SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Capital Exchange Fund, Inc.
(Name of Registrant as Specified in Its Charter)
Janet E. Sanders
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(l)(ii), 14a-6(i)(1), 14a-6(j)(2)
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transactions applies:
3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11:(1)
4) Proposed maximum aggregate value of transaction:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
(1) Set forth the amount on which the filing fee is calculated and state how it
was determined
24 FEDERAL STREET BOSTON, MASS. 02110
October 30, 1995
Dear Stockholders:
On November 30, 1995, a Special Meeting in lieu of the Annual Meeting
of the Stockholders of Capital Exchange Fund, Inc. (the "Fund") will be held to
vote on several important proposals. Adoption of these proposals, which the
Fund's Directors have approved and believe are in the best interests of the Fund
and its stockholders, requires approval of the Fund's stockholders. As a
stockholder, you are entitled to cast one vote for each share that you own.
VOTING ONLY TAKES A FEW MINUTES - PLEASE RESPOND PROMPTLY.
YOUR VOTE IS IMPORTANT, NO MATTER HOW MANY SHARES YOU OWN. If the
required votes are not received by November 30, 1995, it will be necessary to
send further mailings to secure it. This is a costly process and is paid for by
the Fund. Therefore, you, as a stockholder, ultimately pay for the expense of a
delayed vote. Please sign and return your proxy promptly to avoid this
unnecessary expense.
IN ADDITION TO MATTERS RELATED TO AN ANNUAL MEETING, THE MEETING IS
CALLED TO CONSIDER PROPOSALS TO ADOPT THE HUB AND SPOKE(R) MUTUAL FUND STRUCTURE
FOR THE FUND. This would involve the investment by the Fund of its assets in a
corresponding open-end management investment company (the "Portfolio") having
substantially the same investment objective, policies and restrictions as the
Fund. In adopting this structure, other collective investment vehicles will be
able to invest in the resultant Portfolio of the existing Fund without assuming
the Fund's unrealized capital gains. Since these other collective investment
vehicles will have investors who would not otherwise invest in the existing
Fund, additional assets may be invested in the Portfolio. ADDING ASSETS FROM NEW
INVESTORS WILL ENABLE THE FUND TO PARTICIPATE IN A LARGER, MORE DIVERSIFIED AND
POTENTIALLY MORE ATTRACTIVE INVESTMENT PORTFOLIO. THE FUND WILL BE IN A POSITION
TO REALIZE DIRECTLY OR INDIRECTLY CERTAIN ECONOMIES OF SCALE, BASED ON THE
PREMISE THAT CERTAIN OF THE EXPENSES OF OPERATING AN INVESTMENT PORTFOLIO ARE
RELATIVELY FIXED AND THAT A LARGER INVESTMENT PORTFOLIO MAY EVENTUALLY ACHIEVE A
LOWER RATIO OF OPERATING EXPENSES TO NET ASSETS. AS A RESULT, STOCKHOLDERS OF
THE EXISTING FUND MAY EVENTUALLY ENJOY HIGHER RETURNS ON THEIR RESPECTIVE
INVESTMENTS. The Directors of the Fund believe that investing in the Portfolio
may produce other benefits resulting from such increased asset size such as the
ability to purchase securities in larger amounts than the existing Fund
currently is able to acquire, which may reduce certain operating expenses
indirectly borne by stockholders.
THIS IS A VERY IMPORTANT MEETING. IF YOU DO NOT PLAN TO ATTEND IN PERSON,
PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD TODAY.
There can be no assurance that these anticipated portfolio benefits and
economies of scale will be realized. The Directors believe that over time the
aggregate per share expenses of the Fund and the Portfolio should be less than
the expenses that would be incurred by the Fund if it continued to retain the
services of an investment adviser and make direct portfolio investments.
OTHER PROPOSALS YOU ARE VOTING ON.
At the Meeting stockholders will be asked to amend the Fund's
investment objective to state more explicitly that consideration is given to
investor taxes in managing the investment portfolio. Stockholders will also be
asked to amend certain fundamental investment restrictions to enable the Fund to
pursue tax-efficient management strategies and to utilize certain modern
investment techniques commonly used by investment professionals. Amendment of
the By-Laws of the Fund with respect to the timing of stockholder meetings also
is proposed. Finally, amendment of the Articles of Organization with respect to
reorganizations is proposed.
THIS IS A VERY IMPORTANT MEETING. IF YOU DO NOT PLAN
TO ATTEND IN PERSON, PLEASE SIGN, DATE AND RETURN THE
ENCLOSED PROXY CARD TODAY.
The matters to be presented to the Meeting are described in detail in
the enclosed proxy statement. THE DIRECTORS BELIEVE THAT ALL OF THE PROPOSALS
ARE IN THE BEST INTERESTS OF THE FUND AND ITS STOCKHOLDERS. The Directors
believe that the organization of mutual funds in hub-and-spoke arrangements is
an important evolution in the mutual fund industry and with adequate disclosure
and certain structural safeguards for investors, these arrangements can offer
benefits to both investors and the investment company industry without any
significant risk to investors.
For the Board of Directors
Landon T. Clay, President and Director
YOUR DIRECTORS URGE YOU TO VOTE IN FAVOR OF ALL PROPOSALS, AND LOOK FORWARD TO
RECEIVING YOUR PROXY SO YOUR SHARES CAN BE VOTED AT THE MEETING. FOR YOUR
CONVENIENCE AND TO SPEED DELIVERY OF YOUR PROXY, PLEASE USE THE ENCLOSED
POSTAGE-PAID ENVELOPE. YOUR PROMPT RESPONSE IS APPRECIATED. THANK YOU.
CAPITAL EXCHANGE FUND, INC.
24 FEDERAL STREET, BOSTON, MASS. 02110
Notice of Special Meeting in lieu of the Annual Meeting of Stockholders
To Be Held November 30, 1995
A Special Meeting in lieu of the Annual Meeting of Stockholders of
Capital Exchange Fund, Inc. (the "Fund"), will be held at the principal office
of the Fund, 24 Federal Street, Boston, Massachusetts on November 30, 1995,
commencing at 10:00 A.M. (Boston time), for the following purposes:
1. To fix the number of Directors, and to elect a Board of Directors
for the ensuing year and until their successors are elected and
qualified.
2. To ratify or reject the selection of Deloitte & Touche LLP as the
independent certified public accountants to be employed by the Fund
to sign or certify financial statements which may be filed by the
Fund with the Securities and Exchange Commission in respect of all
or any part of its current fiscal year.
3. To consider and act upon a proposal to approve an Amendment to the
By-Laws regarding the timing of annual stockholder meetings.
4. To consider and act upon a proposal to adopt a new investment
policy to authorize the Fund to invest its investable assets in a
specific corresponding open-end management investment company (the
"Portfolio") having substantially the same investment objective,
policies and restrictions as the Fund, and to supplement investment
restrictions to permit such investment.
5. To consider and act upon a proposal to authorize the Fund to vote
at a meeting of holders of interests in the Portfolio to (A) elect
a board of trustees of the Portfolio; (B) ratify the selection of
Deloitte & Touche LLP as the independent certified public
accountants of the Portfolio; and (C) approve the Investment
Advisory Agreement (as set forth in Exhibit A to the accompanying
Proxy Statement) between the Portfolio and its investment adviser,
Boston Management and research (a subsidiary of Eaton Vance
Management).
6. To consider and act upon a proposal to eliminate, reclassify and
amend the Fund's investment objective and certain of the Fund's
fundamental investment policies (as set forth in Exhibit B to the
accompanying proxy statement).
7. To consider and act upon a proposal to approve an Amendment to the
Articles of Organization regarding reorganizations.
8. To consider and act upon any matters incidental to the foregoing
purposes or any of them, and any other matters which may properly
come before said meeting or any adjourned session thereof.
These items are discussed in greater detail in the following pages.
The meeting is called pursuant to the By-Laws of the Fund. The Board of
Directors of the Fund have fixed the close of business on October 23, 1995 as
the record date for the determination of the stockholders of the Fund entitled
to notice of and to vote at the meeting and any adjournments thereof.
THOMAS OTIS
Clerk
OCTOBER 30, 1995
IMPORTANT - STOCKHOLDERS CAN HELP THE BOARD OF DIRECTORS OF THEIR FUND AVOID THE
NECESSITY AND ADDITIONAL EXPENSE TO THE FUND OF FURTHER SOLICITATIONS TO INSURE
A QUORUM BY PROMPTLY RETURNING THE ENCLOSED PROXY. THE ENCLOSED ADDRESSED
ENVELOPE REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES AND IS INTENDED FOR
YOUR CONVENIENCE.
CAPITAL EXCHANGE FUND, INC.
24 Federal Street
Boston, Massachusetts 02110
October 30, 1995
PROXY STATEMENT
A proxy is enclosed with the foregoing Notice of a Special Meeting in
lieu of the Annual Meeting of Stockholders of Capital Exchange Fund, Inc. (the
"Fund"), to be held November 30, 1995 for the benefit of stockholders who do not
expect to be present at the meeting. This proxy is solicited on behalf of the
Board of Directors of the Fund, and is revocable by the person giving it prior
to exercise by a signed writing filed with the Fund's transfer agent, The
Shareholder Services Group, Inc., BOS725, P.O. Box 1559, Boston, Massachusetts
02104, or by executing and delivering a later dated proxy, or by attending the
meeting and voting your shares in person. Each proxy will be voted in accordance
with its instructions; if no instruction is given, an executed proxy will
authorize the persons named as attorneys, or any of them, to vote in favor of
each such matter. This proxy material is being mailed to stockholders on or
about October 30, 1995.
The Board of Directors of the Fund has fixed the close of business
October 23, 1995, as the record date for the determination of the stockholders
entitled to notice of and to vote at the meeting and any adjournments thereof.
Stockholders at the close of business on the record date will be entitled to one
vote for each share held. As of October 23, 1995, there were ____________ shares
of capital stock of the ________________ Fund outstanding. As of such date, the
following stockholders beneficially owned the following number of shares of the
Fund (at least 5% of outstanding shares); ________________, (__%). To the
knowledge of the Fund, no other person owns (of record or beneficially) more
than 5% of its outstanding shares.
The Board of Directors of the Fund knows of no business other than that
mentioned in Items 1 through 7 of the Notice of the meeting which will be
presented for consideration. If any other matters are properly presented, as to
such matters, it is the intention of the persons named as attorneys in the
enclosed proxy to vote the proxies in accordance with their judgment.
PROPOSAL 1. ELECTION OF DIRECTORS
It is the present intention that the enclosed proxy will, unless
authority to vote for election to office is specifically withheld by executing
the proxy in the manner stated thereon, be used for the purpose of voting to fix
the number of Directors for the ensuing year at six, and of voting in favor of
the election of the nominees named below for the respective offices indicated
below, to hold office for a term of one year and until their successors are
elected and qualified. The nominee whose names is preceded by an asterisk(*) is
an "interested person" (as defined in the Investment Company Act of 1940) by
reason of his affiliations with the Funds, the Funds' investment adviser, Eaton
Vance Management ("EVM") or Boston Management and Research ("BMR"), EVM's
wholly-owned subsidiary, of which EVM owns all of the issued and outstanding
shares of BMR, or Eaton Vance Corp. ("EVC"), which owns all of the outstanding
stock of EVM, and of EVM's and BMR's trustee, Eaton Vance, Inc.
("EV"), which is a wholly-owned subsidiary of EVC.
DIRECTORS
Name and Principal Occupations Over
Other Information Past Five Years
- ----------------- ---------------
*LANDON T. CLAY President of the Fund. Chairman of the Board of EVC,
Age: 69; has been a EV, EVM, BMR and Director of EVC and EV. He also
Director since 1970. serves as a Director, Managing General Partner,
Director General Partner, Trustee and/or
officer of fifteen investment companies
advised or administered by EVM or BMR.
DONALD R. DWIGHT Mr. Dwight is President of Dwight Partners, Inc. (a
Age: 64; has been a corporate relations and communications company)
Director since 1986. founded in 1988; Chairman of the Board of Newspapers
of New England, Inc., since 1982. He also serves as a
Director, Managing General Partner, Director General
Partner, or Trustee of seventy-nine investment
companies advised or administered by EVM or BMR.
SAMUEL L. HAYES, III Dr. Hayes is the Jacob H. Schiff Professor of
Age: 60; has been a Investment Banking at Harvard Graduate School of
Director since 1986. Business Administration. He also serves as a
Director, Managing General Partner, Director General
Partner, or Trustee of eighty-two investment
companies advised or administered by EVM or BMR.
NORTON H. REAMER President and a Director of United Asset Management
Age: 60, has been a Corporation, Director, Chairman and President of The
Director since 1986. Regis Fund, Inc., an open- end mutual fund. He also
serves as a Director, Managing General Partner,
Director General Partner, or Trustee of seventy-nine
investment companies advised or administered by EVM
or BMR.
JOHN L. THORNDIKE Director of Fiduciary Company Incorporated in Boston,
Age 69; has been a Massachusetts; a Trustee of the Boston Symphony
Director since 1971. Orchestra. He also serves as a Director, Managing
General Partner, Director General Partner, or Trustee
of seventy-nine investment companies advised or
administered by EVM or BMR.
JACK L. TREYNOR An investment adviser and consultant. Associate
Age: 65; has been a Professor of Finance, Loyola-Marymount University,
Trustee since 1971. Los Angeles, California (until May 1989). Mr. Treynor
is also a member of the Advisory Board of the
Institute for Quantitive Research in Finance. He also
serves as a Director, Managing General Partner,
Director General Partner, or Trustee of seventy-seven
investment companies advised or administered by EVM
or BMR.
As of October 23, 1995, none of the Directors or officers of the Fund
beneficially owned shares of the Fund.
It is not expected that any of the nominees referred to above will
decline or become unavailable for election, but in case this should happen, the
discretionary power given in the proxy may be used to vote for a substitute
nominee or nominees or to vote to fix the number of Directors for the ensuing
year at less than six (unless authority to vote for election of all nominees is
specifically withheld by executing the proxy in the manner stated thereon).
Messrs. Thorndike (Chairman), Hayes and Reamer are members of the
Special Committee of the Board of Directors of the Fund. The Special Committee's
functions include a continuous review of the Fund's investment advisory
agreement with the investment adviser, making recommendations to the Board
regarding the compensation of those Directors who are not members of the
investment adviser's organization, and making recommendations to the Board
regarding candidates to fill vacancies, as and when they occur, in the ranks of
those Directors who are not "interested persons" of the Fund or the investment
adviser. The Board will, when a vacancy exists or is anticipated, consider any
nominee for Director of a Fund recommended by a shareholder if such
recommendation is submitted to the Board in writing and contains sufficient
background information concerning the individual to enable a proper judgment to
be made as to such individual's qualifications.
Messrs. Treynor (Chairman) and Dwight are members of the Audit
Committee of the Board of Directors of the Fund. The Audit Committee's functions
include making recommendations to the Board regarding the selection of the
independent public accountants, and reviewing with such accountants and the
Treasurer of the Fund matters relative to accounting and auditing practices and
procedures, accounting records, internal accounting controls, and the functions
performed by the custodian, transfer agent and dividend disbursing agent of the
Fund.
During the Fund's last fiscal year, the Board of Directors held eight
meetings, the Special committee held meetings and the Audit Committee held one
meeting.
The fees and expenses of those Directors of the Fund who are not
members of the Eaton Vance organization are paid by the Fund. For the fiscal
year ended October 31, 1995, the Directors of the Fund will have earned the
following compensation in their capacities as Directors from the Fund and other
funds in the Eaton Vance fund complex:
Aggregate Retirement
Compensation Benefit Accrued S/B 10/1/94 Total
from the Fund from Fund Compensation 9/30/95
Name for FYE 10/31/95 Complex Fund Complex<F1>
---- ---------------- ------- ---------------
Donald R. Dwight $ 1,244 $ 35,000 $ 135,000
Samuel L. Hayes, III 1,297 33,750 150,000
Norton H. Reamer 1,329 -0- 135,000
John L. Thorndike 1,411 -0- 140,000
Jack L. Treynor 1,318 -0- 140,000
- -----------
<FN>
<F1> The Eaton Vance fund complex consists of 211 registered investment
companies or series thereof.
Directors of the Fund that 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 Deferred Compensation Plan (the "Plan"). Under
the Plan, an eligible Director may elect to have his deferred fees invested by a
Fund in the shares of one or more funds in the Eaton Vance Family of Funds, and
the amount paid to the Directors under the Plan will be determined based upon
the performance of such investments. Deferral of Directors' 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 Director or obligate the Portfolio to pay any
particular level of compensation to the Director. If Proposal 5(A) is approved,
the Plan will cease to be effective as to the fees paid to Directors of the
Fund, but will be effective as to the fees paid to the Trustees of the
Portfolio.
The Fund's charter provides that the Fund will indemnify its Directors
and officers against liabilities and expenses incurred in connection with any
litigation or proceeding in which they may be involved because of their offices
with the Fund. However, no indemnification will be provided to any Director or
officer for any liability to the Fund or its shareholders by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.
2. RATIFICATION OF SELECTION OF ACCOUNTANTS
OF THE FUND
A majority of the members of each Board of Directors who are not
interested persons of a Fund have selected Deloitte & Touche LLP, 125 Summer
Street, Boston, Massachusetts 02110, as independent certified public accountants
to sign or certify any financial statements which may be filed by the Fund with
the Securities and Exchange commission in respect of all or any part of the
Fund's fiscal year ending October 31, 1996, the employment of such accountants
being expressly conditioned upon the right of the Fund, by vote of a majority of
the outstanding capital stock at any meeting called for the purpose, to
terminate such employment forthwith without any penalty. Such selection was made
pursuant to provisions of Section 32(a) of the Investment Company Act of 1940,
and is subject to ratification or rejection by the stockholders at this meeting.
The Fund is informed that no member of Deloitte & Touche LLP has any direct or
material indirect interest in the Fund.
The Fund's independent certified public accountants provide customary
professional services in connection with the audit function for a management
investment company such as the Fund, including services leading to the
expression of opinions on the financial statements included in the Fund's annual
report to stockholders, opinions on financial statements and other data included
in the Fund's annual report to the Securities and Exchange Commission, opinions
on financial statements included in amendments to the Fund's registration
statement, and preparation of the Fund's Federal tax returns. The nature and
scope of the professional services of the accountants have been approved by the
Audit Committee of the Fund's Board of Directors, which has considered the
possible effect thereof on the independence of the accountants.
Representatives of Deloitte & Touche LLP are not expected to be present
at the meeting but have been given the opportunity to make a statement if they
so desire and will be available should any matter arise requiring their
presence.
It is intended that proxies not limited to the contrary will be voted
in favor of ratifying the selection of Deloitte & Touche LLP, as the independent
certified public accountants to be employed by the Fund to sign or certify
financial statements required to be signed or certified by independent public
accountants and filed with the Securities and Exchange Commission in respect of
all or part of the fiscal year ending October 31, 1996.
3. TO APPROVE AN AMENDMENT TO THE BY-LAWS OF THE FUND
The Directors of the Fund recommend amending the Fund's By-Laws to
change the annual meeting date. The purpose of this change is to permit greater
flexibility in scheduling meetings and, when appropriate, the use of combined
proxy materials for Annual Meetings of this and other similar funds which will
reduce the costs associated with annual proxy solicitations. Under Massachusetts
General Laws Chapter 156B, Section 33, the annual shareholder meeting can be
held at any time in the first 6 months of the fiscal year. The Directors
recommend that the Fund change its annual meeting date from the third Thursday
in March to the second Wednesday in April, or such other date as the Directors
shall fix consistent with applicable law. If this Proposal is approved, the
meeting on November 30, 1995 will serve as the annual meeting for the 1995-96
fiscal year. Approval of the amendment requires the affirmative vote of a
majority of the outstanding shares of stock, and implementation is not dependent
on any other proposal in this proxy statement being approved.
PROPOSAL 4. TO APPROVE A NEW INVESTMENT POLICY
AND TO SUPPLEMENT INVESTMENT RESTRICTIONS TO
PERMIT A NEW INVESTMENT STRUCTURE
Summary
The Board of Directors of the Fund has approved, and is submitting to
the stockholders of the Fund for approval, the adoption of a new investment
policy for the Fund and the addition of a fundamental investment provision to
permit the Fund to invest its "investable assets" (portfolio securities and
cash) in a corresponding open-end management investment company, the Tax-Managed
Growth Portfolio (the "Portfolio"), having substantially the same investment
objective, policies and restrictions as the Fund. The new investment policy and
change in the investment restrictions for the Fund are subject to approval by
the Fund's stockholders. If this Proposal is approved by the Fund's
stockholders, the Directors intend to invest the Fund's investable assets in the
Portfolio, thereby converting the Fund to the Hub and Spoke(R) structure. (Hub
and Spoke(R) is a registered service mark of Signature Financial Group, Inc.)
NEW INVESTMENT POLICY
The Board of Directors recommends that the stockholders of the Fund approve a
new investment policy for the Fund, i.e., to invest its investable assets in the
Portfolio. The Portfolio is a trust which, like the Fund, is registered as an
open-end management company under the Investment Company Act of 1940 (the
"Act"). The Portfolio has substantially the same investment objective, policies
and restrictions as the Fund if shareholders approve Proposal 6. Eaton Vance
Management ("EVM") is currently the investment adviser of the Fund and its
wholly-owned subsidiary, Boston Management and Research ("BMR"), will be the
investment adviser of the Portfolio if Proposal 5(C) is approved. Accordingly,
by investing in the Portfolio, the Fund would seek its investment objective
through its investment in the Portfolio, rather than through direct investments
in securities. The Portfolio in turn would invest in securities in accordance
with its objective, policies and restrictions.
The Portfolio is a no-load, open-end management investment company
registered under the Act. The Portfolio was organized as a trust under New York
law on October 23, 1995. The interests in the Portfolio are not available for
purchase by members of the general public.
By investing the Fund's assets in the Portfolio, the Directors expect
that the Eaton Vance organization will be in a position to sponsor other
collective investment vehicles that could invest in the Portfolio without
assuming potential liability for the Fund's large unrealized capital gains.
These new vehicles may include continuously offered open-end investment
companies. Eaton Vance Distributors, Inc. has employed personnel to develop such
new vehicles. To the extent that these strategies are successful, the new Hub
and Spoke structure could enable the Fund to participate in a larger, more
diversified and potentially more attractive investment portfolio. The Fund would
be in a position to benefit, directly or indirectly, from certain economies of
scale, based on the premise that certain of the expenses of operating an
investment portfolio are relatively fixed and that a larger investment portfolio
may eventually achieve a lower ratio of operating expenses to average net
assets. The Directors also believe that investing in the Portfolio may produce
other benefits resulting from such increased asset size such as the ability to
purchase securities in larger amounts than the Fund currently is able to
acquire. No such portfolio benefits or economies of scale are anticipated until
other investors invest their assets in the Portfolio. See the pro forma expense
tables and the discussion provided below. There can be no assurance that these
anticipated benefits will be realized.
Other investment companies advised by Eaton Vance with substantially
the same investment objectives and policies may also invest in the Portfolio.
Adding the assets of such other established investment companies to the
Portfolio will potentially enable the Fund to achieve additional portfolio
benefits and economies of scale. Investors in the Fund will not assume potential
liability for the unrealized capital gains of other investment companies that
invest in the Portfolio. During the first five years after the Fund invests in
the Portfolio, the Portfolio does not intend to distribute securities
contributed by the Fund to any investor in the Portfolio other than the Fund.
Therefore, adopting the Hub-and Spoke structure itself should not subject the
Fund's shareholders to increased capital gain realizations. A more diverse
portfolio of investments will, however, affect investment returns. These returns
could be higher or lower than what the Fund would achieve in its current form.
To the extent that the Fund invests its investable assets in the
Portfolio, the Fund would no longer require investment advisory services and
would have a reduced need for certain administrative services. For this reason,
if stockholders of the Fund approve the addition to the investment restrictions
described and adopt the new investment policy described in this Proposal, and
the Fund continues to invest its investable assets in the Portfolio, no
investment advisory fees will be paid under the existing investment Advisory
Agreement of the Fund with EVM. Currently, under the existing Investment
Advisory Agreement with EVM, the Fund pays a monthly fee of 5/96 of 1%
(equivalent to .625% annually) of the average daily net assets of the Fund.
The Portfolio has an Investment Advisory Agreement pursuant to which
BMR will be paid a monthly fee calculated in the same manner as the fee
currently being paid by the Fund, as set forth above, on 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 $1.0 billion .5625%
$1.0 billion but less than $1.5 billion .5000%
$1.5 billion and over .4375%
If Proposal 5(C) is approved and the average daily net assets of the Portfolio
should grow to over $500 million, lower advisory fee rates would go into effect
in accordance with the above schedule. Thus, the total investment advisory fee
received by EVM and its subsidiary will not increase as a result of the
implementation of the Fund's proposed investment in the Portfolio.
Upon exchange of the investable assets of the Fund for an interest in
the Portfolio, the Fund will retain the services of EVM under an administrative
services agreement 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. Under the administrative services agreement, EVM would provide the
Fund with general office facilities and supervise the overall administration of
the Fund. For these services EVM currently receives no compensation. The
Directors of the Fund may determine, in the future, to compensate EVM for its
services under the administrative services agreement.
The Portfolio and the Fund, as the case may be, will each be
responsible for all respective costs and expenses not expressly stated to be
payable by BMR under the investment advisory agreement with the Portfolio, or by
EVM under the administrative services agreement with the Fund. Such costs and
expenses to be borne by the Portfolio and the Fund, as the case may be, include,
without limitation: custody and transfer agency fees and expenses, including
those incurred for determining net asset value and keeping accounting books and
records; expenses of pricing and valuation services; the cost of share
certificates; membership dues in investment company organizations; expenses of
acquiring, holding and disposing of securities and other investments; fees and
expenses of registering under the securities laws and the governmental fees;
expenses of reporting to stockholders and investors; proxy statements and other
expenses of stockholders' or investors' meetings; insurance premiums; printing
and mailing expenses; interest, taxes and corporate fees; legal and accounting
expenses; compensation and expenses of trustees or Directors, as the case may
be, not affiliated with BMR or EVM; and investment advisory fees and, if any,
administrative services fees. The Portfolio and the Fund will also each bear
expenses incurred in connection with litigation in which the Portfolio or the
Fund, as the case may be, is a party and any legal obligation to indemnify its
respective officers and trustees or Directors, as the case may be, with respect
thereto.
The following table shows the actual expenses of the Fund for the six
months ended April 30, 1995, and a pro forma adjustment thereof assuming the
Fund had invested its investable assets in the Portfolio for the entire period
then ended. The pro forma adjustment includes the estimated costs of converting
the Fund to the Hub and Spoke structure and the estimated costs of this proxy
solicitation (approximately $3,500). The pro forma adjustment assumes that: (i)
there were no holders of interests in the Portfolio other than the Fund; and
(ii) the average daily net assets of the Fund and the Portfolio were equal to
the actual average daily net assets of the Fund during the period.
FUND OPERATING EXPENSES FOR THE SIX MONTHS
ENDED APRIL 30, 1995
(ANNUALIZED AS A PERCENT OF AVERAGE DAILY NET ASSETS)
PRO FORMA (ASSUMING THAT
THE AVERAGE
DAILY NET ASSETS INVESTED
BY THE FUND
IN THE PORTFOLIO WERE
$94,237,918)
--------------------------
ACTUAL FUND PORTFOLIO TOTAL
------ ---- --------- -----
Annual Fund Operating Expenses
Investment advisory fees 0.625% 0.000% 0.625% 0.625%
Other expenses 0.165% 0.095% 0.080% 0.175%
------ ------ ------ ------
Total Fund Operating Expenses 0.790% 0.095% 0.705% 0.800%
====== ====== ====== ======
Assuming that the Fund was the only holder of interests in the
Portfolio and that the Fund was fully invested therein, the net asset value per
share, distributions per share and net investment income per share of the Fund
would have been about the same on a pro forma basis as the actual net asset
value, distributions and net investment income per share of the Fund during the
period indicated. If average daily net assets of the Portfolio grew to $200
million, the projected operating total expense ratio would be reduced to 0.760%.
In recommending that the stockholders authorize the conversion of the
Fund to the Hub and Spoke structure, the Directors have taken into account and
evaluated the possible effects which increased assets in the Portfolio may have
on the expense ratio of the Fund. There is, of course, no assurance that the net
assets of the Portfolio will grow. After carefully weighing the costs involved
against the anticipated benefits of converting the Fund to the Hub and Spoke
structure, the Board of Directors recommend that the stockholders of the Fund
vote to approve Proposal 4.
If Proposal 4 is approved by stockholders of the Fund, the Board of
Directors expects to implement the investment for the Fund by causing the Fund
to exchange its investable assets (portfolio securities and cash) as well as
certain other assets (including receivables for securities sold from the
portfolio and receivables for interest on portfolio securities) for an interest
in the Portfolio. The proposed transaction will not alter the rights and
privileges of stockholders of the Fund. The value of a stockholder's investment
in the Fund will be the same immediately after the Fund's investment in the
Portfolio as immediately before that investment. Of course, the value of a
stockholder's investment in the Fund may fluctuate thereafter.
The Fund would be able to withdraw its investment in the Portfolio at
any time, if the Directors determine that it is in the best interests of the
Fund to do so. Upon any such withdrawal, the Directors would consider what
action might be taken, including the investment of the investable assets of the
Fund in another pooled investment entity having substantially the same
investment objective as the Fund or the retention of an investment adviser to
manage the Fund's assets in accordance with its investment policies as is
presently the case.
DESCRIPTION OF THE PORTFOLIO
The investment objective of the Portfolio is the same as the objective
of the Fund, assuming Proposal 6 is approved. The Portfolio seeks to achieve its
investment objective through investments limited to the types of securities in
which the Fund is authorized to invest. The investment restrictions and policies
of the Portfolio are such that the Portfolio may not invest in any security or
engage in any transaction which would not be permitted by the investment
restrictions and policies of the Fund if the Fund were to invest directly in
such a security or engage directly in such a transaction, again assuming
Proposal 6 is approved.
If the proposed investment in the Portfolio is implemented, the Fund's
assets would no longer be directly invested in a portfolio of securities but
would rather be invested in the securities of a single issuer, i.e., the
Portfolio, which is a New York trust, and is registered as an open-end
management investment company under the Act. Nevertheless, inasmuch as the
assets of the Portfolio would be directly invested in a portfolio of securities,
the Fund believes there are no material risks of investing in the Portfolio that
are different from those to which stockholders of the Fund are currently
subject.
The approval of the Portfolio's investors (i.e., holders of interests
in the Portfolio, such as the Fund) would be required to change any of its
investment restrictions; however, any change in nonfundamental investment
policies would not require such approval. For a discussion of when Fund
stockholders would be requested to vote on Portfolio matters, see page below.
Like the Fund, the Portfolio determines its net asset value 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 Portfolio's net asset value is
computed by determining the value of the Portfolio's total assets (the
securities it holds plus any cash or other assets, including interest accrued
but not yet received), and subtracting all of the Portfolio's liabilities
(including accrued expenses).
Securities listed on securities exchanges or in the NASDAQ National
Market are valued at closing sale prices. Unlisted or listed securities for
which closing sale prices are not available are valued at the mean between the
latest bid and asked prices. Short-term obligations maturing in sixty days or
less are valued at amortized cost, which approximates market. Other assets are
valued at fair value using methods determined in good faith by the Directors.
The Fund's net asset value is determined at the same time and on the
same days that the net asset value of the Portfolio is calculated. Net asset
value per share is computed by determining the value of the Fund's assets (its
investment in the Portfolio and other assets), subtracting all of the Fund's
liabilities (including accrued expenses), and dividing the result by the total
number of shares outstanding at such time.
As a partnership under the Internal Revenue Code, the Portfolio does
not pay Federal income or excise taxes. Provided the Fund qualifies as a
regulated investment company for Federal income tax purposes and the Portfolio
is treated as a partnership for Federal and Massachusetts tax purposes, neither
is liable for income, corporate excise tax or franchise tax in Massachusetts.
Interests in the Portfolio have no pre-emptive or conversion rights,
and are fully paid and non-assessable, except as set forth below. The Portfolio
normally will not hold meetings of holders of such interests except as required
under the Act. The Portfolio would be required to hold a meeting of holders in
the event that at any time less than a majority of the trustees holding office
had been elected by holders. The trustees of the Portfolio continue to hold
office until their successors are elected and have qualified. Holders holding a
specified percentage interest in the Portfolio may call a meeting of holders in
the Portfolio for the purpose of removing any trustee. A trustee of the
Portfolio may be removed upon a majority vote of holders in the Portfolio
qualified to vote in the election. The Act requires the Portfolio to assist its
holders in calling such a meeting. Upon liquidation of the Portfolio, holders in
the Portfolio would be entitled to share pro rata in the net assets of the
Portfolio available for distribution to holders.
Each holder in the Portfolio is entitled to a vote in proportion to its
share of the interests in the Portfolio. Except as described below, whenever the
Fund is requested to vote on matters pertaining to the Portfolio, the Fund will
hold a meeting of its stockholders and will cast its votes proportionately as
instructed by Fund stockholders.
Subject to applicable statutory and regulatory requirements, the Fund
would not request a vote of its stockholders with respect to (a) any proposal
relating to the Portfolio, which proposal, if made with respect to the Fund,
would not require the vote of the stockholders of the Fund, or (b) any proposal,
with respect to the Portfolio that is identical, in all material respects, to a
proposal that has previously been approved by stockholders of the Fund. Any
proposal submitted to holders in the Portfolio, and that is not required to be
voted on by stockholders of the Fund, would nonetheless be voted on by the
Directors of the Fund.
Investments in the Portfolio may not be transferred, but a holder may
withdraw all or any portion of its investment at any time at net asset value.
Each holder in the Portfolio, including the Fund, will be liable for all
obligations of the Portfolio. However, the risk of a holder in the Portfolio
incurring financial loss on account of such liability is limited to
circumstances in which both inadequate insurance exists, and the Portfolio
itself is unable to meet its obligations. Thus, stockholders of the Fund should
not experience losses from the new investment structure itself.
The Portfolio has its own board of trustees, including a majority of
trustees who are not "interested" persons of the Portfolio as defined in the
Act. The present trustees of the Portfolio are identical to the present
Directors of the Fund and are listed on page of this Proxy Statement.
TAX CONSIDERATIONS
The Fund has received an opinion of tax counsel, Brown & Wood, to the
effect that, although there is no judicial authority directly on point, the
contribution of its assets to the Portfolio in exchange for an interest in the
Portfolio will not result in the recognition of gain or loss to the Fund for
federal income tax purposes pursuant to Internal Revenue Code Section 721 and
related authorities. The Fund has not applied for a ruling from the Internal
Revenue Service to the same effect and legal opinions are not binding on the
Service. If it were determined that the transaction was taxable, the Fund would
realize and recognize gain in an amount equal to the appreciation (undiminished
by losses) in the transferred assets as of the date of the transfer (the "deemed
gain"). If the Fund did not make a distribution to its stockholders equal to all
or a portion of the deemed gain, the Fund could be subject to tax (plus interest
and penalties) on all or a portion of the deemed gain. Alternatively, if the
Fund were to make a distribution to its stockholders in an amount equal to all
or a portion of the deemed gain, then its stockholders at the time of such
distribution would be taxed on the amount distributed and the Fund could be
required to pay penalties and/or interest. Depending on the amount and nature of
the deemed gain and the Fund's previous distributions of gains with respect to
the same taxable year, the Fund might be required to make the distribution
described in the preceding sentence in order to preserve its qualification under
the Internal Revenue Code (the "Code") as a regulated investment company.
As of September 30, 1995, the gross unrealized appreciation in the
assets of the Fund on a Federal Income tax basis was $93,498,646. The amount of
gross unrealized appreciation in the assets of the Fund at the time of transfer
of the Fund's assets to the Portfolio may be more or less than the amount
indicated in the preceding sentence, and no assurance can be given as to the
magnitude of such amount at the time of such transfer.
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 stockholders
its net investment income and net realized capital gains in accordance with the
timing requirements imposed by the Code. Under current law, provided that the
Fund qualifies as a regulated investment company for federal income tax
purposes, the Fund is not liable for any income, corporate excise or franchise
tax in the Commonwealth of Massachusetts. The Portfolio also is not expected to
be required to pay any federal income or excise taxes.
PROPOSED SUPPLEMENT TO INVESTMENT RESTRICTIONS
Certain of the Fund's investment restrictions must be amended,
eliminated or reclassified in order for the Fund to invest its investable assets
in the Portfolio. The Board of Directors of the Fund has approved, subject to a
stockholder vote, a supplemental provision to be added to the investment
restrictions of the Fund to permit it to invest its investable assets in the
Portfolio. This proposed amendment to the Fund's investment restrictions is
subject to approval by the Fund's stockholders. Certain of the revised
investment restrictions of the Fund may be deemed to prohibit the Fund from
seeking its investment objective by investing its investable assets in the
Portfolio. See investment restrictions (1), (2), (4), (5), (10), (13) and (14)
in Exhibit B.
The Board of Directors proposes that these restrictions and all other
investment restrictions be supplemented with an additional fundamental
investment provision as follows: "(15) 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."
The additional investment provision would also apply to any conflicting
nonfundamental investment policies. (The current investment restrictions would
also be revised if Proposal 6 is approved.)
EVALUATION BY THE FUND'S DIRECTORS
The Board of Directors of the Fund has carefully considered Proposal 4,
which will in effect authorize the conversion of the Fund to the Hub and Spoke
structure. The Board has carefully evaluated the potential benefits that would
be associated with this Proposal. In this regard, the Board believes that the
Portfolio will attract other collective investment vehicles which will have
investors who would not otherwise be investors in the Fund. Investors in the
Portfolio may include other established investment companies advised by Eaton
Vance with substantially the same investment objectives and policies as the
Fund. By adopting the Hub-and-Spoke structure the Fund can participate in a
larger, more diversified and potentially more attractive investment portfolio.
By this pooling of assets the Portfolio is likely, over time, to achieve a
variety of operating economies. The larger asset size of the Portfolio, in the
Board's view, can be expected to permit the purchase of investments in larger
amounts than the Fund currently is able to purchase, which may reduce certain
operating expenses indirectly borne by the Fund's stockholders. In general, to
the extent that certain operating costs are relatively fixed and currently are
borne by the Fund alone, these expenses would instead be borne in whole or in
part by the Portfolio and shared by the Fund's stockholders with other investors
in the Portfolio. These portfolio benefits and economies of scale would be
likely only if assets of the Portfolio were to grow through investments in the
Portfolio by entities in addition to the Fund. There can be no assurance that
such benefits will be realized. The Board also recognized that the investment
adviser could benefit from the proposed structure because such structure could
enable the investment adviser to increase its assets under management through
the development of new vehicles to attract investor assets to the investment
adviser.
The Directors of the Fund believe that over time the aggregate per
share expenses of the Fund and the Portfolio should be less than or
approximately equal to the expenses that would be incurred by the Fund if it
continued to retain the services of an investment adviser and to invest directly
in securities although there can be no assurance that such expense savings will
be realized. The Board also considered risks associated with an investment in
the Portfolio. The Directors believe that the Portfolio's investment policies
and restrictions involve substantially the same risks as are associated with the
Fund's direct investment in securities.
Based on their consideration, analysis and evaluation of the above
factors and other information deemed by them to be relevant to this Proposal,
the Fund's Board of Directors (including the Independent Directors) have
concluded that it would be in the best interests of the Fund and its
stockholders to approve a new investment policy and supplement to the
fundamental investment restrictions to enable the Fund to invest its investable
assets in the Portfolio.
VOTE REQUIRED TO APPROVE PROPOSAL 4
Approval by the stockholders of the Fund of the new investment policy
and supplement to its fundamental investment restrictions requires the
affirmative vote of a majority of the outstanding voting securities of the Fund
which term as used in this Proxy Statement means the vote of the lesser of (a)
more than 50% of the outstanding shares of the Fund, or (b) 67% of the shares of
the Fund present at the meeting if the holders of more than 50% of the
outstanding shares of the Fund are present or represented by proxy at the
meeting.
THE DIRECTORS OF THE FUND RECOMMEND THAT THE STOCKHOLDERS OF THE FUND
VOTE TO APPROVE THIS PROPOSAL. Implementation of this Proposal is dependent upon
approval of Proposals 5 and 6. In the event the stockholders of the Fund fail to
approve this Proposal, the Directors would continue to retain EVM as the
investment adviser for the Fund to manage the Fund's assets through direct
investments in securities, and the Fund's existing Investment Advisory Agreement
between EVM and the Fund would continue in effect in its current form.
PROPOSAL 5. AUTHORIZATION TO VOTE AT MEETINGS OF
PORTFOLIO INVESTORS
Stockholders of the Fund are being asked to vote on certain matters
with respect to the Portfolio because the Portfolio is expected to call a
meeting of its holders (including the Fund) to vote on such matters.
Specifically, it is expected that the Portfolio will ask its holders to vote at
such meeting to:
(A) Elect a board of trustees of the Portfolio;
(B) Ratify the selection of Deloitte & Touche LLP as the
independent certified public accountants of the Portfolio; and
(C) Approve the Investment Advisory Agreement as set forth in
Exhibit A to this Proxy Statement between the Portfolio and its investment
adviser, Boston Management and Research (a subsidiary of Eaton Vance
Management).
The Fund will cast its votes at the meeting of holders of interests in
the Portfolio on each matter in the same proportions as the votes cast by the
Fund's stockholders. Based on the Fund's current net assets, it is anticipated
that the Fund will hold over 99% of the interests in the Portfolio when the
conversion occurs.
PROPOSAL 5(A). AUTHORIZE THE FUND TO ELECT TRUSTEES
OF THE PORTFOLIO
It is the present intention that the enclosed proxy will, unless
authority to vote for election of one or more nominees is specifically withheld
by executing the proxy in the manner stated thereon, be used for the purpose of
authorizing the Fund to vote in favor of the election of the following six
nominees indicated below as trustees of the Portfolio, to hold office until
their successors are elected and qualified. PLEASE NOTE THAT EACH OF THE
FOLLOWING NOMINEES CURRENTLY SERVES AS A DIRECTOR OF THE FUND. The biographical
information as to each nominee is provided under Proposal 1 on page . The
nominee whose name is preceded by an asterisk(*) is an "interested person" (as
defined in the Act), by reason of his affiliation with the Portfolio; Boston
Management and Research ("BMR"), the Portfolio's investment adviser and a
wholly-owned subsidiary of Eaton Vance Management ("EVM"); Eaton Vance
Distributors, Inc. ("EVD"), the Portfolio's placement agent and a wholly-owned
subsidiary of EVM; or Eaton Vance Corp. ("EVC"), a holding company which owns
all of the outstanding stock of EVM; or of BMR and EVM's trustee, Eaton Vance,
Inc. ("EV") which is a wholly-owned subsidiary of EVC. (EVM, EVD, EVC, BMR and
their affiliates are sometimes referred to collectively as the "EVC
organization".)
NOMINEES FOR TRUSTEES
*Landon T. Clay
Donald R. Dwight
Samuel L. Hayes, III
Norton H. Reamer
John L. Thorndike
Jack L. Treynor
It is not expected that any of the nominees referred to above will
decline or become unavailable for election, but in case this should happen, the
Portfolio may vote for a substitute nominee or nominees (unless authority to
vote for election of all nominees is specifically withheld by executing the
proxy in the manner stated thereon).
As discussed in Proposal 1, Trustees of the Portfolio that 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 Deferred
Compensation Plan (the "Plan"). Under the Plan, an eligible Trustee may elect to
have his deferred fees invested by a 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 a 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.
If Proposal 4 is approved it is estimated that each Trustee will
receive approximately $800 in compensation from the Fund and $1,600 from the
Portfolio in the first fiscal year of operations.
Mr. Clay, a Director of the Fund and trustee of the Portfolio who is
affiliated with EVM and BMR is compensated by EVM and BMR and does not and will
not receive fees or renumeration directly from the Fund or the Portfolio.
The Directors of the Fund recommend that the stockholders of the Fund
vote to authorize the Fund to elect each nominee as a trustee of the Portfolio
at the meeting of the holders of interests in the Portfolio.
PROPOSAL 5(B). RATIFICATION OF SELECTION OF ACCOUNTANTS
OF THE PORTFOLIO
A majority of the trustees of the Portfolio who are not interested
persons of the Portfolio or BMR have selected Deloitte & Touche LLP, 125 Summer
Street, Boston, MA 02110 as independent certified public accountants to sign or
certify and financial statements which may be filed by the Portfolio with the
Securities and Exchange Commission in respect of all or any part of the fiscal
year ending October 31, 1996, of the employment of such accountants being
expressly conditioned upon the right of the Portfolio, by vote of a majority of
the outstanding "voting securities" in the Portfolio at any meeting called for
the purpose, to terminate such employment forthwith without any penalty. Such
selection was made pursuant to provisions of Section 32(a) of the Act, and is
subject to ratification or rejection by the holders of interests in the
Portfolio at the meeting of such holders. Deloitte & Touche LLP currently serves
as the independent certified public accountants of the Fund. The Fund is
informed that no member of Deloitte & Touche LLP has any direct or material
indirect interest in the Fund or the Portfolio.
The Portfolio's independent certified public accountants provide
customary professional services in connection with the audit function for a
management investment company such as the Portfolio, and their fees for such
services include fees for work leading to the expression of opinions on the
financial statements included in annual reports to the holders of interests in
the Portfolio, opinions on financial statements and other data included in the
Portfolio's annual report to the Securities and Exchange Commission, opinions on
financial statements included in amendments to the Portfolio's registration
statement, and preparation of the Portfolio's federal and state income tax
returns. The nature and scope of the professional services of the accountants
have been approved by the Portfolio's trustees, which have considered the
possible effect thereof on the independence of the accountants.
Representatives of Deloitte & Touche LLP are not expected to be present
at the meeting but have been given the opportunity to make a statement if they
do so desire and will be available should any matter arise requiring their
presence.
It is intended that proxies not limited to the contrary will be voted
in favor of authorizing the Fund to ratify the selection of Deloitte & Touche
LLP as the independent certified public accountants to be employed by the
Portfolio to sign or certify financial statements required to be signed or
certified by independent public accountants and filed with the Securities and
Exchange Commission in respect of all or part of the fiscal year ending October
31, 1996.
The Directors of the Fund recommend that the stockholders of the Fund
vote to authorize the Fund to ratify the selection of Deloitte & Touche LLP as
the independent certified public accountants of the Portfolio at the meeting of
the holders of interests in the Portfolio.
PROPOSAL 5(C). AUTHORIZE THE FUND TO APPROVE THE
INVESTMENT ADVISORY AGREEMENT WITH
BOSTON MANAGEMENT AND RESEARCH
Boston Management and Research ("BMR") will act as investment adviser
to the Portfolio pursuant to an Investment Advisory Agreement between BMR and
the Portfolio, to be dated the date of the conversion to the Hub and Spoke
structure (the "Agreement"). BMR, a Massachusetts business trust, is a
wholly-owned subsidiary of Eaton Vance Management ("EVM"). BMR or EVM act as
investment adviser to investment companies and various individual and
institutional clients with combined assets under management of approximately $15
billion. EVM A Massachusetts business trust, is a wholly-owned subsidiary of
Eaton Vance Corp. ("EVC"), a holding company which through subsidiaries and
affiliates is engaged in investment management and marketing activities, real
estate investment, consulting and management, oil and gas operations,
development of precious metals properties, and fiduciary and banking services.
EVC also owns all of the outstanding stock of BMR's and EVM's trustee, Eaton
Vance, Inc. ("EV"). BMR and EVM employ the same investment personnel to provide
advisory services to their respective clients.
The Directors of the Fund have reviewed the Agreement and recommend
that the stockholders of the Fund vote to authorize the Fund to approve the
Agreement entered into by the Portfolio at the meeting of holders of interests
in the Portfolio. A copy of the Agreement is attached hereto as Exhibit A and
the discussion of the Agreement herein is qualified in its entirety by such
Agreement.
The Agreement will remain in full force and effect through February 28,
1996, and will continue in full force and effect indefinitely thereafter, but
only so long as such continuance is specifically approved at least annually (i)
by the board of trustees of the Portfolio or by vote of a majority of the
outstanding voting securities (as defined in the Act) of the Portfolio, and (ii)
by the vote of a majority of those trustees of the Portfolio who are not
interested persons (as defined in the Act) of BMR or the Portfolio cast in
person at a meeting called for the purpose of voting on such approval. In
connection with the organization of the Portfolio, the Agreement was approved by
the trustees of the Portfolio, including a majority of those trustees who are
not interested persons of BMR or the Portfolio, on October 23, 1995, and by vote
of EVM and BMR, which were then the holders of all the outstanding voting
securities of the Portfolio, ___________ on , 1995. At the time of such action
by the trustees of the Portfolio, Mr. Clay, a director and officer of EVC and EV
and an officer of BMR and EVM, and a Voting Trustee and stockholder of EVC, was
a trustee of the Portfolio.
Under the terms of the Agreement, the Portfolio will employ BMR to act
as investment adviser for and to manage the investment and reinvestment of the
assets of the Portfolio and to administer its affairs, subject to the
supervision of its trustees. BMR furnishes to the Portfolio investment advice
and assistance, administrative services, office space, equipment and clerical
personnel, and investment advisory, statistical and research facilities, and has
arranged for certain members of the BMR organization to serve without salary as
officers or trustees of the Portfolio.
In approving the Agreement for the Portfolio, the trustees of the
Portfolio have taken into account such factors and information as were deemed by
them to be relevant to BMR's investment advisory relationship with the
Portfolio. In their deliberations the trustees have considered: the requirements
and needs of the Portfolio for management and administrative services and
facilities, the desirability of providing for the management of the Portfolio
through the EVC organization (of which BMR is a part), the nature, extent and
quality of the management and administrative services and facilities heretofore
provided by the EVC organization to the Fund, the ability of BMR's personnel,
the fiduciary duties and risks to be assumed by the BMR organization and its
commitment to provide management and administrative services and facilities to
the Portfolio on a continuing basis, the aggregate of the compensation and
benefits which will be received by the BMR organization pursuant to the
Agreement, the compensation and benefits which will be received by Investors
Bank & Trust Company (currently 77.3% owned subsidiary of EVC) as custodian of
the Portfolio, the necessity that the BMR organization maintain its ability to
retain and attract capable personnel to service the Portfolio, the continuance
of appropriate incentives to assure that the BMR organization will provide high
quality management and administrative services to the Portfolio, the revenues,
expenses, financial condition, stability and capabilities of the EVC
organization, the advantages to the Portfolio of being one of many investment
companies advised and administered by the EVC organization, the investment
performance of the Fund since its inception, the various investment strategies
and techniques to be employed by BMR to enhance the Portfolio's investment
performance, current developments and trends in the mutual fund and financial
services industries including the entry of large and highly capitalized
companies which are spending and appear to be prepared to continue to spend
substantial amounts to engage personnel and to provide services for competing
mutual funds, and other information and factors which the trustees believed
relevant to the matter.
Pursuant to the Agreement, BMR will provide the Portfolio with
investment research, advice and supervision, will furnish an investment program
and will determine 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 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 Agreement provides that the Portfolio will pay all its expenses
other than those expressly stated to be payable by BMR, which expenses payable
by the Portfolio will include, without implied limitation, (i) expenses of
maintaining the Portfolio and continuing its existence, (ii) registration of the
Portfolio under the 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
holders and 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 holders and of meetings of holders 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,m 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, holder servicing agents and registrars for all services to the
Portfolio, (xv) expenses for servicing the accounts of holders, (xvi) any direct
charges to holders approved by the trustees of the Portfolio, (xvii)
compensation and expenses of trustees of the Portfolio who are not members of
the Adviser'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 holders with respect thereto.
In consideration of the services, payments and facilities to be
furnished by BMR under the Agreement, the Portfolio will pay BMR a monthly
advisory fee equal to and calculated in the same manner as the advisory fee
currently being paid by the Fund on average daily net assets up to $500 million
with reduced rates at various breakpoints as disclosed under Proposal 4 as set
forth on page ___ above. Therefore, there will be no increase in the schedule of
advisory fee rates as a result of the conversion of the Fund to the Hub and
Spoke structure.
Because the Portfolio has not commenced operations as of the date of
this Proxy Statement, BMR has not received any investment advisory fees from the
Portfolio.
The Agreement provides that it may be terminated at any time without
penalty on sixty days' notice by BMR or by the trustees of the Portfolio or by
vote of a majority of the outstanding voting securities of the Portfolio, and
that it shall automatically terminate in the event of its assignment. The
Agreement provides that BMR may render services to others and engage in other
business activities. The Agreement also provides that BMR shall to be liable for
any loss incurred in connection with the performance of its duties, or action
taken or omitted under the Agreement in the absence of willful misfeasance, bad
faith or 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
which may be sustained in the acquisition, holding or disposition of any
security or other investment.
VOTE REQUIRED TO AUTHORIZE THE FUND TO
APPROVE THE INVESTMENT ADVISORY AGREEMENT
Authorization of the Fund to approve the Portfolio's Investment
Advisory Agreement with BMR at the meeting of the holders of interests in the
Portfolio requires the affirmative vote of a majority of the outstanding voting
securities of the Fund which term as used in this Proxy Statement means the vote
of the lesser of (a) more than 50% of the outstanding shares of the Fund, or (b)
67% of the shares of the Fund present at the meeting if the holders of more than
50% of the outstanding shares of the Fund are present or represented by proxy at
the meeting.
THE DIRECTORS OF THE FUND RECOMMEND THAT THE STOCKHOLDERS OF THE FUND
VOTE TO APPROVE THIS PROPOSAL. Implementation of this Proposal is dependent upon
approval of Proposals 4 and 6. In the event that the stockholders of the Fund
fail to approve this Proposal, the Directors of the Fund will consider what
further action should be taken.
PROPOSAL 6. TO APPROVE THE ELIMINATION,
RECLASSIFICATION AND AMENDMENT OF THE FUND'S INVESTMENT
OBJECTIVE AND CERTAIN FUNDAMENTAL INVESTMENT POLICIES
The Act requires a registered investment company like the Fund to have
certain specific investment policies which can be changed only by a shareholder
vote. Investment companies may also elect to designate other policies which may
be changed only by a shareholder vote. Both types of policies are often referred
to as "fundamental" policies. (In this Proxy Statement, the word "restriction"
is sometimes used to describe a policy.) Some fundamental policies have been
adopted in the past by the Fund to reflect certain regulatory, business or
industry conditions which are no longer in effect. Accordingly, the Directors
authorized a review of the Fund's fundamental policies to simplify and modernize
those policies which are required to be fundamental, and to eliminate as
fundamental any policies which are not required to be fundamental under the
positions of the staff of the Securities and Exchange Commission in interpreting
the Act, in which case, depending on the circumstances, the policy would be
reclassified as a nonfundamental policy in the same or a modified form, or
eliminated. Nonfundamental policies can be changed by the Directors without
stockholder approval. Revision of fundamental policies have been approved by
shareholders of numerous other funds advised by EVM, and if these revisions are
approved then the uniformity of such policies would serve to facilitate EVM's
compliance efforts.
This Proposal seeks stockholder approval of changes which are intended
to accomplish the foregoing goals. In addition, the revised policies would be in
conformity with those of the Portfolio to allow implementation of the Hub and
Spoke structure. Because an anticipated investor in the Portfolio will register
its securities with state securities ("Blue Sky") laws, the Fund's policies
should also be conformed to such laws. The proposed changes to the fundamental
policies are discussed in detail below. Please refer to the changes to the
policies as set forth in Exhibit B (which does not include the additional
fundamental investment provision to be added if Proposal 4 is approved). By
reducing to a minimum those policies which can be changed only by stockholder
vote, the Fund would be able to avoid the costs and delay associated with a
stockholder meeting and the Directors believe that EVM's ability to manage the
Fund's portfolio in a changing regulatory or investment environment will be
enhanced. Accordingly, investment management opportunities will be increased.
The references to the Fund's investment restrictions correspond to the
paragraphs in Exhibit B. If this Proposal is approved, the restrictions would be
reordered.
Aside from the changes to restrictions (6), (7), (11) and (14), the
proposed changes will not affect current management of the Fund's portfolio. See
"Use of Modern Investment Management Techniques".
RECLASSIFICATION AND AMENDMENT OF THE INVESTMENT OBJECTIVE
The Fund's present investment objective is "to seek long-term growth of
capital and consequent long-term growth of income." Among the principal
investment policies are that the Fund invests in "a diversified list of common
stocks representing a number of different industries" and that "one of the
factors which will be considered before any portfolio securities are sold will
be the resulting tax liability." It is proposed that the investment objective be
modified to express more explicitly the focus on investing in a diversified
portfolio of stocks, and the consideration given to investor taxation in
managing the investment portfolio. The proposed new objective is to "achieve
long-term, after-tax returns for its stockholders through investing in a
diversified selection of equity securities." The proposed change would not
affect portfolio management.
Modifying the statement of the Fund's investment objective in the
manner proposed will clarify the management focus of the Fund. The Portfolio and
new investment vehicles that will invest in the Portfolio need to adopt the same
objective as the Fund. Expressing the investment objective in a way that
emphasizes the focus on after-tax returns is thought to enhance the investor
appeal of these investment vehicles, potentially leading to greater success in
adding additional assets to the Portfolio than if the present statement of the
Fund's objective were retained. As discussed in proposal 4, adding additional
assets should enable the Fund to realize certain portfolio benefits and
economies of scale.
The Directors of the Fund also propose that the objective become
"nonfundamental", which means the Directors could change it without stockholder
approval in the future. The Directors have no present intention to change the
objective other than as discussed above, and intend to submit any further
proposed change which would be material to stockholders for approval in advance
for approval.
ELIMINATION OF CERTAIN RESTRICTIONS
The Directors propose to delete Restrictions (3) and (7) because such
restrictions are not required to be fundamental policies under the Act or state
"Blue Sky" laws and/or the practices referred to therein are otherwise governed
by the Act.
Restriction (3) concerning investment in other investment companies
prohibits the Fund from investing in securities of other investment companies
and investment funds. Investment in other investment companies is regulated by
the Act and this restriction does not contain all of the provisions in the Act
regarding such investments.
Restriction (7) concerning pledging, mortgaging or hypothecating the
assets of the Corporation is being deleted as pledging restrictions are no
longer required by state law. Restriction (6), as revised, contains limitations
on leverage.
RECLASSIFICATION OF CERTAIN RESTRICTIONS
The Directors also propose that Restrictions (4) and (10) be eliminated
as fundamental, but be retained as nonfundamental policies of the Fund (which
could be thereafter changed or eliminated by Director vote). Each of these
restrictions is required under various state "Blue Sky" laws and/or federal
laws, but are not required to be fundamental policies of the Fund.
Restriction (4) concerning investments in unseasoned issuers limits
investment in securities of companies with less than three years continuous
operation to 5% of total assets. The Fund's investment policies generally
contemplate investing in seasoned issuers.
Restriction (10) concerning investing for control prohibits the Fund
from investing for control or management of other companies. Such investments
would be difficult because of the Act's diversification requirements contained
in Restriction (1) and (2), and are regulated by the Act's provisions on
affiliated transactions.
As a result of this proposed reclassification of certain investment
restrictions as nonfundamental, a future change in any of these restrictions
could be effected by the Directors without stockholder approval if the Directors
determined that such change was appropriate and desirable. The Directors have no
present intention of amending or eliminating the foregoing restrictions which
would be reclassified. The Directors believe, however, that this
reclassification of restrictions will permit the Fund to respond more rapidly to
future changes in the Fund's competitive and regulatory environment.
AMENDMENT OF CERTAIN RESTRICTIONS
The Trustees also propose the amendment of five fundamental policies.
Restrictions (1) and (2) concerning diversification of assets by issuer
is more restrictive than needed to comply with the Act and Subchapter M of the
Internal Revenue Code. The revised restrictions comport with these statutes
primarily by having the diversification tests apply to 75%, instead of 100%, of
total assets.
Restriction (6) concerning borrowing has been revised by permitting
borrowing and the issuance of senior securities consistent with the Act. The
positions of staff of the Securities and Exchange Commission on borrowings and
senior securities have evolved in recent years with the development of new
investment strategies, such as reverse repurchase agreements and futures
transactions. The Fund would like the ability to consider use of new investment
techniques consistent with the Act as interpretations of the Act are further
developed.
Restriction (11) concerning lending has been amended to reflect current
regulatory restraints and proposed changes to the lending policy of other Eaton
Vance funds. The Fund does not expect to lend more than 30% of the value of its
total assets.
Restriction (12) concerning investments in real estate and commodities
is being amended in order to expressly permit the Fund to invest in securities
secured by real estate and securities of companies which invest or deal in real
estate which was previously implied, and to permit the use of financial futures
contracts.
USE OF CERTAIN TECHNIQUES FOR TAX-EFFICIENT MANAGEMENT
Since the Fund commenced operation in 1966, certain techniques for the
tax-efficient management of equity portfolios have been developed and come into
wide use among investment professionals. Consistent with the investment
objective, the Portfolio (through which the Fund will invest if Proposals 4 and
5 are adopted) intends to employ them. Restrictions (6) regarding borrowing, (7)
regarding pledging, (11) regarding lending of portfolio securities and (12)
regarding nonphysical commodity contracts need to be revised to invest in the
Portfolio.
The Portfolio may purchase or sell certain derivative instruments to
hedge against securities price declines and currency movements, and to enhance
returns. The Portfolio may engage in transactions in derivative instruments
(which derive their value by reference to other securities, indices,
instruments, or currencies) in the U.S. and abroad. Such transactions may
include the purchase and sale of stock index futures contracts and options on
stock index futures; the purchase of put options and the sale of call options on
securities held in the Portfolio; equity swaps; and the purchase and sale of
forward currency exchange contracts and currency futures. The Portfolio may use
transactions in derivative instruments as a substitute for the purchase and sale
of securities. Derivative transactions may be more advantageous in a given
circumstance than transactions involving securities due to more favorable tax
treatment, lower transaction costs, or greater liquidity. While many derivative
instruments have built-in leveraging characteristics, the Portfolio will not use
them to leverage its net assets. The purchase and sale of derivative instruments
is a highly specialized activity that can expose the Portfolio to a significant
risk of loss. The built-in leveraging inherent to many derivative instruments
can result in losses that substantially exceed the initial amount paid or
received. Equity swaps and over-the-counter options are private contracts in
which there is a risk of loss in the event of a default on an obligation to pay
by a counterparty. Derivative instruments may be difficult to value, may be
illiquid, and may be subject to wide swings in valuation caused by changes in
the value of an underlying security, index, instrument, or currency. There can
be no assurance that the use of derivative instruments will be advantageous to
the Portfolio. The Portfolio will only enter into equity swaps and
over-the-counter options contracts with counterparties whose credit quality or
claims paying ability are considered to be investment grade by the Adviser. In
addition, at the time of entering into a transaction, the Portfolio's credit
exposure to any one counterparty will be limited to 5% or less of the net assets
of the Portfolio. The Portfolio's investment in illiquid assets, which may
include equity swaps and over-the-counter options, may not represent more than
15% of net assets at the time any such illiquid assets are acquired. All futures
contracts entered into by the Portfolio will be traded on exchanges or boards of
trade that are licensed and regulated by the Commodities Futures Trading
Commission (the "CFTC") and must be executed through a futures commission
merchant or brokerage firm that is a member of the relevant exchange. Under CFTC
regulations, the Portfolio may only enter into futures contracts if, immediately
thereafter, the value of the aggregate initial margin with respect to all
currently outstanding non-hedging positions in futures contracts does not exceed
5% of the Fund's net asset value, after taking into account unrealized profits
and losses on such positions.
In addition, the Portfolio may seek to earn income by lending portfolio
securities to broker-dealers or other institutional borrowers. As with other
extensions of credit there are risks of delay in recovery or even loss of rights
in the securities loaned if the borrower of the securities fails financially.
However, the loans will be made only to organizations deemed by an Adviser to be
sufficiently creditworthy and when, in the judgment of the Adviser, the
consideration which can be earned from securities loans of this type justifies
the attendant risk. Moreover, the tax consequences of the income received would
be considered before lending was implemented.
VOTE REQUIRED TO APPROVE PROPOSAL 6
Approval of the Proposal requires the affirmative vote of a majority of
the outstanding voting securities of the Fund as defined under Proposal 4.
Implementation of this Proposal is not dependent upon any other proposal herein.
The Directors have considered various factors and believe that this
Proposal will increase investment management flexibility and is in the best
interests of the Fund's stockholders. If the Proposal is not approved, the
Fund's present objective and fundamental restrictions will remain in effect and
a stockholder vote would be required before the Fund could engage in activities
prohibited by a fundamental restriction. The Directors recommend that the
stockholders vote in favor of the elimination, reclassification and amendment of
the Fund's investment objective and restrictions as described above.
PROPOSAL 7. TO APPROVE AN AMENDMENT TO THE FUND'S
ARTICLES OF ORGANIZATION REGARDING REORGANIZATIONS
In order to facilitate a possible tax-free reorganization between the
Fund (assuming it invests substantially all of its assets in the Portfolio in
accordance with Proposal 4) and similarly structured and managed investment
companies sponsored by Eaton Vance, the Directors recommend that the
shareholders authorize an Amendment to the Fund's Articles of Organization to
reduce the shareholder vote required for such a transaction from two-thirds to a
majority.
Under Massachusetts General Laws Chapter 156, Section 75, the
affirmative vote of two-thirds of the outstanding shareholders is required to
approve a reorganization less the Articles of Organization provide for a less
onerous requirement which can be no less than a majority. Because of the expense
and delay that can be involved in obtaining a two-thirds vote, the Directors
recommend the change be approved.
A reorganization may be in the shareholders' interest in the future to
reduce costs. Any specific proposal to reorganize would be the subject of a
separate proxy solicitation in which shareholders would receive proxy materials
describing the proposal.
An affirmative vote of a majority of the outstanding shares of the Fund
entitled to vote at this meeting will be required to authorize the Amendment.
THE DIRECTORS UNANIMOUSLY RECOMMEND THAT THE SHAREHOLDERS VOTE TO AMEND THE
ARTICLES OF ORGANIZATION. The Amendment would apply to any type of
reorganization permitted under Massachusetts law. Failure to receive an
affirmative vote on this Proposal will not preclude acting on any other Proposal
set forth in this Proxy Statement which has received the required affirmative
vote.
CERTAIN INFORMATION REGARDING BMR, EVM
AND THE OFFICERS OF THE FUND AND THE PORTFOLIO
INVESTMENT ADVISERS
Eaton Vance Management ("EVM") or Boston Management and Research
("BMR") act as investment adviser to investment companies and various individual
and institutional clients, with combined assets under management of
approximately $15 billion. EVM provides administrative and management services
to certain Eaton Vance funds, as well as The Wright Managed Income Trust, The
Wright Managed Equity Trust, The Wright EquiFund Equity Trust and The Wright
Managed Blue Chip Series Trust. EVM and its affiliates also provide investment
management services to substantial individual and institutional investment
counsel accounts.
BMR is a wholly-owned subsidiary of EVM. There are no financial
conditions known by EVM or BMR which would impair the financial ability of the
adviser to fulfill its commitment to the Portfolio under the proposed investment
advisory agreement. EVM and EV are both wholly-owned subsidiaries of EVC. BMR
and EVM are Massachusetts business trusts, and EV is the trustee of BMR and EVM.
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, EVM, BMR and
EV. All of the issued and outstanding shares of EVM and of EV are owned by EVC.
All of the issued and outstanding shares of BMR are owned by EVM. 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 EVM who are also officers and Directors of EVC and EV. As of
____________ , 1995, Messrs. Clay, Gardner and Hawkes each owned 24% of such
voting trust receipts, and Messrs. Rowland and Brigham owned 15% and 13%,
respectively. The address of EVC, EVM, BMR, EV and of its Directors or Trustees
is 24 Federal Street, Boston, Massachusetts 02110.
As of ___________________ , 1995 there were ________________ shares of
Non-Voting Common Stock of EVC outstanding, _____________________ shares of
which were held by EVM. As at such date, Landon T. Clay owned __________________
shares (or ___%) of such Non-Voting Common Stock of EVC then outstanding, and
M. Dozier Gardner owned shares (or %) of such Non-Voting Common Stock. EVC has
issued outstanding options to the following individuals covering the number of
shares of EVC Non-Voting Common Stock set forth after their names: Landon T.
Clay (19,000); M. Dozier Gardner (52,500); Benjamin A. Rowland, Jr., (26,000);
and James B. Hawkes (130,144).
EVC owns all the stock of Marblehead Energy Corp., which engages in oil
and gas operations, and 77.3% of the stock of Investors Bank & Trust Company
("IBT"), the custodian of the Fund and the Portfolio, which also provides
bookkeeping and pricing services to the Fund and the Portfolio. The charges for
its services are offset by the value (determined by an agreed-upon formula) of
the cash balances of the Fund and the Portfolio, which are maintained with it as
the custodian of the Fund and the Portfolio. IBT also provides custodial,
trustee and other fiduciary services to investors, including individuals,
employee benefit plans, corporations, savings banks, investment companies and
other institutions. EVC has announced its intention to spin-off IBT as an
independent company in 1995. EVM owns all the stock of Northeast Properties,
Inc., which is engaged in real estate investment management and consulting. EVC
owns all the stock of Fulcrum Management, Inc. and MinVen, Inc., which are
engaged in the development of precious metal properties. EVC, BMR, EVM and EV
may also enter into other businesses.
The fees paid IBT under these arrangements for its services as
custodian by the Fund for the six months ended April 30, 1995 and for the fiscal
year ended October 31, 1994, were $22,604 and $49,061 respectively.
EATON VANCE DISTRIBUTORS, INC.
Eaton Vance Distributors, Inc. ("EVD") ( a wholly-owned subsidiary of
EVM) acts as Principal Underwriter for over _________________ investment
companies, each of which makes a continuous offering of shares.
EVD also acts as the Placement Agent for the Portfolio. The Placement
Agent Agreement is renewable annually by the Portfolio's Board of Trustees
(including a majority of the Independent Trustees), may be terminated on sixty
days' notice either by such Trustees or by vote of a majority of the outstanding
voting securities of the Portfolio or on six months' notice by the Placement
Agent and is automatically terminated upon assignment.
OFFICERS OF THE FUND AND THE PORTFOLIO
The officers of the Fund and the Portfolio, with their ages indicated
in parenthesis, are as follows: Landon T. Clay (69), President and Director of
the Fund since 1970 and of the Portfolio; James B. Hawkes, Jr., (53), Vice
President of the Fund since 1971 and of the Portfolio; Duncan W. Richardson
(38), Vice President of the Fund since 1991 and of the Portfolio; James L.
O'Connor (50), Treasurer of the Fund since 1989 and of the Portfolio; Thomas
Otis (64), Clerk of the Fund since 1969 and of the Portfolio; Janet E. Sanders
(59), Assistant Treasurer and Assistant Clerk of the Fund since 1990 and of the
Portfolio; James F. Alban (33), Assistant Treasurer of the Fund since 1991 and
of the Portfolio; A. John Murphy (32), Assistant Clerk of the Fund since April
18, 1995 and of the Portfolio; and Eric G. Woodbury (38), Assistant Clerk of the
Fund since August 7, 1995 and of the Portfolio. Except as indicated, all
officers of the Fund have served in that capacity for the last five years and
all officers of the Portfolio have served since October 23, 1995. All of the
officers of the Fund and the Portfolio have been employed by BMR, EVM or their
predecessors for more than five years except Mr. Alban, Assistant Vice President
of EVM and EV since January 17, 1992 and of BMR since its inception, and an
employee of EVM since September 23, 1991 was a tax Consultant Audit Senior at
Deloitte & Touche LLP from 1987 to 1991; Mr. Murphy, Assistant Vice President of
EVM, BMR and EV since March 1, 1994 and an employee of EVM since March 1993, was
State Regulations Supervisor, The Boston Company from 1991-1993 and Registration
Specialist, Fidelity Management & Research Co., from 1986-1991; and Mr.
Woodbury, Vice President of EVM since February 1993, who was an associate
attorney at Dechert, Price & Rhoades and Gaston & Snow prior thereto. Mr. Hawkes
is an officer, Director, and a stockholder of EVC, an officer and Director of
EV, and an officer of EVM and BMR. Messrs. Alban, Murphy, O'Connor, Richardson,
Ms. Sanders and Mr. Woodbury are officers of EVM, BMR and EV, and stockholders
of EVC. Mr. Otis is an officer and stockholder of EVC and an officer of EVM, BMR
and EV. Because of their positions with BMR, EVM and EV or their ownership of
stock of EVC, Mr. Clay (an Officer and Director of the Fund and officer and
trustee of the Portfolio), as well as the other officers of the Fund and the
Portfolio, will benefit from the advisory fees paid by the Portfolio to BMR and
the Portfolio, as well as any income derived by IBT under the custodian
agreements with the Fund and the Portfolio.
NOTICE TO BANKS AND BROKER/DEALERS
The Fund has previously solicited all Nominee and Broker/Dealer
accounts as to the number of additional proxy statements required to supply
owners of shares. Should additional proxy material be required for beneficial
owners, please forward such requests to: The Shareholder Services Group, Inc.,
Eaton Vance Group of Funds, Proxy Department, P.O. Box 9122 Hingham, MA
02043-9717.
ADDITIONAL INFORMATION
The expense of preparing, printing and mailing this Proxy Statement and
enclosures and the cost of soliciting proxies on behalf of the Board of
Directors of the Fund will be borne by the Fund. Proxies will be solicited by
mail and may be solicited in person or by telephone or telegraph by officers of
the Fund, be personnel of its investment adviser, EVM, its transfer agent, The
Shareholder Services Group, Inc., by broker-dealer firms or by a professional
solicitation organization. The expenses connected with the solicitation of these
proxies and with any further proxies which may be solicited by the Fund's
officers, by EVM's personnel, by its transfer agent, The Shareholder Services
Group, Inc., or by broker-dealer firms, in person, by telephone or by telegraph
will be borne by the Fund. The Fund will reimburse banks, broker-dealer firms,
and other persons holding shares registered in their names or in the names of
their nominees, for their expenses incurred in sending proxy material to and
obtaining proxies from the beneficial owners of such shares.
All proxy cards solicited by the Board of Directors that are properly
executed and received by the Clerk prior to the meeting, and which are not
revoked, will be voted at the meeting. Shares represented by such proxies will
be voted in accordance with the instructions thereon. If no specification is
made on the proxy card, it will be voted for the matters specified on the proxy
card. All proxies not voted, will not be counted toward establishing a quorum.
Broker non-votes will be counted toward establishing a quorum and for
determining whether sufficient votes have been received for approval of the
Proposal to be acted upon. Stockholders should note that while votes to abstain
will count toward establishing a quorum, passage of any Proposal being
considered at the meeting will occur only if a sufficient number of votes are
cast for the Proposal. Accordingly, votes to abstain, broker non-votes and votes
against will have the same effect in determining whether a Proposal is approved.
In the event that sufficient votes by the stockholders of the Fund in
favor of any Proposal set forth in the Notice of this meeting are not received
by November 30, 1995, the persons named as attorneys in the enclosed proxy may
propose one or more adjournments of the meeting to permit further solicitation
of proxies. A stockholder vote may be taken on one or more of the Proposals in
this Proxy Statement prior to such adjournment if sufficient votes have been
received and it is otherwise appropriate. Any such adjournment will require the
affirmative vote of the holders of a majority of the shares present in person or
by proxy at the session of the meeting to be adjourned. The persons named as
attorneys in the enclosed proxy will vote in favor of such adjournment those
proxies which they are entitled to vote in favor of the Proposal for which
further solicitation of proxies is to be made. They will vote against any such
adjournment those proxies required to be voted against such Proposal. The costs
of any such additional solicitation and of any adjourned session will be borne
by the Fund.
The Fund will furnish, without charge a copy of the Fund's Annual
Report and its most recent Semi-Annual Report succeeding the Annual Report to
any stockholder upon request. Stockholders desiring to obtain a copy of such
reports should direct all written requests to: Thomas Otis, Clerk, Capital
Exchange Fund, Inc., 24 Federal, Street, Boston, Massachusetts 02110, or should
call Eaton Vance Shareholder Services at 1-800-225-6265.
Capital Exchange Fund, Inc.
October 30, 1995
EXHIBIT A
TAX-MANAGED GROWTH PORTFOLIO
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 23rd day of October, 1995, between Tax-Managed
Growth Portfolio, a New York trust (the "Trust"), and Boston Management and
Research, a Massachusetts business trust (the "Adviser").
1. Duties of the Adviser. The Trust hereby employs the Adviser to act
as investment adviser for and to manage the investment and reinvestment of the
assets of the Trust and to administer its affairs, subject to the supervision of
the Trustees of the Trust, for the period and on the terms set forth in this
Agreement.
The Adviser hereby accepts such employment, and undertakes to afford to
the Trust the advice and assistance of the Adviser's organization in the choice
of investments and in the purchase and sale of securities for the Trust and to
furnish for the use of the Trust office space and all necessary office
facilities, equipment and personnel for servicing the investments of the Trust
and for administering its affairs and to pay the salaries and fees of all
officers and Trustees of the Trust who are members of the Adviser's organization
and all personnel of the Adviser performing services relating to research and
investment activities. The Adviser shall for all purposes herein be deemed to be
an independent contractor and shall, except as otherwise expressly provided or
authorized, have no authority to act for or represent the Trust in any way or
otherwise be deemed an agent of the Trust.
The Adviser shall provide the Trust with such investment management and
supervision as the Trust may from time to time consider necessary for the proper
supervision of the Trust. As investment adviser to the Trust, the Adviser shall
furnish continuously an investment program and shall determine from time to time
what securities and other investments shall be acquired, disposed of or
exchanged and what portion of the Trust's assets shall be held uninvested,
subject always to the applicable restrictions of the Declaration of Trust,
By-Laws and registration statement of the Trust under the Investment Company Act
of 1940, all as from time to time amended. Should the Trustees of the Trust at
any time, however, make any specific determination as to investment policy for
the Trust and notify the Adviser thereof in writing, the Adviser shall be bound
by such determination for the period, if any, specified in such notice or until
similarly notified that such determination has been revoked. The Adviser shall
take, on behalf of the Trust, all actions which it deems necessary or desirable
to implement the investment policies of the Trust.
The Adviser shall place all orders for the purchase or sale of
portfolio securities for the account of the Trust either directly with the
issuer or with brokers or dealers selected by the Adviser, and to that end the
Adviser is authorized as the agent of the Trust to give instructions to the
custodian of the Trust as to deliveries of securities and payments of cash for
the account of the Trust. In connection with the selection of such brokers or
dealers and the placing of such orders, the Adviser shall use its best efforts
to seek to execute security transactions at prices which are advantageous to the
Trust and (when a disclosed commission is being charged) at reasonably
competitive commission rates. In selecting brokers or dealers qualified to
execute a particular transaction, brokers or dealers may be selected who also
provide brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934) to the Adviser and the Adviser is
expressly authorized to pay any broker or dealer who provides such brokerage and
research services a commission for executing a security transaction which is in
excess of the amount of commission another broker or dealer would have charged
for effecting that transaction if the Adviser determines in good faith that such
amount of commission is reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer, viewed in terms of either
that particular transaction or the overall responsibilities which the Adviser
and its affiliates have with respect to accounts over which they exercise
investment discretion. Subject to the requirement set forth in the second
sentence of this paragraph, the Adviser is authorized to consider, as a factor
in the selection of any broker or dealer with whom purchase or sale orders may
be placed, the fact that such broker or dealer has sold or is selling shares of
any one or more investment companies sponsored by the Adviser or its affiliates
or shares of any other investment company investing in the Trust.
2. Compensation of the Adviser. For the services, payments and
facilities to be furnished hereunder by the Adviser, the Adviser shall be
entitled to receive from the Trust compensation in an amount equal to the
following of the average daily net assets of the Trust throughout each month:
Average Daily Net Assets for the Month Annual Fee Rate
-------------------------------------- ---------------
up to $500 million 0.625%
$500 million but less than $1 billion 0.5625%
$1 billion but less than $1.5 billion 0.50%
$1.5 billion and over 0.4375%
Such compensation shall be paid monthly in arrears on the last business day of
each month. The Trust's daily net assets shall be computed in accordance with
the Declaration of Trust of the Trust and any applicable votes and
determinations of the Trustees of the Trust.
In case of initiation or termination of the Agreement during any month
with respect to the Trust, the fee for that month shall be based on the number
of calendar days during which it is in effect.
The Adviser may, from time to time, waive all or a part of the above
compensation.
3. Allocation of Charges and Expenses. It is understood that the Trust
will pay all expenses other than those expressly stated to be payable by the
Adviser hereunder, which expenses payable by the Trust shall include, without
implied limitation, (i) expenses of maintaining the Trust and continuing its
existence, (ii) registration of the Trust under the Investment Company Act of
1940, (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 Trust, (viii)
expenses of registering and qualifying the Trust and Interests in the Trust
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 Holders and investors, and fees and
expenses of registering and maintaining registrations of the Trust and of the
Trust's placement agent as broker-dealer or agent under state securities laws,
(ix) expenses of reports and notices to Holders and of meetings of Holders 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 Trust (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, Holder servicing agents and registrars for all
services to the Trust, (xv) expenses for servicing the account of Holders, (xvi)
any direct charges to Holders approved by the Trustees of the Trust, (xvii)
compensation and expenses of Trustees of the Trust who are not members of the
Adviser'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 Trust to indemnify its Trustees, officers and
Holders with respect thereto.
4. Other Interests. It is understood that Trustees and officers of the
Trust and Holders of Interests in the Trust are or may be or become interested
in the Adviser as trustees, shareholders or otherwise and that trustees,
officers and shareholders of the Adviser are or may be or become similarly
interested in the Trust, and that the Adviser may be or become interested in the
Trust as Holder or otherwise. It is also understood that trustees, officers,
employees and shareholders of the Adviser may be or become interested (as
directors, trustees, officers, employees, shareholders or otherwise) in other
companies or entities (including, without limitation, other investment
companies) which the Adviser may organize, sponsor or acquire, or with which it
may merge or consolidate, and which may include the words "Eaton Vance" or
"Boston Management and Research" or any combination thereof as part of their
name, and that the Adviser or its subsidiaries or affiliates may enter into
advisory or management agreements or other contracts or relationships with such
other companies or entities.
5. Limitation of Liability of the Adviser. The services of the Adviser
to the Trust are not to be deemed to be exclusive, the Adviser being free to
render services to others and engage in other business activities. In the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties hereunder on the part of the Adviser, the
Adviser shall not be subject to liability to the Trust or to any Holder of
Interests in the Trust for any act or omission in the course of, or connected
with, rendering services hereunder or for any losses which may be sustained in
the acquisition, holding or disposition of any security or other investment.
6. Sub-Investment Advisers. The Adviser may employ one or more
sub-investment advisers from time to time to perform such of the acts and
services of the Adviser, including the selection of brokers or dealers to
execute the Trust's portfolio security transactions, and upon such terms and
conditions as may be agreed upon between the Adviser and such investment adviser
and approved by the Trustees of the Trust.
7. Duration and Termination of this Agreement. This Agreement shall
become effective upon the date of its execution, and, unless terminated as
herein provided, shall remain in full force and effect through and including
February 28, 1996 and shall continue in full force and effect indefinitely
thereafter, but only so long as such continuance after February 28, 1996 is
specifically approved at least annually (i) by the Board of Trustees of the
Trust or by vote of a majority of the outstanding voting securities of the Trust
and (ii) by the vote of a majority of those Trustees of the Trust who are not
interested persons of the Adviser or the Trust cast in person at a meeting
called for the purpose of voting on such approval.
Either party hereto may, at any time on sixty (60) days' prior written
notice to the other, terminate this Agreement without the payment of any
penalty, by action of Trustees of the Trust or the trustees of the Adviser, as
the case may be, and the Trust may, at any time upon such written notice to the
Adviser, terminate this Agreement by vote of a majority of the outstanding
voting securities of the Trust. This Agreement shall terminate automatically in
the event of its assignment.
8. Amendments of the Agreement. This Agreement may be amended by a
writing signed by both parties hereto, provided that no amendment to this
Agreement shall be effective until approved (i) by the vote of a majority of
those Trustees of the Trust who are not interested persons of the Adviser or the
Trust cast in person at a meeting called for the purpose of voting on such
approval, and (ii) by vote of a majority of the outstanding voting securities of
the Trust.
9. Limitation of Liability. The Adviser expressly acknowledges the
provision in the Declaration of Trust of the Trust (Section 5.2 and 5.6)
limiting the personal liability of the Trustees and officers of the Trust, and
the Adviser hereby agrees that it shall have recourse to the Trust for payment
of claims or obligations as between the Trust and the Adviser arising out of
this Agreement and shall not seek satisfaction from any Trustee or officer of
the Trust.
10. Certain Definitions. The terms "assignment" and "interested
persons" when used herein shall have the respective meanings specified in the
Investment Company Act of 1940 as now in effect or as hereafter amended subject,
however, to such exemptions as may be granted by the Securities and Exchange
Commission by any rule, regulation or order. The term "vote of a majority of the
outstanding voting securities" shall mean the vote, at a meeting of Holders, of
the lesser of (a) 67 per centum or more of the Interests in the Trust present or
represented by proxy at the meeting if the Holders of more than 50 per centum of
the outstanding Interests in the Trust are present or represented by proxy at
the meeting, or (b) more than 50 per centum of the outstanding Interests in the
Trust. The terms "Holders" and "Interests" when used herein shall have the
respective meanings specified in the Declaration of Trust of the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.
TAX-MANAGED GROWTH PORTFOLIO
By: /s/ Landon T. Clay
-----------------------------
President
BOSTON MANAGEMENT AND RESEARCH
By: /s/ James B. Hawkes
------------------------------
Vice President
and not individually
EXHIBIT B
CAPITAL EXCHANGE FUND, INC.
FUNDAMENTAL INVESTMENT POLICIES
[Proposed Additions in Italics and Proposed Deletions in Brackets]
As a matter of fundamental investment policy, the Fund may not:
(1) With respect to 75% of its total assets, invest [purchase the
securities of any issuer if such purchase at the time thereof would cause] more
than five percent (5%) of its [the] total assets [of the Corporation] (taken at
market value) [to be invested] in the securities of any one [such] issuer,
except obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities and except securities of other investment companies. [The
foregoing limitation shall not apply to investments in Government securities as
defined in the Investment Company Act of 1940.]
(2) With respect to 75% of its total assets, invest [purchase
securities of any issuer if such purchase at the time thereof would cause] more
than ten percent (10%) of its assets in the outstanding voting securities of any
one issuer, except obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities and except securities of other investment
companies [any class of securities of such issuer to be held by the Corporation.
For this purpose all outstanding bonds and other evidences of indebtedness shall
be deemed to be a single class of securities of the issuer, and all kinds of
stock of an issuer preferred over the common stock as to dividends or in
liquidation shall be deemed to constitute a single class regardless of relative
priorities, series designations, conversion rights and other differences.]
(3) [Purchase securities issued by any other investment company or
investment trust except by purchase in the open market where no commission or
profit to a sponsor or dealer results from such purchase other than the
customary broker's commission, or except when such purchase, though not made in
the open market, is part of a plan of merger or consolidation.]
(4)* Purchase securities of any issuer which has a record of less than
three (3) years' continuous operation including, however, in such three (3)
years the operation of any predecessor company or companies, partnership or
individual enterprise if the issuer whose securities are proposed as an
investment for funds of the Corporation has come into existence as a result of a
merger, consolidation, reorganization, or the purchase of substantially all the
assets of such predecessor company or companies, partnership or individual
enterprise, provided that nothing in this sub-paragraph D shall prevent (a) the
purchase of securities of a company substantially all of whose assets are (i)
securities of one or more companies which have had a record of three (3) years'
continuous operation, or (ii) assets of an independent division of another
company, which division has had a record of three (3) years' continuous
operation; (b) the purchase of securities of (i) a public utility subject to
supervision or regulation as to its rates or charges by a commission or board or
officer of the United States or of any state or territory thereof, or of the
government of Canada or of any province or territory of Canada or (ii) companies
operating or formed for the purpose of operating pipe or transmission lines for
the transmission of oil, gas or electric energy or like products; provided that
no security shall be purchased pursuant to exception (a) or (b) of this
sub-paragraph D if such purchase at the time thereof will cause more than five
percent (5%) of the total assets of the Fund (taken at market value) to be
invested in securities of companies which would not then be eligible for
purchase but for those exceptions.
- -----------
* This restriction would become nonfundamental if Proposal 6 is approved.
(5)* 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 Director of the Corporation, or is a member, officer, director or
trustee of the Investment Adviser of the Corporation, if after the purchase of
the securities of such issuer by the Corporation one or more of such persons
owns beneficially more than one-half of one percent (1/2%) of the shares or
securities, or both (all taken at market value), of such issuer, and such
persons owning more than one-half of one percent (1/2%) of such shares or
securities together own beneficially more than five percent (5%) of such shares
or securities, or both (all taken at market value).
(6) Borrow money or issue senior securities except as permitted by the
Investment Company Act of 1940 [amounts in excess of ten percent (10%) of the
gross assets of the Corporation taken at cost determined in accordance with good
accounting practice, and no borrowing shall be undertaken except as a temporary
measure for extraordinary or emergency purposes.]
(7) [Pledge, mortgage, or hypothecate the assets of the Corporation.]
(8) Purchase any securities or evidences of interest therein on
"margin," that is to say in a transaction in which it has borrowed all or a
portion of the purchase price and pledged the purchased securities or evidences
of interest therein as collateral for the amount so borrowed;
(9)* Sell or contract to sell any security which it does not own unless
by virtue of its ownership of other securities it has at the time of sale a
right to obtain securities equivalent in kind and amount to the securities sold
and provided that if such right is conditional the sale is made upon the same
conditions.
(10)* Invest for the purpose of exercising control or management of
other companies;
(11) Make loans to other persons, except by (a) the acquisition of debt
securities and making portfolio investments, (b) entering into repurchase
agreements and (c) lending portfolio securities;
(12) Buy or sell real estate (although it may purchase and sell
securities which are secured by real estate and securities of companies which
invest or deal in real estate), commodities or commodity contracts for the
purchase or sale of physical commodities;
(13) Engage in the underwriting of securities; or
(14) concentrate its investments in any particular industry, but if it
is deemed appropriate for the attainment of the Fund's objective, up to 25% of
the value of its assets may be invested in any one industry.
- -----------
* This restriction would become nonfundamental if Proposal 6 is approved.
CAPITAL EXCHANGE FUND, INC. THIS PROXY IS SOLICITED ON BEHALF OF
PROXY THE BOARD OF DIRECTORS OF THE FUND
KNOW ALL MEN BY THESE PRESENTS: That the undersigned, revoking previous proxies
for such stock, hereby appoints H. Day Brigham, Jr., Landon T. Clay and Thomas
Otis, or any of them, attorneys of the undersigned, with full power of
substitution, to vote all stock of Capital Exchange Fund, Inc., which the
undersigned is entitled to vote at the Special Meeting in lieu of the Annual
Meeting of the Stockholders of said Fund to be held on November 30, 1995 at the
principal office of the Fund, 24 Federal Street, Boston, Massachusetts 02110, at
10:00 A.M. (Boston time), and at any and all adjournments thereof. Receipt of
the Notice of and Proxy Statement for said Meeting is acknowledged.
The shares represented by this proxy will be voted on the following matters as
specified below and on the reverse side by the undersigned. If no specification
is made, this proxy will be voted in favor of all such matters. Note: This proxy
must be returned in order for your shares to be voted.
1. TO FIX THE NUMBER OF DIRECTORS, AND TO ELECT DIRECTORS.
| | FOR the following nominees, except those whose names are inserted on the
line below:
Directors - L. T. Clay, D.R. Dwight, S.L. Hayes, III, N.H. Reamer,
J. L. Thorndike and J.L. Treynor
- -------------------------------------------------------------------------------
| | WITHHOLD AUTHORITY to vote for any of the nominees.
2. To ratify the selection of Deloitte FOR | | AGAINST | | ABSTAIN | |\2/
& Touche as independent public
accountants of the Fund.
3. To approve an Amendment to the FOR | | AGAINST | | ABSTAIN | |\3/
By-Laws of the Fund.
4. To adopt a new investment policy FOR | | AGAINST | | ABSTAIN | |\4/
and to supplement investment
restrictions to permit a new
investment structure as described
in the Proxy Statement.
5.A. To Authorize the Fund to vote at FOR | | WITHHOLD | |\5A/
a meeting of holders of interests the nominees except AUTHORITY
in the Portfolio to elect six those whose names to vote for
trustees of the Portfolio. are inserted on the any of the
line below. nominees.
T. Clay, D.R. Dwight, S.L. Hayes,
III, N.H. Reamer, J.L. Thorndike,
J.L. Treynor
5.B. To authorize the Fund to vote at FOR | | AGAINST | | ABSTAIN | |\5B/
a meeting of holders of interests
in the Portfolio to ratify the
selection of Deloitte & Touche
LLP as independent accountants of
the Portfolio.
5.C. To authorize the Fund to vote at FOR | | AGAINST | | ABSTAIN | |\5C/
a meeting of holders of interests
in the Portfolio to approve the
Investment Advisory Agreement
between the Portfolio and Boston
Management and Research as set
forth in Exhibit A to the Proxy
Statement.
6. To approve the revision of the
Fund's investment objective and
certain of the Fund's investment
policies as set forth in Exhibit
B to the Proxy Statement as
follows:
6.A. Reclassification and Amendment FOR | | AGAINST | | ABSTAIN | |\6A/
of the investment objective.
6.B. Eliminate the restriction FOR | | AGAINST | | ABSTAIN | |\6B/
concerning investment in other
investment companies.
6.C. Eliminate the restriction FOR | | AGAINST | | ABSTAIN | |\6C/
concerning pledging.
6.D. Reclassify the restriction FOR | | AGAINST | | ABSTAIN | |\6D/
concerning investment in
unseasoned issuers.
6.E. Reclassify the restriction FOR | | AGAINST | | ABSTAIN | |\6E/
concerning investing for
control.
6.F. Amend the restriction concerning FOR | | AGAINST | | ABSTAIN | |\6F/
lending.
6.G. Amend the restriction concerning FOR | | AGAINST | | ABSTAIN | |\6G/
concentration.
6.H. Amend the restriction concerning FOR | | AGAINST | | ABSTAIN | |\6H/
borrowing.
6.I. Amend the restriction concerning FOR | | AGAINST | | ABSTAIN | |\6I/
lending.
6.J. Amend the restriction concerning FOR | | AGAINST | | ABSTAIN | |\6J/
real estate and commodities.
7. To approve an amendment to the FOR | | AGAINST | | ABSTAIN | |\7/
Articles of Organization.
As to any other matter, or if any of the nominees named in the Proxy Statement
are not available for election, said attorneys shall vote in accordance with
their judgment.
THE DIRECTORS RECOMMEND A VOTE IN FAVOR OF
ALL MATTERS
------------------------------------------
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Please sign exactly as your name or names
appear at left.
Dated: --------------------------- , 1995
015