<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 10, 1997
1933 ACT FILE NO. 2-27962
1940 ACT FILE NO. 811-1545
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER
SECURITIES ACT OF 1933 [X]
POST-EFFECTIVE AMENDMENT NO. 48 [X]
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 35 [X]
EATON VANCE SPECIAL INVESTMENT TRUST
--------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
24 FEDERAL STREET, BOSTON, MASSACHUSETTS 02110
----------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
617-482-8260
-----------------------
(REGISTRANT'S TELEPHONE NUMBER)
ALAN R. DYNNER
24 FEDERAL STREET, BOSTON, MASSACHUSETTS 02110
--------------------------------------
(NAME AND ADDRESS OF AGENT FOR SERVICE)
It is proposed that this filing will become effective pursuant to Rule 485
(check appropriate box):
[ ] immediately upon filing [ ] on (date) pursuant
pursuant to paragraph (b) to paragraph (a)(1)
[ ] on (date) pursuant to [X] 75 days after
paragraph (b) filing pursuant to
[ ] 60 days after filing paragraph (a)(2)
pursuant to paragraph (a)(1) [ ] on (date) pursuant
to paragraph (a)(2).
If appropriate, check the following box:
[ ] this post effective amendment designates a new effective date for a
previously filed post-effective amendment.
The Registrant has filed a Declaration pursuant to Rule 24f-2 and on
February 26, 1997 filed its "Notice" as required by that Rule for the fiscal
year ended December 31, 1996. Registrant continues its election to register an
indefinite number of shares of beneficial interest pursuant to Rule 24f-2.
================================================================================
<PAGE>
This Amendment to the registration statement on Form N-1A consists of the
following documents and papers:
Cross Reference Sheets required by Rule 481(a) under the Securities Act of
1933
Part A--The Prospectus of:
Eaton Vance Russia and Eastern Europe Fund
Part B--The Statement of Additional Information of:
Eaton Vance Russia and Eastern Europe Fund
Part C--Other Information
Signatures
Exhibit Index Required by Rule 483(a) under the Securities Act of 1933
Exhibits
This Amendment is not intended to amend the Prospectus and Statement of
Additional Information of any series of the Registrant not identified above.
<PAGE>
EATON VANCE SPECIAL INVESTMENT TRUST
CROSS REFERENCE SHEET FOR
EATON VANCE RUSSIA AND EASTERN EUROPE FUND
ITEMS REQUIRED BY FORM N-1A
<TABLE>
<CAPTION>
PART A
ITEM NO. ITEM CAPTION PROSPECTUS CAPTION
- ------ ------------ -------------------------------------------------------
<S> <C> <C>
1. .............. Cover Page Cover Page
2. .............. Synopsis Shareholder and Fund Expenses
3. .............. Condensed Financial Information Performance Information
4. .............. General Description of Registrant The Fund's Investment Objective; Investment Policies
and Risks; Russia and the Eastern European
Region; Organization of the Fund and the Portfolio
5. .............. Management of the Fund Management of the Fund and the Portfolio
5A............... Management's Discussion of Fund Not Applicable
Performance
6. .............. Capital Stock and Other Securities Organization of the Fund and the Portfolio; Reports to
Shareholders; The Lifetime Investing Account/
Distribution Options; Distributions and Taxes
7. .............. Purchase of Securities Being Offered Valuing Shares; How to Buy Shares; Distribution Plans;
The Lifetime Investing Account/Distribution Options;
The Eaton Vance Exchange Privilege; Eaton Vance
Shareholder Services
8. .............. Redemption or Repurchase How to Redeem Shares
9. .............. Pending Legal Proceedings Not Applicable
PART B
ITEM NO. ITEM CAPTION STATEMENT OF ADDITIONAL INFORMATION CAPTION
- ------ ------------ -------------------------------------------------------
10. .............. Cover Page Cover Page
11. .............. Table of Contents Table of Contents
12. .............. General Information and History Other Information
13. .............. Investment Objective and Policies Additional Information about Investment Policies;
Investment Restrictions
14. .............. Management of the Fund Trustees and Officers
15. .............. Control Persons and Principal Holders Control Persons and Principal Holders of Securities
of Securities
16. .............. Investment Advisory and Other Management of the Fund and the Portfolio; Distribution
Services Plans; Custodian; Independent Certified Public
Accountants; Other Information
17. .............. Brokerage Allocation and Other Portfolio Security Transactions
Practices
18. .............. Capital Stock and Other Securities Other Information
19. .............. Purchase, Redemption and Pricing of Determination of Net Asset Value; Principal
Securities Being Offered Underwriter; Services for Accumulation -- Class A
Shares; Service for Withdrawal; Distribution Plans
20. .............. Tax Status Taxes
21. .............. Underwriters Principal Underwriter
22. .............. Calculation of Performance Data Investment Performance
23. .............. Financial Statements Financial Statements
</TABLE>
<PAGE>
PART A
INFORMATION REQUIRED IN A PROSPECTUS
EATON VANCE RUSSIA AND EASTERN EUROPE FUND
EATON VANCE RUSSIA AND EASTERN EUROPE FUND (THE "FUND") IS A MUTUAL FUND SEEKING
LONG-TERM CAPITAL GROWTH THROUGH INVESTMENT IN EQUITY SECURITIES OF COMPANIES
OPERATING IN RUSSIA OR EASTERN EUROPE. THE FUND INVESTS ITS ASSETS IN THE RUSSIA
AND EASTERN EUROPE PORTFOLIO (THE "PORTFOLIO"), A DIVERSIFIED OPEN-END
INVESTMENT COMPANY HAVING THE SAME INVESTMENT OBJECTIVE AS THE FUND, RATHER THAN
BY DIRECTLY INVESTING IN AND MANAGING ITS OWN PORTFOLIO OF SECURITIES. SUCH
INVESTMENTS CAN INVOLVE SIGNIFICANT RISKS THAT ARE NOT NORMALLY INVOLVED IN
INVESTMENT IN U.S. COMPANIES, AND THEREFORE THE FUND MAY NOT BE SUITABLE FOR ALL
INVESTORS. THE FUND IS A SEPARATE SERIES OF EATON VANCE SPECIAL INVESTMENT TRUST
(THE "TRUST").
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK OR OTHER INSURED DEPOSITORY INSTITUTION, AND ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD
OR ANY OTHER GOVERNMENT AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS,
INCLUDING FLUCTUATIONS IN VALUE AND THE POSSIBLE LOSS OF SOME OR ALL OF THE
PRINCIPAL INVESTMENT.
This Prospectus is designed to provide you with information you should know
before investing. Please retain this document for future reference. A Statement
of Additional Information for the Fund, dated January ____, 1998, as
supplemented from time to time, has been filed with the Securities and Exchange
Commission (the "Commission") and is incorporated herein by reference. The
Statement of Additional Information is available without charge from the Fund's
principal underwriter, Eaton Vance Distributors, Inc. (the "Principal
Underwriter"), 24 Federal Street, Boston, MA 02110 (telephone (800) 225-6265).
The sponsor and manager of the Fund and the administrator of the Portfolio is
Eaton Vance Management, 24 Federal Street, Boston, MA 02110 (the "Manager"). The
Portfolio's investment adviser is Lloyd George Investment Management (Bermuda)
Limited (the "Adviser"), 25 Grosvenor Street, London, W1X 9FE, England.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
Page Page
Shareholder and Fund Expenses ............ How to Buy Shares ................
Russia and the Eastern European Region ... How to Redeem Shares .............
The Fund's Investment Objective .......... Reports to Shareholders ..........
Investment Policies and Risks ............ The Lifetime Investing Account/
Organization of the Fund and Distribution Options ............
the Portfolio .......................... The Eaton Vance Exchange
Management of the Fund and Privilege ......................
the Portfolio .......................... Eaton Vance Shareholder Services .
Distribution Plans ....................... Distribution and Taxes ...........
Valuing Shares ........................... Performance Information ..........
- --------------------------------------------------------------------------------
PROSPECTUS DATED JANUARY ____, 1998
<PAGE>
SHAREHOLDER AND FUND EXPENSES
- --------------------------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES
---------------------------------------------------------------------------
CLASS A CLASS B
SHARES SHARES
------- -------
Maximum Sales Charge Imposed on Purchases 5.75% None
(as a percentage of offering price)
Sales Charges Imposed on Reinvested Distributions None None
Fees to Exchange Shares None None
Maximum Contingent Deferred Sales Charge None 5.00%
ANNUAL FUND AND ALLOCATED PORTFOLIO EXPENSES
(as a percentage of average daily net assets)
---------------------------------------------------------------------------
CLASS A CLASS B
SHARES SHARES
------- -------
Management Fees 1.25% 1.25%
Rule 12b-1 Distribution and/or Service Fees ----% 0.75%
Other Expenses 1.25% 1.25%
Total Operating Expenses 2.50% 3.25%
===== =====
EXAMPLES
An investor would pay the following expenses and, in the case of Class
A shares, maximum initial sales charge or, in the case of Class B shares,
contingent deferred sales charge on a $1,000 investment, assuming (a) 5%
annual return and (b) redemption at the end of each period:
CLASS A CLASS B
SHARES SHARES
------- -------
1 Year $ 81 $ 83
3 Years $ 131 $ 140
An investors would pay the following expenses on the same investment,
assuming (a) 5% annual return and (b) no redemptions:
CLASS A CLASS B
SHARES SHARES
------- -------
1 Year $ 81 $ 33
3 Years $ 131 $ 100
NOTES:
The table and Examples summarize the aggregate expenses of the Portfolio and
each Class of shares of the Fund and are designed to help investors understand
the costs and expenses they will bear, directly or indirectly, by investing in
the Fund. Information for each Class is based on its estimated expenses for the
current fiscal year because the Fund has only recently been organized.
Management Fees include management fees paid by the Fund and investment advisory
and administration fees paid by the Portfolio of 0.25%, 0.75% and 0.25%,
respectively.
The Fund offers two classes of shares. Class A shares are sold subject to a
sales charge imposed at the time of purchase. No sales charge is payable at the
time of purchase on investments in Class A shares of $1 million or more.
However, a contingent deferred sales charge ("CDSC") of 1% will be imposed on
such investments in the event of certain redemptions within 12 months of
purchase. Class B shares are sold subject to a declining CDSC (5% maximum) if
redeemed within six years of purchase. The CDSC does not apply in certain
circumstances. See "How to Buy Shares" and "How to Redeem Shares".
-2-
<PAGE>
THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. Federal
regulations require the Examples to assume a 5% annual return, but actual return
will vary. Long-term holders of Class B shares may pay more than the economic
equivalent of the maximum front-end sales charge permitted by a rule of the
National Association of Securities Dealers, Inc. For further information
regarding the expenses of both the Fund and the Portfolio see "Management of the
Fund and the Portfolio", "Distribution Plans" and "How to Redeem Shares".
For Class A and Class B shares sold by Authorized Firms and remaining
outstanding for at least one year, the Fund will pay service fees not exceeding
.25% per annum of its average daily net assets. The Fund expects to begin making
service fee payments during the quarter ending June, 1999. Therefore, expenses
after year one will be higher. See "Distribution and Service Plans".
The Fund invests exclusively in the Portfolio. Other investment companies and
investors with different distribution arrangement and fees are investing in the
Portfolio and additional such companies may do so in the future. See
"Organization of the Fund and the Portfolio".
-3-
<PAGE>
RUSSIA AND THE EASTERN EUROPEAN ("REE") REGION
- --------------------------------------------------------------------------------
THE FOLLOWING IS A GENERAL DISCUSSION OF CERTAIN FEATURES OF THE ECONOMIES AND
SECURITIES MARKETS IN WHICH THE PORTFOLIO MAY INVEST. There can be no assurance
that the Portfolio will be able to capitalize on the factors described herein.
Opinions expressed herein are the good faith opinions of the Portfolio's
investment adviser, Lloyd George Investment Management (Bermuda) Limited (the
"Adviser"). Unless otherwise indicated, all amounts are expressed in United
States dollars.
The collapse in the late 1980s of the centrally planned economies in REE Region
Countries and the rise of market driven economies in their place, together with
the rebirth of securities markets in the Czech Republic, Hungary, Poland and in
the Russian Federation, provide a new and potentially favorable environment for
investment in the REE Region. The Adviser believes that the conditions in REE
Region Countries are conducive to strong economic growth, offering the potential
for long-term capital appreciation from investment in equity securities of REE
Region companies. These conditions include: an improving economic outlook and a
growing demand for consumer goods and services, relatively low wage rates and a
well-educated workforce, the privatization of many state-owned enterprises, an
increasing degree of political stability, the adoption of policies generally
favorable to foreign investment, the development of the REE Region countries'
international and trade relations, particularly with Western European markets
and in the case of certain countries, abundant natural resources. The REE
Region is strategically located between Western Europe, which can provide
capital and technology, and Asia, which has a large and growing consumer
population. As such the REE may become a major trading region between Western
Europe and Asia. The Adviser believes that there now exists a significant
opportunity to participate in investments in the REE Region which can take
advantage of its economic revitalization.
Russia is the dominant country in the REE Region. At the beginning of the 20th
century, the Russian Empire, ruled by the Romanov dynasty, extended throughout
Eastern Europe and much of Asia. After abdication of the Czar in 1917, the
county came under rule of a communist dictatorship. Economic decisions were
centralized and trading outside Warsaw Pact countries was limited. Beginning in
the 1980s, political and economic reforms designed to create a market orientated
economy were begun. At the same time, various territories of the former Soviet
Union, such as the Ukraine, declared their sovereignty. Today, the size of the
Russian Federation is about 6.6 million square miles. By mid- 1997, Russia
appeared to offer a particularly attractive climate for investment. Inflation
appeared stable and no higher than 15%; interest rates were continuing to fall;
exchange rates had stabilized; consumer good shortages had disappeared;
employment among younger workers was strong and growing; economic growth had
become positive; and property and other laws were becoming more refined.
These trends are evident elsewhere in the REE Region as well. The Czech
Republic, Poland and Hungary each came under the influence of the Soviet Union
after World War II. In the 1990s, political autonomy was achieved and
privatization programs have been implemented. The Prague, Warsaw and Budapest
Stock Exchanges have been reopened. Legal structures and free trade policies
have been adopted to promote free enterprise.
-4-
<PAGE>
The Adviser expects that initially it will consider making investments for the
Portfolio in the following countries:
Bulgaria Croatia Czech Republic
Estonia Hungary Latvia
Lithuania Poland Romania
Russia Slovakia Slovenia
Turkey Ukraine
("Russia" refers to the Russian Federation, which does not include other
countries that formerly comprised the Soviet Union.)
[map of REE Region to be included here]
THE FUND'S INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
THE FUND'S INVESTMENT OBJECTIVE IS LONG-TERM CAPITAL GROWTH. It currently seeks
to meet its investment objective by investing its assets in the Russia and
Eastern Europe Portfolio (the "Portfolio"), a separate registered investment
company that invests primarily in equity securities of companies operating in
Russia or Eastern Europe (the "REE Region").
Investments in the REE Region can involve significant risks that are generally
not involved with investments in U.S. companies. The Fund is intended for
long-term investors who can accept international investment risk, little or no
current income, and volatility in the value of their investment. The Fund is not
intended to be a complete investment program. Prospective investors should take
into account their personal objectives and other investments when considering
the purchase of Fund shares. The Fund cannot assure achievement of its
investment objective. The investment objective of the Fund and the Portfolio are
nonfundamental and may be changed when authorized by a vote of the Trustees of
the Trust or the Portfolio without obtaining the approval of the Fund's
shareholders or the investors in the Portfolio, as the case may be. Investments
in Russia and Eastern Europe can be considered speculative, and, therefore, may
offer higher potential for gains and losses than investments in the developed
markets of the world. See "Investment Policies and Risks" for further
information.
INVESTMENT POLICIES AND RISKS
- --------------------------------------------------------------------------------
THE PORTFOLIO SEEKS TO ACHIEVE ITS OBJECTIVE THROUGH INVESTING IN A CAREFULLY
SELECTED AND CONTINUOUSLY MANAGED PORTFOLIO CONSISTING PRIMARILY OF EQUITY
SECURITIES OF COMPANIES OPERATING IN THE REE REGION. The Portfolio will, under
normal market conditions, invest at least 80% of its total assets in equity
securities of REE Region companies. Substantially all of the Portfolio's
assets, however, will normally be invested in equity securities, warrants and
options on equity securities and indices. As used in this Prospectus, a company
is operating in the REE Region if it (a) is organized under the laws of, or
maintains its principal place of business in, a REE country, (b) has its
securities traded primarily in a REE country or (c) derives at least 50% of its
gross sales revenues or profits from goods produced or sold, investments made,
or services performed in the REE Region, or that has at least 50% of its assets
located in the REE Region. REE Region investments are typically listed on
stock exchanges or traded in an over-the-counter market.
The Portfolio will invest no more than 50% of its assets in the securities of
issuers located in any one country other than Russia. The Portfolio initially is
likely to concentrate investments in Russia, the Czech Republic, Hungary and
Poland.
-5-
<PAGE>
Equity securities, for purposes of the 80% policy, will be limited to common and
preferred stocks; equity interest in trusts, partnerships, joint ventures and
other unincorporated entities or enterprises; special classes of shares
available only to foreign investors in markets that restrict ownership by
foreign investors to certain classes of equity securities; American, Global and
other Depository Receipts; convertible preferred stocks; and other convertible
instruments. The convertible instruments in which the Portfolio will invest will
generally not be rated, but will typically be equivalent in credit quality to
securities rated below investment grade (I.E., credit quality equivalent to
lower than Baa by Moody's Investors Service, Inc. ("Moody's") or lower than BBB
by Standard & Poor's Ratings Group ("S&P")). Convertible debt securities that
are not investment grade are commonly called "junk bonds" and have risks similar
to equity securities; they have speculative characteristics and changes in
economic conditions or other circumstances are more likely to lead to a weakened
capacity to make principal and interest payments than is the case with higher
grade debt securities. Below investment grade debt securities will not exceed
20% of total assets.
With respect to 20% of its net assets, the Portfolio may invest in equity
securities of issuers outside the REE Region which are anticipated to benefit
from the economic development of the REE Region. In addition, the Fund may
invest up to 15% of its total assets in debt obligations of governmental and
private issuers in the REE Region which, in the opinion of the Adviser, have
the potential for long-term capital appreciation based on such factors as
relative interest rate levels and foreign exchange rates. Such debt securities
may be of below investment grade quality. The Fund anticipates that any debt
investments made by the Fund initially will consist of debt securities issued or
guaranteed by REE Region governments or governmental entities. The Fund may
also invest in debt securities acquired in conjunction with an equity investment
by the Fund in a related issuer. Warrants may not exceed 5% of the Portfolio's
net assets. For temporary defensive purposes, such as abnormal market or
economic conditions, the Portfolio may invest without limit in high grade debt
securities of foreign and United States companies, foreign governments and the
U.S. Government, and their respective agencies, instrumentalities, political
subdivisions and authorities, as well as in high quality money market
instruments.
AN INVESTMENT IN THE FUND ENTAILS THE RISK THAT THE PRINCIPAL VALUE OF FUND
SHARES MAY NOT INCREASE OR MAY decline. The Portfolio's investments are subject
to the risk of adverse developments affecting particular companies or industries
and securities markets generally. In addition, the REE Region poses numerous
special risks.
INVESTING IN FOREIGN SECURITIES. Investing in securities issued by foreign
companies and governments involves considerations and possible risks not
typically associated with investing in securities issued by the U.S. Government
and domestic corporations. The values of foreign investments are affected by
changes in exchange control regulations, application of foreign tax laws,
including withholding tax changes in governmental administration or economic or
monetary policy (in this country or abroad) or changed circumstances in dealings
between nations. Because investment in REE Region issuers will usually involve
currencies of foreign countries, the value of the assets of the Portfolio as
measured in U.S. dollars may be adversely affected by changes in foreign
currency exchange rates. Such rates may fluctuate significantly over short
periods of time causing the Portfolio's net asset value to fluctuate as well.
Costs are incurred in connection with conversions between various currencies. In
addition, foreign brokerage commissions, custody fees and other costs of
investing are generally higher than in the United States, and foreign securities
markets may be less liquid, more volatile and less subject to governmental
supervision than in the United States. Investments in foreign issuers could be
adversely affected by other factors not present in the United States, including
expropriation, confiscatory taxation, lack of uniform accounting and auditing
standards, less publicly available financial and other information, armed
conflict, and potential difficulties in enforcing contractual obligations.
Transactions in the securities of foreign issuers could be subject to settlement
delays and risk of loss.
-6-
<PAGE>
More than 25% of the Portfolio's total assets, adjusted to reflect currency
transactions and positions, may be denominated in any single currency.
Concentration in a particular currency will increase the Portfolio's exposure to
adverse developments affecting the value of such currency, including
governmental devaluation. An issuer of securities purchased by the Portfolio may
be domiciled in a country other than the country in whose currency the
securities are denominated.
The Portfolio's investment performance will be especially affected by events
affecting companies in the REE Region. The value and liquidity of REE Region
investments may be affected favorably or unfavorably by political, economic,
fiscal, regulatory or other developments in it or neighboring regions. Economic
conditions, political stability and market depth in the region are comparatively
underdeveloped. REE Region investments typically involve greater potential for
gain or loss than investments in securities of issuers in developed countries.
Given the Portfolio's investments, the Portfolio will likely be particularly
sensitive to changes in the economies of such countries as a result of any
reversals of economic liberalization in those countries, political unrest or
changes in trading status.
SECURITIES TRADING MARKETS. The securities markets in the REE Region are
substantially smaller, less liquid and more volatile than the major securities
markets in the United States. The stock markets have only recently been
reestablished after decades of communist rule. A high proportion of the shares
of many issuers may be held by a limited number of persons and financial
institutions, which may limit the number of shares available for investment by
the Portfolio. The prices at which the Portfolio may acquire investments may be
affected by trading by persons with material non-public information and by
securities transactions by brokers in anticipation of transactions by the
Portfolio in particular securities. The securities markets in the REE Region
are susceptible to being influenced by large investors trading significant
blocks of securities. Similarly, volume and liquidity in the bond markets in
these countries are less than in the United States and, at times, price
volatility can be greater than in the United States. Some exchanges are not open
daily. The limited liquidity of these securities markets may also affect the
Portfolio's ability to acquire or dispose of securities at the price and time it
wishes to do so. Precise valuation of securities may be problematic.
The stock markets in the REE Region are undergoing a period of growth and
change, which may result in trading or price volatility and difficulties in the
settlement and recording of transactions, and in interpreting and applying the
relevant law and regulations. The securities industries in these countries are
comparatively underdeveloped and less regulated, and stockbrokers and other
intermediaries, which often are lacking in experience, technology and capital,
may not perform as well as their counterparts in the United States and other
more developed securities markets. Investment in a country will be delayed until
a custodian that is qualified under U.S. regulations has a contractual
relationship with the Portfolio. In many countries, no qualified custodian
currently exists. The securities registration systems are newly established and
not highly regulated. In some countries, such as Russia, there is no central
registration system and fraud or negligence may lead to losses. Postal and
banking systems generally are less reliable than in the United States, which may
result in lost dividends or other distributions. Amounts lost through insolvency
of a financial institution may not be guaranteed by a sovereign.
Settlement of securities transactions may be delayed and is generally less
frequent than in the United States, which could affect the liquidity of the
Portfolio's assets. To mitigate these risks, the Portfolio may maintain a higher
cash position than it otherwise would, thereby possibly diluting its return, or
the Portfolio may have to sell liquid securities that it would not otherwise
choose to sell. In some cases, the Portfolio may find it necessary or desirable
to borrow funds on a short-term basis, within the limits of the Investment
Company Act of 1940 (the "1940 Act"), to help meet redemption requests. Such
borrowings would result in increased expense to the Fund. THE FUND MAY SUSPEND
REDEMPTION PRIVILEGES OR POSTPONE THE DATE OF PAYMENT FOR MORE THAN SEVEN DAYS
AFTER A REDEMPTION ORDER IS RECEIVED UNDER CERTAIN CIRCUMSTANCES. See "How to
Redeem Shares".
-7-
<PAGE>
INVESTMENT CONTROLS. Foreign investment in the securities of issuers in REE
Region countries is usually restricted or controlled to some degree. Investment
in REE Region countries may require the procurement of a substantial number of
regulatory consents, certificates and approvals, including licenses for the
Portfolio or Adviser to operate in a country, consents to making investments in
particular companies or types of industries, certificates from tax authorities,
licenses for a custodian, and consents required by local legislation. The
inability to obtain a particular license, consent or approval could adversely
impact the Fund's operations.
Participation in privatization by foreign investors in certain enterprises
(including enterprises whose defense orders exceed a certain percentage of
production, or which affect food supply, consumers services, construction, the
oil and gas sector, the extraction and processing of the ore of strategic
materials, precious and semi-precious stones and precious metals, radioactive
and rare elements, and transport and communication enterprises) may require the
consent of the government. Foreign investors may not participate in the
privatization of enterprises situated within certain closed territories.
There can be no assurance that these investment control regimes will not change
in a way that makes it more difficult or impossible for the Portfolio to
implement its investment objective or repatriate its income, gains and initial
capital from these countries.
REE REGION TAXES. The Fund and the Portfolio each intends to conduct its
respective affairs in such a manner that it will not be resident in the REE
Region for local tax purposes. The Portfolio's income from certain regional
sources will be subject to tax by REE countries, subject to tax treaties with
the United States. Fund shareholders may be entitled to a deduction or credit on
foreign taxes paid by the Fund.
[The Portfolio intends to qualify for benefits under the Income Tax Convention
between the Russian Federation and the United States pursuant to which a Russian
withholding tax at a maximum rate of 10% will be imposed upon dividends paid by
a Russian company to the Portfolio. Interest received by the Portfolio from
sources within Russia and capital gains of the Portfolio arising from its
investments in Russia, are exempt. If the Portfolio does not qualify for such
benefits, dividends and interest received from Russian sources will be subject
to Russian withholding tax of 15% and capital gains may be subject to Russian
withholding tax of 20% The Portfolio will be subject to a Russian tax on the
transfer of securities at effective rates between 0.1% and 0.6% of the transfer
value.
Pursuant to a tax treaty between the United States and The Czech Republic
dividends received from Czech securities will be generally subject to a
withholding tax at a rate of 15%. Interest received from such investments will
not be subject to withholding taxes and capital gains will not be taxed.
(Dividends and interest may be subject to tax withholding at 25% in the future).
If the benefits of the Treaty were not available to the Portfolio, the Portfolio
would be subject to tax under Czech domestic tax law which provides that the
sale of shares and securities in Czech corporations is subject to taxation at
the rate of 42%. In addition, the Fund would be subject to withholding of 25% on
dividend and interest payments received with respect to Czech investments. In
Hungary, dividends, interest and capital gains are subject to a 10% tax. In
Poland, dividends only are subject to tax which is 20%.]
New taxes, interpretations of existing law or treaty changes could occur and be
applied retroactively, which may adversely affect the Fund.
COUNTRY CONSIDERATIONS. Political and economic structures in the REE Region
generally lack the social, political and economic stability characteristic of
the United States. REE Region countries have had centrally planned socialist
economies for most of this century. Governmental actions can have a significant
effect on the economic conditions in such countries, which could adversely
affect the value and liquidity of the Portfolio's investments. ALTHOUGH THE
-8-
<PAGE>
GOVERNMENTS OF THE REE REGION HAVE RECENTLY BEGUN TO INSTITUTE DEMOCRATIC
AND FREE MARKET REFORM POLICIES, THERE CAN BE NO ASSURANCE THAT THEY WILL
CONTINUE TO PURSUE SUCH POLICIES OR, IF THEY DO, THAT SUCH POLICIES WILL
SUCCEED. SUCH COUNTRIES HAVE IN THE PAST FAILED TO RECOGNIZE PRIVATE PROPERTY
RIGHTS AND HAVE AT TIMES NATIONALIZED OR EXPROPRIATED THE ASSETS OF PRIVATE
COMPANIES, INCLUDING SECURITIES.
The laws of countries in the REE Region relating to private property, limited
liability of corporate shareholders, fiduciary duties of officers and directors,
foreign investment, and the bankruptcy of state enterprises are new and
generally less developed than and different from such laws in the United States.
Uniform application of legal principles may not occur, and it may be difficult
to obtain and enforce a judgment in the courts of these countries than it is in
the United States. Legislative developments are expected and may further
complicate the administration of law.
In addition to the foregoing, investing in the REE Region involves certain
other considerations not typically associated with investment in developed
capital markets, including the possibility of ethnic or civil conflict,
involvement by the military in political decisions, attempted coup d'etates,
social unrest due to hyperinflation, employment dislocation or other strained
economic conditions, and corruption and crime in the securities industry. In
many industries there is a current lack of management personnel, technology or
capital to compete in an international economy. REE Region governments may be
constrained in the level of support they can provide private enterprise because
of additional factors such as the need to service foreign debt, curb
environmental pollution and address social ills. REE Region countries are
heavily dependent on international trade which can be adversely affected by
trade barriers, exchange rate changes and negotiated protectionist measures.
Stability of international financial assistance may also be essential to a
country's prospects.
UNLISTED SECURITIES. The Portfolio may invest up to 15% of its net assets in
securities of companies that are neither listed on a stock exchange nor traded
over the counter. Unlisted securities may include new and early stage companies,
which may involve a high degree of business and financial risk that can result
in substantial losses and may be considered speculative. Such securities will
generally be deemed to be illiquid. Because of the absence of any public trading
market for these investments, the Portfolio may take longer to liquidate these
positions than would be the case for publicly traded securities. Although these
securities may be resold in privately negotiated transactions, the prices
realized from these sales could be less than those originally paid by the
Portfolio or less than what may be considered the fair value of such securities.
Furthermore, issuers whose securities are not publicly traded may not be subject
to public disclosure and other investor protection requirements applicable to
publicly traded securities. If such securities are required to be registered
under the securities laws of one or more jurisdictions before being resold, the
Portfolio may be required to bear the expenses of registration. In addition, any
capital gains realized on the sale of such securities may be subject to higher
rates of taxation than taxes payable on the sale of listed securities.
DERIVATIVE INSTRUMENTS. The Portfolio may purchase or sell derivative
instruments (which are instruments that derive their value from another
instrument, security, index or currency) to enhance return, to hedge against
fluctuations in securities prices, interest rates or currency exchange rates, or
as a substitute for the purchase or sale of securities or currencies. The
Portfolio's transactions in derivative instruments may be in the U.S. or abroad
and may include the purchase or sale of futures contracts on securities,
securities indices, other indices, other financial instruments or currencies;
options on futures contracts; exchange-traded and over-the-counter options on
securities, indices or currencies; currency swaps and forward foreign currency
exchange contracts. The Portfolio's transactions in derivative instruments
involve a risk of loss or depreciation due to unanticipated adverse changes in
securities prices, interest rates, the other financial instruments' prices or
currency exchange rates; the inability to close out a position; default by the
counterparty; imperfect correlation between a position and the desired hedge;
-9-
<PAGE>
tax constraints on closing out positions; and portfolio management
constraints on securities subject to such transactions. The loss on derivative
instruments (other than purchased options) may substantially exceed the
Portfolio's initial investment in these instruments. In addition, the Portfolio
may lose the entire premium paid for purchased options that expire before they
can be profitably exercised by the Portfolio. The Portfolio incurs transaction
costs in opening and closing positions in derivative instruments. There can be
no assurance that an Adviser's use of derivative instruments will be
advantageous to the Portfolio.
To the extent that the Portfolio enters into futures contracts, options on
futures contracts and options on foreign currencies traded on an exchange
regulated by the Commodity Futures Trading Commission ("CFTC"), in each case
that are not for BONA FIDE hedging purposes (as defined by the CFTC), the
aggregate initial margin and premiums required to establish these positions
(excluding the amount by which options are "in-the-money") may not exceed 5% of
the liquidation value of the Portfolio's investments, after taking into account
unrealized profits and unrealized losses on any contracts the Portfolio has
entered into.
Forward foreign currency exchange contracts are individually negotiated and
privately traded by currency traders and their customers. A forward contract
involves an obligation to purchase or sell a specific currency (or basket of
currencies) for an agreed price at a future date, which may be any fixed number
of days from the date of the contract. The Portfolio may engage in cross-hedging
by using forward contracts in one currency (or basket of currencies) to hedge
against fluctuations in the value of securities denominated in a different
currency if an Adviser determines that there is an established historical
pattern or correlation between the two currencies (or the basket of currencies
and the underlying currency). Use of a different foreign currency magnifies the
Portfolio's exposure to foreign currency exchange rate fluctuations. The
Portfolio may also use forward contracts to shift its exposure to foreign
currency exchange rate changes from one currency to another.
CURRENCY SWAPS. The Portfolio may enter into currency swaps for both hedging and
non-hedging purposes. Currency swaps involve the exchange of rights to make or
receive payments in specified currencies. Since currency swaps are individually
negotiated, the Portfolio expects to achieve an acceptable degree of correlation
between its portfolio investments and its currency swap positions. Currency
swaps usually involve the delivery of the entire principal value of one
designated currency in exchange for the other designated currency. Therefore,
the entire principal value of a currency swap is subject to the risk that the
other party to the swap will default on its contractual delivery obligations.
The use of currency swaps is a highly specialized activity which involves
special investment techniques and risks. If the Adviser is incorrect in its
forecasts of market values and currency exchange rates, the Portfolio's
performance will be adversely affected.
LENDING OF PORTFOLIO SECURITIES. The Portfolio may seek to earn additional
income by lending portfolio securities to broker-dealers or other institutional
borrowers. As with other extensions of credit there are risks of delay in
recovery or even loss of rights in the securities loaned if the borrower of the
securities fails financially. However, the loans will be made only to
organizations deemed by an Adviser to be sufficiently creditworthy and when, in
the judgment of the Adviser, the consideration which can be earned from
securities loans of this type justifies the attendant risk.
REPURCHASE AGREEMENTS. The Portfolio may enter into repurchase agreements (the
purchase of a security coupled with an agreement to resell at a higher price)
with respect to its permitted investments, but currently intends to do so only
with member banks of the Federal Reserve System or with primary dealers in U.S.
Government securities. In the event of the bankruptcy of the other party to a
repurchase agreement, the Portfolio might experience delays in recovering its
-10-
<PAGE>
cash. To the extent that, in the meantime, the value of the securities the
Portfolio purchased may have decreased, the Portfolio could experience a loss.
At no time will the Portfolio commit more than 15% of its net assets to
repurchase agreements which mature in more than seven days and other illiquid
securities. The Portfolio does not expect to invest more than 5% of its total
assets in repurchase agreements, under normal circumstances.
OTHER INVESTMENT COMPANIES. The Portfolio reserves the right to invest up to 10%
of its total assets in the securities of other investment companies unaffiliated
with an Adviser or the Manager that have the characteristics of closed-end
investment companies. The Portfolio will indirectly bear its proportionate share
of any management fees paid by investment companies in which it invests in
addition to the advisory fee paid by the Portfolio. The value of closed-end
investment company securities, which are usually traded on an exchange, is
affected by demand for the securities themselves, independent of the demand for
the underlying portfolio assets, and, accordingly, such securities can trade at
a discount from their net asset values.
CERTAIN INVESTMENT POLICIES. The Fund and the Portfolio have adopted certain
fundamental investment restrictions and policies which are enumerated in detail
in the Statement of Additional Information and which may not be changed unless
authorized by a shareholder vote and an investor vote, respectively. Among the
fundamental restrictions, neither the Fund nor the Portfolio may (1) borrow
money, except as permitted by the 1940 Act; (2) purchase any securities on
margin (but the Fund and the Portfolio may obtain such short-term credits as may
be necessary for the clearance of purchases and sales of securities); or (3)
with respect to 75% of its total assets, invest more than 5% of its total assets
(taken at current value) in the securities of any one issuer, or invest in more
than 10% of the outstanding voting securities of any one issuer, except
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities and except securities of other investment companies.
Investment restrictions are considered at the time of acquisition of assets; the
sale of portfolio assets is not required in the event of a subsequent change in
circumstances. As a matter of fundamental policy the Portfolio will not invest
25% or more of its total assets in the securities, other than U.S. Government
securities, of issuers in any one industry. However, the Portfolio is permitted
to invest 25% or more of its total assets in (i) the securities of issuers
located in any one country and (ii) securities denominated in the currency of
any one country.
Under the 1940 Act and the rules promulgated thereunder, the Portfolio's
investments in the securities of any company that, in its most recent fiscal
year, derived more than 15% of its gross revenues from securities-related
activities is limited to 5% of any class of the issuer's equity securities and
10% of the outstanding principal amount of the issuer's debt securities,
provided that the Portfolio's aggregate investments in the securities of any
such issuer does not exceed 5% of the Portfolio's total assets. Some of the
companies available for investment in the REE Region, including enterprises
being privatized by such countries, may be financial services businesses that
engage in securities-related activities. The Portfolio's ability to invest in
such enterprises may thus be limited.
The Fund's investment policies include a provision allowing the Fund to invest
part of its assets in one or more open-end management investment companies other
than the Portfolio (in the same group of investment companies that are advised
by the Adviser) if, with respect to such assets, the other company's permitted
investments are substantially the same as those of the Fund.
Except for the fundamental investment restrictions and policies specifically
identified above and enumerated in the Statement of Additional Information, the
investment objective and policies of the Fund and the Portfolio are not
fundamental policies and accordingly may be changed by the Trustees of the Trust
and the Portfolio without obtaining the approval of the shareholders of the Fund
or the investors in the Portfolio, as the case may be.
-11-
<PAGE>
ORGANIZATION OF THE FUND AND THE PORTFOLIO
- --------------------------------------------------------------------------------
THE FUND IS A DIVERSIFIED SERIES OF EATON VANCE SPECIAL INVESTMENT TRUST, A
BUSINESS TRUST ESTABLISHED UNDER MASSACHUSETTS LAW PURSUANT TO A DECLARATION OF
TRUST DATED MARCH 27, 1989, AS AMENDED. The Trustees of the Trust are
responsible for the overall management and supervision of its affairs. The Trust
may issue an unlimited number of shares of beneficial interest (no par value per
share) in one or more series (such as the Fund). The Trustees of the Trust have
divided the shares of the Fund into multiple classes, including Class A and
Class B shares. Each class represents an interest in the Fund, but is subject to
different expenses, rights and privileges. See "Distribution Plans" and "How to
Buy Shares". The Trustees have the authority under the Declaration of Trust to
create additional classes of shares with differing rights and privileges.
When issued and outstanding, the shares are fully paid and nonassessable by the
Trust and redeemable as described under "How to Redeem Shares". There are no
annual meetings of shareholders, but special meetings may be held as required by
law to elect Trustees and consider certain other matters. Shareholders are
entitled to one vote for each full share held. Fractional shares may be voted
proportionately. Shares of the Fund will be voted together except that only
shareholders of a particular class may vote on matters affecting only that
class. Shares have no preemptive or conversion rights and are freely
transferable. In the event of the liquidation of the Fund, shareholders of each
class are entitled to share pro rata in the net assets attributable to that
class available for distribution to shareholders.
The Trustees of the Trust have considered the advantages and disadvantages of
investing the assets of the Fund in the Portfolio, as well as the advantages and
disadvantages of the two-tier format. The Trustees believe that the structure
offers opportunities for growth in the assets of the Portfolio, affords the
potential for economies of scale for the Fund and may over time result in lower
expenses for the Fund.
THE PORTFOLIO IS ORGANIZED AS A TRUST UNDER THE LAWS OF THE STATE OF NEW YORK
AND INTENDS TO BE TREATED AS A PARTNERSHIP FOR FEDERAL TAX PURPOSES. In addition
to selling an interest to the Fund, the Portfolio may sell interests to other
affiliated and non-affiliated mutual funds or institutional investors. Such
investors will invest in the Portfolio on the same terms and conditions and will
pay a proportionate share of the Portfolio's expenses. However, the other
investors investing in the Portfolio are not required to sell their shares at
the same public offering price as the Fund due to variations in sales
commissions and other operating expenses. Therefore, these differences may
result in differences in returns experienced by investors in the various funds
that invest in the Portfolio. Information regarding other pooled investment
entities or funds which invest in the Portfolio may be obtained by contacting
the Principal Underwriter, 24 Federal Street, Boston, MA 02110 (617) 482-8260.
Whenever the Fund as an investor in the Portfolio is requested to vote on
matters pertaining to the Portfolio (other than the termination of the
Portfolio's business, which may be determined by the Trustees of the Portfolio
without investor approval), the Fund will hold a meeting of Fund shareholders
and will vote its interest in the Portfolio for or against such matters
proportionately to the instructions to vote for or against such matters received
from Fund shareholders. The Fund shall vote shares for which it receives no
voting instructions in the same proportion as the shares for which it receives
voting instructions. Other investors in the Portfolio may alone or collectively
acquire sufficient voting interests in the Portfolio to control matters relating
to the operation of the Portfolio, which may require the Fund to withdraw its
investment in the Portfolio or take other appropriate action. Any such
-12-
<PAGE>
withdrawal could result in a distribution "in kind" of portfolio securities (as
opposed to a cash distribution from the Portfolio). If securities are
distributed, the Fund could incur brokerage, tax or other charges in converting
the securities to cash. In addition, the distribution in kind may result in a
less diversified portfolio of investments or adversely affect the liquidity of
the Fund. Notwithstanding the above, there are other means for meeting
shareholder redemption requests, such as borrowing.
The Fund may withdraw (completely redeem) all its assets from the Portfolio at
any time if the Board of Trustees of the Trust determines that it is in the best
interest of the Fund to do so. In the event the Fund withdraws all of its assets
from the Portfolio, or the Board of Trustees of the Trust determines that the
investment objective of the Portfolio is no longer consistent with the
investment objective of the Fund, such Trustees would consider what action might
be taken, including investing the assets of the Fund in another pooled
investment entity or retaining an investment adviser to manage the Fund's assets
in accordance with its investment objective. The Fund's investment performance
may be affected by a withdrawal of all its assets (or the assets of another
investor in the Portfolio) from the Portfolio.
MANAGEMENT OF THE FUND AND THE PORTFOLIO
- --------------------------------------------------------------------------------
EATON VANCE MANAGEMENT ("EATON VANCE") ACTS AS THE SPONSOR AND MANAGER OF THE
FUND AND AS THE ADMINISTRATOR OF THE PORTFOLIO. THE PORTFOLIO HAS ENGAGED LLOYD
GEORGE INVESTMENT MANAGEMENT (BERMUDA) LIMITED AS ITS INVESTMENT ADVISER. The
Portfolio is managed by __________________.
The Adviser is registered as an investment adviser with the Commission. The
Adviser is a subsidiary of Lloyd George Management (B.V.I.) Limited ("LGM"). LGM
and its subsidiaries act as investment adviser to various individual and
institutional clients with total assets under management of approximately $2
billion. Eaton Vance's parent, Eaton Vance Corp., owns 21% of the Class A shares
issued by LGM.
LGM was established in 1991 to provide investment management services with
respect to equity securities of companies trading in foreign securities markets,
especially those of emerging markets. LGM currently manages portfolios for both
private clients and institutional investors seeking long-term capital growth.
LGM's core investment team consists of thirteen experienced investment
professionals based in Hong Kong, London and Mumbai, who have worked together
over a number of years successfully managing client portfolios in non-U.S. stock
markets. The team has a unique knowledge of, and experience with, foreign
emerging markets. LGM is ultimately controlled by the Hon. Robert J.D. Lloyd
George, President and Trustee of the Portfolio and Chairman and Chief Executive
Officer of the Adviser. LGM's only activity is portfolio management.
LGM and the Adviser have adopted a conservative management style, providing a
blend of multinational expertise with the most rigorous international standards
of fundamental security analysis. LGM and the Adviser maintain a network of
international contacts in order to monitor international economic and stock
market trends and offer clients a global management service. Personnel of the
Adviser include the following:
-13-
<PAGE>
THE HONOURABLE ROBERT LLOYD GEORGE. Chairman. Born in London in 1952 and
educated at Eton College, where he was a King's Scholar, and at Oxford
University. Prior to founding LGM, Mr. Lloyd George was Managing Director of
Indosuez Asia Investment Services Ltd. Previously, he spent four years with the
Fiduciary Trust Company of New York researching international securities, in the
United States and Europe, for the United Nations Pension Fund. Mr. Lloyd George
is the author of numerous published articles and three books - "A Guide to Asian
Stock Markets (Longmans, Hong Kong, 1989), "The East West Pendulum"
(Woodhead-Faulkner, Cambridge, 1991) and "North South - an Emerging Markets Hand
Book" (Probus England, 1994).
WILLIAM WALTER RALEIGH KERR. Finance Director and Chief Operating Officer.
Born in 1950 and educated at Ampleforth and Oxford. Mr. Kerr qualified as
Chartered Accountant at Thomson McLintock & Co. before joining The Oldham Estate
Company plc as Financial Controller. Prior to joining LGM, Mr. Kerr was a
Director of Banque Indosuez's corporate finance subsidiary, Financiere Indosuez
Limited, in London. Prior to that Mr. Kerr worked for First Chicago Limited.
SCOBIE DICKINSON WARD. Director and Chief Investment Officer. Born in 1966
and a cum laude graduate of both Phillips Academy Andover and Harvard
University. Mr. Ward joined Indosuez Asia Investment Services Ltd. in 1989,
where he managed the $100 million Himalayan Fund, and the Indosuez Tasman Fund,
investing in Australia and New Zealand.
M.F. TANG. Director. Born in 1946 and educated in Hong Kong. Mr. Tang is a
Fellow of the Chartered Association of Certified Accountants. Mr. Tang joined
LGM having worked for Australian Mutual Provident Society in Sydney where he was
a Portfolio Manager responsible for Asian Equities. Prior thereto Mr. Tang
worked for Barclays Australia Investment Services Ltd. From 1978 to 1986 Mr.
Tang worked for Barings International Investment Management and prior to that he
spent six years with Peat Marwick Mitchell & Co. Mr. Tang is fluent in Cantonese
and Mandarin dialects of the Chinese language.
PAMELA CHAN. Director. Born in Hong Kong in 1957 and graduated from Mills
College in Oakland, California. She was an investment executive for Jardine
Fleming from 1982-1984 before moving to Australia where she worked as a Fund
Manager for Rothschild and Aetna. She joined Sun Life Assurance Society PLC in
England in 1987 where she was the head of South East Asian Equities and a
Director. Ms. Chan joined LGM in April 1994.
ADALINE MANG-YEE KO. Director. Born in 1943 and educated at University of
Birmingham, England and at London Business School where she received her MBA.
Ms. Ko has over 14 years experience working with Far East Asian equities. From
1982-1988, she worked at Save & Prosper Group Ltd. as an investment manager. In
1988, Ms. Ko transferred to Robert Fleming & Co. Ltd. In 1990, she was promoted
to Director of Fleming Investment Management Ltd. In 1992, she was promoted to
Head of the Pacific Region Portfolios Group where she supervised a team of 5
with responsibility for over $1.5 billion in assets under management. Ms. Ko
joined LGM in 1995.
KIERSTEN CHRISTENSEN. Born in , is a cum laude graduate of Georgetown
University. She worked and studied in Spain before joining Katama Inc. in 1988.
From 1990 to 1992, Ms. Christensen worked for Chartwell Information, a
consulting company in Washington DC. Ms. Christensen joined Lloyd George
Management in 1993.
-14-
<PAGE>
JOHN STAINSBY. Director. Born in , he graduated from the University of
Manchester. He jointed Schroder Investment Management in London in 1983 where he
worked as an analyst and fund manager on the Asian desk. In 1987 he was seconded
to Singapore International Merchant Bankers where he was the head of investment.
In 1990 Mr. Stainsby moved to New York to join Schroder Capital Management where
he serviced clients investing in international equities and developed a client
base of U.S. pension Funds specialized in investing in Asian portfolios. In 1992
he returned to Schroders in London to be a Pacific Basin portfolio manager for
U.S. pension funds. He joined LGM in 1995 and is responsible for the London
office.
While the Portfolio is a New York trust, the Adviser, together with certain
Trustees and officers of the Portfolio, are not residents of the United States,
and substantially all of their respective assets may be located outside the
United States. It may be difficult for investors to effect service of process
within the United States upon such individuals, or to realize judgments of
courts of the United States predicated upon civil liabilities of the Adviser and
such individuals under the federal securities laws of the United States. The
Portfolio has been advised that there is substantial doubt as to the
enforceability in the countries in which the Adviser and such individuals reside
of such civil remedies and criminal penalties as are afforded by the federal
securities laws of the United States.
Under its investment advisory agreement with the Portfolio, the Adviser receives
a monthly advisory fee of 0.0625% (equivalent to 0.75% annually) of the average
daily net assets of the Portfolio up to $500 million, which fee declines at
intervals above $500 million.
The Adviser also furnishes for the use of the Portfolio office space and all
necessary office facilities, equipment and personnel for servicing the
investments of the Portfolio. The Adviser places the portfolio transactions of
the Portfolio with many broker-dealer firms and uses its best efforts to obtain
execution of such transactions at prices which are advantageous to the Portfolio
and at reasonably competitive commission rates. Subject to the foregoing, the
Adviser may consider sales of shares of the Fund as a factor in the selection of
firms to execute portfolio transactions. The Fund, the Portfolio, the Manager
and the Adviser have adopted Codes of Ethics relating to personal securities
transactions. The Codes permit the Manager's and the Adviser's personnel to
invest in securities (including securities that may be purchased or held by the
Portfolio) for their own accounts, subject to certain reporting and other
restrictions and procedures contained in such Codes.
EATON VANCE, ITS AFFILIATES AND ITS PREDECESSOR COMPANIES HAVE BEEN MANAGING
ASSETS OF INDIVIDUALS AND INSTITUTIONS SINCE 1924 AND MANAGING INVESTMENT
COMPANIES SINCE 1931. EATON VANCE ACTS AS INVESTMENT ADVISER TO INVESTMENT
COMPANIES AND VARIOUS INDIVIDUAL AND INSTITUTIONAL CLIENTS WITH ASSETS UNDER
MANAGEMENT OF APPROXIMATELY $20 BILLION. Eaton Vance is a wholly-owned
subsidiary of Eaton Vance Corp., a publicly-held holding company which through
its subsidiaries and affiliates engages primarily in investment management,
administration and marketing activities. The Principal Underwriter is a
wholly-owned subsidiary of Eaton Vance.
Eaton Vance, acting under the general supervision of the Board of Trustees of
the Trust and the Portfolio, manages and administers the business affairs of the
Fund and the Portfolio. Eaton Vance's services include monitoring and providing
reports to the Trustees of the Trust and the Portfolio concerning the investment
performance achieved by the Adviser for the Portfolio, recordkeeping,
preparation and filing of documents required to comply with federal and state
securities laws, supervising the activities of the transfer agent of the Fund
and the custodian of the Portfolio, providing assistance in connection with
Trustees' and shareholders' meetings and other management and administrative
services necessary to conduct the business of the Fund and the Portfolio. Eaton
Vance does not provide any investment management or advisory services to the
Portfolio or the Fund. Eaton Vance also furnishes for the use of the Fund and
the Portfolio office space and all necessary office facilities, equipment and
personnel for managing and administering the business affairs of the Fund and
the Portfolio.
-15-
<PAGE>
Under its management contract with the Fund, Eaton Vance receives a monthly
management fee in the amount of 1/48 of 1% (equal to 0.25% annually) of the
average daily net assets of the Fund up to $500 million, which fee declines at
intervals above $500 million. In addition, under its administration agreement
with the Portfolio, Eaton Vance receives a monthly administration fee in the
amount of 1/48 of 1% (equal to 0.25% annually) of the average daily net assets
of the Portfolio up to $500 million, which fee declines at intervals above $500
million.
The Fund and the Portfolio, as the case may be, will each be responsible for all
respective costs and expenses not expressly stated to be payable by the Adviser
under the investment advisory agreement, by Eaton Vance under the management
contract or the administration agreement, or by the Principal Underwriter under
the distribution agreement. Such costs and expenses to be borne by each of the
Fund or the Portfolio, as the case may be, include, without limitation: custody
and transfer agency fees and expenses, including those incurred for determining
net asset value and keeping accounting books and records; expenses of pricing
and valuation services; the cost of share certificates; membership dues in
investment company organizations; brokerage commissions and fees; fees and
expenses of registering under the securities laws; expenses of reports to
shareholders and investors; proxy statements, and other expenses of
shareholders' or investors' meetings; insurance premiums, printing and mailing
expenses; interest, taxes and corporate fees; legal and accounting expenses;
compensation and expenses of Trustees not affiliated with Eaton Vance or the
Adviser; and investment advisory, management and administration fees. The Fund
and the Portfolio, as the case may be, will also each bear expenses incurred in
connection with litigation in which the Fund or the Portfolio, as the case may
be, is a party and any legal obligation to indemnify its respective officers and
Trustees with respect thereto, to the extent not covered by insurance.
DISTRIBUTION PLAN
- --------------------------------------------------------------------------------
The Trust has adopted a Distribution Plan (the "Class A Plan") for the Fund's
Class A shares that is designed to meet the requirements of Rule 12b-1 under the
1940 Act. THE CLASS PLAN PROVIDES FOR THE PAYMENT OF A MONTHLY DISTRIBUTION FEE
TO THE PRINCIPAL UNDERWRITER IN AN AMOUNT EQUAL TO THE AGGREGATE OF (A) .50% OF
THAT PORTION OF CLASS A AVERAGE DAILY NET ASSETS FOR ANY FISCAL YEAR WHICH IS
ATTRIBUTABLE TO ITS SHARES WHICH HAVE REMAINED OUTSTANDING FOR LESS THAN ONE
YEAR AND (B) .25% OF THAT PORTION OF CLASS A AVERAGE DAILY NET ASSETS FOR ANY
FISCAL YEAR WHICH IS ATTRIBUTABLE TO ITS SHARES WHICH HAVE REMAINED OUTSTANDING
FOR MORE THAN ONE YEAR. Aggregate payments to the Principal Underwriter under
the Class A Plan are limited to those permissible, pursuant to a rule of the
National Association of Securities Dealers, Inc ("NASD").
The Class A Plan also provides that the Class will pay a quarterly service fee
to the Principal Underwriter in an amount equal on an annual basis to .25% of
that portion of its average daily net assets for any fiscal year which is
attributable to Class A shares which have remained outstanding for more than one
year; from such service fee the Principal Underwriter expects to pay a quarterly
service fee to Authorized Firms, as compensation for providing personal services
and/or the maintenance of shareholder accounts, with respect to shares sold by
such Firms which have remained outstanding for more than one year. The Trustees
of the Trust have implemented the Class A Plan by authorizing each Class A to
make quarterly service fee payments to the Principal Underwriter not to exceed
on an annual basis .25% of that portion of average daily net assets for any
fiscal year which is attributable to Class A shares which have remained
outstanding for more than one year. Service fee payments to Authorized Firms
will be in addition to sales charges on Class A shares which are reallowed to
Authorized Firms. If the Class A Plan is terminated or not continued in effect,
the Class has no obligation to reimburse the Principal Underwriter for amounts
expended by the Principal Underwriter in distributing Class A shares.
-16-
<PAGE>
The Trust has also adopted a Distribution Plan ("Class B Plan") pursuant to Rule
12b-1 under the 1940 Act for the Fund's Class B shares. The Plan is designed to
permit an investor to purchase shares through an Authorized Firm without
incurring an initial sales charge and at the same time permit the Principal
Underwriter to compensate Authorized Firms in connection therewith. UNDER SUCH
PLAN, CLASS B PAYS THE PRINCIPAL UNDERWRITER A FEE, ACCRUED DAILY AND PAID
MONTHLY, AT AN ANNUAL RATE NOT EXCEED .75% OF ITS AVERAGE DAILY NET ASSETS TO
FINANCE THE DISTRIBUTION OF ITS SHARES. Such fees compensate the Principal
Underwriter for sales commissions paid by it to Authorized Firms on the sale of
Class B shares and for interest expenses. The Principal Underwriter uses its own
funds to pay sales commissions (except on exchange transactions and
reinvestments) to Authorized Firms at the time of sale equal to 4% of the
purchase price of the Class B shares sold by such Firms. CDSCs paid to the
Principal Underwriter will be used to reduce amounts owed to it. Because
payments to the Principal Underwriter under the Class B Plan are limited,
uncovered distribution charges (sales commissions paid by the Principal
Underwriter plus interest, less the above fees and CDSCs received by it) may
exist indefinitely.
THE CLASS B PLAN ALSO AUTHORIZES THE CLASS TO MAKE PAYMENTS OF SERVICE FEES TO
THE PRINCIPAL UNDERWRITER, AUTHORIZED FIRMS AND OTHER PERSONS IN AMOUNTS NOT
EXCEEDING .25% OF ITS AVERAGE DAILY NET ASSETS FOR PERSONAL SERVICES, AND/OR THE
MAINTENANCE OF SHAREHOLDER ACCOUNTS. This fee is paid quarterly in arrears based
on the value of Class B shares sold by such persons and remaining outstanding
for at least twelve months. Class B expects to begin accruing for its service
fees during the quarter ending March 31, 1999.
Distribution of Class B shares by the Principal Underwriter will also be
encouraged by the payment by the Adviser to the Principal Underwriter of amounts
equivalent to .15% of Class B annual average daily net assets. Such payments
will be made from the Adviser's own resources, not Class assets. The aggregate
amounts of such payments are a deduction in calculating the outstanding
uncovered distribution charges of the Principal Underwriter under the Plan and,
therefore, will benefit shareholders when such charges exist. Such payments will
be made in consideration of the Principal Underwriter's distribution efforts.
The Principal Underwriter may, from time to time, at its own expense, provide
additional incentives to Authorized Firms which employ registered
representatives who sell Fund shares and/or shares of other funds distributed by
the Principal Underwriter. In some instances, such additional incentives may be
offered only to certain Authorized Firms whose representatives sell or are
expected to sell significant amounts of shares. In addition, the Principal
Underwriter may from time to time increase or decrease the sales commissions
payable to Authorized Firms.
The Trust may, in its absolute discretion, suspend, discontinue or limit the
offering of one or more of its classes of shares at any time. In determining
whether any such action should be taken, the Trust's management intends to
consider all relevant factors, including (without limitation) the size of the
Fund or class, the investment climate and market conditions, the volume of sales
and redemptions of shares, and in the case of Class B shares, the amount of
uncovered distribution charges of the Principal Underwriter. The Plans may
continue in effect and payments may be made under the Plans following any such
suspension, discontinuance or limitation of the offering of shares; however,
there is not contractual obligation to continue any Plan for any particular
period of time. Suspension of the offering of shares would not, of course,
affect a shareholder's ability to redeem shares.
-17-
<PAGE>
VALUING SHARES
- --------------------------------------------------------------------------------
THE FUND VALUES ITS SHARES ONCE ON EACH DAY THE NEW YORK STOCK EXCHANGE (THE
"EXCHANGE") IS OPEN FOR TRADING, as of the close of regular trading on the
Exchange (normally 4:00 p.m. New York time). Each Class's net asset value per
share is determined by the Trust's custodian, Investors Bank & Trust Company
("IBT"), (as agent for the Trust) in the manner authorized by the Trustees of
the Trust. The net asset value of each Class is computed by dividing the value
of that Class's pro rata share of the Fund's total assets, less its liabilities,
by the number of shares of that Class outstanding. Because the Fund invests its
assets in an interest in the Portfolio, each Class's net asset value will
reflect the value of the Fund's interest in the Portfolio (which, in turn,
reflects the underlying value of the Portfolio's assets and liabilities).
Authorized Firms must communicate an investor's order to the Principal
Underwriter prior to the close of the Principal Underwriter's business day to
receive that day's net asset value per share and, for Class A shares, the public
offering price based thereon. It is the Authorized Firms' responsibility to
transmit orders promptly to the Principal Underwriter.
The Portfolio's net asset value is also determined as of the close of regular
trading on the Exchange by IBT (as custodian and agent for the Portfolio) based
on market or fair value in the manner authorized by the Trustees of the
Portfolio. Exchange listed securities are generally valued at closing sales
prices. Net asset value is computed by subtracting the liabilities of the
Portfolio from the value of its total assets.
SHAREHOLDERS MAY DETERMINE THE VALUE OF THEIR INVESTMENT BY MULTIPLYING
THE NUMBER OF SHARES OWNED BY THE CURRENT NET ASSET VALUE PER SHARE.
HOW TO BUY SHARES
- --------------------------------------------------------------------------------
SHARES OF THE FUND MAY BE PURCHASED FOR CASH OR MAY BE ACQUIRED IN EXCHANGE FOR
ACCEPTABLE SECURITIES. Class A shares are purchased at the effective public
offering price, which price is based on the effective net asset value per share
plus the applicable sales charge. The sales charge is divided between the
Authorized Firm and the Principal Underwriter. Class B shares are purchased at
the net asset value per share next determined after an order is effective. An
Authorized Firm may charge its customers a fee in connection with transactions
executed by that Firm. The Trust may suspend the offering of shares at any time
and may refuse an order for the purchase of shares.
An initial investment must be at least $1,000. Once an account has been
established the investor may send investments of $50 or more at any time
directly to the Trust's transfer agent (the "Transfer Agent") as follows: First
Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123. The
$1,000 minimum initial investment is waived for Bank Automated Investing
accounts, which may be established with an investment of $50 or more. See "Eaton
Vance Shareholder Services".
In connection with employee benefit or other continuous group purchase plans,
the Trust may accept initial investments of Class B shares of less than $1,000
on the part of an individual participant. In the event a shareholder who is a
participant of such a plan terminates participation in the plan, his or her
shares will be transferred to a regular individual account. However such account
will be subject to the right of redemption by the Trust as described below under
"How to Redeem Shares".
-18-
<PAGE>
CLASS A SHARES. The sales charge may vary depending on the size of the purchase
and the number of Class A shares of Eaton Vance funds the investor may already
own, any arrangement to purchase additional shares during a 13-month period or
special purchase programs. Complete details of how investors may purchase shares
at reduced sales charges under a Statement of Intention or Right of Accumulation
are available from Authorized Firms or the Principal Underwriter.
The current sales charges and dealer commissions are:
<TABLE>
SALES CHARGE SALES CHARGE DEALER COMMISSION
AS PERCENTAGE OF AS PERCENTAGE OF AS PERCENTAGE OF
AMOUNT OF PURCHASE OFFERING PRICE AMOUNT INVESTED OFFERING PRICE
- ---------------------------------------------- ----------------------- ---------------------- --------------------------
<S> <C> <C> <C>
Less than $50,000 5.75% 6.10% 5.00%
$50,000 but less than $100,000 4.75 4.99 4.00
$100,000 but less than $250,000 3.75 3.90 3.00
$250,000 but less than $500,000 3.00 3.10 2.50
$500,000 but less than $1,000,000 2.00 2.04 1.75
$1,000,000 or more 0.00* 0.00* See Below**
</TABLE>
* No sales charge is payable at the time of purchase on investments of $1
million or more. A CDSC of 1% will be imposed on such investments in the
event of certain redemptions within 12 months of purchase.
**Acommission on sales of $1 million or more will be paid as follows: 1.00% on
amounts of $1 million or more but less than $3 million; plus 0.50% on amounts
from $3 million but less than $5 million; plus 0.25% on amounts of $5 million
or more. Purchases of $1 million or more will be aggregated over a 12-month
period for purposes of determining the commission to be paid.
The Principal Underwriter may at times allow discounts up to the full sales
charge. During periods when the discount includes the full sales charge,
Authorized Firms may be deemed to be underwriters as that term is defined in the
Securities Act of 1933.
Class A shares may be sold at net asset value to current and retired Directors
and Trustees of Eaton Vance funds, including the Portfolio; to clients and
current and retired officers and employees of Eaton Vance, its affiliates and
other investment advisers of Eaton Vance sponsored funds; to registered
representatives and employees of Authorized Firms and bank employees who refer
customers to registered representatives of Authorized Firms; to officer and
employees of IBT and the Transfer Agent; and to such persons' spouses and
children under the age of 21 and their beneficial accounts. Class A shares may
also be issued at net asset value (1) in connection with the merger of an
investment company or series thereof with the Fund, (2) to investors making an
investment as part of a fixed fee program whereby an entity unaffiliated with
Eaton Vance provides multiple investment services, such as management, brokerage
and custody, and (3) to investment advisors, financial planners or other
intermediaries who place trades for their own accounts or the accounts of their
clients and who charge a management, consulting or other fee for their services;
clients of such investment advisors, financial planners or other intermediaries
who place trades for their own accounts if the accounts are linked to the master
account of such advisor, financial planner or other intermediary on the books
and records of the broker or agent; and retirement and deferred compensation
plans and trusts used to fund those plans, including, but not limited to, those
defined in Section 401(a), 403(b) or 457 of the Internal Revenue Code of 1986,
as amended (the "Code") and "rabbi trusts". The Trust's Principal Underwriter
may pay commissions to Authorized Firms who initiate and are responsible for
purchases of Class A shares of the Fund by Eligible Plans of up to 1.00% of the
amount invested in such shares.
-19-
<PAGE>
No sales charge is payable at the time of purchase where the amount invested
represents redemption proceeds from a mutual fund unaffiliated with Eaton Vance
if the redemption occurred no more than 60 days prior to the purchase of Class A
shares and the redeemed shares were potentially subject to a sales charge. A
CDSC of 0.50% will be imposed on such investments in the event of certain
redemptions within 12 months of purchase and the Authorized Firm will be paid a
commission on such sales of 0.50% of the amount invested.
STATEMENT OF INTENTION AND ESCROW AGREEMENT. If the investor, on an application,
makes a Statement of Intention to invest a specified amount over a
thirteen-month period in Class A shares, then out of the initial purchase (or
subsequent purchases if necessary) 5% of the dollar amount specified on the
application shall be held in escrow by the escrow agent in the form of such
shares (computed to the nearest full share at the public offering price
applicable to the initial purchase hereunder) registered in the investor's name.
All income dividends and capital gains distributions on escrowed shares will be
paid to the investor or to the investor's order. When the minimum investment so
specified is completed, the escrowed shares will be delivered to the investor.
If the investor has an accumulation account the shares will remain on deposit
under the investor's account.
If total purchases under this Statement of Intention are less than the amount
specified, the investor will promptly remit to the Principal Underwriter any
difference between the sales charge on the amount specified and on the amount
actually purchased. If the investor does not within 20 days after written
request by the Principal Underwriter or the Authorized Firm pay such difference
in sales charge, the escrow agent will redeem an appropriate number of the
escrowed shares in order to realize such difference. Full shares remaining after
any such redemption together with any excess cash proceeds of the shares so
redeemed will be delivered to the investor or to the investor's order by the
escrow agent.
If total purchases made under this Statement are large enough to qualify for a
lower sales charge than that applicable to the amount specified, all
transactions will be computed at the expiration date of this Statement to give
effect to the lower charge. Any difference in sales charge will be refunded to
the investor in cash, or applied to the purchase of additional shares at the
lower charge if specified by the investor. This refund will be made by the
Authorized Firm and by the Principal Underwriter. If at the time of the
recomputation an Authorized Firm other than the original Firm is placing the
orders, the adjustments will be made only on those shares purchased through the
Firm then handling the investor's account.
ACQUIRING FUND SHARES IN EXCHANGE FOR SECURITIES. IBT, as escrow agent, will
receive securities acceptable to Eaton Vance, as Manager, in exchange for Fund
shares. The minimum value of securities (or securities and cash) accepted for
deposit is $5,000. Securities accepted will be sold on the day of their receipt
or as soon thereafter as possible. The number of Fund shares to be issued in
exchange for securities will be the aggregate proceeds from the sale of such
securities, divided by the applicable public offering price of Class A shares or
net asset value of Class B shares on the day such proceeds are received. Eaton
Vance will use reasonable efforts to obtain the then current market price for
such securities, but does not guarantee the best available price. Eaton Vance
will absorb any transaction costs, such as commissions, on the sale of the
securities.
-20-
<PAGE>
Securities determined to be acceptable should be transferred via book entry or
physically delivered, in proper form for transfer, through an Authorized Firm,
together with a completed and signed Letter of Transmittal in approved form
(available from Authorized Firms), as follows:
IN THE CASE OF BOOK ENTRY: IN THE CASE OF PHYSICAL DELIVERY:
Deliver through Depository Trust Co. Investors Bank & Trust Company
Broker #2212 Attention: Eaton Vance Russia
Investors Bank & Trust Company and Eastern Europe Fund
For A/C Eaton Vance Russia and (state Class)
Eastern Europe Fund (state Class) Physical Securities Processing
Settlement Area
200 Clarendon Street
Boston, MA 02116
Investors who are contemplating an exchange of securities for shares, or their
representatives, must contact Eaton Vance to determine whether the securities
are acceptable before forwarding such securities. Eaton Vance reserves the right
to reject any securities. Exchanging securities for shares may create a taxable
gain or loss. Each investor should consult his or her tax adviser with respect
to the particular federal, state and local tax consequences of exchanging
securities.
IF YOU DON'T HAVE AN AUTHORIZED FIRM, EATON VANCE CAN RECOMMEND ONE.
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
A SHAREHOLDER MAY REDEEM SHARES IN ONE OF THREE WAYS - BY MAIL, BY TELEPHONE OR
THROUGH AN AUTHORIZED FIRM. The redemption price will be based on the net asset
value per share next computed after a redemption request is received in the
proper form as described below.
REDEMPTION BY MAIL: Shares may redeemed by delivering to the Transfer Agent,
First Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123,
during its business hours a written request for redemption in good order, plus
any share certificates with executed stock powers. Good order means that all
relevant documents must be endorsed by the record owner(s) exactly as the shares
are registered and the signature(s) must be guaranteed by a member of either the
Securities Transfer Association's STAMP program or the New York Stock Exchange's
Medallion Signature Program, or certain banks, savings and loan institutions,
credit unions, securities dealers, securities exchanges, clearing agencies and
registered securities associations as required by a Commission regulation and
acceptable to the Transfer Agent. In addition, in some cases, good order may
require the furnishing of additional documents such as where shares are
registered in the name of a corporation, partnership or fiduciary.
REDEMPTION BY TELEPHONE: Shares may be redeemed by telephone provided the
investor has not disclaimed in writing the use of the privilege. Such
redemptions can be effected by calling the Transfer Agent at 800-262-1122,
Monday through Friday, 9:00 a.m. to 4:00 p.m. (Eastern Standard Time). The
proceeds of a telephone redemption may be no greater than the maximum amount
established by the Principal Underwriter (currently $50,000) and may be mailed
only to the account address of record. Shares held by corporations, trusts or
certain other entities, or subject to fiduciary arrangements, may not be
redeemed by telephone. Neither the Trust, the Principal Underwriter nor the
Transfer Agent will be responsible for the authenticity of redemption
instructions received by telephone, provided that reasonable procedures to
confirm that instructions communicated by telephone are genuine have been
followed. Telephone instructions will be tape recorded. In times of drastic
economic or market changes, a telephone redemption may be difficult to
implement.
-21-
<PAGE>
REDEMPTION THROUGH AN AUTHORIZED FIRM. To sell shares at their net asset value
through an Authorized Firm (a repurchase), a shareholder can place a repurchase
order with the Authorized Firm, which may charge a fee. The value of such shares
is based upon the net asset value calculated after the Principal Underwriter, as
the Trust's agent, receives the order. It is the Authorized Firm's
responsibility to transmit promptly repurchase orders to the Principal
Underwriter. Throughout this Prospectus, the word "redemption" is generally
meant to include a repurchase.
Within seven days after receipt of a redemption request in good order by the
Trust will make payment in cash for the net asset value of the shares as of the
date determined above, reduced by the amount of any applicable CDSC (described
below) and any federal income tax required to be withheld. While normally
payments will be made in cash for redeemed shares, the Trust, subject to
compliance with applicable regulations, has reserved the right to pay the
redemption price of shares of the Fund, either totally or partially, by a
distribution in kind of readily marketable securities withdrawn from the
Portfolio. The securities so distributed would be valued pursuant to the
Portfolio's valuation procedures. If a shareholder received a distribution in
kind, the shareholder could incur brokerage or other charges in converting the
securities to cash.
If shares were recently purchased, the proceeds of a redemption will not be sent
until the check (including a certified or cashier's check) received for the
shares purchased has cleared. Payment for shares tendered for redemption may be
delayed up to 15 days from the purchase date when the purchase check has not yet
cleared.
Redemptions may result in a taxable gain or loss.
Due to the high cost of maintaining small accounts, the Trust reserves the right
to redeem accounts with balances of less than $750. Prior to such a redemption,
shareholders will be given 60 days' written notice to make an additional
purchase. However, no such redemption would be required by the Trust if the
cause of the low account balance was a reduction in the net asset value of
shares. No CDSC will be imposed with respect to involuntary redemptions.
CONTINGENT DEFERRED SALES CHARGE. Each class of shares is subject to a CDSC on
certain redemptions. The CDSC is calculated based on the lower of the net asset
value at the time of purchase or the time of redemption. Shares acquired through
the reinvestment of distributions are exempt. Redemptions are made first from
shares in the account which are not subject to a CDSC.
In calculating a CDSC upon the redemption of shares acquired in an exchange, the
shares are deemed to have been acquired at the time of the original purchase of
the exchanged shares and, in the case of Class B shares, the CDSC schedule
applicable to the exchanged shares will apply to the acquired shares. No CDSC is
imposed on shares sold to Eaton Vance or its affiliates, or to their respective
employees or clients. Shares acquired as the result of a merger or liquidation
of another Eaton Vance sponsored fund generally will be subject to the same CDSC
rate imposed by the prior fund.
CLASS A SHARES. If Class A shares are purchased at net asset value because the
purchase amount was $1 million or more, they will be subject to a 1% CDSC if
redeemed within 12 months of purchase. If Class A Shares are purchased at net
asset value because the amount invested represents redemption proceeds from an
unaffiliated mutual fund (as described under "How to Buy Shares"), they will be
subject to a .50% CDSC if redeemed within 12 months of purchase.
-22-
<PAGE>
CLASS B SHARES. Class B shares will be subject to the following CDSC schedule:
Year of Redemption
After Purchase CDSC
------------------ ----
First or Second 5%
Third 4%
Fourth 3%
Fifth 2%
Sixth 1%
Seventh and following 0
The Class B CDSC is waived for redemptions (1) pursuant to a Withdrawal Plan
(see "Eaton Vance Shareholder Services"), (2) as part of a required distribution
from a tax-sheltered retirement plan, or (3) following the death of ALL
beneficial owners of shares, provided the redemption is requested within one
year of death (a death certificate and other applicable documents may be
required).
REPORTS TO SHAREHOLDERS
- --------------------------------------------------------------------------------
THE FUND WILL ISSUE TO ITS SHAREHOLDERS SEMI-ANNUAL AND ANNUAL REPORTS
CONTAINING FINANCIAL STATEMENTS. Financial statements included in annual reports
are audited by the Fund's independent certified public accountants. Shortly
after the end of each calendar year, the Fund will furnish all shareholders with
information necessary for preparing federal and state tax returns. Consistent
with applicable law, duplicate mailings of shareholder reports and certain other
Fund information to shareholders residing at the same address may be eliminated.
THE LIFETIME INVESTING ACCOUNT/DISTRIBUTION OPTIONS
- --------------------------------------------------------------------------------
AFTER AN INVESTOR MAKES AN INITIAL PURCHASE OF SHARES, THE TRANSFER AGENT WILL
SET UP A LIFETIME INVESTING ACCOUNT FOR THE INVESTOR ON THE TRUST'S RECORDS.
This account is a complete record of all transactions which at all times shows
the balance of shares owned. The Trust will not issue share certificates except
upon request.
Each time a transaction takes place in a shareholder's account, the shareholder
will receive a statement showing complete details of the transaction and the
current balance in the account. (Under certain investment plans, statements may
be sent only quarterly.) THE LIFETIME INVESTING ACCOUNT ALSO PERMITS A
SHAREHOLDER TO MAKE ADDITIONAL INVESTMENTS IN SHARES BY SENDING A CHECK FOR $50
OR MORE to the Transfer Agent.
Any questions concerning a shareholder's account or services available may be
directed by telephone to EATON VANCE SHAREHOLDER SERVICES at 800-225-6265,
extension 2, or in writing to the Transfer Agent, First Data Investor Services
Group, P.O. Box 5123, Westborough, MA 01581-5123 (please provide the name of the
shareholder, the Fund and Class, and the account number).
THE FOLLOWING DISTRIBUTION OPTIONS WILL BE AVAILABLE TO ALL LIFETIME INVESTING
ACCOUNTS and may be changed as often as desired by written notice to the Trust's
dividend disbursing agent, First Data Investor Services Group, P.O. Box 5123,
Westborough, MA 01581-5123. The currently effective option will appear on each
account statement.
SHARE OPTION -- Dividends and capital gains will be reinvested in additional
shares.
-23-
<PAGE>
INCOME OPTION -- Dividends will be paid in cash, and capital gains will be
reinvested in additional shares.
CASH OPTION -- Dividends and capital gains will be paid in cash.
The SHARE OPTION will be assigned if no other option is specified.
Distributions, including those reinvested, will be reduced by any withholding
required under federal income tax laws.
If the INCOME OPTION or CASH OPTION has been selected, dividend and/or capital
gains distribution checks which are returned by the United States Postal Service
as not deliverable or which remain uncashed for six months or more will be
reinvested in the account in shares at the then current net asset value.
Furthermore, the distribution option on the account will be automatically
changed to the SHARE OPTION until such time as the shareholder selects a
different option.
DISTRIBUTION INVESTMENT OPTION. In addition to the distribution options set
forth above, dividends and/or capital gains may be invested in additional shares
of another Eaton Vance fund. Before selecting this option, a shareholder should
obtain a prospectus of the other Eaton Vance fund and consider its objectives
and policies carefully.
"STREET NAME" ACCOUNTS. If shares are held in a "street name" account with an
Authorized Firm, all recordkeeping, transaction processing and payments of
distributions relating to the beneficial owner's account will be performed by
the Authorized Firm, and not by the Trust and its Transfer Agent. Since the
Trust will have no record of the beneficial owner's transactions, a beneficial
owner should contact the Authorized Firm to purchase, redeem or exchange shares,
to make changes in or give instructions concerning the account, or to obtain
information about the account. The transfer of shares in a "street name" account
to an account with another Authorized Firm or to an account directly with the
Trust involves special procedures and will require the beneficial owner to
obtain historical purchase information about the shares in the account from the
Authorized Firm. Before establishing a "street name" account with an Authorized
Firm, or transferring the account to another Authorized Firm, an investor
wishing to reinvest distributions should determine whether the Authorized Firm
which will hold the shares allows reinvestment of distributions in "street name"
accounts.
THE EATON VANCE EXCHANGE PRIVILEGE
- --------------------------------------------------------------------------------
Shares of the Fund currently may be exchanged for shares of the same class of
one or more other funds in the Eaton Vance Group of Funds. Class A shares may
also be exchanged for shares of Eaton Vance Cash Management Fund, Eaton Vance
Income Fund of Boston, Eaton Vance Municipal Bond Fund, and Eaton Vance Tax Free
Reserves. Class B shares may also be exchanged for shares of Eaton Vance Prime
Rate Reserves, which are subject to an early withdrawal charge, or shares of
Eaton Vance Money Market Fund, which are subject to a CDSC, and shares of a
money market fund sponsored by an Authorized Firm and approved by the Principal
Underwriter (an "Authorized Firm fund"). Any such exchange will be made on the
basis of the net asset value per share of each fund/class at the time of the
exchange (plus, in the case of an exchange made within six months of the date of
purchase of Class A shares subject to an initial sales charge, an amount equal
to the difference, if any, between the sales charge previously paid on the
shares being exchanged and the sales charge payable on the shares being
acquired). Exchange offers are available only in States where shares of the fund
being acquired may be legally sold. Exchanges are subject to any restrictions or
qualifications set forth in the current prospectus of any such fund.
-24-
<PAGE>
Each exchange must involve shares which have a net asset value of at least
$1,000. The exchange privilege may be changed or discontinued without penalty.
Shareholders will be given sixty (60) days' notice prior to any termination or
material amendment of the exchange privilege. The Trust does not permit the
exchange privilege to be used for "Market Timing" and may terminate the exchange
privilege for any shareholder account engaged in Market Timing activity. Any
shareholder account for which more than two round-trip exchanges are made within
any twelve-month period will be deemed to be engaged in Market Timing.
Furthermore, a group of unrelated accounts for which exchanges are entered
contemporaneously by a financial intermediary will be considered to be engaged
in Market Timing.
The Transfer Agent makes exchanges at the next determined net asset value after
receiving an exchange request in good order (see "How to Redeem Shares").
Consult the Transfer Agent for additional information concerning the exchange
privilege. Applications and prospectuses of other funds are available from
Authorized Firms or the Principal Underwriter. The prospectus for each fund
describes its investment objectives and policies, and shareholders should obtain
a prospectus and consider these objectives and policies carefully before
requesting an exchange.
No CDSC is imposed on exchanges. For purposes of calculating the CDSC upon the
redemption of shares acquired in an exchange, the CDSC schedule applicable to
the shares at the time of purchase will apply and the purchase of shares
acquired in one or more exchanges is deemed to have occurred at the time of the
original purchase of the exchanged shares, except that time during which shares
are held in an Authorized Firm fund will not be credited toward completion of
the CDSC period. For the CDSC schedule applicable to Class B shares (except
Prime Rate Reserves and Class B shares of the Limited Maturity Funds), see "How
to Redeem Shares". The CDSC or early withdrawal charge schedule applicable to
Prime Rate Reserves and Class B shares of the Limited Maturity Funds is 3%,
2.5%, 2% or 1% in the event of a redemption occurring in the first, second,
third or fourth year, respectively, after the original share purchase.
Telephone exchanges are accepted by the Transfer Agent provided that the
investor has not disclaimed in writing the use of the privilege. To effect such
exchanges, call the Transfer Agent at 800-262-1122, Monday through Friday, 9:00
a.m. to 4:00 p.m. (Eastern Standard Time). Shares acquired by telephone exchange
must be registered in the same name(s) and with the same address as the shares
being exchanged. Neither the Trust, the Principal Underwriter nor the Transfer
Agent will be responsible for the authenticity of exchange instructions received
by telephone, provided that reasonable procedures to confirm that instructions
communicated are genuine have been followed. Telephone instructions will be tape
recorded. In times of drastic economic or market changes, a telephone exchange
may be difficult to implement. An exchange may result in a taxable gain or loss.
EATON VANCE SHAREHOLDER SERVICES
- --------------------------------------------------------------------------------
THE TRUST OFFERS THE FOLLOWING SERVICES, WHICH ARE VOLUNTARY, INVOLVE NO EXTRA
CHARGE, AND MAY BE CHANGED OR DISCONTINUED WITHOUT PENALTY AT ANY TIME. Full
information on each of the services described below and an application, where
required, are available from Authorized Firms or the Principal Underwriter. The
cost of administering such services for the benefit of shareholders who
participate in them is borne by the Fund or Class as an expense to all
shareholders.
INVEST-BY-MAIL - FOR PERIODIC SHARE ACCUMULATION: Once the $1,000 minimum
investment has been made, checks of $50 or more payable to the order the Fund
and specifying the Class being purchased may be mailed directly to the Transfer
Agent, First Data Investor Services Group, P.O. Box 5123, Westborough, MA
0158-5123 at any time whether or not distributions are reinvested. The name of
the shareholder, the Fund and Class and the account number should accompany each
investment.
-25-
<PAGE>
BANK AUTOMATED INVESTING -- FOR REGULAR SHARE ACCUMULATION: Cash investments of
$50 or more may be made automatically each month or quarter from a shareholder's
bank account. The $1,000 minimum initial investment and small account redemption
policy are waived for these accounts.
WITHDRAWAL PLAN: A shareholder may draw on shareholdings systematically with
monthly or quarterly checks. For Class B shares, any such withdrawals may not in
the aggregate exceed 12% annually of the account balance at the time the plan is
established. Such amount will be subject to the Class B CDSC. See "How to Redeem
Shares". A minimum deposit of $5,000 in shares is required. The maintenance of a
withdrawal plan concurrently with purchases of additional Class A shares would
be disadvantageous because of the sales charge included in such purchase.
STATEMENT OF INTENTION: Purchases of $50,000 or more of Class A shares made over
a 13-month period are eligible for reduced sales charges. See "How to Buy Shares
- - Statement of Intention and Escrow Agreement".
RIGHT OF ACCUMULATION: Purchases may qualify for reduced sales charges on Class
A shares when the current market value of holdings (shares at current offering
price), plus new purchases, reaches $50,000 or more. Class A shares of the Eaton
Vance funds listed under "The Eaton Vance Exchange Privilege" may be combined
under the Statement of Intention and Right of Accumulation.
REINVESTMENT PRIVILEGE: A shareholder who has redeemed shares may reinvest, with
credit for any CDSCs paid on the redeemed shares, any portion or all of the
redemption proceeds (plus that amount necessary to acquire a fractional share to
round off the purchase to the nearest full share) in the same shares (or for
Class A shares in Class A shares of any other Eaton Vance fund), provided that
the reinvestment is effected within 60 days after such redemption, and the
privilege has not been used more than once in the prior 12 months. Shares are
sold to a reinvesting shareholder at the next determined net asset value
following timely receipt of a written purchase order by the Principal
Underwriter or by the Trust (or by the Trust's Transfer Agent). To the extent
that any shares are sold at a loss and the proceeds are reinvested in shares (or
other shares are acquired) within the period beginning 30 days before and ending
30 days after the date of the redemption, some or all of the loss generally will
not be allowed as a tax deduction. Shareholders should consult their tax
advisers concerning the tax consequences of reinvestments.
TAX-SHELTERED RETIREMENT PLANS: Class A shares of the Fund are available for
purchase in connection with certain tax-sheltered retirement plans. Detailed
information concerning these plans, including certain exceptions to minimum
investment requirements, and copies of the plans are available from the
Principal Underwriter. This information should be read carefully and
consultation with an attorney or tax adviser may be advisable. The information
sets forth the service fee charged for retirement plans and describes the
federal income tax consequences of establishing a plan. Participant accounting
services (including trust fund reconciliation services) will be offered only
through third party recordkeepers and not by the Principal Underwriter. Under
all plans, dividends and distributions will be automatically reinvested in
additional shares.
DISTRIBUTIONS AND TAXES
- --------------------------------------------------------------------------------
DISTRIBUTIONS. It is the present policy of the Fund to make (A) at least one
distribution annually (normally in December) of all or substantially all of the
investment income allocated to the Fund by the Portfolio, less the Fund's direct
and allocated expenses and class-specific expenses, and (B) at least one
distribution annually of all or substantially all of the net realized capital
gains (if any) allocated to the Fund by the Portfolio (reduced by any available
capital loss carryforwards from prior years). Shareholders may reinvest all
distributions in shares of the Fund without a sales charge at the net asset
value per share as of the close of business on the record date.
-26-
<PAGE>
The Fund's net investment income consists of the Fund's allocated share of the
net investment income of the Portfolio, less all actual and accrued expenses of
the Fund determined in accordance with generally accepted accounting principles.
The Portfolio's net investment income consists of all income accrued on the
Portfolio's assets, less all actual and accrued expenses of the Portfolio
determined in accordance with generally accepted accounting principles. The
Fund's net realized capital gains, if any, consist of the net realized capital
gains (if any) allocated to the Fund by the Portfolio for tax purposes, after
taking into account any available capital loss carryovers.
TAXES. Distributions by the Fund which are derived from the Fund's allocated
share of the Portfolio's net investment income, net short-term capital gains and
certain foreign exchange gains are taxable to shareholders as ordinary income,
whether received in cash or reinvested in additional shares of the Fund. The
Fund's distributions will generally not qualify for the dividends-received
deduction for corporate shareholders. The Fund anticipates that for federal tax
purposes the entire distribution will constitute ordinary income to the
shareholders. Shareholders reinvesting such distributions should treat the
entire amount of the distribution as the tax basis of the additional shares by
reason of such reinvestment. Certain distributions, if declared by the Fund in
October, November or December and paid the following January will be taxable to
shareholders as if received on December 31 of the year in which they are
declared.
Capital gains referred to in clause (B) above, if any, realized by the Portfolio
and allocated to the Fund for the Fund's fiscal year, which ends on December 31,
will usually be distributed by the Fund prior to the end of December.
Distributions by the Fund of long-term capital gains allocated to the Fund by
the Portfolio are taxable to shareholders as long-term capital gains, whether
paid in cash or reinvested in additional shares of the Fund and regardless of
the length of time Fund shares have been owned by the shareholder. If shares are
purchased shortly before the record date of a distribution, the shareholder will
pay the full price for the shares and then receive some portion of the price
back as a taxable distribution. The amount, timing and character of the Fund's
distributions to shareholders may be affected by special tax rules governing the
Portfolio's activities in options, futures and forward foreign currency exchange
transactions or certain other investments.
Sales charges paid upon a purchase of Class A shares cannot be taken into
account for purposes of determining gain or loss on a redemption or exchange of
the shares before the 91st day after their purchase to the extent a sales charge
is reduced or eliminated in a subsequent acquisition of shares of the Fund or of
another fund pursuant to the Fund's reinvestment or exchange privilege. Any
disregarded or disallowed amounts will result in an adjustment to the
shareholder's tax basis in some or all of any other shares acquired.
The Fund intends to qualify as a regulated investment company under the Code and
to satisfy all requirements necessary to avoid paying federal income taxes on
the part of its investment company taxable income (consisting of taxable net
investment income and net short-term capital gains) and net capital gains that
it distributes to shareholders. In satisfying these requirements, the Fund will
treat itself as owning it proportionate share of each of the Portfolio's assets
and as entitled to the income of the Portfolio properly attributable to such
share.
As a regulated investment company under the Code, the Fund does not pay federal
income or excise taxes to the extent that it distributes to shareholders
substantially all of its ordinary income and capital gain net income in
accordance with the timing requirements imposed by the Code. As a partnership
under the Code, the Portfolio does not pay federal income or excise taxes.
-27-
<PAGE>
Income realized by the Portfolio from certain investments and allocated to the
Fund may be subject to foreign income taxes, and the Fund may make an election
under Section 853 of the Code that would allow shareholders to claim a credit or
deduction on their federal income tax returns for (and treat as additional
amounts distributed to them) their pro rata portion of the Fund's allocated
share of qualified taxes paid by the Portfolio to foreign countries. This
election may be made only if more than 50% of the assets of the Fund, including
its allocable share of the Portfolio's assets, at the close of a taxable year
consists of securities in foreign corporations. The Fund will send a written
notice of any such election (not later than 60 days after the close of its
taxable year) to each shareholder indicating the amount to be treated as the
proportionate share of such taxes. Availability of foreign tax credits or
deductions for shareholders is subject to certain additional restrictions and
limitations under the Code.
Shareholders will receive annually tax information notices and Forms 1099 to
assist in the preparation of their federal and state tax returns for the prior
calendar year's distributions, proceeds from the redemption or exchange of Fund
shares, and federal income tax (if any) withheld by the Transfer Agent.
Shareholders should consult with their tax advisers concerning the applicability
of state, local or other taxes to an investment in the Fund.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
FROM TIME TO TIME, AVERAGE ANNUAL TOTAL RETURN MAY BE ADVERTISED. Average annual
total return is determined separately for each Class of the Fund by computing
the average annual percentage change in value of $1,000 invested at the maximum
public offering price (net asset value for Class B shares; including maximum
sales charge for Class A shares) for specified periods, assuming reinvestment of
all distributions. The Fund may also publish annual and cumulative total return
figures from time to time. The average annual total return calculation assumes a
complete redemption of the investment and the deduction of any applicable CDSC
at the end of the period. The Fund may publish annual and cumulative total
return figures from time to time.
The Fund may also publish total return figures for each Class which do not take
into account any sales charge. Any performance figure which does not take into
account a sales charge would be reduced to the extent such charge is imposed
upon a redemption. The Fund's performance may be compared in publications to the
performance of various indices and investments for which reliable data is
available, and to averages, performance rankings, or other information prepared
by recognized mutual fund statistical services.
Investors should note that investment results will fluctuate over time, and any
presentation of the total return for any prior period should not be considered a
representation of what an investment may earn or what the total return may be in
any future period.
Investors should note that the investment results will fluctuate over time, and
any presentation of the total return for any prior period should not be
considered a representation of what an investment may earn or what the total
return may be in any future period. Investment results are based on many
factors, including market conditions, the composition of the security holdings
of the Portfolio and the operating expenses of the Fund and the Portfolio.
Investment results also often reflect the risks associated with the particular
investment objective and policies of the Fund and the Portfolio. Among others,
these factors should be considered when comparing the Fund's investment results
to those of other mutual funds and other investment vehicles.
-28-
<PAGE>
EATON VANCE
RUSSIA AND EASTERN EUROPE FUND
PROSPECTUS
JANUARY __, 1998
EATON VANCE RUSSIA AND EASTERN EUROPE FUND
24 FEDERAL STREET
BOSTON, MA 02110
- --------------------------------------------------------------------------------
SPONSOR AND MANAGER OF EATON VANCE RUSSIA AND EASTERN EUROPE FUND
ADMINISTRATOR OF RUSSIA AND EASTERN EUROPE PORTFOLIO
Eaton Vance Management, 24 Federal Street, Boston, MA 02110
ADVISER OF RUSSIA AND EASTERN EUROPE PORTFOLIO
Lloyd George Investment Management (Bermuda) Limited, 25 Grosvenor Street,
London, W1X 9FE, England
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 Investors Services Group, P.O. Box 5123, Westborough, MA 01581-5123
(800)262-1122
AUDITORS
Deloitte & Touche LLP, 125 Summer Street, Boston, MA 02110
- --------------------------------------------------------------------------------
RNEP
<PAGE>
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
STATEMENT OF
ADDITIONAL INFORMATION
January , 1998
EATON VANCE RUSSIA AND EASTERN EUROPE FUND
24 Federal Street
Boston, Massachusetts 02110
(800) 225-6265
This Statement of Additional Information provides general information about
Eaton Vance Russia and Eastern Europe Fund (the "Fund"), and Russia and Eastern
Europe Portfolio (the "Portfolio"). This Statement of Additional Information is
sometimes referred to herein as the "SAI".
TABLE OF CONTENTS
PART I
Additional Information about Investment Policies .......................... 1
Investment Restrictions ................................................... 5
Trustees and Officers ..................................................... 6
Control Persons and Principal Holders of Securities ....................... 8
Management of the Fund and the Portfolio .................................. 8
Custodian ................................................................. 11
Services for Accumulation -- Class A Shares ............................... 12
Service for Withdrawal .................................................... 12
Determination of Net Asset Value .......................................... 12
Investment Performance .................................................... 13
Taxes ..................................................................... 14
Principal Underwriter ..................................................... 16
Distribution Plans ........................................................ 17
Portfolio Security Transactions ........................................... 19
Other Information ......................................................... 21
Independent Certified Public Accountants .................................. 22
Financial Statements ...................................................... 22
Appendix A -- REE Region Countries ....................................... 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 FUND'S PROSPECTUS DATED JANUARY , 1998, AS SUPPLEMENTED
FROM TIME TO TIME, WHICH IS INCORPORATED HEREIN BY REFERENCE. THIS STATEMENT
OF ADDITIONAL INFORMATION SHOULD BE READ IN CONJUNCTION WITH SUCH PROSPECTUS,
A COPY OF WHICH MAY BE OBTAINED WITHOUT CHARGE BY CONTACTING EATON VANCE
DISTRIBUTORS, INC. (THE "PRINCIPAL UNDERWRITER") (SEE BACK COVER FOR ADDRESS
AND PHONE NUMBER).
<PAGE>
This SAI provides information about the Fund and the Portfolio. Capitalized
terms used in this SAI and not otherwise defined have the meanings given them in
the Prospectus. The Fund is subject to the same investment policies as those of
the Portfolio. The Fund currently seeks to achieve its objective by investing in
the Portfolio.
ADDITIONAL INFORMATION ABOUT INVESTMENT POLICIES
INVESTMENT IN REE REGION ISSUERS. The securities markets of REE Region
countries, to the extent they exist, have substantially less trading volume
than the securities markets of the United States, Japan and many countries
elsewhere in Europe. Further, securities of REE Region issuers are generally
less liquid and more volatile than securities of comparable issuers elsewhere
in Europe. In the securities markets of most REE Region countries, a few
large companies account for a substantial portion of such markets' total
capitalization.
Because most of the REE Region countries in which the Portfolio intends
to invest have been governed by totalitarian communist governments, the legal
systems of property rights are newly established and untested. Accordingly,
the effective rights of an investor vis-a-vis his broker, bankruptcy law and
other laws applicable to commercial transactions are uncertain.
The current political situation in certain REE Region countries is
unstable and, in others, anarchistic. Long-term political stability may be a
critical prerequisite to the development of stable market economies and
institutions for the protection of private investment and ownership and,
accordingly, opportunities for capital appreciation. There can be no assurance
that REE Region countries will not experience political instability in the
future which could adversely affect the market values of portfolio securities
and of the Fund's shares. Moreover, there can be no assurance that any country
in which the Portfolio invests will not adopt policies, which may be
retroactive, adversely affecting its investments. There can be no assurance
that any investments that the Portfolio might make in such countries would not
be expropriated, nationalized or otherwise confiscated, through taxation or
otherwise, at some time in the future. In such an event, the Portfolio could
lose its entire investment in the market involved.
Many REE Region countries have experienced or are experiencing
recessionary conditions, high unemployment or hyper-inflation. Such conditions
could affect the market value of portfolio securities and the market value of
Fund shares.
Some REE Region countries prohibit certain kinds of investment or impose
substantial restrictions on investments in their capital markets, particularly
their equity markets, by foreign entities such as the Portfolio. Some REE
Region countries may require governmental registration or approval for the
repatriation of investment income capital or the proceeds of sales of
securities by foreign investors. If for any reason the Portfolio was unable,
through borrowing or otherwise, to distribute an amount equal to substantially
all of its investment company taxable income (as defined for U.S. tax
purposes) within applicable time periods, the Fund would cease to qualify as a
regulated investment company under the Internal Revenue Code of 1986, as
amended.
Custody and settlement practices in the REE Region are newly developed.
In Russia, there is no physical delivery of certificates; rather,
approximately 3,000 registrars are employed separately by each issuer to
maintain records of ownership. Because of the possibility of error or fraud,
the Trustees of the Portfolio have established a registrar monitoring system
through a subcustodian in Russia. There can be no assurance the Portfolio will
not realize losses despite the use of the monitoring system.
Debt issued by issuers (including government issuers) located in the REE
Region generally is deemed to be the equivalent in terms of quality to
securities rated below investment grade by Moody's and S&P. Such securities
are regarded as predominantly speculative with respect to the issuer's
capacity to pay interest and repay principal in accordance with the terms of
the obligations and involve major risk exposure to adverse conditions. Some of
such securities, with respect to which the issuer currently may not be paying
interest or may be in payment default, may be comparable to securities rated D
by S&P or C by Moody's. The Portfolio may have difficulty disposing of and
valuing certain debt obligations because of a limited trading market for such
securities.
The market values of lower grade debt securities tend to reflect
individual developments of the issuer to a greater extent than do higher
quality securities, which react primarily to fluctuations in the general level
of interest rates. In addition, lower grade debt securities tend to be more
sensitive to economic conditions and generally have more volatile prices
than higher quality securities. Similarly, certain governments that issue
lower grade debt securities are among the largest debtors to commercial banks,
foreign governments and supranational organizations such as the World Bank and
may not be able or willing to make principal and/or interest repayments as
they come due. The risk of loss due to default by the issuer is significantly
greater for the holders of lower grade securities because such securities are
generally unsecured and are often subordinated to other creditors of the
issuer. The Portfolio may also incur additional expenses to the extent it is
required to seek recovery upon a default in the payment of principal or
interest on its portfolio holdings. The Portfolio may have limited legal
recourse in the event of a default.
Investments in debt securities of REE Region governments involve special
risks. The issuer of the debt or the governmental authorities that control the
repayment of the debt may be unable or unwilling to repay principal or
interest when due in accordance with the terms of such debt. Political changes
or a deterioration of a country's domestic economy or balance of trade may
affect the willingness of countries to service their debt. Such debtors also
may be dependent on expected disbursements from foreign governments,
multilateral agencies and other entities abroad. Failure to implement such
economic or other reforms, achieve such levels of economic performance or
repay principal or interest when due, may result in the cancellation of such
third parties' commitments to lend funds to the government debtor, which may
further impair such debtor's ability or willingness to timely service its
debts.
The ability of REE Region governments to make timely payments on their
debt is likely to be influenced strongly by a country's balance of trade and
its access to trade and other international credits. A country whose exports
are concentrated in a few commodities could be vulnerable to a decline in the
international prices of one or more of such commodities. Increased
protectionism on the part of a country's trading partners could also adversely
affect its exports.
FOREIGN INVESTMENTS. Investing in securities issued by companies whose
principal business activities are outside the United States may involve
significant risks not present in domestic investments. For example, there is
generally less publicly available information about foreign companies,
particularly those not subject to the disclosure and reporting requirements of
the U.S. securities laws. Foreign issuers are generally not bound by uniform
accounting, auditing, and financial reporting requirements and standards of
practice comparable to those applicable to domestic issuers. Investments in
foreign securities also involve the risk of possible adverse changes in
investment or exchange control regulations, expropriation or confiscatory
taxation, limitation on the removal of funds or other assets of the Portfolio,
political or financial instability or diplomatic and other developments which
could affect such investments. Further, economies of particular countries or
areas of the world may differ favorably or unfavorably from the economy of the
United States. It is anticipated that in most cases the best available market
for foreign securities will be on exchanges or in over-the-counter markets
located outside of the United States. Foreign stock markets, while growing in
volume and sophistication, are generally not as developed as those in the
United States, and securities of some foreign issuers (particularly those
located in developing countries) may be less liquid and more volatile than
securities of comparable U.S. companies. In addition, foreign brokerage
commissions are generally higher than commissions on securities traded in the
United States and may be non-negotiable. In general, there is less overall
governmental supervision and regulation of foreign securities markets, broker-
dealers, and issuers than in the United States.
FOREIGN CURRENCY TRANSACTIONS. The value of the assets of the Portfolio as
measured in U.S. dollars may be affected favorably or unfavorably by changes
in foreign currency exchange rates and exchange control regulations. Currency
exchange rates can also be affected unpredictably by intervention by U.S. or
foreign governments or central banks, or the failure to intervene, or by
currency controls or political developments in the U.S. or abroad. The
Portfolio may conduct its foreign currency exchange transactions on a spot
(i.e., cash) basis at the spot rate prevailing in the foreign currency
exchange market or through entering into swaps, forward contracts, options or
futures on currency. In spot transactions, foreign exchange dealers do not
charge a fee for conversion, but they do realize a profit based on the
difference (the "spread") between the prices at which they are buying and
selling various currencies. Thus, a dealer may offer to sell a foreign
currency to the Portfolio at one rate, while offering a lesser rate of
exchange should the Portfolio desire to resell that currency to the dealer.
Currency swaps require maintenance of a segregated account as described
under "Asset Coverage Requirements" below. The Portfolio will not enter into
any currency swap unless the credit quality of the unsecured senior debt or
the claims-paying ability of the other party thereto is considered to be
investment grade by the Adviser.
The Portfolio may enter into forward foreign currency exchange contracts
in several circumstances. First, when the Portfolio enters into a contract for
the purchase or sale of a security denominated in a foreign currency, or when
the Portfolio anticipates the receipt in a foreign currency of dividend or
interest payments on such a security which it holds, the Portfolio may desire
to "lock in" the U.S. dollar price of the security or the U.S. dollar
equivalent of such dividend or interest payment, as the case may be. By
entering into a forward contract for the purchase or sale, for a fixed amount
of dollars, of the amount of foreign currency involved in the underlying
transactions, the Portfolio will attempt to protect itself against an adverse
change in the relationship between the U.S. dollar and the subject foreign
currency during the period between the date on which the security is purchased
or sold, or on which the dividend or interest payment is declared, and the
date on which such payments are made or received. Additionally, when the
Adviser believes that the currency of a particular foreign country may suffer
a substantial decline against the U.S. dollar, it may enter into a forward
contract to sell, for a fixed amount of dollars, the amount of foreign
currency approximating the value of some or all of the securities held by the
Portfolio denominated in such foreign currency. The precise matching of the
forward contract amounts and the value of the securities involved will not
generally be possible because the future value of such securities in foreign
currencies will change as a consequence of market movements in the value of
those securities between the date on which the contract is entered into and
the date it matures. The precise projection of short-term currency market
movements is not possible, and short-term hedging provides a means of fixing
the dollar value of only a portion of the Portfolio's foreign assets. The
Portfolio generally will not enter into a forward contract with a term of
greater than one year.
RISKS ASSOCIATED WITH DERIVATIVE INSTRUMENTS. Entering into a derivative
instrument involves a risk that the applicable market will move against the
Portfolio's position and that the Portfolio will incur a loss. For derivative
instruments other than purchased options, this loss may exceed the amount of
the initial investment made or the premium received by the Portfolio.
Derivative instruments may sometimes increase or leverage the Portfolio's
exposure to a particular market risk. Leverage enhances the Portfolio's
exposure to the price volatility of derivative instruments it holds. The
Portfolio's success in using derivative instruments to hedge portfolio assets
depends on the degree of price correlation between the derivative instruments
and the hedged asset. Imperfect correlation may be caused by several factors,
including temporary price disparities among the trading markets for the
derivative instrument, the assets underlying the derivative instrument and the
Portfolio assets. Over-the-counter ("OTC") derivative instruments involve an
enhanced risk that the issuer or counterparty will fail to perform its
contractual obligations. Some derivative instruments are not readily
marketable or may become illiquid under adverse market conditions. In
addition, during periods of market volatility, a commodity exchange may
suspend or limit trading in an exchange-traded derivative instrument, which
may make the contract temporarily illiquid and difficult to price. Commodity
exchanges may also establish daily limits on the amount that the price of a
futures contract or futures option can vary from the previous day's settlement
price. Once the daily limit is reached, no trades may be made that day at a
price beyond the limit. This may prevent the Portfolio from closing out
positions and limiting its losses. The staff of the Commission takes the
position that certain OTC options, and assets used as cover for written OTC
options, are subject to the Portfolio's 15% limit on illiquid investments. The
Portfolio's ability to terminate OTC derivative instruments may depend on the
cooperation of the counterparties to such contracts. For thinly traded
derivative instruments, the only source of price quotations may be the selling
dealer or counterparty. In addition, certain provisions of the Code, limit the
extent to which the Portfolio may purchase and sell derivative instruments.
The Portfolio will engage in transactions in futures contracts and related
options only to the extent such transactions are consistent with the
requirements of the Code for maintaining the qualification of the Fund as a
regulated investment company for federal income tax purposes. See "Taxes."
ASSET COVERAGE REQUIREMENTS. Transactions involving reverse repurchase
agreements, currency swaps, forward contracts or futures contracts and options
(other than options that the Portfolio has purchased) expose the Portfolio to
an obligation to another party. The Portfolio will not enter into any such
transactions unless it owns either (1) an offsetting ("covered") position in
securities, currencies, swaps or other options, futures contracts or forward
contracts, or (2) cash or liquid securities (such as readily marketable common
stock and money market instruments) with a value sufficient at all times to
cover its potential obligations not covered as provided in (1) above. The
Portfolio will comply with Commission guidelines regarding cover for these
instruments and, if the guidelines so require, set aside cash or liquid
securities in a segregated account with its custodian in the prescribed
amount. The securities in the segregated account will be marked to market
daily.
Assets used as cover or held in a segregated account maintained by the
Portfolio's custodian cannot be sold while the position requiring coverage or
segregation is outstanding unless they are replaced with other appropriate
assets. As a result, the commitment of a large portion of the Portfolio's
assets to segregated accounts or to cover could impede portfolio management or
the Portfolio's ability to meet redemption requests or other current
obligations.
LIMITATIONS ON FUTURES CONTRACTS AND OPTIONS. The Portfolio does not intend to
write a covered option on any security if after such transaction more than 15%
of its net assets, as measured by the aggregate value of the securities
underlying all covered calls and puts written by the Portfolio, would be
subject to such options. The Portfolio will only write a put option on a
security which it intends to ultimately acquire for its portfolio. The
Portfolio does not intend to purchase any options if after such transaction
more than 5% of its net assets, as measured by the aggregate of all premiums
paid for all such options held by the Portfolio, would be so invested. The
Portfolio may enter into futures contracts (and options thereon) traded on a
foreign exchange if it is determined by the Adviser that trading on such
foreign exchange does not subject the Portfolio to risks, including credit and
liquidity risks, that are materially greater than the risks associated with
trading on United States exchanges regulated by the CFTC.
REPURCHASE AGREEMENTS. Under a repurchase agreement the Portfolio buys a
security at one price and simultaneously promises to sell that same security
back to the seller at a higher price. At no time will the Portfolio commit
more than 15% of its net assets to repurchase agreements which mature in more
than seven days and other illiquid securities. The Portfolio's repurchase
agreements will provide that the value of the collateral underlying the
repurchase agreement will always be at least equal to the repurchase price,
including any accrued interest earned on the repurchase agreement, and will be
marked to market daily.
REVERSE REPURCHASE AGREEMENTS. The Portfolio may enter into reverse repurchase
agreements. Under a reverse repurchase agreement, the Portfolio temporarily
transfers possession of a portfolio instrument to another party, such as a
bank or broker-dealer, in return for cash. At the same time, the Portfolio
agrees to repurchase the instrument at an agreed upon time (normally within
seven days) and price, which reflects an interest payment. The Portfolio
expects that it will enter into reverse repurchase agreements when it is able
to invest the cash so acquired at a rate higher than the cost of the
agreement, which would increase the income earned by the Portfolio. The
Portfolio could also enter into reverse repurchase agreements as a means of
raising cash to satisfy redemption requests without the necessity of selling
portfolio assets.
When the Portfolio enters into a reverse repurchase agreement, any
fluctuations in the market value of either the securities transferred to
another party or the securities in which the proceeds may be invested would
affect the market value of the Portfolio's assets. As a result, such
transactions may increase fluctuations in the market value of the Portfolio's
assets. While there is a risk that large fluctuations in the market value of
the Portfolio's assets could affect the Portfolio's net asset value, this risk
is not significantly increased by entering into reverse repurchase agreements,
in the opinion of the Adviser. Because reverse repurchase agreements may be
considered to be the practical equivalent of borrowing funds, they constitute
a form of leverage. If the Portfolio reinvests the proceeds of a reverse
repurchase agreement at a rate lower than the cost of the agreement, entering
into the agreement will lower the Portfolio's yield.
PORTFOLIO TURNOVER. The Portfolio cannot accurately predict its portfolio
turnover rate, but it is anticipated that the annual turnover rate will
generally not exceed 100% (excluding turnover of securities having a maturity
of one year or less). A 100% annual turnover rate would occur, for example, if
all the securities in the portfolio were replaced once in a period of one
year. A high turnover rate (100% or more) necessarily involves greater
expenses to the Portfolio. The Portfolio engages in portfolio trading
(including short-term trading) if it believes that a transaction including all
costs will help in achieving its investment objective either by increasing
income or by enhancing the Portfolio's net asset value. Short-term trading may
be advisable in light of a change in circumstances of a particular company or
within a particular industry, or in light of general market, economic or
political conditions. High portfolio turnover may also result in the
realization of substantial net short-term capital gains.
LENDING PORTFOLIO SECURITIES. The Portfolio may seek to increase its income by
lending portfolio securities to broker-dealers or other institutional
borrowers. Under present regulatory policies of the Commission, such loans are
required to be secured continuously by collateral in cash, cash equivalents or
U.S. Government securities held by the Portfolio's custodian and maintained on
a current basis at an amount at least equal to market value of the securities
loaned, which will be marked to market daily. Cash equivalents include
certificates of deposit, commercial paper and other short-term money market
instruments. The financial condition of the borrower will be monitored by the
Adviser on an ongoing basis. The Portfolio would continue to receive the
equivalent of the interest or dividends paid by the issuer on the securities
loaned and would also receive a fee, or all or a portion of the interest on
investment of the collateral. The Portfolio would have the right to call a
loan and obtain the securities loaned at any time on up to five business days'
notice. The Portfolio would not have the right to vote any securities having
voting rights during the existence of a loan, but could call the loan in
anticipation of an important vote to be taken among holders of the securities
or the giving or holding of their consent on a material matter affecting the
investment. If the Adviser decides to make securities loans, it is intended
that the value of the securities loaned would not exceed one-third of the
Portfolio's total assets. As with other extensions of credit there are risks
of delay in recovery or even loss of rights in the securities loaned if the
borrower of the securities fails financially. However, the loans will be made
only to organizations deemed by the Adviser to be sufficiently creditworthy
and when, in the judgment of the Adviser, the consideration which can be
earned from securities loans of this type justifies the attendant risk.
Securities lending involves administration expenses, including finder's fees.
INVESTMENT RESTRICTIONS
The following investment restrictions of the Fund are designated as
fundamental and as such cannot be changed without the approval by the holders
of a majority of the Fund's outstanding voting securities, which as used in
this SAI means the lesser of (a) 67% or more of the outstanding voting
securities of the Fund present or represented by proxy at a meeting if the
holders of more than 50% of the shares are present or represented at the
meeting or (b) more than 50% of the shares of the Fund. Accordingly, the Fund
may not:
(1) Borrow money or issue senior securities except as permitted by the
Investment Company Act of 1940;
(2) Purchase any securities on margin (but the Fund may obtain such short-
term credits as may be necessary for the clearance of purchases and sales of
securities);
(3) Underwrite securities of other issuers;
(4) Invest in real estate including interests in real estate limited
partnerships (although it may purchase and sell securities which are secured
by real estate and securities of companies which invest or deal in real
estate) or in commodities or commodity contracts for the purchase or sale of
physical commodities;
(5) Make loans to any person except by (a) the acquisition of debt
securities and making portfolio investments, (b) entering into repurchase
agreements and (c) lending portfolio securities;
(6) With respect to 75% of its total assets, invest more than 5% of its
total assets (taken at current value) in the securities of any one issuer, or
invest in more than 10% of the outstanding voting securities of any one
issuer, except obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities and except securities of other investment
companies; or
(7) Concentrate its investments in any particular industry, but, if deemed
appropriate for the Fund's objective, up to 25% of the value of its assets may
be invested in securities of companies in any one industry (although more than
25% may be invested in securities issued or guaranteed by the U.S. Government
or its agencies or instrumentalities).
Notwithstanding the investment policies and restrictions of the Fund, the
Fund may invest its investable assets in an open-end management investment
company (a Portfolio) with substantially the same investment objective,
policies and restrictions as the Fund; moreover, subject to Trustee approval
the Fund may invest its investable assets in other open-end management
investment companies in the same group of investment companies with the same
placement agent or investment adviser as the Portfolio (or an affiliate) if,
with respect to such assets, the other companies' permitted investments are
substantially the same as those of the Fund.
The Portfolio has adopted substantially the same fundamental investment
restrictions as the foregoing investment restrictions adopted by the Fund;
such restrictions cannot be changed without the approval of a "majority of the
outstanding voting securities" of the Portfolio.
The Fund and the Portfolio have adopted the following investment policies
which may be changed without shareholder or investor approval. Neither the
Fund nor the Portfolio may invest more than 15% of its net assets in
investments which are not readily marketable, including restricted securities
and repurchase agreements with a maturity longer than seven days. Restricted
securities for the purposes of this limitation do not include securities
eligible for resale pursuant to Rule 144A under the Securities Act of 1933 and
commercial paper issued pursuant to Section 4(2) of said Act that the Board of
Trustees of the Trust or the Portfolio, or its delegate, determines to be
liquid. Neither the Fund nor the Portfolio will purchase warrants if, as a
result of such purchase, more than 5% of the Portfolio's or the Fund's net
assets, as the case may be (taken at current value), would be invested in
warrants, and the value of such warrants which are not listed on the New York
or American Stock Exchange may not exceed 2% of the Portfolio's or the Fund's
net assets; this policy does not apply to or restrict warrants acquired by the
Portfolio or the Fund in units or attached to securities, inasmuch as such
warrants are deemed to be without value. Neither the Fund nor the Portfolio
will purchase any securities if at the time of such purchase, permitted
borrowings under investment restriction (1) above exceed 5% of the value of
the Portfolio's or the Fund's total assets, as the case may be. Neither the
Fund nor the Portfolio will purchase or retain in its portfolio any securities
issued by an issuer any of whose officers, directors, trustees or security
holders is an officer or Trustee of the Trust or is a member, officer,
director or trustee of any investment adviser of the Trust or the Portfolio if
after the purchase of the securities of such issuer by the Fund or the
Portfolio one or more of such persons owns beneficially more than 1/2 of 1%
of the shares or securities or both (all taken at market value) of such issuer
and such persons owning more than 1/2 of 1% of such shares or securities
together own beneficially more than 5% of such shares or securities or both
(all taken at market value).
Whenever an investment policy or investment restriction set forth in the
Prospectus or this SAI states a maximum percentage of assets that may be
invested in any security or other asset or describes a policy regarding
quality standards, such percentage limitation or standard shall be determined
immediately after and as a result of the Fund's or the Portfolio's acquisition
of such security or other asset. Accordingly, any later increase or decrease
resulting from a change in values, assets or other circumstances, or any
subsequent rating change below investment grade made by a rating service, will
not compel the Fund or the Portfolio, as the case may be, to dispose of such
security or other asset. 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 equity securities
of REE Region companies. Moreover, the Fund and the Portfolio must always be
in compliance with the borrowing policies set forth above.
TRUSTEES AND OFFICERS
The Trustees and officers of the Trust and the Portfolio are listed below.
Except as indicated, each individual has held the office shown or other
offices in the same company for the last five years. Unless otherwise noted,
the business address of each Trustee and officer is 24 Federal Street, Boston,
Massachusetts 02110, which is also the address of the Fund's sponsor and
manager, Eaton Vance, of Eaton Vance's wholly-owned subsidiary, Boston
Management and Research ("BMR"), of Eaton Vance's parent, Eaton Vance Corp.
("EVC"), and of Eaton Vance's trustee, Eaton Vance, Inc. ("EV"). Eaton Vance
and EV are both wholly-owned subsidiaries of EVC. The business address of the
Adviser is 25 Grosvenor Street, London, W1X9FE, England. Those Trustees who
are "interested persons" of the Trust or the Portfolio, as defined in the 1940
Act by virtue of their affiliation with the Adviser, Eaton Vance, BMR, EVC or
EV, are indicated by an asterisk (*).
TRUSTEES OF THE TRUST AND THE PORTFOLIO
JAMES B. HAWKES (55), President of the Trust, Vice President of the Portfolio
and Trustee*
President and Chief Executive Officer of Eaton Vance, BMR, EVC and EV, and a
Director of EVC and EV. Director or Trustee and officer of various
investment companies managed by Eaton Vance or BMR. Director of LGM.
HON. ROBERT LLOYD GEORGE (44), President and Trustee of the Portfolio*
Chairman and Chief Executive Officer of LGM. Chairman and Chief Executive
Officer of the Adviser.
Address: 3808 One Exchange Square, Central, Hong Kong
M. DOZIER GARDNER (64), Trustee of the Trust
Vice Chairman of Eaton Vance, BMR, EVC and EV, and Director of EVC and EV.
Director or Trustee and officer of various investment companies managed by
Eaton Vance or BMR. Mr. Gardner was elected Trustee of the Trust on November
20, 1995.
HON. EDWARD K.Y. CHEN (52), Trustee of the Portfolio
President of Lingnan College in Hong Kong. Professor and Director of Centre of
Asian Studies at the University of Hong Kong from 1979-1995. Director of
First Pacific Company and a Board Member of the Mass Transit Railway
Corporation. Member of the Executive Council of the Hong Kong Government
since 1992 and Chairman of the Consumer Council since 1991.
Address: President's Office, Lingnan College, Tuen Mun, Hong Kong
DONALD R. DWIGHT (66), Trustee
President of Dwight Partners, Inc. (a corporate relations and communications
company); Chairman of the Board of Newspapers of New England, Inc. Director
or Trustee of various investment companies managed by Eaton Vance or BMR.
Address: Clover Mill Lane, Lyme, New Hampshire 03768
SAMUEL L. HAYES, III (62), Trustee
Jacob H. Schiff Professor of Investment Banking, Harvard University Graduate
School of Business Administration. Director or Trustee of various investment
companies managed by Eaton Vance or BMR.
Address: Harvard University Graduate School of Business Administration,
Soldiers Field Road, Boston, Massachusetts 02163
NORTON H. REAMER (61), Trustee
President and Director, United Asset Management Corporation (a holding company
owning institutional investment management firms); Chairman, President and
Director, UAM Funds (mutual funds). Director or Trustee of various
investment companies managed by Eaton Vance or BMR.
Address: One International Place, Boston, Massachusetts 02110
JOHN L. THORNDIKE (70), Trustee
Formerly Director of Fiduciary Company Incorporated. Director or Trustee of
various investment companies managed by Eaton Vance or BMR.
Address: 175 Federal Street, Boston, Massachusetts 02110
JACK L. TREYNOR (67), Trustee
Investment Adviser and Consultant. Director or Trustee of various investment
companies managed by Eaton Vance or BMR.
Address: 504 Via Almar, Palos Verdes Estates, California 90274
OFFICERS OF THE TRUST AND THE PORTFOLIO
SCOBIE DICKENSON WARD (31), Vice President, Assistant Secretary and Assistant
Treasury of the Portfolio
Director of LGM and the Adviser.
Address: 3808 One Exchange Square, Central, Hong Kong
WILLIAM WALTER RALEIGH KERR (46), Vice President and Assistant Treasurer of
the Portfolio
Director, Finance Director and Chief Operating Officer of the Adviser.
Director of LGM.
Address: 3808 One Exchange Square, Central, Hong Kong
EDWARD E. SMILEY, JR. (52), Vice President of the Trust
Vice President of Eaton Vance and BMR since November 1, 1996; Senior Product
Manager, Equity Management for TradeStreet Investment Associates, Inc., a
wholly-owned subsidiary of Nations Bank (1992-1996). Mr. Smiley was elected
Vice President of the Trust on October 18, 1996.
JAMES L. O'CONNOR (52), Vice President of the Portfolio and Treasurer
Vice President of Eaton Vance, BMR and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
ALAN R. DYNNER (56), Secretary
Vice President and Chief Legal Officer of BMR, Eaton Vance, EVC and EV since
November 1, 1996. Previously, he was a Partner of the law firm of
Kirkpatrick & Lockhart LLP, New York and Washington, D.C., and was Executive
Vice President of Neuberger & Berman Management, Inc., a mutual fund
management company. Officer of various investment companies managed by Eaton
Vance or BMR. Mr. Dynner was elected Secretary of the Trust on June 23,
1997.
JANET E. SANDERS (61), Assistant Treasurer and Assistant Secretary
Vice President of Eaton Vance, BMR and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
A. JOHN MURPHY (34), Assistant Secretary
Assistant Vice President of Eaton Vance, BMR and EV since March 1, 1994;
employee of Eaton Vance since March 1993. State Regulations Supervisor, The
Boston Company (1991-1993). Officer of various investment companies managed
by Eaton Vance or BMR. Mr. Murphy was elected Assistant Secretary of the
Trust on March 27, 1995.
ERIC G. WOODBURY (40), Assistant Secretary
Vice President of Eaton Vance, BMR and EV since February 1993; formerly,
associate attorney at Dechert, Price & Rhoads. Officer of various investment
companies managed by Eaton Vance or BMR. Mr. Woodbury was elected Assistant
Secretary of the Trust on June 19, 1995.
Messrs. Hayes, Reamer and Thorndike, are members of the Special Committee
of the Board of Trustees of the Trust and Messrs. Hayes, Dwight and Reamer,
are members of the Special Committee of the Board of Trustees of the
Portfolio. The purpose of the Special Committee is to consider, evaluate and
make recommendations to the full Board of Trustees concerning (i) all
contractual arrangements with service providers to the Fund and the Portfolio,
including investment advisory (Portfolio only), administrative, transfer
agency, custodial and fund accounting and distribution services, and (ii) all
other matters in which Eaton Vance, the Adviser or their affiliates has any
actual or potential conflict of interest with the Fund, the Portfolio or
investors therein.
The Nominating Committee of the Board of Trustees of the Trust and the
Portfolio is comprised of four Trustees who are not "interested persons" as
that term is defined under the 1940 Act ("noninterested Trustees"). The
Committee has four-year staggered terms, with one member rotating off the
Committee to be replaced by another noninterested Trustee. The purpose of the
Committee is to recommend to the Board nominees for the position of
noninterested Trustee and to assure that at least a majority of the Board of
Trustees is independent of Eaton Vance, the Adviser or their affiliates.
Messrs. Treynor and Dwight are members of the Audit Committee of the Board
of Trustees of the Trust and Messrs. Hayes, Chen and Dwight are members of the
Audit Committee of the Board of Trustees of the Portfolio. The Audit
Committee's functions include making recommendations to the Trustees regarding
the selection of the independent certified public accountants, and reviewing
matters relative to trading and brokerage policies and practices, accounting
and auditing practices and procedures, accounting records, internal accounting
controls, and the functions performed by the custodian, transfer agent and
dividend disbursing agent of the Trust and of the Portfolio.
Trustees of the Portfolio (except Mr. Chen) who are not affiliated with
the Adviser may elect to defer receipt of all or a percentage of their annual
fees received from certain Eaton Vance sponsored funds, 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.
Neither the Portfolio nor the Trust participate in the Trustees' Plan or has a
retirement plan for its Trustees.
The fees and expenses of the noninterested Trustees of the Trust and the
Portfolio are paid by the Fund (and the other series of the Trust) and the
Portfolio, respectively. (The Trustees of the Trust and the Portfolio who are
members of the Eaton Vance organization receive no compensation from the Trust
or the Portfolio.) For the fiscal year ending December 31, 1998, it is
estimated that the noninterested Trustees of the Trust and the Portfolio will
receive the following compensation in their capacities as Trustees from the
Trust and the Portfolio, and, for the year ended September 30, 1997, the non-
interested Trustees earned the following compensation in their capacities as
Trustees of the funds in the Eaton Vance fund complex(1):
<TABLE>
<CAPTION>
AGGREGATE AGGREGATE TOTAL COMPENSATION
COMPENSATION COMPENSATION FROM TRUST AND
NAME FROM TRUST(2) FROM PORTFOLIO FUND COMPLEX
- ---- ------------- -------------- ------------
<S> <C> <C> <C>
Hon. Edward K.Y. Chen ................... $ -- $5,000 $ 23,300
Donald R. Dwight ........................ 5,715 332 145,000(3)
Samuel L. Hayes, III .................... 5,817 332 152,500(4)
Norton H. Reamer ........................ 5,622 332 145,000
John L. Thorndike ....................... 5,911 332 147,500(5)
Jack L. Treynor ......................... 6,132 332 150,000
</TABLE>
- ------------
(1) The Eaton Vance fund complex consists of 215 registered investment
companies or series thereof.
(2) The Trust consists of Funds as of December 31, 1997.
(3) Includes $45,000 of deferred compensation.
(4) Includes $28,750 of deferred compensation.
(5) Includes $1,748 of deferred compensation.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of the date of this SAI, there were no security holders of the Fund's
shares.
MANAGEMENT OF THE FUND AND THE PORTFOLIO
Eaton Vance acts as the sponsor and manager of the Fund and the
administrator of the Portfolio. The Portfolio has engaged Lloyd George
Investment Management (Bermuda) Limited as its investment adviser.
THE ADVISER
As investment adviser to the Portfolio, the Adviser manages the
Portfolio's investments, subject to the supervision of the Board of Trustees
of the Portfolio. The Adviser is also responsible for effecting all security
transactions on behalf of the Portfolio, including the allocation of principal
transactions and portfolio brokerage and the negotiation of commissions. See
"Portfolio Security Transactions". Under the investment advisory agreement,
the Adviser receives a monthly advisory fee computed by applying the annual
asset rate applicable to that portion of the average daily net assets of the
Portfolio throughout the month in each Category as indicated below:
ANNUAL
CATEGORY AVERAGE DAILY NET ASSETS ASSET RATE
-------- ------------------------ ----------
1 less than $500 million .............................. 0.75%
2 $500 million but less than $1 billion ............... 0.70
3 $1 billion but less than $1.5 billion ............... 0.65
4 $1.5 billion but less than $2 billion ............... 0.60
5 $2 billion but less than $3 billion ................. 0.55
6 $3 billion and over ................................. 0.50
Eaton Vance is among the oldest mutual funds organizations in the country.
As an experienced mutual fund provider, Eaton Vance has contributed to making
the securities market more widely accessible to investors. Eaton Vance equity
funds provide a way to take advantage of the potentially higher returns of
individual stocks. Eaton Vance has a staff of more than 25 investment
professionals specializing in security analysis and equity management.
The Eaton Vance investment process stresses intensive fundamental
research. Portfolios are built on a stock-by-stock basis and the process
includes visits to companies under consideration. The process also focuses on
well-managed companies with the following characteristics: strong underlying
value or franchise; solid earnings growth; steady cash flow, strong balance
sheet; innovative products or services; potential for sustained growth;
seasoned, creative management; or ability to survive variable market
conditions.
By investing in diversified portfolios and employing prudent and
professional management, Eaton Vance mutual funds can provide attractive
return, while exposing shareholders to less risk than if they were to build
investment portfolios on their own. Eaton Vance employs rigorous buy and sell
disciplines. For instance, purchases are made with an eye to both relative and
absolute growth rates and price/earning ratios, and sales are made when a
stock is fully valued, fundamentals deteriorate, management fails to execute
its strategy, or more attractive alternatives are available.
LGM specializes in providing investment management services with respect
to equity securities of companies trading in foreign securities markets,
especially those of emerging markets. LGM currently manages portfolios for
both private clients and institutional investors seeking long-term capital
growth and has advised Eaton Vance's international equity funds since 1992.
LGM's core investment team consists of twelve experienced investment
professionals who have worked together over a number of years successfully
managing client portfolios in non-U.S. stock markets. The team has a unique
knowledge of, and experience with, Asian emerging markets. LGM analysts cover
East Asia, the India subcontinent, Russia and Eastern Europe, Latin America,
Australia and New Zealand from offices in Hong Kong, London and Mumbai. LGM is
ultimately controlled by the Hon. Robert Lloyd George, President of the
Portfolio and Chairman and Chief Executive Officer of the Adviser. LGM's only
business is portfolio management. Eaton Vance's parent is a shareholder of
LGM.
The Adviser and LGM have adopted a conservative management style,
providing a blend of Asian and multinational expertise with the most rigorous
international standards of fundamental security analysis. Although focused
primarily in Asia, the Adviser and LGM maintain a network of international
contacts in order to monitor international economic and stock market trends
and offer clients a global management service.
The directors of the Adviser are the Honorable Robert Lloyd George,
William Walter Raleigh Kerr, Scobie Dickinson Ward, M.F. Tang, Pamela Chan,
Adaline Mang-Yee Ko, Peter Bubenzer and Judith Collins. The Hon. Robert Lloyd
George is Chairman and Chief Executive Officer of the Adviser and Mr. Kerr is
an officer of the Adviser. The business address of the first six individuals
is 3808 One Exchange Square, Central, Hong Kong and of the last two is Cedar
House, 41 Cedar Avenue, Hamilton HM12, Bermuda.
Mr. Lloyd George was born in London in 1952 and educated at Eton College,
where he was a King's Scholar, and at Oxford University. Prior to founding
LGM, Mr. Lloyd George was Managing Director of Indosuez Asia Investment
Services Ltd. In 1983 Mr. Lloyd George launched and managed the Henderson
Japan Special Situations Trust. Prior to that he spent four years with the
Fiduciary Trust Company of New York researching international securities, in
the United States and Europe, for the United Nations Pension Fund.
Eaton Vance and the Adviser follow a common investment philosophy,
striving to identify companies with outstanding management and earnings growth
potential by following a disciplined management style, adhering to the most
rigorous international standards of fundamental security analysis, placing
heavy emphasis on research, visiting every company owned, and closely
monitoring political and economic developments.
Eaton Vance mutual funds are distributed by the Principal Underwriter both
within the United States and offshore. The Principal Underwriter believes that
an investment professional can provide valuable services to you to help you
reach your investment goals. Meeting investment goals requires time,
objectivity and investment savvy. Before making an investment recommendation,
a representative can help you carefully consider your short- and long-term
financial goals, your tolerance for investment risk, your investment time
frame, and other investments you may already own. Your professional investment
representatives are knowledgeable about financial markets, as well as the wide
range of investment opportunities available. A representative can provide you
with tailored financial advice and help you decide when to buy, sell or
persevere with your investments.
The Portfolio's investment advisory agreement with the Adviser remains in
effect from year to year for so long as such continuance is approved at least
annually (i) by the vote of a majority of the noninterested Trustees of the
Portfolio cast in person at a meeting specifically called for the purpose of
voting on such approval and (ii) by the Board of Trustees of the Portfolio or
by vote of a majority of the outstanding voting securities of the Portfolio.
The Agreement may be terminated at any time without penalty on sixty days'
written notice by the Board of Trustees of either party or by vote of the
majority of the outstanding voting securities of the Portfolio, and the
Agreement will terminate automatically in the event of its assignment. The
Agreement provides that the Adviser may render services to others. The
Agreement also provides that, in the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties under
the Agreement on the part of the Adviser, the Adviser shall not be liable to
the Portfolio or to any shareholder for any act or omission in the course of
or connected with rendering services or for any losses sustained in the
purchase, holding or sale of any security.
MANAGER, SPONSOR AND ADMINISTRATOR
See "Management of the Fund and the Portfolio" in the Prospectus for a
description of the services Eaton Vance performs as the manager and sponsor of
the Fund and the administrator of the Portfolio. Under Eaton Vance's
management contract with the Fund and administration agreement with the
Portfolio, Eaton Vance receives a monthly management fee from the Fund and a
monthly administration fee from the Portfolio. Each fee is computed by
applying the annual asset rate applicable to that portion of the average daily
net assets of the Fund or the Portfolio throughout the month in each Category
as indicated below:
ANNUAL
CATEGORY AVERAGE DAILY NET ASSETS ASSET RATE
1 less than $500 million .............................. 0.25%
2 $500 million but less than $1 billion ............... 0.23333
3 $1 billion but less than $1.5 billion ............... 0.21667
4 $1.5 billion but less than $2 billion ............... 0.20
5 $2 billion but less than $3 billion ................. 0.18333
6 $3 billion and over ................................. 0.16667
Eaton Vance's management contract with the Fund and its administration
agreement with the Portfolio will each continue in effect from year to year
for so long as such continuance is approved annually by the vote of a majority
of the Trustees of the Trust or the Portfolio, as the case may be. Each
agreement may be terminated at any time without penalty on sixty days' written
notice by the Board of Trustees of either party thereto, or by a vote of a
majority of the outstanding voting securities of the Fund or the Portfolio, as
the case may be. Each agreement will terminate automatically in the event of
its assignment. Each agreement provides that, in the absence of Eaton Vance's
willful misfeasance, bad faith, gross negligence or reckless disregard of its
obligations or duties to the Fund or the Portfolio under such contract or
agreement, Eaton Vance will not be liable to the Fund or the Portfolio for any
loss incurred.
The Fund and the Portfolio, as the case may be, will each be responsible
for all of its respective costs and expenses not expressly stated to be
payable by the Adviser under the investment advisory agreement, by Eaton Vance
under the management contract or the administration agreement or by the
Principal Underwriter under the distribution agreement. Such costs and
expenses to be borne by each of the Fund or the Portfolio, as the case may be,
include, without limitation: custody and transfer agency fees and expenses,
including those incurred for determining net asset value and keeping
accounting books and records, expenses of pricing and valuation services; the
cost of share certificates; membership dues in investment company
organizations; brokerage commissions and fees; fees and expenses of
registering under the securities laws; expenses of reports to shareholders and
investors; proxy statements, and other expenses of shareholders' or investors'
meetings; insurance premiums, printing and mailing expenses; interest, taxes
and corporate fees; legal and accounting expenses; compensation and expenses
of Trustees not affiliated with Eaton Vance or the Adviser; distribution and
service fees payable by the Fund under its Rule 12b-1 distribution plan; and
investment advisory, management and administration fees. The Fund or the
Portfolio, as the case may be, will also each bear expenses incurred in
connection with litigation in which the Fund or the Portfolio, as the case may
be, is a party and any legal obligation to indemnify its respective officers
and Trustees with respect thereto, to the extent not covered by insurance.
Eaton Vance and EV are both wholly-owned subsidiaries of EVC. BMR is a
wholly-owned subsidiary of Eaton Vance. Eaton Vance and BMR are both
Massachusetts business trusts, and EV is the trustee of Eaton Vance and BMR.
The Directors of EV are Landon T. Clay, M. Dozier Gardner, James B. Hawkes and
Benjamin A. Rowland, Jr. The Directors of EVC consist of the same persons and
John G.L. Cabot and Ralph Z. Sorenson. Mr. Clay is chairman, Mr. Gardner is
vice chairman and Mr. Hawkes is president and chief executive officer of EVC,
Eaton Vance, BMR and EV. All of the issued and outstanding shares of Eaton
Vance and of EV are owned by EVC. All of the issued and outstanding shares of
BMR are owned by Eaton Vance. All shares of the outstanding Voting Common
Stock of EVC are deposited in a Voting Trust which expires December 31, 1997,
the Voting Trustees of which are Messrs. Clay, Gardner, Hawkes and Rowland and
Thomas E. Faust, Jr. The Voting Trustees have unrestricted voting rights for
the election of Directors of EVC. All of the outstanding voting trust receipts
issued under said Voting Trust are owned by certain of the officers of Eaton
Vance and BMR who are also officers or officers and Directors of EVC and EV.
As of September 30, 1997, Messrs. Clay, Gardner and Hawkes each owned 24% of
such voting trust receipts, and Messrs. Roland and Faust owned 15% and 13%,
respectively, of such voting trust receipts. Messrs. Dynner, Gardner and
Hawkes, who are officers and/or Trustees of the Trust, and are members of the
EVC, Eaton Vance, BMR and EV organizations. Messrs. Murphy, O'Connor, Smiley
and Woodbury and Ms. Sanders, are officers of the Trust and/or the Portfolio,
and are also members of the Eaton Vance, BMR and EV organizations.
Eaton Vance owns all of the stock of Northeast Properties, Inc., which is
engaged in real estate investment. EVC also owns 22% of the Class A shares
issued by LGM, parent of the Adviser. EVC owns all the stock of Fulcrum
Management, Inc. and MinVen, Inc., which are engaged in precious metal mining
venture investment and management. EVC, Eaton Vance, BMR and EV may also enter
into other businesses.
EVC and its affiliates and their officers and employees from time to time
have transactions with various banks, including the custodian of the Fund and
the Portfolio, IBT. It is Eaton Vance's opinion that the terms and conditions
of such transactions were not and will not be influenced by existing or
potential custodial or other relationships between the Fund or the Portfolio
and such banks.
CUSTODIAN
IBT acts as custodian for the Fund and the Portfolio. IBT has the custody
of all cash and securities of the Fund and all securities of the Portfolio
purchased in the United States, maintains the Fund's and the Portfolio's
general ledger and computes the daily net asset value of interests in the
Portfolio and the net asset value of shares of the Fund. In such capacities,
IBT attends to details in connection with the sale, exchange, substitution,
transfer or other dealings with the Fund's and the Portfolio's respective
investments, receives and disburses all funds, and performs various other
ministerial duties upon receipt of proper instructions from the Fund and the
Portfolio, respectively.
Portfolio securities, if any, purchased by the Portfolio in the U.S. are
maintained in the custody of IBT or of other domestic banks or depositories.
Portfolio securities purchased outside of the U.S. are maintained in the
custody of foreign banks and trust companies that are members of IBT's Global
Custody Network, or foreign depositories used by such foreign banks and trust
companies. Each of the domestic and foreign custodial institutions holding
portfolio securities has been approved by the Board of Trustees of the
Portfolio in accordance with regulations under the 1940 Act.
IBT charges fees which are competitive within the industry. These fees for
the Portfolio relate to: (1) custody services based upon a percentage of the
market values of Portfolio securities; (2) bookkeeping and valuation services
provided at an annual rate; (3) activity charges, primarily the result of the
number of portfolio transactions; and (4) reimbursement of out-of-pocket
expenses. These fees are then reduced by a credit for cash balances of the
Portfolio at the custodian equal to 75% of the 91-day U.S. Treasury Bill
auction rate applied to the Portfolio's average daily collected balances. The
portion of the fee for the Fund related to bookkeeping and pricing services is
based upon a percentage of the Fund's net assets and the portion of the fee
related to financial statement preparation is a fixed amount. Landon T. Clay,
a Director of EVC and an officer, Trustee or Director of other entities in the
Eaton Vance organization, owns approximately 13% of the voting stock of
Investors Financial Services Corp., the holding company parent of IBT.
Management believes that such ownership does not create an affiliated person
relationship between the Fund or the Portfolio and IBT under the 1940 Act. IBT
also provides services in connection with the preparation of shareholder
reports and the electronic filing of such reports with the Commission, for
which it receives a separate fee.
SERVICES FOR ACCUMULATION -- CLASS A SHARES
The following services are voluntary, involve no extra charge, other than
the sales charge included in the offering price, and may be changed or
discontinued without penalty at any time.
Intended Quantity Investment -- Statement of Intention. If it is
anticipated that $50,000 or more of Class A shares and shares of other funds
exchangeable for Class A shares and listed under "The Eaton Vance Exchange
Privilege" in the Prospectus will be purchased within a 13-month period, a
Statement of Intention should be signed so that shares may be obtained at the
same reduced sales charge as though the total quantity were invested in one
lump sum. Shares held under Right of Accumulation (see below) as of the date
of the Statement will be included toward the completion of the Statement. The
Statement authorizes the Transfer Agent to hold in escrow sufficient shares
(5% of the dollar amount specified in the Statement) which can be redeemed to
make up any difference in sales charge on the amount intended to be invested
and the amount actually invested. Execution of a Statement does not obligate
the shareholder to purchase or the Fund to sell the full amount indicated in
the Statement, and should the amount actually purchased during the 13-month
period be more or less than that indicated on the Statement, price adjustments
will be made. For sales charges and other information on quantity purchases,
see "How to Buy Shares" in the Prospectus. Any investor considering signing a
Statement of Intention should read it carefully.
Right of Accumulation -- Cumulative Quantity Discount. The applicable
sales charge level for the purchase of Class A shares is calculated by taking
the dollar amount of the current purchase and adding it to the value
(calculated at the maximum current offering price) of the shares the
shareholder owns in his or her account(s) in the Fund and shares of other
funds exchangeable for Class A shares and listed under "The Eaton Vance
Exchange Privilege" in the Prospectus. The sales charge on the shares being
purchased will then be at the rate applicable to the aggregate. For sales
charges on quantity purchases, see "How to Buy Shares" in the Prospectus.
Shares purchased (i) by an individual, his or her spouse and their children
under the age of twenty-one, and (ii) by a trustee, guardian or other
fiduciary of a single trust estate or a single fiduciary account, will be
combined for the purpose of determining whether a purchase will qualify for
the Right of Accumulation and if qualifying, the applicable sales charge
level.
For any such discount to be made available, at the time of purchase a
purchaser or his or her Authorized Firm must provide the Principal Underwriter
(in the case of a purchase made through an Authorized Firm) or the Transfer
Agent (in the case of an investment made by mail) with sufficient information
to permit verification that the purchase order qualifies for the accumulation
privilege. Confirmation of the order is subject to such verification. The
Right of Accumulation privilege may be amended or terminated at any time as to
purchases occurring thereafter.
SERVICE FOR WITHDRAWAL
The Transfer Agent will send to the shareholder regular monthly or
quarterly payments of any permitted amount designated by the shareholder (see
"Eaton Vance Shareholder Services -- Withdrawal Plan" in the Prospectus) based
upon the value of the shares held. The checks will be drawn from share
redemptions and hence, although they are a return of principal, may require
the recognition of taxable gain or loss. Income dividends and capital gains
distributions in connection with withdrawal plan accounts will be credited at
net asset value as of the record date for each distribution. Continued
withdrawals in excess of current income will eventually use up principal,
particularly in a period of declining market prices. A shareholder may not
have a withdrawal plan in effect at the same time he or she has authorized
Bank Automated Investing or is otherwise making regular purchases of Fund
shares. The shareholder, the Transfer Agent or the Principal Underwriter will
be able to terminate the withdrawal plan at any time without penalty.
DETERMINATION OF NET ASSET VALUE
The Trustees of the Portfolio have established the following procedures
for the fair valuation of the Portfolio's assets under normal market
conditions. Securities listed on foreign or U.S. securities exchanges or in
the NASDAQ National Market System generally are valued at closing sale prices
or, if there were no sales, at the mean between the closing bid and asked
prices therefor on the exchange where such securities are principally traded
or on such National Market System. Unlisted or listed securities for which
closing sale prices are not available are valued at the mean between the
latest bid and asked prices. An option is valued at the last sale price as
quoted on the principal exchange or board of trade on which such option or
contract is traded, or in the absence of a sale, the mean between the last bid
and asked price. Futures positions on securities or currencies are generally
valued at closing settlement prices. All other securities are valued at fair
value as determined in good faith by or pursuant to procedures established by
the Trustees. Short term debt securities with a remaining maturity of 60 days
or less are valued at amortized cost. If securities were acquired with a
remaining maturity of more than 60 days, their amortized cost value will be
based on their value on the sixty-first day prior to maturity. Other fixed
income and debt securities, including listed securities and securities for
which price quotations are available, will normally be valued on the basis of
valuations furnished by a pricing service.
Generally, trading in the foreign securities owned by the Portfolio is
substantially completed each day at various times prior to the close of the
Exchange. The values of these securities used in determining the net asset
value of the Portfolio's shares are computed as of such times. Occasionally,
events affecting the value of foreign securities may occur between such times
and the close of the Exchange which will not be reflected in the computation
of the Portfolio's net asset value (unless the Portfolio deems that such
events would materially affect its net asset value, in which case an
adjustment would be made and reflected in such computation). Foreign
securities and currency held by the Portfolio will be valued in U.S. dollars;
such values will be computed by the custodian based on foreign currency
exchange rate quotations.
Each investor in the Portfolio, including the Fund, may add to or reduce
its investment in the Portfolio on each day the Exchange is open for trading
("Portfolio Business Day") as of the close of regular trading on the Exchange
(the "Portfolio Valuation Time"). The value of each investor's interest in the
Portfolio will be determined by multiplying the net asset value of the
Portfolio by the percentage, determined on the prior Portfolio Business Day,
which represented that investor's share of the aggregate interests in the
Portfolio on such prior day. Any additions or withdrawals for the current
Portfolio Business Day will then be recorded. Each investor's percentage of
the aggregate interest in the Portfolio will then be recomputed as the
percentage equal to a fraction (i) the numerator of which is the value of such
investor's investment in the Portfolio as of the close of Portfolio Valuation
Time on the prior Portfolio Business Day plus or minus, as the case may be,
that amount of any additions to or withdrawals from the investor's investment
in the Portfolio on the current Portfolio Business Day, and (ii) the
denominator of which is the aggregate net asset value of the Portfolio as of
the Portfolio Valuation Time on the prior Portfolio Business Day plus or
minus, as the case may be, the amount of the net additions to or withdrawals
from the aggregate investment in the Portfolio on the current Portfolio
Business Day by all investors in the Portfolio. The percentage so determined
will then be applied to determine the value of the investor's interest in the
Portfolio for the current Portfolio Business Day. The Fund and Portfolio will
be closed for business and will not price their shares on the following
business holidays: New Year's Day, Martin Luther King, Jr. Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day.
INVESTMENT PERFORMANCE
Average annual total return is determined separately for each Class of the
Fund by multiplying a hypothetical initial purchase order of $1,000 by the
average annual compound rate of return (including capital appreciation/
depreciation, and distributions paid and reinvested) for the stated period and
annualizing the results. The calculation assumes (i) that all distributions
are reinvested at net asset value on the reinvestment dates during the period,
(ii) the deduction of the maximum sales charge from the initial $1,000
purchase order for Class A shares, (iii) a complete redemption of the
investment, and (iv) the deduction of any CDSC at the end of the period.
The Fund's total return may be compared to relevant indices, such as the
Consumer Price Index and various domestic and foreign securities indices. The
Fund's total return and comparisons with these indices may be used in
advertisements and in information furnished to present or prospective
shareholders. The Fund's performance may differ from that of other investors
in the Portfolio, including the other investment companies. In addition,
evaluations of the Fund's performance or rankings of mutual funds (which
include the Fund) made by independent sources may be used in advertisements
and in information furnished to present or prospective shareholders.
Information, charts and illustrations showing the effect of compounding
interest or relating to inflation and taxes (including their effects on the
dollar and the return on stocks and other investment vehicles) may also be
included in advertisements and materials furnished to present and prospective
investors.
Information used in advertisements and in materials furnished to present
or prospective shareholders may include statistics, data and performance
studies prepared by independent organizations or included in various
publications reflecting the investment performance or return achieved by
various classes and types of investments (e.g. common stocks, small company
stocks, long-term corporate bonds, long-term government bonds, intermediate-
term government bonds, U.S. Treasury bills) over various periods of time. This
information may be used to illustrate the benefits of long-term investments in
common stocks. Information about the portfolio allocation, portfolio turnover
and holdings of the Portfolio may be included in advertisements and other
material furnished to present and prospective shareholders.
Information used in advertisements and materials furnished to present and
prospective investors may include statements or illustrations relating to the
appropriateness of certain types of securities and/or mutual funds to meet
specific financial goals. Such information may address:
-- cost associated with aging parents;
-- funding a college education (including its actual and estimated cost);
-- health care expenses (including actual and projected expenses);
-- long-term disabilities (including the availability of, and coverage
provided by, disability insurance); and
-- retirement (including the availability of social security benefits, the
tax treatment of such benefits and statistics and other information
relating to maintaining a particular standard of living and outliving
existing assets).
Such information may also address different methods for saving money and
the results of such methods, as well as the benefits of investing in equity
securities. Such information may describe: the potential for growth; the
performance of equities as compared to other investment vehicles; and the
value of investing as early as possible and regularly, as well as staying
invested. The benefits of investing in equity securities by means of a mutual
fund may also be included (such benefits may include diversification,
professional management and the variety of equity mutual fund products).
Information in advertisements and materials furnished to present and
prospective investors may include profiles of different types of investors
(i.e., investors with different goals and assets) and different investment
strategies for meeting specific financial goals. Such information may provide
hypothetical illustrations which include: results of various investment
strategies; performance of an investment in the Fund over various time
periods; and results of diversifying assets among several investments with
varying performance. Information in advertisements and materials furnished to
present and prospective investors may also include quotations (including
editorial comments) and statistics concerning investing in securities, as well
as investing in particular types of securities and the performance of such
securities.
The Principal Underwriter may provide investors with information on global
investing, which may include descriptions, comparisons, charts and/or
illustrations of foreign and domestic equity market capitalizations; returns
obtained by foreign and domestic securities; and the effects of globally
diversifying an investment portfolio (including volatility analysis and
performance information). Such information may be provided for a variety of
countries over varying time periods.
The Trust (or Principal Underwriter) may provide information about Eaton
Vance, its affiliates and other investment advisers to the funds in the Eaton
Vance Family of Funds in sales material or advertisements provided to
investors or prospective investors. Such material or advertisements may also
provide information on the use of investment professionals by such investors.
TAXES
Each series of the Trust is treated as a separate entity for accounting
and tax purposes. The Fund intends to elect to be treated, and to qualify each
year as a regulated investment company ("RIC") under the Code. Accordingly,
the Fund intends to satisfy certain requirements relating to sources of its
income and diversification of its assets and to distribute substantially all
of its ordinary income and net income in accordance with the timing
requirements imposed by the Code, so as to maintain its RIC status and to
avoid paying any federal income or excise tax. Because the Fund invests its
assets in the Portfolio, the Portfolio normally must satisfy the applicable
source of income and diversification requirements in order for the Fund to
also satisfy these requirements. The Portfolio will allocate at least annually
among its investors, including the Fund, the Portfolio's net investment
income, net realized capital gains, and any other items of income, gain, loss,
deduction or credit. The Portfolio will make allocations to the Fund in a
manner intended to comply with the Code and applicable regulations and will
make moneys available for withdrawal at appropriate times and in sufficient
amounts to enable the Fund to satisfy the tax distribution requirements that
apply to the Fund and that must be satisfied in order to avoid federal income
and/or excise tax on the Fund. For purposes of applying the requirements of
the Code regarding qualification as a RIC, the Fund (i) will be deemed to own
its proportionate share of each of the assets of the Portfolio and (ii) will
be entitled to the gross income of the Portfolio attributable to such share.
In order to avoid incurring a federal excise tax obligation, the Code
requires that the Fund distribute (or be deemed to have distributed) by
December 31 of each calendar year at least 98% of its ordinary income (not
including tax-exempt income) for such year, at least 98% of its capital gain
net income (which is the excess of its realized capital gains over its
realized capital losses), generally computed on the basis of the one-year
period ending on October 31 of such year, after reduction by (i) any available
capital loss carryforwards and (ii) 100% of any income and capital gains from
the prior year (as previously computed) that was not paid out during such year
and on which the Fund paid no federal income tax. Under current law, provided
that the Fund qualifies as a RIC and the Portfolio is treated as a partnership
for Massachusetts and federal tax purposes, neither the Fund nor the Portfolio
should be liable for any income, corporate excise or franchise tax in the
Commonwealth of Massachusetts.
Certain foreign exchange gains and losses realized by the Portfolio and
allocated to the Fund in connection with the Portfolio's investments in
foreign securities and foreign currency related options, futures or forward
contracts or foreign currency may be treated as ordinary income and losses
under special tax rules. Certain options, futures or forward contracts of the
Portfolio may be required to be marked to market (i.e., treated as if closed
out) on the last day of each taxable year, and any gain or loss realized with
respect to these contracts may be required to be treated as 60% long-term and
40% short-term gain or loss or, in the case of certain contracts relating to
foreign currency, as ordinary income or loss. Positions of the Portfolio in
securities and offsetting options, futures or forward contracts may be treated
as "straddles", which are subject to tax rules that may cause deferral of
Portfolio losses, adjustments in the holding periods of Portfolio securities,
and other changes in the short-term or long-term characterization of capital
gains and losses, the effect of which may be to change the amount, timing and
character of the Fund's distributions to shareholders. Certain uses of foreign
currency and foreign currency derivatives such as options, futures, forward
contracts and swaps and investment by the Portfolio in certain "passive
foreign investment companies" may be limited or a tax election may be made, if
available, in order to preserve the Fund's ability to qualify as a RIC or
avoid imposition of a tax on the Fund.
The Portfolio anticipates that it will be subject to foreign taxes on its
income (including, in some cases, capital gains) from foreign securities. Tax
conventions between certain countries and the U.S. may reduce or eliminate
such taxes in some cases. If more than 50% of the Fund's total assets, taking
into account its allocable share of the Portfolio's total assets, at the close
of any taxable year of the Fund consists of stock or securities of foreign
corporations, the Fund may file an election with the Internal Revenue Service
(the "IRS") pursuant to which shareholders of the Fund will be required to (i)
include in ordinary gross income (in addition to dividends and distributions
actually received) their pro rata shares of foreign income taxes paid by the
Portfolio and allocated to the Fund even though not actually received by them,
and (ii) treat such respective pro rata portions as foreign income taxes paid
by them. Shareholders may then deduct such pro rata portions of foreign income
taxes in computing their taxable incomes, or, alternatively, use them as
foreign tax credits, subject to applicable limitations, against their U.S.
income taxes. Shareholders who do not itemize deductions for federal income
tax purposes will not, however, be able to deduct their pro rata portion of
foreign taxes deemed paid by the Fund, although such shareholders will be
required to include their shares of such taxes in gross income. Shareholders
who claim a foreign tax credit for such foreign taxes may be required to treat
a portion of dividends received from the Fund as a separate category of income
for purposes of computing the limitations on the foreign tax credit. Tax-
exempt shareholders will ordinarily not benefit from this election. Each year
that the Fund files the election described above, its shareholders will be
notified of the amount of (i) each shareholder's pro rata share of foreign
income taxes paid by the Portfolio and allocated to the Fund and (ii) the
portion of Fund dividends which represents income from each foreign country.
If the Fund does not make this election, it may deduct its allocated share of
such taxes in computing the income it is required to distribute.
The Portfolio will allocate at least annually to the Fund and its other
investors their respective distributive shares of any net investment income
and net capital gains which have been recognized for federal income tax
purposes (including unrealized gains at the end of the Portfolio's fiscal year
on certain options and futures transactions that are required to be marked-to-
market). Such amounts will be distributed by the Fund to its shareholders in
cash or additional shares, as they elect. Shareholders of the Fund will be
advised of the nature of the distributions.
Distributions by the Fund of the excess of net long-term capital gain over
net short-term capital loss earned by the Portfolio and allocated to the Fund,
taking into account any capital loss carryforwards that may be available, are
taxable to shareholders of the Fund as long-term capital gains, whether
received in cash or in additional shares and regardless of the length of time
their shares have been held.
Any loss realized upon the redemption or exchange of shares of the Fund
with a tax holding period of 6 months or less will be treated as a long-term
capital loss to the extent of any distribution of net long-term capital gains
with respect to such shares. All or a portion of a loss realized upon a
redemption or other disposition of Fund shares may be disallowed under "wash
sale" rules if other Fund shares are purchased (whether through reinvestment
of dividends or otherwise) within 30 days before or after the disposition. Any
disallowed loss will result in an adjustment to the shareholder's tax basis in
some or all of the other shares acquired.
Amounts paid by the Fund to individuals and certain other shareholders who
have not provided the Fund with their correct taxpayer identification number
("TIN") and certain certifications required by the IRS, as well as
shareholders with respect to whom the Fund has received certain information
from the IRS or a broker, may be subject to "backup" withholding of federal
income tax arising from the Fund's dividends and other distributions as well
as the proceeds of redemption transactions (including repurchases and
exchanges), at a rate of 31%. An individual's TIN is generally his or her
social security number.
Non-resident alien individuals, foreign corporations and certain other
foreign entities generally will be subject to a U.S. withholding tax at a rate
of 30% on the Fund's distributions from its ordinary income and the excess of
its net short-term capital gain over its net long-term capital loss, unless
the tax is reduced or eliminated by an applicable tax convention.
Distributions from the excess of the Fund's net long-term capital gain over
its net short-term capital loss received by such shareholders and any gain
from the sale or other disposition of shares of the Fund generally will not be
subject to U.S. federal income taxation, provided that non-resident alien
status has been certified by the shareholder. Different U.S. tax consequences
may arise if: (i) the shareholder is engaged in a trade or business in the
United States, (ii) the shareholder is present in the United States for a
sufficient period of time during a taxable year to be treated as a U.S.
resident, (generally 180 days or more); or (iii) the shareholder fails to
provide any required certifications regarding its status as a non-resident
alien investor. Foreign shareholders should consult their tax advisers
regarding the U.S. and foreign tax consequences of an investment in the Fund.
The foregoing discussion does not address the special tax rules applicable
to certain classes of investors, such as IRAs and other retirement plans, tax-
exempt entities, insurance companies and financial institutions. Shareholders
should consult their own tax advisers with respect to these or other special
tax rules that may apply in their particular situations, as well as the state,
local, and, when applicable, foreign tax consequences of investing in the
Fund.
PRINCIPAL UNDERWRITER
CLASS A SHARES. Class A shares of the Fund may be continuously purchased
at the public offering price through Authorized Firms which have agreements
with the Principal Underwriter. The Trust reserves the right to suspend or
limit the offering of its shares to the public at any time. The public
offering price is the net asset value next computed after receipt of the
order, plus, where applicable, a variable percentage (sales charge) depending
upon the amount of purchase as indicated by the sales charge table set forth
in the Prospectus (see "How to Buy Shares"). Such table is applicable to
purchases of a Fund alone or in combination with purchases of certain other
funds offered by the Principal Underwriter, made at a single time by (i) an
individual, or an individual, his spouse and their children under the age of
twenty-one, purchasing shares for his or their own account, and (ii) a trustee
or other fiduciary purchasing shares for a single trust estate or a single
fiduciary account. The table is also presently applicable to (1) purchases of
Class A shares pursuant to a written Statement of Intention or (2) purchases
of Class A shares pursuant to the Right of Accumulation and declared as such
at the time of purchase.
Subject to the applicable provisions of the 1940 Act, the Trust may issue
Class A shares at net asset value in the event that an investment company
(whether a regulated or private investment company or a personal holding
company) is merged or consolidated with or acquired by the Class. Normally no
sales charges will be paid in connection with an exchange of Class A shares
for the assets of such investment company. Class A shares may be sold at net
asset value to any officer, director, trustee, general partner or employee of
the Trust, a Portfolio or any investment company for which Eaton Vance or BMR
acts as investment adviser, any investment advisory, agency, custodial or
trust account managed or administered by Eaton Vance or by any parent,
subsidiary or other affiliate of Eaton Vance, or any officer, director or
employee of any parent, subsidiary or other affiliate of Eaton Vance. The
terms "officer," "director," "trustee," "general partner" or "employee" as
used in this paragraph include any such person's spouse and minor children,
and also retired officers, directors, trustees, general partners and employees
and their spouses and minor children. Class A shares may also be sold at net
asset value to registered representatives and employees of Authorized Firms
and to the spouses and children under the age of 21 and beneficial accounts of
such persons.
The Principal Underwriter acts as principal in selling Class A shares
under a Distribution Agreement with the Trust. The expenses of printing copies
of prospectuses used to offer shares to Authorized Firms or investors and
other selling literature and of advertising are borne by the Principal
Underwriter. The fees and expenses of qualifying and registering and
maintaining qualifications and registrations of the Fund and its Class A
shares under federal and state securities laws are borne by the Class. The
Distribution Agreement is renewable annually by the Board of Trustees of the
Trust (including a majority of the noninterested Trustees), may be terminated
on six months' notice by either party and is automatically terminated upon
assignment. The Principal Underwriter distributes Class A shares on a "best
efforts" basis under which it is required to take and pay for only such shares
as may be sold. The Principal Underwriter allows Authorized Firms discounts
from the applicable public offering price which are alike for all Authorized
Firms. The Principal Underwriter may allow, upon notice to all Authorized
Firms with whom it has agreements, discounts up to the full sales charge
during the periods specified in the notice. During periods when the discount
includes the full sales charge, such Authorized Firms may be deemed to be
underwriters as that term is defined in the Securities Act of 1933.
The Trust has authorized the Principal Underwriter to act as its agent in
repurchasing shares at the rate of $2.50 for each repurchase transaction
handled by the Principal Underwriter. The Principal Underwriter estimates that
the expenses incurred by it in acting as repurchase agent for the Trust will
exceed the amounts paid therefor.
CLASS B SHARES. Under a Distribution Agreement, the Principal Underwriter
acts as principal in selling Class B shares. The expenses of printing copies
of prospectuses used to offer shares to Authorized Firms or investors and
other selling literature and of advertising is borne by the Principal
Underwriter. The fees and expenses of qualifying and registering and
maintaining qualifications and registrations of the Fund and its Class B
shares under federal and state securities laws are borne by the Class. In
addition, Class B makes payments to the Principal Underwriter pursuant to a
Distribution Plan as described in the Prospectus; the provisions of the plan
relating to such payments are included in the Distribution Agreement. The
Distribution Agreement is renewable annually by the Trust's Board of Trustees
(including a majority of the noninterested Trustees who have no direct or
indirect financial interest in the operation of the Distribution Plan or the
Distribution Agreement), may be terminated on sixty days' notice either by
such Trustees or by vote of a majority of the outstanding Class B shares or on
six months' notice by the Principal Underwriter and is automatically
terminated upon assignment. The Principal Underwriter distributes Class B
shares on a "best efforts" basis under which it is required to take and pay
for only such shares as may be sold. The Trust has authorized the Principal
Underwriter to act as its agent in repurchasing shares at the rate of $2.50
for each repurchase transaction handled by the Principal Underwriter. The
Principal Underwriter estimates that the expenses incurred by it in acting as
repurchase agent for the Trust will exceed the amounts paid therefor.
DISTRIBUTION PLANS
CLASS A SHARES
As described in the Prospectus, in addition to the fees and expenses
described herein, the Trust on behalf of its Class A shares finances
distribution activities and bears expenses associated with the distribution of
shares and the provision of certain personal and account maintenance services
to shareholders pursuant to a distribution plan (the "Plan") designed to meet
the requirements of Rule 12b-1 under the 1940 Act.
The Plan remains in effect from year to year provided such continuance is
approved at least annually by a vote of both a majority of (i) the
noninterested Trustees of the Trust who have no direct or indirect financial
interest in the operation of the Plan or any agreement related to the Plan
(the "Rule 12b-1 Trustees") and (ii) all of the Trustees then in office. The
Plan may be terminated at any time by vote of a majority of the Rule 12b-1
Trustees or by vote of a majority of the outstanding Class A shares of the
Fund. The Plan requires quarterly Trustee review of a written report of the
amount expended under the Plan and the purposes for which such expenditures
were made. The Plan may not be amended to increase materially the payments
described therein without approval of the affected shareholders of Class A
shares and the Trustees. So long as the Plan is in effect, the selection and
nomination of the noninterested Trustees shall be committed to the discretion
of such Trustees. The Trustees have determined that in their judgment there is
a reasonable likelihood that the Plan will benefit the Fund and its
shareholders.
The Plan is intended to compensate the Principal Underwriter for its
distribution services to the Fund by paying the Principal Underwriter monthly
distribution fees in connection with the sale of Class A shares. The quarterly
service fee paid by the Class A shares under the Plan is intended to
compensate the Principal Underwriter for its personal and account maintenance
services and for the payment by the Principal Underwriter of service fees to
Authorized Firms.
CLASS B SHARES
The Trust has adopted a Distribution Plan (the "Plan") on behalf of its
Class B shares designed to meet the requirements of Rule 12b-1 under the 1940
Act and the sales charge rule of the NASD. The purpose of the Plan, is to
compensate the Principal Underwriter for its distribution services and
facilities provided with respect to Class B shares.
The Plan provide that the Fund will pay sales commissions and distribution
fees to the Principal Underwriter only after and as a result of the sale of
Class B shares of the Fund. On each sale of Fund shares (excluding
reinvestment of distributions) the Fund will pay the Principal Underwriter
amounts representing (i) sales commissions equal to 5% of the amount received
by the Fund for each share sold and (ii) distribution fees calculated by
applying the rate of 1% over the prime rate then reported in The Wall Street
Journal to the outstanding balance of uncovered distribution charges (as
described below) of the Principal Underwriter.
The amount payable to the Principal Underwriter pursuant to the Plans as
sales commissions and distribution fees with respect to each day will be
accrued on such day as a liability of the respective Class and will
accordingly reduce the net assets of the Class upon such accrual, all in
accordance with generally accepted accounting principles. The amount payable
on each day is limited to 1/365 of .75% of the net assets of the Class on
such day. The level of net assets changes each day and depends upon the amount
of sales and redemptions of shares, the changes in the value of the
investments held by the Portfolio, the expenses of the Class, Fund and the
Portfolio accrued and allocated to the Fund and Class on such day, income on
portfolio investments of the Portfolio accrued and allocated to the Fund on
such day, and any dividends and distributions declared on Fund shares. The
Trust does not accrue possible future payments as a liability of a Class or
reduce current net assets in respect of unknown amounts which may become
payable under the Plan in the future because the standards for accrual of such
a liability under accounting principles have not been satisfied.
The Plan provides that the Class will receive all CDSCs and will make no
payments to the Principal Underwriter in respect of any day on which there are
no outstanding uncovered distribution charges of the Principal Underwriter.
CDSCs and accrued amounts will be paid by the Trust to the Principal
Underwriter whenever there exist uncovered distribution charges.
In calculating daily the amount of uncovered distribution charges,
distribution charges will include the aggregate amount of sales commissions
and distribution fees theretofore paid plus the aggregate amount of sales
commissions and distribution fees which the Principal Underwriter is entitled
to be paid under the Plan since its inception. Payments theretofore paid or
payable under the Plan by the Trust to the Principal Underwriter and CDSCs
theretofore paid or payable to the Principal Underwriter less all amounts
theretofore paid or payable to the Principal Underwriter by the Adviser in
consideration of the former's distribution efforts, will be subtracted from
such distribution charges; if the result of such subtraction is positive, a
distribution fee (computed at 1% over the prime rate then reported in The Wall
Street Journal) will be computed on such amount and added thereto, with the
resulting sum constituting the amount of outstanding uncovered distribution
charges with respect to such day. The amount of outstanding uncovered
distribution charges of the Principal Underwriter calculated on any day does
not constitute a liability recorded on the financial statements of the Fund.
The amount of uncovered distribution charges of the Principal Underwriter
at any particular time depends upon various changing factors, including the
level and timing of sales of shares, the nature of such sales (i.e., whether
they result from exchange transactions, reinvestments or from cash sales
through Authorized Firms), the level and timing of redemptions of shares upon
which a CDSC will be imposed, the level and timing of redemptions of shares
upon which no CDSC will be imposed (including redemptions of shares pursuant
to the exchange privilege which result in a reduction of uncovered
distribution charges), changes in the level of the net assets of the Class,
and changes in the interest rate used in the calculation of the distribution
fee under the Plan. Periods with a high level of sales of Class shares
accompanied by a low level of early redemptions of Class shares resulting in
the imposition of CDSCs will tend to increase the time during which there will
exist uncovered distribution charges of the Principal Underwriter.
Currently, payments of sales commissions and distribution fees and of
service fees may equal, 1% of a Class' average daily net assets per annum. The
Trust believes that the combined rate of all these payments may be higher than
the rate of payments made under distribution plans adopted by other investment
companies pursuant to Rule 12b-1. Although the Principal Underwriter will use
its own funds (which may be borrowed from banks) to pay sales commissions at
the time of sale, it is anticipated that the Eaton Vance organization will
profit by reason of the operation of the Plan through an increase in the
Fund's assets (thereby increasing the management fee payable to Eaton Vance by
the Fund and the administration fee payable to Eaton Vance by the Portfolio)
resulting from sale of shares and through the amounts paid to the Principal
Underwriter, including CDSCs, pursuant to the Plan. The Eaton Vance
organization may be considered to have realized a profit under the Plan if at
any point in time the aggregate amounts theretofore received by the Principal
Underwriter pursuant to the Plan, from the Adviser in consideration of the
distribution efforts and from CDSCs have exceeded the total expenses
theretofore incurred by such organization in distributing Class B shares of
the Fund. Total expenses for this purpose will include an allocable portion of
the overhead costs of such organization and its branch offices, which costs
will include without limitation leasing expense, depreciation of building and
equipment, utilities, communication and postage expense, compensation and
benefits of personnel, travel and promotional expense, stationery and
supplies, literature and sales aids, interest expense, data processing fees,
consulting and temporary help costs, insurance, taxes other than income taxes,
legal and auditing expense and other miscellaneous overhead items. Overhead is
calculated and allocated for such purpose by the Eaton Vance organization in a
manner deemed equitable to the Trust.
The Plan continues in effect from year to year for so long as such
continuance is approved at least annually by the vote of both a majority of
(i) the noninterested Trustees of the Trust who have no direct or indirect
financial interest in the operation of the Plan or any agreements related to
the Plan (the "Rule 12b-1 Trustees") and (ii) all of the Trustees then in
office, and the Distribution Agreement contains a similar provision. The Plan
and Distribution Agreement may each be terminated at any time by vote of a
majority of the Rule 12b-1 Trustees or by a vote of a majority of the
outstanding voting securities of the applicable Class. The Plan requires
quarterly Trustee review of a written report of the amount expended under the
Plan and the purposes for which such expenditures were made. The Plan may not
be amended to increase materially the payments described therein without
approval of the shareholders of the affected Class and the Trustees. So long
as the Plan is in effect, the selection and nomination of the noninterested
Trustees shall be committed to the discretion of such Trustees.
The Trustees of the Trust believe that the Plan will be a significant
factor in the expected growth of the Fund's assets, and will result in
increased investment flexibility and advantages which will benefit the Fund
and its Class B shareholders. Payments for sales commissions and distribution
fees made to the Principal Underwriter under the Plan will compensate the
Principal Underwriter for its services and expenses in distributing Class B
shares of the Fund. Service fee payments made to the Principal Underwriter and
Authorized Firms under the Plan provide incentives to provide continuing
personal services to investors and the maintenance of shareholder accounts.
By providing incentives to the Principal Underwriter and Authorized Firms,
the Plan is expected to result in the maintenance of, and possible future
growth in, the assets of the Fund. Based on the foregoing and other relevant
factors, the Trustees of the Trust have determined that in their judgment
there is a reasonable likelihood that the Plan will benefit the Fund and its
Class B shareholders.
PORTFOLIO SECURITY TRANSACTIONS
Decisions concerning the execution of portfolio security transactions by
the Portfolio, including the selection of the market and the broker-dealer
firm, are made by the Adviser.
The Adviser places the portfolio security transactions of the Portfolio
and of certain other accounts managed by the Adviser for execution with many
firms. The Adviser uses its best efforts to obtain execution of portfolio
security transactions at prices which are advantageous to the Portfolio and
(when a disclosed commission is being charged) at reasonably competitive
commission rates. In seeking such execution, the Adviser will use its best
judgment in evaluating the terms of a transaction, and will give consideration
to various relevant factors, including without limitation the size and type of
the transaction, the general execution and operational capabilities of the
broker-dealer, the nature and character of the market for the security, the
confidentiality, speed and certainty of effective execution required for the
transaction, the reputation, reliability, experience and financial condition
of the broker-dealer, the value and quality of services rendered by the
broker-dealer in other transactions, and the reasonableness of the commission
or spread, if any. Transactions on stock exchanges and other agency
transactions involve the payment by the Portfolio of negotiated brokerage
commissions. Such commissions vary among different broker-dealer firms, and a
particular broker-dealer may charge different commissions according to such
factors as the difficulty and size of the transaction and the volume of
business done with such broker-dealer. Transactions in foreign securities
usually involve the payment of fixed brokerage commissions, which are
generally higher than those in the United States. There is generally no stated
commission in the case of securities traded in the over-the-counter markets,
but the price paid or received by the Portfolio usually includes an
undisclosed dealer markup or markdown. In an underwritten offering the price
paid by the Portfolio includes a disclosed fixed commission or discount
retained by the underwriter or dealer. Although commissions paid on portfolio
transactions will, in the judgment of the Adviser, be reasonable in relation
to the value of the services provided, commissions exceeding those which
another firm might charge may be paid to broker-dealers who were selected to
execute transactions on behalf of the Portfolio and the Adviser's other
clients in part for providing brokerage and research services to the Adviser.
As authorized in Section 28(e) of the Securities Exchange Act of 1934, a
broker or dealer who executes a portfolio transaction on behalf of the
Portfolio may receive a commission which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if the Adviser determines in good faith that such commission was
reasonable in relation to the value of the brokerage and research services
provided. This determination may be made on the basis of either that
particular transaction or on the basis of the overall responsibilities which
the Adviser and its affiliates have for accounts over which they exercise
investment discretion. In making any such determination, the Adviser will not
attempt to place a specific dollar value on the brokerage and research
services provided or to determine what portion of the commission should be
related to such services. Brokerage and research services may include advice
as to the value of securities, the advisability of investing in, purchasing,
or selling securities, and the availability of securities or purchasers or
sellers of securities; furnishing analyses and reports concerning issuers,
industries, securities, economic factors and trends, portfolio strategy and
the performance of accounts; and effecting securities transactions and
performing functions incidental thereto (such as clearance and settlement);
and the "Research Services" referred to in the next paragraph.
It is a common practice in the investment advisory industry for the
advisers of investment companies, institutions and other investors to receive
research, statistical and quotation services, data, information and other
services, products and materials which assist such advisers in the performance
of their investment responsibilities ("Research Services") from broker-dealers
which execute portfolio transactions for the clients of such advisers and from
third parties with which such broker-dealers have arrangements. Consistent
with this practice, the Adviser may receive Research Services from broker-
dealer firms with which the Adviser places the portfolio transactions of the
Portfolio and from third parties with which these broker-dealers have
arrangements. These Research Services may include such matters as general
economic and market reviews, industry and company reviews, evaluations of
securities and portfolio strategies and transactions and recommendations as to
the purchase and sale of securities and other portfolio transactions,
financial, industry and trade publications, news and information services,
pricing and quotation equipment and services, and research oriented computer
hardware, software, data bases and services. Any particular Research Service
obtained through a broker-dealer may be used by the Adviser in connection with
client accounts other than those accounts which pay commissions to such
broker-dealer. Any such Research Service may be broadly useful and of value to
the Adviser in rendering investment advisory services to all or a significant
portion of its clients, or may be relevant and useful for the management of
only one client's account or of a few clients' accounts, or may be useful for
the management of merely a segment of certain clients' accounts, regardless of
whether any such account or accounts paid commissions to the broker-dealer
through which such Research Service was obtained. The advisory fee paid by the
Portfolio is not reduced because the Adviser receives such Research Services.
The Adviser evaluates the nature and quality of the various Research Services
obtained through broker-dealer firms and attempts to allocate sufficient
commissions to such firms to ensure the continued receipt of Research Services
which the Adviser believes are useful or of value to it in rendering
investment advisory services to its clients.
Subject to the requirement that the Adviser shall use its best efforts to
seek to execute portfolio security transactions of the Portfolio at
advantageous prices and at reasonably competitive commission rates or spreads,
the Adviser is authorized to consider as a factor in the selection of any
broker-dealer firm with whom Portfolio orders may be placed the fact that such
firm has sold or is selling shares of the Fund or of other investment
companies sponsored by Eaton Vance. This policy is not inconsistent with a
rule of the NASD, which rule provides that no firm which is a member of the
NASD shall favor or disfavor the distribution of shares of any particular
investment company or group of investment companies on the basis of brokerage
commissions received or expected by such firm from any source.
Securities considered as investments for the Portfolio may also be
appropriate for other investment accounts managed by the Adviser or its
affiliates. The Adviser will attempt to allocate in a manner it deems
equitable portfolio security transactions among the Portfolio and the
portfolios of its other investment accounts whenever decisions are made to
purchase or sell securities by the Portfolio and one or more of such other
accounts simultaneously. In making such allocations, the main factors to be
considered are the respective investment objectives of the Portfolio and such
other accounts, the relative size of portfolio holdings of the same or
comparable securities, the availability of cash for investment by the
Portfolio and such accounts, the size of investment commitments generally held
by the Portfolio and such accounts and the opinions of the persons responsible
for recommending investments to the Portfolio and such accounts. However,
there may be instances when the Portfolio will not participate in a securities
transaction that is allocated among other accounts. While these procedures
could have a detrimental effect on the price or amount of the securities
available to the Portfolio from time to time, it is the opinion of the
Trustees of the Trust and the Portfolio that the benefits available from the
Adviser's organization outweigh any disadvantage that may arise from exposure
to simultaneous transactions.
OTHER INFORMATION
The Trust is organized as a business trust under the laws of the
Commonwealth of Massachusetts under a Declaration of Trust dated March 27,
1989, as amended. On July 21, 1992, the Trust changed its name from Eaton
Vance Special Equities Fund to Eaton Vance Special Investment Trust. Eaton
Vance, pursuant to its agreement with the Trust, controls the use of the words
"Eaton Vance" and "EV" in the Trust's name and may use the words "Eaton Vance"
or "EV" in other connections and for other purposes.
The Trust's Declaration of Trust may be amended by the Trustees when
authorized by vote of a majority of the outstanding voting securities of the
Trust, the financial interests of which are affected by the amendment. The
Trustees may also amend the Declaration of Trust without the vote or consent
of shareholders to change the name of the Trust or any series or to make such
other changes (such as reclassifying series or classes of shares or
restructuring the Trust) as do not have a materially adverse effect on the
rights or interests of shareholders or if they deem it necessary to conform
the Declaration to the requirements of applicable federal laws or regulations.
The Trust's By-laws provide that the Trust will indemnify its Trustees and
officers against liabilities and expenses incurred in connection with any
litigation or proceeding in which they may be involved because of their
offices with the Trust. However, no indemnification will be provided to any
Trustee or officer for any liability to the Trust or its shareholders by
reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office.
Under Massachusetts law, if certain conditions prevail, shareholders of a
Massachusetts business trust (such as the Trust) could be deemed to have
personal liability for the obligations of the Trust. Numerous investment
companies registered under the 1940 Act have been formed as Massachusetts
business trusts, and management is not aware of an instance where such
liability has been imposed. The Trust's Declaration of Trust contains an
express disclaimer of liability on the part of the Fund shareholders and the
Trust's By-laws provide that the Trust shall assume the defense on behalf of
any Fund shareholder. (The Declaration also contains provisions limiting the
liability of a series or class to that series or class.) Moreover, the Trust's
By-laws also provide for indemnification out of the property of the Fund of
any shareholder held personally liable solely by reason of being or having
been a shareholder for all loss or expense arising from such liability. The
assets of the Fund are readily marketable and will ordinarily substantially
exceed its liabilities. In light of the nature of the Fund's business and the
nature of its assets, management believes that the possibility of the Fund's
liabilities exceeding its assets, and therefore the shareholder's risk of
personal liability, is extremely remote.
As permitted by Massachusetts law, there will normally be no meetings of
shareholders for the purpose of electing Trustees unless and until such time
as less than a majority of the Trustees of the Trust holding office have been
elected by shareholders. In such an event the Trustees then in office will
call a shareholder's meeting for the election of Trustees. Except for the
foregoing circumstances and unless removed by action of the shareholders in
accordance with the Trust's By-Laws, the Trustees shall continue to hold
office and may appoint successor Trustees.
The Trust's By-Laws provide that no person shall serve as a Trustee if
shareholders holding two-thirds of the outstanding shares have removed him
from that office either by a written declaration filed with the Trust's
custodian or by votes cast at a meeting called for that purpose. The By-Laws
further provide that under certain circumstances the shareholders may call a
meeting to remove a Trustee and that the Trust is required to provide
assistance in communicating with shareholders about such a meeting.
In accordance with the Declaration of Trust of the Portfolio, there will
normally be no meetings of the investors for the purpose of electing Trustees
unless and until such time as less than a majority of the Trustees holding
office have been elected by investors. In such an event the Trustees of the
Portfolio then in office will call an investors' meeting for the election of
Trustees. Except for the foregoing circumstances and unless removed by action
of the investors in accordance with the Portfolio's Declaration of Trust, the
Trustees shall continue to hold office and may appoint successor Trustees.
The Declaration of Trust of the Portfolio provides that no person shall
serve as a Trustee if investors holding two-thirds of the outstanding
interests have removed him from that office either by a written declaration
filed with the Portfolio's custodian or by votes cast at a meeting called for
that purpose. The Declaration of Trust further provides that under certain
circumstances the investors may call a meeting to remove a Trustee and that
the Portfolio is required to provide assistance in communicating with
investors about such a meeting.
The Portfolio's Declaration of Trust provides that the Fund and other
entities permitted to invest in the Portfolio (e.g., other U.S. and foreign
investment companies and common and commingled trust funds) will each be
liable for all obligations of the Portfolio. However, the risk of the Fund
incurring financial loss on account of such liability is limited to
circumstances in which both inadequate insurance exists and the Portfolio
itself is unable to meet its obligations. Accordingly, the Trustees of the
Trust believe that neither the Fund nor its shareholders will be adversely
affected by reason of the Fund investing in the Portfolio.
The Portfolio's Declaration of Trust provides that the Portfolio will
terminate 120 days after the complete withdrawal of the Fund or any other
investor in the Portfolio, unless either the remaining investors by unanimous
vote at a meeting of such investors, or a majority of the Trustees of the
Portfolio, by written instrument consented to by all investors, agree to
continue the business of the Portfolio. This provision is consistent with
treatment of the Portfolio as a partnership for federal income tax purposes.
The right to redeem shares of the Fund can be suspended and the payment of
the redemption price deferred when the Exchange is closed (other than for
customary weekend and holiday closings), during periods when trading on the
Exchange is restricted as determined by the Commission, or during any
emergency as determined by the Commission which makes it impracticable for the
Portfolio to dispose of its securities or value its assets, or during any
other period permitted by order of the Commission for the protection of
investors.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Deloitte & Touche LLP, 125 Summer Street, Boston, Massachusetts, are the
independent certified public accountants of the Fund and the Portfolio,
providing audit services, tax return preparation, and assistance and
consultation with respect to the preparation of filings with the Commission.
FINANCIAL STATEMENTS
The audited financial statements of and the independent auditors' report
for the Portfolio appear herein.
<PAGE>
RUSSIA AND EASTERN EUROPE PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
, 1997
ASSETS:
Cash ....................................................... $100,010
Deferred organization expenses .............................
--------
Total assets ........................................... $
LIABILITIES:
Accrued organization expenses ..............................
--------
NET ASSETS ..................................................... $
========
NOTES:
(1) Russia and Eastern Europe Portfolio (the "Portfolio") was organized as a New
York Trust on October 17, 1997 and has been inactive since that date, except
for matters relating to its organization and registration as an investment
company under the Investment Company Act of 1940 and the sale of interests
therein at the purchase price of $100,000 to Boston Management and Research
and $10 to Eaton Vance Management (the "Initial Interests").
(2) Organization expenses are being deferred and will be amortized on a
straight-line basis over a period not to exceed five years, commencing on
the effective date of the Portfolio's initial offering of its interests.
The amount paid by the Portfolio on any withdrawal by the holders of the
Initial Interests of any of the respective Initial Interests will be
reduced by a portion of any unamortized organization expenses, determined
by the proportion of the amount of the Initial Interests withdrawn to the
Initial Interests then outstanding.
(3) At 4:00 p.m., New York City time, on each business day of the Portfolio,
the value of an investor's interest in the Portfolio is equal to the
product of (i) the aggregate net asset value of the Portfolio multiplied
by (ii) the percentage representing that investor's share of the aggregate
interest in the Portfolio effective for that day.
<PAGE>
REPORT OF INDEPENDENT AUDITORS'
To the Trustees and Investors of Russia and Eastern Europe Portfolio:
We have audited the accompanying statement of assets and liabilities of
Russia and Eastern Europe Portfolio (a New York Trust) as of , 1997.
This financial statement is the responsibility of the Portfolio's management.
Our responsibility is to express an opinion on this financial statement based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statement referred to above presents fairly,
in all material respects, the financial position of Russia and Eastern Europe
Portfolio as of , 1997, in conformity with generally accepted
accounting principles.
Deloitte & Touche LLP
Boston, Massachusetts
, 1997
<PAGE>
APPENDIX A
REE REGION COUNTRIES
The information set forth in this Appendix has been extracted from various
government and private publications. The Trust's Board of Trustees makes no
representation as to the accuracy of the information, nor has the Board of
Trustees attempted to verify it. No representation is made that any
correlation will exist between the economies or stock markets of REE Region
countries and the Fund's performance.
Over time the Portfolio may invest in the following countries in the
Region: Albania, Armenia, Azerbaijan, Belarus, People's Republic of Bulgaria,
Croatia, Czech Republic, Estonia, Georgia, Republic of Hungary, Kazakhstan,
Kyrgyzstan, Latvia, Lithuania, Macedonia, Moldova, Montenegro, Republic of
Poland, Romania, Russian Federation, Serbia, Slovakia, Slovenia, Tajikistan,
Turkmenistan, Turkey, Ukraine and Uazbekistan. Set forth below is selected
information regarding those countries with more developed securities markets.
RUSSIA
The Russian Federation has a land area of approximately 6.6 million square
miles. It has a population of approximately 150 million.
At the beginning of the 20th century, the Russian Empire extended
throughout vast territories in Eastern Europe and included most of northern
and central Asia. It was ruled as an autocracy by the Romanov dynasty. In
February 1917, the Czar abdicated. In 1922, the Bolsheviks formed the Union of
Soviet Socialist Republics (the "Soviet Union"). The Soviet Union experienced
considerable hardship as a result of the collectivization campaign in the
early 1930s and the widespread repression under Stalin, who established a
dictatorship after the death of Lenin in 1924. Shortly after the death of
Stalin in 1953, Nikita Khrushchev assumed predominance in the Soviet
leadership. He instituted certain political and economic reforms, but was
overthrown in 1964 and replaced by Leonid Brezhnev.
Throughout the 1970s, Soviet economic performance gradually worsened.
Brezhnev's successor, Yuri Andropov made some economic reforms, which were
continued and greatly expanded under Mikhail Gorbachev. In the early 1990s,
the Soviet Republics became, by stages, first states in a loose federation,
then fully independent states, some of which were constituted into the
Commonwealth of Independent States. The Soviet Union was dissolved in December
1992.
In June 1991, Boris Yeltsin was elected president of Russia. He
implemented a variety of political and economic reforms to transform Russia
from a centrally-planned economy to a market oriented system. In July 1996,
Yeltsin succeeded in winning re-election.
A civil war in Chechnya has highlighted the political tensions that exist
between the central government in Moscow and some of the regions within the
Russian Federation. The risk exists that armed conflict in Chechnya will
continue, which could deter foreign investment and international aid and
weaken the reformist government's control. Opposition parties to the reform
process are still a strong political force, particularly in the Russian
parliament.
Although statistical indicators show that Russia's economy is improving,
Russia has suffered severe economic hardship over the past five years. The
economic reforms initiated by Yeltsin's government since January 1992 have
sought to liberalize most prices, reduce central government expenditures and
achieve lasting structural changes by means of the transfer to private
ownership of state enterprises. Privatization has resulted in almost 80% of
the industrial workforce shifting from the state to the private sector. The
vast majority of retail prices have been liberalized, which resulted in high
but declining inflation through 1995. The ruble has become freely convertible
for trade purposes, and, although it has suffered tremendous depreciation over
the last five years, it now trades within a managed "crawling band" against
the U.S. dollar. The International Monetary Fund ("IMF") has recognized
Russia's progress and in 1996 granted a further three year $10.1 billion loan
program, complementing its earlier standby facility of $6.8 billion in 1995.
Russia's economy did not display positive growth from 1990 through 1996.
After the 1990 law relating to the establishment of securities exchanges,
a significant number of exchanges were created throughout Russia. This number
has now fallen from over 200 to approximately 60 exchanges, the largest of
which are located in Moscow, St. Petersburg and Vladivostok. The vast majority
of share transactions are carried out in the over-the-counter market between
Moscow brokers. A screen based system known as the Russian Trading System
("RTS"), modeled on NASDAQ, has been in existence since early 1995.
Approximately 104 issues are listed on the RTS. In June 1996 the market
capitalization of the top 50 stocks in Russia was approximately $19 billion.
Russia's securities markets are regulated by the Federal Securities Market
Commission. Legislation has been recently passed to help the Commission
protect shareholders' rights and also to ensure against securities fraud.
Although shareholder protection is increasing in Russia, nearly all of the
legislation is new and has not been implemented or tested. The Moscow over-
the-counter market is also self-regulated by its brokers, through a body known
as PAUFOR.
Clearing and settlement procedures in Russia, while improving, are still
being developed. Transfer of share ownership generally may only be effected
through the traded company's share registry and there may be significant
delays and difficulties in getting shares properly issued and registered.
Certain organizations, such as the National Registry Company, sponsored by the
IFC and the European Bank of Reconstruction and Development ("EBRD"), have
been set up to help with these problems and are beginning to become integrated
into the market.
Russian companies, with few exceptions, generally have no meaningful
historical financial data, and shareholder reporting obligations are unclear.
Russian accounting differs significantly from Western accounting, and as a
result the current Russian accounts published by firms are unreliable. There
are limitations on private security ownership and foreign ownership of certain
strategic industries, particularly those associated with national defense.
THE CZECH REPUBLIC
The Czech Republic has a land area of approximately 30,000 square miles.
It has a population of approximately 10 million.
The Republic of Czechoslovakia was established in 1918, following the
collapse of the Austro-Hungarian Empire by the joining of the Czech lands of
Bohemia and Moravia, and Slovakia. From 1918 to 1939, a stable democratic
system of government existed and the economy was the most industrialized and
prosperous in Central and Eastern Europe. Czechoslovakia was occupied by
German forces from 1939 to 1945. After their expulsion, a communist People's
Republic was established in 1948 under the Soviet Union's influence. In the
1960s, reforms were undertaken; in response, Warsaw Pact forces invaded
Czechoslovakia and replaced the government in 1968.
Late in 1989, a new government was formed with a majority of non-Communist
members. In 1990, the first free legislative elections since 1946 were held.
On January 1,1993, Czechoslovakia officially became two separate nations,
namely, the Czech Republic and Slovakia.
Price controls in the former Czechoslovakia were removed in January 1991
and this led to a steep rise in inflation. In 1995, however, the consumer
price index is estimated to have risen at an annual rate of 9.1%. A recovery
in domestic demand and a pronounced improvement in exports has caused the
economy to grow in real terms by 2.6% in 1994 and 4.8% in 1995. The Czech
Republic has been extremely successful at restricting state expenditures, and
has run a budget surplus.
Before the dissolution of Czechoslovakia, a large scale mass-privatization
program was implemented that distributed shares in almost 1,500 state owned
companies with an estimated market capitalization of $10 billion to the
citizens of Czechoslovakia. The program has resulted in the rapid transfer of
the majority of state enterprises into the private sector, which is speeding
economic restructuring and recovery. Foreign companies have been able to
participate, to some extent, in the privatization process. Nominally or wholly
private firms now produce over 60% of the country's output. However, through
the National Property Fund, the government continues to hold significant
minority positions in most large Czech enterprises. Germany and Austria are
now the Czech Republic's principal trading partners, due in part to their
historic and geographic links with the Czech Republic. The Czech government
has entered into agreements with the European Community as well as the
European Free Trade Association. The rate of unemployment stood at 2.9% in
December 1995.
The Prague Stock Exchange ("PSE") was originally opened in 1871, but was
closed at the end of World War II. The PSE was reopened in June 1993. There
are only 65 companies that have satisfied the disclosure requirements of the
PSE and are officially "listed." There are over 1,600 companies eligible for
over-the-counter trading, with approximately 330-350 companies trading
actively each session. At the end of 1995, the market capitalization of the
PSE was approximately $15.7 billion. The Czech securities markets are
regulated by a Securities Commission established by the Ministry of Finance.
The Securities Commission administers and regulates the financial reporting
system, supervises participants in the securities markets and establishes
guidelines for the listing of securities. Clearing and settlement of trades
occurs within three business days and is effected through the Czech National
Bank's Clearing Centre.
The Czech Commercial Code and the Accountancy Act, both promulgated in
1992, establish requirements relating to the capitalization, books and records
and auditing of Czech companies.
Currently, there are no restrictions on foreign portfolio investment
except that certain restrictions exist with respect to securities offered in
privatizations or by financial or defense institutions. There are no
restrictions on the repatriation of the proceeds of securities transactions.
POLAND
Poland has a land area of approximately 121,000 square miles. It has a
population of approximately 39 million.
Poland was declared an independent republic in November 1918. The country
was ruled by a military regime from 1926 until 1939. It was invaded and
occupied by Germany in 1939 and subsequently by Soviet forces in 1945. A pro-
communist provisional government was set up under Soviet auspices in 1946. The
elections in January 1947 were won by a communist-led bloc, which subsequently
established a People's Republic. In the 1980s, labor unrest grew, lead by
Solidarity. In May 1990, the first fully free elections in more than 50 years
were held.
The first post-communist government in Poland implemented a stabilization
and liberalization program in 1990 that expanded the reforms started during
the 1980s. That program led to a drastic reduction in the money supply, higher
interest rates, elimination of the budget deficit and price liberalization.
The extreme austerity measures had profound economic and social repercussions.
In the first quarter of 1990, industrial production and officially recorded
real wages dropped by about 30% and 50% respectively. Unemployment, which was
6.3% at the end of 1990, grew to 11.8% by the end of 1991 as the number of
pensioners grew by 12%. The government incurred high budget deficits, which
reached more than 6% of GDP in 1992.
GDP began to increase in 1992 with almost 7% growth in 1995. Industrial
output rose by 9.4% in real terms from 1994 to 1995 and Poland was the first
country in Central and Eastern Europe to achieve recovery of GDP to pre-
transition levels.
During the first months of 1990, inflation was more than 5% a month, but
by 1995 it fell to 26.8% per annum. The unemployment rate rose during the
early 1990s, reaching approximately 16.7% in the third quarter of 1994 and
then declined to 15% by the end of 1995.
Growth in exports has been an important component of Poland's economic
performance. In 1995, 38% of the country's exports went to Germany.
In March 1991, certain western creditor governments agreed to cancel 50%
of Poland's debt in two stages on the condition that the Polish economy stay
within IMF fiscal and economic guidelines. Since that time, Poland's external
debt situation has improved significantly. Total external hard currency debt
was $53.6 billion in 1991 and has fallen to an estimated $43.5 billion by
1995. As a consequence of the debt reduction, Poland's government was able to
issue a five-year $250 million Eurobond in June 1995.
One of the government's most important economic achievements has been
privatization. In August 1992, the government designed a mass privatization
program that offered shares in 514 state-owned companies through a selection
of 15 National Investment Funds (NIF). Every Polish citizen is entitled to a
voucher at a nominal fee that entitles the holder to one share of each NIF,
which are managed by both domestic and international investment managers.
Vouchers in the investment funds started trading on July 15, 1996 and the NIFs
are expected to list in 1997. It is estimated that the private sector in
Poland contributes 65% of GDP, compared to 31% in 1990.
The Warsaw Stock Exchange ("WSE") was re-opened by an act of the Polish
government in July 1991, 52 years after its close in 1939. The trading system
is similar to the French par casier method of quotation, the main features
being that it is order driven, centralized onto a single exchange floor and
paperless. On December 31, 1995, the market capitalization on the WSE was
approximately $4.6 billion. The government of Poland has established a
Securities Commission (the "Commission") as its main administrative body
responsible for monitoring the Polish securities market, supervising all
public trading, including trading on the WSE, and regulating brokers. In
addition, a Brokers Association is responsible for regulating the activities
and conduct of brokers. Clearing and settlement occurs within three business
days through the National Depository for Securities, which is operated by the
WSE.
The Polish Commercial Code sets forth requirements regarding
capitalization, shareholders meetings, records and auditing for Polish
companies.
Currently, there are no restriction on foreign investment in Polish
securities, except with respect to securities of issuers whose business
relates to management of sea or airports, real estate, the defense industry,
wholesaling of imported consumer goods or legal services. Permission must be
sought from the relevant licensing authority to purchase shares of issuers in
industries where licenses from the Polish government are required, such as the
banking or brokerage industry or a business involving the production of
alcohol, cigarettes or medicine.
Both the initial investment in and any profits resulting from business
activities may be freely repatriated, provided the currency exchange is made
at an authorized foreign exchange bank. In the case of dividends, repatriation
is only allowed after an audit certificate has been issued and the necessary
taxes have been paid. The National Bank of Poland is responsible for
overseeing the banking system in Poland and for controlling monetary policy
and exchange rates.
HUNGARY
Hungary has a land area of approximately 36,000 square miles. It has a
population of approximately 10 million.
Hungary allied itself with Germany before World War II. Having sought to
break the alliance in 1944, Hungary was forcibly occupied by German forces. In
January 1945, Hungary was liberated by Soviet troops and it became a republic
in February 1946. In the 1947 elections, the communists became the largest
single party and by the end of the year emerged as the leading political
force. A People's Republic was established in 1949.
The first free multi-party elections were held in March and April 1990.
The resulting government declared its intention to withdraw from the Warsaw
Pact, seek membership in the European Community and effect a full transition
to a Western-style market economy.
Unemployment was 11.6% in February 1996. Economic growth in 1995 was 1.5%.
As a result of Hungary's progress toward macroeconomic stabilization, the
International Monetary Fund granted a standby credit and the country has been
officially admitted to the OECD.
Privatization receipts rose to $3.6 billion in 1995, more than the entire
amount raised during the period from 1990 to 1994. The government has
encouraged privatization by extending tax incentives, enacting legislation
allowing repatriation of profits and otherwise liberalizing foreign investment
rules. Hungary has attracted more foreign investment than any other Eastern
European country. By late 1995, the privatization process was unexpectedly
accelerated. The proceeds from the sale of companies such as the state oil and
gas company raised $3.5 billion, more than three times the sum originally
budgeted by the government, and foreign direct investment reached roughly $4.5
billion, an all-time high. As a result, monetary reserves increased to about
$12 billion in 1995.
The Budapest Stock Exchange ("BSE") was established in June 1990. On
December 31, 1995, capitalization on the BSE was approximately $2.4 billion.
Although currently only 42 companies are listed on the BSE, additional
listings are anticipated. The State Securities Supervision (SSS) is
responsible for monitoring the securities market and establishing guidelines
for the regulation of new issues, market participants and the BSE. Clearing
and settlement occurs within five business days and is effected through the
Clearing Depository Center, which is operated by the BSE.
The Hungarian Companies Act sets forth requirements regarding
capitalization, shareholders meetings, records and auditing for various legal
entities organized in Hungary.
Currently, there are no restrictions on foreign investment in Hungarian
securities, but investment in certain sectors, such as banking, defense,
utilities and insurance, may require prior approval from the government.
<PAGE>
- --------------------------------------------------------------------------------
[Logo]
EATON VANCE
================
Mutual Funds
- --------------------------------------------------------------------------------
EATON VANCE
RUSSIA AND EASTERN EUROPE
FUND
STATEMENT OF ADDITIONAL INFORMATION
JANUARY , 1998
EATON VANCE
RUSSIA AND EASTERN EUROPE FUND
24 FEDERAL STREET
BOSTON, MA 02110
- --------------------------------------------------------------------------------
SPONSOR AND MANAGER OF EATON VANCE RUSSIA AND EASTERN EUROPE FUND
ADMINISTRATOR OF RUSSIA AND EASTERN EUROPE PORTFOLIO
Eaton Vance Management, 24 Federal Street, Boston, MA 02110
ADVISER OF RUSSIA AND EASTERN EUROPE PORTFOLIO
Lloyd George Investment Management (Bermuda) Limited,
25 Grosvenor Street, London, W1X9FE, England
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
RNEPSAI
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS
Not Applicable
(b) EXHIBITS:
<TABLE>
<S> <C>
(1)(a) Amended and Restated Declaration of Trust dated September 27, 1993 filed as Exhibit No.
(1)(a) to Post-Effective Amendment No. 42 and incorporated herein by reference.
(b) Amendment dated June 23, 1997 to the Declaration of Trust filed herewith.
(c) Amendment and Restatement of Establishment and Designation of Series of Shares to be
filed by amendment.
(2)(a) By-Laws filed as Exhibit No. (2)(a) to Post-Effective Amendment No. 42 and incorporated
herein by reference.
(b) Amendment to By-Laws of Eaton Vance Special Investment Trust dated December 13, 1993,
filed as Exhibit No. (2)(b) to Post-Effective Amendment No. 42 and incorporated herein
by reference.
(3) Not applicable
(4) Not applicable
(5)(a)(1) Management Contract between the Trust and Eaton Vance Management filed herewith.
(2) Amended Schedule A-1 to be filed by amendment.
(b) Investment Advisory Agreement with Eaton Vance Management for EV Traditional Emerging
Growth Fund dated December 31, 1996 filed as Exhibit No. (5)(e) to Post-Effective
Amendment No. 45 and incorporated herein by reference.
(6)(a)(1) Distribution Agreement between Eaton Vance Special Investment Trust (on behalf of its
Classic Series) and Eaton Vance Distributors, Inc. dated November 1, 1996 (with attached
Schedule A effective November 1, 1996) filed as Exhibit No. (6)(a)(1) to Post-Effective
Amendment No. 46 and incorporated herein by reference.
(2) Distribution Agreement between Eaton Vance Special Investment Trust (on behalf of its
Marathon Series) and Eaton Vance Distributors, Inc. dated November 1, 1996 (with
attached Schedule A effective November 1, 1996) filed as Exhibit No. (6)(a)(2) to Post-
Effective Amendment No. 46 and incorporated herein by reference.
(3) Distribution Agreement between Eaton Vance Special Investment Trust (on behalf of its
Traditional Series) and Eaton Vance Distributors, Inc. dated November 1, 1996 (with
attached Schedule A effective November 1, 1996) filed as Exhibit No. (6)(a)(3) to Post-
Effective Amendment No. 46 and incorporated herein by reference .
(4) Distribution Agreement between the Trust and Eaton Vance Distributors, Inc. filed
herewith.
(a) Amended Schedule A-1 to be filed by amendment.
(b) Selling Group Agreement between Eaton Vance Distributors, Inc. and Authorized Dealers
filed as Exhibit No. (6)(b) to the Registration Statement of Eaton Vance Growth Trust
Post-Effective Amendment No. 61 and incorporated herein by reference.
(7) The Securities and Exchange Commission has granted the Registrant an exemptive order
that permits the Registrant to enter into deferred compensation arrangements with its
independent Trustees. See in the Matter of Capital Exchange Fund, Inc., Release No.
IC-20671 (November 1, 1994).
(8)(a) Custodian Agreement with Investors Bank & Trust Company dated March 24, 1994, filed as
Exhibit No. (8) to Post-Effective Amendment No. 42 and incorporated herein by reference.
(b) Amendment to Custodian Agreement with Investors Bank & Trust Company dated October 23,
1995, filed as Exhibit No. (8)(b) to Post-Effective Amendment No. 43 and incorporated
herein by reference.
(9)(a)(1) Amended Administrative Services Agreement between Eaton Vance Special Investment Trust
(on behalf of each of its series) and Eaton Vance Management dated June 19, 1995, with
attached schedule regarding each series of the Registrant, filed as Exhibit No. (9) to
Post-Effective Amendment No. 42 and incorporated herein by reference.
(2) Amendment dated June 23, 1997 to Schedule A to the Administrative Services Agreement
filed herewith.
(b) Transfer Agency Agreement dated June 7, 1989 filed herewith.
(c) Amendment to Transfer Agency Agreement dated February 1, 1993 filed herewith.
(10) Not applicable
(11) Not applicable
(12) Not applicable
(13) Not applicable
(14)(a) Vance, Sanders Profit Sharing Retirement Plan for Self-Employed Persons with Adoption
Agreement and instructions, filed as Exhibit No. (14)(1) to Post-Effective Amendment No.
22 to the Registration Statement under the Securities Act of 1933 (File No. 2-28471) and
incorporated herein by reference.
(b) Eaton & Howard, Vance Sanders Defined Contribution Prototype Plan and Trust with
Adoption Agreement: (1) Basic Profit-Sharing Retirement Plan; (2) Basic Money Purchase
Pension Plan; (3) Thrift Plan Qualifying as Profit-Sharing Plan; (4) Thrift Plan
Qualifying as Money Purchase Plan; (5) Integrated Profit-Sharing Retirement Plan; and
(6) Integrated Money Purchase Pension Plan, filed as Exhibit No. (14)(2) to Post-
Effective Amendment No. 29 to the Registration Statement under the Securities Act of
1933 (File No. 2-22019) and incorporated herein by reference.
(c) Individual Retirement Custodian Account (Form 5305A) and Instructions, filed as Exhibit
No. (14)(3) to Post-Effective Amendment No. 21 and incorporated herein by reference.
(d) Vance, Sanders Variable Pension Prototype Plan and Trust with Adoption Agreement, filed
as Exhibit No. (14)(4) to Post-Effective Amendment No. 22 to the Registration Statement
under the Securities Act of 1933 (File No. 2-28471) and incorporated herein by
reference.
(15)(a) Eaton Vance Special Investment Trust Class A Service Plan filed herewith.
(b) Eaton Vance Special Investment Trust Class A Distribution Plan filed herewith.
(1) Amended Schedule A-1 to be filed by amendment.
(c) Eaton Vance Special Investment Trust Class B Distribution Plan filed herewith.
(1) Amended Schedule A-1 to be filed by amendment.
(d) Eaton Vance Special Investment Trust Class C Distribution Plan filed herewith.
(e) Amended Distribution Plan pursuant to Rule 12b-1 under the Investment Company Act of
1940, as amended, for Eaton Vance Special Investment Trust (on behalf of its Classic
Series that invest in domestic Portfolios) dated June 19, 1995 (with attached Schedule A
regarding such Classic series of the Registrant), filed as Exhibit No. (15)(a) to Post-
Effective Amendment No. 42 and incorporated herein by reference.
(1) Amendment to Amended Distribution Plan (on behalf of its Classic Series that invest in
domestic Portfolios) effective November 1, 1996, filed as Exhibit No. (15)(a)(1) to
Post-Effective Amendment No. 46 and incorporated herein by reference.
(f) Amended Distribution Plan pursuant to Rule 12b-1 under the Investment Company Act of
1940, as amended, for Eaton Vance Special Investment Trust (on behalf of its Marathon
Series that invest in domestic Portfolios) dated June 19, 1995 (with attached Schedule A
regarding such Marathon series of the Registrant), filed as Exhibit No. (15)(b) to Post-
Eff4ctive Amendment No. 42 and incprporated herein by reference.
(1) Amendment to Amended Distribution Plan (on behalf of its Marathon Series that invest in
domestic Portfolios) effective November 1, 1996, filed as Exhibit No. (15)(b)(1) to
Post-Effective Amendment No. 46 and incorporated herein by reference.
(g) Amended Service Plan for Eaton Vance Special Investment Trust (on behalf of its
Traditional Series that invest in domestic Portfolios) dated June 19, 1995 (with
attached Schedule A regarding such Traditional series of the Registrant), filed as
Exhibit No. (15)(c) to Post-Effective Amendment No. 42 and incorporated herein by
reference.
(1) Amendment to Service Plan (on behalf of its Traditional Series that invest in domestic
Portfolios) effective November 1, 1996, filed as Exhibit No. (15)(c)(1) to Post-
Effective Amendment No. 46 and incorporated herein by reference.
(h) Distribution Plan dated March 24, 1994 for EV Traditional Emerging Markets Fund pursuant
to Rule 12b-1 under the Investment Company Act of 1940, filed as Exhibit No. (15)(d) to
Post-Effective Amendment No. 42 and incorporated herein by reference.
(1) Amendment to Distribution Plan for EV Traditional Emerging Markets Fund effective
November 1, 1996, filed as Exhibit (15)(d)(1) to Post-Effective Amendment No. 46 and
incorporated herein by reference.
(i) Distribution Plan dated March 24, 1994 for EV Marathon Emerging Markets Fund pursuant to
Rule 12b-1 under the Investment Company Act of 1940, filed as Exhibit No. (15)(e) to
Post-Effective Amendment No. 42 and incorporated herein by reference.
(1) Amendment to Distribution Plan for EV Marathon Emerging Markets Fund effective November
1, 1996, filed as Exhibit (15)(e)(1) to Post-Effective Amendment No. 46 and incorporated
herein by reference.
(j) Distribution Plan dated March 24, 1994 for EV Traditional Greater India Fund pursuant to
Rule 12b-1 under the Investment Company Act of 1940, filed as Exhibit No. (15)(f) to
Post-Effective Amendment No. 42 and incorporated herein by reference.
(1) Amendment to Distribution Plan for EV Traditional Greater India Fund effective November
1, 1996, filed as Exhibit No. (15)(f)(1) to Post-Effective Amendment No. 46 and
incorporated herein by reference.
(k) Distribution Plan dated March 24, 1994 for EV Marathon Greater India Fund pursuant to
Rule 12b-1 under the Investment Company Act of 1940, filed as Exhibit No. (15)(g) to
Post-Effective Amendment No. 42 and incorporated herein by reference.
(1) Amendment to Distribution Plan for EV Marathon Greater India Fund effective November 1,
1996, filed as Exhibit No. (15)(g)(1) to Post-Effective Amendment No. 46 and
incorporated herein by reference.
(16) Not applicable
(17)(a) Power of Attorney dated June 23, 1997 for Eaton Vance Special Investment Trust, filed as
Exhibit (17)(a) to Post-Effective Amendment No. 47 and incorporated herein by reference.
(b) Power of Attorney for Emerging Markets Portfolio dated February 14, 1997, filed as
Exhibit No. (17)(b) to Post-Effective Amendment No. 46 and incorporated herein by
reference.
(c) Power of Attorney for South Asia Portfolio dated February 14, 1997, filed herewith as
Exhibit No. (17)(c) to Post-Effective Amendment No. 46 and incorporated herein by
reference.
(d) Power of Attorney for Special Investment Portfolio dated August 11, 1997 filed herewith.
(e) Power of Attorney for Investors Portfolio dated August 11, 1997 filed herewith.
(f) Power of Attorney for Stock Portfolio dated August 11, 1997 filed herewith.
(g) Power of Attorney for Total Return Portfolio dated August 11, 1997 filed herewith.
(h) Power of Attorney for Russia and Eastern Europe Portfolio to be filed by amendment.
</TABLE>
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Not applicable.
ITEM 26. NUMBERS OF HOLDERS OF SECURITIES
(2)
(1) NUMBER OF
TITLE OF CLASS RECORD HOLDERS
Shares of beneficial interest as of September 30, 1997
without par value
Traditional Emerging Growth Fund 24
EV Traditional Emerging Markets Fund 827
EV Traditional Emerging Markets Fund 450
EV Marathon Greater India Fund 8,394
EV Traditional Greater India Fund 1,794
EV Classic Investors Fund 358
EV Marathon Investors Fund 2,262
EV Traditional Investors Fund 12,681
EV Classic Special Equities Fund 56
EV Marathon Special Equities Fund 22
EV Traditional Special Equities Fund 6,038
EV Classic Stock Fund 82
EV Marathon Stock Fund 783
EV Traditional Stock Fund 5,277
EV Classic Total Return Fund 212
EV Marathon Total Return Fund 2,479
EV Traditional Total Return Fund 15,021
ITEM 27. INDEMNIFICATION
Article IV of the Trust's Declaration of Trust dated September 27, 1993,
as amended, permits Trustee and officer indemnification by By-Law, contract
and vote. Article XI of the By-Laws contains indemnification provisions.
Registrant's Trustees and officers are insured under a standard mutual fund
errors and omissions insurance policy covering loss incurred by reason of
negligent errors and omissions committed in their capacities as such.
The distribution agreements of the Trust also provide for reciprocal
indemnity of the Principal Underwriter on the one hand, and the Trustees and
officers, on the other.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Reference is made to the information set forth under the caption
"Investment Adviser and Administrator" or "Management of the Fund and the
Portfolio" in the Statement of Additional Information, which information is
incorporated herein by reference.
ITEM 29. PRINCIPAL UNDERWRITER
(a) Registrant's principal underwriter, Eaton Vance Distributors, Inc., a
wholly-owned subsidiary of Eaton Vance Management, is the principal
underwriter for each of the investment companies named below:
Eaton Vance Growth Trust Eaton Vance Municipal Bond Fund L.P.
Eaton Vance Income Fund of Boston Eaton Vance Mutual Funds Trust
Eaton Vance Investment Trust Eaton Vance Prime Rate Reserves
Eaton Vance Municipals Trust Eaton Vance Special Investment Trust
Eaton Vance Municipals Trust II EV Classic Senior Floating-Rate Fund
(b)
<TABLE>
<CAPTION>
(1) (2) (3)
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS* WITH PRINCIPAL UNDERWRITER WITH REGISTRANT
------------------ -------------------------- ---------------------
<S> <C> <C>
James B. Hawkes Vice President and Director President, Principal
Executive Officer
and Trustee
William M. Steul Vice President and Director None
Wharton P. Whitaker President and Director None
Chris Berg Vice President None
Kate B. Bradshaw Vice President None
David B. Carle Vice President None
Daniel C. Cataldo Vice President None
Raymond Cox Vice President None
Mark P. Doman Vice President None
Alan R. Dynner Vice President Secretary
James Foley Vice President None
Michael A. Foster Vice President None
William M. Gillen Senior Vice President None
Hugh S. Gilmartin Vice President None
Perry D. Hooker Vice President None
Brian Jacobs Senior Vice President None
Thomas P. Luka Vice President None
John Macejka Vice President None
Timothy D. McCarthy Vice President None
Joseph T. McMenamin Vice President None
Morgan C. Mohrman Senior Vice President None
James A. Naughton Vice President None
Mark D. Nelson Vice President None
Linda D. Newkirk Vice President None
James L. O'Connor Vice President Treasurer
Thomas Otis Secretary and Clerk None
George D. Owen, II Vice President None
F. Anthony Robinson Vice President None
Jay S. Rosoff Vice President None
Benjamin A. Rowland, Jr. Vice President, Treasurer and Director None
Stephen M. Rudman Vice President None
John P. Rynne Vice President None
Kevin Schrader Vice President None
George V.F. Schwab, Jr. Vice President None
Cornelius J. Sullivan Senior Vice President None
David M. Thill Vice President None
John M. Trotsky Vice President None
Chris Volf Vice President None
Sue Wilder Vice President None
</TABLE>
- ----------
*Address is 24 Federal Street, Boston, MA 02110
(c) Not applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
All applicable accounts, books and documents required to be maintained by
the Registrant by Section 31(a) of the Investment Company Act of 1940 and the
Rules promulgated thereunder are in the possession and custody of the
Registrant's custodian, Investors Bank & Trust Company, 200 Clarendon Street,
16th Floor Mail Code ADM 27, 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. The Registrant is informed that all
applicable accounts, books and documents required to be maintained by
registered investment advisers are in the custody and possession of Eaton
Vance Management.
ITEM 31. MANAGEMENT SERVICES
Not applicable.
ITEM 32. UNDERTAKINGS
The Registrant undertakes to file a Post-Effective Amendment, using
financial statements which need not be certified, within four to six months
from the effective date of this Post-Effective Amendment No. 48 (or the
commencement of operations).
The Registrant undertakes to furnish to each person to whom a prospectus
is delivered, a copy of the latest annual report to shareholders, upon request
and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, and the
Investment Company Act of 1940, the Registrant has duly caused this Amendment
to its Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized in the City of Boston, and the Commonwealth of
Massachusetts, on the 8th day of October, 1997.
EATON VANCE SPECIAL INVESTMENT TRUST
By /s/ JAMES B. HAWKES
--------------------------------
JAMES B. HAWKES, President
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
President, Principal Executive
/s/ JAMES B. HAWKES Officer and Trustee October 8, 1997
- --------------------------------------
JAMES B. HAWKES
Treasurer and Principal
Financial and Accounting
/s/ JAMES L. O'CONNOR Officer October 8, 1997
- --------------------------------------
JAMES L. O'CONNOR
/s/ M. DOZIER GARDNER Trustee October 8, 1997
- --------------------------------------
M. DOZIER GARDNER
DONALD R. DWIGHT* Trustee October 8, 1997
- --------------------------------------
DONALD R. DWIGHT
SAMUEL L. HAYES, III* Trustee October 8, 1997
- --------------------------------------
SAMUEL L. HAYES, III
NORTON H. REAMER* Trustee October 8, 1997
- --------------------------------------
NORTON H. REAMER
JOHN L. THORNDIKE* Trustee October 8, 1997
- --------------------------------------
JOHN L. THORNDIKE
JACK L. TREYNOR* Trustee October 8, 1997
- --------------------------------------
JACK L. TREYNOR
*By: /s/ ALAN R. DYNNER
------------------------------
ALAN R. DYNNER
As Attorney-in-fact
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
PAGE IN SEQUENTIAL
EXHIBIT NO. DESCRIPTION NUMBERING SYSTEM
----------- ----------- ------------------
<S> <C> <C>
(1)(b) Amendment dated June 23, 1997 to the Declaration of Trust.
(5)(a)(1) Management Contract between the Trust and Eaton Vance
Management.
(6)(a)(4) Distribution Agreement between the Trust and Eaton Vance
distributors, Inc.
(9)(a)(2) Amendment dated June 23, 1997 to Schedule A to the
Administrative Services Agremeent.
(9)(b) Transfer Agency Agreement dated June 7, 1989.
(9)(c) Amendment to Transfer Agency Agreement dated February 1, 1993.
(15)(a) Eaton Vance Special Investment Trust Class A Service Plan.
(15)(b) Eaton Vance Special Investment Trust Class A Distribution Plan.
(15)(c) Eaton Vance Special Investment Trust Class B Distribution Plan.
(15)(d) Eaton Vance Special Investment Trust Class C Distribution Plan.
(17)(d) Power of Attorney for Special Investment Portfolio dated August
11, 1997.
(17)(e) Power of Attorney for Investors Portfolio dated August 11,
1997.
(17)(f) Power of Attorney for Stock Portfolio dated August 11, 1997.
(17)(g) Power of Attorney for Total Return Portfolio dated August 11,
1997.
</TABLE>
<PAGE>
EATON VANCE SPECIAL INVESTMENT TRUST
Amendment dated June 23, 1997 to Declaration of Trust
WHEREAS, the Trustees of Eaton Vance Special Investment Trust, a
Massachusetts business trust (the "Trust"), have previously designated separate
series (or "Funds"); and
WHEREAS, in connection with a reorganization of the Funds the Trustees now
desire to rename certain of the Funds, establish and designate classes of shares
for such Funds, and terminate certain other Funds effective with the end of
their current fiscal year ends pursuant to the Trust's Amended and Restated
Declaration of Trust dated September 27, 1993 (the "Declaration of Trust");
NOW, THEREFORE, the undersigned, being at least a majority of the duly
elected and qualified Trustees presently in office of the Trust, hereby:
1. Rename the Funds effective January 1, 1998 listed below as follows:
Eaton Vance Emerging Markets Fund
(formerly EV Marathon Emerging Markets Fund)
Eaton Vance Greater India Fund
(formerly EV Marathon Greater India Fund)
Eaton Vance Investors Fund
(formerly EV Traditional Investors Fund)
Eaton Vance Special Equities Fund
(formerly EV Traditional Special Equities Fund)
Eaton Vance Stock Fund
(formerly EV Traditional Stock Fund)
Eaton Vance Total Return Fund
(formerly EV Traditional Total Return Fund)
2. Each Fund shall have classes of shares established and designated as
Class A, Class B, Class C and Class I shares on January 1, 1998, and the
Trustees may designate additional classes in the future. For purposes of
allocating liabilities among classes, each class of a series shall be treated in
the same manner as a separate series.
3. Series of Trust with the designations: EV Traditional Emerging Markets
Fund; EV Traditional Greater India Fund; EV Classic Investors Fund; EV Marathon
Investors Fund; EV Classic Special Equities Fund; EV Marathon Special Equities
Fund; EV Classic Stock Fund; EV Marathon Stock Fund; EV Classic Total Return
Fund; and EV Marathon Total Return Fund shall be terminated on January 1, 1998.
Dated: June 23, 1997
/s/ Donald R. Dwight /s/ Samuel L. Hayes, III
- -------------------------------------- --------------------------------------
Donald R. Dwight Samuel L. Hayes, III
/s/ M. Dozier Gardner /s/ Norton H. Reamer
- -------------------------------------- --------------------------------------
M. Dozier Gardner Norton H. Reamer
/s/ James B. Hawkes /s/ John L. Thorndike
- -------------------------------------- --------------------------------------
James B. Hawkes John L. Thorndike
/s/ Jack L. Treynor
--------------------------------------
Jack L. Treynor
<PAGE>
EATON VANCE SPECIAL INVESTMENT TRUST
MANAGEMENT CONTRACT
AGREEMENT made this 23rd day of June, 1997 between Eaton Vance Special
Investment Trust, a Massachusetts business trust (the "Trust"), on behalf of its
series identified on Schedule A hereto (each a "Fund") and Eaton Vance
Management, a Massachusetts business trust (the "Manager"):
1. Duties of the Manager. The Trust hereby employs the Manager to act
as manager for and to manage and administer the affairs of each Fund, subject to
the supervision of the Trustees of the Trust, for the period and on the terms
set forth in this Contract.
The Manager hereby accepts such employment, and agrees to manage and
administer each Fund's business affairs and, in connection therewith, to furnish
for the use of the Fund office space and all necessary office facilities,
equipment and personnel for administering the affairs of the Fund.
The Manager's services include monitoring and providing reports to the
Trustees of the Trust concerning the investment performance achieved by the
investment adviser, recordkeeping, preparation and filing of documents required
to comply with Federal and state securities laws, supervising the activities of
the transfer agent of each Fund, providing assistance in connection with
Trustees and shareholders' meetings and other management and administrative
services necessary to conduct the business of each Fund. The Manager shall not
provide any investment management or advisory services to a Fund.
2. Compensation of the Manager. For the services, payments and
facilities to be furnished hereunder by the Manager, each Fund shall pay to the
Manager on the last day of such month a fee computed by applying the annual
asset rate applicable to that portion of the average daily net assets of the
Fund throughout the month in each Category as indicated below:
Annual
Category Average Daily Net Assets Asset Rate
- -------- ------------------------ ----------
1 less than $500 million 0.25000%
2 $500 million but less than $1 billion 0.23333%
3 $1 billion but less than $1.5 billion 0.21667%
4 $1.5 billion but less than $2 billion 0.20000%
5 $2 billion but less than $3 billion 0.18333%
6 $3 billion and over 0.16667%
The average daily net assets of each Fund will be computed in accordance with
the Declaration of Trust, and any applicable votes of the Trustees of the Trust.
In case of initiation or termination of this Contract during any month, the fee
for that month shall be reduced proportionately on the basis of the number of
calendar days during which it is in effect and the fee shall be computed upon
the average net assets for the business days it is so in effect for that month.
The Manager may, from time to time, waive all or a part of the above
compensation.
3. Allocation of Charges and Expenses. It is understood that each Fund
will pay all its expenses other than those expressly stated to be payable by the
Manager hereunder, which expenses payable by the Fund shall include, without
implied limitation, (i) expenses of maintaining the Fund and continuing its
existence, (ii) registration of the Trust under the Investment Company Act of
1940, (iii) commissions, fees and other expenses connected with the purchase or
sale of securities and other investments, (iv) auditing, accounting and legal
expenses, (v) taxes and interest, (vi) governmental fees, (vii) expenses of
issue, sale, repurchase and redemption of shares, (viii) expenses of registering
and qualifying the Fund and its shares under federal and state securities laws
and of preparing and printing prospectuses for such purposes and for
distributing the same to shareholders and investors, and fees and expenses of
registering and maintaining registrations of the Fund and of the Fund's
principal underwriter, if any, as broker-dealer or agent under state securities
laws, (ix) expenses of reports and notices to shareholders and of meetings of
shareholders and proxy solicitations therefor, (x) expenses of reports to
governmental officers and commissions, (xi) insurance expenses, (xii)
association membership dues, (xiii) fees, expenses and other disbursements, if
any, of custodians and sub-custodians for all services to the Fund (including
without limitation safekeeping of funds, securities and other investments,
keeping of books and accounts and determination of net asset value), (xiv) fees,
expenses and disbursements of transfer agents, dividend disbursing agents,
shareholder servicing agents and registrars for all services to the Fund, (xv)
expenses of servicing shareholder accounts, (xvi) any direct charges to
shareholders approved by the Trustees of the Trust, (xvii) compensation and
expenses of Trustees of the Trust who are not members of the Manager's
organization, (xviii) all payments to be made and expenses to be assumed by the
Fund pursuant to any one or more distribution plans adopted by the Trust on
behalf of the Fund pursuant to Rule 12b-1 under the Investment Company Act of
1940 and (xix) such non-recurring items as may arise, including expenses
incurred in connection with litigation, proceedings and claims and the
obligation of the Trust to indemnify its Trustees and officers with respect
thereto.
4. Other Interests. It is understood that Trustees, officers and
shareholders of the Trust are or may be or become interested in the Manager as
Trustees, officers, or employees, or otherwise and that Trustees, officers and
employees of the Manager are or may be or become similarly interested in the
Trust, and that the Manager may be or become interested in a Fund as shareholder
or otherwise. It is also understood that Trustees, officers and employees of the
Manager may be or become interested (as directors, trustees, officers,
employees, stockholders or otherwise) in other companies or entities (including,
without limitation, other investment companies) which the Manager may organize,
sponsor or acquire, or with which it may merge or consolidate, and that the
Manager or its subsidiaries or affiliates may enter into advisory or management
agreements or other contracts or relationships with such other companies or
entities.
5. Limitation of Liability of the Manager. The services of the Manager
of the Funds are not to be deemed to be exclusive, the Manager being free to
render services to others and engage in other business activities. In the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties hereunder on the part of the Manager, the
Manager shall not be subject to liability to a Fund or to any shareholder of the
Fund for any act or omission in the course of, or connected with, rendering
services hereunder or for any losses which may be sustained in the purchase,
holding or sale of any security or other instrument, including options and
futures contracts.
6. Duration and Termination of the Contract. This Contract shall become
effective January 1, 1998, and, unless terminated as herein provided, shall
remain in full force and effect to and including February 28, 1998 and shall
continue in full force and effect indefinitely thereafter, but only so long as
such continuance after February 28, 1998 is specifically approved at least
annually by the Trustees of the Trust.
Either party hereto may, at any time on sixty (60) days' prior written
notice to the other, terminate this Contract with respect to any Fund, without
the payment of any penalty, by action of its Trustees, and the Trust may, at any
time upon such written notice to the Manager, terminate this Contract by vote of
a majority of the outstanding voting securities of the Fund. This Contract shall
terminate automatically in the event of its assignment.
7. Amendment of the Contract. This Contract may be amended by a writing
signed by both parties hereto, provided that no amendment to this Contract shall
be effective until approved by the vote of a majority of the Trustees of the
Trust. The Trustees may amend Schedule A at any time.
8. Limitation of Liability. A Fund shall not be responsible for the
obligations of any other series of the Trust. The Manager expressly acknowledges
the provision in the Amended and Restated Declaration of Trust (Article IV,
Section 4.1) limiting the personal liability of shareholders of the Trust, and
the Manager hereby agrees that it shall have recourse only to the assets of the
relevant Fund for payment of claims or obligations as between that Fund and
Manager arising out of this Contract and shall not seek satisfaction from the
shareholders or any shareholder or Trustee of the Fund or the Trust.
9. Use of the Name "Eaton Vance". The Manager hereby consents to the
use by the Fund of the name "Eaton Vance" as part of the Fund's name; provided,
however, that such consent shall be conditioned upon the employment of the
Manager or one of its affiliates as the manager or investment adviser of the
Fund. The name "Eaton Vance" or any variation thereof may be used from time to
time in other connections and for other purposes by the Manager and its
affiliates and other investment companies that have obtained consent to the use
of the name "Eaton Vance." Eaton Vance shall have the right to require each Fund
to cease using the name "Eaton Vance" as part of the Fund's name if the Fund
ceases, for any reason, to employ the Manager or one if its affiliates as the
Fund's manager or investment adviser. Future names adopted by a Fund for itself,
insofar as such names include identifying words requiring the consent of the
Manager, shall be the property of the Manager and shall be subject to the same
terms and conditions.
10. Certain Definitions. The term "assignment" when used herein shall
have the meaning specified in the Investment Company Act of 1940 as now in
effect or as hereafter amended subject, however, to such exemptions as may be
granted by the Securities and Exchange Commission by any rule, regulation or
order. The term "vote of a majority of the outstanding voting securities of the
Fund" shall mean the vote of the lesser of (a) 67 per centum or more of the
shares of the Fund present or represented by proxy at the meeting if the holders
of more than 50 per centum of the outstanding shares of the Fund are present or
represented by proxy at the meeting, or (b) more than 50 per centum of the
outstanding shares of the Fund.
EATON VANCE SPECIAL INVESTMENT TRUST EATON VANCE MANAGEMENT
By /s/ James B. Hawkes By /s/ William M. Steul
---------------------------------- --------------------------------------
President Vice President,
and not individually
<PAGE>
EATON VANCE SPECIAL INVESTMENT TRUST
SCHEDULE A TO MANAGEMENT CONTRACT
Eaton Vance Emerging Markets Fund
Eaton Vance Greater India Fund
Dated: June 23, 1997
<PAGE>
EATON VANCE SPECIAL INVESTMENT TRUST
DISTRIBUTION AGREEMENT
AGREEMENT effective June 23, 1997 between EATON VANCE SPECIAL INVESTMENT
TRUST, a Massachusetts business trust having its principal place of business in
Boston in the Commonwealth of Massachusetts, hereinafter called the "Trust," on
behalf of each of its series listed on Schedule A (a "Fund"), and EATON VANCE
DISTRIBUTORS, INC., a Massachusetts corporation having its principal place of
business in said Boston, hereinafter sometimes called the "Principal
Underwriter." The Trustees of the Trust have established four classes of shares
of each of the Funds (except EV Traditional Emerging Growth Fund), such classes
having been designated Class A, Class B, Class C and Class I (the "Classes").
IN CONSIDERATION of the mutual promises and undertakings herein
contained, the parties hereto agree with respect to each Fund:
1. The Trust grants to the Principal Underwriter the right to purchase
all classes of shares of the Fund upon the terms hereinbelow set forth during
the term of this Agreement. While this Agreement is in force, the Principal
Underwriter agrees to use its best efforts to find purchasers for shares of the
Fund.
The Principal Underwriter shall have the right to buy from the Fund the
shares needed, but not more than the shares needed (except for clerical errors
and errors of transmission) to fill unconditional orders for shares of the Fund
placed with the Principal Underwriter by financial service firms or investors as
set forth in the current Prospectus relating to shares of the Fund. The price
which the Principal Underwriter shall pay for Class A shares and shares of EV
Traditional Emerging Growth Fund (which shall be treated as Class A shares
herein) so purchased shall be the net asset value used in determining the public
offering price on which such orders were based; the price for Class B, Class C
and Class I shares so purchased shall be equal to the price paid by investors
upon purchasing such shares. The Principal Underwriter shall notify Investors
Bank & Trust Company, Custodian of the Trust ("IBT"), and First Data Investor
Services Group, Transfer Agent of the Trust ("First Data"), or a successor
transfer agent, at the end of each business day, or as soon thereafter as the
orders placed with it have been compiled, of the number of shares and the prices
thereof which the Principal Underwriter is to purchase as principal for resale.
The Principal Underwriter shall take down and pay for shares ordered from the
Fund on or before the eleventh business day (excluding Saturdays) after the
shares have been so ordered.
The right granted to the Principal Underwriter to buy shares from the
Fund shall be exclusive, except that said exclusive right shall not apply to
shares issued in connection with the merger or consolidation of any other
investment company or personal holding company with the Fund or the acquisition
by purchase or otherwise of all (or substantially all) the assets or the
outstanding shares of any such company, by the Fund; nor shall it apply to
shares, if any, issued by the Fund in distribution of income or realized capital
gains of the Fund payable in shares or in cash at the option of the shareholder.
2. The shares may be resold by the Principal Underwriter to or through
financial service firms having agreements with the Principal Underwriter, and to
investors, upon the following terms and conditions.
CLASS A SHARES. The public offering price, i.e., the price per Class A
share at which the Principal Underwriter or financial service firm purchasing
shares from the Principal Underwriter may sell shares to the public, shall be
the public offering price as set forth in the current Prospectus relating to
said Class A shares, but not to exceed the net asset value at which the
Principal Underwriter is to purchase the Class A shares, plus a sales charge not
to exceed 7.25% of the public offering price (the net asset value divided by
.9275). If the resulting public offering price does not come out to an even
cent, the public offering price shall be adjusted to the nearer cent.
The Principal Underwriter may also sell Class A shares at the net asset
value at which the Principal Underwriter is to purchase such Class A shares,
provided such sales are not inconsistent with the provisions of Section 22(d) of
the Investment Company Act of 1940, as amended from time to time (the "1940
Act"), and the rules thereunder, including any applicable exemptive orders or
administrative interpretations or "no-action" positions with respect thereto.
CLASS B, CLASS C AND CLASS I SHARES. The public offering price, i.e.,
the price per Class B, Class C and Class I shares at which the Principal
Underwriter or financial service firm purchasing shares from the Principal
Underwriter may sell shares to the public, shall be equal to the net asset value
at which the Principal Underwriter is to purchase the Class B, Class C and Class
I shares.
The net asset value of shares of each Class of the Fund shall be
determined by the Trust or IBT, as the agent of the Trust, as of the close of
regular trading on the New York Stock Exchange (the "Exchange") on each business
day on which said Exchange is open, or as of such other time on each such
business day as may be determined by the Trustees of the Trust, in accordance
with the methodology and procedures for calculating such net asset value
authorized by the Trustees. The Trust may also cause the net asset value to be
determined in substantially the same manner or estimated in such manner and as
of such other time or times as may from time to time be agreed upon by the Trust
and Principal Underwriter. The Trust will notify the Principal Underwriter each
time the net asset value of a Class of shares is determined and when such value
is so determined it shall be applicable to transactions as set forth in the
current Prospectus(es) and Statement(s) of Additional Information (hereafter the
"Prospectus") relating to the Fund's shares.
No Class of shares of the Fund shall be sold by the Fund during any
period when the determination of that Class's net asset value is suspended
pursuant to the Declaration of Trust, except to the Principal Underwriter, in
the manner and upon the terms above set forth to cover contracts of sale made by
the Principal Underwriter with its customers prior to any such suspension, and
except as provided in paragraph 1 hereof. The Trust shall also have the right to
suspend the sale of any Class of shares if in the judgment of the Trust
conditions obtaining at any time render such action advisable. The Principal
Underwriter shall have the right to suspend sales at any time, to refuse to
accept or confirm any order from an investor or financial service firm, or to
accept or confirm any such order in part only, if in the judgment of the
Principal Underwriter such action is in the best interests of the Fund.
3. The Trust covenants and agrees that it will, from time to time, but
subject to the necessary approval of the Fund's shareholders, take such steps as
may be necessary to register the Fund's shares under the federal Securities Act
of 1933, as amended from time to time (the "1933 Act"), to the end that there
will be available for sale such number of shares as the Principal Underwriter
may reasonably be expected to sell. The Trust covenants and agrees to indemnify
and hold harmless the Principal Underwriter and each person, if any, who
controls the Principal Underwriter within the meaning of Section 15 of the 1933
Act against any loss, liability, claim, damages or expense (including the
reasonable cost of investigating or defending any alleged loss, liability,
claim, damages or expense and reasonable counsel fees incurred in connection
therewith), arising by reason of any person acquiring any shares of the Fund,
which may be based upon the 1933 Act or on any other statute or at common law,
on the ground that the Registration Statement or Prospectus, as from time to
time amended and supplemented, includes an untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, unless such statement or
omission was made in reliance upon, and in conformity with, information
furnished in writing to the Trust in connection therewith by or on behalf of the
Principal Underwriter; provided, however, that in no case (i) is the indemnity
of the Trust in favor of the Principal Underwriter and any such controlling
person to be deemed to protect such Principal Underwriter or any such
controlling person against any liability to the Trust or the Fund or its
security holders to which such Principal Underwriter or any such controlling
person would otherwise be subject by reason of willful misfeasance, bad faith,
or gross negligence in the performance of its duties or by reason of its
reckless disregard of its obligations and duties under this Agreement, or (ii)
is the Trust or the Fund to be liable under its indemnity agreement contained in
this paragraph with respect to any claim made against the Principal Underwriter
or any such controlling person unless the Principal Underwriter or any such
controlling person, as the case may be, shall have notified the Trust in writing
within a reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon the Principal
Underwriter or such controlling person (or after such Principal Underwriter or
such controlling person shall have received notice of such service on any
designated agent), but failure to notify the Trust of any such claim shall not
relieve it from any liability which the Fund may have to the person against whom
such action is brought otherwise than on account of its indemnity agreement
contained in this paragraph. The Trust shall be entitled to participate, at the
expense of the Fund, in the defense, or, if the Trust so elects, to assume the
defense of any suit brought to enforce any such liability, but if the Trust
elects to assume the defense, such defense shall be conducted by counsel chosen
by it and satisfactory to the Principal Underwriter or controlling person or
persons, defendant or defendants in the suit. In the event the Trust elects to
assume the defense of any such suit and retains such counsel, the Principal
Underwriter or controlling person or persons, defendant or defendants in the
suit, shall bear the fees and expenses of any additional counsel retained by
them, but, in case the Trust does not elect to assume the defense of any such
suit, the Fund shall reimburse the Principal Underwriter or controlling person
or persons, defendant or defendants in the suit, for the reasonable fees and
expenses of any counsel retained by them. The Trust agrees promptly to notify
the Principal Underwriter of the commencement of any litigation or proceedings
against it or any of its officers or Trustees in connection with the issuance or
sale of any of the Fund's shares.
4. The Principal Underwriter covenants and agrees that, in selling the
shares of the Fund, it will use its best efforts in all respects duly to conform
with the requirements of all state and federal laws relating to the sale of such
shares, and will indemnify and hold harmless the Trust and each of its Trustees
and officers and each person, if any, who controls the Trust within the meaning
of Section 15 of the 1933 Act, against any loss, liability, damages, claim or
expense (including the reasonable cost of investigating or defending any alleged
loss, liability, damages, claim or expense and reasonable counsel fees incurred
in connection therewith), arising by reason of any person acquiring any shares
of the Fund, which may be based upon the 1933 Act or any other statute or at
common law, on account of any wrongful act of the Principal Underwriter or any
of its employees (including any failure to conform with any requirement of any
state or federal law relating to the sale of such shares) or on the ground that
the Registration Statement or Prospectus, as from time to time amended and
supplemented, includes an untrue statement of a material fact or omits to state
a material fact required to be stated therein or necessary in order to make the
statements therein not misleading, insofar as any such statement or omission was
made in reliance upon, and in conformity with information furnished in writing
to the Trust in connection therewith by or on behalf of the Principal
Underwriter, provided, however, that in no case (i) is the indemnity of the
Principal Underwriter in favor of any person indemnified to be deemed to protect
the Fund or any such person against any liability to which the Fund or any such
person would otherwise be subject by reason of willful misfeasance, bad faith,
or gross negligence in the performance of its or his duties or by reason of its
or his reckless disregard of its obligations and duties under this Agreement, or
(ii) is the Principal Underwriter to be liable under its indemnity agreement
contained in this paragraph with respect to any claim made against the Fund or
any person indemnified unless the Trust or such person, as the case may be,
shall have notified the Principal Underwriter in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon the Trust, the Fund or upon such
person (or after the Trust, the Fund or such person shall have received notice
of such service on any designated agent), but failure to notify the Principal
Underwriter of any such claim shall not relieve it from any liability which it
may have to the Fund or any person against whom such action is brought otherwise
than on account of its indemnity agreement contained in this paragraph. The
Principal Underwriter shall be entitled to participate, at its own expense, in
the defense, or, if it so elects, to assume the defense of any suit brought to
enforce any such liability, but if the Principal Underwriter elects to assume
the defense, such defense shall be conducted by counsel chosen by it and
satisfactory to the Trust, or to its officers or Trustees, or to any controlling
person or persons, defendant or defendants in the suit. In the event that the
Principal Underwriter elects to assume the defense of any such suit and retains
such counsel, the Fund or such officers or Trustees or controlling person or
persons, defendant or defendants in the suit, shall bear the fees and expenses
of any additional counsel retained by them or the Trust, but, in case the
Principal Underwriter does not elect to assume the defense of any such suit, it
shall reimburse the Fund, any such officers and Trustees or controlling person
or persons, defendant or defendants in such suit, for the reasonable fees and
expenses of any counsel retained by them or the Trust. The Principal Underwriter
agrees promptly to notify the Trust of the commencement of any litigation or
proceedings against it in connection with the issue and sale of any of the
Fund's shares.
Neither the Principal Underwriter nor any financial service firm nor any
other person is authorized by the Trust to give any information or to make any
representations, other than those contained in the Registration Statement or
Prospectus filed with the Securities and Exchange Commission (the "Commission")
under the 1933 Act, (as said Registration Statement and Prospectus may be
amended or supplemented from time to time), covering the shares of the Fund.
Neither the Principal Underwriter nor any financial service firm nor any other
person is authorized to act as agent for the Trust or the Fund in connection
with the offering or sale of shares of the Fund to the public or otherwise. All
such sales made by the Principal Underwriter shall be made by it as principal,
for its own account. The Principal Underwriter may, however, act as agent in
connection with the repurchase of shares as provided in paragraph 6 below, or in
connection with "exchanges" between investment companies for which the Principal
Underwriter (or an affiliate thereof) acts as principal underwriter or
investment adviser.
5(a). The Fund will pay, or cause to be paid (by one or more classes) -
(i) all the costs and expenses of the Fund, including fees and
disbursements of its counsel, in connection with the preparation and filing of
any required Registration Statement and/or Prospectus under the 1933 Act, or the
1940 Act, covering its shares and all amendments and supplements thereto, and
preparing and mailing periodic reports to shareholders (including the expense of
setting up in type any such Registration Statement, Prospectus or periodic
report);
(ii) the cost of preparing temporary and permanent share
certificates (if any) for shares of the Fund;
(iii) the cost and expenses of delivering to the Principal
Underwriter at its office in Boston, Massachusetts, all shares of the Fund
purchased by it as principal hereunder; and
(iv) all the federal and state (if any) issue and/or transfer
taxes payable upon the issue by or (in the case of treasury shares) transfer
from the Fund to the Principal Underwriter of any and all shares of the Fund
purchased by the Principal Underwriter hereunder.
(v) the fees, costs and expenses of the registration or
qualification of shares for sale in the various states, territories or other
jurisdictions (including without limitation the registering or qualifying the
Fund as a broker or dealer or any officer of the Fund as agent or salesman in
any state, territory or other jurisdiction); and
(vi) all payments to be made pursuant to any written plan
approved in accordance with Rule 12b-1 under the 1940 Act or any written service
plan.
(b) The Principal Underwriter agrees that, after the Prospectus (other
than to existing shareholders of the Fund) and periodic reports have been set up
in type, it will bear the expense of printing and distributing any copies
thereof which are to be used in connection with the offering of shares of the
Fund to financial service firms or investors. The Principal Underwriter further
agrees that it will bear the expenses of preparing, printing and distributing
any other literature used by the Principal Underwriter or furnished by it for
use by financial service firms in connection with the offering of the shares of
the Fund for sale to the public and any expenses of advertising in connection
with such offering.
(c) In addition, the Trust agrees, in accordance with the Fund's
Distribution Plans (the "Plans"), adopted pursuant to Rule 12b-1 under the 1940
Act with respect to Class B and Class C shares, to make certain payments as
follows. The Principal Underwriter shall be entitled to be paid by the Fund a
sales commission equal to an amount not exceeding 5% of the price received by
the Fund for each sale of Class B shares and 6.25% of the price received by the
Fund for each sale of Class C shares (excluding in each case the reinvestment of
dividends and distributions), such payment to be made out of Class B or Class C
assets as applicable and in the manner set forth in this paragraph 5. The
Principal Underwriter shall also be entitled to be paid by the Fund a separate
distribution fee (calculated in accordance with paragraph 5(d)) out of the
relevant Class' assets, such payment to be made in the manner set forth and
subject to the terms of this paragraph 5.
(d) The sales commissions and distribution fees referred to in paragraph
5(c) shall be accrued and paid by the Fund in the following manner. Each Class B
and Class C shall accrue daily an amount calculated at the rate of .75% per
annum of its daily net assets, which net assets shall be computed as described
in paragraph 2. The daily amounts so accrued throughout the month shall be paid
to the Principal Underwriter on the last day of each month. The amount of such
daily accrual, as so calculated, shall first be applied and charged to all
unpaid sales commissions, and the balance, if any, shall then be applied and
charged to all unpaid distribution fees. No amount shall be accrued with respect
to any day on which there exist no outstanding uncovered distribution charges of
the Principal Underwriter due from the relevant Class. The amount of such
uncovered distribution charges shall be calculated daily. For purposes of this
calculation, distribution charges of the Principal Underwriter shall include (a)
the aggregate of all sales commissions which the Principal Underwriter has been
paid pursuant to this paragraph (d) (and pursuant to paragraph 5(d) of the Prior
Agreements) plus all sales commissions which it is entitled to be paid pursuant
to paragraph 5(c) (and pursuant to paragraph 5(c) of the Prior Agreements) since
inception of the Prior Agreements through and including the day next preceding
the date of calculation, and (b) an amount equal to the aggregate of all
distribution fees referred to below which the Principal Underwriter has been
paid pursuant to this paragraph (d) (and pursuant to paragraph 5(d) of the Prior
Agreements) plus all such fees which it is entitled to be paid pursuant to
paragraph 5(c) (and pursuant to paragraph 5(c) of the Prior Agreements) since
inception of the Prior Agreements through and including the day next preceding
the date of calculation. From this sum (distribution charges) there shall be
subtracted (i) the aggregate amount paid or payable to the Principal Underwriter
pursuant to this paragraph (d) (and pursuant to paragraph (d) of the Prior
Agreements) since inception of the Prior Agreements through and including the
day next preceding the date of calculation, (ii) the aggregate amount of all
contingent deferred sales charges paid or payable to the Principal Underwriter
since inception of the Prior Agreements through and including the day next
preceding the date of calculation, and (iii) the aggregate of all amounts paid
or payable to the Principal Underwriter (or any affiliate thereof) by any party
other than the Fund with respect to the sales of Class B and Class C shares
since inception of the Original Plans through and including the day next
preceding the date of calculation. In addition, the calculation shall include
amounts under the Prior Agreements when a predecessor principal underwriter
existed. If the result of such subtraction is a positive amount, a distribution
fee [computed at the rate of 1% per annum above the prime rate (being the base
rate on corporate loans posted by at least 75% of the nation's 30 largest banks)
then being reported in the Eastern Edition of The Wall Street Journal or if such
prime rate is not so reported such other rate as may be designated from time to
time by vote or other action of a majority of (i) those Trustees of the Trust
who are not "interested persons" of the Trust (as defined in the 1940 Act) and
have no direct or indirect financial interest in the operation of the Plan or
any agreements related to it (the "Rule 12b-1 Trustees") and (ii) all of the
Trustees then in office] shall be computed on such amount and added to such
amount, with the resulting sum constituting the amount of outstanding uncovered
distribution charges of the Principal Underwriter due from a Class with respect
to such day for all purposes of this Agreement. If the result of such
subtraction is a negative amount, there shall exist no outstanding uncovered
distribution charges of the Principal Underwriter due from that Class with
respect to such day and no amount shall be accrued or paid to the Principal
Underwriter with respect to such day. The aggregate amounts accrued and paid
pursuant to this paragraph (d) during any fiscal year of the Fund shall not
exceed .75% of the average daily net assets of a Class for such year. The term
"Principal Underwriter" as used in this paragraph (d) shall include the current
Principal Underwriter's predecessor, a Massachusetts corporation called Eaton
Vance Distributors, Inc. that served as principal underwriter for the Trust
prior to November 1, 1996.
(e) The Principal Underwriter shall be entitled to receive all
contingent deferred sales charges paid or payable with respect to any day on
which there exist outstanding uncovered distribution charges due from a Class of
the Principal Underwriter. Each Class B and Class C shall be entitled to receive
all remaining contingent deferred sales charges paid or payable by its
shareholders with respect to any day on which there exist no outstanding
uncovered distribution charges of the Principal Underwriter due from that Class,
provided that no such sales charge which would cause the Fund to exceed the
maximum applicable cap imposed thereon by paragraph (2) of subsection (d) of
Rule 2830 of the Conduct Rules of the National Association of Securities
Dealers, Inc. shall be imposed.
(f) The Principal Underwriter shall be entitled to receive all
contingent deferred sales charges imposed in accordance with the Prospectus on
early redemption of Class A shares.
(g) The persons authorized to direct the disposition of monies paid or
payable by the Fund pursuant to the Plan or this Agreement shall be the
President or any Vice President or the Treasurer of the Trust. Such persons
shall provide to the Trust's Trustees and the Trustees shall review, at least
quarterly, a written report of the amounts so expended and the purposes for
which such expenditures were made.
(h) In addition to the payments to the Principal Underwriter provided
for in paragraph 5(d), the Fund may make payments from the assets of each Class
of service fees to the Principal Underwriter, Authorized Firms and other
persons. The aggregate of such payments during any fiscal year of the Fund shall
not exceed .25% of a class' average daily net assets for such year.
6. The Trust hereby authorizes the Principal Underwriter to repurchase,
upon the terms and conditions set forth in written instructions given by the
Trust to the Principal Underwriter from time to time, as agent of the Trust and
for its account, such shares of the Fund as may be offered for sale to the Fund
from time to time.
(a) The Principal Underwriter shall notify in writing IBT and First Data
at the end of each business day, or as soon thereafter as the repurchases in
each pricing period have been compiled, of the number of shares of each Class
repurchased for the account of the Fund since the last previous report, together
with the prices at which such repurchases were made, and upon the request of any
officer or Trustee of the Trust shall furnish similar information with respect
to all repurchases made up to the time of the request on any day.
(b) The Trust reserves the right to suspend or revoke the foregoing
authorization at any time; unless otherwise stated, any such suspension or
revocation shall be effective forthwith upon receipt of notice thereof by an
officer of the Principal Underwriter, by telegraph or by written instrument from
an officer of the Trust duly authorized by its Trustees. In the event that the
authorization of the Principal Underwriter is, by the terms of such notice,
suspended for more than twenty-four hours or until further notice, the
authorization given by this paragraph 6 shall not be revived except by action of
a majority of the Trustees of the Trust.
(c) The Principal Underwriter shall have the right to terminate the
operation of this paragraph 6 upon giving to the Trust thirty (30) days' written
notice thereof.
(d) The Trust agrees to authorize and direct IBT to pay, for the account
of the Fund, the purchase price of any shares so repurchased against delivery of
the certificates in proper form for transfer to the Trust or for cancellation by
the Trust.
(e) The Principal Underwriter shall receive no commission in respect of
any repurchase of shares under the foregoing authorization and appointment as
agent, except for any sales commission, distribution fee or contingent deferred
sales charges payable under paragraph 5.
(f) The Trust agrees that the Fund will reimburse the Principal
Underwriter, from time to time on demand, for any reasonable expenses incurred
in connection with the repurchase of shares of the Fund pursuant to this
paragraph 6.
7. If, at any time during the existence of this Agreement, the Trust
shall deem it necessary or advisable in the best interests of the Fund that any
amendment of this Agreement be made in order to comply with the recommendations
or requirements of the Commission or other governmental authority or to obtain
any advantage under Massachusetts or federal tax laws, and shall notify the
Principal Underwriter of the form of amendment which it deems necessary or
advisable and the reasons therefor, and, if the Principal Underwriter declines
to assent to such amendment, the Trust may terminate this Agreement forthwith by
written notice to the Principal Underwriter. If, at any time during the
existence of its agreement upon request by the Principal Underwriter, the Trust
fails (after a reasonable time) to make any changes in its Declaration of Trust,
as amended, or in its methods of doing business which are necessary in order to
comply with any requirement of federal law or regulations of the Commission or
of a national securities association of which the Principal Underwriter is or
may be a member, relating to the sale of the shares of the Fund, the Principal
Underwriter may terminate this Agreement forthwith by written notice to the
Trust.
8(a). The Principal Underwriter is a corporation in the United States
organized under the laws of Massachusetts and holding membership in the National
Association of Securities Dealers, Inc., a securities association registered
under Section 15A of the Securities Exchange Act of 1934, as amended from time
to time, and during the life of this Agreement will continue to be so resident
in the United States, so organized and a member in good standing of said
Association. The Principal Underwriter covenants that it and its officers and
directors will comply with the Trust's Declaration of Trust and By-Laws, and the
1940 Act and the rules promulgated thereunder, insofar as they are applicable to
the Principal Underwriter.
(b) The Principal Underwriter shall maintain in the United States and
preserve therein for such period or periods as the Commission shall prescribe by
rules and regulations applicable to it as Principal Underwriter of an open-end
investment company registered under the 1940 Act such accounts, books and other
documents as are necessary or appropriate to record its transactions with the
Fund. Such accounts, books and other documents shall be subject at any time and
from time to time to such reasonable periodic, special and other examinations by
the Commission or any member or representative thereof as the Commission may
prescribe. The Principal Underwriter shall furnish to the Commission within such
reasonable time as the Commission may prescribe copies of or extracts from such
records which may be prepared without effort, expense or delay as the Commission
may by order require.
9. This Agreement shall continue in force indefinitely until terminated
as in this Agreement above provided, except that:
(a) this Agreement shall remain in effect through and including April
28, 1998 (or, if applicable, the next April 28 which follows the day on which a
Fund has become a Fund hereunder by amendment to Schedule A subsequent to April
28, 1998), and shall continue in full force and effect indefinitely thereafter,
but only so long as such continuance after April 28, 1998 (or, if applicable,
said next April 28) is specifically approved at least annually (i) by the vote
of a majority of the Rule 12b-1 Trustees cast in person at a meeting called for
the purpose of voting on such approval, and (ii) by the Trustees of the Trust or
by vote of a majority of the outstanding voting securities of the Fund;
(b) this Agreement may be terminated with respect to a Class with a
12b-1 plan at any time by vote of a majority of the Rule 12b-1 Trustees or by
vote of a majority of the outstanding voting securities of the Class on not more
than sixty (60) days' notice to the Principal Underwriter. The Principal
Underwriter shall be entitled to receive all contingent deferred sales charges
paid or payable from such class with respect to any day subsequent to such
termination;
(c) either party shall have the right to terminate this Agreement with
respect to any Class on six (6) months' written notice thereof given in writing
to the other;
(d) the Trust shall have the right to terminate this Agreement forthwith
in the event that it shall have been established by a court of competent
jurisdiction that the Principal Underwriter or any director or officer of the
Principal Underwriter has taken any action which results in a breach of the
covenants set out in paragraph 9 hereof;
(e) if this Agreement is terminated with respect of any Class or Fund,
it shall not terminate the Agreement with respect to any other Class or Fund;
and
(f) additional series of the Trust will become Funds hereunder upon
approval by the Trustees of the Trust and amendment of Schedule A.
10. In the event of the assignment of this Agreement by the Principal
Underwriter, this Agreement shall automatically terminate.
11. Any notice under this Agreement shall be in writing, addressed and
delivered, or mailed postage paid, to the other party, at such address as such
other party may designate for the receipt of such notices. Until further notice
to the other party, it is agreed that the record address of the Trust and that
of the Principal Underwriter, shall be 24 Federal Street, Boston, Massachusetts
02110.
12. The services of the Principal Underwriter to the Trust hereunder are
not to be deemed to be exclusive, the Principal Underwriter being free to (a)
render similar service to, and to act as principal underwriter in connection
with the distribution of shares of, other series of the Trust or other
investment companies, and (b) engage in other business and activities from time
to time.
13. The terms "vote of a majority of the outstanding voting securities,"
"assignment" and "interested persons," when used herein, shall have the
respective meanings specified in the 1940 Act, subject, however, to such
exemptions as may be granted by the Commission by any rule, regulation or order.
14. The Principal Underwriter expressly acknowledges the provision in
the Trust's Declaration of Trust limiting the personal liability of the
shareholders of the Trust and the Trustees of the Trust. The Principal
Underwriter hereby agrees that it shall have recourse only to the assets of the
relevant Fund or Class thereof for payment of claims or obligations as between
the Trust and the Principal Underwriter arising out of this Agreement and shall
not seek satisfaction from any shareholders or from the Trustees. No Fund or
Class shall not be responsible for obligations of any other fund or class of the
Trust.
15. On June 23, 1997, the Trust adopted a Plan of reorganization and a
Multiple Class Plan on behalf of its series and in connection therewith the
Trustees of the Trust amended the Declaration of Trust to terminate or rename
certain series and to establish four classes of shares within each renamed
series. Pursuant to such reorganization the assets of each Marathon series will
be converted to Class B assets of the renamed series, the shares of each
Marathon series will be converted to Class B shares of the renamed series, the
assets of each Classic series will be converted to Class C assets of that
renamed series, and the shares of each Classic series will be converted to Class
C shares of that renamed series. All references in this Agreement to the "Prior
Agreements" shall mean (i) with respect to the Class B assets or shares of a
particular Fund, all prior distribution agreements of the Trust applicable to
the converted assets and shares of the relevant Marathon series, and (ii) with
respect to the Class C assets or shares of a particular Fund, all prior
distribution agreements of the Trust applicable to the converted assets and
shares of the relevant Classic series. All references in this Agreement to the
"Prior Agreements" shall not be applicable to any additional series of the Trust
which becomes a Fund hereunder by amendment of Schedule A subsequent to June 23,
1997.
16. This Agreement shall be effective with respect to a specific Class
of shares for a particular Fund on the date that Fund begins offering shares of
that Class. As of such effective date, this Agreement shall be deemed to amend,
replace and be substituted for the Prior Agreements previously applicable to the
relevant Class assets of that Fund. The outstanding uncovered distribution
charges of the Principal Underwriter with respect to a specific Class calculated
under the Prior Agreements as of the close of business on the date a Fund begins
offering shares of that Class shall be the outstanding uncovered distribution
charges of the Principal Underwriter with respect to such Class calculated under
this Agreement as of the opening of business on the date such shares are
offered.
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement
on the 23rd day June, 1997.
EATON VANCE SPECIAL INVESTMENT TRUST
By /s/ James B. Hawkes
------------------------------
President
EATON VANCE DISTRIBUTORS, INC.
By /s/ Alan R. Dynner
------------------------------
Vice President
<PAGE>
SCHEDULE A
EATON VANCE SPECIAL INVESTMENT TRUST
DISTRIBUTION AGREEMENT
EFFECTIVE: JUNE 23, 1997
<TABLE>
<CAPTION>
Name of Fund Adopting this Agreement Prior Agreements Relating to Class B and/or Class C Assets
------------------------------------ ---------------------------------------------------------------------------
<S> <C>
Eaton Vance Emerging Markets Fund Class B: March 24, 1994/November 1, 1996
Eaton Vance Greater India Fund Class B: March 24, 1994/November 1, 1996
Eaton Vance Investors Fund* Class B: October 28, 1993/August 1, 1995/November 1, 1996
Class C: October 28, 1993/January 27, 1995/August 1, 1995/November 1, 1996
Eaton Vance Special Equities Fund Class B: August 1, 1994/August 1, 1995/November 1, 1996
Class C: August 1, 1994/January 27, 1995/August 1, 1995/November 1, 1996
Eaton Vance Stock Fund* Class B: August 1, 1994/August 1, 1995/November 1, 1996
Class C: August 1, 1994/January 27, 1995/August 1, 1995/November 1, 1996
Eaton Vance Total Return Fund* Class B: October 28, 1993/August 1, 1995/November 1, 1996
Class C: October 28, 1993/January 27, 1995/August 1, 1995/November 1, 1996
EV Traditional Emerging Growth Fund N/A
</TABLE>
- ---------------------------------
* These funds are successors in operations to funds which was reorganized,
effective August 1, 1995, and the outstanding uncovered distribution charges
of the predecessor funds were assumed by the above funds.
<PAGE>
EATON VANCE SPECIAL INVESTMENT TRUST
ADMINISTRATIVE SERVICES AGREEMENT
dated June 19, 1995
June 23, 1997
Amendment to Schedule A
Effective with their fiscal year end (December 31, 1997), certain Funds which
are series of Eaton Vance Special Investment Trust will be restructured as
classes of shares. With respect to the EV Investors series, EV Special Equities
series, EV Stock series and EV Total Return series, the Marathon and Classic
Funds will become Class B and Class C, respectively of the existing Traditional
version of the corresponding Fund and the current Traditional Fund will change
its name to that indicated on Schedule A hereto with the Traditional shares
becoming Class A shares of the renamed Fund.
<PAGE>
June 23, 1997
SCHEDULE A
Effective January 2, 1998
Eaton Vance Investors Fund
Eaton Vance Special Equities Fund
Eaton Vance Stock Fund
Eaton Vance Total Return Fund
<PAGE>
TRANSFER AGENCY AGREEMENT
AGREEMENT dated as of June 7, 1989, between Eaton Vance Special Equities
Fund, Inc. (the "Fund"), having its principal office and place of business at 24
Federal Street, Boston, Massachusetts 02110 and BOSTON SAFE DEPOSIT AND TRUST
COMPANY (the "Transfer Agent"), a Massachusetts corporation with principal
offices at One Boston Place, Boston, Massachusetts 02108.
W I T N E S S E T H:
That for and in consideration of the mutual promises hereinafter set forth,
the Fund and the Transfer Agent agree as follows:
1. DEFINITIONS. Whenever used in this Agreement, the following words and
phrases, unless the context otherwise requires, shall have the following
meanings:
(a) "Articles of Organization" shall mean the Articles of Organization of
the Fund as the same may be amended from time to time;
(b) "Authorized Person" shall be deemed to include the President, any Vice
President, the Secretary and Treasurer of the Fund, the persons listed in
Appendix A hereto, and any other person, whether or not such person is an
Officer or employee of the Fund, duly authorized to give Oral Instructions or
Written Instructions on behalf of the Fund as indicated in a certificate
furnished to the Transfer Agent pursuant to Section 5(d) or 5(e) hereof as may
be received by the Transfer Agent from time to time;
(c) "Commission" shall have the meaning given it in the 1940 Act;
(d) "Custodian" refers to the custodian and any sub-custodian of all
securities and other property which the Fund may from time to time deposit, or
cause to be deposited or held under the name or account of such custodian
(pursuant to the Custodian Agreement between the Fund and Investors Bank & Trust
Company);
(e) "Directors" or "Board of Directors" refers to the duly elected
Directors of the Fund;
(f) "Portfolio" refers to the Eaton Vance Special Equities Fund or any such
other separate and distinct Portfolio as may from time to time be established
and designated by the Fund in accordance with the provisions of the Articles of
Organization.
(g) "Officer" shall mean the President, any Vice President, Secretary and
Treasurer;
(h) "Oral Instructions" shall mean instructions, other than written
instructions, actually received by the Transfer Agent from a person reasonably
believed by the Transfer Agent to be an Authorized Person;
(i) "Prospectus" shall mean the Fund's current prospectus and statement of
additional information relating to the registration of the Fund's Shares under
the Securities Act of 1933, as amended, and the 1940 Act;
(j) "Shares" refers to the Shares of Common Stock of the Fund;
(k) "Shareholder" means a record owner of Shares;
(l) "Written Instructions" shall mean written communication signed by an
Authorized Person and actually received by the Transfer Agent; and
(m) The "1940 Act" refers to the Investment Company Act of 1940 and the
Rules and regulations promulgated thereunder, all as amended from time to time.
2. APPOINTMENT OF THE TRANSFER AGENT. The Fund hereby appoints and
constitutes the Transfer Agent as transfer agent for its Shares and as
shareholder servicing agent for the Fund, and the Transfer Agent accepts such
appointment and agrees to perform the duties hereinafter set forth. If the Board
of Directors, pursuant to the Articles of Incorporation, hereafter establishes
and designates a new Portfolio, the Transfer Agent agrees that it will act as
transfer agent and shareholder servicing agent for such new Portfolio in
accordance with the terms set forth herein. The Directors shall cause a written
notice to be sent to the Transfer Agent to the effect that it has established a
new Portfolio and that it appoints the Transfer Agent as transfer agent and
shareholder servicing agent for the new Portfolio. Such written notice must be
recieved by the Transfer Agent in a reasonable period of time prior to the
commencement of operations of the new Portfolio to allow the Transfer Agent, in
the ordinary course of its business, to prepare to perform its duties for such
new Portfolio.
3. COMPENSATION
(a) The Fund will compensate the Transfer Agent for the performance of its
obligations hereunder in accordance with the fees set forth in the written
schedule of fees annexed hereto as Schedule A and incorporated herein. Schedule
A does not include out-of-pocket disbursements of the Transfer Agent for which
the Transfer Agent shall be entitled to bill the Fund separately.
The Transfer Agent will bill the Fund as soon as practicable after the end
of each calendar month, and said billings will be detailed in accordance with
the Schedule A. The Fund will promptly pay to the Transfer Agent the amount of
such billing.
Out-of-pocket disbursements shall mean the items specified in the written
schedule of out-of-pocket charges annexed hereto as Schedule B and incorporated
herein. Reimbursement by the Fund for such out-of-pocket disbursements incurred
by the Transfer Agent in any month shall be made as soon as practicable after
the receipt of an itemized bill from the Transfer Agent. Reimbursement by the
Fund for expenses other than those specified in Schedule B shall be upon mutual
agreement of the parties as provided in Schedule B.
(b) Any compensation agreed to hereunder may be adjusted from time to time
by attaching to Schedule A of this Agreement a revised Fee Schedule, dated and
signed by an Officer of each party hereto.
4. DOCUMENTS. In connection with the appointment of the Transfer Agent, the
Fund shall upon request, on or before the date this Agreement goes into effect,
but in any case within a reasonable period of time for the Transfer Agent to
prepare to perform its duties hereunder, furnish the Transfer Agent with the
following documents.
(a) A certified copy of the Articles of Organization of the Fund, as
amended;
(b) A copy of the resolution of the Directors authorizing the execution and
delivery of this Agreement;
(c) If applicable, a specimen of the certificate for Shares of the Fund in
the form approved by the Directors, with a certificate of an Officer of the Fund
as to such approval;
(d) All account application forms and other documents relating to
Shareholder accounts or to any plan, program or service offered by the Fund;
(e) A signature card bearing the signatures of any Officer of the Fund or
other Authorized Person who will sign Written Instructions.
5. FURTHER DOCUMENTATION. The Fund will also furnish from time to time the
following documents:
(a) Certified copies of each vote of the Directors designating Authorized
Persons;
(b) The current Prospectus and Statement of Additional Information of the
Fund.
(c) Certificates as to any change in any Officer or Director of the Fund.
6. REPRESENTATIONS OF THE FUND. The Fund represents to the Transfer Agent
that all outstanding Shares are validly issued, fully paid and non-assessable by
the Fund. When Shares are hereafter issued in accordance with the terms of the
Fund's Articles of Organization and its Prospectus, such Shares shall be validly
issued, fully paid and non-assessable by the Fund.
In the event that the Board of Directors shall declare a distribution
payable in Shares, the Fund shall deliver to the Transfer Agent written notice
of such declaration signed on behalf of the Fund by an Officer thereof, upon
which the Transfer Agent shall be entitled to rely for all purposes, certifying
(i) the number of Shares involved and (ii) that all appropriate action has been
taken.
7. DUTIES OF THE TRANSFER AGENT. The Transfer Agent shall be responsible
for administering and/or performing transfer agent functions; for acting as
service agent in connection with dividend and distribution functions; and for
performing shareholder account and administrative agent functions in connection
with the issuance, transfer and redemption or repurchase (including coordination
with the Custodian) of Shares. The operating standards and procedures to be
followed shall be determined from time to time by agreement between the Transfer
Agent and the Fund and shall be expressed in a written schedule of duties of the
Transfer Agent annexed hereto as Schedule C and incorporated herein.
8. RECORDKEEPING AND OTHER INFORMATION. The Transfer Agent shall create and
maintain all necessary records in accordance with all applicable laws, rules and
regulations, including but not limited to records required by Section 31 (a) of
the 1940 Act, as amended, and the Rules thereunder, as the same may be amended
from time to time, and those records pertaining to the various functions
performed by it hereunder which are set forth in Schedule C and Exhibit 1 to
Schedule C attached hereto. All records and other data established and
maintained by the Transfer Agent pursuant to this Agreement shall be the
property of the Fund, shall be available for inspection and use by the Fund and
shall be surrendered promptly upon request. Where applicable, such records shall
be maintained by the Transfer Agent for the periods and in the places required
by Rule 31a-2 under the 1940 Act, as the same may be amended from time to time.
Disposition of such records after such prescribed periods shall be as mutually
agreed upon from time to time by the Fund and the Transfer Agent.
9. AUDIT, INSPECTION AND VISITATION. The Transfer Agent shall make
available during regular business hours all records and other data created and
maintained pursuant to this Agreement for reasonable audit and inspection by the
Fund, or any person retained by the Fund. Upon reasonable notice by the Fund,
the Transfer Agent shall make available during regular business hours its
facilities and premises employed in connection with its performance of this
Agreement for reasonable visitation by the Fund, or any person retained by the
Fund, to inspect its operating capabilities or for any other reason.
<PAGE>
10. CONFIDENTIALITY OF RECORDS. The Transfer Agent agrees to treat all
records and other information relative to the Fund and its prior, present or
potential Shareholders in confidence except that, after prior notification to
and approval in writing by the Fund, which approval shall not be unreasonably
withheld and may not be withheld where the Transfer Agent may be exposed to
civil or criminal contempt proceedings for failure to comply, when requested to
divulge such information by duly constituted authorities, or when so requested
by the Fund.
11. RELIANCE BY THE TRANSFER AGENT; INSTRUCTIONS
(a) The Transfer Agent will be protected in acting upon Written or Oral
Instructions which it may reasonably have believed to have been executed or
orally communicated by an Authorized Person and will not be held to have any
notice of any change of authority or any person until receipt of a Written
Instruction thereof from the Fund. The Transfer Agent will also be protected in
processing Share certificates which it reasonably believes to bear the proper
manual or facsimile signatures of the Officers of the Fund and the proper
countersignature of the Transfer Agent.
(b) At any time the Transfer Agent may apply to any Authorized Person of
the Fund for Written Instructions and may, after obtaining prior oral or written
approval by an Authorized Person, seek advice from legal counsel for the Fund,
or its own legal counsel, with respect to any matter arising in connection with
this Agreement, and it shall not be liable for any action taken or not taken or
suffered by it in good faith in accordance with such Written Instructions or in
accordance with the opinion of counsel for the Fund or for the Transfer Agent.
Written Instructions requested by the Transfer Agent will be provided by the
Fund within a reasonable period of time. In addition, the Transfer Agent, its
Officers, agents or employees, shall accept Oral Instructions or Written
Instructions given to them by any person representing or acting on behalf of the
Fund only if said representative is known by the Transfer Agent, or its
Officers, agents or employees, to be an Authorized Person. The Transfer Agent
shall have no duty or obligation to inquire into, nor shall the Transfer Agent
be responsible for, the legality of any act done by it upon the request or
direction of an Authorized Person.
(c) Notwithstanding any of the foregoing provisions of this Agreement, the
Transfer Agent shall be under no duty or obligation to inquire into, and shall
not be liable for: (i) the legality of the issuance or sale of any Shares or the
sufficiency of the amount to be received therefor; (ii) the propriety of the
amount per share to be paid on any redemption; (iii) the legality of the
declaration of any dividend by the Directors, or the legality of the issuance of
any Shares in payment of any dividend; or (iv) the legality of any
recapitalization or readjustment of the Shares.
12. ACTS OF GOD, ETC. The Transfer Agent will not be liable or responsible
for delays or errors by reason or circumstances beyond its control, including
acts of civil or military authority, national emergencies, fire, mechanical
breakdown beyond its control, flood, acts of God, insurrection, war, riots, and
loss of communication or power supply.
13. DUTY OF CARE AND INDEMNIFICATION. The Fund will indemnify the Transfer
Agent against and hold it harmless from any and all losses, claims, damages,
liabilities or expenses (including reasonable counsel fees and expenses)
resulting from any claim, demand, action or suit not resulting from the bad
faith or negligence of the Transfer Agent, and arising out of, or in connection
with, its duties on behalf of the Fund hereunder. In addition, the Fund will
indemnify the Transfer Agent against and hold it harmless from any and all
losses, claims, damages, liabilities or expenses (including reasonable counsel
fees and expenses) resulting from any claim, demand action or suit as a result
of: (i) any action taken in accordance with Written or Oral Instructions, or any
other instructions, or share certificates reasonably believed by the Transfer
Agent to be genuine and to be signed, countersigned or executed, or orally
communicated by an Authorized Person; (ii) any action taken in accordance with
written or oral advice reasonably believed by the Transfer Agent to have been
given by counsel for the Fund or its own counsel; or (iii) any action taken as a
result of any error or omission in any record which the Transfer Agent had no
reason to believe was inaccurate (including but not limited to magnetic tapes,
computer printouts, hard copies and microfilm copies) and was delivered, or
caused to be delivered, by the Fund to the Transfer Agent in connection with
this Agreement.
In any case in which the Fund may be asked to indemnify or hold the
Transfer Agent harmless, the Fund shall be advised of all pertinent facts
concerning the situation in question and the Transfer Agent shall notify the
Fund promptly concerning any situation which presents or appears likely to
present a claim for indemnification against the Fund. The Fund shall have the
option to defend the Transfer Agent against any claim which may be the subject
of this indemnification and, in the event that the Fund so elects, such defense
shall be conducted by counsel chosen by the Fund, and thereupon the Fund shall
take over complete defense of the claim and the Transfer Agent shall sustain no
further legal or other expenses in such situation for which it seeks
indemnification under this Section 13. The Transfer Agent will not confess any
claim or make any compromise in any case in which the Fund will be asked to
provide indemnification, except with the Fund's prior written consent. The
obligations of the parties hereto under this Section shall survive the
termination of this Agreement.
14. TERMS AND TERMINATION. This Agreement shall become effective on the
date first set forth above (the "Effective Date") and shall continue in effect
from year to year thereafter as the parties may mutually agree; provided,
however, that either party hereto may terminate this Agreement by giving to the
other party a notice in writing specifying the date of such termination, which
shall not be less than 60 days after the date of receipt of such notice. In the
event such notice is given by the Fund, it shall be accompanied by a resolution
of the Board of Directors, certified by a Secretary, electing to terminate this
Agreement and designating a successor transfer agent or transfer agents. Upon
such termination the Transfer Agent will deliver to such successor a certified
list of shareholders of the Fund (with names, addresses and taxpayer
identification or Social Security numbers and such other federal tax information
as the Transfer Agent may be required to maintain), an historical record of the
account of each shareholder and the status thereof, and all other relevant
books, records, correspondence, and other data established or maintained by the
Transfer Agent under this Agreement in the form reasonably acceptable to the
Fund, and will cooperate in the transfer of such duties and responsibilities,
including provisions for assistance from the Transfer Agent's personnel in the
establishment of books, records and other data by such successor or successors.
If this Agreement is terminated, the Transfer Agent shall deliver all
records and data established or maintained under this Agreement without
compensation or other fees except that the Transfer Agent shall be entitled to
incidental out-of-pocket expenses as limited by and provided for in Schedule B
to this Agreement incurred in the delivery of such records and data.
15. AMENDMENT. This Agreement may not be amended or modified in any manner
except by a written agreement executed by both parties.
16. SUBCONTRACTING. The Fund agrees that the Transfer Agent may, in its
discretion, subcontract for certain of the services described under this
Agreement or the Schedules hereto; provided that the appointment of any such
Agent shall not relieve the Transfer Agent of its responsibilities hereunder and
provided that the Transfer Agent has given 30 days prior written notice to an
Authorized Person.
<PAGE>
17. USE OF TRANSFER AGENT'S NAME. The Transfer Agent shall approve all
reasonable uses of its name which merely refer in accurate terms to its
appointment hereunder or which are required by the Commission or a state
securities commission.
18. USE OF THE FUND'S NAME. The Transfer Agent shall not use the name of
the Fund or material relating to the Fund on any documents or forms for other
than internal use in a manner not approved prior thereto in writing; provided,
that the Fund shall approve all reasonable uses of its name which merely refer
in accurate terms to the appointment of the Transfer Agent or which are required
by the Commission or a state securities commission.
19. SECURITY. The Transfer Agent represents and warrants that, to best of
its knowledge, the various procedures and systems which the Transfer Agent has
implemented or will implement with regard to safeguarding from loss or damage
attributable to fire, theft or any other cause (including provision for 24
hours-a-day restricted access) of the Fund's records and other data and the
Transfer Agent's records, data, equipment, facilities and other property used in
the performance of its obligations hereunder are adequate and that it will make
such changes therein from time to time as in its judgement are required for the
secure performance of its obligations hereunder. The parties shall review such
systems and procedures on a periodic basis.
20. INSURANCE. The Transfer Agent shall notify the Fund should any of its
insurance coverage as set forth in Schedule D attached hereto be changed for any
reason. Such notification shall include the date of change and reason or reasons
therefor. The Transfer Agent shall notify the Fund of any claims against it
whether or not they may be covered by insurance and shall notify the Fund from
time to time as may be appropriate, and at least within 30 days following the
end of each fiscal year of the Transfer Agent, of the total outstanding claims
made by the Transfer Agent under its insurance coverage.
21. MISCELLANEOUS
(a) Any notice or other instrument authorized or required by this Agreement
to be given in writing to the Fund or the Transfer Agent, shall be sufficiently
given if addressed to that party and received by it at its office set forth
below or at such other place as it may from time to time designate in writing.
To the Fund:
Eaton Vance Special Equities Fund, Inc.
24 Federal Street
Boston, Massachusetts 02110
Attention: H. Day Brigham, Jr., Esq.
To the Transfer Agent:
Boston Safe Deposit and Trust Company
One Boston Place
Boston, Massachusetts 02108
Attn: Susan Mann
(b) This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns; provided, however, that
this Agreement shall be assignable without the written consent of the other
party.
<PAGE>
(c) This Agreement shall be construed in accordance with the laws of the
Commonwealth of Massachusetts.
(d) This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original; but such counterparts shall, together,
constitute only one instrument.
(e) The captions of this Agreement are included for convenience or
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
22. LIABILITY OF DIRECTORS, OFFICERS AND SHAREHOLDERS. The execution and
delivery of this Agreement have been authorized by the Directors of the Fund and
signed by an authorized Officer of the Fund, acting as such, and neither such
authorization by such Directors nor such execution and delivery by such Officer
shall be deemed to have been made by any of them individually or to impose any
liability on any of them personally, and the obligations of this Agreement are
not binding upon any of the Directors or shareholders of the Fund, but bind only
the property of the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective Officers thereunder duly authorized as of the day
and year first above written.
Eaton Vance Special Equities Fund, Inc.
Attest: /s/ Paul D. Wallace, Jr. By: /s/ James L. O'Connor
------------------------ --------------------------
BOSTON SAFE DEPOSIT AND
TRUST COMPANY
Attest: By: /s/ Susan Mann
------------------------- -------------------------
<PAGE>
Appendix A
AUTHORIZED PERSONS
Benjamin A. Rowland, Jr.
Richard E. Houghton
Daniel A. MacLellan
Robert A. Chisholm
<PAGE>
Schedule A
SCHEDULE OF FEES
Transfer Agent Fees are computed and paid monthly based on month end net assets
and the following annual rates:
First $250,000,000 8 basis points
$250,000,001 - $500,000,000 7 basis points
$500,000,001 and over 6 basis points
<PAGE>
Schedule B
OUT-OF-POCKET EXPENSES
The Fund shall reimburse the Transfer Agent monthly for the following
out-of-pocket expenses:
o postage and mailing
o forms
o outgoing wire charges
o telephone
o if applicable, magnetic tape and freight
o retention of records
o microfilm/microfiche
o stationery
o if applicable, terminals, transmitting lines and
any expenses incurred in connection with such
terminals and lines
The Fund agrees that an estimate of the postage and mailing expenses of the
Transfer Agent will be paid on the day of or prior to a mailing if requested
reasonably in advance by the Transfer Agent. In addition, the Fund will
reimburse the Transfer Agent for other expenses incurred by the Transfer Agent
which the Fund and the Transfer Agent agree are not otherwise properly borne by
the Transfer Agent as part of its duties and obligations under the Agreement.
<PAGE>
Schedule C
DUTIES OF THE TRANSFER AGENT (See Exhibit 1 for Summary of Services)
1. SHAREHOLDER INFORMATION. The Transfer Agent shall maintain a record of
the number of Shares held by each holder of record which shall include their
addresses and taxpayer identification numbers and which shall indicate whether
such Shares are held in certificated or uncertificated form.
2. SHAREHOLDER SERVICES. The Transfer Agent will investigate all
Shareholder inquiries relating to Shareholder accounts and will answer all
correspondence from Shareholders and others relating to its duties hereunder
between the Transfer Agent and the Fund. The Transfer Agent shall keep records
of Shareholder correspondence and replies thereto, and of the lapse of time
between the receipt of such correspondence and the mailing of such replies.
3. STATE REGISTRATION REPORTS. The Transfer Agent shall furnish the Fund,
on a state-by-state basis, sales reports, such periodic and special reports as
the Fund may reasonably request, and such other information, including
Shareholder lists and statistical information concerning accounts, as may be
agreed upon from time to time between the Fund and the Transfer Agent.
4. SHARE CERTIFICATES
(a) At the expenses of the Fund, the Transfer Agent shall maintain an
adequate supply of blank Share certificates to meet the Transfer Agent's
requirements therefor. Such Share certificates shall be properly signed by
facsimile. The Fund agrees that, notwithstanding the death, resignation, or
removal of any Officer of the Fund whose signature appears on such certificates,
the Transfer Agent may continue to countersign certificates which bear such
signatures until otherwise directed by the Fund.
(b) The Transfer Agent shall issue replacement Share certificates in lieu
of certificates which have been lost, stolen or destroyed without any further
action by the Board of Directors or any Officer of the Fund, upon receipt by the
Transfer Agent of properly executed affidavits and lost certificate bonds, in
form satisfactory to the Transfer Agent, with the Fund and the Transfer Agent as
obligees under the bond.
(c) The Transfer Agent shall also maintain a record of each certificate
issued, the number of Shares represented thereby and the holder of record. With
respect to Shares held in open accounts or uncertificated forms, i.e., no
certificate being issued with respect thereto, the Transfer Agent shall maintain
comparable records of the record holders thereof, including their names,
addresses and taxpayer identification numbers. The Transfer Agent shall further
maintain separately for the Fund a stop transfer record on lost and/or replaced
certificates.
5. MAILING COMMUNICATIONS TO SHAREHOLDERS; PROXY MATERIALS. The Transfer
Agent will address and mail to Shareholders of the Fund all reports to
Shareholders, dividend and distribution notices and proxy material for the
Fund's meetings of Shareholders, and such other communications as the Fund may
authorize. In connection with meetings of Shareholders, the Transfer Agent will
prepare Shareholder lists, mail and certify as to the mailing of proxy
materials, process and tabulate returned proxy cards, report on proxies voted
prior to meetings, act as inspector of election at meetings and certify Shares
voted at meetings.
<PAGE>
6. SALES OF SHARES
(a) PROCESSING OF INVESTMENT CHECKS OR OTHER INVESTMENTS. Upon receipt of
any check or other instrument drawn or endorsed to it as agent for, or
identified as being for the account of, the Fund, or drawn or endorsed to the
Distributor of the Fund's Shares for the purchase of Shares, the Transfer Agent
shall stamp the check with the date of receipt, shall forthwith process the same
for collection and shall record the number of Shares sold, the trade date and
price per Share, and the amount of money to be delivered to the Custodian of the
Fund for the sale of such Shares.
Upon receipt of an order to purchase shares from a broker or dealer
pursuant to procedures approved by the Fund, the Transfer Agent shall record the
number of Shares sold for the account of such broker or dealer, the trade date
and price per share, the amount of money to be delivered to the Custodian of the
Fund for the sale of such Shares, and shall confirm such order and amount to the
broker or dealer promptly in accordance with good industry practice.
(b) ISSUANCE OF SHARES. Upon receipt of notification that the Custodian has
received the amount of money specified in the first paragraph of section (a)
above, the Transfer Agent shall issue to and hold in the account of the
purchaser/Shareholder, or if no account is specified therein, in a new account
established in the name of the purchaser, the number of Shares such purchaser is
entitled to receive, as determined in accordance with applicable Federal law or
regulation.
(c) CONFIRMATION. The Transfer Agent shall send to the
purchaser/Shareholder a confirmation of each purchase which will show the new
Share balance, the Shares held under a particular plan, if any, for withdrawing
investments, the amount invested and the price paid for the newly purchased
Shares, or will be in such other form as the Fund and the Transfer Agent may
agree from time to time.
(d) SUSPENSION OF SALES OF SHARES. The Transfer Agent shall not be required
to issue any Shares of the Fund where it has received a Written Instruction from
the Fund or written notice from any appropriate Federal or state authority that
the sale of the Shares of the Fund has been suspended or discontinued, and the
Transfer Agent shall be entitled to rely upon such Written Instructions or
written notification.
(e) TAXES IN CONNECTION WITH ISSUANCE OF SHARES. Upon the issuance of any
Shares in accordance with the foregoing provisions of this Section, the Transfer
Agent shall not be responsible for the payment of any original issue or other
taxes required to be paid in connection with such issuance.
(f) RETURNED CHECKS. In the event that any check or other order for the
payment of money is returned unpaid for any reason, the Transfer Agent will: (i)
give prompt notice of such return to the Fund or its designee; (ii) place a stop
transfer order against all Shares issued as a result of such check or order; and
(iii) take such actions as the Transfer Agent may from time to time deem
appropriate.
7. REDEMPTIONS
(a) REQUIREMENTS FOR TRANSFER OR REDEMPTION OF SHARES. The Transfer Agent
shall process all requests from Shareholders to transfer or redeem Shares in
accordance with the procedures set forth in the Fund's Prospectus, or as
authorized by the Fund pursuant to Written Instructions, including, but not
limited to, all requests from Shareholders to redeem Shares, all determinations
of the number of Shares required to be redeemed to fund designated monthly
payments and automatic payments or any such distribution or withdrawal plan.
<PAGE>
The Transfer Agent reserves the right to refuse to transfer or redeem
Shares until it is satisfied that the instructions to do so are valid and
genuine, in accordance with procedures set forth in the Fund's Prospectus. The
Transfer Agent shall incur no liability for the refusal, in good faith, to make
transfer or redemptions which the Transfer Agent, in its good judgment deems
improper or unauthorized based upon such procedures, or until it is reasonably
satisfied that there is no basis for any claims adverse to such transfer or
redemption.
The Transfer Agent may in effecting transactions, rely upon the provisions
of the Uniform Act for the Simplification of Fiduciary Security Transfers or the
provisions of Article 8 of the Uniform Commercial Code, as the same may be
amended from time to time in the Commonwealth of Massachusetts, which in the
opinion of legal counsel for the Fund or of its own legal counsel protect it in
not requiring certain documents in connection with the transfer or redemption of
Shares. The Fund may authorize the Transfer Agent to waive the signature
guarantee in certain cases by Written Instructions.
For the purpose of the redemption of Shares of the Fund which have been
purchased within 15 days of a redemption request, the Fund shall provide the
Transfer Agent with written Instructions (see Exhibit 2 hereto) concerning the
time within which such requests may be honored.
(b) NOTICE TO CUSTODIAN. When Shares are redeemed, the Transfer Agent
shall, upon receipt of the instructions and documents in proper form, deliver to
the Custodian a notification setting forth the number of Shares to be redeemed.
Such redemptions shall be reflected on appropriate accounts maintained by the
Transfer Agent reflecting outstanding Shares of the Fund and Shares attributed
to individual accounts and, if applicable, any individual withdrawal or
distribution plan.
(c) PAYMENT OF REDEMPTION PROCEEDS. The Transfer Agent shall, upon receipt
of the money paid to it by the Custodian for the redemption of Shares, pay to
the Shareholder, or his authorized agent or legal representative, such moneys as
are received from the Custodian, all in accordance with the redemption
procedures described in the Fund's Prospectus; provided, however, that the
Transfer Agent shall pay the proceeds of any redemption of Shares purchased
within a period of time agreed upon in writing by the Transfer Agent and the
Fund only in accordance with procedures agreed to in writing by the Transfer
Agent and the Fund for determining that good funds have been collected for the
purchase of such Shares, such written procedures being attached to this Schedule
as Exhibit 2. The Fund shall indemnify the Transfer Agent for any payment of
redemption proceeds or refusal or make such payment if the payment or refusal to
pay is in accordance with said written procedures.
The Transfer Agent shall not process or effect any redemptions pursuant to
a plan of distribution or redemption or in accordance with any other Shareholder
request upon the receipt by the Transfer Agent of notification of the suspension
of the determination of the Fund's net asset value.
(d) The Transfer Agent shall send to the Shareholder a confirmation of each
redemption showing the amount (and price) of shares redeemed, the new Share
balance, and such other information as the Fund may request from time to time.
<PAGE>
8. DIVIDENDS
(a) NOTICE TO TRANSFER AGENT AND CUSTODIAN. Upon the declaration of each
dividend and each capital gains distribution by the Board of Directors of the
Fund with respect to its Shares, the Fund shall furnish to the Transfer Agent
Written Instructions setting forth, with respect to Shares the date of the
declaration of such dividend or distribution, the ex-dividend date, the date of
payment thereof, the record date as of which Shareholders entitled to payment
shall be determined, the amount payable per Share to the Shareholders of record
as of that date, the total amount payable to the Transfer Agent on the payment
date and whether such dividend or distribution is to be paid in Shares of such
class at net asset value.
On or before the payment date specified in such resolution of the Board of
Directors, the Fund will cause the Custodian of the Fund to pay to the Transfer
Agent sufficient cash to make payment to the Shareholders of record as of such
payment date.
(b) PAYMENT OF DIVIDENDS BY THE TRANSFER AGENT. The Transfer Agent will, on
the designated payment date, automatically reinvest all dividends in additional
Shares at net asset value (determined on the record date of such dividend with
respect to Shareholders who have elected such reinvestment), and promptly mail
to each Shareholder at his address of record, or such other address as the
Shareholder may have designated, a statement showing the number of full and
fractional Shares (rounded to three decimal places) then currently owned by the
Shareholder and the net asset value of the Shares so credited to the
Shareholder's account. All other dividends shall be paid in cash, or by check,
to Shareholders of their designees, for shareholders who have so elected.
(c) INSUFFICIENT FUNDS FOR PAYMENTS. If the Transfer Agent does not receive
sufficient cash from the Custodian to make total dividend and/or distribution
payments to all Shareholders of the Fund as of the record date, the Transfer
Agent will, upon notifying the Fund, withhold payment to all Shareholders of
record as of the record date until such sufficient cash is provided to the
Transfer Agent.
(d) INFORMATION RETURNS. It is understood that the Transfer Agent shall
file in a timely manner such appropriate information returns concerning the
payment of dividends, return of capital, capital gains distributions and special
information returns for retirement plan accounts with the proper Federal, state,
local and other authorities as are required by law to be filed and shall be
responsible for the withholding of taxes, if any, due on such dividends or
distributions to Shareholders when required to withhold taxes under applicable
law. The Transfer Agent shall also mail copies of such information returns to
the appropriate Shareholders.
<PAGE>
Exhibit 1
to
Schedule C
Summary of Services
The services to be performed by the Transfer Agent shall be as follows;
A. DAILY RECORDS
Maintain daily on disk, tape or other magnetic media the following
information with respect to each shareholder account as received:
o Name and Address (Zip Code)
o Balance of Shares held by Transfer Agent
o State of residence code
o Beneficial owner code: i.e, male, female, joint tenant, etc.
o Dividend code (reinvestment)
o Number of Shares held in certificate form
o Tax information (certified tax identification number, any
TEFRA and backup withholding)
o Other special coding for retirement plan accounts
B. OTHER DAILY ACTIVITY
o Answer written inquiries relating to Shareholder accounts
(matters relating to portfolio management, distribution of
Shares and other management policy questions will be referred
to the Fund).
o Furnish a Statement of Additional Information to any
Shareholder who requests (in writing or by telephone) such
statement from the Transfer Agent.
o Examine and process Share purchase applications in accordance
with the Prospectus.
o Furnish Forms W-9 to all shareholders whose initial
subscriptions for Shares did not include certified taxpayer
identification numbers.
o Process additional payments into established Shareholder
accounts in accordance with the Prospectus.
o Upon receipt of proper instructions and all required
documentation, process requests for redemption of Shares.
o In accordance with procedures outlined in the Fund's
Prospectus, process and effect telephone exchanges among funds
with similar distribution plans.
o Maintain records of Letter of Intent escrow shares.
o Maintain records necessary to properly invoke the contingent
deferred sales charge.
<PAGE>
o Identify redemption requests made with respect to accounts in
which Shares have been purchased within an agreed-upon period
of time for determining whether good funds have been collected
with respect to such purchase and process as agreed by the
Transfer Agent and the Fund in accordance with written
procedures set forth in the Fund's Prospectus.
o Examine and process all transfers of Shares, ensuring that all
transfer requirements and legal documents have been supplied.
o Issue and mail replacement checks.
o Maintain and execute share purchases with respect to Rights of
Accumulation.
C. SPECIAL REQUIREMENTS WITH RESPECT TO DAILY FUNDING
The Transfer Agent shall provide the Custodian on or before 9:30 A.M. each day
reports summarizing the previous day's transaction activity, subtotaled by
transaction type and trade date, and showing the balance of the Fund's shares
outstanding and other pertinent information. These reports shall indicate all
cash amounts to be paid or received by the Fund for such purposes as settling
sales and redemption of Fund Shares or making distributions to Shareholders.
Providing that the Transfer Agent has reported the daily settlement amounts in a
timely manner with appropriate back-up documentation, the Fund will cause to be
wired monies due the Transfer Agent by the Fund on or before the close of
business that day. All monies due the Fund from the Transfer agent shall be
wired by the Transfer Agent on or before 2:00 P.M.
D. REPORTS PROVIDED TO THE FUND AND/OR THE CUSTODIAN
Furnish the following reports to the Fund:
o Daily financial totals
o Monthly form N-SAR information (sales/redemptions)
o Monthly report of outstanding Shares
o Monthly analysis of accounts by beneficial owner code
o Monthly analysis of accounts by share range
o Bi-monthly analysis of sales by state; provide a "warning
system" that informs the Fund when sales of Shares in certain
states are within a specified percentage of the Shares
registered in the state.
E. DIVIDEND AND REDEMPTION ACTIVITY
o Calculate and process Share dividends and distributions as
instructed by the Fund.
o Compute; prepare and mail all necessary reports to
Shareholders, federal and/or state authorities as requested by
the Fund.
<PAGE>
o On the payable date of a distribution to shareholders, the
Transfer Agent shall deliver to the Custodian a complete
dividend reconciliation, including the record date shares,
total amount distributed, amount reinvested and cash due the
Transfer Agent. Payment of the cash by the Custodian upon
receipt of the reconciliation shall be contingent upon the
Custodian's assent that the figures in such reconciliation
appear to be reasonable.
o The Transfer Agent shall deliver a final dividend
reconciliation to the Custodian no later than 30 days after
the payable date which will reflect any adjustments made
subsequent to the payable date. After the final dividend
reconciliation is prepared, no further adjustments shall be
made to affect the total amount of the distribution without
the written approval of the Fund.
F. MEETINGS OF SHAREHOLDERS
o Cause to be mailed proxy and related material for all meetings
of Shareholders. Tabulate returned proxies (proxies must be
adaptable to mechanical equipment of the Transfer Agent or its
agents) and supply daily reports when sufficient proxies have
been received.
o Prepare and submit to the Fund an Affidavit of Mailing.
o At the time of the meeting, if requested, furnish a certified
list of Shareholders in hard copy, microfilm or microfiche and
Inspectors of Election.
G. PERIODIC ACTIVITIES
o Cause to be mailed reports, Prospectuses, and any other
enclosures requested by the Fund (material must be adaptable
to the mechanical equipment of Transfer Agent or its agents).
o Produce and mail periodic statements as requested to
Shareholders and broker/dealers.
H. AS OF TRANSACTIONS
o The Transfer Agent shall make every effort to minimize the
occurrence of "as of" transactions. For those that do occur,
the Transfer Agent shall maintain records as to the reason for
the delay in processing. In the event the delayed processing
is the fault of the Transfer Agent, and the Fund sustains a
loss, the Fund shall be entitled to compensation from the
Transfer Agent.
<PAGE>
Exhibit 2
to
Schedule C
It is hereby agreed between the Fund and the Transfer Agent that Shares
purchased by personal check may be redeemed only after they are deemed to have
been collected in accordance with the attached check-aging schedule. The
check-aging schedule, which is based upon a Shareholder's address of record,
designates the number of days between the receipt of an investment check by the
Transfer Agent and the date on which funds provided by such checks will be
deemed to have been collected.
<PAGE>
CHECK-AGING SCHEDULE
STATE STATE NUMBER
CODE ABBREV. STATE DESCRIPTION OF DAYS
- ---- ------- ----------------- -------
01 AL Alabama 9
02 AK Alaska 15
03 AZ Arizona 12
04 AR Arkansas 9
05 CA California 13
06 CO Colorado 11
07 CT Connecticut 7
08 DE Delaware 7
09 DC District of Columbia 8
10 FL Florida 9
11 GA Georgia 9
12 HI Hawaii 15
13 ID Idaho 11
14 IL Illinois 10
15 IN Indiana 10
16 IA Iowa 10
17 KS Kansas 10
18 KY Kentucky 9
19 LA Louisiana 9
20 ME Maine 7
21 MD Maryland 8
22 MA Massachusetts 7
23 MI Michigan 10
24 MN Minnesota 10
25 MS Mississippi 10
26 MO Missouri 10
27 MT Montana 11
<PAGE>
STATE STATE NUMBER
CODE ABBREV. STATE DESCRIPTION OF DAYS
- ---- ------- ----------------- -------
28 NE Nebraska 10
29 NV Nevada 11
30 NH New Hampshire 7
31 NJ New Jersey 8
32 NM New Mexico 11
33 NY New York 8
34 NC North Carolina 9
35 ND North Dakota 11
36 OH Ohio 10
37 OK Oklahoma 11
38 OR Oregon 12
39 PA Pennsylvania 8
40 RI Rhode Island 7
41 SC South Carolina 9
42 SD South Dakota 11
43 TN Tennessee 9
44 TX Texas 11
45 UT Utah 12
46 VT Vermont 7
47 VA Virginia 9
48 WA Washington 12
49 WV West Virginia 9
50 WI Wisconsin 10
51 WY Wyoming 11
52 PR Puerto Rico 16
53 53 APO, FPO New York
54 54 APO, FPO California
55 55 Other U.S. Possessions
56 56 Foreign Addresses
<PAGE>
SCHEDULE D
SCHEDULE OF INSURANCE COVERAGE
Boston Safe Deposit and Trust Company ("Boston Safe"), and its New York clearing
facility, Boston Safe Clearing Corporation, are named insureds under the
following insurance policies presently in force covering assets held in custody
at either company.
BANKERS BLANKET BOND
Basic Coverage: $22,500,000
Carrier: Continental Insurance Company #BND1619079, et al., policy dated
April 7, 1985 and effective until cancelled.
Deductible: $250,000
This coverage relates to any dishonest act of any employee of Boston
Safe and to any loss by burglary or mysterious unexplainable
disappearance of securities. The bond provides coverage for forgery
losses up to $2,500,000 and losses for Boston Safe's acceptance of
counterfeited securities in good faith up to $1,000,000.
Additional Coverage;
In addition, both companies are named insureds for $57,500,000 of
excess bond coverage through American Express, bringing the total
blanket bond coverage to $80,000,000
Also, through American Express, Boston Safe has $245,000,000 of Lost
Instrument Bond coverage in addition to the $80.0 million blanket bond
coverage.
ERRORS AND OMISSIONS & FIDUCIARY LIABILITY INSURANCE POLICY
Coverage: $5,000,000
Carrier First State Insurance Company, policy dated November 14,
1988, and effective until November 14, 1989
Deductible: $250,000
Protection under the Errors and Omissions Policy for an account would
be in the area of any alleged negligent act, error, or omission
committed by Boston Safe in the course of its performance of its duties
as Custodian.
As a participant in the Depository Trust Company ("DTC"), Boston Safe is insured
under policies made available by DTC with respect to securities deposited.
<PAGE>
AMENDMENT TO THE TRANSFER AGENCY AGREEMENT
This Agreement, dated as of February 1, 1993, is made to the Transfer
Agency Agreement (the "Agreements") dated June 7, 1989 between each of the EATON
VANCE HIGH YIELD MUNICIPALS TRUST (now Eaton Vance Municipals Trust); EATON
VANCE CALIFORNIA MUNICIPALS FUND (now Eaton Vance Investment Trust); EATON VANCE
LIQUID ASSETS TRUST; EATON VANCE HIGH INCOME TRUST; EATON VANCE NATURAL
RESOURCES TRUST; EATON VANCE EQUITY-INCOME TRUST; THE EXCHANGE FUND OF BOSTON,
INC.; SECOND FIDUCIARY EXCHANGE FUND, INC.; FIDUCIARY EXCHANGE FUND, INC.;
DEPOSITORS FUND OF BOSTON, INC.; CAPITAL EXCHANGE FUND, INC.; VANCE SANDERS
EXCHANGE FUND, L.P.; DIVERSIFICATION FUND, INC.; EATON VANCE MUNICIPAL BOND FUND
L.P.; EATON VANCE INVESTORS FUND, INC. (now Eaton Vance Investors Fund); EATON
VANCE GROWTH FUND, INC. (now Eaton Vance Investors Fund); EATON VANCE GROWTH
FUND, INC. (now Eaton Vance Growth Trust); EATON VANCE STOCK FUND; EATON VANCE
TAX-FREE RESERVES; EATON VANCE GOVERNMENT OBLIGATIONS TRUST; EATON VANCE TOTAL
RETURN TRUST; EATON VANCE INCOME FUND OF BOSTON, INC. (now Eaton Vance Income
Fund of Boston); and dated November 2, 1992, between each of EATON VANCE PRIME
RATE RESERVES and EATON VANCE SHORT-TERM GLOBAL INCOME FUND, INC. (collectively,
the "Funds") and THE SHAREHOLDER SERVICES GROUP, INC. (the "Transfer Agent"),
being a successor in interest to Boston Safe Deposit and Trust Company.
The Funds and the Transfer Agent agree that the Agreements shall, as of
February 1, 1993, be amended as follows:
1. The Transfer Agent will maintain its registration as a transfer agent as
provided in Section 17A(c) of the Securities Act of 1934, as amended, (the "1934
Act") and shall comply with all applicable provisions of Section 17A of the 1934
Act and the rules promulgated thereunder, as may be amended from time to time,
including rules relating to record retention.
2. The references to "legal counsel" and "counsel" in Section 11(b) and 13
of the Agreement and the third paragraph of Section 7(a) of Schedule C of the
Agreement shall be limited to (a) outside legal counsel of the Fund in its
capacity as such, and (b) outside legal counsel of the Transfer Agent if such
counsel has been specifically authorized by an Authorized Person of the Fund to
render its opinion on the matter that has arisen.
3. Section 12 of the Agreement is amended by adding the following clause
after the word "supply": ", provided, however, that the Transfer Agent shall
have acted in accordance with its Disaster Recovery Plan attached hereto as
Schedule F, which Schedule may be amended from time to time by agreement of the
Trust and the Transfer Agent.
4. Section 13 of the Agreement is deleted in its entirety and replaced with
the following paragraphs:
(a) Each party shall fulfill its obligations hereunder by acting with
reasonable care and in good faith;
(b) The Fund will indemnify the Transfer Agent against and hold it
harmless from any and all losses, claims, damages, liabilities or expenses
(including reasonable counsel fees and expenses) resulting from any claim,
demand, action or suit not resulting from the bad faith or negligence of
the Transfer Agent, and arising out of, or in connection with, its duties
on behalf of the Trust hereunder. In addition, the Fund will indemnify the
Transfer Agent against and hold it harmless from any and all losses,
claims, damages, liabilities or expenses (including reasonable counsel fees
and expenses) resulting from any claim, demand action or suit as a result
of: (i) any action taken in accordance with Written or Oral Instructions,
or share certificates reasonable believed by the Transfer Agent to be
genuine and to be signed, countersigned or executed, or orally communicated
by an Authorized Person; (ii) any action taken in accordance with written
or oral advise reasonably believed by the Transfer Agent to have been given
by counsel for the Fund; or (iii) any action taken as a result of any error
or omission in any record which the Transfer Agent had no reasonable basis
to believe was inaccurate (including but not limited to magnetic tapes,
computer printouts, hard copies and microfilm copies) and was delivered, or
caused to be delivered, by the Fund to the Transfer Agent in connection
with this Agreement;
(c) The Transfer Agent will indemnify the Fund against and hold it
harmless from any and all losses, claims, damages, liabilities or expenses
(including reasonable counsel fees and expenses) resulting from any claim,
demand, action or suit not resulting from the bad faith or negligence of
the Fund, or arising out of, or in connection with, the Transfer Agent's
breach of this Agreement;
(d) In any case in which a party may be asked to indemnify or hold the
other party harmless, the indemnifying party shall be advised of all
pertinent facts concerning the situation in question and the party seeking
indemnification shall notify the indemnifying party promptly concerning any
situation which presents or appears likely to present a claim for
indemnification. The indemnifying party shall have the option to defend
against any claim which may be the subject of this indemnification and, in
the event that the indemnifying party so elects, such defense shall be
conducted by counsel chosen by the indemnifying party, and thereupon the
indemnifying party shall take over complete defense of the claim and the
party seeking indemnification shall sustain no further legal or other
expenses in such situation for which it seeks indemnification. The party
seeking indemnification will not confess any claim or make any compromise
in any case in which the indemnifying party will be asked to provide
indemnification, except with the indemnifying party's prior written
consent; and
(e) The obligations of the parties hereto under this Section shall
survive the termination of this Agreement.
5. The second paragraph of Section 7(a) of Schedule C of the Agreement is
amended by deleting the second sentence, and the third paragraph of such Section
7(a) of Schedule C is amended by deleting the first sentence.
6. Section 14 of each Agreement is deleted in its entirety and replaced
with the following paragraphs:
(a) Either party may terminate this Agreement without cause on or
after January 31, 1998 by giving 180 days written notice to the other
party;
(b) Either party may terminate this Agreement if the other party has
materially breached the Agreement by giving the defaulting party 30 days
written notice and the defaulting party has failed to cure the breach
within 60 days thereafter; and
(c) Any written notice of termination shall specify the date of
termination. The Fund shall provide notice of the successor transfer agent
within 30 days of the termination date. Upon termination, the Transfer
Agent will deliver to such successor a certified list of shareholders of
the Fund (with names, addresses and taxpayer identification of Social
Security numbers and such other federal tax information as the Transfer
Agent may be required to maintain), an historical record of the account of
each shareholder and the status thereof, and all other relevant books,
records, correspondence, and other data established or maintained by the
books, records, correspondence, and other data established or maintained by
the Transfer Agent under this Agreement in the form reasonably acceptable
to the Fund, and will cooperate in the transfer of such duties and
responsibilities, including provisions for assistance from the Transfer
Agent's personnel in the establishment of books, records and other data by
such successor or successors. The Transfer Agent shall be entitled to its
out-of-pocket expenses set forth in Schedule B incurred in the delivery of
such records net of the fees owed to the Transfer Agent for the last month
of service if this Agreement is terminated pursuant to paragraph (b)
immediately above.
7. The following paragraph is added to Section 15 of the Agreement:
The Fund and the Transfer Agent agree to renegotiate the terms of this
Agreement if an independent party acceptable to both parties, after
notice to and a hearing with both Fund management and representatives
of the Transfer Agent, determines that the performance of the Transfer
Agent has been adverse to the interests of the Fund shareholders and
if such negotiations do not result in a mutually acceptable amendment
then the Fund may terminate this Agreement on 60 days written notice.
8. The following sentence shall be added at the end of Section 17 of the
Agreements:
Notwithstanding the foregoing, any reference to the Transfer Agent
shall include a statement to the effect that it is a wholly owned
subsidiary of First Data Corporation.
9. The name and address of the transfer agent in Section 21(a) of the
Agreements shall be deleted and replaced with the following:
The Shareholder Services Group, Inc.
One Exchange Place
53 State Street
Boston, Massachusetts 02109
Attention: Robert F. Radin, President
with a copy to TSSG Counsel
10. Section 21(b) of the Agreements shall be deleted in its entirety and
replaced with the following:
(b) This Agreement shall extend to and shall be binding upon the
parties hereto, and their respective successors and assigns; provided,
however, that any assignment of this Agreement to an entity shall
require the written consent of the other party.
11. The following paragraphs shall be added to Schedule A of the
Agreements:
For all funds serviced by Eaton Vance Management for which the
Transfer Agent commences service as transfer agent after February 1,
1993 (the "New Funds"), the Transfer Agent shall waive per account
fees for the initial 90 days of service. After the initial 90 days,
New Funds that impose a 12b-1 Trail Commission or service fee shall
pay the Transfer Agent a monthly fee based on month-end net assets at
an annual rate of 8 basis points. After the initial 90 days, New funds
that do not impose a 12b-1 Trail Commission or service fee shall pay
the Transfer Agent a monthly fee based on month-end net assets at an
annual rate of 7 basis points.
If a New Fund's net assets exceed $250 million for a calendar month,
the fees due the Transfer Agent for that month shall be reduced by
one-twelfth of one basis point, for those assets in excess on that
breakpoint.
<PAGE>
If a New Fund's net assets exceed $500 million for a calendar month,
the fees due the Transfer Agent for that month shall be reduced by
one-twelfth of two basis points, for those assets in excess of that
breakpoint. If a New Fund's net assets exceed $750 million for a
calendar month, the fees due the Transfer Agent for that month shall
be reduced by one-twelfth of three basis points, for those assets in
excess of that breakpoint. If a New Fund's net assets exceed $1
billion for a calendar month, the fees due the Transfer Agent for that
month shall be reduced by one-twelfth of four basis points, for those
assets in excess of that breakpoint. In addition to these breakpoints,
if Eaton Vance National Municipals Trust's net assets exceed $1.5
Billion for a calendar month, the fees due the Transfer Agent for the
month shall be reduced by one-twelfth of four basis points, for those
assets in excess of that breakpoint. If Eaton Vance National
Municipals Trust's net assets exceed $2 Billion for a calendar month,
the fees due the Transfer Agent for the month shall be reduced by
one-twelfth of three basis points, for those assets in excess of that
breakpoint. No other breakpoints in fees shall apply.
12. Schedule B of the Transfer Agency Agreements is deleted and replaced by
Schedule B attached hereto.
13. Schedule E, attached hereto, will be added to the Agreements.
14. This Amendment contains the entire understanding among the parties with
respect to the transactions contemplated hereby. To the extent that any
provision of this amendment modifies or is otherwise inconsistent with any
provision of the Agreement and related agreements, this Amendment shall control,
but the Agreement and all related documents shall otherwise remain in full force
and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their duly authorized officers, as of the day and year first above
written.
EATON VANCE MUNICIPALS TRUST
EATON VANCE INVESTMENT TRUST
EATON VANCE LIQUID ASSETS TRUST
EATON VANCE HIGH INCOME TRUST
EATON VANCE NATURAL RESOURCES TRUST
EATON VANCE EQUITY-INCOME TRUST
THE EXCHANGE FUND OF BOSTON, INC.
SECOND FIDUCIARY EXCHANGE FUND, INC.
FIDUCIARY EXCHANGE FUND, INC.
DEPOSITORS FUND OF BOSTON, INC.
CAPITAL EXCHANGE FUND, INC.
VANCE SANDERS EXCHANGE FUND, L.P.
DIVERSIFICATION FUND, INC.
EATON VANCE MUNICIPAL BOND FUND L.P.
EATON VANCE INVESTORS FUND
EATON VANCE GROWTH TRUST
EATON VANCE STOCK FUND
EATON VANCE SPECIAL INVESTMENT TRUST
EATON VANCE CASH MANAGEMENT FUND
EATON VANCE TAX FREE RESERVES
EATON VANCE GOVERNMENT OBLIGATIONS TRUST
EATON VANCE TOTAL RETURN TRUST
EATON VANCE INCOME FUND OF BOSTON
EATON VANCE PRIME RATE RESERVES
EATON VANCE SHORT-TERM GLOBAL INCOME FUND, INC.
By: /s/ Benjamin A. Rowland, Jr.
---------------------------------
Title: V.P. Eaton Vance Management
/s/ James L. O'Connor Treasurer
----------------------------------
THE SHAREHOLDER SERVICES GROUP, INC.
By: /s/ Jack P. Kutner
---------------------------------
Title: EVP-COO
<PAGE>
B-1
Schedule B
OUT-OF-POCKET EXPENSES
The Fund shall reimburse the Transfer Agent monthly for applicable
out-of-pocket expenses, including, but not limited to the following items:
- Microfiche/microfilm production
- Magnetic media tapes and freight
- Stock costs, including certificates, envelopes, checks,
stationery, confirmations and statements
- Postage (bulk, pre-sort, ZIP+4, barcoding, first class) direct
pass through to the Fund
- Due diligence mailings
- Telephone and telecommunications costs, including all lease,
maintenance and line costs
- Proxy solicitations, mailings and tabulations
- Daily & Distribution advice mailings
- Shipping, Certified and Overnight mail and insurance
- Year-end form production and mailings
- Terminals, communication lines, printers and other equipment and
any expenses incurred in connection with such terminals and lines
as pre-approved by the Fund
- Duplicating services, as pre-approved by the Fund
- Courier services
- Banking charges, including without limitation incoming @ $6.00
and outgoing wire charges @ $8.00 per wire
- Federal Reserve charges for check clearance
- Record retention, retrieval and destruction costs, including, but
not limited to exit fees charged by third party record keeping
vendors
- The Transfer Agent shall provide the Funds with an aggregate
credit of 1,000 system programming hours at no cost during each
calendar year.
- Certificate Insurance
The Fund agrees that postage and mailing expenses will be paid on the day
of or prior to mailing. In addition, the Fund will promptly reimburse the
Transfer Agent for any other unscheduled expenses incurred by the Transfer Agent
whenever the Fund and the Transfer Agent mutually agree that such expenses are
not otherwise properly borne by the Transfer Agent as part of its duties and
obligations under the Agreement.
<PAGE>
E-1
Schedule E
Transfer Agent Performance Standards
1. SCOPE
The Transfer Agent agrees to meet or exceed the processing standards set forth
in this schedule for those items received by the Transfer Agent in the proper
condition, form and order to permit the Transfer Agent to process the item
within the requirements of this Agreement.
"Turnaround", for the purposes of the Schedule, shall be tracked by the Transfer
Agent and shall consist of the date the Transfer Agent receives the item in good
order ("R") and such additional business days (e.g. R=1, R=2) as designated. For
the purpose of this Schedule, "business days" shall be the calendar days on
which the New York Stock Exchange is opened and such other days as agreed to in
writing by the Transfer Agent and the Fund. The Transfer Agent shall track the
processing of items on a calendar month basis and shall report to the Fund the
percentage of the total number of items received and the percentage of items
that were processed within the specific Turnaround period by the 20th of the
following month.
The Transfer Agent shall also track the number of Funds shareholders who contact
the Transfer Agent to complain that their transactions were not processed
correctly. The Transfer Agent shall report to the Funds, on a monthly basis, no
later than the 20th of the following month, the transactions and the total
number of shareholder complaints received by the Transfer Agent from Funds
shareholders, which arose solely from processing errors by the Transfer Agent.
With respect to these turnaround and error standards, the Transfer Agent shall
be responsible for its own conduct only and shall not be held responsible for
delays and other problems arising from the actions or omissions of the Fund,
other agents of the Fund or third parties not affiliated with the Transfer
Agent. In addition, the Fund agrees that these performance standards shall be
waived for any calendar month in which the processing exceeds by more than 20%
the average monthly number of items received by the Transfer Agent during the
six month period prior to that calendar month.
2. CORRECTIVE ACTION
If performance standards are not met for any type of transaction for a given
monthly period, the Transfer Agent shall report to the Fund by the 20th of the
following month the reason for the deficiency and the corrective action being
taken by the Transfer Agent.
The Fund may terminate this Agreement if either: (i) One quarter or more of the
performance standards listed in this Schedule are not met by the Transfer Agent
for four consecutive months, or (ii) any one performance standard is not met by
the Transfer Agent for any six months during a 12 month period. Unless the Fund
provides the Transfer Agent with notice of the Fund's intent to exercise this
option within 60 days of the occurrence, the Fund shall have waived its option
to terminate under this provision. Termination is not the sole remedy of the
Fund for failure to meet the performance standards.
3. PERFORMANCE STANDARDS
The Transfer Agent will use a statistical sampling defined below as a percentage
of transactions processed through the transaction processing and quality control
units of the Transfer Agent providing services to the Fund and will track and
report to the Fund on the accuracy of the transactions processed. Examining the
sampling against predetermined Transfer Agent criteria for accuracy, the
Transfer Agent will provide an accuracy rate as represented by "percent",
measured to the last Friday of each month from the last Friday of the previous
month. The Fund reserves the right to inspect, or have a third party inspect,
the Quality Assurance procedures and documentation and all documents reviewed
and considered in determining the accuracy of processing.
I. Transaction Processing
Turnaround QA Statistical Accuracy
R R+1-R+7 Sampling % Standard
--------- ---------- --------
A1. New Accounts 15%
- Purchases R 98%
- Exchanges R 98%
- Transfer R+3 98%
B. Purchases 5%
- Directs (Money Market Funds) R+1 98%
- Directs (All Other Funds R 98%
- Wire Orders (Placement) R 98%
- Wire Orders (Settlement) R+1 98%
C. Redemptions 10%
- Direct R 98%
- Wire Orders R 98%
D. Exchanges R 5-10% 98%
E. Transfers R+3 10% 98%
F. Adjustments 10%
- Priority R+1 98%
- Non-Priority R+4 98%
- OCF Cancel/Rebill R+1 98%
II. Shareholder Services
Turnaround QA Statistical Accuracy
R R+1-R+7 Sampling % Standard
--------- ---------- --------
A. Research 5%
- Priority R+2 95%
- Non-Priority R+4 95%
- Transcripts R+9 95%
B. Telephone Responsiveness R 2% 98%
(excluding calls abandoned
within 20 seconds)
C. Correspondence 10%
- Priority (Financial) R+3 98%
- Non Priority (Other) R+5 98%
<PAGE>
III. Administration
Turnaround QA Statistical Accuracy
R R+1-R+7 sampling % Standard
--------- ---------- --------
A. Duplicate Confirmation R+2 2% 98%
Mailed
B. Certificates Mailed R+3 10% 98%
C. Daily Checks Mailed R+1 5% 98%
(includes redemptions, SWP's
and replacements)
D. Periodic Checks Mailed R+2 Client 98%
Specific
Sampling
IV. Data Center Services
A. Response Time
An average of 98% of all CICS entries on Business Days from 8:00 p.m. EST
("Business Hours") during a calendar month will have a response time of three
(3) seconds or less.
An average of 98% of all CICS entries during Business hours in a calendar month
will have a response item of five (5) seconds or less.
B. On-Line Systems Availability
The On-Line System will be available for inquiry and data entry at least 96% of
the time during Business Day and from 8:00 a.m. to 8:00 p.m. EST (Business
Hours), measured on a calendar month basis.
V. Quality Assurance
TSSG will use a statistical sampling defined categorically in Section I-III of
transaction processed through the transaction processing and the quality control
units of TSSG providing services to the Funds and will track and report to the
Funds on the accuracy of the transaction processed. Examining the sampling
against pre-determined TSSG criteria for accuracy, TSSG will provide a 98%
accuracy rate, measured monthly by their independent Quality Assurance
Department and reported to the Fund by the 20th of the following month.
<PAGE>
EATON VANCE SPECIAL INVESTMENT TRUST
CLASS A SERVICE PLAN
WHEREAS, Eaton Vance Special Investment Trust (the "Trust") engages in
business as an open-end management investment company with multiple series (each
with multiple classes), and is registered as such under the Investment Company
Act of 1940, as amended (the "Act");
WHEREAS, on June 23, 1997 the Trust adopted a Plan of Reorganization and
a Multiple Class Plan on behalf of its series and in connection therewith the
Trustees amended the Declaration of Trust to terminate or rename certain series,
and to establish four classes of shares (including Class A shares) within most
renamed series;
WHEREAS, except for EV Traditional Emerging Growth Fund the assets of
each Traditional series will be converted to Class A assets of the renamed
series and the shares of each Traditional series will be converted to Class A
shares of the renamed series pursuant to such reorganization;
WHEREAS, the Trust on behalf of each of its series listed on Schedule A
(a "Fund") desires to adopt a Service Plan with respect to each Fund's Class A
shares and EV Traditional Emerging Growth Fund (which shall be treated as Class
A shares herein) pursuant to which each Fund intends to pay service fees out of
Class A assets as contemplated in subsections (b) and (d) of Rule 2830 of the
Conduct Rules of the National Association of Securities Dealers, Inc. (the "NASD
Rules");
WHEREAS, the Trust employs Eaton Vance Distributors, Inc. to act as
Principal Underwriter (as defined in the Act) of Class A shares of each Fund;
and
WHEREAS, the Trustees of the Trust have determined that there is a
reasonable likelihood that adoption of this Service Plan will benefit the Trust,
each Fund listed on Schedule A and the holders of Class A shares of each such
Fund.
NOW, THEREFORE, the Trust hereby adopts this Service Plan (the "Plan")
on behalf of each Fund with Class A shares containing the following terms and
conditions:
1. The Fund may make payments of service fees out of Class A assets to
the Principal Underwriter, Authorized Firms and other persons. The aggregate of
such payments during any fiscal year of the Fund shall not exceed .25% of
average daily net assets of Class A for such year. Appropriate adjustment of
service fee payments shall be made whenever necessary to ensure that no such
payment shall cause the Class to exceed the applicable maximum cap imposed
thereon by subsection (d)(5) of Rule 2830 of the NASD Rules.
2. This Plan shall not take effect until after it has been approved by
both a majority of (i) those Trustees of the Trust who are not "interested
persons" of the Trust (as defined in the Act) and have no direct or indirect
financial interest in the operations of this Plan or any agreements related to
it (the "Rule 12b-1 Trustees"), and (ii) all of the Trustees then in office,
cast in person at a meeting (or meetings) called for the purpose of voting on
this Plan.
3. Any agreements between the Trust on behalf of the Fund and any person
relating to this Plan shall be in writing and shall not take effect until
approved in the manner provided for Trustee approval of this Plan in Section 2.
4. This Plan shall continue in effect with respect to each Class A for
so long as such continuance is specifically approved at least annually in the
manner provided for Trustee approval of this Plan in Section 2.
5. The persons authorized to direct the disposition of monies paid or
payable by the Trust pursuant to this Plan or any related agreement shall be the
President or any Vice President or the Treasurer of the Trust. Such persons
shall provide to the Trustees of the Trust and the Trustees shall review, at
least quarterly, a written report of the amounts so expended and the purposes
for which such expenditures were made.
6. This Plan may be terminated as to any Fund with respect to its Class
A shares at any time by vote of a majority of the Rule 12b-1 Trustees, or by
vote of a majority of the outstanding Class A voting securities of the Fund.
7. This Plan may not be amended to increase materially the payments to
be made by the Class A shares of the Fund as provided in Section 1 unless such
amendment, if required by law, is approved by a vote of at least a majority of
the Class A outstanding voting securities of the Fund. In addition, all material
amendments to this Plan shall be approved in the manner provided for in Section
2. Additional series of the Trust which are to become a Fund hereunder will
become subject to this Plan and governed hereby upon approval by the Trustees of
the Trust and amendment of Schedule A.
8. While this Plan is in effect, the selection and nomination of the
Rule 12b-1 Trustees shall be committed to the discretion of the Rule 12b-1
Trustees.
9. The Trust shall preserve copies of this Plan and any related
agreements made by the Trust and all reports made pursuant to Section 5, for a
period of not less than six years from the date of this Plan, the first two
years in an easily accessible place.
10. Consistent with the limitation of shareholder, officer and Trustee
liability as set forth in the Trust's Declaration of Trust, any obligations
assumed by the Class A shares of a Fund pursuant to this Plan shall be limited
in all cases to the assets of such Class A shares and no person shall seek
satisfaction thereof from the shareholders of the Fund or officers or Trustees
of the Trust or any other class or series of the Trust.
11. When used in this Plan, the term "service fees" shall have the same
meaning as such term has in subsections (b) and (d) of Rule 2830 of the NASD
Rules. When used in this Plan, the term "vote of a majority of the outstanding
Class A voting securities of the Fund" shall mean the vote of the lesser of (a)
67 per centum or more of the Class A shares of the Fund present or represented
by proxy at the meeting if the holders of more than 50 per centum of the
outstanding Class A shares of the Fund are present or represented by proxy at
the meeting, or (b) more than 50 per centum of the outstanding Class A shares of
the Fund.
12. If any provision of this Plan shall be held or made invalid by a
court decision, statute, rule or regulation of the Securities and Exchange
Commission or otherwise, the remainder of this Plan shall not be affected
thereby.
13. This Plan shall be effective with respect to a specific Fund on the
date that Fund begins offering its Class A shares. As of such effective date
this Plan shall amend, replace and be substituted for any service plan
previously applicable to the Class A assets of such Fund.
Adopted June 23, 1997
* * *
<PAGE>
SCHEDULE A
EATON VANCE SPECIAL INVESTMENT TRUST
CLASS A SERVICE PLAN
EFFECTIVE: JUNE 23, 1997
Name of Fund Adopting this Plan
Eaton Vance Investors Fund
Eaton Vance Special Equities Fund
Eaton Vance Stock Fund
Eaton Vance Total Return Fund
EV Traditional Emerging Growth Fund
<PAGE>
EATON VANCE SPECIAL INVESTMENT TRUST
CLASS A DISTRIBUTION PLAN
WHEREAS, Eaton Vance Special Investment Trust (the "Trust") engages in
business as an open-end management investment company with multiple series (each
with multiple classes), and is registered as such under the Investment Company
Act of 1940, as amended (the "Act");
WHEREAS, on June 23, 1997 the Trust adopted a Plan of Reorganization
and a Multiple Class Plan on behalf of its series and in connection therewith
the Trustees amended the Declaration of Trust to terminate or rename certain
series, and to establish four classes of shares (including Class A shares)
within most renamed series;
WHEREAS, the assets of most Traditional series will be converted to
Class A assets of the renamed series and the shares of most Traditional series
will be converted to Class A shares of the renamed series pursuant to such
reorganization;
WHEREAS, the Trust adopted separate Distribution Plans (the "Original
Plans") on behalf of certain of its Traditional series (each a "Fund") which are
the predecessors to its Class A shares pursuant to which each Fund finances
activities which are primarily intended to result in the distribution and sale
of Class A shares and to make payments in connection with the distribution of
such Shares;
WHEREAS, the Trust employs Eaton Vance Distributors, Inc. to act as
Principal Underwriter (as defined in the Act) of Class A shares of each such
Fund;
WHEREAS, the Trust intends to compensate the Principal Underwriter for
its distribution services to such Funds by paying the Principal Underwriter
monthly distribution fees in connection with the sale of shares of the Funds;
WHEREAS, the Trustees of the Trust have determined that it is desirable
to adopt this Plan as a successor to the Original Plans; and
WHEREAS, the Trust intends to pay service fees out of Class A assets as
contemplated in subsections (b) and (d) of Rule 2830 of the Conduct Rules of the
National Association of Securities Dealers, Inc. (the "NASD Rules") to the
Principal Underwriter (from which the Principal Underwriter may pay service fees
to Authorized Firms and other third parties based on the amount of Class A
shares sold through them and remaining outstanding for specified periods of
time);
WHEREAS, such service fees will compensate the Principal Underwriter,
Authorized Firms and other third parties for providing personal services and/or
the maintenance of shareholder accounts;
WHEREAS, the Trustees of the Trust have determined that there is a
reasonable likelihood that adoption of this Distribution Plan will benefit the
Trust, each Fund listed on Schedule A and the holders of Class A shares of each
such Fund.
NOW, THEREFORE, the Trust hereby adopts this Distribution Plan (the
"Plan") on behalf of each Fund listed on Schedule A in accordance with Rule
12b-1 under the Act and containing the following terms and conditions:
1. The Principal Underwriter will provide the Fund with such
distribution services and facilities as the Fund may from time to time consider
necessary to enhance the sale of Class A shares, and the Principal Underwriter
shall pay such compensation to Authorized Firms and other third parties as it
considers appropriate to encourage distribution of such shares. The Principal
Underwriter will also provide such personal and account maintenance services as
the Trust may from time to time consider necessary to enhance the provision of
personal services and/or the maintenance of shareholder accounts, and the
Principal Underwriter may pay such service fees from Class A assets to
Authorized Firms and other third parties as it considers appropriate to
encourage the provision of personal services and/or the maintenance of
shareholder accounts.
2. The Fund shall pay a monthly distribution fee out of Class A assets
to the Principal Underwriter on the last day of each month. Such distribution
fee shall be in an amount equal on an annual basis to the aggregate of (a) .50%
of that portion of the Fund's average daily Class A net assets for any fiscal
year which is attributable to Class A shares of the Fund which have remained
outstanding for less than one year and (b) .25% of that portion of the Fund's
average daily Class A net assets for any fiscal year which is attributable to
Class A shares of the Fund which have remained outstanding for more than one
year. For the purposes of this Plan, daily net assets shall be computed in
accordance with the governing documents of the Trust and applicable votes and
determinations of the Trustees of the Trust. All distribution fees are being
paid in consideration for the distribution services and facilities to be
furnished to the Trust hereunder by the Principal Underwriter.
3. Appropriate adjustment of payments made pursuant to Section 2 of
this Plan shall be made whenever necessary to ensure that no such payment shall
cause a Class A to exceed the applicable maximum cap imposed on asset-based,
front-end and deferred sales charges by paragraph (5) of subsection (d) of Rule
2830 of the NASD Rules.
4. In addition to the payments of distribution fees to the Principal
Underwriter provided for in Section 2, the Fund shall pay out of Class A assets
a quarterly service fee to the Principal Underwriter on the last day of each
calendar quarter of the Fund. Such service fee shall be in an amount equal on an
annual basis to .25% of that portion of the Fund's average daily Class A net
assets for any fiscal year which is attributable to Class A shares of the Fund
which have remained outstanding for more than one year. All service fees are
being paid to the Principal Underwriter hereunder in consideration for the
personal and account maintenance services to be furnished by the Principal
Underwriter and for the payment of service fees by the Principal Underwriter to
Authorized Firms and other third parties in connection with the provision of
personal services and/or the maintenance of shareholder accounts.
5. This Plan shall not take effect until it has been approved by both a
majority of (i) those Trustees of the Trust who are not "interested persons" of
the Trust or the Fund (as defined in the Act) and have no direct or indirect
financial interest in the operation of the Plan or any agreements related to it
(the "Rule 12b-1 Trustees") and (ii) all of the Trustees then in office, cast in
person at a meeting (or meetings) called for the purpose of voting on this Plan.
6. Any agreements between the Trust on behalf of the Fund and any
person relating to this Plan shall be in writing and shall not take effect until
approved in the manner provided for in Section 5.
7. This Plan shall continue in effect for one year from the date of its
execution and shall continue indefinitely thereafter, but only for so long as
such continuance is specifically approved at least annually in the manner
provided for approval of this Plan in Section 5.
8. The persons authorized to direct the disposition of monies paid or
payable by the Trust pursuant to this Plan or any related agreement shall be the
President or any Vice President or the Treasurer of the Trust. Such persons
shall provide to the Trustees of the Trust and the Trustees shall review, at
least quarterly, a written report of the amounts so expended and the purposes
for which such expenditures were made.
9. This Plan may be terminated as to any Fund with respect to its Class
A shares at any time by vote of a majority of the Rule 12b-1 Trustees, or by
vote of a majority of the outstanding Class A voting securities of the Fund.
10. This Plan may not be amended to increase materially the payments to
be made by Class A shares of the Fund as provided in Sections 2, 3 and 4 unless
such amendment, if required by law, is approved by a vote of at least a majority
of the Class A outstanding voting securities of the Fund. In addition, all
material amendments to this Plan shall be approved in the manner provided for in
Section 5. Additional series of the Trust which are to become a Fund hereunder
will become subject to this Plan and governed hereby upon approval by the
Trustees of the Trust and amendment of Schedule A. All references in this Plan
to the "Original Plans" shall not be applicable to any such additional series of
the Trust which becomes a Fund hereunder by amendment of Schedule A subsequent
to June 23, 1997.
11. While this Plan is in effect, the selection and nomination of the
Rule 12b-1 Trustees shall be committed to the discretion of the Rule 12b-1
Trustees.
12. The Trust shall preserve copies of this Plan and any related
agreements made by the Trust and all reports made pursuant to Section 8, for a
period of not less than six years from the date of this Plan, or of the
agreements or of such report, as the case may be, the first two years in an
easily accessible place.
13. Consistent with the limitation of shareholder, officer and Trustee
liability as set forth in the Trust's Declaration of Trust, any obligations
assumed by the Class A shares of a Fund pursuant to this Plan shall be limited
in all cases to the assets of such Class A shares and no person shall seek
satisfaction thereof from the shareholders, officers or Trustees of the Trust or
any other class or series of the Trust.
14. When used in this Plan, the term "service fees" shall have the same
meaning as such term is used in subsections (b) and (d) of Rule 2830 of the NASD
Rules. When used in this Plan, the term "vote of a majority of the outstanding
Class A voting securities of the Fund" shall mean the vote of the lesser of (a)
67 per centum or more of the Class A shares of the Fund present or represented
by proxy at the meeting if the holders of more than 50 per centum of the
outstanding Class A shares of the Fund are present or represented by proxy at
the meeting, or (b) more than 50 per centum of the outstanding Class A shares of
the Fund.
15. If any provision of this Plan shall be held or made invalid by a
court decision, statute, rule or regulation of the Securities and Exchange
Commission or otherwise, the remainder of this Plan shall not be affected
thereby.
16. This Plan shall be effective with respect to a specific Fund on the
date that Fund begins offering its Class A shares. As of such effective date
this Plan shall amend, replace and be substituted for the Original Plans
previously applicable to the Class A assets of that Fund.
Adopted June 23, 1997
* * *
<PAGE>
SCHEDULE A
EATON VANCE SPECIAL INVESTMENT TRUST
CLASS A DISTRIBUTION PLAN
EFFECTIVE: June 23, 1997
Name of Fund Adopting this Plan
Eaton Vance Emerging Markets Fund
Eaton Vance Greater India Fund
<PAGE>
EATON VANCE SPECIAL INVESTMENT TRUST
CLASS B DISTRIBUTION PLAN
WHEREAS, Eaton Vance Special Investment Trust (the "Trust") engages in
business as an open-end investment company with multiple series (each with
multiple classes) and is registered as such under the Investment Company Act of
1940, as amended (the "Act");
WHEREAS, on June 23, 1997 the Trust adopted a Plan of Reorganization and
a Multiple Class Plan on behalf of its series and in connection therewith the
Trustees of the Trust amended the Declaration of Trust to terminate or rename
certain series, and to establish four classes of shares (including Class B
shares) within each renamed series;
WHEREAS, the assets of each Marathon series will be converted to Class B
assets of the renamed series and the shares of each Marathon series will be
converted to Class B shares of the renamed series pursuant to such
reorganization;
WHEREAS, the Trust adopted separate Distribution Plans and an Amended
Distribution Plan (collectively the "Original Plans") on behalf of its Marathon
series which are the predecessors to its Class B shares pursuant to which each
Marathon series made payments in connection with the distribution of its shares;
WHEREAS, the Trust employs Eaton Vance Distributors, Inc. to act as
Principal Underwriter (as defined in the Act) of Class B shares of each of its
series listed on Schedule A (a "Fund"), but does not intend to remunerate the
Principal Underwriter under this Class B Distribution Plan unless and until the
Principal Underwriter sells Class B shares of the Fund;
WHEREAS, each Fund will pay the Principal Underwriter sales commissions
and distribution fees out of Class B assets only in connection with the sale of
Class B shares;
WHEREAS, each Fund intends to pay service fees out of Class B assets as
contemplated in subsections (b) and (d) of Rule 2830 of the Conduct Rules of the
National Association of Securities Dealers, Inc. (the "NASD Rules");
WHEREAS, the Trustees of the Trust have determined that it is desirable
to adopt this Class B Distribution Plan as a successor to the Original Plans;
and
WHEREAS, the Trustees of the Trust have determined that there is a
reasonable likelihood that adoption of this Class B Distribution Plan will
benefit the Trust, each Fund listed on Schedule A, and the holders of Class B
shares of each such Fund.
NOW, THEREFORE, the Trust hereby adopts this Class B Distribution Plan
(this "Plan") on behalf of each Fund in accordance with Rule 12b-1 under the Act
and containing the following terms and conditions:
1. The Fund will pay sales commissions and distribution fees out of
Class B assets to the Principal Underwriter only after and as a result of the
sale of Class B shares. The Principal Underwriter will provide such distribution
services and facilities as the Trust may from time to time consider necessary to
accomplish the sale of Class B shares. It is understood that the Principal
Underwriter may pay such sales commissions and make such other payments to
Authorized Firms and other persons as it considers appropriate to encourage
distribution of such shares.
2. On each sale of Class B shares (excluding reinvestment of dividends
and distributions), the Fund shall pay the Principal Underwriter a sales
commission out of Class B assets in an amount not exceeding 5% of the price
received by the Fund therefor, such payment to be made in the manner set forth
and subject to the terms of this Plan. The amount of the sales commission shall
be established from time to time by vote or other action of a majority of (i)
those Trustees of the Trust who are not "interested persons" (as defined in the
Act) of the Trust and have no direct or indirect financial interest in the
operation of this Plan or any agreements related to it (the "Rule 12b-1
Trustees") and (ii) all of the Trustees then in office. The Fund shall also pay
the Principal Underwriter out of Class B assets a separate distribution fee
(calculated in accordance with Section 3), such payment to be made in the manner
set forth and subject to the terms of this Plan.
3. The sales commissions and distribution fees referred to in Section 2
shall be accrued and paid in the following manner. Each Class B shall accrue
daily an amount calculated at the rate of .75% per annum of its daily net
assets, which net assets shall be computed in accordance with the governing
documents of the Trust and applicable votes and determinations of the Trustees
of the Trust. The daily amounts so accrued throughout the month shall be paid to
the Principal Underwriter on the last day of each month. The amount of such
daily accrual, as so calculated, shall first be applied and charged to all
unpaid sales commissions, and the balance, if any, shall then be applied and
charged to all unpaid distribution fees. No amount shall be accrued with respect
to any day on which there exist no outstanding uncovered distribution charges of
the Principal Underwriter due from Class B shares. The amount of such uncovered
distribution charges shall be calculated daily. For purposes of this
calculation, distribution charges of the Principal Underwriter shall include (a)
the aggregate of all sales commissions which the Principal Underwriter has been
paid pursuant to this Section 3 (and pursuant to Section 3 of the Original
Plans) plus all sales commissions which it is entitled to be paid pursuant to
Section 2 (and pursuant to Section 2 of the Original Plans) since inception of
the Original Plans through and including the day next preceding the date of
calculation, and (b) an amount equal to the aggregate of all distribution fees
referred to below which the Principal Underwriter has been paid pursuant to this
Section 3 (and pursuant to Section 3 of the Original Plans) plus all such fees
which it is entitled to be paid pursuant to Section 2 (and pursuant to Section 2
of the Original Plans) since inception of the Original Plans through and
including the day next preceding the date of calculation. From this sum
(distribution charges) there shall be subtracted (i) the aggregate amount paid
or payable to the Principal Underwriter pursuant to this Section 3 (and pursuant
to Section 3 of the Original Plans) since inception of the Original Plans
through and including the day next preceding the date of calculation, (ii) the
aggregate amount of all contingent deferred sales charges paid or payable to the
Principal Underwriter since inception of the Original Plans through and
including the day next preceding the date of calculation, and (iii) the
aggregate of all amounts paid or payable to the Principal Underwriter (or any
affiliate thereof) by any party other than the Fund with respect to the sales of
Class B shares since inception of the Original Plans through and including the
day next preceding the date of calculation. If the result of such subtraction is
a positive amount, a distribution fee [computed at the rate of 1% per annum
above the prime rate (being the base rate on corporate loans posted by at least
75% of the nation's 30 largest banks) then being reported in the Eastern Edition
of The Wall Street Journal or if such prime rate is not so reported such other
rate as may be designated from time to time by vote or other action of a
majority of (i) the Rule 12b-1 Trustees and (ii) all of the Trustees then in
office] shall be computed on such amount and added to such amount, with the
resulting sum constituting the amount of outstanding uncovered distribution
charges of the Principal Underwriter due from Class B shares with respect to
such day for all purposes of this Plan. In addition, the calculation shall
include amounts under the Original Plans when a predecessor principal
underwriter existed. If the result of such subtraction is a negative amount,
there shall exist no outstanding uncovered distribution charges of the Principal
Underwriter due from Class B shares with respect to such day and no amount shall
be accrued or paid to the Principal Underwriter with respect to such day. The
aggregate amounts accrued and paid pursuant to this Section 3 during any fiscal
year of the Fund shall not exceed .75% of the average daily net assets of Class
B for such year.
4. The Principal Underwriter shall be entitled to receive all contingent
deferred sales charges paid or payable with respect to any day on which there
exist outstanding uncovered distribution charges of the Principal Underwriter
due from Class B shares. Class B shall be entitled to receive all remaining
contingent deferred sales charges paid or payable by Class B shareholders with
respect to any day on which there exist no outstanding uncovered distribution
charges of the Principal Underwriter due from Class B shares, provided that no
such sales charge which would cause the Class B to exceed the maximum applicable
cap imposed thereon by paragraph (2) of subsection (d) of Rule 2830 of the NASD
Rules shall be imposed.
5. The Fund may make payments of service fees out of Class B assets to
the Principal Underwriter, Authorized Firms and other persons. The aggregate of
such payments during any fiscal year of the Fund shall not exceed .25% of the
average daily net assets of Class B for such year. Appropriate adjustment of
service fee payments shall be made whenever necessary to ensure that no such
payment shall cause the Class B to exceed the applicable maximum cap imposed
thereon by paragraph (5) of subsection (d) of Rule 2830 of the NASD Rules.
6. This Plan shall not take effect until after it has been approved by
both a majority of (i) the Rule 12b-1 Trustees and (ii) all of the Trustees then
in office, cast in person at a meeting (or meetings) called for the purpose of
voting on this Plan.
7. Any agreements between the Trust on behalf of the Funds and any
person relating to this Plan shall be in writing and shall not take effect until
approved in the manner provided for Trustee approval of this Plan in Section 6.
8. This Plan shall continue in effect with respect to each Class B until
April 28, 1998 (or, if applicable, the next April 28 which follows the day on
which the Fund has become a Fund hereunder by amendment to Schedule A subsequent
to April 28, 1998) and from year to year thereafter, but only for so long as
such continuance after April 28, 1998 (or if applicable, said next April 28) is
specifically approved at least annually in the manner provided for Trustee
approval of this Plan in Section 6.
9. The persons authorized to direct the disposition of monies paid or
payable pursuant to this Plan or any related agreement shall be the President or
any Vice President or the Treasurer of the Trust. Such persons shall provide to
the Trustees of the Trust and the Trustees shall review, at least quarterly, a
written report of the amounts so expended and the purposes for which such
expenditures were made.
10. This Plan may be terminated as to any Fund with respect to its Class
B shares at any time by vote of a majority of the Rule 12b-1 Trustees, or by
vote of a majority of the outstanding Class B voting securities of the Fund. The
Principal Underwriter shall also be entitled to receive all contingent deferred
sales charges paid or payable with respect to any day subsequent to termination
of this Plan on which there exist outstanding uncovered distribution charges of
the Principal Underwriter due from Class B shares.
11. This Plan may not be amended to increase materially the payments to
be made by the Class B shares of the Fund as provided in Sections 2, 3 and 5
unless such amendment is approved by a vote of at least a majority of the
outstanding voting securities of the Class B shares of the Fund. In addition,
all material amendments to this Plan shall be approved in the manner provided
for Trustee approval of this Plan in Section 6. Additional series of the Trust
which are to become a Fund hereunder will become subject to this Plan and
governed hereby upon approval by the Trustees of the Trust and amendment of
Schedule A. All references in this Plan to the "Original Plans" shall not be
applicable to any such additional series of the Trust which becomes a Fund
hereunder by amendment of Schedule A subsequent to June 23, 1997.
12. While this Plan is in effect, the selection and nomination of the
Rule 12b-1 Trustees shall be committed to the discretion of the Rule 12b-1
Trustees.
13. The Trust shall preserve copies of this Plan and any related
agreements made by the Trust and all reports made pursuant to Section 9, for a
period of not less than six years from the date of this Plan, the first two
years in an easily accessible place.
14. Consistent with the limitation of shareholder, officer and Trustee
liability as set forth in the Trust's Declaration of Trust, any obligations
assumed by the Class B shares of a Fund pursuant to this Plan shall be limited
in all cases to the assets of such Class B shares and no person shall seek
satisfaction thereof from the shareholders, officers or Trustees of the Trust or
any other class or series of the Trust.
15. When used in this Plan, the term "service fees" shall have the same
meaning as such term has in subsections (b) and (d) of Rule 2830 of the NASD
Rules. When used in this Plan, the term "vote of a majority of the outstanding
Class B voting securities of the Fund" shall mean the vote of the lesser of (a)
67 per centum or more of the Class B shares of the Fund present or represented
by proxy at the meeting if the holders of more than 50 per centum of the
outstanding Class B shares of the Fund are present or represented by proxy at
the meeting, or (b) more than 50 per centum of the outstanding Class B shares of
the Fund.
16. If any provision of this Plan shall be held or made invalid by a
court decision, statute, rule or regulation of the Securities and Exchange
Commission or otherwise, the remainder of this Plan shall not be affected
thereby.
17. This Plan shall be effective with respect to a specific Fund on the
date that Fund begins offering its Class B shares. As of such effective date
this Plan shall amend, replace and be substituted for the Original Plans
previously applicable to the Class B assets of that Fund. The outstanding
uncovered distribution charges of the Principal Underwriter calculated under the
Original Plans as of the close of business on the day preceding the date a Fund
begins offering Class B shares shall be the outstanding uncovered distribution
charges of the Principal Underwriter with respect to such Class B calculated
under this Plan as of the opening of business on the date such shares are
offered.
Adopted June 23, 1997
* * *
<PAGE>
SCHEDULE A
EATON VANCE SPECIAL INVESTMENT TRUST
CLASS B DISTRIBUTION PLAN
EFFECTIVE: JUNE 23, 1997
<TABLE>
<CAPTION>
Name of Fund Adopting This Plan Date of Original Plans (Inception Date)
- ------------------------------- ----------------------------------------------------------------
<S> <C>
Eaton Vance Emerging Markets Fund March 24, 1994
Eaton Vance Greater India Fund March 24, 1994
Eaton Vance Investors Fund* October 28, 1993/June 19, 1995 (August 1, 1995)/October 23, 1995
Eaton Vance Special Equities Fund August 1, 1994/June 19, 1995 (August 1, 1995)/October 23, 1995
Eaton Vance Stock Fund* August 1, 1994/June 19, 1995 (August 1, 1995)/October 23, 1995
Eaton Vance Total Return Fund* October 28, 1993/June 19, 1995 (August 1, 1995)/
October 23, 1995
</TABLE>
* These funds are successors in operations to funds which was reorganized,
effective August 1, 1995, and the outstanding uncovered distribution charges
of the predecessor funds were assumed by the above funds.
<PAGE>
EATON VANCE SPECIAL INVESTMENT TRUST
CLASS C DISTRIBUTION PLAN
WHEREAS, Eaton Vance Special Investment Trust (the "Trust") engages in
business as an open-end investment company with multiple series (each with
multiple classes) and is registered as such under the Investment Company Act of
1940, as amended (the "Act");
WHEREAS, on June 23, 1997 the Trust adopted a Plan of Reorganization and
a Multiple Class Plan on behalf of its series and in connection therewith the
Trustees amended the Declaration of Trust to terminate or rename certain series,
and to establish four classes of shares (including Class C shares) within each
renamed series;
WHEREAS, the assets of each Classic series will be converted to Class C
assets of the renamed series and the shares of each Classic series will be
converted to Class C shares of the renamed series pursuant to such
reorganization;
WHEREAS, the Trust adopted separate Distribution Plans and an Amended
Distribution Plan (collectively the "Original Plans") on behalf of its Classic
series which are the predecessors to its Class C shares pursuant to which each
Classic series made payments in connection with the distribution of its shares;
WHEREAS, the Trust employs Eaton Vance Distributors, Inc. to act as
Principal Underwriter (as defined in the Act) of Class C shares of each of its
series listed in Schedule A (a "Fund"), but does not intend to remunerate the
Principal Underwriter under this Class C Distribution Plan unless and until the
Principal Underwriter sells Class C shares of the Fund;
WHEREAS, each Fund will pay the Principal Underwriter sales commissions
and distribution fees out of Class C assets only in connection with the sale of
Class C shares;
WHEREAS, each Fund intends to pay service fees out of Class C assets as
contemplated in subsections (b) and (d) of Rule 2830 of the Conduct Rules of the
National Association of Securities Dealers, Inc. (the "NASD Rules");
WHEREAS, the Trustees of the Trust have determined that it is desirable
to adopt this Class C Distribution Plan as a successor to the Original Plans;
and
WHEREAS, the Trustees of the Trust have determined that there is a
reasonable likelihood that adoption of this Class C Distribution Plan will
benefit the Trust, each Fund listed on Schedule A and the holders of Class C
shares of each such Fund.
NOW, THEREFORE, the Trust hereby adopts this Class C Distribution Plan
(this "Plan") on behalf of each Fund in accordance with Rule 12b-1 under the Act
and containing the following terms and conditions:
1. The Fund will pay sales commissions and distribution fees out of
Class C assets to the Principal Underwriter only after and as a result of the
sale of Class C shares. The Principal Underwriter will provide such distribution
services and facilities as the Trust may from time to time consider necessary to
accomplish the sale of Class C shares. It is understood that the Principal
Underwriter may pay such sales commissions and make such other payments to
Authorized Firms and other persons as it considers appropriate to encourage
distribution of such shares.
2. On each sale of Class C shares (excluding reinvestment of dividends
and distributions), the Fund shall pay the Principal Underwriter a sales
commission out of Class C assets in an amount not exceeding 6.25% of the price
received by the Fund therefor, such payment to be made in the manner set forth
and subject to the terms of this Plan. The amount of the sales commission shall
be established from time to time by vote or other action of a majority of (i)
those Trustees of the Trust who are not "interested persons" (as defined in the
Act) of the Trust and have no direct or indirect financial interest in the
operation of this Plan or any agreements related to it (the "Rule 12b-1
Trustees") and (ii) all of the Trustees then in office. The Fund shall also pay
the Principal Underwriter out of Class C assets a separate distribution fee
(calculated in accordance with Section 3), such payment to be made in the manner
set forth and subject to the terms of this Plan.
3. The sales commissions and distribution fees referred to in Section 2
shall be accrued and paid in the following manner. Each Class C shall accrue
daily an amount calculated at the rate of .75% per annum of its daily net
assets, which net assets shall be computed in accordance with the governing
documents of the Trust and applicable votes and determinations of the Trustees
of the Trust. The daily amounts so accrued throughout the month shall be paid to
the Principal Underwriter on the last day of each month. The amount of such
daily accrual, as so calculated, shall first be applied and charged to all
unpaid sales commissions, and the balance, if any, shall then be applied and
charged to all unpaid distribution fees. No amount shall be accrued with respect
to any day on which there exist no outstanding uncovered distribution charges of
the Principal Underwriter due from Class C shares. The amount of such uncovered
distribution charges shall be calculated daily. For purposes of this
calculation, distribution charges of the Principal Underwriter shall include (a)
the aggregate of all sales commissions which the Principal Underwriter has been
paid pursuant to this Section 3 (and pursuant to Section 3 of the Original
Plans) plus all sales commissions which it is entitled to be paid pursuant to
Section 2 (and pursuant to Section 2 of the Original Plans) since inception of
the Original Plans through and including the day next preceding the date of
calculation, and (b) an amount equal to the aggregate of all distribution fees
referred to below which the Principal Underwriter has been paid pursuant to this
Section 3 (and pursuant to Section 3 of the Original Plans) plus all such fees
which it is entitled to be paid pursuant to Section 2 (and pursuant to Section 2
of the Original Plans) since inception of the Original Plans through and
including the day next preceding the date of calculation. From this sum
(distribution charges) there shall be subtracted (i) the aggregate amount paid
or payable to the Principal Underwriter pursuant to this Section 3 (and pursuant
to Section 3 of the Original Plans) since inception of the Original Plans
through and including the day next preceding the date of calculation, (ii) the
aggregate amount of all contingent deferred sales charges paid or payable to the
Principal Underwriter since inception of the Original Plans through and
including the day next preceding the date of calculation, and (iii) the
aggregate of all amounts paid or payable to the Principal Underwriter (or any
affiliate thereof) by any party other than the Fund with respect to the sales of
Class C shares since inception of the Original Plans through and including the
day next preceding the date of calculation. If the result of such subtraction is
a positive amount, a distribution fee [computed at the rate of 1% per annum
above the prime rate (being the base rate on corporate loans posted by at least
75% of the nation's 30 largest banks) then being reported in the Eastern Edition
of The Wall Street Journal or if such prime rate is not so reported such other
rate as may be designated from time to time by vote or other action of a
majority of (i) the Rule 12b-1 Trustees and (ii) all of the Trustees then in
office] shall be computed on such amount and added to such amount, with the
resulting sum constituting the amount of outstanding uncovered distribution
charges of the Principal Underwriter due from Class C shares with respect to
such day for all purposes of this Plan. In addition, the calculation shall
include amounts under the Original Plans when a predecessor principal
underwriter existed. If the result of such subtraction is a negative amount,
there shall exist no outstanding uncovered distribution charges of the Principal
Underwriter due from Class C shares with respect to such day and no amount shall
be accrued or paid to the Principal Underwriter with respect to such day. The
aggregate amounts accrued and paid pursuant to this Section 3 during any fiscal
year of the Fund shall not exceed .75% of the average daily net assets of Class
C for such year.
4. The Principal Underwriter shall be entitled to receive all contingent
deferred sales charges paid or payable with respect to any day on which there
exist outstanding uncovered distribution charges of the Principal Underwriter
due from Class C shares. Class C shall be entitled to receive all remaining
contingent deferred sales charges paid or payable by Class C shareholders with
respect to any day on which there exist no outstanding uncovered distribution
charges of the Principal Underwriter due from Class C shares, provided that no
such sales charge which would cause the Class C to exceed the maximum applicable
cap imposed thereon by paragraph (2) of subsection (d) of Rule 2830 of the NASD
Rules shall be imposed.
5. The Fund may make payments of service fees out of Class C assets to
the Principal Underwriter, Authorized Firms and other persons. The aggregate of
such payments during any fiscal year of the Fund shall not exceed .25% of the
average daily net assets of Class C for such year. Appropriate adjustment of
service fee payments shall be made whenever necessary to ensure that no such
payment shall cause the Class C to exceed the applicable maximum cap imposed
thereon by paragraph (5) of subsection (d) of Rule 2830 of the NASD Rules.
6. This Plan shall not take effect until after it has been approved by
both a majority of (i) the Rule 12b-1 Trustees and (ii) all of the Trustees then
in office, cast in person at a meeting (or meetings) called for the purpose of
voting on this Plan.
7. Any agreements between the Trust on behalf of the Funds and any
person relating to this Plan shall be in writing and shall not take effect until
approved in the manner provided for Trustee approval of this Plan in Section 6.
8. This Plan shall continue in effect with respect to each Class C until
April 28, 1998 (or, if applicable, the next April 28 which follows the day on
which the Fund has become a Fund hereunder by amendment to Schedule A subsequent
to April 28, 1998) and from year to year thereafter, but only for so long as
such continuance after April 28, 1998 (or if applicable, said next April 28) is
specifically approved at least annually in the manner provided for Trustee
approval of this Plan in Section 6.
9. The persons authorized to direct the disposition of monies paid or
payable pursuant to this Plan or any related agreement shall be the President or
any Vice President or the Treasurer of the Trust. Such persons shall provide to
the Trustees of the Trust and the Trustees shall review, at least quarterly, a
written report of the amounts so expended and the purposes for which such
expenditures were made.
10. This Plan may be terminated as to any Fund with respect to its Class
C shares at any time by vote of a majority of the Rule 12b-1 Trustees, or by
vote of a majority of the outstanding Class C voting securities of the Fund. The
Principal Underwriter shall also be entitled to receive all contingent deferred
sales charges paid or payable with respect to any day subsequent to termination
of this Plan on which there exist outstanding uncovered distribution charges of
the Principal Underwriter due from Class C shares.
11. This Plan may not be amended to increase materially the payments to
be made by the Class C shares of the Fund as provided in Sections 2, 3 and 5
unless such amendment is approved by a vote of at least a majority of the
outstanding voting securities of the Class C shares of the Fund. In addition,
all material amendments to this Plan shall be approved in the manner provided
for Trustee approval of this Plan in Section 6. Additional series of the Trust
which are to become a Fund hereunder will become subject to this Plan and
governed hereby upon approval by the Trustees of the Trust and amendment of
Schedule A. All references in this Plan to the "Original Plans" shall not be
applicable to any such additional series of the Trust which becomes a Fund
hereunder by amendment of Schedule A subsequent to June 23, 1997.
12. While this Plan is in effect, the selection and nomination of the
Rule 12b-1 Trustees shall be committed to the discretion of the Rule 12b-1
Trustees.
13. The Trust shall preserve copies of this Plan and any related
agreements made by the Trust and all reports made pursuant to Section 9, for a
period of not less than six years from the date of this Plan, the first two
years in an easily accessible place.
14. Consistent with the limitation of shareholder, officer and Trustee
liability as set forth in the Trust's Declaration of Trust, any obligations
assumed by the Class C shares of a Fund pursuant to this Plan shall be limited
in all cases to the assets of such Class C shares and no person shall seek
satisfaction thereof from the shareholders, officers or Trustees of the Trust or
any other class or series of the Trust.
15. When used in this Plan, the term "service fees" shall have the same
meaning as such term has in subsections (b) and (d) of Rule 2830 of the NASD
Rules. When used in this Plan, the term "vote of a majority of the outstanding
Class C voting securities of the Fund" shall mean the vote of the lesser of (a)
67 per centum or more of the Class C shares of the Fund present or represented
by proxy at the meeting if the holders of more than 50 per centum of the
outstanding Class C shares of the Fund are present or represented by proxy at
the meeting, or (b) more than 50 per centum of the outstanding Class C shares of
the Fund.
16. If any provision of this Plan shall be held or made invalid by a
court decision, statute, rule or regulation of the Securities and Exchange
Commission or otherwise, the remainder of this Plan shall not be affected
thereby.
17. This Plan shall be effective with respect to a specific Fund on the
date that Fund begins offering its Class C shares. As of such effective date
this Plan shall amend, replace and be substituted for the Original Plans
previously applicable to the Class C assets of that Fund. The outstanding
uncovered distribution charges of the Principal Underwriter calculated under the
Original Plans as of the close of business on the day preceding the date a Fund
begins offering its Class C shares shall be the outstanding uncovered
distribution charges of the Principal Underwriter with respect to such Class C
calculated under this Plan as of the opening of business on the date such shares
are offered.
Adopted June 23, 1997
* * *
<PAGE>
SCHEDULE A
EATON VANCE SPECIAL INVESTMENT TRUST
CLASS C DISTRIBUTION PLAN
EFFECTIVE: JUNE 23, 1997
<TABLE>
<CAPTION>
Name of Fund Adopting this Plan Date of Original Plan (Inception Date)
- ------------------------------- -----------------------------------------------------------------------------------
<S> <C>
Eaton Vance Investors Fund* October 28, 1993/January 27, 1995 (January 30, 1995)/ June 19, 1995 (August 1, 1995)
Eaton Vance Special Equities Fund August 1, 1994/January 27, 1995 (January 30, 1995)/ June 19, 1995 (August 1, 1995)
Eaton Vance Stock Fund* August 1, 1994/January 27, 1995 (January 30, 1995)/ June 19, 1995 (August 1, 1995)
Eaton Vance Total Return Fund* October 28, 1993/January 27, 1995 (January 30, 1995)/ June 19, 1995 (August 1, 1995)
</TABLE>
* These funds are successors in operations to funds which was reorganized,
effective August 1, 1995, and the outstanding uncovered distribution charges
of the predecessor funds were assumed by the above funds.
<PAGE>
POWER OF ATTORNEY
We, the undersigned officers and Trustees of Special Investment
Portfolio, a New York trust, do hereby severally constitute and appoint Alan R.
Dynner, James B. Hawkes and Eric G. Woodbury, or any of them, to be true,
sufficient and lawful attorneys, or attorney for each of us, to sign for each of
us, in the name of each of us in the capacities indicated below, any and all
amendments (including post-effective amendments) to the Registration Statement
on Form N-1A filed by Eaton Vance Special Investment Trust with the Securities
and Exchange Commission in respect of shares of beneficial interest and other
documents and papers relating thereto.
IN WITNESS WHEREOF we have hereunto set our hands on the dates set
opposite our respective signatures.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
President, Principal
/s/ James B. Hawkes Executive Officer and August 11, 1997
- ----------------------------- Trustee
James B. Hawkes
Treasurer and
/s/ James L. O'Connor Principal Financial August 11, 1997
- ----------------------------- and Accounting
James L. O'Connor Officer
/s/ Donald R. Dwight Trustee August 11, 1997
- -----------------------------
Donald R. Dwight
/s/ M. Dozier Gardner Trustee August 11, 1997
- -----------------------------
M. Dozier Gardner
/s/ Samuel L. Hayes, III Trustee August 11, 1997
- -----------------------------
Samuel L. Hayes, III
/s/ Norton H. Reamer Trustee August 11, 1997
- -----------------------------
Norton H. Reamer
/s/ John L. Thorndike Trustee August 11, 1997
- -----------------------------
John L. Thorndike
/s/ Jack L. Treynor Trustee August 11, 1997
- -----------------------------
Jack L. Treynor
</TABLE>
<PAGE>
POWER OF ATTORNEY
We, the undersigned officers and Trustees of Investors Portfolio, a New
York trust, do hereby severally constitute and appoint Alan R. Dynner, James B.
Hawkes and Eric G. Woodbury, or any of them, to be true, sufficient and lawful
attorneys, or attorney for each of us, to sign for each of us, in the name of
each of us in the capacities indicated below, any and all amendments (including
post-effective amendments) to the Registration Statement on Form N-1A filed by
Eaton Vance Special Investment Trust with the Securities and Exchange Commission
in respect of shares of beneficial interest and other documents and papers
relating thereto.
IN WITNESS WHEREOF we have hereunto set our hands on the dates set
opposite our respective signatures.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
President, Principal
/s/ M. Dozier Gardner Executive Officer and August 11, 1997
- ----------------------------- Trustee
M. Dozier Gardner
Treasurer and
/s/ James L. O'Connor Principal Financial August 11, 1997
- ----------------------------- and Accounting
James L. O'Connor Officer
/s/ Donald R. Dwight Trustee August 11, 1997
- -----------------------------
Donald R. Dwight
/s/ James B. Hawkes Trustee August 11, 1997
- -----------------------------
James B. Hawkes
/s/ Samuel L. Hayes, III Trustee August 11, 1997
- -----------------------------
Samuel L. Hayes, III
/s/ Norton H. Reamer Trustee August 11, 1997
- -----------------------------
Norton H. Reamer
/s/ John L. Thorndike Trustee August 11, 1997
- -----------------------------
John L. Thorndike
/s/ Jack L. Treynor Trustee August 11, 1997
- -----------------------------
Jack L. Treynor
</TABLE>
<PAGE>
POWER OF ATTORNEY
We, the undersigned officers and Trustees of Stock Portfolio, a New York
trust, do hereby severally constitute and appoint Alan R. Dynner, James B.
Hawkes and Eric G. Woodbury, or any of them, to be true, sufficient and lawful
attorneys, or attorney for each of us, to sign for each of us, in the name of
each of us in the capacities indicated below, any and all amendments (including
post-effective amendments) to the Registration Statement on Form N-1A filed by
Eaton Vance Special Investment Trust with the Securities and Exchange Commission
in respect of shares of beneficial interest and other documents and papers
relating thereto.
IN WITNESS WHEREOF we have hereunto set our hands on the dates set
opposite our respective signatures.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
President, Principal
/s/ James B. Hawkes Executive Officer and August 11, 1997
- ----------------------------- Trustee
James B. Hawkes
Treasurer and
/s/ James L. O'Connor Principal Financial August 11, 1997
- ----------------------------- and Accounting
James L. O'Connor Officer
/s/ Donald R. Dwight Trustee August 11, 1997
- -----------------------------
Donald R. Dwight
/s/ Samuel L. Hayes, III Trustee August 11, 1997
- -----------------------------
Samuel L. Hayes, III
/s/ Norton H. Reamer Trustee August 11, 1997
- -----------------------------
Norton H. Reamer
/s/ John L. Thorndike Trustee August 11, 1997
- -----------------------------
John L. Thorndike
/s/ Jack L. Treynor Trustee August 11, 1997
- -----------------------------
Jack L. Treynor
</TABLE>
<PAGE>
POWER OF ATTORNEY
We, the undersigned officers and Trustees of Total Return Portfolio, a
New York trust, do hereby severally constitute and appoint Alan R. Dynner, James
B. Hawkes and Eric G. Woodbury, or any of them, to be true, sufficient and
lawful attorneys, or attorney for each of us, to sign for each of us, in the
name of each of us in the capacities indicated below, any and all amendments
(including post-effective amendments) to the Registration Statement on Form N-1A
filed by Eaton Vance Special Investment Trust with the Securities and Exchange
Commission in respect of shares of beneficial interest and other documents and
papers relating thereto.
IN WITNESS WHEREOF we have hereunto set our hands on the dates set
opposite our respective signatures.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
President, Principal
/s/ M. Dozier Gardner Executive Officer and August 11, 1997
- ----------------------------- Trustee
M. Dozier Gardner
Treasurer and
/s/ James L. O'Connor Principal Financial August 11, 1997
- ----------------------------- and Accounting
James L. O'Connor Officer
/s/ Donald R. Dwight Trustee August 11, 1997
- -----------------------------
Donald R. Dwight
/s/ James B. Hawkes Trustee August 11, 1997
- -----------------------------
James B. Hawkes
/s/ Samuel L. Hayes, III Trustee August 11, 1997
- -----------------------------
Samuel L. Hayes, III
/s/ Norton H. Reamer Trustee August 11, 1997
- -----------------------------
Norton H. Reamer
/s/ John L. Thorndike Trustee August 11, 1997
- -----------------------------
John L. Thorndike
/s/ Jack L. Treynor Trustee August 11, 1997
- -----------------------------
Jack L. Treynor
</TABLE>
