<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 19, 1998.
1933 ACT FILE NO.333-46853
1940 ACT FILE NO. 811-08671
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM N-2
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933 [X]
PRE-EFFECTIVE AMENDMENT NO. [ ]
POST-EFFECTIVE AMENDMENT NO. 1 [X]
AND/OR
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 1 [X]
(CHECK APPROPRIATE BOX OR BOXES)
EATON VANCE ADVISERS SENIOR FLOATING-RATE FUND
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
24 FEDERAL STREET, BOSTON, MASSACHUSETTS 02110
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (617) 482-8260
ALAN R. DYNNER
24 FEDERAL STREET, BOSTON, MASSACHUSETTS 02110
(NAME AND ADDRESS OF AGENT FOR SERVICE)
If any of the securities being registered on this Form will be offered on
a delayed or continuous basis in reliance on Rule 415 under the Securities Act
of 1933, other than securities offered in connection with a dividend
reinvestment plan, check the following box. [X]
It is proposed that this filing will become effective (check appropriate box):
[ ] when declared effective pursuant to
section 8(c)
[ ] immediately upon filing pursuant to [ ] 60 days after filing pursuant to
paragraph (b) paragraph (a)
[X] on November 2, 1998 pursuant to [ ] on (date) pursuant to
paragraph (b) paragraph (a)
If appropriate, check the following box:
[ ] This [post-effective] amendment designates a new effective date for a
previously filed [post-effective amendment] [registration statement].
[ ] This form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act and the Securities Act
registration statement number of the earlier effective registration
statement for the same offering is 333-46853.
Senior Debt Portfolio has also executed this Registration Statement.
================================================================================
<PAGE>
EATON VANCE ADVISERS SENIOR FLOATING-RATE FUND
CROSS REFERENCE SHEET
ITEMS REQUIRED BY FORM N-2
PART A
ITEM NO. ITEM CAPTION PROSPECTUS CAPTION
- -------- ------------ ------------------
1. ........... Outside Front Cover Cover Page
2. ........... Inside Front and Outside Back Cover Pages
Cover Page
3. ........... Fee Table and Synopsis Shareholder and Fund Expenses
4. ........... Financial Highlights The Fund's Financial
Highlights
5. ........... Plan of Distribution How to Buy Shares; The
Lifetime Investing Account/
Distribution Options
6. ........... Selling Shareholders Not Applicable
7. ........... Use of Proceeds How to Buy Shares; Investment
Policies and Risks
8. ........... General Description of the Organization of the Fund and
Registrant the Portfolio; Investment
Policies and Risks
9. ........... Management Management of the Fund and
the Portfolio; Organization
of the Fund and the Portfolio
10. ........... Capital Stock, Long-Term Debt, Organization of the Fund and
and Other Securities the Portfolio; Distributions
and Taxes; Reports to
Shareholders
11. ........... Defaults and Arrears on Senior Not Applicable
Securities
12. ........... Legal Proceedings Not Applicable
13. ........... Table of Contents of the Table of Contents of the
Statement of Additional Statement of Additional
Information Information
PART B STATEMENT OF
ITEM NO. ITEM CAPTION ADDITIONAL INFORMATION CAPTION
- -------- ------------ ------------------------------
14. ........... Cover Page Cover Page
15. ........... Table of Contents Table of Contents
16. ........... General Information and Other Information
History
17. ........... Investment Objective and Additional Information about
Policies Investment Policies;
Investment Restrictions
18. ........... Management Trustees and Officers;
Investment Advisory and
Other Services
19. ........... Control Persons and Principal Control Persons and Principal
Holders of Securities Holders of Shares
20. ........... Investment Advisory and Other Investment Advisory and Other
Services Services
21. ........... Brokerage Allocation and Other Portfolio Trading
Practices
22. ........... Tax Status Taxes; Rescission Offer
23. ........... Financial Statements Financial Statements
<PAGE>
[LOGO] Investing
for the Eaton Vance Advisers
EATON VANCE 21st Senior Floating-Rate Fund
============ Century
THE INVESTMENT OBJECTIVE OF EATON VANCE ADVISERS SENIOR FLOATING-RATE FUND
(THE "FUND") IS TO PROVIDE AS HIGH A LEVEL OF CURRENT INCOME AS IS CONSISTENT
WITH THE PRESERVATION OF CAPITAL, BY INVESTING IN A PORTFOLIO PRIMARILY OF
SENIOR SECURED FLOATING RATE LOANS. THE FUND CURRENTLY SEEKS TO ACHIEVE ITS
OBJECTIVE BY INVESTING ITS ASSETS IN SENIOR DEBT PORTFOLIO (THE "PORTFOLIO"),
WHICH HAS THE SAME INVESTMENT OBJECTIVE AS THE FUND, RATHER THAN BY INVESTING
DIRECTLY IN AND MANAGING ITS OWN PORTFOLIO OF LOANS AND SECURITIES. THE FUND,
AS WELL AS THE PORTFOLIO, IS A CONTINUOUSLY OFFERED, CLOSED-END, NON-
DIVERSIFIED INVESTMENT COMPANY.
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 November 2, 1998 for the Fund, as
supplemented from time to time, has been filed with the Securities and
Exchange Commission (the "SEC") and is incorporated herein by reference. The
Table of Contents of the Statement of Additional Information appears at the
end of this Prospectus. The Statement of Additional Information is available
without charge from the Fund's principal underwriter, Eaton Vance
Distributors, Inc. (the "Principal Underwriter"), 24 Federal Street, Boston,
MA 02110 (telephone (800) 225-6265). The Statement of Additional Information
is available along with other Fund-related materials at the SEC's internet web
site (http://www.sec.gov).
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.
Proceeds to
Price to Public Sales Load Fund
- --------------------------------------------------------------------------------
Per Share(1) $10.00 None $10.00
Total $200,000,000 None $200,000,000
- ----------
(1) The shares are offered on a best efforts basis at a price equal to the net
asset value, which, as of October 15, 1998 is $10.00 per share. See "How
to Buy Shares".
- --------------------------------------------------------------------------------
NO MARKET PRESENTLY EXISTS FOR THE FUND'S SHARES AND IT IS NOT CURRENTLY
ANTICIPATED THAT A SECONDARY MARKET WILL DEVELOP FOR THEM. Fund shares are not
readily marketable. To provide investor liquidity, the Fund ordinarily will
make each January, April, July and October an offer to repurchase between 5%
and 25% of the Fund's outstanding shares at net asset value. See "Fund
Repurchase Offers".
CONTENTS
<TABLE>
<CAPTION>
Page Page
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Shareholder and Fund Expenses 2 How to Buy Shares 12
The Fund's Financial Highlights 3 Fund Repurchase Offers 13
The Fund's Investment Objective 4 Reports to Shareholders 14
Investment Policies and Risks 4 The Lifetime Investing Account/Distribution Options 14
Yield and Performance Information 9 Eaton Vance Shareholder Services 15
Organization of the Fund and the Portfolio 9 Distributions and Taxes 15
Management of the Fund and the Portfolio 10 Table of Contents of the Statement of Additional
Valuing Shares 12 Information 16
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
Prospectus dated November 2, 1998
<PAGE>
SHAREHOLDER AND FUND EXPENSES
SHAREHOLDER TRANSACTION EXPENSES
- -------------------------------------------------------------------------------
Sales Load (as a percentage of offering price) None
Dividend Reinvestment Fees None
Contingent Deferred Sales Charge None
ANNUAL FUND AND ALLOCATED PORTFOLIO OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS ATTRIBUTABLE
TO SHARES OF BENEFICIAL INTEREST)
- -------------------------------------------------------------------------------
Investment Advisory Fee 0.89%
Interest Payments on Borrowed Funds 0.01
Other Expenses (including administration fees of .15%) 0.37
Total Annual Expenses 1.27
EXAMPLE
1 year 3 years
- -------------------------------------------------------------------------------
An investor would pay the following expenses on a
$1,000 investment, assuming (a) 5% annual return and (b)
repurchase at the end of each period: $13 $40
NOTES: The table and Example summarize the aggregate expenses of the Fund and
the Portfolio and are designed to help investors understand the costs and
expenses they will bear, directly or indirectly, by investing in the Fund.
Information for the Fund is based on its anticipated expenses for the current
fiscal year because the Fund has only recently been organized, and is derived
in part from actual operations of the Portfolio.
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES SINCE FUTURE EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
Federal regulations require the Example to assume a 5% annual return, but
actual return will vary. For further information regarding the expenses of the
Fund and the Portfolio, see "The Fund's Financial Highlights", "Management of
the Fund and the Portfolio", "How to Buy Shares", and "Fund Repurchase
Offers".
The Investment Advisory and Administration Fees are based upon a percentage of
the Portfolio's average daily gross assets, which were approximately the same
as its average daily net assets for the fiscal year ended December 31, 1997.
The Fund invests exclusively in the Portfolio. Other investment companies and
investors with different distribution arrangements and fees are investing in
the Portfolio. See "Organization of the Fund and the Portfolio".
<PAGE>
THE FUND'S FINANCIAL HIGHLIGHTS
The following information should be read in conjunction with the unaudited
financial statements that appear in the Fund's semiannual report to
shareholders. Unaudited financial statements for the six months ended June 30,
1998 are incorporated by reference in the Statement of Additional Information.
Further information regarding the performance of the Fund is contained in its
semiannual report to shareholders which may be obtained without charge by
contacting the Principal Underwriter.
Period Ended
June 30, 1998*
(Unaudited)
- -----------------------------------------------------------------------------
Net asset value -- beginning of period $10.000
-------
Income (loss) from operations
Net investment outcome $ 0.197
Net realized and unrealized loss (0.001)
-------
Total income from operations $ 0.196
-------
Less distributions
From net investment income $(0.196)
-------
Total distributions $(0.196)
-------
Net asset value -- end of period $10.000
=======
Total Return(1) 1.98%
Ratios/Supplemental Data+
Net assets, end of period (000's omitted) $22,084
Ratios (As a percentage of average daily net assets):
Net operating expenses(2) 1.26%+
Net interest expense(2) 0.01%+
Net investment income 6.59%+
+ The Operating expenses of the Fund may reflect an allocation of expenses to
the Administrator. Had such actions not been taken, the ratios and net
investment income per share would have been as follows:
Ratios (As a percentage of average daily net assets):
Operating expenses(2) 1.45%+
Interest expense(2) 0.01%+
Net investment income 6.40%+
Net investment income per share $ 0.191
Portfolio Turnover of the Portfolio 39%
+ Annualized.
* For the period from the start of business, March 20, 1998 to June 30, 1998.
(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. Dividends and distributions, if any, are assumed to be invested at
the net asset value on the reinvestment date. Total return is computed on a
non-annualized basis.
(2) Includes the Fund's share of the Portfolio's allocated expenses.
<PAGE>
THE FUND'S INVESTMENT OBJECTIVE
Eaton Vance Advisers Senior Floating-Rate Fund's investment objective is to
provide as high a level of current income as is consistent with the
preservation of capital, by investing in a portfolio primarily of senior
secured floating rate loans ("Senior Loans"). The Fund currently seeks to
achieve its objective by investing its assets in the Senior Debt Portfolio
(the "Portfolio"), a separate closed-end, non-diversified investment company
with the same investment objective as the Fund. There is no assurance that the
Fund's objective will be achieved. An investment in shares of the Fund is not
a complete investment program.
Senior Loans are made to corporations, partnerships and other business
entities ("Borrowers") which operate in various industries and geographical
regions. Senior Loans pay interest at rates which are redetermined
periodically on the basis of a floating base lending rate plus a premium.
Senior Loans hold the most senior position in the capital structure of the
Borrower, are secured with specific collateral (discussed below) and will have
a claim on the assets of the Borrower that is senior to that of subordinated
debt, preferred stock and common stock of the Borrower. Investment in floating
rate instruments is expected to minimize changes in the underlying principal
value of Senior Loans, and therefore the Fund's net asset value, resulting
from changes in market interest rates. Nevertheless, the Fund's net asset
value and distribution rate will vary, and may be affected by several factors,
including changes in the credit quality of the Borrowers underlying Senior
Loans.
The Portfolio's investment adviser is Boston Management and Research (the
"Investment Adviser" or "BMR"), a wholly-owned subsidiary of Eaton Vance
Management ("Eaton Vance"), and Eaton Vance 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.
INVESTMENT POLICIES AND RISKS
GENERAL COMPOSITION OF THE PORTFOLIO
In normal market conditions, at least 80% of the Portfolio's total assets will
be invested in interests in Senior Loans (either as an original Lender or as a
purchaser of an Assignment or Participation, each as defined below) of
domestic or foreign Borrowers (so long as foreign loans are U.S. dollar-
denominated and payments of interest and repayments of principal are required
to be made in U.S. dollars). Up to 20% of the Portfolio's total assets may be
held in cash, invested in investment grade short-term debt obligations, and
invested in loan interests that are not fully secured ("Unsecured Loans"). If
BMR determines that market conditions temporarily warrant a defensive
investment policy, the Portfolio may invest up to 100% of its assets in cash
and high quality, short-term debt securities.
It is anticipated that the proceeds of the Senior Loans in which the Portfolio
will acquire interests primarily will be used to finance leveraged buyouts,
recapitalizations, mergers, acquisitions, stock repurchases, and, to a lesser
extent, to finance internal growth and for other corporate purposes of
Borrowers. Senior Loans have the most senior position in a Borrower's capital
structure, although some Senior Loans may hold an equal ranking with other
senior securities of the Borrower. The capital structure of a Borrower may
include Senior Loans, senior and junior subordinated debt, preferred stock and
common stock issued by the Borrower, typically in descending order of
seniority with respect to claims on the Borrower's assets (discussed below).
Senior Loans are secured by specific collateral.
In order to borrow money pursuant to a Senior Loan, a Borrower will
frequently, for the term of the Senior Loan, pledge collateral, including but
not limited to, (i) working capital assets, such as accounts receivable and
inventory; (ii) tangible fixed assets, such as real property, buildings and
equipment; (iii) intangible assets, such as trademarks and patent rights (but
excluding goodwill); and (iv) security interests in shares of stock of
subsidiaries or affiliates. In the case of Senior Loans made to non-public
companies, the company's shareholders or owners may provide collateral in the
form of secured guarantees and/or security interests in assets that they own.
In certain instances, a Senior Loan may be secured only by stock in the
Borrower or its subsidiaries. Collateral may consist of assets that may not be
readily liquidated, and there is no assurance that the liquidation of such
assets would satisfy fully a Borrower's obligations under a Senior Loan. The
Portfolio will not invest in a Senior Loan unless, at the time of investment,
BMR determines that the value of the collateral equals or exceeds the
aggregate outstanding principal amount of the Senior Loan.
The Portfolio is not subject to any restrictions with respect to the maturity
of Senior Loans held in its portfolio. Senior Loans typically have a stated
term of between five and nine years, and have rates of interest which
typically are redetermined either daily, monthly, quarterly or semi-annually.
Senior Loans generally pay interest at rates which are redetermined
periodically by reference to a base lending rate, plus a premium. These base
lending rates generally are the prime rate offered by one or more major United
States banks (the "Prime Rate"), the London Inter-Bank Offered Rate ("LIBOR"),
the certificate of deposit ("CD") rate or other base lending rates used by
commercial lenders. Longer interest rate reset periods generally increase
fluctuations in the Fund's net asset value as a result of changes in market
interest rates. The Senior Loans held by the Portfolio will have a dollar-
weighted average period until the next interest rate adjustment of
approximately 90 days or less. As a result, as short-term interest rates
increase, interest payable to the Portfolio from its investments in Senior
Loans should increase, and as short-term interest rates decrease, interest
payable to the Portfolio from its investments in Senior Loans should decrease.
The Portfolio may utilize certain investment practices to, among other things,
shorten the effective interest rate redetermination period of Senior Loans in
its portfolio. In the experience of BMR over the last decade, because of
prepayments the average life of Senior Loans has been two to three years. As
of October 1, 1998, the Portfolio had a dollar weighted average period to
adjustment of approximately 47 days.
The Portfolio may purchase and retain in its portfolio a Senior Loan where the
Borrower has experienced, or may be perceived to be likely to experience,
credit problems, including involvement in or recent emergence from bankruptcy
reorganization proceedings or other forms of debt restructuring. Such
investments may provide opportunities for enhanced income as well as capital
appreciation. At times, in connection with the restructuring of a Senior Loan
either outside of bankruptcy court or in the context of bankruptcy court
proceedings, the Portfolio may determine or be required to accept equity
securities or junior debt securities in exchange for all or a portion of a
Senior Loan.
The Fund and the Portfolio have adopted certain fundamental investment
restrictions set forth in the Statement of Additional Information which may
not be changed unless authorized by a shareholder and an interestholder vote,
respectively. Except for such restrictions, the investment objective and
policies of the Fund and the Portfolio may be changed by the Trustees of the
Fund and the Portfolio without obtaining the approval of Fund shareholders.
CERTAIN CHARACTERISTICS OF SENIOR LOANS
A Senior Loan is typically originated, negotiated and structured by a U.S. or
foreign commercial bank, insurance company, finance company or other financial
institution (the "Agent") for a lending syndicate of financial institutions
("Lenders"). The Agent typically administers and enforces the Senior Loan on
behalf of the other Lenders in the syndicate. In addition, an institution,
typically but not always the Agent, holds any collateral on behalf of the
Lenders.
Senior Loans include senior secured floating rate loans and institutionally
traded senior secured floating rate debt obligations issued by an asset-backed
pool, and interests therein. Loan interests generally take the form of direct
interests acquired during a primary distribution and may also take the form of
participation interests in, assignments of, or novations of a Senior Loan
acquired in secondary markets. Such loan interests may be acquired from U.S.
or foreign commercial banks, insurance companies, finance companies or other
financial institutions who have made loans or are members of a lending
syndicate or from other holders of loan interests.
The Portfolio may purchase "Assignments" from Lenders. The purchase of an
Assignment typically succeeds to all the rights and obligations under the Loan
Agreement of the assigning Lender and becomes a Lender under the Loan
Agreement with the same rights and obligations as the assigning Lender.
Assignments may, however, be arranged through private negotiations between
potential assignees and potential assignors, and the rights and obligations
acquired by the purchaser of an Assignment may differ from, and be more
limited than, those held by the assigning Lender.
The Portfolio also may invest without limit in "Participations".
Participations by the Portfolio in a Lender's portion of a Senior Loan
typically will result in the Portfolio having a contractual relationship only
with such Lender, not with the Borrower. As a result, the Portfolio may have
the right to receive payments of principal, interest and any fees to which it
is entitled only from the Lender selling the Participation and only upon
receipt by such Lender of such payments from the Borrower. In connection with
purchasing Participations, the Portfolio generally will have no right to
enforce compliance by the Borrower with the terms of the loan agreement, nor
any rights with respect to any funds acquired by other Lenders through set-off
against the Borrower and the Portfolio may not directly benefit from the
collateral supporting the Senior Loan in which it has purchased the
Participation. As a result, the Portfolio may assume the credit risk of both
the Borrower and the Lender selling the Participation. In the event of the
insolvency of the Lender selling a Participation, the Portfolio may be treated
as a general creditor of such Lender. The selling Lenders and other persons
interpositioned between such Lenders and the Portfolio with respect to such
Participations will likely conduct their principal business activities in the
banking, finance and financial services industries. Persons engaged in such
industries may be more susceptible to, among other things, fluctuations in
interest rates, changes in the Federal Open Market Committee's monetary
policy, governmental regulations concerning such industries and concerning
capital raising activities generally and fluctuations in the financial markets
generally.
The Portfolio will only acquire Participations if the Lender selling the
Participation, and any other persons interpositioned between the Portfolio and
the Lender, at the time of investment has outstanding debt or deposit
obligations rated investment grade (BBB or A-3 or higher by Standard & Poor's
Ratings Group ("S&P") or Baa or P-3 or higher by Moody's Investors Service,
Inc. ("Moody's") or comparably rated by another nationally recognized rating
agency (each a "Rating Agency")) or determined by BMR to be of comparable
quality. Similarly, the Portfolio will purchase an Assignment or Participation
or act as a Lender with respect to a syndicated Senior Loan only where the
Agent with respect to such Senior Loan at the time of investment has
outstanding debt or deposit obligations rated investment grade or determined
by BMR to be of comparable quality. Long-term debt rated BBB by S&P is
regarded by S&P as having adequate capacity to pay interest and repay
principal and debt rated Baa by Moody's is regarded by Moody's as a medium
grade obligations, i.e., it is neither highly protected nor poorly secured.
Commercial paper rated A-3 by S&P indicates that S&P believes such obligations
exhibit adequate protection parameters but that adverse economic conditions or
changing circumstances are more likely to lead to a weakened capacity of the
obligor to meet its financial commitment on the obligation and issues of
commercial paper rated P-3 by Moody's are considered by Moody's to have an
acceptable ability for repayment of short-term debt obligations but the effect
of industry characteristics and market compositions may be more pronounced. A
description of the corporate bond ratings of Moody's and S&P is included as
Appendix A to the Statement of Additional Information.
OTHER INVESTMENTS
As stated above, up to 20% of the Portfolio's total assets may be held in
cash, invested in short-term debt obligations, and invested in interests in
Unsecured Loans. The Portfolio will invest in only those Unsecured Loans that
have been determined by BMR to have a credit quality at least equal to that of
the collateralized Senior Loans in which the Portfolio primarily invests.
Should the Borrower of an Unsecured Loan default on its obligation there will
be no specific collateral on which the Portfolio can foreclose, although the
Borrower will typically have asset value believed by BMR at the time of
purchase of the Unsecured Loans to exceed the amount of the loan. The short-
term debt obligations in which the Portfolio may invest include, but are not
limited to, interests in senior Unsecured Loans with a remaining maturity of
one year or less ("Short-Term Loans"), certificates of deposit, commercial
paper, short-term and medium-term notes, bonds with remaining maturities of
less than five years, obligations issued by the U.S. Government or any of its
agencies or instrumentalities and investments in Senior Loans. All of such
other debt instruments will be investment grade. Downgraded securities may be
retained by the Portfolio.
The Portfolio may acquire warrants and other equity securities as part of a
unit combining a Senior Loan and equity securities of a Borrower or its
affiliates. The acquisition of such equity securities will only be incidental
to the Portfolio's purchase of a Senior Loan. The Portfolio may also acquire
equity securities issued in exchange for a Senior Loan or issued in connection
with the debt restructuring or reorganization of a Borrower, or if such
acquisition, in the judgment of BMR, may enhance the value of a Senior Loan or
would otherwise be consistent with the Portfolio's investment policies.
BORROWINGS AND LEVERAGE
The Portfolio may from time to time (i) borrow money on a secured or unsecured
basis at variable or fixed rates, and (ii) issue indebtedness such as
commercial paper, bonds, debentures, notes or similar obligations or
instruments. BMR expects that the Portfolio will do so to remain fully
invested after accounting for anticipated cash infusions from the prepayment
of Senior Loans and the sale of Fund shares, and cash outflows from the
fulfillment of settlement obligations (including the funding of revolving
Senior Loans) and the repurchase of Fund shares. The Portfolio may also borrow
and issue debt for the purpose of acquiring additional income-producing
investments when it believes that the interest payments and other costs with
respect to such borrowings or indebtedness will be exceeded by the anticipated
total return (a combination of income and appreciation) on such investments.
Successful use of a leveraging strategy depends on BMR's ability to predict
correctly interest rates and market movements. Historically, the Portfolio has
not used leverage for investment purposes. There is no assurance that a
leveraging strategy will be successful.
As prescribed by the 1940 Act, the Portfolio will be required to maintain
specified asset coverages of at least 300% with respect to any bank borrowing
or issuance of indebtedness immediately following any such borrowing or
issuance and on an ongoing basis as a condition of declaring dividends and
repurchasing shares. The Portfolio's inability to make distributions as a
result of these requirements could cause the Fund to fail to qualify as a
regulated investment company and/or subject the Fund to income or excise
taxes. The Portfolio may be required to dispose of portfolio investments on
unfavorable terms if market fluctuations or other factors reduce the required
asset coverage to less than the prescribed amount. The Portfolio may be
required to maintain minimum average balances in connection with borrowings or
to pay a commitment or other fee to maintain a line of credit; either of these
requirements will increase the cost of borrowing over the stated interest
rate. The issuance of additional classes of debt involves offering expenses
and other costs and may limit the Portfolio's freedom to pay dividends or to
engage in other activities. Any such borrowing or debt issuance is a
speculative technique in that it will increase the Portfolio's exposure to
capital risk. The Portfolio may also borrow for temporary, extraordinary or
emergency purposes.
ADDITIONAL RISK CONSIDERATIONS
The Fund is subject to numerous investment risks. The Fund is not a money
market fund and its net asset value will fluctuate, reflecting any
fluctuations in the Portfolio's net asset value.
CREDIT RISK. Senior Loans, like other corporate debt obligations, are subject
to the risk of non-payment of scheduled interest or principal. Such non-
payment would result in a reduction of income to the Portfolio, a reduction in
the value of the Senior Loan experiencing non-payment and a potential decrease
in the net asset value of the Portfolio. Although, with respect to Senior
Loans, the Portfolio generally will invest only in Senior Loans that BMR
believes are secured by specific collateral the value of which equals or
exceeds the principal amount of the Senior Loan at the time of initial
investment, there can be no assurance that the liquidation of any such
collateral would satisfy the Borrower's obligation in the event of non-payment
of scheduled interest or principal payments, or that such collateral could be
readily liquidated. In the event of bankruptcy of a Borrower, the Portfolio
could experience delays or limitations with respect to its ability to realize
the benefits of the collateral securing a Senior Loan. To the extent that a
Senior Loan is collateralized by stock in the Borrower or its subsidiaries,
such stock may lose all or substantially all of its value in the event of
bankruptcy of a Borrower. The Agent generally is responsible for determining
that the Lenders have obtained a perfected security interest in the collateral
securing the Senior Loan. Some Senior Loans in which the Portfolio may invest
are subject to the risk that a court, pursuant to fraudulent conveyance or
other similar laws, could subordinate such Senior Loans to presently existing
or future indebtedness of the Borrower or take other action detrimental to the
holders of Senior Loans, such as the Portfolio, including, in certain
circumstances, invalidating such Senior Loans.
Senior Loans in which the Portfolio will invest often are not rated by a
Rating Agency, will not be registered with the SEC or any state securities
commission and will not be listed on any national securities exchange.
Although the Portfolio will generally have access to financial and other
information made available to the Lenders in connection with Senior Loans, the
amount of public information available with respect to Senior Loans will
generally be less extensive than that available for rated, registered or
exchange listed securities. In evaluating the creditworthiness of Borrowers,
BMR will consider, and may rely in part, on analyses performed by others.
Borrowers may have outstanding debt obligations that are rated below
investment grade by a Rating Agency. More recently, such Rating Agencies have
begun rating Senior Loans and many Senior Loans have been assigned a rating
below investment grade. The Portfolio will invest in such Senior Loans. Debt
securities which are unsecured and rated below investment grade are viewed by
the Rating Agencies as having speculative characteristics and are commonly
known as "junk bonds". A description of the ratings of corporate bonds by
Moody's and S&P is included as Appendix A to the Statement of Additional
Information. Because of the protective features of Senior Loans (being senior
and secured by specific collateral), BMR believes, based on its experience,
that these ratings do not necessarily reflect the true risk of loss of
principal or interest on a Senior Loan. For example, BMR believes that Senior
Loans tend to have more favorable loss recovery rates as compared to most
other types of below investment grade debt obligations. Accordingly, BMR
generally does not take ratings into account when determining whether to
invest in a Senior Loan and, in any event, does not view ratings as a
determinative factor in its investment decisions. As a result, the Portfolio
is more dependent on BMR's credit analysis abilities than a fund that invests
in other types of debt securities.
Securities rated below investment grade or unrated securities of comparable
quality ("lower quality securities") are subject to the risk of an issuer's
inability to meet principal and interest payments on the obligations (credit
risk) and may also be subject to price volatility due to such factors as
interest rate sensitivity, market perception of the creditworthiness of the
issuer and general market liquidity (market risk). The prices of lower quality
securities are also more likely to react to real or perceived developments
affecting market and credit risk than are prices of investment grade quality
securities ("high quality securities"), which react primarily to movements in
the general level of interest rates. Senior Loans issued in connection with
mergers, acquisitions, leveraged buy-outs, recapitalizations and other highly
leveraged transactions, pose a higher risk of default or bankruptcy of the
issuer than other higher quality debt securities, particularly during periods
of deteriorating economic conditions and contraction in the credit markets.
The investments in the Portfolio will have speculative characteristics, and
companies obligated by such debt are generally more vulnerable in an economic
downturn.
INTEREST RATE RISK. When interest rates decline, the value of a portfolio
invested in fixed-rate obligations can be expected to rise. Conversely, when
interest rates rise, the value of a portfolio invested in fixed-rate
obligations can be expected to decline. Although the Fund's net asset value
will vary, the Fund's management expects the Portfolio's policy of acquiring
interests in floating rate Senior Loans to minimize fluctuations in net asset
value as a result of changes in market interest rates. However, because
floating rates on Senior Loans only reset periodically, changes in prevailing
interest rates can be expected to cause some fluctuation in the Fund's net
asset value. Similarly, a sudden and significant increase in market interest
rates may cause a decline in the Fund's net asset value.
FOREIGN SECURITIES. Although the Portfolio will only invest in U.S. dollar-
denominated income securities, the Portfolio may invest in Senior Loans and
other debt securities of non-U.S. issuers. Investment in securities of non-
U.S. issuers involves special risks, including that non-U.S. issuers may be
subject to less rigorous accounting and reporting requirements than U.S.
issuers, less rigorous regulatory requirements, differing legal systems and
laws relating to creditors' rights, the potential inability to enforce legal
judgments and the potential for political, social and economic adversity. The
securities of some foreign issuers are less liquid and at times more volatile
than securities of comparable U.S. issuers. Foreign settlement procedures and
trade regulations may involve certain risks (such as delay in the payment or
delivery of securities and interest or in the recovery of assets held abroad)
and expenses not present in the settlement of domestic investments. There may
be a possibility of nationalization or expropriation of assets, imposition of
currency exchange controls, confiscatory taxation, political or financial
instability, armed conflict and diplomatic developments which could affect the
value of the Portfolio's investments in certain foreign countries. The
Portfolio will not invest more than 35% of its net assets in foreign Senior
Loans, and has no current intention to invest more than 10%.
LIQUIDITY RISK. Senior Loans, at present, are generally not readily
marketable and are subject to restrictions on resale. Interests in Senior
Loans generally are not listed on any national securities exchange or
automated quotation system and no active trading market may exist for many of
the Senior Loans in which the Portfolio will invest. Where a secondary market
exists, such market may be subject to irregular trading activity, wide bid/ask
spreads and extended trade settlement periods. Senior Loans are thus
relatively illiquid, which illiquidity may impair the Portfolio's ability to
realize the full value of its assets in the event of a voluntary or
involuntary liquidation of such assets. The Portfolio has no limitation on the
amount of its assets which may be invested in securities which are not readily
marketable or are subject to restrictions on resale. The substantial portion
of the Portfolio's assets invested in Senior Loan interests may restrict the
ability of the Portfolio to dispose of its investments in a timely fashion and
at a fair price, and could result in capital losses. The risks associated with
illiquidity are particularly acute in situations where the Fund's operations
require cash, such as when the Fund conducts repurchase offers for its shares,
and may result in borrowings to meet short-term cash requirements. The
Trustees of the Fund will consider the liquidity of the Portfolio's
investments in determining the amount of quarterly repurchase offers.
REGULATORY CHANGES. To the extent that legislation or state or federal
regulators that regulate certain financial institutions impose additional
requirements or restrictions with respect to the ability of such institutions
to make loans, particularly in connection with highly leveraged transactions,
the availability of Senior Loans for investment by the Portfolio may be
adversely affected. Further, such legislation or regulation could depress the
market value of Senior Loans held by the Portfolio.
NON-DIVERSIFICATION. The Fund and the Portfolio have each registered as a
"non-diversified" investment company under the Investment Company Act of 1940,
as amended (the "1940 Act") so that, subject to its investment restrictions
and in connection with federal income tax rules, with respect to 50% of its
total assets, the Portfolio will be able to invest more than 5% of the value
of its assets in the obligations of any single issuer, including Senior Loans
of a single Borrower or single Lender, although it has no current intention to
do so. The Portfolio will not invest more than 10% of the value of its assets
in securities (including interests in Senior Loans) of any single Borrower.
Moreover, the Portfolio may invest more than 10% (but not more than 25%) of
its total assets in Senior Loan interests for which the same intermediate
participant is interposed between the Portfolio and the Borrower. To the
extent the Portfolio invests a relatively high percentage of its assets in
obligations of a limited number of issuers, the Portfolio will be more
susceptible than a more widely diversified investment company to any single
corporate, economic, political or regulatory occurrence.
SPECIAL INVESTMENT PRACTICES
The Portfolio may engage in the following investment practices to seek to
enhance income or reduce investment risk, but has no current intention to do
so.
INTEREST RATE AND OTHER HEDGING TRANSACTIONS. The Portfolio may purchase or
sell derivative instruments (which are instruments that derive their value
from another instrument, security or index) to seek to hedge against
fluctuations in securities prices or interest rates. The Portfolio's
transactions in derivative instruments may include the purchase or sale of
futures contracts on securities, securities indices or other indices, other
financial instruments; options on futures contracts; exchange-traded and over-
the-counter options on securities or indices; index-linked securities; and
interest rate swaps. 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;
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. Transaction costs will be incurred in opening and closing
positions in derivative instruments. There can be no assurance that BMR's use
of derivative instruments will be advantageous to the Portfolio.
The Portfolio may use interest rate swaps for risk management purposes and not
as a speculative investment and would typically use interest rate swaps to
shorten the average time to interest rate reset of the Portfolio. Interest
rate swaps involve the exchange by the Portfolio with another party of their
respective commitments to pay or receive interests, e.g., an exchange of fixed
rate payments for floating rate payments. The use of interest rate swaps is a
highly specialized activity which involves investment techniques and risks
different from those associated with ordinary portfolio securities
transactions. BMR has had limited experience in the use of interest rate swaps
but has utilized other types of hedging techniques. If BMR is incorrect in its
forecasts of market values, interest rates and other applicable factors, the
investment performance of the Portfolio would be less favorable than what it
would have been if this investment technique were never used.
SECURITIES LENDING. The Portfolio may seek to increase its income by lending
portfolio securities to broker-dealers of other institutional borrowers.
During the existence of a loan, the Portfolio will continue to receive the
equivalent of the interest paid by the issuer on the securities loaned and
will also receive a fee, or all or a portion of the interest on investment of
the collateral, if any. However, the Portfolio may pay lending fees to such
borrowers. As with other extensions of credit, there are risks of delay in
recovery or even loss of rights in the securities loaned if the borrower of
the securities fails financially. However, the loans will be made only to
organizations deemed by BMR to be of good standing and when, in the judgement
of the Portfolio's management, the consideration which can be earned from
securities loans of this type, net of administrative expenses and any finders
or other fees, justifies the attendant risk. The financial condition of the
borrower will be monitored by BMR on an ongoing basis. The value of the
securities loaned will not exceed 30% of the Portfolio's total assets.
REPURCHASE AGREEMENTS. The Portfolio may enter into repurchase agreements
with member banks of the Federal Reserve System or primary dealers in U.S.
Government securities. Under a repurchase agreement, the Portfolio buys
securities at one price and simultaneously promises to sell back those
securities at a higher price. The Portfolio's repurchase agreements will
provide that the value of the collateral underlying the repurchase agreement
will always be at least equal to the repurchase price, including any accrued
interest earned on the repurchase agreement, and will be marked to market
daily. The repurchase date is usually within seven days of the original
purchase date. In all cases, BMR must be satisfied with the creditworthiness
of the other party to the agreement before entering into a repurchase
agreement. In the event of the bankruptcy of the other party to a repurchase
agreement, the Portfolio might experience delays in recovering its cash. To
the extent that, in the meantime, the value of the securities the Portfolio
purchased may have declined, the Portfolio could experience a loss.
YIELD AND PERFORMANCE INFORMATION
From time to time, the Fund may quote current yield based on a specific one-
month period. Current yield is calculated by dividing the net investment
income per share earned during a recent 30-day period by the maximum offering
price per share of the Fund on the last day of the period and annualizing the
resulting figure. Yield will fluctuate from time to time and is not
necessarily representative of future results. Advertisements and
communications to present or prospective shareholders may also cite a total
return for any period. Total return will be calculated by subtracting the net
asset value of a single purchase of shares at a given date from the net asset
value of those shares (assuming reinvestment of distributions) on a subsequent
date. The difference divided by the original net asset value is the total
return. The calculation of the Fund's total return reflects the effect of
compounding inasmuch as all dividends and distributions are assumed to be
reinvested in additional shares of the Fund at net asset value. The Fund may
quote total return for the period prior to commencement of operations which
would reflect the Portfolio's total return (and that of its predecessor). If
the fees or expenses of the Fund or the Portfolio are waived or reimbursed,
the Fund's performance will be higher. Information about the performance of
the Fund or other investments should not be considered a representation of
future Fund performance.
ORGANIZATION OF THE FUND AND THE PORTFOLIO
The Fund is organized as a business trust established under Massachusetts law
pursuant to a Declaration of Trust dated February, 19, 1998, as amended, and
is registered under the 1940 Act. The Trustees of the Fund are responsible for
the overall management and supervision of its affairs. The Fund currently has
one class of shares of beneficial interest which may be issued in an unlimited
number by the Trustees. Each share represents an equal proportionate
beneficial interest in the Fund and, when issued and outstanding, the shares
are fully paid and nonassessable by the Fund and may be repurchased only as
described under "Fund Repurchase Offers". There are no annual meetings of
shareholders, but special meetings may be held as required by law to elect or
remove Trustees and consider certain other matters. Shareholders are entitled
to one vote for each full share held. Fractional shares may be voted
proportionately. Shares have no preemptive or conversion rights and are freely
transferable. In the event of liquidation of the Fund, shareholders are
entitled to share pro rata in the net assets of the Fund available for
distribution to shareholders.
The Fund's Declaration of Trust may not be amended without the affirmative
vote of a majority of the outstanding shares of the Fund (or such greater vote
as is described below under "Anti-Takeover Provisions"), except that the
Declaration of Trust may be amended by the Trustees to change the name of the
Fund, to make such other changes as do not have a materially adverse effect on
the rights or interests of shareholders and to conform the Declaration of
Trust to applicable federal laws or regulations. The Fund may be terminated
(i) upon the merger or consolidation with or sale of the Fund's assets to
another company, if approved by the holders of two-thirds of the outstanding
shares of the Fund, except that if the Trustees recommend such transaction,
the approval by vote of the holders of a majority of the outstanding shares
will be sufficient, or (ii) upon liquidation and distribution of the assets of
the Fund, if approved by the holders of two-thirds of the Fund's outstanding
shares, except that if the Trustees recommend such transaction, the approval
by vote of the holders of a majority of the outstanding shares will be
sufficient. If not so terminated, the Fund may continue indefinitely.
ANTI-TAKEOVER PROVISIONS. The Fund presently has certain anti-takeover
provisions in its Declaration of Trust which are intended to limit, and could
have the effect of limiting, the ability of other entities or persons to
acquire control of the Fund, to cause it to engage in certain transactions or
to modify its structure. As indicated above, a two-thirds vote is required for
certain transactions. The affirmative vote or consent of the holders of two-
thirds of the shares of the Fund (a greater vote than that required by the
1940 Act and, in some cases, greater than the required vote applicable to
business corporations under state law) is required to authorize the conversion
of the Fund from a closed-end to an open-end investment company (except that
if the Trustees recommend such conversion, the approval by vote of the holders
of a majority of the outstanding shares will be sufficient) and the
affirmative vote or consent of the holders of three-quarters of the shares of
the Fund is required to authorize any of the following transactions (the
"Transactions"): (i) merger or consolidation of the Fund with or into any
corporation; (ii) issuance of any securities of the Fund to any person or
entity for cash; (iii) sale, lease or exchange of all or any substantial part
of the assets of the Fund to any entity or person (except assets having an
aggregate fair market value of less than $1,000,000 or assets sold in the
ordinary course of business); or (iv) sale, lease or exchange to the Fund, in
exchange for securities of the Fund, of any assets of any entity or person
(except assets having an aggregate fair market value of less than $1,000,000)
if such corporation, person or entity is directly, or indirectly through
affiliates, the beneficial owner of 5% or more of the outstanding shares of
the Fund. However, such vote or consent will not be required with respect to
the Transactions if the Board of Trustees under certain conditions approves
the Transaction. Further, the provisions of the Fund's Declaration of Trust
relating to conversion of the Fund to an open-end investment company, the
Transactions, the merger or consolidation with or sale of the Fund's assets,
and the liquidation and distribution of the Fund's assets may not be amended
without the affirmative vote or consent of two-thirds of the outstanding
shares of the Fund. Reference is made to the Declaration of Trust of the Fund,
on file with the SEC, for the full text of these provisions.
The foregoing provisions will make more difficult the conversion of the Fund
to an open-end investment company and the consummation of the Transactions
without the Trustees' approval, and could have the effect of depriving
shareholders of an opportunity to sell their shares at a premium over
prevailing market prices, in the event that a secondary market for the Fund
shares does develop, by discouraging a third party from seeking to obtain
control of the Fund in a tender offer or similar transaction. However, the
Board of Trustees has considered these anti-takeover provisions and believes
that they are in the shareholders' best interests and benefit shareholders by
providing the advantage of potentially requiring persons seeking control of
the Fund to negotiate with its management regarding the price to be paid.
MASTER-FEEDER STRUCTURE. The Trustees of the Fund 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, and may afford the potential for economies of
scale for the Fund. The other investors in the Portfolio will affect its
liquidity, and, therefore, could reduce the amount of the Fund's repurchase
offers.
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 investment companies 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 may invest in the Portfolio. Such differences in
returns are also present in other fund structures, including mutual funds that
have multiple classes of shares. Information regarding other pooled investment
entities or funds which invest in the Portfolio may be obtained by contacting
the Principal Underwriter.
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 Senior Loans
and noncash assets (as opposed to a cash distribution from the Portfolio). If
Senior Loans and noncash assets are distributed, the Fund could incur
brokerage, tax or other charges in converting them to cash. In addition, the
distribution in kind may result in a less diversified portfolio of investments
and will adversely affect the liquidity of the Fund.
In the event the Fund withdraws all of its assets from the Portfolio, or the
Board of Trustees of the Fund 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 of its assets (or the assets of another investor in the
Portfolio) from the Portfolio.
MANAGEMENT OF THE FUND AND THE PORTFOLIO
The Portfolio engages BMR, a wholly-owned subsidiary of Eaton Vance, to act as
its investment adviser under an Investment Advisory Agreement (the "Advisory
Agreement"). Under the general supervision of the Portfolio's Board of
Trustees, BMR will carry out the investment and reinvestment of the assets of
the Portfolio, will furnish continuously an investment program with respect to
the Portfolio, will determine which securities should be purchased, sold or
exchanged, and will implement such determinations. BMR will furnish to the
Portfolio investment advice and office facilities, equipment and personnel for
servicing the investments of the Portfolio. BMR will compensate all Trustees
and officers of the Portfolio who are members of the BMR organization and who
render investment services to the Portfolio, and will also compensate all
other BMR personnel who provide research and investment services to the
Portfolio. In return for these services, facilities and payments, the
Portfolio has agreed to pay BMR as compensation under the Advisory Agreement a
monthly fee in the amount of 19/240 of 1% (equivalent to 0.95% annually) of
the average daily gross assets of the Portfolio. Gross assets of the Portfolio
shall be calculated by deducting all liabilities of the Portfolio except the
principal amount of any indebtedness for money borrowed, including debt
securities issued by the Portfolio.
The Trustees of the Portfolio have voted to accept a waiver of BMR's
compensation so that the aggregate advisory fees paid by the Portfolio under
the Advisory Agreement during any fiscal year or portion thereof after the
Fund begins to invest its assets in the Portfolio will not exceed on an
annual basis: (a) 0.95% of average daily gross assets of the Portfolio up to
and including $1 billion; (b) 0.90% of average daily gross assets in excess of
$1 billion up to and including $2 billion; and (c) 0.85% of average daily
gross assets in excess of $2 billion. The Portfolio paid BMR advisory fees
equivalent to 0.89% of the Portfolio's average daily gross assets for the
fiscal year ended December 31, 1997.
Eaton Vance, its affiliates and predecessor companies have been managing
assets of individuals and institutions since 1924 and managing investment
companies since 1931. BMR or Eaton Vance currently serves as the investment
adviser to investment companies and various individual and institutional
clients with combined assets under management of approximately $ billion, of
which approximately $ billion is in investment companies, including over $
billion in the Portfolio and an investment company that invests primarily in
Senior Loans. 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.
Scott H. Page and Payson F. Swaffield have acted as co-portfolio managers of
the Portfolio since August 1, 1996. Mr. Page has been a Vice President of
Eaton Vance and BMR since 1992 and an employee of Eaton Vance since 1989. Mr.
Swaffield has been a Vice President of Eaton Vance and BMR since 1992 and an
employee of Eaton Vance since 1990.
The Fund, the Portfolio and BMR have adopted Codes of Ethics relating to
personal securities transactions. The Codes permit Eaton Vance personnel to
invest in securities (including securities that may be purchased or held by
the Portfolio) for their own accounts, subject to certain pre-clearance,
reporting and other restrictions and procedures contained in such Codes.
The Fund has engaged Eaton Vance to act as its administrator under an
Administration Agreement (the "Administration Agreement"). Under the
Administration Agreement, Eaton Vance is responsible for managing the business
affairs of the Fund, subject to the supervision of the Fund's Board of
Trustees. Eaton Vance will furnish to the Fund all office facilities,
equipment and personnel for administering the affairs of the Fund. Eaton Vance
will compensate all Trustees and officers of the Fund who are members of the
Eaton Vance organization and who render executive and administrative services
to the Fund, and will also compensate all other Eaton Vance personnel who
perform management and administrative services for the Fund. Eaton Vance's
administrative services include recordkeeping, preparation and filing of
documents required to comply with federal and state securities laws,
supervising the activities of the Fund's custodian and transfer agent,
providing assistance in connection with the Trustees' and shareholders'
meetings, providing services in connection with quarterly repurchase offers
and other administrative services necessary to conduct the Fund's business. In
return for these services, facilities and payments, the Fund is authorized to
pay Eaton Vance as compensation under the Administration Agreement a monthly
fee in the amount of 1/48 of 1% (equivalent to 0.25% annually) of the average
daily gross assets of the Portfolio attributable to the Fund. The Trustees of
the Fund have initially implemented the Administration Agreement by
authorizing the Fund to pay Eaton Vance a monthly fee in the amount of 1/80
of 1% (equivalent to 0.15% annually) of the average daily gross assets of the
Portfolio attributable to the Fund. There is no intention to increase such
fees in the current fiscal year. In calculating the gross assets of the
Portfolio, all liabilities of the Portfolio shall be deducted except the
principal amount of any indebtedness for money borrowed, including debt
securities issued by the Portfolio.
Like most investment companies, the Fund and the Portfolio rely on computers
in conducting daily business and processing information. There is a concern
that on January 1, 2000 some computer programs will be unable to recognize the
new year and as a consequence computer malfunctions will occur. The
Administrator is taking steps that it believes are reasonably designed to
address this potential problem and to obtain satisfactory assurance from other
service providers to the Fund and Portfolio that they are also taking steps to
address the issue. There can, however, be no assurance that these steps will
be sufficient to avoid any adverse impact on the Fund, the Portfolio or
shareholders.
The Portfolio and the Fund, as the case may be, will each be responsible for
all of its respective costs and expenses not expressly stated to be payable by
BMR under the Advisory Agreement, by Eaton Vance under the Administration
Agreement or by the Principal Underwriter under its Distribution Agreement.
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). The Fund's net asset value per
share is determined by the Fund's custodian, Investors Bank & Trust Company
("IBT") (as agent for the Fund) in the manner authorized by the Trustees of
the Fund. The Fund will be closed for business and will not price its 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. Net asset value is computed by dividing
the value of the Fund's total assets, less its liabilities by the number of
shares outstanding. Because the Fund invests its assets in an interest in the
Portfolio, the Fund's net asset value will reflect the value of its interest
in the Portfolio (which, in turn, reflects the underlying value of the
Portfolio's assets and liabilities).
The Portfolio's net asset value is also determined as of the close of regular
trading on the Exchange by IBT (as custodian and agent for the Portfolio) in
the manner authorized by the Trustees of the Portfolio. Net asset value is
computed by determining the value of the Portfolio's total assets (the loans
and securities it holds plus any cash or other assets, including interest
accrued but not yet received), and subtracting all of the Portfolio's
liabilities (including the outstanding principal amount of any indebtedness
issued and any unpaid interest thereon).
Because Senior Loans are not actively traded in a public market, BMR,
following procedures established by the Portfolio's Trustees, will value the
Senior Loans held by the Portfolio at fair value. In valuing a Senior Loan,
BMR will consider relevant factors, data, and information, including: (i) the
characteristics of and fundamental analytical data relating to the Senior
Loan, including the cost, size, current interest rate, period until next
interest rate reset, maturity and base lending rate of the Senior Loan, the
terms and conditions of the Loan and any related agreements, and the position
of the Loan in the Borrower's debt structure; (ii) the nature, adequacy and
value of the collateral, including the Portfolio's rights, remedies and
interests with respect to the collateral; (iii) the creditworthiness of the
Borrower, based on an evaluation of its financial condition, financial
statements and information about the Borrower's business, cash flows, capital
structure and future prospects; (iv) information relating to the market for
the Senior Loan, including price quotations (if considered reliable) for and
trading in the Senior Loan and interests in similar Senior Loans and the
market environment and investor attitudes towards the Senior Loan and
interests in similar Senior Loans; (v) the reputation and financial condition
of the Agent and any intermediate participants in the Senior Loan; and (vi)
general economic and market conditions affecting the fair value of the Senior
Loan.
HOW TO BUY SHARES
The Fund is engaged in a continuous public offering of its shares at net asset
value without an initial sales charge. The Fund does not currently intend to
list its shares on any national securities exchange. 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
certain financial service firms who have sales agreements with the Principal
Underwriter ("Authorized Firms") and bank employees who refer customers to
registered representatives of Authorized Firms; to officers and employees of
IBT and the Transfer Agent; and to such persons' spouses and children under
the age of 21 and their beneficial accounts. Shares may also be sold to
investors making an investment as part of a fixed fee program whereby an
entity unaffiliated with BMR provides multiple investment services, such as
management, brokerage and custody; and 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; and to 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.
From time to time the Fund may suspend the continuous offering of its shares.
During any such suspension, shareholders who reinvest their distributions in
additional shares will be permitted to continue such reinvestments, and the
Fund may permit tax sheltered retirement plans which own shares to purchase
additional shares of the Fund. The Fund may also refuse any order for the
purchase of shares.
The Fund's shares may be made available through financial service firms who
have a service agreement with the Fund, which are also Authorized Firms. The
Fund has approved the acceptance of purchase and repurchase request orders
effective as of the time of their receipt by certain authorized financial
intermediaries.
Investors may purchase shares of the Fund through Authorized Firms at the net
asset value per share of the Fund next determined after an order is effective.
Pursuant to its Distribution Agreement with the Principal Underwriter, the
Fund has authorized the Principal Underwriter to distribute its shares on a
"best efforts" basis through Authorized Firms. An Authorized Firm may charge
its customers a fee in connection with transactions executed by that Firm.
An initial investment in the Fund must be at least $5,000 ($2,000 in the case
of Individual Retirement Accounts). Once an account has been established, the
investor may send investments of $50 or more at any time directly to the
Fund's Transfer Agent as follows: First Data Investor Services Group, P.O. Box
5123, Westborough, MA 01581-5123. See "Eaton Vance Shareholder Services".
The Principal Underwriter may also, from time to time, at its own expense,
provide cash incentives to Authorized Firms which employ registered
representatives who sell a minimum dollar amount of the Fund's shares and/or
shares of other funds distributed by the Principal Underwriter. Upon NASD
approval, the Principal Underwriter may provide non-cash incentives to
Authorized Firms.
The Portfolio will limit its investments to those which are eligible for
purchase by national banks for their own portfolios. The conditions and
restrictions governing the purchase of Fund shares by national banks are set
forth in the U.S. Comptroller of the Currency's Banking Circular 220. Subject
to such conditions and restrictions, national banks may acquire Fund shares
for their own investment portfolio.
USE OF PROCEEDS. As of the date of this Prospectus, the net proceeds from the
sale of the Fund's shares currently outstanding were approximately $36.3
million, all of which was invested in the Portfolio. Proceeds from the
continuous offering of Fund shares will be used to increase the Fund's
interest in the Portfolio. Pending investment in Senior Loans, the proceeds
will be held by the Portfolio in cash or invested in investment grade short-
term debt obligations.
FUND REPURCHASE OFFERS
As a matter of fundamental policy which cannot be changed without shareholder
approval, the Fund is required in the months of JANUARY, APRIL, JULY and
OCTOBER to offer to repurchase at least 5% and up to 25% of its shares. Under
normal market conditions, the Trustees expect to authorize a 25% offer. (The
Fund may also make a discretionary repurchase offer once every two years but
has no current intention to do so.) The repurchase price will be the net asset
value determined not more than 14 days following the repurchase request
deadline and payment for all shares repurchased pursuant to these offers will
be made not later than 7 days after the repurchase pricing date. Under normal
circumstances, it is expected that net asset value will be determined on the
repurchase request deadline and payment for shares tendered will be made
within 3 business days after such deadline. During the period the offer to
repurchase is open shareholders may obtain the current net asset value by
calling 1-800-225-6265, option 2 (fund #532).
At least 21 days prior to the repurchase request deadline the Fund will mail
written notice to each shareholder setting forth the number of shares the Fund
will repurchase, the repurchase request deadline and other terms of the offer
to repurchase, and the procedures for shareholders to follow to request a
repurchase. THE REPURCHASE REQUEST DEADLINE WILL BE STRICTLY OBSERVED.
Shareholders and financial intermediaries failing to submit repurchase
requests in good order by such deadline will be unable to liquidate shares
until a subsequent repurchase offer.
If more shares are tendered for repurchase than the Fund has offered to
repurchase, the Board may, but is not obligated, to increase the number of
shares to be repurchased by 2% of the Fund shares outstanding; if there are
still more shares tendered than are offered for repurchase, shares will be
repurchased on a pro-rata basis. Thus, shareholders may be unable to liquidate
all or a given percentage of their shares and some shareholders may tender
more shares than they wish to have repurchased in order to ensure repurchase
of at least a specific number of shares. Shareholders may withdraw shares
tendered for repurchase at any time prior to the repurchase request deadline.
Repurchase offers and the need to fund repurchase obligations may affect the
ability of the Portfolio to be fully invested, which may reduce returns.
Moreover, diminution in the size of the Portfolio through repurchases without
offsetting new sales may result in untimely sales of portfolio securities and
a higher expense ratio, and may limit the ability of the Portfolio to
participate in new investment opportunities. Repurchases resulting in
portfolio turnover will result in additional expenses being borne by the
Portfolio. The Portfolio may borrow to meet repurchase obligations which
entails certain risks and costs. See "Borrowings and Leverage". The Portfolio
may also sell portfolio securities to meet repurchase obligations which, in
certain circumstances, may adversely affect the market for Senior Loans and
reduce the Fund's value.
The Fund may suspend or postpone a repurchase offer only: (A) if making or
effecting the repurchase offer would cause the Fund to lose its status as a
regulated investment company under the Internal Revenue Code; (B) for any
period during which the Exchange or any market in which the securities owned
by the Portfolio are principally traded is closed, other than customary
weekend and holiday closings, or during which trading in such market is
restricted; (C) for any period during which an emergency exists as a result of
which disposal by the Portfolio of securities owned by it is not reasonably
practicable, or during which it is not reasonably practicable for the
Portfolio or Fund fairly to determine the value of its net assets; or (D) for
such other periods as the SEC may by order permit for the protection of
shareholders of the Fund.
EXCHANGES: The Fund makes available to shareholders who are submitting shares
for repurchase the privilege of exchanging Fund shares for Class A shares of
one or more open-end investment companies in the Eaton Vance Group of Funds,
Eaton Vance Cash Management Fund, Eaton Vance Income Fund of Boston or Eaton
Vance Tax Free Reserves. Any such exchange will be made on the basis of the
net asset value per share of each fund at the time of exchange. Exchange
offers are available only in states where shares of the fund acquired may
legally be sold. Shares of certain other funds advised or administered by
Eaton Vance may be exchanged for shares of the Fund at net asset value per
share, but subject to any restrictions or qualifications set forth in the
current prospectus of any such fund. For the purposes of calculating the early
withdrawal or contingent deferred sales charge applicable to shares acquired
in an exchange, the schedule of charges, if any, applicable to the shares at
the time of purchase will apply and the purchase of shares is deemed to have
occurred at the time of the original purchase of the exchanged shares.
The Fund may implement an automatic exchange program whereby shareholders can
elect to have a fixed amount invested in another Eaton Vance Fund quarterly.
Such investments would be subject to the Fund's repurchase offer limitations,
but shareholders would not be required to submit a repurchase offer request
each quarter.
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. 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. An exchange may result in a taxable gain or loss.
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.
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 FUND'S RECORDS.
This account is a complete record of all transactions which at all times shows
the balance of shares owned. Shares are held in non-certificated form by the
Fund's Transfer Agent for the account of the shareholder. The Fund will not
issue share certificates except upon request.
At least quarterly, shareholders will receive a statement showing complete
details of any transaction and the current share balance in the account. THE
LIFETIME INVESTING ACCOUNT ALSO PERMITS A SHAREHOLDER TO MAKE ADDITIONAL
INVESTMENTS IN SHARES BY SENDING A CHECK FOR $50 OR MORE to the Transfer
Agent.
Any questions concerning a shareholder's account or services available may be
directed by telephone to EATON VANCE SHAREHOLDER SERVICES at 800-225-6265,
extension 2, or in writing to the Transfer Agent, First Data Investor Services
Group, P.O. Box 5123, Westborough, MA 01581-5123 (please provide the name of
the shareholder, the Fund and the account number).
THE FOLLOWING DISTRIBUTION OPTIONS WILL BE AVAILABLE TO ALL LIFETIME INVESTING
ACCOUNTS and may be changed as often as desired by written notice to the
Fund's dividend disbursing agent, First Data Investor Services Group, P.O. Box
5123, Westborough, MA 01581-5123. The currently effective option will appear
on each account statement.
SHARE OPTION -- Dividends and capital gains will be reinvested in additional
shares.
INCOME OPTION -- Dividends will be paid in cash and capital gains will be
reinvested in additional shares.
CASH OPTION -- Dividends and capital gains will be paid in cash.
The SHARE OPTION will be assigned if no other option is specified.
Distributions, including those reinvested, will be reduced by any withholding
required under 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 repurchase 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.
EATON VANCE SHAREHOLDER SERVICES
THE FUND OFFERS THE FOLLOWING SERVICES, WHICH ARE VOLUNTARY, INVOLVE NO EXTRA
CHARGE, AND MAY BE CHANGED OR DISCONTINUED WITHOUT PENALTY AT ANY TIME. Full
information on each of the services described below and an application, where
required, is available from Authorized Firms or the Principal Underwriter. The
cost of administering such services for the benefit of shareholders who
participate in them is borne by the Fund as an expense to all shareholders.
INVEST-BY-MAIL -- FOR PERIODIC SHARE ACCUMULATION: Once the $5,000 minimum
investment has been made, checks of $50 or more payable to the order of Eaton
Vance Advisers Senior Floating-Rate Fund may be mailed directly to the
Transfer Agent, First Data Investor Services Group, P.O. Box 5123,
Westborough, MA 01581-5123 at any time -- whether or not distributions are
reinvested. The name of the shareholder, the Fund and the account number
should accompany each investment.
BANK AUTOMATED INVESTING -- FOR REGULAR SHARE ACCUMULATION: Once the $5,000
minimum investment has been made, cash investments of $50 or more may be made
automatically each month or quarter from the shareholder's bank account.
TAX-SHELTERED RETIREMENT PLANS: Shares of the Fund are available for purchase
in connection with certain tax-sheltered retirement plans. Detailed
information concerning these plans, including certain exceptions to minimum
investment requirements, and copies of the plans are available from the
Principal Underwriter. This information should be read carefully and
consultation with an attorney or tax adviser may be advisable. The information
sets forth the service fee charged for retirement plans and describes the
federal income tax consequences of establishing a plan. Participant accounting
services (including trust fund reconciliation services) will be offered only
through third party recordkeepers and not by the Principal Underwriter. Under
all plans, distributions will be automatically reinvested in additional
shares.
DISTRIBUTIONS AND TAXES
The Fund declares daily and distributes monthly substantially all of its
investment company taxable income (consisting generally of taxable net
investment income and net short-term capital gain, if any) and distributes
annually net capital gain, if any (usually in December). Daily distribution
crediting will commence on the business day after collected funds for the
purchase of Fund shares are available at the Transfer Agent, even if orders to
purchase shares had been placed with Authorized Firms. Investors who purchase
shares shortly before the record date of a capital gain distribution will pay
the full price for the shares and then receive some portion of the price back
as a taxable distribution. The Fund's distributions will not qualify for the
dividends-received deduction for corporations. The Fund expects distributions
to consist primarily of investment company taxable income which is taxable to
shareholders as ordinary income, whether paid in cash or additional shares of
the Fund. Certain distributions paid in January will be taxable to
shareholders as if received on December 31 of the prior year.
The repurchase of Fund shares 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. An exchange of
shares of the Fund for shares of another Eaton Vance fund generally will have
similar tax consequences. Different tax consequences may apply for tendering
and nontendering shareholders in connection with a repurchase offer, and these
consequences will be disclosed in the related offering documents. For example,
it is possible that repurchases not treated as an exchange for federal income
tax purposes might result in different tax characterizations of the
distributions to tendering shareholders and in deemed distributions to non-
tendering shareholders.
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%.
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.
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
Page Page
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<S> <C> <C> <C>
Additional Information about Investment Policies 2 Custodian 11
Investment Restrictions 4 Transfer and Dividend Paying Agent and Registrar 11
Trustees and Officers 5 Performance Information 11
Control Persons and Principal Holders of Shares 7 Other Information 12
Investment Advisory and Other Services 7 Auditors 13
Determination of Net Asset Value 9 Financial Statements 14
Portfolio Trading 9 Appendix A: Corporate Bond Ratings A-1
Taxes 10
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</TABLE>
<PAGE>
[LOGO] Investing
for the
EATON VANCE 21st
============ Century
- --------------------------------------------------------------------------------
Eaton Vance
Advisers Senior
Floating-Rate
Fund
Prospectus
November 2, 1998
- --------------------------------------------------------------------------------
Investment Adviser of Senior Debt Portfolio
Boston Management and Research, 24 Federal Street, Boston, MA 02110
Administrator of Eaton Vance Advisers Senior Floating-Rate 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
Auditors
Deloitte & Touche LLP, 125 Summer Street, Boston, MA 02110
ASFRP
<PAGE>
STATEMENT OF
ADDITIONAL INFORMATION
November 2, 1998
EATON VANCE ADVISERS SENIOR
FLOATING-RATE FUND
24 Federal Street
Boston, Massachusetts 02110
(800) 225-6265
- ------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
Additional Information about Investment Policies ................... 2
Investment Restrictions ............................................ 4
Trustees and Officers .............................................. 5
Control Persons and Principal Holders of Shares .................... 7
Investment Advisory and Other Services ............................. 7
Determination of Net Asset Value ................................... 9
Portfolio Trading .................................................. 9
Taxes .............................................................. 10
Custodian .......................................................... 11
Transfer and Dividend Paying Agent and Registrar ................... 11
Performance Information ............................................ 11
Other Information .................................................. 12
Auditors ........................................................... 13
Financial Statements ............................................... 14
Appendix A: Ratings of Corporate Bonds ............................. a-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 PROSPECTUS OF EATON VANCE ADVISERS SENIOR FLOATING-RATE
FUND (THE "FUND") DATED NOVEMBER 2, 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 THE FUND'S PRINCIPAL
UNDERWRITER, EATON VANCE DISTRIBUTORS, INC. (SEE BACK COVER FOR ADDRESS AND
PHONE NUMBER).
<PAGE>
Capitalized terms used in this Statement of Additional Information and not
otherwise defined have the meanings given them in the Fund's Prospectus.
ADDITIONAL INFORMATION ABOUT INVESTMENT POLICIES
Lending Fees. In the process of buying, selling and holding Senior Loans the
Portfolio may receive and/or pay certain fees. These fees are in addition to
interest payments received and may include facility fees, commitment fees,
commissions and prepayment penalty fees. When the Portfolio buys a Senior Loan
it may receive a facility fee and when it sells a Senior Loan it may pay a
facility fee. On an ongoing basis, the Portfolio may receive a commitment fee
based on the undrawn portion of the underlying line of credit portion of a
Senior Loan. In certain circumstances, the Portfolio may receive a prepayment
penalty fee upon the prepayment of a Senior Loan by a Borrower. Other fees
received by the Portfolio may include covenant waiver fees and covenant
modification fees.
Borrower Covenants. A Borrower must comply with various restrictive covenants
contained in a loan agreement or note purchase agreement between the Borrower
and the Lender or lending syndicate (the "Loan Agreement"). Such covenants,
in addition to requiring the scheduled payment of interest and principal, may
include restrictions on dividend payments and other distributions to
stockholders, provisions requiring the Borrower to maintain specific minimum
financial ratios, and limits on total debt. In addition, the Loan Agreement
may contain a covenant requiring the Borrower to prepay the Loan with any free
cash flow. Free cash flow is generally defined as net cash flow after
scheduled debt service payments and permitted capital expenditures, and
includes the proceeds from asset dispositions or sales of securities. A breach
of a covenant which is not waived by the Agent, or by the lenders directly, as
the case may be, is normally an event of acceleration; i.e., the Agent, or the
lenders directly, as the case may be, has the right to call the outstanding
Senior Loan. The typical practice of an Agent or a Lender in relying
exclusively or primarily on reports from the Borrower may involve a risk of
fraud by the Borrower. In the case of a Senior Loan in the form of a
Participation, the agreement between the buyer and seller may limit the rights
of the holder to vote on certain changes which may be made to the Loan
Agreement, such as waiving a breach of a covenant. However, the holder of the
Participation will, in almost all cases, have the right to vote on certain
fundamental issues such as changes in principal amount, payment dates and
interest rate.
Administration of Loans. In a typical Senior Loan the Agent administers the
terms of the Loan Agreement. In such cases, the Agent is normally responsible
for the collection of principal and interest payments from the Borrower and
the apportionment of these payments to the credit of all institutions which
are parties to the Loan Agreement. The Portfolio will generally rely upon the
Agent or an intermediate participant to receive and forward to the Portfolio
its portion of the principal and interest payments on the Senior Loan.
Furthermore, unless under the terms of a Participation Agreement the Portfolio
has direct recourse against the Borrower, the Portfolio will rely on the Agent
and the other members of the lending syndicate to use appropriate credit
remedies against the Borrower. The Agent is typically responsible for
monitoring compliance with covenants contained in the Loan Agreement based
upon reports prepared by the Borrower. The seller of the Senior Loan usually
does, but is often not obligated to, notify holders of Senior Loans of any
failures of compliance. The Agent may monitor the value of the collateral and,
if the value of the collateral declines, may accelerate the Senior Loan, may
give the Borrower an opportunity to provide additional collateral or may seek
other protection for the benefit of the participants in the Senior Loan. The
Agent is compensated by the Borrower for providing these services under a Loan
Agreement, and such compensation may include special fees paid upon
structuring and funding the Senior Loan and other fees paid on a continuing
basis. With respect to Senior Loans for which the Agent does not perform such
administrative and enforcement functions, the Portfolio will perform such
tasks on its own behalf, although a collateral bank will typically hold any
collateral on behalf of the Portfolio and the other lenders pursuant to the
applicable Loan Agreement.
A financial institution's appointment as Agent may usually be terminated
in the event that it fails to observe the requisite standard of care or
becomes insolvent, enters Federal Deposit Insurance Corporation ("FDIC")
receivership, or, if not FDIC insured, enters into bankruptcy proceedings. A
successor Agent would generally be appointed to replace the terminated Agent,
and assets held by the Agent under the Loan Agreement should remain available
to holders of Senior Loans. However, if assets held by the Agent for the
benefit of the Portfolio were determined to be subject to the claims of the
Agent's general creditors, the Portfolio might incur certain costs and delays
in realizing payment on a Senior Loan, or suffer a loss of principal and/or
interest. In situations involving intermediate participants similar risks may
arise.
Prepayments. Senior Loans will usually require, in addition to scheduled
payments of interest and principal, the prepayment of the Senior Loan from
free cash flow, as defined above. The degree to which Borrowers prepay Senior
Loans, whether as a contractual requirement or at their election, may be
affected by general business conditions, the financial condition of the
Borrower and competitive conditions among lenders, among others. As such,
prepayments cannot be predicted with accuracy. Upon a prepayment, either in
part or in full, the actual outstanding debt on which the Portfolio derives
interest income will be reduced. However, the Portfolio may receive both a
prepayment penalty fee from the prepaying Borrower and a facility fee upon the
purchase of a new Senior Loan with the proceeds from the prepayment of the
former. Prepayments generally will not materially affect the Fund's
performance because the Portfolio should be able to reinvest prepayments in
other Senior Loans that have similar or identical yields and because receipt
of such fees may mitigate any adverse impact on the Fund's yield.
Other Information Regarding Senior Loans. From time to time BMR and its
affiliates may borrow money from various banks in connection with their
business activities. Such banks may also sell interests in Senior Loans to or
acquire them from the Portfolio or may be intermediate participants with
respect to Senior Loans in which the Portfolio owns interests. Such banks may
also act as Agents for Senior Loans held by the Portfolio.
The Portfolio may acquire interests in Senior Loans which are designed to
provide temporary or "bridge" financing to a Borrower pending the sale of
identified assets or the arrangement of longer-term loans or the issuance and
sale of debt obligations. The Portfolio may also invest in Senior Loans of
Borrowers who have obtained bridge loans from other parties. A Borrower's use
of bridge loans involves a risk that the Borrower may be unable to locate
permanent financing to replace the bridge loan, which may impair the
Borrower's perceived creditworthiness.
To the extent that collateral consists of the stock of the Borrower's
subsidiaries or other affiliates, the Portfolio will be subject to the risk
that this stock will decline in value. Such a decline, whether as a result of
bankruptcy proceedings or otherwise, could cause the Senior Loan to be
undercollateralized or unsecured. In most credit agreements there is no formal
requirement to pledge additional collateral. In addition, the Portfolio may
invest in Senior Loans guaranteed by, or fully secured by assets of,
shareholders or owners, even if the Senior Loans are not otherwise
collateralized by assets of the Borrower; provided, however, that such
guarantees are fully secured. There may be temporary periods when the
principal asset held by a Borrower is the stock of a related company, which
may not legally be pledged to secure a Senior Loan. On occasions when such
stock cannot be pledged, the Senior Loan will be temporarily unsecured until
the stock can be pledged or is exchanged for or replaced by other assets,
which will be pledged as security for the Senior Loan. However, the Borrower's
ability to dispose of such securities, other than in connection with such
pledge or replacement, will be strictly limited for the protection of the
holders of Senior Loans and, indirectly, Senior Loans.
If a Borrower becomes involved in bankruptcy proceedings, a court may
invalidate the Portfolio's security interest in the loan collateral or
subordinate the Portfolio's rights under the Senior Loan to the interests of
the Borrower's unsecured creditors. Such action by a court could be based, for
example, on a "fraudulent conveyance" claim to the effect that the Borrower
did not receive fair consideration for granting the security interest in the
loan collateral to the Portfolio. For Senior Loans made in connection with a
highly leveraged transaction, consideration for granting a security interest
may be deemed inadequate if the proceeds of the Loan were not received or
retained by the Borrower, but were instead paid to other persons (such as
shareholders of the Borrower) in an amount which left the Borrower insolvent
or without sufficient working capital. There are also other events, such as
the failure to perfect a security interest due to faulty documentation or
faulty official filings, which could lead to the invalidation of the
Portfolio's security interest in loan collateral. If the Portfolio's security
interest in loan collateral is invalidated or the Senior Loan is subordinated
to other debt of a Borrower in bankruptcy or other proceedings, it is unlikely
that the Portfolio would be able to recover the full amount of the principal
and interest due on the Loan.
Interest Rate Swaps. The Portfolio may enter into interest rate swaps on
either an asset-based or liability-based basis, depending on whether it is
hedging its assets or its liabilities. For example, if the Portfolio holds a
Senior Loan with an interest rate that is reset only once each year, it may
swap the right to receive interest at this fixed rate for the right to receive
interest at a rate that is reset daily. Such a swap position would offset
changes in the value of the Senior Loan because of subsequent changes in
interest rates. This would protect the Portfolio from a decline in the value
of the Senior Loan due to rising interest rates, but would also limit its
ability to benefit from falling interest rates.
The Portfolio will enter into interest rate swaps only on a net basis,
i.e., the two payment streams are netted out, with the Portfolio receiving or
paying, as the case may be, only the net amount of the two payments. Inasmuch
as these transactions are entered into for good faith hedging purposes and
because a segregated account will be used, the Portfolio will not treat them
as being subject to the Portfolio's borrowing restrictions. The net amount of
the excess, if any, of the Portfolio's obligations over its entitlements with
respect to each interest rate swap will be accrued on a daily basis and an
amount of cash or liquid securities having an aggregate net asset value at
least equal to the accrued excess will be maintained in a segregated account
by the Portfolio's custodian. The Portfolio will not enter into any interest
rate 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 BMR. 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.
The Portfolio may enter into interest rate swaps only with respect to
positions held in its portfolio. Interest rate swaps do not involve the
delivery of securities or other underlying assets or principal. Accordingly,
the risk of loss with respect to interest rate swaps is limited to the net
amount of interest payments that the Portfolio is contractually obligated to
make or receive. Since interest rate swaps are individually negotiated, the
Portfolio expects to achieve an acceptable degree of correlation between its
rights to receive interest on Senior Loans and its rights and obligations to
receive and pay interest pursuant to interest rate swaps.
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 Statement of Additional Information means the lesser of (a) 67%
of the shares of the Fund present or represented by proxy at a meeting if the
holders of more than 50% of the shares are present or represented at the
meeting or (b) more than 50% of the shares of the Fund. As a matter of
fundamental policy the Fund may not:
(1) Borrow money, except as permitted by the Investment Company Act of
1940;
(2) Issue senior securities, as defined in the Investment Company Act of
1940, other than (i) preferred shares which immediately after issuance will
have asset coverage of at least 200%, (ii) indebtedness which immediately
after issuance will have asset coverage of at least 300%, or (iii) the
borrowings permitted by investment restriction (1) above;
(3) Purchase securities on margin (but the Fund may obtain such short-term
credits as may be necessary for the clearance of purchases and sales of
securities). The purchase of loan interests, securities or other investment
assets with the proceeds of a permitted borrowing or securities offering will
not be deemed to be the purchase of securities on margin;
(4) 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 investment;
(5) Make loans to other persons, except by (a) the acquisition of loan
interests, debt securities and other obligations in which the Fund is
authorized to invest in accordance with its investment objective and policies,
(b) entering into repurchase agreements, and (c) lending its portfolio
securities;
(6) Purchase any security if, as a result of such purchase, more than 25%
of the Fund's total assets (taken at current value) would be invested in the
securities of Borrowers and other issuers having their principal business
activities in the same industry (the electric, gas, water and telephone
utility industries, commercial banks, thrift institutions and finance
companies 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;
(7) Purchase or sell real estate, although it may purchase and sell
securities which are secured by interests in real estate and securities of
issuers which invest or deal in real estate. The Fund reserves the freedom of
action to hold and to sell real estate acquired as a result of the ownership
of securities; or
(8) Purchase or sell physical commodities or contracts for the purchase or
sale of physical commodities. Physical commodities do not include futures
contracts with respect to securities, securities indices or other financial
instruments.
The Fund has no present intention of engaging in options or futures
transactions or of issuing preferred shares.
For the purpose of investment restriction (6), the Fund will consider all
relevant factors in determining who is the issuer of the loan interest,
including: the credit quality of the Borrower, the amount and quality of the
collateral, the terms of the Loan Agreement and other relevant agreements
(including inter-creditor agreements), the degree to which the credit of such
interpositioned person was deemed material to the decision to purchase the
loan interest, the interest rate environment, and general economic conditions
applicable to the Borrower and such interpositioned person. In addition, with
respect to restriction (6) above, the Fund will construe the phrase "more than
25%" to be "25% or more".
The Fund, as a matter of fundamental policy which may not be changed
without a vote of a majority of its outstanding voting securities and in
accord with the provisions of Rule 23c-3 (as amended from time to time) under
the 1940 Act, shall make repurchase offers for its common shares of beneficial
interest at periodic intervals of three months between repurchase request
deadlines, such deadlines to be dates in the months of January, April, July
and October determined by the Board of Trustees with the repurchase pricing
date and time being not later than the close of business fourteen days after
the repurchase request deadline (or the next business day if the 14th day is
not a business day).
The Portfolio, as a matter of fundamental policy which may not be changed
without a vote of a majority of its outstanding voting securities and in
accord with the provisions of Rule 23c-3 (as amended from time to time) under
the 1940 Act, shall make repurchase offers for its interests at periodic
intervals of three months to each holder of its interests between repurchase
request deadlines, such deadlines to be dates determined by the Board of
Trustees in the months when each such holder conducts its periodic repurchases
with the repurchase pricing date and time being not later than the close of
business fourteen days after the repurchase request deadline (or the next
business day if the 14th day is not a business day).
Notwithstanding the investment policies and restrictions of the Fund, the
Fund may invest its investable assets in another management investment company
(a Portfolio) with substantially the same investment objective, policies and
restrictions as the Fund.
The Portfolio has adopted substantially the same fundamental investment
restrictions as the foregoing investment restrictions adopted by the Fund;
such restrictions cannot be changed without the approval of a "majority of the
outstanding voting securities" of the Portfolio.
The Fund and the Portfolio have each adopted the following nonfundamental
investment policy which may be changed with respect to the Fund by the
Trustees of the Fund without approval by the Fund's shareholders or may be
changed with respect to the Portfolio by the Trustees of the Portfolio without
the approval of the Fund or the Portfolio's other investors. As a matter of
nonfundamental policy, neither the Fund nor the Portfolio may make short sales
of securities or maintain a short position, unless at all times when a short
position is open it either owns an equal amount of such securities or owns
securities convertible into or exchangeable, without payment of any further
consideration, for securities of the same issue as, and equal in amount to,
the securities sold short.
Whenever an investment policy or investment restriction set forth in the
Prospectus or this Statement of Additional Information states a maximum
percentage of assets that may be invested in any security or other asset or
describes a policy regarding quality standards, such percentage limitation or
standard shall be determined immediately after and as a result of the Fund's
or the Portfolio's acquisition of such security or asset. Accordingly, any
later increase or decrease resulting from a change in values, assets or other
circumstances will not compel the Fund or the Portfolio, as the case may be,
to dispose of such security or other asset. Notwithstanding the foregoing,
under normal market conditions the Fund and the Portfolio must take actions
necessary to comply with the policy of investing at least 80% of total assets
in interests in Loans. 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 Fund 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. Those Trustees who are "interested persons" of the Fund
or the Portfolio as defined in the 1940 Act, are indicated by an asterisk(*).
TRUSTEES OF THE FUND AND THE PORTFOLIO
JAMES B. HAWKES (57), President and Trustee*
Chairman, President and Chief Executive Officer of BMR, Eaton Vance and their
corporate parent and trustee (EVC and EV); and Director of EVC and EV.
Trustee and officer of various investment companies managed by Eaton Vance
or BMR.
DONALD R. DWIGHT (67), Trustee
President of Dwight Partners, Inc. (a corporate relations and communications
company). Trustee of various investment companies managed by Eaton Vance or
BMR.
Address: Clover Mill Lane, Lyme, New Hampshire 03768
SAMUEL L. HAYES, III (63), Trustee
Jacob H. Schiff Professor of Investment Banking Emeritus, Harvard University
Graduate School of Business Administration. Trustee of the Kobrick-Cendant
Investment Trust (mutual funds). Trustee of various investment companies
managed by Eaton Vance or BMR.
Address: 345 Nahatan Road, Westwood, Massachusetts 02090
NORTON H. REAMER (63), Trustee
Chairman of the Board and Chief Executive Officer, United Asset Management
Corporation (a holding company owning institutional investment management
firms); Chairman, President and Director of UAM Funds (mutual funds).
Trustee of various investment companies managed by Eaton Vance or BMR.
Address: One International Place, Boston, Massachusetts 02110
JOHN L. THORNDIKE (72), Trustee
Former Director of Fiduciary Company Incorporated. Trustee of various
investment companies managed by Eaton Vance or BMR.
Address: 175 Federal Street, Boston, Massachusetts 02110
JACK L. TREYNOR (68), Trustee
Investment Adviser and Consultant. Trustee of various investment companies
managed by Eaton Vance or BMR.
Address: 504 Via Almar, Palos Verdes Estates, California 90274
OFFICERS OF THE FUND AND THE PORTFOLIO
SCOTT H. PAGE (38), Vice President
Vice President of BMR and Eaton Vance. Officer of various investment companies
managed by Eaton Vance or BMR.
PAYSON F. SWAFFIELD (42), Vice President
Vice President of BMR and Eaton Vance. Officer of various investment companies
managed by Eaton Vance or BMR.
JAMES L. O'CONNOR (53), Treasurer
Vice President of BMR and Eaton Vance. Officer of various investment companies
managed by Eaton Vance or BMR.
ALAN R. DYNNER (58), Secretary
Vice President and Chief Legal Officer of BMR, Eaton Vance and EVC 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.
JANET E. SANDERS (62), Assistant Treasurer and Assistant Secretary
Vice President of BMR and Eaton Vance. Officer of various investment companies
managed by Eaton Vance or BMR.
A. JOHN MURPHY (35), Assistant Secretary
Assistant Vice President of BMR and Eaton Vance. Officer of various investment
companies managed by Eaton Vance or BMR.
ERIC G. WOODBURY (41), Assistant Secretary
Vice President of BMR and Eaton Vance. Officer of various investment companies
managed by Eaton Vance or BMR.
Messrs. Hayes (Chairman), Reamer and Thorndike are members of the Special
Committee of the Board of Trustees of the Fund 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 Fund 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 Fund and of the Portfolio. The Audit
Committee's functions include making recommendations to the Trustees regarding
the selection of the independent certified public accountants, and reviewing
matters relative to trading and brokerage policies and practices, accounting
and auditing practices and procedures, accounting records, internal accounting
controls, and the functions performed by the custodian, transfer agent and
dividend disbursing agent of the Fund 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 Fund has a
retirement plan for its Trustees.
Each interested Trustee and officer holds comparable positions with
certain affiliates of BMR or with certain other funds of which BMR or Eaton
Vance is the investment adviser or distributor.
The fees and expenses of the noninterested Trustees of the Fund and of the
Portfolio are paid by the Fund and the Portfolio, respectively. (The Trustees
of the Fund and the Portfolio who are members of the Eaton Vance organization
receive no compensation from the Fund or the Portfolio). During the fiscal
year ended December 31, 1997, the noninterested Trustees of the Portfolio
earned the compensation set forth below in their capacities as Trustees from
the Portfolio, and the funds in the Eaton Vance fund complex(1). It is
estimated that the noninterested Trustees will receive from the Fund the
amounts set forth below for the fiscal year ending December 31, 1998.
ESTIMATED AGGREGATE TOTAL COMPENSATION
COMPENSATION COMPENSATION FROM FUND AND
NAME FROM FUND FROM PORTFOLIO FUND COMPLEX
---------------- ---------------- ----------------------
Donald R. Dwight .... $2,466 $5,994(2) $145,000(5)
Samuel L. Hayes, III 2,466 5,963(3) 155,000(6)
Norton H. Reamer .... 2,466 5,684 145,000
John L. Thorndike ... 2,466 5,910(4) 145,000(7)
Jack L. Treynor ..... 2,466 6,277 150,000
- ------------
(1) As of January 1, 1998 the Eaton Vance fund complex consists of 159
registered investment companies or series thereof.
(2) Includes $2,651 of deferred compensation.
(3) Includes $2,051 of deferred compensation.
(4) Includes $5,910 of deferred compensation.
(5) Includes $45,000 of deferred compensation.
(6) Includes $38,750 of deferred compensation.
(7) Includes $107,925 of deferred compensation.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SHARES
As of September 30, 1998 the Profit Sharing Retirement Plan of Eaton Vance
Management was the record owner of 6.4% of the outstanding voting shares of
the Fund. Eaton Vance is a Massachusetts business trust and a wholly-owned
subsidiary of Eaton Vance Corp. To the knowledge of the Fund, no other person
owned of record or beneficially 5% or more of the Fund's outstanding voting
securities.
INVESTMENT ADVISORY AND OTHER SERVICES
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 $28 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.
For the period from the start of business, February 22, 1995, to the year
ended December 31, 1995, the Portfolio paid BMR advisory fees aggregating
$8,544,646, which was equal to 0.94% (annualized) of the Portfolio's average
daily gross assets for such period. For the fiscal year ended December 31,
1996, the Portfolio paid BMR advisory fees aggregating $21,643,760 which was
equal to 0.91% of the Portfolio's average daily gross assets. For the fiscal
year ended December 31, 1997, the Portfolio paid BMR advisory fees aggregating
$31,751,900 which was equal to 0.89% of the Portfolio's average daily gross
assets. As at December 31, 1997, the gross assets of the Portfolio were
$4,035,071,925. BMR's fee waiver described in the Prospectus is indefinite,
but could be removed or changed upon agreement of BMR and the Portfolio's
Board of Trustees at any time.
The Portfolio and the Fund, as the case may be, will each be responsible
for all of its respective costs and expenses not expressly stated to be
payable by BMR under the Advisory Agreement with the Portfolio, by Eaton Vance
under the Administration Agreement with the Fund or by the Principal
Underwriter under its Distribution Agreement with the Fund. 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 reports to shareholders and investors,
proxy statements and other expenses of shareholders' or investors' meetings;
insurance premiums; printing and mailing expenses; interest, taxes and
corporate fees; legal and accounting expenses; compensation and expenses of
Trustees not affiliated with BMR or Eaton Vance; expenses of conducting
repurchase offers for the purpose of repurchasing Portfolio interests or Fund
shares; and investment advisory and administration fees. The Portfolio and
the Fund 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.
The Portfolio's 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 the Portfolio cast in person at a
meeting specifically called for the purpose of voting on such approval and
(ii) by the Trustees of the Portfolio or by vote of a majority of the
outstanding interests of the Portfolio. The Fund's Administration Agreement
continues in effect from year to year so long as such continuance is approved
at least annually by the vote of a majority of the Fund's Trustees. Each
agreement may be terminated at any time without penalty on sixty (60) days'
written notice by the Trustees of the Fund or the Portfolio, as the case may
be, BMR or Eaton Vance, as applicable, or by vote of the majority of the
outstanding shares of the Fund or interests of 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 willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations or duties to the Fund or the Portfolio under such agreements on
the part of Eaton Vance or BMR, as applicable, Eaton Vance or BMR will not be
liable to the Fund or the Portfolio, as applicable, for any loss incurred, to
the extent not covered by insurance.
BMR and Eaton Vance are business trusts organized under Massachusetts law.
Eaton Vance, Inc. ("EV") serves as trustee of BMR and Eaton Vance. BMR, Eaton
Vance and EV are wholly-owned subsidiaries of Eaton Vance Corporation ("EVC"),
a Maryland corporation and publicly-held holding company. EVC through its
subsidiaries and affiliates engages primarily in investment management,
administration and marketing activities. The Directors of EVC are M. Dozier
Gardner, James B. Hawkes, Benjamin A. Rowland, Jr., John G.L. Cabot, John M.
Nelson, Vincent M. O'Reilly and Ralph Z. Sorenson. All of the issued and
outstanding shares of Eaton Vance 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 indicated under
"Trustees and Officers", all of the officers of the Fund (as well as Mr.
Hawkes who is also a Trustee) hold positions in the Eaton Vance organization.
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.
DETERMINATION OF NET ASSET VALUE
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 (which would be made
pursuant to Portfolio repurchase offers) 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 the
fraction (i) the numerator of which is the value of such investor's investment
in the Portfolio as of the Portfolio Valuation Time on the prior Portfolio
Business Day plus or minus, as the case may be, the amount of any additions to
or withdrawals from the investor's investment in the Portfolio on the current
Portfolio Business Day and (ii) the denominator of which is the aggregate net
asset value of the Portfolio as of the Portfolio Valuation Time on the prior
Portfolio Business Day plus or minus, as the case may be, the amount of the
net additions to or withdrawals from the aggregate investment in the Portfolio
on the current Portfolio Business Day by all investors in the Portfolio. The
percentage so determined will then be applied to determine the value of the
investor's interest in the Portfolio for the current Portfolio Business Day.
Non-Loan Portfolio holdings (other than short term obligations, but
including listed issues) may be valued on the basis of prices furnished by one
or more pricing services which determine prices for normal, institutional-size
trading units of such securities using market information, transactions for
comparable securities and various relationships between securities which are
generally recognized by institutional traders. In certain circumstances,
portfolio securities will be valued at the last sale price on the exchange
that is the primary market for such securities, or the average of the last
quoted bid price and asked price for those securities for which the over-the-
counter market is the primary market or for listed securities in which there
were no sales during the day. The value of interest rate swaps will be
determined in accordance with a discounted present value formula and then
confirmed by obtaining a bank quotation.
Short-term obligations which mature in 60 days or less are valued at
amortized cost, if their original term to maturity when acquired by the
Portfolio was 60 days or less, or are valued at amortized cost using their
value on the 61st day prior to maturity, if their original term to maturity
when acquired by the Portfolio was more than 60 days, unless in each case this
is determined not to represent fair value. Repurchase agreements will be
valued by the Portfolio at cost plus accrued interest. Securities for which
there exist no price quotations or valuations and all other assets are valued
at fair value as determined in good faith by or on behalf of the Trustees of
the Portfolio.
PORTFOLIO TRADING
Specific decisions to purchase or sell securities for the Portfolio are
made by employees of BMR who are appointed and supervised by its senior
officers. Such employees may serve other clients of BMR in a similar capacity.
Changes in the Portfolio's investments are reviewed by the Board.
The Portfolio will acquire Senior Loans from major international banks,
selected domestic regional banks, insurance companies, finance companies and
other financial institutions. In selecting financial institutions from which
Senior Loans may be acquired, BMR will consider, among other factors, the
financial strength, professional ability, level of service and research
capability of the institution. While these financial institutions are
generally not required to repurchase Senior Loans which they have sold, they
may act as principal or on an agency basis in connection with their sale by
the Portfolio.
Other fixed-income obligations which may be purchased and sold by the
Portfolio are generally traded in the over-the-counter market on a net basis
(i.e., without commission) through broker-dealers or banks acting for their
own account rather than as brokers, or otherwise involve transactions directly
with the issuers of such obligations. The Portfolio may also purchase fixed-
income and other securities from underwriters, the cost of which may include
undisclosed fees and concessions to the underwriters. While it is anticipated
that the Portfolio will not pay significant brokerage commissions, on occasion
it may be necessary or desirable to purchase or sell a security through a
broker on an agency basis, in which case the Portfolio will incur a brokerage
commission. Although spreads or commissions on portfolio transactions will, in
the judgment of BMR, be reasonable in relation to the value of the services
provided, spreads or commissions exceeding those which another firm might
charge may be paid to firms who were selected to execute transactions on
behalf of the Portfolio and BMR's other clients for providing brokerage and
research services to BMR. The Portfolio paid no brokerage commissions during
its last three fiscal years.
The frequency of portfolio purchases and sales, known as the "turnover
rate," will vary from year to year. The Portfolio's turnover rate for the
fiscal years ended December 31, 1996 and 1997 were 75% and 81%, respectively.
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.
TAXES
The Fund is treated as a separate corporation, and intends to qualify each
year as a Regulated Investment Company ("RIC"), under the Internal Revenue
Code of 1986, as amended (the "Code") to avoid federal income tax.
Accordingly, the Fund intends to satisfy certain requirements relating to
sources of its income and diversification of its assets and to distribute a
sufficient amount of its investment company taxable income so as to effect
such qualification. The Fund may also distribute part or all of its net
investment income and net realized capital gains in accordance with the timing
requirements imposed by the Code, so as to reduce or avoid any federal income
or excise tax to the Fund.
Because the Fund invests its assets in the Portfolio, the Portfolio
normally must satisfy the applicable source of income and diversification
requirements in order for the Fund to satisfy them, and the Portfolio intends
to do so. For federal income tax purposes, the Portfolio intends to be treated
as a partnership that is not a "publicly traded partnership" and, as a result,
will not be subject to federal income tax. The Fund, as an investor in the
Portfolio, will be required to take into account in determining its federal
income tax liability its share of the Portfolio's income, gains, losses,
deductions, and credits, without regard to whether it has received any cash
distributions from the Portfolio.
The Portfolio will allocate at least annually among its investors,
including the Fund, each investor's distributive share of the Portfolio's net
investment income, net realized capital gains, and any other items of income,
gain, loss, deduction or credit. 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 federal excise tax, the Code requires the Fund to
distribute by the end of each calendar year substantially all of its ordinary
income and capital gain net income for such year, plus certain other amounts.
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.
The federal income tax rules governing the taxation of interest rate swaps
are not entirely clear and may require the Fund to treat payments received by
the Portfolio under such arrangements as ordinary income and to amortize such
payments under certain circumstances. The Portfolio will limit its activity in
this regard in order to enable the Fund to maintain its qualification as a
RIC.
Certain investments of the Portfolio may bear original issue discount or
market discount for tax purposes. The Fund will be required to include in
income each year a portion of such original issue discount and may elect to
include in income each year a portion of such market discount. The Portfolio
may have to dispose of investments that it would otherwise have continued to
hold to provide cash to enable the Fund to satisfy its distribution
requirements with respect to such income.
Distributions of net capital gain are taxable to shareholders as long-term
capital gain, 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. Long-term capital gain is separated into different tax rate
groups depending on the length of time the asset is held by the Fund prior to
sale.
CUSTODIAN
IBT acts as custodian for the Fund and the Portfolio. IBT has the custody
of all cash and securities representing the Fund's interest in the Portfolio,
has custody of all the Portfolio's assets, maintains the general ledger of the
Fund and the Portfolio, and computes the daily net asset value of interests in
the Portfolio and the net asset value of shares of the Fund. In its capacity
as custodian, IBT attends to details in connection with the sale, exchange,
substitution, transfer or other dealings with the Portfolio's investments,
receives and disburses all funds and performs various other ministerial duties
upon receipt of proper instructions from the Fund and the Portfolio. IBT also
provides services in connection with the preparation of shareholder reports
and the electronic filing of such reports with the SEC.
TRANSFER AND DIVIDEND PAYING AGENT AND REGISTRAR
First Data Investor Services Group serves with respect to the shares as
transfer and dividend paying agent and as registrar. The principal business
address of First Data Investor Services Group, 4400 Computer Drive,
Westborough, MA 01581-5120.
PERFORMANCE INFORMATION
The Fund's current yield for the one-month period ended June 30, 1998 was
6.97%. Yields will fluctuate from time to time and are not necessarily
representative of future results.
Total return prior to the Fund's commencement of operations reflects the
Portfolio's total return (and that of its predecessor) and has not been
adjusted to reflect the Fund's operating expenses. If such adjustments were
made, performance would have been higher. Past performance is no guarantee of
future results. Investment return and principal value will fluctuate and
shares, when redeemed, may be worth more or less than their original cost.
The table below indicates the cumulative and average annual total return
on a hypothetical investment of $1,000 in shares for the periods shown in the
table.
VALUE OF A $1,000 INVESTMENT
<TABLE>
<CAPTION>
VALUE OF
INVESTMENT INVESTMENT AMOUNT OF INVESTMENT TOTAL RETURN
PERIOD DATE INVESTMENT ON 6/30/98 CUMULATIVE ANNUALIZED
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Life of the Fund 8/4/89 $1,000 $1,848.15 84.82% 7.14%
5 Years Ended 6/30/98 6/30/93 $1,000 $1,386.98 38.70% 6.76%
1 Year Ended 6/30/98 6/30/97 $1,000 $1,067.15 6.72% 6.72%
</TABLE>
Comparative information about the Fund's current yield, net asset value
and total return, about the Prime Rate, Federal Funds Rate and LIBOR may also
be included in advertisements and communications of the Fund.
From time to time, advertisements and other material furnished to present
and prospective shareholders may include information on the history of the
Fund's net asset value per share. From inception through June 30, 1998, net
asset value per share remained at $10.00. Such materials may include
illustrations such as the following chart:
Principal Performance
as of June 30, 1998
Advisers Senior Floating Rate NAV history
Mar-98 10
10
10
Jun-98 10
Chart shows the Fund's month-end net asset value per share for the life of the
Fund since its inception (3/20/98 to 6/30/98). Past performance is no
guarantee of future results.
- -------------
Advertisements and communications about the Fund may include a comparison
of loan interests and other corporate debt instruments. These may describe the
credit agreements used in connection with loan interests. Moreover, the
markets for loan interests may be described. The comparison may also be made
to relevant indices.
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.
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. 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.
BMR was one of the first investment management firms to manage a portfolio
of Senior Loans. BMR has former commercial bank lending officers and
investment bank corporate finance officers dedicated to this investment
discipline. The services of leading law and accounting firms are used in the
research, analysis and management process.
The Fund (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.
OTHER INFORMATION
The Fund is an organization of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, shareholders of such a trust may,
under certain circumstances, be held personally liable as partners for the
obligations of the trust. The Fund's Declaration of Trust, as amended,
contains an express disclaimer of shareholder liability in connection with the
Fund property or the acts, obligations or affairs of the Fund. The Declaration
of Trust also provides for indemnification out of the Fund property of any
shareholder held personally liable for the claims and liabilities to which a
shareholder may become subject by reason of being or having been a
shareholder. Thus, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which the Fund
itself is unable to meet its obligations. The Fund has been advised by its
counsel that the risk of any shareholder incurring any liability for the
obligations of the Fund is remote.
The Fund's Declaration of Trust provides that the Trustees will not be
liable for errors of judgment or mistakes of fact or law; but nothing in the
Declaration of Trust protects a Trustee against any liability to the Fund or
its shareholders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office. Voting rights are not cumulative, which
means that the holders of more than 50% of the shares voting for the election
of Trustees can elect 100% of the Trustees and, in such event, the holders of
the remaining less than 50% of the shares voting on the matter will not be
able to elect any Trustees. As permitted by Massachusetts law, there will
normally be no meetings of Fund shareholders 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 shareholders. In such an event, the
Trustees of the Fund then in office will call a shareholders' meeting for the
election of Trustees. Except for the foregoing circumstances, the Trustees
shall continue to hold office and may appoint successor Trustees.
The Fund'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 Fund's
custodian or by votes cast at a meeting called for that purpose. The by-laws
further provide that the Trustees of the Fund shall promptly call a meeting of
the shareholders for the purpose of voting upon a question of removal of any
such Trustee or Trustees when requested in writing so to do by the record
holders of not less than 10 per centum of the outstanding shares.
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, as amended, 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
Fund 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 Fund's Prospectus and Statement of Additional Information do not
contain all of the information set forth in the Registration Statement that
the Fund has filed with the SEC. The complete Registration Statement may be
obtained from the SEC upon payment of the fee prescribed by its Rules and
Regulations.
AUDITORS
Deloitte & Touche LLP, 125 Summer Street, 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 SEC.
FINANCIAL STATEMENTS
The audited financial statements of, and the independent auditors' report
for, the Fund and the Portfolio appear herein. The unaudited financial
statements of the Fund, the audited financial statements of, and the
independent auditors' report for the Portfolio appear in the Fund's most
recent semiannual report to shareholders, which is incorporated by reference
into this Statement of Additional Information. A copy of the semiannual report
accompanies this Statement of Additional Information.
Registrant incorporates by reference the unaudited information for the
Fund and the audited information for the Portfolio for the six-months ended
June 30, 1998 (Accession No. 0000950156-98-000608).
<PAGE>
EATON VANCE ADVISERS SENIOR FLOATING-RATE FUND
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 20, 1998
ASSETS:
Cash ......................................................... $100,000
Deferred organization and initial offering expenses .......... 150,000
--------
Total assets ............................................. $250,000
--------
LIABILITIES:
Organization expenses accrued ................................ $ 8,000
Initial offering expenses accrued ............................ 142,000
--------
Total Liabilities ........................................ $150,000
--------
NET ASSETS applicable to 10,000 common shares of
beneficial interest issued and outstanding ..................... $100,000
========
NET ASSET VALUE AND REPURCHASE PRICE PER SHARE..................... $10.00
======
NOTE TO FINANCIAL STATEMENT
Eaton Vance Advisers Senior Floating-Rate Fund was formed under a
Declaration of Trust dated February 19, 1998 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
10,000 shares of its beneficial interest to Eaton Vance Management, the Fund's
administrator. The deferred organization and initial offering expenses,
including federal and state registration and qualification fees, are estimated
to amount to $250,000. These expenses will be deferred and amortized over a
period not to exceed five years beginning on the date of the Fund's initial
public offering of its shares. The amount paid by the Fund on any repurchase
during the amortization period of any of the initial 10,000 common shares will
be reduced by a pro rata portion of any unamortized organization and initial
offering expenses. Such proration is to be calculated by dividing the number of
initial shares repurchased by the number of initial shares outstanding at the
time of purchase.
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Trustees and Shareholders of
Eaton Vance Advisers Senior Floating-Rate Fund:
We have audited the accompanying statement of assets and liabilities of
Eaton Vance Advisers Senior Floating-Rate Fund as of February 20, 1998. This
financial statement is the responsibility of the Fund's management. Our
responsibility is to express an opinion on the financial statement based on our
audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of Eaton Vance
Advisers Senior Floating-Rate Fund as of February 20, 1998, in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
February 23, 1998
<PAGE>
<TABLE>
Senior Debt Portfolio as of December 31, 1997
PORTFOLIO OF INVESTMENTS
(Expressed in United States Dollars)
Senior, Secured, Floating-Rate
Interests -- 90.6%
<CAPTION>
Principal
Amount Borrower/Business Description Value
- --------------------------------------------------------------------------------------
Aerospace/Defense -- 2.1%
- --------------------------------------------------------------------------------------
<S> <C> <C>
Aerostructures Corporation
$ 888,889 Revolving loan, maturing March 29, 2002 $ 888,889
6,944,444 Term loan, maturing March 29, 2002 6,944,444
8,652,381 Term loan, maturing September 30, 2003 8,652,381
3,146,320 Term loan, maturing September 30, 2004 3,146,320
Designs, manufactures, and assembles structural
aircraft components
Fairchild Holdings Corporation
0 Revolving loan, maturing July 28, 2000 0
Manufactures fasteners for the aerospace industry
K & F Industries, Inc.
15,860,409 Term loan, maturing October 15, 2005 15,860,409
Manufacturers aircraft braking systems
Mag Aerospace Industries, Inc.
4,743,234 Term loan, maturing December 6, 2003 4,743,234
Manufactures toilet systems for the aerospace
industry
Shared Technologies Fairchild Communications Corp.
3,400,000 Term loan, maturing March 30, 2001 3,400,000
Aerospace and specialty fasteners, and plastics
industry tooling systems
SWM Holdings, Inc.
5,000,000 Term loan, maturing May 27, 2005 5,000,000
Operator of ship yards
TransTechnology Corporation
0 Revolving loan, maturing December 31, 2000 0
1,163,105 Term loan, maturing December 31, 2000 1,163,105
7,200,000 Term loan, maturing June 30, 2002 7,200,000
Aerospace and specialty fasteners, rescue winches,
and hoists
Tri-Star Inc.
9,900,000 Term loan, maturing September 30, 2003 9,900,000
Distributor of aerospace fasteners
United Defense Industries, Inc.
9,197,101 Term loan, maturing October 6, 2005 9,197,101
8,924,493 Term loan, maturing October 6, 2005 8,924,493
Supplier of armored combat vehicles and weapons
systems
- --------------------------------------------------------------------------------------
$ 85,020,376
- --------------------------------------------------------------------------------------
Airlines -- 0.5%
- --------------------------------------------------------------------------------------
Continental Airlines, Inc.
$20,219,786 Term loan, maturing December 31, 2006 $ 20,219,786
Air carrier
- --------------------------------------------------------------------------------------
$ 20,219,786
- --------------------------------------------------------------------------------------
Automotive -- 3.2%
- --------------------------------------------------------------------------------------
American Axle & Manufacturing, Inc.
$29,000,000 Term loan, maturing April 30, 2006 $ 29,000,000
Develops and manufactures automotive parts
Breed Technologies, Inc.
53,000,000 Term loan, maturing October 30, 1998 53,000,000
Develops, assembles and markets motor vehicle safety
restraint components
Cambridge Industries, Inc.
26,000,000 Term loan, maturing June 30, 2005 26,000,000
Original equipment manufacturer of plastic auto parts
Hayes Wheels International, Inc.
3,650,937 Term loan, maturing July 31, 2004 3,650,937
2,957,389 Term loan, maturing July 31, 2005 2,957,389
Producer of automotive brakes and wheels
Plas-Tech (Engineered) Products, Inc.
6,058,824 Term loan, maturing April 1, 2002 6,058,824
3,941,176 Term loan, maturing April 1, 2004 3,941,176
Manufactures thermoplastic parts for automobiles
Stanadyne Automotive Corp.
5,000,000 Term loan, maturing December 10, 2004 5,000,000
Auto and light truck fuel injection equipment
- --------------------------------------------------------------------------------------
$ 129,608,326
- --------------------------------------------------------------------------------------
Auto Parts -- 0.9%
- --------------------------------------------------------------------------------------
AAS Holdings, LLC
$ 4,061,535 Term loan, maturing October 30, 2004 $ 4,061,535
Designs and manufactures automotive rack systems &
accessories
Exide Corporation
8,400,000 Term loan, maturing March 18, 2005 8,400,000
Manufactures batteries for automobiles
Safelite Glass Corporation
9,250,000 Term loan, maturing December 17, 2004 9,250,000
9,250,000 Term loan, maturing December 17, 2005 9,250,000
Auto glass replacement and repair service provider
Schrader, Inc.
6,734,271 Term loan, maturing February 28, 2001 6,734,271
Produces tire valves, accessories, and pneumatic
connectors
- --------------------------------------------------------------------------------------
$ 37,695,806
- --------------------------------------------------------------------------------------
Beverages -- Soft Drink -- 0.6%
- --------------------------------------------------------------------------------------
Dr. Pepper Bottling Holdings, Inc.
$15,000,000 Term loan, maturing December 31, 2005 $ 15,000,000
Soft drink bottler
Select Beverages, Inc.
3,880,234 Term loan, maturing June 30, 2001 3,880,234
5,820,351 Term loan, maturing June 30, 2002 5,820,351
Soft drink bottler
- --------------------------------------------------------------------------------------
$ 24,700,585
- --------------------------------------------------------------------------------------
Broadcast Media -- 10.7%
- --------------------------------------------------------------------------------------
Benedek Broadcasting Corporation
$15,057,209 Term loan, maturing May 1, 2001 $ 15,057,209
7,051,479 Term loan, maturing November 1, 2002 7,051,479
1,702,635 Term loan, maturing December 31, 2004 1,702,635
797,365 Term loan, maturing December 31, 2004 797,365
Broadcast television operator
Chancellor Radio Broadcasting Company
144,420 Revolving loan, maturing June 26, 2004 144,420
4,000,000 Term loan, maturing June 26, 2004 4,000,000
10,341,160 Revolving loan, maturing June 30, 2005 10,341,160
53,571,429 Term loan, maturing June 30, 2005 53,571,429
Radio broadcasting
Charter Communications Enterprises I, L.P.
1,669,391 Revolving loan, maturing December 31, 2003 1,669,391
15,032,855 Term loan, maturing December 31, 2003 15,032,855
Cable television provider
Charter Communications Enterprises II, L.P.
14,000,000 Term loan, maturing March 31, 2005 14,000,000
4,000,000 Term loan, maturing March 31, 2006 4,000,000
Cable television provider
Chelsea Communications, Inc.
10,000,000 Term loan, maturing December 31, 2004 10,000,000
Cable television provider
Classic Cable, Inc.
4,258,519 Revolving loan, June 30, 2004 4,258,519
3,706,501 Term loan, maturing June 30, 2004 3,706,501
9,796,225 Term loan, maturing June 30, 2005 9,796,225
Cable television provider
Comcorp Broadcasting, Inc.
6,097,561 Term loan, maturing September 30, 2005 6,097,561
Radio broadcasting
Falcon Cable Media
21,824,000 Term loan, maturing July 12, 2005 21,824,000
Cable television provider
Frontiervision Operating Partners, L.P.
15,000,000 Term loan, maturing March 31, 2006 15,000,000
Cable television provider
Intermedia Partners IV, L.P.
26,000,000 Term loan, maturing January 1, 2005 26,000,000
Cable television provider
Jacor Communications Company
17,000,000 Term loan, maturing December 31, 2004 17,000,000
Radio broadcasting
Marcus Cable Operating Company, L.P.
12,005,561 Term loan, maturing December 31, 2002 12,005,561
34,562,500 Term loan, maturing April 30, 2004 34,562,500
Cable television provider
Optel, Inc.
5,000,000 Term loan, maturing May 31, 2004 5,000,000
Cable television provider
Sinclair Broadcasting Group, Inc.
40,068,000 Term loan, maturing December 31, 2004 40,068,000
Broadcast television operator
Sullivan Broadcasting Company, Inc.
8,362,456 Term loan, maturing December 31, 2000 8,362,456
2,000,000 Acquisition revolving loan, maturing December 31, 2003 2,000,000
643,617 Revolving loan, maturing December 31, 2003 643,617
23,910,167 Term loan, maturing December 31, 2003 23,910,167
Broadcast television operator
TCI Pacific, Inc.
11,428,571 Revolving loan, maturing September 30, 2004 11,428,571
47,500,000 Term loan, maturing December 31, 2004 47,500,000
Cable television provider
White Knight Broadcasting, Inc.
3,902,439 Term loan, maturing September 30, 2005 3,902,439
Radio broadcasting
- --------------------------------------------------------------------------------------
$ 430,434,060
- --------------------------------------------------------------------------------------
Building Materials -- 1.7%
- --------------------------------------------------------------------------------------
Dayton Superior Corporation
$10,000,000 Term loan, maturing September 29, 2005 $ 10,000,000
Manufacturer of concrete, masonry and paving
accessories
Falcon Building Products, Inc.
10,719,286 Term loan, maturing June 30, 2005 10,719,286
Manufactures and distributes air distribution
equipment, plumbing fixtures and air compressors.
National Gypsum Company
49,707,847 Term loan, maturing September 20, 2003 49,707,847
Produces gypsum wallboard
- --------------------------------------------------------------------------------------
$ 70,427,133
- --------------------------------------------------------------------------------------
Chemicals -- 3.1%
- --------------------------------------------------------------------------------------
DT Acquisition Inc.
$ 8,814,842 Term loan, maturing December 16, 1998 $ 8,814,842
Diversified chemical producer
GEO Specialty Chemicals, Inc.
4,975,000 Term loan, maturing March 25, 2004 4,975,000
Diversified chemical producer
Huntsman Corporation
9,900,000 Term loan, maturing September 30, 2003 9,900,000
21,037,500 Term loan, maturing December 31, 2004 21,037,500
7,500,000 Term loan, maturing December 31, 2005 7,500,000
Diversified chemical producer
Huntsman Specialty Chemicals Corporation
0 Revolving loan, maturing March 15, 2002 0
7,240,491 Term loan, maturing March 15, 2002 7,240,491
9,900,000 Term loan, maturing March 15, 2004 9,900,000
9,900,000 Term loan, maturing March 15, 2005 9,900,000
Diversified chemical producer
Rheox, Inc.
0 Revolver loan, maturing January 30, 2004 0
18,016,667 Term loan, maturing January 30, 2004 18,016,667
Diversified chemical producer
Sterling Pulp Chemicals (Sask) Ltd.
7,230,323 Term loan, maturing June 30, 2005 7,230,323
Diversified chemical producer
STX Chemicals Corp.
21,839,993 Term loan, maturing September 30, 2004 21,839,993
Petrochemicals and pulp chemicals
- --------------------------------------------------------------------------------------
$ 126,354,816
- --------------------------------------------------------------------------------------
Chemicals Specialty -- 0.3%
- --------------------------------------------------------------------------------------
Harris Specialty Chemicals, Inc.
$ 253,792 Term loan, maturing December 31, 1999 $ 253,792
1,952,719 Term loan, maturing December 31, 2001 1,952,719
3,554,093 Term loan, maturing December 31, 2002 3,554,093
Construction chemicals
NEN Life Sciences Products, Inc.
5,265,306 Term loan, maturing December 31, 2004 5,265,306
Manufactures and distributes biochemical and related
products
- --------------------------------------------------------------------------------------
$ 11,025,910
- --------------------------------------------------------------------------------------
Coal -- 0.3%
- --------------------------------------------------------------------------------------
Alliance Coal Corporation
$ 4,143,663 Term loan, maturing December 31, 2001 $ 4,143,663
6,588,538 Term loan, maturing December 31, 2002 6,588,538
Diversified producer and supplier of steam and
metallurgical coal
- --------------------------------------------------------------------------------------
$ 10,732,201
- --------------------------------------------------------------------------------------
Commercial Services -- 5.7%
- --------------------------------------------------------------------------------------
Advanstar Communications, Inc.
$ 88,456 Revolving loan, maturing June 30, 2001 $ 88,456
3,188,855 Term loan, maturing December 21, 2003 3,188,855
9,712,644 Term loan, maturing December 31, 2002 9,712,644
Trade publication and exposition management company
American Floral Services, Inc.
5,000,000 Term loan, maturing June 30, 2004 5,000,000
Flowers-by-wire service
Brand Scaffold Services, Inc.
2,962,500 Term loan, September 30, 2003 2,962,500
1,975,000 Term loan, September 30, 2004 1,975,000
Industrial scaffolding rental, erection and
dismantlement services
Caterair International Corporation
37,027,200 Term loan, maturing March 1, 2007 37,027,200
Food service to airlines
Erickson Air-Crane Co.
8,932,500 Term loan, maturing December 31, 2004 8,932,500
Provider of heavy-lift helicopter services
NBC Merger Sub, Inc.
7,400,000 Term loan, maturing August 31, 2003 7,400,000
Used college textbook wholesaler
Outsourcing Solutions, Corp.
24,275,209 Term loan, maturing October 15, 2003 24,275,209
Accounts receivable management services
Outdoor Systems, Inc.
15,000,000 Term loan, maturing June 30, 2004 15,000,000
Outdoor advertising company
Omni Services, Inc.
22,910,000 Term loan, maturing October 30, 2005 22,910,000
Workwear rental, laundry and washroom servicing
PSI Acquisition Corporation
17,000,000 Term loan, maturing September 30, 2003 17,000,000
Diversified consulting services
SC International Services, Inc.
20,827,800 Term loan, maturing March 1, 2007 20,827,800
Food service to airlines
Volume Services, Inc.
960,000 Revolving loan, maturing December 31, 2000 960,000
4,957,200 Term loan, maturing December 31, 2002 4,957,200
2,478,500 Term loan, maturing December 31, 2003 2,478,500
Provides food services for civic centers and sports
facilities
Young & Rubicam L.P.
43,728,750 Term loan, maturing March 31, 2003 43,728,750
Advertising, public relations, direct marketing,
sales development and design and health care
communications
- --------------------------------------------------------------------------------------
$ 228,424,614
- --------------------------------------------------------------------------------------
Communication Equipment -- 0.3%
- --------------------------------------------------------------------------------------
Communications & Power Industries, Inc.
$ 1,500,000 Term loan, maturing August 11, 2000 $ 1,500,000
5,533,333 Term loan, maturing August 12, 2002 5,533,333
Microwave, electronic, and radio frequency components
Telex Communications, Inc.
5,000,000 Term loan, maturing November 6, 2004 5,000,000
Supplier of brand name communications products
- --------------------------------------------------------------------------------------
$ 12,033,333
- --------------------------------------------------------------------------------------
Computer Software -- 1.3%
- --------------------------------------------------------------------------------------
Decisionone Corporation
$ 2,175,332 Revolving loan, maturing August 7, 2003 $ 2,175,332
16,900,000 Term loan, maturing August 7, 2003 16,900,000
35,411,250 Term loan, maturing August 7, 2005 35,411,250
Provider of multi-vendor computer maintenance and
technology support
- --------------------------------------------------------------------------------------
$ 54,486,582
- --------------------------------------------------------------------------------------
Computer Systems -- 0.6%
- --------------------------------------------------------------------------------------
Anacomp, Inc.
$ 9,305,682 Term loan, maturing February 28, 2001 $ 9,305,682
Produces micrographics systems
Genicom Corporation
13,415,625 Term loan, maturing December 5, 2004 13,415,625
Produces computer printers and supplies and provides
multi-vendor servicing
- --------------------------------------------------------------------------------------
$ 22,721,307
- --------------------------------------------------------------------------------------
Conglomerates -- 1.0%
- --------------------------------------------------------------------------------------
American Marketing Industries, Inc.
$ 1,305,000 Term loan, maturing August 31, 2001 $ 1,305,000
3,430,000 Term loan, maturing November 30, 2002 3,430,000
6,550,500 Term loan, maturing November 30, 2003 6,550,500
2,250,000 Term loan, maturing November 30, 2004 2,250,000
Manufacturer and distributor of corporate promotional
and incentive products
E & S Holdings
4,277,778 Term loan, maturing September 30, 2004 4,277,778
4,277,778 Term loan, maturing September 30, 2005 4,277,778
2,444,444 Term loan, maturing March 30, 2006 2,444,444
Sporting goods and infant products
Fenway Holdings, L.L.C.
4,742,465 Term loan, maturing September 15, 2002 4,742,465
Manufactures and distributes billiard tables, dart
machines, wood moldings, windows, doors, artificial
flowers, archery bows, and plastics.
Phase Metrics, Inc.
4,950,000 Term loan, maturing December 4, 2001 4,950,000
Designs and manufactures production test equipment
for the computer data storage industry
Smarte Carte Corporation
483,871 Term loan, maturing December 31, 2001 483,871
2,914,286 Term loan, maturing June 30, 2003 2,914,286
4,410,000 Term loan, maturing June 30, 2004 4,410,000
Airport baggage cart management and self storage
locker service
- --------------------------------------------------------------------------------------
$ 42,036,122
- --------------------------------------------------------------------------------------
Containers -- Metal & Glass -- 1.9%
- --------------------------------------------------------------------------------------
Calmar, Inc.
$ 5,868,750 Term loan, maturing September 15, 2003 $ 5,868,750
4,395,000 Term loan, maturing June 15, 2004 4,395,000
Plastic sprayers and dispensers
Reid Plastics, Inc.
9,971,683 Term loan, maturing November 12, 2003 9,971,683
7,500,000 Term loan, maturing November 12, 2004 7,500,000
Bottle manufacturer
Russell-Stanley Holdings, Inc.
14,000,000 Term loan, maturing September 30, 2005 14,000,000
Manufactures and markets steel and plastic drums
Silgan Corporation
27,362,500 Term loan, maturing June 30, 2005 27,362,500
Metal and plastic packaging products
Truseal Technologies, Inc.
7,477,500 Term loan, maturing July 1, 2004 7,477,500
Manufactures and distributes patented sealant
products
- --------------------------------------------------------------------------------------
$ 76,575,433
- --------------------------------------------------------------------------------------
Containers -- Paper -- 5.9%
- --------------------------------------------------------------------------------------
IPC, Inc.
$40,386,250 Term loan, maturing September 30, 2004 $ 40,386,250
Plastic and paper packaging products
Jefferson Smurfit Corporation
37,366,827 Term loan, maturing April 30, 2001 37,366,827
22,190,481 Term loan, maturing April 30, 2002 22,190,481
10,741,040 Term loan, maturing October 31, 2002 10,741,040
Liner board and other paper board products
RIC Holding, Inc.
7,092,309 Revolving loan, maturing February 28, 2003 7,092,309
15,038,657 Term loan, maturing February 28, 2003 15,038,657
10,483,390 Term loan, maturing February 28, 2004 10,483,390
4,154,270 Term loan, maturing August 28, 2004 4,154,270
Liner board, lumber and paper packaging products
St. Laurent Paper Products
3,876,289 Term loan, maturing May 31, 2003 3,876,289
4,123,711 Term loan, maturing May 31, 2004 4,123,711
Major U.S. producer of pulp and paper
Stone Container Corporation
32,645,498 Term loan, maturing April 1, 2000 32,645,498
38,414,645 Term loan, maturing October 1, 2003 38,414,645
Commodity pulp, paper and packaging products
Stronghaven, Inc.
9,401,724 Term loan, maturing May 31, 2004 9,401,724
1,830,657 Term loan, maturing May 15, 2004 1,830,657
Manufacturer of corrugated boxes
- --------------------------------------------------------------------------------------
$ 237,745,748
- --------------------------------------------------------------------------------------
Cosmetics -- 2.3%
- --------------------------------------------------------------------------------------
AM Cosmetics, Inc.
$ 974,359 Term loan, maturing June 30, 2003 $ 974,359
12,937,494 Term loan, maturing December 31, 2004 12,937,494
Cosmetics, skin and hair care, and perfume products
Mary Kay Cosmetics, Inc.
15,310,680 Term loan, maturing March 6, 2004 15,310,680
Cosmetics, skin and hair care, and perfume products
Revlon Consumer Products Corporation
62,000,000 Term loan, maturing May 29, 2002 62,000,000
Cosmetics, skin and hair care, and perfume products
- --------------------------------------------------------------------------------------
$ 91,222,533
- --------------------------------------------------------------------------------------
Electrical Equipment -- 0.5%
- --------------------------------------------------------------------------------------
Celestica International, Inc.
$ 8,415,000 Term loan, maturing June 30, 2003 $ 8,415,000
Produces memory and power systems
Chatham Enterprises Inc.
1,865,000 Term loan, maturing August 18, 2003 1,865,000
3,497,308 Term loan, maturing August 18, 2005 3,497,308
Producer of electronic enclosures
Viasystems, Inc.
3,963,636 Term loan, maturing April 30, 2003 3,963,636
2,400,000 Term loan, maturing April 30, 2003 2,400,000
Supplier of interconnection products
- --------------------------------------------------------------------------------------
$ 20,140,944
- --------------------------------------------------------------------------------------
Electronics -- Defense -- 0.4%
- --------------------------------------------------------------------------------------
L-3 Communications Corporation
$ 1,342,000 Term loan, maturing March 31, 2003 $ 1,342,000
2,483,333 Term loan, maturing March 31, 2005 2,483,333
1,633,500 Term loan, maturing March 31, 2006 1,633,500
Designs and manufactures secure communication systems
and instrumentation products
SPD Holdings, Inc.
911,650 Revolving loan, maturing June 30, 2002 911,650
1,095,209 Term loan, maturing June 30, 2002 1,095,209
7,487,972 Term loan, maturing June 30, 2004 7,487,972
Manufactures circuit breakers, switchgear and control
panels for warships
- --------------------------------------------------------------------------------------
$ 14,953,664
- --------------------------------------------------------------------------------------
Electronics -Instrumentation -- 1.1%
- --------------------------------------------------------------------------------------
Amphenol Corporation
$15,967,500 Term loan, maturing May 19, 2005 $ 15,967,500
15,673,125 Term loan, maturing May 19, 2006 15,673,125
Designs, manufactures and markets interconnect
systems and coaxial cable
Details, Inc.
5,000,000 Term loan, maturing October 27, 2003 5,000,000
1,000,000 Term loan, maturing October 27, 2004 1,000,000
Manufactures prototype printed circuit boards
Packard Bioscience Company
4,975,000 Term loan, maturing March 31, 2003 4,975,000
Manufacturer and distributor of bioanalytical
equipment
- --------------------------------------------------------------------------------------
$ 42,615,625
- --------------------------------------------------------------------------------------
Foods -- 2.7%
- --------------------------------------------------------------------------------------
Del Monte Corporation
$ 6,181,818 Term loan, maturing March 31, 2003 $ 6,181,818
12,750,000 Term loan, maturing March 31, 2005 12,750,000
Manufactures and markets canned vegetables and canned
fruit
Favorite Brands International, Inc.
2,587,780 Revolving loan, maturing August 30, 2001 2,587,780
7,359,389 Term loan, maturing August 30, 2003 7,359,389
12,418,131 Term loan, maturing August 30, 2004 12,418,131
3,396,664 Term loan, maturing February 28, 2005 3,396,664
Manufactures and markets marshmallows and caramels
International Home Foods, Inc.
146,667 Revolving loan, maturing March 31, 2003 146,667
2,016,542 Term loan, maturing March 31, 2003 2,016,542
18,000,000 Term loan, maturing September 30, 2005 18,000,000
Manufactures and markets food products with popular
brand names
Southern Foods Group, L.P.
3,922,240 Term loan, maturing February 28, 2006 3,922,240
Processes and sells dairy products
Specialty Foods Corporation
27,271,521 Term loan, maturing April 30, 2001 27,271,521
Bread and cheese products
Van De Kamp's, Inc.
7,029,687 Term loan, maturing April 30, 2003 7,029,687
4,410,601 Term loan, maturing September 30, 2003 4,410,601
Distributor of frozen convenience foods
- --------------------------------------------------------------------------------------
$ 107,491,040
- --------------------------------------------------------------------------------------
Food Wholesalers -- 0.7%
- --------------------------------------------------------------------------------------
Fleming Companies, Inc.
$28,980,042 Term loan, maturing July 25, 2004 $ 28,980,042
Wholesale food distributor
- --------------------------------------------------------------------------------------
$ 28,980,042
- --------------------------------------------------------------------------------------
Hardware & Tools -- 0.2%
- --------------------------------------------------------------------------------------
Werner Holding Company, Inc.
$ 4,050,000 Term loan, maturing November 30, 2004 $ 4,050,000
4,950,000 Term loan, maturing November 30, 2005 4,950,000
Manufactures and markets ladders and other climbing
products
- --------------------------------------------------------------------------------------
$ 9,000,000
- --------------------------------------------------------------------------------------
Health Care -- Miscellaneous -- 6.9%
- --------------------------------------------------------------------------------------
Ameripath, Inc.
$10,000,000 Term loan, maturing June 27, 2004 $ 10,000,000
Anatomical pathology services
Extendicare Health Services, Inc.
25,500,000 Term loan, maturing December 31, 2004 25,500,000
Operator of long-term care facilities
Genesis Health Ventures, Inc.
10,640,012 Term loan, maturing September 30, 2004 10,640,012
10,620,000 Term loan, maturing June 1, 2005 10,620,000
Operator of long-term care facilities, outpatient
clinics and home health care services
Imed Corporation
9,000,000 Term loan, maturing November 30, 2002 9,000,000
4,544,100 Term loan, maturing November 30, 2003 4,544,100
4,544,100 Term loan, maturing November 30, 2004 4,544,100
4,276,800 Term loan, maturing May 31, 2005 4,276,800
Provider of infusion systems and related technologies
Integrated Health Services, Inc.
33,000,000 Term loan, maturing September 15, 2003 33,000,000
Provider of post-acute health care services
Kinetic Concepts, Inc.
5,250,000 Term loan, maturing December 31, 2004 5,250,000
5,250,000 Term loan, maturing December 31, 2005 5,250,000
Designs, manufactures and markets therapeutic systems
Leiner Health Products Inc.
5,970,000 Term loan, maturing December 30, 2004 5,970,000
4,477,500 Term loan, maturing December 31, 2005 4,477,500
Manufactures and markets vitamins, minerals and
nutritional supplements
Mediq / Prn Life Support Service
9,854,628 Term loan, maturing September 30, 2004 9,854,628
Medical equipment and rental services
Merit Behavioral Care Corporation
11,669,746 Term loan, maturing March 31, 2007 11,669,746
Mental health care provider
National Medical Care, Inc.
60,000,000 Term loan, maturing September 30, 2003 60,000,000
Kidney dialysis service provider
Paragon Health Network, Inc.
12,500,000 Term loan, maturing March 31, 2005 12,500,000
12,500,000 Term loan, maturing March 31, 2006 12,500,000
Operator of long-term care facilities
SMT Health Services
9,975,000 Term loan, maturing August 31, 2003 9,975,000
Provider of mobile magnetic resonance imaging
services
Sun Healthcare Group, Inc.
8,250,000 Term loan, maturing October 9, 2004 8,250,000
8,250,000 Term loan, maturing October 9, 2005 8,250,000
Operator of long-term care facilities, rehabilitation
facilities and home health care services
The Multicare Companies Inc. (Genesis Eldercare)
7,980,009 Term loan, maturing September 30, 2004 7,980,009
2,655,000 Term loan, maturing June 1, 2005 2,655,000
Operator of long-term care facilities, outpatient
clinics and home health care services
Total Renal Care Holdings, Inc.
0 Term loan, maturing September 30, 2007 0
Kidney dialysis service provider
WGL Acquisition Corp.
3,940,000 Term loan, maturing July 10, 2004 3,940,000
Manufactures medical devices and batteries for
medical and commercial applications
- --------------------------------------------------------------------------------------
$ 280,646,895
- --------------------------------------------------------------------------------------
Hospital Management -- 0.9%
- --------------------------------------------------------------------------------------
Community Health Systems, Inc.
$12,561,644 Term loan, maturing December 31, 2003 $ 12,561,644
12,561,644 Term loan, maturing December 31, 2004 12,561,644
9,445,205 Term loan, maturing December 31, 2005 9,445,205
Hospital and healthcare management
- --------------------------------------------------------------------------------------
$ 34,568,493
- --------------------------------------------------------------------------------------
Hotels -- 1.1%
- --------------------------------------------------------------------------------------
Capstar Hotel Company
$11,250,000 Term loan, maturing June 30, 2004 $ 11,250,000
Hotel management
Hard Rock Hotel, Inc.
2,000,000 Term loan, maturing October 24, 2003 2,000,000
3,000,000 Term loan, maturing October 24, 2004 3,000,000
3,000,000 Term loan, maturing October 24, 2005 3,000,000
Hotel management
HMC Capital Resources Corp.
532,800 Term loan, maturing June 17, 2004 532,800
Hotel management
Interstate Hotels Corporation
4,743,590 Term loan, maturing June 25, 2003 4,743,590
19,688,034 Term loan, maturing June 25, 2004 19,688,034
Hotel management
- --------------------------------------------------------------------------------------
$ 44,214,424
- --------------------------------------------------------------------------------------
Household Furnishings -- 2.7%
- --------------------------------------------------------------------------------------
Furniture Brands International, Inc.
$ 9,000,000 Term loan, maturing June 27, 2004 $ 9,000,000
31,000,000 Term loan, maturing June 27, 2007 31,000,000
Manufacturer of residential furniture
Goodman Manufacturing Company, L.P.
9,095,541 Term loan, maturing September 30, 2003 9,095,541
17,750,000 Term loan, maturing September 30, 2004 17,750,000
17,750,000 Term loan, maturing September 30, 2005 17,750,000
Manufacturer of heating/air conditioning equipment
Sealy Mattress Company
6,060,606 Term loan, maturing December 15, 2004 6,060,606
4,363,636 Term loan, maturing December 15, 2005 4,363,636
5,575,758 Term loan, maturing December 15, 2006 5,575,758
Manufactures bedding
Simmons Company
6,940,000 Term loan, maturing March 31, 2003 6,940,000
Manufactures bedding
- --------------------------------------------------------------------------------------
$ 107,535,541
- --------------------------------------------------------------------------------------
Household Products -- 0.5%
- --------------------------------------------------------------------------------------
Playtex Products, Inc.
$21,890,000 Term loan, maturing June 15, 2003 $ 21,890,000
Manufactures and markets a diversified line of
consumer products
- --------------------------------------------------------------------------------------
$ 21,890,000
- --------------------------------------------------------------------------------------
Housewares -- 0.2%
- --------------------------------------------------------------------------------------
Pillowtex Corporation
$ 6,500,000 Term loan, maturing December 31, 2004 $ 6,500,000
Producer of textile products
- --------------------------------------------------------------------------------------
$ 6,500,000
- --------------------------------------------------------------------------------------
Insurance Brokers -- 0.5%
- --------------------------------------------------------------------------------------
Acordia, Inc.
$ 5,900,000 Term loan, maturing December 31, 2004 $ 5,900,000
Provider of retail based brokerage services
TRG Holding Corporation
15,000,000 Term loan, maturing January 7, 2003 15,000,000
Provider of insurance services
- --------------------------------------------------------------------------------------
$ 20,900,000
- --------------------------------------------------------------------------------------
Leisure -- 3.9%
- --------------------------------------------------------------------------------------
24 Hour Fitness, Inc.
$10,000,000 Term loan, maturing December 31, 2004 $ 10,000,000
Fitness center chain
AMF Bowling Worldwide, Inc.
219,595 Revolving loan, maturing March 31, 2002 219,595
13,336,620 Term loan, maturing March 31, 2002 13,336,620
Manufactures and operates bowling equipment and
supplies
AMF Group, Inc.
14,799,106 Term loan, maturing March 31, 2003 14,799,106
13,007,981 Term loan, maturing March 31, 2004 13,007,981
Manufactures and operates bowling equipment and
supplies
ASC East, Inc.
3,857,143 Term loan, maturing May 31, 2006 3,857,143
Operator of alpine resorts
ASC West, Inc.
9,642,857 Term loan, maturing May 31, 2006 9,642,857
Operator of alpine resorts
Alliance Gaming Corporation
7,129,464 Term loan, maturing January 31, 2005 7,129,464
2,850,000 Term loan, maturing July 31, 2005 2,850,000
Designs and manufacturing gaming machines
Interval International Corporation
6,625,000 Term loan, maturing December 16, 2005 6,625,000
6,625,000 Term loan, maturing December 15, 2006 6,625,000
Timeshare exchange operator
KSL Recreation Group, Inc.
6,653,572 Revolving loan, maturing April 30, 2005 6,653,572
7,028,846 Term loan, maturing April 30, 2005 7,028,846
7,028,846 Term loan, maturing April 30, 2006 7,028,846
Operates properties in the leisure, recreation,
resort and travel fields
Metro-Goldwyn-Mayer, Inc.
25,000,000 Term loan, maturing December 31, 2006 25,000,000
Film and television production and distribution
Mikohn Gaming Corporation
5,000,000 Term loan, maturing April 1, 2004 5,000,000
Developer, manufacturer and distributor of gaming
equipment
Six Flags Theme Parks, Inc.
6,649,355 Term loan, maturing June 23, 2001 6,649,355
10,137,000 Term loan, maturing June 23, 2003 10,137,000
Amusement parks
- --------------------------------------------------------------------------------------
$ 155,590,385
- --------------------------------------------------------------------------------------
Machinery -- 0.3%
- --------------------------------------------------------------------------------------
Numatics, Incorporated
$ 4,222,732 Term loan, maturing January 3, 2002 $ 4,222,732
7,626,312 Term loan, maturing January 3, 2004 7,626,312
Manufactures air valves, cylinders, and air
filtration and drying devices
- --------------------------------------------------------------------------------------
$ 11,849,044
- --------------------------------------------------------------------------------------
Manufacturing -- Diversified -- 4.7%
- --------------------------------------------------------------------------------------
AMSCAN Holdings, Inc.
$ 8,454,545 Term loan, maturing December 31, 2004 $ 8,454,545
Designs, manufactures and distributes decorative
party goods
CFS Holding N.V.
9,398,729 Term loan, maturing June 30, 2005 9,398,729
Supplier of integrated production lines for food
processing and packaging
Columbus McKinnon Corporation
5,644,000 Revolving loan, maturing September 30, 2001 5,644,000
6,878,036 Term loan, maturing September 30, 2001 6,878,036
12,469,349 Term loan, maturing September 30, 2003 12,469,349
Manufacturer of hoists and lifting equipment
Desa International, Inc.
7,500,000 Term loan, maturing November 30, 2004 7,500,000
Manufactures indoor and outdoor heaters and specialty
tools
Foamex L.P.
3,879,630 Revolving loan, maturing June 30, 2003 3,879,630
5,559,174 Term loan, maturing June 30, 2003 5,559,174
8,339,048 Term loan, maturing June 30, 2005 8,339,048
7,580,952 Term loan, maturing June 30, 2006 7,580,952
7,000,000 Term loan, maturing December 31, 2006 7,000,000
Manufactures flexible polyurethane and polymer foam
products
International Wire Group, Inc.
23,962,617 Term loan, maturing September 30, 2002 23,962,617
Manufactures and markets copper wire and harnesses
InteSys Technologies, Inc.
4,390,244 Term loan, maturing December 31, 2001 4,390,244
Designs and manufactures plastic components for
original equipment manufacturers
Jackson Products, Inc.
1,975,000 Term loan, maturing September 1, 2001 1,975,000
7,323,912 Term loan, maturing September 1, 2002 7,323,912
7,331,250 Term loan, maturing September 1, 2003 7,331,250
Manufactures and distributes safety equipment and
reflective beads
Joan Fabrics Corporation
$ 5,622,678 Revolving loan, maturing June 30, 2003 $ 5,622,678
10,882,604 Term loan, maturing June 30, 2003 10,882,604
14,473,684 Term loan, maturing June 30, 2005 14,473,684
7,526,316 Term loan, maturing June 30, 2006 7,526,316
Manufacturer of velour fabrics for automotive and
furniture systems
Matthew Warren, Inc.
6,922,328 Term loan, maturing February 28, 2004 6,922,328
Manufactures and distributes industrial spring
products
Panavision International, L.P.
2,163,333 Revolving loan, maturing June 30, 2004 2,163,333
4,400,000 Term loan, maturing June 30, 2004 4,400,000
Manufactures lens and camera equipment
Panolam Industries, Inc.
828,000 Term loan, maturing November 1, 2002 828,000
4,564,000 Term loan, maturing November 1, 2004 4,564,000
2,608,000 Term loan, maturing November 1, 2005 2,608,000
2,000,000 Term loan, maturing May 1, 2006 2,000,000
Designs, manufactures and markets decorative
thermally- fused melamine panels
- --------------------------------------------------------------------------------------
$ 189,677,429
- --------------------------------------------------------------------------------------
Medical Products -- 1.0%
- --------------------------------------------------------------------------------------
Graphic Controls Corporation
$10,786,925 Term loan, maturing August 28, 2003 $ 10,786,925
4,890,890 Term loan, maturing September 28, 2003 4,890,890
Recording and monitoring devices
Nutramax Products, Inc.
3,936,944 Term loan, maturing December 31, 2003 3,936,944
6,000,000 Term loan, maturing September 30, 2004 6,000,000
Manufactures and markets private label health and
personal care products
Sterling Diagnostic Imaging, Inc.
15,000,000 Term loan, maturing December 30, 2005 15,000,000
Manufacturer and marketer of medical x-ray imaging
films and related products
- --------------------------------------------------------------------------------------
$ 40,614,759
- --------------------------------------------------------------------------------------
Metals -- 0.2%
- --------------------------------------------------------------------------------------
U.S. Silica Company
$ 4,145,337 Term loan, maturing December 31, 2001 $ 4,145,337
3,893,333 Term loan, maturing December 31, 2003 3,893,333
Producer of industrial silica
- --------------------------------------------------------------------------------------
$ 8,038,670
- --------------------------------------------------------------------------------------
Miscellaneous -- 1.5%
- --------------------------------------------------------------------------------
Allied Waste North America
$ 7,200,000 Term loan, maturing October 17, 2003 $ 7,200,000
7,644,000 Term loan, maturing December 31, 2003 7,644,000
Non-hazardous solid waste management
LESI, Inc.
7,462,500 Term loan, maturing May 15, 2004 7,462,500
7,462,500 Term loan, maturing May 15, 2005 7,462,500
Hazardous solid waste management
Prime Succession, Inc.
15,822,222 Term loan, maturing August 1, 2003 15,822,222
Operator of funeral homes and cemeteries
Rose Hills Company
9,800,447 Term loan, maturing December 1, 2003 9,800,447
Operator of funeral homes and cemeteries
Walco International, Inc.
4,966,667 Term loan, maturing March 31, 2004 4,966,667
Distributes food animal health products
- --------------------------------------------------------------------------------------
$ 60,358,336
- --------------------------------------------------------------------------------------
Office Equipment and Supplies -- 0.6%
- --------------------------------------------------------------------------------------
F.M.E. Corporation (Neopost, S.A.)
$12,314,749 Term loan, maturing June 24, 2006 $ 12,314,749
Producer of mailroom products
Identity Group, Inc.
9,949,749 Term loan, maturing November 22, 2003 9,949,749
Manufactures and distributes ink delivery products
- --------------------------------------------------------------------------------------
$ 22,264,498
- --------------------------------------------------------------------------------------
Paper and Forest Products -- 0.7%
- --------------------------------------------------------------------------------------
Bear Island Paper Company, LLC
$ 9,000,000 Term loan, maturing December 31, 2005 $ 9,000,000
Producer of news print
S.D. Warren Company
19,578,400 Term loan, maturing December 20, 2002 19,578,400
Major U.S. producer of coated free paper
- --------------------------------------------------------------------------------------
$ 28,578,400
- --------------------------------------------------------------------------------------
Publishing -- 2.4%
- --------------------------------------------------------------------------------------
Cullman Ventures, Inc.
$15,000,000 Term loan, maturing January 31, 2004 $ 15,000,000
Producer of calendars, organizers, diaries and
related products
Cygnus Publishing, Inc.
13,500,000 Term loan, maturing June 5, 2005 13,500,000
Leader in the education, media and information
businesses
Primedia, Inc.
8,770,000 Revolving loan, maturing June 30, 2004 8,770,000
31,500,000 Term loan, maturing June 30, 2004 31,500,000
Leader in the education, media and information
businesses
Rand McNally & Company
1,000,000 Term loan, maturing April 30, 2005 1,000,000
4,500,000 Term loan, maturing April 30, 2006 4,500,000
Provider of geographic information
Von Hoffman Press, Inc.
5,768,143 Term loan, maturing May 30, 2004 5,768,143
5,768,143 Term loan, maturing May 30, 2005 5,768,143
Manufactures textbooks for educational purposes
Yellow Book USA, L.P.
5,000,000 Term loan, maturing September 30, 2005 5,000,000
3,692,308 Term loan, maturing December 31, 2005 3,692,308
2,307,692 Term loan, maturing December 31, 2006 2,307,692
Publisher of yellow pages directories
- --------------------------------------------------------------------------------------
$ 96,806,286
- --------------------------------------------------------------------------------------
Publishing -- Newspapers -- 2.0%
- --------------------------------------------------------------------------------------
21st Century Newspapers, Inc.
$ 9,500,000 Term loan, maturing February 15, 2005 $ 9,500,000
Community newspaper
American Media Operations, Inc.
774,471 Revolving loan, maturing September 30, 2002 774,471
15,939,857 Term loan, maturing September 30, 2002 15,939,857
Weekly periodical publisher
Garden State Newspapers, Inc.
505,263 Revolving loan, maturing June 30, 2003 505,263
0 Revolving loan, maturing March 31, 2004 0
1,473,684 Term loan, maturing March 31, 2004 1,473,684
Suburban newspaper
Journal Register Company
8,168,237 Term loan, maturing June 30, 2000 8,168,237
22,462,955 Term loan, maturing December 31, 2002 22,462,955
4,084,118 Term loan, maturing May 5, 2003 4,084,118
Suburban newspaper
Morris Communications Corporation
20,000,000 Term loan, maturing June 30, 2005 20,000,000
Daily and non-daily publisher
- --------------------------------------------------------------------------------------
$ 82,908,585
- --------------------------------------------------------------------------------------
Railroads -- 0.2%
- --------------------------------------------------------------------------------------
I & M Rail Link, LLC
$ 2,800,000 Revolving loan, maturing March 31, 2004 $ 2,800,000
6,880,000 Term loan, maturing March 31, 2004 6,880,000
Railway operating firm
- --------------------------------------------------------------------------------------
$ 9,680,000
- --------------------------------------------------------------------------------------
Restaurants -- 2.4%
- --------------------------------------------------------------------------------------
Friendly Ice Cream Corporation
$ 1,285,714 Term loan, maturing November 15, 2004 $ 1,285,714
6,428,572 Term loan, maturing November 15, 2005 6,428,572
Operates full service casual dining restaurants
Houlihan's Restaurants, Inc.
4,975,000 Term loan, maturing April 15, 2004 4,975,000
Operates full service casual dining restaurants
Long John Silver's Restaurants, Inc.
7,031,065 Term loan, maturing September 30, 2002 7,031,065
Seafood restaurants
Shoney's Inc.
4,750,000 Term loan, maturing April 30, 2002 4,750,000
9,975,000 Term loan, maturing April 30, 2002 9,975,000
Operates full service casual dining restaurants
Tricon Global Restaurants, Inc.
63,960,000 Term loan, maturing October 2, 2002 63,960,000
Quick service restaurant provider
- --------------------------------------------------------------------------------------
$ 98,405,351
- --------------------------------------------------------------------------------------
Retail Stores -- Drug Stores -- 0.3%
- --------------------------------------------------------------------------------------
Duane Reade, Inc.
$12,468,499 Term loan, maturing June 15, 2002 $ 12,468,499
Retail drug stores
- --------------------------------------------------------------------------------------
$ 12,468,499
- --------------------------------------------------------------------------------------
Retail Stores -- Food Chains -- 2.9%
- --------------------------------------------------------------------------------------
Pathmark Stores, Inc.
$32,963,333 Term loan, maturing December 15, 2001 $ 32,963,333
Supermarket chain in New York Metro Area
Ralphs Grocery Company
26,601,905 Term loan, maturing February 15, 2003 26,601,905
37,715,000 Term loan, maturing February 15, 2004 37,715,000
Third largest supermarket chain in Southern
California
Star Market Company, Inc.
10,042,105 Term loan, maturing December 31, 2001 10,042,105
7,884,211 Term loan, maturing December 31, 2002 7,884,211
Supermarket chain in Massachusetts
- --------------------------------------------------------------------------------------
$ 115,206,554
- --------------------------------------------------------------------------------------
Retail -- Specialty -- 1.3%
- --------------------------------------------------------------------------------------
CSK Auto, Inc.
$15,000,000 Term loan, maturing October 31, 2003 $ 15,000,000
Retailer of automotive parts and accessories
Griffith Consumers Company
5,559,874 Term loan, maturing December 31, 2000 5,559,874
10,001,068 Term loan, maturing December 31, 2002 10,001,068
7,717,437 Term loan, maturing December 31, 2003 7,717,437
Retail petroleum distributor
Petro Stopping Centers
6,555,556 Term loan, maturing December 31, 2003 6,555,556
Operator of full-service truck stops
Travelcenters of America, Inc.
7,975,000 Term loan, maturing March 27, 2005 7,975,000
Operator of truck stops
- --------------------------------------------------------------------------------------
$ 52,808,935
- --------------------------------------------------------------------------------------
Steel -- 0.2%
- --------------------------------------------------------------------------------------
UCAR Global Enterprises, Inc.
$ 8,000,000 Term loan, maturing December 31, 2002 $ 8,000,000
Processing materials for steel industry
- --------------------------------------------------------------------------------------
$ 8,000,000
- --------------------------------------------------------------------------------------
Telecommunications -- 1.0%
- --------------------------------------------------------------------------------------
Access Communications, Inc.
$10,000,000 Term loan, maturing December 31, 2004 $ 10,000,000
Provider of long distance and other
telecommunications services
Arch Communications Enterprises, Inc.
10,500,000 Term loan, maturing December 31, 2003 10,500,000
Paging service provider
Price Communications Wireless, Inc.
1,883,333 Revolving loan, maturing September 30, 2005 1,883,333
1,666,667 Term loan, maturing September 30, 2005 1,666,667
18,000,000 Term loan, maturing September 30, 2006 18,000,000
Cellular systems provider
- --------------------------------------------------------------------------------------
$ 42,050,000
- --------------------------------------------------------------------------------------
Telephone -- 0.2%
- --------------------------------------------------------------------------------------
NSC Communications Corporation
$ 4,563,045 Revolving loan, maturing April 1, 2003 $ 4,563,045
4,378,846 Term loan, maturing October 1, 2003 4,378,846
Independent payphone provider
- --------------------------------------------------------------------------------------
$ 8,941,891
- --------------------------------------------------------------------------------------
Textiles -- 1.8%
- --------------------------------------------------------------------------------------
CAF Holdings, Inc.
$ 4,694,118 Term loan, maturing June 30, 2002 $ 4,694,118
Manufactures and markets commercial floorcovering
Collins & Aikman Products Company
31,685,196 Term loan, maturing December 31, 2002 31,685,196
Automotive products, residential upholstery fabrics,
and wallcoverings
GFSI, Inc. (Gear for Sports)
13,930,000 Term loan, maturing March 31, 2004 13,930,000
Designs, manufactures and markets custom design
sportswear and activewear
Renfro Corporation
5,000,000 Term loan, maturing November 15, 2003 5,000,000
Manufactures socks
The William Carter Company
6,174,000 Term loan, maturing October 31, 2003 6,174,000
Manufacturer and distributor of children's apparel
Walls Industries, Inc.
5,042,552 Term loan, maturing February 28, 2005 5,042,552
6,861,703 Term loan, maturing February 28, 2006 6,861,703
Manufactures and markets workwear, hunting and
outdoor apparel and outerwear
- --------------------------------------------------------------------------------------
$ 73,387,569
- --------------------------------------------------------------------------------------
Toys -- 0.2%
- --------------------------------------------------------------------------------------
Hedstrom Corporation
$ 1,973,333 Term loan, maturing June 30, 2003 $ 1,973,333
7,224,107 Term loan, maturing June 30, 2005 7,224,107
Manufactures swingsets and other children's toys
- --------------------------------------------------------------------------------------
$ 9,197,440
- --------------------------------------------------------------------------------------
Transportation -- 0.8%
- --------------------------------------------------------------------------------------
Atlas Freighter Leasing, Inc.
$ 5,500,000 Term loan, maturing May 29, 2004 $ 5,500,000
Aircraft leasing
Evergreen International Aviation, Inc.
19,836,002 Term loan, maturing April 30, 2002 19,836,002
Air cargo carrier
Gemini Leasing, Inc.
7,500,000 Term loan, maturing December 31, 2002 7,500,000
Air cargo carrier
- --------------------------------------------------------------------------------------
$ 32,836,002
- --------------------------------------------------------------------------------------
Utilities -- 1.2%
- --------------------------------------------------------------------------------------
AES CEMIG Funding Corporation
$25,575,000 Term loan, maturing August 28, 1998 $ 25,575,000
Global power company
AESEBA Funding Corporation
20,925,000 Term loan, maturing August 28, 1998 20,925,000
Global power company
- --------------------------------------------------------------------------------------
$ 46,500,000
- --------------------------------------------------------------------------------------
Total Senior, Secured, Floating-Rate Interests
(identified cost, $3,657,069,972) $3,657,069,972
- --------------------------------------------------------------------------------------
Common Stocks -- 0.1%
Shares/Rights Security Value
- --------------------------------------------------------------------------------------
806,708 America's Favorite Chicken Company,
Common Stock* $ 2,675,850
608 Classic Cable Common Stock Warrants * 0
34,364 PSI Acquisition Corporation, Warrants * 0
- --------------------------------------------------------------------------------------
Total Common Stocks
(identified cost, $0) $ 2,675,850
- --------------------------------------------------------------------------------------
Short-Term Investments -- 6.4%
Principal Maturity
Amount Date Borrower Rate Amount
- --------------------------------------------------------------------------------------
$35,193,644 01/02/98 American General Finance Company 6.50% $ 35,193,644
46,891,532 01/02/98 American General Company 6.50% 46,891,532
41,244,016 01/09/98 American Express Credit Corporation 6.10% 41,244,016
85,876,014 01/02/98 Associate Corporation of N.A. 6.70% 85,876,014
49,990,764 01/02/98 CXC Incorporated 6.65% 49,990,764
- --------------------------------------------------------------------------------------
Total Short-Term Investments,
at amortized cost $ 259,195,970
- --------------------------------------------------------------------------------------
Total Investments -- 97.1%
(identified cost, $3,916,265,942) $3,918,941,792
- --------------------------------------------------------------------------------------
Other Assets, Less Liabilities -- 2.9% $ 116,130,133
- --------------------------------------------------------------------------------------
Total Net Assets -- 100% $4,035,071,925
- --------------------------------------------------------------------------------------
*Non-income producing security.
Note: The description of the principal business for each security set forth
above is unaudited.
</TABLE>
<PAGE>
Senior Debt Portfolio as of December 31, 1997
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
(Expressed in United States Dollars)
As of December 31, 1997
Assets
- -------------------------------------------------------------------------------
Investments, at value (Note 1A)
(identified cost, $3,916,265,942) $3,918,941,792
Cash 93,405,242
Receivable for investments sold 448,058
Interest receivable 25,786,574
Miscellaneous receivable 101,715
Prepaid expenses 979,673
Deferred organization expenses (Note 1D) 31,613
- -------------------------------------------------------------------------------
Total assets $4,039,694,667
- -------------------------------------------------------------------------------
Liabilities
- -------------------------------------------------------------------------------
Deferred facility fee income (Note 1B) $ 4,370,655
Payable to affiliate for Trustees' fees (Note 2) 7,463
Accrued expenses 244,624
- -------------------------------------------------------------------------------
Total liabilities $ 4,622,742
- -------------------------------------------------------------------------------
Net Assets applicable to investors' interest in Portfolio $4,035,071,925
- -------------------------------------------------------------------------------
Sources of Net Assets
- -------------------------------------------------------------------------------
Net proceeds from capital contributions and withdrawals $4,032,396,075
Net unrealized appreciation of investments
(computed on the basis of identified cost) 2,675,850
- -------------------------------------------------------------------------------
Total $4,035,071,925
- -------------------------------------------------------------------------------
Statement of Operations
(Expressed in United States Dollars)
For the Year Ended
December 31, 1997
Investment Income (Note 1B)
- -------------------------------------------------------------------------------
Interest income $ 283,456,988
Facility fees earned 4,774,292
- -------------------------------------------------------------------------------
Total income $ 288,231,280
- -------------------------------------------------------------------------------
Expenses
- -------------------------------------------------------------------------------
Investment adviser fee (Note 2) $ 31,751,900
Compensation of Trustees not members of the Investment Adviser's
organization (Note 2) 29,283
Custodian fee 1,008,778
Legal and accounting services 608,361
Amortization of organization expenses (Note 1D) 6,205
Interest expense (Note 4) 610,023
Miscellaneous 202,512
- -------------------------------------------------------------------------------
Total expenses $ 34,217,062
- -------------------------------------------------------------------------------
Net investment income $ 254,014,218
- -------------------------------------------------------------------------------
Realized and Unrealized
Gain (Loss) on Investments
- -------------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified cost basis) $ (9,000,530)
- -------------------------------------------------------------------------------
Net realized loss on investments $ (9,000,530)
- -------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investments (identified cost basis) $ 8,549,067
- -------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation)
of investments $ 8,549,067
- -------------------------------------------------------------------------------
Net realized and unrealized loss on investments $ (451,463)
- -------------------------------------------------------------------------------
Net increase in net assets from operations $ 253,562,755
- -------------------------------------------------------------------------------
<PAGE>
Senior Debt Portfolio as of December 31, 1997
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
(Expressed in United States Dollars)
Increase (Decrease) Year Ended Year Ended
in Net Assets December 31, 1997 December 31, 1996
- --------------------------------------------------------------------------------
From operations --
Net investment income $ 254,014,218 $ 171,247,196
Net realized loss on investments (9,000,530) (2,509,974)
Net change in unrealized appreciation
(depreciation) of investments 8,549,067 (1,387,860)
- --------------------------------------------------------------------------------
Net increase in net assets from operations $ 253,562,755 $ 167,349,362
- --------------------------------------------------------------------------------
Capital transactions --
Contributions $1,646,867,281 $1,604,853,413
Withdrawals (875,432,567) (383,467,171)
- --------------------------------------------------------------------------------
Net increase in net assets from capital
transactions $ 771,434,714 $1,221,386,242
- --------------------------------------------------------------------------------
Net increase in net assets $1,024,997,469 $1,388,735,604
- --------------------------------------------------------------------------------
Net Assets
- --------------------------------------------------------------------------------
At beginning of year $3,010,074,456 $1,621,338,852
- --------------------------------------------------------------------------------
At end of year $4,035,071,925 $3,010,074,456
- --------------------------------------------------------------------------------
<PAGE>
Statement of Cash Flows
(Expressed in United States Dollars)
Year Ended
Increase (Decrease) in Cash December 31, 1997
- --------------------------------------------------------------------------------
Cash Flows From (Used For) Operating Activities --
Purchases of loan interests $(3,700,509,536)
Proceeds from sales and principal repayments 2,500,784,081
Interest received 275,103,446
Facility fees received 2,015,430
Interest paid (612,171)
Operating expenses paid (33,707,774)
Net decrease in short-term investments 170,130,743
- --------------------------------------------------------------------------------
Net cash used for operating activities $ (786,795,781)
- --------------------------------------------------------------------------------
Cash Flows From (For) Financing Activities --
Proceeds from capital contributions $ 1,646,867,281
Payments for capital withdrawals (875,432,567)
- --------------------------------------------------------------------------------
Net cash provided from financing activities $ 771,434,714
- --------------------------------------------------------------------------------
Net decrease in cash $ (15,361,067)
- --------------------------------------------------------------------------------
Cash at Beginning of Year $ 108,766,309
- --------------------------------------------------------------------------------
Cash at End of Year $ 93,405,242
- -------------------------------------------------------------------------------
Reconciliation of Net Increase in Net Assets
From Operations to Net Cash Used For
Operating Activities
- -------------------------------------------------------------------------------
Net increase in net assets from operations $ 253,562,755
Decrease in receivable for investments sold 388,141
Increase in interest receivable (8,354,627)
Decrease in miscellaneous receivable 1,085
Increase in prepaid expenses (55,524)
Decrease in deferred organization expense 6,205
Decrease in deferred facility fee income (4,768,902)
Decrease in payable to affiliate (420)
Decrease in accrued expenses (53,144)
Net increase in investments (1,027,521,350)
- -------------------------------------------------------------------------------
Net cash used for operating activities $ (786,795,781)
- -------------------------------------------------------------------------------
<PAGE>
Supplementary Data (Expressed in United States Dollars)
Year Ended December 31,
------------------------------------------
1997 1996 1995*
- --------------------------------------------------------------------------------
Ratios to average daily net assets
- --------------------------------------------------------------------------------
Operating expenses 0.94% 0.98% 1.01%+
Interest expense 0.02% 0.04% 0.13%+
Net investment income 7.12% 7.17% 7.95%+
Portfolio Turnover 81% 75% 39%
- ------------------------------------------------------------------------------
Net assets, end of period
(000s omitted) $4,035,072 $3,010,074 $1,621,339
- ------------------------------------------------------------------------------
+Annualized.
*For the period from the start of business, February 22, 1995 to
December 31, 1995.
<PAGE>
Senior Debt Portfolio as of December 31, 1997
NOTES TO FINANCIAL STATEMENTS
(Expressed in United States Dollars)
1 Significant Accounting Policies
- --------------------------------------------------------------------------------
Senior Debt Portfolio (the Portfolio) is registered under the Investment
Company Act of 1940 as a non-diversified closed-end investment company which
was organized as a trust under the laws of the State of New York on May 1,
1992. The Declaration of Trust permits the Trustees to issue interests in
the Portfolio. The following is a summary of significant accounting policies
of the Portfolio. The Policies are in conformity with accounting principles
generally accepted in the United States of America.
A Investment Valuation -- The Portfolio's investments in interests in loans
(Loan Interests) are valued at fair value by the Portfolio's investment
adviser, Boston Management and Research, under procedures established by the
Trustees as permitted by Section 2(a)(41) of the Investment Company Act of
1940. Such procedures include the consideration of relevant factors, data
and information relating to fair value, including (i) the characteristics of
and fundamental analytical data relating to the Loan Interest, including the
cost, size, current interest rate, period until next interest rate reset,
maturity and base lending rate of the Loan Interest, the terms and
conditions of the loan and any related agreements and the position of the
loan in the borrower's debt structure; (ii) the nature, adequacy and value
of the collateral, including the Portfolio's rights, remedies and interests
with respect to the collateral; (iii) the creditworthiness of the borrower,
based on evaluations of its financial condition, financial statements and
information about the borrower's business, cash flows, capital structure and
future prospects; (iv) information relating to the market for the Loan
Interest including price quotations for and trading in the Loan Interest and
interests in similar loans and the market environment and investor attitudes
towards the Loan Interest and interests in similar loans; (v) the reputation
and financial condition of the agent bank and any intermediate participant
in the loan; and (vi) general economic and market conditions affecting the
fair value of the Loan Interest. Other portfolio securities (other than
short-term obligations, but including listed issues) may be valued on the
basis of prices furnished by one or more pricing services which determine
prices for normal, institutional-size trading units of such securities using
market information, transactions for comparable securities and various
relationships between securities which are generally recognized by
institutional traders. In certain circumstances, portfolio securities will
be valued at the last sales price on the exchange that is the primary market
for such securities, or the last quoted bid price for those securities for
which the over-the-counter market is the primary market or for listed
securities in which there were no sales during the day. The value of
interest rate swaps will be determined in accordance with a discounted
present value formula and then confirmed by obtaining a bank quotation.
Short-term obligations which mature in sixty days or less are valued at
amortized cost, if their original term to maturity when acquired by the
Portfolio was 60 days or less or are valued at amortized cost using their
value on the 61st day prior to maturity, if their original term to maturity
when acquired by the Portfolio was more then 60 days, unless in each case
this is determined not to represent fair value. Repurchase agreements are
valued at cost plus accrued interest. Other portfolio securities for which
there are no quotations or valuations are valued at fair value as determined
in good faith by or on behalf of the Trustees.
B Income -- Interest income from Loan Interests is recorded on the accrual
basis at the then-current interest rate, while all other interest income is
determined on the basis of interest accrued, adjusted for amortization of
premium or discount when required for federal income tax purposes. Facility
fees received are recognized as income over the expected term of the loan.
C Income Taxes -- The Portfolio is treated as a partnership for federal tax
purposes. No provision is made by the Portfolio for federal or state taxes
on any taxable income of the Portfolio because each investor in the
Portfolio is ultimately responsible for the payment of any taxes. Since some
of the Portfolio's investors are regulated investment companies that invest
all or substantially all of their assets in the Portfolio, the Portfolio
normally must satisfy the applicable source of income and diversification
requirements (under the Internal Revenue Code) in order for its investors to
satisfy them. The Portfolio will allocate at least annually among its
investors each investor's distributive share of the Portfolio's net
investment income, net realized capital gains, and any other items of
income, gain, loss, deduction or credit.
D Deferred Organization Expenses -- Costs incurred by the Portfolio in
connection with its organization are being amortized on the straight-line
basis over five years.
E Other -- Investment transactions are accounted for on a trade date basis.
F Expense Reduction -- Investors Bank & Trust Company (IBT) serves as
custodian of the Portfolio. Pursuant to the custodian agreement, IBT
receives a fee reduced by the credits which are determined based on the
average daily cash balances the Portfolio maintains with IBT. All
significant credit balances used to reduce the Portfolio's custodian fees
are reported as a reduction of expenses on the statement of operations.
G Use of Estimates -- The preparation of the financial statements in
conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expense during
the reporting period. Actual results could differ from those estimates.
2 Investment Adviser Fee and Other Transactions with Affiliates
- --------------------------------------------------------------------------------
An investment advisory fee is paid to Boston Management and Research (BMR)
as compensation for investment advisory services rendered to the Portfolio.
The fee is computed at a monthly rate of 19/240 of 1% (0.95% annually) of
the Portfolio's average daily gross assets up to and including $1 billion
and at reduced rates as daily gross assets exceed that level. For the year
ended December 31, 1997, the effective annual rate, based on average daily
gross assets, was 0.89% and amounted to $31,751,900. Except as to Trustees
of the Portfolio who are not members of BMR's organization, officers and
Trustees receive remuneration for their services to the Portfolio out of
such investment adviser fee.
Certain of the officers and Trustees of the Portfolio are officers and
directors/trustees of BMR. Trustees of the Portfolio that are not affiliated
with the Investment Adviser may elect to defer receipt of all or a
percentage of their annual fees in accordance with the terms of the Trustees
Deferred Compensation Plan. For the year ended December 31, 1997, no
significant amounts have been deferred.
3 Investments
- --------------------------------------------------------------------------------
The Portfolio invests primarily in Loan Interests. The ability of the
issuers of the Loan Interests to meet their obligations may be affected by
economic developments in a specific industry. The cost of purchases and the
proceeds from principal repayments and sales of Loan Interests and other
securities for the year ended December 31, 1997 aggregated $3,700,509,536
and $2,502,405,980, respectively.
4 Short-Term Debt and Credit Agreements
- --------------------------------------------------------------------------------
The Portfolio has entered into a revolving credit agreement that will allow
the Portfolio to borrow an additional $250 million to support the issuance
of commercial paper and to permit the Portfolio to invest in accordance with
its investment practices. Interest is charged under the revolving credit
agreement at the bank's base rate or at an amount above either the bank's
adjusted certificate of deposit rate or federal funds effective rate.
Interest expense includes a commitment fee of approximately $452,100 which
is computed at the annual rate of 0.20% of the revolving credit agreement.
There were no significant borrowings under this agreement during the year
ended December 31, 1997. As of December 31, 1997, the Portfolio had no
commercial paper outstanding.
5 Federal Income Tax Basis of Investment Securities
- --------------------------------------------------------------------------------
The cost and unrealized appreciation/depreciation in the value of the
investments owned at December 31, 1997, as computed on a federal income tax
basis, were as follows:
Aggregate cost $3,916,265,942
--------------------------------------------------------------------
Gross unrealized appreciation $ 2,675,850
Gross unrealized depreciation --
--------------------------------------------------------------------
Net unrealized appreciation $ 2,675,850
--------------------------------------------------------------------
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Trustees and Investors
of Senior Debt Portfolio
- --------------------------------------------------------------------------------
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of Senior Debt Portfolio (the
Portfolio) as of December 31, 1997, the related statements of operations and
cash flows for the year then ended, the statements of changes in net assets
for the two years then ended and the supplementary data for each of the two
years then ended and for the period from the start of business, February 22,
1995, to December 31, 1995 (all expressed in United States dollars). These
financial statements and supplementary data are the responsibility of the
Portfolio's management. Our responsibility is to express an opinion on these
financial statements and supplementary data based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements and supplementary data are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities and Loan Interests owned at December 31, 1997 by
correspondence with the custodian and selling or agent banks; where replies
were not received from selling or agent banks, we performed other auditing
procedures. 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 audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements and supplementary data present
fairly, in all material respects, the financial position of Senior Debt
Portfolio as of December 31, 1997, the results of its operations and its cash
flows, the changes in net assets and its supplemental data for the respective
stated periods, in conformity with accounting principles generally accepted in
the United States of America.
As discussed in Note 1A, the financial statements include Loan Interests and
certain other securities held by the Portfolio valued at $3,657,069,972 (90.6%
of net assets of the Portfolio), which values are fair values determined by
the Portfolio's investment adviser in the absence of actual market values.
Determination of fair value involves subjective judgment, as the actual market
value of a particular Loan Interest or security can be established only by
negotiations between the parties in a sale transaction. We have reviewed the
procedures established by the Trustees and used by the Portfolio's investment
adviser in determining the fair value of such Loan Interests and securities
and have inspected underlying documentation, and in the circumstances, we
believe that the procedures are reasonable and the documentation appropriate.
DELOITTE & TOUCHE
Grand Cayman, Cayman Islands
British West Indies
February 13, 1998
<PAGE>
APPENDIX A
RATINGS OF CORPORATE BONDS
DESCRIPTION OF CORPORATE BOND RATINGS OF S&P:
AAA -- Bonds rated AAA have the highest rating assigned by S&P. Capacity
to pay interest and repay principal is extremely strong.
AA -- Bonds rated AA have a very strong capacity to pay interest and
repay principal and differ from the highest rated issues only in small degree.
A -- Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than obligations in higher
rated categories.
BBB -- Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest and repay
principal for bonds in this category than for bonds in higher rated
categories.
BB -- Bonds rated BB have less near-term vulnerability to default than
other speculative grade debt. However, they face major ongoing uncertainties
or exposure to adverse business, financial or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments.
B -- Bonds rated B have a greater vulnerability to default but presently
have the capacity to meeting interest payments and principal repayments.
Adverse business, financial or economic conditions would likely impair
capacity or willingness to pay interest and repay principal.
CCC -- Bonds rated CCC have a current identifiable vulnerability to
default and are dependent upon favorable business, financial and economic
conditions to meet timely payments of interest and repayment of principal. In
the event of adverse business, financial or economic conditions, they are not
likely to have the capacity to pay interest and repay principal.
CC -- The rating CC is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC rating.
C -- The rating C is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC- debt rating.
D -- Bonds rated D are in default, and payment of interest and/or
repayment of principal is in arrears.
S&P's letter ratings may be modified by the addition of a plus (+) or a
minus (-) sign designation, which is used to show relative standing within the
major rating categories, except in the AAA (Prime Grade) category.
DESCRIPTION OF BOND RATINGS OF MOODY'S:
Aaa -- Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and generally are referred
to as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such issues.
Aa -- Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what generally are known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.
A -- Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may
be present which suggest a susceptibility to impairment sometime in the
future.
Baa -- Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.
Ba -- Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and, therefore, not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B -- Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
Caa -- Bonds which are rated Caa are of poor standing. Such issues may be
in default or there may be present elements of danger with respect to
principal or interest.
Ca -- Bonds which are rated Ca present obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.
C -- Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Moody's applies the numerical modifiers 1, 2 and 3 to show relative
standing within the major rating categories, except in the Aaa category and in
the categories below B. The modifier 1 indicates a ranking for the security in
the higher end of a rating category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates a ranking in the lower end of a rating
category.
<PAGE>
[LOGO] Investing
for the
EATON VANCE 21st
============ Century
- -------------------------------------------------------------------------------
Eaton Vance Advisers Senior
Floating-Rate Fund
Statement of Additional Information
November 2, 1998
- -------------------------------------------------------------------------------
Investment Adviser of Senior Debt Portfolio
Boston Management and Research, 24 Federal Street, Boston, MA 02110
Administrator of Eaton Vance Advisers Senior Floating-Rate 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
Deloitte & Touche LLP, 125 Summer Street, Boston, MA 02110
ASFRSAI
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(1) FINANCIAL STATEMENTS:
INCLUDED IN PART A:
Financial highlights for the period from the start of business,
March 20, 1998, to June 30, 1998 (Unaudited)
INCLUDED IN PART B:
INCORPORATED BY REFERENCE TO THE SEMI-ANNUAL REPORT DATED JUNE 30,
1998 (ACCESSION NO. 0000950156-98-000608), FILED ELECTRONICALLY
PURSUANT TO SECTION 30(b)(2) OF THE INVESTMENT COMPANY ACT OF 1940.
Financial Statements for EATON VANCE ADVISERS SENIOR FLOATING-RATE
FUND:
Statement of Assets and Liabilities as of June 30, 1998
(Unaudited)
Statement of Operations for the period from the start of
business, March 20, 1998, to June 30, 1998 (Unaudited)
Statements of Changes in Net Assets for each of the period from
the start of business, March 20, 1998, to June 30, 1998
(Unaudited)
Statement of Cash Flows for the period from the start of
business, March 20, 1998, to June 30, 1998 (Unaudited)
Financial Highlights for the period from the start of business,
March 20, 1998, to June 30, 1998 (Unaudited)
Notes to Financial Statements
Financial Statements for SENIOR DEBT PORTFOLIO:
Portfolio of Investments as of June 30, 1998
Statement of Assets and Liabilities as of June 30, 1998
Statement of Operations for the six months ended June 30, 1998
Statements of Changes in Net Assets for the six months ended
June 30, 1998 and for the year ended December 31, 1997
Statement of Cash Flows for the six months ended June 30, 1998
Supplementary Data for the six months ended June 30, 1998, for
each of the two years ended December 31, 1997 and for the
period from the start of business, February 22, 1995, to
December 31, 1995
Notes to Financial Statements
Independent Auditors' Report
Financial Statements for EATON VANCE ADVISERS SENIOR FLOATING-RATE
FUND:
Statement of Assets and Liabilities as of February 20, 1998
Independent Auditors' Report
Financial Statements for SENIOR DEBT PORTFOLIO:
Portfolio of Investments as of December 31, 1997
Statement of Assets and Liabilities as of December 31, 1997
Statement of Operations for the year ended December 31, 1997
Statements of Changes in Net Assets for each of the two years
ended December 31, 1997
Statement of Cash Flows for the year ended December 31, 1997
Supplementary Data for the two years ended December 31, 1997 and
for the period from the start of business, February 22, 1995,
to December 31, 1995
Notes to Financial Statements
Independent Auditors' Report
(2) EXHIBITS:
(a) Agreement and Declaration of Trust dated February 19, 1998 filed
as Exhibit (a) to the Registration Statement under the Securities
Act of 1933 (1933 Act File No. 333-46853) and to the Registration
Statement under the Investment Company Act of 1940 (1940 Act File
No. 811-08671) filed with the Commission on February 25, 1998
(Registration Statement) and incorporated herein by reference.
(b) By-Laws filed as Exhibit (b) to the Registration Statement and
incorporated herein by reference.
(c) Not applicable
(d) Not applicable
(e) Not applicable
(f) Not applicable
(g) Not applicable
(h) (a) Distribution Agreement dated February 20, 1998 filed as
Exhibit (h)(a) to the Registration Statement and incorporated
herein by reference.
(b) Selling Group Agreement between Eaton Vance Distributors, Inc.
and Authorized Dealers filed as Exhibit (6)(b) to
Post-Effective Amendment No. 61 to the Registration Statement
of Eaton Vance Growth Trust (File Nos. 2-22019 and 811-1241)
and incorporated herein by reference.
(c) Schedule of Dealer Discounts and Sales Charges filed as
Exhibit (6)(c) to Post- Effective Amendment No. 59 to the
Registration Statement of Eaton Vance Growth Trust (File Nos.
2-22019 and 811-1241) and incorporated herein by reference.
(i) 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).
(j) Custodian Agreement dated February 20, 1998 filed as Exhibit (j)
to the Registration Statement and incorporated herein by
reference.
(k) (a) Administration Agreement dated February 20, 1998 filed as
Exhibit (k)(a) to the Registration Statement and incorporated
herein by reference.
(b) Transfer Agency Agreement as of January 1, 1998 filed as
Exhibit (k)(b) to the Registration Statement and incorporated
herein by reference.
(l) Opinion and Consent of Counsel dated February 25, 1998 filed as
Exhibit (l) to the Registration Statement and incorporated herein
by reference.
(m) Not applicable
(n) (a) Consent of Independent Auditors for Eaton Vance Advisers
Senior Floating-Rate Fund filed herewith.
(b) Consent of Independent Auditors for Senior Debt Portfolio
filed herewith.
(c) Consent of Independent Auditors for Senior Debt Portfolio
filed herewith.
(o) Not applicable
(p) Letter Agreement with Eaton Vance Management dated February 20,
1998 filed as Exhibit (p) to the Registration Statement and
incorporated herein by reference.
(q) Not applicable
(r) (a) Financial Data Schedule for the period ended June 30, 1998 for
Eaton Vance Advisers Senior Floating-Rate Fund filed herewith.
(b) Financial Data Schedule for the fiscal year ended December 31,
1997 for Senior Debt Portfolio filed herewith.
(c) Financial Data Schedule for the six months ended June 30, 1998
for Senior Debt Portfolio filed herewith.
(s) Power of Attorney for Eaton Vance Advisers Senior Floating-Rate
Fund dated February 20, 1998 filed as Exhibit (r) to the
Registration Statement and incorporated herein by reference.
(t) Power of Attorney for Senior Debt Portfolio dated February 20,
1998 filed as Exhibit (s) to the Registration Statement and
incorporated herein by reference.
ITEM 25. MARKETING ARRANGEMENTS
Not Applicable.
ITEM 26. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the approximate expenses incurred in
connection with the offerings of Registrant:
Registration fees ................................................ $ 59,000
National Association of Securities Dealers, Inc. Fees ............ $ 20,500
Printing (other than stock certificates) ......................... $ 12,500
Engraving and printing stock certificates ........................ $ 1,000
Fees and expenses of qualification under state securities laws
(excluding fees of counsel) .................................... $ 50,000
Accounting fees and expenses ..................................... $ 5,000
Legal fees and expenses .......................................... $ 2,000
--------
Total .................................................... $150,000(1)
========
- ----------
(1) These amounts include expenses for the shares registered pursuant to the
Registration Statement declared effective on March 20, 1998 (File No.
333-46853).
ITEM 27. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL
None.
ITEM 28. NUMBER OF HOLDERS OF SECURITIES
(1) (2)
TITLE OF CLASS NUMBER OF RECORD HOLDERS
Shares of beneficial interest 409
as of
September 30, 1998
ITEM 29. INDEMNIFICATION
The Registrant's By-Laws filed herewith contain provisions limiting the
liability, and providing for indemnification, of the Trustees and officers
under certain circumstances.
Registrant's Trustees and officers are insured under a standard investment
company errors and omissions insurance policy covering loss incurred by reason
of negligent errors and omissions committed in their capacities as such.
ITEM 30. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER
Reference is made to: (i) the information set forth under the captions
"Management of the Fund and the Portfolio" in the Prospectus and "Investment
Advisory and Other Services" in the Statement of Additional Information; (ii)
the Eaton Vance Corp. 10-K filed under the Securities Exchange Act of 1934
(File No. 1-8100); and (iii) the Forms ADV of Eaton Vance Management (File No.
801-15930) and Boston Management and Research (File No. 801-43127) filed with
the Commission, all of which are incorporated herein by reference.
ITEM 31. 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,
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. 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 and Boston Management and
Research.
ITEM 32. MANAGEMENT SERVICES
None.
ITEM 33. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof;
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the continuous offering of the shares; and.
(4) To send by first class mail or other means designed to ensure
equally prompt delivery, within two business days of receipt of a written
or oral request, any Statement of Additional Information.
<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 486(b) under the Securities Act of 1933 and has
duly caused this Amendment to the 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 19th day of October, 1998.
EATON VANCE ADVISERS SENIOR
FLOATING-RATE FUND
By /s/ JAMES B. HAWKES
---------------------------
JAMES B. HAWKES, President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to its Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
Trustee, President and
Principal Executive
/s/ JAMES B. HAWKES Officer October 19, 1998
- -----------------------------
JAMES B. HAWKES
Treasurer and Principal
Financial and
/s/ JAMES L. O'CONNOR Accounting Officer October 19, 1998
- -----------------------------
JAMES L. O'CONNOR
DONALD R. DWIGHT* Trustee October 19, 1998
- -----------------------------
DONALD R. DWIGHT
SAMUEL L. HAYES, III* Trustee October 19, 1998
- -----------------------------
SAMUEL L. HAYES, III
NORTON H. REAMER* Trustee October 19, 1998
- -----------------------------
NORTON H. REAMER
JOHN L. THORNDIKE* Trustee October 19, 1998
- -----------------------------
JOHN L. THORNDIKE
JACK L. TREYNOR* Trustee October 19, 1998
- -----------------------------
JACK L. TREYNOR
*By: /s/ ALAN R. DYNNER
- -----------------------------
ALAN R. DYNNER
Attorney-in-fact
<PAGE>
SIGNATURES
Senior Debt Portfolio has duly caused this Amendment to the Registration
Statement on Form N-2 of Eaton Vance Advisers Senior Floating-Rate Fund (File
No. 333-46853) to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Boston and Commonwealth of Massachusetts, on the
19th day of October, 1998.
SENIOR DEBT 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 on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
Trustee, President and
Principal Executive
/s/ JAMES B. HAWKES Officer October 19, 1998
- -----------------------------
JAMES B. HAWKES
Treasurer and Principal
Financial and
/s/ JAMES L. O'CONNOR Accounting Officer October 19, 1998
- -----------------------------
JAMES L. O'CONNOR
DONALD R. DWIGHT Trustee October 19, 1998
- -----------------------------
DONALD R. DWIGHT
/s/ M. DOZIER GARDNER Trustee October 19, 1998
- -----------------------------
M. DOZIER GARDNER
SAMUEL L. HAYES, III* Trustee October 19, 1998
- -----------------------------
SAMUEL L. HAYES, III
NORTON H. REAMER* Trustee October 19, 1998
- -----------------------------
NORTON H. REAMER
JOHN L. THORNDIKE* Trustee October 19, 1998
- -----------------------------
JOHN L. THORNDIKE
JACK L. TREYNOR* Trustee October 19, 1998
- -----------------------------
JACK L. TREYNOR
*By: /s/ ALAN R. DYNNER
- -----------------------------
ALAN R. DYNNER
Attorney-in-fact
<PAGE>
EXHIBIT INDEX
EXHIBITS DESCRIPTION PAGE
(n)(a) Consent of Independent Auditors for Eaton Vance
Advisers Senior Floating-Rate Fund
(n)(b) Consent of Independent Auditors for Senior
Debt Portfolio
(n)(c) Consent of Independent Auditors for Senior Debt
Portfolio
(r)(a) Financial Data Schedule for the period ended
June 30, 1998 for Eaton Vance Advisers Senior
Floating-Rate Fund
(r)(b) Financial Data Schedule for the fiscal year ended
December 31, 1997 for Senior Debt Portfolio
(r)(c) Financial Data Schedule for the six months ended
June 30, 1998 for Senior Debt Portfolio
<PAGE>
EXHIBIT (N)(A)
INDEPENDENT AUDITORS' CONSENT
We consent to the use in Post-Effective Amendment No. 1 to the Registration
Statement of Eaton Vance Advisers Senior Floating-Rate Fund of our report,
dated February 20, 1998, appearing in the Statement of Additional Information,
which is part of this Registration Statement.
/s/ Deloitte & Touche LLP
- -------------------------
Deloitte & Touche LLP
Boston, Massachusetts
October 19, 1998
<PAGE>
EXHIBIT (N)(B)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Post-Effective Amendment No. 1
to the Registration Statement of Eaton Vance Advisers Senior Floating-Rate
Fund of our report relating to Senior Debt Portfolio dated February 13, 1998,
in the Statement of Additional Information, which is part of such Registration
Statement.
We also consent to the reference to our Firm under the captions "Auditors" and
"Financial Statements" in the Statement of Additional Information of the
Registration Statement.
/s/ Deloitte & Touche
- -----------------------
Deloitte & Touche
Grand Cayman, Cayman Islands
British West Indies
October 19, 1998
<PAGE>
EXHIBIT (N)(C)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Post-Effective Amendment No. 1
to the Registration Statement of Eaton Vance Advisers Senior Floating-Rate
Fund of our report relating to Senior Debt Portfolio dated September 18, 1998,
in the Statement of Additional Information, which is part of such Registration
Statement.
We also consent to the reference to our Firm under the captions "Auditors" and
"Financial Statements" in the Statement of Additional Information of the
Registration Statement.
/s/ Deloitte & Touche
- -----------------------
Deloitte & Touche
Boston, Massachusetts
October 19, 1998
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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