<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 7, 1996
1933 ACT FILE NO. 2-90946
1940 ACT FILE NO. 811-4015
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933 [X]
POST-EFFECTIVE AMENDMENT NO. 29 [X]
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 32 [X]
EATON VANCE MUTUAL FUNDS TRUST
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(FORMERLY EATON VANCE GOVERNMENT OBLIGATIONS TRUST)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
24 FEDERAL STREET, BOSTON, MASSACHUSETTS 02110
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
617-482-8260
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(REGISTRANT'S TELEPHONE NUMBER)
H. DAY BRIGHAM, JR.
24 FEDERAL STREET, BOSTON, MASSACHUSETTS 02110
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(NAME AND ADDRESS OF AGENT FOR SERVICE)
It is proposed that this filing will become effective on July 22, 1996
pursuant to paragraph (a)(ii) of Rule 485.
Tax-Managed Growth Portfolio has also executed this Registration
Statement.
The Registrant has filed a Declaration pursuant to Rule 24f-2 and on May
24, 1995 filed its "Notice" as required by that Rule for the series of the
Registrant with a fiscal year end of March 31, 1995, on November 8, 1995 filed
its "Notice" for the series of the Registrant with a fiscal year end of
October 31, 1995 and on February 23, 1996 filed its "Notice" for the series of
the Registrant with a fiscal year end of December 31, 1995.
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<PAGE>
This Amendment to the registration statement on Form N-1A consists of the
following documents and papers:
Cross Reference Sheet required by Rule 481(a) under the Securities Act of
1933
Part A--The Prospectus of:
EV Classic Tax-Managed Growth Fund
Part B--The Statement of Additional Information of:
EV Classic Tax-Managed Growth Fund
Part C--Other Information
Signatures
Exhibit Index Required by Rule 483(a) under the Securities Act of 1933
Exhibits
This Amendment is not intended to amend the Prospectus and Statement of
Additional Information of any series of the Registrant not identified above.
<PAGE>
EATON VANCE MUTUAL FUNDS TRUST
EV CLASSIC TAX-MANAGED GROWTH FUND
CROSS REFERENCE SHEET
ITEMS REQUIRED BY FORM N-1A
---------------------------
PART A
ITEM NO. ITEM CAPTION PROSPECTUS CAPTION
- ------ -------- -------------------------------
1. ............ Cover Page Cover Page
2. ............ Synopsis Shareholder and Fund Expenses
3. ............ Condensed Financial Not Applicable
Information
4. ............ General Description of The Fund's Investment
Registrant Objective; The Tax-Managed
Mutual Fund Advantage,
Investment Policies and
Risks; Organization of the
Fund and the Portfolio
5. ............ Management of the Fund Management of the Fund and the
Portfolio
5A............. Management's Discussion of Not Applicable
Fund Performance
6. ............ Capital Stock and Other Organization of the Fund and
Securities the Portfolio; Reports to
Shareholders; The Lifetime
Investing Account/
Distribution Options;
Distributions and Taxes
7. ............ Purchase of Securities Valuing Fund Shares;
Being Offered Distribution Plan; How to Buy
Fund Shares; The Lifetime
Investing Account/
Distribution Options; The
Eaton Vance Exchange
Privilege; Eaton Vance
Shareholder Services
8. ............ Redemption or Repurchase How to Redeem Fund Shares
9. ............ Pending Legal Proceedings Not Applicable
PART B STATEMENT OF ADDITIONAL
ITEM NO. ITEM CAPTION INFORMATION CAPTION
- -------- ------------ -------------------------------
10. ............ Cover Page Cover Page
11. ............ Table of Contents Table of Contents
12. ............ General Information and Other Information
History
13. ............ Investment Objectives and Additional Information about
Policies Investment Policies;
Investment Restrictions
14. ............ Management of the Fund Trustees and Officers; Fees and
Expenses
15. ............ Control Persons and Control Persons and Principal
Principal Holders of Holders of Securities
Securities
16. ............ Investment Advisory and Investment Adviser and
Other Services Administrator; Distribution
Plan; Custodian; Independent
Accountants; Fees and
Expenses; Other Information
17. ............ Brokerage Allocation and Not Applicable
Other Practices
18. ............ Capital Stock and Other Other Information
Securities
19. ............ Purchase, Redemption and Determination of Net Asset
Pricing of Securities Value; Principal Underwriter;
Being Offered Service for Withdrawal;
Distribution Plan; Fees and
Expenses
20. ............ Tax Status Taxes
21. ............ Underwriters Principal Underwriter; Fees and
Expenses
22. ............ Calculation of Performance Investment Performance;
Data Performance Information
23. ............ Financial Statements Financial Statements
<PAGE>
EV CLASSIC
TAX-MANAGED GROWTH FUND
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EV CLASSIC TAX-MANAGED GROWTH FUND (THE "FUND") IS A MUTUAL FUND SEEKING
LONG-TERM, AFTER-TAX RETURNS FOR ITS SHAREHOLDERS THROUGH INVESTING IN A
DIVERSIFIED PORTFOLIO OF EQUITY SECURITIES. THE FUND CURRENTLY INTENDS TO PURSUE
ITS INVESTMENT OBJECTIVE BY INVESTING ITS ASSETS IN TAX-MANAGED GROWTH PORTFOLIO
(THE "PORTFOLIO"), A DIVERSIFIED OPEN-END INVESTMENT COMPANY HAVING THE SAME
INVESTMENT OBJECTIVE AS THE FUND, RATHER THAN BY INVESTING DIRECTLY IN AND
MANAGING ITS OWN PORTFOLIO OF SECURITIES AS WITH AN HISTORICALLY STRUCTURED
MUTUAL FUND. THE FUND IS A SEPARATE SERIES OF EATON VANCE MUTUAL FUNDS TRUST
(THE "TRUST").
Shares of the Fund are not deposits or obligations of, or guaranteed or endorsed
by, any bank or other insured depository institution, and are not federally
insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board
or any other government agency. Shares of the Fund involve investment risks,
including fluctuations in value and the possible loss of some or all of the
principal investment.
This Prospectus is designed to provide you with information you should know
before investing in the Fund. Please retain this document for future
reference. A Statement of Additional Information for the Fund dated July 22,
1996, as supplemented from time to time, has been filed with the Securities
and Exchange Commission and is incorporated herein by reference. The Statement
of Additional Information is available without charge from the Fund's
principal underwriter, Eaton Vance Distributors, Inc. (the "Principal
Underwriter"), 24 Federal Street, Boston, MA 02110 (telephone (800) 225-6265).
The Portfolio's investment adviser is Boston Management and Research (the
"Investment Adviser"), a wholly-owned subsidiary of Eaton Vance Management,
and Eaton Vance Management is the administrator (the "Administrator") of the
Fund. The offices of the Investment Adviser and the Administrator are located
at 24 Federal Street, Boston, MA 02110.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
- ------------------------------------------------------------------------------
PAGE
Shareholder and Fund Expenses ............................................ 2
The Fund's Investment Objective .......................................... 3
The Tax-Managed Mutual Fund Advantage .................................... 3
Investment Policies and Risks ............................................ 4
Organization of the Fund and the Portfolio ............................... 6
Management of the Fund and the Portfolio ................................. 8
Distribution Plan ........................................................ 9
Valuing Fund Shares ...................................................... 10
How to Buy Fund Shares ................................................... 10
How to Redeem Fund Shares ................................................ 11
Reports to Shareholders .................................................. 13
The Lifetime Investing Account/Distribution Options ...................... 13
The Eaton Vance Exchange Privilege ....................................... 14
Eaton Vance Shareholder Services ......................................... 14
Distributions and Taxes .................................................. 15
Performance Information .................................................. 16
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PROSPECTUS DATED JULY 22, 1996
<PAGE>
SHAREHOLDER AND FUND EXPENSES
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SHAREHOLDER TRANSACTION EXPENSES
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Sales Charges Imposed on Purchases of Shares None
Sales Charges Imposed on Reinvested Distributions None
Fees to Exchange Shares None
Contingent Deferred Sales Charges Imposed on Redemptions
During the First Year (as a percentage of redemption proceeds
exclusive of all reinvestments and capital appreciation
in the account) 1.00%
ANNUAL FUND AND ALLOCATED PORTFOLIO OPERATING EXPENSES
(as a percentage of average daily net assets)
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Investment Adviser Fee 0.625%
Rule 12b-1 Distribution (and Service) Fees 1.000%
Other Expenses 0.250%
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Total Operating Expenses 1.875%
=====
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS
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<S> <C> <C>
An investor would pay the following contingent deferred sales charge and
expenses on a $1,000 investment, assuming (a) 5% annual return and (b)
redemption at the end of each time period: $29 $59
An investor would pay the following expenses on the same investment, assuming
(a) 5% annual return and (b) no redemptions: $19 $59
</TABLE>
NOTES:
The table and Example summarize the aggregate expenses of the Fund and the
Portfolio and are designed to help investors understand the costs and expenses
they will bear directly or indirectly by investing in the Fund. Other Expenses
are estimated for the current fiscal year because the Fund was only recently
organized.
The Fund invests exclusively in the Portfolio. The Trustees believe the
aggregate per share expenses of the Fund and the Portfolio should be
approximate, and over time may be less than, the per share expenses the Fund
would incur if the Trust retained the services of an investment adviser for the
Fund and the Fund's assets were invested directly in the type of securities
being held by the Portfolio.
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES, AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. Federal
regulations require the Example to assume a 5% annual return, but actual annual
return will vary. For further information regarding the expenses of both the
Fund and the Portfolio see "Organization of the Fund and the Portfolio,"
"Management of the Fund and the Portfolio," "How to Redeem Fund Shares" and
"Distribution Plan." Because the Fund makes payments under its Distribution Plan
adopted under Rule 12b-1, a long-term shareholder may pay more than the economic
equivalent of the maximum front-end sales charge permitted by a rule of the
National Association of Securities Dealers, Inc.
No contingent deferred sales charge is imposed on (a) shares purchased more than
one year prior to redemption, (b) shares acquired through the reinvestment of
distributions or (c) any appreciation in value of other shares in the account
(see "How to Redeem Fund Shares"), and no such charge is imposed on exchanges of
Fund shares for shares of one or more other funds listed under "The Eaton Vance
Exchange Privilege". In the Example above, expenses would be $10 less in the
first year if there was no redemption.
Other investment companies with different distribution arrangements and fees are
investing in the Portfolio and additional such companies and other investors may
do so in the future. See "Organization of the Fund and the Portfolio."
THE FUND'S INVESTMENT OBJECTIVE
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The Fund's investment objective is to achieve long-term, after-tax returns for
its shareholders through investing in a diversified portfolio of equity
securities. The Fund currently intends to pursue its investment objective by
investing its assets in Tax-Managed Growth Portfolio (the "Portfolio"), a
separate registered investment company with the same investment objective and
policies as the Fund. This investment structure is commonly referred to as a
"master/feeder" structure. Using this structure enables the Fund to participate
in a well-established investment portfolio without exposing the Fund to the
unrealized gains accrued prior to the Fund's operations.
In its operations, the Portfolio seeks to achieve after-tax returns for its
shareholders in part by minimizing the taxes they incur in connection with the
Portfolio's investment income and realized capital gains. Taxes on investment
income are minimized by investing primarily in lower yielding securities.
Realized capital gains are minimized by maintaining relatively low portfolio
turnover, and by employing a variety of tax-efficient management strategies. See
"Investment Policies and Risks" for further information.
The Fund is designed for long-term taxable investors. The Fund is not intended
to be a complete investment program. Prospective investors should take into
account their objectives and other investments when considering the purchase of
Fund shares. The Fund cannot assure achievement of its investment objective.
While the Fund seeks to minimize investor taxes associated with the Fund's
investment income and realized capital gains, the Fund may have taxable
investment income and may realize taxable gains from time to time. The Fund's
and the Portfolio's investment objectives are nonfundamental and may be changed
when authorized by a vote of the Trustees of the Trust or the Portfolio,
respectively, without obtaining the approval of the Fund's shareholders or the
investors in the Portfolio, as the case may be. The Trustees of the Trust have
no present intention to change the Fund's objective and intend to submit any
proposed material change in the objective to shareholders for their approval.
THE TAX-MANAGED MUTUAL FUND ADVANTAGE
- ------------------------------------------------------------------------------
Taxes are a major influence on the net returns that investors receive on their
taxable investments. Today, dividends and short-term capital gains distributed
by mutual funds are taxed at federal income tax rates as high as 39.6% and
distributions of long-term capital gains are taxed at federal tax rates of up to
28%. Including state taxes and the federal itemized deduction phaseout, the top
tax rates in high-tax states such as California, New York, and Massachusetts are
in a range of 45-48% on dividend income and short-term gains and 33-36% on
long-term capital gains. There is legislation before Congress that may reduce
federal tax rates on long-term capital gains, but its status is uncertain.
Most equity mutual funds are managed to maximize PRE-TAX returns, largely
ignoring the considerable impact on returns of taxes incurred by investors in
connection with distributions of income and capital gains. In contrast, the Fund
seeks to achieve long-term, AFTER-TAX returns for its shareholders.
In seeking to achieve long-term, after-tax returns, the Fund is similar to and
competitive with retirement planning instruments such as IRAs and variable
annuities. As a mutual fund, however, the Fund avoids a number of structural
disadvantages inherent in an IRA or a variable annuity--including the
limitations and penalties on early withdrawals, the taxing of all income and
gain upon withdrawal at ordinary income rates, and the inability to gain a step
up in basis at death. A variable annuity may also have higher annual expenses
than the Fund due to the embedded insurance features. Annual deductions for
contributions to IRAs are limited.
An analysis of long-term hypothetical returns achievable from a tax-managed
equity fund compared to a conventional equity mutual fund and a variable annuity
or an IRA can illustrate the fundamental soundness of a tax-managed equity fund
approach. Assuming identical annual pre-tax returns, over a holding period of
several years a tax-managed fund can generate liquidation proceeds higher than a
conventional managed equity mutual fund and higher than a variable annuity or
IRA. If the investments are passed into an estate (thereby triggering a step-up
in basis), the relative performance advantage of a tax-managed fund compared to
a conventional fund, or to a variable annuity or an IRA, can be substantial,
again assuming equivalent annual returns before taxes. Of course, actual returns
achieved by long-term investors in the Fund cannot be predicted.
INVESTMENT POLICIES AND RISKS
- ------------------------------------------------------------------------------
It is the policy of the Portfolio to invest in a broadly diversified selection
of equity securities, emphasizing common stocks of domestic and foreign growth
companies that are considered to be high in quality and attractive in their
long-term investment prospects. Under normal market conditions, the Portfolio
will invest at least 65% of its assets in common stocks. Although the Portfolio
may invest in investment-grade preferred stocks and debt securities, purchase of
such securities will normally be limited to securities convertible into common
stocks and temporary investments in short-term notes or government obligations.
The Portfolio's holdings will represent a number of different industries, and
not more than 25% of the Portfolio's assets will be invested in any one
industry. During defensive periods in which the Investment Adviser believes that
returns on common stock investments may be unfavorable, the Fund may invest a
portion of its assets in U.S. government obligations and high quality short-term
notes.
In its operations, the Portfolio seeks to achieve after-tax returns for its
shareholders in part by minimizing the taxes they incur in connection with the
Portfolio's investment income and realized capital gains. Taxes on investment
income are minimized by investing primarily in lower yielding securities. The
Fund can be expected to distribute relatively low levels of taxable investment
income, if any.
Realized capital gains are minimized in part by maintaining relatively low
portfolio turnover, investing primarily in established companies with
characteristics of above-average growth, predictability and stability that are
acquired with the expectation of being held for a period of years. The Portfolio
will generally seek to avoid realizing short-term capital gains. When a decision
is made to sell a particular appreciated security, the Portfolio will select for
sale those share lots with holding periods sufficient to qualify for long-term
capital gains treatment and among those, the share lots with the highest cost
basis. The Portfolio may, when prudent, sell securities to realize capital
losses that can be used to offset realized capital gains.
To protect against price declines in securities holdings with large accumulated
capital gains, the Portfolio may use hedging techniques such as short sales
against-the-box of securities held, the purchase of put options, the sale of
stock index futures contracts, and equity swaps. By using these techniques
rather than selling such securities the Portfolio can reduce its exposure to
price declines in the securities without realizing substantial capital gains
under current tax law. To avoid the sale of appreciated securities and the
realization of capital gains, the Portfolio and the Fund may adopt in the future
a policy of meeting redemptions in whole or in part through the distribution of
readily marketable securities. The practice of distributing securities to meet
shareholder redemptions may provide the Portfolio with a useful management tool,
allowing appreciated stock positions to be reduced without causing capital gains
to be realized. A redeeming shareholder who received securities would incur no
more or less taxable gain than if the redemption had been paid in cash, and
could elect to sell the distributed securities through Eaton Vance to a
broker-dealer at no cost. Shareholders would be notified in writing of this
procedure before it was implemented. See "How to Redeem Fund Shares." It is
expected that by employing these strategies for tax-efficient management, the
Portfolio can minimize the extent to which net capital gains are realized each
year, and the extent to which shareholders incur taxes as a result of these
realized gains. The Portfolio may nevertheless realize taxable gains from time
to time.
An investment in the Fund entails the risk that the principal value of Fund
shares may not increase or may decline. The Portfolio will be managed for
long-term, after-tax returns. In managing the Portfolio, the Investment Adviser
will generally avoid selling securities with large accumulated capital gains.
Such securities are expected to comprise a substantial portion of the assets of
the Portfolio. Although the Portfolio may utilize certain hedging strategies in
lieu of selling appreciated securities, the Fund's exposure to losses during
stock market declines may nonetheless be higher than that of other funds that do
not follow a general policy of avoiding sales of highly- appreciated securities.
The Portfolio may temporarily borrow up to 5% of the value of its total assets
to satisfy redemption requests or settle securities transactions.
INVESTING IN FOREIGN SECURITIES. Investing in securities issued by foreign
companies involves considerations and possible risks not typically associated
with investing in securities issued by U.S. companies. The value of foreign
investments to U.S. investors may be adversely affected by changes in currency
exchange rates. 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 government
supervision than in the United States. Investments in foreign securities could
be adversely affected by other factors not present in the United States,
including expropriation, confiscatory taxation, lack of uniform accounting and
auditing standards, and potential difficulties in enforcing contractual
obligations. To reduce some of these risks, the Portfolio will only invest in
issuers located in developed countries whose securities are traded in
established markets.
DERIVATIVE INVESTMENTS. The Portfolio may purchase or sell derivative
instruments to hedge against securities price declines and currency movements
and to enhance returns. The Portfolio may engage in transactions in derivative
instruments (which derive their value by reference to other securities, indices,
instruments, or currencies) in the U.S. and abroad. Such transactions may
include the purchase and sale of stock index futures contracts and options on
stock index futures; the purchase of put options and the sale of call options on
securities held in the Portfolio; equity swaps; and the purchase and sale of
forward currency exchange contracts and currency futures. The Portfolio may use
transactions in derivative instruments as a substitute for the purchase and sale
of securities. 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. While many
derivative instruments have built-in leveraging characteristics, the Portfolio
will not use them to leverage its net assets.
The purchase and sale of derivative instruments is a highly specialized activity
(which may be considered speculative) that can expose the Portfolio to a
significant risk of loss. The built-in leveraging inherent to many derivative
instruments can result in losses that substantially exceed the initial amount
paid or received. Equity swaps and over-the-counter 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. 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 an underlying security, index, instrument, or currency.
There can be no assurance that the use of derivative instruments will be
advantageous to the Portfolio.
The Portfolio will only enter into equity swaps and over-the-counter options
contracts with counterparties whose credit quality or claims paying ability are
considered to be investment grade by the Investment Adviser. In addition, at the
time of entering into a transaction, the Portfolio's credit exposure to any one
counterparty will be limited to 5% or less of the net assets of the Portfolio.
The Portfolio's investment in illiquid assets, which may include equity swaps
and over-the-counter options, may not represent more than 15% of net assets at
the time any such illiquid assets are acquired.
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 (the "CFTC") and must be executed through a futures
commission merchant or brokerage firm that is a member of the relevant exchange.
Under CFTC regulations, the Portfolio may only enter into futures contracts if,
immediately thereafter, the value of the aggregate initial margin with respect
to all currently outstanding non-hedging positions in futures contracts does not
exceed 5% of the Fund's net asset value, after taking into account unrealized
profits and losses on such positions.
SHORT SALES AGAINST-THE-BOX. The Portfolio may sell securities short where 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). Under
current tax law, short sale against-the-box transactions enable the Portfolio to
hedge its exposure to securities that it holds without selling the securities
and recognizing gains. 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 gain to be recognized. The Portfolio expects normally to close its
short sale against-the-box transactions by delivering newly-acquired stock.
RESTRICTED SECURITIES. Securities that are not freely tradeable or which are
subject to restrictions on sale under the Securities Act of 1933 are considered
restricted. Such securities are illiquid and may be difficult to properly value.
Not more than 15% of the Portfolio's net assets may be invested in restricted
securities or other illiquid assets at the time any such illiquid assets are
acquired.
LENDING OF PORTFOLIO SECURITIES. The Portfolio may seek to earn income by
lending portfolio securities to broker-dealers or other institutional borrowers.
As with other extensions of credit there are risks of delay in recovery or even
loss of rights in the securities loaned if the borrower of the securities fails
financially. However, the loans will be made only to organizations deemed by the
Investment Adviser to be sufficiently creditworthy and when, in the judgment of
the Investment Adviser, the consideration which can be earned from securities
loans of this type justifies the attendant risk.
CERTAIN INVESTMENT POLICIES. The Fund and the Portfolio have adopted certain
fundamental investment restrictions and policies which are enumerated in detail
in the Statement of Additional Information and which may not be changed unless
authorized by a shareholder vote and an investor vote, respectively. Among the
fundamental restrictions, neither the Fund nor the Portfolio may (a) borrow
money, except as permitted by the 1940 Act, or (b) with respect to 75% of its
total assets, invest more than 5% of total assets (taken at current value) in
the securities of any one issuer, or invest in more than 10% of total assets in
the outstanding voting securities of any one issuer, except obligations issued
or guaranteed by the U.S. Government, its agencies or instrumentalities and
except securities of other investment companies. Investment restrictions are
considered at the time of acquisition of assets; the sale of portfolio assets is
not required in the event of a subsequent change in circumstances.
Except for the fundamental investment restrictions and policies specifically
identified above and enumerated in the Statement of Additional Information, the
policies of the Fund and the Portfolio are not fundamental policies and
accordingly may be changed by the Trustees of the Trust and the Portfolio
without obtaining the approval of the shareholders of the Fund or the investors
in the Portfolio, as the case may be. If any changes were made, the Fund might
have investment objectives different from the objectives which an investor
considered appropriate at the time the investor became a shareholder in the
Fund.
ORGANIZATION OF THE FUND AND THE PORTFOLIO
- ------------------------------------------------------------------------------
The Fund is a diversified series of Eaton Vance Mutual Funds Trust, a business
trust established under Massachusetts law pursuant to a Declaration of Trust
dated May 7, 1984, as amended. The Trust is a mutual fund - an open-end
management investment company. THE TRUSTEES OF THE TRUST ARE RESPONSIBLE FOR THE
OVERALL MANAGEMENT AND SUPERVISION OF ITS AFFAIRS. The Trust may issue an
unlimited number of shares of beneficial interest (no par value per share) in
one or more series. Each share represents an equal proportionate beneficial
interest in the Fund. When issued and outstanding, the shares are fully paid and
nonassessable by the Trust and redeemable as described under "How to Redeem Fund
Shares." Shareholders are entitled to one vote for each full share held.
Fractional shares may be voted proportionately. Shares have no preemptive or
conversion rights and are freely transferable. In the event of the liquidation
of the Fund, shareholders are entitled to share pro rata in the net assets of
the Fund available for distribution to shareholders.
THE PORTFOLIO IS ORGANIZED AS A TRUST UNDER THE LAWS OF THE STATE OF NEW YORK
AND INTENDS TO BE TREATED AS A PARTNERSHIP FOR FEDERAL TAX PURPOSES. The
Portfolio, as well as the Trust, intends to comply with all applicable federal
and state securities laws. The Portfolio's Declaration of Trust provides that
the Fund and other entities permitted to invest in the Portfolio (e.g., other
U.S. and foreign investment companies, common and commingled trust funds and
other accredited investors) 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.
SPECIAL INFORMATION ON THE FUND/PORTFOLIO INVESTMENT STRUCTURE. An investor in
the Fund should be aware that the Fund, unlike mutual funds which directly
acquire and manage their own portfolios of securities, seeks to achieve its
investment objective by investing its assets in an interest in the Portfolio,
which is a separate investment company with an identical investment objective
(although the Fund may temporarily hold a de minimis amount of cash). Therefore,
the Fund's interest in securities owned by the Portfolio is indirect. In
addition to selling an interest to the Fund, the Portfolio may sell interests to
other affiliated and non-affiliated mutual funds and other investors. Such
investors will invest in the Portfolio on the same terms and conditions and will
pay a proportionate share of the Portfolio's expenses. However, the other
investment companies investing in the Portfolio either do not sell their shares
or are not required to sell their shares at the same public offering price as
the Fund due to variations in sales commissions and other operating expenses.
Therefore, investors in the Fund should be aware that these differences may
result in differences in returns experienced by investors in the various funds
that invest in the Portfolio. Such differences in returns are also present in
other mutual fund structures, including funds that have multiple classes of
shares. For information regarding the investment objective, policies and
restrictions of the Portfolio, see "How the Fund and the Portfolio Invest their
Assets." Further information regarding the investment practices of the Portfolio
may also be found in the Statement of Additional Information.
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 by investing in
the Portfolio, the Fund can participate in a substantially larger and more
diverse pool of equity investments than if it were to invest its assets
directly.
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. The investment objective and the nonfundamental
investment policies of the Fund and the Portfolio may be changed by the Trustees
of the Trust and the Portfolio without obtaining the approval of the
shareholders of the Fund or the investors in the Portfolio, as the case may be.
Any such change of the investment objective will be preceded by thirty days'
advance written notice to the shareholders of the Fund or the investors in the
Portfolio, as the case may be. If a shareholder redeems shares because of a
change in the nonfundamental objective or policies of the Fund, those shares may
be subject to a contingent deferred sales charge, as described in "How to Redeem
Fund Shares." In the event the Fund withdraws all of its assets from the
Portfolio, or the Board of Trustees of the Trust determines that the investment
objective of the Portfolio is no longer consistent with the investment objective
of the Fund, such Trustees would consider what action might be taken, including
investing the assets of the Fund in another pooled investment entity or
retaining an investment adviser to manage the Fund's assets in accordance with
its investment objective. The Fund's investment performance may be affected by a
withdrawal of all its assets from the Portfolio.
Information regarding other funds or investors that invest in the Portfolio may
be obtained by contacting Eaton Vance Distributors, Inc. (the "Principal
Underwriter" or "EVD"), 24 Federal Street, Boston, MA 02110 (617) 482-8260.
Smaller investors in the Portfolio may be adversely affected by the actions of
larger investors in the Portfolio. For example, if a large investor withdraws
from the Portfolio, the remaining investors may experience higher pro rata
operating expenses, thereby producing lower returns. Additionally, the Portfolio
may become less diverse, resulting in increased portfolio risk, and experience
decreasing economies of scale. However, this possibility exists as well for
historically structured funds which have large or institutional investors.
Until 1992, the Administrator sponsored and advised only historically structured
funds. Funds which invest all their assets in interests in a separate investment
company are a relatively new development in the mutual fund industry and,
therefore, the Fund may be subject to additional regulations than historically
structured funds.
The Declaration of Trust of the Portfolio provides that the Portfolio will
terminate 120 days after the complete withdrawal of the Fund or any other
investor in the Portfolio, unless either the remaining investors, or the
Trustees of the Portfolio, by written instrument consented to by a majority of
all investors, agree to continue the business of the Portfolio. This provision
is consistent with treatment of the Portfolio as a partnership for federal
income tax purposes. See "Distributions and Taxes" for further information.
Whenever the Fund as an investor in the Portfolio is requested to vote on
matters pertaining to the Portfolio (other than the termination of the
Portfolio's business, which may be determined by the Trustees of the Portfolio
without investor approval), the Fund will hold a meeting of Fund shareholders
and will vote its interest in the Portfolio for or against such matters
proportionately to the instructions to vote for or against such matters received
from Fund shareholders. The Fund shall vote shares for which it receives no
voting instructions in the same proportion as the shares for which it receives
voting instructions. Other investors in the Portfolio may alone or collectively
acquire sufficient voting interests in the Portfolio to control matters relating
to the operation of the Portfolio, which may require the Fund to withdraw its
investment in the Portfolio or take other appropriate action. Any such
withdrawal could result in a distribution "in kind" of portfolio securities (as
opposed to a cash distribution from the Portfolio). If securities are
distributed, the Fund could incur brokerage, tax or other charges in converting
the securities to cash. In addition, the distribution in kind may result in a
less diversified portfolio of investments or adversely affect the liquidity of
the Fund. Notwithstanding the above, there are other means for meeting
shareholder redemption requests, such as borrowing.
The Trustees of the Trust, including a majority of the noninterested Trustees,
have approved written procedures designed to identify and address any potential
conflicts of interest arising from the fact that most of the Trustees of the
Trust and the Trustees of the Portfolio are the same. Such procedures require
each Board to take action to resolve any conflict of interest between the Fund
and the Portfolio, and it is possible that the creation of separate Boards may
be considered. For further information concerning the Trustees and officers of
the Trust and the Portfolio, see the Statement of Additional Information.
MANAGEMENT OF THE FUND AND THE PORTFOLIO
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THE PORTFOLIO ENGAGES BOSTON MANAGEMENT AND RESEARCH ("BMR" OR THE "INVESTMENT
ADVISER"), A WHOLLY-OWNED SUBSIDIARY OF EATON VANCE MANAGEMENT ("EATON VANCE"),
AS ITS INVESTMENT ADVISER. EATON VANCE, ITS AFFILIATES AND ITS PREDECESSOR
COMPANIES HAVE BEEN MANAGING ASSETS OF INDIVIDUALS AND INSTITUTIONS SINCE 1924
AND MANAGING INVESTMENT COMPANIES SINCE 1931.
Acting under the general supervision of the Board of Trustees of the Portfolio,
BMR manages the Portfolio's investments and affairs and furnishes for the use of
the Portfolio office space and all necessary office facilities, equipment and
personnel for servicing the investments of the Portfolio. Under the investment
advisory agreement with the Portfolio, BMR receives a monthly advisory fee of
5/96 of 1% (equivalent to 0.625% annually) of the average daily net assets of
the Portfolio up to $500 million. On net assets of $500 million and over the
annual fee is reduced and the advisory fee is computed as follows:
ANNUALIZED FEE RATE
AVERAGE DAILY NET ASSETS FOR THE MONTH (FOR EACH LEVEL)
------------------------------------------------------------------------
$500 million but less than $1 billion 0.5625%
$1 billion but less than $1.5 billion 0.5000%
$1.5 billion and over 0.4375%
BMR places the portfolio securities transactions of the Portfolio with many
broker-dealer firms and uses its best efforts to obtain execution of such
transactions at prices which are advantageous to the Portfolio and at reasonably
competitive commission rates. Subject to the foregoing, BMR may consider sales
of shares of the Fund or of other investment companies sponsored by BMR or Eaton
Vance as a factor in the selection of broker-dealer firms to execute portfolio
transactions.
Duncan W. Richardson has acted as a portfolio manager of the Portfolio since it
commenced operations. He has been a Vice President of Eaton Vance since 1990, a
Vice President of BMR since 1992 and an employee of Eaton Vance since 1987.
BMR OR EATON VANCE ACTS AS INVESTMENT ADVISER TO INVESTMENT COMPANIES AND
VARIOUS INDIVIDUAL AND INSTITUTIONAL CLIENTS WITH ASSETS UNDER MANAGEMENT OF
OVER $16 BILLION. EATON VANCE HAS BEEN MANAGING INVESTMENT COMPANIES WITH
OBJECTIVES SIMILAR TO THAT OF THE FUND SINCE 1961, AND CURRENTLY MANAGES FUNDS
WITH SUCH SIMILAR OBJECTIVES HAVING ASSETS OF OVER $700 MILLION. Eaton Vance is
a wholly-owned subsidiary of Eaton Vance Corp., a publicly held holding company
which through its subsidiaries and affiliates engages primarily in investment
management, administration and marketing activities.
The Trust has retained the services of Eaton Vance to act as Administrator of
the Fund. The Trust has not retained the services of an investment adviser since
the Trust seeks to achieve the investment objective of the Fund by investing the
Fund's assets in the Portfolio. As Administrator, Eaton Vance provides the Fund
with general office facilities and supervises the overall administration of the
Fund. For these services Eaton Vance currently receives no compensation. The
Trustees of the Trust may determine, in the future, to compensate Eaton Vance
for such services.
The Fund and the Portfolio, as the case may be, will each be responsible for all
respective costs and expenses not expressly stated to be payable by BMR under
the investment advisory agreement, by Eaton Vance under the administrative
services agreement, or by EVD under the distribution agreement. Such costs and
expenses to be borne by the Fund or the Portfolio, as the case may be, include,
without limitation: custody and transfer agency fees and expenses, including
those incurred for determining net asset value and keeping accounting books and
records; expenses of pricing and valuation services; the cost of share
certificates; membership dues in investment company organizations; brokerage
commissions and fees; fees and expenses of registering under the securities
laws; expenses of reports to shareholders and investors; proxy statements, and
other expenses of shareholders' or investors' meetings; insurance premiums,
printing and mailing expenses; interest, taxes and corporate fees; legal and
accounting expenses; compensation and expenses of Trustees not affiliated with
BMR or Eaton Vance; and investment advisory fees, and, if any, administrative
services fees. The Fund and the Portfolio, as the case may be, will also each
bear expenses incurred in connection with litigation in which the Fund or the
Portfolio, as the case may be, is a party and any legal obligation to indemnify
its respective officers and Trustees with respect thereto.
DISTRIBUTION PLAN
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THE FUND FINANCES DISTRIBUTION ACTIVITIES AND HAS ADOPTED A DISTRIBUTION PLAN
(THE "PLAN") PURSUANT TO RULE 12B-1 UNDER THE 1940 ACT. Rule 12b-1 permits a
mutual fund, such as the Fund, to finance distribution activities and bear
expenses associated with the distribution of its shares provided that any
payments made by the Fund are made pursuant to a written plan adopted in
accordance with the Rule. The Plan is subject to, and complies with, the sales
charge rule of the National Association of Securities Dealers, Inc. (the "NASD
Rule"). The Plan is described further in the Statement of Additional
Information, and the following is a description of the salient features of the
Plan. The Plan provides that the Fund, subject to the NASD Rule, will pay sales
commissions and distribution fees to the Principal Underwriter only after and as
a result of the sale of shares of the Fund. On each sale of Fund shares
(excluding reinvestment of distributions) the Fund will pay the Principal
Underwriter amounts representing (i) sales commissions equal to 6.25% of the
amount received by the Fund for each share sold and (ii) distribution fees
calculated by applying the rate of 1% over the prime rate then reported in The
Wall Street Journal to the outstanding balance of Uncovered Distribution Charges
(as described below) of the Principal Underwriter. The Principal Underwriter
currently expects to pay to an Authorized Firm (a) sales commissions (except on
exchange transactions and reinvestments) at the time of sale equal to .75% of
the purchase price of the shares sold by such Firm, and (b) monthly sales
commissions approximately equivalent to 1/12 of .75% of the value of shares sold
by such Firm and remaining outstanding for at least one year. The Plan is
designed to permit an investor to purchase Fund shares through an Authorized
Firm without incurring an initial sales charge and at the same time permit the
Principal Underwriter to compensate Authorized Firms in connection with the sale
of Fund shares.
THE NASD RULE REQUIRES THE FUND TO LIMIT ITS ANNUAL PAYMENTS OF SALES
COMMISSIONS AND DISTRIBUTION FEES TO AN AMOUNT NOT EXCEEDING .75% OF THE FUND'S
AVERAGE DAILY NET ASSETS FOR EACH FISCAL YEAR. Under its Plan, the Fund accrues
daily an amount at the rate of 1/365 of .75% of the Fund's net assets, and pays
such accrued amounts monthly to the Principal Underwriter. The Plan requires
such accruals to be automatically discontinued during any period in which there
are no outstanding Uncovered Distribution Charges under the Plan. Uncovered
Distribution Charges are calculated daily and, briefly, are equivalent to all
unpaid sales commissions and distribution fees to which the Principal
Underwriter is entitled under the Plan less all contingent deferred sales
charges theretofore paid to the Principal Underwriter. The Eaton Vance
organization may be considered to have realized a profit under the Plan if at
any point in time the aggregate amounts of all payments made to the Principal
Underwriter pursuant to the Plan, including any contingent deferred sales
charges, have exceeded the total expenses theretofore incurred by such
organization in distributing shares of the Fund. Total expenses for this purpose
will include an allocable portion of the overhead costs of such organization and
its branch offices.
Because of the NASD Rule limitation on the amount of sales commissions and
distribution fees paid during any fiscal year, a high level of sales of Fund
shares during the initial years of the Fund's operations would cause a large
portion of the sales commission attributable to a sale of Fund shares to be
accrued and paid by the Fund to the Principal Underwriter in fiscal years
subsequent to the year in which such shares were sold. This spreading of sales
commissions payments under the Plan over an extended period would result in the
incurrence and payment of increased distribution fees under the Plan.
THE PLAN ALSO AUTHORIZES THE FUND TO MAKE PAYMENTS OF SERVICE FEES TO THE
PRINCIPAL UNDERWRITER, AUTHORIZED FIRMS AND OTHER PERSONS IN AMOUNTS NOT
EXCEEDING .25% OF THE FUND'S AVERAGE DAILY NET ASSETS FOR EACH FISCAL YEAR. The
Trustees of the Trust have initially implemented this provision of the Plan by
authorizing the Fund to make monthly service fee payments to the Principal
Underwriter and Authorized Firms in amounts not expected to exceed .25% of the
Fund's average daily net assets for any fiscal year. The Fund accrues the
service fee daily at the rate of 1/365 of .25% of the Fund's net assets. The
Principal Underwriter currently expects to pay to an Authorized Firm (a) a
service fee (except on exchange transactions and reinvestments) at the time of
sale equal to .25% of the purchase price of the shares sold by such Firm, and
(b) monthly service fees approximately equivalent to 1/12 of .25% of the value
of shares sold by such Firm and remaining outstanding for at least one year.
During the first year after a purchase of Fund shares, the Principal Underwriter
will retain the service fee as reimbursement for the service fee payment made to
the Authorized Firm at the time of sale. As permitted by the NASD Rule, all
service fee payments are made for personal services and/or the maintenance of
shareholder accounts. Service fees are separate and distinct from the sales
commissions and distribution fees payable by the Fund to the Principal
Underwriter, and as such are not subject to automatic discontinuance when there
are no outstanding Uncovered Distribution Charges of the Principal Underwriter.
The Principal Underwriter may, from time to time, at its own expense, provide
additional incentives to Authorized Firms which employ registered
representatives who sell Fund shares and/or shares of other funds distributed by
the Principal Underwriter. In some instances, such additional incentives may be
offered only to certain Authorized Firms whose representatives sell or are
expected to sell significant amounts of shares. In addition, the Principal
Underwriter may from time to time increase or decrease the sales commissions
payable to Authorized Firms.
The Fund may, in its absolute discretion, suspend, discontinue or limit the
offering of its shares at any time. In determining whether any such action
should be taken, the Fund's management intends to consider all relevant factors,
including without limitation the size of the Fund, the investment climate and
market conditions, the volume of sales and redemptions of Fund shares, and the
amount of Uncovered Distribution Charges of the Principal Underwriter. The Plan
may continue in effect and payments may be made under the Plan following any
such suspension, discontinuance or limitation of the offering of Fund shares;
however, the Fund is not contractually obligated to continue the Plan for any
particular period of time. Suspension of the offering of Fund shares would not,
of course, affect a shareholder's ability to redeem shares.
VALUING FUND SHARES
- ------------------------------------------------------------------------------
THE FUND VALUES ITS SHARES ONCE ON EACH DAY THE NEW YORK STOCK EXCHANGE (THE
"EXCHANGE") IS OPEN FOR TRADING, as of the close of regular trading on the
Exchange (normally 4:00 p.m. New York time). The Fund's net asset value per
share is determined by its custodian, Investors Bank & Trust Company ("IBT"),
(as agent for the Fund) in the manner authorized by the Trustees of the Trust.
Net asset value is computed by dividing the value of the Fund's total assets,
less its liabilities, by the number of Fund shares outstanding. Because the Fund
invests its assets in an interest in the Portfolio, the Fund's net asset value
will reflect the value of its interest in the Portfolio (which, in turn,
reflects the underlying value of the Portfolio's assets and liabilities).
Authorized Firms must communicate an investor's order to the Principal
Underwriter prior to the close of the Principal Underwriter's business day to
receive that day's net asset value per Fund share. It is the Authorized Firms'
responsibility to transmit orders promptly to the Principal Underwriter, which
is a wholly-owned subsidiary of Eaton Vance.
The Portfolio's net asset value is also determined as of the close of regular
trading on the Exchange by IBT (as custodian and agent for the Portfolio) based
on market or fair value in the manner authorized by the Trustees of the
Portfolio. Net asset value is computed by subtracting the liabilities of the
Portfolio from the value of its total assets. Securities listed on securities
exchanges or in the NASDAQ National Market are valued at closing sale prices.
For further information regarding the valuation of the Portfolio's assets, see
"Determination of Net Asset Value" in the Statement of Additional Information.
SHAREHOLDERS MAY DETERMINE THE VALUE OF THEIR INVESTMENT BY MULTIPLYING THE
NUMBER OF FUND SHARES OWNED BY THE CURRENT NET ASSET VALUE PER SHARE.
HOW TO BUY FUND SHARES
- ------------------------------------------------------------------------------
SHARES OF THE FUND MAY BE PURCHASED FOR CASH OR MAY BE ACQUIRED IN EXCHANGE FOR
SECURITIES. Investors may purchase shares of the Fund through Authorized Firms
at the net asset value per share of the Fund next determined after an order is
effective. An Authorized Firm may charge its customers a fee in connection with
transactions executed by that Firm. The Fund may suspend the offering of shares
at any time and may refuse an order for the purchase of shares.
An initial investment in the Fund must be at least $5,000. Once an account has
been established the investor may send investments of $500 or more at any time
directly to the Fund's transfer agent (the "Transfer Agent") as follows: First
Data Investor Services Group, BOS725, P.O. Box 1559, Boston, MA 02104. The
$5,000 minimum initial investment is waived for Bank Automated Investing
accounts, which may be established with an investment of $500 or more. See
"Eaton Vance Shareholder Services."
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 acquired at their net asset value as determined above. The minimum
value of securities (or securities and cash) accepted for deposit is $5,000. The
number of Fund shares to be issued to an investor exchanging securities that are
retained by the Portfolio will be the value of the securities, as determined by
the Portfolio's valuation procedures, divided by the applicable net asset value
per Fund share on the day such securities are accepted. BMR may request that the
Portfolio retain the securities for investment purposes. Securities accepted for
exchange may also be sold for the account of their owner on the day of their
receipt or as soon thereafter as possible. The number of Fund shares acquired to
be issued in exchange for securities will be the aggregate value of or proceeds
from the sale of such securities, divided by the applicable net asset value per
Fund share on the day such proceeds are received. Eaton Vance will use
reasonable efforts to obtain the then current market price for such securities,
but does not guarantee the best price available. Eaton Vance will absorb any
transaction costs, such as commissions, on the sale of the securities.
Securities determined to be acceptable should be transferred via book entry or
physically delivered, in proper form for transfer, through an Authorized Firm,
together with a completed and signed Letter of Transmittal in approved form
(available from Authorized Firms), as follows:
IN THE CASE OF BOOK ENTRY:
Deliver through Depository Trust Co.
Broker #2212
Investors Bank & Trust Company
For A/C EV Classic Tax-Managed Growth Fund
IN THE CASE OF PHYSICAL DELIVERY:
Investors Bank & Trust Company
Attention: EV Classic Tax-Managed Growth Fund
Physical Securities Processing Settlement Area
89 South Street
Boston, MA 02111
Investors who are contemplating an exchange of securities for shares of the
Fund, or their representatives, must contact Eaton Vance to determine whether
the securities are acceptable before forwarding such securities. Eaton Vance
reserves the right to reject any securities. Exchanging securities for Fund
shares may create a taxable gain or loss. Each investor should consult his or
her tax adviser with respect to the particular federal, state and local tax
consequences of exchanging securities for Fund shares.
IF YOU DON'T HAVE AN AUTHORIZED FIRM, EATON VANCE CAN RECOMMEND ONE.
HOW TO REDEEM FUND SHARES
- ------------------------------------------------------------------------------
A SHAREHOLDER MAY REDEEM FUND SHARES BY DELIVERING TO FIRST DATA INVESTOR
SERVICES GROUP, BOS725, P.O. BOX 1559, BOSTON, MA 02104, on any business day a
written request for redemption in good order, plus any share certificates with
executed stock powers. The redemption price will be based on the net asset value
per Fund share next computed after such delivery. Good order means that all
relevant documents must be endorsed by the record owner(s) exactly as the shares
are registered and the signature(s) must be guaranteed by a member of either the
Securities Transfer Association's STAMP program or the New York Stock Exchange's
Medallion Signature Program, or certain banks, savings and loan institutions,
credit unions, securities dealers, securities exchanges, clearing agencies and
registered securities associations as required by a regulation of the Securities
and Exchange Commission and acceptable to First Data Investor Services Group. In
addition, in some cases, good order may require the furnishing of additional
documents such as where shares are registered in the name of a corporation,
partnership or fiduciary.
Within seven days after receipt of a redemption request in good order by First
Data Investor Services Group, the Fund will make payment for the net asset value
of the shares as of the date determined above, reduced by the amount of any
applicable contingent deferred sales charges (described below) and any federal
income tax required to be withheld.
MEETING REDEMPTIONS BY DISTRIBUTING PORTFOLIO SECURITIES. The Portfolio and the
Fund currently will meet redemptions in cash, but in the future may adopt a
policy of meeting redemption requests in whole or in part by distributing
appreciated securities held in the Portfolio chosen by the Investment Adviser to
reduce the realization of capital gains. At the request of a redeeming investor
who is to receive securities, the Portfolio might, at the discretion of the
Investment Adviser, provide the redeeming investor with a diversified selection
of securities. The Fund would only distribute readily marketable securities
valued pursuant to the Portfolio's valuation procedures. Even if an in-kind
redemption policy were adopted, many redemptions would still be paid in cash.
Sufficient quantities of appreciated securities may not be available for
distribution. Moreover, during periods of volatile market conditions, the Fund
could be expected to meet redemptions primarily through distributions of cash.
If a redeeming shareholder received securities, a procedure would be implemented
whereby the shareholder could elect to sell them through Eaton Vance to a
broker-dealer at no cost and at a price equal to the price used in determining
the redemption value of the distributed securities. This election would need to
be made in a letter of instruction which would be provided to shareholders
before the policy was implemented. Shareholders not making an affirmative
election to sell distributed securities to the designated broker-dealer, would
be required to take delivery of any securities distributed upon a redemption of
shares. Such shareholders could incur brokerage charges and other costs and may
be exposed to market risk in selling the distributed securiies.
ADDITIONAL REDEMPTION INFORMATION. To sell Fund shares at their net asset value
through an Authorized Firm (a repurchase), a shareholder can place a repurchase
order with the Authorized Firm, which may charge a fee. The value of such shares
is based upon the net asset value next computed after EVD, as the Fund's agent,
receives the order. It is the Authorized Firm's responsibility to transmit
promptly repurchase orders to EVD. Throughout this Prospectus, the word
"redemption" is generally meant to include a repurchase.
If shares were recently purchased, the proceeds of a redemption (or repurchase)
will not be sent until the check (including a certified or cashier's check)
received for the shares purchased has cleared. Payment for shares tendered for
redemption may be delayed up to 15 days from the purchase date when the purchase
check has not yet cleared. Redemptions or repurchases may result in a taxable
gain or loss.
Due to the high cost of maintaining small accounts, the Fund reserves the right
to redeem accounts with balances of less than $4,000. Prior to such a
redemption, shareholders will be given 60 days' written notice to make an
additional purchase. However, no such redemption would be required by the Fund
if the cause of the low account balance was a reduction in the net asset value
of Fund shares. No contingent deferred sales charge will be imposed with respect
to such involuntary redemptions.
CONTINGENT DEFERRED SALES CHARGE. Shares redeemed within the first year of their
purchase (except shares acquired through the reinvestment of distributions)
generally will be subject to a contingent deferred sales charge equal to 1% of
the net asset value of the redeemed shares. This contingent deferred sales
charge is imposed on any redemption the amount of which exceeds the aggregate
value at the time of redemption of (a) all shares in the account purchased more
than one year prior to the redemption, (b) all shares in the account acquired
through reinvestment of distributions, and (c) the increase, if any, of value in
the other shares in the account (namely those purchased within the year
preceding the redemption) over the purchase price of such shares. Redemptions
are processed in a manner to maximize the amount of redemption proceeds which
will not be subject to a contingent deferred sales charge. That is, each
redemption will be assumed to have been made first from the exempt amounts
referred to in clauses (a), (b) and (c) above, and second through liquidation of
those shares in the account referred to in clause (c) on a first-in-first out
basis. As described under "Distribution Plan", the contingent deferred sales
charge will be paid to the Principal Underwriter or the Fund.
In calculating the contingent deferred sales charge upon the redemption of Fund
shares acquired in an exchange for shares of a fund currently listed under "The
Eaton Vance Exchange Privilege," the purchase of Fund shares acquired in the
exchange is deemed to have occurred at the time of the original purchase of the
exchanged shares.
No contingent deferred sales charge will be imposed on Fund shares which have
been sold to Eaton Vance or its affiliates, or to their respective employees or
clients. The contingent deferred sales charge will be waived for shares redeemed
(1) pursuant to a Withdrawal Plan (see "Eaton Vance Shareholder Services"), (2)
as part of a distribution from a retirement plan qualified under Section 401,
403(b) or 457 of the Internal Revenue Code of 1986, as amended (the "Code"), or
(3) as part of a minimum required distribution from other tax-sheltered
retirement plans.
REPORTS TO SHAREHOLDERS
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THE FUND WILL ISSUE TO ITS SHAREHOLDERS SEMI-ANNUAL AND ANNUAL REPORTS
CONTAINING FINANCIAL STATEMENTS. Financial statements included in annual reports
are audited by the Fund's independent certified public accountants. Shortly
after the end of each calendar year, the Fund will furnish all shareholders with
information necessary for preparing federal and state income tax returns.
THE LIFETIME INVESTING ACCOUNT/DISTRIBUTION OPTIONS
- ------------------------------------------------------------------------------
AFTER AN INVESTOR MAKES AN INITIAL PURCHASE OF FUND SHARES, THE FUND'S TRANSFER
AGENT, FIRST DATA INVESTOR SERVICES GROUP, WILL SET UP A LIFETIME INVESTING
ACCOUNT FOR THE INVESTOR ON THE FUND'S RECORDS. This account is a complete
record of all transactions between the investor and the Fund, which at all times
shows the balance of shares owned. The Fund will not issue share certificates
except upon request.
Each time a transaction takes place in a shareholder's account, the shareholder
will receive a statement showing complete details of the transaction and the
current balance in the account. (Under certain investment plans, statements may
be sent only quarterly.) THE LIFETIME INVESTING ACCOUNT PERMITS A SHAREHOLDER TO
MAKE ADDITIONAL INVESTMENTS IN SHARES BY SENDING A CHECK FOR $500 OR MORE to
First Data Investor Services Group.
Any questions concerning a shareholder's account or services available may be
directed by telephone to EATON VANCE SHAREHOLDER SERVICES at 800-225-6265,
extension 2, or in writing to First Data Investor Services Group, BOS725, P.O.
Box 1559, Boston, MA 02104 (please provide the name of the shareholder, the Fund
and the account number).
THE FOLLOWING DISTRIBUTION OPTIONS WILL BE AVAILABLE TO ALL LIFETIME INVESTING
ACCOUNTS and may be changed as often as desired by written notice to the Fund's
dividend disbursing agent, First Data Investor Services Group, BOS725, P.O. Box
1559, Boston, MA 02104. The currently effective option will appear on each
account statement.
SHARE OPTION -- Dividends and capital gains will be reinvested in additional
shares.
INCOME OPTION -- Dividends will be paid in cash, and capital gains will be
reinvested in additional shares.
CASH OPTION -- Dividends and capital gains will be paid in cash.
The SHARE OPTION will be assigned if no other option is specified.
Distributions, including those reinvested, will be reduced by any withholding
required under Federal income tax laws.
If the INCOME OPTION or CASH OPTION has been selected, dividend and/or capital
gains distribution checks which are returned by the United States Postal Service
as not deliverable or which remain uncashed for six months or more will be
reinvested in the account in shares at the then current net asset value.
Furthermore, the distribution option on the account will be automatically
changed to the SHARE OPTION until such time as the shareholder selects a
different option.
DISTRIBUTION INVESTMENT OPTION. In addition to the distribution options set
forth above, dividends and/or capital gains, if any, may be invested in
additional shares of another Eaton Vance fund. Before selecting this option, a
shareholder should obtain a prospectus of the other Eaton Vance fund and
consider its objectives and policies carefully.
"STREET NAME" ACCOUNTS. If shares of the Fund are held in a "street name"
account with an Authorized Firm, all recordkeeping, transaction processing and
payments of distributions relating to the beneficial owner's account will be
performed by the Authorized Firm, and not by the Fund and its Transfer Agent.
Since the Fund will have no record of the beneficial owner's transactions, a
beneficial owner should contact the Authorized Firm to purchase, redeem or
exchange shares, to make changes in or give instructions concerning the account,
or to obtain information about the account. The transfer of shares in a "street
name" account to an account with another dealer or to an account directly with
the Fund involves special procedures and will require the beneficial owner to
obtain historical purchase information about the shares in the account from the
Authorized Firm. Before establishing a "street name" account with an investment
firm, or transferring the account to another investment firm, an investor
wishing to reinvest distributions should determine whether the firm which will
hold the shares allows reinvestment of distributions in "street name" accounts.
THE EATON VANCE EXCHANGE PRIVILEGE
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Shares of the Fund currently may be exchanged for shares of one or more other
funds in the Eaton Vance Classic Group of Funds or Eaton Vance Money Market
Fund, which are distributed subject to a contingent deferred sales charge (or
equivalent early withdrawal charge), on the basis of the net asset value per
share of each fund at the time of the exchange, provided that such exchange
offers are available only in states where shares of the fund being acquired may
be legally sold.
Each exchange must involve shares which have a net asset value of at least
$1,000. The exchange privilege may be changed or discontinued without penalty.
Shareholders will be given sixty (60) days' notice prior to any termination or
material amendment of the exchange privilege. The Fund does not permit the
exchange privilege to be used for "Market Timing" and may terminate the exchange
privilege for any shareholder account engaged in Market Timing activity. Any
shareholder account for which more than two round-trip exchanges are made within
any twelve month period will be deemed to be engaged in Market Timing.
Furthermore, a group of unrelated accounts for which exchanges are entered
contemporaneously by a financial intermediary will be considered to be engaged
in Market Timing.
First Data Investor Services Group makes exchanges at the next determined net
asset value after receiving an exchange request in good order (see "How to
Redeem Fund Shares"). Consult First Data Investor Services Group for additional
information concerning the exchange privilege. Applications and prospectuses of
other funds are available from Authorized Firms or the Principal Underwriter.
The prospectus for each fund describes its investment objectives and policies,
and shareholders should obtain a prospectus and consider these objectives and
policies carefully before requesting an exchange.
No contingent deferred sales charge is imposed on exchanges. For purposes of
calculating the contingent deferred sales charge upon the redemption of shares
acquired in an exchange, the purchase of shares acquired in one or more
exchanges is deemed to have occurred at the time of the original purchase of the
exchanged shares.
Shares of the other funds in the Eaton Vance Classic Group of Funds (and shares
of Eaton Vance Money Market Fund acquired as the result of an exchange from an
EV Classic fund) may be exchanged for Fund shares on the basis of the net asset
value per share of each fund at the time of the exchange, but subject to any
restrictions or qualifications set forth in the current prospectus of any such
fund.
Telephone exchanges are accepted by First Data Investor Services Group provided
that the investor has not disclaimed in writing the use of the privilege. To
effect such exchanges, call First Data Investor Services Group at 800-262-1122
or, within Massachusetts, 617-573-9403, Monday through Friday, 9:00 a.m. to 4:00
p.m. (Eastern Standard Time). Shares acquired by telephone exchange must be
registered in the same name(s) and with the same address as the shares being
exchanged. Neither the Fund, the Principal Underwriter nor First Data Investor
Services Group will be responsible for the authenticity of exchange instructions
received by telephone, provided that reasonable procedures to confirm that
instructions communicated are genuine have been followed, and if such procedures
are not followed, the Fund, the Principal Underwriter or First Data Investor
Services Group may be liable for any losses due to unauthorized or fraudulent
telephone instructions. Telephone instructions will be tape recorded. In times
of drastic economic or market changes, a telephone exchange may be difficult to
implement. An exchange may result in a taxable gain or loss.
EATON VANCE SHAREHOLDER SERVICES
- ------------------------------------------------------------------------------
THE FUND OFFERS THE FOLLOWING SERVICES, WHICH ARE VOLUNTARY, INVOLVE NO EXTRA
CHARGE, AND MAY BE CHANGED OR DISCONTINUED WITHOUT PENALTY AT ANY TIME. Full
information on each of the services described below and an application, where
required, are available from Authorized Firms or the Principal Underwriter. The
cost of administering such services for the benefit of shareholders who
participate in them is borne by the Fund as an expense to all shareholders.
INVEST-BY-MAIL -- FOR PERIODIC SHARE ACCUMULATION: Once the $5,000 minimum
investment has been made, checks of $500 or more payable to the order of EV
Classic Tax-Managed Growth Fund may be mailed directly to First Data Investor
Services Group BOS725, P.O. Box 1559, Boston, MA 02104 at any time -- whether or
not distributions are reinvested. The name of the shareholder, the Fund and the
account number should accompany each investment.
BANK AUTOMATED INVESTING -- FOR REGULAR SHARE ACCUMULATION: Cash investments of
$500 or more may be made automatically each month or quarter from the
shareholder's bank account. The $5,000 minimum initial investment and small
account redemption policy are waived for these accounts.
SYSTEMATIC WITHDRAWAL PLAN: The Fund will make available to shareholders making
a deposit of at least $20,000 a systematic withdrawal plan through which they
can make regular quarterly redemptions to yield them either a specified dollar
amount of at least $800 per year or a specified percentage of net asset value of
at least 4% but not more than 12% annually. Such amount will not be subject to a
contingent deferred sales charge. See "How to Redeem Fund Shares." These
redemptive distributions will be paid in cash. Such distributions would be paid
at the option of each shareholder and would reduce the number of Fund shares
held by any shareholder electing to receive them. Distributions would consist of
an untaxed return of capital component and a taxable capital gain or capital
loss. The all-in tax rate on the amount of cash received in such redemptions
(equal to the capital gains rate multiplied by the percentage of the
distribution that is gain rather than return of capital) would be substantially
below the rate payable by mutual fund investors on dividend distributions (equal
to the ordinary income tax rate).
REINVESTMENT PRIVILEGE: A SHAREHOLDER WHO HAS REPURCHASED OR REDEEMED SHARES MAY
REINVEST, WITH CREDIT FOR ANY CONTINGENT DEFERRED SALES CHARGES PAID ON THE
REPURCHASED OR REDEEMED SHARES, ANY PORTION OR ALL OF THE REPURCHASE OR
REDEMPTION PROCEEDS (PLUS THAT AMOUNT NECESSARY TO ACQUIRE A FRACTIONAL SHARE TO
ROUND OFF THE PURCHASE TO THE NEAREST FULL SHARE) IN SHARES OF THE FUND,
provided that the reinvestment is effected within 60 days after such repurchase
or redemption, and the privilege has not been used more than once in the prior
12 months. Shares are sold to a reinvesting shareholder at the net asset value
next determined following timely receipt of a written purchase order by the
Principal Underwriter or by the Fund (or by the Fund's Transfer Agent). To the
extent that any shares of the Fund are sold at a loss and the proceeds are
reinvested in shares of the Fund (or other shares of the Fund are acquired
within the period beginning 30 days before and ending 30 days after the date of
the redemption), some or all of the loss generally will not be allowed as a tax
deduction. Shareholders should consult their tax advisers concerning the tax
consequences of reinvestments.
DISTRIBUTIONS AND TAXES
- ------------------------------------------------------------------------------
The Portfolio will be managed toward an objective of achieving long-term,
after-tax returns in part by minimizing shareholders taxes. Because
distributions of net investment income and realized capital gains give rise to
shareholder taxes, the Portfolio will generally seek to select and manage its
investments so as to minimize net investment income and net realized gains and
associated distributions. The Fund can be expected to generally distribute a
lesser percentage of returns each year than other equity mutual funds. There can
be no assurance, however, that the Portfolio can be managed to avoid taxable
distributions. The Portfolio's ability to utilize various tax management
techniques may be curtailed or eliminated by future tax and other legislation,
regulations, administrative interpretations, or court decisions. As of the date
of this Prospectus, the Clinton administration had proposed legislation that
would have the effect of substantially eliminating the tax advantages of short
sales against-the-box, equity swaps, and certain options transactions. If the
legislation were to be enacted in the form proposed, use of these techniques by
the Portfolio would effectively be precluded.
DISTRIBUTIONS. To the extent that the Fund has net investment income and net
realized capital gains in any year, the Fund's present policy is to make (A) at
least one distribution annually (normally in December) of all or substantially
all of the investment income (if any) allocated to the Fund by the Portfolio,
less the Fund's direct and allocated expenses and (B) at least one distribution
annually of all or substantially all of the net realized capital gains (if any)
allocated to the Fund by the Portfolio (reduced by any available capital loss
carryforwards from prior years).
Shareholders may reinvest all distributions in shares of the Fund without a
sales charge at the net asset value per share as of the close of business on the
record date.
The Fund's net investment income consists of the Fund's allocated share of the
net investment income of the Portfolio, less all actual and accrued expenses of
the Fund determined in accordance with generally accepted accounting principles.
The Portfolio's net investment income consists of all income accrued on the
Portfolio's assets, less all actual and accrued expenses of the Portfolio
determined in accordance with generally accepted accounting principles. The
Fund's net realized capital gains, if any, consist of the net realized capital
gains (if any) allocated to the Fund by the Portfolio for tax purposes, after
taking into account any available capital loss carryovers.
TAXES. Distributions by the Fund which are derived from the Fund's allocated
share of the Portfolio's net investment income, net short-term capital gains and
certain foreign exchange gains are taxable to shareholders as ordinary income,
whether received in cash or reinvested in additional shares of the Fund. The
Fund's distributions will generally not qualify for the dividends-received
deduction for corporate shareholders.
Capital gains referred to in clause (B) above, if any, realized by the Portfolio
and allocated to the Fund for the Fund's fiscal year, which ends on October 31,
will usually be distributed by the Fund prior to the end of December.
Distributions by the Fund of long-term capital gains allocated to the Fund by
the Portfolio are taxable to shareholders as long-term capital gains, whether
paid in cash or reinvested in additional shares of the Fund and regardless of
the length of time Fund shares have been owned by the shareholder.
The Fund will provide its shareholders annually with tax information notices and
Forms 1099 to assist in the preparation of their federal and state tax returns
for the prior calendar year's distributions, proceeds from the redemption or
exchange of Fund shares, and federal income tax (if any) withheld by the Fund's
Transfer Agent.
If shares are purchased shortly before the record date of a distribution, the
shareholder will pay the full price for the shares and then receive some portion
of the price back as a taxable distribution. The amount, timing and character of
the Fund's distributions to shareholders may be affected by special tax rules
governing the Portfolio's activities in options, futures and forward foreign
currency exchange transactions or certain other investments.
Certain distributions, if declared by the Fund in October, November or December
and paid the following January, will be taxable to shareholders as if received
on December 31 of the year in which they are declared.
The Fund intends to qualify as a regulated investment company under the Code and
to satisfy all requirements necessary to be relieved of federal taxes on income
and gains it distributes to shareholders. In satisfying these requirements, the
Fund will treat itself as owning its proportionate share of each of the
Portfolio's assets and as entitled to the income of the Portfolio properly
attributable to such share.
As a regulated investment company under the Code, the Fund does not pay federal
income or excise taxes to the extent that it distributes to shareholders its net
investment income and net realized capital gains in accordance with the timing
requirements imposed by the Code. As a partnership under the Code, the Portfolio
does not pay federal income or excise taxes.
PERFORMANCE INFORMATION
- ------------------------------------------------------------------------------
FROM TIME TO TIME, THE FUND MAY ADVERTISE ITS AVERAGE ANNUAL TOTAL RETURN. The
Fund's average annual total return is determined by multiplying a hypothetical
initial purchase order of $1,000 invested at the maximum public offering price
(net asset value) by the average annual compounded rate of return (including
capital appreciation/depreciation, and distributions paid and reinvested) for
the stated period and annualizing the result. The average annual total return
calculation assumes a complete redemption of the investment and the deduction of
any contingent deferred sales charge at the end of the period. The Fund may also
publish annual and cumulative total return figures from time to time. The Fund
may use such total return figures, together with comparisons with the Consumer
Price Index, various domestic and foreign securities indices and performance
studies prepared by independent organizations, in advertisements and in
information furnished to present or prospective shareholders. The Fund may use
total return figures showing after-tax returns, including comparisons to
tax-deferred vehicles. The Fund may also quote total return for the period prior
to commencement of operations which would reflect the Portfolio's total return
(or that of its predecessor) adjusted to reflect any applicable Fund sales
charge.
The Fund may also publish total return figures which do not take into account
any contingent deferred sales charge which may be imposed upon redemptions at
the end of the specified period. Any performance figure which does not take into
account the contingent deferred sales charge would be reduced to the extent such
charge is imposed upon a redemption.
Investors should note that the investment results of the Fund will fluctuate
over time, and any presentation of the Fund's total return for any prior period
should not be considered a representation of what an investment may earn or what
the Fund's total return may be in any future period. The Fund's investment
results are based on many factors, including market conditions, the composition
of the security holdings of the Portfolio and the operating expenses of the Fund
and the Portfolio. Investment results also often reflect the risks associated
with the particular investment objective and policies of the Fund and the
Portfolio. Among others, these factors should be considered when comparing the
Fund's investment results to those of other mutual funds and other investment
vehicles. If the expenses related to the operation of the Fund or the Portfolio
are allocated to Eaton Vance, the Fund's performance will be higher.
<PAGE>
[logo]
EV CLASSIC
TAX-MANAGED GROWTH FUND
PROSPECTUS
JULY 22, 1996
EV CLASSIC
TAX-MANAGED GROWTH FUND
24 FEDERAL STREET
BOSTON, MA 02110
INVESTMENT ADVISER OF TAX-MANAGED GROWTH PORTFOLIO
Boston Management and Research, 24 Federal Street, Boston, MA 02110
ADMINISTRATOR OF EV CLASSIC TAX-MANAGED GROWTH FUND
Eaton Vance Management, 24 Federal Street, Boston, MA 02110
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc., 24 Federal Street, Boston, MA 02110
(800) 225-6265
CUSTODIAN
Investors Bank & Trust Company, 89 South Street, Boston, MA 02111
TRANSFER AGENT
First Data Investor Services Group, BOS725, P.O. Box 1559, Boston, MA 02104
(800) 262-1122
AUDITORS
Deloitte & Touche LLP, 125 Summer Street, Boston, MA 02110
C-TGP
<PAGE>
STATEMENT OF
ADDITIONAL INFORMATION
July 22, 1996
EV CLASSIC TAX-MANAGED GROWTH FUND
24 Federal Street
Boston, Massachusetts 02110
(800) 225-6265
This Statement of Additional Information consists of two parts. Part I
provides information about EV Classic Tax-Managed Growth Fund (the "Fund"),
Tax-Managed Growth Portfolio (the "Portfolio") and certain other series of
Eaton Vance Mutual Funds Trust (the "Trust"). The Fund's Part II (the "Part
II") provides information solely about the Fund. Where appropriate, Part I
includes cross-references to the relevant sections of Part II that provide
additional, Fund-specific information. This Statement of Additional
Information is sometimes referred herein to as the "SAI".
TABLE OF CONTENTS
Page
PART I
Additional Information about Investment Policies .......................... 2
Investment Restrictions ................................................... 4
Trustees and Officers ..................................................... 6
Investment Adviser and Administrator ...................................... 8
Custodian ................................................................. 10
Service for Withdrawal .................................................... 10
Determination of Net Asset Value .......................................... 11
Investment Performance .................................................... 11
Taxes ..................................................................... 14
Portfolio Security Transactions ........................................... 15
Other Information ......................................................... 17
Independent Certified Public Accountants .................................. 18
PART II
Fees and Expenses ......................................................... a-1
Distribution Plan ......................................................... a-1
Performance Information ................................................... a-3
Control Persons and Principal Holders of Securities ....................... a-4
Financial Statements ...................................................... a-5
Independent Auditors' Report .............................................. a-6
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR
ACCOMPANIED BY THE FUND'S PROSPECTUS DATED JULY 22, 1996, AS SUPPLEMENTED FROM
TIME TO TIME, WHICH IS INCORPORATED HEREIN BY REFERENCE. THIS STATEMENT OF
ADDITIONAL INFORMATION SHOULD BE READ IN CONJUNCTION WITH SUCH PROSPECTUS, A
COPY OF WHICH MAY BE OBTAINED WITHOUT CHARGE BY CONTACTING EATON VANCE
DISTRIBUTORS, INC. (THE "PRINCIPAL UNDERWRITER") (SEE BACK COVER FOR ADDRESS
AND PHONE NUMBER).
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
PART I
This Part I provides information about the Fund, certain other series of
the Trust and the Portfolio. Capitalized terms used in this SAI and not
otherwise defined have the meanings given to them in the Fund's Prospectus.
The Fund is subject to the same investment policies as those of the Portfolio.
The Fund currently seeks to achieve its objective by investing in the
Portfolio.
ADDITIONAL INFORMATION ABOUT INVESTMENT POLICIES
Foreign Securities. Investing in securities issued by companies whose
principal business activities are outside the United States may involve
significant risks not present in domestic investments. For example, there is
generally less publicly available information about foreign companies,
particularly those not subject to the disclosure and reporting requirements of
the U.S. securities laws. Foreign issuers are generally not bound by uniform
accounting, auditing, and financial reporting requirements and standards of
practice comparable to those applicable to domestic issuers. Investments in
foreign securities also involve the risk of possible adverse changes in
investment or exchange control regulations, expropriation or confiscatory
taxation, limitation on the removal of funds or other assets of the Portfolio,
political or financial instability or diplomatic and other developments which
could affect such investments. Further, economies of particular countries or
areas of the world may differ favorably or unfavorably from the economy of the
United States. It is anticipated that in most cases the best available market
for foreign securities will be on exchanges or in over-the-counter markets
located outside of the United States. Foreign stock markets, while growing in
volume and sophistication, are generally not as developed as those in the
United States, and securities of some foreign issuers (particularly those
located in developing countries) may be less liquid and more volatile than
securities of comparable U.S. companies. In addition, foreign brokerage
commissions are generally higher than commissions on securities traded in the
United States and may be non-negotiable. In general, there is less overall
governmental supervision and regulation of foreign securities markets, broker-
dealers, and issuers than in the United States.
Foreign Currency Transactions. The value of 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.
Risks Associated With Derivative Instruments. Entering into a derivative
instrument involves a risk that the applicable market will move against the
Portfolio's position and that the Portfolio will incur a loss. For derivative
instruments other than purchased options, this loss may exceed the amount of
the initial investment made or the premium received by the Portfolio.
Derivative instruments may sometimes increase or leverage the Portfolio's
exposure to a particular market risk. Leverage enhances the Portfolio's
exposure to the price volatility of derivative instruments it holds. The
Portfolio's success in using derivative instruments to hedge portfolio assets
depends on the degree of price correlation between the derivative instruments
and the hedged asset. Imperfect correlation may be caused by several factors,
including temporary price disparities among the trading markets for the
derivative instrument, the assets underlying the derivative instrument and the
Portfolio assets. Over-the-counter ("OTC") derivative instruments involve an
enhanced risk that the issuer or counterparty will fail to perform its
contractual obligations. Some derivative instruments are not readily
marketable or may become illiquid under adverse market conditions. In
addition, during periods of market volatility, a commodity exchange may
suspend or limit trading in an exchange-traded derivative instrument, which
may make the contract temporarily illiquid and difficult to price. Commodity
exchanges may also establish daily limits on the amount that the price of a
futures contract or futures option can vary from the previous day's settlement
price. Once the daily limit is reached, no trades may be made that day at a
price beyond the limit. This may prevent the Portfolio from closing out
positions and limiting its losses. The staff of the Securities and Exchange
Commission (the "Commission") takes the position that purchased OTC options,
and assets used as cover for written OTC options, are subject to the
Portfolio's 15% limit on illiquid investments. However, with respect to
options written with primary dealers in U.S. Government securities pursuant to
an agreement requiring a closing purchase transaction at a formula price, the
amount of illiquid securities may be calculated with reference to the formula
price. The Portfolio's ability to terminate OTC derivative instruments may
depend on the cooperation of the counterparties to such contracts. For thinly
traded derivative instruments, the only source of price quotations may be the
selling dealer or counterparty. In addition, certain provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), limit the extent to
which the Portfolio may purchase and sell derivative instruments. The
Portfolio will engage in transactions in futures contracts and related options
only to the extent such transactions are consistent with the requirements of
the Code for maintaining the qualification of the Fund as a regulated
investment company for federal income tax purposes. See "Taxes".
Asset Coverage for Derivative Instruments. Transactions using forward
contracts, futures contracts and options (other than options that the
Portfolio has purchased) expose the Portfolio to an obligation to another
party. The Portfolio will not enter into any such transactions unless it owns
either (1) an offsetting ("covered") position in securities, currencies, or
other options or futures contracts or forward contracts, or (2) cash,
receivables, and short-term debt securities with a value sufficient at all
times to cover its potential obligations not covered as provided in (1) above.
The Portfolio will comply with Commission guidelines regarding cover for these
instruments and, if the guidelines so require, set aside cash, U.S. Government
securities or other liquid, high-grade debt securities in a segregated account
with its custodian in the prescribed amount.
Assets used as cover or held in a segregated account cannot be sold while
the position in the corresponding forward contract, futures contract or option
is open, unless they are replaced with other appropriate assets. As a result,
the commitment of a large portion of the Portfolio's assets to cover or
segregated accounts could impede portfolio management or the Portfolio's
ability to meet redemption requests or other current obligations.
Limitations on Futures Contracts and Options. 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.
All call options on securities written by the Portfolio will be covered.
This means that, the Portfolio will own the securities subject to the call
option or an offsetting call option so long as the call option is outstanding.
Repurchase Agreements. Under a repurchase agreement the Portfolio buys a
security at one price and simultaneously promises to sell that same security
back to the seller at a higher price. At no time will the Portfolio commit
more than 15% of its net assets to repurchase agreements which mature in more
than seven days and other illiquid securities. The Portfolio's repurchase
agreements will provide that the value of the collateral underlying the
repurchase agreement will always be at least equal to the repurchase price,
including any accrued interest earned on the repurchase agreement, and will be
marked to market daily.
Reverse Repurchase Agreements. The Portfolio may enter into reverse
repurchase agreements. Under a reverse repurchase agreement, the Portfolio
temporarily transfers possession of a portfolio instrument to another party,
such as a bank or broker-dealer, in return for cash. At the same time, the
Portfolio agrees to repurchase the instrument at an agreed upon time (normally
within seven days) and price, which reflects an interest payment. The
Portfolio expects that it will enter into reverse repurchase agreements when
it is able to invest the cash so acquired at a rate higher than the cost of
the agreement, which would increase the income earned by the Portfolio. The
Portfolio could also enter into reverse repurchase agreements as a means of
raising cash to satisfy redemption requests without the necessity of selling
portfolio assets.
When the Portfolio enters into a reverse repurchase agreement, any
fluctuations in the market value of either the securities transferred to
another party or the securities in which the proceeds may be invested would
affect the market value of the Portfolio's assets. As a result, such
transactions may increase fluctuations in the market value of the Portfolio's
assets. While there is a risk that large fluctuations in the market value of
the Portfolio's assets could affect the Portfolio's net asset value, this risk
is not significantly increased by entering into reverse repurchase agreements,
in the opinion of the Investment Adviser. Because reverse repurchase
agreements may be considered to be the practical equivalent of borrowing
funds, they constitute a form of leverage. If the Portfolio reinvests the
proceeds of a reverse repurchase agreement at a rate lower than the cost of
the agreement, entering into the agreement will lower the Portfolio's yield.
At all times that a reverse repurchase agreement is outstanding, the
Portfolio will maintain cash or high grade liquid securities in a segregated
account at its custodian bank with a value at least equal to its obligation
under the agreement. Securities and other assets held in the segregated
account may not be sold while the reverse repurchase agreement is outstanding,
unless other suitable assets are substituted. Although the Investment Adviser
does not consider reverse repurchase agreements to involve a traditional
borrowing of money, reverse repurchase agreements will be included within the
aggregate limitation on "borrowings" contained in the Portfolio's investment
restriction (1) set forth below.
Portfolio Turnover. The Portfolio cannot accurately predict its portfolio
turnover rate, but it is anticipated that the annual turnover rate will
generally be lower than that of most other equity mutual funds and will
generally not exceed 100% (excluding turnover of securities having a maturity
of one year or less). A 100% annual turnover rate would occur, for example, if
all the securities in the portfolio were replaced once in a period of one
year. A high turnover rate (100% or more) necessarily involves greater
expenses to the Portfolio.
Lending Portfolio Securities. If the Investment Adviser decides to make
securities loans, the Portfolio may seek to increase its income by lending
portfolio securities to broker-dealers or other institutional borrowers. Under
present regulatory policies of the Commission, such loans are required to be
secured continuously by collateral in cash, cash equivalents or U.S.
Government securities held by the Portfolio's custodian and maintained on a
current basis at an amount at least equal to market value of the securities
loaned, which will be marked to market daily. Cash equivalents include
certificates of deposit, commercial paper and other short-term money market
instruments. The financial condition of the borrower will be monitored by the
Investment Adviser on an ongoing basis. The Portfolio would continue to
receive the equivalent of the interest or dividends paid by the issuer on the
securities loaned and would also receive a fee, or all or a portion of the
interest on investment of the collateral. The Portfolio would have the right
to call a loan and obtain the securities loaned at any time on up to five
business days' notice. The Portfolio would not have the right to vote any
securities having voting rights during the existence of a loan, but could call
the loan in anticipation of an important vote to be taken among holder of the
securities or the giving or holding of their consent on a material matter
affecting the investment. If the Investment Adviser decides 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
administration expenses, including finders' fees.
INVESTMENT RESTRICTIONS
The Fund and the Portfolio have each adopted the following investment
restrictions which may not be changed without the approval by the holders of a
majority of the outstanding voting securities of the Fund or the Portfolio, as
the case may be, which as used in this SAI means the lesser of (a) 67% or more
of the outstanding voting securities of the Fund or the Portfolio, as the case
may be, present or represented by proxy at a meeting if the holders of more
than 50% of the outstanding voting securities of the Fund or the Portfolio are
present or represented at the meeting or (b) more than 50% of the outstanding
voting securities of the Fund or the Portfolio. Neither the Fund nor the
Portfolio may:
(1) Borrow money or issue senior securities except as permitted by the
Investment Company Act of 1940;
(2) Purchase any securities or evidences of interest therein on
"margin," that is to say in a transaction in which it has borrowed all or
a portion of the purchase price and pledged the purchased securities or
evidences of interest therein as collateral for the amount so borrowed;
(3) Engage in the underwriting of securities; or
(4) Buy or sell real estate (although it may purchase and sell
securities which are secured by real estate and securities of companies
which invest or deal in real estate), commodities or commodity contracts
for the purchase or sale of physical commodities;
(5) Make loans to other persons, except by (a) the acquisition of debt
securities and making portfolio investments, (b) entering into repurchase
agreements and (c) lending portfolio securities;
(6) With respect to 75% of its total assets, invest more than 5% of
its total assets (taken at current value) in the securities of any one
issuer, or invest in more than 10% of the outstanding voting securities of
any one issuer, except obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities and except securities of
other investment companies; or
(7) Concentrate its investments in any particular industry, but, if
deemed appropriate for the Fund's objective, up to 25% of the value of its
assets may be invested in any one industry.
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 other asset. Accordingly, any later increase
or decrease resulting from a change in values, assets or other circumstances,
will not compel the Fund or the Portfolio, as the case may be, to dispose of
such security or other asset.
Notwithstanding the investment policies and restrictions of the Fund, the
Fund may invest its assets in an open-end management investment company with
substantially the same investment objective, policies and restrictions as the
Fund. Notwithstanding the investment policies and restrictions of the
Portfolio, the Portfolio may invest part of its assets in another investment
company consistent with the Investment Company Act of 1940 (the "1940 Act").
The Fund and the Portfolio have each adopted the following investment
policies which may be changed without shareholder or investor approval.
Neither the Fund nor the Portfolio may invest more than 15% of its net assets
in investments which are not readily marketable, including restricted
securities and repurchase agreements with a maturity longer than seven days.
Restricted securities for the purposes of this limitation do not include
securities eligible for resale pursuant to Rule 144A under the Securities Act
of 1933 and commercial paper issued pursuant to Section 4(2) of said Act that
the Board of Trustees of the Trust or the Portfolio, or their delegate,
determines to be liquid. Neither the Fund nor the Portfolio will purchase
securities of any issuer which has a record of less than three (3) years'
continuous operation including, however, in such three (3) years the operation
of any predecessor company or companies, partnership or individual enterprise
if the issuer whose securities are proposed as an investment for funds of the
Trust has come into existence as a result of a merger, consolidation,
reorganization, or the purchase of substantially all the assets of such
predecessor company or companies, partnership or individual enterprise,
provided that nothing in this provision shall prevent (a) the purchase of
securities of a company substantially all of whose assets are (i) securities
of one or more companies which have had a record of three (3) years'
continuous operation, or (ii) assets of an independent division of another
company, which division has had a record of three (3) years' continuous
operation; (b) the purchase of securities of (i) a public utility subject to
supervision or regulation as to its rates or charges by a commission or board
or officer of the United States or of any state or territory thereof, or of
the government of Canada or of any province or territory of Canada or (ii)
companies operating or formed for the purpose of operating pipe or
transmission lines for the transmission of oil, gas or electric energy or like
products; provided that no security shall be purchased pursuant to exception
(a) or (b) of this provision if such purchase at the time thereof will cause
more than five per cent (5%) of the total assets of the Fund (taken at market
value) to be invested in securities of companies which would not then be
eligible for purchase but for those exceptions. Neither the Fund nor the
Portfolio will sell or contract to sell any security which it does not own
unless by virtue of its ownership of other securities it has at the time of
sale a right to obtain securities equivalent in kind and amount to the
securities sold and provided that if such right is conditional the sale is
made upon the same conditions. Neither the Fund nor the Portfolio will invest
for the purpose of exercising control or management of other companies.
Neither the Fund nor the Portfolio will purchase oil, gas or other mineral
leases or purchase partnership interests in oil, gas or other mineral
exploration or development programs. Neither the Fund nor the Portfolio will
purchase or retain in its portfolio any securities issued by an issuer any of
whose officers, directors, trustees or security holders is an officer or
Trustee of the Trust or is a member, officer, director or trustee of the
Investment Adviser of the Trust or the Portfolio, if after the purchase of the
securities of such issuer by the Fund or the Portfolio one or more of such
persons owns beneficially more than 1/2 of 1% of the shares or securities or
both (all taken at market value) of such issuer and such persons owning more
than 1/2 of 1% of such shares or securities together own beneficially more
than 5% of such shares or securities or both (all taken at market value).
Neither the Fund nor the Portfolio will purchase an option on any security
if, after such transaction, more than 5% of its net assets, as measured by the
aggregate of all premiums paid for all such options held by the Portfolio,
would be so invested.
In order to permit the sale of shares of the Fund in certain states, the
Fund and the Portfolio may make commitments more restrictive than the
fundamental policies described above. Should the Fund determine that any such
commitment is no longer in the best interests of the Fund and its
shareholders, it will revoke the commitment by terminating sales of its shares
in the state(s) involved.
Although permissible under the Fund's investment restrictions, the Fund
has no present intention during the coming fiscal year to: borrow money;
pledge its assets; or make loans to other persons.
TRUSTEES AND OFFICERS
The Trustees and officers of the Trust and the Portfolio are listed below.
Except as indicated, each individual has held the office shown or other
offices in the same company for the last five years. Unless otherwise noted,
the business address of each Trustee and officer is 24 Federal Street, Boston,
Massachusetts 02110, which is also the address of the Portfolio's Investment
Adviser, Boston Management and Research ("BMR"), which is a wholly-owned
subsidiary of Eaton Vance Management ("Eaton Vance"); of Eaton Vance's parent,
Eaton Vance Corp. ("EVC"); and of Eaton Vance's and BMR's trustee, Eaton
Vance, Inc. ("EV"). Eaton Vance and EV are both wholly-owned subsidiaries of
EVC. Those Trustees and officers who are "interested persons" of the Trust,
Eaton Vance, BMR, EVC or EV as defined in the 1940 Act by virtue of their
affiliation with any one or more of the Trust, the Portfolio Eaton Vance, BMR,
EVC or EV, are indicated by an asterisk(*).
TRUSTEES OF THE TRUST AND THE PORTFOLIO
M. DOZIER GARDNER (62), President and Trustee of the Trust*
President and Chief Executive Officer of BMR, Eaton Vance, EVC and EV, and a
Director of EVC and EV. Director or Trustee and officer of various
investment companies managed by Eaton Vance or BMR.
LANDON T. CLAY (70), President and Trustee of the Portfolio*
Chairman of Eaton Vance, BMR, EVC and EV and a Director of EVC and EV.
Director or Trustee and officer of various investment companies managed by
Eaton Vance or BMR.
JAMES B. HAWKES (54), Vice President of the Portfolio and the Trust and
Trustee of the Trust*
Executive Vice President of Eaton Vance, BMR, EVC and EV, and a Director of
EVC and EV. Director or Trustee and officer of various investment companies
managed by Eaton Vance or BMR.
H. DAY BRIGHAM, JR. (69) Vice President of the Trust
Chairman of the Management Committee, Vice President of Eaton Vance, BMR, EVC
and EV and Director of EVC and EV, Director, Trustee and officer of various
investment companies managed by Eaton Vance or BMR.
DONALD R. DWIGHT (64), Trustee
President of Dwight Partners, Inc. (a corporate relations and communications
company) founded in 1988. Director or Trustee of various investment
companies managed by Eaton Vance or BMR.
Address: Clover Mill Lane, Lyme, New Hampshire 03768
SAMUEL L. HAYES, III (61), Trustee
Jacob H. Schiff Professor of Investment Banking, Harvard University Graduate
School of Business Administration. Director or Trustee of various investment
companies managed by Eaton Vance or BMR.
Address: Harvard University Graduate School of Business Administration,
Soldiers Field Road, Boston, Massachusetts 02163
NORTON H. REAMER (60), Trustee
President and Director, United Asset Management Corporation, a holding company
owning institutional investment management firms). Chairman, President and
Director, UAM Funds (mutual funds). Director or Trustee of various
investment companies managed by Eaton Vance or BMR.
Address: One International Place, Boston, Massachusetts 02110
JOHN L. THORNDIKE (69), Trustee
Director, Fiduciary Company Incorporated. Director or Trustee of various
investment companies managed by Eaton Vance or BMR.
Address: 175 Federal Street, Boston, Massachusetts 02110
JACK L. TREYNOR (66), Trustee
Investment Adviser and Consultant. Director or Trustee of various investment
companies managed by Eaton Vance or BMR.
Address: 504 Via Almar, Palos Verdes Estates, California 90274
OFFICERS OF THE TRUST AND THE PORTFOLIO
DUNCAN W. RICHARDSON (38), Vice President of the Portfolio
Vice President of Eaton Vance and EV since January 19, 1990 and of BMR since
August 11, 1992. Officer of various investment companies managed by Eaton
Vance or BMR. Mr. Richardson was elected Vice President of the Portfolio on
October 23, 1995.
WILLIAM H. AHERN, JR. (36), Vice President of the Trust
Assistant Vice President of BMR, Eaton Vance and EV and an employee of Eaton
Vance since July 17, 1989. Officer of various investment companies managed
by Eaton Vance or BMR. Mr. Ahern was elected Vice President of the Trust on
June 19, 1995.
MICHAEL B. TERRY (53), Vice President of the Trust
Vice President of BMR, Eaton Vance and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
JAMES L. O'CONNOR (50), Treasurer
Vice President of Eaton Vance, BMR and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
M. KATHERINE KREIDER (35), Assistant Treasurer
Assistant Vice President of Eaton Vance, BMR and EV since February 5, 1996.
Senior Audit Manager (1993-1996), Audit Manager (1991-1993) -- Financial
Services Industry Practice, Deloitte & Touche (1987-1996). Officer of
various investment companies managed by Eaton Vance or BMR. Ms. Kreider was
elected Assistant Treasurer of the Trust on February 21, 1996.
THOMAS OTIS (64), Secretary
Vice President and Secretary of Eaton Vance, BMR, EVC and EV. Officer of
various investment companies managed by Eaton Vance or BMR.
JANET E. SANDERS (60), Assistant Treasurer and Assistant Secretary
Vice President of Eaton Vance, BMR and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
A. JOHN MURPHY (33), Assistant Secretary
Assistant Vice President of BMR, Eaton Vance and EV since March 1, 1994;
employee of Eaton Vance since March 1993. State Regulations Supervisor, The
Boston Company (1991-1993) and Registration Specialist, Fidelity Management
& Research Co. (1986-1991). Officer of various investment companies managed
by Eaton Vance or BMR. Mr. Murphy was elected Assistant Secretary of the
Trust on March 27, 1995 and of the Portfolio on October 23, 1995.
JOHN P. RYNNE (53), Assistant Secretary of the Trust
Corporate Controller and Vice President of EVC. Vice President of Eaton Vance,
EVD and BMR, and Treasurer of Energex Energy Corporation. Mr. Rynne became
an officer of the Trust on June 19, 1995.
ERIC G. WOODBURY (38), Assistant Secretary
Vice President of BMR, Eaton Vance and EV since February 1993; formerly,
associate attorney at Dechert, Price & Rhoads and Gaston & Snow. Mr.
Woodbury was elected Assistant Secretary of the Trust on June 19, 1995 and
of the Portfolio on October 23, 1995.
Messrs. Thorndike (Chairman), Hayes and Reamer are members of the Special
Committee of the Board of Trustees of the Trust and of the Portfolio. The
purpose of the Special Committee is to consider, evaluate and make
recommendations to the full Board of Trustees concerning (i) all contractual
arrangements with service providers to the Fund, including administrative
services, 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 or its
shareholders.
The Nominating Committee is comprised of four Trustees who are not
"interested persons" as that term is defined under the Investment Company Act
of 1940 ("noninterested Trustees"). The Committee has four-year staggered
terms, with one member rotating off the Committee to be replaced by another
noninterested Trustee of the Trust. Messrs. Hayes (Chairman), Reamer,
Thorndike and Treynor are currently serving on the Committee. The purpose of
the Committee is to recommend to the Board nominees for the position of
noninterested Trustee and to assure that at least a majority of the Board of
Trustees is independent of Eaton Vance and its affiliates.
Messrs. Treynor (Chairman) and Dwight are members of the Audit Committee
of the Board of Trustees of the Trust and of the Portfolio. The Audit
Committee's functions include making recommendations to the Board of Trustees
regarding the selection of the independent certified public accountants, and
reviewing with such accountants and the Treasurer of the Trust and of the
Portfolio 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 and transfer
agent of the Fund and of the Portfolio.
Trustees of the Portfolio who 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
"Plan"). Under the 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 Plan will
be determined based upon the performance of such investments. Deferral of
Trustees' fees in accordance with the Plan will have a negligible effect on
the Portfolio's assets, liabilities, and net income per share, and will not
obligate the Portfolio to retain the services of any Trustee or obligate the
Portfolio to pay any particular level of compensation to the Trustee. Neither
the Portfolio nor the Fund has a retirement plan for its Trustees.
The fees and expenses of those Trustees of the Trust and the Portfolio who
are not members of the Eaton Vance organization (the noninterested Trustees)
are paid by the Fund (and the other series of the Trust) and the Portfolio,
respectively. For the compensation received by the noninterested Trustees of
the Trust and the Portfolio, see "Fees and Expenses" in Part II.
INVESTMENT ADVISER AND ADMINISTRATOR
The Portfolio engages BMR as investment adviser pursuant to an Investment
Advisory Agreement dated October 23, 1995. BMR or Eaton Vance acts as
investment adviser to investment companies and various individual and
institutional clients with combined assets under management of over $16
billion.
Eaton Vance, its affiliates and its predecessor companies have been
managing assets of individuals and institutions since 1924 and managing
investment companies since 1931. They maintain a large staff of experienced
fixed-income and equity investment professionals to service the needs of their
clients. The fixed-income division focuses on all kinds of taxable investment-
grade and high-yield securities, tax-exempt investment-grade and high-yield
securities, and U.S. Government securities. The equity division cover stocks
ranging from blue chip to emerging growth companies.
Eaton Vance and its affiliates act as adviser to over 150 mutual funds,
individual and various institutional accounts, including corporations,
hospitals, retirement plans, universities, foundations and trusts. Eaton Vance
mutual funds feature international equities, domestic equities, tax-free
municipal bonds, and U.S. government and corporate bonds. Lloyd George
Management has advised Eaton Vance's international equity funds since 1992.
Founded in 1991, Lloyd George is headquartered in Hong Kong with offices in
London and Mumbai, India. It has established itself as a leader in investment
management in Asian equities and other global markets. Lloyd George features
an experience team of investment professionals that began working together in
the mid-1980s. Lloyd George's staff includes 11 highly qualified investment
professionals who manage U.S. $1.3 billion. Lloyd George analysts cover East
Asia, the India subcontinent, Russia and Eastern Europe, Latin America,
Australia and New Zealand from offices in Hong Kong, London and Mumbai.
Together Eaton Vance and Lloyd George manage over $18 billion in assets. Eaton
Vance mutual funds are distributed by Eaton Vance Distributors both within the
United States and offshore.
Eaton Vance Distributors believes that an investment professional can
provide valuable services to you to help you reach your investment goals.
Meeting investment goals requires time, objectivity and investment savvy.
Before making an investment recommendation, a representative can help you
carefully consider your "short-term" and "long-term" financial goals, your
tolerance for investment risk, your investment time frame, and other
investments you may already own. Your professional investment representatives
are knowledgeable about financial markets, as well as the wide range of
investment opportunities available. A representative can provide you with
tailored financial advice and help you decide when to buy, sell or persevere
with your investments.
BMR manages the investments and affairs of the Portfolio subject to the
supervision of the Portfolio's Board of Trustees. BMR furnishes to the
Portfolio investment research, advice and supervision, furnishes an investment
program and determines what securities will be purchased, held or sold by the
Portfolio and what portion, if any, of the Portfolio's assets will be held
uninvested. The Investment Advisory Agreement requires BMR to pay the salaries
and fees of all officers and Trustees of the Portfolio who are members of the
BMR organization and all personnel of BMR performing services relating to
research and investment activities. The Portfolio is responsible for all
expenses not expressly stated to be payable by BMR under the Investment
Advisory Agreement, including, without implied limitation, (i) expenses of
maintaining the Portfolio and continuing its existence, (ii) registration of
the Portfolio under the 1940 Act, (iii) commission, fees and other expenses
connected with the acquisition, holding and disposition of securities and
other investments, (iv) auditing, accounting and legal expenses, (v) taxes and
interest, (vi) governmental fees, (vii) expenses of issue, sale and redemption
of interests in the Portfolio, (viii) expenses of registering and qualifying
the Portfolio and interest in the Portfolio under federal and state securities
laws and of preparing and printing registration statements or other offering
statements or memoranda for such purposes and for distributing the same to
investors, and fees and expenses of registering and maintaining registration
of the Portfolio and of the Portfolio's placement agent as broker-dealer or
agent under state securities laws, (ix) expenses of reports and notices to
investors and of meetings of investors and proxy solicitations therefor, (x)
expenses of reports to governmental officers and commissions, (xi) insurance
expenses, (xii) association membership dues, (xiii) fees, expenses and
disbursements of custodians and subcustodians for all services to the
Portfolio (including without limitation safekeeping of funds, securities and
other investments, keeping of books, accounts and records, and determination
of net asset values, book capital account balances and tax capital account
balances), (xiv) fees, expenses and disbursements of transfer agents, dividend
disbursing agents, investor servicing agents and registrars for all services
to the Portfolio, (xv) expenses for servicing the accounts of investors, (xvi)
any direct charges to investors approved by the Trustees of the Portfolio,
(xvii) compensation and expenses of Trustees of the Portfolio who are not
members of BMR's organization, and (xviii) such non-recurring items as may
arise, including expenses incurred in connection with litigation, proceedings
and claims and the obligation of the Portfolio to indemnify its Trustees,
officer and investors with respect thereto.
For a description of the compensation that the Portfolio pays BMR under
the Investment Advisory Agreement, see the Fund's current Prospectus.
The Investment Advisory Agreement with BMR remains in effect until
February 28, 1997. It may be continued indefinitely thereafter so long as such
continuance after February 28, 1997 is approved at least annually (i) by the
vote of a majority of the Trustees of the Portfolio who are not interested
persons of the Portfolio or of BMR cast in person at a meeting specifically
called for the purpose of voting on such approval and (ii) by the Board of
Trustees of the Portfolio or by vote of a majority of the outstanding voting
securities of the Portfolio. The Agreement may be terminated at any time
without penalty on sixty (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.
As indicated in the Prospectus, Eaton Vance serves as Administrator of the
Fund, but currently receives no compensation for providing administrative
services to the Fund. Under its agreement with the Fund, Eaton Vance has been
engaged to administer the Fund's affairs, subject to the supervision of the
Trustees of the Trust, and shall furnish for the use of the Fund office space
and all necessary office facilities, equipment and personnel for administering
the affairs of the Fund. For additional information about the Administrator,
see "Fees and Expenses" in the Fund's Part II.
The Fund pays all of its own expenses including, without limitation, (i)
expenses of maintaining the Fund and continuing its existence, (ii)
registration of the Trust under the 1940 Act, (iii) commission, fees and other
expenses connected with the purchase or sale of securities and other
investments, (iv) auditing, accounting and legal expenses, (v) taxes and
interest, (vi) governmental fees, (vii) expenses of issue, sale, repurchase
and redemption of shares, (viii) expenses of registering and qualifying the
Fund and its shares under federal and state securities laws and of preparing
and printing prospectuses for such purpose and for distribution of the same to
shareholders and investors, and fees and expenses of registering and
maintaining registration of the Fund and of the Fund's principal underwriter,
if any, as broker-dealer or agent under state securities laws, (ix) expenses
of reports and notices to shareholders and of meetings of shareholders and
proxy solicitations therefor, (x) expenses of reports to governmental officers
and commissions, (xi) insurance expenses, (xii) association membership dues,
(xiii) fees, expenses and disbursements of custodians and subcustodians for
all services to the Fund (including without limitation safekeeping of funds,
securities and other investments, keeping of books and accounts and
determination of net asset values), (xiv) fees, expenses and disbursements of
transfer agents, dividend disbursing agents, shareholder servicing agents and
registrar for all services to the Fund, (xv) expenses for servicing
shareholder accounts, (xvi) any direct charges to shareholder approved by the
Trustees of the Trust, (xvii) compensation and expenses of Trustees of the
Trust who are not members of the Eaton Vance organization, and (xviii) such
non-recurring items as may arise, including expenses incurred in connection
with litigation, proceedings and claims and the obligation of the Trust to
indemnify its Trustees and officer with respect thereto.
BMR is a wholly-owned subsidiary of Eaton Vance. Eaton Vance and EV are
both wholly-owned subsidiaries of EVC. Eaton Vance and BMR are both
Massachusetts business trusts, and EV is the trustee of Eaton Vance and BMR.
The Directors of EV are Landon T. Clay, H. Day Brigham, Jr., M. Dozier
Gardner, James B. Hawkes and Benjamin A. Rowland, Jr. The Directors of EVC
consist of the same persons and John G.L. Cabot and Ralph Z. Sorenson. Mr.
Clay is chairman and Mr. Gardner is president and chief executive officer of
EVC, Eaton Vance, BMR and EV. All of the issued and outstanding shares of
Eaton Vance and of EV are owned by EVC. All of the issued and outstanding
shares of BMR are owned by Eaton Vance. All shares of the outstanding Voting
Common Stock of EVC are deposited in a Voting Trust which expires December 31,
1996, the Voting Trustees of which are Messrs. Brigham, Clay, Gardner, Hawkes
and Rowland. The Voting Trustees have unrestricted voting rights for the
election of Directors of EVC. All of the outstanding voting trust receipts
issued under said Voting Trust are owned by certain of the officers of Eaton
Vance and BMR who are also officers and Directors of EVC and EV. As of May 1,
1996, Messrs. Clay, Gardner and Hawkes each owned 24% of such voting trust
receipts and Messrs. Rowland and Brigham owned 15% and 13%, respectively, of
such voting trust receipts. Messrs. Clay, Gardner, Hawkes and Otis, who are
officers or Trustees of the Trust and/or the Portfolio, are members of the
EVC, Eaton Vance, BMR and EV organizations. Messrs. Ahern, Murphy, O'Connor,
Richardson, Rynne, Terry and Woodbury, and Ms. Kreider and Ms. Sanders are
officers of the Trust and/or the Portfolio and are also members of the Eaton
Vance, BMR and EV organizations. BMR will receive the fees paid under the
Investment Advisory Agreement.
EVC owns all of the stock of Energex Energy Corporation, which engages in
oil and gas exploration and development. In addition, Eaton Vance owns all the
stock of Northeast Properties, Inc., which is engaged in real estate
investment. EVC also owns 24% of the Class A shares of Lloyd George Management
(B.V.I.) Limited, a registered investment adviser. EVC owns all the stock of
Fulcrum Management, Inc. and MinVen, Inc., which are engaged in the
development of precious metal mining, venture investment and management. EVC,
Eaton Vance, BMR and EV may also enter into other businesses.
EVC and its affiliates and their officers and employees from time to time
have transactions with various banks, including the custodian of the Fund and
the Portfolio, Investors Bank & Trust Company. It is Eaton Vance's opinion
that the terms and conditions of such transactions will not be influenced by
existing or potential custodial or other relationships between the Trust or
the Portfolio and such banks.
CUSTODIAN
Investors Bank & Trust Company ("IBT"), 89 South Street, Boston,
Massachusetts acts as custodian for the Fund and the Portfolio. IBT has the
custody of all cash and securities representing the Fund's interest in the
Portfolio, has custody of all the Portfolio's assets, maintains the general
ledger of the Portfolio and the Fund and computes the daily net asset value of
interests in the Portfolio and the net asset value of shares of the fund. In
such capacity it attends to details in connection with the sale, exchange,
substitution, transfer or other dealings with the Portfolio's investments,
receives and disburse all funds and performs various other ministerial duties
upon receipt of proper instruction from the Fund and the Portfolio. IBT
charges fees which are competitive within the industry. A portion of the fee
relates to custody, bookkeeping and valuation services and is based upon a
percentage of Fund and Portfolio net assets and a portion of the fee relates
to activity charges, primarily the number of portfolio transactions. These
fees are then reduced by a credit for cash balances of the particular
investment company at the custodian equal to 75% of the 91-day, U.S. Treasury
Bill auction rate applied to the particular investment company's average daily
collected balances for the week. In view of Mr. Clay's interest in IBT, the
Portfolio is treated as a self-custodian pursuant to Rule 17f-2 under the
Investment Company Act of 1940, and the Portfolio's investments held by IBT as
custodian are thus subject to the additional examinations by the Portfolio's
independent certified public accountants as called for by such Rule.
Management believes that such ownership does not create an affiliated person
relationship between the Fund and IBT under the Investment Company Act of
1940.
SERVICE FOR WITHDRAWAL
By a standard agreement, the Trust's Transfer Agent will send to the
shareholder regular quarterly payments of any permitted amount designated by
the shareholder (see "Eaton Vance Shareholder Services - Systematic Withdrawal
Plan" in the Fund's current Prospectus) based upon the value of the shares
held. The checks will be drawn from share redemptions and hence, are a return
of principal. Income dividends and capital gain distributions in connection
with withdrawal accounts will be credited at net asset value as of the record
date for each distribution. Continued withdrawals in excess of current income
will eventually use up principal, particularly in a period of declining market
prices. A shareholder may not have a withdrawal plan in effect at the same
time he or she has authorized Bank Automated Investing or is otherwise making
regular purchases of Fund shares. Either the shareholder, the Transfer Agent
or the Principal Underwriter will be able to terminate the withdrawal plan at
any time without penalty.
DETERMINATION OF NET ASSET VALUE
The net asset value of the Portfolio and of shares of the Fund is
determined by IBT (as agent and custodian for the Fund and the Portfolio) in
the manner described under "Valuing Fund Shares" in the Fund's current
Prospectus. The Fund and Portfolio will be closed for business and will not
price their shares on the following business holidays: New Year's Day,
Presidents' Day, Good Friday (a New York Stock Exchange holiday), Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
The Trustees of the Portfolio have established the following procedures
for the fair valuation of the Portfolio's assets under normal market
conditions. Securities listed on foreign or U.S. securities exchanges or in
the NASDAQ National Market System generally are valued at closing sale prices
or, if there were no sales, at the mean between the closing bid and asked
prices therefor on the exchange where such securities are principally traded
or on such National Market System. Unlisted or listed securities for which
closing sale prices are not available are valued at the mean between the
latest bid and asked prices. An option is valued at the last sale price as
quoted on the principal exchange or board of trade on which such option or
contract is traded, or in the absence of a sale, at the mean between the last
bid and asked prices. Futures positions on securities or currencies are
generally valued at closing settlement prices. Short-term debt securities with
a remaining maturity of 60 days or less are valued at amortized cost. If
securities were acquired with a remaining maturity of more than 60 days, their
amortized cost value will be based on their value on the sixty-first day prior
to maturity. Other fixed income and debt securities, including listed
securities and securities for which price quotations are available, will
normally be valued on the basis of valuations furnished by a pricing service.
All other securities are valued at fair value as determined in good faith by
or at the direction of the Trustees.
Each investor in the Portfolio, including the Fund, may add to or reduce
its investment in the Portfolio on each day the 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 represents that investor's share of the
aggregate interests in the Portfolio on such prior day. Any additions or
withdrawals for the current Portfolio Business Day will then be recorded. Each
investor's percentage of the aggregate interest in the Portfolio will then be
recomputed as a percentage equal to a fraction (i) the numerator of which is
the value of such investor's investment in the Portfolio as of the Portfolio
Valuation Time on the prior Portfolio Business Day plus or minus, as the case
may be, that amount of any additions to or withdrawals from the investor's
investment in the Portfolio on the current Portfolio Business Day and (ii) the
denominator of which is the aggregate net asset value of the Portfolio as of
the Portfolio Valuation Time on the prior Portfolio Business Day plus or
minus, as the case may be, the amount of the net additions to or withdrawals
from the aggregate investment in the Portfolio on the current Portfolio
Business Day by all investors in the Portfolio. The percentage so determined
will then be applied to determine the value of the investor's interest in the
Portfolio for the current Portfolio Business Day.
Generally, trading in the foreign securities owned by the Portfolio is
substantially completed each day at various times prior to the close of the
Exchange. The values of these securities used in determining the net asset
value of the Portfolio's share are computed as of such times. Occasionally,
events affecting the value of foreign securities may occur between such times
and the close of the Exchange which will not be reflected in the computation
of the Portfolio's net asset value (unless the Portfolio deems that such
events would materially affect its net asset value, in which case an
adjustment would be made and reflected in such computation). Foreign
securities and currency held by the Portfolio will be valued in U.S. dollars;
such values will be computed by the custodian based on foreign currency
exchange rate quotations supplied by Reuters Information Service.
INVESTMENT PERFORMANCE
Average annual total return is determined by multiplying a hypothetical
initial purchase order of $1,000 by the average annual compound rate of return
(including capital appreciation/depreciation, and distributions paid and
reinvested) for the stated period and annualizing the result. The calculation
assumes that all distributions are reinvested at net asset value on the
reinvestment dates during the period.
The Fund may use total return figures showing after-tax returns, including
comparisons to tax-deferred vehicles such as Individual Retirement Accounts
("IRAs") and variable annuities. In calculating after-tax returns, the Fund
will, in general, assume that its shareholders are U.S. individual taxpayers
subject to federal income taxes at the highest marginal rate then applicable
to ordinary income and long-term capital gains. After-tax returns may also be
calculated using different tax rate assumptions and taking into account state
and local income taxes as well as federal taxes. In calculating after-tax
returns, distributions made by the Fund are assumed to be reduced by the
amount of taxes payable on the distribution, and the after-tax proceeds of the
distribution are reinvested in the Fund at net asset value on the reinvestment
date.
The Fund's total return may be compared to relevant indices, such as the
Consumer Price Index and various domestic and foreign securities indices, for
example: Standard & Poor's Index of 400 Common Stocks, Standard & Poor's Index
of 500 Common Stocks, Merrill Lynch U.S. Treasury (15-year plus) Index, Lehman
Brothers Government/Corporate Bond Index, the Dow Jones Industrial Average and
Morgan Stanley Global Equity. The Fund's total return and comparisons with
these indices may be used in advertisements and in information furnished to
present or prospective shareholders. The Fund's performance may differ from
that of other investors in the Portfolio, and other investment companies.
Information used in advertisements and in materials furnished to present
or prospective shareholders may include statistics, data and performance
studies prepared by independent organizations (e.g. Ibbotson Associates,
Standard & Poor's Ratings Group, Merrill Lynch Private Client Group,
Bloomberg, L.P., Dow Jones & Company, Inc., and the Federal Reserve Board) or
included in various publications (e.g. The Wall Street Journal, Barron's and
The Decade: Wealth of Investments in U.S. Stocks, Bonds, Bills & Inflation)
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
Portfolio may be included in advertisements and other material furnished to
present and prospective shareholders.
Evaluations of the Fund's performance or rankings of mutual funds (which
include the Fund) made by independent sources (e.g., Lipper Analytical
Services, Inc., CDA/Weisenberger and Morningstar, Inc.) may be used in
advertisements and in information furnished to present or prospective
shareholders. Information, charts and illustrations showing the effect of
compounding interest or relating to inflation and taxes (including their
effects on the dollar and the return on stocks and other investment vehicles)
may also be included in advertisements and materials furnished to present and
prospective investors.
Information used in advertisements and materials furnished to present and
prospective investors may include statements or illustrations relating to the
appropriateness of certain types of securities and/or mutual funds to meet
specific financial goals. Such information may address:
-- costs associated with aging parents;
-- funding a college education (including its actual and estimated cost);
-- health care expenses (including actual and projected expenses);
-- long-term disabilities (including the availability of, and coverage
provided by, disability insurance); and
-- retirement (including the availability of social security benefits, the
tax treatment of such benefits and statistics and other information
relating to maintaining a particular standard of living and outliving
existing assets).
Such information may also address different methods for saving money and
the results of such methods, as well as the benefits of investing in equity
securities. Such information may describe: the potential for growth; the
performance of equities as compared to other investment vehicles; and the
value of investing as early as possible and regularly, as well as staying
invested. The benefits of investing in equity securities by means of a mutual
fund may also be included (such benefits may include diversification,
professional management and the variety of equity mutual fund products).
Information in advertisements and materials furnished to present and
prospective investors may include profiles of different types of investors
(i.e., investors with different goals and assets) and different investment
strategies for meeting specific financial goals. Such information may provide
hypothetical illustrations which include: results of various investment
strategies; performance of an investment in the Fund over various time
periods; and results of diversifying assets among several investments with
varying performance. Information in advertisements and materials furnished to
present and prospective investors may also include quotations (including
editorial comments) and statistics concerning investing in securities, as well
as investing in particular types of securities and the performance of such
securities.
The Fund may provide information about Eaton Vance, its affiliates and
other investment advisers to the funds in the Eaton Vance Family of Funds in
sales material or advertisements provided to investors or prospective
investors. Such material or advertisements may also provide information on the
use of investment professionals by such investors.
HYPOTHETICAL RETURNS
The following analysis compares the after-tax returns achieved from three
hypothetical investments with identical pre-tax returns of 10% per year. The
first hypothetical investment is a tax-managed equity mutual fund whose
returns consist entirely of deferred gains (no dividend income and no realized
capital gains). Note - It is possible the Fund will distribute some net
investment income and capital gains in some years, so the hypothetical may not
be entirely applicable. The second hypothetical investment is a conventional
equity mutual fund, managed without regard to investor tax considerations,
whose 10% annual returns consist of 2% return from dividend income and 8%
return from realized capital gains, three-quarters of which are long-term
gains and one-quarter of which are short-term gains. The third hypothetical
investment is a variable annuity fund, which by its structure defers taxation
on all income and gains. The third hypothetical investment is a variable
annuity fund, which by its structure defers taxation on all income and gains.
The investor is amused to pay federal taxes at the highest rate applicable to
individual income and gains, including the effect of the itemized deduction
phaseout. this rate is 40.8% for dividend income and short-term capital gains
and 29.2% for long-term capital gains. The investor is assumed to pay no state
or local taxes.
An initial investment of $10,000 in each of the three hypothetical funds
would grow in value to:
CONVENTIONAL EQUITY VARIABLE
TAX-MANAGED FUND MUTUAL FUND ANNUITY FUND
---------------- ------------------- ------------
After 10 years: $25,937 $18,942 $25,937
After 20 years: $67,275 $35,881 $67,275
The returns from the tax-managed fund and the variable annuity fund are
the same since the pre-tax returns are assumed to be identical and no taxes
have been paid in either case. The returns from the conventional fund are
substantially lower due to the taxes paid each year in connection with the
funds dividend income and realized long-term and short-term capital gains.
If the hypothetical fund investments were each to be sold, the amount
realized from the sale, net of taxes, would be:
CONVENTIONAL EQUITY VARIABLE
TAX-MANAGED FUND MUTUAL FUND ANNUITY FUND
---------------- ------------------- ------------
After 10 years: $21,286 $18,942 $19,437
After 20 years: $50,558 $35,881 $43,914
The proceeds from selling the conventional fund, net of taxes, equals the
value of the shares (from above), since no gain is recognized at sale. The
net-of-tax proceeds of the tax-managed fund position is reduced by the capital
gains taxes due on the accumulated gain. The net-of-tax proceeds of the
variable annuity is reduced by taxes on the accumulated income and gain, all
of which is taxed as ordinary income.
If the holder of the hypothetical fund investments were to die, the value
of the investment passing to the estate would be:
CONVENTIONAL EQUITY VARIABLE
TAX-MANAGED FUND MUTUAL FUND ANNUITY FUND
---------------- ------------------- ------------
After 10 years: $25,937 $18,942 $19,437
After 20 years: $67,275 $35,881 $43,914
The value of the tax-managed fund and the conventional fund would pass
through to the estate without being taxed and their tax basis would be
adjusted upward to the value at the time of death. The value of the variable
annuity would be reduced by taxes at the ordinary income rate on the
accumulated income and gain, as if the investor had sold the position.
TAXES
See also "Distribution and Taxes" in the Fund's current Prospectus.
The Fund, as a series of a Massachusetts business trust, will be treated
as a separate entity for accounting and tax purposes. The Fund intends to
elect to be treated, and to qualify each year as a regulated investment
company ("RIC") under the Code. Accordingly, the Fund intends to satisfy
certain requirements relating to sources of its income and diversification of
its assets and to distribute all of its net investment income and net realized
capital gains in accordance with the timing requirements imposed by the Code,
so as to avoid any federal income or excise tax on the Fund. Because the Fund
invests its assets in the Portfolio, the Portfolio normally must satisfy the
applicable source of income and diversification requirements in order for the
Fund to satisfy them. The Portfolio will allocate at least annually among its
investors, including the Fund, each investor's distributive share of the
Portfolio's net investment income, net realized capital gains, and any other
items of income, gain, loss, deduction or credit. The Portfolio will make
allocations to the Fund in accordance with the Code and applicable regulations
and will make moneys available for withdrawal at appropriate times and in
sufficient amounts to enable the Fund to satisfy the tax distribution
requirements that apply to the Fund and that must be satisfied in order to
avoid federal income and/or excise tax on the Fund. For purposes of applying
the requirements of the Code regarding qualification as a RIC, the Fund will
be deemed (i) to own its proportionate share of each of the assets of the
Portfolio and (ii) to be entitled to the gross income of the Portfolio
attributable to such share.
In order to avoid federal excise tax, the Code requires that the Fund
distribute (or be deemed to have distributed) by December 31 of each calendar
year at least 98% of its ordinary income (not including tax-exempt income) for
such year, at least 98% of the excess of its realized capital gains over its
realized capital losses, generally computed on the basis of the one-year
period ending on October 31 of such year, after reduction by any available
capital loss carryforwards, and 100% of any income and capital gains from the
prior year (as previously computed) that was not paid out during such year and
on which the Fund was not taxed. Further, under current law, provided that the
Fund qualifies as a RIC for federal income tax purposes and the Portfolio is
treated as a partnership for Massachusetts and federal tax purposes, neither
the Fund nor the Portfolio is liable for any income, corporate excise or
franchise tax in the Commonwealth of Massachusetts.
Foreign exchange gains and losses realized by the Portfolio and allocated
to the Fund in connection with the Portfolio's investments in foreign
securities and certain options, futures or forward contracts or foreign
currency may be treated as ordinary income and losses under special tax rules.
Certain options, futures or forward contracts of the Portfolio may be required
to be marked to market (i.e., treated as if closed out) on the last day of
each taxable year, and any gain or loss realized with respect to these
contracts may be required to be treated as 60% long-term and 40% short-term
gain or loss. Positions of the Portfolio in securities and offsetting options,
swaps, futures or forward contracts may be treated as "straddles" and be
subject to other special rules that may, upon allocation of the Portfolio's
income, gain or loss to the Fund, affect the amount, timing and character of
the Fund's distributions to shareholders. Certain uses of foreign currency and
foreign currency derivatives such as options, futures, forward contracts and
swaps and investment by the Portfolio in certain "passive foreign investment
companies" may be limited or a tax election may be made, if available, in
order to preserve the Fund's qualification as a RIC or avoid imposition of a
tax on the Fund.
The Portfolio will allocate at least annually to the Fund and its other
investors their respective distributive shares of any net investment income
and net capital gains which have been recognized for federal income tax
purposes (including unrealized gains at the end of the Portfolio's fiscal year
on certain options and futures transactions that are required to be marked-to-
market). Such amounts will be distributed by the Fund to its shareholders in
cash or additional shares, as they elect. Shareholders of the Fund will be
advised of the nature of the distributions.
Certain investors in the Portfolio, including RICs, have acquired
interests in the Portfolio by contributing securities. Due to tax
considerations, during the first five years following the contribution of
securities to the Portfolio by an investor, such securities will not be
distributed to any investor other than the investor who contributed those
securities. Investors who acquire an interest in the Portfolio by contributing
securities and who redeem that interest within five years thereafter will
generally receive back one or more of the securities they contributed. In
partial redemptions by such investors during this period, the Portfolio will
attempt to accommodate requests to distribute initially those contributed
securities and share lots with the highest cost basis.
The Portfolio has significant holdings of highly appreciated securities
that were contributed to the Portfolio by investors other than the Fund. If
such securities were to be sold, the resulting capital gain would be allocated
disproportionately among the Portfolio's investors, with the result that the
Fund would not be subject to taxation on any gain arising prior to the
contribution of the securities to the Portfolio.
Distributions by the Fund of the excess of net long-term capital gains
over short-term capital losses earned by the Portfolio and allocated to the
Fund, taking into account any capital loss carryforwards that may be available
to the Fund in years after its first taxable year, are taxable to shareholders
of the Fund as long-term capital gains, whether received in cash or in
additional shares and regardless of the length of time their shares have been
held. Certain distributions, if declared in October, November or December and
paid the following January, will be taxed to shareholders as if received on
December 31 of the year in which they are declared.
Any loss realized upon the redemption or exchange of shares with a tax
holding period of 6 months or less will be treated as a long-term capital loss
to the extent of any distribution of net long-term capital gains with respect
to such shares. All or a portion of a loss realized upon a taxable disposition
of Fund shares may be disallowed under "wash sale" rules if other Fund shares
are purchased (whether through reinvestment of dividends or otherwise) within
30 days before or after the disposition. Any disallowed loss will result in an
adjustment to the shareholder's tax basis in some or all of the other shares
acquired.
The Fund will not be subject to Massachusetts income, corporate excise or
franchise taxation as long as it qualifies as a RIC under the Code.
Amounts paid by the Fund to individuals and certain other shareholders who
have not provided the Fund with their correct taxpayer identification number
and certain certifications required by the Internal Revenue Service (the
"IRS"), as well as shareholders with respect to whom the Fund has received
notification from the IRS or a broker, may be subject to "backup" withholding
of federal income tax from the Fund's dividends and distributions and the
proceeds of redemptions (including repurchases and exchanges) at a rate of
31%. An individual's taxpayer identification number is generally his or her
social security number.
Non-resident alien individuals, foreign corporations and certain other
foreign entities generally will be subject to a U.S. withholding tax at a rate
of 30% on the Fund's distributions from its ordinary income and the excess of
its net short-term capital gain over its net long-term capital loss, unless
the tax is reduced or eliminated by an applicable tax treaty. Distributions
from the excess of the Fund's net long-term capital gain over its net short-
term capital loss received by such shareholders and any gain from the sale or
other disposition of shares of the Fund generally will not be subject to U.S.
Federal income taxation, provided that non-resident alien status has been
certified by the shareholder. Different U.S. tax consequences may result if
the shareholder is engaged in a trade or business in the United States, is
present in the United States for a sufficient period of time during a taxable
year to be treated as a U.S. resident, or fails to provide any required
certifications regarding status as a non-resident alien investor. Foreign
shareholders should consult their tax advisers regarding the U.S. and foreign
tax consequences of an investment in the Fund.
The foregoing discussion does not describe many of the tax rules
applicable to IRAs nor does it address the special tax rules applicable to
certain other classes of investors, such as other retirement plans, tax-exempt
entities, insurance companies and financial institutions. Shareholders should
consult their own tax advisers with respect to these or other special tax
rules that may apply in their particular situations, as well as the state,
local or foreign tax consequences of investing in the Fund.
PORTFOLIO SECURITY TRANSACTIONS
Decisions concerning the execution of portfolio security transactions by
the Portfolio, including the selection of the market and the broker-dealer
firm, are made by 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, 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 commission was
reasonable in relation to the value of the brokerage and research services
provided. This determination may be made on the basis of either that
particular transaction or on the basis of 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 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 of the Portfolio at advantageous
prices and at reasonably competitive commission rates or spreads, BMR is
authorized to consider as a factor in the selection of any broker-dealer firm
with whom Portfolio orders may be placed the fact that such firm has sold or
is selling shares of the Fund or of other investment companies sponsored by
Eaton Vance. This policy is not inconsistent with a rule of the National
Association of Securities Dealers, Inc., which rule provides that no firm
which is a member of the Association 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.
BMR will attempt to allocate equitably portfolio transactions among the
Portfolio and the portfolios of its other investment accounts whenever
decisions are made to purchase or sell securities by the Portfolio and one or
more of such other accounts simultaneously. In making such allocations, the
main factors to be considered are the respective investment objectives of the
Portfolio and such other accounts, the relative size of portfolio holdings of
the same or comparable securities, the availability of cash for investment by
the Portfolio and such accounts, the size of investment commitments generally
held by the Portfolio and such accounts and the opinions of the persons
responsible for recommending investments to the Portfolio and such accounts.
While this procedure 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 Portfolio that the benefits available from BMR's
organization outweigh any disadvantage that may arise from exposure to
simultaneous transactions. For the brokerage commissions paid by the Portfolio
on portfolio transactions, see "Fees and Expenses" in Part II.
OTHER INFORMATION
On July 10, 1995, the Trust changed its name from Eaton Vance Government
Obligations Trust to Eaton Vance Mutual Funds Trust. The Trust is organized as
a business trust under the laws of the Commonwealth of Massachusetts under a
Declaration of Trust dated May 7, 1984, as amended. 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.
The Declaration of Trust may be amended by the Trustees when authorized by
a majority of the outstanding voting securities of the Trust affected by the
amendment. The Trustees may also amend the Declaration of Trust without the
vote or consent of shareholders to change the name of the Trust or any series
or to make such other changes as do not have a materially adverse effect on
the rights or interests of shareholders or if they deem it necessary to
conform the Declaration to the requirements of federal laws or 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.
As permitted by Massachusetts law, there will normally be no meetings of
shareholders for the purpose of electing Trustees unless and until such time
as less than a majority of the Trustees of the Trust holding office have been
elected by shareholders. In such an event the Trustees then in office will
call a shareholder's meeting for the election of Trustees. Except for the
foregoing circumstances and unless removed by action of the shareholders in
accordance with the Trust's By-laws, the Trustees shall continue to hold
office and may appoint successor Trustees.
The 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. In addition, the By-laws of the Trust provide that no natural person
shall serve as a Trustee of the Trust after the holders of record of not less
than two-thirds of the outstanding shares have declared that he be removed
from office either by declaration in writing filed with the custodian of the
assets of the Trust or by votes set in person or by proxy at a meeting called
for the purpose. The By-laws further provide that under certain circumstances
the shareholders may call a meeting to remove a Trustee and that the Trust is
required to provide assistance in communicating with shareholders about such a
meeting. The By-laws also provide that the Trustees shall promptly call a
meeting of shareholders for the purpose of voting upon a question of removal
of a Trustee when requested so to do by the record holders of not less than 10
per centum of the outstanding shares.
In accordance with the Declaration of Trust of the Portfolio, there will
normally be no meetings of the investors for the purpose of electing Trustees
unless and until such time as less than a majority of the Trustees holding
office have been elected by investors. In such an event the Trustees of the
Portfolio then in office will call an investors' meeting for the election of
Trustees. Except for the foregoing circumstances and unless removed by action
of the investors in accordance with the Portfolio's Declaration of Trust, the
Trustees shall continue to hold office and may appoint successor Trustees.
The Declaration of Trust of the Portfolio provides that no person shall
serve as a Trustee if investors holding two-thirds of the outstanding 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 right to redeem shares of the Fund can be suspended and the payment of
the redemption price deferred when the Exchange is closed (other than for
customary weekend and holiday closings), during periods when trading on the
Exchange is restricted as determined by the Commission, or during any
emergency as determined by the Commission which makes it impracticable for the
Portfolio or the Fund to dispose of its securities or value its assets, or
during any other period permitted by order of the Commission for the
protection of investors.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Deloitte & Touche LLP, 125 Summer Street, Boston, Massachusetts, are the
independent certified public accountants of the Fund, providing audit
services, tax return preparation, and assistance and consultation with respect
to the preparation of filings with the Securities and Exchange Commission.
For the financial statements of the Portfolio see "Financial Statements"
in Part II.
STATEMENT OF ADDITIONAL INFORMATION
PART II
This Part II provides information about EV CLASSIC TAX-MANAGED GROWTH
FUND. The Fund became a series of the Trust on June 24, 1996.
FEES AND EXPENSES
INVESTMENT ADVISER
No fees paid to date.
DISTRIBUTION PLAN
The Fund has not made any sales commission payments to the Principal
Underwriter under the Plan to date.
PRINCIPAL UNDERWRITER
The Fund has authorized the Principal Underwriter to act as its agent in
repurchasing shares at the rate of $2.50 for each repurchase transaction
handled by the Principal Underwriter. The Principal Underwriter estimates that
the expenses incurred by it in acting as repurchase agent for the Fund will
exceed the amounts paid therefor by the Fund.
BROKERAGE
No fees paid to date.
TRUSTEES
The fees and expenses of those Trustees of the Trust and of the Portfolio
who are not members of the Eaton Vance organization (the noninterested
Trustees) are paid by the Fund (and the other series of the Trust) and the
Portfolio, respectively. (The Trustees of the Trust and the Portfolio who are
members of the Eaton Vance organization receive no compensation from the Fund
or the Portfolio.) For the fiscal year ending October 31, 1996, it is
estimated that the noninterested Trustees of the Trust and the Portfolio will
receive the following compensation in their capacities as Trustees of the
Trust and the Portfolio and, during the one year period ended September 30,
1995, the noninterested Trustees of the Trust and the Portfolio earned the
following compensation in their capacities as Trustees of the other funds in
the Eaton Vance fund complex(1):
<TABLE>
<CAPTION>
ESTIMATED ESTIMATED TOTAL COMPENSATION
COMPENSATION COMPENSATION FROM TRUST AND
NAME FROM FUND FROM PORTFOLIO FUND COMPLEX
- --- ------------ -------------- ------------------
<S> <C> <C> <C>
Donald R. Dwight $50 $1,600 $135,000(2)
Samuel L. Hayes, III 50 1,600 150,000(3)
Norton H. Reamer 50 1,600 135,000
John L. Thorndike 50 1,600 140,000
Jack L. Treynor 50 1,600 140,000
- ----------
(1) The Eaton Vance fund complex consists of 219 registered investment
companies or series thereof.
(2) Includes $35,000 of deferred compensation.
(3) Includes $33,750 of deferred compensation.
</TABLE>
DISTRIBUTION PLAN
The Distribution Plan (the "Plan") is described in the Prospectus and is
designed to meet the requirements of Rule 12b-1 under the 1940 Act and the
NASD Rule. The purpose of the Plan is to compensate the Principal Underwriter
for its distribution services and facilities provided to the Fund by paying
the Principal Underwriter sales commissions and a separate distribution fee in
connection with sales of Fund shares. The following supplements the discussion
of the Plan contained in the Fund's Prospectus.
The amount payable by the Fund to the Principal Underwriter pursuant to
the Plan as sales commissions and distribution fees with respect to each day
will be accrued on such day as a liability of the Fund and will accordingly
reduce the Fund's net assets upon such accrual, all in accordance with
generally accepted accounting principles. The amount payable on each day is
limited to 1/365 of .75% of the Fund's net assets on such day. The level of
the Fund's net assets changes each day and depends upon the amount of sales
and redemptions of Fund shares, the changes in the value of the investments
held by the Portfolio, the expenses of the Fund and the Portfolio accrued and
allocated to the Fund on such day, income on portfolio investments of the
Portfolio accrued and allocated to the Fund on such day, and any distributions
declared on Fund shares. The Fund does not accrue possible future payments as
a liability of the Fund or reduce the Fund's current net assets in respect of
unknown amounts which may become payable under the Plan in the future because
the standards for accrual of such a liability under accounting principles have
not been satisfied.
The Plan provides that the Fund will receive all contingent deferred sales
charges and will make no payments to the Principal Underwriter in respect of
any day on which there are no outstanding Uncovered Distribution Charges of
the Principal Underwriter. Contingent deferred sales charges and accrued
amounts will be paid by the Fund to the Principal Underwriter whenever there
exist Uncovered Distributions Charges under the Plan.
Periods with a high level of sales of Fund shares accompanied by a low
level of early redemptions of Fund shares resulting in the imposition of
contingent deferred sales charges will tend to increase the time during which
there will exist Uncovered Distribution Charges of the Principal Underwriter.
Conversely, periods with a low level of sales of Fund shares accompanied by a
high level of early redemptions of Fund shares resulting in the imposition of
contingent deferred sales charges will tend to reduce the time during which
there will exist Uncovered Distribution Charges of the Principal Underwriter.
In calculating daily the amount of uncovered distribution charges,
distribution charges will include the aggregate amount of sales commissions
and distribution fees theretofore paid plus the aggregate amount of sales
commissions and distribution fees which the Principal Underwriter is entitled
to be paid under the Plan since its inception. Payments theretofore paid or
payable under the Plan by the Fund to the Principal Underwriter and contingent
deferred sales charges theretofore paid or payable to the Principal
Underwriter will be subtracted from such distribution charges; if the result
of such subtraction is positive, a distribution fee (computed at 1% over the
prime rate then reported in The Wall Street Journal) will be computed on such
amount and added thereto, with the resulting sum constituting the amount of
uncovered distribution charges with respect to such day. The amount of
outstanding uncovered distribution charges of the Principal Underwriter
calculated on any day does not constitute a liability recorded on the
financial statements of the Fund.
The amount of uncovered distribution charges of the Principal Underwriter
at any particular time depends upon various changing factors, including the
level and timing of sales of Fund shares, the nature of such sales (i.e.
whether they result from exchange transactions, reinvestments or from cash
sales through Authorized Firms), the level and timing of redemptions of Fund
shares upon which a contingent deferred sales charge will be imposed, the
level and timing of redemptions of Fund shares upon which no contingent
deferred sales charge will be imposed (including redemptions involving
exchanges of Fund shares for shares of another fund in the Eaton Vance Classic
Group of Funds which result in a reduction of uncovered distribution charges),
changes in the level of the net assets of the Fund, and changes in the
interest rate used in the calculation of the distribution fee under the Plan.
As currently implemented by the Trustees, the Plan authorizes payments of
sales commissions, distribution fees and service fees to the Principal
Underwriter which may be equivalent, on an aggregate basis during any fiscal
year of the Fund, to 1% of the Fund's average daily net assets for such year.
For the sales commission and service fee payments made by the Fund and the
outstanding uncovered distribution charges of the Principal Underwriter, see
"Fees and Expenses -- Distribution Plan" in this Part II. The Fund believes
that the combined rate of all these payments may be higher than the rate of
payments made under distribution plans adopted by many other investment
companies pursuant to Rule 12b-1. Although the Principal Underwriter will use
its own funds (which may be borrowed from banks) to pay sales commissions and
service fees at the time of sale, it is anticipated that the Eaton Vance
organization will profit by reason of the operation of the Plan through an
increase in the Fund's assets (thereby increasing the management fee payable
to Eaton Vance by the Fund and the administration fee payable to Eaton Vance
by the Portfolio) resulting from sale of Fund shares and through the sales
commissions, distribution fees and contingent deferred sales charges paid to
the Principal Underwriter. The Eaton Vance organization may be considered to
have realized a profit in distributing shares of the Fund if at any point in
time the aggregate amounts theretofore received by the Principal Underwriter
from the Fund pursuant to the Plan and from contingent deferred sales charges
have exceeded the total expenses theretofore incurred by such organization in
distributing shares of the Fund. Total expenses for this purpose will include
an allocable portion of the overhead costs of such organization and its branch
offices, which costs will include without limitation leasing expense,
depreciation of building and equipment, utilities, communication and postage
expense, compensation and benefits of personnel, travel and promotional
expense, stationery and supplies, literature and sales aids, interest expense,
data processing fees, consulting and temporary help costs, insurance, taxes
other than income taxes, legal and auditing expense and other miscellaneous
overhead items. Overhead is calculated and allocated for such purpose by the
Eaton Vance organization in a manner deemed equitable to the Fund.
The Plan provides that it shall continue in effect for so long as such
continuance is approved at least annually by the vote of both a majority of
(i) the Trustees of the Trust who are not interested persons of the Trust and
who have no direct or indirect financial interest in the operation of the Plan
or any agreements related to the Plan (the "Rule 12b-1 Trustees") and (ii) all
of the Trustees then in office, and the Distribution Agreement contains a
similar provision. The Plan and the Distribution Agreement may each be
terminated at any time by vote of a majority of the Rule 12b-1 Trustees, or by
a vote of a majority of the outstanding voting securities of the Fund. The
provisions of the Plan relating to payments of sales commissions and
distribution fees to the Principal Underwriter are also included in the
Distribution Agreement between the Trust on behalf of the Fund and the
Principal Underwriter. Pursuant to Rule 12b-1, the Plan has been approved by
the Fund's initial sole shareholder (Eaton Vance) and by the Board of Trustees
of the Trust, including the Rule 12b-1 Trustees. Under the Plan the President
or a Vice President of the Trust shall provide to the Trustees for their
review, and the Trustees shall review at lease quarterly, a written report of
the amount expended under the Plan and the purposes for which such
expenditures were made. The Plan may not be amended to increase materially the
payments described therein without approval of the shareholders of the Fund,
and all material amendments of the Plan must also be approved by the Trustees
as required by Rule 12b-1. So long as the Plan is in effect, the selection and
nomination of Trustees who are not interested persons of the Trust shall be
committed to the discretion of the Trustees who are not such interested
persons.
The Trustees of the Trust believe that the Plan will be a significant
factor in the expected growth of the Fund's assets, and will result in
increased investment flexibility and advantages which will benefit the Fund
and its shareholders. Payments for sales commissions and distribution fees
made to the Principal Underwriter under the Plan will compensate the Principal
Underwriter for its services and expenses in distributing shares of the Fund.
Service fee payments made to Authorized Firms under the Plan would provide
incentives to provide continuing personal services to investors and the
maintenance of shareholder accounts. By providing incentives to the Principal
Underwriter and Authorized Firms, the Plan is expected to result in the
maintenance of, and possible future growth in, the assets of the Fund. Based
on the foregoing and other relevant factors, the Trustees of the Trust have
determined that in their judgment there is a reasonable likelihood that the
Plan will benefit the Fund and its shareholders.
PERFORMANCE INFORMATION
The table below indicates the cumulative and average annual total return
on a hypothetical investment of $1,000 in the Fund covering the 1, 5, and 10
year periods ended October 31, 1995. The total return for the period prior to
the Fund's commencement of operations reflects the Portfolio's total return
(or that of its predecessor) adjusted to reflect any applicable Fund
contingent deferred sales charge ("CDSC"). The total return for such prior
period has not been adjusted to reflect the Fund's distribution fees and
certain other expenses.
VALUE OF $1,000 INVESTMENT
<TABLE>
<CAPTION>
VALUE OF VALUE OF
INVESTMENT INVESTMENT TOTAL RETURN TOTAL RETURN
BEFORE CDSC AFTER CDSC* BEFORE DEDUCTING CDSC AFTER DEDUCTING CDSC*
ON 10/31/95 ON 10/31/95 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
----------- ----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
10 years
ended 10/31/95 $4,128.69 $4,128.69 312.87% 15.22% 312.87% 15.23%
5 years
ended 10/31/95 $2,355.07 $2,335.07 135.51% 18.65% 135.51% 18.69%
1 year
ended 10/31/95 $1,325.60 $1,315.60 32.56% 32.56% 31.56% 31.56%
</TABLE>
Past performance is not indicative of future results. Investment return
and principal value will fluctuate; shares, when redeemed, may be worth more
or less than their original cost.
- ----------
*No CDSC is imposed on certain redemptions. See the Fund's current Prospectus.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of , Eaton Vance owned one share of the Fund, being the
only share of the Fund outstanding on such date. Eaton Vance is a
Massachusetts business trust and a wholly-owned subsidiary of EVC.
<PAGE>
FINANCIAL STATEMENTS
TAX-MANAGED GROWTH PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 23, 1995
Assets:
Cash ..................................................... $100,010
Deferred organization expenses ........................... 6,850
--------
Total assets ......................................... $106,860
Liabilities:
Accrued organization expenses ............................ 6,850
--------
Net assets ............................................... $100,010
--------
NOTES:
(1) Tax-Managed Growth Portfolio (the "Portfolio") was organized as a New York
Trust on October 23, 1995 and has been inactive since that date, except
for matters relating to its organization and registration as an investment
company under the Investment Company Act of 1940 and the sale of interests
therein at the purchase price of $100,000 to Eaton Vance Management and
the sale of interest therein at the purchase price of $10 to Boston
Management & Research (the "Initial Interests").
(2) Organization expenses are being deferred and will be amortized on a
straight-line basis over a period not to exceed five years, commencing on
the effective date of the Portfolio's initial offering of its interests.
The amount paid by the Portfolio on any withdrawal by the holders of the
Initial Interests of any of the respective Initial Interests will be
reduced by a portion of any unamortized organization expenses, determined
by the proportion of the amount of the Initial Interests withdrawn to the
Initial Interests then outstanding.
(3) At 4:00 p.m., New York City time, on each business day of the Portfolio,
the value of an investor's interest in the Portfolio is equal to the
product of (1) the aggregate net asset value of the Portfolio multiplied
by (ii) the percentage representing that investor's share of the aggregate
interest in the Portfolio effective for that day.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Trustees and Investors of
Tax-Managed Growth Portfolio:
We have audited the accompanying statement of assets and liabilities of
Tax-Managed Growth Portfolio (a New York Trust) as of October 23, 1995. This
financial statement is the responsibility of the Trust's management. Our
responsibility is to express an opinion on this financial statement based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, such statement of assets and liabilities presents fairly,
in all material respects, the financial position of Tax-Managed Growth
Portfolio as of October 23, 1995, in conformity with generally accepted
accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
October 24, 1995
<PAGE>
[Logo]
EATON VANCE EV CLASSIC
- --------------
Mutual Funds TAX-MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
STATEMENT OF
ADDITIONAL INFORMATION
JULY 22, 1996
EV CLASSIC
TAX-MANAGED GROWTH FUND
24 FEDERAL STREET
BOSTON, MA 02110
- --------------------------------------------------------------------------------
INVESTMENT ADVISER OF TAX-MANAGED GROWTH PORTFOLIO
Boston Management and Research, 24 Federal Street, Boston, MA 02110
FUND ADMINISTRATOR
Eaton Vance Management, 24 Federal Street, Boston, MA 02110
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc., 24 Federal Street, Boston, MA 02110
(800) 225-6265
CUSTODIAN
Investors Bank & Trust Company, 89 South Street, Boston, MA 02111
TRANSFER AGENT
First Data Investor Services Group, BOS725, P.O. Box 1559, Boston, MA 02104
(800) 262-1122
AUDITORS
Deloitte & Touche LLP, 125 Summer Street, Boston, MA 02110
C-TGSAI
<PAGE>
PART C
OTHER INFORMATION
ITEM 24: FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS
INCLUDED IN PART B:
For EV Classic Tax-Managed Growth Fund:
Financial Statements for Tax-Managed Growth Portfolio:
Statement of Assets and Liabilities as of October 23, 1995
Independent Auditors' Report
(B) EXHIBITS:
(1)(a) Amended and Restated Declaration of Trust dated August 17,
1993 filed as Exhibit (1)(a) to Post-Effective Amendment No.
23 and incorporated herein by reference.
(b) Amendment to Declaration of Trust dated July 10, 1995 filed
as Exhibit (1)(c) to Post- Effective Amendment No. 23 and
incorporated herein by reference.
(c) Amendment and Restatement of Establishment and Designation
of Series dated October 23, 1995 filed as Exhibit (1)(d) to
Post-Effective Amendment No. 26 and incorporated herein by
reference.
(d) Form of Amendment and Restatement and Designation of Series
of Shares filed herein.
(2)(a) By-Laws (As Amended November 3, 1986) filed as Exhibit
(2)(a) to Post-Effective Amendment No. 23 and incorporated
herein by reference.
(b) Amendment to By-Laws of Eaton Vance Government Obligations
Trust dated December 13, 1993 filed as Exhibit (2)(b) to
Post-Effective Amendment No. 23 and incorporated herein by
reference.
(3) Not applicable
(4) Not applicable
(5)(a) Investment Advisory Agreement with Eaton Vance Management
for Eaton Vance Short-Term Treasury Fund dated February 4,
1991 filed as Exhibit (5)(a) to Post-Effective Amendment No.
23 and incorporated herein by reference.
(b) Investment Advisory Agreement with Eaton Vance Management
for Eaton Vance Tax Free Reserves dated August 15, 1995
filed as Exhibit (5)(b) to Post-Effective Amendment No.
25 and incorporated herein by reference.
(6)(a)(1) Distribution Agreement with Eaton Vance Distributors, Inc.
for Eaton Vance Government Obligations Trust (now EV
Traditional Government Obligations Fund) dated July 9, 1984
filed as Exhibit (6)(a)(1) to Post-Effective Amendment No.
23 and incorporated herein by reference.
(2) Distribution Agreement with Eaton Vance Distributors, Inc.
for Eaton Vance Short-Term Treasury Fund dated February 4,
1991 as Amended and Restated February 25, 1991 filed as
Exhibit (6)(a)(2) to Post-Effective Amendment No. 23 and
incorporated herein by reference.
(3) Amended Distribution Agreement with Eaton Vance
Distributors, Inc. for EV Classic Government Obligations
Fund dated January 27, 1995 filed as Exhibit (6)(a)(3) to
Post- Effective Amendment No. 22 and incorporated herein by
reference.
(4) Distribution Agreement with Eaton Vance Distributors, Inc.
for EV Marathon Government Obligations Fund dated October
28, 1993 filed as Exhibit (6)(a)(3) to Post-Effective
Amendment No. 2 and incorporated herein by reference.
(5) Distribution Agreement with Eaton Vance Distributors, Inc.
for EV Marathon High Income Fund dated July 31, 1995 filed
as Exhibit (6)(a)(5) to Post-Effective Amendment No. 25 and
incorporated herein by reference.
(6) Distribution Agreement with Eaton Vance Distributors, Inc.
for EV Classic High Income Fund dated July 31, 1995 filed as
Exhibit (6)(a)(6) to Post-Effective Amendment No. 25 and
incorporated herein by reference.
(7) Distribution Agreement with Eaton Vance Distributors, Inc.
for EV Classic Strategic Income Fund dated August 15, 1995
filed as Exhibit (6)(a)(7) to Post-Effective Amendment No.
24 and incorporated herein by reference.
(8) Distribution Agreement with Eaton Vance Distributors, Inc.
for EV Marathon Strategic Income Fund dated August 15, 1995
filed as Exhibit (6)(a)(8) to Post-Effective Amendment No.
24 and incorporated herein by reference.
(9) Distribution Agreement between Eaton Vance Cash Management
Fund and Eaton Vance Distributors, Inc. dated August 15,
1995, filed as Exhibit (6)(a)(9) to Post-Effective Amendment
No. 25 and incorporated herein by reference.
(10) Distribution Agreement with Eaton Vance Distributors, Inc.
for Eaton Vance Liquid Assets Fund dated August 15, 1995
filed as Exhibit (6)(a)(10) to Post-Effective Amendment No.
25 and incorporated herein by reference.
(11) Distribution Agreement with Eaton Vance Distributors, Inc.
for Eaton Vance Money Market Fund dated August 15, 1995
filed as Exhibit (6)(a)(11) to Post-Effective Amendment No.
25 and incorporated herein by reference.
(12) Distribution Agreement between Eaton Vance Tax Free Reserves
and Eaton Vance Distributors, Inc. dated August 15, 1995
filed as Exhibit (6)(a)(12) to Post-Effective Amendment No.
25 and incorporated herein by reference.
(13) Distribution Agreement with Eaton Vance Distributors, Inc.
for EV Marathon Tax-Managed Growth Fund dated March 20, 1996
filed as Exhibit (6)(a)(13) to Post-Effective Amendment No.
28 and incorporated herein by reference.
(14) Distribution Agreement with Eaton Vance Distributors, Inc.
for EV Traditional Tax- Managed Growth Fund dated March 20,
1996 filed as Exhibit (6)(a)(14) to Post-Effective Amendment
No. 28 and incorporated herein by reference.
(15) Form of Distribution Agreement with EV Distributors, Inc.
for EV Classic Tax-Managed Growth Fund filed herewith.
(b) Selling Group Agreement between Eaton Vance Distributors,
Inc. and Authorized Dealers filed as Exhibit (6)(b) to the
Registration Statement of Eaton Vance Growth Trust Post-
Effective Amendment No. 61 and incorporated herein by
reference.
(c) Schedule of Dealer Discounts and Sales Charges filed as
Exhibit (6)(c) to the Registration Statement of Eaton Vance
Growth Trust Post-Effective Amendment No. 59 and
incorporated herein by reference.
(7) The Securities and Exchange Commission has granted the
Registrant an exemptive order that permits the Registrant
to enter into deferred compensation arrangements with its
independent Trustees. See in the Matter of Capital Exchange
Fund, Inc., Release No. IC-20671 (November 1, 1994).
(8)(a) Custodian Agreement with Investors Bank & Trust Company
dated October 15, 1992 filed as Exhibit (8) to
Post-Effective Amendment No. 23 and incorporated herein by
reference.
(b) Amendment to Custodian Agreement with Investors Bank & Trust
Company dated October 23, 1995 filed as Exhibit (8)(b) to
Post-Effective Amendment No. 27 and incorporated herein by
reference.
(9)(a) Amended Administrative Services Agreement between Eaton
Vance Mutual Funds Trust (on behalf of each of its series)
and Eaton Vance Management dated July 31, 1995, with
attached schedules (including Amended Schedule A dated
October 23, 1995) under Rule 8b- 31 under the Investment
Company Act of 1940, as amended, filed as Exhibit (9)(a) to
Post-Effective Amendment No. 24 and incorporated herein by
reference.
(b) Transfer Agency Agreement dated June 7, 1989 filed as
Exhibit 9(d) to the Registration Statement of Eaton Vance
Growth Trust Post-Effective Amendment No. 59 and
incorporated herein by reference.
(c) Amendment to Transfer Agency Agreement dated February 1,
1993 filed as Exhibit 9(e) to the Registration Statement of
Eaton Vance Growth Trust Post-Effective Amendment No. 59 and
incorporated herein by reference.
(d) Amended Schedule A dated October 23, 1995 to Administrative
Services Agreement filed herewith.
(10) Not applicable
(11) Consent of Independent Accountants for Tax-Managed Growth
Portfolio filed herewith.
(13) Not applicable
(14)(a) Vance, Sanders Profit Sharing Retirement Plan for
Self-Employed Persons with Adoption Agreement and
instructions filed as Exhibit #14(1) to Post-Effective
Amendment #22 on Form N-1 under the Securities Act of 1933
(File No. 2-28471) and incorporated herein by reference.
(b) Eaton & Howard, Vance Sanders Defined Contribution Prototype
Plan and Trust with Adoption Agreements (1) Basic
Profit-Sharing Retirement Plan, (2) Basic Money Purchase
Pension Plan, (3) Thrift Plan Qualifying as Profit Sharing
Plan, (4) Thrift Plan Qualifying as Money Purchase Plan, (5)
Integrated Profit Sharing Retirement Plan, (6) Integrated
Money Purchase Pension Plan filed as Exhibit 14(2) to
Post-Effective Amendment #22 on Form N-1 under the
Securities Act of 1933 (File No. 2-28471) and incorporated
herein by reference.
(c) Individual Retirement Custodial Account (Form 5305-A) and
Investment Instruction Form filed as Exhibit 14(3) to
Post-Effective Amendment #22 on Form N-1 under the
Securities Act of 1933 (File No. 2-28471) and incorporated
herein by reference.
(d) Eaton & Howard, Vance Sanders Variable Pension Prototype
Plan and Trust with Adoption Agreement filed as Exhibit
14(b) to Post-Effective Amendment #22 on Form N-1 under the
Securities Act of 1933 (File No. 2-28471) and incorporated
herein by reference.
(15)(a) Service Plan for Eaton Vance Government Obligations Fund
(now EV Traditional Government Obligations Fund) pursuant to
Rule 12b-1 under the Investment Company Act of 1940 dated
July 7, 1993 filed as Exhibit (15)(a) to Post-Effective
Amendment No. 23 and incorporated herein by reference.
(b) Distribution Plan pursuant to Rule 12b-1 under the
Investment Company Act of 1940 for Eaton Vance Short-Term
Treasury Fund dated February 4, 1991 as Amended and Restated
February 25, 1991 filed as Exhibit (15)(b) to Post-Effective
Amendment No. 23 and incorporated herein by reference.
(c) Amended Distribution Plan for EV Classic Government
Obligations Fund pursuant to Rule 12b-1 under the Investment
Company Act of 1940 dated January 27, 1995 filed as Exhibit
(15)(c) to Post-Effective Amendment No. 22 and incorporated
herein by reference.
(d) Distribution Plan for EV Marathon Government Obligations
Fund pursuant to Rule 12b-1 under the Investment Company Act
of 1940 dated October 28, 1993 filed as Exhibit (15) (d) to
Post-Effective Amendment No. 23 and incorporated herein by
reference.
(e) Distribution Plan for EV Marathon High Income Fund pursuant
to Rule 12b-1 under the Investment Company Act of 1940 dated
June 19, 1995 filed as Exhibit (15)(e) to Post- Effective
Amendment No. 25 and incorporated herein by reference.
(f) Distribution Plan for EV Classic High Income Fund pursuant
to Rule 12b-1 under the Investment Company Act of 1940 dated
June 19, 1995 filed as Exhibit (15)(f) to Post- Effective
Amendment No. 25 and incorporated herein by reference.
(g) Distribution Plan for EV Classic Strategic Income Fund
pursuant to Rule 12b-1 under the Investment Company Act of
1940 dated June 19, 1995 filed as Exhibit (15)(g) to Post-
Effective Amendment No. 24 and incorporated herein by
reference.
(h) Distribution Plan for EV Marathon Strategic Income Fund
pursuant to Rule 12b-1 under the Investment Company Act of
1940 dated June 19, 1995 filed as Exhibit (15)(h) to
Post-Effective Amendment No. 24 and incorporated herein by
reference.
(i) Distribution Plan for Eaton Vance Liquid Assets Fund
pursuant to Rule 12b-1 under the Investment Company Act of
1940 dated June 19, 1995 filed as Exhibit (15)(i) to Post-
Effective Amendment No. 25 and incorporated herein by
reference.
(j) Distribution Plan for Eaton Vance Money Market Fund pursuant
to Rule 12b-1 under the Investment Company Act of 1940 dated
June 19, 1995 filed as Exhibit (15)(j) to Post- Effective
Amendment No. 25 and incorporated herein by reference.
(k) Distribution Plan for EV Marathon Tax-Managed Growth
Fund pursuant to Rule 12b-1 under the Investment Company Act
of 1940, dated March 20, 1996, filed as Exhibit (15) (k) to
Post-Effective Amendment No. 28 and incorporated herein by
reference.
(l) Service Plan for EV Traditional Tax-Managed Growth Fund
pursuant to Rule 12b-1 under the Investment Company Act of
1940, dated March 20, 1996 filed as Exhibit (15)(l) to
Post-Effective Amendment No. 28 and incorporated herein by
reference.
(m) Form of Distribution Plan for EV Classic Tax-Managed Growth
Fund pursuant to Rule 12b-1 under the Investment Company Act
of 1940 filed herewith.
(16) Schedules for Computation of Performance Quotations filed
herewith.
(17)(a) Power of Attorney for Eaton Vance Mutual Funds Trust dated
July 11, 1995 filed as Exhibit (17)(a) to Post-Effective
Amendment No. 23 and incorporated herein by reference.
(b) Power of Attorney for Government Obligations Portfolio dated
June 19, 1995 filed as Exhibit (17)(b) to Post-Effective
Amendment No. 23 and incorporated herein by reference.
(c) Power of Attorney for High Income Portfolio dated June 19,
1995 filed as Exhibit (17) (c) to Post-Effective Amendment
No. 23 and incorporated herein by reference.
(d) Power of Attorney for Strategic Income Portfolio dated
August 7, 1995 filed as Exhibit (17)(d) to Post-Effective
Amendment No. 24 and incorporated herein by reference.
(e) Power of Attorney for Cash Management Portfolio dated August
7, 1995 filed as Exhibit (17)(e) to Post-Effective Amendment
No. 25 and incorporated herein by reference.
(f) Power of Attorney for Tax-Managed Growth Portfolio dated
October 23, 1995 filed as Exhibit (17)(f) to Post-Effective
Amendment No. 26 and incorporated herein by reference.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Not applicable
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
(1) (2)
TITLE OF CLASS NUMBER OF RECORD HOLDERS
Shares of beneficial interest without par value as of April 30, 1996
Eaton Vance Short-Term Treasury Fund 68
EV Classic Government Obligations Fund 963
EV Marathon Government Obligations Fund 3,520
EV Traditional Government Obligations Fund 10,404
EV Classic High Income Fund 232
EV Marathon High Income Fund 15,270
EV Classic Strategic Income Fund 9
EV Marathon Strategic Income Fund 5,979
EV Marathon Tax-Managed Growth Fund 67
EV Traditional Tax-Managed Growth Fund 65
Eaton Vance Cash Management Fund 2,285
Eaton Vance Liquid Assets Fund 729
Eaton Vance Money Market Fund 629
Eaton Vance Tax Free Reserves 187
ITEM 27. INDEMNIFICATION
The Registrant's By-Laws filed as Exhibit (2)(a) to Post-Effective Amendment
No. 23 contain provisions limiting the liability, and providing for
indemnification, of the Trustees and officers under certain circumstances.
Registrant's Trustees and officers are insured under a standard mutual fund
errors and omissions insurance policy covering loss incurred by reason of
negligent errors and omissions committed in their capacities as such.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Reference is made to the information set forth under the captions
"Investment Adviser and Administrator" or "Investment Adiviser" in the
Statements of Additional Information which information is incorporated herein by
reference.
<PAGE>
ITEM 29. 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>
<S> <C>
EV Classic California Municipals Fund EV Marathon Greater China Growth Fund
EV Classic Connecticut Municipals Fund EV Marathon Greater India Fund
EV Classic Florida Insured Municipals Fund EV Marathon Growth Fund
EV Classic Florida Limited Maturity EV Marathon Hawaii Municipals Fund
Municipals Fund EV Marathon High Income Fund
EV Classic Florida Municipals Fund EV Marathon High Yield Municipals Fund
EV Classic Government Obligations Fund EV Marathon Information Age Fund
EV Classic Greater China Growth Fund EV Marathon Investors Fund
EV Classic Growth Fund EV Marathon Kansas Municipals Fund
EV Classic High Income Fund EV Marathon Kentucky Municipals Fund
EV Classic Information Age Fund EV Marathon Louisiana Municipals Fund
EV Classic Investors Fund EV Marathon Maryland Municipals Fund
EV Classic Massachusetts Limited Maturity EV Marathon Massachusetts Limited Maturity
Municipals Fund Municipals Fund
EV Classic National Limited Maturity EV Marathon Massachusetts Municipals Fund
Municipals Fund EV Marathon Michigan Limited Maturity
EV Classic National Municipals Fund Municipals Fund
EV Classic New Jersey Municipals Fund EV Marathon Michigan Municipals Fund
EV Classic New York Limited Maturity EV Marathon Minnesota Municipals Fund
Municipals Fund EV Marathon Mississippi Municipals Fund
EV Classic New York Municipals Fund EV Marathon Missouri Municipals Fund
EV Classic Pennsylvania Limited Maturity EV Marathon National Limited Maturity
Municipals Fund Municipals Fund
EV Classic Pennsylvania Municipals Fund EV Marathon National Municipals Fund
EV Classic Rhode Island Municipals Fund EV Marathon New Jersey Limited Maturity
EV Classic Senior Floating-Rate Fund Municipals Fund
EV Classic Strategic Income Fund EV Marathon New Jersey Municipals Fund
EV Classic Special Equities Fund EV Marathon New York Limited Maturity
EV Classic Stock Fund Municipals Fund
EV Classic Total Return Fund EV Marathon New York Municipals Fund
EV Marathon Alabama Municipals Fund EV Marathon North Carolina Municipals Fund
EV Marathon Arizona Municipals Fund EV Marathon Ohio Limited Maturity
EV Marathon Arkansas Municipals Fund Municipals Fund
EV Marathon Asian Small Companies Fund EV Marathon Ohio Municipals Fund
EV Marathon California Limited Maturity EV Marathon Oregon Municipals Fund
Municipals Fund EV Marathon Pennsylvania Limited Maturity
EV Marathon California Municipals Fund Municipals Fund
EV Marathon Colorado Municipals Fund EV Marathon Pennsylvania Municipals Fund
EV Marathon Connecticut Limited Maturity EV Marathon Rhode Island Municipals Fund
Municipals Fund EV Marathon Strategic Income Fund
EV Marathon Connecticut Municipals Fund EV Marathon South Carolina Municipals Fund
EV Marathon Emerging Markets Fund EV Marathon Special Equities Fund
EV Marathon Florida Insured Municipals Fund EV Marathon Stock Fund
EV Marathon Florida Limited Maturity EV Marathon Tax-Managed Growth Fund
Municipals Fund EV Marathon Tennessee Municipals Fund
EV Marathon Florida Municipals Fund EV Marathon Texas Municipals Fund
EV Marathon Georgia Municipals Fund EV Marathon Total Return Fund
EV Marathon Gold & Natural Resources Fund EV Marathon Virginia Municipals Fund
EV Marathon Government Obligations Fund EV Marathon West Virginia Municipals Fund
EV Traditional Alabama Municipals Fund
</TABLE>
<PAGE>
<TABLE>
<S> <C>
EV Traditional Arizona Municipals Fund EV Traditional Mississippi Municipals Fund
EV Traditional Arkansas Municipals Fund EV Traditional Missouri Municipals Fund
EV Traditional Asian Small Companies Fund Eaton Vance Municipal Bond Fund L.P.
EV Traditional California Limited Maturity EV Traditional National Limited Maturity
Municipals Fund Municipals Fund
EV Traditional California Municipals Fund EV Traditional National Municipals Fund
EV Traditional Colorado Municipals Fund EV Traditional New Jersey Limited Maturity
EV Traditional Connecticut Limited Maturity Municipals Fund
Municipals Fund EV Traditional New Jersey Municipals Fund
EV Traditional Connecticut Municipals Fund EV Traditional New York Limited Maturity
EV Traditional Emerging Markets Fund Municipals Fund
EV Traditional Florida Insured Municipals Fund EV Traditional New York Municipals Fund
EV Traditional Florida Limited Maturity EV Traditional North Carolina Municipals Fund
Municipals Fund EV Traditional Ohio Limited Maturity
EV Traditional Florida Municipals Fund Municipals Fund
EV Traditional Georgia Municipals Fund EV Traditional Ohio Municipals Fund
EV Traditional Government Obligations Fund EV Traditional Oregon Municipals Fund
EV Traditional Greater China Growth Fund EV Traditional Pennsylvania Municipals Fund
EV Traditional Greater India Fund EV Traditional South Carolina Municipals Fund
EV Traditional Growth Fund EV Traditional Special Equities Fund
EV Traditional Hawaii Municipals Fund EV Traditional Stock Fund
EV Traditional High Yield Municipals Fund EV Traditional Tax-Managed Growth Fund
Eaton Vance Income Fund of Boston EV Traditional Tennessee Municipals Fund
EV Traditional Information Age Fund EV Traditional Texas Municipals Fund
EV Traditional Investors Fund EV Traditional Total Return Fund
EV Traditional Kansas Municipals Fund EV Traditional Virginia Municipals Fund
EV Traditional Kentucky Municipals Fund EV Traditional West Virginia Municipals Fund
EV Traditional Louisiana Municipals Fund Eaton Vance Cash Management Fund
EV Traditional Maryland Municipals Fund Eaton Vance Liquid Assets Trust
EV Traditional Massachusetts Municipals Fund Eaton Vance Money Market Fund
EV Traditional Michigan Limited Maturity Eaton Vance Prime Rate Reserves
Municipals Fund Eaton Vance Short-Term Treasury Fund
EV Traditional Michigan Municipals Fund Eaton Vance Tax Free Reserves
EV Traditional Minnesota Municipals Fund Massachusetts Municipal Bond Portfolio
</TABLE>
<TABLE>
<CAPTION>
(B)
(1) (2) (3)
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICE
BUSINESS ADDRESS WITH PRINCIPAL UNDERWRITER WITH REGISTRANT
------------------ -------------------------- --------------------
<S> <C> <C>
James B. Hawkes* Vice President and Director Vice President and Trustee
William M. Steul* Vice President and Director None
Wharton P. Whitaker* President and Director None
Chris Berg* Vice President None
H. Day Brigham, Jr.* Vice President None
Susan W. Bukima* Vice President None
Jeffrey W. Butterfield* Vice President None
Jeffrey Chernoff* Vice President None
James S. Comforti* Vice President None
Raymond Cox* Vice President None
Mark P. Doman* Vice President None
James Foley Vice President None
Michael A. Foster* Vice President None
William M. Gillen* Vice President None
Hugh S. Gilmartin* Vice President None
Brian Jacobs* Senior Vice President None
Thomas J. Marcello* Vice President None
Timothy D. McCarthy* Vice President None
Joseph T. McMenamin* Vice President None
Morgan C. Mohrman* Senior Vice President None
James A. Naughton* Vice President None
Mark D. Nelson* Vice President None
James L. O'Connor* Vice President Treasurer
Thomas Otis* Secretary and Clerk Secretary
George D. Owen* Vice President None
F. Anthony Robinson* Vice President None
Benjamin A. Rowland, Jr.* Vice President, None
Treasurer and Director
John P. Rynne* Vice President None
Kevin Schrader* Vice President None
George V.F. Schwab, Jr.* Vice President None
Cornelius J. Sullivan* Vice President None
David M. Thill* Vice President None
Chris Volf* Vice President None
Sue Wilder* Vice President None
- ----------
*Address is 24 Federal Street, Boston, MA 02110
</TABLE>
(C) Not applicable
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
All applicable accounts, books and documents required to be maintained by
the Registrant by Section 31(a) of the Investment Company Act of 1940 and the
Rules promulgated thereunder are in the possession and custody of the
Registrant's custodian, Investors Bank & Trust Company, 89 South Street, Boston,
MA 02111 and its transfer agent, First Data Investor Services Group, 53 State
Street, Boston, MA 02104, with the exception of certain corporate documents and
portfolio trading documents which are in the possession and custody of Eaton
Vance Management, 24 Federal Street, Boston, MA 02110. Certain corporate
documents of High Income Portfolio (the "Portfolio") are also maintained by IBT
Trust Company (Cayman), Ltd., The Bank of Nova Scotia Building, P.O. Box 501,
George Town, Grand Cayman, Cayman Islands, British West Indies, and certain
investor account, Portfolio and the Registrant's accounting records are held by
IBT Fund Services (Canada) Inc., 1 First Canadian Place, King Street West, Suite
2800, P.O. Box 231, Toronto, Ontario, Canada M5X 1C8. Registrant is informed
that all applicable accounts, books and documents required to be maintained by
registered investment advisers are in the custody and possession of Eaton Vance
Management.
ITEM 31. MANAGEMENT SERVICES
Not applicable
ITEM 32. UNDERTAKINGS
The Registrant undertakes to file a Post-Effective Amendment on behalf of EV
Marathon Tax-Managed Growth Fund and EV Traditional Tax-Managed Growth Fund,
using financial statements which need not be certified, within four to six
months from the effective date of Post-Effective Amendment No. 26.
The Registrant undertakes to file a Post-Effective Amendment on behalf of EV
Classic Tax-Managed Growth Fund, using financial statements which need not be
certified, within four to six months from the effective date of Post- Effective
Amendment No. 29.
The Registrant undertakes to furnish to each person to whom a prospectus is
delivered a copy of the latest annual report to shareholders, upon request and
without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, and the
Investment Company Act of 1940, the Registrant has duly caused this Post-
Effective Amendment to its Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Boston, and the
Commonwealth of Massachusetts, on the 1st day of May, 1996.
EATON VANCE MUTUAL FUNDS TRUST
By: /s/ M. DOZIER GARDNER
-------------------------------------
M. DOZIER GARDNER, President
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
President, Principal
Executive Officer and
/s/ M. DOZIER GARDNER Trustee May 1, 1996
- --------------------------------
M. DOZIER GARDNER
Treasurer and Principal
Financial and Accounting
/s/ JAMES L. O'CONNOR Officer May 1, 1996
- --------------------------------
JAMES L. O'CONNOR
/s/ JAMES B. HAWKES Vice President, Trustee May 1, 1996
- --------------------------------
JAMES B. HAWKES
DONALD R. DWIGHT* Trustee May 1, 1996
- --------------------------------
DONALD R. DWIGHT
SAMUEL L. HAYES, III* Trustee May 1, 1996
- --------------------------------
SAMUEL L. HAYES, III
NORTON H. REAMER* Trustee May 1, 1996
- --------------------------------
NORTON H. REAMER
JOHN L. THORNDIKE* Trustee May 1, 1996
- --------------------------------
JOHN L. THORNDIKE
JACK L. TREYNOR* Trustee May 1, 1996
- --------------------------------
JACK L. TREYNOR
*By: /s/ H. DAY BRIGHAM, JR.
---------------------------
H. DAY BRIGHAM, JR.
As Attorney-in-fact
<PAGE>
SIGNATURES
Tax-Managed Growth Portfolio has duly caused this Amendment to the
Registration Statement on Form N-1A of Eaton Vance Mutual Funds Trust (File
No. 2-90946) to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Boston, and the Commonwealth of Massachusetts, on
the 1st day of May, 1996.
TAX-MANAGED GROWTH PORTFOLIO
By: /s/ M. DOZIER GARDNER
-------------------------------------
M. DOZIER GARDNER, President
This Amendment to the Registration Statement on Form N-1A of Eaton Vance
Mutual Funds Trust (File No. 2-90946) has been signed below by the following
persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
Trustee, President and
Principal Executive
/s/ M. DOZIER GARDNER Officer May 1, 1996
- ----------------------------------
M. DOZIER GARDNER
Treasurer and Principal
Financial and Accounting
/s/ JAMES L. O'CONNOR Officer May 1, 1996
- ----------------------------------
JAMES L. O'CONNOR
/s/ H. DAY BRIGHAM, JR. Trustee May 1, 1996
- ----------------------------------
H. DAY BRIGHAM, JR.
/s/ JAMES B. HAWKES Trustee May 1, 1996
- ----------------------------------
JAMES B. HAWKES
DONALD R. DWIGHT* Trustee May 1, 1996
- ----------------------------------
DONALD R. DWIGHT
SAMUEL L. HAYES, III* Trustee May 1, 1996
- ----------------------------------
SAMUEL L. HAYES, III
NORTON H. REAMER* Trustee May 1, 1996
- ----------------------------------
NORTON H. REAMER
JOHN L. THORNDIKE* Trustee May 1, 1996
- ----------------------------------
JOHN L. THORNDIKE
JACK L. TREYNOR* Trustee May 1, 1996
- ----------------------------------
JACK L. TREYNOR
*By: /s/ H. DAY BRIGHAM, JR.
--------------------------------
H. DAY BRIGHAM, JR.
As Attorney-in-fact
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
PAGE IN SEQUENTIAL
EXHIBIT NO. DESCRIPTION NUMBERING SYSTEM
- ----------- ----------- ----------------
<C> <S> <C>
(1)(d) Form of Amendment and Restatement of Establishment and Designation of Series.
(6)(a)(15) Form of Distribution Agreement with Eaton Vance Distributors, Inc. for EV Classic
Tax-Managed Growth Fund.
(9)(d) Amended Schedule A dated October 23, 1995 to Administrative Services Agreement.
(11) Consent of Independent Auditors for Tax-Managed Growth Portfolio dated May 3,
1996.
(15)(m) Form of Distribution Plan for EV Classic Tax-Managed Growth Fund pursuant to Rule
12b-1 under the Investment Company Act of 1940.
(16) Calculation of Investment Performance.
</TABLE>
<PAGE>
EXHIBIT 1(d)
Form of
EATON VANCE MUTUAL FUNDS TRUST
Amendment and Restatement
of
Establishment and Designation of Series of Shares
of Beneficial Interest, Without Par Value
(as amended and restated June 24, 1996)
WHEREAS, the Trustees of Eaton Vance Mutual Funds Trust, a
Massachusetts business trust (the "Trust"), have previously designated separate
series (or "Funds"); and
WHEREAS, the Trustees now desire to further redesignate the series or
Funds pursuant to Section 5.1 of Article V of the Trust's Amended and Restated
Declaration of Trust dated August 17, 1993 (the "Declaration of Trust");
NOW, THEREFORE, the undersigned, being at least a majority of the duly
elected and qualified Trustees presently in office of the Trust, hereby divide
the shares of beneficial interest of the Trust into fifteen separate series
("Funds"), each Fund to have the following special and relative rights:
1. The Funds shall be designated as follows:
EV Classic Government Obligations Fund
EV Marathon Government Obligations Fund
EV Traditional Government Obligations Fund
EV Classic High Income Fund
EV Marathon High Income Fund
EV Classic Strategic Income Fund
EV Marathon Strategic Income Fund
EV Marathon Tax-Managed Growth Fund
EV Traditional Tax-Managed Growth Fund
EV Classic Tax-Managed Growth Fund
Eaton Vance Cash Management Fund
Eaton Vance Liquid Assets Fund
Eaton Vance Money Market Fund
Eaton Vance Short-Term Treasury Fund
Eaton Vance Tax Free Reserves
2. Each Fund shall be authorized to invest in cash, securities,
instruments and other property as from time to time described in the Trust's
then currently effective registration statements under the Securities Act of
1933 and the Investment Company Act of 1940. Each share of beneficial interest
of each Fund ("share") shall be redeemable, shall be entitled to one vote (or
fraction thereof in respect of a fractional share) on matters on which shares of
that Fund shall be entitled to vote and shall represent a pro rata beneficial
interest in the assets allocated to that Fund, all as provided in the
Declaration of Trust. The proceeds of sales of shares of each Fund, together
with any income and gain thereon, less any diminution or expenses thereof, shall
irrevocably belong to such Fund, unless otherwise required by law. Each share of
a Fund shall be entitled to receive its pro rata share of net assets of that
Fund upon liquidation of that Fund.
3. Shareholders of each Fund shall vote separately as a class to the
extent provided in Rule 18f-2, as from time to time in effect, under the
Investment Company Act of 1940.
4. The assets and liabilities of the Trust shall be allocated among the
above-referenced Funds as set forth in Section 5.5 of Article V of the
Declaration of Trust, except as provided below:
(a) Costs incurred by each Fund in connection with its organization and
start-up, including Federal and state registration and qualification fees and
expenses of the initial public offering of such Fund's shares, shall (if
applicable) be borne by such Fund and deferred and amortized over the five year
period beginning on the date that such Fund commences operations.
(b) Reimbursement required under any expense limitation applicable to
the Trust shall be allocated among those Funds whose expense ratios exceed such
limitation on the basis of the relative expense ratios of such Funds.
(c) The liabilities, expenses, costs, charges and reserves of the Trust
(other than the management and investment advisory fees or the organizational
expenses paid by the Trust) which are not readily identifiable as belonging to
any particular Fund shall be allocated among the Funds on an equitable basis as
determined by the Trustees.
5. The Trustees (including any successor Trustees) shall have the right
at any time and from time to time to reallocate assets and expenses or to change
the designation of any Fund now or hereafter created, or to otherwise change the
special and relative rights of any such Fund, and to terminate any Fund or add
additional Funds as provided in the Declaration of Trust.
6. Any Fund may merge or consolidate with any other corporation,
association, trust or other organization or may sell, lease or exchange all or
substantially all of its property, including its good will, upon such terms and
conditions and for such consideration when and as authorized by the Trustees;
and any such merger, consolidation, sale, lease or exchange shall be deemed for
all purposes to have been accomplished under and pursuant to the statutes of the
Commonwealth of Massachusetts. The Trustees may also at any time sell and
convert into money all the assets of any Fund. Upon making provision for the
payment of all outstanding obligations, taxes and other liabilities, accrued or
contingent, of such Fund, the Trustees shall distribute the remaining assets of
such Fund ratably among the holders of the outstanding shares. Upon completion
of the distribution of the remaining proceeds or the remaining assets as
provided in this paragraph 6, the Fund shall terminate and the Trustees shall be
discharged of any and all further liabilities and duties hereunder with respect
to such Fund and the right, title and interest of all parties with respect to
such Fund shall be cancelled and discharged.
7. The Declaration of Trust authorizes the Trustees to divide each Fund
and any other series of shares into two or more classes and to fix and determine
the relative rights and preferences as between, and all provisions applicable
to, each of the different classes so established and designated by the Trustees.
The establishment and designation of any class of any Fund or other series of
shares shall be effective upon the execution by a majority of then the Trustees
of an instrument setting forth such establishment and designation and the
relative rights and preferences, and provisions applicable to, such class, or as
otherwise provided in such instrument.
Dated: June 24, 1996
- -------------------------------------- --------------------------------------
Donald R. Dwight Norton H. Reamer
- -------------------------------------- --------------------------------------
M. Dozier Gardner Samuel L. Hayes, III
- -------------------------------------- --------------------------------------
James B. Hawkes John L. Thorndike
--------------------------------------
Jack L. Treynor
<PAGE>
EXHIBIT 6(a)(15)
EATON VANCE MUTUAL FUNDS TRUST
FORM OF DISTRIBUTION AGREEMENT
ON BEHALF OF EV CLASSIC TAX-MANAGED GROWTH FUND
AGREEMENT effective as of between EATON VANCE MUTUAL
FUNDS TRUST, a Massachusetts business trust having its principal place of
business in Boston in the Commonwealth of Massachusetts, hereinafter called the
"Trust", on behalf of EV Classic Tax-Managed Growth Fund (the "Fund"), and EATON
VANCE DISTRIBUTORS, INC., a Massachusetts corporation having its principal place
of business in said Boston, hereinafter sometimes called the "Principal
Underwriter".
IN CONSIDERATION of the mutual promises and undertakings herein
contained, the parties hereto agree:
1. The Trust grants to the Principal Underwriter the right to purchase
shares of the Fund upon the terms hereinbelow set forth during the term of this
Agreement. While this Agreement is in force, the Principal Underwriter agrees to
use its best efforts to find purchasers for shares of the Fund.
The Principal Underwriter shall have the right to buy from the Fund the
shares needed, but not more than the shares needed (except for clerical errors
and errors of transmission) to fill unconditional orders for shares of the Fund
placed with the Principal Underwriter by financial service firms or investors as
set forth in the current Prospectus relating to shares of the Fund. The price
which the Principal Underwriter shall pay for the shares so purchased shall be
equal to the price paid by investors upon purchasing such shares. The Principal
Underwriter shall notify Investors Bank & Trust Company, Custodian of the Fund
("IBT"), and The Shareholder Services Group, Inc., Transfer Agent of the Fund
("TSSG"), or a successor transfer agent, at the end of each business day, or as
soon thereafter as the orders placed with it have been compiled, of the number
of shares and the prices thereof which the Principal Underwriter is to purchase
as principal for resale. The Principal Underwriter shall take down and pay for
shares ordered from the Fund on or before the eleventh business day (excluding
Saturdays) after the shares have been so ordered.
The right granted to the Principal Underwriter to buy shares from the
Fund shall be exclusive, except that said exclusive right shall not apply to
shares issued in connection with the merger or consolidation of any other
investment company or personal holding company with the Fund or the acquisition
by purchase or otherwise of all (or substantially all) the assets or the
outstanding shares of any such company, by the Fund; nor shall it apply to
shares, if any, issued by the Fund in distribution of income or realized capital
gains of the Fund payable in shares or in cash at the option of the shareholder.
2. The shares may be resold by the Principal Underwriter to or through
financial service firms having agreements with the Principal Underwriter, and to
investors, upon the following terms and conditions.
The public offering price, i.e., the price per share at which the
Principal Underwriter or financial service firm purchasing shares from the
Principal Underwriter may sell shares to the public, shall be equal to the net
asset value at which the Principal Underwriter is to purchase the shares.
The net asset value of shares of the Fund shall be determined by the
Trust or IBT, as the agent of the Fund, as of the close of regular trading on
the New York Stock Exchange on each business day on which said Exchange is open,
or as of such other time on each such business day as may be determined by the
Trustees of the Trust, in accordance with the methodology and procedures for
calculating such net asset value authorized by the Trustees. The Trust may also
cause the net asset value to be determined in substantially the same manner or
estimated in such manner and as of such other time or times as may from time to
time be agreed upon by the Trust and Principal Underwriter. The Trust will
notify the Principal Underwriter each time the net asset value of the Fund's
shares is determined and when such value is so determined it shall be applicable
to transactions as set forth in the current Prospectus and Statement of
Additional Information (hereafter the "Prospectus") relating to the Fund's
shares.
No shares of the Fund shall be sold by the Fund during any period when
the determination of net asset value is suspended pursuant to the Declaration of
Trust, except to the Principal Underwriter, in the manner and upon the terms
above set forth to cover contracts of sale made by the Principal Underwriter
with its customers prior to any such suspension, and except as provided in the
last paragraph of paragraph 1 hereof. The Trust shall also have the right to
suspend the sale of the Fund's shares if in the judgment of the Trust conditions
obtaining at any time render such action advisable. The Principal Underwriter
shall have the right to suspend sales at any time, to refuse to accept or
confirm any order from an investor or financial service firm, or to accept or
confirm any such order in part only, if in the judgment of the Principal
Underwriter such action is in the best interests of the Fund.
3. The Trust agrees that it will, from time to time, but subject to the
necessary approval of the Fund's shareholders, take such steps as may be
necessary to register the Fund's shares under the federal Securities Act of
1933, as amended from time to time, (the "1933 Act"), to the end that there will
be available for sale such number of shares as the Principal Underwriter may
reasonably be expected to sell. The Trust agrees to indemnify and hold harmless
the Principal Underwriter and each person, if any, who controls the Principal
Underwriter within the meaning of Section 15 of the 1933 Act against any loss,
liability, claim, damages or expense (including the reasonable cost of
investigating or defending any alleged loss, liability, claim, damages or
expense and reasonable counsel fees incurred in connection therewith), arising
by reason of any person acquiring any shares of the Fund, which may be based
upon the 1933 Act or on any other statute or at common law, on the ground that
the Registration Statement or Prospectus, as from time to time amended and
supplemented, includes an untrue statement of a material fact or omits to state
a material fact required to be stated therein or necessary in order to make the
statements therein not misleading, unless such statement or omission was made in
reliance upon, and in conformity with, information furnished in writing to the
Trust in connection therewith by or on behalf of the Principal Underwriter;
provided, however, that in no case (i) is the indemnity of the Trust in favor of
the Principal Underwriter and any such controlling person to be deemed to
protect such Principal Underwriter or any such controlling person against any
liability to the Trust or the Fund or its security holders to which such
Principal Underwriter or any such controlling person would otherwise be subject
by reason of willful misfeasance, bad faith, or gross negligence in the
performance of its duties or by reason of its reckless disregard of its
obligations and duties under this Agreement, or (ii) is the Trust or the Fund to
be liable under its indemnity agreement contained in this paragraph with respect
to any claim made against the Principal Underwriter or any such controlling
person unless the Principal Underwriter or any such controlling person, as the
case may be, shall have notified the Trust in writing within a reasonable time
after the summons or other first legal process giving information of the nature
of the claim shall have been served upon the Principal Underwriter or such
controlling person (or after such Principal Underwriter or such controlling
person shall have received notice of such service on any designated agent), but
failure to notify the Trust of any such claim shall not relieve it from any
liability which the Fund may have to the person against whom such action is
brought otherwise than on account of its indemnity agreement contained in this
paragraph. The Trust shall be entitled to participate, at the expense of the
Fund, in the defense, or, if the Trust so elects, to assume the defense of any
suit brought to enforce any such liability, but if the Trust elects to assume
the defense, such defense shall be conducted by counsel chosen by it and
satisfactory to the Principal Underwriter or controlling person or persons,
defendant or defendants in the suit. In the event the Trust elects to assume the
defense of any such suit and retains such counsel, the Principal Underwriter or
controlling person or persons, defendant or defendants in the suit, shall bear
the fees and expenses of any additional counsel retained by them, but, in case
the Trust does not elect to assume the defense of any such suit, the Fund shall
reimburse the Principal Underwriter or controlling person or persons, defendant
or defendants in the suit, for the reasonable fees and expenses of any counsel
retained by them. The Trust agrees promptly to notify the Principal Underwriter
of the commencement of any litigation or proceedings against it or any of its
officers or Trustees in connection with the issuance or sale of any of the
Fund's shares.
4. The Principal Underwriter covenants and agrees that, in selling the
shares of the Fund, it will use its best efforts in all respects duly to conform
with the requirements of all state and federal laws relating to the sale of such
shares, and will indemnify and hold harmless the Trust and each of its Trustees
and officers and each person, if any, who controls the Trust within the meaning
of Section 15 of the 1933 Act, against any loss, liability, damages, claim or
expense (including the reasonable cost of investigating or defending any alleged
loss, liability, damages, claim or expense and reasonable counsel fees incurred
in connection therewith), arising by reason of any person acquiring any shares
of the Fund, which may be based upon the 1933 Act or any other statute or at
common law, on account of any wrongful act of the Principal Underwriter or any
of its employees (including any failure to conform with any requirement of any
state or federal law relating to the sale of such shares) or on the ground that
the registration statement or Prospectus, as from time to time amended and
supplemented, includes an untrue statement of a material fact or omits to state
a material fact required to be stated therein or necessary in order to make the
statements therein not misleading, insofar as any such statement or omission was
made in reliance upon, and in conformity with information furnished in writing
to the Fund in connection therewith by or on behalf of the Principal
Underwriter, provided, however, that in no case (i) is the indemnity of the
Principal Underwriter in favor of any person indemnified to be deemed to protect
the Fund or any such person against any liability to which the Fund or any such
person would otherwise be subject by reason of willful misfeasance, bad faith,
or gross negligence in the performance of its or his duties or by reason of its
or his reckless disregard of its obligations and duties under this Agreement, or
(ii) is the Principal Underwriter to be liable under its indemnity agreement
contained in this paragraph with respect to any claim made against the Fund or
any person indemnified unless the Trust or such person, as the case may be,
shall have notified the Principal Underwriter in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon the Trust, the Fund or upon such
person (or after the Trust or such person shall have received notice of such
service on any designated agent), but failure to notify the Principal
Underwriter of any such claim shall not relieve it from any liability which it
may have to the Fund or any person against whom such action is brought otherwise
than on account of its indemnity agreement contained in this paragraph. The
Principal Underwriter shall be entitled to participate, at its own expense, in
the defense, or, if it so elects, to assume the defense of any suit brought to
enforce any such liability, but if the Principal Underwriter elects to assume
the defense, such defense shall be conducted by counsel chosen by it and
satisfactory to the Trust, or to its officers or Trustees, or to any controlling
person or persons, defendant or defendants in the suit. In the event that the
Principal Underwriter elects to assume the defense of any such suit and retains
such counsel, the Fund or such officers or Trustees or controlling person or
persons, defendant or defendants in the suit, shall bear the fees and expenses
of any additional counsel retained by them or the Trust, but, in case the
Principal Underwriter does not elect to assume the defense of any such suit, it
shall reimburse the Fund, any such officers and Trustees or controlling person
or persons, defendant or defendants in such suit, for the reasonable fees and
expenses of any counsel retained by them or the Trust. The Principal Underwriter
agrees promptly to notify the Trust of the commencement of any litigation or
proceedings against it in connection with the issue and sale of any of the
Fund's shares.
Neither the Principal Underwriter nor any financial service firm nor
any other person is authorized by the Trust to give any information or to make
any representations, other than those contained in the Registration Statement or
Prospectus filed with the Securities and Exchange Commission (the "Commission")
under the 1933 Act, (as said Registration Statement and Prospectus may be
amended or supplemented from time to time), covering the shares of the Fund.
Neither the Principal Underwriter nor any financial service firm nor any other
person is authorized to act as agent for the Trust or the Fund in connection
with the offering or sale of shares of the Fund to the public or otherwise. All
such sales made by the Principal Underwriter shall be made by it as principal,
for its own account. The Principal Underwriter may, however, act as agent in
connection with the repurchase of shares as provided in paragraph 6 below, or in
connection with "exchanges" between investment companies for which the Principal
Underwriter acts as Principal Underwriter or for which an affiliate of the
Principal Underwriter acts as investment adviser.
5(a). The Fund will pay, or cause to be paid -
(i) all the costs and expenses of the Fund, including fees and
disbursements of its counsel, in connection with the preparation and filing of
any required Registration Statement and/or Prospectus under the 1933 Act, or the
Investment Company Act of 1940, as amended from time to time, (the "1940 Act")
covering its shares and all amendments and supplements thereto, and preparing
and mailing periodic reports to shareholders (including the expense of setting
up in type any such Registration Statement, Prospectus or periodic report);
(ii) the cost of preparing temporary and permanent share
certificates (if any) for shares of the Fund;
(iii) The cost and expenses of delivering to the Principal
Underwriter at its office in Boston, Massachusetts, all shares of the Fund
purchased by it as principal hereunder; and
(iv) all the federal and state (if any) issue and/or transfer
taxes payable upon the issue by or (in the case of treasury shares) transfer
from the Fund to the Principal Underwriter of any and all shares of the Fund
purchased by the Principal Underwriter hereunder.
(b) The Principal Underwriter agrees that, after the Prospectus and
periodic reports have been set up in type, it will bear the expense of printing
and distributing any copies thereof which are to be used in connection with the
offering of shares of the Fund to financial service firms or investors. The
Principal Underwriter further agrees that it will bear the expenses of
preparing, printing and distributing any other literature used by the Principal
Underwriter or furnished by it for use by financial service firms in connection
with the offering of the shares of the Fund for sale to the public and any
expenses of advertising in connection with such offering. The Fund agrees to pay
the expenses of registration and maintaining registration of its shares for sale
under federal and state securities laws, and, if necessary or advisable in
connection therewith, of qualifying the Trust or the Fund as a dealer or broker,
in such states as shall be selected by the Principal Underwriter and the fees
payable to each such state for continuing the qualification therein until the
Principal Underwriter notifies the Trust that it does not wish such
qualification continued.
(c) In addition, the Trust agrees, in accordance with the Fund's
Distribution Plan (the "Plan"), adopted pursuant to Rule 12b-1 under the 1940
Act with respect to shares, to make certain payments as follows. The Principal
Underwriter shall be entitled to be paid by the Fund a sales commission equal to
an amount not exceeding 6.25% of the price received by the Fund for each sale of
shares (excluding reinvestment of dividends and distributions), such payment to
be made in the manner set forth in this paragraph 5. The Principal Underwriter
shall also be entitled to be paid by the Fund a separate distribution fee
(calculated in accordance with paragraph 5(d)), such payment to be made in the
manner set forth and subject to the terms of this paragraph 5.
(d) The sales commissions and distribution fees referred to in
paragraph 5(c) shall be accrued and paid by the Fund in the following manner.
The Fund shall accrue daily an amount calculated at the rate of .75% per annum
of the daily net assets of the Fund, which net assets shall be computed as
described in paragraph 2. The daily amounts so accrued throughout the month
shall be paid to the Principal Underwriter on the last day of each month. The
amount of such daily accrual, as so calculated, shall first be applied and
charged to all unpaid sales commissions, and the balance, if any, shall then be
applied and charged to all unpaid distribution fees. No amount shall be accrued
with respect to any day on which there exist no outstanding uncovered
distribution charges of the Principal Underwriter. The amount of such uncovered
distribution charges shall be calculated daily. For purposes of this
calculation, distribution charges of the Principal Underwriter shall include (a)
the aggregate of all sales commissions which the Principal Underwriter has been
paid pursuant to this paragraph (d) plus all sales commissions which it is
entitled to be paid pursuant to paragraph 5(c) since inception of this Agreement
through and including the day next preceding the date of calculation, and (b) an
amount equal to the aggregate of all distribution fees referred to below which
the Principal Underwriter has been paid pursuant to this paragraph (d) plus all
such fees which it is entitled to be paid pursuant to paragraph 5(c) since
inception of this Agreement through and including the day next preceding the
date of calculation. From this sum (distribution charges) there shall be
subtracted (i) the aggregate amount paid or payable to the Principal Underwriter
pursuant to this paragraph (d) since inception of this Agreement through and
including the day next preceding the date of calculation and (ii) the aggregate
amount of all contingent deferred sales charges paid or payable to the Principal
Underwriter since inception of this Agreement through and including the day next
preceding the date of calculation. If the result of such subtraction is a
positive amount, a distribution fee [computed at the rate of 1% per annum above
the prime rate (being the base rate on corporate loans posted by at least 75% of
the nation's 30 largest banks) then being reported in the Eastern Edition of The
Wall Street Journal or if such prime rate is not so reported such other rate as
may be designated from time to time by vote or other action of a majority of (i)
those Trustees of the Trust who are not "interested persons" of the Trust (as
defined in the 1940 Act) and have no direct or indirect financial interest in
the operation of the Plan or any agreements related to it (the "Rule 12b-1
Trustees") and (ii) all of the Trustees then in office] shall be computed on
such amount and added to such amount, with the resulting sum constituting the
amount of outstanding uncovered distribution charges of the Principal
Underwriter with respect to such day for all purposes of this Agreement. If the
result of such subtraction is a negative amount, there shall exist no
outstanding uncovered distribution charges of the Principal Underwriter with
respect to such day and no amount shall be accrued or paid to the Principal
Underwriter with respect to such day. The aggregate amounts accrued and paid
pursuant to this paragraph (d) during any fiscal year of the Fund shall not
exceed .75% of the average daily net assets of the Fund for such year.
(e) The Principal Underwriter shall be entitled to receive all
contingent deferred sales charges paid or payable with respect to any day on
which there exist outstanding uncovered distribution charges of the Principal
Underwriter. The Fund shall be entitled to receive all remaining contingent
deferred sales charges paid or payable by shareholders with respect to any day
on which there exist no outstanding uncovered distribution charges of the
Principal Underwriter, provided that no such sales charge which would cause the
Fund to exceed the maximum applicable cap imposed thereon by paragraph (2) of
subsection (d) of Section 26 of Article III of the Rules of Fair Practice of the
National Association of Securities Dealers, Inc. shall be imposed.
(f) The persons authorized to direct the disposition of monies paid or
payable on behalf of the Fund pursuant to the Plan or this Agreement shall be
the President or any Vice President of the Trust. Such persons shall provide to
the Trust's Trustees and the Trustees shall review, at least quarterly, a
written report of the amounts so expended and the purposes for which such
expenditures were made.
(g) In addition to the payments to the Principal Underwriter provided
for in paragraph 5(d), the Fund may make payments of service fees to the
Principal Underwriter, Authorized Firms and other persons. The aggregate of such
payments during any fiscal year of the Fund shall not exceed .25% of the Fund's
average daily net assets for such year.
6. The Trust hereby authorizes the Principal Underwriter to repurchase,
upon the terms and conditions set forth in written instructions given by the
Trust to the Principal Underwriter from time to time, as agent of the Fund and
for its account, such shares of the Fund as may be offered for sale to the Fund
from time to time.
(a) The Principal Underwriter shall notify in writing IBT and TSSG at
the end of each business day, or as soon thereafter as the repurchases in each
pricing period have been compiled, of the number of shares repurchased for the
account of the Fund since the last previous report, together with the prices at
which such repurchases were made, and upon the request of any officer or Trustee
of the Trust shall furnish similar information with respect to all repurchases
made up to the time of the request on any day.
(b) The Trust reserves the right to suspend or revoke the foregoing
authorization at any time; unless otherwise stated, any such suspension or
revocation shall be effective forthwith upon receipt of notice thereof by an
officer of the Principal Underwriter, by telegraph or by written instrument from
an officer of the Trust duly authorized by its Trustees. In the event that the
authorization of the Principal Underwriter is, by the terms of such notice,
suspended for more than twenty-four hours or until further notice, the
authorization given by this paragraph 6 shall not be revived except by action of
a majority of the Trustees of the Trust.
(c) The Principal Underwriter shall have the right to terminate the
operation of this paragraph 6 upon giving to the Trust thirty (30) days' written
notice thereof.
(d) The Trust agrees to authorize and direct IBT to pay, for the
account of the Fund, the purchase price of any shares so repurchased against
delivery of the certificates in proper form for transfer to the Fund or for
cancellation by the Fund.
(e) The Principal Underwriter shall receive no commission in respect of
any repurchase of shares under the foregoing authorization and appointment as
agent, except for any sales commission, distribution fee or contingent deferred
sales charges payable under paragraph 5.
(f) The Trust agrees that the Fund will reimburse the Principal
Underwriter, from time to time on demand, for any reasonable expenses incurred
in connection with the repurchase of shares of the Fund pursuant to this
paragraph 6.
7. If, at any time during the existence of this Agreement, the Trust
shall deem it necessary or advisable in the best interests of the Fund that any
amendment of this Agreement be made in order to comply with the recommendations
or requirements of the Commission or other governmental authority or to obtain
any advantage under Massachusetts or federal tax laws, and shall notify the
Principal Underwriter of the form of amendment which it deems necessary or
advisable and the reasons therefor, and, if the Principal Underwriter declines
to assent to such amendment, the Trust may terminate this Agreement forthwith by
written notice to the Principal Underwriter. If, at any time during the
existence of its agreement upon request by the Principal Underwriter, the Trust
fails (after a reasonable time) to make any changes in its Declaration of Trust,
as amended, or in its methods of doing business which are necessary in order to
comply with any requirement of federal law or regulations of the Commission or
of a national securities association of which the Principal Underwriter is or
may be a member, relating to the sale of the shares of the Fund, the Principal
Underwriter may terminate this Agreement forthwith by written notice to the
Trust.
8. The term "net asset value" as used in this Agreement with reference
to the shares of the Fund shall have the same meaning as used in the Declaration
of Trust, as amended, and calculated in the manner referred to in paragraph 2
above.
9. (a) The Principal Underwriter is a corporation in the United States
organized under the laws of Massachusetts and holding membership in the National
Association of Securities Dealers, Inc., a securities association registered
under Section 15A of the Securities Exchange Act of 1934, as amended from time
to time, and during the life of this Agreement will continue to be so resident
in the United States, so organized and a member in good standing of said
Association. The Principal Underwriter will comply with the Trust's Declaration
of Trust and By-Laws, and the 1940 Act and the rules promulgated thereunder,
insofar as they are applicable to the Principal Underwriter.
(b) The Principal Underwriter shall maintain in the United States
and preserve therein for such period or periods as the Commission shall
prescribe by rules and regulations applicable to it as Principal Underwriter of
an open-end investment company registered under the 1940 Act such accounts,
books and other documents as are necessary or appropriate to record its
transactions with the Fund. Such accounts, books and other documents shall be
subject at any time and from time to time to such reasonable periodic, special
and other examinations by the Commission or any member or representative thereof
as the Commission may prescribe. The Principal Underwriter shall furnish to the
Commission within such reasonable time as the Commission may prescribe copies of
or extracts from such records which may be prepared without effort, expense or
delay as the Commission may by order require.
10. This Agreement shall continue in force indefinitely until
terminated as in this Agreement above provided, except that:
(a) this Agreement shall remain in effect for one year from the date
of its execution and shall continue in full force and effect indefinitely
thereafter, but only so long as such continuance is specifically approved at
least annually (i) by the vote of a majority of the Trustees of the Trust who
are not "interested persons" of the Trust and who have no direct or indirect
interest in the operation of the Plan or this Agreement (the "Rule 12b-1
Trustees") cast in person at a meeting called for the purpose of voting on such
approval, and (ii) by the Trustees of the Trust or by vote of a majority of the
outstanding voting securities of the Fund;
(b) this Agreement may be terminated at any time by vote of a
majority of the Rule 12b-1 Trustees or by vote of a majority of the outstanding
voting securities of the Fund on not more than sixty (60) days' notice to the
Principal Underwriter. The Principal Underwriter shall be entitled to receive
all contingent deferred sales charges paid or payable with respect to any day
subsequent to the termination of this Agreement;
(c) the Principal Underwriter shall have the right to terminate this
Agreement on six (6) months' written notice thereof given in writing to the
Fund; and
(d) the Trust shall have the right to terminate this Agreement
forthwith in the event that it shall have been established by a court of
competent jurisdiction that the Principal Underwriter or any director or officer
of the Principal Underwriter has taken any action which results in a breach of
the covenants set out in paragraph 9 hereof.
11. In the event of the assignment of this Agreement by the Principal
Underwriter, this Agreement shall automatically terminate.
12. Any notice under this Agreement shall be in writing, addressed and
delivered, or mailed postage paid, to the other party, at such address as such
other party may designate for the receipt of such notices. Until further notice
to the other party, it is agreed that the record address of the Trust and that
of the Principal Underwriter, shall be 24 Federal Street, Boston, Massachusetts
02110.
13. The services of the Principal Underwriter to the Fund hereunder are
not to be deemed to be exclusive, the Principal Underwriter being free to (a)
render similar service to, and to act as principal underwriter in connection
with the distribution of shares of, other series of the Trust or other
investment companies, and (b) engage in other business and activities from time
to time.
14. The terms "vote of a majority of the outstanding voting
securities," "assignment" and "interested persons," when used herein, shall have
the respective meanings specified in the 1940 Act, subject, however, to such
exemptions as may be granted by the Commission by any rule, regulation or order.
15. The Principal Underwriter expressly acknowledges the provision in
the Trust's Declaration of Trust limiting the personal liability of the
shareholders of the Fund or the Trustees of the Trust. The Principal Underwriter
hereby agrees that it shall have recourse to the Trust or the Fund for payment
of claims or obligations as between the Trust or the Fund and the Principal
Underwriter arising out of this Agreement and shall not seek satisfaction from
the shareholders or any shareholder of the Trust or from the Trustees or any
Trustee of the Trust. The Fund shall not be responsible for obligations of any
other series of the Trust.
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement on
the day of , 1996.
EATON VANCE GROWTH TRUST
(on behalf of EV CLASSIC
TAX-MANAGED GROWTH FUND)
By
------------------------------------
President
EATON VANCE DISTRIBUTORS INC.
By
------------------------------------
President
<PAGE>
EXHIBIT 9(d)
SCHEDULE A
EATON VANCE MUTUAL FUNDS TRUST
AMENDED ADMINISTRATIVE SERVICES AGREEMENT
DATED OCTOBER 23, 1995
Eaton Vance Cash Management Fund Eaton Vance
Liquid Assets Fund Eaton Vance Money Market
Fund EV Classic Government Obligations Fund
EV Marathon Government Obligations Fund EV
Traditional Government Obligations Fund EV
Classic High Income Fund EV Marathon High
Income Fund EV Classic Strategic Income Fund
EV Marathon Strategic Income Fund EV
Marathon Tax-Managed Growth Fund EV
Traditional Tax-Managed Growth Fund
<PAGE>
EXHIBIT 11
INDEPENDENT AUDITORS' CONSENT
We consent to the inclusion in Post-Effective Amendment No. 29 to the
Registration Statement on Form N-1A (1933 Act File Number 2-90946) of Eaton
Vance Mutual Funds Trust on behalf of EV Classic Tax-Managed Growth Fund of
our report dated October 23, 1995, relating to Tax-Managed Growth Portfolio
appearing in the Statement of Additional Information which is part of such
Registration Statement.
/s/ DELOITTE & TOUCHE LLP
----------------------------------
DELOITTE & TOUCHE LLP
Boston, Massachusetts
May 3, 1996
<PAGE>
EXHIBIT 15(m)
EATON VANCE MUTUAL FUNDS TRUST
FORM OF DISTRIBUTION PLAN
ON BEHALF OF
EV CLASSIC TAX-MANAGED GROWTH FUND
WHEREAS, Eaton Vance Mutual Funds Trust (the "Trust") engages in
business as an open-end investment company with multiple series and is
registered as such under the Investment Company Act of 1940, as amended (the
"Act");
WHEREAS, the Trust desires to adopt a separate Distribution Plan on
behalf of its series, EV Classic Tax-Managed Growth Fund (the "Fund"), pursuant
to which the Fund will make payments in connection with the distribution of
shares of the Fund;
WHEREAS, the Trust employs Eaton Vance Distributors, Inc. to act as
Principal Underwriter (as defined in the Act) of shares of the Fund, but does
not intend to remunerate the Principal Underwriter unless and until the
Principal Underwriter sells shares of the Fund;
WHEREAS, the Fund will pay the Principal Underwriter sales commissions
and distribution fees only in connection with the sale of shares of the Fund;
WHEREAS, the Fund intends to pay service fees as contemplated in
subsections (b) and (d) of Section 26 of Article III of the Rules of Fair
Practice of the National Association of Securities Dealers, Inc. (the "NASD
Rules"); and
WHEREAS, the Trustees of the Trust have determined that there is a
reasonable likelihood that adoption of this Distribution Plan will benefit the
Fund and its shareholders.
NOW, THEREFORE, the Trust hereby adopts this Distribution Plan (this
"Plan") on behalf of the Fund in accordance with Rule 12b-1 under the Act and
containing the following terms and conditions:
1. The Fund will pay sales commissions and distribution fees to the
Principal Underwriter only after and as a result of the sales of shares of the
Fund. The Principal Underwriter will provide the Fund with such distribution
services and facilities as the Trust may from time to time consider necessary to
accomplish the sale of shares of the Fund. It is understood that the Principal
Underwriter may pay such sales commissions and make such other payments to
Authorized Firms and other persons as it considers appropriate to encourage
distribution of such shares.
2. On each sale of Fund shares (excluding reinvestment of dividends and
distributions), the Fund shall pay the Principal Underwriter a sales commission
in an amount not exceeding 6.25% of the price received by the Fund therefor,
such payment to be made in the manner set forth and subject to the terms of this
Plan. The amount of the sales commission shall be established from time to time
by vote or other action of a majority of (i) those Trustees of the Trust who are
not "interested persons" (as defined in the Act) of the Trust and have no direct
or indirect financial interest in the operation of this Plan or any agreements
related to it (the "Rule 12b-1 Trustees") and (ii) all of the Trustees then in
office. The Fund shall also pay the Principal Underwriter a separate
distribution fee (calculated in accordance with Section 3), such payment to be
made in the manner set forth and subject to the terms of this Plan.
3. The sales commissions and distribution fees referred to in Section 2
shall be accrued and paid by the Fund in the following manner. The Fund shall
accrue daily an amount calculated at the rate of .75% per annum of the daily net
assets of the Fund, which net assets shall be computed in accordance with the
governing documents of the Trust and applicable votes and determinations of the
Trustees of the Trust. The daily amounts so accrued throughout the month shall
be paid to the Principal Underwriter on the last day of each month. The amount
of such daily accrual, as so calculated, shall first be applied and charged to
all unpaid sales commissions, and the balance, if any, shall then be applied and
charged to all unpaid distribution fees. No amount shall be accrued with respect
to any day on which there exist no outstanding uncovered distribution charges of
the Principal Underwriter. The amount of such uncovered distribution charges
shall be calculated daily. For purposes of this calculation, distribution
charges of the Principal Underwriter shall include (a) the aggregate of all
sales commissions which the Principal Underwriter has been paid pursuant to this
Section 3 plus all sales commissions which it is entitled to be paid pursuant to
Section 2 since inception of this Plan through and including the day next
preceding the date of calculation, and (b) an amount equal to the aggregate of
all distribution fees referred to below which the Principal Underwriter has been
paid pursuant to this Section 3 plus all such fees which it is entitled to be
paid pursuant to Section 2 since inception of this Plan through and including
the day next preceding the date of calculation. From this sum (distribution
charges) there shall be subtracted (i) the aggregate amount paid or payable to
the Principal Underwriter pursuant to this Section 3 since inception of this
Plan through and including the day next preceding the date of calculation and
(ii) the aggregate amount of all contingent deferred sales charges paid or
payable to the Principal Underwriter since inception of this Plan through and
including the day next preceding the date of calculation. If the result of such
subtraction is a positive amount, a distribution fee [computed at the rate of 1%
per annum above the prime rate (being the base rate on corporate loans posted by
at least 75% of the nation's 30 largest banks) then being reported in the
Eastern Edition of The Wall Street Journal or if such prime rate is not so
reported such other rate as may be designated from time to time by vote or other
action of a majority of (i) the Rule 12b-1 Trustees and (ii) all of the Trustees
then in office] shall be computed on such amount and added to such amount, with
the resulting sum constituting the amount of outstanding uncovered distribution
charges of the Principal Underwriter with respect to such day for all purposes
of this Plan. If the result of such subtraction is a negative amount, there
shall exist no outstanding uncovered distribution charges of the Principal
Underwriter with respect to such day and no amount shall be accrued or paid to
the Principal Underwriter with respect to such day. The aggregate amounts
accrued and paid pursuant to this Section 3 during any fiscal year of the Fund
shall not exceed .75% of the average daily net assets of the Fund for such year.
4. The Principal Underwriter shall be entitled to receive all
contingent deferred sales charges paid or payable with respect to any day on
which there exist outstanding uncovered distribution charges of the Principal
Underwriter. The Fund shall be entitled to receive all remaining contingent
deferred sales charges paid or payable by shareholders with respect to any day
on which there exist no outstanding uncovered distribution charges of the
Principal Underwriter, provided that no such sales charge which would cause the
Fund to exceed the maximum applicable cap imposed thereon by paragraph (2) of
subsection (d) of Section 26 of Article III of the NASD Rules shall be imposed.
5. The Fund may make payments of service fees to the Principal
Underwriter, Authorized Firms and other persons. The aggregate of such payments
during any fiscal year of the Fund shall not exceed .25% of the Fund's average
daily net assets for such year. Appropriate adjustment of service fee payments
shall be made whenever necessary to ensure that no such payment shall cause the
Fund to exceed the applicable maximum cap imposed thereon by paragraph (5) of
subsection (d) of Section 26 of Article III of the NASD Rules.
6. This Plan shall not take effect until after it has been approved by
both a majority of (i) the Rule 12b-1 Trustees and (ii) all of the Trustees then
in office, cast in person at a meeting (or meetings) called for the purpose of
voting on this Plan.
7. Any agreements between the Trust on behalf of the Fund and any
person relating to this Plan shall be in writing and shall not take effect until
approved in the manner provided for Trustee approval of this Plan in Section 6.
8. This Plan shall continue in effect through and including April 28,
1997, and shall continue in effect indefinitely thereafter, but only for so long
as such continuance after April 28, 1997 is specifically approved at least
annually in the manner provided for Trustee approval of this Plan in Section 6.
9. The persons authorized to direct the disposition of monies paid or
payable by the Fund pursuant to this Plan or any related agreement made on
behalf of the Fund shall be the President or any Vice President of the Trust.
Such persons shall provide to the Trustees of the Trust and the Trustees shall
review, at least quarterly, a written report of the amounts so expended and the
purposes for which such expenditures were made.
10. This Plan may be terminated at any time by vote of a majority of
the Rule 12b-1 Trustees, or by vote of a majority of the outstanding voting
securities of the Fund. The Principal Underwriter shall also be entitled to
receive all contingent deferred sales charges paid or payable with respect to
any day subsequent to termination of this Plan on which there exist outstanding
uncovered distribution charges of the Principal Underwriter.
11. This Plan may not be amended to increase materially the payments to
be made by the Fund as provided in Sections 2, 3 and 5 unless such amendment is
approved by a vote of at least a majority of the outstanding voting securities
of the Fund. In addition, all material amendments to this Plan shall be approved
in the manner provided for Trustee approval of this Plan in Section 6.
12. While this Plan is in effect, the selection and nomination of the
Rule 12b-1 Trustees shall be committed to the discretion of the Rule 12b-1
Trustees.
13. The Trust shall preserve copies of this Plan and any related
agreements made by the Trust on behalf of the Fund and all reports made pursuant
to Section 9, for a period of not less than six years from the date of this
Plan, or of the agreements or of such report, as the case may be, the first two
years in an easily accessible place.
14. Consistent with the limitation of shareholder, officer and Trustee
liability as set forth in the Trust's Declaration of Trust, any obligations
assumed by the Fund pursuant to this Plan shall be limited in all cases to the
assets of the Fund and no person shall seek satisfaction thereof from the
shareholders of the Trust, officers or Trustees of the Trust or any other series
of the Trust.
15. This Plan shall, prior to the initial accrual or payment of any
amount hereunder, be approved by a vote of at least a majority of the
outstanding voting securities of the Fund.
16. When used in this Plan, the term "service fees" shall have the same
meaning as such term has in subsections (b) and (d) of Section 26 of Article III
of the NASD Rules. When used in this Plan, the term "vote of a majority of the
outstanding voting securities of the Fund" shall mean the vote of the lesser of
(a) 67 per centum or more of the shares of the Fund present or represented by
proxy at the meeting if the holders of more than 50 per centum of the
outstanding shares of the Fund are present or represented by proxy at the
meeting, or (b) more than 50 per centum of the outstanding shares of the Fund.
17. If any provision of this Plan shall be held or made invalid by a
court decision, statute, rule or regulation of the Securities and Exchange
Commission or otherwise, the remainder of this Plan shall not be affected
thereby.
ADOPTED JUNE 24, 1996
* * *
<PAGE>
EXHIBIT 16
INVESTMENT PERFORMANCE -- EV CLASSIC TAX-MANAGED GROWTH FUND
The table below indicates the total return (capital changes plus
reinvestment of all distributions) on a hypothetical investment of $1,000 in
the Fund covering the 1, 5, and 10 year periods ended October 31, 1995. Total
return for the period prior to the Fund's commencement of operations is for
the Portfolio (or its predecessor) adjusted for the Fund's sales charge.
VALUE OF A $1,000 INVESTMENT
<TABLE>
<CAPTION>
VALUE OF VALUE OF TOTAL RETURN TOTAL RETURN
INVESTMENT INVESTMENT BEFORE DEDUCTING CDSC AFTER DEDUCTING CDSC
INVESTMENT INVESTMENT BEFORE CDSC AFTER CDSC ---------------------------- ----------------------------
PERIOD DATE ON 10/31/95 ON 10/31/95 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ---------- --------- ----------- ----------- ---------- ---------- ---------- ----------
<C> <C> <C> <C> <C> <C> <C> <C>
10 Years Ended
10/31/95 10/31/85 $4,128.69 $4,128.69 312.87% 15.22% 312.87% 15.23%
5 Years Ended
10/31/95 10/31/90 $2,355.07 $2,335.07 135.51% 18.65% 135.51% 18.69%
1 Year Ended
10/31/95 10/31/94 $1,325.60 $1,315.60 32.56% 32.56% 31.56% 31.56%
</TABLE>
Average annual total return is calculated using the following formula:
n
P(1+T) = ERV
where P = an initial investment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of $1,000 initial
investment at the end of the period after
deducting the CDSC*
Cumulative total return is calculated using the following formula:
T = (ERV/P) - 1
where T = cumulative total return including the CDSC
ERV = ending redeemable value of $1,000 initial
investment at the end of the period after
deducting the CDSC**
P = an initial investment of $1,000
*The average annual total return not including the CDSC is calculated based
on the ending investment value before deducting the CDSC.
**The cumulative total return not including the CDSC is calculated based on
the ending investment value before deducting the CDSC.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0001002667
<NAME> TAX MANAGED GROWTH PORTFOLIO
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 1-MO
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-23-1995
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 107
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 107
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 7
<TOTAL-LIABILITIES> 7
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 100
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
