<PAGE>
As filed with the Securities and Exchange Commission on May 1, 2000
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. 59 [X]
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 62 [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 May 12, 2000 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.
Capital Appreciation Portfolio has also executed this Registration
Statement.
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<PAGE>
LOGO
Mutual Funds
for People
Who Pay
Taxes(R)
EATON VANCE
TAX-MANAGED
YOUNG SHAREHOLDER FUND
A diversified fund seeking long-term, after-tax returns
Prospectus Dated
May 12, 2000
The Securities and Exchange Commission has not approved or disapproved these
securities or determined whether this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
Information in this prospectus
Page Page
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Fund Summary 2 Sales Charges 6
Investment Objective & Principal Policies Redeeming Shares 8
and Risks 4 Shareholder Account
Management and Organization 5 Features 9
Valuing Shares 6 Tax Information 10
Purchasing Shares 6
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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 Young
Shareholder 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
securities, the Fund may invest up to 25% of its assets in foreign securities.
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 a separate registered
investment company with the same investment objective and policies as the Fund.
Tax-Managed Investing. Most equity 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), as well as distributions
of realized long-term gains (taxed as long-term capital gains). 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 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 equity mutual funds that are managed without regard to tax
considerations. There can be no assurance, however, that taxable distributions
can always be avoided.
Investing for Young Shareholders. The Fund believes that a growth oriented
investment program that seeks to minimize and defer shareholder taxes is
especially well suited to the needs of young shareholders, due to their longer
investment horizon. The Fund avoids investments that it believes are
inappropriate for young shareholders.
The Fund also has an educational objective. It seeks to teach young shareholders
about mutual funds, personal finance and the stock market.
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.
Because the Fund invests a portion of its assets in foreign securities
(including those in emerging market countries), the value of Fund shares may be
affected by changes in currency exchange rates and other developments abroad.
The use of derivative transactions is subject to certain limitations and may
expose the Fund to increased risk of principal loss. Securities subject to
restrictions on resale are often less liquid and more difficult to value.
The Fund is not a complete investment program and you may lose money by
investing. 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.
Performance Information. As of the date of this prospectus, the Fund had not
begun operations so there is no performance history.
2
<PAGE>
Fund Fees and Expenses. These tables describe the fees and expenses that you may
pay if you buy and hold shares.
<TABLE>
<CAPTION>
Shareholder Fees
(fees paid directly from your investment Class A Class B Class C
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<S> <C> <C> <C>
Maximum Sales Charge (Load) (as a percentage of offering price) 5.75% None None
Maximum Deferred Sales Charge (Load)(as a percentage of the lower
of net asset value at time of purchase or redemption) None 5.00% 1.00%
Maximum Sales Charge (Load)Imposed on Reinvested Distributions None None None
Exchange Fee None None None
</TABLE>
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets) Class A Class B Class C
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Management Fees 0.80% 0.80% 0.80%
Distribution and Service (12b-1) Fees 0.00% 1.00% 1.00%
Other Expenses* 0.60% 0.35% 0.35%
---- ---- ----
Total Annual Fund Operating Expenses 1.40% 2.15% 2.15%
* Other Expenses are based on estimates and for Class A shares include a
service fee of 0.25%.
Example. This Example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The Example assumes
that you invest $10,000 in the Fund for the time periods indicated and then
redeem all of your shares at the end of those periods. The Example also assumes
that your investment has a 5% return each year and that the operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
1 Year 3 Years
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Class A shares $709 $ 993
Class B shares $718 $1,073
Class C shares $318 $ 673
You would pay the following expenses if you did not redeem your shares:
1 Year 3 Years
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Class A shares $709 $993
Class B shares $218 $673
Class C shares $218 $673
3
<PAGE>
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
Capital Appreciation 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 approaches its investments from the perspective of a taxpaying
shareholder. Buy and sell decisions are made by balancing investment
considerations and tax considerations, taking into account the taxes payable by
shareholders in connection with distributions of investment income and net
realized capital gains.
The Portfolio invests in a broadly diversified selection of equity securities,
emphasizing common stocks of growth companies. In the view of the investment
adviser, "growth companies" are companies that are expected, over the long term,
to have earnings growth that is faster than the growth rates of the U.S. economy
and the U.S. stock market as a whole. Growth companies owned by the Portfolio
may include both large and established market leaders, as well as smaller, less
seasoned companies. 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 generally 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 invest with
particular consideration to the needs of children and teenagers. The Portfolio
avoids investments that it believes are inappropriate for young shareholders.
Securities of smaller, less seasoned companies, which may include legally
restricted securities, are generally subject to greater price fluctuations,
limited liquidity, higher transaction costs and higher investment risk. Smaller
companies may have limited product lines, markets or financial resources, and
they may be dependent on a limited management group. There is generally less
publicly available information about such companies than larger, more
established companies. The Portfolio may make direct investments in companies in
private placement transactions. Because of the absence of any public trading
market for some of these investments it may take longer to liquidate these
positions at fair value than would be the case for publicly traded securities.
The Portfolio may also invest in securities of companies in the technology
industry that could be adversely affected by factors such as deregulation and
product obsolescence due to technological advances.
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. Fund distributions that are taxed
as ordinary income are minimized by investing principally in lower-yielding
growth stocks and by generally avoiding net realized short-term capital gains.
Fund distributions taxed as long-term capital gains are minimized by avoiding or
minimizing the sale of securities with large accumulated 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.
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
returns 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. Derivative
hedging transactions may not be effective because of imperfect correlation and
other factors.
The Portfolio may invest up to 25% of assets in foreign securities. 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
4
<PAGE>
subject to governmental supervision than markets in the United States. Foreign
investments also could be affected by other factors not present in the United
States, including expropriation, armed conflict, confiscatory taxation, lack of
uniform accounting and auditing standards, less publicly available financial and
other information and potential difficulties in enforcing contractual
obligations. These risks can be more significant for securities traded in less
developed, emerging market countries. As an alternative to holding
foreign-traded securities, the Portfolio may invest in dollar-denominated
securities of foreign companies that trade on U.S. exchanges or in the U.S.
over-the-counter market (including depositary receipts which evidence ownership
in underlying foreign securities). Such investments are not subject to the
Portfolio's 25% limitation on investing in foreign securities.
The Portfolio may invest not more than 15% of its net assets in illiquid
securities, which may be difficult to value properly and may involve greater
risks than liquid securities. Illiquid securities include those legally
restricted as to resale, and may include commercial paper issued pursuant to
Section 4(2) of the Securities Act of 1933 and securities eligible for resale
pursuant to Rule 144A thereunder. Certain Section 4(2) and Rule 144A securities
may be treated as liquid securities if the investment adviser determines that
such treatment is warranted. Even if determined to be liquid, holdings of these
securities may increase the level of Portfolio illiquidity if eligible buyers
become uninterested in purchasing them.
The Portfolio may borrow amounts up to 25% of the value of net 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. Borrowings result in
increased expense to the Fund and, while they are outstanding, 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. 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, which may be inconsistent with the Fund's investment objective.
While temporarily invested, the Portfolio may not achieve its investment
objective. While at times the Portfolio may use alternative investment
strategies in an effort to limit its losses, it may not choose to do so.
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 $43 billion on behalf of
mutual funds, institutional clients and individuals.
The investment adviser manages the investments of the Fund and provides related
office facilities and personnel. Under its investment advisory agreement with
the Fund, Eaton Vance receives a monthly advisory fee of 13/240 of 1%
(equivalent to 0.650% annually) of the average daily net assets of the Fund up
to and including $500 million. On net assets of $500 million and over the annual
fee is reduced.
Arieh Coll is the portfolio manager of the Fund (since inception). He also
manages other Eaton Vance portfolios, has been an employee of Eaton Vance and
BMR since January, 2000, and is a Vice President of Eaton Vance and BMR. Prior
to joining Eaton Vance, Mr. Coll was employed by Fidelity Investments as a
portfolio manager and investment analyst.
The investment adviser and the Fund and the Portfolio have adopted Codes of
Ethics governing personal securities transactions. Under the Codes, Eaton Vance
employees may purchase and sell securities (including securities held by the
Portfolio) subject to certain pre-clearance and reporting requirements and other
procedures.
Eaton Vance serves as administrator of the Fund, providing the Fund with
administrative services and related office facilities. In return, the Fund is
authorized to pay Eaton Vance a fee of 0.15% of average daily net assets.
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.
5
<PAGE>
VALUING SHARES
The Fund values its shares once each day only when the New York Stock Exchange
is open for trading (typically Monday through Friday), as of the close of
regular trading on the Exchange (normally 4:00 p.m. eastern time). The purchase
price of Fund shares is their net asset value (plus a sales charge for Class A
shares), which is derived from Portfolio holdings. Securities traded in the U.S.
are generally valued as of the close of regular trading on the Exchange. The
value of foreign securities is generally determined as of the close of trading
in the principal exchange on which such securities trade. Fluctuations in value
that occur between the close of trading on foreign exchanges and the close of
regular trading on the Exchange are normally reflected in the Portfolio's
valuation for that day. The value of foreign securities may be adjusted to
reflect developments after the close of trading on foreign exchanges if the
Portfolio deems that its net asset value would be materially affected.
When purchasing or redeeming Fund shares, your investment dealer must
communicate your order to the principal underwriter by a specific time each day
in order for the purchase price or the redemption price to be based on that
day's net asset value per share. It is the investment dealer's responsibility to
transmit orders promptly. The Fund may accept purchase and redemption orders as
of the time of their receipt by certain investment dealers (or their designated
intermediaries).
PURCHASING SHARES
You may purchase shares through your investment dealer or by mailing the account
application form included in this prospectus to the transfer agent (see back
cover for address). Your initial investment must be at least $1,000. The price
of Class A shares is the net asset value plus a sales charge. The price of Class
B and Class C shares is the net asset value; however, you may be subject to a
sales charge (called a "contingent deferred sales charge" or "CDSC") if you
redeem Class B shares within six years of purchase or Class C shares within one
year of purchase. The sales charges are described below. Your investment dealer
can help you decide which Class of shares suits your investment needs.
After your initial investment, additional investments of $50 or more may be made
at any time by sending a check payable to the order of the Fund or the transfer
agent directly to the transfer agent (see back cover for address). Please
include your name and account number and the name of the Fund and Class of
shares with each investment.
You may also make automatic investments of $50 or more each month or each
quarter from your bank account. You can establish bank automated investing on
the account application or by calling 1-800-262-1122. The minimum initial
investment amount and Fund policy of redeeming accounts with low account
balances are waived for bank automated investing accounts and certain group
purchase plans.
You may purchase Fund shares in exchange for securities. Please call
1-800-225-6265 for information about exchanging securities for Fund shares. If
you purchase shares through an investment dealer (which includes brokers,
dealers and other financial institutions), that dealer may charge you a fee for
executing the purchase for you. The Fund may suspend the sale of its shares at
any time and any purchase order may be refused.
SALES CHARGES
Front-End Sales Charge. Class A shares are offered at net asset value per share
plus a sales charge that is determined by the amount of your investment. The
current sales charge schedule is:
<TABLE>
<CAPTION>
Sales Charge Sales Charge Dealer Commission
as Percentage of as Percentage of Net as a Percentage of
Amount of Purchase Offering Price Amount Invested Offering Price
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<S> <C> <C> <C>
Less than $50,000 5.75% 6.10% 5.00%
$50,000 but less than $100,000 4.75% 4.99% 4.00%
$100,000 but less than $250,000 3.75% 3.90% 3.00%
$250,000 but less than $500,000 3.00% 3.09% 2.50%
$500,000 but less than $1,000,000 2.00% 2.04% 1.75%
$1,000,000 or more 0.00* 0.00* See Below
</TABLE>
* No sales charge is payable at the time of purchase on investments of $1
million or more. A CDSC of 1.00% will be imposed on such investments (as
described below) in the event of r edemptions within 12 months of purchase.
6
<PAGE>
The principal underwriter will pay a commission to investment dealers on sales
of $1 million or more as follows: 1.00% on amounts of $1 million or more but
less than $3 million; plus 0.50% on amounts over $3 million but less than $5
million; plus 0.25% on amounts over $5 million. Purchases totalling $1 million
or more will be aggregated over a 12-month period for purposes of determining
the commission. The principal underwriter may also pay commissions of up to
1.00% on sales of Class A shares made at net asset value to certain tax-deferred
retirement plans.
Contingent Deferred Sales Charge. Each Class of shares is subject to a CDSC on
certain redemptions. Class A shares purchased at net asset value in amounts of
$1 million or more are subject to a 1.00% CDSC if redeemed within 12 months of
purchase. Class C shares are subject to a 1.00% CDSC if redeemed within 12
months of purchase. Class B shares are subject to the following CDSC schedule:
Year of Redemption After Purchase CDSC
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First or Second 5%
Third 4%
Fourth 3%
Fifth 2%
Sixth 1%
Seventh or following 0%
The CDSC is based on the lower of the net asset value at the time of purchase or
at the time of redemption. Shares acquired through the reinvestment of
distributions are exempt from the CDSC. Redemptions are made first from shares
that are not subject to a CDSC.
The principal underwriter pays commissions to investment dealers on sales of
Class B and Class C shares (except exchange transactions and reinvestments). The
sales commission on Class B shares equals 4% of the purchase price of the
shares. The principal underwriter compensates investment dealers who sell Class
C shares at a rate of 1.00% of the purchase price of the shares, consisting of
0.75% of sales commission and 0.25% of service fee (for the first year's
service). After the first year, investment dealers also receive 0.75% of the
value of Class C shares in annual distribution fees.
Reducing or Eliminating Sales Charges. Front-end sales charges on purchases of
Class A shares may be reduced under the right of accumulation or under a
statement of intention. Under the right of accumulation, the sales charges you
pay are reduced if the current market value of your current holdings (based on
the current offering price), plus your new purchases, total $50,000 or more.
Class A shares of other Eaton Vance funds owned by you can be included as part
of your current holdings for this purpose. Under a statement of intention,
purchases of $50,000 or more made over a 13-month period are eligible for
reduced sales charges. Under a statement of intention, the principal underwriter
may hold 5% of the dollar amount to be purchased in escrow in the form of shares
registered in your name until you satisfy the statement or the 13-month period
expires.
Class A shares are offered at net asset value to clients of financial
intermediaries who charge a fee for their services; accounts affiliated with
those financial intermediaries; tax-deferred retirement plans; investment and
institutional clients of Eaton Vance; certain persons affiliated with Eaton
Vance; and certain Eaton Vance and fund service providers. Ask your investment
dealer for details. Class A shares are also sold at net asset value if the
amount invested represents redemption proceeds from a mutual fund not affiliated
with Eaton Vance, provided the redemption occurred within 60 days of the Fund
share purchase and the redeemed shares were subject to a sales charge. Class A
shares so acquired will be subject to a 0.50% CDSC if they are redeemed within
12 months of purchase. Investment dealers will be paid a commission on such
sales equal to 0.50% of the amount invested.
CDSCs are waived for certain redemptions pursuant to a Withdrawal Plan (see
"Shareholder Account Features") and, for Class B and Class C shares, in
connection with certain redemptions from tax-sheltered retirement plans. Call
1-800-225-6265 for details. The Class B CDSC is also waived following the death
of all beneficial owners of shares, but only if the redemption is requested
within one year after death (a death certificate and other applicable documents
may be required).
If you redeem shares, you may reinvest at net asset value all or any portion of
the redemption proceeds in the same class of shares of the Fund (or, for Class A
shares, in Class A shares of any other Eaton Vance fund), provided that the
reinvestment occurs within 60 days of the redemption, and the privilege has not
been used more than once in the prior 12 months. Under these circumstances your
account will be credited with any CDSC paid in connection with the redemption.
Any CDSC period applicable to the shares you acquire upon reinvestment will run
from the date of your original share purchase. Reinvestment requests must be in
writing. If you reinvest, you will be sold shares at the next determined net
asset value following receipt of your request.
Distribution and Service Fees. Class B and Class C shares have in effect plans
under Rule 12b-1 that allows the Fund to pay distribution fees for the sale and
distribution of shares (so-called "12b-1 fees"). Class B and Class C shares pay
7
<PAGE>
distribution fees of 0.75% of average daily net assets annually. Because these
fees are paid from Fund assets on an ongoing basis, they will increase your cost
over time and may cost you more than paying other types of sales charges. All
Classes pay service fees for personal and/or account services equal to 0.25% of
average daily net assets annually. After the sale of shares, the principal
underwriter receives service fees for one year and thereafter investment dealers
receive them based on the value of shares sold by such dealers.
Class B and Class C distribution fees are subject to termination when payments
under the Rule 12b-1 plans are sufficient to extinguish uncovered distribution
charges. As described more fully in the Statement of Additional Information,
uncovered distribution charges of a class are increased by sales commissions
payable by the class to the principal underwriter in connection with sales of
shares of that class and by an interest factor tied to the U.S. Prime Rate.
Uncovered distribution charges are reduced by the distribution fees paid by the
class and by CDSCs paid to the Fund by redeeming shareholders. The amount of the
sales commissions payable by Class B to the principal underwriter in connection
with sales of Class B shares is significantly less than the maximum permitted by
the sales charge rule of the National Association of Securities Dealers, Inc.
REDEEMING SHARES
You can redeem shares in any of the following ways:
By Mail Send your request to the transfer agent along
with any certificates and stock powers. The
request must be signed exactly as your
account is registered and signature
guaranteed. You can obtain a signature
guarantee at certain banks, savings and loan
institutions, credit unions, securities
dealers, securities exchanges, clearing
agencies and registered securities
associations. You may be asked to provide
additional documents if your shares are
registered in the name of a corporation,
partnership or fiduciary.
By Telephone You can redeem up to $50,000 by calling the
transfer agent at 1-800-262-1122 on Monday
through Friday, 9:00 a.m. to 4:00 p.m.
(eastern time). Proceeds of a telephone
redemption can be mailed only to the account
address. Shares held by corporations, trusts
or certain other entities and shares that are
subject to fiduciary arrangements cannot be
redeemed by telephone.
Through an Investment Dealer Your investment dealer is responsible for
transmitting the order promptly. An
investment dealer may charge a fee for this
service.
If you redeem shares, your redemption price will be based on the net asset value
per share next computed after the redemption request is received. Your
redemption proceeds will be paid in cash within seven days, reduced by the
amount of any applicable CDSC and any federal income tax required to be
withheld. Payments will be sent by mail unless you complete the Bank Wire
Redemptions section of the account application.
If you recently purchased shares, the proceeds of a redemption will not be sent
until the purchase check (including a certified or cashier's check) has cleared.
If the purchase check has not cleared, redemption proceeds may be delayed up to
15 days from the purchase date. If your account value falls below $750 (other
than due to market decline), you may be asked to either add to your account or
redeem it within 60 days. If you take no action, your account will be redeemed
and the proceeds sent to you.
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
8
<PAGE>
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
Once you purchase shares, the transfer agent establishes a Lifetime Investing
Account(R) for you. Share certificates are issued only on request.
Distributions. You may have your Fund distributions paid in one of the following
ways:
.Full Reinvest Option Dividends and capital gains are reinvested in
additional shares. This option will be assigned if
you do not specify an option.
.Partial Reinvest Option Dividends are paid in cash and capital gains are
reinvested in additional shares.
.Cash Option Dividends and capital gains are paid in cash.
.Exchange Option Dividends and/or capital gains are reinvested in
additional shares of another Eaton Vance fund
chosen by you. Before selecting this option, you
must obtain a prospectus of the other fund and
consider its objectives and policies carefully.
Information from the Fund. From time to time, you may be mailed the following:
.Annual and Semi-Annual Reports, containing performance information and
financial statements.
.Periodic account statements, showing recent activity and total share
balance.
.Form 1099 and tax information needed to prepare your income tax returns.
.Proxy materials, in the event a shareholder vote is required.
.Special notices about significant events affecting your Fund.
Withdrawal Plan. You may redeem shares on a regular quarterly basis by
establishing a systematic withdrawal plan. Withdrawal amounts must be at least
$200 per year, or a specified percentage of net asset value of at least 4% but
not more than 12% annually of the greater of either the initial account balance
or the current account balance. These withdrawals will not be subject to a CDSC.
A minimum account size of $5,000 is required to establish a systematic
withdrawal plan. Because purchases of Class A shares are generally subject to an
initial sales charge, you should not make withdrawals from your account while
you are making purchases.
Exchange Privilege. You may exchange your Fund shares for shares of the same
Class of another Eaton Vance fund. Exchanges are generally made at net asset
value. If you hold Class A shares for less than six months and exchange them for
shares subject to a higher sales charge, you will be charged the difference
between the two sales charges. If your shares are subject to a CDSC, the CDSC
will continue to apply to your new shares at the same CDSC rate. For purposes of
the CDSC, your shares will continue to age from the date of your original
purchase.
Before exchanging, you should read the prospectus of the new fund carefully. If
you wish to exchange shares, write to the transfer agent (address on back cover)
or call 1-800-262-1122. Periodic automatic exchanges are also available. The
exchange privilege may be changed or discontinued at any time. You will receive
60 days' notice of any material change to the privilege. This privilege may not
be used for "market timing". If an account (or group of accounts) makes more
than two round-trip exchanges (exchanged from one fund to another and back
again) within 12 months, it will be deemed to be market timing. The exchange
privilege may be terminated for market timing accounts.
Telephone and Electronic Transactions. You can redeem or exchange shares by
telephone as described in this prospectus. In addition, certain transactions may
be conducted through the Internet. The transfer agent and the principal
underwriter have procedures in place to authenticate telephone and electronic
instructions (such as using security codes or verifying personal account
information). As long as the transfer agent and principal underwriter follow
reasonable procedures, they will not be responsible for unauthorized telephone
or electronic transactions and you bear the risk of possible loss resulting from
these transactions. You may decline the telephone redemption option on the
account application. Telephone instructions are tape recorded.
9
<PAGE>
"Street Name" Accounts. If your shares are held in a "street name" account at an
investment dealer, that dealer (and not the Fund or its transfer agent) will
perform all recordkeeping, transaction processing and distribution payments.
Because the Fund will have no record of your transactions, you should contact
your investment dealer to purchase, redeem or exchange shares, to make changes
in your account, or to obtain account information. You will not be able to
utilize a number of shareholder features, such as telephone transactions,
directly with the Fund. The transfer of shares in a "street name" account to an
account with another investment dealer or to an account directly with the Fund
involves special procedures and you will be required to obtain historical
information about your shares prior to the transfer. Before establishing a
"street name" account with an investment dealer, you should determine whether
that dealer allows reinvestment of distributions in "street name" accounts.
Account Questions. If you have any questions about your account or the services
available, please call Eaton Vance Shareholder Services at 1-800-225-6265, or
write to the transfer agent (see back cover for address).
TAX INFORMATION
While the Fund attempts to minimize taxable distributions, there can be no
assurance that taxable distributions can be avoided. Distributions of investment
income and net realized short-term capital gains will be taxable as ordinary
income. Distributions of net realized long-term capital gains are taxable as
long-term gains. The Fund expects to pay any distributions annually.
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
purchase 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.
10
<PAGE>
LOGO
Mutual Funds
for People
Who Pay
Taxes(R)
MORE INFORMATION
- --------------------------------------------------------------------------------
About the Fund: More information is available in the
statement of additional information. The statement of
additional information is incorporated by reference into
this prospectus. Additional information about the
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
(including the statement of additional information and
shareholder reports): at the Securities and Exchange
Commission's public reference room in Washington, DC (call
1-202-942-8090 for information on the operation of the
public reference room); on the EDGAR Database on the SEC's
Internet site (http:// www.sec.gov); or, upon payment of
copying fees, by writing to the SEC's public reference
section, Washington, DC 20549-0102, or by electronic mail at
[email protected].
About Shareholder Accounts: You can obtain more information
from Eaton Vance Shareholder Services (1-800-225-6265). If
you own shares and would like to add to, redeem or change
your account, please write or call the transfer agent:
PFPC, Inc.
P.O. BOX 9653
PROVIDENCE, RI 02904-9653
1-800-262-1122
- --------------------------------------------------------------------------------
The Fund's SEC File No. is 811-4015. TMYSP
<PAGE>
STATEMENT OF
ADDITIONAL INFORMATION
May 12, 2000
EATON VANCE TAX-MANAGED
YOUNG SHAREHOLDER FUND
The Eaton Vance Building
255 State Street
Boston, Massachusetts 02109
(800) 225-6265
This Statement of Additional Information ("SAI") provides general
information about the 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 ........................................... 5
Management and Organization ....................................... 6
Investment Advisory and Administrative Services ................... 10
Other Service Providers ........................................... 11
Purchasing and Redeeming Shares ................................... 12
Sales Charges ..................................................... 14
Performance ....................................................... 17
Control Persons and Principal Holders of Securities ............... 18
Taxes ............................................................. 18
Portfolio Security Transactions ................................... 20
THIS SAI IS NOT A PROSPECTUS AND IS AUTHORIZED FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS ONLY IF PRECEDED OR ACCOMPANIED BY THE FUND'S PROSPECTUS
DATED MAY 12, 2000, AS SUPPLEMENTED FROM TIME TO TIME, WHICH IS INCORPORATED
HEREIN BY REFERENCE. THIS SAI SHOULD BE READ IN CONJUNCTION WITH THE PROSPECTUS,
WHICH MAY BE OBTAINED BY CALLING 1-800-225-6265.
<PAGE>
STRATEGIES AND RISKS
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 his or her shares. Upon redemption, a capital gain
(short-term, if the shareholder has held his or her shares for one year or less,
otherwise long-term) 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.
The Portfolio may also invest in depositary receipts, which are certificates
evidencing ownership of shares of a foreign issuer and are alternatives to
directly purchasing the underlying foreign securities in their national markets
and currencies. However, they continue to be subject to many of the risks
associated with investing directly in foreign securities. These risks include
foreign exchange risk as well as the political and economic risks of the
underlying issuer's country. Depositary receipts may be sponsored or
unsponsored. Unsponsored receipts are established without the participation of
the issuer. Unsponsored receipts may involve higher expenses, they may not
pass-through voting and other shareholder rights, and they may be less liquid.
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 as described below. The use of futures for nonhedging purposes is
limited by regulations of the Commodity Futures Trading Commission ("CFTC") as
described below. 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 (the "SEC") 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). 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. These transactions may also
require the current recognition of taxable gain under certain tax rules
applicable to constructive sales. 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.
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 SEC guidelines regarding cover for these instruments
and, if the guidelines so require, set aside cash or liquid securities in a
segregated account with its custodian in the prescribed amount. The securities
in the segregated account will be marked to market daily.
Assets used as cover or held in a segregated account maintained by the
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.
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 SEC, 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 lender (i.e., the Portfolio) 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.
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, except to the
extent the Portfolio sells securities in order to generate capital losses.
Selling securities to generate capital losses will increase the Portfolio's
turnover rate, resulting in more commission expense.
INVESTMENT RESTRICTIONS
The following investment restrictions of the Fund are designated as
fundamental policies and as such cannot be changed without the approval of the
holders of a majority of the Fund's outstanding voting securities, which as used
in this SAI means the lesser of (a) 67% of the shares of the Fund, present or
represented by proxy at a meeting if the holders of more than 50% of the
outstanding shares are present or represented at the meeting or (b) more than
50% of the outstanding shares of the Fund. Accordingly, the Fund may not:
(1) 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, (c) lending portfolio securities and (d) lending cash consistent
with applicable law;
(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. For purposes of
Restriction (7) above, less than 25% of the Fund's total assets will be
concentrated in any one industry.
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. If the Fund or Portfolio invests in Rule 144A securities, the
level of portfolio illiquidity may be increased to the extent that eligible
buyers become uninterested in purchasing such securities; or
(b) 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 Portfolio must always be in compliance with the
borrowing policy and 15% limitation on investing in illiquid securities 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 (58), 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 (40), Trustee*
President and Chief Operating Officer of National Financial Partners (a
financial services company) (sine 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). Formerly Executive Vice President of
Smith Barney Mutual Funds (from July, 1994 to June, 1997). Elected Trustee
October 30, 1998. Trustee of various investment companies managed by Eaton
Vance or BMR since October 30, 1998.
Address: 1301 Avenue of the Americas, New York, NY 10019
DONALD R. DWIGHT (69), Trustee
President of Dwight Partners, Inc. (a corporate relations and communications
company). Trustee/Director of the Royce Funds (mutual funds). Trustee of
various investment companies managed by Eaton Vance or BMR.
Address: Clover Mill Lane, Lyme, New Hampshire 03768
SAMUEL L. HAYES, III (65), Trustee
Jacob H. Schiff Professor of Investment Banking Emeritus, Harvard University
Graduate School of Business Administration. Trustee of the Kobrick Investment
Trust (mutual funds). Trustee of various investment companies managed by Eaton
Vance or BMR.
Address: 345 Nahatan Road, Westwood Massachusetts 02090
NORTON H. REAMER (64), Trustee
Chairman of the Board and Chief Executive Officer, United Asset Management
Corporation (a holding company owning institutional investment management
firms); Chairman, President and Director, UAM Funds (mutual funds). Trustee of
various investment companies managed by Eaton Vance or BMR.
Address: One International Place, Boston, Massachusetts 02110
LYNN A. STOUT (42), Trustee
Professor of Law, Georgetown University Law Center. Elected Trustee October
30, 1998. Trustee of various investment companies managed by Eaton Vance or
BMR since October 30, 1998.
Address: 600 New Jersey Avenue, NW, Washington, DC 20001
JACK L. TREYNOR (70), Trustee
Investment adviser and Consultant. Trustee of various investment companies
managed by Eaton Vance or BMR.
Address: 504 Via Almar, Palos Verdes Estates, California 90274
WILLIAM H. AHERN, JR. (40), Vice President of the Trust
Vice President of BMR and Eaton Vance. Officer of various investment companies
managed by Eaton Vance or BMR.
ARIEH COLL (36) Vice President of the Portfolio
Vice President of Eaton Vance and BMR since January 10, 2000. Previously, he was
employed by Fidelity Investments as a portfolio manager and investment
analyst. Officer of various investment companies managed by Eaton Vance or
BMR.
THOMAS J. FETTER (56), Vice President of the Trust
Vice President of Eaton Vance and BMR. Officer of various investment companies
managed by Eaton Vance or BMR.
ARMIN J. LANG (35), Vice President of the Trust
Vice President of Eaton Vance and BMR since March, 1998. Previously he was a
Vice President at Standish, Ayer & Wood.
MICHAEL R. MACH (52), Vice President of the Trust
Vice President of Eaton Vance and BMR since December 15, 1999. Previously, he
was a Managing Director and Senior Analyst for Robertson Stephens (1998-1999);
Managing Director and Senior Analyst for Piper Jaffray (1996-1998); and Senior
Vice President and Senior Analyst for Putnam Investments (1989-1996). Officer
of various investment companies managed by Eaton Vance or BMR.
ROBERT B. MACINTOSH (44), Vice President of the Trust
Vice President of Eaton Vance and BMR. 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 (59), Secretary
Vice President, Secretary and Chief Legal Officer of Eaton Vance, BMR, EVC and
EV. Prior to joining Eaton Vance on November 1, 1996, he was a Partner of the
law firm of Kirkpatrick & Lockhart LLP, New York and Washington, D.C., and was
Executive Vice President of Neuberger & Berman Management, Inc., a mutual fund
management company. Officer of various investment companies managed by Eaton
Vance or BMR.
JANET E. SANDERS (64), Assistant Treasurer and Assistant Secretary
Vice President of Eaton Vance and BMR. Officer of various investment companies
managed by Eaton Vance or BMR.
A. JOHN MURPHY (37), Assistant Secretary
Vice President of BMR and Eaton Vance. Officer of various investment companies
managed by Eaton Vance or BMR.
ERIC G. WOODBURY (42), Assistant Secretary
Vice President of BMR and Eaton Vance. Officer of various investment companies
managed by Eaton Vance or BMR.
The Nominating Committee of the Board of Trustees of the Trust and the
Portfolio is comprised of the Trustees who are not "interested persons" as that
term is defined under the 1940 Act ("noninterested Trustees"). The purpose of
the Committee is to recommend to the Board nominees for the position of
noninterested Trustee and to assure that at least a majority of the Board of
Trustees is independent of Eaton Vance and its affiliates.
Messrs. Hayes (Chairman), Dwight and Reamer and Ms. Stout are members of the
Special Committee of the Board of Trustees of the Trust and 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 ending October 31, 2000, it is
estimated that the noninterested Trustees of the Portfolio will earn the
following compensation in their capacities as Trustees of the Portfolio and, for
the year ended December 31, 1999, earned the following compensation in their
capacities as Trustees of the Trust and 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 DWIGHT HAYES, III REAMER STOUT TREYNOR
--------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Trust(2) .......................... $ 8,968 $ 8,508 $ 9,043 $ 8,575 $ 8,420 $ 9,365
Portfolio* ........................ 29 29 29 29 29 29
Trust and Fund Complex ............ 160,000 160,000(3) 170,000 160,000 160,000(4) 170,000
- ------------
*Estimated.
(1) As of May 1, 2000, the Eaton Vance Fund complex consists of 145 registered
investment companies or series thereof.
(2) The Trust consisted of 16 Funds as of December 31, 1999.
(3) Includes $60,000 of deferred compensation.
(4) Includes $16,000 of deferred compensation.
</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 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 Trust's By-laws provide that no person shall serve as a Trustee if
shareholders holding two-thirds of the outstanding shares have removed him from
that office either by a written declaration filed with the Trust's custodian or
by votes cast at a meeting called for that purpose. The By-laws further provide
that under certain circumstances the shareholders may call a meeting to remove a
Trustee and that the Trust is required to provide assistance in communication
with shareholders about such a meeting.
The Trust's Declaration of Trust may be amended by the Trustees when
authorized by vote of a majority of the outstanding voting securities of the
Trust, the financial interests of which are affected by the amendment. The
Trustees may also amend the Declaration of Trust without the vote or consent of
shareholders to change the name of the Trust or any series or to make such other
changes (such as reclassifying series 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 $500 million,
see the prospectus. On net assets of $500 million and over the annual fee is
reduced and the advisory fee is computed as follows:
ANNUALIZED FEE RATE
AVERAGE DAILY NET ASSETS FOR THE MONTH (FOR EACH LEVEL)
- -------------------------------------- ----------------
$500 million but less than $1 billion .............. 0.625%
$1 billion but less than $2.5 billion .............. 0.600%
$2.5 billion and over .............................. 0.600%
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, and the Fund is authorized to pay Eaton Vance a fee
in the amount of 0.15% of average daily net assets 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, John G.L. Cabot, Leo I.
Higdon, Jr., John M. Nelson, Vincent M. O'Reilly and Ralph Z. Sorenson. All of
the issued and outstanding shares of Eaton Vance are owned by EVC. All of the
issued and outstanding shares of BMR are owned by Eaton Vance. All shares of
the outstanding Voting Common Stock of EVC are deposited in a Voting Trust,
the Voting Trustees of which are Messrs. Hawkes, Jeffrey P. Beale, Alan R.
Dynner, Thomas E. Faust, Jr., Thomas J. Fetter, Scott H. Page, Duncan W.
Richardson, William M. Steul, Payson F. Swaffield, Michael W. Weilheimer and
Wharton P. Whitaker (all of whom are officers of Eaton Vance). The Voting
Trustees have unrestricted voting rights for the election of Directors of EVC.
All of the outstanding voting trust receipts issued under said Voting Trust
are owned by certain of the officers of BMR and Eaton Vance who are also
officers, or officers and Directors of EVC and EV. As indicated under
"Management 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 as it applies to Class A shares is renewable
annually by the Board of Trustees of the Trust (including a majority of the
noninterested Trustees) may be terminated on six months' notice by either party
and is automatically terminated upon assignment. The Distribution Agreement as
it applies to Class B and Class C shares is renewable annually by the Trust's
Board of Trustees (including a majority of the noninterested Trustees who have
no direct or indirect financial interest in the operation of the Distribution
Plan or the Distribution Agreement), may be terminated on sixty days' notice
either by such Trustees or by vote of a majority of the outstanding shares of
the relevant class or on six months' notice by the principal underwriter and is
automatically terminated upon assignment. The principal underwriter distributes
shares on a "best efforts" basis under which it is required to take and pay for
only such shares as may be sold. The principal underwriter allows investment
dealers discounts from the applicable public offering price which are alike for
all investment dealers. See "Sales Charges." EVD is a wholly-owned subsidiary of
EVC. Mr. Hawkes is a Vice President and Director and Messrs. Dynner and O'Connor
are Vice Presidents of EVD.
CUSTODIAN. Investors Bank & Trust Company ("IBT"), 200 Clarendon Street, Boston,
MA 02116, serves as custodian to the 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, 200 Berkeley Street, Boston, MA
02116, are the independent accountants of the Fund and the Portfolio, providing
audit services, tax return preparation, and assistance and consultation with
respect to the preparation of filings with the SEC.
TRANSFER AGENT. PFPC, Inc., 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. Fund shares are continuously offered
through investment dealers which have entered agreements with the principal
underwriter. The public offering price is the net asset value next computed
after receipt of the order, plus, in the case of Class A shares, a variable
percentage (sales charge) depending upon the amount of purchase as indicated by
the sales charge table set forth in the prospectus. The sales charge is divided
between the principal underwriter and the investment dealer. The sales charge
table is applicable to purchases of the Fund alone or in combination with
purchases of certain other funds offered by the principal underwriter, made at a
single time by (i) an individual, or an individual, his spouse and their
children under the age of twenty-one, purchasing shares for his or their own
account, and (ii) a trustee or other fiduciary purchasing shares for a single
trust estate or a single fiduciary account. The table is also presently
applicable to (1) purchases of Class A shares pursuant to a written Statement of
Intention; or (2) purchases of Class A shares pursuant to the Right of
Accumulation and declared as such at the time of purchase. See "Sales Charges".
In connection with employee benefit or other continuous group purchase
plans, the Fund may accept initial investments of less than $1,000 on the part
of an individual participant. In the event a shareholder who is a participant of
such a plan terminates participation in the plan, his or her shares will be
transferred to a regular individual account. However, such account will be
subject to the right of redemption by the Fund as described below.
SUSPENSION OF SALES. The Trust may, in its absolute discretion, suspend,
discontinue or limit the offering of one or more of its classes of shares at any
time. In determining whether any such action should be taken, the Trust's
management intends to consider all relevant factors, including (without
limitation) the size of the Fund or class, the investment climate and market
conditions, the volume of sales and redemptions of shares, and in the case of
Class B and Class C shares, the amount of uncovered distribution charges of the
principal underwriter. The Class B and Class C Distribution Plans may continue
in effect and payments may be made under the Plans following any such
suspension, discontinuance or limitation of the offering of shares; however,
there is no contractual obligation to continue any Plan for any particular
period of time. Suspension of the offering of shares would not, of course,
affect a shareholder's ability to redeem shares.
ACQUIRING FUND SHARES IN EXCHANGE FOR SECURITIES. IBT, as escrow agent, will
receive securities acceptable to Eaton Vance, as administrator, in exchange for
Fund shares. The minimum value of securities (or securities and cash) accepted
for deposit is $5,000. Securities accepted will be sold on the day of their
receipt or as soon thereafter as possible. The number of Fund shares to be
issued in exchange for securities will be the aggregate proceeds from the sale
of such securities, divided by the applicable public offering price of Class A
shares or net asset value of Class B and Class C shares on the day such proceeds
are received. Eaton Vance will use reasonable efforts to obtain the then current
market price for such securities but does not guarantee the best available
price. Eaton Vance will absorb any transaction costs, such as commissions, on
the sale of 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.
SALES CHARGES
DEALER COMMISSIONS. The principal underwriter may, from time to time, at its own
expense, provide additional incentives to investment dealers which employ
registered representatives who sell Fund shares and/or shares of other funds
distributed by the principal underwriter. In some instances, such additional
incentives may be offered only to certain investment dealers whose
representatives sell or are expected to sell significant amounts of shares. In
addition, the principal underwriter may from time to time increase or decrease
the sales commissions payable to investment dealers. The principal underwriter
may allow, upon notice to all investment dealers with whom it has agreements,
discounts up to the full sales charge during the periods specified in the
notice. During periods when the discount includes the full sales charge, such
investment dealers may be deemed to be underwriters as that term is defined in
the Securities Act of 1933.
SALES CHARGE WAIVERS. Class A shares may be sold at net asset value to current
and retired Directors and Trustees of Eaton Vance funds, including the
Portfolio; to clients and current and retired officers and employees of Eaton
Vance, its affiliates and other investment advisers of Eaton Vance sponsored
funds; to officers and employees of IBT and the transfer agent; to persons
associated with law firms, consulting firms and others providing services to
Eaton Vance and the Eaton Vance funds; and to such persons' spouses, parents,
siblings and children and their beneficial accounts. 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 (or class thereof), (2) to
investors making an investment as part of a fixed fee program whereby an entity
unaffiliated with the investment adviser provides multiple investment services,
such as management, brokerage and custody, and (3) to investment advisors,
financial planners or other intermediaries who place trades for their own
accounts or the accounts of their clients and who charge a management,
consulting or other fee for their services; clients of such investment advisors,
financial planners or other intermediaries who place trades for their own
accounts if the accounts are linked to the master account of such investment
advisor, financial planner or other intermediary on the books and records of the
broker or agent; and retirement and deferred compensation plans and trusts used
to fund those plans, including, but not limited to, those defined in Section
401(a), 403(b) or 457 of the Internal Revenue Code of 1986, as amended (the
"Code") and "rabbi trusts". Class A shares may be sold at net asset value to any
investment advisory, agency, custodial or trust account managed or administered
by Eaton Vance or by any parent, subsidiary or other affiliate of Eaton Vance.
Class A shares are offered at net asset value to the foregoing persons and in
the foregoing situations because either (i) there is no sales effort involved in
the sale of shares or (ii) the investor is paying a fee (other than the sales
charge) to the investment dealer involved in the sale.
The CDSC applicable to Class B shares will be waived in connection with
minimum required distributions from tax-sheltered retirement plans by applying
the rate required to be withdrawn under the applicable rules and regulations of
the Internal Revenue Service to the balance of Class B shares in your account.
All CDSC waivers are prospective only.
STATEMENT OF INTENTION. If it is anticipated that $50,000 or more of Class A
shares and shares of other funds exchangeable for Class A shares of another
Eaton Vance fund will be purchased within a 13-month period, the Statement of
Intention section of the account application should be completed so that shares
may be obtained at the same reduced sales charge as though the total quantity
were invested in one lump sum. Shares held under Right of Accumulation (see
below) as of the date of the Statement will be included toward the completion of
the Statement. If you make a Statement of Intention the transfer agent is
authorized to hold in escrow sufficient shares (5% of the dollar amount
specified in the Statement) which can be redeemed to make up any difference in
sales charge on the amount intended to be invested and the amount actually
invested. A Statement of Intention does not obligate the shareholder to purchase
or the Fund to sell the full amount indicated in the Statement.
If the amount actually purchased during the 13-month period is less than
that indicated in the Statement, the shareholder will be requested to pay the
difference between the sales charge applicable to the shares purchased and the
sales charge paid under the Statement of Intention. If the payment is not
received in 20 days, the appropriate number of escrowed shares will be redeemed
in order to realize such difference. If the total purchases during the 13-month
period are large enough to qualify for a lower sales charge than that applicable
to the amount specified in the Statement, all transactions will be computed at
the expiration date of the Statement to give effect to the lower sales charge.
Any difference will be refunded to the shareholder in cash or applied to the
purchase of additional shares, as specified by the shareholder. This refund will
be made by the investment dealer and the principal underwriter. If at the time
of the recomputation, the investment dealer for the account has changed, the
adjustment will be made only on those shares purchased through the current
investment dealer for the account.
RIGHT OF ACCUMULATION. The applicable sales charge level for the purchase of
Class A shares is calculated by taking the dollar amount of the current purchase
and adding it to the value (calculated at the maximum current offering price) of
the Class A shares the shareholder owns in his or her account(s) in the Fund,
and shares of other funds exchangeable for Class A shares. The sales charge on
the shares being purchased will then be at the rate applicable to the aggregate.
Shares purchased (i) by an individual, his or her spouse and their children
under the age of twenty-one, and (ii) by a trustee, guardian or other fiduciary
of a single trust estate or a single fiduciary account, will be combined for the
purpose of determining whether a purchase will qualify for the Right of
Accumulation and if qualifying, the applicable sales charge level. For any such
discount to be made available, at the time of purchase a purchaser or his or her
investment dealer must provide the principal underwriter (in the case of a
purchase made through an investment dealer) or the transfer agent (in the case
of an investment made by mail) with sufficient information to permit
verification that the purchase order qualifies for the accumulation privilege.
Confirmation of the order is subject to such verification. The Right of
Accumulation privilege may be amended or terminated at any time as to purchases
occurring thereafter.
EXCHANGE PRIVILEGE. In addition to exchanges into the same class of another
Eaton Vance fund, Class B shares may be exchanged for shares of a money market
fund sponsored by an investment dealer and approved by the principal underwriter
(an "investment dealer fund"). For purposes of calculating the CDSC applicable
to investment dealer fund shares acquired in an exchange, the CDSC schedule
applicable to the exchanged shares will apply and the purchase of investment
dealer fund shares is deemed to have occurred at the time of the original
purchase of the exchanged shares, except that the time during which a
shareholder holds such investment dealer fund shares will not be credited toward
completion of the CDSC period.
TAX-SHELTERED RETIREMENT PLANS. Class A and Class C shares are available for
purchase in connection with certain tax-sheltered retirement plans. Detailed
information concerning these plans, including certain exceptions to minimum
investment requirements, and copies of the plans are available from the
principal underwriter. This information should be read carefully and
consultation with an attorney or tax adviser may be advisable. The information
sets forth the service fee charged for retirement plans and describes the
federal income tax consequences of establishing a plan. Participant accounting
services (including trust fund reconciliation services) will be offered only
through third party recordkeepers and not by the principal underwriter. Under
all plans, dividends and distributions will be automatically reinvested in
additional shares.
DISTRIBUTION AND SERVICE PLANS. The Trust has in effect a Service Plan (the
"Class A Plan") for the Fund's Class A shares that is designed to meet the
service fee requirements of the sales charge rule of the National Association of
Securities Dealers, Inc. (the "NASD"). (Management believes service fee payments
are not distribution expenses governed by Rule 12b-1 under the 1940 Act, but has
chosen to have the Plan approved as if that Rule were applicable.) The Class A
Plan provides that the Class A may make service fee payments for personal
services and/or the maintenance of shareholder accounts to the principal
underwriter, investment dealers and other persons in amounts not exceeding .25%
of its average daily net assets for any fiscal year.
The Trust also has in effect compensation-type Distribution Plans (the
"Class B and Class C Plans") pursuant to Rule 12b-1 under the 1940 Act for the
Fund's Class B and Class C shares. The Class B and Class C Plans are designed to
permit an investor to purchase shares through an investment dealer without
incurring an initial sales charge and at the same time permit the principal
underwriter to compensate investment dealers in connection therewith. The Class
B and Class C Plans provide that the Fund will pay sales commissions and
distribution fees to the principal underwriter only after and as a result of the
sale of shares. On each sale of shares (excluding reinvestment of
distributions), the Fund will pay the principal underwriter amounts representing
(i) sales commissions equal to 5% for Class B shares and 6.25% for Class C
shares of the amount received by the Fund for each share sold and (ii)
distribution fees calculated by applying the rate of 1% over the prime rate then
reported in The Wall Street Journal to the outstanding balance of uncovered
distribution charges (as described below) of the principal underwriter. To pay
these amounts, each Class pays the principal underwriter a fee, accrued daily
and paid monthly, at an annual rate not exceeding .75% of its average daily net
assets to finance the distribution of its shares. Such fees compensate the
principal underwriter for sales commissions paid by it to investment dealers on
the sale of shares and for interest expenses. For sales of Class B shares, the
principal underwriter uses its own funds to pay sales commissions (except on
exchange transactions and reinvestments) to investment dealers at the time of
sale equal to 4% of the purchase price of the Class B shares sold by such
dealers. For Class C shares, the principal underwriter currently expects to pay
to an investment dealer (a) sales commissions (except on exchange transactions
and reinvestments) at the time of sale equal to .75% of the purchase price of
the shares sold by such dealer, and (b) monthly sales commissions approximately
equivalent to 1/12 of .75% of the value of shares sold by such dealer and
remaining outstanding for at least one year. During the first year after a
purchase of Class C shares, the principal underwriter will retain the sales
commission as reimbursement for the sales commissions paid to investment dealers
at the time of sale. CDSCs paid to the principal underwriter will be used to
reduce amounts owed to it. The Class B and Class C Plans provide that the Fund
will make no payments to the principal underwriter in respect of any day on
which there are no outstanding uncovered distribution charges of the principal
underwriter. CDSCs and accrued amounts will be paid by the Trust to the
principal underwriter whenever there exist uncovered distribution charges.
Because payments to the principal underwriter under the Class B and Class C
Plans are limited, uncovered distribution charges (sales commissions paid by the
principal underwriter plus interest, less the above fees and CDSCs received by
it) may exist indefinitely.
In calculating daily the amount of uncovered distribution charges,
distribution charges will include the aggregate amount of sales commissions and
distribution fees theretofore paid plus the aggregate amount of sales
commissions and distribution fees which the principal underwriter is entitled to
be paid under the Plan since its inception. Payments theretofore paid or payable
under the Class B and Class C Plans by the Trust to the principal underwriter
and CDSCs theretofore paid or payable to the principal underwriter will be
subtracted from such distribution charges; if the result of such subtraction is
positive, a distribution fee (computed at 1% over the prime rate then reported
in The Wall Street Journal) will be computed on such amount and added thereto,
with the resulting sum constituting the amount of outstanding uncovered
distribution charges with respect to such day. The amount of outstanding
uncovered distribution charges of the principal underwriter calculated on any
day does not constitute a liability recorded on the financial statements of the
Fund.
The amount of uncovered distribution charges of the principal underwriter at
any particular time depends upon various changing factors, including the level
and timing of sales of shares, the nature of such sales (i.e., whether they
result from exchange transactions, reinvestments or from cash sales through
investment dealers), the level and timing of redemptions of shares upon which a
CDSC will be imposed, the level and timing of redemptions of shares upon which
no CDSC will be imposed (including redemptions of shares pursuant to the
exchange privilege which result in a reduction of uncovered distribution
charges), changes in the level of the net assets of the Class, and changes in
the interest rate used in the calculation of the distribution fee under the
Class B and Class C Plans.
The Class B and Class C Plans also authorize each Class to make payments of
service fees to the principal underwriter, investment dealers and other persons
in amounts not exceeding .25% of its average daily net assets for personal
services, and/or the maintenance of shareholder accounts. This fee is paid
quarterly in arrears based on the value of Class B shares sold by such persons.
For Class C, investment dealers currently receive (a) a service fee (except on
exchange transactions and reinvestments) at the time of sale equal to .25% of
the purchase price of the Class C shares sold by such dealer, and (b) monthly
service fees approximately equivalent to 1/12 of .25% of the value of Class C
shares sold by such dealer. During the first year after a purchase of Class C
shares, the principal underwriter will retain the service fee as reimbursement
for the service fee payment made to investment dealers at the time of sale.
Currently, payments of sales commissions and distribution fees and of
service fees may equal 1% of a Class's average daily net assets per annum. The
Trust believes that the combined rate of all these payments may be higher than
the rate of payments made under distribution plans adopted by other investment
companies pursuant to Rule 12b-1. Although the principal underwriter will use
its own funds (which may be borrowed from banks) to pay sales commissions at the
time of sale, it is anticipated that the Eaton Vance organization will profit by
reason of the operation of the Class B and Class C Plans through an increase in
the Fund's assets (thereby increasing the advisory fee payable to BMR by the
Portfolio) resulting from sale of shares and through the amounts paid to the
principal underwriter, including CDSCs, pursuant to the Plans. The Eaton Vance
organization may be considered to have realized a profit under the Class B and
Class C Plans if at any point in time the aggregate amounts theretofore received
by the principal underwriter pursuant to the Class B or Class C Plan and from
CDSCs have exceeded the total expenses theretofore incurred by such organization
in distributing shares. Total expenses for this purpose will include an
allocable portion of the overhead costs of such organization and its branch
offices, which costs will include without limitation leasing expense,
depreciation of building and equipment, utilities, communication and postage
expense, compensation and benefits of personnel, travel and promotional expense,
stationery and supplies, literature and sales aids, interest expense, data
processing fees, consulting and temporary help costs, insurance, taxes other
than income taxes, legal and auditing expense and other miscellaneous overhead
items. Overhead is calculated and allocated for such purpose by the Eaton Vance
organization in a manner deemed equitable to the Trust.
The Class A and Class B and Class C Plans continue in effect from year to
year so long as such continuance is approved at least annually by the vote of
both a majority of (i) the noninterested Trustees of the Trust who have no
direct or indirect financial interest in the operation of the Plan or any
agreements related to the Plan (the "Plan Trustees") and (ii) all of the
Trustees then in office. Each Plan may be terminated at any time by vote of a
majority of the Plan Trustees or by a vote of a majority of the outstanding
voting securities of the applicable Class. Each Plan requires quarterly Trustee
review of a written report of the amount expended under the Plan and the
purposes for which such expenditures were made. The Plans may not be amended to
increase materially the payments described therein without approval of the
shareholders of the affected Class and the Trustees. So long as a Plan is in
effect, the selection and nomination of the noninterested Trustees shall be
committed to the discretion of such Trustees. The Class A, Class B and Class C
Plans were initially approved by the Trustees, including the Plan Trustees, on
February 28, 2000. The Trustees of the Trust who are "interested" persons of the
Fund have an indirect financial interest in the Plans because their employers
(or affiliates thereof) receive distribution and/or service fees under the Plans
or agreements related thereto.
The Trustees of the Trust believe that each Plan will be a significant
factor in the expected growth of each Fund's assets, and will result in
increased investment flexibility and advantages which have benefitted and will
continue to benefit the Fund and its shareholders. Payments for sales
commissions and distribution fees made to the principal underwriter under the
Class B and Class C Plans will compensate the principal underwriter for its
services and expenses in distributing those classes of shares. Service fee
payments made to the principal underwriter and investment dealers provide
incentives to provide continuing personal services to investors and the
maintenance of shareholder accounts. By providing incentives to the principal
underwriter and investment dealers, each Plan is expected to result in the
maintenance of, and possible future growth in, the assets of the Fund. Based on
the foregoing and other relevant factors, the Trustees of the Trust have
determined that in their judgment there is a reasonable likelihood that each
Plan will benefit the Fund and its shareholders.
PERFORMANCE
Average annual total return is determined separately for each Class of 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 (i) that all distributions are
reinvested at net asset value on the reinvestment dates during the period, (ii)
the deduction of the maximum sales charge from the initial $1,000 purchase order
for Class A shares, (iii) a complete redemption of the investment, and (iv) the
deduction of any CDSC at the end of the period. The Fund may also publish total
return figures for each class based on reduced sales charges or at net asset
value. These returns would be lower if the full sales charge was imposed.
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, rankings or ratings of mutual funds
(which include the Fund) made by independent sources may be used in
advertisements and in information furnished to present or prospective
shareholders. Information, charts and illustrations showing the effect of
compounding interest or relating to inflation and taxes (including their effects
on the dollar and the return on stocks and other investment vehicles) may also
be included in advertisements and materials furnished to present and prospective
investors. 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 portfolio allocation, turnover 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.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of the date hereof, Eaton Vance owned one share of the Fund, being the
only shares of the Fund outstanding on such date. Eaton Vance is a Massachusetts
business trust and a wholly-owned subsidiary of EVC.
TAXES
Each series of the Trust is treated as a separate entity for federal income
tax purposes. The Fund has elected 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 incurring a federal excise tax obligation, the Code
requires that the Fund distribute (or be deemed to have distributed) by December
31 of each calendar year (i) at least 98% of its ordinary income for such year,
(ii) at least 98% of its capital gain net income (which is the excess of its
realized capital gains over its realized capital losses), generally computed on
the basis of the one-year period ending on October 31 of such year) after
reduction by any available capital loss carryforwards and (iii) 100% of any
income and capital gains from the prior year (as previously computed) that was
not paid out during such year and on which the Fund paid no federal income tax.
Under current law, provided the Fund qualifies as a RIC for federal income 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.
Foreign exchange gains and losses realized by the Portfolio in connection
with its investments in foreign securities and certain options, futures or
forward contracts or foreign currency may be treated as ordinary income and
losses under special tax rules. Certain options, futures or forward contracts of
the Portfolio may be required to be marked to market (i.e., treated as if closed
out) on the last day of each taxable year, and any gain or loss realized with
respect to these contracts may be required to be treated as 60% long-term and
40% short-term capital gain or loss. Positions of the Portfolio in securities
and offsetting options, swaps, futures or forward contracts may be treated as
"straddles" and be subject to other special rules that may affect the amount,
timing and character of the Fund's distributions to shareholders. Certain uses
of foreign currency and foreign currency derivatives such as options, futures,
forward contracts and swaps and investment by the Portfolio in certain "passive
foreign investment companies" may be limited or a tax election may be made, if
available, in order to preserve the Fund's qualification as a RIC or avoid
imposition of a tax on the Fund.
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.
Any loss realized upon the redemption or exchange of shares of the Fund with
a tax holding period of 6 months or less will be treated as a long-term capital
loss to the extent of any distribution treated as long-term capital gains with
respect to such shares. In addition, all or a portion of a loss realized on a
redemption or other disposition of Fund shares may be disallowed under "wash
sale" rules if other shares of the Fund are purchased (whether through
reinvestment of dividends or otherwise) within a period beginning 30 days before
and ending 30 days after the date of such redemption or other disposition. Any
disallowed loss will result in an adjustment to the shareholder's tax basis in
some or all of the other shares acquired.
Sales charges paid upon a purchase of shares of the Fund cannot be taken
into account for purposes of determining gain or loss on a redemption or
exchange of the shares before the 91st day after their purchase to the extent a
sales charge is reduced or eliminated in a subsequent acquisition of shares of
the Fund or of another fund pursuant to the Fund's reinvestment or exchange
privilege. Any disregarded amounts will result in an adjustment to the
shareholder's tax basis in some or all of any other shares acquired.
Amounts paid by the Fund to individuals and certain other shareholders who
have not provided the Fund with their correct taxpayer identification number
("TIN") and certain certifications required by the Internal Revenue Service (the
"IRS"), as well as shareholders with respect to whom the Fund has received
certain information from the IRS or a broker, may be subject to "backup"
withholding of federal income tax arising from the Fund's taxable dividends and
other distributions as well as the proceeds of redemption transactions
(including repurchases and exchanges) at a rate of 31%. An individual's TIN is
generally his or her social security number.
The foregoing discussion does not address the special tax rules applicable
to certain other classes of investors, such as other retirement plans,
tax-exempt entities, foreign investors, insurance companies and financial
institutions. Shareholders should consult their own tax advisers with respect to
special tax rules that may apply in their particular situations, as well as the
state, local, and, where applicable, foreign tax consequences of investing in
the Fund.
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.
* * * *
<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 filed July 14, 1995 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 filed July
14, 1995 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 filed
October 30, 1997 and incorporated herein by reference.
(4) Amendment and Restatement of Establishment and Designation of
Series of Shares dated May 1, 2000 filed herewith.
(b)(1) By-Laws as amended November 3, 1986 filed as Exhibit (2)(a) to
Post-Effective Amendment No. 23 filed July 14, 1995 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 filed July 14, 1995 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 Tax Free Reserves dated August 15, 1995 filed as
Exhibit (5)(b) to Post-Effective Amendment No. 25 filed August
17, 1995 and incorporated herein by reference.
(2) 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
filed October 17, 1997 and incorporated herein by reference.
(3) 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 filed October
17, 1997 and incorporated herein by reference.
(4) 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
filed March 30, 1998 and incorporated herein by reference.
(5) Investment Advisory Agreement with Eaton Vance Management for
Eaton Vance Tax-Managed Value Fund dated August 16, 1999 filed as
Exhibit (d)(5) to Post-Effective Amendment No. 54 filed August
26, 1999 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 filed April 21, 1997
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 filed April 21, 1997
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 filed April 21, 1997
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 filed April 21, 1997
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 (A, A-1 and
A-2) filed as Exhibit (6)(a)(8) to Post-Effective Amendment No.
38 filed October 30, 1997 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 filed
October 30, 1997 and incorporated herein by reference.
(ii) Schedules A-3, A-4 and A-5 to Distribution Agreement filed as
Exhibit (e)(5)(ii) to Poet-Effective Amendment No. 54 filed
August 26, 1999 and incorporated herein by reference.
(iii) Schedule A-6 to Distribution Agreement effective May 1, 2000
filed herewith.
(6) Selling Group Agreement between Eaton Vance Distributors, Inc.
and Authorized Dealers filed as Exhibit (6)(b) to the
Post-Effective Amendment No. 61 filed December 28, 1995 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 filed July 14, 1995 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 filed February 27, 1996 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) filed
January 25, 1999 and incorporated herein by reference.
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<PAGE>
(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 filed August 16, 1995
and incorporated herein by reference.
(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 filed
October 30, 1997 and incorporated herein by reference.
(2)(a) Administrative Services Agreement between Eaton Vance Mutual
Funds Trust (on behalf of certain of its series) and Eaton Vance
Management dated August 16, 1999 with attached Schedule A dated
August 16, 1999 filed as Exhibit (h)(2) to Post-Effective
Amendment No. 54 filed August 26, 1999 and incorporated herein by
reference.
(b) Schedule A-1 to Administrative Services Agreement effective May
1, 2000 filed herewith.
(3) 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) filed February
25, 1998 and incorporated herein by reference.
(i)(1) Opinion of Internal Counsel dated April 28, 2000 filed herewith.
(j) Not applicable
(k) Not applicable
(l) Not applicable
(m)(1)(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 filed August 17, 1995 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
filed April 21, 1997 and incorporated herein by reference.
(2)(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 filed August 17, 1995 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
filed April 21, 1997 and incorporated herein by reference.
(3)(a) Eaton Vance Mutual Funds Trust Class A Service Plan adopted June
23, 1997 with attached Schedules (A, A-1 and A-2) filed as
Exhibit (15)(i) to Post-Effective Amendment No. 38 filed October
30, 1997 and incorporated herein by reference.
(b) Schedules A-3, A-4 and A-5 to Class A Service Plan filed as
Exhibit (m)(3)(b) to Post-Effective Amendment No. 54 filed August
26, 1999 and incorporated herein by reference.
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<PAGE>
(c) Schedule A-6 to Class A Service Plan effective May 1, 2000 filed
herewith.
(d) Eaton Vance Mutual Funds Trust Class S Service Plan adopted
February 22, 1999 filed as Exhibit (m)(3)(c) to Post-Effective
Amendment No. 53 filed July 28, 1999 and incorporated herein by
reference.
(4)(a) Eaton Vance Mutual Funds Trust Class B Distribution Plan adopted
June 23, 1997 with attached Schedules (A, A-1 and A-2) filed as
Exhibit (15)(j) to Post-Effective Amendment No. 38 filed October
30, 1997 and incorporated herein by reference.
(b) Schedules A-3, A-4 and A-5 to Class B Distribution Plan filed as
Exhibit (m)(4)(b) to Post-Effective Amendment No. 54 filed August
26, 1999 and incorporated herein by reference.
(c) Schedule A-6 to Class B Distribution Plan effective May 1, 2000
filed herewith.
(5)(a) Eaton Vance Mutual Funds Trust Class C Distribution Plan adopted
June 23, 1997 with attached Schedules (A and A-1) filed as
Exhibit (15)(k) to Post-Effective Amendment No. 38 filed October
30, 1997 and incorporated herein by reference.
(b) Schedules A-2, A-3, A-4 and A-5 to Class C Distribution Plan
filed as Exhibit (m)(5)(b) to Post-Effective Amendment No. 54
filed August 26, 1999 and incorporated herein by reference.
(c) Schedule A-6 to Class C Distribution Plan effective May 1, 2000
filed herewith.
(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 filed
October 17, 1999 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 filed
March 30, 1998 and incorporated herein by reference.
(c) Amendment to Multiple Class Plan for Eaton Vance Mutual Funds
Trust dated February 22, 1999 filed as Exhibit (o)(1)(c) to
Post-Effective Amendment No. 53 filed July 28, 1999 and
incorporated herein by reference.
(d) Schedule A-6 to Multiple Class Plan dated August 16, 1999 filed
as Exhibit (o)(d) to Post-Effective Amendment No. 54 filed August
26, 1999 and incorporated herein by reference.
(e) Schedule A-7 to Multiple Class Plan dated may 1, 2000 filed
herewith.
(p) Code of Ethics adopted by the Eaton Vance Group of Funds
effective May 1, 1981, as amended February 21, 1995 filed as
Exhibit (r) to the Registration Statement on Form N-2 of EV
Classic Senior Floating-Rate Fund (File Nos. 333-32262,
811-07945) (Accession No. 0000950156-00-000169) filed March 13,
2000 and incorporated herein by reference.
(q)(1)(a) 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 filed July 3, 1997 and incorporated herein by reference.
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<PAGE>
(b) Power of Attorney for Eaton Vance Mutual Funds Trust dated
November 16, 1998 filed as Exhibit (p)(1) to Post-Effective
Amendment No. 47 filed December 30, 1998 and incorporated herein
by reference.
(2)(a) Power of Attorney for Government Obligations Portfolio dated
April 22, 1997 filed as Exhibit (17)(b) to Post-Effective
Amendment No. 36 filed July 25, 1997 and incorporated herein by
reference.
(b) Power of Attorney for Government Obligations Portfolio dated
November 16, 1998 filed as Exhibit (p)(2)(a) to Post-Effective
Amendment No. 48 filed February 25, 1999 and incorporated herein
by reference.
(3)(a) Power of Attorney for High Income Portfolio dated February 14,
1997 filed as Exhibit No. (17)(c) to Post-Effective Amendment No.
36 filed July 26, 1997 and incorporated herein by reference.
(b) Power of Attorney for High Income Portfolio dated November 16,
1998 filed as Exhibit (p)(3) to Post-Effective Amendment No. 47
filed December 30, 1998 and incorporated herein by reference.
(4)(a) Power of Attorney for Strategic Income Portfolio dated April 22,
1997 filed as Exhibit No. (17)(d) to Post-Effective Amendment No.
36 filed July 26, 1997 and incorporated herein by reference.
(b) Power of Attorney for Strategic Income Portfolio dated November
16, 1998 filed as Exhibit (p)(4) to Post-Effective Amendment No.
47 filed December 30, 1998 and incorporated herein by reference.
(5)(a) Power of Attorney for Cash Management Portfolio dated April 22,
1997 filed as Exhibit (17)(e) to Post-Effective Amendment No. 36
filed July 26, 1997 and incorporated herein by reference.
(b) Power of Attorney for Cash Management Portfolio dated November
16, 1998 filed as Exhibit (p)(5)(a) to Post-Effective Amendment
No. 48 filed February 25, 1999 and incorporated herein by
reference.
(6)(a) Power of Attorney for Tax-Managed Growth Portfolio dated February
20, 1998 filed as Exhibit No. (17)(f) to Post-Effective Amendment
No. 41 filed February 26, 1998 and incorporated herein by
reference.
(b) Power of Attorney for Tax-Managed Growth Portfolio dated November
16, 1998 filed as Exhibit (p)(6) to Post-Effective Amendment No.
47 filed December 30, 1998 and incorporated herein by reference.
(7) Power of Attorney for Capital Appreciation Portfolio dated
February 28, 2000 filed as Exhibit (p)(7) to Post-Effective
Amendment No. 56 filed February 28, 2000 and incorporated herein
by reference.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL
Not applicable
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<PAGE>
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:
<TABLE>
<CAPTION>
<S> <C>
Eaton Vance Advisers Senior Floating-Rate Fund Eaton Vance Municipals Trust II
Eaton Vance Growth Trust Eaton Vance Mutual Funds Trust
Eaton Vance Income Fund of Boston Eaton Vance Prime Rate Reserves
Eaton Vance Institutional Senior Floating-Rate Fund Eaton Vance Special Investment Trust
Eaton Vance Investment Trust EV Classic Senior Floating-Rate Fund
Eaton Vance Municipals Trust
</TABLE>
(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
Ira Baron Vice President None
Chris Berg Vice President None
Kate B. Bradshaw Vice President None
Mark Carlson Vice President None
Daniel C. Cataldo Vice President and Treasurer None
Raymond Cox Vice President None
Peter Crowley Vice President None
Anthony DeVille Vice President None
Ellen Duffy Vice President None
Alan R. Dynner Vice President, Secretary and Clerk Secretary
Richard A. Finelli Vice President None
Kelly Flynn Vice President None
James Foley Vice President None
Michael A. Foster Vice President None
William M. Gillen Senior Vice President None
Hugh S. Gilmartin Vice President None
James B. Hawkes Vice President and Director President and Trustee
Perry D. Hooker Vice President None
Kara Lawler Vice President None
Thomas P. Luka Vice President None
John Macejka Vice President None
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<PAGE>
Geoff Marshall Vice President None
Joseph T. McMenamin Vice President None
Morgan C. Mohrman Senior Vice President None
James A. Naughton Vice President None
Joseph Nelson Vice President None
Mark D. Nelson Vice President None
Linda D. Newkirk Vice President None
James L. O'Connor Vice President Treasurer
Andrew Ogren Vice President None
George D. Owen, II Vice President None
Margaret Pier Vice President None
Enrique M. Pineda Vice President None
F. Anthony Robinson Vice President None
Frances Rogell Vice President None
Jay S. Rosoff Vice President None
Stephen M. Rudman Vice President None
Kevin Schrader Vice President None
Teresa A. Sheehan Vice President None
William M. Steul Vice President and Director None
Cornelius J. Sullivan Senior Vice President None
Peter Sykes Vice President None
David M. Thill Vice President None
John M. Trotsky Vice President None
Jerry Vainisi Vice President None
John Vaughan Vice President None
Chris Volf Vice President None
Debra Wekstein Vice President None
Wharton P. Whitaker President and Director None
Sue Wilder Vice President None
</TABLE>
- ------------------------------------------
* Address is The Eaton Vance Building, 255 State Street, Boston, MA 02109
(c) Not applicable
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
All applicable accounts, books and documents required to be maintained by
the Registrant by Section 31(a) of the Investment Company Act of 1940 and the
Rules promulgated thereunder are in the possession and custody of the
Registrant's custodian, Investors Bank & Trust Company, 200 Clarendon Street,
16th Floor, Mail Code ADM27, Boston, MA 02116, and its transfer agent, PFPC,
Inc., 4400 Computer Drive, Westborough, MA 01581-5120, with the exception of
certain corporate documents and portfolio trading documents which are in the
possession and custody of the administrator and investment adviser. Registrant
is informed that all applicable accounts, books and documents required to be
maintained by registered investment advisers are in the custody and possession
of Eaton Vance Management and Boston Management and Research.
ITEM 29. MANAGEMENT SERVICES
Not applicable
ITEM 30. UNDERTAKINGS
The Registrant undertakes to include the information required by Item 5 of
Form N-1A in its annual reports to shareholders under Rule 30d-1.
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<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 April 26, 2000.
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 their capacities on April 26, 2000.
<TABLE>
<CAPTION>
<S> <C>
SIGNATURE TITLE
--------- -----
/s/ James B. Hawkes
- ------------------- President (Chief Executive Officer) and Trustee
James B. Hawkes
/s/ James L. O'Connor
- --------------------- Treasurer (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
Norton H. Reamer*
- ----------------- Trustee
Norton H. Reamer
Lynn A. Stout*
- -------------- Trustee
Lynn A. Stout
Jack L. Treynor*
- ----------------- Trustee
Jack L. Treynor
*By: /s/ Alan R. Dynner
-----------------------------------
Alan R. Dynner ( As attorney-in-fact)
</TABLE>
C-8
<PAGE>
SIGNATURES
Capital Appreciation 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 April
26, 2000.
CAPITAL APRRECIATION 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 April 26, 2000.
<TABLE>
<CAPTION>
<S> <C>
SIGNATURE TITLE
--------- -----
/s/ James B. Hawkes
- ------------------- President (Chief Executive Officer) and Trustee
James B. Hawkes
/s/ James L. O'Connor
- --------------------- Treasurer (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
Norton H. Reamer*
- ----------------- Trustee
Norton H. Reamer
Lynn A. Stout*
- -------------- Trustee
Lynn A. Stout
Jack L. Treynor*
- ----------------- Trustee
Jack L. Treynor
*By: /s/ Alan R. Dynner
-----------------------------------
Alan R. Dynner ( As attorney-in-fact)
</TABLE>
C-9
<PAGE>
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
- ----------- -----------
(a)(4) Amendment and Restatement of Establishment and Designation of
Series of Shares dated May 1, 2000.
(e)(5)(iii) Schedule A-6 to Distribution Agreement effective May 1, 2000.
(h)(2)(b) Schedule A-1 to Administrative Services Agreement effective May
1, 2000.
(i)(1)
Opinion of Internal Counsel dated April 28, 2000.
(m)(3)(c) Schedule A-6 to Class A Service Plan effective May 1, 2000.
(4)(c) Schedule A-6 to Class B Distribution Plan effective May 1, 2000.
(5)(c) Schedule A-6 to Class C Distribution Plan effective May 1, 2000.
(o)(1)(e) Schedule A-7 to Multiple Class Plan dated May 1, 2000.
C-10
<PAGE>
EXHIBIT (a)(4)
EATON VANCE MUTUAL FUNDS TRUST
------------------------------
Amendment and Restatement
of
Establishment and Designation of Series of Shares
of Beneficial Interest, Without Par Value
(as amended and restated May 1, 2000)
WHEREAS, the Trustees of Eaton Vance Mutual Funds Trust, a Massachusetts
business trust (the "Trust"), have previously designated separate series (or
"Funds"); and
WHEREAS, the Trustees now desire to add an additional series (i.e., Eaton
Vance Tax-Managed Young Shareholder Fund) and to further redesignate the series
or Funds pursuant to Section 5.1 of Article V of the Trust's Amended and
Restated Declaration of Trust dated August 17, 1993 (as further Amended) (the
"Declaration of Trust");
NOW, THEREFORE, the undersigned, being at least a majority of the duly
elected and qualified Trustees presently in office of the Trust, hereby divide
the shares of beneficial interest of the Trust into seventeen separate series
("Funds"), each Fund to have the following special and relative rights:
1. The Funds shall be designated as follows:
Eaton Vance Government Obligations Fund
Eaton Vance High Income Fund
Eaton Vance Strategic Income Fund
Eaton Vance Tax-Managed Growth Fund
Eaton Vance Cash Management Fund
Eaton Vance Liquid Assets Fund
Eaton Vance Money Market Fund
Eaton Vance Municipal Bond Fund
Eaton Vance Tax Free Reserves
Eaton Vance Tax-Managed Emerging Growth Fund
Eaton Vance Tax-Managed International Growth Fund
Eaton Vance Tax-Managed Value Fund
Eaton Vance Tax-Managed Young Shareholder Fund
Eaton Vance Insured Tax-Managed Growth Fund
Eaton Vance Insured Tax-Managed Emerging Growth Fund
Eaton Vance Insured Tax-Managed International Growth Fund
Eaton Vance Insured High Income Fund
2. Each Fund shall be authorized to invest in cash, securities, instruments
and other property as from time to time described in the Trust's then currently
effective registration statements under the Securities Act of 1933 and the
Investment Company Act of 1940. Each share of beneficial interest of each Fund
("share") shall be redeemable, shall be entitled to one vote (or fraction
thereof in respect of a fractional share) on matters on which shares of that
Fund shall be entitled to vote and shall represent a pro rata beneficial
interest in the assets allocated to that Fund, all as provided in the
Declaration of Trust. The proceeds of sales of shares of each Fund, together
with any income and gain thereon, less any diminution
<PAGE>
or expenses thereof, shall irrevocably belong to such Fund, unless otherwise
required by law. Each share of a Fund shall be entitled to receive its pro rata
share of net assets of that Fund upon liquidation of that Fund.
3. Shareholders of each Fund shall vote separately as a class to the extent
provided in Rule 18f-2, as from time to time in effect, under the Investment
Company Act of 1940.
4. The assets and liabilities of the Trust shall be allocated among the
above-referenced Funds as set forth in Section 5.5 of Article V of the
Declaration of Trust, except as provided below:
(a) Costs incurred by each Fund in connection with its organization and
start-up, including Federal and state registration and qualification fees and
expenses of the initial public offering of such Fund's shares, shall (if
applicable) be borne by such Fund.
(b) Reimbursement required under any expense limitation applicable to the
Trust shall be allocated among those Funds whose expense ratios exceed such
limitation on the basis of the relative expense ratios of such Funds.
(c) The liabilities, expenses, costs, charges and reserves of the Trust
(other than the management and investment advisory fees or the organizational
expenses paid by the Trust) which are not readily identifiable as belonging to
any particular Fund shall be allocated among the Funds on an equitable basis as
determined by the Trustees.
5. The Trustees (including any successor Trustees) shall have the right at
any time and from time to time to reallocate assets and expenses or to change
the designation of any Fund now or hereafter created, or to otherwise change the
special and relative rights of any such Fund, and to terminate any Fund or add
additional Funds as provided in the Declaration of Trust.
6. Any Fund may merge or consolidate with any other corporation,
association, trust or other organization or may sell, lease or exchange all or
substantially all of its property, including its good will, upon such terms and
conditions and for such consideration when and as authorized by the Trustees;
and any such merger, consolidation, sale, lease or exchange shall be deemed for
all purposes to have been accomplished under and pursuant to the statutes of the
Commonwealth of Massachusetts. The Trustees may also at any time sell and
convert into money all the assets of any Fund. Upon making provision for the
payment of all outstanding obligations, taxes and other liabilities, accrued or
contingent, of such Fund, the Trustees shall distribute the remaining assets of
such Fund ratably among the holders of the outstanding shares. Upon completion
of the distribution of the remaining proceeds or the remaining assets as
provided in this paragraph 6, the Fund shall terminate and the Trustees shall be
discharged of any and all further liabilities and duties hereunder with respect
to such Fund and the right, title and interest of all parties with respect to
such Fund shall be canceled and discharged.
7. The Declaration of Trust authorizes the Trustees to divide each Fund and
any other series of shares into two or more classes and to fix and determine the
relative rights and preferences as between, and all provisions applicable to,
each of the different classes so established and designated by the Trustees. The
following Funds (Eaton Vance Government Obligations Fund, Eaton Vance High
Income Fund, Eaton Vance Strategic Income Fund, Eaton Vance Municipal Bond Fund,
Eaton Vance Tax-Managed Emerging Growth Fund, Eaton Vance Tax-Managed
International Growth Fund, Eaton Vance Tax-Managed Value Fund and Eaton Vance
Tax-Managed Young Shareholder Fund) shall have classes of shares established and
designated as Class A, Class B, Class C and Class I shares, and the Trustees may
<PAGE>
designate additional classes in the future. Eaton Vance Tax-Managed Growth Fund
shall have classes of shares established and designated as Class A, Class B,
Class C, Class I and Class S shares and the Trustees may designate additional
classes in the future. In addition, the following Funds (Eaton Vance Insured
Tax-Managed Growth Fund, Eaton Vance Insured Tax-Managed Emerging Growth Fund,
Eaton Vance Insured Tax-Managed International Growth Fund and Eaton Vance
Insured High Income Fund) shall have classes of shares established and
designated as Class A and Class B shares, and the Trustees may designate
additional classes in the future. For purposes of allocating liabilities among
classes, each class of that Fund shall be treated in the same manner as a
separate series.
Dated: May 1, 2000
- ----------------------------------- ---------------------------
Jessica M. Bibliowicz Norton H. Reamer
/s/ Donald R. Dwight /s/ Lynn A. Stout
- ------------------------------------ --- -----------------------
Donald R. Dwight Lynn A. Stout
/s/ James B. Hawkes /s/ Jack L. Treynor
- ------------------------------------ ---------------------------
James B. Hawkes Jack L. Treynor
/s/ Samuel L. Hayes, III
- ------------------------------------
Samuel L. Hayes, III
3
<PAGE>
EXHIBIT (e)(5)(iii)
SCHEDULE A-6
------------
EATON VANCE MUTUAL FUNDS TRUST
DISTRIBUTION AGREEMENT
EFFECTIVE: MAY 1, 2000
<TABLE>
<CAPTION>
<S> <C> <C>
Sales Commissions on
Name of Fund Adopting this Plan Class B Shares Prior Agreements
------------------------------- -------------- ----------------
Eaton Vance Tax-Managed Young Shareholder Fund 5% N/A
</TABLE>
<PAGE>
EXHIBIT (h)(2)(b)
SCHEDULE A-1
------------
Eaton Vance Mutual Funds Trust
------------------------------
ADMINISTRATIVE SERVICES AGREEMENT
Effective: May 1, 2000
Eaton Vance Tax-Managed Young Shareholder Fund
Fee: 0.15% of average daily net assets per annum,
computed and paid monthly
<PAGE>
Exhibit (i)(1)
Eaton Vance Management
The Eaton Vance Building
255 State Street, Boston, MA 02109
(617) 482-8260
April 28, 2000
Eaton Vance Mutual Funds Trust
255 State Street
Boston, MA 02109
Ladies and Gentlemen:
Eaton Vance Mutual Funds Trust (the "Trust") is a voluntary association
(commonly referred to as a "business trust") established under Massachusetts law
with the powers and authority set forth under its Declaration of Trust dated
August 17, 1993, as amended (the "Declaration of Trust").
I am of the opinion that all legal requirements have been complied with in
the creation of the Trust, and that said Declaration of Trust is legal and
valid.
The Trustees of the Trust have the powers set forth in the Declaration of
Trust, subject to the terms, provisions and conditions therein provided. As
provided in the Declaration of Trust, the Trustees may authorize one or more
series or classes of shares, without par value, and the number of shares of each
series or class authorized is unlimited. The series and classes of shares
established and designated as of the date hereof are identified on Appendix A
hereto.
Under the Declaration of Trust, the Trustees may from time to time issue
and sell or cause to be issued and sold shares of the Trust for cash or for
property. All such shares, when so issued, shall be fully paid and nonassessable
by the Trust.
I have examined originals, or copies, certified or otherwise identified to
my satisfaction, of such certificates, records and other documents as we have
deemed necessary or appropriate for the purpose of this opinion.
Based upon the foregoing, and with respect to Massachusetts law (other than
the Massachusetts Uniform Securities Act), only to the extent that Massachusetts
law may be applicable and without reference to the laws of the other several
states or of the United States of America, I am of the opinion that under
existing law:
1. The Trust is a trust with transferable shares of beneficial interest
organized in compliance with the laws of the Commonwealth of Massachusetts, and
the Declaration of Trust is legal and valid under the laws of the Commonwealth
of Massachusetts.
2. Shares of beneficial interest of the Trust registered by Form N-1A may
be legally and validly issued in accordance with the Declaration of Trust upon
receipt of payment in compliance with the Declaration of Trust and, when so
issued and sold, will be fully paid and nonassessable by the Trust.
<PAGE>
Eaton Vance Mutual Funds Trust
April 28, 2000
Page Two
I am a member of the Massachusetts bar and have acted as internal legal
counsel to the Trust in connection with the registration of shares.
I hereby consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to Post-Effective Amendment No. 59 to the
Trust's Registration Statement on Form N-1A pursuant to the Securities Act of
1933, as amended.
Very truly yours,
/s/ Maureen A. Gemma
--------------------
Maureen A. Gemma
Vice President
<PAGE>
Appendix A
Established and Designated Series* of the Trust
Eaton Vance Cash Management Fund
Eaton Vance Government Obligations Fund
Eaton Vance High Income Fund
Eaton Vance Liquid Assets Fund
Eaton Vance Money Market Fund
Eaton Vance Municipal Bond Fund
Eaton Vance Strategic Income Fund
Eaton Vance Tax Free Reserves
Eaton Vance Tax-Managed Emerging Growth Fund
Eaton Vance Tax-Managed Growth Fund
Eaton Vance Tax-Managed International Growth Fund
Eaton Vance Tax-Managed Value Fund
Eaton Vance Tax Managed Young Shareholder Fund
Eaton Vance Insured Tax-Managed Emerging Growth Fund
Eaton Vance Insured Tax-Managed Growth Fund
Eaton Vance Insured Tax-Managed International Growth Fund
Eaton Vance Insured High Income Fund
- ----------------------------
* Each Series is authorized to issue Class A, Class B, Class C and Class I
shares. Eaton Vance Tax-Managed Growth Fund is also authorized to issue Class S
shares.
<PAGE>
EXHIBIT (m)(3)(c)
SCHEDULE A-6
------------
EATON VANCE MUTUAL FUNDS TRUST
CLASS A SERVICE PLAN
EFFECTIVE: MAY 1, 2000
Name of Fund Adopting this Plan
-------------------------------
Eaton Vance Tax-Managed Young Shareholder Fund
<PAGE>
EXHIBIT (m)(4)(c)
SCHEDULE A-6
------------
EATON VANCE MUTUAL FUNDS TRUST
CLASS B DISTRIBUTION PLAN
EFFECTIVE: MAY 1, 2000
<TABLE>
<CAPTION>
<S> <C> <C>
Sales Date of Original Plans
Name of Fund Adopting This Plan Commission (Inception Date)
- ------------------------------- ---------- ----------------
Eaton Vance Tax-Managed Young Shareholder Fund 5% N/A
</TABLE>
<PAGE>
EXHIBIT (m)(5)(c)
SCHEDULE A-6
------------
EATON VANCE MUTUAL FUNDS TRUST
CLASS C DISTRIBUTION PLAN
EFFECTIVE: MAY 1, 2000
<TABLE>
<CAPTION>
<S> <C>
Name of Fund Adopting this Plan Date of Original Plans (Inception Date)
- ------------------------------- ---------------------------------------
Eaton Vance Tax-Managed Young Shareholder Fund N/A
</TABLE>
<PAGE>
EXHIBIT (o)(1)(e)
May 1, 2000
Schedule A-7
------------
Eaton Vance Mutual Funds Trust
------------------------------
Eaton Vance Tax-Managed Young Shareholder Fund
