<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 30, 1997
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. 33 [X]
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 36 [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)
ALAN R. DYNNER
24 FEDERAL STREET, BOSTON, MASSACHUSETTS 02110
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(NAME AND ADDRESS OF AGENT FOR SERVICE)
<TABLE>
It is proposed that this filing will become effective pursuant to rule 485 (check appropriate box):
<C> <C>
[ ] immediately upon filing pursuant to paragraph (b) [ ] on (date) pursuant to paragraph (a)(1)
[X] on February 1, 1997 pursuant to paragraph (b) [ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] 60 days after filing pursuant to paragraph (a)(1) [ ] on (date) pursuant to paragraph (a)(2).
If appropriate, check the following box:
[ ] this post effective amendment designates a new effective date for a perviously filed post-effective amendment.
</TABLE>
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, 1996 filed its "Notice" as required by that Rule for the series of the
Registrant with a fiscal year end of March 31, 1996, on February 23, 1996
filed its "Notice" for the series of the Registrant with a fiscal year end of
December 31, 1995 and on December 23, 1996 filed its "Notice" for the series
of the Registrant with a fiscal year end of October 31, 1996. Registrant
continues its election to register an indefinite number of shares of
beneficial interest pursuant to Rule 24f-2.
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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 Prospectuses of:
EV Classic Tax-Managed Growth Fund
EV Marathon Tax-Managed Growth Fund
EV Traditional Tax-Managed Growth Fund
Part B--The Statements of Additional Information of:
EV Classic Tax-Managed Growth Fund
EV Marathon Tax-Managed Growth Fund
EV Traditional Tax-Managed Growth Fund
Part C--Other Information
Signatures
Exhibit Index Required by Rule 483(b) 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
CROSS REFERENCE SHEET FOR
EV CLASSIC TAX-MANAGED GROWTH FUND
EV MARATHON TAX-MANAGED GROWTH FUND
EV TRADITIONAL TAX-MANAGED GROWTH FUND
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 The Fund's Financial Highlights;
Information Performance Information
4. ..............General Description of The Fund's Investment Objective;
Registrant 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 the
Securities Portfolio; Reports to
Shareholders; The Lifetime
Investing Account/Distribution
Options; Distributions and
Taxes
7. ..............Purchase of Securities Valuing Fund Shares;
Being Offered Distribution Plan (for Classic
and Marathon Funds only);
Service Plan (for Traditional
Fund only); 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 Administrator; Distribution
Services Plan (for Classic and Marathon
Funds only); Service Plan (for
Traditional Fund only);
Custodian; Independent
Certified Public Accountants;
Fees and Expenses
17. ..............Brokerage Allocation and Portfolio Security Transactions;
Other Fees and Expenses
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;
Services for Accumulation (for
Traditional Fund only);
Distribution Plan (for Classic
and Marathon Funds only);
Service Plan (for Traditional
Fund only); 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>
PART A
INFORMATION REQUIRED IN A PROSPECTUS
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. 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 February
1, 1997, 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.
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PAGE PAGE
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Shareholder and Fund Expenses ......................... 2 How to Buy Fund Shares ................................ 11
The Fund's Financial Highlights ....................... 3 How to Redeem Fund Shares ............................. 12
The Fund's Investment Objective ....................... 4 Reports to Shareholders ............................... 14
The Tax-Managed Mutual Fund Advantage ................. 4 The Lifetime Investing Account/Distribution
Investment Policies and Risks ......................... 5 Options ............................................. 14
Organization of the Fund and the Portfolio ............ 7 The Eaton Vance Exchange Privilege .................... 15
Management of the Fund and the Portfolio .............. 8 Eaton Vance Shareholder Services ...................... 16
Distribution Plan ..................................... 9 Distributions and Taxes ............................... 16
Valuing Fund Shares ................................... 11 Performance Information ............................... 18
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</TABLE>
PROSPECTUS DATED FEBRUARY 1, 1997
<PAGE>
SHAREHOLDER AND FUND EXPENSES
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<TABLE>
<CAPTION>
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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<S> <C>
Investment Adviser Fee 0.618%
Rule 12b-1 Distribution (and Service) Fees 1.000%
Other Expenses 0.300%
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Total Operating Expenses 1.918%
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<CAPTION>
EXAMPLE 1 YEAR 3 YEARS
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An investor would pay the following expenses (including a contingent deferred
sales charge in the case of redemption during the first year after purchase) on
a $1,000 investment, assuming (a) 5% annual return and (b) redemption at the end
of each period: $29 $60
</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.
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 "The Fund's Financial Highlights," "Management of the
Fund and the Portfolio" and "How to Redeem Fund Shares." A long-term shareholder
in the Fund 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. See "Distribution Plan."
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.
The Fund invests exclusively in the Portfolio. Other investment companies with
different distribution arrangements and fees are investing in the Portfolio and
others may do so in the future. See "Organization of the Fund and the
Portfolio."
<PAGE>
THE FUND'S FINANCIAL HIGHLIGHTS
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The following information should be read in conjunction with the audited
financial statements included in the Fund's annual report to shareholders which
is incorporated by reference into the Statement of Additional Information in
reliance upon the report of Deloitte & Touche LLP, independent certified public
accountants, as experts in accounting and auditing. Further information
regarding the performance of the Fund is contained in its annual report to
shareholders which may be obtained without charge by contacting the Principal
Underwriter.
- --------------------------------------------------------------------------------
FOR THE PERIOD FROM THE START OF BUSINESS, AUGUST 2, 1996, TO OCTOBER 31, 1996
NET ASSET VALUE, beginning of period $10.000
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INCOME FROM OPERATIONS:
Net investment loss $(0.010)
Net realized and unrealized gain on investments 0.790
-------
Total income from investment operations $ 0.780
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NET ASSET VALUE, end of period $10.780
=======
TOTAL RETURN(1) 7.80%
RATIOS/SUPPLEMENTAL DATA:
Ratio of net expenses to average net assets(2) 2.15% +
Ratio of net investment income to average net assets (0.84%)+
Net assets, end of period (000's omitted) $10,816
+Computed on an annualized basis.
(1)Total return is calculated assuming a purchase at the net asset value on the
first day and a sale at the net asset value on the last day of the period
reported. Distributions, if any, are assumed to be reinvested at the net
asset value on the payable date. Total return is computed on a non-annualized
basis.
(2)Includes the Fund's share of the Portfolio's allocated expenses.
<PAGE>
THE FUND'S INVESTMENT OBJECTIVE
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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. 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. Taxes
on 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
investment objectives of the Fund and the Portfolio are fundamental, and may not
be changed unless authorized by a vote of the Fund's shareholders or the
Portfolio's investors, as the case may be.
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.
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 by managing
its investments so as to minimize and defer the taxes incurred by shareholders
as a consequence of their investment in the Fund. The Fund seeks to achieve
returns primarily in the form of unrealized capital gains, which do not give
rise to current tax obligations for shareholders.
The Fund is similar to retirement planning instruments (such as nondeductible
IRAs and variable annuities) in that it is a long-term investment that seeks to
maximize after-tax returns. As a mutual fund, however, the Fund avoids a number
of structural disadvantages inherent in a nondeductible 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 a nondeductible 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 nondeductible 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 a
nondeductible 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
less than 25% of the Portfolio's total 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 Portfolio may
temporarily invest up to 65% 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.
Taxes on 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. A substantial portion of the assets of the Portfolio are
securities with large accumulated capital gains that have been contributed by
investors in the Portfolio. As a general matter, the Portfolio will not sell
appreciated securities contributed to the Portfolio if such a sale would give
rise to the recognition of capital gains accumulated prior to investment in the
Portfolio by the investor in the Portfolio who contributed the securities, but
will instead seek to manage its exposure to such securities by using the
above-described hedging techniques as appropriate.
The Portfolio follows the practice of distributing selected appreciated
securities to meet redemptions of certain investors and may, within certain
limits, use the selection of securities distributed to meet such redemptions as
a management tool. By distributing appreciated securities the Portfolio can
reduce its position in such securities without realizing capital gains. During
periods of net withdrawals by investors in the Portfolio, using distributions of
securities also enables the Portfolio to avoid the forced sale of securities to
raise cash for meeting redemptions. The Portfolio's ability to select the
securities used to meet redemptions is limited with respect to redemptions by
investors in the Portfolio who contributed securities, and with respect to the
securities contributed by such investors in the Portfolio. See the Statement of
Additional Information. Such limitations could affect the performance of the
Portfolio, and, therefore, the Fund. The Fund currently meets redemptions solely
in cash, but may adopt in the future a policy of meeting shareholder redemptions
in whole or in part through the distribution of readily marketable securities.
Such a policy would only be adopted after giving notice to the shareholders and
only in conjunction with putting in place a program whereby redeeming
shareholders who receive securities could elect to sell the securities received
to an affiliate of the Fund's custodian (or a designated broker-dealer) at no
cost and at a price equal to the price used in determining the redemption value
of the distributed securities. See "How to Redeem Fund Shares." A redeeming
shareholder of the Fund who received securities would incur no more or less
taxable gain than if the redemption had been paid in cash.
It is expected that by employing the various tax-efficient management strategies
described herein, the Portfolio can minimize the extent to which shareholders
incur taxes as a result of realized capital gains. The Portfolio may
nevertheless realize gains and shareholders will incur tax liability 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, armed conflict, 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 and will limit investment in foreign issuers to 25% of
assets.
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
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 will include certain 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. No
more than 25% of the Portfolio's assets is expected to be subject to short-sales
against-the-box at any one time.
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, net of administrative expenses and finders' fees, 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 Investment Company Act of 1940, as amended
(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 (except with respect to the
borrowing of money and issuing of senior securities) 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.
ORGANIZATION OF THE FUND AND THE PORTFOLIO
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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 (such as the Fund). 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." There are no annual meetings of shareholders,
but special meetings may be held as required by law to elect Trustees and
consider certain other matters. Shareholders are entitled to one vote for each
full share held. Fractional shares may be voted proportionately. Shares 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.
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. Such investment affords the potential for
economies of scale for the Fund and may over time result in lower expenses.
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. Information regarding other funds or investors that invest in the
Portfolio may be obtained by contacting the Principal Underwriter, 24 Federal
Street, Boston, MA 02110 (617) 482-8260.
Whenever the Fund as an investor in the Portfolio is requested to vote on
matters pertaining to the Portfolio (other than the termination of the
Portfolio's business, which may be determined by the Trustees of the Portfolio
without investor approval), the Fund will hold a meeting of Fund shareholders
and will vote its interest in the Portfolio for or against such matters
proportionately to the instructions to vote for or against such matters received
from Fund shareholders. The Fund shall vote shares for which it receives no
voting instructions in the same proportion as the shares for which it receives
voting instructions. Other investors in the Portfolio may alone or collectively
acquire sufficient voting interests in the Portfolio to control matters relating
to the operation of the Portfolio, which may require the Fund to withdraw its
investment in the Portfolio or take other appropriate action. Any such
withdrawal could result in a distribution "in kind" of portfolio securities (as
opposed to a cash distribution from the Portfolio). If securities are
distributed, the Fund could incur brokerage, tax or other charges in converting
the securities to cash. In addition, the distribution in kind may result in a
less diversified portfolio of investments or adversely affect the liquidity of
the Fund.
The Fund may withdraw (completely redeem) all its assets from the Portfolio at
any time if the Board of Trustees of the Trust determines that it is in the best
interest of the Fund to do so. In the event the Fund withdraws all of its assets
from the Portfolio, 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.
MANAGEMENT OF THE FUND AND THE PORTFOLIO
- --------------------------------------------------------------------------------
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. BMR also furnishes for the
use of the Portfolio office space and all necessary office facilities, equipment
and personnel for servicing the investments of the Portfolio. Under 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)
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$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%
For the period from the start of business, December 1, 1995, to October 31,
1996, the Portfolio paid BMR advisory fees equivalent to 0.618% (annualized) of
the Portfolio's average daily net assets for such period.
BMR OR EATON VANCE ACTS AS INVESTMENT ADVISER TO INVESTMENT COMPANIES AND
VARIOUS INDIVIDUAL AND INSTITUTIONAL CLIENTS WITH ASSETS UNDER MANAGEMENT OF
OVER $17 BILLION. EATON VANCE HAS BEEN MANAGING INVESTMENT COMPANIES WITH
OBJECTIVES SIMILAR TO THAT OF THE FUND SINCE 1961. Eaton Vance is a wholly-owned
subsidiary of Eaton Vance Corp., a publicly-held holding company, which through
its subsidiaries and affiliates engages primarily in investment management,
administration and marketing activities. The Principal Underwriter is a
wholly-owned subsidiary of Eaton Vance.
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 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. The Fund, the Portfolio and BMR have adopted Codes of Ethics
relating to personal securities transactions. The Codes permit Eaton Vance
personnel to invest in securities (including securities that may be purchased or
held by the Portfolio) for their own accounts, subject to certain pre-clearance,
reporting and other restrictions and procedures contained in such Codes.
The 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 the Principal Underwriter 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 any litigation in which
the Fund or the Portfolio, as the case may be, is a party and any legal
obligation to indemnify its respective officers and Trustees with respect
thereto, to the extent not covered by insurance.
DISTRIBUTION PLAN
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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. For the
period from the start of business, August 2, 1996, to October 31, 1996, the Fund
paid or accrued sales commissions under the Plan equivalent to 0.75%
(annualized) of the Fund's average daily net assets for such period. As at
October 31, 1996, the Uncovered Distribution Charges of the Principal
Underwriter calculated under the Plan amounted to approximately $642,000
(equivalent to 5.94% of the Fund's net assets on such day).
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.
For the period from the start of business, August 2, 1996, to October 31, 1996,
the Fund paid service fees under the Plan equivalent to 0.25% (annualized) of
the Fund's average daily net assets for such period.
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
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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 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.
The Portfolio's net asset value is also determined as of the close of regular
trading on the Exchange by IBT (as custodian and agent for the Portfolio) in the
manner authorized by the Trustees of the Portfolio. Net asset value is computed
by 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
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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 $1,000. Once an account has
been established the investor may send investments of $50 or more at any time
directly to the Fund's transfer agent (the "Transfer Agent") as follows: First
Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123. The
$1,000 minimum initial investment is waived for Bank Automated Investing
accounts, which may be established with an investment of $50 or more. See
"Eaton Vance Shareholder Services."
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. BMR
may request that the Portfolio retain the securities for investment purposes.
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. 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
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A SHAREHOLDER MAY REDEEM FUND SHARES IN ONE OF THREE WAYS -- BY MAIL, BY
TELEPHONE OR THROUGH AN AUTHORIZED FIRM. The redemption price will be based on
the net asset value per Fund share next computed after a redemption request is
received in the proper form as described below.
REDEMPTION BY MAIL: Shares may be redeemed by delivering to the Transfer Agent,
First Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123,
on any business day a written request for redemption in good order, plus any
share certificates with executed stock powers. Good order means that all
relevant documents must be endorsed by the record owner(s) exactly as the shares
are registered and the signature(s) must be guaranteed by a member of either the
Securities Transfer Association's STAMP program or the New York Stock Exchange's
Medallion Signature Program, or certain banks, savings and loan institutions,
credit unions, securities dealers, securities exchanges, clearing agencies and
registered securities associations as required by a regulation of the Securities
and Exchange Commission and acceptable to the Transfer Agent. In addition, in
some cases, good order may require the furnishing of additional documents such
as where shares are registered in the name of a corporation, partnership or
fiduciary.
REDEMPTION BY TELEPHONE: Shares may be redeemed by telephone provided the
investor has not disclaimed in writing the use of the privilege. Such
redemptions can be effected by calling the Transfer Agent at 800-262-1122,
Monday through Friday, 9:00 a.m. to 4:00 p.m. (Eastern Standard Time). The
proceeds of a telephone redemption may be no greater than the maximum amount
established by the Principal Underwriter (currently $50,000) and may be mailed
only to the account address of record. Shares held by corporations, trusts or
certain other entities, or subject to fiduciary arrangements, may not be
redeemed by telephone. Neither the Fund, the Principal Underwriter nor the
Transfer Agent will be responsible for the authenticity of redemption
instructions received by telephone, provided that reasonable procedures to
confirm that instructions communicated by telephone are genuine have been
followed. Telephone instructions will be tape recorded. In times of drastic
economic or market changes, a telephone redemption may be difficult to
implement.
REDEMPTION THROUGH AN AUTHORIZED FIRM: To sell 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 the Principal
Underwriter, as the Fund's agent, receives the order. It is the Authorized
Firm's responsibility to transmit promptly repurchase orders to the Principal
Underwriter. Throughout this Prospectus, the word "redemption" is generally
meant to include a repurchase.
Within seven days after receipt of a redemption request in good order by the
Transfer Agent, 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.
If shares were recently purchased, the proceeds of a redemption will not be sent
until the check (including a certified or cashier's check) received for the
shares purchased has cleared. Payment for shares tendered for redemption may be
delayed up to 15 days from the purchase date when the purchase check has not yet
cleared. Redemptions may result in a taxable gain or loss.
Due to the high cost of maintaining small accounts, the Fund reserves the right
to redeem accounts with balances of less than $750. Prior to such a redemption,
shareholders will be given 60 days' written notice to make an additional
purchase. However, no such redemption would be required by the 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.
MEETING REDEMPTIONS BY DISTRIBUTING PORTFOLIO SECURITIES. The Fund currently
will meet redemptions entirely 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 as chosen by the Investment Adviser. The Fund
would only distribute readily marketable securities, which would be valued
pursuant to the Portfolio's valuation procedures. As described under "Investment
Policies and Risks," the practice of distributing appreciated securities to meet
redemptions can be a useful tool for the tax-efficient management of the
Portfolio. A policy of meeting redemptions in whole or in part through the
distribution of securities will only be established in conjunction with putting
in place a program whereby redeeming shareholders who receive securities could
elect to sell the securities received to the Fund's custodian (or a designated
broker-dealer) at no cost and at a price equal to the price used in determining
the redemption value of the distributed securities. Redeeming shareholders who
receive securities and who elect to participate in this program would receive
the same amount of cash as if the redemption had been paid directly in cash and
would incur no more or less taxable gains than if the redemption had been paid
directly in cash. 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 custodian, 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 securities.
If the Fund does adopt a policy of using distributions of securities to meet
redemptions, it may continue to meet redemptions in whole or in part using cash.
At certain times, the Portfolio may not have sufficient quantities of
appreciated securities available to meet redemptions by shareholders. Moreover,
during periods of volatile market conditions the Fund can be expected to meet
redemptions primarily through distributions of cash.
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 ("CDSC") equal
to 1% of the net asset value of the redeemed shares. This CDSC 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, in the value of all 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 CDSC.
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 CDSC will
be paid to the Principal Underwriter or the Fund.
In calculating the CDSC 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 CDSC will be imposed on Fund shares which have been sold to Eaton Vance or
its affiliates, or to their respective employees or clients. The CDSC will also
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
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AFTER AN INVESTOR MAKES AN INITIAL PURCHASE OF FUND SHARES, THE TRANSFER AGENT
WILL SET UP A LIFETIME INVESTING ACCOUNT FOR THE INVESTOR ON THE FUND'S RECORDS.
This account is a complete record of all transactions 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 $50 OR MORE to the
Transfer Agent.
Any questions concerning a shareholder's account or services available may be
directed by telephone to EATON VANCE SHAREHOLDER SERVICES at 800-225-6265,
extension 2, or in writing to the Transfer Agent, First Data Investor Services
Group, P.O. Box 5123, Westborough, MA 01581-5123 (please provide the name of the
shareholder, the Fund and the account number).
THE FOLLOWING DISTRIBUTION OPTIONS WILL BE AVAILABLE TO ALL LIFETIME INVESTING
ACCOUNTS and may be changed as often as desired by written notice to the Fund's
dividend disbursing agent, First Data Investor Services Group, P.O. Box 5123,
Westborough, MA 01581-5123. The currently effective option will appear on each
account statement.
Share Option -- Dividends and capital gains will be reinvested in additional
shares.
Income Option -- Dividends will be paid in cash, and capital gains will be
reinvested in additional shares.
Cash Option -- Dividends and capital gains will be paid in cash.
The Share Option will be assigned if no other option is specified.
Distributions, including those reinvested, will be reduced by any withholding
required under federal income tax laws.
If 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
- --------------------------------------------------------------------------------
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 subject to a CDSC (or equivalent early withdrawal charge), on
the basis of the net asset value per share of each fund at the time of the
exchange. 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.
The Transfer Agent makes exchanges at the next determined net asset value after
receiving an exchange request in good order (see "How to Redeem Fund Shares").
Consult the Transfer Agent for additional information concerning the exchange
privilege. Applications and prospectuses of other funds are available from
Authorized Firms or the Principal Underwriter. The prospectus for each fund
describes its investment objectives and policies, and shareholders should obtain
a prospectus and consider these objectives and policies carefully before
requesting an exchange.
No CDSC is imposed on exchanges. For purposes of calculating the CDSC upon the
redemption of shares acquired in an exchange, the 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 the Transfer Agent provided that the
investor has not disclaimed in writing the use of the privilege. To effect such
exchanges, call the Transfer Agent at 800-262-1122, Monday through Friday, 9:00
a.m. to 4:00 p.m. (Eastern Standard Time). Shares acquired by telephone exchange
must be registered in the same name(s) and with the same address as the shares
being exchanged. Neither the Fund, the Principal Underwriter nor the Transfer
Agent will be responsible for the authenticity of exchange instructions received
by telephone, provided that reasonable procedures to confirm that instructions
communicated are genuine have been followed. Telephone instructions will be tape
recorded. In times of drastic economic or market changes, a telephone exchange
may be difficult to implement. An exchange may result in a taxable gain or loss.
EATON VANCE SHAREHOLDER SERVICES
- --------------------------------------------------------------------------------
THE 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 $1,000 minimum
investment has been made, checks of $50 or more payable to the order of EV
Classic Tax-Managed Growth Fund may be mailed directly to the Transfer Agent,
First Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123 at
any time -- whether or not distributions are reinvested. The name of the
shareholder, the Fund and the account number should accompany each investment.
BANK AUTOMATED INVESTING -- FOR REGULAR SHARE ACCUMULATION: Cash investments of
$50 or more may be made automatically each month or quarter from the
shareholder's bank account. The $1,000 minimum initial investment and small
account redemption policy are waived for these accounts.
WITHDRAWAL PLAN: The Fund will make available to shareholders making a deposit
of at least $5,000 a systematic withdrawal plan through which they can make
regular quarterly redemptions to yield them either a specified dollar amount of
at least $200 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 CDSC.
See "How to Redeem Fund Shares." 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 (for shares
held more than one year, 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 redeemed shares may reinvest, with
credit for any CDSC paid on the redeemed shares, any portion or all of the
redemption proceeds (plus that amount necessary to acquire a fractional share to
round off the purchase to the nearest full share) in shares of the Fund,
provided that the reinvestment is effected within 60 days after such redemption,
and the privilege has not been used more than once in the prior 12 months.
Shares are sold to a reinvesting shareholder at the 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.
TAX-SHELTERED RETIREMENT PLANS: Shares of the Fund are available for purchase in
connection with certain tax-sheltered retirement plans. Detailed information
concerning these plans, including certain exceptions to minimum investment
requirements, and copies of the plans are available from the Principal
Underwriter. This information should be read carefully and consultation with an
attorney or tax adviser may be advisable. The information sets forth the service
fee charged for retirement plans and describes the federal income tax
consequences of establishing a plan. Participant accounting services (including
trust fund reconciliation services) will be offered only through third party
recordkeepers and not by the Principal Underwriter. Under all plans, dividends
and distributions will be automatically reinvested in additional shares.
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 or the desirability of various
tax management techniques and securities lending may be reduced or eliminated by
future tax and other legislation, regulations, administrative interpretations,
or court decisions. In January 1996, the Clinton administration 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 legislation similar in effect were to be enacted at some future
time, 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 computing the average annual
percentage change in value of $1,000 invested at the maximum public offering
price (net asset value) for specified periods, assuming reinvestment of all
distributions. The average annual total return calculation assumes a complete
redemption of the investment and the deduction of any CDSC at the end of the
period. The Fund may also publish annual and cumulative total return figures
from time to time. The Fund may 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 CDSC which may be imposed upon redemptions at the end of the specified
period. Any performance figure which does not take into account the CDSC 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 of the Fund or the Portfolio are allocated to Eaton
Vance, the Fund's performance will be higher.
The following chart reflects the annual investment returns of the Fund for
one-year periods ending October 31 and does not take into account the sales
charge which investors may bear. The total return for the period prior to the
Fund's commencement of operations on August 2, 1996 reflects the total return of
the Portfolio (or that of its predecessor) which had different operating
expenses.
5 YEAR AVERAGE ANNUAL TOTAL RETURN -- 14.72%
10 YEAR AVERAGE ANNUAL TOTAL RETURN -- 15.95%
1987 14.63%
1988 5.49%
1989 18.46%
1990 (4.05%)
1991 37.13%
1992 10.94%
1993 7.33%
1994 8.80%
1995 32.56%
1996 22.02%
<PAGE>
[Logo]
EATON VANCE
- -----------------
Mutual Funds
EV CLASSIC
TAX-MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
PROSPECTUS
FEBRUARY 1, 1997
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, P.O. Box 5123, Westborough, MA 01581-5123
(800) 262-1122
AUDITORS
Deloitte & Touche LLP, 125 Summer Street, Boston, MA 02110
C-TGP
<PAGE>
PART A
INFORMATION REQUIRED IN A PROSPECTUS
EV MARATHON
TAX-MANAGED GROWTH FUND
- ------------------------------------------------------------------------------
EV MARATHON 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. 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 February
1, 1997, 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.
- ------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
- ------------------------------------------------------------------------------
PAGE PAGE
Shareholder and Fund Expenses ....... 2 Valuing Fund Shares ............... 11
The Fund's Financial Highlights ..... 3 How to Buy Fund Shares ............ 11
The Fund's Investment Objective ..... 4 How to Redeem Fund Shares ......... 12
The Tax-Managed Mutual Fund Reports to Shareholders ........... 14
Advantage ......................... 4 The Lifetime Investing Account/
Investment Policies and Risks ....... 5 Distribution Options ............ 14
Organization of the Fund and the The Eaton Vance Exchange Privilege 15
Portfolio ......................... 7 Eaton Vance Shareholder Services .. 16
Management of the Fund and the Distributions and Taxes ........... 17
Portfolio ......................... 8 Performance Information ........... 18
Distribution Plan ................... 9
- ------------------------------------------------------------------------------
PROSPECTUS DATED FEBRUARY 1, 1997
<PAGE>
SHAREHOLDER AND FUND EXPENSES
- ------------------------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES
----------------------------------------------------------------------------
Sales Charges Imposed on Purchases of Shares None
Sales Charges Imposed on Reinvested Distributions None
Fees to Exchange Shares None
Range of Declining Contingent Deferred Sales Charges Imposed on
Redemptions During the First Seven Years (as a percentage of
redemption proceeds exclusive of all reinvestments and capital
appreciation in the account) 5.00%-0%
ANNUAL FUND AND ALLOCATED PORTFOLIO OPERATING EXPENSES (as a
percentage of average daily net assets)
----------------------------------------------------------------------------
Investment Adviser Fee 0.618%
Rule 12b-1 Distribution (and Service) Fees 0.850%
Other Expenses 0.300%
-----
Total Operating Expenses 1.768%
=====
EXAMPLE 1 YEAR 3 YEARS
------ -------
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: $68 $95
An investor would pay the following expenses on the same
investment, assuming (a) 5% annual return and (b) no
redemptions: $18 $55
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.
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 "The Fund's Financial Highlights," "Management of the
Fund and the Portfolio" and "How to Redeem Fund Shares." A long-term shareholder
in the Fund 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. See "Distribution Plan."
No contingent deferred sales charge is imposed on (a) shares purchased more than
six years prior to the 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." See "How to Redeem Fund Shares."
For shares sold by Authorized Firms and remaining outstanding for at least one
year, the Fund will pay service fees not exceeding .25% per annum of its
average daily net assets. The Fund expects to begin making service fee
payments during the quarter ending June 30, 1997. Therefore, expenses after
year one will be higher. See "Distribution Plan."
The Fund invests exclusively in the Portfolio. Other investment companies with
different distribution arrangements and fees are investing in the Portfolio and
others may do so in the future. See "Organization of the Fund and the
Portfolio."
<PAGE>
THE FUND'S FINANCIAL HIGHLIGHTS
- -----------------------------------------------------------------------------
The following information should be read in conjunction with the audited
financial statements included in the Fund's annual report to shareholders
which is incorporated by reference into the Statement of Additional
Information in reliance upon the report of Deloitte & Touche LLP, independent
certified public accountants, as experts in accounting and auditing. Further
information regarding the performance of the Fund is contained in its annual
report to shareholders which may be obtained without charge by contacting the
Principal Underwriter.
- ------------------------------------------------------------------------------
FOR THE PERIOD FROM THE START OF BUSINESS, MARCH 28, 1996, TO OCTOBER
31, 1996.
NET ASSET VALUE, beginning of period $10.000
-------
INCOME FROM OPERATIONS:
Net investment loss $(0.003)
Net realized and unrealized gain on investments 1.153
-------
Total income from investment operations $ 1.150
-------
NET ASSET VALUE, end of period $11.150
=======
TOTAL RETURN(1) 11.50%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets(2) 1.63%+
Ratio of net investment loss to average net assets (0.13%)+
Net assets, end of period (000's omitted) $77,644
+ Computed on an annualized basis.
(1) Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of the
period reported. Distributions, if any, are assumed to be reinvested at
the net asset value on the payable date. Total return is computed on a
non-annualized basis.
(2) Includes the Fund's share of the Portfolio's allocated expenses.
<PAGE>
THE FUND'S INVESTMENT OBJECTIVE
- ------------------------------------------------------------------------------
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. 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. Taxes
on 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
investment objectives of the Fund and the Portfolio are fundamental, and may not
be changed unless authorized by a vote of the Fund's shareholders or the
Portfolio's investors, as the case may be.
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.
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 by managing
its investments so as to minimize and defer the taxes incurred by shareholders
as a consequence of their investment in the Fund. The Fund seeks to achieve
returns primarily in the form of unrealized capital gains, which do not give
rise to current tax obligations for shareholders.
The Fund is similar to retirement planning instruments (such as nondeductible
IRAs and variable annuities) in that it is a long-term investment that seeks to
maximize after-tax returns. As a mutual fund, however, the Fund avoids a number
of structural disadvantages inherent in a nondeductible 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 a nondeductible 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 nondeductible 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 a
nondeductible 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
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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
less 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 Portfolio may temporarily
invest up to 65% 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.
Taxes on 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. A substantial portion of the assets of the Portfolio are
securities with large accumulated capital gains that have been contributed by
investors in the Portfolio. As a general matter, the Portfolio will not sell
appreciated securities contributed to the Portfolio if such a sale would give
rise to the recognition of capital gains accumulated prior to investment in the
Portfolio by the investor in the Portfolio who contributed the securities, but
will instead seek to manage its exposure to such securities by using the
above-described hedging techniques as appropriate.
The Portfolio follows the practice of distributing selected appreciated
securities to meet redemptions of certain investors and may, within certain
limits, use the selection of securities distributed to meet such redemptions as
a management tool. By distributing appreciated securities the Portfolio can
reduce its position in such securities without realizing capital gains. During
periods of net withdrawals by investors in the Portfolio, using distributions of
securities also enables the Portfolio to avoid the forced sale of securities to
raise cash for meeting redemptions. The Portfolio's ability to select the
securities used to meet redemptions is limited with respect to redemptions by
investors in the Portfolio who contributed securities, and with respect to the
securities contributed by such investors in the Portfolio. See the Statement of
Additional Information. Such limitations could affect the performance of the
Portfolio, and, therefore, the Fund. The Fund currently meets redemptions solely
in cash, but may adopt in the future a policy of meeting shareholder redemptions
in whole or in part through the distribution of readily marketable securities.
Such a policy would only be adopted after giving notice to the shareholders and
only in conjunction with putting in place a program whereby redeeming
shareholders who receive securities could elect to sell the securities received
to an affiliate of the Fund's custodian (or a designated broker-dealer) at no
cost and at a price equal to the price used in determining the redemption value
of the distributed securities. See "How to Redeem Fund Shares." A redeeming
shareholder of the Fund who received securities would incur no more or less
taxable gain than if the redemption had been paid in cash.
It is expected that by employing the various tax-efficient management strategies
described herein, the Portfolio can minimize the extent to which shareholders
incur taxes as a result of realized capital gains. The Portfolio may
nevertheless realize gains and shareholders will incur tax liability 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, armed conflict, 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 and will limit investment in foreign issuers to 25% of
assets.
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
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 will include certain 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. No
more than 25% of the Portfolio's assets is expected to be subject to short-sales
against-the-box at any one time.
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, net of administrative expenses and finders' fees, 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 Investment Company Act of 1940, as amended
(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 (except with respect to the
borrowing of money and issuing senior securities) 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.
ORGANIZATION OF THE FUND AND THE PORTFOLIO
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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 (such as the Fund). 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." There are no annual meetings of shareholders,
but special meetings may be held as required by law to elect Trustees and
consider certain other matters. Shareholders are entitled to one vote for each
full share held. Fractional shares may be voted proportionately. Shares 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.
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. Such investment affords the potential for
economies of scale for the Fund and may over time result in lower expenses.
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. Information regarding other funds or investors that invest in the
Portfolio may be obtained by contacting the Principal Underwriter, 24 Federal
Street, Boston, MA 02110 (617) 482-8260.
Whenever the Fund as an investor in the Portfolio is requested to vote on
matters pertaining to the Portfolio (other than the termination of the
Portfolio's business, which may be determined by the Trustees of the Portfolio
without investor approval), the Fund will hold a meeting of Fund shareholders
and will vote its interest in the Portfolio for or against such matters
proportionately to the instructions to vote for or against such matters received
from Fund shareholders. The Fund shall vote shares for which it receives no
voting instructions in the same proportion as the shares for which it receives
voting instructions. Other investors in the Portfolio may alone or collectively
acquire sufficient voting interests in the Portfolio to control matters relating
to the operation of the Portfolio, which may require the Fund to withdraw its
investment in the Portfolio or take other appropriate action. Any such
withdrawal could result in a distribution "in kind" of portfolio securities (as
opposed to a cash distribution from the Portfolio). If securities are
distributed, the Fund could incur brokerage, tax or other charges in converting
the securities to cash. In addition, the distribution in kind may result in a
less diversified portfolio of investments or adversely affect the liquidity of
the Fund.
The Fund may withdraw (completely redeem) all its assets from the Portfolio at
any time if the Board of Trustees of the Trust determines that it is in the best
interest of the Fund to do so. In the event the Fund withdraws all of its assets
from the Portfolio, 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.
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. BMR also furnishes for the
use of the Portfolio office space and all necessary office facilities, equipment
and personnel for servicing the investments of the Portfolio. Under 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%
For the period from the start of business, December 1, 1995, to October 31,
1996, the Portfolio paid BMR advisory fees equivalent to 0.618% (annualized) of
the Portfolio's average daily net assets for such period.
BMR OR EATON VANCE ACTS AS INVESTMENT ADVISER TO INVESTMENT COMPANIES AND
VARIOUS INDIVIDUAL AND INSTITUTIONAL CLIENTS WITH ASSETS UNDER MANAGEMENT OF
OVER $17 BILLION. EATON VANCE HAS BEEN MANAGING INVESTMENT COMPANIES WITH
OBJECTIVES SIMILAR TO THAT OF THE FUND SINCE 1961. Eaton Vance is a wholly-owned
subsidiary of Eaton Vance Corp., a publicly-held holding company, which through
its subsidiaries and affiliates engages primarily in investment management,
administration and marketing activities. The Principal Underwriter is a
wholly-owned subsidiary of Eaton Vance.
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 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. The Fund, the Portfolio and BMR have adopted Codes of Ethics
relating to personal securities transactions. The Codes permit Eaton Vance
personnel to invest in securities (including securities that may be purchased or
held by the Portfolio) for their own accounts, subject to certain pre-clearance,
reporting and other restrictions and procedures contained in such Codes.
The 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 the Principal Underwriter 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 any litigation in which
the Fund or the Portfolio, as the case may be, is a party and any legal
obligation to indemnify its respective officers and Trustees with respect
thereto, to the extent not covered by insurance.
DISTRIBUTION PLAN
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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 5% of the amount
received by the Fund for each share sold and (ii) distribution fees calculated
by applying the rate of 1% over the prime rate then reported in The Wall Street
Journal to the outstanding balance of Uncovered Distribution Charges (as
described below) of the Principal Underwriter. The Principal Underwriter
currently expects to pay sales commissions (except on exchange transactions and
reinvestments) to a financial services firm (an "Authorized Firm") at the time
of sale equal to 4% of the purchase price of the shares sold by such Firm. The
Principal Underwriter will use its own funds (which may be borrowed from banks)
to pay such commissions. Because the payment of the sales commissions and
distribution fees to the Principal Underwriter is subject to the NASD Rule
described below, it will take the Principal Underwriter a number of years to
recoup the sales commissions paid by it to Authorized Firms from the payments
received by it from the Fund pursuant to the Plan.
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 received by the
Principal Underwriter from the Fund 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. For the
period from the start of business, March 28, 1996, to October 31, 1996, the Fund
paid sales commissions under the Plan equivalent to 0.75% (annualized) of the
Fund's average daily net assets for such period. As at October 31, 1996, the
Uncovered Distribution Charges of the Principal Underwriter calculated under the
Plan amounted to approximately $3,260,000 (equivalent to 4.20% of the Fund's net
assets on such day).
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 quarterly service fee payments to the Principal
Underwriter and Authorized Firms in amounts not expected to exceed .25% per
annum of the Fund's average daily net assets based on the value of Fund shares
sold by such persons and remaining outstanding for at least one year. As
permitted by the NASD Rule, such 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 Fund expects to begin accruing for its service fees during the
quarter ending June 30, 1997.
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, the
accumulated unrealized capital gains of the Fund 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
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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 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.
The Portfolio's net asset value is also determined as of the close of regular
trading on the Exchange by IBT (as custodian and agent for the Portfolio) in the
manner authorized by the Trustees of the Portfolio. Net asset value is computed
by 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 $1,000. Once an account has
been established the investor may send investments of $50 or more at any time
directly to the Fund's transfer agent (the "Transfer Agent") as follows: First
Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123. The
$1,000 minimum initial investment is waived for Bank Automated Investing
accounts, which may be established with an investment of $50 or more. See
"Eaton Vance Shareholder Services."
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. BMR
may request that the Portfolio retain the securities for investment purposes.
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. 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 Marathon Tax-Managed Growth Fund
IN THE CASE OF PHYSICAL DELIVERY:
Investors Bank & Trust Company
Attention: EV Marathon 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 IN ONE OF THREE WAYS -- BY MAIL, BY
TELEPHONE OR THROUGH AN AUTHORIZED FIRM. The redemption price will be based on
the net asset value per Fund share next computed after a redemption request is
received in the proper form as described below.
REDEMPTION BY MAIL: Shares may be redeemed by delivering to the Transfer Agent,
First Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123,
on any business day a written request for redemption in good order, plus any
share certificates with executed stock powers. Good order means that all
relevant documents must be endorsed by the record owner(s) exactly as the shares
are registered and the signature(s) must be guaranteed by a member of either the
Securities Transfer Association's STAMP program or the New York Stock Exchange's
Medallion Signature Program, or certain banks, savings and loan institutions,
credit unions, securities dealers, securities exchanges, clearing agencies and
registered securities associations as required by a regulation of the Securities
and Exchange Commission and acceptable to the Transfer Agent. In addition, in
some cases, good order may require the furnishing of additional documents such
as where shares are registered in the name of a corporation, partnership or
fiduciary.
REDEMPTION BY TELEPHONE: Shares may be redeemed by telephone provided the
investor has not disclaimed in writing the use of the privilege. Such
redemptions can be effected by calling the Transfer Agent at 800-262-1122,
Monday through Friday, 9:00 a.m. to 4:00 p.m. (Eastern Standard Time). The
proceeds of a telephone redemption may be no greater than the maximum amount
established by the Principal Underwriter (currently $50,000) and may be mailed
only to the account address of record. Shares held by corporations, trusts or
certain other entities, or subject to fiduciary arrangements, may not be
redeemed by telephone. Neither the Fund, the Principal Underwriter nor the
Transfer Agent will be responsible for the authenticity of redemption
instructions received by telephone, provided that reasonable procedures to
confirm that instructions communicated by telephone are genuine have been
followed. Telephone instructions will be tape recorded. In times of drastic
economic or market changes, a telephone redemption may be difficult to
implement.
REDEMPTION THROUGH AN AUTHORIZED FIRM: To sell 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 the Principal
Underwriter, as the Fund's agent, receives the order. It is the Authorized
Firm's responsibility to transmit promptly repurchase orders to the Principal
Underwriter. Throughout this Prospectus, the word "redemption" is generally
meant to include a repurchase.
Within seven days after receipt of a redemption request in good order by the
Transfer Agent, 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.
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 $750. Prior to such a redemption,
shareholders will be given 60 days' written notice to make an additional
purchase. However, no such redemption would be required by the 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.
MEETING REDEMPTIONS BY DISTRIBUTING PORTFOLIO SECURITIES. The Fund currently
will meet redemptions entirely 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 as chosen by the Investment Adviser. The Fund
would only distribute readily marketable securities, which would be valued
pursuant to the Portfolio's valuation procedures. As described under "Investment
Policies and Risks," the practice of distributing appreciated securities to meet
redemptions can be a useful tool for the tax-efficient management of the
Portfolio. A policy of meeting redemptions in whole or in part through the
distribution of securities will only be established in conjunction with putting
in place a program whereby redeeming shareholders who receive securities could
elect to sell the securities received to the Fund's custodian (or a designated
broker-dealer) at no cost and at a price equal to the price used in determining
the redemption value of the distributed securities. Redeeming shareholders who
receive securities and who elect to participate in this program would receive
the same amount of cash as if the redemption had been paid directly in cash and
would incur no more or less taxable gain than if the redemption had been paid
directly in cash. 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 custodian, 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 securities.
If the Fund does adopt a policy of using distributions of securities to meet
redemptions, it may continue to meet redemptions in whole or in part using cash.
At certain times, the Portfolio may not have sufficient quantities of
appreciated securities available to meet redemptions by shareholders. Moreover,
during periods of volatile market conditions the Fund can be expected to meet
redemptions primarily through distributions of cash.
CONTINGENT DEFERRED SALES CHARGE. Shares redeemed within the first six years of
their purchase (except shares acquired through the reinvestment of
distributions) generally will be subject to a contingent deferred sales charge
("CDSC"). This CDSC 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 six years prior to the redemption, (b) all shares in the
account acquired through reinvestment of distributions, and (c) the increase, if
any, in the value of all other shares in the account (namely those purchased
within the six years 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 CDSC. 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 CDSC will be paid to the
Principal Underwriter or the Fund. Any CDSC which is required to be imposed on
share redemptions will be made in accordance with the following schedule:
YEAR OF
REDEMPTION
AFTER PURCHASE CDSC
----------------------------------------------------------------------------
First or Second .................................................... 5%
Third .............................................................. 4%
Fourth ............................................................. 3%
Fifth .............................................................. 2%
Sixth .............................................................. 1%
Seventh and following .............................................. 0%
In calculating the CDSC upon the redemption of Fund shares acquired in an
exchange for shares of a fund currently listed under "The Eaton Vance Exchange
Privilege," the CDSC schedule applicable to the shares at the time of purchase
will apply and the purchase of shares acquired in the exchange is deemed to have
occurred at the time of the original purchase of the exchanged shares.
No CDSC will be imposed on Fund shares which have been sold to Eaton Vance or
its affiliates, or to their respective employees or clients. The CDSC will also
be waived for shares redeemed (1) pursuant to a Withdrawal Plan (see "Eaton
Vance Shareholder Services"), (2) as part of a required distribution from a
tax-sheltered retirement plan, or (3) following the death of all beneficial
owners of such shares, provided the redemption is requested within one year of
death (a death certificate and other applicable documents may be required). In
addition, shares acquired as a result of a merger or liquidation of another
Eaton Vance sponsored fund will have a CDSC imposed at the same rate as would
have been imposed in the prior fund.
THE FOLLOWING EXAMPLE ILLUSTRATES THE OPERATION OF THE CDSC. ASSUME THAT AN
INVESTOR PURCHASES $100,000 OF THE FUND'S SHARES AND THAT 16 MONTHS LATER THE
VALUE OF THE ACCOUNT HAS GROWN THROUGH INVESTMENT PERFORMANCE AND REINVESTMENT
OF DIVIDENDS TO $120,000. THE INVESTOR THEN MAY REDEEM UP TO $20,000 OF SHARES
WITHOUT INCURRING A CDSC. IF THE INVESTOR SHOULD REDEEM $30,000 OF SHARES, A
CDSC WOULD BE IMPOSED ON $10,000 OF THE REDEMPTION. THE RATE WOULD BE 5%
BECAUSE THE REDEMPTION WAS MADE IN THE SECOND YEAR AFTER THE PURCHASE WAS MADE
AND THE CHARGE WOULD BE $500.
REPORTS TO SHAREHOLDERS
- ------------------------------------------------------------------------------
THE FUND WILL ISSUE TO ITS SHAREHOLDERS SEMI-ANNUAL AND ANNUAL REPORTS
CONTAINING FINANCIAL STATEMENTS. Financial statements included in annual reports
are audited by the Fund's independent certified public accountants. Shortly
after the end of each calendar year, the Fund will furnish all shareholders with
information necessary for preparing federal and state income tax returns.
THE LIFETIME INVESTING ACCOUNT/DISTRIBUTION OPTIONS
- ------------------------------------------------------------------------------
AFTER AN INVESTOR MAKES AN INITIAL PURCHASE OF FUND SHARES, THE TRANSFER AGENT
WILL SET UP A LIFETIME INVESTING ACCOUNT FOR THE INVESTOR ON THE FUND'S RECORDS.
This account is a complete record of all transactions 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 $50 OR MORE to the
Transfer Agent.
Any questions concerning a shareholder's account or services available may be
directed by telephone to EATON VANCE SHAREHOLDER SERVICES at 800-225-6265,
extension 2, or in writing to the Transfer Agent, First Data Investor Services
Group, P.O. Box 5123, Westborough, MA 01581-5123 (please provide the name of the
shareholder, the Fund and the account number).
THE FOLLOWING DISTRIBUTION OPTIONS WILL BE AVAILABLE TO ALL LIFETIME INVESTING
ACCOUNTS and may be changed as often as desired by written notice to the Fund's
dividend disbursing agent, First Data Investor Services Group, P.O. Box 5123,
Westborough, MA 01581-5123. The currently effective option will appear on each
account statement.
Share Option -- Dividends and capital gains will be reinvested in additional
shares.
Income Option -- Dividends will be paid in cash, and capital gains will be
reinvested in additional shares.
Cash Option -- Dividends and capital gains will be paid in cash.
The Share Option will be assigned if no other option is specified.
Distributions, including those reinvested, will be reduced by any withholding
required under federal income tax laws.
If 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
- ------------------------------------------------------------------------------
Shares of the Fund currently may be exchanged for shares of one or more other
funds in the Eaton Vance Marathon Group of Funds (including Class I shares of
any EV Marathon Limited Maturity fund) or Eaton Vance Money Market Fund, which
are subject to a CDSC. Shares of the Fund may also be exchanged for shares of
Eaton Vance Prime Rate Reserves, which are subject to an early withdrawal
charge, and shares of a money market fund sponsored by an Authorized Firm and
approved by the Principal Underwriter (an "Authorized Firm fund"). Any such
exchange will be made on the basis of the net asset value per share of each fund
at the time of the exchange. 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.
The Transfer Agent makes exchanges at the next determined net asset value after
receiving an exchange request in good order (see "How to Redeem Fund Shares").
Consult the Transfer Agent for additional information concerning the exchange
privilege. Applications and prospectuses of other funds are available from
Authorized Firms or the Principal Underwriter. The prospectus for each fund
describes its investment objectives and policies, and shareholders should obtain
a prospectus and consider these objectives and policies carefully before
requesting an exchange.
No CDSC is imposed on exchanges. For purposes of calculating the CDSC upon the
redemption of shares acquired in an exchange, the CDSC schedule applicable to
the shares at the time of purchase will apply and the purchase of shares
acquired in one or more exchanges is deemed to have occurred at the time of the
original purchase of the exchanged shares, except that time during which shares
are held in an Authorized Firm fund will not be credited toward completion of
the CDSC period. For the CDSC schedule applicable to the Eaton Vance Marathon
Group of Funds (except EV Marathon Strategic Income Fund, Class I shares of any
EV Marathon Limited Maturity Fund and Eaton Vance Prime Rate Reserves), see "How
to Redeem Fund Shares." The CDSC or early withdrawal charge schedule applicable
to EV Marathon Strategic Income Fund, Class I shares of any EV Marathon Limited
Maturity Fund and Eaton Vance Prime Rate Reserves is 3%, 2.5%, 2% or 1% in the
event of a redemption occurring in the first, second, third or fourth year,
respectively, after the original share purchase.
Shares of the funds listed above 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 the Transfer Agent provided that the
investor has not disclaimed in writing the use of the privilege. To effect such
exchanges, call the Transfer Agent at 800-262-1122, Monday through Friday, 9:00
a.m. to 4:00 p.m. (Eastern Standard Time). Shares acquired by telephone exchange
must be registered in the same name(s) and with the same address as the shares
being exchanged. Neither the Fund, the Principal Underwriter nor the Transfer
Agent will be responsible for the authenticity of exchange instructions received
by telephone, provided that reasonable procedures to confirm that instructions
communicated are genuine have been followed.Telephone instructions will be tape
recorded. In times of drastic economic or market changes, a telephone exchange
may be difficult to implement. An exchange may result in a taxable gain or loss.
EATON VANCE SHAREHOLDER SERVICES
- ------------------------------------------------------------------------------
THE 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 $1,000 minimum
investment has been made, checks of $50 or more payable to the order of EV
Marathon Tax-Managed Growth Fund may be mailed directly to the Transfer Agent,
P.O. Box 5123, Westborough, MA 01581-5123 at any time -- whether or not
distributions are reinvested. The name of the shareholder, the Fund and the
account number should accompany each investment.
BANK AUTOMATED INVESTING -- FOR REGULAR SHARE ACCUMULATION: Cash investments of
$50 or more may be made automatically each month or quarter from the
shareholder's bank account. The $1,000 minimum initial investment and small
account redemption policy are waived for these accounts.
WITHDRAWAL PLAN: The Fund will make available to shareholders making a deposit
of at least $5,000 a systematic withdrawal plan through which they can make
regular quarterly redemptions to yield them either a specified dollar amount of
at least $200 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 CDSC.
See "How to Redeem Fund Shares." 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 (for shares
held more than one year 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 redeemed shares may reinvest, with
credit for any CDSC paid on the redeemed shares, any portion or all of the
redemption proceeds (plus that amount necessary to acquire a fractional share to
round off the purchase to the nearest full share) in shares of the Fund,
provided that the reinvestment is effected within 60 days after such redemption,
and the privilege has not been used more than once in the prior 12 months.
Shares are sold to a reinvesting shareholder at the 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 or the desirability of various
tax management techniques and securities lending may be reduced or eliminated by
future tax and other legislation, regulations, administrative interpretations,
or court decisions. In January 1996, the Clinton administration 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 legislation similar in effect were to be enacted at some future
time, 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.
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 Internal
Revenue Code of 1986, as amended (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 computing the average annual
percentage change in value of $1,000 invested at the maximum public offering
price (net asset value) for specified periods, assuming reinvestment of all
distributions. The average annual total return calculation assumes a complete
redemption of the investment and the deduction of any CDSC at the end of the
period. The Fund may also publish annual and cumulative total return figures
from time to time. The Fund may 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 CDSC which may be imposed upon redemptions at the end of the specified
period. Any performance figure which does not take into account the CDSC 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 of the Fund or the Portfolio are allocated to Eaton
Vance, the Fund's performance will be higher.
The following chart reflects the annual investment returns of the Fund for
one-year periods ending October 31 and does not take into account the sales
charge which investors may bear. The total return for the period prior to the
Fund's commencement of operations on March 28, 1996 reflects the total return of
the Portfolio (or that of its predecessor) which had different operating
expenses.
5 YEAR AVERAGE ANNUAL TOTAL RETURN -- 14.75%
10 YEAR AVERAGE ANNUAL TOTAL RETURN -- 16.00%
1987 14.63%
1988 5.49%
1989 18.46%
1990 (4.05%)
1991 37.13%
1992 10.94%
1993 7.33%
1994 8.80%
1995 32.56%
1996 22.31%
<PAGE>
[LOGO]
EATON VANCE
- --------------------------
Mutual Funds
EV MARATHON TAX-MANAGED
GROWTH FUND
- ------------------------------------------------------------------------------
PROSPECTUS
FEBRUARY 1, 1997
EV MARATHON
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 MARATHON 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, P.O. Box 5123, Westborough, MA 01581-5123
(800) 262-1122
AUDITORS
Deloitte & Touche LLP, 125 Summer Street, Boston, MA 02110
M-TGP
<PAGE>
PART A
INFORMATION REQUIRED IN A PROSPECTUS
EV TRADITIONAL
TAX-MANAGED GROWTH FUND
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EV TRADITIONAL 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. 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 February
1, 1997, 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.
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<TABLE>
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PAGE PAGE
<S> <C> <C> <C>
Shareholder and Fund Expenses ......................... 2 How to Buy Fund Shares ................................ 10
The Fund's Financial Highlights ....................... 3 How to Redeem Fund Shares ............................. 12
The Fund's Investment Objectives ...................... 4 Reports to Shareholders ............................... 14
The Tax-Managed Mutual Fund Advantage ................. 4 The Lifetime Investing Account/
Investment Policies and Risks ......................... 5 Distribution Options ................................ 14
Organization of the Fund and the Portfolio ............ 7 The Eaton Vance Exchange Privilege .................... 15
Management of the Fund and the Portfolio .............. 8 Eaton Vance Shareholder Services ...................... 16
Service Plan .......................................... 9 Distributions and Taxes ............................... 17
Valuing Fund Shares ................................... 10 Performance Information ............................... 18
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</TABLE>
PROSPECTUS DATED FEBRUARY 1, 1997
<PAGE>
SHAREHOLDER AND FUND EXPENSES
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<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES
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<S> <C>
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price) 4.75%
Sales Charges Imposed on Reinvested Distributions None
Fees to Exchange Shares None
<CAPTION>
ANNUAL FUND AND ALLOCATED PORTFOLIO OPERATING EXPENSES (as a percentage of average daily net assets)
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<S> <C>
Investment Advisory Fee 0.618%
Service Plan Fees 0.100
Other Fees 0.300
-----
Total Operating Expense 1.018%
EXAMPLE
An investor would pay the following expenses and maximum initial sales charge
on a $1,000 investment, assuming (a) 5% annual return and (b) redemption at the
end of each time period:
1 Year $57
3 Years 78
</TABLE>
NOTES:
The table and Example summarize the aggregate expenses of the Portfolio and
the Fund 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.
The Example should not be considered a representation of past or future
expenses, and actual expenses may be greater or less than those shown. Federal
regulations require the Example to assume a 5% annual return, but actual return
will vary. For further information regarding the expenses of both the Fund and
the Portfolio see "The Fund's Financial Highlights," "Management of the Fund and
the Portfolio" and "Service Plan."
No sales charge is payable at the time of purchase on investments of $1 million
or more. However, a contingent deferred sales charge of 1% will be imposed on
such investments in the event of certain redemptions within 12 months of
purchase. See "How to Buy Fund Shares" and "How to Redeem Fund Shares."
For shares sold by Authorized Firms and remaining outstanding for at least one
year, the Fund will pay service fees not exceeding .25% per annum of its
average daily net assets. The Fund expects to begin accruing for its service
fee payments during the quarter ending June 30, 1997. After such date,
expenses will be higher. See "Service Plan."
The Fund invests exclusively in the Portfolio. Other investment companies with
different distribution arrangements and fees are investing in the Portfolio and
others may do so in the future. See "Organization of the Fund and the
Portfolio."
<PAGE>
THE FUND'S FINANCIAL HIGHLIGHTS
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The following information should be read in conjunction with the audited
financial statements included in the Fund's annual report to shareholders which
is incorporated by reference into the Statement of Additional Information in
reliance upon the report of Deloitte & Touche LLP, independent certified public
accountants, as experts in accounting and auditing. Further information
regarding the performance of the Fund is contained in its annual report to
shareholders which may be obtained without charge by contacting the Principal
Underwriter.
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FOR THE PERIOD FROM THE START OF BUSINESS, MARCH 28, 1996, TO OCTOBER 31, 1996
NET ASSET VALUE, beginning of period $10.000
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INCOME FROM OPERATIONS:
Net investment income $ 0.013
Net realized and unrealized gain on investments 1.157
-------
Total income from investment operations $ 1.170
-------
NET ASSET VALUE, end of period $11.170
=======
TOTAL RETURN(1) 11.70%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to average net assets(2) 1.05%+
Ratio of net investment income to average net assets 0.47%+
Net assets, end of period (000's omitted) $30,178
+Computed on an annualized basis.
(1)Total return is calculated assuming a purchase at the net asset value on the
first day and a sale at the net asset value on the last day of the period
reported. Distributions, if any, are assumed to be reinvested at the net
asset value on the payable date. Total return is computed on a non-annualized
basis.
(2)Includes the Fund's share of the Portfolio's allocated expenses.
<PAGE>
THE FUND'S INVESTMENT OBJECTIVE
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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. 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. Taxes
on 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
investment objectives of the Fund and the Portfolio are fundamental, and may not
be changed unless authorized by a vote of the Fund's shareholders or the
Portfolio's investors, as the case may be.
THE TAX-MANAGED MUTUAL FUND ADVANTAGE
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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.
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 by managing
its investments so as to minimize and defer the taxes incurred by shareholders
as a consequence of their investment in the Fund. The Fund seeks to achieve
returns primarily in the form of unrealized capital gains, which do not give
rise to current tax obligations for shareholders.
The Fund is similar to retirement planning instruments (such as nondeductible
IRAs and variable annuities) in that it is a long-term investment that seeks to
maximize after-tax returns. As a mutual fund, however, the Fund avoids a number
of structural disadvantages inherent in a nondeductible 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 a nondeductible 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 nondeductible 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 a
nondeductible 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
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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
less 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 Portfolio may temporarily
invest up to 65% 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.
Taxes on 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. A substantial portion of the assets of the Portfolio are
securities with large accumulated capital gains that have been contributed by
investors in the Portfolio. As a general matter, the Portfolio will not sell
appreciated securities contributed to the Portfolio if such a sale would give
rise to the recognition of capital gains accumulated prior to investment in the
Portfolio by the investor in the Portfolio who contributed the securities, but
will instead seek to manage its exposure to such securities by using the
above-described hedging techniques as appropriate.
The Portfolio follows the practice of distributing selected appreciated
securities to meet redemptions of certain investors and may, within certain
limits, use the selection of securities distributed to meet such redemptions as
a management tool. By distributing appreciated securities the Portfolio can
reduce its position in such securities without realizing capital gains. During
periods of net withdrawals by investors in the Portfolio, using distributions of
securities also enables the Portfolio to avoid the forced sale of securities to
raise cash for meeting redemptions. The Portfolio's ability to select the
securities used to meet redemptions is limited with respect to redemptions by
investors in the Portfolio who contributed securities, and with respect to the
securities contributed by such investors in the Portfolio. See the Statement of
Additional Information. Such limitations could affect the performance of the
Portfolio, and, therefore, the Fund. The Fund currently meets redemptions solely
in cash, but may adopt in the future a policy of meeting shareholder redemptions
in whole or in part through the distribution of readily marketable securities.
Such a policy would only be adopted after giving notice to the shareholders and
only in conjunction with putting in place a program whereby redeeming
shareholders who receive securities could elect to sell the securities received
to an affiliate of the Fund's custodian (or a designated broker-dealer) at no
cost and at a price equal to the price used in determining the redemption value
of the distributed securities. See "How to Redeem Fund Shares." A redeeming
shareholder of the Fund who received securities would incur no more or less
taxable gain than if the redemption had been paid in cash.
It is expected that by employing the various tax-efficient management strategies
described herein, the Portfolio can minimize the extent to which shareholders
incur taxes as a result of realized capital gains. The Portfolio may
nevertheless realize gains and shareholders will incur tax liability 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, armed conflict, 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 and will limit investment in foreign issuers to 25% of
assets.
DERIVATIVE INSTRUMENTS. 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
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 will include certain 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. No
more than 25% of the Portfolio's assets is expected to be subject to short sales
against-the-box at any one time.
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, net of administrative expenses and finders' fees, 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 Investment Company Act of 1940, as amended
(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 (except with respect to the
borrowing of money and issuing senior securities) 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.
ORGANIZATION OF THE FUND AND THE PORTFOLIO
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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 (such as the Fund). Each share represents an equal
proportionate 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." There are no annual meetings of shareholders, but
special meetings may be held as required by law to elect Trustees and consider
certain other matters. Shareholders are entitled to one vote for each full share
held. Fractional shares may be voted proportionately. Shares 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.
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. Such investment affords the potential for
economies of scale for the Fund and may over time result in lower expenses.
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. Information regarding other funds or investors that invest in the
Portfolio may be obtained by contacting the Principal Underwriter, 24 Federal
Street, Boston, MA 02110 (617) 482-8260.
Whenever the Fund as an investor in the Portfolio is requested to vote on
matters pertaining to the Portfolio (other than the termination of the
Portfolio's business, which may be determined by the Trustees of the Portfolio
without investor approval), the Fund will hold a meeting of Fund shareholders
and will vote its interest in the Portfolio for or against such matters
proportionately to the instructions to vote for or against such matters received
from Fund shareholders. The Fund shall vote shares for which it receives no
voting instructions in the same proportion as the shares for which it receives
voting instructions. Other investors in the Portfolio may alone or collectively
acquire sufficient voting interests in the Portfolio to control matters relating
to the operation of the Portfolio, which may require the Fund to withdraw its
investment in the Portfolio or take other appropriate action. Any such
withdrawal could result in a distribution "in kind" of portfolio securities (as
opposed to a cash distribution from the Portfolio). If securities are
distributed, the Fund could incur brokerage, tax or other charges in converting
the securities to cash. In addition, the distribution in kind may result in a
less diversified portfolio of investments or adversely affect the liquidity of
the Fund.
The Fund may withdraw (completely redeem) all its assets from the Portfolio at
any time if the Board of Trustees of the Trust determines that it is in the best
interest of the Fund to do so. In the event the Fund withdraws all of its assets
from the Portfolio, 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.
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. BMR also furnishes for the
use of the Portfolio office space and all necessary office facilities, equipment
and personnel for servicing the investments of the Portfolio. Under 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)
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$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%
For the period from the start of business, December 1, 1995, to October 31,
1996, the Portfolio paid BMR advisory fees equivalent to 0.618% (annualized) of
the Portfolio's average daily net assets for such period.
BMR OR EATON VANCE ACTS AS INVESTMENT ADVISER TO INVESTMENT COMPANIES AND
VARIOUS INDIVIDUAL AND INSTITUTIONAL CLIENTS WITH ASSETS UNDER MANAGEMENT OF
OVER $17 BILLION. EATON VANCE HAS BEEN MANAGING INVESTMENT COMPANIES WITH
OBJECTIVES SIMILAR TO THAT OF THE FUND SINCE 1961. Eaton Vance is a wholly-owned
subsidiary of Eaton Vance Corp., a publicly-held holding company, which through
its subsidiaries and affiliates engages primarily in investment management,
administration and marketing activities. The Principal Underwriter is a
wholly-owned subsidiary of Eaton Vance.
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 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. The Fund, the Portfolio and BMR have adopted Codes of Ethics
relating to personal securities transactions. The Codes permit Eaton Vance
personnel to invest in securities (including securities that may be purchased or
held by the Portfolio) for their own accounts, subject to certain pre-clearance,
reporting and other restrictions and procedures contained in such Codes.
The 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 the Principal Underwriter 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 any litigation in which
the Fund or the Portfolio, as the case may be, is a party and any legal
obligation to indemnify its respective officers and Trustees with respect
thereto, to the extent not covered by insurance.
SERVICE PLAN
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In addition to advisory fees and other expenses, the Fund pays service fees
pursuant to a Service Plan (the "Plan") designed to meet the requirements of
Rule 12b-1 under the 1940 Act and the service fee requirements of the revised
sales charge rule of the National Association of Securities Dealers, Inc. THE
PLAN PROVIDES THAT THE FUND MAY MAKE SERVICE FEE PAYMENTS FOR PERSONAL SERVICES
AND/OR THE MAINTENANCE OF SHAREHOLDER ACCOUNTS TO THE PRINCIPAL UNDERWRITER,
FINANCIAL SERVICE FIRMS ("AUTHORIZED FIRMS") AND OTHER PERSONS IN AMOUNTS NOT
EXCEEDING .25% OF ITS AVERAGE DAILY NET ASSETS FOR ANY FISCAL YEAR. The Trustees
of the Trust have implemented the Plan by authorizing the Fund to make quarterly
service fee payments to the Principal Underwriter and Authorized Firms in
amounts not expected to exceed .25% of that portion of the Fund's average daily
net assets for any fiscal year based on the value of shares sold by such persons
remaining outstanding for at least twelve months. The Fund expects to begin
accruing for its service fee payments during the quarter ending June 30, 1997.
VALUING FUND SHARES
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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 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 share and the public offering price based
thereon. It is the Authorized Firms' responsibility to transmit orders promptly
to the Principal Underwriter.
The Portfolio's net asset value is also determined as of the close of regular
trading on the Exchange by IBT (as custodian and agent for the Portfolio) 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
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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 effective public offering price, which price is based on the effective
net asset value per share plus the applicable sales charge. The Fund receives
the net asset value, while the sales charge is divided between the Authorized
Firm and the Principal Underwriter. 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.
The sales charge may vary depending on the size of the purchase and the number
of shares of Eaton Vance funds the investor may already own, any arrangement to
purchase additional shares during a 13-month period or special purchase
programs. Complete details of how investors may purchase shares at reduced sales
charges under a Statement of Intention, Right of Accumulation, or various
employee benefit plans are available from Authorized Firms or the Principal
Underwriter.
The current sales charges and dealer commissions are:
<TABLE>
<CAPTION>
SALES CHARGE SALES CHARGE DEALER DISCOUNT
AS PERCENTAGE OF AS PERCENTAGE OF AS PERCENTAGE OF
AMOUNT OF PURCHASE OFFERING PRICE AMOUNT INVESTED OFFERING PRICE
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C>
Less than $100,000 4.75% 4.99% 4.00%
$100,000 but less than $250,000 3.75 3.90 3.15
$250,000 but less than $500,000 2.75 2.83 2.30
$500,000 but less than $1,000,000 2.00 2.04 1.70
$1,000,000 or more 0.00* 0.00* See Below**
<FN>
*No sales charge is payable at the time of purchase on investments of $1 million or more. A contingent deferred sales charge
("CDSC") of 1% will be imposed on such investments in the event of certain redemptions within 12 months of purchase. Such
purchases made before January 1, 1997 will be subject to a CDSC of 0.50% in the event of such redemptions.
**A commission on sales of $1 million or more will be paid as follows: 1.00% on amounts of $1 million or more but less than $3
million, plus .50% on amounts from $3 million but less than $5 million, plus .25% on amounts of $5 million or more. Purchases of
$1 million or more will be aggregated over a 12-month period for purposes of determining the commission to be paid.
</FN>
</TABLE>
The Principal Underwriter may at times allow discounts up to the full sales
charge. During periods when the discount includes the full sales charge,
Authorized Firms may be deemed to be underwriters as that term is defined in the
Securities Act of 1933. 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.
An initial investment in the Fund must be at least $1,000. Once an account has
been established the investor may send investments of $50 or more at any time
directly to the Fund's transfer agent (the "Transfer Agent") as follows: First
Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123. The
$1,000 minimum initial investment is waived for Bank Automated Investing
accounts, which may be established with an investment of $50 or more. See
"Eaton Vance Shareholder Services."
Shares of the Fund may be sold at net asset value to current and retired
Directors and Trustees of Eaton Vance funds, including the Portfolio; to clients
and current and retired officers and employees of Eaton Vance, its affiliates
and other investment advisers of Eaton Vance sponsored funds; to registered
representatives and employees of Authorized Firms and bank employees who refer
customers to registered representatives of Authorized Firms; to officers and
employees of IBT and the Transfer Agent; and to such persons' spouses and
children under the age of 21 and their beneficial accounts. Class A shares may
also be issued at net asset value (1) in connection with the merger of an
investment company with the Fund, (2) to investors making an investment as part
of a fixed fee program whereby an entity unaffiliated with Eaton Vance provides
multiple investment services, such as management, brokerage and custody, and (3)
to investment advisors, financial planners or other intermediaries who place
trades for their own accounts or the accounts of their clients and who charge a
management, consulting or other fee for their services; clients of such
investment advisors, financial planners or other intermediaries who place trades
for their own accounts if the accounts are linked to the master account of such
investment advisor, financial planner or other intermediary on the books and
records of the broker or agent; and retirement and deferred compensation plans
and trusts used to fund those plans, including, but not limited to, those
defined in Section 401(a), 403(b) or 457 of the Internal Revenue Code of 1986,
as amended (the "Code") ("Eligible Plans") and "rabbi trusts." The Fund's
Principal Underwriter may pay commissions to Authorized Firms who initiate and
are responsible for purchases of shares of the Fund by Eligible Plans of up to
1.00% of the amount invested in such shares.
No sales charge is payable at the time of purchase where the amount invested
represents redemption proceeds from a mutual fund unaffiliated with Eaton Vance
if the redemption occurred no more than 60 days prior to the purchase of Fund
shares and the redeemed shares were subject to a sales charge. A CDSC of 0.50%
will be imposed on such investments in the event of certain redemptions within
12 months of purchase and the Authorized Firm will be paid a commission on such
sales of 0.50% of the amount invested.
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 public offering price as determined above. The
minimum value of securities (or securities and cash) accepted for deposit is
$5,000. BMR may request that the Portfolio retain the securities for investment
purposes. 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 public offering price per Fund share on the day such securities
are accepted. 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 public offering price per Fund share on the day such proceeds
are received. Eaton Vance will use reasonable efforts to obtain the then current
market price for such securities, but does not guarantee the best 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 Traditional Tax-Managed Growth Fund
IN THE CASE OF PHYSICAL DELIVERY:
Investors Bank & Trust Company
Attention: EV Traditional 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.
STATEMENT OF INTENTION AND ESCROW AGREEMENT. If the investor, on an application,
makes a Statement of Intention to invest a specified amount over a
thirteen-month period, then out of the initial purchase (or subsequent purchases
if necessary) 5% of the dollar amount specified on the application shall be held
in escrow by the escrow agent in the form of shares (computed to the nearest
full share at the public offering price applicable to the initial purchase
hereunder) registered in the investor's name. All income dividends and capital
gains distributions on escrowed shares will be paid to the investor or to the
investor's order. When the minimum investment so specified is completed, the
escrowed shares will be delivered to the investor. If the investor has an
accumulation account the shares will remain on deposit under the investor's
account.
If total purchases under this Statement of Intention are less than the amount
specified, the investor will promptly remit to the Principal Underwriter any
difference between the sales charge on the amount specified and on the amount
actually purchased. If the investor does not within 20 days after written
request by the Principal Underwriter or the Authorized Firm pay such difference
in sales charge, the escrow agent will redeem an appropriate number of the
escrowed shares in order to realize such difference. Full shares remaining after
any such redemption together with any excess cash proceeds of the shares so
redeemed will be delivered to the investor or to the investor's order by the
escrow agent.
If total purchases made under this Statement are large enough to qualify for a
lower sales charge than that applicable to the amount specified, all
transactions will be computed at the expiration date of the Statement to give
effect to the lower charge. Any difference in sales charge will be refunded to
the investor in cash, or applied to the purchase of additional shares at the
lower charge if specified by the investor. This refund will be made by the
Authorized Firm and by the Principal Underwriter. If at the time of the
recomputation a firm other than the original firm is placing the orders, the
adjustment will be made only on those shares purchased through the firm then
handling the account.
IF YOU DON'T HAVE AN AUTHORIZED FIRM, EATON VANCE CAN RECOMMEND ONE.
HOW TO REDEEM FUND SHARES
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A SHAREHOLDER MAY REDEEM FUND SHARES IN ONE OF THREE WAYS -- BY MAIL, BY
TELEPHONE OR THROUGH AN AUTHORIZED FIRM. The redemption price will be based on
the net asset value per Fund share next computed after a redemption request is
received in the proper form as described below.
REDEMPTION BY MAIL: Shares may be redeemed by delivering to the Transfer Agent,
First Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123,
on any business day a written request for redemption in good order, plus any
share certificates with executed stock powers. Good order means that all
relevant documents must be endorsed by the record owner(s) exactly as the shares
are registered and the signature(s) must be guaranteed by a member of either the
Securities Transfer Association's STAMP program or the New York Stock Exchange's
Medallion Signature Program, or certain banks, savings and loan institutions,
credit unions, securities dealers, securities exchanges, clearing agencies and
registered securities associations as required by a regulation of the Securities
and Exchange Commission and acceptable to the Transfer Agent. In addition, in
some cases, good order may require the furnishing of additional documents such
as where shares are registered in the name of a corporation, partnership or
fiduciary.
REDEMPTION BY TELEPHONE: Shares may be redeemed by telephone provided the
investor has not disclaimed in writing the use of the privilege. Such
redemptions can be effected by calling the Transfer Agent at 800-262-1122,
Monday through Friday, 9:00 a.m. to 4:00 p.m. (Eastern Standard Time). The
proceeds of a telephone redemption may be no greater than the maximum amount
established by the Principal Underwriter (currently $50,000) and may be mailed
only to the account address of record. Shares held by corporations, trusts or
certain other entities, or subject to fiduciary arrangements, may not be
redeemed by telephone. Neither the Fund, the Principal Underwriter nor the
Transfer Agent will be responsible for the authenticity of redemption
instructions received by telephone, provided that reasonable procedures to
confirm that instructions communicated by telephone are genuine have been
followed. Telephone instructions will be tape recorded. In times of drastic
economic or market changes, a telephone redemption may be difficult to
implement.
REDEMPTION THROUGH AN AUTHORIZED FIRM: To sell 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 the Principal
Underwriter, as the Fund's agent, receives the order. It is the Authorized
Firm's responsibility to transmit promptly repurchase orders to the Principal
Underwriter. Throughout this Prospectus, the word "redemption" is generally
meant to include a repurchase.
Within seven days after receipt of a redemption request in good order by the
Transfer Agent, 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 federal income tax
required to be withheld.
If shares were recently purchased, the proceeds of a redemption will not be sent
until the check (including a certified or cashier's check) received for the
shares purchased has cleared. Payment for shares tendered for redemption may be
delayed up to 15 days from the purchase date when the purchase check has not yet
cleared. Redemptions may result in a taxable gain or loss.
Due to the high cost of maintaining small accounts, the Fund reserves the right
to redeem accounts with balances of less than $750. Prior to such a redemption,
shareholders will be given 60 days' written notice to make an additional
purchase. However, no such redemption would be required by the Fund if the cause
of the low account balance was a reduction in the net asset value of Fund
shares.
MEETING REDEMPTIONS BY DISTRIBUTING PORTFOLIO SECURITIES. The Fund currently
will meet redemptions entirely 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 as chosen by the Investment Adviser. The Fund
would only distribute readily marketable securities, which would be valued
pursuant to the Portfolio's valuation procedures. As described under "Investment
Policies and Risks," the practice of distributing appreciated securities to meet
redemptions can be a useful tool for the tax-efficient management of the
Portfolio. A policy of meeting redemptions in whole or in part through the
distribution of securities will only be established in conjunction with putting
in place a program whereby redeeming shareholders who receive securities could
elect to sell the securities received to the Fund's custodian (or a designated
broker-dealer) at no cost and at a price equal to the price used in determining
the redemption value of the distributed securities. Redeeming shareholders who
receive securities and who elect to participate in this program would receive
the same amount of cash as if the redemption had been paid directly in cash and
would incur no more or less taxable gain than if the redemption had been paid
directly in cash. 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 custodian, 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 securities.
If the Fund does adopt a policy of using distributions of securities to meet
redemptions, it may continue to meet redemptions in whole or in part using cash.
At certain times, the Portfolio may not have sufficient quantities of
appreciated securities available to meet redemptions by shareholders. Moreover,
during periods of volatile market conditions the Fund can be expected to meet
redemptions primarily through distributions of cash.
If shares have been purchased at net asset value with no initial sales charge by
virtue of the purchase having been in the amount of $1 million or more and are
redeemed within 12 months of purchase, a CDSC of 1% will be imposed on such
redemption. (Such purchases made before January 1, 1997 will be subject to a
CDSC of 0.50% in the event of certain redemptions made within 12 months of
purchases.) If shares have been purchased at net asset value because the amount
invested represents redemption proceeds from a mutual fund unaffiliated with
Eaton Vance (as described under "How to Buy Fund Shares") and are redeemed
within 12 months of purchase, a CDSC of 0.50% will be imposed on such
redemption. The CDSC will be imposed on an amount equal to the lesser of the
current market value or the original purchase price of the shares redeemed.
Accordingly, no CDSC will be imposed on increases in account value above the
initial purchase price, including any dividends or distributions that have been
reinvested in additional shares. It will be assumed that redemptions are made
first from any shares in the shareholder's account that are not subject to a
CDSC. The CDSC will be retained by the Principal Underwriter.
The CDSC is waived for redemptions involving certain liquidation, merger or
acquisition transactions involving other investment companies. If a shareholder
reinvests redemption proceeds within a 60-day period and in accordance with the
conditions set forth under "Eaton Vance Shareholder Services -- Reinvestment
Privilege," the shareholder's account will be credited with the amount of any
CDSC paid on such redeemed shares.
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.
Consistent with applicable law, duplicate mailings of shareholder reports and
certain other Fund information to shareholders residing at the same address may
be eliminated.
THE LIFETIME INVESTING ACCOUNT/DISTRIBUTION OPTIONS
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AFTER AN INVESTOR MAKES AN INITIAL PURCHASE OF FUND SHARES, THE TRANSFER AGENT,
WILL SET UP A LIFETIME INVESTING ACCOUNT FOR THE INVESTOR ON THE FUND'S RECORDS.
This account is a complete record of all transactions 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 $50 OR MORE to the
Transfer Agent.
Any questions concerning a shareholder's account or services available may be
directed by telephone to EATON VANCE SHAREHOLDER SERVICES at 800-225-6265,
extension 2, or in writing to the Transfer Agent, First Data Investor Services
Group, P.O. Box 5123, Westborough, MA 01581-5123 (please provide the name of the
shareholder, the Fund and the account number).
THE FOLLOWING DISTRIBUTION OPTIONS WILL BE AVAILABLE TO ALL LIFETIME INVESTING
ACCOUNTS and may be changed as often as desired by written notice to the Fund's
dividend disbursing agent, First Data Investor Services Group, P.O. Box 5123,
Westborough, MA 01581-5123. The currently effective option will appear on each
account statement.
Share Option -- Dividends and capital gains will be reinvested in additional
shares.
Income Option -- Dividends will be paid in cash, and capital gains will be
reinvested in additional shares.
Cash Option -- Dividends and capital gains will be paid in cash.
The Share Option will be assigned if no other option is specified.
Distributions, including those reinvested, will be reduced by any withholding
required under federal income tax laws.
If 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 any of the following
funds: Eaton Vance Cash Management Fund, Eaton Vance Income Fund of Boston,
Eaton Vance Municipal Bond Fund L.P., Eaton Vance Tax Free Reserves and any fund
in the Eaton Vance Traditional Group of Funds on the basis of the net asset
value per share of each fund at the time of the exchange (plus, in the case of
an exchange made within six months of the date of purchase of shares subject to
an initial sales charge, an amount equal to the difference, if any, between the
sales charge previously paid on the shares being exchanged and the sales charge
payable on the shares being acquired). Exchange offers are available only in
States where shares of the fund being acquired may be legally sold.
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.
Shares of the Fund which are subject to a CDSC may be exchanged into any of the
above funds without incurring the CDSC. The shares acquired in an exchange may
be subject to a CDSC upon redemption. For purposes of computing the CDSC payable
upon the redemption of shares acquired in an exchange, the holding period of the
original shares is added to the holding period of the shares acquired in the
exchange.
The Transfer Agent makes exchanges at the next determined net asset value after
receiving an exchange request in good order (see "How to Redeem Fund Shares").
Consult the Transfer Agent for additional information concerning the exchange
privilege. Applications and prospectuses of other funds are available from
Authorized Firms or the Principal Underwriter. The prospectus for each fund
describes its investment objectives and policies, and shareholders should obtain
a prospectus and consider these objectives and policies carefully before
requesting an exchange.
Shares of certain other funds for which Eaton Vance acts as investment adviser
or administrator 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 (plus, in the case of
an exchange made within six months of the date of purchase of shares subject to
an initial sales charge, an amount equal to the difference, if any, between the
sales charge previously paid on the shares being exchanged and the sales charge
payable on the shares being acquired). Any such exchange is subject to any
restrictions or qualifications set forth in the current prospectus of any such
fund.
Telephone exchanges are accepted by the Transfer Agent provided that the
investor has not disclaimed in writing the use of the privilege. To effect such
exchanges, call the Transfer Agent at 800-262-1122, Monday through Friday, 9:00
a.m. to 4:00 p.m. (Eastern Standard Time). Shares acquired by telephone exchange
must be registered in the same name(s) and with the same address as the shares
being exchanged. Neither the Fund, the Principal Underwriter nor the Transfer
Agent will be responsible for the authenticity of exchange instructions received
by telephone, provided that reasonable procedures to confirm that instructions
communicated are genuine have been followed. Telephone instructions will be tape
recorded. In times of drastic economic or market changes, a telephone exchange
may be difficult to implement. An exchange may result in a taxable gain or loss.
EATON VANCE SHAREHOLDER SERVICES
- --------------------------------------------------------------------------------
THE 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 $1,000 minimum
investment has been made, checks of $50 or more payable to the order of EV
Traditional Tax-Managed Growth Fund may be mailed directly to the Transfer
Agent, First Data Investor Services Group, P.O. Box 5123, Westborough, MA
01581-5123 at any time -- whether or not distributions are reinvested. The name
of the shareholder, the Fund and the account number should accompany each
investment.
BANK AUTOMATED INVESTING -- FOR REGULAR SHARE ACCUMULATION: Cash investments of
$50 or more may be made automatically each month or quarter from the
shareholder's bank account. The $1,000 minimum initial investment and small
account redemption policy are waived for these accounts.
STATEMENT OF INTENTION: Purchases of $100,000 or more made over a 13-month
period are eligible for reduced sales charges. See "How to Buy Fund Shares --
Statement of Intention and Escrow Agreement."
RIGHT OF ACCUMULATION: Purchases may qualify for reduced sales charges when the
current market value of holdings (shares at current offering price), plus new
purchases, reaches $100,000 or more. Shares of the Eaton Vance funds listed
under "The Eaton Vance Exchange Privilege" may be combined under the Statement
of Intention and Right of Accumulation.
WITHDRAWAL PLAN: The Fund will make available to shareholders making a deposit
of at least $5,000 a systematic withdrawal plan through which they can make
regular quarterly redemptions to yield them either a specified dollar amount of
at least $200 per year or a specified percentage of net asset value of at least
4% but not more than 12% annually. See "How to Redeem Fund Shares." 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 (for shares held more than one year 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). The maintenance of a systematic withdrawal plan concurrently with
purchases of additional shares would be disadvantageous because of the sales
charge included in such purchases.
REINVESTMENT PRIVILEGE: A shareholder who has redeemed shares may reinvest at
net asset value any portion or all of the redemption proceeds (plus that amount
necessary to acquire a fractional share to round off the purchase to the nearest
full share) in shares of the Fund, or, provided that the shares redeemed have
been held for at least 60 days, in shares of any of the other funds offered by
the Principal Underwriter subject to an initial sales charge, provided that the
reinvestment is effected within 60 days after such redemption, and the privilege
has not been used more than once in the prior 12 months. Shares are sold to a
reinvesting shareholder at the net asset value next determined following timely
receipt of a written purchase order by the Principal Underwriter or by the fund
the shares of which are to be purchased (or by such fund's transfer agent). The
privilege is also available to shareholders of the funds listed under "The Eaton
Vance Exchange Privilege" who wish to reinvest such redemption proceeds in
shares of a Fund. If a shareholder reinvests redemption proceeds within the
60-day period, the shareholder's account will be credited with the amount of any
CDSC paid on such redeemed shares. 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.
TAX-SHELTERED RETIREMENT PLANS: Shares of the Fund are available for purchase in
connection with certain tax-sheltered retirement plans. Detailed information
concerning these plans, including certain exceptions to minimum investment
requirements, and copies of the plans are available from the Principal
Underwriter. This information should be read carefully and consultation with an
attorney or tax adviser may be advisable. The information sets forth the service
fee charged for retirement plans and describes the federal income tax
consequences of establishing a plan. Participant accounting services (including
trust fund reconciliation services) will be offered only through third party
recordkeepers and not by the Principal Underwriter. Under all plans, dividends
and distributions will be automatically reinvested in additional shares.
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 or the desirability of various
tax management techniques and securities lending may be reduced or eliminated by
future tax and other legislation, regulations, administrative interpretations,
or court decisions. In January 1996, the Clinton administration 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 legislation similar in effect were to be enacted at some future
time, 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 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.
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.
Sales charges paid upon a purchase of shares of the Fund cannot be taken into
account for purposes of determining gain or loss on a redemption or exchange of
the shares before the 91st day after their purchase to the extent a sales charge
is reduced or eliminated in a subsequent acquisition of shares of the Fund or
similar shares of another fund pursuant to the Fund's reinvestment or exchange
privilege. In addition, losses realized on a redemption of shares may be
disallowed under certain "wash sale" rules if within a period beginning 30 days
before and ending 30 days after the date of redemption other shares of the Fund
are acquired. Any disregarded amounts will result in an adjustment to the
shareholder's tax basis in some or all of any other shares acquired.
The Fund intends to qualify as a regulated investment company under the Code and
to satisfy all requirements necessary to 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 computing the average annual
percentage change in value of $1,000 invested at the maximum public offering
price (which includes the maximum sales charge) for specified periods, assuming
reinvestment of all distributions. The Fund may 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 furnish total return calculations based on investments at
various sales charge levels or at net asset value. Any performance data which is
based on the net asset value per share would be lower if a sales charge were
taken into account. The Fund's performance may be compared in publications to
the performance of various indices and investments for which reliable data is
available, and to averages, performance rankings, or other information prepared
by recognized mutual fund statistical services.
Investors should note that 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 of the Fund or the Portfolio are allocated to Eaton
Vance, the Fund's performance will be higher.
The following chart reflects the annual investment returns of the Fund for
one-year periods ending October 31 and does not take into account the sales
charge which investors may bear. The total return for the period prior to the
Fund's commencement of operations on March 28, 1996 reflects the total return of
the Portfolio (or that of its predecessor) which had different operating
expenses.
5 YEAR AVERAGE ANNUAL TOTAL RETURN -- 14.77%
10 YEAR AVERAGE ANNUAL TOTAL RETURN -- 16.04%
1987 14.63%
1988 5.49%
1989 18.46%
1990 (4.05%)
1991 37.13%
1992 10.94%
1993 7.33%
1994 8.80%
1995 32.56%
1996 22.53%
<PAGE>
[Logo]
EATON VANCE
- -----------------
Mutual Funds
EV TRADITIONAL
TAX-MANAGED
GROWTH FUND
- --------------------------------------------------------------------------------
PROSPECTUS
FEBRUARY 1, 1997
EV TRADITIONAL 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 TRADITIONAL 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, P.O. Box 5123, Westborough, MA 01581-5123
(800) 262-1122
AUDITORS
Deloitte & Touche LLP, 125 Summer Street, Boston, MA 02110
T-TGP
<PAGE>
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
STATEMENT OF
ADDITIONAL INFORMATION
February 1, 1997
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 ................................................. 5
Investment Adviser and Administrator .................................. 7
Custodian ............................................................. 10
Service for Withdrawal ................................................ 10
Determination of Net Asset Value ...................................... 10
Investment Performance ................................................ 11
Taxes ................................................................. 13
Portfolio Security Transactions ....................................... 15
Other Information ..................................................... 16
Independent Certified Public Accountants .............................. 18
Financial Statements .................................................. 18
PART II
Fees and Expenses ..................................................... a-1
Principal Underwriter ................................................. a-2
Distribution Plan ..................................................... a-2
Performance Information ............................................... a-4
Control Persons and Principal Holders of Securities ................... a-4
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 FEBRUARY 1, 1997, 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.
Forward Foreign Currency Exchange Contracts and Currency Futures. Forward
foreign currency contracts ("forward contracts") are individually negotiated and
privately traded by currency traders and their customers. A forward contract
involves an obligation to purchase or sell a specific currency (or basket of
currencies) for an agreed price at a future date, which may be any fixed number
of days from the date of the contract. The Portfolio may enter into a forward
contract in connection with the purchase or sale of a security denominated in a
foreign currency, or when the Portfolio anticipates the receipt in a foreign
currency of dividend or interest payments on such a security which it holds, to
"lock" in the U.S. dollar price of the security or the U.S. dollar equivalent of
such dividend or interest payment, as the case may be. Additionally, when the
Investment Adviser believes that the currency of a particular foreign country
may suffer a substantial decline against the U.S. dollar, it may enter into a
forward contract to sell, for a fixed amount of dollars, the amount of foreign
currency approximating the value of some or all of the Portfolio's securities
denominated in such foreign currency. The precise matching of the forward
contract amounts and the value of the securities involved will not generally be
possible. The Portfolio generally will not enter into a forward contract with a
term of greater than one year.
Currency futures contracts are exchange traded instruments that may be used
by the Portfolio for the purposes described in the preceding paragraphs as an
alternative to the purchase or sale of forward currency exchange contracts.
Currency futures contracts are similar in structure to stock index futures
contracts, but change in value to reflect the movements of a currency or basket
of currencies rather than a stock index. The Portfolio's investments in currency
contracts are subject to limitations and restrictions similar to those set forth
for the Portfolio's investments in stock index futures and options on stock
index futures.
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's 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
certain purchased OTC options, and assets used as cover for written OTC options,
are subject to the Portfolio's 15% limit on illiquid investments. The
Portfolio's ability to terminate OTC derivative instruments may depend on the
cooperation of the counterparties to such contracts. For thinly traded
derivative instruments, the only source of price quotations may be the selling
dealer or counterparty. In addition, certain provisions of the Code limit the
extent to which the Portfolio may purchase and sell derivative instruments. The
Portfolio will engage in transactions in futures contracts and related options
only to the extent such transactions are consistent with the requirements of the
Code for maintaining the qualification of the Fund as a regulated investment
company for federal income tax purposes. See "Taxes".
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.
Lending Portfolio Securities. Under present regulatory policies of the
Commission, securities 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 the 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 Portfolio will only lend
securities to borrowers whose credit quality or claims paying ability is
considered to be investment grade by the Investment Adviser. The financial
condition of the borrower will be monitored by the Investment Adviser on an
ongoing basis. If a borrower of securities from the Portfolio defaults on a
securities loan, the Portfolio will, under proposed Treasury Regulations, be
considered to have disposed of the securities in a taxable transaction. The
Portfolio may experience delays in the recovery or loss of rights in loaned
securities if a borrower of securities fails financially. 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 withholding 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.
Asset Coverage Requirements. Transactions involving swaps, short sales, 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, swaps, or other
options, futures contracts or forward contracts, or (2) cash or liquid
securities (such as readily marketable common stock and money market
instruments) with a value sufficient at all times to cover its potential
obligations not covered as provided in (1) above. For swap transactions only the
net obligations of the Portfolio will be covered. The Portfolio will comply with
Commission guidelines regarding cover for these instruments and, if the
guidelines so require, set aside cash or liquid securities in a segregated
account with its custodian in the prescribed amount. The securities in the
segregated account will be marked to market daily.
Assets used as cover or held in a segregated account maintained by the
Fund's custodian cannot be sold while the position requiring coverage or
segregation is outstanding unless they are replaced with other appropriate
assets. As a result, the commitment of a large portion of the Portfolio's assets
to segregated accounts or to cover could impede portfolio management or the
Portfolio's ability to meet redemption requests or other current obligations.
Selection of Securities Used to Meet Redemptions. Investors in the Portfolio may
redeem interests in the Portfolio at net asset value on a daily basis.
Redemptions by the Fund's shareholders currently are met entirely in cash, but
distributions of securities generally are used to meet redemptions by other
investors in the Portfolio and may in the future be used to meet redemptions by
the Fund's shareholders. See "How to Redeem Fund Shares" in the Fund's
prospectus. The Portfolio's ability to select the securities used to meet
redemptions is limited with respect to redemptions by investors who contributed
securities, and with respect to the securities contributed by such investors.
Within five years of any contribution of securities, the Portfolio will not
distribute such securities to any investor other than the contributing investor.
In meeting a redemption of an investor within five years of a contribution of
securities by such investor, the Portfolio will not, unless requested by the
redeeming investor, distribute any securities other than the securities
contributed by the redeeming investor while retaining all or a portion of the
securities contributed by such investor. If the Portfolio were to do otherwise,
certain investors who contributed securities could realize taxable gain. In
addition, upon the request at any time of a redeeming investor in the Portfolio
that contributed securities, the Portfolio will utilize securities held in the
Portfolio that were contributed by such investor to meet the redemption.
Investors in the Portfolio can request a diversified basket of securities, which
may be distributed in the Investment Adviser's discretion. These redemption
practices constrain the selection of securities distributed to meet redemptions
and, consequently, may adversely affect the performance of the Portfolio and the
Fund. The Trustees of the Portfolio believe that the potential advantages for
the Portfolio to be derived from attracting contributions of securities that
would not be made in the absence of these redemption practices outweigh the
potential disadvantages of reduced flexibility to select securities to meet
redemptions. It is impossible to predict whether the net result will be
beneficial or detrimental to the Fund's performance.
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 20% (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.
INVESTMENT RESTRICTIONS
The following investment restrictions of the Fund are designated as
fundamental policies and as such cannot be changed without the approval of the
holders of a majority of the Fund's outstanding voting securities, which as used
in this SAI means the lesser of (a) 67% 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 investors of 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.
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 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 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).
Whenever an investment policy or investment restriction set forth in the
Prospectus or this SAI states a maximum percentage of assets that may be
invested in any security or other asset, such percentage limitation shall be
determined immediately after and as a result of the Fund's or the Portfolio's
acquisition of such security or asset. Accordingly, any later increase or
decrease resulting from a change in values, assets or other circumstances, will
not compel the Fund or the Portfolio, as the case may be, to dispose of such
security or other asset. Notwithstanding the foregoing, under normal market
conditions the Fund and the Portfolio must take actions necessary to comply with
the policy of investing at least 65% of total assets in common stock. Moreover,
the Fund and Portfolio must always be in compliance with the borrowing policy
set forth above.
Although permissible under the Fund's investment restrictions, the Fund has
no present intention during the coming fiscal year to: borrow money (except for
short-term liquidity purposes) or; pledge its assets.
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 (63), President and Trustee of the Trust*
Vice Chairman of BMR, Eaton Vance, EVC and EV, and a Director of EVC and EV.
Director or Trustee and officer of various investment companies managed by
Eaton Vance or BMR.
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 (55), Vice President of the Portfolio and the Trust and
Trustee of the Trust*
President and Chief Executive Officer of Eaton Vance, BMR, EVC and EV, and a
Director of EVC and EV. Director or Trustee and officer of various investment
companies managed by Eaton Vance or BMR.
DONALD R. DWIGHT (65), 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 (61), Trustee
President and Director, United Asset Management Corporation, a holding company
owning institutional investment management firms). Chairman, President and
Director, UAM Funds (mutual funds). Director or Trustee of various investment
companies managed by Eaton Vance or BMR.
Address: One International Place, Boston, Massachusetts 02110
JOHN L. THORNDIKE (70), Trustee
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 (39), Vice President of the Portfolio
Vice President of BMR, Eaton Vance and EV. Officer of various investment
companies managed by Eaton Vance or BMR. Mr. Richardson was elected Vice
President of the Portfolio on October 23, 1995.
WILLIAM H. AHERN, JR. (37), Vice President of the Trust
Assistant Vice President of BMR, Eaton Vance and EV. 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 (54), 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 (51), Treasurer
Vice President of Eaton Vance, BMR and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
M. KATHERINE KREIDER (36), 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 (65), 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 (61), Assistant Treasurer and Assistant Secretary
Vice President of Eaton Vance, BMR and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
A. JOHN MURPHY (34), Assistant Secretary
Assistant Vice President of BMR, Eaton Vance and EV since March 1, 1994;
employee of Eaton Vance since March 1993. State Regulations Supervisor, The
Boston Company (1991-1993). Officer of various investment companies managed by
Eaton Vance or BMR. Mr. Murphy was elected Assistant Secretary of the Trust on
March 27, 1995 and of the Portfolio on October 23, 1995.
JOHN P. RYNNE (54), 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 (39), Assistant Secretary
Vice President of BMR, Eaton Vance and EV since February 1993; formerly,
associate attorney at Dechert, Price & Rhoads. Mr. Woodbury was elected
Assistant Secretary of the Trust on June 19, 1995 and of the Portfolio on
October 23, 1995.
Messrs. Hayes (Chairman), Reamer and Thorndike are members of the Special
Committee of the Board of Trustees of the Trust and of the Portfolio. The
purpose of the Special Committee is to consider, evaluate and make
recommendations to the full Board of Trustees concerning (i) all contractual
arrangements with service providers to the Fund, 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. 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 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
experienced 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 any
legal obligation of the Portfolio to indemnify its Trustees, officer and
investors with respect thereto, to the extent not covered by insurance.
For a description of the compensation that the Portfolio pays BMR under the
Investment Advisory Agreement, see the Fund's current Prospectus. As of October
31, 1996, the Portfolio had net assts of $936,799,570. For the period from the
Portfolio's start of business, December 1, 1995, to the fiscal year ended
October 31, 1996, the Portfolio paid BMR advisory fees of $2,116,576 (equivalent
to 0.618% (annualized) of the Portfolio's average daily net assets for such
period).
The Investment Advisory Agreement with BMR continues in effect from year to
year so long as such continuance is approved at least annually (i) by the vote
of a majority of the 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 shareholders approved by the Trustees of the Trust, (xvii)
compensation and expenses of Trustees of the Trust who are not members of the
Eaton Vance organization, and (xviii) such non-recurring items as may arise,
including expenses incurred in connection with litigation, proceedings and
claims and any legal obligation of the Trust to indemnify its Trustees and
officer with respect thereto, to the extent not covered by insurance.
BMR is a wholly-owned subsidiary of Eaton Vance. Eaton Vance and EV are both
wholly-owned subsidiaries of EVC. Eaton Vance and BMR are both Massachusetts
business trusts, and EV is the trustee of Eaton Vance and BMR. The Directors of
EV are Landon T. Clay, M. Dozier Gardner, James B. Hawkes and Benjamin A.
Rowland, Jr. The Directors of EVC consist of the same persons and John G.L.
Cabot and Ralph Z. Sorenson. Mr. Clay is chairman, Mr. Gardner is vice chairman
and Mr. Hawkes is president and chief executive officer of EVC, Eaton Vance, BMR
and EV. All of the issued and outstanding shares of Eaton Vance and of EV are
owned by EVC. All of the issued and outstanding shares of BMR are owned by Eaton
Vance. All shares of the outstanding Voting Common Stock of EVC are deposited in
a Voting Trust which expires December 31, 1997, the Voting Trustees of which are
Messrs. Clay, Gardner, Hawkes and Rowland and Thomas E. Faust, Jr. The Voting
Trustees have unrestricted voting rights for the election of Directors of EVC.
All of the outstanding voting trust receipts issued under said Voting Trust are
owned by certain of the officers or officers and Directors of Eaton Vance and
BMR who are also officers and Directors of EVC and EV. As of January 1, 1997,
Messrs. Clay, Gardner and Hawkes each owned 24% of such voting trust receipts
and Messrs. Rowland and Faust 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 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 also owns 24% of the Class A shares of Lloyd George Management
(B.V.I.) Limited, a registered investment adviser. EVC, Eaton Vance, BMR and EV
may also enter into other businesses.
EVC and its affiliates and their officers and employees from time to time
have transactions with various banks, including the custodian of the Fund and
the Portfolio, IBT. It is Eaton Vance's opinion that the terms and conditions of
such transactions will not be influenced by existing or potential custodial or
other relationships between the Trust or the Portfolio and such banks.
CUSTODIAN
IBT acts as custodian for the Fund and the Portfolio. IBT has the custody of
all cash and securities 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.
IBT also provides services in connection with the preparation of shareholder
reports and the electronic filing of such reports with the Commission for which
it receives a separate fee.
SERVICE FOR WITHDRAWAL
The Transfer Agent will send to the shareholder regular quarterly payments
of any permitted amount designated by the shareholder (see "Eaton Vance
Shareholder Services - 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,
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 the last sale prices or, if there
were no sales on a particular day, at the mean between the closing bid and asked
prices therefor on the exchange where such securities are principally traded or
on such National Market System. Unlisted or listed securities for which closing
sale prices are not available are valued at the mean between the latest bid and
asked prices. An option is valued at the last sale price as quoted on the
principal exchange or board of trade on which such option or contract is traded,
or in the absence of a sale, at the mean between the last bid and asked prices.
Futures positions on securities or currencies are generally valued at closing
settlement prices. Short-term debt securities with a remaining maturity of 60
days or less are valued at amortized cost. If securities were acquired with a
remaining maturity of more than 60 days, their amortized cost value will be
based on their value on the sixty-first day prior to maturity. Other fixed
income and debt securities, including listed securities and securities for which
price quotations are available, will normally be valued on the basis of
valuations furnished by a pricing service. All other securities are valued at
fair value as determined in good faith by or at the direction of the Trustees.
Each investor in the Portfolio, including the Fund, may add to or reduce its
investment in the Portfolio on each day the Exchange is open for trading
("Portfolio Business Day") as of the close of regular trading on the Exchange
(the "Portfolio Valuation Time"). The value of each investor's interest in the
Portfolio will be determined by multiplying the net asset value of the Portfolio
by the percentage, determined on the prior Portfolio Business Day, which
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 an
independent quotation 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. See Part II for the Fund's total return.
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 anticipated 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 assumed 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 has elected to be
treated, and intends to qualify each year as a regulated investment company
("RIC") under the Code. Accordingly, the Fund intends to satisfy certain
requirements relating to sources of its income and diversification of its assets
and to distribute 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 taxable 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 period from the Portfolio's start of
business, December 1, 1995, to the fiscal year ended October 31, 1996, the
Portfolio paid brokerage commissions of $144,815 on portfolio security
transactions, of which approximately $112,018 was paid in respect of portfolio
security transactions aggregating approximately $89,523,457 to firms which
provided some Research Services to Eaton Vance (although many of such firms may
have been selected in any particular transaction primarily because of their
execution capabilities).
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 Portfolio's Declaration of Trust provides that the Portfolio will
terminate 120 days after the complete withdrawal of the Fund or any other
investor in the Portfolio, unless either the remaining investors by unanimous
vote at a meeting of such investors, or a majority of the Trustees of the
Portfolio, by written instrument consented to by all investors, agree to
continue the business of the Portfolio. This provision is consistent with
treatment of the Portfolio as a partnership for federal income tax purposes.
The right to redeem shares of the Fund can be suspended and the payment of
the redemption price deferred when the Exchange is closed (other than for
customary weekend and holiday closings), during periods when trading on the
Exchange is restricted as determined by the Commission, or during any emergency
as determined by the Commission which makes it impracticable for the Portfolio
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 Commission.
FINANCIAL STATEMENTS
The financial statements of the Fund and the Portfolio, which are included
in the Fund's Annual Report to Shareholders, are incorporated by reference into
this SAI and have been so incorporated in reliance on the report of Deloitte &
Touche, independent certified public accountants, as experts in accounting and
auditing. A copy of the Fund's most recent annual report accompanies this SAI.
Registrant incorporates by reference the audited financial information for
the Funds and the Portfolio for the fiscal year ended October 31, 1996, as
previously filed electronically with the Commission:
EV Classic Tax-Managed Growth Fund (0000950156-97-000030)
EV Marathon Tax-Managed Growth Fund (0000950156-97-000034)
EV Traditional Tax-Managed Growth Fund (0000950156-97-000033)
<PAGE>
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
DISTRIBUTION PLAN
For the period from the start of business, August 2, 1996, to the fiscal
year ended October 31, 1996, the Principal Underwriter paid to Authorized Firms
sales commissions of $16,878 on sales of Fund shares. During the same period,
the Fund made sales commission payments under the Plan to the Principal
Underwriter aggregating $9,181, and the Principal Underwriter received $5,750 in
CDSCs which were imposed on early redeeming shareholders. These sales
commissions and CDSC payments reduced Uncovered Distribution Charges under the
Plan. As at October 31, 1996, the outstanding Uncovered Distribution Charges of
the Principal Underwriter calculated under the Plan amounted to approximately
$642,000 (which amount was equivalent to 5.90% of the Fund's net assets on such
date). During the fiscal year ended October 31, 1996, the Fund made service fee
payments aggregating $3,060, all of which were paid to Authorized Firms.
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. For the period from the start of
business, August 2, 1996, to the fiscal year ended October 31, 1996, the Fund
paid the Principal Underwriter $22.50 for repurchase transactions handled by the
Principal Underwriter.
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, 1997, 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, 1996, 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) :
ESTIMATED ESTIMATED TOTAL COMPENSATION
COMPENSATION COMPENSATION FROM TRUST AND
NAME FROM FUND FROM PORTFOLIO FUND COMPLEX
- ---- --------- -------------- ------------
Donald R. Dwight $9 $1,254 $142,500(2)
Samuel L. Hayes, III 8 1,220 153,750(3)
Norton H. Reamer 8 1,191 142,500
John L. Thorndike 8 1,270 145,500
Jack L. Treynor 9 1,319 147,500
- ----------
(1) The Eaton Vance fund complex consists of 228 registered investment companies
or series thereof.
(2) Includes $42,500 of deferred compensation.
(3) Includes $37,500 of deferred compensation.
PRINCIPAL UNDERWRITER
The Principal Underwriter is a wholly-owned subsidiary of Eaton Vance. Under
the Distribution Agreement the Principal Underwriter acts as principal in
selling shares of the Fund. The expenses of printing copies of prospectuses used
to offer shares to Authorized Firms or investors and other selling literature
and of advertising is borne by the Principal Underwriter. The fees and expenses
of qualifying and registering and maintaining qualifications and registrations
of the Fund and its shares under federal and states securities laws is borne by
the Fund. In addition, the Fund makes payments to the Principal Underwriter
pursuant to its Distribution Plan as described in the Fund's current Prospectus;
the provisions of the plan relating to such payments are included in the
Distribution Agreement. The Distribution Agreement is renewable annually by the
Trust's Board of Trustees (including a majority of its Trustees who are not
interested persons of the Trust and who have no direct or indirect financial
interest in the operation of the Fund's Distribution Plan or the Distribution
Agreement), may be terminated on sixty days' notice either by such Trustees or
by vote of a majority of the outstanding voting securities of the Fund or on six
months' notice by the Principal Underwriter and is automatically terminated upon
assignment. The Principal Underwriter distributes Fund shares on a "best
efforts" basis under which it is required to take and pay for only such shares
as may be sold.
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 CDSCs and will make no
payments to the Principal Underwriter in respect of any day on which there are
no outstanding Uncovered Distribution Charges of the Principal Underwriter.
CDSCs and accrued amounts will be paid by the 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 CDSCs 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 CDSCs 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 CDSCs theretofore
paid or payable to the Principal Underwriter will be subtracted from such
distribution charges; if the result of such subtraction is positive, a
distribution fee (computed at 1% over the prime rate then reported in The Wall
Street Journal) will be computed on such amount and added thereto, with the
resulting sum constituting the amount of 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 CDSC will be imposed, the level and timing of redemptions of Fund shares upon
which no CDSC 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 CDSCs 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 CDSCs
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 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
as required by Rule 12b-1. The Plan continues in effect from year to year so
long as such continuance is approved at least annually by the vote of both a
majority of (i) the 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 least quarterly, a written report of the amount
expended under the Plan and the purposes for which such expenditures were made.
The Plan may not be amended to increase materially the payments described
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 one-, five- and
ten-year periods ended October 31, 1996. The total return for the period
prior to the Fund's commencement of operations on August 2, 1996 reflects the
Portfolio's total return (or that of its predecessor) adjusted to reflect any
applicable Fund CDSC. The total return for such prior period has not been
adjusted to reflect the Fund's distribution and service fees and certain other
expenses.
VALUE OF A $1,000 INVESTMENT
<TABLE>
<CAPTION>
VALUE OF VALUE OF TOTAL RETURN BEFORE TOTAL RETURN AFTER
INVESTMENT INVESTMENT DEDUCTING CDSC DEDUCTING CDSC*
INVESTMENT INVESTMENT BEFORE CDSC AFTER CDSC ----------------------------- --------------------------
PERIOD DATE ON 10/31/96 ON 10/31/96 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ----------------- ----------- ----------- -------------- -------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
10 years ended
10/31/96 10/31/86 $3,949.87 $3,949.87 294.99% 14.72% 294.99% 14.72%
5 years ended
10/31/96 10/31/91 $2,095.52 $2,095.52 109.55% 15.95% 109.55% 15.95%
1 year ended
10/31/96 10/31/95 $1,220.21 $1,210.21 22.02% 22.02% 21.02% 21.02%
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.
</TABLE>
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of January 1, 1997, the Trustees and officers of the Trust, as a group,
owned in the aggregate less than 1% of the outstanding shares of the Fund. As of
January 1, 1997, Merrill Lynch, Pierce, Fenner & Smith, Inc., Jacksonville, FL
was the record owner of approximately 28.72% of the outstanding shares, which
were held on behalf of its customers who are the beneficial owners of such
shares, and as to which it had voting power under certain limited circumstances.
In addition, the following shareholders owned beneficially and of record the
percentages of outstanding shares of the Fund indicated after their names:
Western New York Labor Income Security Fund, Buffalo, NY (19.72%) and
Painewebber FBO Ann E. Garvey, Trustee, Annie's Revocable Trust DTD 4/12/ 90,
Wichita, KS (7.38%). To the knowledge of the Trust, no other person owned of
record or beneficially 5% or more of the Fund's outstanding shares as of such
date.
<PAGE>
[LOGO]
EATON VANCE
- --------------------------
Mutual Funds
EV CLASSIC
TAX-MANAGED GROWTH FUND
- ---------------------------------------------------------------------------
STATEMENT OF
ADDITIONAL INFORMATION
FEBRUARY 1, 1997
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, P.O. Box 5123, Westborough, MA 01581-5123
(800) 262-1122
AUDITORS
Deloitte & Touche LLP, 125 Summer Street, Boston, MA 02110
C-TGSAI
<PAGE>
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
STATEMENT OF
ADDITIONAL INFORMATION
February 1, 1997
EV MARATHON 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 Marathon 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 ................................................ 5
Investment Adviser and Administrator ................................. 7
Custodian ............................................................ 10
Service for Withdrawal ............................................... 10
Determination of Net Asset Value ..................................... 10
Investment Performance ............................................... 11
Taxes ................................................................ 13
Portfolio Security Transactions ...................................... 15
Other Information .................................................... 16
Independent Certified Public Accountants ............................. 18
Financial Statements ................................................. 18
PART II
Fees and Expenses .................................................... a-1
Principal Underwriter ................................................ a-1
Distribution Plan .................................................... a-2
Performance Information .............................................. a-3
Control Persons and Principal Holders of Securities .................. a-4
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 FEBRUARY 1, 1997, 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).
FOR EDGAR FILING PURPOSES ONLY: REGISTRANT INCORPORATES BY REFERENCE FOR EV
MARATHON TAX-MANAGED GROWTH FUND THE PART I FOUND IN THE STATEMENT OF ADDITIONAL
INFORMATION OF EV CLASSIC TAX-MANAGED GROWTH FUND CONTAINED IN THIS AMENDMENT.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
PART II
This Part II provides information about EV MARATHON TAX-MANAGED GROWTH FUND.
The Fund became a series of the Trust on October 23, 1995.
FEES AND EXPENSES
DISTRIBUTION PLAN
For the period from the start of business, March 28, 1996, to the fiscal
year ended October 31, 1996, the Principal Underwriter paid to Authorized Firms
sales commissions of $2,537,475 on sales of Fund shares. During the same period,
the Fund paid sales commissions under the Plan to the Principal Underwriter
aggregating $126,080, and the Principal Underwriter received $6,015 in CDSCs
imposed on early redeeming shareholders. These sales commissions and CDSC
payments reduced Uncovered Distribution Charges under the Plan. As at October
31, 1996, the outstanding Uncovered Distribution Charges of the Principal
Underwriter calculated under the Plan amounted to approximately $3,260,000
(which amount was equivalent to 4.10% of the Fund's net assets on such date).
The Fund expects to begin accruing for its service fee payments during the
quarter ending June 30, 1997.
PRINCIPAL UNDERWRITER
The Fund has authorized the Principal Underwriter to act as its agent in
repurchasing shares and will pay the Principal Underwriter $2.50 for each
repurchase transaction handled by the Principal Underwriter. The Principal
Underwriter estimates that the expenses incurred by it in acting as repurchase
agent for the Fund will exceed the amounts paid therefor by the Fund. For the
period from the start of business, March 28, 1996, to the fiscal year ended
October 31, 1996, the Fund paid the Principal Underwriter $77.50 for repurchase
transactions handled by the Principal Underwriter.
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, 1997, 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, 1996, 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):
ESTIMATED ESTIMATED TOTAL COMPENSATION
COMPENSATION COMPENSATION FROM TRUST AND
NAME FROM FUND FROM PORTFOLIO FUND COMPLEX
- ---- ------------ -------------- ------------------
Donald R. Dwight $88 $1,254 $142,500(2)
Samuel L. Hayes, III 79 1,220 153,750(3)
Norton H. Reamer 78 1,191 142,500
John L. Thorndike 82 1,270 147,500
Jack L. Treynor 88 1,319 147,500
- ----------
(1) The Eaton Vance fund complex consists of 228 registered investment companies
or series thereof.
(2) Includes $42,500 of deferred compensation.
(3) Includes $37,500 of deferred compensation.
PRINCIPAL UNDERWRITER
The Principal Underwriter is a wholly-owned subsidiary of Eaton Vance. Under
the Distribution Agreement the Principal Underwriter acts as principal in
selling shares of the Fund. The expenses of printing copies of prospectuses used
to offer shares to Authorized Firms or investors and other selling literature
and of advertising is borne by the Principal Underwriter. The fees and expenses
of qualifying and registering and maintaining qualifications and registrations
of the Fund and its shares under federal and states securities laws is borne by
the Fund. In addition, the Fund makes payments to the Principal Underwriter
pursuant to its Distribution Plan as described in the Fund's current Prospectus;
the provisions of the plan relating to such payments are included in the
Distribution Agreement. The Distribution Agreement is renewable annually by the
Trust's Board of Trustees (including a majority of its Trustees who are not
interested persons of the Trust and who have no direct or indirect financial
interest in the operation of the Fund's Distribution Plan or the Distribution
Agreement), may be terminated on sixty days' notice either by such Trustees or
by vote of a majority of the outstanding voting securities of the Fund or on six
months' notice by the Principal Underwriter and is automatically terminated upon
assignment. The Principal Underwriter distributes Fund shares on a "best
efforts" basis under which it is required to take and pay for only such shares
as may be sold.
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 dividends and 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 a liability under such accounting principles have not been satisfied.
The Plan provides that the Fund will receive all CDSCs and will make no
payments to the Principal Underwriter in respect of any day on which there are
no outstanding Uncovered Distribution Charges of the Principal Underwriter.
CDSCs and accrued amounts will be paid by the 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 CDSCs 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 CDSCs 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 CDSCs theretofore
paid or payable to the Principal Underwriter will be subtracted from such
distribution charges; if the result of such subtraction is positive, a
distribution fee (computed at 1% over the prime rate then reported in The Wall
Street Journal) will be computed on such amount and added thereto, with the
resulting sum constituting the amount of 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 CDSC will be imposed, the level and timing of redemptions of Fund shares upon
which no CDSC will be imposed (including redemptions involving exchanges of Fund
shares for shares of another fund in the Eaton Vance Marathon 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 and distribution fees to the Principal Underwriter and service
fees to the Principal Underwriter and Authorized Firms 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 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 advisory fee payable to
BMR by the Portfolio, resulting from sale of Fund shares and through the sales
commissions and distribution fees and CDSCs 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 CDSCs 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.
Pursuant to Rule 12b-1, the Plan has been approved by the Fund's initial
sole shareholder (Eaton Vance Management) and by the Board of Trustees of the
Trust as required by Rule 12b-1. The Plan provides that it shall continue in
effect from year to year so long as such continuance is approved at least
annually by the vote of both a majority of (i) the 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. 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 least quarterly, a written report of the amount expended under the
Plan and the purposes for which such expenditures were made. The Plan may not be
amended to increase materially the payments described 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 one-, five- and
ten- year periods ended October 31, 1996. The total return for the period prior
to the Fund's commencement of operations on March 28, 1996 reflects the
Portfolio's total return (or that of its predecessor) adjusted to reflect any
applicable Fund CDSC. The total return for such prior period has not been
adjusted to reflect the Fund's distribution and service fees and certain other
expenses.
<TABLE>
VALUE OF $1,000 INVESTMENT
<CAPTION>
VALUE OF VALUE OF
INVESTMENT INVESTMENT TOTAL RETURN TOTAL RETURN
INVESTMENT BEFORE CDSC AFTER CDSC* BEFORE DEDUCTING CDSC AFTER DEDUCTING CDSC*
DATE ON 10/31/96 ON 10/31/96 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
---------- ----------- ----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
10 years ended
10/31/96 10/31/86 $3,959.28 $3,959.28 295.93% 14.75% 295.95% 14.75%
5 years ended
10/31/96 10/31/91 $2,100.46 $2,080.46 110.05% 16.00% 108.05% 15.78%
1 year ended
10/31/96 10/31/95 $1,223.09 $1,173.09 22.31% 22.31% 17.31% 17.31%
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.
</TABLE>
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of January 1, 1997, the Trustees and officers of the Trust, as a group,
owned in the aggregate less than 1% of the outstanding shares of the Fund. As of
January 1, 1997, Merrill Lynch, Pierce, Fenner & Smith, Inc., Jacksonville, FL
was the record owner of approximately 22.96% of the outstanding shares, which
were held on behalf of its customers who are the beneficial owners of such
shares, and as to which it had voting power under certain limited circumstances.
To the knowledge of the Trust, no other person owned of record or beneficially
5% or more of the Fund's outstanding shares as of such date.
<PAGE>
[Logo]
EATON VANCE
- -----------------
Mutual Funds
EV MARATHON
TAX-MANAGED GROWTH FUND
- --------------------------------------------------------------------------------
STATEMENT OF
ADDITIONAL INFORMATION
FEBRUARY 1, 1997
EV MARATHON
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, P.O. Box 5123, Westborough, MA 01581-5123
(800) 262-1122
AUDITORS
Deloitte & Touche LLP, 125 Summer Street, Boston, MA 02110
M-TGSAI
<PAGE>
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
STATEMENT OF
ADDITIONAL INFORMATION
February 1, 1997
EV TRADITIONAL 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 Traditional 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 .......................................... 5
Investment Adviser and Administrator ........................... 7
Custodian ...................................................... 10
Service for Withdrawal ......................................... 10
Determination of Net Asset Value ............................... 10
Investment Performance ......................................... 11
Taxes .......................................................... 13
Portfolio Security Transactions ................................ 15
Other Information .............................................. 16
Independent Certified Public Accountants ....................... 18
Financial Statements ........................................... 18
PART II
Fees and Expenses .............................................. a-1
Services for Accumulation ...................................... a-2
Principal Underwriter .......................................... a-2
Service Plan ................................................... a-3
Performance Information ........................................ a-4
Control Persons and Principal Holders of Securities ............ a-4
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 FEBRUARY 1, 1997, 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).
FOR EDGAR FILING PURPOSES ONLY: REGISTRANT INCORPORATES BY REFERENCE FOR EV
TRADITIONAL TAX-MANAGED GROWTH FUND THE PART I FOUND IN THE STATEMENT OF
ADDITIONAL INFORMATION OF EV CLASSIC TAX-MANAGED GROWTH FUND CONTAINED IN THIS
AMENDMENT.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
PART II
This Part II provides information about EV TRADITIONAL TAX-MANAGED GROWTH
FUND. The Fund became a series of the Trust on October 23, 1995.
FEES AND EXPENSES
SERVICE PLAN
The Fund has not made any service fee payments to the Principal Underwriter
under the Plan to date. The Fund expects to begin accruing for its service fee
payments during the quarter ending June 30, 1997.
PRINCIPAL UNDERWRITER
The total sales charges for sales of shares of the Fund during the fiscal
year ended October 31, 1996 was $855,011 of which $105,772 was paid to the
Principal Underwriter and the balance of which was paid to Authorized Firms.
The Fund has authorized the Principal Underwriter to act as its agent in
repurchasing shares and will pay the Principal Underwriter $2.50 for each
repurchase transaction handled by the Principal Underwriter. The Principal
Underwriter estimates that the expenses incurred by it in acting as repurchase
agent for the Fund will exceed the amounts paid therefor by the Fund. For the
period from the start of business, March 28, 1996, to the fiscal year ended
October 31, 1996, the Fund paid the Principal Underwriter $57.50 for repurchase
transactions handled by the Principal Underwriter.
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, 1997, 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, 1996, 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):
ESTIMATED ESTIMATED TOTAL COMPENSATION
COMPENSATION COMPENSATION FROM TRUST AND
NAME FROM FUND FROM PORTFOLIO FUND COMPLEX
- ---- ------------ -------------- ------------------
Donald R. Dwight $9 $1,254 $142,500(2)
Samuel L. Hayes III 8 1,220 153,750(3)
Norton H. Reamer 8 1,191 142,500
John L. Thorndike 8 1,270 147,500
Jack L. Treynor 9 1,319 147,500
- ------------
(1) The Eaton Vance fund complex consists of 228 registered investment companies
or series thereof.
(2) Includes $42,500 of deferred compensation.
(3) Includes $37,500 of deferred compensation.
SERVICES FOR ACCUMULATION
The following services and are voluntary, involve no extra charge, other
than the sales charge included in the offering price, and may be changed or
discontinued without penalty at any time.
Intended Quantity Investment - Statement of Intention. If it is anticipated that
$100,000 or more of Fund shares and shares of the other continuously offered
open-end funds listed under "The Eaton Vance Exchange Privilege" in the current
Prospectus of the Fund will be purchased within a 13-month period, a Statement
of Intention should be signed so that shares may be obtained at the same reduced
sales charge as though the total quantity were invested in one lump sum. Shares
held under the Right of Accumulation (see below) as of the date of the Statement
will be included toward the completion of the Statement. The Statement
authorizes the Transfer Agent to hold in escrow sufficient shares (5% of the
dollar amount specified in the Statement) which can be redeemed to make up any
difference in sales charge on the amount intended to be invested and the amount
actually invested. Execution of a Statement does not obligate the shareholder to
purchase or the Fund to sell the full amount indicated in the Statement, and
should the amount actually purchased during the 13-month period be more or less
than that indicated on the Statement, price adjustments will be made
accordingly. For sales charges and other information on quantity purchases, see
"How to Buy Fund Shares" in the Fund's current Prospectus. Any investor
considering signing a Statement of Intention should read it carefully.
Right of Accumulation - Cumulative Quantity Discount. The applicable sales
charge level for the purchase of Fund shares is calculated by taking the dollar
amount of the current purchase and adding it to the value (calculated at the
maximum current offering price) of the shares the shareholder owns in his or her
account(s) in the Fund and in the other continuously offered open-end funds
listed under "The Eaton Vance Exchange Privilege" in the current Prospectus of
the Fund. The sales charge on the shares being purchased will then be at the
rate applicable to the aggregate. For example, if the shareholder owned shares
valued at $80,000 and purchased an additional $20,000 of shares, the sales
charge for the $20,000 purchase would be at the rate of 3.75% of the offering
price (3.90% of the net amount invested), which is the rate applicable to single
transactions of $100,000. For sales charges on quantity purchases, see "How to
Buy Fund Shares" in the Fund's current Prospectus. Shares purchased (i) by an
individual, his or her spouse and their children under the age of twenty-one and
(ii) by a trustee, guardian or other fiduciary of a single trust estate or a
single fiduciary account, will be combined for the purpose of determining
whether a purchase will qualify for the Right of Accumulation and if qualifying,
the applicable sales charge level.
For any such discount to be made available, at the time of purchase a
purchaser or his or her Authorized Firm must provide the Principal Underwriter
(in the case of a purchase made through an Authorized Firm) or the Transfer
Agent (in the case of an investment made by mail) with sufficient information to
permit verification that the purchase order qualifies for the accumulation
privilege. Confirmation of the order is subject to such verification. The Right
of Accumulation privilege may be amended or terminated at any time as to
purchases occurring thereafter.
PRINCIPAL UNDERWRITER
Shares of the Fund may be continuously purchased at the public offering
price through Authorized Firms which have agreements with the Principal
Underwriter. The public offering price is the net asset value next computed
after receipt of the order, plus, where applicable, a variable percentage (sales
charge) depending upon the amount of purchase as indicated by the sales charge
table set forth in the Fund's current Prospectus. Such table is applicable to
purchases of Fund shares alone or in combination with purchases of certain other
funds offered by the Principal Underwriter, made at a single time by (i) an
individual, or an individual, his or her spouse and their children under the age
of twenty-one, purchasing shares for his or their own account; and (ii) a
trustee or other fiduciary purchasing shares for a single trust estate or a
single fiduciary account. The table is also presently applicable to (1)
purchases of Fund shares, alone or in combination with purchases of any of the
other funds offered by the Principal Underwriter through one dealer aggregating
$100,000 or more made by any of the persons enumerated above within a
thirteen-month period starting with the first purchase pursuant to a written
Statement of Intention, in the form provided by the Principal Underwriter, which
includes provisions for a price adjustment depending upon the amount actually
purchased within such period (a purchase not made pursuant to such Statement may
be included thereunder if the Statement is filed within 90 days of such
purchase); or (2) purchases of Fund shares pursuant to the Right of Accumulation
and declared as such at the time of purchase.
Subject to the applicable provisions of the 1940 Act, the Fund may issue
shares at net asset value in the event that an investment company (whether a
regulated or private investment company or a personal holding company) is merged
or consolidated with or acquired by the Fund. Normally no sales charges will be
paid in connection with an exchange of Fund shares for the assets of such
investment company.
Shares may be sold at net asset value to any officer, director, trustee,
general partner or employee of the Fund, the Portfolio or any investment company
for which Eaton Vance or BMR acts as investment adviser, any investment
advisory, agency, custodial or trust account managed or administered by Eaton
Vance or by any parent, subsidiary or other affiliate of Eaton Vance, or any
officer, director, trustee or employee of any parent, subsidiary or other
affiliate of Eaton Vance. The terms "officer," "director," "trustee," "general
partner" or "employee" as used in this paragraph include any such person's
spouse and minor children, and also retired officers, directors, trustees,
general partners and employees and their spouses and minor children. Shares may
also be sold at net asset value to registered representatives and employees of
certain investment dealers and to such person's spouses and children under the
age of 21 and their beneficial accounts.
The Trust reserves the right to suspend or limit the offering of shares of
the Fund to the public at any time.
The Principal Underwriter acts as principal in selling shares of the Fund
under the distribution agreement with the Trust on behalf of the Fund. The
expenses of printing copies of prospectuses used to offer shares to Authorized
Firms or investors and other selling literature and of advertising are borne by
the Principal Underwriter. The fees and expenses of qualifying and registering
and maintaining qualifications and registrations of the Fund and its shares
under federal and state securities laws are borne by the Fund. The distribution
agreement is renewable annually by the Trust's Board of Trustees (including a
majority of its Trustees who are not interested persons of the Principal
Underwriter or the Trust), may be terminated on six months' notice by either
party, and is automatically terminated upon assignment. The Principal
Underwriter distributes Fund shares on a "best efforts" basis under which it is
required to take and pay for only such shares as may be sold. The Principal
Underwriter allows Authorized Firms discounts from the applicable public
offering price which are alike for all Authorized Firms. See "How to Buy Fund
Shares" in the Fund's current Prospectus for the discounts allowed to Authorized
Firms on the sale of Fund shares. The Principal Underwriter may allow, upon
notice to all Authorized Firms with whom it has agreements, discounts up to the
full sales charge during the periods specified in the notice. During periods
when the discount includes the full sales charge, such Authorized Firms may be
deemed to be underwriters as that term is defined in the Securities Act of 1933.
See "Fees and Expenses" in this Part II for the sales charge paid to the
Principal Underwriter and Authorized Firms.
SERVICE PLAN
The Trust on behalf of the Fund has adopted a Service Plan (the "Plan")
designed to meet the service fee requirements of the revised sale charge rule of
the National Association of Securities Dealers, Inc. (the "NASD") (Management
believes service fee payments are not distribution expenses governed by Rule
12b-1 under the 1940 Act, but has chosen to have the Plan approved as if that
Rule were applicable.) The following supplements the discussion of the Plan
contained in the Fund's Prospectus.
The Plan continues in effect from year to year provided such continuance is
approved by a vote of both a majority of (i) the Trustees 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 it (the "Non-interested
Trustees") and (ii) all of the Trustees then in office, cast in person at a
meeting (or meetings) called for the purpose of voting on this Plan. The Plan
may be terminated any time by vote of the Non-interested Trustees or by vote of
a majority of the outstanding voting securities of the Fund. Pursuant to the
Rule, the Plan has been approved by the Board of Trustees of the Trust,
including the Non-interested Trustees.
Under the Plan, the President or Vice President of the Trust shall provide
to the Trustees for their review, and the Trustees shall review at least
quarterly, a written report of the amount expended under the Plan and the
purposes for which such expenditures were made. The Plan may not be amended to
increase materially the payments described herein without approval of the
shareholders of the Fund, and all material amendments of the Plan must also be
approved by the Trustees of the Trust as prescribed by the Rule. So long as the
Plan is in effect, the selection and nomination of Trustees who are not
interested persons of the Trust shall be committed to the discretion of the
Trustees who are not such interested persons. The Trustees have determined that
in their judgment there is a reasonable likelihood that the Plan will benefit
the Fund and its shareholder. For the service fees paid by the Fund under the
Plan, see "Fees and Expenses" in this Part II.
PERFORMANCE INFORMATION
The table below indicates the cumulative and average annual total return on
a hypothetical investment of $1,000 in Class A shares of the Fund covering the
one-, five and ten-year periods ended October 31, 1996. Total return for the
period prior to the Fund's commencement of operations on March 28, 1996 reflects
the Portfolio's total return (or that of its predecessor) adjusted to reflect
any applicable Fund sales charge. Total return for this time period has not been
adjusted to reflect the Fund's service fee or certain other expenses.
<TABLE>
VALUE OF $1,000 INVESTMENT
<CAPTION>
TOTAL RETURN TOTAL RETURN
VALUE OF VALUE OF EXCLUDING MAXIMUM INCLUDING MAXIMUM
INVESTMENT INVESTMENT INITIAL INVESTMENT SALES CHARGE SALES CHARGE
PERIOD DATE INVESTMENT* ON 10/31/96 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
---------- ---------- ----------- ----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
10 years ended
10/31/96 10/31/86 $952.19 $3,776.66 296.64% 14.77% 277.67% 14.21%
5 years ended
10/31/96 10/31/91 $952.03 $2,003.31 110.42% 16.04% 100.33% 14.91%
1 year ended
10/31/96 10/31/95 $952.29 $1,166.83 22.53% 22.53% 16.68% 16.68%
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.
- ------------
*Initial investment less the current maximum sales charge of 4.75%.
</TABLE>
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of January 1, 1997, the Trustees and officers of the Trust, as a group,
owned in the aggregate less than 1% of the outstanding shares of the Fund. As of
January 1, 1997, Merrill Lynch, Pierce, Fenner & Smith, Inc., Jacksonville, FL
was the record owner of approximately 17.58% of the outstanding shares, which
were held on behalf of its customers who are the beneficial owners of such
shares, and as to which it had voting power under certain limited circumstances.
To the knowledge of the Trust, no other person owned of record or beneficially
5% or more of the Fund's outstanding shares as of such date.
<PAGE>
[Logo]
EATON VANCE
- -----------------
Mutual Funds
EV TRADITIONAL
TAX-MANAGED
GROWTH
FUND
STATEMENT OF
ADDITIONAL INFORMATION
FEBRUARY 1, 1997
EV TRADITIONAL
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, P.O. Box 5123, Westborough, MA 01581-5123
(800) 262-1122
AUDITORS
Deloitte & Touche LLP, 125 Summer Street, Boston, MA 02110
T-TGSAI
<PAGE>
PART C
OTHER INFORMATION
ITEM 24: FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS
INCLUDED IN PART A:
FOR EV CLASSIC TAX-MANAGED GROWTH FUND:
Financial Highlights for the period from the start of business,
August 2, 1996, through October 31, 1996.
FOR EV MARATHON TAX-MANAGED GROWTH FUND:
Financial Highlights for the period from the start of business,
March 28, 1996, through October 31, 1996.
FOR EV TRADITIONAL TAX-MANAGED GROWTH FUND:
Financial Highlights for the period from the start of business,
March 28, 1996, through October 31, 1996.
INCLUDED IN PART B:
INCORPORATED BY REFERENCE INTO PART B ARE THE FINANCIAL STATEMENTS
CONTAINED IN THE ANNUAL REPORTS FOR THE FOLLOWING FUNDS, EACH
DATED OCTOBER 31, 1996 (WHICH WERE PREVIOUSLY FILED
ELECTRONICALLY PURSUANT TO SECTION 30(B)(2) OF THE INVESTMENT
COMPANY ACT OF 1940):
EV Classic Tax-Managed Growth Fund
(Accession No. 0000950156-97-000030)
EV Marathon Tax-Managed Growth Fund
(Accession No. 0000950156-97-000034)
EV Traditional Tax-Managed Growth Fund
(Accession No. 0000950156-97-000033)
The Financial Statements for the above-referenced Funds for the
time periods set forth in the Funds' Annual Reports include:
Statement of Assets and Liabilities
Statement of Operations
Statements of Changes in Net Assets
Financial Highlights
Notes to Financial Statements
Independent Auditors' Report
ALSO INCORPORATED BY REFERENCE INTO PART B ARE THE FINANCIAL
STATEMENTS OF TAX-MANAGED GROWTH PORTFOLIO, WHICH ARE CONTAINED
IN EACH FUND'S ANNUAL REPORT DATED OCTOBER 31, 1996. THE
FINANCIAL STATEMENTS FOR THE PORTFOLIO FOR THE TIME PERIODS SET
FORTH IN EACH FUND'S ANNUAL REPORT ARE AS FOLLOWS:
Portfolio of Investments
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
Supplementary Data
Notes to Financial Statements
Independent Auditors' Report
(B) EXHIBITS:
<TABLE>
<CAPTION>
<S> <C>
(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)(b) 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)(c) to Post-Effective Amendment No. 26 and incorporated herein
by reference.
(d) Amendment and Restatement of Establishment and Designation of Series of Shares dated
May 7, 1996 filed as Exhibit (1)(d) to Post-Effective Amendment No. 30 and incorporated
herein by reference.
(e) Establishment and Designation of Classes of Shares of Beneficial Interest dated
November 18, 1996 filed as Exhibit 1(e) to Post-Effective Amendment No. 31 and
incorporated herein by reference.
(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 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) Distribution Agreement with EV Distributors, Inc. for EV Classic Tax-Managed Growth
Fund dated May 7, 1996 filed as Exhibit (6)(a)(15) to Post-Effective Amendment No. 30
and incorporated herein by reference.
(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 Post-Effective
Amendment No. 65 to the Registration Statement of Eaton Vance Growth Trust (File Nos.
2-22019, 811-1241) and incorporated herein by reference.
(c) Amendment to Transfer Agency Agreement dated February 1, 1993 filed as Exhibit 9(e) to
Post-Effective Amendment No. 65 to the Registration Statement of Eaton Vance Growth
Trust (File Nos. 2-22019, 811-1241) and incorporated herein by reference.
(d) Amended Schedule A to Administrative Services Agreement dated May 7, 1996 filed as
Exhibit (9)(d) to Post-Effective Amendment No. 30 and incorporated herein by reference.
(10) Not applicable
(11)(a) Consent of Independent Auditors for EV Classic Tax-Managed Growth Fund filed herewith.
(b) Consent of Independent Auditors for EV Marathon Tax-Managed Growth Fund filed herewith.
(c) Consent of Independent Auditors for EV Traditional Tax-Managed Growth Fund 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 No. 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 No. 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 No. 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 No. 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) 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 dated March 20, 1996 filed as
Exhibit (15)(l) to Post-Effective Amendment No. 28 and incorporated herein by
reference.
(m) Distribution Plan for EV Classic Tax-Managed Growth Fund pursuant to Rule 12b-1 under the
Investment Company Act of 1940 dated August 1, 1996 filed as Exhibit (15)(m) to
Post-Effective Amendment No. 30 and incorporated herein by reference.
(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.
(18) Multiple Class Plan for Institutional Shares dated November 18, 1996 filed as Exhibit
(18) to Post-Effective Amendment No. 31 and incorporated herein by reference.
</TABLE>
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Not applicable
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
<TABLE>
<CAPTION>
(1) (2)
TITLE OF CLASS NUMBER OF RECORD HOLDERS
Shares of beneficial interest without par value as of December 31, 1996
<S> <C>
Eaton Vance Short-Term Treasury Fund 54
EV Classic Government Obligations Fund 852
EV Marathon Government Obligations Fund 3,393
EV Traditional Government Obligations Fund 9,472
EV Classic High Income Fund 341
EV Marathon High Income Fund 15,950
EV Classic Strategic Income Fund 19
EV Marathon Strategic Income Fund 5,574
EV Classic Tax-Managed Growth Fund 488
EV Marathon Tax-Managed Growth Fund 3,498
EV Traditional Tax-Managed Growth Fund 1,386
Eaton Vance Cash Management Fund 2,179
Eaton Vance Liquid Assets Fund 565
Eaton Vance Money Market Fund 649
Eaton Vance Tax Free Reserves 174
</TABLE>
<PAGE>
ITEM 27. INDEMNIFICATION
Article IV of the Trust's Amended and Restated Declaration of Trust, dated
August 17, 1993 permits Trustee and officer indemnification by By-law, contract
and vote. Article XI of the By-laws contains indemnification provisions.
Registrant's Trustees and officers are insured under a standard mutual fund
errors and omissions insurance policy covering insured by reason of negligent
errors and omissions committed in their capacities as such.
The distribution agreements of the Trust also provide for reciprocal
indemnity of the principal underwriter, on the one hand, and the Trustees and
officers, on the other.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Reference is made to the information set forth under the captions
"Investment Adviser and Administrator" or "Investment Adiviser" in the
Statements of Additional Information which information is incorporated herein by
reference.
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>
<CAPTION>
<S> <C>
EV Classic Florida Limited Maturity EV Classic National Municipals Fund
Municipals Fund EV Classic New York Limited Maturity
EV Classic Government Obligations Fund Municipals Fund
EV Classic Greater China Growth Fund EV Classic Pennsylvania Limited Maturity
EV Classic Growth Fund Municipals Fund
EV Classic High Income Fund EV Classic Senior Floating-Rate Fund
EV Classic Information Age Fund EV Classic Strategic Income Fund
EV Classic Investors Fund EV Classic Special Equities Fund
EV Classic Massachusetts Limited Maturity EV Classic Stock Fund
Municipals Fund EV Classic Tax-Managed Growth Fund
EV Classic National Limited Maturity EV Classic Total Return Fund
Municipals Fund EV Marathon Alabama Municipals Fund
<PAGE>
EV Marathon Arizona Municipals Fund EV Marathon South Carolina Municipals Fund
EV Marathon Arkansas Municipals Fund EV Marathon Special Equities Fund
EV Marathon Asian Small Companies Fund EV Marathon Stock Fund
EV Marathon California Limited Maturity EV Marathon Tax-Managed Growth Fund
Municipals Fund EV Marathon Tennessee Municipals Fund
EV Marathon California Municipals Fund EV Marathon Texas Municipals Fund
EV Marathon Colorado Municipals Fund EV Marathon Total Return Fund
EV Marathon Connecticut Limited Maturity EV Marathon Virginia Municipals Fund
Municipals Fund EV Marathon West Virginia Municipals Fund
EV Marathon Connecticut Municipals Fund EV Marathon Worldwide Health Sciences Fund
EV Marathon Emerging Markets Fund EV Traditional Alabama Municipals Fund
EV Marathon Florida Insured Municipals Fund EV Traditional Arizona Municipals Fund
EV Marathon Florida Limited Maturity EV Traditional Arkansas Municipals Fund
Municipals Fund EV Traditional Asian Small Companies Fund
EV Marathon Florida Municipals Fund EV Traditional California Limited Maturity
EV Marathon Georgia Municipals Fund Municipals Fund
EV Marathon Gold & Natural Resources Fund EV Traditional California Municipals Fund
EV Marathon Government Obligations Fund EV Traditional Colorado Municipals Fund
EV Marathon Greater China Growth Fund EV Traditional Connecticut Limited Maturity
EV Marathon Greater India Fund Municipals Fund
EV Marathon Growth Fund EV Traditional Connecticut Municipals Fund
EV Marathon Hawaii Municipals Fund EV Traditional Emerging Growth Fund
EV Marathon High Income Fund EV Traditional Emerging Markets Fund
EV Marathon High Yield Municipals Fund EV Traditional Florida Insured Municipals Fund
EV Marathon Information Age Fund EV Traditional Florida Limited Maturity
EV Marathon Investors Fund Municipals Fund
EV Marathon Kansas Municipals Fund EV Traditional Florida Municipals Fund
EV Marathon Kentucky Municipals Fund EV Traditional Georgia Municipals Fund
EV Marathon Louisiana Municipals Fund EV Traditional Government Obligations Fund
EV Marathon Maryland Municipals Fund EV Traditional Greater China Growth Fund
EV Marathon Massachusetts Limited Maturity EV Traditional Greater India Fund
Municipals Fund EV Traditional Growth Fund
EV Marathon Massachusetts Municipals Fund EV Traditional Hawaii Municipals Fund
EV Marathon Michigan Limited Maturity EV Traditional High Yield Municipals Fund
Municipals Fund Eaton Vance Income Fund of Boston
EV Marathon Michigan Municipals Fund EV Traditional Information Age Fund
EV Marathon Minnesota Municipals Fund EV Traditional Investors Fund
EV Marathon Mississippi Municipals Fund EV Traditional Kansas Municipals Fund
EV Marathon Missouri Municipals Fund EV Traditional Kentucky Municipals Fund
EV Marathon National Limited Maturity EV Traditional Louisiana Municipals Fund
Municipals Fund EV Traditional Maryland Municipals Fund
EV Marathon National Municipals Fund EV Traditional Massachusetts Municipals Fund
EV Marathon New Jersey Limited Maturity EV Traditional Michigan Limited Maturity
Municipals Fund Municipals Fund
EV Marathon New Jersey Municipals Fund EV Traditional Michigan Municipals Fund
EV Marathon New York Limited Maturity EV Traditional Minnesota Municipals Fund
Municipals Fund EV Traditional Mississippi Municipals Fund
EV Marathon New York Municipals Fund EV Traditional Missouri Municipals Fund
EV Marathon North Carolina Municipals Fund Eaton Vance Municipal Bond Fund L.P.
EV Marathon Ohio Limited Maturity EV Traditional National Limited Maturity
Municipals Fund Municipals Fund
EV Marathon Ohio Municipals Fund EV Traditional National Municipals Fund
EV Marathon Oregon Municipals Fund EV Traditional New Jersey Limited Maturity
EV Marathon Pennsylvania Limited Maturity Municipals Fund
Municipals Fund EV Traditional New Jersey Municipals Fund
EV Marathon Pennsylvania Municipals Fund EV Traditional New York Limited Maturity
EV Marathon Rhode Island Municipals Fund Municipals Fund
EV Marathon Strategic Income Fund EV Traditional New York Municipals Fund
<PAGE>
EV Traditional North Carolina Municipals Fund EV Traditional Total Return Fund
EV Traditional Ohio Limited Maturity EV Traditional Virginia Municipals Fund
Municipals Fund EV Traditional West Virginia Municipals Fund
EV Traditional Ohio Municipals Fund EV Traditional Worldwide Health Sciences
EV Traditional Oregon Municipals Fund Fund, Inc.
EV Traditional Pennsylvania Municipals Fund Eaton Vance Cash Management Fund
EV Traditional Rhode Island Municipals Fund Eaton Vance Liquid Assets Fund
EV Traditional South Carolina Municipals Fund Eaton Vance Money Market Fund
EV Traditional Special Equities Fund Eaton Vance Prime Rate Reserves
EV Traditional Stock Fund Eaton Vance Short-Term Treasury Fund
EV Traditional Tax-Managed Growth Fund Eaton Vance Tax Free Reserves
EV Traditional Tennessee Municipals Fund Massachusetts Municipal Bond Portfolio
EV Traditional Texas Municipals Fund
</TABLE>
(B)
<TABLE>
<CAPTION>
(1) (2) (3)
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICE
BUSINESS ADDRESS* WITH PRINCIPAL UNDERWRITER WITH REGISTRANT
----------------- -------------------------- ---------------
<S> <C> <C>
James B. Hawkes Vice President and Director Vice President and Trustee
William M. Steul Vice President and Director None
Wharton P. Whitaker President and Director None
Chris Berg Vice President None
Kate Bradshaw Vice President None
David B. Carle Vice President None
James S. Comforti Vice President None
Raymond Cox Vice President None
Mark P. Doman Vice President None
Alan R. Dynner Vice President None
James Foley Vice President None
Michael A. Foster Vice President None
William M. Gillen Senior Vice President None
Hugh S. Gilmartin Vice President None
Perry D. Hooker Vice President None
Thomas P. Luka Vice President None
John Macejka Vice President None
Timothy D. McCarthy Vice President None
Joseph T. McMenamin Vice President None
Morgan C. Mohrman Senior Vice President None
James A. Naughton Vice President None
Mark D. Nelson Vice President None
Linda D. Newkirk Vice President None
James L. O'Connor Vice President Treasurer
Thomas Otis Secretary and Clerk Secretary
George D. Owen, II Vice President None
F. Anthony Robinson Vice President None
Jay S. Rosoff Vice President None
Benjamin A. Rowland, Jr. Vice President, 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, 4400
Computer Drive, Westborough, MA 01581, 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 "HI 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, HI Portfolio and the Registrant's
accounting records are held by IBT Fund Services (Canada) Inc., 1 First Canadian
Place, Kingstreet 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 furnish to each person to whom a prospectus is
delivered a copy of the latest annual report to shareholders, upon request and
without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, and the
Investment Company Act of 1940, the Registrant certifies that it meets all
requirements for effectiveness of this Amendment to the Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused
this 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 27th day of January, 1997.
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 January 27, 1997
- ------------------------------
M. DOZIER GARDNER
Treasurer and Principal
Financial and Accounting
/s/ JAMES L. O'CONNOR Officer January 27, 1997
- ------------------------------
JAMES L. O'CONNOR
/s/ JAMES B. HAWKES Vice President, Trustee January 27, 1997
- ------------------------------
JAMES B. HAWKES
DONALD R. DWIGHT* Trustee January 27, 1997
- ------------------------------
DONALD R. DWIGHT
SAMUEL L. HAYES, III* Trustee January 27, 1997
- ------------------------------
SAMUEL L. HAYES, III
NORTON H. REAMER* Trustee January 27, 1997
- ------------------------------
NORTON H. REAMER
JOHN L. THORNDIKE* Trustee January 27, 1997
- ------------------------------
JOHN L. THORNDIKE
JACK L. TREYNOR* Trustee January 27, 1997
- ------------------------------
JACK L. TREYNOR
*By: /s/ M. DOZIER GARDNER
--------------------------
M. DOZIER GARDNER
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
27th day of January, 1997.
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 January 27, 1997
- ------------------------------
M. DOZIER GARDNER
Treasurer and Principal
Financial and Accounting
/s/ JAMES L. O'CONNOR Officer January 27, 1997
- ------------------------------
JAMES L. O'CONNOR
/s/ JAMES B. HAWKES Trustee January 27, 1997
- ------------------------------
JAMES B. HAWKES
DONALD R. DWIGHT* Trustee January 27, 1997
- ------------------------------
DONALD R. DWIGHT
SAMUEL L. HAYES, III* Trustee January 27, 1997
- ------------------------------
SAMUEL L. HAYES, III
NORTON H. REAMER* Trustee January 27, 1997
- ------------------------------
NORTON H. REAMER
JOHN L. THORNDIKE* Trustee January 27, 1997
- ------------------------------
JOHN L. THORNDIKE
JACK L. TREYNOR* Trustee January 27, 1997
- ------------------------------
JACK L. TREYNOR
*By: /s/ M. DOZIER GARDNER
--------------------------
M. DOZIER GARDNER
As Attorney-in-fact
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
PAGE IN SEQUENTIAL
EXHIBIT NO. DESCRIPTION NUMBERING SYSTEM
- ----------- ----------- ----------------
<C> <S> <C>
(11)(a) Independent Auditors' Consent for EV Classic Tax-Managed Growth Fund.
(11)(b) Independent Auditors' Consent for EV Marathon Tax-Managed Growth Fund.
(11)(c) Independent Auditors' Consent for EV Traditional Tax-Managed Growth Fund.
(16) Schedules for Calculations of Performance Quotations.
</TABLE>
<PAGE>
EXHIBIT (11)(A)
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Post-Effective Amendment No. 33 to the
Registration Statement of Eaton Vance Mutual Funds Trust (1933 Act File No.
2-90946) on behalf of EV Classic Tax-Managed Growth Fund of our report dated
November 29, 1996 relating to such Fund, and of our report dated November 29,
1996, relating to Tax-Managed Growth Portfolio, which reports are included in
the Annual Report to Shareholders for the year ended October 31, 1996 which is
incorporated by reference in the Statement of Additional Information, which is
part of such Registration Statement.
We also consent to the reference to our Firm under the heading "The Funds"
Financial Highlights'' in the Prospectus and under the captions "Independent
Certified Public Accountants" and "Financial Statements" in the Statement of
Additional Information of the Registration Statement.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
January 27, 1997
Boston, Massachusetts
<PAGE>
EXHIBIT (11)(B)
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Post-Effective Amendment No. 33 to the
Registration Statement of Eaton Vance Mutual Funds Trust (1933 Act File No.
2-90946) on behalf of EV Marathon Tax-Managed Growth Fund of our report dated
November 29, 1996 relating to such Fund, and of our report dated November 29,
1996, relating to Tax-Managed Growth Portfolio, which reports are included in
the Annual Report to Shareholders for the year ended October 31, 1996 which is
incorporated by reference in the Statement of Additional Information, which is
part of such Registration Statement.
We also consent to the reference to our Firm under the heading "The Funds"
Financial Highlights'' in the Prospectus and under the captions "Independent
Certified Public Accountants" and "Financial Statements" in the Statement of
Additional Information of the Registration Statement.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
January 27, 1997
Boston, Massachusetts
<PAGE>
EXHIBIT (11)(C)
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Post-Effective Amendment No. 33 to the
Registration Statement of Eaton Vance Mutual Funds Trust (1933 Act File No.
2-90946) on behalf of EV Traditional Tax-Managed Growth Fund of our report
dated November 29, 1996 relating to such Fund, and of our report dated
November 29, 1996, relating to Tax-Managed Growth Portfolio, which reports are
included in the Annual Report to Shareholders for the year ended October 31,
1996 which is incorporated by reference in the Statement of Additional
Information, which is part of such Registration Statement.
We also consent to the reference to our Firm under the heading "The Funds"
Financial Highlights'' in the Prospectus and under the captions "Independent
Certified Public Accountants" and "Financial Statements" in the Statement of
Additional Information of the Registration Statement.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
January 27, 1997
Boston, Massachusetts
<PAGE>
EXHIBIT 16
<TABLE>
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, 1996. Total return for the period prior to the
Fund's commencement of operations is for the Portfolio (or its predecessor) adjusted for the Fund's sales charge.
<CAPTION>
VALUE OF A $1,000 INVESTMENT
VALUE OF VALUE OF
INVESTMENT INVESTMENT TOTAL RETURN TOTAL RETURN
INVESTMENT INVESTMENT BEFORE CDSC AFTER CDSC EXCLUDING SALES CHARGE INCLUDING SALES CHARGE
PERIOD DATE ON 10/31/96 ON 10/31/96 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ---------- ---------- ----------- ----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
10 YEARS ENDED
10/31/96 10/31/86 $3,949.87 $3,949.87 294.99% 14.72% 294.99% 14.72%
5 YEARS ENDED
10/31/96 10/31/91 $2,095.52 $2,095.52 109.55% 15.95% 109.55% 15.95%
1 YEAR ENDED
10/31/96 10/31/95 $1,220.21 $1,210.21 22.02% 22.02% 21.02% 21.02%
Average annual total return is calculated using the following formula:
n
P(1+T) = ERV
where P = an initial investment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of $1,000 initial investment at the end of the period after
deducting the CDSC *
Cumulative total return is calculated using the following formula:
T = ( ERV / P ) - 1
where T = cumulative total return including the maximum sales charge
ERV = ending redeemable value of $1,000 initial investment at the end of the period after
deducting the CDSC **
P = an initial investment of $1,000
* The average annual total return not including the CDSC is calculated based the ending investment value
before deducting the CDSC.
** The cumulative total return not including the CDSC is calculated based the ending investment value before
deducting the CDSC.
</TABLE>
<PAGE>
<TABLE>
INVESTMENT PERFORMANCE -- EV MARATHON 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, 1996. Total return for the period prior to the
Fund's commencement of operations is for the Portfolio (or its predecessor) adjusted for the Fund's sales charge.
<CAPTION>
VALUE OF A $1,000 INVESTMENT
VALUE OF VALUE OF
INVESTMENT INVESTMENT TOTAL RETURN TOTAL RETURN
INVESTMENT INVESTMENT BEFORE CDSC AFTER CDSC EXCLUDING SALES CHARGE INCLUDING SALES CHARGE
PERIOD DATE ON 10/31/96 ON 10/31/96 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ---------- ---------- ----------- ----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
10 YEARS ENDED
10/31/96 10/31/86 $3,959.28 $3,959.28 295.93% 14.75% 295.93% 14.75%
5 YEARS ENDED
10/31/96 10/31/91 $2,100.46 $2,080.46 110.05% 16.00% 108.05% 15.78%
1 YEAR ENDED
10/31/96 10/31/95 $1,223.09 $1,173.09 22.31% 22.31% 17.31% 17.31%
Average annual total return is calculated using the following formula:
n
P(1+T) = ERV
where P = an initial investment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of $1,000 initial investment at the end of the period after
deducting the CDSC *
Cumulative total return is calculated using the following formula:
T = ( ERV / P ) - 1
where T = cumulative total return including the maximum sales charge
ERV = ending redeemable value of $1,000 initial investment at the end of the period after
deducting the CDSC **
P = an initial investment of $1,000
* The average annual total return not including the CDSC is calculated based the ending investment value
before deducting the CDSC.
** The cumulative total return not including the CDSC is calculated based the ending investment value before
deducting the CDSC.
</TABLE>
<PAGE>
<TABLE>
INVESTMENT PERFORMANCE -- EV TRADITIONAL 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, 1996. Total return for the period prior to the
Fund's commencement of operations is for the Portfolio (or its predecessor) adjusted for the Fund's sales charge.
<CAPTION>
VALUE OF A $1,000 INVESTMENT
VALUE OF VALUE OF TOTAL RETURN TOTAL RETURN
INVESTMENT INVESTMENT INITIAL INVESTMENT EXCLUDING SALES CHARGE INCLUDING SALES CHARGE
PERIOD DATE INVESTMENT* ON 10/31/96 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ---------- ---------- ----------- ----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
10 YEARS ENDED
10/31/96 10/31/86 $952.19 $3,776.66 296.64% 14.77% 277.67% 14.21%
5 YEARS ENDED
10/31/96 10/31/91 $952.03 $2,003.31 110.42% 16.04% 100.33% 14.91%
1 YEAR ENDED
10/31/96 10/31/95 $952.29 $1,166.83 22.53% 22.53% 16.68% 16.68%
Average annual total return is calculated using the following formula:
n
P(1+T) = ERV
where P = an initial investment of $1,000 **
T = average annual total return
n = number of years
ERV = ending redeemable value of $1,000 initial investment at the end of the period
Cumulative total return is calculated using the following formula:
T = ( ERV / P ) - 1
where T = cumulative total return including the maximum sales charge
ERV = ending redeemable value of $1,000 initial investment at the end of the period
P = an initial investment of $1,000 ***
* Initial investment less the current maximum sales charge of 4.75%.
** The average annual total return including the sales charge is calculated based on an initial investment of $1,000 less the
maximum initial sales charge of 4.75%.
*** The cumulative total return including the sales charge is calculated based on an initial investment of $1,000 less
maximum initial sales charge of 4.75%.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 15
<NAME>EV CLASSIC TAX-MANAGED GROWTH FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 10,364
<INVESTMENTS-AT-VALUE> 10,779
<RECEIVABLES> 75
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 32
<TOTAL-ASSETS> 10,886
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 71
<TOTAL-LIABILITIES> 71
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 10,406
<SHARES-COMMON-STOCK> 1,004
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (6)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 416
<NET-ASSETS> 10,816
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 8
<EXPENSES-NET> 19
<NET-INVESTMENT-INCOME> (11)
<REALIZED-GAINS-CURRENT> (6)
<APPREC-INCREASE-CURRENT> 416
<NET-CHANGE-FROM-OPS> 399
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,067
<NUMBER-OF-SHARES-REDEEMED> (63)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 10,816
<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> 19
<AVERAGE-NET-ASSETS> 4,987
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> (0.010)
<PER-SHARE-GAIN-APPREC> 0.790
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.78
<EXPENSE-RATIO> 2.15
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 13
<NAME>EV MARATHON TAX-MANAGED GROWTH FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 73,460
<INVESTMENTS-AT-VALUE> 77,681
<RECEIVABLES> 709
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 32
<TOTAL-ASSETS> 78,422
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 778
<TOTAL-LIABILITIES> 778
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 73,456
<SHARES-COMMON-STOCK> 6,965
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (33)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4,221
<NET-ASSETS> 77,644
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 144
<EXPENSES-NET> 166
<NET-INVESTMENT-INCOME> (22)
<REALIZED-GAINS-CURRENT> (33)
<APPREC-INCREASE-CURRENT> 4,221
<NET-CHANGE-FROM-OPS> 4,165
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7,024
<NUMBER-OF-SHARES-REDEEMED> 59
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 77,644
<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> 166
<AVERAGE-NET-ASSETS> 28,577
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> (0.003)
<PER-SHARE-GAIN-APPREC> 1.153
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.15
<EXPENSE-RATIO> 1.63
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 14
<NAME>EV TRADITIONAL TAX-MANAGED GROWTH FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 28,444
<INVESTMENTS-AT-VALUE> 30,202
<RECEIVABLES> 446
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 31
<TOTAL-ASSETS> 30,679
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 500
<TOTAL-LIABILITIES> 500
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 28,398
<SHARES-COMMON-STOCK> 2,702
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 35
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (13)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,758
<NET-ASSETS> 30,178
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 64
<EXPENSES-NET> 29
<NET-INVESTMENT-INCOME> 35
<REALIZED-GAINS-CURRENT> (13)
<APPREC-INCREASE-CURRENT> 1,758
<NET-CHANGE-FROM-OPS> 1,780
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,731
<NUMBER-OF-SHARES-REDEEMED> (29)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 30,178
<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> 3
<AVERAGE-NET-ASSETS> 12,450
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> (0.013)
<PER-SHARE-GAIN-APPREC> 1.157
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.17
<EXPENSE-RATIO> 1.05
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 256,724
<INVESTMENTS-AT-VALUE> 936,448
<RECEIVABLES> 1,076
<ASSETS-OTHER> 30
<OTHER-ITEMS-ASSETS> 74
<TOTAL-ASSETS> 937,628
<PAYABLE-FOR-SECURITIES> 798
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 31
<TOTAL-LIABILITIES> 829
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 257,075
<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> 679,724
<NET-ASSETS> 936,799
<DIVIDEND-INCOME> 4,932
<INTEREST-INCOME> 442
<OTHER-INCOME> 0
<EXPENSES-NET> 2,269
<NET-INVESTMENT-INCOME> 3,105
<REALIZED-GAINS-CURRENT> 9,583
<APPREC-INCREASE-CURRENT> 70,638
<NET-CHANGE-FROM-OPS> 83,325
<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> 936,700
<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> 2,269
<AVERAGE-NET-ASSETS> 372,785
<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> 0.68
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
