes payments to the Principal Underwriter pursuant to a
Distribution Plan as described in the 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 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 Class B and Class C shares
or on six months' notice by the Principal Underwriter and is automatically
terminated upon assignment. The Principal Underwriter distributes Class B shares
on a "best efforts" basis under which it is required to take and pay for only
such shares as may be sold.
SERVICE PLAN -- CLASS A SHARES
The Trust on behalf of its Developing Resources Fund Class A shares has
adopted 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 "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 Prospectus.
The Plan remains 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 a vote of a majority of the outstanding Class A shares of
Developing Resources Fund. The Plan has been approved by the Board of Trustees
of the Trust, including the Plan Trustees.
The Plan requires quarterly Trustee review of 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 Class A shares, and all material
amendments of the Plan must also be approved by the Trustees of the Trust in the
manner described above. So long as the Plan is in effect, the selection and
nomination of the noninterested Trustees shall be committed to the discretion of
such Trustees. The Trustees have determined that in their judgment there is a
reasonable likelihood that the Plan will benefit the Developing Resources Fund
and its Class A shareholders.
DISTRIBUTION PLAN -- CLASS A SHARES
As described in the Prospectus, in addition to the fees and expenses
described herein, the Trust on behalf of the Information Age and Health Sciences
Funds Class A shares finances distribution activities and bears expenses
associated with the distribution of shares and the provision of certain personal
and account maintenance services to shareholders pursuant to a distribution plan
(the "Plans") designed to meet the requirements of Rule 12b-1 under the 1940
Act.
The Plans remain in effect from year to year provided such continuance is
approved at least annually by a 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 Plans or any agreements related to the Plans (the "Rule 12b-1
Trustees") and (ii) all of the Trustees then in office. The Plans 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 Class A shares of a Fund. Each Plan
requires quarterly Trustee review of a written report of the amount expended
under the Plan and the purposes for which such expenditures were made. The Plans
may not be amended to increase materially the payments described therein without
approval of the affected shareholders of Class A shares and the Trustees. So
long as the Plans are in effect, the selection and nomination of the
noninterested Trustees shall be committed to the discretion of such Trustees.
The Trustees have determined that in their judgment there is a reasonable
likelihood that the Plans will benefit the Funds and their shareholders.
Each Plan is intended to compensate the Principal Underwriter for its
distribution services to a Fund by paying the Principal Underwriter monthly
distribution fees in connection with the sale of Class A shares. The quarterly
service fee paid by the Class A shares of the Information Age Fund under its
Plan is intended to compensate the Principal Underwriter for its personal and
account maintenance services and for the payment by the Principal Underwriter of
service fees to Authorized Firms.
DISTRIBUTION PLANS -- CLASS B AND CLASS C SHARES
The Trust has adopted Distribution Plans (the "Plans") on behalf of its
Class B and Class C shares designed to meet the requirements of Rule 12b-1 under
the 1940 Act and the sales charge rule of the NASD. The purpose of each Plan, is
to compensate the Principal Underwriter for its distribution services and
facilities provided with respect to Class B and Class C shares.
The Plans provide that the Fund will pay sales commissions and distribution
fees to the Principal Underwriter only after and as a result of the sale of
Class B or Class C 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 Class B sales and
6.25% of Class C sales 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 amount payable to the Principal Underwriter pursuant to the Plans as
sales commissions and distribution fees with respect to each day will be accrued
on such day as a liability of the Funds respective Class and will accordingly
reduce the Class' 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 a Class's net assets on such day. The level of a Class' net
assets changes each day and depends upon the amount of sales and redemptions of
shares, the changes in the value of the investments held by the Portfolio, the
expenses of the Class, Fund and the Portfolio accrued and allocated to the Fund
and Class 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 Trust does not accrue possible future payments as a
liability of a Class or reduce a Class' current net assets in respect of unknown
amounts which may become payable under the Plans in the future because the
standards for accrual of such a liability under accounting principles have not
been satisfied.
The Plans provide that the Class 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 Trust to the Principal Underwriter
whenever there exist uncovered distribution charges.
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 Plans since their inception. Payments theretofore paid or
payable under the Plans by the Trust 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 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 shares upon which a
CDSC will be imposed, the level and timing of redemptions of shares upon which
no CDSC will be imposed (including redemptions of 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 Class, and changes in
the interest rate used in the calculation of the distribution fee under the
Plans. Periods with a high level of sales of Class shares accompanied by a low
level of early redemptions of Class 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.
Currently, payments of sales commissions and distribution fees and of
service fees may equal, 1% of a Class's average daily net assets per annum. For
actual payments made and the outstanding uncovered distribution charges of the
Principal Underwriter, see Appendix B. The Trust believes that the combined rate
of all these payments may be higher than the rate of payments made under
distribution plans adopted by other investment companies pursuant to Rule 12b-1.
Although the Principal Underwriter will use its own funds (which may be borrowed
from banks) to pay sales commissions and service fees for Class C sales and
sales commissions for Class B sales at the time of sale, it is anticipated that
the Eaton Vance organization will profit by reason of the operation of the Plans
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
Plans. The Eaton Vance organization may be considered to have realized a profit
under the Plans if at any point in time the aggregate amounts theretofore
received by the Principal Underwriter pursuant to the Plans and from CDSCs have
exceeded the total expenses theretofore incurred by such organization in
distributing Class B and Class C 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
Trust.
The Plans continue 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 Plans and Distribution
Agreements 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
applicable Class. The Plans require quarterly Trustee review of a written report
of the amount expended under the Plans and the purposes for which such
expenditures were made. The Plans may not be amended to increase materially the
payments described therein without approval of the shareholders of the affected
Class and the Trustees. So long as the Plans are in effect, the selection and
nomination of the noninterested Trustees shall be committed to the discretion of
such Trustees.
The Trustees of the Trust believe that the Plans 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 Class B and Class C shareholders. Payments for sales
commissions and distribution fees made to the Principal Underwriter under the
Plans will compensate the Principal Underwriter for its services and expenses in
distributing Class B and Class C shares of the Fund. Service fee payments made
to the Principal Underwriter and Authorized Firms under the Plans 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 Plans are 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 Class B and Class C shareholders.
PORTFOLIO SECURITY TRANSACTIONS
Decisions concerning the execution of portfolio security transactions of the
Portfolios, including the selection of the market and the broker-dealer firm,
are made by an Adviser.
An Adviser places the portfolio security transactions of a Portfolio and of
all other accounts managed by it for execution with many broker-dealer firms. An
Adviser uses its best efforts to obtain execution of portfolio transactions at
prices which are advantageous to the relevant Portfolio and (when a disclosed
commission is being charged) at reasonably competitive commission rates. In
seeking such execution, an Adviser will use its best judgment in evaluating the
terms of a transaction, and will give consideration to various relevant factors,
including without limitation the size and type of the transaction, the general
execution and operational capabilities of the broker-dealer, the nature and
character of the market for the security, the confidentiality, speed and
certainty of effective execution required for the transaction, the reputation,
reliability, experience and financial condition of the broker-dealer, the value
and quality of the 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 a 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 a Portfolio
usually includes an undisclosed dealer markup or markdown. In an underwritten
offering, the price paid by a 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 an
Adviser, be reasonable in relation to the value of the services provided,
commissions exceeding those which another firm might charge may be paid to
broker-dealers who were selected to execute transactions on behalf of the
Portfolios and an Adviser's other clients for providing brokerage and research
services to an Adviser.
As authorized in Section 28(e) of the Securities Exchange Act of 1934, a
broker or dealer who executes a portfolio transaction on behalf of a Portfolio
may receive a commission which is in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction if an Adviser
determines in good faith that such 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 an Adviser and its affiliates have for
accounts over which they exercise investment discretion. In making any such
determination, an Adviser will not attempt to place a specific dollar value on
the brokerage and research services provided or to determine what portion of the
commission should be related to such services. Brokerage and research services
may include advice as to the value of securities, the advisability of investing
in, purchasing, or selling securities, and the availability of securities or
purchasers or sellers of securities; furnishing analyses and reports concerning
issuers, industries, securities, economic factors and trends, portfolio strategy
and the performance of accounts; 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, an Adviser receives Research Services from many broker-dealer firms
with which an Adviser places the portfolio transactions of a 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 an
Adviser in connection with client accounts other than those accounts which pay
commissions to such broker-dealer. Any such Research Service may be broadly
useful and of value to an Adviser in rendering investment advisory services to
all or a significant portion of its clients, or may be relevant and useful for
the management of only one client's account or of a few clients' accounts, or
may be useful for the management of merely a segment of certain clients'
accounts, regardless of whether any such account or accounts paid commissions to
the broker-dealer through which such Research Service was obtained. The advisory
fee paid by each Portfolio is not reduced because an Adviser receives such
Research Services. An Adviser evaluates the nature and quality of the various
Research Services obtained through broker-dealer firms and attempts to allocate
sufficient commissions to such firms to ensure the continued receipt of Research
Services which the Adviser believes are useful or of value to it in rendering
investment advisory services to its clients.
Subject to the requirement that an Adviser shall use its best efforts to
seek to execute portfolio security transactions at advantageous prices and at
reasonably competitive commission rates or spreads, an Adviser is authorized to
consider as a factor in the selection of any broker-dealer firm with whom
Portfolio orders may be placed the fact that such firm has sold or is selling
shares of the Funds or of other investment companies sponsored by Eaton Vance.
This policy is not inconsistent with a rule of the NASD, which rule provides
that no firm which is a member of the NASD shall favor or disfavor the
distribution of shares of any particular investment company or group of
investment companies on the basis of brokerage commissions received or expected
by such firm from any source.
Securities considered as investments for the Portfolios may also be
appropriate for other investment accounts managed by an Adviser or its
affiliates. Whenever decisions are made to buy or sell securities by a Portfolio
and one or more of such other accounts simultaneously, an Adviser 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 a 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
the Adviser 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 Portfolios that the benefits from an Adviser's organization outweigh any
disadvantage that may arise from exposure to simultaneous transactions.
For the fiscal year ended August 31, 1997 and for the period from the
Information Age Portfolio's start of business, September 18, 1995, to August 31,
1996, the Information Age Portfolio paid brokerage commissions of $356,832 and
$241,041, respectively, with respect to portfolio transactions. Of these
amounts, approximately $265,390 and $211,697, respectively, was paid in respect
of portfolio security transactions aggregating approximately $81,407,806 and
$64,655,820, respectively, 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). For
the fiscal year ended August 31, 1997, the Developing Resources and Health
Sciences Portfolios paid brokerage commissions of $97,519 and $115,257,
respectively, with respect to portfolio transactions. Of these amounts,
approximately $68,402 and $66,817, respectively, was paid in respect of
portfolio security transactions aggregating approximately $10,695,812 and
$24,197,622, respectively, to firms which provided some Research Services to the
Adviser's organization (although many firms may have been selected in any
particular transaction primarily because of their execution capabilities).
OTHER INFORMATION
The Trust is a Massachusetts business trust established in 1989 as the
successor to Eaton Vance Growth Fund, Inc., a Massachusetts corporation. The
Funds were reorganized as Class A shares (formerly EV Traditional Information
Age Fund, EV Traditional Worldwide Developing Resources Fund and EV Traditional
Worldwide Health Sciences Fund, Inc.), Class B shares (formerly EV Marathon
Information Age Fund, EV Marathon Worldwide Developing Resources Fund and EV
Marathon Worldwide Health Sciences Fund) and Class C shares (formerly EV Classic
Information Age Fund) of Eaton Vance Growth Trust on September 1, 1997, so
information herein prior to such date is for the Funds when they were separate
series of the Trust (or a separate corporation) and before they became
multiple-class funds. Class C shares of Health Sciences Fund were established
January 1, 1998. 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 Trust's Declaration of Trust may be amended by the Trustees when
authorized by vote of a majority of the outstanding voting securities of the
Trust, the financial interests of which are 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 (such as reclassifying series or classes of shares or restructuring the
Trust) 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. (The Declaration also contains provisions limiting the liability
of a series or class to that series or class.) 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 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 Portfolio's Declaration of Trust provides that the Portfolio will
terminate 120 days after the complete withdrawal of the Fund or any other
investor in the Portfolio, unless either the remaining investors, by unanimous
vote at a meeting of such investors, or a majority of the Trustees of the
Portfolio, by written instrument consented to by all investors, agree to
continue the business of the Portfolio. This provision is consistent with
treatment of the Portfolio as a partnership for federal income tax purposes.
The right to redeem shares of the Fund can be suspended and the payment of
the redemption price deferred when the Exchange is closed (other than for
customary weekend and holiday closings), during periods when trading on the
Exchange is restricted as determined by the Commission, or during any emergency
as determined by the Commission which makes it impracticable for the Portfolio
to dispose of its securities or value its assets, or during any other period
permitted by order of the Commission for the protection of investors.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Deloitte & Touche LLP, 125 Summer Street, Boston, Massachusetts, are the
independent certified public accountants of the Developing Resources Fund and
Coopers & Lybrand L.L.P., One Post Office Square, Boston, Massachusetts are the
independent accountants of the Information Age Fund and Health Sciences 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 Developing Resources Portfolio
and Coopers & Lybrand Chartered Accountants, Toronto, Canada, are the
independent accountants for the Information Age Portfolio and Health Sciences
Portfolio.
FINANCIAL STATEMENTS
The audited financial statements of and the auditors' reports for the Funds
and the Portfolios appear in each Fund's most recent annual report to
shareholders, which are incorporated by reference into this SAI. A copy of the
Funds' most recent annual report accompanies this SAI.
Registrant incorporates by reference the audited financial information for
the fiscal year ended August 31, 1997 for the Funds and Portfolios listed below,
all as previously filed electronically with the Commission:
EV Marathon Information Age Fund
Information Age Portfolio
(Accession No. 0000950109-97-007088)
EV Marathon Worldwide Developing Resources Fund
Worldwide Developing Resources Portfolio
(Accession No. 0000950109-97-007242)
EV Traditional Worldwide Health Sciences Fund, Inc.
Worldwide Health Sciences Portfolio
(Accession No. 0000950109-97-007116)
<PAGE>
APPENDIX A
CLASS A SHARES
FEES AND EXPENSES -- HEALTH SCIENCES FUND
Through August 31, 1996, the Health Sciences Fund invested directly in
securities rather than investing in the Health Sciences Portfolio. In addition,
some current service providers and some fee rates differ from the providers and
rates in effect prior to August 31, 1996.
ADVISER
Prior to the Health Sciences Portfolio's start of business on September 1,
1996, the Health Sciences Fund paid advisory fees directly to M&I. During the
fiscal years ended August 31, 1996 and 1995, the Health Sciences Fund paid M&I
$350,234 and $138,826, respectively, in advisory fees. M&I received advisory
fees of $121,553 during the fiscal year ended August 31, 1994 and pursuant to
the expense limitation previously in effect, M&I reimbursed $16,868 during such
period.
MANAGER AND ADMINISTRATOR
The prior administrator (manager) of the Fund was paid $114,411 and $58,707,
respectively, for its services during the fiscal years ended August 31, 1996 and
1995.
DISTRIBUTION PLAN
Pursuant to the Distribution Plan in effect during the fiscal year ended
August 31, 1996, the Fund paid $90,449 in 12b-1 fees to the prior distributor
during such year.
During the fiscal year ended August 31, 1997, the Fund made payments under
the Plan aggregating $132,608, of which $78,084 was paid to Authorized Firms and
the balance of which was retained by the Principal Underwriter.
PRINCIPAL UNDERWRITER
For the fiscal year ended August 31, 1997, the Fund paid the Principal
Underwriter $2,430 for repurchase transactions handled by the Principal
Underwriter.
The total sales charges for sales of shares of the Fund for the fiscal year
ended August 31, 1997 was $1,209,455, of which $185,989 was received by the
Principal Underwriter and Authorized Firms received $1,023,466.
BROKERAGE
During the fiscal years ended August 31, 1996 and 1995, the Fund paid
$184,676 and $29,541, respectively, in brokerage commissions.
<PAGE>
PERFORMANCE INFORMATION -- ALL FUNDS
The table below indicates the cumulative and average annual total return on
a hypothetical investment of $1,000 in Class A shares for the periods shown in
the table. The Value of Initial Investment reflects the deduction of the maximum
sales charge of 5.75%. Past performance is not indicative of future results.
Investment return and principal value will fluctuate; shares, when redeemed, may
be worth more or less than their original cost. Information presented with two
asterisks (**) includes the effect of subsidizing expenses. Return would have
been lower without subsidies.
<TABLE>
<CAPTION>
VALUE OF A $1,000 INVESTMENT -- HEALTH SCIENCES FUND
TOTAL RETURN TOTAL RETURN
EXCLUDING MAXIMUM INCLUDING MAXIMUM
VALUE OF VALUE OF SALES CHARGE SALES CHARGE
INVESTMENT INVESTMENT INITIAL INVESTMENT ------------------------- ------------------------
PERIOD** DATE INVESTMENT ON 8/31/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ----------------------- ---------- ---------- ---------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
10 Years Ended 8/31/97 8/31/87 $942.56 $3,991.51 323.47% 15.53% 299.15% 14.85%
5 Years Ended 8/31/97 8/31/92 $942.72 $2,502.43 165.45% 21.56% 150.24% 20.14%
1 Year Ended 8/31/97 8/31/96 $942.57 $1,109.15 17.67% 17.67% 10.92% 10.92%
</TABLE>
The tables below indicate the cumulative and average annual total return on
a hypothetical investment in shares of $1,000. Total return for the period prior
to September 1, 1997 reflects the total return of the predecessor to Class A.
Total return prior to the Predecessor Fund's commencement of operations reflects
the total return of Class B, adjusted to reflect the Class A sales charge. The
Class B total return has not been adjusted to reflect certain other expenses
(such as distribution and/or service fees). If such adjustments were made, the
Class A total return would be different. The Value of Initial Investment
reflects the deduction of the maximum sales charge of 5.75%. Past performance is
not indicative of future results. Investment return and principal value will
fluctuate; shares, when redeemed, may be worth more or less than their original
cost. Information presented with two asterisks (**) includes the effect of
subsidizing expenses. Return would have been lower without subsidiaries.
<TABLE>
<CAPTION>
VALUE OF A $1,000 INVESTMENT -- DEVELOPING RESOURCES FUND
TOTAL RETURN TOTAL RETURN
EXCLUDING MAXIMUM INCLUDING MAXIMUM
VALUE OF VALUE OF SALES CHARGE SALES CHARGE
INVESTMENT* INVESTMENT INITIAL INVESTMENT ------------------------- -------------------------
PERIOD DATE INVESTMENT ON 8/31/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ----------------------- ---------- ---------- ---------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Life of the Fund** 10/21/87 $943.15 $2,473.31 162.24% 10.27% 147.33% 9.62%
5 Years Ended 8/31/97 8/31/92 $942.78 $1,650.53 75.07% 11.85% 65.05% 10.54%
1 Year Ended 8/31/97 8/31/96 $942.47 $ 802.52 -14.85% -14.85% -19.75% -19.75%
- ----------
*Predecessor Fund commenced operations April 17, 1997.
<CAPTION>
VALUE OF A $1,000 INVESTMENT -- INFORMATION AGE FUND
TOTAL RETURN TOTAL RETURN
EXCLUDING MAXIMUM INCLUDING MAXIMUM
VALUE OF VALUE OF SALES CHARGE SALES CHARGE
INVESTMENT* INVESTMENT INITIAL INVESTMENT ---------------------------- ---------------------------
PERIOD DATE INVESTMENT ON 8/31/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ----------------------- ---------- ---------- ---------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Life of the Fund 9/18/95 $942.51 $1,261.47 33.84% 16.12% 26.15% 12.65%
1 Year Ended
8/31/97 8/31/96 $942.88 $1,141.03 21.01% 21.01% 14.10% 14.10%
- ----------
*Predecessor Fund commenced operations September 18, 1995.
</TABLE>
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As at December 1, 1997, the Trustees and officers of the Trust, as a group,
owned in the aggregate less than 1% of the outstanding Class A shares of Health
Sciences Fund. As of December 1, 1997, Merrill Lynch, Pierce, Fenner & Smith,
Inc., Jacksonville, FL was the record owner of 9% of the Class A shares, which
are 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 Health Sciences Fund's outstanding Class A shares as of such date.
<PAGE>
APPENDIX B
CLASS B SHARES
FEES AND EXPENSES -- DEVELOPING RESOURCES AND INFORMATION AGE FUND
ADVISER
Prior to the Developing Resources Portfolio's start of business on April 1,
1997, the Developing Resources Fund paid advisory fees directly to Eaton Vance.
As at August 31, 1996, the Developing Resources Fund had net assets of
$20,128,782. For the fiscal years ended August 31, 1996, 1995 and September 30,
1994, the Fund paid Eaton Vance advisory fees of $114,803, $92,809 and $70,439,
respectively (equivalent to 0.75% (annualized) of the Fund's average daily net
assets for each such period).
DISTRIBUTION PLANS
Each Distribution Plan and Distribution Agreement remains in effect until
April 28, 1998 and may be continued as described under "Distribution Plan."
Pursuant to Rule 12b-1, the Plan has been approved by the relevant Fund's
shareholders and by the Board of Trustees of the Trust, as required by Rule
12b-1.
The following table shows, for the fiscal year ended August 31, 1997, (1)
sales commissions paid by the Principal Underwriter to Authorized Firms on sales
of Class B shares, (2) Class B distribution payments to the Principal
Underwriter under the Plan, (3) Class B CDSC payments to the Principal
Underwriter, (4) service fees on Class B shares paid or accrued under the Plan,
and (5) amount of service fees on Class B shares paid to Authorized Firms (the
balance of which being retained by the Principal Underwriter).
<TABLE>
<CAPTION>
DISTRIBUTION CDSC SERVICE
PAYMENTS TO PAYMENTS TO FEES TO
SALES THE PRINCIPAL THE PRINCIPAL SERVICE AUTHORIZED
CLASS B COMMISSIONS UNDERWRITER UNDERWRITER FEES FIRMS
- ------- ----------- ------------- ------------- ------- ----------
<S> <C> <C> <C> <C> <C>
Developing Resources ............ $587,879 $194,212 $169,436 $36,036 $34,080
Information Age ................. 173,850 192,044 109,000 27,272 12,017
</TABLE>
PRINCIPAL UNDERWRITER
For the fiscal year ended August 31, 1997, each Fund paid the Principal
Underwriter for repurchase transactions handled by it $2.50 for each such
transaction which aggregated as follows: Developing Resources Fund -- $1,320 and
Information Age Fund -- $930.
<PAGE>
PERFORMANCE INFORMATION -- ALL FUNDS
The tables below indicate the cumulative and average annual total return on
a hypothetical investment of $1,000 in Class B shares for the periods shown in
each table. Past performance is not indicative of future results. Investment
return and principal value will fluctuate; shares, when redeemed, may be worth
more or less than their original cost. Information presented with two asterisks
(**) includes the effect of subsidizing expenses. Return would have been lower
without subsidies.
<TABLE>
<CAPTION>
VALUE OF A $1,000 INVESTMENT -- DEVELOPING RESOURCES FUND
VALUE OF
INVESTMENT VALUE OF TOTAL RETURN BEFORE TOTAL RETURN AFTER
BEFORE INVESTMENT DEDUCTING DEDUCTING
DEDUCTING AFTER DEDUCTING THE MAXIMUM CDSC THE MAXIMUM CDSC
INVESTMENT INVESTMENT AMOUNT OF THE MAXIMUM THE MAXIMUM ------------------------ ------------------------
PERIOD DATE INVESTMENT CDSC ON 8/31/97 CDSC ON 8/31/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ------------ ---------- ---------- --------------- --------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Life of
the Fund** 10/21/87 $1,000 $2,633.42 $2,633.42 163.34% 10.32% 163.34% 10.32%
5 Years
Ended
8/31/97** 8/31/92 $1,000 $1,758.07 $1,738.07 75.81% 11.95% 73.81% 11.69%
1 Year
Ended
8/31/97 8/31/96 $1,000 $ 855.09 $ 819.01 -14.49% -14.49% -18.10% -18.10%
<CAPTION>
VALUE OF A $1,000 INVESTMENT -- INFORMATION AGE FUND
VALUE OF
INVESTMENT VALUE OF TOTAL RETURN BEFORE TOTAL RETURN AFTER
BEFORE INVESTMENT DEDUCTING DEDUCTING
DEDUCTING AFTER DEDUCTING THE MAXIMUM CDSC THE MAXIMUM CDSC
INVESTMENT INVESTMENT AMOUNT OF THE MAXIMUM THE MAXIMUM ------------------------ ------------------------
PERIOD DATE INVESTMENT CDSC ON 8/31/97 CDSC ON 8/31/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ------------ ---------- ---------- --------------- --------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Life of
the Fund 9/18/95 $1,000 $1,333.57 $1,283.57 33.36% 15.91% 28.36% 13.66%
1 Year
Ended
8/31/97 8/31/96 $1,000 $1,207.94 $1,157.94 20.79% 20.79% 15.79% 15.79%
</TABLE>
The table below indicates the cumulative and average annual total return on
a hypothetical investment in shares of $1,000. Total return for the period prior
to September 1, 1997 reflects the total return of the predecessor to Class B.
Total return prior to the Predecessor Fund's commencement of operations reflects
the total return of Class A, adjusted to reflect the Class B sales charge. The
Class A total return has not been adjusted to reflect certain other expenses
(such as distribution and/or service fees). If such adjustments were made, the
Class B total return would be different. 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. Information
presented with two asterisks (**) includes the effect of subsidizing expenses.
Return would have been lower without subsidiaries.
<PAGE>
<TABLE>
<CAPTION>
VALUE OF A $1,000 INVESTMENT -- HEALTH SCIENCES FUND
VALUE OF
INVESTMENT VALUE OF TOTAL RETURN BEFORE TOTAL RETURN AFTER
BEFORE INVESTMENT DEDUCTING DEDUCTING
DEDUCTING AFTER DEDUCTING THE MAXIMUM CDSC THE MAXIMUM CDSC
INVESTMENT* INVESTMENT AMOUNT OF THE MAXIMUM THE MAXIMUM ------------------------ ------------------------
PERIOD DATE INVESTMENT CDSC ON 8/31/97 CDSC ON 8/31/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ------------ ---------- ---------- --------------- --------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
10 Years
Ended
8/31/97 8/31/87 $1,000 $4,231.43 $4,231.43 323.14% 15.52% 323.14% 15.52%
5 Years
Ended
8/31/97 8/31/92 $1,000 $2,652.46 $2,632.46 165.25% 21.54% 163.25% 21.36%
1 Year
Ended
8/31/97 8/31/96 $1,000 $1,175.81 $1,125.81 17.58% 17.58% 12.58% 12.58%
- ------------
* Predecessor Fund commenced operations September 23, 1996.
</TABLE>
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As at December 1, 1997, the Trustees and officers of the Trust, as a group,
owned in the aggregate less than 1% of the outstanding Class B shares of
Developing Resources and Information Age Funds. As of December 1, 1997, Merrill
Lynch, Pierce, Fenner & Smith, Inc., Jacksonville, FL was the record owner of
the following amounts of the Class B shares, which are 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: Developing Resources Fund --
19% and Information Age Fund -- 26.8%. To the knowledge of the Trust, no other
person owned of record or beneficially 5% or more of any Fund's outstanding
Class B shares as of such date.
<PAGE>
APPENDIX C
CLASS C SHARES
PERFORMANCE INFORMATION
The table below indicates the cumulative and average annual total return on
a hypothetical investment in shares of $1,000. Total return for the period prior
to September 1, 1997 reflects the total return of the predecessor to Class C.
Total return prior to the Predecessor Fund's commencement of operations reflects
the total return of Class B, adjusted to reflect the Class C sales charge. The
Class B total return has not been adjusted to reflect certain other expenses
(such as distribution and/or service fees). If such adjustments were made, the
Class C total return would be different. 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. Information
presented with two asterisks (**) includes the effect of subsidizing expenses.
Return would have been lower without subsidiaries.
<PAGE>
<TABLE>
<CAPTION>
VALUE OF A $1,000 INVESTMENT -- INFORMATION AGE FUND
VALUE OF
INVESTMENT VALUE OF TOTAL RETURN BEFORE TOTAL RETURN AFTER
BEFORE INVESTMENT DEDUCTING DEDUCTING
DEDUCTING AFTER DEDUCTING THE MAXIMUM CDSC THE MAXIMUM CDSC
INVESTMENT* INVESTMENT AMOUNT OF THE MAXIMUM THE MAXIMUM ------------------------ ------------------------
PERIOD DATE INVESTMENT CDSC ON 8/31/97 CDSC ON 8/31/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ------------ ---------- ---------- --------------- --------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Life of
the Fund** 9/18/95 $1,000 $1,320.66 $1,320.66 32.07% 15.33% 32.07% 15.33%
1 Year
Ended
8/31/97 8/31/96 $1,000 $1,200.49 $1,190.49 20.05% 20.05% 19.05% 19.05%
- ------------
* Predecessor Fund commenced operations on November 22, 1995.
</TABLE>
The table below indicates the cumulative and average annual total return on
a hypothetical investment in shares of $1,000. Total return for the period prior
to January 1, 1998 reflects the total return of Class A, adjusted to reflect the
Class C sales charge. The Class A total return has not been adjusted to reflect
certain other expenses (such as distribution and/or service fees). If such
adjustments were made, the Class C total return would be different. 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. Information presented with two asterisks (**) includes the
effect of subsidizing expenses. Return would have been lower without
subsidiaries.
<TABLE>
<CAPTION>
VALUE OF A $1,000 INVESTMENT -- HEALTH SCIENCES FUND
VALUE OF
INVESTMENT VALUE OF TOTAL RETURN BEFORE TOTAL RETURN AFTER
BEFORE INVESTMENT DEDUCTING DEDUCTING
DEDUCTING AFTER DEDUCTING THE MAXIMUM CDSC THE MAXIMUM CDSC
INVESTMENT INVESTMENT AMOUNT OF THE MAXIMUM THE MAXIMUM ------------------------ ------------------------
PERIOD DATE INVESTMENT CDSC ON 8/31/97 CDSC ON 8/31/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ------------ ---------- ---------- --------------- --------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
10 Years
Ended
8/31/97 8/31/87 $1,000 $4,234.73 $4,234.73 323.47% 15.53% 323.47% 15.53%
5 Years
Ended
8/31/97 8/31/92 $1,000 $2,654.51 $2,654.51 165.45% 21.56% 165.45% 21.56%
1 Year
Ended
8/31/97 8/31/96 $1,000 $1,176.74 $1,166.74 17.67% 17.67% 16.67% 16.67%
</TABLE>
<PAGE>
[graphic omitted]
- -----------------------------------------------------------------------------
EATON VANCE WORLDWIDE DEVELOPING RESOURCES FUND
EATON VANCE WORLDWIDE HEALTH SCIENCES FUND
EATON VANCE INFORMATION AGE FUND
STATEMENT OF ADDITIONAL INFORMATION
JANUARY 1, 1998
- -----------------------------------------------------------------------------
PORTFOLIO INVESTMENT ADVISERS
Boston Management and Research, 24 Federal Street, Boston, MA 02110
Lloyd George Investment Management (Bermuda) Limited, 3808 One Exchange Square,
Central, Hong Kong
Mehta and Isaly Asset Management, Inc., 41 Madison Avenue, New York, NY
10010-2202
FUND SPONSOR AND MANAGER OR ADMINISTRATOR
Eaton Vance Management, 24 Federal Street, Boston, MA 02110
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc., 24 Federal Street, Boston, MA 02110
(800) 225-6265
CUSTODIAN
Investors Bank & Trust Company, 200 Clarendon Street, Boston, MA 02116
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
Coopers &Lybrand, L.L.P., One Post Office Square, Boston, MA 02109
1/1 COMBSAI
<PAGE>
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
STATEMENT OF
ADDITIONAL INFORMATION
January 1, 1998
EATON VANCE ASIAN SMALL COMPANIES FUND
24 Federal Street
Boston, Massachusetts 02110
(800) 225-6265
This Statement of Additional Information provides general information about
Eaton Vance Asian Small Companies Fund (the "Fund") and Asian Small Companies
Portfolio (the "Portfolio"). This Statement of Additional Information is
sometimes referred to herein as the "SAI".
TABLE OF CONTENTS
Page
PART I
Additional Information about Investment Policies .......................... 1
Investment Restrictions ................................................... 4
Trustees and Officers ..................................................... 5
Management of the Fund and the Portfolio .................................. 8
Custodian ................................................................. 10
Services for Accumulation -- Class A Shares ............................... 11
Service for Withdrawal .................................................... 11
Determination of Net Asset Value .......................................... 12
Investment Performance .................................................... 12
Taxes ..................................................................... 14
Principal Underwriter ..................................................... 15
Distribution Plans -- Class A and Class B Shares .......................... 16
Portfolio Security Transactions ........................................... 18
Other Information ......................................................... 20
Independent Certified Public Accountants .................................. 21
Financial Statements ...................................................... 22
Appendix A: Class B Shares ................................................ a-1
Appendix B: Asian Region Countries ........................................ b-1
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR
ACCOMPANIED BY THE FUND'S PROSPECTUS DATED JANUARY 1, 1998, 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>
This SAI provides information about the Fund and the Portfolio. Capitalized
terms used in this SAI and not otherwise defined have the meanings given them in
the Fund's Prospectus. The Fund is subject to the same investment policies as
those of the Portfolio. The Fund currently seeks to achieve its objective by
investing in the Portfolio.
ADDITIONAL INFORMATION ABOUT INVESTMENT POLICIES
FOREIGN INVESTMENTS. Investing in securities issued by companies whose principal
business activities are outside the United States may involve significant risks
not present in domestic investments. For example, there is generally less
publicly available information about foreign companies, particularly those not
subject to the disclosure and reporting requirements of the U.S. securities
laws. Foreign issuers are generally not bound by uniform accounting, auditing,
and financial reporting requirements and standards of practice comparable to
those applicable to domestic issuers. Investments in foreign securities also
involve the risk of possible adverse changes in investment or exchange control
regulations, expropriation or confiscatory taxation, limitation on the removal
of funds or other assets of the Portfolio, political or financial instability or
diplomatic and other developments which could affect such investments. Further,
economies of particular countries or areas of the world may differ favorably or
unfavorably from the economy of the United States. It is anticipated that in
most cases the best available market for foreign securities will be on exchanges
or in over-the-counter markets located outside of the United States. Foreign
stock markets, while growing in volume and sophistication, are generally not as
developed as those in the United States, and securities of some foreign issuers
(particularly those located in developing countries) may be less liquid and more
volatile than securities of comparable U.S. companies. In addition, foreign
brokerage commissions are generally higher than commissions on securities traded
in the United States and may be non-negotiable. In general, there is less
overall governmental supervision and regulation of foreign securities markets,
broker-dealers, and issuers than in the United States.
Physical delivery of securities in small lots generally is required in India
and a shortage of vault capacity and trained personnel has existed among
qualified custodial Indian and Pakistani banks. The Portfolio may be unable to
sell securities where the registration process is incomplete and may experience
delays in receipt of dividends. If trading volume is limited by operational
difficulties, the ability of the Portfolio to invest its assets may be impaired.
Settlement of securities transactions in the Indian subcontinent may be delayed
and is generally less frequent than in the United States, which could affect the
liquidity of the Portfolio's assets. In addition, disruptions due to work
stoppages and trading improprieties in these securities markets have caused such
markets to close. If extended closings were to occur in stock markets where the
Portfolio was heavily invested, the Fund's ability to redeem Fund shares could
become correspondingly impaired.
The Adviser intends, as of the date of this SAI, not to invest in issuers
located in Vietnam, Cambodia, Laos or former Burma and to invest no more than 1%
of total assets in Bangladesh issuers.
FOREIGN CURRENCY TRANSACTIONS. The value of the assets of the Portfolio as
measured in U.S. dollars may be affected favorably or unfavorably by changes in
foreign currency exchange rates and exchange control regulations. Currency
exchange rates can also be affected unpredictably by intervention by U.S. or
foreign governments or central banks, or the failure to intervene, or by
currency controls or political developments in the U.S. or abroad. The Portfolio
may conduct its foreign currency exchange transactions on a spot (i.e., cash)
basis at the spot rate prevailing in the foreign currency exchange market or
through entering into swaps, forward contracts, options or futures on currency.
In spot transactions, foreign exchange dealers do not charge a fee for
conversion, but they do realize a profit based on the difference (the "spread")
between the prices at which they are buying and selling various currencies.
Thus, a dealer may offer to sell a foreign currency to the Portfolio at one
rate, while offering a lesser rate of exchange should the Portfolio desire to
resell that currency to the dealer.
Currency swaps require maintenance of a segregated account as described
under "Asset Coverage Requirements" below. The Portfolio will not enter into any
currency swap unless the credit quality of the unsecured senior debt or the
claims-paying ability of the other party thereto is considered to be investment
grade by the Adviser.
The Portfolio may enter into forward foreign currency exchange contracts in
several circumstances. First, when the Portfolio enters into a contract for the
purchase or sale of a security denominated in a foreign currency, or when the
Portfolio anticipates the receipt in a foreign currency of dividend or interest
payments on such a security which it holds, the Portfolio may desire to "lock
in" the U.S. dollar price of the security or the U.S. dollar equivalent of such
dividend or interest payment, as the case may be. By entering into a forward
contract for the purchase or sale, for a fixed amount of dollars, of the amount
of foreign currency involved in the underlying transactions, the Portfolio will
attempt to protect itself against an adverse change in the relationship between
the U.S. dollar and the subject foreign currency during the period between the
date on which the security is purchased or sold, or on which the dividend or
interest payment is declared, and the date on which such payments are made or
received.
Additionally, when the Adviser believes that the currency of a particular
foreign country may suffer a substantial decline against the U.S. dollar, it may
enter into a forward contract to sell, for a fixed amount of dollars, the amount
of foreign currency approximating the value of some or all of the securities
held by the Portfolio denominated in such foreign currency. The precise matching
of the forward contract amounts and the value of the securities involved will
not generally be possible because the future value of such securities in foreign
currencies will change as a consequence of market movements in the value of
those securities between the date on which the contract is entered into and the
date it matures. The precise projection of short-term currency market movements
is not possible, and short-term hedging provides a means of fixing the dollar
value of only a portion of the Portfolio's foreign assets.
RISKS ASSOCIATED WITH DERIVATIVE INSTRUMENTS. Entering into a derivative
instrument involves a risk that the applicable market will move against the
Portfolio's position and that the Portfolio will incur a loss. For derivative
instruments other than purchased options, this loss may exceed the amount of the
initial investment made or the premium received by the Portfolio. Derivative
instruments may sometimes increase or leverage the Portfolio's exposure to a
particular market risk. Leverage enhances the Portfolio's exposure to the price
volatility of derivative instruments it holds. The Portfolio's success in using
derivative instruments to hedge portfolio assets depends on the degree of price
correlation between the derivative instruments and the hedged asset. Imperfect
correlation may be caused by several factors, including temporary price
disparities among trading markets for the derivative instrument, the assets
underlying the derivative instrument and the Portfolio assets. Over-the-counter
("OTC") derivative instruments involve an enhanced risk that the issuer or
counterparty will fail to perform its contractual obligations. Some derivative
instruments are not readily marketable or may become illiquid under adverse
market conditions. In addition, during periods of market volatility, a commodity
exchange may suspend or limit trading in an exchange-traded derivative
instrument, which may make the contract temporarily illiquid and difficult to
price. Commodity exchanges may also establish daily limits on the amount that
the price of a futures contract or futures option can vary from the previous
days settlement price. Once the daily limit is reached, no trades may be made
that day at a price beyond the limit. This may prevent the Portfolio from
closing out positions and limiting its losses. The staff of the Commission takes
the position that certain purchased OTC options, and assets used as cover for
written OTC options, are subject to the Portfolio's 15% limit on illiquid
investments. The Portfolio's ability to terminate OTC derivative instruments may
depend on the cooperation of the counterparties to such contracts. For thinly
traded derivative instruments, the only source of price quotations may be the
selling dealer or counterparty. In addition, certain provisions of the Code,
limit the extent to which the Portfolio may purchase and sell derivative
instruments. The Portfolio will engage in transactions in futures contracts and
related options only to the extent such transactions are consistent with the
requirements of the Code for maintaining the qualification of the Fund as a
regulated investment company for federal income tax purposes. See "Taxes."
ASSET COVERAGE REQUIREMENTS. Transactions involving reverse repurchase
agreements, currency swaps, forward contracts or futures contracts and options
(other than options that the Portfolio has purchased) expose the Portfolio to an
obligation to another party. The Portfolio will not enter into any such
transactions unless it owns either (1) an offsetting ("covered") position in
securities, currencies, or other options, futures contracts or forward
contracts, or (2) cash or liquid securities (such as readily marketable
securities 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 obligation 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.
LIMITATIONS ON FUTURES CONTRACTS AND OPTIONS. The Portfolio does not intend to
write a covered option on any security if after such transaction more than 15%
of its net assets, as measured by the aggregate value of the securities
underlying all covered calls and puts written by the Portfolio, would be subject
to such options. The Portfolio will only write a put option on a security which
it intends to ultimately acquire for its portfolio. The Portfolio does not
intend to purchase any options if after such transaction more than 5% of its net
assets, as measured by the aggregate of all premiums paid for all such options
held by the Portfolio, would be so invested. The Portfolio may enter into
futures contracts (and options thereon) traded on a foreign exchange, only if
the Adviser determines that trading on 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 United States
CFTC-regulated exchanges.
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.
REPURCHASE AGREEMENTS. Under a repurchase agreement the Portfolio buys a
security at one price and simultaneously promises to sell that same security
back to the seller at a higher price. At no time will the Portfolio commit more
than 15% of its net assets to repurchase agreements which mature in more than
seven days and other illiquid securities. The Portfolio's repurchase agreements
will provide that the value of the collateral underlying the repurchase
agreement will always be at least equal to the repurchase price, including any
accrued interest earned on the repurchase agreement, and will be marked to
market daily.
REVERSE REPURCHASE AGREEMENTS. The Portfolio may enter into reverse repurchase
agreements. Under a reverse repurchase agreement, the Portfolio temporarily
transfers possession of a portfolio instrument to another party, such as a bank
or broker-dealer, in return for cash. At the same time, the Portfolio agrees to
repurchase the instrument at an agreed upon time (normally within seven days)
and price, which reflects an interest payment. The Portfolio expects that it
will enter into reverse repurchase agreements when it is able to invest the cash
so acquired at a rate higher than the cost of the agreement, which would
increase the income earned by the Portfolio. The Portfolio could also enter into
reverse repurchase agreements as a means of raising cash to satisfy redemption
requests without the necessity of selling portfolio assets.
When the Portfolio enters into a reverse repurchase agreement, any
fluctuations in the market value of either the securities transferred to another
party or the securities in which the proceeds may be invested would affect the
market value of the Portfolio's assets. As a result, such transactions may
increase fluctuations in the market value of the Portfolio's assets. While there
is a risk that large fluctuations in the market value of the Portfolio's assets
could affect the Portfolio's net asset value, this risk is not significantly
increased by entering into reverse repurchase agreements, in the opinion of the
Adviser. Because reverse repurchase agreements may be considered to be the
practical equivalent of borrowing funds, they constitute a form of leverage. If
the Portfolio reinvests the proceeds of a reverse repurchase agreement at a rate
lower than the cost of the agreement, entering into the agreement will lower the
Portfolio's yield.
PORTFOLIO TURNOVER. The Portfolio cannot accurately predict its portfolio
turnover rate, but it is anticipated that the annual turnover rate will
generally not exceed 100% (excluding turnover of securities having a maturity of
one year or less). A 100% annual turnover rate could occur, for example, if all
the securities in the portfolio were replaced once in a period of one year. A
high turnover rate (100% or more) necessarily involves greater expenses to the
Portfolio. The Portfolio engages in portfolio trading (including short-term
trading) if it believes that a transaction including all costs will help in
achieving its investment objective either by increasing income or by enhancing
the Portfolio's net asset value. Short-term trading may be advisable in light of
a change in circumstances of a particular company or within a particular
industry, or in light of general market, economic or political conditions. High
portfolio turnover may also result in the realization of substantial net
short-term capital gains. In order for the Fund to continue to qualify as a
regulated investment company for federal tax purposes, less than 30% of the
annual gross income of the Fund must be derived from the sale of securities and
certain other investments (including its share of gains from the sale of
securities and certain other investments held by the Portfolio) held for less
than three months.
LENDING PORTFOLIO SECURITIES. The Portfolio may seek to increase its income by
lending portfolio securities to broker-dealers or other institutional borrowers.
Under present regulatory policies of the Commission, such loans are required to
be secured continuously by collateral in cash, cash equivalents or U.S.
Government securities held by the Portfolio's custodian and maintained on a
current basis at an amount at least equal to market value of the securities
loaned, which will be marked to market daily. Cash equivalents include
short-term municipal obligations as well as taxable certificates of deposit,
commercial paper and other short-term money instruments. The financial condition
of the borrower will be monitored by the Adviser on an ongoing basis. The
Portfolio would continue to receive the equivalent of the interest or dividends
paid by the issuer on the securities loaned and would also receive a fee, or all
or a portion of the interest on investment of the collateral. The Portfolio
would have the right to call a loan and obtain the securities loaned at any time
on up to five business days' notice. The Portfolio would not have the right to
vote any securities having voting rights during the existence of a loan, but
could call the loan in anticipation of an important vote to be taken among
holders of the securities or the giving or holding of their consent on a
material matter affecting the investment. If the Adviser decides to make
securities loans, it is intended that the value of the securities loaned would
not exceed one-third of the Portfolio's total assets. As with other extensions
of credit there are risks of delay in recovery or even loss of rights in the
securities loaned if the borrower of the securities fails financially. However,
the loans will be made only to organizations deemed by the Adviser to be
sufficiently creditworthy and when, in the judgment of the Adviser, the
consideration which can be earned from securities loans of this type justifies
the attendant risk. Securities lending involves administration expenses
including finders fees.
INVESTMENT RESTRICTIONS
The following investment restrictions of the Fund are designated as
fundamental and as such cannot be changed without the approval by the holders of
a majority of the Fund's outstanding voting securities, which as used in this
SAI means the lesser of (a) 67% or more of the outstanding voting securities of
the Fund present or represented by proxy at a meeting if the holders of more
than 50% of the shares are present or represented at the meeting or (b) more
than 50% of the shares of the Fund. Accordingly, the Fund may not:
(1) Borrow money or issue senior securities except as permitted by the
Investment Company Act of 1940;
(2) Purchase any securities on margin (but the Fund and the Portfolio may
obtain such short-term credits as may be necessary for the clearance of
purchases and sales of securities);
(3) Underwrite securities of other issuers;
(4) Invest in real estate including interests in real estate limited
partnerships (although it may purchase and sell securities which are secured by
real estate and securities of companies which invest or deal in real estate) or
in commodities or commodity contacts for the purchase or sale of physical
commodities;
(5) Make loans to any person except by (a) the acquisition of debt
securities and making portfolio investments, (b) entering into repurchase
agreements and (c) lending portfolio securities;
(6) With respect to 75% of its total assets, invest more than 5% of its
total assets (taken at current value) in the securities of any one issuer, or
invest in more than 10% of the outstanding voting securities of any one issuer,
except obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities and except securities of other investment companies; or
(7) Concentrate its investments in any particular industry, but, if deemed
appropriate for the Fund's objective, up to 25% of the value of its assets may
be invested in securities of companies in any one industry (although more than
25% may be invested in securities issued or guaranteed by the U.S. Government or
its agencies or instrumentalities).
Notwithstanding the investment policies and restrictions of the Fund, the
Fund may invest its assets in an open-end management investment company with
substantially the same investment objective, policies and restrictions as the
Fund. Notwithstanding the investment policies and restrictions of the Portfolio,
the Portfolio may invest part of its assets in another investment company
consistent with the 1940 Act.
The Portfolio has adopted substantially the same fundamental investment
restrictions as the foregoing investment restrictions adopted by the Fund; such
restrictions cannot be changed without the approval of a "majority of the
outstanding voting securities" of the Portfolio.
The Fund and the Portfolio have each adopted the following investment
policies which may be changed without shareholder or investor approval. As a
matter of nonfundamental policy, the Fund and the Portfolio may 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) purchase warrants if, as a result of such
purchase, more than 5% of the Portfolio's or the Fund's net assets, as the case
may be (taken at current value), would be invested in warrants, and the value of
such warrants which are not listed on the New York or American Stock Exchange
may not exceed 2% of the Portfolio's or the Fund's net assets; this policy does
not apply to or restrict warrants acquired by the Portfolio or the Fund in units
or attached to securities, inasmuch as such warrants are deemed to be without
value; (c) purchase any securities if at the time of such purchase, permitted
borrowings under investment restriction (1) above exceed 5% of the value of the
Portfolio's or the Fund's total assets, as the case may be; or (d) purchase or
retain in its portfolio any securities issued by an issuer any of whose
officers, directors, trustees or security holders is an officer or Trustee of
the Trust or is a member, officer, director or trustee of any investment adviser
of the Trust or the Portfolio if after the purchase of the securities of such
issuer by the Fund or the Portfolio one or more of such persons owns
beneficially more than 1/2 of 1% of the shares or securities or both (all taken
at market value) of such issuer and such persons owning more than 1/2 of 1% of
such shares or securities together own beneficially more than 5% of such shares
or securities or both (all taken at market value).
Whenever an investment policy or investment restriction set forth in the
Prospectus or this SAI states a maximum percentage of assets that may be
invested in any security or other asset or describes a policy regarding quality
standards, such percentage limitation or standard shall be determined
immediately after and as a result of the Fund's or the Portfolio's acquisition
of such security or other asset. Accordingly, any later increase or decrease
resulting from a change in values, assets or other circumstances, or any
subsequent rating change below investment grade made by a rating service, will
not compel the Fund or the Portfolio, as the case may be, to dispose of such
security or other asset. Nevertheless, under normal market conditions the Fund
and the Portfolio must take actions necessary to comply with its policy of
investing at least 65% of total assets in equity securities of Asian small
companies and not investing more than 15% of net assets in illiquid securities.
Moreover, the Fund and the Portfolio must always be in compliance with its
borrowing policy set forth above.
Although permissible under the Fund's investment restrictions, the Fund has
no present intention during the coming fiscal year to: borrow money; pledge its
assets; underwrite securities issued by other persons; or make loans to other
persons.
TRUSTEES AND OFFICERS
The Trustees and officers of the Trust and the Portfolio are listed below.
Except as indicated, each individual has held the office shown or other offices
in the same company for the last five years. Unless otherwise noted, the
business address of each Trustee and officer is 24 Federal Street, Boston,
Massachusetts 02110, which is also the address of the Fund's sponsor and
manager, Eaton Vance, of Eaton Vance's wholly-owned subsidiary, Boston
Management and Research ("BMR"), of Eaton Vance's parent, Eaton Vance Corp.
("EVC"), and of Eaton Vance's trustee, Eaton Vance, Inc. ("EV"). Eaton Vance and
EV are both wholly-owned subsidiaries of EVC. The business address of the
Adviser is 3808 One Exchange Square, Central, Hong Kong. Those Trustees who are
"interested persons" of the Trust or the Portfolio as defined in the 1940 Act,
by virtue of their affiliation with the Adviser, Eaton Vance, BMR, EVC or EV,
are indicated by an asterisk (*).
TRUSTEES OF THE TRUST AND THE PORTFOLIO
JAMES B. HAWKES (56), President of the Trust, Vice President of the Portfolio
and Trustee*
Chairman, President and Chief Executive Officer of Eaton Vance, BMR, EVC and
EV, and a Director of EVC and EV. Director, Trustee and officer of various
investment companies managed by Eaton Vance or BMR. Director of Lloyd George
Management (B.V.I.) Limited.
EDWARD K.Y. CHEN (52), Trustee of the Portfolio
President of Lingnan College in Hong Kong. Professor and Director of Centre of
Asian Studies at the University of Hong Kong from 1979-1995. Director of First
Pacific Company and Asia Satellite Telecommunications Holdings Ltd., and a
Board Member of the Mass Transit Railway Corporation. Member of the Executive
Council of the Hong Kong Government from 1992-1997 and Chairman of the
Consumer Council from 1991-1997.
Address: President's Office, Lingnan College, Tuen Mun, Hong Kong
HON. ROBERT LLOYD GEORGE (45), President and Trustee of the Portfolio*
Chairman and Chief Executive of Lloyd George Management (B.V.I.) Limited.
Chairman and Chief Executive Officer of the Advisers. Managing Director of
Indosuez Asia Investment Services, Ltd. from 1984 to 1991.
Address: 3808 One Exchange Square, Central, Hong Kong
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 (62), 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 (71), 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 (59), Vice President of the Trust
Vice President of Eaton Vance, BMR and EV since November 1994; formerly Vice
President of The Boston Company (1990-1994). Mr. Burt was elected Vice
President of the Trust on June 19, 1995.
M. DOZIER GARDNER (64), Vice President of the Trust
Vice Chairman of Eaton Vance, BMR, EVC and EV, and Director of EVC and EV.
Director or Trustee and officer of various investment companies managed by
Eaton Vance or BMR.
BARCLAY TITTMANN (65), Vice President of the Trust
Vice President of Eaton Vance, BMR and EV since October 1993; formerly Vice
President of Invesco Management and Research (1970-1993). Mr. Tittmann was
elected Vice President of the Trust on June 19, 1995.
SCOBIE DICKINSON WARD (31), Vice President, Assistant Secretary and Assistant
Treasurer of the Portfolio
Director of LGM and Chief Investment Officer of the Adviser.
Address: 3808 One Exchange Square, Central, Hong Kong
WILLIAM WALTER RALEIGH KERR (47), Vice President and Assistant Treasurer of the
Portfolio
Director, Finance Director and Chief Operating Officer of the
Advisers.
Director of Lloyd George Management (B.V.I.) Limited.
Address: 3808 One Exchange Square, Central, Hong Kong
JAMES L. O'CONNOR (52), Vice President of the Portfolio and Treasurer
Vice President of Eaton Vance, BMR and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
ALAN R. DYNNER (57), Secretary
Vice President and Chief Legal Officer of Eaton Vance, BMR, EVC and EV since
November 1, 1996. Previously, he was a Partner of the law firm of Kirkpatrick
& Lockhart LLP, New York and Washington, D.C., and was Executive Vice
President of Neuberger & Berman Management, Inc., a mutual fund management
company. Officer of various investment companies managed by Eaton Vance or
BMR. Mr. Dynner was elected Secretary on June 23, 1997.
JANET E. SANDERS (62), 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 (35), Assistant Secretary
Assistant Vice President of Eaton Vance, BMR and EV since March 1, 1994;
employee of Eaton Vance since March 1993. State Regulations Supervisor, The
Boston Company (1991-1993). Officer of various investment companies managed by
Eaton Vance or BMR. Mr. Murphy was elected Assistant Secretary of the Trust on
March 27, 1995.
ERIC G. WOODBURY (40), Assistant Secretary
Vice President of Eaton Vance, BMR 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, Reamer and Thorndike, are members of the Special Committee of
the Board of Trustees of the Trust and Messrs. Hayes, Dwight and Reamer are
members of the Special Committee of the Board of Trustees 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, the Adviser 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, the Adviser and its affiliates.
Messrs. Treynor and Dwight are members of the Audit Committee of the Board
of Trustees of the Trust and Messrs. Hayes, Chen and Dwight are members of the
Audit Committee of the Board of Trustees 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 (except Mr. Chen) that are not affiliated with
Eaton Vance may elect to defer receipt of all or a percentage of their annual
fees in accordance with the terms of a Trustees Deferred Compensation Plan (the
"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 Trust nor the Portfolio 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. (The Trustees of the Trust and the Portfolio who are
members of the Eaton Vance organization receive no compensation from the Trust
or the Portfolio.) For the fiscal year ending August 31, 1998, it is estimated
that the noninterested Trustees of the Trust and the Portfolio will receive the
following compensation in their capacities as Trustees from the Fund and the
Portfolio, and, for the fiscal year ended August 31, 1997, received the
following compensation in their capacities as Trustees of the funds in the Eaton
Vance fund complex(1):
<TABLE>
<CAPTION>
ESTIMATED ESTIMATED
AGGREGATE AGGREGATE TOTAL COMPENSATION
COMPENSATION COMPENSATION FROM TRUST AND
NAME FROM TRUST(2) FROM PORTFOLIO FUND COMPLEX
- ---- ------------- -------------- ------------------
<S> <C> <C> <C>
Hon. Edward K.Y. Chen ................... $ -- $5,000 $ 23,300
Donald R. Dwight ........................ 8 80 145,000(3)
Samuel L. Hayes, III .................... 8 80 152,500(4)
Norton H. Reamer ........................ 8 80 145,000
John L. Thorndike ....................... 8 80 147,500(5)
Jack L. Treynor ......................... 8 80 150,000
</TABLE>
- ----------
(1) As of January 1, 1998, the Eaton Vance fund complex consists of 159
registered investment companies or series thereof.
(2) The Trust consisted of 6 Funds as of December 31, 1997. (3) Includes $45,000
of deferred compensation. (4) Includes $28,750 of deferred compensation. (5)
Includes $82,384 of deferred compensation.
The Adviser is a subsidiary of Lloyd George Management (B.V.I.) Limited,
which is ultimately controlled by the Hon. Robert J.D. Lloyd George, President
of the Portfolio and Chairman and Chief Executive Officer of the Adviser. Mr.
Hawkes is a Trustee and officer of the Trust and an officer of the Fund's
sponsor and manager. Mr. Hayes is a Trustee of the Trust.
MANAGEMENT OF THE FUND AND THE PORTFOLIO
Eaton Vance acts as the sponsor and manager of the Fund and the
administrator of the Portfolio. The Portfolio has engaged Lloyd George
Investment Management (Bermuda) Limited (the "Adviser") as its investment
adviser.
THE ADVISER
As investment adviser to the Portfolio, the Adviser manages the Portfolio's
investments, subject to the supervision of the Board of Trustees of the
Portfolio. The Adviser is also responsible for effecting all security
transactions on behalf of the Portfolio, including the allocation of principal
transactions and portfolio brokerage and the negotiation of commissions. See
"Portfolio Security Transactions." Under the investment advisory agreement, the
Adviser is entitled to receive a monthly advisory fee computed by applying the
annual asset rate applicable to that portion of the average daily net assets of
the Portfolio throughout the month in each Category as indicated below:
<TABLE>
<CAPTION>
ANNUAL
CATEGORY AVERAGE DAILY NET ASSETS ASSET RATE
<S> <C> <C>
1 less than $500 million ..................................... 0.75%
2 $500 million but less than $1 billion ...................... 0.70
3 $1 billion but less than $1.5 billion ...................... 0.65
4 $1.5 billion but less than $2 billion ...................... 0.60
5 $2 billion but less than $3 billion ........................ 0.55
6 $3 billion and over ........................................ 0.50
</TABLE>
For the investment advisory fees that the Portfolio paid to the Adviser, see
Appendix A.
Eaton Vance is among the oldest mutual funds organizations in the country.
As an experienced mutual fund provider, Eaton Vance has contributed to making
the securities market more widely accessible to investors. Eaton Vance equity
funds provide a way to take advantage of the potentially higher returns of
individual stocks. Eaton Vance has a staff of more than 25 investment
professionals specializing in security analysis and equity management.
The Eaton Vance investment process stresses intensive fundamental research.
Portfolios are built on a stock-by-stock basis and the process includes visits
to companies under consideration. The process also focuses on well-managed
companies with the following characteristics: strong underlying value or
franchise; solid earnings growth; steady cash flow, strong balance sheet;
innovative products or services; potential for sustained growth; seasoned,
creative management; or ability to survive variable market conditions.
By investing in diversified portfolios and employing prudent and
professional management, Eaton Vance mutual funds can provide attractive return,
while exposing shareholders to less risk than if they were to build investment
portfolios on their own. Eaton Vance employs rigorous buy and sell disciplines.
For instance, purchases are made with an eye to both relative and absolute
growth rates and price/earning ratios, and sales are made when a stock is fully
valued, fundamentals deteriorate, management fails to execute its strategy, or
more attractive alternatives are available.
LGM specializes in providing investment management services with respect to
equity securities of companies trading in Asian securities markets, and also
those of emerging markets. LGM currently manages portfolios for both private
clients and institutional investors seeking long-term capital growth and has
advised Eaton Vance's international equity funds since 1992. LGM's core
investment team consists of fourteen experienced investment professionals who
have worked together over a number of years successfully managing client
portfolios in non-U.S. stock markets. The team has a unique knowledge of, and
experience with, Asian and emerging markets. LGM analysts cover Asia, the India
subcontinent, Russia and Eastern Europe, Latin America, Australia and New
Zealand from offices in Hong Kong, London and Mumbia. LGM is ultimately
controlled by the Hon. Robert J.D. Lloyd George, President of the Portfolio and
Chairman and Chief Executive Officer of the Adviser. LGM's only business is
portfolio management. Eaton Vance's parent is a shareholder of LGM.
The Adviser and LGM have adopted a conservative management style, providing
a blend of Asian and multinational expertise with the most rigorous
international standards of fundamental security analysis. Although focused
primarily in Asia, the Adviser and LGM maintain a network of international
contacts in order to monitor international economic and stock market trends and
offer clients a global management service.
The directors of the Adviser are the Honourable Robert Lloyd George,
William Walter Raleigh Kerr, M.F. Tang, Scobie Dickinson Ward, Pamela Chan,
Adaline Mang-Yee Ko, Peter Bubenzer and Judith Collis. The Hon. Robert J.D.
Lloyd George is Chairman and Chief Executive Officer of the Adviser and Mr.
Kerr is Chief Operating Officer of the Adviser. The business address of the
first six individuals is 3808 One Exchange Square, Central, Hong Kong and of
the last two is Cedar House, 41 Cedar Avenue, Hamilton HM12, Bermuda.
Mr. Lloyd George was born in London in 1952 and educated at Eton College,
where he was a King's Scholar, and at Oxford University. Prior to founding LGM,
Mr. Lloyd George was Managing Director of Indosuez Asia Investment Services Ltd.
In 1983 Mr. Lloyd George launched and managed the Henderson Japan Special
Situations Trust. Prior to that he spent four years with the Fiduciary Trust
Company of New York researching international securities, in the United States
and Europe, for the United Nations Pension Fund.
Eaton Vance and the Adviser follow a common investment philosophy, striving
to identify companies with outstanding management and earnings growth potential
by following a disciplined management style, adhering to the most rigorous
international standards of fundamental security analysis, placing heavy emphasis
on research, visiting every company owned, and closely monitoring political and
economic developments.
Eaton Vance mutual funds are distributed by 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.
The Portfolio's investment advisory agreement with the Adviser remains in
effect from year to year for 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 the Adviser may render services to others. The Agreement also provides
that, in the absence of willful misfeasance, bad faith, gross negligence or
reckless disregard of obligations or duties under the Agreement on the part of
the Adviser, the Adviser shall not be liable to the Portfolio or to any
shareholder for any act or omission in the course of or connected with rendering
services or for any losses sustained in the purchase, holding or sale of any
security.
MANAGER, SPONSOR AND ADMINISTRATOR
See "Management of the Fund and the Portfolio" in the 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:
<TABLE>
<CAPTION>
ANNUAL
CATEGORY AVERAGE DAILY NET ASSETS ASSET RATE
<S> <C> <C>
1 less than $500 million ..................................... 0.25%
2 $500 million but less than $1 billion ...................... 0.23333
3 $1 billion but less than $1.5 billion ...................... 0.21667
4 $1.5 billion but less than $2 billion ...................... 0.20
5 $2 billion but less than $3 billion ........................ 0.18333
6 $3 billion and over ........................................ 0.16667
</TABLE>
For the administration and management fees the Portfolio and the Fund paid
to Eaton Vance see Appendix A.
Eaton Vance's management contract with the Fund and administration agreement
with the Portfolio will each remain in effect from year to year for so long as
such continuance is approved annually by the vote of a majority of the Trustees
of the Trust or the Portfolio, as the case may be. Each agreement may be
terminated at any time without penalty on sixty days' written notice by the
Board of Trustees of either party thereto, or by a vote of a majority of the
outstanding voting securities of the Fund or the Portfolio, as the case may be.
Each agreement will terminate automatically in the event of its assignment. Each
agreement provides that, in the absence of Eaton Vance's willful misfeasance,
bad faith, gross negligence or reckless disregard of its obligations or duties
to the Fund or the Portfolio under such contract or agreement, Eaton Vance will
not be liable to the Fund or the Portfolio for any loss incurred. Each agreement
was initially approved by the Trustees, including the noninterested Trustees, of
the Trust or the Portfolio which is a party thereto at meetings held on February
21, 1996 of the Trust and the Portfolio.
The Fund and the Portfolio, as the case may be, will each be responsible for
all of its respective costs and expenses not expressly stated to be payable by
Eaton Vance under the management contract or the administration agreement. Such
costs and expenses to be borne by each of the Fund or the Portfolio, as the case
may be, include, without limitation, custody and transfer agency fees and
expenses, including those incurred for determining net asset value and keeping
accounting books and records, expenses of pricing and valuation services; the
cost of share certificates; membership dues in investment company organizations;
brokerage commissions and fees; fees and expenses of registering under the
securities laws; expenses of reports to shareholders and investors; proxy
statements, and other expenses of shareholders' or investors' meetings;
insurance premiums, printing and mailing expenses; interest, taxes and corporate
fees; legal and accounting expenses; compensation and expenses of Trustees not
affiliated with Eaton Vance; distribution and service fees payable by the Fund
under its Rule 12b-1 distribution plan; and investment advisory, management and
administration fees. The Fund or the Portfolio will also each bear expenses
incurred in connection with litigation in which the Fund or the Portfolio, as
the case may be, is a party and any legal obligation to indemnify its respective
officers and Trustees with respect thereto, to the extent not covered by
insurance.
Eaton Vance and EV are both wholly-owned subsidiaries of EVC. BMR is a
wholly-owned subsidiary of Eaton Vance. Eaton Vance and BMR are both
Massachusetts business trusts, and EV is the trustee of Eaton Vance and BMR.
The Directors of EV are 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. Hawkes is chairman and Mr. Gardner is vice
chairman. 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, the Voting Trustees of which are Messrs.
Gardner, Hawkes and Rowland and Alan R. Dynner, Thomas E. Faust, Jr., William
M. Steul and Wharton P. Whitaker. 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 December 31, 1997, Messrs. Gardner and Hawkes
each owned 24% of such voting trust receipts, and Messrs. Roland and Faust
owned 15% and 13%, respectively, and Messrs. Dynner, Steul and Whitaker each
owned 8%. Messrs. Gardner, Hawkes and Dynner, who are officers and/or Trustees
of the Trust, are members of the EVC, Eaton Vance, BMR and EV organizations.
Messrs. Burt, Murphy, O'Connor, Tittmann and Woodbury and Ms. Sanders, are
officers of the Trust and/or the Portfolio, and are also members of the Eaton
Vance, BMR and EV organizations.
Eaton Vance owns all the stock of Northeast Properties, Inc., which is
engaged in real estate investment. EVC also owns approximately 21% of the Class
A shares issued by the parent of the Adviser. EVC owns all the stock of Fulcrum
Management, Inc. and MinVen, Inc., which are engaged in precious metal mining
venture investment and management. EVC, Eaton Vance, BMR and EV may also enter
into other businesses.
EVC and its affiliates and their officers and employees from time to time
have transactions with various banks, including the custodian of the Fund and
the Portfolio, 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 Trust and the Portfolio. IBT has the custody
of all cash and securities of the Fund and all securities of the Portfolio
purchased in the United States, maintains the Fund's and the Portfolio's general
ledger and computes the daily net asset value of interests in the Portfolio and
the net asset value of shares of the Fund. In such capacities, IBT attends to
details in connection with the sale, exchange, substitution, transfer or other
dealings with the Fund's and the Portfolio's respective investments, receives
and disburses all funds, and performs various other ministerial duties upon
receipt of proper instructions from the Trust and the Portfolio, respectively.
Portfolio securities, if any, purchased by the Portfolio in the U.S. are
maintained in the custody of IBT or of other domestic banks or depositories.
Portfolio securities purchased outside of the U.S. are maintained in the custody
of foreign banks and trust companies that are members of IBT's Global Custody
Network, or foreign depositories used by such foreign banks and trust companies.
Each of the domestic and foreign custodial institutions holding portfolio
securities has been approved by the Board of Trustees of the Portfolio in
accordance with regulations under the 1940 Act.
IBT charges fees which are competitive within the industry. These fees for
the Portfolio relate to: (1) custody services based upon a percentage of the
market values of Portfolio securities; (2) bookkeeping and valuation services
provided at an annual rate; (3) activity charges, primarily the result of the
number of portfolio transactions; and (4) reimbursement of out-of-pocket
expenses. These fees are then reduced by a credit for cash balances of the
Portfolio at the custodian equal to 75% of the 91-day U.S. Treasury Bill auction
rate applied to the Portfolio's average daily collected balances. The portion of
the fee for the Fund related to bookkeeping and pricing services is based upon a
percentage of the Fund's net assets and the portion of the fee related to
financial statement preparation is a fixed amount.
IBT also provides services in connection with the preparation of shareholder
reports and the electronic filing of such reports with the Commission, for which
it receives a separate fee.
SERVICES FOR ACCUMULATION -- CLASS A SHARES
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 $50,000 or more of Class A shares and shares of other funds exchangeable
for Class A shares and listed under "The Eaton Vance Exchange Privilege" in the
Prospectus will be purchased within a 13-month period, a Statement of Intention
should be signed so that shares may be obtained at the same reduced sales charge
as though the total quantity were invested in one lump sum. Shares held under
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 Shares" in the
Prospectus. Any investor considering signing a Statement of Intention should
read it carefully.
Right of Accumulation -- Cumulative Quantity Discount. The applicable sales
charge level for the purchase of Class A shares is calculated by taking the
dollar amount of the current purchase and adding it to the value (calculated at
the maximum current offering price) of the shares the shareholder owns in his or
her account(s) in the Fund and shares of other funds exchangeable for Class A
shares and listed under "The Eaton Vance Exchange Privilege" in the Prospectus.
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 Shares" in the Prospectus. Shares purchased (i) by an individual, his or
her spouse and their children under the age of twenty-one, and (ii) by a
trustee, guardian or other fiduciary of a single trust estate or a single
fiduciary account, will be combined for the purpose of determining whether a
purchase will qualify for the Right of Accumulation and if qualifying, the
applicable sales charge level.
For any such discount to be made available, at the time of purchase a
purchaser or his or her Authorized Firm must provide the Principal Underwriter
(in the case of a purchase made through an Authorized Firm) or the Transfer
Agent (in the case of an investment made by mail) with sufficient information to
permit verification that the purchase order qualifies for the accumulation
privilege. Confirmation of the order is subject to such verification. The Right
of Accumulation privilege may be amended or terminated at any time as to
purchases occurring thereafter.
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 Prospectus) based upon the value
of the shares held. The checks will be drawn from share redemptions and hence,
although they are a return of principal may require the recognition of taxable
gain or loss. Income dividends and capital gains distributions in connection
with withdrawal accounts will be credited at net asset value as of the record
date for each distribution. Continued withdrawals in excess of current income
will eventually use up principal, particularly in a period of declining market
prices. A shareholder may not have a withdrawal plan in effect at the same time
he or she has authorized Bank Automated Investing or is otherwise making regular
purchases of Fund shares. The shareholder, Transfer Agent or the Principal
Underwriter will be able to terminate the withdrawal plan at any time without
penalty.
DETERMINATION OF NET ASSET VALUE
The Fund and Portfolio will be closed for business and will not price
their shares on the following business holidays: New Year's Day, Martin Luther
King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day.
The Trustees of the Portfolio have established the following procedures for
the fair valuation of the Portfolio's assets under normal market conditions.
Marketable securities listed on foreign or U.S. securities exchanges or in the
NASDAQ National Market System generally are valued at closing sale prices or, if
there were no sales, at the mean between the closing bid and asked prices
therefor on the exchange where such securities are principally traded or on such
National Market System (such prices may not be used, however, where an active
over-the-counter market in an exchange listed security better reflects current
market value). Unlisted or listed securities for which closing sale prices are
not available are valued at the mean between the latest bid and asked prices. An
option is valued at the last sale price as quoted on the principal exchange or
board of trade on which such option or contract is traded, or in the absence of
a sale, the mean between the last bid and asked price. Futures positions on
securities or currencies are generally valued at closing settlement prices. All
other securities are valued at fair value as determined in good faith by or
pursuant to procedures established by the Trustees of the Portfolio.
Short term debt securities with a remaining maturity of 60 days or less are
valued at amortized cost. If securities were acquired with a remaining maturity
of more than 60 days, their amortized cost value will be based on their value on
the sixty-first day prior to maturity. Other fixed income and debt securities,
including listed securities and securities for which price quotations are
available, will normally be valued on the basis of valuations furnished by a
pricing service.
Generally, trading in the foreign securities owned by the Portfolio is
substantially completed each day at various times prior to the close of the
Exchange. The values of these securities used in determining the net asset value
of the Portfolio's shares are computed as of such times. Occasionally, events
affecting the value of foreign securities may occur between such times and the
close of the Exchange which will not be reflected in the computation of the
Portfolio's net asset value (unless the Portfolio deems that such events would
materially affect its net asset value, in which case an adjustment would be made
and reflected in such computation). Foreign securities and currency held by the
Portfolio will be valued in U.S. dollars; such values will be computed by the
custodian based on foreign currency exchange rate quotations.
Each investor in the Portfolio, including the Fund, may add to or reduce its
investment in the Portfolio on each day the Exchange is open for trading
("Portfolio Business Day") as of the close of regular trading on the Exchange
(the "Portfolio Valuation Time"). The value of each investor's interest in the
Portfolio will be determined by multiplying the net asset value of the Portfolio
by the percentage, determined on the prior Portfolio Business Day, which
represented that investor's share of the aggregate interests in the Portfolio on
such prior day. Any additions or withdrawals for the current Portfolio Business
Day will then be recorded. Each investor's percentage of the aggregate interest
in the Portfolio will then be recomputed as the percentage equal to a fraction
(i) the numerator of which is the value of such investor's investment in the
Portfolio as of the close of Portfolio Valuation Time on the prior Portfolio
Business Day plus or minus, as the case may be, that amount of any additions to
or withdrawals from the investor's investment in the Portfolio on the current
Portfolio Business Day, and (ii) the denominator of which is the aggregate net
asset value of the Portfolio as of the Portfolio Valuation Time on the prior
Portfolio Business Day plus or minus, as the case may be, the amount of the net
additions to or withdrawals from the aggregate investment in the Portfolio on
the current Portfolio Business Day by all investors in the Portfolio. The
percentage so determined will then be applied to determine the value of the
investor's interest in the Portfolio for the current Portfolio Business Day.
INVESTMENT PERFORMANCE
Average annual total return is determined separately for each Class of the
Fund by multiplying a hypothetical initial purchase order of $1,000 by the
average annual compound rate of return (including capital appreciation/
depreciation, and distributions paid and reinvested) for the stated period and
annualizing the results. The calculation assumes (i) that all distributions are
reinvested at net asset value on the reinvestment dates during the period, (ii)
the deduction of the maximum sales charge from the initial $1,000 purchase order
for Class A shares, (iii) a complete redemption of the investment and (iv) the
deduction of any CDSC at the end of the period.
Total return may be compared to relevant indices, such as the Consumer Price
Index and various domestic and foreign securities indices. The Fund's total
return and comparisons with these indices may be used in advertisements and in
information furnished to present or prospective shareholders. The Fund's
performance may differ from that of other investors in the Portfolio, including
any other investment companies. 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, 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 Trust (or Principal Underwriter) 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 Trust (or Principal Underwriter) 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 accounting and
tax purposes. The Fund intends to elect to be treated, and to qualify each year
as a regulated investment company ("RIC") under the Code. Accordingly, the Fund
intends to satisfy certain requirements relating to sources of its income and
diversification of its assets and to distribute substantially all of its
ordinary income and net income in accordance with the timing requirements
imposed by the Code, so as to maintain its RIC status and to avoid paying any
federal income or excise tax. 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 also satisfy these
requirements. The Portfolio will allocate at least annually among its investors,
including the Fund, the Portfolio's net investment income, net realized capital
gains, and any other items of income, gain, loss, deduction or credit. The
Portfolio will make allocations to the Fund in a manner intended to comply with
the Code and applicable regulations and will make moneys available for
withdrawal at appropriate times and in sufficient amounts to enable the Fund to
satisfy the tax distribution requirements that apply to the Fund and that must
be satisfied in order to avoid federal income and/or excise tax on the Fund. For
purposes of applying the requirements of the Code regarding qualification as a
RIC, the Fund will be deemed (i) to own its proportionate share of each of the
assets of the Portfolio and (ii) will be entitled to the gross income of the
Portfolio attributable to such share.
In order to avoid incurring a federal excise tax obligation, the Code
requires that the Fund distribute (or be deemed to have distributed) by December
31 of each calendar year at least 98% of its ordinary income for such year, at
least 98% of its capital gain net income (which is 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 (i)
any available capital loss carryforwards and (ii) 100% of any income and capital
gains from the prior year (as previously computed) that was not paid out during
such year and on which the Fund paid no federal income tax. Under current law,
provided that the Fund qualifies as a RIC and the Portfolio is treated as a
partnership for Massachusetts and federal tax purposes, neither the Fund nor the
Portfolio should be liable for any income, corporate excise or franchise tax in
the Commonwealth of Massachusetts.
Certain foreign exchange gains and losses realized by the Portfolio and
allocated to the Fund in connection with the Portfolio's investments in foreign
securities and foreign currency related options, futures or forward contracts or
foreign currency may be treated as ordinary income and losses under special tax
rules. Certain options, futures or forward contracts of the Portfolio may be
required to be marked to market (i.e., treated as if closed out) on the last day
of each taxable year, and any gain or loss realized with respect to these
contracts may be required to be treated as 60% long-term and 40% short-term gain
or loss or, in the case of certain contracts relating to foreign currency, as
ordinary income or loss. Positions of the Portfolio in securities and offsetting
options, futures or forward contracts may be treated as "straddles", which are
subject to tax rules that may cause deferral of Portfolio losses, adjustments in
the holding periods of Portfolio securities, and other changes in the short-term
or long-term characterization of capital gains and losses, the effect of which
may be to change the amount, timing and character of the Fund's distributions to
shareholders. Certain uses of foreign currency and foreign currency derivatives
such as options, futures, forward contracts and swaps and investment by the
Portfolio in certain "passive foreign investment companies" may be limited or a
tax election may be made, if available, in order to preserve the Fund's ability
to qualify as a RIC or avoid imposition of a tax on the Fund.
The Portfolio anticipates that it will be subject to foreign taxes on its
income (including, in some cases, capital gains) from foreign securities. Tax
conventions between certain countries and the U.S. may reduce or eliminate such
taxes in some cases. If more than 50% of the Fund's total assets, taking into
account its allocable share of the Portfolio's total assets, at the close of any
taxable year of the Fund consists of stock or securities of foreign
corporations, the Fund may file an election with the Internal Revenue Service
("IRS") pursuant to which shareholders of the Fund will be required to (i)
include in ordinary gross income (in addition to dividends and distributions
actually received) their pro rata shares of foreign income taxes paid by the
Portfolio and allocated to the Fund even though not actually received by them,
and (ii) treat such respective pro rata portions as foreign income taxes paid by
them. Shareholders may then deduct such pro rata portions of foreign income
taxes in computing their taxable incomes, or, alternatively, use them as foreign
tax credits, subject to applicable limitations, against their U.S. income taxes.
Shareholders who do not itemize deductions for federal income tax purposes will
not, however, be able to deduct their pro rata portion of foreign taxes deemed
paid by the Fund, although such shareholders will be required to include their
shares of such taxes in gross income. Shareholders who claim a foreign tax
credit for such foreign taxes may be required to treat a portion of dividends
received from the Fund as a separate category of income for purposes of
computing the limitations on the foreign tax credit. Tax- exempt shareholders
will ordinarily not benefit from this election. Each year that the Fund files
the election described above, its shareholders will be notified of the amount of
(i) each shareholder's pro rata share of foreign income taxes paid by the
Portfolio and allocated to the Fund and (ii) the portion of Fund dividends which
represents income from each foreign country. If the Fund does not make this
election, it may deduct its allocated share of such taxes in computing the
income it is required to distribute.
The Portfolio will allocate at least annually to the Fund and its other
investors their respective distributive shares of any net investment income and
net capital gains which have been recognized for federal income tax purposes
(including unrealized gains at the end of the Portfolio's fiscal year on certain
options and futures transactions that are required to be marked-to- market).
Such amounts will be distributed by the Fund to its shareholders in cash or
additional shares, as they elect. Shareholders of the Fund will be advised of
the nature of the distributions.
Distributions by the Fund of the excess of net long-term capital gain over
net short-term capital loss earned by the Portfolio and allocated to the Fund,
taking into account any capital loss carryforwards that may be available, are
taxable to shareholders of the Fund as long-term capital gains, whether received
in cash or in additional shares and regardless of the length of time their
shares have been held. Certain distributions, if declared in October, November
or December and paid the following January, will be taxed to shareholders as if
received on December 31 of the year in which they are declared.
Any loss realized upon the redemption or exchange of shares of the Fund with
a tax holding period of 6 months or less will be treated as a long-term capital
loss to the extent of any distribution of net long-term capital gains with
respect to such shares. All or a portion of a loss realized upon a redemption or
other disposition of Fund shares may be disallowed under "wash sale" rules if
other Fund shares are purchased (whether through reinvestment of dividends or
otherwise) within 30 days before or after the disposition. Any disallowed loss
will result in an adjustment to the shareholder's tax basis in some or all of
the other shares acquired.
Amounts paid by the Fund to individuals and certain other shareholders who
have not provided the Fund with their correct taxpayer identification number
("TIN") and certain certifications required by the IRS, as well as shareholders
with respect to whom the Fund has received certain information from the IRS or a
broker, may be subject to "backup" withholding of federal income tax arising
from the Fund's dividends and other distributions as well as the proceeds of
redemption transactions (including repurchases and exchanges), at a rate of 31%.
An individual's TIN 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 convention. 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 arise if: (i) the
shareholder is engaged in a trade or business in the United States; (ii) the
shareholder is present in the United States for a sufficient period of time
during a taxable year to be treated as a U.S. resident, (generally 180 days or
more); or (iii) the shareholder fails to provide any required certifications
regarding its status as a non-resident alien investor. Foreign shareholders
should consult their tax advisers regarding the U.S. and foreign tax
consequences of an investment in the Fund.
The foregoing discussion does not address the special tax rules applicable
to certain classes of investors, such as IRAs and other retirement plans,
tax-exempt entities, insurance companies and financial institutions.
Shareholders should consult their own tax advisers with respect to these or
other special tax rules that may apply in their particular situations, as well
as the state, local, and, where applicable, foreign tax consequences of
investing in the Fund.
PRINCIPAL UNDERWRITER
The Trust 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 Trust will exceed
the amounts paid therefor.
CLASS A SHARES. Class A shares of the Fund may be continuously purchased at
the public offering price through Authorized Firms which have agreements with
the Principal Underwriter. The Trust reserves the right to suspend or limit the
offering of its shares to the public at any time. The public offering price is
the net asset value next computed after receipt of the order, plus, where
applicable, a variable percentage (sales charge) depending upon the amount of
purchase as indicated by the sales charge table set forth in the Prospectus (see
"How to Buy Shares"). Such table is applicable to purchases of a Fund alone or
in combination with purchases of certain other funds offered by the Principal
Underwriter, made at a single time by (i) an individual, or an individual, his
or her spouse and their children under the age of twenty-one, purchasing shares
for his or 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 Class A shares
pursuant to a written Statement of Intention or (2) purchases of Class A shares
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 Trust may issue
Class A 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 Class. Normally no
sales charges will be paid in connection with an exchange of Class A shares for
the assets of such investment company. Class A shares may be sold at net asset
value to any officer, director, trustee, general partner or employee of the
Trust, 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. Class A shares may also be sold at net asset value to registered
representatives and employees of Authorized Firms and to the spouses and
children under the age of 21 and beneficial accounts of such persons.
The Principal Underwriter acts as principal in selling Class A shares under
a Distribution Agreement with the Trust. 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 Class A shares on a "best efforts" basis under which it
is required to take and pay for only such shares as may be sold. The Principal
Underwriter allows Authorized Firms discounts from the applicable public
offering price which are alike for all Authorized Firms. The Principal
Underwriter may allow, upon notice to all Authorized Firms with whom it has
agreements, discounts up to the full sales charge during the periods specified
in the notice. During periods when the discount includes the full sales charge,
such Authorized Firms may be deemed to be underwriters as that term is defined
in the Securities Act of 1933.
CLASS B SHARES. Under the Distribution Agreement, the Principal Underwriter
acts as principal in selling Class B shares. 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, each Class B makes payments to the
Principal Underwriter pursuant to a Distribution Plan as described in the
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 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
Class B shares or on six months' notice by the Principal Underwriter and is
automatically terminated upon assignment. The Principal Underwriter distributes
Class B shares on a "best efforts" basis under which it is required to take and
pay for only such shares as may be sold.
DISTRIBUTION PLANS
CLASS A SHARES
As described in the Prospectus, in addition to the fees and expenses
described herein, the Trust on behalf of its Class A shares finances
distribution activities and bears expenses associated with the distribution of
shares and the provision of certain personal and account maintenance services to
shareholders pursuant to a distribution plan (the "Plan") designed to meet the
requirements of Rule 12b-1 under the 1940 Act.
The Plan remains in effect from year to year provided such continuance is
approved at least annually by a 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 agreement related to the Plan (the "Rule 12b-1
Trustees") and (ii) all of the Trustees then in office. The 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 Class A shares of the Fund. The Plan
requires quarterly Trustee review of 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 affected shareholders of Class A shares and the Trustees. So
long as the Plan is in effect, the selection and nomination of the noninterested
Trustees shall be committed to the discretion of such Trustees. The Trustees
have determined that in their judgment there is a reasonable likelihood that the
Plan will benefit the Fund and its shareholders.
The Plan is intended to compensate the Principal Underwriter for its
distribution services to the Fund by paying the Principal Underwriter monthly
distribution fees in connection with the sale of Class A shares. The quarterly
service fee paid by the Class A shares under the Plan is intended to compensate
the Principal Underwriter for its personal and account maintenance services and
for the payment by the Principal Underwriter of service fees to Authorized
Firms.
CLASS B SHARES
The Trust has adopted a Distribution Plan (the "Plan") on behalf of its
Class B shares designed to meet the requirements of Rule 12b-1 under the 1940
Act and the sales charge rule of the National Association of Securities Dealers,
Inc. (the "NASD"). The purpose of the Plan, is to compensate the Principal
Underwriter for its distribution services and facilities provided with respect
to Class B shares.
The Plan provides that the Fund will pay sales commissions and distribution
fees to the Principal Underwriter only after and as a result of the sale of
Class B 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 amount payable to the Principal Underwriter pursuant to the Plan as
sales commissions and distribution fees with respect to each day will be accrued
on such day as a liability of the Class and will accordingly reduce the Class'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 a Class's net assets on such day. The level of a Class's net assets
changes each day and depends upon the amount of sales and redemptions of shares,
the changes in the value of the investments held by the Portfolio, the expenses
of the Class, Fund and the Portfolio accrued and allocated to the Fund and Class
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 Trust does not accrue possible future payments as a
liability of a Class or reduce a Class'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 Class 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 Trust to the Principal Underwriter
whenever there exist uncovered distribution charges.
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 Trust to the Principal Underwriter and CDSCs theretofore
paid or payable to the Principal Underwriter less all amounts theretofore paid
or payable to the Principal Underwriter by the Adviser in consideration of the
former's distribution efforts, will be subtracted from such distribution
charges; if the result of such subtraction is positive, a distribution fee
(computed at 1% over the prime rate then reported in The Wall Street Journal)
will be computed on such amount and added thereto, with the resulting sum
constituting the amount of outstanding uncovered distribution charges with
respect to such day. The amount of outstanding uncovered distribution charges of
the Principal Underwriter calculated on any day does not constitute a liability
recorded on the financial statements of the Fund.
The amount of uncovered distribution charges of the Principal Underwriter at
any particular time depends upon various changing factors, including the level
and timing of sales of 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 shares upon which a
CDSC will be imposed, the level and timing of redemptions of shares upon which
no CDSC will be imposed (including redemptions of 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 Class, and changes in
the interest rate used in the calculation of the distribution fee under the
Plan. Periods with a high level of sales of Class shares accompanied by a low
level of early redemptions of Class 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.
Currently, payments of sales commissions and distribution fees and of
service fees may equal, 1% of a Class' average daily net assets per annum. For
actual payments made by the Fund and the outstanding uncovered distribution
charges of the Principal Underwriter, see Appendix B. The Trust believes that
the combined rate of all these payments may be higher than the rate of payments
made under distribution plans adopted by other investment companies pursuant to
Rule 12b-1. Although the Principal Underwriter will use its own funds (which may
be borrowed from banks) to pay sales commissions at the time of sale, it is
anticipated that the Eaton Vance organization will profit by reason of the
operation of the Plan through an increase in the Fund's assets (thereby
increasing the management fee payable to Eaton Vance by the Fund and the
administration fees payable to Eaton Vance by the Portfolio) resulting from sale
of Fund shares and through 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, from the Adviser in consideration of the distribution efforts and from
CDSCs have exceeded the total expenses theretofore incurred by such organization
in distributing Class B 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 Trust.
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
applicable Class. The Plan requires quarterly Trustee review of 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 affected
Class and the Trustees. So long as the Plan is in effect, the selection and
nomination of the noninterested Trustees shall be committed to the discretion of
such 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 Class B 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 Class B 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 Class B shareholders.
PORTFOLIO SECURITY TRANSACTIONS
Decisions concerning the execution of portfolio security transactions by the
Portfolio, including the selection of the market and the broker-dealer firm, are
made by the Adviser.
The Adviser places the portfolio security transactions of the Portfolio and
of certain other accounts managed by the Adviser for execution with many firms.
The Adviser uses its best efforts to obtain execution of portfolio transactions
at prices which are advantageous to the Portfolio and (when a disclosed
commission is being charged) at reasonably competitive commission rates. In
seeking such execution, the Adviser will use its best judgment in evaluating the
terms of a transaction, and will give consideration to various relevant factors,
including without limitation the size and type of the transaction, the general
execution and operational capabilities of the broker-dealer, the nature and
character of the market for the security, the confidentiality, speed and
certainty of effective execution required for the transaction, the reputation,
reliability, experience and financial condition of the broker-dealer, the value
and quality of services rendered by the broker-dealer in other transactions, and
the reasonableness of the commission 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 over-the-counter markets, but the price paid or received by the Portfolio
usually includes an undisclosed dealer markup or markdown. In an underwritten
offering the price paid by the Portfolio includes a disclosed fixed commission
or discount retained by the underwriter or dealer. Although commissions paid on
portfolio transactions will, in the judgment of the Adviser, be reasonable in
relation to the value of the services provided, commissions exceeding those
which another firm might charge may be paid to broker-dealers who were selected
to execute transactions on behalf of the Portfolio and the Adviser's other
clients in part for providing brokerage and research services to the Adviser.
As authorized in Section 28(e) of the Securities Exchange Act of 1934, a
broker or dealer who executes a portfolio transaction on behalf of the Portfolio
may receive a commission which is in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction if the
Adviser determines in good faith that such 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 the overall responsibilities which the Adviser and its
affiliates have for accounts over which they exercise investment discretion. In
making any such determination, the Adviser will not attempt to place a specific
dollar value on the brokerage and research services provided or to determine
what portion of the commission should be related to such services. Brokerage and
research services may include advice as to the value of securities, the
advisability of investing in, purchasing, or selling securities, and the
availability of securities or purchasers or sellers of securities; furnishing
analyses and reports concerning issuers, industries, securities, economic
factors and trends, portfolio strategy and the performance of accounts; and
effecting securities transactions and performing functions incidental thereto
(such as clearance and settlement); and the "Research Services" referred to in
the next paragraph.
It is a common practice in the investment advisory industry for the advisers
of investment companies, institutions and other investors to receive research,
statistical and quotation services, data, information and other services,
products and materials which assist such advisers in the performance of their
investment responsibilities ("Research Services") from broker-dealers which
execute portfolio transactions for the clients of such advisers and from third
parties with which such broker-dealers have arrangements. Consistent with this
practice, the Adviser may receive Research Services from broker-dealer firms
with which the Adviser places the portfolio transactions of the Portfolio and
from third parties with which these broker-dealers have arrangements. These
Research Services may include such matters as general economic and market
reviews, industry and company reviews, evaluations of securities and portfolio
strategies and transactions and recommendations as to the purchase and sale of
securities and other portfolio transactions, financial, industry and trade
publications, news and information services, pricing and quotation equipment and
services, and research oriented computer hardware, software, data bases and
services. Any particular Research Service obtained through a broker-dealer may
be used by the Adviser in connection with client accounts other than those
accounts which pay commissions to such broker-dealer. Any such Research Service
may be broadly useful and of value to the Adviser in rendering investment
advisory services to all or a significant portion of its clients, or may be
relevant and useful for the management of only one client's account or of a few
clients' accounts, or may be useful for the management of merely a segment of
certain clients' accounts, regardless of whether any such account or accounts
paid commissions to the broker-dealer through which such Research Service was
obtained. The advisory fee paid by the Portfolio is not reduced because the
Adviser receives such Research Services. The Adviser evaluates the nature and
quality of the various Research Services obtained through broker-dealer firms
and attempts to allocate sufficient commissions to such firms to ensure the
continued receipt of Research Services which the Adviser believes are useful or
of value to it in rendering investment advisory services to its clients.
Subject to the requirement that the Adviser shall use its best efforts to
seek to execute portfolio security transactions of the Portfolio at advantageous
prices and at reasonably competitive commission rates or spreads, the Adviser is
authorized to consider as a factor in the selection of any broker-dealer firm
with whom Portfolio orders may be placed the fact that such firm has sold or is
selling shares of the Fund or of other investment companies sponsored by Eaton
Vance. This policy is not inconsistent with a rule of the 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 the Adviser or its
affiliates. Whenever decisions are made to buy or sell securities by the
Portfolio and one or more of such other accounts simultaneously, the Adviser
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 the Adviser 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 Adviser's organization outweigh any
disadvantage that may arise from exposure to simultaneous transactions. For the
brokerage commissions paid by the Portfolio on portfolio transactions, see
Appendix A.
OTHER INFORMATION
The Trust is a Massachusetts business trust established in 1989 as the
successor to Eaton Vance Growth Fund, Inc., a Massachusetts corporation. The
Fund established multiple classes of shares on September 1, 1997. Class A is the
successor to the operations of a separate series of the 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 Trust's Declaration of Trust may be amended by the Trustees when
authorized by vote of a majority of the outstanding voting securities of the
Trust, the financial interests of which are 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 (such as reclassifying series or classes of shares or restructuring the
Trust) as do not have a materially adverse effect on the rights or interests of
shareholders or if they deem it necessary to conform the Declaration to the
requirements of applicable federal laws or regulations. The Trust's By-laws
provide that the Trust will indemnify its Trustees and officers against
liabilities and expenses incurred in connection with any litigation or
proceeding in which they may be involved because of their offices with the
Trust. However, no indemnification will be provided to any Trustee or officer
for any liability to the Trust or its shareholders by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.
Under Massachusetts law, if certain conditions prevail, shareholders of a
Massachusetts business trust (such as the Trust) could be deemed to have
personal liability for the obligations of the Trust. Numerous investment
companies registered under the 1940 Act have been formed as Massachusetts
business trusts, and management is not aware of an instance where such liability
has been imposed. The Trust's Declaration of Trust contains an express
disclaimer of liability on the part of the Fund shareholders and the Trust's
By-laws provide that the Trust shall assume the defense on behalf of any Fund
shareholder. (The Declaration also contains provisions limiting the liability of
a series or class to that series or class). Moreover, the Trust's By-laws also
provide for indemnification out of the property of the Fund of any shareholder
held personally liable solely by reason of being or having been a shareholder
for all loss or expense arising from such liability. The assets of the Fund are
readily marketable and will ordinarily substantially exceed its liabilities. In
light of the nature of the Fund's business and the nature of its assets,
management believes that the possibility of the Fund's liabilities exceeding its
assets, and therefore the shareholder's risk of personal liability, is extremely
remote.
As permitted by Massachusetts law, there will normally be no meetings of
shareholders for the purpose of electing Trustees unless and until such time as
less than a majority of the Trustees of the Trust holding office have been
elected by shareholders. In such an event the Trustees then in office will call
a shareholder's meeting for the election of Trustees. Except for the foregoing
circumstances and unless removed by action of the shareholders in accordance
with the Trust's By-Laws, the Trustees shall continue to hold office and may
appoint successor Trustees.
The Trust's By-Laws provide that no person shall serve as a Trustee if
shareholders holding two-thirds of the outstanding shares have removed him from
that office either by a written declaration filed with the Trust's custodian or
by votes cast at a meeting called for that purpose. The By-Laws further provide
that under certain circumstances the shareholders may call a meeting to remove a
Trustee and that the Trust is required to provide assistance in communicating
with shareholders about such a meeting.
In accordance with the Declaration of Trust of the Portfolio, there will
normally be no meetings of the investors for the purpose of electing Trustees
unless and until such time as less than a majority of the Trustees holding
office have been elected by investors. In such an event the Trustees of the
Portfolio then in office will call an investors' meeting for the election of
Trustees. Except for the foregoing circumstances and unless removed by action of
the investors in accordance with the Portfolio's Declaration of Trust, the
Trustees shall continue to hold office and may appoint successor Trustees.
The Declaration of Trust of the Portfolio provides that no person shall
serve as a Trustee if investors holding two-thirds of the outstanding interests
have removed him from that office either by a written declaration filed with the
Portfolio's custodian or by votes cast at a meeting called for that purpose. The
Declaration of Trust further provides that under certain circumstances the
investors may call a meeting to remove a Trustee and that the Portfolio is
required to provide assistance in communicating with investors about such a
meeting.
The Portfolio's Declaration of Trust provides that the 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 Portfolio's Declaration of Trust provides that the Portfolio will
terminate 120 days after the complete withdrawal of the Fund or any other
investor in the Portfolio, unless either the remaining investors, by unanimous
vote at a meeting of such investors, or a majority of the Trustees of the
Portfolio, by written instrument consented to by all investors, agree to
continue the business of the Portfolio. This provision is consistent with
treatment of the Portfolio as a partnership for federal income tax purposes.
The right to redeem shares of the Fund can be suspended and the payment of
the redemption price deferred when the Exchange is closed (other than for
customary weekend and holiday closings), during periods when trading on the
Exchange is restricted as determined by the Commission, or during any emergency
as determined by the Commission which makes it impracticable for the Portfolio
to dispose of its securities or value its assets, or during any other period
permitted by order of the Commission for the protection of investors.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Deloitte & Touche LLP, 125 Summer Street, Boston, Massachusetts, are the
independent certified public accountants of the Fund and the Portfolio,
providing audit services, tax return preparation, and assistance and
consultation with respect to the preparation of filings with the Commission.
<PAGE>
FINANCIAL STATEMENTS
EV MARATHON ASIAN SMALL COMPANIES FUND
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1997
ASSETS:
Investment in Asian Small Companies Portfolio, at cost and value $ 10
Deferred organization expenses (Note 2) ......................... 28,500
-------
Total assets ................................................ $28,510
LIABILITIES:
Accrued organization expenses ................................... 28,500
-------
Net assets (applicable to 1 share of beneficial interest issued
and outstanding) .............................................. $ 10
=======
Net asset value and offering price per share .................... $ 10
=======
NOTES:
(1) Eaton Vance Growth Trust, a Massachusetts business trust (the Trust),
established and designated the EV Marathon Asian Small Companies Fund (the
Fund) as a separate series on March 1, 1996. The Fund has been inactive
since that date, except for matters relating to the Fund's establishment,
the designation and the registration under the Securities Act of 1933 of the
Fund's shares of beneficial interest (Shares), the sale of one Share
(Initial Share) of the Fund to Eaton Vance Management, and the investment of
the proceeds of such Initial Share in Asian Small Companies Portfolio (the
Portfolio). The value of such investment reflects the Fund's proportionate
interest in the net assets of the Portfolio.
(2) Organization expenses are being deferred and will be amortized on a straight
line basis over a period not to exceed five years, commencing on the
effective date of the Fund's initial offering of its shares. The amount paid
by the Fund on any withdrawal by the holders of the Initial Share of any of
the respective initial interests will be reduced by a portion of any
unamortized organization expenses, determined by the proportion of the
amount of the initial interests withdrawn to the initial interests then
outstanding.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Trustees and Shareholder of EV Marathon Asian Small Companies Fund:
We have audited the accompanying statement of assets and liabilities of EV
Marathon Asian Small Companies Fund (one of the series constituting Eaton Vance
Growth Trust) as of August 31, 1997. This financial statement is the
responsibility of the Trust's management. Our responsibility is to express an
opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such statement of assets and liabilities presents fairly, in
all material respects, the financial position of EV Marathon Asian Small
Companies Fund as of August 31, 1997, in conformity with generally accepted
accounting principles.
Deloitte & Touche LLP
Boston, Massachusetts
December 15, 1997
<PAGE>
ASIAN SMALL COMPANIES PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1997
ASSETS:
Cash .......................................................... $100,030
Deferred organization expenses ................................ 7,000
--------
Total assets .............................................. $107,030
LIABILITIES:
Accrued organization expenses ................................. 7,000
--------
NET ASSETS ........................................................ $100,030
========
NOTES:
(1) Organization expenses are being deferred and will be amortized on a
straight-line basis over a period not to exceed five years, commencing on
the effective date of the Portfolio's initial offering of its interests. The
amount paid by the Portfolio on any withdrawal by the holders of the Initial
Interests of any of the respective Initial Interests will be reduced by a
portion of any unamortized organization expenses, determined by the
proportion of the amount of the Initial Interests withdrawn to the Initial
Interests then outstanding.
(2) At 4:00 p.m., New York City time, on each business day of the Portfolio, the
value of an investor's interest in the Portfolio is equal to the product of
(1) the aggregate net asset value of the Portfolio multiplied by (ii) the
percentage representing that investor's share of the aggregate interest in
the Portfolio effective for that day.
(3) Asian Small Companies Portfolio (the "Portfolio") was organized as a New
York Trust on January 19, 1996 and has been inactive since that date, except
for matters relating to its organization and registration as an investment
company under the Investment Company Act of 1940 and the sale of interests
therein at the purchase price of $100,000 to Eaton Vance Management, $10 to
Boston Management & Research, $10 to EV Marathon Asian Small Companies Fund,
and $10 to EV Traditional Asian Small Companies Fund (the "Initial
Interests").
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Trustees and Investors of Asian Small Companies Portfolio:
We have audited the accompanying statement of assets and liabilities of
Asian Small Companies Portfolio (a New York Trust) as of August 31, 1997. This
financial statement is the responsibility of the Trust's management. Our
responsibility is to express an opinion on this financial statement based on our
audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such statement of assets and liabilities presents fairly, in
all material respects, the financial position of Asian Small Companies Portfolio
as of August 31, 1997, in conformity with generally accepted accounting
principles.
Deloitte & Touche LLP
Boston, Massachusetts
December 15, 1997
<PAGE>
APPENDIX A: CLASS B SHARES
FEES AND EXPENSES
ADVISER
No fees paid to date.
MANAGER AND ADMINISTRATOR
No fees paid to date.
DISTRIBUTION PLAN
The Fund has not paid any distribution fees to the Principal Underwriter to
date. The Fund expects to begin accruing for its service fee payments one year
after the commencement of operations.
PRINCIPAL UNDERWRITER
No fees paid to date.
BROKERAGE
No fees to date.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of December 1, 1997, Eaton Vance owned one Class A and one Class B share
of the Fund, being the only shares of the Fund outstanding on such date. Eaton
Vance is a Massachusetts business trust and a wholly-owned subsidiary of EVC.
<PAGE>
APPENDIX B: ASIAN REGION COUNTRIES
The information set forth in this Appendix has been extracted from various
government and private publications. The Trust's Board of Trustees makes no
representation as to the accuracy of the information, nor has the Board of
Trustees attempted to verify it. No representation is made that any correlation
will exist between the economies or stock markets of Asian Region countries and
the Fund's performance.
AUSTRALIA
The Commonwealth of Australia comprises an area of about 2,773,000 square
miles -- almost the same as that of the United States, excluding Alaska. In June
1992. Australia's population was estimated to be 17 million people.
The Commonwealth of Australia was formed as a federal union in 1901, when
six British colonies of New South Wales, Victoria, Queensland, South Australia
and Tasmania were united as states in a "Federal Commonwealth" under the
authority of the Commonwealth of Australia Constitution Act enacted by the
British Parliament.
Prior to World War II, the Australian economy was highly dependent on the
rural sector. The 1950s and 1960 saw strong growth in the economy and
diversification through developments in the mining sector. There have been some
significant structural changes in the past 20 years, with the tertiary and
mining sectors growing strongly. The rural sector now accounts for approximately
4% of Gross Domestic Product ("GDP"), 6% of employment and 23% of exports by
value. The mining sector accounts for approximately 8% of GDP and 1% of
employment. Exports of mining commodities (including basic metal products)
account for approximately 42% of exports by value. The tertiary sector accounts
for approximately 71% of GDP, approximately 78% of employment and around 20% of
exports by value.
As of September 30, 1997, the total market capitalization of Australian
listed equities was U.S. $322 billion, which ranks behind Japan, Hong Kong and
Taiwan in Asia.
PEOPLE'S REPUBLIC OF CHINA
China is the world's third largest country occupying a region of 9.6 million
square kilometers.China is the world's most populous nation, consisting of more
than one-fifth of the human race. The estimated population is approximately 1.3
billion.
In 1949, the Communist Party established the People's Republic of China. The
Communist government engaged in numerous campaigns to industrialize the country
with various programs. The failure of the Communist Party to achieve substantive
economic reform eventually led to political domination by the army. In the
1970's, the Chinese government, which had remained isolated from the world,
opened its doors by encouraging foreign investment and expertise inside its
borders.
In 1989, a growing dissatisfaction with the Communist government led to
anti-government student protests culminating in what is known as the Tiananmen
Square incident. The government's use of the military to suppress a peaceful
demonstration resulted in world-wide criticism. However, recent developments in
China have been encouraging. The death of Deng Xiaoping did not trigger any
social unrest and restructuring of state-owned enterprises had been the main
theme of the 15th Party Congress held in 1997. Leadership under Jiang Zemin
remains committed to the implementation of economic reforms. Investment in China
still entails significant political risk of nationalization or expropriation.
Over the past decade, China has achieved annual growth in real gross
domestic product (GDP) averaging in excess of 10%. GDP in 1995 had increased to
over 4 times the GDP in 1980 in real terms.
The economy in China consists of three sectors: state, cooperative, and
private. The state sector, though decreasing from 76% of GDP in 1980 to
approximately 50% in 1991, continues to constitute the bulk of the economy. In
recent years, however, the economy has been significantly restructured through
the abolition of the commune system in rural areas and the relaxing of
government authority in the day to day operations in both agricultural and
industrial enterprises. As the government assumes more of a regulatory and
supervisory role and less of a direct management role, market forces have been
allowed to operate. This has resulted in increased productivity and rising
incomes.
In 1990, industry accounted for 45.8% of China's National Income. In the
first three decades under Communist rule, China placed great emphasis on heavy
industry. Since the reform program began in 1978, a much greater emphasis has
been placed on light industry. Considerable industrial growth has come from
industrial enterprises in rural townships which are engaged in the processing
and assembly of consumer goods. These operations are concentrated in southern
China, where a major light industrial base has developed. Industrial output has
grown rapidly and is increasingly important to the Chinese economy. China's
current industrial policy also places emphasis on high-technology industries
supported by foreign technology, such as micro-electronics and
telecommunications. However, many enterprises have a huge staff burden which
must be relieved to increase the competitiveness of the enterprises. To avoid
social unrest caused by the increase in unemployment rate, there is so far no
easy solution.
Inflation, which was a problem in early 1990s, has been under control.
Inflation rate rocketed to 24% in 1994 and then dropped to 17.1%, 8.3% in 1995,
1996 respectively. Estimate for 1997 is currently at 3.5%. The control achieved
over inflation is the result of austerity measures implemented by the government
during 1994, 1995 and early 1996. The soft landing of economy in 1996 has paved
a better way for future economic developments.
Textiles and garments together form the single largest export category,
representing about one quarter of total export values. China's trade balance has
fluctuated over the last five years. In 1996, China's foreign trade yielded a
surplus of U.S. $12.23 billion. Hong Kong is one of the leading destination for
Chinese exports, accounting for over 40% of total export volume. Hong Kong is
also a major re-export center for Chinese goods. Other large export markets for
China include Japan, the United States, and Germany. Over the past few years,
China's imports have continued to expand and diversify. Hong Kong, Japan and the
United States are China's top three suppliers. Other major suppliers include
Germany and Italy.
China has traditionally adopted a policy of self-reliance when financing
development; overseas borrowings have been minimal. The country has remained a
conservative borrower but, since the early 1980s, has been making greater use of
foreign capital and financing, including government-assisted facilities and
project and trade financing. The primary sources of foreign capital for China
include: International Monetary Fund and World Bank loans and credits;
government low interest loans and credits; and commercial loans and credits.
There is centralized control and unified management of foreign exchange in
China. The renminbi has been devalued progressively in the past decade,
depreciating by almost 70% against the U.S. dollar between 1981 and 1990.
However, it has been stabilized at the 1994 level for the past 3 years.
There currently are two officially recognized exchanges in China, the
Shanghai Securities Exchange ("SHSE"), which commenced trading on December 19,
1990, and the Shenzhen Stock Exchange ("SZSE"), which commenced trading on July
3, 1991. "B" shares are offered exclusively for investment by foreign investors,
and their total market capitalization in December 1996 was over $23 billion. A
number of organized securities markets exist in other cities in China, but these
are primarily over-the-counter markets. At the local level, however, many cities
and provinces have promulgated securities rules and regulations. In fact, it is
becoming common for state-owned enterprises to go for an overseas listing, for
example by a listing of H Shares in Hong Kong, or through Red Chips securities
in The Stock Exchange of Hong Kong.
HONG KONG
As a trade entrepot and finance center, Hong Kong's viability has been
inexorably linked to mainland China since the establishment of the Colony in
1841. Hong Kong remains China's largest trade partner and its leading foreign
investor. In 1995, imports from China amounted to $69.8 billion, exports and
re-exports to $57.9 billion. In recent years large numbers of Hong Kong based
companies have set up factories in the southern province of Guangdong, where it
is estimated that Hong Kong companies employ about 3 million workers. There also
has been considerable growth in Chinese investment in Hong Kong over the last
decade and particularly in the last five years. In contrast to Japanese
investment, Chinese investment in Hong Kong typically involves the purchase of
stakes in existing companies. This has traditionally been in the banking and
import/export sectors. Recently, investment in property, manufacturing and
infrastructure projects has increased. In view of the growing economic
interaction between Hong Kong and Southern China, it is increasingly meaningful
to consider the concept of a Greater Hong Kong economy consisting of Hong Kong
and Guangdong Province, with a combined population of pver 75 million. To
sustain the growth of the Guangdong economy, the Hong Kong government in 1989
unveiled PADS, the Port and Airport Development Strategy. The project, estimated
to cost $21 billion, is designed to allow Hong Kong's cargo handling capacity to
increase by four times between 1988 and 2011 and its air traffic handling
capacity to increase from 15 million passengers in 1988 to 50 million in 2011.
In the past, political considerations have hindered closer economic
integration between Hong Kong and China. It was largely in response to the
United Nations embargo on trade with China in the 1950s and 1960s that Hong Kong
developed a significant manufacturing base. In the last several years, however,
there has been an improvement in relations. The Basic Law, the outline for Hong
Kong's government post 1997, calls for Hong Kong's capitalist system to remain
intact for an additional fifty years after 1997 and sets out details for the
integration of Hong Kong into China after 1997. This integration process
directly affects the value of Hong Kong investments.
In the last two decades there has been a structural change in Hong Kong's
economy, with growth in the services sector outpacing manufacturing growth. With
more and more labor intensive manufacturing relocating to Southern China, Hong
Kong has developed its services sector, which in 1995 contributed 81.7% of GDP.
The Stock Exchange of Hong Kong Ltd. ("HKSE"), commenced trading on April 2,
1986. The HKSE, with a total market capitalization as of October, 1997 of
approximately H.K. $329.6 billion (approximately U.S. $426 billion), is now the
second largest stock market in Asia, measured by market capitalization, behind
only that of Japan. As of that date, 575 companies and 1,595 securities were
listed on the Hong Kong Stock Exchange.
There are no regulations governing foreign investment in Hong Kong. There
are no exchange control regulations and investors have total flexibility in the
movement of capital and the repatriation of profits. Funds invested in Hong Kong
can be repatriated at will; dividends and interest are freely remittable.
INDIA
India is the seventh largest country in the world, covering an area of
approximately 3,300,000 square kilometers. The Indian population is comprised of
diverse religious and linguistic groups. Despite this diversity, India is the
world's largest democracy and has had one of the more stable political systems
among the world's developing nations. However, periodic sectarian conflict among
India's religious and linguistic groups could adversely affect Indian
businesses, temporarily close stock exchanges or other institutions, or
undermine or distract from government efforts to liberalize the Indian economy.
India became independent from the United Kingdom in 1947. Since 1991, the
government of Prime Minister Narasimha Rao has introduced far-reaching measures
with the goal of reducing government intervention in the economy, strengthening
India's industrial base, expanding exports and increasing economic efficiency.
Elections in May 1996 could result in a change of government and reversal of
policies.
In India, Foreign Institutional Investors ("FIIs") may predominately invest
in exchange-traded securities (and securities to be listed, or those approved on
the over-the counter exchange of India) subject to the conditions specified in
the Guidelines for Direct Foreign Investment by FIIs in India, (the
"Guidelines") published in a Press Note dated September 14, 1992, issued by the
Government of India, Ministry of Finance, Investment Division. FIIs have to
apply for registration to the Securities and Exchange Board of India ("SEBI")
and to the Reserve Bank of India for permission to trade in Indian securities.
The Guidelines require SEBI to take into account the track record of the FII,
its professional competence, financial soundness, experience and other relevant
criteria. SEBI must also be satisfied that suitable custodial arrangements are
in place for the Indian securities. The Adviser is a registered FII and the
inclusion of the Portfolio in the Adviser's registration was approved by SEBI.
FIIs are required to observe certain investment restrictions, including an
account ownership ceiling of 5% of the total issued share capital of any one
company. In addition, the shareholdings of all registered FIIS, together with
the shareholdings of non-resident Indian individuals and foreign bodies
corporate substantially owned by non-resident Indians, may not exceed 30% of the
issued share capital of any one company. Only registered FIIS and non-Indian
mutual funds that comply with certain statutory conditions may make direct
portfolio investments in exchange-traded Indian securities. Income, gains and
initial capital with respect to such investments are freely repatriable, subject
to payment of applicable Indian taxes.
India currently imposes no withholding tax on interest and dividends.
Withholding tax of 10% is currently imposed on gains from sales of shares held
one year or more and 30% on gains from sales of shares held less than one year.
The withholding rate on gains from sales of deb securities is currently 10% if
the securities have been held three years or more and 30% if the securities have
been held less than three years. (Rates are higher for non-FII transactions.)
Investment through a Republic of Mauritius entity may be made to reduce taxes,
but there can be no assurance of its success.
INDONESIA
There have been only two rulers of Indonesia since independence was gained
from the Dutch in 1948 -- Sukarno and Suharto. However, independence and the
1965 revolution were unusually violent episodes in the life of any country. The
stability which Indonesia has enjoyed during the past twenty-five years under
Suharto should, therefore, be placed against this background.
The question of monarchical or presidential succession remains perhaps the
major political risk confronted by the foreign investor as so many aspects of
the business life of the country relate directly to Suharto or his immediate
family. The role of the army in Indonesia is a great deal more clear cut. There
have been no attempted military coups since 1966. The army remains wholly in
support of Suharto.
The huge Indonesian archipelago will have, by the year 2000, a population of
over 200 million. Fundamentalism is on the rise, as also in Malaysia, and
politicians with fundamentalist Islamic beliefs and supporters are likely to
take a more active role. However, the social question, which one cannot ignore,
concerns the role of the minority and non-Muslim peoples in Indonesia, in
particular the Chinese community in Java. Although the total Chinese population
is less than 5 million, or around 3 percent of the total, 80 percent of the
commerce and much of the capital wealth remains in the hands of this small but
tight-knit Chinese community.
Indonesia began the 1980s principally as an oil exporter. During the 1970s
it had a high rate of inflation but also a very rapid economic growth on the
back of the oil boom. The fall in oil prices in the early 1980s, which became
precipitate in the spring of 1986, therefore, forced a review of their
priorities. Reducing inflation, diversifying the economy away from oil and
maintaining a stable growth in the economy were selected as the main objectives.
Inflation was brought from 20 percent, at the beginning of the decade, to around
6 percent in 1989-90. Economic growth, having fallen to 2.5 percent in 1985
regained the level of 7.4 percent by 1990 and averaged at around 6% thereafter.
The rupiah, which had undergone a 30 percent once-and- for-all evaluation in the
autumn of 1985, had stabilized on a "crawling peg" system with an annual
devaluation of around 5 percent until 1997 when it suffered in the Asian
currency turmoil. The trade surplus continued at a healthy US $5 billion. The
path of the Indonesian economy will depend as much on the development of low
wage manufacturing and the inflow of foreign capital, on the liberalization of
the banking system and the capital market, as on the price of basic commodities
the social and political stability.
JAPAN
The Japanese archipelago stretches for 1,300 miles in the western Pacific
Ocean. The total area of all the islands is about equal to the size of
California. Only one third of the land is suitable for agriculture, housing,
industry, and commerce.
Japan has a population of about 125 million people, roughly half that of the
United States and twice that of England or Germany. Life expectancy is the
highest in the world. The literacy rate in Japan approaches 100%. The high level
of education, combined with the Confucian work ethic, has created a motivated
work force which boasts a very high savings rate.
Japan is evolving into a post-industrial society and economy as we approach
the 21st century. Japan's postwar growth was phenomenal. By 1970, Japan's Gross
National Product (GNP) had surpassed those of the United Kingdom and the former
Soviet Union. The Japanese economy is now the second largest in the world; its
per capita GNP is the highest among large industrial countries.
During the era of high economic growth in the 1960s and early 1970s,
Japanese expansion focused on the development of heavy industries such as steel,
shipbuilding, and chemicals. In the 1970s, Japan's industrial structure shifted
toward assembly industries with a strong emphasis on exports. In that decade,
Japan became a major producer and exporter of automobiles and consumer
electronics. In the 1980s, Japan gradually stepped toward a post-industrial
society. This evolution had been characterized by an increased reliance on
services, a per capita income which is the highest in the world, rapidly
changing lifestyles influenced by the younger generation, a greater dependence
on domestic markets, a comparative advantage in high technology, and active
participation in the high-growth economies of East Asia, including China.
Japan has had low inflation in recent years. In the past 10 years, the rate
of inflation has ranged between 2% and 3% per year, making it one of the lowest
rates in the world. This remarkable achievement was made possible by gains in
productivity, which exceeded wage increases, and by a strong yen, which reduced
imported raw material costs.
Japan's stock exchanges comprise over 25% of the world's equity market. Like
other stock markets, the Japanese stock market can be volatile. For example, the
Japanese stock market, as measured by the Tokyo Stock Price Index (TOPIX),
increased by over 500% during the ten-year period ended December 31, 1989,
reaching its high of 2884.80 on December 18, 1989, and it has declined by 59%
since that time, falling to 1177.52 on November 14, 1997. This decline has had
an adverse effect on the availability of credit and on the value of the
substantial stock holdings of Japanese companies, in particular, Japanese banks,
insurance companies and other financial institutions. This in turn has
contributed to the recent weakness in Japan's economy. A continuation or
recurrence of a Japanese stock market decline could have an adverse impact
throughout Japan's economy.
KOREA
Political volatility has characterized the history of South Korea (referred
to as Korea throughout this section) during the past forty years, while at the
same time an extraordinary economic boom has occurred. Rigid discipline has been
characteristic of the military government under President Park during the 1960s
and 1970s, which were the most successful decades in economic terms particularly
in the growth of Korea's exports and in the per capita income. It is important
to remember how completely the cities and transport system of the southern part
of the Korean peninsula had been destroyed in the civil war of the 1950s. The
effort of reconstruction was, therefore, enormous. Living standards in the 1960s
were extremely low. The threat from North Korea has exerted a continuous
military pressure on the South in the past forty years which is probably unique
to any country in the world, even including West Germany or Taiwan. Seoul is
only 30 kilometers from the demilitarized zone and, therefore, lives in a
continuous state of tension and fear of an imminent invasion. This very real
threat is also translated into a very high percentage of military spending in
the national budget. If Korea is compared with Japan, the Koreans have had to
spend ten times more of their national income on defense than the Japanese.
Inflation in Korea has been higher than in Japan or Taiwan. In the 1970s,
Korea experienced an annual average inflation rate of nearly 15 percent.
Beginning in 1982, however, the tight monetary policy succeeded in bringing this
annual consumer price index down to single digits until 1990 when the rate
jumped again to 8.6 percent. However, series of economic problems have flooded
Korea in 1996 and 1997. Korea Won and stocks have seriously weakened in 1997.
These have forced Korea to accept International Monetary Fund's rescue package
which comes in with measures intended to put the economy in better order.
MALAYSIA
The central dilemma in assessing Malaysia's political risk is the perennial
question of relations between the Malay and Chinese communities representing as
they do about 60 percent and 30 percent of the population respectively. Since
the 1969 anti-Chinese riots in Kuala Lumpur the country has been unruffled by
any serious inter-racial violence and during this period a great deal has been
accomplished in transforming the economy and in transferring the wealth of the
country from foreign and Chinese hands into the hands of the bumiputra (or the
sons of the soil), which is the dominant Malay majority. The success of this New
Economic Policy is unquestioned and has given a great deal of legitimacy to the
continued run of the United Malay National Organisation (UMNO) under its
successive prime ministers and most recently under Dr. Mahathir Mohammed who has
now held power for more than a decade. This economic success has also done much
to defuse the threat from the Islamic fundamentalists who have tended to get
co-opted into the ruling party. The Chinese community has also done well in
economic terms although the political disunity in the Malay Chinese Association
(MCA) has left them somewhat leaderless in the political sphere.
Malaysia has a kingship which is shared on a five-year revolving basis among
the sultans of the various states of the federation. Malaysia's relations with
its neighbours are good. Singapore, remains the largest investor in the country.
Malaysia, along with Singapore, experienced a sharp recession in 1985-6 owing to
an excessive tight monetary policy in both countries. Since 1987 Malaysia has,
however, returned to the path of high growth and low inflation. The change in
recent years has also been accompanied by an accelerated shift into
manufacturing and away from the old dependence on the plantation sector. This
manufacturing growth has been led by investment from Japan and Taiwan and
notable national projects such as the Proton car. Malaysia is attempting to move
up market into the new product areas such as electronics, car assembly and
consumer goods. It has a literate and trainable workforce.
As manufactured goods assume a larger importance in the composition of
exports compared with crude oil, rubber and palm oil, Malaysia's trade position
should gradually become steadier. For an investor, Malaysia remains vulnerable
to external shocks either in terms of commodity prices or in a fall in export
demand in its principal markets.
PAKISTAN
Pakistan is the world's ninth most populous country. The population is
currently estimated at approximately 130 million, with an annual population
growth rate of 3.0%. Pakistan was created in 1947 in response to the demands of
Indian Muslims for an independent homeland, by the partition from British India
of two Muslim majority areas. In 1971, a civil war in East Pakistan culminated
in independence for East Pakistan (now Bangladesh). Over the past 45 years,
Pakistan and India have gone to war two times and intermittent border exchanges
occur at times. In particular, relations with India remain unfriendly over the
disputed territory of Kashmir, with its majority Muslim population.
Pakistan has a federal parliamentary system in which its provinces enjoy
considerable autonomy. The military has been, and continues to be, an important
factor in Pakistani government and politics and the civilian government
continues to rely on the support of the army. Ethnic unrest and troubled
relations with India are also continuing problems. Violence and political unrest
made Pakistan a less attractive destination in 1995.
The government of Pakistan has been heavily involved in the economy through
ownership of financial and industrial enterprises, investment policies and
incentives and taxation programs established in the five-year economic plans.
Recent governments, however, have announced various liberalization measures
including banking reforms and a number of measures designed to encourage the
private sector. The government has also embarked on a major privatization
program and, as of July 1994, a large number of public sector entities have been
offered for sale.
In Pakistan, the Portfolio may invest in the shares of issuers listed on any
of the stock exchanges in the country provided that the purchase price as
certified by a local stock exchange broker is paid in foreign exchange
transferred into Pakistan through a commercial bank and in the case of an off-
exchange sale of listed shares, that the sale price is not less than the price
quoted on any of the local stock exchanges on the date of the sale. In addition,
the issuer's shares held by the Portfolio must be registered with the State Bank
of Pakistan for purposes of repatriation of income, gains and initial capital.
The Portfolio may also invest in the shares of unlisted and closely-held
manufacturing companies provided that the sale price is certified by a Pakistani
chartered accountant to be not less than the break-up value of the shares and is
paid in foreign exchange transferred into Pakistan through a commercial bank. If
local procedures are complied with, income, gains, and initial capital are
freely repatriable after payment of any applicable Pakistani withholding taxes.
Pakistan currently imposes a withholding tax on dividends at a rate of 10%
and on interest at a rate of 43%. Under current law, the withholding rate on
interest is to be reduced by three percentage points per year through 1998.
There is currently no withholding tax on capital gains from listed shares. This
exemption will expire in June 1998. As regards the shares of unlisted and
closely held manufacturing companies, withholding tax on capital gains is
currently imposed at a rate of 43%, reduced to 27 1/2% (or 25% for small
amounts) if the shares are held for 12 months or more.
The Federal Shariat Court, a constitutionally established body which has
exclusive jurisdiction to determine whether any law in Pakistan violates the
principals of Islam (the official State religion), ruled in November 1991 that a
number of legal provisions in Pakistan violated Islamic principles relating to
Riba (an Islamic term generally accepted as being analogous to interest) and
instructed the government of Pakistan to conform these provisions to Islamic
principles. It is believed that strict conformity with the ruling of the Shariat
Court would substantially disrupt a variety of commercial relationships in
Pakistan involving the payment of interest, although the extent and nature of
any such disruption on the Pakistani economy, or any segment thereof (other than
the banking system), is uncertain. The ruling of the Shariat Court has been
appealed and will have no effect until the Shariat Appellate Bench of the
Supreme Court of Pakistan renders a decision on the appeal. A hearing on the
appeal was held in November 1993 but, in early 1994 at the request of the
government of Pakistan, the appeal is still continuing. In addition, pursuant to
the Enforcement of Shariat Act, 1991 (the "Shariat Act"), the government of
Pakistan has appointed a commission to recommend steps to be taken to introduce
suitable alternatives by which an economic system in Pakistan conforming to
Islamic principles could be established. This commission may be in a position to
propose a pragmatic approach to the requirements of the Constitution and the
Shariat Act with a view to avoiding any substantial disruption to the economy of
Pakistan. There can be no assurance, however, that the commission will propose
such an approach or that implementation of the steps recommended by the
commission or the effect of the ultimate decision of the courts in Pakistan on
this issue will not adversely affect the economy in Pakistan.
THE PHILIPPINES
The question most investors raise is whether the Philippines is capable of
responsible government and economic planning which would give it a GNP growth
rate approaching that of its Asian tiger neighbours. Many observers dismiss this
prospect out of hand citing the endemic problems of corruption, political
in-fighting and the lack of Confucian work ethic present in North Asia. However,
there is no doubt that the Philippines possesses enormous natural advantages and
it would be wrong to generalize about the whole archipelago of 7,000 islands
from the political life of Manila alone. The island of Cebu, for example, has
seen a successful economic transformation in the past twenty years.
Manufacturing investment has grown and has begun to replace agriculture as a
principal source of employment. The Philippines has a very high rate of literacy
and the work ethic cannot be doubted by anyone who has employed Filipino
domestic workers overseas. Their earnings are an important source of remittance
back to the Philippines each year. The Filipino population in the United States
is now the largest Asian ethnic group in that country approaching 2 million,
mainly in California. Both natural resources, and an intelligent, hardworking
population favour the country. Unfortunately, the political system has never
been able to maintain the long-term stability for its promise to be fulfilled.
SINGAPORE
"The silent success", in the words of a Singapore government minister, of
this region is based on a high literacy rate and a well-educated and trainable
workforce. The investment in human capital has proven to be more important to a
lasting economic growth success story than the availability of finance or
technology. Singapore is the de facto financial centre of the Association of
South East Asian Nations (ASEAN) region. Singapore is a small Chinese island
surrounded by a sea of Muslims. Singapore is aiming its investment at Johore in
Malaysia and Batam Island in Indonesia. This is the so-called growth triangle.
One aspect of political risk is the handover of political power from one
generation to another. Although Lee Kwan Yew stepped down as Prime Minister in
1990, he continues to wield a large influence and power behind the scenes. His
son, Lee Hsien Loong may not take up the post of Prime Minister in the near
future. In any case, the question of dynastic succession in a parliamentary
democracy, even within a limited Confucian Chinese democracy, is, to say the
least, a questionable one. Many of the elder Lee's policies, such as imposing
the Mandarin Chinese language on the Singapore educational system, have aroused
fierce opposition among the older, anti-communist generation of Singapore
Chinese. The tight control of the media and the suppression of all political
opposition or criticism of the government, the People's Action Party or the
Prime Minister himself, has also aroused criticism both at home and
internationally.
The Singapore economy has been characterized by the highest degree of
government involvement and intervention outside of the socialist world.
Nevertheless, the growth rate has been quite impressive, averaging around 7
percent, except during the 1985-6 recession, and even more impressive has been
the tight control of inflation which, along with that of Japan, has remained
extremely low at below 3 percent for the past decade. Being a small island state
it is very sensitive to developments in its two main neighbours, Indonesia and
Malaysia, with their large commodity-based economies. Thus, Singapore runs a
regular trade deficit of around US $6 billion per annum. Singapore's foreign
reserves held by the Monetary Authority of Singapore (MAS) and the Government
Investment Corporation of Singapore (GICS) are estimated to be in excess of US
$70 billion.
SRI LANKA
Sri Lanka, historically known as Ceylon, is an island about 65,000 square
kilometers, situated off the southeast coast of India. It has a relatively
well-educated population, with nearly 25% of the 17 million Sri Lankans speaking
English and a literacy rate (in Sinhalese and Tamil) of nearly 90%.
A former British colony, Ceylon became an independent Commonwealth in 1948
and became the Democratic Socialist Republic of Sri Lanka in 1972. Sri Lanka is
governed by a popularly elected President and unicameral Parliament.
Insurrection and political violence among Sri Lanka's ethnic groups
including terrorist actions by the Tamil Tigers, a separatist organization, have
in the past disrupted Sri Lanka's government and economy. The current government
has accorded top priority for settling the ethnic conflict with the Tamils in
the north and has initiated peace talks with the LTTE. Nevertheless, armed
conflict was increasing in early 1996. Although Sri Lanka's government is
currently fairly stable, there can be no assurance that such stability will
continue.
The Sri Lankan government recently has reviewed and revised laws,
regulations and procedures to promote a competitive business environment, remove
distortions and reduce unnecessary government regulation. The government has
liberalized trade and encourages private ownership including foreign investment.
Laws pertaining to tax, labor standards, customs and environmental norms have
been designed to attract more investment. There are now few exchange controls, a
fairly stable currency and many incentives for private investors. With guidance
from the World Bank, IMF and U.S. advisers, government enterprises area being
privatized, financial services liberalized, manufacturing for exports
encouraged, a stock exchange formed and foreign investment actively sought.
About 80% of the land in Sri Lanka is still owned by the government including
most tea, rubber and coconut plantations. The government did privatize the
management of these estates recently, however.
Sri Lanka's economy is primarily agricultural, but the manufacturing and
service sectors have grown greatly in the past decade, partly in response to the
Sri Lankan government's efforts to diversify and liberalize its economy. In
1991, gross foreign exchange earnings from apparel exports exceeded earnings
from the entire agricultural sector (tea, rubber and coconut) for the first
time.
The financial system is reasonably sophisticated and basic legislation for
private corporations is in place. Commercial banks are the principal source of
finance. However, the increase in net government borrowing (because of budget
deficits) has reduced credit to the private sector. Inflation, which was about
21% in 1990, has come down to approximately 10-11% but remains a concern.
Sri Lanka is actively working to improve its basic infrastructure. A $500
million expansion of the telecommunications network has begun. The Colombo
Container Port - the 25th busiest in the world - is expected to increase its
capacity soon, and new dry dock services are under construction.
In Sri Lanka, the Portfolio may invest in the shares of exchange-listed
issuers, subject to certain limitations for specific sectors of the economy. Sri
Lanka imposes 15% withholding tax on dividends and interest but does not impose
withholding tax on capital gains of listed shares. Unlisted shares are subject
to a maximum capital gains tax of 35%.
TAIWAN
The basic geopolitical fact about Taiwan is that it sits under the shadow of
mainland China and under the threat of reunification, whether peaceful or by
military means. Taiwan is dependent on its close relationship with the United
States and its very successful diplomacy and public relations campaign which,
ever since Madame Chiang Kai-Shek's days in the 1940s has sustained a high level
of sympathy in Washington for the Nationalist regime. Taiwan also has close
relations with Israel, with whom it has had military as well as trade links.
Taiwan remains a free capitalist enclave with some very successful
entrepreneurial and export-oriented companies. The government's role in the
economy is relatively small.
Nevertheless, economic integration between the Chinese communities of China
and Taiwan has increased in recent years. China has low labor costs, inexpensive
land, natural resources and less rigid environmental rules. Taiwan has capital,
technology and trained entrepreneurs. Over 30 percent of Taiwan's trade is with
mainland China and the total investment from Taiwan to China may approach US $5
billion or even US $10 billion. A shortage of skilled labour, the high cost of
labour and the relatively strong New Taiwan dollar, has impelled many Taiwanese
businesspeople to shift their production to Thailand, the Philippines, and
Malaysia as well as China. Taiwan has over US $80 billion of foreign exchange
reserves. However, Chinese military exercises in 1996 suggest that there could
be a renewed cold war across the Taiwan Straits, a cut off of business and
cultural links, and a potential military conflict.
Between 1960 and 1994, Taiwan's GNP grew from less than $2 billion to over
$240 billion. The economic growth has been accompanied by a transformation of
domestic production from labor intensive to capital intensive industries in the
1970s and finally to higher technology industries in the 1980s. The Taiwan Stock
Exchange Corp. is viewed as a highly priced and highly volatile securities
market.
Taiwan has a purely Chinese culture and way of life which affects the legal
and commercial systems. Legal contracts or agreements may not be enforceable.
Even more than in China, Taiwan depends on the personal contact and trust
between the two individuals involved.
THAILAND
Thailand is unique in South East Asia in that it has escaped the colonial
experience and maintained its freedom and independence. The monarchy plays a key
role in maintaining the country's political stability and independence.
Nevertheless, since the absolute monarchy was ended in 1932 there have been
twenty-one coup d'etats, of which twelve have been successful. Thailand in the
1990s may remain democratic but the King and the army will continue to play a
role.
Thailand has a free and independent peasant population which has, on the
whole, enjoyed a higher standard of living than their neighbours and, therefore,
the communist movement has never made much headway among the rural people. On
the other hand again, Thailand's extraordinary economic growth in the 1980s
(averaging 10 percent per annum) has put great strains not only on the urban
environment because of traffic jams and pollution, but also on the social and
family system. Many rural families have been forced to send their teenage
children to the cities to find employment. The contrast of living standards
between Bangkok and the north east provinces (an estimated per capital income
would be perhaps US $2,500 per annum for the former and less than US $500 per
annum for the latter) must eventually create social tensions and potential
unrest. Buddhism must also be counted as a major factor of political stability.
Thailand's economy has been among the fastest growing in the world during
the past decade. The take-off really began in 1986-7 with the flood of new
foreign investment into the country, largely from Japan and Taiwan. There has
been a large shift away from agriculture towards manufacturing. As recently as
1980, 50 percent of Thailand's exports consisted of rice and tapioca and other
agricultural products. By 1990, 75 percent of the total volume of exports were
manufactured goods, mainly from the newly established assembly plants in Bangkok
and the south. This has resulted in large changes in employment and moves of
populations.
It is surprising, considering the very high rate of economic growth that the
economy has experienced, that prices, as measured by the consumer price index,
have been kept under control. The last serious bout of inflation in Thailand
occurred during the two oil crises, first in 1973-4 when the CPI touched 24
percent and then again in 1980-1 when there was a resurgence of inflation to
nearly 20 percent. In the later 1980s, and thanks largely to a more stable oil
price, inflation has been held in single digits and has not exceeded 7 percent.
The boom in early 1990s has resulted in over-valued currency, real estates and
problems in the banking sector. These have finally hurt the economy of Thailand
in 1997 and as a result International Monetary Fund's rescue have been
requested.
<PAGE>
[LOGO] Investing
EATON VANCE for the
===========
Mutual Funds 21st
Century
- --------------------------------------------------------------------------------
Eaton Vance
Asian Small Companies Fund
STATEMENT OF ADDITIONAL INFORMATION
JANUARY 1, 1998
- --------------------------------------------------------------------------------
Sponsor and Manager of Eaton Vance Asian Small Companies Fund
Administrator of Asian Small Companies Portfolio
Eaton Vance Management, 24 Federal Street, Boston, MA 02110
Adviser of Asian Small Companies Portfolio
Lloyd George Investment Management (Bermuda) Limited, 3808 One Exchange Square,
Central, Hong Kong
Principal Underwriter
Eaton Vance Distributors, Inc., 24 Federal Street,
Boston, MA 02110 (800) 225-6265
Custodian
Investors Bank & Trust Company, 200 Clarendon Street, Boston, MA 02116
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
ACSAI
<PAGE>
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
STATEMENT OF
ADDITIONAL INFORMATION
January 1, 1998
EATON VANCE GREATER CHINA GROWTH FUND
24 Federal Street
Boston, Massachusetts 02110
(800) 225-6265
This Statement of Additional Information provides general information
about Eaton Vance Greater China Growth Fund (the "Fund") and Greater China
Growth Portfolio (the "Portfolio"). This Statement of Additional Information
is sometimes referred to herein as the "SAI".
TABLE OF CONTENTS
PART I
Additional Information about Investment Policies ...................... 1
Investment Restrictions ............................................... 4
Trustees and Officers ................................................. 6
Management of the Fund and the Portfolio .............................. 9
Custodian ............................................................. 12
Services for Accumulation -- Class A Shares ........................... 12
Service for Withdrawal ................................................ 13
Determination of Net Asset Value ...................................... 13
Investment Performance ................................................ 14
Taxes ................................................................. 15
Principal Underwriter ................................................. 17
Distribution Plans .................................................... 18
Portfolio Security Transactions ....................................... 20
Other Information ..................................................... 22
Independent Certified Public Accountants .............................. 23
Financial Statements .................................................. 23
Appendix A -- Class A Shares .......................................... a-1
Appendix B -- Class B Shares .......................................... b-1
Appendix C -- Class C Shares .......................................... c-1
Appendix D -- China Region Countries .................................. d-1
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR
ACCOMPANIED BY THE FUND'S PROSPECTUS DATED JANUARY 1, 1998, 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>
This SAI provides information about the Fund and the Portfolio. Capitalized
terms used in this SAI and not otherwise defined have the meanings given them in
the Prospectus. The Fund is subject to the same investment policies as those of
the Portfolio. The Fund currently seeks to achieve its objective by investing in
the Portfolio.
ADDITIONAL INFORMATION ABOUT INVESTMENT POLICIES
FOREIGN INVESTMENTS. Investing in securities issued by companies whose principal
business activities are outside the United States may involve significant risks
not present in domestic investments. For example, there is generally less
publicly available information about foreign companies, particularly those not
subject to the disclosure and reporting requirements of the U.S. securities
laws. Foreign issuers are generally not bound by uniform accounting, auditing,
and financial reporting requirements and standards of practice comparable to
those applicable to domestic issuers. Investments in foreign securities also
involve the risk of possible adverse changes in investment or exchange control
regulations, expropriation or confiscatory taxation, limitation on the removal
of funds or other assets of the Portfolio, political or financial instability or
diplomatic and other developments which could affect such investments. Further,
economies of particular countries or areas of the world may differ favorably or
unfavorably from the economy of the United States. It is anticipated that in
most cases the best available market for foreign securities will be on exchanges
or in over-the-counter markets located outside of the United States. Foreign
stock markets, while growing in volume and sophistication, are generally not as
developed as those in the United States, and securities of some foreign issuers
(particularly those located in developing countries) may be less liquid and more
volatile than securities of comparable U.S. companies. In addition, foreign
brokerage commissions are generally higher than commissions on securities traded
in the United States and may be non-negotiable. In general, there is less
overall governmental supervision and regulation of foreign securities markets,
broker-dealers, and issuers than in the United States.
FOREIGN CURRENCY TRANSACTIONS. The value of the assets of the Portfolio as
measured in U.S. dollars may be affected favorably or unfavorably by changes in
foreign currency exchange rates and exchange control regulations. Currency
exchange rates can also be affected unpredictably by intervention by U.S. or
foreign governments or central banks, or the failure to intervene, or by
currency controls or political developments in the U.S. or abroad. The Portfolio
may conduct its foreign currency exchange transactions on a spot (i.e., cash)
basis at the spot rate prevailing in the foreign currency exchange market or
through entering into swaps, forward contracts, options or futures on currency.
In spot transactions, foreign exchange dealers do not charge a fee for
conversion, but they do realize a profit based on the difference (the "spread")
between the prices at which they are buying and selling various currencies.
Thus, a dealer may offer to sell a foreign currency to the Portfolio at one
rate, while offering a lesser rate of exchange should the Portfolio desire to
resell that currency to the dealer.
Currency swaps require maintenance of a segregated account as described
under "Asset Coverage Requirements" below. The Portfolio will not enter into any
currency swap unless the credit quality of the unsecured senior debt or the
claims-paying ability of the other party thereto is considered to be investment
grade by the Advisers.
The Portfolio may enter into forward foreign currency exchange contracts in
several circumstances. First, when the Portfolio enters into a contract for the
purchase or sale of a security denominated in a foreign currency, or when the
Portfolio anticipates the receipt in a foreign currency of dividend or interest
payments on such a security which it holds, the Portfolio may desire to "lock
in" the U.S. dollar price of the security or the U.S. dollar equivalent of such
dividend or interest payment, as the case may be. By entering into a forward
contract for the purchase or sale, for a fixed amount of dollars, of the amount
of foreign currency involved in the underlying transactions, the Portfolio will
attempt to protect itself against an adverse change in the relationship between
the U.S. dollar and the subject foreign currency during the period between the
date on which the security is purchased or sold, or on which the dividend or
interest payment is declared, and the date on which such payments are made or
received.
Additionally, when management of the Portfolio believes that the currency of
a particular foreign country may suffer a substantial decline against the U.S.
dollar, it may enter into a forward contract to sell, for a fixed amount of
dollars, the amount of foreign currency approximating the value of some or all
of the securities held by the Portfolio denominated in such foreign currency.
The precise matching of the forward contract amounts and the value of the
securities involved will not generally be possible because the future value of
such securities in foreign currencies will change as a consequence of market
movements in the value of those securities between the date on which the
contract is entered into and the date it matures. The precise projection of
short-term currency market movements is not possible, and short-term hedging
provides a means of fixing the dollar value of only a portion of the Portfolio's
foreign assets.
RISKS ASSOCIATED WITH DERIVATIVE INSTRUMENTS. Entering into a derivative
instrument involves a risk that the applicable market will move against the
Portfolio's position and that the Portfolio will incur a loss. For derivative
instruments other than purchased options, this loss may exceed the amount of the
initial investment made or the premium received by the Portfolio. Derivative
instruments may sometimes increase or leverage the Portfolio's exposure to a
particular market risk. Leverage enhances the Portfolio's exposure to the price
volatility of derivative instruments it holds. The Portfolio's success in using
derivative instruments to hedge portfolio assets depends on the degree of price
correlation between the derivative instruments and the hedged asset. Imperfect
correlation may be caused by several factors, including temporary price
disparities among trading markets for the derivative instrument, the assets
underlying the derivative instrument and the Portfolio assets. Over-the-counter
("OTC") derivative instruments involve an enhanced risk that the issuer or
counterparty will fail to perform its contractual obligations. Some derivative
instruments are not readily marketable or may become illiquid under adverse
market conditions. In addition, during periods of market volatility, a commodity
exchange may suspend or limit trading in an exchange-traded derivative
instrument, which may make the contract temporarily illiquid and difficult to
price. Commodity exchanges may also establish daily limits on the amount that
the price of a futures contract or futures option can vary from the previous
days settlement price. Once the daily limit is reached, no trades may be made
that day at a price beyond the limit. This may prevent the Portfolio from
closing out positions and limiting its losses. The staff of the Commission takes
the position that certain purchased OTC options, and assets used as cover for
written OTC options, are subject to the Portfolio's 15% limit on illiquid
investments. The Portfolio's ability to terminate OTC derivative instruments may
depend on the cooperation of the counterparties to such contracts. For thinly
traded derivative instruments, the only source of price quotations may be the
selling dealer or counterparty. In addition, certain provisions of the Code,
limit the extent to which the Portfolio may purchase and sell derivative
instruments. The Portfolio will engage in transactions in futures contracts and
related options only to the extent such transactions are consistent with the
requirements of the Code for maintaining the qualification of the Fund as a
regulated investment company for federal income tax purposes. See "Taxes."
ASSET COVERAGE REQUIREMENTS. Transactions involving reverse repurchase
agreements, currency swaps, forward contracts or futures contracts and options
(other than options that the Portfolio has purchased) expose the Portfolio to an
obligation to another party. The Portfolio will not enter into any such
transactions unless it owns either (1) an offsetting ("covered") position in
securities, currencies, or other options, futures contracts or forward
contracts, or (2) cash or liquid securities (such as readily marketable
securities 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 obligation 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.
LIMITATIONS ON FUTURES CONTRACTS AND OPTIONS. The Portfolio does not intend to
write a covered option on any security if after such transaction more than 15%
of its net assets, as measured by the aggregate value of the securities
underlying all covered calls and puts written by the Portfolio, would be subject
to such options. The Portfolio will only write a put option on a security which
it intends to ultimately acquire for its portfolio. The Portfolio does not
intend to purchase any options if after such transaction more than 5% of its net
assets, as measured by the aggregate of all premiums paid for all such options
held by the Portfolio, would be so invested. The Portfolio may enter into
futures contracts (and options thereon) traded on a foreign exchange, only if
the Adviser determines that trading on 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 United States
CFTC-regulated exchanges.
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.
REPURCHASE AGREEMENTS. Under a repurchase agreement the Portfolio buys a
security at one price and simultaneously promises to sell that same security
back to the seller at a higher price. At no time will the Portfolio commit more
than 15% of its net assets to repurchase agreements which mature in more than
seven days and other illiquid securities. The Portfolio's repurchase agreements
will provide that the value of the collateral underlying the repurchase
agreement will always be at least equal to the repurchase price, including any
accrued interest earned on the repurchase agreement, and will be marked to
market daily.
REVERSE REPURCHASE AGREEMENTS. The Portfolio may enter into reverse repurchase
agreements. Under a reverse repurchase agreement, the Portfolio temporarily
transfers possession of a portfolio instrument to another party, such as a bank
or broker-dealer, in return for cash. At the same time, the Portfolio agrees to
repurchase the instrument at an agreed upon time (normally within seven days)
and price, which reflects an interest payment. The Portfolio expects that it
will enter into reverse repurchase agreements when it is able to invest the cash
so acquired at a rate higher than the cost of the agreement, which would
increase the income earned by the Portfolio. The Portfolio could also enter into
reverse repurchase agreements as a means of raising cash to satisfy redemption
requests without the necessity of selling portfolio assets.
When the Portfolio enters into a reverse repurchase agreement, any
fluctuations in the market value of either the securities transferred to another
party or the securities in which the proceeds may be invested would affect the
market value of the Portfolio's assets. As a result, such transactions may
increase fluctuations in the market value of the Portfolio's assets. While there
is a risk that large fluctuations in the market value of the Portfolio's assets
could affect the Portfolio's net asset value, this risk is not significantly
increased by entering into reverse repurchase agreements, in the opinion of the
Adviser. Because reverse repurchase agreements may be considered to be the
practical equivalent of borrowing funds, they constitute a form of leverage. If
the Portfolio reinvests the proceeds of a reverse repurchase agreement at a rate
lower than the cost of the agreement, entering into the agreement will lower the
Portfolio's yield.
PORTFOLIO TURNOVER. The Portfolio cannot accurately predict its portfolio
turnover rate, but it is anticipated that the annual turnover rate will
generally not exceed 100% (excluding turnover of securities having a maturity of
one year or less). A 100% annual turnover rate could occur, for example, if all
the securities in the portfolio were replaced once in a period of one year. A
high turnover rate (100% or more) necessarily involves greater expenses to the
Portfolio. The Portfolio engages in portfolio trading (including short-term
trading) if it believes that a transaction including all costs will help in
achieving its investment objective either by increasing income or by enhancing
the Portfolio's net asset value. Short-term trading may be advisable in light of
a change in circumstances of a particular company or within a particular
industry, or in light of general market, economic or political conditions. High
portfolio turnover may also result in the realization of substantial net
short-term capital gains. For the fiscal years ended August 31, 1997 and 1996,
the portfolio turnover rates of the Portfolio were 48% and 42%, respectively.
LENDING PORTFOLIO SECURITIES. The Portfolio may seek to increase its income by
lending portfolio securities to broker-dealers or other institutional borrowers.
Under present regulatory policies of the Commission, such loans are required to
be secured continuously by collateral in cash, cash equivalents or U.S.
Government securities held by the Portfolio's custodian and maintained on a
current basis at an amount at least equal to market value of the securities
loaned, which will be marked to market daily. Cash equivalents include
short-term municipal obligations as well as taxable certificates of deposit,
commercial paper and other short-term money market instruments. The financial
condition of the borrower will be monitored by the Adviser on an ongoing basis.
The Portfolio would continue to receive the equivalent of the interest or
dividends paid by the issuer on the securities loaned and would also receive a
fee, or all or a portion of the interest on investment of the collateral. The
Portfolio would have the right to call a loan and obtain the securities loaned
at any time on up to five business days' notice. The Portfolio would not have
the right to vote any securities having voting rights during the existence of a
loan, but could call the loan in anticipation of an important vote to be taken
among holders of the securities or the giving or holding of their consent on a
material matter affecting the investment. If the Adviser decides to make
securities loans, it is intended that the value of the securities loaned would
not exceed one-third of the Portfolio's total assets. As with other extensions
of credit there are risks of delay in recovery or even loss of rights in the
securities loaned if the borrower of the securities fails financially. However,
the loans will be made only to organizations deemed by the Adviser to be
sufficiently creditworthy and when, in the judgment of the Adviser, the
consideration which can be earned from securities loans of this type justifies
the attendant risk. Securities lending involves administration expenses
including finders fees.
INVESTMENT RESTRICTIONS
The following investment restrictions of the Fund are designated as
fundamental and as such cannot be changed without the approval by the holders of
a majority of the Fund's outstanding voting securities, which as used in this
SAI means the lesser of }a{ 67% or more of the outstanding voting securities of
the Fund present or represented by proxy at a meeting if the holders of more
than 50% of the shares are present or represented at the meeting or }b{ more
than 50% of the shares of the Fund. Accordingly, the Fund may not:
(1) issue senior securities (as defined in the Investment Company Act of
1940 and rules thereunder) or borrow money, except that the Fund or the
Portfolio may borrow:
}i{ from banks to purchase or carry securities, commodities, commodities
contracts or other investments;
(ii) from banks for temporary or emergency purposes not in excess of 10%
of its gross assets taken at market value; or
(iii) by entering into reverse repurchase agreements,
if, immediately after any such borrowing, the value of the Fund's or Portfolio's
total assets, including all borrowings then outstanding, is equal to at least
300% of the aggregate amount of borrowings then outstanding. Any such borrowings
may be secured or unsecured. The Portfolio or the Fund may issue securities
(including senior securities) appropriate to evidence such indebtedness,
including reverse repurchase agreements.
(2) Pledge its assets, except that the Portfolio or the Fund may pledge not
more than one-third of its total assets (taken at current value) to secure
borrowings made in accordance with investment restriction (1) above; for the
purpose of this restriction the deposit of assets in a segregated account with
the Portfolio's or the Fund's custodian, as the case may be, in connection with
any of the Portfolio's or the Fund's respective investment transactions is not
considered to be a pledge.
(3) Purchase securities on margin (but the Portfolio or the Fund may obtain
such short-term credits as may be necessary for the clearance of purchases and
sales of securities).
(4) Make short sales of securities or maintain a short position, unless at
all times when a short position is open the Portfolio or the Fund either owns an
equal amount of such securities or owns securities convertible into or
exchangeable, without the payment of any additional consideration, for
securities of the same issue as, and equal in amount to, the securities sold
short.
(5) Purchase securities issued by any other open-end investment company or
investment portfolio, except as they may be acquired as part of a merger,
consolidation or acquisition of assets, except that the Fund may invest all or
substantially all of its assets in either the Portfolio or any other registered
investment company having substantially the same investment objective as the
Fund and except as otherwise permitted by the Investment Company Act of 1940.
(6) Purchase or retain in its portfolio any securities issued by an issuer
any of whose officers, directors, trustees or security holders is an officer or
Trustee of the Portfolio or the Trust or is a member, officer, director or
trustee of any investment adviser of the Portfolio or the Fund, if after the
purchase of the securities of such issuer by the Portfolio or the Fund one or
more of such persons owns beneficially more than 1/2 of 1% of the shares or
securities or both (all taken at current value) of such issuer and such persons
owning more than 1/2 of 1% of such shares or securities together own
beneficially more than 5% of such shares or securities or both (all taken at
current value); provided, however, that the Fund may invest all or substantially
all of its assets in either the Portfolio or any other registered investment
company having substantially the same investment objective as the Fund and
having any officers, directors, trustees or security holders who are officers or
Trustees of the Trust.
(7) Underwrite securities issued by other persons, except insofar as the
Fund or the Portfolio may technically be deemed to be an underwriter under the
Securities Act of 1933 in selling or disposing of a portfolio security, and
except that the Fund may invest all or substantially all of its assets in either
the Portfolio or any other registered investment company having substantially
the same investment objective as the Fund.
(8) Make loans to other persons, except by }a{ the acquisition of money
market instruments, debt securities and other obligations in which the Portfolio
or the Fund is authorized to invest in accordance with their respective
investment objective and policies, }b{ entering into repurchase agreements and
}c{ lending their respective portfolio securities.
(9) Purchase the securities of any one issuer (other than obligations issued
or guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, with respect to 75% of its total assets and as a result
of such purchase }a{ more than 5% of the total assets of the Portfolio or the
Fund, as the case may be (taken at current value), would be invested in the
securities of such issuer, or }b{ the Fund or the Portfolio would hold more than
10% of the outstanding voting securities of that issuer, except that the Fund
may invest all or substantially all of its assets in, and may acquire up to 100%
of the outstanding voting securities of either the Portfolio or any other
registered investment company having substantially the same investment
objectives as the Fund.
(10) Purchase any security if, as a result of such purchase, 25% or more of
the total assets of the Portfolio or the Fund, as the case may be (taken at
current value) would be invested in the securities of issuers having their
principal business activities in the same industry (the electric, gas and
telephone utility industries being treated as separate industries for the
purpose of this restriction); provided that there is no limitation with respect
to obligations issued or guaranteed by the U.S. Government or any of its
agencies or instrumentalities and except that the Fund may invest all or
substantially all of its assets in either the Portfolio or any other registered
investment company having substantially the same investment objective as the
Fund.
(11) Invest for the purpose of gaining control of a company's management.
(12) Purchase or sell real estate, although the Fund or the Portfolio may
purchase and sell securities which are secured by interests in real estate,
securities of issuers which invest or deal in real estate and real estate that
is acquired as the result of the ownership of securities.
(13) Purchase or sell physical commodities (other than currency) or
contracts for the purchase or sale of physical commodities (other than
currency).
(14) Buy investment securities from or sell them to any of the respective
officers or Trustees of the Trust or the Portfolio, the Portfolio's investment
adviser or the Fund's principal underwriter, as principal; provided, however,
that any such person or firm may be employed as a broker upon customary terms
and that this restriction does not apply to the Fund's investments in either the
Portfolio or any other registered investment company having substantially the
same investment objective as the Fund.
(15) Purchase oil, gas or other mineral leases or purchase partnership
interests in oil, gas or other mineral exploration or development programs.
The Portfolio has adopted substantially the same fundamental investment
restrictions as the foregoing investment restrictions adopted by the Fund; such
restrictions cannot be changed without the approval of a "majority of the
outstanding voting securities" of the Portfolio.
For the purpose of investment restrictions (1), (2) and (3), the
arrangements (including escrow, margin and collateral arrangements) made by the
Portfolio or the Fund with respect to their respective transactions in all types
of options, futures contracts, options on futures contracts, forward contracts,
currencies, and commodities and options thereon shall not be considered to be
}i{ a borrowing of money or the issuance of securities (including senior
securities) by the Portfolio or the Fund, as the case may be, (ii) a pledge of
its assets or (iii) the purchase of a security on margin.
For as long as a feeder fund of the Portfolio has registered shares in Hong
Kong, the Portfolio may not }i{ invest more than 10% of its net assets in the
securities of any one issuer or, purchase more than 10% of any class of security
of any one issuer, provided, however, up to 30% of the Portfolio's net asset
value may be invested in Government and public securities of the same issue; and
the Portfolio may invest all of its assets in Government and other public
securities in at least six different issues, (ii) invest more than 15% of net
assets in securities which are not listed or quoted on any stock exchange,
over-the-counter market or other organized securities market that is open to the
international public and on which such securities are regularly traded (a
"Market"), (iii) invest more than 15% of net assets in warrants and options for
non-hedging purposes, (iv) write call options on Portfolio investments exceeding
25% of its total net asset value in terms of exercise price, }v{ enter into
futures contracts on an unhedged basis where the net total aggregate value of
contract prices, whether payable by or to the Portfolio under all outstanding
futures contracts, together with the aggregate value of holdings under (vi)
below exceeds 20% of the net total asset value of the Portfolio, (vi) invest in
physical commodities (including gold, silver, platinum or other bullion) and
commodity based investments (other than shares in companies engaged in
producing, processing or trading in commodities) which value together with the
net aggregate value of the holdings described in }v{ above, exceeds 20% of the
Portfolio's net asset value, (vii) purchase shares of other investment companies
exceeding 10% of net assets. In addition, the investment objective of any scheme
in which any Portfolio invests must not be to invest in investments prohibited
by this undertaking and where the scheme's investment objective is to invest
primarily in investments which are restricted by this undertaking, such holdings
must not be in contravention of the relevant limitation, (viii) borrow more than
25% of its net assets (provided that for the purposes of this paragraph, back to
back loans are not to be categorized as borrowings), (ix) write uncovered
options, }x{ invest in real estate (including options, rights or interests
therein but excluding shares in real estate companies), (xi) assume, guarantee,
endorse or otherwise become directly or contingently liable for, or in
connection with, any obligation or indebtedness of any person in respect of
borrowed money without the prior written consent of the custodian of the
Portfolio, (xii) engage in short sales involving a liability to deliver
securities exceeding 10% of its net assets provided that any security which a
Portfolio does sell short must be actively traded on a market, (xiii) subject to
paragraph }v{ above, purchase an investment with unlimited liability or (xiv)
purchase any nil or partly-paid securities unless any call thereon could be met
in full out of cash or near cash held by it in the amount of which has not
already been taken into account for the purposes of (ix) above.
The Fund and the Portfolio have adopted the following investment policies
which may be changed without shareholder or investor approval. As a matter of
nonfundamental policy the Fund and the Portfolio may 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 its
delegate, determines to be liquid; }b{ purchase warrants if, as a result of such
purchase, more than 5% of the Portfolio's or the Fund's net assets, as the case
may be (taken at current value), would be invested in warrants, and the value of
such warrants which are not listed on the New York or American Stock Exchange
may not exceed 2% of the Portfolio's or the Fund's net assets; this policy does
not apply to or restrict warrants acquired by the Portfolio or the Fund in units
or attached to securities, inasmuch as such warrants are deemed to be without
value; or }c{ purchase any securities if at the time of such purchase, permitted
borrowings under investment restriction (1) above exceed 5% of the value of the
Portfolio's or the Fund's total assets, as the case may be.
Whenever an investment policy or investment restriction set forth in the
Prospectus or this SAI states a maximum percentage of assets that may be
invested in any security or other asset or describes a policy regarding quality
standards, such percentage limitation or standard shall be determined
immediately after and as a result of the Fund's or the Portfolio's acquisition
of such security or other asset. Accordingly, any later increase or decrease
resulting from a change in values, assets or other circumstances, or any
subsequent rating change below investment grade made by a rating service, will
not compel the Fund or the Portfolio, as the case may be, to dispose of such
security or other asset. Nevertheless, under normal market conditions the Fund
and the Portfolio must take actions necessary to comply with its policy of
investing at least 65% of total assets in equity securities of China growth
companies and not investing more than 15% of net assets in illiquid securities.
Moreover, the Fund and the Portfolio must always be in compliance with its
borrowing policy set forth above.
Although permissible under the Fund's investment restrictions, the Fund has
no present intention during the coming fiscal year to: borrow money; pledge its
assets; underwrite securities issued by other persons; or make loans to other
persons.
TRUSTEES AND OFFICERS
The Trustees and officers of the Trust and the Portfolio are listed below.
Except as indicated, each individual has held the office shown or other offices
in the same company for the last five years. Unless otherwise noted, the
business address of each Trustee and officer is 24 Federal Street, Boston,
Massachusetts 02110, which is also the address of the Fund's sponsor and
manager, Eaton Vance, of Eaton Vance's wholly-owned subsidiary, Boston
Management and Research ("BMR"), of Eaton Vance's parent, Eaton Vance Corp.
("EVC"), and of Eaton Vance's trustee, Eaton Vance, Inc. ("EV"). Eaton Vance and
EV are both wholly-owned subsidiaries of EVC. The business address of the
Advisers is 3808 One Exchange Square, Central, Hong Kong. Those Trustees who are
"interested persons" of the Trust or the Portfolio, as defined in the 1940 Act
by virtue of their affiliation with the Advisers, Eaton Vance, BMR, EVC or EV,
are indicated by an asterisk (*).
TRUSTEES OF THE TRUST AND THE PORTFOLIO
JAMES B. HAWKES (56), President of the Trust, Vice President of the Portfolio
and Trustee*
Chairman, President and Chief Executive Officer of Eaton Vance, BMR, EVC and
EV, and a Director of EVC and EV. Director or Trustee and officer of various
investment companies managed by Eaton Vance or BMR. Director of Lloyd George
Management (B.V.I.) Limited.
HON. ROBERT LLOYD GEORGE (45), President of the Portfolio and Trustee of the
Portfolio*
Chairman and Chief Executive Officer of LGM. Chairman and Chief Executive
Officer of the Advisers.
Address: 3808 One Exchange Square, Central, Hong Kong
EDWARD K.Y. CHEN (52), Trustee of the Portfolio
President of Lingnan College in Hong Kong. Professor and Director of Centre of
Asian Studies at the University of Hong Kong from 1979-1995. Director of First
Pacific Company and Asia Satellite Telecommunications Holdings Ltd., and a
Board Member of the Mass Transit Railway Corporation. Member of the Executive
Council of the Hong Kong Government from 1992-1997 and Chairman of the
Consumer Council from 1991-1997.
Address: President's Office, Lingnan College, Tuen Mun, Hong Kong
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 (62), 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 (71), Trustee of the Trust
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 of the Trust
Investment Adviser and Consultant. Director or Trustee of various investment
companies managed by Eaton Vance or BMR.
Address: 504 Via Almar, Palos Verdes Estates, California 90274
OFFICERS OF THE TRUST AND THE PORTFOLIO
WILLIAM D. BURT (59), Vice President of the Trust
Vice President of Eaton Vance, BMR and EV since November 1994; formerly Vice
President of The Boston Company (1990-1994). Mr. Burt was elected Vice
President of the Trust on June 19, 1995.
M. DOZIER GARDNER (64), Vice President of the Trust
Vice Chairman of Eaton Vance, BMR, EVC and EV, and Director of EVC and EV.
Director or Trustee and officer of various investment companies managed by
Eaton Vance or BMR.
BARCLAY TITTMANN (65), Vice President of the Trust
Vice President of Eaton Vance, BMR and EV since October 1993; formerly Vice
President of Invesco Management and Research (1970-1993). Mr. Tittmann was
elected Vice President of the Trust on June 19, 1995.
SCOBIE DICKINSON WARD (31), Vice President, Assistant Secretary and Assistant
Treasurer of the Portfolio
Director of LGM and Chief Investment Officer of the Advisers.
Address: 3808 One Exchange Square, Central, Hong Kong
WILLIAM WALTER RALEIGH KERR (47), Vice President and Assistant Treasurer of the
Portfolio Director, Finance Director and Chief Operating Officer of the
Advisers. Director of LGM.
Address: 3808 One Exchange Square, Central, Hong Kong
JAMES L. O'CONNOR (52), Treasurer
Vice President of Eaton Vance, BMR and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
ALAN R. DYNNER (57), Secretary
Vice President and Chief Legal Officer of BMR, Eaton Vance, EVC and EV since
November 1, 1996. Previously, he was a Partner of the law firm of Kirkpatrick
& Lockhart LLP, New York and Washington, D.C., and was Executive Vice
President of Neuberger & Berman Management, Inc., a mutual fund management
company. Officer of various investment companies managed by Eaton Vance or
BMR. Mr. Dynner was elected Secretary of the Trust and the Portfolio on June
23, 1997.
JANET E. SANDERS (62), 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 (35), Assistant Secretary
Assistant Vice President of Eaton Vance, BMR and EV since March 1, 1994;
employee of Eaton Vance since March 1993. State Regulations Supervisor, The
Boston Company (1991-1993). Officer of various investment companies managed by
Eaton Vance or BMR. Mr. Murphy was elected Assistant Secretary of the Trust
and the Portfolio on March 27, 1995.
ERIC G. WOODBURY (40), Assistant Secretary
Vice President of Eaton Vance, BMR 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 and the Portfolio on June 19, 1995.
Messrs. Hayes, Reamer and Thorndike, are members of the Special Committee of
the Board of Trustees of the Trust and Messrs. Hayes, Dwight and Reamer, are
members of the Special Committee of the Board of Trustees 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, the Advisers or their 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 and Dwight are members of the Audit Committee of the Board
of Trustees of the Trust and Messrs. Hayes, Chen and Dwight are members of the
Audit Committee of the Board of Trustees 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 (except Mr. Chen) that are not affiliated with
Eaton Vance may elect to defer receipt of all or a percentage of their annual
fees in accordance with the terms of a Trustees Deferred Compensation Plan (the
"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. (The Trustees of the Trust and the Portfolio who are
members of the Eaton Vance organization receive no compensation from the Trust
or the Portfolio.) During the fiscal year ended August 31, 1997, the
noninterested Trustees of the Trust and the Portfolio received the following
compensation in their capacities as Trustees from the Trust, the Portfolio and
the funds in the Eaton Vance fund complex(1):
AGGREGATE AGGREGATE TOTAL COMPENSATION
COMPENSATION COMPENSATION FROM TRUST AND
NAME FROM TRUST(2) FROM PORTFOLIO FUND COMPLEX
- ---- ------------- -------------- ------------
Hon. Edward K.Y. Chen .... $ -- $5,000 $ 23,300
Donald R. Dwight ......... 2,600 4,075(3) 145,000(6)
Samuel L. Hayes, III ..... 2,378 4,136(4) 152,500(7)
Norton H. Reamer ......... 2,355 3,971(5) 145,000
John L. Thorndike ........ 2,439 -- (5) 147,500(8)
Jack L. Treynor .......... 2,625 -- 150,000
- ----------
(1) As of January 1, 1998 the Eaton Vance fund complex consists of 159
registered investment companies or series thereof.
(2) The Trust consisted of 14 Funds as of August 31, 1997.
(3) Includes $853 of deferred compensation.
(4) Includes $332 of deferred compensation.
(5) Includes $0 of deferred compensation.
(6) Includes $45,000 of deferred compensation.
(7) Includes $28,750 of deferred compensation.
(8) Includes $82,384 of deferred compensation.
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 Lloyd George
Management (Hong Kong) Limited ("LGM-HK") as its investment adviser. Pursuant to
a service agreement effective on January 1, 1996 between LGM-HK and its
affiliate, Lloyd George Investment Management (Bermuda) Limited ("LGIM-B"),
LGIM-B, acting under the general supervision of the Portfolio's Board of
Trustees, is responsible for managing the Portfolio's investments. LGM-HK
supervises LGIM-B's performance of this function and retains its contractual
obligations under its investment advisory agreement with the Portfolio. LGM-HK
and LGIM-B are both referred to separately as an Adviser or together as the
Advisers.
THE ADVISER
LGIM-B is responsible for effecting all security transactions on behalf of
the Portfolio, including the allocation of principal transactions and portfolio
brokerage and the negotiation of commissions. See "Portfolio Security
Transactions." Under the investment advisory agreement, LGM-HK is entitled to
receive a monthly advisory fee computed by applying the annual asset rate
applicable to that portion of the average daily net assets of the Portfolio
throughout the month in each Category as indicated below:
ANNUAL
CATEGORY AVERAGE DAILY NET ASSETS ASSET RATE
-------- ------------------------ ----------
1 less than $500 million .......................... 0.75%
2 $500 million but less than $1 billion ........... 0.70
3 $1 billion but less than $1.5 billion ........... 0.65
4 $1.5 billion but less than $2 billion ........... 0.60
5 $2 billion but less than $3 billion ............. 0.55
6 $3 billion and over ............................. 0.50
Since January 1, 1996, LGM-HK pays to LGIM-B the entire amount of the
advisory fee payable by the Portfolio under its investment advisory agreement
with LGM-HK.
As of August 31, 1997, the Portfolio had net assets of $537,781,878. For the
fiscal years ended August 31, 1997, 1996, and 1995, LGM-HK earned advisory fees
of $3,890,037, $4,211,398 and $4,763,655, respectively, (equivalent to 0.75%,
0.74% and 0.74%, respectively, of the Portfolio's average daily net assets for
each such year).
Eaton Vance is among the oldest mutual funds organizations in the country.
As an experienced mutual fund provider, Eaton Vance has contributed to making
the securities market more widely accessible to investors. Eaton Vance equity
funds provide a way to take advantage of the potentially higher returns of
individual stocks. Eaton Vance has a staff of more than 25 investment
professionals specializing in security analysis and equity management.
The Eaton Vance investment process stresses intensive fundamental research.
Portfolios are built on a stock-by-stock basis and the process includes visits
to companies under consideration. The process also focuses on well-managed
companies with the following characteristics: strong underlying value or
franchise; solid earnings growth; steady cash flow, strong balance sheet;
innovative products or services; potential for sustained growth; seasoned,
creative management; or ability to survive variable market conditions.
By investing in diversified portfolios and employing prudent and
professional management, Eaton Vance mutual funds can provide attractive return,
while exposing shareholders to less risk than if they were to build investment
portfolios on their own. Eaton Vance employs rigorous buy and sell disciplines.
For instance, purchases are made with an eye to both relative and absolute
growth rates and price/earning ratios, and sales are made when a stock is fully
valued, fundamentals deteriorate, management fails to execute its strategy, or
more attractive alternatives are available.
LGM specializes in providing investment management services with respect to
equity securities of companies trading in Asian securities markets, and also
those of emerging markets. LGM currently manages portfolios for both private
clients and institutional investors seeking long-term capital growth and has
advised Eaton Vance's international equity funds since 1992. LGM's core
investment team consists of fourteen experienced investment professionals who
have worked together over a number of years successfully managing client
portfolios in non-U.S. stock markets. The team has a unique knowledge of, and
experience with, Asian and emerging markets. LGM analysts cover Asia, the India
subcontinent, Russia and Eastern Europe, Latin America, Australia and New
Zealand from offices in Hong Kong, London and Mumbai. LGM is ultimately
controlled by the Hon. Robert Lloyd George, President of the Portfolio and
Chairman and Chief Executive Officer of the Adviser. LGM's only business is
portfolio management. Eaton Vance's parent is a shareholder of LGM.
The Advisers and LGM have adopted a conservative management style, providing
a blend of Asian and multinational expertise with the most rigorous
international standards of fundamental security analysis. Although focused
primarily in Asia, the Advisers and LGM maintain a network of international
contacts in order to monitor international economic and stock market trends and
offer clients a global management service.
The directors of LGM-HK are the Honourable Robert Lloyd George, William
Walter Raleigh Kerr, M.F. Tang, Scobie Dickinson Ward, Pamela Chan and Adaline
Mang-Yee Ko. The Hon. Robert Lloyd George is Chairman and Chief Executive
Officer of each Adviser and Mr. Kerr is Chief Operating Officer of each Adviser.
The directors of LGIM-B are the Honorable Robert Lloyd George, William Walter
Raleigh Kerr, Scobie Dickinson Ward, M.F. Tang, Pamela Chan, Adaline Mang-Yee
Ko, Peter Bubenzer and Judith Collis. The business address of the first six
individuals is 3808 One Exchange Square, Central, Hong Kong and of the last two
is Cedar House, 41 Cedar Avenue, Hamilton HM 12, Bermuda.
Mr. Lloyd George was born in London in 1952 and educated at Eton College,
where he was a King's Scholar, and at Oxford University. Prior to founding LGM,
Mr. Lloyd George was Managing Director of Indosuez Asia Investment Services Ltd.
In 1983 Mr. Lloyd George launched and managed the Henderson Japan Special
Situations Trust. Prior to that he spent four years with the Fiduciary Trust
Company of New York researching international securities, in the United States
and Europe, for the United Nations Pension Fund.
Eaton Vance and the Advisers follow a common investment philosophy, striving
to identify companies with outstanding management and earnings growth potential
by following a disciplined management style, adhering to the most rigorous
international standards of fundamental security analysis, placing heavy emphasis
on research, visiting every company owned, and closely monitoring political and
economic developments.
Eaton Vance mutual funds are distributed by 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.
The Portfolio's investment advisory agreement with LGM-HK remains in effect
from year to year for 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 the
LGM-HK may render services to others. The Agreement also provides that, in the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties under the Agreement on the part of LGM-HK,
LGM-HK shall not be liable to the Portfolio or to any shareholder for any act or
omission in the course of or connected with rendering services or for any losses
sustained in the purchase, holding or sale of any security.
MANAGER, SPONSOR AND ADMINISTRATOR
See "Management of the Fund and the Portfolio" in the Prospectus for a
description of the services Eaton Vance performs as the manager and sponsor of
the Fund and the administrator of the Portfolio. Under Eaton Vance's management
contract with the Fund and administration agreement with the Portfolio, Eaton
Vance receives a monthly management fee from the Fund and a monthly
administration fee from the Portfolio. Each fee is computed by applying the
annual asset rate applicable to that portion of the average daily net assets of
the Fund or the Portfolio throughout the month in each Category as indicated
below:
ANNUAL
CATEGORY AVERAGE DAILY NET ASSETS ASSET RATE
1 less than $500 million ........................... 0.25%
2 $500 million but less than $1 billion ............ 0.23333
3 $1 billion but less than $1.5 billion ............ 0.21667
4 $1.5 billion but less than $2 billion ............ 0.20
5 $2 billion but less than $3 billion .............. 0.18333
6 $3 billion and over .............................. 0.16667
As of August 31, 1997, the Portfolio had net assets of $537,781,878. For the
fiscal years ended August 31, 1997, 1996 and 1995, Eaton Vance earned
administration fees of $1,295,045, $1,404,681 and $1,571,184, respectively,
(equivalent to 0.25%, 0.25% and 0.24%, respectively, of the Portfolio's average
daily net assets for each such year).
Eaton Vance's management contract with the Fund and administration agreement
with the Portfolio will each remain in effect from year to year for so long as
such continuance is approved annually by the vote of a majority of the Trustees
of the Trust or the Portfolio, as the case may be. Each agreement may be
terminated at any time without penalty on sixty days' written notice by the
Board of Trustees of either party thereto, or by a vote of a majority of the
outstanding voting securities of the Fund or the Portfolio, as the case may be.
Each agreement will terminate automatically in the event of its assignment. Each
agreement provides that, in the absence of Eaton Vance's willful misfeasance,
bad faith, gross negligence or reckless disregard of its obligations or duties
to the Fund or the Portfolio under such contract or agreement, Eaton Vance will
not be liable to the Fund or the Portfolio for any loss incurred. Each agreement
was initially approved by the Trustees, including the noninterested Trustees, of
the Trust or the Portfolio which is a party thereto at meetings held on
September 8, 1992 and on October 8, 1992, respectively, of the Trust and the
Portfolio.
The Fund and the Portfolio, as the case may be, will each be responsible for
all of its respective costs and expenses not expressly stated to be payable by
Eaton Vance under the management contract or the administration agreement. Such
costs and expenses to be borne by each of the Fund or the Portfolio, as the case
may be, include, without limitation, custody and transfer agency fees and
expenses, including those incurred for determining net asset value and keeping
accounting books and records, expenses of pricing and valuation services; the
cost of share certificates; membership dues in investment company organizations;
brokerage commissions and fees; fees and expenses of registering under the
securities laws; expenses of reports to shareholders and investors; proxy
statements, and other expenses of shareholders' or investors' meetings;
insurance premiums, printing and mailing expenses; interest, taxes and corporate
fees; legal and accounting expenses; compensation and expenses of Trustees not
affiliated with Eaton Vance; distribution and service fees payable by the Fund
under its Rule 12b-1 distribution plan; and investment advisory, management and
administration fees. The Fund or the Portfolio will also each bear expenses
incurred in connection with litigation in which the Fund or the Portfolio, as
the case may be, is a party and any legal obligation to indemnify its respective
officers and Trustees with respect thereto, to the extent not covered by
insurance.
Eaton Vance and EV are both wholly-owned subsidiaries of EVC. BMR is a
wholly-owned subsidiary of Eaton Vance. Eaton Vance and BMR are both
Massachusetts business trusts, and EV is the trustee of Eaton Vance and BMR.
The Directors of EV are 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. Hawkes is chairman and Mr. Gardner is vice
chairman. 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, the Voting Trustees of which are Messrs.
Gardner, Hawkes and Rowland and Alan R. Dynner, Thomas E. Faust, Jr., William
M. Steul and Wharton P. Whitaker. 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 December 31, 1997, Messrs. Gardner and Hawkes
each owned 24% of such voting trust receipts, and Messrs. Roland and Faust
owned 15% and 13%, respectively, and Messrs. Dynner, Steul and Whitaker each
owned 8%. Messrs. Dynner, Gardner and Hawkes, who are officers and/or Trustees
of the Trust, are members of the EVC, Eaton Vance, BMR and EV organizations.
Messrs. Burt, Murphy, O'Connor, Tittmann and Woodbury and Ms. Sanders, are
officers of the Trust and/or the Portfolio, and are also members of the Eaton
Vance, BMR and EV organizations.
Eaton Vance owns all of the stock of Northeast Properties, Inc., which is
engaged in real estate investment. EVC also owns approximately 21% of the Class
A shares issued by the parent of each Adviser. EVC owns all the stock of Fulcrum
Management, Inc. and MinVen, Inc., which are engaged in precious metal mining
venture investment and management. EVC, Eaton Vance, BMR and EV may also enter
into other businesses.
EVC and its affiliates and their officers and employees from time to time
have transactions with various banks, including the custodian of the Fund and
the Portfolio, 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 Trust and the Portfolio. IBT has the custody
of all cash and securities of the Fund and all securities of the Portfolio
purchased in the United States, maintains the Fund's and the Portfolio's general
ledger and computes the daily net asset value of interests in the Portfolio and
the net asset value of shares of the Fund. In such capacities, IBT attends to
details in connection with the sale, exchange, substitution, transfer or other
dealings with the Fund's and the Portfolio's respective investments, receives
and disburses all funds, and performs various other ministerial duties upon
receipt of proper instructions from the Trust and the Portfolio, respectively.
Portfolio securities, if any, purchased by the Portfolio in the U.S. are
maintained in the custody of IBT or of other domestic banks or depositories.
Portfolio securities purchased outside of the U.S. are maintained in the custody
of foreign banks and trust companies that are members of IBT's Global Custody
Network, or foreign depositories used by such foreign banks and trust companies.
Each of the domestic and foreign custodial institutions holding portfolio
securities has been approved by the Board of Trustees of the Portfolio in
accordance with regulations under the 1940 Act.
IBT charges fees which are competitive within the industry. These fees for
the Portfolio relate to: (1) custody services based upon a percentage of the
market values of Portfolio securities; (2) bookkeeping and valuation services
provided at an annual rate; (3) activity charges, primarily the result of the
number of portfolio transactions; and (4) reimbursement of out-of-pocket
expenses. These fees are then reduced by a credit for cash balances of the
Portfolio at the custodian equal to 75% of the 91-day U.S. Treasury Bill auction
rate applied to the Portfolio's average daily collected balances. The portion of
the fee for the Fund related to bookkeeping and pricing services is based upon a
percentage of the Fund's net assets and the portion of the fee related to
financial statement preparation is a fixed amount.
IBT also provides services in connection with the preparation of shareholder
reports and the electronic filing of such reports with the Commission, for which
it receives a separate fee.
SERVICES FOR ACCUMULATION -- CLASS A SHARES
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 $50,000 or more of Class A shares and shares of other funds exchangeable
for Class A shares and listed under "The Eaton Vance Exchange Privilege" in the
Prospectus will be purchased within a 13-month period, a Statement of Intention
should be signed so that shares may be obtained at the same reduced sales charge
as though the total quantity were invested in one lump sum. Shares held under
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 Shares" in the
Prospectus. Any investor considering signing a Statement of Intention should
read it carefully.
Right of Accumulation -- Cumulative Quantity Discount. The applicable sales
charge level for the purchase of Class A shares is calculated by taking the
dollar amount of the current purchase and adding it to the value (calculated at
the maximum current offering price) of the shares the shareholder owns in his or
her account}s{ in the Fund and shares of other funds exchangeable for Class A
shares and listed under "The Eaton Vance Exchange Privilege" in the Prospectus.
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 Shares" in the Prospectus. Shares purchased }i{ by an individual, his or
her spouse and their children under the age of twenty-one, and (ii) by a
trustee, guardian or other fiduciary of a single trust estate or a single
fiduciary account, will be combined for the purpose of determining whether a
purchase will qualify for the Right of Accumulation and if qualifying, the
applicable sales charge level.
For any such discount to be made available, at the time of purchase a
purchaser or his or her Authorized Firm must provide the Principal Underwriter
(in the case of a purchase made through an Authorized Firm) or the Transfer
Agent (in the case of an investment made by mail) with sufficient information to
permit verification that the purchase order qualifies for the accumulation
privilege. Confirmation of the order is subject to such verification. The Right
of Accumulation privilege may be amended or terminated at any time as to
purchases occurring thereafter.
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 Prospectus) based upon the value
of the shares held. The checks will be drawn from share redemptions and hence,
although they are a return of principal, may require the recognition of taxable
gain or loss. Income dividends and capital gains distributions in connection
with withdrawal accounts will be credited at net asset value as of the record
date for each distribution. Continued withdrawals in excess of current income
will eventually use up principal, particularly in a period of declining market
prices. A shareholder may not have a withdrawal plan in effect at the same time
he or she has authorized Bank Automated Investing or is otherwise making regular
purchases of Fund shares. The shareholder, 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 Trustees of the Portfolio have established the following procedures for
the fair valuation of the Portfolio's assets under normal market conditions.
Marketable securities listed on foreign or U.S. securities exchanges or in the
NASDAQ National Market System generally are valued at closing sale prices or, if
there were no sales, at the mean between the closing bid and asked prices
therefor on the exchange where such securities are principally traded or on such
National Market System (such prices may not be used, however, where an active
over-the-counter market in an exchange listed security better reflects current
market value). Unlisted or listed securities for which closing sale prices are
not available are valued at the mean between the latest bid and asked prices. An
option is valued at the last sale price as quoted on the principal exchange or
board of trade on which such option or contract is traded, or in the absence of
a sale, the mean between the last bid and asked price. Futures positions on
securities or currencies are generally valued at closing settlement prices. All
other securities are valued at fair value as determined in good faith by or
pursuant to procedures established by the Trustees of the Portfolio.
Short term debt securities with a remaining maturity of 60 days or less are
valued at amortized cost. If securities were acquired with a remaining maturity
of more than 60 days, their amortized cost value will be based on their value on
the sixty-first day prior to maturity. Other fixed income and debt securities,
including listed securities and securities for which price quotations are
available, will normally be valued on the basis of valuations furnished by a
pricing service.
Each investor in the Portfolio, including the Fund, may add to or reduce its
investment in the Portfolio on each day the Exchange is open for trading
("Portfolio Business Day") as of the close of regular trading on the Exchange
(the "Portfolio Valuation Time"). The value of each investor's interest in the
Portfolio will be determined by multiplying the net asset value of the Portfolio
by the percentage, determined on the prior Portfolio Business Day, which
represented that investor's share of the aggregate interests in the Portfolio on
such prior day. Any additions or withdrawals for the current Portfolio Business
Day will then be recorded. Each investor's percentage of the aggregate interest
in the Portfolio will then be recomputed as the percentage equal to a fraction
}i{ the numerator of which is the value of such investor's investment in the
Portfolio as of the close of Portfolio Valuation Time on the prior Portfolio
Business Day plus or minus, as the case may be, that amount of any additions to
or withdrawals from the investor's investment in the Portfolio on the current
Portfolio Business Day, and (ii) the denominator of which is the aggregate net
asset value of the Portfolio as of the Portfolio Valuation Time on the prior
Portfolio Business Day plus or minus, as the case may be, the amount of the net
additions to or withdrawals from the aggregate investment in the Portfolio on
the current Portfolio Business Day by all investors in the Portfolio. The
percentage so determined will then be applied to determine the value of the
investor's interest in the Portfolio for the current Portfolio Business Day. The
Fund and Portfolio will be closed for business and will not price their shares
on the following business holidays: New Year's Day, Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.
Generally, trading in the foreign securities owned by the Portfolio is
substantially completed each day at various times prior to the close of the
Exchange. The values of these securities used in determining the net asset value
of the Portfolio's shares are computed as of such times. Occasionally, events
affecting the value of foreign securities may occur between such times and the
close of the Exchange which will not be reflected in the computation of the
Portfolio's net asset value (unless the Portfolio deems that such events would
materially affect its net asset value, in which case an adjustment would be made
and reflected in such computation). Foreign securities and currency held by the
Portfolio will be valued in U.S. dollars; such values will be computed by the
custodian based on foreign currency exchange rate quotations supplied by Reuters
Information Service.
INVESTMENT PERFORMANCE
Average annual total return is determined separately for each Class of the
Fund by multiplying a hypothetical initial purchase order of $1,000 by the
average annual compound rate of return (including capital appreciation/
depreciation, and distributions paid and reinvested) for the stated period and
annualizing the results. The calculation assumes }i{ that all distributions are
reinvested at net asset value on the reinvestment dates during the period, (ii)
the deduction of the maximum sales charge from the initial $1,000 purchase order
for Class A shares, (iii) a complete redemption of the investment, and (iv) the
deduction of any CDSC at the end of the period. For information concerning the
total return of the Classes of the Fund, see Appendix A, Appendix B and Appendix
C.
Total return may be compared to relevant indices, such as the Consumer Price
Index and various domestic and foreign 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. The Fund's
performance may differ from that of other investors in the Portfolio, including
the other investment companies. 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, charts and illustrations
showing the effect of compounding interest or relating to inflation and taxes
(including their effects on the dollar and the return on stocks and other
investment vehicles) may also be included in advertisements and materials
furnished to present and prospective investors.
Information used in advertisements and materials furnished to present or
prospective shareholders may include descriptions of the economies of China and
countries in the China region. Such descriptions may include discussions of
developments in such economies; statistical information relating China and China
region countries, companies located in such countries and the stock markets of
such countries; and opinions of the Adviser. Information provided to present and
prospective shareholders may also include descriptions of the Adviser's
investment experience and the benefits of global investing.
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.
From time to time, information about the portfolio allocation, portfolio
turnover and holdings of the Portfolio may be included in advertisements and
other material furnished to present and prospective shareholders.
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 Trust (or Principal Underwriter) 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 Trust (or Principal Underwriter) 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 accounting and
tax purposes. The Fund has elected to be treated, and intends to qualify each
year as a regulated investment company ("RIC") under the Code. Accordingly, the
Fund intends to satisfy certain requirements relating to sources of its income
and diversification of its assets and to distribute substantially all of its
ordinary income and net income in accordance with the timing requirements
imposed by the Code, so as to maintain its RIC status and to avoid paying any
federal income or excise tax. 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 also satisfy these
requirements. The Portfolio will allocate at least annually among its investors,
including the Fund, the Portfolio's net investment income, net realized capital
gains, and any other items of income, gain, loss, deduction or credit. The
Portfolio will make allocations to the Fund in a manner intended to comply with
the Code and applicable regulations and will make moneys available for
withdrawal at appropriate times and in sufficient amounts to enable the Fund to
satisfy the tax distribution requirements that apply to the Fund and that must
be satisfied in order to avoid federal income and/or excise tax on the Fund. For
purposes of applying the requirements of the Code regarding qualification as a
RIC, the Fund }i{ will be deemed to own its proportionate share of each of the
assets of the Portfolio and (ii) will be entitled to the gross income of the
Portfolio attributable to such share.
In order to avoid incurring a federal excise tax obligation, the Code
requires that the Fund distribute (or be deemed to have distributed) by December
31 of each calendar year at least 98% of its ordinary income for such year, at
least 98% of its capital gain net income (which is 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 }i{
any available capital loss carryforwards and (ii) 100% of any income and capital
gains from the prior year (as previously computed) that was not paid out during
such year and on which the Fund paid no federal income tax. Under current law,
provided that the Fund qualifies as a RIC and the Portfolio is treated as a
partnership for Massachusetts and federal tax purposes, neither the Fund nor the
Portfolio should be liable for any income, corporate excise or franchise tax in
the Commonwealth of Massachusetts.
Certain foreign exchange gains and losses realized by the Portfolio and
allocated to the Fund in connection with the Portfolio's investments in foreign
securities and foreign currency related options, futures or forward contracts or
foreign currency may be treated as ordinary income and losses under special tax
rules. Certain options, futures or forward contracts of the Portfolio may be
required to be marked to market (i.e., treated as if closed out) on the last day
of each taxable year, and any gain or loss realized with respect to these
contracts may be required to be treated as 60% long-term and 40% short-term gain
or loss or, in the case of certain contracts relating to foreign currency, as
ordinary income or loss. Positions of the Portfolio in securities and offsetting
options, futures or forward contracts may be treated as "straddles", which are
subject to tax rules that may cause deferral of Portfolio losses, adjustments in
the holding periods of Portfolio securities, and other changes in the short-term
or long-term characterization of capital gains and losses, the effect of which
may be to change the amount, timing and character of the Fund's distributions to
shareholders. Certain uses of foreign currency and foreign currency derivatives
such as options, futures, forward contracts and swaps and investment by the
Portfolio in certain "passive foreign investment companies" may be limited or a
tax election may be made, if available, in order to preserve the Fund's ability
to qualify as a RIC or avoid imposition of a tax on the Fund.
The Portfolio anticipates that it will be subject to foreign taxes on its
income (including, in some cases, capital gains) from foreign securities. Tax
conventions between certain countries and the U.S. may reduce or eliminate such
taxes in some cases. If more than 50% of the Fund's total assets, taking into
account its allocable share of the Portfolio's total assets, at the close of any
taxable year of the Fund consists of stock or securities of foreign
corporations, the Fund may file an election with the Internal Revenue Service
(the "IRS") pursuant to which shareholders of the Fund will be required to }i{
include in ordinary gross income (in addition to dividends and distributions
actually received) their pro rata shares of foreign income taxes paid by the
Portfolio and allocated to the Fund even though not actually received by them,
and (ii) treat such respective pro rata portions as foreign income taxes paid by
them. Shareholders may then deduct such pro rata portions of foreign income
taxes in computing their taxable incomes, or, alternatively, use them as foreign
tax credits, subject to applicable limitations, against their U.S. income taxes.
Shareholders who do not itemize deductions for federal income tax purposes will
not, however, be able to deduct their pro rata portion of foreign taxes deemed
paid by the Fund, although such shareholders will be required to include their
shares of such taxes in gross income. Shareholders who claim a foreign tax
credit for such foreign taxes may be required to treat a portion of dividends
received from the Fund as a separate category of income for purposes of
computing the limitations on the foreign tax credit. Tax- exempt shareholders
will ordinarily not benefit from this election. Each year that the Fund files
the election described above, its shareholders will be notified of the amount of
}i{ each shareholder's pro rata share of foreign income taxes paid by the
Portfolio and allocated to the Fund and (ii) the portion of Fund dividends which
represents income from each foreign country. If the Fund does not make this
election, it may deduct its allocated share of such taxes in computing the
income it is required to distribute.
The Portfolio will allocate at least annually to the Fund and its other
investors their respective distributive shares of any net investment income and
net capital gains which have been recognized for federal income tax purposes
(including unrealized gains at the end of the Portfolio's fiscal year on certain
options and futures transactions that are required to be marked-to- market).
Such amounts will be distributed by the Fund to its shareholders in cash or
additional shares, as they elect. Shareholders of the Fund will be advised of
the nature of the distributions.
Distributions by the Fund of the excess of net long-term capital gain over
net short-term capital loss earned by the Portfolio and allocated to the Fund,
taking into account any capital loss carryforwards that may be available, are
taxable to shareholders of the Fund as long-term capital gains, whether received
in cash or in additional shares and regardless of the length of time their
shares have been held. Certain distributions, if declared in October, November
or December and paid the following January, will be taxed to shareholders as if
received on December 31 of the year in which they are declared.
Any loss realized upon the redemption or exchange of shares of the Fund with
a tax holding period of 6 months or less will be treated as a long-term capital
loss to the extent of any distribution of net long-term capital gains with
respect to such shares. All or a portion of a loss realized upon a redemption or
other disposition of Fund shares may be disallowed under "wash sale" rules if
other Fund shares are purchased (whether through reinvestment of dividends or
otherwise) within 30 days before or after the disposition. Any disallowed loss
will result in an adjustment to the shareholder's tax basis in some or all of
the other shares acquired.
Amounts paid by the Fund to individuals and certain other shareholders who
have not provided the Fund with their correct taxpayer identification number
("TIN") and certain certifications required by the IRS, as well as shareholders
with respect to whom the Fund has received certain information from the IRS or a
broker, may be subject to "backup" withholding of federal income tax arising
from the Fund's dividends and other distributions as well as the proceeds of
redemption transactions (including repurchases and exchanges), at a rate of 31%.
An individual's TIN 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 convention. 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 arise if: }i{ the
shareholder is engaged in a trade or business in the United States; (ii) the
shareholder is present in the United States for a sufficient period of time
during a taxable year to be treated as a U.S. resident, (generally 180 days or
more); or (iii) the shareholder fails to provide any required certifications
regarding its status as a non-resident alien investor. Foreign shareholders
should consult their tax advisers regarding the U.S. and foreign tax
consequences of an investment in the Fund.
The foregoing discussion does not address the special tax rules applicable
to certain classes of investors, such as IRAs and other retirement plans,
tax-exempt entities, insurance companies and financial institutions.
Shareholders should consult their own tax advisers with respect to these or
other special tax rules that may apply in their particular situations, as well
as the state, local, and, where applicable, foreign tax consequences of
investing in the Fund.
PRINCIPAL UNDERWRITER
The Trust 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 Trust will exceed
the amounts paid therefor. For the amount paid by the Trust to the Principal
Underwriter for acting as repurchase agent for Class B shares, see Appendix B.
CLASS A SHARES. Class A shares of the Fund may be continuously purchased at
the public offering price through Authorized Firms which have agreements with
the Principal Underwriter. The Trust reserves the right to suspend or limit the
offering of its shares to the public at any time. The public offering price is
the net asset value next computed after receipt of the order, plus, where
applicable, a variable percentage (sales charge) depending upon the amount of
purchase as indicated by the sales charge table set forth in the Prospectus (see
"How to Buy Shares"). Such table is applicable to purchases of a Fund alone or
in combination with purchases of certain other funds offered by the Principal
Underwriter, made at a single time by }i{ an individual, or an individual, his
or her spouse and their children under the age of twenty-one, purchasing shares
for his or 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 Class A shares
pursuant to a written Statement of Intention or (2) purchases of Class A shares
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 Trust may issue
Class A 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 Class. Normally no
sales charges will be paid in connection with an exchange of Class A shares for
the assets of such investment company. Class A shares may be sold at net asset
value to any officer, director, trustee, general partner or employee of the
Trust, 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. Class A shares may also be sold at net asset value to registered
representatives and employees of Authorized Firms and to the spouses and
children under the age of 21 and beneficial accounts of such persons.
The Principal Underwriter acts as principal in selling Class A shares under
a Distribution Agreement with the Trust. 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 Class A shares on a "best efforts" basis under which it
is required to take and pay for only such shares as may be sold. The Principal
Underwriter allows Authorized Firms discounts from the applicable public
offering price which are alike for all Authorized Firms. The Principal
Underwriter may allow, upon notice to all Authorized Firms with whom it has
agreements, discounts up to the full sales charge during the periods specified
in the notice. During periods when the discount includes the full sales charge,
such Authorized Firms may be deemed to be underwriters as that term is defined
in the Securities Act of 1933.
CLASS B AND CLASS C SHARES. Under the Distribution Agreements, the Principal
Underwriter acts as principal in selling Class B and Class C shares. 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, each
Class B and Class C makes payments to the Principal Underwriter pursuant to
their Distribution Plans as described in the Prospectus; the provisions of the
plan relating to such payments are included in the Distribution Agreements. The
Distribution Agreements are renewable annually by the Trust's Board of Trustees
(including a majority of their noninterested Trustees who have no direct or
indirect financial interest in the operation of the Distribution Plans or the
Distribution Agreements), may be terminated on sixty days' notice either by such
Trustees or by vote of a majority of the outstanding Class B and Class C shares
or on six months' notice by the Principal Underwriter and is automatically
terminated upon assignment. The Principal Underwriter distributes Class B and
Class C shares on a "best efforts" basis under which it is required to take and
pay for only such shares as may be sold.
DISTRIBUTION PLANS
CLASS A SHARES
As described in the Prospectus, in addition to the fees and expenses
described herein, the Trust on behalf of its Class A shares finances
distribution activities and bears expenses associated with the distribution of
shares and the provision of certain personal and account maintenance services to
shareholders pursuant to a distribution plan (the "Plan") designed to meet the
requirements of Rule 12b-1 under the 1940 Act.
The Plan remains in effect from year to year provided such continuance is
approved at least annually by a 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 agreement related to the Plan (the "Rule 12b-1
Trustees") and (ii) all of the Trustees then in office. The 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 Class A shares of the Fund. The Plan
requires quarterly Trustee review of 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 affected shareholders of Class A shares and the Trustees. So
long as the Plan is in effect, the selection and nomination of the noninterested
Trustees shall be committed to the discretion of such Trustees. The Trustees
have determined that in their judgment there is a reasonable likelihood that the
Plan will benefit the Fund and its shareholders.
The Plan is intended to compensate the Principal Underwriter for its
distribution services to the Fund by paying the Principal Underwriter monthly
distribution fees in connection with the sale of Class A shares. The quarterly
service fee paid by the Class A shares under the Plan is intended to compensate
the Principal Underwriter for its personal and account maintenance services and
for the payment by the Principal Underwriter of service fees to Authorized
Firms.
CLASS B AND CLASS C SHARES
The Trust has adopted Distribution Plans (the "Plans") on behalf of its
Class B and Class C shares designed to meet the requirements of Rule 12b-1 under
the 1940 Act and the sales charge rule of the National Association of Securities
Dealers, Inc. (the "NASD"). The purpose of the Plans is to compensate the
Principal Underwriter for its distribution services and facilities provided with
respect to Class B and Class C shares.
The Plans provide that the Fund will pay sales commissions and distribution
fees to the Principal Underwriter only after and as a result of the sale of
Class B or Class C 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 Class B sales and
6.25% of Class C sales 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 amount payable to the Principal Underwriter pursuant to the Plans as
sales commissions and distribution fees with respect to each day will be accrued
on such day as a liability of the Fund's respective Class and will accordingly
reduce the Class' 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 a Class' net assets on such day. The level of a Class' net
assets changes each day and depends upon the amount of sales and redemptions of
shares, the changes in the value of the investments held by the Portfolio, the
expenses of the Class, Fund and the Portfolio accrued and allocated to the Fund
and Class 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 Trust does not accrue possible future payments as a
liability of a Class or reduce a Class' current net assets in respect of unknown
amounts which may become payable under the Plans in the future because the
standards for accrual of such a liability under accounting principles have not
been satisfied.
The Plans provide that the Class 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 Trust to the Principal Underwriter
whenever there exist uncovered distribution charges.
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 Plans since their inception. Payments theretofore paid or
payable under the Plans by the Trust to the Principal Underwriter and CDSCs
theretofore paid or payable to the Principal Underwriter less all amounts
theretofore paid or payable to the Principal Underwriter by the Adviser in
consideration of the former's distribution efforts, will be subtracted from such
distribution charges; if the result of such subtraction is positive, a
distribution fee (computed at 1% over the prime rate then reported in The Wall
Street Journal) will be computed on such amount and added thereto, with the
resulting sum constituting the amount of outstanding uncovered distribution
charges with respect to such day. The amount of outstanding uncovered
distribution charges of the Principal Underwriter calculated on any day does not
constitute a liability recorded on the financial statements of the Fund.
The amount of uncovered distribution charges of the Principal Underwriter at
any particular time depends upon various changing factors, including the level
and timing of sales of 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 shares upon which a
CDSC will be imposed, the level and timing of redemptions of shares upon which
no CDSC will be imposed (including redemptions of 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 Class, and changes in
the interest rate used in the calculation of the distribution fee under the
Plans. Periods with a high level of sales of Class shares accompanied by a low
level of early redemptions of Class 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.
Currently, payments of sales commissions and distribution fees and of
service fees may equal, 1% of a Class' average daily net assets per annum. For
actual payments made by the Fund and the outstanding uncovered distribution
charges of the Principal Underwriter, see Appendix B. The Trust believes that
the combined rate of all these payments may be higher than the rate of payments
made under distribution plans adopted by other investment companies pursuant to
Rule 12b-1. Although the Principal Underwriter will use its own funds (which may
be borrowed from banks) to pay sales commissions and service fees for Class C
sales and sales commissions for Class B sales at the time of sale, it is
anticipated that the Eaton Vance organization will profit by reason of the
operation of the Plans through an increase in the Fund's assets (thereby
increasing the management fee payable to Eaton Vance by the Fund and the
administration fees payable to Eaton Vance by the Portfolio) resulting from sale
of Fund shares and through the amounts paid to the Principal Underwriter,
including CDSCs, pursuant to the Plans. The Eaton Vance organization may be
considered to have realized a profit under the Plans if at any point in time the
aggregate amounts theretofore received by the Principal Underwriter pursuant to
the Plans from the Adviser in consideration of the distribution efforts and from
CDSCs have exceeded the total expenses theretofore incurred by such organization
in distributing Class B and Class C 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
Trust.
The Plans continue 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 Plans and Distribution
Agreements 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
applicable Class. The Plans require quarterly Trustee review of a written report
of the amount expended under the Plans and the purposes for which such
expenditures were made. The Plans may not be amended to increase materially the
payments described therein without approval of the shareholders of the affected
Class and the Trustees. So long as the Plans are in effect, the selection and
nomination of the noninterested Trustees shall be committed to the discretion of
such Trustees.
The Trustees of the Trust believe that the Plans 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 Class B and Class C shareholders. Payments for sales
commissions and distribution fees made to the Principal Underwriter under the
Plans will compensate the Principal Underwriter for its services and expenses in
distributing Class B and Class C shares of the Fund. Service fee payments made
to the Principal Underwriter and Authorized Firms under the Plans 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 Plans are 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 Class B and Class C shareholders.
PORTFOLIO SECURITY TRANSACTIONS
Decisions concerning the execution of portfolio security transactions by the
Portfolio, including the selection of the market and the broker-dealer firm, are
made by the Adviser.
The Adviser places the portfolio security transactions of the Portfolio and
of certain other accounts managed by the Adviser for execution with many firms.
The Adviser uses its best efforts to obtain execution of portfolio transactions
at prices which are advantageous to the Portfolio and (when a disclosed
commission is being charged) at reasonably competitive commission rates. In
seeking such execution, the Adviser will use its best judgment in evaluating the
terms of a transaction, and will give consideration to various relevant factors,
including without limitation the size and type of the transaction, the general
execution and operational capabilities of the broker-dealer, the nature and
character of the market for the security, the confidentiality, speed and
certainty of effective execution required for the transaction, the reputation,
reliability, experience and financial condition of the broker-dealer, the value
and quality of services rendered by the broker-dealer in other transactions, and
the reasonableness of the commission 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 over-the-counter markets, but the price paid or received by the Portfolio
usually includes an undisclosed dealer markup or markdown. In an underwritten
offering the price paid by the Portfolio includes a disclosed fixed commission
or discount retained by the underwriter or dealer. Although commissions paid on
portfolio transactions will, in the judgment of the Adviser, be reasonable in
relation to the value of the services provided, commissions exceeding those
which another firm might charge may be paid to broker-dealers who were selected
to execute transactions on behalf of the Portfolio and the Adviser's other
clients in part for providing brokerage and research services to the Adviser.
As authorized in Section 28}e{ of the Securities Exchange Act of 1934, a
broker or dealer who executes a portfolio transaction on behalf of the Portfolio
may receive a commission which is in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction if the
Adviser determines in good faith that such 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 the overall responsibilities which the Adviser and its
affiliates have for accounts over which they exercise investment discretion. In
making any such determination, the Adviser will not attempt to place a specific
dollar value on the brokerage and research services provided or to determine
what portion of the commission should be related to such services. Brokerage and
research services may include advice as to the value of securities, the
advisability of investing in, purchasing, or selling securities, and the
availability of securities or purchasers or sellers of securities; furnishing
analyses and reports concerning issuers, industries, securities, economic
factors and trends, portfolio strategy and the performance of accounts; and
effecting securities transactions and performing functions incidental thereto
(such as clearance and settlement); and the "Research Services" referred to in
the next paragraph.
It is a common practice in the investment advisory industry for the advisers
of investment companies, institutions and other investors to receive research,
statistical and quotation services, data, information and other services,
products and materials which assist such advisers in the performance of their
investment responsibilities ("Research Services") from broker-dealers which
execute portfolio transactions for the clients of such advisers and from third
parties with which such broker-dealers have arrangements. Consistent with this
practice, the Adviser may receive Research Services from broker-dealer firms
with which the Adviser places the portfolio transactions of the Portfolio and
from third parties with which these broker-dealers have arrangements. These
Research Services may include such matters as general economic and market
reviews, industry and company reviews, evaluations of securities and portfolio
strategies and transactions and recommendations as to the purchase and sale of
securities and other portfolio transactions, financial, industry and trade
publications, news and information services, pricing and quotation equipment and
services, and research oriented computer hardware, software, data bases and
services. Any particular Research Service obtained through a broker-dealer may
be used by the Adviser in connection with client accounts other than those
accounts which pay commissions to such broker-dealer. Any such Research Service
may be broadly useful and of value to the Adviser in rendering investment
advisory services to all or a significant portion of its clients, or may be
relevant and useful for the management of only one client's account or of a few
clients' accounts, or may be useful for the management of merely a segment of
certain clients' accounts, regardless of whether any such account or accounts
paid commissions to the broker-dealer through which such Research Service was
obtained. The advisory fee paid by the Portfolio is not reduced because the
Adviser receives such Research Services. The Adviser evaluates the nature and
quality of the various Research Services obtained through broker-dealer firms
and attempts to allocate sufficient commissions to such firms to ensure the
continued receipt of Research Services which the Adviser believes are useful or
of value to it in rendering investment advisory services to its clients.
Subject to the requirement that the Adviser shall use its best efforts to
seek to execute portfolio security transactions of the Portfolio at advantageous
prices and at reasonably competitive commission rates or spreads, the Adviser is
authorized to consider as a factor in the selection of any broker-dealer firm
with whom Portfolio orders may be placed the fact that such firm has sold or is
selling shares of the Fund or of other investment companies sponsored by Eaton
Vance. This policy is not inconsistent with a rule of the 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 the Adviser or its
affiliates. Whenever decisions are made to buy or sell securities by the
Portfolio and one or more of such other accounts simultaneously, the Adviser
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 the Adviser 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 Adviser's organization outweigh any
disadvantage that may arise from exposure to simultaneous transactions.
For the fiscal years ended August 31, 1997, 1996 and 1995, the Portfolio
paid brokerage commissions of $2,263,407, $2,802,590 and $2,608,520,
respectively, with respect to portfolio transactions. Of this amount,
approximately $1,181,469, $2,342,231 and $2,341,272 was paid in respect of
portfolio security transactions aggregating approximately $272,549,565,
$366,522,257 and $387,659,617, respectively, 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
The Trust is a Massachusetts business trust established in 1989 as the
successor to Eaton Vance Growth Fund, Inc., a Massachusetts corporation. The
Fund established multiple classes of shares on September 1, 1997. The operations
of Class B reflect the operations of the Fund prior to such date. Class A and
Class C are the successors to the operations of separate series of the 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 Trust's Declaration of Trust may be amended by the Trustees when
authorized by vote of a majority of the outstanding voting securities of the
Trust, the financial interests of which are 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 (such as reclassifying series or classes of shares or restructuring the
Trust) as do not have a materially adverse effect on the rights or interests of
shareholders or if they deem it necessary to conform the Declaration to the
requirements of applicable federal laws or regulations. The Trust's By-laws
provide that the Trust will indemnify its Trustees and officers against
liabilities and expenses incurred in connection with any litigation or
proceeding in which they may be involved because of their offices with the
Trust. However, no indemnification will be provided to any Trustee or officer
for any liability to the Trust or its shareholders by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.
Under Massachusetts law, if certain conditions prevail, shareholders of a
Massachusetts business trust (such as the Trust) could be deemed to have
personal liability for the obligations of the Trust. Numerous investment
companies registered under the 1940 Act have been formed as Massachusetts
business trusts, and management is not aware of an instance where such liability
has been imposed. The Trust's Declaration of Trust contains an express
disclaimer of liability on the part of the Fund shareholders and the Trust's
By-laws provide that the Trust shall assume the defense on behalf of any Fund
shareholder. (The Declaration also contains provisions limiting the liability of
a series or class to that series or class.) Moreover, the Trust's By-laws also
provide for indemnification out of the property of the Fund of any shareholder
held personally liable solely by reason of being or having been a shareholder
for all loss or expense arising from such liability. The assets of the Fund are
readily marketable and will ordinarily substantially exceed its liabilities. In
light of the nature of the Fund's business and the nature of its assets,
management believes that the possibility of the Fund's liabilities exceeding its
assets, and therefore the shareholder's risk of personal liability, is extremely
remote.
As permitted by Massachusetts law, there will normally be no meetings of
shareholders for the purpose of electing Trustees unless and until such time as
less than a majority of the Trustees of the Trust holding office have been
elected by shareholders. In such an event the Trustees then in office will call
a shareholder's meeting for the election of Trustees. Except for the foregoing
circumstances and unless removed by action of the shareholders in accordance
with the Trust's By-Laws, the Trustees shall continue to hold office and may
appoint successor Trustees.
The Trust's By-Laws provide that no person shall serve as a Trustee if
shareholders holding two-thirds of the outstanding shares have removed him from
that office either by a written declaration filed with the Trust's custodian or
by votes cast at a meeting called for that purpose. The By-Laws further provide
that under certain circumstances the shareholders may call a meeting to remove a
Trustee and that the Trust is required to provide assistance in communicating
with shareholders about such a meeting.
In accordance with the Declaration of Trust of the Portfolio, there will
normally be no meetings of the investors for the purpose of electing Trustees
unless and until such time as less than a majority of the Trustees holding
office have been elected by investors. In such an event the Trustees of the
Portfolio then in office will call an investors' meeting for the election of
Trustees. Except for the foregoing circumstances and unless removed by action of
the investors in accordance with the Portfolio's Declaration of Trust, the
Trustees shall continue to hold office and may appoint successor Trustees.
The Declaration of Trust of the Portfolio provides that no person shall
serve as a Trustee if investors holding two-thirds of the outstanding interests
have removed him from that office either by a written declaration filed with the
Portfolio's custodian or by votes cast at a meeting called for that purpose. The
Declaration of Trust further provides that under certain circumstances the
investors may call a meeting to remove a Trustee and that the Portfolio is
required to provide assistance in communicating with investors about such a
meeting.
The Portfolio's Declaration of Trust provides that the 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 Portfolio's Declaration of Trust provides that the Portfolio will
terminate 120 days after the complete withdrawal of the Fund or any other
investor in the Portfolio, unless either the remaining investors by unanimous
vote at a meeting of such investors, or a majority of the Trustees of the
Portfolio, by written instrument consented to by all investors, agree to
continue the business of the Portfolio. This provision is consistent with
treatment of the Portfolio as a partnership for federal income tax purposes.
The right to redeem shares of the Fund can be suspended and the payment of
the redemption price deferred when the Exchange is closed (other than for
customary weekend and holiday closings), during periods when trading on the
Exchange is restricted as determined by the Commission, or during any emergency
as determined by the Commission which makes it impracticable for the Portfolio
to dispose of its securities or value its assets, or during any other period
permitted by order of the Commission for the protection of investors.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Deloitte & Touche LLP, 125 Summer Street, Boston, Massachusetts, are the
independent certified public accountants of the Fund and the Portfolio,
providing audit services, tax return preparation, and assistance and
consultation with respect to the preparation of filings with the Commission.
FINANCIAL STATEMENTS
The audited financial statements of and the independent auditors' report for
the Fund and the Portfolio appear in the Fund's most recent annual report to
shareholders and are incorporated by reference into this SAI. A copy of the
Fund's most recent annual report accompanies this SAI.
Registrant incorporates by reference the audited financial information for
the Fund and the Portfolio for the fiscal year ended August 31, 1997, as
previously filed electronically with the Commission (Accession No.
0000950109-97-007188).
<PAGE>
APPENDIX A: CLASS A SHARES
PERFORMANCE INFORMATION
The table below indicates the cumulative and average annual total return on
a hypothetical investment of $1,000 in a predecessor fund reorganized September
1, 1997 into Class A shares for the periods shown in the table. The "Value of
Initial Investment" reflects the deduction of the maximum sales charge of 5.75%.
Past performance is not indicative of future results. Investment return and
principal value will fluctuate; shares, when redeemed, may be worth more or less
than their original cost.
<TABLE>
<CAPTION>
VALUE OF $1,000 INVESTMENT
TOTAL RETURN TOTAL RETURN
EXCLUDING MAXIMUM INCLUDING MAXIMUM
VALUE OF VALUE OF SALES CHARGE SALES CHARGE
INVESTMENT INVESTMENT INITIAL INVESTMENT ---------------------------- ----------------------------
PERIOD DATE INVESTMENT ON 8/31/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
------ ------ ------- ------ ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Life of the Fund* 10/28/92 $942.51 $1,863.87 97.76% 15.13% 86.39% 13.73%
1 Year Ended
8/31/97 8/31/96 $942.74 $1,232.72 30.76% 30.76% 23.27% 23.27%
*Investment operations began on October 28, 1992.
</TABLE>
<PAGE>
APPENDIX B: CLASS B SHARES
FEES AND EXPENSES
MANAGER
As of August 31, 1997, the Fund had net assets of $296,586,481. For the
fiscal years ended August 31, 1997, 1996 and 1995, Eaton Vance earned management
fees of $722,858, $782,873 and $876,239, respectively (equivalent to 0.25% of
the Fund's average daily net assets for each such year).
DISTRIBUTION PLAN
During the fiscal year ended August 31, 1997, the Principal Underwriter paid
to Authorized Firms sales commissions of $467,392 on sales of Fund shares.
During the same period, the Fund made sales commission payments under the Plan
to the Principal Underwriter aggregating $2,168,574 and the Principal
Underwriter received approximately $1,703,000 in CDSCs imposed on early
redeeming shareholders. These sales commissions and CDSC payments reduced
uncovered distribution charges under the Plan. As at August 31, 1997, the
outstanding uncovered distribution charges of the Principal Underwriter
calculated under the Plan amounted to approximately $6,284,000. During the
fiscal year ended August 31, 1997, the Fund made service fee payments to the
Principal Underwriter and Authorized Firms aggregating $669,127, of which
$661,638 was paid to Authorized Firms and the balance of which was retained by
the Principal Underwriter.
PRINCIPAL UNDERWRITER
For the fiscal year ended August 31, 1997, the Fund paid the Principal
Underwriter $19,195.00 for repurchase transactions handled by the Principal
Underwriter.
PERFORMANCE INFORMATION
The table below indicates the cumulative and average annual total return on
a hypothetical investment of $1,000 in Class B shares for the periods shown in
the table. The total return for Class B prior to December 28, 1993 reflects the
total return of another investment company that invested in the Portfolio
adjusted to reflect the Class B sales charge. This total return has not been
adjusted to reflect certain other expenses (such as distribution and/or service
fees). If such adjustments were made, the performance would be lower. Past
performance is not indicative of future results. Investment return and principal
vaue will fluctuate; shares, when redeemed, may be worth more or less than their
original cost.
<TABLE>
<CAPTION>
VALUE OF A $1,000 INVESTMENT
VALUE OF VALUE OF
INVESTMENT INVESTMENT
BEFORE AFTER TOTAL RETURN BEFORE TOTAL RETURN AFTER
DEDUCTING THE DEDUCTING THE DEDUCTING THE CDSC DEDUCTING THE CDSC
INVESTMENT INVESTMENT AMOUNT OF CDSC CDSC -------------------------- -------------------------
PERIOD DATE INVESTMENT ON 8/31/97 ON 8/31/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
------ ---- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Life of the
Fund* 10/28/92 $1,000 $1,962.28 $1,942.28 96.23% 14.94% 94.23% 14.70%
1 Year Ended
8/31/97 8/31/96 $1,000 $1,301.48 $1,251.48 30.15% 30.15% 25.15% 25.15%
*Predecessor Fund commenced operations December 28, 1993.
</TABLE>
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As at December 1, 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
December 1, 1997, Merrill Lynch, Pierce, Fenner & Smith, Inc., Jacksonville, FL
was the record owner of approximately 30.3% of the outstanding Class B shares,
which it held on behalf of its customers who are the beneficial owners of such
shares, and as to which they had voting power under certain limited
circumstances. To the knowledge of the Trust, no other person owned of record or
beneficially 5% or more of the Fund's outstanding Class B shares as of such
date.
<PAGE>
APPENDIX C: CLASS C SHARES
PERFORMANCE INFORMATION
The table below indicates the cumulative and average annual total return on
a hypothetical investment of $1,000 in Class C shares for the periods shown in
the table. Total return for Class C prior to June 7, 1993 reflects the total
return of another investment company that invested in the Portfolio adjusted to
reflect the Class C sales charge. This total return has not been adjusted to
reflect certain other expenses (such as distribution and/or service fees). If
such adjustments were made, performance would be lower. 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.
<TABLE>
<CAPTION>
VALUE OF A $1,000 INVESTMENT
VALUE OF INVEST- VALUE OF INVEST-
MENT BEFORE DE- MENT AFTER DE- TOTAL RETURN BEFORE TOTAL RETURN AFTER
DUCTING THE DUCTING THE DEDUCTING THE CDSC DEDUCTING THE CDSC
INVESTMENT INVESTMENT AMOUNT OF CDSC CDSC -------------------------- --------------------------
PERIOD DATE INVESTMENT ON 8/31/97 ON 8/31/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- -------------- ------------ ----------- --------------- --------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Life of
the Fund* 10/28/92 $1,000 $1,919.38 $1,919.38 91.94% 14.42% 91.94% 14.42%
1 Year
Ended
8/31/97 8/31/96 $1,000 $1,296.69 $1,286.69 29.67% 29.67% 28.67% 28.67%
*Predecessor Fund commenced operations June 7, 1993.
</TABLE>
<PAGE>
APPENDIX D: CHINA REGION COUNTRIES
The information set forth in this Appendix has been extracted from various
government and private publications. The Trust's Board of Trustees make no
representation as to the accuracy of the information, nor has the Board of
Trustees attempted to verify it. No representation is made that any correlation
will exist between the economies or stock markets of China Region countries and
the Fund's performance.
PEOPLE'S REPUBLIC OF CHINA
China is the world's third largest country occupying a region of 9.6 million
square kilometers.China is the world's most populous nation, consisting of more
than one-fifth of the human race. The estimated population is approximately 1.3
billion.
In 1949, the Communist Party established the People's Republic of China. The
Communist government engaged in numerous campaigns to industrialize the country
with various programs. The failure of the Communist Party to achieve substantive
economic reform eventually led to political domination by the army. In the
1970's, the Chinese government, which had remained isolated from the world,
opened its doors by encouraging foreign investment and expertise inside its
borders.
In 1989, a growing dissatisfaction with the Communist government led to
anti-government student protests culminating in what is known as the Tiananmen
Square incident. The government's use of the military to suppress a peaceful
demonstration resulted in world-wide criticism. However, recent developments in
China have been encouraging. The death of Deng Xiaoping did not trigger any
social unrest and restructuring of state-owned enterprises had been the main
theme of the 15th Party Congress held in 1997. Leadership under Jiang Zemin
remains committed to the implementation of economic reforms. Investment in China
still entails significant political risk of nationalization or expropriation.
Over the past decade, China has achieved annual growth in real gross
domestic product (GDP) averaging in excess of 10%. GDP in 1995 had increased to
over 4 times the GDP in 1980 in real terms.
The economy in China consists of three sectors: state, cooperative, and
private. The state sector, though decreasing from 76% of GDP in 1980 to
approximately 50% in 1991, continues to constitute the bulk of the economy. In
recent years, however, the economy has been significantly restructured through
the abolition of the commune system in rural areas and the relaxing of
government authority in the day to day operations in both agricultural and
industrial enterprises. As the government assumes more of a regulatory and
supervisory role and less of a direct management role, market forces have been
allowed to operate. This has resulted in increased productivity and rising
incomes.
In 1990, industry accounted for 45.8% of China's National Income. In the
first three decades under Communist rule, China placed great emphasis on heavy
industry. Since the reform program began in 1978, a much greater emphasis has
been placed on light industry. Considerable industrial growth has come from
industrial enterprises in rural townships which are engaged in the processing
and assembly of consumer goods. These operations are concentrated in southern
China, where a major light industrial base has developed. Industrial output has
grown rapidly and is increasingly important to the Chinese economy. China's
current industrial policy also places emphasis on high-technology industries
supported by foreign technology, such as micro-electronics and
telecommunications. However, many enterprises have a huge staff burden which
must be relieved to increase the competitiveness of the enterprises. To avoid
social unrest caused by the increase in unemployment rate, there is so far no
easy solution.
Inflation, which was a problem in early 1990s, has been under control.
Inflation rate rocketed to 24% in 1994 and then dropped to 17.1%, 8.3% in 1995,
1996 respectively. Estimate for 1997 is currently at 3.5%. The control achieved
over inflation is the result of austerity measures implemented by the government
during 1994, 1995 and early 1996. The soft landing of economy in 1996 has paved
a better way for future economic developments.
Textiles and garments together form the single largest export category,
representing about one quarter of total export values. China's trade balance has
fluctuated over the last five years. In 1996, China's foreign trade yielded a
surplus of U.S. $12.23 billion. Hong Kong is one of the leading destination for
Chinese exports, accounting for over 40% of total export volume. Hong Kong is
also a major re-export center for Chinese goods. Other large export markets for
China include Japan, the United States, and Germany. Over the past few years,
China's imports have continued to expand and diversify. Hong Kong, Japan and the
United States are China's top three suppliers. Other major suppliers include
Germany and Italy.
China has traditionally adopted a policy of self-reliance when financing
development; overseas borrowings have been minimal. The country has remained a
conservative borrower but, since the early 1980s, has been making greater use of
foreign capital and financing, including government-assisted facilities and
project and trade financing. The primary sources of foreign capital for China
include: International Monetary Fund and World Bank loans and credits;
government low interest loans and credits; and commercial loans and credits.
There is centralized control and unified management of foreign exchange in
China. The renminbi has been devalued progressively in the past decade,
depreciating by almost 70% against the U.S. dollar between 1981 and 1990.
However, it has been stabilized at the 1994 level for the past 3 years.
There currently are two officially recognized exchanges in China, the
Shanghai Securities Exchange ("SHSE"), which commenced trading on December 19,
1990, and the Shenzhen Stock Exchange ("SZSE"), which commenced trading on July
3, 1991. "B" shares are offered exclusively for investment by foreign investors,
and their total market capitalization in December 1996 was over $3 billion. A
number of organized securities markets exist in other cities in China, but these
are primarily over-the-counter markets. At the local level, however, many cities
and provinces have promulgated securities rules and regulations. In fact, it is
becoming common for state-owned enterprises to go for an overseas listing, for
example by a listing of H Shares in Hong Kong, or through Red Chips securities
in The Stock Exchange of Hong Kong.
HONG KONG
As a trade entrepot and finance center, Hong Kong's viability has been
inexorably linked to mainland China since the establishment of the Colony in
1841. Hong Kong remains China's largest trade partner and its leading foreign
investor. In 1995, imports from China amounted to $69.8 billion, exports and
re-exports to $57.9 billion. In recent years large numbers of Hong Kong based
companies have set up factories in the southern province of Guangdong, where it
is estimated that Hong Kong companies employ about 3 million workers. There also
has been considerable growth in Chinese investment in Hong Kong over the last
decade and particularly in the last five years. In contrast to Japanese
investment, Chinese investment in Hong Kong typically involves the purchase of
stakes in existing companies. This has traditionally been in the banking and
import/export sectors. Recently, investment in property, manufacturing and
infrastructure projects has increased. In view of the growing economic
interaction between Hong Kong and Southern China, it is increasingly meaningful
to consider the concept of a Greater Hong Kong economy consisting of Hong Kong
and Guangdong Province, with a combined population of over 75 million. To
sustain the growth of the Guangdong economy, the Hong Kong government in 1989
unveiled PADS, the Port and Airport Development Strategy. The project, estimated
to cost $21 billion, is designed to allow Hong Kong's cargo handling capacity to
increase by four times between 1988 and 2011 and its air traffic handling
capacity to increase from 15 million passengers in 1988 to 50 million in 2011.
In the past, political considerations have hindered closer economic
integration between Hong Kong and China. It was largely in response to the
United Nations embargo on trade with China in the 1950s and 1960s that Hong Kong
developed a significant manufacturing base. In the last several years, however,
there has been an improvement in relations. The Basic Law, the outline for Hong
Kong's government post 1997, calls for Hong Kong's capitalist system to remain
intact for an additional fifty years after 1997 and sets out details for the
integration of Hong Kong into China after 1997. This integration process
directly affects the value of Hong Kong investments.
In the last two decades there has been a structural change in Hong Kong's
economy, with growth in the services sector outpacing manufacturing growth. With
more and more labor intensive manufacturing relocating to Southern China, Hong
Kong has developed its services sector, which in 1995 contributed 81.7% of GDP.
The Stock Exchange of Hong Kong Ltd. ("HKSE"), commenced trading on April 2,
1986. The HKSE, with a total market capitalization as of October, 1997 of
approximately H.K. $329.6 billion (approximately U.S. $426 billion), is now the
second largest stock market in Asia, measured by market capitalization, behind
only that of Japan. As of that date, 658 companies and 1,595 securities were
listed on the Hong Kong Stock Exchange.
There are no regulations governing foreign investment in Hong Kong. There
are no exchange control regulations and investors have total flexibility in the
movement of capital and the repatriation of profits. Funds invested in Hong Kong
can be repatriated at will; dividends and interest are freely remittable.
TAIWAN
The basic geopolitical fact about Taiwan is that it sits under the shadow of
mainland China and under the threat of reunification, whether peaceful or by
military means. Taiwan is dependent on its close relationship with the United
States and its very successful diplomacy and public relations campaign which,
ever since Madame Chiang Kai-Shek's days in the 1940s has sustained a high level
of sympathy in Washington for the Nationalist regime. Taiwan also has close
relations with Israel, with whom it has had military as well as trade links.
Taiwan remains a free capitalist enclave with some very successful
entrepreneurial and export-oriented companies. The government's role in the
economy is relatively small.
Nevertheless, economic integration between the Chinese communities of China
and Taiwan has increased in recent years. China has low labor costs, inexpensive
land, natural resources and less rigid environmental rules. Taiwan has capital,
technology and trained entrepreneurs. Over 30 percent of Taiwan's trade is with
mainland China and the total investment from Taiwan to China may approach US $5
billion or even US $10 billion. A shortage of skilled labour, the high cost of
labour and the relatively strong New Taiwan dollar, has impelled many Taiwanese
businesspeople to shift their production to Thailand, the Philippines, and
Malaysia as well as China. Taiwan has over US $80 billion of foreign exchange
reserves. However, Chinese military exercises in 1996 suggest that there could
be a renewed cold war across the Taiwan Straits, a cut off of business and
cultural links, and a potential military conflict.
Between 1960 and 1994, Taiwan's GNP grew from less than $2 billion to over
$240 billion. The economic growth has been accompanied by a transformation of
domestic production from labor intensive to capital intensive industries in the
1970s and finally to higher technology industries in the 1980s. The Taiwan Stock
Exchange Corp. is viewed as a highly priced and highly volatile securities
market.
Taiwan has a purely Chinese culture and way of life which affects the legal
and commercial systems. Legal contracts or agreements may not be enforceable.
Even more than in China, Taiwan depends on the personal contact and trust
between the two individuals involved.
KOREA
Political volatility has characterized the history of South Korea (referred
to as Korea throughout this section) during the past forty years, while at the
same time an extraordinary economic boom has occurred. Rigid discipline has been
characteristic of the military government under President Park during the 1960s
and 1970s, which were the most successful decades in economic terms particularly
in the growth of Korea's exports and in the per capita income. It is important
to remember how completely the cities and transport system of the southern part
of the Korean peninsula had been destroyed in the civil war of the 1950s. The
effort of reconstruction was, therefore, enormous. Living standards in the 1960s
were extremely low. The threat from North Korea has exerted a continuous
military pressure on the South in the past forty years which is probably unique
to any country in the world, even including West Germany or Taiwan. Seoul is
only 30 kilometers from the demilitarized zone and, therefore, lives in a
continuous state of tension and fear of an imminent invasion. This very real
threat is also translated into a very high percentage of military spending in
the national budget. If Korea is compared with Japan, the Koreans have had to
spend ten times more of their national income on defense than the Japanese.
Inflation in Korea has been higher than in Japan or Taiwan. In the 1970s,
Korea experienced an annual average inflation rate of nearly 15 percent.
Beginning in 1982, however, the tight monetary policy succeeded in bringing this
annual consumer price index down to single digits until 1990 when the rate
jumped again to 8.6 percent. However, series of economic problems have flooded
Korea in 1996 and 1997. Korea Won and stocks have seriously weakened in 1997.
These have forced Korea to accept International Monetary Fund's rescue package
which comes in with measures intended to put the economy in better order.
THAILAND
Thailand is unique in South East Asia in that it has escaped the colonial
experience and maintained its freedom and independence. The monarchy plays a key
role in maintaining the country's political stability and independence.
Nevertheless, since the absolute monarchy was ended in 1932 there have been
twenty-one coup d'etats, of which twelve have been successful. Thailand in the
1990s may remain democratic but the King and the army will continue to play a
role.
Thailand has a free and independent peasant population which has, on the
whole, enjoyed a higher standard of living than their neighbours and, therefore,
the communist movement has never made much headway among the rural people. On
the other hand again, Thailand's extraordinary economic growth in the 1980s
(averaging 10 percent per annum) has put great strains not only on the urban
environment because of traffic jams and pollution, but also on the social and
family system. Many rural families have been forced to send their teenage
children to the cities to find employment. The contrast of living standards
between Bangkok and the north east provinces (an estimated per capital income
would be perhaps US $2,500 per annum for the former and less than US $500 per
annum for the latter) must eventually create social tensions and potential
unrest. Buddhism must also be counted as a major factor of political stability.
Thailand's economy has been among the fastest growing in the world during
the past decade. The take-off really began in 1986-7 with the flood of new
foreign investment into the country, largely from Japan and Taiwan. There has
been a large shift away from agriculture towards manufacturing. As recently as
1980, 50 percent of Thailand's exports consisted of rice and tapioca and other
agricultural products. By 1990, 75 percent of the total volume of exports were
manufactured goods, mainly from the newly established assembly plants in Bangkok
and the south. This has resulted in large changes in employment and moves of
populations.
It is surprising, considering the very high rate of economic growth that the
economy has experienced, that prices, as measured by the consumer price index,
have been kept under control. The last serious bout of inflation in Thailand
occurred during the two oil crises, first in 1973-4 when the CPI touched 24
percent and then again in 1980-1 when there was a resurgence of inflation to
nearly 20 percent. In the later 1980s, and thanks largely to a more stable oil
price, inflation has been held in single digits and has not exceeded 7 percent.
The boom in early 1990s has resulted in over-valued currency, real estates and
problems in the banking sector. These have finally hurt the economy of Thailand
in 1997 and as a result International Monetary Fund's rescue have been
requested.
MALAYSIA
The central dilemma in assessing Malaysia's political risk is the perennial
question of relations between the Malay and Chinese communities representing as
they do about 60 percent and 30 percent of the population respectively. Since
the 1969 anti-Chinese riots in Kuala Lumpur the country has been unruffled by
any serious inter-racial violence and during this period a great deal has been
accomplished in transforming the economy and in transferring the wealth of the
country from foreign and Chinese hands into the hands of the bumiputra (or the
sons of the soil), which is the dominant Malay majority. The success of this New
Economic Policy is unquestioned and has given a great deal of legitimacy to the
continued run of the United Malay National Organisation (UMNO) under its
successive prime ministers and most recently under Dr. Mahathir Mohammed who has
now held power for more than a decade. This economic success has also done much
to defuse the threat from the Islamic fundamentalists who have tended to get
co-opted into the ruling party. The Chinese community has also done well in
economic terms although the political disunity in the Malay Chinese Association
(MCA) has left them somewhat leaderless in the political sphere.
Malaysia has a kingship which is shared on a five-year revolving basis among
the sultans of the various states of the federation. Malaysia's relations with
its neighbours are good. Singapore, remains the largest investor in the country.
Malaysia, along with Singapore, experienced a sharp recession in 1985-6 owing to
an excessive tight monetary policy in both countries. Since 1987 Malaysia has,
however, returned to the path of high growth and low inflation. The change in
recent years has also been accompanied by an accelerated shift into
manufacturing and away from the old dependence on the plantation sector. This
manufacturing growth has been led by investment from Japan and Taiwan and
notable national projects such as the Proton car. Malaysia is attempting to move
up market into the new product areas such as electronics, car assembly and
consumer goods. It has a literate and trainable workforce.
As manufactured goods assume a larger importance in the composition of
exports compared with crude oil, rubber and palm oil, Malaysia's trade position
should gradually become steadier. For an investor, Malaysia remains vulnerable
to external shocks either in terms of commodity prices or in a fall in export
demand in its principal markets.
SINGAPORE
"The silent success", in the words of a Singapore government minister, of
this region is based on a high literacy rate and a well-educated and trainable
workforce. The investment in human capital has proven to be more important to a
lasting economic growth success story than the availability of finance or
technology. Singapore is the de facto financial centre of the Association of
South East Asian Nations (ASEAN) region. Singapore is a small Chinese island
surrounded by a sea of Muslims. Singapore is aiming its investment at Johore in
Malaysia and Batam Island in Indonesia. This is the so-called growth triangle.
One aspect of political risk is the handover of political power from one
generation to another. Although Lee Kwan Yew stepped down as Prime Minister in
1990, he continues to wield a large influence and power behind the scenes. His
son, Lee Hsien Loong may not take up the post of Prime Minister in the near
future. In any case, the question of dynastic succession in a parliamentary
democracy, even within a limited Confucian Chinese democracy, is, to say the
least, a questionable one. Many of the elder Lee's policies, such as imposing
the Mandarin Chinese language on the Singapore educational system, have aroused
fierce opposition among the older, anti-communist generation of Singapore
Chinese. The tight control of the media and the suppression of all political
opposition or criticism of the government, the People's Action Party or the
Prime Minister himself, has also aroused criticism both at home and
internationally.
The Singapore economy has been characterized by the highest degree of
government involvement and intervention outside of the socialist world.
Nevertheless, the growth rate has been quite impressive, averaging around 7
percent, except during the 1985-6 recession, and even more impressive has been
the tight control of inflation which, along with that of Japan, has remained
extremely low at below 3 percent for the past decade. Being a small island state
it is very sensitive to developments in its two main neighbours, Indonesia and
Malaysia, with their large commodity-based economies. Thus, Singapore runs a
regular trade deficit of around US $6 billion per annum. Singapore's foreign
reserves held by the Monetary Authority of Singapore (MAS) and the Government
Investment Corporation of Singapore (GICS) are estimated to be in excess of US
$70 billion.
INDONESIA
There have been only two rulers of Indonesia since independence was gained
from the Dutch in 1948 -- Sukarno and Suharto. However, independence and the
1965 revolution were unusually violent episodes in the life of any country. The
stability which Indonesia has enjoyed during the past twenty-five years under
Suharto should, therefore, be placed against this background.
The question of monarchical or presidential succession remains perhaps the
major political risk confronted by the foreign investor as so many aspects of
the business life of the country relate directly to Suharto or his immediate
family. The role of the army in Indonesia is a great deal more clear cut. There
have been no attempted military coups since 1966. The army remains wholly in
support of Suharto.
The huge Indonesian archipelago will have, by the year 2000, a population of
over 200 million. Fundamentalism is on the rise, as also in Malaysia, and
politicians with fundamentalist Islamic beliefs and supporters are likely to
take a more active role. However, the social question, which one cannot ignore,
concerns the role of the minority and non-Muslim peoples in Indonesia, in
particular the Chinese community in Java. Although the total Chinese population
is less than 5 million, or around 3 percent of the total, 80 percent of the
commerce and much of the capital wealth remains in the hands of this small but
tight-knit Chinese community.
Indonesia began the 1980s principally as an oil exporter. During the 1970s
it had a high rate of inflation but also a very rapid economic growth on the
back of the oil boom. The fall in oil prices in the early 1980s, which became
precipitate in the spring of 1986, therefore, forced a review of their
priorities. Reducing inflation, diversifying the economy away from oil and
maintaining a stable growth in the economy were selected as the main objectives.
Inflation was brought from 20 percent, at the beginning of the decade, to around
6 percent in 1989-90. Economic growth, having fallen to 2.5 percent in 1985
regained the level of 7.4 percent by 1990 and averaged at around 6% thereafter.
The rupiah, which had undergone a 30 percent once-and- for-all evaluation in the
autumn of 1985, had stabilized on a "crawling peg" system with an annual
devaluation of around 5 percent until 1997 when it suffered in the Asian
currency turmoil. The trade surplus continued at a healthy US $5 billion. The
path of the Indonesian economy will depend as much on the development of low
wage manufacturing and the inflow of foreign capital, on the liberalization of
the banking system and the capital market, as on the price of basic commodities,
the social and political stability.
THE PHILIPPINES
The question most investors raise is whether the Philippines is capable of
responsible government and economic planning which would give it a GNP growth
rate approaching that of its Asian tiger neighbours. Many observers dismiss this
prospect out of hand citing the endemic problems of corruption, political
in-fighting and the lack of Confucian work ethic present in North Asia. However,
there is no doubt that the Philippines possesses enormous natural advantages and
it would be wrong to generalize about the whole archipelago of 7,000 islands
from the political life of Manila alone. The island of Cebu, for example, has
seen a successful economic transformation in the past twenty years.
Manufacturing investment has grown and has begun to replace agriculture as a
principal source of employment. The Philippines has a very high rate of literacy
and the work ethic cannot be doubted by anyone who has employed Filipino
domestic workers overseas. Their earnings are an important source of remittance
back to the Philippines each year. The Filipino population in the United States
is now the largest Asian ethnic group in that country approaching 2 million,
mainly in California. Both natural resources, and an intelligent, hardworking
population favour the country. Unfortunately, the political system has never
been able to maintain the long-term stability for its promise to be fulfilled.
<PAGE>
[LOGO] Investing
EATON VANCE for the
===========
Mutual Funds 21st
Century
- --------------------------------------------------------------------------------
Eaton Vance
Greater China Growth Fund
STATEMENT OF ADDITIONAL INFORMATION
JANUARY 1, 1998
- --------------------------------------------------------------------------------
Sponsor and Manager of Eaton Vance Greater China Growth Fund
Administrator of Greater China Growth Portfolio
Eaton Vance Management, 24 Federal Street, Boston, MA 02110
Adviser of Greater China Growth Portfolio
Lloyd George Investment Management (Bermuda) Limited, 3808 One Exchange Square,
Central, Hong Kong
Principal Underwriter
Eaton Vance Distributors, Inc., 24 Federal Street, Boston, MA 02110
(800) 225-6265
Custodian
Investors Bank & Trust Company, 200 Clarendon Street, Boston, MA 02116
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
CGSAI
<PAGE>
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
STATEMENT OF
ADDITIONAL INFORMATION
January 1, 1998
EATON VANCE GROWTH FUND
24 Federal Street
Boston, Massachusetts 02110
(800) 225-6265
This Statement of Additional Information provides general information about
Eaton Vance Growth Fund (the "Fund") and Growth Portfolio (the "Portfolio").
This Statement of Additional Information is sometimes referred to herein as the
"SAI."
- -------------------------------------------------------------------------------
TABLE OF CONTENTS
PART I
Page
Additional Information about Investment Policies ...................... 1
Investment Restrictions ............................................... 3
Trustees and Officers ................................................. 4
Investment Adviser and Administrator .................................. 7
Custodian ............................................................. 9
Services for Accumulation -- Class A Shares ........................... 9
Service for Withdrawal ................................................ 10
Determination of Net Asset Value ...................................... 10
Investment Performance ................................................ 11
Taxes ................................................................. 12
Principal Underwriter ................................................. 13
Service Plan -- Class A Shares ........................................ 14
Distribution Plans -- Class B and Class C Shares ...................... 15
Portfolio Security Transactions ....................................... 16
Other Information ..................................................... 18
Independent Accountants ............................................... 19
Financial Statements .................................................. 19
Appendix A: Class A Shares ............................................ a-1
Appendix B: Class B Shares ............................................ b-1
Appendix C: Class C Shares ............................................ c-1
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THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR
ACCOMPANIED BY THE FUND'S PROSPECTUS DATED JANUARY 1, 1998, 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>
This SAI provides information about the Fund and the Portfolio. Capitalized
terms used in this SAI and not otherwise defined have the meanings given them in
the Prospectus. The Fund is subject to the same investment policies as those of
the Portfolio. The Fund currently seeks to achieve its objective by investing in
the Portfolio.
ADDITIONAL INFORMATION ABOUT INVESTMENT POLICIES FOREIGN
SECURITIES. Investing in securities issued by companies whose principal business
activities are outside the United States may involve significant risks not
present in domestic investments. For example, there is generally less publicly
available information about foreign companies, particularly those not subject to
the disclosure and reporting requirements of the United States securities laws.
Foreign issuers are generally not bound by uniform accounting, auditing, and
financial reporting requirements and standards of practice comparable to those
applicable to domestic issuers. Investments in foreign securities also involve
the risk of possible adverse changes in investment or exchange control
regulations, expropriation or confiscatory taxation, limitation on the removal
of funds or other assets of the Portfolio, political or financial instability or
diplomatic and other developments which could affect such investments.
Furthermore, economies of particular countries or areas of the world may differ
favorably or unfavorably from the economy of the United States. It is
anticipated that in most cases the best available market for foreign securities
will be on exchanges or in over-the-counter markets located outside of the
United States. Foreign stock markets, while growing in volume and
sophistication, are generally not as developed as those in the United States,
and securities of some foreign issuers (particularly those located in developing
countries) may be less liquid and more volatile than securities of comparable
U.S. companies. In addition, foreign brokerage commissions are generally higher
than commissions on securities traded in the United States and may be
non-negotiable. In general, there is less overall governmental supervision and
regulation of foreign securities markets, broker-dealers, and issuers than in
the United States.
FOREIGN CURRENCY TRANSACTIONS. Because investments in companies whose principal
business activities are located outside of the United States will frequently
involve currencies of foreign countries, and because assets of the Portfolio may
temporarily be held in bank deposits in foreign currencies during the completion
of investment programs, the value of the assets of the Portfolio as measured in
U.S. dollars may be affected favorably or unfavorably by changes in foreign
currency exchange rates and exchange control regulations. Currency exchange
rates can also be affected unpredictably by intervention by U.S. or foreign
governments or central banks, or the failure to intervene, or by currency
controls or political developments in the U.S. or abroad. The Portfolio may
conduct its foreign currency exchange transactions on a spot (i.e., cash) basis
at the spot rate prevailing in the foreign currency exchange market or through
entering into swaps, forward contracts, options or futures on currency. On spot
transactions, foreign exchange dealers do not charge a fee for conversion, but
they do realize a profit based on the difference (the "spread") between the
prices at which they are buying and selling various currencies. Thus, a dealer
may offer to sell a foreign currency to the Portfolio at one rate, while
offering a lesser rate of exchange should the Portfolio desire to resell that
currency to the dealer.
FORWARD FOREIGN CURRENCY EXCHANGE TRANSACTIONS. The Portfolio may enter into
forward foreign currency exchange contracts in several circumstances. First,
when the Portfolio enters into a contract for the purchase or sale of a security
denominated in a foreign currency, or when the Portfolio anticipates the receipt
in a foreign currency of dividend or interest payments on such a security which
it holds, the Portfolio may desire to "lock in" the U.S. dollar price of the
security or the U.S. dollar equivalent of such dividend or interest payment, as
the case may be. By entering into a forward contract for the purchase or sale,
for a fixed amount of dollars, of the amount of foreign currency involved in the
underlying transactions, the Portfolio will attempt to protect itself against an
adverse change in the relationship between the U.S. dollar and the subject
foreign currency during the period between the date on which the security is
purchased or sold, or on which the dividend or interest payment is declared, and
the date on which such payments are made or received.
Additionally, when management of the Portfolio believes that the currency of
a particular foreign country may suffer a substantial decline against the U.S.
dollar, it may enter into a forward contract to sell, for a fixed amount of
dollars, the amount of foreign currency approximating the value of some or all
of the securities held by the Portfolio denominated in such foreign currency.
The precise matching of the forward contract amounts and the value of the
securities involved will not generally be possible because the future value of
such securities in foreign currencies will change as a consequence of market
movements in the value of those securities between the date on which the
contract is entered into and the date it matures. The precise projection of
short-term currency market movements is not possible, and short-term hedging
provides a means of fixing the dollar value of only a portion of the Portfolio's
foreign assets.
SPECIAL RISKS ASSOCIATED WITH CURRENCY TRANSACTIONS. Transactions in forward
contracts are subject to the risk of governmental actions affecting trading in
or the prices of currencies underlying such contracts, which could restrict or
eliminate trading and could have a substantial adverse effect on the value of
positions held by the Portfolio. In addition, the value of such positions could
be adversely affected by a number of other complex political and economic
factors applicable to the countries issuing the underlying currencies.
Furthermore, unlike trading in most other types of instruments, there is no
systematic reporting of last sale information with respect to the foreign
currencies underlying forward contracts, futures contracts and options. As a
result, the available information on which the Portfolio's trading systems will
be based may not be as complete as the comparable data on which the Portfolio
makes investment and trading decisions in connection with securities and other
transactions. Moreover, because the foreign currency market is a global,
twenty-four hour market, events could occur on that market which will not be
reflected in the forward, futures or options markets until the following day,
thereby preventing the Portfolio from responding to such events in a timely
manner.
Settlements of over-the-counter forward contracts or of the exercise of
foreign currency options generally must occur within the country issuing the
underlying currency, which in turn requires parties to such contracts to accept
or make delivery of such currencies in conformity with any United States or
foreign restrictions and regulations regarding the maintenance of foreign
banking relationships, fees, taxes or other charges.
Unlike currency futures contracts and exchange-traded options, forward
contracts are not traded on contract markets regulated by the Commodity Futures
Trading Commission (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. In an over-the-counter
trading environment, many of the protections associated with transactions on
exchanges will not be available. For example, there are no daily price
fluctuation limits, and adverse market movements could therefore continue to an
unlimited extent over a period of time. There is no limit on the amount of
potential losses on forward contracts to which the Portfolio is a party.
In addition, over-the-counter transactions can only be entered into with a
financial institution willing to take the opposite side, as principal, of the
Portfolio's position unless the institution acts as broker and is able to find
another counterparty willing to enter into the transaction with the Portfolio.
Where no such counterparty is available, it will not be possible to enter into a
desired transaction. There also may be no liquid secondary market in the trading
of over-the-counter contacts, and the Portfolio may be unable to close out
forward contracts entered into until their exercise, expiration or maturity.
This in turn could limit the Portfolio's ability to realize profits or to reduce
losses on open positions and could result in greater losses.
Furthermore, over-the-counter transactions are not backed by the guarantee
of an exchange's clearing corporation. The Portfolio will therefore be subject
to the risk of default by, or the bankruptcy of, the financial institution
serving as its counterparty. One or more of such institutions also may decide to
discontinue its role as market-maker in a particular currency, thereby
restricting the Portfolio's ability to enter into desired hedging transactions.
The Portfolio will enter into over-the-counter transactions only with parties
whose creditworthiness has been reviewed and found satisfactory by an Adviser.
FUTURES CONTRACTS ON STOCK INDICES. Entering into a derivative instrument
involves a risk that the applicable market will move against the Portfolio's
position and that the Portfolio will incur a loss. This loss may exceed the
amount of the initial investment made or the premium received by the Portfolio.
Derivative instruments may sometimes increase or leverage the Portfolio's
exposure to a particular market risk. Leverage enhances the Portfolio's exposure
to the price volatility of derivative instruments it holds. The Portfolio's
success in using derivative instruments to hedge portfolio assets depends on the
degree of price correlation between the derivative instruments and the hedged
asset. Imperfect correlation may be caused by several factors, including
temporary price disparities among the trading markets for the derivative
instrument, the assets underlying the derivative instrument and the Portfolio's
assets. During periods of market volatility, a commodity exchange may suspend or
limit trading in an exchange-traded derivative instrument, which may make the
contract temporarily illiquid and difficult to price. Commodity exchanges may
also establish daily limits on the amount that the price of a futures contract
or futures can vary from the previous day's settlement price. Once the daily
limit is reached, no trades may be made that day at a price beyond the limit.
This may prevent the Portfolio from closing out positions and limiting its
losses. Certain provisions of the Code limit the extent to which the Portfolio
may purchase and sell derivative instruments. The Portfolio will engage in
transactions in futures contracts and related options only to the extent such
transactions are consistent with the requirements of the Code for maintaining
the qualification of the Fund as a regulated investment company ("RIC") for
federal income tax purposes.
To the extent that the Portfolio enters into futures contracts and options
thereon traded on an exchange regulated by the CFTC, in each case that are not
for bona fide hedging purposes (as defined by the CFTC), the aggregate initial
margin and premiums required to establish these positions (excluding the amount
by which options are "in-the-money") may not exceed 5% of the liquidation value
of the Portfolio's investments, after taking into account unrealized profits and
unrealized losses on any contracts the Portfolio has entered into.
ASSET COVERAGE REQUIREMENTS. Transactions using forward contracts, futures
contracts and options thereon (other than options that the Portfolio has
purchased) expose the Portfolio to an obligation to another party. The Portfolio
will not enter into any such transactions unless it owns either (1) an
offsetting ("covered") position in securities, currencies, forward contracts or
futures contracts, or (2) cash or liquid securities (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. The
Portfolio will comply with Commission guidelines regarding cover for these
instruments and, if the guidelines so require, set aside cash or liquid
securities in a segregated account with its custodian in the prescribed amount.
Assets used as cover or held in a segregated account maintained by the
Fund's custodian cannot be sold while the position in the corresponding futures
contract or option is open, unless they are replaced with other appropriate
assets. As a result, the commitment of a large portion of the Portfolio's assets
to cover or segregated accounts could impede portfolio management or the
Portfolio's ability to meet redemption requests or other current obligations.
The Portfolio may enter into futures contracts, and options on futures
contracts, traded on an exchange regulated by the CFTC and on foreign exchanges,
but, with respect to foreign exchange-traded futures contracts and options on
such futures contracts, only if the Investment Adviser determined that trading
on each such foreign exchange does not subject the Portfolio to risks, including
credit and liquidity risks, that are materially greater then the risks
associated with trading on CFTC-regulated exchanges.
REPURCHASE AGREEMENTS. The Portfolio may purchase U.S. Government securities and
concurrently enter into repurchase agreements with the seller under which the
seller agrees to repurchase such securities at the Portfolio's cost plus
interest within a specified time (normally one day). While repurchase agreements
involve certain risks not associated with direct investments in U.S. Government
securities, the Portfolio follows procedures designed to minimize such risks.
These procedures include effecting repurchase transactions only with large,
well-capitalized banks. In addition, the Portfolio's repurchase agreements will
provide that the value of the collateral underlying the repurchase agreement
will always be at least equal to the repurchase price, including any accrued
interest earned on the repurchase agreement. In the event of a default or
bankruptcy by a selling bank, the Portfolio will seek to liquidate such
collateral. However, the exercise of the Portfolio's right to liquidate such
collateral could involve certain costs or delays and, to the extent that
proceeds from any sale upon a default of the obligation to repurchase are less
than the repurchase price, the Portfolio could suffer a loss.
PORTFOLIO TURNOVER. For the fiscal years ended August 31, 1997 and 1996, the
portfolio turnover rates of the Portfolio were 28% and 62%, respectively.
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 shares of the
Fund. Accordingly, the Fund may not:
(1) With respect to 75% of its total assets, purchase the securities of any
issuer if such purchase at the time thereof would cause more than 5% of its
total assets (taken at market value) to be invested in the securities of such
issuer, or purchase securities of any issuer if such purchase at the time
thereof would cause more than 10% of the total voting securities of such issuer
to be held by the Fund or Portfolio, except obligations issued or guaranteed by
the U.S. Government, its agencies or instrumentalities and except securities of
other investment companies;
(2) Borrow money or issue senior securities except as permitted by the
Investment Company Act of 1940;
(3) Purchase securities on margin (but the Fund may obtain such short-term
credits as may be necessary for the clearance of purchase and sales of
securities);
(4) Underwrite or participate in the marketing of securities of others;
(5) Make an investment in any one industry if such investment would cause
investments in such industry to exceed 25% of the Fund's total assets, at market
value at the time of such investment (other than securities issued or guaranteed
by the U.S. Government or its agencies or instrumentalities);
(6) Purchase or sell real estate, although it may purchase and sell
securities which are secured by real estate and securities of companies which
invest or deal in real estate;
(7) Purchase or sell commodities or commodity contracts for the purchase or
sale of physical commodities; or
(8) Make loans to any person except by }a{ the acquisition of debt
securities and making portfolio investments }b{ entering into repurchase
agreements or }c{ lending portfolio securities.
Notwithstanding the investment policies and restrictions of the Fund, the
Fund may invest all of its investable assets in an open-end management
investment company with substantially the same investment objective, policies
and restrictions as the Fund.
Each Portfolio has adopted substantially the same fundamental investment
restrictions as the foregoing investment restrictions adopted by each Fund; such
restrictions cannot be changed without the approval of a "majority of the
outstanding voting securities" of a Portfolio.
The Fund will not issue bonds, debentures or senior equity securities, and
this policy will not be changed unless authorized by a vote of the shareholders
of the Fund.
The Fund and the Portfolio have adopted the following investment policies
which may be changed by the Trust with respect to the Fund without approval by
the Fund's shareholders or with respect to the Portfolio without approval of the
Fund or its other investors. As a matter of nonfundamental policy, the Fund and
the Portfolio will not: }a{ purchase or retain in its portfolio any securities
issued by an issuer any of whose officers, directors, trustees or security
holders is an officer or trustee of the Trust or the Portfolio or is a member,
officer, director or trustee of any investment adviser of the Trust or the
Portfolio, if after the purchase of the securities of such issuer by the Fund or
the Portfolio one or more of such persons owns beneficially more than 1/2 of 1%
of the shares or securities or both (all taken at market value) of such issuer
and such persons owning more than 1/2 of 1% of such shares or securities
together own beneficially more than 5% of such shares or securities or both (all
taken at market value); }b{ sell or contract to sell any security which it does
not own unless by virtue of its ownership of other securities it has at the time
of sale a right to obtain securities equivalent in kind and amount to the
securities sold and provided that if such right is conditional the sale is made
upon the same conditions; or }c{ invest more than 15% of net assets in
investments which are not readily marketable, including restricted securities
and repurchase agreements maturing in more than seven days. Restricted
securities for the purposes of this limitation do not include securities
eligible for resale pursuant to Rule 144A of the Securities Act of 1933 and
commercial paper issued pursuant to Section 4(2) of said Act that the Board of
Trustees of the Trust or the Portfolio, or their delegate, determines to be
liquid.
Whenever an investment policy or investment restriction set forth in the
Prospectus or this SAI states a maximum percentage of assets that may be
invested in any security or other asset, such percentage limitation shall be
determined immediately after and as a result of the Fund's or the Portfolio's
acquisition of such security or asset. Accordingly, any later increase or
decrease resulting from a change in values, assets or other circumstances, will
not compel the Fund or the Portfolio, as the case may be, to dispose of such
security or other asset. Notwithstanding the foregoing, the Fund and Portfolio
must always be in compliance with the borrowing policies set forth above and may
not invest more than 15% of net assets in illiquid securities.
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 Management ("Eaton Vance"); of Eaton
Vance's parent, Eaton Vance Corp. ("EVC"); and of BMR's and Eaton Vance's
trustee, Eaton Vance, Inc. ("EV"). Eaton Vance and EV are both wholly-owned
subsidiaries of EVC. Those Trustees who are "interested persons" of the Trust 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 (56), President and Trustee*
Chairman, 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 02163
NORTON H. REAMER (62), 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 (71), Trustee
Formerly 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
M. DOZIER GARDNER (64), Vice President
Vice Chairman of BMR, Eaton Vance, EVC and EV, and Director of EVC and EV.
Director or Trustee and officer of various investment companies managed by
Eaton Vance or BMR.
WILLIAM D. BURT (59), Vice President
Vice President of Eaton Vance, BMR and EV since November 1994; formerly Vice
President of The Boston Company (1990-1994). Mr. Burt was elected Vice
President of the Trust on June 19, 1995.
BARCLAY TITTMANN (65), Vice President
Vice President of Eaton Vance, BMR and EV since October 1993; formerly Vice
President of Invesco Management and Research (1970-1993). Mr. Tittmann was
elected Vice President of the Trust on June 19, 1995.
THOMAS E. FAUST, JR. (39), Vice President of the Portfolio
Vice President of BMR, Eaton Vance and EV. Officer of various investment
companies managed by Eaton Vance or BMR. Mr. Faust was elected Vice
President of the Portfolio on March 18, 1996.
JAMES L. O'CONNOR (52), Treasurer
Vice President of BMR, Eaton Vance, and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
ALAN R. DYNNER (57), Secretary
Vice President and Chief Legal Officer of BMR, Eaton Vance, EVC and EV since
November 1, 1996. Previously, he was a Partner of the law firm of Kirkpatrick
& Lockhart LLP, New York and Washington, D.C., and was Executive Vice
President of Neuberger & Berman Management, Inc., a mutual fund management
company. Officer of various investment companies managed by Eaton Vance or
BMR. Mr. Dynner was elected Secretary of the Trust and the Portfolio on June
23, 1997.
JANET E. SANDERS (62), 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 (35), 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 (40), Assistant Secretary
Vice President of Eaton Vance, BMR 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 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 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 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. (The Trustees of the Trust and the Portfolio who are
members of the Eaton Vance organization receive no compensation from the Trust
or the Portfolio.) During the fiscal year ended August 31, 1997, the
noninterested Trustees of the Trust and the Portfolio earned the following
compensation in their capacities as Trustees from the Trust and the Portfolio,
and, for the year ended September 30, 1997, earned the following compensation in
their capacities as Trustees of the funds in the Eaton Vance fund complex (1):
AGGREGATE AGGREGATE TOTAL COMPENSATION
COMPENSATION COMPENSATION FROM TRUST AND
NAME FROM TRUST(2) FROM PORTFOLIO FUND COMPLEX
Donald R. Dwight ..... $2,506 $2,109(3) $145,000(6)
Samuel L. Hayes, III . 2,302 2,367(4) 153,750(7)
Norton H. Reamer ..... 2,274 2,194 145,000
John L. Thorndike .... 2,348 2,316 146,250(8)
Jack L. Treynor ...... 2,534 2,378 150,000
- ----------
(1) As of January 1, 1998 the Eaton Vance fund complex consists of 159
registered investment companies or series thereof.
(2) The Trust consisted of six Funds as of August 31, 1997-----.
(3) Includes $921 of deferred compensation.
(4) Includes $805 of deferred compensation.
(5) Includes $2,299 of deferred compensation.
(6) Includes $45,000 of deferred compensation.
(7) Includes $37,804 of deferred compensation.
(8) Includes $108,549 of deferred compensation.
INVESTMENT ADVISER AND ADMINISTRATOR
The Portfolio engages BMR as its investment adviser pursuant to an
Investment Advisory Agreement. BMR or Eaton Vance acts as investment adviser to
investment companies and various individual and institutional clients with
combined assets under management of approximately $20 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 and its affiliates act as adviser to a family of 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
$21 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 provide you with tailored financial advice and
help you decide when to buy, sell or persevere with your investments.
BMR manages the investments and affairs of the Portfolio subject to the
supervision of the Portfolio's Board of Trustees. BMR furnishes to the Portfolio
investment research, advice and supervision, furnishes an investment program and
determines what securities will be purchased, held or sold by the Portfolio and
what portion, if any, of the Portfolio's assets will be held uninvested. The
Investment Advisory Agreement requires BMR to pay the salaries and fees of all
officers and Trustees of the Portfolio who are members of the BMR organization
and all personnel of BMR performing services relating to research and investment
activities. The Portfolio is responsible for all expenses not expressly stated
to be payable by BMR under the Investment Advisory Agreement, including, without
implied limitation, }i{ expenses of maintaining the Portfolio and continuing its
existence, (ii) registration of the Portfolio under the 1940 Act, (iii)
commissions, fees and other expenses connected with the acquisition, holding and
disposition of securities and other investments, (iv) auditing, accounting and
legal expenses, }v{ taxes and interest, (vi) governmental fees, (vii) expenses
of issue, sale and redemption of interests in the Portfolio, (viii) expenses of
registering and qualifying the Portfolio and interests in the Portfolio under
federal and state securities laws and of preparing and printing registration
statements or other offering statements or memoranda for such purposes and for
distributing the same to investors, and fees and expenses of registering and
maintaining registrations of the Portfolio and of the Portfolio's placement
agent as broker-dealer or agent under state securities laws, (ix) expenses of
reports and notices to investors and of meetings of investors and proxy
solicitations therefor, }x{ expenses of reports to governmental officers and
commissions, (xi) insurance expenses, (xii) association membership dues, (xiii)
fees, expenses and disbursements of custodians and subcustodians for all
services to the Portfolio (including without limitation safekeeping of funds,
securities and other investments, keeping of books, accounts and records, and
determination of net asset values, book capital account balances and tax capital
account balances), (xiv) fees, expenses and disbursements of transfer agents,
dividend disbursing agents, investor servicing agents and registrars for all
services to the Portfolio, (xv) expenses for servicing the accounts of
investors, (xvi) any direct charges to investors approved by the Trustees of the
Portfolio, (xvii) compensation and expenses of Trustees of the Portfolio who are
not members of BMR's organization, and (xviii) such non-recurring items as may
arise, including expenses incurred in connection with litigation, proceedings
and claims and any legal obligation of the Portfolio to indemnify its Trustees,
officers and investors with respect thereto, to the extent not covered by
insurance.
For a description of the compensation that the Portfolio pays BMR under the
Investment Advisory Agreement, see the Fund's current Prospectus. As of August
31, 1997, the Portfolio had net assets of $179,784,746. For the fiscal years
ended August 31, 1997, 1996 and 1995, the Portfolio paid BMR advisory fees of
$1,038,600, $897,686 and $786,194, respectively, (equivalent to 0.625% of the
Portfolio's average daily net assets for each such year).
The Investment Advisory Agreement with BMR remains in effect from year to
year for 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.
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 Administrative Services 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 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. Hawkes is chairman, president and chief
executive officer, and Mr. Gardner is vice chairman, of EVC, BMR, Eaton Vance
and EV. All of the issued and outstanding shares of Eaton Vance and of EV are
owned by EVC. All of the issued and outstanding shares of BMR are owned by
Eaton Vance. All shares of the outstanding Voting Common Stock of EVC are
deposited in a Voting Trust, the Voting Trustees of which are Messrs. Gardner,
Hawkes, Rowland and, Alan R. Dynner, Thomas E. Faust, Jr., William M. Steul,
and Wharton P. Whitaker. 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 December 31, 1997, Messrs. Gardner and Hawkes each owned 24% of
such voting trust receipts, Messrs. Rowland and Faust owned 15% and 13%,
respectively, and Messrs. Dynner, Steul and Whitaker each owned 8%. Messrs.
Hawkes and Dynner are officers or Trustees of the Trust and the Portfolio and
are members of the EVC, Eaton Vance, BMR and EV organizations. Messrs. Austin,
Burt, Faust, Murphy, O'Connor, Tittmann and Woodbury, and Ms. Sanders are
officers of the Trust and/or the Portfolio and all are also members of the
BMR, Eaton Vance and EV organizations.
Eaton Vance owns all of the stock of Northeast Properties, Inc., which is
engaged in real estate investment. EVC also owns approximately 21% of the Class
A shares of Lloyd George Management (B.V.I.) Limited, a registered investment
adviser. EVC owns all the stock of Fulcrum Management, Inc. and MinVen, Inc.,
which are engaged in the development of precious metal mining venture investment
and management. EVC, BMR, Eaton Vance and EV may also enter into other
businesses.
EVC and its affiliates and their officers and employees from time to time
have transactions with various banks, including the custodian of the Fund and
the Portfolio, 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 Trust and the Portfolio. IBT has the custody
of all cash and securities representing the Fund's interest in the Portfolio,
has custody of all the Portfolio's assets, maintains the general ledger of the
Portfolio and the Fund, and computes the daily net asset value of interests in
the Portfolio and the net asset value of shares of the Fund. In such capacity it
attends to details in connection with the sale, exchange, substitution, transfer
or other dealings with the Portfolio's investments, receives and disburses all
funds, and performs various other ministerial duties upon receipt of proper
instructions from the Trust and the Portfolio. IBT charges fees which are
competitive within the industry. A portion of the fee relates to custody,
bookkeeping and valuation services and is based upon a percentage of Fund and
Portfolio net assets and a portion of the fee relates to activity charges,
primarily the number of portfolio transactions. These fees are then reduced by a
credit for cash balances of the particular investment company at the custodian
equal to 75% of the 91-day, U.S. Treasury Bill auction rate applied to the
particular investment company's average daily collected balances for the week.
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.
SERVICES FOR ACCUMULATION -- CLASS A SHARES
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 $50,000 or more of Class A shares and shares of other funds exchangeable
for Class A shares and listed under "The Eaton Vance Exchange Privilege" in the
Prospectus will be purchased within a 13-month period, a Statement of Intention
should be signed so that shares may be obtained at the same reduced sales charge
as though the total quantity were invested in one lump sum. Shares held under
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 Shares" in the
Prospectus. Any investor considering signing a Statement of Intention should
read it carefully.
Right of Accumulation -- Cumulative Quantity Discount. The applicable sales
charge level for the purchase of Class A Fund shares is calculated by taking the
dollar amount of the current purchase and adding it to the value (calculated at
the maximum current offering price) of the shares the shareholder owns in his or
her account}s{ in the Fund and shares of other funds exchangeable for Class A
shares and listed under "The Eaton Vance Exchange Privilege" in the Prospectus.
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 Shares" in the Prospectus. Shares purchased }i{ by an individual, his or
her spouse and their children under the age of twenty-one, and (ii) by a
trustee, guardian or other fiduciary of a single trust estate or a single
fiduciary account, will be combined for the purpose of determining whether a
purchase will qualify for the Right of Accumulation and if qualifying, the
applicable sales charge level.
For any such discount to be made available, at the time of purchase a
purchaser or his or her Authorized Firm must provide the Principal Underwriter
(in the case of a purchase made through an Authorized Firm) or the Transfer
Agent (in the case of an investment made by mail) with sufficient information to
permit verification that the purchase order qualifies for the accumulation
privilege. Confirmation of the order is subject to such verification. The Right
of Accumulation privilege may be amended or terminated at any time as to
purchases occurring thereafter.
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 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 plan accounts will be credited at net asset value as of the record
date for each distribution. Continued withdrawals in excess of current income
will eventually use up principal, particularly in a period of declining market
prices. A shareholder may not have a withdrawal plan in effect at the same time
he or she has authorized Bank Automated Investing or is otherwise making regular
purchases of Fund shares. Either the shareholder, the Transfer Agent or the
Principal Underwriter will be able to terminate the withdrawal plan at any time
without penalty.
DETERMINATION OF NET ASSET VALUE
The net asset value of the shares of the Portfolio is determined by IBT
(as agent and custodian for the Portfolio) in the manner described under
"Valuing Fund Shares" in the Prospectus. The Fund and the Portfolio will be
closed for business and will not price their respective shares or interests on
the following business holidays: New Year's Day, Presidents' Day, Martin Luther
King, Jr. Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.
The Trustees of the Portfolio have established the following procedures for
the fair valuation of the Portfolio's assets under normal market conditions.
Securities listed on foreign or U.S. securities exchanges or in the NASDAQ
National Market System generally are valued at closing sale prices or, if there
were no sales, at the mean between the closing bid and asked prices therefor on
the exchange where such securities are principally traded or on such National
Market System. Unlisted or listed securities for which closing sale prices are
not available are valued at the mean between the latest bid and asked prices. An
option is valued at the last sale price as quoted on the principal exchange or
board of trade on which such option or contract is traded, or in the absence of
a sale, at the mean between the last bid and asked prices. Futures positions on
securities or currencies are generally valued at closing settlement prices.
Short-term debt securities with a remaining maturity of 60 days or less are
valued at amortized cost. If securities were acquired with a remaining maturity
of more than 60 days, their amortized cost value will be based on their value on
the sixty-first day prior to maturity. Other fixed income and debt securities,
including listed securities and securities for which price quotations are
available, will normally be valued on the basis of valuations furnished by a
pricing service. All other securities are valued at fair value as determined in
good faith by or at the direction of the Trustees.
Each investor in the Portfolio, including the Fund, may add to or reduce its
investment in the Portfolio on each day the Exchange is open for trading
("Portfolio Business Day") as of the close of regular trading on the Exchange
(the "Portfolio Valuation Time"). The value of each investor's interest in the
Portfolio will be determined by multiplying the net asset value of the Portfolio
by the percentage, determined on the prior Portfolio Business Day, which
represented that investor's share of the aggregate interests in the Portfolio on
such prior day. Any additions or withdrawals for the current Portfolio Business
Day will then be recorded. Each investor's percentage of the aggregate interest
in the Portfolio will then be recomputed as a percentage equal to a fraction }i{
the numerator of which is the value of such investor's investment in the
Portfolio as of the Portfolio Valuation Time on the prior Portfolio Business Day
plus or minus, as the case may be, that amount of any additions to or
withdrawals from the investor's investment in the Portfolio on the current
Portfolio Business Day and (ii) the denominator of which is the aggregate net
asset value of the Portfolio as of the Portfolio Valuation Time on the prior
Portfolio Business Day plus or minus, as the case may be, the amount of the net
additions to or withdrawals from the aggregate investment in the Portfolio on
the current Portfolio Business Day by all investors in the Portfolio. The
percentage so determined will then be applied to determine the value of the
investor's interest in the Portfolio for the current Portfolio Business Day.
Generally, trading in the foreign securities owned by the Portfolio is
substantially completed each day at various times prior to the close of the
Exchange. The values of these securities used in determining the net asset value
of the Portfolio's share are computed as of such times. Occasionally, events
affecting the value of foreign securities may occur between such times and the
close of the Exchange which will not be reflected in the computation of the
Portfolio's net asset value (unless the Portfolio deems that such events would
materially affect its net asset value, in which case an adjustment would be made
and reflected in such computation). Foreign securities and currency held by the
Portfolio will be valued in U.S. dollars; such values will be computed by the
custodian based on foreign currency exchange rate quotations supplied by Reuters
Information Service.
INVESTMENT PERFORMANCE
Average annual total return is determined separately for each Class of the
Fund 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 }i{ that all distributions are
reinvested at net asset value on the reinvestment dates during the period, (ii)
the deduction of the maximum sales charge from the initial $1,000 purchase order
for Class A shares, (iii) a complete redemption of the investment, and (iv) the
deduction of any CDSC at the end of the period. For information concerning the
total return of the Classes of the Fund, see Appendix A, Appendix B and Appendix
C.
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. The Fund's
performance may differ from that of other investors in the Portfolio, including
any other investment companies. 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, charts and illustrations
showing the effect of compounding interest or relating to inflation and taxes
(including their effects on the dollar and the return on stocks and other
investment vehicles) may also be included in advertisements and material
furnished to present and prospective investors.
Information used in advertisements and in materials furnished to present or
prospective shareholders may include statistics, data and performance studies
prepared by independent organizations reflecting the investment performance or
return achieved by various classes and types of investments (e.g., common
stocks, small company stocks, long-term corporate bonds, long-term government
bonds, intermediate-term government bonds, U.S. Treasury bills) over various
periods of time. This information may be used to illustrate the benefits of
long-term investments in common stocks. Information about the portfolio
allocation, portfolio turnover and holdings of the Portfolio may be included in
advertisements and other material furnished to present and prospective
shareholders.
Information used in advertisements and materials furnished to present and
prospective investors may include statements or illustrations relating to the
appropriateness of certain types of securities and/or mutual funds to meet
specific financial goals. Such information may address:
-- costs associated with aging parents;
-- funding a college education (including its actual and estimated cost);
-- health care expenses (including actual and projected expenses);
-- long-term disabilities (including the availability of, and coverage
provided by, disability insurance); and
-- retirement (including the availability of social security benefits, the
tax treatment of such benefits and statistics and other information
relating to maintaining a particular standard of living and outliving
existing assets).
Such information may also address different methods for saving money and the
results of such methods, as well as the benefits of investing in equity
securities. Such information may describe: the potential for growth; the
performance of equities as compared to other investment vehicles; and the value
of investing as early as possible and regularly, as well as staying invested.
The benefits of investing in equity securities by means of a mutual fund may
also be included (such benefits may include diversification, professional
management and the variety of equity mutual fund products).
Information in advertisements and materials furnished to present and
prospective investors may include profiles of different types of investors
(i.e., investors with different goals and assets) and different investment
strategies for meeting specific financial goals. Such information may provide
hypothetical illustrations which include: results of various investment
strategies; performance of an investment in the Fund over various time periods;
and results of diversifying assets among several investments with varying
performance. Information in advertisements and materials furnished to present
and prospective investors may also include quotations (including editorial
comments) and statistics concerning investing in securities, as well as
investing in particular types of securities and the performance of such
securities.
The Trust (or Principal Underwriter) 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. The Fund has elected to be treated, has qualified, and intends to
qualify each year as a RIC under the Code. Accordingly, the Fund intends to
satisfy certain requirements relating to sources of its income and
diversification of its assets and to distribute substantially all of its
ordinary income and net income in accordance with the timing requirements
imposed by the Code, so as to maintain its RIC status and to avoid paying any
federal income or excise tax. The Fund so qualified for its fiscal year ended
August 31, 1997. 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 also satisfy these
requirements. The Portfolio will allocate at least annually among its investors,
including the Fund, the Portfolio's net investment income, net realized capital
gains, and any other items of income, gain, loss, deduction or credit. The
Portfolio will make allocations to the Fund in a manner intended to comply with
the Code and applicable regulations and will make moneys available for
withdrawal at appropriate times and in sufficient amounts to enable the Fund to
satisfy the tax distribution requirements that apply to the Fund and that must
be satisfied in order to avoid federal income and/or excise tax on the Fund. For
purposes of applying the requirements of the Code regarding qualification as a
RIC, the Fund }i{ will be deemed to own its proportionate share of each of the
assets of the Portfolio and (ii) will be entitled to the gross income of the
Portfolio attributable to such share.
In order to avoid incurring a federal excise tax obligation, the Code
requires that the Fund distribute (or be deemed to have distributed) by December
31 of each calendar year at least 98% of its ordinary income (not including
tax-exempt income) for such year, and at least 98% of the capital gain net
income which is 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 }i{ any available capital loss
carryforwards and 100% of any income from the prior year (as previously
computed) that was not paid out during such year and on which the Fund paid no
federal income tax. Under current law, provided that the Fund qualifies as a RIC
and the Portfolio is treated as a partnership for Massachusetts and federal tax
purposes, neither the Fund nor the Portfolio should be liable for any income,
corporate excise or franchise tax in the Commonwealth of Massachusetts.
Certain foreign exchange gains and losses realized by the Portfolio in
connection with investments in foreign securities and forward contracts may be
treated as ordinary income and losses under special tax rules. Certain forward
contracts of the Portfolio may be required to be "marked to market" (i.e.,
treated as if closed out) on the last day of each taxable year, and any gain or
loss realized with respect to these contracts generally will be treated as
ordinary income or loss. Certain options and futures contracts are also subject
to these mark to market rules, except that gains or losses on these contracts,
in connection with a marking to market or an actual disposition, will generally
be treated as 60% long-term and 40% short-term capital gain or loss. Positions
of the Portfolio in securities and offsetting options, futures or forward
contracts may be treated as "straddles," which are subject to tax rules that may
cause deferral of Portfolio losses, adjustments in the holding periods of
Portfolio securities, and other changes in the short-term or long-term
characterization of capital gains and losses, the effect of which may be to
change the amount, timing and character of the Fund's distributions to
shareholders. The Portfolio intends to limit its options and futures
transactions and its activities in foreign currency and related forward
contracts to the extent necessary to preserve the Fund's ability to qualify as a
RIC.
The Portfolio may be subject to foreign withholding or other foreign taxes
with respect to income (possibly including, in some cases, capital gains) on
certain foreign securities. These taxes may be reduced or eliminated under the
terms of an applicable U.S. income tax treaty. As it is not expected that more
than 50% of the value of the total assets of the Fund, taking into account its
allocable share of the Portfolio's total assets, at the close of any taxable
year of the Fund will consist of securities issued by foreign corporations, the
Fund will not be eligible to pass through to shareholders their proportionate
share of any foreign taxes paid by the Portfolio and allocated to the Fund, with
the result that shareholders will not include in income, and will not be
entitled to take any foreign tax credits or deductions for, foreign taxes paid
by the Portfolio and allocated to the Fund. Certain uses of foreign currency and
investments by the Portfolio in the stock of certain "passive foreign investment
companies" may be limited or a tax election may be made, if available, in order
to preserve the Fund's qualification as a RIC and/or to avoid imposition of a
tax on the Fund.
A portion of distributions made by the Fund which are derived from dividends
received by the Portfolio from domestic corporations and allocated to the Fund
may qualify for the dividends-received deduction for corporations. The
dividends-received deduction for corporate shareholders is reduced to the extent
the shares of the Fund with respect to which the dividends are received are
treated as debt-financed under the federal income tax law and is eliminated if
the shares are deemed to have been held for less than a minimum period,
generally 46 days. Receipt of certain distributions qualifying for the deduction
may result in reduction of the tax basis of the corporate shareholder's shares
or increase liability, if any, for the corporate alternative minimum tax.
Distributions of the excess of net long-term capital gain over net
short-term capital loss (including any capital losses carried forward from prior
years) earned by the Portfolio and allocated to the Fund are taxable to
shareholders of the Fund as long-term capital gains, whether received in cash or
in additional shares and regardless of the length of time their shares have been
held. Certain distributions declared in October, November or December and paid
the following January will be taxed to shareholders as if received on December
31 of the year in which they are declared.
Any loss realized upon the redemption or exchange of shares of the Fund with
a tax holding period of 6 months or less will be treated as a long-term capital
loss to the extent of any distribution of net long-term capital gains with
respect to such shares. In addition, all or a portion of a loss realized on a
redemption or other disposition of Fund shares may be disallowed under "wash
sale" rules if other Fund shares are acquired (whether through reinvestment of
dividends or otherwise) within a period beginning 30 days before and ending 30
days after the date of such redemption or other disposition. Any disallowed loss
will result in an adjustment to the shareholder's tax basis in some or all of
the other shares acquired.
Special tax rules apply to Individual Retirement Accounts ("IRAs") and other
retirement plans and persons investing through IRAs or such plans should consult
their tax advisers for more information. Amounts paid by the Fund to individuals
and certain other shareholders who have not provided the Fund with their correct
taxpayer identification number ("TIN") and certain certifications required by
the Internal Revenue Service (the "IRS"), as well as shareholders with respect
to whom the Fund has received certain information from the IRS or a broker, may
be subject to "backup" withholding of federal income tax arising from the Fund's
dividends and other distributions as well as the proceeds of redemption
transactions (including repurchases and exchanges) at a rate of 31%. An
individual's TIN is generally his or her social security number.
The foregoing discussion does not address the special tax rules applicable
to certain classes of investors, such as IRAs and other retirement plans,
tax-exempt entities, insurance companies and financial institutions.
Shareholders should consult their own tax advisers with respect to special tax
rules that may apply in their particular situations, as well as the state, local
and, where applicable, foreign tax consequences of investing in the Fund.
PRINCIPAL UNDERWRITER
The Trust 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 Trust will exceed
the amounts paid therefor. For the amount paid by the Trust to the Principal
Underwriter for acting as repurchase agent, see Appendix A.
CLASS A SHARES. Class A shares of the Fund may be continuously purchased at
the public offering price through Authorized Firms which have agreements with
the Principal Underwriter. The Trust reserves the right to suspend or limit the
offering of its shares to the public at any time. The public offering price is
the net asset value next computed after receipt of the order, plus, where
applicable, a variable percentage (sales charge) depending upon the amount of
purchase as indicated by the sales charge table set forth in the Prospectus (see
"How to Buy Shares"). Such table is applicable to purchases of a 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 Class A shares pursuant to a written
Statement of Intention; or (2) purchases of Class A shares 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 Trust may issue
Class A 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 Class. Normally no
sales charges will be paid in connection with an exchange of Class A shares for
the assets of such investment company. Class A shares may be sold at net asset
value to any officer, director, trustee, general partner or employee of the
Trust, a 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. Class A shares may also be sold at net asset value to registered
representatives and employees of Authorized Firms and to the spouses and
children under the age of 21 and beneficial accounts of such persons.
The Principal Underwriter acts as principal in selling Class A shares under
a Distribution Agreement with the Trust. 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 Class A shares on a "best efforts" basis under which it
is required to take and pay for only such shares as may be sold. The Principal
Underwriter allows Authorized Firms discounts from the applicable public
offering price which are alike for all Authorized Firms. The Principal
Underwriter may allow, upon notice to all Authorized Firms with whom it has
agreements, discounts up to the full sales charge during the periods specified
in the notice. During periods when the discount includes the full sales charge,
such Authorized Firms may be deemed to be underwriters as that term is defined
in the Securities Act of 1933. For the amount of sales charges for sales of
Class A shares paid to the Principal Underwriter (and Authorized Firms), see
Appendix A.
CLASS B AND CLASS C SHARES. Under the Distribution Agreements, the Principal
Underwriter acts as principal in selling Class B and Class C shares. 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, each
Class B and Class C makes payments to the Principal Underwriter pursuant to
their Distribution Plans as described in the Prospectus; the provisions of the
plan relating to such payments are included in the Distribution Agreements. The
Distribution Agreements are renewable annually by the Trust's Board of Trustees
(including a majority of their noninterested Trustees who have no direct or
indirect financial interest in the operation of the Distribution Plans or the
Distribution Agreements), may be terminated on sixty days' notice either by such
Trustees or by vote of a majority of the outstanding Class B and Class C shares
or on six months' notice by the Principal Underwriter and is automatically
terminated upon assignment. The Principal Underwriter distributes Class B and
Class C shares on a "best efforts" basis under which it is required to take and
pay for only such shares as may be sold.
SERVICE PLAN -- CLASS A SHARES
The Trust on behalf of its Class A shares has adopted 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 "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 Prospectus.
The Plan remains in effect from year to year provided such continuance is
approved by a vote of both a majority of }i{ the 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 a vote of a majority of the outstanding Class A shares of the
Fund. The Plan has been approved by the Board of Trustees of the Trust,
including the Plan Trustees.
Under the Plan, an officer 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 affected shareholders of Class
A shares, and all material amendments of the Plan must also be approved by the
Trustees of the Trust in the manner described above. 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
Class A shareholders. For the service fees paid under the Plan, see Appendix A.
DISTRIBUTION PLANS -- CLASS B AND CLASS C SHARES
The Trust has adopted Distribution Plans (the "Plans") on behalf of its
Class B and Class C shares designed to meet the requirements of Rule 12b-1 under
the 1940 Act and the sales charge rule of the NASD. The purpose of the Plans is
to compensate the Principal Underwriter for its distribution services and
facilities provided with respect to Class B and Class C shares.
The Plans provide that the Fund will pay sales commissions and distribution
fees to the Principal Underwriter only after and as a result of the sale of
Class B or Class C 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 Class B sales and
6.25% of Class C sales 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 amount payable to the Principal Underwriter pursuant to the Plans as
sales commissions and distribution fees with respect to each day will be accrued
on such day as a liability of the respective Class and will accordingly reduce
the net assets of the Class 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 net assets of the Class on such day. The level of net
assets changes each day and depends upon the amount of sales and redemptions of
shares, the changes in the value of the investments held by the Portfolio, the
expenses of the Class, the Fund and the Portfolio accrued and allocated to the
Fund and Class 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 Trust does not accrue possible future
payments as a liability of a Class or reduce current net assets in respect of
unknown amounts which may become payable under the Plans in the future because
the standards for accrual of such a liability under accounting principles have
not been satisfied.
The Plans provide that the Class 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 Trust to the Principal Underwriter
whenever there exist uncovered distribution charges.
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 Plans since their inception. Payments theretofore paid or
payable under the Plans by the Trust 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 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 shares upon which a
CDSC will be imposed, the level and timing of redemptions of shares upon which
no CDSC will be imposed (including redemptions of 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 Class, and changes in
the interest rate used in the calculation of the distribution fee under the
Plans. Periods with a high level of sales of Class shares accompanied by a low
level of early redemptions of Class 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.
Currently, payments of sales commissions and distribution fees and of
service fees may equal 1% of average daily net assets per annum. The Trust
believes that the combined rate of all these payments may be higher than the
rate of payments made under distribution plans adopted by other investment
companies pursuant to Rule 12b-1. Although the Principal Underwriter will use
its own funds (which may be borrowed from banks) to pay sales commissions and
service fees for Class C sales and sales commissions for Class B sales at the
time of sale, it is anticipated that the Eaton Vance organization will profit by
reason of the operation of the Plans through an increase in the Fund's assets
(thereby increasing the advisory fee payable to BMR by the Portfolio) resulting
from sale of shares and through the amounts paid to the Principal Underwriter,
including CDSCs, pursuant to the Plans. The Eaton Vance organization may be
considered to have realized a profit under the Plans if at any point in time the
aggregate amounts theretofore received by the Principal Underwriter pursuant to
the Plans and from CDSCs have exceeded the total expenses theretofore incurred
by such organization in distributing Class B and Class C 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 Trust.
The Plans continue 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 Plans and Distribution
Agreements 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
applicable Class. The Plans require quarterly Trustee review of a written report
of the amount expended under the Plans and the purposes for which such
expenditures were made. The Plans may not be amended to increase materially the
payments described therein without approval of the shareholders of the affected
Class and the Trustees. So long as the Plans are in effect, the selection and
nomination of the noninterested Trustees shall be committed to the discretion of
such Trustees.
The Trustees of the Trust believe that the Plans 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 Class B and Class C shareholders. Payments for sales
commissions and distribution fees made to the Principal Underwriter under the
Plans will compensate the Principal Underwriter for its services and expenses in
distributing Class B shares of the Fund. Service fee payments made to the
Principal Underwriter and Authorized Firms under the Plans 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 Plans are 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 Class B and Class C shareholders.
PORTFOLIO SECURITY TRANSACTIONS
Decisions concerning the execution of portfolio security transactions of the
Portfolio, including the selection of the market and the broker-dealer firm, are
made by BMR. BMR is also responsible for the execution of transactions for all
other accounts managed by it.
BMR places the security transactions of the Portfolio and of all other
accounts managed by it for execution with many broker-dealer firms. BMR uses its
best efforts to obtain execution of portfolio transactions at prices which are
advantageous to the Portfolio and at reasonably competitive spreads or (when a
disclosed commision is being charged) at reasonably competitive commission
rates. In seeking such execution, BMR will use its best judgment in evaluating
the terms of a transaction, and will give consideration to various relevant
factors, including without limitation the size and type of the transaction, the
general execution and operational capabilities of the broker-dealer, the nature
and character of the market for the security, the confidentiality, speed and
certainty of effective execution required for the transaction, the reputation,
reliability, experience and financial condition of the broker-dealer, the value
and quality of services rendered by the broker-dealer in other transactions, and
the reasonableness of the commission 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 spreads
or commissions paid on portfolio security transactions will, in the judgment of
BMR, be reasonable in relation to the value of the services provided,
commissions exceeding those which another firm might charge may be paid to
broker-dealers who were selected to execute transactions on behalf of the
Portfolio and BMR's other clients in part for providing brokerage and research
services to BMR. For the fiscal years ended August 31, 1997, 1996 and 1995, the
Portfolio paid brokerage commissions of $109,181, $231,498 and $272,785,
respectively, on portfolio security transactions, of which approximately
$106,933, $203,868 and $221,260, respectively, was paid in respect of portfolio
security transactions aggregating approximately $93,456,264, $143,902,804 and
$140,204,754, respectively, to firms which provided some Research Services to
Eaton Vance, (although many of such firms may have been selected in any
particular transaction primarly because of their execution capabilities).
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 the overall responsibilities which BMR and its affiliates have for accounts
over which they exercise investment discretion. In making any such
determination, BMR will not attempt to place a specific dollar value on the
brokerage and research services provided or to determine what portion of the
commission should be related to such services. Brokerage and research services
may include advice as to the value of securities, the advisability of investing
in, purchasing, or selling securities, and the availability of securities or
purchasers or sellers of securities; furnishing analyses and reports concerning
issuers, industries, securities, economic factors and trends, portfolio strategy
and the performance of accounts; and effecting securities transactions and
performing functions incidental thereto (such as clearance and settlement); and
the "Research Services" referred to in the next paragraph.
It is a common practice in the investment advisory industry for the advisers
of investment companies, institutions and other investors to receive research,
statistical and quotation services, data, information and other services,
products and materials which assist such advisers in the performance of their
investment responsibilities ("Research Services") from broker-dealer firms which
execute portfolio transactions for the clients of such advisers and from third
parties with which these broker-dealers have arrangements. Consistent with this
practice, BMR receives Research Services from many broker-dealer firms with
which BMR places the Portfolio transactions and from third parties with which
these broker-dealers have arrangements. These Research Services include such
matters as general economic and market reviews, industry and company reviews,
evaluations of securities and portfolio strategies and transactions 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 BMR in connection with
client accounts other than those accounts which pay commissions to such
broker-dealer. Any such Research Service may be broadly useful and of value to
BMR in rendering investment advisory services to all or a significant portion of
its clients, or may be relevant and useful for the management of only one
client's account or of a few clients' accounts, or may be useful for the
management of merely a segment of certain clients' accounts, regardless of
whether any such account or accounts paid commissions to the broker-dealer
through which such Research Service was obtained. The advisory fee paid by the
Portfolio is not reduced because BMR receives such Research Services. BMR
evaluates the nature and quality of the various Research Services obtained
through broker-dealer firms and attempts to allocate sufficient commissions to
such firms to ensure the continued receipt of Research Services which BMR
believes are useful or of value to it in rendering investment advisory services
to its clients.
Subject to the requirement that BMR shall use its best efforts to seek to
execute Portfolio security transactions at advantageous prices and at reasonably
competitive commission rates or spreads, BMR is authorized to consider as a
factor in the selection of any broker-dealer firm with whom Portfolio orders may
be placed the fact that such firm has sold or is selling shares of the Fund or
of other investment companies sponsored by BMR or Eaton Vance. This policy is
not inconsistent with a rule of the NASD, which rule provides that no firm which
is a member of the NASD shall favor or disfavor the distribution of shares of
any particular investment company or group of investment companies on the basis
of brokerage commissions received or expected by such firm from any source.
Securities considered as investments for the Portfolio may also be
appropriate for other investment accounts managed by BMR or its affiliates.
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. The Fund was reorganized as Class A shares (formerly
EV Traditional Growth Fund), Class B shares (formerly EV Marathon Growth Fund)
and Class C shares (formerly EV Classic Growth Fund) of Eaton Vance Growth Fund
on September 1, 1997, so information herein prior to such date is for the Fund
when it was a separate series of the Trust and before it became a multiple-class
fund. 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 Trust's Declaration of Trust may be amended by the Trustees when
authorized by vote of a majority of the outstanding voting securities of the
Trust, the financial interests of which are 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 (such as reclassifying series or classes of shares or restructuring the
Trust) as do not have a materially adverse effect on the financial interests of
shareholders or if they deem it necessary to conform the Declaration to the
requirements of applicable federal laws or regulations. The Trust's By-laws
provide that the Trust will indemnify its Trustees and officers against
liabilities and expenses incurred in connection with any litigation or
proceeding in which they may be involved because of their offices with the
Trust. However, no indemnification will be provided to any Trustee or officer
for any liability to the Trust or its shareholders by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.
Under Massachusetts law, if certain conditions prevail, shareholders of a
Massachusetts business trust (such as the Trust) could be deemed to have
personal liability for the obligations of the Trust. Numerous investment
companies registered under the 1940 Act have been formed as Massachusetts
business trusts, and management is not aware of an instance where such liability
has been imposed. The Trust's Declaration of Trust contains an express
disclaimer of liability on the part of the Fund shareholders and the Trust's
By-laws provide that the Trust shall assume the defense on behalf of any Fund
shareholders. (The Declaration also contains provisions limiting the liability
of a series or class to that series or class). Moreover, the Trust's By-laws
also provide for indemnification out of the property of the Fund of any
shareholder held personally liable solely by reason of being or having been a
shareholder for all loss or expense arising from such liability. The assets of
the Fund are readily marketable and will ordinarily substantially exceed its
liabilities. In light of the nature of the Fund's business and the nature of its
assets, management believes that the possibility of the Fund's liabilities
exceeding its assets, and therefore the shareholder's risk of personal
liability, is extremely remote.
As permitted by Massachusetts law, there will normally be no meetings of
shareholders for the purpose of electing Trustees unless and until such time as
less than a majority of the Trustees of the Trust holding office have been
elected by shareholders. In such an event the Trustees then in office will call
a shareholder's meeting for the election of Trustees. Except for the foregoing
circumstances and unless removed by action of the shareholders in accordance
with the Trust's By-laws, the Trustees shall continue to hold office and may
appoint successor Trustees.
The Trust's By-laws provide that no person shall serve as a Trustee if
shareholders holding two-thirds of the outstanding shares have removed him from
that office either by a written declaration filed with the Trust's custodian or
by votes cast at a meeting called for that purpose. The By-laws further provide
that under certain circumstances the shareholders may call a meeting to remove a
Trustee and that the Trust is required to provide assistance in communicating
with shareholders about such a meeting.
In accordance with the Declaration of Trust of the Portfolio, there will
normally be no meetings of the investors for the purpose of electing Trustees
unless and until such time as less than a majority of the Trustees holding
office have been elected by investors. In such an event the Trustees of the
Portfolio then in office will call an investors' meeting for the election of
Trustees. Except for the foregoing circumstances and unless removed by action of
the investors in accordance with the Portfolio's Declaration of Trust, the
Trustees shall continue to hold office and may appoint successor Trustees.
The Declaration of Trust of the Portfolio provides that no person shall
serve as a Trustee if investors holding two-thirds of the outstanding 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 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 Portfolio's Declaration of Trust provides that the Portfolio will
terminate 120 days after the complete withdrawal of the Fund or any other
investor in the Portfolio, unless either the remaining investors, by unanimous
vote at a meeting of such investors, or a majority of the Trustees of the
Portfolio, by written instrument consented to by all investors, agree to
continue the business of the Portfolio. This provision is consistent with
treatment of the Portfolio as a partnership for federal income tax purposes.
The right to redeem shares of the Fund can be suspended and the payment of
the redemption price deferred when the Exchange is closed (other than for
customary weekend and holiday closings), during periods when trading on the
Exchange is restricted as determined by the Commission, or during any emergency
as determined by the Commission which makes it impracticable for the Portfolio
to dispose of its securities or value its assets, or during any other period
permitted by order of the Commission for the protection of investors.
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P., One Post Office Square, Boston, Massachusetts, are
the independent accountants for the Fund and the Portfolio, providing audit
services, tax return preparation, and assistance and consultation with respect
to the preparation of filings with the Commission.
FINANCIAL STATEMENTS
The audited financial statements of and the report of independent
accountants for the Fund and the Portfolio appear in the Fund's most recent
annual report to shareholders and are incorporated by reference into this SAI. A
copy of the Fund's annual report accompanies this SAI.
Registrant incorporates by reference the audited financial information for
the EV Traditional Growth Fund and Growth Portfolio for the fiscal year ended
August 31, 1997, as previously filed with the Commission (Accession No.
0000950109-97-007086).
<PAGE>
APPENDIX A: CLASS A SHARES
FEES AND EXPENSES
SERVICE PLAN
During the fiscal year ended August 31, 1997, the Fund made service fee
payments under the Plan aggregating $155,597, of which $99,791 was paid to
Authorized Firms and the balance of which was retained by the Principal
Underwriter.
PRINCIPAL UNDERWRITER
The total sales charges paid in connection with sales of Class A shares
during the fiscal years ended August 31, 1997, 1996 and 1995, were $24,331,
$17,636 and $24,651, respectively, of which $3,685, $2,826 and $3,924,
respectively, was received by the Principal Underwriter. For the fiscal years
ended August 31, 1997, 1996 and 1995, Authorized Firms received $20,646, $14,810
and $20,727, respectively, from the total sales charges.
For the fiscal year ended August 31, 1997, the Fund paid the Principal
Underwriter $742.50 for repurchase transactions handled by the Principal
Underwriter (being $2.50 for each repurchase transaction handled by the
Principal Underwriter).
PERFORMANCE INFORMATION
The table below indicates the cumulative and average annual total return on
a hypothetical investment of $1,000 in Class A shares covering the one-, five-
and ten-year periods ended August 31, 1997. The "Value of Initial Investment"
reflects the deduction of the maximum sales charge of 5.75%. Past performance is
not indicative of future results. Investment return and principal value will
fluctuate; shares, when redeemed, may be worth more or less than their original
cost.
<TABLE>
<CAPTION>
VALUE OF A $1,000 INVESTMENT
TOTAL RETURN TOTAL RETURN
EXCLUDING MAXIMUM INCLUDING MAXIMUM
VALUE OF VALUE OF SALES CHARGE SALES CHARGE
INVESTMENT INVESTMENT INITIAL INVESTMENT ---------------------------- ---------------------------
PERIOD DATE INVESTMENT ON 8/31/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- -------------------------- ------------- -------------- ------------- ------------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
10 Years Ended
8/31/97 8/31/87 $942.50 $2,488.31 164.01% 10.19% 148.83% 9.54%
5 Years Ended
8/31/97 8/31/92 $942.47 $1,795.69 90.54% 13.76% 79.57% 12.42%
1 Year Ended
8/31/97 8/31/96 $942.86 $1,254.10 33.01% 33.01% 25.41% 25.41%
</TABLE>
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of November 30, 1997, the Trustees and officers of the Trust, as a group,
owned in the aggregate less than 1% of the outstanding shares of Class A and of
the Fund. To the knowledge of the Trust, no person owned of record or
beneficially 5% or more of the Fund's outstanding Class A shares as of such
date.
<PAGE>
APPENDIX B: CLASS B SHARES
PERFORMANCE INFORMATION
The table below indicates the cumulative and average annual total return on
a hypothetical investment in shares of $1,000. Total return for the period prior
to September 1, 1997 reflects the total return of a predecessor to Class B.
Total return prior to September 13, 1994 reflects the total return of Class A,
adjusted to reflect the Class B sales charge. The Class B total return has not
been adjusted to reflect certain other expenses (such as distribution and/ or
service fees). If such adjustments were made the Class B total return would be
lower. 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. Information presented with two asterisks (**)
includes the effect of subsidizing expenses.
<TABLE>
<CAPTION>
VALUE OF A $1,000 INVESTMENT
VALUE OF VALUE OF
INVESTMENT INVESTMENT
BEFORE AFTER TOTAL RETURN BEFORE TOTAL RETURN AFTER
DEDUCTING DEDUCTING DEDUCTING THE CDSC DEDUCTING THE CDSC
INVESTMENT INVESTMENT AMOUNT OF THE CDSC THE CDSC -------------------------- --------------------------
PERIOD DATE INVESTMENT ON 8/31/97 ON 8/31/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- -------------- ------------ ----------- --------------- --------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
10 Years
Ended
8/31/97 8/31/87 $1,000 $2,575.36 $2,575.36 157.54% 9.92% 157.54% 9.92%
5 Years
Ended
8/31/97 8/31/92 $1,000 $1,858.63 $1,838.63 85.86% 13.20% 83.86% 12.95%
1 Year
Ended
8/31/97 8/31/96 $1,000 $1,311.50 $1,261.50 31.15% 31.15% 26.15% 26.15%
</TABLE>
<PAGE>
APPENDIX C: CLASS C SHARES
PERFORMANCE INFORMATION
The table below indicates the cumulative and average annual total return on
a hypothetical investment in shares of $1,000. Total return for the period prior
to September 1, 1997 reflects the total return of a predecessor to Class C.
Total return prior to November 7, 1994 reflects the total return of Class A,
adjusted to reflect the Class C sales charge. The Class C total return has not
been adjusted to reflect certain other expenses (such as distribution and/ or
service fees). If such adjustments were made, the Class C total return would be
lower. 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. Information presented with two asterisks (**)
includes the effect of subsidizing expenses.
<TABLE>
<CAPTION>
VALUE OF A $1,000 INVESTMENT
VALUE OF VALUE OF
INVESTMENT INVESTMENT
BEFORE AFTER TOTAL RETURN BEFORE TOTAL RETURN AFTER
DEDUCTING DEDUCTING DEDUCTING THE CDSC DEDUCTING THE CDSC
INVESTMENT INVESTMENT AMOUNT OF THE CDSC THE CDSC -------------------------- --------------------------
PERIOD DATE INVESTMENT ON 8/31/97 ON 8/31/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- -------------- ------------ ------------ --------------- -------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
10 Years
Ended
8/31/97 8/31/87 $1,000 $2,446.93 $2,446.93 144.69% 9.36% 144.69% 9.36%
5 Years
Ended
8/31/97 8/31/92 $1,000 $1,766.04 $1,766.04 76.60% 12.05% 76.60% 12.05%
1 Year
Ended
8/31/97 8/31/96 $1,000 $1,286.33 $1,276.33 28.63% 28.63% 27.63% 27.63%
</TABLE>
<PAGE>
[LOGO] Investing
EATON VANCE for the
===========
Mutual Funds 21st
Century
- -------------------------------------------------------------------------------
Eaton Vance Growth Fund
STATEMENT OF ADDITIONAL INFORMATION
JANUARY 1, 1998
- -------------------------------------------------------------------------------
Investment Adviser of Growth Portfolio
Boston Management and Research, 24 Federal Street, Boston, MA 02110
Administrator of Eaton Vance Growth Fund
Eaton Vance Management, 24 Federal Street, Boston, MA 02110
Principal Underwriter
Eaton Vance Distributors, Inc., 24 Federal Street, Boston, MA 02110
(800) 225-6265
Custodian
Investors Bank & Trust Company, 200 Clarendon Street, Boston, MA 02116
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
GFPSAI
<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, 1997:
Eaton Vance Greater China Growth Fund (start of business June 7,
1993)
Eaton Vance Growth Fund (period commencing September 1, 1987)
Eaton Vance Information Age Fund (start of business September 18,
1995)
Eaton Vance Worldwide Developing Resources Fund (start of business
October 21, 1987)
Eaton Vance Worldwide Health Sciences Fund (period commencing
September 1, 1987)
INCORPORATED BY REFERENCE INTO PART B ARE THE FINANCIAL STATEMENTS
CONTAINED IN THE ANNUAL REPORTS FOR THE FUNDS LISTED BELOW, EACH DATED
AUGUST 31, 1997 (WHICH WERE PREVIOUSLY FILED ELECTRONICALLY PURSUANT TO
SECTION 30(b) (2) OF THE INVESTMENT COMPANY ACT OF 1940):
<TABLE>
<CAPTION>
<S> <C>
Eaton Vance Greater China Growth Fund Eaton Vance Worldwide Developing Resources Fund
(Accession No. 0000950109-97-007188) (Accession No. 0000950109-97-007242)
Eaton Vance Growth Fund Eaton Vance Worldwide Health Sciences Fund
(Accession No. 0000950109-97-007086) (Accession No. 0000950109-97-007116)
Eaton Vance Information Age Fund
(Accession No. 0000950109-97-007088)
</TABLE>
*Eaton Vance Greater China Growth Fund was previously known as EV Marathon
Greater China Growth Fund; Eaton Vance Growth Fund was previously known as EV
Traditional Growth Fund; Eaton Vance Information Age Fund was previously known
as EV Marathon Information Age Fund; Eaton Vance Worldwide Health Sciences Fund
was previously known as EV Traditional Worldwide Health Sciences Fund; Eaton
Vance Worldwide Developing Resources Fund was previously known as EV Marathon
Worldwide Developing Resources Fund; and Eaton Vance Asian Small Companies Fund
was previously known as EV Marathon Asian Small Companies Fund.
THE FINANCIAL STATEMENTS CONTAINED IN EACH FUND'S ANNUAL REPORT ARE AS
FOLLOWS:
Statement of Assets and Liabilities
Statement of Operations
Statements of Changes in Net Assets
Financial Highlights
Notes to Financial Statements
Independent Auditors' Report (for Eaton Vance Growth Fund and Eaton
Vance Worldwide Health Sciences Fund)
Report of Independent Certified Public Accountants (for Eaton Vance
Greater China Growth Fund, Eaton Vance Information Age Fund, Eaton
Vance Asian Small Companies Fund and Eaton Vance Worldwide Developing
Resources Fund)
ALSO INCORPORATED BY REFERENCE INTO PART B ARE THE FOLLOWING FINANCIAL
STATEMENTS OF GREATER CHINA GROWTH PORTFOLIO, GROWTH PORTFOLIO,
INFORMATION AGE PORTFOLIO, WORLDWIDE DEVELOPING RESOURCES PORTFOLIO
AND WORLDWIDE HEALTH SCIENCES PORTFOLIO, WHICH ARE CONTAINED IN THE
ANNUAL REPORTS DATED AUGUST 31, 1997 OF THE CORRESPONDING FUNDS:
THE FINANCIAL STATEMENTS FOR EACH PORTFOLIO CONTAINED IN EACH FUND'S
ANNUAL REPORT ARE AS FOLLOWS:
Portfolio of Investments
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
Supplementary Data
Notes to Financial Statements
Independent Auditors' Report
APPEARING IN PART B ARE THE STATEMENT OF ASSETS AND LIABILITIES AND
AUDITORS' REPORT FOR EATON VANCE ASIAN SMALL COMPANIES FUND AND ASIAN
SMALL COMPANIES PORTFOLIO EACH DATED AUGUST 31, 1997.
(b) EXHIBITS:
(1)(a)(1) 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 to the Declaration of Trust dated June 23, 1997
filed as Exhibit 1(c) to Post-Effective Amendment No. 68 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 between Eaton Vance Growth Trust (on
behalf of Eaton Vance Asian Small Companies Fund, Eaton Vance
Information Age Fund, Eaton Vance Greater China Growth Fund
and Eaton Vance Worldwide Health Sciences Fund) and Eaton
Vance Management dated June 23, 1997 filed as Exhibit No.
(5)(a) to Post-Effective Amendment No. 68 and incorporated
herein by reference.
(6)(a) Distribution Agreement between Eaton Vance Growth Trust and
Eaton Vance Distributors, Inc. dated June 23, 1997 with
attached Schedule A dated June 23, 1997 filed as Exhibit No.
(6)(a)(1) to Post-Effective Amendment No. 68 and incorporated
herein by reference.
(b) Selling Group Agreement between Eaton Vance Distributors, Inc. and
Authorized Firms filed as Exhibit (6)(b) to Post-Effective
Amendment No. 61 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)(1) Administrative Services Agreement with Eaton Vance Management
for Eaton Vance Growth Fund and Eaton Vance Worldwide
Developing Resources Fund filed as Exhibit (9)(a) to
Post-Effective Amendment No. 59 and incorporated herein by
reference.
(a)(2) Amendment dated June 23, 1997 to Schedule A to Administrative
Services Agreement filed as Exhibit No. (9)(a)(2) to Post-Effective
Amendment No. 68 and incorporated herein by reference.
(b) Transfer Agency Agreement dated June 7, 1989 filed as Exhibit
(9)(d) to Post-Effective Amendment No. 55 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. 55
and incorporated herein by reference.
(10) Not applicable.
(11)(a) Consent of Independent Auditors for Eaton Vance Asian Small
Companies Fund.
(b) Consent of Independent Auditors for Eaton Vance Greater China
Growth Fund.
(c) Consent of Independent Accountants for Eaton Vance Growth Fund.
(d) Consent of Independent Accountants for Eaton Vance Information Age
Fund.
(e) Consent of Independent Accountants for Information Age Portfolio.
(f) Consent of Independent Auditors for Eaton Vance Worldwide
Developing Resources Fund.
(g) Consent of Independent Auditors for Worldwide Developing Resources
Portfolio.
(h) Consent of Independent Accountants for Eaton Vance Worldwide Health
Sciences Fund.
(i) Consent of Independent Accountants for Worldwide Health Sciences
Portfolio.
(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) Eaton Vance Growth Trust Class A Service Plan adopted June 23, 1997
with attached Schedule A dated June 23, 1997 filed as Exhibit No.
15(a) to Post-Effective Amendment No. 68 and incorporated herein by
reference.
(b) Eaton Vance Growth Trust Class A Distribution Plan adopted June 23,
1997 with attached Schedule A dated June 23, 1997 filed as Exhibit
No. (15)(b) to Post-Effective Amendment No. 68 and incorporated
herein by reference.
(c) Eaton Vance Growth Trust Class B Distribution Plan adopted June 23,
1997 with attached Schedule A dated June 23, 1997 filed as Exhibit
No. (15)(c) to Post-Effective Amendment No. 68 and incorporated
herein by reference.
(d) Eaton Vance Growth Trust Class C Distribution Plan adopted June 23,
1997 with attached Schedule A dated June 23, 1997 filed as Exhibit
No. (15)(d) to Post-Effective Amendment No. 68 and incorporated
herein by reference.
(16) Schedules for Computation of Performance Quotations filed herewith.
(17)(a) Power of Attorney dated April 22, 1997 for Eaton Vance Growth
Trust filed as Exhibit No. (17)(a) to Post-Effective
Amendment No. 68 and incorporated herein by reference.
(b) Power of Attorney dated April 22, 1997 for Growth Portfolio filed
as Exhibit No. (17)(b) to Post-Effective Amendment No. 68 and
incorporated herein by reference.
(c) Power of Attorney for Information Age Portfolio filed as Exhibit
No. (17)(c) to Post- Effective Amendment No. 68 and incorporated
herein by reference.
(d) Power of Attorney dated February 14, 1997 for Asian Small Companies
Portfolio filed as Exhibit (17)(d) to Post-Effective Amendment No.
67 and incorporated herein by reference.
(e) Power of Attorney dated February 14, 1997 for Greater China Growth
Portfolio filed as Exhibit (17)(e) to Post-Effective Amendment No.
67 and incorporated herein by reference.
(f) Power of Attorney for Worldwide Health Sciences Portfolio filed as
Exhibit No. (17)(f) to Post-Effective Amendment No. 68 and
incorporated herein by reference.
(g) Power of Attorney for Worldwide Developing Resources Portfolio
filed as Exhibit No. (17)(g) to Post-Effective Amendment No. 68 and
incorporated herein by reference.
(18)(a) Multiple Class Plan for Eaton Vance Funds dated June 23, 1997
filed as Exhibit No. (18)(a) to Post-Effective Amendment No.
68 and incorporated herein by reference.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Not applicable
<TABLE>
<CAPTION>
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
(1) (2)
TITLE OF CLASS NUMBER OF RECORD HOLDERS AS OF
Shares of beneficial interest without par value December 1, 1997
CLASS A CLASS B CLASS C
<S> <C> <C> <C>
Eaton Vance Asian Small Companies Fund 1 1 --
Eaton Vance Greater China Growth Fund 13,119 19,524 1,135
Eaton Vance Growth Fund 9,748 754 143
Eaton Vance Information Age Fund 1,181 2,166 185
Eaton Vance Worldwide Developing Resources Fund 106 1,821 --
Eaton Vance Worldwide Health Sciences Fund 10,927 6,408 --
</TABLE>
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" or "Management of the Fund(s) and the Portfolio(s)"
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:
Eaton Vance Growth Trust Eaton Vance Mutual Funds Trust
Eaton Vance Income Fund of Boston Eaton Vance Prime Rate Reserves
Eaton Vance Investment Trust Eaton Vance Special Investment Trust
Eaton Vance Municipals Trust EV Classic Senior Floating-Rate Fund
Eaton Vance Municipals Trust II
(b)
<TABLE>
<CAPTION>
(1) (2) (3)
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICE
BUSINESS ADDRESS* WITH PRINCIPAL UNDERWRITER WITH REGISTRANT
<S> <C> <C>
James B. Hawkes Vice President and Director President and Trustee
William M. Steul Vice President and Director None
Wharton P. Whitaker President and Director None
Albert F. Barbaro Vice President None
Chris Berg Vice President None
Kate Bradshaw Vice President None
David B. Carle Vice President None
Daniel C. Cataldo Vice President None
Raymond Cox Vice President None
Mark P. Doman Vice President None
Alan R. Dynner Vice President Secretary
Richard Finelli Vice President None
Kelly Flynn 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
Thomas Otis Secretary and Clerk None
George D. Owen, II Vice President None
Enrique M. Pineada Vice President None
F. Anthony Robinson Vice President None
Jay S. Rosoff Vice President None
Benjamin A. Rowland, Jr. Vice President, Treasurer and Director None
Stephen M. Rudman Vice President None
John P. Rynne Vice President None
Kevin Schrader Vice President None
George V.F. Schwab, Jr. Vice President None
Teresa A. Sheehan Vice President None
David C. Sturgis Vice President None
Cornelius J. Sullivan Senior Vice President None
David M. Thill Vice President None
John M. Trotsky Vice President None
Chris Volf Vice President None
Sue Wilder Vice President None
- ----------
*Address is 24 Federal Street, Boston, MA 02110
</TABLE>
(c) Not applicable
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
All applicable accounts, books and documents required to be maintained by
the Registrant by Section 31(a) of the Investment Company Act of 1940 and the
Rules promulgated thereunder are in the possession and custody of the
Registrant's custodian, Investors Bank & Trust Company, 200 Clarendon Street,
16th Floor, Mail Code ADM27, Boston, MA 02116, and its transfer agent, First
Data Investor Services Group, 4400 Computer Drive, Westborough, MA 01581-5120,
with the exception of certain corporate documents and portfolio trading
documents which are in the possession and custody of Eaton Vance Management, 24
Federal Street, Boston, MA 02110. Certain corporate documents of Information Age
Portfolio and Worldwide Health Sciences Portfolio (each a "Portfolio") are also
maintained by IBT Trust Company (Cayman), Ltd., The Bank of Nova Scotia
Building, P.O. Box 501, George Town, Grand Cayman, Cayman Islands, British West
Indies, and certain investor account, Portfolio and the Registrant's accounting
records are held by IBT Fund Services (Canada) Inc., 1 First Canadian Place,
King Street West, Suite 2800, P.O. Box 231, Toronto, Ontario, Canada M5X 1C8.
Registrant is informed that all applicable accounts, books and documents
required to be maintained by registered investment advisers are in the custody
and possession of Eaton Vance Management.
ITEM 31. MANAGEMENT SERVICES
Not applicable
ITEM 32. UNDERTAKINGS
The Registrant undertakes to file a Post-Effective Amendment on behalf of
Eaton Vance 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 (or the commencement of its operations).
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 this Amendment to the Registration
Statement pursuant to Rule 485 (b) under the Securities Act of 1933 and has duly
caused this Amendment to its Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Boston, and
Commonwealth of Massachusetts, on the 17th day of December, 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.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
President, Principal Executive
/s/ JAMES B. HAWKES Officer and Trustee December 17, 1997
- -------------------------------
JAMES B. HAWKES
Treasurer and Principal
Financial and Accounting
/s/ JAMES L. O'CONNOR Officer December 17, 1997
- -------------------------------
JAMES L. O'CONNOR
DONALD R. DWIGHT* Trustee December 17, 1997
- -------------------------------
DONALD R. DWIGHT
SAMUEL L. HAYES, III* Trustee December 17, 1997
- -------------------------------
SAMUEL L. HAYES, III
NORTON H. REAMER* Trustee December 17, 1997
- -------------------------------
NORTON H. REAMER
JOHN L. THORNDIKE* Trustee December 17, 1997
- -------------------------------
JOHN L. THORNDIKE
JACK L. TREYNOR* Trustee December 17, 1997
- -------------------------------
JACK L. TREYNOR
*By: /s/ ALAN R. DYNNER
--------------------------
ALAN R. DYNNER
As Attorney-in-fact
</TABLE>
<PAGE>
SIGNATURES
Asian Small Companies Portfolio has duly caused this Amendment to the
Registration Statement on Form N-1A of Eaton Vance Growth Trust (File No.
2-22019) to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Boston and Commonwealth of Massachusetts on the 17th
day of December, 1997.
ASIAN SMALL COMPANIES PORTFOLIO
By HON. ROBERT LLOYD GEORGE*
--------------------------------------
HON. ROBERT LLOYD GEORGE, President
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
President, Principal Executive
HON. ROBERT LLOYD GEORGE* Officer and Trustee December 17, 1997
- -------------------------------
HON. ROBERT LLOYD GEORGE
Treasurer and Principal
Financial and Accounting
/s/ JAMES L. O'CONNOR Officer and Trustee December 17, 1997
- -------------------------------
JAMES L. O'CONNOR
Vice President and
/s/ JAMES B. HAWKES Trustee December 17, 1997
- -------------------------------
JAMES B. HAWKES
DONALD R. DWIGHT* Trustee December 17, 1997
- -------------------------------
DONALD R. DWIGHT
SAMUEL L. HAYES, III* Trustee December 17, 1997
- -------------------------------
SAMUEL L. HAYES, III
NORTON H. REAMER* Trustee December 17, 1997
- -------------------------------
NORTON H. REAMER
JOHN L. THORNDIKE* Trustee December 17, 1997
- -------------------------------
JOHN L. THORNDIKE
JACK L. TREYNOR* Trustee December 17, 1997
- -------------------------------
JACK L. TREYNOR
*By: /s/ ALAN R. DYNNER
--------------------------
ALAN R. DYNNER
As Attorney-in-fact
</TABLE>
<PAGE>
SIGNATURES
Greater China Growth Portfolio has duly caused this Amendment to the
Registration Statement on Form N-1A of Eaton Vance Growth Trust (File No.
2-22019) to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Boston and Commonwealth of Massachusetts on the 17th
day of December, 1997.
GREATER CHINA GROWTH PORTFOLIO
By HON. ROBERT LLOYD GEORGE*
--------------------------------------
HON. ROBERT LLOYD GEORGE, President
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
President, Principal Executive
HON. ROBERT LLOYD GEORGE* Officer and Trustee December 17, 1997
- -------------------------------
HON. ROBERT LLOYD GEORGE
Treasurer and Principal
Financial and Accounting
/s/ JAMES L. O'CONNOR Officer and Trustee December 17, 1997
- -------------------------------
JAMES L. O'CONNOR
Vice President and
/s/ JAMES B. HAWKES Trustee December 17, 1997
- -------------------------------
JAMES B. HAWKES
HON. EDWARD K.Y. CHEN* Trustee December 17, 1997
- -------------------------------
HON. EDWARD K.Y. CHEN*
DONALD R. DWIGHT* Trustee December 17, 1997
- -------------------------------
DONALD R. DWIGHT
SAMUEL L. HAYES, III* Trustee December 17, 1997
- -------------------------------
SAMUEL L. HAYES, III
NORTON H. REAMER* Trustee December 17, 1997
- -------------------------------
NORTON H. REAMER
*By: /s/ ALAN R. DYNNER
--------------------------
ALAN R. DYNNER
As Attorney-in-fact
</TABLE>
<PAGE>
SIGNATURES
Growth Portfolio has duly caused this Amendment to the Registration
Statement on Form N-1A of Eaton Vance Growth Trust (File No. 2-22019) to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Boston and Commonwealth of Massachusetts on the 17th day of December, 1997.
GROWTH PORTFOLIO
By /s/ JAMES B. HAWKES
--------------------------------------
JAMES B. HAWKES, President
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
President, Principal Executive
/s/ JAMES B. HAWKES Officer and Trustee December 17, 1997
- -------------------------------
JAMES B. HAWKES
Treasurer and Principal
Financial and Accounting
/s/ JAMES L. O'CONNOR Officer and Trustee December 17, 1997
- -------------------------------
JAMES L. O'CONNOR
DONALD R. DWIGHT* Trustee December 17, 1997
- -------------------------------
DONALD R. DWIGHT
SAMUEL L. HAYES, III* Trustee December 17, 1997
- -------------------------------
SAMUEL L. HAYES, III
NORTON H. REAMER* Trustee December 17, 1997
- -------------------------------
NORTON H. REAMER
JOHN L. THORNDIKE* Trustee December 17, 1997
- -------------------------------
JOHN L. THORNDIKE
JACK L. TREYNOR* Trustee December 17, 1997
- -------------------------------
JACK L. TREYNOR
*By: /s/ ALAN R. DYNNER
--------------------------
ALAN R. DYNNER
As Attorney-in-fact
</TABLE>
<PAGE>
SIGNATURES
Information Age Portfolio has duly caused this Amendment to the Registration
Statement on Form N-1A of Eaton Vance Growth Trust (File No. 2-22019) to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Hamilton, Bermuda on the 17th day of October, 1997.
INFORMATION AGE PORTFOLIO
By /s/ JAMES B. HAWKES
--------------------------------------
JAMES B. HAWKES, President
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
President, Principal Executive
/s/ JAMES B. HAWKES Officer and Trustee October 17, 1997
- -------------------------------
JAMES B. HAWKES
Treasurer and Principal
Financial and Accounting
/s/ JAMES L. O'CONNOR* Officer and Trustee October 17, 1997
- -------------------------------
JAMES L. O'CONNOR
HON. EDWARD K.Y. CHEN* Trustee October 17, 1997
- -------------------------------
HON. EDWARD K.Y. CHEN
/s/ DONALD R. DWIGHT Trustee October 17, 1997
- -------------------------------
DONALD R. DWIGHT
HON. ROBERT LLOYD GEORGE* Trustee October 17, 1997
- -------------------------------
HON. ROBERT LLOYD GEORGE
/s/ SAMUEL L. HAYES, III Trustee October 17, 1997
- -------------------------------
SAMUEL L. HAYES, III
NORTON H. REAMER* Trustee October 17, 1997
- -------------------------------
NORTON H. REAMER
/s/ JOHN L. THORNDIKE** Trustee October 17, 1997
- -------------------------------
JOHN L. THORNDIKE
JACK L. TREYNOR Trustee October 17, 1997
- -------------------------------
JACK L. TREYNOR
*By: /s/ JAMES B. HAWKES
--------------------------
JAMES B. HAWKES
As Attorney-in-fact
**Executed in Geneva, Switzerland
</TABLE>
<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 17th day of October, 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.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
President, Principal Executive
/s/ JAMES B. HAWKES Officer and Trustee October 17, 1997
- -------------------------------
JAMES B. HAWKES
Treasurer and Principal
Financial and Accounting
JAMES L. O'CONNOR* Officer and Trustee October 17, 1997
- -------------------------------
JAMES L. O'CONNOR
/s/ DONALD R. DWIGHT Trustee October 17, 1997
- -------------------------------
DONALD R. DWIGHT
/s/ SAMUEL L. HAYES, III Trustee October 17, 1997
- -------------------------------
SAMUEL L. HAYES, III
/s/ NORTON H. REAMER Trustee October 17, 1997
- -------------------------------
NORTON H. REAMER
/s/ JOHN L. THORNDIKE** Trustee October 17, 1997
- -------------------------------
JOHN L. THORNDIKE
/s/ JACK L. TREYNOR Trustee October 17, 1997
- -------------------------------
JACK L. TREYNOR
*By: /s/ JAMES B. HAWKES
--------------------------
JAMES B. HAWKES
As Attorney-in-fact
</TABLE>
**Executed in Geneva, Switzerland
<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 17th day of October, 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.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
President, Principal Executive
/s/ JAMES B. HAWKES Officer and Trustee October 17, 1997
- -------------------------------
JAMES B. HAWKES
Treasurer and Principal
Financial and Accounting
/s/ JAMES L. O'CONNOR* Officer and Trustee October 17, 1997
- -------------------------------
JAMES L. O'CONNOR
/s/ DONALD R. DWIGHT Trustee October 17, 1997
- -------------------------------
DONALD R. DWIGHT
/s/ SAMUEL L. HAYES, III Trustee October 17, 1997
- -------------------------------
SAMUEL L. HAYES, III
/s/ NORTON H. REAMER Trustee October 17, 1997
- -------------------------------
NORTON H. REAMER
/s/ JOHN L. THORNDIKE** Trustee October 17, 1997
- -------------------------------
JOHN L. THORNDIKE
/s/ JACK L. TREYNOR Trustee October 17, 1997
- -------------------------------
JACK L. TREYNOR
*By: /s/ JAMES B. HAWKES
--------------------------
JAMES B. HAWKES
As Attorney-in-fact
**Executed in Geneva, Switzerland
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
PAGE IN
SEQUENTIAL
NUMBERING
EXHIBIT NO. DESCRIPTION SYSTEM
- ----------- ----------- ------
<C> <S>
(11)(a) Consent of Independent Auditors for Eaton Vance Asian Small Companies
Fund
(b) Consent of Independent Auditors for Eaton Vance Greater China Growth
Fund
(c) Consent of Independent Accountants for Eaton Vance Growth Fund
(d) Consent of Independent Accountants for Eaton Vance Information Age
Fund
(e) Consent of Independent Accountants for Information Age Portfolio
(f) Consent of Independent Auditors for Eaton Vance Worldwide Developing
Resources Fund
(g) Consent of Independent Auditors for Worldwide Developing Resources
Portfolio
(h) Consent of Independent Accountants for Eaton Vance Worldwide Health
Sciences Fund
(i) Consent of Independent Accountants for Worldwide Health Sciences
Portfolio
(16) Schedules for Computation of Performance Quotations.
</TABLE>
<PAGE>
EXHIBIT (11)(a)
CONSENT OF INDEPENDENT AUDITORS
We consent to the use in this Post-Effective Amendment No. 70 to the
Registration Statement of Eaton Vance Growth Trust (1933 Act File No. 2-22019)
on behalf of Eaton Vance Asian Small Companies Fund of our report dated December
15, 1997, relating to Eaton Vance Asian Small Companies Fund (formerly EV
Marathon Asian Small Companies Fund), and of our report dated December 15, 1997,
relating to Asian Small Companies Portfolio, which reports are included in the
Statement of Additional Information, which is part of such Registration
Statement.
We also consent to the reference to our Firm under the caption "Independent
Certified Public Accountants" in the Statement of Additional Information of the
Registration Statement.
/s/ DELOITTE & TOUCHE LLP
-----------------------------
DELOITTE & TOUCHE LLP
December 17, 1997
Boston, Massachusetts
<PAGE>
EXHIBIT (11)(b)
CONSENT OF INDEPENDENT AUDITORS
We consent to the use in this Post-Effective Amendment No. 70 to the
Registration Statement of Eaton Vance Growth Trust (1933 Act File No. 2-22019)
on behalf of Eaton Vance Greater China Growth Fund of our report dated October
10, 1997, relating to Eaton Vance Greater China Growth Fund (formerly EV
Marathon Greater China Growth Fund), and of our report dated October 10, 1997,
relating to Greater China Growth Portfolio, which reports are included in the
Annual Report to Shareholders for the year ended August 31, 1997 which is
incorporated by reference in the Statement of Additional Information, which is
part of such Registration Statement.
We also consent to the reference to our Firm under the heading "The Fund's
Financial Highlights" in the Prospectus and under the caption "Independent
Certified Public Accountants" in the Statement of Additional Information of the
Registration Statement.
/s/ DELOITTE & TOUCHE LLP
-----------------------------
DELOITTE & TOUCHE LLP
December 17, 1997
Boston, Massachusetts
<PAGE>
EXHIBIT (11)(c)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the use in this Post-Effective Amendment No. 70 to the
Registration Statement of Eaton Vance Growth Trust (1933 Act File No. 2-22019)
on behalf of Eaton Vance Growth Fund of our report dated September 25, 1997,
relating to Eaton Vance Growth Fund (formerly EV Traditional Growth Fund), and
of our report dated September 25, 1997, relating to Growth Portfolio, which
reports are included in the Annual Report to Shareholders for the year ended
August 31, 1997 which is incorporated by reference in the Statement of
Additional Information, which is part of such Registration Statement.
We also consent to the reference to our Firm under the heading "The Fund's
Financial Highlights" in the Prospectus and under the caption "Independent
Accountants" in the Statement of Additional Information of the Registration
Statement.
/s/ COOPERS & LYBRAND L.L.P.
-----------------------------
COOPERS & LYBRAND L.L.P.
December 17, 1997
Boston, Massachusetts
<PAGE>
EXHIBIT (11)(d)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the use in this Post-Effective Amendment No. 70 to the
Registration Statement of Eaton Vance Growth Trust (1933 Act File No. 2-22019)
on behalf of Eaton Vance Information Age Fund of our report dated October 3,
1997, relating to Eaton Vance Information Age Fund (formerly EV Marathon
Information Age Fund), which report is included in the Annual Report to
Shareholders for the year ended August 31, 1997 which is incorporated by
reference in the Statement of Additional Information, which is part of such
Registration Statement.
We also consent to the reference to our Firm under the heading "The Funds"
Financial Highlights" in the Prospectus and under the caption "Independent
Certified Public Accountants" in the Statement of Additional Information of the
Registration Statement.
/s/ COOPERS & LYBRAND L.L.P.
-----------------------------
COOPERS & LYBRAND L.L.P.
December 17, 1997
Boston, Massachusetts
<PAGE>
EXHIBIT (11)(e)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in Post-Effective Amendment
No. 70 to the Registration Statement of Eaton Vance Growth Trust (1933 Act
File No. 2-22019) on behalf of Eaton Vance Information Age Fund of our report
relating to Information Age Portfolio dated October 3, 1997, in the Statement
of Additional Information, which is part of such Registration Statement.
We also consent to the reference to our firm under the caption
"Independent Certified Public Accountants" in the Statement of Additional
Information of the Registration Statement.
/s/ COOPERS & LYBRAND CHARTERED ACCOUNTANTS
---------------------------------------
COOPERS & LYBRAND
Chartered Accountants
December 17, 1997
Toronto, Canada
<PAGE>
EXHIBIT (11)(f)
CONSENT OF INDEPENDENT AUDITORS
We consent to the use in this Post-Effective Amendment No. 70 to the
Registration Statement of Eaton Vance Growth Trust (1933 Act File No. 2-22019)
on behalf of Eaton Vance Worldwide Developing Resources Fund of our report dated
October 10, 1997, relating to Eaton Vance Worldwide Developing Resources Fund
(formerly EV Marathon Worldwide Developing Resources Fund), which report is
included in the Annual Report to Shareholders for the year ended August 31, 1997
which is incorporated by reference in the Statement of Additional Information,
which is part of such Registration Statement.
We also consent to the reference to our Firm under the heading "The Funds"
Financial Highlights" in the Prospectus and under the caption "Independent
Certified Public Accountants" in the Statement of Additional Information of the
Registration Statement.
/s/ DELOITTE & TOUCHE LLP
-----------------------------
DELOITTE & TOUCHE LLP
December 17, 1997
Boston, Massachusetts
<PAGE>
EXHIBIT (11)(g)
CONSENT OF INDEPENDENT AUDITORS
We consent to the inclusion of Post-Effective Amendment No. 70 to the
Registration Statement on Form N-1A of Eaton Vance Growth Trust (1933 Act File
No. 2-22019) on behalf of Eaton Vance Worldwide Developing Resources Fund of our
report dated October 10, 1997, relating to Worldwide Developing Resources
Portfolio in the Statement of Additional Information which is part of such
Registration Statement.
We also consent to the reference to our Firm under the caption "Independent
Certified Public Accountants" in the Statement of Additional
Information of the Registration Statement.
/s/ DELOITTE & TOUCHE
------------------------------
DELOITTE & TOUCHE
December 17, 1997
Grand Cayman, Cayman Islands
British West Indies
<PAGE>
EXHIBIT (11)(h)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the use in this Post-Effective Amendment No. 70 to the
Registration Statement of Eaton Vance Growth Trust (1933 Act File No. 2-22019)
on behalf of Eaton Vance Worldwide Health Sciences Fund, of our report dated
October 3, 1997, relating to Eaton Vance Worldwide Health Sciences Fund
(formerly EV Traditional Worldwide Health Sciences Fund, Inc.) which report is
included in the Annual Report to Shareholders for the year ended August 31, 1997
which is incorporated by reference in the Statement of Additional Information,
which is part of such Registration Statement.
We also consent to the reference to our Firm under the heading "The Funds"
Financial Highlights" in the Prospectus and under the caption "Independent
Certified Public Accountants" in the Statement of Additional Information of the
Registration Statement.
/s/ COOPERS & LYBRAND L.L.P.
-------------------------------
COOPERS & LYBRAND L.L.P.
December 17, 1997
Boston, Massachusetts
<PAGE>
EXHIBIT (11)(i)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in Post-Effective Amendment No. 70 to the
Registration Statement on Form N-1A (1933 Act File No. 2-22019) of Eaton Vance
Growth Trust on behalf of Eaton Vance Worldwide Health Sciences Fund of our
report dated October 3, 1997, relating to Worldwide Health Sciences Portfolio
appearing in the Statement of Additional Information which is part of such
Registration Statement.
We also consent to the reference to our Firm under the caption "Independent
Certified Public Accountants" in the Statement of Additional
Information of the Registration Statement.
/s/ COOPERS & LYBRAND CHARTERED ACCOUNTANTS
---------------------------------------
COOPERS & LYBRAND CHARTERED ACCOUNTANTS
December 17, 1997
Toronto, Canada
<PAGE>
EXHIBIT 16
<TABLE>
INVESTMENT PERFORMANCE -- EATON VANCE GREATER CHINA GROWTH FUND - CLASS A SHARES
The table below indicates the total return (capital changes plus reinvestment of all distributions) on a hypothetical investment of
$1,000 in the Fund covering the period from October 28, 1992 through August 31, 1997 and for the 1 year period ended
August 31, 1997.
<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 08/31/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
<S> <C> <C> <C> <C> <C> <C> <C>
LIFE OF
FUND 10/28/92 $942.51 $1,863.87 97.76% 15.13% 86.39% 13.73%
1 YEAR ENDED
08/31/97 08/31/96 $942.74 $1,232.72 30.76% 30.76% 23.27% 23.27%
Average annual total return is calculated using the following formula:
n
P(1+T) = ERV
where P = an initial investment of $1,000 **
T = average annual total return
n = number of years
ERV = ending redeemable value of $1,000 initial investment at the end of the period
Cumulative total return is calculated using the following formula:
T = ( ERV / P ) - 1
where T = cumulative total return including the maximum sales charge
ERV = ending redeemable value of $1,000 initial investment at the end of the period
P = an initial investment of $1,000 ***
* Initial investment less the current maximum sales charge of 5.75%.
** 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 5.75%.
*** The cumulative total return including the sales charge is calculated based on an initial investment of $1,000 less
maximum initial sales charge of 5.75%.
</TABLE>
<PAGE>
<TABLE>
INVESTMENT PERFORMANCE -- EATON VANCE GREATER CHINA GROWTH FUND - CLASS B SHARES
The table below indicates the total return (capital changes plus reinvestment of all distributions) on a hypothetical investment of
$1,000 in the Fund covering the period from October 28, 1992 through August 31, 1997 and for the 1 year period ended
August 31, 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 08/31/97 ON 08/31/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
<S> <C> <C> <C> <C> <C> <C> <C>
LIFE OF
FUND 10/28/92 $1,962.28 $1,942.28 96.23% 14.94% 94.23% 14.70%
1 YEAR ENDED
08/31/97 08/31/96 $1,301.48 $1,251.48 30.15% 30.15% 25.15% 25.15%
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 -- EATON VANCE GREATER CHINA GROWTH FUND - CLASS C SHARES
The table below indicates the total return (capital changes plus reinvestment of all distributions) on a hypothetical investment of
$1,000 in the Fund covering the period from October 28, 1992 through August 31, 1997 and for the 1 year period ended
August 31, 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 08/31/97 ON 08/31/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
<S> <C> <C> <C> <C> <C> <C> <C>
LIFE OF
FUND 10/28/92 $1,919.38 $1,919.38 91.94% 14.42% 91.94% 14.42%
1 YEAR ENDED
08/31/97 08/31/96 $1,296.69 $1,286.69 29.67% 29.67% 28.67% 28.67%
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 -- EATON VANCE GROWTH FUND - CLASS A SHARES
The table below indicates the total return (capital changes plus reinvestment of all distributions) on a hypothetical investment of
$1,000 in the Fund covering the 1, 5, and 10 year periods ended August 31, 1997.
<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 08/31/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
<S> <C> <C> <C> <C> <C> <C> <C>
10 YEARS ENDED
08/31/97 08/31/87 $942.50 $2,488.31 164.01% 10.19% 148.83% 9.54%
5 YEARS ENDED
08/31/97 08/31/92 $942.47 $1,795.69 90.54% 13.76% 79.57% 12.42%
1 YEAR ENDED
08/31/97 08/31/96 $942.86 $1,254.10 33.01% 33.01% 25.41% 25.41%
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 5.75%.
** 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 5.75%.
*** The cumulative total return including the sales charge is calculated based on an initial investment of $1,000 less
maximum initial sales charge of 5.75%.
</TABLE>
<PAGE>
<TABLE>
INVESTMENT PERFORMANCE -- EATON VANCE GROWTH FUND - CLASS B SHARES
The table below indicates the total return (capital changes plus reinvestment of all distributions) on a hypothetical investment of
$1,000 in the Fund covering the 1, 5, and 10 year periods ended August 31, 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 08/31/97 ON 08/31/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
<S> <C> <C> <C> <C> <C> <C> <C>
10 YEARS ENDED
08/31/97 08/31/87 $2,575.36 $2,575.36 157.54% 9.92% 157.54% 9.92%
5 YEARS ENDED
08/31/97 08/31/92 $1,858.63 $1,838.63 85.86% 13.20% 83.86% 12.95%
1 YEAR ENDED
08/31/97 08/31/96 $1,311.50 $1,261.50 31.15% 31.15% 26.15% 26.15%
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 -- EATON VANCE GROWTH FUND - CLASS C SHARES
The table below indicates the total return (capital changes plus reinvestment of all distributions) on a hypothetical investment of
$1,000 in the Fund covering the 1, 5, and 10 year periods ended August 31, 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 08/31/97 ON 08/31/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
<S> <C> <C> <C> <C> <C> <C> <C>
10 YEARS ENDED
08/31/97 08/31/87 $2,446.93 $2,446.93 144.69% 9.36% 144.69% 9.36%
5 YEARS ENDED
08/31/97 08/31/92 $1,766.04 $1,766.04 76.60% 12.05% 76.60% 12.05%
1 YEAR ENDED
08/31/97 08/31/96 $1,286.33 $1,276.33 28.63% 28.63% 27.63% 27.63%
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 -- EATON VANCE INFORMATION AGE FUND - CLASS A SHARES
The table below indicates the total return (capital changes plus reinvestment of all distributions) on a hypothetical investment of
$1,000 in the Fund covering the period from September 18, 1995 through August 31, 1997 and for the 1 year period ended
August 31, 1997.
<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 08/31/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
<S> <C> <C> <C> <C> <C> <C> <C>
LIFE OF
FUND 09/18/95 $942.51 $1,261.47 33.84% 16.12% 26.15% 12.65%
1 YEAR ENDED
08/31/97 08/31/96 $942.88 $1,141.03 21.01% 21.01% 14.10% 14.10%
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 5.75%.
** 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 5.75%.
*** The cumulative total return including the sales charge is calculated based on an initial investment of $1,000 less
maximum initial sales charge of 5.75%.
</TABLE>
<PAGE>
<TABLE>
INVESTMENT PERFORMANCE -- EATON VANCE INFORMATION AGE FUND - CLASS B SHARES
The table below indicates the total return (capital changes plus reinvestment of all distributions) on a hypothetical investment of
$1,000 in the Fund covering the period from September 18, 1995 through August 31, 1997 and for the 1 year period ended
August 31, 1997.
<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 08/31/97 ON 08/31/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
<S> <C> <C> <C> <C> <C> <C> <C>
LIFE OF
FUND 09/18/95 $1,333.57 $1,283.57 33.36% 15.91% 28.36% 13.66%
1 YEAR ENDED
08/31/97 08/31/96 $1,207.94 $1,157.94 20.79% 20.79% 15.79% 15.79%
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 -- EATON VANCE INFORMATION AGE FUND - CLASS C SHARES
The table below indicates the total return (capital changes plus reinvestment of all distributions) on a hypothetical investment of
$1,000 in the Fund covering the period from September 18, 1995 through August 31, 1997 and for the 1 year period ended
August 31, 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 08/31/97 ON 08/31/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
<S> <C> <C> <C> <C> <C> <C> <C>
LIFE OF
FUND 09/18/95 $1,320.66 $1,320.66 32.07% 15.33% 32.07% 15.33%
1 YEAR ENDED
08/31/97 08/31/96 $1,200.49 $1,190.49 20.05% 20.05% 19.05% 19.05%
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 -- EATON VANCE WORLDWIDE DEVELOPING RESOURCES FUND - CLASS A SHARES
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, 1997 and for the 1 and 5 year periods ended
August 31, 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 TOTAL RETURN TOTAL RETURN
INVESTMENT INVESTMENT INITIAL INVESTMENT EXCLUDING SALES CHARGE INCLUDING SALES CHARGE
PERIOD DATE INVESTMENT* ON 08/31/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
<S> <C> <C> <C> <C> <C> <C> <C>
LIFE OF
FUND 10/21/87 $943.15 $2,473.31 162.24% 10.27% 147.33% 9.62%
5 YEARS ENDED
08/31/97 08/31/92 $942.78 $1,650.53 75.07% 11.85% 65.05% 10.54%
1 YEAR ENDED
08/31/97 08/31/96 $942.47 $802.52 -14.85% -14.85% -19.75% -19.75%
Average annual total return is calculated using the following formula:
n
P(1+T) = ERV
where P = an initial investment of $1,000 **
T = average annual total return
n = number of years
ERV = ending redeemable value of $1,000 initial investment at the end of the period
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 5.75%.
** 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 5.75%.
*** The cumulative total return including the sales charge is calculated based on an initial investment of $1,000 less
maximum initial sales charge of 5.75%.
</TABLE>
<PAGE>
<TABLE>
INVESTMENT PERFORMANCE -- EATON VANCE WORLDWIDE DEVELOPING RESOURCES FUND - CLASS B SHARES
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, 1997 and for the 1 and 5 year periods ended
August 31, 1997.
<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 08/31/97 ON 08/31/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
<S> <C> <C> <C> <C> <C> <C> <C>
LIFE OF
FUND 10/21/87 $2,633.42 $2,633.42 163.34% 10.32% 163.34% 10.32%
5 YEARS ENDED
08/31/97 08/31/92 $1,758.07 $1,738.07 75.81% 11.95% 73.81% 11.69%
1 YEAR ENDED
08/31/97 08/31/96 $855.09 $819.01 -14.49% -14.49% -18.10% -18.10%
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 -- EATON VANCE WORLDWIDE HEALTH SCIENCES FUND - CLASS A SHARES
The table below indicates the total return (capital changes plus reinvestment of all distributions) on a hypothetical investment of
$1,000 in the Fund covering the 1, 5, and 10 year periods ended August 31, 1997.
<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 08/31/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
<S> <C> <C> <C> <C> <C> <C> <C>
10 YEARS ENDED
08/31/97 08/31/87 $942.56 $3,991.51 323.47% 15.53% 299.15% 14.85%
5 YEARS ENDED
08/31/97 08/31/92 $942.72 $2,502.43 165.45% 21.56% 150.24% 20.14%
1 YEAR ENDED
08/31/97 08/31/96 $942.57 $1,109.15 17.67% 17.67% 10.92% 10.92%
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 5.75%.
** 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 5.75%.
*** The cumulative total return including the sales charge is calculated based on an initial investment of $1,000 less
maximum initial sales charge of 5.75%.
</TABLE>
<PAGE>
<TABLE>
INVESTMENT PERFORMANCE -- EATON VANCE WORLDWIDE HEALTH SCIENCES FUND - CLASS B SHARES
The table below indicates the total return (capital changes plus reinvestment of all distributions) on a hypothetical investment of
$1,000 in the Fund covering the 1, 5, and 10 year periods ended August 31, 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 08/31/97 ON 08/31/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
<S> <C> <C> <C> <C> <C> <C> <C>
10 YEARS ENDED
08/31/97 08/31/87 $4,231.43 $4,231.43 323.14% 15.52% 323.14% 15.52%
5 YEARS ENDED
08/31/97 08/31/92 $2,652.46 $2,632.46 165.25% 21.54% 163.25% 21.36%
1 YEAR ENDED
08/31/97 08/31/96 $1,175.81 $1,125.81 17.58% 17.58% 12.58% 12.58%
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 -- EATON VANCE WORLDWIDE HEALTH SCIENCES FUND - CLASS C SHARES
The table below indicates the total return (capital changes plus reinvestment of all distributions) on a hypothetical investment of
$1,000 in the Fund covering the 1, 5, and 10 year periods ended August 31, 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 08/31/97 ON 08/31/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
<S> <C> <C> <C> <C> <C> <C> <C>
10 YEARS ENDED
08/31/97 08/31/87 $4,234.73 $4,234.73 323.47% 15.53% 323.47% 15.53%
5 YEARS ENDED
08/31/97 08/31/92 $2,654.51 $2,654.51 165.45% 21.56% 165.45% 21.56%
1 YEAR ENDED
08/31/97 08/31/96 $1,176.74 $1,166.74 17.67% 17.67% 16.67% 16.67%
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>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000102816
<NAME> EATON VANCE GROWTH TRUST
<SERIES>
<NUMBER> 3
<NAME> EV MARATHON GREATER CHINA GROWTH FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> AUG-31-1997
<INVESTMENTS-AT-COST> 200,177,783
<INVESTMENTS-AT-VALUE> 299,037,825
<RECEIVABLES> 270,272
<ASSETS-OTHER> 7,569
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 299,315,666
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,729,185
<TOTAL-LIABILITIES> 2,729,185
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 216,482,191
<SHARES-COMMON-STOCK> 18,389,645
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> (8,551,056)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (10,204,696)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 98,860,042
<NET-ASSETS> 296,586,481
<DIVIDEND-INCOME> 5,424,541
<INTEREST-INCOME> 26,490
<OTHER-INCOME> (3,362,307)
<EXPENSES-NET> 4,243,215
<NET-INVESTMENT-INCOME> (2,154,491)
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (480,992)
<NET-ASSETS> 31,508,862
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<EXPENSES-NET> 129,704
<NET-INVESTMENT-INCOME> (88,261)
<REALIZED-GAINS-CURRENT> 839,952
<APPREC-INCREASE-CURRENT> (480,992)
<NET-CHANGE-FROM-OPS> 270,699
<EQUALIZATION> 0
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<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
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<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 31,508,862
<ACCUMULATED-NII-PRIOR> 0
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<PER-SHARE-NAV-BEGIN> 0
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<EXPENSE-RATIO> 1.15
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
