<PAGE>
As filed with the Securities and Exchange Commission on January 12, 2001
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 [ ]
POST-EFFECTIVE AMENDMENT NO. 71 [x]
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940 [ ]
AMENDMENT NO. 74 [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
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)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[x] on March 13, 2001 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.
<PAGE>
The prospectus and statement of additional information ("SAI") of each of
the Eaton Vance Tax-Managed America and Eaton Vance Tax-Managed New America
Funds were filed electronically with the Commission in Post-Effective Amendment
No. 68 to the Registration Statement on Form N-1A (the "Registration Statement")
on October 27, 2000 (Accession No. 0000950156-00-000540); the prospectus and SAI
of the Eaton Vance Tax-Managed Young Shareholder Fund were filed electronically
with the Commission in Post-Effective Amendment No. 59 to the Registration
Statement on May 12, 2000 (Accession No. 0000950156-00-000264); the prospectus
and SAI of each of Eaton Vance Tax-Managed International Fund was filed
electronically with the Commission in Post-Effective Amendment No. 55 to the
Registration Statement on February 25, 2000 (Accession No.
0000950156-00-000119); the prospectus and SAI of the Eaton Vance Tax-Managed
Value Fund were filed electronically with the Commission in Post-Effective
Amendment No. 54 to the Registration Statement on August 26, 1999 (Accession No.
0000950156-99-000566); and all are incorporated by reference herein.
C-1
<PAGE>
{LOGO} Mutual Funds
EATON VANCE for People
Mutual Funds Who Pay
Taxes(R)
Eaton Vance
Tax-Managed
Capital Appreciation Fund
A diversified fund seeking long-term, after-tax returns
Prospectus Dated
March 1, 2001
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 Sales Charges
Investment Objective & Principal Redeeming Shares
Policies and Risks Shareholder Account
Management and Organization Features
Valuing Shares Tax Information
Purchasing Shares
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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 Capital
Aprreciation 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 its assets 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.
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. Through its fiscal year end, the Fund did not have
sufficient operations to provide required performance data.
2
<PAGE>
Fund Fees and Expenses. These tables describe the fees and expenses that you may
pay if you buy and hold shares.
Shareholder Fees (fees paid
directly from your investment) Class A Class B Class C Class D
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Maximum Sales Charge (Load)
(as a percentage of offering
price) 5.75% None 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% 5.00%
Maximum Sales Charge (Load)
Imposed on Reinvested
Distributions None None None None
Exchange Fee None None None None
Annual Fund Operating Expenses
(expenses that are deducted
from Fund assets) Class A Class B Class C Class D
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Management Fees 0.80% 0.80% 0.80% 0.80%
Distribution and Service
(12b-1) Fees 0.00% 1.00% 1.00% 1.00%
Other Expenses* 0.60% 0.35% 0.35% 0.35%
----- ----- ----- -----
Total Annual Fund Operating
Expenses 1.40% 2.15% 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
Class D shares $ 718 $ 1,073
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
Class D 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. Because another investment company
that invests in the Portfolio avoids investments that are inappropriate for
young shareholders (such as companies that derive their revenues primarily from
adult entertainment, alcoholic beverages or tabacco), the Portfolio will also
avoid such investments.
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, some of
which may be located in emerging market countries. 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
4
<PAGE>
between nations and trading, settlement, custodial and other operational risks.
In addition, the costs of investing abroad are generally higher than in the
United States, and foreign securities markets may be less liquid, more volatile
and less subject to governmental supervision than markets in the United States.
Foreign investments also could be affected by other factors not present in the
United States, including expropriation, armed conflict, confiscatory taxation,
lack of uniform accounting and auditing standards, less publicly available
financial and other information and potential difficulties in enforcing
contractual obligations. These risks can be more significant for 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 not invest 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 defensive 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 $45 billion on behalf of
mutual funds, institutional clients and individuals.
The investment adviser manages the investments of the Portfolio and provides
related office facilities and personnel. Under its investment advisory agreement
with the Portfolio, BMR receives a monthly advisory fee of 13/240 of 1%
(equivalent to 0.650% annually) of the average daily net assets of the Portfolio
up to and including $500 million. On net assets of $500 million and over the
annual fee is reduced.
Arieh Coll is the portfolio manager of the Portfolio (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.
Administration. Eaton Vance serves as the administrator of the Fund. In this
capacity, Eaton Vance administers the affairs of the Fund and provides certain
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.
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
5
<PAGE>
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, Class C and Class D 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 or Class D 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>
Sales Charge Sales Charge Dealer Commission
as Percentage of as Percentage of Net as a Perentage of
Amount of Purchase Offering Price Amount Invested Offering Price
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $50,000 5.75% 6.10% 5.00%
$50,000 but less than $100,000 4.75% 4.99% 4.00%
$100,000 but less than $250,000 3.75% 3.90% 3.00%
$250,000 but less than $500,000 3.00% 3.09% 2.50%
$500,000 but less than $1,000,000 2.00% 2.04% 1.75%
$1,000,00 or more 0.00* 0.00* See Below
</TABLE>
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.
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<PAGE>
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 and Class D shares are subject to the following
CDSC schedule:
Year of Redemption After Purchase CDSC
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First or Second 5.0%
Third 4.0%
Fourth 3.0%
Fifth 2.0%
Sixth 1.0%
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.
Class B and Class D Conversion Feature. After eight years, your Class B or Class
D shares will automatically convert to Class A shares. Class B and Class D
shares acquired through the reinvestment of distributions will convert in
proportion to shares not so acquired.
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, Class C and Class D shares, in
connection with certain redemptions from tax-sheltered retirement plans. Call
1-800-225-6265 for details. The Class B and Class D CDSCs are 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, Class C and Class D shares have in
effect plans under Rule 12b-1 that allow the Fund to pay distribution fees for
the sale and distribution of shares (so-called "12b-1 fees"). Class B, Class C
and Class D shares pay distribution fees of 0.75% of average daily net assets
annually. Because these fees are paid from Fund assets on an ongoing basis, they
will increase your cost over time and may cost you more than paying other types
of sales charges. All Classes pay service fees to the principal underwriter for
personal and/or account services equal to 0.25% of average daily net assets
annually. The principal underwriter pays compensation to investment dealers on
sales of Class B, Class C and Class D shares (except exchange transactions and
reinvestments) equal to 4%, 1% and 5.5%, respectively, of the purchase price of
the shares. After the first year, investment dealers also receive 0.75% of the
value of Class C shares in annual distribution fees. For Class A, Class B and
Class C shares, the principal underwriter generally pays service fees to
investment dealers commencing one year after the sale of shares based on
7
<PAGE>
the value of shares sold by such dealers. Distribution and service fees are
subject to the limitations contained in 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 b y 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. Redeeming shareholders who receive securities
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.
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.
8
<PAGE>
Information from the Fund. From time to time, you may be mailed the following:
* Annual and Semi-Annual Reports, containing performance information and
financial statements.
* Periodic account statements, showing recent activity and total share
balance.
* 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.
"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 are taxable as ordinary income.
Distributions of net realized long-term capital gains are taxable as long-term
gains. The Fund expects to pay any required 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.
9
<PAGE>
The Portfolio's investments in foreign securities may be subject to foreign
withholding taxes, which would decrease the Fund's return on such securities.
Shareholders generally will not be entitled to claim a credit or deduction with
respect to foreign taxes paid by the Portfolio.
Shareholders should consult with their advisers concerning the applicability of
state, local and other taxes to an investment.
10
<PAGE>
{LOGO} Mutual Funds
EATON VANCE for People
Mutual Funds 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 Share- holder Services (1-800-225-6265). If you own shares and would
like to add to, redeem or change your account, please write or call the
transfer agent:
--------------------------------------------------------------------------------
PFPC, Inc.
P.O. Box 9653
Providence, RI 02904-9653
1-800-262-1122
The Fund's SEC File No. is 811-4015. TMCAP
<PAGE>
STATEMENT OF
ADDITIONAL INFORMATION
March , 2001
EATON VANCE TAX-MANAGED
CAPITAL APPRECIATION 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
Taxes ...................................................... 18
Portfolio Security Transactions ............................ 19
Financial Statements ....................................... 21
Appendices:
A: Class A Fees, Performance and Ownership ................. a-1
B: Class B Fees, Performance and Ownership ................. b-1
C: Class C Fees, Performance and Ownership ................. c-1
D: Class D Fees, Performance and Ownership ................. d-1
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 MARCH , 2001, 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 (but less than) 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 (59), 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 (41), 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: 787 Seventh Avenue, New York, NY 10019
DONALD R. DWIGHT (70), 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 (66), 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 (65), Trustee
Chairman and Chief Operating Officer, Hellman, Jordan Management Co., Inc. (an
investment management company) (since November, 2000) and President, Jordan
Simmons Capital LLC (manager of energy related investments) (since November,
2000). President, Unicorn Corporation (an investment and financial advisory
services company) (since September, 2000). Formerly Chairman of the Board,
United Asset Management Corporation (a holding company owning institutional
investment management firms) and 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 (43), 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 (71), 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. (41), 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 (37) Vice President of the Portfolio
Vice President of Eaton Vance and BMR since January 10, 2000. Portfolio
manager and investment analyst for Fidelity Investments (1989-1999). Officer
of various investment companies managed by Eaton Vance or BMR.
THOMAS J. FETTER (57), 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 (36), 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 (53), 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.
EDWARD E. SMILEY, JR. (56), Vice President of the Trust
Vice President of Eaton Vance and BMR since November 1996. Previously he was a
Senior Vice President at Nationsbank. Officer of various investment
companies managed by Eaton Vance or BMR.
JAMES L. O'CONNOR (56), Treasurer
Vice President of Eaton Vance and BMR. Officer of various investment companies
managed by Eaton Vance or BMR.
ALAN R. DYNNER (60), 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.
Officer of various investment companies managed by Eaton Vance or BMR.
JANET E. SANDERS (65), 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 (38), Assistant Secretary
Vice President of BMR and Eaton Vance. Officer of various investment companies
managed by Eaton Vance or BMR.
ERIC G. WOODBURY (43), 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), Dwight and Reamer 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,
the noninterested Trustees of the Trust and the Portfolio earned the following
compensation in their capacities as Trustees from the Trust and the Portfolio.
For the year ended December 31, 1999, the noninterested Trustees earned the
following compensation in their capacities as Trustees of the funds in the
Eaton Vance fund complex(1):
<TABLE>
<CAPTION>
SOURCE OF JESSICA M. DONALD R. SAMUEL L. NORTON H. LYNN A. JACK L.
COMPENSATION BIBLIOWICZ 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
</TABLE>
----------
*Estimated.
(1) As of February 1, 2001, the Eaton Vance Fund complex consists of 146
registered investment companies or series thereof.
(2) The Trust consisted of 16 Funds as of December 31, 2000.
(3) Includes $60,000 of deferred compensation.
(4) Includes $16,000 of deferred compensation.
ORGANIZATION. The Fund is a series of the Trust, which is organized under
Massachusetts law on August 17, 1993 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, Class C and Class D 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, Class C and Class D shares, the amount of uncovered distribution
charges of the principal underwriter. The Class B, Class C and Class D
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, Class C and Class D 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 and Class D 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 or
Class D 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.
CONVERSION FEATURE. Class B and Class D shares held for eight years (the
"holding period") will automatically convert to Class A shares. For purposes
of this conversion, all distributions paid on Class B or Class D shares which
the shareholder elects to reinvest in Class B or Class D shares will be
considered to be held in a separate sub-account. Upon the conversion of Class
B or Class D shares not acquired through the reinvestment of distributions, a
pro rata portion of the Class B or Class D shares held in the sub-account will
also convert to Class A shares. This portion will be determined by the ratio
that the Class B or Class D shares being converted bear to the total of Class
B or Class D shares (excluding shares acquired through reinvestment) in the
account. This conversion feature is subject to the continuing availability of
a ruling from the Internal Revenue Service or an opinion of counsel that the
conversion is not taxable for federal income tax purposes.
EXCHANGE PRIVILEGE. In addition to exchanges into the same class of another
Eaton Vance fund, Class B or Class D 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, Class C and Class D Plans") pursuant to Rule 12b-1 under the 1940
Act for the Fund's Class B, Class C and Class D shares that permit
compensation to be made to the principal underwriter to the maximum extent
permitted by the NASD sales charge rule. The Class B, Class C and Class D
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. 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. The
principal underwriter currently pays an up-front sales commission of 4% of the
purchase price of Class B and Class D shares and 0.75% of the purchase price
of Class C shares, and an up-front service fee of 0.25% on Class C shares and
1.5% on Class D shares.
The Class B, Class C and Class D 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 or Class D
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 112 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, Class C and Class D 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, Class C and Class D Plans if at any point in time
the aggregate amounts theretofore received by the principal underwriter
pursuant to the Class B, Class C and Class D Plan and from CDSCs have exceeded
the total expenses theretofore incurred by such organization in distributing
shares. Total expenses for this purpose will include an allocable portion of
the overhead costs of such organization and its branch offices, which costs
will include without limitation leasing expense, depreciation of building and
equipment, utilities, communication and postage expense, compensation and
benefits of personnel, travel and promotional expense, stationery and
supplies, literature and sales aids, interest expense, data processing fees,
consulting and temporary help costs, insurance, taxes other than income taxes,
legal and auditing expense and other miscellaneous overhead items. Overhead is
calculated and allocated for such purpose by the Eaton Vance organization in a
manner deemed equitable to the Trust.
The Class A, Class B, Class C and Class D Plans continue in effect from
year to year so long as such continuance is approved at least annually by the
vote of both a majority of }i{ the noninterested Trustees of the Trust who
have no direct or indirect financial interest in the operation of the Plan or
any agreements related to the Plan (the "Plan Trustees") and (ii) all of the
Trustees then in office. Each Plan may be terminated at any time by vote of a
majority of the Plan Trustees or by a vote of a majority of the outstanding
voting securities of the applicable Class. Each Plan requires quarterly
Trustee review of a written report of the amount expended under the Plan and
the purposes for which such expenditures were made. The Plans may not be
amended to increase materially the payments described therein without approval
of the shareholders of the affected Class and the Trustees. So long as a Plan
is in effect, the selection and nomination of the noninterested Trustees shall
be committed to the discretion of such Trustees. The Class A, Class B and
Class C Plans were initially approved by the Trustees, including the Plan
Trustees, on June 19, 2000 while the Class D Plan was initially approved by
the Trustees, including the Plan Trustees, on December 11, 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, Class C and Class D 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.
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.
FINANCIAL STATEMENTS
The audited financial statements of and independent auditors' report for
the Fund and the Portfolio appears in the Eaton Vance Tax-Managed Capital
Appreciation Fund's most recent annual report to shareholders and is
incorporated by reference into this SAI. A copy of such Fund's annual report
accompanies this SAI.
HOUSEHOLDING. Consistent with applicable law, duplicate mailings of
shareholder reports and certain other Fund information to shareholders
residing at the same address may be eliminated.
Registrant incorporates by reference the audited financial information for
the Capital Appreciation Portfolio for the fiscal year ended October 31, 2000,
as previously filed electronically with the SEC (Accession No.
0000928816-01-000008).
<PAGE>
APPENDIX A
INSERT A
<PAGE>
APPENDIX B
INSERT B
<PAGE>
APPENDIX C
INSERT C
<PAGE>
APPENDIX D
INSERT D
<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 August 14, 2000 filed as Exhibit (a)(4) to
Post-Effective Amendment No. 67 filed August 31, 2000 and
incorporated herein by reference.
(5) Form of Amendment and Restatement of Establishment and Designation
of Series of Shares filed as Exhibit (a)(5) to Post-Effective
Amendment No. 68 filed October 27, 2000 and incorporated herein by
reference.
(b)(1) By-Laws as amended November 3, 1986 filed as Exhibit (2)(a) to
Post-Effective Amendment No. 23 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.
C-2
<PAGE>
(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.
(2) 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.
(3) 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.
(4) 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)(4)(ii) to Post-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
as Exhibit (e)(4)(iii) to Post-Effective Amendment No. 59 filed May
1, 2000 and incorporated herein by reference.
(iv) Schedule A-7 to Distribution Agreement effective June 19, 2000 filed
as Exhibit (e)(4)(iv) to Post-Effective Amendment No. 61 filed June
23, 2000 and incorporated herein by reference.
(v) Schedule A-8 to Distribution Agreement effective August 14, 2000
filed as Exhibit (e)(4)(v) to Post-Effective Amendment No. 66 filed
August 14, 2000 and incorporated herein by reference.
(vi) Form of Schedule A-9 to Distribution Agreement filed as Exhibit
(e)(4)(vi) to Post-Effective Amendment No. 68 filed October 27, 2000
and incorporated herein by reference.
(5) Form of Distribution Agreement between Eaton Vance Mutual Funds
Trust and Eaton Vance Distributors dated as of March 1, 2001 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.
C-3
<PAGE>
(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.
(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 as Exhibit (h)(2)(b) to Post-Effective Amendment No. 59
filed May 1, 2000 and incorporated herein by reference.
(c) Schedule A-2 to Administrative Services Agreement effective June 19,
2000 filed as Exhibit (h)(2)(c) to Post-Effective Amendment No. 61
filed June 23, 2000 and incorporated herein by reference.
(d) Schedule A-3 to Administrative Services Agreement effective August
14, 2000 filed as Exhibit (h)(2)(d) to Post-Effective Amendment No.
66 filed August 14, 2000 and incorporated herein by reference.
(e) Form of Schedule A-4 to Administrative Services Agreement filed as
Exhibit (h)(2)(e) to Post-Effective Amendment No. 68 filed October
27, 2000 and incorporated herein by reference.
(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 and Consent of Internal Counsel to be filed by amendment.
(j)(1) Independent Auditors' Consent to be filed by amendment.
(k) Not applicable
(l) Not applicable
C-4
<PAGE>
(m)(1)(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.
(2)(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.
(c) Schedule A-6 to Class A Service Plan effective May 1, 2000 filed as
Exhibit (m)(3)(c) to Post-Effective Amendment No. 59 filed May 1,
2000 and incorporated herein by reference.
(d) Schedule A-7 to Class A Service Plan effective June 19, 2000 filed
as Exhibit (m)(3)(d) to Post-Effective Amendment No. 61 filed June
23, 2000 and incorporated herein by reference.
(e) Schedule A-8 to Class A Service Plan effective August 14, 2000 filed
as Exhibit (m)(2)(e) to Post-Effective Amendment No. 66 filed August
14, 2000 and incorporated herein by reference.
(f) Form of Schedule A-9 to Class A Service Plan filed as Exhibit
(m)(2)(f) to Post-Effective Amendment No. 68 filed October 27, 2000
and incorporated herein by reference.
(g) 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.
(3)(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 as Exhibit (m)(4)(c) to Post-Effective Amendment No. 59 filed
May 1, 2000 and incorporated herein by reference.
(d) Schedule A-7 to Class B Distribution Plan effective June 19, 2000
filed as Exhibit (m)(4)(d) to Post-Effective Amendment No. 61 filed
June 23, 2000 and incorporated herein by reference.
(e) Schedule A-8 to Class B Distribution Plan effective August 14, 2000
filed as Exhibit (m)(3)(e) to Post-Effective Amendment No. 66 filed
August 14, 2000 and incorporated herein by reference.
(f) Form of Schedule A-9 to Class B Distribution Plan filed as Exhibit
(m)(3)(f) to Post-Effective Amendment No. 68 filed October 27, 2000
and incorporated herein by reference.
C-5
<PAGE>
(4)(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 as Exhibit No. (m)(5)(c) to Post-Effective Amendment No. 59
filed May 1, 2000 and incorporated herein by reference.
(d) Schedule A-7 to Class C Distribution Plan effective June 19, 2000
filed as Exhibit (m)(5)(d) to Post-Effective Amendment No. 61 filed
June 23, 2000 and incorporated herein by reference.
(e) Schedule A-8 to Class C Distribution Plan effective August 14, 2000
filed as Exhibit (m)(4)(e) to Post-Effective Amendment No. 66 filed
August 14, 2000 and incorporated herein by reference.
(f) Form of Schedule A-9 to Class C Distribution Plan filed as Exhibit
(m)(4)(f) to Post-Effective Amendment No. 68 filed October 27, 2000
and incorporated herein by reference.
(5)(a) Eaton Vance Mutual Funds Trust Class D Distribution Plan adopted
December 11, 2000 with attached Schedules (A and A-1) filed
herewith.
(n) Not applicable
(o)(1) Amended and Restated Multiple Class Plan for Eaton Vance Funds dated
June 19, 2000 filed as Exhibit (o)(1) to Post-Effective Amendment
No. 61 filed June 23, 2000 and incorporated herein by reference.
(2) Schedule A-1 to the Amended and Restated Multiple Class Plan dated
August 14, 2000 filed as Exhibit (o)(2) to Post-Effective Amendment
No. 67 filed August 31, 2000 and incorporated herein by reference.
(3) Form of Schedule A-2 to the Amended and Restated Multiple Class Plan
filed as Exhibit (o)(3) to Post-Effective Amendment No. 68 filed
October 27, 2000 and incorporated herein by reference.
(4) Amended and Restated Multiple Class Plan for Eaton Vance Funds dated
December 11, 2000 filed herewith.
(p) Code of Ethics adopted by Eaton Vance Corp., Eaton Vance Management,
Boston Management and Research, Eaton Vance Distributors, Inc. and
the Eaton Vance Funds effective September 1, 2000 as revised
November 6, 2000 filed as Exhibit (p) to Post-Effective Amendment
No. 75 of Eaton Vance Growth Trust (File Nos. 02-22019, 811-1241)
filed December 21, 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.
(b) Power of Attorney for Eaton Vance Mutual Funds Trust dated November
16, 1998 filed as Exhibit (q)(1)(a) to Post-Effective Amendment No.
47 filed December 30, 1998 and incorporated herein by reference.
C-6
<PAGE>
(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 (q)(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 (q)(3)(a) 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 (q)(4)(a) 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 (q)(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 (q)(6)(a) 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 (q)(7) to Post-Effective Amendment No. 56
filed February 28, 2000 and incorporated herein by reference.
(8) Power of Attorney for Floating Rate Portfolio dated June 19, 2000
filed as Exhibit (q)(8) to Post-Effective Amendment No. 61 filed
June 23, 2000 and incorporated herein by reference.
(9) Power of Attorney for Tax-Managed Emerging Growth Portfolio dated
August 14, 2000 filed as Exhibit (q)(9) to Post-Effective Amendment
No. 66 filed August 14, 2000 and incorporated herein by reference.
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<PAGE>
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL
Not applicable
ITEM 25. INDEMNIFICATION
Article IV of the Registrant's Amended and Restated Declaration of Trust
permits Trustee and officer indemnification by By-law, contract and vote.
Article XI of the By-Laws contains indemnification provisions. Registrant's
Trustees and officers are insured under a standard mutual fund errors and
omissions insurance policy covering loss incurred by reason of negligent errors
and omissions committed in their capacities as such.
The distribution agreements of the Registrant also provide for reciprocal
indemnity of the principal underwriter, on the one hand, and the Trustees and
officers, on the other.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT Adviser
Reference is made to: (i) the information set forth under the caption
"Management and Organization" in the Statement of Additional Information; (ii)
the Eaton Vance Corp. 10-K filed under the Securities Exchange Act of 1934 (File
No. 1-8100); and (iii) the Form ADV of Eaton Vance Management (File No.
801-15930) and Boston Management and Research (File No. 801-43127) filed with
the Commission, all of which are incorporated herein by reference.
ITEM 27. PRINCIPAL UNDERWRITERS
(a) Registrant's principal underwriter, Eaton Vance Distributors, Inc., a
wholly-owned subsidiary of Eaton Vance Management, is the principal
underwriter for each of the investment companies named below:
Eaton Vance Advisers Senior Floating-Rate Fund
Eaton Vance Growth Trust
Eaton Vance Income Fund of Boston
Eaton Vance Institutional Senior Floating-Rate Fund
Eaton Vance Investment Trust
Eaton Vance Municipals Trust
Eaton Vance Municipals Trust II
Eaton Vance Mutual Funds Trust
Eaton Vance Prime Rate Reserves
Eaton Vance Special Investment Trust
EV Classic Senior Floating-Rate Fund
(b)
(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 None
and Treasurer
Raymond Cox Vice President None
Peter Crowley Vice President None
Ellen Duffy Vice President None
Alan R. Dynner Vice President, Secretary Secretary
and
Clerk
Richard A. Finelli Vice President None
Kelly Flynn Vice President None
James Foley Vice President None
Michael A. Foster Vice President None
Anne Marie Gallagher Vice President None
William M. Gillen Senior Vice President None
Hugh S. Gilmartin Vice President None
Robert Hammond Vice President None
C-8
<PAGE>
James B. Hawkes Vice President and Director President and Trustee
Perry D. Hooker Vice President None
Steve Jones Vice President None
Kara Lawler Vice President None
Thomas P. Luka Vice President None
John Macejka Vice President None
Geoff Marshall Vice President None
Tim McEwan 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
Philip Pace Vice President None
Margaret Pier Vice President None
Enrique M. Pineda Vice President None
Matt Raynor 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
Lawrence Sinsimer Senior 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
------------------------------------------
* 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
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<PAGE>
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 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 January 12, 2001.
EATON VANCE MUTUAL FUNDS TRUST
By: /s/ ROBERT B. MACINTOSH
----------------------------------
Robert B. MacIntosh, Vice 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 January 12, 2001.
Signature Title
--------- -----
James B. Hawkes* President (Chief Executive Officer) and Trustee
---------------------------
James B. Hawkes
/s/ James L. O'Connor Treasurer (Principal Financial and Accounting
--------------------------- Officer)
James L. O'Connor
Jessica M. Bibliowicz* Trustee
---------------------------
Jessica M. Bibliowicz
Donald R. Dwight* Trustee
---------------------------
Donald R. Dwight
Samuel L. Hayes, III* Trustee
---------------------------
Samuel L. Hayes, III
Norton H. Reamer* Trustee
---------------------------
Norton H. Ramer
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)
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<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
----------- -----------
(e)(5) Form of Distribution Agreement
(m)(5)(a) Eaton Vance Mutual Funds Trust Class D Distribution Plan
(o)(4) Amended and Restated Multiple Class Plan for Eaton Vance Funds
C-12