AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 21, 1998.
1933 ACT FILE NO. -____
1940 ACT FILE NO. 811-4015
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-14
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933 [X]
PRE-EFFECTIVE AMENDMENT NO. ___ [ ]
POST-EFFECTIVE AMENDMENT NO. ___ [ ]
EATON VANCE MUTUAL FUNDS TRUST
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
24 FEDERAL STREET, BOSTON, MA 02110
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFIICES)
(617) 482-8260
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(REGISTRANT'S TELEPHONE NUMBER)
ALAN R. DYNNER, 24 FEDERAL STREET, BOSTON, MA 02110
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(NAME AND ADDRESS OF AGENT FOR SERVICE)
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of the registration statement.
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TITLE OF SECURITIES BEING REGISTERED: Shares of Beneficial Interest
No filing fee is required because an indefinite number of shares have previously
been registered pursuant to Rule 24f-2 under the Investment Company Act of 1940,
as amended. Pursuant to Rule 429, this Registration Statement relates to shares
previously registered on Form N-1A (File No. 2-90946).
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Pursuant to Rule 488 under the Securities Act of 1933, it is proposed that this
filing will become effective on November 20, 1998.
EATON VANCE MUTUAL FUNDS TRUST
CONTENTS OF REGISTRATION STATEMENT
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This Registration Statement contains the following pages and documents:
Front Cover
Contents Page
Cross Reference Sheet
Letter to Shareholders
Notice of Special Meeting
Part A -- Prospectus/Proxy Statement
Proxy Card
Part B -- Statement of Additional Information
Part C -- Other Information
Signature Page
Exhibits
EATON VANCE MUTUAL FUNDS TRUST
CROSS-REFERENCE SHEET
FOR EATON VANCE TAX-MANAGED EMERGING GROWTH FUND
ITEMS REQUIRED BY FORM N-14
PART A. INFORMATION REQUIRED IN THE PROSPECTUS
CAPTION IN
ITEM NO. ITEM CAPTION PROSPECTUS/PROXY STATEMENT
- -------- ------------ --------------------------
1. Beginning of Registration Statement and Outside COVER PAGE OF REGISTRATION STATEMENT; FRONT
Front Cover Page of Prospectus COVER PAGE OF PROSPECTUS
2. Beginning and Outside Back Cover Page of TABLE OF CONTENTS
Prospectus
3. Fee Table, Synopsis Information, and Risk Factors SUMMARY; PRINCIPAL RISK FACTORS; FUND EXPENSES
4. Information About the Transaction REASONS FOR THE REORGANIZATION; INFORMATION
ABOUT THE REORGANIZATION; COMPARATIVE
INFORMATION ON SHAREHOLDER RIGHTS
5. Information About the Registrant PROSPECTUS COVER PAGE; SUMMARY; COMPARISON OF
INVESTMENT OBJECTIVES AND POLICIES; INFORMATION
ABOUT THE FUNDS; EMERGING GROWTH FINANCIAL
HIGHLIGHTS
6. Information About the Company Being Acquired PROSPECTUS COVER PAGE; SUMMARY; COMPARISON OF
INVESTMENT OBJECTIVES AND POLICIES; INFORMATION
ABOUT THE FUNDS; DEVELOPING RESOURCES FINANCIAL
HIGHLIGHTS
7. Voting Information SUMMARY; VOTING INFORMATION; DISSENTERS RIGHTS
8. Interest of Certain Persons and Experts EXPERTS
PART B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
CAPTION IN
ITEM NO. ITEM CAPTION STATEMENT OF ADDITIONAL INFORMATION
- -------- ------------ -----------------------------------
9. Additional Information Required for Reoffering
by Persons Deemed to be Underwriters NOT APPLICABLE
10. Cover Page COVER PAGE
11. Table of Contents TABLE OF CONTENTS
12. Additional Information About the Registrant STATEMENT OF ADDITIONAL INFORMATION OF EATON VANCE
TAX-MANAGED EMERGING GROWTH FUND
13. Additional Information About the Company Being STATEMENT OF ADDITIONAL INFORMATION OF EATON VANCE
Acquired DEVELOPING RESOURCES FUND
14. Financial Statements FINANCIAL STATEMENTS OF EATON VANCE TAX-MANAGED
EMERGING GROWTH FUND; FINANCIAL STATEMENTS OF EATON
VANCE DEVELOPING RESOURCES FUND
PART C. OTHER INFORMATION
ITEM NO. ITEM CAPTION PART C CAPTION
- -------- ------------ --------------
15. Indemnification INDEMNIFICATION
16. Exhibits EXHIBITS
17. Undertakings UNDERTAKINGS
EATON VANCE
WORLDWIDE DEVELOPING RESOURCES FUND
24 Federal Street, Boston, Massachusetts 02110
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November 20, 1998
Dear Shareholder:
A Special Meeting of Shareholders of Eaton Vance Worldwide Developing
Resources Fund (the "Fund"), a series of Eaton Vance Growth Trust, which is a
Massachusetts business trust, is to be held at 10:00 a.m., Eastern Standard
Time, on December 18, 1998 at the offices of the Fund, 24 Federal Street,
Boston, Massachusetts 02110. Enclosed is a Prospectus/Proxy Statement regarding
the meeting, a proxy to allow you to vote, and a postage prepaid envelope in
which to return your proxy.
At the Special Meeting, action will be taken to approve or disapprove a
series of transactions (the "Reorganization") of the Fund with and into Eaton
Vance Tax-Managed Emerging Growth Fund ("Emerging Growth"), a series of Eaton
Vance Mutual Funds Trust, which is also a Massachusetts business trust. If
approved, the Reorganization would result in the conversion of your Fund shares
into corresponding shares of Emerging Growth. Each shareholder would receive
that number of full and fractional shares of Emerging Growth having a total net
asset value equal to the total net asset value of the shareholder's shares of
the Fund as of the applicable valuation date. Emerging Growth has an investment
objective and policies different from the Fund and the risks of an investment in
Emerging Growth differ from those of an investment in the Fund. The enclosed
Prospectus/Proxy Statement describes the Reorganization in detail. Please review
the enclosed materials, complete and return your proxy in the postage prepaid
envelope provided.
The number of shares of the Fund that will be voted in accordance with
your instructions appears on your proxy.
The management and Trustees of the Fund believe that the Reorganization
will benefit Fund shareholders and recommend that you vote IN FAVOR of the
Reorganization. Emerging Growth has a lower expense ratio and broader investment
policies. Every vote counts, so please return your proxy today in the postage
prepaid envelope provided for your convenience.
Should you have questions regarding the proposed Reorganization, please
call (800) 225-6265 anytime between 9 a.m. and 5 p.m. Eastern Standard Time.
Sincerely,
James B. Hawkes
President
SHAREHOLDERS ARE URGED TO SIGN AND MAIL THE ENCLOSED PROXY IN THE ENCLOSED
POSTAGE PREPAID ENVELOPE SO AS TO ENSURE A QUORUM AT THE MEETING. THIS IS
IMPORTANT WHETHER YOU OWN A FEW SHARES OR MANY SHARES.
EATON VANCE WORLDWIDE DEVELOPING RESOURCES FUND
NOTICE OF A SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD FRIDAY, DECEMBER 18, 1998
To Shareholders:
Please note that a Special Meeting of Shareholders of Eaton Vance
Worldwide Developing Resources Fund (the "Fund") has been called to be held at
the offices of the Fund, 24 Federal Street, Boston, Massachusetts 02110 on
Friday, December 18, 1998 at 10:00 a.m., Eastern Standard Time, for the
following purposes:
(1) To approve an Agreement and Plan of Reorganization (the "Plan")
providing for the acquisition by Eaton Vance Tax-Managed Emerging
Growth Fund ("Emerging Growth"), a series of Eaton Vance Mutual
Funds Trust, of all of the assets of the Fund, in exchange for
shares of Emerging Growth, the distribution of such shares to the
shareholders of the Fund and the termination of the Fund, all as
described in the accompanying Prospectus/Proxy Statement. A copy
of the Plan is attached as Exhibit A thereto.
(2) To consider and act upon such other matters as may properly come
before the Meeting or any adjournments thereof.
Shareholders of record at the close of business on November 12, 1998
are entitled to vote at the meeting or any adjournments thereof.
By Order of the Trustees
Alan R. Dynner
Secretary
November 20, 1998
IMPORTANT - WE URGE YOU TO SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT USING
THE ENCLOSED ADDRESSED ENVELOPE, WHICH REQUIRES NO POSTAGE AND IS INTENDED FOR
YOUR CONVENIENCE. YOUR PROMPT RETURN OF YOUR ENCLOSED PROXY WILL SAVE THE FUND
THE NECESSITY AND EXPENSE OF FURTHER SOLICITATIONS TO ENSURE A QUORUM AT THE
SPECIAL MEETING. IF YOU CAN ATTEND THE MEETING AND WISH TO VOTE YOUR SHARES IN
PERSON AT THAT TIME, YOU WILL BE ABLE TO DO SO.
PROSPECTUS/PROXY STATEMENT DATED NOVEMBER 20, 1998
ACQUISITION OF THE ASSETS OF
EATON VANCE WORLDWIDE DEVELOPING RESOURCES FUND
24 FEDERAL STREET
BOSTON, MASSACHUSETTS 02110
(800) 225-6265
BY AND IN EXCHANGE FOR SHARES OF
EATON VANCE TAX-MANAGED EMERGING GROWTH FUND
24 FEDERAL STREET
BOSTON, MASSACHUSETTS 02110
(800) 225-6265
This Prospectus/Proxy Statement relates to the proposed transfer of the
assets and liabilities of Eaton Vance Worldwide Developing Resources Fund
("Developing Resources"), a series of Eaton Vance Growth Trust, which is a
Massachusetts business trust, to Eaton Vance Tax-Managed Emerging Growth Fund
("Emerging Growth"), a series of Eaton Vance Mutual Funds Trust, which is also a
Massachusetts business trust, in exchange for shares, without par value, of
Emerging Growth ("Emerging Growth Shares"). Following such transfer, Emerging
Growth Shares will be distributed to shareholders of Developing Resources in
liquidation of Developing Resources and Developing Resources will be terminated.
As a result of the proposed transaction, each shareholder of Developing
Resources will receive Emerging Growth Shares equal in value to the value of
such shareholder's shares, in each case calculated as of the close of regular
trading on the New York Stock Exchange on the business day immediately prior to
the exchange. This document serves as a Proxy Statement for the Special Meeting
of Shareholders of Developing Resources to be held on December 18, 1998 at 10:00
a.m. and any adjournments and postponements thereof and is being used by the
Board of Trustees of Developing Resources to solicit the proxies of shareholders
in connection therewith. This document also serves as a Prospectus of Emerging
Growth and covers the proposed issuance of Emerging Growth Shares.
Emerging Growth, an open-end management investment company, seeks to
provide long-term, after-tax returns for its shareholders through investing in a
diversified portfolio of equity securities of emerging growth companies.
This Proxy Statement/Prospectus, which should be retained for future
reference, sets forth concisely the information about Emerging Growth that a
prospective investor should know before investing. This Proxy
Statement/Prospectus is accompanied by the Prospectus of Emerging Growth dated
March 1, 1998, which is incorporated by reference herein. A Statement of
Additional Information dated November 20, 1998 containing additional information
about the proposed transaction has been filed with the Securities and Exchange
Commission and is incorporated by reference into this Proxy
Statement/Prospectus. A copy of such Statement may be obtained without charge by
writing the distributor of Emerging Growth, Eaton Vance Distributors, Inc.
("EVD"), 24 Federal Street, Boston, MA 02110; or by calling (800) 225-6265.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
TABLE OF CONTENTS
Page
SUMMARY.......................................................................
FUND EXPENSES.................................................................
PRINCIPAL RISK FACTORS........................................................
REASONS FOR THE REORGANIZATION................................................
INFORMATION ABOUT THE REORGANIZATION .........................................
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES .............................
COMPARATIVE INFORMATION ON DISTRIBUTION ARRANGEMENTS..........................
SHAREHOLDER SERVICES..........................................................
COMPARATIVE INFORMATION ON SHAREHOLDER RIGHTS.................................
INFORMATION ABOUT THE FUNDS...................................................
VOTING INFORMATION............................................................
DISSENTERS RIGHTS.............................................................
EMERGING GROWTH FINANCIAL HIGHLIGHTS..........................................
DEVELOPING RESOURCES FINANCIAL HIGHLIGHTS.....................................
EXPERTS ......................................................................
OTHER MATTERS.................................................................
SUMMARY
The following is a summary of certain information contained in or
incorporated by reference in this Proxy Statement/Prospectus. This summary is
not intended to be a complete statement of all material features of the proposed
Reorganization and is qualified in its entirety by reference to the full text of
this Proxy Statement/Prospectus and the documents referred to herein.
Proposed Transaction. The Trustees of Developing Resources have
approved an Agreement and Plan of Reorganization (the "Plan") providing for the
transfer of all of the assets of Developing Resources to Emerging Growth in
exchange for Emerging Growth Shares at a closing to be held following the
satisfaction of the conditions to the Reorganization (the "Closing"). The Plan
of Reorganization is attached hereto as Exhibit A. The value of shares to be
issued to Developing Resources and its shareholders will be identical in value
to Developing Resources' outstanding shares on the Closing Date. Emerging Growth
Shares will be distributed to shareholders of Developing Resources in
liquidation of Developing Resources and Developing Resources will be terminated.
(The proposed transaction is referred to in this Proxy Statement/Prospectus as
the "Reorganization.") As a result of the Reorganization, each shareholder of
Developing Resources will receive full and fractional Emerging Growth Shares
equal in value at the close of regular trading on the New York Stock Exchange on
the Closing Date to the value of such shareholder's shares of Developing
Resources. At or prior to the Closing, Developing Resources shall declare a
dividend or dividends which, together with all previous such dividends, shall
have the effect of distributing to Developing Resources' shareholders all of
Developing Resources' investment company taxable income and all of its net
capital gains realized for the taxable year ending at the Closing. The Trustees,
including the Trustees who are not "interested persons" of each Fund as defined
in the Investment Company Act of 1940, as amended (the "1940 Act"), have
determined that the interests of existing shareholders of the Funds will not be
diluted as a result of the transactions contemplated by the Reorganization and
that the Reorganization would be in the best interests of such shareholders.
Background for the Proposed Transaction. The Board of Trustees of
Developing Resources and of Emerging Growth considered a number of factors,
including the proposed terms of the Reorganization, and the characteristics of
Emerging Growth. The Trustees considered that combining Developing Resources
with Emerging Growth would produce economies of scale, which will be reflected
in reduced costs per share, resulting in net benefits to shareholders of each
Fund. The Board of Trustees of Developing Resources has concluded that the
Reorganization with Emerging Growth will allow Developing Resources shareholders
to become affiliated with a fund with a broader investment objective and greater
net assets. Moreover, the Board of Trustees of Developing Resources considered
that, in light of its small size, Developing Resources was not economically
viable for Eaton Vance to sponsor and manage, and the Reorganization was a
better alternative than liquidation.
THE BOARD OF TRUSTEES OF DEVELOPING RESOURCES BELIEVES THAT THE
PROPOSED REORGANIZATION IS IN THE BEST INTERESTS OF THE SHAREHOLDERS AND HAS
RECOMMENDED THAT SHAREHOLDERS OF DEVELOPING RESOURCES VOTE FOR THE
REORGANIZATION.
Summary of Principal Differences Between Developing Resources and
Emerging Growth. Shareholders should consider several differences in the
structure, investment objectives and policies, and management of Developing
Resources and Emerging Growth. Developing Resources, managed by William D. Burt
and Barclay Tittmann of Eaton Vance, is a non-diversified investment company
whose principal investment objective is capital appreciation and protection of
the purchasing power of the shareholder's capital. It seeks to achieve this
objective by investing in natural resources related investments and as such,
concentrates its assets on investments in these industries. Emerging Growth,
managed by Edward J. Smiley, Jr. of Eaton Vance, seeks long-term, after-tax
returns for its shareholders through investing in a diversified portfolio of
equity securities of emerging growth companies. Under normal circumstances, it
does not concentrate its investments in any industry. To minimize taxes on
realized capital gains, in managing investments, Emerging Growth will generally
avoid selling securities with large accumulated capital gains. Developing
Resources does not follow a tax-managed approach. In addition, Developing
Resources invests heavily in foreign securities and under normal circumstances
will hold securities of issuers in at least three countries, while Emerging
Growth may invest no more than 20% of assets in securities issued by foreign
companies. Finally, Developing Resources uses a master-feeder structure, meaning
that it attempts to achieve its investment objectives indirectly by investing
its assets in another open-end investment company having substantially the same
investment policies and restrictions, called Worldwide Developing Resources
Portfolio (the "Portfolio"). Emerging Growth, by contrast, does not employ a
master-feeder structure.
Advisory Fees and Expenses. Developing Resources Portfolio pays Boston
Management and Research ("BMR"), a wholly-owned subsidiary of Eaton Vance
Management ("Eaton Vance"), its investment adviser, an investment advisory fee
computed at an annual rate of .75% of its aggregate average net assets. At
October 15, 1998, the net assets of Developing Resources Portfolio were
approximately $9.5 million, and of Developing Resources was $6.9 million.
Emerging Growth pays Eaton Vance, its investment adviser, a monthly
advisory fee of 5/96 of 1% (equivalent to 0.625% annually) of average daily net
assets up to $500 million. For assets of $500 million or more, the annual fee is
reduced. At October 15, 1998, the net assets of Emerging Growth were $85.4
million.
The expense ratio of Developing Resources is substantially higher than
that of Emerging Growth. For the year ended August 31, 1998, the ratio of
expenses to net assets was approximately 2.11% and 3.20% per annum for Class A
and Class B of Developing Resources and approximately 1.0% and 1.91% per annum
for Class A and Class B of Emerging Growth. Thus, Developing Resources
shareholders will experience an immediate and substantial reduction in expenses
if the Reorganization is approved. The actual amount of reduction cannot be
determined until the closing, but Developing Resources expenses are likely to
increase whereas Emerging Growth's currently are not. See "Fund Expenses" below.
Distribution Arrangements. Shares of both Developing Resources and
Emerging Growth are sold on a continuous basis by EVD, as each Fund's
distributor. Class A shares of each Fund are sold at net asset value per share
plus a sales charge; Class B shares of each Fund are sold at net asset value
subject to a contingent deferred sales charge ("CDSC"). The sales charge
schedules are identical. In the Reorganization, Developing Resources
shareholders will receive shares of the corresponding class of Emerging Growth.
Class B shareholders will be given credit for their holding period in Developing
Resources in determining any applicable CDSC. Emerging Growth offers Class C
shares but these shares will not be affected by the Reorganization because
Developing Resources does not offer Class C shares.
Redemption Procedures. Both Funds offer similar redemption features
pursuant to which proceeds of the redemption are remitted by check after receipt
of proper documents including signature guaranties.
Tax Consequences. The Reorganization will result in the recognition of
capital gain or loss to Developing Resources shareholders depending upon their
original purchase price for their shares (tax basis) and the net asset value of
the relevant Class on the valuation date. It is anticipated most shareholders
will have capital loss (which may be short or long term) which can be used to
offset capital gains in other securities transactions. Shareholders should
consult their tax advisers. See "INFORMATION ABOUT THE REORGANIZATION - Federal
Income Tax Consequences."
FUND EXPENSES
SHAREHOLDER AND FUND EXPENSES
SHAREHOLDER TRANSACTION EXPENSES
Class A Class B
Shares Shares
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Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 5.75% None
Sales Charges Imposed on Reinvested Distributions None None
Fees to Exchange Shares None None
Maximum Contingent Deferred Sales Charge None 5.00%
ANNUAL FUND AND ALLOCATED PORTFOLIO OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS)
Investment Rule 12b-1
Adviser or Distribution Total
Management and/or Other Operating
Fees Service Fees Expenses Expenses**
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Developing Resources Fund
Class A shares 0.75% 0.03% 1.11% 1.89%
Class B shares 0.75 0.91 1.32 2.98
Tax-Managed Emerging Growth
Class A shares* 0.625% 0.000% 0.280% 0.905%
Class B shares* 0.625 0.750 0.280 1.655
* Payment of the Tax-Managed Emerging Growth Class A and Class B service fee will commence in the third quarter of
1998. See note below.
** The expense ratios of Developing Resources Fund reflect an allocation of expenses by the Distributor. Had such
actions not been taken, total operating expenses and other expenses would have been 2.11% and 1.33% for
Class A and 3.20% and 1.54% for Class B.
EXAMPLE
An investor would pay the following expenses and, in the case of Class A shares, maximum initial sales charge, or,
in the case of Class B shares, the applicable contingent deferred sales charge on a $1,000 investment, assuming (a)
5% annual return and (b) redemption at the end of each period (and, for Class B, no redemption):
1 Year 3 Years 5 Years 10 Years
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Developing Resources Fund
Class A shares $76 $113 $154 $266
Class B shares 80 132 177 330
Class B (no redemption) 30 92 157 330
Tax-Managed Emerging Growth
Class A shares $66 $ 85 N/A N/A
Class B shares 67 92 N/A N/A
Class B shares (no redemption) 17 52 N/A N/A
NOTES: The table and Examples summarize the aggregate expenses of each Class of shares of the Funds (including, in
the case of Developing Resources, the Portfolio) and are designed to help investors understand the costs and
expenses they will bear, directly or indirectly, by investing in a Fund. Information for Class B shares of
Developing Resources Fund is based on expenses for the most recent fiscal year except that service fees have been
estimated. Information for Class A shares of Developing Resources Fund is estimated based upon the most recent
fiscal year of its predecessor fund adjusted for the multiple-class structure. Information for each Class of
Tax-Managed Emerging Growth is estimated based on the most recent fiscal year because Tax-Managed Emerging Growth
has only recently been organized.
Each Fund offers multiple classes of shares. Class A shares are sold subject to
a sales charge imposed at the time of purchase. No sales charge is payable at
the time of purchase on investments in Class A shares of $1 million or more.
However, a contingent deferred sales charge ("CDSC") of 1% will be imposed on
such investments in the event of certain redemptions within 12 months of
purchase. Class B shares are sold subject to a declining CDSC (5% maximum) if
redeemed within six years of purchase. The CDSC does not apply in certain
circumstances.
THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAS OR FUTURE
EXPENSES, AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. Federal
regulations require the Examples to assume a 5% annual return, but actual annual
return will vary. Long-term holders of Class B shares may pay more than the
economic equivalent of the maximum front-end sales charge permitted by a rule of
the National Association of Securities Dealers, Inc.
For Class A shares sold by Authorized Firms and remaining outstanding for at
least one year, each Fund will pay service fees not exceeding .25% per annum of
the average daily net assets of such classes. Developing Resources and
Tax-Managed Emerging Growth expect to begin making service fee payments during
the quarter ending September 30, 1998 and December 31, 1998, respectively.
Therefore, expenses after year one will be higher. See "Distribution and Service
Plans."
PRINCIPAL RISK FACTORS
Emerging Growth invests in a broadly diversified selection of
public-traded equity securities of emerging growth companies that are believed
to have superior long-term earnings growth prospects. Under normal market
conditions, Emerging Growth will invest at least 65% of its total assets in such
securities. Emerging Growth may invest up to 35% of its assets in preferred
stocks, warrants, money market instruments and other securities and instruments
described in this document and in its Prospectus.
Emerging Growth's investments include investments in smaller companies
for which there is less publicly available information than larger, more
established companies. The securities of these companies are generally subject
to greater price fluctuations, limited liquidity, higher transaction costs and
higher investment risk. To minimize taxes on realized capital gains, Emerging
Growth maintains relatively low portfolio turnover. Thus, Eaton Vance will
generally avoid selling securities with large accumulated capital gains.
Although certain hedging strategies may be used in lieu of selling appreciated
securities, Emerging Growth's exposure to losses during stock market declines
may nonetheless become greater than that of other funds investing in similar
securities that do not follow a general policy of avoiding sales of
highly-appreciated securities.
Emerging Growth may invest up to 20% of assets in securities issued by
foreign companies. Investing in these securities involves considerations and
possible risks not typically associated with investing in securities issued by
U.S. companies. Investments in foreign securities could be seriously affected by
other factors not present in the United States, including expropriation,
confiscatory taxation, lack of uniform accounting and auditing standards, armed
conflict, and potential difficulties in enforcing contractual obligations. In
addition, foreign brokerage commissions, custody fees and other costs of
investing are generally higher than in the United States, and foreign securities
may be less liquid, more volatile and less subject to government supervision
than in the United States.
Emerging Growth invests up to 15% of its assets in securities that are
not freely tradable or which are subject to restrictions on sale under the
Securities Act of 1933. Such securities may be illiquid and may be difficult to
properly value.
Emerging Growth may also purchase or sell derivative instruments in the
U.S. and abroad to hedge against price declines and currency movements and to
enhance returns. Derivative transactions may be more advantageous in some
circumstances than transactions involving securities due to more favorable tax
treatment, lower transaction costs, or greater liquidity. However, the purchase
and sale of derivative instruments can expose Emerging Growth to a significant
risk of loss. Derivative instruments may be difficult to value, may be illiquid,
and may be subject to wide swings in valuation caused by changes in value of an
underlying security, index, instrument or currency. The built-in leveraging
inherent in many derivative instruments can also result in losses that
substantially exceed the initial amount paid or received.
Emerging Growth may seek to earn income by lending up to 33% of its
total assets in 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 fails
financially. However, the loans will only be made to organizations deemed
sufficiently creditworthy and when, in the judgment of Eaton Vance, the
consideration earned from such transactions justifies the attendant risk. To
date, Emerging Growth has not engaged in securities lending.
Developing Resources invests heavily in foreign securities, securities
of smaller companies, and engages in transactions with derivative instruments
and restricted securities. Thus, it is subject to the same risks as Emerging
Growth with respect to these transactions. Developing Resources also engages in
other investment practices that subject it to other risks. Developing Resources
concentrates its investments in the natural resources industries. As a result it
has greater exposure to economic, political or regulatory occurrences or other
developments affecting its investment sector. In addition, Developing Resources
frequently invests in metals and gold-related companies. Metal prices are highly
volatile and the securities of companies dealing with such metals are vulnerable
to these fluctuations. Developing Resources is also a "non-diversified"
investment company, meaning that it may invest its assets in a more limited
number of issuers than if it were a diversified company. This practice involves
an increased risk of loss. Developing Resources may borrow money to invest in
additional portfolio securities, a practice known as leverage. The use of
leverage increases the Portfolio's market exposure and risk. Moreover, the
interest Developing Resources must pay on borrowed money will reduce the amount
of any potential gains or increase any losses.
Developing Resources may enter into currency swaps for hedging and
non-hedging purposes. Currency swaps involve the exchange of rights to make or
receive payments in specified currencies. The use of currency swaps is a highly
specialized activity involving special investment techniques and risks. If the
Adviser is incorrect in its forecasts of market values and currency exchange
rates, Developing Resources' performance will be adversely affected.
Developing Resources may make natural resource related investments in
"direct placement securities" issued by a company directly to the Fund and
"venture capital companies," companies the securities of which have no public
market at the time of investment. These investments are considered speculative
in nature and are not readily marketable.
The current investment portfolios are different. It is anticipated most
or all of Developing Resources portfolio securities will be sold prior to the
Reorganization, and Developing Resources will bear all commission and
transaction costs.
REASONS FOR THE REORGANIZATION
The Reorganization has been considered by the Board of Trustees of
Developing Resources and the Board of Trustees of Emerging Growth. In reaching
the decision to recommend that the shareholders of Developing Resources vote to
approve the Reorganization, the Board of Trustees of each Fund, including the
Trustees who are not interested persons of Developing Resources, concluded that
the Reorganization would be in the best interests of that Fund's shareholders
and that the interests of existing shareholders would will not be diluted as a
consequence thereof. In making this determination, the Trustees considered a
number of factors, including the proposed terms of the Reorganization, and the
characteristics of Emerging Growth.
The Trustees considered that combining Developing Resources with
Emerging Growth could, over time, produce economies of scale, which may be
reflected in reduced costs per share, resulting in net benefits to the
shareholders of each Fund. For the year ended August 31, 1998, the ratio of
expenses to net assets for Class A and Class B shareholders of Developing
Resources will decline approximately 52.6% and 40.3%, respectively as
shareholders of Emerging Growth. This benefit is likely to increase because the
relative assets of Developing Resources is declining and many costs are fixed.
The Board of Trustees of Developing Resources has concluded that the
Reorganization with Emerging Growth will allow Developing Resources shareholders
to become affiliated with a fund with a broader investment objective and greater
net assets. Moreover, the Board of Trustees of Developing Resources considered
that, in light of its small size, Developing Resources may not be economically
viable for Eaton Vance to sponsor and manage, and the Reorganization was a
better alternative than liquidation.
THE BOARD OF TRUSTEES OF DEVELOPING RESOURCES BELIEVES THAT THE
PROPOSED REORGANIZATION IS IN THE BEST INTERESTS OF THE SHAREHOLDERS AND HAS
RECOMMENDED THAT SHAREHOLDERS OF DEVELOPING RESOURCES VOTE FOR THE
REORGANIZATION.
INFORMATION ABOUT THE REORGANIZATION
At a meeting held on October 19, 1998, the Board of Trustees of
Developing Resources and the Board of Trustees of Emerging Growth, respectively,
approved the Plan substantially in the form set forth as Exhibit A to this
Prospectus by each of the Trustees voting on the Plan.
Agreement and Plan of Reorganization. The Agreement and Plan of
Reorganization provides that, at the Closing, Emerging Growth will acquire all
of the assets of Developing Resources (subject to the assumption by Emerging
Growth of all of the liabilities of Developing Resources reflected on the
unaudited statement of assets and liabilities) in exchange for Emerging Growth
Shares. The value of Class A and/or Class B shares issued to Developing
Resources by Emerging Growth will be the same as the value of Class A and/or
Class B shares that Developing Resources has outstanding on the Closing Date.
The Emerging Growth shares received by Developing Resources will be distributed
to Developing Resources shareholders, and each Developing Resources shareholder
will receive shares of the corresponding class of Emerging Growth equal in value
to those of Developing Resources held by such shareholders.
Emerging Growth will assume all liabilities, expenses, costs, charges
and reserves of Developing Resources on the Closing Date. At or prior to the
Closing, Developing Resources shall declare a dividend or dividends which,
together with all previous such dividends, shall have the effect of distributing
to Developing Resources' shareholders all of Developing Resources' investment
company taxable income for the fund taxable period of Developing Resources and
all of its net capital gains realized (after reduction for any capital loss
carry-forward) in all taxable years ending at or prior to the Closing.
At or as soon as practicable after the Closing, Developing Resources
will liquidate and distribute pro rata to its shareholders of record as of the
Close of Trading on the New York Stock Exchange on the Closing Date the full and
fractional Emerging Growth Class A and/or Class B Shares equal in value to the
Developing Resources shares exchanged. Such liquidation and distribution will be
accomplished by the establishment of shareholder accounts on the share records
of Emerging Growth in the name of each such shareholder of Developing Resources,
representing the respective pro rata number of full and fractional Emerging
Growth Class A and/or Class B Shares due such shareholder. All of Emerging
Growth's future distributions attributable to the shares issued in the
Reorganization will be paid to shareholders in cash or invested in additional
shares of Emerging Growth at the price in effect as described in Emerging
Growth's prospectus on the respective payment dates in accordance with
instructions previously given by the shareholder to Developing Resources'
transfer agent.
The consummation of the Plan is subject to the conditions set forth
therein. Notwithstanding approval by shareholders of Developing Resources, the
Plan may be terminated at any time prior to the consummation of the
Reorganization without liability on the part of either party or its respective
officers, trustees or shareholders, by either party on written notice to the
other party if certain specified representations and warranties or conditions
have not been performed or do not exist on or before February 28, 1999. The Plan
may be amended by written agreement of Developing Resources and Emerging Growth
without approval of the shareholders of Developing Resources and either
Developing Resources or Emerging Growth may waive without shareholder approval
any default by the other or any failure to satisfy any of the conditions to its
obligations; provided, however, that following the Special Meeting, no such
amendment or waiver may have the effect of changing the provision for
determining the number of Emerging Growth Shares to be issued to Developing
Resources shareholders to the detriment of such shareholders without their
further approval.
Each of Developing Resources and Emerging Growth will bear its expenses
related to the Reorganization.
Each of the Board of Trustees of Developing Resources and Emerging
Growth has determined, with respect to its fund, that the interests of existing
shareholders of the fund will not be diluted as a result of the transactions
contemplated by the Reorganization and that participation in the Reorganization
is in the best interests of the fund's shareholders.
Description of Emerging Growth Shares. Full and fractional Class A
and/or Class B shares of Emerging Growth will be issued to Developing Resources
shareholders in accordance with the procedures under the Plan as described
above. Each share will be fully paid, non-assessable when issued and
transferable without restrictions and will have no preemptive or cumulative
voting rights and have only such conversion or exchange rights as the Board of
Trustees of Emerging Growth may grant in its discretion.
Federal Income Tax Consequences. The Reorganization will result in the
recognition of capital gain or loss to Developing Resources shareholders
depending upon their original purchase price for their shares (tax basis) and
the net asset value of the relevant Class on the valuation date. It is
anticipated most shareholders will have capital loss (which may be short or long
term) which can be used to affect capital gains in other securities
transactions. Shareholders of Developing Resources will, therefore, receive a
new tax basis in the shares received of Emerging Growth for calculation of
capital gain or loss upon their ultimate disposition.
Shareholders of Developing Resources should consult their tax advisers
regarding the effect, if any, of the proposed Reorganization in light of their
individual circumstances. Because the foregoing discussion relates only to the
federal income tax consequences of the Reorganization, shareholders of
Developing Resources should also consult their tax advisers as to state and
local tax consequences, if any, of the Reorganization.
Capitalization. The following table sets forth the capitalization of
Developing Resources and Emerging Growth as of September 30, 1998, and on a pro
forma basis as of that date giving effect to the proposed acquisition of assets
at net asset value.
Pro Forma
Combined After
Developing Resources Emerging Growth Reorganization
(Class A) (Class B) (Class A) (Class B) (Class A) (Class B)
--------- --------- --------- --------- --------- ---------
Net assets $393,752 $6,944,392 $24,133,390 $47,808,640 $24,527,142 $54,753,032
Net asset value per share $4.34 $7.14 $9.05 $8.99 $9.05 $8.99
Shares outstanding 90,632 973,265 2,666,018 5,315,039 2,709,527 6,087,496
Investment Performance. The average annual total return is determined
by multiplying a hypothetical initial purchase order of $1,000 by the average
annual compound rate of return (including capital appreciation/depreciation, and
dividends and distributions paid and reinvested) for the stated period and
annualizing the result. The calculation assumes that all dividends and
distributions are reinvested at net asset value on the reinvestment dates.
The table below indicates the total return (capital change plus
reinvestment of all distributions) on a hypothetical investment of $1,000 in
Emerging Growth and Developing Resources, respectively, covering the ten, five
and one year periods ending September 30, 1998.
VALUE OF A $l,000 INVESTMENT
Developing Resources Emerging Growth
Total Return* Total Return*
Class A Class B Class A Class B
Investment Average Average Average Average
Period Annual Annual Annual Annual
- ------ ------ ------ ------ ------
1 Year Ended 6/30/98 -56.07% -56.12% -10.04% -10.72%
Since Inception through 6/30/98** -43.27% 1.74% N/A N/A
- -------
* Calculated excluding a sales charge.
** Inception of Developing Resources Class A was April 4, 1997, and Class B was October 21, 1987; of Emerging
Growth Class A and Class B was September 25, 1997 and September 29, 1997, respectively.
Investment results will fluctuate over time, and prior performance
should not be considered as a representation of what an investment may earn or
what an investor's total return may be in any future period.
Management's Discussion of Fund Performance. Developing Resources'
total returns have been somewhat volatile compared to most mutual funds.
Emerging Growth was founded in 1997 and has a shorter record than Developing
Resources. During this relatively brief period, Emerging Growth has amassed a
larger pool of assets and has produced better returns. There can be no assurance
that Emerging Growth would continue to achieve better returns than mutual funds
concentrating in natural resource investments.
The performance of Developing Resources is described under the caption
"Management's Discussion" in the Annual Report of Developing Resources for the
year ended August 31, 1998, which has been sent to the shareholders of
Developing Resources.
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES
Developing Resources is an open-end, non-diversified management
investment company and Emerging Growth is an open-end, diversified management
investment company. Information about the investment objectives and policies of
Developing Resources and Emerging Growth is summarized below. More complete
information regarding the same is set forth in the Prospectus dated March 1,
1998 of Emerging Growth, enclosed herewith, in the Statement of Additional
Information also dated March 1, 1998 of Emerging Growth, and the Prospectus and
Statement of Additional Information each dated January 1, 1998 of Developing
Resources, each of which has been filed with the Securities and Exchange
Commission. Shareholders should consult such Prospectuses and Statements of
Additional Information, as supplemented, for a more thorough comparison.
Investment Objectives and Policies of Developing Resources. Developing
Resources seeks to provide capital appreciation and protection of the purchasing
power of the shareholder's capital. Developing Resources invests its assets in
Worldwide Developing Resources Portfolio (the "Portfolio"), which invests in
natural resources related investments. The Portfolio seeks to achieve its
investment objective by investing in domestic and foreign natural resource
related investments. Natural resource related investments include securities
issued by companies engaged in exploring for, developing, processing,
fabricating, producing, distributing, dealing in or owning natural resources,
companies engaged in the creation or development of technologies for the
production or use of natural resources, and companies engaged in the furnishing
of technology, equipment, supplies or services to the natural resource
investment sector. The Adviser to the Portfolio, BMR, seeks to identify
securities of companies in this investment sector which, in its judgment, are
undervalued relative to the value of their natural resource assets, revenues or
profits in light of current and anticipated economic conditions.
The Portfolio invests primarily in common stocks, but it may also hold
convertible bonds, convertible preferred stocks, warrants, preferred stocks and
debt securities. Under normal circumstances, the Portfolio maintains at least
65% of its total assets in natural resource related investments or in
asset-related securities. The Portfolio is a "non-diversified" investment
company and so may invest its assets in a more limited number of issuers than if
it were a diversified investment company. The Portfolio may also from time to
time invest to a limited extent in gold and silver bullion, strategic metals,
gold or silver coins, natural resource-related direct placement securities and
venture capital companies. During temporary defensive periods, such as during
abnormal market or economic conditions, or for liquidity purposes, the Portfolio
may invest in U.S. government securities and money market securities, including
repurchase agreements or hold a portion of its assets in cash or cash
equivalents.
The Portfolio invests heavily in foreign securities and under normal
market conditions holds securities of issuers in at least three countries. When
BMR anticipates significant economic or political instability, such as high
inflation or turmoil in the foreign country exchange markets, the Portfolio, in
seeking to protect the purchasing power of shareholders' capital, may invest a
majority of its assets in companies that explore for, extract, process or deal
in gold or in asset-related securities indexed to the value of some natural
resource such as gold bullion.
Investment Objective and Policies of Emerging Growth. Emerging Growth's
investment objective is to achieve long-term, after-tax returns for its
shareholders through investing in a broadly-diversified selection of
publicly-traded equity securities of emerging growth companies that are believed
to have superior long-term earnings growth prospects. "Emerging growth
companies" are companies that are expected to demonstrate earnings growth rates
and profit margins over the long term that are substantially in excess of the
average of all publicly-traded companies in the U.S. Emerging Growth will invest
no more than 20% of its total assets in foreign securities. These companies will
typically have annual revenues of between $50 million and $1 billion at the time
of acquisition, but the Fund may invest in larger and smaller companies
identified as having characteristics of emerging growth. Under normal market
conditions, Emerging Growth will invest at least 65% of its total assets in
equity securities of emerging growth companies.
Emerging Growth may invest up to 35% of its assets in preferred stocks,
warrants, money market instruments and other securities and instruments
described in the Prospectus. For temporary defensive purposes, such as during
abnormal market or economic conditions, Emerging Growth may also invest without
limitation in various money market instruments and high grade debt obligations.
Assets will be managed for long-term, after-tax returns. Because taxes
on realized capital gains are minimized in part by maintaining relatively low
portfolio turnover, in managing investments, Emerging Growth will generally
avoid selling securities with large accumulated capital gains. The realization
of short-term and mid-term capital gains generally will be avoided. When a
decision is made to sell a particular appreciated security, share lots selected
for sale will be those with holding periods sufficient to qualify for long-term
capital gains treatment and among those, the share lots with the highest cost
basis.
Investment Restrictions. The investment restrictions of Developing
Resources differ in certain respects from those of Emerging Growth. Set forth
below is a summary of the differences between the existing investment
restrictions of Developing Resources and Emerging Growth. The summary is
qualified in its entirety by reference, and made subject to the complete text of
the investment restrictions of each fund, which are set forth in the Statement
of Additional Information of each fund. Certain of the investment restrictions
of each fund which are fundamental may not be changed without the approval of a
majority of such fund's outstanding voting securities (as defined in the 1940
Act). Investment restrictions which are not fundamental may be changed by the
fund's trustees.
As a matter of fundamental policy, Emerging Growth may not concentrate
its investments in any particular industry, but, if deemed appropriate for the
Fund's objective, up to 25% of the value of the assets may be invested in any
one industry. To date, the Emerging Growth Fund has not concentrated its assets
in any industry. In contrast, Developing Growth has a fundamental policy that
during normal conditions the Fund will invest at least 25% of its total assets
in the natural resources group of industries, except when such percentage is
reduced as a result of a decrease in the value of assets so invested or during
such times when management believes that the assets so invested should be
redeployed for defensive purposes or during such times when management believes
that the assets so invested should be redeployed in obligations or other
securities, the principal amount, redemption terms or conversion terms of which
are related to the market price of some natural resource asset such as gold
bullion; the Fund may invest more than 25% of its total assets in any industry
in the natural resource group of industries; and the Fund may invest up to 25%
of its total assets, taken at market value at the time of each investment, in
any other industry.
In addition, unlike Emerging Growth Fund, as a matter of nonfundamental
policy Developing Resources will not: (1) Purchases securities of any issuer
(other than securities or obligations issued or guaranteed by the U.S.
government or any of its agencies or instrumentalities) if such purchase, at the
time thereof, would cause more 10% of the total outstanding voting securities of
such issuer to be held by the Fund; this restriction will not apply (i) during
periods when the management of the Fund anticipates significant economic,
political or financial instability or (ii) to investments in certificates of
deposit, bankers' acceptances or time deposits of banking and thrift
institutions; or (2) Purchase an option on a security if, after such
transaction, more than 5% of its net assets, as measured by the aggregate of all
premiums paid for such options held by it, would be so invested.
The Portfolio has adopted substantially the same fundamental and
nonfundamental investment restrictions as the foregoing restrictions adopted by
Developing Resources.
Use of Master-Feeder Structure by Developing Resources. Developing
Resources attempts to achieve its investment objectives by investing
substantially all of its assets in an open-end management investment company
having substantially the same investment policies and restrictions named
Developing Resources Portfolio (the "Portfolio"). Use of this structure allows
for the potential to achieve economies of scale through the use of additional
feeder funds. One such feeder fund for the Portfolio exists: it has
approximately $2 million in assets and will be liquidated by December 31, 1998.
Emerging Growth does not employ a master-feeder structure but has the authority
to do so if advantageous in the future.
Portfolio Turnover. Portfolio turnover rate of Emerging Growth for the
period from the start of business, September 17, 1997, through April 30, 1998
was 45%. That Fund commenced operations in September 1997. In comparison,
portfolio turnover rates of Developing Resources for the fiscal years ended
August 31, 1998, 1997 and 1996 were 69%, 63% and 86%, respectively.
Investment Advisers. Eaton Vance serves as investment adviser to
Emerging Growth. Boston Management and Research, a wholly-owned subsidiary of
Eaton Vance, serves as investment adviser to the Portfolio in which Developing
Resources invests.
Portfolio Managers. William D. Burt and Barclay Tittmann are the
co-portfolio managers of the Developing Resources Portfolio since inception. Mr.
Burt joined Eaton Vance and BMR as a Vice President in November, 1994. Prior to
joining Eaton Vance, he was a Vice President of The Boston Company (1990 -
1994). Mr. Tittmann joined Eaton Vance and BMR as a Vice President in October
1993. Prior to joining Eaton Vance, he was a Vice President, portfolio manager
and analyst with Invesco Management and Research (formerly Gardner and Preston
Moss) (1970 - 1993).
Edward E. Smiley, Jr. has acted as the portfolio manager of Emerging
Growth since it commenced operations. He has been a Vice President of Eaton
Vance and BMR since 1996. Prior to joining Eaton Vance, he was a Senior Product
Manager, Equity Management for TradeStreet Investment Associates, Inc., a
wholly-owned subsidiary of NationsBank.
COMPARATIVE INFORMATION ON DISTRIBUTION ARRANGEMENTS
EVD serves as distributor (principal underwriter) for Developing
Resources and Emerging Growth, pursuant to Distribution Agreements. For its
services as underwriter, EVD generally receives fees for sales of shares. With
respect to Class A shares, these fees are paid by investors at the time they
purchase shares. Class A shares are sold on a continuous basis at net asset
value plus a sales charge as set forth in the Prospectus. The applicable sales
charge depends upon a number of factors and is subject to a number of waivers.
No sales charge will be imposed with respect to the Emerging Growth Shares
received by the Developing Resources shareholders pursuant to the
Reorganization. Class B shares are sold at net asset value but are subject to a
declining CDSC (5% maximum) if redeemed within six years of purchase. Emerging
Growth also offers Class C shares, which are sold at net asset value subject to
a 1% CDSC if redeemed within one year of purchase. Because Developing Resources
does not offer Class C shares, no Class C shares of Emerging Growth will be
issued in connection with the Reorganization.
Developing Resources and Emerging Growth are authorized under a Service
Plan (the "Service Plan") for the Class A Shares pursuant to Rule 12b-1 under
the 1940 Act to make payments for personal services and/or the maintenance of
shareholder accounts. The Plan provides that each Fund may pay service fees to
EVD, financial service firms ("Authorized Firms") and other persons in amounts
not exceeding .25% of the Fund's average daily net assets for any fiscal year.
The Trustees have initially implemented the Service Plan by authorizing the
Funds to make quarterly service fee payments to EVD and Authorized Firms in
amounts not expected to exceed .25% of the Fund's average daily net assets for
any fiscal year based on the value of each Fund's shares sold by such persons
and remaining outstanding for at least twelve months.
Each Fund has also adopted a Distribution Plan pursuant to Rule 12b-1
under the 1940 Act for its Class B shares. Each Plan is designed to permit an
investor to purchase shares through an Authorized Firm without incurring an
initial sales charge and at the same time permit the Principal Underwriter to
compensate Authorized Firms in connection therewith. Under such Plans, Class B
pays the Principal Underwriter a fee, accrued daily and paid monthly, at an
annual rate not exceeding .75% of its average daily net assets to finance the
distribution of its shares. Such fees compensate the Principal Underwriter for
sales commissions paid by it to Authorized Firms on the sale of Class B shares
and for interest expenses. Under each Class B Plan, the Principal Underwriter
uses its own funds to pay sales commissions (except on exchange transactions and
reinvestments) to Authorized Firms at the time of sale equal to 4% of the
purchase price of the Class B shares sold by such Firms. CDSCs paid to the
Principal Underwriter will be used to reduce amounts owed to it. Because
payments to the Principal Underwriter under the Plan are limited, uncovered
distribution charges (sales commissions due the Principal Underwriter plus
interest, less the above fees and CDSCs received by it) may exist indefinitely.
Through August 31, 1998, the outstanding uncovered distribution charges
calculated under the Developing Resources and Emerging Growth Class B Plans
amounted to approximately $680,000 and $2.4 million, respectively. Part of the
amounts accrued by Developing Resources up to the Closing will become a
liability of Emerging Growth if the Reorganization is consummated.
The Class B Plan also authorizes each Class B to make payments of
service fees to the Principal Underwriter, Authorized Firms and other persons in
amounts not exceeding .25% of its average daily net assets for personal
services, and/or the maintenance of shareholder accounts. Under the Class B
Plan, this fee is paid quarterly in arrears based on the value of Class B shares
sold by such persons and remaining outstanding for at least twelve months.
SHAREHOLDER SERVICES
Shareholder Services. There are no differences in the shareholder
services offered by Developing Resources and Emerging Growth.
COMPARATIVE INFORMATION ON SHAREHOLDER RIGHTS
General. Developing Resources is a separate series of Eaton Vance
Growth Trust ("EVGT"), a Massachusetts business trust, governed by a Declaration
of Trust dated May 25, 1989, as amended (the "Developing Resources Declaration
of Trust") and applicable Massachusetts law. Emerging Growth is a separate
series of Eaton Vance Mutual Funds Trust ("EVMFT"), a Massachusetts business
trust, governed under a Declaration of Trust dated May 7, 1984, as amended (the
"Emerging Growth Declaration of Trust"). The two Declarations of Trust are
substantially the same.
Shareholder Liability. Under Massachusetts law, shareholders of a
Massachusetts business trust could, under certain circumstances, be held
personally liable for the obligations of the trust, including its other series.
However, the Developing Resources and Emerging Growth Declaration of Trusts
disclaim shareholder liability for acts or obligations of the trust and other
series of the trust and requires that notice of such disclaimer be given in each
agreement, obligation, or instrument entered into or executed by the trust or
the trustees. Indemnification out of the trust property for all losses and
expenses of any shareholder held personally liable by virtue of his status as
such for the obligations of the trust is provided for in the Declaration of
Trusts and By-laws. Thus, the risk of a shareholder incurring financial loss on
account of shareholder liability is considered by Developing Resources and
Emerging Growth to be remote since it is limited to circumstances in which the
respective disclaimers are inoperative and the series would be unable to meeting
their respective obligations.
Shareholders should refer directly to the provisions of the
Declarations of Trusts and By-laws for a more thorough comparison. Copies may be
obtained from each Fund upon written request at its principal office.
INFORMATION ABOUT THE FUNDS
Emerging Growth. EVMFT is a Massachusetts business trust established in
1984. On July 10, 1995, the Trust changed its name from Eaton Vance Government
Obligations Trust to EVMFT.
Information about Emerging Growth is included in its current Prospectus
dated March 1, 1998, a copy of which is included herewith and incorporated by
reference herein. Additional information about Emerging Growth is included in
the Statement of Additional Information dated the date hereof. This Statement of
Additional Information has been filed with the Securities and Exchange
Commission and is incorporated by reference herein. Copies of this Statement may
be obtained without charge by writing to Eaton Vance Distributors, Inc., 24
Federal Street, Boston, MA 02110. Emerging Growth is currently subject to the
informational requirements of the Securities Exchange Act of 1934, an amended
(the "1934 Act"), and in accordance therewith files proxy material, reports and
other information with the Securities and Exchange Commission. These reports can
be inspected and copied at the Public Reference Facilities maintained by the
Securities and Exchange Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, DC 20549, as well as at the following regional offices: Northeast
Regional Office, 7 World Trade Center, Suite 1300 New York, NY 10048; and
Midwest Regional Office, Citicorp Center, 500 W. Madison Street, Suite 1400,
Chicago, IL 60661-2511. Copies of such material can also be obtained from the
Public Reference Branch, Office of Consumer Affairs and Information Services,
Securities and Exchange Commission, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington DC 20549 at prescribed rates.
Developing Resources. EVGT is a Massachusetts business trust and a
registered open-end, management investment company established in 1989 which
continuously offers and redeems its shares. The predecessor of EVGT was Eaton
Vance Growth Fund, Inc., a Massachusetts corporation.
Information concerning the operations and management of Developing
Resources is incorporated herein by reference from its current Prospectus and
Statement of Additional Information, each dated January 1, 1998, copies of which
may be obtained without charge by writing Developing Resources at 24 Federal
Street, Boston, MA 02110 or by calling (800) 225-6265. Developing Resources is
currently subject to the informational requirements of 1934 Act, and in
accordance therewith files proxy materials, reports, and other information.
Reports and other information filed by Developing Resources can be inspected and
copied at the Public Reference Facilities maintained by the Securities and
Exchange Commission at the addresses set forth above, and copies of such
material can be obtained from the Public Reference Branch, Office of Consumer
Affairs and Information Services, Securities and Exchange Commission,
Washington, DC 20549 at prescribed rates.
Developing Resources and Emerging Growth have six common trustees and
five common officers.
Eaton Vance. Eaton Vance, its affiliates and predecessor companies have
been managing assets of individuals and institutions since 1924 and of
investment companies since 1931. As of September 30, 1998, Eaton Vance managed
assets of over $27 billion. Eaton Vance is a wholly-owned subsidiary of Eaton
Vance Corp., a holding company with publicly traded stock. Eaton Vance Corp.,
through its subsidiaries and affiliates, engages in investment management,
administration and marketing activities.
VOTING INFORMATION
Proxies from the shareholders of Developing Resources are being
solicited by its Board of Trustees for the Special Meeting of Shareholders and
any adjournments thereof (the "Special Meeting"). The Special Meeting is
scheduled to be held at the offices of Developing Resources, 24 Federal Street,
Boston, Massachusetts on December 18, 1998 at 10:00 a.m. At the Special Meeting,
shareholders of the Developing Resources will be asked to consider and vote upon
the Plan. The approval of the Reorganization by shareholders of Emerging Growth
is not required under its Declaration of Trust or By-laws or under Massachusetts
law, and accordingly, shareholders of Emerging Growth will not be voting in
connection with the Reorganization.
Any person giving a proxy may revoke it at any time prior to its use. A
shareholder of record may revoke a proxy at any time before it has been
exercised by filing a written revocation with the Secretary of Developing
Resources at the address of Developing Resources set forth above; by filing a
duly executed proxy bearing a later date; or by appearing in person, notifying
the Secretary and voting by ballot at the Special Meeting. A written proxy may
be delivered to the Fund or its transfer agent prior to the meeting by facsimile
machine, graphic communication equipment or similar electronic equipment. Any
shareholder of record as of the record date attending the Special Meeting may
vote in person whether or not a proxy has been previously given, but the
presence (without further action) of a shareholder at the Special Meeting will
not constitute revocation of a previously given proxy. The enclosed form of
proxy, if properly executed and received by the Board of Trustees in time for
voting and not so revoked, will be voted in accordance with the instructions
noted thereon. If no instructions are given, the proxy will be voted FOR
approval of the Agreement and Plan of Reorganization, and, at the discretion of
the proxy holders, on any other matters that may properly come before the
Special Meeting.
The affirmative vote of the holders of a majority of the outstanding
shares of Developing Resources (as defined in the 1940 Act) is required to
approve the Plan. Such "majority" vote is defined in the 1940 Act as the vote of
the holders of the lesser of (a) 67% or more of the shares present or
represented by proxy at the Special Meeting, if the holders of more than 50% of
the outstanding shares are present or represented by proxy, or (b) 50% of the
outstanding shares of Developing Resources. Class A and Class B shareholders
will vote together as a class. Approval of the Agreement and Plan of
Reorganization by the shareholders of Developing Resources is a condition of the
consummation of the Reorganization.
For purposes of determining the presence of a quorum for transacting
business at the Special Meeting and for determining whether sufficient votes
have been received for approval of the proposal to be acted upon at the Special
Meeting, abstentions and broker "non-votes" (that is, proxies from brokers or
nominees indicating that such persons have not received instructions from the
beneficial owner or other persons entitled to vote shares on a particular matter
with respect to which the brokers or nominees do not have discretionary power)
will be treated as shares that are present at the Special Meeting and entitled
to vote on the matter, but which have not been voted. For this reason,
abstentions and broker non-votes will assist Developing Resources in obtaining a
quorum; both have the practical effect of a "no" vote for purposes of obtaining
the requisite vote for approval of the proposal to be acted upon at the Special
Meeting.
If the Reorganization is consummated, legal fees and the costs of
soliciting proxies (comprised of printing and postage expenses) estimated at
$15,000 will be considered as part of the total expenses of the Reorganization
attributable to Developing Resources. The Board of Trustees of Developing
Resources expects to make this solicitation primarily by mail. Additional
solicitations may be made, without remuneration, personally or by telephone by
officers or employees of Eaton Vance or its affiliates.
Shareholders of Developing Resources of record at the close of business
on November 12, 1998 (the "record date") will be entitled to vote at the Special
Meeting. The holders of a majority of the shares of Developing Resources
outstanding at the close of business on the record date present in person or
represented by proxy will constitute a quorum for the meeting; however, as noted
above, the affirmative vote of a majority of the shares of the Fund (as defined
in the 1940 Act) is required to approve the Reorganization. In the event a
quorum is not present at the Special Meeting or in the event a quorum is present
at the Special Meeting but sufficient votes to approve the Agreement and Plan of
Reorganization are not received, the persons named as proxies may propose one or
more adjournments of the Special Meeting to permit further solicitation of
proxies, provided they determine such an adjournment and additional solicitation
is reasonable and in the interest of shareholders based on a consideration of
all relevant factors, including the percentage of votes then cast, the
percentage of negative votes then cast, the nature of the proposed solicitation
activities and the nature of the reasons for such further solicitation.
Shareholders are entitled to the number of votes equal to the number of
shares of Developing Resources held by such shareholder. As of November 12,
1998, there were ___ shareholders of record and ___________ issued and
outstanding shares of beneficial interest.
As of the record date, the Trustees and officers of Developing
Resources as a group owned less than one percent of the outstanding shares of
Emerging Growth, and the Trustees and officers of Emerging Growth as a group
owned less than one percent of the outstanding shares of Developing Resources or
Emerging Growth.
THE TRUSTEES OF THE TRUST, INCLUDING THE INDEPENDENT TRUSTEES, RECOMMEND
APPROVAL OF THE PLAN OF REORGANIZATION.
DISSENTERS RIGHTS
Neither the Declaration of Trust nor Massachusetts law grants the
shareholders of Developing Resources any rights in the nature of dissenters
rights of appraisal with respect to any action upon which such shareholders may
be entitled to vote; however, the normal right of mutual fund shareholders to
redeem their shares is not affected by the proposed Reorganization.
EMERGING GROWTH FINANCIAL HIGHLIGHTS
The financial highlights tables are intended to help you understand a
Fund's financial performance. Certain information in the tables reflects the
financial results for a single Fund share. The total returns in the table
represents the rate an investor would have earned (or lost) on an investment in
the Fund (assuming reinvestment of all distributions and not taking into account
a sales charge). The Fund began offering Class A shares on September 25, 1997
and Class B shares on September 29, 1997.
SIX MONTHS ENDED
APRIL 30, 1998 PERIOD ENDED
(UNAUDITED) OCTOBER 31, 1997
CLASS A CLASS B CLASS A* CLASS B**
- --------------------------------------------------------------------------------------------------------------------
Net asset value - Beginning of Period $ 9.740 $ 9.740 $ 10.000 $ 10.000
- --------------------------------------------------------------------------------------------------------------------
Income from operations
- --------------------------------------------------------------------------------------------------------------------
Net investment income (loss) $ (0.024) $ (0.043) $ 0.008 $ 0.005
Net realized and unrealized gain (loss on 1.464 1.453 (0.268) (0.265)
investments)
- --------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) FROM OPERATIONS $ 1.440 $ 1.410 $ (0.260) $ (0.260)
- --------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE - END OF PERIOD $ 11.180 $ 11.150 $ 9.740 $ 9.740
- --------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (1) 14.78% 14.48% (2.60)% (2.60)%
- --------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- --------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000's omitted) $20,901 $40,501 $3,925 $8,613
Ratio of expenses to average daily net assets 1.26%+ 1.99%+ 0.63%+ 1.37%+
Ratio of net investment income (loss) to average
daily net assets (0.61)%+ (1.34)%+ 1.83%+ 1.13%+
Portfolio Turnover 38.00% 38.00% 7.00% 7.00%
- --------------------------------------------------------------------------------------------------------------------
AVERAGE COMMISSION RATE (PER SHARE) (2) $0.0586 $0.0586 $0.0600 $0.0600
- --------------------------------------------------------------------------------------------------------------------
+ Annualized.
* For the period from the start of business, September 25, 1997, to October 31, 1997.
** For the period from the commencement of offerings of Class B shares, September 29, 1997, to October
31, 1997.
(1) Total return is calculated assuming a purchase at the net asset value on the first day and a sale at the net
asset value on the last day of each period reported. Dividends and distributions, if any, are assumed to be
reinvested at the net asset value on the ex-date. Total return is not computed on an annualized basis.
(2) Average commission rate paid is computed by dividing the total dollar amount of commissions paid during the
fiscal year by the total number of shares purchased and sold during the fiscal year for which commissions were
charged.
DEVELOPING RESOURCES FINANCIAL HIGHLIGHTS
The financial highlights tables are intended to help you understand a
Fund's financial performance for the past five years. Certain information in the
tables reflects the financial results for a single Fund share. The total returns
in the table represents the rate an investor would have earned (or lost) on an
investment in the Fund (assuming reinvestment of all distributions and not
taking into account a sales charge). This information for the fiscal years ended
August 31st and September 30th has been audited by Deloitte & Touche, L.L.P.,
independent accountants. The report of such firm and the Fund's financial
statements are included in the Fund's annual report, which is available on
request. The Fund began offering two Classes of shares on September 1, 1997.
Year Ended
August 31, September 30,
1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------
Class A Class B Class B Class B Class B Class B
- ------------------------------------------------------------------------------------------------------------------------
Net asset value -
Beginning of period $ 9.430 $ 15.570 $ 21.580 $ 16.420 $ 14.890 $ 13.240
- ------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- ------------------------------------------------------------------------------------------------------------------------
Net investment loss $ (0.064) $ (0.415) $ (0.248) $ (0.261) $ (0.100)++ $ (0.050)
Net realized and
unrealized gain (loss)
on investments (5.696) (9.125) (2.427) 6.371 1.630++ 2.650
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
OPERATIONS $ (5.760) $ (9.540) $ (2.675) $ 6.110 $ 1.530 $ 2.600
- ------------------------------------------------------------------------------------------------------------------------
Less distributions:
- ------------------------------------------------------------------------------------------------------------------------
In excess of net
investment loss $ --- $ --- $ --- $ --- $ --- $ (0.020)
From net realized gain
on investments --- --- (3.335) (0.950) --- ---
In excess of net realized
gain on investments --- --- --- --- --- (0.930)
- ------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS $ --- $ --- $ (3.335) $ (0.950) $ --- $ (0.950)
- ------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE -
END OF PERIOD $ 3.670 $ 6.030 $ 15.570 $ 21.580 $ 16.420 $ 14.890
- ------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (1) (61.08%) (61.27%) (14.49)% 39.69% 10.28% 20.47%
- ------------------------------------------------------------------------------------------------------------------------
Ratios/SupplementalData+
- ------------------------------------------------------------------------------------------------------------------------
Net assets, end of period
(000 omitted) $ 338 $5,935 $22,664 $20,129 $15,259 $13,055
Ratio of net expenses to
average daily net
assets (2)(4) 1.89% 2.98% 2.44% 2.49% 2.43%+ 2.64%
Ratio of net expenses to
average daily net assets
after custodian fee
reduction 1.89% 2.98% 2.40% 2.47% --- ---
(4)
Ratio of net investment
loss to average daily net
assets (1.70%) (2.76%) (1.92)% (1.60)% (0.74)%+ (0.96)%
Portfolio Turnover(3) --- --- --- 86% 49% 17%
- ------------------------------------------------------------------------------------------------------------------------
+ The operating expenses of the Fund and the Portfolio may reflect a reduction of the investment adviser fee, an
allocation of expenses to the Distributor, or both. Had such actions not been taken, the ratios and net
investment loss per share would have been as follows:
Ratios (As a percentage of average daily net assets):
Expenses (4) 2.11% 3.20% --- --- --- ---
Net investment loss (4) (1.93)% (2.99)% --- --- --- ---
Net investment loss per share $(0.073) $(0.449) --- --- --- ---
- --------------------------- --------------- -------------- --------------- -------------- --------------- --------------
+ Annualized.
++ Computed using average shares outstanding throughout the period.
* For the eleven months ended August 31, 1995.
(1) Total return is calculated assuming a purchase at the net asset value on the first day and a sale at the net
asset value on the last day of each period reported. Dividends and distributions, if any, are assumed to be
reinvested at the net asset value on the ex-dividend date. Total return is not computed on an annualized basis.
(2) The expense ratios for the year ended August 31, 1996 and periods thereafter have been adjusted to reflect a
change in reporting requirements. The new reporting guidelines require each Fund, as well as its corresponding
Portfolio, to increase its expense ratio by the effect of any expense offset arrangements with its service
providers. The expense ratios for each of the periods ended on or before August 31, 1995 have not been adjusted
to reflect this change.
(3) Portfolio Turnover represents the rate of portfolio activity for the period while the Fund was making
investments directly in securities. The Portfolio Turnover for the period since the Fund transferred
substantially all of its assets to the Portfolio is shown in the Portfolio's financial statements which are
included elsewhere in this report.
(4) Includes the Fund's share of its corresponding Portfolio's allocated expenses.
EXPERTS
The statement of assets and liabilities, including the statement of
investment securities, of Emerging Growth as of October 31, 1997, the related
statement of operations for the year then ended, the related statement of
changes in net assets for the year then ended and the financial highlights
included in its Statement of Additional Information have been incorporated
herein in reliance on the report of Deloitte & Touche LLP, independent public
accountants, given on the authority of that firm as experts in accounting and
auditing.
OTHER MATTERS
The Boards of Trustees of Developing Resources and Emerging Growth do
not know of any other matters to be considered at the Special Meeting other than
approval of the Plan. If any other matters are properly presented to the Special
Meeting, it is the intention of proxy holders to vote such proxies on such
matters in accordance with their judgment.
Exhibit A
AGREEMENT
AND
PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is made as of
this 19th day of October, 1998, by and among Eaton Vance Growth Trust, a
Massachusetts business trust ("Growth Trust") on behalf of its series Eaton
Vance Worldwide Developing Resources Fund ("Developing Resources") and Eaton
Vance Mutual Funds Trust, also a Massachusetts business trust ("Mutual Funds
Trust") on behalf of its series Eaton Vance Tax-Managed Emerging Developing
Resources ("Emerging Growth").
WITNESSETH
WHEREAS, Mutual Funds Trust is registered under the Investment Company
Act of 1940 (the "1940 Act") as an open-end management investment company
authorized to issue an unlimited number of shares of beneficial interest without
par value in one or more series (such as Emerging Growth), and the Trustees of
Mutual Funds Trust have divided the shares of Emerging Growth into multiple
classes, including Class A and Class B shares ("Emerging Growth Shares");
WHEREAS, Growth Trust is registered under the 1940 Act as an open-end
management investment company authorized to issue an unlimited number of shares
of beneficial interest without par value in one or more series (such as
Developing Resources), and the Trustees of Growth Trust divided the shares of
Developing Resources into multiple classes, including Class A and Class B shares
("Developing Resources Shares");
WHEREAS, Developing Resources currently invests all of its assets in
Worldwide Developing Resources Portfolio (the "Portfolio");
WHEREAS, Boston Management and Research ("BMR"), a wholly owned
subsidiary of Eaton Vance Management ("Eaton Vance"), serves as investment
adviser to Developing Resources and Eaton Vance serves as investment adviser to
Emerging Growth; and
WHEREAS, Growth Trust, on behalf of Developing Resources, desires to
provide for the reorganization of Developing Resources through the acquisition
by Emerging Growth of substantially all of the assets of Developing Resources in
exchange for Emerging Growth Shares in the manner set forth herein;
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties hereto agree as follows:
1. DEFINITIONS
1.1 The term "Agreement" shall mean this Agreement and Plan of
Reorganization among Growth Trust on behalf of Developing
Resources and Mutual Funds Trust on behalf of Emerging Growth.
1.2 The term "Assumed Liabilities" shall mean all liabilities,
expenses, costs, charges and receivables of Developing
Resources as of the Close of Trading on the New York Stock
Exchange on the Valuation Date.
1.3 The term "Business Day" shall mean any day that is not a
Saturday or Sunday and that the New York Stock Exchange is
open.
1.4 The term "Close of Trading on the NYSE" shall mean the close
of regular trading, which is usually 4:00 p.m. Eastern time.
1.5 The term "Closing" shall mean the closing of the transaction
contemplated by this Agreement.
1.6 The term "Closing Date" shall mean the first Monday following
receipt of all necessary regulatory approvals and the final
adjournment of the meeting of Developing Resources
shareholders at which this Agreement is considered, or such
other date as may be agreed by the parties on which the
Closing is to take place.
1.7 The term "Commission" shall mean the Securities and Exchange
Commission.
1.8 The term "Custodian" shall mean Investors Bank & Trust
Company.
1.9 The term "Delivery Date" shall mean the date contemplated by
Section 3.3 of this Agreement.
1.10 The term "Developing Resources" shall mean the Developing
Resources series of Growth Trust.
1.11 The term "Developing Resources Shares" shall mean the voting
shares representing interests in Developing Resources at the
time of Closing.
1.12 The term "Emerging Growth" shall mean the Eaton Vance
Tax-Managed Emerging Growth Fund, a series of Eaton Vance
Mutual Funds Trust, a Massachusetts business trust.
1.13 The term "Emerging Growth Shares" shall mean the voting shares
representing interests in Emerging Growth to be issued at the
Closing.
1.14 The term "Growth Trust" shall mean Eaton Vance Growth Trust, a
Massachusetts business trust.
1.15 The term "Growth Trust N-1A" shall mean the registration
statement, as amended, on Form N-1A of Growth Trust with
respect to Emerging Growth in effect on the date hereof or on
the Closing Date, as the context may require.
1.16 The term "Mutual Funds Trust N-14" shall mean Mutual Funds
Trust's registration statement on Form N-14, as may be
amended, that describes the transactions contemplated by this
Agreement and the Emerging Growth Shares.
1.17 The term "Mutual Funds Trust N-1A" shall mean the registration
statement, as amended, on Form N-1A of Mutual Funds Trust with
respect to Emerging Growth in effect on the date hereof or on
the Closing Date, as the context may require.
1.18 The term "1933 Act" shall mean the Securities Act of 1933, as
amended.
1.19 The term "1934 Act" shall mean the Securities Exchange Act of
1934, as amended.
1.20 The term "1940 Act" shall mean the Investment Company Act of
1940, as amended.
1.21 The term "NYSE" shall mean the New York Stock Exchange.
1.22 The term "Proxy Statement" shall mean the combined prospectus
and proxy statement furnished to the Developing Resources
shareholders in connection with this transaction.
1.23 The term "Securities List" shall mean the list of those
securities (and other assets) owned by Growth Trust, on behalf
of Developing Resources, on the Delivery Date.
1.24 The term "Valuation Date" shall mean the Business Day
preceding the Closing Date.
2. TRANSFER AND EXCHANGE OF ASSETS
2.1 Reorganization of Developing Resources. At the Closing, Growth
Trust shall transfer all of the assets of Developing Resources
received from the Portfolio, and assign all Assumed
Liabilities to Emerging Growth, and Emerging Growth shall
acquire such assets and shall assume such Assumed Liabilities
upon delivery by Emerging Growth to Growth Trust on the
Closing Date of Class A and Class B Emerging Growth Shares
(including, if applicable, fractional shares) having an
aggregate net asset value equal to the value of the assets so
transferred, assigned and delivered, less the Assumed
Liabilities, all determined and adjusted as provided in
Section 2.2
2.2 Computation of Net Asset Value. The net asset value per share
of the Emerging Growth Shares and the net value of the assets
of Developing Resources subject to this Agreement shall, in
each case, be determined as of the Close of Trading on the
NYSE on the Valuation Date, after the declaration and payment
of any dividend on that date. The net asset value of the
Emerging Growth Shares shall be computed in the manner set
forth in the Mutual Funds Trust Form N-1A.
In determining the value of the securities
transferred by Developing Resources to Emerging Growth, each
security shall be priced in accordance with the policies and
procedures described in the Mutual Funds Trust N-1A. All such
computations shall be subject to review by Deloitte & Touche
LLP, Mutual Funds Trust auditors. In the event Mutual Funds
Trust's valuation procedures would result in an adjustment to
the book value of an illiquid security held by Developing
Resources, then the respective auditors of Mutual Funds Trust
and Developing Resources shall consult and resolve such
discrepancy.
3. CLOSING DATE, VALUATION DATE AND DELIVERY
3.1 Closing Date. The Closing shall be at the offices of Eaton
Vance, 24 Federal Street, Boston, MA 02110 immediately prior
to the opening of Eaton Vance's business on the Closing Date.
All acts taking place at Closing shall be deemed to take place
simultaneously as of 9:00 a.m. Eastern time on the Closing
Date unless otherwise agreed in writing by the parties.
3.2 Valuation Date. Pursuant to Section 2.2, the net value of the
assets of Developing Resources and the net asset value per
share of Emerging Growth shall be determined as of the Close
of Trading on the NYSE on the Valuation Date, after the
declaration and payment of any dividend on that date. The
stock transfer books of Growth Trust will be permanently
closed, and sales of Developing Resources Shares shall be
suspended, as of the close of business of Growth Trust on the
Valuation Date. Redemption requests thereafter received by
Growth Trust with respect to Developing Resources shall be
deemed to be redemption requests for Emerging Growth Shares to
be distributed to shareholders of Growth Trust under this
Agreement provided that the transactions contemplated by this
Agreement are consummated.
In the event that trading on the NYSE or on another
exchange or market on which securities held by Growth Trust,
on behalf of Developing Resources, shall be disrupted on the
Valuation Date so that, in the judgment of both Mutual Funds
Trust and Growth Trust, accurate appraisal of the net assets
of Developing Resources to be transferred hereunder or the
assets of Emerging Growth is impracticable, the Valuation Date
shall be postponed until the first Business Day after the day
on which trading on such exchange or in such market shall, in
the judgment of both Mutual Funds Trust and Growth Trust, have
been resumed without disruption. In such event, the Closing
Date shall be postponed until one Business Day after the
Valuation Date.
3.3 Delivery of Securities and other Assets. After the close of
business on the Valuation Date, Growth Trust shall issue
instructions providing for the delivery of all securities held
by Growth Trust, on behalf of Developing Resources, together
with other non-cash assets of Developing Resources to the
Custodian to be held for the account of Emerging Growth,
effective as of the Closing. Emerging Growth may inspect such
securities at the offices of Developing Resources' custodian
prior to the Valuation Date.
Securities so delivered shall be in proper form for
transfer in such condition as to constitute a good delivery
thereof, in accordance with the custom of brokers, and shall
be accompanied by all necessary stock transfer stamps (or
other documentation evidencing payment of local taxes), if
any, or a check for the appropriate purchase price of such
stamps (or payment of such local tax). Unless otherwise
directed by Mutual Funds Trust in writing on or before the
Delivery Date, cash held by and to be delivered by Growth
Trust, on behalf of Developing Resources, shall be delivered
on the Closing Date and shall be in the form of wire transfer
in Federal Funds, payable to the order of the account of
Emerging Growth at the Custodian. A confirmation for the
Emerging Growth Shares registered in the name of Growth Trust
shall be delivered to Growth Trust on the Closing Date.
4. DEVELOPING RESOURCES TERMINATION
As soon as reasonably practicable after the Closing Date,
Growth Trust shall pay or make provisions for the payment of all of the
debts and taxes of Developing Resources and distribute all remaining
assets, if any, to shareholders of Developing Resources, and Developing
Resources shall thereafter be terminated under Massachusetts law. The
Portfolio shall liquidate and deregister under the 1940 Act.
At, or as soon as may be practicable following the Closing
Date, Growth Trust shall instruct Emerging Growth as to the amount of
the pro rata interest of each of Developing Resources' shareholders as
of the close of business on the Valuation Date (such shareholders to be
certified as such by the transfer agent for Growth Trust), to be
registered on the books of Emerging Growth, in full and fractional
Emerging Growth Shares, in the name of each such shareholder, and
Emerging Growth agrees promptly to so register each such shareholder in
accordance with said instruction. Each Developing Resources shareholder
shall receive shares of the corresponding class of Emerging Growth to
the class of Developing Resources held by such shareholder. All issued
and outstanding Developing Resources Shares shall thereupon be canceled
on the books of Growth Trust. Emerging Growth shall have no obligation
to inquire as to the correctness of any such instruction, but shall, in
each case, assume that such instruction is valid, proper and correct.
Emerging Growth shall record on its books the ownership of Emerging
Growth Shares by Developing Resources shareholders and shall promptly
furnish to Growth Trust a confirmation to that effect.
5. DEVELOPING RESOURCES SECURITIES
On the Delivery Date, Growth Trust shall deliver the
Securities List. Growth Trust (or the Portfolio) shall also provide to
Emerging Growth a list of all Passive Foreign Investment companies and
the tax treatment given thereto, as required by Section 1291 et seq. of
the Code. Such records shall be made available by Growth Trust prior to
the Closing Date for inspection by the Treasurer (or his designee) and
the auditors of Emerging Growth upon reasonable request.
Notwithstanding the foregoing, it is expressly understood that Growth
Trust, on behalf of Developing Resources, may hereafter until the close
of business on the Valuation Date sell any securities owned by it in
the ordinary course of its business as an open-end, management
investment company.
6. LIABILITIES AND EXPENSES
Emerging Growth shall acquire all liabilities of Growth Trust,
whether known or unknown, or contingent or determined. Growth Trust
will discharge all known liabilities of Developing Resources, so far as
may be possible, prior to the Closing Date. Developing Resources and
Emerging Growth shall bear their respective expenses, in connection
with carrying out this Agreement.
7. GROWTH TRUST REPRESENTATIONS AND WARRANTIES
Growth Trust, on behalf of Developing Resources, hereby
represents, warrants and agrees as follows:
7.1 Legal Existence. Growth Trust is a business trust duly
organized and validly existing under the laws of the
Commonwealth of Massachusetts. Developing Resources is a
validly existing series of Growth Trust.
7.2 Registration under 1940 Act. Growth Trust is duly registered
with the Commission as an open-end management investment
company under the 1940 Act and its registration with the
Commission as an investment company under the 1940 Act is in
full force and effect.
7.3 Financial Statements. The statement of assets and liabilities,
schedule of portfolio investments and related statements of
operations and changes in net assets dated August 31, 1998
(audited) fairly present the financial condition of Developing
Resources as of said dates in conformity with generally
accepted accounting principles.
7.4 No Material Events. There are no legal, administrative or
other proceedings pending, or to its knowledge, threatened
against Growth Trust which would materially affect its
financial condition.
7.5 Requisite Approvals. The execution and delivery of this
Agreement and the consummation of the transactions
contemplated herein have been authorized by Growth Trust's
Board of Trustees by vote taken at a meeting of such Board
duly called and held on October 19, 1998, and Growth Trust
will take all steps necessary duly to call, give notice of,
convene and hold a meeting of Developing Resources
shareholders, as soon as practicable and in accordance with
applicable state and federal law, for the purpose of approving
this Agreement and the transactions contemplated hereby and
for such other purposes as may be necessary and desirable.
7.6 No Material Violations. Growth Trust is not, and the
execution, delivery and performance of this Agreement will not
result, in a material violation of any provision of its
Declaration of Trust or By-Laws, as each may be amended, of
Growth Trust or of any agreement, indenture, instrument,
contract, lease or other undertaking to which Growth Trust is
a party or by which it is bound.
7.7 Taxes and Related Filings. Except where failure to do so would
not have a material adverse effect on Growth Trust, Growth
Trust has filed, on behalf of Developing Resources, and will
file or obtain valid extensions of filing dates for all
required federal, state and local tax returns and reports for
all taxable years through and including the taxable year ended
August 31, 1998, and no such filings or reports are currently
being audited or contested by the Internal Revenue Service or
state or local taxing authority and all federal, state and
local income, franchise, property, sales, employment or other
taxes or penalties payable have been paid or will be paid, so
far as due. Developing Resources has elected to be treated as
a regulated investment company for federal tax purposes, has
qualified as such for each taxable year of its operations, and
will qualify as such as of the Closing Date.
7.8 Good and Marketable Title. On the Closing Date, Growth Trust
will have good and marketable title to Developing Resources'
assets, free and clear of all liens, mortgages, pledges,
encumbrances, charges, claims and equities whatsoever, and
full right, power and authority to sell, assign, transfer and
deliver such assets and shall deliver such assets to Emerging
Growth. Upon delivery of such assets, Emerging Growth will
receive good and marketable title to such assets, free and
clear of all liens, mortgages, pledges, encumbrances, charges,
claims, restrictions (including such restrictions as might
arise under the 1933 Act) and equities, except as to adverse
claims under Article 8 of the Uniform Commercial Code of which
Emerging Growth has notice and necessary documentation at or
prior to the time of delivery.
7.9 Books and Records; Dividends and Distributions. Growth Trust
has maintained all records required under Section 31 of the
1940 Act and rules thereunder, and has distributed all of its
investment company taxable income and net capital gain, if
any, for the fiscal year ending on the Closing Date.
7.10 Growth Trust N-1A Not Misleading. Growth Trust N-1A (copies of
which have been delivered to Mutual Funds Trust) conforms on
the date of this Agreement, and will conform on the date of
the Proxy Statement and the Closing Date, in all material
respects to the applicable requirements of the 1933 Act and
the 1940 Act and the rules and regulations of the Commission
thereunder and does not include any untrue statement of a
material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not
materially misleading.
7.11 Proxy Materials. Only insofar as it relates to Growth Trust
and Developing Resources, the Proxy Statement delivered to
Developing Resources shareholders in connection with this
transaction (both at the time of delivery to such shareholders
in connection with the meeting of shareholders and at all
times subsequent thereto and including the Closing Date) in
all material respects conforms to the applicable requirements
of the applicable federal securities laws and the rules and
regulations of the Commission thereunder, and will not include
any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances
under which they were made, not materially misleading, except
that no representations or warranties in this section apply to
statements or omissions made in reliance upon and in
conformity with written information furnished to Growth Trust
by Mutual Funds Trust.
8. MUTUAL FUNDS TRUST REPRESENTATIONS AND WARRANTIES
Mutual Funds Trust, on behalf of Emerging Growth, hereby
represents, warrants and agrees as follows:
8.1 Legal Existence. Mutual Funds Trust is a business trust duly
organized and validly existing under the laws of the
Commonwealth of Massachusetts. Emerging Growth is a validly
existing series of Mutual Funds Trust. Mutual Funds Trust is
authorized to issue an unlimited number of shares of
beneficial interest in its series, Emerging Growth.
8.2 Registration under 1940 Act. Mutual Funds Trust is duly
registered as an open-end management investment company under
the 1940 Act and its registration with the Commission as an
investment company under the 1940 Act is in full force and
effect.
8.3 Financial Statements. The statement of assets and liabilities
and the schedule of portfolio investments and the related
statements of operations and changes in net assets of Emerging
Growth dated October 31, 1997 (audited) and April 30, 1998
(unaudited), furnished to Growth Trust fairly presents the
financial condition of Emerging Growth as of said dates in
conformity with generally accepted accounting principles.
8.4 No Contingent Liabilities. There are no known contingent
liabilities of Emerging Growth not disclosed and there are no
legal, administrative or other proceedings pending, or to the
knowledge of Emerging Growth threatened, against Emerging
Growth which would materially affect its financial condition.
8.5 Requisite Approvals. The execution and delivery of this
Agreement and the consummation of the transactions
contemplated herein, have been authorized by the Board of
Trustees of Mutual Funds Trust by vote taken at a meeting of
such Board duly called and held on October 19, 1998. No
approval of the shareholders of Emerging Growth is required in
connection with this Agreement or the transaction contemplated
hereby.
8.6 No Material Violations. Mutual Funds Trust is not, and the
execution, delivery and performance of this Agreement will not
result, in a material violation of any provision of its
Declaration of Trust or By-Laws, as each may be amended, of
Mutual Funds Trust or of any agreement, indenture, instrument,
contract, lease or other undertaking to which Mutual Funds
Trust is a party or by which it is bound.
8.7 Taxes and Related Filings. Except where failure to do so would
not have a material adverse effect on Emerging Growth (i)
Emerging Growth has filed or will file (or has obtained valid
extensions of filing dates for) all required federal, state
and local tax returns and reports for all taxable years
through the taxable year ended October 31, 1998 and no such
filings are currently being audited or contested by the
Internal Revenue Service or state or local taxing authority;
and (ii) all federal, state and local income, franchise,
property, sales, employment or other taxes or penalties
payable pursuant to such returns have been paid or will be
paid, so far as due. Emerging Growth has elected to be treated
as a regulated investment company for federal tax purposes,
has qualified as such for each taxable year of its operations
and will qualify as such as of the Closing Date.
8.8 Mutual Funds Trust N-1A Not Misleading. The Mutual Funds Trust
N-1A (copies of which have been delivered to Growth Trust)
conforms on the date of the Agreement, and will conform on the
date of the Proxy Statement and the Closing Date, in all
material respects to the applicable requirements of the 1933
Act and the 1940 Act and the rules and regulations of the
Commission thereunder and does not include any untrue
statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which
they were made, not materially misleading.
8.9 Proxy Materials. Only insofar as it relates to Emerging
Growth, the Proxy Statement delivered to the Developing
Resources shareholders in connection with this transaction
(both at the time of delivery to such shareholders in
connection with the meeting of shareholders and at all times
subsequent thereto and including the Closing Date) in all
material respects, conforms to the applicable requirements of
the applicable federal securities law and the rules and
regulations of the Commission thereunder, and will not include
any untrue statement of a material fact or omit to state any
material fact required to be stated thereon or necessary to
make statements therein, in light of the circumstances under
which they were made, not materially misleading, except that
no representations or warranties in this Section apply to
statements or omissions made in reliance upon and in
conformity with written information furnished to Mutual Funds
Trust by Growth Trust.
9. CONDITIONS PRECEDENT TO CLOSING
The obligations of the parties hereto shall be conditioned on
the following:
9.1 Representations and Warranties. The representations and
warranties of the parties made herein will be true and correct
on the Closing Date.
9.2 Shareholder Approval. The Agreement and the transactions
contemplated herein shall have been approved by the requisite
vote of the holders of Developing Resources Shares in
accordance with the 1940 Act and the Declaration of Trust and
By-Laws, each as amended, of Growth Trust.
9.3 Pending or Threatened Proceedings. On the Closing Date, no
action, suit or other proceeding shall be threatened or
pending before any court or governmental agency in which it is
sought to restrain or prohibit, or obtain damages or other
relief in connection with, this Agreement or the transactions
contemplated herein.
9.4 Registration Statement. The Mutual Funds Trust N-14 shall have
become effective under the 1933 Act; no stop orders suspending
the effectiveness of such Mutual Funds Trust N-14 shall have
been issued; and, to the best knowledge of the parties hereto,
no investigation or proceeding for that purpose shall have
been instituted or be pending, threatened or contemplated
under the 1933 Act.
9.5 Declaration of Dividend. Growth Trust shall have declared a
dividend or dividends which, together with all previous such
dividends, shall have the effect of distributing to Developing
Resources shareholders all of Developing Resources' investment
company taxable income for the final taxable period of
Developing Resources and all of its net capital gain realized
in the final taxable period of Developing Resources (after
reduction for any capital loss carryforward).
9.6 State Securities Laws. The parties shall have received all
permits and other authorizations necessary under state
securities laws to consummate the transactions contemplated
herein.
9.7 Performance of Covenants. Each party shall have performed and
complied in all material respects with each of the agreements
and covenants required by this Agreement to be performed or
complied with by each such party prior to or at the Valuation
Date and the Closing Date.
9.8 Due Diligence. Mutual Funds Trust shall have had reasonable
opportunity to have its officers and agents review the records
of Growth Trust.
9.9 Developing Resources Financial Statements. Growth Trust will
furnish to Mutual Funds Trust the audited financial statements
of Developing Resources for the year ending August 31, 1998
prior to the Closing Date and such financial statements will
fairly present the financial condition and portfolio
investments of Developing Resources and the results of its
operations as of and for the period ending on the date of such
statements in conformity with generally accepted accounting
principles.
9.10. No Material Adverse Change. From the date of this Agreement,
through the Closing Date, there shall not have been:
(1) any change in the business, results of operations,
assets or financial condition or the manner of
conducting the business of Developing Resources or
Emerging Growth (other than changes in the ordinary
course of its business, including, without
limitation, dividends and distributions in the
ordinary course and changes in the net asset value
per share) which has had a material adverse effect on
such business, results of operations, assets or
financial condition, except in all instances as set
forth in the financial statements;
(2) any loss (whether or not covered by insurance)
suffered by Developing Resources or Emerging Growth
materially and adversely affecting of Developing
Resources or Emerging Growth, other than depreciation
of securities;
(3) issued by Growth Trust or Mutual Funds Trust to any
person any option to purchase or other right to
acquire shares of any class of Developing Resources
or Emerging Growth Shares (other than in the ordinary
course of Growth Trust's or Mutual Funds Trust's
business as an open-end management investment
company);
(4) any indebtedness incurred by Developing Resources or
Emerging Growth for borrowed money or any commitment
to borrow money entered into by Developing Resources
or Emerging Growth except as permitted in Growth
Trust N-1A or Mutual Funds Trust N-1A and disclosed
in financial statements required to be provided under
this Agreement;
(5) any amendment to the Declaration of Trust or By-Laws
of Growth Trust or Mutual Funds Trust that will
adversely affect the ability of Growth Trust or
Mutual Funds Trust to comply with the terms of this
Agreement; or
(6) any grant or imposition of any lien, claim, charge or
encumbrance upon any asset of Growth Trust except as
provided in Growth Trust N-1A so long as it will not
prevent Growth Trust from complying with Section 7.8.
9.11 Lawful Sale of Shares. On the Closing Date, Emerging Growth
Shares to be issued pursuant to Section 2.1 of this Agreement
will be duly authorized, duly and validly issued and
outstanding, and fully paid and non-assessable by Mutual Funds
Trust, and conform in all substantial respects to the
description thereof contained in the Mutual Funds Trust N-14
and Proxy Statement furnished to the Developing Resources
shareholders and the Emerging Growth Shares to be issued
pursuant to paragraph 2.1 of this Agreement will be duly
registered under the 1933 Act by the Mutual Funds Trust N-14
and will be offered and sold in compliance with all applicable
state securities laws.
10. ADDRESSES
All notices required or permitted to be given under this
Agreement shall be given in writing to Growth Trust, to 24 Federal
Street, Boston, MA 02110 (Attention: Eric G. Woodbury, Esq.), and to
Mutual Funds Trust, 24 Federal Street, Boston, MA 02110 (Attention:
Eric G. Woodbury, Esq.) or at such other place as shall be specified in
written notice given by either party to the other party to this
Agreement and shall be validly given if mailed by first-class mail,
postage prepaid.
11. TERMINATION
This Agreement may be terminated by either party upon the
giving of written notice to the other, if any of the representations,
warranties or conditions specified in Section 7, 8 or 9 hereof have not
been performed or do not exist on or before February 28, 1999. In the
event of termination of this Agreement pursuant to this provision,
neither party (nor its officers, Trustees or shareholders) shall have
any liability to the other.
12. MISCELLANEOUS
This Agreement shall be governed by, construed and enforced in
accordance with the laws of the Commonwealth of Massachusetts. Growth
Trust and Mutual Funds Trust represent and warrant to each other that
there are no brokers or finders entitled to receive any payments in
connection with the transactions provided for herein. Growth Trust and
Mutual Funds Trust agree that neither party has made any
representation, warranty or covenant not set forth herein and that this
Agreement constitutes the entire agreement between the parties as to
the subject matter hereof. The representations, warranties and
covenants contained in this Agreement or in any document delivered
pursuant hereto or in connection herewith shall not survive the
consummation of the transactions contemplated hereunder. The Section
headings contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this
Agreement. This Agreement shall be executed in any number of
counterparts, each of which shall be deemed an original. Whenever used
herein, the use of any gender shall include all genders.
13. PUBLICITY
Any announcements or similar publicity with respect to this
Agreement or the transactions contemplated herein will be made at such
time and in such manner as Growth Trust and Mutual Funds Trust shall
agree, provided that nothing herein will prevent either party from
making such public announcements as may be considered advisable by
their respective counsel in order to satisfy legal obligations in such
regard, provided that the other party receives a copy of all such
announcements.
14. AMENDMENTS
At any time prior to or after approval of this Agreement by
Developing Resources shareholders (i) the parties hereto may, by
written agreement and without shareholder approval, amend any of the
provisions of this Agreement, and (ii) either party may waive without
such approval any default by the other party or the failure to satisfy
any of the conditions to its obligations (such waiver to be in
writing); provided, however, that following shareholder approval, no
such amendment may have the effect of changing the provisions for
determining the number of Emerging Growth Shares to be issued to
Developing Resources shareholders under this Agreement to the detriment
of such shareholders without their further approval. The failure of
either party hereto to enforce at any time any of the provisions of
this Agreement shall in no way be construed to be a waiver of any such
provision, nor in any way to affect the validity of this Agreement or
any part hereof or the right of any party thereafter to enforce each
and every such provision. No waiver of any breach of this Agreement
shall be held to be a waiver of any other or subsequent breach.
15. MASSACHUSETTS BUSINESS TRUSTS
References in this Agreement to Growth Trust and Mutual Funds
Trust mean and refer to the Trustees, from time to time serving under
their respective Declarations of Trust on file with the Secretary of
the Commonwealth of Massachusetts, as the same may be amended from time
to time, pursuant to which they conduct their businesses. It is
expressly agreed that the obligations of Growth Trust and Mutual Funds
Trust hereunder shall not be binding upon any of the trustees,
shareholders, nominees, officers, agents or employees of either Trust
personally, but bind only the trust property of Growth Trust and Mutual
Funds Trust as provided in said Declarations of Trust. The execution
and delivery of this Agreement has been authorized by the respective
trustees and signed by an authorized officer of Growth Trust and Mutual
Funds Trust, acting as such, and neither such authorization by such
trustees nor such execution and delivery by such officer shall be
deemed to have been made by any of them but shall bind only the trust
property of Growth Trust and Mutual Funds Trust as provided in such
Declarations of Trust.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed and its seal affixed hereto by their officers thereunto
duly authorized, as of the day and year first above written.
ATTEST: EATON VANCE GROWTH TRUST
(on behalf of Eaton Vance Worldwide
Developing Resources Fund)
/s/ Janet E. Sanders by /s/ James B. Hawkes
----------------------------- -------------------------------
ATTEST: EATON VANCE MUTUAL FUNDS TRUST
(on behalf of Eaton Vance Tax-Managed
Emerging Growth Fund)
/s/ Janet E. Sanders by /s/ M. Dozier Gardner
----------------------------- -------------------------------
EATON VANCE WORLDWIDE DEVELOPING RESOURCES FUND
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned, revoking all previous proxies for his or her shares, hereby
acknowledges receipt of the notice of meeting and proxy statement dated November
20, 1998, and appoints Alan R. Dynner and Eric G. Woodbury, and each of them as
proxies, with power of substitution, to vote all shares of Eaton Vance Worldwide
Developing Resources Fund ("Developing Resources"), which the undersigned is
entitled to vote at the special meeting of the shareholders of Developing
Resources to be held at the offices of Developing Resources, 24 Federal Street,
Boston, Massachusetts, on December 18, 1998 at 10:00 a.m. local time, including
any adjournments thereof, upon such business as may be properly brought before
the meeting and specifically upon the proposal set out on the back of this
Proxy.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED BY THE UNDERSIGNED SHAREHOLDER. IF NO SPECIFICATION IS MADE, THE PROXY
WILL BE VOTED FOR APPROVAL OF THE AGREEMENT AND PLAN OF REORGANIZATION. AS TO
ANY OTHER MATTERS, SAID PROXIES SHALL VOTE IN ACCORDANCE WITH THEIR BEST
JUDGMENT.
(PLEASE MARK AND SIGN ON REVERSE SIDE AND RETURN PROMPTLY
IN THE ENCLOSED ENVELOPE.)
- -------------------------------------------------------------------------------
To vote on the following proposal, please indicate your vote for each of
your accounts beneath your account number.
Account No. No. of Shares
(1) Approve of an Agreement and Plan of Reorganization between Eaton Vance
Worldwide Developing Resources Fund and Eaton Vance Mutual Funds Trust
on behalf of Eaton Vance Tax-Managed Emerging Growth Fund and the
transactions contemplated thereby, as described in the accompanying
proxy statement/prospectus.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Dated -------------------------------, 1998
-------------------------------------------
-------------------------------------------
-------------------------------------------
Signature(s)
-------------------------------------------
Signature(s)
(Sign exactly as name appears hereon)
IMPORTANT-PLEASE READ
If more than one owner, each must sign. If
the signer is a corporation, please sign
full corporate name by duly authorized
officer. Executors, administrators,
trustees, guardians, custodians,
attorneys-in-fact, etc., should so indicate
when signing.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
PART B
EATON VANCE TAX-MANAGED EMERGING GROWTH FUND
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
November 20, 1998
- --------------------------------------------------------------------------------
Acquisition of the Assets of By and in Exchange for Class A and Class B
Eaton Vance Worldwide Developing Shares of Eaton Vance Tax-Managed Emerging
Resources Fund, a series of Eaton Growth Fund, a series of Eaton Vance
Vance Growth Trust Mutual Funds Trust
24 Federal Street 24 Federal Street
Boston, Massachusetts 02110 Boston, Massachusetts 02110
Telephone: (617) 482-8260 Telephone: (617) 482-8260
This Statement of Additional Information is available to the
shareholders of Eaton Vance Worldwide Developing Resources Fund ("Developing
Resources"), a series of Eaton Vance Growth Trust, in connection with a proposed
transaction whereby Eaton Vance Tax-Managed Emerging Growth Fund ("Emerging
Growth"), a series of Eaton Vance Mutual Funds Trust, will acquire all of the
assets of Developing Resources in exchange for Class A and Class B shares of
Emerging Growth and will assume all of the liabilities of Developing Resources.
This Statement of Additional Information of Emerging Growth consists of
this cover page and the following documents, each of which is attached hereto
and incorporated by reference herein:
(1) The Statement of Additional Information of Emerging Growth
dated March 1, 1998, containing financial statements of
Emerging Growth for the year ended October 31, 1997;
(2) Semiannual Report dated April 30, 1998 (unaudited) for
Emerging Growth;
(3) Financial Statements for the year ended August 31, 1998 for
Developing Resources.
This Statement of Additional Information is not a Prospectus. A
Prospectus/Proxy Statement dated November 20, 1998 relating to the
reorganization of Developing Resources may be obtained by writing to Eaton Vance
Distributors, Inc., 24 Federal Street, Boston, MA 02110 or by calling
1-800-225-6265. This Statement of Additional Information should be read in
conjunction with the Prospectus/Proxy Statement.
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
STATEMENT OF
ADDITIONAL INFORMATION
March 1, 1998
EATON VANCE TAX-MANAGED GROWTH FUND
EATON VANCE TAX-MANAGED EMERGING GROWTH FUND
24 Federal Street
Boston, Massachusetts 02110
(800) 225-6265
This Statement of Additional Information provides information about the
Funds listed above and Tax-Managed Growth Portfolio (the "Portfolio"). This
Statement of Additional Information is sometimes referred herein to as the
"SAI".
TABLE OF CONTENTS
Page
Additional Information about Investment Policies ...................... 2
Investment Restrictions ............................................... 4
Trustees and Officers ................................................. 6
Investment Adviser and Administrator .................................. 8
Custodian ............................................................. 10
Services for Accumulation -- Class A Shares ........................... 11
Service for Withdrawal ................................................ 11
Determination of Net Asset Value ...................................... 12
Investment Performance ................................................ 12
Taxes ................................................................. 14
Principal Underwriter ................................................. 15
Service Plan -- Class A Shares ........................................ 16
Distribution Plans -- Class B and Class C Shares ...................... 16
Portfolio Security Transactions ....................................... 18
Other Information ..................................................... 20
Independent Certified Public Accountants .............................. 21
Financial Statements .................................................. 21
Appendix A: Class A Shares ............................................ a-1
Appendix B: Class B Shares ............................................ b-1
Appendix C: Class C Shares ............................................ c-1
Although each Fund offers only its shares of beneficial interest, it is
possible that a Fund (or Class) might become liable for a misstatement or
omission in this Statement of Additional Information regarding another Fund
(or Class) because the Funds use this combined Statement of Additional
Information. The Trustees of the Trust have considered this factor in
approving the use of a combined Statement of Additional Information.
THIS COMBINED STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND
IS AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR
ACCOMPANIED BY THE FUNDS' PROSPECTUS DATED MARCH 1, 1998, AS SUPPLEMENTED FROM
TIME TO TIME, WHICH IS INCORPORATED HEREIN BY REFERENCE. THIS COMBINED
STATEMENT OF ADDITIONAL INFORMATION SHOULD BE READ IN CONJUNCTION WITH SUCH
PROSPECTUS, A COPY OF WHICH MAY BE OBTAINED WITHOUT CHARGE BY CONTACTING EATON
VANCE DISTRIBUTORS, INC. (THE "PRINCIPAL UNDERWRITER") (SEE BACK COVER FOR
ADDRESS AND PHONE NUMBER).
This SAI provides information about the Funds and the Portfolio.
Capitalized terms used in this SAI and not otherwise defined have the meanings
given to them in the Prospectus. Tax-Managed Growth currently seeks to achieve
its objective by investing in the Portfolio and is subject to the same
investment policies as those of the Portfolio.
ADDITIONAL INFORMATION ABOUT INVESTMENT POLICIES
Foreign Securities. Investing in securities issued by companies whose
principal business activities are outside the United States may involve
significant risks not present in domestic investments. For example, there is
generally less publicly available information about foreign companies,
particularly those not subject to the disclosure and reporting requirements of
the U.S. securities laws. Foreign issuers are generally not bound by uniform
accounting, auditing, and financial reporting requirements and standards of
practice comparable to those applicable to domestic issuers. Investments in
foreign securities also involve the risk of possible adverse changes in
investment or exchange control regulations, expropriation or confiscatory
taxation, limitation on the removal of funds or other assets, political or
financial instability or diplomatic and other developments which could affect
such investments. Further, economies of particular countries or areas of the
world may differ favorably or unfavorably from the economy of the United
States. It is anticipated that in most cases the best available market for
foreign securities will be on exchanges or in over-the-counter markets located
outside of the United States. Foreign stock markets, while growing in volume
and sophistication, are generally not as developed as those in the United
States, and securities of some foreign issuers (particularly those located in
developing countries) may be less liquid and more volatile than securities of
comparable U.S. companies. In addition, foreign brokerage commissions are
generally higher than commissions on securities traded in the United States
and may be non-negotiable. In general, there is less overall governmental
supervision and regulation of foreign securities markets, broker-dealers, and
issuers than in the United States.
Foreign Currency Transactions. The value of foreign assets as measured in
U.S. dollars may be affected favorably or unfavorably by changes in foreign
currency exchange rates and exchange control regulations. Currency exchange
rates can also be affected unpredictably by intervention by U.S. or foreign
governments or central banks, or the failure to intervene, or by currency
controls or political developments in the U.S. or abroad. Foreign currency
exchange transactions may be conducted on a spot (i.e., cash) basis at the
spot rate prevailing in the foreign currency exchange market or through
entering into swaps, forward contracts, options or futures on currency. On
spot transactions, foreign exchange dealers do not charge a fee for
conversion, but they do realize a profit based on the difference (the
"spread") between the prices at which they are buying and selling various
currencies. Thus, a dealer may offer to sell a foreign currency at one rate,
while offering a lesser rate of exchange should an Adviser desire to resell
that currency to the dealer.
Forward Foreign Currency Exchange Contracts and Currency Futures. Forward
foreign currency contracts ("forward contracts") are individually negotiated
and privately traded by currency traders and their customers. A forward
contract involves an obligation to purchase or sell a specific currency (or
basket of currencies) for an agreed price at a future date, which may be any
fixed number of days from the date of the contract. An Adviser may enter into
a forward contract in connection with the purchase or sale of a security
denominated in a foreign currency, or when it anticipates the receipt in a
foreign currency of dividend or interest payments on such a security, to
"lock" in the U.S. dollar price of the security or the U.S. dollar equivalent
of such dividend or interest payment, as the case may be. Additionally, when
an Adviser believes that the currency of a particular foreign country may
suffer a substantial decline against the U.S. dollar, it may enter into a
forward contract to sell, for a fixed amount of dollars, the amount of foreign
currency approximating the value of some or all of the securities denominated
in such foreign currency. The precise matching of the forward contract amounts
and the value of the securities involved will not generally be possible.
Forward contracts with a term of greater than one year generally will not be
entered into.
Currency futures contracts are exchange traded instruments that may be
used for the purposes described in the preceding paragraphs as an alternative
to the purchase or sale of forward currency exchange contracts. Currency
futures contracts are similar in structure to stock index futures contracts,
but change in value to reflect the movements of a currency or basket of
currencies rather than a stock index. Investments in currency contracts are
subject to limitations and restrictions similar to those set forth for
investments in stock index futures and options on stock index futures.
Risks Associated With Derivative Instruments. Entering into a derivative
instrument involves a risk that the applicable market will move against the
position held and that a loss will result. For derivative instruments other
than purchased options, this loss may exceed the amount of the initial
investment made or the premium received. Derivative instruments may sometimes
increase or leverage exposure to a particular market risk. Leverage enhances
exposure to the price volatility of derivative instruments it holds. Success
in using derivative instruments to hedge portfolio assets depends on the
degree of price correlation between the derivative instruments and the hedged
asset. Imperfect correlation may be caused by several factors, including
temporary price disparities among the trading markets for the derivative
instrument, the assets underlying the derivative instrument and other assets
held in the portfolio. Over-the-counter ("OTC") derivative instruments involve
an enhanced risk that the issuer or counterparty will fail to perform its
contractual obligations. Some derivative instruments are not readily
marketable or may become illiquid under adverse market conditions. In
addition, during periods of market volatility, a commodity exchange may
suspend or limit trading in an exchange-traded derivative instrument, which
may make the contract temporarily illiquid and difficult to price. Commodity
exchanges may also establish daily limits on the amount that the price of a
futures contract or futures option can vary from the previous day's settlement
price. Once the daily limit is reached, no trades may be made that day at a
price beyond the limit. This may prevent the closing out of positions and
limiting losses. The staff of the Commission takes the position that certain
purchased OTC options, and assets used as cover for written OTC options, are
subject to the 15% limit on illiquid investments. The ability to terminate OTC
derivative instruments may depend on the cooperation of the counterparties to
such contracts. For thinly traded derivative instruments, the only source of
price quotations may be the selling dealer or counterparty. In addition,
certain provisions of the Code limit the extent to which derivative
instruments may be purchased and sold. Transactions in futures contracts and
related options will be entered into only to the extent such transactions are
consistent with the requirements of the Code for maintaining qualification as
a regulated investment company for federal income tax purposes. See "Taxes".
Limitations on Futures Contracts and Options. Futures contracts, and options
on futures contracts traded on an exchange regulated by the Commodity Futures
Trading Commission (the "CFTC ") and on foreign exchanges may be entered into,
but, with respect to foreign exchange-traded futures contracts and options on
such futures contracts, only if the Adviser determines that trading on each
such foreign exchange does not result in risks, including credit and liquidity
risks, that are materially greater than the risks associated with trading on
CFTC-regulated exchanges.
All futures contracts will be traded on exchanges or boards of trade that
are licensed and regulated by the CFTC and must be executed through a futures
commission merchant or brokerage firm that is a member of the relevant
exchange. Under CFTC regulations, futures contracts may only be entered into
if, immediately thereafter, the value of the aggregate initial margin with
respect to all currently outstanding non-hedging positions in futures
contracts does not exceed 5% of net asset value, after taking into account
unrealized profits and losses on such positions.
In order to hedge current or anticipated portfolio positions, futures
contracts on securities held or on securities with characteristics similar to
those of the securities held may be used. If, in the opinion of an Adviser,
there is a sufficient degree of correlation between price trends for the
securities held and futures contracts based on other financial instruments,
securities indices or other indices, such futures contracts may also be
entered into as part of its hedging strategy.
All call options on securities written will be covered. This means that,
Tax-Managed Emerging Growth or the Portfolio will own the securities subject
to the call option or an offsetting call option so long as the call option is
outstanding.
Short Sales Against-the-Box. Securities may be sold short where Tax-Managed
Emerging Growth or the Portfolio owns at least an equal amount of the security
sold short or another security convertible or exchangeable for an equal amount
of the security sold short without payment of further compensation (a short
sale against-the-box). A short sale against-the-box requires that the short
seller absorb certain costs so long as the position is open. In a short sale
against-the-box, the short seller is exposed to the risk of being forced to
deliver appreciated stock to close the position if the borrowed stock is
called in, causing a gain to be recognized. The Adviser expects normally to
close short sale against-the-box transactions by delivering newly-acquired
stock. No more than 25% of assets is expected to be subject to short-sales
against-the-box at any one time.
Lending Portfolio Securities. Under present regulatory policies of the
Commission, securities loans are required to be secured continuously by
collateral in cash, cash equivalents or U.S. Government securities held by the
custodian and maintained on a current basis at an amount at least equal to the
market value of the securities loaned, which will be marked to market daily.
Cash equivalents include certificates of deposit, commercial paper and other
short-term money market instruments. Securities will be loaned only to
borrowers whose credit quality or claims paying ability is considered to be
investment grade by an Adviser. The financial condition of the borrower will
be monitored by the Adviser on an ongoing basis. If a borrower of securities
defaults on a securities loan, the lender (i.e., Tax-Managed Emerging Growth
or the Portfolio) will, under proposed Treasury Regulations, be considered to
have disposed of the securities in a taxable transaction. Delays may be
experienced in the recovery or loss of rights in loaned securities if a
borrower of securities fails financially. The lender of the securities would
continue to receive the equivalent of the interest or dividends paid by the
issuer on the securities loaned and would also receive a fee, or all or a
portion of the interest on investment of the collateral. The lender of the
securities would have the right to call a loan and obtain the securities
loaned at any time on up to five business days' notice. The lender would not
have the right to vote any securities having voting rights during the
existence of a loan, but could call the loan in anticipation of an important
vote to be taken among holder of the securities or the giving or withholding
of their consent on a material matter affecting the investment.
Asset Coverage Requirements. Transactions involving swaps, short sales,
forward contracts, futures contracts and options (other than options that the
Fund has purchased) create an obligation to another party. Neither Tax-Managed
Emerging Growth nor the Portfolio will enter into any such transactions unless
it owns either (1) an offsetting ("covered") position in securities,
currencies, swaps, or other options, futures contracts or forward contracts,
or (2) cash or liquid securities (such as readily marketable common stock and
money market instruments) with a value sufficient at all times to cover its
potential obligations not covered as provided in (1) above. (Only the net
obligations of a swap will be covered.) Tax-Managed Emerging Growth and the
Portfolio will comply with Commission guidelines regarding cover for these
instruments and, if the guidelines so require, set aside cash or liquid
securities in a segregated account with its custodian in the prescribed
amount. The securities in the segregated account will be marked to market
daily.
Assets used as cover or held in a segregated account maintained by the
custodian cannot be sold while the position requiring coverage or segregation
is outstanding unless they are replaced with other appropriate assets. As a
result, the commitment of a large portion of assets to segregated accounts or
to cover could impede portfolio management or the ability to meet redemption
requests or other current obligations.
Selection of Securities Used to Meet Redemptions from Tax-Managed Growth
Portfolio. Investors in the Portfolio (including Tax-Managed Growth) may redeem
all or a portion of their interests in the Portfolio at net asset value on a
daily basis. Redemptions by Tax-Managed Growth's shareholders currently are met
entirely in cash, but distributions of securities generally are used to meet
redemptions by other investors in the Portfolio who have contributed securities
and may in the future be used to meet redemptions by Tax-Managed Growth's
shareholders. See "How to Redeem Shares" in the Prospectus. The Portfolio's
ability to select the securities used to meet redemptions is limited with
respect to redemptions by investors who contributed securities, and with respect
to the securities contributed by such investors. Within seven years of any
contribution of securities (or, for securities contributed prior to June 9,
1997, five years) (the "holding period") the Portfolio will not distribute such
securities to any investor other than the contributing investor. In meeting a
redemption of an investor within the holding period of a contribution of
securities by such investor, the Portfolio will not, unless requested by the
redeeming investor, distribute any securities other than the securities
contributed by the redeeming investor while retaining all or a portion of the
securities contributed by such investor. If the Portfolio were to do otherwise,
certain investors who contributed securities could realize taxable gain. In
addition, upon the request at any time of a redeeming investor in the Portfolio
that contributed securities, the Portfolio will utilize securities held in the
Portfolio that were contributed by such investor to meet the redemption. After
expiration of the holding period, investors in the Portfolio can request a
diversified basket of securities, which may be distributed in the Investment
Adviser's discretion. These redemption practices constrain the selection of
securities distributed to meet redemptions (particularly during the holdin
period) and, consequently, may adversely affect the performance of the Portfolio
and the Fund. The Trustees of the Portfolio believe that the potential
advantages for the Portfolio to be derived from attracting contributions of
securities that would not be made in the absence of these redemption practices
outweigh the potential disadvantages of reduced flexibility to select securities
to meet redemptions. It is impossible to predict whether the net result will be
beneficial or detrimental to Tax-Managed Growth's performance.
Portfolio Turnover. Neither Tax-Managed Emerging Growth nor the Portfolio can
accurately predict its portfolio turnover rate, but it is anticipated that the
annual turnover rate will generally be lower than that of most other equity
mutual funds and will generally not exceed 20% (excluding turnover of
securities having a maturity of one year or less). For the portfolio turnover
rate of each Fund, see "Financial Highlights" or "Supplementary Data" in the
"Financial Statements."
INVESTMENT RESTRICTIONS
The following investment restrictions of each Fund are designated as
fundamental policies and as such cannot be changed without the approval of the
holders of a majority of the Fund's outstanding voting securities, which as
used in this SAI means the lesser of (a) 67% of the shares of the Fund present
or represented by proxy at a meeting if the holders of more than 50% of the
shares are present or represented at the meeting or (b) more than 50% of the
shares of the Fund. Accordingly, a Fund may not:
(1) Borrow money or issue senior securities except as permitted by the
Investment Company Act of 1940;
(2) Purchase any securities or evidences of interest therein on
"margin," that is to say in a transaction in which it has borrowed all or
a portion of the purchase price and pledged the purchased securities or
evidences of interest therein as collateral for the amount so borrowed;
(3) Engage in the underwriting of securities; or
(4) Buy or sell real estate (although it may purchase and sell
securities which are secured by real estate and securities of companies
which invest or deal in real estate), commodities or commodity contracts
for the purchase or sale of physical commodities;
(5) Make loans to other persons, except by (a) the acquisition of debt
securities and making portfolio investments, (b) entering into repurchase
agreements and (c) lending portfolio securities;
(6) With respect to 75% of its total assets, invest more than 5% of
its total assets (taken at current value) in the securities of any one
issuer, or invest in more than 10% of the outstanding voting securities of
any one issuer, except obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities and except securities of
other investment companies; or
(7) Concentrate its investments in any particular industry, but, if
deemed appropriate for the Fund's objective, up to 25% of the value of its
assets may be invested in any one industry.
The Portfolio has adopted substantially the same fundamental investment
restrictions as the investment restrictions adopted by Tax-Managed Growth set
forth above; such restrictions cannot be changed without the approval of a
"majority of the outstanding voting securities" of the Portfolio.
Notwithstanding their investment policies and restrictions, each Fund may
invest its assets in an open-end management investment company with
substantially the same investment objective, policies and restrictions as the
Fund; moreover, subject to Trustee approval, Tax-Managed Emerging Growth may
invest its investable assets in other open-end management investment companies
in the same group of investment companies with the same placement agent or
investment adviser (or an affiliate thereof) as Tax-Managed Emerging Growth
if, with respect to such assets, the other companies' permitted investments
are substantially the same as those of Tax-Managed Emerging Growth.
Notwithstanding the investment policies and restrictions of the Portfolio, the
Portfolio may invest part of its assets in another investment company
consistent with the 1940 Act.
Each Fund and the Portfolio have adopted the following investment policies
which may be changed without shareholder or investor approval. As a matter of
nonfundamental policy, each Fund and the Portfolio will not: (a) invest more
than 15% of its net assets in investments which are not readily marketable,
including restricted securities and repurchase agreements with a maturity
longer than seven days. Restricted securities for the purposes of this
limitation do not include securities eligible for resale pursuant to Rule 144A
under the Securities Act of 1933 and commercial paper issued pursuant to
Section 4(2) of said Act that the Board of Trustees of the Trust or the
Portfolio, or their delegate, determines to be liquid; (b) sell or contract to
sell any security which it does not own unless by virtue of its ownership of
other securities it has at the time of sale a right to obtain securities
equivalent in kind and amount to the securities sold and provided that if such
right is conditional the sale is made upon the same conditions; (c) invest for
the purpose of exercising control or management of other companies; or (d)
purchase or retain in its portfolio any securities issued by an issuer any of
whose officers, directors, trustees or security holders is an officer or
Trustee of the Trust or is a member, officer, director or trustee of the
Investment Adviser of the Trust or the Portfolio, if after the purchase of the
securities of such issuer by a Fund or the Portfolio one or more of such
persons owns beneficially more than 1/2 of 1% of the shares or securities or
both (all taken at market value) of such issuer and such persons owning more
than 1/2 of 1% of such shares or securities together own beneficially more
than 5% of such shares or securities or both (all taken at market value).
Whenever an investment policy or investment restriction set forth in the
Prospectus or this SAI states a maximum percentage of assets that may be
invested in any security or other asset, such percentage limitation shall be
determined immediately after and as a result of the Fund's or the Portfolio's
acquisition of such security or asset. Accordingly, any later increase or
decrease resulting from a change in values, assets or other circumstances,
will not compel a Fund or the Portfolio, as the case may be, to dispose of
such security or other asset. Notwithstanding the foregoing, under normal
market conditions Tax-Managed Growth and the Portfolio must take actions
necessary to comply with the policy of investing, at least 65% of total assets
in common stock and Tax-Managed Emerging Growth must take action to comply
with its policy of investing at least 65% of total assets in equity securities
of emerging growth companies. Moreover, the Funds and Portfolio must always be
in compliance with the borrowing policy and 15% limitation on investing in
illiquid securities set forth above.
TRUSTEES AND OFFICERS
The Trustees and officers of the Trust and the Portfolio are listed below.
Except as indicated, each individual has held the office shown or other
offices in the same company for the last five years. Unless otherwise noted,
the business address of each Trustee and officer is 24 Federal Street, Boston,
Massachusetts 02110, which is also the address of BMR, a wholly-owned
subsidiary of Eaton Vance; of Eaton Vance's parent, Eaton Vance Corp. ("EVC");
and of Eaton Vance's and BMR's trustee, Eaton Vance, Inc. ("EV"). Eaton Vance
and EV are both wholly-owned subsidiaries of EVC. Those Trustees and officers
who are "interested persons" of the Trust or the Portfolio, as defined in the
1940 Act by virtue of their affiliation with Eaton Vance, BMR, EVC or EV, are
indicated by an asterisk(*).
TRUSTEES OF THE TRUST AND THE PORTFOLIO
M. DOZIER GARDNER (64), President and Trustee of the Trust*
Vice Chairman of BMR, Eaton Vance, EVC and EV, and a Director of EVC and EV.
Director or Trustee and officer of various investment companies managed by
Eaton Vance or BMR.
LANDON T. CLAY (71), Trustee of the Portfolio*
Director or Trustee of various investment companies managed by Eaton Vance or
BMR. Former Chairman of BMR, Eaton Vance, EVC and EV.
Address: 10 Post Office Square, Suite 300, Boston, Massachusetts 02109
JAMES B. HAWKES (56), President of the Portfolio, Vice President of the Trust
and Trustee*
Chairman, President and Chief Executive Officer of Eaton Vance, BMR, EVC and
EV, and a Director of EVC and EV. Director or Trustee and officer of various
investment companies managed by Eaton Vance or BMR.
DONALD R. DWIGHT (66), Trustee
President of Dwight Partners, Inc. (a corporate relations and communications
company). Director or Trustee of various investment companies managed by
Eaton Vance or BMR.
Address: Clover Mill Lane, Lyme, New Hampshire 03768
SAMUEL L. HAYES, III (63), Trustee
Jacob H. Schiff Professor of Investment Banking, Harvard University Graduate
School of Business Administration. Director or Trustee of various investment
companies managed by Eaton Vance or BMR.
Address: Harvard University Graduate School of Business Administration,
Soldiers Field Road, Boston, Massachusetts 02163
NORTON H. REAMER (62), Trustee
Chairman of the Board and Chief Executive Officer, United Asset Management
Corporation (a holding company owning institutional investment management
firms); Chairman, President and Director, UAM Funds (mutual funds). Director
or Trustee of various investment companies managed by Eaton Vance or BMR.
Address: One International Place, Boston, Massachusetts 02110
JOHN L. THORNDIKE (71), Trustee
Formerly Director of Fiduciary Company Incorporated. Director or Trustee of
various investment companies managed by Eaton Vance or BMR.
Address: 175 Federal Street, Boston, Massachusetts 02110
JACK L. TREYNOR (68), Trustee
Investment Adviser and Consultant. Director or Trustee of various investment
companies managed by Eaton Vance or BMR.
Address: 504 Via Almar, Palos Verdes Estates, California 90274
OFFICERS OF THE TRUST AND THE PORTFOLIO
DUNCAN W. RICHARDSON (40), Vice President of the Portfolio
Vice President of BMR, Eaton Vance and EV. Officer of various investment
companies managed by Eaton Vance or BMR. Mr. Richardson was elected Vice
President of the Portfolio on October 23, 1995.
WILLIAM H. AHERN, JR. (38), Vice President of the Trust
Assistant Vice President of BMR, Eaton Vance and EV. Officer of various
investment companies managed by Eaton Vance or BMR. Mr. Ahern was elected
Vice President of the Trust on June 19, 1995.
MICHAEL B. TERRY (55), Vice President of the Trust
Vice President of BMR, Eaton Vance and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
THOMAS J. FETTER (54), Vice President of the Trust
Vice President of BMR, Eaton Vance and EV. Officer of various investment
companies managed by Eaton Vance or BMR. Mr. Fetter was elected Vice
President of the Trust on October 17, 1997.
JAMES L. O'CONNOR (52), Treasurer
Vice President of Eaton Vance, BMR and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
ALAN R. DYNNER (57), Secretary
Vice President and Chief Legal Officer of Eaton Vance, BMR, EVC and EV since
November 1, 1996. Previously, he was a Partner of the law firm of
Kirkpatrick & Lockhart LLP, New York and Washington, D.C., and was Executive
Vice President of Neuberger & Berman Management, Inc., a mutual fund
management company. Officer of various investment companies managed by Eaton
Vance or BMR. Mr. Dynner was elected Secretary on June 23, 1997.
JANET E. SANDERS (62), Assistant Treasurer and Assistant Secretary
Vice President of Eaton Vance, BMR and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
A. JOHN MURPHY (35), Assistant Secretary
Assistant Vice President of BMR, Eaton Vance and EV since March 1, 1994;
employee of Eaton Vance since March 1993. State Regulations Supervisor, The
Boston Company (1991-1993). Officer of various investment companies managed
by Eaton Vance or BMR. Mr. Murphy was elected Assistant Secretary of the
Trust on March 27, 1995 and of the Portfolio on October 23, 1995.
ERIC G. WOODBURY (40), Assistant Secretary
Vice President of BMR, Eaton Vance and EV since February 1993; formerly,
associate attorney at Dechert, Price & Rhoads. Mr. Woodbury was elected
Assistant Secretary of the Trust on June 19, 1995 and of the Portfolio on
October 23, 1995.
Messrs. Hayes (Chairman), Reamer and Thorndike are members of the Special
Committee of the Board of Trustees of the Trust and of the Portfolio. The
purpose of the Special Committee is to consider, evaluate and make
recommendations to the full Board of Trustees concerning (i) all contractual
arrangements with service providers to the Funds and the Portfolio, including
investment advisory (Portfolio only), administrative, transfer agency,
custodial and fund accounting and distribution services, and (ii) all other
matters in which Eaton Vance or its affiliates has any actual or potential
conflict of interest with the Funds, the Portfolio or investors therein.
The Nominating Committee of the Board of Trustees of the Trust and the
Portfolio is comprised of four Trustees who are not "interested persons" as
that term is defined under the 1940 Act ("noninterested Trustees"). The
Committee has four-year staggered terms, with one member rotating off the
Committee to be replaced by another noninterested Trustee. The purpose of the
Committee is to recommend to the Board nominees for the position of
noninterested Trustee and to assure that at least a majority of the Board of
Trustees is independent of Eaton Vance and its affiliates.
Messrs. Treynor (Chairman) and Dwight are members of the Audit Committee
of the Board of Trustees of the Trust and of the Portfolio. The Audit
Committee's functions include making recommendations to the Trustees regarding
the selection of the independent certified public accountants, and reviewing
matters relative to trading and brokerage policies and practices, accounting
and auditing practices and procedures, accounting records, internal accounting
controls, and the functions performed by the custodian, transfer agent and
dividend disbursing agent of the Trust and of the Portfolio.
Trustees of the Trust (with respect to Tax-Managed Emerging Growth's
allocable portion of their compensation received from the Trust) and the
Portfolio who are not affiliated with the Advisers may elect to defer receipt
of all or a percentage of their annual fees in accordance with the terms of a
Trustees Deferred Compensation Plan (the "Trustees" Plan"). Under the
Trustees' Plan, an eligible Trustee may elect to have his deferred fees
invested in the shares of one or more funds in the Eaton Vance Family of
Funds, and the amount paid to the Trustees under the Trustees' Plan will be
determined based upon the performance of such investments. Deferral of
Trustees' fees in accordance with the Trustees' Plan will have a negligible
effect on Tax-Managed Emerging Growth or the Portfolio's assets, liabilities,
and net income per share, and will not obligate Tax-Managed Emerging Growth or
the Portfolio to retain the services of any Trustee or obligate Tax-Managed
Emerging Growth or the Portfolio to pay any particular level of compensation
to the Trustees. Neither the Portfolio nor the Trust has a retirement plan for
its Trustees.
The fees and expenses of the noninterested Trustees of the Trust and of
the Portfolio are paid by the Funds (and the other series of the Trust) and
the Portfolio, respectively. (The Trustees of the Trust and the Portfolio who
are members of the Eaton Vance organization receive no compensation from the
Trust or the Portfolio.) During the fiscal year ended October 31, 1997, the
noninterested Trustees of the Trust and the Portfolio received the following
compensation in their capacities as Trustees of the Trust, the Portfolio and
of the other funds in the Eaton Vance fund complex(1):
DONALD R. SAMUEL L. NORTON H. JOHN L. JACK L.
SOURCE OF COMPENSATION DWIGHT(3) HAYES, III(4) REAMER THORNDIKE(5) TREYNOR
---------------------- --------- ------------- ------ ------------ -------
Trust(2) $ 6,080 $ 6,213 $ 5,958 $ 6,205 $ 6,511
Tax-Managed Portfolio 5,168 5,175 4,963 5,175 2,553
Trust and Fund Complex $145,000(6) $153,750(7) $145,000 $146,250(8) $150,000
- ----------
(1) As of March 1, 1998, the Eaton Vance complex consists of 146 registered investment companies or series thereof.
(2) The Trust consisted of 16 Funds as of October 31, 1997.
(3) Mr. Dwight received $678 of deferred compensation from the Portfolio.
(4) Mr. Hayes received $520 of deferred compensation from the Portfolio.
(5) Mr. Thorndike received $1,474 of deferred compensation from the Portfolio.
(6) Includes $45,000 of deferred compensation.
(7) Includes $38,438 of deferred compensation.
(8) Includes $109,022 of deferred compensation.
INVESTMENT ADVISER AND ADMINISTRATOR
The Trust on behalf of Tax-Managed Emerging Growth engages Eaton Vance as
its investment adviser and the Portfolio engages BMR as its investment adviser
pursuant to separate investment advisory agreements which are substantially
the same for each. BMR or Eaton Vance acts as investment adviser to investment
companies and various individual and institutional clients with combined
assets under management of approximately $22 billion.
Eaton Vance, its affiliates and its predecessor companies have been
managing assets of individuals and institutions since 1924 and managing
investment companies since 1931. They maintain a large staff of experienced
fixed-income and equity investment professionals to service the needs of their
clients. The fixed-income division focuses on all kinds of taxable investment-
grade and high-yield securities, tax-exempt investment-grade and high-yield
securities, and U.S. Government securities. The equity division cover stocks
ranging from blue chip to emerging growth companies.
Eaton Vance and its affiliates act as adviser to a family of mutual funds,
and individual and various institutional accounts, including corporations,
hospitals, retirement plans, universities, foundations and trusts. Eaton Vance
mutual funds feature international equities, domestic equities, tax-free
municipal bonds, and U.S. government and corporate bonds. Lloyd George
Management has advised Eaton Vance's international equity funds since 1992.
Founded in 1991, Lloyd George is headquartered in Hong Kong with offices in
London and Mumbai, India. It has established itself as a leader in investment
management in Asian equities and other global markets. Lloyd George features
an experienced team of investment professionals that began working together in
the mid-1980s. Lloyd George analysts cover East Asia, the India subcontinent,
Russia and Eastern Europe, Latin America, Australia and New Zealand from
offices in Hong Kong, London and Mumbai. Together Eaton Vance and Lloyd George
manage over $23 billion in assets. Eaton Vance mutual funds are distributed by
the Principal Underwriter both within the United States and offshore.
The Principal Underwriter believes that an investment professional can
provide valuable services to you to help you reach your investment goals.
Meeting investment goals requires time, objectivity and investment savvy.
Before making an investment recommendation, a representative can help you
carefully consider your short- and long-term financial goals, your tolerance
for investment risk, your investment time frame, and other investments you may
already own. Your professional investment representatives are knowledgeable
about financial markets, as well as the wide range of investment opportunities
available. A representative can provide you with tailored financial advice and
help you decide when to buy, sell or persevere with your investments.
BMR manages the investments and affairs of the Portfolio subject to the
supervision of the Portfolio's Board of Trustees. BMR furnishes to the
Portfolio investment research, advice and supervision, furnishes an investment
program and determines what securities will be purchased, held or sold by the
Portfolio and what portion, if any, of the Portfolio's assets will be held
uninvested. The Investment Advisory Agreement requires BMR to pay the salaries
and fees of all officers and Trustees of the Portfolio who are members of the
BMR organization and all personnel of BMR performing services relating to
research and investment activities. The Portfolio is responsible for all
expenses not expressly stated to be payable by BMR under the Investment
Advisory Agreement, including, without implied limitation, (i) expenses of
maintaining the Portfolio and continuing its existence, (ii) registration of
the Portfolio under the 1940 Act, (iii) commission, 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 interest in the Portfolio under federal and state securities
laws and of preparing and printing registration statements or other offering
statements or memoranda for such purposes and for distributing the same to
investors, and fees and expenses of registering and maintaining registration
of the Portfolio and of the Portfolio's placement agent as broker-dealer or
agent under state securities laws, (ix) expenses of reports and notices to
investors and of meetings of investors and proxy solicitations therefor, (x)
expenses of reports to governmental officers and commissions, (xi) insurance
expenses, (xii) association membership dues, (xiii) fees, expenses and
disbursements of custodians and subcustodians for all services to the
Portfolio (including without limitation safekeeping of funds, securities and
other investments, keeping of books, accounts and records, and determination
of net asset values, book capital account balances and tax capital account
balances), (xiv) fees, expenses and disbursements of transfer agents, dividend
disbursing agents, investor servicing agents and registrars for all services
to the Portfolio, (xv) expenses for servicing the accounts of investors, (xvi)
any direct charges to investors approved by the Trustees of the Portfolio,
(xvii) compensation and expenses of Trustees of the Portfolio who are not
members of BMR's organization, and (xviii) such non-recurring items as may
arise, including expenses incurred in connection with litigation, proceedings
and claims and any legal obligation of the Portfolio to indemnify its
Trustees, officer and investors with respect thereto, to the extent not
covered by insurance.
For a description of the compensation that the Portfolio pays BMR under
its Investment Advisory Agreement, see the Prospectus. As of October 31, 1997,
the Portfolio had net assets of $2,871,445,818. For the fiscal year ended
October 31, 1997 and for the period from the Portfolio's start of business,
December 1, 1995, to the fiscal year ended October 31, 1996, the Portfolio
paid BMR advisory fees of $9,455,900 and $2,116,576, respectively (equivalent
to 0.53% and 0.618% (annualized), respectively, of the Portfolio's average
daily net assets for each such period).
Eaton Vance manages the investments and affairs of Tax-Managed Emerging
Growth subject to the supervision of the Trust's Board of Trustees. Eaton
Vance furnishes to Tax-Managed Emerging Growth investment research, 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 Eaton Vance organization to serve
without salary as officers or Trustees of the Trust. The Fund is responsible
for all expenses not expressly stated to be payable by Eaton Vance under the
Investment Advisory Agreement, including, without limitation, the fees and
expenses of its custodian and transfer agent, including those incurred for
determining the Fund's net asset value and keeping its books; the cost of
share certificates; membership dues in investment company organizations;
brokerage commissions and fees; fees and expenses of registering its shares;
expenses of reports to shareholders, proxy statements, and other expenses of
shareholders' meetings; insurance premiums; printing and mailing expenses;
interest, taxes and corporate fees; legal and accounting expenses; and
compensation and expenses of Trustees not affiliated with Eaton Vance. Tax-
Managed Emerging Growth will also bear expenses incurred in connection with
litigation, proceedings and claims and any legal obligation of the Trust to
indemnify its officers and Trustees with respect thereto, to the extent not
covered by insurance.
For a description of the compensation that Tax-Managed Emerging Growth
pays Eaton Vance under the Investment Advisory Agreement, see the Prospectus.
As of October 31, 1997, Tax-Managed Emerging Growth had net assets of
$14,588,056. For the period from the start of business, September 25, 1997, to
October 31, 1997, Tax-Managed Emerging Growth paid Eaton Vance advisory fees
of $3,602 (equivalent to 0.625% (annualized) of the Fund's average daily net
assets for such period).
Each Investment Advisory Agreement continues in effect from year to year
so long as such continuance is approved at least annually (i) by the vote of a
majority of the noninterested Trustees of the Portfolio or the Trust (as the
case may be) cast in person at a meeting specifically called for the purpose
of voting on such approval and (ii) by the Board of Trustees of the Portfolio
or the Trust or by vote of a majority of the outstanding voting securities of
the Portfolio or Tax-Managed Emerging Growth. Each Agreement may be terminated
at any time without penalty on sixty (60) days' written notice by the Board of
Trustees of either party, or by vote of the majority of the outstanding voting
securities of the Portfolio or Tax-Managed Emerging Growth (as the case may
be), and each Agreement will terminate automatically in the event of its
assignment. Each Agreement provides that an Adviser may render services to
others. Each Agreement also provides that an Adviser shall not be liable for
any loss incurred in connection with the performance of its duties, or action
taken or omitted under that Agreement, in the absence of willful misfeasance,
bad faith, gross negligence in the performance of its duties or by reason of
its reckless disregard of its obligations and duties thereunder, or for any
losses sustained in the acquisition, holding or disposition of any security or
other investment.
Each Fund pays all of its own expenses including, without limitation, (i)
expenses of maintaining the Fund and continuing its existence, (ii) its pro
rata share of the Trust's registration under the 1940 Act, (iii) commission,
fees and other expenses connected with the purchase or sale of securities and
other investments, (iv) auditing, accounting and legal expenses, (v) taxes and
interest, (vi) governmental fees, (vii) expenses of issue, sale, repurchase
and redemption of shares, (viii) expenses of registering and qualifying the
Fund and its shares under federal and state securities laws and of preparing
and printing prospectuses for such purpose and for distribution of the same to
shareholders and investors, and fees and expenses of registering and
maintaining registration of the Fund and of the Fund's principal underwriter,
if any, as broker-dealer or agent under state securities laws, (ix) expenses
of reports and notices to shareholders and of meetings of shareholders and
proxy solicitations therefor, (x) expenses of reports to governmental officers
and commissions, (xi) insurance expenses, (xii) association membership dues,
(xiii) fees, expenses and disbursements of custodians and subcustodians for
all services to the Fund (including without limitation safekeeping of funds,
securities and other investments, keeping of books and accounts and
determination of net asset values), (xiv) fees, expenses and disbursements of
transfer agents, dividend disbursing agents, shareholder servicing agents and
registrar for all services to the Fund, (xv) expenses for servicing
shareholder accounts, (xvi) any direct charges to shareholders approved by the
Trustees of the Trust, (xvii) compensation and expenses of Trustees of the
Trust who are not members of the Eaton Vance organization, and (xviii) such
non-recurring items as may arise, including expenses incurred in connection
with litigation, proceedings and claims and any legal obligation of the Trust
to indemnify its Trustees and officers with respect thereto, to the extent not
covered by insurance.
BMR is a wholly-owned subsidiary of Eaton Vance. Eaton Vance and EV are
both wholly-owned subsidiaries of EVC. Eaton Vance and BMR are both
Massachusetts business trusts, and EV is the trustee of Eaton Vance and BMR.
The Directors of EV are 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, John M. Nelson and Ralph Z. Sorenson. Mr. Hawkes is chairman, president
and chief executive officer and Mr. Gardner is vice chairman of EVC, Eaton
Vance, BMR and EV. All of the issued and outstanding shares of Eaton Vance and
of EV are owned by EVC. All of the issued and outstanding shares of BMR are
owned by Eaton Vance. All shares of the outstanding Voting Common Stock of EVC
are deposited in a Voting Trust, the Voting Trustees of which are Messrs.
Gardner, Hawkes, Rowland and Alan R. Dynner, Thomas E. Faust, Jr., William M.
Steul and Wharton P. Whitaker. 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 Eaton Vance and BMR who are also officers or officers and
Directors of EVC and EV. As of February 28, 1998, Messrs. Gardner and Hawkes
each owned 24% of such voting trust receipts and Messrs. Rowland and Faust
owned 15% and 13%, respectively, and Messrs. Dynner, Steul and Whitaker each
owned 8%. Messrs. Gardner, Hawkes and Dynner, who are officers or Trustees of
the Trust and/or the Portfolio, are members of the EVC, Eaton Vance, BMR and
EV organizations. Messrs. Ahern, Fetter, Murphy, O'Connor, Richardson, Terry
and Woodbury, and Ms. Sanders are officers of the Trust and/or the Portfolio
and are also members of the Eaton Vance, BMR and EV organizations.
Eaton Vance owns all the stock of Northeast Properties, Inc., which is
engaged in real estate investment. EVC owns all the stock of Fulcrum
Management, Inc. and MinVen, Inc., which are engaged in precious metal mining
venture investment and management. EVC also owns approximately 21% of the
Class A shares of Lloyd George Management (B.V.I.) Limited, a registered
investment adviser. EVC, Eaton Vance, BMR and EV may also enter into other
businesses.
EVC and its affiliates and their officers and employees from time to time
have transactions with various banks, including the custodian of the Fund and
the Portfolio, IBT. It is Eaton Vance's opinion that the terms and conditions
of such transactions will not be influenced by existing or potential custodial
or other relationships between the Trust or the Portfolio and such banks.
CUSTODIAN
IBT acts as custodian for the Trust and the Portfolio. IBT has custody of
all cash and securities of Tax-Managed Emerging Growth, maintains the Fund's
general ledger and computes the daily net asset value of shares of Tax-Managed
Emerging Growth. IBT has the custody of all cash and securities representing
Tax-Managed Growth's interest in the Portfolio, has custody of all the
Portfolio's assets, maintains the general ledger of the Portfolio and the Fund
and computes the daily net asset value of interests in the Portfolio and the
net asset value of shares of Tax-Managed Growth. In such capacity it attends
to details in connection with the sale, exchange, substitution, transfer or
other dealings with Tax-Managed Emerging Growth's and the Portfolio's
investments, receives and disburses all funds and performs various other
ministerial duties upon receipt of proper instruction from the Trust and the
Portfolio. IBT also provides services in connection with the preparation of
shareholder reports and the electronic filing of such reports with the
Commission for which it receives a separate fee. Landon T. Clay, a Trustee of
the Portfolio, owns approximately 13% of the voting stock of Investors
Financial Services Corp., the holding company parent of IBT. In view of Mr.
Clay's interest in IBT, the Portfolio is treated as a self-custodian pursuant
to Rule 17f-2 under the 1940 Act and the Portfolio's investments held by IBT
as custodian are thus subject to the additional examinations by the
Portfolio's independent certified public accountants as called for by such
Rule.
SERVICES FOR ACCUMULATION -- CLASS A SHARES
The following services are voluntary, involve no extra charge, other than
the sales charge included in the offering price, and may be changed or
discontinued without penalty at any time.
Intended Quantity Investment -- Statement of Intention. If it is
anticipated that $50,000 or more of Class A shares and shares of other funds
exchangeable for Class A shares and listed under "The Eaton Vance Exchange
Privilege" in the Prospectus will be purchased within a 13-month period, a
Statement of Intention should be signed so that shares may be obtained at the
same reduced sales charge as though the total quantity were invested in one
lump sum. Shares held under Right of Accumulation (see below) as of the date
of the Statement will be included toward the completion of the Statement. The
Statement authorizes the Transfer Agent to hold in escrow sufficient shares
(5% of the dollar amount specified in the Statement) which can be redeemed to
make up any difference in sales charge on the amount intended to be invested
and the amount actually invested. Execution of a Statement does not obligate
the shareholder to purchase or the Fund to sell the full amount indicated in
the Statement, and should the amount actually purchased during the 13-month
period be more or less than that indicated on the Statement, price adjustments
will be made. For sales charges and other information on quantity purchases,
see "How to Buy Shares" in the Prospectus. Any investor considering signing a
Statement of Intention should read it carefully.
Right of Accumulation -- Cumulative Quantity Discount. The applicable
sales charge level for the purchase of Class A shares is calculated by taking
the dollar amount of the current purchase and adding it to the value
(calculated at the maximum current offering price) of the shares the
shareholder owns in his or her account(s) in the Fund and shares of other
funds exchangeable for Class A shares and listed under "The Eaton Vance
Exchange Privilege" in the Prospectus. The sales charge on the shares being
purchased will then be at the rate applicable to the aggregate. For sales
charges on quantity purchases, see "How to Buy Shares" in the Prospectus.
Shares purchased (i) by an individual, his or her spouse and their children
under the age of twenty-one, and (ii) by a trustee, guardian or other
fiduciary of a single trust estate or a single fiduciary account, will be
combined for the purpose of determining whether a purchase will qualify for
the Right of Accumulation and if qualifying, the applicable sales charge
level.
For any such discount to be made available, at the time of purchase a
purchaser or his or her Authorized Firm must provide the Principal Underwriter
(in the case of a purchase made through an Authorized Firm) or the Transfer
Agent (in the case of an investment made by mail) with sufficient information
to permit verification that the purchase order qualifies for the accumulation
privilege. Confirmation of the order is subject to such verification. The
Right of Accumulation privilege may be amended or terminated at any time as to
purchases occurring thereafter.
SERVICE FOR WITHDRAWAL
The Transfer Agent will send to the shareholder regular quarterly payments
of any permitted amount designated by the shareholder (see "Eaton Vance
Shareholder Services - Withdrawal Plan" in the Prospectus) based upon the
value of the shares held. The checks will be drawn from share redemptions and
hence, although they are a return of principal, may require the recognition of
taxable gain or loss. Income dividends and capital gain distributions in
connection with withdrawal plan accounts will be credited at net asset value
as of the record date for each distribution. Continued withdrawals in excess
of current income will eventually use up principal, particularly in a period
of declining market prices. A shareholder may not have a withdrawal plan in
effect at the same time he or she has authorized Bank Automated Investing or
is otherwise making regular purchases of Fund shares. The shareholder, the
Transfer Agent or the Principal Underwriter will be able to terminate the
withdrawal plan at any time without penalty.
DETERMINATION OF NET ASSET VALUE
The net asset value of the Portfolio and of shares of each Fund is
determined by IBT (as agent and custodian for the Funds and the Portfolio) in
the manner described under "Valuing Shares" in the Prospectus. Each Fund and
the Portfolio will be closed for business and will not price their shares on
the following business holidays: New Year's Day, Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.
The Trustees of the Trust and the Portfolio have established the following
procedures for the fair valuation of Tax-Managed Emerging Growth's and the
Portfolio's assets under normal market conditions. Securities listed on
foreign or U.S. securities exchanges or in the NASDAQ National Market System
generally are valued at the last sale prices or, if there were no sales on a
particular day, at the mean between the closing bid and asked prices therefor
on the exchange where such securities are principally traded or on such
National Market System. Unlisted or listed securities for which closing sale
prices are not available are valued at the mean between the latest bid and
asked prices. An option is valued at the last sale price as quoted on the
principal exchange or board of trade on which such option or contract is
traded, or in the absence of a sale, at the mean between the last bid and
asked prices. Futures positions on securities or currencies are generally
valued at closing settlement prices. Short-term debt securities with a
remaining maturity of 60 days or less are valued at amortized cost. If
securities were acquired with a remaining maturity of more than 60 days, their
amortized cost value will be based on their value on the sixty-first day prior
to maturity. Other fixed income and debt securities, including listed
securities and securities for which price quotations are available, will
normally be valued on the basis of valuations furnished by a pricing service.
All other securities are valued at fair value as determined in good faith by
or at the direction of the Trustees.
Each investor in the Portfolio, including Tax-Managed Growth, may add to
or reduce its investment in the Portfolio on each day the Exchange is open for
trading ("Portfolio Business Day") as of the close of regular trading on the
Exchange (the "Portfolio Valuation Time"). The value of each investor's
interest in the Portfolio will be determined by multiplying the net asset
value of the Portfolio by the percentage, determined on the prior Portfolio
Business Day, which represents that investor's share of the aggregate
interests in the Portfolio on such prior day. Any additions or withdrawals for
the current Portfolio Business Day will then be recorded. Each investor's
percentage of the aggregate interest in the Portfolio will then be recomputed
as a percentage equal to a fraction (i) the numerator of which is the value of
such investor's investment in the Portfolio as of the Portfolio Valuation Time
on the prior Portfolio Business Day plus or minus, as the case may be, the
amount of any additions to or withdrawals from the investor's investment in
the Portfolio on the current Portfolio Business Day and (ii) the denominator
of which is the aggregate net asset value of the Portfolio as of the Portfolio
Valuation Time on the prior Portfolio Business Day plus or minus, as the case
may be, the amount of the net additions to or withdrawals from the aggregate
investment in the Portfolio on the current Portfolio Business Day by all
investors in the Portfolio. The percentage so determined will then be applied
to determine the value of the investor's interest in the Portfolio for the
current Portfolio Business Day.
Generally, trading in the foreign securities owned by Tax-Managed Emerging
Growth and the Portfolio is substantially completed each day at various times
prior to the close of the Exchange. The values of these securities used in
determining the net asset value of the Portfolio and Tax-Managed Emerging
Growth's shares are computed as of such times. Occasionally, events affecting
the value of foreign securities may occur between such times and the close of
the Exchange which will not be reflected in the computation of the Portfolio's
and Tax-Managed Emerging Growth's net asset value (unless the Portfolio or the
Fund deems that such events would materially affect net asset value, in which
case an adjustment would be made and reflected in such computation). Foreign
securities and currency held by the Portfolio and Tax-Managed Emerging Growth
will be valued in U.S. dollars; such values will be computed by the custodian
based on foreign currency exchange rate quotations supplied by an independent
quotation service.
INVESTMENT PERFORMANCE
Average annual total return is determined seperately for each Class of a
Fund by multiplying a hypothetical initial purchase order of $1,000 by the
average annual compound rate of return (including capital appreciation/
depreciation, and distributions paid and reinvested) for the stated period and
annualizing the result. The calculation assumes (i) that all distributions are
reinvested at net asset value on the reinvestment dates during the period,
(ii) the deduction of the maximum sales charge from the initial $1,000
purchase order for Class A shares, (iii) a complete redemption of the
investment and, (iv) the deduction of any CDSC at the end of the period. For
information concerning the total return of the Classes of a Fund, see Appendix
A, Appendix B and Appendix C.
Each Fund may use total return figures showing after-tax returns,
including comparisons to tax-deferred vehicles such as Individual Retirement
Accounts ("IRAs") and variable annuities. In calculating after-tax returns,
the Fund will, in general, assume that its shareholders are U.S. individual
taxpayers subject to federal income taxes at the highest marginal rate then
applicable to ordinary income and long-term capital gains. After-tax returns
may also be calculated using different tax rate assumptions and taking into
account state and local income taxes as well as federal taxes. In calculating
after-tax returns, distributions made by the Fund are assumed to be reduced by
the amount of taxes payable on the distribution, and the after-tax proceeds of
the distribution are reinvested in the Fund at net asset value on the
reinvestment date.
Total return may be compared to relevant indices, such as the Consumer
Price Index and various domestic and foreign securities indices. In addition,
evaluations of a Fund's performance or rankings of mutual funds (which include
a Fund) made by independent sources may be used in advertisements and in
information furnished to present or prospective shareholders. Information,
charts and illustrations showing the effect of compounding interest or
relating to inflation and taxes (including their effects on the dollar and the
return on stocks and other investment vehicles) may also be included in
advertisements and materials furnished to present and prospective investors.
Tax-Managed Growth's performance may differ from that of other investors in
the Portfolio, and other investment companies.
Information used in advertisements and in materials furnished to present
or prospective shareholders may include statistics, data and performance
studies prepared by independent organizations or included in various
publications reflecting the investment performance or return achieved by
various classes and types of investments (e.g. common stocks, small company
stocks, long-term corporate bonds, long-term government bonds, intermediate-
term government bonds, U.S. Treasury bills) over various periods of time. This
information may be used to illustrate the benefits of long-term investments in
common stocks.
Information about the allocation and holdings of investments in the
Portfolio may be included in advertisements and other material furnished to
present and prospective shareholders.
Information used in advertisements and materials furnished to present and
prospective investors may include statements or illustrations relating to the
appropriateness of certain types of securities and/or mutual funds to meet
specific financial goals. Such information may address:
-- costs associated with aging parents;
-- funding a college education (including its actual and estimated cost);
-- health care expenses (including actual and projected expenses);
-- long-term disabilities (including the availability of, and coverage
provided by, disability insurance); and
-- retirement (including the availability of social security benefits, the
tax treatment of such benefits and statistics and other information
relating to maintaining a particular standard of living and outliving
existing assets).
Such information may also address different methods for saving money and
the results of such methods, as well as the benefits of investing in equity
securities. Such information may describe: the potential for growth; the
performance of equities as compared to other investment vehicles; and the
value of investing as early as possible and regularly, as well as staying
invested. The benefits of investing in equity securities by means of a mutual
fund may also be included (such benefits may include diversification,
professional management and the variety of equity mutual fund products).
Information in advertisements and materials furnished to present and
prospective investors may include profiles of different types of investors
(i.e., investors with different goals and assets) and different investment
strategies for meeting specific financial goals. Such information may provide
hypothetical illustrations which include: results of various investment
strategies; performance of an investment in a Fund over various time periods;
and results of diversifying assets among several investments with varying
performance. Information in advertisements and materials furnished to present
and prospective investors may also include quotations (including editorial
comments) and statistics concerning investing in securities, as well as
investing in particular types of securities and the performance of such
securities.
The Trust (or Principal Underwriter) may provide information about Eaton
Vance, its affiliates and other investment advisers to the funds in the Eaton
Vance Family of Funds in sales material or advertisements provided to
investors or prospective investors. Such material or advertisements may also
provide information on the use of investment professionals by such investors.
TAXES
Each Fund is treated as a separate corporation, and intends to qualify
each year as a regulated investment company ("RIC") under the Code to avoid
federal income tax. Accordingly, each Fund intends to satisfy certain
requirements relating to sources of its income and diversification of its
assets and to distribute a sufficient amount of its investment company taxable
income so as to effect such qualification. Each Fund may also distribute part
of all of its net investment income and net realized capital gains in
accordance with the timing requirements imposed by the Code, so as to reduce
or avoid any federal income or excise tax.
Because Tax-Managed Growth invests its assets in the Portfolio, the
Portfolio normally must satisfy the applicable source of income and
diversification requirements in order for the Fund to also satisfy them, and
the Portfolio intends to do so. For federal income tax purposes, the Portfolio
intends to be treated as a partnership that is not a "publicly traded
partnership" and, as a result, will not be subject to federal income tax. Tax-
Managed Growth, as an investor in the Portfolio, will be required to take into
account in determining its federal income tax liability its share of the
Portfolio's income, gains, losses, deductions, and credits, without regard to
whether it has received any cash distributions from the Portfolio.
The Portfolio will allocate at least annually among its investors,
including Tax-Managed Growth, each investor's distributive share of the
Portfolio's net investment income, net realized capital gains, and any other
items of income, gain, loss, deduction or credit. For purposes of applying the
requirements of the Code regarding qualification as a RIC, Tax-Managed Growth
(i) will be deemed to own its proportionate share of each of the assets of the
Portfolio and (ii) will be entitled to the gross income of the Portfolio
attributable to such share.
In order to avoid excise tax, the Code requires each Fund to distribute by
the end of each calendar year substantially all of its ordinary income for
such year and capital gain net income for the one-year period ending on
October 31 of such year, plus certain other amounts. Under current law,
provided each Fund qualifies as a RIC and the Portfolio is treated as a
partnership for Massachusetts and federal tax purposes, neither Fund nor the
Portfolio should be liable for any income, corporate excise or franchise tax
in the Commonwealth of Massachusetts.
A portion of distributions made by a Fund (that are derived from dividends
received by the Portfolio in the case of Tax-Managed Growth) from domestic
corporations and allocated to the Fund may qualify for the dividends-received
deduction ("DRD") for corporations. The DRD is reduced to the extent the
shares of the Fund with respect to which the dividends are received are
treated as debt-financed under the Code and is eliminated if the shares are
deemed to have been held for less than a minimum period, generally 46 days.
Receipt of certain distributions qualifying for the DRD may result in
reduction of the tax basis of the corporate shareholder's shares.
Distributions eligible for the DRD may give rise to or increase an alternative
minimum tax for certain corporations.
Under the Code, the redemption or exchange of shares of a RIC normally
results in capital gain or loss if such shares are held as capital assets.
However, a loss realized on a redemption or other disposition of Fund shares
may be disallowed under certain "wash sale" rules if shares of the Fund are
acquired within a period beginning 30 days before and ending 30 days after the
date of such redemption or other disposition. Any disallowed loss will result
in an adjustment to the shareholder's tax basis in some or all of the other
shares acquired.
Any loss realized upon the redemption or exchange of a Fund with a tax
holding period of six months or less will be treated as a long-term capital
loss to the extent of any distribution of net long-term capital gains with
respect to such shares.
Certain investors in the Portfolio, including RICs, have acquired
interests in the Portfolio by contributing securities. Due to tax
considerations, during the first seven years following the contribution of
securities (or within five years for securities contributed prior to June 9,
1997) to the Portfolio by an investor, such securities will not be distributed
to any investor other than the investor who contributed those securities.
Investors who acquire an interest in the Portfolio by contributing securities
and who redeem that interest within the applicable time period will generally
receive back one or more of the securities they contributed. In partial
redemptions by such investors during this period, the Portfolio will attempt
to accommodate requests to distribute initially those contributed securities
and share lots with the highest cost basis.
The Portfolio has significant holdings of highly appreciated securities
that were contributed to the Portfolio by investors other than Tax-Managed
Growth. If such securities were to be sold, the resulting capital gain would
be allocated disproportionately among the Portfolio's investors, with the
result that Tax-Managed Growth would not be subject to taxation on any gain
arising prior to the contribution of the securities to the Portfolio.
PRINCIPAL UNDERWRITER
The Trust has authorized the Principal Underwriter to act as its agent in
repurchasing shares at the rate of $2.50 for each repurchase transaction
handled by the Principal Underwriter. The Principal Underwriter estimates that
the expenses incurred by it in acting as repurchase agent for the Trust will
exceed the amounts paid therefor. For the amount paid by the Trust to the
Principal Underwriter for acting as repurchase agent, see Appendix A, Appendix
B and Appendix C.
CLASS A SHARES. Class A shares may be continuously purchased at the public
offering price through Authorized Firms which have agreements with the
Principal Underwriter. The Trust reserves the right to suspend or limit the
offering of its shares to the public at any time. The public offering price is
the net asset value next computed after receipt of the order, plus, where
applicable, a variable percentage (sales charge) depending upon the amount of
purchase as indicated by the sales charge table set forth in the Prospectus
(see "How to Buy Shares"). Such table is applicable to purchases of a Fund
alone or in combination with purchases of certain other funds offered by the
Principal Underwriter, made at a single time by (i) an individual, or an
individual, his spouse and their children under the age of twenty-one,
purchasing shares for his or their own account, and (ii) a trustee or other
fiduciary purchasing shares for a single trust estate or a single fiduciary
account. The table is also presently applicable to (1) purchases of Class A
shares pursuant to a written Statement of Intention; or (2) purchases of Class
A shares pursuant to the Right of Accumulation and declared as such at the
time of purchase.
Subject to the applicable provisions of the 1940 Act, the Trust may issue
Class A shares at net asset value in the event that an investment company
(whether a regulated or private investment company or a personal holding
company) is merged or consolidated with or acquired by the Class. Normally no
sales charges will be paid in connection with an exchange of Class A shares
for the assets of such investment company. Class A shares may be sold at net
asset value to any officer, director, trustee, general partner or employee of
the Trust, the Portfolio or any investment company for which Eaton Vance or
BMR acts as investment adviser, any investment advisory, agency, custodial or
trust account managed or administered by Eaton Vance or by any parent,
subsidiary or other affiliate of Eaton Vance, or any officer, director or
employee of any parent, subsidiary or other affiliate of Eaton Vance. The
terms "officer," "director," "trustee," "general partner" or "employee" as
used in this paragraph include any such person's spouse and minor children,
and also retired officers, directors, trustees, general partners and employees
and their spouses and minor children. Class A shares may also be sold at net
asset value to registered representatives and employees of Authorized Firms
and to the spouses and children under the age of 21 and beneficial accounts of
such persons.
The Principal Underwriter acts as principal in selling Class A shares
under a Distribution Agreement with the Trust. The expenses of printing copies
of prospectuses used to offer shares to Authorized Firms or investors and
other selling literature and of advertising are borne by the Principal
Underwriter. The fees and expenses of qualifying and registering and
maintaining qualifications and registrations of a Fund and its shares under
federal and state securities laws are borne by the Fund. The Distribution
Agreement is renewable annually by the Board of Trustees of the Trust
(including a majority of the noninterested Trustees), may be terminated on six
months' notice by either party and is automatically terminated upon
assignment. The Principal Underwriter distributes Class A shares on a "best
efforts" basis under which it is required to take and pay for only such shares
as may be sold. The Principal Underwriter allows Authorized Firms discounts
from the applicable public offering price which are alike for all Authorized
Firms. The Principal Underwriter may allow, upon notice to all Authorized
Firms with whom it has agreements, discounts up to the full sales charge
during the periods specified in the notice. During periods when the discount
includes the full sales charge, such Authorized Firms may be deemed to be
underwriters as that term is defined in the Securities Act of 1933.
CLASS B AND CLASS C SHARES. Under a Distribution Agreement, the Principal
Underwriter acts as principal in selling Class B and Class C shares. The
expenses of printing copies of prospectuses used to offer shares to Authorized
Firms or investors and other selling literature and of advertising is borne by
the Principal Underwriter. The fees and expenses of qualifying and registering
and maintaining qualifications and registrations of a Fund and its shares
under federal and state securities laws are borne by the Fund. In addition,
each Class B and Class C makes payments to the Principal Underwriter pursuant
to a Distribution Plan as described in the Prospectus; the provisions of the
plan relating to such payments are included in the Distribution Agreement. The
Distribution Agreement is renewable annually by the Trust's Board of Trustees
(including a majority of the noninterested Trustees who have no direct or
indirect financial interest in the operation of the Distribution Plans or the
Distribution Agreement), may be terminated on sixty days' notice either by
such Trustees or by vote of a majority of the outstanding Class B and Class C
shares or on six months' notice by the Principal Underwriter and is
automatically terminated upon assignment. The Principal Underwriter
distributes Class B and Class C shares on a "best efforts" basis under which
it is required to take and pay for only such shares as may be sold.
SERVICE PLAN -- CLASS A SHARES
The Trust on behalf of its Class A shares has adopted a Service Plan (the
"Plan") designed to meet the service fee requirements of the sales charge rule
of the National Association of Securities Dealers, Inc. (the "NASD").
(Management believes service fee payments are not distribution expenses
governed by Rule 12b-1 under the 1940 Act, but has chosen to have the Plan
approved as if that Rule were applicable.) The following supplements the
discussion of the Plan contained in the Prospectus.
The Plan remains in effect from year to year provided such continuance is
approved by a vote of both a majority of (i) the noninterested Trustees who
have no direct or indirect financial interest in the operation of the Plan or
any agreements related to it (the "Plan Trustees") and (ii) all of the
Trustees then in office, cast in person at a meeting (or meetings) called for
the purpose of voting on this Plan. The Plan may be terminated any time by
vote of the Plan Trustees or by a vote of a majority of the outstanding Class
A shares of the Fund. The Plan was approved by the Trustees, including the
Plan Trustees, on behalf of Tax-Managed Growth on June 23, 1997 and on behalf
of Tax-Managed Emerging Growth on August 11, 1997.
The Plan requires quarterly Trustee review of a written report of the
amount expended under the Plan and the purposes for which such expenditures
were made. The Plan may not be amended to increase materially the payments
described herein without approval of the affected shareholders of Class A
shares and the Trustees. So long as the Plan is in effect, the selection and
nomination of the noninterested Trustees shall be committed to the discretion
of such Trustees. The Trustees have determined that in their judgment there is
a reasonable likelihood that the Plan will benefit a Fund and its Class A
shareholders.
DISTRIBUTION PLANS -- CLASS B AND CLASS C SHARES
The Trust has adopted Distribution Plans (the "Plans") on behalf of its
Class B and Class C shares designed to meet the requirements of Rule 12b-1
under the 1940 Act and the sales charge rule of the NASD. The purpose of the
Plans is to compensate the Principal Underwriter for its distribution services
and facilities provided with respect to Class B and Class C shares.
The Plans provide that the Fund will pay sales commissions and
distribution fees to the Principal Underwriter only after and as a result of
the sale of Class B or Class C shares of the Fund. On each sale of Fund shares
(excluding reinvestment of distributions) the Fund will pay the Principal
Underwriter amounts representing (i) sales commissions equal to 5% of Class B
sales and 6.25% of Class C sales of the amount received by the Fund for each
share sold and (ii) distribution fees calculated by applying the rate of 1%
over the prime rate then reported in The Wall Street Journal to the
outstanding balance of uncovered distribution charges (as described below) of
the Principal Underwriter.
The amount payable to the Principal Underwriter pursuant to the Plans as
sales commissions and distribution fees with respect to each day will be
accrued on such day as a liability of the Funds' respective Class and will
accordingly reduce the Class' net assets upon such accrual, all in accordance
with generally accepted accounting principles. The amount payable on each day
is limited to 1/365 of .75% of a Class's net assets on such day. The level of
a Class' net assets changes each day and depends upon the amount of sales and
redemptions of shares, the changes in the value of the investments held by
Tax-Managed Emerging Growth or the Portfolio, the expenses of the Class, Fund
and the Portfolio accrued and allocated to the Fund and Class on such day,
income on portfolio investments of Tax-Managed Emerging Growth or the
Portfolio accrued and allocated to the Fund on such day, and any dividends and
distributions declared on Fund shares. The Trust does not accrue possible
future payments as a liability of a Class or reduce a Class' current net
assets in respect of unknown amounts which may become payable under the Plans
in the future because the standards for accrual of such a liability under
accounting principles have not been satisfied.
The Plans provide that the Class will receive all CDSCs and will make no
payments to the Principal Underwriter in respect of any day on which there are
no outstanding uncovered distribution charges of the Principal Underwriter.
CDSCs and accrued amounts will be paid by the Trust to the Principal
Underwriter whenever there exist uncovered distribution charges.
In calculating daily the amount of uncovered distribution charges,
distribution charges will include the aggregate amount of sales commissions
and distribution fees theretofore paid plus the aggregate amount of sales
commissions and distribution fees which the Principal Underwriter is entitled
to be paid under the Plans since their inception. Payments theretofore paid or
payable under the Plans by the Trust to the Principal Underwriter and CDSCs
theretofore paid or payable to the Principal Underwriter will be subtracted
from such distribution charges; if the result of such subtraction is positive,
a distribution fee (computed at 1% over the prime rate then reported in The
Wall Street Journal) will be computed on such amount and added thereto, with
the resulting sum constituting the amount of outstanding uncovered
distribution charges with respect to such day. The amount of outstanding
uncovered distribution charges of the Principal Underwriter calculated on any
day does not constitute a liability recorded on the financial statements of
the Fund.
The amount of uncovered distribution charges of the Principal Underwriter
at any particular time depends upon various changing factors, including the
level and timing of sales of shares, the nature of such sales (i.e., whether
they result from exchange transactions, reinvestments or from cash sales
through Authorized Firms), the level and timing of redemptions of shares upon
which a CDSC will be imposed, the level and timing of redemptions of shares
upon which no CDSC will be imposed (including redemptions of shares pursuant
to the exchange privilege which result in a reduction of uncovered
distribution charges), changes in the level of the net assets of the Class,
and changes in the interest rate used in the calculation of the distribution
fee under the Plans. Periods with a high level of sales of Class shares
accompanied by a low level of early redemptions of Class shares resulting in
the imposition of CDSCs will tend to increase the time during which there will
exist uncovered distribution charges of the Principal Underwriter.
Currently, payments of sales commissions and distribution fees and of
service fees may equal 1% of a Class's average daily net assets per annum. For
actual payments made and the outstanding uncovered distribution charges of the
Principal Underwriter, see Appendix B and Appendix C. The Trust believes that
the combined rate of all these payments may be higher than the rate of
payments made under distribution plans adopted by other investment companies
pursuant to Rule 12b-1. Although the Principal Underwriter will use its own
funds (which may be borrowed from banks) to pay sales commissions and service
fees for Class C sales and sales commissions for Class B sales at the time of
sale, it is anticipated that the Eaton Vance organization will profit by
reason of the operation of the Plans through an increase in the Fund's assets
(thereby increasing the advisory fee payable to BMR by the Portfolio or to
Eaton Vance by Tax-Managed Emerging Growth) resulting from sale of shares and
through the amounts paid to the Principal Underwriter, including CDSCs,
pursuant to the Plans. The Eaton Vance organization may be considered to have
realized a profit under the Plans if at any point in time the aggregate
amounts theretofore received by the Principal Underwriter pursuant to the
Plans and from CDSCs have exceeded the total expenses theretofore incurred by
such organization in distributing Class B and Class C shares of the Fund.
Total expenses for this purpose will include an allocable portion of the
overhead costs of such organization and its branch offices, which costs will
include without limitation leasing expense, depreciation of building and
equipment, utilities, communication and postage expense, compensation and
benefits of personnel, travel and promotional expense, stationery and
supplies, literature and sales aids, interest expense, data processing fees,
consulting and temporary help costs, insurance, taxes other than income taxes,
legal and auditing expense and other miscellaneous overhead items. Overhead is
calculated and allocated for such purpose by the Eaton Vance organization in a
manner deemed equitable to the Trust.
The Plans continue in effect from year to year for so long as such
continuance is approved at least annually by the vote of both a majority of
(i) the noninterested Trustees of the Trust who have no direct or indirect
financial interest in the operation of the Plan or any agreements related to
the Plan (the "Rule 12b-1 Trustees") and (ii) all of the Trustees then in
office, and the Distribution Agreement contains a similar provision. The Plans
and Distribution Agreements may be terminated at any time by vote of a
majority of the Rule 12b-1 Trustees or by a vote of a majority of the
outstanding voting securities of the applicable Class. The Plans require
quarterly Trustee review of a written report of the amount expended under the
Plans and the purposes for which such expenditures were made. The Plans may
not be amended to increase materially the payments described therein without
approval of the shareholders of the affected Class and the Trustees. So long
as the Plans are in effect, the selection and nomination of the noninterested
Trustees shall be committed to the discretion of such Trustees. Each Plan was
approved by the Trustees, including the Rule 12b-1 Trustees on behalf of Tax-
Managed Growth on June 23, 1997 and on behalf of Tax-Managed Emerging Growth
on August 11, 1997.
The Trustees of the Trust believe that the Plans will be a significant
factor in the expected growth of the Fund's assets, and will result in
increased investment flexibility and advantages which have benefitted and will
continue to benefit the Fund and its Class B and Class C shareholders.
Payments for sales commissions and distribution fees made to the Principal
Underwriter under the Plans will compensate the Principal Underwriter for its
services and expenses in distributing Class B and Class C shares of the Fund.
Service fee payments made to the Principal Underwriter and Authorized Firms
under the Plans provide incentives to provide continuing personal services to
investors and the maintenance of shareholder accounts. By providing
incentives to the Principal Underwriter and Authorized Firms, the Plans are
expected to result in the maintenance of, and possible future growth in, the
assets of the Fund. Based on the foregoing and other relevant factors, the
Trustees of the Trust have determined that in their judgment there is a
reasonable likelihood that the Plans will benefit the Fund and its Class B and
Class C shareholders.
PORTFOLIO SECURITY TRANSACTIONS
Decisions concerning the execution of portfolio security transactions,
including the selection of the market and the broker-dealer firm, are made by
an Adviser. An Adviser is also responsible for the execution of transactions
for all other accounts managed by it.
The Advisers place the portfolio security transactions of Tax-Managed
Emerging Growth and the Portfolio and of certain other accounts managed by
them for execution with many broker-dealer firms. An Adviser uses its best
efforts to obtain execution of portfolio security transactions at prices which
are advantageous and (when a disclosed commission is being charged) at
reasonably competitive commission rates. In seeking such execution, an Adviser
will use its best judgment in evaluating the terms of a transaction, and will
give consideration to various relevant factors, including without limitation
the size and type of the transaction, the general execution and operational
capabilities of the broker-dealer, the nature and character of the market for
the security, the confidentiality, speed and certainty of effective execution
required for the transaction, the reputation, reliability, experience and
financial condition of the broker-dealer, the value and quality of services
rendered by the broker-dealer in other transactions, and the reasonableness of
the commission or spread, if any. Transactions on stock exchanges and other
agency transactions involve the payment of negotiated brokerage commissions.
Such commissions vary among different broker-dealer firms, and a particular
broker-dealer may charge different commissions according to such factors as
the difficulty and size of the transaction and the volume of business done
with such broker-dealer. Transactions in foreign securities usually involve
the payment of fixed brokerage commissions, which are generally higher than
those in the United States. There is generally no stated commission in the
case of securities traded in the over-the-counter markets, but the price paid
or received usually include an undisclosed dealer markup or markdown. In an
underwritten offering the price paid includes a disclosed fixed commission or
discount retained by the underwriter or dealer. Although commissions paid on
portfolio transactions will, in the judgment of the relevant Adviser, be
reasonable in relation to the value of the services provided, commissions
exceeding those which another firm might charge may be paid to broker-dealers
who were selected to execute transactions on behalf of Tax-Managed Emerging
Growth or the Portfolio and an Adviser's other clients in part for providing
brokerage and research services to the Adviser.
As authorized in Section 28(e) of the Securities Exchange Act of 1934, a
broker or dealer who executes a portfolio transaction may receive a commission
which is in excess of the amount of commission another broker or dealer would
have charged for effecting that transaction if the relevant Adviser determines
in good faith that such compensation was reasonable in relation to the value
of the brokerage and research services provided. This determination may be
made on the basis of either that particular transaction or on the basis of
overall responsibilities which the Adviser and its affiliates have for
accounts over which it exercises investment discretion. In making any such
determination, the Adviser will not attempt to place a specific dollar value
on the brokerage and research services provided or to determine what portion
of the commission should be related to such services. Brokerage and research
services may include advice as to the value of securities, the advisability of
investing in, purchasing or selling securities, and the availability of
securities or purchasers or sellers of securities; furnishing analyses and
reports concerning issuers, industries, securities, economic factors and
trends, portfolio strategy and the performance of accounts; and effecting
securities transactions and performing functions incidental thereto (such as
clearance and settlement); and the "Research Services" referred to in the next
paragraph.
It is a common practice of the investment advisory industry for the
advisers of investment companies, institutions and other investors to receive
research, statistical and quotation services, data, information and other
services, products and materials which assist such advisers in the performance
of their investment responsibilities ("Research Services") from broker-dealers
which execute portfolio transactions for the clients of such advisers and from
third parties with which such broker-dealers have arrangements. Consistent
with this practice, an Adviser may receive Research Services from broker-
dealer firms with which that Adviser places portfolio transactions and from
third parties with which these broker-dealers have arrangements. These
Research Services may include such matters as general economic and market
reviews, industry and company reviews, evaluations of securities and portfolio
strategies and transactions and recommendations as to the purchase and sale of
securities and other portfolio transactions, financial, industry and trade
publications, news and information services, pricing and quotation equipment
and services, and research oriented computer hardware, software, data bases
and services. Any particular Research Service obtained through a broker-dealer
may be used by an Adviser in connection with client accounts other than those
accounts which pay commissions to such broker-dealer. Any such Research
Service may be broadly useful and of value to an Adviser in rendering
investment advisory services to all or a significant portion of its clients,
or may be relevant and useful for the management of only one client's account
or of a few clients' accounts, or may be useful for the management of merely a
segment of certain clients' accounts, regardless of whether any such account
or accounts paid commissions to the broker-dealer through which such Research
Service was obtained. The advisory fee paid by Tax-Managed Emerging Growth or
the Portfolio is not reduced because its Adviser receives such Research
Services. An Adviser evaluates the nature and quality of the various Research
Services obtained through broker-dealer firms and attempts to allocate
sufficient commissions to such firms to ensure the continued receipt of
Research Services which the Adviser believes are useful or of value to it in
rendering investment advisory services to its clients.
Subject to the requirement that an Adviser shall use its best efforts to
seek to execute portfolio security transactions at advantageous prices and at
reasonably competitive commission rates or spreads, an Adviser is authorized
to consider as a factor in the selection of any broker-dealer firm with whom
portfolio orders may be placed the fact that such firm has sold or is selling
shares of the Funds or of other investment companies sponsored by Eaton Vance.
This policy is not inconsistent with a rule of the NASD, which rule provides
that no firm which is a member of the NASD shall favor or disfavor the
distribution of shares of any particular investment company or group of
investment companies on the basis of brokerage commissions received or
expected by such firm from any source.
Securities considered as investments for Tax-Managed Emerging Growth or
the Portfolio may also be appropriate for other investment accounts managed by
an Adviser or its affiliates. Whenever decisions are made to buy or sell
securities for Tax-Managed Emerging Growth or the Portfolio and one or more of
such other accounts simultaneously, the Adviser will allocate the security
transactions (including "hot" issues) in a manner which it believes to be
equitable under the circumstances. As a result of such allocations, there may
be instances where Tax-Managed Emerging Growth and the Portfolio will not
participate in a transaction that is allocated among other accounts. If an
aggregated order cannot be filled completely, allocations will generally be
made on a pro rata basis. An order may not be allocated on a pro rata basis
where, for example: (i) consideration is given to portfolio managers who have
been instrumental in developing or negotiating a particular investment; (ii)
consideration is given to an account with specialized investment policies that
coincide with the particulars of a specific investment; (iii) pro rata
allocation would result in odd-lot or de minimis amounts being allocated to a
portfolio or other client; or (iv) where the Adviser reasonably determines
that departure from a pro rata allocation is advisable. While these
aggregation and allocation policies could have a detrimental effect on the
price or amount of the securities available to Tax-Managed Emerging Growth and
the Portfolio from time to time, it is the opinion of the Trustees of the
Trust and the Portfolio that the benefits from the Adviser's organization
outweigh any disadvantage that may arise from exposure to simultaneous
transactions.
For the period from the start of business, September 25, 1997, to October
31, 1997, Tax-Managed Emerging Growth paid brokerage commissions of $9,058
with respect to portfolio transactions. Of this amount, approximately $8,926
was paid in respect of portfolio security transactions aggregating
approximately $5,484,898 to firms which provided some Research Services to the
Adviser's organization (although many of such firms may have been selected in
any particular transaction primarily because of their execution capabilities).
For the fiscal year ended October 31, 1997 and for the period from the
Portfolio's start of business, December 1, 1995, to the fiscal year ended
October 31, 1996, the Portfolio paid brokerage commissions of $1,019,496 and
$144,815, respectively, on portfolio security transactions. Of these amounts,
approximately $832,436 and $112,018, respectively, was paid in respect of
portfolio security transactions aggregating approximately $740,796,988 and
$89,523,457, respectively, to firms which provided some Research Services to
the Adviser's organization (although many of such firms may have been selected
in any particular transaction primarily because of their execution
capabilities).
OTHER INFORMATION
The Trust is organized as a business trust under the laws of the
Commonwealth of Massachusetts under a Declaration of Trust dated May 7, 1984,
as amended. On July 10, 1995, the Trust changed its name from Eaton Vance
Government Obligations Trust to Eaton Vance Mutual Funds Trust. Tax-Managed
Growth established multiple classes of shares on November 1, 1997. The
operations of Class B reflect the operations of Tax-Managed Growth prior to
such date. Class A and Class C are successors to the operations of separate
series of the Trust. Eaton Vance, pursuant to its agreement with the Trust,
controls the use of the words "Eaton Vance" and "EV" in the Fund's name and
may use the words "Eaton Vance" or "EV" in other connections and for other
purposes.
The Trust's Declaration of Trust may be amended by the Trustees when
authorized by vote of a majority of the outstanding voting securities of the
Trust, the financial interests of which are affected by the amendment. The
Trustees may also amend the Declaration of Trust without the vote or consent
of shareholders to change the name of the Trust or any series or to make such
other changes (such as reclassifying series or classes of shares or
restructuring the Trust) as do not have a materially adverse effect on the
rights or interests of shareholders or if they deem it necessary to conform it
to applicable federal or state laws or regulations. The Trust's By-laws
provide that the Trust will indemnify its Trustees and officers against
liabilities and expenses incurred in connection with any litigation or
proceeding in which they may be involved because of their offices with the
Trust. However, no indemnification will be provided to any Trustee or officer
for any liability to the Trust or its shareholders by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office. The Trust or any series or class
thereof may be terminated by: (1) the affirmative vote of the holders of not
less than two-thirds of the shares outstanding and entitled to vote at any
meeting of shareholders of the Trust or the appropriate series or class
thereof, or by an instrument or instruments in writing without a meeting,
consented to by the holders of two-thirds of the shares of the Trust or a
series or class thereof, provided, however, that, if such termination is
recommended by the Trustees, the vote of a majority of the outstanding voting
securities of the Trust or a series or class thereof entitled to vote thereon
shall be sufficient authorization; or (2) by means of an instrument in writing
signed by a majority of the Trustees, to be followed by a written notice to
shareholders stating that a majority of the Trustees has determined that the
continuation of the Trust or a series or a class thereof is not in the best
interest of the Trust, such series or class or of their respective
shareholders.
Under Massachusetts law, if certain conditions prevail, shareholders of a
Massachusetts business trust (such as the Trust) could be deemed to have
personal liability for the obligations of the Trust. Numerous investment
companies registered under the 1940 Act have been formed as Massachusetts
business trusts, and management is not aware of an instance where such
liability has been imposed. The Trust's Declaration of Trust contains an
express disclaimer of liability on the part of the Fund shareholders and the
Trust's By-laws provide that the Trust shall assume the defense on behalf of
any Fund shareholders. (The Declaration of Trust also contains provisions
limiting the liability of a series or class to that series or class).
Moreover, the Trust's By-laws also provide for indemnification out of the
property of the Fund of any shareholder held personally liable solely by
reason of being or having been a shareholder for all loss or expense arising
from such liability. The assets of the Fund are readily marketable and will
ordinarily substantially exceed its liabilities. In light of the nature of the
Fund's business and the nature of its assets, management believes that the
possibility of the Fund's liabilities exceeding its assets, and therefore the
shareholder's risk of personal liability, is extremely remote.
In accordance with the Declaration of Trust of the Portfolio, there will
normally be no meetings of the investors for the purpose of electing Trustees
unless and until such time as less than a majority of the Trustees holding
office have been elected by investors. In such an event the Trustees of the
Portfolio then in office will call an investors' meeting for the election of
Trustees. Except for the foregoing circumstances and unless removed by action
of the investors in accordance with the Portfolio's Declaration of Trust, the
Trustees shall continue to hold office and may appoint successor Trustees.
The Declaration of Trust of the Portfolio provides that no person shall
serve as a Trustee if investors holding two-thirds of the outstanding interest
have removed him from that office either by a written declaration filed with
the Portfolio's custodian or by votes cast at a meeting called for that
purpose. The Declaration of Trust further provides that under certain
circumstances the investors may call a meeting to remove a Trustee and that
the Portfolio is required to provide assistance in communicating with
investors about such a meeting.
The Portfolio's Declaration of Trust provides that Tax-Managed Growth and
other entities permitted to invest in the Portfolio (e.g., other U.S. and
foreign investment companies, and common and commingled trust funds) will each
be liable for all obligations of the Portfolio. However, the risk of Tax-
Managed Growth incurring financial loss on account of such liability is
limited to circumstances in which both inadequate insurance exists and the
Portfolio itself is unable to meet its obligations. Accordingly, the Trustees
of the Trust believe that neither Tax-Managed Growth nor its shareholders will
be adversely affected by reason of the Fund investing in the Portfolio.
In connection with telephone redemptions and exchanges, the Trust, the
Principal Underwriter and the Transfer Agent generally will verify personal
account information in order to determine that instructions communicated are
genuine.
The Portfolio's Declaration of Trust provides that the Portfolio will
terminate 120 days after the complete withdrawal of Tax-Managed Growth or any
other investor in the Portfolio, unless either the remaining investors by
unanimous vote at a meeting of such investors, or a majority of the Trustees
of the Portfolio, by written instrument consented to by all investors, agree
to continue the business of the Portfolio. This provision is consistent with
treatment of the Portfolio as a partnership for federal income tax purposes.
The right to redeem shares of a Fund can be suspended and the payment of
the redemption price deferred when the Exchange is closed (other than for
customary weekend and holiday closings), during periods when trading on the
Exchange is restricted as determined by the Commission, or during any
emergency as determined by the Commission which makes it impracticable for the
Portfolio to dispose of its securities or value its assets, or during any
other period permitted by order of the Commission for the protection of
investors.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Deloitte & Touche LLP, 125 Summer Street, Boston, Massachusetts, are the
independent certified public accountants of the Funds and the Portfolio,
providing audit services, tax return preparation, and assistance and
consultation with respect to the preparation of filings with the Commission.
FINANCIAL STATEMENTS
The audited financial statements of and independent auditors' reports for
the Funds and the Portfolio, appear in each Fund's most recent annual report
to shareholders, which are incorporated by reference into this SAI. A copy of
each Fund's annual report accompanies this SAI.
Registrant incorporates by reference the audited financial information for
the Funds and the Portfolio listed below for the fiscal year ended October 31,
1997, as previously filed electronically with the Commission:
Eaton Vance Tax-Managed Growth Fund
Tax-Managed Growth Portfolio
(Accession No. 0000950156-98-000080
Eaton Vance Tax-Managed Emerging Growth Fund
(Accession No. 0000950109-98-000228)
APPENDIX A: CLASS A SHARES
FEES AND EXPENSES -- TAX-MANAGED EMERGING GROWTH
SERVICE PLAN
Class A has not made any service fee payments to the Principal Underwriter
under the Plan to date. Class A expects to begin accruing for its service fee
payments during the quarter ending December 31, 1998.
PRINCIPAL UNDERWRITER
For the period from the start for business, September 25, 1997, to October
31, 1997, there were no repurchase transactions.
The total sales charges for sales of shares of the Fund for the period
from the start of business, September 25, 1997, to October 31, 1997 was
$118,058, of which $17,757 was received by the Principal Underwriter and
Authorized Firms received $100,301.
PERFORMANCE INFORMATION -- ALL FUNDS
The table below indicates the cumulative and average annual total return
on a hypothetical investment of $1,000 in Class A shares for the period shown
in the table. The "Value of Initial Investment" reflects the deduction of the
maximum sales charge of 5.75%. Past performance is not indicative of future
results. Investment return and principal value will fluctuate; shares, when
redeemed, may be worth more or less than their original cost.
VALUE OF A $1,000 INVESTMENT -- TAX-MANAGED EMERGING GROWTH
TOTAL RETURN TOTAL RETURN
EXCLUDING MAXIMUM INCLUDING MAXIMUM
VALUE OF VALUE OF SALES CHARGE SALES CHARGE
INVESTMENT INVESTMENT INITIAL INVESTMENT -------------------------- ---------------------------
PERIOD DATE INVESTMENT ON 10/31/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- -------------------------- ------------- -------------- --------------- ------------ ------------ ------------- ------------
Life of Fund 9/25/97 $942.51 $918.00 -2.60% N/A -8.20% N/A
The table below indicates the cumulative and average total return on a
hypothetical investment of $1,000. Total return prior to November 1, 1997
reflects the total return of the predecessor to Class A. Total return prior to
March 28, 1996 reflects the total return of Class B, adjusted to reflect the
Class A sales charge. The Class B total return has not been adjusted to
reflect certain other expenses (such as distribution and/or service fees). If
such adjustments were made, the Class A total return would be different. The
"Value of Initial Investment" reflects the deduction of the maximum sales
charge of 5.75%. Past performance is not indicative of future results.
Investment return and principal value will fluctuate; shares, when redeemed,
may be worth more or less than their original cost.
VALUE OF A $1,000 INVESTMENT -- TAX-MANAGED GROWTH
TOTAL RETURN TOTAL RETURN
EXCLUDING MAXIMUM INCLUDING MAXIMUM
VALUE OF VALUE OF SALES CHARGE SALES CHARGE
INVESTMENT INVESTMENT INITIAL INVESTMENT -------------------------- ---------------------------
PERIOD DATE INVESTMENT ON 10/31/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- -------------------------- ------------- -------------- --------------- ------------ ------------ ------------- ------------
10 Years Ended
10/31/97 10/31/87 $941.99 $4,297.25 356.18% 16.39% 329.72% 15.70%
5 Years Ended
10/31/97 10/31/92 $942.00 $2,355.80 150.09% 20.12% 135.58% 18.69%
1 Year Ended
10/31/97 10/31/96 $942.61 $1,242.81 31.85% 31.85% 24.28% 24.28%
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As at January 31, 1998, the Trustees and officers of the Trust, as a
group, owned in the aggregate less than 1% of the outstanding shares of each
Class A and of each Fund. In addition, as of the same date, the following
record owners held the amounts of Class A shares indicated below, which were
held on behalf of customers who are the beneficial owners of such shares, and
as to which they have voting power under certain limited circumstances:
TAX-MANAGED GROWTH -- Merrill Lynch, Pierce, Fenner & Smith, Inc. Jacksonville, FL 12.1%
TAX-MANAGED EMERGING GROWTH -- Merrill Lynch, Pierce, Fenner & Smith, Inc. Jacksonville, FL 8.7%
To the knowledge of the Trust, no other person owned of record or
beneficially 5% or more of either Fund's outstanding Class A shares as of such
date.
APPENDIX B: CLASS B SHARES
FEES AND EXPENSES -- ALL FUNDS
DISTRIBUTION PLANS
Each Distribution Plan and Distribution Agreement remains in effect until
April 28, 1998 and may be continued as described under "Distribution Plan".
Pursuant to Rule 12b-1, the Plan has been approved by the relevant Fund's
shareholders and by the Board of Trustees of the Trust, as required by Rule
12b-1.
The following table shows, for the fiscal year ended October 31, 1997, (1)
sales commissions paid by the Principal Underwriter to Authorized Firms on
sales of Class B shares, (2) distribution payments to the Principal
Underwriter allocated to Class B shares under the Plan, (3) CDSC payments to
the Principal Underwriter, (4) service fees on Class B shares paid under the
Plan, and (5) amount of service fees on Class B shares paid to Authorized
Firms (the balance of which being retained by the Principal Underwriter).
DISTRIBUTION CDSC SERVICE
PAYMENTS TO PAYMENTS TO FEES TO
SALES THE PRINCIPAL THE PRINCIPAL SERVICE AUTHORIZED
CLASS B COMMISSIONS UNDERWRITER UNDERWRITER FEES** FIRMS
- ------- ----------- ----------- ----------- ------ -----
Tax-Managed Growth ............... $16,528,950 $2,104,488 $353,000 $78,511 $77,815
Tax-Managed Emerging Growth* ..... 339,086 2,603 400 0 0
- ----------
* For the period from the start of business, September 29, 1997,to October 31, 1997.
** Tax-Managed Emerging Growth expects to begin accruing for its service fees during the quarter ending
December 31, 1998.
PRINCIPAL UNDERWRITER
For the fiscal year ended October 31, 1997, Tax-Managed Growth paid the
Principal Underwriter $2,402.50 for repurchase transactions handled by the
Principal Underwriter. For the period from the start of business, September
29, 1997, to October 31, 1997 Tax-Managed Emerging Growth Class B had no
repurchase transactions.
PERFORMANCE INFORMATION -- ALL FUNDS
The table below indicates the cumulative and average annual total return
on a hypothetical investment of $1,000 in Class B shares for the periods shown
in the table. Past performance is not indicative of future results. Investment
return and principal value will fluctuate; shares, when redeemed, may be worth
more or less than their original cost.
VALUE OF A $1,000 INVESTMENT -- TAX-MANAGED EMERGING GROWTH
VALUE OF VALUE OF
INVESTMENT INVESTMENT TOTAL RETURN BEFORE TOTAL RETURN AFTER
BEFORE AFTER DEDUCTING DEDUCTING
DEDUCTING THE DEDUCTING THE THE MAXIMUM CDSC THE MAXIMUM CDSC
INVESTMENT INVESTMENT AMOUNT OF MAXIMUM CDSC MAXIMUM CDSC -------------------------- --------------------------
PERIOD* DATE INVESTMENT ON 10/31/97 ON 10/31/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- -------------- ------------ ----------- --------------- --------------- ------------ ------------ ------------ ------------
Life of Fund 9/29/97 $1,000 $974.00 $925.30 -2.60% N/A -7.47% N/A
- ------------
*Investment operations began on September 29, 1997.
The table below indicates the cumulative and average annual total return
on a hypothetical investment of $1,000 in Class B shares of Tax-Managed
Growth. Total return for Class B prior to March 28, 1996 reflects the total
return of another investor in the Portfolio, adjusted to reflect the Class B
sales charge. This total return has not been adjusted to reflect certain other
Class B expenses (such as distribution and/or service fees). If such
adjustments were made, the performance would be lower. Past performance is not
indicative of future results. Investment return and principal value will
fluctuate; shares, when redeemed, may be worth more or less than their
original cost.
VALUE OF $1,000 INVESTMENT -- TAX-MANAGED GROWTH
VALUE OF VALUE OF
INVESTMENT INVESTMENT TOTAL RETURN TOTAL RETURN
INVESTMENT INVESTMENT BEFORE CDSC AFTER CDSC BEFORE DEDUCTING CDSC AFTER DEDUCTING CDSC
PERIOD DATE ON 10/31/97 ON 10/31/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
------ ---- ----------- ----------- ---------- ---------- ---------- ----------
10 years ended
10/31/97 10/31/87 $4,506.89 $4,506.89 350.69% 16.25% 350.69% 16.25%
5 years ended
10/31/97 10/31/92 $2,470.82 $2,450.82 147.08% 19.83% 145.08% 19.64%
1 year ended
10/31/97 10/31/96 $1,304.93 $1,254.93 30.49% 30.49% 25.49% 25.49%
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As at January 31, 1998, the Trustees and officers of the Trust, as a
group, owned in the aggregate less than 1% of the outstanding shares of each
Class B and of each Fund. In addition, as of the same date, the following
record owners held the amounts of Class B shares indicated below, which were
held on behalf of their customers who are the beneficial owners of such
shares, and as to which they have voting power under certain limited
circumstances:
TAX-MANAGED GROWTH -- Merrill Lynch, Pierce, Fenner & Smith, Inc. Jacksonville, FL 20.5%
TAX-MANAGED EMERGING GROWTH -- Merrill Lynch, Pierce, Fenner & Smith, Inc. Jacksonville, FL 17.8%
To the knowledge of the Trust, no other person owned of record or
beneficially 5% or more of either Fund's outstanding Class B shares as of such
date.
APPENDIX C: CLASS C SHARES
FEES AND EXPENSES -- TAX-MANAGED EMERGING GROWTH
DISTRIBUTION PLAN
For the period from the start of business, September 29, 1997, to October
31, 1997, the Principal Underwriter paid to Authorized Firms sales commissions
of $20,998 on sales of Class C shares of Tax-Managed Emerging Growth. During
the same period, Class C made sales commission payments under the Plan to the
Principal Underwriter aggregating $461. The Principal Underwriter received no
CDSCs during the period. The sales commission payments reduced Uncovered
Distribution Charges under the Plan. As at October 31, 1997, the outstanding
Uncovered Distribution Charges of the Principal Underwriter calculated under
the Plan amounted to approximately $122,000. During the period from the start
of business, September 29, 1997, to October 31, 1997, Class C made service fee
payments aggregating $154, all of which were paid to the Principal
Underwriter.
PRINCIPAL UNDERWRITER
For the period from the start of business, September 29, 1997, to October
31, 1997, there were no repurchase transactions.
PERFORMANCE INFORMATION -- ALL FUNDS
The table below indicates the cumulative and average annual total return
on a hypothetical investment of $1,000 in Class C shares for the period shown
in the table. Past performance is not indicative of future results. Investment
return and principal value will fluctuate; shares, when redeemed, may be worth
more or less than their original cost.
VALUE OF A $1,000 INVESTMENT -- TAX-MANAGED EMERGING GROWTH
VALUE OF VALUE OF
INVESTMENT INVESTMENT TOTAL RETURN BEFORE TOTAL RETURN AFTER
BEFORE AFTER DEDUCTING DEDUCTING
DEDUCTING DEDUCTING THE MAXIMUM CDSC THE MAXIMUM CDSC
INVESTMENT INVESTMENT AMOUNT OF THE CDSC THE CDSC -------------------------- --------------------------
PERIOD* DATE INVESTMENT ON 10/31/97 ON 10/31/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- -------------- ------------ ------------ --------------- -------------- ------------ ------------ ------------ ------------
Life of
the Fund 9/29/97 $1,000 $972.00 $962.28 -2.80% N/A -3.77% N/A
- ------------
*Investment operations began on September 29, 1997.
The table below indicates the cumulative and average annual total return
on a hypothetical investment of $1,000. Total return prior to November 1, 1997
reflects the total return of the predecessor to Class C. Total return prior to
August 2, 1996 reflects the total return of Class B adjusted to reflect the
Class C sales charge. The Class B total return has not been adjusted to
reflect certain other expenses (such as distribution and/or service fees). If
such adjustments were made, the Class C total return would be different. Past
performance is not indicative of future results. Investment return and
principal value will fluctuate; shares, when redeemed, may be worth more or
less than their original cost.
VALUE OF A $1,000 INVESTMENT -- TAX-MANAGED GROWTH
VALUE OF VALUE OF
INVESTMENT INVESTMENT TOTAL RETURN BEFORE TOTAL RETURN AFTER
BEFORE AFTER DEDUCTING DEDUCTING
DEDUCTING DEDUCTING THE CDSC THE CDSC
INVESTMENT INVESTMENT AMOUNT OF THE CDSC THE CDSC -------------------------- --------------------------
PERIOD DATE INVESTMENT ON 10/31/97 ON 10/31/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- -------------- ------------ ------------ --------------- -------------- ------------ ------------ ------------ ------------
10 Years Ended
10/31/97 10/31/87 $1,000 $4,484.42 $4,484.42 348.44% 16.19% 348.44% 16.19%
5 Years Ended
10/31/97 10/31/92 $1,000 $2,458.48 $2,458.48 145.85% 19.71% 145.85% 19.71%
1 Year Ended
10/31/97 10/31/96 $1,000 $1,301.48 $1,291.48 30.15% 30.15% 29.15% 29.15%
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As at January 31, 1998, the Trustees and officers of the Trust, as a
group, owned in the aggregate less than 1% of the outstanding shares of each
Class C and of each Fund. In addition, as of the same date, the following
record owners held the amounts of Class C shares indicated below, which were
held either individually or on behalf of their customers who are the
beneficial owners of such shares, and as to which they have voting power under
certain limited circumstances:
TAX-MANAGED GROWTH - Merrill Lynch, Pierce, Fenner & Smith, Inc. Jacksonville, FL 34.1%
TAX-MANAGED EMERGING GROWTH - Merrill Lynch, Pierce, Fenner & Smith, Inc. Jacksonville, FL 30.2%
Kenneth and Anna Damhof Charitable
Remainder Unitrust Trust New Ulm, MN 5.4%
To the knowledge of the Trust, no other person owned of record or
beneficially 5% or more of either Fund's outstanding Class C shares as of such
date.
[logo] Investing
for the
EATON VANCE 21st
- ------------ Century
MUTUAL FUNDS
- --------------------------------------------------------------------------------
Eaton Vance Tax-Managed Growth Fund
Eaton Vance Tax-Managed Emerging Growth Fund
STATEMENT OF ADDITONAL INFORMATION
March 1, 1998
- --------------------------------------------------------------------------------
Portfolio Investment Adviser
Boston Management and Research, 24 Federal Street, Boston, MA 02110
Investment Adviser of Eaton Vance Tax-Managed Emerging Growth Fund
Fund Administrator
Eaton Vance Management, 24 Federal Street, Boston, MA 02110
Principal Underwriter
Eaton Vance Distributors, Inc., 24 Federal Street, Boston, MA 02110
(800) 225-6265
Custodian
Investors Bank & Trust Company, 200 Clarendon Street, Boston, MA 02116
Transfer Agent
First Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123
(800) 262-1122
Auditors
Deloitte & Touche LLP, 125 Summer Street, Boston, MA 02110
TGMGSAI
Mutual Funds [PHOTO OF 1040 TAX FORM ON DESK APPEARS HERE]
for People
Who Pay
EATON VANCE
================ Taxes
Mutual Funds
Semiannual Report April 30, 1998
[PHOTO OF NYSE FLAG
APPEARS HERE]
EATON VANCE
TAX-MANAGED
EMERGING
GROWTH
FUND
[PHOTO OF 1099 TAX FORM ON
DESK APPEARS HERE]
Eaton Vance Tax-Managed Emerging Growth Fund as of April 30, 1998
- --------------------------------------------------------------------------------
INVESTMENT UPDATE
- --------------------------------------------------------------------------------
[PHOTO OF EDWARD E. SMILEY, PORTFOLIO MANAGER APPEARS HERE]
Investment Environment
- --------------------------------------------------------------------------------
The Equity Markets
. The U.S. market maintained its momentum through the six months ended April
30, 1998 as low interest rates and a global flight to quality provided
continuing support for investors. The rally was increasingly dominated by
large-cap stocks, with the S&P 500 registering a gain of 22.5% during the
period./1/
. Smaller, emerging companies continued to lag the blue chip indices. The S&P
600 Index - an unmanaged index of small-cap companies - had a return of
13.2% during the six-month period./1/
. The economy remained fairly robust. First quarter gross domestic product
rose a stronger-than-expected 4.8%, while inflation remained well under
control. Corporate earnings trended generally higher, although some sectors
experienced shortfalls.
The Fund
- --------------------------------------------------------------------------------
Performance for the Past Six Months
. The Fund's Class A shares had a total return of 14.8% during the six months
ended April 30, 1998./2/ This return resulted from an increase in net asset
value per share (NAV) to $11.18 on April 30, 1998 from $9.74 on October 31,
1997.
. The Fund's Class B shares had a total return of 14.5% during the six months
ended April 30, 1998./2/ This return resulted from an increase in NAV to
$11.15 from $9.74 on October 31, 1997.
. The Fund's Class C shares had a total return of 14.5% during the six months
ended April 30, 1998./2/ This return resulted from an increase in NAV to
$11.13 from $9.72 on October 31, 1997.
Recent Strong Performers
. Information services companies remained the Fund's largest sector weighting
and featured some of the Fund's strongest performers. Abacus Direct Corp.,
which provides database consumer information for direct marketing
companies, rose 53% during the period. Paychex, Inc., which provides
computerized payroll and internal accounting services to small and
medium-sized companies, rose 42%.
. Other strong performers included Documentum, Inc., which rose 79%. The
company develops Internet and server-based software that allows companies
to share information. In the financial sector, Capital One Financial Corp.
rose 105%. First quarter earnings rose 55% due to strong consumer loan
business and improved net interest margins.
. In keeping with the tax-managed aspect of the Fund, several holdings were
sold in cases where earnings failed to meet expectations. Those losses were
used to offset realized gains in other securities.
Some Major Portfolio Holdings
. IDX Systems Corp. was the Fund's largest holding at April 30, 1998. The
Vermont-based company's IDXtend and LastWord systems integrate services for
hospitals and medical practices, streamline patient processing, and help
reduce costs of health care providers.
. In the restaurant sector, Papa John's International, Inc. saw first quarter
earnings rise 47%. The 1600-store chain has followed a successful strategy
that includes high-quality pizza and rapid expansion. Papa John's plans to
open an additional 300 stores in 1998.
. J.D. Edwards, Inc. develops Enterprise Resource Planning software that
helps integrate functions as diverse as ordering, manufacturing,
transportation, and human resources. The company's SCOREx and One-World
products have been especially well received, contributing to 154% second
quarter earnings growth.
- --------------------------------------------------------------------------------
Mutual fund shares are not insured by the FDIC and are not deposits or other
obligations of, or guaranteed by, any depository institution. Shares are subject
to investment risks, including possible loss of principal invested.
================================================================================
Fund Information
as of April 30, 1998
Performance/3/ Class A Class B Class C
- -------------------------------------------------------------------------------
Cumulative Total Returns (at net asset value)
- -------------------------------------------------------------------------------
Life of Fund+ 11.8% 11.5% 11.3%
SEC Cumulative Total Returns (including sales charge or applicable CDSC)
- -------------------------------------------------------------------------------
Life of Fund+ 5.4% 6.5% 10.3%
+Inception Dates - Class A: 9/25/97; Classes B & C: 9/29/97
Ten Largest Holdings/4/
- -------------------------------------------------------------------------------
By total net assets
IDX Systems Corp. 1.4%
MiniMed, Inc. 1.3
Varco International, Inc. 1.3
Cambridge Technology Partners, Inc. 1.3
Papa John's International, Inc. 1.3
Louis Dreyfus Natural Gas 1.2
Central Newspapers, Inc., Class A 1.2
J.D. Edwards, Inc. 1.2
The Mens Wearhouse, Inc. 1.2
Harbinger, Corp. 1.2
/1/ It is not possible to invest directly in an Index./2/ These returns do not
include the 5.75% maximum sales charge for the Fund's Class A shares or the
applicable contingent deferred sales charges (CDSC) for the Fund's Class B
and Class C shares. /3/ Returns are calculated by determining the
percentage change in net asset value (NAV) with all distributions
reinvested. SEC cumulative total returns for Class A reflect a 5.75% sales
charge; for Class B, returns reflect applicable CDSC based on the following
schedule: 5%-1st and 2nd years; 4%-3rd year; 3%-4th year; 2%-5th year; 1%-
6th year; for Class C, return reflects one-year 1% CDSC. /4/ Based on
market value as of 4/30/98. Ten largest holdings represent 12.6% of the
Portfolio's investments. Holdings are subject to change.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost.
2
Eaton Vance Tax-Managed Emerging Growth Fund as of April 30, 1998
PORTFOLIO OF INVESTMENTS (Unaudited)
Common Stocks -- 89.9%
Security Shares Value
- --------------------------------------------------------------------------
Advertising -- 1.6%
- --------------------------------------------------------------------------
Catalina Marketing Corp.* 13,400 $ 696,800
Outdoor Systems, Inc.* 14,500 460,375
- --------------------------------------------------------------------------
$ 1,157,175
- --------------------------------------------------------------------------
Banks - Regional -- 1.7%
- --------------------------------------------------------------------------
Colonial Bancgroup, Inc. (The) 13,900 $ 498,663
Sovereign Bancorp, Inc. 39,920 753,490
- --------------------------------------------------------------------------
$ 1,252,153
- --------------------------------------------------------------------------
Banks and Money Services -- 0.6%
- --------------------------------------------------------------------------
Bank United Corp. 7,950 $ 411,413
- --------------------------------------------------------------------------
$ 411,413
- --------------------------------------------------------------------------
Broadcasting and Cable -- 2.4%
- --------------------------------------------------------------------------
Emmis Broadcasting Corp., Class A* 16,000 $ 828,000
Jacor Communications, Inc.* 9,300 528,938
Sinclair Broadcast Group, Class A* 7,900 409,813
- --------------------------------------------------------------------------
$ 1,766,751
- --------------------------------------------------------------------------
Building Materials -- 0.9%
- --------------------------------------------------------------------------
Texas Industries, Inc. 10,000 $ 644,375
- --------------------------------------------------------------------------
$ 644,375
- --------------------------------------------------------------------------
Business Products and Services -- 3.7%
- --------------------------------------------------------------------------
CN Maximus, Inc.* 24,100 $ 759,150
Gartner Group, Inc., Class A* 25,000 828,125
Personnel Group of America, Inc.* 38,800 771,150
United Rentals, Inc.* 10,300 354,706
- --------------------------------------------------------------------------
$ 2,713,131
- --------------------------------------------------------------------------
Business Services - Miscellaneous -- 2.2%
- --------------------------------------------------------------------------
Human Genome Sciences, Inc.* 11,600 $ 421,950
On Assignment, Inc. 21,000 677,250
Sylvan Learning Systems, Inc.* 10,000 493,750
- --------------------------------------------------------------------------
$ 1,592,950
- --------------------------------------------------------------------------
Communications Equipment -- 3.3%
- --------------------------------------------------------------------------
Aspect Telecommunication Corp.* 20,000 $ 575,000
Comverse Technology, Inc.* 16,200 767,475
ECI Telecommunications 8,700 265,350
Glenayre Technologies, Inc.* 34,800 545,925
P-COM, Inc.* 14,600 287,438
- --------------------------------------------------------------------------
$ 2,441,188
- --------------------------------------------------------------------------
Communications Services -- 1.5%
- --------------------------------------------------------------------------
Smartalk Teleservices, Inc.* 20,000 $ 397,500
Transition Systems, Inc.* 30,400 684,000
- --------------------------------------------------------------------------
$ 1,081,500
- --------------------------------------------------------------------------
Computer Software -- 2.4%
- --------------------------------------------------------------------------
Brio Technology, Inc.* 900 $ 9,900
HNC Software, Inc.* 8,500 331,500
PeopleSoft, Inc.* 12,000 558,000
Saville Systems, PLC ADR* 11,100 553,613
Visio Corp.* 6,500 321,750
- --------------------------------------------------------------------------
$ 1,774,763
- --------------------------------------------------------------------------
Consumer Products -- 1.0%
- --------------------------------------------------------------------------
Sola International, Inc.* 9,600 $ 408,000
Twinlab Corp.* 8,600 337,550
- --------------------------------------------------------------------------
$ 745,550
- --------------------------------------------------------------------------
Consumer Services -- 0.9%
- --------------------------------------------------------------------------
Strayer Education, Inc. 18,400 $ 676,200
- --------------------------------------------------------------------------
$ 676,200
- --------------------------------------------------------------------------
Drugs -- 4.8%
- --------------------------------------------------------------------------
Elan Corp., PLC ADR* 11,000 $ 683,375
Genzyme Corp.* 45,100 343,888
Genzyme Corp., Class A* 18,100 559,969
Parexel International Corp.* 20,600 690,100
Quintiles Transnational Corp.* 7,500 371,250
Sepracor, Inc.* 12,500 578,125
Vertex Pharmaceuticals, Inc.* 10,200 317,475
- --------------------------------------------------------------------------
$ 3,544,182
- --------------------------------------------------------------------------
See notes to financial statements
3
Eaton Vance Tax-Managed Emerging Growth Fund as of April 30, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
Security Shares Value
- --------------------------------------------------------------------------
Electrical Equipment -- 1.4%
- --------------------------------------------------------------------------
Level One Communications, Inc.* 20,900 $ 650,513
Micrel, Inc.* 9,000 353,250
- --------------------------------------------------------------------------
$ 1,003,763
- --------------------------------------------------------------------------
Electronics - Instruments -- 1.3%
- --------------------------------------------------------------------------
Broadcom Corp., Class A* 100 $ 4,800
Qlogic Corp.* 8,400 373,800
Vitesse Semiconductor Corp.* 10,100 582,644
- --------------------------------------------------------------------------
$ 961,244
- --------------------------------------------------------------------------
Electronics - Semiconductors -- 2.0%
- --------------------------------------------------------------------------
Altera Corp.* 13,800 $ 558,900
Dallas Semiconductor Corp. 15,200 586,150
Linear Technologies Corp. 4,200 338,100
- --------------------------------------------------------------------------
$ 1,483,150
- --------------------------------------------------------------------------
Entertainment -- 0.5%
- --------------------------------------------------------------------------
MGM Grand, Inc.* 11,200 $ 378,000
- --------------------------------------------------------------------------
$ 378,000
- --------------------------------------------------------------------------
Financial - Miscellaneous -- 0.8%
- --------------------------------------------------------------------------
Capital One Financial Corp. 6,200 $ 595,588
- --------------------------------------------------------------------------
$ 595,588
- --------------------------------------------------------------------------
Health Care Services -- 0.7%
- --------------------------------------------------------------------------
NCS Healthcare, Inc., Class A* 17,000 $ 499,375
- --------------------------------------------------------------------------
$ 499,375
- --------------------------------------------------------------------------
Health Services -- 9.2%
- --------------------------------------------------------------------------
American Retirement Corp.* 32,100 $ 694,163
Compdent Corp.* 45,000 590,625
Concentra Managed Care, Inc.* 22,000 684,750
Express Scripts, Inc., Class A* 7,600 608,000
Health Management Associates, Inc., Class A* 27,450 864,674
MiniMed, Inc.* 19,100 954,999
National Surgery Centers, Inc.* 9,900 280,913
Omnicare, Inc. 12,700 434,975
Pediatrix Medical Group, Inc.* 7,200 303,750
Renal Care Group, Inc.* 19,000 726,750
Sunrise Assisted Living, Inc.* 14,500 649,781
- --------------------------------------------------------------------------
$ 6,793,380
- --------------------------------------------------------------------------
Information Services -- 22.7%
- --------------------------------------------------------------------------------
Abacus Direct Corp.* 11,000 $ 625,625
Acxiom Corp.* 35,100 851,175
Affiliated Computer Services, Inc., Class A* 18,200 639,275
Aspect Development, Inc.* 9,800 620,463
Aspen Technologies, Inc.* 17,300 845,538
BISYS Group, Inc. (The)* 19,800 782,100
Cambridge Technology Partners, Inc.* 17,700 924,824
CBT Group, PLC ADR* 11,600 590,150
CCC Information Services Group* 22,700 544,800
Citrix Systems, Inc.* 6,250 388,281
Documentum, Inc.* 12,100 651,888
FIserv, Inc.* 8,500 555,688
Harbinger, Corp.* 23,800 865,724
IDX Systems Corp.* 23,000 1,001,937
Information Management Resources, Inc.* 6,850 185,806
J.D. Edwards, Inc.* 25,000 890,624
Legato Systems, Inc.* 15,800 499,675
Lycos, Inc.* 4,200 259,613
Manugistics Group, Inc. 8,800 528,000
Mobius Management Systems, Inc.* 21,900 405,150
National Data Corp. 5,000 204,063
Nova Corp.* 21,100 717,400
Paychex, Inc. 5,700 309,581
Pegasystems, Inc.* 12,300 230,625
SunGard Data Systems, Inc.* 21,500 765,938
Symantec* 19,000 551,000
Vantive Corp.* 15,300 489,600
Veritas Software Corp.* 13,000 711,750
Yahoo!, Inc.* 1,000 118,938
- --------------------------------------------------------------------------
$16,755,231
- --------------------------------------------------------------------------
Insurance -- 1.0%
- --------------------------------------------------------------------------
Mercury General Corp. 6,600 $ 427,350
Mutual Risk Management Ltd. 9,400 318,425
- --------------------------------------------------------------------------
$ 745,775
- --------------------------------------------------------------------------
Investment Services -- 2.9%
- --------------------------------------------------------------------------
Centura Banks, Inc. 12,000 $ 864,000
E*Trade Group, Inc.* 22,000 548,625
PIMCO Advisors Holdings L.P. 14,300 445,088
PMI Group, Inc. 3,600 292,500
- --------------------------------------------------------------------------
$ 2,150,213
- --------------------------------------------------------------------------
See notes to financial statements
4
Eaton Vance Tax-Managed Emerging Growth Fund as of April 30, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
Security Shares Value
- --------------------------------------------------------------------------
Machinery -- 2.4%
- --------------------------------------------------------------------------
Camco International, Inc. 12,000 $ 814,500
Varco International, Inc.* 30,900 950,174
- --------------------------------------------------------------------------
$ 1,764,674
- --------------------------------------------------------------------------
Medical Products -- 1.6%
- --------------------------------------------------------------------------
Ocular Sciences, Inc.* 15,100 $ 422,800
Sofamor Danek Group, Inc.* 9,100 798,525
- --------------------------------------------------------------------------
$ 1,221,325
- --------------------------------------------------------------------------
Oil and Gas - Exploration
and Production -- 7.3%
- --------------------------------------------------------------------------
Cross Timbers Oil Co. 43,300 $ 828,113
Devon Energy Corp. 18,800 749,650
Forcenergy, Inc.* 30,000 691,875
Louis Dreyfus Natural Gas* 45,790 918,661
Meridian Resource Corp.* 81,000 734,063
Newfield Exploration Co.* 26,900 652,325
Titan Exploration, Inc.* 50,000 415,625
Vintage Petroleum, Inc. 21,800 425,100
- --------------------------------------------------------------------------
$ 5,415,412
- --------------------------------------------------------------------------
Publishing -- 2.1%
- --------------------------------------------------------------------------
Belo (A.H.) Corp. 11,700 $ 619,369
Central Newspapers, Inc., Class A 12,400 908,299
- --------------------------------------------------------------------------
$ 1,527,668
- --------------------------------------------------------------------------
Retail - Food and Drug -- 2.0%
- --------------------------------------------------------------------------
Papa John's International, Inc.* 22,100 $ 922,674
Starbucks Corp.* 11,200 539,000
- --------------------------------------------------------------------------
$ 1,461,674
- --------------------------------------------------------------------------
Retail - Specialty and Apparel -- 1.9%
- --------------------------------------------------------------------------
Bed Bath and Beyond, Inc.* 10,000 $ 492,500
The Mens Wearhouse, Inc.* 20,800 876,199
- --------------------------------------------------------------------------
$ 1,368,699
- --------------------------------------------------------------------------
Semiconductor Equipment -- 1.0%
- --------------------------------------------------------------------------
Advanced Energy Industries, Inc.* 18,000 $ 267,750
PRI Automation, Inc.* 17,600 470,800
- --------------------------------------------------------------------------
$ 738,550
- --------------------------------------------------------------------------
Software Services -- 0.4%
- --------------------------------------------------------------------------
JDA Software Group, Inc.* 5,950 $ 300,847
- --------------------------------------------------------------------------
$ 300,847
- --------------------------------------------------------------------------
Telephone Utilities -- 0.7%
- --------------------------------------------------------------------------
Pacific Gateway Exchange, Inc.* 9,600 $ 547,200
- --------------------------------------------------------------------------
$ 547,200
- --------------------------------------------------------------------------
Transportation -- 1.0%
- --------------------------------------------------------------------------
Comair Holdings, Inc. 26,100 $ 712,856
- --------------------------------------------------------------------------
$ 712,856
- --------------------------------------------------------------------------
Total Common Stocks
(identified cost $58,914,598) $66,225,955
- --------------------------------------------------------------------------
Short-Term Investments -- 10.1%
Face Amount
Security (000's omitted) Value
- --------------------------------------------------------------------------
Federal Home Loan Mortgage Corp.,
5.45%, 5/1/98 $ 7,398 $ 7,398,000
- --------------------------------------------------------------------------
Total Short-Term Investments
(identified cost $7,398,000) $ 7,398,000
- --------------------------------------------------------------------------
Total Investments -- 100.0%
(identified cost $66,312,598) $73,623,955
- --------------------------------------------------------------------------
Other Assets, Less Liabilities -- 0.0% $ 3,080
- --------------------------------------------------------------------------
Net Assets -- 100.0% $73,627,035
- --------------------------------------------------------------------------
* Non-income producing security.
See notes to financial statements
5
Eaton Vance Tax-Managed Emerging Growth Fund as of April 30, 1998
FINANCIAL STATEMENTS (Unaudited)
Statement of Assets and Liabilities
As of April 30, 1998
Assets
- -------------------------------------------------------------------------------
Investments at value (Note 1A), (identified cost, $66,312,598) $73,623,955
Cash 1,641
Receivable for investments sold 1,281,746
Receivable for Fund shares sold 2,355,213
Dividends receivable 13,493
Deferred organization expense (Note 1D) 18,265
- -------------------------------------------------------------------------------
Total assets $77,294,313
- -------------------------------------------------------------------------------
Liabilities
- -------------------------------------------------------------------------------
Payable for investments purchased $ 2,675,202
Payable for Fund shares redeemed 970,670
Payable to affiliate for shareholder services (Note 6) 523
Accrued expenses 20,883
- -------------------------------------------------------------------------------
Total liabilities $ 3,667,278
- -------------------------------------------------------------------------------
Net Assets $73,627,035
- -------------------------------------------------------------------------------
Sources of Net Assets
- -------------------------------------------------------------------------------
Paid-in capital $67,941,893
Accumulated net realized loss on investments
(computed on the basis of identified cost) (1,410,440)
Accumulated net investment loss (215,775)
Net unrealized appreciation of investments (computed
on the basis of identified cost) 7,311,357
- -------------------------------------------------------------------------------
Total $73,627,035
- -------------------------------------------------------------------------------
Class A Shares
- -------------------------------------------------------------------------------
Net Assets $20,900,977
Shares Outstanding 1,869,075
Net Asset Value and Redemption Price Per Share
(net assets / shares of beneficial interest outstanding) $ 11.18
Offering Price Per Share (100 / 94.25 of net asset $ 11.86
value per share)
- -------------------------------------------------------------------------------
Class B Shares
- -------------------------------------------------------------------------------
Net Assets $40,501,151
Shares Outstanding 3,631,881
Net Asset Value, Offering Price and Redemption Price
Per Share (Note 7) (net assets / shares of $ 11.15
beneficial interest outstanding)
- -------------------------------------------------------------------------------
Class C Shares
- -------------------------------------------------------------------------------
Net Assets $12,224,907
Shares Outstanding 1,098,542
Net Asset Value, Offering Price and Redemption Price
Per Share (Note 7) (net assets / shares of $ 11.13
beneficial interest outstanding)
- -------------------------------------------------------------------------------
Statement of Operations
For the Six Months Ended
April 30, 1998
Investment Income (Note 1G)
- -------------------------------------------------------------------------------
Dividends $ 35,949
Interest 89,141
- -------------------------------------------------------------------------------
Total investment income $ 125,090
- -------------------------------------------------------------------------------
Expenses
- -------------------------------------------------------------------------------
Investment Adviser fee (Note 3) $ 118,479
Compensation of Trustees not members of the
Investment Adviser's organization (Note 3) 630
Distribution and service fees (Note 6)
Class B 80,228
Class C 29,712
Custodian fee 58,614
Transfer and dividend disbursing agent fees 24,815
Registration fees 17,043
Printing and postage 3,822
Amortization of organization expenses (Note 1D) 992
Legal and accounting services 335
Miscellaneous 14,344
- -------------------------------------------------------------------------------
Total expenses $ 349,014
- -------------------------------------------------------------------------------
Net investment loss $ (223,924)
- -------------------------------------------------------------------------------
Realized and Unrealized
Gain (Loss) on Investments
- -------------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified cost basis) $(1,336,977)
- -------------------------------------------------------------------------------
Net realized loss on investment transactions $(1,336,977)
- -------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investments (identified cost basis) $ 7,765,100
- -------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) $ 7,765,100
of investments
- -------------------------------------------------------------------------------
Net realized and unrealized gain on investments $ 6,428,123
- -------------------------------------------------------------------------------
Net increase in net assets from operations $ 6,204,199
- -------------------------------------------------------------------------------
On sales of $50,000 or more, the offering price of Class A shares is reduced.
See notes to financial statements
6
Eaton Vance Tax-Managed Emerging Growth Fund as of April 30, 1998
FINANCIAL STATEMENTS CONT'D
Statement of Changes in Net Assets
Six Months Ended
Increase (Decrease) April 30, 1998 For the Period Ended
in Net Assets (Unaudited) October 31, 1997*
- --------------------------------------------------------------------------------
From operations --
Net investment income (loss) $ (223,924) $ 8,149
Net realized loss on
investment transactions (1,336,977) (73,463)
Net change in unrealized
appreciation (depreciation)
of investments 7,765,100 (453,743)
- --------------------------------------------------------------------------------
Net increase (decrease) in net
assets from operations $ 6,204,199 $ (519,057)
- --------------------------------------------------------------------------------
Transactions in shares of
beneficial interest (Note 5) --
Proceeds from sale of shares
Class A $ 17,062,040 $ 4,869,539
Class B 30,245,463 8,974,780
Class C 10,191,526 2,116,676
Cost of shares redeemed
Class A (1,820,351) (816,967)
Class B (1,844,635) (36,915)
Class C (999,263) --
- --------------------------------------------------------------------------------
Net increase in net assets from
Fund share transactions $ 52,834,780 $ 15,107,113
- --------------------------------------------------------------------------------
Net increase in net assets $ 59,038,979 $ 14,588,056
- --------------------------------------------------------------------------------
Net Assets
- --------------------------------------------------------------------------------
At beginning of period $ 14,588,056 $ --
- --------------------------------------------------------------------------------
At end of period $ 73,627,035 $ 14,588,056
- --------------------------------------------------------------------------------
Accumulated undistributed
net investment income
(loss) included in net assets
- --------------------------------------------------------------------------------
At end of period $ (215,775) $ 8,149
- --------------------------------------------------------------------------------
* For the period from the start of business, September 25, 1997, to October 31,
1997.
See notes to financial statements
7
Eaton Vance Tax-Managed Emerging Growth Fund as of April 30, 1998
FINANCIAL STATEMENTS CONT'D
Financial Highlights
Six Months Ended
April 30, 1998 Period Ended
(Unaudited) October 31, 1997
--------------------------------------------------------------------------
Class A Class B Class C Class A* Class B** Class C**
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value -- Beginning of period $ 9.740 $ 9.740 $ 9.720 $10.000 $ 10.000 $ 10.000
- -----------------------------------------------------------------------------------------------------------------------------------
Income from operations
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) $ (0.024) $(0.043) $ (0.045) $ 0.008 $ 0.005 $ 0.003
Net realized and unrealized gain (loss) on investments 1.464 1.453 1.455 (0.268) (0.265) (0.283)
- -----------------------------------------------------------------------------------------------------------------------------------
Net income (loss) from operations $ 1.440 $ 1.410 $ 1.410 $(0.260) $ (0.260) $ (0.280)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value -- End of period $ 11.180 $11.150 $ 11.130 $ 9.740 $ 9.740 $ 9.720
- -----------------------------------------------------------------------------------------------------------------------------------
Total Return/(1)/ 14.78% 14.48% 14.51% (2.60)% (2.60)% (2.80)%
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000's omitted) $ 20,901 $40,501 $ 12,225 $ 3,925 $ 8,613 $ 2,051
Ratio of expenses to average daily net assets 1.26%+ 1.99%+ 2.23%+ 0.63%+ 1.37%+ 1.56%+
Ratio of net investment income (loss) to average
daily net assets (0.61)%+ (1.34)%+ (1.58)%+ 1.83%+ 1.13%+ 0.90%+
Portfolio Turnover 38.00% 38.00% 38.00% 7.00% 7.00% 7.00%
- -----------------------------------------------------------------------------------------------------------------------------------
Average commission rate (per share)/(2)/ $ 0.0586 $0.0586 $ 0.0586 $0.0600 $ 0.0600 $ 0.0600
- -----------------------------------------------------------------------------------------------------------------------------------
+ Annualized.
* For the period from the start of business, September 25, 1997, to October
31, 1997.
** For the period from the commencement of offerings of Class B and Class C
shares, September 29, 1997, to October 31, 1997.
/(1)/Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Dividends and distributions, if any, are assumed to be
reinvested at the net asset value on the ex-date. Total return is not
computed on an annualized basis.
/(2)/Average commission rate paid is computed by dividing the total dollar
amount of commissions paid during the fiscal year by the total number of
shares purchased and sold during the fiscal year for which commissions were
charged.
See notes to financial statements
8
Eaton Vance Tax-Managed Emerging Growth Fund as of April 30, 1998
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1 Significant Accounting Policies
------------------------------------------------------------------------------
Eaton Vance Tax-Managed Emerging Growth Fund (the Fund) is registered under
the Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The Fund, which is a series of Eaton Vance
Mutual Funds Trust (the Trust), seeks to provide long-term after-tax returns
by investing in a diversified portfolio of equity securities of emerging
growth companies. The Declaration of Trust permits the Trustees to issue
interests in the Fund. The Fund has three classes of shares. Class A shares
are sold at the effective public offering price, which is based on the
effective net asset value per share plus the applicable sales charge. Class B
and Class C shares are sold at net asset value and are subject to a contingent
deferred sales charge (see Note 7). All classes of shares have equal rights to
assets and voting privileges. Realized and unrealized gains and losses and net
investment income, other than class specific expenses, are allocated daily to
each class of shares based on the relative net assets of each class to the
total net assets of the Fund. Each class of shares differs in its distribution
plan and certain other class specific expenses. The following is a summary of
significant accounting policies consistently followed by the Fund in the
preparation of its financial statements. The policies are in conformity with
generally accepted accounting principles.
A Investment Valuations -- Marketable securities, including options, that are
listed on foreign or U.S. securities exchanges or in the NASDAQ National
Market System are valued at closing sale prices, on the exchange where such
securities are principally traded. Futures positions on securities or
currencies are generally valued at closing settlement 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 debt
securities with a remaining maturity of 60 days or less are valued at
amortized cost, which approximates value. Other fixed income and debt
securities, including listed securities and securities for which price
quotations are available, will normally be valued on the basis of valuations
furnished by a pricing service. Investments for which valuations or market
quotations are unavailable are valued at fair value using methods determined
in good faith by or at the direction of the Trustees.
B Federal Taxes -- The Fund's policy is to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute to shareholders each year all of its taxable income, including any
net realized gain on investments. Accordingly, no provision for federal income
or excise tax is necessary. At October 31, 1997, the Fund, for federal income
tax purposes, had a capital loss carryover of $56,332 which will reduce the
taxable income arising from future net realized gain on investments, if any,
to the extent permitted by the Internal Revenue Code and thus will reduce the
amount of distributions to shareholders which would otherwise be necessary to
relieve the Fund of any liability for federal income or excise tax. Such
capital loss carryover will expire on October 31, 2005.
C Futures Contracts -- Upon the entering of a financial futures contract, the
Fund is required to deposit either in cash or securities an amount ("initial
margin") equal to a certain percentage of the purchase price indicated in the
financial futures contract. Subsequent payments are made or received by the
Fund ("margin maintenance") each day, dependent on daily fluctuations in the
value of the underlying security, and are recorded for book purposes as
unrealized gains or losses by the Fund. The Fund's investment in financial
futures contracts is designed to hedge against anticipated future changes in
price of current or anticipated Fund positions. Should prices move
unexpectedly, the Fund may not achieve the anticipated benefits of the
financial futures contracts and may realize a loss.
D Deferred Organization Expenses -- Costs incurred by the Fund in connection
with its organization are being amortized on the straight-line basis over five
years.
E Use of Estimates -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts
of revenue and expense during the reporting period. Actual results could
differ from those estimates.
F Expense Reduction -- Investors Bank & Trust Company (IBT) serves as
custodian to the Fund. Pursuant
9
Eaton Vance Tax-Managed Emerging Growth Fund as of April 30, 1998
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
to the custodian agreement, IBT receives a fee reduced by credits which are
determined based on the average cash balances the Fund maintains with IBT. All
significant credit balances used to reduce the Fund's custodian fees are
reported as a reduction of operating expenses on the Statement of Operations.
G Other -- Investment transactions are accounted for on the date the
investments are purchased or sold. Dividend income is recorded on the
ex-dividend date. However, if the ex-dividend date has passed, certain
dividends from foreign securities are recorded as the Fund is informed of the
ex-dividend date. Interest income is recorded on the accrual basis.
H Interim Financial Statements -- The interim financial statements relating to
April 30, 1998 and for the six months then ended have not been audited by
independent certified public accountants, but in the opinion of the Fund's
management, reflect all adjustments, consisting only of normal recurring
adjustments, necessary for the fair presentation of the financial statements.
2 Distributions to Shareholders
------------------------------------------------------------------------------
It is the present policy of the Fund to make (a) at least one distribution
annually (normally in December) of all or substantially all of the net
investment income and (b) at least one distribution annually of all or
substantially all of the net realized capital gains (reduced by any available
capital loss carryforwards from prior years). Income dividends are declared
separately for each class of shares. Shareholders may reinvest all
distributions in shares of the Fund without a sales charge at the net asset
value per share as of the close of business on the ex-date.
The Fund distinguishes between distributions on a tax basis and a financial
reporting basis. Generally accepted accounting principles require that only
distributions in excess of tax basis earnings and profits be reported in the
financial statements as a return of capital. Differences in the recognition or
classification of income between the financial statements and tax earnings and
profits which result in temporary over distributions for financial statement
purposes only are classified as distributions in excess of net investment
income or accumulated net realized gains. Permanent differences between book
and tax accounting relating to distributions are reclassified to paid-in
capital.
3 Investment Adviser Fee and Other Transactions with Affiliates
------------------------------------------------------------------------------
The investment adviser fee is earned by Eaton Vance Management (EVM) as
compensation for management and investment advisory services rendered to the
Fund. EVM receives a monthly advisory fee in the amount of 5/96th of 1% (equal
to 0.625% annually) of the average daily net assets of the Fund up to $500
million, and at reduced rates as daily net assets exceed that level. For the
six months ended April 30, 1998, the fee amounted to $118,479.
Except as to Trustees of the Fund who are not members of EVM's organization,
officers and Trustees receive remuneration for their services to the Fund out
of such investment adviser fee. Trustees of the Fund who are not affiliated
with the Investment Adviser may elect to defer receipt of all or a percentage
of their annual fees in accordance with the terms of the Trustees Deferred
Compensation Plan. For the six months ended April 30, 1998, no significant
amounts have been deferred.
Certain officers and Trustees of the Fund are officers and directors/trustees
of EVM.
4 Federal Income Tax Basis of Investments
------------------------------------------------------------------------------
The cost and unrealized appreciation (depreciation) in value of the
investments owned at April 30, 1998, as computed on a federal income tax
basis, are as follows:
Aggregate cost $ 66,312,598
------------------------------------------------------------------------------
Gross unrealized appreciation $ 7,797,562
Gross unrealized depreciation (486,205)
------------------------------------------------------------------------------
Net unrealized appreciation $ 7,311,357
------------------------------------------------------------------------------
10
Eaton Vance Tax-Managed Emerging Growth Fund as of April 30, 1998
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
5 Shares of Beneficial Interest
------------------------------------------------------------------------------
The Declaration of the Trust permits the Trustees to issue an unlimited number
of full and fractional shares of beneficial interest (without par value).
Transactions in Fund shares were as follows:
Six Months Ended
April 30, 1998 Period Ended
Class A (Unaudited) October 31, 1997*
------------------------------------------------------------------------------
Sales 1,638,062 483,988
Redemptions (171,881) (81,094)
Net increase 1,466,181 402,894
------------------------------------------------------------------------------
* For the period from the start of business, September 25, 1997, to
October 31, 1997.
Six Months Ended
April 30, 1998 Period Ended
Class B (Unaudited) October 31, 1997**
------------------------------------------------------------------------------
Sales 2,921,757 887,994
Redemptions (174,165) (3,705)
------------------------------------------------------------------------------
Net increase 2,747,592 884,289
------------------------------------------------------------------------------
** For the period from the commencement of offering of Class B shares,
September 29, 1997, to October 31, 1997.
Six Months Ended
April 30, 1998 Period Ended
Class C (Unaudited) October 31, 1997***
------------------------------------------------------------------------------
Sales 985,097 210,914
Redemptions (97,469) -
------------------------------------------------------------------------------
Net increase 887,628 210,914
------------------------------------------------------------------------------
*** For the period from the commencement of offering of Class C shares,
September 29, 1997, to October 31, 1997.
6 Distribution and Service Fees
------------------------------------------------------------------------------
The Fund has adopted a Service Plan for the Fund's Class A shares (the
"Class A Plan") that is designed to meet the service fee requirements of the
sales charge rule of the National Association of Securities Dealers, Inc.
The Class A Plan provides that the Fund may make service fee payments for
personal services and/or the maintenance of shareholder accounts to the
Principal Underwriter, financial service firms ("Authorized Firms") and
other persons in amounts not exceeding 0.25% of average daily net assets for
Class A shares for any fiscal year. The Trustees have initially implemented
the Class A Plan by authorizing Class A to make quarterly service fee
payments to the Principal Underwriter and Authorized Firms in amounts not
expected to exceed 0.25% of the average daily net assets for any fiscal year
which is based on the value of Class A shares sold by such persons and
remaining outstanding for at least twelve months. The Fund expects to begin
accruing for Class A service fees during the quarter ending December 31,
1998.
The Fund has also adopted distribution plans (Class B and Class C Plan, the
Plans) pursuant to Rule 12b-1 under the Investment Company Act of 1940. The
Plans, which are approved annually, require the Fund to pay the Principal
Underwriter, Eaton Vance Distributors, Inc. (EVD), amounts equal to 1/365 of
0.75% of the Fund's Class B and Class C daily net assets, for providing
ongoing distribution services and facilities to the Fund. The Fund will
automatically discontinue payments to EVD during any period in which there
are no outstanding Uncovered Distribution Charges, which are equivalent to
the sum of (i) 5% and 6.25% of the aggregate amount received by the Fund for
Class B and Class C shares sold, respectively, plus (ii) distribution fees
calculated by applying the rate of 1% over the prevailing prime rate to the
outstanding balance of Uncovered Distribution Charges due EVD, of each
respective class reduced by the aggregate amount of contingent deferred
sales charges (see Note 7) and daily amounts theretofore paid to EVD by each
respective class. The amount payable to EVD with respect to each day is
accrued on such day as a liability of the Fund and, accordingly, reduces the
Fund's net assets. For the six months ended April 30, 1998, the Fund paid or
accrued $80,228 and $22,284, to or payable to EVD, representing 0.75%
(annualized) of average daily net assets of Class B and Class C shares,
respectively. At April 30, 1998, the amount of Uncovered Distribution
Charges of EVD calculated under the Plans was approximately $1,596,000 and
$633,000 for Class B and Class C shares, respectively.
11
Eaton Vance Tax-Managed Emerging Growth Fund as of April 30, 1998
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
In addition, Class B and Class C Plans authorize the Fund to make payments of
service fees to the Principal Underwriter, Authorized Firms, and other persons
in amounts not exceeding 0.25% of their average daily net assets for each
fiscal year. Service fee payments are made for personal services and/or the
maintenance of shareholder accounts. Under the Class B Plan, this fee is paid
quarterly in arrears based on the value of Class B shares sold by such persons
and remaining outstanding for at least twelve months. Class B expects to begin
accruing for its service fees during the quarter ending December 31, 1998.
Under the Class C Plan, the Principal Underwriter currently expects to pay to
an Authorized Firm (a) a service fee (except on exchange transactions and
reinvestments) at the time of sale equal to 0.25% of the purchase price of the
Class C shares sold by such Firm and (b) monthly service fees approximately
equivalent to 1/12 of 0.25% of the value of Class C shares sold by such Firm
and remaining outstanding for at least one year. During the first year after a
purchase of Class C shares, the Principal Underwriter will retain the service
fee as reimbursement for the service fee payment made to Authorized Firms at
the time of sale. The Fund paid or accrued service fees to or payable to EVD
for the six months ended April 30, 1998 in the amount of $7,428 for Class C.
Service fees are separate and distinct from the sales commissions and
distribution fees payable by the Fund to EVD, and as such are not subject to
automatic discontinuance when there are no outstanding Uncovered Distribution
Charges of EVD.
7 Contingent Deferred Sales Charge
------------------------------------------------------------------------------
A contingent deferred sales charge (CDSC) may be imposed on certain Class A
shares redeemed within 12 months of purchase. A CDSC is imposed on any
redemption of Class B shares made within six years of purchase. A CDSC is
imposed on any redemption of Class C shares made within one year of purchase.
Generally, the CDSC is based on the lower of the net asset value at date of
redemption or date of purchase. No charge is levied on shares acquired by
reinvestment of dividends. Class A shares may be subject to a 1% CDSC if
redeemed within 12 months of purchase (depending on the circumstances of
purchase). For Class B shares the CDSC is imposed at declining rates that
begin at 5% in the case of redemptions in the first and second year after
purchase, declining one percentage point each subsequent year. Class C shares
will be subject to a 1% CDSC if redeemed within 12 months of purchase.
No CDSC is levied on shares which have been sold to EVM or its affiliates or
to their respective employees. CDSC charges are paid to EVD to reduce the
amount of Uncovered Distribution Charges calculated under the Class B and
Class C Distribution Plans. CDSC received when no Uncovered Distribution
Charges exist will be retained by the Fund. EVD received approximately $14,000
and $5,000 of CDSC paid by shareholders of Class B and Class C shares,
respectively, during the six months ended April 30, 1998. There was no CDSC
paid by shareholders of Class A shares during the six months ended April 30,
1998.
8 Line of Credit
------------------------------------------------------------------------------
The Fund participates with other funds and portfolios managed by EVM and its
affiliates in a $100 million unsecured line of credit agreement with a group
of banks. The Fund may temporarily borrow from the line of credit to satisfy
redemption requests or settle investment transactions. Interest is charged to
each fund or portfolio based on its borrowings at an amount above the banks'
Eurodollar rate or federal funds advanced funding rate. In addition, a fee
computed at an annual rate of 0.10% on the daily unused portion of the line of
credit is allocated among the participating funds and portfolios at the end of
each quarter. The Fund did not have any significant borrowings or allocated
fees during the six months ended April 30, 1998.
9 Investment Transactions
------------------------------------------------------------------------------
Purchases and sales of investments, other than short-term obligations,
aggregated $60,169,564 and $13,983,241, respectively, for the six months ended
April 30, 1998.
12
Eaton Vance Tax-Managed Emerging Growth Fund as of April 30, 1998
INVESTMENT MANAGEMENT
Eaton Vance Tax-Managed Emerging Growth Fund
Officers
M. Dozier Gardner
President and Trustee
James B. Hawkes
Vice President and Trustee
William H. Ahern, Jr.
Vice President
Thomas J. Fetter
Vice President
Robert B. MacIntosh
Vice President
Michael B. Terry
Vice President
James L. O'Connor
Treasurer
Alan R. Dynner
Secretary
Independent Trustees
Donald R. Dwight
President, Dwight Partners, Inc.
Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment Banking,
Harvard University Graduate School of
Business Administration
Norton H. Reamer
President and Director, United Asset
Management Corporation
John L. Thorndike
Formerly Director, Fiduciary Company Incorporated
Jack L. Treynor
Investment Adviser and Consultant
13
This Page Intentionally Left Blank
This Page Intentionally Left Blank
Investment Adviser and Administrator of Eaton Vance
Tax-Managed Emerging Growth Fund
Eaton Vance Management
24 Federal Street
Boston, MA02110
Principal Underwriter
Eaton Vance Distributors, Inc.
24 Federal Street
Boston, MA 02110
(617)482-8260
Custodian
Investors Bank & Trust Company
200 Clarendon Street,16th Floor
Boston, MA 02116
Transfer Agent
First Data Investor Services Group
Attention: Eaton Vance Funds
P.O. Box 5123
Westborough, MA 01581-5123
Eaton Vance
Tax-Managed Emerging Growth Fund
24 Federal Street
Boston, MA 02110
- --------------------------------------------------------------------------------
This report must be preceded or accompanied by a current prospectus which
contains more complete information on the Fund, including its sales charges and
expenses. Please read the prospectus carefully before you invest or send money.
- --------------------------------------------------------------------------------
[LOGO OF EATON VANCE APPEARS HERE] [PHOTO OF PHONE, CALCULATOR
AND TAX FORM APPEARS HERE]
Annual Report October 31, 1997
[PHOTO OF NYSE FLAG
AND BUILDING FRONT
APPEARS HERE]
E A T O N V A N C E
TAX-MANAGED
EMERGING
GROWTH
FUND
Global Management-Global Distribution
[PHOTO OF 1099-FORM
AND CALCULATOR TAPE &
CALCULATOR APPEARS HERE]
Eaton Vance Tax-Managed Emerging Growth Fund as of October 31, 1997
LETTER TO SHAREHOLDERS
[PHOTO OF M. DOZIER GARDNER APPEARS HERE]
M. Dozier Gardner, President
I am pleased to welcome shareholders of Eaton Vance Tax-Managed Emerging Growth
Fund with this inaugural shareholder report. In the opening month of the Fund's
operations, the market climate was unusually volatile. Currency concerns in
Asia, combined with already-high valuations, brought about significant market
fluctuations. Stock prices of large and small companies in general fell. For
example, the S&P 500 Index - an unmanaged index of U.S. common stocks - declined
3.3% during October./1/ As the Fund was in its "start-up" phase during October
and making its initial investments, the market's volatility provided an
opportunity to initiate new positions at attractive prices.
Investors maintained a strong appetite for equities in 1997...
Investors funneled a record amount of assets into the equity markets during the
past year. According to Dow Jones, 45 million households owned equity mutual
funds in November, 1997, worth a staggering $2.5 trillion. The massive scale of
that investment - aimed at boosting savings, providing for retirement, and
funding college education - shows a continuing confidence that equities
represent the best way to build wealth for the future.
Emerging growth companies poised to post strong earnings growth...
According to Commerce Department figures, smaller companies have become
responsible in recent years for a larger share of our nation's job creation.
These emerging growth companies typically enjoy earnings growth rates well above
those of the wider market. Because stock prices tend to follow earnings, we
believe these companies have the potential to provide above-average, long-term
returns.
The Tax-Managed approach seeks to improve investors' after-tax returns...
As impressive as recent personal savings trends are, the fact remains that taxes
continue to take a heavy toll on the average investor. Even the most determined
savers can see the value of their investments dwindle when faced with taxes on
capital gains and dividends. While the Taxpayer Relief Act of 1997 slightly
lowered capital gains rates, taxes still pose a challenge for growth-minded
investors.
We believe that the combination of focusing on emerging growth companies
together with a tax-managed approach is a sound strategy for wealth-building. In
the pages that follow, portfolio manager Edward "Jack" Smiley discusses this
investment discipline and offers an overview of Eaton Vance Tax-Managed Emerging
Growth Portfolio.
Sincerely,
/s/ M. Dozier Gardner
M. Dozier Gardner
President
December 9, 1997
- --------------------------------------------------------------------------------
Fund Information
as of October 31, 1997
Performance/2/
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
Life of Fund *(9/25/97); **(9/29/97)
Class A* -2.6%
Class B** -2.6
Class C** -2.8
- --------------------------------------------------------------------------------
SEC Average Annual Total Returns (including applicable sales charge)
- --------------------------------------------------------------------------------
Life of Fund *(9/25/97);**(9/29/97)
Class A* -8.2%
Class B** -7.5
Class C** -3.8
- --------------------------------------------------------------------------------
Ten Largest Holdings/3/
- --------------------------------------------------------------------------------
PeopleSoft, Inc. 1.5%
Emmis Broadcasting Corp., Cl. A 1.5
Baan Co. NV 1.4
Outdoor Systems, Inc. 1.4
Camco International, Inc. 1.3
Anadarko Petroleum Corp. 1.3
BMCSoftware, Inc. 1.3
Cambridge Technology Partners, Inc. 1.3
Health Management Associates, Inc. 1.3
Jacor Communications, Inc. 1.3
/1/ It is not possible to invest directly in an average or Index.
/2/ Returns are calculated by determining the percentage change in net asset
value with all distributions reinvested. SEC return for A shares reflects
maximum 5.75% sales charge; for B shares, SEC return reflects applicable
contingent deferred sales charge (CDSC) based on the following schedule: 5%-
1st year; 5%-2nd year; 4%-3rd year; 3%-4th year; 2%-5th year; 1%-6th year;
for C shares, SEC return reflects applicable 1% CDSC.
/3/ Ten largest holdings account for 13.6% of the Portfolio's investments,
determined by dividing the total market value of the holdings by the total
net assets of the Portfolio. Holdings are subject to change.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost.
2
Eaton Vance Tax-Managed Emerging Growth Fund as of October 31, 1997
Management Discussion
[PHOTO OF EDWARD SMILEY APPEARS HERE]
Edward Smiley, Portfolio Manager
An interview with Edward Smiley, portfolio manager of Eaton Vance Tax-Managed
Emerging Growth Fund.
Q: Jack, how have you structured the Fund in its initial months of operation?
A: We have pursued a dual strategy for Tax-Managed Emerging Growth Fund.
First, as the name implies, this is a growth fund, with an emphasis on
small-cap and mid-cap companies that we view as the likely industry leaders
of tomorrow. I've targeted a universe of companies that have a revenue base
below $1.5 billion, but that demonstrate rapid sales growth. I prefer
companies with profit margins in excess of 15% and the ability to post
superior earnings growth relative to their industry competitors.
The other part of our strategy is tax-related. The Fund is pursuing an
approach that seeks to limit tax liabilities, including reducing the
realization and distribution of capital gains as well as the distribution
of income dividends to shareholders. This combination of investing for
growth while working to limit tax liabilities can be a useful strategy in a
period of economic expansion but continued high taxes.
Q: Could you discuss briefly some of the strategies you're using to reduce tax
liabilities?
A: Certainly. First, with respect to capital gains, we take a long-term
approach to our investments. Many other growth funds may buy and sell
repeatedly over short-term periods and, in so doing, chalk up short-term
capital gains. The tax liabilities incurred by such practices tend to
dramatically reduce the after-tax returns to shareholders. Put simply, we
take a position as investors, not traders.
By assuming a buy-and-hold outlook, we tend to ignore the short-term blips
caused by emotions and one-time events, and focus instead on the growth
characteristics of well-positioned companies. In short, we're willing to
wait for companies to reach their full potential. This long-term approach
sharply reduces portfolio turnover - generally keeping it below 10%
annually on stocks with gains - while limiting the distribution of capital
gains.
Q: Surely, there are times when you must sell. Do you have a distinct sell
discipline?
A: Yes. When sales are necessary, we seek to sell securities that will qualify
for capital gains treatment, assuring a more favorable tax
Five Largest Sector Weightings/1/
- --------------------------------------------------------------------------------
By total net assets
Information Services 19.4%
Health Services 10.4%
Oil, Gas Exploration 8.0%
Computer Software 4.2%
Electronics 4.0%
How Taxes Hurt Returns
Hypothetical Example of a Growth Investment/2/
Pre-Tax Tax After-Tax
Return Rate Returns
Dividends & Short-Term Gains 4.0% 39.6% 2.4
Long-Term Gains 6.0% 20.0% 4.8%
- ---------------------------------------------------------------------
Unrealized Gains 2.0% 0.0% 2.0%
Total Return/3/ 12.0% 9.2%
- ---------------------------------------------------------------------
23% of Total Return Lost to Taxes!
/1/ Because the Portfolio is actively managed, sector weightings are subject to
change.
/2/ Source: Eaton Vance. This chart is for illustrative purposes only and uses
the highest applicable federal tax rates. State taxes and taxes due upon
redemption are not considered. The chart is not meant to represent or imply
returns from any particular mutual fund.
/3/ The hypothetical 12% return is not meant to represent or imply returns from
any particular mutual fund.
- --------------------------------------------------------------------------------
Mutual fund shares are not insured by the FDIC and are not deposits or other
obligations of, or guaranteed by, any depository institution. Shares are
subject to investment risks, including possible loss of principal invested.
- --------------------------------------------------------------------------------
3
Eaton Vance Tax-Managed Emerging Growth Fund as of October 31, 1997
MANAGEMENT DISCUSSION CONT'D
treatment for shareholders. And when we sell appreciated securities, we
sell those with the highest cost basis first, once again limiting the
extent of our capital gain liabilities.
Q: You also indicated that you seek to limit income distributed to
shareholders. What is your strategy in that area?
A: The law dictates that income from securities must be passed along to
shareholders and taxed as ordinary income. That can not only create an
unwanted tax burden for shareholders, but also can severely complicate tax
planning.
Because the Portfolio focuses solely on emerging small and mid-cap
companies, we are largely able to avoid income distributions. Typically,
because these companies are in the early stages of growth, they rarely pay
dividends. Instead, dividends are reinvested into the business. Many of the
companies in our investment universe require continuing investments in
technology to maintain competitive advantages and improve productivity.
That reinvestment tends to add value over time while limiting the impact of
tax-inefficient dividends on shareholders.
Q: In which industries did you concentrate the Fund's investments?
A: While the Fund is very well diversified across many industry sectors, there
are some areas that provide unusual opportunities for smaller, emerging
companies. Information services, health services, energy, and computer
software constituted the largest sector weightings in the Fund. Smaller
companies have managed to carve out highly profitable niches in areas like
information and health care. These are service industries in which small
companies can offer a high degree of value-added. Elsewhere, computer
software has long been a sector in which entrepreneurship has thrived. And
in the energy area, energy service and supply companies as well as
selected, smaller exploration companies have managed to do well in a period
of weak oil prices.
Q: Could you discuss some of the Fund's holdings in these sectors?
A: Yes. Software is a rapidly growing sector, with many opportunities among
emerging companies. Two of the Fund's largest holdings are PeopleSoft, Inc.
and Baan Co., NV. Both of these companies operate in a software niche
called enterprise resource planning (ERP). ERP links the diverse parts of
an enterprise to a common technology platform. That has become increasingly
necessary in recent years as different departments within companies have
begun using a wider array of technology equipment. In using this ERP
software, a company can integrate the various components of its business:
in effect, making certain that manufacturing, human resources, vendors,
inventory, and finance are all talking to one another with respect to a
given project.
Q: What are some other major areas?
A: Another interesting theme has been among media companies, including radio
broadcasting companies such as Emmis Broadcasting Corp., Jacor
Communications, Inc. and A.H. Belo, Corp. Radio has become a much more
attractive outlet for advertisers in recent years. While television
advertising rates have skyrocketed and audiences have become increasingly
fragmented by the addition of cable offerings, radio rates remain
affordable.
In addition, following a wave of mergers in recent years, major radio
companies can offer advertisers a wider audience. While it falls short of
television's pull-through capabilities, radio represents a cost-effective
marketing tool for many companies. Another media holding, Outdoor Systems,
produces outdoor advertising that can be very effectively teamed with radio
campaigns.
4
Eaton Vance Tax-Managed Emerging Growth Fund as of October 31, 1997
MANAGEMENT DISCUSSION CONT'D
Q: Health care has also been another large concentration. What have you
focused on there?
A: We have exposure to a number of health care trends, including the graying
of America and the growing biotech industry. In the continuing care area,
the Fund has an investment in Sunrise Assisted Living, Inc. The company is
a developer of projects nationwide that provide housing and assisted living
facilities for elderly citizens. Many seniors are able to live
independently but may require modest, periodic medical attention. These
facilities have become increasingly popular as a housing and health care
alternative for an aging population.
In the biotech sector, the Fund owns Genzyme Corp. Genzyme has been a
leader in several forms of gene therapy treatment, including that for
Gaucher disease, a debilitating disorder caused by defective genes.
Q: Does the smaller size of the companies in your universe represent a
competitive advantage in some instances?
A: Yes. Because of their size and versatility, smaller, emerging companies can
sometimes fill a market niche or adapt to changing industry trends more
quickly than larger companies. For example, Strayer Education, Inc. and
Sylvan Learning Systems, Inc. are two companies that have taken advantage
of a changing educational environment. Strayer operates schools in the
Washington, D.C. area, with a focus on technical fields such as computer
programming. Students emerge from Strayer with associate degrees, better
prepared for the job market.
In another educational niche, Sylvan Learning Systems, Inc. provides
supplemental and remedial educational services in addition to administering
professional tests. Like Strayer, Sylvan has identified an area of the
educational market where it can provide much needed services, and has been
able to add incrementally over time to the breadth and quality of those
services. Both of these companies have benefited from the ability to
respond quickly to changes within a fairly large industry.
Q: Jack, what is your outlook for the coming year?
A: In my view, with a likely investment climate of continued moderate growth
and low inflation, the outlook for emerging growth companies appears good.
Given the outperformance of the large-cap, blue chip stocks in recent
years, a good case can be made that smaller companies have some catching-up
to do. Interestingly, that is true not only of traditional growth areas
like technology and biotech, but of a wide range of industries across the
economy.
With our bottom-up, company-by-company approach, we continue to look for
those companies that we believe will be the leaders of tomorrow. Together
with our tax-managed strategies, we believe that the Fund is
well-positioned to provide excellent after-tax returns to shareholders.
5
Eaton Vance Tax-Managed Emerging Growth Fund as of October 31, 1997
Comparison of Change in Value of a $10,000 Investment in the Fund vs. the
Standard & Poor's 500 Index
From Sept. 25, 1997 through Oct. 31, 1997
Date Fund/NAV Fund/Off Pr S&P 500
- --------------------------------------------------------------------------------
3/31/96 $10,000 $9,422 $10,000
4/30/96 $10,282 $9,687 $10,134
5/31/96 $10,503 $9,896 $10,366
6/30/96 $10,543 $9,934 $10,448
7/31/96 $10,050 $9,469 $9,970
8/31/96 $10,342 $9,744 $10,157
9/30/96 $10,956 $10,322 $10,768
10/31/96 $11,237 $10,588 $11,050
11/30/96 $12,042 $11,346 $11,860
12/31/96 $11,831 $11,147 $11,665
1/31/97 $12,525 $11,801 $12,380
2/28/97 $12,435 $11,716 $12,453
3/31/97 $12,052 $11,355 $11,979
4/30/97 $12,676 $11,943 $12,679
5/31/97 $13,471 $12,692 $13,422
6/30/97 $14,090 $13,275 $14,066
7/31/97 $15,227 $14,346 $15,165
8/31/97 $14,583 $13,739 $14,294
9/30/97 $15,378 $14,489 $15,118
10/31/97 $14,816 $13,959 $14,597
Comparison of Change in Value of a $10,000 Investment in the Fund vs. the
Standard & Poor's 500 Index
From Sept. 29, 1997, through Oct. 31, 1997
Date Fund/NAV Fund/Off Pr S&P 500
- --------------------------------------------------------------------------------
3/31/96 $10,000 $14,138 $10,000
4/30/96 $10,272 $14,138 $10,134
5/31/96 $10,503 $14,138 $10,366
6/30/96 $10,543 $14,138 $10,448
7/31/96 $10,040 $14,138 $9,970
8/31/96 $10,332 $14,138 $10,157
9/30/96 $10,936 $14,138 $10,768
10/31/96 $11,217 $14,138 $11,050
11/30/96 $12,002 $14,138 $11,860
12/31/96 $11,781 $14,138 $11,665
1/31/97 $12,465 $14,138 $12,380
2/28/97 $12,374 $14,138 $12,453
3/31/97 $11,992 $14,138 $11,979
4/30/97 $12,596 $14,138 $12,679
5/31/97 $13,360 $14,138 $13,422
6/30/97 $13,954 $14,138 $14,066
7/31/97 $15,060 $14,138 $15,165
8/31/97 $14,416 $14,138 $14,294
9/30/97 $15,191 $14,138 $15,118
10/31/97 $14,638 $14,138 $14,597
Comparison of Change in Value of a $10,000 Investment in the Fund vs. the
Standard & Poor's 500 Index
From Sept. 29, 1997, through Oct. 31, 1997
Date Fund/NAV S&P 500
- --------------------------------------------------------------
8/31/96 $10,000 $10,000
9/30/96 $10,584 $10,602
10/31/96 $10,856 $10,878
11/30/96 $11,621 $11,677
12/31/96 $11,390 $11,484
1/31/97 $12,044 $12,188
2/28/97 $11,954 $12,260
3/31/97 $11,571 $11,794
4/30/97 $12,165 $12,483
5/31/97 $12,920 $13,214
6/30/97 $13,494 $13,848
7/31/97 $14,562 $14,930
8/31/97 $13,927 $14,073
9/30/97 $14,673 $14,884
10/31/97 $14,129 $14,371
Performance+
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
Life of Fund (Class A: 9/25/97);(Classes B- and C: 9/29/97)
Class A -2.6%
Class B -2.6
Class C -2.8
SEC Average Annual Total Returns (including applicable sales charge)
- --------------------------------------------------------------------------------
Life of Fund (Class A: 9/25/97);(Classes B- and C: 9/29/97)
Class A -8.2%
Class B -7.5
Class C -3.8
- --------------------------------------------------------------------------------
* Source: Towers Data Systems, Bethesda, MD. Investment operations commenced
on 9/25/97 for Class A shares, and on 9/29/97 for Class B and Class C
shares. Index information is only available at month-end; therefore, the
line comparison begins at the next month-end following the commencement of
the Fund's investment operations.
The chart compares the Fund's total return with that of the S&P 500 Stock
Index, a broad-based, unmanaged market index of common stocks. Returns are
calculated by determining the percentage change in net asset value (NAV)
with all distributions reinvested. The lines on the chart represent the
total returns of $10,000 hypothetical investments in the Fund and the
Index. The Index's total return does not reflect commissions or expenses
that would have been incurred if an investor individually purchased or sold
the securities represented in the Index. It is not possible to invest
directly in an Index.
** For Class A, this figure represents the Fund's performance including the
Fund's maximum 5.75% sales charge. For Class B and Class C, this figure
represents the Fund's performance including the Fund's applicable
contingent deferred sales charge (CDSC).
+ Returns are calculated by determining the percentage change in net asset
value (NAV) with all distributions reinvested. SEC returns reflect
applicable sales charges.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth
more or less their original cost.
6
Eaton Vance Tax-Managed Emerging Growth Fund as of October 31, 1997
PORTFOLIO OF INVESTMENTS
Common Stocks-- 93.3%
Security Shares Value
- --------------------------------------------------------------------------------
Advertising -- 1.9%
- --------------------------------------------------------------------------------
Catalina Marketing Corp.* 1,800 $ 82,238
Outdoor Systems, Inc.* 6,400 196,800
- --------------------------------------------------------------------------------
$ 279,038
- --------------------------------------------------------------------------------
Banks - Regional -- 1.7%
- --------------------------------------------------------------------------------
Colonial Bancgroup, Inc. 4,400 $ 130,625
Sovereign Bancorp, Inc. 6,800 120,700
- --------------------------------------------------------------------------------
$ 251,325
- --------------------------------------------------------------------------------
Banks and Money Services -- 0.9%
- --------------------------------------------------------------------------------
Bank United Corp., Class A 3,000 $ 126,000
- --------------------------------------------------------------------------------
$ 126,000
- --------------------------------------------------------------------------------
Broadcasting and Cable -- 3.6%
- --------------------------------------------------------------------------------
Emmis Broadcasting Corp., Class A* 4,800 $ 212,400
Jacor Communications, Inc.* 4,400 184,250
Sinclair Broadcast Group, Class A* 3,500 127,750
- --------------------------------------------------------------------------------
$ 524,400
- --------------------------------------------------------------------------------
Building Materials -- 1.1%
- --------------------------------------------------------------------------------
Texas Industries, Inc. 3,300 $ 156,544
- --------------------------------------------------------------------------------
$ 156,544
- --------------------------------------------------------------------------------
Business Products and Services -- 2.2%
- --------------------------------------------------------------------------------
CN Maximus, Inc.* 1,900 $ 53,200
Gartner Group, Inc.-Class A* 4,400 124,300
Personnel Group of America, Inc.* 4,100 142,219
- --------------------------------------------------------------------------------
$ 319,719
- --------------------------------------------------------------------------------
Business Services - Miscellaneous -- 3.3%
- --------------------------------------------------------------------------------
Agouron Pharmaceuticals, Inc.* 1,000 $ 45,625
Human Genome Sciences, Inc.* 1,800 73,800
Learning Tree International* 3,700 128,575
Medicis Pharmaceutical, Inc.-Class A* 1,400 67,375
Sylvan Learning Systems, Inc.* 4,000 168,500
- --------------------------------------------------------------------------------
$ 483,875
- --------------------------------------------------------------------------------
Communications Equipment -- 3.1%
- --------------------------------------------------------------------------------
Comverse Technology, Inc.* 4,200 $ 173,250
Davox Corp.* 4,900 175,175
ECI Telecommunications* 3,600 99,450
- --------------------------------------------------------------------------------
$ 447,875
- --------------------------------------------------------------------------------
Communications Services -- 0.8%
- --------------------------------------------------------------------------------
Nextel Communications, Inc.* 3,300 $ 86,625
Transition Systems, Inc.* 1,600 32,400
- --------------------------------------------------------------------------------
$ 119,025
- --------------------------------------------------------------------------------
Computer Software -- 4.2%
- --------------------------------------------------------------------------------
BMC Software, Inc.* 3,200 $ 193,200
HNC Software, Inc.* 2,750 101,750
PeopleSoft, Inc.* 3,500 219,504
Security Dynamics Technology, Inc.* 3,100 105,013
- --------------------------------------------------------------------------------
$ 619,467
- --------------------------------------------------------------------------------
Consumer Services -- 0.5%
- --------------------------------------------------------------------------------
Strayer Education, Inc. 1,600 $ 76,400
- --------------------------------------------------------------------------------
76,400
- --------------------------------------------------------------------------------
Drugs -- 5.0%
- --------------------------------------------------------------------------------
Curative Health Services, Inc.* 3,200 $ 96,400
Elan Corp., PLC ADR* 3,400 169,575
Genzyme Corp.* 7,100 61,238
Genzyme Corp. Class A* 5,000 136,875
Parexel International Corp. 3,700 133,663
Quintiles Transnational Corp. 1,400 101,500
Vertex Pharmaceuticals, Inc.* 1,100 32,450
- --------------------------------------------------------------------------------
$ 731,701
- --------------------------------------------------------------------------------
Electrical Equipment -- 1.2%
- --------------------------------------------------------------------------------
Level One Communications, Inc.* 4,000 $ 180,000
- --------------------------------------------------------------------------------
$ 180,000
- --------------------------------------------------------------------------------
See notes to financial statements
7
Eaton Vance Tax-Managed Emerging Growth Fund as of October 31, 1997
PORTFOLIO OF INVESTMENTS CONT'D
Security Shares Value
- --------------------------------------------------------------------------------
Electronics - Instruments -- 4.0%
- --------------------------------------------------------------------------------
Altera Corp.* 3,250 $ 144,219
Microchip Technology, Inc.* 3,600 143,550
Sanmina Corp.* 1,900 142,025
Vitesse Semiconductor Corp. 3,500 151,813
- --------------------------------------------------------------------------------
$ 581,607
- --------------------------------------------------------------------------------
Electronics - Semiconductors -- 1.2%
- --------------------------------------------------------------------------------
Linear Technology Corp. 2,700 $ 169,763
- --------------------------------------------------------------------------------
$ 169,763
- --------------------------------------------------------------------------------
Entertainment -- 1.2%
- --------------------------------------------------------------------------------
MGM Grand, Inc.* 4,000 $ 175,500
- --------------------------------------------------------------------------------
$ 175,500
- --------------------------------------------------------------------------------
Financial - Miscellaneous -- 0.7%
- --------------------------------------------------------------------------------
Capital One Financial Corp. 2,200 $ 100,375
- --------------------------------------------------------------------------------
$ 100,375
- --------------------------------------------------------------------------------
Health Services -- 10.4%
- --------------------------------------------------------------------------------
American Retirement Corp.* 6,900 $ 134,119
Bioreliance Corp.* 3,500 77,875
Concentra Managed Care, Inc.* 5,000 163,125
Express Scripts, Inc., Class A* 3,000 169,125
Health Management Associates, Inc. Class A* 7,600 185,250
MiniMed, Inc.* 2,400 93,600
National Surgery Centers, Inc.* 6,900 172,500
Omnicare, Inc. 3,200 89,000
Pediatrix Medical Group, Inc.* 2,400 101,400
PhyCor, Inc.* 1,900 43,819
Renal Care Group, Inc. 3,600 120,600
Sunrise Assisted Living, Inc.* 4,300 159,638
- --------------------------------------------------------------------------------
$1,510,051
- --------------------------------------------------------------------------------
Information Services -- 19.4%
- --------------------------------------------------------------------------------
Acxiom Corp.* 6,700 $ 110,131
Affiliated Computer Services, Inc. Class A* 7,300 183,413
Aspect Development, Inc.* 2,650 123,888
Aspen Technologies, Inc.* 3,500 131,688
Baan Co. NV* 3,000 210,375
Cambridge Technology Partners, Inc.* 5,100 186,150
CCC Information Services Group* 5,500 102,438
Documentum, Inc.* 1,700 50,788
FIserv, Inc.* 3,800 170,050
Harbinger, Corp.* 1,300 $ 38,675
IDX Systems Corp.* 4,500 151,875
J.D. Edwards, Inc.* 3,400 115,600
Manugistics Group, Inc.* 3,500 124,688
National Data Corp. 3,800 140,363
Netscape Communications Corp.* 1,700 55,888
Nova Corp.* 6,000 161,250
Paychex, Inc. 4,800 183,000
Pegasystems, Inc.* 4,200 76,650
SunGard Data Systems, Inc. 6,800 160,650
Symantec* 4,800 105,000
Vantive Corp.* 4,700 118,675
Veritas Software Corp. 3,000 124,875
- --------------------------------------------------------------------------------
$2,826,110
- --------------------------------------------------------------------------------
Insurance -- 2.9%
- --------------------------------------------------------------------------------
Frontier Insurance Group, Inc. 2,800 $ 94,325
HCC Insurance Holdings, Inc. 3,700 86,488
Mercury General Corp. 2,700 114,581
Mutual Risk Management Ltd. 5,000 129,688
- --------------------------------------------------------------------------------
$ 425,082
- --------------------------------------------------------------------------------
Investment Services -- 3.1%
- --------------------------------------------------------------------------------
Centura Banks, Inc. 3,000 $173,625
Crescent Real Estate Equitable Co. 1,300 46,800
PMI Group, Inc. 1,900 114,831
The Money Store, Inc. 4,300 122,013
- --------------------------------------------------------------------------------
$457,269
- --------------------------------------------------------------------------------
Machinery -- 2.9%
- --------------------------------------------------------------------------------
Camco International, Inc. 2,700 $195,075
Ionics, Inc.* 2,200 84,288
Varco International, Inc.* 2,300 140,156
- --------------------------------------------------------------------------------
$419,519
- --------------------------------------------------------------------------------
Medical Products -- 2.8%
- --------------------------------------------------------------------------------
Arterial Vascular Engineering, Inc.* 700 $ 37,188
Guidant Corp. 2,800 161,000
Heartstream, Inc.* 1,850 19,194
Invacare Corp. 2,700 62,100
Sofamor Danek Group, Inc.* 1,900 130,863
- --------------------------------------------------------------------------------
$410,345
- --------------------------------------------------------------------------------
See notes to financial statements
8
Eaton Vance Tax-Managed Emerging Growth Fund as of October 31, 1997
PORTFOLIO OF INVESTMENTS CONT'D
Security Shares Value
- --------------------------------------------------------------------------------
Oil and Gas - Exploration and Production -- 8.0%
- --------------------------------------------------------------------------------
Anadarko Petroleum Corp.* 2,650 $ 194,113
Apache Corp.* 4,200 176,400
Cross Timbers Oil Co. 4,900 130,769
Devon Energy Corp. 3,300 147,675
Louis Dreyfus Natural Gas* 6,640 146,910
Newfield Exploration Co.* 4,700 127,488
Triton Energy Ltd.* 3,800 148,675
Vintage Petroleum, Inc. 4,100 93,788
- --------------------------------------------------------------------------------
$ 1,165,818
- --------------------------------------------------------------------------------
Publishing -- 1.2%
- --------------------------------------------------------------------------------
A.H. Belo Corp.* 3,200 $ 151,200
CMP Media Inc., Class A* 1,250 23,125
- --------------------------------------------------------------------------------
$ 174,325
- --------------------------------------------------------------------------------
Retail - Food and Drug -- 1.0%
- --------------------------------------------------------------------------------
Papa John's International, Inc.* 4,200 $ 124,163
Starbucks Corp.* 800 26,400
- --------------------------------------------------------------------------------
$ 150,563
- --------------------------------------------------------------------------------
Retail - Specialty and Apparel -- 2.5%
- --------------------------------------------------------------------------------
Bed Bath and Beyond, Inc.* 5,400 $ 171,450
Polo Ralph Lauren Corp., Class A* 3,250 84,500
The Mens Wearhouse, Inc.* 2,700 104,625
- --------------------------------------------------------------------------------
$ 360,575
- --------------------------------------------------------------------------------
Specialty Chemicals and Materials -- 0.0%
- --------------------------------------------------------------------------------
Millipore Corp. 100 $ 3,913
- --------------------------------------------------------------------------------
$ 3,913
- --------------------------------------------------------------------------------
Telephone Utilities -- 1.5%
- --------------------------------------------------------------------------------
ACC Corp.* 3,000 $ 118,875
Pacific Gateway Exchange, Inc.* 2,600 99,450
- --------------------------------------------------------------------------------
$ 218,325
- --------------------------------------------------------------------------------
Transportation -- 1.0%
- --------------------------------------------------------------------------------
Comair Holdings, Inc. 4,000 $ 147,000
- --------------------------------------------------------------------------------
$ 147,000
- --------------------------------------------------------------------------------
Total Common Stocks
(identified cost $14,065,252) $13,611,509
- --------------------------------------------------------------------------------
Mortgage Pass-Throughs -- 23.9%
Face Amount
Security (000 omitted) Value
- --------------------------------------------------------------------------------
Federal Home Loan Bank, 5.63%, 11/3/97 $3,488 $ 3,486,909
- --------------------------------------------------------------------------------
Total Mortgage Pass-Throughs
(identified cost $3,486,909) $ 3,486,909
- --------------------------------------------------------------------------------
Total Investments -- 117.2%
(identified cost $17,552,161) $17,098,418
- --------------------------------------------------------------------------------
Other Assets, Less Liabilities -- (17.2)% (2,510,362)
- --------------------------------------------------------------------------------
Net Assets -- 100.0% $14,588,056
- --------------------------------------------------------------------------------
* Non-income producing security.
See notes to financial statements
9
Eaton Vance Tax-Managed Emerging Growth Fund as of October 31, 1997
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
As of October 31, 1997
Assets
- --------------------------------------------------------------------------------
Investments at value (Note 1A), (identified cost, $17,552,161) $ 17,098,418
Cash 20
Receivable for investments sold 51,498
Receivable for Fund shares sold 701,285
Dividends and interest receivable 2,751
Deferred organization expense (Note 1D) 9,893
- --------------------------------------------------------------------------------
Total assets $ 17,863,865
- --------------------------------------------------------------------------------
Liabilities
- --------------------------------------------------------------------------------
Payable for investments purchased $ 1,964,525
Payable for Fund shares redeemed 1,285,155
Payable to affiliate for shareholder services (Note 6) 154
Accrued expenses 25,975
- --------------------------------------------------------------------------------
Total liabilities $ 3,275,809
- --------------------------------------------------------------------------------
Net Assets $ 14,588,056
- --------------------------------------------------------------------------------
Sources of Net Assets
- --------------------------------------------------------------------------------
Paid-in capital $ 15,107,113
Accumulated net realized loss on investments
(computed on the basis of identified cost) (73,463)
Accumulated undistributed net investment income 8,149
Net unrealized depreciation of investments (computed
on the basis of identified cost) (453,743)
- --------------------------------------------------------------------------------
Total $ 14,588,056
- --------------------------------------------------------------------------------
Net Asset Value and Redemption Price Per Share
- --------------------------------------------------------------------------------
Class A Shares
Net Asset Value per share (Note 5)
($3,924,653 / 402,894 Participating shares
outstanding) $ 9.74
- --------------------------------------------------------------------------------
Class B Shares
Net Asset Value per share (Notes 5 and 7)
($8,612,619 / 884,289 Participating shares
outstanding) $ 9.74
- --------------------------------------------------------------------------------
Class C Shares
Net Asset Value per share (Notes 5 and 7)
($2,050,784 / 210,914 Participating shares
outstanding) $ 9.72
- --------------------------------------------------------------------------------
Computation of Offering Price
- --------------------------------------------------------------------------------
Class A Shares
Offering Price per share (100 / 94.25 of $9.74) $ 10.33
- --------------------------------------------------------------------------------
On sales of $50,000 or more, the offering price is reduced.
Statement of Operations
For the Period Ended
October 31, 1997 *
Investment Income (Note 1G)
- --------------------------------------------------------------------------------
Dividend income $ 2,286
Interest income 13,098
- --------------------------------------------------------------------------------
Total income $ 15,384
- --------------------------------------------------------------------------------
Expenses
- --------------------------------------------------------------------------------
Investment Adviser fee (Note 3) $ 3,602
Distribution and service fees (Note 6)
Class B 2,603
Class C 615
Printing and postage 255
Amortization of organization expenses (Note 1D) 107
Legal and accounting services 43
Miscellaneous 10
- --------------------------------------------------------------------------------
Total expenses $ 7,235
- --------------------------------------------------------------------------------
Net investment income $ 8,149
- --------------------------------------------------------------------------------
Realized and Unrealized
Gain (Loss) on Investments
- --------------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified cost basis) $ (73,463)
- --------------------------------------------------------------------------------
Net realized loss on investments $ (73,463)
- --------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investment transactions $ (453,743)
- --------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation)
of investments $ (453,743)
- --------------------------------------------------------------------------------
Net realized and unrealized loss on investments $ (527,206)
- --------------------------------------------------------------------------------
Net decrease in net assets from operations $ (519,057)
- --------------------------------------------------------------------------------
* For the period from the start of business, September 25, 1997, to
October 31, 1997.
See notes to financial statements
10
Eaton Vance Tax-Managed Emerging Growth Fund as of October 31, 1997
FINANCIAL STATEMENTS CONT'D
Statement of Changes in Net Assets
Increase (Decrease) For the Period Ended
in Net Assets October 31, 1997 *
- --------------------------------------------------------------------------------
From operations --
Net investment income $ 8,149
Net realized loss on investments (73,463)
Net change in unrealized appreciation
(depreciation)
of investments (453,743)
- --------------------------------------------------------------------------------
Net decrease in net assets from operations $ (519,057)
- --------------------------------------------------------------------------------
Transactions in shares of beneficial interest (Note 5) --
Proceeds from sale of shares
Class A $ 4,869,539
Class B 8,974,780
Class C 2,116,676
Cost of shares redeemed
Class A (816,967)
Class B (36,915)
- --------------------------------------------------------------------------------
Net increase in net assets from Fund
share transactions $ 15,107,113
- --------------------------------------------------------------------------------
Net increase in net assets $ 14,588,056
- --------------------------------------------------------------------------------
Net Assets
- --------------------------------------------------------------------------------
At beginning of period $ --
- --------------------------------------------------------------------------------
At end of period $ 14,588,056
- --------------------------------------------------------------------------------
Accumulated undistributed
net investment income
included in net assets
- --------------------------------------------------------------------------------
At end of period $ 8,149
- --------------------------------------------------------------------------------
* For the period from the start of business, September 25, 1997, to October 31,
1997.
See notes to financial statements
11
Eaton Vance Tax-Managed Emerging Growth Fund as of October 31, 1997
FINANCIAL STATEMENTS CONT'D
Financial Highlights
Period Ended October 31, 1997
------------------------------------------------------------
Class A* Class B** Class C**
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value -- Beginning of period $ 10.000 $10.000 $10.000
- ------------------------------------------------------------------------------------------------------------------------------------
Income from operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.008 $ 0.005 $ 0.003
Net realized and unrealized loss on investments (0.268) (0.265) (0.283)
- ------------------------------------------------------------------------------------------------------------------------------------
Net loss from operations $ (0.260) $(0.260) (0.280)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value -- End of period $ 9.740 $ 9.740 $ 9.720
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return(1) (2.60)% (2.60)% (2.80)%
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover 7.00% 7.00% 7.00%
- ------------------------------------------------------------------------------------------------------------------------------------
Average Commission Rate(2) $ 0.0600 $0.0600 $0.0600
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $ 3,925 $ 8,613 $ 2,051
Ratio of net expenses to average daily net assets 0.63%+ 1.37%+ 1.56%+
Ratio of net investment income to average daily net assets 1.83%+ 1.13%+ 0.90%+
- ------------------------------------------------------------------------------------------------------------------------------------
+ Annualized.
* For the period from the start of business, September 25, 1997, to
October 31, 1997.
** For the period from the commencement of offerings of Class B and Class C
shares, September 29, 1997, to October 31, 1997.
(1) Total return is calculated assuming a purchase at the net asset value on the
first day and a sale at the net asset value on the last day of each period
reported. Dividends and distributions, if any, are assumed to be reinvested
at the net asset value on the ex-date. Total return is not computed on an
annualized basis.
(2) Average commission rate paid is computed by dividing the total dollar amount
of commissions paid during the fiscal year by the total number of shares
purchased and sold during the fiscal year for which commissions were
charged.
See notes to financial statements
12
Eaton Vance Tax-Managed Emerging Growth Fund as of October 31, 1997
NOTES TO FINANCIAL STATEMENTS
1 Significant Accounting Policies
----------------------------------------------------------------------------
Eaton Vance Tax-Managed Emerging Growth Fund (the Fund) is registered under
the Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The Fund, which is a series of Eaton Vance
Mutual Fund Trust (the Trust), seeks to provide long-term after-tax returns
by investing in a diversified portfolio of equity securities of emerging
growth companies. The Declaration of Trust permits the Trustees to issue
interests in the Fund. The Fund has three classes of shares. Class A shares
are sold at the effective public offering price, which price is based on the
effective net asset value per share plus the applicable sales charge. Class
B and Class C shares are sold at net asset value and are subject to a
contingent deferred sales charge (see Note 7). All classes of shares have
equal rights to assets and voting privileges. Realized and unrealized gains
and losses and net investment income, other than class specific expenses,
are allocated daily to each class of shares based on the relative net assets
of each class to the total net assets of the Fund. Each class of shares
differs in its distribution plan and certain other class specific expenses.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
A Investment Valuations -- Marketable securities, including options, that
are listed on foreign or U.S. securities exchanges or in the NASDAQ National
Market System are valued at closing sale prices, on the exchange where such
securities are principally traded. Futures positions on securities or
currencies are generally valued at closing settlement 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 debt
securities with a remaining maturity of 60 days or less are valued at
amortized cost, which approximates value. Other fixed income and debt
securities, including listed securities and securities for which price
quotations are available, will normally be valued on the basis of valuations
furnished by a pricing service. Investments for which valuations or market
quotations are unavailable are valued at fair value using methods determined
in good faith by or at the direction of the Trustees.
B Federal Taxes -- The Fund's policy is to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute to shareholders each year all of its taxable income, including
any net realized gain on investments. Accordingly, no provision for federal
income or excise tax is necessary. At October 31, 1997, the Fund, for
federal income tax purposes, had a capital loss carryover of $56,332 which
will reduce the taxable income arising from future net realized gain on
investments, if any, to the extent permitted by the Internal Revenue Code
and thus will reduce the amount of distributions to shareholders which would
otherwise be necessary to relieve the Fund of any liability for federal
income or excise tax. Such capital loss carryover will expire on October 31,
2005.
C Futures Contracts -- Upon the entering of a financial futures contract,
the Fund is required to deposit either in cash or securities an amount
("initial margin") equal to a certain percentage of the purchase price
indicated in the financial futures contract. Subsequent payments are made or
received by the Fund ("margin maintenance") each day, dependent on daily
fluctuations in the value of the underlying security, and are recorded for
book purposes as unrealized gains or losses by the Fund. The Fund's
investment in financial futures contracts is designed to hedge against
anticipated future changes in price of current or anticipated Fund
positions. Should prices move unexpectedly, the Fund may not achieve the
anticipated benefits of the financial futures contracts and may realize a
loss.
D Deferred Organization Expenses -- Costs incurred by the Fund in connection
with its organization are being amortized on the straight-line basis over
five years.
E Use of Estimates -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts
of revenue and expense during the reporting period. Actual results could
differ from those estimates.
F Expense Reduction -- Investors Bank & Trust Company (IBT) serves as
custodian to the Fund. Pursuant to the custodian agreement, IBT receives a
fee reduced by credits which are determined based on the average cash
13
Eaton Vance Tax-Managed Emerging Growth Fund as of October 31, 1997
NOTES TO FINANCIAL STATEMENTS CONT'D
balances the Fund maintains with IBT. All significant credit balances used
to reduce the Fund's custodian fees are reported as a reduction of operating
expenses on the Statement of Operations.
G Other -- Investment transactions are accounted for on the date the
investments are purchased or sold. Dividend income is recorded on the
ex-dividend date. However, if the ex-dividend date has passed, certain
dividends from foreign securities are recorded as the Fund is informed of
the ex-dividend date. Interest income is recorded on the accrual basis.
2 Distributions to Shareholders
----------------------------------------------------------------------------
It is the present policy of the Fund to make (a) at least one distribution
annually (normally in December) of all or substantially all of the net
investment income and (b) at least one distribution annually of all or
substantially all of the net realized capital gains (reduced by any
available capital loss carryforwards from prior years). Income dividends are
declared separately for each class of shares. Shareholders may reinvest all
distributions in shares of the Fund without a sales charge at the net asset
value per share as of the close of business on the ex-date.
The Fund distinguishes between distributions on a tax basis and a financial
reporting basis. Generally accepted accounting principles require that only
distributions in excess of tax basis earnings and profits be reported in the
financial statements as a return of capital. Differences in the recognition
or classification of income between the financial statements and tax
earnings and profits which result in temporary over distributions for
financial statement purposes only are classified as distributions in excess
of net investment income or accumulated net realized gains. Permanent
differences between book and tax accounting relating to distributions are
reclassified to paid-in capital.
3 Investment Adviser Fee and Other Transactions with Affiliates
----------------------------------------------------------------------------
The investment adviser fee is earned by Eaton Vance Management (EVM) as
compensation for management and investment advisory services rendered to the
Fund. EVM receives a monthly advisory fee in the amount of 5/96th of 1%
(equal to 0.625% annually) of the average daily net assets of the Fund up to
$500 million, and at reduced rates as daily net assets exceed that level.
For the period ended October 31, 1997 the fee amounted to $3,602. Except as
to Trustees of the Fund who are not members of EVM's organization, officers
and Trustees receive remuneration for their services to the Fund out of such
investment adviser fee. Trustees of the Fund who are not affiliated with the
Investment Adviser may elect to defer receipt of all or a percentage of
their annual fees in accordance with the terms of the Trustees Deferred
Compensation Plan. For the period ended October 31, 1997, no significant
amounts have been deferred. Certain officers and Trustees of the Fund are
officers and directors/trustees of EVM.
4 Federal Income Tax Basis of Investments
----------------------------------------------------------------------------
The cost and unrealized appreciation (depreciation) in value of the
investments owned at October 31, 1997, as computed on a federal income tax
basis, are as follows:
Aggregate cost $ 17,552,161
----------------------------------------------------------------------------
Gross unrealized appreciation $ 186,304
Gross unrealized depreciation (640,047)
----------------------------------------------------------------------------
Net unrealized depreciation $ (453,743)
----------------------------------------------------------------------------
5 Shares of Beneficial Interest
----------------------------------------------------------------------------
The Declaration of the Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest (without par
value). Transactions in Fund shares were as follows:
Class A Period Ended October 31, 1997 *
----------------------------------------------------------------------------
Sales 483,988
Redemptions (81,094)
----------------------------------------------------------------------------
Net increase 402,894
----------------------------------------------------------------------------
* For the period from the start of business, September 25, 1997, to
October 31, 1997.
Class B Period Ended October 31, 1997 **
----------------------------------------------------------------------------
Sales 887,994
Redemptions (3,705)
----------------------------------------------------------------------------
Net increase 884,289
----------------------------------------------------------------------------
** For the period from the commencement of offering of Class B shares,
September 29, 1997, to October 31, 1997.
14
Eaton Vance Tax-Managed Emerging Growth Fund as of October 31, 1997
NOTES TO FINANCIAL STATEMENTS CONT'D
Class C Period Ended October 31, 1997 ***
----------------------------------------------------------------------------
Sales 210,914
Redemptions --
----------------------------------------------------------------------------
Net increase 210,914
----------------------------------------------------------------------------
***For the period from the commencement of offering of Class C shares,
September 29, 1997, to October 31, 1997.
6 Distribution and Service Fees
----------------------------------------------------------------------------
The Fund has adopted a Service Plan for the Fund's Class A shares (the
"Class A Plan") that is designed to meet the service fee requirements of the
sales charge rule of the National Association of Securities Dealers, Inc.
The Class A Plan provides that the Fund may make service fee payments for
personal services and/or the maintenance of shareholder accounts to the
Principal Underwriter, financial service firms ("Authorized Firms") and
other persons in amounts not exceeding 0.25% of average daily net assets for
Class A shares for any fiscal year. The Trustees have initially implemented
the Class A Plan by authorizing Class A to make quarterly service fee
payments to the Principal Underwriter and Authorized Firms in amounts not
expected to exceed 0.25% of the average daily net assets for any fiscal year
which is based on the value of Class A shares sold by such persons and
remaining outstanding for at least twelve months. The Fund expects to begin
accruing for Class A service fees during the quarter ending December 31,
1998.
The Fund has also adopted distribution plans (Class B and Class C Plan, the
Plans) pursuant to Rule 12b-1 under the Investment Company Act of 1940. The
Plans, which are approved annually, require the Fund to pay the Principal
Underwriter, Eaton Vance Distributors, Inc. (EVD), amounts equal to 1/365 of
0.75% of the Fund's Class B and Class C daily net assets, for providing
ongoing distribution services and facilities to the Fund. The Fund will
automatically discontinue payments to EVD during any period in which there
are no outstanding Uncovered Distribution Charges, which are equivalent to
the sum of (i) 5% and 6.25% of the aggregate amount received by the Fund for
Class B and Class C shares sold, respectively, plus (ii) distribution fees
calculated by applying the rate of 1% over the prevailing prime rate to the
outstanding balance of Uncovered Distribution Charges due EVD, of each
respective class reduced by the aggregate amount of contingent deferred
sales charges (see Note 7) and daily amounts theretofore paid to EVD by each
respective class.
The amount payable to EVD with respect to each day is accrued on such day as
a liability of the Fund and, accordingly, reduces the Fund's net assets. For
the period ended October 31, 1997, the Fund paid or accrued $2,603 and $461,
to or payable to EVD representing 0.75% (annualized) of average daily net
assets of Class B and Class C shares, respectively. At October 31, 1997, the
amount of Uncovered Distribution Charges of EVD calculated under the Plans
was approximately $415,000 and $122,000 for Class B and Class C shares,
respectively.
In addition, Class B and Class C Plans authorize the Fund to make payments
of service fees to the Principal Underwriter, Authorized Firms, and other
persons in amounts not exceeding 0.25% of their average daily net assets for
each fiscal year. Service fee payments are made for personal services and/or
the maintenance of shareholder accounts. Under the Class B Plan, this fee is
paid quarterly in arrears based on the value of Class B shares sold by such
persons and remaining outstanding for at least twelve months. Class B
expects to begin accruing for its service fees during the quarter ending
December 31, 1998. Under the Class C Plan, the Principal Underwriter
currently expects to pay to an Authorized Firm (a) a service fee (except on
exchange transactions and reinvestments) at the time of sale equal to 0.25%
of the purchase price of the Class C shares sold by such Firm and (b)
monthly service fees approximately equivalent to 1/12 of 0.25% of the value
of Class C shares sold by such Firm and remaining outstanding for at least
one year. During the first year after a purchase of Class C shares, the
Principal Underwriter will retain the service fee as reimbursement for the
service fee payment made to Authorized Firms at the time of sale. The Fund
paid or accrued service fees to or payable to EVD for the period ended
October 31, 1997 in the amount of $154 for Class C. Service fees are
separate and distinct from the sales commissions and distribution fees
payable by the Fund to EVD, and as such are not subject to automatic
discontinuance when there are no outstanding Uncovered Distribution Charges
of EVD.
7 Contingent Deferred Sales Charge
----------------------------------------------------------------------------
A contingent deferred sales charge (CDSC) may be imposed on certain Class A
shares redeemed within 12 months of purchase. A CDSC is imposed on any
redemption of Class B shares made within six years of purchase. A CDSC is
imposed on any redemption of Class C shares made within one year of
purchase. Generally, the CDSC is based on the lower of the net asset value
at date of redemption or date of purchase. No charge is levied on shares
acquired by reinvestment of dividends. Class A
15
Eaton Vance Tax-Managed Emerging Growth Fund as of October 31, 1997
NOTES TO FINANCIAL STATEMENTS CONT'D
shares may be subject to a 1% CDSC if redeemed within 12 months of purchase
(depending on the circumstances of purchase). For Class B the CDSC is
imposed at declining rates that begin at 5% in the case of redemptions in
the first and second year after purchase, declining one percentage point
each subsequent year. Class C shares will be subject to a 1% CDSC if
redeemed within 12 months of purchase.
No CDSC is levied on shares which have been sold to EVM or its affiliates or
to their respective employees. CDSC charges are paid to EVD to reduce the
amount of Uncovered Distribution Charges calculated under the Class B and
Class C Distribution Plans. CDSC received when no Uncovered Distribution
Charges exist will be retained by the Fund. EVD received approximately $400
of CDSC paid by shareholders of Class B shares during the period ended
October 31, 1997. There was no CDSC paid by shareholders of Class A and
Class C shares during the period ended October 31, 1997.
8 Line of Credit
----------------------------------------------------------------------------
The Fund participates with other funds and portfolios managed by EVM and its
affiliates in a $100 million unsecured line of credit agreement with a group
of banks. The Fund may temporarily borrow from the line of credit to satisfy
redemption requests or settle investment transactions. Interest is charged
to each fund or portfolio based on its borrowings at an amount above the
banks' Eurodollar rate or federal funds advanced funding rate. In addition,
a fee computed at an annual rate of 0.10% on the daily unused portion of the
line of credit is allocated among the participating funds and portfolios at
the end of each quarter. The Fund did not have any significant borrowings or
allocated fees during the period ended October 31, 1997.
9 Investment Transactions
----------------------------------------------------------------------------
Purchases and sales of investments, other than short-term obligations,
aggregated $14,500,040 and $360,762, respectively, for the period ended
October 31, 1997.
16
Eaton Vance Tax-Managed Emerging Growth Fund as of October 31, 1997
INDEPENDENT AUDITORS' REPORT
To the Trustees and Shareholders
of Eaton Vance Tax-Managed
Emerging Growth Fund
- --------------------------------------------------------------------------------
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Eaton Vance Tax-Managed Emerging Growth Fund
(the Fund) as of October 31, 1997, and the related statement of operations, the
statement of changes in net assets and the financial highlights for the period
from the start of business, September 25, 1997, to October 31, 1997. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. Our procedures included confirmation of
securities owned as of October 31, 1997 by correspondence with the custodian and
brokers; where replies were not received from brokers, we performed other
auditing procedures. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights, referred to
above, present fairly, in all material respects, the financial position of Eaton
Vance Tax-Managed Emerging Growth Fund at October 31, 1997, the results of its
operations, the changes in its net assets and its financial highlights for the
period from the start of business, September 25, 1997, to October 31, 1997 in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
December 5, 1997
17
Eaton Vance Tax-Managed Emerging Growth Fund as of October 31, 1997
INVESTMENT MANAGEMENT
Eaton Vance Tax-Managed Emerging Growth Fund
Officers
M. Dozier Gardner
President and Trustee
James B. Hawkes
Vice President and Trustee
William H. Ahern, Jr.
Vice President
Thomas J. Fetter
Vice President
Michael B. Terry
Vice President
James L. O'Connor
Treasurer
Alan R. Dynner
Secretary
Independent Trustees
Donald R. Dwight
President, Dwight Partners, Inc.
Chairman, Newspapers of New England, Inc.
Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment Banking,
Harvard University Graduate School of
Business Administration
Norton H. Reamer
President and Director, United Asset
Management Corporation
John L. Thorndike
Formerly Director, Fiduciary Company Incorporated
Jack L. Treynor
Investment Adviser and Consultant
18
This Page Intentionally Left Blank
Investment Adviser and Administrator of Eaton Vance
Tax-Managed Emerging Growth Fund
Eaton Vance Management
24 Federal Street
Boston, MA 02110
Principal Underwriter
Eaton Vance Distributors, Inc.
24 Federal Street
Boston, MA 02110
(617)482-8260
Custodian
Investors Bank & Trust Company
200 Clarendon Street,16th Floor
Boston, MA 02116
Transfer Agent
First Data Investor Services Group
Attention: Eaton Vance Funds
P.O. Box 5123
Westborough, MA 01581-5123
Eaton Vance
Tax-Managed Emerging Growth Fund
24 Federal Street
Boston, MA 02110
- --------------------------------------------------------------------------------
This report must be preceded or accompanied by a current prospectus which
contains more complete information on the Fund, including its sales charges and
expenses. Please read the prospectus carefully before you invest or send money.
- --------------------------------------------------------------------------------
MGSRC-12/97
Eaton Vance Worldwide Developing Resources Fund as of August 31, 1998
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
As of August 31, 1998
Assets
- ------------------------------------------------------
Investment in Worldwide Developing
Resources Portfolio, at value $ 6,307,362
(identified cost, 17,688,642)
Receivable for Fund shares sold 10,922
Receivable from Distributor 34,100
Deferred organization expenses 20,406
Other assets 105
- ------------------------------------------------------
Total assets $ 6,372,895
- ------------------------------------------------------
Liabilities
- ------------------------------------------------------
Payable for Fund shares redeemed $ 43,343
Other accrued expenses 56,641
- ------------------------------------------------------
Total liabilities $ 99,984
- ------------------------------------------------------
Net Assets $ 6,272,911
- ------------------------------------------------------
Sources of Net Assets
- ------------------------------------------------------
Paid-in capital $18,135,420
Accumulated net realized loss from
Portfolio (computed on
the basis of identified cost) (480,007)
Accumulated net investment loss (1,222)
Net unrealized depreciation from
Portfolio (computed on
the basis of identified cost) (11,381,290)
- ------------------------------------------------------
Total $ 6,272,911
- ------------------------------------------------------
Class A Shares
- -------------------------------------------------------
Net Assets $ 337,515
Shares Outstanding 92,018
Net Asset Value and Redemption Price
Per Share (net assets / shares of
beneficial interest outstanding) $ 3.67
Maximum Offering Price Per Share
(100 / 94.25 of $3.67) $ 3.89
- ------------------------------------------------------
Class B Shares
- ------------------------------------------------------
Net Assets $ 5,935,396
Shares Outstanding 984,316
Net Asset Value, Offering Price and
Redemption Price Per Share
(net assets / shares of beneficial $ 6.03
interest outstanding) $ 6.03
- ------------------------------------------------------
On sales of $50,000 or more, the offering price of
Class A shares is reduced.
Statement of Operations
For the Year Ended
August 31, 1998
Investment Income
- ------------------------------------------------------
Dividends allocated from Portfolio
(net of foreign taxes, $1,445) $ 18,644
Interest allocated from Portfolio 14,260
Expenses allocated from Portfolio (224,433)
- ------------------------------------------------------
Net investment loss from Portfolio $ (191,529)
- ------------------------------------------------------
Expenses
- ------------------------------------------------------
Distribution and Service fees
Class A $ 88
Class B 135,090
Transfer and dividend disbursing agent
fees 36,180
Registration fees 25,864
Printing and postage 15,281
Legal and accounting services 14,763
Custodian fee 11,113
Amortization of organization expenses 8,724
Miscellaneous 9,223
- ------------------------------------------------------
Total expenses $ 256,326
- ------------------------------------------------------
Deduct --
Allocation of expenses to the
Distributor $ 34,100
- ------------------------------------------------------
Total expense reductions $ 34,100
- ------------------------------------------------------
Net expenses $ 222,226
- ------------------------------------------------------
Net investment loss $ (413,755)
- ------------------------------------------------------
Realized and Unrealized
Gain (Loss) from Portfolio
- ------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified
cost basis) $ (451,902)
Foreign currency transactions (1,260)
- ------------------------------------------------------
Net realized loss $ (453,162)
- ------------------------------------------------------
Change in unrealized appreciation
(depreciation) --
Investments $(10,831,401)
Foreign currency (14)
- ------------------------------------------------------
Net change in unrealized appreciation
(depreciation) $(10,831,415)
- ------------------------------------------------------
Net realized and unrealized loss $(11,284,577)
- ------------------------------------------------------
Net decrease in net assets from
operations $(11,698,332)
- ------------------------------------------------------
Eaton Vance Worldwide Developing Resources Fund as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
Increase (Decrease) Year Ended Year Ended
in Net Assets August 31, 1998 August 31, 1997
- --------------------------------------------------------------------------------
From operations --
Net investment loss $ (413,755) $ (497,332)
Net realized gain (loss) (453,162) 1,029,394
Net change in unrealized
appreciation (depreciation) (10,831,415) (5,411,34)
- --------------------------------------------------------------------------------
Net decrease in net assets
from operations $(11,698,332) $ (4,879,283)
- --------------------------------------------------------------------------------
Distributions to shareholders --
From net realized gain Class B $ -- $ (4,169,529)
- --------------------------------------------------------------------------------
Total distributions to shareholders $ -- $ (4,169,529)
- --------------------------------------------------------------------------------
Transactions in shares of beneficial
interest --
Proceeds from sale of shares
Class A $ 602,271 $ --
Class B 3,221,071 22,007,503
Issued in reorganization of
EV Traditional Worldwide
Developing Resources Fund
Class A 355,723 --
Net asset value of shares issued
to shareholders in payment of
distributions declared
Class A 2,711 --
Class B 569,625 2,940,572
Cost of shares redeemed
Class A (249,415) --
Class B (9,195,23) (13,363,551)
- --------------------------------------------------------------------------------
Net increase (decrease) in net assets
from Fund share transactions $ (4,693,251) $ 11,584,524
- --------------------------------------------------------------------------------
Net increase (decrease) in net assets $(16,391,583) $ 2,535,712
- ------------------------
Net Assets
- --------------------------------------------------------------------------------
At beginning of year $ 22,664,494 $ 20,128,782
- --------------------------------------------------------------------------------
At end of year $ 6,272,911 $ 22,664,494
- --------------------------------------------------------------------------------
Accumulated net investment loss
included in net assets
- --------------------------------------------------------------------------------
At end of year $ (1,222) $ (1,708)
- --------------------------------------------------------------------------------
See notes to financial statements
Eaton Vance Worldwide Developing Resources Fund as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Financial Highlights
Year Ended
----------------------------------------------------------------------------------
August 31, September 30,
------------------------------------------------------------ -------------------
1998 1997 1996 1995(1)(2) 1994 1993
- --------------------------------------------------------------------------------------------------------------------------
Class A Class B Class B Class B Class B Class B Class B
- --------------------------------------------------------------------------------------------------------------------------
Net asset value-- beginning of year $ 9.430 $15.570 $21.580 $16.420 $14.890 $13.240 $11.850
- --------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- --------------------------------------------------------------------------------------------------------------------------
Net investment loss $(0.06) $(0.41) $(0.248) $(0.261) $(0.100) $(0.050) $(0.090)
Net realized and unrealized gain (loss) (5.696) (9.125) (2.427) 6.371 1.630 2.650 1.480
- --------------------------------------------------------------------------------------------------------------------------
Total income (loss) from operations $(5.76) $(9.54) $(2.675) $ 6.110 $ 1.530 $ 2.600 $ 1.390
- --------------------------------------------------------------------------------------------------------------------------
Less distributions
- --------------------------------------------------------------------------------------------------------------------------
In excess of net investment loss $ -- $ -- $ -- $ -- $ -- $(0.020) $ --
From net realized gain -- -- (3.335) (0.950) -- -- --
In excess of net realized gain -- -- -- -- -- (0.930) --
- --------------------------------------------------------------------------------------------------------------------------
Total distributions $ -- $ -- $(3.335) $(0.950) $ -- $(0.950) $ --
- --------------------------------------------------------------------------------------------------------------------------
Net asset value-- end of year $3.670 $6.030 $15.570 $21.580 $16.420 $14.890 $13.240
- --------------------------------------------------------------------------------------------------------------------------
Total Return (3) (61.08)% (61.27)% (14.49)% 39.69% 10.28% 20.47% 11.73%
- --------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data +
- --------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000's
omitted) $ 338 $5,935 $22,664 $20,129 $15,259 $13,055 $ 5,792
Ratios (As a percentage of average
daily net assets):
Net expenses (4)(5) 1.89% 2.98% 2.44% 2.49% 2.43%(6) 2.64% 3.15%
Net expenses after custodian
fee reduction (4) 1.89% 2.98% 2.40% 2.47% -- -- --
Net investment loss (1.70)% (2.76)% (1.92)% (1.60)% (0.74)%(6) (0.96)% (0.92)%
Portfolio turnover (7) -- -- -- 86% 49% 17% 57%
- --------------------------------------------------------------------------------------------------------------------------
+ The operating expenses of the Fund and the Portfolio may reflect a reduction of the investment adviser fee, an
allocation of expenses to the Distributor, or both. Had such actions not been taken, the ratios and net investment
loss per share would have been as follows:
Ratios (As a percentage of average daily net assets):
Expenses (4) 2.11% 3.20% -- -- -- -- 3.90%
Net investment loss (4) (1.92)% (2.98)% -- -- -- -- (1.67)%
Net investment loss per share $(0.07) $(0.45) -- -- -- -- $(0.210)
- --------------------------------------------------------------------------------------------------------------------------
(1) Net investment loss per share was computed using average shares outstanding.
(2) For the eleven months ended August 31, 1995.
(3) Total return is calculated assuming a purchase at the net asset value on the first day and a sale at the net asset
value on the last day of each period reported. Dividends and distributions, if any, are assumed reinvested at the net
asset value on the reinvestment date. Total return is not computed on an annualized basis.
(4) Includes the Fund's share of its corresponding Portfolio's allocated expenses.
(5) The expense ratios for the year ended August 31, 1996 and periods thereafter have been adjusted to reflect a change
in reporting requirements. The new reporting guidelines require the Fund, as well as its corresponding Portfolio, to
increase its expense ratio by the effect of any expense offset arrangements with its service provider. The expense
ratios for each of the prior periods have not been adjusted to reflect this change.
(6) Annualized.
(7) Portfolio Turnover represents the rate of portfolio activity for the period while the Fund was making investments
directly in securities. The portfolio turnover rate for the period since the Fund transferred all of its investable
assets to the Portfolio is shown in the Portfolio's financial statements which are included elsewhere in this report.
Eaton Vance Worldwide Developing Resources Fund as of August 31, 1998
NOTES TO FINANCIAL STATEMENTS
1 Significant Accounting Policies
- --------------------------------------------------------------------------------
Eaton Vance Worldwide Developing Resources Fund (the Fund) is a
non-diversified series of Eaton Vance Growth Trust (the Trust). The Fund is
an entity of the type commonly known as a Massachusetts business trust and is
registered under the Investment Company Act of 1940, as amended, as an
open-end investment management company. On April 10, 1997, the Fund
transferred substantially all of its investable assets to the Worldwide
Developing Resources Portfolio (the Portfolio). The Fund offers two classes
of shares. Class A shares are sold subject to a sales charge imposed at the
time of purchase. Class B shares are sold at net asset value and are subject
to a declining contingent deferred sales charge (see Note 6). All classes of
shares have equal rights to assets and voting privileges. Realized and
unrealized gains and losses and net investment income, other than class
specific expenses, are allocated daily to each class of shares based on the
relative net assets of each class to the total net assets of the Fund. Each
class of shares differs in its distribution plan and certain other class
specific expenses. The Fund invests all of its investable assets in interests
in the Portfolio, a New York Trust, having the same investment objective as
the Fund. The value of the Fund's investment in the Portfolio reflects the
Fund's proportionate interest in the net assets of the Portfolio (73.8% at
August 31, 1998). The performance of the Fund is directly affected by the
performance of the Portfolio. The financial statements of the Portfolio,
including the portfolio of investments, are included elsewhere in this report
and should be read in conjunction with the Fund's financial statements.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
A Investment Valuation -- Valuation of securities by the Portfolio is
discussed in Note 1A of the Portfolio's Notes to Financial Statements which
are included elsewhere in this report.
B Income -- The Fund's net investment income consists of the Fund's pro rata
share of the net investment income of the Portfolio, less all actual and
accrued expenses of the Fund determined in accordance with generally accepted
accounting principles. Prior to the Fund's investment in the Portfolio, the
Fund held its investments directly.
C Federal Taxes -- The Fund's policy is to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute to shareholders each year all of its taxable income, including any
net realized gain on investments. Accordingly, no provision for federal
income or excise tax is necessary.
D Expense Reduction -- Investors Bank & Trust Company (IBT) serves as
custodian of the Fund and the Portfolio. Pursuant to the respective custodian
agreements, IBT receives a fee reduced by credits which are determined based
on the average daily cash balances the Fund or the Portfolio maintains with
IBT. All significant credit balances used to reduce the Fund's custodian fees
are reported as a reduction of expenses on the Statement of Operations.
E Deferred Organization Expenses -- Costs incurred by the Fund in connection
with its organization, including registration costs, are being amortized on
the straight-line basis over five years.
F Use of Estimates -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts
of revenue and expense during the reporting period. Actual results could
differ from those estimates.
G Other -- Investment transactions are accounted for on a trade date basis.
Gain or loss on the sale of investments is determined on the identified cost
basis.
2 Distributions to Shareholders
- --------------------------------------------------------------------------------
It is the present policy of the Fund to make (a) at least one distribution
annually (normally in December) of all or substantially all of the investment
income allocated to the Fund by the Portfolio, if any, less the Fund's direct
and allocated expenses and (b) at least one distribution annually of all or
substantially all of the net realized capital gains allocated by the
Portfolio to the Fund, if any (reduced by any available capital loss
carryforwards from prior years). Shareholders may reinvest all distributions
in shares of the Fund without a sales charge at the per share net asset value
as of the close of business on the ex-dividend date.
The Fund distinguishes between distributions on a tax basis and a financial
reporting basis. Generally accepted accounting principles require that only
distributions in excess of tax basis earnings and profits be reported in the
financial statements as a return of capital. Differences in the recognition
or classification of income between the financial statement and tax earnings
and profits which result in temporary over distributions for financial
statement purposes are classified as distributions in excess of net
investment income or accumulated net realized losses. Permanent differences
between book and tax accounting are reclassified to paid-in capital.
3 Shares of Beneficial Interest
- --------------------------------------------------------------------------------
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value). Such
shares may be issued in a number of different classes.
Transactions in Fund shares were as follow:
Year Ended Year Ended
August 31, 1998 August 31, 1997
-----------------------------------------
Class A Class B Class B
-----------------------------------------------------------------------------
Shares sold 84,938 257,618 1,108,712
Shares issued to shareholders
in reinvestment of distributions 287 36,656 154,604
Shares redeemed (30,936) (765,838) (740,328)
Issued to EV Traditional
Worldwide Developing
Resources Fund
shareholders 37,729 -- --
-----------------------------------------------------------------------------
Net increase
(decrease) 92,018 (471,564) 522,988
-----------------------------------------------------------------------------
4 Transactions with Affiliates
- --------------------------------------------------------------------------------
Eaton Vance Management (EVM) serves as the Administrator of the Fund, but
receives no compensation. The Portfolio has engaged Boston Management and
Research (BMR), a subsidiary of EVM, to render investment advisory services.
See Note 2 of the Portfolio's Notes to Financial Statements which are
included elsewhere in this report. Except as to Trustees of the Fund who are
not members of EVM's organization, officers and Trustees receive remuneration
for their services to the Fund out of such investment adviser fee. Eaton
Vance Distributors, Inc., (EVD), a subsidiary of EVM and the Fund's principal
underwriter, received approximately $2,535 as its portion of the sales charge
on sales of Class A shares of the Fund for the year ended August 31, 1998.
Certain officers and Trustees of the Fund and the Portfolio are
directors/trustees of the above organizations.
5 Distribution Plans
- --------------------------------------------------------------------------------
The Fund has adopted distribution plans (Class A Plan, Class B Plan, the
Plans) pursuant to Rule 12b-1 under the Investment Company Act of 1940. The
Plans require the Fund to pay the Principal Underwriter, Eaton Vance
Distributors, Inc. (EVD) amounts equal to 1/365 of 0.75% of the Fund's Class
B daily net assets, for providing ongoing distribution services and
facilities to the Fund. The Fund will automatically discontinue payments to
EVD during any period in which there are no outstanding Uncovered
Distribution Charges, which are equivalent to the sum of (i) 5% of the
aggregate amount received by the Fund for Class B shares sold plus (ii)
distribution fees calculated by applying the rate of 1% over the prevailing
prime rate to the outstanding balance of Uncovered Distribution Charges of
EVD, reduced by the aggregate amount of contingent deferred sales charges
(see Note 6) and daily amounts theretofore paid to EVD. The amount payable to
EVD with respect to each day is accrued on such day as a liability of the
Fund and, accordingly, reduces the Fund's net assets. The Fund paid or
accrued $111,132 for the year ended August 31, 1998, representing 0.75% of
average daily net assets attributable to Class B shares. At August 31, 1998,
the amount of Uncovered Distribution Charges EVD calculated under the Plan
was approximately $685,000.
In addition, the Plans authorize the Fund to make monthly payments of service
fees to EVD, Authorized Firms and other persons in amounts not exceeding
0.25% of the Fund's average daily net assets for any fiscal year. The
Trustees have initially implemented the Plans by authorizing the Fund to make
quarterly payments of service fees to EVD and Authorized Firms in amounts not
expected to exceed 0.25% per annum, of the Fund's average daily net assets
attributable to both Class A and Class B shares based on the value of Fund
shares sold by such persons and remaining outstanding for at least one year.
Service fee payments will be made for personal services and/or the
maintenance of shareholder accounts. Service fees are separate and distinct
from the sales commissions and distribution fees payable by the Fund to EVD,
and, as such are not subject to automatic discontinuance where there are no
outstanding Uncovered Distribution Charges of EVD. Service fee payments for
the year ended August 31, 1998 amounted to $88 and $23,958 for Class A and
Class B shares, respectively.
6 Contingent Deferred Sales Charge
- --------------------------------------------------------------------------------
A contingent deferred sales charge (CDSC) is imposed on any redemption of
Class B shares made within six years of purchase. Generally, the CDSC is
based upon the lower of the net asset value at date of redemption or date of
purchase. No charge is levied on Class B shares acquired by reinvestment of
dividends or capital gains distributions. The CDSC is imposed at declining
rates that begin at 5% in the case of redemptions in the first and second
year after purchase, declining one percentage point each subsequent year. No
CDSC is levied on Class B shares which have been sold to EVM or its
affiliates or to their respective employees or clients. CDSC charges are paid
to EVD to reduce the amount of Uncovered Distribution Charges calculated
under the Fund's Distribution Plan. CDSC charges received when no Uncovered
Distribution Charges exist will be credited to the Fund. For the year ended
August 31, 1998, EVD received approximately $130,000 of CDSC paid by
shareholders.
7 Investment Transactions
- --------------------------------------------------------------------------------
For the year ended August 31, 1998, increases and decreases of the Fund's
investment in the Portfolio aggregated $4,039,598 and $9,857,014,
respectively.
8 Transfer of Net Assets
- --------------------------------------------------------------------------------
On September 1, 1997, EV Marathon Worldwide Developing Resources Fund
acquired the net assets of EV Traditional Worldwide Developing Resources Fund
pursuant to an Agreement and Plan of Reorganization dated June 23, 1997. In
accordance with the agreement, the Fund at the closing, issued 37,729 Class A
shares with an aggregate value of $355,723 (including unrealized depreciation
of $3,670) and a net asset value per share of $9.43. The transaction was
structured for tax purposes to qualify as a tax free reorganization under the
Internal Revenue Code. Directly after the merger, the combined net assets of
the Fund were $23,020,217, with net asset values of $9.43 and $15.57 for
Class A shares and Class B shares, respectively.
9 Name Change
- --------------------------------------------------------------------------------
Effective September 1, 1997, EV Marathon Worldwide Developing Resources Fund
changed its name to Eaton Vance Worldwide Developing Resources Fund.
Eaton Vance Worldwide Developing Resources Fund as of August 31, 1998
INDEPENDENT AUDITORS' REPORT
To the Trustees and Shareholders of
Eaton Vance Worldwide Developing Resources Fund:
- --------------------------------------------------------------------------------
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Eaton Vance Worldwide Developing Resources Fund
(the Fund) (one of the series of Eaton Vance Growth Trust) as of August 31,
1998, and the related statements of operations for year then ended, the
statement of changes in net assets for the years ended August 31, 1998 and 1997
and the financial highlights for each of the years in the four-year period ended
August 31, 1998, and for each of the years in the two year period ended
September 30, 1994. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion. In our opinion, such financial statements and
financial highlights present fairly, in all material respects, the financial
position of Eaton Vance Worldwide Developing Resources Fund at August 31, 1998,
the results of its operations, the changes in its net assets and its financial
highlights for the respective stated period, in conformity with generally
accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
October 2, 1998
Worldwide Developing Resources Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS
(Expressed in United States Dollars)
Common Stocks-- 89.1%
- -----------------------------------------------------------------------------
Security Shares Value
- -----------------------------------------------------------------------------
Diamonds -- 5.1%
- -----------------------------------------------------------------------------
Canabrava Diamond Corp.(1) 100,000 $ 54,980
Diamondworks, Ltd.(1)(2) 150,000 81,510
Diamondworks, Ltd.(1) 150,000 81,510
Namibian Minerals Corp.(1) 75,000 84,375
Southernera Resources, Ltd.(1) 34,700 130,888
- -----------------------------------------------------------------------------
$ 433,263
- -----------------------------------------------------------------------------
Fertilizer -- 4.0%
- -----------------------------------------------------------------------------
Asia Pacific Resources(1) 150,000 $ 340,439
- -----------------------------------------------------------------------------
$ 340,439
- -----------------------------------------------------------------------------
Metals - Gold -- 23.2%
- -----------------------------------------------------------------------------
Argosy Mining Corp.(2)(3) 100,000 $ 11,510
Ashanti Goldfields Co., Ltd.(3) 8,889 57,781
Barrick Gold Corp.(3) 15,000 195,000
Black Hawk Mining, Inc. 50,000 4,155
Black Hawk Mining, Inc.(2) 30,000 2,493
Black Swan Gold Mines, Ltd. 200,000 16,620
Canarc Resource Corp.(1)(2) 150,000 11,505
Crystallex International Corp.(1)(3) 150,000 65,625
Etruscan Enterprises, Ltd.(1) 150,000 172,620
Global Pacific Minerals, Inc.(1) 400,000 30,680
Golden Gram Resources, Inc.(1) 250,000 39,950
Greenstone Resources, Ltd.(1) 50,000 62,500
Iamgold International African Mining(2) 25,000 39,638
Intrepid Minerals Corp.(2) 300,000 28,770
Kazakhstan Minerals Corp. 40,000 5,600
Meridian Gold(1) 120,000 358,140
Minefinders Corp.(1) 100,000 53,700
Minorca Resources, Inc.(1)(2) 50,000 14,385
Nevsun Resources, Ltd. 40,000 10,740
Queenstake Resources, Ltd.(2) 150,000 19,185
Repadre Capital Corp.(1) 70,000 111,881
Rio Narcea Gold Mines, Ltd.(1)(3) 60,000 91,440
Rio Narcea Gold Mines, Ltd.(1)(2)(3) 60,000 91,440
Romarco Minerals, Inc.(1)(3) 125,000 119,063
Southwestern Gold Corp.(1)(3) 80,000 162,640
Steppe Gold Resources, Ltd.(1) 200,000 30,040
Steppe Gold Resources, Ltd.(1)(2) 200,000 30,040
Sutton Resources Ltd.(2) 20,000 46,670
Tanganyika Gold NL 300,000 14,829
Tombstone Explorations Co., Ltd.(2)(3) 225,000 25,898
TVX Gold, Inc.(1) 5,000 5,625
TVX Gold, Inc.(1)(2) 45,000 50,625
- -----------------------------------------------------------------------------
$1,980,788
- -----------------------------------------------------------------------------
Metals - Industrial -- 12.1%
- -----------------------------------------------------------------------------
AMT International Mining Corp.(1)(3) 817,200 $ 203,728
Billiton PLC(2)(3) 75,000 127,646
Breakwater Resources, Ltd.(1) 100,000 51,150
Corriente Resources, Inc.(1)(2)(3) 75,000 26,370
Corriente Resources, Inc.(2)(3) 84,500 29,710
First Quantum Minerals(1) 159,091 111,873
First Quantum Minerals(1)(2) 100,000 70,320
Formation Capital Corp.(2) 400,000 191,800
Freeport McMoran Copper & Gold, Inc. 16,300 185,413
Tiomin Resources, Inc.(2)(3) 200,000 38,360
- -----------------------------------------------------------------------------
$1,036,370
- -----------------------------------------------------------------------------
Metals - Silver -- 3.0%
- -----------------------------------------------------------------------------
Apex Silver Mines, Ltd.(1) 20,000 $ 135,000
Pan American Silver Corp.(1) 10,000 51,250
Silver Standard Resources, Inc.(1) 100,000 75,000
- -----------------------------------------------------------------------------
$ 261,250
- -----------------------------------------------------------------------------
Metals - Steel -- 8.1%
- -----------------------------------------------------------------------------
Ispat International 15,000 $ 162,188
Reliance Steel and Aluminum Co. 10,000 305,000
Steel Dynamics Corp.(1) 20,000 222,500
- -----------------------------------------------------------------------------
$ 689,688
- -----------------------------------------------------------------------------
Oil and Gas - Equipment and Services -- 1.0%
- -----------------------------------------------------------------------------
Unifab International, Inc. 10,000 $85,000
- -----------------------------------------------------------------------------
$ 85,000
- -----------------------------------------------------------------------------
Oil and Gas - Exploration and Production -- 31.9%
- -----------------------------------------------------------------------------
Abacan Resources Corp.(1) 70,000 $ 24,066
Anadarko Petroleum Corp. 10,000 287,500
Arakis Energy Corp.(1) 170,000 180,625
Beau Canada Exploration, Ltd.(1)(3) 100,000 100,370
Bellator Exploration, Inc.(2) 300,000 105,480
EEX Corp.(1) 35,000 155,313
FX Energy, Inc.(1) 50,000 300,000
Louis Dreyfus Natural Gas(1) 20,000 226,250
Mercantile International Petroleum(1)(3) 342,000 30,780
Meridian Resource Corp.(1) 70,000 201,250
Pease Oil and Gas Co.(2) 150,000 23,445
Petsec Energy, Ltd., ADR(1) 25,000 139,063
Probe Exploration, Inc.(1) 60,000 103,572
Ranger Oil, Ltd. 30,000 159,375
Remington Energy, Ltd.(3) 20,000 83,820
Seagull Energy Corp. 20,000 177,500
Seven Seas Petroleum Co.(3) 20,000 206,000
Seven Seas Petroleum Co.(2)(3) 10,000 103,000
Triton Energy, Ltd.(1) 10,000 115,000
- -----------------------------------------------------------------------------
$2,722,409
- -----------------------------------------------------------------------------
Paper and Forest Products -- 0.7%
- -----------------------------------------------------------------------------
Saint Laurent Paperboard, Inc.(2) 10,000 $ 63,500
- -----------------------------------------------------------------------------
$ 63,500
- -----------------------------------------------------------------------------
Total Common Stocks
(identified cost $22,986,986) $7,612,707
Installment Receipts -- 0.0%
- -----------------------------------------------------------------------------
Oil and Gas - Equipment and Services -- 0.0%
- -----------------------------------------------------------------------------
Fracmaster, Ltd.(2) 11,000 $ --
- -----------------------------------------------------------------------------
$ --
- -----------------------------------------------------------------------------
Total Installment Receipts
(identified cost $77,552) $ --
- -----------------------------------------------------------------------------
Preferred Stocks -- 0.0%
- -----------------------------------------------------------------------------
Metals - Gold -- 0.0%
- -----------------------------------------------------------------------------
Ashanti Goldfields Co., Ltd., Class B, 3/31/99(4) 8,889 $ --
Ashanti Goldfields Co., Ltd., Class C, 3/31/00(4) 8,889 --
Ashanti Goldfields Co., Ltd., Class D, 3/31/01(4) 8,889 --
Ashanti Goldfields Co., Ltd., Class E, 3/31/02(4) 8,889 --
- -----------------------------------------------------------------------------
$ --
- -----------------------------------------------------------------------------
Total Preferred Stocks
(identified cost $--) $ --
- -----------------------------------------------------------------------------
Private Placements and Special Warrants -- 12.2%
Metals - Gold -- 12.2%
- -----------------------------------------------------------------------------
Nevada Pacific Mining Co.(2)(4) 80,000 $ 80,000
Quincunx Gold Exploration(2)(4) 300,000 285,751
Western Exploration and Development, Ltd.(1)(2)(4) 600,000 674,999
- -----------------------------------------------------------------------------
$1,040,750
- -----------------------------------------------------------------------------
Total Private Placements and Special Warrants
(identified cost $969,101) $1,040,750
Warrants -- 0.0%
- -----------------------------------------------------------------------------
Diamonds -- 0.0%
- -----------------------------------------------------------------------------
Diamondworks, Ltd.(1)(2)(4) 150,000 $ --
- -----------------------------------------------------------------------------
$ --
- -----------------------------------------------------------------------------
Metals - Gold -- 0.0%
- -----------------------------------------------------------------------------
Golden Gram Resources, Inc.(1)(4) 250,000 $ --
Iamgold International African Mining(1)(2)(4) 12,500 --
Minorca Resources, Inc.(1)(4) 12,500 --
Queenstake Resources, Ltd.(1)(2)(4) 75,000 --
- -----------------------------------------------------------------------------
$ --
- -----------------------------------------------------------------------------
Metals - Industrial -- 0.0%
- -----------------------------------------------------------------------------
Formation Capital Corp.(1)(2)(4) 400,000 $ --
- -----------------------------------------------------------------------------
$ --
- -----------------------------------------------------------------------------
Total Warrants
(identified cost $--) $ --
- -----------------------------------------------------------------------------
Total Investments -- 101.3%
(identified cost $24,033,639) $8,653,457
- -----------------------------------------------------------------------------
Other Assets, Less Liabilities -- (1.3)% $ (108,076)
- -----------------------------------------------------------------------------
Net Assets -- 100% $8,545,381
- -----------------------------------------------------------------------------
ADR -- American Depositary Receipt
- -----------------------------------------------------------------------------
(1) Non-income producing security.
(2) Restricted security.
(3) Foreign security.
(4) Security valued at fair value using methods determined in good faith by or
at the direction of the Trustees.
See notes to financial statements
Worldwide Developing Resources Portfolio as of August 31, 1998
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
As of August 31, 1998
(Expressed in United States Dollars)
Assets
- ------------------------------------------------------------------------------
Investments, at value (identified cost, $24,033,639) $ 8,653,457
Cash 17,512
Foreign currency, at value (identified cost, $60) 52
Interest and dividends receivable 1,688
- ------------------------------------------------------------------------------
Total assets $ 8,672,709
- ------------------------------------------------------------------------------
Liabilities
- ------------------------------------------------------------------------------
Demand note payable $ 100,000
Payable to affiliate for Trustees' fees 47
Other accrued expenses 27,281
- ------------------------------------------------------------------------------
Total liabilities $ 127,328
- ------------------------------------------------------------------------------
Net Assets applicable to investors'interest in Portfolio $ 8,545,381
- ------------------------------------------------------------------------------
Sources of Net Assets
- ------------------------------------------------------------------------------
Net proceeds from capital contributions and withdrawals $23,925,571
Net unrealized depreciation (computed on the basis of
identified cost) (15,380,190)
- ------------------------------------------------------------------------------
Total $ 8,545,381
- ------------------------------------------------------------------------------
Statement of Operations
For the Year Ended
August 31, 1998
(Expressed in United States Dollars)
Investment Income
- -------------------------------------------------------------------------------
Dividends (net of foreign taxes, $2,013) $ 25,983
Interest 19,039
- -------------------------------------------------------------------------------
Total investment income $ 45,022
- -------------------------------------------------------------------------------
Expenses
- -------------------------------------------------------------------------------
Investment adviser fee $ 158,955
Trustees fees and expenses 1,022
Interest 65,382
Custodian fee 55,748
Legal and accounting services 29,897
Miscellaneous 2,486
- -------------------------------------------------------------------------------
Total expenses $ 313,490
- -------------------------------------------------------------------------------
Net investment loss $ (268,468)
- -------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss)
- -------------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified cost basis) $ (920,945)
Foreign currency transactions (1,797)
- -------------------------------------------------------------------------------
Net realized loss $ (922,742)
- -------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investments (identified cost basis) $(14,899,190)
Foreign currency (8)
- -------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) $(14,899,198)
- -------------------------------------------------------------------------------
Net realized and unrealized loss $(15,821,940)
- -------------------------------------------------------------------------------
Net decrease in net assets resulting from operations $(16,090,408)
- -------------------------------------------------------------------------------
Worldwide Developing Resources Portfolio as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets (Expressed in United States Dollars)
Increase (Decrease) For the
in Net Assets Year Ended Period Ended
August 31, August 31,
1998 1997 (1)
- -------------------------------------------------------------------------------
From operations --
Net investment loss $ (268,468) $ (88,261)
Net realized gain (loss) (922,742) 839,952
Net change in unrealized appreciation
(depreciation) (14,899,198) (480,992)
- -------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations $(16,090,408) $ 270,699
- -------------------------------------------------------------------------------
Capital transactions --
Contributions $ 5,654,112 $ 38,738,578
Withdrawals (12,527,185) (7,500,415)
- -------------------------------------------------------------------------------
Net increase (decrease) in net assets from
capital transactions $ (6,873,073) $ 31,238,163
- -------------------------------------------------------------------------------
Net increase (decrease) in net (decrease)
in net assets $(22,963,481) $ 31,508,862
- -------------------------------------------------------------------------------
Net Assets
- -------------------------------------------------------------------------------
At beginning of year $ 31,508,862 $ --
- -------------------------------------------------------------------------------
At end of year $ 8,545,381 $ 31,508,862
- -------------------------------------------------------------------------------
(1) For the period from the start of business, April 10, 1997, to August 31,
1997.
Worldwide Developing Resources Portfolio as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Supplementary Data (Expressed in United States Dollars)
Year Ended For the
August 31, Period Ended
1998 August 31,
1997 (1)
- -----------------------------------------------------------------------------
Ratios to average daily net assets
- -----------------------------------------------------------------------------
Expenses 1.48% 1.19%(2)
Expenses after custodian fee reduction 1.48% 1.15%(2)
Net investment loss (1.27)% (0.81)%(2)
Portfolio Turnover 69% 63%
- -----------------------------------------------------------------------------
Net assets, end of year (000's omitted) $8,545 $31,509
- -----------------------------------------------------------------------------
(1) For the period from the start of business, April 10, 1997, to August 31,
1997.
(2) Annualized.
See notes to financial statements
Worldwide Developing Resources Portfolio as of August 31, 1998
NOTES TO FINANCIAL STATEMENTS CONT'D
(Expressed in United States Dollars)
1 Significant Accounting Policies
- -------------------------------------------------------------------------------
Worldwide Developing Resources Portfolio (the Portfolio) is registered under
the Investment Company Act of 1940 as a diversified, open-end investment
company which was organized as a trust under the laws of the State of New
York. The Declaration of Trust permits the Trustees to issue beneficial
interests in the Portfolio. Investment operations began on April 10, 1997,
with the acquisition of net assets of $26,141,520 in exchange for an interest
in the Portfolio by one of the Portfolio's investors. The following is a
summary of significant accounting policies of the Portfolio. The policies are
in conformity with accounting principles generally accepted in the United
States of America.
A Investment Valuation -- Securities listed on securities exchanges or in the
NASDAQ National Market System are valued at closing sale prices or, if there
has been no sale, at the mean between the closing bid and asked prices.
Unlisted securities are valued at the mean between the latest bid and asked
prices. Options and financial futures contracts are valued at the last sale
price, as quoted on the principal exchange or board of trade on which such
options or contracts are traded or, in the absence of a sale, the mean
between the last bid and asked prices. Short-term obligations, maturing in 60
days or less, are valued at amortized cost, which approximates the value.
Securities for which market quotations are unavailable are appraised at their
fair value as determined in good faith by or at the direction of the
Trustees.
B Income Taxes -- The Portfolio is treated as a partnership for Federal tax
purposes. No provision is made by the Portfolio for federal or state taxes on
any taxable income of the Portfolio because each investor in the Portfolio is
ultimately responsible for the payment of any taxes on its share of such
income. Since some of the Portfolio's investors are regulated investment
companies that invest all or substantially all of their assets in the
Portfolio, the Portfolio normally must satisfy the applicable source of
income and diversification requirements (under the Internal Revenue Code) in
order for its investors to satisfy them. The Portfolio will allocate, at
least annually among its investors, each investor's distributive share of the
Portfolio's net investment income, net realized capital gains, and any other
items of income, gain, loss, deduction or credit.
C Financial Futures Contracts -- Upon the entering of a financial futures
contract, the Portfolio is required to deposit an amount ("initial margin")
either of cash or securities equal to a certain percentage of the purchase
price indicated in the financial futures contract. Subsequent payments are
made or received by the Portfolio (margin maintenance) each day, dependent on
the daily fluctuations in the value of the underlying security, and are
recorded for book purposes as unrealized gains or losses by the Portfolio.
When the Portfolio enters into a closing transaction, the Portfolio will
realize for book purposes a gain or loss equal to the difference between the
value of the financial futures contract to sell and the financial futures
contract to buy. The Portfolio's investment in financial futures contracts is
designed only to hedge against anticipated future changes in interest or
currency exchange rates. Should interest or currency exchange rates move
unexpectedly, the Portfolio may not achieve the anticipated benefits of the
financial futures contracts and may realize a loss.
D Foreign Currency Translation -- Investment valuations, other assets, and
liabilities initially expressed in foreign currencies are converted each
business day into U.S. dollars based upon current exchange rates. Purchases
and sales of foreign investment securities and income and expenses are
converted into U.S. dollars based upon currency exchange rates prevailing on
the respective dates of such transactions. Recognized gains or losses on
investment transactions attributable to foreign currency rates are recorded
for financial statement purposes as net realized gains and losses on
investments. That portion of unrealized gains and losses on investments that
result from fluctuation in foreign currency exchange rates are not separately
disclosed.
E Forward Foreign Currency Exchange
Contracts -- The Portfolio may enter into forward foreign currency exchange
contracts for the purchase or sale of a specific foreign currency at a fixed
price on a future date. Risk may arise upon entering these contracts from the
potential inability of counterparties to meet the terms of their contracts
and from movements in the value of a foreign currency relative to the U.S.
dollar. The Portfolio will enter into forward contracts for hedging purposes
as well as non-hedging purposes. The forward foreign currency exchange
contracts are adjusted by the daily exchange rate of the underlying currency
and any gains or losses are recorded for financial statement purposes as
unrealized until such time as the contracts have been closed or offset.
F Other -- Investment transactions are accounted for on the date the
investments are purchased or sold. Interest income is determined on the basis
of interest accrued. Dividend income is recorded on the ex-dividend date.
Realized gains and losses on the sale of investments are determined on the
identified cost basis.
G Use of Estimates -- The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of income and expense during the
reporting period. Actual results could differ from those estimates.
H Expense Reduction -- Investors Bank & Trust Company (IBT) serves as
custodian of the Portfolio. Pursuant to the custodian agreement, IBT receives
a fee reduced by credits which are determined based on the average daily cash
balances the Portfolio maintains with IBT. All significant credit balances
used to reduce the Portfolio's custodian fees are reflected as a reduction of
expense in the statement of operations.
2 Investment Adviser Fee and Other Transactions with Affiliates
- ------------------------------------------------------------------------------
The investment adviser fee is earned by Boston Management and Research (BMR),
a wholly-owned subsidiary of Eaton Vance Management (EVM) as compensation for
management and investment advisory services rendered to the Portfolio. Under
the advisory agreement, the Adviser receives a monthly fee of 0.0625% (0.75%
annually) of the average daily net assets of the Portfolio up to $500
million, and at reduced rates as daily net assets exceed that level. For the
year ended August 31, 1998, the adviser fee was 0.75% of average net assets.
Except as to Trustees of the Portfolio who are not members of the Adviser or
EVM's organization, officers and Trustees receive remuneration for their
services to the Portfolio out of such investment adviser fee. Trustees of the
Portfolio that are not affiliated with the Adviser may elect to defer receipt
of all or a percentage of their annual fees in accordance with the terms of
the Trustee Deferred
Compensation Plan. For the year ended August 31, 1998 no significant amounts
have been deferred.
Certain of the officers and Trustees of the Portfolio are officers and
directors/trustees of the above organizations.
3 Line of Credit
- ------------------------------------------------------------------------------
The Portfolio participates with other portfolios and funds managed by EVM and
its affiliates in a committed $100 million unsecured line of credit agreement
with a group of banks. The Fund may temporarily borrow from the line of
credit to satisfy redemption requests or settle investment transactions.
Interest is charged to each portfolio or fund based on its borrowings at an
amount above either the bank's adjusted certificate of deposit rate,
Eurodollar rate or Federal Funds rate. In addition, a fee computed at an
annual rate of 0.10% on the daily unused portion of the $100 million line of
credit is allocated among the participating funds and portfolios at the end
of each quarter. At August 31, 1998, the Portfolio had a balance outstanding
pursuant to this line of credit of $100,000. The average daily loan balance
for the year ended August 31, 1998 was $1,049,052 and the average interest
rate was 6.2%. The maximum borrowing outstanding at any time during the year
ended August 31, 1998 was $2,795,000.
4 Federal Income Tax Basis of Investments
- ------------------------------------------------------------------------------
The cost and unrealized appreciation (depreciation) in value of the
investments owned at August 31, 1998, as computed on a federal income tax
basis, are as follows:
Aggregate cost $ 24,033,639
---------------------------------------------------------------------------
Gross unrealized appreciation $ 653,298
Gross unrealized depreciation $(16,033,480)
---------------------------------------------------------------------------
Net unrealized depreciation $(15,380,182)
---------------------------------------------------------------------------
5 Investment Transactions
---------------------------------------------------------------------------
Purchases and sales of investments, other than short term obligations,
aggregated $14,955,517 and $17,357,914, respectively.
6 Restricted Securities
---------------------------------------------------------------------------
At August 31, 1998, the Portfolio owned the following securities
(constituting 26.6% of net assets) which were restricted as to public resale
and not registered under the Securities Act of 1933. The Portfolio has
various registration rights (exercisable under a variety of circumstances)
with respect to certain of these securities. The fair value of these
securities is determined based on valuations provided by brokers when
available, or if not available, they are valued at fair value using methods
determined in good faith by or at the direction of the Trustees.
Date of
Description Acquisition Shares/Face Cost Fair Value
----------------------------------------------------------------------------------------------
Common Stocks
----------------------------------------------------------------------------------------------
Argosy Mining Corp. 10/29/96 100,000 $ 181,950 $ 11,510
Bellator Exploration, Inc. 3/10/98 300,000 502,800 105,480
Billiton PLC 9/18/97 75,000 276,128 127,646
Black Hawk Mining, Inc. 3/26/97 30,000 183,030 2,493
Canarc Resource Corp. 11/5/96 150,000 247,395 11,505
Corriente Resources, Ltd. 10/19/95 75,000 158,436 26,370
Corriente Resources, Ltd. 10/19/95 84,500 199,685 29,710
Diamondworks, Ltd. 10/23/96 150,000 298,880 81,510
First Quantum Minerals 2/27/97 100,000 256,129 70,320
Formation Capital Corp. 6/9/98 400,000 326,440 191,800
Iamgold International African Mining 10/8/97 25,000 83,862 39,638
Intrepid Minerals Corp. 11/22/96 300,000 246,660 28,770
Minorca Resources, Inc. 10/16/97 50,000 180,592 14,385
Pease Oil and Gas Co. 6/24/97 150,000 376,766 23,445
Queenstake Resources, Ltd. 7/9/97 150,000 259,564 19,185
Rio Narcea Gold Mines, Ltd. 3/27/97 60,000 167,784 91,440
Saint Laurent Paperboard, Inc. 5/16/97 10,000 149,547 63,500
Seven Seas Petroleum Co. 3/24/97 10,000 150,000 103,000
Steppe Gold Resources, Ltd. 10/29/96 200,000 327,820 30,040
Sutton Resources, Ltd. 7/8/97 20,000 179,133 46,670
Tiomin Resources, Inc. 6/25/96 200,000 288,760 38,360
Tombstone Explorations Co., Ltd. 11/6/96 225,000 274,770 25,898
TVX Gold, Inc. 6/28/93 45,000 177,679 50,625
----------------------------------------------------------------------------------------------
$5,493,810 1,233,300
----------------------------------------------------------------------------------------------
Installment Receipts
----------------------------------------------------------------------------------------------
Fracmaster, Ltd. 9/8/97 11,000 $ 77,552 $ 0
----------------------------------------------------------------------------------------------
$ 77,552 $ 0
----------------------------------------------------------------------------------------------
Date of
Description Acquisition Shares/Face Cost Fair Value
----------------------------------------------------------------------------------------------
Private Placements and Special Warrants
----------------------------------------------------------------------------------------------
Nevada Pacific Mining Co. 4/9/97 80,000 $ 341,352 $ 80,800
Quincunx Gold Exploration 8/16/9 300,000 327,749 285,751
Western Exploration and Development, Ltd. 9/22/97 600,000 300,000 674,999
----------------------------------------------------------------------------------------------
$ 969,101 $1,040,750
----------------------------------------------------------------------------------------------
Warrants
----------------------------------------------------------------------------------------------
Diamondworks,Ltd 1/27/98 150,000 $ 0 $ 0
Formation Capital Corp. 6/9/98 400,000 0 0
Iamgold International African Mining 11/4/97 12,500 0 0
Queenstake Resources, Ltd. 7/9/97 75,000 0 0
----------------------------------------------------------------------------------------------
$ 0 $ 0
----------------------------------------------------------------------------------------------
Worldwide Developing Resources Portfolio as of August 31, 1998
INDEPENDENT AUDITORS' REPORT
To the Trustees and Shareholders
of Worldwide Developing Resources Portfolio:
- --------------------------------------------------------------------------------
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Worldwide Developing Resources Portfolio (the
Portfolio) as of August 31, 1998, the related statement of operations for the
year then ended, the statements of changes in net assets and the supplementary
data for the year ended August 31, 1998 and the period from April 10, 1997,
(start of business) to August 31, 1997 (all expressed in United States Dollars).
These financial statements and supplementary data are the responsibility of the
Portfolio's management. Our responsibility is to express an opinion on these
financial statements and supplementary data based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements and supplementary data are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities held as of August 31, 1998 by correspondence with the custodian. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements and supplementary data present fairly,
in all material respects, the financial position of the Portfolio at August 31,
1998, and the results of its operations, the changes in its net assets and its
supplementary data for the respective stated periods (all expressed in United
States Dollars), in conformity with accounting principles generally accepted in
the United States of America.
DELOITTE & TOUCHE
Grand Cayman, Cayman Islands
British West Indies
October 2, 1998
EATON VANCE WORLDWIDE DEVELOPING RESOURCES FUND as of August 31, 1998
INVESTMENT MANAGEMENT
EATON VANCE WORLDWIDE DEVELOPING RESOURCES FUND
OFFICERS INDEPENDENT TRUSTEES
James B. Hawkes Donald R. Dwight
President and Director President, Dwight Partners, Inc.
M. Dozier Gardner Samuel L. Hayes, III
Vice President Jacob H. Schiff Professor of Investment
Banking, Harvard University Graduate School
William D. Burt of Business Administration
Vice President and
Co-Portfolio Manager Norton H. Reamer
Chairman and Chief Executive Officer,
Barclay Tittmann United Asset Management Corporation
Vice President and
Co-Portfolio Manager John L. Thorndike
Formerly Director, Fiduciary Company Incorporated
James L. O'Connor
Treasurer Jack L. Treynor
Investment Adviser and Consultant
Alan R. Dynner
Secretary
WORLDWIDE DEVELOPING RESOURCES PORTFOLIO
OFFICERS INDEPENDENT TRUSTEES
James B. Hawkes Donald R. Dwight
President and Trustee President, Dwight Partners, Inc.
M. Dozier Gardner Samuel L. Hayes, III
Vice President Jacob H. Schiff Professor of Investment
Banking, Harvard University Graduate School
Michel Normandeau of Business Administration
Vice President
Norton H. Reamer
Raymond O'Neill Chairman and Chief Executive Officer,
Vice President United Asset Management Corporation
William D. Burt John L. Thorndike
Vice President and Formerly Director, Fiduciary Company Incorporated
Co-Portfolio Manager
Jack L. Treynor
Barclay Tittmann Investment Adviser and Consultant
Vice President and
Co-Portfolio Manager
James L. O'Connor
Treasurer
Alan R. Dynner
Secretary
PART C.
OTHER INFORMATION
ITEM 15. INDEMNIFICATION
No change from the information set forth in Item 27 of Form N-1A filed
as Post-Effective Amendment No. 45 to the Registration Statement under the
Securities Act of 1933 (File No. 2-90946) and Amendment No. 49 to the
Registration Statement under the Investment Company Act of 1940 (File No.
811-4015) (Accession No. 0000950156-98-000328), which information is
incorporated herewith by reference.
Registrant's Trustees and officers are insured under a standard mutual
fund errors and omissions insurance policy covering insured by reason of
negligent errors and omissions committed in their capacities as such.
ITEM 16. EXHIBITS
(1)(a) Amended and Restated Declaration of Trust dated August 17, 1993
filed as Exhibit (1)(a) to Post-Effective Amendment No. 23
(Accession No. 0000950156-95-000497) ("PEA 23") and incorporated
herein by reference.
(1)(b) Amendment to Declaration of Trust dated July 10, 1995 filed as
Exhibit (1)(b) to PEA 23 and incorporated herein by reference.
(1)(c) Amendment to Declaration of Trust dated June 23, 1997 filed as
Exhibit (1)(c) to Post-Effective Amendment No. 38 (Accession No.
0000950156-97-000918) ("PEA 38") and incorporated herein by
reference.
(1)(d) Amendment and Restatement of Establishment and Designation of
Series of Shares dated June 22, 1998 filed herewith.
(2)(a) By-Laws (As Amended November 3, 1986) filed as Exhibit (2)(a) to
PEA 23 and incorporated herein by reference.
(2)(b) Amendment to By-Laws dated December 13, 1993 filed as Exhibit
(2)(b) to PEA 23 and incorporated herein by reference.
(3) Not applicable.
(4) Agreement and Plan of Reorganization Between Registrant and Eaton
Vance Growth Trust on behalf of Eaton Vance Worldwide Developing
Resources Fund filed herewith as Exhibit A to the Prospectus/Proxy
Statement included as Part A to this Registration Statement on
Form N-14.
(5) Not applicable.
(6) Investment Advisory Agreement with Eaton Vance Management for
Eaton Vance Tax-Managed Emerging Growth Fund dated September 16,
1997 filed herewith.
(7)(a) Distribution Agreement between Eaton Vance Mutual Funds Trust and
Eaton Vance Distributors, Inc., dated June 23, 1997 with attached
Schedules filed as Exhibit (6)(a)(8) to PEA 38 and incorporated
herein by reference.
(7)(a)(1) Amendment to Distribution Agreement dated October 17, 1997 filed
as Exhibit (6)(a)(9) to PEA 38 and incorporated herein by
reference.
(7)(a)(2) Schedule A-3 to Distribution Agreement dated March 4, 1998, filed
as Exhibit (6)(a)(5)(ii) to Post-Effective Amendment No. 42
(Accession No. 0000950156-98-000292) ("PEA 42") and incorporated
herein by reference.
(7)(a)(3) Schedule A-4 to Distribution Agreement dated June 22, 1998 filed
herewith.
(7)(b) Selling Group Agreement between Eaton Vance Distributors, Inc. and
Authorized Dealers filed as Exhibit (6)(b) to the Registration
Statement of Eaton Vance Growth Trust Post-Effective Amendment No.
61 and incorporated herein by reference.
(8) The Securities and Exchange Commission has granted the Registrant
an exemptive order that permits the Registrant to enter into
deferred compensation arrangements with its Independent Trustees.
See in the Matter of Capital Exchange Fund, Inc., Release No.
IC-20671 (November 1, 1994).
(9)(a) Custodian Agreement with Investors Bank & Trust Company dated
October 15, 1992 filed as Exhibit (8) to PEA 23 and incorporated
herein by reference.
(9)(b) Amendment to Custodian Agreement with Investors Bank & Trust
Company dated October 23, 1995 filed as Exhibit (8)(b) to
Post-Effective Amendment No. 27 (Accession No.
0000950156-96-000197) ("PEA 27") and incorporated herein by
reference.
(10)(a) Eaton Vance Mutual Funds Trust Class A Service Plan adopted June
23, 1997 with attached Schedules filed as Exhibit (15)(i) to PEA
38 and incorporated herein by reference.
(10)(a)(1) Schedule A-3 to Class A Service Plan dated March 4, 1998, filed as
Exhibit (15)(d)(1) to PEA 42 and incorporated herein by reference.
(10)(a)(2) Schedule A-4 to Class A Service Plan dated June 22, 1998 filed
herewith.
(10)(b) Multiple Class Plan for Eaton Vance Funds dated June 23, 1997
filed as Exhibit (18) to Post-Effective Amendment No. 37
(Accession No. 0000950156-97-000870) ("PEA 37") and incorporated
herein by reference.
(10)(b)(1) Schedule A-4 to Multiple Class Plan dated January 6, 1998 filed as
Exhibit (18)(a)(1) to PEA 42 and incorporated herein by reference.
(11) Opinion and Consent of Counsel as to legality of securities being
issued filed herewith.
(12) Not Applicable.
(13)(a) Amended Administrative Services Agreement between Eaton Vance
Mutual Funds Trust (on behalf of certain of its series) and Eaton
Vance Management dated July 31, 1995, with attached scheduled
(including Amended Schedule A dated May 7, 1996) filed as Exhibit
(9)(a) to Post-Effective Amendment No. 24 (Accession No.
0000950156-95-000603) and incorporated herein by reference.
(13)(a)(1) Amendment to Schedule A dated June 23, 1997 to the Amended
Administrative Services Agreement filed as Exhibit (9)(a)(1) to
PEA 38 and incorporated herein by reference.
(13)(a)(2) Schedule A-1 to the Amended Administrative Services Agreement
dated March 4, 1998, filed as Exhibit (9)(a)(2) to PEA 42 and
incorporated herein by reference.
(13)(a)(3) Schedule A-2 to the Amended Administrative Services Agreement
dated June 22, 1998 filed herewith.
(13)(b) Transfer Agency Agreement dated January 1, 1998 filed as Exhibit
(k)(b) to the Registration Statement on Form N-2 of Eaton Vance
Advisers Senior Floating-Rate Fund (File Nos. 333-46853,
811-08671) (Accession No. 0000950156-98-000172) and incorporated
herein by reference.
(14)(a) Consent of Deloitte & Touche LLP regarding financial statements of
Registrant filed herewith.
(14)(b) Consent of Deloitte & Touche LLP regarding financial statements of
Eaton Vance Growth Trust on behalf of Eaton Vance Worldwide
Developing Resources Fund filed herewith.
(15) Not Applicable.
(16)(a) Power of Attorney for the Registrant dated October 19, 1998 filed
herewith.
(17) Rule 24f-2 Election of Registrant filed herewith.
ITEM 17. UNDERTAKINGS.
(1) The undersigned Registrant agrees that prior to any public
reoffering of the securities registered through the use of a prospectus which is
a part of this Registration Statement by any person or party who is deemed to be
an underwriter within the meaning of Rule 145(c) under the Securities Act of
1933 (the "1933 Act"), the reoffering prospectus will contain the information
called for by the applicable registration form for reofferings by persons who
may be deemed underwriters, in addition to the information called for by the
other items of the applicable form.
(2) The undersigned Registrant agrees that every prospectus that is
filed under paragraph (1) above will be filed as a part of an amendment to the
Registration Statement and will not be used until the amendment is effective,
and that, in determining any liability under the 1933 Act, each post-effective
amendment shall be deemed to be a new registration statement for the securities
offered therein, and the offering of the securities at that time shall be deemed
to be the initial bona fide offering of them.
SIGNATURES
As required by the Securities Act of 1933, this Registration Statement
has been signed on behalf of the Registrant in the City of Boston, and the
Commonwealth of Massachusetts on the 19th day of October, 1998.
EATON VANCE MUTUAL FUNDS TRUST
/s/ M. DOZIER GARDNER
-----------------------------
M. Dozier Gardner, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
Signatures Title Date
---------- ----- ----
President, Principal
/s/ M. Dozier Gardner Executive Officer and October 19, 1998
- ------------------------------ Trustee
M. Dozier Gardner
Treasurer and Principal
/s/ James L. O'Connor Financial and Accounting October 19, 1998
- ------------------------------ Officer
James L. O'Connor
/s/ Donald R. Dwight Trustee October 19, 1998
- ------------------------------
Donald R. Dwight
/s/ James B. Hawkes Trustee October 19, 1998
- ------------------------------
James B. Hawkes
/s/ Samuel L. Hayes, III Trustee October 19, 1998
- ------------------------------
Samuel L. Hayes, III
/s/ Norton H. Reamer Trustee October 19, 1998
- ------------------------------
Norton H. Reamer
/s/ John L. Thorndike Trustee October 19, 1998
- ------------------------------
John L. Thorndike
/s/ Jack L. Treynor Trustee October 19, 1998
- ------------------------------
Jack L. Treynor
*By:
-------------------------
Alan R. Dynner
As Attorney-in-fact
EXHIBIT INDEX
The following exhibits are filed as a part of this Registration
Statement:
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION NUMBERED PAGE
- ------ ----------- -------------
(1)(d) Amendment and Restatement of Establishment and
Designation of Series of Shares dated June 22,
1998
(4) Agreement and Plan of Reorganization between the
Registrant and Eaton Vance Growth Trust on
behalf of Eaton Vance Worldwide Developing
Resources Fund filed herewith as Exhibit A to
the Prospectus/Proxy Statement included as Part
A to this Registration Statement on Form N-14.
(6) Investment Advisory Agreement with Eaton Vance
Management for Eaton Vance Tax-Managed Emerging
Growth Fund dated September 16, 1997.
(7)(a)(3) Schedule A-4 to Distribution Agreement dated
June 22, 1998.
(10)(a)(2) Schedule A-4 to Class A Service Plan dated June
22, 1998.
(11) Opinion and Consent of Counsel as to legality of
securities being issued and consent.
(13)(a)(3) Schedule A-2 to the Amended Administrative
Services Agreement dated June 22, 1998.
(14)(a) Consent of Deloitte & Touche LLP regarding
financial statements of Registrant.
(14)(b) Consent of Deloitte & Touche LLP regarding
financial statements of Eaton Vance Growth Trust
on behalf of Eaton Vance Worldwide Developing
Resources Fund.
(16)(a) Power of Attorney for the Registrant dated
October 19, 1998.
(17) Rule 24f-2 Election of Registrant.