-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SnVYQKsLbZmfjHtBtxd10H0lsfRzfvWch1MgarQK0oCBafnS4rfHVMexzRdezHod cMuzvkblNbWSjI9KEPlwWw== 0000950156-96-000597.txt : 19960724 0000950156-96-000597.hdr.sgml : 19960724 ACCESSION NUMBER: 0000950156-96-000597 CONFORMED SUBMISSION TYPE: 485APOS PUBLIC DOCUMENT COUNT: 9 FILED AS OF DATE: 19960722 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEDICAL RESEARCH INVESTMENT FUND INC CENTRAL INDEX KEY: 0000760110 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 521378236 STATE OF INCORPORATION: MA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 485APOS SEC ACT: 1933 Act SEC FILE NUMBER: 002-95103 FILM NUMBER: 96597229 FILING VALUES: FORM TYPE: 485APOS SEC ACT: 1940 Act SEC FILE NUMBER: 811-04196 FILM NUMBER: 96597230 BUSINESS ADDRESS: STREET 1: 5847 SAN FELIPE STREET 2: SUITE 4100 CITY: HOUSTON STATE: TX ZIP: 77057 BUSINESS PHONE: 7132609000 MAIL ADDRESS: STREET 1: 5847 SAN FELIPE STREET 2: SUITE 4100 CITY: HOUSTON STATE: TX ZIP: 77057 485APOS 1 MEDICAL RESEARCH INVESTMENT FUND, INC. PEA #15 1933 Act File No. 2-95103 1940 Act File No. 811-4196 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-1A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / x / Pre-Effective Amendment No. ________ / / Post-Effective Amendment No. 15 / x / and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / x / Amendment No. 16 / x / Medical Research Investment Fund, Inc. - ------------------------------------------------------------------------------ (Exact Name of Registrant as Specified in Charter) 5847 San Felipe, Suite 4100, Houston, Texas 77057 - ------------------------------------------------------------------------------ (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, Including Area Code (713) 260-9000 - ------------------------------------------------------------------------------ Allan S. Mostoff, Esq., Dechert Price & Rhoads - ------------------------------------------------------------------------------ 500 K Street, N.W., Suite 500, Washington, DC 20005 - ------------------------------------------------------------------------------ (Name and Address of Agent for Service) It is proposed that this filing will become effective (check appropriate box) / / immediately upon filing pursuant to paragraph (b). / / on ________________ pursuant to paragraph (b). /XX/ 60 days after filing pursuant to paragraph (a). / / on (date) pursuant to paragraph (a) of rule 485. Registrant has filed with the Securities and Exchange Commission a declaration pursuant to Rule 24f-2 under the Investment Company Act of 1940, and: /XX/ filed the notice required by that Rule on October 27, 1995; or / / intends to file the notice required by that Rule on or about ___________; or / / during the most recent fiscal year did not sell any securities pursuant to Rule 24f-2 under the Investment Company Act of 1940, and, pursuant to Rule 24f-2(b)(2), need not file the Notice. Worldwide Health Sciences Portfolio has also executed this Registration Statement. MEDICAL RESEARCH INVESTMENT FUND, INC. CROSS REFERENCE SHEET ITEMS REQUIRED BY FORM N-1A
PART A ITEM NO. FORM N-1A HEADING CAPTION IN PROSPECTUS - -------- ----------------- ---------------------- 1. Cover Page Cover Page 2. Synopsis Prospectus Summary; Shareholder and Fund Expenses; Example 3. Condensed Financial Information The Fund's Financial Highlights 4. General Description of Registrant Health Science Investments; The Fund's Investment Objective; Investment Policies and Risks; Organization of the Fund and the Portfolio 5. Management of the Fund Management of the Fund and the Portfolio 5A. Management's Discussion of Fund Inapplicable Performance 6. Capital Stock and Other Securities Organization of the Fund and the Portfolio; Reports to Shareholders; The Lifetime Investing Account/Distribution Options; Distributions and Taxes 7. Purchase of Securities Being Offered Valuing Fund Shares; How to Buy Fund Shares; Distribution Plan; The Lifetime Investing Account/Distribution Options; The Eaton Vance Exchange Privilege; Eaton Vance Shareholder Services 8. Redemption or Repurchase How to Redeem Fund Shares 9. Pending Legal Proceedings Inapplicable PART A ITEM NO. FORM N-1A HEADING CAPTION IN STATEMENT OF ADDITIONAL INFORMATION - -------- ----------------- ---------------------- 10. Cover Page Cover Page 11. Table of Contents Table of Contents 12. General Information and History Other Information 13. Investment Objective and Policies Additional Information About Investment Policies; Investment Restrictions 14. Management of the Fund Board Members and Officers; Fees and Expenses 15. Control Persons and Principal Control Persons and Principal Holders of Securities Holders of Securities 16. Investment Advisory and Other Services Management of the Fund and the Portfolio; Distribution Plan; Custodian; Independent Accountants; Fees and Expenses 17. Brokerage Allocation and Other Practices Portfolio Security Transactions; Fees and Expenses 18. Capital Stock and Other Securities Other Information 19. Purchase, Redemption and Pricing of Determination of Net Asset Value; Service for Securities Being Offered Withdrawal; Services for Accumulation; Principal Underwriter; Distribution Plan; Fees and Expenses 20. Tax Status Taxes 21. Underwriters Principal Underwriter; Fees and Expenses 22. Calculation of Performance Data Investment Performance; Performance Information 23. Financial Statements Financial Statements
PART A INFORMATION REQUIRED IN A PROSPECTUS EV TRADITIONAL WORLDWIDE HEALTH SCIENCES FUND, INC. - ------------------------------------------------------------------------------ EV TRADITIONAL WORLDWIDE HEALTH SCIENCES FUND, INC. (THE "FUND") IS A MUTUAL FUND SEEKING LONG-TERM CAPITAL GROWTH BY INVESTING IN A GLOBAL AND DIVERSIFIED PORTFOLIO OF SECURITIES OF HEALTH SCIENCE COMPANIES. THE FUND INVESTS ITS ASSETS IN WORLDWIDE HEALTH SCIENCES PORTFOLIO (THE "PORTFOLIO"), A DIVERSIFIED OPEN-END INVESTMENT COMPANY HAVING THE SAME INVESTMENT OBJECTIVE AS THE FUND, RATHER THAN BY INVESTING DIRECTLY IN AND MANAGING ITS OWN PORTFOLIO OF SECURITIES AS WITH HISTORICALLY STRUCTURED MUTUAL FUNDS. Shares of the Fund are not deposits or obligations of, or guaranteed or endorsed by, any bank or other insured depository institution, and are not federally insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency. Shares of the Fund involve investment risks, including fluctuations in value and the possible loss of some or all of the principal investment. This Prospectus is designed to provide you with information you should know before investing in the Fund. Please retain this document for future reference. A Statement of Additional Information for the Fund dated September 3, 1996, as supplemented from time to time, has been filed with the Securities and Exchange Commission and is incorporated herein by reference. The Statement of Additional Information is available without charge from the Fund's principal underwriter, Eaton Vance Distributors, Inc. (the "Principal Underwriter"), 24 Federal Street, Boston, MA 02110 (telephone (800) 225-6265). The sponsor and manager of the Fund and the administrator of the Portfolio is Eaton Vance Management, 24 Federal Street, Boston, MA 02110 ("Eaton Vance" or the "Manager"). The Portfolio's investment adviser is G/A Capital Management, Inc. ("G/A" or the "Adviser"). The principal business address of the Adviser is 41 Madison Avenue, 40th Floor, New York, NY 10010-2202. - ------------------------------------------------------------------------------ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. - ------------------------------------------------------------------------------
PAGE PAGE Shareholder and Fund Expenses ..................... 2 How to Buy Fund Shares ............................ 11 The Fund's Financial Highlights .................... 3 How to Redeem Fund Shares ......................... 13 Health Science Investments ......................... 4 Reports to Shareholders ........................... 14 The Fund's Investment Objective ................... 4 The Lifetime Investing Account/Distribution Investment Policies and Risks ...................... 5 Options ......................................... 15 Organization of the Fund and the Portfolio ......... 7 The Eaton Vance Exchange Privilege ................ 15 Management of the Fund and the Portfolio ........... 9 Eaton Vance Shareholder Services .................. 16 Distribution Plan .................................. 10 Distributions and Taxes ........................... 17 Valuing Fund Shares ................................ 10 Performance Information ........................... 19 - ---------------------------------------------------------------------------------------------------------------------
PROSPECTUS DATED SEPTEMBER 3, 1996 SHAREHOLDER AND FUND EXPENSES - ------------------------------------------------------------------------------ SHAREHOLDER TRANSACTION EXPENSES ---------------------------------------------------------------------------- Maximum Sales Charge Imposed on Purchases (as a percentage of offering price) 4.75% Sales Charges Imposed on Reinvested Distributions None Fees to Exchange Shares None ANNUAL FUND AND ALLOCATED PORTFOLIO OPERATING EXPENSES (as a percentage of average daily net assets) ---------------------------------------------------------------------- Management Fees (after fee reduction) 1.25% Rule 12b-1 Distribution Fees 0.25 Other Expenses (after expense reduction) 0.50 ---- Total Operating Expenses 2.00% ==== EXAMPLE 1 YEAR 3 YEARS ------ ------- An investor would pay the following maximum initial sales charge and expenses on a $1,000 investment, assuming (a) 5% annual return and (b) redemption at the end of each period: $67 $107 NOTES: The table and Example summarize the aggregate expenses of the Fund and the Portfolio and are designed to help investors understand the costs and expenses they will bear, directly or indirectly, by investing in the Fund. Except for the investment advisory fee, expenses are estimated for the fiscal year ending August 31, 1997. Management Fees include management fees paid by the Fund, administration fees paid by the Portfolio and investment advisory fees paid by the Portfolio of 0.25%, 0.25% and 1.00%, respectively. The advisory fee is assumed to be the same as the actual fee paid by the Fund for its last fiscal year. The advisory fee is subject to a performance adjustment after one year. See "Management of the Fund and the Portfolio." The management and administration fee information contained in the table assumes reimbursement to the Fund by the Manager and Administrator as a result of an expense limitation agreement. Absent a fee reduction and expense allocation, Management Fees would amount to 1.50%, Other Expenses would amount to 0.56% and total estimated operating expenses for the fiscal year ending August 31, 1997 would be 2.31%. The Manager of the Fund has agreed to waive their fee and/or reimburse the Fund for operating expenses to maintain an expense ratio of 2.0% or less until August 31, 1999. The Fund invests exclusively in the Portfolio. The Directors of the Fund believe the aggregate per share expenses of the Fund and the Portfolio should approximate, and over time be less than, the per share expenses the Fund would incur if the Fund retained the services of an investment adviser for the Fund and the Fund's assets were invested directly in the type of securities being held by the Portfolio. THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES, AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. Federal regulations require the Example to assume a 5% annual return, but actual return will vary. For further information regarding the expenses of the Fund and the Portfolio see "Organization of the Fund and the Portfolio," "Management of the Fund and the Portfolio" and "How to Redeem Fund Shares." A long-term shareholder in the Fund may pay more than the economic equivalent of the maximum front-end sales charge permitted by a rule of the National Association of Securities Dealers, Inc. See "Distribution Plan." No sales charge is payable at the time of purchase on investments of $1 million or more. However, a contingent deferred sales charge of 0.50% will be imposed on such investments in the event of certain redemptions within 12 months of purchase. See "How to Buy Fund Shares," "How to Redeem Fund Shares" and "Eaton Vance Shareholder Services." Other investment companies and investors with different distribution arrangements and fees are investing in the Portfolio and others may do so in the future. See "Organization of the Fund and the Portfolio." THE FUND'S FINANCIAL HIGHLIGHTS - ------------------------------------------------------------------------------ The following table sets forth the per share operating performance data for a share of capital stock outstanding, total return, ratios to average net assets and other supplemental data for each year indicated. This information has been derived from information provided in the Fund's financial statements which have been examined by Tait, Weller & Baker, independent certified public accountants. The Fund's annual report contains additional performance information. - ------------------------------------------------------------------------------
SIX MONTHS ENDED FEBRUARY 29, YEAR ENDED AUGUST 31, 1996 ----------------------------------------------------------------------------------------------- (UNAUDITED) 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 ----------- ------- ------- ------- ------- ------- ------- ------- -------- ------- ----- PER SHARE DATA NET ASSET VALUE, at beginning of period $ 23.41 $ 18.30 $ 19.27 $ 17.94 $ 17.15 $ 14.70 $ 13.92 $ 10.60 $ 15.26 $ 13.65 $ 10.08 ------ ------- ------- ------- ------- ------- ------- ------- -------- ------- ------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) $ (.20) $ (.34) $ (.31) $ (.27) $ (.26) $ (.23) $ (.33) $ (.86) $ (.45) $ (.20) $ (.45) Net realized and unrealized gain (loss) on investments 4.89 6.81 0.86 3.72 2.30 4.30 1.83 4.18 (3.17) 2.60 4.07 ------- ------- ------- ------- ------- ------- ------- ------- -------- ------- ------- Total from investment operations $ 4.69 $ 6.47 $ 0.55 $ 3.45 $ 2.04 $ 4.07 $ 1.50 $ 3.32 $ (3.62) $ 2.40 $ 3.62 ------- ------- ------- ------- ------- ------- ------- ------- -------- ------- ------- LESS DISTRIBUTIONS FROM: Net investment income $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ .05 Net realized gain on investments 2.80 1.36 1.52 2.12 1.25 1.62 .72 -- 1.04 .79 -- ------- ------- ------- ------- ------- ------- ------- ------- -------- ------- ------- Total distributions $ 2.80 $ 1.36 $ 1.52 $ 2.12 $ 1.25 $ 1.62 $ .72 $ .00 $ 1.04 $ .79 $ .05 ------- ------- ------- ------- ------- ------- ------- ------- -------- ------- ------- NET ASSET VALUE, at end of period $ 25.30 $ 23.41 $ 18.30 $ 19.27 $ 17.94 $ 17.15 $ 14.70 $ 13.92 $ 10.60 $ 15.26 $ 13.65 ======= ======= ======= ======= ======= ======= ======= ======= ======== ======= ======= TOTAL RETURN 22.43% 38.13% 2.69% 21.37% 12.04% 30.60% 11.13% 31.32% (25.30)% 19.81% 36.04% RATIOS/SUPPLEMENTAL DATA Net assets at end of period (in thousands)$46,913 $17,690 $13,231 $10,223 $11,415 $ 6,955 $ 3,771 $ 2,754 $ 2,819 $ 4,015 $ 1,623 Ratio of operating expenses to average net assets: Before expense reimbursement 2.01% 2.44% 2.67% 2.87% 2.59% 3.74% 4.77% 5.54% 5.71% 6.72% 9.90% After expense reimbursement N/A N/A 2.50% 2.50% 2.48% 2.50% 3.51% 5.27% 5.59% 6.08% 7.87% Ratio of net investment loss to average net assets: Before expense reimbursement (1.72)%* (1.82)% (1.82)% (1.90)% (1.56)% (2.71)% (3.51)% (4.00)% (4.12)% (5.01)% (8.13)% After expense reimbursement N/A N/A (1.65)% (1.53)% (1.45)% (1.47)% (2.26)% (3.73)% (4.00)% (4.37)% (6.10)% PORTFOLIO TURNOVER RATE 25% 45% 49% 77% 71% 81% 143% 75% 59% 95% 69% Based on average month end shares outstanding. Calculated without a sales load. Since September, 1989, the Adviser and Administrator have reimbursed a portion of their fees, when necessary, in order to allow the Fund to operate within the expense limitation of any state having jurisdiction over the Fund. Annualized
HEALTH SCIENCE INVESTMENTS - ----------------------------------------------------------------------------- Markets for health sciences products and services have undergone significant growth over the last 25 years. In the U.S., the Department of Health and Human Services estimates healthcare expenditures alone could increase to over 16% of gross national product by the year 2000, compared to 7.6%, 10.3% and 14.0% in 1972, 1982 and 1992, respectively. Outside the U.S., most developed countries are seeing similar growth in health care expenditures. In emerging markets, health care spending is increasing as standards of living are improving and as revenues become available to fund government and private programs to address basic health needs. Factors contributing to this growth include demographic shifts tending to a higher world population and a larger elderly populaton in industrialized nations, technological advances, and popular acceptance of and worldwide familiarity with healthcare products, resulting in high consumer demand. In addition to increased demand for health science products and services, substantial public and private expenditures on basic medical research and advances in technology have accelerated the pace of medical discoveries. The Adviser believes that the rate of change may accelerate in the future, causing certain segments of the business to decline and others to experience growth. Favorable investment opportunities may be found in companies that provide products or services designed for the prevention, diagnosis and treatment of physical and mental disorders. In making portfolio selections, in addition to evaluating trends in corporate revenues, earnings and dividends, the Adviser generally considers the amount of capital currently being expended on research and development, and the nature thereof. The Adviser believes that dollars invested in research and development today frequently have significant bearing on future growth. Portfolio securities generally will be selected from companies in the following groups: Biotechnology -- Companies which are producing or plan to produce as a result of current research, diagnostic and therapeutic drugs and reagents based on genetic engineering and the use of monoclonal antibodies or on recombinant DNA; also, specialty companies catering to the unique requirements of biotechnology companies such as those providing enzymes, media and purification equipment. Diagnostics -- Private organizations that develop or maintain sophisticated diagnostic equipment such as CAT scanners and Magnetic Resonance Imaging as well as urological and serological assays. Managed Healthcare -- Operators of investor-owned hospital chains (including acute care psychiatric hospitals), nursing centers for the elderly, health maintenance organizations, and rehabilitation clinics which seek to deliver hospital care on an efficient cost basis. Medical Equipment and Supplies -- Companies engaged in the manufacture of inpatient and outpatient medical (and dental), surgical, laboratory and diagnostic products (ranging from cotton swabs through kidney dialyses equipment to CAT scanners). Pharmaceuticals -- Companies involved with new types of drugs and their delivery systems. By focusing on companies such as the foregoing, the Adviser believes that the opportunity for long-term capital growth exists. Of course, there can be no assurance that the Portfolio will be able to take advantage of the foregoing opportunities, or that such investment opportunities will be favorable. THE FUND'S INVESTMENT OBJECTIVE - ------------------------------------------------------------------------------ THE FUND'S INVESTMENT OBJECTIVE IS TO SEEK LONG-TERM CAPITAL GROWTH BY INVESTING IN A GLOBAL AND DIVERSIFIED PORTFOLIO OF HEALTH SCIENCE COMPANIES. IT CURRENTLY SEEKS TO MEET ITS INVESTMENT OBJECTIVE BY INVESTING ITS ASSETS IN WORLDWIDE HEALTH SCIENCES PORTFOLIO (THE "PORTFOLIO"), A SEPARATE REGISTERED INVESTMENT COMPANY THAT INVESTS IN SECURITIES OF HEALTH SCIENCE COMPANIES. This investment structure is commonly referred to as a "master/feeder" structure. The Fund is intended for long-term investors who can accept international investment risk and little or no current income. Because the Fund concentrates its investments in medical research and the health care industry, the Fund is not intended to be a complete investment program. Prospective investors should take into account their objectives and other investments when considering the purchase of Fund shares. The Fund cannot assure achievement of its investment objective. See "Investment Policies and Risks" for further information. The investment objective of the Fund and the Portfolio are nonfundamental. See "Organization of the Fund and the Portfolio -- Special Information on the Fund/Portfolio Investment Structure" for further information. INVESTMENT POLICIES AND RISKS - ------------------------------------------------------------------------------ The Portfolio invests in a global and diversified portfolio of securities of health science companies. These companies principally are engaged in the development, production or distribution of products or services related to scientific advances in healthcare, including biotechnology, diagnostics, managed healthcare and medical equipment and supplies, and pharmaceuticals. At the time the Fund makes an investment, 50% or more of such a company's sales, earnings or assets will arise from or will be dedicated to the application of scientific advances related to healthcare. The Portfolio may invest in securities of both established and emerging companies, some of which may be denominated in foreign currencies. Under normal market conditions, the Portfolio will invest at least 65% of its assets in securities of health science companies, including common and preferred stocks; equity interests in partnerships; convertible preferred stocks; and other convertible instruments. Convertible debt instruments generally will be rated below investment grade (i.e., rated lower than Baa by Moody's Investors Service, Inc. or lower than BBB by Standard & Poor's Ratings Group) or, if unrated, determined by the Adviser to be of equivalent quality. Convertible debt securities so rated are commonly called "junk bonds" and have risks similar to equity securities; they are speculative 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 below investment grade debt securities will not exceed 20% of total assets. For temporary defensive purposes, the Portfolio may invest without limit in high grade debt securities of foreign and United States companies, foreign governments and the U.S. Government, and their respective agencies, instrumentalities, political subdivisions and authorities, as well as in high quality money market instruments. An investment in the Fund entails the risk that the principal value of Fund shares may not increase or may decline. The Portfolio's investments are subject to the risk of adverse developments affecting particular companies, the health science industries and securities markets generally. The value of Fund shares may fluctuate more than shares invested in a broader range of industries. Many health science companies are subject to substantial governmental regulations that can affect their prospects. Changes in governmental policies, such as reductions in the funding of third-party payment programs, may have a material effect on the demand for particular health care products and services. Regulatory approvals (often entailing lengthy application and testing procedures) are also generally required before new drugs and certain medical devices and procedures may be introduced. Many of the products and services of companies engaged in medical research and health care are also subject to relatively high risks of rapid obsolescence caused by progressive scientific and technological advances. The enforcement of patent, trademark and other intellectual property laws will affect the value of many such companies. The Fund will invest in securities of emerging growth health science companies, which may offer limited products or services or which are at the research and developmental stage with no marketable or approved products or technologies. The securities of smaller, less-seasoned companies, which may include legally restricted securities, are generally subject to greater price fluctuations, limited liquidity, higher transaction costs and higher investment risk. The Portfolio may invest up to 15% of its net assets in illiquid securities, which excludes securities eligible for resale under Rule 144A of the Securities Act of 1933 that the trustees and the Adviser determine are liquid. Holding Rule 144A securities may increase illiquidity if qualified institutional buyers become uninterested in buying them. In addition, the Portfolio may temporarily borrow up to 5% of the value of its total assets to satisfy redemption requests or settle securities transactions. INVESTING IN FOREIGN SECURITIES. Investing in securities issued by foreign companies and governments involves considerations and possible risks not typically associated with investing in securities issued by the U.S. Government and domestic corporations. 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. Because investment in foreign issuers will usually involve currencies of foreign countries, the value of the assets of the Portfolio as measured in U.S. dollars may be adversely affected by changes in foreign currency exchange rates. Such rates may fluctuate significantly over short periods of time causing the Portfolio's net asset value to fluctuate as well. Costs are incurred in connection with conversions between various currencies. In addition, foreign brokerage commissions, custody fees and other costs of investing 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 adversely affected by other factors not present in the United States, including expropriation, confiscatory taxation, lack of uniform accounting and auditing standards and potential difficulties in enforcing contractual obligations. In addition to investing in foreign companies of countries which represent established and developed economies, the Portfolio may also invest some of its assets in the emerging economies of lesser developed countries such as China and India, and countries located in Latin America and Eastern Europe. Consistent with its investment objective, the Portfolio is not limited in the percentage of assets it may invest in such securities but the number of health science issues in less developed countries is relatively small. The relative risk and cost of investing in the securities of companies in such emerging economies may be higher than an investment in securities of companies in more developed countries. As of the date of this Prospectus, the Adviser initially expects to invest 50% of the Portfolio's assets in foreign securities. DERIVATIVE INSTRUMENTS. The Portfolio may purchase or sell derivative instruments (which are instruments that derive their value from another instrument, security, index or currency) to enhance return (which may be speculative), to hedge against fluctuations in securities prices, interest rates or currency exchange rates, or as a substitute for the purchase or sale of securities or currencies. The Portfolio's transactions in derivative instruments may be in the U.S. or abroad and may include the purchase or sale of futures contracts on securities, securities indices, other indices, other financial instruments or currencies; options on futures contracts; exchange-traded and over-the-counter options on securities, indices or currencies; and forward foreign currency exchange contracts. The Portfolio's transactions in derivative instruments involve a risk of loss or depreciation due to: unanticipated adverse changes in securities prices, interest rates, the other financial instruments' prices or currency exchange rates; the inability to close out a position; 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 Portfolio's initial investment in these instruments. In addition, the Portfolio may lose the entire premium paid for purchased options that expire before they can be profitably exercised by the Portfolio. The Portfolio incurs transaction costs in opening and closing positions in derivative instruments. There can be no assurance that the Adviser's use of derivative instruments will be advantageous to the Portfolio. To the extent that the Portfolio enters into futures contracts, options on futures contracts and options on foreign currencies traded on an exchange regulated by the Commodity Futures Trading Commission ("CFTC"), in each case that are not for bona fide hedging purposes (as defined by the CFTC), the aggregate initial margin and premiums required to establish these positions (excluding the amount by which options are "in-the-money") may not exceed 5% of the liquidation value of the Portfolio's investments, after taking into account unrealized profits and unrealized losses on any contracts the Portfolio has entered into. There is no current intention to use derivative instruments for non-hedging purposes. Forward contracts are individually negotiated and privately traded by currency traders and their customers. A forward contract involves an obligation to purchase or sell a specific currency (or basket of currencies) for an agreed price at a future date, which may be any fixed number of days from the date of the contract. The Portfolio may engage in cross-hedging by using forward contracts in one currency (or basket of currencies) to hedge against fluctuations in the value of securities denominated in a different currency if an Adviser determines that there is an established historical pattern or correlation between the two currencies (or the basket of currencies and the underlying currency). Use of a different foreign currency magnifies the Portfolio's exposure to foreign currency exchange rate fluctuations. The Portfolio may also use forward contracts to shift its exposure to foreign currency exchange rate changes from one currency to another. CURRENCY SWAPS. The Portfolio may enter into currency swaps for both hedging and non-hedging purposes. Currency swaps involve the exchange of rights to make or receive payments in specified currencies. Since currency swaps are individually negotiated, the Portfolio expects to achieve an acceptable degree of correlation between its portfolio investments and its currency swap positions. Currency swaps usually involve the delivery of the entire principal value of one designated currency in exchange for the other designated currency. Therefore, 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 use of currency swaps is a highly specialized activity which involves special investment techniques and risks. If the Adviser is incorrect in its forecasts of market values and currency exchange rates, the Portfolio's performance will be adversely affected. REPURCHASE AGREEMENTS. The Portfolio may enter into repurchase agreements (the purchase of a security coupled with an agreement to resell) with respect to its permitted investments, but currently intends to do so only with member banks of the Federal Reserve System or with primary dealers in U.S. Government securities. In the event of the bankruptcy of the other party to a repurchase agreement, the Portfolio might experience delays in recovering its cash. To the extent that, in the meantime, the value of the securities the Portfolio purchased may have decreased, the Portfolio could experience a loss. The Portfolio does not expect to invest more than 5% of its total assets in repurchase agreements under normal circumstances. OTHER INVESTMENT COMPANIES. The Portfolio reserves the right to invest up to 10% of its total assets in the securities of other investment companies unaffiliated with an Adviser that have the characteristics of closed-end investment companies. The Portfolio 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 Portfolio. 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. CERTAIN INVESTMENT POLICIES. The Fund and the Portfolio have adopted certain fundamental investment restrictions and policies which are enumerated in detail in the Statement of Additional Information and which may not be changed unless authorized by a shareholder vote and an investor vote. Investment restrictions are considered at the time of acquisition of assets; the sale of portfolio assets generally is not required in the event of a subsequent change in circumstances. As a matter of fundamental policy the Portfolio will not invest 25% or more of its total assets in the securities of issuers in any one industry, other than U.S. Government securities and securities of health science companies. However, the Portfolio is permitted to invest 25% or more of its total assets in (i) the securities of issuers located in any one country and (ii) securities denominated in the currency of any one country. Under normal market conditions, the Portfolio will hold securities of issuers in an least three countries. Except for the fundamental investment restrictions and policies specifically identified above and enumerated in the Statement of Additional Information, the investment objective and policies of the Fund and the Portfolio are not fundamental policies and accordingly may be changed by the Directors of the Fund and the Trustees of the Portfolio without obtaining the approval of the shareholders of the Fund or the investors in the Portfolio, as the case may be. If any changes were made, the Fund might have investment objectives different from the objectives which an investor considered appropriate at the time the investor became a shareholder in the Fund. Please refer to the Statement of Additional Information for further information regarding the investment policies and risks of the Fund and Portfolio. ORGANIZATION OF THE FUND AND THE PORTFOLIO - ------------------------------------------------------------------------------ The Fund is a Maryland corporation incorporated in November, 1984. The Directors of the Fund are responsible for the overall management and supervision of its affairs. The Fund's authorized capital consists of one billion full and fractional shares of Common Stock, $.001 par value per share. The shares have equal rights and privileges. When issued and outstanding, the shares are fully paid and nonassessable by the Fund and redeemable as described under "How to Redeem Fund Shares." Shareholders are entitled to one vote for each full share held. Fractional shares may be voted proportionately. Shares have no preemptive or conversion rights and are freely transferable. In the event of the liquidation of the Fund, shareholders are entitled to share pro rata in the net assets of the Fund available for distribution to shareholders. The Fund will only hold shareholder meetings when required by law; no annual meeting is required. The Fund formerly was named the Medical Research Investment Fund, Inc. THE PORTFOLIO IS ORGANIZED AS A TRUST UNDER THE LAWS OF THE STATE OF NEW YORK AND INTENDS TO BE TREATED AS A PARTNERSHIP FOR FEDERAL TAX PURPOSES. The Portfolio, as well as the Fund, intends to comply with all applicable federal and state securities laws. The Portfolio's Declaration of Trust provides that the Fund and other entities permitted to invest in the Portfolio (e.g., other U.S. and foreign investment companies, and common and commingled trust funds) will each be liable for all obligations of the Portfolio. However, the risk of the Fund incurring financial loss on account of such liability is limited to circumstances in which both inadequate insurance exists and the Portfolio itself is unable to meet its obligations. Accordingly, the Directors of the Fund believe that neither the Fund nor its shareholders will be adversely affected by reason of the Fund investing in the Portfolio. SPECIAL INFORMATION ON THE FUND/PORTFOLIO INVESTMENT STRUCTURE. An investor in the Fund should be aware that the Fund, unlike mutual funds which directly acquire and manage their own portfolios of securities, seeks to achieve its investment objective by investing its assets in an interest in the Portfolio, which is a separate investment company with an identical investment objective (although the Fund may temporarily hold a de minimis amount of cash). Therefore, the Fund's interest in securities owned by the Portfolio is indirect. In addition to selling an interest to the Fund, the Portfolio may sell interests to other affiliated and non-affiliated mutual funds or institutional investors. Such investors will invest in the Portfolio on the same terms and conditions and will pay a proportionate share of the Portfolio's expenses. However, the other investors investing in the Portfolio are not required to sell their shares at the same public offering price as the Fund due to variations in sales commissions and other operating expenses. Therefore, investors in the Fund should be aware that these differences may result in differences in returns experienced by investors in the various funds that invest in the Portfolio. Such differences in returns are also present in other mutual fund structures, including funds that have multiple classes of shares. For information regarding the investment objective, policies and restrictions of the Portfolio, see "Investment Policies and Risks." Further information regarding the investment practices of the Portfolio may be found in the Statement of Additional Information. The Directors of the Fund have considered the advantages and disadvantages of investing the assets of the Fund in the Portfolio, as well as the advantages and disadvantages of the two-tier format. The Directors believe that the structure offers opportunities for substantial growth in the assets of the Portfolio, and affords the potential for economies of scale for the Fund. The Fund may withdraw (completely redeem) all its assets from the Portfolio at any time if the Board of Directors of the Fund determines that it is in the best interest of the Fund to do so. The investment objective and the nonfundamental investment policies of the Fund and the Portfolio may be changed by the Directors of the Fund and the Trustees of the Portfolio without obtaining the approval of the shareholders of the Fund or the investors in the Portfolio, as the case may be. Any such change of the investment objective will be preceded by thirty days' advance written notice to the shareholders of the Fund or the investors in the Portfolio, as the case may be. If a shareholder redeems shares because of a change in the nonfundamental objective or policies of the Fund, those shares may be subject to a contingent deferred sales charge, as described in "How to Redeem Fund Shares." In the event the Fund withdraws all of its assets from the Portfolio, or the Board of Directors of the Fund determines that the investment objective of the Portfolio is no longer consistent with the investment objective of the Fund, such Directors would consider what action might be taken, including investing the assets of the Fund in another pooled investment entity or retaining an investment adviser to manage the Fund's assets in accordance with its investment objective. The Fund's investment performance may be affected by a withdrawal of all its assets from the Portfolio. Information regarding other pooled investment entities or funds which invest in the Portfolio may be obtained by contacting Eaton Vance Distributors, Inc. (the "Principal Underwriter"), 24 Federal Street, Boston, MA 02110 (617) 482-8260. Smaller investors in the Portfolio may be adversely affected by the actions of larger investors in the Portfolio. For example, if a large investor withdraws from the Portfolio, the remaining investors may experience higher pro rata operating expenses, thereby producing lower returns. Additionally, the Portfolio may become less diverse, resulting in increased portfolio risk, and experience decreasing economies of scale. However, this possibility exists as well for historically structured funds which have large or institutional investors. Until 1992, the Manager sponsored and advised historically structured funds. Funds which invest all their assets in interests in a separate investment company are a relatively new development in the mutual fund industry and, therefore, the Fund may be subject to additional regulations than historically structured funds. The Declaration of Trust of the Portfolio provides that the Portfolio will terminate 120 days after the complete withdrawal of the Fund or any other investor in the Portfolio, unless either the remaining investors, by unanimous vote at a meeting of such investors, or a majority of the Trustees of the Portfolio, by written instrument consented to by all investors, agree to continue the business of the Portfolio. This provision is consistent with treatment of the Portfolio as a partnership for federal income tax purposes. Whenever the Fund as an investor in the Portfolio is requested to vote on matters pertaining to the Portfolio (other than the termination of the Portfolio's business, which may be determined by the Trustees of the Portfolio without investor approval), the Fund will hold a meeting of Fund shareholders and will vote its interest in the Portfolio for or against such matters proportionately to the instructions to vote for or against such matters received from Fund shareholders. The Fund shall vote shares for which it receives no voting instructions in the same proportion as the shares for which it receives voting instructions. Other investors in the Portfolio may alone or collectively acquire sufficient voting interests in the Portfolio to control matters relating to the operation of the Portfolio, which may require the Fund to withdraw its investment in the Portfolio or take other appropriate action. Any such withdrawal could result in a distribution "in kind" of portfolio securities (as opposed to a cash distribution from the Portfolio). If securities are distributed, the Fund could incur brokerage, tax or other charges in converting the securities to cash. In addition, the distribution in kind may result in a less diversified portfolio of investments or adversely affect the liquidity of the Fund. Notwithstanding the above, there are other means for meeting shareholder redemption requests, such as borrowing. The Directors of the Fund, including a majority of the noninterested Directors, have approved written procedures designed to identify and address any potential conflicts of interest arising from the fact that most of the Directors of the Fund and the Trustees of the Portfolio are the same. Such procedures require each Board to take action to resolve any conflict of interest between the Fund and the Portfolio, and it is possible that the creation of separate Boards may be considered. For further information concerning the Directors, Trustees and officers of the Fund and the Portfolio, see "Directors and Officers" in the Statement of Additional Information. MANAGEMENT OF THE FUND AND THE PORTFOLIO - ------------------------------------------------------------------------------ EATON VANCE MANAGEMENT ("EATON VANCE") ACTS AS THE SPONSOR AND MANAGER OF THE FUND AND AS THE ADMINISTRATOR OF THE PORTFOLIO. THE PORTFOLIO HAS ENGAGED G/A CAPITAL MANAGEMENT, INC. ("G/A"), LOCATED AT 41 MADISON AVENUE, 40TH FLOOR, NEW YORK, NEW YORK 10010-2202 AS ITS INVESTMENT ADVISER (THE "ADVISER"). G/A was incorporated in Delaware on February 24, 1989 and is principally owned by Samuel D. Isaly, who serves as the President of G/A. The Portfolio is the only investment company registered under the Investment Company Act of 1940 (the "1940 Act") advised by G/A. Investment decisions for the Portfolio are made by the portfolio manager, Samuel D. Isaly. Mr. Isaly has been active in international and health care investing throughout his career, beginning at Chase Manhattan Bank in New York in 1968. He studied international economics, mathematics and econometrics at Princeton and the London School of Economics. His company, Gramercy Associates, was the first to develop an integrated worldwide system of analysis on the 100 leading worldwide pharmaceutical companies, with investment recommendations conveyed to 50 leading financial institutions in the United States and Europe beginning in 1982. Gramercy Associates was absorbed into S.G. Warburg & Company Inc. in 1986, where Mr. Isaly became a Senior Vice President. In July of 1989, Mr. Isaly joined with Dr. Viren Mehta to found the partnership of Mehta and Isaly. The operations of the combined effort are (1) to provide investment ideas to institutional investors on the subject of worldwide health care, (2) to undertake cross-border merger and acquisition projects in the industry and (3) to provide investment management services to selected investors. The latter activity is undertaken through the legal entity G/A Capital Management, Inc. which is an investment advisory firm registered with the Securities and Exchange Commission. For its services, G/A receives a fee computed daily and payable monthly at an annual rate of 1.00% of the Portfolio's average daily net assets up to $30 million of such assets, 0.90% of the next $20 million of such assets, and 0.75% on such assets in excess of $50 million. The fee rate declines for net assets of $500 million and greater. After September 1, 1997, G/A may receive a performance based adjustment of up to .25% of the average daily net assets of the Portfolio. For the year ended August 31, 1995, G/A received an advisory fee of 1.00% of average daily net assets, during which time assets were managed at the Fund level. G/A has agreed to pay EVD the equivalent of one-third of its advisory fee receipts out of G/A's own resources for EVD's activities as placement agent of the Portfolio. The Adviser furnishes for the use of the Portfolio office space and all necessary office facilities, equipment and personnel for servicing the investments of the Portfolio. The Adviser places the portfolio securities transactions of the Portfolio with many broker-dealer firms and use its best efforts to obtain execution of such transactions at prices which are advantageous to the Portfolio and at reasonably competitive commission rates. Subject to the foregoing, the Adviser may consider sales of shares of the Fund as a factor in the selection of firms to execute portfolio transactions. Eaton Vance, its affiliates and its predecessor companies have been managing assets of individuals and institutions since 1924 and managing investment companies since 1931. Eaton Vance acts as investment adviser to investment companies and various individual and institutional clients with assets under management of over $16 billion. Eaton Vance is a wholly-owned subsidiary of Eaton Vance Corp., a publicly-held holding company which through its subsidiaries and affiliates engages primarily in investment management, administration and marketing activities. Eaton Vance, acting under the general supervision of the Boards of Directors of the Fund and of Trustees of the Portfolio, manages and administers the business affairs of the Fund and the Portfolio. Eaton Vance's services include monitoring and providing reports to the Directors of the Fund and the Trustees of the Portfolio concerning the investment performance achieved by the Adviser for the Portfolio, recordkeeping, preparation and filing of documents required to comply with federal and state securities laws, supervising the activities of the transfer agent of the Fund and the custodian of the Portfolio, providing assistance in connection with Board and shareholders' meetings and other management and administrative services necessary to conduct the business of the Fund and the Portfolio. Eaton Vance also furnishes for the use of the Fund and the Portfolio office space and all necessary office facilities, equipment and personnel for managing and administering the business affairs of the Fund and the Portfolio. Eaton Vance does not provide any investment management or advisory services to the Portfolio or the Fund. The Fund, the Portfolio and G/A have adopted Codes of Ethics relating to personal securities transactions. The Codes permit G/A personnel to invest in securities (including securities that may be purchased or held by the Portfolio) for their own accounts, subject to certain pre-clearance, reporting and other restrictions and procedures contained in such Codes. Under its management contract with the Fund, Eaton Vance receives a monthly management fee in the amount of 1/48 of 1% (equal to 0.25% annually) of the average daily net assets of the Fund up to $500 million, which fee declines at intervals above $500 million. Under its administration agreement with the Portfolio, Eaton Vance currently receives a monthly administration fee in the amont of 1/48 of 1% (equal to .25% annually) of the average daily net assets of the Portfolio up to $500 million, which fee declines at intervals above $500 million. The combined investment advisory, administration and management fees payable by the Fund and the Portfolio are higher than similar fees charged by many other investment companies. The Fund and the Portfolio, as the case may be, will each be responsible for all respective costs and expenses not expressly stated to be payable by the Adviser under the investment advisory agreement, or Eaton Vance under the management contract or the administration agreement, or by EVD under the distribution agreement. Such costs and expenses to be borne by each of the Fund or the Portfolio, as the case may be, include, without limitation: custody and transfer agency fees and expenses, including those incurred for determining net asset value and keeping accounting books and records; expenses of pricing and valuation services; the cost of share certificates; membership dues in investment company organizations; brokerage commissions and fees; fees and expenses of registering under the securities laws; expenses of reports to shareholders and investors; proxy statements, and other expenses of shareholders' or investors' meetings; insurance premiums, printing and mailing expenses; interest, taxes and corporate fees; legal and accounting expenses; compensation and expenses of Directors or Trustees not affiliated with Eaton Vance or the Adviser; and investment advisory, management and administration fees. The Fund and the Portfolio, as the case may be, will also each bear expenses incurred in connection with litigation in which the Fund or the Portfolio, as the case may be, is a party and any legal obligation to indemnify its respective officers and Board members with respect thereto. Eaton Vance has agreed that through August 31, 1999, if the annual aggregate expenses of the Fund (excluding extraordinary expenses) exceed 2.00% of average daily net assets, then Eaton Vance will reduce its fees and take other actions to the extent required to reduce Fund expenses. DISTRIBUTION PLAN - ------------------------------------------------------------------------------ IN ADDITION TO MANAGEMENT FEES AND OTHER EXPENSES, THE FUND PAYS FOR CERTAIN EXPENSES PURSUANT TO A DISTRIBUTION PLAN (THE "PLAN") DESIGNED TO MEET THE REQUIREMENTS OF RULE 12B-1 UNDER THE 1940 ACT. The Plan provides that the Fund will pay a monthly distribution fee to the Principal Underwriter in an amount equal to 0.25% of the Fund's average daily net assets. Aggregate payments to the Principal Underwriter under the Plan are limited to those permissible pursuant to a rule of the National Association of Securities Dealers, Inc. (the "NASD Rule"). The Principal Underwriter may realize a profit from these arrangements. If the Plan is terminated or not continued in effect, the Fund has no obligation to reimburse the Principal Underwriter for amounts expended by the Principal Underwriter in distributing shares of the Fund. VALUING FUND SHARES - ------------------------------------------------------------------------------ THE FUND VALUES ITS SHARES ONCE ON EACH DAY THE NEW YORK STOCK EXCHANGE (THE "EXCHANGE") IS OPEN FOR TRADING, as of the close of regular trading on the Exchange (normally 4:00 p.m. New York time). The Fund's net asset value per share is determined by IBT Fund Services (Canada) Inc. (as agent for the Fund) in the manner authorized by the Directors of the Fund. IBT Fund Services (Canada), Inc. is a subsidiary of Investors Bank & Trust ("IBT"), the Fund's and the Portfolio's custodian. Net asset value is computed by dividing the value of the Fund's total assets, less its liabilities, by the number of Fund shares outstanding. Because the Fund invests its assets in an interest in the Portfolio, the Fund's net asset value will reflect the value of its interest in the Portfolio (which, in turn, reflects the underlying value of the Portfolio's assets and liabilities). Authorized Firms must communicate an investor's order to the Principal Underwriter prior to the close of the Principal Underwriter's business day to receive that day's net asset value per share and the public offering price based thereon. It is the Authorized Firms' responsibility to transmit orders promptly to the Principal Underwriter, which is a wholly-owned subsidiary of Eaton Vance. The Portfolio's net asset value is also determined as of the close of regular trading on the Exchange by IBT Fund Services (Canada) Inc. (as agent for the Portfolio) based on market or fair value in the manner authorized by the Trustees of the Portfolio. Exchange traded equity securities generally are valued at their last sale price. Net asset value is computed by subtracting the liabilities of the Portfolio from the value of its total assets. For further information regarding the valuation of the Portfolio's assets, see "Determination of Net Asset Value" in the Statement of Additional Information. SHAREHOLDERS MAY DETERMINE THE VALUE OF THEIR INVESTMENT BY MULTIPLYING THE NUMBER OF FUND SHARES OWNED BY THE CURRENT NET ASSET VALUE PER SHARE. HOW TO BUY FUND SHARES - ------------------------------------------------------------------------------ SHARES OF THE FUND MAY BE PURCHASED FOR CASH OR MAY BE ACQUIRED IN EXCHANGE FOR SECURITIES. Investors may purchase shares of the Fund through Authorized Firms at the effective public offering price, which price is based on the effective net asset value per share plus the applicable sales charge. The Fund receives the net asset value, while the sales charge is divided between the Authorized Firm and the Principal Underwriter. The Principal Underwriter will furnish the names of Authorized Firms to an investor upon request. An Authorized Firm may charge its customers a fee in connection with transactions executed by that Firm. The Fund may suspend the offering of shares at any time and may refuse an order for the purchase of shares. The sales charge may vary depending on the size of the purchase and the number of shares of Eaton Vance funds the investor may already own, any arrangement to purchase additional shares during a 13-month period or special purchase programs. Complete details of how investors may purchase shares at reduced sales charges under a Statement of Intention, Right of Accumulation, or various employee benefit plans are available from Authorized Firms or the Principal Underwriter. The current sales charges and dealer commissions are: SALES CHARGE SALES CHARGE DEALER COMMISSION AS PERCENTAGE OF AS PERCENTAGE OF AS PERCENTAGE OF AMOUNT OF PURCHASE AMOUNT INVESTED OFFERING PRICE OFFERING PRICE - ------------------ ---------------- ---------------- ---------------- Less than $100,000 .. 4.99% 4.75% 4.00% $100,000 but less than $250,000 ..... 3.90 3.75 3.15 $250,000 but less than $500,000 ..... 2.83 2.75 2.30 $500,000 but less than $1,000,000 ... 2.04 2.00 1.70 $1,000,000 or more .. 0.00* 0.00* 0.50 *No sales charge is payable at the time of purchase on investments of $1 million or more. A contingent deferred sales charge ("CDSC") of 0.50% will be imposed on such investments (as described below) in the event of certain redemptions within 12 months of purchase. The Principal Underwriter may at times allow discounts up to the full sales charge. During periods when the discount includes the full sales charge, Authorized Firms may be deemed to be underwriters as that term is defined in the Securities Act of 1933. The Principal Underwriter may, from time to time, at its own expense, provide additional incentives to Authorized Firms which employ registered representatives who sell Fund shares and/or shares of other funds distributed by the Principal Underwriter. In some instances, such additional incentives may be offered only to certain Authorized Firms whose representatives sell or are expected to sell significant amounts of shares. In addition, the Principal Underwriter may from time to time increase or decrease the dealer commissions paid to Authorized Firms. An initial investment in the Fund must be at least $1,000. Once an account has been established the investor may send investments of $50 or more at any time directly to the Fund's transfer agent (the "Transfer Agent") as follows: First Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123. The $1,000 minimum initial investment is waived for Bank Automated Investing accounts, which may be established with an investment of $50 or more. See "Eaton Vance Shareholder Services." Shares of the Fund may be sold at net asset value to shareholders of the Fund on August 30, 1996 that have maintained their account until the subsequent purchase, current and retired Directors and Trustees of Eaton Vance funds, including the Portfolio; to officers and employees and clients of Eaton Vance and its affiliates; to registered representatives and employees of Authorized Firms; to bank employees who refer customers to registered representatives of Authorized Firms; and to such persons' spouses and children under the age of 21 and their beneficial accounts. Shares may also be issued at net asset value (1) in connection with the merger of an investment company with the Fund, (2) to investors making an investment as part of a fixed fee program whereby an entity unaffiliated with Eaton Vance provides multiple investment services, such as management, brokerage and custody, (3) where the amount invested represents redemption proceeds from a mutual fund unaffiliated with Eaton Vance, if the redemption occurred no more than 60 days prior to the purchase of Fund shares and the redeemed shares were subject to a sales charge, and (4) to investment advisors, financial planners or other intermediaries who place trades for their own accounts or the accounts of their clients and who charge a management, consulting or other fee for their services; clients of such investment advisors, financial planners or other intermediaries who place trades for their own accounts if the accounts are linked to the master account of such investment advisor, financial planner or other intermediary on the books and records of the broker or agent; and retirement and deferred compensation plans and trusts used to fund those plans, including, but not limited to, those defined in Section 401(a), 403(b) or 457 of the Internal Revenue Code of 1986, as amended (the "Code") and "rabbi trusts." No initial sales charge and no contingent deferred sales charge will be payable or imposed with respect to shares of the Fund purchased by retirement plans qualified under Section 401, 403(b) or 457 of the Code ("Eligible Plans"). In order to purchase shares without a sales charge, the plan sponsor of an Eligible Plan must notify the Transfer Agent of the Fund of its status as an Eligible Plan. Participant accounting services (including trust fund reconciliation services) will be offered only through third party recordkeepers and not by the Principal Underwriter. The Principal Underwriter may pay commissions to Authorized Firms who initiate and are responsible for purchases of shares of the Fund by Eligible Plans of up to 1.00% of the amount invested in such shares. ACQUIRING FUND SHARES IN EXCHANGE FOR SECURITIES. IBT, as escrow agent, will receive securities acceptable to Eaton Vance, as Manager, in exchange for Fund shares at the applicable public offering price as determined above. The minimum value of securities (or securities and cash) accepted for deposit is $5,000. Securities accepted will be sold on the day of their receipt or as soon thereafter as possible. The number of Fund shares to be issued in exchange for securities will be the aggregate proceeds from the sale of such securities, divided by the applicable public offering price per Fund share on the day such proceeds are received. Eaton Vance will use reasonable efforts to obtain the then current market price for such securities, but does not guarantee the best price available. Eaton Vance will absorb any transaction costs, such as commissions, on the sale of the securities. Securities determined to be acceptable should be transferred via book entry or physically delivered, in proper form for transfer, through an Authorized Firm, together with a completed and signed Letter of Transmittal in approved form (available from Authorized Firms), as follows: IN THE CASE OF BOOK ENTRY: Deliver through Depository Trust Co. Broker #2212 Investors Bank & Trust Company For A/C EV Traditional Worldwide Health Sciences Fund, Inc. IN THE CASE OF PHYSICAL DELIVERY: Investors Bank & Trust Company Attention: EV Traditional Worldwide Health Sciences Fund, Inc. Physical Securities Processing Settlement Area 89 South Street Boston, MA 02111 Investors who are contemplating an exchange of securities for shares of the Fund, or their representatives, must contact Eaton Vance to determine whether the securities are acceptable before forwarding such securities. Eaton Vance reserves the right to reject any securities. Exchanging securities for Fund shares may create a taxable gain or loss. Each investor should consult his or her tax adviser with respect to the particular federal, state and local tax consequences of exchanging securities for Fund shares. STATEMENT OF INTENTION AND ESCROW AGREEMENT. If the investor, on an application, makes a Statement of Intention to invest a specified amount over a thirteen-month period, then out of the initial purchase (or subsequent purchases if necessary) 5% of the dollar amount specified on the application shall be held in escrow by the escrow agent in the form of shares (computed to the nearest full share at the public offering price applicable to the initial purchase hereunder) registered in the investor's name. All income dividends and capital gains distributions on escrowed shares will be paid to the investor or to the investor's order. When the minimum investment so specified is completed, the escrowed shares will be delivered to the investor. If the investor has an accumulation account the shares will remain on deposit under the investor's account. If total purchases under this Statement of Intention are less than the amount specified, the investor will promptly remit to the Principal Underwriter any difference between the sales charge on the amount specified and on the amount actually purchased. If the investor does not within 20 days after written request by the Principal Underwriter or the Authorized Firm pay such difference in sales charge, the escrow agent will redeem an appropriate number of the escrowed shares in order to realize such difference. Full shares remaining after any such redemption together with any excess cash proceeds of the shares so redeemed will be delivered to the investor or to the investor's order by the escrow agent. If total purchases made under this Statement are large enough to qualify for a lower sales charge than that applicable to the amount specified, all transactions will be computed at the expiration date of this Statement to give effect to the lower charge. Any difference in sales charge will be refunded to the investor in cash, or applied to the purchase of additional shares at the lower charge if specified by the investor. This refund will be made by the Authorized Firm and by the Principal Underwriter. If at the time of the recomputation a firm other than the original firm is placing the orders, the adjustment will be made only on those shares purchased through the firm then handling the investor's account. IF YOU DON'T HAVE AN AUTHORIZED FIRM, EATON VANCE CAN RECOMMEND ONE. HOW TO REDEEM FUND SHARES - ------------------------------------------------------------------------------ A SHAREHOLDER MAY REDEEM FUND SHARES IN ONE OF THREE WAYS -- BY MAIL, BY TELEPHONE OR THROUGH AN AUTHORIZED FIRM. The redemption price will be based on the net asset value per Fund share next computed after a redemption request is received in the proper form as described below. REDEMPTION BY MAIL: Shares may be redeemed by delivering to First Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123, during its business hours a written request for redemption in good order, plus any share certificates with executed stock powers. Good order means that all relevant documents must be endorsed by the record owner(s) exactly as the shares are registered and the signature(s) must be guaranteed by a member of either the Securities Transfer Association's STAMP program or the New York Stock Exchange's Medallion Signature Program, or certain banks, savings and loan institutions, credit unions, securities dealers, securities exchanges, clearing agencies and registered securities associations as required by a regulation of the Securities and Exchange Commission and acceptable to First Data Investor Services Group. In addition, in some cases, good order may require the furnishing of additional documents such as where shares are registered in the name of a corporation, partnership or fiduciary. REDEMPTION BY TELEPHONE: Shares may be redeemed by telephone provided the investor has not disclaimed in writing the use of the privilege. Such redemptions can be effected by calling the Transfer Agent at 800-262-1122, Monday through Friday, 9:00 a.m. to 4:00 p.m.(Eastern Standard Time). The proceeds of a telephone redemption may be no greater than the maximum amount established by the Principal Underwriter (currently $50,000) and may be mailed only to the account address of record. Shares held by corporations, trusts or certain other entities, or subject to fiduciary arrangements, may not be redeemed by telephone. Neither the Fund, the Principal Underwriter nor the Transfer Agent will be responsible for the authenticity of redemption instructions received by telephone, provided that reasonable procedures to confirm that instructions communicated by telephone are genuine have been followed. If such procedures are not followed, the Fund, the Principal Underwriter or the Transfer Agent may be liable for any losses due to unauthorized or fraudulent telephone instructions. Telephone instructions will be tape recorded. In times of drastic economic or market changes, a telephone redemption may be difficult to implement. REDEMPTION THROUGH AN AUTHORIZED FIRM: To sell shares at their net asset value through an Authorized Firm (a repurchase), a shareholder can place a repurchase order with the Authorized Firm, which may charge a fee. The value of such shares is based upon the net asset value calculated after EVD, as the Fund's agent, receives the order. It is the Authorized Firm's responsibility to transmit promptly repurchase orders to EVD. Throughout this Prospectus, the word "redemption" is generally meant to include a repurchase. Within seven days after receipt of a redemption request in good order by First Data Investor Services Group, the Fund will make payment in cash for the net asset value of the shares as of the date determined above and reduced by the amount of any federal income tax required to be withheld. Although the Fund normally expects to make payment in cash for redeemed shares, the Fund, subject to compliance with applicable regulations, has reserved the right to pay the redemption price of shares of the Fund, either totally or partially, by a distribution in kind of readily marketable securities withdrawn by the Fund from the Portfolio. The securities so distributed would be valued pursuant to the Portfolio's valuation procedures. If a shareholder received a distribution in kind, the shareholder could incur brokerage or other charges in converting the securities to cash. If shares were recently purchased, the proceeds of a redemption (or repurchase) will not be sent until the check (including a certified or cashier's check) received for the shares purchased has cleared. Payment for shares tendered for redemption may be delayed up to 15 days from the purchase date when the purchase check has not yet cleared. Redemptions or repurchases may result in a taxable gain or loss. Due to the high cost of maintaining small accounts, the Fund reserves the right to redeem accounts with balances of less than $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 Fund if the cause of the low account balance was a reduction in the net asset value of Fund shares. In addition, no account of less than $750 will be redeemed if the account size was below such amount on August 30, 1996 and no partial redemption since then has occurred. If shares have been purchased at net asset value with no initial sale charge by virtue of the purchase having been in the amount of $1 million or more and are redeemed within 12 months of purchase, a CDSC of 0.50% will be imposed on such redemption. The CDSC will be retained by the Principal Underwriter. The CDSC will be imposed on an amount equal to the lesser of the current market value or the original purchase price of the shares redeemed. Accordingly, no CDSC will be imposed on increases in account value above the initial purchase price, including any distributions that have been reinvested in additional shares. In determining whether a CDSC is applicable to a redemption, the calculation will be made in a manner that results in the lowest possible rate being charged. It will be assumed that redemptions are made first from any shares in the shareholder's account that are not subject to a CDSC. The CDSC is waived for redemptions involving certain liquidation, merger or acquisition transactions involving other investment companies. If a shareholder reinvests redemption proceeds within a 60-day period and in accordance with the conditions set forth under "Eaton Vance Shareholder Services -- Reinvestment Privilege," the shareholder's account will be credited with the amount of any CDSC paid on such redeemed shares. REPORTS TO SHAREHOLDERS - ------------------------------------------------------------------------------ THE FUND WILL ISSUE TO ITS SHAREHOLDERS SEMI-ANNUAL AND ANNUAL REPORTS CONTAINING FINANCIAL STATEMENTS. Financial statements included in annual reports are audited by the Fund's independent certified public accountants. Shortly after the end of each calendar year, the Fund will furnish all shareholders with information necessary for preparing federal and state tax returns. Consistent with applicable law, duplicate mailings of shareholder reports and certain other Fund information to shareholders residing at the same address may be eliminated. THE LIFETIME INVESTING ACCOUNT/DISTRIBUTION OPTIONS - ------------------------------------------------------------------------------ AFTER AN INVESTOR MAKES AN INITIAL PURCHASE OF FUND SHARES, THE FUND'S TRANSFER AGENT, FIRST DATA INVESTOR SERVICES GROUP, WILL SET UP A LIFETIME INVESTING ACCOUNT FOR THE INVESTOR ON THE FUND'S RECORDS. This account is a complete record of all transactions between the investor and the Fund which at all times shows the balance of shares owned. The Fund will not issue share certificates except upon request. Each time a transaction takes place in a shareholder's account, the shareholder will receive a statement showing complete details of the transaction and the current balance in the account. (Under certain investment plans, statements may be sent only quarterly.) THE LIFETIME INVESTING ACCOUNT PERMITS A SHAREHOLDER TO MAKE ADDITIONAL INVESTMENTS IN SHARES BY SENDING A CHECK FOR $50 OR MORE to First Data Investor Services Group. Any questions concerning a shareholder's account or services available may be directed by telephone to EATON VANCE SHAREHOLDER SERVICES at 800-225-6265, extension 2, or in writing to First Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123, (please provide the name of the shareholder, the Fund and the account number). THE FOLLOWING DISTRIBUTION OPTIONS WILL BE AVAILABLE TO ALL LIFETIME INVESTING ACCOUNTS and may be changed as often as desired by written notice to the Fund's dividend disbursing agent, First Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123. The currently effective option will appear on each account statement. Share Option -- Dividends and capital gains will be reinvested in additional shares. Income Option -- Dividends will be paid in cash, and capital gains will be reinvested in additional shares. Cash Option -- Dividends and capital gains will be paid in cash. The Share Option will be assigned if no other option is specified. Distributions, including those reinvested, will be reduced by any withholding required under federal income tax laws. If the Income Option or Cash Option has been selected, dividend and/or capital gains distribution checks which are returned by the United States Postal Service as not deliverable or which remain uncashed for six months or more will be reinvested in the account in shares at the then current net asset value. Furthermore, the distribution option on the account will be automatically changed to the Share Option until such time as the shareholder selects a different option. DISTRIBUTION INVESTMENT OPTION. In addition to the distribution options set forth above, dividends and/or capital gains may be invested in additional shares of another Eaton Vance fund. Before selecting this option, a shareholder should obtain a prospectus of the other Eaton Vance fund and consider its objectives and policies carefully. "STREET NAME" ACCOUNTS. If shares of the Fund are held in a "street name" account with an Authorized Firm, all recordkeeping, transaction processing and payments of distributions relating to the beneficial owner's account will be performed by the Authorized Firm, and not by the Fund and its Transfer Agent. Since the Fund will have no record of the beneficial owner's transactions, a beneficial owner should contact the Authorized Firm to purchase, redeem or exchange shares, to make changes in or give instructions concerning the account, or to obtain information about the account. The transfer of shares in a "street name" account to an account with another dealer or to an account directly with the Fund involves special procedures and will require the beneficial owner to obtain historical purchase information about the shares in the account from the Authorized Firm. Before establishing a "street name" account with an investment firm, or transferring the account to another investment firm, an investor wishing to reinvest distributions should determine whether the firm which will hold the shares allows reinvestment of distributions in "street name" accounts. THE EATON VANCE EXCHANGE PRIVILEGE - ------------------------------------------------------------------------------ Shares of the Fund currently may be exchanged for shares of any of the following funds: Eaton Vance Cash Management Fund, Eaton Vance Income Fund of Boston, Eaton Vance Municipal Bond Fund L.P., Eaton Vance Tax Free Reserves and any fund in the Eaton Vance Traditional Group of Funds, on the basis of the net asset value per share of each fund at the time of the exchange (plus, in the case of an exchange made within six months of the date of purchase of shares subject to an initial sales charge, an amount equal to the difference, if any, between the sales charge previously paid on the shares being exchanged and the sales charge payable on the shares being acquired). Such exchange offers are available only in states where shares of the fund being acquired may be legally sold. Each exchange must involve shares which have a net asset value of at least $1,000. The exchange privilege may be changed or discontinued without penalty. Shareholders will be given sixty (60) days' notice prior to any termination or material amendment of the exchange privilege. The Fund does not permit the exchange privilege to be used for "Market Timing" and may terminate the exchange privilege for any shareholder account engaged in Market Timing activity. Any shareholder account for which more than two round-trip exchanges are made within any twelve month period will be deemed to be engaged in Market Timing. Furthermore, a group of unrelated accounts for which exchanges are entered contemporaneously by a financial intermediary will be considered to be engaged in Market Timing. Shares of the Fund which are subject to a CDSC may be exchanged into any of the above funds without incurring the CDSC. The shares acquired in an exchange may be subject to a CDSC upon redemption. For purposes of computing the CDSC payable upon the redemption of shares acquired in an exchange, the holding period of the original shares is added to the holding period of the shares acquired in the exchange. First Data Investor Services Group makes exchanges at the next determined net asset value after receiving an exchange request in good order (see "How to Redeem Fund Shares"). Consult First Data Investor Services Group for additional information concerning the exchange privilege. Applications and prospectuses of other funds are available from Authorized Firms or the Principal Underwriter. The prospectus for each fund describes its investment objectives and policies, and shareholders should obtain a prospectus and consider these objectives and policies carefully before requesting an exchange. Shares of certain other funds for which Eaton Vance acts as investment adviser or administrator may be exchanged for Fund shares on the basis of the net asset value per share of each fund at the time of the exchange (plus, in the case of an exchange made within six months of the date of purchase, an amount equal to the difference, if any, between the sales charge previously paid on the shares being exchanged and the sales charge payable on the Fund shares being acquired). Any such exchange is subject to any restrictions or qualifications set forth in the current prospectus of any such fund. Telephone exchanges are accepted by First Data Investor Services Group provided that the investor has not disclaimed in writing the use of the privilege. To effect such exchanges, call First Data Investor Services Group at 800-262-1122, Monday through Friday, 9:00 a.m. to 4:00 p.m. (Eastern Standard Time). Shares acquired by telephone exchange must be registered in the same name(s) and with the same address as the shares being exchanged. Neither the Fund, the Principal Underwriter nor First Data Investor Services Group will be responsible for the authenticity of exchange instructions received by telephone, provided that reasonable procedures to confirm that instructions communicated are genuine have been followed. If such procedures are not followed, the Fund, the Principal Underwriter or the Transfer Agent may be liable for any losses due to unauthorized or fraudulent telephone instructions. Telephone instructions will be tape recorded. In times of drastic economic or market changes, a telephone exchange may be difficult to implement. An exchange may result in a taxable gain or loss. EATON VANCE SHAREHOLDER SERVICES - ------------------------------------------------------------------------------ THE FUND OFFERS THE FOLLOWING SERVICES, WHICH ARE VOLUNTARY, INVOLVE NO EXTRA CHARGE, AND MAY BE CHANGED OR DISCONTINUED WITHOUT PENALTY AT ANY TIME. Full information on each of the services described below and an application, where required, are available from Authorized Firms or the Principal Underwriter. The cost of administering such services for the benefit of shareholders who participate in them is borne by the Fund as an expense to all shareholders. INVEST-BY-MAIL -- FOR PERIODIC SHARE ACCUMULATION: Once the $1,000 minimum investment has been made, checks of $50 or more payable to the order of EV Traditional Worldwide Health Sciences Fund, Inc. may be mailed directly to First Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123 at any time -- whether or not distributions are reinvested. The name of the shareholder, the Fund and the account number should accompany each investment. BANK AUTOMATED INVESTING -- FOR REGULAR SHARE ACCUMULATION: Cash investments of $50 or more may be made automatically each month or quarter from the shareholder's bank account. The $1,000 minimum initial investment and small account redemption policy are waived for these accounts. STATEMENT OF INTENTION: Purchases of $100,000 or more made over a 13-month period are eligible for reduced sales charges. See "How to Buy Fund Shares -- Statement of Intention and Escrow Agreement." RIGHT OF ACCUMULATION: Purchases may qualify for reduced sales charges when the current market value of holdings (shares at current offering price) plus new purchases reaches $100,000 or more. Shares of the Eaton Vance funds listed under "The Eaton Vance Exchange Privilege" may be combined under the Statement of Intention and Right of Accumulation. WITHDRAWAL PLAN: A shareholder may draw on shareholdings systematically with monthly or quarterly checks in an amount specified by the shareholder. A minimum deposit of $5,000 in shares is required. The maintenance of a withdrawal plan concurrently with purchases of additional shares would be disadvantageous because of the sales charge included in such purchases. REINVESTMENT PRIVILEGE: A shareholder who has repurchased or redeemed shares may reinvest any portion or all of the repurchase or redemption proceeds (plus that amount necessary to acquire a fractional share to round off the purchase to the nearest full share) in shares of the Fund, or, provided that the shares repurchased or redeemed have been held for at least 60 days, in shares of any of the other funds offered by the Principal Underwriter subject to an initial sales charge, provided that the reinvestment is effected within 60 days after such repurchase or redemption, and the privilege has not been used more than once in the prior 12 months. Shares are sold to a reinvesting shareholder at the net asset value next determined following timely receipt of a written purchase order by the Principal Underwriter or by the fund the shares of which are to be purchased (or by such fund's transfer agent). The privilege is also available to shareholders of the Funds listed under "The Eaton Vance Exchange Privilege" who wish to reinvest such redemption or repurchase proceeds in shares of the Fund. If a shareholder reinvests redemption proceeds within the 60-day period, the shareholder's account will be credited with the amount of any CDSC paid on such redeemed shares. To the extent that any shares of the Fund are sold at a loss and the proceeds are reinvested in shares of the Fund (or other shares of the Fund are acquired within the period beginning 30 days before and ending 30 days after the date of the redemption), some or all of the loss generally will not be allowed as a tax deduction. Shareholders should consult their tax advisers concerning the tax consequences of reinvestments. TAX-SHELTERED RETIREMENT PLANS: Shares of the Fund are available for purchase in connection with the following tax-sheltered retirement plans: - --Pension and Profit Sharing Plans for self-employed individuals, corporations and nonprofit organizations; - --Individual Retirement Account Plans for individuals and their non-employed spouses; and - --403(b) Retirement Plans for employees of public school systems, hospitals, colleges and other nonprofit organizations meeting certain requirements of the Code. Detailed information concerning these plans, including certain exceptions to minimum investment requirements, and copies of the plans are available from the Principal Underwriter. This information should be read carefully and consultation with an attorney or tax adviser may be advisable. The information sets forth the service fee charged for retirement plans and describes the federal income tax consequences of establishing a plan. Under all plans, dividends and distributions will be automatically reinvested in additional shares. DISTRIBUTIONS AND TAXES - ------------------------------------------------------------------------------ DISTRIBUTIONS. The Fund's present policy is to make (A) at least one distribution annually (normally in December) of all or substantially all of the investment income allocated to the Fund by the Portfolio (less the Fund's direct and allocated expenses), and (B) at least one distribution annually of all or substantially all of the net realized capital gains (if any) allocated to the Fund by the Portfolio (reduced by any available capital loss carryforwards from prior years). Shareholders may reinvest all distributions in shares of the Fund without a sales charge at the net asset value per share as of the close of business on the record date. The Fund's net investment income consists of the Fund's allocated share of the net investment income of the Portfolio, less all actual and accrued expenses of the Fund determined in accordance with generally accepted accounting principles. The Portfolio's net investment income consists of all income accrued on the Portfolio's assets, less all actual and accrued expenses of the Portfolio determined in accordance with generally accepted accounting principles. The Fund's net realized capital gains, if any, consist of the net realized capital gains (if any) allocated to the Fund by the Portfolio for tax purposes, after taking into account any available capital loss carryovers. TAXES. Distributions by the Fund which are derived from the Fund's allocated share of the Portfolio's net investment income, net short-term capital gains and certain foreign exchange gains are taxable to shareholders as ordinary income, whether received in cash or reinvested in additional shares of the Fund. The Fund's distributions will generally not qualify for the dividends-received deduction for corporate shareholders. Capital gains referred to in clause (B) above, if any, realized by the Portfolio and allocated to the Fund for the Fund's fiscal year, which ends on August 31, will usually be distributed by the Fund prior to the end of December. Distributions by the Fund of long-term capital gains allocated to the Fund by the Portfolio are taxable to shareholders as long-term capital gains, whether paid in cash or reinvested in additional shares of the Fund and regardless of the length of time Fund shares have been owned by the shareholder. If shares are purchased shortly before the record date of a distribution, the shareholder will pay the full price for the shares and then receive some portion of the price back as a taxable distribution. The amount, timing and character of the Fund's distributions to shareholders may be affected by special tax rules governing the Portfolio's activities in options, futures and forward foreign currency exchange transactions or certain other investments. Certain distributions, if declared by the Fund in October, November or December and paid the following January, will be taxable to shareholders as if received on December 31 of the year in which they are declared. Sales charges paid upon a purchase of shares of the Fund cannot be taken into account for purposes of determining gain or loss on a redemption or exchange of the shares before the 91st day after their purchase to the extent shares of the Fund or of another fund are subsequently acquired pursuant to the Fund's reinvestment or exchange privilege. Any disregarded amounts will result in an adjustment to the shareholder's tax basis in some or all of any other shares acquired. The Fund intends to qualify as a regulated investment company under the Code and to satisfy all requirements necessary to be relieved of federal taxes on income and gains it distributes to shareholders. In satisfying these requirements, the Fund will treat itself as owning its proportionate share of each of the Portfolio's assets and as entitled to the income of the Portfolio properly attributable to such share. Shareholders should consult with their tax adviser concerning the applicability of state, local or other taxes to an investment in the Fund. As a regulated investment company under the Code, the Fund does not pay federal income or excise taxes to the extent that it distributes to shareholders its net investment income and net realized capital gains in accordance with the timing requirements imposed by the Code. As a partnership under the Code, the Portfolio does not pay federal income or excise taxes. Income realized by the Portfolio from certain investments and allocated to the Fund may be subject to foreign income taxes, and the Fund may make an election under Section 853 of the Code that would allow shareholders to claim a credit or deduction on their federal income tax returns for (and treat as additional amounts distributed to them) their pro rata portion of the Fund's allocated share of qualified taxes paid by the Portfolio to foreign countries. This election may be made only if more than 50% of the assets of the Fund, including its allocable share of the Portfolio's assets, at the close of a taxable year consists of securities in foreign corporations. The Fund will send a written notice of any such election (not later than 60 days after the close of its taxable year) to each shareholder indicating the amount to be treated as the proportionate share of such taxes. The availability of foreign tax credits or deductions for shareholders is subject to certain additional restrictions and limitations. The Fund will provide its shareholders annually with tax information notices and Forms 1099 to assist in the preparation of their federal and state tax returns for the prior calendar year's distributions, proceeds from the redemption or exchange of Fund shares, and federal income tax (if any) withheld by the Fund's Transfer Agent. PERFORMANCE INFORMATION - ------------------------------------------------------------------------------ FROM TIME TO TIME, THE FUND MAY ADVERTISE ITS AVERAGE ANNUAL TOTAL RETURN. The Fund's average annual total return is determined by multiplying a hypothetical initial purchase order of $1,000 by the average annual compounded rate of return (including capital appreciation/depreciation, and distributions paid and reinvested) for the stated period and annualizing the result. The average annual total return calculation assumes the maximum sales charge is deducted from the initial $1,000 purchase order and that all distributions are reinvested at net asset value on the reinvestment dates during the period. The Fund may also publish annual and cumulative total return figures from time to time. The Fund may use total return figures, together with comparisons with the Consumer Price Index, various domestic and foreign securities indices and performance studies prepared by independent organizations, in advertisements and in information furnished to present or prospective shareholders. The Fund may also furnish total return calculations based on investments at various sales charge levels or at net asset value. Any performance data which is based on the Fund's net asset value per share would be lower if a sales charge were taken into account. The Fund's performance may be compared in publications to the performance of various indices and investments for which reliable data is available, and to averages, performance rankings, or other information prepared by recognized mutual fund statistical services. Investors should note that the investment results of the Fund will fluctuate over time, and any presentation of the Fund's total return for any prior period should not be considered a representation of what an investment may earn or what the Fund's total return may be in any future period. The Fund's investment results are based on many factors, including market conditions, the composition of the security holdings of the Portfolio and the operating expenses of the Fund and the Portfolio. Investment results also often reflect the risks associated with the particular investment objective and policies of the Fund and the Portfolio. Among others, these factors should be considered when comparing the Fund's investment results to those of other mutual funds and other investment vehicles. EV TRADITIONAL [logo] WORLDWIDE HEALTH SCIENCES FUND, INC. PROSPECTUS SEPTEMBER 3, 1996 EV TRADITIONAL WORLDWIDE HEALTH SCIENCES FUND, INC. 24 FEDERAL STREET BOSTON, MA 02110 SPONSOR AND MANAGER OF EV TRADITIONAL WORLDWIDE HEALTH SCIENCES FUND, INC. ADMINISTRATOR OF WORLDWIDE HEALTH SCIENCES PORTFOLIO Eaton Vance Management, 24 Federal Street, Boston, MA 02110 ADVISER OF WORLDWIDE HEALTH SCIENCES PORTFOLIO G/A Capital Management, Inc., 41 Madison Avenue, 40th Floor New York, NY 10010-2202 PRINCIPAL UNDERWRITER Eaton Vance Distributors, Inc., 24 Federal Street, Boston, MA 02110 (800) 225-6265 CUSTODIAN Investors Bank & Trust Company, 89 South Street, Boston, MA 02111 TRANSFER AGENT First Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123 (800) 262-1122 INDEPENDENT ACCOUNTANTS Coopers & Lybrand, L.L.P., One Post Office Square, Boston, MA 02109 T- P PART B INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION STATEMENT OF ADDITIONAL INFORMATION September 3, 1996 EV TRADITIONAL WORLDWIDE HEALTH SCIENCES FUND, INC. 24 Federal Street Boston, Massachusetts 02110 (800) 225-6265 TABLE OF CONTENTS Page PART I Additional Information About Investment Policies ................ 1 Investment Restrictions ......................................... 5 Management of the Fund and the Portfolio ........................ 7 Custodian ....................................................... 9 Service for Withdrawal .......................................... 9 Determination of Net Asset Value ................................ 10 Investment Performance .......................................... 10 Taxes ........................................................... 12 Portfolio Security Transactions ................................. 13 PART II Fees and Expenses ............................................... a-1 Board Members and Officers ...................................... a-2 Services for Accumulation ....................................... a-3 Principal Underwriter ........................................... a-4 Distribution Plan ............................................... a-5 Performance Information ......................................... a-5 Control Persons and Principal Holders of Securities ............. a-5 Other Information ............................................... a-6 Independent Accountants ......................................... a-6 Financial Statements ............................................ a-6 Report of Independent Accountants ............................... a-8 THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR ACCOMPANIED BY THE FUND'S PROSPECTUS DATED SEPTEMBER 3, 1996, AS SUPPLEMENTED FROM TIME TO TIME, WHICH IS INCORPORATED HEREIN BY REFERENCE. THIS STATEMENT OF ADDITIONAL INFORMATION SHOULD BE READ IN CONJUNCTION WITH SUCH PROSPECTUS, A COPY OF WHICH MAY BE OBTAINED WITHOUT CHARGE BY CONTACTING EATON VANCE DISTRIBUTORS, INC. (THE "PRINCIPAL UNDERWRITER") (SEE BACK COVER FOR ADDRESS AND PHONE NUMBER). THIS STATEMENT OF ADDITIONAL INFORMATION IS SOMETIMES REFERRED TO HEREIN AS THE "SAI." CAPITALIZED TERMS USED IN THIS SAI AND NOT OTHERWISE DEFINED HAVE THE MEANINGS GIVEN THEM IN THE FUND'S PROSPECTUS. STATEMENT OF ADDITIONAL INFORMATION PART I ADDITIONAL INFORMATION ABOUT INVESTMENT POLICIES The Fund is subject to the same investment policies as those of the Portfolio. The Fund currently seeks to achieve its objective by investing in the Portfolio. Foreign Investments. Under normal market conditions, the Portfolio will invest in securities of issuers located in at least three different countries. 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 of the Portfolio, political or financial instability or diplomatic and other developments which could affect such investments. Further, economies of particular countries or areas of the world may differ favorably or unfavorably from the economy of the United States. It is anticipated that in most cases the best available market for foreign securities will be on exchanges or in over-the-counter markets located outside of the United States. Foreign stock markets, while growing in volume and sophistication, are generally not as developed as those in the United States, and securities of some foreign issuers (particularly those located in developing countries) may be less liquid and more volatile than securities of comparable U.S. companies. In addition, foreign brokerage commissions are generally higher than commissions on securities traded in the United States and may be non-negotiable. In general, there is less overall governmental supervision and regulation of foreign securities markets, broker-dealers, and issuers than in the United States. Foreign Currency Transactions. Because investments in companies whose principal business activities are located outside of the United States will frequently involve currencies of foreign countries, and because assets of the Portfolio may temporarily be held in bank deposits in foreign currencies during the completion of investment programs, the value of the assets of the Portfolio as measured in U.S. dollars may be affected favorably or unfavorably by changes in foreign currency exchange rates and exchange control regulations. Currency exchange rates can also be affected unpredictably by intervention by U.S. or foreign governments or central banks, or the failure to intervene, or by currency controls or political developments in the U.S. or abroad. The Portfolio may conduct its foreign currency exchange transactions on a spot (i.e., cash) basis at the spot rate prevailing in the foreign currency exchange market or through entering into swaps, forward contracts, options or futures on currency. On spot transactions, foreign exchange dealers do not charge a fee for conversion, but they do realize a profit based on the difference (the "spread") between the prices at which they are buying and selling various currencies. Thus, a dealer may offer to sell a foreign currency to the Portfolio at one rate, while offering a lesser rate of exchange should the Portfolio desire to resell that currency to the dealer. Emerging Companies. The investment risk associated with emerging companies is higher than that normally associated with larger, older companies due to the greater business risks associated with small size, the relative age of the company, limited product lines, distribution channels and financial and managerial resources. Further, there is typically less publicly available information concerning smaller companies than for larger, more established ones. The securities of small companies are often traded only over-the-counter and may not be traded in the volumes typical of trading on a national securities exchange. As a result, in order to sell this type of holding, the Portfolio may need to discount the securities from recent prices or dispose of the securities over a long period of time. The prices of this type of security may be more volatile than those of larger companies which are often traded on a national securities exchange. Currency Swaps. Currency swaps require maintenance of a segregated account described under "Asset Coverage for Derivative Investments" below. The Portfolio will not enter into any currency swap unless the credit quality of the unsecured senior debt or the claims-paying ability of the other party thereto is considered to be investment grade by the Adviser. If there is a default by the other party to such a transaction, the Portfolio will have contractual remedies pursuant to the agreements related to the transaction. The swap market has grown substantially in recent years with a large number of banks and investment banking firms acting both as principals and as agents utilizing standardized swap documentation. As a result, the swap market has become relatively liquid in comparison with the markets for other similar instruments which are traded in the interbank market. Forward Foreign Currency Exchange Transactions. The Portfolio may enter into forward foreign currency exchange contracts in several circumstances. First, when the Portfolio enters into a contract for the purchase or sale of a security denominated in a foreign currency, or when the Portfolio anticipates the receipt in a foreign currency of dividend or interest payments on such a security which it holds, the Portfolio may desire to "lock in" the U.S. dollar price of the security or the U.S. dollar equivalent of such dividend or interest payment, as the case may be. By entering into a forward contract for the purchase or sale, for a fixed amount of dollars, of the amount of foreign currency involved in the underlying transactions, the Portfolio will attempt to protect itself against an adverse change in the relationship between the U.S. dollar and the subject foreign currency during the period between the date on which the security is purchased or sold, or on which the dividend or interest payment is declared, and the date on which such payments are made or received. Additionally, when management of the Portfolio 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 by the Portfolio 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 because the future value of such securities in foreign currencies will change as a consequence of market movements in the value of those securities between the date on which the contract is entered into and the date it matures. The precise projection of short-term currency market movements is not possible, and short-term hedging provides a means of fixing the dollar value of only a portion of the Portfolio's foreign assets. Special Risks Associated With Currency Transactions. Transactions in forward contracts, as well as futures and options on foreign currencies, are subject to the risk of governmental actions affecting trading in or the prices of currencies underlying such contracts, which could restrict or eliminate trading and could have a substantial adverse effect on the value of positions held by the Portfolio. In addition, the value of such positions could be adversely affected by a number of other complex political and economic factors applicable to the countries issuing the underlying currencies. Furthermore, unlike trading in most other types of instruments, there is no systematic reporting of last sale information with respect to the foreign currencies underlying forward contracts, futures contracts and options. As a result, the available information on which the Portfolio's trading systems will be based may not be as complete as the comparable data on which the Portfolio makes investment and trading decisions in connection with securities and other transactions. Moreover, because the foreign currency market is a global, twenty-four hour market, events could occur on that market which will not be reflected in the forward, futures or options markets until the following day, thereby preventing the Portfolio from responding to such events in a timely manner. Settlements of over-the-counter forward contracts or of the exercise of foreign currency options generally must occur within the country issuing the underlying currency, which in turn requires parties to such contracts to accept or make delivery of such currencies in conformity with any United States or foreign restrictions and regulations regarding the maintenance of foreign banking relationships, fees, taxes or other charges. Unlike currency futures contracts and exchange-traded options, options on foreign currencies and forward contracts are not traded on contract markets regulated by the CFTC or (with the exception of certain foreign currency options) the Securities and Exchange Commission (the "Commission"). To the contrary, such instruments are traded through financial institutions acting as market-makers. (Foreign currency options are also traded on the Philadelphia Stock Exchange subject to Commission regulation). In an over-the-counter trading environment, many of the protections associated with transactions on exchanges will not be available. For example, there are no daily price fluctuation limits, and adverse market movements could therefore continue to an unlimited extent over a period of time. Although the purchaser of an option cannot lose more than the amount of the premium plus related transaction costs, this entire amount could be lost. Moreover, an option writer could lose amounts substantially in excess of its initial investment due to the margin and collateral requirements associated with such option positions. Similarly, there is no limit on the amount of potential losses on forward contracts to which the Portfolio is a party. In addition, over-the-counter transactions can only be entered into with a financial institution willing to take the opposite side, as principal, of the Portfolio's position unless the institution acts as broker and is able to find another counterparty willing to enter into the transaction with the Portfolio. Where no such counterparty is available, it will not be possible to enter into a desired transaction. There also may be no liquid secondary market in the trading of over-the-counter contacts, and the Portfolio may be unable to close out options purchased or written, or forward contracts entered into, until their exercise, expiration or maturity. This in turn could limit the Portfolio's ability to realize profits or to reduce losses on open positions and could result in greater losses. Furthermore, over-the-counter transactions are not backed by the guarantee of an exchange's clearing corporation. The Portfolio will therefore be subject to the risk of default by, or the bankruptcy of, the financial institution serving as its counterparty. One or more of such institutions also may decide to discontinue its role as market-maker in a particular currency, thereby restricting the Portfolio's ability to enter into desired hedging transactions. The Portfolio will enter into over-the-counter transactions only with parties whose creditworthiness has been reviewed and found satisfactory by the Adviser. The purchase and sale of exchange-traded foreign currency options, however, are subject to the risks of the availability of a liquid secondary market described above, as well as the risks regarding adverse market movements, margining of options written, the nature of the foreign currency market, possible intervention by governmental authorities and the effect of other political and economic events. In addition, exchange-traded options on foreign currencies involve certain risks not presented by the over-the-counter market. For example, exercise and settlement of such options must be made exclusively through the Options Clearing Corporation ("OCC"), which has established banking relationships in applicable foreign countries for this purpose. As a result, the OCC may, if it determines that foreign governmental restrictions or taxes would prevent the orderly settlement of foreign currency option exercises, or would result in undue burdens on the OCC or its clearing member, impose special procedures for exercise and settlement, such as technical changes in the mechanics of delivery of currency, the fixing of dollar settlement prices or prohibitions on exercise. Risks Associated With Derivative Instruments. Entering into a derivative instrument involves a risk that the applicable market will move against the Portfolio's position and that the Portfolio will incur a loss. For derivative instruments other than purchased options, this loss may exceed the amount of the initial investment made or the premium received by the Portfolio. Derivative instruments may sometimes increase or leverage the Portfolio's exposure to a particular market risk. Leverage enhances the Portfolio's exposure to the price volatility of derivative instruments it holds. The Portfolio's success in using derivative instruments to hedge portfolio assets depends on the degree of price correlation between the derivative instruments and the hedged asset. Imperfect correlation may be caused by several factors, including temporary price disparities among the trading markets for the derivative instrument, the assets underlying the derivative instrument and the Portfolio assets. Over-the-counter ("OTC") derivative instruments involve an enhanced risk that the issuer or counterparty will fail to perform its contractual obligations. Some derivative instruments are not readily marketable or may become illiquid under adverse market conditions. In addition, during periods of market volatility, a commodity exchange may suspend or limit trading in an exchange-traded derivative instrument, which may make the contract temporarily illiquid and difficult to price. Commodity exchanges may also establish daily limits on the amount that the price of a futures contract or futures option can vary from the previous day's settlement price. Once the daily limit is reached, no trades may be made that day at a price beyond the limit. This may prevent the Portfolio from closing out positions and limiting its losses. The staff of the Commission takes the position that purchased OTC options, and assets used as cover for written OTC options, are subject to the Portfolio's 15% limit on illiquid investments. However, with respect to options written with primary dealers in U.S. Government securities pursuant to an agreement requiring a closing purchase transaction at a formula price, the amount of illiquid securities may be calculated with reference to the formula price. The Portfolio's 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 Internal Revenue Code of 1986, as amended (the "Code"), limit the extent to which the Portfolio may purchase and sell derivative instruments. The Portfolio will engage in transactions in futures contracts and related options only to the extent such transactions are consistent with the requirements of the Code for maintaining the qualification of the Fund as a regulated investment company for federal income tax purposes. See "Taxes." Asset Coverage for Derivative Instruments. Transactions using forward contracts, futures contracts and options (other than options that the Portfolio has purchased) expose the Portfolio to an obligation to another party. The Portfolio will not enter into any such transactions unless it owns either (1) an offsetting ("covered") position in securities, currencies, or other options or futures contracts or forward contracts, or (2) cash, receivables, and short-term debt securities with a value sufficient at all times to cover its potential obligations not covered as provided in (1) above. The Portfolio will comply with Commission guidelines regarding cover for these instruments and, if the guidelines so require, set aside cash, U.S. Government securities or other liquid, high-grade debt securities in a segregated account with its custodian in the prescribed amount. Assets used as cover or held in a segregated account cannot be sold while the position in the corresponding forward contract, futures contract or option is open, unless they are replaced with other appropriate assets. As a result, the commitment of a large portion of the Portfolio's assets to cover or segregated accounts could impede portfolio management or the Portfolio's ability to met redemption requests or other current obligations. Limitations on Futures Contracts and Options. If the Portfolio has not complied with the 5% CFTC test set forth in the Fund's prospectus, to evidence its hedging intent, the Portfolio expects that, on 75% or more of the occasions on which it takes a long futures or option on futures position, it will have purchased or will be in the process of purchasing, equivalent amounts of related securities at the time when the futures or options position is closed out. However, in particular cases, when it is economically advantageous for the Portfolio to do so, a long futures or options position may be terminated (or an option may expire) without a corresponding purchase of securities. The Portfolio may enter into futures contracts, and options on futures contracts, traded on an exchange regulated by the CFTC and on foreign exchanges, but, with respect to foreign exchange-traded futures contracts and options on such futures contracts, only if the Adviser determines that trading on each such foreign exchange does not subject the Portfolio to risks, including credit and liquidity risks, that are materially greater than the risks associated with trading on CFTC-regulated exchanges. In order to hedge its current or anticipated portfolio positions, the Portfolio may use futures contracts on securities held in its Portfolio or on securities with characteristics similar to those of the securities held by the Portfolio. If, in the opinion of the Adviser, there is a sufficient degree of correlation between price trends for the securities held by the Portfolio and futures contracts based on other financial instruments, securities indices or other indices, the Portfolio may also enter into such futures contracts as part of its hedging strategy. All call and put options on securities written by the Portfolio will be covered. This means that, in the case of call option, the Portfolio will own the securities subject to the call option or an offsetting call option so long as the call option is outstanding. In the case of a put option, the Portfolio will own an offsetting put option or will have deposited with its custodian cash or liquid, high-grade debt securities with a value at least equal to the exercise price of the put option. The Portfolio may only write a put option on a security that it intends to acquire for its investment portfolio. Repurchase Agreements. Under a repurchase agreement the Portfolio buys a security at one price and simultaneously promise to sell that same security back to the seller at a higher price. At no time will the Portfolio commit more than 15% of its net assets to repurchase agreements which mature in more than seven days and other illiquid securities. The Portfolio'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 repurchase agreement, and will be marked to market daily. Reverse Repurchase Agreements. The Portfolio may enter into reverse repurchase agreements. Under a reverse repurchase agreement, the Portfolio 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 Portfolio agrees to repurchase the instrument at an agreed upon time (normally within seven days) and price, which reflects an interest payment. The Portfolio expects that it will enter into reverse repurchase agreements when it is able to invest the cash so acquired at a rate higher than the cost of the agreement, which would increase the income earned by the Portfolio. The Portfolio 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 Portfolio 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 Portfolio's assets. As a result, such transactions may increase fluctuations in the market value of the Portfolio's assets. While there is a risk that large fluctuations in the market value of the Portfolio's assets could affect the Portfolio's 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. If the Portfolio 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 Portfolio's yield. At all times that a reverse repurchase agreement is outstanding, the Portfolio will maintain cash or high grade liquid securities in a segregated account at its custodian bank with a value at least equal to its obligation under the agreement. Securities and other assets held in the segregated account may not be sold while the reverse repurchase agreement is outstanding, unless other suitable assets are substituted. While the Adviser does not consider reverse repurchase agreements to involve a traditional borrowing of money, reverse repurchase agreements will be included within the aggregate limitation on "borrowings" contained in the Portfolio's investment restriction (1) set forth below. Portfolio Turnover. The Portfolio cannot accurately predict its portfolio turnover rate, but it is anticipated that the annual turnover rate will generally not exceed 100% (excluding turnover of securities having a maturity of one year or less). A 100% annual turnover rate would occur, for example, if all the securities in the portfolio were replaced once in a period of one year. A high turnover rate (100% or more) necessarily involves greater expenses to the Portfolio. The Portfolio engages in portfolio trading (including short-term trading) if it believes that a transaction including all costs will help in achieving its investment objective either by increasing income or by enhancing the Portfolio's net asset value. High portfolio turnover may also result in the realization of substantial net short-term capital gains. In order for the Fund to continue to qualify as a regulated investment company for federal tax purposes, less than 30% of the annual gross income of the Fund must be derived from the sale of securities (including its share of gains from the sale of securities held by the Portfolio) held for less than three months. Lending Portfolio Securities. If the Adviser decides to make securities loans, the Portfolio may seek to increase its income by lending portfolio securities to broker-dealers or other institutional borrowers. Under present regulatory policies of the Commission, such loans are required to be secured continuously by collateral in cash, cash equivalents or U.S. Government securities held by the Portfolio's custodian and maintained on a current basis at an amount at least equal to market value of the securities loaned, which will be marked to market daily. Cash equivalents include certificates of deposit, commercial paper and other short-term money market instruments. The financial condition of the borrower will be monitored by the Adviser on an ongoing basis. The Portfolio would continue to receive the equivalent of the interest or dividends paid by the issuer on the securities loaned and would also receive a fee, or all or a portion of the interest on investment of the collateral. The Portfolio would have the right to call a loan and obtain the securities loaned at any time on up to five business days' notice. The Portfolio would not have the right to vote any securities having voting rights during the existence of a loan, but could call the loan in anticipation of an important vote to be taken among holder of the securities or the giving or holding of their consent on a material matter affecting the investment. Securities lending involves administration expenses, including finders' fees. If the Adviser decides to make securities loans, it is intended that the value of the securities loaned would not exceed 1/3 of the Portfolio's total assets. Securities lending involves administrative expenses including finders' fees. As of the present time, the Trustees of the Portfolio have not made a determination to engage in this activity, and have no present intention of making such a determination during the current fiscal year. 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 shares are present or represented at the meeting or (b) more than 50% of the shares of the Fund. Accordingly the Fund may not: (1) Borrow money or issue senior securities except as permitted by the Investment Company Act of 1940; (2) Purchase any securities on margin (but the Fund and the Portfolio may obtain such short-term credits as may be necessary for the clearance of purchases and sales of securities); (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 purchase or sell commodities or commodity contacts with respect to 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 any one issuer, or invest in more than 10% of the outstanding voting securities of any one issuer, except obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities and except securities of other investment companies; or (7) Invest in the securities of any one industry, except the medical research and health care industry (and except securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities) if as a result 25% or more of the Fund's total assets would be invested in the securities of such industry. Notwithstanding the investment policies and restrictions of the Fund, the Fund may invest its assets in an open-end management investment company with substantially the same investment objective, policies and restrictions as the Fund. Notwithstanding the investment policies and restrictions of the Portfolio, the Portfolio may invest part of its assets in another investment company consistent with the Investment Company Act of 1940 (the "1940 Act"). The Portfolio has adopted substantially the same fundamental investment restrictions as the foregoing investment restrictions adopted by the Fund; such restrictions cannot be changed without the approval of a "majority of the outstanding voting securities" of the Portfolio. The Fund and the Portfolio have each adopted the following investment policies which may be changed without shareholder or investor approval. Neither the Fund nor the Portfolio may invest more than 15% of its net assets in investments which are not readily marketable, including restricted securities and repurchase agreements with a maturity longer than seven days. Restricted securities for the purposes of this limitation do not include securities eligible for resale pursuant to Rule 144A under the Securities Act of 1933 and commercial paper issued pursuant to Section 4(2) of said Act that the Board of Directors of the Fund or Trustees of the Trust or Portfolio, or their delegate, determines to be liquid. Except for obligations issued or guaranteed by the U.S. Government or any of its agencies or instrumentalities, neither the Fund nor the Portfolio will knowingly purchase a security issued by a company (including predecessors) with less than three years operating history (unless such security is rated at least B or a comparable rating at the time of purchase by a least one nationally recognized rating service) if, as a result of such purchase, more than 5% of the Portfolio's or the Fund's total assets, as the case may be (taken at current value), would be invested in such securities. Neither the Fund nor the Portfolio will purchase warrants if, as a result of such purchase, more than 5% of the Portfolio's or the Fund's net assets, as the case may be (taken at current value), would be invested in warrants, and the value of such warrants which are not listed on the New York or American Stock Exchange may not exceed 2% of the Portfolio's or the Fund's net assets; this policy does not apply to or restrict warrants acquired by the Portfolio or the Fund in units or attached to securities, inasmuch as such warrants are deemed to be without value. Neither the Fund nor the Portfolio will purchase oil, gas or other mineral leases or purchase partnership interests in oil, gas or other mineral exploration or development programs. Neither the Fund nor the Portfolio will purchase or retain in its portfolio any securities issued by an issuer any of whose officers, directors, trustees or security holders is an officer or Director of the Fund or is a member, officer, director or trustee of any investment adviser of the Fund or the Portfolio if after the purchase of the securities of such issuer by the Fund or the Portfolio one or more of such persons owns beneficially more than 1/2 of 1% of the shares or securities or both (all taken at market value) of such issuer and such persons owning more than 1/2 of 1% of such shares or securities together own beneficially more than 5% of such shares or securities or both (all taken at market value). Neither the Fund nor the Portfolio will purchase an option on a security if, after such transaction, more than 5% of its net assets, measured by the aggregate of all premiums paid for all such options held by the Portfolio, would be so invested. 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 Fund's or the Portfolio's acquisition of such security or other asset. Accordingly, any later increase or decrease resulting from a change in values, assets or other circumstances, other than a subsequent rating change below investment grade made by a rating service, will not compel the Fund or the Portfolio, as the case may be, to dispose of such security or other asset. Nevertheless, under normal market conditions the Fund and the Portfolio must take actions necessary to comply with its policy of investing at least 65% of total assets in equity securities of health science companies. Moreover, the Fund and the Portfolio must always be in compliance with its borrowing policy set forth below. In order to permit the sale of shares of the Fund in certain states, the Fund and the Portfolio may make commitments more restrictive than the fundamental policies described above. Should the Fund determine that any such commitment is no longer in the best interests of the Fund and its shareholders, it will revoke the commitment by terminating sales of its shares in the state(s) involved. Although permissible under the Fund's investment restrictions, the Fund has no present intention during the coming fiscal year to: borrow money; pledge its assets; or make loans to other persons. MANAGEMENT OF THE FUND AND THE PORTFOLIO Eaton Vance acts as the sponsor and manager of the Fund and the administrator of the Portfolio. The Portfolio has engaged G/A as its investment adviser. THE ADVISER As investment adviser to the Portfolio, the Adviser manages the Portfolio's investments, subject to the supervision of the Board of Trustees of the Portfolio. The Adviser is also responsible for effecting all security transactions on behalf of the Portfolio, including the allocation of principal transactions and portfolio brokerage and the negotiation of commissions. See "Portfolio Security Transactions." The advisory fee rate on daily net assets is reduced to .70% on assets of $500 million but less than $1 billion, to .65% on assets of $1 billion but less than $1.5 billion, to .60% on assets of $1.5 billion but less than $2 billion, to .55% on assets of $2 billion but less than $3 billion and .50% on assets of $3 billion and over. The performance fee adjustment to the advisory fee is as follows: After 12 months, the basic advisory fee is subject to upward or downward adjustment depending upon whether, and to what extent, the investment performance of the Portfolio differs by at least one percentage point from the record of the Standard & Poor's Index of 500 Common Stocks over the same period. Each percentage point difference is multiplied by a performance adjustment rate of 0.025%. The maximum adjustment plus/minus is 0.25%. One twelfth (1/12) of this adjustment is applied each month to the average daily net assets of the Portfolio over the entire peformance period. This adjustment shall be based on a rolling period of up to and incuding the most recent 36 months. Portfolio performance shall be total return as computed under Rule 482 under the Securities Act of 1933. The Portfolio's investment advisory agreement with the Adviser remains in effect until February 28, 1997; it may be continued indefinitely thereafter so long as such continuance is approved at least annually (i) by the vote a majority of the Trustees of the Portfolio who are not interested persons of the Portfolio cast in person at a meeting specifically called for the purpose of voting on such approval and (ii) by the Board of Trustees of the Portfolio or by vote of a majority of the outstanding voting securities of the Portfolio. The agreement may be terminated at any time without penalty on sixty days' written notice by the Board of Trustees of either party or by vote of the majority of the outstanding voting securities of the Portfolio, and the agreement will terminate automatically in the event of its assignment. The agreement provides that the Adviser may render services to others. The agreement also provides that, in the absence of willful misfeasance, bad faith, gross negligence or reckless disregard of obligations or duties under the agreement on the part of the Adviser, the Adviser shall not be liable to the Portfolio or to any shareholder for any act or omission in the course of or connected with rendering services or for any losses sustained in the purchase, holding or sale of any security. MANAGER, SPONSOR AND ADMINISTRATOR Eaton Vance, its affiliates and its predecessor companies have been managing assets of individuals and institutions since 1924 and managing investment companies since 1931. They maintain a large staff of experienced fixed-income and equity investment professionals to service the needs of their clients. The fixed-income division focuses on all kinds of taxable investment-grade and high-yield securities, tax-exempt investment-grade and high-yield securities, and U.S. Government securities. The equity division, with a staff of approximately 30 professionals, covers stocks ranging from blue chip to emerging growth companies. Eaton Vance manages more than 150 mutual funds, as well as retirement plans, pension funds and endowments. See "Management of the Fund and the Portfolio" in the Prospectus for a description of the services Eaton Vance performs as the manager and sponsor of the Fund and the administrator of the Portfolio. Under Eaton Vance's management contract with the Fund and administration agreement with the Portfolio, Eaton Vance receives a monthly management fee from the Fund and a monthly administration fee from the Portfolio. Each fee is computed by applying the annual asset rate applicable to that portion of the average daily net assets of the Fund or the Portfolio throughout the month in each Category as indicated below: ANNUAL CATEGORY AVERAGE DAILY NET ASSETS ASSET RATE - ---------- ------------------------ ---------- 1 less than $500 million ............................... 0.25% 2 $500 million but less than $1 billion ................ 0.23333 3 $1 billion but less than $1.5 billion ................ 0.21667 4 $1.5 billion but less than $2 billion ................ 0.20 5 $2 billion but less than $3 billion .................. 0.18333 6 $3 billion and over .................................. 0.1667 For the management fees that the Fund paid to Eaton Vance, see "Fees and Expenses" in the Part II. Eaton Vance's management contract with the Fund will remain in effect until February 28, 1997, and its administration agreement with the Portfolio will remain in effect until February 28, 1997. Each agreement may be continued from year to year, so long as such continuance is approved annually by the vote of a majority of the Directors of the Fund or the Trustees of the Portfolio, as the case may be. Each agreement may be terminated at any time without penalty on sixty days' written notice by the relevant Board of Trustees of either party thereto, or by a vote of a majority of the outstanding voting securities of the Fund or the Portfolio, as the case may be. Each agreement will terminate automatically in the event of its assignment. Each agreement provides that, in the absence of Eaton Vance's willful misfeasance, bad faith, gross negligence or reckless disregard of its obligations or duties to the Fund or the Portfolio under such contract or agreement, Eaton Vance will not be liable to the Fund or the Portfolio for any loss incurred. Each agreement was initially approved by the Directors and Trustees, including the non-interested Directors and Trustees, of the Trust or the Portfolio. To the extent necessary to comply with U.S. tax law, Eaton Vance has employed IBT Trust Company (Cayman) Ltd. to serve as the sub-administrator of the Portfolio. The sub-administrator maintains the Portfolio's principal office and certain of its records and provides administrative assistance in connection with meetings of the Portfolio's Trustees and interestholders. The Fund and the Portfolio, as the case may be, will each be responsible for all of its respective costs and expenses not expressly stated to be payable by an Adviser under the investment advisory agreement, by Eaton Vance under the management contract or the administration agreement, or by EVD under the distribution agreement. Such costs and expenses to be borne by each of the Fund or the Portfolio, as the case may be, include, without limitation: custody and transfer agency fees and expenses, including those incurred for determining net asset value and keeping accounting books and records; expenses of pricing and valuation services; the cost of share certificates; membership dues in investment company organizations; brokerage commissions and fees; fees and expenses of registering under the securities laws; expenses of reports to shareholders and investors; proxy statements, and other expenses of shareholders' or investors' meetings; insurance premiums, printing and mailing expenses; interest, taxes and corporate fees; legal and accounting expenses; compensation and expenses of Directors or Trustees not affiliated with Eaton Vance or an Adviser; distribution and service fees payable by the Fund under its Rule 12b-1 distribution plan; and investment advisory, management and administration fees. The Fund and the Portfolio, as the case may be, will also each bear expenses incurred in connection with litigation in which the Fund or the Portfolio, as the case may be, is a party and any legal obligation to indemnify its respective officers and Directors or Trustees with respect thereto. Eaton Vance and EV are both wholly-owned subsidiaries of EVC. BMR is a wholly-owned subsidiary of Eaton Vance. Eaton Vance and BMR are both Massachusetts business trusts, and EV is the trustee of Eaton Vance and BMR. The Directors of EV are Landon T. Clay, H. Day Brigham, Jr., M. Dozier Gardner, James B. Hawkes and Benjamin A. Rowland, Jr. The Directors of EVC consist of the same persons and John G.L. Cabot and Ralph Z. Sorenson. Mr. Clay is chairman and Mr. Gardner is president and chief executive officer of EVC, Eaton Vance, BMR and EV. All of the issued and outstanding shares of Eaton Vance and of EV are owned by EVC. All of the issued and outstanding shares of BMR are owned by Eaton Vance. All shares of the outstanding Voting Common Stock of EVC are deposited in a Voting Trust which expires December 31, 1996, the Voting Trustees of which are Messrs. Brigham, Clay, Gardner, Hawkes and Rowland. The Voting Trustees have unrestricted voting rights for the election of Directors of EVC. All of the outstanding voting trust receipts issued under said Voting Trust are owned by certain of the officers of Eaton Vance and BMR who are also officers and Directors of EVC and EV. As of September 3, 1996, Messrs. Clay, Gardner and Hawkes each owned 24% of such voting trust receipts and Messrs. Rowland and Brigham owned 15% and 13%, respectively, of such voting trust receipts. Messrs. Clay, Gardner, Hawkes and Otis, who are officers, Directors or Trustees of the Fund and/or the Portfolio, are members of the EVC, Eaton Vance, BMR and EV organizations. Messrs. Murphy, O'Connor, Richardson and Woodbury and Ms. Sanders are officers of the Fund and/or the Portfolio, and are also members of the Eaton Vance, BMR and/or EV organizations. Eaton Vance will receive the fees paid under the management agreement and its wholly-owned subsidiary, Eaton Vance Distributors, Inc., as Principal Underwriter, will receive its portion of the sales charge on shares of the Fund sold through investment dealers. EVC owns all of the stock of Energex Energy Corporation, which engages in oil and gas exploration and development. In addition, Eaton Vance owns all the stock of Northeast Properties, Inc., which is engaged in real estate investment. EVC also owns 24% of the Class A shares of Lloyd George Management (B.V.I.) Limited, a registered investment adviser. EVC owns all the stock of Fulcrum Management, Inc. and MinVen, Inc., which are engaged in precious metal mining venture investment and management. EVC, BMR, Eaton Vance and EV may also enter into other businesses. Eaton Vance mutual funds are distributed by Eaton Vance Distributors both within the United States and offshore. Eaton Vance Distributors believes that an investment professional can provide valuable services to you to help you reach your investment goals. Meeting investment goals requires time, objectivity and investment savvy. Before making an investment recommendation, a representative can help you carefully consider your short- and long-term financial goals, your tolerance for investment risk, your investment time frame, and other investments you may already own. Your professional investment representatives are knowledgeable about financial markets, as well as the wide range of investment opportunities available. A representative can provide you with tailored financial advice and help you decide when to buy, sell or persevere with your investments. CUSTODIAN Investors Bank & Trust Company ("IBT"), 89 South Street, Boston, Massachusetts, acts as custodian for the Fund and the Portfolio. IBT has the custody of all cash and securities of the Fund and all securities of the Portfolio purchased in the United States, and its subsidiary, IBT Fund Services (Canada) Inc., 1 First Canadian Place, King Street West, Toronto, Ontario, Canada, maintains the Fund's and the Portfolio's general ledger and computes the daily net asset value of interests in the Portfolio and the net asset value of shares of the Fund. In such capacities, IBT attends to details in connection with the sale, exchange, substitution, transfer or other dealings with the Fund's and the Portfolio's respective investments, receives and disburses all funds, and performs various other ministerial duties upon receipt of proper instructions from the Fund and the Portfolio, respectively. Portfolio securities, if any, purchased by the Portfolio in the U.S. are maintained in the custody of IBT or of other domestic banks or depositories. Portfolio securities purchased outside of the U.S. are maintained in the custody of foreign banks and trust companies that are member of IBT's Global Custody Network, or foreign depositories used by such foreign banks and trust companies. Each of the domestic and foreign custodial institutions holding portfolio securities has been approved by the Board of Trustees of the Portfolio in accordance with regulations under the 1940 Act. IBT charges fees which are competitive within the industry. These fees for the Portfolio relate to (1) custody services based upon a percentage of the market values of Portfolio securities; (2) bookkeeping and valuation services provided at an annual rate; (3) activity charges, primarily the result of the number of portfolio transactions; and (4) reimbursement of out-of-pocket expenses. These fees are then reduced by a credit for cash balances of the Portfolio at the custodian equal to 75% of the 91-day U.S. Treasury Bill auction rate applied to the Portfolio's average daily collected balances. The portion of the fee for the Fund related to bookkeeping and pricing services is based upon a percentage of the Fund's net assets and the portion of the fee related to financial statement preparation is a fixed amount. Landon T. Clay, a Director of EVC and an officer, Trustee or Director of other entities in the Eaton Vance organization, owns approximately 13% of the voting stock of Investors Financial Services Corp., the holding company parent of IBT. Management believes that such ownership does not create an affiliated person relationship between the Fund or Portfolio and IBT under the 1940 Act. SERVICE FOR WITHDRAWAL By a standard agreement, the Fund's transfer agent will send to the shareholder regular monthly or quarterly payments of any permitted amount designated by the shareholder (see "Eaton Vance Shareholder Services Withdrawal Plan" in the Fund's current Prospectus) based upon the value of the shares held. The checks will be drawn from share redemptions and hence are a return of principal. Income dividends and capital gain distributions in connection with withdrawal accounts will be credited at net asset value as of the record date for each distribution. Continued withdrawals in excess of current income will eventually use up principal, particularly in a period of declining market prices. A shareholder may not have a withdrawal plan in effect at the same time he or she has authorized Bank Automated Investing or is otherwise making regular purchases of Fund shares. Either the shareholder, the Fund's transfer agent or the Principal Underwriter will be able to terminate the withdrawal plan at any time without penalty. DETERMINATION OF NET ASSET VALUE The net asset value per share is computed daily, Monday through Friday, as of the close of regular trading on the New York Stock Exchange (the "Exchange"), which is currently 4:00 p.m., Eastern time, except that the net asset value will not be computed on the following holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The Portfolio's net asset value also will be determined on any day in which there is sufficient trading in its portfolio securities that the net asset value might be affected materially, but only if on any such day the Portfolio is required to sell or redeem shares. The net asset value per share is computed by dividing the value of the securities held by the Portfolio plus any cash or other assets (including any accrued interest and dividends receivable but not yet received) minus all liabilities (including accrued expenses) by the total number of Portfolio shares outstanding at such time. To the extent sales prices are available, securities that are traded on a recognized stock exchange, whether U.S. or foreign, are valued at the last sale price on that exchange prior to the time when assets are valued or prior to the close of trading on the Exchange. In the event that there are no sales, the last available sale price will be used. If a security is traded on more than one exchange, the latest price on the exchange where the stock is primarily traded will be used. If there is no sale that day or if the security is not listed, the security is valued at its last sale quotation. The calculation of the Portfolio's net asset value may not take place contemporaneously with the times noted above for determining the prices of certain portfolio securities, including foreign securities. If events materially effecting the value of such securities occur between the time when their prices are determined and the time the Portfolio's net asset value is calculated, such securities will be valued at fair value as determined in good faith by the Trustees of the Portfolio. Also, for any security for which application of the preceding methods of valuation results in a price for a security that is deemed not to be representative of the market value of such security, the security will be valued at fair value under the supervision and responsibility of the Board of Trustees. Futures contracts and call options written on portfolio securities will be priced at the latest sales price on the principal exchange on which such options are normally traded or, if there have been no sales on such exchange on that day, at the closing asked price. Short-term investments having a maturity of 60 days or less are valued on the basis of amortized cost. All other assets and securities held by the Portfolio (including restricted securities) are valued at fair value as determined in good faith under the supervision and responsibility of the Board of Trustees. Any assets that are denominated in a foreign currency are translated in U.S. dollars of the last quoted spot rate of exchange prevailing on each valuation date. Each investor in the Portfolio, including the Fund, may add to or reduce its investment in the Portfolio on each day the New York Stock Exchange (the "Exchange") is open for trading ("Portfolio Business Day") as of the close of regular trading on the Exchange. The value of each investor's interest in the Portfolio will be determined by multiplying the net asset value of the Portfolio by the percentage, determined on the prior Portfolio Business Day, which represents that investor's share of the aggregate interests in the Portfolio on such prior day. Any additions or withdrawals, which are to be effected on that day, will then be effected. Each investor's percentage of the aggregate interests in the Portfolio will then be recomputed as the percentage equal to a fraction (i) the numerator of which is the value of such investor's investment in the Portfolio as of the close of regular trading on the Exchange (normally 4:00 p.m., New York time), on such day plus or minus, as the case may be, that amount of any additions to or withdrawals from the investor's investment in the Portfolio effected on such day, and (ii) the denominator of which is the aggregate net asset value of the Portfolio as of the close of such trading on such day plus or minus, as the case may be, the amount of the net additions to or withdrawals from the aggregate investment in the Portfolio by all investors in the Portfolio. The percentage so determined will then be applied to determine the value of the investor's interest in the Portfolio for the current Portfolio Business Day. INVESTMENT PERFORMANCE Average annual total return is determined by multiplying a hypothetical initial purchase order of $1,000 by the average annual compound rate of return (including capital appreciation/depreciation, and dividends and distributions paid and reinvested) for the stated period and annualizing the result. The calculation assumes that all distributions are reinvested at net asset value on the reinvestment dates during the period, and either (i) the deduction of the maximum sales charge from the initial $1,000 purchase order or (ii) a complete redemption of the investment and, if applicable, the deduction of the contingent deferred sales charge at the end of the period. Total return may be compared to relevant indices, such as the Consumer Price Index and various domestic and foreign securities indices, such as the Standard & Poor's Index 500 Stock Index. In addition, the Fund's total return may be compared to indices available through Lipper Analytical Services, Inc. The Fund's total return and comparisons with these indices may be used in advertisements and in information furnished to present or prospective shareholders. The Fund's performance may differ from that of other investors in the Portfolio, including the other investment companies. Average annual total return and total return figures represent the increase (or decrease) in the value of an investment in the Fund over a specified period. Both calculations assume that all income dividends and capital gain distributions during the period are reinvested at net asset value in additional Fund shares. Quotations of the average annual total return reflect the deduction of the maximum sales charge and a proportional share of Fund expenses on an annual basis. The results, which are annualized, represent an average annual compounded rate of return on a hypothetical investment in the Fund over a period of 1, 5 and 10 years ending on the most recent calendar quarter (but not for a period greater than the life of the Fund), calculated pursuant to the following formula: P (1 + T) n = ERV where P = a hypothetical initial payment of $1,000, T = the average annual total return, n = the number of years, and ERV = the ending redeemable value of a hypothetical $1,000 payment made at the beginning of the period. Information used in advertisements and in materials furnished to present or prospective shareholders may include statistics, data and performance studies prepared by independent organizations (e.g. Ibbotson Associates, Standard & Poor's Ratings Group, Merrill Lynch Private Client Group, Bloomberg, L.P., Dow Jones & Company, Inc., and the Federal Reserve Board) or included in various publications (e.g. The Wall Street Journal, Barron's and The Decade: Wealth of Investments in U.S. Stocks, Bonds, Bills & Inflation) reflecting the investment performance or return achieved by various classes and types of investments (e.g. common stocks, small company stocks, long-term corporate bonds, long-term government bonds, intermediate-term government bonds, U.S. Treasury bills) over various periods of time. This information may be used to illustrate the benefits of long-term investments in common stocks. Information about the Portfolio allocation and holdings of investments in the Portfolio may be included in advertisements and other material furnished to present and prospective shareholders. Also, evaluations of the Fund's performance made by independent sources, such as Lipper Analytical Services, Inc., CDA/Weisenberger and Morningstar, Inc. may be used in advertisements and in information furnished to present or prospective shareholders. Information used in advertisements and materials furnished to present or prospective shareholders may include examples and performance illustrations of the cumulative change in various levels of investments in the Fund for various periods of time and at various prices per share. Such examples and illustrations may assume that all dividends and capital gain distributions are reinvested in additional shares and may also show separately the value of shares acquired form such reinvestments as well as the total value of all shares acquired for such investments and reinvestments. Such information may also include statements or illustration relating to the appropriateness of types of securities and/or mutual funds which may be employed to meet specific financial goals, such as (1) funding retirement, (2) paying for children's education, and (3) financially supporting aging parents. These three financial goals may be referred to in such advertisements or materials as the "Triple Squeeze". The Fund may provide investors with information on global investing, which may include descriptions, comparisons, charts and/or illustrations of: foreign and domestic equity market capitalizations; returns obtained by foreign and domestic securities; and the effects of globally diversifying an investment portfolio (including volatility analysis and performance information). Such information may be provided for a variety of countries over varying time periods. The Fund may provide information about Eaton Vance, its affiliates and other investment advisers to the funds in the Eaton Vance Family of Funds in sales material or advertisements provided to investors or prospective investors. Such material or advertisements may also provide information on the use of investment professionals by such investors. TAXES See also "Distribution and Taxes" in the Fund's current Prospectus. The Fund intends to elect to be treated, and to qualify each year as a regulated investment company ("RIC") under the Code. Accordingly, the Fund intends to satisfy certain requirements relating to sources of its income and diversification of its assets and to distribute all of its net investment income and net realized capital gains in accordance with the timing requirements imposed by the Code, so as to avoid any federal income or excise tax on the Fund. Because the Fund invests its assets in the Portfolio, the Portfolio normally must satisfy the applicable source of income and diversification requirements in order for the Fund to satisfy them. The Portfolio will allocate at least annually among its investors, including the Fund, each investor's distributive share of the Portfolio's net investment income, net realized capital gains, and any other items of income, gain, loss, deduction or credit. The Portfolio will make allocations to the Fund in accordance with the Code and applicable regulations and will make moneys available for withdrawal at appropriate times and in sufficient amounts to enable the Fund to satisfy the tax distribution requirements that apply to the Fund and that must be satisfied in order to avoid federal income and/or excise tax on the Fund. For purposes of applying the requirements of the Code regarding qualification as a RIC, the Fund will be deemed (i) to own its proportionate share of each of the assets of the Portfolio and (ii) to be entitled to the gross income of the Portfolio attributable to such share. In order to avoid federal excise tax, the Code requires that the Fund distribute (or be deemed to have distributed) by December 31 of each calendar year at least 98% of its ordinary income (not including tax-exempt income) for such year, at least 98% of the excess of its realized capital gains over its realized capital losses, generally computed on the basis of the one-year period ending on October 31 of such year, after reduction by any available capital loss carryforwards, and 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 was not taxed. Further, under current law, provided that the Fund qualifies as a RIC for federal income tax purposes and the Portfolio is treated as a partnership for Massachusetts and federal tax purposes, neither the Fund nor the Portfolio is liable for any income, corporate excise or franchise tax in the Commonwealth of Massachusetts or State of Maryland. Foreign exchange gains and losses realized by the Portfolio and allocated to the Fund in connection with the Portfolio's investments in foreign securities and certain options, futures or forward contracts or foreign currency may be treated as ordinary income and losses under special tax rules. Certain options, futures or forward contracts of the Portfolio may be required to be marked to market (i.e., treated as if closed out) on the last day of each taxable year, and any gain or loss realized with respect to these contracts may be required to be treated as 60% long-term and 40% short-term gain or loss. Positions of the Portfolio in securities and offsetting options, futures or forward contracts may be treated as "straddles" and be subject to other special rules that may, upon allocation of the Portfolio's income, gain or loss to the Fund, affect the amount, timing and character of the Fund's distributions to shareholders. Certain uses of foreign currency and foreign currency derivatives such as options, futures, forward contracts and swaps and investment by the Portfolio in certain "passive foreign investment companies" may be limited or a tax election may be made, if available, in order to preserve the Fund's qualification as a RIC or avoid imposition of a tax on the Fund. The Portfolio anticipates that it will be subject to foreign taxes on its income (including, in some cases, capital gains) from foreign securities. Tax conventions between certain countries and the U.S. may reduce or eliminate such taxes. If more than 50% of the Fund's total assets, taking into account its allocable share of the Portfolio's total assets, at the close of any taxable year of the Fund consists of stock or securities of foreign corporations, the Fund may file an election with the Internal Revenue Service pursuant to which shareholders of the Fund will be required to (i) include in ordinary gross income (in addition to taxable dividends actually received) their pro rata shares of foreign income taxes paid by the Portfolio and allocated to the Fund even though not actually received, and (ii) treat such respective pro rata portions as foreign income taxes paid by them. Shareholders may then deduct such pro rata portions of foreign income taxes in computing their taxable incomes, or, alternatively, use them as foreign tax credits, subject to applicable limitations, against their U.S. income taxes. Shareholders who do not itemize deductions for federal income tax purposes will not, however, be able to deduct their pro rata portion of foreign taxes deemed paid by the Fund, although such shareholders will be required to include their shares of such taxes in gross income. Shareholders who claim a foreign tax credit for such foreign taxes may be required to treat a portion of dividends received from the Fund as separate category income for purposes of computing the limitations on the foreign tax credit. Tax-exempt shareholders will ordinarily not benefit from this election. Each year that the Fund files the election described above, its shareholders will be notified of the amount of (i) each shareholder's pro rata share of foreign income taxes paid by the Portfolio and allocated to the Fund and (ii) the portion of Fund dividends which represents income from each foreign country. If the Fund does not make this election, it may deduct its allocated share of such taxes in computing its investment company taxable income. The Portfolio will allocate at least annually to the Fund and its other investors their respective distributive shares of any net investment income and net capital gains which have been recognized for federal income tax purposes (including unrealized gains at the end of the Portfolio's fiscal year on certain options and futures transactions that are required to be marked-to-market). Such amounts will be distributed by the Fund to its shareholders in cash or additional shares, as they elect. Shareholders of the Fund will be advised of the nature of the distributions. Distributions by the Fund of the excess of net long-term capital gains over short-term capital losses earned by the Portfolio and allocated to the Fund, taking into account any capital loss carryforwards that may be available to the Fund in years after its first taxable year, are taxable to shareholders of the Fund as long-term capital gains, whether received in cash or in additional shares and regardless of the length of time their shares have been held. Certain distributions, if declared in October, November or December and paid the following January, will be taxed to shareholders as if received on December 31 of the year in which they are declared. Any loss realized upon the redemption or exchange of 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 distribution of net long-term capital gains with respect to such shares. All or a portion of a loss realized upon a taxable disposition of Fund shares may be disallowed under "wash sale" rules if other Fund shares are purchased (whether through reinvestment of dividends or otherwise) within 30 days before or after the disposition. Any disallowed loss will result in an adjustment to the shareholder's tax basis in some or all of the other shares acquired. The Fund will not be subject to Massachusetts or Maryland income, corporate excise or franchise taxation as long as it qualifies as a RIC under the Code. Special tax rules apply to Individual Retirement Accounts ("IRAs") and shareholders investing through IRAs should consult their tax advisers for more information. Amounts paid by the Fund to individuals and certain other shareholders who have not provided the Fund with their correct taxpayer identification number and certain certifications required by the Internal Revenue Service (the "IRS"), as well as shareholders with respect to whom the Fund has received notification from the IRS or a broker, may be subject to "backup" withholding of federal income tax from the Fund's dividends and distributions and the proceeds of redemptions (including repurchases and exchanges) at a rate of 31%. An individual's taxpayer identification number is generally his or her social security number. Non-resident alien individuals, foreign corporations and certain other foreign entities generally will be subject to a U.S. withholding tax at a rate of 30% on the Fund's distributions from its ordinary income and the excess of its net short-term capital gain over its net long-term capital loss, unless the tax is reduced or eliminated by an applicable tax treaty. Distributions from the excess of the Fund's net long-term capital gain over its net short-term capital loss received by such shareholders and any gain from the sale or other disposition of shares of the Fund generally will not be subject to U.S. federal income taxation, provided that non-resident alien status has been certified by the shareholder. Different U.S. tax consequences may result if the shareholder is engaged in a trade or business in the United States, is present in the United States for a sufficient period of time during a taxable year to be treated as a U.S. resident, or fails to provide any required certifications regarding status as a non-resident alien investor. Foreign shareholders should consult their tax advisers regarding the U.S. and foreign tax consequences of an investment in the Fund. The foregoing discussion does not describe many of the tax rules applicable to IRAs nor does it address the special tax rules applicable to certain other classes of investors, such as other retirement plans, tax-exempt entities, insurance companies and financial institutions. Shareholders should consult their own tax advisers with respect to these or other special tax rules that may apply in their particular situations, as well as the state, local or foreign tax consequences of investing in the Fund. PORTFOLIO SECURITY TRANSACTIONS Decisions concerning the execution of portfolio security transactions by the Portfolio, including the selection of the market and the broker-dealer firm, are made by the Adviser. The Adviser places the portfolio security transactions of the Portfolio and of certain other accounts managed by the Adviser for execution with many broker-dealer firms. The Adviser uses its best efforts to obtain execution of portfolio transactions at prices which are advantageous to the Portfolio and (when a disclosed commission is being charged) at reasonably competitive commission rates. In seeking such execution, the Adviser will use its best judgment in evaluating the terms of a transaction, and will give consideration to various relevant factors, including without limitation the size and type of the transaction, the general execution and operational capabilities of the broker-dealer, the nature and character of the market for the security, the confidentiality, speed and certainty of effective execution required for the transaction, the reputation, reliability, experience and financial condition of the broker-dealer, the value and quality of services rendered by the broker-dealer in other transactions, and the reasonableness of the commission, if any. Transactions on stock exchanges and other agency transactions involve the payment by the Portfolio of negotiated brokerage commissions. Such commissions vary among different broker-dealer firms, and a particular broker-dealer may charge different commissions according to such factors as the difficulty and size of the transaction and the volume of business done with such broker-dealer. Transactions in foreign securities usually involve the payment of fixed brokerage commissions, which are generally higher than those in the United States. There is generally no stated commission in the case of securities traded in the over-the-counter markets, but the price paid or received by the Portfolio usually includes an undisclosed dealer markup or markdown. In an underwritten offering the price paid by the Portfolio includes a disclosed fixed commission or discount retained by the underwriter or dealer. Although commissions paid on portfolio transactions will, in the judgment of the 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 Portfolio and the Adviser's other clients in part for providing brokerage and research services to the Adviser. As authorized in Section 28(e) of the Securities Exchange Act of 1934, a broker or dealer who executes a portfolio transaction on behalf of the Portfolio may receive a commission which is in excess of the amount of commission another broker or dealer would have charged for effecting that transaction if the Adviser determines in good faith that such commission was reasonable in relation to the value of the brokerage and research services provided. This determination may be made on the basis of either that particular transaction or on the basis of overall responsibilities which the Adviser and its affiliates have for accounts over which it exercises investment discretion. In making any such determination, the Adviser will not attempt to place a specific dollar value on the brokerage and research services provided or to determine what portion of the commission should be related to such services. Brokerage and research services may include advice as to the value of securities, the advisability of investing in, purchasing or selling securities, and the availability of securities or purchasers or sellers of securities; furnishing analyses and reports concerning issuers, industries, securities, economic factors and trends, portfolio strategy and the performance of accounts; and effecting securities transactions and performing functions incidental thereto (such as clearance and settlement); and the "Research Services" referred to in the next paragraph. It is a common practice of the investment advisory industry for the advisers of investment companies, institutions and other investors to receive research, statistical and quotation services, data, information and other services, products and materials which assist such advisers in the performance of their investment responsibilities ("Research Services") from broker-dealers which execute portfolio transactions for the clients of such advisers and from third parties with which such broker-dealers have arrangements. Consistent with this practice, the Adviser may receive Research Services from broker-dealer firms with which the Adviser places the portfolio transactions of the Portfolio and from third parties with which these broker-dealers have arrangements. These Research Services may include such matters as general economic and market reviews, industry and company reviews, evaluations of securities and portfolio strategies and transactions and recommendations as to the purchase and sale of securities and other portfolio transactions, financial, industry and trade publications, news and information services, pricing and quotation equipment and services, and research oriented computer hardware, software, data bases and services. Any particular Research Service obtained through a broker-dealer may be used by the 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 Adviser in rendering investment advisory services to all or a significant portion of its clients, or may be relevant and useful for the management of only one client's account or of a few clients' accounts, or may be useful for the management of merely a segment of certain clients' accounts, regardless of whether any such account or accounts paid commissions to the broker-dealer through which such Research Service was obtained. The advisory fee paid by the Portfolio is not reduced because the Adviser receives such Research Services. The Adviser evaluates the nature and quality of the various Research Services obtained through broker-dealer firms and attempts to allocate sufficient commissions to such firms to ensure the continued receipt of Research Services which the Adviser believes are useful or of value to it in rendering investment advisory services to its clients. Subject to the requirement that the Adviser shall use its best efforts to seek to execute portfolio security transactions of the Portfolio at advantageous prices and at reasonably competitive commission rates or spreads, the Adviser is authorized to consider as a factor in the selection of any broker-dealer firm with whom Portfolio orders may be placed the fact that such firm has sold or is selling shares of the Fund or of other investment companies sponsored by Eaton Vance. This policy is not inconsistent with a rule of the National Association of Securities Dealers, Inc., which rule provides that no firm which is a member of the Association shall favor or disfavor the distribution of shares of any particular investment company or group of investment companies on the basis of brokerage commissions received or expected by such firm from any source. Securities considered as investments for the Portfolio may also be appropriate for other investment accounts managed by the Adviser or its affiliates. The Adviser will attempt to allocate equitably portfolio transactions among the Portfolio and the portfolios of its other investment accounts whenever decisions are made to purchase or sell securities by the Portfolio and one or more of such other accounts simultaneously. In making such allocations, the main factors to be considered are the respective investment objectives of the Portfolio and such other accounts, the relative size of portfolio holdings of the same or comparable securities, the availability of cash for investment by the Portfolio and such accounts, the size of investment commitments generally held by the Portfolio and such accounts and the opinions of the persons responsible for recommending investments to the Portfolio and such accounts. While this procedure could have a detrimental effect on the price or amount of the securities available to the Portfolio from time to time, it is the opinion of the Trustees of the Portfolio that the benefits available from the Adviser's organization outweigh any disadvantage that may arise from exposure to simultaneous transactions. STATEMENT OF ADDITIONAL INFORMATION PART II This Part II provides information about EV TRADITIONAL WORLDWIDE HEALTH SCIENCES FUND, INC. FEES AND EXPENSES Through August 31, 1996, the Fund incurred expenses by investing directly in securities rather than investing in the Portfolio. In addition, some service providers and some fee rates differ. ADVISER For the period September 1, 1995 to February 29, 1996, the Fund paid the Adviser $141,499 in advisory fees. During the fiscal year ended August 31, 1995, the Fund paid the Adviser $138,826 in advisory fees. The Adviser received advisory fees of $121,553 and $30,036 during the fiscal years ended August 31, 1994 and 1993, respectively. Pursuant to the expense limitation previously in effect, the Adviser reimbursed $16,868 and $30,036, respectively, during those periods. MANAGER AND ADMINISTRATOR The prior Administrator (manager) of the Fund was paid $34,707 for its services during the fiscal year ended August 31, 1995 and $36,020 for the six months ended February 29, 1996. DISTRIBUTION PLAN Pursuant to the Distribution Plan in effect during the fiscal years ended August 31, 1995, 1994 and 1993, the Fund paid $34,688, $24,300 and $25,455, respectively, in 12b-1 fees to the prior Distributor. For the six months ended February 29, 1996, $36,126 was paid. PRINCIPAL UNDERWRITER The Fund has authorized EVD to act as its agent in repurchasing shares at the rate of $2.50 for each repurchase transaction handled by EVD. EVD estimates that the expenses incurred by it in acting as repurchase agent for the Fund will exceed the amounts paid therefor by the Fund. No fees paid to date. BROKERAGE During the fiscal years ended August 31, 1995, 1994 and 1993, the Fund paid $29,541, $40,651 and $43,706, respectively, in brokerage commissions. DIRECTORS AND TRUSTEES The fees and expenses of those Directors of the Fund and Trustees of the Portfolio who are not members of the Eaton Vance organization (the noninterested Directors and Trustees) are paid by the Fund and the Portfolio, respectively. (Board members who are members of the Eaton Vance organization receive no compensation from the Fund or the Portfolio.) For the fiscal year ending August 31, 1997, it is estimated that the noninterested Directors and Trustees of the Fund and the Portfolio will receive the following compensation in such capacities.
ESTIMATED ESTIMATED AGGREGATE AGGREGATE TOTAL COMPENSATION COMPENSATION COMPENSATION FROM TRUST AND NAME FROM FUND FROM PORTFOLIO FUND COMPLEX(1) ---- ------------ -------------- ------------------ Donald R. Dwight .............................. $35 $90 $145,000(2) Samuel L. Hayes, III .......................... 35 90 160,000(3) Norton H. Reamer .............................. 35 90 145,000 John L. Thorndike ............................. 35 90 150,000 Jack L. Treynor ............................... 35 90 150,000 - ---------- (1) The Eaton Vance fund complex consists of 217 registered investment companies or series thereof. (2) Includes $35,312 of deferred compensation. (3) Includes $37,500 of deferred compensation.
Prior to August 31, 1996, the Directors of the Fund were Dr. John J. Maggio, Philip C. Smith and Dr. Eugene E. Weise, and their combined compensation for the calendar year 1995 was $2,750. BOARD MEMBERS AND OFFICERS Except as indicated, each individual has held the office shown or other offices in the same company for the last five years. Unless otherwise noted, the business address of each Board Member and officer is 24 Federal Street, Boston, Massachusetts 02110, which is also the address of the Fund's sponsor and manager, Eaton Vance Management ("Eaton Vance"); of Eaton Vance's wholly-owned subsidiary, Boston Management and Research ("BMR"); of Eaton Vance's parent, Eaton Vance Corp. ("EVC"); and of Eaton Vance's trustee, Eaton Vance, Inc. ("EV"). Eaton Vance and EV are both wholly-owned subsidiaries of EVC. Those Board Members who are "interested persons" of the Trust, Eaton Vance, BMR, EVC or EV as defined in the 1940 Act by virtue of their affiliation with any one or more of the Trust, Eaton Vance, BMR, EVC or EV, are indicated by an asterisk(*). OFFICERS AND DIRECTORS OF THE FUND JAMES B. HAWKES (54), President and Director* Executive Vice President of Eaton Vance, BMR, EVC and EV, and a Director of EVC and EV. Director or Trustee and officer of various investment companies managed by Eaton Vance or BMR. DONALD R. DWIGHT (65), Director President of Dwight Partners, Inc. (a corporate relations and communications company) founded in 1988. Director or Trustee of various investment companies managed by Eaton Vance or BMR. Address: Clover Mill Lane, Lyme, New Hampshire 03768 SAMUEL L. HAYES, III (61), Director Jacob H. Schiff Professor of Investment Banking, Harvard University Graduate School of Business Administration. Director or Trustee of various investment companies managed by Eaton Vance or BMR. Address: Harvard University Graduate School of Business Administration, Soldiers Field Road, Boston, Massachusetts 02163 NORTON H. REAMER (60), Director President and Director, United Asset Management Corporation, (a holding company owning institutional investment management firms); Chairman, President and Director, UAM Funds (mutual funds). Director or Trustee of various investment companies managed by Eaton Vance or BMR. Address: One International Place, Boston, Massachusetts 02110 JOHN L. THORNDIKE (69), Director Director, Fiduciary Company Incorporated. Director or Trustee of various investment companies managed by Eaton Vance or BMR. Address: 175 Federal Street, Boston, Massachusetts 02110 JACK L. TREYNOR (66), Director Investment Adviser and Consultant. Director or Trustee of various investment companies managed by Eaton Vance or BMR. Address: 504 Via Almar, Palos Verdes Estates, California 90274 OFFICERS SAMUEL D. ISALY (51), Vice President President of G/A Capital Management, Inc. since 1989; Senior Vice President of S.G. Warburg & Co., Inc. from 1986 through 1989; and President of Gramercy Associates, a health care industry consulting firm, from 1983 through 1986. Address: G/A Capital Management, Inc., 41 Madison Avenue, 40th Floor, New York, NY 10010-2202 JAMES L. O'CONNOR (51), Treasurer Vice President of Eaton Vance, BMR and EV. Officer of various investment companies managed by Eaton Vance or BMR. THOMAS OTIS (64), Secretary Vice President and Secretary of Eaton Vance, BMR, EVC and EV. Officer of various investment companies managed by Eaton Vance or BMR. JANET E. SANDERS (60), Assistant Treasurer and Assistant Secretary Vice President of Eaton Vance, BMR and EV. Officer of various investment companies managed by Eaton Vance or BMR. A. JOHN MURPHY (33), Assistant Secretary Assistant Vice President of BMR, Eaton Vance and EV since March 1, 1994; employee of Eaton Vance since March 1993. State Regulations Supervisor, The Boston Company (1991-1993) and Registration Specialist, Fidelity Management & Research Co. (1986-1991). Officer of various investment companies managed by Eaton Vance or BMR. Mr. Murphy was elected Assistant Secretary of the Trust on March 27, 1995. ERIC G. WOODBURY (39), Assistant Secretary Vice President of Eaton Vance since February 1993; formerly, associate attorney at Dechert, Price & Rhoads and Gaston & Snow. Officer of various investment companies managed by Eaton Vance or BMR. Mr. Woodbury was elected Assistant Secretary of the Trust on June 19, 1995. OFFICERS AND TRUSTEES OF THE PORTFOLIO The Trustees and officers of the Portfolio are identical to the Directors and officers of the Fund. Messrs. Thorndike (Chairman), Hayes and Reamer are members of the Special Committee of the Board of the Fund and Portfolio. The purpose of the Special Committee is to consider, evaluate and make recommendations to the full Board concerning (i) all contractual arrangements with service providers to the Fund or Portfolio, including administrative services, 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 or Portfolio or its shareholders or interestholders. The Nominating Committee is comprised of four Directors who are not "interested persons" as that term is defined under the Investment Company Act of 1940 ("noninterested Directors"). The Committee has four-year staggered terms, with one member rotating off the Committee to be replaced by another noninterested Director of the Fund. Messrs. Hayes (Chairman), Reamer, Thorndike and Treynor are currently serving on the Committee. The purpose of the Committee is to recommend to the Board nominees for the position of noninterested Director and to assure that at least a majority of the Board of Directors is independent of Eaton Vance and its affiliates. Messrs. Treynor (Chairman) and Dwight are members of the Audit Committee of the Board of Directors. The Audit Committee's functions include making recommendations to the Board of Directors regarding the selection of the independent certified public accountants, and reviewing with such accountants and the Treasurer of the Fund matters relative to trading and brokerage policies and practices, accounting and auditing practices and procedures, accounting records, internal accounting controls, and the functions performed by the custodian, transfer agent and dividend disbursing agent of the Fund. Directors of the Fund who are not affiliated with an Adviser may elect to defer receipt of all or a percentage of their annual fees in accordance with the terms of a Trustees Deferred Compensation Plan (the "Plan"). Under the Plan, an eligible Director may elect to have his deferred fees invested by the Fund in the shares of one or more funds in the Eaton Vance Family of Funds, and the amount paid to the Directors under the Plan will be determined based upon the performance of such investments. Deferral of Directors' fees in accordance with the Plan will have a negligible effect on the Fund's assets, liabilities, and net income per share, and will not obligate the Fund to retain the services of any Director or obligate the Fund to pay any particular level of compensation to the Director. Neither the Portfolio nor the Fund has a retirement plan for its Trustees. For information concerning the compensation expected to be earned by the Directors of the Fund and Trustees of the Portfolio, see "Fees and Expenses" in the Part II. SERVICES FOR ACCUMULATION The following services are voluntary, involve no extra charge, other than the sales charge included in the offering price, and may be changed or discontinued without penalty at any time. INTENDED QUANTITY INVESTMENT -- STATEMENT OF INTENTION. If it is anticipated that $100,000 or more of Fund shares and shares of the other continuously offered open-end funds listed under "The Eaton Vance Exchange Privilege" in the Prospectus will be purchased within a 13-month period, a Statement of Intention should be signed so that shares may be obtained at the same reduced sales charge as though the total quantity were invested in one lump sum. Shares held under the Right of Accumulation (see below) as of the date of the Statement will be included toward the completion of the Statement. The Statement authorizes the Transfer Agent to hold in escrow sufficient shares (5% of the dollar amount specified in the Statement) which can be redeemed to make up any difference in sales charge on the amount intended to be invested and the amount actually invested. Execution of a Statement does not obligate the shareholder to purchase or the Fund to sell the full amount indicated in the Statement, and should the amount actually purchased during the 13-month period be more or less than that indicated on the Statement, price adjustments will be made accordingly. For sales charges and other information on quantity purchases, see "How to Buy Fund Shares" in the Prospectus. Any investor considering signing a Statement of Intention should read it carefully. RIGHT OF ACCUMULATION -- CUMULATIVE QUANTITY DISCOUNT. The applicable sales charge level for the purchase of Fund shares is calculated by taking the dollar amount of the current purchase and adding it to the value (calculated at the maximum current offering price) of the shares the shareholder owns in his or her account(s) in the Fund and in the other continuously offered open-end funds listed under "The Eaton Vance Exchange Privilege" in the Prospectus. The sales charge on the shares being purchase will then be at the rate applicable to the aggregate amount. For example, if the shareholder owned shares valued at $80,000 of the Fund and purchased an additional $20,000 of Fund shares, the sales charge for the $20,000 purchase would be at the rate of 3.75% of the offering price (3.90% of the net amount invested), which is the rate applicable to single transactions of $100,000. For sales charges on quantity purchases, see "How to Buy Fund Shares" in the Prospectus. Shares purchased (i) by an individual, his or her spouse and their children under the age of twenty-one and (ii) by a trustee, guardian or other fiduciary of a single trust estate or a single fiduciary account, will be combined for the purpose of determining whether a purchase will qualify for the Right of Accumulation and if qualifying, the applicable sales charge level. For any such discount to be made available, at the time of purchase a purchaser or any Authorized Firm which has an agreement with EVD must provide EVD (in the case of a purchase made through an Authorized Firm) or the Transfer Agent (in the case of an investment made by mail) with sufficient information to permit verification that the purchase order qualifies for the accumulation privilege. Confirmation of the order is subject to such verification. The Right of Accumulation privilege may be amended or terminated at any time as to purchases occurring thereafter. PRINCIPAL UNDERWRITER Shares of the Fund may be continuously purchased at the public offering price through Authorized Firms which have agreements with EVD. EVD is a wholly-owned subsidiary of Eaton Vance. The public offering price is the net asset value next computed after receipt of the order, plus, where applicable, a variable percentage sales charge depending upon the amount of purchase as indicated by the sales charge table set forth in the Prospectus. Such table is applicable to purchases of the Fund alone or in combination with purchases of certain other funds offered by the Principal Underwriter, made at a single time by (i) an individual, or an individual, his or her spouse and their children under the age of twenty-one, purchasing shares for his or her or their own account; and (ii) a trustee or other fiduciary purchasing shares for a single trust estate or a single fiduciary account. The table is also presently applicable to (1) purchases of Fund shares, alone or in combination with purchases of any of the other funds offered by the Principal Underwriter through one dealer aggregating $100,000 or more made by any of the persons enumerated above within a thirteen-month period starting with the first purchase pursuant to a written Statement of Intention, in the form provided by the Principal Underwriter, which includes provisions for a price adjustment depending upon the amount actually purchased within such period (a purchase not made pursuant to such Statement may be included thereunder if the Statement if filed within 90 days of such purchase); or (2) purchases of the Fund pursuant to the Right of Accumulation and declared as such at the time of purchase. Subject to the applicable provisions of the 1940 Act, the Fund may issue shares at net asset value in the event that an investment company (whether a regulated or private investment company or a personal holding company) is merged or consolidated with or acquired by the Fund. Normally no sales charges will be paid in connection with an exchange of Fund shares for the assets of such investment company. Shares may be sold at net asset value to any officer, director, trustee, general partner or employee of the Fund, the Portfolio or any investment company for which Eaton Vance or BMR acts as investment adviser, any investment advisory, agency, custodial or trust account managed or administered by Eaton Vance or by any parent, subsidiary or other affiliate of Eaton Vance, or any officer, director, trustee or employee of any parent, subsidiary or other affiliate of Eaton Vance. The terms "officer," "director," "trustee," "general partner" or "employee" as used in this paragraph include any such person's spouse and minor children, and also retired officers, directors, trustees, general partners and employees and their spouses and minor children. Shares may also be sold at net asset value to registered representatives and employees of certain investment dealers and to such person's spouses and children under the age of 21 and their beneficial accounts. The Fund reserves the right to suspend or limit the offering of shares to the public at any time. EVD acts as principal in selling shares of the Fund under the distribution agreement with the Fund. The distribution agreement is renewable annually by the Fund's Board of Directors (including a majority of its Directors who are not interested persons of EVD or the Fund), may be terminated on six months' notice by either party, and is automatically terminated upon assignment. EVD distributes Fund shares on a "best efforts" basis under which it is required to take and pay for only such shares as may be sold. EVD allows Authorized Firms discounts from the applicable public offering price which are alike for all Authorized Firms. See "How to Buy Fund Shares" in the Prospectus for the discounts allowed to Authorized Firms. EVD may allow, upon notice to all Authorized Firms, discounts up to the full sales charge during the periods specified in the notice. During periods when the discount includes the full sales charge, such Authorized Firms may be deemed to be underwriters as that term is defined in the Securities Act of 1933. DISTRIBUTION PLAN As described in the Prospectus, in addition to the fees and expenses described herein, the Fund finances distribution activities and bears expenses associated with the distribution of its shares pursuant to a distribution plan (the "Plan") designed to meet the requirements of Rule 12b-1 under the 1940 Act. Pursuant to such Rule, the Plan has been approved by the Board of Directors of the Fund (including a majority of those Directors who are not interested persons of the Fund and who have no direct or indirect financial interest in the operation of the Plan). Under the Plan, the President or a Vice President of the Fund shall provide to the Directors for their review, and the Directors shall review at least quarterly, a written report of the amounts expended under the Plan and the purposes for which such expenditures were made. The Plan remains in effect from year to year provided such continuance is approved at least annually by a vote of the Board of Directors and by a majority of those Directors who are not interested persons of the Fund and who have no direct or indirect financial interest in the operation of the Plan. The Plan may not be amended to increase materially the payments described therein without approval of the shareholders of the Fund, and all material amendments of the Plan must also be approved by the Directors in the manner described above. The Plan may be terminated at any time by vote of a majority of the Directors who are not interested persons of the Fund and who have no direct or indirect financial interest in the operation of the Plan or by a vote of a majority of the outstanding voting securities of the Fund. If the Plan is terminated or not continued in effect, the Fund has no obligation to reimburse the Principal Underwriter for amounts expended by the Principal Underwriter in distributing shares of the Fund. So long as the Plan is in effect, the selection and nomination of Directors who are not interested persons of the Fund shall be committed to the discretion of the Directors who are not such interested persons. The Directors have determined that in their judgment there is a reasonable likelihood that the Plan will benefit the Fund and its shareholders. The Plan is intended to compensate the Principal Underwriter for its distribution services to the Fund by paying the Principal Underwriter monthly distribution fees in connection with the sale of shares of the Fund. PERFORMANCE INFORMATION The table below indicates the cumulative and average annual total return on a hypothetical investment of $1,000 in the Fund covering the ten-, five- and one-year periods ended August 31, 1995. VALUE OF $1,000 INVESTMENT
TOTAL RETURN TOTAL RETURN VALUE OF EXCLUDING SALES CHARGE INCLUDING SALES CHARGE INVESTMENT INVESTMENT AMOUNT OF INVESTMENT ------------------------ ------------------------ PERIOD DATE INVESTMENT* ON 8/31/95 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED - ------------------------------------------------------------------------------------------------------------- 10 Years Ended 8/31/95 8/31/85 $952.50 $4,263.29 347.59% 16.17% 326.33% 15.60% 5 Years Ended 8/31/95 8/31/90 $952.50 $2,399.44 151.91% 20.30% 139.94% 19.13% 1 Year Ended 8/31/95 8/31/94 $952.50 $1,315.69 38.13% 38.13% 31.57% 31.57%
Past performance is not indicative of future results. Investment return and principal value will fluctuate; shares, when redeemed, may be worth more or less than their original cost. *Initial investment less current maximum sales charge of 4.75%. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES As of July 18, 1996, the Directors and officers of the Fund, as a group, owned in the aggregate less than 1% of the outstanding shares of the Fund. As of July 18, 1996, Donaldson Lufkin & Jenrette Securities Corp., c/o Pershing Div. - Transfer Dept., 5th Floor, Jersey City, NJ 07303-2052 and National Financial Services Corp., New York, NY 10281 were the record owners of approximately 7.92% and 6.22%, respectively, of the outstanding shares, which they held on behalf of their customers who are the beneficial owners of such shares, and as to which it has voting power under certain limited circumstances. To the knowledge of the Fund, no person owns of record or beneficially 5% or more of the Fund's outstanding shares as of such date. OTHER INFORMATION The Fund was incorporated in Maryland on November 7, 1984. On August 30, 1996, the Fund changed its name from Medical Research Investment Fund, Inc. INDEPENDENT ACCOUNTANTS For the fiscal year ending August 31, 1996 and the audit of the Fund for such year, Tait, Weller & Baker, Two Penn Center, Suite 700, Philadelphia, Pennsylvania, has served as the Fund's independent accountants. For future fiscal periods, Coopers & Lybrand L.L.P., One Post Office Square, Boston, Massachusetts, will be 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 Commission. Coopers & Lybrand Chartered Accountants, Toronto, Canada, are the independent accountants for the Portfolio. FINANCIAL STATEMENTS At the time of the audit of the Portfolio, its name was Global Health Sciences Portfolio. The financial statements of the Fund, which are included in the Fund's Unaudited Semi-Annual Report of February 28, 1996 and the Fund's Annual Report to Shareholders dated August 31, 1995, are incorporated by reference into this SAI and have been so incorporated in reliance on the report of Tait, Weller & Baker, independent accountants, as experts in accounting and auditing. Registrant incorporates by reference the unaudited financial information for the Fund for the six months ended February 28, 1996 filed with the Commission on or about April 30, 1996, and the audited financial information for the Fund for the fiscal year ended August 31, 1995 (included in PEA #14) (Accession No. 0000760110-95-000008), as previously electronically filed with the Commission. GLOBAL HEALTH SCIENCES PORTFOLIO STATEMENT OF ASSETS AND LIABILITIES JUNE 3, 1996 ASSETS: Cash ..................................................... $100,010 Deferred organization expenses ........................... 12,000 -------- Total assets ......................................... $112,010 LIABILITIES: Accrued organization expenses ............................ 12,000 -------- NET ASSETS ................................................... $100,010 ======== NOTES: (1) Global Health Sciences Portfolio (the "Portfolio") was organized as a New York Trust on March 26, 1996 and has been inactive since that date, except for matters relating to its organization and registration as an investment company under the Investment Company Act of 1940 and the sale of interests therein at the purchase price of $100,000 to Boston Management & Research and the sale of interest therein at the purchase price of $10 to Eaton Vance Management (the "Initial Interests"). (2) Organization expenses are being deferred and will be amortized on a straight-line basis over a period not to exceed five years, commencing on the effective date of the Portfolio's initial offering of its interests. The amount paid by the Portfolio on any withdrawal by the holders of the Initial Interests of any of the respective Initial Interests will be reduced by a portion of any unamortized organization expenses, determined by the proportion of the amount of the Initial Interests withdrawn to the Initial Interests then outstanding. (3) At 4:00 p.m., New York City time, on each business day of the Portfolio, the value of an investor's interest in the Portfolio is equal to the product of (i) the aggregate net asset value of the Portfolio multiplied by (ii) the percentage representing tht investor's share of the aggregate interest in the Portfolio effective for that day. REPORT OF INDEPENDENT ACCOUNTANTS To the Trustees and Investors of Global Health Sciences Portfolio: We have audited the accompanying statement of assets and liabilities of Global Health Sciences Portfolio (a New York Trust) as of June 3, 1996. This financial statement is the responsibility of the Portfolio's management. Our responsibility is to express an opinion on this financial statement based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statement referred to above presents fairly, in all material respects, the financial position of Global Health Sciences Portfolio as of June 3, 1996, in conformity with generally accepted accounting principles. /s/ Coopers & Lybrand Chartered Accountants -------------------------------------- Coopers & Lybrand Chartered Accountants Toronto, Ontario June 21, 1996 EV TRADITIONAL WORLDWIDE HEALTH SCIENCES FUND, INC. [LOGO] STATEMENT OF ADDITIONAL INFORMATION SEPTEMBER 3, 1996 EV TRADITIONAL WORLDWIDE HEALTH SCIENCES FUND, INC. 24 FEDERAL STREET BOSTON, MA 02110 - ------------------------------------------------------------------------------ SPONSOR AND MANAGER OF EV TRADITIONAL WORLDWIDE HEALTH SCIENCES FUND, INC. ADMINISTRATOR OF WORLDWIDE HEALTH SCIENCES PORTFOLIO Eaton Vance Management, 24 Federal Street, Boston, MA 02110 ADVISER OF WORLDWIDE HEALTH SCIENCES PORTFOLIO G/A Capital Management, Inc., 41 Madison Avenue, 40th Floor New York, NY 10010-2202 PRINCIPAL UNDERWRITER Eaton Vance Distributors, Inc., 24 Federal Street, Boston, MA 02110 (800) 225-6265 CUSTODIAN Investors Bank & Trust Company, 89 South Street, Boston, MA 02111 TRANSFER AGENT First Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123 (800) 262-1122 INDEPENDENT ACCOUNTANTS Coopers & Lybrand L.L.P., One Post Office Square, Boston, MA 02109 T- SAI PART C OTHER INFORMATION Item 24. Financial Statements and Exhibits (a) Financial Statements (included in Parts A and B): Per Share Data and Ratios (Part A) Report of Independent Accountants (Part B) Statement of Assets and Liabilities (Part B) Portfolio of Investments in Securities (Part B) Statement of Operations (Part B) Statement of Changes in Net Assets (Part B) Notes to Financial Statements (Part B) (b) Exhibits: 1 Copy of Articles of Incorporation dated November 5, 1984; Exhibit 1 to Pre-Effective Amendment No. 1 to Form N-1A Registration Statement No. 2-95103. 2 Copy of By-Laws; Exhibit 2 to Pre-Effective Amendment No. 1 to Form N-1A Registration Statement No. 2-95103. 3 None. 4 Copy of Specimen copy of Share Certificate; Exhibit 4 to Pre-Effective Amendment No. 1 to Form N-1A Registration Statement No. 2-95103. 5(a) Copy of Investment Advisory Agreement between Registrant and Medical Research Management Group, Inc., dated August 10, 1985; Exhibit 5 to Post-Effective Amendment No. 1 to Form N-1A Registration Statement No. 2-95103. 5(b) Copy of Investment Advisory Agreement between Registrant and G/A Capital Management, Inc. dated August 17, 1989; Exhibit 5(b) to Post-Effective Amendment No. 9 to Form N-1A Registration Statement No. 2-95103. 5(c) Management Contract between Registrant and Eaton Vance Management dated July 17, 1996 filed herewith. 6(a) Copy of Distribution Agreement between Registrant and Medical Research Management Group, Inc., dated August 10, 1985, as amended on June 25, 1986; Exhibit 6 to Post-Effective Amendment No. 3. 6(b) Copy of Distribution Agreement between Registrant and Capstone Asset Planning Company dated April 21, 1988; Exhibit 6(b) to Post-Effective Amendment No. 5 to Form N-1A Registration Statement No. 2-95103. 6(c) Distribution Agreement between Registrant and Eaton Vance Distributors, Inc. dated July 17, 1996 filed herewith. 7 The Securities and Exchange Commission has granted the Eaton Vance Group of Funds an exemptive order that permits them to enter into deferred compensation arrangements with its independent Trustees. See in the Matter of Capital Exchange Fund, Inc., Release No. IC-20671 (November 1, 1994). 8(a)(1) Custodian Agreement between Registrant and Provident National Bank, dated August 10, 1985, is incorporated herein by reference to Post-Effective Amendment No. 1 filed March 27, 1986. 8(a)(2) Copy of Custodian Agreement between Registrant and The First Jersey National bank dated June 3, 1988; Exhibit 8(a)(2) to Post-Effective Amendment No. 5 to Form N-1A Registration Statement No. 2-95103. 8(b)(1) Sub-Custodian Agreement between Provident National Bank and The Chase Manhattan Bank, N.A. dated August 10, 1985 is incorporated herein by reference to Post-Effective Amendment No. 2 filed October 28, 1986. 8(b)(2) Form of Sub-Custodian Agreement among the Registrant, Chase Manhattan Bank, N.A. and The First Jersey National Bank dated June, 1988; Exhibit 8(b)(2) to Post-Effective Amendment No. 5 to Form N-1A Registration Statement No. 2-95103. 9(a)(1) Administration Agreement between Registrant and Provident Institutional Management Corporation, dated August 10, 1985, is incorporated herein by reference to Post-Effective Amendment No. 1 filed March 27, 1986. 9(a)(2) Copy of Administration Agreement between the Registrant and Capstone Asset Management Company dated March 1, 1988; Exhibit 9(a)(2) to Post-Effective Amendment No. 5 to Form N-1A Registration Statement No. 2-95103. 9(b)(1) Transfer Agency Agreement between Registrant and Provident Financial Processing Corporation, dated August 10, 1985, is incorporated herein by reference to Post-Effective Amendment No. 1 filed March 27, 1986. 9(b)(2) Copy of Agency Agreement between the Registrant and Capstone Financial Services, Inc. dated April 21, 1988; Exhibit 9(b)(2) to Post-Effective Amendment No. 5 to Form N-1A Registration Statement No. 2-95103. 10 Opinion and consent of counsel; Exhibit 10 to Post-Effective Amendment No. 12 to Form N-1A Registration Statement No. 2-95103. 11(a)(1) Consent of Coopers & Lybrand; Exhibit 11(a)(1) to Post-Effective Amendment No. 5 to Form N-1A Registration Statement No. 2-95103. 11(a)(2) Consent of Price Waterhouse; Exhibit 11(a)(2) to Post-Effective Amendment No. 5 to Form N-1A Registration Statement No. 2-95103. 11(a)(3) Consent of Tait, Weller & Baker on behalf of Medical Research Investment Fund, Inc. filed herewith. 11(a)(4) Consent of Coopers & Lybrand on behalf of Worldwide Health Sciences Portfolio filed herewith. 12 None. 13 Agreement made in consideration of providing initial capital is incorporated herein by reference to Post-Effective Amendment No. 2 filed October 28, 1986. 14 None. 15(a)(1) Rule 12b-1 Plan as amended on June 25, 1986 is incorporated herein by reference to Post-Effective Amendment No. 3 filed December 30, 1986. 15(a)(2) Copy of Service and Distribution Plan as amended on April 21, 1988; Exhibit 15(a)(2) to Post-Effective Amendment No. 5 to Form N-1A Registration Statement No. 2-95103. 15(a)(3) Copy of Service and Distribution Plan as amended on May 3, 1993; Exhibit 15(a)(3) to Post-Effective Amendment No. 12 to Form N-1A Registration Statement No. 2-95103. 15(a)(4) Distribution Plan dated July 17, 1996 filed herewith. 15(b)(1) Form of Service Agreement is incorporated herein by reference to Post-Effective Amendment No. 2 filed October 28, 1986. 15(b)(2) Form of Service Agreement, as amended; Exhibit 15(b)(2) to Post-Effective Amendment No. 5 to Form N-1A Registration Statement No. 2-95103. 15(c)(1) Form of Selected Dealers Agreement is incorporated herein by reference to Post-Effective Amendment No. 2 filed October 28, 1986. 15(c)(2) Form of Selling Group Agreement; Exhibit 15(c)(2) to Post-Effective Amendment No. 5 to Form N-1A Registration Statement No. 2-95103. 16 Schedule for Computation of Performance Quotations filed herewith. Item 25. Persons Controlled by or under Common Control with Registrant None. Item 26. Number of Holders of Securities Number of Record Holders Title of Class as of July 18, 1996 -------------- ------------------- Shares of common stock 5,661 par value $.001 Item 27. Indemnification Article VII (3) of the Registrant's Articles of Incorporation, incorporated by reference as Exhibit 1 hereto, and Article VI, Section II of the Registrant's By-Laws incorporated by reference as Exhibit 2 hereto, provide for the indemnification of the Registrant's principal underwriter, custodian, and transfer agent. In no event will the Registrant indemnify any of its Directors, officers, employees, or agents against any liability to which such person would otherwise be subject by reason of his willful misfeasance, bad faith, or gross negligence in the performance of his duties, or by reason of his reckless disregard of the duties involved in the conduct of his office or under his agreement with the Registrant. The Registrant will comply with Rule 484 under the Securities Act of 1933 and the Release No. 11330 under the Investment Company Act of 1940 in connection with any indemnification. Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to Directors, officers, and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a Director, officer, or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such Director, officer, or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issues. Item 28. Business and Other Connections of Investment Adviser Uniform Form ADV (File No. 801-34429) for G/A Capital Management, Inc. iS hereby incorporated herein byreference. Item 29. Principal Underwriters (a) The principal underwriter of the Registrant, Capstone Asset Planning Company, also acts as principal underwriter for Capstone Fixed Income Series, Inc. - Capstone Government Income Fund and Capstone Intermediate Government Fund - - Capstone Growth Fund, Inc.; and Capstone International Series Trust - Capstone New Zealand Fund and Capstone Nikko Japan Fund. (b) Name and Principal Positions and Offices Positions and Offices Business Address* with Underwriter with Registrant - ----------------- ---------------------- --------------------- Dan E. Watson ........... Chairman of the Board -- and Director Edward L. Jaroski ....... President and Director Vice President Leticia N. Jaroski....... Vice President -- Janet K. Roberts ....... Assistant Vice President -- Iris R. Clay ....... Assistant Vice President Secretary Linda G. Giuffre ....... Treasurer Treasurer - ---------------------- * 5847 San Felipe, Suite 4100, Houston, Texas 77057 Item 30. Location of Accounts and Records G/A Capital Management, Inc., the Investment Adviser to the Registrant, 41 Madison Avenue, 40th floor, New York, New York 10010-2202; Capstone Asset Management Company, the Administrator of the Registrant, 5847 San Felipe, Suite 4100, Houston, Texas 77057; Fifth Third Bank, the Custodian of the Registrant, Fifth Third Center, Cincinnati, Ohio 45263; and Fund/Plan Services, Inc., the transfer agent of the Registrant, 2 W. Elm Street, Conshohocken, Pennsylvania 19428, maintain physical possession of each account, book or other document required to be maintained by Section 31(a) of Investment Company Act of 1940 and the rules promulgated thereunder. Item 31. Management Services Not applicable Item 32. Undertakings Not applicable SIGNATURES Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant has duly caused this Registration Statement or Amendment to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, and State of New York on the 17th day of July, 1996. MEDICAL RESEARCH INVESTMENT FUND, INC. By: /s/ Samuel D. Isaly ------------------------------ Samuel D. Isaly, President Pursuant to the requirements of the Securities Act of 1933, this Amendment to Registration Statement has been signed below by the following persons in the capacities and on the dates indicated. Signatures Title Date ---------- ----- ---- President (Principal Executive Officer) and Director July 17, 1996 /s/ Samuel D. Isaly - ------------------- Samuel D. Isaly Treasurer (Principal Financial and Accounting Officer) July 17, 1996 /s/ Linda G. Giuffre - ------------------- Linda G. Giuffre Director July 17, 1996 /s/ John J. Maggio - ------------------- John J. Maggio Director July 17, 1996 /s/ Philip C. Smith - ------------------- Philip C. Smith Director July 17, 1996 /s/ Eugene E. Weise - ------------------- Eugene E. Weise SIGNATURES Worldwide Health Sciences Portfolio has duly caused this Amendment to the Registration Statement on Form N-1A of Medical Research Investment Fund, Inc. to be signed on its behalf by the undersigned, thereunto duly authorized, in Hamilton, Bermuda on the 24th day of June, 1996. WORLDWIDE HEALTH SCIENCES PORTFOLIO By: /s/ James B. Hawkes ------------------------------ James B. Hawkes, President Pursuant to the requirements of the Securities Act of 1933, this Post-Effective Amendment to the Registration Statement has been signed below by the following persons in the capacities and on the dates indicated. Signatures Title Date ---------- ----- ---- President, Principal Officer and Trustee June 24, 1996 /s/ James B. Hawkes - ------------------------ James B. Hawkes Treasurer, Principal Financial and Accounting Officer and Trustee June 24, 1996 /s/ James L. O'Connor - ------------------------ James L. O'Connor Trustee June 24, 1996 /s/ Donald R. Dwight - ------------------------ Donald R. Dwight Trustee June 24, 1996 /s/ Samuel L. Hayes, III - ------------------------ Samuel L. Hayes, III Trustee June 24, 1996 /s/ Norton H. Reamer - ------------------------ Norton H. Reamer Trustee June 24, 1996 /s/ John L. Thorndike - ------------------------ John L. Thorndike Trustee June 24, 1996 /s/ Jack L. Treynor - ------------------------ Jack L. Treynor INDEX TO EXHIBITS Exhibit Number Description of Exhibits - ------- ------------------------ 5(c) Management Contract between Registrant and Eaton Vance Management dated July 17, 1996. 6(c) Distribution Agreement between Registrant and Eaton Vance Distributors, Inc. dated July 17, 1996. 11(a)(3) Consent of Tait, Weller & Baker on behalf of Medical Research Investment Fund, Inc. 11(a)(4) Consent of Coopers & Lybrand on behalf of Worldwide Health Sciences Portfolio. 15(a)(4) Distribution Plan between Registrant and Eaton Vance Distributors, Inc. dated July 17, 1996. 16 Schedules for Computation of Performance Quotations EX-99.5(C) 2 MANAGEMENT CONTRACT DATED 7/17/96 EXHIBIT 5(c) MANAGEMENT CONTRACT EV TRADITIONAL WORLDWIDE HEALTH SCIENCES FUND, INC. (currently Medical Research Investment Fund, Inc.) AGREEMENT made this 17th day of July, 1996 between EV Traditional Worldwide Health Sciences Fund, Inc. a Maryland corporation (the "Fund") and Eaton Vance Management, a Massachusetts business trust (the "Manager"): 1. Duties of the Manager. The Fund hereby employs the Manager to act as manager for and to manage and administer the affairs of the Fund, subject to the supervision of the Directors of the Fund, for the period and on the terms set forth in this Contract. The Manager hereby accepts such employment, and agrees to manage and administer the Fund's business affairs and, in connection therewith, to furnish for the use of the Fund office space and all necessary office facilities, equipment and personnel for administering the affairs of the Fund. The Manager's services include monitoring and providing reports to the Directors of the Fund concerning the investment performance achieved by the investment adviser for Worldwide Health Sciences Portfolio, recordkeeping, preparation and filing of documents required to comply with federal and state securities laws, supervising the activities of the transfer agent of the Fund, providing assistance in connection with Directors and shareholders' meetings and other management and administrative services necessary to conduct the business of the Fund. The Manager shall not provide any investment management or advisory services to the Fund. 2. Compensation of the Manager. For the services, payments and facilities to be furnished hereunder by the Manager, the Fund shall pay to the Manager on the last day of such month a fee computed by applying the annual asset rate applicable to that portion of the average daily net assets of the Fund throughout the month in each Category as indicated below: Annual Category Average Daily Net Assets Asset Rate - -------- ------------------------ ---------- 1 less than $500 million 0.25000% 2 $500 million but less than $1 billion 0.23333% 3 $1 billion but less than $1.5 billion 0.21667% 4 $1.5 billion but less than $2 billion 0.20000% 5 $2 billion but less than $3 billion 0.18333% 6 $3 billion and over 0.16667% The average daily net assets of the Fund will be computed in accordance with the Articles of Organization, and any applicable votes of the Directors of the Fund. In case of initiation or termination of this Contract during any month, the fee for that month shall be reduced proportionately on the basis of the number of calendar days during which it is in effect and the fee shall be computed upon the average net assets for the business days it is so in effect for that month. The Manager 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 its expenses other than those expressly stated to be payable by the Manager 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 Fund under the Investment Company Act of 1940, (iii) commissions, fees and other expenses connected with the purchase or sale of securities and other investments, (iv) auditing, accounting and legal expenses, (v) taxes and interest, (vi) governmental fees, (vii) expenses of issue, sale, repurchase and redemption of shares, (viii) expenses of registering and qualifying the Fund and its shares under federal and state securities laws and of preparing and printing prospectuses for such purposes and for distributing the same to shareholders and investors, and fees and expenses of registering and maintaining registrations of the Fund and of the Fund's principal underwriter, if any, as broker-dealer or agent under state securities laws, (ix) expenses of reports and notices to shareholders and of meetings of shareholders and proxy solicitations therefor, (x) expenses of reports to governmental officers and commissions, (xi) insurance expenses, (xii) association membership dues, (xiii) fees, expenses and other disbursements, if any, of custodians and sub-custodians for all services to the Fund (including without limitation safekeeping of funds, securities and other investments, keeping of books and accounts and determination of net asset value), (xiv) fees, expenses and disbursements of transfer agents, dividend disbursing agents, shareholder servicing agents and registrars for all services to the Fund, (xv) expenses of servicing shareholder accounts, (xvi) any direct charges to shareholders approved by the Directors of the Fund, (xvii) compensation and expenses of Directors of the Fund who are not members of the Manager'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 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 Fund to indemnify its Directors and officers with respect thereto. 4. Other Interests. It is understood that Directors, officers and shareholders of the Fund are or may be or become interested in the Manager as Directors, officers, or employees, or otherwise and that Directors, officers and employees of the Manager are or may be or become similarly interested in the Fund, and that the Manager may be or become interested in the Fund as shareholder or otherwise. It is also understood that Directors, officers and employees of the Manager may be or become interested (as directors, trustees, officers, employees, stockholders or otherwise) in other companies or entities (including, without limitation, other investment companies) which the Manager may organize, sponsor or acquire, or with which it may merge or consolidate, and that the Manager 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 Manager. The services of the Manager of the Fund are not to be deemed to be exclusive, the Manager 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 Manager, the Manager shall not be subject to liability to 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 purchase, holding or sale of any security or other instrument, including options and futures contracts. 6. Duration and Termination of the Contract. This Contract shall become effective upon the date of its execution, and, unless terminated as herein provided, shall remain in full force and effect to and including February 28, 1997 and shall continue in full force and effect indefinitely thereafter, but only so long as such continuance after February 28, 1997 is specifically approved at least annually by the Directors of the Fund. Either party hereto may, at any time on sixty (60) days' prior written notice to the other, terminate this Contract, without the payment of any penalty, by action of its Directors, and the Fund may, at any time upon such written notice to the Manager, terminate this Contract by vote of a majority of the outstanding voting securities of the Fund. This Contract shall terminate automatically in the event of its assignment. 7. Amendment of the Contract. This Contract may be amended by a writing signed by both parties hereto, provided that no amendment to this Contract shall be effective until approved by the vote of a majority of the Directors of the Fund. 8. Use of the Name "Eaton Vance". The Manager hereby consents to the use by the Fund of the name "Eaton Vance" or "EV" as part of the Fund's name; provided, however, that such consent shall be conditioned upon the employment of the Manager or one of its affiliates as the manager or 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 Manager and its affiliates and other investment companies that have obtained consent to the use of the name "Eaton Vance." Eaton Vance 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 Manager or one if its affiliates as the Fund's manager or investment adviser. Future names adopted by the Fund for itself, insofar as such names include identifying words requiring the consent of the Manager, shall be the property of the Manager and shall be subject to the same terms and conditions. 9. Certain Definitions. The term "assignment" when used herein shall have the meaning 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 of the Fund" shall mean the vote 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 outstanding shares of the Fund are present or represented by proxy at the meeting, or (b) more than 50 per centum of the outstanding shares of the Fund. EV TRADITIONAL WORLDWIDE HEALTH EATON VANCE MANAGEMENT SCIENCES FUND, INC. By/s/ Samuel D. Isaly By/s/ James B. Hawkes --------------- -------------------- President Vice President, and not individually EX-99.6(C) 3 DISTRIBUTION AGREEMENT DATED 7/17/96 EXHIBIT 6(c) DISTRIBUTION AGREEMENT EV TRADITIONAL WORLDWIDE HEALTH SCIENCES FUND, INC. (currently Medical Research Investment Fund, Inc.) AGREEMENT effective as of July 17, 1996 between EV TRADITIONAL WORLDWIDE HEALTH SCIENCES FUND, INC., hereinafter called the "Fund," a Maryland corporation having its principal place of business in Boston in the Commonwealth of Massachusetts and EATON VANCE DISTRIBUTORS, INC., a Massachusetts corporation having its principal place of business in said Boston, hereinafter sometimes called the "Principal Underwriter." IN CONSIDERATION of the mutual promises and undertakings herein contained, the parties hereto agree: 1. The Fund grants to the Principal Underwriter the right to purchase shares of the Fund upon the terms hereinbelow 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 the shares so purchased shall be the net asset value used in determining the public offering price on which such orders were based. The Principal Underwriter shall notify Investors Bank & Trust Company, Custodian of the Fund ("IBT"), and The Shareholder Services Group, Inc., Transfer Agent of the Fund ("TSSG"), 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. The public offering price, i.e., the price per 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 shares, but not to exceed the net asset value at which the Principal Underwriter is to purchase the 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 shares at the net asset value at which the Principal Underwriter is to purchase such 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. The net asset value of shares of the Fund shall be determined by the Fund or IBT, as the agent of the Fund, as of the close of regular trading on the New York Stock 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 Directors of the Fund, in accordance with the methodology and procedures for calculating such net asset value authorized by the Directors. The Fund 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 Fund and Principal Underwriter. The Fund will notify the Principal Underwriter each time the net asset value of the Fund's shares is determined and when such value is so determined it shall be applicable to transactions as set forth in the current Prospectus and Statement of Additional Information (hereafter the "Prospectus") relating to the Fund's shares. No shares of the Fund shall be sold by the Fund during any period when the determination of net asset value is suspended pursuant to the Articles of Organization, 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 the last paragraph of paragraph 1 hereof. The Fund shall also have the right to suspend the sale of the Fund's shares if in the judgment of the Fund 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 Fund 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 Fund 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 Fund in connection therewith by or on behalf of the Principal Underwriter; provided, however, that in no case (i) is the indemnity of the Fund 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 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 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 Fund 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 Fund 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 Fund shall be entitled to participate, at the expense of the Fund, in the defense, or, if the Fund so elects, to assume the defense of any suit brought to enforce any such liability, but if the Fund 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 Fund 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 Fund 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 Fund agrees promptly to notify the Principal Underwriter of the commencement of any litigation or proceedings against it or any of its officers or Directors 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 Fund and each of its Directors and officers and each person, if any, who controls the Fund 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 Fund 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 Fund 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 Fund, the Fund or upon such person (or after the Fund, 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 Fund, or to its officers or Directors, 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 Directors 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 Fund, 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 Directors 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 Fund. The Principal Underwriter agrees promptly to notify the Fund 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 Fund 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 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 - (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 distributing 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 of the Fund 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 by the Fund pursuant to any written plan approved in accordance with Rule 12b-1 under the 1940 Act. (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) The Principal Underwriter shall be entitled to receive all contingent deferred sales charges imposed in accordance with the Prospectus on early redemptions of Fund shares. 6. The Fund hereby authorizes the Principal Underwriter to repurchase, upon the terms and conditions set forth in written instructions given by the Fund to the Principal Underwriter from time to time, as agent of the Fund 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 TSSG, 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 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 Directors of the Fund shall furnish similar information with respect to all repurchases made up to the time of the request on any day. (b) The Fund 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 Fund duly authorized by its Directors. 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 Directors of the Fund. (c) The Principal Underwriter shall have the right to terminate the operation of this paragraph 6 upon giving to the Fund thirty (30) days' written notice thereof. (d) The Fund agrees to authorize and direct TSSG, 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 Fund or for cancellation by the Fund. (e) The Principal Underwriter shall receive no commission in respect of any repurchase of shares under the foregoing authorization and appointment as agent. (f) The Fund agrees it 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 Fund 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 Fund may terminate this Agreement forthwith by written notice to the Principal Underwriter. If, at any time during the existence of this Agreement upon request by the Principal Underwriter, the Fund fails (after a reasonable time) to make any changes in its Articles of Organization, 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 Fund. 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 Fund's Articles of Organization 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 for one year from the date of its execution and shall continue in full force and effect indefinitely thereafter, but only so long as such continuance is specifically approved at least annually (i) by the vote of a majority of the Directors of the Fund who are not interested persons of the Fund or of the Principal Underwriter cast in person at a meeting called for the purpose of voting on such approval, and (ii) by the Directors of the Fund or by vote of a majority of the outstanding voting securities of the Fund; and (b) that either party shall have the right to terminate this Agreement on six (6) months' written notice thereof given in writing to the other. 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 Fund and that of the Principal Underwriter, shall be 24 Federal Street, Boston, Massachusetts 02110. 12. The services of the Principal Underwriter to the Fund hereunder are not to be deemed to be exclusive, the Principal Underwriter being free to (a) render similar services to, and to act as principal underwriter in connection with the distribution of shares of, 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. IN WITNESS WHEREOF, the parties hereto have entered into this Agreement this 17th day of July, 1996. EV TRADITIONAL WORLDWIDE HEALTH SCIENCES FUND, INC. By/s/ Samuel D. Isaly ----------------------- President EATON VANCE DISTRIBUTORS INC. By/s/ James B. Hawkes ----------------------- Vice President EX-99.11(A)(3) 4 AUDITORS CONSENT-MEDICAL RESEARCH INVESTMENT FUND EXHIBIT 11(a)(3) CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS We consent to the reference to our firm in the Post-Effective Amendment No. 15 to the Registration Statement, (Form N-1A) of Medical Research Investment Fund, Inc. and to the incorporation by reference of our report dated September 25, 1995 to the Shareholders and Board of Directors of Medical Research Investment Fund, Inc. /s/ Tait, Weller & Baker -------------------------- TAIT, WELLER & BAKER Philadelphia, Pennsylvania July 19, 1996 EX-99.11(A)(4) 5 AUDITORS CONSENT-WORLDWIDE HEALTH SCIENCES PORT. Exhibit 11(a)(4) CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the inclusion in Post-Effective Amendment No. 15 to the Registration Statement on Form N-1A (1933 Act File No. 2-95103) of Medical Research Investment Fund, Inc. of our report dated June 21, 1996, relating to Global Health Sciences Portfolio (now named Worldwide Health Sciences Portfolio) appearing in the Statement of Additional Information which is part of such Registration Statement. /s/ Coopers & Lybrand L.L.P. Chartered Accountants ---------------------------------------------- COOPERS & LYBRAND L.L.P. Chartered Accountants Toronto, Ontario July 17, 1996 EX-99.15(A)(4) 6 DISTRIBUTION PLAN DATED 7/17/96 EXHIBIT 15(A)(4) DISTRIBUTION PLAN OF EV TRADTIONAL WORLDWIDE HEALTH SCIENCES FUND, INC. (currently Medical Research Investment Fund, Inc.) WHEREAS, EV Traditional Worldwide Health Sciences Fund, Inc. (the "Fund") engages in business as an open-end management investment company and is registered as such under the Investment Company Act of 1940, as amended (the "Act"); WHEREAS, the Fund desires to adopt a new Distribution Plan pursuant to Rule 12b-1 under the Act, pursuant to which the Fund intends to finance activities which are primarily intended to result in the distribution and sale of its shares and to make payments in connection with the distribution of its shares; WHEREAS, the Fund employs Eaton Vance Distributors, Inc., to act as Principal Underwriter (as defined in the Act) of the shares of the Fund; WHEREAS, the Directors of the Fund have determined that it is desirable to amend and replace the Amended Service and Distribution Plan dated May 3, 1993 (the "Current Plan") with this Plan; WHEREAS, the Fund intends to compensate the Principal Underwriter for its distribution services to the Fund by paying the Principal Underwriter monthly distribution fees in connection with the sale of shares of the Fund; and WHEREAS, the Directors of the Fund have determined that there is a reasonable likelihood that adoption of this Distribution Plan will benefit the Fund and its shareholders. NOW, THEREFORE, the Fund hereby adopts this Distribution Plan (the "Plan") in accordance with Rule 12b-1 under the Act and containing the following terms and conditions: 1. The Principal Underwriter will provide the Fund with such distribution services and facilities as the Fund may from time to time consider necessary to enhance the sale of shares of the Fund, and the Principal Underwriter shall pay such compensation to Authorized Firms and other third parties as it considers appropriate to encourage distribution of such shares. 2. The Fund shall pay a monthly distribution fee to the Principal Underwriter on the last day of each month. Such distribution fee shall be in an amount equal on an annual basis to .25% of the Fund's average daily net assets for any fiscal year. For the purposes of this Plan, daily net assets of the Fund shall be computed in accordance with the governing documents of the Fund and applicable votes and determinations of the Directors of the Fund. All distribution fees are being paid in consideration for the distribution services and facilities to be furnished to the Fund hereunder by the Principal Underwriter. 3. Appropriate adjustment of payments made pursuant to Section 2 of this Plan shall be made whenever necessary to ensure that no such payment shall cause the Fund to exceed the applicable maximum cap imposed on asset-based, front-end and deferred sales charges by subsection (d) of Section 26 of Article III of the Rules of Fair Practice of the National Association of Securities Dealers, Inc. (the "NASD Rules"). 4. This Plan shall not take effect until it has been approved by a majority of (i) those Directors of the Fund who are not "interested persons" of the Fund (as defined in the 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 Directors") and (ii) all of the Directors then in office, cast in person at a meeting (or meetings) called for the purpose of voting on this Plan. 5. Any agreements between the Fund and any person relating to this Plan shall be in writing and shall not take effect until approved in the manner provided for in Section 4. 6. This Plan shall continue in effect through and including April 28, 1997 and shall continue indefinitely thereafter, but only for so long as such continuance after such date is specifically approved at least annually in the manner provided for approval of this Plan in Section 4. 7. The persons authorized to direct the disposition of monies paid or payable by the Fund pursuant to this Plan or any related agreement made on behalf of the Fund shall be the President or any Vice President of the Fund. Such persons shall provide to the Fund's Board of Directors and the Board of Directors shall review, at least quarterly, a written report of the amounts so expended and the purposes for which such expenditures were made. 8. This Plan may be terminated at any time by vote of a majority of the Rule 12b-1 Directors, or by vote of a majority of the outstanding voting securities of the Fund. 9. This Plan may not be amended to increase materially the payments to be made by the Fund unless such amendment, if required by law, is approved by a vote of at least a majority of the outstanding voting securities of the Fund. In addition, all material amendments to this Plan shall be approved in the manner provided for in Section 4. 10. While this Plan is in effect, the selection and nomination of the Rule 12b-1 Directors shall be committed to the discretion of the Rule 12b-1 Directors. 11. The Trust shall preserve copies of this Plan and any related agreements made by the Fund and all reports made pursuant to Section 7, for a period of not less than six years from the date of this Plan, or of the agreements or of such report, as the case may be, the first two years in an easily accessible place. 12. When used in this Plan, the term "vote of a majority of the outstanding voting securities of the Fund" shall mean the vote 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 outstanding shares of the Fund are present or represented by proxy at the meeting, or (b) more than 50 per centum of the outstanding shares of the Fund. 13. If any provision of this Plan shall be held or made invalid by a court decision, statute, rule or regulation of the Securities and Exchange Commission or otherwise, the remainder of this Plan shall not be affected thereby. 14. This Plan shall amend, replace and be substituted for the Current Plan as of the day Eaton Vance Distributors, Inc. begins serving as principal underwriter of the Fund, and this Plan shall be effective as of such time. ADOPTED JULY 17, 1996 * * * EX-99.16 7 SCH. FOR COMPUTATION OF PERF. QUOTATIONS EXHIBIT 16 INVESTMENT PERFORMANCE -- EV TRADITIONAL WORLDWIDE HEALTH SCIENCES FUND, INC. The table below indicates the total return (capital changes plus reinvestment of all distributions) on a hypothetical investment of $1,000 in the Fund covering the 1, 5, and 10 year periods ended August 31, 1995.
VALUE OF A $1,000 INVESTMENT VALUE OF VALUE OF TOTAL RETURN TOTAL RETURN INVESTMENT INVESTMENT INITIAL INVESTMENT EXCLUDING SALES CHARGE INCLUDING SALES CHARGE PERIOD DATE INVESTMENT* ON 08/31/95 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED 10 YEARS ENDED 08/31/95 08/31/85 $952.50 $4,263.29 347.59% 16.17% 326.33% 15.60% 5 YEARS ENDED 08/31/95 08/31/90 $952.50 $2,399.44 151.91% 20.30% 139.94% 19.13% 1 YEAR ENDED 08/31/95 08/31/94 $952.50 $1,315.69 38.13% 38.13% 31.57% 31.57% Average annual total return is calculated using the following formula: n P(1+T) = ERV where P = an initial investment of $1,000 ** T = average annual total return n = number of years ERV = ending redeemable value of $1,000 initial investment at the end of the period Cumulative total return is calculated using the following formula: T = ( ERV / P ) - 1 where T = cumulative total return including the maximum sales charge ERV = ending redeemable value of $1,000 initial investment at the end of the period P = an initial investment of $1,000 *** * Initial investment less the current maximum sales charge of 4.75%. ** The average annual total return including the sales charge is calculated based on an initial investment of $1,000 less the maximum initial sales charge of 4.75%. *** The cumulative total return including the sales charge is calculated based on an initial investment of $1,000 less maximum initial sales charge of 4.75%.
EX-27 8 FDS - MEDICAL RESEARCH INVESTMENT FUND, INC.
6 1000 YEAR AUG-31-1995 SEP-01-1994 AUG-31-1995 13614 17733 33 0 0 17766 0 0 76 76 0 11936 0 0 (216) 0 1851 0 4119 17690 86 0 0 337 (251) 1852 3162 4764 0 0 995 0 127 150 56 4459 (200) 996 0 0 139 0 339 13883 18.30 (0.34) 6.81 0 1.36 0 23.41 2.44 0 0
EX-27 9 FDS - WORLDWIDE HEALTH SCIENCES PORTFOLIO
6 1000 OTHER AUG-31-1996 JUN-03-1996 JUN-03-1996 0 0 0 100 12 112 0 0 12 12 0 100 0 0 0 0 0 0 0 100 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 100 0 0 0 0 0 0 0 100 0 0 0 0 0 0 0 0 0 0
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