<PAGE>
As filed with the Securities and Exchange Commission on June 23, 1999
1933 Act File No. 02-90946
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. 52 [x]
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940 [x]
AMENDMENT NO. 55 [x]
EATON VANCE MUTUAL FUNDS TRUST
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
THE EATON VANCE BUILDING, 255 STATE STREET, BOSTON, MASSACHUSETTS 02109
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(617) 482-8260
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(REGISTRANT'S TELEPHONE NUMBER)
ALAN R. DYNNER
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THE EATON VANCE BUILDING, 255 STATE STREET, BOSTON, MASSACHUSETTS 02109
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(NAME AND ADDRESS OF AGENT FOR SERVICE)
It is proposed that this filing will become effective pursuant to Rule 485
(check appropriate box):
[ ] immediately upon filing pursuant to paragraph (b)
[x] on July 1, 1999 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2)
If appropriate, check the following box:
[ ] this post effective amendment designates a new effective date for a
previously filed post-effective amendment.
Tax-Managed Growth Portfolio has also executed this Registration Statement.
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<PAGE>
{LOGO} Mutual Funds
EATON VANCE for People
Mutual Funds Who Pay
Taxes
Eaton Vance Tax-Managed
Growth Fund
Institutional Shares
A mutual fund seeking long-term, after-tax returns
Prospectus Dated
July 1, 1999
The Securities and Exchange Commission has not approved or disapproved these
securities or determined whether this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
Information in this prospectus
Page Page
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Fund Summary 2 Purchasing Shares 6
Investment Objective & Principal Redeeming Shares 7
Policies and Risks 4 Shareholder Account
Management and Organization 5 Features 7
Valuing Shares 6 Tax Information 8
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This prospectus contains important information about the Fund and the services
available to shareholders. Please save it for reference.
<PAGE>
FUND SUMMARY
Investment Objective and Principal Strategies. Eaton Vance Tax-Managed Growth
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 invests primarily in common stocks of growth companies that are
considered to be high in quality and attractive in their long-term investment
prospects. Although it invests primarily in domestic companies, the Fund may
invest up to 25% of its assets in foreign companies. The Fund may engage in
derivative transactions to protect against price declines, to enhance returns or
as a substitute for purchasing or selling securities. Some of the securities
held by the Fund may be subject to restrictions on resale.
The Fund pursues its investment objective by investing in Tax-Managed Growth
Portfolio, a separate registered investment company with the same investment
objective and policies as the Fund. Using this structure allows the Fund to
participate in a well-established investment portfolio without exposing the Fund
to unrealized gains accrued prior to the Fund's inception in March, 1996.
Tax-Managed Investing. Most mutual funds focus on pre-tax returns and largely
ignore shareholder tax considerations. By contrast, the Fund attempts to achieve
high after-tax returns for its shareholders by balancing investment
considerations and tax considerations. The Fund seeks to achieve returns
primarily in the form of price appreciation (which is not subject to current
tax). The Fund seeks to minimize income distributions and distributions of
realized short-term gains (taxed as ordinary income). Among the techniques and
strategies used in the tax-efficient management of the Fund are the following:
*investing primarily in lower-yielding growth stocks;
*employing a long-term, low turnover approach to investing;
*attempting to avoid net realized short-term gains;
*when appropriate, selling stocks trading below cost to realize losses;
*in selling appreciated stocks, selecting the most tax-favored share lots;
and
*selectively using tax-advantaged hedging techniques as an alternative to
taxable sales.
The Fund can generally be expected to distribute a smaller percentage of returns
each year than most other equity mutual funds. There can be no assurance,
however, that taxable distributions can always be avoided.
Principal Risk Factors. The value of Fund shares is sensitive to stock market
volatility. If there is a general decline in the value of U.S. stocks, the value
of the Fund's shares will also likely decline. Changes in stock market values
can be sudden and unpredictable. Also, although stock values can rebound, there
is no assurance that values will return to previous levels. The Fund seeks to
minimize stock-specific risk by diversifying its holdings among many companies
and industries.
The use of derivative transactions is subject to certain limitations and may
expose the Fund to increased risk of principal loss. Because the Fund invests a
portion of its assets in foreign securities, the value of Fund shares may be
affected by changes in currency exchange rates and other developments abroad.
Securities subject to restrictions on resale are often less liquid and more
difficult to value.
The Fund is not a complete investment program and you may lose money by
investing. An investment in the Fund is not a deposit in a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
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Performance Information. The following bar chart and table provide information
about the investment performance of another class of shares of Eaton Vance
Tax-Managed Growth Fund. These shares (the "Retail Shares") are distributed
through retail distribution channels and are subject to higher expenses than
Institutional Shares. The returns are adjusted to eliminate the Retail Shares'
sales charge, but they are not adjusted to reflect other differences in
expenses. The returns in the bar chart and the table are for each calendar year
of the Retail Shares' operations through December 31, 1998. Returns for the
period prior to March 28, 1996 are those of Tax-Managed Growth Portfolio's
predecessor. The table below also contains a comparison of the Retail Shares'
performance to the performance of an index of domestic common stocks. Although
past performance is no guarantee of future results, the Retail Shares'
performance demonstrates the risk that the value of your investment will change.
Annual Total Returns of Retail Shares of the Fund
21.6% 5.7% 34.2% 4.0% 5.7% 6.0% 37.3% 24.9% 31.0% 24.5%
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1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
Average Annual Total Return One Five Ten
as of December 31, 1998 Year Years Years
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Retail Shares 25.75% 24.87% 19.12%
Standard & Poor's 500 Index 28.52% 24.02% 19.16%
The Standard & Poor's 500 Index is an unmanaged index of common stocks trading
in the U.S. Investors cannot invest directly in an index. (Source for S&P 500
Index returns: Lipper, Inc.)
Fees and Expenses of the Fund. These tables describe the fees and expenses that
you may pay if you buy and hold shares.
Shareholder Fees
(fees paid directly from your investment)
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Maximum Sales Charge (Load) (as a percentage
of offering price) None
Maximum Deferred Sales Charge (as a percentage
of the lower of the net asset value at time
of purchase or time of redemption) None
Sales Charge Imposed on Reinvested Distributions None
Exchange Fee None
Annual Fund Operating Expenses
(expenses that are deducted from Fund Assets)
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Management Fees 0.46%
Other Expenses* 0.12%
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Total Annual Fund Operating Expenses 0.58%
*Other Expenses is estimated.
Example. This Example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The Example assumes
that you invest $10,000 in the Fund for the time periods indicated and then
redeem all of your shares at the end of those periods. The Example also assumes
that your investment has a 5% return each year and that the operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
1 Year 3 Years
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Institutional Shares $59 $186
3
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INVESTMENT OBJECTIVE & PRINCIPAL POLICIES AND RISKS
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 seeks to meet its objective by investing in
Tax-Managed Growth Portfolio (the "Portfolio"), a separate open-end investment
company that has the same objective and policies as the Fund. The Fund's
investment objective may not be changed without shareholder approval. Certain of
the Fund's policies may be changed by the Trustees without shareholder approval.
The Portfolio invests in a broadly diversified selection of equity securities,
emphasizing common stocks of growth companies that are considered to be high in
quality and attractive in their long-term investment prospects. The portfolio
manager seeks to purchase stocks that are favorably priced in relation to their
fundamental value, and which will grow in value over time. In making investment
decisions, the portfolio manager may draw upon the information provided by, and
the expertise of, the investment adviser's research staff. Management of the
Portfolio involves consideration of numerous factors (such as potential for
price appreciation, risk/return, and the mix of securities held by the
Portfolio). Many of these considerations are subjective. Stocks are acquired
with the expectation of being held for the long-term. Under normal market
conditions, the Portfolio will invest at least 65% of its total assets in common
stocks. 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.
The Portfolio seeks to achieve long-term, after-tax returns in part by
minimizing the taxes incurred by shareholders 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
avoiding or minimizing the sale of securities with large accumulated capital
gains. The Portfolio generally seeks to avoid net realized short-term capital
gains. When a decision is made to sell a particular appreciated security, the
portfolio manager will select for sale the share lots resulting in the most
favorable tax treatment, generally those with holding periods sufficient to
qualify for long-term capital gains treatment that have the highest cost basis.
The portfolio manager may sell securities to realize capital losses that can be
used to offset realized gains. When selling a security, the portfolio manager
will generally consider the after-tax proceeds of the transaction.
To protect against price declines in securities holdings with large accumulated
gains, the Portfolio may use various hedging techniques (such as purchased put
options, equity collars (combining the purchase of a put option and the sale of
a call option), equity swaps, covered short sales, and the purchase or sale of
stock index futures contracts). By using these techniques rather than selling
appreciated securities, the Portfolio can reduce its exposure to price declines
in the securities without realizing substantial capital gains under current tax
law. These derivative instruments may also be used by the Portfolio to enhance
return or as a substitute for the purchase or sale of securities. The use of
derivatives is highly specialized. The built-in leverage inherent to many
derivative instruments can result in losses that substantially exceed the
initial amount paid or received by the Portfolio. Equity swaps and
over-the-counter options are private contracts in which there is a risk of loss
in the event of a counterparty's default. Derivative instruments may be
difficult to value, may be illiquid, and may be subject to wide swings in
valuation caused by changes in the value of the underlying security.
The Portfolio may invest up to 25% of assets in securities of foreign companies
located in developed countries and traded in established markets. The value of
foreign securities is affected by changes in currency rates, foreign tax laws
(including withholding tax), government policies (in this country or abroad),
relations between nations and trading, settlement, custodial and other
operational risks. In addition, the costs of investing abroad are generally
higher than in the United States, and foreign securities markets may be less
liquid, more volatile and less subject to governmental supervision than markets
in the United States. The Portfolio may also invest in depositary receipts which
evidence ownership in underlying foreign securities.
The Portfolio may invest not more than 15% of its net assets in illiquid
securities, which may be difficult to value properly and may involve greater
risks. Illiquid securities include those legally restricted as to resale, and
may include commercial paper issued pursuant to Section 4(2) of the Securities
Act of 1933 and securities eligible for resale pursuant to Rule 144A thereunder.
Certain Section 4(2) and Rule 144A securities may be treated as liquid
securities if the investment adviser determines that such treatment is
warranted. Even if determined to be liquid, holdings of these securities may
increase the level of Portfolio illiquidity if eligible buyers become
uninterested in purchasing them.
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 cash and cash equivalents. While temporarily
invested, the Portfolio may not achieve its investment objective. The Portfolio
may also borrow amounts up to one-third of the value of its total assets, but it
will not borrow more than 5% of the value of its total assets except to satisfy
redemption requests or for other temporary purposes. Such borrowings would
4
<PAGE>
result in increased expense to the Fund and, while they are outstanding, would
magnify increases or decreases in the value of Fund shares. The Portfolio will
not purchase additional portfolio securities while outstanding borrowings exceed
5% of the value of its total assets.
Benefits of Investing in the Portfolio. Investing in the Portfolio enables the
Fund to participate in a large and well-established investment portfolio without
being exposed to potential tax liability for unrealized gains accrued prior to
contribution of securities contributed to the Portfolio by other investors in
the Portfolio. Securities with large accumulated gains that have been
contributed by other investors in the Portfolio constitute a substantial portion
of the assets of the Portfolio. If contributed securities are sold, the gains
accumulated prior to their contribution are allocated to the contributing
investors and not to the Fund or its shareholders. As a general matter, the
Portfolio does not intend to sell appreciated securities contributed to the
Portfolio even if expected to decline in value, but will instead seek to manage
its exposure to these securities by using hedging techniques as appropriate. The
Portfolio follows the practice of distributing appreciated securities to meet
redemptions by investors in the Portfolio that contributed securities. The
Portfolio uses the selection of securities distributed to meet redemptions as a
tax-efficient 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 who have contributed
securities to the Portfolio, distributing 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. These limitations could affect the performance of the Portfolio, and,
therefore, the Fund. As described under "Redeeming Shares", redemptions are
currently paid solely in cash, but the Fund may adopt in the future a policy of
meeting shareholder redemptions in whole or in part through the distribution of
readily marketable securities.
Like most mutual funds, the Fund and Portfolio rely on computers in conducting
daily business and processing information. There is a concern that on January 1,
2000 some computer programs will be unable to recognize the new year and as a
consequence computer malfunctions will occur. Eaton Vance is taking steps that
it believes are reasonably designed to address this potential problem and to
obtain satisfactory assurance from other service providers to the Fund and the
Portfolio that they are also taking steps to address the issue. There can,
however, be no assurance that these steps will be sufficient to avoid any
adverse impact on the Fund and the Portfolio or shareholders. The Year 2000
concern may also adversely impact issuers of securities held by the Portfolio
and the markets in which these securities trade. The foregoing statement is
subject to the Year 2000 Information and Readiness Disclosure Act, which may
protect Eaton Vance and the Fund and the Portfolio from liability arising from
the statement.
MANAGEMENT AND ORGANIZATION
Management. The Portfolio's investment adviser is Boston Management and Research
("BMR"), a subsidiary of Eaton Vance Management ("Eaton Vance"), with offices at
The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109. Eaton
Vance has been managing assets since 1924 and managing mutual funds since 1931.
Eaton Vance and its subsidiaries currently manage over $37 billion on behalf of
mutual funds, institutional clients and individuals.
The investment adviser manages the investments of the Portfolio and provides
related office facilities and personnel. Under its 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 and including $500 million. On net assets of $500 million and over the
annual fee is reduced and the fee is computed as follows:
Annual 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 fiscal year ended December 31, 1998, the Portfolio paid BMR advisory
fees equivalent to 0.46% (annualized) of its average daily net assets.
Duncan W. Richardson has acted as the portfolio manager of the Portfolio since
it commenced operations and of its predecessor in investment operations (Capital
Exchange Fund) since 1990. He also manages other Eaton Vance portfolios, has
been an Eaton Vance portfolio manager for more than 5 years, and is a Vice
President of Eaton Vance and BMR.
The investment adviser and the Fund and Portfolio have adopted Codes of Ethics
governing personal securities transactions. Under the Codes, Eaton Vance
employees may purchase and sell securities (including securities held by the
Portfolio) subject to certain pre-clearance and reporting requirements and other
procedures.
5
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Eaton Vance serves as administrator of the Fund, providing the Fund with
administrative services and related office facilities. Eaton Vance does not
currently receive a fee for serving as administrator.
Organization. The Fund is a series of Eaton Vance Mutual Funds Trust, a
Massachusetts business trust. The Fund offers multiple classes of shares. Each
class represents a pro rata interest in the Fund, but is subject to different
expenses and rights. The Fund does not hold annual shareholder meetings, but may
hold special meetings for matters that require shareholder approval (like
electing or removing trustees, approving management contracts or changing
investment policies that may only be changed with shareholder approval). Because
the Fund invests in the Portfolio, it may be asked to vote on certain Portfolio
matters (like changes in certain Portfolio investment restrictions). When
necessary, the Fund will hold a meeting of its shareholders to consider the
Portfolio matter and then vote its interest in the Portfolio in proportion to
the votes cast by its shareholders. The Fund can withdraw from the Portfolio at
any time.
VALUING SHARES
The Fund values its shares once each day only when the New York Stock Exchange
is open for trading (typically Monday through Friday), as of the close of
regular trading on the Exchange (normally 4:00 p.m. eastern time). The price of
Fund shares is their net asset value, which is derived from Portfolio holdings.
Exchange-listed securities are generally valued at closing sale prices.
When purchasing or redeeming Fund shares, your investment dealer must
communicate your order to the principal underwriter by a specific time each day
in order for the purchase price or the redemption price to be based on that
day's net asset value per share. It is the investment dealer's responsibility to
transmit orders promptly. The Fund may accept purchase and redemption orders as
of the time of their receipt by certain investment dealers (or their designated
intermediaries).
PURCHASING SHARES
Institutional Shares are offered to clients of financial intermediaries who
charge an advisory, management, consulting or similar fee for their services;
accounts affiliated with those financial intermediaries; investment and
institutional clients of Eaton Vance and its affiliates; certain persons
affiliated with Eaton Vance; and certain Eaton Vance and fund service providers.
Your initial investment must be at least $250,000. Subsequent investments of any
amount may be made at any time. The investment minimum is waived for persons
affiliated with Eaton Vance and its service providers.
The Fund provides shareholders ease of investment by allowing same day wire
purchases. You may purchase Institutional Shares through your investment dealer
or by requesting your bank to transmit immediately available funds (Federal
Funds) by wire to the address set forth below. To make an initial investment by
wire, you must first telephone the Fund Order Department at 800-225-6265
(extension 7604) to advise of your action and to be assigned an account number.
Failure to call will delay the order. The account application form which
accompanies this prospectus must be promptly forwarded to the transfer agent.
Additional investments may be made at any time through the same wire procedure.
The Fund Order Department must be advised by telephone of each transmission.
Wire funds to:
Boston Safe Deposit & Trust Co.
ABA #811001234
Account #080411
Further Credit Eaton Vance Tax-Managed Growth Fund - Fund #492
A/C # [Insert your account number]
Purchase orders will be executed at the net asset value next determined after
their receipt by the Fund only if the Fund has received payment in cash or in
Federal Funds. If you purchase shares through an investment dealer, that dealer
may charge you a fee for executing the purchase for you.
From time to time the Fund may suspend the continuous offering of its shares.
During any such suspension, shareholders who reinvest their distributions in
additional shares will be permitted to continue such reinvestments, and the Fund
may permit tax-sheltered retirement plans which own shares to purchase
additional shares of the Fund. The Fund may also refuse any order for the
purchase of shares.
6
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REDEEMING SHARES
You can redeem shares in one of two ways:
By Wire If you have given complete written authorization in
advance you may request that redemption proceeds be
wired directly to your bank account. The bank
designated may be any bank in the United States. The
redemption request may be made by calling the Eaton
Vance Fund Order Department at 800-225-6265 (extension
7604) or by sending a signature guaranteed letter of
instruction to the transfer agent (see back cover for
address). You may be required to pay the costs of
redeeming by wire; however, no costs are currently
charged. The Fund may suspend or terminate this
expedited payment procedure upon at least 30 days
notice.
Through an
Investment Dealer Your investment dealer is responsible for transmitting
the order promptly. A dealer may charge a fee for this
service.
If you redeem shares, your redemption price will be based on the net asset value
per share next computed after the redemption request is received. Your
redemption proceeds will be paid in cash within seven days, reduced by the
amount of any federal income tax required to be withheld. Payments will be sent
by mail unless you complete the Bank Wire Redemptions section of the account
application.
Meeting Redemptions by Distributing Portfolio Securities. The Fund currently
pays shareholder 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 chosen by the investment adviser. The Fund would only
distribute readily marketable securities, which would be valued pursuant to the
Portfolio's valuation procedures. The practice of distributing appreciated
securities to meet redemptions can be a useful tool for tax-efficient
management. A policy of meeting redemptions in whole or in part through the
distribution of securities will only be established after any necessary
regulatory approvals are received and in conjunction with putting in place a
program whereby redeeming shareholders who receive securities could elect to
sell the securities received to Eaton Vance, the Fund's custodian or a
designated agent without transaction costs 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. Redeeming shareholders electing not
to participate in the program would be required to take delivery of any
securities distributed upon redemption. Such shareholders could incur brokerage
charges and other costs and may be exposed to market risk in selling the
distributed securities.
If the Fund adopts a policy of distributing securities to meet redemptions, it
may continue to meet redemptions in whole or in part with cash. During periods
of volatile market conditions, the Fund could be expected to meet redemptions
primarily with cash.
SHAREHOLDER ACCOUNT FEATURES
Distributions. You may have your Fund distributions paid in one of the following
ways:
*Full Reinvest
Option Dividends and capital gains are reinvested in additional
shares. This option will be assigned if you do not specify
an option.
*Partial
Reinvest
Option Dividends are paid in cash and capital gains are reinvested
in additional shares.
*Cash
Option Dividends and capital gains are paid in cash.
Information from the Fund. From time to time, you may be mailed the following:
*Annual and Semi-Annual Reports, containing performance information and
financial statements.
*Periodic account statements, showing recent activity and total share
balance.
*Form 1099 and tax information needed to prepare your income tax returns.
*Proxy materials, in the event a shareholder vote is required.
*Special notices about significant events affecting your Fund.
7
<PAGE>
Exchange Privilege. You may exchange your Institutional Shares for other Eaton
Vance Institutional shares. Exchanges are made at net asset value. Before
exchanging, you should read the prospectus of the new fund carefully. The
exchange privilege may be changed or discontinued at any time. You will receive
60 days' notice of any material change to the privilege. This privilege may not
be used for "market timing". If an account (or group of accounts) makes more
than two round-trip exchanges within twelve months, it will be deemed to be
market timing. The exchange privilege may be terminated for market timing
accounts.
Telephone Transactions. The transfer agent and the principal underwriter have
procedures in place to authenticate telephone instructions (such as verifying
personal account information). As long as the transfer agent and principal
underwriter follow these procedures, they will not be responsible for
unauthorized telephone transactions and you bear the risk of possible loss
resulting from telephone transactions. You may decline the telephone redemption
option on the account application. Telephone instructions are tape recorded.
Account Questions. If you have any questions about your account or the services
available, please call Eaton Vance Shareholder Services at 1-800-225-6265, or
write to the transfer agent (see back cover for address).
Tax-Sheltered Retirement Plans. Institutional Shares are available for purchase
in connection with certain tax-sheltered retirement plans. Call 1-800-225-6265
for information. Distributions will be invested in additional shares for all
tax-sheltered retirement plans.
TAX INFORMATION
While the Fund attempts to minimize and eliminate distributions, there can be no
assurance that taxable distributions can be avoided. Distributions of any income
and net realized short-term capital gains will be taxable as ordinary income.
Distributions of any net realized long-term capital gains are taxable as
long-term gains. Any distributions paid will generally be paid annually and are
expected to be taxable as primarily long-term capital gains.
Investors who purchase shares shortly before the record date of a distribution
will pay the full price for the shares and then receive some portion of the
price back as a taxable distribution. Certain distributions paid in January (if
any) will be taxable to shareholders as if received on December 31 of the prior
year. A redemption of Fund shares, including an exchange for shares of another
fund, is a taxable transaction.
Shareholders should consult with their advisers concerning the applicability of
state, local and other taxes to an investment.
8
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{LOGO} Mutual Funds
EATON VANCE for People
Mutual Funds Who Pay
Taxes
More Information
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About the Fund: More information is available in the statement of
additional information. The statement of additional information is
incorporated by reference into this prospectus. Additional information
about the Portfolio's investments is available in the annual and
semi-annual reports to shareholders. In the annual report, you will find a
discussion of the market conditions and investment strategies that
significantly affected the Fund's performance during the past year. You may
obtain free copies of the statement of additional information and the
shareholder reports by contacting:
Eaton Vance Distributors, Inc.
The Eaton Vance Building
255 State Street
Boston, MA 02109
1-800-225-6265
website: www.eatonvance.com
You will find and may copy information about the Fund at the Securities and
Exchange Commission's public reference room in Washington, DC (call
1-800-SEC-0330 for information); on the SEC's Internet site
(http://www.sec.gov); or upon payment of copying fees by writing to the
SEC's public reference room in Washington, DC 20549-6009.
About Shareholder Accounts: You can obtain more information from Eaton
Vance Share- holder Services (1-800-225-6265). If you own shares and would
like to add to, redeem or change your account, please write or call the
transfer agent:
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First Data Investor Services Group
P.O. Box 5123
Westborough, MA 01581-5123
1-800-262-1122
SEC File No. 811-4015 ITGP
<PAGE>
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
STATEMENT OF
ADDITIONAL INFORMATION
July 1, 1999
EATON VANCE TAX-MANAGED GROWTH FUND
INSTITUTIONAL SHARES
The Eaton Vance Building
255 State Street
Boston, Massachusetts 02109
(800) 225-6265
This Statement of Additional Information ("SAI") provides general
information about the Fund and the Portfolio. The Fund is a series of Eaton
Vance Mutual Funds Trust. Capitalized terms used in this SAI and not otherwise
defined have the meanings given to them in the prospectus. This SAI contains
additional information about:
Page
Strategies and Risks ................................................ 2
Investment Restrictions ............................................. 6
Management and Organization ......................................... 7
Investment Advisory and Administrative Services ..................... 10
Other Service Providers ............................................. 12
Purchasing and Redeeming Shares ..................................... 12
Performance ......................................................... 14
Taxes ............................................................... 15
Portfolio Security Transactions ..................................... 17
Financial Statements ................................................ 18
Appendices:
A: Institutional Shares - Performance ............................... a-1
THIS IS NOT A PROSPECTUS AND IS AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE
INVESTORS ONLY IF PRECEDED OR ACCOMPANIED BY THE FUND'S PROSPECTUS FOR ITS
INSTITUTIONAL SHARES DATED JULY 1, 1999, AS SUPPLEMENTED FROM TIME TO TIME,
WHICH IS INCORPORATED HEREIN BY REFERENCE. THIS SAI SHOULD BE READ IN
CONJUNCTION WITH THE PROSPECTUS, WHICH MAY BE OBTAINED BY CALLING
1-800-225-6265.
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STRATEGIES 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. The Portfolio may invest in investment-grade
preferred stocks and debt securities, but purchase of such securities will
normally be limited to securities convertible into common stocks and temporary
investments in short-term notes or government obligations.
TAX-MANAGED INVESTING. Taxes are a major influence on the net returns that
investors receive on their taxable investments. There are four components of the
returns of an equity mutual fund -- price appreciation, distributions of income
and distributions of realized short-term and long-term capital gains -- which
are treated differently for federal income tax purposes. Distributions of net
investment income and net realized short-term gains (on stocks held less than 12
months) are taxed as ordinary income, at rates as high as 39.6%. Distributions
of realized long-term gains (on stocks held at least 12 months) are taxed at
rates up to 20%. Returns derived from price appreciation are untaxed until the
shareholder redeems. Upon redemption, a capital gain equal to the difference
between the net proceeds of the redemption and the shareholder's adjusted tax
basis is realized.
The Fund is similar to retirement planning products such as variable
annuities and IRAs in that they are vehicles for long-term, tax-deferred
investing. As a mutual fund, however, the Fund avoids a number of structural
disadvantages inherent in 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. Variable annuities offer tax-free exchanges and a death benefit,
which are not offered by the Fund. Eligibility to invest in IRAs and annual
contributions to IRAs are limited. Contributions to deductible IRAs can be made
from pre-tax dollars and distributions from Roth IRAs are not taxed if certain
requirements are met.
An analysis of long-term hypothetical returns achievable from a tax- managed
equity fund that achieves returns predominantly from unrealized gains compared
to a conventional equity mutual fund and a variable annuity can illustrate the
fundamental soundness of a tax-managed equity fund investment. 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 a variable annuity. 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 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.
FOREIGN SECURITIES. Investing in securities issued by foreign-domiciled
companies 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,
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.
DERIVATIVE INVESTMENTS. The Portfolio may purchase or sell derivative
instruments to hedge against securities price declines and currency movements,
to enhance returns and as a substitute for the purchase and sale of securities.
Transactions in derivative instruments (which derive their value by reference to
other securities, indices, instruments, or currencies) may be conducted 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; equity swaps; and the
purchase and sale of forward currency exchange contracts and currency futures.
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 for
the purpose of leverage. The purchase and sale of derivative instruments is a
highly specialized activity that can expose the Portfolio to a significant risk
of loss. The use of futures for nonhedging purposes is limited by regulations of
the Commodity Futures Trading Commission ("CFTC"). There can be no assurance
that the use of derivative instruments will be advantageous.
EQUITY SWAPS AND OTC OPTIONS. Equity swaps and over-the-counter options
contracts will only be entered into 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 net assets. As described below, the Portfolio's investment in illiquid
assets, which may 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.
FOREIGN CURRENCY TRANSACTIONS. The value of foreign assets 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. Foreign currency exchange transactions may
be conducted 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 generally 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 at one rate, while offering a lesser rate of exchange
should the investment adviser 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 investment adviser may enter into a
forward contract in connection with the purchase or sale of a security
denominated in a foreign currency, or when it 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 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.
Currency futures contracts are exchange-traded instruments that may be used
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. Investments in currency contracts are subject to limitations
and restrictions similar to those set forth for 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
position held and that a loss will result. For derivative instruments other than
purchased options, this loss may exceed the amount of the initial investment
made or the premium received. Derivative instruments may sometimes increase or
leverage exposure to a particular market risk. Leverage enhances exposure to the
price volatility of derivative instruments. 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 other assets held in the portfolio. 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 closing out of
positions and limiting losses. The staff of the Securities and Exchange
Commission takes the position that certain purchased OTC options, and assets
used as cover for written OTC options, are subject to the 15% limit on illiquid
investments. The 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 derivative instruments may be purchased and sold. Transactions
in futures contracts and related options will be entered into only to the extent
such transactions are consistent with the requirements of the Code for
maintaining qualification as a regulated investment company for federal income
tax purposes.
LIMITATIONS ON FUTURES CONTRACTS AND OPTIONS. All futures contracts will be
traded on exchanges or boards of trade that are licensed and regulated by 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, futures
contracts may only be entered into 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 net asset value, after
taking into account unrealized profits and losses on such positions.
In order to hedge current or anticipated portfolio positions, futures
contracts on securities held or on securities with characteristics similar to
those of the securities held may be used. If, in the opinion of the investment
adviser, there is a sufficient degree of correlation between price trends for
the securities held and futures contracts based on other financial instruments,
securities indices or other indices, such futures contracts may also be entered
into as part of its hedging strategy.
All call options on securities written 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.
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). 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 investment adviser expects normally to close short sale against-the-box
transactions by delivering newly-acquired stock. No more than 25% of assets is
expected to be subject to short-sales against-the-box at any one time.
The ability to use short sales against-the-box, certain equity swaps and
certain equity collar strategies as a tax-efficient management technique with
respect to holdings of appreciated securities is limited to circumstances in
which the hedging transaction is closed out within thirty days after the end of
the taxable year and the underlying appreciated securities position is held
unhedged for at least the next sixty days after the hedging transaction is
closed.
LENDING 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. 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 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. Securities will be loaned only 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 defaults
on a securities loan, the Potfolio will, under proposed Treasury Regulations, be
considered to have disposed of the securities in a taxable transaction. Delays
may be experienced in the recovery or loss of rights in loaned securities if a
borrower of securities fails financially. The lender of the securities 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 lender of the
securities would have the right to call a loan and obtain the securities loaned
at any time on up to five business days' notice. The lender would not have the
right to vote any securities having voting rights during the existence of a
loan, but could call the loan in anticipation of an important vote to be taken
among holders of the securities or the giving or withholding of their consent on
a material matter affecting the investment. Securities lending involves
administrative expenses, including finders' fees. If the investment adviser
decides to make securities loans, it is intended that the value of the
securities loaned would not exceed one-third of the Portfolio's total assets.
ASSET COVERAGE REQUIREMENTS. Transactions involving swaps, short sales, forward
contracts, futures contracts and options (other than options that the Portfolio
has purchased) create 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. Only the net obligation of a swap 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
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 assets to segregated accounts or to
cover could impede portfolio management or the ability to meet redemption
requests or other current obligations.
DIVERSIFIED STATUS. The Portfolio is a "diversified" investment company under
the 1940 Act. This means that with respect to 75% of its total assets (1) the
Portfolio may not invest more than 5% of its total assets in the securities of
any one issuer (except U.S. Government obligations) and (2) the Portfolio may
not own more than 10% of the outstanding voting securities of any one issuer.
SELECTION OF SECURITIES USED TO MEET REDEMPTIONS. Investors in the Portfolio
(including the Fund) may redeem all or a portion of their 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 investors in the Portfolio who have
contributed securities and may in the future be used to meet redemptions by the
Fund's shareholders. See "Redeeming Shares" in the 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 seven years of a
contribution of securities (or, for securities contributed prior to June 9,
1997, within five years of contribution), (the "initial holding period") the
Portfolio will not distribute such securities to any investor other than the
contributing investor. In meeting a redemption of an investor who contributed
securities within the initial holding period after the contribution 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. 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. After expiration of the initial holding period, redeeming investors
in the Portfolio who contributed securities generally may request a diversified
basket of securities, the composition of which will be determined in the
investment adviser's discretion. These redemption practices constrain the
selection of securities distributed to meet redemptions (particularly during the
initial holding period) 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.
TEMPORARY INVESTMENTS. Under unusual market conditions, the Portfolio may invest
temporarily in cash or cash equivalents. Cash equivalents are highly liquid,
short-term securities such as commercial paper, certificates of deposit,
short-term notes and short-term U.S. Government obligations.
PORTFOLIO TURNOVER. The Portfolio cannot accurately predict its portfolio
turnover rate, but 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 high turnover rate (100% or more) necessarily involves
greater trading expenses to the Portfolio.
INVESTMENT RESTRICTIONS
The following investment restrictions of the Fund are designated as
fundamental and as such cannot be changed without the approval of the holders of
a majority of the Fund's outstanding voting securities, which as used in this
SAI means the lesser of (a) 67% of the shares of the Fund, present or
represented by proxy at a meeting if the holders of more than 50% of the
outstanding shares are present or represented at the meeting or (b) more than
50% of the outstanding shares of the Fund. Accordingly, the Fund may not:
(1) 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 investable 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 1940 Act.
The Fund and the Portfolio have adopted the following investment policies
which may be changed by the Trustees with respect to the Fund without
shareholder approval or with respect to the Portfolio without approval of the
Fund or its other investors. The Fund and the Porffolio will not:
(a) 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 its delegate, determines to be liquid. Any such
determination by a delegate will be made pursuant to procedures adopted by
the Board; or
(b) 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.
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 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
Portfolio to dispose of such security or other asset. Notwithstanding the
foregoing, under normal market conditions 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 limitation on investing in illiquid securities and the borrowing policies
set forth above.
MANAGEMENT AND ORGANIZATION
FUND MANAGEMENT. The Trustees of the Trust are responsible for the overall
management and supervision of the Trust's affairs. The Trustees and officers of
the Trust and the 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 The Eaton Vance Building, 255 State Street, Boston,
Massachusetts 02109. Those Trustees who are "interested persons" of the Trust or
the Portfolio, as defined in the 1940 Act, are indicated by an asterisk(*).
JAMES B. HAWKES (57), President and Trustee*
Chairman, President and Chief Executive Officer of Eaton Vance, BMR and their
corporate parent and trustee (EVC and EV); Director of EVC and EV. Trustee and
officer of various investment companies managed by Eaton Vance or BMR.
JESSICA M. BIBLIOWICZ (39), Trustee*
President and Chief Executive Officer of National Financial Partners (a
financial services company) (since April, 1999). President and Chief Operating
Officer of John A. Levin & Co. (a registered investment advisor) (July, 1997
to April, 1999) and a Director of Baker, Fentress & Company which owns John A.
Levin & Co. (July, 1997 to April, 1999). Executive Vice President of Smith
Barney Mutual Funds (from July, 1994 to June, 1997). Elected Trustee October
30, 1998. Trustee of various investment companies managed by Eaton Vance or
BMR since October 30, 1998.
Address: 1301 Avenue of the Americas, New York, New York 10019
DONALD R. DWIGHT (68), Trustee
President of Dwight Partners, Inc. (a corporate relations and communications
company). Trustee/Director of the Royce Funds (mutual funds). Trustee of
various investment companies managed by Eaton Vance or BMR.
Address: Clover Mill Lane, Lyme, New Hampshire 03768
SAMUEL L. HAYES, III (64), Trustee
Jacob H. Schiff Professor of Investment Banking Emeritus, Harvard University
Graduate School of Business Administration. Trustee of the Kobrick-Cendant
Investment Trust (mutual funds). Trustee of various investment companies
managed by Eaton Vance or BMR.
Address: 345 Nahatan Road, Westwood Massachusetts 02090
NORTON H. REAMER (63), Trustee
Chairman of the Board and Chief Executive Officer, United Asset Management
Corporation (a holding company owning institutional investment management
firms); Chairman, President and Director, UAM Funds (mutual funds). Trustee of
various investment companies managed by Eaton Vance or BMR.
Address: One International Place, Boston, Massachusetts 02110
LYNN A. STOUT (41), Trustee of the Trust
Professor of Law, Georgetown University Law Center. Elected Trustee October
30, 1998. Trustee of various investment companies managed by Eaton Vance or
BMR since October 30, 1998.
Address: 600 New Jersey Avenue, NW, Washington, DC 20001
JACK L. TREYNOR (69), Trustee
Investment adviser and Consultant. Trustee of various investment companies
managed by Eaton Vance or BMR.
Address: 504 Via Almar, Palos Verdes Estates, California 90274
WILLIAM H. AHERN, JR. (39), Vice President of the Trust
Vice President of BMR and Eaton Vance. Officer of various investment companies
managed by Eaton Vance or BMR.
THOMAS J. FETTER (55), Vice President of the Trust
Vice President of Eaton Vance and BMR. Officer of various investment companies
managed by Eaton Vance or BMR.
ROBERT B. MACINTOSH (42), Vice President of the Trust
Vice President of Eaton Vance and BMR. Officer of various investment companies
managed by Eaton Vance or BMR.
DUNCAN W. RICHARDSON (41), Vice President of the Portfolio
Vice President of Eaton Vance and BMR. Officer of various investment companies
managed by Eaton Vance or BMR.
MICHAEL B. TERRY (56), Vice President of the Trust
Vice President of BMR and Eaton Vance. Officer of various investment companies
managed by Eaton Vance or BMR.
JAMES L. O'CONNOR (54), Treasurer
Vice President of Eaton Vance and BMR. Officer of various investment companies
managed by Eaton Vance or BMR.
ALAN R. DYNNER (58), Secretary
Vice President and Chief Legal Officer of Eaton Vance, BMR, EVC and EV since
November 1, 1996. Previously, he was a Partner of the law firm of Kirkpatrick
& Lockhart LLP, New York and Washington, D.C., and was Executive Vice
President of Neuberger & Berman Management, Inc., a mutual fund management
company. Officer of various investment companies managed by Eaton Vance or
BMR.
JANET E. SANDERS (63), Assistant Treasurer and Assistant Secretary
Vice President of Eaton Vance and BMR. Officer of various investment companies
managed by Eaton Vance or BMR.
A. JOHN MURPHY (36), Assistant Secretary
Vice President of BMR and Eaton Vance. Officer of various investment companies
managed by Eaton Vance or BMR.
ERIC G. WOODBURY (41), Assistant Secretary
Vice President of BMR and Eaton Vance. Officer of various investment companies
managed by Eaton Vance or BMR.
The Nominating Committee of the Board of Trustees of the Trust and the
Portfolio is comprised of the Trustees who are not "interested persons" as that
term is defined under the 1940 Act ("noninterested Trustees"). The purpose of
the Committee is to recommend to the Board nominees for the position of
noninterested Trustee and to assure that at least a majority of the Board of
Trustees is independent of Eaton Vance and its affiliates.
Messrs. Hayes (Chairman), Dwight and Reamer 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 and the Portfolio, including
investment advisory (Portfolio only), administrative, transfer agency, custodial
and fund accounting and distribution services, and (ii) all other matters in
which Eaton Vance or its affiliates has any actual or potential conflict of
interest with the Fund, the Portfolio or investors therein.
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, transfer agent and
dividend disbursing agent of the Trust 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 "Trustees" Plan").
Under the Trustees' Plan, an eligible Trustee may elect to have his deferred
fees invested by the Fund in the shares of one or more funds in the Eaton Vance
Family of Funds, and the amount paid to the Trustees under the Trustees' Plan
will be determined based upon the performance of such investments. Deferral of
Trustees' fees in accordance with the Trustees' Plan will have a negligible
effect on the Portfolio's assets, liabilities, and net income per share, and
will not obligate the Portfolio to retain the services of any Trustee or
obligate the Portfolio to pay any particular level of compensation to the
Trustees. Neither the Portfolio nor the Trust has a retirement plan for its
Trustees.
The fees and expenses of the noninterested Trustees of the Trust and of the
Portfolio are paid by the Fund (and the other series of the Trust) and of the
Portfolio, respectively. (The Trustees of the Trust and of the Portfolio who are
members of the Eaton Vance organization receive no compensation from the Trust
or the Portfolio.) During the fiscal year ended October 31, 1998, the
noninterested Trustees of the Trust and the Portfolio earned the following
compensation in their capacities as Trustees of the Trust and the Portfolio and,
for the year ended December 31, 1998, earned the following compensation in their
capacities as Trustees of the funds in the Eaton Vance fund complex (1):
<TABLE>
<CAPTION>
SOURCE OF JESSICA M. DONALD R. SAMUEL L. NORTON H. LYNN A. JACK L.
COMPENSATION BIBLIOWICZ(7) DWIGHT HAYES, III REAMER STOUT(7) TREYNOR
------------ ------------- -------- ----------- --------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Trust(2) ........................ $ -- $ 7,534 $ 7,910 $ 7,427 $ -- $ 8,311
Portfolio ....................... -- 6,433(3) 6,538(4) 6,212 -- 6,990
Trust and Fund
Complex ....................... 33,333 160,000(5) 170,000(6) 160,000 33,333 170,000
- ------------
(1) As of March 1, 1999, the Eaton Vance Fund complex consists of 152 registered investment companies or series thereof.
(2) The Trust consisted of 12 Funds as of October 31, 1998.
(3) Includes $3,233 of deferred compensation.
(4) Includes $2,237 of deferred compensation.
(5) Includes $60,000 of deferred compensation.
(6) Includes $41,563 of deferred compensation.
(7) Ms. Bibliowicz and Ms. Stout were elected Trustees on October 30, 1998.
</TABLE>
ORGANIZATION. The Fund is a series of the Trust, which is organized under
Massachusetts law and is operated as an open-end management investment company.
The Fund (formerly EV Marathon Tax-Managed Growth Fund) established 3 classes of
shares on November 1, 1997 -- Class A shares (formerly EV Traditional
Tax-Managed Growth Fund), Class B shares and Class C shares (formerly EV Classic
Tax-Managed Growth Fund) of Eaton Vance Tax-Managed Growth Fund. Information
herein prior to such date is for the Fund before it became a multiple-class
fund. The Fund's Class A, Class B and Class C shares are offered pursuant to a
separate prospectus and SAI. Class A and Class C are successors to the
operations of separate series of the Trust. Class S shares were established May
14, 1999. Class I shares (referred to as "Institutional Shares") were
established July 1, 1999.
The Trust may issue an unlimited number of shares of beneficial interest (no
par value per share) in one or more series (such as the Fund). The Trustees of
the Trust have divided the shares of the Fund into multiple classes. Each class
represents an interest in the Fund, but is subject to different expenses, rights
and privileges. The Trustees have the authority under the Declaration of Trust
to create additional classes of shares with differing rights and privileges.
When issued and outstanding, shares are fully paid and nonassessable by the
Trust. Shareholders are entitled to one vote for each full share held.
Fractional shares may be voted proportionately. Shares of the Fund will be voted
together except that only shareholders of a particular class may vote on matters
affecting only that class. Shares have no preemptive or conversion rights and
are freely transferable. In the event of the liquidation of the Fund,
shareholders of each class are entitled to share pro rata in the net assets
attributable to that class available for distribution to shareholders.
The Trustees of the Trust have considered the advantages and disadvantages
of investing the assets of the Fund in the Portfolio, as well as the advantages
and disadvantages of the two-tier format. The Trustees believe that the
structure offers opportunities for growth in the assets of the Portfolio, may
afford the potential for economies of scale for the Fund and may over time
result in lower expenses for the Fund.
As permitted by Massachusetts law, there will normally be no meetings of
shareholders for the purpose of electing Trustees unless and until such time as
less than a majority of the Trustees of the Trust holding office have been
elected by shareholders. In such an event the Trustees then in office will call
a shareholders' meeting for the election of Trustees. Except for the foregoing
circumstances and unless removed by action of the shareholders in accordance
with the Trust's By-laws, the Trustees shall continue to hold office and may
appoint successor Trustees.
The Declaration of Trust may be amended by the Trustees when authorized by
vote of a majority of the outstanding voting securities of the Trust, the
financial interests of which are affected by the amendment. The Trustees may
also amend the Declaration of Trust without the vote or consent of shareholders
to change the name of the Trust or any series or to make such other changes
(such as reclassifying series or classes of shares or restructuring the Trust)
as do not have a materially adverse effect on the financial interests of
shareholders or if they deem it necessary to conform it to applicable federal or
state laws or regulations. The Trust's By-laws provide that the Trust will
indemnify its Trustees and officers against liabilities and expenses incurred in
connection with any litigation or proceeding in which they may be involved
because of their offices with the Trust. However, no indemnification will be
provided to any Trustee or officer for any liability to the Trust or its
shareholders by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office. 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.
Under Massachusetts law, if certain conditions prevail, shareholders of a
Massachusetts business trust (such as the Trust) could be deemed to have
personal liability for the obligations of the Trust. Numerous investment
companies registered under the 1940 Act have been formed as Massachusetts
business trusts, and management is not aware of an instance where such liability
has been imposed. The Trust's Declaration of Trust contains an express
disclaimer of liability on the part of the Fund shareholders and the Trust's
By-laws provide that the Trust shall assume the defense on behalf of any Fund
shareholders. The Declaration of Trust also contains provisions limiting the
liability of a series or class to that series or class. Moreover, the Trust's
By-laws also provide for indemnification out of the property of the Fund of any
shareholder held personally liable solely by reason of being or having been a
shareholder for all loss or expense arising from such liability. The assets of
the Fund are readily marketable and will ordinarily substantially exceed its
liabilities. In light of the nature of the Fund's business and the nature of its
assets, management believes that the possibility of the Fund's liability
exceeding its assets, and therefore the shareholder's risk of personal
liability, is remote.
The Portfolio is organized as a trust under the laws of the state of New
York and intends to be treated as a partnership for federal tax purposes. In
accordance with the Declaration of Trust of the Portfolio, there will normally
be no meetings of the investors for the purpose of electing Trustees unless and
until such time as less than a majority of the Trustees of the Portfolio holding
office have been elected by investors. In such an event the Trustees of the
Portfolio then in office will call an investors' meeting for the election of
Trustees. Except for the foregoing circumstances and unless removed by action of
the investors in accordance with the Portfolio's Declaration of Trust, the
Trustees shall continue to hold office and may appoint successor Trustees.
The Declaration of Trust of the Portfolio provides that no person shall
serve as a Trustee if investors holding two-thirds of the outstanding interest
have removed him from that office either by a written declaration filed with the
Portfolio's custodian or by votes cast at a meeting called for that purpose. The
Declaration of Trust further provides that under certain circumstances the
investors may call a meeting to remove a Trustee and that the Portfolio is
required to provide assistance in communicating with investors about such a
meeting.
The Portfolio's Declaration of Trust provides that the Fund and other
entities permitted to invest in the Portfolio (e.g., other U.S. and foreign
investment companies, and common and commingled trust funds) will each be liable
for all obligations of the Portfolio. However, the risk of the Fund incurring
financial loss on account of such liability is limited to circumstances in which
both inadequate insurance exists and the Portfolio itself is unable to meet its
obligations. Accordingly, the Trustees of the Trust believe that neither the
Fund nor its shareholders will be adversely affected by reason of the Fund
investing in the Portfolio.
Whenever the Fund as an investor in a Portfolio is requested to vote on
matters pertaining to the Portfolio (other than the termination of the
Portfolio's business, which may be determined by the Trustees of the Portfolio
without investor approval), the Fund will hold a meeting of Fund shareholders
and will vote its interest in the Portfolio for or against such matters
proportionately to the instructions to vote for or against such matters received
from Fund shareholders. The Fund shall vote shares for which it receives no
voting instructions in the same proportion as the shares for which it receives
voting instructions. Other investors in the Portfolio may alone or collectively
acquire sufficient voting interests in the Portfolio to control matters relating
to the operation of the Portfolio, which may require the Fund to withdraw its
investment in the Portfolio or take other appropriate action. Any such
withdrawal could result in a distribution "in kind" of portfolio securities (as
opposed to a cash distribution from the Portfolio). If securities are
distributed, the Fund could incur brokerage, tax or other charges in converting
the securities to cash. In addition, the distribution in kind may result in a
less diversified portfolio of investments or adversely affect the liquidity of
the Fund. Notwithstanding the above, there are other means for meeting
shareholder redemption requests, such as borrowing.
The Fund may withdraw (completely redeem) all its assets from the Portfolio
at any time if the Board of Trustees of the Trust determines that it is in the
best interest of the Fund to do so. In the event the Fund withdraws all of its
assets from the Portfolio, or the Board of Trustees of the Trust determines that
the investment objective of the Portfolio is no longer consistent with the
investment objective of the Fund, the Trustees would consider what action might
be taken, including investing the assets of the Fund in another pooled
investment entity or retaining an investment adviser to manage the Fund's assets
in accordance with its investment objective. The Fund's investment performance
may be affected by a withdrawal of all its assets (or the assets of another
investor in the Portfolio) from the Portfolio.
INVESTMENT ADVISORY AND ADMINISTRATIVE SERVICES
INVESTMENT ADVISORY SERVICES. BMR manages the investments and affairs of the
Portfolio subject to the supervision of the Portfolio's Board of Trustees. BMR
furnishes to the Portfolio investment research, advice and supervision,
furnishes an investment program and determines what securities will be
purchased, held or sold by the Portfolio and what portion, if any, of the
Portfolio's assets will be held uninvested. The Investment Advisory Agreement
requires BMR to pay the salaries and fees of all officers and Trustees of the
Portfolio who are members of the BMR organization and all personnel of BMR
performing services relating to research and investment activities.
For a description of the compensation that the Portfolio pays BMR under the
Investment Advisory Agreement on average daily net assets up to $1.5 billion,
see the prospectus. On net assets of $1.5 billion 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)
- -------------------------------------- -------------------
$1.5 billion but less than $7 billion ..................... 0.4375%
$7 billion but less than $10 billion ...................... 0.4250%
$10 billion and over ...................................... 0.4125%
As of December 31, 1998, the Portfolio had net assets of $8,704,859,335. For
the period from November 1, 1998, to December 31, 1998, the Portfolio paid BMR
advisory fees of $6,020,740 (equivalent to 0.46% (annualized) of the Portfolio's
average daily net assets for the period). For the fiscal years ended October 31,
1998 and 1997 and for the period from the start of business, December 1, 1995,
to October 31, 1996, the Portfolio paid BMR advisory fees of $24,370,514,
$9,455,900 and $2,116,576, respectively, (equivalent to 0.47%, 0.53% and 0.618%
(annualized), respectively, of the Portfolio's average daily net assets for each
such year).
The Investment Advisory Agreement with BMR continues in effect from year to
year for so long as such continuance is approved at least annually (i) by the
vote of a majority of the noninterested Trustees of the Portfolio cast in person
at a meeting specifically called for the purpose of voting on such approval and
(ii) by the Board of Trustees of the Portfolio or by vote of a majority of the
outstanding voting securities of the Portfolio. The Agreement may be terminated
at any time without penalty on sixty days' written notice by the Board of
Trustees of either party, or by vote of the majority of the outstanding voting
securities of the Portfolio, and the Agreement will terminate automatically in
the event of its assignment. The Agreement provides that BMR may render services
to others. The Agreement also provides that BMR shall not be liable for any loss
incurred in connection with the performance of its duties, or action taken or
omitted under that Agreement, in the absence of willful misfeasance, bad faith,
gross negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties thereunder, or for any losses sustained
in the acquisition, holding or disposition of any security or other investment.
ADMINISTRATIVE SERVICES. As indicated in the prospectus, Eaton Vance serves as
administrator of the Fund, but currently receives no compensation for providing
administrative services to the Fund. Under its Administrative Services Agreement
with the Trust, Eaton Vance has been engaged to administer the Fund's affairs,
subject to the supervision of the Trustees of the Trust, and shall furnish for
the use of the Fund office space and all necessary office facilities, equipment
and personnel for administering the affairs of the Fund.
INFORMATION ABOUT BMR AND EATON VANCE. BMR and Eaton Vance are business
trusts organized under Massachusetts law. Eaton Vance, Inc. ("EV") serves as
trustee of BMR and Eaton Vance. BMR, Eaton Vance and EV are wholly-owned
subsidiaries of Eaton Vance Corporation ("EVC"), a Maryland corporation and
publicly-held holding company. EVC through its subsidiaries and affiliates
engages primarily in investment management, administration and marketing
activities. The Directors of EVC are James B. Hawkes, Benjamin A. Rowland,
Jr., John G.L. Cabot, John M. Nelson, Vincent M. O'Reilly and Ralph Z.
Sorenson. All of the issued and outstanding shares of Eaton Vance are owned by
EVC. All of the issued and outstanding shares of BMR are owned by Eaton Vance.
All shares of the outstanding Voting Common Stock of EVC are deposited in a
Voting Trust, the Voting Trustees of which are Messrs. Hawkes, and Rowland,
Alan R. Dynner, Thomas E. Faust, Jr., Thomas J. Fetter, Duncan W. Richardson,
William M. Steul, and Wharton P. Whitaker (all of whom are officers of Eaton
Vance). The Voting Trustees have unrestricted voting rights for the election
of Directors of EVC. All of the outstanding voting trust receipts issued under
said Voting Trust are owned by certain of the officers of BMR and Eaton Vance
who are also officers, or officers and Directors of EVC and EV. As indicated
under "Management and Organization", all of the officers of the Trust (as well
as Mr. Hawkes who is also a Trustee) hold positions in the Eaton Vance
organization.
EXPENSES. The Fund and Portfolio are each responsible for all expenses not
expressly stated to be payable by another party (such as the investment adviser
under the Investment Advisory Agreement, Eaton Vance under the Administrative
Services Agreement or the principal underwriter under the Distribution
Agreement). In the case of expenses incurred by the Trust, the Fund is
responsible for its pro rata share of those expenses. The only expenses of the
Fund allocated to a particular class are those incurred under the Distribution
or Service Plan applicable to that class and those resulting from the fee paid
to the principal underwriter for repurchase transactions.
OTHER SERVICE PROVIDERS
PRINCIPAL UNDERWRITER. Eaton Vance Distributors, Inc. ("EVD"), The Eaton Vance
Building, 255 State Street, Boston, MA 02109, is the Fund's principal
underwriter. The principal underwriter acts as principal in selling shares under
a Distribution Agreement with the Trust. The expenses of printing copies of
prospectuses used to offer shares and other selling literature and of
advertising are borne by the principal underwriter. The fees and expenses of
qualifying and registering and maintaining qualifications and registrations of
the Fund and its shares under federal and state securities laws are borne by the
Fund. The Distribution Agreement is renewable annually by the Board of Trustees
of the Trust (including a majority of the noninterested Trustees) may be
terminated on six months' notice by either party and is automatically terminated
upon assignment. The principal underwriter distributes shares on a "best
efforts" basis under which it is required to take and pay for only such shares
as may be sold. EVD is a wholly-owned subsidiary of EVC. Mr. Hawkes is a Vice
President and Director and Messrs. Dynner and O'Connor are Vice Presidents
of EVD.
CUSTODIAN. Investors Bank & Trust Company ("IBT"), 200 Clarendon Street, Boston,
MA 02116, serves as custodian to the Fund and Portfolio. IBT has the custody of
all cash and securities representing the Fund's interest in the Portfolio, has
custody of the Portfolio's assets, maintains the general ledger of the Portfolio
and the Fund and computes the daily net asset value of 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 disburses all
funds and performs various other ministerial duties upon receipt of proper
instructions from the Trust and the Portfolio. IBT also provides services in
connection with the preparation of shareholder reports and the electronic filing
of such reports with the SEC. EVC and its affiliates and their officers and
employees from time to time have transactions with various banks, including IBT.
It is Eaton Vance's opinion that the terms and conditions of such transactions
were not and will not be influenced by existing or potential custodial or other
relationships between the Fund or the Portfolio and such banks.
INDEPENDENT ACCOUNTANTS. Deloitte & Touche LLP, 125 Summer Street, Boston,
Massachusetts, are the independent accountants of the Fund and the Portfolio,
providing audit services, tax return preparation, and assistance and
consultation with respect to the preparation of filings with the SEC.
TRANSFER AGENT. First Data Investor Services Group, P.O. Box 5123,
Westborough, MA 01581-5123, serves as transfer and dividend disbursing agent
for the Fund.
PURCHASING AND REDEEMING SHARES
CALCULATION OF NET ASSET VALUE. The net asset value of the Portfolio is computed
by IBT (as agent and custodian for the Portfolio) by subtracting the liabilities
of the Portfolio from the value of its total assets. The Fund and the Portfolio
will be closed for business and will not price their respective shares or
interests on the following business holidays: New Year's Day, Martin Luther
King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day.
Each investor in the Portfolio, including the Fund, may add to or reduce its
investment in the Portfolio on each day the Exchange is open for trading
("Portfolio Business Day") as of the close of regular trading on the Exchange
(the "Portfolio Valuation Time"). The value of each investor's interest in the
Portfolio will be determined by multiplying the net asset value of the Portfolio
by the percentage, determined on the prior Portfolio Business Day, which
represented that investor's share of the aggregate interests in the Portfolio on
such prior day. Any additions or withdrawals for the current Portfolio Business
Day will then be recorded. Each investor's percentage of the aggregate interest
in the Portfolio will then be recomputed as the percentage equal to a fraction
(i) the numerator of which is the value of such investor's investment in the
Portfolio as of the close of Portfolio Valuation Time on the prior Portfolio
Business Day plus or minus, as the case may be, that amount of any additions to
or withdrawals from the investor's investment in the Portfolio on the current
Portfolio Business Day, and (ii) the denominator of which is the aggregate net
asset value of the Portfolio as of the Portfolio Valuation Time on the prior
Portfolio Business Day plus or minus, as the case may be, the amount of the net
additions to or withdrawals from the aggregate investment in the Portfolio on
the current Portfolio Business Day by all investors in the Portfolio. The
percentage so determined will then be applied to determine the value of the
investor's interest in the Portfolio for the current Portfolio Business Day.
The 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 price.
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.
Generally, trading in the foreign securities owned by the Portfolio is
substantially completed each day at various times prior to the close of the
Exchange. The values of these securities used in determining the net asset value
of the Portfolio's shares generally 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.
ADDITIONAL INFORMATION ABOUT PURCHASES. Institutional Shares may be sold at net
asset value to current and retired Directors and Trustees of Eaton Vance funds,
including the Portfolio; to current and retired officers and employees of Eaton
Vance, its affiliates and other investment advisers of Eaton Vance sponsored
funds; to investment clients and institutional clients (including corporations,
foundations, pension and other retirement plans and certain individuals) of
Eaton Vance and its affiliates; to officers and employees of IBT and the
transfer agent; and to such persons' spouses, parents, siblings and children and
their beneficial accounts. Such shares may also be issued at net asset value (1)
in connection with the merger of an investment company or series or class
thereof with the Fund, (2) to investors making an investment as part of a fixed
fee program whereby an entity unaffiliated with the investment adviser provides
multiple investment services, such as management, brokerage and custody, and (3)
to investment advisors, financial planners or other intermediaries who place
trades for their own accounts or the accounts of their clients and who charge a
management, consulting or other fee for their services; clients of such
investment advisors, financial planners or other intermediaries who place trades
for their own accounts if the accounts are linked to the master account of such
investment advisor, financial planner or other intermediary on the books and
records of the broker or agent; and retirement and deferred compensation plans
and trusts used to fund those plans, including, but not limited to, those
defined in Section 401(a), 403(b) or 457 of the Internal Revenue Code of 1986,
as amended (the "Code") and "rabbi trusts". Subject to the applicable provisions
of the 1940 Act, the Trust may issue Institutional Shares at net asset value in
the event that an investment company (whether a regulated or private investment
company or a personal holding company) is merged or consolidated with or
acquired by the Class. Institutional Shares may be sold at net asset value to
any investment advisory, agency, custodial or trust account managed or
administered by Eaton Vance or by any parent, subsidiary or other affiliate of
Eaton Vance.
SUSPENSION OF SALES. The Trust may, in its absolute discretion, suspend,
discontinue or limit the offering of one or more of its classes of shares at any
time. In determining whether any such action should be taken, the Trust's
management intends to consider all relevant factors, including (without
limitation) the size of the Fund or class, the investment climate and market
conditions, and the volume of sales and redemptions of shares.
ACQUIRING FUND SHARES IN EXCHANGE FOR SECURITIES. IBT, as escrow agent, will
receive securities acceptable to Eaton Vance, as administrator, in exchange for
Fund shares. The minimum value of securities (or securities and cash) accepted
for deposit is $250,000. Securities accepted will be sold on the day of their
receipt or as soon thereafter as possible. The number of Fund shares to be
issued in exchange for securities will be the aggregate proceeds from the sale
of such securities, divided by the net asset value on the day such proceeds are
received. Eaton Vance will use reasonable efforts to obtain the then current
market price for such securities but does not guarantee the best available
price. Eaton Vance will absorb any transaction costs, such as commissions, on
the sale of securities. Securities determined to be acceptable should be
transferred via book entry or physically delivered, in proper form for transfer,
through an investment dealer, together with a completed and signed Letter of
Transmittal in approved form (available from investment dealers). Investors who
are contemplating an exchange of securities for shares, or their
representatives, must contact Eaton Vance to determine whether the securities
are acceptable before forwarding such securities. Eaton Vance reserves the right
to reject any securities. Exchanging securities for shares may create a taxable
gain or loss. Each investor should consult his or her tax adviser with respect
to the particular federal, state and local tax consequences of exchanging
securities.
ADDITIONAL INFORMATION ABOUT REDEMPTIONS. The right to redeem shares of the Fund
can be suspended and the payment of the redemption price deferred when the
Exchange is closed (other than for customary weekend and holiday closings),
during periods when trading on the Exchange is restricted as determined by the
SEC, or during any emergency as determined by the SEC which makes it
impracticable for the Portfolio to dispose of its securities or value its
assets, or during any other period permitted by order of the SEC for the
protection of investors.
Due to the high cost of maintaining small accounts, the Trust reserves the
right to redeem accounts with balances of less than $750. Prior to such a
redemption, shareholders will be given 60 days' written notice to make an
additional purchase. However, no such redemption would be required by the Trust
if the cause of the low account balance was a reduction in the net asset value
of shares. No CDSC will be imposed with respect to such involuntary redemptions.
SYSTEMATIC WITHDRAWAL PLAN. The transfer agent will send to the shareholder
regular monthly or quarterly payments of any permitted amount designated by the
shareholder based upon the value of the shares held. The checks will be drawn
from share redemptions and, hence, may require the recognition of taxable gain
or loss. Income dividends and capital gains distributions in connection with
withdrawal plan accounts will be credited at net asset value as of the record
date for each distribution. Continued withdrawals in excess of current income
will eventually use up principal, particularly in a period of declining market
prices. A shareholder may not have a withdrawal plan in effect at the same time
he or she has authorized Bank Automated Investing or is otherwise making regular
purchases of Fund shares. The shareholder, the transfer agent or the principal
underwriter will be able to terminate the withdrawal plan at any time without
penalty.
PERFORMANCE
Average annual total return is determined separately for each Class of the
Fund by multiplying a hypothetical initial purchase order of $1,000 by the
average annual compound rate of return (including capital appreciation/
depreciation, and distributions paid and reinvested) for the stated period and
annualizing the result. The calculation assumes that all distributions are
reinvested at net asset value on the reinvestment dates during the period and a
complete redemption of the investment. Total return may also be calculated based
on a purchase at net asset value and at varying sales charge levels. For
information concerning the total return of Institutional Shares, see Appendix A.
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.
Total return may be compared to relevant indices, such as the Consumer Price
Index and various domestic and foreign securities indices. The Fund's total
return and comparisons with these indices may be used in advertisements and in
information furnished to present or prospective shareholders. In addition,
evaluations of the Fund's performance or rankings of mutual funds (which include
the Fund) made by independent sources may be used in advertisements and in
information furnished to present or prospective shareholders. Information,
charts and illustrations showing the effect of compounding interest or relating
to inflation and taxes (including their effects on the dollar and the return on
stocks and other investment vehicles) may also be included in advertisements and
materials furnished to present and prospective investors. 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 or included in various publications
reflecting the investment performance or return achieved by various classes and
types of investments (e.g. common stocks, small company stocks, long-term
corporate bonds, long-term government bonds, intermediate- term government
bonds, U.S. Treasury bills) over various periods of time. This information may
be used to illustrate the benefits of long-term investments in common stocks.
Information used in advertisements and in materials provided to present and
prospective shareholders may include descriptions of Eaton Vance and other Fund
and Portfolio service providers, their investment styles, other investment
products, personnel and Fund distribution channels.
Information about the allocation and holdings of investments in the
Portfolio may be included in advertisements and other material furnished to
present and prospective shareholders.
Information used in advertisements and materials furnished to present and
prospective investors may include statements or illustrations relating to the
appropriateness of certain types of securities and/or mutual funds to meet
specific financial goals. Such information may address:
-- 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 Trust (or Principal Underwriter) may provide information about Eaton
Vance, its affiliates and other investment advisers to the funds in the Eaton
Vance Family of Funds in sales material or advertisements provided to investors
or prospective investors. Such material or advertisements may also provide
information on the use of investment professionals by such investors.
TAXES
Each series of the Trust, is treated as a separate entity for federal income
tax purposes. The Fund intends to elect to be treated, and to qualify each year
as a regulated investment company ("RIC") under the Code. Accordingly, the Fund
intends to satisfy certain requirements relating to sources of its income and
diversification of its assets and to distribute a sufficient amount of any
investment company taxable income so as to effect such qualification. The Fund
may also distribute part or all of any net investment income and net realized
capital gains in accordance with the timing requirements imposed by the Code, so
as to reduce or avoid any federal income or excise tax.
Because the Fund invests its assets in the Portfolio, the Portfolio normally
must satisfy the applicable source of income and diversification requirements in
order for the Fund to also satisfy them, and the Portfolio intends to do so. For
federal income tax purposes, the Portfolio intends to be treated as a
partnership that is not a "publicly traded partnership" and, as a result, will
not be subject to federal income tax. The Fund, as an investor in the Portfolio,
will be required to take into account in determining its federal income tax
liability its share of the Portfolio's income, gains, losses, deductions, and
credits, without regard to whether it has received any cash distributions from
the Portfolio.
The Portfolio will allocate at least annually among its investors, including
the Fund, each investor's distributive share of the Portfolio's net investment
income, net realized capital gains, and any other items of income, gain, loss,
deduction or credit. For purposes of applying the requirements of the Code
regarding qualification as a RIC, the Fund (i) will be deemed to own its
proportionate share of each of the assets of the Portfolio and (ii) will be
entitled to the gross income of the Portfolio attributable to such share.
In order to avoid excise tax, the Code requires the Fund to distribute by
the end of each calendar year substantially all of its ordinary income for such
year and capital gain net income for the one-year period ending on October 31 of
such year, plus certain other amounts. Under current law, provided the Fund
qualifies as a RIC and the Portfolio is treated as a partnership for
Massachusetts and federal tax purposes, neither the Fund nor the Portfolio
should be liable for any income, corporate excise or franchise tax in the
Commonwealth of Massachusetts.
The Fund may retain for investment its net capital gain. However, if the
Fund does so, it will be subject to a tax of 35% on the amount retained. In that
event, the Fund expects to designate the retained amount as undistributed
capital gain in a notice to its Shareholders, who (i) will be required to
include in income for tax purposes, as long-term capital gain, their
proportionate shares of such undistributed amount, (ii) will be entitled to
credit their proportionate shares of the 35% tax paid by the Fund against their
federal income tax liabilities, if any, and to claim refunds to the extent the
credit exceeds those liabilities, and (iii) will increase the tax basis of their
Fund Shares by an amount equal to 65% of the amount of undistributed capital
gain included in their gross income.
A portion of distributions made by the Fund (that are derived from dividends
received by the Portfolio) from domestic corporations and allocated to the Fund
may qualify for the dividends-received deduction ("DRD") for corporations. The
DRD is reduced to the extent the shares of the Fund with respect to which the
dividends are received are treated as debt-financed under the Code and is
eliminated if the shares are deemed to have been held for less than a minimum
period, generally 46 days. Receipt of certain distributions qualifying for the
DRD may result in reduction of the tax basis of the corporate shareholder's
shares. Distributions eligible for the DRD may give rise to or increase an
alternative minimum tax for certain corporations.
Under the Code, the redemption or exchange of shares of a RIC normally
results in capital gain or loss if such shares are held as capital assets.
However, a loss realized on a redemption or other disposition of Fund shares may
be disallowed under certain "wash sale" rules if shares of the Fund are acquired
within a period beginning 30 days before and ending 30 days after the date of
such redemption or other disposition. Any disallowed loss will result in an
adjustment to the shareholder's tax basis in some or all of the other shares
acquired.
Any loss realized upon the redemption or exchange of a Fund with a tax
holding period of six 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.
Certain investors in the Portfolio, including RICs, have acquired interests
in the Portfolio by contributing securities. Due to tax considerations, during
the first seven years following the contribution of securities (or within five
years for securities contributed prior to June 9, 1997) 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 the
applicable time period 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. If securities are contributed
to the Fund in a tax-free transaction, the Fund will be liable for any pre-
contribution gain if such securities are sold.
PORTFOLIO SECURITY TRANSACTIONS
Decisions concerning the execution of portfolio security transactions,
including the selection of the market and the executing 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 firms. BMR uses its
best efforts to obtain execution of portfolio transactions at prices which are
advantageous and (when a disclosed commission is being charged) at reasonably
competitive commission rates. In seeking such execution, BMR will use its best
judgment in evaluating the terms of a transaction, and will give consideration
to various relevant factors, including without limitation the full range and
quality of the broker-dealer's services, the value of the brokerage and research
services provided, the responsiveness of the broker-dealer to BMR, the size and
type of the transaction, the nature and character of the market for the
security, the confidentiality, speed and certainty of effective execution
required for the transaction, the general execution and operational capabilities
of the executing firm, the reputation, reliability, experience and financial
condition of the firm, the value and quality of services rendered by the firm in
this and other transactions, and the reasonableness of the commission, if any.
Transactions on stock exchanges and other agency transactions involve the
payment of negotiated brokerage commissions. Such commissions vary among
different 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 usually includes an undisclosed dealer markup or
markdown. In an underwritten offering the price paid 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 firms who were
selected to execute transactions on behalf of the Portfolio and BMR's other
clients 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 may receive a commission
which is in excess of the amount of commission another broker or dealer would
have charged for effecting that transaction if BMR determines in good faith that
such compensation was reasonable in relation to the value of the brokerage and
research services provided. This determination may be made either on the basis
of 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,
analytical, statistical and quotation services, data, information and other
services, products and materials which assist such advisers in the performance
of their investment responsibilities ("Research Services") from broker-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 it places the portfolio transactions and from third parties with which
these broker-dealers have arrangements. These Research Services may include such
matters as general economic, political, business and market information,
industry and company reviews, evaluations of securities and portfolio strategies
and transactions, proxy voting data and analysis services, technical analysis of
various aspects of the securities markets, 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 portfolio securitiy transactions to such firms to ensure the
continued receipt of Research Services which BMR believes are useful or of value
to it in rendering investment advisory services to its clients.
The Fund and BMR may also receive Research Services from underwriters and
dealers in fixed price offerings, which Research Services are reviewed and
evaluated by BMR in connection with its investment responsibilities. The
investment companies sponsored by BMR or Eaton Vance may allocate brokerage
commissions to acquire information relating to the performance, fees and
expenses of such companies and other mutual funds, which information is used by
the Trustees of such companies to fulfill their responsibility to oversee the
quality of the services provided by various entities, including BMR, to such
companies. Such companies may also pay cash for such information.
Subject to the requirement that BMR shall use its best efforts to seek to
execute portfolio security transactions of the Fund 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 NASD, which rule provides
that no firm which is a member of the NASD shall favor or disfavor the
distribution of shares of any particular investment company or group of
investment companies on the basis of brokerage commissions received or expected
by such firm from any source.
Securities considered as investments for the Portfolio may also be
appropriate for other investment accounts managed by BMR or its affiliates.
Whenever decisions are made to buy or sell securities by the Porttolio and one
or more of such other accounts simultaneously, BMR will allocate the security
transactions (including "hot" issues) in a manner which it believes to be
equitable under the circumstances. As a result of such allocations, there may be
instances where the Portfolio will not participate in a transaction that is
allocated among other accounts. If an aggregated order cannot be filled
completely, allocations will generally be made on a pro rata basis. An order may
not be allocated on a pro rata basis where, for example: (i) consideration is
given to portfolio managers who have been instrumental in developing or
negotiating a particular investment; (ii) consideration is given to an account
with specialized investment policies that coincide with the particulars of a
specific investment; (iii) pro rata allocation would result in odd-lot or de
minimis amounts being allocated to a portfolio or other client; or (iv) where
BMR reasonably determines that departure from a pro rata allocation is
advisable. While these aggregation and allocation policies could have a
detrimental effect on the price or amount of the securities available to the
Portfolio from time to time, it is the opinion of the Trustees of the Portfolio
that the benefits from BMR's organization outweigh any disadvantage that may
arise from exposure to simultaneous transactions.
For the period from November 1, 1998 to December 31, 1998, for the fiscal
years ended October 31, 1998 and 1997 and for the period from the Portfolio's
start of business, December 1, 1995, to October 31, 1996, the Portfolio paid
brokerage commissions of $577,400, $2,367,391, $1,019,496 and $144,815,
respectively, on portfolio security transactions. Of these amounts,
approximately $571,400, $1,542,207, $832,436 and $112,018, respectively, was
paid in respect of portfolio security transactions aggregating approximately
$538,746,955, $2,248,322,320, $740,796,988 and $89,523,457, respectively, to
firms which provided some Research Services to the investment adviser's
organization (although many of such firms may have been selected in any
particular transaction primarily because of their execution capabilities).
FINANCIAL STATEMENTS
The audited financial statements of and the independent auditors' reports
for the Fund and the Portfolio, appear in the Fund's most recent annual report
to shareholders, which is incorporated by reference into this SAI. A copy of the
Fund's annual report accompanies this SAI. Consistent with applicable law,
duplicate mailings of shareholder reports and certain other Fund information to
shareholders residing at the same address may be eliminated.
Registrant incorporates by reference the audited financial information for
the Fund and the Portfolio for the fiscal year ended December 31, 1998, as
previously filed electronically with the Commission (Accession No.
0000950109-99-000763).
<PAGE>
APPENDIX A
INSTITUTIONAL SHARES PERFORMANCE
PERFORMANCE INFORMATION
The table below indicates the cumulative and average annual total return on
a hypothetical investment of $1,000 in the Retail Shares of the Fund, adjusted
to eliminate the sales charge applicable to Retail Shares (but not adjusted to
reflect certain other differences in expenses). 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.
<TABLE>
<CAPTION>
VALUE OF $1,000 INVESTMENT
VALUE OF TOTAL RETURN
INVESTMENT INVESTMENT AMOUNT OF INVESTMENT -----------------------
PERIOD DATE INVESTMENT ON 12/31/98 CUMULATIVE ANNUALIZED
---------- ---------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
10 Years Ended 12/31/98 12/31/88 $1,000.00 $5,754.25 75.42% 19.12%
5 Years Ended 12/31/98 12/31/93 $1,000.00 $3,035.57 203.56% 24.87%
1 Year Ended 12/31/98 12/31/97 $1,000.00 $1,257.53 25.75% 25.75%
</TABLE>
<PAGE>
PART C - OTHER INFORMATION
ITEM 23. EXHIBITS
(a)(1) Amended and Restated Declaration of Trust of Eaton Vance Mutual
Funds Trust dated August 17, 1993, filed as Exhibit (1)(a) to
Post-Effective Amendment No. 23 and incorporated herein by
reference.
(2) Amendment dated July 10, 1995 to the Declaration of Trust filed as
Exhibit (1)(b) to Post-Effective Amendment No. 23 and incorporated
herein by reference.
(3) Amendment dated June 23, 1997 to the Declaration of Trust filed as
Exhibit (1)(c) to Post-Effective Amendment No. 38 and incorporated
herein by reference.
(4) Amendment and Restatement of Establishment and Designation of Shares
dated January 6, 1998 filed as Exhibit (1)(d) to Post-Effective
Amendment No. 41 and incorporated herein by reference.
(b)(1) By-Laws as amended November 3, 1986 filed as Exhibit (2)(a) to
Post-Effective Amendment No. 23 and incorporated herein by
reference.
(2) Amendment to By-Laws of Eaton Vance Mutual Funds Trust dated
December 13, 1993 filed as Exhibit (2)(b) to Post-Effective
Amendment No. 23 and incorporated herein by reference.
(c) Reference is made to Item 23(a) and 23(b) above.
(d)(1) 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.
(2) 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.
(3) Investment Advisory Agreement with Eaton Vance Management for Eaton
Vance Tax-Managed Emerging Growth Fund dated September 16, 1997
filed as Exhibit (5)(c) to Post-Effective Amendment No. 37 and
incorporated herein by reference.
(4) Investment Advisory Agreement with Eaton Vance Management for Eaton
Vance Municipal Bond Fund dated October 17, 1997 filed as Exhibit
(5)(d) to Post-Effective Amendment No. 37 and incorporated herein by
reference.
(5) Investment Advisory Agreement with Eaton Vance Management for Eaton
Vance Tax-Managed International Growth Fund dated March 4, 1998
filed as Exhibit (5)(e) to Post-Effective Amendment No. 42 and
incorporated herein by reference.
(e)(1) Distribution Agreement between Eaton Vance Mutual Funds Trust, on
behalf of Eaton Vance Cash Management Fund, and Eaton Vance
Distributors, Inc. effective November 1, 1996 filed as Exhibit
(6)(a)(4) to Post-Effective Amendment No. 34 and incorporated herein
by reference.
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<PAGE>
(2) Distribution Agreement Between Eaton Vance Mutual Funds Trust, on
behalf of Eaton Vance Liquid Assets Fund, and Eaton Vance
Distributors, Inc. effective November 1, 1996 filed as Exhibit
(6)(a)(5) to Post-Effective Amendment No. 34 and incorporated herein
by reference.
(3) Distribution Agreement between Eaton Vance Mutual Funds Trust, on
behalf of Eaton Vance Money Market Fund, and Eaton Vance
Distributors, Inc. effective November 1, 1996 filed as Exhibit
(6)(a)(6) to Post-Effective Amendment No. 34 and incorporated herein
by reference.
(4) Distribution Agreement between Eaton Vance Mutual Funds Trust, on
behalf of Eaton Vance Tax Free Reserves, and Eaton Vance
Distributors, Inc. effective November 1, 1996 filed as Exhibit
(6)(a)(7) to Post-Effective Amendment No. 34 and incorporated herein
by reference.
(5) Distribution Agreement between Eaton Vance Mutual Funds Trust (on
behalf of certain of its series), and Eaton Vance Distributors, Inc.
effective June 23, 1997 with attached Schedules filed as Exhibit
(6)(a)(8) to Post-Effective Amendment No. 38 and incorporated herein
by reference.
(i) Amendment to Distribution Agreement dated October 17, 1997 filed as
Exhibit (6)(a)(9) to Post-Effective Amendment No. 38 and
incorporated herein by reference.
(ii) Schedule A-2 to Distribution Agreement dated March 4, 1998, filed as
Exhibit (6)(a)(5)(ii) to Post-Effective Amendment No. 42 and
incorporated herein by reference.
(6) Selling Group Agreement between Eaton Vance Distributors, Inc. and
Authorized Dealers filed as Exhibit (6)(b) to the Post-Effective
Amendment No. 61 to the Registration Statement of Eaton Vance Growth
Trust (File Nos. 2-22019, 811-1241) and incorporated herein by
reference.
(f) The Securities and Exchange Commission has granted the Registrant an
exemptive order that permits the Registrant to enter into deferred
compensation arrangements with its independent Trustees. See in the
Matter of Capital Exchange Fund, Inc., Release No. IC-20671
(November 1, 1994).
(g)(1) 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.
(2) 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.
(3) Amendment to Master Custodian Agreement with Investors Bank & Trust
Company dated December 21, 1998 filed as Exhibit (g)(3) to the
Registration Statement of Eaton Vance Municipals Trust (File Nos.
33-572, 811-4409)(Accession No. 0000950156-99-000050) and
incorporated herein by reference.
(h)(1)(a) Amended Administrative Services Agreement between Eaton Vance Mutual
Funds Trust (on behalf of certain of its series) and Eaton Vance
Management dated July 31, 1995 with attached schedules (including
Amended Schedule A dated May 7, 1996) filed as Exhibit (9)(a) to
Post-Effective Amendment No. 24 and incorporated herein by
reference.
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<PAGE>
(b) Amendment to Schedule A dated June 23, 1997 to the Amended
Administrative Services Agreement dated July 31, 1995 filed as
Exhibit (9)(a)(1) to Post-Effective Amendment No. 38 and
incorporated herein by reference.
(2) Transfer Agency Agreement dated January 1, 1998 filed as Exhibit
(k)(b) to the Registration Statement on Form N-2 of Eaton Vance
Advisers Senior Floating-Rate Fund (File Nos. 333-46853, 811-08671)
(Accession No. 0000950156-98-000172) and incorporated herein by
reference.
(i)(1) Opinion of Internal Counsel filed as Exhibit No. (i) to
Post-Effective Amendment No. 47 and incorporated herein by
reference.
(2) Consent of Internal Counsel filed herewith.
(j) Independent Auditors' Consent for Eaton Vance Tax-Managed Growth
Fund and Tax-Managed Growth Portfolio filed herewith.
(k) Not applicable
(l) Not applicable
(m)(1)(a) 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.
(b) Amendment to Distribution Plan for Eaton Vance Mutual Funds Trust on
behalf of Eaton Vance Short-Term Treasury Fund adopted June 24, 1996
filed as Exhibit (15)(b)(1) to Post-Effective Amendment No. 34 and
incorporated herein by reference.
(2)(a) 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)(g) to Post-Effective Amendment No. 25 and
incorporated herein by reference.
(b) Amendment to Distribution Plan for Eaton Vance Mutual Funds Trust on
behalf of Eaton Vance Liquid Assets Fund adopted June 24, 1996 filed
as Exhibit (15)(g)(1) to Post-Effective Amendment No. 34 and
incorporated herein by reference.
(3)(a) 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)(h) to Post-Effective Amendment No. 25 and
incorporated herein by reference.
(b) Amendment to Distribution Plan for Eaton Vance Mutual Funds Trust on
behalf of Eaton Vance Money Market Fund adopted June 24, 1996 filed
as Exhibit (15)(h)(1) to Post-Effective Amendment No. 34 and
incorporated herein by reference.
(4)(a) Eaton Vance Mutual Funds Trust Class A Service Plan adopted June 23,
1997 with attached Schedules filed as Exhibit (15)(i) to
Post-Effective Amendment No. 38 and incorporated herein by
reference.
(b) Schedule A-2 to Class A Service Plan dated March 4, 1998, filed as
Exhibit (15)(d)(1) to Post-Effective Amendment No. 42 and
incorporated herein by reference.
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<PAGE>
(5)(a) Eaton Vance Mutual Funds Trust Class B Distribution Plan adopted
June 23, 1997 with attached Schedules filed as Exhibit (15)(j) to
Post-Effective Amendment No. 38 and incorporated herein by
reference.
(b) Schedule A-2 to Class B Distribution Plan dated March 4, 1998, filed
as Exhibit (15)(e)(1) to Post-Effective Amendment No. 42 and
incorporated herein by reference.
(6)(a) Eaton Vance Mutual Funds Trust Class C Distribution Plan adopted
June 23, 1997 with attached Schedules filed as Exhibit (15)(k) to
Post-Effective Amendment No. 38 and incorporated herein by
reference.
(b) Schedule A-2 to Class C Distribution Plan dated March 4, 1998, filed
as Exhibit (15)(f)(1) to Post-Effective Amendment No. 42 and
incorporated herein by reference.
(n) Not applicable.
(o)(1)(a) Multiple Class Plan for Eaton Vance Funds dated June 23, 1997 filed
as Exhibit (18) to Post-Effective Amendment No. 37 and incorporated
herein by reference.
(b) Schedule A-4 to Multiple Class Plan dated January 6, 1998 filed as
Exhibit (18)(a)(1) to Post-Effective Amendment No. 42 and
incorporated herein by reference.
(p)(1) Power of Attorney for Eaton Vance Mutual Funds Trust dated June 23,
1997 filed as Exhibit No. (17)(a) to Post-Effective Amendment No. 35
and incorporated herein by reference.
(a) Power of Attorney for Eaton Vance Mutual Funds Trust dated November
16, 1998 filed as Exhibit (p)(1) to Post-Effective Amendment No. 47
and incorporated herein by reference.
(2) Power of Attorney for Government Obligations Portfolio dated April
22, 1997 filed as Exhibit (17)(b) to Post-Effective Amendment No. 36
and incorporated herein by reference.
(a) Power of Attorney for Government Obligations Portfolio dated
November 16, 1998 filed as Exhibit (p)(2)(a) to Post-Effective
Amendment No. 48 and incorporated herein by reference.
(3) Power of Attorney for High Income Portfolio dated February 14, 1997
filed as Exhibit No. (17)(c) to Post-Effective Amendment No. 36 and
incorporated herein by reference.
(a) Power of Attorney for High Income Portfolio dated November 16, 1998
filed as Exhibit (p)(3) to Post-Effective Amendment No. 47 and
incorporated herein by reference.
(4) Power of Attorney for Strategic Income Portfolio dated April 22,
1997 filed as Exhibit No. (17)(d) to Post-Effective Amendment No. 36
and incorporated herein by reference.
(a) Power of Attorney for Strategic Income Portfolio dated November 16,
1998 filed as Exhibit (p)(4) to Post-Effective Amendment No. 47 and
incorporated herein by reference.
(5) Power of Attorney for Cash Management Portfolio dated April 22, 1997
filed as Exhibit (17)(e) to Post-Effective Amendment No. 36 and
incorporated herein by reference.
(a) Power of Attorney for Cash Management Portfolio dated November 16,
1998 filed as Exhibit (p)(5)(a) to Post-Effective Amendment No. 48
and incorporated herein by reference.
C-4
<PAGE>
(6) Power of Attorney for Tax-Managed Growth Portfolio dated February
20, 1998 filed as Exhibit No. (17)(f) to Post-Effective Amendment
No. 41 and incorporated herein by reference.
(a) Power of Attorney for Tax-Managed Growth Portfolio dated November
16, 1998 filed as Exhibit (p)(6) to Post-Effective Amendment No. 47
and incorporated herein by reference.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL
Not applicable
ITEM 25. INDEMNIFICATION
Article IV of the Registrant's Amended and Restated Declaration of Trust
permits Trustee and officer indemnification by By-law, contract and vote.
Article XI of the By-Laws contains indemnification provisions. Registrant's
Trustees and officers are insured under a standard mutual fund errors and
omissions insurance policy covering loss incurred by reason of negligent errors
and omissions committed in their capacities as such.
The distribution agreements of the Registrant also provide for reciprocal
indemnity of the principal underwriter, on the one hand, and the Trustees and
officers, on the other.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT Adviser
Reference is made to: (i) the information set forth under the caption
"Management and Organization" in the Statement of Additional Information; (ii)
the Eaton Vance Corp. 10-K filed under the Securities Exchange Act of 1934 (File
No. 1-8100); and (iii) the Form ADV of Eaton Vance Management (File No.
801-15930) and Boston Management and Research (File No. 801-43127) filed with
the Commission, all of which are incorporated herein by reference.
ITEM 27. PRINCIPAL UNDERWRITERS
(a) Registrant's principal underwriter, Eaton Vance Distributors, Inc., a
wholly-owned subsidiary of Eaton Vance Management, is the principal
underwriter for each of the investment companies named below:
Eaton Vance Advisers Senior Floating-Rate Fund Eaton Vance Municipals Trust II
Eaton Vance Growth Trust Eaton Vance Mutual Funds Trust
Eaton Vance Income Fund of Boston Eaton Vance Prime Rate Reserves
Eaton Vance Institutional Senior Eaton Vance Special Investment
Floating-Rate Fund Trust
Eaton Vance Investment Trust EV Classic Senior Floating-Rate
Eaton Vance Municipals Trust Fund
(b)
<TABLE>
<CAPTION>
<S> <C> <C>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address* with Principal Underwriter with Registrant
----------------- -------------------------- --------------------
Albert F. Barbaro Vice President None
Chris Berg Vice President None
Kate B. Bradshaw Vice President None
Mark Carlson Vice President None
Daniel C. Cataldo Vice President None
Raymond Cox Vice President None
Peter Crowley Vice President None
Mark P. Doman Vice President None
Alan R. Dynner Vice President Secretary
Richard A. Finelli Vice President None
</TABLE>
C-5
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address* with Principal Underwriter with Registrant
----------------- -------------------------- --------------------
Kelly Flynn Vice President None
James Foley Vice President None
Michael A. Foster Vice President None
William M. Gillen Senior Vice President None
Hugh S. Gilmartin Vice President None
James B. Hawkes Vice President and Director PRESIDENT AND TRUSTEE
Perry D. Hooker Vice President None
Brian Jacobs Senior Vice President None
Thomas P. Luka Vice President None
John Macejka Vice President None
Stephen Marks Vice President None
Joseph T. McMenamin Vice President None
Morgan C. Mohrman Senior Vice President None
James A. Naughton Vice President None
Joseph Nelson Vice President None
Mark D. Nelson Vice President None
Linda D. Newkirk Vice President None
James L. O'Connor Vice President Treasurer
Andrew Ogren Vice President None
Thomas Otis Secretary and Clerk None
George D. Owen, II Vice President None
Enrique M. Pineda Vice President None
F. Anthony Robinson Vice President None
Frances Rogell Vice President None
Jay S. Rosoff Vice President None
Benjamin A. Rowland,Jr. Vice President, Treasurer and Director None
Stephen M. Rudman Vice President None
Kevin Schrader Vice President None
George V.F. Schwab, Jr. Vice President None
Teresa A. Sheehan Vice President None
William M. Steul Vice President and Director None
Cornelius J. Sullivan Senior Vice President None
Peter Sykes Vice President None
David M. Thill Vice President None
John M. Trotsky Vice President None
Jerry Vainisi Vice President None
Chris Volf Vice President None
Wharton P. Whitaker President and Director None
Sue Wilder Vice President None
</TABLE>
- ------------------------------------------
* Address is The Eaton Vance Building, 255 State Street, Boston, MA 02109
(c) Not applicable
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
All applicable accounts, books and documents required to be maintained by
the Registrant by Section 31(a) of the Investment Company Act of 1940 and the
Rules promulgated thereunder are in the possession and custody of the
Registrant's custodian, Investors Bank & Trust Company, 200 Clarendon Street,
16th Floor, Mail Code ADM27, Boston, MA 02116, and its transfer agent, First
Data Investor Services Group, 4400 Computer Drive, Westborough, MA 01581-5120,
with the exception of certain corporate documents and portfolio trading
documents which are in the possession and custody, Eaton Vance Management, The
Eaton Vance Building, 255 State Street, Boston, MA 02109. Registrant is informed
that all applicable accounts, books and documents required to be maintained by
registered investment advisers are in the custody and possession of Eaton Vance
Management and Boston Management and Research.
ITEM 29. MANAGEMENT SERVICES
Not applicable
C-6
<PAGE>
ITEM 30. UNDERTAKINGS
Not applicable
C-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Amendment to the Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Amendment to its Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized in the City of Boston, and the
Commonwealth of Massachusetts, on June 23, 1999.
EATON VANCE MUTUAL FUNDS TRUST
By: /s/ JAMES B. HAWKES
------------------------------------
James B. Hawkes, President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statement has been signed below by
the following persons in the capacities on June 23, 1999.
Signature Title
- --------- -----
/s/ James B. Hawkes President (Chief Executive Officer)
- ------------------------------- and Trustee
James B. Hawkes
/s/ James L. O'Connor Treasurer (and Principal Financial and
- ------------------------------- Accounting Officer)
James L. O'Connor
Jessica M. Bibliowicz* Trustee
- -------------------------------
Jessica M. Bibliowicz
Donald R. Dwight* Trustee
- -------------------------------
Donald R. Dwight
Samuel L. Hayes, III* Trustee
- -------------------------------
Samuel L. Hayes, III
Norton H. Reamer* Trustee
- -------------------------------
Norton H. Reamer
Lynn A. Stout* Trustee
- -------------------------------
Lynn A. Stout
John L. Thorndike* Trustee
- -------------------------------
John L. Thorndike
*By: /s/ Alan R. Dynner
--------------------------------------
Alan R. Dynner (As attorney-in-fact)
C-8
<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.
02-90946) to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Boston and the Commonwealth of Massachusetts on June
23, 1999.
TAX-MANAGED GROWTH PORTFOLIO
By: /s/ JAMES B. HAWKES
-------------------------------------
James B. Hawkes, President
This Amendment to the Registration Statement on Form N-1A of Eaton Vance
Mutual Funds Trust (File No. 02-90946) has been signed below by the following
persons in their capacities on June 23, 1999.
Signature Title
- --------- -----
/s/ James B. Hawkes President (Chief Executive Officer)
- ------------------------------- and Trustee
James B. Hawkes
/s/ James L. O'Connor Treasurer (and Principal Financial and
- ------------------------------- Accounting Officer)
James L. O'Connor
Jessica M. Bibliowicz* Trustee
- -------------------------------
Jessica M. Bibliowicz
Donald R. Dwight* Trustee
- -------------------------------
Donald R. Dwight
Samuel L. Hayes, III* Trustee
- -------------------------------
Samuel L. Hayes, III
Norton H. Reamer* Trustee
- -------------------------------
Norton H. Reamer
John L. Thorndike* Trustee
- -------------------------------
John L. Thorndike
Jack L. Treynor* Trustee
- -------------------------------
Jack L. Treynor
*By: /s/ Alan R. Dynner
--------------------------------------
Alan R. Dynner (As attorney-in-fact)
C-9
<PAGE>
EXHIBIT INDEX
The following exhibits are filed as part of this amendment to the
Registration Statement pursuant to Rule 483 of Regulation C.
Exhibit No. Description
- ----------- -----------
(i)(2) Consent of Internal Counsel to Opinion.
(j) Independent Auditors' Consent for Eaton Vance Tax-Managed Growth
Fund and Tax-Managed Growth Portfolio.
C-10
<PAGE>
EXHIBIT (I)(2)
CONSENT OF COUNSEL
I consent to the incorporation by reference in this Post-Effective
Amendment No. 52 to the Registration Statement of Eaton Vance Mutual Funds Trust
(1933 Act File No. 02-90946) of my opinion dated December 23, 1998, which was
filed as Exhibit (i) to Post-Effective Amendment No. 47.
/s/ Maureen A. Gemma
-------------------------------------
Maureen A. Gemma, Esq.
June 23, 1999
Boston, Massachusetts
<PAGE>
EXHIBIT (J)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference into the Prospectus and
Statement of Additional Information in this Post-Effective Amendment No. 52 to
the Registration Statement of Eaton Vance Mutual Funds Trust (1933 Act File No.
2-90946) of our reports each dated February 12, 1999 on the financial
statements, supplementary data and financial highlights of Tax-Managed Growth
Portfolio and Eaton Vance Tax-Managed Growth Fund included in the December 31,
1998 Annual Report to Shareholders of Eaton Vance Tax-Managed Growth Fund.
We also consent to the reference to our Firm under the heading "Other
Service Providers" in the Statement of Additional Information of the
Registration Statement.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
June 23, 1999
Boston, Massachusetts
