<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 1, 1995
1933 ACT FILE NO. 33-16435
1940 ACT FILE NO. 811-5453
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933 [X]
POST-EFFECTIVE AMENDMENT NO. 11 [X]
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 12 [X]
EATON VANCE EQUITY-INCOME TRUST
----------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
24 FEDERAL STREET, BOSTON, MASSACHUSETTS 02110
----------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(617) 482-8260
-----------------------
(REGISTRANT'S TELEPHONE NUMBER)
H. DAY BRIGHAM, JR.
24 FEDERAL STREET, BOSTON, MASSACHUSETTS 02110
--------------------------------------
(NAME AND ADDRESS OF AGENT FOR SERVICE)
It is proposed that this filing will become effective on May 1, 1995
pursuant to paragraph (b) of Rule 485.
The exhibit index required by Rule 483(a) under the Securities Act of 1933
is located on page in the sequential numbering system of the manually signed
copy of this Registration Statement.
Total Return Portfolio has also executed this Registration Statement.
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
==================================================================================================================================
AMOUNT OF PROPOSED MAXIMUM PROPOSED AGGREGATE AMOUNT OF
TITLE OF SECURITIES SHARES BEING OFFERING PRICE MAXIMUM REGISTRATION
BEING REGISTERED REGISTERED PER SHARE OFFERING PRICE FEE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares of beneficial interest 289,902 $10.26<F1> $2,974,394<F2> $100
- ----------------------------------------------------------------------------------------------------------------------------------
<FN>
<F1>Computed under Rule 457(d) on the basis of the offering price per share at the close of business on April 17, 1995.
<F2>Registrant elects to calculate the maximum aggregate offering price pursuant to Rule 24e-2. 365,004 shares were redeemed
during the fiscal year ended December 31, 1994. 103,367 shares were used for reductions pursuant to Paragraph (c) of Rule
24f-2 during such fiscal year. 261,637 of the shares redeemed are being used for the reduction of the registration fee in this
Amendment. While no fee is required for the 261,637 shares, the Registrant has elected to register, for $100, an additional
28,265 shares (28,265 shares at $10.26 per share).
</TABLE>
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant
has registered an indefinite number of securities under the Securities Act of
1933. Registrant filed a Rule 24f-2 Notice for the fiscal year ended December
31, 1994, on February 15, 1995. Registrant continues its election to register an
indefinite number of shares of beneficial interest pursuant to Rule 24f-2.
================================================================================
<PAGE>
EATON VANCE EQUITY-INCOME TRUST
CROSS REFERENCE SHEET
ITEMS REQUIRED BY FORM N-1A
---------------------------
PART A
ITEM NO. ITEM CAPTION PROSPECTUS CAPTION
- ------------ -------- --------------------------------
1. .......... Cover Page Cover Page
2. .......... Synopsis Shareholder and Fund Expenses
3. .......... Condensed Financial The Fund's Financial Highlights;
Information Performance and Yield
Information
4. .......... General Description of The Fund's Investment
Registrant Objectives; How the Fund and
the Portfolio Invest their
Assets; Leverage Through
Borrowing -- Lending of
Securities; Organization of
the Fund and the Portfolio
5. .......... Management of the Fund Management of the Fund and the
Portfolio;
Organization of the Fund and
the Portfolio;
Back Cover
5A. .......... Management's Discussion of Not Applicable
Fund Performance
6. .......... Capital Stock and Other Organization of the Fund and the
Securities Portfolio;
The Lifetime Investing
Account/Distribution
Options; Distributions and
Taxes
7. .......... Purchase of Securities How the Fund and the Portfolio
Being Offered Determine their Net Asset
Values; How to Buy Shares of
the Fund for Cash; How to
Acquire Fund Shares in
Exchange for Securities; The
Lifetime
Investing Account/Distribution
Options;
Eaton Vance Shareholder
Services; Service Plan; Back
Cover
8. .......... Redemption or Repurchase How to Redeem or Sell Fund
Shares
9. .......... Pending Legal Proceedings Not Applicable
PART B
STATEMENT OF ADDITIONAL
ITEM NO. ITEM CAPTION INFORMATION CAPTION
- ------------ ------------ --------------------------------
10. ........... Cover Page Cover Page
11. ........... Table of Contents Table of Contents
12. ........... General Information and Not Applicable
History
13. ........... Investment Objectives and Investment Objective and
Policies Policies; Investment
Restrictions
14. ........... Management of the Fund Trustees and Officers
15. ........... Control Persons and Control Persons and Principal
Principal Holders of Holders of
Securities Securities
16. ........... Investment Advisory and Investment Adviser and
Other Services Administrator; Custodian;
Service Plan; Other Information;
Back Cover
17. ........... Brokerage Allocation and Portfolio Security Transactions;
Other Practices Investment Objective and
Policies -- Portfolio Turnover
18. ........... Capital Stock and Other Other Information
Securities
19. ........... Purchase, Redemption and Determination of Net Asset
Pricing of Securities Value; Service for Withdrawal;
Being Offered Purchase and Redemption of
Shares; Distribution Plan
20. ........... Tax Status Taxes
21. ........... Underwriters Principal Underwriter
22. ........... Calculation of Performance Investment Performance
Data
23. ........... Financial Statements Financial Statements
<PAGE>
Part A
Information Required in a Prospectus
EATON VANCE EQUITY-INCOME TRUST
A MUTUAL FUND SEEKING HIGH TOTAL RETURN FROM RELATIVELY PREDICTABLE INCOME
IN CONJUNCTION WITH CAPITAL APPRECIATION, CONSISTENT WITH PRUDENT
MANAGEMENT AND PRESERVATION OF CAPITAL.
IN SEEKING HIGH TOTAL RETURN, EATON VANCE EQUITY-INCOME TRUST (THE "FUND")
INVESTS ITS ASSETS IN TOTAL RETURN PORTFOLIO (THE "PORTFOLIO"), A DIVERSIFIED
OPEN-END INVESTMENT COMPANY HAVING THE SAME INVESTMENT OBJECTIVE AS THE FUND,
RATHER THAN, AS WITH AN HISTORICALLY STRUCTURED MUTUAL FUND, DIRECTLY INVESTING
IN AND MANAGING ITS OWN PORTFOLIO OF SECURITIES.
Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, any bank or other insured depository institution, and are not
federally insured by the Federal Deposit Insurance Corporation, the Federal
Reserve Board or any other government agency. Shares of the Fund involve
investment risks, including fluctuations in value and the possible loss of some
or all of the principal investment.
This prospectus is designed to provide you with information you should know
before investing. Please retain this document for future reference. A Statement
of Additional Information dated May 1, 1995, for the Fund, as supplemented from
time to time, has been filed with the Securities and Exchange Commission and is
incorporated herein by reference. This Statement of Additional Information is
available without charge from the Fund's principal underwriter, Eaton Vance
Distributors, Inc. (the "Principal Underwriter"), 24 Federal Street, Boston, MA
02110 (telephone (800) 225-6265). The Portfolio's investment adviser is Boston
Management and Research (the "Investment Adviser"), a wholly-owned subsidiary of
Eaton Vance Management, and Eaton Vance Management is the administrator (the
"Administrator") of the Fund. The offices of the Investment Adviser and the
Administrator are located at 24 Federal Street, Boston, MA 02110.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
Shareholder and Fund Expenses ................. 2 How to Acquire Fund Shares in Exchange for
The Fund's Financial Highlights ............... 3 Securities .............................. 16
The Fund's Investment Objective ............... 4 How to Redeem or Sell Fund Shares ......... 17
How the Fund and the Portfolio Invest The Lifetime Investing Account/Distribution
their Assets; Investment Risks .............. 4 Options ................................. 20
Organization of the Fund and the Portfolio .... 9 Eaton Vance Exchange Privilege ............ 22
Reports to Shareholders ....................... 13 Eaton Vance Shareholder Services .......... 23
Management of the Fund and the Portfolio ...... 13 Distribution Plan ......................... 25
How the Fund and the Portfolio Determine Distributions and Taxes ................... 27
their Net Asset Values ...................... 14 Performance and Yield Information ......... 28
How to Buy Shares of the Fund for Cash ........ 15
</TABLE>
- ------------------------------------------------------------------------------
Prospectus dated May 1, 1995
<PAGE>
<TABLE>
<CAPTION>
SHAREHOLDER AND FUND EXPENSES<F1>
- ------------------------------------------------------------------------------
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Sales Charges Imposed on Purchases of Shares None
Sales Charges Imposed on Reinvested Distributions None
Fees to Exchange Shares None
Range of Declining Contingent Deferred Sales Charges Imposed on Redemptions
During the First Seven Years (as a percentage of redemption proceeds
exclusive of all reinvestments and capital appreciation in the account)<F2> 5.00%-0%
ANNUAL FUND AND ALLOCATED PORTFOLIO OPERATING EXPENSES
(as a percentage of average daily net assets)
Investment Adviser Fee 0.74%
Rule 12b-1 Distribution (and Service) Fees 0.98%
Other Expenses
(including Interest Expense of 0.03%) 1.26%
-----
Total Operating Expenses 2.98%
=====
<CAPTION>
EXAMPLE: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
An investor would pay the following contingent deferred sales charge and
expenses on a $1,000 investment, assuming (a) 5% annual return and (b)
redemption at the end of each period: $80 $132 $177 $330
An investor would pay the following expenses on the same investment,
assuming (a) 5% annual return and (b) no redemptions: $30 $ 92 $157 $330
Notes:
<FN>
<F1>The purpose of the above table and Example is to summarize the aggregate expenses of the Fund and the Portfolio and to assist
investors in understanding the various costs and expenses that investors in the Fund will bear directly or indirectly. The
Trustees of the Trust believe that over time the aggregate per share expenses of the Fund and the Portfolio should be
approximately equal to or less than the per share expenses which the Fund would incur if the Trust retained the services of an
investment adviser and the assets of the Fund were invested directly in the type of securities being held by the Portfolio.
The percentages indicated as Annual Fund and Allocated Portfolio Operating Expenses in the table and the amounts included in
the Example are based on the Fund's and the Portfolio's results for the fiscal year ended December 31, 1994. The Example
should not be considered a representation of past or future expenses and actual expenses may be greater or less than those
shown. The Example assumes a 5% annual return and the Fund's actual performance may result in an annual return greater or less
than 5%. For further information regarding the expenses of both the Fund and the Portfolio see "The Fund's Financial
Highlights," "Organization of the Fund and the Portfolio," "Management of the Fund and the Portfolio" and "How to Redeem or
Sell Fund Shares." Because the Fund makes payments under its Distribution Plan adopted under Rule 12b-1, a long-term
shareholder may pay more than the economic equivalent of the maximum front-end sales charge permitted by a rule of the
National Association of Securities Dealers, Inc. See "Distribution Plan."
<F2>No contingent deferred sales charge is imposed on (a) shares purchased more than six years prior to the redemption, (b) shares
acquired through the reinvestment of distributions or (c) any appreciation in value of other shares in the account (see "How
to Redeem or Sell Fund Shares"), and no such charge is imposed on exchanges of Fund shares for shares of one or more other
funds listed under "The Eaton Vance Exchange Privilege".
<F3>Other investment companies with different distribution arrangements and fees are investing in the Portfolio and additional
such companies may do so in the future. See "Organization of the Fund and the Portfolio."
</TABLE>
<PAGE>
THE FUND'S FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The following information should be read in conjunction with the audited
financial statements included in the Statement of Additional Information, all of
which have been so included in reliance upon the report of Coopers & Lybrand
L.L.P., independent accountants, as experts in accounting and auditing, which
report is contained in the Statement of Additional Information. The financial
highlights for each of the seven years in the period ended September 30, 1994,
presented here were audited by other auditors whose report dated November 2,
1994 expressed an unqualified opinion on such financial highlights. Further
information regarding the performance of the Fund is contained in the Fund's
annual report to shareholders which may be obtained without charge by contacting
the Principal Underwriter.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
FROM START
OF BUSINESS
OCTOBER 1, 1994 YEAR ENDED SEPTEMBER 30,
TO DECEMBER -------------------------------------------------------------------------------
31, 1994 1994<F3> 1993<F3> 1992<F3> 1991<F3> 19903> 1989<F3> 1988<F3>
----------------- --------- --------- --------- --------- --------- --------- --------
NET ASSET VALUE,
<S> <C> <C> <C> <C> <C> <C> <C> <C>
beginning of period $10.120 $12.340 $10.730 $11.180 $10.290 $11.800 $ 9.780 $10.000
------- ------- ------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income $ 0.094 $ 0.326 $ 0.440 $ 0.374 $ 0.442 $ 0.643 $ 0.583d $ 0.561
Net realized and
unrealized gain (loss)
on investments (0.014) (2.136) 1.640 (0.344) 0.958 (1.183) 2.187 (0.417)
------- ------- ------- ------- ------- ------- ------- -------
Total income (loss)
from investment
operations $ 0.080 $(1.810) $ 2.080 $ 0.030 $ 1.400 $ (0.540) $ 2.770 $ 0.144
------- ------- ------- ------- ------- ------- ------- -------
Less distributions declared
to shareholders:
From net investment income $(0.090) $(0.326) $(0.330) $(0.413) $(0.510) $(0.634) $(0.750) $(0.364)
In excess of net investment
income<F4> -- (0.084) (0.140) -- -- -- -- --
Net realized gain/(loss)
on investment
transactions -- -- -- -- -- (0.336) -- --
Paid-in capital -- -- -- (0.067) -- -- -- --
------- ------- ------- ------- ------- ------- ------- -------
Total distributions $(0.090) $(0.410) $(0.470) $(0.480) $(0.510) $(0.970) $(0.750) $(0.364)
------- ------- ------- ------- ------- ------- ------- -------
NET ASSET VALUE,
end of period $10.110 $10.120 $12.340 $10.730 $11.180 $10.290 $11.800 $ 9.780
======= ======= ======= ======= ======= ======= ======= =======
TOTAL RETURN<F2> 0.79% (14.82)% 19.88% (0.03)% 13.91% (4.98)% 29.52% 1.50%
RATIOS/SUPPLEMENTAL DATA:
(to average daily net assets)
Expenses<F1> 2.98%<F5> 2.18% 2.30% 2.40% 2.26% 1.43% 2.29% 1.00%<F5>
Net investment income 3.85%<F5> 2.91% 2.88% 3.22% 3.96% 5.22% 4.99%<F6> 6.58%<F5>
PORTFOLIO TURNOVER<F7> -- 119% 87% 158% 151% 204% 222% 297%
NET ASSETS, END OF PERIOD
(000'S OMITTED) $27,650 $30,126 $49,941 $48,219 $55,364 $42,693 $ 6,490 $ 2,160
<FN>
<F1>Includes the Fund's share of Total Return Portfolio's allocated expenses for the period from October 1, 1994, to December 31,
1994.
<F2>Total return is calculated assuming a purchase at the net asset value on the first day and a sale at the net asset value on
the last day of each period reported. Dividends and distributions, if any, are assumed to be reinvested at the net asset value
on the record date.
<F3>Audited by previous auditors.
<F4>Distributions from paid-in capital for the year ended 1992 have been restated to conform with the treatment permitted under
current financial reporting standards.
<F5>Computed on an annualized basis.
<F6>Investment income and net investment income per share include $.081 applicable to nonrecurring dividend income. Had such
dividends not been included, the ratio of net investment income to average net assets would have been 3.85%.
<F7>Portfolio turnover represents the rate of portfolio activity for the period when the Fund was making investments directly in
securities. The portfolio turnover for the period since the Fund transferred its assets to the Portfolio is shown in the
Portfolio's financial statements, which are included elsewhere in this report.
Note: Certain parts of the above per share data for the year ended September 30, 1990, have been determined on the basis of average
monthly shares outstanding.
</TABLE>
<PAGE>
THE FUND'S INVESTMENT OBJECTIVES
- ------------------------------------------------------------------------------
EATON VANCE EQUITY-INCOME TRUST'S INVESTMENT OBJECTIVE IS TO SEEK FOR ITS
SHAREHOLDERS A HIGH LEVEL OF TOTAL RETURN, CONSISTING OF RELATIVELY PREDICTABLE
INCOME IN CONJUNCTION WITH CAPITAL APPRECIATION, CONSISTENT WITH PRUDENT
MANAGEMENT AND PRESERVATION OF CAPITAL. The Fund currently seeks to meet its
investment objective by investing its assets in the Total Return Portfolio, a
separate registered investment company which has the same investment objective
as the Fund. The Fund's and the Portfolio's investment objectives are
nonfundamental and may be changed when authorized by a vote of the Trustees of
the Fund or the Portfolio, respectively, without obtaining the approval of the
Fund's shareholders or the investors in the Portfolio, as the case may be. The
Trustees of the Fund have no present intention to change the Fund's objective
and intend to submit any proposed material change in the investment objective to
shareholders in advance for their approval.
HOW THE FUND AND THE PORTFOLIO INVEST THEIR ASSETS; INVESTMENT RISKS
- -------------------------------------------------------------------------------
THE PORTFOLIO SEEKS TO ACHIEVE ITS OBJECTIVE BY INVESTING PRINCIPALLY IN
DIVIDEND-PAYING COMMON STOCKS WITH THE POTENTIAL TO INCREASE DIVIDENDS IN THE
FUTURE. The Portfolio concentrates its investments in common stocks of public
utilities ("utility stocks"), principally electric, gas and telephone companies.
Accordingly, the Portfolio invests at least 25% of its total assets, and may
invest up to 100% of its total assets, in utility stocks. The Portfolio may also
invest in preferred stocks and may hold non-incoming-producing securities.
The Portfolio may from time to time invest in fixed-income debt securities
when the Portfolio's investment adviser ("BMR" or the "Investment Adviser")
believes that their total return potential is consistent with the Fund's
objective. The Portfolio may invest its cash reserves in high quality money
market securities, which include securities of the U.S. Government and its
agencies or instrumentalities maturing in one year or less, commercial paper,
and bankers' acceptances and certificates of deposit of domestic banks or
savings and loan associations having total assets of $1 billion or more. The
Portfolio may also invest in longer-term debt securities that at the time of
purchase are rated Aaa, Aa or A by Moody's Investors Service, Inc. ("Moody's"),
or AAA, AA or A by Standard & Poor's Ratings Group ("S&P"), Fitch Investors
Service, Inc. ("Fitch") or Duff & Phelps, Inc. ("Duff"), or that at the time of
purchase are issued, guaranteed, backed or secured by the U.S. Government or any
of its agencies or instrumentalities. The Portfolio currently intends to limit
its investments in fixed- income debt securities to 20% or less of its net
assets. Subject to such limitation, the Portfolio may invest up to 10% of its
net assets in fixed-income debt securities that at the time of purchase are
rated investment grade (i.e., rated Baa or higher by Moody's, or BBB or higher
by S&P, Fitch or Duff) or below investment grade. Debt securities rated below
Baa or BBB are commonly known as "junk bonds".
In view of the Portfolio's policy of concentrating its investments in
utility stocks, an investment in shares of the Fund should be made with an
understanding of the characteristics of the public utility industry and the
potential risks of such an investment. Industry-wide problems include the
effects of fluctuating economic conditions, energy conservation practices,
environmental regulations, high capital expenditures, construction delays due to
pollution control and environmental considerations, uncertainties as to fuel
availability and costs, increased competition in deregulated sectors of the
industry, and difficulties in obtaining timely and adequate rate relief from
regulatory commissions. If applications for rate increases are not granted or
are not acted upon promptly, the market prices of and dividend payments on
utility stocks may be adversely affected. The Portfolio's policy of
concentrating in utility stocks is a fundamental policy and may not be changed
unless authorized by an investor vote. The Fund has a similar fundamental policy
which cannot be changed unless authorized by a shareholder vote.
The Portfolio may invest in securities issued by foreign companies
(including American Depository Receipts and Global Depository Receipts). Such
investments may be subject to various risks such as fluctuations in currency and
exchange rates, foreign taxes, social, political and economic conditions in the
countries in which such companies operate, and changes in governmental, economic
or monetary policies both here and abroad. There may be less publicly available
information about a foreign company than about a comparable domestic company.
Because the securities markets in many foreign countries are not as developed as
those in the United States, the securities of many foreign companies are less
liquid and their prices are more volatile than securities of comparable domestic
companies. In order to hedge against possible variations in foreign exchange
rates pending the settlement of foreign securities transactions, the Portfolio
may buy or sell foreign currencies, foreign currency futures and options, and
forward foreign currency exchange contracts.
The Portfolio may invest a significant portion of its assets in the
securities of real estate investment trusts ("REITs"), which are affected by
conditions in the real estate industry, interest rate changes and, in the case
of REITs investing in health care facilities, events affecting the health care
industry.
The Portfolio may also enter into repurchase agreements with respect to
securities of the U.S. Government and its agencies or instrumentalities with the
seller of such securities, usually a bank. Under a repurchase agreement, the
seller agrees to repurchase the securities at the Portfolio's cost plus interest
within a specified time (normally one day). Repurchase agreements involve a risk
that the value of the securities subject to the repurchase agreement may decline
to an amount less than the repurchase price and that, in the event of the
seller's bankruptcy or insolvency, the Portfolio may be prevented from disposing
of such securities. The Portfolio will comply with the collateralization
policies of the Securities and Exchange Commission (the "Commission"), which
policies require that the Portfolio or its custodian obtain actual or
constructive possession of the collateral and that the market value of the
securities held as collateral be marked to the market daily and at least equal
the repurchase price during the term of the agreement. The Portfolio intends
that the total of its investments, if any, in repurchase agreements maturing in
more than 7 days and other illiquid securities will not exceed 15% of its net
assets.
DERIVATIVE INSTRUMENTS. The Portfolio may purchase or sell derivative
instruments (which are instruments that derive their value from another
instrument, security, index or currency) to enhance return, to hedge against
fluctuations in securities prices, interest rates or currency exchange rates, or
as a substitute for the purchase or sale of securities or currencies. The
Portfolio's transactions in derivative instruments may include the purchase or
sale of futures contracts on securities (such as U.S. Government securities),
securities indices, other indices, other financial instruments or currencies;
options on futures contracts; exchange-traded options on securities, indices or
currencies; and forward foreign currency exchange contracts. The Portfolio's
transactions in derivative instruments involve a risk of loss or depreciation
due to unanticipated adverse changes in securities prices, interest rates, the
other financial instruments' prices or currency exchange rates, the inability to
close out a position or default by the counterparty. The loss on derivative
instruments (other than purchased options) may exceed the Portfolio's initial
investment in these instruments. In addition, the Portfolio may lose the entire
premium paid for purchased options that expire before they can be profitably
exercised by the Portfolio. The Portfolio incurs transaction costs in opening
and closing positions in derivative instruments. There can be no assurance that
the Investment Adviser's use of derivative instruments will be advantageous to
the Portfolio.
The Portfolio may write (sell) covered call and put options on securities,
currencies and indices with respect to up to 50% of its net assets, as measured
by the aggregate value of the securities underlying such written call and put
options. If a written covered call option is exercised, the Portfolio will be
unable to realize further price appreciation on the underlying securities and
portfolio turnover will increase, resulting in higher brokerage costs. The
Portfolio may purchase call and put options on any securities in which the
Portfolio may invest or options on any securities index composed of securities
in which the Portfolio may invest. The Portfolio does not intend to purchase an
option on any security if, after such transaction, more than 5% of its net
assets, as measured by the aggregate of all premiums paid for all such options
held by the Portfolio, would be so invested.
To the extent that the Portfolio enters into futures contracts, options on
futures contracts and options on foreign currencies traded on an exchange
regulated by the Commodity Futures Trading Commission ("CFTC"), in each case
that are not for bona fide hedging purposes (as defined by the CFTC), the
aggregate initial margin and premiums required to establish these positions
(excluding the amount by which options are "in-the- money") may not exceed 5% of
the liquidation value of the Portfolio's portfolio, after taking into account
unrealized profits and unrealized losses on any contracts the Portfolio has
entered into.
Forward contracts are individually negotiated and privately traded by
currency traders and their customers. A forward contract involves an obligation
to purchase or sell a specific currency (or basket of currencies) for an agreed
price at a future date, which may be any fixed number of days from the date of
the contract. The Portfolio may engage in cross-hedging by using forward
contracts in one currency (or basket of currencies) to hedge against
fluctuations in the value of securities denominated in a different currency if
the Investment Adviser determines that there is an established historical
pattern of correlation between the two currencies (or the basket of currencies
and the underlying currency). Use of a different foreign currency magnifies the
Portfolio's exposure to foreign currency exchange rate fluctuations. The
Portfolio may also use forward contracts to shift its exposure to foreign
currency exchange rate changes from one currency to another.
LEVERAGE THROUGH BORROWING. The Portfolio may from time to time increase its
ownership of portfolio securities above the amounts otherwise possible by
borrowing from banks on an unsecured basis at fixed or variable rates of
interest and investing the borrowed funds. The Investment Adviser currently
anticipates that the Portfolio will incur borrowings for the purpose of
acquiring additional income-producing securities when it is believed that the
interest payable with respect to such borrowings will be exceeded by (a) the
income payable on the securities acquired with such borrowings or (b) the
anticipated total return (a combination of income and appreciation) on such
securities. Such borrowings might be made, for example, when short-term interest
rates fall below the yields available from the securities acquired with the
borrowed funds or the total return anticipated from such securities.
The Portfolio is required to maintain asset coverage of at least 300% with
respect to such borrowings, which means that the Portfolio may borrow an amount
up to 50% of the value of its net assets (not including such borrowings). The
Portfolio may be required to dispose of securities held by it on unfavorable
terms if market fluctuations or other factors reduce such asset coverage to less
than 300%.
Leveraging will exaggerate any increase or decrease in the market value of
the securities held by the Portfolio. Money borrowed for leveraging will be
subject to interest costs which may or may not exceed the income from the
securities purchased. The Portfolio may also be required to maintain minimum
average balances in connection with such borrowing or to pay a commitment or
other fee to maintain a line of credit; either of these requirements will
increase the cost of borrowing over the stated interest rate. Unless the income
and appreciation, if any, on assets acquired with borrowed funds exceeds the
cost of borrowing, the use of leverage will diminish the investment performance
of the Portfolio compared with what it would have been without leverage.
The Portfolio will not always borrow money for additional investments. The
Portfolio's willingness to borrow money for investment purposes, and the amount
it will borrow, will depend on many factors, the most important of which are the
investment outlook, market conditions and interest rates. Successful use of a
leveraging strategy depends on the Investment Adviser's ability to predict
correctly interest rates and market movements, and there is no assurance that a
leverage strategy will be successful during any period in which it is employed.
The average daily loan balance for the fiscal year ended December 31, 1994 was
$3,137,134 and the average daily interest rate was 5.96%.
LENDING OF SECURITIES. The Portfolio may seek to increase its income by lending
portfolio securities to broker-dealers or other institutional borrowers. Under
present regulatory policies of the Commission, such loans would be required to
be secured continuously by collateral in cash, cash equivalents or U.S.
Government securities held by the Portfolio's custodian and maintained on a
current basis at an amount at least equal to the market value of the securities
loaned which will be marked to market daily. The Portfolio would have the right
to call a loan and obtain the securities loaned at any time on five business
days' notice. During the existence of a loan, the Portfolio will continue to
receive the equivalent of the interest or dividends paid by the issuer on the
securities loaned and will also receive a fee, or all or a portion of the
interest on investment of the collateral, if any. However, the Portfolio may pay
lending fees to such borrowers. The Portfolio would not have the right to vote
any securities having voting rights during the existence of the loan, but would
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. 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 would be
made only to organizations deemed by the Portfolio's management to be of good
standing and, when, in the judgment of the Portfolio's management, the
consideration which can be earned from securities loans of this type justifies
the attendant risk. If the management of the Portfolio decides to make
securities loans, it is intended that the value of the securities loaned would
not exceed 30% of the Portfolio's total assets.
INVESTMENT RESTRICTIONS. The Fund and the Portfolio have adopted certain
fundmental investment restrictions which are enumerated in detail in the
Statement of Additional Information and which may not be changed unless
authorized by a shareholder vote and an investor vote, respectively. Except for
such enumerated restrictions and as otherwise indicated in this prospectus, the
investment objective and policies of the Fund and the Portfolio are not
fundamental policies and accordingly may be changed by the Trustees of the Trust
and the Portfolio without obtaining the approval of the Fund's shareholders or
the investors in the Portfolio, as the case may be. If any changes were made in
the Fund's investment objective, the Fund might have an investment objective
different from the objective which an investor considered appropriate at the
time the investor became a shareholder of the Fund.
An investment in the Fund entaiTls the risk that the principal value of
Fund shares and the income earned there on may not increase or may decline. The
Portfolio's investments in equity securities are subject to the risk of adverse
developments affecting particular companies or industries and the stock market
generally. The lowest investment grade, lower rated and comparable unrated debt
securities in which the Portfolio may invest will have speculative
characteristics in varying degrees. While such securities may have some quality
and protective characteristics, these characteristics can be expected to be
offset or outweighed by uncertainties or major risk exposures to adverse
conditions. Lower rated and comparable unrated securites are subject to the risk
of an issuer's inability to meet principal and interest payments on the
securities (credit risk) and may also be subject to price volatility due to such
factors as interest rate sensitivity, market perception of the creditworthiness
of the issuer and general market liquidity (market risk). Lower rated and
comparable unrated securities are also more likely to react to real or perceived
developments affecting markets and credit risk than are more highly rated
securities, which react primarily to movements in the general level of interest
rates. The Portfolio may retain defaulted securities in its portfolio when such
retention is considered desirable by the Investment Adviser. In the case of a
defaulted security, the Portfolio may incur additional expenses seeking recovery
of its investment. In the event the rating of a security held by the Portfolio
is downgraded, the Investment Adviser will consider disposing of such security,
but is not obligated to do so.
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THE FUND IS NOT INTENDED TO BE A COMPLETE INVESTMENT PROGRAM, AND
PROSPECTIVE INVESTORS SHOULD TAKE INTO ACCOUNT THEIR OBJECTIVES AND OTHER
INVESTMENTS WHEN CONSIDERING THE PURCHASE OF FUND SHARES. THE FUND CANNOT
ELIMINATE RISK OR ASSURE ACHIEVEMENT OF ITS OBJECTIVE.
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ORGANIZATION OF THE FUND AND THE PORTFOLIO
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THE TRUSTEES OF THE FUND ARE RESPONSIBLE FOR THE OVERALL MANAGEMENT AND
SUPERVISION OF ITS AFFAIRS.
EATON VANCE EQUITY-INCOME TRUST IS A BUSINESS TRUST ESTABLISHED UNDER
MASSACHUSETTS LAW PURSUANT TO A DECLARATION OF TRUST DATED AUGUST 3, 1987. THE
FUND IS A MUTUAL FUND -- A DIVERSIFIED OPEN-END MANAGEMENT INVESTMENT COMPANY.
The Trustees of the Fund are responsible for the overall management and
supervision of its affairs. The Fund has one class of shares of beneficial
interest, an unlimited number of which may be issued. Each share represents an
equal proportionate beneficial interest in the Fund. When issued and
outstanding, the shares are fully paid and nonassessable by the Fund and
redeemable as described under "How to Redeem or Sell Fund Shares". Shareholders
are entitled to one vote for each full share held. Fractional shares may be
voted proportionately. Shares have no preemptive or conversion rights and are
freely transferable. In the event of the liquidation of the Fund, shareholders
are entitled to share pro rata in the net assets of the Fund available for
distribution to shareholders.
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 Fund 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 Fund's by-laws, the Trustees shall continue to hold office and may
appoint successor Trustees.
The Fund's by-laws provide that a Trustee may be removed at any special
meeting of the shareholders of the Fund by a vote of two-thirds of the
outstanding shares of beneficial interest of the Fund (the "shares"). The
Trustees will promptly call a meeting of shareholders for the purpose of voting
upon a question of removal of a Trustee when requested to do so by the record
holders of not less than 10 per centum of the outstanding shares.
THE PORTFOLIO IS ORGANIZED AS A TRUST UNDER THE LAWS OF THE STATE OF NEW
YORK AND INTENDS TO BE TREATED AS A PARTNERSHIP FOR FEDERAL TAX PURPOSES. The
Portfolio, as well as the Fund, intends to comply with all applicable Federal
and state securities laws. The Portfolio's Declaration of Trust provides that
the Fund and other entities permitted to invest in the Portfolio (e.g., other
U.S. and foreign investment companies, 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 is
unable to meet its obligations. Accordingly, the Trustees of the Fund believe
that neither the Fund nor its shareholders will be adversely affected by reason
of the Fund investing in the Portfolio.
SPECIAL INFORMATION ON THE FUND/PORTFOLIO INVESTMENT STRUCTURE. An investor in
the Fund should be aware that the Fund, unlike mutual funds which directly
acquire and manage their own portfolios of securities, seeks to achieve its
investment objective by investing its assets in an interest in the Portfolio
(although the Fund may temporarily hold a de minimus amount of cash), which is a
separate investment company with an identical investment objective. Therefore,
the Fund's interest in the securities owned by the Portfolio is indirect. In
addition to selling an interest to the Fund, the Portfolio may sell interests to
other affiliated and non-affiliated mutual funds or institutional investors.
Such investors will invest in the Portfolio on the same terms and conditions and
will pay a proportionate share of the Portfolio's expenses. However, the other
investors investing in the Portfolio are not required to sell their shares at
the same public offering price as the Fund due to variations in sales
commissions and other operating expenses. Therefore, investors in the Fund
should be aware that these differences may result in differences in returns
experienced by investors in the various funds that invest in the Portfolio. Such
differences in returns are also present in other mutual fund structures,
including funds that have multiple classes of shares. For information regarding
the investment objective, policies and restrictions of the Fund and the
Portfolio, see "How the Fund and the Portfolio Invest their Assets; Investment
Risks". Further information regarding investment practices may be found in the
Statement of Additional Information.
The Trustees of the Fund 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 substantial growth in the assets of the
Portfolio, and affords the potential for economies of scale for the Fund, at
least when the assets of the Portfolio exceed $500 million. The shareholders of
the Fund approved the policy of investing the Fund's assets in an interest in
the Portfolio on September 1, 1994.
The Fund may withdraw (completely redeem) all its assets from the Portfolio
at any time if the Board of Trustees of the Fund determines that it is in the
best interest of the Fund to do so. The investment objective and the
nonfundamental investment policies of the Fund and the Portfolio may be changed
by the Trustees of the Fund and the Portfolio without obtaining the approval of
the shareholders of the Fund or the investors in the Portfolio, as the case may
be. Any such change of the investment objective of the Fund or the Portfolio
will be preceded by thirty days' advance written notice to the shareholders of
the Fund or the investors in the Portfolio, as the case may be. If a shareholder
redeems shares because of a change in the nonfundamental objective or policies
of the Fund, those shares may be subject to a contingent deferred sales charge,
as described in "How to Redeem or Sell Fund Shares." In the event the Fund
withdraws all of its assets from the Portfolio, or the Board of Trustees of the
Fund determines that the investment objective of the Portfolio is no longer
consistent with the investment objective of the Fund, the Board of Trustees of
the Fund would consider what action might be taken, including investing the
assets of the Fund in another pooled investment entity or retaining an
investment adviser to manage the Fund's assets in accordance with its investment
objective. The Fund's investment performance may be affected by a withdrawal of
all its assets from the Portfolio.
Information regarding other pooled investment entities or funds which
invest in the Portfolio may be obtained by contacting Eaton Vance Distributors,
Inc. (the "Principal Underwriter" or "EVD"), 24 Federal Street, Boston, MA
02110, (617) 482-8260. Smaller investors in the Portfolio may be adversely
affected by the actions of larger investors in the Portfolio. For example, if a
large investor withdraws from the Portfolio, the remaining investors may
experience higher pro rata operating expenses, thereby producing lower returns.
Additionally, the Portfolio may become less diverse, resulting in increased
portfolio risk, and experience decreasing economies of scale. However, this
possibility exists as well for historically structured funds which have large or
institutional investors.
Until recently, the Administrator sponsored and advised historically
structured funds. Funds which invest all their assets in interests in a separate
investment company are a relatively new development in the mutual fund industry
and, therefore, the Fund may be subject to additional regulations than
historically structured funds.
The Declaration of Trust of the Portfolio provides that the Portfolio will
terminate 120 days after the complete withdrawal of the Fund or any other
investor in the Portfolio, unless either the remaining investors, by unanimous
vote at a meeting of such investors, or a majority of the Trustees of the
Portfolio, by written instrument consented to by all investors, agree to
continue the business of the Portfolio. This provision is consistent with
treatment of the Portfolio as a partnership for Federal income tax purposes. See
"Distributions and Taxes" for further information. Whenever the Fund as an
investor in the Portfolio is requested to vote on matters pertaining to the
Portfolio (other than the termination of the Portfolio's business, which may be
determined by the Trustees of the Portfolio without investor approval), the Fund
will hold a meeting of Fund shareholders and will vote its interest in the
Portfolio for or against such matters proportionately to the instructions to
vote for or against such matters received from Fund shareholders. The Fund shall
vote shares for which it receives no voting instructions in the same proportion
as the shares for which it receives voting instructions. Other investors in the
Portfolio may alone or collectively acquire sufficient voting interests in the
Portfolio to control matters relating to the operation of the Portfolio, which
may require the Fund to withdraw its investment in the Portfolio or take other
appropriate action. Any such withdrawal could result in a distribution "in kind"
of portfolio securities (as opposed to a cash distribution from the Portfolio).
If securities are distributed, the Fund could incur brokerage, tax or other
charges in converting the securities to cash. In addition, the distribution in
kind may result in a less diversified portfolio of investments or adversely
affect the liquidity of the Fund. Notwithstanding the above, there are other
means for meeting shareholder redemption requests, such as borrowing.
In accordance with the Declaration of Trust of the Portfolio, there will
normally be no meetings of the investors for the purpose of electing Trustees
unless and until such time as less than a majority of the Trustees holding
office have been elected by investors. In such an event the Trustees of the
Portfolio then in office will call an investors' meeting for the election of
Trustees. Except for the foregoing circumstances and unless removed by action of
the investors in accordance with the Portfolio's Declaration of Trust, the
Trustees shall continue to hold office and may appoint successor Trustees.
The Declaration of Trust of the Portfolio provides that no person shall
serve as a Trustee if investors holding two-thirds of the outstanding interests
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 Trustees of the Fund, including a majority of noninterested Trustees,
have approved written procedures designed to identify and address any potential
conflicts of interest arising from the fact that the Trustees of the Fund and
the Trustees of the Portfolio are the same. Such procedures require each Board
to take actions to resolve any conflict of interest between the Fund and the
Portfolio, and it is possible that the creation of separate Boards may be
considered. For further information concerning the Trustees and officers of the
Fund and the Portfolio, see the Statement of Additional Information.
REPORTS TO SHAREHOLDERS
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THE FUND WILL ISSUE TO ITS SHAREHOLDERS SEMI-ANNUAL AND ANNUAL REPORTS
CONTAINING FINANCIAL STATEMENTS. Financial statements included in annual reports
are audited by the Fund's independent accountants. Shortly after the end of each
calendar year, the Fund will furnish all shareholders with information necessary
for preparing Federal and state tax returns.
MANAGEMENT OF THE FUND AND THE PORTFOLIO
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THE PORTFOLIO ENGAGES BOSTON MANAGEMENT AND RESEARCH ("BMR"), A WHOLLY-OWNED
SUBSIDIARY OF EATON VANCE MANAGEMENT ("EATON VANCE"), AS ITS INVESTMENT ADVISER.
EATON VANCE, ITS AFFILIATES AND ITS PREDECESSOR COMPANIES HAVE BEEN MANAGING
ASSETS OF INDIVIDUALS AND INSTITUTIONS SINCE 1924 AND MANAGING INVESTMENT
COMPANIES SINCE 1931.
ACTING UNDER SUPERVISION OF THE TRUSTEES, BMR MANAGES THE PORTFOLIO'S
INVESTMENTS AND AFFAIRS.
Acting under the general supervision of the Board of Trustees of the
Portfolio, BMR manages the Portfolio's investments and affairs. Under its
investment advisory agreement with the Portfolio, BMR receives a monthly
advisory fee of .0625% (equivalent to .75% annually) of the average daily net
assets of the Portfolio up to $500 million. On net assets of $500 million and
over the annual fee is reduced as follows:
ANNUALIZED FEE RATE
AVERAGE DAILY NET ASSETS FOR THE MONTH (FOR EACH LEVEL)
- --------------------------------------- -------------------
$500 million but less than $1 billion .................... 0.6875%
$1 billion but less than $1.5 billion .................... 0.6250%
$1.5 billion but less than $2 billion .................... 0.5625%
$2 billion but less than $3 billion ...................... 0.5000%
$3 billion and over ...................................... 0.4375%
For the period from October 1, 1994 to December 31, 1994, the Portfolio
paid BMR advisory fees equivalent to 0.74% (annualized) of the Portfolio's
average daily net assets for such period. Prior to the close of business on
September 30, 1994 (when the Fund transferred its assets to the Portfolio in
exchange for an interest in the Portfolio) the Fund retained Eaton Vance as its
investment adviser. For the fiscal year ended September 30, 1994, the Fund paid
Eaton Vance advisory fees equivalent to 0.75% of the Fund's average daily net
assets for such year.
BMR furnishes for the use of the Portfolio office space and all necessary
office facilities, equipment and personnel for servicing the investments of the
Portfolio. BMR also places the portfolio security transactions of the Portfolio
for execution with many broker-dealer firms and uses its best efforts to obtain
execution of such transactions at prices which are advantageous to the Portfolio
and at reasonably competitive commission rates. Subject to the foregoing, BMR
may consider sales of shares of the Fund or of other investment companies
sponsored by BMR or Eaton Vance as a factor in the selection of broker-dealer
firms to execute portfolio transactions.
Timothy O'Brien has been the portfolio manager of the Portfolio since
January, 1995. Mr. O'Brien became a Vice President of Eaton Vance on April 25,
1994. Prior to joining Eaton Vance, Mr. O'Brien served as a Vice President of
Loomis, Sayles & Co.
BMR OR EATON VANCE ACTS AS INVESTMENT ADVISER TO INVESTMENT COMPANIES AND
VARIOUS INDIVIDUAL AND INSTITUTIONAL CLIENTS WITH ASSETS UNDER MANAGEMENT OF
APPROXIMATELY $15 BILLION. Eaton Vance is a wholly-owned subsidiary of Eaton
Vance Corp., a publicly-held holding company. Eaton Vance Corp., through its
subsidiaries and affiliates, engages in investment management and marketing
activities, fiduciary and banking services, oil and gas operations, real estate
investment, consulting and management, and development of precious metals
properties.
The Fund has retained the services of Eaton Vance to act as Administrator
of the Fund. The Fund has not retained the services of an investment adviser
since the Fund seeks to achieve the investment objective of the Fund by
investing the Fund's assets in the Portfolio. As Administrator, Eaton Vance
provides the Fund with general office facilities and supervises the overall
administration of the Fund. For these services Eaton Vance currently receives no
compensation. The Trustees of the Fund may determine, in the future, to
compensate Eaton Vance for such services.
The Portfolio and the Fund, as the case may be, will each be responsible
for all of its respective costs and expenses not expressly stated to be payable
by BMR under the investment advisory agreement, by Eaton Vance under the
administrative services agreement or by EVD under the distribution agreement.
HOW THE FUND AND THE PORTFOLIO DETERMINE THEIR NET ASSET VALUES
- -------------------------------------------------------------------------------
THE FUND'S NET ASSET VALUE IS COMPUTED DAILY.
THE FUND VALUES ITS SHARES ONCE ON EACH DAY THE NEW YORK STOCK EXCHANGE (THE
"EXCHANGE") IS OPEN FOR TRADING, AS OF THE CLOSE OF REGULAR TRADING ON THE
EXCHANGE. The Fund's net asset value per share is determined by its custodian,
Investors Bank & Trust Company ("IBT") (as agent for the Fund), in the manner
authorized by the Trustees of the Fund. The net asset value is computed by
dividing the value of the Fund's total assets, less its liabilities, by the
number of shares outstanding. Because the Fund invests its assets in an interest
in the Portfolio, the Fund's net asset value will reflect the value of its
interest in the Portfolio (which in turn, reflects the underlying value of the
Portfolio's assets and liabilities). For further information regarding the
valuation of the Fund's interest in the Portfolio, see "Determination of Net
Asset Value" in the Statement of Additional Information.
The net asset value per Fund share so determined is effective for orders
received by certain financial service firms ("Authorized Firms") prior to the
price determination (which for this purpose shall be deemed to have been made as
of the close of regular trading on the Exchange -- normally 4:00 p.m., New York
time) and communicated by the Authorized Firm to the Principal Underwriter prior
to the close of the Principal Underwriter's business day. See "How to Buy Shares
of the Fund for Cash." It is the Authorized Firms' responsibility to transmit
orders promptly to the Principal Underwriter. Authorized Firms include financial
service firms with whom the Principal Underwriter has agreements.
THE PORTFOLIO'S NET ASSET VALUE IS ALSO DETERMINED AS OF THE CLOSE OF
REGULAR TRADING ON THE EXCHANGE. The Portfolio's net asset value is determined
by IBT (as custodian and agent for the Portfolio), in the manner authorized by
the Trustees of the Portfolio. The net asset value is computed by subtracting
the liabilities of the Portfolio from the value of its total assets. Securities
listed on securities exchanges or in the NASDAQ National Market are valued at
closing sales prices or, if there are no sales, at the mean between the closing
bid and asked prices therefor on such exchanges. For further information
regarding the valuation of the Portfolio's assets, see "Determination of Net
Asset Value" in the Statement of Additional Information. Eaton Vance Corp. owns
77.3% of the outstanding stock of IBT, the Fund's and the Portfolio's custodian.
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SHAREHOLDERS MAY DETERMINE THE VALUE OF THEIR INVESTMENT BY MULTIPLYING THE
NUMBER OF FUND SHARES OWNED BY THE CURRENT NET ASSET VALUE PER SHARE.
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HOW TO BUY SHARES OF THE FUND FOR CASH
- -------------------------------------------------------------------------------
INVESTORS MAY PURCHASE SHARES OF THE FUND THROUGH AUTHORIZED FIRMS AT THE NET
ASSET VALUE PER SHARE OF THE FUND NEXT DETERMINED AFTER SUCH PURCHASE. Pursuant
to its Distribution Agreement with EVD, the Fund engages EVD to distribute the
Fund's shares on a "best efforts" basis through Authorized Firms. EVD will
furnish the names of Authorized Firms to an investor upon request.
THE INITIAL INVESTMENT MUST BE AT LEAST $1,000. SHAREHOLDERS CAN MAKE ADDITIONAL
INVESTMENTS AT ANY TIME FOR AS LITTLE AS $50.
An initial investment in the Fund must be at least $1,000. Once an account
has been established the investor may send investments of $50 or more at any
time directly to the Fund's Transfer Agent (the "Transfer Agent") as follows:
The Shareholder Services Group, Inc., BOS725, P.O. Box 1559, Boston, MA 02104.
The $1,000 minimum initial investment is waived for Bank Automated Investing
accounts, which may be established with an investment of $50 or more. See "Eaton
Vance Shareholder Services" below.
The Fund may suspend the offering of shares at any time and may refuse any
order for the purchase of shares.
In connection with employee benefit or other continuous group purchase
plans under which the average initial purchase by a participant of the plan is
$1,000 or more, 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 under "How to Redeem or Sell Fund Shares."
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IF YOU DON'T HAVE AN AUTHORIZED FIRM, EATON VANCE CAN RECOMMEND ONE.
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HOW TO ACQUIRE FUND SHARES IN EXCHANGE FOR SECURITIES
- -------------------------------------------------------------------------------
IN EXCHANGING SECURITIES FOR FUND SHARES, THE MINIMUM VALUE OF SECURITIES
ACCEPTABLE TO EATON VANCE IS $5,000. COMPLIANCE WITH CERTAIN OTHER CONDITIONS IS
ALSO REQUIRED TO MAKE AN REQUIRED TO MAKE AN
IBT, AS ESCROW AGENT, WILL RECEIVE SECURITIES ACCEPTABLE TO EATON VANCE, AS
ADMINISTRATOR, IN EXCHANGE FOR FUND SHARES AT THEIR NET ASSET VALUE AS
DETERMINED ABOVE. The minimum value of securities (or securities and cash)
accepted for deposit is $5,000. Securities accepted will be sold by IBT as agent
for the account of their owner on the day of their receipt by IBT 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 net asset value per Fund share on the day such
proceeds are received. Eaton Vance will use reasonable efforts to obtain the
then current prices for such securities, but does not guarantee the best price
available. Eaton Vance will absorb any transaction costs, such as commissions,
on the sale of the securities.
Securities determined to be acceptable should be transferred via book entry
or physically delivered, in proper form for transfer, through an Authorized
Firm, together with a completed and signed Letter of Transmittal in approved
form (available from Authorized Firms), as follows:
In the case of book entry:
Deliver through Depository Trust Co.
Broker #2212
Investors Bank & Trust Company
For A/C Eaton Vance Equity-Income Trust
In the case of physical delivery:
Investors Bank & Trust Company
Attention: Eaton Vance Equity- Income Trust
Physical Securities Processing
Settlement Area
89 South Street
Boston, MA 02111
Investors who are contemplating an exchange of securities for shares of the
Fund, or their representatives, are advised to contact Eaton Vance to determine
whether the securities are acceptable before forwarding such securities to IBT.
Eaton Vance reserves the right to reject any securities.
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EXCHANGING SECURITIES FOR FUND SHARES MAY CREATE A TAXABLE GAIN OR LOSS.
EACH INVESTOR SHOULD CONSULT HIS OR HER TAX ADVISER WITH RESPECT TO THE
PARTICULAR FEDERAL, STATE AND LOCAL TAX CONSEQUENCES OF EXCHANGING
SECURITIES FOR FUND SHARES.
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HOW TO REDEEM OR SELL FUND SHARES
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THE REDEMPTION PRICE WILL BE BASED ON THE NET ASSET VALUE NEXT COMPUTED AFTER
DELIVERY OF THE SHARE CERTIFICATES OR STOCK POWERS.
A SHAREHOLDER MAY REDEEM FUND SHARES BY DELIVERING TO THE SHAREHOLDER
SERVICES GROUP, INC., BOS725, P.O. BOX 1559, BOSTON, MA 02104, EITHER SHARE
CERTIFICATES, OR A STOCK POWER if no certificates have been issued, in good
order for transfer, with a separate written request for redemption. The
redemption price will be based on the net asset value next computed after such
delivery. Good order means that the certificates or stock powers must be
endorsed by the record owner(s) exactly as the shares are registered and the
signature(s) must be guaranteed by a member of either the Securities Transfer
Association's STAMP program or the New York Stock Exchange's Medallion Signature
Program, or certain banks, savings and loan institutions, credit unions,
securities dealers, securities exchanges, clearing agencies and registered
securities associations as required by a regulation of the Securities and
Exchange Commission and acceptable to The Shareholder Services Group, Inc. In
addition, in some cases, good order may require the furnishing of additional
documents such as where shares are registered in the name of a corporation,
partnership or fiduciary.
Within seven days after receipt of a redemption request by The Shareholder
Services Group, Inc. in "good order", the Fund will make payment in cash for the
net asset value of the shares as of the date determined above, reduced by the
amount of any applicable contingent deferred sales charge (described below) and
any Federal income tax required to be withheld. Although the Fund normally
expects to make payment in cash for redeemed shares, the Fund, subject to
compliance with applicable regulations, has reserved the right to pay the
redemption price of shares of the Fund, either totally or partially, by a
distribution in kind of readily marketable securities withdrawn by the Fund from
the Portfolio (instead of cash). The securities so distributed would be valued
at the same amount as that assigned to them in calculating the net asset value
for the shares being sold. If a shareholder received a distribution in kind, the
shareholder could incur brokerage or other charges in converting the securities
to cash.
The right to redeem can be suspended and the payment of the redemption
price deferred when the Exchange is closed (other than customary weekend and
holiday closings), during periods when trading on the Exchange is restricted as
determined by the Commission, or during any emergency as determined by the
Commission which makes it impracticable for the Portfolio to dispose of its
securities or value its assets, or during any other period permitted by order of
the Commission for the protection of investors.
To sell shares at their net asset value through an Authorized Firm (a
repurchase), a shareholder can place a repurchase order with the Authorized
Firm, which may charge a fee. Net asset value is calculated on the day the Firm
places the order with EVD, as the Fund's agent, if the Firm receives the order
prior to the close of regular trading on the Exchange and communicates it to EVD
on the same day before EVD closes.
If shares were recently purchased, the proceeds of a redemption (or
repurchase) will not be sent until the check (including a certified or cashier's
check) received for the shares purchased has cleared. Payment for shares
tendered for redemption or repurchase may result in a delay of more than seven
days when the purchase check has not yet cleared, but the delay (anticipated not
to exceed fifteen days) will be no longer than required to verify that the
purchase check has cleared. The value of Fund shares redeemed or repurchased,
less any contingent deferred sales charge imposed (see below), may be more or
less than their cost, and redemptions or repurchases may therefore result in a
taxable gain or loss.
Due to the high cost of maintaining small accounts, the Fund reserves the
right to redeem accounts with balances of less than $1,000. Prior to such a
redemption, shareholders will be notified in writing and will be allowed 60
days' written notice to make additional purchases to bring the account up to the
Fund's $1,000 minimum investment requirement. Thus, an investor making an
initial investment of $1,000 would not be able to redeem shares without being
subject to this policy. However, no such redemption would be required by the
Fund if the cause of the low account balance was a reduction in the net asset
value of Fund shares. No contingent deferred sales charge will be imposed with
respect to such involuntary redemptions.
A CONTINGENT DEFERRED SALES CHARGE MAY BE IMPOSED ON THE REDEMPTION OF CERTAIN
SHARES.
IF THE SHAREHOLDER HOLDS FUND SHARES FOR MORE THAN SIX YEARS AFTER THEIR
PURCHASE, THE SHAREHOLDER WILL NOT HAVE TO PAY ANY CHARGE WHEN HE OR SHE REDEEMS
THOSE SHARES. SHARES REDEEMED WITHIN THE FIRST SIX YEARS OF THEIR PURCHASE
(EXCEPT SHARES ACQUIRED THROUGH THE REINVESTMENT OF DISTRIBUTIONS) GENERALLY
WILL BE SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE. A CONTINGENT DEFERRED
SALES CHARGE IS IMPOSED ON ANY REDEMPTION THE AMOUNT OF WHICH EXCEEDS THE
AGGREGATE VALUE AT THE TIME OF REDEMPTION OF (A) ALL SHARES IN THE ACCOUNT
PURCHASED MORE THAN SIX YEARS PRIOR TO THE REDEMPTION, (B) ALL SHARES IN THE
ACCOUNT ACQUIRED THROUGH REINVESTMENT OF DISTRIBUTIONS, AND (C) THE INCREASE, IF
ANY, OF VALUE OF ALL OTHER SHARES IN THE ACCOUNT (NAMELY THOSE PURCHASED WITHIN
THE SIX YEARS PRECEDING THE REDEMPTION) OVER THE PURCHASE PRICE OF SUCH SHARES.
REDEMPTIONS ARE PROCESSED IN A MANNER TO MAXIMIZE THE AMOUNT OF REDEMPTION
PROCEEDS WHICH WILL NOT BE SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE. THAT
IS, EACH REDEMPTION WILL BE ASSUMED TO HAVE BEEN MADE FIRST FROM THE EXEMPT
AMOUNTS REFERRED TO IN CLAUSES (A), (B) AND (C) ABOVE, AND SECOND THROUGH
LIQUIDATION OF THOSE SHARES IN THE ACCOUNT REFERRED TO IN CLAUSE (C) ON A
FIRST-IN-FIRST-OUT BASIS. Any contingent deferred sales charge which is required
to be imposed on share redemptions will be made in accordance with the following
schedule:
YEAR OF CONTINGENT
REDEMPTION DEFERRED SALES
AFTER PURCHASE CHARGE
-------------- --------------
First ................ 5%
Second ............... 5%
Third ................ 4%
Fourth ............... 3%
Fifth ................ 2%
Sixth ................ 1%
Seventh and following 0%
For shares purchased prior to August 1, 1994, the contingent deferred sales
charge for redemptions within the first year after purchase is 6%. In
calculating the contingent deferred sales charge upon the redemption of Fund
shares acquired in an exchange of shares of a fund currently listed under "The
Eaton Vance Exchange Privilege", the contingent deferred sales charge schedule
applicable to the shares at the time of purchase will apply and the purchase of
Fund shares acquired in the exchange is deemed to have occurred at the time of
the original purchase of the exchanged shares. The contingent deferred sales
charge will be waived for shares redeemed (1) pursuant to a Withdrawal Plan (See
"Eaton Vance Shareholder Services"), (2) as part of a required distribution from
a tax-sheltered retirement plan or (3) following the death of all beneficial
owners of such shares, provided the redemption is requested within one year of
death (a death certificate and other applicable documents may be required).
No contingent deferred sales charge will be imposed on Fund shares which
have been sold to Eaton Vance or its affiliates or to their respective employees
or clients. The contingent deferred sales charge will be paid to the Principal
Underwriter or the Fund.
-------------------------------------------------------------------------
THE FOLLOWING EXAMPLE ILLUSTRATES THE OPERATION OF THE CONTINGENT DEFERRED
SALES CHARGE. ASSUME THAT AN INVESTOR PURCHASES $10,000 OF THE FUND'S
SHARES AND THAT 16 MONTHS LATER THE VALUE OF THE ACCOUNT HAS GROWN THROUGH
INVESTMENT PERFORMANCE AND REINVESTMENT OF DISTRIBUTIONS TO $12,000. THE
INVESTOR THEN MAY REDEEM UP TO $2,000 OF SHARES WITHOUT INCURRING A
CONTINGENT DEFERRED SALES CHARGE. IF THE INVESTOR SHOULD REDEEM $3,000 OF
SHARES, A CONTINGENT DEFERRED SALES CHARGE WOULD BE IMPOSED ON $1,000 OF
THE REDEMPTION. THE RATE WOULD BE 5% BECAUSE THE REDEMPTION WAS MADE IN THE
SECOND YEAR AFTER THE PURCHASE WAS MADE AND THE CHARGE WOULD BE $50.
--------------------------------------------------------------------------
THE LIFETIME INVESTING ACCOUNT/DISTRIBUTION OPTIONS
- -------------------------------------------------------------------------------
THE TRANSFER AGENT AUTOMATICALLY SETS UP AN ACCOUNT FOR YOU. EACH TIME A
TRANSACTION TAKES PLACE YOU WILL RECEIVE A STATEMENT SHOWING COMPLETE DETAILS OF
THE TRANSACTION AND THE ACCOUNT'S CURRENT BALANCE.
AFTER AN INVESTOR MAKES AN INITIAL PURCHASE OF FUND SHARES, THE FUND'S
TRANSFER AGENT, THE SHAREHOLDER SERVICES GROUP, INC., WILL SET UP A LIFETIME
INVESTING ACCOUNT FOR THE INVESTOR ON THE FUND'S RECORDS. This account is a
complete record of all transactions between the investor and the Fund which at
all times shows the balance of shares owned. The Fund will not issue share
certificates except upon request.
Each time a transaction takes place in a shareholder's account, the
shareholder will receive a statement showing complete details of the transaction
and the current balance in the account. The Lifetime Investing Account also
permits a shareholder to make additional investments in shares by sending a
check for $50 or more to The Shareholder Services Group, Inc.
Any questions concerning a shareholder's account or services available may
be directed by telephone to Eaton Vance Shareholder Services at 800- 225-6265,
extension 2 or in writing to The Shareholder Services Group, Inc., BOS725, P.O.
Box 1559, Boston, MA 02104 (please provide the name of the shareholder, the Fund
and the account number).
SHAREHOLDERS MAY CHOOSE WHETHER TO RECEIVE DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS IN CASH OR SHARES.
THE FOLLOWING DISTRIBUTION OPTIONS WILL BE AVAILABLE TO ALL LIFETIME
INVESTING ACCOUNTS and may be changed as often as desired by written notice to
the Fund's dividend-disbursing agent, The Shareholder Services Group, Inc.,
BOS725, P.O. Box 1559, Boston, MA 02104. The currently effective option will
appear on each confirmation statement.
SHARE OPTION -- Dividends and capital gains in additional shares. This
option will be assigned if no other option is specified.
INCOME OPTION -- Dividends in cash; capital gains in additional shares.
CASH OPTION -- Dividends in cash; capital gains in cash.
Under the SHARE OPTION, dividends will be reinvested (net of any
withholding required under the Federal income tax laws) on the payment date in
additional full and fractional shares at the net asset value per share as of the
record date.
Under SHARE and INCOME OPTIONS, all distributions from capital gains
(whether long or short-term) will be paid in additional full and fractional
shares at the net asset value as of the record date of each such distribution,
net of any withholding required under Federal income tax laws.
If the INCOME OPTION or CASH OPTION has been selected, dividend and/or
capital gains distribution checks which are returned by the United States Postal
Service as not deliverable or which remain uncashed for six months or more will
be reinvested in the account at the then current net asset value. Furthermore,
the distribution option on the account will be automatically changed to the
SHARE OPTION until such time as the shareholder selects a different option.
DISTRIBUTION INVESTMENT OPTION. Dividends and/or capital gains may be
invested in additional shares of another Eaton Vance fund. Before selecting this
option, a shareholder should obtain a prospectus of the other Eaton Vance fund
and consider its objectives and policies carefully.
Transactions in a "street name" account will be reflected on the records of
the Fund only upon the instructions of the investment firm which is the record
owner of the shares. A beneficial owner of shares in a "street name" account
should contact his investment firm representative if he wants to purchase or
redeem shares or make other changes in his account. A transfer of a "street
name" account at one investment firm to a "street name" account at another firm
may require approval by the transferee firm. There are no fees charged by the
Fund for an account transfer, but transfer fees may be charged by the investment
firms.
A beneficial owner of shares who holds shares in a "street name" account at
an investment firm is reminded that all recordkeeping, transaction processing
and payments of distributions to his account will be done by the firm holding
the shares, and not by the Fund or its Transfer Agent. Year end forms required
for tax purposes (1099-DIV, 1099-B, etc.) are also provided by that investment
firm. The Fund will have no record of transactions for a beneficial owner of
shares while shares held for him are in a "street name" account. Requests for
any such information regarding the shares or the account should be directed to
that investment firm.
If a beneficial owner wishes to transfer shares from a "street name"
account to another firm's "street name" account, he should instruct the firm
currently holding the "street name" account to provide the costs and purchase
dates of all shares purchased in the account and the number of shares
accumulated through reinvestment of distributions and remaining in the account
to the transferee firm in a form satisfactory to the Fund. If the transfer is to
an account to be registered in the name of the owner on the records of the Fund,
this information must be furnished to the Fund's transfer agent in a form
satisfactory to the Fund. The furnishing of this information is essential to
provide an historical investment record of all shares owned.
Before establishing a "street name" account with an investment firm, or
transferring the account to another investment firm, an investor wishing to
reinvest distributions should determine whether the firm which will hold the
shares allows reinvestment of distributions in "street name" accounts.
--------------------------------------------------------------------------
UNDER A LIFETIME INVESTING ACCOUNT A SHAREHOLDER CAN MAKE ADDITIONAL
INVESTMENTS IN SHARES BY SENDING A CHECK FOR $50 OR MORE.
---------------------------------------------------------------------------
THE EATON VANCE EXCHANGE PRIVILEGE
- -------------------------------------------------------------------------------
SHAREHOLDERS MAY EXCHANGE FUND SHARES FOR SHARES OF OTHER EV MARATHON FUNDS. NO
CONTINGENT DEFERRED SALES CHARGE IS IMPOSED ON SUCH EXCHANGES.
Fund shares may be exchanged for shares of one or more other funds in the
Eaton Vance Marathon Group of Funds (which includes Eaton Vance Equity-Income
Trust and any EV Marathon fund, except Eaton Vance Prime Rate Reserves) or Eaton
Vance Money Market Fund, which are distributed subject to a contingent deferred
sales charge, on the basis of the net asset value per share of each fund at the
time of the exchange, provided that such exchange offers are available only in
states where shares of the fund being acquired may be legally sold.
The prospectus for each fund describes its investment objectives and
policies, and shareholders should obtain a prospectus and consider these
objectives and policies carefully before requesting an exchange. Each exchange
must involve shares which have a net asset value of at least $1,000. The
exchange privilege may be changed or discontinued without penalty. Shareholders
will be given sixty (60) days' written notice prior to any termination or
material amendment of the exchange privilege. The Fund does not permit the
exchange privilege to be used for "Market Timing" and may terminate the exchange
privilege for any shareholder account engaged in Market Timing activity. Any
shareholder account for which more than two round-trip exchanges are made within
any twelve month period will be deemed to be engaged in Market Timing.
Furthermore, a group of unrelated accounts for which exchanges are entered
contemporaneously by a financial intermediary will be considered to be engaged
in Market Timing.
The Shareholder Services Group, Inc. makes exchanges at the next determined
net asset value after receiving an exchange request in good order (see "How to
Redeem or Sell Fund Shares"), and share certificates, if any. The Shareholder
Services Group, Inc. may require additional documentation if shares are
registered in the name of a corporation, partnership or fiduciary.
No contingent deferred sales charge is imposed on exchanges. For purposes
of calculating the contingent deferred sales charge upon the redemption of
shares acquired in an exchange, the contingent deferred sales charge schedule
applicable to the shares at the time of purchase will apply and the purchase of
shares acquired in one or more exchanges is deemed to have occurred at the time
of the original purchase of the exchanged shares. Any contingent deferred sales
charge which is required to be imposed on redemptions of shares acquired in an
exchange will be imposed in accordance with the schedule set forth under "How to
Redeem or Sell Fund Shares", except that shares acquired in an exchange from EV
Marathon Strategic Income Fund or any EV Marathon Limited Maturity Fund will be
subject to a charge of 3%, 2.5%, 2% or 1% in the event of a redemption occurring
in the first, second, third or fourth year, respectively, after the original
purchase of the exchanged shares.
Shares of the other funds in the Eaton Vance Marathon Group of Funds and
shares of Eaton Vance Money Market Fund may be exchanged for Fund shares on the
basis of the net asset value per share of each fund at the time of the exchange,
but subject to any restrictions or qualifications set forth in the current
prospectus of any such fund.
Telephone exchanges within the group of funds listed above are also
accepted if the exchange involves shares on deposit with The Shareholder
Services Group, Inc. and the investor has not disclaimed in writing the use of
the privilege. To effect such exchanges, call The Shareholder Services Group,
Inc. at 800- 262-1122 or, within Massachusetts, 617- 573-9403, Monday through
Friday, 9:00 a.m. to 4:00 p.m. (Eastern Standard Time). All such telephone
exchanges must be registered in the same name(s) and with the same address as
are registered with the fund from which the exchange is being made. Neither the
Fund, the Principal Underwriter nor The Shareholder Services Group, Inc. will be
responsible for the authenticity of exchange instructions received by telephone;
provided that reasonable procedures to confirm that instructions communicated
are genuine have been followed. Telephone instructions will be tape recorded. In
times of drastic economic or market changes, a telephone exchange may be
difficult to implement. An exchange may result in a taxable gain or loss.
EATON VANCE SHAREHOLDER SERVICES
- ------------------------------------------------------------------------------
FULL INFORMATION ON THESE SERVICES IS AVAILABLE FROM EATON VANCE DISTRIBUTORS,
INC.
THE FOLLOWING SERVICES ARE VOLUNTARY, INVOLVE NO EXTRA CHARGE, AND MAY BE
CHANGED OR DISCONTINUED WITHOUT PENALTY AT ANY TIME. Full information on each of
the services described below and an application, where required, are available
from Authorized Firms or the Principal Underwriter. The cost of administering
such services for the benefit of shareholders who participate in them is borne
by the Fund as an expense to all shareholders.
INVEST-BY-MAIL -- FOR PERIODIC SHARE ACCUMULATION: Once the $1,000 minimum
investment has been made, checks of $50 or more payable to the order of Eaton
Vance Equity-Income Trust may be mailed directly to The Shareholder Services
Group, Inc., BOS725, P.O. Box 1559, Boston, MA 02104 at any time -- whether or
not distributions are reinvested. The name of the shareholder, the Fund and the
account number should accompany each investment.
BANK AUTOMATED INVESTING -- FOR REGULAR SHARE ACCUMULATION: Cash investments of
$50 or more may be made automatically each month or quarter from a shareholder's
bank account. The $1,000 minimum initial investment and small account redemption
policy are waived for these accounts.
WITHDRAWAL PLAN: A shareholder may draw on shareholdings systematically with
monthly or quarterly checks in an aggregate amount that does not exceed annually
12% of the account balance at the time the plan is established. Such amount will
not be subject to a contingent deferred sales charge. See "How to Redeem or Sell
Fund Shares". A minimum deposit of $5,000 in shares is required.
REINVESTMENT PRIVILEGE: A SHAREHOLDER WHO HAS REPURCHASED OR REDEEMED SHARES MAY
REINVEST, WITH CREDIT FOR ANY CONTINGENT DEFERRED SALES CHARGES PAID ON THE
REDEEMED OR REPURCHASED SHARES, ANY PORTION OR ALL OF THE REPUR- CHASE OR
REDEMPTION PROCEEDS (PLUS THAT AMOUNT NECESSARY TO ACQUIRE A FRACTIONAL SHARE TO
ROUND OFF THE PURCHASE TO THE NEAREST FULL SHARE) IN SHARES OF THE FUND,
provided that the reinvestment is effected within 30 days after such repurchase
or redemption. Shares are sold to a reinvesting shareholder at the net asset
value next determined following timely receipt of a written purchase order by
the Principal Underwriter or by the Fund (or by the Fund's Transfer Agent). To
the extent that any shares of the Fund are sold at a loss and the proceeds are
reinvested in shares of the Fund (or other shares of the Fund are acquired
within the period beginning 30 days before and ending 30 days after the date of
the redemption), some or all of the loss generally will not be allowed as a tax
deduction. Shareholders should consult their tax advisers concerning the tax
consequences of reinvestments.
TAX-SHELTERED RETIREMENT PLANS: Shares of the Fund are available for purchase in
connection with the following tax- sheltered retirement plans:
-- Pension and Profit Sharing Plans for self-employed individuals,
corporations and non-profit organizations;
-- Individual Retirement Account Plans for individuals and their non-
employed spouses; and
-- 403(b) Retirement Plans for employees of public school systems,
hospitals, colleges and other non- profit organizations meeting certain
requirements of the Internal Revenue Code of 1986, as amended (the
"Code").
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. Under all plans,
dividends and distributions will be automatically reinvested in additional
shares.
DISTRIBUTION PLAN
- -------------------------------------------------------------------
THE FUND WILL FINANCE DISTRIBUTION ACTIVITIES BY MONTHLY PAYMENTS EQUAL ON AN
ANNUAL BASIS TO .75% OF THE FUND'S AVERAGE DAILY NET ASSETS.
THE FUND FINANCES DISTRIBUTION ACTIVITIES AND HAS ADOPTED A DISTRIBUTION
PLAN (THE "PLAN") PURSUANT TO RULE 12B-1 UNDER THE INVESTMENT COMPANY ACT OF
1940. Rule 12b-1 permits a mutual fund, such as the Fund, to finance
distribution activities and bear expenses associated with the distribution of
its shares provided that any payments made by the Fund are made pursuant to a
written plan adopted in accordance with the Rule. The Plan is subject to, and
complies with, the sales charge rule of the National Association of Securities
Dealers, Inc. (the "NASD Rule"). The Plan is described further in the Statement
of Additional Information, and the following is a description of the salient
features of the Plan. The Plan provides that the Fund, subject to the NASD Rule,
will pay sales commissions and distribution fees to the Principal Underwriter
only after and as a result of the sale of shares of the Fund. On each sale of
Fund shares (excluding reinvestment of distributions) the Fund will pay the
Principal Underwriter amounts representing (i) sales commissions equal to 5% of
the amount received by the Fund for each share sold and (ii) distribution fees
calculated by applying the rate of 1% over the prime rate then reported in The
Wall Street Journal to the outstanding balance of Uncovered Distribution Charges
(as described below) of the Principal Underwriter. The Principal Underwriter
currently expects to pay sales commissions (except on exchange transactions and
reinvestments) to an Authorized Firm at the time of sale equal to 4% of the
purchase price of the shares sold by such Firm. The Principal Underwriter will
use its own funds (which may be borrowed from banks) to pay such commissions.
Because the payment of the sales commissions and distribution fees to the
Principal Underwriter is subject to the NASD Rule described below, it will take
the Principal Underwriter a number of years to recoup the sales commissions paid
by it to Authorized Firms from the payments received by it from the Fund
pursuant to the Plan.
THE NASD RULE REQUIRES THE FUND TO LIMIT ITS ANNUAL PAYMENTS OF SALES
COMMISSIONS AND DISTRIBUTION FEES TO THE PRINCIPAL UNDERWRITER TO AN AMOUNT NOT
EXCEEDING .75% OF THE FUND'S AVERAGE DAILY NET ASSETS FOR EACH FISCAL YEAR.
Under the Plan, the Fund accrues daily an amount at the rate of 1/365 of .75% of
the Fund's net assets, and pays such accrued amounts monthly to the Principal
Underwriter. The Plan requires such accruals to be automatically discontinued
during any period in which there are no outstanding Uncovered Distribution
Charges under the Plan. Uncovered Distribution Charges are calculated daily and,
briefly, are equivalent to all unpaid sales commissions and distribution fees to
which the Principal Underwriter is entitled under the Plan less all contingent
deferred sales charges theretofore paid to the Principal Underwriter. The Eaton
Vance organization may be considered to have realized a profit under the Plan if
at any point in time the aggregate amounts of all payments received by the
Principal Underwriter from the Fund pursuant to the Plan, including any
contingent deferred sales charges, have exceeded the total expenses theretofore
incurred by such organization in distributing shares of the Fund. Total expenses
for this purpose will include an allocable portion of the overhead costs of such
organization and its branch offices.
Because of the NASD Rule limitation on the amount of sales commissions and
distribution fees paid to the Principal Underwriter during any fiscal year, a
high level of sales of Fund shares during the initial years of the Fund's
operations would cause a large portion of the sales commission attributable to a
sale of Fund shares to be accrued and paid by the Fund to the Principal
Underwriter in fiscal years subsequent to the year in which such shares were
sold. This spreading of sales commissions payments under the Plan over an
extended period would result in the incurrence and payment of increased
distribution fees under the Plan. For the fiscal year ended September 30, 1994,
and for the period from October 1, 1994 to December 31, 1994, the Fund paid
sales commissions under the Plan to the Principal Underwriter equivalent to
0.75% and 0.75% (annualized), respectively, of the Fund's average daily net
assets for such periods. The amount of Uncovered Distribution Charges of the
Principal Underwriter calculated under the Plan on September 30, 1994 and
December 31, 1994 amounted to approximately $638,000 and $541,466, respectively
(equivalent to 2.1% and 1.9%, respectively, of the Fund's net assets on such
days).
THE FUND ALSO WILL PAY QUARTERLY SERVICE FEES NOT EXPECTED TO EXCEED .25% OF THE
FUND'S AVERAGE DAILY NET ASSETS FOR EACH FISCAL YEAR.
THE PLAN ALSO AUTHORIZES THE FUND TO MAKE PAYMENTS OF SERVICE FEES TO THE
PRINCIPAL UNDERWRITER, AUTHORIZED FIRMS AND OTHER PERSONS IN AMOUNTS NOT
EXCEEDING .25% OF THE FUND'S AVERAGE DAILY NET ASSETS FOR EACH FISCAL YEAR. The
Trustees of the Fund have initially implemented the Plan by authorizing the Fund
to make quarterly payments of service fees to the Principal Underwriter and
Authorized Firms in amounts not expected to exceed .25% of the Fund's average
daily net assets for any fiscal year based on the value of Fund shares sold by
such persons and remaining outstanding for at least twelve months. As permitted
by the NASD Rule, such payments are made for personal services and/or the
maintenance of shareholder accounts. Service fees are separate and distinct from
the sales commissions and distribution fees payable by the Fund to the Principal
Underwriter, and as such are not subject to automatic discontinuance when there
are no outstanding Uncovered Distribution Charges of the Principal Underwriter.
For the fiscal year ended September 30, 1994, and for the period from October 1,
1994 to December 31, 1994, the Fund made service fee payments to the Principal
Underwriter and Authorized Firms equivalent to 0.19% and 0.23% (annualized) of
the Fund's average daily net assets for such periods.
The Principal Underwriter may, from time to time, at its own expense,
provide additional incentives to Authorized Firms which employ registered
representatives who sell a minimum dollar amount of the Fund's shares and/or
shares of other funds distributed by the Principal Underwriter. In some
instances, such additional incentives may be offered only to certain Authorized
Firms whose representatives are expected to sell significant amounts of shares.
In addition, the Principal Underwriter may from time to time increase or
decrease the sales commissions payable to Authorized Firms.
The Fund may, in its absolute discretion, suspend, discontinue or limit the
offering of its shares at any time. In determining whether any such action
should be taken, the Fund's management intends to consider all relevant factors,
including without limitation the size of the Fund, the investment climate and
market conditions, the volume of sales and redemptions of Fund shares, and the
amount of Uncovered Distribution Charges of the Principal Underwriter. The Plan
may continue in effect and payments may be made under the Plan following any
such suspension, discontinuance or limitation of the offering of Fund shares;
however, the Fund is not contractually obligated to continue the Plan for any
particular period of time. Suspension of the offering of Fund shares would not,
of course, affect a shareholder's ability to redeem shares.
DISTRIBUTIONS AND TAXES
- -------------------------------------------------------------------
DIVIDENDS WILL BE PAID AT LEAST QUARTERLY. CAPITAL GAINS WILL BE DISTRIBUTED
ANNUALLY. THE FUND IS NOT EXPECTED TO HAVE ANY FEDERAL OR STATE TAX LIABILITY.
THE FUND'S POLICY IS TO DISTRIBUTE QUARTERLY SUBSTANTIALLY ALL OF THE NET
INVESTMENT INCOME ALLOCATED TO THE FUND BY THE PORTFOLIO, LESS THE FUND'S DIRECT
AND ALLOCATED EXPENSES, AND TO DISTRIBUTE AT LEAST ANNUALLY SUBSTANTIALLY ALL OF
ITS NET REALIZED CAPITAL GAINS. A portion of distributions from net investment
income will be eligible for the dividends- received deduction for corporations.
The Fund's distributions from its net investment income, net short-term capital
gains, and certain foreign exchange gains will be taxable to shareholders as
ordinary income, whether paid in cash or reinvested in additional shares of the
Fund. The Fund's distributions from its net long-term capital gains are taxable
to shareholders as long-term capital gains, whether paid in cash or reinvested
in additional shares of the Fund and regardless of the length of time Fund
shares have been owned by shareholders. Certain distributions declared by the
Fund in October, November or December and paid the following January will be
taxable to shareholders as if received on December 31 of the year in which they
are declared.
Shareholders will receive annually tax information notices and Forms 1099
to assist in the preparation of their Federal and state tax returns for the
prior calendar year's distributions, proceeds from the redemption or exchange of
Fund shares, and Federal income tax (if any) withheld by the Fund's Transfer
Agent.
In order to qualify as a regulated investment company under the Code, the
Fund must satisfy certain requirements relating to the sources of its income,
the distribution of its income, and the diversification of its assets. In
satisfying these requirements, the Fund will treat itself as owning its
proportionate share of each of the Portfolio's assets and as entitled to the
income of the Portfolio properly attributable to such share.
- -------------------------------------------------------------------------------
AS A REGULATED INVESTMENT COMPANY UNDER THE CODE, THE FUND DOES NOT PAY FEDERAL
INCOME OR EXCISE TAXES TO THE EXTENT THAT IT DISTRIBUTES TO SHAREHOLDERS ITS NET
INVESTMENT INCOME AND NET REALIZED CAPITAL GAINS IN ACCORDANCE WITH THE TIMING
REQUIREMENTS IMPOSED BY THE CODE. AS A PARTNERSHIP UNDER THE CODE, THE PORTFOLIO
DOES NOT PAY FEDERAL INCOME OR EXCISE TAXES.
- -------------------------------------------------------------------------------
PERFORMANCE AND YIELD INFORMATION
- --------------------------------------------------------------------------------
FROM TIME TO TIME, THE FUND MAY ADVERTISE ITS YIELD AND/OR AVERAGE ANNUAL TOTAL
RETURN. The Fund's current yield is calculated by dividing the net investment
income per share during a recent 30-day period by the maximum offering price per
share (net asset value) of the Fund on the last day of the period and
annualizing the resulting figure. The Fund's average annual total return is
determined by computing the average annual percentage change in value of $1,000
invested at the maximum public offering price (net asset value) for specified
periods ending with the most recent calendar quarter, assuming reinvestment of
all distributions. The average annual total return calculation assumes a
complete redemption of the investment and the deduction of any applicable
contingent deferred sales charge at the end of the period. The Fund may also
publish annual and cumulative total return figures from time to time.
The Fund may also publish its distribution rate and/or its effective
distribution rate. The Fund's distribution rate is computed by dividing the most
recent monthly distribution per share annualized by the current maximum offering
price per share (net asset value). The Fund's effective distribution rate is
computed by dividing the distribution rate by 12 and reinvesting the resulting
amount for a full year on a monthly basis. The effective distribution rate will
be higher than the distribution rate because of the compounding effect of the
assumed reinvestment. Investors should note that the Fund's yield is calculated
using a standardized formula the income component of which is computed from
dividends on equity securities held by the Portfolio based on the stated annual
dividend rates of such securities, exclusive of special or extra distributions
(with all purchases and sales of securities during such period included in the
income calculation on a settlement date basis), and from the income earned on
short-term debt instruments held by the Portfolio, whereas the distribution rate
is based on the Fund's last monthly distribution, which tends to be relatively
stable and may be more or less than the amount of net investment income actually
earned by the Fund during the quarter.
The Fund may also publish total return figures which do not take into
account any contingent deferred sales charge which may be imposed upon
redemptions at the end of the specified period. Any performance figure which
does not take into account the contingent deferred sales charge would be reduced
to the extent such charge is imposed upon a redemption.
Investors should note that the investment results of the Fund will
fluctuate over time, and any presentation of the Fund's current yield or total
return for any prior periods should not be considered as a representation of
what an investment may earn or what the Fund's yield or total return may be in
any future period.
<PAGE>
INVESTMENT ADVISER OF
TOTAL RETURN PORTFOLIO
Boston Management and Research
24 Federal Street
Boston, MA 02110
ADMINISTRATOR OF
EATON VANCE EQUITY-INCOME TRUST
Eaton Vance Management
24 Federal Street
Boston, MA 02110
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc.
24 Federal Street
Boston, MA 02110
(800) 225-6265
CUSTODIAN
Investors Bank & Trust Company
24 Federal Street
Boston, MA 02110
TRANSFER AGENT
The Shareholder Services Group, Inc.
BOS725
P.O. Box 1559
Boston, MA 02104
(800) 262-1122
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, MA 02109
EATON VANCE EQUITY-INCOME TRUST
24 FEDERAL STREET
BOSTON, MA 02110
EIP
[Logo]
EATON VANCE
EQUITY-INCOME
TRUST
PROSPECTUS
MAY 1, 1995
<PAGE>
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
STATEMENT OF
ADDITIONAL INFORMATION
May 1, 1995
EATON VANCE EQUITY-INCOME TRUST
24 Federal Street
Boston, Massachusetts 02110
800-225-6265
- ------------------------------------------------------------------------------
TABLE OF CONTENTS Page
Investment Objective and Policies .............................. 2
Investment Restrictions ........................................ 4
Trustees and Officers .......................................... 5
Control Persons and Principal Holders of Securities ............ 7
Investment Adviser and Administrator ........................... 8
Custodian ...................................................... 10
Independent Accountants ........................................ 10
Service for Withdrawal ......................................... 10
Determination of Net Asset Value ............................... 11
Purchase and Redemption of Shares .............................. 11
Investment Performance ......................................... 11
Taxes .......................................................... 14
Principal Underwriter .......................................... 16
Distribution Plan .............................................. 17
Portfolio Security Transactions ............................. .. 19
Other Information .............................................. 20
Financial Statements ........................................... 21
- ------------------------------------------------------------------------------
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR
ACCOMPANIED BY THE CURRENT PROSPECTUS OFFERING SHARES OF EATON VANCE EQUITY-
INCOME TRUST (THE "FUND") DATED MAY 1, 1995, AS SUPPLEMENTED FROM TIME TO TIME.
THIS STATEMENT OF ADDITIONAL INFORMATION SHOULD BE READ IN CONJUNCTION WITH SUCH
PROSPECTUS, A COPY OF WHICH MAY BE OBTAINED WITHOUT CHARGE BY CONTACTING THE
PRINCIPAL UNDERWRITER (SEE BACK COVER FOR ADDRESS AND PHONE NUMBER).
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The primary investment objective of Eaton Vance Equity-Income Trust (the
"Fund" or "Trust") is to seek for its shareholders a high level of total return,
consisting of relatively predictable income in conjunction with capital
appreciation, consistent with prudent management and preservation of capital.
The Fund currently seeks to meet its investment objective by investing its
assets in the Total Return Portfolio (the "Portfolio"), a separate registered
investment company with the same investment objective as the Fund and
substantially the same investment policies and restrictions as the Fund. The
Portfolio seeks to achieve its investment objective by investing principally in
dividend-paying common stocks with the potential for increased dividends in the
future.
The Trust is a Massachusetts business trust established in 1987.
The Trustees of the Trust may withdraw the Fund's investment from the
Portfolio at any time, if they determine that it is in the best interests of the
Fund to do so. Upon any such withdrawal, the Fund's assets would be invested in
another investment company with substantially the same investment objective,
policies and restrictions as those of the Fund or directly in investment
securities in accordance with the Portfolio's investment policies, as described
below. Except as indicated in the next paragraph, the approval of the Fund's
shareholders would not be required to change the Portfolio's investment
objective or any of the Portfolio's investment policies discussed below,
including those concerning security transactions.
Because the investment characteristics of the Fund will correspond directly
to those of the Portfolio, the following is a discussion of the various
investments of and techniques employed by the Portfolio.
LEVERAGE THROUGH BORROWING
The practice of leveraging to enhance investment return may be viewed as a
speculative activity. Leveraging will exaggerate any increase or decrease in the
market value of the securities held by the Portfolio. Money borrowed for
leveraging will be subject to interest costs which may or may not exceed the
dividends for the securities purchased. The Portfolio may also be required to
maintain minimum average balances in connection with such borrowing or to pay a
commitment or other fee to maintain a line of credit; either of these
requirements will increase the cost of borrowing over the stated interest rate.
The Portfolio and the other investment companies managed by Boston
Management and Research ("BMR") or Eaton Vance Management participate in a Line
of Credit Agreement (the "Credit Agreement") with Citibank, N.A. ("Citibank").
Citibank agrees, in the Credit Agreement, to consider requests from the
Portfolio and such other investment companies that Citibank make advances
("Advances") to the Portfolio and such other investment companies from time to
time. The aggregate amount of all such Advances to all such borrowers will not
exceed $120,000,000, of which $100,000,000 is a discretionary facility and
$20,000,000 is a committed facility. The Portfolio has currently determined that
its borrowings under the Credit Agreement will not exceed, at any one time
outstanding, the lesser of (a) 13 of the current market value of the net assets
of the Portfolio or (b) $60,000,000 (the "Amount Available to the Portfolio").
The Portfolio is obligated to pay to Citibank, in addition to interest on
Advances made to it, a quarterly fee on the $20,000,000 committed facility and
on the daily unused portion of the Amount Available to the Portfolio at the rate
of 14 of 1% per annum. The Credit Agreement may be terminated by Citibank or the
borrowers at any time upon 30 days' prior written notice. The Portfolio expects
to use the proceeds of the Advances primarily for leveraging purposes. As at
December 31, 1994, the Portfolio had no outstanding loans pursuant to the Credit
Agreement.
The Portfolio, like many other investment companies, can also borrow money
for temporary extraordinary or emergency purposes. Such borrowings may not
exceed 5% of the value of the Portfolio's total assets when the loan is made.
The Portfolio may pledge up to 10% of the lesser of cost or value of its total
assets to secure such borrowings.
The ability of the Portfolio to borrow could be partially or entirely
curtailed in the event that the Credit Control Act of 1969 were to be invoked
and the Federal Reserve Board were to limit or prohibit certain extensions of
credit. This Act empowers the Federal Reserve Board, when authorized by the
President, to regulate directly the costs and allocation of funds in the credit
market.
RISKS ASSOCIATED WITH DERIVATIVE INSTRUMENTS. Entering into a derivative
instrument involves a risk that the applicable market will move against the
Portfolio's position and that the Portfolio will incur a loss. For derivative
instruments other than purchased options, this loss may exceed the amount of the
initial investment made or the premium received by the Portfolio. Derivative
instruments may sometimes increase or leverage the Portfolio's exposure to a
particular market risk. Leverage enhances the Portfolio's exposure to the price
volatility of derivative instruments it holds. The Portfolio's success in using
derivative instruments to hedge portfolio assets depends on the degree of price
correlation between the derivative instruments and the hedged asset. Imperfect
correlation may be caused by several factors, including temporary price
disparities among the trading markets for the derivative instrument, the assets
underlying the derivative instrument and the Portfolio assets. Over-the-counter
("OTC") derivative instruments involve an enhanced risk that the issuer or
counterparty will fail to perform its contractual obligations. Some derivative
instruments are not readily marketable or may become illiquid under adverse
market conditions. In addition, during periods of market volatility, a commodity
exchange may suspend or limit trading in an exchange-traded derivative
instrument, which may make the contract temporarily illiquid and difficult to
price. Commodity exchanges may also establish daily limits on the amount that
the price of a futures contract or futures option can vary from the previous
day's settlement price. Once the daily limit is reached, no trades may be made
that day at a price beyond the limit. This may prevent the Portfolio from
closing out positions and limiting its losses. The staff of the Securities and
Exchange Commission ("Commission") takes the position that purchased OTC
options, and assets used as cover for written OTC options, are subject to the
Portfolio's 15% limit on illiquid investments. The Portfolio's ability to
terminate OTC derivative instruments may depend on the cooperation of the
counterparties to such contracts. The Portfolio expects to purchase and write
only exchange- traded options until such time as the Portfolio's management
determines that the OTC options market is sufficiently developed and the
Portfolio has amended its prospectus so that appropriate disclosure is furnished
to prospective and existing shareholders. For thinly traded derivative
instruments, the only source of price quotations may be the selling dealer or
counterparty. In addition, certain provisions of the Internal Revenue Code of
1986, as amended ("Code"), limit the extent to which the Portfolio may purchase
and sell derivative instruments. The Portfolio will engage in transactions in
futures contracts and related options only to the extent such transactions are
consistent with the requirements of the Code for maintaining the qualification
of the Fund as a regulated investment company for Federal income tax purposes.
See "Taxes."
ASSET COVERAGE FOR DERIVATIVE INSTRUMENTS. Transactions using forward
contracts, futures contracts and options (other than options that the Portfolio
has purchased) expose the Portfolio to an obligation to another party. The
Portfolio will not enter into any such transactions unless it owns either (1) an
offsetting ("covered") position in securities, currencies, or other options or
futures contracts or forward contracts, or (2) cash, receivables and short-term
debt securities with a value sufficient at all times to cover its potential
obligations not covered as provided in (1) above. The Portfolio will comply with
Commission guidelines regarding cover for these instruments and, if the
guidelines so require, set aside cash, U.S. Government securities or other
liquid, high-grade debt securities in a segregated account with its custodian in
the prescribed amount.
Assets used as cover or held in a segregated account cannot be sold while
the position in the corresponding forward contract, futures contract or option
is open, unless they are replaced with other appropriate assets. As a result,
the commitment of a large portion of the Portfolio's assets to cover or
segregated accounts counsel impede portfolio management or the Portfolio's
ability to meet redemption requests or other current obligations.
LIMITATIONS ON FUTURES CONTRACTS AND OPTIONS. If the Portfolio has not
complied with the 5% CFTC test set forth in the Fund's prospectus, to evidence
its hedging intent, the Portfolio expects that, on 75% or more of the occasions
on which it takes a long futures or option on futures position, it will have
purchased or will be in the process of purchasing, equivalent amounts of related
securities at the time when the futures or options position is closed out.
However, in particular cases, when it is economically advantageous for the
Portfolio to do so, a long futures or options position may be terminated (or an
option may expire) without a corresponding purchase of securities.
The Portfolio may enter into futures contracts, and options on futures
contracts, traded on an exchange regulated by the CFTC and on foreign exchanges,
but, with respect to foreign exchange-traded futures contracts and options on
such futures contracts, only if the Investment Adviser determines that trading
on each such foreign exchange does not subject the Portfolio to risks, including
credit and liquidity risks, that are materially greater than the risks
associated with trading on CRTC-regulated exchanges.
In order to hedge its current or anticipated portfolio position, the
Portfolio may use futures contracts on securities held in its Portfolio or on
securities with characteristics similar to those of the securities held by the
Portfolio. If, in the opinion of the Investment Adviser, there is a sufficient
degree of correlation between price trends for the securities held by the
Portfolio and futures contracts based on other financial instruments, securities
indices or other indices, the Portfolio may also enter into such futures
contracts as part of its hedging strategy.
All call and put options on securities written by the Portfolio will be
covered. This means that, in the case of a call option, the Portfolio will own
the securities subject to the call option or an offsetting call option so long
as the call option is outstanding. In the case of a put option, the Portfolio
will own an offsetting put option or will have deposited with its custodian cash
or liquid, high-grade debt securities with a value at least equal to the
exercise price of the put option. The Portfolio may only write a put option on a
security that it intends ultimately to acquire for its investment portfolio.
PORTFOLIO TURNOVER
The portfolio turnover rate of the Portfolio is likely to exceed 100%, but
under normal conditions is not likely to exceed 250%. A 100% turnover rate
occurs if all of the securities held by the Portfolio are sold and either
repurchased or replaced within one year. High portfolio turnover involves
correspondingly greater brokerage commissions and other transaction costs, which
will be borne directly by the Portfolio. It may also result in the realization
of capital gains. See "Portfolio Security Transactions" for a discussion of the
Portfolio's brokerage practices.
INVESTMENT RESTRICTIONS
The following investment restrictions 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
Statement of Additional Information 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 shares are present or represented at the meeting or (b) more
than 50% of the shares of the Fund. Accordingly, the Fund may not:
(1) With respect to 75% of its total assets, invest more than 5% of its
total assets in the securities of any one issuer or purchase 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;
(2) Borrow money or issue senior securities except as permitted by the
Investment Company Act of 1940;
(3) Purchase securities on margin (but the Fund may obtain such short-term
credits as may be necessary for the clearance of purchases and sales of
securities). The deposit or payment by the Fund of initial, maintenance or
variation margin in connection with all types of options and futures contract
transactions is not considered the purchase of a security on margin;
(4) Underwrite or participate in the marketing of securities of others,
except insofar as it may technically be deemed to be an underwriter in selling a
portfolio security under circumstances which may require the registration of the
same under the Securities Act of 1933;
(5) Make an investment in any one industry if such investment would cause
investments in such industry to exceed 25% of the Fund's total assets (taken at
market value) except that the Fund will concentrate at least 25% of its
investments in utility stocks (i.e., principally electric, gas and telephone
companies);
(6) Purchase or sell real estate (including interests in real estate
limited partnerships), although it may purchase and sell securities which are
secured by real estate and securities of companies which invest or deal in real
estate;
(7) Purchase or sell physical commodities or contracts for the purchase or
sale of physical commodities; or
(8) Make loans to any person except by (a) the acquisition of debt
securities and making portfolio investments, (b) entering into repurchase
agreements and (c) lending portfolio securities.
Notwithstanding the investment policies and restrictions of the Fund, the
Fund may invest all of its investable assets in an open-end management
investment company with substantially the same investment objective, policies
and restrictions as the Fund.
For purposes of investment restriction (5) above, the Fund will not invest
25% or more of its assets in any one industry.
The Portfolio has adopted substantially the same fundamental investment
restrictions as the foregoing numbered investment restrictions adopted by the
Fund; such restrictions cannot be changed without the approval of a "majority of
the outstanding voting securities" of the Portfolio, which as used in this
Statement of Additional Information means the lesser of (a) 67% of the
outstanding voting securities of the Portfolio present or represented by proxy
at a meeting if the holders of more than 50% of the outstanding voting
securities of the Portfolio are present or represented at the meeting or (b)
more than 50% of the outstanding voting securities of the Portfolio. The term
"voting securities" as used in this paragraph has the same meaning as in the
Investment Company Act of 1940 (the "1940 Act"). Whenever the Trust is requested
to vote on a change in the investment restrictions of the Portfolio, the Trust
will hold a meeting of Fund shareholders and will cast its vote as instructed by
the shareholders.
The Fund and the Portfolio have each adopted the following nonfundamental
investment policies which may be changed with respect to the Fund by the
Trustees of the Trust without approval by the Fund's shareholders or may be
changed with respect to the Portfolio by the Trustees of the Portfolio with or
without the approval of the Fund or the Portfolio's other investors. As a matter
of nonfundamental policy, neither the Fund nor the Portfolio may: (a) invest
more than 15% of net assets in investments which are not readily marketable,
including restricted securities and repurchase agreements maturing in more than
seven days. Restricted securities for the purposes of this limitation do not
include securities eligible for resale pursuant to Rule 144A of the Securities
Act of 1933 that the Board of Trustees of the Fund or the Portfolio, or its
delegate, determine to be liquid, based upon the trading markets for the
specific security; (b) purchase warrants if, as a result of such purchase, more
than 5% of the Trust's net assets, taken at current value, would be invested in
warrants (and the value of such warrants which are not listed on the New York or
American Stock Exchange may not exceed 2% of the Trust's net assets); this
policy does not apply to or restrict warrants acquired by the Trust in units or
attached to securities, inasmuch as such warrants are deemed to be without
value; (c) make short sales of securities or maintain a short position, unless
at all times when a short position is open, the Fund owns an equal amount of
such securities or securities convertible into or exchangeable, without payment
of any further consideration, for securities of the same issue as, and equal in
amount to, the securities sold short, and unless no more than 25% of its net
assets (taken at current value) is held as collateral for such sales at any one
time. (It is the present intention of management to make such sales only for the
purpose of deferring realization of gain or loss for Federal income tax
purposes); (d) purchase securities of any issuer which, including predecessors,
has not been in continuous operation for at least three years, except that 5% of
its total assets (taken at market value) may be invested in certain issuers not
in such continuous operation but substantially all of whose assets are (i)
securities of one or more issuers which have had a record of three years'
continuous operation or (ii) assets of an independent division of an issuer
which division has had a record of three years' continuous operation; provided,
however, that exempted from this restriction are U.S. Government securities,
securities of issuers which are rated by at least one nationally recognized
statistical rating organization, municipal obligations and obligations issued or
guaranteed by any foreign government or its agencies or instrumentalities; (e)
purchase or retain in its portfolio any securities issued by an issuer, any of
whose officers, directors, trustees or security holders is an officer or trustee
of the Fund or the Portfolio or is a member, officer, director or trustee of any
investment adviser of the Trust or the Portfolio, if after the purchase of the
securities of such issuer by the Fund or the Portfolio one or more of such
persons owns beneficially more than 12 of 1% of the shares or securities or both
(all taken at market value) of such issuer and such persons owning more than 12
of 1% of such shares of securities together own beneficially more than 5% of
such shares or securities or both (all taken at market value); (f) purchase oil,
gas or other mineral leases or purchase partnership interests in oil, gas or
other mineral exploration or development programs; and (g) invest more than 5%
of its net assets in the securities of foreign issuers. The securities of some
of such foreign issuers may be denominated in foreign currency.
It is contrary to the present policy of the Fund and the Portfolio which
may be changed without shareholder or investor approval, as the case may be, to
purchase any voting security of any electric or gas utility company (as defined
by the Public Utility Holding Company Act of 1935) if as a result it would then
hold more than 5% of the outstanding voting securities of such company.
In order to permit the sale of shares of the Fund in certain states, the
Fund may make commitments more restrictive than the policies described above.
Should the Fund determine that any such commitment is no longer in the best
interests of the Fund and its shareholders, it will revoke the commitment by
terminating sales of its shares in the state(s) involved.
TRUSTEES AND OFFICERS
The Trustees and officers of the Trust and the Portfolio are listed below.
Except as indicated, each individual has held the office shown or other offices
in the same company for the last five years. Unless otherwise noted, the
business address of each Trustee and officer is 24 Federal Street, Boston,
Massachusetts 02110, which is also the address of the Portfolio's investment
adviser, Boston Management and Research ("BMR"), a wholly-owned subsidiary of
Eaton Vance Management ("Eaton Vance"); of Eaton Vance's parent, Eaton Vance
Corp. ("EVC"); and of BMR's and Eaton Vance's trustee, Eaton Vance, Inc. ("EV").
Eaton Vance and EV are both wholly-owned subsidiaries of EVC. Those Trustees who
are "interested persons" of the Trust, the Portfolio, BMR, Eaton Vance, EVC or
EV, as defined in the 1940 Act, by virtue of their affiliation with any one or
more of the Trust, the Portfolio, BMR, Eaton Vance, EVC or EV, are indicated by
an asterisk(*).
TRUSTEES OF THE TRUST AND THE PORTFOLIO
JAMES B. HAWKES (53), PRESIDENT OF THE TRUST, VICE PRESIDENT OF THE PORTFOLIO
AND TRUSTEE*
Executive Vice President of Eaton Vance, BMR, EVC and EV, and a Director of EVC
and EV. Director, Trustee and officer of various investment companies managed
by Eaton Vance or BMR.
M.DOZIER GARDNER (61), PRESIDENT AND TRUSTEE OF THE PORTFOLIO*
President and Chief Executive Officer of BMR, Eaton Vance, EVC and EV, and
Director of EVC and EV. Director, Trustee and officer of various investment
companies managed by Eaton Vance or BMR.
LANDON T. CLAY (69), VICE PRESIDENT AND TRUSTEE OF THE PORTFOLIO*
Chairman of BMR, Eaton Vance, EVC and EV and a Director of EVC and EV. Director,
Trustee and officer of various investment companies managed by Eaton Vance or
BMR.
DONALD R. DWIGHT (64), TRUSTEE
President of Dwight Partners, Inc. (a corporate relations and communications
company) founded in 1988; Chairman of the Board of Newspapers of New England,
Inc., since 1983. Director or Trustee of various investment companies managed
by Eaton Vance or BMR.
Address: Clover Mill Lane, Lyme, New Hampshire 03768
SAMUEL L. HAYES, III (60), TRUSTEE
Jacob H. Schiff Professor of Investment Banking, Harvard University Graduate
School of Business Administration. Director or Trustee of various investment
companies managed by Eaton Vance or BMR.
Address: Harvard University Graduate School of Business Administration, Soldiers
Field Road, Boston, Massachusetts 02163
PETER F. KIELY (58), VICE PRESIDENT AND TRUSTEE OF THE TRUST*
Vice President of Eaton Vance, BMR, and EV. Director or Trustee and officer of
various investment companies managed by Eaton Vance or BMR. Mr. Kiely was
elected Trustee and Vice President of the Trust on December 16, 1991.
NORTON H. REAMER (59), TRUSTEE
President and Director, United Asset Management Corporation, a holding company
owning institutional investment management firms. Chairman, President and
Director, The Regis Fund, Inc. (mutual fund). Director or Trustee of various
investment companies managed by Eaton Vance or BMR.
Address: One International Place, Boston, Massachusetts 02110
JOHN L. THORNDIKE (68), TRUSTEE
Director, Fiduciary Company Incorporated. Director or Trustee of various
investment companies managed by Eaton Vance or BMR.
Address: 175 Federal Street, Boston, Massachusetts 02110
JACK L. TREYNOR (65), TRUSTEE
Investment Adviser and Consultant. Director or Trustee of various investment
companies managed by Eaton Vance or BMR.
Address: 504 Via Almar, Palos Verdes Estates, California 90274
OFFICERS OF THE TRUST AND THE PORTFOLIO
EDWIN W. BRAGDON (72), VICE PRESIDENT
Vice President of BMR, Eaton Vance and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
A. WALKER MARTIN (49), VICE PRESIDENT
Vice President of BMR, Eaton Vance and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
JAMES L. O'CONNOR (50), TREASURER
Vice President of BMR, Eaton Vance and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
THOMAS OTIS (63), SECRETARY
Vice President and Secretary of BMR, Eaton Vance, EVC and EV. Officer of various
investment companies managed by Eaton Vance or BMR.
JANET E. SANDERS (59), ASSISTANT TREASURER AND ASSISTANT SECRETARY
Vice President of BMR, Eaton Vance and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
WILLIAM J. AUSTIN, JR. (43), ASSISTANT TREASURER
Assistant Vice President of BMR, Eaton Vance and EV. Officer of various
investment companies managed by Eaton Vance or BMR. Mr. Austin was elected
Assistant Treasurer of the Trust on December 16, 1991.
A. JOHN MURPHY (32), ASSISTANT SECRETARY
Assistant Vice President of BMR, Eaton Vance and EV since March 1, 1994;
employee of Eaton Vance since March 1993. Officer of various investment
companies managed by Eaton Vance or BMR. (State Regulations Supervisor, The
Boston Company, 1991-1993 and Registration Specialist, Fidelity Management &
Research Co., 1986-1991.) Mr. Murphy was elected Assistant Secretary of the
Trust and the Portfolio on March 27, 1995.
Messrs. Thorndike (Chairman), Hayes and Reamer are members of the Special
Committee of the Board of Trustees of the Trust and of the Portfolio. The
Special Committee's functions include a continuous review of the Trust's
contractual relationship with the Administrator, the Portfolio's contractual
relationship with the Investment Adviser, making recommendations to the Trustees
regarding the compensation of those Trustees who are not members of the Eaton
Vance organization, and making recommendations to the Trustees regarding
candidates to fill vacancies, as and when they occur, in the ranks of those
Trustees who are not "interested persons" of the Trust, the Portfolio, or the
Eaton Vance organization.
Messrs. Treynor (Chairman) and Dwight are members of the Audit Committee of
the Board of Trustees of the Trust and of the Portfolio. The Audit Committee's
functions include making recommendations to the Trustees regarding the selection
of the independent accountants, and reviewing with such independent accountants
and the Treasurer of the Trust and of the Portfolio matters relative to
accounting and auditing practices and procedures, accounting records, internal
accounting controls, and the functions performed by the custodian and transfer
agent of the Fund and of the Portfolio.
<TABLE>
<CAPTION>
The fees and expenses of those Trustees of the Trust and the Portfolio who
are not members of the Eaton Vance organization (the noninterested Trustees) are
paid by the Fund and the Portfolio, respectively. (The Trustees who are members
of the Eaton Vance organization receive no compensation from the Fund or the
Portfolio.) During the fiscal year ended December 31, 1994, the noninterested
Trustees of the Trust and the Portfolio earned the following compensation in
their capacities as Trustees from the Fund, the Portfolio and the other funds in
the Eaton Vance fund complex:<F1>
AGGREGATE AGGREGATE RETIREMENT TOTAL COMPENSATION
COMPENSATION COMPENSATION BENEFIT ACCRUED FROM TRUST AND
NAME FROM FUND FROM PORTFOLIO FROM FUND COMPLEX FUND COMPLEX
- ---- ---------------- ---------------- --------------------- ----------------------
<S> <C> <C> <C> <C>
Donald R. Dwight ...... $266 $4,119<F2> $8,750 $135,000
Samuel L. Hayes, III .. 255 4,079<F3> 8,865 142,500
Norton H. Reamer ...... 247 4,002 -- 0 -- 135,000
John L. Thorndike ..... 254 4,140 -- 0 -- 140,000
Jack L. Treynor ....... 268 4,247 -- 0 -- 140,000
- ---------
<FN>
<F1> The Eaton Vance fund complex consists of 201 registered investment companies or series thereof.
<F2> Includes $331 of deferred compensation.
<F3> Includes $334 of deferred compensation.
</FN>
</TABLE>
Trustees of the Portfolio who are not affiliated with the Investment
Adviser may elect to defer receipt of all or a percentage of their annual fees
in accordance with the terms of a Trustees Deferred Compensation Plan (the
"Plan"). Under the Plan, an eligible Trustee may elect to have his deferred fees
invested by the Portfolio in the shares of one or more funds in the Eaton Vance
Family of Funds, and the amount paid to the Trustees under the Plan will be
determined based upon the performance of such investments. Deferral of Trustees'
fees in accordance with the Plan will have a negligible effect on the
Portfolio's assets, liabilities, and net income per share, and will not obligate
the Portfolio to retain the services of any Trustee or obligate the Portfolio to
pay any particular level of compensation to the Trustee.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As at March 31, 1995, the Trustees and officers of the Trust, as a group,
owned in the aggregate less than 1% of the outstanding shares of the Fund. As of
March 31, 1995, Merrill Lynch, Pierce, Fenner & Smith, Inc., New Brunswick, NJ
was the record owner of approximately 37.7% of the outstanding shares, which
were held on behalf of its customers who are beneficial owners of such shares,
and as to which it had voting power under certain limited circumstances. To the
knowledge of the Trust, no other person owned of record or beneficially 5% or
more of the Fund's outstanding shares on such date.
INVESTMENT ADVISER AND ADMINISTRATOR
The Portfolio engages BMR as its investment adviser pursuant to an
Investment Advisory Agreement dated October 28, 1993. BMR or Eaton Vance acts as
investment adviser to investment companies and various individual and
institutional clients with combined assets under management of approximately $15
billion.
Eaton Vance, its affiliates and its predecessor companies have been
managing assets of individuals and institutions since 1924 and managing
investment companies since 1931. They maintain a large staff of experienced
fixed-income and equity investment professionals to service the needs of their
clients. The fixed-income division focuses on all kinds of taxable investment-
grade and high-yield securities, tax-exempt investment-grade and high-yield
securities, and U.S. Government securities. The equity division covers stocks
ranging from blue chip to emerging growth companies.
BMR manages the investments and affairs of the Portfolio subject to the
supervision of the Portfolio's Board of Trustees. BMR furnishes to the Portfolio
investment research, advice and supervision, furnishes an investment program and
determines what securities will be purchased, held or sold by the Portfolio and
what portion, if any, of the Portfolio's assets will be held uninvested. The
Investment Advisory Agreement requires BMR to pay the salaries and fees of all
officers and Trustees of the Portfolio who are members of the BMR organization
and all personnel of BMR performing services relating to research and investment
activities. The Portfolio is responsible for all expenses not expressly stated
to be payable by BMR under the Investment Advisory Agreement, including, without
implied limitation, (i) expenses of maintaining the Portfolio and continuing its
existence, (ii) registration of the Portfolio under the 1940 Act, (iii)
commissions, fees and other expenses connected with the acquisition, holding and
disposition of securities and other investments, (iv) auditing, accounting and
legal expenses, (v) taxes and interest, (vi) governmental fees, (vii) expenses
of issue, sale and redemption of interests in the Portfolio, (viii) expenses of
registering and qualifying the Portfolio and interests in the Portfolio under
Federal and state securities laws and of preparing and printing registration
statements or other offering statements or memoranda for such purposes and for
distributing the same to investors, and fees and expenses of registering and
maintaining registrations of the Portfolio and of the Portfolio's placement
agent as broker-dealer or agent under state securities laws, (ix) expenses of
reports and notices to investors and of meetings of investors and proxy
solicitations therefor, (x) expenses of reports to governmental officers and
commissions, (xi) insurance expenses, (xii) association membership dues, (xiii)
fees, expenses and disbursements of custodians and subcustodians for all
services to the Portfolio (including without limitation safekeeping of funds,
securities and other investments, keeping of books, accounts and records, and
determination of net asset values, book capital account balances and tax capital
account balances), (xiv) fees, expenses and disbursements of transfer agents,
dividend disbursing agents, investor servicing agents and registrars for all
services to the Portfolio, (xv) expenses for servicing the accounts of
investors, (xvi) any direct charges to investors approved by the Trustees of the
Portfolio, (xvii) compensation and expenses of Trustees of the Portfolio who are
not members of BMR's organization, and (xviii) such non-recurring items as may
arise, including expenses incurred in connection with litigation, proceedings
and claims and the obligation of the Portfolio to indemnify its Trustees,
officers and investors with respect thereto.
Under the Investment Advisory Agreement with the Portfolio, BMR receives a
monthly advisory fee of .0625% (equivalent to .75% annually) of the average
daily net assets of the Portfolio up to $500 million. On net assets of $500
million and above the annual fee is reduced as follows:
AVERAGE DAILY NET ANNUALIZED FEE RATE
ASSETS FOR THE MONTH (FOR EACH LEVEL)
-------------------- -------------------
$500 million but less than $1 billion ............. 0.6875%
$1 billion but less than $1.5 billion ............. 0.6250%
$1.5 billion but less than $2 billion ............. 0.5625%
$2 billion but less than $3 billion ............... 0.5000%
$3 billion and over ............................... 0.4375%
As at December 31, 1994, the Portfolio had net assets of $505,566,892. For
the fiscal year ended December 31, 1994, the Portfolio paid BMR advisory fees of
$4,106,857 (equivalent to 0.74% of the Portfolio's average daily net assets for
such year). For the period from the Portfolio's start of business, October 28,
1993, to the fiscal year ended December 31, 1993, the Portfolio paid BMR
advisory fees of $841,228 (equivalent to 0.74% (annualized) of the Portfolio's
average daily net assets for such period).
Prior to the close of business on September 30, 1994 (when the Fund
transferred its assets to the Portfolio in exchange for an interest in the
Portfolio), the Fund retained Eaton Vance as its investment adviser. As at
September 30, 1994, the Fund had net assets of $30,126,226. For the fiscal year
ended September 30, 1994, the Fund paid Eaton Vance advisory fees of $294,607
(equivalent to 0.75% of the Fund's average daily net assets for such year). The
Fund paid Eaton Vance advisory fees of $360,036 and $394,943, respectively, for
the fiscal years ended September 30, 1993 and September 30, 1992.
The Investment Advisory Agreement with BMR remains in effect until February
28, 1996. It may be continued indefinitely thereafter so long as such
continuance after February 28, 1996 is approved at least annually (i) by the
vote of a majority of the Trustees of the Portfolio who are not interested
persons of the Portfolio or of BMR cast in person at a meeting specifically
called for the purpose of voting on such approval and (ii) by the Board of
Trustees of the Portfolio or by vote of a majority of the outstanding voting
securities of the Portfolio. The Agreement may be terminated at any time without
penalty on sixty (60) days' written notice by the Board of Trustees of either
party, or by vote of the majority of the outstanding voting securities of the
Portfolio, and the Agreement will terminate automatically in the event of its
assignment. The Agreement provides that BMR may render services to others and
engage in other business activities and may permit other fund clients and other
corporations and organizations to use the words "Eaton Vance" or "Boston
Management and Research" in their names. The Agreement also provides that BMR
shall not be liable for any loss incurred in connection with the performance of
its duties, or action taken or omitted under that Agreement, in the absence of
willful misfeasance, bad faith, gross negligence in the performance of its
duties or by reason of its reckless disregard of its obligations and duties
thereunder, or for any losses sustained in the acquisition, holding or
disposition of any security or other investment.
As indicated in the Prospectus, Eaton Vance serves as Administrator of the
Fund, but receives no compensation for providing administrative services to the
Fund. Under its Administrative Services Agreement with the Fund, Eaton Vance has
been engaged to administer the Fund's affairs, subject to the supervision of the
Trustees of the Trust, and shall furnish for the use of the Fund office space
and all necessary office facilities, equipment and personnel for administering
the affairs of the Fund.
The Fund pays all of its own expenses including, without limitation, (i)
expenses of maintaining the Fund and continuing its existence, (ii) registration
of the Trust under the 1940 Act, (iii) commissions, fees and other expenses
connected with the purchase or sale of securities and other investments, (iv)
auditing, accounting and legal expenses, (v) taxes and interest, (vi)
governmental fees, (vii) expenses of issue, sale, repurchase and redemption of
shares, (viii) expenses of registering and qualifying the Fund and its shares
under federal and state securities laws and of preparing and printing
prospectuses for such purposes and for distributing the same to shareholders and
investors, and fees and expenses of registering and maintaining registrations of
the Fund and of the Fund's principal underwriter, if any, as broker-dealer or
agent under state securities laws, (ix) expenses of reports and notices to
shareholders and of meetings of shareholders and proxy solicitations therefor,
(x) expenses of reports to governmental officers and commissions, (xi) insurance
expenses, (xii) association membership dues, (xiii) fees, expenses and
disbursements of custodians and subcustodians for all services to the Fund
(including without limitation safekeeping of funds, securities and other
investments, keeping of books and accounts and determination of net asset
values), (xiv) fees, expenses and disbursements of transfer agents, dividend
disbursing agents, shareholder servicing agents and registrars for all services
to the Fund, (xv) expenses for servicing shareholder accounts, (xvi) any direct
charges to shareholders approved by the Trustees of the Trust, (xvii)
compensation and expenses of Trustees of the Trust who are not members of the
Eaton Vance organization, and (xviii) such non-recurring items as may arise,
including expenses incurred in connection with litigation, proceedings and
claims and the obligation of the Trust to indemnify its Trustees and officers
with respect thereto.
BMR is a wholly-owned subsidiary of Eaton Vance. Eaton Vance and EV are
both wholly-owned subsidiaries of EVC. BMR and Eaton Vance are both
Massachusetts business trusts, and EV is the trustee of BMR and Eaton Vance. The
Directors of EV are Landon T. Clay, H. Day Brigham, Jr., M. Dozier Gardner,
James B. Hawkes and Benjamin A. Rowland, Jr. The Directors of EVC consist of the
same persons and John G. L. Cabot and Ralph Z. Sorenson. Mr. Clay is chairman
and Mr. Gardner is president and chief executive officer of EVC, BMR, Eaton
Vance and EV. All of the issued and outstanding shares of Eaton Vance and EV are
owned by EVC. All of the issued and outstanding shares of BMR are owned by Eaton
Vance. All shares of the outstanding Voting Common Stock of EVC are deposited in
a Voting Trust which expires on December 31, 1996, the Voting Trustees of which
are Messrs. Clay, Brigham, Gardner, Hawkes and Rowland. The Voting Trustees have
unrestricted voting rights for the election of Directors of EVC. All of the
outstanding voting trust receipts issued under said Voting Trust are owned by
certain of the officers of BMR and Eaton Vance who are also officers and
Directors of EVC and EV. As of March 31, 1995, Messrs. Clay, Gardner and Hawkes
each owned 24% of such voting trust receipts, and Messrs. Rowland and Brigham
owned 15% and 13%, respectively, of such voting trust receipts. Messrs. Clay,
Gardner, Hawkes and Otis are officers or Trustees of the Trust and/or the
Portfolio and are members of the EVC, BMR, Eaton Vance and EV organizations.
Messrs. Austin, Bragdon, Kiely, Martin, Murphy and O'Connor and Ms. Sanders are
officers or Trustees of the Trust and the Portfolio and are also members of the
BMR, Eaton Vance and EV organizations. BMR will receive the fees paid under the
Investment Advisory Agreement.
Eaton Vance owns all of the stock of Energex Corporation, which is engaged
in oil and gas operations. EVC owns all of the stock of Marblehead Energy Corp.
(which engages in oil and gas operations) and owns 77.3% of the stock of
Investors Bank & Trust Company, custodian of the Fund and the Portfolio, which
provides custodial, trustee and other fiduciary services to investors, including
individuals, employee benefit plans, corporations, investment companies, savings
banks and other institutions. In addition, Eaton Vance owns all the stock of
Northeast Properties, Inc., which is engaged in real estate investment,
consulting and management. EVC owns all the stock of Fulcrum Management, Inc.
and MinVen, Inc., which are engaged in the development of precious metal
properties. EVC, BMR, Eaton Vance and EV may also enter into other businesses.
EVC and its affiliates and their officers and employees from time to time
have transactions with various banks, including the custodian of the Fund and
the Portfolio, Investors Bank & Trust Company. It is Eaton Vance's opinion that
the terms and conditions of such transactions were not and will not be
influenced by existing or potential custodial or other relationships between the
Trust or the Portfolio and such banks.
CUSTODIAN
Investors Bank & Trust Company ("IBT"), 24 Federal Street, Boston,
Massachusetts (a 77.3% owned subsidiary of EVC) acts as custodian for the Fund
and the Portfolio. IBT has the custody of all cash and securities representing
the Fund's interest in the Portfolio, has custody of all the Portfolio's assets,
maintains the general ledger of the Portfolio and the Fund and computes the
daily net asset value of interests in the Portfolio and the net asset value of
shares of the Fund. In such capacity it attends to details in connection with
the sale, exchange, substitution, transfer or other dealings with the
Portfolio's investments, receives and disburses all funds and performs various
other ministerial duties upon receipt of proper instructions from the Fund and
the Portfolio. IBT charges fees which are competitive within the industry. A
portion of the fee relates to custody, bookkeeping and valuation services and is
based upon a percentage of Fund and Portfolio net assets, and a portion of the
fee relates to activity charges, primarily the number of portfolio transactions.
These fees are then reduced by a credit for cash balances of the particular
investment company at the custodian equal to 75% of the 91-day, U.S. Treasury
Bill auction rate applied to the particular investment company's average daily
collected balances for the week. In view of the ownership of EVC in IBT, the
Portfolio is treated as a self-custodian pursuant to Rule 17f-2 under the 1940
Act, and the Portfolio's investments held by IBT as custodian are thus subject
to additional examinations by the Portfolio's independent accountants as called
for by such Rule. For the fiscal year ended September 30, 1994 and for the
period from October 1, 1994 to December 31, 1994, the Fund paid IBT $31,599 and
$2,121, respectively, for its services as custodian. For the fiscal year ended
December 31, 1994, the Portfolio paid IBT $159,872.
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P., One Post Office Square, Boston, Massachusetts are
the independent accountants of the Fund and the Portfolio, providing audit
services, tax return preparation, and assistance and consultation with respect
to the preparation of filings with the Securities and Exchange Commission.
SERVICE FOR WITHDRAWAL
By a standard agreement, the Fund's Transfer Agent will send to the
shareholder regular monthly or quarterly payments of any permitted amount
designated by the shareholder (see "Eaton Vance Shareholder Services --
Withdrawal Plan" in the Fund's prospectus) based upon the value of the shares
held. The checks will be drawn from share redemptions and hence are a return of
principal and may give rise to gain or loss for tax purposes. Income dividend
and capital gains distributions in connection with withdrawal accounts will be
credited at net asset value as of the record date for each distribution.
Continued withdrawals in excess of current income will eventually use up
principal, particularly in a period of declining market prices.
To use this service, at least $5,000 in cash or shares at the public
offering price (i.e., net asset value plus the applicable sales charge) will
have to be deposited with the Transfer Agent. A shareholder may not have a
withdrawal plan in effect at the same time he or she has authorized Bank
Automated Investing or is otherwise making regular purchases of Fund shares.
Either the shareholder, the Transfer Agent or the Principal Underwriter will be
able to terminate the withdrawal plan at any time without penalty.
DETERMINATION OF NET ASSET VALUE
The net asset value of the Portfolio and of shares of the Fund is
determined by the custodian, IBT (as agent for the Fund and the Portfolio) in
the manner described under "How the Fund and the Portfolio Determine their Net
Asset Values" in the Fund's current prospectus. 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, Presidents' Day, Good Friday
(a New York Stock Exchange holiday), Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.
Securities listed on securities exchanges or in the NASDAQ National Market
are valued at closing sales prices. Unlisted or listed securities for which
closing sales prices are not available are valued at the mean between the latest
available bid and asked prices. An option or futures contract is valued at the
last sale price, as quoted on the principal exchange or board of trade on which
such option or futures contract is traded or, in the absence of a sale, at the
mean between the last bid and asked prices. Short-term obligations maturing in
sixty days or less are valued at amortized cost, which is believed to represent
fair value. Securities for which market quotations are unavailable, including
any security the disposition of which is restricted under the Securities Act of
1933, and other assets will be appraised at their fair value as determined in
good faith by or at the direction of the Trustees of the Portfolio.
Each investor in the Portfolio, including the Fund, may add to or reduce
its investment in the Portfolio on each day the New York Stock Exchange (the
"Exchange") is open for trading ("Portfolio Business Day") as of the close of
regular trading on the Exchange (the "Portfolio Valuation Time"). The value of
each investor's interest in the Portfolio will be determined by multiplying the
net asset value of the Portfolio by the percentage, determined on the prior
Portfolio Business Day, which 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
a percentage equal to a fraction (i) the numerator of which is the value of such
investor's investment in the Portfolio as of the Portfolio Valuation Time on the
prior Portfolio Business Day plus or minus, as the case may be, the 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.
PURCHASE AND REDEMPTION OF SHARES
For information regarding the purchase of shares, see "How to Buy Shares of
the Fund for Cash" and "How to Acquire Fund Shares in Exchange for Securities"
in the Fund's current prospectus.
For a description of how a shareholder may have the Fund redeem his or her
shares, or how a shareholder may sell his or her shares through an Authorized
Firm, see "How to Redeem or Sell Fund Shares" in the Fund's current prospectus.
See the Statement of Assets and Liabilities in the Fund's Financial
Statements for a specimen price mark-up sheet showing the computation of maximum
offering price per share as at December 31, 1994.
INVESTMENT PERFORMANCE
The average annual total return is determined by multiplying a hypothetical
initial purchase order of $1,000 by the average annual compound rate of return
(including capital appreciation/depreciation, and dividends and distributions
paid and reinvested) for the stated period and annualizing the result. The
calculation assumes that all dividends and distributions are reinvested at net
asset value on the reinvestment dates during the period and a complete
redemption of the investment and, if applicable, the deduction of the maximum
contingent deferred sales charge at the end of the period.
The Fund's yield is computed pursuant to a standardized formula by dividing
its net investment income per share earned during a recent thirty-day period by
the maximum offering price (net asset value) per share on the last day of the
period and annualizing the resulting figure. Net investment income per share is
calculated using a standardized formula the income component of which is
computed from dividends on equity securities held by the Portfolio based on the
stated annual dividend rates of such securities, exclusive of special or extra
distributions (with all purchases and sales of securities during such period
included in the income calculation on a settlement date basis), and from the
income earned on short-term debt instruments held by the Portfolio, and such
income is then reduced by accrued Fund expenses for the period, with the
resulting number being divided by the average daily number of Fund shares
outstanding and entitled to receive dividends during the period. The yield
figure does not reflect the deduction of any contingent deferred sales charges
which are imposed upon certain redemptions at the rates set forth under "How to
Redeem or Sell Fund Shares" in the prospectus. For the thirty-day period ended
December 31, 1994 the yield of the Fund was 3.24%.
The Fund may publish its distribution rate and/or its effective
distribution rate. The Fund's distribution rate is computed by dividing the most
recent monthly distribution per share annualized, by the current net asset value
per share. The Fund's effective distribution rate is computed by dividing the
distribution rate by 12 and reinvesting the resulting amount for a full year on
a monthly basis. The effective distribution rate will be higher than the
distribution rate because of the compounding effect of the assumed reinvestment.
Investors should note that the Fund's yield is calculated using a standardized
formula the income component of which is computed from dividends on equity
securities and from the income earned on short-term debt instruments held by the
Portfolio, whereas the distribution rate is based on the Fund's last monthly
distribution. Monthly distributions tend to be relatively stable and may be more
or less than the amount of net investment income and short-term capital gain
actually earned by the Fund during the quarter. The Fund's distribution rate
(calculated on December 31, 1994 and based on the Fund's quarterly distribution
paid December 31, 1994) was 3.56%, and the Fund's effective distribution rate
(calculated on the same date and based on the same quarterly distribution) was
3.61%.
The table below indicates the total return (capital changes plus
reinvestment of all distributions) on a hypothetical investment of $1,000 in the
Fund covering the life of the Fund from October 21, 1987 through December 31,
1994 and for the five year and the one year periods ended December 31, 1994.
<PAGE>
<TABLE>
<CAPTION>
VALUE OF A $1,000 INVESTMENT
VALUE OF INVEST- VALUE OF INVEST-
MENT BEFORE DE- MENT AFTER DE- TOTAL RETURN BEFORE TOTAL RETURN AFTER
DUCTING THE CON- DUCTING THE CON- DEDUCTING THE CONTINGENT DEDUCTING THE CONTINGENT
TINGENT DEFERRED TINGENT DEFERRED DEFERRED SALES CHARGE DEFERRED SALES CHARGE**
INVESTMENT INVESTMENT AMOUNT OF SALES CHARGE SALES CHARGE** ------------------------- -------------------------
PERIOD DATE INVESTMENT 12/31/94 12/31/94 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ---------- ---------- ---------- ---------------- --------------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Life of the Fund* 10/21/87 $1,000 $1,464.25 $1,464.25 46.43% 5.44% 46.43% 5.44%
5 Years Ended
12/31/94 12/31/89 $1,000 $1,078.13 $1,060.79 7.81% 1.52% 6.08% 1.19%
1 Year Ended
12/31/94 12/31/93 $1,000 $ 934.16 $ 889.15 -6.58% -6.58% -11.09% -11.09%
<CAPTION>
PERCENTAGE CHANGES 10/21/87--12/31/94
NET ASSET VALUE TO NET ASSET VALUE NET ASSET VALUE TO NET ASSET VALUE
BEFORE DEDUCTING THE CONTINGENT DEFERRED AFTER DEDUCTING THE CONTINGENT DEFERRED
SALES CHARGE WITH ALL DISTRIBUTIONS REINVESTED** SALES CHARGE WITH ALL DISTRIBUTIONS REINVESTED
--------------------------------------------- ----------------------------------------------
FISCAL YEAR ENDED ANNUAL CUMULATIVE AVERAGE ANNUAL ANNUAL CUMULATIVE AVERAGE ANNUAL
- ----------------- ------ ---------- -------------- ------ ---------- --------------
<S> <C> <C> <C> <C> <C> <C>
12/31/87 -- 0.13% -- -- -4.84% --
12/31/88 4.94% 5.08% 4.22% -0.00% 0.17% 0.14%
12/31/89 29.25% 35.81% 14.95% 24.25% 31.81% 13.39%
12/31/90 -4.79% 29.31% 8.37% -9.30% 26.31% 7.58%
12/31/91 11.80% 44.57% 9.18% 6.80% 42.57% 8.82%
12/31/92 1.03% 46.05% 7.56% -3.81% 45.05% 7.41%
12/31/93 7.32% 56.75% 7.52% 2.32% 56.75% 7.52%
12/31/94 -6.58% 46.43% 5.44% -11.09% 46.43% 5.44%
<CAPTION>
This was a period of fluctuating prices and interest rates; the above
tables should not be considered a representation of the future performance of
the Fund.
- ----------
<FN>
*Investment operations began on October 21, 1987
**No contingent deferred sales charge is imposed on shares purchased more than
six years prior to the redemption, shares acquired through the reinvestment of
dividends and distributions, or any appreciation in value of other shares in
the account, and no such charge is imposed on exchanges of Fund shares for
shares of one or more other funds listed under "The Eaton Vance Exchange
Privilege" in the Prospectus.
</FN>
</TABLE>
Some of the expenses related to the operation of the Fund during this
period were allocated to Eaton Vance Management, which increased total return/
yield.
The Fund's total return and yield may be compared to the Consumer Price
Index and various domestic securities indices, for example: Standard & Poor's
Utilities Index, Standard & Poor's 400 Stock Index, Standard & Poor's 500 Stock
Index. Standard & Poor's Telephone Index, Standard & Poor's Natural Gas Index,
Standard & Poor's Electric Companies Index, Merrill Lynch U.S. Treasury (15-year
plus) Index, Lehman Brothers Government/Corporate Bond Index, Dow Jones 15
Utility Average, and the Dow Jones Industrial Average. The Fund's total return,
yield and comparisons with these indices may be used in advertisements and in
information furnished to present or prospective shareholders. The Fund's
performance may differ from that of other investors in the Portfolio, including
any other investment companies.
Information used in advertisements and in materials furnished to present or
prospective shareholders may include statistics, data and performance studies
prepared by independent organizations, (e.g. Ibbotson Associates, Standard &
Poor's Ratings Group, Merrill Lynch, Pierce, Fenner & Smith, Inc., Bloomberg,
L.P., Dow Jones & Company, Inc., and The Federal Reserve Board) or included in
various publications (e.g. The Wall Street Journal, Barron's and The Decade:
Wealth of Investments in U.S. Stocks, Bonds, Bills & Inflation) reflecting the
investment performance or return achieved by various classes and types of
investments (e.g. common stocks, small company stocks, long-term corporate
bonds, long-term government bonds, intermediate-term government bonds, U.S.
Treasury bills) over various periods of time. This information may be used to
illustrate the benefits of long-term investments in common stocks.
From time to time, evaluations of the Fund's performance made by
independent sources, e.g., Lipper Analytical Srvices, Inc., CDA/Wiesenberger and
Morningstar, Inc., may be used in advertisements and in informatin furnished to
present and prospective shareholders, may be used in advertisements and in
information furnished to present or prospective shareholders.
From time to time, information showing the effect of compounding interest
may be included in advertisements and other material furnished to present and
prospective shareholders. Compounding is the process of earning income on
principal plus interest that was earned earlier. Interest can be compounded
annually, semi-annually, quarterly or daily, e.g. $1,000 compounded annually
at 9% will grow to $1,090 at the end of the first year and $1,188 at the end
of the second year. The extra $8, which was earned on the $90 income from the
first year, is the compound interest. $1,000 compounded annually at 9% grows
to $2,367 at the end of 10 years and $5,604 at the end of 20 years. Other
examples of compounding $1,000 annually are 7% grows to $1,967 at the end of
10 years and $3,870 at the end of 20 years. At 12% the $1,000 grows to $3,106
at the end of 10 years and $9,646 at the end of 20 years. All of these
examples are for illustrative purposes only and are not meant to indicate
performance of the Fund.
From time to time, information, charts and illustrations relating to
inflation and the effects of inflation on the dollar may be included in
advertisements and other material furnished to present and prospective
shareholders. For example: After 10 years, the purchasing power of $25,000 would
shrink to $16,621, $14,968, $13,465 and $12,100, respectively, if the annual
rate of inflation during such period were 4%, 5%, 6% and 7%, respectively. (To
calculate the purchasing power, the value at the end of each year is reduced by
the above inflation rates for 10 consecutive years.)
From time to time, information about the portfolio allocation and holdings
of the Portfolio may be included in advertisements and other material furnished
to present and prospective shareholders.
The Portfolio's portfolio allocation on March 31, 1995 was:
PERCENT OF NET ASSETS
------------------
Common Stock .................................... 82.99%
Electric Utilities ................... 54.55%
Telephone Utilities .................. 8.38
Natural Gas .......................... 0.55
Oil .................................. 5.24
REITs .............................. 14.12
Other ................................ 0.15
Convertible Preferred ........................... 2.68
Convertible Bonds ................................ 3.51
Cash and Commercial Paper ........................ 10.82
------
Total ....................................... 100.00%
The Portfolio's 10 largest common stock holdings on March 31, 1995, were:
COMPANY PERCENT OF NET ASSETS
------- ---------------------
Cinergy ......................................... 4.5%
FPL Group ....................................... 4.4
DPL Inc. ........................................ 4.0
Carolina Power & Light .......................... 3.3
DQE ............................................. 2.7
Nipsco Industries ............................... 2.5
Ameritech ....................................... 2.5
Central Louisiana Electric ...................... 2.5
Southern Company ................................ 2.5
Central Pacific & Southwest ..................... 2.4
----
Total 31.3%
Information used in advertisements and in materials furnished to present
and prospective shareholders may include statements or illustrations relating to
the appropriateness of types of securities and/or mutual funds which may be
employed to meet specific financial goals, such as (1) funding retirement, (2)
paying for children's education, and (3) financially supporting aging parents.
These three financial goals may be referred to in such advertisements or
materials as the "Triple Squeeze."
TAXES
FEDERAL INCOME TAXES
See "Distributions and Taxes" in the Fund's current prospectus.
The Fund has elected to be treated, has qualified and intends to continue
to qualify each year, as a regulated investment company ("RIC") under the
Internal Revenue Code ("the Code"). Accordingly, the Fund intends to satisfy
certain requirements relating to sources of its income and diversification of
its assets and to distribute all of its net investment income and net realized
capital gains in accordance with the timing requirements imposed by the Code, so
as to avoid any Federal income or excise tax on the Fund. The Fund so qualified
for the fiscal year ended September 30, 1994 (see the Notes to Financial
Statements). Because the Fund invests its assets in the Portfolio, the Portfolio
normally must satisfy the applicable source of income and diversification
requirements in order for the Fund to satisfy them. The Portfolio will allocate
at least annually among its investors, including the Fund, the Portfolio's net
investment income, net realized capital gains, and any other items of income,
gain, loss, deduction or credit. The Portfolio will make allocations to the Fund
in accordance with the Code and applicable regulations and will make moneys
available for withdrawal at appropriate times and in sufficient amounts to
enable the Fund to satisfy the tax distribution requirements that apply to the
Fund and that must be satisfied in order to avoid Federal income and/or excise
tax on the Fund. For purposes of applying the requirements of the Code regarding
qualification as a RIC, the Fund will be deemed (i) to own its proportionate
share of each of the assets of the Portfolio and (ii) to be entitled to the
gross income of the Portfolio attributable to such share.
In order to avoid Federal excise tax, the Code requires that the Fund
distribute (or be deemed to have distributed) by December 31 of each calendar
year at least 98% of its ordinary income (not including tax-exempt income) for
such year, at least 98% of the excess of its realized capital gains over its
realized capital losses, generally computed on the basis of the one-year period
ending on October 31 of such year or, by election, December 31 of such year,
after reduction by any available capital loss carryforwards, and 100% of any
income or capital gain 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.
As of the close of business, September 30, 1994, the Fund contributed its
assets to the Portfolio in exchange for an interest in the Portfolio. The Trust
has obtained an opinion of tax counsel to the effect that, although there is no
judicial authority directly on point, this contribution will not result in the
recognition of gain or loss by the Fund for Federal income tax purposes. The
Trust intends to file the Fund's Federal income tax return for its taxable year
ended December 31, 1994 reporting such contribution of assets in a manner
consistent with such opinion. The Trust has also applied for a private letter
ruling from the Internal Revenue Service ("IRS") to confirm this result for such
series. If it were determined that this contribution by the Fund was a taxable
transaction, the Fund could be required to recognize gain on the transfer of its
assets to the Portfolio and to make additional distributions to its shareholders
in order to avoid Fund-level Federal income taxes, and any such distributions
would be taxable to the shareholders who receive them; and in such case, the
Fund might also be required to pay penalties and/or interest to the IRS.
Distributions of net investment income and the excess of net short-term
capital gain over net long-term capital loss and certain foreign exchange gains
earned by the Portfolio and allocated to the Fund are taxable to shareholders of
the Fund as ordinary income whether received in cash or reinvested in additional
shares. Distributions of the excess of net long-term capital gain over net
short-term capital loss (including any capital loss carried forward from prior
years) earned by the Portfolio and allocated to the Fund are taxable to
shareholders of the Fund as long-term capital gains, whether received in cash or
reinvested in additional shares, and regardless of the length of time their
shares have been held.
Distributions by the Fund reduce the net asset value of the Fund's shares.
Should a distribution reduce the net asset value below a shareholder's cost
basis, such distribution would be taxable to the shareholder even though, from
an investment standpoint, it may constitute a return of capital. Therefore,
investors should consider the tax implications of buying shares immediately
before a distribution.
A portion of distributions made by the Fund which are derived from
dividends received by the Portfolio from domestic corporations and allocated to
the Fund may qualify for the dividends-received deduction for corporations. The
dividends-received deduction for corporate shareholders 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 Federal income tax law 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 deduction
may result in reduction of the tax basis of the corporate shareholder's shares.
Distributions eligible for the dividends-received deduction may give rise to or
increase an alternative minimum tax for 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 of net 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 certain
"wash sale" rules if other shares of the Fund are acquired within a period
beginning 30 days before and ending 30 days after the date of such redemption or
other disposition. Any disallowed loss will result in an adjustment to the
shareholder's tax basis in some or all of the other shares acquired.
The Portfolio's transactions in options and futures contracts will be
subject to special tax rules that may affect the amount, timing and character of
Fund distributions to shareholders. For example, certain positions held by the
Portfolio on the last business day of each taxable year will be marked to market
(i.e., treated as if closed out on such day), and any resulting gain or loss
will generally be treated as 60% long-term and 40% short-term capital gain or
loss. Certain positions held by the Portfolio that substantially diminish the
Portfolio's risk of loss with respect to other positions in its portfolio may
constitute "straddles," which are subject to tax rules that may cause deferral
of Portfolio losses, adjustments in the holding period of Portfolio securities
and conversion of short-term into long-term capital losses. The Portfolio may
have to limit its activities in options and futures contracts in order to enable
the Fund to maintain its qualification as a RIC.
The Portfolio may be subject to foreign withholding or other foreign taxes
with respect to income (possibly including, in some cases, capital gains) on
certain foreign securities. As it is not expected that more than 50% of the
value of the Fund's total assets, taking into account its allocable share of the
Portfolio's total assets at the close of any taxable year of the Fund, will
consist of securities issued by foreign corporations, the Fund will not be
eligible to pass through to shareholders their proportionate share of foreign
taxes paid by the Portfolio and allocated to the Fund, with the result that
shareholders will not include in income, and will not be entitled to take any
foreign tax credits or deductions for, foreign taxes paid by the Portfolio and
allocated to the Fund. However, the Fund may deduct such taxes in calculating
its distributable income earned by the Portfolio and allocated to the Fund.
These taxes may be reduced or eliminated under the terms of an applicable U.S.
income tax treaty. Certain foreign exchange gains and losses realized by the
Portfolio and allocated to the Fund will be treated as ordinary income and
losses. Certain uses of foreign currency and investment by the Portfolio in the
stock of 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 and/or avoid imposition of a tax on the Fund.
Special tax rules apply to Individual Retirement Accounts ("IRAs") and to
other retirement plans, and persons investing through such plans should consult
their tax advisers for more information.
Amounts paid by the Fund to individuals and certain other shareholders who
have not provided the Fund with their correct taxpayer identification number and
certain required certifications, as well as shareholders with respect to whom
the Fund has received notification from the Internal Revenue Service or a
broker, may be subject to "backup" withholding of Federal income tax from the
Fund's dividends and distributions and the proceeds of redemptions (including
repurchases and exchanges), at a rate of 31%. An individual's taxpayer
identification number is generally his or her social security number.
Non-resident alien individuals and certain foreign corporations and other
foreign entities generally will be subject to a U.S. withholding tax at a rate
of 30% on the Fund's distributions from its ordinary income and the excess of
its net short-term capital gain over its net long-term capital loss, unless the
tax is reduced or eliminated by an applicable tax treaty. Distributions from the
excess of the Fund's net long-term capital gain over its net short- term capital
loss received by such shareholders and any gain from the sale or other
disposition of shares of the Fund generally will not be subject to U.S. Federal
income taxation, provided that non-resident alien status has been certified by
the shareholder. Different U.S. tax consequences may result if the shareholder
is engaged in a trade or business in the United States, is present in the United
States for a sufficient period of time during a taxable year to be treated as a
U.S. resident, or fails to provide any required certifications regarding status
as a non-resident alien investor. Foreign shareholders should consult their tax
advisers regarding the U.S. and foreign tax consequences of an investment in the
Fund.
The foregoing discussion does not address the special tax rules applicable
to certain classes of investors, such as retirement plans, tax-exempt entities,
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 or foreign tax consequences
of investing in the Fund.
PRINCIPAL UNDERWRITER
Under the Distribution Agreement the Principal Underwriter acts as
principal in selling shares of the Fund. The expenses of printing copies of
prospectuses used to offer shares to financial service firms or investors and
other selling literature and of advertising is borne by the Principal
Underwriter. The fees and expenses of qualifying and registering and maintaining
qualifications and registrations of the Fund and its shares under Federal and
state securities laws is borne by the Fund. In addition, the Fund makes payments
to the Principal Underwriter pursuant to its Distribution Plan as described in
the Fund's current prospectus; the provisions of the plan relating to such
payments are included in the Distribution Agreement. The Distribution Agreement
is renewable annually by the Trust's Board of Trustees (including a majority of
its Trustees who are not interested persons of the Trust and who have no direct
or indirect financial interest in the operation of the Fund's Distribution Plan
or the Distribution Agreement), may be terminated on sixty days' notice either
by such Trustees or by vote of a majority of the outstanding voting securities
of the Fund or on six months' notice by the Principal Underwriter and is
automatically terminated upon assignment. The Principal Underwriter distributes
Fund shares on a "best efforts" basis under which it is required to take and pay
for only such shares as may be sold.
The Fund has authorized the Principal Underwriter to act as agent in
repurchasing shares and paid the Principal Underwriter $1,945 for the period
ended December 31, 1994 (being $2.50 for each repurchase transaction handled by
the Principal Underwriter). The Principal Underwriter estimates that the
expenses incurred by it in acting as repurchase agent for the Fund will exceed
the amounts paid therefor by the Fund.
DISTRIBUTION PLAN
The Distribution Plan (the "Plan") is described in the prospectus and is
designed to meet the requirements of Rule 12b-1 under the 1940 Act and the sales
charge rule of the National Association of Securities Dealers, Inc. (the "NASD
Rule"). The purpose of the Plan is to compensate the Principal Underwriter for
its distribution services and facilities provided to the Fund by paying the
Principal Underwriter sales commissions and a separate distribution fee in
connection with sales of Fund shares. The following supplements the discussion
of the Plan contained in the Fund's prospectus.
The amount payable by the Fund to the Principal Underwriter pursuant to the
Plan as sales commissions and distribution fees with respect to each day will be
accrued on such day as a liability of the Fund and will accordingly reduce the
Fund's net assets upon such accrual, all in accordance with generally accepted
accounting principles. The amount payable on each day is limited to 1365 of .75%
of the Fund's net assets on such day. The level of the Fund's net assets changes
each day and depends upon the amount of sales and redemptions of Fund shares,
the changes in the value of the investments held, by the Portfolio, the expenses
of the Fund and the Portfolio accrued and allocated to the Fund on such day,
income on portfolio investments of the Portfolio accrued and allocated to the
Fund on such day, and any dividends and distributions declared on Fund shares.
The Fund does not accrue possible future payments as a liability of the Fund or
reduce the Fund's current net assets in respect of unknown amounts which may
become payable under the Plan in the future because the standards for accrual of
a liability under such accounting principles have not been satisfied.
The Plan provides that the Fund will receive all contingent deferred sales
charges and will make no payments to the Principal Underwriter in respect of any
day on which there are no outstanding Uncovered Distribution Charges of the
Principal Underwriter. Contingent deferred sales charges and accrued amounts
will be paid by the Fund to the Principal Underwriter whenever there exist
Uncovered Distribution Charges under the Plan.
Periods with a high level of sales of Fund shares accompanied by a low
level of early redemptions of Fund shares resulting in the imposition of
contingent deferred sales charges will tend to increase the time during which
there will exist Uncovered Distribution Charges of the Principal Underwriter.
Conversely, periods with a low level of sales of Fund shares accompanied by a
high level of early redemptions of Fund shares resulting in the imposition of
contingent deferred sales charges will tend to reduce the time during which
there will exist Uncovered Distribution Charges of the Principal Underwriter.
In calculating daily the amount of uncovered distribution charges will be
calculated daily. For the purposes of this calculation, distribution charges
will include the aggregate amount of sales commissions and distribution fees
theretofore paid plus the aggregate amount of sales commissions and distribution
fees which the Principal Underwriter is entitled to be paid under the Plan since
its inception. Payments theretofore paid and payable under the Plan by the Fund
to the Principal Underwriter and contingent deferred sales charges theretofore
paid and payable to the Principal Underwriter will be subtracted from such
distribution charges; if the result of such subtraction is positive, a
distribution fee (computed at 1% over the prime rate then reported in The Wall
Street Journal) will be computed on such amount and added thereto, with the
resulting sum constituting the amount of outstanding uncovered distribution
charges with respect to such day. The amount of outstanding uncovered
distribution charges of the Principal Underwriter calculated on any day does not
constitute a liability recorded on the financial statements of the Fund.
The amount of uncovered distribution charges of the Principal Underwriter
at any particular time depends upon various changing factors, including the
level and timing of sales of Fund shares, the nature of such sales (i.e.,
whether they result from exchange transactions, reinvestments or from cash sales
through Authorized Firms), the level and timing of redemptions of Fund shares
upon which a contingent deferred sales charge will be imposed, the level and
timing of redemptions of Fund shares upon which no contingent deferred sales
charge will be imposed (including redemptions involving exchanges of Fund shares
for shares of another fund in the Eaton Vance Marathon Group of Funds which
result in a reduction of uncovered distribution charges), changes in the level
of the net assets of the Fund, and changes in the interest rate used in the
calculation of the distribution fee under the Plan.
As currently implemented by the Trustees, the Plan authorizes payments of
sales commissions and distribution fees to the Principal Underwriter and service
fees to the Principal Underwriter and Authorized Firms which may be equivalent,
on an aggregate basis during any fiscal year of the Fund, to 1% of the Fund's
average daily net assets for such year. The Fund believes that the combined rate
of all these payments may be higher than the rate of payments made under
distribution plans adopted by other investment companies pursuant to Rule 12b-1.
Although the Principal Underwriter will use its own funds (which may be borrowed
from banks) to pay sales commissions at the time of sale, it is anticipated that
the Eaton Vance organization will profit by reason of the operation of the Plan
through an increase in the Fund's assets (thereby increasing the advisory fee
payable to BMR by the Portfolio) resulting from sale of Fund shares and through
the sales commissions and distribution fees and contingent deferred sales
charges paid to the Principal Underwriter pursuant to the Plan. The Eaton Vance
organization may be considered to have realized a profit under the Plan if at
any point in time the aggregate amounts theretofore received by the Principal
Underwriter pursuant to the Plan and from contingent deferred sales charges have
exceeded the total expenses theretofore incurred by such organization in
distributing shares of the Fund. Total expenses for this purpose will include an
allocable portion of the overhead costs of such organization and its branch
offices, which costs will include without limitation leasing expense,
depreciation of building and equipment, utilities, communication and postage
expense, compensation and benefits of personnel, travel and promotional expense,
stationery and supplies, literature and sales aids, interest expense, data
processing fees, consulting and temporary help costs, insurance, taxes other
than income taxes, legal and auditing expense and other miscellaneous overhead
items. Overhead is calculated and allocated for such purpose by the Eaton Vance
organization in a manner deemed equitable to the Fund.
For the period from October 1, 1994 to December 31, 1994, the Fund paid
sales commissions under the Plan to the Principal Underwriter aggregating
$53,776, which amount was used by the Principal Underwriter to defray sales
commissions aggregating $6.393 paid during such period by the Principal
Underwriter to Authorized Firms on sales of shares of the Fund and to reduce the
outstanding uncovered distribution charges. For the period from October 1, 1994
to December 31, 1994, contingent deferred sales charges aggregating
approximately $72,219 were imposed on early redeeming shareholders and paid to
the Principal Underwriter, which amounts were used by the Principal Underwriter
to reduce the outstanding uncovered distribution charges. As at December 31,
1994, the outstanding uncovered distribution charges of the Principal
Underwriter under the Plan amounted to approximately $541,466 (which amount was
equivalent to 1.9% of the Fund's net assets on such day).
The Plan also authorizes the Fund to make payments of service fees. For the
period from October 1, 1994 to December 31, 1994, the Fund made service fee
payments to the Principal Underwriter and Authorized Firms aggregating $13,721,
of which $13,679 was paid to financial service firms and the balance was
retained by the Principal Underwriter.
The provisions of the Plan relating to payments of sales commissions and
distribution fees to the Principal Underwriter are also included in the
Distribution Agreement between the Fund and the Principal Underwriter. Pursuant
to Rule 12b-1, the Plan has been approved by the Trust's initial sole
shareholder (Eaton Vance) and by the Board of Trustees of the Trust, as required
by Rule 12b-1. The Plan continues in effect through and including April 28,
1996, and shall continue in effect indefinitely thereafter for so long as such
continuance is approved at least annually by the vote of both a majority of (i)
the Trustees of the Fund who are not interested persons of the Fund and who have
no direct or indirect financial interest in the operation of the Plan or any
agreements related to the Plan (the "Rule 12b-1 Trustees") and (ii) all of the
Trustees then in office, and the Distribution Agreement contains a similar
provision. The Plan and Distribution Agreement may be terminated at any time by
vote of a majority of the Rule 12b-1 Trustees or by a vote of a majority of the
outstanding voting securities of the Fund. Under the Plan the President or a
Vice President of the Trust shall provide to the Trustees for their review, and
the Trustees shall review at least quarterly, a written report of the amount
expended under the Plan and the purposes for which such expenditures were made.
The Plan may not be amended to increase materially the payments described
therein without approval of the shareholders of the Fund, and all material
amendments of the Plan must also be approved by the Trustees as required by Rule
12b-1. So long as the Plan is in effect, the selection and nomination of
Trustees who are not interested persons of the Trust shall be committed to the
discretion of the Trustees who are not such interested persons.
The Trustees of the Trust believe that the Plan will be a significant
factor in the growth of the Fund's assets, and will result in increased
investment flexibility and advantages which will benefit the Fund and its
shareholders. Payments for sales commissions and distribution fees made to the
Principal Underwriter under the Plan will compensate the Principal Underwriter
for its services and expenses in distributing shares of the Fund. Service fee
payments made to the Principal Underwriter and Authorized Firms under the Plan
provide incentives to provide continuing personal services to investors and the
maintenance of shareholder accounts. By providing incentives to the Principal
Underwriter and Authorized Firms, the Plan is expected to result in the
maintenance of, and possible future growth in, the assets of the Fund. Based on
the foregoing and other relevant factors, the Trustees of the Trust have
determined that in their judgment there is a reasonable likelihood that the Plan
will benefit the Fund and its shareholders.
PORTFOLIO SECURITY TRANSACTIONS
Decisions concerning the execution of portfolio security transactions,
including the selection of the market and the broker-dealer firm, are made by
BMR. BMR is also responsible for the execution of transactions for all other
accounts managed by it.
BMR places the portfolio security transactions of the Portfolio and of all
other accounts managed by it for execution with many broker-dealer firms. BMR
uses its best efforts to obtain execution of portfolio security transactions at
prices which are advantageous to the Portfolio and (when a disclosed commission
is being charged) at reasonably competitive commission rates. In seeking such
execution, BMR will use its best judgment in evaluating the terms of a
transaction, and will give consideration to various relevant factors, including
without limitation the size and type of the transaction, the general execution
and operational capabilities of the broker-dealer, the nature and character of
the market for the security, the confidentiality, speed and certainty of
effective execution required for the transaction, the reputation, reliability,
experience and financial condition of the broker-dealer, the value and quality
of services rendered by the broker-dealer in other transactions, and the
reasonableness of the commission, if any. Transactions on United States stock
exchanges and other agency transactions involve the payment by the Portfolio of
negotiated brokerage commissions. Such commissions vary among different
broker-dealer firms, and a particular broker-dealer may charge different
commissions according to such factors as the difficulty and size of the
transaction and the volume of business done with such broker- dealer.
Transactions in foreign securities usually involve the payment of fixed
brokerage commissions, which are generally higher than those in the United
States. There is generally no stated commission in the case of securities traded
in the over-the-counter markets, but the price paid or received by the Portfolio
usually includes an undisclosed dealer markup or markdown. In an underwritten
offering the price paid by the Portfolio includes a disclosed fixed commission
or discount retained by the underwriter or dealer. Although commissions paid on
portfolio security transactions will, in the judgment of BMR, be reasonable in
relation to the value of the services provided, commissions exceeding those
which another firm might charge may be paid to broker-dealers who were selected
to execute transactions on behalf of the Portfolio and BMR's other clients in
part for providing brokerage and research services to BMR.
As authorized in Section 28(e) of the Securities Exchange Act of 1934, a
broker or dealer who executes a portfolio transaction on behalf of the Portfolio
may receive a commission which is in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction if BMR
determines in good faith that such commission was reasonable in relation to the
value of the brokerage and research services provided. This determination may be
made on the basis of either that particular transaction or on the basis of the
overall responsibilities which BMR and its affiliates have for accounts over
which they exercise 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 in the investment advisory industry for the
advisers of investment companies, institutions and other investors to receive
research, statistical and quotation services, data, information and other
services, products and materials which assist such advisers in the performance
of their investment responsibilities ("Research Services") from broker-dealer
firms whch 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 receives Research Services from many broker-dealer firms
with which BMR places the Portfolio transactions and from third parties with
which these broker-dealers have arrangements. These Research Services include
such matters as general economic and market reviews, industry and company
reviews, evaluations of securities and portfolio strategies and transactions,
recommendations as to the purchase and sale of securities and other portfolio
transactions, financial, industry and trade publications, news and information
services, pricing and quotation equipment and services, and research oriented
computer hardware, software, data bases and services. Any particular Research
Service obtained through a broker-dealer may be used by BMR in connection with
client accounts other than those accounts which pay commissions to such
broker-dealer. Any such Research Service may be broadly useful and of value to
BMR in rendering investment advisory services to all or a significant portion of
its clients, or may be relevant and useful for the management of only one
client's account or of a few clients' accounts, or may be useful for the
management of merely a segment of certain clients' accounts, regardless of
whether any such account or accounts paid commissions to the broker-dealer
through which such Research Service was obtained. The advisory fee paid by the
Portfolio is not reduced because BMR receives such Research Services. BMR
evaluates the nature and quality of the various Research Services obtained
through broker-dealer firms and attempts to allocate sufficient commissions to
such firms to ensure the continued receipt of Research Services which BMR
believes are useful or of value to it in rendering investment advisory services
to its clients.
Subject to the requirement that BMR shall use its best efforts to seek to
execute portfolio security transactions at advantageous prices and at reasonably
competitive commission rates. 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 BMR or Eaton Vance. This policy is not
inconsistent with a rule of the National Association of Securities Dealers,
Inc., which rule provides that no firm which is a member of the Association
shall favor or disfavor the distribution of shares of any particular investment
company or group of investment companies on the basis of brokerage commissions
received or expected by such firm from any source.
Securities considered as investments for the Portfolio may also be
appropriate for other investment accounts managed by BMR or its affiliates. BMR
will attempt to allocate equitably portfolio security transactions among the
Portfolio and the portfolios of its other investment accounts whenever decisions
are made to purchase or sell securities by the Portfolio and one or more of such
other accounts simultaneously. In making such allocations, the main factors to
be considered are the respective investment objectives of the Portfolio and such
other accounts, the relative size of portfolio holdings of the same or
comparable securities, the availability of cash for investment by the Portfolio
and such accounts, the size of investment commitments generally held by the
Portfolio and such accounts and the opinions of the persons responsible for
recommending investments to the Portfolio and such accounts. While this
procedure could have a detrimental effect on the price or amount of the
securities available to the Portfolio from time to time, it is the opinion of
the Trustees of the Trust and the Portfolio that the benefits available from the
BMR organization outweigh any disadvantage that may arise from exposure to
simultaneous transactions.
During the fiscal years ended September 30, 1994, 1993 and 1992, the Trust
paid brokerage commissions of $162,605, $133,768 and $320,413, respectively, on
portfolio security transactions. Of the total brokerage commissions paid during
the fiscal year ended September 30, 1994, approximately $148,112 was paid in
respect of portfolio security transactions aggregating approximately $83,003,408
to firms which provided some research services to BMR or its affiliates. For the
fiscal year ended December 31, 1994, the Portfolio paid brokerage commissions of
$1,997,260 on portfolio security transactions, of which approximately $1,509,827
was paid in respect of portfolio security transactions aggregating approximately
$718,689,809 to firms which provided some research services to BMR or its
affiliates.
OTHER INFORMATION
Eaton Vance, pursuant to its agreement with the Trust, controls the use of
the words "Eaton Vance" in the Fund's name and may use the words "Eaton Vance"
in other connections and for other purposes.
The Trust's Declaration of Trust may not be amended without the affirmative
vote of a majority of the outstanding shares of the Trust, except that the
Declaration of Trust may be amended by the Trustees to change the name of the
Trust, to make such other changes as do not have a materially adverse effect on
the rights or interests of shareholders and to conform the Declaration of Trust
to applicable Federal laws or regulations. The Trust may be terminated (i) upon
the merger or consolidation with or sale of the Trust's assets to another
company, if approved by the holders of two-thirds of the outstanding shares of
the Trust, except that if the Trustees recommend such transaction, the approval
by vote of the holders of a majority of the outstanding shares will be
sufficient; or (ii) upon liquidation and distribution of the assets of the
Trust, if approved by a majority of the Trustees or by the holders of a majority
of the Trust's outstanding shares. If not so terminated, the Trust may continue
indefinitely.
The Declaration of Trust further provides that the Trustees will not be
liable for errors of judgment or mistakes of fact or law; but nothing in the
Declaration of Trust protects a Trustee against any liability to which he would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of his
office. In addition, the By-Laws of the Trust provide that no natural person
shall serve as a Trustee of the Trust after the holders of record of not less
than two-thirds of the outstanding shares have declared that he be removed from
office either by declaration in writing filed with the custodian of the assets
of the Trust or by votes cast in person or by proxy at a meeting called for the
purpose.
FINANCIAL STATEMENTS
Registrant incorporates by reference the audited financial information for
the Fund and the Portfolio contained in the Fund's shareholder report for the
period from October 1, 1994 to December 31, 1994 as previously filed
electronically with the Securities and Exchange Commission (Accession No.
0000950156-95-000084).
<PAGE>
PART C
OTHER INFORMATION
ITEM 24: FINANCIAL STATEMENTS AND EXHIBITS
(A) INCLUDED IN PART A:
Financial Highlights for the period from the start of business October
1, 1994 to December 31, 1994 and for the seven years ended December
31, 1994.
INCLUDED IN PART B:
INCORPORATED BY REFERENCE TO THE ANNUAL REPORT FOR THE FUND DATED
DECEMBER 31, 1994, FILED ELECTRONICALLY PURSUANT TO SECTION 30(B)(2) OF
THE INVESTMENT COMPANY ACT OF 1940
FOR EATON VANCE EQUITY-INCOME TRUST (ACCESSION NO.
0000950156-95-000084):
Portfolio of Investments as of December 31, 1994
Statement of Assets and Liabilities as of December 31, 1994
Statement of Operations for the period from the start of business,
October 1, 1994, to December 31, 1994
Statement of Changes in Net Assets for the period from the start of
business, October 1, 1994 to December 31, 1994 and for the year
ended September 30, 1994
Financial Highlights for the period from the start of business
October 1, 1994, to December 31, 1994 and for the 4 years ended
September 30, 1994
Notes to Financial Statements
Report of Independent Accountants
Financial Statements for Total Return Portfolio:
Portfolio of Investments as of December 31, 1994
Statement of Assets and Liabilities as of December 31, 1994
Statement of Operations for the year ended December 31, 1994
Statement of Changes in Net Assets for the year ended December 31,
1994 and for the period from the start of business, October 28,
1993 to December 31, 1992
Supplementary Data for the year ended December 31, 1994 and for the
period from the start of business, October 28, 1993 to December
31, 1993
Notes to Financial Statements
Report of Independent Accountants
(B) EXHIBITS:
(1)(a) Declaration of Trust dated August 3, 1987 filed herewith.
(b) Amendment to Declaration of Trust dated February 22, 1995 filed
herewith.
(2)(a) By-Laws, filed as Exhibit (2) to the original Registration
Statement and incorporated herein by reference.
(b) Amendment to By-Laws of Eaton Vance Equity-Income Trust dated
December 13, 1993 filed as Exhibit (2)(b) to Post-Effective
Amendment No. 8 and incorporated herein by reference.
(3) Not applicable
(4) Specimen certificate representing share of beneficial interest,
filed as Exhibit (4) to Post-Effective Amendment No. 1 and
incorporated herein by reference.
(5) Investment Advisory Agreement with Eaton Vance Management dated
November 1, 1990 filed as Exhibit (5) to Post-Effective Amendment
No. 4 and incorporated herein by reference.
(6)(a) Amended Distribution Agreement with Eaton Vance Distributors, Inc.
dated July 7, 1993 filed as Exhibit (6)(a) to Post-Effective
Amendment No. 8 and incorporated herein by reference.
(b) Selling Group Agreement between Eaton Vance Distributors, Inc. and
Authorized Dealers filed as Exhibit (6)(b) to Post-Effective
Amendment No. 8 and incorporated herein by reference.
(c) Schedule of Dealer Discounts and Sales Charges filed as Exhibit
(6)(c) to Post- Effective Amendment No. 8 and incorporated herein
by reference.
(7) Not applicable
(8) Custodian Agreement with Investors Bank & Trust Company dated
December 17, 1990 filed as Exhibit (8) to Post-Effective Amendment
No. 4 and incorporated herein by reference.
(9) Form of Administrative Services Agreement with Eaton Vance
Management for Eaton Vance Equity-Income Trust filed as Exhibit (9)
to Post-Effective Amendment No. 8 and incorporated herein by
reference.
(10) Opinion of Counsel filed herewith.
(11) Consent of Independent Accountants for Eaton Vance Equity-Income
Trust and Total Return Portfolio filed herewith.
(12) Not applicable
(13) Letter Agreement with Eaton Vance Management, Inc. filed as Exhibit
(13) to the original Registration Statement and incorporated herein
by reference.
(14)(a) Vance, Sanders Profit Sharing Retirement Plan for Self-Employed
Persons with Adoption Agreement and instructions filed as Exhibit
No. 14(1) to Post-Effective Amendment No. 22 on Form N-1 under the
Securities Act of 1933 (File No. 2-28471) and incorporated herein
by reference.
(b) Eaton & Howard, Vance Sanders Defined Contribution Prototype Plan
and Trust with Adoption Agreements (1) Basic Profit-Sharing
Retirement Plan, (2) Basic Money Purchase Pension Plan, (3) Thrift
Plan Qualifying as Profit-Sharing Plan, (4) Thrift Plan Qualifying
as Money Purchase Pension Plan, (5) Integrated Profit- Sharing
Retirement Plan, (6) Integrated Money Purchase Pension Plan filed
as Exhibit 14(2) to Post-Effective Amendment No. 22 on Form N-1
under the Securities Act of 1933 (File No. 2-28471) and
incorporated herein by reference.
(c) Individual Retirement Custodial Account (Form 5305-A) and
Investment Instruction Form filed as Exhibit No. 14(3) to
Post-Effective Amendment No. 22 on Form N-1 under the Securities
Act of 1933 (File No. 2-28471) and incorporated herein by
reference.
(d) Eaton & Howard, Vance Sanders Variable Pension Prototype Plan and
Trust with Adoption Agreement filed as Exhibit 14(d) to
Post-Effective Amendment No. 22 on Form N-1 under the Securities
Act of 1933 (File No. 2-28471) and incorporated herein by
reference.
(15) Amended Distribution Plan pursuant to Rule 12b-1 under the
Investment Company Act of 1940 dated July 7, 1993 filed as Exhibit
(15) to Post-Effective Amendment No. 8 and incorporated herein by
reference.
(16) Schedule for Computation of Performance Quotations filed herewith.
(17)(a) Power of Attorney for Eaton Vance Equity-Income Trust dated January
10, 1994 filed as Exhibit (17)(a) to Post-Effective Amendment No. 8
and incorporated herein by reference.
(b) Power of Attorney for Total Return Portfolio dated August 16, 1993
filed as Exhibit (17)(b) to Post-Effective Amendment No. 15 on Form
N-1A under the Securities Act of 1933 (File No. 2-74378) and
incorporated herein by reference.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Not applicable
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
(1) (2)
TITLE OF CLASS NUMBER OF RECORD HOLDERS
Shares of beneficial interest as of March 31, 1995
without par value 1,721
<PAGE>
ITEM 27. INDEMNIFICATION
No change over the original filing has been made.
Registrant's Trustees and officers are insured under a mutual fund errors
and omissions insurance policy covering loss incurred by reason of negligent
errors and omissions committed in their capacities as such.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Reference is made to the information set forth under the caption
"Investment Adviser" in the Statement of Additional Information, which
information is incorporated herein by reference.
ITEM 29. PRINCIPAL UNDERWRITER
(A) Registrant's principal underwriter, Eaton Vance Distributors, Inc., a
wholly-owned subsidiary of Eaton Vance Management, is the principal
underwriter for each of the investment companies named below:
<TABLE>
<S> <C>
EV Classic Alabama Tax Free Fund EV Classic National Municipals Fund
EV Classic Arizona Tax Free Fund EV Classic New Jersey Limited Maturity
EV Classic Arkansas Tax Free Fund Tax Free Fund
EV Classic California Limited Maturity EV Classic New Jersey Tax Free Fund
Tax Free Fund EV Classic New York Limited Maturity
EV Classic California Municipals Fund Tax Free Fund
EV Classic Colorado Tax Free Fund EV Classic New York Tax Free Fund
EV Classic Connecticut Limited Maturity EV Classic North Carolina Tax Free Fund
Tax Free Fund EV Classic Ohio Limited Maturity
EV Classic Connecticut Tax Free Fund Tax Free Fund
EV Classic Florida Insured Tax Free Fund EV Classic Ohio Tax Free Fund
EV Classic Florida Limited Maturity EV Classic Oregon Tax Free Fund
Tax Free Fund EV Classic Pennsylvania Limited Maturity
EV Classic Florida Tax Free Fund Tax Free Fund
EV Classic Georgia Tax Free Fund EV Classic Pennsylvania Tax Free Fund
EV Classic Government Obligations Fund EV Classic Rhode Island Tax Free Fund
EV Classic Greater China Growth Fund EV Classic Senior Floating-Rate Fund
EV Classic Growth Fund EV Classic South Carolina Tax Free Fund
EV Classic Hawaii Tax Free Fund EV Classic Special Equities Fund
EV Classic High Income Fund EV Classic Senior Floating-Rate Fund
EV Classic Investors Fund EV Classic Stock Fund
EV Classic Kansas Tax Free Fund EV Classic Tennessee Tax Free Fund
EV Classic Kentucky Tax Free Fund EV Classic Texas Tax Free Fund
EV Classic Louisiana Tax Free Fund EV Classic Total Return Fund
EV Classic Maryland Tax Free Fund EV Classic Virginia Tax Free Fund
EV Classic Massachusetts Limited Maturity EV Classic West Virginia Tax Free Fund
Tax Free Fund EV Marathon Alabama Tax Free Fund
EV Classic Massachusetts Tax Free Fund EV Marathon Arizona Limited Maturity
EV Classic Michigan Limited Maturity Tax Free Fund
Tax Free Fund EV Marathon Arizona Tax Free Fund
EV Classic Michigan Tax Free Fund EV Marathon Arkansas Tax Free Fund
EV Classic Minnesota Tax Free Fund EV Marathon California Limited Maturity
EV Classic Mississippi Tax Free Fund Tax Free Fund
EV Classic Missouri Tax Free Fund EV Marathon California Municipals Fund
EV Classic National Limited Maturity EV Marathon Colorado Tax Free Fund
Tax Free Fund
<PAGE>
EV Marathon Connecticut Limited Maturity EV Marathon Pennsylvania Limited Maturity
Tax Free Fund Tax Free Fund
EV Marathon Connecticut Tax Free Fund EV Marathon Pennsylvania Tax Free Fund
EV Marathon Emerging Markets Fund EV Marathon Rhode Island Tax Free Fund
Eaton Vance Equity - Income Trust EV Marathon South Carolina Tax Free Fund
EV Marathon Florida Insured Tax Free Fund EV Marathon Special Equities Fund
EV Marathon Florida Limited Maturity EV Marathon Stock Fund
Tax Free Fund EV Marathon Strategic Income Fund
EV Marathon Florida Tax Free Fund EV Marathon Tennessee Tax Free Fund
EV Marathon Georgia Tax Free Fund EV Marathon Texas Tax Free Fund
EV Marathon Gold & Natural Resources Fund EV Marathon Total Return Fund
EV Marathon Government Obligations Fund EV Marathon Virginia Limited Maturity
EV Marathon Greater China Growth Fund Tax Free Fund
EV Marathon Greater India Fund EV Marathon Virginia Tax Free Fund
EV Marathon Growth Fund EV Marathon West Virginia Tax Free Fund
EV Marathon Hawaii Tax Free Fund EV Traditional California Municipals Fund
EV Marathon High Income Fund EV Traditional Connecticut Tax Free Fund
EV Marathon Investors Fund EV Traditional Emerging Markets Fund
EV Marathon Kansas Tax Free Fund EV Traditional Florida Insured Tax Free Fund
EV Marathon Kentucky Tax Free Fund EV Traditional Florida Limited Maturity
EV Marathon Louisiana Tax Free Fund Tax Free Fund
EV Marathon Maryland Tax Free Fund EV Traditional Florida Tax Free Fund
EV Marathon Massachusetts Limited Maturity EV Traditional Government Obligations Fund
Tax Free Fund EV Traditional Greater China Growth Fund
EV Marathon Massachusetts Tax Free Fund EV Traditional Greater India Fund
EV Marathon Michigan Limited Maturity EV Traditional Growth Fund
Tax Free Fund Eaton Vance Income Fund of Boston
EV Marathon Michigan Tax Free Fund EV Traditional Investors Fund
EV Marathon Minnesota Tax Free Fund Eaton Vance Municipal Bond Fund L.P.
EV Marathon Mississippi Tax Free Fund EV Traditional National Limited Maturity
EV Marathon Missouri Tax Free Fund Tax Free Fund
EV Marathon National Limited Maturity EV Traditional National Municipals Fund
Tax Free Fund EV Traditional New Jersey Tax Free Fund
EV Marathon National Municipals Fund EV Traditional New York Limited Maturity
EV Marathon New Jersey Limited Maturity Tax Free Fund
Tax Free Fund EV Traditional New York Tax Free Fund
EV Marathon New Jersey Tax Free Fund EV Traditional Pennsylvania Tax Free Fund
EV Marathon New York Limited Maturity EV Traditional Special Equities Fund
Tax Free Fund EV Traditional Stock Fund
EV Marathon New York Tax Free Fund EV Traditional Total Return Fund
EV Marathon North Carolina Limited Maturity Eaton Vance Cash Management Fund
Tax Free Fund Eaton Vance Liquid Assets Fund
EV Marathon North Carolina Tax Free Fund Eaton Vance Money Market Fund
EV Marathon Ohio Limited Maturity Eaton Vance Prime Rate Reserves
Tax Free Fund Eaton Vance Short-Term Treasury Fund
EV Marathon Ohio Tax Free Fund Eaton Vance Tax Free Reserves
EV Marathon Oregon Tax Free Fund Massachusetts Municipal Bond Portfolio
<CAPTION>
(B)
(1) (2) (3)
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICE
BUSINESS ADDRESS WITH PRINCIPAL UNDERWRITER WITH REGISTRANT
------------------ -------------------------- --------------------
<S> <C> <C>
James B. Hawkes* Vice President and Director President and Trustee
William M. Steul* Vice President and Director None
Wharton P. Whitaker* President and Director None
Howard D. Barr Vice President None
2750 Royal View Court
Oakland, Michigan
Nancy E. Belza Vice President None
463-1 Buena Vista East
San Francisco, California
Chris Berg Vice President None
45 Windsor Lane
Palm Beach Gardens, Florida
H. Day Brigham, Jr.* Vice President None
Susan W. Bukima Vice President None
106 Princess Street
Alexandria, Virginia
Jeffrey W. Butterfield Vice President None
9378 Mirror Road
Columbus, Indiana
Mark A. Carlson* Vice President None
Jeffrey Chernoff Vice President None
115 Concourse West
Bright Waters, New York
William A. Clemmer* Vice President None
James S. Comforti Vice President None
1859 Crest Drive
Encinitas, California
Mark P. Doman Vice President None
107 Pine Street
Philadelphia, Pennsylvania
Michael A. Foster Vice President None
850 Kelsey Court
Centerville, Ohio
William M. Gillen Vice President None
280 Rea Street
North Andover, Massachusetts
Hugh S. Gilmartin Vice President None
1531-184th Avenue, NE
Bellevue, Washington
Richard E. Houghton* Vice President None
Brian Jacobs* Senior Vice President None
Stephen D. Johnson Vice President None
13340 Providence Lake Drive
Alpharetta, Georgia
Thomas J. Marcello Vice President None
553 Belleville Avenue
Glen Ridge, New Jersey
Timothy D. McCarthy Vice President None
9801 Germantown Pike
Lincoln Woods Apt. 416
Lafayette Hill, Pennsylvania
Morgan C. Mohrman* Senior Vice President None
Gregory B. Norris Vice President None
6 Halidon Court
Palm Beach Gardens, Florida
Thomas Otis* Secretary and Clerk Secretary
George D. Owen Vice President None
1911 Wildwood Court
Blue Springs, Missouri
F. Anthony Robinson Vice President None
510 Gravely Hill Road
Wakefield, Rhode Island
Benjamin A. Rowland, Jr.* Vice President, None
Treasurer and Director
John P. Rynne* Vice President None
George V.F. Schwab, Jr. Vice President None
9501 Hampton Oaks Lane
Charlotte, North Carolina
Cornelius J. Sullivan* Vice President None
Maureen C. Tallon Vice President None
518 Armistead Drive
Nashville, Tennessee
David M. Thill Vice President None
126 Albert Drive
Lancaster, New York
William T. Toner Vice President None
747 Lilac Drive
Santa Barbara, California
Chris Volf Vice President None
6517 Thoroughbred Loop
Odessa, Florida
Donald E. Webber* Senior Vice President None
Sue Wilder Vice President None
141 East 89th Street
New York, New York
- ----------
<FN>
*Address is 24 Federal Street, Boston, MA 02110
</FN>
</TABLE>
(C) Not applicable
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
All applicable accounts, books and documents required to be maintained by
the Registrant by Section 31(a) of the Investment Company Act of 1940 and the
Rules promulgated thereunder are in the possession and custody of the
Registrant's custodian, Investors Bank & Trust Company, 24 Federal Street,
Boston, MA 02110 and 89 South Street, Boston, MA 02111, and its transfer agent,
The Shareholder Services Group, Inc., 53 State Street, Boston, MA 02104, with
the exception of certain corporate documents and portfolio trading documents
which are in the possession and custody of the Registrant's investment adviser,
24 Federal Street, Boston, MA 02110. The 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 Registrant's investment
adviser.
ITEM 31. MANAGEMENT SERVICES
Not applicable
ITEM 32. UNDERTAKINGS
The Registrant undertakes to furnish to each person to whom a prospectus is
delivered a copy of the latest annual report to shareholders, upon request and
without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Amendment to the Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Amendment to the Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Boston, and
Commonwealth of Massachusetts, on the 26th day of April, 1995.
EATON VANCE EQUITY-INCOME TRUST
By /s/ JAMES B. HAWKES
----------------------------------
JAMES B. HAWKES, President
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
President, Principal
Executive Officer and
/s/ JAMES B. HAWKES Trustee April 26, 1995
- ------------------------------------
JAMES B. HAWKES
Treasurer and Principal
Financial and Accounting
/s/ JAMES L. O'CONNOR Officer April 26, 1995
- ------------------------------------
JAMES L. O'CONNOR
DONALD R. DWIGHT* Trustee April 26, 1995
- ------------------------------------
DONALD R. DWIGHT
SAMUEL L. HAYES, III* Trustee April 26, 1995
- ------------------------------------
SAMUEL L. HAYES, III
/s/ PETER F. KILEY Vice President and Trustee April 26, 1995
- ------------------------------------
PETER F. KILEY
NORTON H. REAMER* Trustee April 26, 1995
- ------------------------------------
NORTON H. REAMER
JOHN L. THORNDIKE* Trustee April 26, 1995
- ------------------------------------
JOHN L. THORNDIKE
JACK L. TREYNOR* Trustee April 26, 1995
- ------------------------------------
JACK L. TREYNOR
<FN>
*By: /s/ H. DAY BRIGHAM, JR.
-------------------------------
As attorney-in-fact
</FN>
</TABLE>
<PAGE>
SIGNATURES
Total Return Portfolio has duly caused this Amendment to the Registration
Statement on Form N-1A of Eaton Vance Equity-Income Trust (File No. 33-16435)
to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of Boston and the Commonwealth of Massachusetts on the 26th day of
April, 1995.
TOTAL RETURN PORTFOLIO
By /s/ M. DOZIER GARDNER
----------------------------------
M. DOZIER GARDNER, President
This Amendment to the Registration Statement on Form N-1A of Eaton Vance
Eqity-Income Trust (File No. 33-16435) has been signed below by the following
persons in the capacities on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
Trustee, President, and
Principal Executive
/s/ M. DOZIER GARDNER Officer April 26, 1995
- ------------------------------------
M. DOZIER GARDNER
Treasurer and Principal
Financial and Accounting
/s/ JAMES L. O'CONNOR Officer April 26, 1995
- ------------------------------------
JAMES L. O'CONNOR
/s/ LANDON T. CLAY Trustee April 26, 1995
- ------------------------------------
LANDON T. CLAY
DONALD R. DWIGHT* Trustee April 26, 1995
- ------------------------------------
DONALD R. DWIGHT
/s/ JAMES B. HAWKES Trustee April 26, 1995
- ------------------------------------
JAMES B. HAWKES
SAMUEL L. HAYES, III* Trustee April 26, 1995
- ------------------------------------
SAMUEL L. HAYES, III
NORTON H. REAMER* Trustee April 26, 1995
- ------------------------------------
NORTON H. REAMER
JOHN L. THORNDIKE* Trustee April 26, 1995
- ------------------------------------
JOHN L. THORNDIKE
JACK L. TREYNOR* Trustee April 26, 1995
- ------------------------------------
JACK L. TREYNOR
<FN>
*By: /s/ H. DAY BRIGHAM, JR.
--------------------------------
As attorney-in-fact
</FN>
</TABLE>
<PAGE>
EXHIBIT INDEX
The following exhibits are filed as part of this amendment to the
Registration Statement pursuant to General Instructions E of Form N-1A.
<TABLE>
<CAPTION>
PAGE IN SEQUENTIAL
EXHIBIT NO. DESCRIPTION NUMBERING SYSTEM
----------- ----------- ------------------
<S> <C>
(1)(a) Declaration of Trust dated August 3, 1987
(b) Amendment to Declaration of Trust dated February 22, 1995
(10) Opinion of Counsel
(11) Consent of Independent Accountants for Eaton Vance Equity-Income
Trust and Total Return Portfolio
(16) Schedule for Computation of Performance Quotations
</TABLE>
EATON VANCE EQUITY INCOME TRUST
DECLARATION OF TRUST
Dated August 3, 1987
DECLARATION OF TRUST, made August 3, 1987 by Donald R. Dwight, James B.
Hawkes, Samuel L. Hayes, III, Norton H. Reamer, John L. Thorndike, and Jack L.
Treynor, hereinafter referred to collectively as the "Trustees" and indivi-
dually as a "Trustee", which terms shall include any successor Trustees or
Trustee and any present Trustees who are not signatories to this instrument.
WHEREAS, the Trustees desire to establish a trust fund under a Declaration
of Trust for the investment and reinvestment of funds contributed thereto;
NOW, THEREFORE, the Trustees declare that all money and property
contributed to the trust fund hereunder shall be held and managed under this
Declaration of Trust IN TRUST as herein set forth below.
ARTICLE I
NAME
This Trust shall be known as Eaton Vance Equity-Income Trust.
ARTICLE II
PURPOSE OF TRUST
The purpose of this Trust is to provide investors with a continuous source
of managed investment primarily in securities.
ARTICLE III
MANAGEMENT OF THE TRUST
The business and affairs of the Trust shall be managed by the Trustees and
they shall have all powers necessary and appropriate to perform that function.
The number, term of office, manner of election, resignation, filling of
vacancies and procedures with respect to meetings of Trustees shall be as
prescribed in the By-Laws of the Trust.
ARTICLE IV
OWNERSHIP OF ASSETS OF THE TRUST
The legal title to all cash, securities and property held by the Trust
shall at all times be vested in the Trustees. Shareholders (hereinafter referred
to as "Shareholders", or individually as a "Shareholder") of the Trust shall not
have title to any such assets held by the Trust, but each Shareholder shall be
deemed to own a proportionate undivided beneficial interest in the Trust equal
to the number of Shares of a series, if more than one series of Shares is
established by the Trustees as provided in Section 1A of Article VI, of which
such Shareholder is the record owner divided by the total number of Shares of
such series outstanding.
<PAGE>
ARTICLE V
POWERS OF THE TRUSTEES
The Trustees in all instances shall act as principals. The Trustees shall
have full power and authority to do any and all acts and to make and execute any
and all contracts and instruments that they may consider necessary or
appropriate in connection with the management of the Trust. The Trustees shall
not be bound or limited by present or future laws or customs in regard to trust
investments, but shall have full authority and power to make any and all
investments which they, in their uncontrolled discretion, shall deem proper to
accomplish the purpose of this Trust. The Trustees shall have full power and
authority to adopt such accounting and tax accounting practices as they consider
appropriate. Without limiting the generality of the foregoing, the Trustees
shall have power and authority:
(a) To buy, and invest funds of the Trust in, own, hold for
investment or otherwise, and to sell or otherwise dispose
of, securities including, but not limited to, bonds,
debentures, warrants and rights to purchase securities,
certificates of beneficial interest, notes or other
evidences of indebtedness or other negotiable securities,
however named or described, issued by corporations, trusts,
associations or other persons, domestic or foreign, or
issued and guaranteed by the United States of America or any
agency or instrumentality thereof, by the government of any
foreign country, by any State of the United States, or by
any political sub-division or agency of any State or foreign
country, deposit any assets of the Trust in any bank, trust
company or banking institution or retain any such assets in
cash; to purchase and sell (or write) options on securities,
currency, precious metals and other commodities, indices,
futures contracts and other financial instruments and enter
into closing transactions in connection therewith; to enter
into all types of commodities contracts, including without
limitation the purchase and sale of futures contracts on
securities, currency, precious metals and other commodities,
indices and other financial instruments; to enter into
forward foreign currency exchange contracts; to purchase and
sell gold and silver bullion, precious or strategic metals,
coins and currency of all countries; to engage in "when
issued" and delayed delivery transactions; to enter into
repurchase agreements and reverse repurchase agreements; and
to employ all kinds of hedging techniques and investment
management strategies; and from time to time change the
investments of funds of the Trust.
(b) To adopt By-Laws not inconsistent with this Declaration
of Trust providing for the conduct of the business of the
Trust, which By-Laws shall bind the Shareholders, and to
amend and repeal such By-Laws to the extent that such
authority is not otherwise reserved to the Shareholders.
(c) To elect and remove such officers of the Trust and to
appoint and terminate such agents of the Trust as they
consider appropriate.
(d) To employ one or more banks, trust companies or banking
institutions as custodian of any assets of the Trust subject
to any conditions set forth in this Declaration of Trust or
in the By-Laws.
(e) To retain one or more transfer agents and shareholder
servicing agents, or both, which may be the same entity, for
the Trust.
(f) From time to time to sell Shares of the Trust either for
cash or property whenever and in such amounts as the
Trustees may deem desirable and to provide for the
distribution of Shares of the Trust either through one or
more principal underwriters in the manner hereinafter
provided for or by the Trust itself, or both.
<PAGE>
(g) To set record dates or direct that the Share transfer
books be closed for a stated period for the purpose of
making a determination with respect to Shareholders,
including which Shareholders are entitled to notice of a
meeting, vote at a meeting, consent to actions or other
matters, receive a distribution or dividend, or exercise or
be allotted other rights.
(h) To delegate such authority as they consider desirable to
any officers of the Trust and to any agent, custodian or
underwriter.
(i) To sell or give assent, or exercise any rights of
ownership, with respect to stock or other securities or
property held by the Trust, and to execute and deliver
powers of attorney to such person or persons as the Trustees
shall deem proper, granting to such person or persons such
power and discretion with relation to stock or other
securities or property as the Trustees shall deem proper.
(j) To exercise all of the rights of the Trust as owner of
any securities which might be exercised by any individual
owning such securities in his own right, including without
limitation the right to vote by proxy for any and all
purposes (including the right to authorize any officer or
agent of the Trust to execute proxies), to consent to the
reorganization, merger or consolidation of any company, or
to consent to the sale or lease of all or substantially all
of the property and assets of any company to any other
company; to exchange any of the securities of any company
for the securities, including shares of stock, issued
therefor upon any such reorganization, merger,
consolidation, sale or lease; to exercise any conversion or
subscription privileges, rights, options and warrants
incident to the ownership of any security owned by it or
acquired therewith; to hold any securities acquired in the
name of any custodian of the assets of the Trust, or in the
name of its nominee or a nominee of the Trust, or in any
manner permitted herein or in the By-Laws; and to execute
any and all instruments and do any and all things incidental
to the Trust not inconsistent with the provisions hereof,
the execution or performance of which the Trustees may deem
expedient.
(k) To hold any security or property in a form not
indicating any trust, whether in bearer, unregistered or
other negotiable form; or either in its own name or in the
name of a custodian or a nominee or nominees of the Trust or
of a custodian, subject in either case to proper safeguards
according to the usual practice of Massachusetts trust
companies or investment companies.
(l) To compromise, arbitrate, or otherwise adjust claims of
the Trust in favor of or against the Trust or any matter in
controversy including, but not limited to, claims for taxes.
(m) To make distributions of the earnings or profits,
surplus (including paid-in surplus), capital or assets of
the Trust to Shareholders in the manner hereinafter provided
for, the amount of such distributions and their payment to
be solely at the discretion of the Trustees.
(n) To pay any and all taxes or liens of whatever nature or
kind imposed upon or against the Trust or any part thereof,
or imposed upon any of the Trustees herein, individually or
jointly, by reason of the Trust, or of the business
conducted by said Trustees under the terms of this
Declaration of Trust, out of the funds of the Trust
available for such purpose.
<PAGE>
(o) To engage in and to prosecute, compound, compromise,
abandon, or adjust, by arbitration, or otherwise, any
actions, suits, proceedings, disputes, claims, demands, and
things relating to the Trust, and out of the assets of the
Trust to pay, or to satisfy, any debts, claims or expenses
incurred in connection therewith, including those of
litigation, upon any evidence that the Trustees may deem
sufficient. The powers aforesaid are to include any actions,
suits, proceedings, disputes, claims, demands and things
relating to the Trust wherein any of the Trustees may be
named individually, but the subject matter of which arises
by reason of business for and on behalf of the Trust.
(p) To buy or join with any person or persons in buying the
property of any corporation, association, or other
organization any of the securities of which are included in
the Trust, or any property in which the Trustees, as such,
shall have or may hereafter acquire an interest, and to
allow the title to any property so bought to be taken in the
name or names of, and to be held by, such person, or persons
as the Trustees shall name or approve.
(q) From time to time in their discretion to enter into,
modify and terminate agreements with Federal or state
regulatory authorities, which agreements may restrict but
not amplify their powers under this Declaration of Trust.
(r) To borrow money and in this connection issue notes or
other evidence of indebtedness; to secure borrowings by
mortgaging, pledging or otherwise subjecting as security the
Trust property; to endorse, guarantee, or undertake the
performance of any obligation or engagement of any other
person and to lend the portfolio securities or other assets
of the Trust to other persons.
(s) From time to time in their discretion to charge all or
any part of any cost, expense or expenditure (including
without limitation any expense of selling or distributing
the Shares of the Trust) or tax against the principal or
capital of the Trust, and to credit all or any part of any
profit, income or receipt (including without limitation any
deferred sales charge or fee, whether contingent or
otherwise, paid or payable to the Trust on any redemption or
repurchase of Shares of the Trust) to the principal or
capital of the Trust.
The foregoing enumeration of specific powers shall not be held to limit or
restrict in any manner the general powers of the Trustees.
No one dealing with the Trustees shall be under any obligation to make any
inquiry concerning the authority of the Trustees, or to see to the application
of any payments made or property transferred to the Trustees or upon their
order. The Trustees may authorize one of their number to sign, execute,
acknowledge, and deliver any note, deed, certificate or other instrument in the
name of, and in behalf of, the Trust, and upon such authorization such
signature, acknowledgement or delivery shall have full force and effect as the
act of all of the Trustees.
<PAGE>
ARTICLE VI
BENEFICIAL INTEREST
Section l. Shares of Beneficial Interest The beneficial interest in the
Trust shall at all times be divided into an unlimited number of transferable
shares (herein referred to as the "Shares" and individually as a "Share"),
without par value. The Trustees may, in their discretion and as provided by
Section 1A of this Article VI, authorize the division of Shares into two or more
series , and the Trustees may vary the relative rights and preferences between
different series. Each Share represents an equal proportionate interest in the
Trust or the series with each other outstanding Share of the Trust or the
series, as the case may be. The Trustees may from time to time divide or combine
the Shares into a greater or lesser number without thereby changing the
proportionate beneficial interests in the Trust or in any series. Contributions
to the Trust may be accepted for, and Shares shall be redeemed as, whole Shares
and/or fractional Shares as the Trustees may in their discretion determine. The
Trustees may issue certificates of beneficial interest to evidence ownership of
such Shares.
Section 1A. Series Designation The Trustees, in their discretion, may
authorize the division of Shares into two or more series, and the different
series shall be established and designated, and the variations in the relative
rights and preferences as between the different series shall be fixed and
determined by the Trustees; provided, that all Shares shall be identical except
that there may be variations so fixed and determined between different series as
to investment objective, investment policies, purchase price, right of
redemption, special and relative rights as to dividends and on liquidation,
conversion rights, and conditions under which the several series shall have
separate voting rights. All references to Shares in this Declaration shall be
deemed to be shares of any or all series as the context may require.
If the Trustees shall divide the Shares of the Trust into two or more
series, the following provisions shall be applicable:
(a) The number of authorized Shares and the number of Shares of each series
that may be issued shall be unlimited. The Trustees may classify or reclassify
any unissued Shares or any Shares previously issued and reacquired of any series
into one or more series that may be established and designated from time to
time. The Trustees may hold as treasury shares (of the same or some other
series), reissue for such consideration and on such terms as they may determine,
or cancel any Shares of any series reacquired by the Trust at their discretion
from time to time.
(b) All consideration received by the Trust for the issue or sale of Shares
of a particular series, together with all assets in which such consideration is
invested or reinvested, all income, earnings, profits, and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation of such
assets, and any funds or payments derived from any reinvestment of such proceeds
in whatever form the same may be, shall irrevocably belong to that series for
all purposes, subject only to the rights of creditors and except as may
otherwise be required by applicable tax laws, and shall be so recorded upon the
books of account of the Trust. In the event that there are any assets, income,
earnings, profits, and proceeds thereof, funds or payments which are not readily
identifiable as belonging to any particular series, the Trustees shall allocate
them among any one or more of the series established and designated from time to
time in such manner and on such basis as they, in their sole discretion, deem
fair and equitable. Each such allocation by the Trustees shall be conclusive and
binding upon the shareholders of all series for all purposes.
<PAGE>
(c) The assets belonging to each particular series shall be charged with
the liabilities of the Trust in respect of that series and all expenses, costs,
charges and reserves attributable to that series, and any general liabilities,
expenses, costs, charges or reserves of the Trust which are not readily
identifiable as belonging to any particular series shall be allocated and
charged by the Trustees to and among any one or more of the series established
and designated from time to time in such manner and on such basis as the
Trustees in their sole discretion deem fair and equitable. Each allocation of
liabilities, expenses, costs, charges and reserves by the Trustees shall be
conclusive and binding upon the holders of all series for all purposes. The
Trustees shall have full discretion, to the extent not inconsistent with the
Investment Company Act of 1940, to determine which items are capital; and each
such determination and allocation shall be conclusive and binding upon the
Shareholders.
The establishment and designation of any series of Shares shall be
effective upon the execution by a majority of the then Trustees of an instrument
setting forth such establishment and designation and the relative rights and
preferences of such series, or as otherwise provided in such instrument. At any
time that there are no Shares outstanding of any particular series previously
established and designated, the Trustees may by an instrument executed by a
majority of their number abolish that series and the establishment and
designation thereof. Each instrument referred to in this paragraph shall have
the status of an amendment to this Declaration in accordance with Section 7 of
Article XIV hereof, and a copy of each such instrument shall be filed in
accordance with Section 5 of Article XIV hereof.
Section 2. Ownership of Shares The ownership of Shares shall be recorded in
the books of the Trust or of one or more transfer agents. The Trustees may make
such rules and adopt such procedures as they consider appropriate for the
transfer of Shares and similar matters. The record books of the Trust or of any
transfer agent, as the case may be, shall be conclusive evidence as to who are
the holders of Shares and as to the number of Shares held from time to time by
each such holder.
Section 3. Investments in the Trust The Trustees shall accept investments
in the Trust from such persons and on such terms as they may from time to time
authorize. After the date of the initial contribution of capital, the number of
Shares representing the initial contribution may, in the Trustees' discretion,
be considered as outstanding and the amount received by the Trustees on account
of the contribution shall be treated as an asset of the Trust. Subsequent
investments in the Trust shall be credited to the Shareholder's account in the
form of full and fractional Shares of the Trust at the net asset value per Share
as determined in accordance with Article XII hereof; provided, however, that the
Trustees may, in their sole discretion, impose a sales charge upon investments
in the Trust.
Section 4. Preemptive Rights Shareholders shall have no preemptive or other
right to subscribe to any additional Shares or other securities issued by the
Trust, except as the Trustees may determine with respect to any series of
Shares.
ARTICLE VII
CUSTODY OF ASSETS
The Trustees shall at all times employ a bank or trust company having an
aggregate capital, surplus and undivided profits (as shown in its last published
report) of at least two million dollars ($2,000,000) as the principal custodian
of the Trust(the "Custodian") with authority as its agent, but subject to such
restrictions, limitations and other requirements, if any, as may be contained in
the By-Laws:
<PAGE>
(a) To hold the securities owned by the Trust and deliver
the same upon written order;
(b) To receive and receipt for any moneys due to the Trust
and deposit the same in its own banking department or, as
the Trustees may direct, in any bank, trust company or
banking institution approved by the Custodian, provided that
all such deposits shall be subject only to the draft or
order of the Custodian; and
(c) To disburse such funds upon orders or vouchers.
The Trustees may also employ such Custodian as its agent:
(a) To keep the books and accounts of the Trust and furnish
clerical and accounting services; and
(b) To compute the net asset value per Share in accordance
with the provision of Article XII hereof.
All of the foregoing services shall be performed upon such basis of
compensation as may be agreed upon between the Trustees and the Custodian. If so
directed by vote of the holders of a majority of the outstanding Shares, the
Custodian shall deliver and pay over all property of the Trust held by it as
specified in such vote.
The Trustees may also authorize the Custodian to employ one or more
sub-custodians from time to time to perform such of the acts and services of the
Custodian and upon such terms and conditions as may be agreed upon between the
Custodian and such sub-custodian and approved by the Trustees.
Subject to such rules, regulations and orders as the Securities and
Exchange Commission (the "Commission") may adopt, the Trustees may direct the
Custodian to deposit all or any part of the securities in a depository and
clearing system established by a national securities exchange or a national
securities association registered with the Commission under the Securities
Exchange Act of 1934, as from time to time amended, or such other person as may
be permitted by the Commission, or otherwise in accordance with the Investment
Company Act of 1940, as from time to time amended (the "1940 Act"), pursuant to
which system all securities of any particular class or series of any issuer
deposited within the system are treated as fungible and may be transferred or
pledged by bookkeeping entry without physical delivery of such securities,
provided that all such deposits shall be subject to withdrawal only upon the
order of the Trust or the Custodian. The Trustees may also authorize the deposit
with one or more eligible foreign custodians of all or part of the Trust's
foreign assets, securities, cash and cash equivalents in amounts reasonably
necessary to effect the Trust's foreign investment transactions, in accordance
with such rules, regulations and orders as the Commission may adopt.
ARTICLE VIII
CONTRACTS
Section 1. Adviser The Trustees may in their discretion from time to time
enter into an investment advisory agreement whereby the other party to such
agreement shall undertake to furnish to the Trustees such investment advisory,
statistical and research facilities and services and such other facilities and
services, if any, and all upon such terms and conditions as the Trustees may in
their discretion determine. Notwithstanding any provisions of this Declaration
of Trust, the Trustees may authorize the Adviser, in its discretion and without
any prior consultation with the Trust, to buy, sell, lend and otherwise trade in
any and all securities, commodity contracts and other investments and assets of
the Trust and to engage in and employ all types of transactions and strategies
in connection therewith. Any such action taken pursuant to such agreement shall
be deemed to have been authorized by all of the Trustees.
<PAGE>
The Trustees may also employ, or authorize the Adviser to employ, one or
more sub-investment advisers from time to time to perform such of the acts and
services of the Adviser and upon such terms and conditions as may be agreed upon
between the Adviser and such sub-investment adviser and approved by the
Trustees.
Section 2. Principal Underwriters The Trustees may in their discretion from
time to time enter into one or more contracts providing for the sale of the
Shares of the Trust. Pursuant to any such contract the Trust may either agree to
sell the Shares to the other party to the contract or appoint such other party
its sales agent for such Shares (such other party being herein sometimes called
the "underwriter.") In either case, any such contract shall be on such terms and
conditions as may be prescribed in the By-Laws, if any, and such further terms
and conditions as the Trustees may in their discretion determine; and any such
contract may also provide for the repurchase or sale of Shares of the Trust by
such other party as principal or as agent of the Trust.
Section 2A. Plan of Distribution The Trustees may in their discretion enter
into a plan or plans of distribution and any related agreements whereby the
Trust may finance directly or indirectly any activity which is primarily
intended to result in sales of Shares. Such plan or plans of distribution and
any related agreements may contain such terms and conditions as the Trustees may
in their discretion determine, subject to the requirements of Section 12 of the
1940 Act, Rule 12b-1 thereunder, and any other applicable rules and regulations.
Section 3. Transfer Agents The Trustees may in their discretion from time
to time appoint one or more transfer agents for the Trust. Any contract with a
transfer agent shall be on such terms and conditions as the Trustees may in
their discretion determine. The Trustees may employ a transfer agent as the
Trust's agent to (a) keep the books and accounts of the Trust and furnish
clerical and accounting services and (b) compute the net asset value per Share
in accordance with the provisions of Article XII hereof.
Section 4. Parties to Contract Any contract of the character described in
Sections 1, 2, 2A and 3 of this Article VIII or in Article VII hereof may be
entered into with any corporation, firm, trust or association, although one or
more of the Trustees or officers of the Trust may be an officer, director,
trustee, shareholder, or member of such other party to the contract, and no such
contract shall be invalidated or rendered voidable by reason of the existence of
any such relationship, nor shall any person holding such relationship be liable
merely by reason of such relationship for any loss or expense to the Trust under
or by reason of said contract or accountable for any profit realized directly or
indirectly therefrom, provided that the contract when entered into was
reasonable and fair and not inconsistent with the provisions of this Article
VIII, Article VII or the By-Laws. The same person (including a firm,
corporation, trust, or association) may be the other party to contracts entered
into pursuant to Sections 1, 2, 2A and 3 above or Article VII, and any
individual may be financially interested or otherwise affiliated with persons
who are parties to any or all of the contracts mentioned in this Section 4.
Section 5. Provisions and Amendments Any contract entered into pursuant to
Sections 1 and 2 of this Article VIII shall be consistent with and subject to
the requirements of Section 15 of the 1940 Act and any applicable rules or
orders of the Commission with respect to its continuance in effect, its
termination, and the method of authorization and approval, renewal or amendment
thereof.
<PAGE>
ARTICLE IX
COMPENSATION AND REIMBURSEMENT OF TRUSTEES
The Trustees shall be entitled to reasonable compensation from the Trust
and shall be reimbursed from the Trust estate for their expenses and
disbursements incurred by them in connection with the administration and
management of the Trust, including, without limitation, interest expense, taxes,
fees and commissions of every kind, payments made and expenses incurred pursuant
to any plan of distribution referred to in Section 2A of Article VIII hereof,
expenses of issue, repurchase and redemption of shares including expenses
attributable to a program of periodic repurchases or redemptions, expenses of
registering and qualifying the Trust and its Shares under Federal and state laws
and regulations, charges of custodians, transfer agents, shareholder servicing
agents, and registrars, expenses of preparing and setting in type prospectuses,
expenses of printing and distributing prospectuses sent annually to existing
shareholders, auditing and legal expense, reports to Shareholders, expenses of
meetings of Shareholders and proxy solicitations therefor, insurance expense,
association membership dues, expenses primarily intended to result in sales of
Shares of the Trust, and such non-recurring items as may arise, including
litigation to which the Trust is a party and for all losses and liabilities, as
well as such other expenses as the Trustees may determine are properly
chargeable to the Trust. This section shall not preclude the Trust from directly
paying any of the aforementioned fees and expenses.
ARTICLE X
SALE OF SHARES
The Trustees shall have the power from time to time to issue and sell or
cause to be issued and sold an unlimited number of Shares of any series of the
Trust for cash or for property, which shall in every case be paid to the
Custodian as agent of the Trust before the delivery of any certificate for such
Shares. The Shares of the Trust, including any Shares which may have been
repurchased by the Trust (herein sometimes referred to as "treasury shares"),
may be sold at a price as specified in the current prospectus of the Trust.
When an underwriting contract is in effect pursuant to Article VIII,
Section 2, the time of sale shall be the time when an unconditional order is
placed with the underwriter. Such contract may provide for the sale of Shares
either at a price based on the net asset value determined next after the order
is placed with said underwriter or at a price based on a net asset value to be
determined at some later time, or at such other price as is assented to by the
affirmative vote of the holders of a majority of the outstanding Shares of the
Trust. No Shares need be offered to existing Shareholders before being offered
to others. No Shares shall be sold by the Trust (although Shares previously
contracted to be sold may be issued upon payment therefor) during any period
when the determination of net asset value is suspended by declaration of the
Trustees pursuant to the provisions of Article XII hereof. In connection with
the acquisition by merger or otherwise of all or substantially all the assets of
a trust or another investment company, including companies classified as
personal holding companies under Federal income tax laws, the Trustees may issue
or cause to be issued Shares of the Trust and accept in payment therefor such
assets at such value as may be determined by or under the direction of the
Trustees, provided that such assets are of the character in which the Trustees
are permitted to invest the funds of the Trust.
<PAGE>
ARTICLE XI
REDEMPTIONS
Section 1. Redemption In case any Shareholder of record of the Trust
desires to dispose of his Shares, he may deposit at the office of the transfer
agent or other authorized agent of the Trust a written request or such other
form of request as the Trustees may from time to time authorize, requesting that
the Trust purchase the Shares in accordance with this Section 1; and the
Shareholder so requesting shall be entitled to require the Trust to purchase,
and the Trust or the underwriter of the Trust shall purchase his said Shares,
but only at the net asset value per Share (as determined under Article XII
hereof) minus any applicable sales charge, except that with respect to any
series of Shares established by the Trustees, the right of a Shareholder to
redeem such Shares may be varied. Payment for such Shares shall be made by the
Trust or the underwriter of the Trust to the Shareholder of record within seven
(7) days after the date upon which the request is received. The Trust may
require Shareholders to pay a sales charge to the Trust, the underwriter or any
other person designated by the Trustees upon redemption or repurchase of Trust
Shares in such amount as shall be determined from time to time by the Trustees.
The Trustees may also charge a redemption or repurchase fee in such amount as
may be determined from time to time by the Trustees. If the Trustees shall have
divided the Shares into two or more series, payment for shares of a series
tendered for redemption shall be made only out of assets allocated to that
series.
Section 2. Manner of Payment Payment for such Shares may at the option of
the Trustees or such officer or officers as they may duly authorize for the
purpose, in their complete discretion, be made in cash, or in kind, or partially
in cash and partially in kind. In case of payment in kind the Trustees, or their
delegate, shall have absolute discretion as to what security or securities shall
be distributed in kind and the amount of the same, and the securities shall be
valued for purposes of distribution at the figure at which they were appraised
in computing the net asset value of the Shares, provided that any Shareholder
who cannot legally acquire securities so distributed in kind by reason of the
prohibitions of the l940 Act shall receive cash.
Section 3. Suspension of the Right of Redemption If, pursuant to Article
XII hereof, the Trustees declare a suspension of the determination of net asset
value, the rights of Shareholders (including those who shall have applied for
redemption pursuant to Section 1 of this Article XI but who shall not yet have
received payment) to have Shares redeemed and paid for by the Trust shall be
suspended until the termination of such suspension is declared. In the case of a
suspension of the right of redemption, a Shareholder may either withdraw his
request for redemption or receive payment based on the net asset value existing
after the termination of the suspension.
Section 4. Involuntary Redemptions The Trustees may require a Shareholder
to redeem his Shares if the value of the Shares in his account is below $1,000.
The manner of effecting such involuntary redemptions shall be determined from
time to time by the Trustees.
If the Trustees shall, at any time and in good faith, be of the opinion
that direct or indirect ownership of Shares or other securities of the Trust has
or may become concentrated in any person to an extent which would disqualify the
Trust as a regulated investment company under the Internal Revenue Code, then
the Trustees shall have the power by lot or other means deemed equitable by them
(i) to call for redemption by any such person a number, or principal amount, of
Shares or other securities of the Trust sufficient to maintain or bring the
direct or indirect ownership of Shares or other securities of the Trust into
conformity with the requirements for such qualification and (ii) to refuse to
transfer or issue Shares or other securities of the Trust to any person whose
acquisition of the Shares or other securities of the Trust in question would
result in such disqualification. The redemption shall be effected at the
redemption price and in the manner provided in Sections 1 and 2 of this Article
XI.
The holders of Shares or other securities of the Trust shall upon demand
disclose to the Trustees in writing such information with respect to direct and
indirect ownership of Shares or other securities of the Trust as the Trustees
deem necessary to comply with the provisions of the Internal Revenue Code, or to
comply with the requirements of any other taxing authority.
<PAGE>
ARTICLE XII
NET ASSET VALUE PER SHARE
The net asset value of each Share of the Trust outstanding shall be
determined by the Trustees not less frequently than once on each day on which
the Trust is open for business, as of the close of trading on the New York Stock
Exchange or at such other time as the Trustees by resolution may determine. The
power and duty to determine net asset value may be delegated by the Trustees
from time to time to one or more of the Trustees and officers of the Trust, to
the other party to any contract entered into pursuant to Article VIII hereof, or
to the Custodian or a transfer agent. For the purpose of this Declaration of
Trust, any reference to the time at which a determination of net asset value is
made shall mean the time as of which the determination is made.
The Trustees may declare a suspension of the determination of net asset
value to the extent permitted by the 1940 Act.
The value of the assets of the Trust shall be determined in a manner
approved by the Trustees. From the total value of said assets, there shall be
deducted all indebtedness, interest and taxes, payable or accrued, expenses and
management charges accrued to the appraisal date, amounts determined and
declared as a distribution and all other items in the nature of liabilities
which shall be deemed appropriate. The resulting amount which shall represent
the total net assets of the Trust shall be divided by the number of Shares
outstanding at the time as of which the calculation is made and the quotient so
obtained shall be deemed to be the net asset value of the Shares.
Nothing in this Article XII shall be construed to affect the ability of the
Trustees to establish any series of Shares in accordance with Section 1A of
Article VI. In such a case, the net asset value per Share of a series shall be
determined as nearly as possible as set forth above for Shares of the Trust.
ARTICLE XIII
DIVIDENDS AND DISTRIBUTIONS
(a) The Trustees may from time to time distribute ratably among the
Shareholders such proportion of the earnings or profits, surplus (including
paid-in surplus), capital, or assets held by the Trustees as they may deem
proper. Such distributions may be made in cash, additional shares or property
(including without limitation any type of obligations of the Trust or any assets
thereof), and the Trustees may distribute ratably among the Shareholders
additional Shares issuable hereunder in the form of a stock dividend or
otherwise in such manner, at such times, and on such terms as the Trustees may
deem proper. Such distributions may be among the Shareholders of record at the
time of declaring a distribution or among the Shareholders of record at such
other date or time or dates or times as the Trustees shall determine. The
Trustees may in their discretion determine that, solely for the purposes of such
distributions, outstanding Shares shall exclude Shares for which orders have
been placed subsequent to a specified time on the date the distribution is
declared as of a day on which Boston banks are not open for business. The
Trustees may always retain from the net profits such amount as they may deem
necessary to pay the debts or expenses of the Trust or to meet obligations of
the Trust, or as they may deem desirable to use in the conduct of its affairs or
to retain for future requirements or extensions of the business. The Trustees
may adopt and offer to Shareholders such dividend reinvestment plans, cash
dividend payout plans or other distribution plans as the Trustees shall deem
appropriate.
<PAGE>
(b) The Trustees may prescribe, in their absolute discretion, such bases
and times for determining the amounts for the declaration and payment of
dividends and distributions as they may deem necessary or desirable.
(c) The Trustees shall, in the event that one series has a net capital loss
for a fiscal year and to the extent that such loss offsets a net capital gain
from another series, have the power to reduce the amount available for
distribution to the series having the net realized capital gain by the amount
offset. The series whose gain was offset by a loss shall retain the amount of
such gain in its net asset value.
ARTICLE XIV
MISCELLANEOUS
Section l. Trust Not a Partnership It is hereby expressly declared that a
trust and not a partnership is created hereby. No Trustee hereunder shall have
any power to bind personally either the Trust's officers or any Shareholders.
Section 2. Limitation of Personal Liability The Trustees shall not have the
power to bind the Shareholders or to call upon them or any of them for the
payment of any sum of money or any assessment whatever other than such sums as
the Shareholders at any time personally agree to pay by way of subscription for
Shares or otherwise. All persons or corporations dealing or contracting with the
Trustees as such shall have recourse only to the Trust for the payment of their
claims or for the payment or satisfaction of claims or obligations arising out
of such dealings or contracts, so that neither the Trustees nor the
Shareholders, nor the agents or attorneys of the Trust, past, present or future,
shall be personally liable therefor. In all contracts or instruments creating
liability it may be expressly stipulated, either by such reference to this
instrument as shall accomplish such purpose or otherwise, that the liability of
the Trustees and Shareholders under such contracts or instruments shall be
limited to the assets which may from time to time constitute the Trust.
Section 3. Trustee's Good Faith Action, Expert Advice, No Bond or Surety
The exercise by the Trustees of their powers and discretions hereunder in good
faith and with reasonable care under the circumstances then prevailing shall be
binding upon everyone interested. The Trustees shall not be liable for errors of
judgment or mistakes of fact or law. The Trustees may take advice of counsel or
other experts with respect to the meaning and operation of this Declaration of
Trust, and shall be under no liability for any act or omission in accordance
with such advice or for failing to follow such advice. Unless otherwise required
by the By-Laws, the Trustees shall not be required to give any bond as such, nor
any surety if a bond is required.
Section 4. Termination of Trust
(a) This Trust shall continue without limitation of time but
subject to the provisions of sub-sections (b), (c) and (d)
of this Section 4.
(b) The Trust may merge or consolidate with any other
corporation, association, trust or other organization or may
sell, lease or exchange all or substantially all of the
Trust property, including its good will, upon such terms and
conditions and for such consideration when and as authorized
by a majority of the Trustees and at any meeting of
Shareholders called for the purpose by the affirmative vote
of the holders of two-thirds of the Shares outstanding and
entitled to vote, or by an instrument or instruments in
writing without a meeting, consented to by the holders of
two-thirds of the Shares; provided, however, that, if such
merger, consolidation, sale, lease or exchange is
recommended by the Trustees, the vote or written consent of
the holders of a majority of the Shares outstanding and
entitled to vote shall be sufficient authorization; and any
such merger, consolidation, sale, lease or exchange shall be
deemed for all purposes to have been accomplished under and
pursuant to the statutes of the Commonwealth of
Massachusetts.
<PAGE>
(c) Subject to the approval of a majority of the Trustees or
of a majority of the outstanding Shares of the Trust, the
Trustees may at any time sell and convert into money all the
assets of the Trust. Upon making provision for the payment
of all outstanding obligations, taxes and other liabilities,
accrued or contingent, of the Trust, the Trustees shall
distribute the remaining assets of the Trust ratably among
the holders of the outstanding Shares, except as may be
otherwise provided by the Trustees with respect to any
series of Shares, and except that the Trustees shall
distribute to holders of Shares of a series only assets
allocated to that series.
(d) Upon completion of the distribution of the remaining
proceeds or the remaining assets as provided in sub-sections
(b) and (c), the Trust shall terminate and the Trustees
shall be discharged of any and all further liabilities and
duties hereunder and the right, title and interest of all
parties shall be cancelled and discharged.
Section 5. Filing of Copies, References, Headings and Counterparts The
original or a copy of this instrument, of any amendment hereto and of each
declaration of trust supplemental hereto, shall be kept at the office of the
Trust where it may be inspected by any Shareholder. A copy of this instrument,
of any amendment hereto, and of each supplemental declaration of trust shall be
filed by the Trustees with the Massachusetts Secretary of State and with any
other governmental office where such filing may from time to time be required.
Anyone dealing with the Trust may rely on a certificate by an officer of the
Trust as to whether or not any such amendments or supplemental declarations of
trust have been made and as to any matters in connection with the Trust
hereunder, and with the same effect as if it were the original, may rely on a
copy certified by a Trustee or an officer of the Trust to be a copy of this
instrument or of any such amendment hereto or supplemental declaration of trust.
In this instrument or in any such amendment or supplemental declaration of
trust, references to this instrument, and all expressions such as "herein",
"hereof" and "hereunder", shall be deemed to refer to this instrument as amended
or affected by any such supplemental declaration of trust. Headings are placed
herein for convenience of reference only and in case of any conflict, the text
of this instrument, rather than the headings, shall control. This instrument may
be executed in any number of counterparts each of which shall be deemed an
original, but such counterparts shall constitute one instrument.
Section 6. Applicable Law The Trust set forth in this instrument is made in
the Commonwealth of Massachusetts, and it is created under and is to be governed
by and construed and administered according to the laws of said Commonwealth.
The Trust shall be of the type commonly called a Massachusetts business trust,
and without limiting the provisions hereof, the Trust may exercise all powers
which are ordinarily exercised by such a trust.
Section 7. Amendments The execution of an instrument setting forth the
establishment and designation and the relative rights of any series of Shares in
accordance with Section 1A of Article VI hereof shall, without any
authorization, consent or vote of the Shareholders, effect an amendment of this
Declaration. Except as otherwise provided in this Section 7, if authorized by
vote of a majority of the Trustees and a majority of the outstanding Shares of
the Trust affected by the amendment (which Shares shall, unless otherwise
provided by vote of a majority of the Trustees, vote together on such amendment
as a single class), or by any larger vote which may be required by applicable
law or this Declaration of Trust in any particular case, the Trustees may amend
or otherwise supplement this Declaration. The Trustees may also amend this
Declaration without the vote or consent of Shareholders to change the name of
the Trust or to make such other changes as do not have a materially adverse
effect on the rights or interests of Shareholders hereunder or if they deem it
necessary to conform this Declaration to the requirements of applicable Federal
laws or regulations or the requirements of the regulated investment company
provisions of the Internal Revenue Code, but the Trustees shall not be liable
for failing so to do. Copies of any amendment or of the supplemental Declaration
of Trust shall be filed as specified in Section 5 of this Article XIV.
<PAGE>
Nothing contained in this Declaration shall permit the amendment of this
Declaration to impair the exemption from personal liability of the Shareholders,
Trustees, officers, employees and agents of the Trust or to permit assessments
upon Shareholders.
Notwithstanding any other provision hereof, until such time as a
Registration Statement under the Securities Act of 1933, as amended, covering
the first public offering of securities of the Trust shall have become
effective, this Declaration may be terminated or amended in any respect by the
affirmative vote of a majority of the Trustees or by an instrument signed by a
majority of the Trustees.
IN WITNESS WHEREOF, the undersigned have executed this instrument this 3rd
day of August, 1987.
________________________________ ______________________________________
Donald R. Dwight Norton H. Reamer
________________________________ ______________________________________
James B. Hawkes John L. Thorndike
________________________________ ______________________________________
Samuel L. Hayes, III Jack L. Treynor
<PAGE>
THE COMMONWEALTH OF MASSACHUSETTS
August 3, 1987
Suffolk, ss. Boston, Massachusetts
Then personally appeared the above named Donald R. Dwight, James B.
Hawkes, Samuel L. Hayes, III, Norton H. Reamer, John L. Thorndike and Jack L.
Treynor, being all of the Trustees then in office, who severally acknowledged
the foregoing instrument to be their free act and deed.
Before me,
/s/ Ruth E. McDonald
Notary Public
My commission expires June 4, 1993
____________________________________________
EATON VANCE EQUITY-INCOME TRUST
AMENDMENT TO DECLARATION OF TRUST
February 22, 1995
AMENDMENT, made February 22, 1995, to the Declaration of Trust made
August 3, 1987 (hereinafter called the "Declaration") of Eaton Vance
Equity-Income Trust, a Massachusetts business trust (hereinafter called the
"Trust"), by the undersigned, being a majority of the Trustees of the Trust in
office on February 22, 1995.
WHEREAS, Section 7 of Article XIV of the Declaration empowers the
Trustees to amend the Declaration when authorized by a majority of the Trustees
and a majority of the outstanding shares of the Trust affected by the amendment;
and
WHEREAS, the following amendment was approved by the Trustees at a
meeting held on April 25, 1994 and authorized by the vote of a majority of the
outstanding shares of the Trust at a Shareholder Meeting held on September 1,
1994;
NOW, THEREFORE, the undersigned Trustees do hereby amend the
Declaration in the following manner:
1. Section 4(b) of Article XIV of the Declaration is hereby
amended to read as follows:
(b) The Trust may merge or consolidate with any other
corporation, association, trust or other organization
or may sell, lease or exchange all or substantially
all of the Trust property, including its good will,
upon such terms and conditions and for such
consideration when and as authorized by a majority of
the Trustees and at any meeting of Shareholders
called for the purpose by the affirmative vote of the
holders of two-thirds of the Shares outstanding and
entitled to vote, or by an instrument or instruments
in writing without a meeting, consented to by the
holders of two-thirds of the Shares; provided,
however, that, if such merger, consolidation, sale,
lease or exchange is recommended by the Trustees, the
vote or written consent of the holders of a majority
of the Shares voting shall be sufficient
authorization; and any such merger, consolidation,
sale, lease or exchange shall be deemed for all
purposes to have been accomplished under and pursuant
to the statutes of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the undersigned Trustees have executed this
instrument this 22nd day of February, 1995.
/s/ Donald R. Dwight /s/ Norton H. Reamer
--------------------- ---------------------
Donald R. Dwight Norton H. Reamer
/s/ James B. Hawkes /s/ John L. Thorndike
--------------------- ---------------------
James B. Hawkes John L. Thorndike
/s/ Jack L. Treynor
--------------------- ---------------------
Samuel L. Hayes, III Jack L. Treynor
/s/ Peter F. Kiely
--------------------- ---------------------
Peter F. Kiely
April 27, 1995
Eaton Vance Equity-Income Trust
24 Federal Street
Boston, MA 02110
Gentlemen:
Eaton Vance Equity-Income Trust (the "Trust") is a Massachusetts
business trust created under a Declaration of Trust dated August 3, 1987
executed and delivered in Boston, Massachusetts and currently operating under an
Amendment to the Declaration of Trust dated February 22, 1995 (the "Declaration
of Trust"). I am of the opinion that all legal requirements have been complied
with in the creation of the Trust, and that said Declaration of Trust is legal
and valid.
The Trustees of the Trust have the powers set forth in the Declaration
of Trust, subject to the terms, provisions and conditions therein provided. As
provided in the Declaration of Trust, the interest of shareholders is divided
into shares of beneficial interest without par value, and the number of shares
that may be issued is unlimited. The Trustees may from time to time issue and
sell or cause to be issued and sold shares for cash or for property. All such
shares, when so issued, shall be fully paid and nonassessable by the Trust.
By votes duly adopted, the Trustees of the Trust have authorized the
issuance of shares of beneficial interest, without par value. The Trust intends
to register under the Securities Act of 1933, as amended, 289,902 of its shares
of beneficial interest with Post-Effective Amendment No. 11 to its Registration
Statement on Form N-1A (the "Amendment") with the Securities and Exchange
Commission.
I have examined originals, or copies, certified or otherwise identified
to my satisfaction, of such certificates, records and other documents as I have
deemed necessary or appropriate for the purpose of this opinion, including the
Declaration of Trust and votes adopted by the Trustees. Based upon the
foregoing, and with respect to Massachusetts law (other than the Massachusetts
Uniform Securities Act), only to the extent that Massachusetts law may be
applicable and without reference to the laws of the other several states or of
the United States of America, I am of the opinion that under existing law:
1. The Trust is a trust with transferable shares of beneficial interest
organized in compliance with the laws of The Commonwealth of Massachusetts, and
the Declaration of Trust is legal and valid under the laws of The Commonwealth
of Massachusetts.
2. Shares of beneficial interest registered by the Amendment may be
legally and validly issued in accordance with the Declaration of Trust upon
receipt by the Trust of payment in compliance with the Declaration of Trust and,
when so issued and sold, will be fully paid and nonassessable by the Trust.
I am a member of the Massachusetts and New York bars and have acted as
internal legal counsel of the Trust in connection with the Amendment, and I
hereby consent to the filing of this opinion with the Securities and Exchange
Commission as an exhibit thereto.
Very truly yours,
/s/ H. Day Brigham, Jr.
------------------------
H. Day Brigham, Jr., Esq.
Vice President, Eaton Vance Management
HDB/EGW/drb
b:\eit.opn
EXHIBIT NO. 11
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in Post-Effective Amendment No. 11 to the
Registration Statement on Form N-1A (1933 Act File Number 33-16435) of Eaton
Vance Equity-Income Trust (the "Fund") of our report dated February 3, 1995 on
our audit of the financial statements and financial highlights of the Fund and
of our report dated February 3, 1995 on our audit of the financial statements
and supplementary data of Total Return Portfolio, which reports are included in
the Annual Report to Shareholders for the year ended December 31, 1994, which is
incorporated by reference in this Registration Statement.
We also consent to the reference to our Firm under the caption "The Fund's
Financial Highlights" in the Prospectus and under the caption "Independent
Accountants" in the Statement of Additional Information of the Registration
Statement.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
April 24, 1995
<TABLE>
EATON VANCE EQUITY-INCOME TRUST
INVESTMENT PERFORMANCE
The table below indicates the total return (capital changes plus reinvestment of all distributions) on a hypothetical investment of
$1,000 in the Fund covering the life of the Fund ending December 31, 1994. Past performance is not indicative of future results.
Investment return and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost.
<CAPTION>
TOTAL TOTAL
RETURN RETURN
NO. OF SHARES 12/31/94 12/31/94 THROUGH THOUGH
GAINED THROUGH VALUE OF VALUE OF 12/31/94 12/31/94
REINVESTMENT TOTAL INVEST- INVEST- BEFORE AFTER
NO. OF NAV ON OF ALL NO. OF MENT MENT DEDUCTING DEDUCTING
INVEST- INVEST- AMT OF SHARES DATE OF DISTRIBUTIONS SHARES BEFORE AFTER THE CDSC THE CDSC *
MENT MENT INVEST- PUR- INVEST- THROUGH AS OF 12/31/94 DEDUCTING DEDUCTING
PERIOD DATE MENT CHASED MENT 12/31/94 12/31/94 NAV+ THE CDSC THE CDSC* CUMUL^ ANN++ CUMUL^^ ANN++
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
LIFE OF 10/21/87 $1,000 100.000 $10.00 44.832 144.832 $10.11 $1,464.25 $1,464.25 46.43% 5.44% 46.43% 5.44%
THE FUND
(7.20 YRS)
5 YEARS
ENDING 12/31/89 $1,000 85.763 $11.66 20.877 106.640 $10.11 $1,078.13 $1,060.79 7.81% 1.52% 6.08% 1.19%
12/31/94
1 YEAR
ENDING 12/31/93 $1,000 89.047 $11.23 3.352 92.400 $10.11 $934.16 $889.15 -6.58% -6.58% -11.09% -11.09%
12/31/94
* No contingent deferred sales charge (CDSC) is imposed on shares purchased more than six years prior to the redemption,
shares acquired through the reinvestment of dividends and distributions and any appreciation in value of other shares in
the account, and no such charge is imposed on exchanges of fund shares for shares of one or more other funds in the Eaton
Vance Marathon Group of Funds.
^ Cumulative total return (net asset value to net asset value) is calculated by dividing the cumulative net asset value on
12/31/94 by the initial net asset value.
^^ Cumulative total return (net asset value to net asset value) is calculated by dividing the cumulative net asset value on
12/31/94 by the initial net asset value and subtracting the CDSC.
+ 12/31/94 Net Asset Value is an unaudited figure
++ Average annual total return is the average annual compounded rate of return based on the cumulative value for each period.
It is calculated by taking the nth root of 1 + the cumulative total return, where n = the number of years invested.
</TABLE>
<PAGE>
INVESTMENT PERFORMANCE -- EATON VANCE EQUITY INCOME TRUST
The tables below indicate the total return (capital changes plus reinvestment of
all distributions) on a hypothetical investment of $1,000 in the Fund covering
the life of the Fund to December 31,1994.
<TABLE>
<CAPTION>
VALUE OF A $1,000 INVESTMENT
VALUE OF VALUE OF
INVESTMENT INVESTMENT TOTAL RETURN TOTAL RETURN
INVESTMENT INVESTMENT AMOUNT OF BEFORE CDSC AFTER CDSC BEFORE DEDUCTING CDSC AFTER DEDUCTING CDSC
PERIOD DATE INVESTMENT ON 12/31/94 ON 12/31/94 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ---------- ---------- ---------- ----------- ----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
LIFE OF
FUND 10/21/87 $1,000 $1,464.25 $1,464.25 46.43% 5.44% 46.43% 5.44%
5 YEARS ENDED
12/31/94 12/31/89 $1,000 $1,078.13 $1,060.79 7.81% 1.52% 6.08% 1.19%
1 YEAR ENDED
12/31/94 12/31/93 $1.000 $934.16 $889.15 -6.58% -6.58% -11.09% -11.09%
<CAPTION>
PERCENTAGE CHANGES
OCTOBER 21, 1987-DECEMBER 31, 1994
NET ASSET VALUE TO NET ASSET NET ASSET VALUE TO NET ASSET
VALUE BEFORE DEDUCTING THE CDSC VALUE AFTER DEDUCTING THE CDSC
WITH ALL DISTRIBUTIONS REINVESTED WITH ALL DISTRIBUTIONS REINVESTED
--------------------------------- ---------------------------------
FISCAL YEAR AVERAGE AVERAGE
ENDED ANNUAL CUMULATIVE ANNUAL ANNUAL CUMULATIVE ANNUAL
- ----------- ------ ---------- ------- ------ ---------- -------
<S> <C> <C> <C> <C> <C> <C>
12/31/87 ---- 0.13% ---- ---- -4.84% ----
12/31/88 4.94% 5.08% 4.22% -0.00% 0.17% 0.14%
12/31/89 29.25% 35.81% 14.95% 24.25% 31.81% 13.39%
12/31/90 -4.79% 29.31% 8.37% -9.30% 26.31% 7.58%
12/31/91 11.80% 44.57% 9.18% 6.80% 42.57% 8.82%
12/31/92 1.03% 46.05% 7.56% -3.81% 45.05% 7.41%
12/31/93 7.32% 56.75% 7.52% 2.32% 56.75% 7.52%
12/31/94 -6.58% 46.43% 5.44% -11.09% 46.43% 5.44%
</TABLE>
Past performance is not indicative of future results. Investment return and
principal value will fluctuate and shares, when redeemed, may be worth more or
less than their original cost.
<PAGE>
EATON VANCE EQUITY-INCOME TRUST
CALCULATION OF DISTRIBUTION RATE
AND EFFECTIVE DISTRIBUTION RATE
AS OF 12/31/94
DISTRIBUTION RATE
Annualize
Most Recent
Monthly : $0.090 x 4
Distribution
Divide by
Current Maximum : $10.72
Offering Price
Distribution
Rate Equals : 0.0356 ( or 3.56% )
EFFECTIVE DISTRIBUTION RATE
Divide
Distribution : 0.0356
Rate by 4 ----- + 1
and Add 1. 4
The Resulting
Number Equals : 1.0089
Take this
Number to the 4
4th power : ( 1.0089 ) - 1
and Subtract 1.
Effective
Distribution : 0.0361 ( or 3.61% )
Rate Equals
<PAGE>
Exhibit 16
EATON VANCE EQUITY-INCOME TRUST
CALCULATION OF YIELD
For the 30 days ended 12/31/94:
Interest Income Earned: $21,506
Plus Dividend Income Earned: $104,745
--------
Equal Gross Income: $126,251
Minus Expenses: $51,904
--------
Equal Net Investment Income: $74,347
Divided by Average daily number of shares
outstanding that were entitled
to receive dividends: 2,739,960
Equal Net Investment Income Earned Per Share: $0.0271
Maximum Offering Price Per Share 12/31/94*: $10.1300
30 Day Yield*: 3.24%
* Yield is calculated on a bond equivalent rate as follows:
6
2[(($0.0271/$10.13)+1) -1]
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000820066
<NAME> EV EQUITY-INCOME TRUST
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 27,624,478
<RECEIVABLES> 166,073
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 27,790,551
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 140,218
<TOTAL-LIABILITIES> 140,218
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 28,328,391
<SHARES-COMMON-STOCK> 2,733,924
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 23,975
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,627,123)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 925,090
<NET-ASSETS> 27,650,333
<DIVIDEND-INCOME> 440,931
<INTEREST-INCOME> 36,752
<OTHER-INCOME> (60,382)
<EXPENSES-NET> 147,915
<NET-INVESTMENT-INCOME> 269,386
<REALIZED-GAINS-CURRENT> (225,236)
<APPREC-INCREASE-CURRENT> 173,127
<NET-CHANGE-FROM-OPS> 217,277
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 245,154
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 103,367
<NUMBER-OF-SHARES-REDEEMED> 365,004
<SHARES-REINVESTED> 18,691
<NET-CHANGE-IN-ASSETS> (2,475,893)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 147,915
<AVERAGE-NET-ASSETS> 28,376,910
<PER-SHARE-NAV-BEGIN> 10.12
<PER-SHARE-NII> 0.094
<PER-SHARE-GAIN-APPREC> (0.014)
<PER-SHARE-DIVIDEND> (0.090)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.11
<EXPENSE-RATIO> 2.98
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000912751
<NAME> TOTAL RETURN PORTFOLIO
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 482,187,111
<INVESTMENTS-AT-VALUE> 497,964,811
<RECEIVABLES> 12,389,342
<ASSETS-OTHER> 16,027
<OTHER-ITEMS-ASSETS> 2,597
<TOTAL-ASSETS> 510,372,777
<PAYABLE-FOR-SECURITIES> 4,775,774
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 30,111
<TOTAL-LIABILITIES> 4,805,885
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 491,941,692
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 13,625,200
<NET-ASSETS> 505,566,892
<DIVIDEND-INCOME> 32,158,717
<INTEREST-INCOME> 1,330,065
<OTHER-INCOME> 0
<EXPENSES-NET> 4,702,796
<NET-INVESTMENT-INCOME> 28,785,986
<REALIZED-GAINS-CURRENT> (15,151,998)
<APPREC-INCREASE-CURRENT> (89,492,365)
<NET-CHANGE-FROM-OPS> (75,858,377)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (75,858,377)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4,106,857
<INTEREST-EXPENSE> 143,450
<GROSS-EXPENSE> 4,702,796
<AVERAGE-NET-ASSETS> 551,436,458
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0.85
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
