As filed with the Securities and Exchange Commission on November 19, 2003
1933 Act File No. 02-42722
1940 Act File No. 811-02258
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933 [ ]
POST-EFFECTIVE AMENDMENT NO. 58 [x]
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940 [ ]
AMENDMENT NO. 35 [x]
|
It is proposed that this filing will become effective pursuant to Rule 485
(check appropriate box):
[x] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2)
If appropriate, check the following box:
[ ] this post effective amendment designates a new effective date for a
previously filed post-effective amendment.
{LOGO}
EATON VANCE TAX-MANAGED
EMERGING MARKETS FUND
Institutional Shares
A diversified fund seeking long-term, after-tax returns by investing in emerging market stocks
Prospectus Dated November 19, 2003
The Securities and Exchange Commission has not approved or disapproved these securities or determined whether this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
Information in this prospectus
Page Page
--------------------------------------------------------------------------------
Fund Summary 2 Purchasing Shares 7
Investment Objective & Principal Redeeming Shares 7
Policies and Risks 4 Shareholder Account
Management and Organization 6 Features 8
Valuing Shares 6 Tax Information 9
--------------------------------------------------------------------------------
|
This prospectus contains important information about the Fund and the services available to shareholders. Please save it for reference.
FUND SUMMARY
Investment Objective and Principal Strategies. The Fund's investment objective is to seek long-term, after-tax returns for its shareholders. The Fund normally invests at least 80% of its net assets in equity securities of companies located in emerging market countries, which are those considered to be developing. Emerging market countries include countries in Asia, Latin America, the Middle East, Southern Europe, Eastern Europe, Africa and the region comprising the former Soviet Union. Securities acquired by the Fund are typically listed on stock exchanges in emerging market countries, but also may include securities traded in markets outside these countries, including securities trading in the form of depositary receipts.
The Fund invests in companies with a broad range of market capitalizations, including smaller companies. In managing the portfolio, the portfolio manager looks for stocks that will grow in value over time, regardless of short-term market fluctuations. The portfolio manager may (but is not obligated to) use investments such as forward contracts and options to attempt to mitigate the adverse effects of foreign currency fluctuations.
The portfolio manager follows a disciplined and systematic investment process
that emphasizes diversification and allocation among countries, industries and
issuers. Countries are selected based on factors such as level of economic
development (with emphasis on GNP per capita and local economic diversification)
and the maturity of equity markets in the country (with emphasis on freedom of
investment flows and development of legal, regulatory, banking and settlement
systems). Within each country in which the Fund invests, the portfolio manager
attempts to maintain exposure across the following five economic sectors:
financial, industrial, consumer, utilities and natural resources. The portfolio
manager purchases and sells individual stocks based on such factors as
liquidity, industry representation, performance relative to industry and
long-term profitability. A stock may also be sold when the portfolio manager
believes its relative weighting in the portfolio has become excessive.
Tax-Managed Investing. Most mutual funds focus on pre-tax returns and largely ignore shareholder tax considerations. By contrast, the Fund approaches its investments from the perspective of a taxpaying shareholder. Buy and sell decisions are made by balancing investment considerations and tax considerations, and taking into account the taxes payable by shareholders in connection with distributions of investment income and net realized capital gains. Among the techniques and strategies used in the tax-efficient management of the Fund are the following:
* purchasing stocks primarily from a long-term perspective;
* generally maintaining low portfolio turnover of stocks with
appreciated gains;
* attempting to avoid net realized short-term gains;
* when appropriate, selling stocks trading below cost to realize losses;
* in selling appreciated stocks, selecting the most tax-favored share
lots; and
* selectively using tax-advantaged hedging techniques as an alternative
to taxable sales.
The Fund seeks to achieve returns primarily in the form of price appreciation (which is not subject to current tax). The Fund seeks to minimize income distributions and distributions of realized short-term gains (taxed as ordinary income), as well as distributions of realized long-term gains (taxed as long-term capital gains). The Fund can generally be expected to distribute a smaller percentage of returns each year than equity mutual funds that are managed without regard to tax considerations. There can be no assurance, however, that taxable distributions can always be avoided.
Principal Risk Factors. Because securities markets in emerging market countries are substantially smaller, less liquid and more volatile than the major securities markets in the United States, Fund share values will be more volatile. Emerging market countries are either comparatively underdeveloped or in the process of becoming developed. Investment in emerging market countries typically involves greater price volatility than investments in securities of issuers in developed countries.
Emerging market countries may have relatively unstable governments and economies based on only a few industries. The value of Fund shares will likely be particularly sensitive to changes in the economies of such countries (such as reversals of economic liberalization, political unrest or changes in trading status). Although depositary receipts have similar risks, unsponsored receipts may involve higher expenses, may not pass through voting and other shareholder rights, and may be less liquid than receipts sponsored by issuers of the underlying securities.
The value of Fund shares is also sensitive to stock market volatility. If there is a decline in the value of exchange-listed stocks in emerging market countries, the value of Fund shares will also likely decline. Changes in stock market values can be sudden and unpredictable. Also, although stock values can rebound, there is no assurance that values will return to previous levels. Because the Fund invests predominantly in foreign securities, the value of Fund shares can also be adversely affected by changes in currency exchange rates and
political and economic developments abroad. As noted above, these risks can be significant in emerging market countries. The securities of smaller companies are generally subject to greater price fluctuation and investment risk than securities of more established companies.
The Fund is not a complete investment program and you may lose money by investing in the Fund. Shareholders should invest for the long-term. An investment in the Fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
Performance Information. As of the date of this prospectus, the Fund has not begun operations so there is no performance history.
Fund Fees and Expenses. These tables describe the fees and expenses that you may pay if you buy and hold shares.
Shareholder Fees
(fees paid directly from your investment)
-------------------------------------------------------------------------------
Maximum Sales Charge (Load)(as a percentage
of offering price) None
Maximum Deferred Sales Charge (Load)
(as a percentage of the lower of net asset
value at time of purchase or time of redemption) None
Maximum Sales Charge (Load)
Imposed on Reinvested Distributions None
Purchase Fee (as a percentage of offering price)* 1.00%
Redemption Fee (as a percentage of exchange price or
amount redeemed)* 1.00%
Exchange Fee None
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
-------------------------------------------------------------------------------
Management Fees 0.95%
Other Expenses 0.05%
-----
Total Annual Fund Operating Expenses** 1.00%
|
* Institutional shares will be subject to a 1% fee when they are purchased, exchanged or redeemed. See "Shareholder Account Features - Fund Purchase and Redemption Fees" for additional information. ** Other Expenses is estimated.
Example. This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The Example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the operating expenses are reduced in the first year of operations as described above. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
You would pay the following expenses if you did not redeem your shares:
* Reflects the payment of a 1% fee both at the time of purchase and at the time of redemption. ** Reflects the payment of a 1% fee at the time of purchase.
INVESTMENT OBJECTIVE & PRINCIPAL POLICIES AND RISKS
The Fund's investment objective is to seek long-term, after-tax returns. Under normal market conditions, the Fund will invest at least 80% of its net assets in equity securities of companies located in emerging market countries. A country will be considered to be located in an emerging market country if it is domiciled in or derives more than 50% of its revenues or profits from emerging market countries. Emerging market countries are countries that are generally considered to be developing or emerging countries by the International Bank for Reconstruction and Development (more commonly referred to as the "World Bank") or the International Finance Corporation, as well as countries that are classified by the United Nations or otherwise regarded by their own authorities as developing. The portfolio manager may identify other emerging markets countries on the basis of market capitalization and liquidity and may consider issuers emerging market issuers based on their inclusion (or consideration for inclusion) as emerging market issuers in one or more broad-based market indices. The Fund ordinarily is exposed to roughly twenty emerging market countries at all times and invests in more than 250 stocks. The Fund's investment objective and most of the Fund's policies may be changed without shareholder approval. There is no present intention to make any such change and shareholders will receive 60 days prior notice of any material change in the investment objective.
Investments in emerging market countries can be considered speculative, and therefore may offer higher potential for gains and losses than investments in developed markets of the world. Political and economic structures in emerging market countries generally lack the social, political and economic stability characteristics of the United States. Governmental actions can have a significant effect on the economic conditions in such countries, which could adversely affect the value and liquidity of the Fund's investments. The laws of countries in the region relating to limited liability of corporate shareholders, fiduciary duties of officers and directors, and the bankruptcy of state enterprises are generally less well developed than or different from such laws in the United States. It may be more difficult to obtain a judgment in the courts of these countries than it is in the United States. In addition, unanticipated political or social developments may affect the value of the Fund's investments in these countries and the availability to the Fund of additional investments. These factors may cause emerging market securities to be more volatile and potentially less liquid than securities in more developed countries.
Settlement of securities transactions in emerging market countries are subject to risk of loss, may be delayed and are generally less frequent than in the United States, which could affect the liquidity of the Fund's assets. In addition, disruptions due to work stoppages and trading improprieties in these securities markets have caused such markets to close. If extended closings were to occur in stock markets where the Fund was heavily invested, the Fund's ability to redeem Fund shares could become correspondingly impaired. To mitigate these risks, the Fund may maintain a higher cash position than it otherwise would, thereby possibly diluting its return, or the Fund may have to sell more liquid securities which it would not otherwise choose to sell.
The Fund seeks to achieve long-term after-tax returns in part by minimizing the taxes incurred by shareholders in connection with the Fund's investment income and realized capital gains. Fund distributions that are taxed as ordinary income are minimized by investing principally in equity securities and by generally avoiding income taxable as ordinary income and net realized short-term capital gains in excess of the Fund's expenses. Fund distributions taxed as long-term capital gains are minimized by avoiding or minimizing the sale of securities with large accumulated capital gains. When a decision is made to sell a particular appreciated security, the portfolio manager will select for sale the share lots resulting in the most favorable tax treatment, generally those with holding periods sufficient to qualify for long-term capital gains treatment that have the highest cost basis. The portfolio manager may sell securities to realize capital losses that can be used to offset realized gains.
To protect against price declines in securities holdings with large accumulated gains, the Fund may use various hedging techniques (such as the purchase and sale of futures contracts on stocks and stock indexes and options thereon, the purchase of put options and the sale of call options on securities held, equity swaps, covered short sales, forward sales of stocks and the purchase and sale of forward currency exchange contracts and currency futures). By using these techniques rather than selling appreciated securities, the Fund can, with certain limitations, reduce its exposure to price declines in the securities without realizing substantial capital gains under current tax law. These derivative instruments may also be used by the Fund to enhance returns or as a substitute for the purchase or sale of securities. Dividends received on securities with respect to which the Fund is obligated to make payments (pursuant to short sales or otherwise) will be treated as fully taxable ordinary income.
The use of derivatives is highly specialized. The built-in leverage inherent to many derivative instruments can result in losses that substantially exceed the initial amount paid or received by the Fund. Equity swaps, over-the-counter options and forward sales are private contracts in which there is a risk of loss
in the event of a counterparty's default. In a covered short sale, the Fund may be forced to deliver appreciated stock to close the short position, causing a recognition of gain. Derivative instruments may be difficult to value, may be illiquid, and may be subject to wide swings in valuation caused by changes in the value of the underlying security. Derivative hedging transactions may not be effective because of imperfect correlation and other factors. As a general matter, dividends received on hedged stock positions are characterized as ordinary income and are not eligible for favorable tax treatment.
The values of foreign investments are affected by changes in currency rates or exchange control regulations, application of foreign tax laws (including withholding tax), changes in governmental administration or economic or monetary policy (in this country or abroad) or changed circumstances in dealings between nations. In addition, foreign brokerage commissions, custody fees and other costs of investing in foreign securities are generally higher than in the United States, and foreign securities markets may be less liquid, more volatile and less subject to governmental supervision than in the United States. Investments in foreign issuers could be affected by other factors not present in the United States, including expropriation, armed conflict, confiscatory taxation, lack of uniform accounting and auditing standards, less publicly available financial and other information and potential difficulties in enforcing contractual obligations. As a result, the Fund may be exposed to greater risk and will be more dependent on the investment adviser's ability to assess such risk than if the Fund invested solely in more developed countries.
More than 25% of the Fund's total assets may be denominated in any single currency. The Fund may also invest directly in foreign currencies. Exchange rates may fluctuate significantly over short periods of time causing the Fund's net asset value to fluctuate as well. Costs are incurred in connection with conversions between various currencies. At times, the portfolio manager may (but are not obligated to) use hedging techniques (such as forward contracts and options) to attempt to mitigate adverse effects of foreign currency fluctuations.
The Fund may invest in securities of smaller, less seasoned companies. Such securities are generally subject to greater price fluctuations, limited liquidity, higher transaction costs and higher investment risk. Smaller companies may have limited product lines, markets or financial resources, may be dependent on a limited management group or lack substantial capital reserves and do not have established performance records. There is generally less publicly available information about such companies than larger, more established companies.
Stocks purchased by the Fund because the portfolio manager believes they are inexpensive relative to the overall market may be undervalued due to adverse economic conditions or other near-term difficulties that cause them not to achieve their expected financial potential. Undervaluation may also arise because companies are misunderstood by investors or because they are out of step with favored market themes.
The Fund may invest in privately issued securities whose investment results are designed to correspond generally to the performance of a specified stock index or "basket" of securities, or sometimes a single stock (referred to as "equity-linked securities"). The Fund may invest up to 15% of its assets in equity-linked securities.
The convertible instruments in which the Fund will invest will generally not be rated, but will typically be equivalent in credit quality to securities rated below investment grade (i.e., credit quality equivalent to lower than Baa by Moody's Investors Service, Inc. and lower than BBB by Standard & Poor Ratings Group). Convertible debt securities that are not investment grade are commonly called "junk bonds" and have risks similar to equity securities; they have speculative characteristics and changes in economic conditions or other circumstances are more likely to lead to a weakened capacity to make principal and interest payments than is the case with higher grade debt securities. Such lower rated debt securities will not exceed 20% of total assets.
The Fund may not invest more than 15% of its net assets in illiquid securities, which may be difficult to value properly and may involve greater risks than liquid securities. Illiquid securities include those legally restricted as to resale, and may include commercial paper issued pursuant to Section 4(2) of the Securities Act of 1933 and securities eligible for resale pursuant to Rule 144A thereunder. Certain Section 4(2) and Rule 144A securities may be treated as liquid securities if the investment adviser determines that such treatment is warranted. Even if determined to be liquid, holdings of these securities may increase the level of Fund illiquidity if eligible buyers become uninterested in purchasing them.
The Fund may borrow amounts up to one-third of the value of total assets (including borrowings), but it will not borrow more than 5% of the value of its total assets except to satisfy redemption requests or for other temporary purposes. Borrowings result in increased expense to the Fund and, while they are outstanding, magnify increases or decreases in the value of Fund shares. The Fund will not purchase additional portfolio securities while outstanding borrowings exceed 5% of the value of its total assets. The Fund may suspend redemption privileges or postpone the date of payment for more than seven days after a redemption order is received under certain circumstances. For cash management purposes, the Fund may invest up to 10% of its assets in cash or cash equivalents, and high quality corporate debt securities isued by domestic or foreign issuers and denominated in U.S. dollars or foreign currency. The Fund
might not use all of the strategies and techniques or invest in all of the types of securities described in this Prospectus or the Statement of Additional Information. While at times the Fund may use alternative investment strategies in an effort to limit its losses, it may choose not to do so.
The Fund's investment policies include a fundamental investment provision allowing the Fund to invest its assets in one or more open-end management investment companies having substantially the same investment policies and restrictions as the Fund. Any such company or companies would be advised by the Fund's investment adviser (or an affiliate) and the Fund would not pay directly any advisory fee with respect to the assets so invested. In addition, the Fund may invest up to 10% of its net assets in other investment companies, or in other pooled accounts or other investment vehicles which may invest in foreign markets but that are not advised by the Fund's investment adviser. The Fund will indirectly bear its proportionate share of any management fees paid by investment companies in which it invests in addition to the advisory fee paid by the Fund. The Fund may initiate investments in one or more investment companies at any time without shareholder approval.
MANAGEMENT AND ORGANIZATION
Management. The Fund's investment adviser is Eaton Vance Management ("Eaton Vance"), with offices at The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109. Eaton Vance has been managing assets since 1924 and managing mutual funds since 1931. Eaton Vance and its subsidiaries currently manage approximately $70 billion on behalf of mutual funds, institutional clients and individuals.
The investment adviser manages the investments of the Fund. Under it's investment advisory agreement with the Fund, Eaton Vance receives a monthly advisory fee equal to 0.45% annually of the average daily net assets of the Fund. Pursuant to a sub-advisory agreement, Eaton Vance has delegated the investment management of the Fund to Parametric Portfolio Associates, a majority-owned subsidiary of Eaton Vance ("Parametric"). Eaton Vance pays Parametric a portion of the advisory fee for sub-advisory services provided to the Fund.
Cliff Quisenberry has served as portfolio manager of the Fund since operations commenced. Mr. Quisenberry has been a Vice President and global portfolio manager of Parametric for more than five years.
Eaton Vance serves as the administrator of the Fund, providing the Fund with administrative services and related office facilities. Under its administrative agreement with the Fund, Eaton Vance receives a monthly admintrative fee equal to 0.50% annually of the average daily net assets of the Fund. Eaton Vance also pays all ordinary operating expenses of the Fund (except administrative services and advisory fees).
Eaton Vance also serves as the sub-transfer agent for the Fund. For the sub-transfer agency services it provides, Eaton Vance receives an aggregate fee based upon the actual expenses it incurs in the performance of sub-transfer agency services. This fee is paid to Eaton Vance by the Fund's transfer agent from fees it receives from the Eaton Vance funds.
Organization. The Fund is a series of Eaton Vance Series Trust II, a Massachusetts business trust. The Fund does not hold annual shareholder meetings but may hold special meetings for matters that require shareholder approval (such as electing or removing trustees, approving management contracts or changing investment policies that may only be changed with shareholder approval).
VALUING SHARES
The Fund values its shares once each day only when the New York Stock Exchange is open for trading (typically Monday through Friday), as of the close of regular trading on the Exchange (normally 4:00 p.m. eastern time). The purchase price of Fund shares is their net asset value (plus the purchase fee applicable to share purchases). Exchange-listed securities are valued at closing sale prices. The investment adviser may use the fair value of a security if market prices are unavailable or if events occurring after the close of a securities market and before the Fund values its assets would materially affect net asset value. A security that is fair valued may be valued at a price higher or lower than actual market quotations or the value determined by other funds using their own fair valuation procedures. Because foreign securities trade on days when Fund shares are not priced, net asset value can change on days when Fund shares cannot be redeemed. Foreign securities and currency held by the Fund will be valued in U.S. dollars. The values will be computed by the custodian based on foreign currency exchange rate quotations supplied by an independent quotation service.
When purchasing or redeeming Fund shares, your investment dealer must
communicate your order to the principal underwriter by a specific time each day
in order for the purchase price or the redemption price to be based on that
day's net asset value per share. It is the investment dealer's responsibility to
transmit orders promptly. The Fund may accept purchase and redemption orders as
of the time of their receipt by certain investment dealers (or their designated
intermediaries).
PURCHASING SHARES
Institutional shares are offered to clients of financial intermediaries who charge an advisory, management, consulting or similar fee for their services; accounts affiliated with those financial intermediaries; investment and institutional clients of Eaton Vance and its affiliates; certain persons affiliated with Eaton Vance; and certain Eaton Vance and fund service providers. Institutional shares also are offered to pension plans, endowments and corporations. Your initial investment must be at least $250,000. Subsequent investments of any amount may be made at any time. The investment minimum is waived for persons affiliated with Eaton Vance and its service providers.
The Fund provides shareholders ease of investment by allowing same day wire purchases. You may purchase Institutional shares through your investment dealer or by requesting your bank to transmit immediately available funds (Federal Funds) by wire to the address set forth below. To make an initial investment by wire, you must first telephone the Fund Order Department at 800-262-1122 (extension 7604) to advise of your action and to be assigned an account number. Failure to call will delay the order. The account application form which accompanies this prospectus must be promptly forwarded to the transfer agent. Additional investments may be made at any time through the same wire procedure. The Fund Order Department must be advised by telephone of each transmission. Wire funds to:
Mellon Trust of New England
ABA #011001234
Account #080411
Further Credit Eaton Vance Tax-Managed Emerging Markets Fund - Fund #500
A/C # [Insert your account number]
Purchase orders will be executed at the net asset value next determined after their receipt by the Fund. The Fund or your investment dealer must receive your purchase order no later than the close of regular trading on the New York Stock Exchange (normally 4:00 p.m. eastern time) in order for your purchase to be effected at that day's net asset value. If you purchase shares through an investment dealer, that dealer may charge you a fee for executing the purchase for you.
From time to time the Fund may suspend the continuous offering of its shares. During any such suspension, shareholders who reinvest their distributions in additional shares will be permitted to continue such reinvestments, and the Fund may permit tax-sheltered retirement plans which own shares to purchase additional shares of the Fund. The Fund may also refuse any order for the purchase of shares.
The Fund is not intended for market timing or excessive trading. These activities may disrupt portfolio management and increase costs for all shareholders. For this reason, the Fund or its principal underwriter will reject or cancel a purchase order, suspend or terminate the exchange privilege or terminate the ability of an investor to invest in the Eaton Vance funds if the Fund or the principal underwriter determines, in its discretion, that a proposed transaction involves market timing or excessive trading to the potential detriment of the Fund. If an investor (through one or more accounts) makes more than two round-trip exchanges (exchanging from one fund to another fund and back again) within 12 months, it will be deemed to constitute market timing or excessive trading. The Fund or its principal underwriter may also reject or cancel any purchase order (including an exchange) from an investor or group of investors for any other reason. Purchases of Institutional shares are subject to a 1% purchase fee.
REDEEMING SHARES
You can redeem shares in one of two ways:
By Wire If you have given complete written authorization in
advance you may request that redemption proceeds be
wired directly to your bank account. The bank
designated may be any bank in the United States. The
redemption request may be made by calling the Eaton
Vance Fund Order Department at 800-262-1122 (extension
7604) or by sending a signature guaranteed letter of
instruction to the transfer agent (see back cover for
address). You may be required to pay the costs of
redeeming by wire; however, no costs are currently
charged. The Fund may suspend or terminate this
expedited payment procedure upon at least 30 days
notice.
Through an
Investment Dealer Your investment dealer is responsible for transmitting
the order promptly. An investment dealer may charge a
fee for this service.
|
Institutional shares are subject to a 1% redemption fee if redeemed or exchanged. If you redeem shares, your redemption price will be based on the net asset value per share next computed after the redemption request is received. Your redemption proceeds will be paid in cash within seven days, reduced by the amount of any federal income tax required to be withheld. Payments will be sent by mail unless you complete the Bank Wire Redemptions section of the account application.
While redemption proceeds are normally paid in cash, redemptions may be paid by distributing marketable securities. If you receive securities, you could incur brokerage or other charges in converting the securities to cash.
SHAREHOLDER ACCOUNT FEATURES
Distributions. You may have your Fund distributions paid in one of the following ways:
* Full Reinvest Option Dividends and capital gains are reinvested in
additional shares. This option will be assigned if
you do not specify an option.
* Partial Reinvest Option Dividends are paid in cash and capital gains are
reinvested in additional shares.
* Cash Option Dividends and capital gains are paid in cash.
Information from the Fund. From time to time, you may be mailed the following:
* Annual and Semiannual Reports, containing performance information and
financial statements.
* Periodic account statements, showing recent activity and total share
balance.
* Form 1099 and tax information needed to prepare your income tax
returns.
* Proxy materials, in the event a shareholder vote is required.
* Special notices about significant events affecting your Fund.
Fund Purchase and Redemption Fees. Institutional shares are subject to both a purchase fee, at the time of purchase, and a redemption fee, at the time of exchange or redemption, equal to 1% of the net asset value of the shares purchased, exchanged or redeemed. These fees are not paid separately but are deducted automatically from the amount invested (in the case of the purchase fee) or received in connection with a redemption or exchange (in the case of the redemption fee). The purchase and redemption fees are retained by the Fund to defray the costs associated with investing the proceeds of the sale of Fund shares or the sale of portfolio securities to satisfy an exchange or redemption request. Shares acquired through the reinvestment of dividends and capital gains distributions paid to shareholders by the Fund are not subject to the purchase or redemption fee.
Exchange Privilege. You may exchange your Institutional shares for other Eaton Vance fund Institutional Shares. Exchanges are made at net asset value (subject to any applicable redemption fee). Before exchanging, you should read the prospectus of the new fund carefully. The exchange privilege may be changed or discontinued at any time. You will receive 60 days' notice of any material change to the privilege. This privilege may not be used for "market timing". If an account (or group of accounts) makes more than two round-trip exchanges (exchanged from one fund to another and back again) within twelve months, it will be deemed to be market timing. The exchange privilege may be terminated for market timing accounts.
Telephone and Electronic Transactions. The transfer agent and the principal underwriter have procedures in place to authenticate telephone and electronic instructions (such as using security codes or verifying personal account information). As long as the transfer agent and principal underwriter follow reasonable procedures, they will not be responsible for unauthorized telephone or electronic transactions and you bear the risk of possible loss resulting from these transactions. You may decline the telephone redemption option on the account application. Telephone instructions are tape recorded.
Tax-Sheltered Retirement Plans. Fund shares are available for purchase in connection with certain tax-sheltered retirement plans. Call 1-800-262-1122 for information. Distributions will be invested in additional shares for all tax-sheltered retirement plans.
Procedures for Opening New Accounts. To help the government fight the funding of terrorism and money laundering activities, federal law requires the Fund to obtain, verify and record information that identifies each person who opens a Fund account. When you open an account, the transfer agent or your investment dealer will ask you for your name, address, date of birth and other identifying information. You also may be asked to produce a copy of your driver's license and other identifying documents. If a person fails to provide the information requested, any application by that person to open a new account will be rejected. Moreover, if the transfer agent or the investment dealer is unable to verify the identity of a person based on information provided by that person, it may take additional steps including, but not limited to, requesting additional information from the person, closing the person's account or reporting the matter to the appropriate federal authorities.
Account Questions. If you have any questions about your account or the services available, please call Eaton Vance Shareholder Services at 1-800-262-1122, or write to the transfer agent (see back cover for address).
TAX INFORMATION
While the Fund attempts to minimize taxable distributions, there can be no assurance that taxable distributions can be avoided. Distributions of income and net short-term capital gains will be taxable as ordinary income. Distributions of any long-term capital gains are taxable as long-term capital gains. The Fund expects that its distributions will consist primarily of capital gains (which may be taxable at different rates depending on how long the Fund owned the investment that generated them). The Fund's distributions will be taxable as described above whether they are paid in cash or reinvested in additional shares. The Fund's distributions will generally not qualify for the dividends-received deduction for corporations.
Investors who purchase shares at a time when the Fund's net asset value reflects gains that are either unrealized or realized but undistributed will pay the full price for the shares and then may receive some portion of the purchase price back as a taxable distribution. Certain distributions paid in January will be taxable to shareholders as if received on December 31 of the prior year. A redemption of Fund shares, including an exchange for shares of another fund, is a taxable transaction.
The Fund's investments in foreign securities may be subject to foreign withholding taxes, which would decrease the Fund's return on such securities. Under certain circumstances, shareholders may be entitled to claim a credit or deduction with respect to foreign taxes paid by the Fund. In addition, investments in foreign securities or foreign currencies may increase or accelerate the Fund's recognition of ordinary income and may affect the timing or amount of the Fund's distributions.
Shareholders should consult with their advisers concerning the applicability of state, local, foreign and other taxes to an investment.
{LOGO}
About the Fund: More information is available in the statement of additional information. The statement of additional information is incorporated by reference into this prospectus. Additional information about the Fund's investments will be available in the annual and semiannual reports to shareholders. In the annual report, you will find a discussion of the market conditions and investment strategies that significantly affected the Fund's performance during the past year. You may obtain free copies of the statement of additional information and the shareholder reports by contacting the principal underwriter:
Eaton Vance Distributors, Inc. The Eaton Vance Building 255 State Street Boston, MA 02109 1-800-262-1122 website: www.eatonvance.com
You will find and may copy information about the Fund (including the statement of additional information and shareholder reports): at the Securities and Exchange Commission's public reference room in Washington, DC (call 1-202-942-8090 for information on the operation of the public reference room); on the EDGAR Database on the SEC's Internet site (http:// www.sec.gov); or, upon payment of copying fees, by writing to the SEC's public reference section, Washington, DC 20549-0102, or by electronic mail at publicinfo@sec.gov.
About Shareholder Accounts: You can obtain more information from Eaton Vance Share- holder Services (1-800-262-1122). If you own shares and would like to add to, redeem or change your account, please write or call the transfer agent:
The Fund's SEC File No. is 811-2258 TMEMP
(c) 2003 Eaton Vance Management
|
STATEMENT OF
ADDITIONAL INFORMATION
November 19, 2003
|
Eaton Vance Tax-Managed Emerging Markets Fund
The Eaton Vance Building 255 State Street Boston, Massachusetts 02109 1-800-225-6265
This Statement of Additional Information ("SAI") provides general information about the Fund. The Fund is a series of Eaton Vance Series Trust II. Capitalized terms used in this SAI and not otherwise defined have the meanings given to them in the prospectus. This SAI contains additional information about:
Page Page
Strategies and Risks 2 Purchasing and Redeeming Shares 16
Investment Restrictions 7 Performance 17
Management and Organization 9 Taxes 18
Investment Advisory and Portfolio Securities
Administrative Services 14 Transactions 20
Other Service Providers 15 Financial Statements 21
Calculation of Net Asset Value 15
|
Appendix A: Class I Fees, Performance and Ownership 22
This SAI is NOT a prospectus and is authorized for distribution to prospective investors only if preceded or accompanied by the Fund's relevant prospectus dated November 19, 2003, as supplemented from time to time, which is incorporated herein by reference. This SAI should be read in conjunction with the prospectus, which may be obtained by calling 1-800-225-6265.
(c) 2003 Eaton Vance Management
The following defined terms may be used herein: "SEC" for the Securities and Exchange Commission; "CFTC" for the Commodities Futures Trading Commission; "Code" for the Internal Revenue Code of 1986, as amended; "1940 Act" for the Investment Company Act of 1940, as amended; and "NASD" for the National Association of Securities Dealers, Inc. For purposes of the Fund's policy of investing at least 80% of net assets in equity securities of companies located in emerging market countries, "net assets" will include any borrowings made for investment purposes. This policy will not be revised unless Fund shareholders are notified of the proposed change at least sixty days in advance of the proposed change.
STRATEGIES AND RISKS
Primary strategies are defined in the prospectus. The following is a description of the various investment practices that may be engaged in, whether as a primary or secondary strategy, and a summary of certain attendant risks. The investment adviser(s) may not buy any of the following instruments or use any of the following techniques unless it believes that doing so will help achieve the investment objective(s).
Tax-Managed Investing. Taxes are a major influence on the net returns that investors receive on their taxable investments. There are four components of the returns of an equity mutual fund - price appreciation, distributions of income and distributions of realized short-term and long-term capital gains - which are treated differently for federal income tax purposes. Distributions of net taxable investment income and net realized short-term gains (on stocks held by a fund for one year or less) are taxed to individual shareholders as ordinary income, currently at rates as high as 35%. Distributions of realized long-term gains (on stocks held by a fund for more than one year) are taxed to individual shareholders at rates up to 15%. Returns derived from price appreciation are untaxed until the shareholder disposes of his or her shares. Upon disposition, a capital gain (short-term, if the shareholder has held his or her shares for one year or less, otherwise long-term) equal to the difference between the net proceeds of the disposition and the shareholder's adjusted tax basis is realized.
The Fund is similar to retirement planning products such as variable annuities and IRAs. As a mutual fund, however, the Fund avoids a number of structural disadvantages inherent in a variable annuity - including the limitations and penalties on early withdrawals, the taxing of all income and gain upon withdrawal at ordinary income rates, and the inability to gain a step up in basis at death. Variable annuities offer tax-free exchanges and a death benefit, which are not offered by the Fund. Eligibility to invest in IRAs and annual contributions to IRAs are limited. Contributions to deductible IRAs can be made from pre-tax dollars and distributions from Roth IRAs are not taxed if certain requirements are met.
An analysis of long-term hypothetical returns achievable from a tax-managed equity fund that achieves returns predominantly from unrealized gains compared to a conventional equity mutual fund and a variable annuity can illustrate the fundamental soundness of a tax-managed equity fund investment. Assuming identical annual pre-tax returns, over a holding period of several years a tax-managed fund can generate liquidation proceeds higher than a conventional managed equity mutual fund and a variable annuity. If the investments are passed into an estate (thereby triggering a step-up in basis), the relative performance advantage of a tax-managed fund compared to a conventional fund or to a variable annuity can be substantial, again assuming equivalent annual returns before taxes. Of course, actual returns achieved by long-term investors in the Fund cannot be predicted.
Equity Securities. Equity securities, for purposes of the 80% policy, will be limited to common and preferred stocks; equity interests in trusts, partnerships, joint ventures and other unincorporated entities or enterprises; special classes of shares available only to foreign investors in markets that restrict ownership by foreign investors to certain classes of equity securities; depositary receipts; convertible preferred stocks; and other convertible instruments. The convertible instruments in which the Fund will invest will generally not be rated, but will typically be equivalent in credit quality to securities rated below investment grade (i.e., credit quality equivalent to lower than Baa by Moody's Investors Service, Inc. and lower than BBB by Standard & Poor Ratings Group). Convertible debt securities that are not investment grade are commonly called "junk bonds" and have risks similar to equity securities; they have speculative characteristics and changes in economic conditions or other circumstances are more likely to lead to a weakened capacity to make principal and interest payments than is the case with higher grade debt securities. Such lower rated debt securities will not exceed 20% of total assets.
When consistent with its investment objective, the Fund may also invest in equity securities of companies not in emerging market countries, as well as warrants, options on equity securities and indices, options on currency, futures contracts, options on futures contracts, forward foreign currency exchange contracts, currency swaps, U.S. dollar or foreign currency denominated obligations of foreign governments or their subsidiaries, agencies or instrumentalities, international agencies and supranational agencies, commercial paper that is denominated in a foreign currency issued by domestic or foreign issuers and other non-equity investments.
Securities Trading Markets. A high proportion of the shares of many issuers in emerging market countries (the "Region") may be held by a limited number of persons and financial institutions, which may limit the number of shares
available for investment. The prices at which investments may be acquired may be affected by trading by persons with material non-public information and by securities transactions by brokers in anticipation of transactions by the Fund in particular securities. Similarly, volume and liquidity in the bond markets in the Region are less than in the United States and, at times, price volatility can be greater than in the United States. The limited liquidity of securities markets in the Region may also affect the ability to acquire or dispose of securities at the price and time it wishes to do so. In addition, Region securities markets are susceptible to being influenced by large investors trading significant blocks of securities.
Region stock markets are undergoing a period of growth and change which may result in trading volatility and difficulties in the settlement and recording of transactions, and in interpreting and applying the relevant law and regulations. The securities industry in these countries is comparatively underdeveloped. Stockbrokers and other intermediaries in the Region may not perform as well as their counterparts in the United States and other more developed securities markets.
Political and economic structures in many Region countries are undergoing significant evolution and rapid development, and such countries may lack the social, political and economic stability characteristic of the United States. Certain of such countries may have, in the past, failed to recognize private property rights and have at times nationalized or expropriated the assets of private companies. As a result, the risks described above, including the risks of nationalization or expropriation of assets, may be heightened. In addition, unanticipated political or social developments may affect the values of investments in those countries and the availability of additional investments in those countries. The laws of countries in the Region relating to limited liability of corporate shareholders, fiduciary duties of officers and directors, and the bankruptcy of state enterprises are generally less well developed than or different from such laws in the United States. It may be more difficult to obtain or enforce a judgment in the courts of these countries than it is in the United States. The securities markets in the Region are substantially smaller, less liquid and more volatile than the major securities markets in the U.S. Governmental actions can have a significant effect on the economic conditions in the Region,which could adversely affect the value and liquidity of investments Although some governments in the Region have recently begun to institute economic reform policies, there can be no assurances that such policies will continue or succeed.
The investment adviser will take into account the effects on returns of local taxation. Certain countries may require withholding on dividends paid on portfolio securities and on realized capital gains. In the past, these taxes have sometimes been substantial. There can be no assurance that repatriation of its income, gains or initial capital from these countries can occur.
The risks associated with the securities trading markets in the Region may be more pronounced in certain countries, such as Russia and other Eastern European states.
Foreign Investments. 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 the United States. Foreign securities 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. In some countries, delayed settlements are customary, which increase the risk of loss.
American Depositary Receipts (ADRs), European Depositary Receipts (EDRs) and Global Depositary Receipts (GDRs) may be purchased. ADRs, EDRs and GDRs are certificates evidencing ownership of shares of a foreign issuer and are alternatives to directly purchasing the underlying foreign securities in their national markets and currencies. However, they continue to be subject to many of the risks associated with investing directly in foreign securities. These risks include foreign exchange risk as well as the political and economic risks of the underlying issuer's country. ADRs, EDRs and GDRs may be sponsored or unsponsored. Unsponsored receipts are established without the participation of the issuer. Unsponsored receipts may involve higher expenses, they may not pass-through voting or other shareholder rights, and they may be less liquid.
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 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 derivative currency transactions. Currency futures contracts are exchange-traded and change in value to reflect movements of a currency or a basket of currencies. Settlement must be made in a designated currency.
Forward foreign currency exchange contracts are individually negotiated and privately traded so they are dependent upon the creditworthiness of the counterparty. Such contracts may be used when a security denominated in a foreign currency is purchased or sold, or when the receipt in a foreign currency of dividend or interest payments on such a security is anticipated. A forward contract can then "lock in" the U.S. dollar price of the security or the U.S. dollar equivalent of such dividend or interest payment, as the case may be. Additionally, when the investment adviser believes that the currency of a particular foreign country may suffer a substantial decline against the U.S. dollar, it may enter into a forward contract to sell, for a fixed amount of dollars, the amount of foreign currency approximating the value of some or all of the securities held that are 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. In addition, it may not be possible to hedge against long-term currency changes. Cross-hedging may be used by using forward contracts in one currency (or basket of currencies) to hedge against fluctuations in the value of securities denominated in a different currency if the investment adviser determines that there is an established historical pattern of correlation between the two currencies (or the basket of currencies and the underlying currency). Use of a different foreign currency magnifies exposure to foreign currency exchange rate fluctuations. Forward contracts may also be used to shift exposure to foreign currency exchange rate changes from one currency to another. Short-term hedging provides a means of fixing the dollar value of only a portion of portfolio assets.
Currency swaps involve the exchange of rights to make or receive payments in specified currencies and are individually negotiated. The entire principal value of a currency swap is subject to the risk that the other party to the swap will default on its contractual delivery obligations. The credit quality of the unsecured senior debt or the claims-paying ability of the other party thereto must be considered to be investment grade by the investment adviser at the time the swap is entered into. The use of currency swaps is a highly specialized activity which involves special investment techniques and risks. If the investment adviser is incorrect in its forecasts of market value and currency exchange rates, performance will be adversely affected.
Derivative Instruments. Derivative instruments (which are instruments that derive their value from another instrument, security, index or currency) may be purchased or sold to enhance return (which may be considered speculative), to hedge against fluctuations in securities prices, market conditions or currency exchange rates, or as a substitute for the purchase or sale of securities or currencies. Such transactions may be in the U.S. or abroad and may include the purchase or sale of futures contracts on securities, securities and other indices, other financial instruments or currencies; options on futures contracts; exchange-traded and over-the-counter options on securities, indices or currencies; forward foreign currency exchange contracts; and agreements, sometimes called cash puts, which may accompany the purchase of a new issue of bonds from a dealer. Transactions in derivative instruments involve a risk of loss or depreciation due to: unanticipated adverse changes in securities prices, interest rates, indices, the other financial instruments' prices or currency exchange rates; the inability to close out a position; default by the counterparty; imperfect correlation between a position and the desired hedge; tax constraints on closing out positions; and portfolio management constraints on securities subject to such transactions. The loss on derivative instruments (other than purchased options) may substantially exceed an investment in these instruments. In addition, the entire premium paid for purchased options may be lost before they can be profitably exercised. Transaction costs are incurred in opening and closing positions. Derivative instruments may sometimes increase or leverage exposure to a particular market risk, thereby increasing price volatility. 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 to limit losses. The staff of the SEC takes the position that certain purchased OTC options, and assets used as cover for written OTC options, are illiquid. 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 use of derivative instruments. There can be no assurance that the use of derivative instruments will be advantageous.
Foreign exchange traded futures contracts and options thereon may be used only if the investment adviser determines that trading on such foreign exchange does not entail risks, including credit and liquidity risks, that are materially greater than the risks associated with trading on CFTC-regulated exchanges.
A put option on a security may be written only if the investment adviser intends to acquire the security. A covered option may not be written on any security if after such transaction more than 15% of net assets, as measured by the aggregate value of the securities underlying all written covered calls and puts would be subject to such options. Options will not be purchased if after such transaction more than 5% of net assets, as measured by the aggregate of all premiums paid for all such options held would be so invested.
The Fund will only enter into futures contracts and futures options which are standardized and traded on U.S. or foreign exchanges, boards of trade or similar entities or quoted on an automated quotation system, or in the case of futures options, for which an established over-the-counter market exists.
Risks Associated With Derivative Instruments. Transactions in derivative instruments involve a risk of loss or depreciation due to: unanticipated adverse changes in securities prices, interest rates, the other financial instruments' prices or currency exchange rates; the inability to close out a position; default by the counterparty; imperfect correlation between a position and the desired hedge; tax constraints on closing out positions; and portfolio management constraints on securities subject to such transactions. The loss on derivative instruments (other than purchased options) may substantially exceed the Fund's initial investment in these instruments. In addition, the Fund may lose the entire premium paid for purchased options that expire before they can be profitably exercised. Transaction costs are incurred in opening and closing positions in derivative instruments.
Derivative instruments may sometimes increase or leverage the Fund's exposure to a particular market risk. Leverage enhances the Fund's exposure to the price volatility of derivative instruments it holds. The Fund's success in using derivative instruments to hedge portfolio assets depends on the degree of price correlation between the derivative instruments and the hedged asset. Imperfect correlation may be caused by several factors, including temporary price disparities among the trading markets for the derivative instrument, the assets underlying the derivative instrument and the Fund's assets. 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. A commodity exchange 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 Fund from closing out positions and limiting its losses. The use of derivatives are highly specialized activities that involve skills different from conducting ordinary portfolio securities transactions. There can be no assurance that the investment adviser's use of derivative instruments will be advantageous to the Fund. The Fund will engage in transactions in futures contracts and regulated options only to the extent such transactions are consistent with the requirements of the Code for maintaining the qualification of the Fund as a regulated investment company for federal income tax purposes.
Repurchase Agreements. The Fund may enter into repurchase agreements (the purchase of a security coupled with an agreement to resell at a higher price) with respect to its permitted investments. In the event of the bankruptcy of the other party to a repurchase agreement, the Fund might experience delays in recovering its cash. To the extent that, in the meantime, the value of the securities the Fund purchased may have decreased, the Fund could experience a loss. Repurchase agreements which mature in more than seven days will be treated as illiquid. The Fund's repurchase agreements will provide that the value of the collateral underlying the repurchase agreement will always be at least equal to the repurchase price, including any accrued interest earned on the agreement, and will be marked to market daily.
Reverse Repurchase Agreements. The Fund may enter into reverse repurchase agreements. Under a reverse repurchase agreement, the Fund temporarily transfers possession of a portfolio instrument to another party, such as a bank or broker-dealer, in return for cash. At the same time, the Fund agrees to repurchase the instrument at an agreed upon time (normally within seven days) and price, which reflects an interest payment. The Fund may enter into such agreements when it is able to invest the cash acquired at a rate higher than the cost of the agreement, which would increase earned income. The Fund could also enter into reverse repurchase agreements as a means of raising cash to satisfy redemption requests without the necessity of selling portfolio assets.
When the Fund enters into a reverse repurchase agreement, any fluctuations in the market value of either the securities transferred to another party or the securities in which the proceeds may be invested would affect the market value
of the Fund's assets. As a result, such transactions may increase fluctuations in the market value of the Fund's assets. While there is a risk that large fluctuations in the market value of the Fund's assets could affect net asset value, this risk is not significantly increased by entering into reverse repurchase agreements, in the opinion of the Adviser. Because reverse repurchase agreements may be considered to be the practical equivalent of borrowing funds, they constitute a form of leverage. Such agreements will be treated as subject to investment restrictions regarding "borrowings." If the Fund reinvests the proceeds of a reverse repurchase agreement at a rate lower than the cost of the agreement, entering into the agreement will lower the Fund's yield.
Equity Index Swaps. The Fund will enter into equity index swaps only on a net basis, i.e., the two payment streams are netted out, with the Fund receiving or paying, as the case may be, only the net amount of the two payments. Inasmuch as these transactions are entered into for good faith hedging purposes and because a segregated account will be used, the Fund will not treat them as being subject to the Fund's borrowing restrictions. The net amount of the excess, if any, of the Fund's obligations over its entitlements with respect to each equity index swap will be accrued on a daily basis and an amount of cash or liquid securities having an aggregated asset value at least equal to the accrued excess will be segregated by the Fund's custodian. The Fund will not enter into any equity index swap unless the credit quality of the other party thereto is considered to be investment grade by the investment adviser. If there is a default by the other party to such a transaction, the Fund will have contractual remedies pursuant to the agreements related to the transaction. The swaps market is a relatively new market and is largely unregulated. It is possible that developments in the swaps market, including potential government regulation, could adversely affect the Fund's ability to terminate existing swap agreements or to realize amounts to be received under such agreements.
Equity-Linked Securities. The Fund may invest in privately issued securities whose investment results are designed to correspond generally to the performance of a specified stock index or "basket" of securities, or sometimes a single stock (referred to as "equity-linked securities"). These securities are used for many of the same purposes as derivative instruments and share many of the same risks. Equity-linked securities may be considered illiquid and thus subject to the Fund's restrictions on investments in illiquid securities.
Asset Coverage. To the extent required by SEC guidelines, the Fund will only engage in transactions that expose it to an obligation to another party if it owns either (1) an offsetting ("covered") position for the same type of financial asset, or (2) cash or liquid securities, segregated with its custodian, with a value sufficient at all times to cover its potential obligations not covered as provided in (1). Assets used as cover or segregated with the custodian cannot be sold while the position(s) requiring cover is open unless replaced with other appropriate assets. As a result, if a large portion of assets is segregated or committed as cover, it could impede portfolio management or the ability to meet redemption requests or other current obligations.
Unlisted Securities. The Fund may invest in securities of companies that are neither listed on a stock exchange nor traded over the counter. Unlisted securities may include investments in new and early stage companies, which may involve a high degree of business and financial risk that can result in substantial losses and may be considered speculative. Such securities will generally be deemed to be illiquid. Because of the absence of any public trading market for these investments, the Fund may take longer to liquidate these positions than would be the case for publicly traded securities. Although these securities may be resold in privately negotiated transactions, the prices realized from these sales could be less than those originally paid by the Fund or less than what may be considered the fair value of such securities. Furthermore, issuers whose securities are not publicly traded may not be subject to public disclosure and other investor protection requirements applicable to publicly traded securities. If such securities are required to be registered under the securities laws of one or more jurisdictions before being resold, the Fund may be required to bear the expenses of registration. In addition, any capital gains realized on the sale of such securities may be subject to higher rates of foreign taxation than taxes payable on the sale of listed securities.
Other Investment Companies. The Fund reserves the right to invest up to 10% of its total assets, calculated at the time of purchase, in the securities of other investment companies unaffiliated with the investment adviser that have the characteristics of closed-end investment companies and which may invest in foreign markets. The Fund will indirectly bear its proportionate share of any management fees paid by investment companies in which it invests in addition to the advisory fee paid by the Fund. The value of closed-end investment company securities, which are usually traded on an exchange, is affected by demand for the securities themselves, independent of the demand for the underlying portfolio assets, and, accordingly, such securities can trade at a discount from their net asset values.
When-Issued Securities, Delayed Delivery and Forward Commitments. Securities may be purchased on a "forward commitment", "when-issued" or "delayed delivery" basis (meaning securities are purchased or sold with payment and delivery taking place in the future) in order to secure what is considered to be an advantageous price and yield at the time of entering into the transaction. However, the yield
on a comparable security when the transaction is consummated may vary from the yield on the security at the time that the forward commitment, when-issued or delayed delivery transaction was made. From the time of entering into the transaction until delivery and payment is made at a later date, the securities that are the subject of the transaction are subject to market fluctuations. In forward commitment, when-issued or delayed delivery transactions, if the seller or buyer, as the case may be, fails to consummate the transaction the counterparty may miss the opportunity of obtaining a price or yield considered to be advantageous. Forward commitment, when-issued or delayed delivery transactions may be expected to occur a month or more before delivery is due. However, no payment or delivery is made until payment is received or delivery is made from the other party to the transaction. Forward commitment, when-issued or delayed delivery transactions are not entered into for the purpose of investment leverage.
Lending Portfolio Securities. The Fund may lend up to one-third of the value of its total assets (including borrowings) or such other amount as is permitted under relevant law. The Fund may seek to earn income by lending portfolio securities to broker-dealers or other institutional borrowers. As with other extensions of credit, there are risks of delay in recovery or even loss of rights in the securities loaned if the borrower of the securities fails financially. In the judgment of the investment adviser the loans will be made only to organizations whose credit quality or claims paying ability is considered to be at least investment grade and when the expected returns, net of administrative expenses and any finders' fees, justify the attendant risk. Securities loans currently are required to be secured continuously by collateral in cash, cash equivalents (such as money market instruments) or other liquid securities held by the custodian and maintained in an amount at least equal to the market value of the securities loaned. The financial condition of the borrower will be monitored by the sub-adviser. Distributions of any income realized from securities loans will be taxable as ordinary income.
Short Sales. The Fund may sell a security short if it owns at least an equal amount of the security sold short or another security convertible or exchangeable for an equal amount of the security sold short without payment of further compensation (a short sale against-the-box). In a short sale against-the-box, the short seller is exposed to the risk of being forced to deliver appreciated stock to close the position if the borrowed stock is called in by the lender. These transactions may also require the current recognition of taxable gain under certain tax rules applicable to constructive sales. The Fund will not make short sales or maintain a short position if doing so would create liabilities or require collateral deposits and segregation of assets aggregating more than 25% of the value of the Fund's total assets.
The ability to use short sales against-the-box, certain equity swaps and certain equity collar strategies as a tax-efficient management technique with respect to holdings of appreciated securities is limited to circumstances in which the hedging transaction is closed out within thirty days of the end of the Fund's taxable year and the underlying appreciated securities position is held unhedged for at least the next sixty days after the hedging transaction is closed.
Cash Management Investments. The Fund may invest in cash or cash equivalents for cash management purposes. Cash equivalents are highly liquid, short-term securities such as commercial paper, time deposits, certificates of deposit, short-term notes and short-term U.S. Government obligations. For cash management purposes, the Fund may also invest or hold it assets in high quality corporate debt securities issued by domestic or foreign issuers and denominated in U.S. dollars or foreign currency. Normally not more than 10% of the Fund's assets will be invested for these cash management purposes.
Portfolio Turnover. The Fund cannot accurately predict its portfolio turnover rate, but it is anticipated that the annual turnover rate will generally be lower than that of most other mutual funds, except to the extent the Fund sells securities in order to generate capital losses. Selling securities for such purposes will increase the Fund's turnover rate and the trading costs it incurs.
INVESTMENT RESTRICTIONS
The following investment restrictions of the Fund are designated as fundamental policies and as such cannot be changed without the approval of the holders of a majority of the Fund's outstanding voting securities, which as used in this SAI means the lesser of (a) 67% of the shares of the Fund present or represented by proxy at a meeting if the holders of more than 50% of the outstanding shares are present or represented at the meeting or (b) more than 50% of the outstanding shares of the Fund. Accordingly, the Fund may not:
(1) Borrow money or issue senior securities except as permitted by the
1940 Act;
(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) Underwrite securities of other issuers;
(4) Invest in real estate including interests in real estate limited
partnerships (although it may purchase and sell securities which are
secured by real estate and securities of companies which invest or
deal in real estate) or in commodities or commodity contracts for the
purchase or sale of physical commodities;
(5) Make loans to any person except by (a) the acquisition of debt
securities and making portfolio investments, (b) entering into
repurchase agreements and (c) lending portfolio securities;
(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 anyone
issuer, or invest in more than 10% of the outstanding voting
securities of any one issuer, except obligations issued or guaranteed
by the U.S. Government, its agencies or instrumentalities and except
securities of other investment companies; or
(7) Concentrate its investments in any particular industry, but, if deemed
appropriate for the Fund's objective, up to (but less than) 25% of the
value of its assets may be invested in securities of companies in any
one industry (although more than 25% may be invested in securities
issued or guaranteed by the U.S. Government or its agencies or
instrumentalities).
For purposes of determining industry classifications, the investment adviser considers an issuer to be in a particular industry if a third party has designated the issuer to be in that industry, unless the investment adviser is aware of circumstances that make the third party's classification inappropriate. In such a case, the investment adviser will assign an industry classification to the issuer.
In connection with Restriction (1) above, the 1940 Act currently permits investment companies to borrow money so long as there is 300% asset coverage of the borrowing (i.e., borrowings do not exceed one-third of the investment company's total assets after subtracting liabilities other than the borrowings). There is no current intent to borrow money, except for the limited purposes described in the prospectus.
Notwithstanding the investment policies and restrictions of the Fund, the Fund may invest its investable assets in another open-end management investment company (a portfolio) with substantially the same investment objective, policies and restrictions as the Fund; moreover, subject to Trustee approval the Fund may invest its investable assets in two or more open-end management investment companies which together have substantially the same investment objective, policies and restrictions as the Fund, to the extent permitted by Section 12(d)(1)(G) of the 1940 Act.
The following nonfundamental investment policies have been adopted by the Fund. A policy may be changed by the Trustees with respect to the Fund without approval by the Fund's shareholders. The Fund will not:
* make short sales of securities or maintain a short position, unless at
all times when a short position is open (i) it owns an equal amount of
such securities or securities convertible into or exchangeable,
without payment of any further consideration, for securities of the
same issue as, and equal in amount to, the securities sold short or
(ii) it holds in a segregated account cash or other liquid securities
(to the extent required under the 1940 Act) in an amount equal to the
current market value of the securities sold short, and unless not more
than 25% of its net assets (taken at current value) is held as
collateral for such sales at any one time; or
* invest more than 15% of net assets in investments which are not
readily marketable, including restricted securities and repurchase
agreements maturing in more than seven days. Restricted securities for
the purposes of this limitation do not include securities eligible for
resale pursuant to Rule 144A under the Securities Act of 1933 and
commercial paper issued pursuant to Section 4(2) of said Act that the
Board of Trustees, or its delegate, determines to be liquid. Any such
determination by a delegate will be made pursuant to procedures
adopted by the Board. When investing in Rule 144A securities, the
level of portfolio illiquidity may be increased to the extent that
eligible buyers become uninterested in purchasing such securities.
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, or describes a policy regarding quality standards, such percentage limitation or standard shall be determined immediately after and as a result of the acquisition by the Fund of such security or asset. Accordingly, any later increase or decrease resulting from a change in values, assets or other circumstances or any subsequent rating change made by a rating service (or as determined by the investment adviser if the security is not rated by a rating agency), will not compel the Fund to dispose of such security or other asset. However, the Fund must always be in compliance with the borrowing policy and limitation on investing in illiquid securities set forth above.
MANAGEMENT AND ORGANIZATION
Fund Management. The Trustees of the Trust are responsible for the overall management and supervision of the affairs of the Trust. The Trustees and officers of the Trust 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. Trustees and officers of the Trust hold indefinite terms of office. The "noninterested Trustees" consist of those Trustees who are not "interested persons" of the Trust, as that term is defined under the 1940 Act. The business address of each Trustee and officer is The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109. As used in this SAI, "EVC" refers to Eaton Vance Corp., "EV" refers to Eaton Vance Inc. and "EVD" refers to Eaton Vance Distributors, Inc. EVC and EV are the corporate parent and trustee, respectively, of Eaton Vance and BMR. EVD is the principal underwriter of the Fund.
Number of Portfolios
in Fund Complex
Name and Position(s) with Term of Office and Principal Occupation(s) During Overseen By Other Directorships
Date of Birth the Trust Length of Service Past Five Years Trustee(1) Held
------------- ---------------- ------------------ ------------------------------ -------------------- -------------------
Interested Trustees
JAMES B. HAWKES Trustee Since 1991 Chairman, President and Chief 194 Director of EVC
11/9/41 Executive Officer of BM$, Eaton
Vance, EVC and EV; Director
of EV; Vice President and
Director of EVD. Trustee
and/or officer of 194
registered investment
companies in the Eaton Vance
Fund Complex. Mr. Hawkes is an
interested person because of
his positions with BMR, Eaton
Vance, EVC and EV, which are
affiliates of the Trust.
Noninterested Trustees
SAMUEL L. HAYES, III Trustee Since 1986 Jacob H. Schiff Professor 194 Director of Tiffany
2/23/35 of Investment Banking & Co. (specialty
Emeritus, Harvard University retailer) and
Graduate School of Business Telect, Inc.
Administration. (telecommunication
services company)
WILLIAM H. PARK Trustee Since 2003 President and Chief Executive 191 None
9/19/47 Officer, Prizm Capital Management,
LLC (investment management firm)
(since 2002). Formerly, Executive
Vice President and Chief Financial
Officer, Management Corporation
(a holding company owning
institutional investment management
firms) (1982-2001).
RONALD A. PEARLMAN Trustee Since 2003 Professor of Law, Georgetown 191 None
7/10/40 University Law Center (since 2002).
Formerly, Tax Partner, Covington &
Burling, Washington, DC (1991-2000).
NORTON H. REAMER Trustee Since 1986 President, Unicorn Corporation (an 194 None
9/21/35 investment and financial advisory
services company) (since September
2000). Chairman, Hellman, Jordan
Management Co., Inc. (an investment
management company) (since November
2000). Advisory Director of Berkshire
Capital Corporation (investment
(since June 2002). Formerly,
Chairman of the Board, United Asset
Management Corporation (a holding
company owning institutional investment
management firms) and Chairman,
President and Director, UAM Funds
(mutual funds).
LYNN A. STOUT Trustee Since 1998 Professor of Law, University of 194 None
9/14/57 California at Los Angeles School of
Law (since July 2001). Formerly,
Professor of Law, Georgetown
University Law Center.
|
(1) Includes both master and feeder funds in a master-feeder structure.
Principal Officers who are not Trustees
Name and Position(s) with the Term of Office and
Date of Birth Trust Length of Service Principal Occupation(s) During Past Five Years
------------- -------------------- ------------------ ----------------------------------------------
MICHAEL W. WEILHEIMER President Since 2002* Vice President of Eaton Vance and BMR. Officer of
2/11/61 10 registered investment companies managed by
Eaton Vance or BMR.
THOMAS P. HUGGINS Vice President Since 2000 Vice President of Eaton Vance and BMR. Officer of
3/7/66 7 registered investment companies managed by
Eaton Vance or BMR.
CLIFF QUISENBERRY Vice President Since 2003 Vice President and Global Portfolio Manager of
1/1/65 Parametric Portfolio Associates ("Parametric").
Officer of 2 registered investment companies
managed by Eaton Vance or BMR.
9
|
Name and Position(s) with the Term of Office and
Date of Birth Trust Length of Service Principal Occupation(s) During Past Five Years
------------- -------------------- ------------------ ----------------------------------------------
BRYAN J. DODDY Treasurer Since 2003 Vice President of Eaton Vance and BMR. Previously,
3/7/59 Vice President and Tax Director at PFPC Inc. (2000-
2003) and Director of Taxation for John Hancock
Advisers, Inc. (1997-2000). Officer of 2 registered
investment companies managed by Eaton Vance or BMR.
ALAN R. DYNNER Secretary Since 1997 Vice President, Secretary and Chief Legal Officer of
10/10/40 BMR, Eaton Vance, EVD, EV and EVC. Officer of 194
registered investment companies managed by
Eaton Vance or BMR.
|
* Prior to 2002, Mr. Weilheimer served as Vice President of the Trust since 1996.
The Board of Trustees of the Trust has several standing Committees including the Governance Committee, the Audit Committee and the Special Committee. Each such Committee is comprised of only noninterested Trustees.
The Governance Committee of the Board of Trustees of the Trust is comprised of the noninterested Trustees. Ms. Stout currently serves as chairperson of the Governance Committee. The purpose of the Committee is to undertake a periodic review of, and make recommendations with respect to, the Board's performance; Trustee compensation; appointment of new Trustees; identity, duties and composition of the various Board committees; development and maintenance of the Board's membership, structure and operations; policies and procedures adopted or approved by the Board to comply with regulatory requirements that relate to fund governance; and any other matters related to fund governance. The Governance Committee was previously named the Nominating Committee; its name was changed and a new charter adopted in March 2003. The Nominating Committee's purpose was 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 was comprised of noninterested Trustees. In the fiscal year ended June 30, 2003, the Nominating Committee convened four times.
The Trustees will, when a vacancy exists or is anticipated, consider any nominee for Trustee recommended by a shareholder if such recommendation is submitted to the Trustees in writing and contains sufficient background information concerning the individual to enable a proper judgement to be made as to such individual's qualifications.
Messrs. Reamer (Chairman), Hayes and Park and Ms. Stout are members of the Audit Committee of the Board of Trustees of the Trust. The Board of Trustees has designated Messrs. Park, Hayes and Reamer, each a noninterested Trustee, as audit committee financial experts. The Audit Committee's functions include making recommendations to the Trustees regarding the selection and performance of the independent accountants, and reviewing matters relative to accounting and auditing practices and procedures, accounting records, and the internal accounting controls, of the Trust, and certain service providers. In the fiscal year ended June 30, 2003, the Audit Committee convened once.
Messrs. Hayes (Chairman), Pearlman and Reamer are members of the Special Committee of the Board of Trustees of the Trust. 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 Trust, including investment advisory, administrative, transfer agency, custodial and fund accounting and distribution services, and (ii) all other matters in which Eaton Vance or its affiliates has any actual or potential conflict of interest with the Fund. In the fiscal year ended June 30, 2003, the Special Committee convened four times.
In considering the approval of the investment advisory agreement between the Fund and the investment adviser, the Board of Trustees, including the noninterested Trustees, considered information presented by the investment adviser relating to the Fund. The Board of Trustees also took into consideration information relating to the Eaton Vance Group of Funds, which was previously presented to the Special Committee in connection with the renewal of certain advisory agreements for other Eaton Vance funds. The information considered included, among other things, the following:
* An independent report comparing the fees and expenses of the Fund's
peer group;
* The economic outlook and the general investment outlook in the
relevant investment markets;
* Eaton Vance's results and financial condition and the overall
organization of the investment adviser;
* Arrangements regarding the distribution of Fund shares;
* The procedures used to determine the fair value of the Fund's assets;
* The allocation of brokerage, including allocations to soft dollar
brokerage and allocations to firms that sell Eaton Vance fund shares;
* Eaton Vance's management of the relationship with the custodian,
subcustodians and fund accountants;
* The resources devoted to Eaton Vance's compliance efforts undertaken
on behalf of the funds it manages and the record of compliance with
the investment policies and restrictions and with policies on personal
securities transactions;
* The quality, nature, cost and character of the administrative and
other non-investment management services provided by Eaton Vance and
its affiliates;
* Investment management staffing;
* The profitability of Eaton Vance in respect of the management of the
Eaton Vance funds;
* Operating expenses (including transfer agency expenses) paid to third
parties; and
* Information provided to investors, including the Fund's shareholders.
In evaluating the investment advisory agreement between the Fund and Eaton Vance, the Special Committee also considered information relating to the education, experience and number of investment professionals and other Eaton Vance personnel whose responsibilities include supervising the sub-adviser's activities with respect to the Fund.
When reviewing the sub-advisory agreement for the Fund, the Trustees also reviewed information relating to the education, experience and number of investment professionals and other personnel of the sub-adviser who would provide services under the sub- advisory agreement. The Trustees took into account the resources available to the sub- adviser in fulfilling its duties under the sub-advisory agreement. The Trustees noted the sub-adviser's experience in managing other investment companies and separate accounts with investment objectives and policies similar to those of the Fund, including the sub- adviser's experience in tax-managed investing. Finally, the Trustees noted that the Fund was organized to act as a successor to an existing mutual fund managed by the sub- adviser in an unaffiliated mutual fund complex; that the existing fund proposes to merge into the Fund; and that the sub-adviser proposes to manage the Fund's investments in a manner that is consistent with its management of the existing fund.
The Board of Trustees did not consider any single factor as controlling in determining whether or not to approve the investment advisory and subadvisory agreements. Nor are the items described herein all encompassing of the matters considered by the Board. In assessing the information provided by Eaton Vance and its affiliates, the Board also took into consideration the benefits to shareholders of investing in a fund that is a part of a large family of funds which provides a large variety of shareholder services.
Based on their consideration of all factors that they deemed material and assisted by the advice of their independent counsel, the Trustees, including the noninterested Trustees, concluded that the approval of the investment advisory and subadvisory agreements, including the fee structure (described herein) is in the interests of shareholders.
Share Ownership. The following table shows the dollar range of equity securities beneficially owned by each Trustee in the Fund and in all Eaton Vance Funds overseen by the Trustee as of December 31, 2002.
Aggregate Dollar Range of Equity
Securities Owned in All Registered
Dollar Range of Equity Securities Funds Overseen by Trustee in the
Name of Trustee Owned in the Fund Eaton Vance Fund Complex
--------------- ----------------- ------------------------
INTERESTED TRUSTEES
James B. Hawkes N/A over $100,000
NONINTERESTED TRUSTEES
Samuel L. Hayes, III N/A over $100,000
William H. Park* N/A None
Ronald A. Pearlman* N/A None
Norton H. Reamer N/A over $100,000
Lynn A. Stout N/A $10,001 - $50,000
|
* Messrs. Park and Pearlman were elected Trustees in 2003, and thus had no beneficial ownership of securities in the Fund or in the Eaton Vance Fund Complex as of December 31, 2002.
As of December 31, 2002, no noninterested Trustee or any of their immediate family members owned beneficially or of record any class of securities of EVC, EVD or any person controlling, controlled by or under common control with EVC or EVD.
During the calendar years ended December 31, 2001 and December 31, 2002, no noninterested Trustee (or their immediate family members) had:
1. Any direct or indirect interest in Eaton Vance, EVC, EVD or any person controlling, controlled by or under common control with EVC or EVD;
2. Any direct or indirect material interest in any transaction or series
of similar transactions with (i) the Trust or any Fund; (ii) another
fund managed by EVC, distributed by EVD or a person controlling,
controlled by or under common control with EVC or EVD; (iii) EVC or
EVD; (iv) a person controlling, controlled by or under common control
with EVC or EVD; or (v) an officer of any of the above; or
3. Any direct or indirect relationship with (i) the Trust or any Fund;
(ii) another fund managed by EVC, distributed by EVD or a person
controlling, controlled by or under common control with EVC or EVD;
(iii) EVC or EVD; (iv) a person controlling, controlled by or under
common control with EVC or EVD; or (v) an officer of any of the above.
During the calendar years ended December 31, 2001 and December 31, 2002, no officer of EVC, EVD or any person controlling, controlled by or under common control with EVC or EVD served on the Board of Directors of a company where a noninterested Trustee of the Trust or any of their immediate family members served as an officer.
Trustees of the Trust who are not affiliated with Eaton Vance may elect to defer receipt of all or a percentage of their annual fees received from certain Eaton Vance sponsored funds in accordance with the terms of a Trustees Deferred Compensation Plan (the "Trustees' Plan"). Under the Trustees' Plan, an eligible Trustee may elect to have his deferred fees invested by the Eaton Vance sponsored fund in the shares of one or more funds in the Eaton Vance Family of Funds, and the amount paid to the Trustees under the Trustees' Plan will be determined based upon the performance of such investments. The Trust does not have a retirement plan for Trustees. The Fund does not participate in the Trustees' Plan.
The fees and expenses of the Trustees of the Trust are paid by the Fund (and other series of the Trust). (A Trustee of the Trust who is a member of the Eaton Vance organization receives no compensation from the Trust). During the fiscal year ended June 30, 2003, the Trustees of the Trust earned the following compensation in their capacities as Trustees from the Trust. For the year ended December 31, 2002, the Trustees earned the following compensation in their capacities as Trustees of the funds in the Eaton Vance fund complex(1):
Source of Samuel L. William H. Ronald A. Norton H. Lynn A. Compensation Hayes Park Pearlman(3) Reamer(3) Stout ------------ ----- ---- -------- ------ ----- Trust(2) $ 1,270 $ 1,136 $ 1,136 $ 1,136 $ 1,259 Trust and Fund Complex 180,000 160,000 160,000 160,000 170,000 |
(1) As of November 1, 2003, the Eaton Vance fund complex consists of 195
registered investment companies or series thereof.
(2) The Trust consisted of 1 Fund as of June 30, 2003.
(3) Messrs. Park and Pearlman were elected as Trustees in 2003 and thus did not
recieve fees from the Trust and Fund Complex for the calendar year ended
December 31, 2002. The Trust and Fund Complex compensation figures listed
for each of Mr. Park and Mr. Pearlman are estimated for the calendar year
ending December 31, 2003 and the Trust compensation figures are estimated
for the fiscal year ending June 30, 2004.
(4) Includes $60,000 of deferred compensation.
(5) Includes $16,000 of deferred compensation.
Organization
The Fund is a series of the Trust, which was organized under Massachusetts law on March 27, 1989 and is operated as an open-end management investment company. On October 20, 2003, the Trust changed its name from "Eaton Vance Income Fund of Boston" to "Eaton Vance Series Trust II". The Trust may issue an unlimited number of shares of beneficial interest (no par value per share) in one or more series (such as the Fund). The Trustees of the Trust have divided the shares of the Fund into multiple classes. Each class represents an interest in the Fund, but is subject to different expenses, rights and privileges. The Trustees have the authority under the Declaration of Trust to create additional classes of shares with differing rights and privileges. When issued and outstanding, shares are fully paid and nonassessable by the Trust. Shareholders are entitled to one vote for each full share held. Fractional shares may be voted proportionately. Shares of the Fund will be voted together except that only shareholders of a particular class may vote on matters affecting only that class. Shares have no preemptive or conversion rights and are freely transferable. In the event of the liquidation of the Fund, shareholders of each class are entitled to share pro rata in the net assets attributable to that class available for distribution to shareholders.
As permitted by Massachusetts law, there will normally be no meetings of
shareholders for the purpose of electing Trustees unless and until such time as
less than a majority of the Trustees of the Trust holding office have been
elected by shareholders. In such an event the Trustees then in office will call
a shareholders' meeting for the election of Trustees. Except for the foregoing
circumstances and unless removed by action of the shareholders in accordance
with the Trust's By-laws, the Trustees shall continue to hold office and may
appoint successor Trustees. The Trust's By-laws provide that no person shall
serve as a Trustee if shareholders holding two-thirds of the outstanding shares
have removed him or her from that office either by a written declaration filed
with the Trust's custodian or by votes cast at a meeting called for that
purpose. The By-laws further provide that under certain circumstances the
shareholders may call a meeting to remove a Trustee and that the Trust is
required to provide assistance in communication with shareholders about such a
meeting.
The Trust's Declaration of Trust may be amended by the Trustees when authorized
by vote of a majority of the outstanding voting securities of the Trust, the
financial interests of which are affected by the amendment. The Trustees may
also amend the Declaration of Trust without the vote or consent of shareholders
to change the name of the Trust or any series or to make such other changes
(such as reclassifying series or classes of shares or restructuring the Trust)
as do not have a materially adverse effect on the financial interests of
shareholders or if they deem it necessary to conform it to applicable federal or
state laws or regulations. The Trust's By-laws provide that the Trust will
indemnify its Trustees and officers against liabilities and expenses incurred in
connection with any litigation or proceeding in which they may be involved
because of their offices with the Trust. However, no indemnification will be
provided to any Trustee or officer for any liability to the Trust or
shareholders by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his or her 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 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 Fund property of any shareholder held personally liable solely by reason of being or having been a shareholder for all loss or expense arising from such liability. The assets of the Fund are readily marketable and will ordinarily substantially exceed its liabilities. In light of the nature of the Fund's business and the nature of its assets, management believes that the possibility of the Fund's liability exceeding its assets, and therefore the shareholder's risk of personal liability, is remote.
Proxy voting policy. The Board of Trustees of the Trust has adopted a proxy voting policy and procedure (the "Fund Policy"), pursuant to which the Trustees have delegated proxy voting responsibility to the Fund's investment sub-adviser and adopted the investment sub-adviser's proxy voting policies and procedures (the "Policies") which are described below. The Trustees will review the Fund's proxy voting records from time to time and will annually consider approving the Policies for the upcoming year. In the event that a conflict of interest arises between the Fund's shareholders and the investment sub-adviser, the administrator, or any of their affiliates or any affiliate of the Fund, the investment sub-adviser will generally refrain from voting the proxies related to the companies giving rise to such conflict until it consults with the Board of the Fund except as contemplated under the Fund Policy. The Board's Special Committee will instruct the investment sub-adviser on the appropriate course of action.
In accordance with the Policies the investment sub-adviser will generally support company management on proposals relating to eliminating cumulative voting or preemptive rights, changes in capitalization to eliminate other classes of stock or to authorize stock splits and routine matters related to corporate administration which are not expected to have a significant economic impact on the company or its shareholders. The investment sub-adviser will generally not support management on matters, among others, regarding amendments to by-laws to require super-majority votes and classified boards. The Policies include voting guidelines for matters relating to, among other things, the election of directors, approval of independent auditors, executive compensation, corporate structure and anti-takeover defenses.
In addition, the investment sub-adviser will monitor situations that may result in a conflict of interest between the Fund's shareholders and the investment sub-adviser. If a conflict does exist, a Proxy Committee will meet to discuss voting the proxy in accordance with the Policies or refer the proxy to an independent third party to vote. Effective August 31, 2004, information on how the Fund voted proxies relating to portfolio securities during the 12 month period ended June 30, 2004 will be available (1) without charge, upon request, by calling 1-800-262-1122, and (2) on the Securities and Exchange Commission's website at http://www.sec.gov.
INVESTMENT ADVISORY AND ADMINISTRATIVE SERVICES
Pursuant to the Investment Advisory Agreement with the Fund, Eaton Vance acts as the investment adviser for the Fund. Pursuant to the Investment Sub-Advisory Agreement with Parametric, Eaton Vance has delegated investment management of the Fund to Parametric. Parametric is an indirect, majority-owned subsidiary of Eaton Vance. From time to time, Eaton Vance and Parametric are each referred to herein as an "investment adviser". Parametric is sometimes referred to herein as "sub-adviser".
Investment Advisory Services. The investment adviser and sub-adviser are responsible for managing the investments and affairs of the Fund and providing related office facilities and personnel subject to the supervision of the Trust's Board of Trustees. The investment sub-adviser furnishes investment research, advice and supervision, furnishes an investment program and determines what securities will be purchased, held or sold by the Fund and what portion, if any, of the Fund's assets will be held uninvested. The Investment Advisory Agreement and Investment Sub-Advisory Agreement require the investment adviser or sub-adviser, as the case may be, to pay the salaries and fees of all officers and Trustees of the Trust who are members of the investment adviser's or sub-adviser's organization and all personnel of the investment adviser or sub-adviser performing services relating to research and investment activities.
For a description of the compensation that the Fund pays the investment adviser, see the prospectus. Pursuant to the Investment Sub-Advisory Agreement, Eaton Vance pays Parametric a monthly sub-advisory fee equal to 0.35% annually of the average daily net assets of the Fund.
The Investment Advisory Agreement with the investment adviser 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 Trust 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 Trust or by vote of a majority of the outstanding voting securities of the Fund. The Agreement may be terminated at any time without penalty on sixty (60) days' written notice by the Board of Trustees of either party, or by vote of the majority of the outstanding voting securities of the Fund, and the Agreement will terminate automatically in the event of its assignment. The Agreement provides that the investment adviser may render services to others. The Agreement also provides that the investment adviser shall not be liable for any loss incurred in connection with the performance of its duties, or action taken or omitted under the Agreement, in the absence of willful misfeasance, bad faith, gross negligence in the performance of its duties or by reason of its reckless disregard of its obligations and duties thereunder, or for any losses sustained in the acquisition, holding or disposition of any security or other investment.
Administrative Services. As indicated in the prospectus, Eaton Vance serves as administrator of the Fund, and the Fund is authorized to pay Eaton Vance a fee in the amount of 0.50% of average daily net assets for providing administrative services to the Fund. Under its Administrative Services Agreement, Eaton Vance has been engaged to administer the Fund's affairs, subject to the supervision of the Trustees of the Trust, and shall furnish office space and all necessary office facilities, equipment and personnel for administering the affairs of the Fund.
Sub-Transfer Agency Services. Eaton Vance also serves as sub-transfer agent for the Fund. As sub-transfer agent, Eaton Vance performs the following services directly on behalf of the Fund: 1) provides call center services to financial intermediaries and shareholders; 2) answers written inquiries related to shareholder accounts (matters relating to portfolio management, distribution of shares and other management policy questions will be referred to the Funds); 3) furnishes an SAI to any shareholder who requests one in writing or by telephone from a Fund; and 4) processes transaction requests received via telephone. For the transfer agency services it provides, Eaton Vance receives an aggregate annual fee equal to the lesser of $2.5 million or the actual expenses incurred by Eaton Vance in the performance of those services. This fee is paid to Eaton Vance by the Fund's transfer agent from fees it receives from the Eaton Vance funds. The Fund will pay a pro-rata share of such fee.
Information About Parametric Portfolio Associates. Parametric is a Seattle, Washington based investment manager providing investment management services to a number of institutional accounts, including employee benefit plans, college endowment funds and foundations. At September 30, 2003, Parametric's assets under management totalled approximately $5.2 billion. Parametric is the successor investment adviser to Parametric Portfolio Associates, Inc., which commenced operations in 1987. Parametric's address is 1151 Fairview Avenue N., Seattle, WA 98109.
Information About Eaton Vance. Eaton Vance is a business trust organized under Massachusetts law. Eaton Vance, Inc. ("EV") serves as trustee of Eaton Vance. EV is an indirect, wholly-owned subsidiary of Eaton Vance Corporation ("EVC"), a Maryland corporation and publicly-held holding company. Eaton Vance is an indirect, wholly-owned subsidiary of EVC. EVC through its subsidiaries and affiliates engages primarily in investment management, administration and marketing activities. The Directors of EVC are James B. Hawkes, Thomas E. Faust Jr., John G.L. Cabot, Leo I. Higdon, Jr., John M. Nelson, Vincent M. O'Reilly and Ralph Z. Sorenson. All shares of the outstanding Voting Common Stock of EVC
are deposited in a Voting Trust, the Voting Trustees of which are Messrs. Hawkes, Faust, Jeffrey P. Beale, Alan R. Dynner, Thomas J. Fetter, Scott H. Page, Duncan W. Richardson, William M. Steul, Payson F. Swaffield, Michael W. Weilheimer, and Wharton P. Whitaker (all of whom are officers of Eaton Vance). The Voting Trustees have unrestricted voting rights for the election of Directors of EVC. All of the outstanding voting trust receipts issued under said Voting Trust are owned by certain of the officers of Eaton Vance who are also officers, or officers and Directors of EVC and EV. As indicated under "Management and Organization", all of the officers of the Trust (as well as Mr. Hawkes who is also a Trustee) hold positions in the Eaton Vance organization.
Code of Ethics. The investment adviser, the sub-adviser and the Fund have adopted Codes of Ethics governing personal securities transactions. Under the Codes, Eaton Vance employees may purchase and sell securities (including securities held or eligible for purchase by the Fund) subject to certain pre-clearance and reporting requirements and other procedures.
Expenses. The Fund is responsible for all expenses not expressly stated to be payable by another party (such as expenses required to be paid pursuant to an agreement with the investment adviser, the principal underwriter, or the administrator). In the case of expenses incurred by the Trust, the Fund is responsible for its pro rata share of those expenses.
OTHER SERVICE PROVIDERS
Principal Underwriter. Eaton Vance Distributors, Inc. ("EVD"), The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109, is the principal underwriter of the Fund. The principal underwriter acts as principal in selling shares under a Distribution Agreement with the Trust. The expenses of printing copies of prospectuses used to offer shares and other selling literature and of advertising are borne by the principal underwriter. The fees and expenses of qualifying and registering and maintaining qualifications and registrations of the Fund and its shares under federal and state securities laws are borne by the Fund. The principal underwriter distributes shares on a "best efforts" basis under which it is required to take and pay for only such shares as may be sold. The Trust has authorized the principal underwriter to act as its agent in repurchasing shares at a rate of $2.50 for each repurchase transaction handled by the principal underwriter. EVD is an indirect, wholly-owned subsidiary of EVC. Mr. Hawkes is a Vice President and Director, Mr. Dynner is a Vice President, Secretary and Clerk and Mr. O'Connor is a Vice President of EVD.
Custodian. State Street Bank & Trust Co. ("State Street"), 255 Franklin Street, Boston, MA 02110, serves as custodian to the Fund. State Street has custody of all cash and securities of the Fund, maintains the general ledger of the Fund and computes the daily net asset value of shares of the Fund. In such capacity it attends to details in connection with the sale, exchange, substitution, transfer or other dealings with the Fund's investments, receives and disburses all funds and performs various other ministerial duties upon receipt of proper instructions from the Trust. State Street provides services in connection with the preparation of shareholder reports and the electronic filing of such reports with the SEC. EVC and its affiliates and their officers and employees from time to time have transactions with various banks, including State Street. It is Eaton Vance's opinion that the terms and conditions of such transactions were not and will not be influenced by existing or potential custodial or other relationships between the Fund and such banks.
Independent Accountants. PricewaterhouseCoopers LLP, 160 Federal Street, Boston, MA 02110, are the independent accountants of the Fund, providing audit services, tax return preparation, and assistance and consultation with respect to the preparation of filings with the SEC.
Transfer Agent. PFPC Inc., P.O. Box 9653, Providence, RI 02940-9653, serves as transfer and dividend disbursing agent for the Fund.
CALCULATION OF NET ASSET VALUE
The net asset value of the Fund is computed by State Street (as agent and custodian for the Fund) by subtracting the liabilities of the Fund from the value of its total assets. The Fund will be closed for business and will not price its 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 have established the following procedures for the fair valuation of the Fund's assets under normal market conditions. Marketable securities listed on foreign or U.S. securities exchanges generally are valued at closing sale prices or, if there were no sales, at the mean between the closing bid and asked prices therefor on the exchange where such securities are principally traded (such prices may not be used, however, where an active over-the-counter market in an exchange listed security better reflects current market value). Marketable securities listed in the NASDAQ National Market System are valued at the NASDAQ official closing price. 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.
Generally, trading in the foreign securities owned by the Fund 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 Fund generally are computed as of such times. Occasionally, events affecting the value of foreign securities may occur between such times and the close of the Exchange which will not be reflected in the computation of the Fund's net asset value (unless the Fund deems that such events would materially affect its net asset value, in which case an adjustment would be made and reflected in such computation). The Fund may rely on an independent fair valuation service in making any such adjustment. Foreign securities and currency held by the Fund 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.
PURCHASING AND REDEEMING SHARES
Additional Information About Purchases. Fund shares are offered for sale only in states where they are registered. Fund shares are continuously offered through investment dealers which have entered agreements with the principal underwriter. The public offering price is the net asset value next computed after receipt of the order.
In connection with employee benefit or other continuous group purchase plans, the Fund may accept initial investments of less than $1,000 on the part of an individual participant. In the event a shareholder who is a participant of such a plan terminates participation in the plan, his or her shares will be transferred to a regular individual account. However, such account will be subject to the right of redemption by the Fund as described below.
Suspension of Sales. The Trust may, in its absolute discretion, suspend, discontinue or limit the offering of its shares at any time. In determining whether any such action should be taken, the Trust's management intends to consider all relevant factors, including (without limitation) the size of the Fund, the investment climate and market conditions, the volume of sales and redemptions of shares. Suspension of the offering of shares would not, of course, affect a shareholder's ability to redeem shares.
Additional Information About Redemptions. The right to redeem shares of the Fund can be suspended and the payment of the redemption price deferred when the Exchange is closed (other than for customary weekend and holiday closings), during periods when trading on the Exchange is restricted as determined by the SEC, or during any emergency as determined by the SEC which makes it impracticable for the Fund to dispose of its securities or value its assets, or during any other period permitted by order of the SEC for the protection of investors.
Due to the high cost of maintaining small accounts, the Trust reserves the right to redeem accounts with balances of less than $750. Prior to such a redemption, shareholders will be given 60 days' written notice to make an additional purchase. However, no such redemption would be required by the Trust if the cause of the low account balance was a reduction in the net asset value of shares. No CDSC will be imposed with respect to such involuntary redemptions.
While normally payments will be made in cash for redeemed shares, the Trust, subject to compliance with applicable regulations, has reserved the right to pay the redemption price of shares of the Fund, either totally or partially, by a distribution in kind of readily marketable securities. The securities so
distributed would be valued pursuant to the valuation procedures described in this SAI. If a shareholder received a distribution in kind, the shareholder could incur brokerage or other charges in converting the securities to cash.
Systematic Withdrawal Plan. The transfer agent will send to the shareholder regular monthly or quarterly payments of any permitted amount designated by the shareholder based upon the value of the shares held. The checks will be drawn from share redemptions and hence, may require the recognition of taxable gain or loss. Income dividends and capital gains distributions in connection with withdrawal plan accounts will be credited at net asset value as of the record date for each distribution. Continued withdrawals in excess of current income will eventually use up principal, particularly in a period of declining market prices. A shareholder may not have a withdrawal plan in effect at the same time he or she has authorized Bank Automated Investing or is otherwise making regular purchases of Fund shares. The shareholder, the transfer agent or the principal underwriter may terminate the withdrawal plan at any time without penalty.
Tax-Sheltered Retirement Plans. Fund shares are available for purchase in connection with certain tax-sheltered retirement plans. Detailed information concerning these plans, including certain exceptions to minimum investment requirements, and copies of the plans are available from the principal underwriter. This information should be read carefully and consulting with an attorney or tax adviser may be advisable. The information sets forth the service fee charged for retirement plans and describes the federal income tax consequences of establishing a plan. Participant accounting services (including trust fund reconciliation services) will be offered only through third party recordkeepers and not by the principal underwriter. Under all plans, dividends and distributions will be automatically reinvested in additional shares.
Information Regarding Market Timing and Excessive Trading. The Fund is not intended for market timing or excessive trading. These activities may disrupt portfolio management and increase costs for all shareholders. If an investor (through one or more accounts) makes more than two round-trip exchanges (exchanging from one fund to another fund and back again) within 12 months, it will be deemed to constitute market timing or excessive trading. The Fund or its principal underwriter will reject or cancel a purchase order, suspend or terminate the exchange privilege or terminate the ability of an investor to invest in the Eaton Vance funds if the Fund or the principal underwriter determines, in its discretion, that a proposed transaction involves market timing or excessive trading that is potentially detrimental to the Fund. The Fund and the principal underwriter cannot ensure that they will be able to identify all cases of market timing and excessive trading although they believe they have adequate procedures in place to attempt to do so. The Fund or its principal underwriter may also reject or cancel any purchase order (including an exchange) from an investor or group of investors for any other reason.
The Fund and the principal underwriter have established guidelines concerning the Fund's market timing and excessive trading policies with respect to Fund shares held in accounts maintained and administered by financial intermediaries (such as banks, broker-dealers and retirement plan administrators). These guidelines include standards indicating situations where market timing or excessive trading are considered to be potentially detrimental to the Fund. The Fund and the principal underwriter cannot ensure that these financial intermediaries will in all cases apply the guidelines to accounts under their control.
PERFORMANCE
Average annual total return before deduction of taxes ("pre-tax 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 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 of any initial sales charge from the initial $1,000 purchase, (iii) a complete redemption of the investment at the end of the period, and (iv) the deduction of any applicable CDSC at the end of the period.
Average annual total return after the deduction of taxes on distributions is calculated in the same manner as pre-tax return except the calculation assumes that any federal income taxes due on distributions are deducted from the distributions before they are reinvested. Average annual total return after the deduction of taxes on distributions and taxes on redemption also is calculated in the same manner as pre-tax return except the calculation assumes that (i) any federal income taxes due on distributions are deducted from the distributions before they are reinvested and (ii) any federal income taxes due upon redemption are deducted at the end of the period. After-tax returns are based on the highest federal income tax rates in effect for individual taxpayers as of the time of each assumed distribution and redemption (taking into account their tax character), and do not reflect the impact of state and local taxes. In calculating after-tax returns, the net value of any federal income tax credits available to shareholders is applied to reduce federal income taxes payable on distributions at or near year-end and, to the extent the net value of such credits exceeds such distributions, is then assumed to be reinvested in additional Fund shares at net asset value on the last day of the fiscal year in which the credit was generated or, in the case of certain tax credits, on the date on which the year-end distribution is paid. For pre-tax and after-tax total return information, see Appendix A.
In addition to the foregoing total return figures, the Fund may provide pre-tax and after-tax annual and cumulative total return, as well as the ending redeemable cash value of a hypothetical investment. If shares are subject to a sales charge, total return figures may be calculated based on reduced sales charges or at net asset value. These returns would be lower if the full sales charge was imposed. 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.
Information about portfolio allocation, portfolio turnover and portfolio holdings at a particular date may be included in advertisements and other material furnished to present and prospective shareholders.
TAXES
Each series of the Trust is treated as a separate entity for federal income tax purposes. The Fund has elected to be treated and intends to qualify each year as a regulated investment company ("RIC") under the Code. Accordingly, the Fund intends to satisfy certain requirements relating to sources of its income and diversification of its assets and to distribute substantially all of its net income and net short-term and long-term capital gains (after reduction by any available capital loss carryforwards) in accordance with the timing requirements imposed by the Code, so as to maintain its RIC status and to avoid paying any federal income or excise tax. To the extent it qualifies for treatment as a RIC and satisfies the above-mentioned distribution requirements, the Fund will not be subject to federal income tax on income paid to its shareholders in the form of dividends or capital gain distributions. The Fund intends to qualify as a RIC for its fiscal year ending June 30, 2004.
In order to avoid incurring a federal excise tax obligation, the Code requires that the Fund distribute (or be deemed to have distributed) by December 31 of each calendar year (i) at least 98% of its ordinary income for such year, (ii) at least 98% of its capital gain net income (which is the excess of its realized capital gains over its realized capital losses), generally computed on the basis of the one-year period ending on October 31 of such year, after reduction by any available capital loss carryforwards and (iii) 100% of any income and capital gains from the prior year (as previously computed) that was not paid out during such year and on which the Fund paid no federal income tax. Under current law, provided that the Fund qualifies as a RIC, the Fund should not be liable for any income, corporate excise or franchise tax in the Commonwealth of Massachusetts.
If the Fund does not qualify as a RIC for any taxable year, the Fund's taxable income will be subject to corporate income taxes, and all distributions from earnings and profits, including distributions of net capital gain (if any), will be taxable to the shareholder as ordinary income. In addition, in order to requalify for taxation as a RIC, the Fund may be required to recognize unrealized gains, pay substantial taxes and interest, and make certain distributions.
The Fund's investments in options, futures contracts, hedging transactions, forward contracts (to the extent permitted) and certain other transactions will be subject to special tax rules (including mark-to-market, constructive sale, straddle, wash sale, short sale and other rules), the effect of which may be to accelerate income to the Fund, defer Fund losses, cause adjustments in the holding periods of Fund securities, convert capital gain into ordinary income and convert short-term capital losses into long-term capital losses. These rules could therefore affect the amount, timing and character of distributions to investors.
The Fund's investments in certain debt obligations may cause the Fund to recognize taxable income in excess of cash generated by such obligations. Thus, the Fund could be required at times to liquidate other investments in order to satisfy distribution requirements.
Transactions in foreign currencies, foreign currency-denominated debt securities and certain foreign currency options, futures contracts, forward contracts and similar instruments (to the extent permitted) may give rise to ordinary income or loss to the extent such income or loss results from fluctuations in the value of the foreign currency concerned.
Investments in "passive foreign investment companies" could subject the Fund to U.S. federal income tax or other charges on certain distributions from such companies and on disposition of investments in such companies; however, the tax effects of such investments may be mitigated by making an election to mark such investments to market annually or treat the passive foreign investment company as a "qualified electing fund".
If more than 50% of the Fund's assets at year end consists of the debt and equity securities of foreign corporations, the Fund may elect to permit shareholders to claim a credit or deduction on their income tax returns for their pro rata portion of qualified taxes paid by the Fund to foreign countries. If the election is made, shareholders will include in gross income from foreign sources their pro rata share of such taxes. A shareholder's ability to claim a foreign tax credit or deduction in respect of foreign taxes paid by the Fund may be subject to certain limitations imposed by the Code (including a holding period requirement applied at both the Fund and shareholder level), as a result of which a shareholder may not get a full credit or deduction for the amount of such taxes. Shareholders who do not itemize deductions on their federal income tax returns may claim a credit (but no deduction) for such taxes. Individual shareholders subject to the alternative minimum tax ("AMT") may not deduct such taxes for AMT purposes.
Any loss realized upon the sale or exchange of Fund shares with a tax holding period of 6 months or less will be treated as a long-term capital loss to the extent of any distributions treated as long-term capital gain with respect to such shares. In addition, all or a portion of a loss realized on a redemption or other disposition of Fund shares may be disallowed under "wash sale" rules to the extent the shareholder acquired other shares of the same Fund (whether through the reinvestment of distributions or otherwise) within the period beginning 30 days before the redemption of the loss shares and ending 30 days after such date. Any disallowed loss will result in an adjustment to the shareholder's tax basis in some or all of the other shares acquired.
Dividends and distributions on the Fund's shares are generally subject to federal income tax as described herein to the extent they do not exceed the Fund's realized income and gains, even though such dividends and distributions may economically represent a return of a particular shareholder's investment. Such distributions are likely to occur in respect of shares purchased at a time when the Fund's net asset value reflects gains that are either unrealized, or realized but not distributed. Such realized gains may be required to be distributed even when the Fund's net asset value also reflects unrealized losses. Certain distributions declared in October, November or December and paid in the following January will be taxed to shareholders as if received on December 31 of the year in which they were declared.
Amounts paid by the Fund to individuals and certain other shareholders who have not provided the Fund with their correct taxpayer identification number ("TIN") and certain certifications required by the Internal Revenue Service (the "IRS") as well as shareholders with respect to whom the Fund has received certain information from the IRS or a broker, may be subject to "backup" withholding of federal income tax arising from the Fund's taxable dividends and other distributions as well as the proceeds of redemption transactions (including repurchases and exchanges), at a rate of 28% for amounts paid through 2010. The backup withholding rate will be 31% for amounts paid thereafter. An individual's TIN is generally his or her social security number.
Under recently enacted Treasury regulations, if a shareholder realizes a loss on disposition of a Fund's shares of $2 million or more for an individual shareholder of $10 million or more for a corporate shareholder, the shareholder must file with the Internal Revenue Service a disclosure statement on Form 8886. Direct shareholders of portfolio securities are in many cases excepted from this reporting requirement, but under current guidance, shareholders of a RIC are not excepted. Future guidance may extend the current exception from this reporting requirement to shareholders of most or all RICs.
The foregoing discussion does not address the special tax rules applicable to
certain classes of investors, such as IRAs and other retirement plans,
tax-exempt entities, foreign investors, insurance companies and financial
institutions. Shareholders should consult their own tax advisers with respect to
special tax rules that may apply in their particular situations, as well as the
state, local, and, where applicable, foreign tax consequences of investing in
the Fund.
PORTFOLIO SECURITIES TRANSACTIONS
Decisions concerning the execution of portfolio security transactions, including the selection of the market and the executing firm, are made by the investment adviser or sub-adviser of the Fund (each referred to herein as the "investment adviser"). The Fund is responsible for the expenses associated with portfolio transactions. The investment adviser is also responsible for the execution of transactions for all other accounts managed by it. The investment adviser places the portfolio security transactions for execution with many firms. The investment adviser uses its best efforts to obtain execution of portfolio security transactions at prices which are advantageous and at reasonably competitive spreads or (when a disclosed commission is being charged) at reasonably competitive commission rates. In seeking such execution, the investment 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 full range and quality of the executing firm's services, the value of the brokerage and research services provided, the responsiveness of the firm to the investment adviser, the size and type of the transaction, the nature and character of the market for the security, the confidentiality, speed and certainty of effective execution required for the transaction, the general execution and operational capabilities of the executing firm, the reputation, reliability, experience and financial condition of the firm, the value and quality of the services rendered by the firm in this and other transactions, and the reasonableness of the spread or commission, 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 often involve the payment of brokerage commissions, which may be higher than those in the United States. There is generally no stated commission in the case of securities traded in the over-the-counter markets, but the price paid or received usually includes an undisclosed dealer markup or markdown. In an underwritten offering the price paid often includes a disclosed fixed commission or discount retained by the underwriter or dealer. Although spreads or commissions paid on portfolio security transactions will, in the judgment of the investment 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 the investment adviser's clients in part for providing brokerage and research services to the investment 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 investment 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 either on the basis of that particular transaction or on the basis of overall responsibilities which the investment adviser and its affiliates have for accounts over which they exercise investment discretion. In making any such determination, the investment 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; 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 and of the advisers of investment companies, institutions and other investors to receive research, analytical, statistical and quotation services, data, information and other services, products and materials which assist such advisers in the performance of their investment responsibilities ("Research Services") from broker-dealer firms 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, the investment adviser receives Research Services from many broker-dealer firms with which the investment adviser places transactions and from third parties with which these broker-dealers have arrangements. These Research Services include such matters as general economic, political, business and market information, industry and company reviews, evaluations of securities and portfolio strategies and transactions, proxy voting data and analysis services, technical analysis of various aspects of the securities markets, 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 the investment 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 the investment 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 is not reduced because the investment adviser receives such Research Services. The investment adviser evaluates the nature and quality of the various Research Services obtained through broker-dealer firms and attempts to allocate sufficient portfolio security transactions to such firms to ensure the continued receipt of Research Services which the investment adviser believes are useful or of value to it in rendering investment advisory services to its clients.
The Fund and the investment adviser may also receive Research Services from underwriters and dealers in fixed-price offerings, which Research Services are reviewed and evaluated by the investment adviser in connection with its investment responsibilities. The investment companies sponsored by the investment adviser or its affiliates may allocate brokerage commissions to acquire information relating to the performance, fees and expenses of such companies and other mutual funds, which information is used by the Trustees of such companies to fulfill their responsibility to oversee the quality of the services provided by various entities, including the investment adviser, to such companies. Such companies may also pay cash for such information.
Subject to the requirement that the investment adviser shall use its best efforts to seek and execute portfolio security transactions at advantageous prices and at reasonably competitive spreads or commission rates, the investment 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 Fund shares or shares of other investment companies sponsored by the investment adviser or its affiliates. This policy is not inconsistent with a rule of the NASD, which rule provides that no firm which is a member of the NASD shall favor or disfavor the distribution of shares of any particular investment company or group of investment companies on the basis of brokerage commissions received or expected by such firm from any source.
Securities considered as investments for the Fund may also be appropriate for other investment accounts managed by the investment adviser or its affiliates. Whenever decisions are made to buy or sell securities by the Fund and one or more of such other accounts simultaneously, the investment 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 the Fund 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 investment 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 the Fund from time to time, it is the opinion of the Trustees of the Trust that the benefits from the investment adviser organization outweigh any disadvantage that may arise from exposure to simultaneous transactions.
FINANCIAL STATEMENTS
There are no financial statements of the Fund because as of the date of this SAI, the Fund has not commenced operations.
Householding. Consistent with applicable law, duplicate mailings of shareholder reports and certain other Fund information to shareholders residing at the same address may be eliminated.
APPENDIX A
Class I Fees, Performance & Ownership
As of the date of this SAI, this Class of the Fund had not yet commenced operations so there is no fee or performance information.
Control Persons and Principal Holders of Securities. At October 20, 2003, Eaton Vance owned one share of the Fund, being the only shares of the Fund outstanding as of such date.
PART C - OTHER INFORMATION
ITEM 23. EXHIBITS (WITH INAPPLICABLE ITEMS OMITTED)
(a)(1) Amended and Restated Declaration of Trust dated December 14, 1995, filed as Exhibit (1) to Post-Effective Amendment No. 42 filed January 24, 1997 (Accession No. 0000950156-97-000102) and incorporated herein by reference.
(2) Amendment of Establishment and Designation of a Series and Classes of Shares of Beneficial Interest, Without Par Value effective June 16, 2003 filed as Exhibit (a)(2) to Post-Effective Amendment No. 55 filed July 9, 2003 (Accession No. 0000940394-03-000487) and incorporated herein by reference.
(3) Amendment to Declaration of Trust effective October 20, 2003 filed herewith.
(4) Amendment of Establishment and Designation of Series of Shares of Beneficial Interest, Without Par Value, effective October 20, 2003 filed herewith.
(b)(1) By-Laws filed as Exhibit (2)(a) to Post-Effective Amendment No. 41 filed November 30, 1995 (Accession No. 0000950156-95-000839) and incorporated herein by reference.
(2) Amendment to By-Laws dated December 13, 1993 filed as Exhibit
(2)(b) to Post-Effective Amendment No. 41 filed November 30, 1995
(Accession No. 0000950156-95-000839) and incorporated herein by
reference.
(3) Amendment to By-Laws dated June 18, 2002 filed as Exhibit (b)(3) to Post Effective Amendment No. 54 filed January 27, 2003 (Accession No. 000940394-03-00027) and incorporated herein by reference.
(c) Reference is made to Item 23(a) and 23(b) above.
(d) Investment Advisory Agreement with Eaton Vance Management for Eaton Vance Tax-Managed Emerging Markets Fund dated October 20, 2003 filed herewith.
(e)(1) Amended and Restated Distribution Agreement between Eaton Vance Series Trust II and Eaton Vance Distributors, Inc. effective October 20, 2003 with attached Schedule A filed herewith.
(2) Selling Group Agreement between Eaton Vance Distributors, Inc. and Authorized Dealers filed as Exhibit (6)(b) to Post-Effective Amendment No. 61 of Eaton Vance Growth Trust (File Nos. 2-22019, 811-1241) filed December 28, 1995 (Accession No. 0000950156-95-000883) and incorporated herein by reference.
(g)(1) Custodian Agreement with Investors Bank & Trust Company dated December 17, 1990 filed as Exhibit (8)(a) to Post-Effective Amendment No. 41 filed November 30, 1995 (Accession No. 0000950156-95-000839) and incorporated herein by reference.
(2) Amendment to Custodian Agreement with Investors Bank & Trust Company dated November 20, 1995 filed as Exhibit (8)(b) to Post-Effective Amendment No. 41 filed November 30, 1995 (Accession No. 0000950156-95-000839) and incorporated herein by reference.
(3) Amendment to Master Custodian Agreement with Investors Bank & Trust Company dated December 21, 1998 filed as Exhibit (g)(3) to Post-Effective Amendment No. 78 of Eaton Vance Municipals Trust (File Nos. 33-572, 811-4409) filed January 25, 1999 (Accession No. 0000950156-99-000050) and incorporated herein by reference.
(4) Extension Agreement dated August 31, 2000 to Master Custodian
Agreement with Investors Bank & Trust Company filed as Exhibit
(g)(4) to Post-Effective Amendment No. 85 of Eaton Vance
Municipals Trust (File Nos. 33-572, 811-4409) filed January 23,
2001 (Accession No. 000940394-01-500027) and incorporated herein
by reference.
(5) Delegation Agreement dated December 11, 2000 with Investors Bank & Trust Company filed as Exhibit (j)(e) to the Eaton Vance Prime Rate Reserves N-2, File No. 333-32276, 811-05808, Amendment No. 5, filed April 3, 2001 (Accession No. 0000940394-01-500125) and incorporated herein by reference.
(6) Custodian Agreement with State Street Bank and Trust Company dated October 20, 2003 to be filed by amendment.
(h)(1) Transfer Agency Agreement dated as of July 31, 2003 filed as Exhibit (h)(3) to Post-Effective Amendment No. 82 of Eaton Vance Growth Trust (File Nos. 2-22019, 811-1241) filed July 31, 2003 (Accession No. 0000940394-03-000592) and incorporated herein by reference.
(2) Sub-Transfer Agency Service Agreement effective August 1, 2002
between PFPC Inc. and Eaton Vance Management filed as Exhibit
(h)(3) to Post-Effective Amendment No. 45 of Eaton Vance
Investment Trust (File Nos. 33-1121, 811-4443) filed July 24,
2002 (Accession No. 0000940394-02-000462) and incorporated herein
by reference.
(3) Administrative Services Agreement effective October 20, 2003 including Schedule A between Eaton Vance Series Trust II and Eaton Vance Management filed herewith.
(i) Opinion of Internal Counsel dated November 19, 2003 filed herewith.
(m)(1) Service Plan pursuant to Rule 12b-1 under the Investment Company Act of 1940 dated August 9, 1993 filed as Exhibit (15) to Post-Effective Amendment No. 41 filed November 30, 1995 (Accession No. 0000950156-95-000839) and incorporated herein by reference.
(2) Amendment to Service Plan dated November 1, 1996 filed as Exhibit
(15)(b) to Post-Effective Amendment No. 42 filed January 24, 1997
(Accession No. 0000950156-97-000102) and incorporated herein by
reference.
(3) Class B Distribution Plan adopted March 18, 2002 with attached Schedule A effective March 18, 2002 filed as Exhibit (m)(3) to Post-Effective Amendment No. 52 filed April 15, 2002 and incorporated herein by reference.
(4) Class C Distribution Plan adopted March 18, 2002 with attached Schedule A effective March 18, 2002 filed as Exhibit (m)(4) to Post-Effective Amendment No. 52 filed April 15, 2002 and incorporated herein by reference.
(5) Class R Distribution Plan adopted June 16, 2003 with attached Schedule A filed as Exhibit (n)(5) to Post-Effective Amendment No. 55 filed July 9, 2003 (Accession No. 0000940394-03-000487) and incorporated herein by reference.
(o)(1) Amended and Restated Multiple Class Plan for Eaton Vance Funds dated March 17, 2003 filed as Exhibit (o)(1) to Post-Effective Amendment No. 87 of Eaton Vance Mutual Funds Trust (File Nos. 002-90946, 811-04015) filed April 22, 2003 (Accession No. 0000950156-03-000234) and incorporated herein by reference.
(2) Schedule A effective October 20, 2003 to Amended and Restated Multiple Class Plan filed herewith.
(p)(1) Code of Ethics adopted by Eaton Vance Corp., Eaton Vance Management, Boston Management and Research, Eaton Vance Distributors, Inc. and the Eaton Vance Funds effective September 1, 2000 as revised June 4, 2002 filed as Exhibit (p) to Post-Effective Amendment No. 45 of Eaton Vance Investment Trust (File Nos. 33-1121, 811-4443) filed July 24, 2002 (Accession No. 0000940394-02-00462) and incorporated herein by reference.
(2) Code of Ethics adopted by Parametric Portfolio Associates effective June 15, 2001 filed as Exhibit (p)(2) to Post-Effective Amendment No. 57 filed September 22, 2003 (Accession No. 0000940394-03-001021) and incorporated herein by reference.
(q)(1) Power of Attorney for Eaton Vance Income Fund of Boston dated July 1, 2003 filed as Exhibit (q)(1) to Post-Effective Amendment No. 55 filed July 9, 2003 (Accession No. 0000940394-03-000487) and incorporated herein by reference.
(2) Power of Attorney for Boston Income Portfolio dated July 1, 2003 filed as Exhibit (q)(2) to Post-Effective Amendment No. 55 filed July 9, 2003 (Accession No. 0000940394-03-000487) and incorporated herein by reference.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL
Not applicable
ITEM 25. INDEMNIFICATION
Article IV of the Registrant's Amended and Restated Declaration of Trust permits Trustee and officer indemnification by By-law, contract and vote. Article XI of the By-Laws contains indemnification provisions. Registrant's Trustees and officers are insured under a standard mutual fund errors and omissions insurance policy covering loss incurred by reason of negligent errors and omissions committed in their capacities as such.
The distribution agreements of the Registrant also provide for reciprocal indemnity of the principal underwriter, on the one hand, and the Trustees and officers, on the other.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Reference is made to: (i) the information set forth under the caption "Management and Organization" in the Statement of Additional Information; (ii) the Eaton Vance Corp. 10-K filed under the Securities Exchange Act of 1934 (File No. 1-8100); and (iii) the Form ADV of Eaton Vance Management (File No. 801-15930) , Boston Management and Research (File No. 801-43127) and Parametric Portfolio Associates (File No. 801-60485) filed with the Commission, all of which are incorporated herein by reference.
ITEM 27. PRINCIPAL UNDERWRITERS
(a) Registrant's principal underwriter, Eaton Vance Distributors, Inc., a wholly-owned subsidiary of Eaton Vance Management, is the principal underwriter for each of the registered investment companies named below:
Eaton Vance Advisers Senior Floating-Rate Fund Eaton Vance Growth Trust Eaton Vance Institutional Senior Floating-Rate Fund Eaton Vance Investment Trust Eaton Vance Municipals Trust Eaton Vance Municipals Trust II Eaton Vance Mutual Funds Trust Eaton Vance Prime Rate Reserves Eaton Vance Series Trust II Eaton Vance Special Investment Trust EV Classic Senior Floating-Rate Fund Eaton Vance Variable Trust
(b)
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address* with Principal Underwriter with Registrant
----------------- -------------------------- ---------------
Ira Baron Vice President None
John Bercini Vice President None
Chris Berg Vice President None
Kate B. Bradshaw Vice President None
Timothy Breer Vice President None
Eric Caplinger Vice President None
Mark Carlson Vice President None
Daniel C. Cataldo Vice President and Treasurer None
Patrick Cosgrove Vice President None
Raymond Cox Vice President None
Peter Crowley Vice President None
Derek Devine Vice President None
John Dolan Vice President None
James Durocher Vice President None
Alan R. Dynner Vice President, Secretary and Clerk Secretary
Robert Ellerbeck Vice President None
Daniel Ethier Vice President None
Troy Evans Vice President None
Vince Falbo Vice President None
Richard A. Finelli Vice President None
James Foley Vice President None
Michael A. Foster Vice President None
Kathleen Fryer Vice President None
Anne Marie Gallagher Vice President None
William M. Gillen Senior Vice President None
Hugh S. Gilmartin Vice President None
John Greenway Vice President None
Jorge Gutierrez Vice President None
Robert Hammond Vice President None
James B. Hawkes Vice President and Director Trustee
Peter Hartman Vice President None
Perry D. Hooker Vice President None
Thomas Hughes Vice President None
Elizabeth Johnson Vice President None
Paul F. Jones Vice President None
Steve Jones Vice President None
Teresa A. Jones Vice President None
Lindsey Kidder Vice President None
Kara Lawler Vice President None
Thomas P. Luka Vice President None
Coleen Lynch Vice President None
John Macejka Vice President None
Geoff Marshall Vice President None
Christopher Mason Vice President None
Judy Snow May Vice President None
Don McCaughey Vice President None
Andy McClelland Vice President None
Tim McEwen Vice President None
Morgan C. Mohrman Senior Vice President None
Gregory Murphy Vice President None
Michael Nardone Vice President None
James A. Naughton Vice President None
Joseph Nelson Vice President None
Mark D. Nelson Vice President None
Scott Nelson Vice President None
Linda D. Newkirk Vice President None
C-4
|
James L. O'Connor Vice President None
Andrew Ogren Vice President None
Philip Pace Vice President None
Margaret Pier Vice President None
Shannon Price Vice President None
James Putnam Vice President None
James Queen Vice President None
Matt Raynor Vice President None
Tim Roach Vice President None
Randy Skarda Vice President None
Lawrence Sinsimer Senior Vice President None
Bill Squadroni Vice President None
Joseph Staszkiw Vice President None
William M. Steul Vice President and Director None
Cornelius J. Sullivan Senior Vice President None
Stefan Thielan Vice President None
David M. Thill Vice President None
John Thompson Vice President None
Michael Tordone Vice President None
John M. Trotsky Vice President None
Jerry Vainisi Vice President None
John Vaughan Vice President None
Chris Volf Vice President None
Greg Walsh Vice President None
Stan Weiland Vice President None
Debra Wekstein Vice President None
Wharton P. Whitaker President and Director None
Greg Whitehead Vice President None
Mark Whitehouse Vice President None
Steve Widder Vice President None
Charles Womack Vice President None
Trey Young Vice President None
Gregor Yuska Vice President None
------------------------------------------
|
* Address is The Eaton Vance Building, 255 State Street, Boston, MA 02109
(c) Not applicable
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
All applicable accounts, books and documents required to be maintained by the Registrant by Section 31(a) of the Investment Company Act of 1940 and the Rules promulgated thereunder are in the possession and custody of the Registrant's custodians, Investors Bank & Trust Company, 200 Clarendon Street, 16th Floor, Mail Code ADM27, Boston, MA 02116, and State Street Bank and Trust Company, 225 Franklin Street, Boston, MA 02110, and its transfer agent, PFPC Inc., 4400 Computer Drive, Westborough, MA 01581-5120, with the exception of certain corporate documents and portfolio trading documents which are in the possession and custody of the administrator and investment adviser or sub-adviser. Registrant is informed that all applicable accounts, books and documents required to be maintained by registered investment advisers are in the custody and possession of Eaton Vance Management, Parametric Portfolio Associates and Boston Management and Research.
ITEM 29. MANAGEMENT SERVICES
Not applicable
ITEM 30. UNDERTAKINGS
The Registrant undertakes to include the information required by Item 5 of Form N-1A in its annual reports to shareholders under Rule 30d-1.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, and the Investment Company Act of 1940, the Registrant certifies that it meets all of the requirements for effectiveness of this Amendment to the Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused this Amendment to its Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Boston, and the Commonwealth of Massachusetts, on November 19, 2003.
EATON VANCE SERIES TRUST II
By: /s/ Michael W. Weilheimer
-----------------------------------
Michael W. Weilheimer, President
|
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective Amendment to the Registration Statement has been signed below by the following persons in the capacities indicated on November 19, 2003.
Signature Title --------- ----- /s/ Michael W. Weilheimer President (Chief Executive Officer) ------------------------------ Michael W. Weilheimer /s/ Barbara E. Campbell Treasurer (Principal Financial and |
------------------------------ Accounting Officer)
Barbara E. Campbell
James B. Hawkes* Trustee
------------------------------
James B. Hawkes
Samuel L. Hayes, III* Trustee
------------------------------
Samuel L. Hayes, III
William H. Park* Trustee
------------------------------
William H. Park
Ronald A. Pearlman* Trustee
------------------------------
Ronald A. Pearlman
Norton H. Reamer* Trustee
------------------------------
Norton H. Reamer
Lynn A. Stout* Trustee
------------------------------
Lynn A. Stout
*By: /s/ Alan R. Dynner
-----------------------------------
|
Alan . Dynner (As attorney-in-fact)
EXHIBIT INDEX
The following exhibits are filed as part of this amendment to the Registration Statement pursuant to Rule 483 of Regulation C.
Exhibit No. Description
----------- -----------
(a)(3) Amendment to Declaration of Trust effective October 20, 2003
(4) Amendment of Establishment and Designation of Series of Shares of
Beneficial Interest, Without Par Value, effective October 20,
2003
(d) Investment Advisory Agreement with Eaton Vance Management and
Eaton Vance Tax-Managed Emerging Markets Fund dated October 20,
2003
(e)(1) Amended and Restated Distribution Agreement between Eaton Vance
Series Trust II and Eaton Vance Distributors, Inc. effective
October 20, 2003 with attached Schedule A
(h)(3) Administrative Services Agreement effective October 20, 2003
between Eaton Vance Series Trust II and Eaton Vance Management,
including Schedule
(i) Opinion of Counsel dated November 19, 2003.
(o)(2) Schedule A effective October 20, 2003 to Amended and Restated
Multiple Class Plan
|
Exhibit (a)(3)
EATON VANCE SERIES TRUST II
(formerly called Eaton Vance Income Fund of Boston)
AMENDMENT TO DECLARATION OF TRUST
AMENDMENT, to be effective October 20, 2003 to the Amended and Restated Declaration of Trust dated December 14, 1995 (hereinafter called the "Declaration") of Eaton Vance Income Fund of Boston, a Massachusetts business trust (hereinafter called the "Trust") by the undersigned, being at least a majority of the Trustees of the Trust in office.
WHEREAS, Section 8.4 of Article VIII of the Declaration empowers a majority of the Trustees of the Trust to amend the Declaration without the vote or consent of Shareholders to change the name of the Trust;
NOW, THEREFORE, the undersigned Trustees do hereby amend the Declaration as of October 20, 2003 in the following manner:
1. The caption at the head of the Declaration is hereby amended to read as follows:
EATON VANCE SERIES TRUST II
2. Section 1.1 of Article I of the Declaration is hereby amended to read as follows:
ARTICLE I
NAME AND DEFINITIONS
Section 1.1. Name. The name of the trust created hereby is Eaton Vance Series Trust II (the "Trust).
IN WITNESS WHEREOF, the undersigned Trustees have executed this instrument this 20th day of October, 2003.
/s/ James B. Hawkes /s/ Ronald A. Pearlman --------------------------- ------------------------------- James B. Hawkes Ronald A. Pearlman /s/ Samuel L. Hayes, III /s/ Norton H. Reamer --------------------------- ------------------------------- Samuel L. Hayes, III Norton H. Reamer /s/ William H. Park /s/ Lynn A. Stout --------------------------- ------------------------------- William H. Park Lynn A. Stout |
Exhibit (a)(4)
EATON VANCE SERIES TRUST II
(formerly Eaton Vance Income Fund of Boston)
Amendment
of
Establishment and Designation of Series of Shares of Beneficial Interest, Without Par Value
(as amended effective October 20, 2003)
WHEREAS, the Trustees of Eaton Vance Series Trust II, a Massachusetts business trust (the "Trust"), have previously designated separate series (or "Funds"); and
WHEREAS, the Trustees now desire to add one new series, i.e. Eaton Vance Tax-Managed Emerging Markets Fund, and to further redesignate the series or Funds pursuant to Section 5.1 of Article V of the Trust's Amended and Restated Declaration of Trust dated December 14, 1995 (as further amended) (the "Declaration of Trust");
NOW, THEREFORE, the undersigned, being at least a majority of the duly elected and qualified Trustees presently in office of the Trust, hereby divide the shares of beneficial interest of the Trust into the following separate series ("Funds"), each Fund to have the following special and relative rights:
1. The Funds shall be designated as follows effective October 20, 2003:
Eaton Vance Income Fund of Boston Eaton Vance Tax-Managed Emerging Markets Fund
2. Each Fund shall be authorized to invest in cash, securities, instruments and other property as from time to time described in the Trust's then currently effective registration statements under the Securities Act of 1933 and the Investment Company Act of 1940. Each share of beneficial interest of each Fund ("share") shall be redeemable, shall be entitled to one vote (or fraction thereof in respect of a fractional share) on matters on which shares of that Fund shall be entitled to vote and shall represent a pro rata beneficial interest in the assets allocated to that Fund, all as provided in the Declaration of Trust. The proceeds of sales of shares of each Fund, together with any income and gain thereon, less any diminution or expenses thereof, shall irrevocably belong to such Fund, unless otherwise required by law. Each share of a Fund shall be entitled to receive its pro rata share of net assets of that Fund upon liquidation of that Fund.
3. Shareholders of each Fund shall vote separately as a class to the extent provided in Rule 18f-2, as from time to time in effect, under the Investment Company Act of 1940.
4. The assets and liabilities of the Trust shall be allocated among the above-referenced Funds as set forth in Section 5.5 of Article V of the Declaration of Trust, except as provided below:
(a) Costs incurred by each Fund in connection with its organization and start-up, including Federal and state registration and qualification fees and expenses of the initial public offering of such Fund's shares, shall (if applicable) be borne by such Fund.
(b) Reimbursement required under any expense limitation applicable to the Trust shall be allocated among those Funds whose expense ratios exceed such limitation on the basis of the relative expense ratios of such Funds.
(c) The liabilities, expenses, costs, charges and reserves of the Trust (other than the management and investment advisory fees or the organizational expenses paid by the Trust) which are not readily identifiable as belonging to any particular Fund shall be allocated among the Funds on an equitable basis as determined by the Trustees.
5. The Trustees (including any successor Trustees) shall have the right at any time and from time to time to reallocate assets and expenses or to change the designation of any Fund now or hereafter created, or to otherwise change the special and relative rights of any such Fund, and to terminate any Fund or add additional Funds as provided in the Declaration of Trust.
6. Any Fund may merge or consolidate with any other corporation, association, trust or other organization or may sell, lease or exchange all or substantially all of its property, including its good will, upon such terms and conditions and for such consideration when and as authorized by the Trustees; and any such merger, consolidation, sale, lease or exchange shall be deemed for all purposes to have been accomplished under and pursuant to the statutes of the Commonwealth of Massachusetts. The Trustees may also at any time sell and convert into money all the assets of any Fund. Upon making provision for the payment of all outstanding obligations, taxes and other liabilities, accrued or contingent, of such Fund, the Trustees shall distribute the remaining assets of such Fund ratably among the holders of the outstanding shares. Upon completion of the distribution of the remaining proceeds or the remaining assets as provided in this paragraph 6, the Fund shall terminate and the Trustees shall be discharged of any and all further liabilities and duties hereunder with respect to such Fund and the right, title and interest of all parties with respect to such Fund shall be canceled and discharged.
7. The Declaration of Trust authorizes the Trustees to divide each Fund and any other series of shares into two or more classes and to fix and determine the relative rights and preferences as between, and all provisions applicable to, each of the different classes so established and designated by the Trustees. Eaton Vance Income Fund of Boston shall have classes of shares established and designated as Class A, Class B, Class C, Class I and Class R shares. Eaton Vance Tax-Managed Emerging Markets Fund shall have a class of shares established and designated as Class I shares. The shares of Eaton Vance Income Fund of Boston outstanding on June 30, 1999 are designated Class A shares. The Trustees may designate additional classes in the future. For purposes of allocating liabilities among classes, each class of each Fund shall be treated in the same manner as a separate series.
Dated: October 20, 2003 /s/ James B. Hawkes /s/ Ronald A. Pearlman ------------------------------ ----------------------------------- James B. Hawkes Ronald A. Pearlman /s/ Samuel L. Hayes, III /s/ Norton H. Reamer ------------------------------ ----------------------------------- Samuel L. Hayes, III Norton H. Reamer /s/ William H. Park /s/ Lynn A. Stout ------------------------------ ----------------------------------- William H. Park Lynn A. Stout |
Exhibit (d)
EATON VANCE SERIES TRUST II
INVESTMENT ADVISORY AGREEMENT
ON BEHALF OF
EATON VANCE TAX-MANAGED EMERGING MARKETS FUND
AGREEMENT made this 20th day of October, 2003, between Eaton Vance Series Trust II, a Massachusetts business trust (the "Trust"), on behalf of Eaton Vance Tax-Managed Emerging Markets Fund (the "Fund") and Eaton Vance Management, a Massachusetts business trust (the "Adviser").
1. Duties of the Adviser. The Trust hereby employs the Adviser to act as investment adviser for and to manage the investment and reinvestment of the assets of the Fund and to administer its investment affairs, subject to the supervision of the Trustees of the Trust, for the period and on the terms set forth in this Agreement.
The Adviser hereby accepts such employment, and undertakes to afford to the Trust the advice and assistance of the Adviser's organization in the choice of investments and in the purchase and sale of securities for the Fund and to furnish for the use of the Fund office space and all necessary office facilities, equipment and personnel for servicing the investments of the Fund and for administering its affairs and to pay the salaries and fees of all officers and Trustees of the Trust who are members of the Adviser's organization and all personnel of the Adviser performing services relating to research and investment activities. The Adviser shall for all purposes herein be deemed to be an independent contractor and shall, except as otherwise expressly provided or authorized, have no authority to act for or represent the Trust in any way or otherwise be deemed an agent of the Trust.
The Adviser shall provide the Trust with such investment management and supervision as the Trust may from time to time consider necessary for the proper supervision of the Fund. As investment adviser to the Trust, the Adviser shall furnish continuously an investment program and shall determine from time to time what securities and other investments shall be acquired, disposed of or exchanged and what portion of the Fund's assets shall be held uninvested, subject always to the applicable restrictions of the Declaration of Trust, By-Laws and registration statement of the Trust under the Investment Company Act of 1940, all as from time to time amended. The Adviser is authorized, in its discretion and without prior consultation with the Trust, to buy, sell, and otherwise trade in any and all types of securities, commodities and investment instruments on behalf of the Fund. Should the Trustees of the Trust at any time, however, make any specific determination as to investment policy for the Fund and notify the Adviser thereof in writing, the Adviser shall be bound by such determination for the period, if any, specified in such notice or until similarly notified that such determination has been revoked. The Adviser shall take, on behalf of the Trust, all actions which it deems necessary or desirable to implement the investment policies of the Trust and of the Fund.
The Adviser shall place all orders for the purchase or sale of portfolio securities for the account of the Fund either directly with the issuer or with brokers or dealers selected by the Adviser, and to that end the Adviser is authorized as the agent of the Fund to give instructions to the custodian of the Fund as to deliveries of securities and payments of cash for the account of the
Fund. In connection with the selection of such brokers or dealers and the placing of such orders, the Adviser shall use its best efforts to seek to execute security transactions at prices which are advantageous to the Fund and (when a disclosed commission is being charged) at reasonably competitive commission rates. In selecting brokers or dealers qualified to execute a particular transaction, brokers or dealers may be selected who also provide brokerage and research services (as those terms are defined in Section 28(e) of the Securities Exchange Act of 1934) to the Adviser and the Adviser is expressly authorized to pay any broker or dealer who provides such brokerage and research services a commission for executing a security transaction which is in excess of the amount of commission another broker or dealer would have charged for effecting that transaction if the Adviser determines in good faith that such amount of commission is reasonable in relation to the value of the brokerage and research services provided by such broker or dealer, viewed in terms of either that particular transaction or the overall responsibilities which the Adviser and its affiliates have with respect to accounts over which they exercise investment discretion. Subject to the requirement set forth in the second sentence of this paragraph, the Adviser is authorized to consider, as a factor in the selection of any broker or dealer with whom purchase or sale orders may be placed, the fact that such broker or dealer has sold or is selling shares of the Fund, or any other series of the Trust, or of any one or more investment companies sponsored by the Adviser or its affiliates.
2. Compensation of the Adviser. For the services, payments and facilities to be furnished hereunder by the Adviser, the Adviser shall be entitled to receive from the Fund a monthly advisory fee in an amount equal to 0.45% annually of the average daily net assets of the Fund. Such compensation shall be paid monthly in arrears on the last business day of each month. The Fund's daily net assets shall be computed in accordance with the Declaration of Trust of the Trust and any applicable votes and determinations of the Trustees of the Trust. In case of initiation or termination of the Agreement during any month with respect to the Fund, the fee for that month shall be based on the number of calendar days during which it is in effect. The Adviser may, from time to time, waive all or a part of the above compensation.
3. Allocation of Charges and Expenses. It is understood that the Fund will
pay all expenses other than those expressly stated to be payable by the Adviser
hereunder, which expenses payable by the Fund shall include, without implied
limitation, (i) expenses of maintaining the Fund and continuing its existence,
(ii) registration of the Trust under the Investment Company Act of 1940, (iii)
commissions, fees and other expenses connected with the acquisition, holding and
disposition of securities and other investments, (iv) auditing, accounting and
legal expenses, (v) taxes and interest, (vi) governmental fees, (vii) expenses
of issue, sale, and redemption of shares, (viii) expenses of registering and
qualifying the Fund and its shares 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 shareholders and
investors, and fees and expenses of registering and maintaining registrations of
the Fund and of the Fund's placement agent 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, accounts and records, and determination of net asset values), (xiv) fees,
expenses and disbursements of transfer agents, dividend disbursing agents,
shareholder servicing agents and registrars for all services to the Fund, (xv)
expenses for servicing shareholder accounts, (xvi) any direct charges to
shareholders approved by the Trustees of the Trust, (xvii) compensation and
expenses of Trustees of the Trust who are not members of the Adviser's
organization, (xviii) all payments to be made and expenses to be assumed by the
Fund pursuant to any one or more distribution plans adopted by the Trust on
behalf of the Fund pursuant to Rule 12b-1 under the Investment Company Act of
1940, and (xix) such non-recurring items as may arise, including expenses
incurred in connection with litigation, proceedings and claims and the
obligation of the Trust to indemnify its Trustees, officers and shareholders
with respect thereto.
4. Other Interests. It is understood that Trustees and officers of the Trust and shareholders of the Fund are or may be or become interested in the Adviser as trustees, officers, employees, shareholders or otherwise and that trustees, officers, employees and shareholders of the Adviser are or may be or become similarly interested in the Fund, and that the Adviser may be or become interested in the Fund as a shareholder or otherwise. It is also understood that trustees, officers, employees and shareholders of the Adviser may be or become interested (as directors, trustees, officers, employees, shareholders or otherwise) in other companies or entities (including, without limitation, other investment companies) which the Adviser may organize, sponsor or acquire, or with which it may merge or consolidate, and which may include the words "Eaton Vance" or any combination thereof as part of their name, and that the Adviser or its subsidiaries or affiliates may enter into advisory or management agreements or other contracts or relationships with such other companies or entities.
5. Limitation of Liability of the Adviser. The services of the Adviser to the Trust are not to be deemed to be exclusive, the Adviser being free to render services to others and engage in other business activities. In the absence of willful misfeasance, bad faith, gross negligence or reckless disregard of obligations or duties hereunder on the part of the Adviser, the Adviser shall not be subject to liability to the Trust or to any shareholder of the Fund for any act or omission in the course of, or connected with, rendering services hereunder or for any losses which may be sustained in the acquisition, holding or disposition of any security or other investment.
6. Sub-Investment Advisers. The Adviser may employ one or more sub-investment advisers from time to time to perform such of the acts and services of the Adviser, including the selection of brokers or dealers or other persons to execute the Fund's portfolio security transactions, and upon such terms and conditions as may be agreed upon between the Adviser and such sub-investment adviser and approved by the Trustees of the Trust, all as permitted by the Investment Company Act of 1940.
7. Duration and Termination of this Agreement. This Agreement shall become effective upon the date of its execution, and, unless terminated as herein provided, shall remain in full force and effect through and including March 31, 2005 and shall continue in full force and effect indefinitely thereafter, but only so long as such continuance after March 31, 2005 is specifically approved at least annually (i) by the Board of Trustees of the Trust or by vote of a majority of the outstanding voting securities of the Fund and (ii) by the vote of a majority of those Trustees of the Trust who are not interested persons of the Adviser or the Trust cast in person at a meeting called for the purpose of voting on such approval.
Either party hereto may, at any time on sixty (60) days' prior written notice to the other, terminate this Agreement without the payment of any penalty, by action of Trustees of the Trust or the trustees of the Adviser, as the case may be, and the Trust may, at any time upon such written notice to the Adviser, terminate this Agreement by vote of a majority of the outstanding voting securities of the Fund. This Agreement shall terminate automatically in the event of its assignment.
8. Amendments of the Agreement. This Agreement may be amended by a writing signed by both parties hereto, provided that no amendment to this Agreement shall be effective until approved (i) by the vote of a majority of those Trustees of the Trust who are not interested persons of the Adviser or the Trust cast in person at a meeting called for the purpose of voting on such approval, and (ii) except for any such amendment as may be effected in the absence of such approval without violating the Investment Company Act of 1940, by vote of a majority of the outstanding voting securities of the Fund.
9. Limitation of Liability. The Adviser expressly acknowledges the provision in the Declaration of Trust of the Trust limiting the personal liability of shareholders of the Fund, and the Adviser hereby agrees that it shall have recourse to the Trust or the Fund for payment of claims or obligations as between the Trust or the Fund and the Adviser arising out of this Agreement and shall not seek satisfaction from the shareholders or any shareholder of the Fund.
10. Use of the Name "Eaton Vance". The Adviser hereby consents to the use by the Fund of the name "Eaton Vance" as part of the Fund's name; provided, however, that such consent shall be conditioned upon the employment of the Adviser or one of its affiliates as the investment adviser of the Fund. The name "Eaton Vance" or any variation thereof may be used from time to time in other connections and for other purposes by the Adviser and its affiliates and other investment companies that have obtained consent to the use of the name "Eaton Vance". The Adviser shall have the right to require the Fund to cease using the name "Eaton Vance" as part of the Fund's name if the Fund ceases, for any reason, to employ the Adviser or one of its affiliates as the Fund's investment adviser. Future names adopted by the Fund for itself, insofar as such names include identifying words requiring the consent of the Adviser, shall be the property of the Adviser and shall be subject to the same terms and conditions.
11. Certain Definitions. The terms "assignment" and "interested persons" when used herein shall have the respective meanings specified in the Investment Company Act of 1940 as now in effect or as hereafter amended subject, however, to such exemptions as may be granted by the Securities and Exchange Commission by any rule, regulation or order. The term "vote of a majority of the outstanding voting securities" shall mean the vote, at a meeting of shareholders, of the lesser of (a) 67 per centum or more of the shares of the Fund present or represented by proxy at the meeting if the holders of more than 50 per centum of the shares of the Fund are present or represented by proxy at the meeting, or (b) more than 50 per centum of the shares of the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on the day and year first above written.
EATON VANCE SERIES TRUST II
(on behalf of Eaton Vance Tax-Managed
Emerging Markets Fund)
By: /s/ Michael W. Weilheimer
--------------------------------------
Michael W. Weilheimer
President
|
EATON VANCE MANAGEMENT
By: /s/ Alan R. Dynner
---------------------------------------
Alan R. Dynner
Vice President
and not individually
|
Exhibit (e)(1)
EATON VANCE SERIES TRUST II
(FORMERLY EATON VANCE INCOME FUND OF BOSTON)
AMENDED AND RESTATED AGREEMENT effective as of October 20, 2003 between EATON VANCE SERIES TRUST II, a Massachusetts business trust having its principal place of business in Boston in the Commonwealth of Massachusetts, hereinafter called the "Trust", on behalf of each of its series listed on Schedule A (a "Fund"), and EATON VANCE DISTRIBUTORS, INC., a Massachusetts corporation having its principal place of business in said Boston, hereinafter sometimes called the "Principal Underwriter". The Trustees of the Trust have established multiple classes of shares of the Funds, such classes having been designated Class A, Class B, Class C, Class I and Class R (the "Classes").
IN CONSIDERATION of the mutual promises and undertakings herein contained, the parties hereto agree with respect to each Fund:
1. The Trust grants to the Principal Underwriter the right to purchase all classes of shares of the Fund upon the terms herein below set forth during the term of this Agreement. While this Agreement is in force, the Principal Underwriter agrees to use its best efforts to find purchasers for shares of the Fund.
The Principal Underwriter shall have the right to buy from the Fund the shares needed, but not more than the shares needed (except for clerical errors and errors of transmission) to fill unconditional orders for shares of the Fund placed with the Principal Underwriter by financial service firms or investors as set forth in the current Prospectus relating to shares of the Fund. The price which the Principal Underwriter shall pay for Class A shares so purchased shall be the net asset value used in determining the public offering price on which such orders were based; the price for Class B, Class C, Class I and Class R shares so purchased shall be equal to the price paid by investors upon purchasing such shares. The Principal Underwriter shall notify the custodian of the Fund (the "Custodian") and PFPC Inc., Transfer Agent of the Trust ("PFPC"), or a successor transfer agent, at the end of each business day, or as soon thereafter as the orders placed with it have been compiled, of the number of shares and the prices thereof which the Principal Underwriter is to purchase as principal for resale. The Principal Underwriter shall take down and pay for shares ordered from the Fund on or before the eleventh business day (excluding Saturdays) after the shares have been so ordered.
The right granted to the Principal Underwriter to buy shares from the Fund shall be exclusive, except that said exclusive right shall not apply to shares issued in connection with the merger or consolidation of any other investment company or personal holding company with the Fund or the acquisition by purchase or otherwise of all (or substantially all) the assets or the outstanding shares of any such company, by the Fund; nor shall it apply to shares, if any, issued by the Fund in distribution of income or realized capital gains of the Fund payable in shares or in cash at the option of the shareholder.
2. The shares may be resold by the Principal Underwriter to or through financial service firms having agreements with the Principal Underwriter, and to investors, upon the following terms and conditions.
CLASS A SHARES. The public offering price, i.e., the price per Class A share at which the Principal Underwriter or financial service firm purchasing shares from the Principal Underwriter may sell shares to the public, shall be the public offering price as set forth in the current Prospectus relating to said Class A shares, but not to exceed the net asset value at which the Principal Underwriter is to purchase the Class A shares, plus a sales charge not to exceed 7.25% of the public offering price (the net asset value divided by .9275). If the resulting public offering price does not come out to an even cent, the public offering price shall be adjusted to the nearer cent.
The Principal Underwriter may also sell Class A shares at the net asset value at which the Principal Underwriter is to purchase such Class A shares, provided such sales are not inconsistent with the provisions of Section 22(d) of the Investment Company Act of 1940, as amended from time to time (the "1940 Act"), and the rules thereunder, including any applicable exemptive orders or administrative interpretations or "no-action" positions with respect thereto.
CLASS B, CLASS C, CLASS I AND CLASS R SHARES. The public offering price,
i.e., the price per Class B, Class C, Class I and Class R shares at which the
Principal Underwriter or financial service firm purchasing shares from the
Principal Underwriter may sell shares to the public, shall be equal to the net
asset value at which the Principal Underwriter is to purchase the Class B, Class
C, Class I and Class R shares.
The net asset value of shares of each Class of the Fund shall be determined by the Trust or the Custodian, as the agent of the Trust, as of the close of regular trading on the New York Stock Exchange (the "Exchange") on each business day on which said Exchange is open, or as of such other time on each such business day as may be determined by the Trustees of the Trust, in accordance with the methodology and procedures for calculating such net asset value authorized by the Trustees. The Trust may also cause the net asset value to be determined in substantially the same manner or estimated in such manner and as of such other time or times as may from time to time be agreed upon by the Trust and Principal Underwriter. The Trust will notify the Principal Underwriter each time the net asset value of a Class of shares is determined and when such value is so determined it shall be applicable to transactions as set forth in the current Prospectus(es) and Statement(s) of Additional Information (hereafter the "Prospectus") relating to the Fund's shares.
No Class of shares of the Fund shall be sold by the Fund during any period when the determination of that Class's net asset value is suspended pursuant to the Declaration of Trust, except to the Principal Underwriter, in the manner and upon the terms above set forth to cover contracts of sale made by the Principal Underwriter with its customers prior to any such suspension, and except as provided in paragraph 1 hereof. The Trust shall also have the right to suspend the sale of any Class of shares if in the judgment of the Trust conditions obtaining at any time render such action advisable. The Principal Underwriter shall have the right to suspend sales at any time, to refuse to accept or confirm any order from an investor or financial service firm, or to accept or confirm any such order in part only, if in the judgment of the Principal Underwriter such action is in the best interests of the Fund.
3. The Trust covenants and agrees that it will, from time to time, but subject to the necessary approval of the Fund's shareholders, take such steps as may be necessary to register the Fund's shares under the federal Securities Act of 1933, as amended from time to time (the "1933 Act"), to the end that there will be available for sale such number of shares as the Principal Underwriter may reasonably be expected to sell. The Trust covenants and agrees to indemnify and hold harmless the Principal Underwriter and each person, if any, who controls the Principal Underwriter within the meaning of Section 15 of the 1933
Act against any loss, liability, claim, damages or expense (including the reasonable cost of investigating or defending any alleged loss, liability, claim, damages or expense and reasonable counsel fees incurred in connection therewith), arising by reason of any person acquiring any shares of the Fund, which may be based upon the 1933 Act or on any other statute or at common law, on the ground that the Registration Statement or Prospectus, as from time to time amended and supplemented, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading, unless such statement or omission was made in reliance upon, and in conformity with, information furnished in writing to the Trust in connection therewith by or on behalf of the Principal Underwriter; provided, however, that in no case (i) is the indemnity of the Trust in favor of the Principal Underwriter and any such controlling person to be deemed to protect such Principal Underwriter or any such controlling person against any liability to the Trust or the Fund or its security holders to which such Principal Underwriter or any such controlling person would otherwise be subject by reason of willful misfeasance, bad faith, or gross negligence in the performance of its duties or by reason of its reckless disregard of its obligations and duties under this Agreement, or (ii) is the Trust or Fund to be liable under its indemnity agreement contained in this paragraph with respect to any claim made against the Principal Underwriter or any such controlling person unless the Principal Underwriter or any such controlling person, as the case may be, shall have notified the Trust in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon the Principal Underwriter or such controlling person (or after such Principal Underwriter or such controlling person shall have received notice of such service on any designated agent), but failure to notify the Trust of any such claim shall not relieve it from any liability which the Fund may have to the person against whom such action is brought otherwise than on account of its indemnity agreement contained in this paragraph. The Trust shall be entitled to participate, at the expense of the Fund, in the defense, or, if the Trust so elects, to assume the defense of any suit brought to enforce any such liability, but if the Trust elects to assume the defense, such defense shall be conducted by counsel chosen by it and satisfactory to the Principal Underwriter or controlling person or persons, defendant or defendants in the suit. In the event the Trust elects to assume the defense of any such suit and retains such counsel, the Principal Underwriter or controlling person or persons, defendant or defendants in the suit, shall bear the fees and expenses of any additional counsel retained by them, but, in case the Trust does not elect to assume the defense of any such suit, the Fund shall reimburse the Principal Underwriter or controlling person or persons, defendant or defendants in the suit, for the reasonable fees and expenses of any counsel retained by them. The Trust agrees promptly to notify the Principal Underwriter of the commencement of any litigation or proceedings against it or any of its officers or Trustees in connection with the issuance or sale of any of the Fund's shares.
4. The Principal Underwriter covenants and agrees that, in selling the shares of the Fund, it will use its best efforts in all respects duly to conform with the requirements of all state and federal laws relating to the sale of such shares, and will indemnify and hold harmless the Trust and each of its Trustees and officers and each person, if any, who controls the Trust within the meaning of Section 15 of the 1933 Act, against any loss, liability, damages, claim or expense (including the reasonable cost of investigating or defending any alleged loss, liability, damages, claim or expense and reasonable counsel fees incurred in connection therewith), arising by reason of any person acquiring any shares of the Fund, which may be based upon the 1933 Act or any other statute or at common law, on account of any wrongful act of the Principal Underwriter or any of its employees (including any failure to conform with any requirement of any state or federal law relating to the sale of such shares) or on the ground that the Registration Statement or Prospectus, as from time to time amended and supplemented, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading, insofar as any such statement or omission was
made in reliance upon, and in conformity with information furnished in writing
to the Trust in connection therewith by or on behalf of the Principal
Underwriter, provided, however, that in no case (i) is the indemnity of the
Principal Underwriter in favor of any person indemnified to be deemed to protect
the Fund or any such person against any liability to which the Fund or any such
person would otherwise be subject by reason of willful misfeasance, bad faith,
or gross negligence in the performance of its or his duties or by reason of its
or his reckless disregard of its obligations and duties under this Agreement, or
(ii) is the Principal Underwriter to be liable under its indemnity agreement
contained in this paragraph with respect to any claim made against the Fund or
any person indemnified unless the Trust or such person, as the case may be,
shall have notified the Principal Underwriter in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon the Trust, the Fund or upon such
person (or after the Trust, the Fund or such person shall have received notice
of such service on any designated agent), but failure to notify the Principal
Underwriter of any such claim shall not relieve it from any liability which it
may have to the Fund or any person against whom such action is brought otherwise
than on account of its indemnity agreement contained in this paragraph. The
Principal Underwriter shall be entitled to participate, at its own expense, in
the defense, or, if it so elects, to assume the defense of any suit brought to
enforce any such liability, but if the Principal Underwriter elects to assume
the defense, such defense shall be conducted by counsel chosen by it and
satisfactory to the Trust, or to its officers or Trustees, or to any controlling
person or persons, defendant or defendants in the suit. In the event that the
Principal Underwriter elects to assume the defense of any such suit and retains
such counsel, the Fund or such officers or Trustees or controlling person or
persons, defendant or defendants in the suit, shall bear the fees and expenses
of any additional counsel retained by them or the Trust, but, in case the
Principal Underwriter does not elect to assume the defense of any such suit, it
shall reimburse the Fund, any such officers and Trustees or controlling person
or persons, defendant or defendants in such suit, for the reasonable fees and
expenses of any counsel retained by them or the Trust. The Principal Underwriter
agrees promptly to notify the Trust of the commencement of any litigation or
proceedings against it in connection with the issue and sale of any of the
Fund's shares.
Neither the Principal Underwriter nor any financial service firm nor any other person is authorized by the Trust to give any information or to make any representations, other than those contained in the Registration Statement or Prospectus filed with the Securities and Exchange Commission (the "Commission") under the 1933 Act, (as said Registration Statement and Prospectus may be amended or supplemented from time to time), covering the shares of the Fund. Neither the Principal Underwriter nor any financial service firm nor any other person is authorized to act as agent for the Trust or the Fund in connection with the offering or sale of shares of the Fund to the public or otherwise. All such sales made by the Principal Underwriter shall be made by it as principal, for its own account. The Principal Underwriter may, however, act as agent in connection with the repurchase of shares as provided in paragraph 6 below, or in connection with "exchanges" between investment companies for which the Principal Underwriter (or an affiliate thereof) acts as principal underwriter or investment adviser.
5(a). The Fund will pay, or cause to be paid (by one or more classes) -
(i) all the costs and expenses of the Fund, including fees and disbursements of its counsel, in connection with the preparation and filing of any required Registration Statement and/or Prospectus under the 1933 Act, or the 1940 Act, covering its shares and all amendments and supplements thereto, and preparing and mailing periodic reports to shareholders (including the expense of setting up in type any such Registration Statement, Prospectus or periodic report);
(ii) the cost of preparing temporary and permanent share certificates (if any) for shares of the Fund;
(iii) the cost and expenses of delivering to the Principal Underwriter at its office in Boston, Massachusetts, all shares of the Fund purchased by it as principal hereunder;
(iv) all the federal and state (if any) issue and/or transfer taxes payable upon the issue by or (in the case of treasury shares) transfer from the Fund to the Principal Underwriter of any and all shares of the Fund purchased by the Principal Underwriter hereunder;
(v) the fees, costs and expenses of the registration or qualification of shares for sale in the various states, territories or other jurisdictions (including without limitation the registering or qualifying the Fund as a broker or dealer or any officer of the Fund as agent or salesman in any state, territory or other jurisdiction); and
(vi) all payments to be made pursuant to any written plan approved in accordance with Rule 12b-1 under the 1940 Act or any written service plan.
(b) The Principal Underwriter agrees that, after the Prospectus (other than to existing shareholders of the Fund) and periodic reports have been set up in type, it will bear the expense of printing and distributing any copies thereof which are to be used in connection with the offering of shares of the Fund to financial service firms or investors. The Principal Underwriter further agrees that it will bear the expenses of preparing, printing and distributing any other literature used by the Principal Underwriter or furnished by it for use by financial service firms in connection with the offering of the shares of the Fund for sale to the public and any expenses of advertising in connection with such offering.
(c) In addition, the Fund agrees, in accordance with the Fund's Distribution Plans (the "Plans"), adopted pursuant to Rule 12b-1 under the 1940 Act with respect to Class B and Class C shares, to make certain payments as follows. The Principal Underwriter shall be entitled to be paid by the Fund a sales commission equal to 6.25% of the price received by the Fund for each sale of Class B and Class C shares (excluding in each case the reinvestment of dividends and distributions) unless otherwise noted on Schedule A hereto, such payment to be made out of Class B and Class C assets as applicable and in the manner set forth in this paragraph 5. The Principal Underwriter shall also be entitled to be paid by the Fund a separate distribution fee (calculated in accordance with paragraph 5(d)) out of the relevant Class' assets, such payment to be made in the manner set forth and subject to the terms of this paragraph 5.
(d) The sales commissions and distribution fees referred to in paragraph 5(c) shall be accrued and paid by the Fund in the following manner. Each of Class B and Class C shall accrue daily an amount calculated at the rate of .75% per annum of its daily net assets, which net assets shall be computed as described in paragraph 2. The daily amounts so accrued throughout the month shall be paid to the Principal Underwriter on the last day of each month. The amount of such daily accrual, as so calculated, shall first be applied and charged to all unpaid sales commissions, and the balance, if any, shall then be applied and charged to all unpaid distribution fees. No amount shall be accrued with respect to any day on which there exist no outstanding uncovered distribution charges of the Principal Underwriter due from the relevant Class. The amount of such uncovered distribution charges shall be calculated daily. For purposes of this calculation, distribution charges of the Principal Underwriter shall include (a) the aggregate of all sales commissions which the Principal Underwriter has been paid pursuant to this paragraph (d) plus all sales commissions which it is entitled to be paid pursuant to paragraph 5(c) through and including the day next preceding the date of calculation, and (b) an amount equal to the aggregate of all distribution fees referred to below which the Principal Underwriter has been paid pursuant to this paragraph (d) plus all such fees which it is entitled to be paid pursuant to paragraph 5(c) through and
including the day next preceding the date of calculation. From this sum (distribution charges) there shall be subtracted (i) the aggregate amount paid or payable to the Principal Underwriter pursuant to this paragraph (d) through and including the day next preceding the date of calculation and (ii) the aggregate amount of all contingent deferred sales charges paid or payable to the Principal Underwriter through and including the day next preceding the date of calculation. If the result of such subtraction is a positive amount, a distribution fee [computed at the rate of 1% per annum above the prime rate (being the base rate on corporate loans posted by at least 75% of the nation's 30 largest banks) then being reported in the Eastern Edition of The Wall Street Journal or if such prime rate is not so reported such other rate as may be designated from time to time by vote or other action of a majority of (i) those Trustees of the Trust who are not "interested persons" of the Trust (as defined in the 1940 Act) and have no direct or indirect financial interest in the operation of the Plan or any agreements related to it (the "Rule 12b-1 Trustees") and (ii) all of the Trustees then in office] shall be computed on such amount and added to such amount, with the resulting sum constituting the amount of outstanding uncovered distribution charges of the Principal Underwriter due from a Class with respect to such day for all purposes of this Agreement. If the result of such subtraction is a negative amount, there shall exist no outstanding uncovered distribution charges of the Principal Underwriter due from that Class with respect to such day and no amount shall be accrued or paid to the Principal Underwriter with respect to such day. The aggregate amounts accrued and paid pursuant to this paragraph (d) during any fiscal year of the Fund shall not exceed .75% of the average daily net assets of a Class for such year. The term "Principal Underwriter" as used in this paragraph (d) shall include the current Principal Underwriter's predecessor, a Massachusetts corporation called Eaton Vance Distributors, Inc.
(e) The Principal Underwriter shall be entitled to receive all contingent deferred sales charges paid or payable with respect to any day on which there exist outstanding uncovered distribution charges due from a Class of the Principal Underwriter. Each Class B and Class C shall be entitled to receive all remaining contingent deferred sales charges paid or payable by its shareholders with respect to any day on which there exist no outstanding uncovered distribution charges of the Principal Underwriter due from that Class, provided that no such sales charge which would cause the Fund to exceed the maximum applicable cap imposed thereon by paragraph (2) of subsection (d) of Rule 2830 of the Conduct Rules of the National Association of Securities Dealers, Inc. shall be imposed.
(f) In accordance with a Distribution Plan adopted pursuant to rule 12b-1 under the 1940 Act with respect to Class R shares (the "Class R Plan"), a Fund may make payments from Class R assets of distribution fees to the Principal Underwriter, Authorized Firms and other persons. The aggregate of such payments during any fiscal year of the Fund shall not exceed .50% of Class R's average daily net assets for such year.
(g) The Principal Underwriter shall be entitled to receive all contingent deferred sales charges imposed in accordance with the Prospectus on early redemption of Class A shares.
(h) The persons authorized to direct the disposition of monies paid or payable by the Fund pursuant to the Plans, the Class R Plan or this Agreement shall be the President or any Vice President or the Treasurer of the Trust. Such persons shall provide to the Trust's Trustees and the Trustees shall review, at least quarterly, a written report of the amounts so expended and the purposes for which such expenditures were made.
(i) In addition to the payments to the Principal Underwriter provided for in paragraph 5(d), the Fund may make payments from the assets of each Class of service fees to the Principal Underwriter, financial service firms and other persons. The aggregate of such payments during any fiscal year of the Fund shall not exceed .25% of a Class' average daily net assets for such year.
6. The Trust hereby authorizes the Principal Underwriter to repurchase, upon the terms and conditions set forth in written instructions given by the Trust to the Principal Underwriter from time to time, as agent of the Trust and for its account, such shares of the Fund as may be offered for sale to the Fund from time to time.
(a) The Principal Underwriter shall notify in writing IBT and the Custodian at the end of each business day, or as soon thereafter as the repurchases in each pricing period have been compiled, of the number of shares of each Class repurchased for the account of the Fund since the last previous report, together with the prices at which such repurchases were made, and upon the request of any officer or Trustee of the Trust shall furnish similar information with respect to all repurchases made up to the time of the request on any day.
(b) The Trust reserves the right to suspend or revoke the foregoing authorization at any time; unless otherwise stated, any such suspension or revocation shall be effective forthwith upon receipt of notice thereof by an officer of the Principal Underwriter, by telegraph or by written instrument from an officer of the Trust duly authorized by its Trustees. In the event that the authorization of the Principal Underwriter is, by the terms of such notice, suspended for more than twenty-four hours or until further notice, the authorization given by this paragraph 6 shall not be revived except by action of a majority of the Trustees of the Trust.
(c) The Principal Underwriter shall have the right to terminate the operation of this paragraph 6 upon giving to the Trust thirty (30) days' written notice thereof.
(d) The Trust agrees to authorize and direct the Custodian to pay, for the account of the Fund, the purchase price of any shares so repurchased against delivery of the certificates in proper form for transfer to the Trust or for cancellation by the Trust.
(e) The Principal Underwriter shall receive no commission in respect of any repurchase of shares under the foregoing authorization and appointment as agent, except for any sales commission, distribution fee or contingent deferred sales charges payable under paragraph 5.
(f) The Trust agrees that the Fund will reimburse the Principal Underwriter, from time to time on demand, for any reasonable expenses incurred in connection with the repurchase of shares of the Fund pursuant to this paragraph 6.
7. If, at any time during the existence of this Agreement, the Trust shall deem it necessary or advisable in the best interests of the Fund that any amendment of this Agreement be made in order to comply with the recommendations or requirements of the Commission or other governmental authority or to obtain any advantage under Massachusetts or federal tax laws, and shall notify the Principal Underwriter of the form of amendment which it deems necessary or advisable and the reasons therefor, and, if the Principal Underwriter declines to assent to such amendment, the Trust may terminate this Agreement forthwith by written notice to the Principal Underwriter. If, at any time during the existence of its agreement upon request by the Principal Underwriter, the Trust fails (after a reasonable time) to make any changes in its Declaration of Trust, as amended, or in its methods of doing business which are necessary in order to comply with any requirement of federal law or regulations of the Commission or of a national securities association of which the Principal Underwriter is or may be a member, relating to the sale of the shares of the Fund, the Principal Underwriter may terminate this Agreement forthwith by written notice to the Trust.
8(a). The Principal Underwriter is a corporation in the United States organized under the laws of Massachusetts and holding membership in the National Association of Securities Dealers, Inc., a securities association registered under Section 15A of the Securities Exchange Act of 1934, as amended from time to time, and during the life of this Agreement will continue to be so resident
in the United States, so organized and a member in good standing of said Association. The Principal Underwriter covenants that it and its officers and directors will comply with the Trust's Declaration of Trust and By-Laws, and the 1940 Act and the rules promulgated thereunder, insofar as they are applicable to the Principal Underwriter.
(b) The Principal Underwriter shall maintain in the United States and preserve therein for such period or periods as the Commission shall prescribe by rules and regulations applicable to it as Principal Underwriter of an open-end investment company registered under the 1940 Act such accounts, books and other documents as are necessary or appropriate to record its transactions with the Fund. Such accounts, books and other documents shall be subject at any time and from time to time to such reasonable periodic, special and other examinations by the Commission or any member or representative thereof as the Commission may prescribe. The Principal Underwriter shall furnish to the Commission within such reasonable time as the Commission may prescribe copies of or extracts from such records which may be prepared without effort, expense or delay as the Commission may by order require.
9. This Agreement shall continue in force indefinitely until terminated as in this Agreement above provided, except that:
(a) this Agreement shall remain in effect through and including April 29, 2005 (or, if applicable, the next April 29 which follows the day on which a Fund has become a Fund hereunder by amendment to Schedule A subsequent to April 29, 2005), and shall continue in full force and effect indefinitely thereafter, but only so long as such continuance after April 29, 2005 (or, if applicable, said next April 29) is specifically approved at least annually (i) by the vote of a majority of the Rule 12b-1 Trustees cast in person at a meeting called for the purpose of voting on such approval, and (ii) by the Trustees of the Trust or by vote of a majority of the outstanding voting securities of the Fund;
(b) this Agreement may be terminated with respect to a Class with a 12b-1 plan at any time by vote of a majority of the Rule 12b-1 Trustees or by vote of a majority of the outstanding voting securities of the Class on not more than sixty (60) days' notice to the Principal Underwriter. The Principal Underwriter shall be entitled to receive all contingent deferred sales charges paid or payable from such class with respect to any day subsequent to such termination;
(c) either party shall have the right to terminate this Agreement with respect to any Class on six (6) months' written notice thereof given in writing to the other;
(d) the Trust shall have the right to terminate this Agreement forthwith in the event that it shall have been established by a court of competent jurisdiction that the Principal Underwriter or any director or officer of the Principal Underwriter has taken any action which results in a breach of the covenants set out in paragraph 9 hereof;
(e) if this Agreement is terminated with respect of any Class it shall not terminate the Agreement with respect to any other Class; and
(f) additional series of the Trust will become Funds hereunder upon approval by the Trustees of the Trust and Amendment of Schedule A.
10. In the event of the assignment of this Agreement by the Principal Underwriter, this Agreement shall automatically terminate.
11. Any notice under this Agreement shall be in writing, addressed and delivered, or mailed postage paid, to the other party, at such address as such other party may designate for the receipt of such notices. Until further notice
to the other party, it is agreed that the record address of the Trust and that of the Principal Underwriter, shall be The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109.
12. The services of the Principal Underwriter to the Trust hereunder are not to be deemed to be exclusive, the Principal Underwriter being free to (a) render similar service to, and to act as principal underwriter in connection with the distribution of shares of other series of the Trust or other investment companies, and (b) engage in other business and activities from time to time.
13. The terms "vote of a majority of the outstanding voting securities," "assignment" and "interested persons," when used herein, shall have the respective meanings specified in the 1940 Act, subject, however, to such exemptions as may be granted by the Commission by any rule, regulation or order.
14. The Principal Underwriter expressly acknowledges the provision in the Trust's Declaration of Trust limiting the personal liability of the shareholders of the Trust and the Trustees of the Trust. The Principal Underwriter hereby agrees that it shall have recourse only to the assets of the relevant Fund or Class thereof for payment of claims or obligations as between the Trust and the Principal Underwriter arising out of this Agreement and shall not seek satisfaction from any shareholders or from the Trustees. No Fund or Class shall not be responsible for obligations of any other fund or class of the Trust.
15. This Agreement, as amended and restated, shall be deemed to replace and be substituted for the distribution agreement between the Fund and its prior principal underwriter, Eaton Vance Distributors, Inc., a separate Massachusetts corporation that previously served as principal underwriter of the Fund. This Agreement shall be effective with respect to additional Classes of shares on the date that Fund begins offering shares of that Class.
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement as of the 20th day of October, 2003.
EATON VANCE SERIES TRUST II
(formerly Eaton Vance Income Fund of Boston)
By /s/ Michael W. Weilheimer
-----------------------------------
Michael W. Weilheimer, President
|
EATON VANCE DISTRIBUTORS, INC.
EATON VANCE SERIES TRUST II
DISTRIBUTION AGREEMENT
Sales Commission
On Class On Class
Name of Fund Adopting this Agreement (effective date) B Shares D Shares
----------------------------------------------------- -------- --------
Eaton Vance Income Fund of Boston (October 20, 2003) N/A N/A
Eaton Vance Tax-Managed Emerging Markets Fund (October 20, 2003) N/A N/A
|
Exhibit (h)(3)
EATON VANCE SERIES TRUST II
ADMINISTRATIVE SERVICES AGREEMENT
AGREEMENT made this 20th day of October, 2003, between Eaton Vance Series Trust II, a Massachusetts business trust (the "Trust") on behalf of Eaton Vance Tax-Managed Emerging Markets Fund (the "Fund") and Eaton Vance Management, a Massachusetts business trust, (the "Administrator").
IN CONSIDERATION of the mutual promises and undertakings herein contained, the parties hereto agree with respect to the Fund:
1. Duties of the Administrator. The Trust hereby employs the Administrator to act as administrator of the Fund and to administer its affairs, subject to the supervision of the Trustees of the Trust, for the period and on the terms set forth in this Agreement.
The Administrator hereby accepts such employment, and undertakes to afford to the Trust the advice and assistance of the Administrator's organization in the administration of the Fund and to furnish, at the Administrator's expense, for the use of the Fund office space and all necessary office facilities, equipment and personnel for administering the affairs of the Fund and to pay (i) the Fund's pro rata share of the salaries and fees of all officers and Trustees of the Trust who are members of the Administrator's organization and (ii) the salaries and fees of all personnel of the Administrator performing services relating to administrative activities.
In connection with providing the Trust advice and assistance in the administration of the Fund, the Administrator shall provide or procure on behalf of the Fund, at the Administrator's expense, the following services: (a) coordinating matters relating to the operation of the Fund, including any necessary coordination among the adviser or advisers to the Fund, the custodian(s), transfer agent(s), dividend disbursing agent(s), and recordkeeping agent(s) (including pricing and valuation of the Fund), accountants, attorneys, and other parties performing services or operational functions for the Fund or the Trust on behalf of the Fund; (b) maintaining, or supervising the maintenance by third parties, of such books and records of the Trust on behalf of the Fund as may be required by applicable federal or state law other than the records and ledgers maintained under the Investment Advisory Agreement; (c) preparing or supervising the preparation by third parties of all federal, state, and local tax returns and reports of the Trust on behalf of the Fund required by applicable law; (d) preparing, filing, and arranging for the distribution of proxy materials and periodic reports to shareholders of the Trust on behalf of the Fund as required by applicable law; (e) preparing and arranging for the filing of such registration statements and other documents with the Securities and Exchange Commission (the "SEC") and other federal and state regulatory authorities as may be required to register the shares of the Fund; and (f) taking such other action with respect to the Fund as may be required by applicable law, including, without limitation the rules and regulations of the SEC and of state securities commissions and other regulatory agencies.
In addition, the Administrator shall provide or procure on behalf of the
Fund, at the Administrator's expense, the following services: (w) custodian
services to provide for the safekeeping of the Fund's assets; (x) recordkeeping
services to maintain the portfolio accounting records for the Fund; (y) transfer
agency services to maintain the portfolio accounting records for the Fund; and
(z) dividend disbursing services for the Fund. The services to be provided under
(y) and (z) of this Section 1 shall be commensurate with the level of services
reasonably necessary for the institutional investors that are eligible to invest
in Class I shares of the Fund, as set forth in the prospectus for such Class of
the Fund. The Trust may be a party to any agreement with any person or persons
engaged to provide the services referred to in this Section 1(y) and 1(z).
During the term of this Agreement, the Administrator will pay all expenses incurred by it in connection with its obligations under this Agreement, except such expenses as are those of the Fund under this Agreement.
In performing the services enumerated in this Section 1, the Administrator shall:
(i) conform with the Investment Company Act of 1940, as amended (the "1940 Act"), and all rules and regulations thereunder, all other applicable federal and state laws and regulations, with any applicable procedures adopted by the Trust's Board of Trustees, and with the provisions of the Trust's Registration Statement related to the Fund filed on Form N-1A as supplemented or amended from time to time.
(ii) make available to the Trust, promptly upon request, any of the Fund's books and records as are maintained under this Agreement, and will furnish to regulatory authorities having the requisite authority any such books and records and any information or reports in connection with the Administrator's services under this Agreement that may be requested in order to ascertain whether the operations of the Trust are being conducted in a manner consistent with applicable laws and regulations.
(iii) regularly report to the Trust's Board of Trustees on the services provided under this Agreement and will furnish the Trust's Board of Trustees with respect to the Fund such periodic and special reports as the Trustees may reasonably request.
The Administrator shall for all purposes herein be deemed to be an independent contractor and shall, except as otherwise expressly provided or authorized, have no authority to act for or represent the Trust in any way or otherwise be deemed an agent of the Trust.
Notwithstanding the foregoing, the Administrator shall not be deemed to have assumed any duties with respect to, and shall not be responsible for, the management of the Fund's assets or the rendering of investment advice and supervision with respect thereto or the distribution of shares of the Fund, nor shall the Administrator be deemed to have assumed or have any responsibility with respect to functions specifically assumed by any transfer agent, custodian or shareholder servicing agent of the Trust or the Fund.
2. Allocation of Charges and Expenses. The Administrator shall pay the salaries and fees of all of the Trust's Trustees and officers who devote part or all of their time to the affairs of the Administrator; the Trust shall not pay any part of the salaries and fees of such Trustees and officers..
In addition, the Administrator shall, at its expense, furnish to the Trust on behalf of the Fund: (i) services by the Trust's independent public accountants to perform all audits of the Fund; (ii) services of the Trust's transfer agent(s), registrar, dividend disbursing agent(s), and shareholder recordkeeping with respect to the Fund; (iii) services of the Trust's custodian, including any recordkeeping services provided by the custodian on behalf of the Fund; (iv) services of obtaining quotations for calculating the value of the Fund's net assets; (v) services of maintaining the Trust's tax records on behalf of the Fund; (vi) services, including procurement of legal services, incident to meetings of the Fund's shareholders, the preparation and mailing of prospectuses and reports of the Fund to its shareholders, the filing of reports with regulatory bodies, and the registration of shares of the Fund with federal and state securities authorities (except as described in clause (d) below); (vii) certificates representing shares of the Fund; (viii) the Fund's pro rata share of the Trust's fidelity bond required by Section 17(g) of the 1940 Act, or other insurance premiums; (ix) the Fund's pro rata portion of the Trust's association membership dues; and (x) services to offer shares of the Fund.
The Trust shall bear the following expenses: (a) taxes, if any, levied against the Fund; (b) brokerage fees and commissions in connection with the purchase and sale of portfolio securities for the Fund; (c) costs, including the interest expenses, of borrowing money; (d) extraordinary expenses, including extraordinary legal expenses and federal and state securities registration fees and expenses incurred on behalf of the Fund to the extent authorized by the Trust's Board of Trustees, as may arise, including expenses incurred in connection with litigation, proceedings, other claims and the legal obligations of the Trust to indemnify its trustees, officers, employees, shareholders, distributors, and agents with respect thereto; (e) organizational expenses of the Trust on behalf of the Fund; (f) offering expenses of the Trust on behalf of the Fund to the extent authorized by the Trust's Board of Trustees; and (g) any expenses listed in clauses (e) and (f) above which are capitalized in accordance with generally accepted accounting principles.
3. Compensation of Administrator. The Administrator shall receive compensation from the Trust on behalf of the Fund in respect of the services to be rendered and the facilities to be provided by the Administrator under this Agreement in an amount equal to 0.50% of average daily net assets per annum computed and paid monthly.
4. Other Interests. It is understood that Trustees and officers of the Trust and shareholders of the Fund are or may be or become interested in the Administrator as trustees, officers, employees, shareholders or otherwise and that trustees, officers, employees and shareholders of the Administrator are or may be or become similarly interested in the Fund, and that the Administrator may be or become interested in the Fund as shareholder or otherwise. It is also understood that trustees, officers, employees and shareholders of the Administrator may be or become interested (as directors, trustees, officers, employees, shareholders or otherwise) in other companies or entities (including, without limitation, other investment companies) which the Administrator may organize, sponsor or acquire, or with which it may merge or consolidate, and which may include the words "Eaton Vance" or any combination thereof as part of their name, and that the Administrator or its subsidiaries or affiliates may enter into advisory or management or administration agreements or other contracts or relationships with such other companies or entities.
5. Limitation of Liability of the Administrator. The services of the Administrator to the Trust and the Fund are not to be deemed to be exclusive, the Administrator being free to render services to others and engage in other business activities. The Administrator shall give the Trust the benefit of the Administrator's best efforts in rendering services under this Agreement. The Administrator may rely on information reasonably believed by it to be accurate and reliable. In the absence of willful misfeasance, bad faith, gross negligence or reckless disregard of obligations or duties hereunder on the part of the Administrator, the Administrator shall not be subject to liability to the Trust or the Fund or to any shareholder of the Fund for any act or omission in the course of, or connected with, rendering services hereunder or for any losses which may be sustained in the acquisition, holding or disposition of any security or other investment.
6. Sub-Administrators. The Administrator may employ one or more sub-administrators from time to time to perform such of the acts and services of the Administrator and upon such terms and conditions as may be agreed upon between the Administrator and such sub-administrators and approved by the Trustees of the Trust, all as permitted by the Investment Company Act of 1940.
7. Duration and Termination of this Agreement. This Agreement shall become effective upon the date of its execution, and, unless terminated as herein provided, shall remain in full force and effect through and including March 31, 2005 and shall continue in full force and effect indefinitely thereafter, but only so long as such continuance after March 31, 2005 is specifically approved at least annually (i) by the Board of Trustees of the Trust and (ii) by the vote of a majority of those Trustees of the Trust who are not interested persons of the Administrator or the Trust.
Either party hereto may, at any time on sixty (60) days' prior written notice to the other, terminate this Agreement without the payment of any penalty, by action of Trustees of the Trust or the trustee of the Administrator, as the case may be, and the Trust may, at any time upon such written notice to the Administrator, terminate this Agreement by vote of a majority of the outstanding voting securities of the Fund. This Agreement shall terminate automatically in the event of its assignment.
8. Amendments of the Agreement. This Agreement may be amended by a writing signed by both parties hereto, provided that no amendment to this Agreement shall be effective until approved (i) by the vote of a majority of those Trustees of the Trust who are not interested persons of the Administrator or the Trust, and (ii) by vote of the Board of Trustees of the Trust. Additional series of the Trust, however, will become a Fund hereunder upon approval by the Trustees of the Trust and amendment of Schedule A.
9. Limitation of Liability. The Fund shall not be responsible for the obligations of any other series of the Trust. Each party expressly acknowledges the provision in the other party's Declaration of Trust limiting the personal liability of trustees, officers and shareholders, and each party hereby agrees that it shall only have recourse to the assets of the other party for payment of claims or obligations arising out of this Agreement.
10. Use of the Name "Eaton Vance". The Administrator hereby consents to the use by the Fund of the name "Eaton Vance" as part of the Fund's name; provided, however, that such consent shall be conditioned upon the employment of the Administrator or one of its affiliates as the administrator of the Fund. The name "Eaton Vance" or any variation thereof may be used from time to time in other connections and for other purposes by the Administrator and its affiliates and other investment companies that have obtained consent to the use of the name "Eaton Vance." The Administrator shall have the right to require the Fund to cease using the name "Eaton Vance" as part of the Fund's name if the Fund ceases, for any reason, to employ the Administrator or one of its affiliates as the Fund's administrator. Future names adopted by the Fund for itself, insofar as such names include identifying words requiring the consent of the Administrator, shall be the property of the Administrator and shall be subject to the same terms and conditions.
11. Certain Definitions. The term "interested persons" when used herein shall have the respective meanings specified in the 1940 Act as now in effect or as hereafter amended subject, however, to such exemptions as may be granted by the Securities and Exchange Commission by any rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on the day and year first above written.
EATON VANCE SERIES TRUST II EATON VANCE MANAGEMENT
By /s/ Michael W. Weilheimer By /s/ Alan R. Dynner
-------------------------------- --------------------------
Michael W. Weilheimer Alan R. Dynner
President Vice President
|
Exhibit (i)
EATON VANCE MANAGEMENT
The Eaton Vance Building
255 State Street
Boston, MA 02109
Telephone: (617) 482-8260
Telecopy: (617) 338-8054
November 19, 2003
Eaton Vance Series Trust II
The Eaton Vance Building
255 State Street
Boston, MA 02109
Ladies and Gentlemen:
Eaton Vance Series Trust II (the "Trust") is a voluntary association (commonly referred to as a "business trust") established under Massachusetts law with the powers and authority set forth under its Declaration of Trust dated December 14, 1995, as amended (the "Declaration of Trust").
I am of the opinion that all legal requirements have been complied with in the creation of the Trust, and that said Declaration of Trust is legal and valid.
The Trustees of the Trust have the powers set forth in the Declaration of Trust, subject to the terms, provisions and conditions therein provided. As provided in the Declaration of Trust, the Trustees may authorize one or more series or classes of shares, without par value, and the number of shares of each series or class authorized is unlimited. The series and classes of shares established and designated as of the date hereof and registered by Form N-1A are identified on Appendix A hereto.
Under the Declaration of Trust, the Trustees may from time to time issue and sell or cause to be issued and sold shares of the Trust for cash or for property. All such shares, when so issued, shall be fully paid and nonassessable by the Trust.
I have examined originals, or copies, certified or otherwise identified to my satisfaction, of such certificates, records and other documents as we have deemed necessary or appropriate for the purpose of this opinion.
Based upon the foregoing, and with respect to Massachusetts law (other than the Massachusetts Uniform Securities Act), only to the extent that Massachusetts law may be applicable and without reference to the laws of the other several states or of the United States of America, I am of the opinion that under existing law:
1. The Trust is a trust with transferable shares of beneficial interest organized in compliance with the laws of the Commonwealth of Massachusetts, and the Declaration of Trust is legal and valid under the laws of the Commonwealth of Massachusetts.
2. Shares of beneficial interest of the Trust registered by Form N-1A may be legally and validly issued in accordance with the Declaration of Trust upon receipt of payment in compliance with the Declaration of Trust and, when so issued and sold, will be fully paid and nonassessable by the Trust.
Eaton Vance Series Trust II
November 19, 2003
I am a member of the Massachusetts bar and have acted as internal legal counsel to the Trust in connection with the registration of shares.
I hereby consent to the filing of this opinion with the Securities and Exchange Commission as an exhibit to Post-Effective Amendment No. 58 to the Trust's Registration Statement on Form N-1A pursuant to the Securities Act of 1933, as amended.
Very truly yours,
/s/ Deidre E. Walsh ------------------------------- Deidre E. Walsh, Esq. Vice President |
Appendix A
Established and Designated Series of the Trust
Eaton Vance Income Fund of Boston*
Eaton Vance Tax-Managed Emerging Markets Fund**
Exhibit (o)(2)
SCHEDULE A
EFFECTIVE OCTOBER 20, 2003
AMENDED AND RESTATED
MULTIPLE CLASS PLAN FOR EATON VANCE FUNDS
MARCH 17, 2003
Eaton Vance Growth Trust
Atlanta Capital Intermediate Bond Fund Eaton Vance Growth Fund
Atlanta Capital Large-Cap Growth Fund Eaton Vance Information Age Fund
Atlanta Capital Small-Cap Fund Eaton Vance Large-Cap Growth Fund
Eaton Vance Asian Small Companies Fund Eaton Vance Small-Cap Growth Fund
Eaton Vance Greater China Growth Fund Eaton Vance Worldwide Health Sciences Fund
Eaton Vance Investment Trust
Eaton Vance California Limited Maturity Municipals Fund Eaton Vance New Jersey Limited Maturity Municipals Fund
Eaton Vance Florida Limited Maturity Municipals Fund Eaton Vance New York Limited Maturity Municipals Fund
Eaton Vance Massachusetts Limited Maturity Municipals Fund Eaton Vance Ohio Limited Maturity Municipals Fund
Eaton Vance National Limited Maturity Municipals Fund Eaton Vance Pennsylvania Limited Maturity Municipals Fund
Eaton Vance Municipals Trust
Eaton Vance Alabama Municipals Fund Eaton Vance Mississippi Municipals Fund
Eaton Vance Arizona Municipals Fund Eaton Vance Missouri Municipals Fund
Eaton Vance Arkansas Municipals Fund Eaton Vance National Municipals Fund
Eaton Vance California Municipals Fund Eaton Vance New Jersey Municipals Fund
Eaton Vance Colorado Municipals Fund Eaton Vance New York Municipals Fund
Eaton Vance Connecticut Municipals Fund Eaton Vance North Carolina Municipals Fund
Eaton Vance Florida Municipals Fund Eaton Vance Ohio Municipals Fund
Eaton Vance Georgia Municipals Fund Eaton Vance Oregon Municipals Fund
Eaton Vance Kentucky Municipals Fund Eaton Vance Pennsylvania Municipals Fund
Eaton Vance Louisiana Municipals Fund Eaton Vance Rhode Island Municipals Fund
Eaton Vance Maryland Municipals Fund Eaton Vance South Carolina Municipals Fund
Eaton Vance Massachusetts Municipals Fund Eaton Vance Tennessee Municipals Fund
Eaton Vance Michigan Municipals Fund Eaton Vance Virginia Municipals Fund
Eaton Vance Minnesota Municipals Fund Eaton Vance West Virginia Municipals Fund
Eaton Vance Municipals Trust II
Eaton Vance Florida Insured Municipals Fund Eaton Vance High Yield Municipals Fund
Eaton Vance Hawaii Municipals Fund Eaton Vance Kansas Municipals Fund
A-1
|
Eaton Vance Mutual Funds Trust
Eaton Vance Floating-Rate Fund Eaton Vance Tax-Managed Growth Fund 1.2
Eaton Vance Floating-Rate High Income Fund Eaton Vance Tax-Managed International Growth Fund
Eaton Vance Government Obligations Fund Eaton Vance Tax-Managed Mid-Cap Core Fund
Eaton Vance High Income Fund Eaton Vance Tax-Managed Multi-Cap Opportunity Fund
Eaton Vance Low Duration Fund Eaton Vance Tax-Managed Small-Cap Growth Fund 1.1
Eaton Vance Strategic Income Fund Eaton Vance Tax-Managed Small-Cap Growth Fund 1.2
Eaton Vance Tax-Managed Dividend Income Fund Eaton Vance Tax-Managed Small-Cap Value Fund
Eaton Vance Tax-Managed Equity Asset Allocation Fund Eaton Vance Tax-Managed Value Fund
Eaton Vance Tax-Managed Growth Fund 1.1
Eaton Vance Series Trust II
Eaton Vance Income Fund of Boston Eaton Vance Tax-Managed Emerging Markets Fund
Eaton Vance Special Investment Trust
Eaton Vance Balanced Fund Eaton Vance Small-Cap Growth Fund
Eaton Vance Emerging Markets Fund Eaton Vance Small-Cap Value Fund
Eaton Vance Greater India Fund Eaton Vance Special Equities Fund
Eaton Vance Large-Cap Core Fund Eaton Vance Utilities Fund
Eaton Vance Large-Cap Value Fund
|