<PAGE>
As filed with the Securities and Exchange Commission on February 28, 2000
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
THE SECURITIES ACT OF 1933 [x]
POST-EFFECTIVE AMENDMENT NO. 56 [x]
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940 [x]
AMENDMENT NO. 43 [x]
EATON VANCE SPECIAL INVESTMENT TRUST
------------------------------------
(Exact Name of Registrant as Specified in Charter)
The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109
-----------------------------------------------------------------------
(Address of Principal Executive Offices)
(617) 482-8260
--------------
(Registrant's Telephone Number)
ALAN R. DYNNER
The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109
-----------------------------------------------------------------------
(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 pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[x] on May 1, 2000 pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] 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.
Balanced Portfolio, Capital Growth Portfolio and High Grade Income Portfolio
have also executed this Registration Statement.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
LOGO
Investing
for the
21st
Century(R)
EATON VANCE BALANCED FUND
A diversified fund seeking current income and long-term capital growth
EATON VANCE GROWTH & INCOME FUND
A diversified fund seeking growth of principal and income
EATON VANCE SPECIAL EQUITIES FUND
A diversified fund seeking growth of capital
EATON VANCE UTILITIES FUND
A diversified fund seeking high total return and preservation of capital
Prospectus Dated
May 1, 2000
The Securities and Exchange Commission has not approved or disapproved these
securities or determined whether this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
<TABLE>
<CAPTION>
Information in this prospectus
Page Page
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fund Summaries 2 Sales Charges 14
Investment Objectives & Principal Policies and Risks 10 Redeeming Shares 15
Management and Organization 12 Shareholder Account Features 16
Valuing Shares 13 Tax Information 17
Purchasing Shares 13 Financial Highlights 18
- -------------------------------------------------------------------------------------------------
</TABLE>
This prospectus contains important information about the Funds and the services
available to shareholders. Please save it for reference.
<PAGE>
FUND SUMMARIES
EATON VANCE BALANCED FUND
Investment Objective and Principal Strategies. The Fund's investment objective
is to provide current income and long-term growth of capital. The Fund allocates
its assets between common stocks and fixed-income securities. The Fund usually
invests between 50% and 70% of net assets in a diversified portfolio of common
stocks of seasoned companies and between 30% and 50% of net assets in
fixed-income securities (primarily corporate bonds, U.S. Government securities
and short-term investments). Fixed-income securities may be of any investment
quality, but investment in securities rated below investment grade will be
limited to not more than 5% of total assets. The Fund may invest up to 25% of
its total assets in foreign securities. The Fund at times may engage in
derivative transactions (such as futures contracts and options) to protect
against price declines, to enhance returns or as a substitute for purchasing or
selling securities.
When choosing common stocks, the portfolio manager generally seeks to invest in
established growth companies with attractive financial characteristics,
reasonable valuations and an identified catalyst for future growth. The
portfolio manager generally acquires fixed-income securities in order to
maintain a reasonable level of current income, to build or preserve capital. The
managers rely on the investment adviser's research staff in making investment
decisions, and will generally sell a security when the fundamentals of the
company deteriorate or to pursue more attractive investment opportunities.
The Fund currently seeks its objective by investing in Capital Growth Portfolio
and High Grade Income Portfolio, separate registered investment companies. The
investment objective of Capital Growth Portfolio is to seek growth of capital
and the investment objectives of High Grade Income Portfolio are to provide
current income and total return.
Principal Risk Factors. The value of Fund shares is sensitive to stock market
volatility. If there is a general decline in the value of U.S. stocks, the value
of Fund shares will also likely decline. Changes in stock market values can be
sudden and unpredictable. Also, although stock values can rebound, there is no
assurance that values will return to previous levels. The Fund has recently held
fewer than 75 stocks; therefore, the Fund's value is more sensitive to
developments affecting particular stocks than would be a more broadly
diversified fund. To minimize this risk, the Fund normally invests in a variety
of industries.
Because the Fund invests in fixed-income securities, the value of Fund shares is
sensitive to increases in prevailing interest rates and the creditworthiness of
issuers. Because the Fund invests a portion of its assets in foreign securities,
the value of Fund shares may be affected by changes in currency exchange rates
and developments abroad. The use of derivative transactions is subject to
certain limitations and may expose the Fund to increased risk of principal loss.
The Fund is not a complete investment program and you may lose money by
investing. An investment in the Fund is not a deposit in a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
2
<PAGE>
EATON VANCE BALANCED FUND
Performance Information. The following bar chart and table provide information
about Balanced Fund's performance, including a comparison of the Fund's
performance to the performance of a broad-based index of domestic equity stocks
and a diversified, unmanaged index of corporate and U.S. government bonds.
Although past performance is no guarantee of future results, this performance
information demonstrates the risk that the value of your investment will change.
The following returns are for Class A shares for each calendar year through
December 31, 1999 and do not reflect sales charges. If the sales charge was
reflected, the returns would be lower.
20.8% 1.0% 21.3% 6.5% 11.2% -1.8% 29.7% 13.6% 21.6% 13.4%
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
The highest quarterly total return for Class A was ___% for the quarter ended
________, 19__, and the lowest quarterly return was ___% for the quarter ended
_________, 19__. The year-to-date total return through the end of the most
recent calendar quarter (December 31, 1999 to March 31, 2000) was ____%.
<TABLE>
<CAPTION>
One Five Ten
Average Annual Total Return as of December 31, 1999 Year Years Years
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Class A Shares % % %
Class B Shares % % %
Class C Shares % % %
Standard & Poor's 500 Index % % %
Lehman Brothers Government/Corporate Bond Index
</TABLE>
These returns reflect the maximum sales charge for Class A (5.75%) and any
applicable CDSC for Class B and Class C. The Class B and Class C performance
shown above for the period prior to November 2, 1993 is the performance of Class
A shares, adjusted for the sales charge that applies to Class B or Class C
shares (but not adjusted for any other differences in the expenses of the
classes). The S&P 500 Index is an unmanaged index commonly used as a measure of
U.S. stock market performance. The Lehman Brothers Government/Corporate Index is
a diversified, unmanaged index of corporate and U.S. government bonds. Investors
cannot invest directly in an Index. (Source for S&P 500 Index and Lehman Bros.
Government/Corporate Index: Lipper Inc.)
Balanced Fund Fees and Expenses. These tables describe the fees and expenses
that you may pay if you buy and hold shares.
<TABLE>
<CAPTION>
Shareholder Fees
(fees paid directly from your Class A Class B Class C
investment)
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) (as a percentage of
offering price) 5.75% None None
Maximum Deferred Sales Charge (Load) (as a percentage
of the lower of net asset value at time of purchase or time
of redemption) None 5.00% 1.00%
Maximum Sales Charge (Load) Imposed on Reinvested
Distributions None None None
Exchange Fee None None None
</TABLE>
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets) Class A Class B Class C
- --------------------------------------------------------------------------------
Management Fees % % %
Distribution and Service (12b-1) Fees 0.00% % %
Other Expenses* % % %
---- ---- ----
Total Annual Fund Operating Expenses % % %
* Other Expenses for Class A includes a service fee of 0.25%.
Example. This Example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The Example assumes
that you invest $10,000 in the Fund for the time periods indicated and then
redeem all of your shares at the end of those periods. The Example also assumes
that your investment has a 5% return each year and that the operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
Class A shares $ $ $ $
Class B shares $ $ $ $
Class C shares $ $ $ $
3
<PAGE>
You would pay the following expenses if you did not redeem your shares:
1 Year 3 Years 5 Years 10 Years
- -------------------------------------------------------------------------------
Class A shares $ $ $ $
Class B shares $ $ $ $
Class C shares $ $ $ $
4
<PAGE>
EATON VANCE GROWTH & INCOME FUND
Investment Objective and Principal Strategies. The Fund's investment objective
is to provide growth of principal and income. The Fund invests primarily in
common stocks of companies that appear to offer good prospects for increases in
both earnings and dividends. The Fund may invest up to 25% of its total assets
in foreign companies and up to 20% of net assets in convertible debt securities
(including securities rated below investment grade). The Fund at times may
engage in derivative transactions (such as futures contracts and options) to
protect against price declines, to enhance return or as a substitute for
purchasing or selling securities.
The portfolio manager seeks to purchase securities that are favorably priced in
relation to their fundamental value. The manager relies on the investment
adviser's research staff in making investment decisions and will generally sell
a security when the price objective for the stock is reached or the fundamentals
of the company deteriorate, or to pursue more attractive investment
opportunities. Dividends received by the Fund from its investments are generally
expected to equal or exceed the prevailing dividend level of stocks included in
the Standard & Poor's 500 Index. If, however, Fund (and class) expenses exceed
income, Fund shareholders will not receive distributions.
The Fund currently invests its assets in a separate registered investment
company with the same objective and policies as the Fund.
Principal Risk Factors. The value of Fund shares is sensitive to stock market
volatility. If there is a general decline in the value of U.S. stocks, the value
of the Fund's shares will also likely decline. Changes in stock market values
can be sudden and unpredictable. Also, although stock values can rebound, there
is no assurance that values will return to previous levels. The Fund has
historically held fewer than 75 stocks at any one time; therefore, the Fund's
value is more sensitive to developments affecting particular stocks than would
be a more broadly diversified fund. To minimize this risk, the Fund normally
invests in a variety of industries.
The use of derivative transactions is subject to certain limitations and may
expose the Fund to increased risk of principal loss. Because the Fund invests a
portion of its assets in foreign securities, the value of Fund shares may be
affected by changes in currency exchange rates and developments abroad.
Convertible debt securities rated below investment grade may have speculative
characteristics.
The Fund is not a complete investment program and you may lose money by
investing in the Fund. An investment in the Fund is not a deposit in a bank and
is not insured or guaranteed by the Federal Deposit Insurance Corporation or any
other government agency.
5
<PAGE>
EATON VANCE GROWTH & INCOME FUND
Performance Information. The following bar chart and table provide information
about Growth & Income Fund's performance, including a comparison of the Fund's
performance to the performance of a broad-based index of domestic equity stocks.
Although past performance is no guarantee of future results, this performance
information demonstrates the risk that the value of your investment will change.
The following returns are for Class A shares for each calendar year through
December 31, 1999 and do not reflect sales charges. If the sales charge was
reflected, the returns would be lower.
28.9% 0.6% 21.5% 6.9% 4.2% -4.1% 32.8% 20.2% 30.9% 21.8%
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
The highest quarterly total return for Class A was ____% for the quarter ended
_________, 19__, and the lowest quarterly return was ____% for the quarter ended
________, 19__. The year-to-date total return through the end of the most recent
calendar quarter (December 31, 1999 to March 31, 2000) was ____%.
<TABLE>
<CAPTION>
One Five Ten
Average Annual Total Return as of December 31, 1999 Year Years Years
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A Shares % % %
Class B Shares % % %
Class C Shares % % %
Standard & Poor's 500 Index % % %
</TABLE>
These returns reflect the maximum sales charge for Class A (5.75%) and any
applicable CDSC for Class B and Class C. The Class B and Class C performance
shown above for the period prior to August 17, 1994 and November 4, 1994,
respectively, is the performance of Class A shares, adjusted for the sales
charge that applies to Class B or Class C shares (but not adjusted for any other
differences in the expenses of the classes). The S&P 500 Index is an unmanaged
index commonly used as a measure of U.S. stock market performance. Investors
cannot invest directly in an Index. (Source for S&P 500 Index: Lipper Inc.)
Growth & Income Fund Fees and Expenses. These tables describe the fees and
expenses that you may pay if you buy and hold shares.
<TABLE>
<CAPTION>
Shareholder Fees
(fees paid directly from your Class A Class B Class C
investment)
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) (as a percentage of
offering price) 5.75% None None
Maximum Deferred Sales Charge (Load)(as a percentage
of the lower of net asset value at time of purchase or
time of redemption) None 5.00% 1.00%
Maximum Sales Charge (Load) Imposed on Reinvested
Distributions None None None
Exchange Fee None None None
</TABLE>
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets) Class A Class B Class C
- --------------------------------------------------------------------------------
Management Fees % % %
Distribution and Service (12b-1) Fees 0.000% % %
Other Expenses* % % %
----- ----- ----
Total Annual Fund Operating Expenses % % %
* Other Expenses for Class A includes a service fee of 0.25%
Example. This Example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The Example assumes
that you invest $10,000 in the Fund for the time periods indicated and then
redeem all of your shares at the end of those periods. The Example also assumes
that your investment has a 5% return each year and that the operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
Class A shares $ $ $ $
Class B shares $ $ $ $
Class C shares $ $ $ $
You would pay the following expenses if you did not redeem your shares:
1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
Class A shares $ $ $ $
Class B shares $ $ $ $
Class C shares $ $ $ $
6
<PAGE>
EATON VANCE SPECIAL EQUITIES FUND
Investment Objective and Principal Strategies. The Fund's investment objective
is to provide growth of capital. The Fund invests primarily in common stocks of
emerging growth companies. Emerging growth companies are companies that are
expected to achieve earnings growth over the long-term that substantially
exceeds the average of all publicly traded stocks in the United States. The Fund
may invest up to 25% of its total assets in foreign companies. The Fund at times
may engage in derivative transactions (such as futures contracts and options) to
protect against price declines, to enhance returns or as a substitute for
purchasing or selling securities.
Many emerging growth companies acquired by the Fund will have annual revenues of
$1 billion or less at the time they are acquired, but the Fund may also invest
in larger or smaller companies having emerging growth characteristics. In making
investment decisions, the portfolio manager relies on the investment adviser's
research staff and will generally sell a security when the price objective for
the stock is reached or the fundamentals of the company deteriorate, or to
pursue more attractive investment opportunities.
The Fund currently invests its assets in a separate registered investment
company with the same objective and policies as the Fund.
Principal Risk Factors. Shares of the Fund are sensitive to factors affecting
emerging growth companies. The securities of emerging growth companies are
generally subject to greater price fluctuation and investment risk than
securities of more established companies. The value of Fund shares is also
sensitive to stock market volatility. If there is a general decline in the value
of U.S. stocks, the value of the Fund's shares will also likely decline. Changes
in stock market values can be sudden and unpredictable. Also, although stock
values can rebound, there is no assurance that values will return to previous
levels.
The use of derivative transactions is subject to certain limitations and may
expose the Fund to increased risk of principal loss. Because the Fund invests a
portion of its assets in foreign securities, the value of Fund shares may be
affected by changes in currency exchange rates and developments abroad.
The Fund is not a complete investment program and you may lose money by
investing in the Fund. An investment in the Fund is not a deposit in a bank and
is not insured or guaranteed by the Federal Deposit Insurance Corporation or any
other government agency.
7
<PAGE>
EATON VANCE SPECIAL EQUITIES FUND
Performance Information. The following bar chart and table provide information
about Special Equities Fund's performance, including a comparison of the Fund's
performance to the performance of a broad-based index of domestic small
capitalization equity stocks. Although past performance is no guarantee of
future results, this performance information demonstrates the risk that the
value of your investment will change. The following returns are for Class A
shares for each calendar year through December 31, 1999 and do not reflect sales
charges. If the sales charge was reflected, the returns would be lower.
23.6% 2.5% 57.3% 2.7% 1.1% -9.6% 23.3% 23.8% 14.2% 15.8%
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
The highest quarterly total return for Class A was ____% for the quarter ended
_________, 19__, and the lowest quarterly return was ____% for the quarter ended
_______, 19__. The year-to-date total return through the end of the most recent
calendar quarter (December 31, 1999 to March 31, 2000) was ____%.
<TABLE>
<CAPTION>
One Five Ten
Average Annual Total Return as of December 31, 1999 Year Years Years
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A Shares % % %
Class B Shares % % %
Class C Shares % % %
Standard & Poor's Small Cap 600 Index % % %
</TABLE>
These returns reflect the maximum sales charge for Class A (5.75%) and any
applicable CDSC for Class B and Class C. The Class B and Class C performance
shown above for the period prior to August 22, 1994 and November 17, 1994,
respectively, is the performance of Class A shares, adjusted for the sales
charge that applies to Class B or Class C shares (but not adjusted for any other
differences in the expenses of the classes). The S&P Small Cap 600 Index is an
unmanaged index of common stocks of small capitalization companies trading in
the U.S. Investors cannot invest directly in an Index. (Source for S&P Small Cap
600 Index: Lipper Inc.)
Special Equities Fund Fees and Expenses. These tables describe the fees and
expenses that you may pay if you buy and hold shares.
<TABLE>
<CAPTION>
Shareholder Fees
(fees paid directly from your Class A Class B Class C
investment)
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) (as a percentage of
offering price) 5.75% None None
Maximum Deferred Sales Charge(Load) (as a percentage
of the lower of net asset value at time of purchase or
time of redemption) None 5.00% 1.00%
Maximum Sales Charge (Load) Imposed on Reinvested
Distributions None None None
Exchange Fee None None None
</TABLE>
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets) Class A Class B Class C
- --------------------------------------------------------------------------------
Management Fees % % %
Distribution and Service (12b-1) Fees 0.00% % %
Other Expenses* % % %
--- --- ---
Total Annual Fund Operating Expenses % % %
* Other Expenses for Class A includes a service fee of 0.25%.
Example. This Example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The Example assumes
that you invest $10,000 in the Fund for the time periods indicated and then
redeem all of your shares at the end of those periods. The Example also assumes
that your investment has a 5% return each year and that the operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
Class A shares $ $ $ $
Class B shares $ $ $ $
Class C shares $ $ $ $
You would pay the following expenses if you did not redeem your shares:
1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
Class A shares $ $ $ $
Class B shares $ $ $ $
Class C shares $ $ $ $
8
<PAGE>
EATON VANCE UTILITIES FUND
Investment Objective and Principal Strategies. The Fund's investment objective
is to provide a high level of total return, consisting of capital appreciation
and relatively predictable income. The Fund seeks high total return consistent
with prudent management and preservation of capital. The Fund invests
principally in dividend-paying common stocks. Under normal circumstances, the
Fund invests at least 65% of its total assets in common stocks of utilities
companies, including (among others) producers and distributors of gas power and
electric energy, and communications service providers. The Fund may also invest
up to 20% of its net assets in fixed-income securities (including up to 10% of
net assets in lower rated fixed-income securities), and up to 25% of its total
assets in foreign securities. The Fund at times may engage in derivative
transactions (such as futures contracts and options) to protect against price
declines, to enhance returns or as a substitute for purchasing or selling
securities. The Fund may also invest in real estate investment trusts ("REITs").
The portfolio manager seeks to purchase securities that are favorably priced in
relation to their fundamental value and which will grow in value over time. The
issuer's dividend payment record is also considered. The manager relies on the
investment adviser's research staff in making investment decisions, and will
generally sell a security when the price objective for the stock is reached or
the fundamentals of the company deteriorate, or to pursue more attractive
investment opportunities.
The Fund currently invests its assets in a separate registered investment
company with the same objective and policies as the Fund.
Principal Risk Factors. The Fund concentrates in the utilities industries, so
the value of Fund shares will be affected by events that adversely affect those
industries. Utility companies are sensitive to changes in interest rates and
other economic conditions, governmental regulation, the price and availability
of fuel, environmental protection or energy conservation practices, the level
and demand for services, increased competition in deregulated sectors, and the
cost and delay of technological developments. Changes in the utilities
industries and in the dividend policies of utility companies could make it
difficult for the Fund to provide a meaningful level of income. Because the Fund
concentrates its investments, the value of Fund shares may fluctuate more than
if the Fund invested in a broader variety of industries.
The value of Fund shares is also sensitive to stock market volatility. If there
is a general decline in the value of U.S. stocks, the value of the Fund's shares
will also likely decline. Changes in stock market values can be sudden and
unpredictable. Also, although stock values can rebound, there is no assurance
that values will return to previous levels. The Fund has recently held fewer
than 50 stocks; therefore, the Fund's value is more sensitive to developments
affecting particular stocks than would be a more broadly diversified fund.
Because the Fund may invest in fixed-income securities, the value of Fund shares
may be sensitive to increases in interest rates. Fixed-income securities rated
below investment grade may have speculative characteristics. The use of
derivative transactions is subject to certain limitations and may expose the
Fund to increased risk of principal loss. Because the Fund invests a portion of
its assets in foreign securities, the value of Fund shares may be affected by
changes in currency exchange rates and developments abroad. Some of the
securities held by the Fund may be subject to restrictions on resale, making
them less liquid and more difficult to value. Investing in REITs exposes the
Fund to real estate-related and other risks.
The Fund is not a complete investment program and you may lose money by
investing in the Fund. An investment in the Fund is not a deposit in a bank and
is not insured or guaranteed by the Federal Deposit Insurance Corporation or any
other government agency.
9
<PAGE>
EATON VANCE UTILITIES FUND
Performance Information. The following bar chart and table provide information
about Utilities Fund's performance, including a comparison of the Fund's
performance to the performance of a broad-based index of certain utilities
stocks. Although past performance is no guarantee of future results, this
performance information demonstrates the risk that the value of your investment
will change. The following returns are for Class A shares for each calendar year
through December 31, 1999 and do not reflect sales charges. If the sales charge
was reflected, the returns would be lower.
33.5% 0.2% 23.6% 6.6% 9.5% -12.3% 27.5% 7.0% 16.2% 23.8%
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
The highest quarterly total return for Class A was ____% for the quarter ended
_______, 19__, and the lowest quarterly return was ____% for the quarter ended
______, 19__. The year-to-date total return through the end of the most recent
calendar quarter (December 31, 1999 to March 31, 2000) was ____%
<TABLE>
<CAPTION>
One Five Ten
Average Annual Total Return as of December 31, 1999 Year Years Years
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A Shares % % %
Class B Shares % % %
Class C Shares % % %
Standard & Poor's Utilities Index % % %
</TABLE>
These returns reflect the maximum sales charge for Class A (5.75%) and any
applicable CDSC for Class B and Class C. The Class B and Class C performance
shown above for the period prior to November 1, 1993 is the performance of Class
A shares, adjusted for the sales charge that applies to Class B or Class C
shares (but not adjusted for any other differences in the expenses of the
classes). The S&P Utilities Index is an unmanaged index of certain utilities
stocks. Investors cannot invest directly in an Index. (Source of S&P Utilities
Index: Lipper Inc.)
Utilities Fund Fees and Expenses. These tables describe the fees and expenses
that you may pay if you buy and hold shares.
<TABLE>
<CAPTION>
Shareholder Fees
(fees paid directly from your Class A Class B Class C
investment)
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) (as a percentage of
offering price) 5.75% None None
Maximum Deferred Sales Charge (Load)(as a percentage
of the lower of net asset value at time of purchase or
time of redemption) None 5.00% 1.00%
Maximum Sales Charge (Load) Imposed on Reinvested
Distributions None None None
Exchange Fee None None None
</TABLE>
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets) Class A Class B Class C
- --------------------------------------------------------------------------------
Management Fees % % %
Distribution and Service (12b-1) Fees 0.00% % %
Other Expenses* % % %
----- ---- ----
Total Annual Fund Operating Expenses % % %
Management Fee Waiver** ( %) ( %) ( %)
------- ----- -----
Total Annual Fund Operating Expenses (net waiver) % % %
* Other Expenses for Class A includes a service fee of 0.25%.
** The investment adviser has agreed to reduce the advisory fee to 0.65%
annually of average daily net assets up to $500 million and 0.625% annually
on average daily net assets of $500 million and more. The fee declines
further on assets of $1 billion or more.
Example. This Example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The Example assumes
that you invest $10,000 in the Fund for the time periods indicated and then
redeem all of your shares at the end of those periods. The Example also assumes
that your investment has a 5% return each year and that the operating expenses
continue to reflect the Management Fee waiver described above. Although your
actual costs may be higher or lower, based on these assumptions your costs would
be:
1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
Class A shares $ $ $ $
Class B shares $ $ $ $
Class C shares $ $ $ $
You would pay the following expenses if you did not redeem your shares:
1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
Class A shares $ $ $ $
Class B shares $ $ $ $
Class C shares $ $ $ $
10
<PAGE>
INVESTMENT OBJECTIVES & PRINCIPAL POLICIES AND RISKS
The investment objectives and prinicipal policies and risks of the Funds are set
forth below. Each Fund's investment objective may not be changed without
shareholder approval. Certain of a Fund's investment policies may be changed by
the Trustees without shareholder approval. Each Fund currently seeks its
investment objective by investing in one or more separate open-end investment
companies that have the same objective and policies as the Fund.
Balanced Fund. Balanced Fund's investment objective is to provide current income
and long-term capital growth. The Fund currently invests in Capital Growth
Portfolio and High Grade Income Portfolio. The investment objective of Capital
Growth Portfolio is to seek growth of capital and the investment objectives of
High Grade Income Portfolio are to seek current income and total return.
The Balanced Fund's allocation of assets to equity securities in the Capital
Growth Portfolio will generally not exceed 75% nor be less than 25% of net
assets. The Capital Growth Portfolio invests in a broadly diversified list of
seasoned securities representing a number of different industries. The portfolio
manager places emphasis on equity securities considered to be of high or
improving quality. The foregoing policies cannot be changed without shareholder
approval. A portion of Capital Growth Portfolio's assets may consist of
unseasoned issuers. Balanced Fund also allocates at least 25% of its net assets
in fixed-income securities by investing in the High Grade Income Portfolio,
which may include preferred stocks, corporate bonds, U.S. Government securities,
money market instruments and mortgage-backed obligations. High Grade Income
Portfolio may invest in fixed-income securities of any credit quality but will
limit investment in those rated below investment grade to not more than 5% of
the Balanced Fund's total assets.
Growth & Income Fund. Growth & Income Fund's investment objective is to provide
growth of principal and income. The Fund currently invests in Growth & Income
Portfolio. Under normal circumstances, Growth & Income Portfolio will invest at
least 65% of its total assets in equity securities. The Portfolio may also
invest up to 20% of its net assets in convertible debt securities of any credit
quality (including securities rated below investment grade).
Dividends received by the Fund from its investments are generally expected to
equal or exceed the prevailing dividend level of stocks included in the Standard
& Poor's 500 Index. The Fund's ability to distribute income to shareholders,
however, depends on the yields available on common stocks and Fund (and class)
expenses. If Fund (and class) expenses exceed income, Fund shareholders will not
receive distributions. The Portfolio may invest in non-income producing stocks.
Growth & Income Portfolio's annual portfolio turnover rate may exceed 100%. A
fund with high turnover (100% or more) pays more commissions and may generate
more capital gains than a fund with a lower rate. Brokerage commissions are an
expense which reduce returns. Capital gains distributions will reduce after tax
returns for shareholders holding Fund shares in taxable accounts.
Special Equities Fund. Special Equities Fund's investment objective is to
provide growth of capital. The Fund currently invests in Special Equities
Portfolio. Special Equities Portfolio invests primarily in common stocks of
emerging growth companies. Many emerging growth companies acquired by the
Portfolio will have annual revenues of $1 billion or less at the time they are
acquired, but the Portfolio may also invest in larger or smaller companies
having emerging growth characteristics. Many emerging growth companies are in
the early stages of their development, are more dependent on fewer products,
services or product markets than more established companies, may have limited
financial resources or may rely upon a limited management group, may lack
substantial capital reserves and do not have established performance records.
Emerging growth stocks frequently have lower trading volume and tend to be more
sensitive to changes in earnings projections than stocks of more established
companies, making them more volatile and possibly more difficult to value. Under
normal circumstances, Special Equities Portfolio invests at least 65% of its
total assets in equity securities.
Special Equities Portfolio's annual portfolio turnover rate may exceed 100%. A
fund with high turnover (100% or more) pays more commissions and may generate
more capital gains than a fund with a lower rate. Brokerage commissions are an
expense which reduce returns. Capital gains distributions will reduce after tax
returns for shareholders holding Fund shares in taxable accounts.
Utilities Fund. Utilities Fund's investment objective is to provide a high level
of total return, consisting of capital appreciation and relatively predictable
income. The Fund seeks high total return consistent with prudent management and
preservation of capital. The Fund currently invests in Utilities Portfolio.
Utilities Portfolio invests principally in dividend-paying common stocks and
securities convertible into common stock. Under normal circumstances, Utilities
Portfolio invests at least 65% of its total assets in common stocks of
utilities. In recent years, dividend payments by certain utilities companies
have grown more slowly than in the past (or have been reduced) due, in part, to
industry deregulation (increasing price competition) and diversification into
less established lines of business with greater capital requirements.
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<PAGE>
"Utilities" are companies engaged in the manufacture, production, generation,
transmission, sale and distribution of water, gas and electric energy, as well
as companies engaged in the communications field, including telephone,
telegraph, satellite, cable, microwave, radio-telephone, mobile communication
and cellular paging, electronic mail, videotext and teletext. A company will be
considered to be in the utilities industry if, during the most recent 12-month
period, at least 50% of the company's gross revenues, on a consolidated basis,
are derived from utilities industries. The Portfolio's policy of concentrating
in utility stocks may not be changed without shareholder approval.
When consistent with achieving total return, Utilities Portfolio may invest up
to 20% of its net assets in fixed-income securities, including (with respect to
up to 10% of net assets) securities rated BBB or Baa or below. The Portfolio may
also invest in non-income producing securities and in real estate investment
trusts. REITs are sensitive to the real estate market, interest rates and, in
the case of REITs investing in health care facilities, the health care industry.
Utilities Portfolio's annual portfolio turnover rate may exceed 100%. A fund
with high turnover (100% or more) pays more commissions and may generate more
capital gains than a fund with a lower rate. Brokerage commissions are an
expense which reduce returns. Capital gains distributions will reduce after tax
returns for shareholders holding Fund shares in taxable accounts.
Common Investment Practices. Each Portfolio may invest up to 25% of its total
assets in securities of foreign companies located in developed countries and
traded in established markets, although the High Grade Income Portfolio will
only invest in U.S. dollar denominated foreign securities. The value of foreign
securities may be affected by changes in currency rates, foreign tax laws
(including withholding tax), government policies (in this country or abroad),
relations between nations, and trading, settlement, custodial and other
operational risks. In addition, the costs of investing abroad 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 markets
in the United States. Foreign investments also could be affected by other
factors not present in the United States, including expropriation, armed
conflict, confiscatory taxation, lack of uniform accounting and auditing
standards, less publicly available financial and other information and potential
difficulties in enforcing contractual obligations. These risks can be more
significant for companies in less developed countries. As an alternative to
holding foreign stocks directly, each Portfolio may invest in dollar-denominated
securities of foreign companies that trade on U.S. exchanges or in the
over-the-counter market (including depositary receipts which evidence ownership
in underlying foreign stocks). Such investments are not subject to the
Portfolios' 25% limitation on investing in foreign securities.
High Grade Income, Growth & Income and Utilities Portfolios may invest a portion
of their assets in fixed-income and/or convertible debt securities that are, at
the time of investment, rated ivestment grade or below (which are those rated
Baa or lower by Moody's Investors Service, Inc., or BBB or lower by Standard &
Poor's Ratings Group). Securities rated Baa or BBB or below have speculative
characteristics. Also, changes in economic conditions or other circumstances are
more likely to reduce the capacity of issuers of lower rated securities to make
principal and interest payments. Lower rated securities also may be subject to
greater price volatility than higher rated obligations. The Portfolios may
invest in securities in any rating category, including those in default.
Each Portfolio, except High Grade Income Portfolio, at times may engage in
derivative transactions (such as options, futures contracts and options thereon,
forward currency exchange contracts and, in the case of Capital Growth
Portfolio, short sales against-the-box) to protect against stock price, interest
rate or currency rate declines, to enhance return or as a substitute for the
purchase or sale of securities or currencies. The use of derivatives is highly
specialized. The built-in leverage inherent to many derivative instruments can
result in losses that substantially exceed the initial amount paid or received
by the Portfolio. Derivative instruments may be difficult to value, may be
illiquid, and may be subject to wide swings in valuation caused by changes in
the value of the underlying security or currency. Derivative hedging
transactions may not be effective because of imperfect correlations and other
factors. To date, the Portfolio has utilized these techniques on a limited
basis.
Each Portfolio may invest not more than 15% of its net assets in illiquid
securities, which may be difficult to value properly and may involve greater
risks. Illiquid securities include those legally restricted as to resale, and
may include commercial paper issued pursuant to Section 4(2) of the Securities
Act of 1933 and securities eligible for resale pursuant to Rule 144A thereunder.
Certain Section 4(2) and Rule 144A securities may be treated as liquid
securities if the investment adviser determines that such treatment is
warranted. Even if determined to be liquid, holdings of these securities may
increase the level of Portfolio illiquidity if eligible buyers become
uninterested in purchasing them.
Each Portfolio may borrow amounts up to one-third of the value of its total
assets (including borrowings), but it will not borrow more than 5% of the value
of its total assets except to satisfy redemption requests or for other temporary
purposes. Such borrowings would result in increased expense to the Fund and,
while they are outstanding, would magnify increases or decreases in the value of
Fund shares. None of the Portfolios will purchase additional investment
securities while
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<PAGE>
outstanding borrowings exceed 5% of the value of its total assets. During
unusual market conditions, each Portfolio may temporarily invest up to 100% of
its assets in cash or cash equivalents. While temporarily invested, the
Portfolio may not achieve its investment objective. While at times the Portfolio
may use alternative investment strategies in an effort to limit losses, it may
choose not to do so.
MANAGEMENT AND ORGANIZATION
Management. Each Portfolio's investment adviser is Boston Management and
Research ("BMR"), a subsidiary of Eaton Vance Management ("Eaton Vance"), with
offices at THe Eaton Vance Building, 255 State Street, Boston, Massachusetts
02109. Eaton Vance has been managing assets since 1924 and managing mutual funds
since 1931. Eaton Vance and its subsidiaries currently manage over $41 billion
on behalf of mutual funds, institutional clients and individuals.
The investment adviser manages the investments of each Portfolio and provides
related office facilities and personnel. Under its investment advisory
agreements with Capital Growth Portfolio and High Grade Income Portfolio, BMR
receives a monthly advisory fee from each Portfolio of 5/96 of 1% (equivalent to
0.625% annually) of the average daily net assets up to an including $300
million, and 1/24 of 1% (equivalent to 0.50% annually) of the average daily net
assets over $300 million. If the net assets of the Fund, including its
investments in the Capital Growth and High Grade Income Portfolios, exceed $300
million, Eaton Vance will take actions to maintain the expenses of the Fund as
if an advisory fee breakpoint had been reached on the net assets of the Fund.
For the fiscal year ended December 31, 1999, the portfolio that the Balanced
Fund invested in prior to March 1, 2000 ("Balanced Portfolio") paid BMR advisory
fees equivalent to ____% of average daily net assets.
Under its investment advisory agreements with Growth & Income Portfolio and
Special Equities Portfolio, BMR receives a monthly advisory fee of 5/96 of 1%
(equivalent to 0.625% annually) of the average daily net assets of each such
Portfolio. For the fiscal year ended December 31, 1999, the Growth & Income
Portfolio and Special Equities Portfolio each paid BMR advisory fees equivalent
to 0.625% of average daily net assets.
Under its investment advisory agreement with Utilities Portfolio, BMR is
entitled to receive a monthly advisory fee of .0625% (equivalent to 0.75%
annually) of the average daily net assets of Utilities Portfolio up to $500
million, and .06875% of the average daily net assets of $500 million and more,
which fee is further reduced on assets of $1 billion or more. In February 1997,
the Trustees of Utilities Portfolio voted to accept a waiver of BMR's
compensation so that the advisory fees paid by Utilities Portfolio during any
fiscal year or portion thereof will not exceed on an annual basis 0.65% of
average daily net assets up to $500 million and 0.625% on average daily net
assets of $500 million and more, which fee declines further on assets of $1
billion or more. For the fiscal year ended December 31, 1999, the Utilities
Portfolio paid BMR advisory fees equivalent to 0.65% of its average daily net
assets.
Arieh Coll is the portfolio manager of the Capital Growth Portfolio (since it
commenced operations). He has been an Eaton Vance portfolio manager since
January 2000 and is Vice President of Eaton Vance and BMR. Prior to joining
Eaton Vance, Mr. Coll was employed by Fidelity Investments as a portfolio
manager and investment analyst.
Michael B. Terry is the portfolio manager of the High Grade Income Portfolio
(since it commenced operations). He also manages other Eaton Vance portfolios,
has been an Eaton Vance portfolio manager for more than 5 years, and is a Vice
President of Eaton Vance and BMR.
Michael R. Mach is the portfolio manager of the Growth & Income Portfolio (since
January 2000). He also manages another Eaton Vance portfolio, has been an
employee of Eaton Vance and BMR since January 2000, and is a Vice President of
Eaton Vance. Prior to joining Eaton Vance, Mr. Mach was a Managing Director and
Senior Analyst for Robertson Stephens (1998-1999), Managing Director and Senior
Analyst for Piper Jaffray (1996-1998), and Senior Vice President and Senior
Analyst for Putnam Investments (1989-1996).
Judith A. Saryan is the portfolio manager of the Utilities Portfolio (since
March 1999). She has been an Eaton Vance portfolio manager since March 1999 and
is a Vice President of Eaton Vance and BMR. Prior to joining Eaton Vance, Ms.
Saryan was a portfolio manager and equity analyst for State Street Global
Advisors.
Edward E. Smiley, Jr. is the portfolio manager of the Special Equities Portfolio
(since November 1996). He also manages other Eaton Vance portfolios, has been an
employee of Eaton Vance since November 1996, and is a Vice President of Eaton
Vance and BMR. Prior to joining Eaton Vance, Mr. Smiley was a Senior Product
Manager, Equity Management for Trade-Street Investment Associates, Inc., a
wholly-owned subsidiary of NationsBank.
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<PAGE>
The investment adviser and each Fund and Portfolio have adopted Codes of Ethics
governing personal securities transactions. Under the Codes, Eaton Vance
employees may purchase and sell securities (including securities held by the
Portfolio) subject to certain pre-clearance and reporting requirements and other
procedures.
Eaton Vance serves as administrator of each Fund, providing the Fund with
administrative services and related office facilities. Eaton Vance does not
currently receive a fee for serving as administrator, except that Eaton Vance
receives a monthly administrative fee of 0.10% annually of the average daily net
assets of Balanced Fund. Eaton Vance, however, will maintain the expenses of
Balanced Fund so that the aggregate fees paid by the Fund indirectly under the
Capital Growth and High Grade Income Portfolios' advisory agreements and
directly under the Fund's administration agreement do not exceed 0.625% annually
of average daily net assets of the two Portfolios up to and including $300
million, and 0.50% of average daily net assets over $300 million.
Organization. Each Fund is a series of Eaton Vance Special Investment Trust, a
Massachusetts business trust. Each Fund offers multiple classes of shares. Each
class represents a pro rata interest in the Fund, but is subject to different
expenses and rights. The Funds do not hold annual shareholder meetings, but may
hold special meetings for matters that require shareholder approval (like
electing or removing trustees, approving management contracts or changing
investment policies that may only be changed with shareholder approval). Because
a Fund invests in the Portfolios, it may be asked to vote on certain Portfolio
matters (like changes in certain Portfolio investment restrictions). When
necessary, a Fund will hold a meeting of its shareholders to consider the
Portfolio matter and then vote its interest in the Portfolio in proportion to
the votes cast by its shareholders. A Fund can withdraw from a Portfolio at any
time.
Because the Funds use this combined prospectus, a Fund could be held liable for
a misstatement or omission made about another Fund. The Trust's Trustees
considered this in approving the use of a combined prospectus.
VALUING SHARES
Each Fund values its shares once each day only when the New York Stock Exchange
is open for trading (typically Monday through Friday), as of the close of
regular trading on the Exchange (normally 4:00 p.m. eastern time). The purchase
price of Fund shares is their net asset value (plus a sales charge for Class A
shares), which is derived from Portfolio holdings. Exchange-listed securities
are generally valued at closing sale prices however, the investment adviser may
use the fair value of a foreign security if events occurring after the close of
a foreign exchange would materially affect net asset value. Because foreign
securities trade on days when Fund shares are not priced, net asset value can
change at times when Fund shares cannot be redeemed.
When purchasing or redeeming Fund shares, your investment dealer must
communicate your order to the principal underwriter by a specific time each day
in order for the purchase price or the redemption price to be based on that
day's net asset value per share. It is the investment dealer's responsibility to
transmit orders promptly. Each Fund may accept purchase and redemption orders as
of the time of their receipt by certain investment dealers (or their designated
intermediaries).
PURCHASING SHARES
You may purchase shares through your investment dealer or by mailing the account
application form included in this prospectus to the transfer agent (see back
cover for address). Your initial investment must be at least $1,000. The price
of Class A shares is the net asset value plus a sales charge. The price of Class
B and Class C shares is the net asset value; however, you may be subject to a
sales charge (called a "contingent deferred sales charge" or "CDSC") if you
redeem Class B shares within six years of purchase or Class C shares within one
year of purchase. The sales charges are described below. Your investment dealer
can help you decide which class of shares suits your investment needs.
After your initial investment, additional investments of $50 or more may be made
at any time by sending a check payable to the order of the Fund or the transfer
agent directly to the transfer agent (see back cover for address). Please
include your name and account number and the name of the Fund and Class of
shares with each investment.
You may also make automatic investments of $50 or more each month or each
quarter from your bank account. You can establish bank automated investing on
the account application or by calling 1-800-262-1122. The minimum initial
investment amount and Fund policy of redeeming accounts with low account
balances are waived for bank automated investing accounts and certain group
purchase plans.
You may purchase Fund shares in exchange for securities. Please call
1-800-225-6265 for information about exchanging securities for Fund shares. If
you purchase shares through an investment dealer (which includes brokers,
dealers and other
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<PAGE>
financial institutions), that dealer may charge you a fee for executing the
purchase for you. A Fund may suspend the sale of its shares at any time and any
purchase order may be refused.
SALES CHARGES
Front-End Sales Charge. Class A shares are offered at net asset value per share
plus a sales charge that is determined by the amount of your investment. The
current sales charge schedule is:
<TABLE>
<CAPTION>
Sales Charge Sales Charge Dealer Commission
as Percentage of as Percentage of Net as a percentage of
Amount of Purchase Offering Price Amount Invested Offering Price
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $50,000 5.75% 6.10% 5.00%
$50,000 but less than $100,000 4.75% 4.99% 4.00%
$100,000 but less than $250,000 3.75% 3.90% 3.00%
$250,000 but less than $500,000 3.00% 3.09% 2.50%
$500,000 but less than $1,000,000 2.00% 2.04% 1.75%
$1,000,000 or more 0.00* 0.00* See Below
</TABLE>
* No sales charge is payable at the time of purchase on investments of $1
million or more. A CDSC of 1.00% will be imposed on such investments (as
described below) in the event of r edemptions within 12 months of purchase.
The principal underwriter will pay a commission to investment dealers on sales
of $1 million or more as follows: 1.00% on amounts of $1 million or more but
less than $3 million; plus 0.50% on amounts over $3 million but less than $5
million; plus 0.25% on amounts over $5 million. Purchases totalling $1 million
or more will be aggregated over a 12-month period for purposes of determining
the commission. The principal underwriter may also pay commissions of up to
1.00% on sales of Class A shares made at net asset value to certain tax-deferred
retirement plans.
Contingent Deferred Sales Charge. Each class of shares is subject to a CDSC on
certain redemptions. Class A shares purchased at net asset value in amounts of
$1 million or more are subject to a 1.00% CDSC if redeemed within 12 months of
purchase. Class C shares are subject to a 1.00% CDSC if redeemed within 12
months of purchase. Class B shares are 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 or following 0%
The CDSC is based on the lower of the net asset value at the time of purchase or
at the time of redemption. Shares acquired through the reinvestment of
distributions are exempt from the CDSC. Redemptions are made first from shares
that are not subject to a CDSC.
The principal underwriter pays commissions to investment dealers on sales of
Class B and Class C shares (except exchange transactions and reinvestments). The
sales commission on Class B shares equals 4% of the purchase price of the
shares. The sales commission on Class C shares equals 0.75% of the purchase
price of the shares. After the first year, investment dealers also receive 0.75%
of the value of Class C shares in annual distribution fees.
Reducing or Eliminating Sales Charges. Front-end sales charges on purchases of
Class A shares may be reduced under the right of accumulation or under a
statement of intention. Under the right of accumulation, the sales charges you
pay are reduced if the current market value of your current holdings (based on
the current offering price), plus your new purchases, total $50,000 or more.
Class A shares of other Eaton Vance funds owned by you can be included as part
of your current holdings for this purpose. Under a statement of intention,
purchases of $50,000 or more made over a 13-month period are eligible for
reduced sales charges. Under a statement of intention, the principal underwriter
may hold 5% of the dollar amount to be purchased in escrow in the form of shares
registered in your name until you satisfy the statement or the 13-month period
expires.
Class A shares are offered at net asset value to clients of financial
intermediaries who charge a fee for their services; accounts affiliated with
those financial intermediaries; tax-deferred retirement plans; investment and
institutional clients of Eaton Vance; certain persons affiliated with Eaton
Vance; and certain Eaton Vance and fund service providers. Ask your
15
<PAGE>
investment dealer for details. Class A shares are also sold at net asset value
if the amount invested represents redemption proceeds from a mutual fund not
affiliated with Eaton Vance, provided the redemption occurred within 60 days of
the Fund share purchase and the redeemed shares were subject to a sales charge.
Class A shares so acquired will be subject to a 0.50% CDSC if they are redeemed
within 12 months of purchase. Investment dealers will be paid a commission on
such sales of 0.50% of the amount invested.
CDSCs are waived for certain redemptions pursuant to a Withdrawal Plan (see
"Shareholder Account Features") and, for Class B and Class C shares, in
connection with certain redemptions from tax-sheltered retirement plans. Call
1-800-225-6265 for details. The Class B CDSC is also waived following the death
of all beneficial owners of shares, but only if the redemption is requested
within one year after death (a death certificate and other applicable documents
may be required).
If you redeem shares, you may reinvest at net asset value all or any portion of
the redemption proceeds in the same class of shares of the Fund (or, for Class A
shares, in Class A shares of any other Eaton Vance fund), provided that the
reinvestment occurs within 60 days of the redemption, and the privilege has not
been used more than once in the prior 12 months. Under these circumstances your
account will be credited with any CDSC paid in connection with the redemption.
Any CDSC period applicable to the shares you acquire upon reinvestment will run
from the date of your original share purchase. Reinvestment requests must be in
writing. If you reinvest, you will be sold shares at the next determined net
asset value following receipt of your request.
Distribution and Service Fees. Class B and Class C shares have in effect plans
under Rule 12b-1 that allow each Fund to pay distribution fees for the sale and
distribution of shares (so-called "12b-1 fees"). Class B and Class C shares pay
distribution fees of 0.75% of average daily net assets annually. Because these
fees are paid from Fund assets on an ongoing basis, they will increase your cost
over time and may cost you more than paying other types of sales charges. All
classes pay service fees for personal and/or account services equal to 0.25%% of
average daily net assets annually.
Class B and Class C distribution fees are subject to termination when payments
under the Rule 12b-1 plans are sufficient to extinguish uncovered distribution
charges. As described more fully in the Statement of Additional Information,
uncovered distribution charges of a Class are increased by sales commissions
payable by the Class to the principal underwriter in connection with sales of
shares of that Class and by an interest factor tied to the U.S. Prime Rate.
Uncovered distribution charges are reduced by the distribution fees paid by the
Class and by CDSCs paid to the Fund by redeeming shareholders. The amount of the
sales commissions payable by Class B to the principal underwriter in connection
with sales of Class B shares is significantly less than the maximum permitted by
the sales charge rule of the National Association of Securities Dealers, Inc. To
date, neither Class B nor Class C uncovered distribution charges have been fully
covered.
REDEEMING SHARES
You can redeem shares in any of the following ways:
By Mail Send your request to the transfer agent along
with any certificates and stock powers. The
request must be signed exactly as your
account is registered and signature
guaranteed. You can obtain a signature
guarantee at certain banks, savings and loan
institutions, credit unions, securities
dealers, securities exchanges, clearing
agencies and registered securities
associations. You may be asked to provide
additional documents if your shares are
registered in the name of a corporation,
partnership or fiduciary.
By Telephone You can redeem up to $50,000 by calling the
transfer agent at 1-800-262-1122 on Monday
through Friday, 9:00 a.m. to 4:00 p.m.
(eastern time). Proceeds of a telephone
redemption can be mailed only to the account
address. Shares held by corporations, trusts
or certain other entities and shares that are
subject to fiduciary arrangements cannot be
redeemed by telephone.
Through an Investment Dealer Your investment dealer is responsible for
transmitting the order promptly. An
investment dealer may charge a fee for this
service.
If you redeem shares, your redemption price will be based on the net asset value
per share next computed after the redemption request is received. Your
redemption proceeds will be paid in cash within seven days, reduced by the
amount of any applicable CDSC and any federal income tax required to be
withheld. Payments will be sent by mail unless you complete the Bank Wire
Redemptions section of the account application.
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<PAGE>
If you recently purchased shares, the proceeds of a redemption will not be sent
until the purchase check (including a certified or cashier's check) has cleared.
If the purchase check has not cleared, redemption proceeds may be delayed up to
15 days from the purchase date. If your account value falls below $750 (other
than due to market decline), you may be asked to either add to your account or
redeem it within 60 days. If you take no action, your account will be redeemed
and the proceeds sent to you.
While redemption proceeds are normally paid in cash, redemptions may be paid by
distributing marketable securities. If you receive securities, you could incur
brokerage or other charges in converting the securities to cash.
SHAREHOLDER ACCOUNT FEATURES
Once you purchase shares, the transfer agent establishes a Lifetime Investing
Account(R) for you. Share certificates are issued only on request.
Distributions. You may have your Fund distributions paid in one of the
following ways:
.Full Reinvest Option Dividends and capital gains are reinvested in
additional shares. This option will be assigned if
you do not specify an option.
.Partial Reinvest Option Dividends are paid in cash and capital gains are
reinvested in additional shares.
.Cash Option Dividends and capital gains are paid in cash.
.Exchange Option Dividends and/or capital gains are reinvested in
additional shares of another Eaton Vance fund
chosen by you. Before selecting this option, you
must obtain a prospectus of the other fund and
consider its objectives and policies carefully.
Information from the Fund. From time to time, you may be mailed the following:
.Annual and Semi-Annual Reports, containing performance information and
financial statements.
.Periodic account statements, showing recent activity and total share
balance.
.Form 1099 and tax information needed to prepare your income tax returns.
.Proxy materials, in the event a shareholder vote is required.
.Special notices about significant events affecting your Fund.
Withdrawal Plan. You may redeem shares on a regular monthly or quarterly basis
by establishing a systematic withdrawal plan. Withdrawals will not be subject to
any applicable CDSC if they are, in the aggregate, less than or equal to 12%
annually of the greater of either the initial account balance or the current
account balance. A minimum account size of $5,000 is required to establish a
systematic withdrawal plan. Because purchases of Class A shares are generally
subject to an initial sales charge, you should not make withdrawals from your
account while you are making purchases.
Tax-Sheltered Retirement Plans. Class A and Class C shares are available for
purchase in connection with certain tax-sheltered retirement plans. Call
1-800-225-6265 for information. Distributions will be invested in additional
shares for all tax-sheltered retirement plans.
Exchange Privilege. You may exchange your Fund shares for shares of the same
class of another Eaton Vance fund. Exchanges are generally made at net asset
value. If you hold Class A shares for less than six months and exchange them for
shares subject to a higher sales charge, you will be charged the difference
between the two sales charges. If your shares are subject to a CDSC, the CDSC
will continue to apply to your new shares at the same CDSC rate. For purposes of
the CDSC, your shares will continue to age from the date of your original
purchase.
Before exchanging, you should read the prospectus of the new fund carefully. If
you wish to exchange shares, write to the transfer agent (address on back cover)
or call 1-800-262-1122. Periodic automatic exchanges are also available. The
exchange privilege may be changed or discontinued at any time. You will receive
60 days' notice of any material change to the privilege. This privilege may not
be used for "market timing". If an account (or group of accounts) makes more
than two round-trip exchanges within 12 months, it will be deemed to be market
timing. The exchange privilege may be terminated for market timing accounts.
Telephone and Electronic Transactions. You can redeem or exchange shares by
telephone as described in this prospectus. In addition, certain transactions may
be conducted through the Internet. The transfer agent and the principal
underwriter have procedures in place to authenticate telephone and electronic
instructions (such as using security codes or verifying personal account
information). As long as the transfer agent and principal underwriter follow
these procedures, they will
17
<PAGE>
not be responsible for unauthorized telephone or electronic transactions and you
bear the risk of possible loss resulting from these transactions. You may
decline the telephone redemption option on the account application. Telephone
instructions are tape recorded.
"Street Name" Accounts. If your shares are held in a "street name" account at an
investment dealer, that dealer (and not the Fund or its transfer agent) will
perform all recordkeeping, transaction processing and distribution payments.
Because the Fund will have no record of your transactions, you should contact
your investment dealer to purchase, redeem or exchange shares, to make changes
in your account, or to obtain account information. You will not be able to
utilize a number of shareholder features, such as telephone transactions,
directly with the Fund. The transfer of shares in a "street name" account to an
account with another investment dealer or to an account directly with the Fund
involves special procedures and you will be required to obtain historical
information about your shares prior to the transfer. Before establishing a
"street name" account with an investment dealer, you should determine whether
that dealer allows reinvestment of distributions in "street name" accounts.
Account Questions. If you have any questions about your account or the services
available, please call Eaton Vance Shareholder Services at 1-800-225-6265, or
write to the transfer agent (see back cover for address).
TAX INFORMATION
Utilities Fund pays dividends monthly, Balanced Fund and Growth & Income Fund
pay dividends quarterly, and Special Equities Fund pays dividends annually.
Dividends may not be paid if Fund (and class) expenses exceed Fund income for
the period. Different classes of a Fund will generally distribute different
dividend amounts. Each Fund makes distributions of net realized capital gains,
if any, at least annually. Distributions of income and net short-term capital
gains are taxable as ordinary income. Distributions of any long-term capital
gains are taxable as long-term gains. Over time, distributions by each Fund can
generally be expected to include both dividends taxable as ordinary income and
capital gain distributions taxable as long-term gains. A portion of each Fund's
income distributions may be eligible for the corporate dividends-received
deduction.
Investors who purchase shares shortly before the record date of a distribution
will pay the full price for the shares and then receive some portion of the
price back as a taxable distribution. Certain distributions paid in January will
be taxable to shareholders as if received on December 31 of the prior year. A
redemption of Fund shares, including an exchange for shares of another fund, is
a taxable transaction.
Shareholders should consult with their advisers concerning the applicability of
state, local and other taxes to an investment.
18
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights are intended to help you understand the Fund's
financial performance for the past five years. Certain information in the tables
reflects the financial results for a single Fund share. The total returns in the
TABLES represent the rate an investor would have earned (or lost) on an
investment in the Fund (assuming reinvestment of all distributions and not
taking into account a sales charge). This information has been audited by
Pricewaterhousecoopers LLP, independent accountants. The report of
Pricewaterhousecoopers LLP and each Fund's financial statements are incorporated
herein by reference and included in the annual report, which is available on
request. Each Fund began offering three classes of shares on January 1, 1998.
Prior to that date, each Fund offered only Class A shares and Class B and C
existed as separate funds.
<TABLE>
<CAPTION>
BALANCED FUND
------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995*
--------------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS A CLASS A
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value -
Beginning of year $ $ $ $ 8.700 $13.680 $13.240 $ 8.090 $ 8.150 $ 6.840
-------- ------- ------- -------- -------- --------
Income (loss) from
operations
Net investment
income $ $ $ $ 0.226 $ 0.231 $ 0.216 $ 0.208 $ 0.254 $ 0.254
Net realized and
unrealized gain
(loss) 0.901 1.451 1.401 1.492 0.821 1.641
-------- ------- ------- -------- -------- --------
Total income (loss)
from operations $ $ $ $ 1.127 $ 1.682 $ 1.617 $ 1.700 $ 1.075 $ 1.895
-- -- -- -------- ------- ------- -------- -------- --------
Less distributions
From net investment
income $ $ $ $ (0.220) $(0.215) $(0.220) $ (0.200) $ (0.254) $ (0.248)
In excess of net
investment income -- -- -- -- (0.001) --
From net realized
gain (1.467) (1.467) (1.467) (0.890) (0.880) (0.337)
-------- ------- ------- -------- -------- --------
Total distributions $ $ $ $ (1.687) $(1.682) $(1.687) $ (1.090) $ (1.135) $ (0.585)
-- -- -- -------- ------- ------- -------- -------- --------
Net asset value -
End of year $ $ $ $ 8.140 $13.680 $13.170 $ 8.700 $ 8.090 $ 8.150
== == == ======== ======= ======= ======== ======== ========
Total return(1) % % % 13.43% 12.59% 12.51% 21.60% 13.61% 28.36%
Ratios/Supplemental
Data
Net assets, end of
year (000's omitted) $ $ $ $270,277 $72,836 $10,742 $263,730 $240,217 $236,870
Ratios (as a
percentage of
average daily net
assets):
Expenses(2) % % % 0.98% 1.81% 1.85% 0.97% 0.93% 0.95%+
Net investment
income % % % 2.45% 1.62% 1.58% 2.35% 3.03% 3.60%+
Portfolio turnover
of the Fund(3) -- -- -- -- -- --
Portfolio turnover
of the
Portfolio(3) % % % 49% 49% 49% 37% 64% 47%
<CAPTION>
YEAR ENDED JANUARY 31,
------------------------
1995
------------------------
CLASS A
- ------------------------------------------------
<S> <C>
Net asset value -
Beginning of year $ 7.600
--------
Income (loss) from
operations
Net investment $ 0.283
income
Net realized and
unrealized gain (0.623)
(loss) --------
Total income (loss)
from operations $ (0.340)
--------
Less distributions
From net investment $ (0.275)
income
In excess of net --
investment income
From net realized
gain (0.145)
--------
Total distributions $ (0.420)
--------
Net asset value -
End of year $ 6.840
========
Total return(1) (4.45)%
Ratios/Supplemental
Data
Net assets, end of $200,419
year (000's omitted)
Ratios (as a
percentage of
average daily net
assets):
Expenses(2) 0.91%
Net investment 4.05%
income
Portfolio turnover --
of the Fund(3)
Portfolio turnover 28%
of the
Portfolio(3)
</TABLE>
(See footnotes on last page.)
19
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
GROWTH & INCOME FUND
--------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
--------------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS A CLASS A
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value - Beginning of year $ $ $ $ 13.760 $15.400 $13.020 $ 13.560 $ 12.760 $10.900
-- -- -- -------- ------- ------- -------- -------- -------
Income (loss) from operations
Net investment income $ $ $ $ 0.088 $(0.031) $(0.033) $ 0.163 $ 0.228 $ 0.250
Net realized and unrealized gain
(loss) 2.879 3.218 2.715 3.827 2.272 3.255
-- -- -- -------- ------- ------- -------- -------- -------
Total income (loss) from operations $ $ $ $ 2.967 $ 3.187 $ 2.682 $ 3.990 $ 2.500 $ 3.505
== == == -------- ------- ------- -------- -------- -------
Less distributions
From net investment income $ $ $ $ (0.090) $(0.001) $(0.005) $ (0.170) $ (0.220) $(0.251)
In excess of net investment income ---/(4)/ (0.009) -- -- -- --
From net realized gain (0.587) (0.587) (0.582) (3.602) (1.480) (1.394)
In excess of net realized gain -- -- (0.005) (0.018) -- --
-- -- -- -------- ------- ------- -------- -------- -------
Total distributions $ $ $ $ (0.677) $(0.597) $(0.592) $ (3.790) $ (1.700) $(1.645)
-- -- -- -------- ------- ------- -------- -------- -------
Net asset value - End of year $ $ $ $ 16.050 $17.990 $15.110 $ 13.760 $ 13.560 $12.760
== == == ======== ======= ======= ======== ======== =======
Total return(1) % % % 21.81% 20.85% 20.77% 30.93% 20.20% 32.77%
Ratios/Supplemental Data
Net assets, end of year (000's
omitted) $ $ $ $141,985 $26,708 $ 2,344 $124,569 $106,775 $99,375
Ratios (as a percentage of average
daily net assets):
Expenses(2) % % % 1.07% 1.90% 1.94% 1.04% 1.00% 1.04%
Net investment income % % % 0.60% (0.22)% (0.24)% 1.07% 1.70% 2.02%
Portfolio turnover of the
Fund(3) -- -- -- -- -- --
Portfolio turnover of the
Portfolio(3) % % % 95% 95% 95% 93% 114% 108%
</TABLE>
(See footnotes on last page.)
20
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
SPECIAL EQUITIES FUND
---------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
---------------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS A CLASS A
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value - Beginning of
year $ $ $ $ 6.990 $13.320 $ 9.960 $ 8.950 $ 7.980 $ 6.880
------- ------- ------- ------- ------- -------
Income (loss) from operations
Net investment income $ $ $ $(0.055) $(0.162) $(0.241) $(0.032) $(0.009) $(0.009)
Net realized and unrealized gain
(loss) 1.126 2.223 1.842 0.922 1.874 1.599
------- ------- ------- ------- ------- -------
Total income (loss) from
operations $ $ $ $ 1.071 $ 2.061 $ 1.601 $ 0.890 $ 1.865 $ 1.590
------- ------- ------- ------- ------- -------
Less distributions
From net realized gain $ $ $ $(0.561) $(0.561) $(0.561) $(2.706) $(0.895) $(0.490)
In excess of net realized gain -- -- -- (0.144) -- --
From total return of capital -- -- -- -- -- --
------- ------- ------- ------- ------- -------
Total distributions $ $ $ $(0.561) $(0.561) $(0.561) $(2.850) $(0.895) $(0.490)
------- ------- ------- ------- ------- -------
Net asset value - End of year $ $ $ $ 7.500 $14.820 $11.000 $ 6.990 $ 8.950 $ 7.980
======= ======= ======= ======= ======= =======
Total return(1) % % % 15.82% 15.74% 16.44% 14.18% 23.76% 23.31%
Ratios/Supplemental Data
Net assets, end of year (000's
omitted) $ $ $ $73,896 $ 3,946 $ 709 $73,144 $76,999 $70,456
Ratios (as a percentage of average
daily net assets):
Expenses(2) % % % 1.23% 2.09% 2.11% 1.12% 1.04% 1.08%
Net investment income % % % (0.76)% (1.25)% (1.24)% (0.46)% (0.10)% (0.12)%
Portfolio turnover of the
Fund(3) -- -- -- -- -- --
Portfolio turnover of the
Portfolio(3) % % % 116% 116% 116% 156% 91% 81%
</TABLE>
(See footnotes on last page.)
21
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
UTILITIES FUND
---------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
1999 1998** 1997 1996 1995
---------------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS A CLASS A
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value - Beginning of
year $ $ $ $ 8.450 $ 9.670 $10.190 $ 8.770 $ 9.130 $ 7.630
-------- ------- ------- -------- -------- --------
Income (loss) from operations
Net investment income $ $ $ $ 0.251 $ 0.209 $ 0.220 $ 0.409 $ 0.626 $ 0.523
Net realized and unrealized gain
(loss) 1.721 1.970 2.082 0.887 (0.014)++ 1.520
-------- ------- ------- -------- -------- --------
Total income (loss) from
operations $ $ $ $ 1.972 $ 2.179 $ 2.302 $ 1.296 $ 0.612 $ 2.043
-------- ------- ------- -------- -------- --------
Less distributions
From net investment income $ $ $ $ (0.235) $(0.202) $(0.185) $ (0.331) $ (0.522) $ (0.364)
In excess of net investment income -- -- -- -- -- (0.039)
From net realized gain (0.037) (0.037) (0.037) (1.243) (0.450) (0.078)
In excess of net realized gain -- -- -- (0.042) -- (0.062)
-------- ------- ------- -------- -------- --------
Total distributions $ $ $ $ (0.272) $(0.239) $(0.222) $ (1.616) $ (0.972) $ (0.543)
-------- ------- ------- -------- -------- --------
Net asset value - End of year $ $ $ $ 10.150 $11.610 $12.270 $ 8.450 $ 8.770 $ 9.130
======== ======= ======= ======== ======== ========
Total return(1) % % % 23.78% 22.89% 22.88% 16.18% 7.00% 27.52%
Ratios/Supplemental Data
Net assets, end of year (000's
omitted) $ $ $ $409,178 $45,958 $ 3,736 $370,457 $401,974 $457,879
Ratios (as a percentage of average
daily net assets):
Expenses(2) % % % 1.27% 2.01% 2.05% 1.13% 1.23% 1.19%
Net investment income % % % 2.75% 2.01% 1.99% 4.06% 5.59% 4.49%
Portfolio turnover of the
Portfolio(3) % % % 78% 78% 78% 169% 166% 103%
</TABLE>
* For the eleven-month period ended December 31, 1995.
** Net investment income per share was computed using average shares
outstanding.
+ Computed on an annualized basis.
++ The per share amount is not in accord with the net realized and unrealized
gain (loss) for the period because of the timing of sales of Fund shares
and the amount of the per share realized and unrealized gains and losses at
such time.
(1) Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Distributions, if any, are assumed to be reinvested at the
net asset value on the reinvestment date. Total return is not computed on
an annualized basis.
(2) For the Balanced Fund, includes the Fund's share of the Portfolio's
allocated expenses for the eleven months ended December 31, 1995, the year
ended January 31, 1995 and for the period from October 28, 1993 to January
31, 1994. For the Growth & Income Fund and Special Equities Fund, includes
the Funds' share of the Portfolios' allocated expenses for the years ended
December 31, 1996 and 1995, and for the period from August 1, 1994 to
December 31, 1994. For the Utilities Fund, includes the Fund's share of the
Portfolio's allocated expenses for the years ended December 31, 1996, 1995
and 1994.
(3) Portfolio Turnover of the Fund represents the rate of portfolio activity
for the period while the Fund was making investments directly in
securities. The Portfolio Turnover of the Portfolio represents the period
when the Fund began investing in the Portfolio as follows: October 28, 1993
for the Balanced and Utilities Funds; and August 1, 1994 for the Growth &
Income and Special Equities Funds.
(4) Distributions in excess of net investment income are less than $0.001 per
share.
<PAGE>
LOGO
Investing
for the
21st
Century(R)
More Information
- --------------------------------------------------------------------------------
About the Funds: More information is available in the statement
of additional information. The statement of additional
information is incorporated by reference into this prospectus.
Additional information about each Portfolio's investments is
available in the annual and semi-annual reports to shareholders.
In the annual report, you will find a discussion of the market
conditions and investment strategies that significantly affected
each Fund's performance during the past year. You may obtain free
copies of the statement of additional information and the
shareholder reports by contacting:
Eaton Vance Distributors, Inc.
The Eaton Vance Building
255 State
StreetBoston, MA 02109
1-800-225-6265
website: www.eatonvance.com
You will find and may copy information about each Fund at the
Securities and Exchange Commission's public reference room in
Washington, DC (call 1-800-SEC-0330 for information on the
operation of the public reference room); on the SEC's Internet
site (http://www.sec.gov); or, upon payment of copying fees, by
writing to the SEC's public reference room in Washington, DC
20549-0102 or by electronic mail at [email protected].
About Shareholder Accounts: You can obtain more information from
Eaton Vance Shareholder Services (1-800-225-6265). If you own
shares and would like to add to, redeem or change your account,
please write or call the transfer agent:
- --------------------------------------------------------------------------------
PFPC Global Fund Services
P.O. Box 9653
Providence, RI 02904-9653
1-800-262-1122
The Fund's SEC File No. is 811-1545 COMBEQP
23
<PAGE>
LOGO
Investing
for the
21st
Century(R)
EATON VANCE
EMERGING GROWTH FUND
A diversified fund seeking long-term capital appreciation
Prospectus Dated
May 1, 2000
The Securities and Exchange Commission has not approved or disapproved these
securities or determined whether this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
Information in this prospectus
Page Page
- -------------------------------------------------------------------------------
Fund Summary 2 Sales Charges 6
Investment Objective & Principal Policies Redeeming Shares 7
and Risks 4 Shareholder Account
Management and Organization 5 Features 7
Valuing Shares 5 Tax Information 8
Purchasing Shares 5 Financial Highlights 9
- -------------------------------------------------------------------------------
This prospectus contains important information about the Fund and the services
available to shareholders. Please save it for reference.
<PAGE>
FUND SUMMARY
Investment Objective and Principal Strategies. The Fund's investment objective
is to seek long-term capital appreciation. The Fund invests primarily in common
stocks of emerging growth companies. Emerging growth companies are companies
that are expected to achieve earnings growth and profit margins over the
long-term that substantially exceed the average of all publicly traded stocks in
the United States.
Many emerging growth companies acquired by the Fund will have annual revenues of
$1 billion or less at the time they are acquired, but the Fund may also invest
in larger or smaller companies having emerging growth characteristics. In making
investment decisions, the portfolio manager relies on the investment adviser's
research staff and will generally sell a security when the price objective for
the stock is reached or the fundamentals of the company change, or to pursue
more attractive investment opportunities.
Although it invests primarily in domestic companies, the Fund may invest up to
25% of its assets in foreign securities. The Fund may also at times engage in
derivative transactions to protect against price declines, to enhance returns or
as a substitute for purchasing or selling securities. Some of the securities
owned by the Fund may be subject to restrictions on resale.
The Fund currently invests its assets in Emerging Growth Portfolio (the
"Portfolio"), a separate registered investment company with the same objective
and policies as the Fund.
Principal Risk Factors. Shares of the Fund are sensitive to factors affecting
emerging growth companies. The securities of emerging growth companies are
generally subject to greater price fluctuation and investment risk than
securities of more established companies. The value of Fund shares is also
sensitive to stock market volatility. If there is a general decline in the value
of U.S. stocks, the value of the Fund's shares will also likely decline. Changes
in stock market values can be sudden and unpredictable. Also, although stock
values can rebound, there is no assurance that values will return to previous
levels.
Because the Fund invests a portion of its assets in foreign securities, the
value of Fund shares may be affected by changes in currency exchange rates and
developments abroad. The use of derivative transactions is subject to certain
limitations and may expose the Fund to increased risk of principal loss.
Securities subject to restrictions on resale are often less liquid and more
difficult to value.
The Fund is not a complete investment program and you may lose money by
investing in the Fund. An investment in the Fund is not a deposit in a bank and
is not insured or guaranteed by the Federal Deposit Insurance Corporation or any
other government agency
2
<PAGE>
Performance Information. The following bar chart and table provide information
about the Fund's performance including a comparision of the Fund's performance
to the performance of an index of 600 small capitalization companies. Although
past performance is no guarantee of future results, this performance information
demonstrates that the value of your investment will change from year-to-year.
These returns are for each calendar year through December 31, 1999. During these
periods, the expenses of the Fund were subsidized. Absent the subsidy, Fund
performance would have been lower. The returns in the bar chart do not reflect a
sales charge. If the sales charge was reflected, the returns would be lower.
Due to the Fund's relatively small size, its performance for the year ended
December 31, 1999 benefited significantly from participation in certain initial
public offerings ("IPOs"). As Fund assets grow, IPO activity will have a less
dramatic effect on Fund performance.
15.15% 109.14%
1998 1999
The Fund's highest quarterly total return was 59.81% for the quarter ended
December 31, 1999, and its lowest quarterly total return was -17.20% for the
quarter ended September 30, 1998.
<TABLE>
<CAPTION>
One
Average Annual Total Return as of December 31, 1999 Year Life of Fund
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Fund Shares 97.10% 39.70%
Standard & Poor's Small Cap 600 Index 12.41% 11.40%
</TABLE>
These returns reflect the maximum sales charge (5.75%). The Fund commenced
operations on January 2, 1997. Life of Fund returns are calculated from January
31, 1997. The S&P Small Cap 600 Index is an unmanaged index of common stocks of
small capitalization companies trading in the U.S. Investors cannot invest
directly in an index. (Source for S&P Small Cap 600 Index: Lipper Inc.)
Fees and Expenses of the Fund. These tables describe the fees and expenses that
you may pay if you buy and hold shares.
<TABLE>
<CAPTION>
Shareholder Fees
(fees paid directly from your investment)
- -------------------------------------------------------------------------------------
<S> <C>
Maximum Sales Charge (Load) (as a percentage of offering price) 5.75%
Maximum Deferred Sales Charge (Load)(as a percentage of the lower of net asset
value at time of purchase or time of redemption) None
Sales Charge (Load)Imposed on Reinvested Distributions None
Exchange Fee None
</TABLE>
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
- -------------------------------------------------------------------------------
Management Fees* 0.75%
Other Expenses** 6.91%
-----
Total Annual Fund Operating Expenses* 7.66%
* For the fiscal year ended December 31, 1999, the investment adviser waived
the entire amount of the Management Fee and reimbursed the Fund for all of
its Other Expenses. As a result, the Fund paid no expenses.
** Other Expenses includes service fees of 0.25%
Example. This Example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The Example assumes
that you invest $10,000 in the Fund for the time periods indicated and then
redeem all of your shares at the end of those periods. The Example also assumes
that your investment has a 5% return each year and that the operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
$1,287 $2,656 $3,952 $6,904
3
<PAGE>
INVESTMENT OBJECTIVE & PRINCIPAL POLICIES AND RISKs
The Fund's investment objective is to seek long-term capital appreciation. The
Fund currently seeks to meet its investment objective by investing in Emerging
Growth Portfolio (the "Portfolio"), a separate open-end investment company with
the same objective and policies as the Fund. The Fund's investment objective may
not be changed without shareholder approval. Certain of the Fund's investment
policies may be changed by the Trustees without shareholder approval.
The Portfolio invests in a diversified portfolio of publicly-traded emerging
growth companies. Many emerging growth companies acquired by the Portfolio will
have annual revenues of $1 billion or less at the time they are acquired, but
the Portfolio may also invest in larger or smaller companies having emerging
growth characteristics. Many emerging growth companies are in the early stages
of their development, are more dependent on fewer products, services or product
markets than more established companies, have limited financial resources or may
rely upon a limited management group, may lack substantial capital reserves and
do not have established performance records. Emerging growth stocks frequently
have lower trading volume and tend to be more sensitive to earnings projections
than stocks of more established companies, making them more volatile and
possibly more difficult to value. Under normal circumstances, the Portfolio
invests at least 65% of its total assets in equity securities of emerging growth
companies.
The Portfolio at times may engage in derivative transactions (such as futures
contracts and options thereon, forward currency exchange contracts, and equity
and currency swaps) to protect against stock price, interest rate or currency
rate declines, or as a substitute for the purchase or sale of securities or
currencies. The use of derivatives is highly specialized. The built-in leverage
inherent to many derivative instruments can result in losses that substantially
exceed the initial amount paid or received by the Portfolio. Derivative
instruments may be difficult to value, may be illiquid, and may be subject to
wide swings in valuation caused by changes in the value of the underlying
security or currency. Derivative hedging transactions may not be effective
because of imperfect correlations and other factors.
The portfolio may invest up to 25% of assets in securities of foreign companies.
The value of foreign securities is affected by changes in currency rates,
foreign tax laws (including withholding tax), government policies (in this
country or abroad), relations between nations and trading, settlement, custodial
and other operational risks. In addition, the costs of investing abroad 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
markets in the United States. Foreign investments also could be affected by
other factors not present in the United States, including expropriation, armed
conflict, confiscatory taxation, lack of uniform accounting and auditing
standards, less publicly available financial and other information and potential
difficulties in enforcing contractual obligations. These risks can be more
significant for companies in less developed countries. As an alternative to
holding foreign stocks directly, the Portfolio may invest in dollar-denominated
securities of foreign companies that trade on U.S. exchanges or in the
over-the-counter market (including depositary receipts which evidence ownership
in underlying foreign stocks). Such investments are not subject to the
Portfolio's 25% limitation on investing in foreign securities.
The portfolio may invest not more than 15% of its net assets in illiquid
securities, which may be difficult to value properly and may involve greater
risks than liquid securities. Illiquid securities include those legally
restricted as to resale, and may include commercial paper issued pursuant to
Section 4(2) of the Securities Act of 1933 and securities eligible for resale
pursuant to Rule 144A thereunder. Certain Section 4(2) and Rule 144A securities
may be treated as liquid securities if the investment adviser determines that
such treatment is warranted. Even if determined to be liquid, holdings of these
securities may increase the level of portfolio illiquidity if eligible buyers
become uninterested in purchasing them.
The portfolio's annual portfolio turnover rate may exceed 100%. A fund with high
turnover (100% or more) pays more commissions and may generate more capital
gains than a fund with a lower rate. Brokerage commissions are an expense which
also reduces return. Capital gains distributions will reduce after tax returns
for shareholders holding Fund shares in taxable accounts.
The portfolio may borrow amounts up to one-third of the value of its total
assets (including borrowings), but it will not borrow more than 5% of the value
of its total assets except to satisfy redemption requests or for other temporary
purposes. Such borrowings would result in increased expense to the Fund and,
while they are outstanding, would magnify increases or decreases in the value of
Fund shares. The Portfolio will not purchase additional investment securities
while outstanding borrowings exceed 5% of the value of its total assets. During
unusual market conditions, the Portfolio may temporarily invest up to 100% of
its assets in cash or cash equivalents. While temporarily invested, the
Portfolio may not achieve its investment objective. While at times the Portfolio
may use alternative investment strategies in an effort to limit losses, it may
choose not to do so.
4
<PAGE>
MANAGEMENT AND ORGANIZATION
Management. The Portfolio's investment adviser is Boston Management and Research
("BMR"), a subsidiary of Eaton Vance Management ("Eaton Vance"), with offices at
255 State Street, Boston, MA 02109. Eaton Vance has been managing assets since
1924 and managing mutual funds since 1931. Eaton Vance and its subsidiaries
currently manage over $41 billion on behalf of mutual funds, institutional
clients and individuals.
The investment adviser manages the investments of the Portfolio and provides
related office facilities and BMR receives a monthly advisory fee of .0625%
(equivalent to 0.75% annually) of the average daily net assets of the Portfolio
up to $500 million. On net assets of $500 million and over, the annual fee is
reduced. Prior to May 1, 2000, the Fund's assets were managed by Eaton Vance
under an investment advisory agreement substantially identical to the agreement
between the Portfolio and BMR. For the fiscal year ended December 31, 1999,
Eaton Vance reduced it advisory fee and the Fund paid no advisory fees. Absent
the fee reduction, the Fund would have paid advisory fees equivalent to 0.75% of
its average daily net assets.
Edward E. Smiley, Jr. is the portfolio manager of the Fund (since inception). He
also manages other Eaton Vance portfolios, has been an employee of Eaton Vance
since November 1996, and is a Vice President of Eaton Vance. Prior to joining
Eaton Vance, Mr. Smiley was a Senior Product Manager, Equity Management for
Trade-Street Investment Associates, Inc., a wholly-owned subsidiary of
NationsBank.
The investment adviser and the Fund and Portfolio have adopted Codes of Ethics
governing personal securities transactions. Under the Codes, Eaton Vance
employees may purchase and sell securities (including securities held by the
Portfolio) subject to certain pre-clearance and reporting requirements and other
procedures.
Eaton Vance serves as administrator of the Fund, providing the Fund with
administrative services and related office facilities. Eaton Vance does not
currently receive a fee for serving as administrator.
VALUING SHARES
The Fund values its shares once each day only when the New York Stock Exchange
is open for trading (typically Monday through Friday), as of the close of
regular trading on the Exchange (normally 4:00 p.m. eastern time). The purchase
price of Fund shares is their net asset value (plus a sales charge), which is
derived from Portfolio holdings. Exchange-listed securities are generally valued
at closing sale prices however, the investment adviser may use the fair value of
a foreign security if events occurring after the close of a foreign exchange
would materially affect net asset value. Because foreign securities trade on
days when Fund shares are not priced, net asset value can change at times when
Fund shares cannot be redeemed.
When purchasing or redeeming Fund shares, your investment dealer must
communicate your order to the principal underwriter by a specific time each day
in order for the purchase price or the redemption price to be based on that
day's net asset value per share. It is the investment dealer's responsibility to
transmit orders promptly. The Fund may accept purchase and redemption orders as
of the time of their receipt by certain investment dealers (or their designated
intermediaries).
PURCHASING SHARES
You may purchase Fund shares through your investment dealer or by mailing the
account application form included in this prospectus to the transfer agent (see
back cover for address). Your initial investment must be at least $1,000. The
price of Fund shares is the net asset value plus a sales charge.
After your initial investment, additional investments of $50 or more may be made
at any time by sending a check payable to the order of the Fund or the transfer
agent directly to the transfer agent (see back cover for address). Please
include your name and account number and the name of the Fund with each
investment.
You may also make automatic investments of $50 or more each month or each
quarter from your bank account. You can establish bank automated investing on
the account application or by calling 1-800-262-1122. The minimum initial
investment amount and Fund policy of redeeming accounts with low account
balances are waived for bank automated investing accounts and certain group
purchase plans.
5
<PAGE>
You may purchase Fund shares in exchange for securities. Please call
1-800-225-6265 for information about exchanging securities for Fund shares. If
you purchase shares through an investment dealer (which includes brokers,
dealers and otherfinancial institutions), that dealer may charge you a fee for
executing the purchase for you. The Fund may suspend the sale of its shares at
any time and any purchase order may be refused.
SALES CHARGES
Fund shares are offered at net asset value per share plus a sales charge that is
determined by the amount of your investment. The current sales charge schedule
is:
<TABLE>
<CAPTION>
Sales Charge Sales Charge Dealer Commission
as Percentage of as Percentage of Net as a Percentage of
Amount of Purchase Offering Price Amount Invested Offering Price
- ----------------------------------------------------------------------------------------------------------
<S> <C>
Less than $50,000 5.75% 6.10% 5.00%
$50,000 but less than $100,000 4.75% 4.99% 4.00%
$100,000 but less than $250,000 3.75% 3.90% 3.00%
$250,000 but less than $500,000 3.00% 3.09% 2.50%
$500,000 but less than $1,000,000 2.00% 2.04% 2.50%
$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 1.00% will be imposed on such investments (as
described below) in the event of r edemptions within 12 months of purchase.
The principal underwriter will pay a commission to investment dealers on sales
of $1 million or more as follows: 1.00% on amounts of $1 million or more but
less than $3 million; plus 0.50% on amounts over $3 million but less than $5
million; plus 0.25% on amounts over $5 million. Purchases totalling $1 million
or more will be aggregated over a 12-month period for purposes of determining
the commission. The principal underwriter may also pay commissions of up to
1.00% on sales of Fund shares made at net asset value to certain tax-deferred
retirement plans.
Reducing or Eliminating Sales Charges. Front-end sales charges on purchases of
fund shares may be reduced under the right of accumulation or under a statement
of intention. Under the right of accumulation, the sales charges you pay are
reduced if the current market value of your current holdings (based on the
current offering price), plus your new purchases, total $50,000 or more. Class A
shares of other Eaton Vance funds owned by you can be included as part of your
current holdings for this purpose. Under a statement of intention, purchases of
$50,000 or more made over a 13-month period are eligible for reduced sales
charges. Under a statement of intention, the principal underwriter may hold 5%
of the dollar amount to be purchased in escrow in the form of shares registered
in your name until you satisfy the statement or the 13-month period expires.
Fund shares are offered at net asset value to clients of financial
intermediaries who charge a fee for their services; accounts affiliated with
those financial intermediaries; tax-deferred retirement plans; investment and
institutional clients of Eaton Vance; certain persons affiliated with Eaton
Vance; and certain Eaton Vance and fund service providers. Ask your investment
dealer for details. Fund shares are also sold at net asset value if the amount
invested represents redemption proceeds from a mutual fund not affiliated with
Eaton Vance, provided the redemption occurred within 60 days of the Fund share
purchase and the redeemed shares were subject to a sales charge. Fund shares so
acquired will be subject to a 0.50% CDSC if they are redeemed within 12 months
of purchase. Investment dealers will be paid a commission on such sales of 0.50%
of the amount invested.
Fund shares purchased at net asset value in amounts of $1 million or more are
subject to a 1.00% contingent deferred sales charge ("CDSC") if redeemed within
12 months of purchase. The CDSC is 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
which are not subject to a CDSC.
If you redeem shares, you may reinvest at net asset value all or any portion of
the redemption proceeds in shares of the Fund (or in Class A shares of any other
Eaton Vance fund), provided that the reinvestment occurs within 60 days of the
redemption, and the privilege has not been used more than once in the prior 12
months. Your account will be credited with any CDSC paid in connection with the
redemption. Any CDSC period applicable to the shares you acquire upon
reinvestment will run from the date of your original share purchase.
Reinvestment requests must be in writing. If you reinvest, you will be sold
shares at the next determined net asset value following receipt of your request.
6
<PAGE>
Service Fees. The Fund pays service fees for personal and/or account services
equal to .25% of average daily net assets annually.
REDEEMING SHARES
You can redeem shares in any of the following ways:
By Mail Send your request to the transfer agent along
with any certificates and stock powers. The
request must be signed exactly as your
account is registered and signature
guaranteed. You can obtain a signature
guarantee at certain banks, savings and loan
institutions, credit unions, securities
dealers, securities exchanges, clearing
agencies and registered securities
associations. You may be asked to provide
additional documents if your shares are
registered in the name of a corporation,
partnership or fiduciary.
By Telephone You can redeem up to $50,000 by calling the
transfer agent at 1-800-262-1122 on Monday
through Friday, 9:00 a.m. to 4:00 p.m.
(eastern time). Proceeds of a telephone
redemption can be mailed only to the account
address. Shares held by corporations, trusts
or certain other entities and shares that are
subject to fiduciary arrangements cannot be
redeemed by telephone.
Through an Investment Dealer Your investment dealer is responsible for
transmitting the order promptly. An
investment dealer may charge a fee for this
service.
If you redeem shares, your redemption price will be based on the net asset value
per share next computed after the redemption request is received. Your
redemption proceeds will be paid in cash within seven days, reduced by the
amount of any applicable CDSC and any federal income tax required to be
withheld. Payments will be sent by mail unless you complete the Bank Wire
Redemptions section of the account application.
If you recently purchased shares, the proceeds of a redemption will not be sent
until the purchase check (including a certified or cashier's check) has cleared.
If the purchase check has not cleared, redemption proceeds may be delayed up to
15 days from the purchase date. If your account value falls below $750 (other
than due to market decline), you may be asked to either add to your account or
redeem it within 60 days. If you take no action, your account will be redeemed
and the proceeds sent to you.
While redemption proceeds are normally paid in cash, redemptions may be paid by
distributing marketable securities. If you receive securities, you could incur
brokerage or other charges in converting the securities to cash.
SHAREHOLDER ACCOUNT FEATURES
Once you purchase shares, the transfer agent establishes a Lifetime Investing
Account(R) for you. Share certificates are issued only on request.
Distributions. You may have your Fund distributions paid in one of the
following ways:
.Full Reinvest Option Dividends and capital gains are reinvested in
additional shares. This option will be assigned if
you do not specify an option.
.Partial Reinvest Option Dividends are paid in cash and capital gains are
reinvested in additional shares.
.Cash Option Dividends and capital gains are paid in cash.
.Exchange Option Dividends and/or capital gains are reinvested in
additional shares of another Eaton Vance fund
chosen by you. Before selecting this option, you
must obtain a prospectus of the other fund and
consider its objectives and policies carefully.
7
<PAGE>
Information from the Fund. From time to time, you may be mailed the following:
.Annual and Semi-Annual Reports, containing performance information
and financial statements.
.Periodic account statements, showing recent activity and total share
balance.
.Form1099 and tax information needed to prepare your income tax
returns.
.Proxy materials, in the event a shareholder vote is required.
.Special notices about significant events affecting your Fund.
Withdrawal Plan. You may redeem shares on a regular monthly or quarterly basis
by establishing a systematic withdrawal plan. Withdrawals will not be subject to
any applicable CDSC if they are, in the aggregate, less than or equal to 12%
annually of the greater of either the initial account balance or the current
account balance. A minimum account size of $5,000 is required to establish a
systematic withdrawal plan. Because purchases of Fund shares are generally
subject to an initial sales charge, you should not make withdrawals from your
account while you are making purchases.
Tax-Sheltered Retirement Plans. Fund shares are available for purchase in
connection with certain tax-sheltered retirement plans. Call 1-800-225-6265 for
information. Distributions will be invested in additional shares for all
tax-sheltered retirement plans.
Exchange Privilege. You may exchange your Fund shares for Class A shares of
another Eaton Vance fund. Exchanges are generally made at net asset value. If
you hold Fund shares for less than six months and exchange them for shares
subject to a higher sales charge, you will be charged the difference between the
two sales charges. If your shares are subject to a CDSC, the CDSC will continue
to apply to your new shares at the same CDSC rate. For purposes of the CDSC,
your shares will continue to age from the date of your original PURCHASE.
Before exchanging, you should read the prospectus of the new fund carefully. If
you wish to exchange shares, write to the transfer agent (address on back cover)
or call 1-800-262-1122. Periodic automatic exchanges are also available. The
exchange privilege may be changed or discontinued at any time. You will receive
60 days' notice of any material change to the privilege. This privilege may not
be used for "market timing". If an account (or group of accounts) makes more
than two round-trip exchanges within 12 months, it will be deemed to be market
timing. The exchange privilege may be terminated for market timing accounts.
Telephone and Electronic Transactions. You can redeem or exchange shares by
telephone as described in this prospectus. In addition, certain transactions may
be conducted through the Internet. The transfer agent and the principal
underwriter have procedures in place to authenticate telephone and electronic
instructions (such as using security codes or verifying personal account
information). As long as the transfer agent and principal underwriter follow
these procedures, they will not be responsible for unauthorized telephone or
electronic transactions and you bear the risk of possible loss resulting from
these transactions. You may decline the telephone redemption option on the
account application. Telephone instructions are tape recorded.
"Street Name" Accounts. If your shares are held in a "street name" account at an
investment dealer, that dealer (and not the Fund or its transfer agent) will
perform all recordkeeping, transaction processing and distribution payments.
Because the Fund will have no record of your transactions, you should contact
your investment dealer to purchase, redeem or exchange shares, to make changes
in your account, or to obtain account information. You will not be able to
utilize a number of shareholder features, such as telephone transactions,
directly with the Fund. The transfer of shares in a "street name" account to an
account with another investment dealer or to an account directly with the Fund
involves special procedures and you will be required to obtain historical
information about your shares prior to the transfer. Before establishing a
"street name" account with an investment dealer, you should determine whether
that dealer allows reinvestment of distributions in "street name" accounts.
Account Questions. If you have any questions about your account or the services
available, please call Eaton Vance Shareholder Services at 1-800-225-6265, or
write to the transfer agent (see back cover for address).
TAX INFORMATION
The Fund pays dividends at least once annually and intends to pay capital gains
annually. Distributions of income and net short-term capital gains are taxable
as ordinary income. Distributions of any long-term capital gains are taxable as
long-term gains. The Fund expects that its distributions will consist primarily
of capital gains. The Fund's distributions will be taxable as described above
whether they are paid in cash or reinvested in additional shares.
Investors who purchase shares shortly before the record date of a distribution
will pay the full price for the shares and then receive some portion of the
price back as a taxable distribution. Certain distributions paid in January will
be taxable to
8
<PAGE>
shareholders as if received on December 31 of the prior year. A redemption of
Fund shares, including an exchange for shares of another fund, is a taxable
transaction.
Shareholders should consult with their advisers concerning the applicability of
state, local and other taxes to an investment.
9
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights are intended to help you understand the Fund's
financial performance for the past five years. Certain information in the table
reflects the financial results for a single Fund share. The total returns in the
table represent the rate an investor would have earned (or lost) on an
investment in the Fund (assuming reinvestment of all distributions and not
taking into account a sales charge). This information has been audited by
,independent accountants. The report of
and the Fund's financial statements are incorporated by reference and
included in the annual report, which is availableon request.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------
1999 1998(1) 1997
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value - Beginning of year 12.440 $10.830 $ 10.000
---- ------- --------
Income (loss) from operations
Net investment income $ 0.028 $ 0.017
Net realized and unrealized gain (loss) 1.612 1.871
------- --------
Total income (loss) from operations $ 1.640 $ 1.888
------- --------
Less distributions
From net investment income $(0.030) $-------
From net realized gain -- (0.956)
In excess of net realized gain(2) -- (0.102)
------- --------
Total distributions $(0.030) $ (1.058)
Net asset value - End of year $12.440 $ 10.830
------- --------
Total return(3) 15.16% 19.26%
Ratios/Supplemental Data+:
Net assets, end of year (000's omitted) $ 368 $ 307
Ratios (as a percentage of average daily
net assets):
Expenses 0.13% 0.18%
Expenses after custodian fee reduction 0.00% 0.00%
Net investment income 0.25% 0.18%
Portfolio turnover 122% 2%
</TABLE>
+ The operating expenses of the Fund reflect a reduction of the investment
adviser fee, an allocation of expenses to the manager or administrator, or
both. Had such action not been taken, the ratios and investment income per
share would have been as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Ratios (as a percentage of average daily net assets):
Expenses(2)(3) 9.93% 10.13%
Expenses after custodian fee reduction(2) 9.81% 10.13%
Net investment income (9.56)% (9.95)%
Net investment loss per share $(1.30) $(0.90)
</TABLE>
(1) Certain per share amounts are based on average shares outstanding.
(2) The Fund has followed the Statement of Position (SOP) 93-2: Determination,
Disclosure and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distribution by Investment Companies. The SOP
requires that differences in the recognition or classification of income
between the financial statements and tax earnings and profits that result
in temporary over-distributions for financial statement purposes, are
classified as distributions in excess of net investment income or
accumulated net realized gains.
(3) Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Distributions, if any, are assumed to be reinvested at the
net asset value on the reinvestment date. Total return is not computed on
an annualized basis.
10
<PAGE>
LOGO
Investing
for the
21st
Century(R)
More Information
- --------------------------------------------------------------------------------
About the Fund: More information is available in the statement of
additional information. The statement of additional information
is incorporated by reference into this prospectus. Additional
information about the Fund's investments is available in the
annual and semi-annual reports to shareholders. In the annual
report, you will find a discussion of the market conditions and
investment strategies that significantly affected the Fund's
performance during the past year. You may obtain free copies of
the statement of additional information and the shareholder
reports by contacting:
Eaton Vance Distributors, Inc.
The Eaton Vance Building
255 State StreetBoston, MA 02109
1-800-225-6265
website: www.eatonvance.com
You will find and may copy information about the Fund at the
Securities and Exchange Commission's public reference room in
Washington, DC (call 1-800-SEC-0330 for information on the
operation of the public reference room); on the SEC's Internet
site (http://www.sec.gov); or, upon payment of copying fees, by
writing to the SEC's public reference room in Washington, DC
20549-0102 or by electronic mail at [email protected].
About Shareholder Accounts: You can obtain more information from
Eaton Vance Shareholder Services (1-800-225-6265). If you own
shares and would like to add to, redeem or change your account,
please write or call the transferagent:
- --------------------------------------------------------------------------------
PFPC Global Fund Services
P.O. BOX 9653
Providence, RI 02904-9653
1-800-262-1122
The Fund's SEC File No. is 811-1545 EMGP
<PAGE>
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
STATEMENT OF
ADDITIONAL INFORMATION
May 1, 2000
EATON VANCE BALANCED FUND
EATON VANCE GROWTH & INCOME FUND
EATON VANCE SPECIAL EQUITIES FUND
EATON VANCE UTILITIES FUND
The Eaton Vance Building
255 State Street
Boston, Massachusetts 02109
(800) 225-6265
This Statement of Additional Information ("SAI") provides general
information about the Funds listed above and their corresponding Portfolios.
Each Fund is a series of Eaton Vance Special Investment Trust. Capitalized
terms used in this SAI and not otherwise defined have the meanings given them
in the prospectus. This SAI contains additional information about:
Page
Strategies and Risks ................................................ 1
Investment Restrictions ............................................. 4
Management and Organization ......................................... 6
Investment Advisory and Administrative Services ..................... 10
Other Service Providers ............................................. 12
Purchasing and Redeeming Shares ..................................... 12
Sales Charges ....................................................... 14
Performance ......................................................... 18
Taxes ............................................................... 19
Portfolio Security Transactions ..................................... 21
Financial Statements ................................................ 23
Appendices:
A: Class A Fees, Performance and Ownership .......................... a-1
B: Class B Fees, Performance and Ownership .......................... b-1
C: Class C Fees, Performance and Ownership .......................... c-1
Although each Fund offers only its shares of beneficial interest, it is
possible that a Fund (or Class) might become liable for a misstatement or
omission in this SAI regarding another Fund (or Class) because the Funds use
this combined SAI. The Trustees of the Trust have considered this factor in
approving the use of a combined SAI.
THIS IS NOT A PROSPECTUS AND IS AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE
INVESTORS ONLY IF PRECEDED OR ACCOMPANIED BY THE FUNDS' PROSPECTUS DATED MAY
1, 2000, AS SUPPLEMENTED FROM TIME TO TIME, WHICH IS INCORPORATED HEREIN BY
REFERENCE. THIS SAI SHOULD BE READ IN CONJUNCTION WITH THE PROSPECTUS, WHICH
MAY BE OBTAINED BY CALLING 1-800-225-6265.
<PAGE>
STRATEGIES AND RISKS
FOREIGN INVESTMENTS. Investing in foreign securities (including depository
receipts) involves considerations and possible risks not typically associated
with investing in securities issued by domestic corporations. The values of
foreign investments are affected by changes in currency rates or exchange
control regulations, application of foreign tax laws (including withholding
tax), changes in governmental administration or economic or monetary policy
(in this country or abroad), or changed circumstances in dealings between
nations. Foreign currency exchange rates may fluctuate significantly over
short periods of time causing a Portfolio's net asset value to fluctuate as
well. Costs are incurred in connection with conversions between various
currencies. In addition, foreign brokerage commissions, custody fees and other
costs of investing are generally higher than in the United States, and foreign
securities markets may be less liquid, more volatile and less subject to
governmental supervision than in the United States. Investments in foreign
issuers could be adversely affected by other factors not present in the United
States, including expropriation, confiscatory taxation, lack of uniform
accounting and auditing standards, delays in settlements of transactions, less
publicly-available financial and other information, armed conflict and
potential difficulities in enforcing contractual obligations. In order to
hedge against possible variations in foreign exchange rates pending the
settlement of foreign securities transactions, each Portfolio, except the High
Grade Income Portfolio, may buy or sell foreign currencies. Utilities
Portfolio's investments in depository receipts traded on a U.S. exchange are
not subject to that Portfolio's 25% limitation on foreign investing.
Because investments in companies domiciled outside of the United States
will frequently be denominated in foreign currencies, and because assets of a
Portfolio, except the High Grade Income Portfolio, may temporarily be held in
bank deposits in foreign currencies during the completion of investment
programs, the value of the assets of a Portfolio as measured in U.S. dollars
may be affected favorably or unfavorably by changes in foreign currency
exchange rates and exchange control regulations. A Portfolio may conduct its
foreign currency exchange transactions on a spot (i.e., cash) basis at the
spot rate prevailing in the foreign currency exchange market.
Each Portfolio may also invest in American Depositary Receipts, European
Depositary Receipts and Global Depositary Receipts. ADRs, EDRs and GDRs may be
sponsored or unsponsored. Unsponsored receipts are established without the
participation of the issuer. Unsponsored receipts differ from receipts
sponsored by an issuer in that they may involve higher expenses, they may not
pass-through voting and other shareholder rights, and they may be less liquid.
Each Portfolio, except the High Grade Income Portfolio, may enter into
forward foreign currency exchange contracts. Forward contracts are traded in
the interbank market conducted directly between currency traders (usually
large commercial banks) 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. A Portfolio may engage in cross-hedging by
using forward contracts in one currency (or basket of currencies) to hedge
against fluctuations in the value of securities denominated in a different
currency if the investment adviser determines that there is an established
historical pattern of correlation between the two currencies (or the basket of
currencies and the underlying currency). Use of a different foreign currency
magnifies a Portfolio's exposure to foreign currency exchange rate
fluctuations. A Portfolio may also use forward contracts to shift its exposure
to foreign currency exchange rate changes from one currency to another.
Although a forward contract will minimize the risk of loss due to a decline in
the value of the hedged currency, it also limits any potential gain which
might result should the value of such currency increase.
FUTURES CONTRACTS AND OPTIONS. The Portfolios, except the High Grade Income
Portfolio, may enter into futures contracts and options on futures contracts,
traded on an exchange regulated by the Commodity Futures Trading Commission
(the "CFTC"), and on foreign exchanges if the investment adviser determines
that trading on each such foreign exchange does not subject the Portfolios to
risks, including credit and liquidity risks, that are materially greater than
the risks associated with trading on CFTC-regulated exchanges. Transactions in
futures contracts and options thereon (other than purchased options) exposes a
Portfolio to an obligation to another party.
To the extent that a Portfolio enters into futures contracts, options on
futures contracts and options on foreign currencies traded on an exchange
regulated by the CFTC 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 investments, after taking into
account unrealized profits and unrealized losses on any contracts the
Portfolio has entered into.
OPTIONS. Each Portfolio (except Capital Growth and High Grade Income
Portfolio) may write (sell) call options on securities, currencies and
indices. A call option gives the buyer the right to buy, for example, a
security at a fixed price at a specified future date. Call options written on
securities, currencies and indices will be "covered", meaning the Portfolio
will own the security or currency underlying the option or have segregated
cash or liquid securities in an amount sufficient to cover the Portfolio's
obligation to the counterparty to the option. No Portfolio intends to write a
covered call option on any security if after such transaction more than 25% of
its net assets (50% in the case of Utilities Portfolio), as measured by the
aggregate value of the securities underlying all covered calls written by the
Portfolio, would be subject to such options. The Special Equities Portfolio
may write covered call options when, in the opinion of the Trustees of the
Portfolio, such activity is advisable and appropriate. If a written covered
call option is exercised, the Portfolio will be unable to realize further
price appreciation on the underlying securities and portfolio turnover will
increase, resulting in higher brokerage costs.
A Portfolio may terminate its obligations under a call option by engaging
in "closing purchase transactions." In the event no market for such a
transaction exists, a Portfolio would have to exercise its options in order to
realize any profit and would incur transaction costs upon the sale of
underlying securities pursuant to the exercise of put options. Reasons for the
absence of a liquid secondary market on an exchange include the following: (i)
there may be insufficient trading interest in certain options; (ii)
restrictions may be imposed by an exchange on opening transactions or closing
transactions or both; (iii) trading halts, suspensions or other restrictions
may be imposed with respect to particular classes or series of options or
underlying securities; (iv) unusual or unforeseen circumstances may interrupt
normal operations on an exchange; (v) the facilities of an exchange or the
Options Clearing Corporation may not at all times be adequate to handle
current trading volume; or (vi) one or more exchanges could, for economic or
other reasons, decide or be compelled at some future date to discontinue the
trading of options (or a particular class or series of options), in which
event the secondary market on that exchange (or in that class or series of
options) would cease to exist, although outstanding options on that exchange
that had been issued by the Options Clearing Corporation as a result of trades
on that exchange would continue to be exercisable in accordance with their
terms.
Each Portfolio (except Capital Growth, High Grade Income and Special
Equities Portfolios) may also write put options on securities, currencies and
indices. A put option gives the buyer the right to sell, for example, a
security at a fixed price at a specified future date. A Portfolio may only
write a put option on a security it owns or intends ultimately to acquire for
its investment portfolio. Each Portfolio (except Capital Growth and High Grade
Income Portfolios) may purchase call and (except Special Equities Portfolio)
put options on any securities in which it may invest or options on any
securities index composed of securities in which it may invest. No Portfolio
intends to purchase an option on any security if, after such transaction, more
than 5% of its net assets, as measured by the aggregate of all premiums paid
for all such options it holds, would be so invested.
SHORT SALES AGAINST-THE-BOX. Capital Growth Portfolio may sell a security
short if it owns at least an equal amount of the security sold short or
another security convertible or exchangeable for an equal amount of the
security sold short without payment of further compensation (a short sale
against-the-box). In a short sale against-the-box, the short seller is exposed
to the risk of being forced to deliver appreciated stock to close the position
if the borrowed stock is called in, causing a taxable gain to be recognized.
These transactions may also require the current recognition of taxable gain
under certain tax rules applicable to constructive sales. No more than 20% of
Capital Growth Portfolio's assets will be subject to short sales at any one
time.
WHEN-ISSUED SECURITIES. Each Portfolio (except Capital Growth Portfolio) may
purchase debt securities on a when-issued basis; that is, delivery and payment
for the securities normally take place up to 90 days after the date of the
transaction. The payment obligation and the interest rate that will be
received on the securities are fixed at the time the Portfolio enters into the
purchase commitment. Securities purchased on a when-issued basis are subject
to changes in value. Therefore, to the extent that a Portfolio remains
substantially fully invested at the same time that it has purchased securities
on a when-issued basis, there will be greater fluctuations in the Portfolio's
net asset value than if it solely set aside cash to pay for when-issued
securities.
LENDING OF SECURITIES. The Portfolios may each seek to increase their income
by lending portfolio securities to broker-dealers or other institutional
borrowers. If the investment adviser determines to make securities loans, it
is intended that the value of the securities loaned would not exceed 30% of
the Portfolio's total assets. Securities lending involves risks of delay in
recovery or even loss of rights on the securities loaned if the borrower fails
financially. The Portfolios have no present intention of engaging in
securities lending.
ASSET COVERAGE REQUIREMENTS. Transactions involving when-issued securities,
forward contracts, futures contracts and options (other than options that a
Portfolio has purchased) expose a Portfolio to an obligation to another party.
A Portfolio will not enter into any such transactions unless it owns either
(1) an offsetting ("covered") position in securities or other options, forward
contracts or futures contracts, or (2) cash or liquid securities (such as
readily marketable common stock and money market instruments) with a value
sufficient at all times to cover its potential obligations not covered as
provided in (1) above. The Portfolios will comply with Securities and Exchange
Commission ("SEC") guidelines regarding cover for these instruments and, if
the guidelines so require, set aside cash or liquid securities in a segregated
account with its custodian in the prescribed amount. The securities in the
segregated account will be marked to market daily.
Assets used as cover or held in a segregated account maintained by the
Portfolio's custodian cannot be sold while the position requiring coverage or
segregation is outstanding unless they are replaced with other appropriate
assets. As a result, the commitment of a large portion of a Portfolio's assets
to segregated accounts or to cover could impede portfolio management or the
Portfolio's ability to meet redemption requests or other current obligations.
RISKS ASSOCIATED WITH DERIVATIVE INSTRUMENTS. Transactions in derivative
instruments involve a risk of loss or depreciation due to: unanticipated
adverse changes in securities prices, interest rates, the other financial
instruments' prices or currency exchange rates; the inability to close out a
position; default by the counterparty; imperfect correlation between a
position and the desired hedge; tax constraints on closing out positions; and
portfolio management constraints on securities subject to such transactions.
The loss on derivative instruments (other than purchased options) may
substantially exceed a Portfolio's initial investment in these instruments. In
addition, a Portfolio may lose the entire premium paid for purchased options
that expire before they can be profitably exercised. Transaction costs are
incurred in opening and closing positions in derivative instruments.
Derivative instruments may sometimes increase or leverage a Portfolio's
exposure to a particular market risk. Leverage enhances a Portfolio's exposure
to the price volatility of derivative instruments it holds. A Portfolio's
success in using derivative instruments to hedge portfolio assets depends on
the degree of price correlation between the derivative instruments and the
hedged asset. Imperfect correlation may be caused by several factors,
including temporary price disparities among the trading markets for the
derivative instrument, the assets underlying the derivative instrument and the
Portfolio's assets. During periods of market volatility, a commodity exchange
may suspend or limit trading in an exchange-traded derivative instrument,
which may make the contract temporarily illiquid and difficult to price.
Commodity exchanges may also establish daily limits on the amount that the
price of a futures contract or futures option can vary from the previous day's
settlement price. Once the daily limit is reached, no trades may be made that
day at a price beyond the limit. This may prevent a Portfolio from closing out
positions and limiting its losses. The use of derivatives are highly
specialized activities that involve skills different from conducting ordinary
portfolio securities transactions. Under regulations of the CFTC, the use of
futures transactions for nonhedging purposes is limited. There can be no
assurance that the investment adviser's use of derivative instruments will be
advantageous to a Portfolio. A Portfolio will engage in transactions in
futures contracts and related options only to the extent such transactions are
consistent with the requirements of the Code for maintaining the qualification
of the corresponding Fund as a regulated investment company for federal income
tax purposes.
The Utilities Portfolio expects to purchase and write only exchange-traded
options until such time as the investment adviser determines that the over-
the-counter ("OTC") options market is sufficiently developed and, if
required, the Utilities Fund has amended its prospectus so that appropriate
disclosure is furnished to prospective and existing shareholders. OTC
derivative instruments in which the Utilities Portfolio may invest 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. The staff
of the SEC takes the position that purchased OTC options, and assets used as
cover for written OTC options, may be subject to the Portfolio's 15% limit on
illiquid investments. Utilities 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.
FIXED INCOME SECURITIES. Fixed income securities include preferred stocks,
bonds, debentures, notes and other types of debt securities (such as
collateralized mortgage obligations, mortgage-backed securities and other
types of asset-backed and collateralized obligations). In seeking to achieve
its investment objective, or to consolidate growth previously attained, Growth
& Income Portfolio may from time to time purchase bonds, U.S. Government
obligations and other securities. Bonds will constitute 5% or less of net
assets and will be of investment grade quality which are those rated Baa or
higher by Moody's or BBB or higher by either S&P or Fitch at the time of
investment.
Debt securities of below investment grade quality (commonly called "junk
bonds") bear special risks. The lowest investment grade, lower rated and
comparable unrated debt securities will have speculative characteristics in
varying degrees. While such securities may have some quality and protective
characteristics, these characteristics can be expected to be offset or
outweighed by uncertainties or major risk exposures to adverse conditions.
Lower rated and comparable unrated securities are subject to the risk of an
issuer's inability to meet principal and interest payments on the securities
(credit risk) and may also be subject to price volatility due to such factors
as interest rate sensitivity, market perception of the creditworthiness of the
issuer and general market liquidity (market risk). Lower rated and comparable
unrated securities are also more likely to react to real or perceived
developments affecting markets and credit risk than are more highly rated
securities, which react primarily to movements in the general level of
interest rates. Lack of liquidity may make such securities difficult to value.
During periods of deteriorating economic conditions and contraction in the
credit markets, the ability of issuers of such securities to service their
debt, meet projected goals or obtain additional financing may be impaired. A
Portfolio may retain defaulted securities when such is considered desirable by
the investment adviser. In the case of a defaulted security, a Portfolio may
incur additional expenses seeking recovery of its investment. In the event the
rating of a security held by a Portfolio is downgraded, the invesment adviser
will consider disposing of such security, but is not obligated to do so.
Each Portfolio may purchase convertible debt securities, which may have
equity characteristics.
REPURCHASE AGREEMENTS. A Portfolio may enter into repurchase agreements with
respect to U.S. Government securities. In the event of the bankruptcy of the
other party to a repurchase agreement, a Portfolio might experience delays in
recovering its cash. To the extent that, in the meantime, the value of the
securities the Portfolio purchased may have decreased, the Portfolio could
experience a loss. Each Portfolio will treat repurchase agreements maturing in
more than seven days as illiquid.
TEMPORARY INVESTMENTS. Under unusual market conditions, each Portfolio may
invest temporarily in cash or cash equivalents. Cash equivalents are highly
liquid, short-term securities such as commercial paper, certificates of
deposit, short-term notes and short-term U.S. Government obligations.
PORTFOLIO TURNOVER. While it is not the policy of the Portfolios to purchase
securities with a view to short-term profits, the Portfolios will dispose of
securities without regard to the time they have been held if such action seems
advisable. The Capital Growth, High Grade Income and Special Equities
Portfolios anticipate that under normal market conditions, each Portfolio's
annual turnover rate will generally not exceed 100% (excluding turnover of
securities having a maturity of one year or less), although Special Equities
Portfolio's annual portfolio turnover rate has exceeded 100% in the past. The
Portfolio turnover rate of the Utilities Portfolio may exceed 100%, but under
normal conditions is not likely to exceed 250%. The annual turnover rate of
Growth & Income Portfolio may exceed 100%.
INVESTMENT RESTRICTIONS
The following investment restrictions of each Fund are designated as
fundamental policies and as such cannot be changed without the approval of the
holders of a majority of a Fund's outstanding voting securities, which as used
in this SAI means the lesser of (a) 67% of the shares of a Fund present or
represented by proxy at a meeting if the holders of more than 50% of the
outstanding shares are present or represented at the meeting or (b) more than
50% of the outstanding shares of a Fund. Accordingly, each Fund may not:
(1) With respect to 75% of its total assets, invest more than 5% of
its total assets taken at market value in the securities of any one issuer
or 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;
(2) Borrow money or issue senior securities, except as permitted by
the Investment Company Act of 1940;
(3) Purchase securities on margin (but the Fund may obtain such short-
term credits as may be necessary for the clearance of purchases and sales
of securities);
(4) Invest in real estate (although it may purchase and sell
securities which are secured by real estate and securities of companies
which invest or deal in real estate);
(5) Invest in physical commodities or commodity contracts for the
purchase and sale of physical commodities; or
(6) Make loans to any person except by (a) the acquisition of debt
securities and making portfolio investments, (b) entering into repurchase
agreements or (c) lending portfolio securities.
In addition, Balanced Fund may not:
(7) Invest more than 25% of the value of its total assets at the time
of acquisition in any one industry with public utility companies (being
electric utility companies, natural gas producing companies, transmission
companies, telephone companies, and water works companies) being
considered separate industries.
In addition, Growth & Income Fund and Special Equities Fund may not:
(8) Underwrite securities of other issuers; or
(9) Concentrate 25% of more of its assets in any one industry
(provided that there is no limitation with respect to obligations issued
or guaranteed by the U.S. Government or any of its agencies or
instrumentalities).
In addition, Utilities Fund may not:
(10) Underwrite or participate in the marketing of securities of
others, except insofar as it may technically be deemed to be an
underwriter in selling a portfolio security under circumstances which may
require the registration of the same under the Securities Act of 1933; or
(11) Make an investment in any one industry if such investment would
cause investments in such industry to exceed 25% of the Fund's total
assets (taken at market value) except that the Fund will concentrate at
least 25% of its investments in utility stocks (i.e., principally
electric, gas and telephone companies).
Notwithstanding the investment policies and restrictions of each Fund, a
Fund may invest all of its investable assets in an open-end management
investment company with substantially the same investment objective, policies
and restrictions as the Fund; and Balanced Fund may invest in two or more
open-end management investment companies which together have substantially the
same investment objectives, policies and restrictions as the Fund. In
addition, Balanced Fund and its corresponding Portfolios may not underwrite
securities of other issuers. For purposes of Restriction (9) above, not more
than 25% of the total assets of the Growth & Income and Special Equities Funds
will be concentrated in any one industry.
Each Portfolio has adopted substantially the same fundamental investment
restrictions as the foregoing investment restrictions adopted by each Fund;
such restrictions cannot be changed without the approval of a "majority of the
outstanding voting securities" of a Portfolio.
The Funds and the Portfolios have each adopted the following investment
policies which may be changed by the Trustees with respect to a Fund without
approval by that Fund's shareholders or with respect to the Portfolio without
approval of a Fund or its other investors. Each Fund and each Portfolio will
not:
(a) invest more than 15% of net assets in investments which are not
readily marketable, including restricted securities and repurchase
agreements maturing in more than seven days. Restricted securities for the
purposes of this limitation do not include securities eligible for resale
pursuant to Rule 144A 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. Any such determination by a delegate will be made pursuant to
procedures adopted by the Board. If the Fund or Portfolio invests in Rule
144A securities, the level of portfolio illiquidity may be increased to
the extent that eligible buyers become uninterested in purchasing such
securities; or
(b) make short sales of securities or maintain a short position,
unless at all times when a short position is open the Fund or the
Portfolio either owns an equal amount of such securities or owns
securities convertible into or exchangeable for securities of the same
issue as, and equal in amount to, the securities sold short. In the case
of each of Utilities Fund and Portfolio, no more than 25% of its net
assets (taken at current value) may be held as collateral for such sales
at any one time.
In addition, Balanced Fund and its corresponding Portfolios may not:
(c) invest in put or call options or straddles or spreads.
In addition, Special Equities Fund and Special Equities Portfolio may
not:
(d) invest in put or call options, except that the Fund or the
Portfolio is authorized to engage in the writing and sale of call option
contracts and the purchase of call options as described in the Fund's
prospectus and statement of additional information and may invest in
warrants where the grantor thereof is the issuer of the underlying
securities.
In addition, Growth & Income Fund and Growth & Income Portfolio may
not:
(e) invest more than 25% of its net assets in the securities of
foreign issuers (with depositary receipts of non-U.S. issuers traded on a
U.S. exchange not deemed foreign securities).
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 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. Where applicable and notwithstanding the foregoing,
under normal market conditions the Fund and the Portfolio must take actions
necessary to comply with the policy of investing in securities corresponding
to its name as set forth in the prospectus. Moreover, each Fund and Portfolio
must always be in compliance with the limitation on investing in illiquid
securities and the borrowing policies set forth above.
MANAGEMENT AND ORGANIZATION
FUND MANAGEMENT. The Trustees of the Trust are responsible for the
overall management and supervision of the Trust's affairs. The Trustees and
officers of the Trust and the Portfolios are listed below. Except as
indicated, each individual has held the office shown or other offices in the
same company for the last five years. Unless otherwise noted, the business
address of each Trustee and officer is 255 State Street, Boston, Massachusetts
02109. Those Trustees who are "interested persons" of the Trust or a Portfolio
as defined in the 1940 Act are indicated by an asterisk(*).
JESSICA M. BIBLIOWICZ (40), Trustee*
Chief Executive Officer of National Financial Partners (a financial services
company) (since April 1999). President and Chief Operating Officer of John
A. Levin & Co. (a registered investment advisor) (July 1997 to April 1999)
and a Director of Baker, Fentress & Company which owns John A. Levin & Co.
(July 1997 to April 1999). Executive Vice President of Smith Barney Mutual
Funds (from July 1994 to June 1997). Elected Trustee October 30, 1998.
Trustee of various investment companies managed by Eaton Vance or BMR since
October 30, 1998.
Address: 1301 Avenue of the Americas, New York, NY 10019
DONALD R. DWIGHT (69), Trustee
President of Dwight Partners, Inc. (a corporate relations and communications
company). Trustee/Director of the Royce Funds (mutual funds). Trustee of
various investment companies managed by Eaton Vance or BMR.
Address: Clover Mill Lane, Lyme, New Hampshire 03768
JAMES B. HAWKES (58), President and Trustee*
Chairman, President and Chief Executive Officer of BMR, Eaton Vance and their
corporate parent and trustee (EVC and EV); Director of EVC and EV. Trustee
and officer of various investment companies managed by Eaton Vance or BMR.
SAMUEL L. HAYES, III (65), Trustee
Jacob H. Schiff Professor of Investment Banking Emeritus, Harvard University
Graduate School of Business Administration. Trustee of the Kobrick
Investment Trust (mutual funds). Trustee of various investment companies
managed by Eaton Vance or BMR.
Address: 345 Nahatan Road, Westwood, Massachusetts 02090
NORTON H. REAMER (64), Trustee
Chairman of the Board and Chief Executive Officer, United Asset Management
Corporation (a holding company owning institutional investment management
firms); Chairman, President and Director, UAM Funds (mutual funds). Trustee
of various investment companies managed by Eaton Vance or BMR.
Address: One International Place, Boston, Massachusetts 02110
LYNN A. STOUT (42), Trustee
Professor of Law, Georgetown University Law Center. Elected Trustee October
30, 1998. Trustee of various investment companies managed by Eaton Vance or
BMR since October 30, 1998.
Address: 600 New Jersey Avenue, NW, Washington, DC 20001
JACK L. TREYNOR (70), Trustee
Investment Adviser and Consultant. Trustee of various investment companies
managed by Eaton Vance or BMR.
Address: 504 Via Almar, Palos Verdes Estates, California 90274
ARIEH COLL (36), Vice President of Capital Growth Portfolio
Vice President of BMR and Eaton Vance since January 10, 2000. Portfolio
manager and investment analyst for Fidelity Investments (1989-1999).
MICHAEL R. MACH (52), Vice President of the Growth & Income Portfolio
Vice President of Eaton Vance and BMR since December 15, 1999. Previously, he
was a Managing Director and Senior Analyst for Robertson Stephens
(1998-1999); Managing Director and Senior Analyst for Piper Jaffray
(1996-1998); and Senior Vice President and Senior Analyst for Putnam
Investments (1989-1996). Officer of various investment companies managed by
Eaton Vance or BMR.
JUDITH A. SARYAN (45), Vice President of Utilities Portfolio
Vice President of BMR and Eaton Vance since March 31, 1999. Portfolio Manager
and Equity Analyst for State Street Global Advisors (1980-1999).
EDWARD E. SMILEY, JR. (55), Vice President of the Trust and Special Equities
Portfolio
Vice President of BMR and Eaton Vance since November 1, 1996. Senior Product
Manager, Equity Management for TradeStreet Investment Associates, Inc., a
wholly-owned subsidiary of NationsBank (1992-1996). Officer of various
investment companies managed by Eaton Vance or BMR.
MICHAEL B. TERRY (57), Vice President of the Trust and High Grade Income
Portfolio
Vice President of BMR and Eaton Vance. Officer of various investment companies
managed by Eaton Vance or BMR.
JAMES L. O'CONNOR (55), Treasurer
Vice President of BMR and Eaton Vance. Officer of various investment companies
managed by Eaton Vance or BMR.
ALAN R. DYNNER (59), Secretary
Vice President, Secretary and Chief Legal Officer of BMR, Eaton Vance and EVC.
Prior to joining Eaton Vance on November 1, 1996, he was a Partner of the
law firm of Kirkpatrick & Lockhart LLP, New York and Washington, D.C., and
was Executive Vice President of Neuberger & Berman Management, Inc., a
mutual fund management company. Officer of various investment companies
managed by Eaton Vance or BMR.
JANET E. SANDERS (64), Assistant Treasurer and Assistant Secretary
Vice President of BMR and Eaton Vance. Officer of various investment companies
managed by Eaton Vance or BMR.
A. JOHN MURPHY (37), Assistant Secretary
Vice President of BMR and Eaton Vance. Officer of various investment companies
managed by Eaton Vance or BMR.
ERIC G. WOODBURY (42), Assistant Secretary
Vice President of BMR and Eaton Vance. Officer of various investment companies
managed by Eaton Vance or BMR.
The Nominating Committee of the Board of Trustees of the Trust and each
Portfolio is comprised of the Trustees who are not "interested persons" as
that term is defined under the 1940 Act ("noninterested Trustees"). The
purpose of the Committee is to recommend to the Board nominees for the
position of noninterested Trustee and to assure that at least a majority of
the Board of Trustees is independent of Eaton Vance and its affiliates.
Messrs. Hayes (Chairman), Dwight and Reamer and Ms. Stout are members of
the Special Committee of the Board of Trustees of the Trust and of each
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 Funds and the
Portfolios, including investment advisory (Portfolio only), administrative,
transfer agency, custodial and fund accounting and distribution services, and
(ii) all other matters in which Eaton Vance or its affiliates has any actual
or potential conflict of interest with the Funds, the Portfolios or its
investors therein.
Messrs. Treynor (Chairman) and Dwight and Ms. Bibliowicz are members of
the Audit Committee of the Board of Trustees of the Trust and of each
Portfolio. The Audit Committee's functions include making recommendations to
the Trustees regarding the selection of the independent accountants, and
reviewing matters relative to trading and brokerage policies and practices,
accounting and auditing practices and procedures, accounting records, internal
accounting controls, and the functions performed by the custodian, transfer
agent and dividend disbursing agent of the Trust and of the Portfolios.
Trustees of the Portfolios that are not affiliated with the investment
adviser may elect to defer receipt of all or a percentage of their annual fees
in accordance with the terms of a Trustees Deferred Compensation Plan (the
"Trustees" Plan"). Under the Trustees' Plan, an eligible Trustee may elect to
have his deferred fees invested by a Portfolio in the shares of one or more
funds in the Eaton Vance Family of Funds, and the amount paid to the Trustees
under the Trustees' Plan will be determined based upon the performance of such
investments. Deferral of Trustees' fees in accordance with the Trustees' Plan
will have a negligible effect on the Portfolios' assets, liabilities, and net
income per share, and will not obligate a Portfolio to retain the services of
any Trustee or obligate a Portfolio to pay any particular level of
compensation to the Trustees. Neither the Portfolios nor the Trust has a
retirement plan for its Trustees.
The fees and expenses of the noninterested Trustees of the Trust and of
the Portfolios are paid by the Funds (and the other series of the Trust) and
the Portfolios, respectively. (The Trustees of the Trust and the Portfolios
who are members of the Eaton Vance organization receive no compensation from
the Trust or the Portfolios). During the fiscal year ended December 31, 1999,
the noninterested Trustees of the Trust and the Portfolios earned the
following compensation in their capacities as Trustees from the Trust and the
Portfolios, and for the year ended December 31, 1999, earned the following
compensation in their capacities as Trustees of the funds in the Eaton Vance
fund complex(1):
<TABLE>
<CAPTION>
JESSICA M. DONALD R. SAMUEL L. NORTON H. LYNN A. JACK L.
SOURCE OF COMPENSATION BIBLIOWICZ DWIGHT(3) HAYES, III(4) REAMER STOUT TREYNOR
- ---------------------- ---------- --------- ------------- ------ ----- -------
<S> <C> <C> <C> <C> <C> <C>
Trust(2) $ $ $ $ $ $
Balanced Portfolio
Growth & Income Portfolio
Special Equities Portfolio
Utilities Portfolio
Trust and Fund Complex (5) (6)
- ----------
(1) As of May 1, 2000, the Eaton Vance fund complex consists of 154 registered investment companies or series thereof.
(2) The Trust consisted of 8 Funds as of December 31, 1999.
(3) Includes deferred compensation as follows: Balanced -- $ ; Growth & Income -- $ ; Special Equities -- $ ;
Utilities -- $ .
(4) Includes deferred compensation as follows: Balanced -- $ ; Growth & Income -- $ ; Special Equities -- $ ;
Utilities -- $ .
(5) Includes $ of deferred compensation.
(6) Includes $ of deferred compensation.
</TABLE>
ORGANIZATION. Each Fund is a series of the Trust, which is organized under
Massachusetts law as a business trust, and is operated as an open-end
management investment company. On May 1, 1998, Eaton Vance Investors Fund
changed its name to Eaton Vance Balanced Fund, Eaton Vance Stock Fund changed
its name to Eaton Vance Growth & Income Fund and Eaton Vance Total Return Fund
changed its name to Eaton Vance Utilities Fund. The Funds were reorganized as
Class A shares (formerly EV Traditional Investors Fund, EV Traditional Special
Equities Fund, EV Traditional Stock Fund and EV Traditional Total Return
Fund), Class B shares (formerly EV Marathon Investors Fund, EV Marathon
Special Equities Fund, EV Marathon Stock Fund and EV Marathon Total Return
Fund) and Class C shares (formerly EV Classic Investors Fund, EV Classic
Special Equities Fund, EV Classic Stock Fund and EV Classic Total Return Fund)
of Eaton Vance Special Investment Trust on January 1, 1998, so information
herein prior to such date is for the Funds when they were separate series of
the Trust (or a separate corporation) and before they became multiple-class
funds.
The Trust may issue an unlimited number of shares of beneficial interest
(no par value per share) in one or more series (such as the Funds). The
Trustees of the Trust have divided the shares of each Fund into multiple
classes. Each class represents an interest in a Fund, but is subject to
different expenses, rights and privileges. 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, shares are fully
paid and nonassessable by the Trust. Shareholders are entitled to one vote for
each full share held. Fractional shares may be voted proportionately. Shares
of a Fund will be voted together except that only shareholders of a particular
class may vote on matters affecting only that class. Shares have no preemptive
or conversion rights and are freely transferable. In the event of the
liquidation of a Fund, shareholders of each class are entitled to share pro
rata in the net assets attributable to that class available for distribution
to shareholders.
The Trustees of the Trust have considered the advantages and disadvantages
of investing the assets of each Fund in its corresponding Portfolio, as well
as the advantages and disadvantages of the two-tier format. The Trustees
believe that the structure offers opportunities for growth in the assets of
the Portfolios, may afford the potential for economies of scale for each Fund
and may over time result in lower expenses for a Fund.
As permitted by Massachusetts law, there will normally be no meetings of
shareholders for the purpose of electing Trustees unless and until such time
as less than a majority of the Trustees of the Trust holding office have been
elected by shareholders. In such an event the Trustees then in office will
call a shareholders' meeting for the election of Trustees. Except for the
foregoing circumstances and unless removed by action of the shareholders in
accordance with the Trust's By-laws, the Trustees shall continue to hold
office and may appoint successor Trustees.
The Trust's By-laws provide that no person shall serve as a Trustee if
shareholders holding two-thirds of the outstanding shares have removed him
from that office either by a written declaration filed with the Trust's
custodian or by votes cast at a meeting called for that purpose. The By-laws
further provide that under certain circumstances the shareholders may call a
meeting to remove a Trustee and that the Trust is required to provide
assistance in communication with shareholders about such a meeting.
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 of classes of shares or
restructuring the Trust) as do not have a materially adverse effect on the
financial interests of shareholders or if they deem it necessary to conform it
to applicable federal or state laws or regulations. The Trust or any series or
class thereof may be terminated by: (1) the affirmative vote of the holders of
not less than two-thirds of the shares outstanding and entitled to vote at any
meeting of shareholders of the Trust or the appropriate series or class
thereof, or by an instrument or instruments in writing without a meeting,
consented to by the holders of two-thirds of the shares of the Trust or a
series or class thereof, provided, however, that, if such termination is
recommended by the Trustees, the vote of a majority of the outstanding voting
securities of the Trust or a series or class thereof entitled to vote thereon
shall be sufficient authorization; or (2) by means of an instrument in writing
signed by a majority of the Trustees, to be followed by a written notice to
shareholders stating that a majority of the Trustees has determined that the
continuation of the Trust or a series or a class thereof is not in the best
interest of the Trust, such series or class or of their respective
shareholders.
The Declaration of Trust further provides that the Trustees will not be
liable for errors of judgment or mistakes of fact or law; but nothing in the
Declaration of Trust protects a Trustee against any liability to which he
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of his
office.
Under Massachusetts law, if certain conditions prevail, shareholders of a
Massachusetts business trust (such as the Trust) could be deemed to have
personal liability for the obligations of the Trust. Numerous investment
companies registered under the 1940 Act have been formed as Massachusetts
business trusts, and management is not aware of an instance where such
liability has been imposed. The Trust's Declaration of Trust contains an
express disclaimer of liability on the part of the Fund shareholders and the
Trust's By-laws provide that the Trust shall assume the defense on behalf of
any Fund shareholders. The Declaration of Trust also contains provisions
limiting the liability of a series or class to that series or class. Moreover,
the Trust's By-laws also provide for indemnification out of the property of
the Fund of any shareholder held personally liable solely by reason of being
or having been a shareholder for all loss or expense arising from such
liability. The assets of the Fund are readily marketable and will ordinarily
substantially exceed its liabilities. In light of the nature of the Fund's
business and the nature of its assets, management believes that the
possibility of the Fund's liability exceeding its assets, and therefore the
shareholder's risk of personal liability, is remote.
Each Portfolio is organized as a trust under the laws of the state of New
York and intends to be treated as a partnership for federal tax purposes. In
accordance with the Declaration of Trust of each 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 of the
Portfolio 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 each Portfolio provides that no person shall
serve as a Trustee if investors holding two-thirds of the outstanding interest
have removed him from that office either by a written declaration filed with
the Portfolio's custodian or by votes cast at a meeting called for that
purpose. The Declaration of Trust further provides that under certain
circumstances the investors may call a meeting to remove a Trustee and that
the Portfolio is required to provide assistance in communicating with
investors about such a meeting.
Each Portfolio's Declaration of Trust provides that a 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.
Whenever a Fund as an investor in a Portfolio is requested to vote on
matters pertaining to the Portfolio (other than the termination of the
Portfolio's business, which may be determined by the Trustees of the Portfolio
without investor approval), the Fund will hold a meeting of Fund shareholders
and will vote its interest in the Portfolio for or against such matters
proportionately to the instructions to vote for or against such matters
received from Fund shareholders. A Fund shall vote shares for which it
receives no voting instructions in the same proportion as the shares for which
it receives voting instructions. Other investors in a Portfolio may alone or
collectively acquire sufficient voting interests in the Portfolio to control
matters relating to the operation of the Portfolio, which may require the Fund
to withdraw its investment in the Portfolio or take other appropriate action.
Any such withdrawal could result in a distribution "in kind" of portfolio
securities (as opposed to a cash distribution from the Portfolio). If
securities are distributed, a Fund could incur brokerage, tax or other charges
in converting the securities to cash. In addition, the distribution in kind
may result in a less diversified portfolio of investments or adversely affect
the liquidity of a Fund. Notwithstanding the above, there are other means for
meeting shareholder redemption requests, such as borrowing.
A Fund may withdraw (completely redeem) all its assets from its
corresponding Portfolio at any time if the Board of Trustees of the Trust
determines that it is in the best interest of that Fund to do so. In the event
a Fund withdraws all of its assets from its corresponding Portfolio, or the
Board of Trustees of the Trust determines that the investment objective of
such Portfolio is no longer consistent with the investment objective of the
Fund, the Trustees would consider what action might be taken, including
investing the assets of such Fund in another pooled investment entity or
retaining an investment adviser to manage the Fund's assets in accordance with
its investment objective. A Fund's investment performance may be affected by a
withdrawal of all its assets (or the assets of another investor in the
Portfolio) from its corresponding Portfolio.
Prior to March 1, 2000, the Balanced Fund invested all of its assets in
one investment company, the Balanced Portfolio.
INVESTMENT ADVISORY AND ADMINISTRATIVE SERVICES
INVESTMENT ADVISORY SERVICES. BMR manages the investments and affairs
of each Portfolio subject to the supervision of the Portfolio's Board of
Trustees. BMR furnishes to the Portfolios investment research, advice and
supervision, furnishes an investment program and determines what securities
will be purchased, held or sold by the Portfolio and what portion, if any, of
the Portfolio's assets will be held uninvested. Each Investment Advisory
Agreement requires BMR to pay the salaries and fees of all officers and
Trustees of the Portfolio who are members of the BMR organization and all
personnel of BMR performing services relating to research and investment
activities.
BMR has agreed to waive a portion of its management fee of the Utilities
Portfolio under the Investment Advisory Agreement as follows:
AVERAGE DAILY NET ANNUALIZED FEE RATE CONTRACTUAL
ASSETS FOR THE MONTH WITH WAIVER ANNUALIZED FEE RATE
- -------------------------------------------------------------------------------
Up to $500 million 0.6500% 0.7500%
$500 million but less than $1 billion 0.6250% 0.6875%
$1 billion but less than $1.5 billion 0.6000% 0.6250%
$1.5 billion but less than $2 billion 0.5500% 0.5625%
$2 billion but less than $3 billion 0.5000% 0.5000%
$3 billion and over 0.4375% 0.4375%
As at December 31, 1999, the Utilities Portfolio had net assets of
$ . For the fiscal years ended December 31, 1999, 1998 and 1997, the
Utilities Portfolio paid BMR advisory fees of $ , $2,793,965 and
$2,839,559, respectively (equivalent to %, 0.65% and 0.66%, respectively,
of the Utilities Portfolio's average daily net assets for such period).
For a description of the compensation that the Capital Growth, High Grade
Income, Growth & Income and Special Equities Portfolios pay BMR under each
Investment Advisory Agreement, see the prospectus.
As of December 31, 1999, the Balanced Portfolio had net assets of
$ . For the fiscal years ended December 31, 1999, 1998 and 1997, the
Balanced Portfolio paid BMR advisory fees of $ , $2,132,133 and
$1,964,597, respectively (equivalent to % 0.61% and 0.61%, respectively,
of the Balanced Portfolio's average daily net assets for each such period).
As of December 31, 1999, the Special Equities Portfolio had net assets of
$ . For the fiscal years ended December 31, 1999, 1998 and 1997, the
Special Equities Portfolio paid BMR advisory fees of $ , $477,657 and
$488,529, respectively (equivalent to 0.625% of the Special Equities
Portfolio's average daily net assets for each such year).
As of December 31, 1999, the Growth & Income Portfolio had net assets of
$ . For the fiscal years ended December 31, 1999, 1998 and 1997, the
Growth & Income Portfolio paid BMR advisory fees of $ , $969,883 and
$856,583, respectively (equivalent to 0.625% of the Growth & Income
Portfolio's average daily net assets for each such period).
Each Investment Advisory Agreement with BMR continues 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 a Portfolio cast in
person at a meeting specifically called for the purpose of voting on such
approval and (ii) by the Board of Trustees of a Portfolio or by vote of a
majority of the outstanding voting securities of a Portfolio. Each Agreement
may be terminated at any time without penalty on sixty (60) days' written
notice by the Board of Trustees of either party, or by vote of the majority of
the outstanding voting securities of a Portfolio, and each Agreement will
terminate automatically in the event of its assignment. Each Agreement
provides that BMR may render services to others. Each Agreement also provides
that BMR shall not be liable for any loss incurred in connection with the
performance of its duties, or action taken or omitted under that Agreement, in
the absence of willful misfeasance, bad faith, gross negligence in the
performance of its duties or by reason of its reckless disregard of its
obligations and duties thereunder, or for any losses sustained in the
acquisition, holding or disposition of any security or other investment.
ADMINISTRATIVE SERVICES. As indicated in the prospectus, Eaton Vance serves as
administrator of each Fund, but currently receives no compensation for
providing administrative services to the Fund. Under its Administrative
Services Agreement with the Trust, Eaton Vance has been engaged to administer
the Funds' affairs, subject to the supervision of the Trustees of the Trust,
and shall furnish for the use of the Funds' office space and all necessary
office facilities, equipment and personnel for administering the affairs of
the Funds.
INFORMATION ABOUT BMR AND EATON VANCE. BMR and Eaton Vance are business trusts
organized under Massachusetts law. Eaton Vance, Inc. ("EV") serves as trustee
of BMR and Eaton Vance. BMR, Eaton Vance and EV are wholly-owned subsidiaries
of Eaton Vance Corporation ("EVC"), a Maryland corporation and publicly-held
holding company, EVC through its subsidiaries and affiliates engages primarily
in investment management, administration and marketing activities. The
Directors of EVC are James B. Hawkes, John G.L. Cabot, Leo I. Higdon, Jr.,
John M. Nelson, Vincent M. O'Reilly and Ralph Z. Sorenson. All of the issued
and outstanding shares of Eaton Vance are owned by EVC. All of the issued and
outstanding shares of BMR are owned by Eaton Vance. All shares of the
outstanding Voting Common Stock of EVC are deposited in a Voting Trust, the
Voting Trustees of which are Mr. Hawkes, Jeffrey P. Beale, Alan R. Dynner,
Thomas E. Faust, Jr., Thomas J. Fetter, Scott H. Page, Duncan W. Richardson,
William M. Steul, Payson F. Swaffield, Michael W. Weilheimer, and Wharton P.
Whitaker (all of whom are officers of Eaton Vance). The Voting Trustees have
unrestricted voting rights for the election of Directors of EVC. All of the
outstanding voting trust receipts issued under said Voting Trust are owned by
certain of the officers of BMR and Eaton Vance who are also officers or
officers and Directors of EVC and EV. As indicated under "Management
Organization," all of the officers of the Trust (as well as Mr. Hawkes who is
also a Trustee), hold positions in the Eaton Vance organization.
EXPENSES. Each Fund and Portfolio is responsible for all expenses not
expressly stated to be payable by another party (such as the investment
adviser under the Investment Advisory Agreement, Eaton Vance under the
Administrative Services Agreement or the principal underwriter under the
Distribution Agreement). In the case of expenses incurred by the Trust, each
Fund is responsible for its pro rata share of those expenses. The only
expenses of a Fund allocated to a particular class are those incurred under
the Distribution or Service Plan applicable to that class and those resulting
from the fee paid to the principal underwriter for repurchase transactions.
OTHER SERVICE PROVIDERS
PRINCIPAL UNDERWRITER. Eaton Vance Distributors, Inc. ("EVD"), The
Eaton Vance Building, 255 State Street, Boston, MA 02109, is the Funds'
principal underwriter. The principal underwriter acts as principal in selling
shares under a Distribution Agreement with the Trust. The expenses of printing
copies of prospectuses used to offer shares and other selling literature and
of advertising are borne by the principal underwriter. The fees and expenses
of qualifying and registering and maintaining qualifications and registrations
of a Fund and its shares under federal and state securities laws are borne by
that Fund. The Distribution Agreement as it applies to Class A shares 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 Distribution
Agreement as it applies to Class B and Class C shares 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 shares of the relevant class or on six months' notice by the
principal underwriter and is automatically terminated upon assignment. The
principal underwriter distributes 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 investment dealers discounts from the applicable
public offering price which are alike for all investment dealers. See "Sales
Charges." EVD is a wholly-owned subsidiary of EVC. Mr. Hawkes is a Vice
President and Director and Messrs. Dynner and O'Connor are Vice Presidents of
EVD.
CUSTODIAN. Investors Bank & Trust Company ("IBT"), 200 Clarendon Street,
Boston, MA 02116, serves as custodian to the Funds and Portfolios. IBT has the
custody of all cash and securities representing a Fund's interest in a
Portfolio, has custody of each Portfolio's assets, maintains the general
ledger of each Portfolio and each Fund, and computes the daily net asset value
of interests in each Portfolio and the net asset value of shares of each Fund.
In such capacity it attends to details in connection with the sale, exchange,
substitution, transfer or other dealings with the Portfolios' investments,
receives and disburses all funds and performs various other ministerial duties
upon receipt of proper instructions from the Trust and the Portfolios. IBT
also provides services in connection with the preparation of shareholder
reports and the electronic filing of such reports with the SEC. EVC and its
affiliates and their officers and employees from time to time have
transactions with various banks, including 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.
INDEPENDENT ACCOUNTANTS. PricewaterhouseCoopers LLP, 160 Federal Street,
Boston, Massachusetts 02110, are the independent accountants of the Funds and
the Portfolios, providing audit services, tax return preparation, and
assistance and consultation with respect to the preparation of filings with
the SEC.
TRANSFER AGENT. PFPC Global Fund Services, P.O. Box 9653, Providence, RI
02904-9653, serves as transfer and dividend disbursing agent for the Funds.
PURCHASING AND REDEEMING SHARES
CALCULATION OF NET ASSET VALUE. The net asset value of each Portfolio is
computed by IBT (as agent and custodian for the Portfolio) by subtracting the
liabilities of the Portfolio from the value of its total assets. The Funds and
the Portfolios will be closed for business and will not price their respective
shares or interests 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.
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
available bid and asked prices on the principal market where the security was
traded. An option is valued at the last sale price as quoted on the principal
exchange or board of trade on which such option or contract is traded or, in
the absence of a sale, at closing settlement prices. Short-term debt
securities with a remaining maturity of 60 days or less are valued at
amortized cost. If securities were acquired with a remaining maturity of more
than 60 days, their amortized cost value will be based on their value on the
sixty-first day prior to maturity. Other fixed income and debt securities,
including listed securities and securities for which price quotations are
available, will normally be valued on the basis of valuations furnished by a
pricing service. Securities for which market quotations are unavailable,
including any security the disposition of which is restricted under the
Securities Act of 1933, and other assets will be appraised at their fair value
as determined in good faith by or at the direction of the Trustees of a
Portfolio.
Generally, trading in the foreign securities owned by a 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 a Portfolio's share are computed as of such times. Occasionally,
events affecting the value of foreign securities may occur between such times
and the close of the Exchange which will not be reflected in the computation
of a Portfolio's net asset value (unless a 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 a 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 a Portfolio, including a Fund, may add to or reduce its
investment in the Portfolio on each day the New York Stock Exchange (the
"Exchange") is open for trading ("Portfolio Business Day") as of the close of
regular trading on the Exchange (the "Portfolio Valuation Time"). The value of
each investor's interest in the Portfolio will be determined by multiplying
the net asset value of the Portfolio by the percentage, determined on the
prior Portfolio Business Day, which represented that investor's share of the
aggregate interests in the Portfolio on such prior day. Any additions or
withdrawals for the current Portfolio Business Day will then be recorded. Each
investor's percentage of the aggregate interest in the Portfolio will then be
recomputed as a percentage equal to a fraction (i) the numerator of which is
the value of such investor's investment in the Portfolio as of the Portfolio
Valuation Time on the prior Portfolio Business Day plus or minus, as the case
may be, the amount of any additions to or withdrawals from the investor's
investment in the Portfolio on the current Portfolio Business Day and (ii) the
denominator of which is the aggregate net asset value of the Portfolio as of
the Portfolio Valuation Time on the prior Portfolio Business Day plus or
minus, as the case may be, the amount of the net additions to or withdrawals
from the aggregate investment in the Portfolio on the current Portfolio
Business Day by all investors in the Portfolio. The percentage so determined
will then be applied to determine the value of the investor's interest in the
Portfolio for the current Portfolio Business Day.
ADDITIONAL INFORMATION ABOUT PURCHASES. Fund shares are continuously offered
through investment dealers which have entered agreements with the principal
underwriter. The public offering price is the net asset value next computed
after receipt of the order, plus, in the case of Class A shares, a variable
percentage (sales charge) depending upon the amount of purchase as indicated
by the sales charge table set forth in the prospectus. The sales charge is
divided between the principal underwriter and the investment dealer. The
sales charge 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. See
"Sales Charges."
In connection with employee benefit or other continuous group purchase
plans, the Funds may accept initial investments of less than $1,000 on the
part of an individual participant. In the event a shareholder who is a
participant of such a plan terminates participation in the plan, his or her
shares will be transferred to a regular individual account. However, such
account will be subject to the right of redemption by the Funds as described
below.
SUSPENSION OF SALES. 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 a Fund or class, the investment climate and market
conditions, the volume of sales and redemptions of shares, and in the case of
Class B and Class C shares, the amount of uncovered distribution charges of
the principal underwriter. The Class B and Class C Distribution Plans may
continue in effect and payments may be made under the Plans following any such
suspension, discontinuance or limitation of the offering of shares; however,
there is no contractual obligation to continue any Plan for any particular
period of time. Suspension of the offering of shares would not, of course,
affect a shareholder's ability to redeem shares.
ACQUIRING FUND SHARES IN EXCHANGE FOR SECURITIES. IBT, as escrow agent, will
receive securities acceptable to Eaton Vance, as administrator, in exchange
for Fund shares. The minimum value of securities (or securities and cash)
accepted for deposit is $5,000. Securities accepted will be sold on the day of
their receipt or as soon thereafter as possible. The number of Fund shares to
be issued in exchange for securities will be the aggregate proceeds from the
sale of such securities, divided by the applicable public offering price of
Class A shares or net asset value of Class B and Class C shares on the day
such proceeds are received. Eaton Vance will use reasonable efforts to obtain
the then current market price for such securities but does not guarantee the
best available price. Eaton Vance will absorb any transaction costs, such as
commissions, on the sale of the securities. Securities determined to be
acceptable should be transferred via book entry or physically delivered, in
proper form for transfer, through investment dealers, together with a
completed and signed Letter of Transmittal in approved form (available from
investment dealers). 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.
ADDITIONAL INFORMATION ABOUT REDEMPTIONS. The right to redeem shares of a 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
SEC, or during any emergency as determined by the SEC which makes it
impracticable for a Portfolio to dispose of its securities or value its
assets, or during any other period permitted by order of the SEC for the
protection of investors.
While normally payments will be made in cash for redeemed shares, the
Trust, subject to compliance with applicable regulations, has reserved the
right to pay the redemption price of shares of a Fund, either totally or
partially, by a distribution in kind of readily marketable securities
withdrawn from its corresponding Portfolio. The securities so distributed
would be valued pursuant to the Portfolio's valuation procedures. If a
shareholder received a distribution in kind, the shareholder could incur
brokerage or other charges in converting the securities to cash.
Due to the high cost of maintaining small accounts, the Trust reserves the
right to redeem accounts with balances of less than $750. Prior to such a
redemption, shareholders will be given 60 days' written notice to make an
additional purchase. However, no such redemption would be required by the
Trust if the cause of the low account balance was a reduction in the net asset
value of shares. No CDSC will be imposed with respect to such involuntary
redemptions.
SYSTEMATIC WITHDRAWAL PLAN. The transfer agent will send to the shareholder
regular monthly or quarterly payments of any permitted amount designated by
the shareholder based upon the value of the shares held. The checks will be
drawn from share redemptions and hence, 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.
SALES CHARGES
DEALER COMMISSIONS. The principal underwriter may, from time to time, at its
own expense, provide additional incentives to investment dealers 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 investment dealers 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 investment dealers. The principal underwriter
may allow, upon notice to all investment dealers 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
investment dealers may be deemed to be underwriters as that term is defined in
the Securities Act of 1933.
SALES CHARGE WAIVERS. Class A shares may be sold at net asset value to current
and retired Directors and Trustees of Eaton Vance funds, including the
Portfolios; to clients and current and retired officers and employees of Eaton
Vance, its affiliates and other investment advisers of Eaton Vance sponsored
funds; to officers and employees of IBT and the transfer agent; to persons
associated with law firms, consulting firms and others providing services to
Eaton Vance and the Eaton Vance funds; and to such persons' spouses, parents,
siblings and children 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 or class thereof) with a Fund (or class
thereof), (2) to investors making an investment as part of a fixed fee program
whereby an entity unaffiliated with the investment adviser provides multiple
investment services, such as management, brokerage and custody, and (3) to
investment advisors, financial planners or other intermediaries who place
trades for their own accounts or the accounts of their clients and who charge
a management, consulting or other fee for their services; clients of such
investment advisors, financial planners or other intermediaries who place
trades for their own accounts if the accounts are linked to the master account
of such investment advisor, financial planner or other intermediary on the
books and records of the broker or agent; and retirement and deferred
compensation plans and trusts used to fund those plans, including, but not
limited to, those defined in Section 401(a), 403(b) or 457 of the Internal
Revenue Code of 1986, as amended (the "Code") and "rabbi trusts". Class A
shares may be sold at net asset value to 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. Class A shares are
offered at net asset value to the foregoing persons and in the foregoing
situations because either (i) there is no sales effort involved in the sale of
shares or (ii) the investor is paying a fee (other than the sales charge) to
the investment dealer involved in the sale.
The CDSC applicable to Class B shares will be waived in connection with
minimum required distributions from tax-sheltered retirement plans by applying
the rate required to be withdrawn under the applicable rules and regulations
of the Internal Revenue Service to the balance of Class B shares in your
account. All CDSC waivers are prospective only.
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 of another
Eaton Vance fund will be purchased within a 13-month period, the Statement of
Intention section of the account application should be completed 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. If you make a Statement of Intention,
the transfer agent is authorized 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. A Statement of Intention does not obligate the
shareholder to purchase or the Fund to sell the full amount indicated in the
Statement.
If the amount actually purchased during the 13-month period is less than
that indicated on the Statement, the shareholder will be requested to pay the
difference between the sales charge applicable to the shares purchased and the
sales charge paid under the Statement of Intention. If the payment is not
received in 20 days, the appropriate number of escrowed shares will be
redeemed in order to realize such difference. If the total purchases during
the 13-month period are large enough to qualify for a lower sales charge than
that applicable to the amount specified in the Statement, all transactions
will be computed at the expiration date of the Statement to give effect to the
lower sales charge. Any difference will be refunded to the shareholder in cash
or applied to the purchase of additional shares, as specified by the
shareholder. This refund will be made by the investment dealer and the
principal underwriter. If at the time of the recomputation, the investment
dealer for the account has changed, the adjustment will be made only on those
shares purchased through the current investment dealer for the account.
RIGHT OF ACCUMULATION. 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 Class A shares the shareholder owns in his or her
account(s) in the Fund, and shares of other funds exchangeable for Class A
shares. The sales charge on the shares being purchased will then be at the
rate applicable to the aggregate. 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 investment dealer must provide
the principal underwriter (in the case of a purchase made through an
investment dealer) 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.
EXCHANGE PRIVILEGE. In addition to exchanges into the same class of another
Eaton Vance fund, Class B shares may be exchanged for shares of a money market
fund sponsored by an investment dealer and approved by the principal
underwriter (an "investment dealer fund"). For purposes of calculating the
CDSC applicable to investment dealer fund shares acquired in an exchange, the
CDSC schedule applicable to the exchanged shares will apply and the purchase
of investment dealer fund shares is deemed to have occurred at the time of the
original purchase of the exchanged shares, except that the time during which a
shareholder holds such investment dealer fund shares will not be credited
toward completion of the CDSC period.
TAX-SHELTERED RETIREMENT PLANS. Class A and Class C shares 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.
DISTRIBUTION AND SERVICE PLANS. The Trust has in effect a Service Plan (the
"Class A Plan") for each Fund's Class A shares that is designed to meet the
service fee requirements of the sales charge rule of the National Association
of Securities Dealers, Inc. (the "NASD"). (Management believes service fee
payments are not distribution expenses governed by Rule 12b-1 under the 1940
Act, but has chosen to have the Plan approved as if that Rule were
applicable.) The Class A Plan provides that each Class A may make service fee
payments for personal services and/or the maintenance of shareholder accounts
to the principal underwriter, investment dealers and other persons in amounts
not exceeding .25% of its average daily net assets for any fiscal year. For
the service fees paid by Class A shares, see Appendix A.
The Trust also has in effect compensation-type Distribution Plans (the
"Class B and Class C Plans") pursuant to Rule 12b-1 under the 1940 Act for
each Fund's Class B and Class C shares. The Class B and Class C Plans are
designed to permit an investor to purchase shares through an investment dealer
without incurring an initial sales charge and at the same time permit the
principal underwriter to compensate investment dealers in connection
therewith. The Class B and Class C Plans provide that each Fund will pay sales
commissions and distribution fees to the principal underwriter only after and
as a result of the sale of shares. On each sale of shares (excluding
reinvestment of distributions), each Fund will pay the principal underwriter
amounts representing (i) sales commissions equal to 5% for Class B shares and
6.25% for Class C shares 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. To pay these amounts, each Class pays the principal underwriter a
fee, accrued daily and paid monthly, at an annual rate not exceeding .75% of
its average daily net assets to finance the distribution of its shares. Such
fees compensate the principal underwriter for sales commissions paid by it to
investment dealers on the sale of shares and for interest expenses. For sales
of Class B shares, the principal underwriter uses its own funds to pay sales
commissions (except on exchange transactions and reinvestments) to investment
dealers at the time of sale equal to 4% of the purchase price of the Class B
shares sold by such dealers. For Class C shares, the principal underwriter
currently expects to pay to an investment dealer (a) sales commissions (except
on exchange transactions and reinvestments) at the time of sale equal to .75%
of the purchase price of the shares sold by such dealer, and (b) monthly sales
commissions approximately equivalent to 1/12 of .75% of the value of shares
sold by such dealer and remaining outstanding for at least one year. During
the first year after a purchase of Class C shares, the principal underwriter
will retain the sales commission as reimbursement for the sales commissions
paid to investment dealers at the time of sale. CDSCs paid to the principal
underwriter will be used to reduce amounts owed to it. The Class B and Class C
Plans provide that the Fund 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. Because payments to the principal underwriter under the
Class B and Class C Plans 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. For the sales
commissions and CDSCs paid on (and uncovered distribution charges of) Class B
and Class C shares, see Appendix B and Appendix C, respectively.
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 Class B and Class C Plans by the Trust to the principal
underwriter and CDSCs theretofore paid or payable to the principal underwriter
will be subtracted from such distribution charges; if the result of such
subtraction is positive, a distribution fee (computed at 1% over the prime
rate then reported in The Wall Street Journal) will be computed on such amount
and added thereto, with the resulting sum constituting the amount of
outstanding uncovered distribution charges with respect to such day. The
amount of outstanding uncovered distribution charges of the principal
underwriter calculated on any day does not constitute a liability recorded on
the financial statements of the Fund.
The amount of uncovered distribution charges of the principal underwriter
at any particular time depends upon various changing factors, including the
level and timing of sales of shares, the nature of such sales (i.e., whether
they result from exchange transactions, reinvestments or from cash sales
through investment dealers), 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 Class B and Class C Plans.
The Class B and Class C Plans also authorize each Class to make payments
of service fees to the principal underwriter, investment dealers 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. For Class C, investment dealers currently receive (a) a service fee
(except on exchange transactions and reinvestments) at the time of sale equal
to .25% of the purchase price of the Class C shares sold by such dealer, and
(b) monthly service fees approximately equivalent to 1/12 of .25% of the
value of Class C shares sold by such dealer and remaining outstanding for at
least one year. During the first year after a purchase of Class C shares, the
principal underwriter will retain the service fee as reimbursement for the
service fee payment made to investment dealers at the time of sale. For the
service fees paid by Class B and Class C shares, see Appendix B and Appendix
C, respectively.
Currently, payments of sales commissions and distribution fees and of
service fees may equal 1% of a Class's average daily net assets per annum. 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 Class B and Class C Plans through an
increase in the Fund's assets (thereby increasing the advisory fee payable to
BMR by the Portfolio) resulting from sale of shares and through the amounts
paid to the principal underwriter, including CDSCs, pursuant to the Plans. The
Eaton Vance organization may be considered to have realized a profit under the
Class B and Class C Plans if at any point in time the aggregate amounts
theretofore received by the principal underwriter pursuant to the Class B or
Class C Plan and from CDSCs have exceeded the total expenses theretofore
incurred by such organization in distributing shares. 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 Class A, Class B and Class C Plans continue in effect from year to
year 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 "Plan Trustees") and (ii) all of the
Trustees then in office. Each Plan may be terminated at any time by vote of a
majority of the Plan Trustees or by a vote of a majority of the outstanding
voting securities of the applicable Class. Each Plan requires quarterly
Trustee review of a written report of the amount expended under the Plan and
the purposes for which such expenditures were made. The Plans may not be
amended to increase materially the payments described therein without approval
of the shareholders of the affected Class and the Trustees. So long as a Plan
is in effect, the selection and nomination of the noninterested Trustees shall
be committed to the discretion of such Trustees. The Class A, Class B and
Class C Plans were initially approved by the Trustees, including the Plan
Trustees, on June 23, 1997. The Trustees of the Trust who are "interested"
persons of the Funds have an indirect financial interest in the Plans because
their employers (or affiliates thereof) receive distribution and/or service
fees under the Plans or agreements related thereto.
The Trustees of the Trust believe that each Plan will be a significant
factor in the expected growth of each Fund's assets, and will result in
increased investment flexibility and advantages which have benefitted and will
continue to benefit the Fund and its shareholders. Payments for sales
commissions and distribution fees made to the principal underwriter under the
Class B and Class C Plans will compensate the principal underwriter for its
services and expenses in distributing those classes of shares. Service fee
payments made to the principal underwriter and investment dealers provide
incentives to provide continuing personal services to investors and the
maintenance of shareholder accounts. By providing incentives to the principal
underwriter and investment dealers, each 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 each
Plan will benefit the Fund and its shareholders.
PERFORMANCE
Average annual total return is determined separately for each Class of a
Fund by multiplying a hypothetical initial purchase order of $1,000 by the
average annual compound rate of return (including capital appreciation/
depreciation, and distributions paid and reinvested) for the stated period and
annualizing the result. The calculation assumes (i) that all distributions are
reinvested at net asset value on the reinvestment dates during the period,
(ii) the deduction of the maximum sales charge from the initial $1,000
purchase order for Class A shares, (iii) a complete redemption of the
investment and, (iv) the deduction of the CDSC at the end of the period. A
Fund may also publish total return figures for each class based on reduced
sales charges or a net asset value. These returns would be lower if the full
sales charge was imposed. For information concerning the total return of the
Classes of a Fund, see Appendix A, Appendix B and Appendix C.
Each Fund may provide information to investors concerning the volatility
or beta of the Fund. Beta is a measure of risk which shows a Fund's volatility
relative to the Standard & Poor's 500 Composite Index, an unmanaged index of
common stocks (and a commonly used measure of U.S. stock market performance).
A fund with a beta of 1 would perform exactly like the market index; a beta of
2 would mean its performance was twice as volatile as the index, positive or
negative. Each Fund may also provide information concerning its portfolio
turnover rate and dividend paying record (or the record of issuers in which a
Fund may invest) in information provided to investors. Each Fund may also
provide information on the utilities industry in general and the demand for
utility services.
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 also include a discussion of the nature of stocks, bonds, or
other investments. This information may be used to illustrate the benefits of
long-term investments in common stocks and fixed-income securities. This
diversification is commonly referred to as "asset allocation." Information
about the portfolio allocation, portfolio turnover rate and holdings of the
Portfolio may be included in advertisements and other material furnished to
present and prospective shareholders.
Information used in advertisements and in materials provided to present
and prospective shareholders may include descriptions of Eaton Vance and other
Fund service providers, their investment styles, other investment products,
personnel and Fund distribution channels.
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 a Fund over various time periods;
and results of diversifying assets among several investments with varying
performance. Information in advertisements and materials furnished to present
and prospective investors may also include quotations (including editorial
comments) and statistics concerning investing in securities, as well as
investing in particular types of securities and the performance of such
securities.
The Trust (or principal underwriter) may provide information about Eaton
Vance, its affiliates and other investment advisers to the funds in the Eaton
Vance Family of Funds in sales material or advertisements provided to
investors or prospective investors. Such material or advertisements may also
provide information on the use of investment professionals by such investors.
TAXES
Each series of the Trust is treated as a separate entity for federal
income tax purposes. Each Fund has elected to be treated, has qualified, and
intends to continue to qualify each year as a regulated investment company
("RIC") under the Code. Accordingly, each Fund intends to satisfy certain
requirements relating to sources of its income and diversification of its
assets and to distribute all of its net income and net short-term and long-
term capital gains 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. Each Fund so qualified for its taxable year ended December 31,
1999. Because each Fund invests its assets in a Portfolio, the Portfolio
normally must satisfy the applicable source of income and diversification
requirements in order for each Fund to also satisfy these requirements. The
Portfolio will allocate at least annually among its investors, including a
Fund, the Portfolio's net investment income, net realized capital gains, and
any other items of income, gain, loss, deduction or credit. The Portfolio will
make allocations to a Fund in accordance with the Code and applicable
regulations and will make moneys available for withdrawal at appropriate times
and in sufficient amounts to enable the Fund to satisfy the tax distribution
requirements that apply to the Fund and that must be satisfied in order to
avoid federal income and/or excise tax on the Fund. For purposes of applying
the requirements of the Code regarding qualification as a RIC, each Fund (i)
will be deemed to own its proportionate share of each of the assets of the
corresponding Portfolio and (ii) will be entitled to the gross income of that
Portfolio attributable to such share.
In order to avoid incurring a federal excise tax obligation, the Code
requires that each Fund distribute (or be deemed to have distributed) by
December 31 of each calendar year at least 98% of its ordinary income (not
including tax-exempt income) for such year, at least 98% of its capital gain
net income, which is the excess of its realized capital gains over its
realized capital losses, generally computed on the basis of the one-year
period ending on October 31 of such year, after reduction by (i) any available
capital loss carryforwards, and (ii) 100% of any income from the prior year
(as previously computed) that was not paid out during such year and on which
the Fund paid no federal income tax. Under current law, provided that a Fund
qualifies as a RIC and a Portfolio is treated as a partnership for
Massachusetts and federal tax purposes, neither the Fund nor the Portfolio
should be liable for any income, corporate excise or franchise tax in the
Commonwealth of Massachusetts.
Each Fund's distributions of net investment income and the excess of net
short-term capital gain over net long-term capital loss and certain foreign
exchange gains earned by its corresponding Portfolio and allocated to the
Fund are taxable to shareholders of the Fund as ordinary income whether
received in cash or reinvested in additional shares. Each Fund's distributions
of the excess of net long-term capital gain over net short-term capital loss
(including any capital loss carried forward from prior years) earned by its
corresponding Portfolio and allocated to the Fund are taxable to shareholders
of the Fund as long-term capital gains, whether received in cash or reinvested
in additional shares, and regardless of the length of time their shares have
been held.
Distributions by a Fund reduce the net asset value of the Fund's shares.
Should a distribution reduce the net asset value below a shareholder's cost
basis, such distribution would be taxable to the shareholder even though, from
an investment standpoint, it may constitute a return of a portion of the
purchase price. Therefore, investors should consider the tax implications of
buying shares immediately before a distribution.
A portion of distributions made by a Fund which are derived from dividends
received by its corresponding Portfolio from domestic corporations and
allocated to the Fund may qualify for the dividends-received deduction for
corporations. The dividends-received deduction for corporate shareholders is
reduced to the extent the shares of a Fund with respect to which the dividends
are received are treated as debt-financed under federal income tax law and is
eliminated if the shares are deemed to have been held for less than a minimum
period, generally 46 days, which must be satisfied separately for each
dividend during a specified period. Receipt of certain distributions
qualifying for the deduction may result in reduction of the tax basis of the
corporate shareholder's shares and require current income recognition to the
extent in excess of such basis. Distributions eligible for the dividends-
received deduction may give rise to or increase an alternative minimum tax for
corporations.
Any loss realized upon the redemption or exchange of shares of a Fund with
a tax holding period of 6 months or less will be treated as a long-term
capital loss to the extent of any distribution of net long-term capital gains
with respect to such shares. In addition, all or a portion of a loss realized
on a redemption or other disposition of Fund shares may be disallowed under
"wash sale" rules if other shares of the same Fund are acquired (whether
through reinvestment of dividends or otherwise) within a period beginning 30
days before and ending 30 days after the date of such redemption or other
disposition. Any disallowed loss will result in an adjustment to the
shareholder's tax basis in some or all of the other shares acquired.
Sales charges paid upon a purchase of shares of a Fund cannot be taken
into account for purposes of determining gain or loss on a redemption or
exchange of the shares before 91st day after their purchase to the extent a
sales charge is reduced or eliminated in a subsequent acquisition of shares of
the Fund or of another fund pursuant to the Fund's reinvestment or exchange
privilege. Any disregarded amounts will result in an adjustment to the
shareholder's tax basis in some or all of any other shares acquired.
Investments in lower-rated or unrated securities may present special tax
issues for a Portfolio and hence for its corresponding Fund to the extent
actual or anticipated defaults may be more likely with respect to such
securities. Tax rules are not entirely clear about issues such as when a
Portfolio may cease to accrue interest, original issue discount, or market
discount; when and to what extent deductions may be taken for bad debts or
worthless securities; how payments received on obligations in default should
be allocated between principal and income; and whether exchanges of debt
obligations in a workout context are taxable.
Certain foreign exchange gains and losses realized by a Portfolio and
allocated to the corresponding Fund in connection with the Portfolio's
investments in foreign securities, foreign currency, and foreign currency-
related options, futures or forward contracts may be treated as ordinary
income and losses under special tax rules. Additionally, a Portfolio's
transactions in options, futures contracts and forward contracts will be
subject to other special tax rules that may affect the amount, timing and
character of Fund distributions to shareholders. For example, certain
positions held by a Portfolio on the last business day of each taxable year
will be "marked to market" (i.e., treated as if closed out on such day), and
any resulting gain or loss will generally be treated as 60% long-term and 40%
short-term capital gain or loss or, in the case of certain currency-related
positions as described above, recharacterized as ordinary income or loss.
Certain positions held by a Portfolio that substantially diminish the
Portfolio's risk of loss with respect to other positions in its portfolio may
constitute "straddles," which are subject to tax rules that may cause deferral
of Portfolio losses, adjustments in the holding period of Portfolio
securities, and conversion of short-term capital losses into long-term capital
losses. A Portfolio may make certain elections to mitigate adverse
consequences of these tax rules and may have to limit its activities in
options, futures contracts and forward contracts in order to enable each Fund
to maintain its RIC status for federal income tax purposes.
A Portfolio may be subject to foreign withholding or other foreign taxes
with respect to income (possibly including, in some cases, capital gains) on
certain foreign securities. As it is not expected that more than 50% of the
value of a 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, will
consist of securities issued by foreign corporations, each Fund will not be
eligible to pass through to shareholders their proportionate share of foreign
taxes paid by the Portfolio and allocated to the Fund, with the result that
shareholders will not include in income, and will not be entitled to take any
foreign tax credits or deductions for, foreign taxes paid by the Portfolio and
allocated to the Fund. However, a Fund may deduct such taxes in calculating
its distributable income earned by the Portfolio and allocated to the Fund.
These taxes may be reduced or eliminated under the terms of an applicable U.S.
income tax treaty in some cases. Certain uses of foreign currency and related
options, futures or forward contracts and investment by a Portfolio in the
stock of certain "passive foreign investment companies" may be limited or a
tax election may be made, if available, in order to preserve a Fund's
qualification as a RIC and/or avoid imposition of a tax on the Fund.
A Portfolio's investment in securities acquired at a market discount may,
or in zero coupon and certain other securities with original issue discount
generally will, cause it to realize income prior to the receipt of cash
payments with respect to these securities. Such income will be allocated daily
to interests in the Portfolio and, in order to enable the corresponding Fund
to distribute its proportionate share of this income and avoid a tax payable
by the Fund, the Portfolio may be required to liquidate portfolio securities
that it might otherwise have continued to hold in order to generate cash that
the Fund may withdraw from the Portfolio for subsequent distribution to Fund
shareholders.
Amounts paid by a Fund to individuals and certain other shareholders who
have not provided a Fund with their correct taxpayer identification number
("TIN") and certain certifications required by the Internal Revenue Service
(the "IRS"), as well as shareholders with respect to whom a Fund has received
certain information from the IRS or a broker, may be subject to "backup"
withholding of federal income tax arising from a Fund's taxable dividends and
other distributions as well as the proceeds of redemption transactions
(including repurchases and exchanges), at a rate of 31%. An individual's TIN
is generally his or her social security number.
The foregoing discussion does not address the special tax rules applicable
to certain classes of investors, such as IRAs and other retirement plans, tax-
exempt entities, insurance companies and financial institutions. Shareholders
should consult their own tax advisers with respect to special tax rules that
may apply in their particular situations, as well as the state, local, and,
where applicable, foreign tax consequences of investing in a Fund.
PORTFOLIO SECURITY TRANSACTIONS
Decisions concerning the execution of portfolio security transactions of
the Portfolios, including the selection of the market and the broker-dealer
firm, are made by BMR. BMR places the portfolio security transactions of a
Portfolio and of all other accounts managed by it for execution with many
broker-dealer firms. BMR uses its best efforts to obtain execution of
portfolio security transactions at prices which are advantageous to the
relevant Portfolio and (when a disclosed commission is being charged) at
reasonably competitive commission rates. In seeking such execution, BMR will
use its best judgment in evaluating the terms of a transaction, and will give
consideration to various relevant factors, including without limitation, the
full range and quality of the broker-dealers services, the value of the
brokerage and research services provided, the responsiveness of the broker-
dealer to BMR, 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 this and other transactions, and
the reasonableness of the commission or spread, if any. Transactions on United
States stock exchanges and other agency transactions involve the payment by a
Portfolio of negotiated brokerage commissions. Such commissions vary among
different broker-dealer firms, and a particular broker-dealer may charge
different commissions according to such factors as the difficulty and size of
the transaction and the volume of business done with such broker-dealer.
Transactions in foreign securities often involve the payment of brokerage
commissions, which may be higher than those in the United States. There is
generally no stated commission in the case of securities traded in the over-
the-counter markets, but the price paid or received by a Portfolio usually
includes an undisclosed dealer markup or markdown. In an underwritten offering
the price paid by a Portfolio includes a disclosed fixed commission or
discount retained by the underwriter or dealer. Although commissions paid on
portfolio security transactions will, in the judgment of BMR, be reasonable in
relation to the value of the services provided, commissions exceeding those
which another firm might charge may be paid to broker-dealers who were
selected to execute transactions on behalf of the Portfolios and BMR's other
clients in part for providing brokerage and research services to BMR.
For the fiscal years ended December 31, 1999, 1998 and 1997, Balanced
Portfolio paid brokerage commisions of $ , $225,542 and $150,611,
respectively, with respect to portfolio transactions. Of these amounts,
approximately $ , $157,179 and $122,849, respectively, were paid in
respect of portfolio security transactions aggregating approximately
$ , $129,051,550 and $101,577,000, respectively, to firms which
provide some Research Services to the investment adviser's organization
(although many of such firms may have been selected in any particular
transaction primarily because of their execution capabilities).
For the fiscal years ended December 31, 1999, 1998 and 1997, Growth &
Income Portfolio paid brokerage commissions of $ , $355,926 and
$311,584, respectively, with respect to portfolio transactions. Of these
amounts, approximately $ , $240,996 and $262,030, respectively, were
paid in respect of portfolio security transactions aggregating $ ,
$189,828,471 and $194,723,039, respectively, to firms which provide some
Research Services to the investment adviser's organization (although many of
such firms may have been selected in any particular transaction primarily
because of their execution capabilities).
For the fiscal years ended December 31, 1999, 1998 and 1997, Special
Equities Portfolio paid brokerage commissions of $ , $129,036 and
$200,452, respectively, with respect to portfolio transactions. Of these
amounts, approximately $ , $115,881 and $181,345, respectively, were
paid in respect of portfolio security transactions aggregating approximately
$ , $56,931,864 and $83,316,207, respectively, to firms which provide
some Research Services to the investment adviser's organization (although many
of such firms may have been selected in any particular transaction primarily
because of their execution capabilities).
For the fiscal years ended December 31, 1999, 1998 and 1997, Utilities
Portfolio paid brokerage commissions of $ , $707,649 and $1,341,755,
respectively, with respect to portfolio transactions. Of these amounts,
approximately $ , $572,321 and $1,122,289, respectively, were paid in
respect of portfolio security transactions aggregating approximately
$ , $398,037,287 and $765,570,460, respectively, to firms which
provide some Research Services to the investment adviser's organization
(although many of such firms may have been selected in any particular
transaction primarily because of their execution capabilities).
As authorized in Section 28(e) of the Securities Exchange Act of 1934, a
broker or dealer who executes a portfolio transaction on behalf of the
Portfolio may receive a commission which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if BMR determines in good faith that such compensation was
reasonable in relation to the value of the brokerage and research services
provided. This determination may be made on the basis of either that
particular transaction or on the basis of the overall responsibilities which
BMR and its affiliates have for accounts over which they exercise investment
discretion. In making any such determination, BMR will not attempt to place a
specific dollar value on the brokerage and research services provided or to
determine what portion of the commission should be related to such services.
Brokerage and research services may include advice as to the value of
securities, the advisability of investing in, purchasing, or selling
securities, and the availability of securities or purchasers or sellers of
securities; furnishing analyses and reports concerning issuers, industries,
securities, economic factors and trends, portfolio strategy and the
performance of accounts; and effecting securities transactions and performing
functions incidental thereto (such as clearance and settlement); and the
"Research Services" referred to in the next paragraph.
It is a common practice in the investment advisory industry for the
advisers of investment companies, institutions and other investors to receive
research, analytical, statistical and quotation services, data, information
and other services, products and materials which assist such advisers in the
performance of their investment responsibilities ("Research Services") from
broker-dealer firms which execute portfolio transactions for the clients of
such advisers and from third parties with which such broker-dealers have
arrangements. Consistent with this practice, BMR receives Research Services
from many broker-dealer firms with which BMR places the Portfolio transactions
and from third parties with which these broker-dealers have arrangements.
These Research Services include such matters as general economic, political,
business and market information, industry and company reviews, evaluations of
securities and portfolio strategies and transactions, recommendations as to
the purchase and sale of securities and other portfolio transactions, proxy
voting data and analysis services, technical analysis of various aspects of
the securities markets, financial, industry and trade publications, news and
information services, pricing and quotation equipment and services, and
research oriented computer hardware, software, data bases and services. Any
particular Research Service obtained through a broker-dealer may be used by
BMR in connection with client accounts other than those accounts which pay
commissions to such broker-dealer. Any such Research Service may be broadly
useful and of value to BMR in rendering investment advisory services to all or
a significant portion of its clients, or may be relevant and useful for the
management of only one client's account or of a few clients' accounts, or may
be useful for the management of merely a segment of certain clients' accounts,
regardless of whether any such account or accounts paid commissions to the
broker-dealer through which such Research Service was obtained. The advisory
fee paid by each Portfolio is not reduced because BMR receives such Research
Services. BMR evaluates the nature and quality of the various Research
Services obtained through broker-dealer firms and attempts to allocate
sufficient portfolio security transactions to such firms to ensure the
continued receipt of Research Services which BMR believes are useful or of
value to it in rendering investment advisory services to its clients.
The Portfolio and BMR may also receive Research Services from underwriters
and dealers in fixed price offerings, which Research Services are reviewed and
evaluated by BMR in connection with its investment responsibilities. The
investment companies sponsored by BMR or Eaton Vance may allocate brokerage
commissions to acquire information relating to performance, fees and expenses
of such companies and other mutual funds, which information is used by the
Trustees of such companies to fulfill their responsibility to oversee the
quality of the services provided by various entities, including BMR. Such
companies may also pay cash for such information.
Subject to the requirement that BMR shall use its best efforts to seek to
execute portfolio security transactions at advantageous prices and at
reasonably competitive commission rates. BMR is authorized to consider as a
factor in the selection of any broker-dealer firm with whom portfolio orders
may be placed the fact that such firm has sold or is selling shares of the
Funds or of other investment companies sponsored by BMR or Eaton Vance. This
policy is not inconsistent with a rule of the National Association of
Securities Dealers, Inc. ("NASD"), which rule provides that no firm which is a
member of the NASD shall favor or disfavor the distribution of shares of any
particular investment company or group of investment companies on the basis of
brokerage commissions received or expected by such firm from any source.
Securities considered as investments for the Portfolio may also be
appropriate for other investment accounts managed by BMR or its affiliates.
Whenever decisions are made to buy or sell securities by the Portfolio and one
or more of such other accounts simultaneously, BMR will allocate the security
transactions (including "hot" issues) in a manner which it believes to be
equitable under the circumstances. As a result of such allocations, there may
be instances where a Portfolio will not participate in a transaction that is
allocated among other accounts. If an aggregated order cannot be filled
completely, allocations will generally be made on a pro rata basis. An order
may not be allocated on a pro rata basis where, for example: (i) consideration
is given to portfolio managers who have been instrumental in developing or
negotiating a particular investment; (ii) consideration is given to an account
with specialized investment policies that coincide with the particulars of a
specific investment; (iii) pro rata allocation would result in odd-lot or de
minimis amounts being allocated to a portfolio or other client; or (iv) where
BMR reasonably determines that departure from a pro rata allocation is
advisable. While these aggregation and allocation policies could have a
detrimental effect on the price or amount of the securities available to the
Portfolios from time to time, it is the opinion of the Trustees of the Trust
and the Portfolios that the benefits from the BMR organization outweigh any
disadvantage that may arise from exposure to simultaneous transactions.
FINANCIAL STATEMENTS
The audited financial statements of and the independent accountants'
report for the Funds and the Portfolios appear in the Funds' most recent
annual report to shareholders and are incorporated by reference into this SAI.
A copy of the Funds' annual report accompanies this SAI. Consistent with
applicable law, duplicate mailings of shareholder reports and certain other
Fund information to shareholders residing at the same address may be
eliminated.
Registrant incorporates by reference the audited financial information for
the fiscal year ended December 31, 1999 for the Funds and the Portfolios
listed below, all as previously filed electronically with the SEC:
Eaton Vance Balanced Fund
Balanced Portfolio
(Accession No. 0000950109-00-000 )
Eaton Vance Growth & Income Fund
Growth & Income Portfolio
(Accession No. 0000927016-00-000 )
Eaton Vance Special Equities Fund
Special Equities Portfolio
(Accession No. 0000950109-00-000 )
Eaton Vance Utilities Fund
Utilities Portfolio
(Accession No. 0000927016-00-000 )
<PAGE>
APPENDIX A
CLASS A FEES, PERFORMANCE AND OWNERSHIP
SERVICE FEES
For the fiscal year ended December 31, 1999, Class A made service fee
payments under the Plans to the principal underwriter as follows: Balanced
Fund -- $ ; Growth & Income Fund -- $ ; Special Equities Fund --
$ ; and Utilities Fund -- $ . Of these amounts, the following was
paid to investment dealers and the balance of which was retained by the
principal underwriter: Balanced Fund -- $ ; Growth & Income Fund --
$ ; Special Equities Fund -- $ ; and Utilities Fund -- $ .
PRINCIPAL UNDERWRITER
The following table shows, for the fiscal years ended December 31, 1999,
1998 and 1997, (1) total sales charges paid in connection with sales of Class
A shares, and (2) sales charges paid to the principal underwriter (the balance
of which was paid to investment dealers).
SALES CHARGES PAID TO
FUND AND FISCAL YEAR ENDED TOTAL SALES CHARGES PRINCIPAL UNDERWRITER
- -------------------------- ------------------- ---------------------
Balanced Fund
December 31, 1999 $ $
December 31, 1998 179,034 25,178
December 31, 1997 117,510 17,650
Growth & Income Fund
December 31, 1999 $ $
December 31, 1998 72,706 10,109
December 31, 1997 40,247 5,522
Special Equities Fund
December 31, 1999 $ $
December 31, 1998 9,336 1,119
December 31, 1997 0 0
Utilities Fund
December 31, 1999 $ $
December 31, 1998 128,114 18,943
December 31, 1997 67,137 18,096
The Trust has authorized the principal underwriter to act as its agent in
repurchasing shares of Balanced Fund and Utilities Fund at the rate of $2.50
for each repurchase transaction handled by the principal underwriter. For the
fiscal year ended December 31, 1999, Class A paid the principal underwriter
for repurchase transactions handled by it $2.50 for each such transaction
which aggregated as follows: Balanced Fund -- $ ; and Utilities Fund --
$ .
PERFORMANCE INFORMATION
The tables below indicate the cumulative and average total return on a
hypothetical investment of $1,000 in Class A shares for the periods shown in
each table. The "Value of Initial Investment" reflects the deduction of the
maximum sales charge of 5.75%. Past performance is not indicative of future
results. Investment return and principal value will fluctuate; shares, when
redeemed, may be worth more or less than their original cost.
<PAGE>
<TABLE>
VALUE OF A $1,000 INVESTMENT -- BALANCED FUND
<CAPTION>
TOTAL RETURN TOTAL RETURN
EXCLUDING MAXIMUM INCLUDING MAXIMUM
VALUE OF VALUE OF SALES CHARGE SALES CHARGE
INVESTMENT INVESTMENT INITIAL INVESTMENT ---------------------------- -----------------------------
PERIOD DATE INVESTMENT ON 12/31/99 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- --------------------- -------------- --------------- --------------- ------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
10 Years ended
12/31/99 12/31/89 $ $ % % % %
5 Years Ended
12/31/99 12/31/94 $ $ % % % %
1 Year Ended
12/31/99 12/31/98 $ $ % % % %
<CAPTION>
VALUE OF A $1,000 INVESTMENT -- GROWTH & INCOME FUND
TOTAL RETURN TOTAL RETURN
EXCLUDING MAXIMUM INCLUDING MAXIMUM
VALUE OF VALUE OF SALES CHARGE SALES CHARGE
INVESTMENT INVESTMENT INITIAL INVESTMENT ---------------------------- -----------------------------
PERIOD DATE INVESTMENT ON 12/31/99 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- --------------------- -------------- --------------- --------------- ------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
10 Years Ended
12/31/99 12/31/89 $ $ % % % %
5 Years Ended
12/31/99 12/31/94 $ $ % % % %
1 Year Ended
12/31/99 12/31/98 $ $ % % % %
<CAPTION>
VALUE OF A $1,000 INVESTMENT -- SPECIAL EQUITIES FUND
TOTAL RETURN TOTAL RETURN
EXCLUDING MAXIMUM INCLUDING MAXIMUM
VALUE OF VALUE OF SALES CHARGE SALES CHARGE
INVESTMENT INVESTMENT INITIAL INVESTMENT ---------------------------- -----------------------------
PERIOD DATE INVESTMENT ON 12/31/99 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- --------------------- -------------- --------------- --------------- ------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
10 Years Ended
12/31/99 12/31/89 $ $ % % % %
5 Years Ended
12/31/99 12/31/94 $ $ % % % %
1 Year Ended
12/31/99 12/31/98 $ $ % % % %
<CAPTION>
VALUE OF A $1,000 INVESTMENT -- UTILITIES FUND
TOTAL RETURN TOTAL RETURN
EXCLUDING MAXIMUM INCLUDING MAXIMUM
VALUE OF VALUE OF SALES CHARGE SALES CHARGE
INVESTMENT INVESTMENT INITIAL INVESTMENT ---------------------------- -----------------------------
PERIOD DATE INVESTMENT ON 12/31/99 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- --------------------- -------------- --------------- --------------- ------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
10 Years Ended
12/31/99 12/31/89 $ $ % % % %
5 Years Ended
12/31/99 12/31/94 $ $ % % % %
1 Year Ended
12/31/99 12/31/98 $ $ % % % %
</TABLE>
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of February 1, 2000, the Trustees and officers of the Trust, as a
group, owned in the aggregate less than 1% of the outstanding shares of each
Class A and of each Fund. As of February 1, 2000, Merrill Lynch, Pierce,
Fenner & Smith, Inc., Jacksonville, FL 32246 was the record owner of 19.7% of
the Class A shares of Utilities Fund, which are held on behalf of its
customers who are the beneficial owners of such shares, and as to which it had
voting power under certain limited circumstances. As of the same date, the
Eaton Vance Management Master Trust for Retirement Plans was the record owner
of 6.3% of the Class A shares of Special Equities Fund, which are held on
behalf of its customers who are the beneficial owners of such shares and as to
which it had voting power under certain limited circumstances. To the
knowledge of the Trust, no other person owned of record or beneficially 5% or
more of any Fund's outstanding Class A shares on such date.
<PAGE>
APPENDIX B
CLASS B FEES, PERFORMANCE AND OWNERSHIP
DISTRIBUTION AND SERVICE FEES
For the fiscal year ended December 31, 1999, the following table shows (1)
sales commissions paid by the principal underwriter to investment dealers on
sales of Class B shares, (2) distribution fees to the principal underwriter
under the Distribution Plan, (3) CDSC payments to the principal underwriter,
(4) uncovered distribution charges under the Plan (dollar amount and as a
percentage of net assets attributable to Class B), (5) service fees paid under
the Distribution Plan, and (6) the service fees paid to investment dealers.
The service fees paid by the Funds that were not paid to investment dealers
were retained by the principal underwriter. Distribution payments and CDSC
payments reduce uncovered distribution charges under the Plan.
<TABLE>
<CAPTION>
DISTRIBUTION CDSCS UNCOVERED SERVICE
FEES PAID TO PAID TO DISTRIBUTION CHARGES FEES TO
SALES THE PRINCIPAL THE PRINCIPAL (AS A % OF SERVICE INVESTMENT
CLASS B COMMISSIONS UNDERWRITER UNDERWRITER CLASS NET ASSETS) FEES DEALERS
- ------- ----------- ----------- ----------- ----------------- ---- -------
<S> <C> <C> <C> <C> <C> <C>
Balanced .. $ $ $ $ ( %) $ $
Growth &
Income .... $ $ $ $ ( %) $ $
Special
Equities .. $ $ $ $ ( %) $ $
Utilities . $ $ $ $ ( %) $ $
</TABLE>
PRINCIPAL UNDERWRITER
The Trust has authorized the principal underwriter to act as its agent in
repurchasing shares at the rate of $2.50 for each repurchase transaction
handled by the principal underwriter. For the fiscal year ended December 31,
1999, Class B paid the principal underwriter for repurchase transactions
handled by it $2.50 for each such transaction which aggregated as follows:
Balanced Fund -- $ ; Growth & Income Fund -- $ ; Special
Equities Fund -- $ ; and Utilities Fund -- $ .
PERFORMANCE INFORMATION
The tables below indicate the cumulative and average annual total return
on a hypothetical investment in shares of $1,000. Total return for the period
prior to January 1, 1998 reflects the total return of the predecessor to Class
B. Total return prior to the Predecessor Fund's commencement of operations
reflects the total return of Class A, adjusted to reflect the Class B sales
charge. The Class A total return has not been adjusted to reflect certain
other expenses (such as distribution and/or service fees). If such adjustments
were made, the Class B total return would be lower. Past performance is not
indicative of future results. Investment return and principal value will
fluctuate; shares, when redeemed, may be worth more or less than their
original cost. Information presented with two asterisks (**) includes the
effect of subsidizing expenses. Return would have been lower without
subsidies.
<TABLE>
VALUE OF A $1,000 INVESTMENT -- BALANCED FUND
<CAPTION>
VALUE OF VALUE OF TOTAL RETURN BEFORE TOTAL RETURN AFTER
INVESTMENT INVESTMENT DEDUCTING DEDUCTING
BEFORE DEDUCTING AFTER DEDUCTING THE MAXIMUM CDSC THE MAXIMUM CDSC
INVESTMENT* INVESTMENT AMOUNT OF THE MAXIMUM THE MAXIMUM -------------------------- -------------------------
PERIOD DATE INVESTMENT CDSC ON 12/31/99 CDSC ON 12/31/99 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- -------------- ----------- ----------- ---------------- ---------------- ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
10 Years
Ended
12/31/99 12/31/89 $1,000 $ $ % % % %
5 Years
Ended
12/31/99 12/31/94 $1,000 $ $ % % % %
1 Year
Ended
12/31/99 12/31/98 $1,000 $ $ % % % %
- ----------------
* Predecessor Fund commenced operations on November 2, 1993.
<CAPTION>
VALUE OF A $1,000 INVESTMENT -- GROWTH & INCOME FUND
VALUE OF VALUE OF TOTAL RETURN BEFORE TOTAL RETURN AFTER
INVESTMENT INVESTMENT DEDUCTING DEDUCTING
BEFORE DEDUCTING AFTER DEDUCTING THE MAXIMUM CDSC THE MAXIMUM CDSC
INVESTMENT* INVESTMENT AMOUNT OF THE MAXIMUM THE MAXIMUM -------------------------- -------------------------
PERIOD DATE INVESTMENT CDSC ON 12/31/99 CDSC ON 12/31/99 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- -------------- ----------- ----------- ---------------- ---------------- ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
10 Years
Ended
12/31/99 12/31/89 $1,000 $ $ % % % %
5 Years
Ended
12/31/99 12/31/94 $1,000 $ $ % % % %
1 Year
Ended
12/31/99** 12/31/98 $1,000 $ $ % % % %
- ----------------
* Predecessor Fund commenced operations on August 17, 1994.
<CAPTION>
VALUE OF A $1,000 INVESTMENT -- SPECIAL EQUITIES FUND
VALUE OF VALUE OF TOTAL RETURN BEFORE TOTAL RETURN AFTER
INVESTMENT INVESTMENT DEDUCTING DEDUCTING
BEFORE DEDUCTING AFTER DEDUCTING THE MAXIMUM CDSC THE MAXIMUM CDSC
INVESTMENT* INVESTMENT AMOUNT OF THE MAXIMUM THE MAXIMUM -------------------------- -------------------------
PERIOD DATE INVESTMENT CDSC ON 12/31/99 CDSC ON 12/31/99 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- -------------- ----------- ----------- ---------------- ---------------- ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
10 Years
Ended
12/31/99 12/31/89 $1,000 $ $ % % % %
5 Years
Ended
12/31/99 12/31/94 $1,000 $ $ % % % %
1 Year
Ended
12/31/99** 12/31/98 $1,000 $ $ % % % %
- ----------------
* Predecessor Fund commenced operations on August 22, 1994.
<CAPTION>
VALUE OF A $1,000 INVESTMENT -- UTILITIES FUND
VALUE OF VALUE OF TOTAL RETURN BEFORE TOTAL RETURN AFTER
INVESTMENT INVESTMENT DEDUCTING DEDUCTING
BEFORE DEDUCTING AFTER DEDUCTING THE MAXIMUM CDSC THE MAXIMUM CDSC
INVESTMENT* INVESTMENT AMOUNT OF THE MAXIMUM THE MAXIMUM -------------------------- -------------------------
PERIOD DATE INVESTMENT CDSC ON 12/31/99 CDSC ON 12/31/99 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- -------------- ----------- ----------- ---------------- ---------------- ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
10 Years
Ended
12/31/99 12/31/89 $1,000 $ $ % % % %
5 Years
Ended
12/31/99 12/31/94 $1,000 $ $ % % % %
1 Year
Ended
12/31/99 12/31/98 $1,000 $ $ % % % %
- ----------------
* Predecessor Fund commenced operations on November 1, 1993.
</TABLE>
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of February 1, 2000, the Trustees and officers of the Trust, as a
group, owned in the aggregate less than 1% of the outstanding shares of each
Class B and of each Fund. In addition, as of the same date, the following
recordowners held the amounts of Class B shares indicated below, which were
held either individually or on behalf of its customers who are the beneficial
owners of such shares, and as to which it had voting power under certain
limited circumstances:
<TABLE>
<S> <C> <C> <C>
BALANCED FUND -- Merrill Lynch, Pierce, Fenner & Smith, Inc. Jacksonville, FL 13.4%
BISYS Brokerage Services Inc. Concord, CA 11.5%
GROWTH & INCOME FUND -- Merrill Lynch, Pierce, Fenner & Smith, Inc. Jacksonville, FL 13.5%
SPECIAL EQUITIES FUND -- Merrill Lynch, Pierce, Fenner & Smith, Inc. Jacksonville, FL 23.9%
Prudential Securities Inc. FBO Ruth G. Battel Mahwah, NJ 6.9%
Donaldson Lufkin Jenrette Securities Corporation Inc. Jersey City, NJ 5.2%
UTILITIES FUND -- Merrill Lynch, Pierce, Fenner & Smith, Inc. Jacksonville, FL 18.9%
</TABLE>
To the knowledge of the Trust, no other person owned of record or
beneficially 5% or more of any Fund's outstanding Class B shares on such date.
<PAGE>
APPENDIX C
CLASS C FEES, PERFORMANCE AND OWNERSHIP
DISTRIBUTION AND SERVICE FEES
For the fiscal year ended December 31, 1999, the following table shows (1)
sales commissions paid by the principal underwriter to investment dealers on
sales of Class C shares, (2) distribution fees to the principal underwriter
under the Distribution Plan, (3) CDSC payments to the principal underwriter,
(4) uncovered distribution charges under the Plan (dollar amount and as a
percentage of net assets attributable to Class C), (5) service fees paid under
the Distribution Plan, and (6) the service fees paid to investment dealers.
The service fees paid by the Funds that were not paid to investment dealers
were retained by the principal underwriter. Distribution payments and CDSC
payments reduce uncovered distribution charges under the Plan.
<TABLE>
<CAPTION>
DISTRIBUTION CDSCS UNCOVERED SERVICE
FEES PAID TO PAID TO DISTRIBUTION CHARGES FEES TO
SALES THE PRINCIPAL THE PRINCIPAL (AS A % OF SERVICE INVESTMENT
CLASS C COMMISSIONS UNDERWRITER UNDERWRITER CLASS NET ASSETS) FEES DEALERS
- ------- ----------- ----------- ----------- ----------------- ---- -------
<S> <C> <C> <C> <C> <C> <C>
Balanced .. $ $ $ $ ( %) $ $
Growth &
Income .... $ $ $ $ ( %) $ $
Special
Equities .. $ $ $ $ ( %) $ $
Utilities . $ $ $ $ ( %) $ $
</TABLE>
PRINCIPAL UNDERWRITER
The Trust has authorized the principal underwriter to act as its agent in
repurchasing shares at the rate of $2.50 for each repurchase transaction
handled by the principal underwriter. For the fiscal year ended December 31,
1999, Class C paid the principal underwriter for repurchase transactions
handled by it $2.50 for each such transaction which aggregated as follows:
Balanced Fund -- $ ; Growth & Income Fund -- $ ; Special Equities Fund
- -- $ ; and Utilities Fund -- $ .
PERFORMANCE INFORMATION
The tables below indicate the cumulative and average annual total return
on a hypothetical investment in shares of $1,000. Total return for the period
prior to January 1, 1998 reflects the total return of the predecessor to Class
C. Total return prior to the Predecessor Fund's commencement of operations
reflects the total return of Class A, adjusted to reflect the Class C sales
charge. The Class A total return has not been adjusted to reflect certain
other expenses (such as distribution and/or service fees). If such adjustments
were made, the Class C total return would be lower. Past performance is not
indicative of future results. Investment return and principal value will
fluctuate; shares, when redeemed, may be worth more or less than their
original cost. Information presented with two asterisks (**) includes the
effect of subsidizing expenses. Return would have been lower without
subsidies.
<TABLE>
VALUE OF A $1,000 INVESTMENT -- BALANCED FUND
<CAPTION>
VALUE OF VALUE OF TOTAL RETURN BEFORE TOTAL RETURN AFTER
INVESTMENT INVESTMENT DEDUCTING DEDUCTING
BEFORE DEDUCTING AFTER DEDUCTING THE MAXIMUM CDSC THE MAXIMUM CDSC
INVESTMENT* INVESTMENT AMOUNT OF THE MAXIMUM THE MAXIMUM -------------------------- -------------------------
PERIOD DATE INVESTMENT CDSC ON 12/31/99 CDSC ON 12/31/99 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- -------------- ----------- ----------- ---------------- ---------------- ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
10 Years
Ended
12/31/99 12/31/89 $1,000 $ $ % % % %
5 Years
Ended
12/31/99 12/31/94 $1,000 $ $ % % % %
1 Year
Ended
12/31/99 12/31/98 $1,000 $ $ % % % %
- ------------------
* Predecessor Fund commenced operations on November 2, 1993.
VALUE OF A $1,000 INVESTMENT -- GROWTH & INCOME FUND
<CAPTION>
VALUE OF VALUE OF TOTAL RETURN BEFORE TOTAL RETURN AFTER
INVESTMENT INVESTMENT DEDUCTING DEDUCTING
BEFORE DEDUCTING AFTER DEDUCTING THE MAXIMUM CDSC THE MAXIMUM CDSC
INVESTMENT* INVESTMENT AMOUNT OF THE MAXIMUM THE MAXIMUM -------------------------- -------------------------
PERIOD DATE INVESTMENT CDSC ON 12/31/99 CDSC ON 12/31/99 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- -------------- ----------- ----------- ---------------- ---------------- ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
10 Years
Ended
12/31/99 12/31/89 $1,000 $ $ % % % %
5 Years
Ended
12/31/99 12/31/94 $1,000 $ $ % % % %
1 Year
Ended
12/31/99** 12/31/98 $1,000 $ $ % % % %
- ------------------
* Predecessor Fund commenced operations on November 4, 1994.
VALUE OF A $1,000 INVESTMENT -- SPECIAL EQUITIES FUND
<CAPTION>
VALUE OF VALUE OF TOTAL RETURN BEFORE TOTAL RETURN AFTER
INVESTMENT INVESTMENT DEDUCTING DEDUCTING
BEFORE DEDUCTING AFTER DEDUCTING THE MAXIMUM CDSC THE MAXIMUM CDSC
INVESTMENT* INVESTMENT AMOUNT OF THE MAXIMUM THE MAXIMUM -------------------------- -------------------------
PERIOD DATE INVESTMENT CDSC ON 12/31/99 CDSC ON 12/31/99 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- -------------- ----------- ----------- ---------------- ---------------- ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
10 Years
Ended
12/31/99 12/31/89 $1,000 $ $ % % % %
5 Years
Ended
12/31/99 12/31/94 $1,000 $ $ % % % %
1 Year
Ended
12/31/99 12/31/98 $1,000 $ $ % % % %
- ------------------
* Predecessor Fund commenced operations on November 17, 1994.
VALUE OF A $1,000 INVESTMENT -- UTILITIES FUND
<CAPTION>
VALUE OF VALUE OF TOTAL RETURN BEFORE TOTAL RETURN AFTER
INVESTMENT INVESTMENT DEDUCTING DEDUCTING
BEFORE DEDUCTING AFTER DEDUCTING THE MAXIMUM CDSC THE MAXIMUM CDSC
INVESTMENT* INVESTMENT AMOUNT OF THE MAXIMUM THE MAXIMUM -------------------------- -------------------------
PERIOD DATE INVESTMENT CDSC ON 12/31/99 CDSC ON 12/31/99 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- -------------- ----------- ----------- ---------------- ---------------- ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
10 Years
Ended
12/31/99 12/31/89 $1,000 $ $ % % % %
5 Years
Ended
12/31/99 12/31/94 $1,000 $ $ % % % %
1 Year
Ended
12/31/99 12/31/98 $1,000 $ $ % % % %
- ------------------
* Predecessor Fund commenced operations on November 1, 1993.
</TABLE>
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of February 1, 2000, the Trustees and officers of the Trust, as a
group, owned in the aggregate less than 1% of the outstanding shares of each
Class C and of each Fund. In addition, as of the same date, the following
recordowners held the amounts of Class C shares indicated below, which were
held either individually or on behalf of its customers who are the beneficial
owners of such shares, and as to which it had voting power under certain
limited circumstances:
<TABLE>
<S> <C> <C> <C>
BALANCED FUND -- Merrill Lynch, Pierce, Fenner & Smith, Inc. Jacksonville, FL 11.6%
GROWTH & INCOME FUND -- Merrill Lynch, Pierce, Fenner & Smith Inc. Jacksonville, FL 23.6%
Frontier Trust Co. FBO West Florida Pharmacies Inc. Ambler, PA 8.2%
401(k) Savings & Retirement Plan
SPECIAL EQUITIES FUND -- Merrill Lynch, Pierce, Fenner & Smith, Inc. Jacksonville, FL 22.7%
Prudential Securities Inc. Edmond, OK 10.3%
FBO Dr. James Walnaver
Dain Rauscher Custodian San Diego, CA 6.3%
John F. Gaughan
UTILITIES FUND -- Merrill Lynch, Pierce, Fenner & Smith, Inc. Jacksonville, FL 22.0%
</TABLE>
To the knowledge of the Trust, no other person owned of record or
beneficially 5% or more of any Fund's outstanding Class C shares on such date.
<PAGE>
STATEMENT OF
ADDITIONAL INFORMATION
May 1, 2000
EATON VANCE EMERGING GROWTH FUND
255 State Street
Boston, Massachusetts 02109
(800) 225-6265
This Statement of Additional Information ("SAI") provides general
information about the Fund and the Portfolio. The Fund is a series of Eaton
Vance Special Investment Trust. Capitalized terms used in this SAI and not
otherwise defined have the meanings given to them in the prospectus. This SAI
contains additional information about:
PAGE
Strategies and Risks..................................................2
Investment Restrictions...............................................5
Management and Organization...........................................6
Investment Advisory and Administrative Services......................11
Other Service Providers..............................................12
Purchasing and Redeeming Shares......................................13
Sales Charges........................................................15
Performance..........................................................17
Certain Holders of Fund Shares.......................................19
Taxes................................................................19
Portfolio Security Transactions......................................21
Financial Statements.................................................23
This is not a prospectus and is authorized for distribution to prospective
investors only if preceded or accompanied by the Fund's prospectus dated May 1,
2000, as supplemented from time to time, which is incorporated herein by
reference. This SAI should be read in conjunction with the prospectus, which may
be obtained by calling 1-800-225-6265.
<PAGE>
STRATEGIES AND RISKS
The Portfolio invests primarily in publicly-traded equity securities of
emerging growth companies. Equity securities include common stocks and
securities convertible into common stocks. The Portfolio may also invest in
preferred stocks and money market instruments (to meet anticipated redemption
requests or while investment of cash is pending). The Fund is subject the same
investment policies as those of the Portfolio.
FOREIGN SECURITIES. Investing in securities issued by companies whose principal
business activities are outside the United States may involve significant risks
not present in domestic investments. For example, investments in foreign
securities involve the risk of possible adverse changes in investment or
exchange control regulations, expropriation or confiscatory taxation, limitation
on the removal of Portfolios 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.
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.
Settlement practices are less developed and entail the risk of loss.
The Portfolio may also invest in depositary receipts, which are
certificates evidencing ownership of shares of a foreign issuer and are
alternatives to directly purchasing the underlying foreign securities in their
national markets and currencies. However, they continue to be subject to many of
the risks associated with investing directly in foreign securities. These risks
include foreign exchange risk as well as the political and economic risks of the
underlying issuer's country. Depositary receipts may be sponsored or
unsponsored. Unsponsored receipts are established without the participation of
the issuer. Unsponsored receipts may involve higher expenses, they may not
pass-through voting and other shareholder rights, and they may be less liquid.
FOREIGN CURRENCY TRANSACTIONS. The value of foreign assets of the Portfolio as
measured in U.S. dollars may be affected favorably or unfavorably by changes in
foreign currency exchange rates and exchange control regulations. Currency
exchange rates can also be affected unpredictably by intervention by U.S. or
foreign governments or central banks, or the failure to intervene, or by
currency controls or political developments in the U.S. or abroad. The Portfolio
may conduct its foreign currency exchange transactions on a spot (I.E., cash)
basis at the spot rate prevailing in the foreign currency exchange market or
through entering into swaps, forward contracts, options or futures on currency.
On spot transactions, foreign exchange dealers do not charge a fee for
conversion, but they do realize a profit based on the difference (the "spread")
between the prices at which they are buying and selling various currencies.
Thus, a dealer may offer to sell a foreign currency to the Portfolio at one
rate, while offering a lesser rate of exchange should the Portfolio desire to
resell that currency to the dealer.
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CONVERTIBLE SECURITIES. The Fund may invest in convertible securities rated
below investment grade at the time of investment (which are those rated Baa or
lower by Moody's Investors Service, Inc., or BBB or lower by either Standard &
Poor's Ratings Group or Fitch/IBCA). Securities rated Baa or BBB or below have
speculative characteristics. Also, changes in economic conditions or other
circumstances are more likely to reduce the capacity of issuers of lower-rated
securities to make principal and interest payments. Lower rated obligations also
may be subject to greater price volatility than higher rated obligations. There
is no minimum rating for investment. Securities rated in the lowest category are
in default.
FUTURES CONTRACTS AND OPTIONS THEREON. The Portfolio may enter into futures
contracts, and options on futures contracts, traded on an exchange regulated by
the CFTC and on foreign exchanges, but, with respect to foreign exchange-traded
futures contracts and options on such futures contracts, only if the investment
adviser determines that trading on each such foreign exchange does not subject
the Portfolio to risks, including credit and liquidity risks, that are
materially greater than the risks associated with trading on CFTC-regulated
exchanges.
In order to hedge its current or anticipated portfolio positions, the
Portfolio may use futures contracts on securities held in its portfolio or on
securities with characteristics similar to those of the securities held by the
Portfolio. If, in the opinion of the investment adviser, there is a sufficient
degree of correlation between price trends for the securities held by the
Portfolio and futures contracts based on other financial instruments, securities
indices or other indices, the Portfolio may also enter into such futures
contracts as part of its hedging strategy.
SWAPS AND OTC OPTIONS. Equity swaps and over-the-counter ("OTC") options are
private contracts in which there is a risk of loss in the event of a default on
an obligation to pay by a counterparty. The Portfolio will only enter into
equity swaps and OTC options contracts with counterparties whose credit quality
or claims paying ability are considered to be investment grade by the investment
adviser. Some of the Portfolio's investment in equity swaps and OTC options may
be treated as illiquid assets. All futures contracts entered into by the
Portfolio will be traded on exchanges or boards of trade that are licensed and
regulated by the Commodities Futures Trading Commission ("CFTC") and must be
executed through a futures commission merchant or brokerage firm that is a
member of the relevant exchange.
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. If the investment adviser
is incorrect in its forecasts of market values and currency exchange rates, the
Portfolio's performance will be adversely affected.
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.
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Certain OTC options, and assets used as cover for written OTC options, may be
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. The Portfolio expects to purchase and
write only exchange-traded options until such time as the Portfolio's management
determines that the OTC options market is sufficiently developed and the
Portfolio has amended its prospectus so that appropriate disclosure is furnished
to prospective and existing shareholders. For thinly traded derivative
instruments, the only source of price quotations may be the selling dealer or
counterparty. In addition, certain provisions of the tax 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 Portfolio as a regulated
investment company for federal income tax purposes.
SHORT SALES AGAINST-THE-BOX. The Portfolio may sell a security short if it owns
at least an equal amount of the security sold short or another security
convertible or exchangeable for an equal amount of the security sold short
without payment of further compensation (a short sale against-the-box). A short
sale against-the-box requires that the short seller absorb certain costs so long
as the position is open. In a short sale against-the-box, the short seller is
exposed to the risk of being forced to deliver appreciated stock to close the
position if the borrowed stock is called in, causing a taxable gain to be
recognized. These transactions may also require the current recognition of
taxable gain under certain tax rules applicable to constructive sales. No more
than 20% of the Portfolio's assets will be subject to short sales at any one
time.
RISKS ASSOCIATED WITH DERIVATIVE INSTRUMENTS. The Portfolio's transactions in
derivative instruments involve a risk of loss or depreciation due to:
unanticipated adverse changes in securities prices, interest rates, the other
financial instruments' prices or currency exchange rates; the inability to close
out a position; default by the counterparty; imperfect correlation between a
position and the desired hedge; tax constraints on closing out positions; and
portfolio management constraints on securities subject to such transactions.
Derivative transactions may be more advantageous in a given circumstance than
transactions involving securities due to more favorable current tax treatment,
lower transaction costs, or greater liquidity.
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. While many
derivative instruments have built-in leveraging characteristics, the Portfolio
will not use them to leverage its net assets. The Portfolio's success in using
derivative instruments to hedge portfolio assets depends on the degree of price
correlation between the derivative instruments and the hedged asset. Imperfect
correlation may be caused by several factors, including temporary price
disparities among the trading markets for the derivative instrument, the assets
underlying the derivative instrument and the Portfolio's assets.
ASSET COVERAGE FOR DERIVATIVE INSTRUMENTS. Transactions using forward contracts,
swaps, 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 or futures contracts or forward contracts, or (2) cash and liquid
securities (such as readily marketable common stock and money market
instruments) with a value sufficient at all times to cover its potential
obligations not covered as provided in (1) above. (Only the net obligation of a
swap will be covered.) The Portfolios will comply with Securities and Exchange
Commission ("SEC") guidelines regarding cover for these instruments and, if the
guidelines so require, set aside cash or liquid securities in a segregated
account
-4-
<PAGE>
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 in the corresponding instrument is open, unless they are replaced
with other appropriate assets. As a result, the commitment of a large portion of
the Portfolio's assets to cover or segregated accounts could impede portfolio
management or the Portfolio's ability to meet redemption requests or other
current obligations.
LENDING PORTFOLIO SECURITIES. The Portfolio may seek to increase its income by
lending portfolio securities to broker-dealers or other institutional borrowers.
If the investment adviser determines to make securities loans, it is intended
that the value of the securities loaned would not exceed 30% of the Portfolio's
total assets. Securities lending involves risks of delay in recovery or even
loss of rights on the securities loaned if the borrower fails financially. The
Portfolio has no present intention of engaging in securities lending.
TEMPORARY INVESTMENTS. Under unusual market conditions, the Portfolio may invest
temporarily in cash or cash equivalents. Cash equivalents are highly liquid,
short-term securities such as commercial paper, certificates of deposit,
short-term notes and short-term U.S. Government obligations.
PORTFOLIO TURNOVER. The Portfolio cannot accurately predict its portfolio
turnover rate, but the annual turnover rate may exceed 100% (excluding turnover
of securities having a maturity of one year or less). A high turnover rate (100%
or more) necessarily involves greater expenses to the Portfolio.
INVESTMENT RESTRICTIONS
The following investment restrictions of the Fund are designated as
fundamental policies and as such cannot be changed without the approval of the
holders of a majority of the Fund's outstanding voting securities, which as used
in this SAI means the lesser of (a) 67% of the shares of the Fund present or
represented by proxy at a meeting if the holders of more than 50% of the
outstanding shares are present or represented at the meeting or (b) more than
50% of the outstanding shares of the Fund. Accordingly, the Fund may not:
(1) 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 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;
(2) Borrow money or issue senior securities except as permitted
by the Investment Company Act of 1940;
(3) 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);
(4) Underwrite securities of other issuers;
(5) Invest more than 25% of its assets 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);
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<PAGE>
(6) Invest in real estate (although it may purchase and sell
securities which are secured by real estate and securities of
companies which invest or deal in real estate);
(7) Invest in commodities or commodity contracts for the purchase
or sale of physical commodities; or
(8) Make loans to any person except by (a) the acquisition of
debt securities and making portfolio investments, (b) entering into
repurchase agreements and (c) lending portfolio securities.
Notwithstanding the investment policies and restrictions of the Fund, the
Fund may invest all of its investable assets in an open-end management
investment company with substantially the same investment objective, policies
and restrictions as the Fund.
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 by the Trustees with respect to the Fund without approval
by the Fund's shareholders or with respect to the Portfolio without approval by
the Fund or its other investors. The Fund and the Portfolio will not:
(a) invest more than 15% of 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 its delegate, determines to be liquid. Any
such determination by a delegate will be made pursuant to procedures
adopted by the Board. If the Fund invests in Rule 144A securities, the
level of portfolio illiquidity may be increased to the extent that eligible
buyers become uninterested in purchasing such securities; or
(b) sell or contract to sell a security which it does not own unless
by virtue of its ownership of other securities it has at the time of sale a
right to obtain securities equivalent in kind and amount to the securities
sold and provided that if such right is conditional the sale is made upon
the same conditions.
Whenever an investment policy or investment restriction set forth in the
prospectus or this SAI states a maximum percentage of assets that may be
invested in any security or other asset, such percentage limitation shall be
determined immediately after and as a result of the Fund's or the Portfolio's
acquisition of such security or asset. Accordingly, any later increase or
decrease resulting from a change in values, assets or other circumstances, will
not compel the Fund or the Portfolio 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 policies of investing
at least 65% of total assets in equity securities of emerging growth companies
and not investing more than 15% of net assets in illiquid securities. Moreover,
the Fund must always be in compliance with the limitation on investing in
illiquid securities and the borrowing policies set forth above.
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<PAGE>
MANAGEMENT AND ORGANIZATION
FUND MANAGEMENT. The Trustees of the Trust are responsible for the overall
supervision of the Trust's affairs. 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 255
State Street, Boston, Massachusetts 02109. Those Trustees who are "interested
persons" of the Trust or the Portfolio, as defined in the 1940 Act, are
indicated by an asterisk(*).
JESSICA M. BIBLIOWICZ (40), Trustee*
Chief Executive Officer of National Financial Partners (a financial services
company) (since April 1999). President and Chief Operating Officer of John
A. Levin & Co. (a registered investment advisor) (July 1997 to April 1999)
and a Director of Baker, Fentress & Company which owns John A. Levin & Co.
(July 1997 to April 1999). Executive Vice President of Smith Barney Mutual
Funds (from July 1994 to June 1997). Elected Trustee October 30, 1998.
Trustee of various investment companies managed by Eaton Vance or Boston
Management & Research ("BMR"), a wholly-owned subsidiary of Eaton Vance,
since October 30, 1998.
Address: 1301 Avenue of the Americas, New York, New York 10019
DONALD R. DWIGHT (68), Trustee
President of Dwight Partners, Inc. (a corporate relations and communications
company). Trustee/Director of the Royce Funds (mutual funds). Trustee of
various investment companies managed by Eaton Vance or BMR.
Address: Clover Mill Lane, Lyme, New Hampshire 03768
JAMES B. HAWKES (58), President and Trustee*
Chairman, President and Chief Executive Officer of BMR, Eaton Vance and their
corporate parent and trustee (EVC and EV); Director of EVC and EV. Trustee
and officer of various investment companies managed by Eaton Vance or BMR.
SAMUEL L. HAYES, III (65), Trustee
Jacob H. Schiff Professor of Investment Banking Emeritus, Harvard University
Graduate School of Business Administration. Trustee of the Kobrick-Cendant
Investment Trust (mutual funds). Trustee of various investment companies
managed by Eaton Vance or BMR.
Address: 345 Nahatan Road, Westwood, Massachusetts 02090
NORTON H. REAMER (64), Trustee
Chairman of the Board and Chief Executive Officer, United Asset Management
Corporation (a holding company owning institutional investment management
firms); Chairman, President and Director, UAM Funds (mutual funds). Trustee
of various investment companies managed by Eaton Vance or BMR.
Address: One International Place, Boston, Massachusetts 02110
LYNN A. STOUT (42), Trustee
Professor of Law, Georgetown University Law Center. Elected Trustee October 30,
1998. Trustee of various investment companies managed by Eaton Vance or BMR
since October 30, 1998.
Address: 600 New Jersey Avenue, NW, Washington, DC 20001
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JACK L. TREYNOR (70), Trustee
Investment adviser and Consultant. Trustee of various investment companies
managed by Eaton Vance or BMR.
Address: 504 Via Almar, Palos Verdes Estates, California 90274
EDWARD E. SMILEY, JR. (55), Vice President
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 NationsBank (1992-1996). Officer of various
investment companies managed by Eaton Vance or BMR.
MICHAEL B. TERRY (56), Vice President
Vice President of BMR and Eaton Vance. Officer of various investment companies
managed by Eaton Vance or BMR.
JAMES L. O'CONNOR (54), Treasurer
Vice President of BMR and Eaton Vance. Officer of various investment companies
managed by Eaton Vance or BMR.
ALAN R. DYNNER (59), Secretary
Vice President and Chief Legal Officer of BMR, Eaton Vance and EVC since
November 1, 1996. Previously, he was a Partner of the law firm of
Kirkpatrick & Lockhart LLP, New York and Washington, D.C., and was
Executive Vice President of Neuberger & Berman Management, Inc., a mutual
fund management company. Officer of various investment companies managed by
Eaton Vance or BMR.
JANET E. SANDERS (64), Assistant Treasurer and Assistant Secretary
Vice President of BMR and Eaton Vance. Officer of various investment companies
managed by Eaton Vance or BMR.
A. JOHN MURPHY (37), Assistant Secretary
Vice President of BMR and Eaton Vance. Officer of various investment companies
managed by Eaton Vance or BMR.
ERIC G. WOODBURY (42), Assistant Secretary
Vice President of BMR and Eaton Vance. Officer of various investment companies
managed by Eaton Vance or BMR.
The Nominating Committee of the Board of Trustees of the Trust and the
Portfolio is comprised of the Trustees who are not "interested persons" as that
term is defined under the 1940 Act ("noninterested Trustees"). The purpose of
the Committee is to recommend to the Board nominees for the position of
noninterested Trustee and to assure that at least a majority of the Board of
Trustees is independent of Eaton Vance and its affiliates.
Messrs. Hayes (Chairman), Dwight and Reamer and Ms. Stout are members of
the Special Committee of the Board of Trustees of the Trust and the Portfolio.
The purpose of the Special Committee is to consider, evaluate and make
recommendations to the full Board of Trustees concerning (i) all contractual
arrangements with service providers to the Fund and the Portfolio, including
investment advisory (Portfolio only), administrative, transfer agency, custodial
and fund accounting and distribution services, and (ii) all other matters in
which Eaton Vance or its affiliates has any actual or potential conflict of
interest with the Fund, the Portfolio or its shareholders.
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Messrs. Treynor (Chairman) and Dwight and Ms. Bibliowicz are members of the
Audit Committee of the Board of Trustees of the Trust and the Portfolio. The
Audit Committee's functions include making recommendations to the Board of
Trustees regarding the selection of the independent accountants, and reviewing
matters relative to trading and brokerage policies and practices, accounting and
auditing practices and procedures, accounting records, internal accounting
controls, and the functions performed by the custodian, transfer agent and
dividend disbursing agent of the Trust and the Portfolio.
Trustees of the Portfolio who are not affiliated with the investment
adviser may elect to defer receipt of all or a percentage of their annual fees
in accordance with the terms of a Trustees Deferred Compensation Plan (the
"Trustees' Plan"). Under the Trustees' Plan, an eligible Trustee may elect to
have his deferred fees invested by the Portfolio in the shares of one or more
funds in the Eaton Vance Family of Funds, and the amount paid to the Trustees
under the Trustees' Plan will be determined based upon the performance of such
investments. Deferral of Trustees' fees in accordance with the Trustees' Plan
will have a negligible effect on the Portfolio's assets, liabilities, and net
income per share, and will not obligate the Portfolio to retain the services of
any Trustee or obligate the Portfolio to pay any particular level of
compensation to the Trustee. Neither the Trust nor the Portfolio has a
retirement plan for its Trustees.
The fees and expenses of the noninterested Trustees of the Trust and the
Portfolio are paid by the Fund (and the other series of the Trust) and the
Portfolio, respectively. (The Trustees of the Trust who are members of the Eaton
Vance organization receive no compensation from the Fund or the Portfolio.)
Because the Portfolio was only recently organized, it has yet to pay Trustees'
fees. During the fiscal year ending December 31, 1999, the noninterested
Trustees of the Trust earned the following compensation in their capacities as
Trustees from the Trust and for the year ended December 31, 1999, earned the
following compensation in their capacities as Trustees of the funds in the Eaton
Vance fund complex(1):
Aggregate Total Compensation
Compensation from Trust and
Name from Trust(2) Fund Complex
- ---- ---------- ------------
Jessica M. Bibliowicz.......... $3,099 $ 160,000
Donald R. Dwight............... 2,755 160,000(3)
Samuel L. Hayes, III........... 3,053 170,000
Norton H. Reamer............... 2,819 160,000
Lynn A. Stout.................. 3,052 160,000(4)
Jack L. Treynor................ 2,990 170,000
(1) As of May 1, 2000, the Eaton Vance fund complex consists of 145 registered
investment companies or series thereof.
(2) The Trust consisted of 9 Funds as of December 31, 1999.
(3) Includes $60,000 of deferred compensation.
(4) Includes $16,000 of deferred compensation.
ORGANIZATION. The Fund is a series of the Trust, which is organized under
Massachusetts law as a business trust and is operated as an open-end management
investment company. On May 1, 1999, the Fund changed it name from EV Traditional
Emerging Growth Fund to Eaton Vance Emerging Growth Fund. Eaton Vance pursuant
to its agreement with the Trust, controls the use of the words "Eaton Vance" and
"EV" in the Fund's name and may use the words "Eaton Vance" or "EV" in other
connections and for other purposes.
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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). When issued
and outstanding, shares are fully paid and nonassessable by the Trust.
Shareholders are entitled to one vote for each full share held. Fractional
shares may be voted proportionately. Shares have no preemptive or conversion
rights and are freely transferable. In the event of the liquidation of the Fund,
shareholders are entitled to share pro rata in the Fund's net assets available
for distribution to shareholders. The Trustees have the authority under the
Declaration of Trust to create classes of shares with differing rights and
privileges.
The Trustees of the Trust have considered the advantages and disadvantages
of investing the assets of the Fund in the Portfolio, as well as the advantages
and disadvantages of the two-tier format. The Trustees believe that the
structure offers opportunities for growth in the assets of the Portfolio, may
afford the potential for economies of scale for the Fund and may over time
result in lower expenses for the Fund.
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 than in office will call
a shareholders' meeting for the election of Trustees. Except for the foregoing
circumstances and unless removed by action of the shareholders in accordance
with the Trust's By-laws, the Trustees shall continue to hold office and may
appoint successor Trustees.
The Trust's By-laws provide that no person shall serve as a Trustee if
shareholders holding two-thirds of the outstanding shares have removed him from
the 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 communication
with shareholders about such a meeting.
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 of classes of shares or restructuring the
Trust) as do not have a materially adverse effect on the financial interests of
shareholders or if they deem it necessary to conform it to applicable federal or
state laws or regulations. The Trust or any series or class thereof may be
terminated by: (1) the affirmative vote of the holders of not less than
two-thirds of the shares of the outstanding voting securities and entitled to
vote at any meeting of shareholders of the Trust, or by an instrument or
instruments in writing without a meeting, consented to by the holders of
two-thirds of the shares of the Trust or a series or class thereof, provided,
however, that, if such termination is recommended by the Trustees, the vote of a
majority of the outstanding voting securities of the Trust or a series or class
thereof entitled to vote thereon shall be sufficient authorization; or (2) by
means of an instrument in writing signed by a majority of the Trustees, to be
followed by a written notice to shareholders stating that a majority of the
Trustees has determined that the continuation of the Trust or a series or a
class thereof is not in the best interest of the Trust, such series or class or
of their respective shareholders.
The Declaration of Trust further provides that the Trustees will not be
liable for errors of judgment or mistakes of fact or law; but nothing in the
Declaration of Trust protects a Trustee against any liability to which he would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of his
office.
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Under Massachusetts law, if certain conditions prevail, shareholders of a
Massachusetts business trust (such as the Trust) could be deemed to have
personal liability for the obligations of the Trust. Numerous investment
companies registered under the 1940 Act have been formed as Massachusetts
business trusts, and management is not aware of an instance where such liability
has been imposed. The Trust's Declaration of Trust contains an express
disclaimer of liability on the part of the Fund shareholders and the Trust's
By-laws provide that the Trust shall assume the defense on behalf of any Fund
shareholders. The Declaration of Trust 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 or any
shareholder held personally liable solely by reason of being or having been a
shareholder for all loss or expense arising from such liability. The assets of
the Fund are readily marketable and will ordinarily substantially exceed its
liabilities. In light of the nature of the Fund's business and the nature of its
assets, management believes that the possibility of the Fund's liability
exceeding its assets, and therefore the shareholder's risk of personal
liability, is remote.
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
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 of the Portfolio holding
office have been elected by investors. In such an event the Trustees of the
Portfolio holding office have been elected by investors. In such an event the
Trustees of the Portfolio then in office will call an investors' meeting for the
election of Trustees. Except for the foregoing circumstances and unless removed
by action of the investors in accordance with the Portfolio's Declaration of
Trust, the Trustees shall continue to hold office and may appoint successor
Trustees.
The Declaration of Trust of the Portfolio provides that no person shall
serve as a Trustee if investors holding two-thirds of the outstanding interest
have removed him from that office either by a written declaration filed with the
Portfolio's custodian or by votes cast at a meeting called for that purpose. The
Declaration of Trust further provides that under certain circumstances the
investors may call a meeting to remove a Trustee and that the Portfolio is
required to provide assistance in communicating with investors about such a
meeting.
The Portfolio's Declaration of Trust provides that the Fund and other
entities permitted to invest in the Portfolio (E.G., other U.S. and foreign
investment companies, and common and commingled trust funds) will each be liable
for all obligations of the Portfolio. However, the risk of the Fund incurring
financial loss on account of such liability is limited to circumstances in which
both inadequate insurance exists and the Portfolio itself is unable to meet its
obligations. Accordingly, the Trustees of the Trust believe that neither the
Fund nor its shareholders will be adversely affected by reason of the Fund
investing in the Portfolio.
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
investments in the Portfolio or take other appropriate action. Any such
withdrawal could result in a distribution "in kind" of portfolio securities (as
opposed to a cash distribution from the Portfolio). If securities are
distributed, the Fund could incur brokerage, tax or other chares in converting
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<PAGE>
the securities to cash. In addition, the distribution in kind may result in a
less diversified portfolio of investments or adversely affect the liquidity of
the Fund. Notwithstanding the above, there are other means for meeting
shareholder redemption requests, such as borrowing.
The Fund may withdraw (completely redeem) all its assets from the Portfolio
at any time if the Board of Trustees of the Trust determines that it is in the
best interest of the Fund to do so. In the event the Fund withdraws all of its
assets from the Portfolio, or the Board of Trustees of the Trust determines that
the investment objective of the Portfolio is no longer consistent with the
investment objective of the Fund, the Trustees would consider what action might
be taken, including investing the assets of the Fund in another pooled
investment entity or retaining an investment adviser to manage the Fund's assets
in accordance with its investment objective. The Fund's investment performance
may be affected by a withdrawal of all its assets (or the assets of another
investor in the Portfolio) from the Portfolio.
INVESTMENT ADVISORY AND ADMINISTRATIVE SERVICES
INVESTMENT ADVISORY SERVICES. BMR manages the investments and affairs of the
Portfolio subject to the supervision of the Portfolio's Board of Trustees. BMR
furnishes to the Portfolio investment research, advice and supervision,
furnishes an investment program and determines what securities will be
purchased, held or sold by the Portfolio and what portion, if any, of the
Portfolio's assets will be held uninvested. The Investment Advisory Agreement
requires BMR to pay the salaries and fees of all officers and Trustees of the
Portfolio who are members of the BMR organization and all personnel of BMR
performing services relating to research and investment activities.
The Fund pays Eaton Vance as compensation under the Investment Advisory
Agreement a monthly fee based on average daily net assets as follows:
<TABLE>
<CAPTION>
Average Daily Net Annualized Fee Rate Monthly Fee Rate
Assets for the Month (For Each Level) (For Each Level)
-------------------- ---------------- ----------------
<S> <C> <C>
Up to $500 million............................... 0.7500% 1/16 of 1%
$500 million but less than $1 billion............ 0.6875% 11/192 of 1%
$1 billion but less than $1.5 billion............ 0.6250% 5/96 of 1%
$1.5 billion but less than $2 billion............ 0.5625% 3/64 of 1%
$2 billion but less than $3 billion.............. 0.5000% 1/24 of 1%
$3 billion and over.............................. 0.4375% 7/192 of 1%
</TABLE>
Prior to May 1, 2000, the Fund retained Eaton Vance to manage its assets
under an advisory agreement substantially identical to the Portfolio's advisory
agreement with BMR. As of December 31, 1999, the Fund had net assets of $ . For
the fiscal years ended December 31, 1999 and 1998, and for the period from the
start of business, January 2, 1997, to December 31, 1997, absent a fee
reduction, the Fund would have paid Eaton Vance advisory fees of $________ ,
$2,439 and $1,896, respectively (each equivalent to 0.75% (annualized) of the
Fund's average daily net assets for such period). To enhance the net income of
the Fund, Eaton Vance made a reduction of the full amount of its advisory fee
and Eaton Vance was allocated a portion of expenses related to the operation of
the Fund in the amount of $___________ , $29,456 and $24,157, respectively.
The Investment Advisory Agreement with BMR continues 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
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<PAGE>
outstanding voting securities of the Portfolio. The Agreement may be terminated
at any time without penalty on sixty (60) days' written notice by the Board of
Trustees of either party, or by vote of the majority of the outstanding voting
securities of the Portfolio, and the Agreement will terminate automatically in
the event of its assignment. The Agreement provides that BMR may render services
to others. The Agreement also provides that BMR shall not be liable for any loss
incurred in connection with the performance of its duties, or action taken or
omitted under that Agreement, in the absence of willful misfeasance, bad faith,
gross negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties thereunder, or for any losses sustained
in the acquisition, holding or disposition of any security or other investment.
ADMINISTRATIVE SERVICES. As indicated in the prospectus, Eaton Vance serves as
administrator of the Fund, but currently receives no compensation for providing
administrative services to the Fund. Under its Administrative Services Agreement
with the Fund, Eaton Vance has been engaged to administer the Fund's affairs,
subject to the supervision of the Trustees of the Trust, and shall furnish for
the use of the Fund office space and all necessary office facilities, equipment
and personnel for administering the affairs of the Fund.
INFORMATION ABOUT EATON VANCE. BMR and Eaton Vance are business trusts organized
under Massachusetts law. Eaton Vance Inc. ("EV") serves as trustee of BMR and
Eaton Vance. BMR, Eaton Vance and EV are wholly-owned subsidiaries of Eaton
Vance Corporation ("EVC"), a Maryland corporation and publicly-held holding
company. EVC through its subsidiaries and affiliates engages primarily in
investment management, administration and marketing activities. The Directors of
EVC are James B. Hawkes, John G.L. Cabot, Leo I. Higdon, Jr., John M. Nelson,
Vincent M. O'Reilly and Ralph Z. Sorenson. All of the issued and outstanding
shares of Eaton Vance and of EV are owned by EVC. All shares of the outstanding
Voting Common Stock of EVC are deposited in a Voting Trust, the Voting Trustees
of which are Mr. Hawkes, Jeffrey P. Beale, Alan R. Dynner, Thomas E. Faust, Jr.,
Thomas J. Fetter, Scott H. Page, Duncan W. Richardson, William M. Steul, Payson
F. Swaffield, Michael W. Weilheimer and Wharton P. Whitaker (all of whom are
officers of Eaton Vance). 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 who are also officers or officers and Directors of EVC and EV. As
indicated under "Management and Organization," all of the officers of the Trust
(as well as Mr. Hawkes who is also a Trustee) hold positions in the Eaton Vance
organization.
EXPENSES. The Fund and the Portfolio are each responsible for all expenses not
expressly stated to be payable by another party (such as the investment adviser
under the Investment Advisory Agreement, Eaton Vance under the Administrative
Services Agreement or the principal underwriter under the Distribution
Agreement). In the case of expenses incurred by the Trust, the Fund is
responsible for its PRO RATA share of those expenses.
OTHER SERVICE PROVIDERS
PRINCIPAL UNDERWRITER. Eaton Vance Distributors, Inc. ("EVD"), 255 State Street,
Boston, Massachusetts 02109, is the Fund's principal underwriter. The principal
underwriter acts as principal in selling shares of the Fund under the
Distribution Agreement with the Trust on behalf of the Fund. The expenses of
printing copies of prospectuses used to offer shares and other selling
literature and of advertising are borne by the principal underwriter. The fees
and expenses of qualifying and registering and maintaining qualifications and
registrations of the Fund and its shares under federal and state securities laws
are borne by the Fund. The Distribution Agreement is renewable annually by the
Trust's Board of Trustees (including a majority of the noninterested Trustees),
may be terminated on six months' notice by either party, and is automatically
terminated upon assignment. The principal underwriter
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<PAGE>
distributes Fund shares on a "best efforts" basis under which it is required to
take and pay for only such shares as may be sold. The principal underwriter
allows investment dealer discounts from the applicable public offering price
which are alike for all investment dealers. The principal underwriter may allow,
upon notice to all investment dealers 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 investment
dealers may be deemed to be underwriters as that term is defined in the
Securities Act of 1933. The total sales charges paid in connection with sales of
shares of the Fund for the fiscal years ended December 31, 1999 and 1998, and
for the period from the start of business, January 2, 1997, to December 31,
1997, was $0, $137 and $32, respectively, of which $0, $18 and $6, respectively,
was received by the principal underwriter and $0, $119 and $26, respectively,
was received by investment dealers.
The Fund has authorized the principal underwriter to act as its agent in
repurchasing shares and will pay the principal underwriter $2.50 for each
repurchase transaction handled by the principal underwriter. The principal
underwriter estimates that the expenses incurred by it in acting as repurchase
agent for the Fund will exceed the amounts paid therefor by the Fund. For the
fiscal years ended December 31, 1999 and 1998, and for the period from the start
of business, January 2, 1997, to December 31, 1997, there were no repurchase
transactions of the Fund handled by the principal underwriter.
CUSTODIAN. Investors Bank & Trust Company ("IBT"), 200 Clarendon Street, Boston,
Massachusetts 02116, serves as custodian to the Fund and the Portfolio. IBT has
the custody of all cash and securities representing the Fund's interest in the
Portfolio, has custody of the Portfolio's assets, maintains the general ledger
of the Portfolio and the Fund and computes the daily net asset value of interest
in the Portfolio and the net assets value of shares of the Fund. In such
capacity it attends to details in connection with the sale, exchange,
substitution, transfer or other dealings with the Portfolio's investments,
receives and disburses all funds and performs various other ministerial duties
upon receipt of proper instructions from the Fund and the Portfolio. IBT also
provides services in connection with the preparation of shareholder reports and
the electronic filing of such reports with the SEC. EVC and its affiliates and
their officers and employees from time to time have transactions with various
banks, including 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.
INDEPENDENT ACCOUNTANTS. PricewaterhouseCoopers LLP, 160 Federal Street, Boston,
Massachusetts 02110, are the independent 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 SEC.
TRANSFER AGENT. PFPC Global Fund Services, P.O. Box 9653, Providence, RI
02904-9653, serves as transfer and dividend disbursing agent for the Fund.
PURCHASING AND REDEEMING SHARES
CALCULATION OF NET ASSET VALUE. The net asset value of the Portfolio is computed
by IBT (as agent and custodian for the Portfolio) by subtracting the liabilities
of the Portfolio from the value of its total assets. The Fund and the Portfolio
will be closed for business and will not price its shares on the following
business holidays: New Year's Day, Martin Luther King, Jr. Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day.
-14-
<PAGE>
Each investor in the Portfolio, including the Fund, may add to or reduce
its investment in the Portfolio on each day the New York Stock Exchange (the
"Exchange") is open for trading ("Portfolio Business Day") as of the close of
regular trading on the Exchange (the "Portfolio Valuation Time"). The value of
each investor's interest in the Portfolio will be determined by multiplying the
net asset value of the Portfolio by the percentage, determined on the prior
Portfolio Business Day, which represented that investor's share of the aggregate
interests in the Portfolio on such prior day. Any additions or withdrawals for
the current Portfolio Business Day will then be recorded. The investor's
percentage of the aggregate interest in the Portfolio will then be recomputed as
a percentage equal to the fraction (i) the numerator of which is the value of
such investor's investment in the Portfolios of the Portfolio Valuation Time on
the prior Portfolio Business Day plus or minus, as the case may be, the amount
of any additions to or withdrawals from the investor's investment in the
Portfolio on the current Portfolio Business Day and (ii) the denominator of
which is the aggregate net asset value of the Portfolio as of the Portfolio
Valuation Time on the prior Portfolio Business Day plus or minus, as the case
may be, the amount of the net additions to or withdrawals from the aggregate
investment in the Portfolio on the current Portfolio Business Day by all
investors in the Portfolio. The percentage so determined will then be applied to
determine the value of the investor's interest in the Portfolio for the current
Portfolio Business Day.
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 on
the principal market where the security was traded. An option is valued at the
last sale price as quoted on the principal exchange or board of trade on which
such option or contract is traded or, in the absence of a sale, at the mean
between the last bid and asked prices. Futures positions on securities or
currencies are generally valued at closing settlement prices. Short-term debt
securities with a remaining maturity of 60 days or less are valued at amortized
cost. If securities were acquired with a remaining maturity of more than 60
days, their amortized cost value will be based on their value on the sixty-first
day prior to maturity. Other fixed income and debt securities, including listed
securities and securities for which price quotations are available, will
normally be valued on the basis of valuations furnished by a pricing service.
All other securities are valued at fair value as determined in good faith by or
at the direction of the Trustees of the Portfolio.
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 Portfolio's net
asset value are computed as of such times. Occasionally, events affecting the
value of foreign securities may occur between such times and the close of the
Exchange which will not be reflected in the computation of the Portfolio's net
asset value (unless the Portfolio deems that such events would materially affect
its net asset value, in which case an adjustment would be made and reflected in
such computation). Foreign securities and currency held by the Portfolio will be
valued in U.S. dollars; such values will be computed by the custodian based on
foreign currency exchange rate quotations supplied by an independent pricing
service.
ADDITIONAL INFORMATION ABOUT PURCHASES. Fund shares are continuously offered
through investment dealers which have entered agreements with the principal
underwriter. The public offering price is the net asset value next computed
after receipt of the order, plus, a variable percentage (sale charge) depending
upon the amount of purchase as indicated by the sales charge table set forth in
the prospectus. The sales charge is divided between the principal underwriter
and the investment dealer. The sales charge
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<PAGE>
table is applicable to purchases of the Fund alone or in combination with
purchases of certain other funds offered by the principal underwriter, made at a
single time by (i) an individual, or an individual, his spouse and their
children under the age of twenty-one, purchasing shares for his or their own
account, and (ii) a trustee or other fiduciary purchasing shares for a single
trust estate or a single fiduciary account. The table is also presently
applicable to (1) purchases of Fund shares pursuant to a written Statement of
Intention; or (2) purchases of Fund shares pursuant to the Right of Accumulation
and declared as such at the time of purchase. See "Sales Charges".
In connection with employee benefit or other continuous group purchase
plans, the Fund may accept initial investments of less than $1,000 on the part
of an individual participant. In the event a shareholder who is a participant of
such a plan terminates participation in the plan, his or her shares will be
transferred to a regular individual account. However, such account will be
subject to the right of redemption by the Fund as described below.
SUSPENSION OF SALES. The Fund may, in its absolute discretion, suspend,
discontinue or limit the offering of shares at any time. In determining whether
any such action should be taken, the Fund's management intends to consider all
relevant factors, including (without limitation) the size of the Fund, the
investment climate and market conditions, and the volume of sales and
redemptions of shares. Suspension of the offering of shares would not, of
course, affect a shareholder's ability to redeem shares.
ACQUIRING FUND SHARES IN EXCHANGE FOR SECURITIES. IBT, as escrow agent, will
receive securities acceptable to Eaton Vance, as administrator, in exchange for
Fund shares. The minimum value of securities (or securities and cash) accepted
for deposit is $5,000. Securities accepted will be sold on the day of their
receipt or as soon thereafter as possible. The number of Fund shares to be
issued in exchange for securities will be the aggregate proceeds from the sale
of such securities, divided by the applicable public offering price per Fund
share on the day such proceeds are received. Eaton Vance will use reasonable
efforts to obtain the then current market price for such securities but does not
guarantee the best available price. Eaton Vance will absorb any transaction
costs, such as commissions, on the sale of the securities. Securities determined
to be acceptable should be transferred via book entry or physically delivered,
in proper form for transfer, through an investment dealer, together with a
completed and signed Letter of Transmittal in approved form (available from
investment dealers). 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.
ADDITIONAL INFORMATION ABOUT REDEMPTIONS. 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
SEC, or during any emergency as determined by the SEC which makes it
impracticable for the Fund to dispose of its securities or value its assets, or
during any other period permitted by order of the SEC for the protection of
investors.
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<PAGE>
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. The securities so
distributed would be valued pursuant to the Fund'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.
Due to the high cost of maintaining small accounts, the Trust reserves the
right to redeem accounts with balances of less than $750. Prior to such a
redemption, shareholders will be given 60 days' written notice to make an
additional purchase. However, no such redemption would be required by the Trust
if the cause of the low account balance was a reduction in the net asset value
of shares. No CDSC will be imposed with respect to such involuntary redemptions.
SYSTEMATIC WITHDRAWAL PLAN. The transfer agent will send to the shareholder
regular monthly or quarterly payments of any permitted amount designated by the
shareholder based upon the value of the shares held. The checks will be drawn
from share redemptions and hence, although they are a return of principal, may
require the recognition of taxable gain or loss. Income dividends and capital
gain distributions in connection with withdrawal plan accounts will be credited
at net asset value as of the record date for each distribution. Continued
withdrawals in excess of current income will eventually use up principal,
particularly in a period of declining market prices. A shareholder may not have
a withdrawal plan in effect at the same time he or she has authorized Bank
Automated Investing or is otherwise making regular purchases of Fund shares. The
shareholder, transfer agent or the principal underwriter will be able to
terminate the withdrawal plan at any time without penalty.
SALES CHARGES
DEALER COMMISSIONS. The principal underwriter may, from time to time, at its own
expense, provide additional incentives to investment dealers 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 investment dealers 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 investment dealers. The principal underwriter
may allow, upon notice to all investment dealers 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
investment dealers may be deemed to be underwriters as that term is defined in
the Securities Act of 1933.
SALES CHARGE WAIVERS. Fund shares may be sold at net asset value to current and
retired Directors and Trustees of Eaton Vance funds; 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 investment dealers and bank employees who refer
customers to registered representatives of investment dealers; to officers and
employees of IBT and the transfer agent; persons associated with law firms,
consulting firms, and others providing services to Eaton Vance and the Eaton
Vance funds; and to such persons' spouses, parents, siblings and children and
their beneficial accounts. Fund shares may also be issued at net asset value (1)
in connection with the merger of an investment company or series thereof with
the Fund, (2) to investors making an investment as part of a fixed fee program
whereby an entity unaffiliated with the investment adviser provides multiple
investment services, such as management, brokerage and custody, and (3) to
investment advisors, financial planners or other intermediaries who place trades
for their own accounts or the accounts of their clients and who charge a
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<PAGE>
management, consulting or other fee for their services; clients of such
investment advisors, financial planners or other intermediaries who place trades
for their own accounts if the accounts are linked to the master account of such
investment advisor, financial planner or other intermediary on the books and
records of the broker or agent; and retirement and deferred compensation plans
and trusts used to fund those plans, including, but not limited to, those
defined in Sections 401(a), 403(b) or 457 of the Internal Revenue Code of 1986,
as amended (the "Code") and "rabbi trusts". Subject to the applicable provisions
of the 1940 Act, the Trust may issue Fund shares at net asset value in the event
that an investment company (whether a regulated or private investment company or
a personal holding company) is merged or consolidated with or acquired by the
Fund. Normally no sales charges will be paid in connection with an exchange of
Fund shares for the assets of such investment company. Fund shares may be sold
at net asset value to 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. Fund shares are offered at net asset value to
the foregoing persons and in the foregoing situations because either (i) there
is no sales effort involved in the sale of shares or (ii) the investor is paying
a fee (other than the sales charge) to the investment dealer involved in the
sale.
STATEMENT OF INTENTION. If it is anticipated that $50,000 or more of Fund shares
and shares of other funds exchangeable for Fund shares of another Eaton Vance
fund will be purchased within a 13-month period, the Statement of Intention
section of the account application should be completed so that shares may be
obtained at the same reduced sales charge as thought 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. If you make a Statement the transfer agent is authorized 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. A Statement of
Intention does not obligate the shareholder to purchase or the Fund to sell the
full amount indicated in the Statement.
If the amount actually purchased during the 13-month period is less than
that indicated in the Statement, the shareholder will be requested to pay the
difference between the sales charge applicable to the shares purchased and the
sales charge paid under the Statement of Intention. If the payment is not
received in 20 days, the appropriate number of escrowed shares will be redeemed
in order to realize such difference. If the total purchases during the 13-month
period are large enough to qualify for a lower sales charge than that applicable
to the amount specified in the Statement, all transactions will be computed at
the expiration date of the Statement to give effect to the lower sales charge.
Any difference will be refunded to the shareholder in cash or applied to the
purchase of additional shares, as specified by the shareholder. This refund will
be made by the investment dealer and the principal underwriter. If at the time
of the recomputation, the investment dealer for the account has changed, the
adjustment will be made only on those shares purchased through the current
investment dealer for the account.
RIGHT OF ACCUMULATION. The applicable sales charge level for the purchase of
Fund shares is calculated by taking the dollar amount of the current purchase
and adding it to the value (calculated at the maximum current offering price) of
the Fund shares the shareholder owns in his or her account(s) in the Fund, and
shares of other funds exchangeable for Fund shares. The sales charge on the
shares being purchased will then be at the rate applicable to the aggregate.
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
investment dealer must provide the principal underwriter (in the case of a
purchase made through an investment
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<PAGE>
dealer) 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.
TAX-SHELTERED RETIREMENT PLANS. Fund shares 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.
SERVICE PLAN. The Trust on behalf of the Fund has in effect a Service Plan (the
"Plan") designed to meet the service fee requirements of the sales charge rule
of the National Association of Securities Dealers, Inc. (the "NASD") (Management
believes service fee payments are not distribution expenses governed by Rule
12b-1 under the 1940 Act, but has chosen to have the Plan approved as if that
Rule were applicable.) The following supplements the discussion of the Plan
contained in the Fund's prospectus.
The Plan remains 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 who have no direct or indirect financial interest in
the operation of the Plan or any agreements related to it (the "Plan Trustees")
and (ii) all of the Trustees then in office, cast in person at a meeting (or
meetings) called for the purpose of voting on the Plan. The Plan may be
terminated any time by vote of the Plan Trustees or by vote of a majority of the
outstanding voting securities of the Fund. The Plan was approved by the
Trustees, including the Plan Trustees, on June 23, 1997. The Trustees of the
Trust who are "interested" persons of the Fund have an indirect financial
interest in the Plan because their employers (or affiliated thereof) received
distribution and/or service fees under the Plan or agreements related thereto.
The Plan requires quarterly Trustee review of a written report of the
amount expended under the Plan and the purposes for which such expenditures were
made. The Plan may not be amended to increase materially the payments described
herein without approval of the shareholders of the Fund 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 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.
During the fiscal years ended December 31, 1999 and 1998, the Fund made
service fee payments under the Plan aggregating $1,514 and $576, all of which
was retained by the principal underwriter.
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<PAGE>
PERFORMANCE
Average annual total return is determined by multiplying a hypothetical
initial purchase order of $1,000 by the average annual compound rate of return
(including capital appreciation/depreciation, and distributions paid and
reinvested) for the stated period and annualizing the result. The calculation
assumes the maximum initial sales charge is deducted from the initial $1,000
purchase order and that all distributions are reinvested at net asset value on
the reinvestment dates during the period. The Fund may also publish total return
figures for the Fund based on reduced sales charges or at net asset value. These
returns would be lower if the full sales charge was imposed.
The table below indicates the cumulative and average total return on a
hypothetical investment of $1,000 in the Fund covering the one-year period ended
December 31, 1999, and the life of the Fund from January 2, 1997 through
December 31, 1999. The "Value of Initial Investment" reflects the deduction of
the maximum sales charge of 5.75%. Past performance is not indicative of future
results. Investment return and principal value will fluctuate; shares, when
redeemed, may be worth more or less than their original cost. Information
presented with an asterisk (*) includes the effect of subsidizing expenses.
Returns would have been lower without subsidies.
<TABLE>
<CAPTION>
VALUE OF A $1,000 INVESTMENT
Value of Value of Total Return Excluding Total Return Including
Investment Investment Initial Investment MAXIMUM SALES CHARGE MAXIMUM SALES CHARGE
Period Date Investment on 12/31/99 Cumulative Annualized Cumulative Annualized
------ ---- ---------- ----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Life of Fund* 1/2/97
1 Year Ended
12/31/99* 12/31/98
</TABLE>
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 investment
companies. In addition, evaluations of the Fund's performance or rankings or
ratings 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 allocation and holdings of investments in the Fund's
portfolio may be included in advertisements and other material furnished to
present and prospective shareholders.
Information about portfolio allocation and holdings of the Portfolio at a
particular date may be included in advertisements and other material furnished
to present and prospective shareholders. Such information may be stated as a
percentage of the Portfolio's holdings on such date.
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<PAGE>
Information used in advertisements and in materials provided to present and
prospective shareholders may include descriptions of Eaton Vance and other Fund
and Portfolio service providers, their investment styles, other investment
products, personnel and Fund distribution channels.
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).
The Fund (or principal underwriter) may provide information about Eaton
Vance, its affiliates and other investment advisers to the funds in the Eaton
Vance Family of Funds in sales material or advertisements provided to investors
or prospective investors. Such material or advertisements may also provide
information on the use of investment professionals by such investors.
CERTAIN HOLDERS OF FUND SHARES
As of April 1, 2000, the Trustees and officers of the Trust, as a group,
owned in the aggregate less than 1% of the outstanding shares of the Fund. As of
the same date __________________________,________________, held of record and
beneficially owned ____% of the outstanding shares of the Fund. To the knowledge
of the Trust, no other person owned of record or beneficially 5% or more of the
Fund's outstanding shares as of such date.
TAXES
Each series of the Trust is treated as a separate entity for accounting and
tax purposes. The Fund has elected to be treated, and intends to qualify each
year as a regulated investment company ("RIC") under the Code. Accordingly, the
Fund intends to satisfy certain requirements relating to sources of its income
and diversification of its assets and to distribute substantially all of its net
income and net short-term and long-term capital gains in accordance with the
timing requirements imposed by the Code, so as to maintain its RIC status and to
avoid paying any federal income or excise tax. The Fund so qualified for the
fiscal year ended December 31, 1999. 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
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<PAGE>
investors, including the Fund, each investor's distributive share of the
Portfolio's net investment income, net realized capital gains, and any other
items of income, gain, loss, deduction or credit. The Portfolio will make
allocations to the Fund in 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 was not
taxed. Under current law, provided that the Fund qualifies as a RIC and the
Portfolio is treated as a partnership for Massachusetts and federal tax
purposes, neither the Fund nor the Portfolio should be liable for any income,
corporate excise or franchise tax in the Commonwealth of Massachusetts.
Certain foreign exchange gains and losses realized by the Portfolio in
connection with its investments in foreign securities, foreign currency, and
foreign currency-related options, futures or forward contracts may be treated as
ordinary income and losses under special tax rules. Certain options, futures or
forward contracts of the Fund 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
currency-related positions as described above, recharacterized as ordinary
income or loss. Positions of the Fund in securities and offsetting options,
swaps, futures or forward contracts may be treated as "straddles" and be subject
to other special rules that may affect the amount, timing and character of the
Fund's distributions to shareholders. Certain uses of foreign currency and
foreign currency derivatives such as options, futures, forward contracts and
swaps and investment by the Fund in certain "passive foreign investment
companies" may be limited or a tax election may be made, if available, in order
to preserve the Fund's qualification as a RIC or avoid imposition of a tax on
the Fund.
Distributions of the excess of net long-term capital gains over short-term
capital losses earned by the Portfolio and allocated to the Fund, taking into
account any capital loss carryforwards that may be available to the Portfolio in
years after its first taxable year, are taxable to shareholders of the Fund as
long-term capital gains, whether received in cash or in additional shares and
regardless of the length of time their shares have been held. Certain
distributions, if declared in October, November or December and paid the
following January, will be taxed to shareholders as if received on December 31
of the year in which they are declared.
The Portfolio may be subject to foreign withholding or other foreign taxes
with respect to income (possibly including, in some cases, capital gains) on
certain foreign securities. These taxes may be reduced or eliminated under the
terms of an applicable U.S. income tax treaty. As it is not expected that more
than 50% of the value of the total assets of the Fund, taking into account its
allocable share of the Portfolio's total assets, at the close of any taxable
year of the Fund will consist of securities issued by foreign corporations, the
Fund will not be eligible to pass through to shareholders their proportionate
share of any foreign taxes paid by the Portfolio and allocated to the Fund, with
the result that shareholders
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<PAGE>
will not include in income, and will not be entitled to take any foreign tax
credits or deductions for, foreign taxes paid by the Portfolio and allocated to
the Fund. Certain uses of foreign currency and investments by the Portfolio in
the stock of certain "passive foreign investment companies" may be limited or a
tax election may be made, if available, in order to preserve the Fund's
qualification as a RIC and/or to avoid imposition of a tax on the Fund.
A portfolio of distributions made by the Fund which are derived from
dividends received by the Portfolio from domestic corporations and allocated to
the Fund may qualify for the dividends-received deduction for corporations. The
dividends-received deduction for corporate shareholders is reduced to the extent
the shares of the Fund with respect to which the dividends are received are
treated as debt-financed under the federal income tax and is eliminated if the
shares are deemed to have been held for less than a minimum period, generally 46
days, which must be satisfied separately for each dividend during a specified
period. Receipt of certain distributions qualifying for the deduction may result
in reduction of the tax basis of the corporate shareholder's shares are require
current income recognition to the extent in excess of such basis or increase
liability, if any, for the corporate alternative minimum tax.
Any loss realized upon the redemption or exchange of shares of the Fund
with a tax holding period of 6 months or less will be treated as a long-term
capital loss to the extent of any distribution of net long-term capital gains
with respect to such shares. In addition, a loss realized on a redemption of
Fund shares may be disallowed under certain "wash sale" rules if other Fund
shares are acquired (whether through reinvestment of dividends or otherwise)
within a period beginning 30 days before and ending 30 days after the date of
such redemption. Any disallowed loss will result in an adjustment to the
shareholder's tax basis in some or all of the other shares acquired.
Sales charges paid upon a purchase of Class A shares of the Fund cannot be
taken into account for purposes of determining gain or loss on a redemption or
exchange of the shares before the 91st day after their purchase to the extent a
sales charge is reduced or eliminated in a subsequent acquisition of shares of
the Fund (or of another fund) pursuant to the reinvestment or exchange
privilege. Any disregarded amounts will result in an adjustment to the
shareholders' tax basis in some or all of any 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 Internal Revenue Service (the
"IRS"), as well as shareholders with respect to whom the Fund has received
certain information from the IRS or a broker, may be subject to "backup"
withholding of federal income tax arising from the Fund's taxable dividends and
other distributions as well as the proceeds of redemption transactions
(including repurchases and exchanges) at a rate of 31%. An individual's TIN is
generally his or her social security number.
The foregoing discussion does not describe many of the tax rules applicable
to IRAs nor does it address the special tax rules applicable to certain other
classes of investors, such as other retirement plans, tax-exempt entities,
insurance companies and financial institutions. Shareholders should consult
their own tax advisers with respect to these or other special tax rules that may
apply in their particular situations, as well as the state, local, and, where
applicable, foreign tax consequences of investing in the Fund.
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<PAGE>
PORTFOLIO SECURITY TRANSACTIONS
Decisions concerning the execution of Portfolio portfolio security
transactions, including the selection of the market and the broker-dealer firm,
are made by BMR. BMR is also responsible for the execution of transactions for
all other accounts managed by it. BMR places the portfolio security transactions
of the Portfolio and of certain other accounts managed by it for execution with
many broker-dealer firms. BMR uses its best efforts to obtain execution of
portfolio transactions at prices which are advantageous to the Portfolio and
(when a disclosed commission is being charged) at reasonably competitive
commission rates. In seeking such execution, BMR will use its best judgment in
evaluating the terms of a transaction, and will give consideration to various
relevant factors, including without limitation the size and type of the
transaction, the general execution and operational capabilities of the
broker-dealer, the nature and character of the market for the security, the
confidentiality, speed and certainty of effective execution required for the
transaction, the reputation, reliability, experience and financial condition of
the broker-dealer, the value and quality of services rendered by the
broker-dealer in other transactions, and the reasonableness of the commission 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 BMR, be reasonable in relation
to the value of the services provided, commissions exceeding those which another
firm might charge may be paid to broker-dealers who were selected to execute
transactions on behalf of the Portfolio and BMR's other clients in part for
providing brokerage and research services to BMR.
As authorized in Section 28(e) of the Securities Exchange Act of 1934, a
broker or dealer who executes a portfolio transaction on behalf of the Portfolio
may receive a commission which is in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction if BMR
determines in good faith that such compensation was reasonable in relation to
the value of the brokerage and research services provided. This determination
may be made on the basis of either that particular transaction or on the basis
of overall responsibilities which BMR and its affiliates have for accounts over
which it exercises investment discretion. In making any such determination, BMR
will not attempt to place a specific dollar value on the brokerage and research
services provided or to determine what portion of the commission should be
related to such services. Brokerage and research services may include advice as
to the value of securities, the advisability of investing in, purchasing or
selling securities, and the availability of securities or purchasers or sellers
of securities; furnishing analyses and reports concerning issuers, industries,
securities, economic factors and trends, portfolio strategy and the performance
of accounts; and effecting securities transactions and performing functions
incidental thereto (such as clearance and settlement); and the "Research
Services" referred to in the next paragraph.
It is a common practice of the investment advisory industry for the
advisers of investment companies, institutions and other investors to receive
research, statistical and quotation services, data, information and other
services, products and materials which assist such advisers in the performance
of their investment responsibilities ("Research Services") from broker-dealers
which execute portfolio transactions for the clients of such advisers and from
third parties with which such broker-dealers have arrangements. Consistent with
this practice, BMR may receive Research Services from broker-dealer firms with
which BMR places the portfolio transactions of the Portfolio and from third
parties with which these broker-dealers have
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<PAGE>
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 BMR in connection with client accounts
other than those accounts which pay commissions to such broker-dealer. Any such
Research Service may be broadly useful and of value to BMR in rendering
investment advisory services to all or a significant portion of its clients, or
may be relevant and useful for the management of only one client's account or of
a few clients' accounts, or may be useful for the management of merely a segment
of certain clients' accounts, regardless of whether any such account or accounts
paid commissions to the broker-dealer through which such Research Service was
obtained. The advisory fee paid by the Portfolio is not reduced because BMR
receives such Research Services. BMR evaluates the nature and quality of the
various Research Services obtained through broker-dealer firms and attempts to
allocate sufficient commissions to such firms to ensure the continued receipt of
Research Services which BMR believes are useful or of value to it in rendering
investment advisory services to its clients.
Subject to the requirement that BMR shall use its best efforts to seek to
execute portfolio security transactions at advantageous prices and at reasonably
competitive commission rates or spreads, BMR is authorized to consider as a
factor in the selection of any broker-dealer firm with whom Portfolio portfolio
orders may be placed the fact that such firm has sold or is selling shares of
the Portfolio or of other investment companies sponsored by BMR. This policy is
not inconsistent with a rule of the NASD, which rule provides that no firm which
is a member of the NASD shall favor or disfavor the distribution of shares of
any particular investment company or group of investment companies on the basis
of brokerage commissions received or expected by such firm from any source.
Securities considered as investments for the Portfolio may also be
appropriate for other investment accounts managed by BMR or its affiliates.
Whenever decisions are made to buy or sell securities by the Portfolio and one
or more of such other accounts simultaneously, BMR will allocate the security
transactions (including "hot" issues) in a manner which it believes to be
equitable under the circumstances. As a result of such allocations, there may be
instances where the Portfolio will not participate in a transaction that is
allocated among other accounts. If an aggregated order cannot be filled
completely, allocations will generally be made on a pro rata basis. An order may
not be allocated on a pro rata basis where, for example (i) consideration is
given to portfolio managers who have been instrumental in developing or
negotiating a particular investment; (ii) consideration is given to an account
with specialized investment policies that coincide with the particulars of a
specific investment; (iii) pro rata allocation would result in odd-lot or de
minimis amounts being allocated to a portfolio or other client; or (iv) where
BMR reasonably determines that departure from a pro rata allocation is
advisable. While these aggregation and allocation policies could have a
detrimental effect on the price or amount of the securities available to the
Portfolio from time to time, it is the opinion of the Trustees of the Trust that
the benefits available from the BMR organization outweigh any disadvantage that
may arise from exposure to simultaneous transactions.
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<PAGE>
Prior to May 1, 2000, the Fund retained Eaton Vance to manage its assets.
For the fiscal years ended December 31, 1999 and 1998, the Portfolio paid
brokerage commissions of $492 and $563 with respect to portfolio transactions.
Of this amount, approximately $372 and $507 was paid in respect of portfolio
security transactions aggregating approximately $197,198 and $228,677 to firms
which provided some Research Services to the investment adviser's organization
(although many of such firms may have been selected in any particular
transaction primarily because of their execution capabilities).
For the period from the start of business, January 2, 1997, to December 31,
1997, the Fund paid brokerage commissions of $17,708, all of which was paid in
respect of portfolio security transactions aggregating approximately $513,711 to
firms which provided some research services to BMR or its affiliates (although
many of such firms may have been selected in any particular transaction
primarily because of their execution capabilities).
FINANCIAL STATEMENTS
The audited financial statements of and the report of independent
accountants for the Fund appear in the Fund's most recent annual report to
shareholders and is incorporated by reference into this SAI. A copy of the
Fund's annual report accompanies this SAI. Consistent with applicable law,
duplicate mailings of shareholder reports and certain other Fund information to
shareholders residing at the same address may be eliminated.
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<PAGE>
PART C - OTHER INFORMATION
Item 23. Exhibits
- -------- --------
(a)(1) Amended and Restated Declaration of Trust dated September 27,
1993, filed as Exhibit (1)(a) to Post-Effective Amendment No. 42
and incorporated herein by reference.
(2) Amendment to the Declaration of Trust dated June 23, 1997 filed
as Exhibit (1)(b) to Post-Effective Amendment No. 48 and
incorporated herein by reference.
(3) Amendment and Restatement of Establishment and Designation of
Series of Shares dated October 19, 1998 filed as Exhibit (a)(3)
to Post-Effective Amendment No. 52 and incorporated herein by
reference.
(4) Amendment and Restatement of Establishment and Designation of
Series of Shares dated February 22, 1999 filed as Exhibit (a)(4)
to Post Effective Amendment No. 54 and incorporated herein by
reference.
(b)(1) By-Laws filed as Exhibit (2)(a) to Post-Effective Amendment No.
42 and incorporated herein by reference.
(2) Amendment to By-Laws dated December 13, 1993 filed as Exhibit
(2)(b) to Post-Effective Amendment No. 42 and incorporated herein
by reference.
(c) Reference is made to Item 23(a) and 23(b) above.
(d) Investment Advisory Agreement with Eaton Vance Management for EV
Traditional Emerging Growth Fund dated December 31, 1996 filed as
Exhibit (5)(e) to Post-Effective Amendment No. 45 and
incorporated herein by reference.
(e)(1)(a) Distribution Agreement between Eaton Vance Special Investment
Trust and Eaton Vance Distributors, Inc. effective June 23, 1997
with attached Schedule A filed as Exhibit (6)(a)(4) to
Post-Effective Amendment No. 48 and incorporated herein by
reference.
(b) Schedule A-1 dated November 17, 1997 filed as Exhibit
(6)(a)(4)(a) to Post-Effective Amendment No. 49 and incorporated
herein by reference.
(c) Schedule A-2 dated December 31, 1998 filed as Exhibit (e)(1)(c)
to Post-Effective Amendment No. 53 and incorporated herein by
reference.
(d) Schedule A-3 dated February 22, 1999 filed as Exhibit (e)(1)(d)
to Post-Effective Amendment No. 54 and incorporated herein by
reference.
(2) Selling Group Agreement between Eaton Vance Distributors, Inc.
and Authorized Dealers filed as Exhibit (6)(b) to the
Post-Effective Amendment No. 61 and incorporated herein by
reference.
(f) 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).
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<PAGE>
(g)(1) Custodian Agreement with Investors Bank & Trust Company dated
March 24, 1994 filed as Exhibit (8) to Post-Effective Amendment
No. 42 and incorporated herein by reference.
(2) Amendment to Custodian Agreement with Investors Bank & Trust
Company dated October 23, 1995 filed as Exhibit (8)(b) to
Post-Effective Amendment No. 43 and incorporated herein by
reference.
(3) Amendment to Master Custodian Agreement with Investors Bank &
Trust Company dated December 21, 1998 filed as Exhibit (g)(3) to
the Registration Statement of Eaton Vance Municipals Trust (File
Nos. 33-572, 811-4409) (Accession No. 0000950156-99-000050) and
incorporated herein by reference.
(h)(1)(a) Management Contract between Eaton Vance Special Investment Trust
(on behalf of certain of its series) and Eaton Vance Management
filed as Exhibit (5)(a)(1) to Post-Effective Amendment No. 48 and
incorporated herein by reference.
(b) Amended Schedule A-1 dated November 17, 1997 filed as Exhibit No.
(5)(a)(2) to Post-Effective Amendment No. 49 and incorporated
herein by reference.
(2) Management Agreement between Eaton Vance Special Investment Trust
on behalf of Eaton Vance Institutional Short Term Treasury Fund
and Eaton Vance Management filed as Exhibit (h)(2) to
Post-Effective Amendment No. 52 and incorporated herein by
reference.
(3)(a) Amended Administrative Services Agreement between Eaton Vance
Special Investment Trust (on behalf of each of its series listed
on Schedule A) and Eaton Vance Management dated June 19, 1995
filed as Exhibit (9) to Post-Effective Amendment No. 42 and
incorporated herein by reference.
(b) Amendment to Schedule A dated June 23, 1997 to the Amended
Administrative Services Agreement filed as Exhibit (9)(a)(2) to
Post-Effective Amendment No. 48 and incorporated herein by
reference.
(4) Transfer Agency Agreement dated January 1, 1998 filed as Exhibit
(k)(b) to the Registration Statement on Form N-2 of Eaton Vance
Advisers Senior Floating-Rate Fund (File Nos. 333-46853,
811-08671) (Accession No. 0000950156-98-000172) and incorporated
herein by reference.
(i)(1) Opinion of Internal Counsel filed as Exhibit (i) to
Post-Effective Amendment No. 53 and incorporated herein by
reference.
(2) Consent of Counsel filed herewith.
(j) Not applicable
(k) Not applicable
(l) Not applicable
(m)(1) Eaton Vance Special Investment Trust Class A Service Plan adopted
June 23, 1997 with attached Schedule A effective June 23, 1997
filed as Exhibit (15)(a) to Post-Effective Amendment No. 48 and
incorporated herein by reference.
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<PAGE>
(a) Amended Schedule A effective December 31, 1998 filed as Exhibit
(m)(1)(a) to Post-Effective Amendment No. 52 and incorporated
herein by reference.
(2)(a) Eaton Vance Special Investment Trust Class A Distribution Plan
adopted June 23, 1997 with attached Schedule A effective June 23,
1997 filed as Exhibit (15)(b) to Post-Effective Amendment No. 48
and incorporated herein by reference.
(b) Amended Schedule A-1 dated November 17, 1997 filed as Exhibit
(15)(b)(1) to Post-Effective Amendment No. 49 and incorporated
herein by reference.
(3)(a) Eaton Vance Special Investment Trust Class B Distribution Plan
adopted June 23, 1997 with attached Schedule A effective June 23,
1997 filed as Exhibit (15)(c) to Post-Effective Amendment No. 48
and incorporated herein by reference.
(b) Amended Schedule A-1 dated November 17, 1997 filed as Exhibit
(15)(c)(1) to Post-Effective Amendment No. 49 and incorporated
herein by reference.
(4) Eaton Vance Special Investment Trust Class C Distribution Plan
adopted June 23, 1997 with attached Schedule A effective June 23,
1997 filed as Exhibit (15)(d) to Post-Effective Amendment No. 48
and incorporated herein by reference.
(n) Not applicable
(o) Multiple Class Plan for Eaton Vance Funds dated June 23, 1997
filed as Exhibit (18) to Post-Effective Amendment No. 49 and
incorporated herein by reference.
(p)(1) Power of Attorney for Eaton Vance Special Investment Trust dated
June 23, 1997 filed as Exhibit (17)(a) to Post-Effective
Amendment No. 47 and incorporated herein by reference.
(a) Power of Attorney for Eaton Vance Special Investment Trust dated
November 16, 1998 filed as Exhibit No. (p)(1)(a) to
Post-Effective Amendment No. 54.
(2) Power of Attorney for Emerging Markets Portfolio dated February
14, 1997 filed as Exhibit (17)(b) to Post-Effective Amendment No.
46 and incorporated herein by reference.
(3) Power of Attorney for South Asia Portfolio dated February 14,
1997 filed as Exhibit (17)(c) to Post-Effective Amendment No. 46
and incorporated herein by reference.
(4) Power of Attorney for Special Investment Portfolio dated August
11, 1997 filed as Exhibit (17)(d) to Post-Effective Amendment No.
48 and incorporated herein by reference.
(a) Power of Attorney for Special Investment Portfolio dated November
16, 1998 filed as Exhibit No. (p)(4)(a) to Post-Effective
Amendment No. 54.
(5) Power of Attorney for Investors Portfolio dated August 11, 1997
filed as Exhibit (17)(e) to Post-Effective Amendment No. 48 and
incorporated herein by reference.
(a) Power of Attorney for Balanced Portfolio (formerly Investors
Portfolio) dated November 16, 1998 filed as Exhibit No. (p)(5)(a)
to Post-Effective Amendment No. 54.
(6) Power of Attorney for Stock Portfolio dated August 11, 1997 filed
as Exhibit (17)(f) to Post-Effective Amendment No. 48 and
incorporated herein by reference.
C-3
<PAGE>
(a) Power of Attorney for Growth & Income Portfolio (formerly Stock
Portfolio) dated November 16, 1998 filed as Exhibit No. (p)(6)(a)
to Post-Effective Amendment No. 54.
(7) Power of Attorney for Total Return Portfolio dated August 11,
1997 filed as Exhibit (17)(g) to Post-Effective Amendment No. 48
and incorporated herein by reference.
(a) Power of Attorney for Utilities Portfolio (formerly Total Return
Portfolio) dated November 16, 1998 filed as Exhibit No. (p)(7)(a)
to Post-Effective Amendment No. 54.
(8) Power of Attorney for Capital Growth Portfolio dated February 28,
2000 filed herewith.
(9) Power of Attorney for High Grade Income Portfolio dated February
28, 2000 filed herewith.
(10) Power of Attorney for Emerging Growth Portfolio dated February
28, 2000 filed herewith.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL
Not applicable
ITEM 25. INDEMNIFICATION
Article IV of the Registrant's Amended and Restated Declaration of Trust
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 Registrant also provide for reciprocal
indemnity of the principal underwriter, on the one hand, and the Trustees and
officers, on the other.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISERS
Reference is made to: (i) the information set forth under the caption
"Management and Organization" in the Statement of Additional Information; (ii)
the Eaton Vance Corp. 10-K filed under the Securities Exchange Act of 1934 (File
No. 1-8100); and (iii) the Form ADV of Eaton Vance (File No. 801-15930), BMR
(File No. 43127) and Lloyd George (File No. 801-40889) filed with the
Commission, all of which are incorporated herein by reference.
ITEM 27. PRINCIPAL UNDERWRITERS
(a) Registrant's principal underwriter, Eaton Vance Distributors, Inc., a
wholly-owned subsidiary of Eaton Vance Management, is the principal
underwriter for each of the investment companies named below:
<TABLE>
<CAPTION>
<S> <C>
Eaton Vance Advisers Senior Floating-Rate Fund Eaton Vance Municipals Trust II
Eaton Vance Growth Trust Eaton Vance Mutual Funds Trust
Eaton Vance Income Fund of Boston Eaton Vance Prime Rate Reserves
Eaton Vance Institutional Senior Floating-Rate Fund Eaton Vance Special Investment Trust
Eaton Vance Investment Trust EV Classic Senior Floating-Rate Fund
Eaton Vance Municipals Trust
</TABLE>
C-4
<PAGE>
(b)
<TABLE>
<CAPTION>
<S> <C> <C>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address* with Principal Underwriter with Registrant
----------------- -------------------------- ---------------
Albert F. Barbaro Vice President None
Chris Berg Vice President None
Kate B. Bradshaw Vice President None
Mark Carlson Vice President None
Daniel C. Cataldo Vice President None
and Treasurer
Raymond Cox Vice President None
Peter Crowley Vice President None
Anthony DeVille Vice President None
Ellen Duffy Vice President None
Alan R. Dynner Vice President, Secretary and Clerk Secretary
Richard A. Finelli Vice President None
Kelly Flynn Vice President None
James Foley Vice President None
Michael A. Foster Vice President None
William M. Gillen Senior Vice President None
Hugh S. Gilmartin Vice President None
James B. Hawkes Vice President and Director President and Trustee
Perry D. Hooker Vice President None
Kara Lawler Vice President None
Thomas P. Luka Vice President None
John Macejka Vice President None
Stephen Marks Vice President None
Geoff Marshall Vice President None
Joseph T. McMenamin Vice President None
Morgan C. Mohrman Senior Vice President None
James A. Naughton Vice President None
Joseph Nelson Vice President None
Mark D. Nelson Vice President None
Linda D. Newkirk Vice President None
James L. O'Connor Vice President Treasurer
Andrew Ogren Vice President None
George D. Owen, II Vice President None
Margaret Pier Vice President None
Enrique M. Pineda Vice President None
F. Anthony Robinson Vice President None
Frances Rogell Vice President None
Jay S. Rosoff Vice President None
Stephen M. Rudman Vice President None
Kevin Schrader Vice President None
Teresa A. Sheehan Vice President None
William M. Steul Vice President and Director None
Cornelius J. Sullivan Senior Vice President None
Peter Sykes Vice President None
David M. Thill Vice President None
John M. Trotsky Vice President None
Jerry Vainisi Vice President None
Chris Volf Vice President None
Debra Wekstein Vice President None
Wharton P. Whitaker President and Director None
Sue Wilder Vice President None
</TABLE>
- ------------------------------------------
* Address is The Eaton Vance Building, 255 State Street, Boston, MA 02109
(c) Not applicable
C-5
<PAGE>
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
All applicable accounts, books and documents required to be maintained by
the Registrant by Section 31(a) of the Investment Company Act of 1940 and the
Rules promulgated thereunder are in the possession and custody of the
Registrant's custodian, Investors Bank & Trust Company, 200 Clarendon Street,
16th Floor, Mail Code ADM27, Boston, MA 02116, and its transfer agent, PFPC
Global Fund Services, 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 the administrator and investment adviser.
Registrant is informed that all applicable accounts, books and documents
required to be maintained by registered investment advisers are in the custody
and possession of Eaton Vance Management and Boston Management and Research.
ITEM 29. MANAGEMENT SERVICES
Not applicable
ITEM 30. UNDERTAKINGS
The Registrant undertakes to include the information required by Item 5 of
Form N-1A in its annual reports to shareholders under Rule 30d-1.
C-6
<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 February 28, 2000.
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 indicated on February 28, 2000.
<TABLE>
<CAPTION>
<S> <C>
Signature Title
--------- -----
/s/ James B. Hawkes
- ------------------- President (Chief Executive Officer) and Trustee
James B. Hawkes
/s/ James L. O'Connor
- --------------------- Treasurer (Principal Financial and Accounting Officer)
James L. O'Connor
Jessica M. Bibliowicz*
- ---------------------- Trustee
Jessica M. Bibliowicz
Donald R. Dwight*
- ----------------- Trustee
Donald R. Dwight
Samuel L. Hayes, III*
- --------------------- Trustee
Samuel L. Hayes
Norton H. Reamer*
- ----------------- Trustee
Norton H. Reamer
Lynn A. Stout*
- -------------- Trustee
Lynn A. Stout
Jack L. Treynor*
- ----------------- Trustee
Jack L. Treynor
*By: /s/ Alan R. Dynner
-----------------------------------
Alan R. Dynner (As attorney-in-fact)
</TABLE>
C-7
<PAGE>
SIGNATURES
Balanced Portfolio has duly caused this Amendment to the Registration
Statement on Form N-1A of Eaton Vance Special Investment Trust (File No.
2-27962) to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Boston and the Commonwealth of Massachusetts on
February 28, 2000.
BALANCED PORTFOLIO
By: /s/ JAMES B. HAWKES
---------------------------
James B. Hawkes, President
This Amendment to the Registration Statement on Form N-1A of Eaton Vance
Special Investment Trust (File No. 2-27962) has been signed below by the
following persons in the capacities indicated on February 28, 2000.
<TABLE>
<CAPTION>
<S> <C>
Signature Title
--------- -----
/s/ James B. Hawkes
- ------------------- President (Chief Executive Officer) and Trustee
James B. Hawkes
/s/ James L. O'Connor
- --------------------- Treasurer (Principal Financial and Accounting Officer)
James L. O'Connor
Jessica M. Bibliowicz*
- ---------------------- Trustee
Jessica M. Bibliowicz
Donald R. Dwight*
- ----------------- Trustee
Donald R. Dwight
Samuel L. Hayes, III*
- --------------------- Trustee
Samuel L. Hayes
Norton H. Reamer*
- ----------------- Trustee
Norton H. Reamer
Lynn A. Stout*
- -------------- Trustee
Lynn A. Stout
Jack L. Treynor*
- ----------------- Trustee
Jack L. Treynor
*By: /s/ Alan R. Dynner
-----------------------------------
Alan R. Dynner (As attorney-in-fact)
</TABLE>
C-8
<PAGE>
SIGNATURES
Capital Growth Portfolio has duly caused this Amendment to the Registration
Statement on Form N-1A of Eaton Vance Special Investment Trust (File No.
2-27962) to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Boston and the Commonwealth of Massachusetts on
February 28, 2000.
CAPITAL GROWTH PORTFOLIO
By: /s/ JAMES B. HAWKES
------------------------------------
James B. Hawkes, President
This Amendment to the Registration Statement on Form N-1A of Eaton Vance
Special Investment Trust (File No. 2-27962) has been signed below by the
following persons in the capacities indicated on February 28, 2000.
<TABLE>
<CAPTION>
<S> <C>
Signature Title
--------- -----
/s/ James B. Hawkes
- ------------------- President (Chief Executive Officer) and Trustee
James B. Hawkes
/s/ James L. O'Connor
- --------------------- Treasurer (Principal Financial and Accounting Officer)
James L. O'Connor
Jessica M. Bibliowicz*
- ---------------------- Trustee
Jessica M. Bibliowicz
Donald R. Dwight*
- ----------------- Trustee
Donald R. Dwight
Samuel L. Hayes, III*
- --------------------- Trustee
Samuel L. Hayes
Norton H. Reamer*
- ----------------- Trustee
Norton H. Reamer
Lynn A. Stout*
- -------------- Trustee
Lynn A. Stout
Jack L. Treynor*
- ----------------- Trustee
Jack L. Treynor
*By: /s/ Alan R. Dynner
-----------------------------------
Alan R. Dynner (As attorney-in-fact)
</TABLE>
C-9
<PAGE>
SIGNATURES
High Grade Income Portfolio has duly caused this Amendment to the
Registration Statement on Form N-1A of Eaton Vance Special Investment Trust
(File No. 2-27962) to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Boston and the Commonwealth of Massachusetts on
February 28, 2000.
HIGH GRADE INCOME PORTFOLIO
By: /s/ JAMES B. HAWKES
--------------------------------------
James B. Hawkes, President
This Amendment to the Registration Statement on Form N-1A of Eaton Vance
Special Investment Trust (File No. 2-27962) has been signed below by the
following persons in the capacities indicated on February 28, 2000.
<TABLE>
<CAPTION>
<S> <C>
Signature Title
--------- -----
/s/ James B. Hawkes
- ------------------- President (Chief Executive Officer) and Trustee
James B. Hawkes
/s/ James L. O'Connor
- --------------------- Treasurer (Principal Financial and Accounting Officer)
James L. O'Connor
Jessica M. Bibliowicz*
- ---------------------- Trustee
Jessica M. Bibliowicz
Donald R. Dwight*
- ----------------- Trustee
Donald R. Dwight
Samuel L. Hayes, III*
- --------------------- Trustee
Samuel L. Hayes
Norton H. Reamer*
- ----------------- Trustee
Norton H. Reamer
Lynn A. Stout*
- -------------- Trustee
Lynn A. Stout
Jack L. Treynor*
- ----------------- Trustee
Jack L. Treynor
*By: /s/ Alan R. Dynner
-----------------------------------
Alan R. Dynner (As attorney-in-fact)
</TABLE>
C-10
<PAGE>
EXHIBIT INDEX
The following exhibits are filed as part of this amendment to the
Registration Statement pursuant to Rule 483 of Regulation C.
Exhibit No. Description
- ----------- -----------
(i)(2) Consent of Counsel to Opinion dated February 12, 1999.
(p)(8) Power of Attorney for Capital Growth Portfolio dated February 28,
2000.
(9) Power of Attorney for High Grade Income Portfolio dated February
28, 2000.
(10) Power of Attorney for Emerging Growth Portfolio dated February
28, 2000.
C-11
<PAGE>
EXHIBIT (i)(2)
CONSENT OF COUNSEL
I consent to the incorporation by reference in this Post-Effective
Amendment No. 56 to the Registration Statement of Eaton Vance Special Investment
Trust (1933 Act File No. 2-27962) of my opinion dated February 12, 1999, which
was filed as Exhibit (i) to Post-Effective Amendment No. 53.
/s/ Maureen A. Gemma
Maureen A. Gemma, Esq.
February 28, 2000
Boston, Massachusetts
<PAGE>
Exhibit (p)(8)
POWER OF ATTORNEY
We, the undersigned officers and Trustees of Capital Growth Portfolio, a
New York trust, do hereby severally constitute and appoint Alan R. Dynner, James
B. Hawkes and Eric G. Woodbury, or any of them, to be true, sufficient and
lawful attorneys, or attorney for each of us, to sign for each of us, in the
name of each of us in the capacities indicated below, the Registration Statement
and 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>
<S> <C> <C>
Signature Title Date
--------- ----- ----
/s/ James B. Hawkes President, Principal Executive February 28, 2000
- ----------------------------
James B. Hawkes Officer and Trustee
/s/ James L. O'Connor Treasurer and Principal Financial February 28, 2000
- ----------------------------
James L. O'Connor and Accounting Officer
/s/ Jessica M. Bibliowicz Trustee February 28, 2000
- ----------------------------
Jessica M. Bibliowicz
/s/ Donald R. Dwight Trustee February 28, 2000
- ----------------------------
Donald R. Dwight
/s/ Samuel L. Hayes, III Trustee February 28, 2000
- ----------------------------
Samuel L. Hayes, III
/s/ Norton H. Reamer Trustee February 28, 2000
- ----------------------------
Norton H. Reamer
/s/ Lynn A. Stout Trustee February 28, 2000
- ----------------------------
Lynn A. Stout
/s/ Jack L. Treynor Trustee February 28, 2000
- ----------------------------
Jack L. Treynor
</TABLE>
<PAGE>
Exhibit (p)(9)
POWER OF ATTORNEY
We, the undersigned officers and Trustees of High Grade Income 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, the Registration Statement
and 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>
<S> <C> <C>
Signature Title Date
--------- ----- ----
/s/ James B. Hawkes President, Principal Executive February 28, 2000
- -------------------
James B. Hawkes Officer and Trustee
/s/ James L. O'Connor Treasurer and Principal Financial February 28, 2000
- --------------------
James L. O'Connor and Accounting Officer
/s/ Jessica M. Bibliowicz Trustee February 28, 2000
- -------------------------
Jessica M. Bibliowicz
/s/ Donald R. Dwight Trustee February 28, 2000
- --------------------
Donald R. Dwight
/s/ Samuel L. Hayes, III Trustee February 28, 2000
- ------------------------
Samuel L. Hayes, III
/s/ Norton H. Reamer Trustee February 28, 2000
- ---------------------
Norton H. Reamer
/s/ Lynn A. Stout Trustee February 28, 2000
- -----------------
Lynn A. Stout
/s/ Jack L. Treynor Trustee February 28, 2000
- -------------------
Jack L. Treynor
</TABLE>
<PAGE>
Exhibit (p)(10)
POWER OF ATTORNEY
We, the undersigned officers and Trustees of Emerging Growth Portfolio, a
New York trust, do hereby severally constitute and appoint Alan R. Dynner, James
B. Hawkes and Eric G. Woodbury, or any of them, to be true, sufficient and
lawful attorneys, or attorney for each of us, to sign for each of us, in the
name of each of us in the capacities indicated below, the Registration Statement
and 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>
<S> <C> <C>
Signature Title Date
--------- ----- ----
/s/ James B. Hawkes President, Principal Executive February 28, 2000
- -----------------------------
James B. Hawkes Officer and Trustee
/s/ James L. O'Connor Treasurer and Principal Financial February 28, 2000
- -----------------------------
James L. O'Connor and Accounting Officer
/s/ Jessica M. Bibliowicz Trustee February 28, 2000
- -----------------------------
Jessica M. Bibliowicz
/s/ Donald R. Dwight Trustee February 28, 2000
- -----------------------------
Donald R. Dwight
/s/ Samuel L. Hayes, III Trustee February 28, 2000
- -----------------------------
Samuel L. Hayes, III
/s/ Norton H. Reamer Trustee February 28, 2000
- -----------------------------
Norton H. Reamer
/s/ Lynn A. Stout Trustee February 28, 2000
- -----------------------------
Lynn A. Stout
/s/ Jack L. Treynor Trustee February 28, 2000
- -----------------------------
Jack L. Treynor
</TABLE>
