EATON VANCE MICHIGAN MUNICIPAL INCOME TRUST, 497, 1999-01-28

EATON VANCE MICHIGAN MUNICIPAL INCOME TRUST
497, 1999-01-28

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<PAGE> 1

[EATON VANCE LOGO]

1,800,000 SHARES

EATON VANCE MICHIGAN MUNICIPAL INCOME TRUST
------------------------
Eaton Vance Michigan Municipal Income Trust (the "Trust") is a newly
organized closed-end fund. The Trust's investment objective is to provide
current income exempt from regular federal income tax and Michigan state and
city income and single business taxes. This income will be earned by investing
primarily in investment grade Michigan municipal securities. The Trust may also
invest a portion of its assets in higher risk, higher yielding municipal
securities of lesser quality. The Trust's net asset value and distribution rate
will vary, and may be affected by several factors, including changes in interest
rates and the credit quality of Michigan municipal issuers. Fluctuations in net
asset value may be magnified as a result of the Trust's use of leverage, which
may be a speculative investment technique. An investment in the Trust may not be
appropriate for all investors, particularly those subject to the federal
alternative minimum tax. The Trust is designed for investors who are residents
of Michigan for tax purposes. Closed-end fund shares often trade at a discount
to their net asset value. There is no assurance that the Trust will achieve its
investment objective. See "Investment Objective, Policies and Risks" beginning
at page 9.

The Trust's investment adviser is Eaton Vance Management ("Eaton Vance" or
the "Adviser"). Eaton Vance manages 45 different municipal bond funds with
combined assets of about $7.5 billion.

(continued on the following page)

<TABLE>
<CAPTION>
Per Share Total
--------- -----
<S> <C> <C>
Public Offering Price.............................. $15.00 $27,000,000
Underwriting Discounts............................. None None
Proceeds, before expenses, to the Trust............ $15.00 $27,000,000
</TABLE>

Eaton Vance or an affiliate will pay all Trust offering expenses that
exceed $0.03 per Share. It is expected that delivery of the Shares will be made
in New York City on or about January 29, 1999.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
------------------------
PAINEWEBBER INCORPORATED
A.G. EDWARDS & SONS, INC.
PRUDENTIAL SECURITIES INCORPORATED
SALOMON SMITH BARNEY
FIRST OF MICHIGAN
A DIVISION OF FAHNESTOCK & CO. INC.

MCDONALD INVESTMENTS INC.
RONEY CAPITAL MARKETS
A DIVISION OF FIRST CHICAGO CAPITAL
MARKETS, INC.
------------------------
THE DATE OF THIS PROSPECTUS IS JANUARY 26, 1999
<PAGE> 2

(continued from cover page)

The Trust is offering shares of beneficial interest, par value $0.01 per
share ("Shares"). The Underwriters may also purchase up to an additional 270,000
Shares at the public offering price within 45 days from the date of this
Prospectus. Assuming these additional Shares are purchased, the total proceeds
to the Trust would be $31,050,000. Eaton Vance or an affiliate (not the Trust)
from its own assets will pay a commission to the Underwriters in the amount of
4.50% of the Public Offering Price per Share for the sale of the Shares.
Offering expenses of $54,000 ($62,100 if the Underwriters' over-allotment option
is exercised in full) will be deducted from net proceeds. Offering expenses
include $10,975 payment to the Underwriters in partial reimbursement of their
expenses. Eaton Vance or an affiliate will pay all Trust offering expenses that
exceed $0.03 per Share.

Prior to this offering, there has been no market for the Shares. The Shares
have been approved for listing, subject to notice of issuance, on the American
Stock Exchange under the symbol "EMI." The shares of closed-end investment
companies, such as the Trust, have frequently traded at a discount to their net
asset values. Investors in this offering should note that the Shares may
likewise trade at a discount to net asset value. This risk may be greater for
investors who sell their Shares in a relatively short period after completion of
the public offering.

The Trust expects to use financial leverage through the issuance of
preferred shares, initially equal to approximately 35% of its total assets
(including the amount obtained through leverage). The Trust intends to use
leverage if it is expected to result in higher income to Shareholders over time.
Use of financial leverage creates an opportunity for increased income but, at
the same time, creates special risks. There can be no assurance that a
leveraging strategy will be successful. SEE "INVESTMENT OBJECTIVE, POLICIES AND
RISKS -- USE OF LEVERAGE AND RELATED RISKS" AT PAGE 12 AND "DESCRIPTION OF
CAPITAL STRUCTURE" AT PAGE 21.

This Prospectus sets forth concisely information you should know before
investing in the Shares of the Trust. Please read and retain this Prospectus for
future reference. A Statement of Additional Information dated January 26, 1999,
has been filed with the Securities and Exchange Commission ("SEC") and can be
obtained without charge by calling 1-800-225-6265 or by writing to the Trust. A
table of contents to the Statement of Additional Information is located at page
28 of this Prospectus. This Prospectus incorporates by reference the entire
Statement of Additional Information. The Statement of Additional Information is
available along with other Trust-related materials at the SEC's internet web
site (http://www.sec.gov). The Trust's address is 24 Federal Street, Boston,
Massachusetts 02110 and its telephone number is 1-800-225-6265.

The Trust's Shares do not represent a deposit or obligation of, and are not
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.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 1
Trust Expenses........................ 8
The Trust............................. 9
Use of Proceeds....................... 9
Investment Objective, Policies and
Risks............................... 9
Management of the Trust............... 17
Distributions and Taxes............... 18
Dividend Reinvestment Plan............ 19
Description of Capital Structure...... 21
</TABLE>

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Underwriting.......................... 25
Shareholder Servicing Agent, Custodian
and Transfer Agent.................. 27
Legal Opinions........................ 27
Additional Information................ 27
Table of Contents for the Statement of
Additional Information.............. 28
Trustees of the Trust................. 28
</TABLE>

YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS.
NEITHER THE TRUST NOR THE UNDERWRITERS HAVE AUTHORIZED ANY OTHER PERSON TO
PROVIDE YOU WITH DIFFERENT INFORMATION. IF ANYONE PROVIDES YOU WITH DIFFERENT OR
INCONSISTENT INFORMATION, YOU SHOULD NOT RELY ON IT. NEITHER THE TRUST NOR THE
UNDERWRITERS ARE MAKING AN OFFER TO SELL THESE SECURITIES IN ANY JURISDICTION
WHERE THE OFFER OR SALE IS NOT PERMITTED. YOU SHOULD ASSUME THAT THE INFORMATION
APPEARING IN THIS PROSPECTUS IS ACCURATE AS OF THE DATE ON THE FRONT COVER ONLY.

ii
<PAGE> 3

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by reference to the more
detailed information included elsewhere in this Prospectus and the Statement of
Additional Information.

THE TRUST..................... Eaton Vance Michigan Municipal Income Trust
(the "Trust") is a newly organized closed-end
fund. The Trust offers investors the
opportunity to receive current income exempt
from regular federal income tax and Michigan
state and city income and single business taxes
through a professionally managed portfolio of
Michigan municipal obligations. Investments are
based on Eaton Vance Management's ("Eaton
Vance" or the "Adviser") research and ongoing
credit analysis, the underlying materials for
which are generally not available to individual
investors. An investment in the Trust may not
be appropriate for all investors, particularly
those subject to the federal alternative
minimum tax. There is no assurance that the
Trust will achieve its investment objective.
The Trust is designed for investors who are
residents of Michigan for tax purposes.

THE OFFERING.................. The Trust is offering 1,800,000 shares of
beneficial interest, par value $0.01 per share
(the "Shares"), through a group of underwriters
(the "Underwriters") led by PaineWebber
Incorporated, A.G. Edwards & Sons, Inc.,
Prudential Securities Incorporated, Salomon
Smith Barney Inc., First of Michigan, a
division of Fahnestock & Co. Inc., McDonald
Investments Inc. and Roney Capital Markets, a
division of FIRST CHICAGO CAPITAL MARKETS, INC.
The Underwriters have been granted an option to
purchase up to 270,000 additional Shares solely
to cover over-allotments, if any. The initial
public offering price is $15.00 per share. The
minimum purchase in this offering is 100 Shares
($1,500).

NO SALES CHARGE............... The Shares will be sold in the initial public
offering without any sales load or underwriting
discounts payable by investors or the Trust.
Eaton Vance or an affiliate (not the Trust)
from its own assets will pay a commission to
the Underwriters in connection with sales of
the Shares in this offering. See
"Underwriting."

INVESTMENT OBJECTIVE AND
POLICIES.................... The Trust's investment objective is to provide
current income exempt from regular federal
income tax and Michigan state and city income
and single business taxes. Securities will be
purchased and sold in an effort to maintain a
competitive yield and to enhance return based
upon the relative value of the securities
available in the marketplace.

During normal market conditions substantially
all of the Trust's total assets (at least 80%)
will be invested in debt obligations, the
interest on which is exempt from regular
federal income tax and Michigan and city income
and single business taxes ("municipal
obligations"). At least 65% of the Trust's
total assets normally will be invested in
municipal obligations (i) issued by the state
of Michigan or its political subdivisions,
agencies, authorities and instrumentalities and
(ii) rated at least investment grade at the
time of investment (which are those rated Baa
or higher by Moody's Investors Service, Inc.
("Moody's") or BBB or higher by

1
<PAGE> 4

either Standard & Poor's Ratings Group ("S&P")
or by Fitch IBCA ("Fitch")), or, if unrated,
determined by Eaton Vance to be of at least
investment grade quality. From time to time,
the Trust may hold a significant number of
municipal obligations not rated by a nationally
recognized statistical rating organization
("Rating Agency"). When the Trust invests in
unrated municipal obligations it may be more
dependent on Eaton Vance's research
capabilities than when it invests in rated
municipal obligations.

The Trust may invest up to 35% of its total
assets in municipal obligations rated below
investment grade (but not, with respect to more
than 30% of total assets, lower than B by all
Rating Agencies rating the obligation) and
unrated municipal obligations considered to be
of comparable quality by Eaton Vance.
Investment in municipal obligations of below
investment grade quality involves special risks
as compared with investment in higher grade
municipal obligations. These risks include
greater sensitivity to a general economic
downturn, greater market price volatility and
less secondary market trading. Securities rated
below investment grade are commonly known as
"junk bonds." Such securities are regarded, on
balance, as predominantly speculative with
respect to the issuer's ability to pay interest
and repay principal owed.

The Trust may invest to a significant extent in
residual interest municipal bonds known as
inverse floaters. Compared to similar fixed
rate municipal bonds, the value of these bonds
will fluctuate to a greater extent in response
to changes in prevailing long-term interest
rates. Moreover, the income earned on residual
interest municipal bonds will fluctuate in
response to changes in prevailing short-term
interest rates. Thus, when such bonds are held
by the Trust, an increase in short- or
long-term market interest rates will adversely
affect the income received from such bonds or
the net asset value of Trust shares. To the
extent the Trust has preferred shares
outstanding, an increase in short-term rates
would also result in an increased cost of
leverage, which would adversely affect the
Trust income available for distribution.
Although the Trust is not limited with respect
to its investment in residual interest
municipal bonds, the Trust does not intend
initially to invest more than 10% of its total
assets in such bonds.

The Trust may purchase and sell various kinds
of financial futures contracts and related
options, including futures contracts and
related options based on various debt
securities and securities indices, to seek to
hedge against changes in interest rates, as a
substitute for the purchase of securities or
for other risk management purposes.

Interest income from certain types of municipal
obligations may be a tax preference item for
purposes of the federal alternative minimum tax
(the "AMT") for individual investors.
Distributions to corporate investors of certain
interest income may also be indirectly subject
to the AMT. The Trust may not be suitable for
investors subject to the AMT.

2
<PAGE> 5

LISTING....................... The Shares have been approved for listing,
subject to notice of issuance, on the American
Stock Exchange under the symbol "EMI."

LEVERAGE...................... The Trust expects to use financial leverage
through the issuance of preferred shares. The
Trust intends initially to use financial
leverage of approximately 35% of its total
assets (including the amount obtained through
leverage). The Trust generally will not use
leverage if it anticipates that it would result
in a lower return to Shareholders over time.
Use of financial leverage creates an
opportunity for increased income for
Shareholders but, at the same time, creates
special risks (including the likelihood of
greater volatility of net asset value and
market price of the Shares), and there can be
no assurance that a leveraging strategy will be
successful during any period in which it is
employed. See "Investment Objective, Policies
and Risks -- Use of Leverage and Related
Risks."

INVESTMENT ADVISER AND
ADMINISTRATOR............... Eaton Vance, a wholly-owned subsidiary of Eaton
Vance Corp., is the Trust's investment adviser
and administrator. The Adviser manages 3
national municipal funds, 32 single state
municipal funds, 10 limited maturity municipal
funds and 1 money market municipal fund with
combined assets of about $7.5 billion. All but
1 of these funds are open-end. Among such
funds, Eaton Vance currently sponsors Eaton
Vance Michigan Municipals Fund, an open-end
fund which invests primarily in investment
grade Michigan municipal obligations. Such Fund
is managed by the same portfolio manager
employed by the Adviser who will manage the
Trust's assets. See "Management of the Trust."

SHAREHOLDER SERVICING AGENT... PaineWebber Incorporated has been retained by
the Administrator to act as the Shareholder
Servicing Agent of the Trust. See "Shareholder
Servicing Agent, Custodian and Transfer Agent."

DISTRIBUTIONS................. The Trust's policy will be to make monthly
distributions to Shareholders. Distributions to
Shareholders cannot be assured, and the amount
of each monthly distribution will vary. The
initial distribution to Shareholders is
expected to be paid approximately 60 days after
the completion of this offering. See
"Distributions and Taxes," "Dividend
Reinvestment Plan" and "Use of Proceeds."

DIVIDEND REINVESTMENT PLAN.... The Trust has established a Dividend
Reinvestment Plan (the "Plan"). Under the Plan,
all dividend and capital gain distributions
will be automatically reinvested in additional
Shares either purchased in the open market, or
newly issued by the Trust if the Shares are
trading at or above their net asset value, in
either case unless a Shareholder elects to
receive cash. Shareholders who intend to hold
their Shares through a broker or nominee should
contact such broker or nominee to determine
whether or how they may participate in the
Plan. See "Dividend Reinvestment Plan."

CLOSED-END STRUCTURE.......... Closed-end funds differ from open-end
management investment companies (commonly
referred to as mutual funds) in that closed-
end funds generally list their shares for
trading on a securities exchange and do not
redeem their shares at the option of the
shareholder. By comparison, mutual funds issue
securities redeemable at net asset value at the
option of the shareholder and typically

3
<PAGE> 6

engage in a continuous offering of their
shares. Mutual funds are subject to continuous
asset in-flows and out-flows that can
complicate portfolio management, whereas
closed-end funds generally can stay more fully
invested in securities consistent with the
closed-end fund's investment objective and
policies. In addition, in comparison to
open-end funds, closed-end funds have greater
flexibility in the employment of financial
leverage and in the ability to make certain
types of investments, including investments in
illiquid securities. However, shares of
closed-end funds frequently trade at a discount
from their net asset value. In recognition of
the possibility that the Shares might trade at
a discount to net asset value and that any such
discount may not be in the interest of
Shareholders, the Trust's Board of Trustees
(the "Board"), in consultation with Eaton
Vance, from time to time may review possible
actions to reduce any such discount. The Board
might consider open market repurchases or
tender offers for Shares at net asset value.
There can be no assurance that the Board will
decide to undertake any of these actions or
that, if undertaken, such actions would result
in the Shares trading at a price equal to or
close to net asset value per Share. The Board
might also consider the conversion of the Trust
to an open-end mutual fund. The Board of
Trustees believes, however, that the closed-end
structure is desirable, given the Trust's
investment objective and policies. Investors
should assume, therefore, that it is highly
unlikely that the Board would vote to convert
the Trust to an open-end investment company.
See "Description of Capital Structure."

SPECIAL RISK CONSIDERATIONS... No Operating History. The Trust is a
closed-end investment company with no history
of operations and is designed for long-term
investors and not as a trading vehicle.

Concentration. The Trust normally will invest
65% or more of its total assets in municipal
obligations of issuers located in Michigan, and
may invest 25% or more of its total assets in a
U.S. territory or in the same economic sector,
such as revenue obligations of health care
facilities or hospitals, airport revenue
obligations or industrial development bonds.
This may make the Trust more susceptible to
adverse economic, political or regulatory
occurrences affecting Michigan, a particular
territory or economic sector. Michigan general
obligation bonds currently are rated Aa1, AA+
and AA+ by Moody's, S&P and Fitch,
respectively.

4
<PAGE> 7

ing solely in shorter-term securities. Market
risk is often greater among certain types of
debt securities, such as zero-coupon bonds,
which do not make regular interest payments. As
interest rates change, these bonds often
fluctuate in price more than higher quality
bonds that make regular interest payments.
Because the Trust may invest in these types of
debt securities, it may be subject to greater
market risk than a fund that invests only in
current interest paying securities.

Income Risk. The income investors receive from
the Trust is based primarily on the interest it
earns from its investments, which can vary
widely over the short and long-term. If
interest rates drop, investors' income from the
Trust over time could drop as well if the Trust
purchases securities with lower interest
coupons. This risk is magnified when prevailing
short-term interest rates increase and the
Trust holds residual interest municipal bonds.

Call Risk. If interest rates fall, it is
possible that issuers of callable bonds with
high interest coupons will "call" (or prepay)
their bonds before their maturity date. If a
call were exercised by the issuer during a
period of declining interest rates, the Trust
is likely to replace such called security with
a lower yielding security. If that were to
happen, it would decrease the Trust's
dividends.

Credit Risk. Credit risk refers to an issuer's
ability to make payments of principal and
interest when they are due. Because the Trust
may invest up to 35% of its total assets in
below investment grade securities, it will be
subject to a high level of credit risk. The
credit quality of such securities is considered
speculative by Rating Agencies with respect to
the issuer's ability to pay interest or
principal. The prices of lower grade securities
are more sensitive to negative developments,
such as a decline in the issuer's revenues, or
adverse economic conditions, such as a
recession, than are the prices of higher grade
securities. Securities that have longer
maturities also fluctuate more in price in
response to negative economic or other news.
Therefore, lower grade securities may
experience high default rates, which would mean
that the Trust may lose some of its investment
in such securities, which would adversely
affect the Trust's net asset value and ability
to make distributions.

Liquidity Risk. The Trust may invest in
securities for which there is no readily
available trading market or which are otherwise
illiquid, which includes residual interest
municipal bonds. The Trust may not be able to
readily dispose of such securities at prices
that approximate those at which the Trust could
sell such securities if they were more widely
traded and, as a result of such illiquidity,
the Trust may have to sell other investments or
engage in borrowing transactions if necessary
to raise cash to meet its obligations. In
addition, the limited liquidity could affect
the market price of the securities, thereby
adversely affecting the Trust's net asset value
and ability to make dividend distributions.

Municipal Bond Market. Many obligations in
which the Trust will invest may not be rated by
a Rating Agency, will not be registered with
the Securities and Exchange Commission or any
state securities commission, and will not be
listed on any national

5
<PAGE> 8

securities exchange. Therefore, the amount of
public information available about portfolio
securities will be limited, and the performance
of the Trust is more dependent on the
analytical abilities of Eaton Vance than would
be the case for an investment company that
invests primarily in more widely rated,
registered or exchange-listed securities.

Effects of Leverage. The use of leverage
through issuance of preferred shares by the
Trust creates an opportunity for increased net
income, but, at the same time, creates special
risks. There can be no assurance that a
leveraging strategy will be successful during
any period in which it is employed. The Trust
intends to use leverage to provide the holders
of Shares with a potentially higher return.
Leverage creates risks for holders of Shares,
including the likelihood of greater volatility
of net asset value and market price of the
Shares and the risk that fluctuations in
dividend rates on any preferred shares may
affect the return to Shareholders. It is
anticipated that preferred share dividends will
be based on the yields of short-term municipal
obligations, while the proceeds of any
preferred share offering will be invested in
longer-term municipal obligations, which
typically have higher yields. To the extent the
income derived from securities purchased with
funds received from leverage exceeds the cost
of leverage, the Trust's return will be greater
than if leverage had not been used. Conversely,
if the income from the securities purchased
with such funds is not sufficient to cover the
cost of leverage, the return to the Trust will
be less than if leverage had not been used, and
therefore the amount available for distribution
to Shareholders as dividends and other
distributions will be reduced. In the latter
case, Eaton Vance in its best judgment may
nevertheless determine to maintain the Trust's
leveraged position if it deems such action to
be appropriate.

Investment by the Trust in residual interest
municipal bonds may amplify the effects of
leverage and, during periods of rising short-
term interest rates, may adversely affect the
Trust's income and distributions to
Shareholders. In addition, under current
federal income tax law, the Trust is required
to allocate a portion of any net realized
capital gains or other taxable income to
holders of preferred shares. The terms of any
preferred shares are expected to require the
Trust to pay to any preferred shareholders
additional dividends intended to compensate the
preferred shareholders for taxes payable on any
capital gains or other taxable income allocated
to the preferred shares. Any such additional
dividends will reduce the amount available for
distribution to the Shareholders. As discussed
under "Management of the Trust," the fee paid
to Eaton Vance will be calculated on the basis
of the Trust's gross assets, including proceeds
from the issuance of preferred shares, so the
fees will be higher when leverage is utilized.
See "Investment Objective, Policies and
Risks -- Use of Leverage and Related Risks."

The Trust currently intends to seek an
investment grade rating on any preferred shares
from a Rating Agency. The Trust may be subject
to investment restrictions of the Rating Agency
as a result. These restrictions may impose
asset coverage or portfolio composi-

6
<PAGE> 9

tion requirements that are more stringent than
those imposed on the Trust by the Investment
Company Act of 1940, as amended (the
"Investment Company Act" or "1940 Act"). It is
not anticipated that these covenants or
guidelines will impede Eaton Vance in managing
the Trust's portfolio in accordance with its
investment objective and policies. See
"Description of Capital Structure -- Preferred
Shares."

Financial leverage may also be achieved through
the purchase of certain derivative instruments.
The Trust's use of residual interest municipal
bonds and futures contracts expose the Trust to
special risks. Such transactions may result in
the Trust earning taxable income or gains. See
"Investment Objective, Policies and Risks."

Market Price of Shares. The shares of
closed-end investment companies often trade at
a discount from their net asset value, and the
Trust's Shares may likewise trade at a discount
from net asset value. The trading price of the
Trust's Shares may be less than the public
offering price. This risk may be greater for
investors who sell their Shares in a relatively
short period after completion of the public
offering.

Non-Diversification. The Trust has registered
as a "non-diversified" investment company under
the 1940 Act. For federal income tax purposes
the Trust, with respect to up to 50% of its
total assets, will be able to invest more than
5% (but not more than 25%) of the value of its
total assets in the obligations of any single
issuer. To the extent the Trust invests a
relatively high percentage of its assets in
obligations of a limited number of issuers, the
Trust may be more susceptible than a more
widely diversified investment company to any
single economic, political or regulatory
occurrence.

Alternative Minimum Tax and Other Tax
Considerations. Interest on certain "private
activity" municipal obligations is treated as a
tax preference item for purposes of the AMT. In
addition, for corporations income subject to
the AMT includes interest on all tax-exempt
obligations. There is no specific limitation on
the amount of the Trust's assets that may be
invested in municipal obligations that pay
interest that is treated as a tax preference
item. Accordingly, an investment in the Trust
may not be appropriate for investors who are
already subject to the AMT or who would become
subject thereto as a result of owning Shares.
Moreover, distributions of any taxable net
investment income and net short-term capital
gain are taxable as ordinary income. See
"Distributions and Taxes."

Anti-Takeover Provisions. The Trust's
Agreement and Declaration of Trust includes
provisions that could have the effect of
limiting the ability of other persons or
entities to acquire control of the Trust or to
change the composition of its Board of
Trustees. See "Description of Capital
Structure -- Anti-Takeover Provisions in the
Declaration of Trust."

7
<PAGE> 10

TRUST EXPENSES

The following tables are intended to assist investors in understanding the
various costs and expenses that an investor in the Trust will bear, directly or
indirectly.

<TABLE>
<CAPTION>
NET ASSETS
WITH
LEVERAGE(1)
-----------
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Sales Load................................................ None
Dividend Reinvestment Plan Fees........................... None
ANNUAL OPERATING EXPENSES (AS A PERCENTAGE OF NET ASSETS
ATTRIBUTABLE TO SHARES)(1)
Investment Advisory Fee................................... 1.07%
Dividend Payments on Preferred Shares..................... 1.65%
Other Expenses (including Administration Fee of
0.31%)(2).............................................. 0.96%
----
Total Annual Operating Expenses........................... 3.68%
====
</TABLE>

- ---------------
(1) The Trust intends to utilize leverage only if the Adviser believes that it
would result in higher income to Shareholders over time. See "Investment
Objective, Policies and Risks -- Use of Leverage and Related Risks." Assumes
preferred shares outstanding of approximately 35% of total assets (including
preferred shares) at a dividend rate of 3.10%, which is based upon the
Trust's estimation of current market conditions. At times when the Trust
does not utilize leverage, the estimated annual operating expenses would be:

<TABLE>
<S> <C>
Investment Advisory Fee................................... 0.70%
Dividend Payments on Preferred Shares..................... None
Other Expenses (including Administration Fee of
0.20%)(2).............................................. 0.69%
----
Total Annual Operating Expenses........................... 1.39%
====
</TABLE>

(2) Reflects estimated amounts for the Trust's first year of operations,
including organizational expenses. After the first year, total annual
operating expenses (assuming no leverage) are expected to be 1.31% per
annum.

EXAMPLE

An investor would pay the following expenses on a $1,000 investment in the
Trust, assuming a 5% annual return:

<TABLE>
<CAPTION>
ONE YEAR(*) THREE YEARS FIVE YEARS TEN YEARS
----------- ----------- ---------- ---------
<S> <C> <C> <C> <C>
Assuming No Leverage.......................... $14 $ 44 $ 76 $167
Assuming approximately 35% Leverage........... $37 $113 $190 $393
</TABLE>

- ---------------
* This Example assumes that all dividends and other distributions are reinvested
at net asset value and that the percentage amounts listed under Total Annual
Operating Expenses remain the same in the years shown, except for amounts for
the Three Years, Five Years and Ten Years periods which are after the
deduction of organization expenses in the first year. The above tables and the
assumption in the Example of a 5% annual return and reinvestment at net asset
value are required by regulations of the SEC; the assumed 5% annual return is
not a prediction of, and does not represent, the projected or actual
performance of Trust Shares. THIS EXAMPLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF FUTURE EXPENSES, AS THE TRUST'S ACTUAL EXPENSES MAY BE MORE
OR LESS THAN THOSE SHOWN.

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<PAGE> 11

THE TRUST

Eaton Vance Michigan Municipal Income Trust (the "Trust") is a newly
organized, non-diversified, closed-end management investment company that was
organized as a Massachusetts business trust on December 10, 1998 and has no
operating history. The Trust's principal office is located at 24 Federal Street,
Boston, MA 02110 and its telephone number is 1-800-225-6265.

This Prospectus relates to the initial public offering of the Trust's
shares of beneficial interest, $0.01 par value (the "Shares"). The Shares will
be sold during the initial public offering without any sales load or
underwriting discounts payable by investors or the Trust. Eaton Vance Management
(the "Adviser" or "Eaton Vance") or an affiliate (not the Trust) from its own
assets will pay a commission to the Underwriters in connection with sales of the
Shares in this offering. See "Underwriting."

USE OF PROCEEDS

The proceeds of this offering, before deduction of offering expenses,
estimated to be $27,000,000 (or $31,050,000 assuming exercise of the
Underwriters' over-allotment option in full), will be invested in accordance
with the Trust's investment objective and policies as soon as practicable, but
in no event, under normal market conditions, later than three months after the
receipt thereof. Pending such investment, the proceeds may be invested in
high-quality, short-term municipal debt securities. Eaton Vance has agreed to
pay all offering expenses of the Trust that exceed $0.03 per Share.

INVESTMENT OBJECTIVE, POLICIES AND RISKS

INVESTMENT OBJECTIVE

The Trust's investment objective is to provide current income exempt from
regular federal income tax and Michigan state and city income and single
business taxes. This income will be earned by investing primarily in investment
grade municipal obligations. Securities will be purchased and sold in an effort
to maintain a competitive yield and to enhance return based upon the relative
value of the securities available in the marketplace. Investments are based on
Eaton Vance's research and ongoing credit analysis, the underlying materials for
which are generally not available to individual investors. The Trust is designed
for investors who are residents of Michigan for tax purposes.

Eaton Vance seeks to find municipal obligations of high quality that have
been undervalued in the marketplace. Eaton Vance's research specialists examine
credit histories, revenue sources, total debt histories, capital structures and
other data. This research capability is important because many obligations in
which the Trust will invest will not be rated or listed on a national securities
exchange, and the amount of public information available about such securities
will be limited. The Trust intends to emphasize the research that is critical to
discovering value while avoiding undue credit risk. The Trust will attempt to
enhance performance opportunities by seeking to remain fully invested.

INVESTMENT POLICIES -- GENERAL COMPOSITION OF THE TRUST

During normal market conditions, substantially all of the Trust's total
assets (at least 80%) will be invested in debt obligations, the interest on
which is exempt from regular federal income tax and Michigan state and city
income and single business taxes ("municipal obligations"). At least 65% of the
Trust's total assets will normally be invested in municipal obligations (i)
issued by the state of Michigan or its political subdivisions, agencies,
authorities and instrumentalities and (ii) rated at least investment grade at
the time of investment (which are those rated Baa or higher by Moody's Investors
Service, Inc. ("Moody's") or BBB or higher by either Standard & Poor's Ratings
Group ("S&P") or by Fitch IBCA ("Fitch")), or, if unrated, determined by Eaton
Vance to be of at least investment grade quality. From time to time, the Trust
may hold a significant amount of municipal obligations not rated by a nationally
recognized statistical rating organization ("Rating Agency"). When the Trust
invests in unrated municipal obligations, it may be more dependent on Eaton
Vance's research capabilities than when it invests in rated municipal
obligations.

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<PAGE> 12

The Trust may invest up to 35% of its total assets in municipal obligations
rated below investment grade (but not, with respect to more than 30% of total
assets, lower than B by all Rating Agencies rating the obligation) and unrated
municipal obligations considered to be of comparable quality by Eaton Vance. No
such securities will be in default at the time of purchase. Investment in
municipal obligations of below investment grade quality involves special risks
as compared with investment in higher grade municipal obligations. These risks
include greater sensitivity to a general economic downturn, greater market price
volatility and less secondary market trading. Securities rated below investment
grade are commonly known as "junk bonds". Such securities are regarded, on
balance, as predominantly speculative with respect to the issuer's ability to
pay interest and repay principal owed. See "-- Additional Risk Considerations."
For a description of municipal obligation ratings, see Appendix A to the
Statement of Additional Information.

The foregoing credit quality policies apply only at the time a security is
purchased, and the Trust is not required to dispose of a security in the event
that a Rating Agency downgrades its assessment of the credit characteristics of
a particular issue. In determining whether to retain or sell such a security,
Eaton Vance may consider such factors as Eaton Vance's assessment of the credit
quality of the issuer of such security, the price at which such security could
be sold and the rating, if any, assigned to such security by other Rating
Agencies.

Municipal obligations include bonds, notes and commercial paper issued by a
municipality for a wide variety of both public and private purposes, the
interest on which is, in the opinion of issuer's counsel (or on the basis of
other reliable authority), exempt from regular federal income tax. Public
purpose municipal bonds include general obligation and revenue bonds. General
obligation bonds are backed by the taxing power of the issuing municipality.
Revenue bonds are backed by the revenues of a project or facility, or from the
proceeds of a specific revenue source. Some revenue bonds are payable solely or
partly from funds which are subject to annual appropriations by a state's
legislature. Municipal notes include bond anticipation, tax anticipation and
revenue anticipation notes. Bond, tax and revenue anticipation notes are
short-term obligations that will be retired with the proceeds of an anticipated
bond issue, tax revenue or facility revenue, respectively.

Some of the securities in which the Trust invests may include so-called
"zero-coupon" bonds, whose values are subject to greater fluctuation in response
to changes in market interest rates than bonds that pay interest currently.
Zero-coupon bonds are issued at a significant discount from face value and pay
interest only at maturity rather than at intervals during the life of the
security. The Trust is required to take into account income from zero-coupon
bonds on a current basis, even though it does not receive that income currently
in cash, and the Trust is required to distribute substantially all of its income
for each taxable year. Thus, the Trust may have to sell other investments to
obtain cash needed to make income distributions.

The Trust may invest in residual interest municipal bonds whose interest
rates bear an inverse relationship to the interest rate on another security or
the value of an index ("inverse floaters"). An investment in inverse floaters
may involve greater risk than an investment in a fixed-rate bond. Because
changes in the interest rate on the other security or index inversely affect the
residual interest paid on the inverse floater, the value of an inverse floater
is generally more volatile than that of a fixed-rate bond. Inverse floaters have
interest rate adjustment formulas which generally reduce or, in the extreme,
eliminate the interest paid to the Trust when short-term interest rates rise,
and increase the interest paid to the Trust when short-term interest rates fall.
Inverse floaters have varying degrees of liquidity, and the market for these
securities is relatively new and volatile. These securities tend to underperform
the market for fixed-rate bonds in a rising interest rate environment, but tend
to outperform the market for fixed-rate bonds when interest rates decline.
Shifts in long-term interest rates may, however, alter this tendency. Although
volatile, inverse floaters typically offer the potential for yields exceeding
the yields available on fixed-rate bonds with comparable credit quality, coupon,
call provisions and maturity. These securities usually permit the investor to
convert the floating rate to a fixed rate (normally adjusted downward), and this
optional conversion feature may provide a partial hedge against rising rates if
exercised at an opportune time. Investment in inverse floaters may amplify the
effects of the Trust's use of leverage. Should short-term interest rates rise,
the combination of the Trust's investment in inverse floaters and the use of
leverage likely will adversely affect the Trust's income and distributions to
Shareholders. Although the Trust is not limited with respect to its investment
in residual interest municipal bonds, the Trust does not intend initially to
invest more than 10% of its total assets in such bonds.

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<PAGE> 13

The Trust may purchase municipal bonds that are additionally secured by
insurance, bank credit agreements, or escrow accounts. The credit quality of
companies which provide such credit enhancements will affect the value of those
securities. Although the insurance feature reduces certain financial risks, the
premiums for insurance and the higher market price paid for insured obligations
may reduce the Trust's current yield. Insurance generally will be obtained from
insurers with a claims-paying ability rated Aaa by Moody's or AAA by S&P or
Fitch. The insurance feature does not guarantee the market value of the insured
obligations or the net asset value of the Trust's shares.

Interest income from certain types of municipal obligations may be a tax
preference item for purposes of the federal alternative minimum tax (the "AMT")
for individual investors. Distributions to corporate investors of certain
interest income may also be indirectly subject to the AMT. The Trust may not be
suitable for investors subject to the AMT.

The Trust has adopted certain fundamental investment restrictions set forth
in the Statement of Additional Information which may not be changed without a
Shareholder vote. Except for such restrictions and the 80% requirement set forth
above, the investment objective and policies of the Trust may be changed by the
Board of Trustees without Shareholder action.

Based on available market data, the Adviser believes that the average yield
on 20-year tax-exempt municipal bonds that make up the General Obligation
Municipal Bond Buyer Index has historically represented approximately 85% of the
yields on 30-year U.S. Treasury bonds. As of December 31, 1998, such
representative municipal bonds had an average yield of 5.00%, or approximately
98% of the taxable yield of a 30-year U.S. Treasury bond, which had a yield of
5.08% (Source: FactSet). Based on a maximum federal income tax rate of 39.6%, a
tax-exempt municipal yield of 5.00% is equivalent to a yield of 8.28% from a
taxable investment. The General Obligation Municipal Bond Buyer Index is
unmanaged and contains 20 general obligation municipal bonds. Unlike the Trust,
this index carries no management fees, account charges or other expenses. U.S.
Treasury bonds offer a government guarantee as to the timely payment of interest
and repayment of principal at maturity. It is not possible to invest directly in
an index.

The Adviser also believes that the closed-end structure of the Trust
provides an effective way of investing in municipal obligations. The average
annual total return on 93 national leveraged and non-leveraged closed-end
municipal funds tracked by CDA Weisenberger as of December 31, 1998 was 8.71%,
10.60%, 7.24% and 7.87% for one, three, five and ten years, and on 84 national
open-end funds tracked by Lipper, Inc. as of December 31, 1998 was 5.49%, 6.07%,
5.53% and 7.72% for one, three, five and ten years. In addition, the average
annualized yield on such closed-end municipal funds and its taxable equivalent
(assuming a maximum 39.6% federal income tax rate only) were 5.66% and 9.37%,
whereas for such open-end municipal funds the average annualized yield and its
taxable equivalent were 4.71% and 7.80%. The yield on a 30-year U.S. Treasury
bond as of December 31, 1998 was 5.08%. The Trust will not seek to match the
performance or composition of any index or average.

ADDITIONAL INVESTMENT PRACTICES

When-Issued Securities. The Trust may purchase securities on a
"when-issued" basis, which means that payment and delivery occur on a future
settlement date. The price and yield of such securities are generally fixed on
the date of commitment to purchase. However, the market value of the securities
may fluctuate prior to delivery and upon delivery the securities may be worth
more or less than the Trust agreed to pay for them. The Trust may be required to
maintain a segregated account of liquid assets equal to outstanding purchase
commitments. The Trust may also purchase instruments that give the Trust the
option to purchase a municipal obligation when and if issued.

Futures Transactions. The Trust may purchase and sell various kinds of
financial futures contracts and options thereon to seek to hedge against changes
in interest rates or as a substitute for the purchase of securities. For
example, futures contracts may sometimes be used to seek to reduce the
additional long-term interest rate risk the Trust bears by holding residual
interest municipal bonds. Futures contracts may be based on various debt
securities and securities indices (such as the Municipal Bond Index traded on
the Chicago Board of Trade). Such transactions involve a risk of loss or
depreciation due to unanticipated adverse changes

11
<PAGE> 14

in securities prices, which may exceed the Trust's initial investment in these
contracts. The Trust will only purchase or sell futures contracts or related
options in compliance with the rules of the Commodity Futures Trading
Commission. These transactions involve transaction costs. There can be no
assurance that Eaton Vance's use of futures will be advantageous to the Trust.
Distributions by the Trust of any gains realized on the Trust's transactions in
futures and options on futures will be taxable. Rating agency guidelines on any
preferred shares issued by the Trust may limit use of these transactions.

Investment Company Securities. The Trust may purchase common shares of
closed-end investment companies that have a similar investment objective and
policies to the Trust. In addition to providing tax-exempt income, such
securities may provide capital appreciation. Such investments, which may also be
leveraged and subject to the same risks as the Trust, will not exceed 10% of
total assets, and no such company will be affiliated with Eaton Vance. These
companies bear fees and expenses that the Trust will incur indirectly.

USE OF LEVERAGE AND RELATED RISKS

The Trust expects to use leverage through the issuance of preferred shares.
The Trust initially intends to use leverage of approximately 35% of its total
assets (including the amount obtained from leverage). The Trust generally will
not use leverage if the Adviser anticipates that it would result in a lower
return to Shareholders for any significant amount of time. The Trust also may
borrow money as a temporary measure for extraordinary or emergency purposes,
including the payment of dividends and the settlement of securities transactions
which otherwise might require untimely dispositions of Trust securities.

Leverage creates risks for holders of the Shares, including the likelihood
of greater volatility of net asset value and market price of the Shares. There
is a risk that fluctuations in the dividend rates on any preferred shares may
adversely affect the return to the holders of the Shares. If the income from the
securities purchased with such funds is not sufficient to cover the cost of
leverage, the return on the Trust will be less than if leverage had not been
used, and therefore the amount available for distribution to Shareholders as
dividends and other distributions will be reduced. The Adviser in its best
judgment nevertheless may determine to maintain the Trust's leveraged position
if it deems such action to be appropriate in the circumstances. Investment by
the Trust in residual interest municipal bonds may amplify the effects of
leverage and, during periods of rising short-term interest rates, may adversely
affect the Trust's income and distributions to Shareholders. As discussed under
"Management of the Trust," during periods in which the Trust is using leverage
the fees paid to Eaton Vance for investment advisory and administrative services
will be higher than if the Trust did not use leverage because the fees paid will
be calculated on the basis of the Trust's gross assets, including proceeds from
the issuance of preferred shares.

Capital raised through leverage will be subject to dividend payments which
may exceed the income and appreciation on the assets purchased. The issuance of
preferred shares involves offering expenses and other costs and may limit the
Trust's freedom to pay dividends on Shares or to engage in other activities. The
issuance of a class of preferred shares having priority over the Trust's Shares
creates an opportunity for greater return per Share, but at the same time such
leveraging is a speculative technique in that it will increase the Trust's
exposure to capital risk. Unless the income and appreciation, if any, on assets
acquired with offering proceeds exceed the cost of issuing additional classes of
securities (and other Trust expenses), the use of leverage will diminish the
investment performance of the Trust's Shares compared with what it would have
been without leverage.

The Trust may be subject to certain restrictions on investments imposed by
guidelines of one or more Rating Agencies which may issue ratings for any
preferred shares issued by the Trust. These guidelines may impose asset coverage
or Trust composition requirements that are more stringent than those imposed on
the Trust by the Investment Company Act of 1940 (the "Investment Company Act" or
"1940 Act"). It is not anticipated that these covenants or guidelines will
impede the Adviser from managing the Trust's portfolio in accordance with the
Trust's investment objective and policies.

Under the Investment Company Act, the Trust is not permitted to issue
preferred shares unless immediately after such issuance the net asset value of
the Trust's portfolio is at least 200% of the liquidation

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<PAGE> 15

value of the outstanding preferred shares (i.e., such liquidation value may not
exceed 50% of the Trust's total assets). In addition, the Trust is not permitted
to declare any cash dividend or other distribution on its Shares unless, at the
time of such declaration, the net asset value of the Trust's portfolio
(determined after deducting the amount of such dividend or other distribution)
is at least 200% of such liquidation value. If preferred shares are issued, the
Trust intends, to the extent possible, to purchase or redeem preferred shares
from time to time to maintain coverage of any preferred shares of at least 200%.
In addition, under current federal income tax law, the Trust is required to
allocate a portion of any net realized capital gains or other taxable income to
holders of preferred shares. The terms of any preferred shares are expected to
require the Trust to pay to any preferred shareholders additional dividends
intended to compensate the preferred shareholders for taxes payable on any
capital gains or other taxable income allocated to the preferred shares. Any
such additional dividends will reduce the amount available for distribution to
the Shareholders. Normally, holders of the Shares will elect five of the
Trustees of the Trust and holders of any preferred shares will elect two. In the
event the Trust failed to pay dividends on its preferred shares for two years,
preferred shareholders would be entitled to elect a majority of the Trustees
until the dividends are paid.

To qualify for federal income taxation as a "regulated investment company,"
the Trust must distribute in each taxable year at least 90% of its net
investment income (including tax-exempt interest and net short-term gain). The
Trust also will be required to distribute annually substantially all of its
taxable income and capital gain net income, if any, to avoid imposition of a
nondeductible 4% federal excise tax. If the Trust is precluded from making
distributions on the Shares because of any applicable asset coverage
requirements, the terms of the preferred shares may provide that any amounts so
precluded from being distributed, but required to be distributed for the Trust
to meet the distribution requirements for qualification as a regulated
investment company, will be paid to the holders of the preferred shares as a
special dividend. This dividend can be expected to decrease the amount that
holders of preferred shares would be entitled to receive upon redemption or
liquidation of the those shares.

The Trust's willingness to issue new securities for investment purposes,
and the amount the Trust will issue, will depend on many factors, the most
important of which are market conditions and interest rates. Successful use of a
leveraging strategy may depend on the Adviser's ability to predict correctly
interest rates and market movements, and there is no assurance that a leveraging
strategy will be successful during any period in which it is employed.

Assuming the utilization of leverage in the amount of 35% of the Trust's
total assets and an annual dividend rate on preferred shares of 3.10% payable on
such leverage based on market rates as of the date of this Prospectus, the
additional income that the Trust must earn (net of expenses) in order to cover
such dividend payments would be 1.07%. The Trust's actual cost of leverage will
be based on market rates at the time the Trust undertakes a leveraging strategy,
and such actual cost of leverage may be higher or lower than that assumed in the
previous example.

The following table is designed to illustrate the effect on the return to a
holder of the Trust's Shares of leverage in the amount of approximately 35% of
the Trust's total assets, assuming hypothetical annual returns of the Trust's
portfolio of minus 10% to plus 10%. As the table shows, leverage generally
increases the return to Shareholders when portfolio return is positive and
greater than the cost of leverage and decreases the return when the portfolio
return is negative or less than the cost of leverage. The figures appearing in
the table are hypothetical and actual returns may be greater or less than those
appearing in the table.

<TABLE>
<S> <C> <C> <C> <C> <C>
Assuming Portfolio Return (net of expenses)....... (10)% (5)% 0% 5% 10%
Corresponding Share Return Assuming 35%
Leverage........................................ (16.94)% (9.29)% (1.64)% 6.01% 13.66%
</TABLE>

Until the Trust issues preferred shares, the Shares will not be leveraged,
and the risks and special considerations related to leverage described in this
Prospectus will not apply. Such leveraging of the Shares cannot be achieved
until the proceeds resulting from the use of leverage have been invested in
accordance with the Trust's investment objective and policies.

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<PAGE> 16

ADDITIONAL RISK CONSIDERATIONS

Concentration. The Trust normally will invest 65% or more of its total
assets in municipal obligations of issuers located in Michigan, and may invest
25% or more of its total assets in a U.S. territory or in municipal obligations
in the same economic sector, including without limitation the following: lease
rental obligations of state and local authorities; obligations dependent on
annual appropriations by a state's legislature for payment; obligations of state
and local housing finance authorities, municipal utilities systems or public
housing authorities; obligations of hospitals or life care facilities; or
industrial development or pollution control bonds issued for electric utility
systems, steel companies, paper companies or other purposes. This may make the
Trust more susceptible to adverse economic, political, or regulatory occurrences
affecting Michigan, a particular territory or economic sector. For example,
health care related issuers are susceptible to Medicaid reimbursement policies,
and national and state health care legislation. As concentration increases, so
does the potential for fluctuation in the net asset value of Trust Shares.

Interest Rate and Market Risk. The prices of municipal obligations tend to
fall as interest rates rise. Securities that have longer maturities tend to
fluctuate more in price in response to changes in market interest rates. A
decline in the prices of the municipal obligations owned by the Trust would
cause a decline in the net asset value of the Trust, which could adversely
affect the trading price of the Trust's Shares. This risk is usually greater
among municipal obligations with longer maturities or durations and when
residual interest municipal bonds are held by the Trust. Although the Trust has
no policy governing the maturities or durations of its investments, the Trust
expects that it will invest in a portfolio of longer-term securities. This means
that the Trust will be subject to greater market risk (other things being equal)
than a fund investing solely in shorter-term securities. Market risk is often
greater among certain types of income securities, such as zero-coupon bonds,
which do not make regular interest payments. As interest rates change, these
bonds often fluctuate in price more than higher quality bonds that make regular
interest payments. Because the Trust may invest in these types of income
securities, it may be subject to greater market risk than a fund that invests
only in current interest paying securities.

The Trust may invest to a significant extent in residual interest municipal
bonds known as inverse floaters. Compared to similar fixed-rate municipal bonds,
the value of these bonds will fluctuate to a greater extent in response to
changes in prevailing long-term interest rates. Moreover, the income earned on
residual interest municipal bonds will fluctuate in response to changes in
prevailing short-term interest rates. Thus, when such bonds are held by the
Trust, an increase in short- or long-term market interest rates will adversely
affect the income received from such bonds or the net asset value of Trust
shares. To the extent that the Trust has preferred shares outstanding, an
increase in short-term rates would also result in an increase cost of leverage,
which would adversely affect the Trust's income available for distribution.

Income Risk. The income investors receive from the Trust is based
primarily on the interest it earns from its investments, which can vary widely
over the short- and long-term. If interest rates drop, investors' income from
the Trust over time could drop as well if the Trust purchases securities with
lower interest coupons. This risk is magnified when prevailing short-term
interest rates increase and the Trust holds residual interest municipal bonds.

Call Risk. If interest rates fall, it is possible that issuers of callable
bonds with high interest coupons will "call" (or prepay) their bonds before
their maturity date. If a call were exercised by the issuer during a period of
declining interest rates, the Trust is likely to replace such called security
with a lower yielding security. If that were to happen, it would decrease the
Trust's dividends.

Credit Risk. Municipal debt obligations are subject to the risk of
non-payment of scheduled interest and/or principal. Such non-payment would
result in a reduction of income to the Trust, a reduction in the value of the
security experiencing non-payment and a potential decrease in the net asset
value of the Trust. Securities rated below investment grade or unrated
securities of comparable quality ("lower quality securities") are subject to the
risk of an issuer's inability to meet principal and interest payments on the
obligations ("credit risk") and may also be subject to price volatility due to
such factors as interest rate sensitivity, market perception of the
creditworthiness of the issuer and general market liquidity ("market risk"). The
prices of lower quality securities are also more likely to react to real or
perceived developments

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<PAGE> 17

affecting market and credit risk than are prices of investment grade quality
securities ("higher quality securities"), which react primarily to movements in
the general level of interest rates. The investments in the Trust's portfolio
will have speculative characteristics.

As indicated above, the Trust may invest up to 35% of its total assets in
municipal obligations rated below investment grade (but not, with respect to
more than 30% of its total assets, lower than B by all Rating Agencies rating
the obligation) and comparable unrated obligations. Such obligations are
commonly called "junk bonds" and will have speculative characteristics in
varying degrees. While such obligations may have some quality and protective
characteristics, these characteristics can be expected to be offset or
outweighed by uncertainties or major risk exposures to adverse conditions. Eaton
Vance seeks to minimize the risks of investing in below investment grade
securities through professional investment analysis, attention to current
developments in interest rates and economic conditions, and industry and
geographic diversification (if practicable). When the Trust invests in lower
rated or unrated municipal obligations, the achievement of the Trust's goals is
more dependent on the Eaton Vance's ability than would be the case if the Trust
were investing in municipal obligations in the higher rating categories. In
evaluating the credit quality of a particular issue, whether rated or unrated,
Eaton Vance will normally take into consideration, among other things, the
financial resources of the issuer (or, as appropriate, of the underlying source
of funds for debt service), its sensitivity to economic conditions and trends,
any operating history of and the community support for the facility financed by
the issue, the ability of the issuer's management and regulatory matters. Eaton
Vance will attempt to reduce the risks of investing in the lowest investment
grade, below investment grade and comparable unrated obligations through active
portfolio management, credit analysis and attention to current developments and
trends in the economy and the financial markets.

Increases in interest rates and changes in the economy may adversely affect
the ability of issuers of lower grade municipal securities to pay interest and
to repay principal, to meet projected financial goals and to obtain additional
financing. In the event that an issuer of securities held by the Trust
experiences difficulties in the timely payment of principal or interest and such
issuer seeks to restructure the terms of its borrowings, the Trust may incur
additional expenses and may determine to invest additional assets with respect
to such issuer or the project or projects to which the Trust's portfolio
securities relate. Further, the Trust may incur additional expenses to the
extent that it is required to seek recovery upon a default in the payment of
interest or the repayment of principal on its portfolio holdings, and the Trust
may be unable to obtain full recovery thereof.

To the extent that there is no established retail market for some of the
lower grade municipal securities in which the Trust may invest, trading in such
securities may be relatively inactive. The Adviser is responsible for
determining the net asset value of the Trust, subject to the supervision of the
Board of Trustees of the Trust. During periods of reduced market liquidity and
in the absence of readily available market quotations for lower grade municipal
securities held in the Trust's portfolio, the ability of the Adviser to value
the Trust's securities becomes more difficult and the Adviser's use of judgment
may play a greater role in the valuation of the Trust's securities due to the
reduced availability of reliable objective data. The effects of adverse
publicity and investor perceptions may be more pronounced for securities for
which no established retail market exists as compared with the effects on
securities for which such a market does exist. Further, the Trust may have more
difficulty selling such securities in a timely manner and at their stated value
than would be the case for securities for which an established retail market
does exist.

Municipal obligations held by the Trust that are of below investment grade
quality but which, subsequent to the assignment of such rating, are backed by
escrow accounts containing U.S. Government obligations may be determined by
Eaton Vance to be of investment grade quality for purposes of the Trust's
investment policies. The Trust may retain in its portfolio an obligation that
declines in quality, including defaulted obligations, if such retention is
considered desirable by Eaton Vance. In the case of a defaulted obligation, the
Trust may incur additional expense seeking recovery of its investment.

Changes in the credit quality of the issuers of municipal obligations held
by the Trust will affect the principal value of (and possibly the income earned
on) such obligations. In addition, the value of such securities are affected by
changes in general economic conditions and business conditions affecting the

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<PAGE> 18

relevant economic sectors. Changes by Rating Agencies in their ratings of a
security and in the ability of the issuer to make payments of principal and
interest may also affect the value of the Trust's investments. The amount of
information about the financial condition of an issuer of municipal obligations
may not be as extensive as that made available by corporations whose securities
are publicly traded.

The Trust may invest in municipal leases and participations in municipal
leases. The obligation of the issuer to meet its obligations under such leases
is often subject to the appropriation by the appropriate legislative body, on an
annual or other basis, of funds for the payment of the obligations. Investments
in municipal leases are thus subject to the risk that the legislative body will
not make the necessary appropriation and the issuer will not otherwise be
willing or able to meet its obligation.

Liquidity Risk. At times, a substantial portion of the Trust's assets may
be invested in securities as to which the Trust, by itself or together with
other accounts managed by Eaton Vance and its affiliates, holds a major portion
of all of such securities. Under adverse market or economic conditions or in the
event of adverse changes in the financial condition of the issuer, the Trust
could find it more difficult to sell such securities when Eaton Vance believes
it is advisable to do so or may be able to sell such securities only at prices
lower than if such securities were more widely held. Under such circumstances,
it may also be more difficult to determine the fair value of such securities for
purposes of computing the Trust's net asset value.

The secondary market for some municipal obligations is less liquid than
that for taxable debt obligations or other more widely traded municipal
obligations. These include residual interest municipal bonds. No established
resale market exists for certain of the municipal obligations in which the Trust
may invest. The market for obligations rated below investment grade is also
likely to be less liquid than the market for higher rated obligations. As a
result, the Trust may be unable to dispose of these municipal obligations at
times when it would otherwise wish to do so at the prices at which they are
valued.

A secondary market may be subject to irregular trading activity, wide
bid/ask spreads and extended trade settlement periods. The Trust has no
limitation on the amount of its assets which may be invested in securities which
are not readily marketable or are subject to restrictions on resale. The risks
associated with illiquidity are particularly acute in situations where the
Trust's operations require cash, such as if the Trust tenders for its Shares,
and may result in the Trust borrowing to meet short-term cash requirements.

Closed-End Funds. The Trust is a closed-end investment company with no
history of operations and is designed primarily for long-term investors and not
as a trading vehicle. The shares of closed-end investment companies often trade
at a discount from their net asset value, and the Shares may likewise trade at a
discount from net asset value. The trading price of the Trust's Shares may be
less than the initial public offering price, creating a risk of loss for
investors purchasing in the initial public offering of the Shares. This market
price risk may be greater for investors who sell their Shares within a
relatively short period after completion of this offering.

Non-Diversification. The Trust has registered as a "non-diversified"
investment company under the 1940 Act so that, subject to its investment
restrictions and applicable federal income tax diversification requirements,
with respect to 50% of its total assets, it will be able to invest more than 5%
(but not more than 25%) of the value of its total assets in the obligations of
any single issuer. To the extent the Trust invests a relatively high percentage
of its assets in obligations of a limited number of issuers, the Trust will be
more susceptible than a more widely diversified investment company to any single
corporate, economic, political or regulatory occurrence.

Year 2000 Compliance. The Trust could be adversely affected if the
computer systems used by the Adviser and other service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. This is commonly known as the "Year 2000 Problem." Eaton Vance is
taking steps that it believes are reasonably designed to address the Year 2000
Problem with respect to computer systems that it uses and to obtain reasonable
assurances that comparable steps are being taken by the Trust's other major
service providers. At this time, there can be no assurance that these steps will
be sufficient to avoid any adverse impact to the Trust.

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In addition, it is possible that the markets for municipal securities in
which the Trust invests may be detrimentally affected by computer failures
throughout the financial services industry beginning on or before January 1,
2000. Improperly functioning trading systems may result in settlement problems
and liquidity issues. In addition, corporate and governmental data processing
errors may result in production problems for individual issuers and overall
economic uncertainties. Earnings of individual issuers will be affected by
remediation costs, which may be substantial and may be reported inconsistently
in financial statements. Accordingly, the Trust's investments may be adversely
affected. The statements above are subject to the Year 2000 Information and
Readiness Disclosure Act, which may limit the legal rights regarding the use of
such statements in the case of a dispute.

MANAGEMENT OF THE TRUST

BOARD OF TRUSTEES

The management of the Trust, including general supervision of the duties
performed by the Adviser under the Advisory Agreement (as defined below), is the
responsibility of the Trust's Board of Trustees under the laws of The
Commonwealth of Massachusetts and the Investment Company Act.

THE ADVISER

Eaton Vance Management acts as the Trust's investment adviser under an
Investment Advisory Agreement (the "Advisory Agreement"). The Adviser's
principal office is located at 24 Federal Street, Boston, MA 02110. Eaton Vance,
its affiliates and predecessor companies have been managing assets of
individuals and institutions since 1924 and of investment companies since 1931.
Eaton Vance (or its affiliates) currently serves as the investment adviser to
investment companies and various individual and institutional clients with
combined assets under management of over $31 billion, of which approximately $28
billion is in investment companies. 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 employs 24 personnel in its municipal bond department,
including six portfolio managers, two traders and eleven credit analysts. Eaton
Vance was one of the first advisory firms to manage a registered municipal bond
investment company, and has done so continuously since 1978. Eaton Vance
currently manages 3 national municipal investment companies, 32 single state
municipal investment companies, 10 limited maturity municipal investment
companies and 1 money market municipal investment company, with assets of about
$7.5 billion. All but 1 of these funds are open-end. Among such funds, Eaton
Vance currently offers Eaton Vance Michigan Municipals Fund, an open-end fund
which invests primarily in investment grade Michigan municipal obligations.

Under the general supervision of the Trust's Board of Trustees, the Adviser
will carry out the investment and reinvestment of the assets of the Trust, will
furnish continuously an investment program with respect to the Trust, will
determine which securities should be purchased, sold or exchanged, and will
implement such determinations. The Adviser will furnish to the Trust investment
advice and office facilities, equipment and personnel for servicing the
investments of the Trust. The Adviser will compensate all Trustees and officers
of the Trust who are members of the Adviser's organization and who render
investment services to the Trust, and will also compensate all other Adviser
personnel who provide research and investment services to the Trust. In return
for these services, facilities and payments, the Trust has agreed to pay the
Adviser as compensation under the Advisory Agreement a fee in the amount of .70%
of the average weekly gross assets of the Trust. Gross assets of the Trust shall
be calculated by deducting accrued liabilities of the Trust not including the
amount of any preferred shares outstanding.

Timothy T. Browse is the portfolio manager of the Trust and is responsible
for day-to-day management of the Trust's investments. Mr. Browse has been an
employee of Eaton Vance since 1992 and a Vice President of Eaton Vance since
1993. He currently manages eight municipal bond investment companies (including
the Eaton Vance Michigan Municipals Fund) with combined assets of over $900
million.

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The Trust and the Adviser have adopted Codes of Ethics relating to personal
securities transactions. The Codes permit Adviser personnel to invest in
securities (including securities that may be purchased or held by the Trust) for
their own accounts, subject to certain pre-clearance, reporting and other
restrictions and procedures contained in such Codes.

The Trust has engaged Eaton Vance to act as its administrator under an
Administration Agreement (the "Administration Agreement"). Under the
Administration Agreement, Eaton Vance is responsible for managing the business
affairs of the Trust, subject to the supervision of the Trust's Board of
Trustees. Eaton Vance will furnish to the Trust all office facilities, equipment
and personnel for administering the affairs of the Trust. Eaton Vance's
administrative services include recordkeeping, preparation and filing of
documents required to comply with federal and state securities laws, supervising
the activities of the Trust's custodian and transfer agent, providing assistance
in connection with the Trustees' and shareholders' meetings, providing service
in connection with any repurchase offers and other administrative services
necessary to conduct the Trust's business. In return for these services,
facilities and payments, the Trust is authorized to pay Eaton Vance as
compensation under the Administration Agreement a fee in the amount of .20% of
the average weekly gross assets of the Trust.

Eaton Vance has agreed to bear all ordinary and organizational expenses of
the Trust that exceed 5% of average weekly net assets (taking into account the
deduction of any preferred shares and related expenses) for the first year of
operations. In return for this arrangement, the Trust will reimburse Eaton Vance
over the first year of operations for organizational expenses of the Trust borne
by Eaton Vance at the onset of operations.

DISTRIBUTIONS AND TAXES

The Trust intends to make monthly distributions of net investment income,
after payment of any dividends on any outstanding preferred shares. The Trust
will distribute annually any net short-term capital gain and any net capital
gain (which is the excess of net long-term capital gain over net short-term
capital loss). Distributions to Shareholders cannot be assured, and the amount
of each monthly distribution is likely to vary. Initial distributions to
Shareholders are expected to be paid approximately 60 days after the completion
of this offering. While there are any preferred shares outstanding, the Trust
might not be permitted to declare any cash dividend or other distribution on its
Shares in certain circumstances. See "Description of Capital Structure."

The Trust intends to invest a sufficient portion of its assets in
tax-exempt municipal securities so that it will be permitted to pay
"exempt-interest dividends" (as defined under applicable federal income tax
law). Each distribution of exempt-interest dividends, whether paid in cash or
reinvested in additional Shares, ordinarily will constitute income exempt from
regular federal income tax. Distributions of interest on certain municipal
obligations, however, are a tax preference item under the AMT. Furthermore,
exempt-interest dividends are included in determining what portion, if any, of a
person's social security and railroad retirement benefits will be includible in
gross income subject to regular federal income tax. Distributions of any taxable
net investment income and net short-term capital gain are taxable as ordinary
income. Distributions of the Trust's net capital gain ("capital gain
dividends"), if any, are taxable to Shareholders as long-term capital gains,
regardless of the length of time Shares have been held by Shareholders.
Distributions, if any, in excess of the Trust's earnings and profits will first
reduce the adjusted tax basis of a holder's Shares and, after that basis has
been reduced to zero, will constitute capital gains to the Shareholder (assuming
the Shares are held as a capital asset). See below for a summary of the maximum
tax rates applicable to capital gains (including capital gain dividends).
Interest on indebtedness incurred or continued by a Shareholder to purchase or
carry Shares is not deductible for federal income tax purposes if the Trust
distributes exempt-interest dividends during the Shareholder's taxable year.

The Trust will inform Shareholders of the source and tax status of all
distributions promptly after the close of each calendar year.

Selling Shareholders will generally recognize gain or loss in an amount
equal to the difference between the Shareholder's adjusted tax basis in the
Shares and the amount received. If the Shares are held as a capital

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asset, the gain or loss will be a capital gain or loss. The maximum tax rate
applicable to net capital gains recognized by individuals and other
non-corporate taxpayers is (i) the same as the maximum ordinary income tax rate
for gains recognized on the sale of capital assets held for one year or less or
(ii) 20% for gains recognized on the sale of capital assets held for more than
one year (as well as capital gain dividends). Any loss on a disposition of
Shares held for six months or less will be treated as a long-term capital loss
to the extent of any capital gain dividends received with respect to those
Shares, and will be disallowed to the extent of any exempt-interest dividends
received with respect to those Shares. For purposes of determining whether
Shares have been held for six months or less, the holding period is suspended
for any periods during which the Shareholder's risk of loss is diminished as a
result of holding one or more other positions in substantially similar or
related property, or through certain options or short sales. Any loss realized
on a sale or exchange of Shares will be disallowed to the extent those Shares
are replaced by other Shares within a period of 61 days beginning 30 days before
and ending 30 days after the date of disposition of the Shares (which could
occur, for example, if the Shareholder is a participant in the Plan (as defined
below)). In that event, the basis of the replacement Shares will be adjusted to
reflect the disallowed loss.

An investor should be aware that if Shares are purchased shortly before the
record date for any taxable dividend (including a capital gain dividend), the
purchase price likely will reflect the value of the dividend and the investor
then would receive a taxable distribution likely to reduce the trading value of
such Shares, in effect resulting in a taxable return of some of the purchase
price. Taxable distributions to individuals and certain other non-corporate
Shareholders, including those who have not provided their correct taxpayer
identification number and other required certifications, may be subject to
"backup" federal income tax withholding at the rate of 31%.

MICHIGAN TAXES. The Trust has received an opinion from special Michigan
tax counsel to the Trust to the effect that Shareholders of the Trust who are
subject to the Michigan state income tax, municipal income tax or single
business tax will not be subject to such taxes on their Trust dividends to the
extent that such distributions are exempt-interest dividends for federal income
tax purposes and are attributable to interest on obligations held by the Trust
which is exempt from regular federal income tax and is exempt from Michigan
State and city income taxes and Michigan single business tax ("Michigan
tax-exempt obligations"). Other distributions with respect to shares of the
Trust including, but not limited to, long or short-term capital gains, will be
subject to the Michigan income tax or single business tax and may be subject to
the city income taxes imposed by certain Michigan cities.

The foregoing briefly summarizes some of the important income tax
consequences to Shareholders of investing in Shares, reflects the federal and
state tax law as of the date of this Prospectus, and does not address special
tax rules applicable to certain types of investors, such as corporate investors.
Investors should consult their tax advisors regarding other federal, state or
local tax considerations applicable in their particular circumstances, as well
as any proposed tax law changes.

DIVIDEND REINVESTMENT PLAN

Pursuant to the Trust's Dividend Reinvestment Plan (the "Plan"), unless a
Shareholder otherwise elects, all distributions of dividends (including all
capital gain dividends) will be automatically reinvested in Shares.

First Data Investor Services Group (the "Plan Agent") serves as agent for
the Shareholders in administering the Plan. Shareholders who elect not to
participate in the Plan will receive all distributions of dividends in cash paid
by check mailed directly to the Shareholder of record (or if the Shares are held
in Street or other nominee name, then to the nominee) by First Data Investor
Services Group as disbursing agent. Participation in the Plan is completely
voluntary and may be terminated or resumed at any time without penalty by
written notice if received by the Plan Agent not less than ten days prior to any
dividend record date.

Shares will be acquired by the Plan Agent or an independent broker-dealer
for the participants' accounts, depending upon the circumstances described
below, either (i) through receipt of additional previously authorized but
unissued Shares from the Trust ("newly issued Shares") or (ii) by purchase of
outstanding Shares on the open market ("open-market purchases") on the American
Stock Exchange or elsewhere. If on

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the payment date for the dividend, the net asset value per Share is equal to or
less than the market price per Share plus estimated brokerage commissions (such
condition being referred to herein as "market premium"), the Plan Agent will
invest the dividend amount in newly issued Shares on behalf of the participants.
The number of newly issued Shares to be credited to each participant's account
will be determined by dividing the dollar amount of the dividend by the net
asset value per Share on the date the Shares are issued, provided that the
maximum discount from the then current market price per Share on the date of
issuance may not exceed 5%. If on the dividend payment date the net asset value
per Share is greater than the market value plus estimated brokerage commissions
(such condition being referred to herein as "market discount"), the Plan Agent
will invest the dividend amount in Shares acquired on behalf of the participants
in open-market purchases.

In the event of a market discount on the dividend payment date, the Plan
Agent will have up to 30 days after the dividend payment date to invest the
dividend amount in Shares acquired in open-market purchases. If, before the Plan
Agent has completed its open-market purchases, the market price of a Share
exceeds the net asset value per Share, the average per Share purchase price paid
by the Plan Agent may exceed the net asset value of the Trust's Shares,
resulting in the acquisition of fewer Shares than if the dividend had been paid
in newly issued Shares on the dividend payment date. Therefore, the Plan
provides that if the Plan Agent is unable to invest the full dividend amount in
open-market purchases during the purchase period or if the market discount
shifts to a market premium during the purchase period, the Plan Agent will cease
making open-market purchases and will invest the uninvested portion of the
dividend amount in newly issued Shares.

The Plan Agent maintains all Shareholders' accounts in the Plan and
furnishes written confirmation of all transactions in the accounts, including
information needed by Shareholders for tax records. Shares in the account of
each Plan participant will be held by the Plan Agent on behalf of the Plan
participant, and each Shareholder proxy will include those Shares purchased or
received pursuant to the Plan. The Plan Agent will forward all proxy
solicitation materials to participants and vote proxies for Shares held pursuant
to the Plan in accordance with the instructions of the participants.

In the case of Shareholders such as banks, brokers or nominees that hold
Shares for others who are the beneficial owners, the Plan Agent will administer
the Plan on the basis of the number of Shares certified from time to time by the
record Shareholder's name and held for the account of beneficial owners who
participate in the Plan.

There will be no brokerage charges with respect to Shares issued directly
by the Trust as a result of dividends payable either in Shares or in cash.
However, each participant will pay a pro rata share of brokerage commissions
incurred with respect to the Plan Agent's open-market purchases in connection
with the reinvestment of dividends.

Shareholders participating in the Plan may receive benefits not available
to Shareholders not participating in the Plan. If the market price (plus
commissions) of the Trust's Shares is above their net asset value, participants
in the Plan will receive Shares of the Trust at less than they could otherwise
purchase them and will have Shares with a cash value greater than the value of
any cash distribution they would have received on their Shares. If the market
price plus commissions is below the net asset value, participants will receive
distributions in Shares with a net asset value greater than the per Share value
of any cash distribution they would have received on their Shares. However,
there may be insufficient Shares available in the market to make distributions
in Shares at prices below the net asset value. Also, since the Trust does not
redeem its Shares, the price on resale may be more or less than the net asset
value.

Experience under the Plan may indicate that changes are desirable.
Accordingly, the Trust reserves the right to amend or terminate the Plan. There
is no direct service charge to participants in the Plan; however, the Trust
reserves the right to amend the Plan to include a service charge payable by the
participants.

All correspondence concerning the Plan should be directed to the Plan Agent
at P. O. Box 8030, Boston, MA 02266-8030. Please call 1-800-331-1710 between the
hours of 9:00 a.m. and 5:00 p.m. Eastern Standard Time if you have questions
regarding the Plan.

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DESCRIPTION OF CAPITAL STRUCTURE

The Trust is an unincorporated business trust established under the laws of
the Commonwealth of Massachusetts by an Agreement and Declaration of Trust dated
December 10, 1998 (the "Declaration of Trust"). The Declaration of Trust
provides that the Trustees of the Trust may authorize separate classes of shares
of beneficial interest. The Trustees have authorized an unlimited number of
Shares. The Trust intends to hold annual meetings of Shareholders in compliance
with the requirements of the American Stock Exchange.

Shares. The Declaration of Trust permits the Trust to issue an unlimited
number of full and fractional Shares of beneficial interest, $0.01 par value per
Share. Each Share represents an equal proportionate interest in the assets of
the Trust with each other Share in the Trust. Holders of Shares will be entitled
to the payment of dividends when, as and if declared by the Board of Trustees.
The 1940 Act or the terms of any borrowings or preferred shares may limit the
payment of dividends to the holders of Shares. Each whole Share shall be
entitled to one vote as to matters on which it is entitled to vote pursuant to
the terms of the Declaration of Trust on file with the SEC. Upon liquidation of
the Trust, after paying or adequately providing for the payment of all
liabilities of the Trust and the liquidation preference with respect to any
outstanding preferred shares, and upon receipt of such releases, indemnities and
refunding agreements as they deem necessary for their protection, the Trustees
may distribute the remaining assets of the Trust among the holders of the
Shares. The Declaration of Trust provides that Shareholders are not liable for
any liabilities of the Trust, requires inclusion of a clause to that effect in
every agreement entered into by the Trust and indemnifies shareholders against
any such liability. Although shareholders of an unincorporated business trust
established under Massachusetts law, in certain limited circumstances, may be
held personally liable for the obligations of the Trust as though they were
general partners, the provisions of the Declaration of Trust described in the
foregoing sentence make the likelihood of such personal liability remote.

While there are any borrowings or preferred shares outstanding, the Trust
may not be permitted to declare any cash dividend or other distribution on its
Shares, unless at the time of such declaration, (i) all accrued dividends on
preferred shares or accrued interest on borrowings have been paid and (2) the
value of the Trust's total assets (determined after deducting the amount of such
dividend or other distribution), less all liabilities and indebtedness of the
Trust not represented by senior securities, is at least 300% of the aggregate
amount of such securities representing indebtedness and at least 200% of the
aggregate amount of securities representing indebtedness plus the aggregate
liquidation value of the outstanding preferred shares (expected to equal the
aggregate original purchase price of the outstanding preferred shares plus
redemption premium, if any, together with any accrued and unpaid dividends
thereon, whether or not earned or declared and on a cumulative basis). In
addition to the requirements of the 1940 Act, the Trust may be required to
comply with other asset coverage requirements as a condition of the Trust
obtaining a rating of the preferred shares from a Rating Agency. These
requirements may include an asset coverage test more stringent than under the
1940 Act. This limitation on the Trust's ability to make distributions on its
Shares could in certain circumstances impair the ability of the Trust to
maintain its qualification for taxation as a regulated investment company. The
Trust intends, however, to the extent possible to purchase or redeem preferred
shares from time to time to maintain compliance with such asset coverage
requirements and may pay special dividends to the holders of the preferred
shares in certain circumstances in connection with any such impairment of the
Trust's status as a regulated investment company. See "Investment Objective,
Policies and Risks" and "Distributions and Taxes." Depending on the timing of
any such redemption or repayment, the Trust may be required to pay a premium in
addition to the liquidation preference of the preferred shares to the holders
thereof.

The Trust has no present intention of offering additional Shares, except as
described herein. Other offerings of its Shares, if made, will require approval
of the Board of Trustees. Any additional offering will not be sold at a price
per Share below the then current net asset value (exclusive of underwriting
discounts and commissions) except in connection with an offering to existing
Shareholders or with the consent of a majority of the Trust's outstanding
Shares. The Shares have no preemptive rights.

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The Trust generally will not issue Share certificates. However, upon
written request to the Trust's transfer agent, a share certificate will be
issued for any or all of the full Shares credited to an investor's account.
Share certificates which have been issued to an investor may be returned at any
time.

Repurchase of Shares and Other Discount Measures. Because shares of
closed-end management investment companies frequently trade at a discount to
their net asset values, the Board of Trustees has determined that from time to
time it may be in the interest of Shareholders for the Trust to take corrective
actions. The Board of Trustees, in consultation with Eaton Vance, will review at
least annually the possibility of open market repurchases and/or tender offers
for the Shares and will consider such factors as the market price of the Shares,
the net asset value of the Shares, the liquidity of the assets of the Trust,
effect on the Trust's expenses, whether such transactions would impair the
Trust's status as a regulated investment company or result in a failure to
comply with applicable asset coverage requirements, general economic conditions
and such other events or conditions which may have a material effect on the
Trust's ability to consummate such transactions. There are no assurances that
the Board of Trustees will, in fact, decide to undertake either of these actions
or if undertaken, that such actions will result in the Trust's Shares trading at
a price which is equal to or approximates their net asset value. In recognition
of the possibility that the Shares might trade at a discount to net asset value
and that any such discount may not be in the interest of Shareholders, the Board
of Trustees, in consultation with Eaton Vance, from time to time may review
possible actions to reduce any such discount.

Preferred Shares. The Declaration of Trust authorizes the issuance of an
unlimited number of shares of beneficial interest with preference rights,
including preferred shares (the "Preferred Shares"), having a par value of $0.01
per share, in one or more series, with rights as determined by the Board of
Trustees, by action of the Board of Trustees without the approval of the
Shareholders.

Under the requirements of the 1940 Act, the Trust must, immediately after
the issuance of any Preferred Shares, have an "asset coverage" of at least 200%.
Asset coverage means the ratio which the value of the total assets of the Trust,
less all liability and indebtedness not represented by senior securities (as
defined in the 1940 Act), bears to the aggregate amount of senior securities
representing indebtedness of the Trust, if any, plus the aggregate liquidation
preference of the Preferred Shares. If the Trust seeks a rating of the Preferred
Shares, asset coverage requirements, in addition to those set forth in the 1940
Act, may be imposed. The liquidation value of the Preferred Shares is expected
to equal their aggregate original purchase price plus redemption premium, if
any, together with any accrued and unpaid dividends thereon (on a cumulative
basis), whether or not earned or declared. The terms of the Preferred Shares,
including their dividend rate, voting rights, liquidation preference and
redemption provisions, will be determined by the Board of Trustees (subject to
applicable law and the Trust's Declaration of Trust) if and when it authorizes
the Preferred Shares. The Trust may issue Preferred Shares that provide for the
periodic redetermination of the dividend rate at relatively short intervals
through an auction or remarketing procedure, although the terms of the Preferred
Shares may also enable the Trust to lengthen such intervals. At times, the
dividend rate as redetermined on the Trust's Preferred Shares may approach or
exceed the Trust's return after expenses on the investment of proceeds from the
Preferred Shares and the Trust's leverage structure would result in a lower rate
of return to Shareholders than if the Trust were not so structured.

In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Trust, the terms of any Preferred Shares may entitle the
holders of Preferred Shares to receive a preferential liquidating distribution
(expected to equal the original purchase price per share plus redemption
premium, if any, together with accrued and unpaid dividends, whether or not
earned or declared and on a cumulative basis) before any distribution of assets
is made to holders of Shares. After payment of the full amount of the
liquidating distribution to which they are entitled, the Preferred Shareholders
would not be entitled to any further participation in any distribution of assets
by the Trust.

Holders of Preferred Shares, voting as a class, shall be entitled to elect
two of the Trust's Trustees. Under the 1940 Act, if at any time dividends on the
Preferred Shares are unpaid in an amount equal to two full years' dividends
thereon, the holders of all outstanding Preferred Shares, voting as a class,
will be allowed to elect a majority of the Trust's Trustees until all dividends
in default have been paid or declared and set apart for

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payment. In addition, if required by the Rating Agency rating the Preferred
Shares or if the Board of Trustees determines it to be in the best interests of
the common shareholders, issuance of the Preferred Shares may result in more
restrictive provisions than required by the 1940 Act being imposed. In this
regard, holders of the Preferred Shares may be entitled to elect a majority of
the Trust's Board of Trustees in other circumstances, for example, if one
payment on the Preferred Shares is in arrears.

The Trust currently intends to seek an investment grade rating for the
Preferred Shares from one Rating Agency. The Trust intends that, as long as
Preferred Shares are outstanding, the composition of its portfolio will reflect
guidelines established by such Rating Agency. Although, as of the date hereof,
no such Rating Agency has established guidelines relating to the Preferred
Shares, based on previous guidelines established by such Rating Agencies for the
securities of other issuers, the Trust anticipates that the guidelines with
respect to the Preferred Shares will establish a set of tests for portfolio
composition and asset coverage that supplement (and in some cases are more
restrictive than) the applicable requirements under the 1940 Act. Although, at
this time, no assurance can be given as to the nature or extent of the
guidelines which may be imposed in connection with obtaining a rating of the
Preferred Shares, the Trust currently anticipates that such guidelines will
include asset coverage requirements which are more restrictive than those under
the 1940 Act, restrictions on certain portfolio investments and investment
practices, requirements that the Trust maintain a portion of its assets in
short-term, high-quality, fixed-income securities and certain mandatory
redemption requirements relating to the Preferred Shares. No assurance can be
given that the guidelines actually imposed with respect to the Preferred Shares
by such Rating Agency will be more or less restrictive than as described in this
Prospectus.

Anti-Takeover Provisions in the Declaration of Trust. The Declaration of
Trust includes provisions that could have the effect of limiting the ability of
other entities or persons to acquire control of the Trust or to change the
composition of its Board of Trustees, and could have the effect of depriving
Shareholders of an opportunity to sell their Shares at a premium over prevailing
market prices by discouraging a third party from seeking to obtain control of
the Trust. These provisions may have the effect of discouraging attempts to
acquire control of the Trust, which attempts could have the effect of increasing
the expenses of the Trust and interfering with the normal operation of the
Trust. The Board of Trustees is divided into three classes, with the term of one
class expiring at each annual meeting of Shareholders. At each annual meeting,
one class of Trustees is elected to a three-year term. This provision could
delay for up to two years the replacement of a majority of the Board of
Trustees. A Trustee may be removed from office only for cause by a written
instrument signed by the remaining Trustees or by a vote of the holders of at
least two-thirds of the class of Shares of the Trust that elected such Trustee
and is entitled to vote on the matter.

In addition, the Declaration of Trust requires the favorable vote of the
holders of at least 75% of the outstanding shares of each class of the Trust,
voting as a class, then entitled to vote to approve, adopt or authorize certain
transactions with 5%-or-greater holders of a class of shares and their
associates, unless the Board of Trustees shall by resolution have approved a
memorandum of understanding with such holders, in which case normal voting
requirements would be in effect. For purposes of these provisions, a
5%-or-greater holder of a class of shares (a "Principal Shareholder") refers to
any person who, whether directly or indirectly and whether alone or together
with its affiliates and associates, beneficially owns 5% or more of the
outstanding shares of any class of beneficial interest of the Trust. The
transactions subject to these special approval requirements are: (i) the merger
or consolidation of the Trust or any subsidiary of the Trust with or into any
Principal Shareholder; (ii) the issuance of any securities of the Trust to any
Principal Shareholder for cash; (iii) the sale, lease or exchange of all or any
substantial part of the assets of the Trust to any Principal Shareholder (except
assets having an aggregate fair market value of less than $1,000,000,
aggregating for the purpose of such computation all assets sold, leased or
exchanged in any series of similar transactions within a twelve-month period);
or (iv) the sale, lease or exchange to the Trust or any subsidiary thereof, in
exchange for securities of the Trust, of any assets of any Principal Shareholder
(except assets having an aggregate fair market value of less than $1,000,000,
aggregating for the purposes of such computation all assets sold, leased or
exchanged in any series of similar transactions within a twelve-month period).

The Board of Trustees has determined that provisions with respect to the
Board and the 75% voting requirements described above, which voting requirements
are greater than the minimum requirements under

23
<PAGE> 26

Massachusetts law or the 1940 Act, are in the best interest of Shareholders
generally. Reference should be made to the Declaration of Trust on file with the
SEC for the full text of these provisions.

Conversion to Open-End Fund. The Trust may be converted to an open-end
investment company at any time if approved by the lesser of (i) 2/3 or more of
the Trust's then outstanding Shares and Preferred Shares (if any), each voting
separately as a class, or (ii) more than 50% of the then outstanding Shares and
Preferred Shares (if any), voting separately as a class if such conversion is
recommended by at least 75% of the Trustees then in office. If approved in the
foregoing manner, conversion of the Trust could not occur until 90 days after
the Shareholders' meeting at which such conversion was approved and would also
require at least 30 days' prior notice to all Shareholders. The composition of
the Trust's portfolio likely would prohibit the Trust from complying with
regulations of the SEC applicable to open-end investment companies. Accordingly,
conversion likely would require significant changes in the Trust's investment
policies and liquidation of a substantial portion of its relatively illiquid
portfolio. Conversion of the Trust to an open-end investment company also would
require the redemption of any outstanding Preferred Shares and could require the
repayment of borrowings, which would eliminate the leveraged capital structure
of the Trust with respect to the Shares. In the event of conversion, the Shares
would cease to be listed on the American Stock Exchange or other national
securities exchange or market system. The Board of Trustees believes, however,
that the closed-end structure is desirable, given the Trust's investment
objective and policies. Investors should assume, therefore, that it is unlikely
that the Board of Trustees would vote to convert the Trust to an open-end
investment company. Shareholders of an open-end investment company may require
the company to redeem their shares at any time (except in certain circumstances
as authorized by or under the 1940 Act) at their net asset value, less such
redemption charge, if any, as might be in effect at the time of a redemption.
The Trust expects to pay all such redemption requests in cash, but intends to
reserve the right to pay redemption requests in a combination of cash or
securities. If such partial payment in securities were made, investors may incur
brokerage costs in converting such securities to cash. If the Trust were
converted to an open-end fund, it is likely that new Shares would be sold at net
asset value plus a sales load.

24
<PAGE> 27

UNDERWRITING

The underwriters named below (the "Underwriters"), acting through
PaineWebber Incorporated, 1285 Avenue of the Americas, New York, New York, as
lead representative, and A.G. Edwards & Sons, Inc., Prudential Securities
Incorporated, Salomon Smith Barney Inc., Fahnestock & Co. Inc., McDonald
Investments Inc. and Roney Capital Markets, a division of FIRST CHICAGO CAPITAL
MARKETS, INC., as their representatives (together with PaineWebber Incorporated,
the "Representatives"), have severally agreed, subject to the terms and
conditions of the Underwriting Agreement with the Trust and Eaton Vance (the
"Underwriting Agreement"), to purchase from the Trust the number of Shares set
forth opposite their respective names. The Underwriters are committed to
purchase all of such Shares if any are purchased.

<TABLE>
<CAPTION>
UNDERWRITER NUMBER OF SHARES
----------- ----------------
<S> <C>
PaineWebber Incorporated.................................... 207,000
A.G. Edwards & Sons, Inc.................................... 207,000
Prudential Securities Incorporated.......................... 207,000
Salomon Smith Barney Inc.................................... 207,000
Fahnestock & Co. Inc........................................ 207,000
McDonald Investments Inc.................................... 207,000
Roney Capital Markets....................................... 207,000
BT Alex. Brown Incorporated................................. 54,000
SG Cowen Securities Corporation............................. 54,000
Robert W. Baird & Co. Incorporated.......................... 31,500
EVEREN Securities, Inc...................................... 31,500
Fifth Third/The Ohio Company................................ 31,500
Fleet Securities, Inc....................................... 31,500
Piper Jaffray Inc........................................... 31,500
Wheat First Securities, Inc................................. 31,500
J.J.B. Hilliard, W.L. Lyons, Inc............................ 13,500
Howe Barnes Investments Inc................................. 13,500
NatCity Investments, Inc.................................... 13,500
Stifel, Nicolaus & Company, Incorporated.................... 13,500
---------
Total............................................. 1,800,000
=========
</TABLE>

The Trust has granted to the Underwriters an option, exercisable for 45
days from the date of this Prospectus to purchase up to an additional 270,000
Shares to cover over-allotments, if any, at the initial offering price. The
Underwriters may exercise such option solely for the purpose of covering
over-allotments incurred in the sale of the Shares offered hereby. To the extent
that the Underwriters exercise this option, each of the Underwriters will have a
firm commitment, subject to certain conditions, to purchase an additional number
of Shares proportionate to such Underwriter's initial commitment.

The Shares are offered by the Underwriters, subject to prior sale, when, as
and if delivered to and accepted by the Underwriters and subject to their right
to reject orders in whole or in part. As set forth in the notes to the table on
the cover page of this Prospectus, Eaton Vance or an affiliate (not the Trust)
from its own assets has agreed to pay a commission to the Underwriters in the
amount of $0.675 per Share (4.50% of the public offering price per Share) or an
aggregate amount of $1,215,000 ($1,397,250 assuming full exercise of the
over-allotment option) for all Shares covered by this Prospectus. Such payment
will be the legal obligation of Eaton Vance or an affiliate and made out of its
own assets and will not in any way represent an obligation of the Trust or its
Shareholders. The Representatives have advised the Trust that the Underwriters
may pay up to $0.45 per Share from such payment received from Eaton Vance to
selected dealers who sell the Shares and that the Underwriters and such dealers
may reallow a concession of up to $0.10 per Share to certain other dealers who
sell Shares. Eaton Vance (or an affiliate) has agreed to pay all offering
expenses of the Trust that exceed $0.03 per share. Offering expenses include
$10,975 payment to the Underwriters in partial reimbursement of their expenses.

25
<PAGE> 28

Prior to this offering, there has been no public market for the Shares or
any other securities of the Trust. Shares have been approved for listing on the
American Stock Exchange under the symbol "EMI." In order to meet the
requirements for listing the Shares on the American Stock Exchange, the
Underwriters have undertaken to sell lots of 100 or more Shares to a minimum of
400 beneficial holders. The minimum investment requirement is 100 Shares
($1,500).

The Trust and Eaton Vance have each agreed to indemnify the several
Underwriters for or to contribute to the losses arising out of certain
liabilities, including liabilities under the Securities Act of 1933, as amended.

The Trust has agreed not to offer or sell any additional Shares of the
Trust, other than as contemplated by this Prospectus, for a period of 180 days
after the date of the Underwriting Agreement without the prior written consent
of the Underwriters.

The Representatives have informed the Trust that the Underwriters do not
intend to confirm sale to any accounts over which they exercise discretionary
authority.

In connection with this offering, the Underwriters may purchase and sell
Shares in the open market. These transactions may include over-allotment and
stabilizing transactions and purchases to cover syndicate short positions
created in connection with this offering. Stabilizing transactions consist of
certain bids or purchases for the purpose of preventing or retarding a decline
in the market price of the Shares and syndicate short positions involve the sale
by the Underwriters of a greater number of Shares than they are required to
purchase from the Trust in this offering. The Underwriters also may impose a
penalty bid, whereby selling concessions allowed to syndicate members or other
broker-dealers in respect of the Shares sold in this offering for their account,
may be reclaimed by the syndicate if such Shares are repurchased by the
syndicate in stabilizing or covering transactions. These activities may
stabilize, maintain or otherwise affect the market price of the Shares, which
may be higher than the price that might otherwise prevail in the open market;
and these activities, if commenced, may be discontinued at any time without
notice. These transactions may be effected on the American Stock Exchange or
otherwise.

Under the terms of and subject to the conditions of the Underwriting
Agreement, the Underwriters are committed to purchase and pay for all Shares
offered hereby if any are purchased. The Underwriting Agreement provides that it
may be terminated at or prior to the closing date for the purchase of the Shares
if, in the judgement of the Representatives, payment for the delivery of the
Shares is rendered impracticable or inadvisable because (1) trading in the
equity securities of the Trust is suspended by the SEC, by an exchange that
lists the Shares, or by the National Association of Securities Dealers Automated
Quotation National Market System ("NASDAQ"), (2) trading in securities generally
on the New York Stock Exchange or NASDAQ shall have been suspended or limited or
minimum or maximum prices shall have been generally established on such exchange
or over-the-counter market, (3) additional material governmental restrictions,
not in force on the date of the Underwriting Agreement, have been imposed upon
trading in securities generally or trading in securities generally has been
suspended on any U.S. securities exchange, (4) a general banking moratorium has
been established by federal or New York authorities, or (5) any material adverse
change in the financial or securities markets in the United States or in
political, financial or economic conditions in the United States or any outbreak
or material escalation of hostilities or other calamity or crisis occurs, the
effect of which is such as to make it impracticable to market any or all of the
Shares. The Underwriting Agreement also may be terminated if any of the
conditions specified in the Underwriting Agreement have not been fulfilled when
and as required by such agreement.

The Trust anticipates that the Representatives and certain other
Underwriters may from time to time act as brokers or dealers in connection with
the execution of its Trust transactions after they have ceased to be
Underwriters and, subject to certain restrictions, may act as such brokers while
they are Underwriters.

As described below under "Shareholder Servicing Agent, Custodian and
Transfer Agent," PaineWebber Incorporated will provide shareholder services to
the Trust pursuant to a Shareholder Servicing Agreement with Eaton Vance. Eaton
Vance will pay a monthly fee for such services on an annual basis equal to .10%
of the average weekly gross assets of the Trust.

26
<PAGE> 29

SHAREHOLDER SERVICING AGENT, CUSTODIAN AND TRANSFER AGENT

Pursuant to a Shareholder Servicing Agreement between PaineWebber
Incorporated (the "Shareholder Servicing Agent") and Eaton Vance, the
Shareholder Servicing Agent will (i) undertake to make public information
pertaining to the Trust on an ongoing basis and to communicate to investors and
prospective investors the Trust's features and benefits (including periodic
seminars or conference calls, responses to questions from current or prospective
shareholders and specific shareholder contact where appropriate); (ii) make
available to investors and prospective investors market price, net asset value,
yield and other information regarding the Trust, if reasonably obtainable, for
the purpose of maintaining the visibility of the Trust in the investor
community; (iii) at the request of Eaton Vance, provide certain economic
research and statistical information and reports, if reasonably obtainable, on
behalf of the Trust, and consult with representatives and Trustees of the Trust
in connection therewith, which information and reports shall include: (a)
statistical and financial market information with respect to the Trust's market
performance and (b) comparative information regarding the Trust and other
closed-end management investment companies with respect to (1) the net asset
value of their respective shares, (2) the respective market performance of the
Trust and such other companies and (3) other relevant performance indicators;
and (iv) at the request of Eaton Vance, provide information to and consult with
the Board of Trustees with respect to applicable modifications to dividend
policies or capital structure, repositioning or restructuring of the Trust,
conversion of the Trust to an open-end investment company, liquidation or
merger; provided, however, that under the terms of the Shareholder Servicing
Agreement, the Shareholder Servicing Agent is not obligated to render any
opinions, valuations or recommendations of any kind or to perform any such
similar services. For these services, Eaton Vance will pay the Shareholder
Servicing Agent a fee equal on an annual basis to .10% of the Trust's average
weekly gross assets, payable in arrears at the end of each calendar month. Under
the terms of the Shareholder Servicing Agreement, the Shareholder Servicing
Agent is relieved from liability to Eaton Vance for any act or omission in the
course of its performances under the Shareholder Servicing Agreement in the
absence of gross negligence or willful misconduct by the Shareholder Servicing
Agent. The Shareholder Servicing Agreement will continue for an initial term of
two years and thereafter for successive one-year periods unless terminated by
either party upon 60 days written notice.

Investors Bank & Trust Company ("IBT"), 200 Clarendon Street, Boston, MA
02116 is the custodian of the Trust and will maintain custody of the securities
and cash of the Trust. IBT maintains the Trust's general ledger and computes net
asset value per share at least weekly. IBT also attends to details in connection
with the sale, exchange, substitution, transfer and other dealings with the
Trust's investments, and receives and disburses all funds. IBT also assists in
preparation of shareholder reports and the electronic filing of such reports
with the SEC.

First Data Investor Services Group, P.O. Box 5123, Westborough, MA
01581-5123 is the transfer agent and dividend disbursing agent of the Trust.

LEGAL OPINIONS

It is expected that certain legal matters in connection with the Shares
offered hereby will be passed upon for the Trust by Kirkpatrick & Lockhart LLP,
and for the Underwriters by Skadden, Arps, Slate, Meagher & Flom LLP and its
affiliated entities.

ADDITIONAL INFORMATION

The Prospectus and the Statement of Additional Information do not contain
all of the information set forth in the Registration Statement that the Trust
has filed with the SEC. The complete Registration Statement may be obtained from
the SEC upon payment of the fee prescribed by its rules and regulations. The
Statement of Additional Information can be obtained without charge by calling
1-800-225-6265.

Statements contained in this Prospectus as to the contents of any contract
or other documents referred to are not necessarily complete, and, in each
instance, reference is made to the copy of such contract or other document filed
as an exhibit to the Registration Statement of which this Prospectus forms a
part, each such statement being qualified in all respects by such reference.

27
<PAGE> 30

TABLE OF CONTENTS FOR THE STATEMENT OF ADDITIONAL INFORMATION

<TABLE>
<CAPTION>
PAGE
------
<S> <C>
Additional Investment Information and Restrictions.......... B-2
Trustees and Officers....................................... B-7
Investment Advisory and Other Services...................... B-10
Determination of Net Asset Value............................ B-11
Portfolio Trading........................................... B-11
Taxes....................................................... B-13
Other Information........................................... B-15
Auditors.................................................... B-15
Financial Statements........................................ B-16
Independent Auditors' Report................................ B-18
Appendix A: Ratings of Municipal Bonds...................... B-19
Appendix B: Tax Equivalent Yield Table...................... B-24
Appendix C: Michigan and U.S. Territory Information......... B-25
</TABLE>

TRUSTEES OF THE TRUST

JESSICA M. BIBLIOWICZ
President and Chief Operating Officer of John A. Levin & Co.

DONALD R. DWIGHT
President of Dwight Partners, Inc.

JAMES B. HAWKES
Chairman, President and Chief Executive Officer of Eaton Vance Corp.

SAMUEL L. HAYES, III
Jacob H. Schiff Professor of Investment Banking Emeritus, Harvard University
Graduate School of Business Administration

NORTON H. REAMER
Chairman and Chief Executive Officer of United Asset Management Corporation

LYNN A. STOUT
Professor of Law, Georgetown University Law Center

JACK L. TREYNOR
Investment Adviser and Consultant

28
<PAGE> 31

(This page intentionally left blank)
<PAGE> 32

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1,800,000 SHARES

EATON VANCE MICHIGAN
MUNICIPAL INCOME TRUST

---------------------
---------------------

[EATON VANCE LOGO]

----------------------
PROSPECTUS
----------------------
PAINEWEBBER INCORPORATED
A.G. EDWARDS & SONS, INC.
PRUDENTIAL SECURITIES INCORPORATED
SALOMON SMITH BARNEY
FIRST OF MICHIGAN
A DIVISION OF FAHNESTOCK & CO. INC.

MCDONALD INVESTMENTS INC.
RONEY CAPITAL MARKETS
A DIVISION OF FIRST CHICAGO CAPITAL MARKETS, INC.

------------------------
JANUARY 26, 1999
UNTIL FEBRUARY 20, 1999, ALL DEALERS EFFECTING TRANSACTIONS IN THE
REGISTERED SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE
REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF
DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO
THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
CE-MIMITP
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 33

STATEMENT OF
ADDITIONAL INFORMATION
JANUARY 26, 1999

EATON VANCE MICHIGAN MUNICIPAL INCOME TRUST

24 FEDERAL STREET
BOSTON, MASSACHUSETTS 02110
(800) 225-6265

- --------------------------------------------------------------------------------

TABLE OF CONTENTS

PAGE
----

Additional Investment Information and Restrictions....................... B-2
Trustees and Officers.................................................... B-7
Investment Advisory and Other Services................................... B-10
Determination of Net Asset Value......................................... B-11
Portfolio Trading........................................................ B-11
Taxes.................................................................... B-13
Other Information........................................................ B-15
Auditors................................................................. B-15
Financial Statements..................................................... B-16
Independent Auditors' Report............................................. B-18
Appendix A: Ratings of Municipal Bonds................................... B-19
Appendix B: Tax Equivalent Yield Table................................... B-24
Appendix C: Michigan and U.S. Territory Information...................... B-25

- --------------------------------------------------------------------------------

THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR
ACCOMPANIED BY THE PROSPECTUS OF EATON VANCE MICHIGAN MUNICIPAL INCOME TRUST
(THE "TRUST") DATED JANUARY 26, 1999, 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 YOUR FINANCIAL INTERMEDIARY OR CALLING THE
TRUST AT 1-800-225-6265.
<PAGE> 34

Capitalized terms used in this Statement of Additional Information and not
otherwise defined have the meanings given them in the Trust's Prospectus.

ADDITIONAL INVESTMENT INFORMATION AND RESTRICTIONS

Municipal Obligations. Municipal obligations are issued to obtain funds
for various public and private purposes. Municipal obligations include long-term
obligations, which are often called municipal bonds, as well as tax-exempt
commercial paper, project notes and municipal notes such as tax, revenue and
bond anticipation notes of short maturity, generally less than three years.
Market rates of interest available with respect to municipal obligations may be
lower than those available with respect to taxable securities, although such
differences may be partially or wholly offset by the effects of federal income
tax on income derived from such taxable securities. While most municipal bonds
pay a fixed rate of interest semi-annually in cash, some bonds pay no periodic
cash interest but instead make a single payment at maturity representing both
principal and interest. Municipal obligations may be issued or subsequently
offered with interest coupons materially greater or less than those then
prevailing, with price adjustments reflecting such deviation.

In general, there are three categories of municipal obligations the
interest on which is exempt from federal income tax and is not a tax preference
item for purposes of the AMT: (i) certain "public purpose" obligations (whenever
issued), which include obligations issued directly by state and local
governments or their agencies to fulfill essential governmental functions; (ii)
certain obligations issued before August 8, 1986 for the benefit of
non-governmental persons or entities; and (iii) certain "private activity bonds"
issued after August 7, 1986 which include "qualified Section 501(c)(3) bonds" or
refundings of certain obligations included in the second category. Interest on
certain "private activity bonds" issued after August 7, 1986 is exempt from
regular federal income tax, but is treated as a tax preference item that could
subject the recipient to or increase the recipient's liability for the AMT. For
corporate shareholders, the Trust's distributions derived from interest on all
municipal obligations (whenever issued) is included in "adjusted current
earnings" for purposes of the AMT as applied to corporations (to the extent not
already included in alternative minimum taxable income as income attributable to
private activity bonds). In assessing the federal income tax treatment of
interest on any such obligation, the Trust will rely on an opinion of the
issuer's counsel (when available) obtained by the issuer or other reliable
authority and will not undertake any independent verification thereof.

The two principal classifications of municipal bonds are "general
obligation" and "revenue" bonds. Issuers of general obligation bonds include
states, counties, cities, towns and regional districts. The proceeds of these
obligations are used to fund a wide range of public projects including the
construction or improvement of schools, highways and roads, water and sewer
systems and a variety of other public purposes. The basic security of general
obligation bonds is the issuer's pledge of its faith, credit, and taxing power
for the payment of principal and interest. The taxes that can be levied for the
payment of debt service may be limited or unlimited as to rate and amount.

Revenue bonds are generally secured by the net revenues derived from a
particular facility or group of facilities or, in some cases, from the proceeds
of a special excise or other specific revenue source. Revenue bonds have been
issued to fund a wide variety of capital projects including: electric, gas,
water, sewer and solid waste disposal systems; highways, bridges and tunnels;
port, airport and parking facilities; transportation systems; housing
facilities, colleges and universities and hospitals. Although the principal
security behind these bonds varies widely, many provide additional security in
the form of a debt service reserve fund whose monies may be used to make
principal and interest payments on the issuer's obligations. Housing finance
authorities have a wide range of security including partially or fully insured,
rent subsidized and/or collateralized mortgages, and/or the net revenues from
housing or other public projects. In addition to a debt service reserve fund,
some authorities provide further security in the form of a state's ability
(without legal obligation) to make up deficiencies in the debt service reserve
fund. Lease rental revenue bonds issued by a state or local authority for
capital projects are normally secured by annual lease rental payments from the
state or locality to the authority sufficient to cover debt service on the
authority's obligations. Such payments are usually subject to annual
appropriations by the state or locality. Industrial development and pollution
control

B-2
<PAGE> 35

bonds, although nominally issued by municipal authorities, are in most cases
revenue bonds and are generally not secured by the taxing power of the
municipality, but are usually secured by the revenues derived by the authority
from payments of the industrial user or users. The Trust may on occasion acquire
revenue bonds which carry warrants or similar rights covering equity securities.
Such warrants or rights may be held indefinitely, but if exercised, the Trust
anticipates that it would, under normal circumstances, dispose of any equity
securities so acquired within a reasonable period of time.

The obligations of any person or entity to pay the principal of and
interest on a municipal obligation are subject to the provisions of bankruptcy,
insolvency and other laws affecting the rights and remedies of creditors, such
as the Federal Bankruptcy Act, and laws, if any, which may be enacted by
Congress or state legislatures extending the time for payment of principal or
interest, or both, or imposing other constraints upon enforcement of such
obligations. There is also the possibility that as a result of litigation or
other conditions the power or ability of any person or entity to pay when due
principal of and interest on a municipal obligation may be materially affected.
There have been recent instances of defaults and bankruptcies involving
municipal obligations which were not foreseen by the financial and investment
communities. The Trust will take whatever action it considers appropriate in the
event of anticipated financial difficulties, default or bankruptcy of either the
issuer of any municipal obligation or of the underlying source of funds for debt
service. Such action may include retaining the services of various persons or
firms (including affiliates of the Adviser) to evaluate or protect any real
estate, facilities or other assets securing any such obligation or acquired by
the Trust as a result of any such event, and the Trust may also manage (or
engage other persons to manage) or otherwise deal with any real estate,
facilities or other assets so acquired. The Trust anticipates that real estate
consulting and management services may be required with respect to properties
securing various municipal obligations in its portfolio or subsequently acquired
by the Trust. The Trust will incur additional expenditures in taking protective
action with respect to portfolio obligations in default and assets securing such
obligations. To enforce its rights in the event of a default in the payment of
interest or repayment of principal, or both, the Trust may take possession of
and manage the assets or have a receiver appointed to collect and disburse
pledged revenues securing the issuer's obligations on such securities, which may
increase the operating expenses and adversely affect the net asset value of the
Trust. Any income derived from the ownership of operation of such assets may not
be tax-exempt. In addition, the Trust's intention to qualify as a "regulated
investment company" ("RIC") under the Code may limit the extent to which the
Trust may exercise its rights by taking possession of such assets, because as a
RIC, the Trust is subject to certain limitations on its investments and on the
nature of its income.

The yields on municipal obligations are dependent on a variety of factors,
including purposes of issue and source of funds for repayment, general money
market conditions, general conditions of the municipal bond market, size of a
particular offering, maturity of the obligation and rating of the issue. The
ratings of Moody's, S&P and Fitch represent their opinions as to the quality of
the municipal obligations which they undertake to rate. It should be emphasized,
however, that ratings are based on judgment and are not absolute standards of
quality. Consequently, municipal obligations with the same maturity, coupon and
rating may have different yields while obligations of the same maturity and
coupon with different ratings may have the same yield. In addition, the market
price of municipal obligations will normally fluctuate with changes in interest
rates, and therefore the net asset value of the Trust will be affected by such
changes.

State Concentration. The Trust normally will invest 65% or more of its
total assets in municipal obligations of issuers located in Michigan, and may
invest 25% or more of its total assets in a U.S. territory (Puerto Rico, the
U.S. Virgin Islands and Guam). When the Trust does so, it will be sensitive to
factors affecting that jurisdiction, such as changes in the economy, decreases
in tax collection or the tax base, legislation which limits taxes and changes in
issuer credit ratings. Moody's currently rates Puerto Rico general obligations
Baa, while S&P rates them A.

Economic Sector Concentration. The Trust may invest 25% or more of its
total assets in municipal obligations of issuers in the same economic sector.
There could be economic, business or political developments which might affect
all municipal obligations in a particular economic sector. In particular,
investments in the industrial revenue bonds listed above might involve (without
limitation) the following risks.

B-3
<PAGE> 36

Hospital bond ratings are often based on feasibility studies which contain
projections of expenses, revenues and occupancy levels. Among the influences
affecting a hospital's gross receipts and net income available to service its
debt are demand for hospital services, the ability of the hospital to provide
the services required, management capabilities, economic developments in the
service area, efforts by insurers and government agencies to limit rates and
expenses, confidence in the hospital, service area economic developments,
competition, availability and expense of malpractice insurance, Medicaid and
Medicare funding and possible federal legislation limiting the rates of increase
of hospital charges.

Electric utilities face problems in financing large construction programs
in an inflationary period, cost increases and delay occasioned by safety and
environmental considerations (particularly with respect to nuclear facilities),
difficulty in obtaining fuel at reasonable prices and in achieving timely and
adequate rate relief from regulatory commissions, effects of energy conservation
and limitations on the capacity of the capital market to absorb utility debt.

Bonds to finance life care facilities are normally secured only by the
revenues of each facility and not by state or local government tax payments,
they are subject to a wide variety of risks. Primarily, the projects must
maintain adequate occupancy levels to be able to provide revenues sufficient to
meet debt service payments. Moreover, since a portion of housing, medical care
and other services may be financed by an initial deposit, it is important that
the facility maintain adequate financial reserves to secure estimated actuarial
liabilities. The ability of management to accurately forecast inflationary cost
pressures is an important factor in this process. The facilities may also be
affected adversely by regulatory cost restrictions applied to health care
delivery in general, particularly state regulations or changes in Medicare and
Medicaid payments or qualifications, or restrictions imposed by medical
insurance companies. They may also face competition from alternative health care
or conventional housing facilities in the private or public sector.

Municipal Leases. The Trust may invest in municipal leases and
participations therein, which arrangements frequently involve special risks.
Municipal leases are obligations in the form of a lease or installment purchase
arrangement which is issued by state or local governments to acquire equipment
and facilities. Interest income from such obligations is generally exempt from
local and state taxes in the state of issuance. "Participations" in such leases
are undivided interests in a portion of the total obligation. Participations
entitle their holders to receive a pro rata share of all payments under the
lease. The obligation of the issuer to meet its obligations under such leases is
often subject to the appropriation by the appropriate legislative body, on an
annual or other basis, of funds for the payment of the obligations. Investments
in municipal leases are thus subject to the risk that the legislative body will
not make the necessary appropriation and the issuer will not otherwise be
willing or able to meet its obligation. Certain municipal lease obligations are
illiquid.

When-Issued Securities. New issues of municipal obligations are sometimes
offered on a "when-issued" basis, that is, delivery and payment for the
securities normally take place within a specified number of days after the date
of the Trust's commitment and are subject to certain conditions such as the
issuance of satisfactory legal opinions. The Trust may also purchase securities
on a when-issued basis pursuant to refunding contracts in connection with the
refinancing of an issuer's outstanding indebtedness. Refunding contracts
generally require the issuer to sell and the Trust to buy such securities on a
settlement date that could be several months or several years in the future. The
Trust may also purchase instruments that give the Trust the option to purchase a
municipal obligation when and if issued.

The Trust will make commitments to purchase when-issued securities only
with the intention of actually acquiring the securities, but may sell such
securities before the settlement date if it is deemed advisable as a matter of
investment strategy. The payment obligation and the interest rate that will be
received on the securities are fixed at the time the Trust enters into the
purchase commitment. When the Trust commits to purchase a security on a
when-issued basis it records the transaction and reflects the value of the
security in determining its net asset value. Securities purchased on a
when-issued basis and the securities held by the Trust are subject to changes in
value based upon the perception of the creditworthiness of the issuer and
changes in the level of interest rates (i.e. appreciation when interest rates
decline and depreciation when interest rates rise). Therefore, to the extent
that the Trust remains substantially fully invested at the same time

B-4
<PAGE> 37

that it has purchased securities on a when-issued basis, there will be greater
fluctuations in the Trust's net asset value than if it set aside cash to pay for
when-issued securities.

Redemption, Demand and Put Features, and Put Options. Issuers of municipal
obligations reserve the right to call (redeem) the bond. If an issuer redeems
securities held by the Trust during a time of declining interest rates, the
Trust may not be able to reinvest the proceeds in securities providing the same
investment return as the securities redeemed. Also, some bonds may have "put" or
"demand" features that allow early redemption by the bondholder. Longer term
fixed-rate bonds may give the holder a right to request redemption at certain
times (often annually after the lapse of an intermediate term). These bonds are
more defensive than conventional long term bonds because they may protect to
some degree against a rise in interest rates.

Liquidity and Protective Put Options. The Trust may also enter into a
separate agreement with the seller of a security or some other person granting
the Trust the right to put the security to the seller thereof or the other
person at an agreed upon price. Such agreements are subject to the risk of
default by the other party, although the Trust intends to limit this type of
transaction to institutions (such as banks or securities dealers) which the
Adviser believes present minimal credit risks. The Trust would engage in this
type of transaction to facilitate portfolio liquidity or (if the seller so
agrees) to hedge against rising interest rates. There is no assurance that this
kind of put option will be available to the Trust or that selling institutions
will be willing to permit the Trust to exercise a put to hedge against rising
interest rates. The Trust does not expect to assign any value to any separate
put option which may be acquired to facilitate portfolio liquidity, inasmuch as
the value (if any) of the put will be reflected in the value assigned to the
associated security; any put acquired for hedging purposes would be valued in
good faith under methods or procedures established by the Trustees of the Trust
after consideration of all relevant factors, including its expiration date, the
price volatility of the associated security, the difference between the market
price of the associated security and the exercise price of the put, the
creditworthiness of the issuer of the put and the market prices of comparable
put options. Interest income generated by certain bonds having put or demand
features may be taxable.

Illiquid Obligations. At times, a substantial portion of the Trust's
assets may be invested in securities as to which the Trust, by itself or
together with other accounts managed by the Adviser and its affiliates, holds a
major portion or all of such securities. Under adverse market or economic
conditions or in the event of adverse changes in the financial condition of the
issuer, the Trust could find it more difficult to sell such securities when the
Adviser believes it advisable to do so or may be able to sell such securities
only at prices lower than if such securities were more widely held. Under such
circumstances, it may also be more difficult to determine the fair value of such
securities for purposes of computing the Trust's net asset value.

The secondary market for some municipal obligations issued within a state
(including issues which are privately placed with the Trust) is less liquid than
that for taxable debt obligations or other more widely traded municipal
obligations. No established resale market exists for certain of the municipal
obligations in which the Trust may invest. The market for obligations rated
below investment grade is also likely to be less liquid than the market for
higher rated obligations. As a result, the Trust may be unable to dispose of
these municipal obligations at times when it would otherwise wish to do so at
the prices at which they are valued.

Futures Contracts and Options on Futures Contracts. A change in the level
of interest rates may affect the value of the securities held by the Trust (or
of securities that the Trust expects to purchase). To hedge against changes in
rates or as a substitute for the purchase of securities, the Trust may enter
into (i) futures contracts for the purchase or sale of debt securities and (ii)
futures contracts on securities indices. All futures contracts entered into by
the Trust are traded on exchanges or boards of trade that are licensed and
regulated by the Commodity Futures Trading Commission ("CFTC") and must be
executed through a futures commission merchant or brokerage firm which is a
member of the relevant exchange. The Trust may purchase and write call and put
options on futures contracts which are traded on a United States or foreign
exchange or board of trade. The Trust will be required, in connection with
transactions in futures contracts and the writing of options on futures, to make
margin deposits, which will be held by the Trust's custodian for the benefit of
the futures commission merchant through whom the Trust engages in such futures
and options transactions.

B-5
<PAGE> 38

Some futures contracts and options thereon may become illiquid under
adverse market conditions. In addition, during periods of market volatility, a
commodity exchange may suspend or limit transactions in an exchange-traded
instrument, which may make the instrument 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 Trust from closing
out positions and limiting its losses.

The Trust will engage in futures and related options transactions for bona
fide hedging purposes or non-hedging purposes as defined in or permitted by CFTC
regulations. The Trust will determine that the price fluctuations in the futures
contracts and options on futures used for hedging purposes are substantially
related to price fluctuations in securities held by the Trust or which it
expects to purchase. The Trust will engage in transactions in futures and
related options contracts only to the extent such transactions are consistent
with the requirements of the Code for maintaining its qualification as a RIC for
federal income tax purposes.

Investment Restrictions. The following investment restrictions of the
Trust are designated as fundamental policies and as such cannot be changed
without the approval of the holders of a majority of the Trust's outstanding
voting securities, which as used in this Statement of Additional Information
means the lesser of (a) 67% of the shares of the Trust present or represented by
proxy at a meeting if the holders of more than 50% of the outstanding shares are
present or represented at the meeting or (b) more than 50% of the outstanding
shares of the Trust. As a matter of fundamental policy the Trust may not:

(1) Borrow money, except as permitted by the 1940 Act;

(2) Issue senior securities, as defined in the 1940 Act, other than
(i) preferred shares which immediately after issuance will have asset
coverage of at least 200%, (ii) indebtedness which immediately after
issuance will have asset coverage of at least 300%, or (iii) the borrowings
permitted by investment restriction (1) above;

(3) Purchase securities on margin (but the Trust may obtain such
short-term credits as may be necessary for the clearance of purchases and
sales of securities). The purchase of investment assets with the proceeds
of a permitted borrowing or securities offering will not be deemed to be
the purchase of securities on margin;

(4) Underwrite securities issued by other persons, except insofar as
it may technically be deemed to be an underwriter under the Securities Act
of 1933 in selling or disposing of a portfolio investment;

(5) Make loans to other persons, except by (a) the acquisition of loan
interests, debt securities and other obligations in which the Trust is
authorized to invest in accordance with its investment objective and
policies, (b) entering into repurchase agreements, and (c) lending its
portfolio securities;

(6) Purchase or sell real estate, although it may purchase and sell
securities which are secured by interests in real estate and securities of
issuers which invest or deal in real estate. The Trust reserves the freedom
of action to hold and to sell real estate acquired as a result of the
ownership of securities;

(7) Purchase or sell physical commodities or contracts for the
purchase or sale of physical commodities. Physical commodities do not
include futures contracts with respect to securities, securities indices or
other financial instruments; or

(8) Invest more than 25% of its total assets in securities of issuers
in any one industry.

For purposes of the Trust's investment restrictions, the determination of
the "issuer" of a municipal obligation which is not a general obligation bond
will be made by the Adviser on the basis of the characteristics of the
obligation and other relevant factors, the most significant of which is the
source of funds committed to meeting interest and principal payments of such
obligation.

For purposes of construing restriction (8), securities of the U.S.
Government, it agencies, or instrumentalities, and securities, including
Michigan municipal obligations, backed by the credit of a governmental entity
are not considered to represent industries. However, Michigan municipal
obligations backed only by the assets and

B-6
<PAGE> 39

revenues of non-governmental users may for this purpose be deemed to be issued
by such non-governmental users. Thus, the 25% limitation would apply to such
obligations. As discussed previously in this section and in the Prospectus, it
is nonetheless possible that the Trust may invest more than 25% of its total
assets in a broader economic sector of the market for Michigan municipal
obligations, such as revenue obligations of hospitals and other health care
facilities or electrical utility revenue obligations. The Trust reserves the
right to invest more than 25% of its assets in industrial development bonds and
private activity securities.

The Trust has adopted the following nonfundamental investment policy which
may be changed by the Trustees without approval of the Trust's shareholders. As
a matter of nonfundamental policy, the Trust may not make short sales of
securities or maintain a short position, unless at all times when a short
position is open it either owns an equal amount of such securities or owns
securities convertible into or exchangeable, without payment of any further
consideration, for securities of the same issue as, and equal in amount to, the
securities sold short.

Upon Board of Trustee approval the Trust may invest more than 10% of its
total assets in one or more other management investment companies (or may invest
in affiliated investment companies) to the extent permitted by the 1940 Act and
rules thereunder.

Whenever an investment policy or investment restriction set forth in the
Prospectus or this Statement of Additional Information 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 Trust's
acquisition of such security or asset. Accordingly, any later increase or
decrease resulting from a change in values, assets or other circumstances will
not compel the Trust to dispose of such security or other asset. Notwithstanding
the foregoing, the Trust must always be in compliance with the borrowing
policies set forth above.

TRUSTEES AND OFFICERS

The Trust's Trustees and officers are listed below. Except as indicated,
each individual has held the office shown or other offices in the same company
for the last five years. Unless otherwise noted, the business address of each
Trustee and officer is 24 Federal Street, Boston, Massachusetts 02110. Those
Trustees who are "interested persons" of the Trust as defined in the 1940 Act by
virtue of their affiliation with Eaton Vance, BMR, EVC or EV, are indicated by
an asterisk(*).

JESSICA M. BIBLIOWICZ (38), TRUSTEE (1)
President and Chief Operating Officer of John A. Levin & Co. (a registered
investment advisor) (since July 1997) and a Director of Baker, Fentress &
Company which owns John A. Levin & Co. (since July 1997). Formerly Executive
Vice President of Smith Barney Mutual Funds (from July 1994 to June 1997).
Trustee of various investment companies managed by Eaton Vance or BMR since
October 30, 1998.
Address: One Rockefeller Plaza, New York, New York 10020

DONALD R. DWIGHT (67), TRUSTEE (1)
President of Dwight Partners, Inc. (a corporate relations and communications
company). Trustee of various investment companies managed by Eaton Vance or BMR.
Address: Clover Mill Lane, Lyme, New Hampshire 03768

JAMES B. HAWKES (57), VICE PRESIDENT AND TRUSTEE* (2)
Chairman, President and Chief Executive Officer of Eaton Vance, BMR and their
corporate parent and trustee (EVC and EV). Director of EVC and EV. Trustee and
officer of various investment companies managed by Eaton Vance or BMR.

SAMUEL L. HAYES, III (63), TRUSTEE (2)
Jacob H. Schiff Professor of Investment Banking Emeritus, Harvard University
Graduate School of Business Administration. Trustee of Kobrick-Cendant
Investment Trust (mutual funds). Trustee of various investment companies managed
by Eaton Vance or BMR.
Address: 345 Nahatan Road, Westwood, Massachusetts 02090

B-7
<PAGE> 40

NORTON H. REAMER (63), TRUSTEE (3)
Chairman of the Board and Chief Executive Officer, United Asset Management
Corporation (a holding company owning institutional investment management
firms); Chairman, President and Director of UAM Funds (mutual funds). Trustee of
various investment companies managed by Eaton Vance or BMR.
Address: One International Place, Boston, Massachusetts 02110

LYNN A. STOUT (41), TRUSTEE (3)
Professor of Law, Georgetown University Law Center. Trustee of various
investment companies managed by Eaton Vance or BMR since October 30, 1998.
Address: 600 Michigan, NW, Washington, DC 20001.

JACK L. TREYNOR (68), TRUSTEE (3)
Investment Adviser and Consultant. Trustee of various investment companies
managed by Eaton Vance or BMR.
Address: 504 Via Almar, Palos Verdes Estates, California 90274

THOMAS J. FETTER (55), PRESIDENT
Vice President of Eaton Vance and BMR. Officer of various investment companies
managed by Eaton Vance or BMR.

TIMOTHY T. BROWSE (39), VICE PRESIDENT
Vice President of Eaton Vance and BMR. Officer of various investment companies
managed by Eaton Vance or BMR.

ROBERT B. MACINTOSH (41), VICE PRESIDENT
Vice President of Eaton Vance and BMR. Officer of various investment companies
managed by Eaton Vance or BMR.

JAMES L. O'CONNOR (53), TREASURER
Vice President of Eaton Vance and BMR. Officer of various investment companies
managed by Eaton Vance or BMR.

ALAN R. DYNNER (58), SECRETARY
Vice President and Chief Legal Officer of Eaton Vance, BMR, EVC and EV since
November 1, 1996. Previously, he was a Partner of the law firm of Kirkpatrick &
Lockhart LLP, New York and Washington, D.C., and was Executive Vice President of
Neuberger & Berman Management, Inc., a mutual fund management company. Officer
of various investment companies managed by Eaton Vance or BMR.

JANET E. SANDERS (62), ASSISTANT TREASURER AND ASSISTANT SECRETARY
Vice President of Eaton Vance and BMR. Officer of various investment companies
managed by Eaton Vance or BMR.

A. JOHN MURPHY (35), ASSISTANT SECRETARY
Vice President of Eaton Vance and BMR. Officer of various investment companies
managed by Eaton Vance or BMR.

ERIC G. WOODBURY (41), ASSISTANT SECRETARY
Vice President of Eaton Vance and BMR. Officer of various investment companies
managed by Eaton Vance or BMR.

- ---------

(1) Class I Trustee whose term expires after 1999.

(2) Class II Trustee whose term expires after 2000.

(3) Class III Trustee whose term expires after 2001.

B-8
<PAGE> 41

Messrs. Hayes (Chairman) and Reamer and Ms. Stout are members of the
Special Committee of the Board of Trustees of the Trust. The purpose of the
Special Committee is to consider, evaluate and make recommendations to the full
Board of Trustees concerning (i) all contractual arrangements with service
providers to the Trust, including investment advisory, administrative, transfer
agency, custodial and fund accounting and distribution services, and (ii) all
other matters in which Eaton Vance or its affiliates has any actual or potential
conflict of interest with the Trust or its shareholders.

The Nominating Committee of the Board of Trustees of the Trust is comprised
of four Trustees who are not "interested persons" as that term is defined under
the 1940 Act ("noninterested Trustees"). The Committee has four-year staggered
terms, with one member rotating off the Committee to be replaced by another
noninterested Trustee. The purpose of the Committee is to recommend to the Board
nominees for the position of noninterested Trustee and to assure that at least a
majority of the Board of Trustees is independent of Eaton Vance and its
affiliates.

Messrs. Treynor (Chairman) and Dwight are members of the Audit Committee of
the Board of Trustees of the Trust. The Audit Committee's functions include
making recommendations to the Trustees regarding the selection of the
independent certified public accountants, and reviewing matters relative to
trading and brokerage policies and practices, accounting and auditing practices
and procedures, accounting records, internal accounting controls, and the
functions performed by the custodian, transfer agent and dividend disbursing
agent of the Trust.

Trustees of the Trust who are not affiliated with the Adviser may elect to
defer receipt of all or a percentage of their annual fees in accordance with the
terms of a Trustees Deferred Compensation Plan (the "Trustees' Plan"). Under the
Trustees' Plan, an eligible Trustee may elect to have his deferred fees invested
by the Trust in the shares of one or more funds in the Eaton Vance Family of
Funds, and the amount paid to the Trustees under the Trustees' Plan will be
determined based upon the performance of such investments. Deferral of Trustees'
fees in accordance with the Trustees' Plan will have a negligible effect on the
Trust's assets, liabilities, and net income per share, and will not obligate the
Trust to retain the services of any Trustee or obligate the Trust to pay any
particular level of compensation to the Trustee. The Trust does not have a
retirement plan for its Trustees.

The fees and expenses of the noninterested Trustees of the Trust are paid
by the Trust. (The Trustees of the Trust who are members of the Eaton Vance
organization receive no compensation from the Trust.) During the year ended
December 31, 1998, the noninterested Trustees of the Trust earned the
compensation set forth below in their capacities as Trustees from the funds in
the Eaton Vance fund complex(1). It is estimated that the noninterested Trustees
will receive from the Trust the amounts set forth below for the fiscal year
ending November 30, 1999.

<TABLE>
<CAPTION>
ESTIMATED TOTAL COMPENSATION
COMPENSATION FROM
NAME FROM TRUST FUND COMPLEX
- ---- ------------ ------------------
<S> <C> <C>
Jessica M. Bibliowicz................... $385 N/A
Donald R. Dwight........................ 385 $156,250(2)
Samuel L. Hayes, III.................... 381 166,250(3)
Norton H. Reamer........................ 374 156,250
Lynn A. Stout........................... 385 N/A
Jack L. Treynor......................... 422 165,000

</TABLE>

- ---------------

(1) As of January 1, 1999 the Eaton Vance fund complex consisted of 143
registered investment companies or series thereof.

(2) Includes $56,250 of deferred compensation.

(3) Includes $41,563 of deferred compensation.

B-9
<PAGE> 42

INVESTMENT ADVISORY AND OTHER SERVICES

Eaton Vance, its affiliates and its predecessor companies have been
managing assets of individuals and institutions since 1924 and of investment
companies since 1931. They maintain a large staff of experienced fixed-income
and equity investment professionals to service the needs of their clients. The
fixed-income division focuses on all kinds of taxable investment-grade and
high-yield securities, tax-exempt investment-grade and high-yield securities,
and U.S. Government securities. The equity division covers stocks ranging from
blue chip to emerging growth companies. Eaton Vance and its affiliates act as
adviser to a family of mutual funds, and individual and various institutional
accounts, including corporations, hospitals, retirement plans, universities,
foundations and trusts.

The Trust will be responsible for all of its costs and expenses not
expressly stated to be payable by Eaton Vance under the Advisory Agreement or
Administration Agreement. Such costs and expenses to be borne by the Trust
include, without limitation: custody and transfer agency fees and expenses,
including those incurred for determining net asset value and keeping accounting
books and records; expenses of pricing and valuation services; the cost of share
certificates; membership dues in investment company organizations; expenses of
acquiring, holding and disposing of securities and other investments; fees and
expenses of registering under the securities laws, stock exchange listing fees
and governmental fees; rating agency fees and preferred share remarketing
expenses; expenses of reports to shareholders, proxy statements and other
expenses of shareholders' meetings; insurance premiums; printing and mailing
expenses; interest, taxes and corporate fees; legal and accounting expenses;
compensation and expenses of Trustees not affiliated with Eaton Vance; expenses
of conducting repurchase offers for the purpose of repurchasing Trust shares;
and investment advisory and administration fees. The Trust will also bear
expenses incurred in connection with any litigation in which the Trust is a
party and any legal obligation to indemnify its officers and Trustees with
respect thereto, to the extent not covered by insurance.

The Advisory Agreement with the Adviser continues in effect to February 28,
2000 and from year to year so long as such continuance is approved at least
annually (i) by the vote of a majority of the noninterested Trustees of the
Trust or of the Adviser cast in person at a meeting specifically called for the
purpose of voting on such approval and (ii) by the Board of Trustees of the
Trust or by vote of a majority of the outstanding interests of the Trust. The
Trust's Administration Agreement continues in effect from year to year so long
as such continuance is approved at least annually by the vote of a majority of
the Trust's Trustees. Each agreement may be terminated at any time without
penalty on sixty (60) days' written notice by the Trustees of the Trust or Eaton
Vance, as applicable, or by vote of the majority of the outstanding shares of
the Trust. Each agreement will terminate automatically in the event of its
assignment. Each agreement provides that, in the absence of willful misfeasance,
bad faith, gross negligence or reckless disregard of its obligations or duties
to the Trust under such agreements on the part of Eaton Vance, Eaton Vance shall
not be liable to the Trust for any loss incurred, to the extent not covered by
insurance.

BMR and Eaton Vance are business trusts organized under Massachusetts law.
Eaton Vance, Inc. ("EV") serves as trustee of BMR and Eaton Vance. BMR, Eaton
Vance and EV are wholly-owned subsidiaries of Eaton Vance Corporation ("EVC"), a
Maryland corporation and publicly-held holding company. EVC through its
subsidiaries and affiliates engages primarily in investment management,
administration and marketing activities. The Directors of EVC are James B.
Hawkes, Benjamin A. Rowland, Jr., John G.L. Cabot, John M. Nelson, Vincent M.
O'Reilly and Ralph Z. Sorenson. All of the issued and outstanding shares of
Eaton Vance are owned by EVC. All of the issued and outstanding shares of BMR
are owned by Eaton Vance. All shares of the outstanding Voting Common Stock of
EVC are deposited in a Voting Trust, the Voting Trustees of which are Messrs.
Hawkes, Rowland, and Alan R. Dynner, Thomas E. Faust, Jr., Thomas J. Fetter,
Duncan Richardson, William M. Steul and Wharton P. Whitaker. The Voting Trustees
have unrestricted voting rights for the election of Directors of EVC. All of the
outstanding voting trust receipts issued under said Voting Trust are owned by
certain of the officers of BMR and Eaton Vance who are also officers, or
officers and Directors of EVC and EV. As indicated under "Trustees and
Officers", all of the officers of the Trust (as well as Mr. Hawkes who is also a
Trustee) hold positions in the Eaton Vance organization.

B-10
<PAGE> 43

EVC and its affiliates and their officers and employees from time to time
have transactions with various banks, including the custodian of the Trust, IBT.
It is Eaton Vance's opinion that the terms and conditions of such transactions
were not and will not be influenced by existing or potential custodial or other
relationships between the Trust and such banks.

DETERMINATION OF NET ASSET VALUE

The net asset value per Share of the Trust is determined no less frequently
than weekly, generally on the last day of the week that 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 Trust's net
asset value per Share is determined by IBT, in the manner authorized by the
Trustees of the Trust. Net asset value is computed by dividing the value of the
Trust's total assets, less its liabilities by the number of shares outstanding.

Inasmuch as the market for municipal obligations is a dealer market with no
central trading location or continuous quotation system, it is not feasible to
obtain last transaction prices for most municipal obligations held by the Trust,
and such obligations, including those purchased on a when-issued basis, will
normally be valued on the basis of valuations furnished by a pricing service.
The pricing service uses information with respect to transactions in bonds,
quotations from bond dealers, market transactions in comparable securities,
various relationships between securities, and yield to maturity in determining
value. Taxable obligations for which price quotations are readily available
normally will be valued at the mean between the latest available bid and asked
prices. Open futures positions on debt securities are valued at the most recent
settlement prices, unless such price does not reflect the fair value of the
contract, in which case the positions will be valued by or at the direction of
the Trustees. Other assets are valued at fair value using methods determined in
good faith by the Trustees.

PORTFOLIO TRADING

Decisions concerning the execution of portfolio security transactions,
including the selection of the market and the executing firm, are made by the
Adviser. The Adviser is also responsible for the execution of transactions for
all other accounts managed by it. The Adviser places the portfolio security
transactions of the Trust and of all other accounts managed by it for execution
with many firms. The Adviser uses its best efforts to obtain execution of
portfolio security transactions at prices which are advantageous to the Trust
and at reasonably competitive spreads or (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 full range and quality of the executing firm's services, the
value of the brokerage and research services provided, the responsiveness of the
firm to the Adviser, the size and type of the transaction, the nature and
character of the market for the security, the confidentiality, speed and
certainty of effective execution required for the transaction, the general
execution and operational capabilities of the executing firm, the reputation,
reliability, experience and financial condition of the firm, the value and
quality of the services rendered by the firm in this and other transactions, and
the reasonableness of the spread or commission, if any. Municipal obligations,
including state obligations, purchased and sold by the Trust are generally
traded in the over-the-counter market on a net basis (i.e., without commission)
through broker-dealers and banks acting for their own account rather than as
brokers, or otherwise involve transactions directly with the issuer of such
obligations. Such firms attempt to profit from such transactions by buying at
the bid price and selling at the higher asked price of the market for such
obligations, and the difference between the bid and asked price is customarily
referred to as the spread. The Trust may also purchase municipal obligations
from underwriters, and dealers in fixed price offerings, the cost of which may
include undisclosed fees and concessions to the underwriters. On occasion it may
be necessary or appropriate to purchase or sell a security through a broker on
an agency basis, in which case the Trust will incur a brokerage commission.
Although spreads or commissions on portfolio security transactions will, in the
judgment of the Adviser, be reasonable in relation to the value of the services
provided, spreads or commissions exceeding those which another firm might charge
may be paid to firms who

B-11
<PAGE> 44

were selected to execute transactions on behalf of the Trust and the Adviser's
other clients 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 Trust 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 compensation was reasonable in
relation to the value of the brokerage and research services provided. This
determination may be made on the basis of that particular transaction or on the
basis of overall responsibilities which the Adviser and its affiliates have for
accounts over which they exercise 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; effecting securities transactions and
performing functions incidental thereto (such as clearance and settlement); and
the "Research Services" referred to in the next paragraph.

It is a common practice of the investment advisory industry and of the
Advisers of investment companies, institutions and other investors to receive
research, analytical, statistical and quotation services, data, information and
other services, products and materials which assist such advisers in the
performance of their investment responsibilities ("Research Services") from
broker-dealer firms which execute portfolio transactions for the clients of such
advisers and from third parties with which such broker-dealers have
arrangements. Consistent with this practice, the Adviser receives Research
Services from many broker-dealer firms with which the Adviser places the Trust's
transactions and from third parties with which these broker-dealers have
arrangements. These Research Services include such matters as general economic,
political, business and market information, industry and company reviews,
evaluations of securities and portfolio strategies and transactions, proxy
voting data and analysis services, technical analysis of various aspects of the
securities market, 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 Trust 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 portfolio security transactions 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.

The Trust and the Adviser may also receive Research Services from
underwriters and dealers in fixed-price offerings, which Research Services are
reviewed and evaluated by the Adviser in connection with its investment
responsibilities. The investment companies sponsored by the Adviser or BMR may
allocate trades in such offerings to acquire information relating to the
performance, fees and expenses of such companies and other mutual funds, which
information is used by the Trustees of such companies to fulfill their
responsibility to oversee the quality of the services provided by various
entities, including the Adviser, to such companies. Such companies may also pay
cash for such information.

Subject to the requirement that the Adviser shall use its best efforts to
seek and execute portfolio security transactions at advantageous prices and at
reasonably competitive spreads or commission rates, the 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 Trust or of other investment companies

B-12
<PAGE> 45

sponsored by the Adviser. This policy is not inconsistent with a rule of the
National Association of Securities Dealers, Inc. ("NASD"), which rule provides
that no firm which is a member of the NASD shall favor or disfavor the
distribution of shares of any particular investment company or group of
investment companies on the basis of brokerage commissions received or expected
by such firm from any source.

Municipal obligations considered as investments for the Trust may also be
appropriate for other investment accounts managed by the Adviser or its
affiliates. Whenever decisions are made to buy or sell securities by the Trust
and one or more of such other accounts simultaneously, the Adviser will allocate
the security transactions (including "hot" issues) in a manner which it believes
to be equitable under the circumstances. As a result of such allocations, there
may be instances where the Trust will not participate in a transaction that is
allocated among other accounts. If an aggregated order cannot be filled
completely, allocations will generally be made on a pro rata basis. An order may
not be allocated on a pro rata basis where, for example: (i) consideration is
given to portfolio managers who have been instrumental in developing or
negotiating a particular investment; (ii) consideration is given to an account
with specialized investment policies that coincide with the particulars of a
specific investment; (iii) pro rata allocation would result in odd-lot or de
minimis amounts being allocated to a portfolio or other client; or (iv) where
the Adviser reasonably determines that departure from a pro rata allocation is
advisable. While these aggregation and allocation policies could have a
detrimental effect on the price or amount of the securities available to the
Trust from time to time, it is the opinion of the Trustees of the Trust that the
benefits from the Adviser's organization outweigh any disadvantage that may
arise from exposure to simultaneous transactions.

TAXES

The Trust has elected to be, and intends to qualify for treatment each year
as, a RIC under the Code. Accordingly, the Trust intends to satisfy certain
requirements relating to sources of its income and diversification of its assets
and to distribute substantially all of its net investment income (including tax-
exempt income) and net capital gains in accordance with the timing requirements
imposed by the Code, so as to maintain its RIC status. By doing so, the Trust
will avoid any federal income tax on any income and gains it distributes to its
shareholders. If the Trust failed to qualify as a RIC for any taxable year, it
would be taxed on the full amount of its taxable income for that year without
being able to deduct the distributions it makes to its shareholders and the
shareholders would treat all distributions, including those that otherwise would
qualify as "exempt-interest dividends" (described below), as dividends (that is,
ordinary income) to the extent of the Trusts' earnings and profits.

To avoid incurring a federal excise tax obligation, the Trust must
distribute (or be deemed to have distributed) each calendar year at least an
amount equal to the sum of (i) 98% of its ordinary income (not including
tax-exempt income) for that year, (ii) 98% of its capital gain net income (which
is the excess of its realized capital gains over its realized capital losses),
generally computed on the basis of the one-year period ending on October 31 of
that year, after reduction by any available capital loss carryforwards and (iii)
100% of certain other amounts. Under current law, provided that the Trust
qualifies as a RIC, it should not be liable for any income, corporate excise or
franchise tax in the Commonwealth of Massachusetts.

The Trust's investment in zero coupon and certain other securities will
cause it to realize income prior to the receipt of cash payments with respect to
these securities. The Trust may be required to liquidate securities that it
might otherwise have continued to hold in order to generate cash to enable it to
distribute that income to Trust shareholders and thereby remain qualified for
treatment as a RIC and avoid imposition of the income and excise taxes described
above.

Investments in lower-rated or unrated securities may present special tax
issues for the Trust to the extent that the issuers of these securities default
on their obligations pertaining thereto. The federal tax law is not entirely
clear regarding the consequences of the Trust's taking certain positions in
connection with ownership of distressed securities. For example, there is
uncertainty regarding: (i) when the Trust may or must cease to accrue interest,
original issue discount, or market discount on these securities; (ii) when and
to what extent deductions may be taken for bad debts or worthless securities;
(iii) how payments received on obligations in

B-13
<PAGE> 46

default should be allocated between principal and income; and (iv) whether
exchanges of debt obligations in a workout context are taxable.

Distributions by the Trust of net tax-exempt interest income that are
properly designated as "exempt-interest dividends" may be treated by
shareholders as interest excludable from gross income under Section 103(a) of
the Code. In order for the Trust to be able to pay exempt-interest dividends, at
least 50% of the Trust's total assets at the close of each quarter of its
taxable year, must consist of obligations the interest on which is exempt from
regular federal income tax under Code Section 103(a). The portion of exempt-
interest dividends attributable to interest on certain municipal obligations is
treated as a tax preference item for purposes of the AMT. Furthmore,
exempt-interest dividends are included in determining what portion, if any, of a
person's social security and railroad retirement benefits will be includible in
gross income subject to regular federal income tax. Shareholders are required to
report exempt-interest dividends on their federal income tax returns.

If the Trust issues preferred shares, the Trust will designate
distributions made to holders of shares and to holders of those preferred shares
in accordance with each class's proportionate share of each item of Trust income
(such as tax-exempt interest, net capital gains and other taxable income).

A portion of exempt-interest dividends paid by the Trust will not be
tax-exempt to any shareholder who is a "substantial user" of the facilities
financed by tax-exempt obligations held by the Trust or "related persons" of
such substantial users.

Any recognized gain or other income attributable to market discount on
long-term tax-exempt municipal obligations (i.e., obligations with a term of
more than one year) other than, in general, at their original issue, is taxable
as ordinary income. Such an obligation is generally treated as acquired at a
market discount if purchased after its original issue at a price less than (i)
the stated principal amount payable at maturity, in the case of an obligation
that does not have original issue discount, or (ii) in the case of an obligation
that does have original issue discount, the sum of the issue price and any
original issue discount that accrued before the obligation was purchased,
subject to a de minimis exclusion.

Some of the Trust's investment practices are subject to special provisions
of the Code that, among other things, may defer the use of certain losses of the
Trust and affect the holding period of the securities held by the Trust and the
character of the gains or losses realized by the Trust. These provisions may
also require the Trust to recognize income or gain without receiving cash with
which to make distributions in the amounts necessary to satisfy the requirements
for maintaining RIC status and for avoiding income and excise taxes. The Trust
will monitor its transactions and may make certain tax elections in order to
mitigate the effect of these rules and prevent disqualification of the Trust as
a RIC.

Any loss realized upon the sale or exchange of shares held by a shareholder
for six months or less will be disallowed to the extent the shareholder has
received exempt-interest dividends with respect to those shares, and any such
loss that exceeds the disallowed amount will be treated as a long-term capital
loss to the extent of any distribution of net capital gain with respect to those
shares. In addition, a loss realized on a sale of shares will be disallowed to
the extent the shareholder acquires other shares (whether through the
reinvestment of distributions or otherwise) within the period beginning 30 days
before the sale and ending 30 days after the sale.

Taxable dividends (including capital gain dividends) payable by the Trust
to individuals and certain other non-corporate shareholders who have not
provided the Trust with their correct taxpayer identification number ("TIN") and
certain certifications required by the Internal Revenue Service ("IRS"), as well
as shareholders with respect to whom the Trust has received certain
notifications from the IRS are subject to "backup" withholding of federal income
tax at a rate of 31%. An individual's TIN is generally his or her social
security number.

The Trust is not appropriate for non-U.S. investors or as a retirement plan
investment.

The foregoing discussion does not address the special tax rules applicable
to certain classes of investors, such as non-U.S. investors, insurance companies
and financial institutions. Shareholders should consult their

B-14
<PAGE> 47

own tax advisers with respect to special tax rules that may apply in their
particular situations, as well as the state or local tax consequences of
investing in the Trust and any proposed tax law changes.

OTHER INFORMATION

The Trust is an organization of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, shareholders of such a trust may, in
certain circumstances, be held personally liable as partners for the obligations
of the trust. The Declaration of Trust contains an express disclaimer of
shareholder liability in connection with the Trust property or the acts,
obligations or affairs of the Trust. The Declaration of Trust also provides for
indemnification out of the Trust property of any shareholder held personally
liable for the claims and liabilities to which a shareholder may become subject
by reason of being or having been a shareholder. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is limited to
circumstances in which the Trust itself is unable to meet its obligations. The
Trust believes the risk of any shareholder incurring any liability for the
obligations of the Trust is remote.

The Declaration of Trust provides that the Trustees will not be liable for
errors of judgment or mistakes of fact or law; but nothing in the Declaration of
Trust protects a Trustee against any liability to the Trust or its shareholders
to which he would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence, or reckless disregard of the duties involved in the
conduct of his office. Voting rights are not cumulative, which means that the
holders of more than 50% of the shares voting for the election of Trustees can
elect 100% of the Trustees and, in such event, the holders of the remaining less
than 50% of the shares voting on the matter will not be able to elect any
Trustees.

The Declaration of Trust provides that no person shall serve as a Trustee
if shareholders holding two-thirds of the outstanding shares have removed him
from that office either by a written declaration filed with the Trust's
custodian or by votes cast at a meeting called for that purpose. The Declaration
of Trust further provides that the Trustees of the Trust shall promptly call a
meeting of the shareholders for the purpose of voting upon a question of removal
of any such Trustee or Trustees when requested in writing so to do by the record
holders of not less than 10 per centum of the outstanding shares.

The Trust's Prospectus and this Statement of Additional Information do not
contain all of the information set forth in the Registration Statement that the
Fund has filed with the SEC. The complete Registration Statement may be obtained
from the SEC upon payment of the fee prescribed by its Rules and Regulations.

AUDITORS

Deloitte & Touche LLP, 125 Summer Street, Boston, Massachusetts, are the
independent accountants for the Trust, providing audit services, tax return
preparation, and assistance and consultation with respect to the preparation of
filings with the SEC.

B-15
<PAGE> 48

EATON VANCE MICHIGAN MUNICIPAL INCOME TRUST

STATEMENT OF ASSETS AND LIABILITIES

JANUARY 21, 1999

<TABLE>
<S> <C>
ASSETS:
Cash................................................... $100,000
Deferred initial offering expenses..................... 50,000
Receivable from Investment Adviser for expenses subject
to expense reimbursement plan......................... 24,411
Receivable from Investment Adviser for expenses assumed
by Investment
Adviser.............................................. 589
--------
Total Assets...................................... $175,000
LIABILITIES:
Initial offering expenses accrued...................... $ 50,000
Accrued expenses....................................... 25,000
--------
Total liabilities................................. $ 75,000
--------
Net assets applicable to 6,666.67 common shares of
beneficial Interest issued and outstanding................ $100,000
--------
NET ASSET VALUE AND OFFERING PRICE PER SHARE................ $ 15.00
--------
</TABLE>

NOTE TO FINANCIAL STATEMENT

Eaton Vance Michigan Municipal Income Trust was formed under an Agreement
and Declaration of Trust dated December 10, 1998 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
6,666.67 shares of its beneficial interest to Eaton Vance Management, the Fund's
administrator. The initial offering expenses, including federal and state
registration and qualification fees, will be deducted from net proceeds, and
will not exceed $0.03 per share, as Eaton Vance Management or an affiliate will
pay any such expenses in excess of $0.03 per share. The initial offering
expenses reflected above assume the initial sale of 1,666,666.67 shares.

B-16
<PAGE> 49

EATON VANCE MICHIGAN MUNICIPAL INCOME TRUST

STATEMENT OF OPERATIONS

FOR THE PERIOD FROM THE DATE OF ORGANIZATION DECEMBER 10, 1998 TO
JANUARY 21, 1999

INCOME:..................................................... $ 0
--------
EXPENSES:
Organization expenses..................................... $ 25,000
--------
Total Expenses......................................... $ 25,000
--------
Less:
Preliminary reduction of expenses subject to expense
reimbursement plan..................................... $(24,411)
Assumption of expenses by Investment Adviser.............. $ (589)
--------
Net Expenses................................................ $ 0
--------
Net Income.................................................. $ 0
--------
</TABLE>

NOTE OF FINANCIAL STATEMENT

Eaton Vance Management, the Trust's administrator, has agreed to bear all
ordinary and organizational expenses of the Trust that exceed 5% of average
weekly net assets (taking into account the deduction of any preferred shares and
related expenses) for the Trust's first fiscal year. In return for this
arrangement, the Trust may reimburse Eaton Vance over the first year of
operations for organizational expenses of the Trust initially borne by the
administrator. In addition, for the period from the date of organization,
December 10, 1998, to January 21, 1999, Eaton Vance has agreed to voluntarily
assume any expenses not covered by the expense reimbursement plan.

B-17
<PAGE> 50

INDEPENDENT AUDITORS' REPORT

To the Trustees and Shareholder of
Eaton Vance Michigan Municipal Income Trust:

We have audited the accompanying statement of assets and liabilities of
Eaton Vance Michigan Municipal Income Trust (the "Fund") as of January 21, 1999
and the related statement of operations for the period from the date of
organization December 10, 1998, to January 21, 1999. These financial statements
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, such financial statements referred to above presents
fairly, in all material respects, the financial position of Eaton Vance Michigan
Municipal Income Trust as of January 21, 1999, and the results of its operations
for the stated period, in conformity with generally accepted accounting
principles.

Deloitte & Touche LLP

Boston, Massachusetts

January 22, 1999

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<PAGE> 51

APPENDIX A

DESCRIPTION OF SECURITIES RATINGS+
MOODY'S INVESTORS SERVICE, INC.

MUNICIPAL BONDS

Aaa -- Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edged." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.

Aa -- Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long term risk appear somewhat larger than the Aaa securities.

A -- Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper-medium-grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment sometime in the future.

Baa -- Bonds which are rated Baa are considered as medium-grade obligations
(i.e., they are neither highly protected nor poorly secured). Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

Ba -- Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well-assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during other good and bad times over the future. Uncertainty of
position characterizes bonds in this class.

B -- Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.

Caa -- Bonds which are rated Caa are of poor standing. Such issues may be
in default or there may be present elements of danger with respect to principal
or interest.

Ca -- Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.

C -- Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.

- --------

+ The ratings indicated herein are believed to be the most recent ratings
available at the date of this SAI for the securities listed. Ratings are
generally given to securities at the time of issuance. While the rating
agencies may from time to time revise such ratings, they undertake no
obligation to do so, and the ratings indicated do not necessarily represent
ratings which would be given to these securities on the date of the Trust's
fiscal year end.

B-19
<PAGE> 52

Absence of Rating -- Where no rating has been assigned or where a rating
has been suspended or withdrawn, it may be for reasons unrelated to the quality
of the issue.

Should no rating be assigned, the reason may be one of the following:

1. An application for rating was not received or accepted.

2. The issue or issuer belongs to a group of securities or companies
that are not rated as a matter of policy.

3. There is a lack of essential data pertaining to the issue or
issuer.

4. The issue was privately placed, in which case the rating is not
published in Moody's publications.

Suspension or withdrawal may occur if new and material circumstances arise,
the effects of which preclude satisfactory analysis; if there is no longer
available reasonable up-to-date data to permit a judgment to be formed; if a
bond is called for redemption; or for other reasons.

NOTE: Moody's applies numerical modifiers, 1, 2, and 3 in each generic
rating classification from Aa through B in its municipal bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.

MUNICIPAL SHORT-TERM OBLIGATIONS

Ratings -- Moody's ratings for state and municipal short-term obligations
will be designated Moody's Investment Grade or (MIG). Such rating recognizes the
differences between short term credit risk and long term risk. Factors effecting
the liquidity of the borrower and short term cyclical elements are critical in
short term ratings, while other factors of major importance in bond risk, long
term secular trends for example, may be less important over the short run.

A short term rating may also be assigned on an issue having a demand
feature, variable rate demand obligation (VRDO). Such ratings will be designated
as VMIG1, SG or if the demand feature is not rated, NR. A short term rating on
issues with demand features are differentiated by the use of the VMIG1 symbol to
reflect such characteristics as payment upon periodic demand rather than fixed
maturity dates and payment relying on external liquidity. Additionally,
investors should be alert to the fact that the source of payment may be limited
to the external liquidity with no or limited legal recourse to the issuer in the
event the demand is not met.

STANDARD & POOR'S RATINGS GROUP

INVESTMENT GRADE

AAA -- Debt rated AAA has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.

AA -- Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in small degree.

A -- Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.

BBB -- Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.

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<PAGE> 53

SPECULATIVE GRADE

Debt rated BB, B, CCC, CC, and C is regarded as having predominantly
speculative characteristics with respect to capacity to pay interest and repay
principal. BB indicates the least degree of speculation and C the highest. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major exposures to adverse conditions.

BB -- Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating.

B -- Debt rated B has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The B rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
BB or BB- rating.

CCC -- Debt rated CCC has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of principal. In the
event of adverse business, financial, or economic conditions, it is not likely
to have the capacity to pay interest and repay principal. The CCC rating
category is also used for debt subordinated to senior debt that is assigned an
actual or implied B or B- rating.

CC -- The rating CC is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC debt rating.

C -- The rating C is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC- debt rating. The C rating may be
used to cover a situation where a bankruptcy petition has been filed, but debt
service payments are continued.

C1 -- The Rating C1 is reserved for income bonds on which no interest is
being paid.

D -- Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The D rating also will be used upon the
filing of a bankruptcy petition if debt service payments are jeopardized.

Plus (+) or Minus (-) -- The ratings from AA to CCC may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.

p -- The letter "p" indicates that the rating is provisional. A provisional
rating assumes the successful completion of the project being financed by the
debt being rated and indicates that payment of debt service requirements is
largely or entirely dependent upon the successful and timely completion of the
project. This rating, however, while addressing credit quality subsequent to
completion of the project, makes no comment on the likelihood of, or the risk of
default upon failure of such completion. The investor should exercise his own
judgment with respect to such likelihood and risk.

L -- The letter "L" indicates that the rating pertains to the principal
amount of those bonds to the extent that the underlying deposit collateral is
insured by the Federal Deposit Insurance Corp. and interest is adequately
collateralized. In the case of certificates of deposit, the letter "L" indicates
that the deposit, combined with other deposits being held in the same right and
capacity, will be honored for principal and accrued pre-default interest up to
the federal insurance limits within 30 days after closing of the insured
institution or, in the event that the deposit is assumed by a successor insured
institution, upon maturity.

NR -- NR indicates no rating has been requested, that there is insufficient
information on which to base a rating, or that S&P does not rate a particular
type of obligation as a matter of policy.

B-21
<PAGE> 54

MUNICIPAL NOTES

S&P note ratings reflect the liquidity concerns and market access risks
unique to notes. Notes due in 3 years or less will likely receive a note rating.
Notes maturing beyond 3 years will most likely receive a long-term debt rating.
The following criteria will be used in making that assessment:

-- Amortization schedule (the larger the final maturity relative to
other maturities the more likely it will be treated as a note).

-- Sources of payment (the more dependent the issue is on the market for
its refinancing, the more likely it will be treated as a note).

Note rating symbols are as follows:

SP-1 -- Strong capacity to pay principal and interest. Those issues
determined to possess very strong characteristics will be given a plus(+)
designation.

SP-2 -- Satisfactory capacity to pay principal and interest, with
some vulnerability to adverse financial and economic changes over the term
of the notes.

SP-3 -- Speculative capacity to pay principal and interest.

FITCH IBCA

INVESTMENT GRADE BOND RATINGS

AAA -- Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest and
repay principal, which is unlikely to be affected by reasonably foreseeable
events.

AA -- Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated "AAA". Because bonds rated
in the "AAA" and "AA" categories are not significantly vulnerable to foreseeable
future developments, short-term debt of these issuers is generally rated "F-1+".

A -- Bonds considered to be investment grade and of high credit quality.
The obligors ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.

BBB -- Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is considered
to be adequate. Adverse changes in economic conditions and circumstances,
however, are more likely to have adverse impact on these bonds, and therefore,
impair timely payment. The likelihood that the ratings of these bonds will fall
below investment grade is higher than for bonds with higher ratings.

HIGH YIELD BOND RATINGS

BB -- Bonds are considered speculative. The obligor's ability to pay
interest and repay principal may be affected over time by adverse economic
changes. However, business and financial alternatives can be identified that
could assist the obligor in satisfying its debt service requirements.

B -- Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.

CCC -- Bonds have certain identifiable characteristics which, if not
remedied, may lead to default. The ability to meet obligations requires an
advantageous business and economic environment.

CC -- Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.

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<PAGE> 55

C -- Bonds are in imminent default in payment of interest or principal.

DDD, DD, and D -- Bonds are in default on interest and/or principal
payments. Such bonds are extremely speculative and should be valued on the basis
of their ultimate recovery value in liquidation or reorganization of the
obligor. "DDD" represents the highest potential for recovery on these bonds, and
"D" represents the lowest potential for recovery.

Plus (+) or Minus (-): -- The ratings from AA to C may be modified by the
addition of a plus or minus sign to indicate the relative position of a credit
within the rating category.

NR -- Indicates that Fitch does not rate the specific issue.

Conditional -- A conditional rating is premised on the successful
completion of a project or the occurrence of a specific event.

INVESTMENT GRADE SHORT-TERM RATINGS

Fitch's short-term ratings apply to debt obligations that are payable on
demand or have original maturities of generally up to three years, including
commercial paper, certificates of deposit, medium-term notes, and municipal and
investment notes.

F-1+ -- Exceptionally Strong Credit Quality. Issues assigned this rating
are regarded as having the strongest degree of assurance for timely payment.

F-1 -- Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
"F-1+".

F-2 -- Good Credit Quality. Issues carrying this rating have a
satisfactory degree of assurance for timely payment, but the margin of safety is
not as great as the "F-1+" and "F-1" categories.

F-3: -- Fair Credit Quality. Issues carrying this rating have
characteristics suggesting that the degree of assurance for timely payment is
adequate, however, near-term adverse change could cause these securities to be
rated below investment grade.

* * * * * * *

Notes -- Bonds which are unrated expose the investor to risks with respect
to capacity to pay interest or repay principal which are similar to the risks of
lower-rated speculative bonds. The Trust is dependent on the Investment
Adviser's judgment, analysis and experience in the evaluation of such bonds.

Investors should note that the assignment of a rating to a bond by a rating
service may not reflect the effect of recent developments on the issuer's
ability to make interest and principal payments.

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<PAGE> 56

APPENDIX B

TAX EQUIVALENT YIELD TABLE

The table below gives the approximate yield a taxable security must earn at
various income brackets to produce after-tax yields equivalent to those of
tax-exempt bonds yielding from 4.75% to 5.50% under the regular 1999 federal
income tax law and 1998 Michigan state and city income taxes.

COMBINED TAX EXEMPT YIELD OF:
(TAXABLE INCOME*) FEDERAL AND 4.75% 5.00% 5.25% 5.50%
- ----------------------------------------- MI STATE AND CITY --------------------------------------------
SINGLE RETURN JOINT RETURN TAX BRACKET IS EQUIVALENT TO A FULLY TAXABLE YIELD OF:
- ------------------- ------------------- ----------------- --------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Up to $ 25,750 Up to $ 43,050 19.59% 5.91% 6.22% 6.53% 6.84%
$ 25,751 - $ 62,450 $43,051 - $104,050 31.89 6.97 7.34 7.71 8.07
$ 62,451 - $130,250 $104,051 - $158,550 34.73 7.28 7.66 8.04 8.43
$130,251 - $283,150 $158,551 - $283,150 39.46 7.85 8.26 8.67 9.08
Over $283,150 Over $283,150 42.86 8.31 8.75 9.19 9.63
</TABLE>

- ---------

* Net amount subject to federal and Michigan personal income tax after
deductions and exemptions.

The above indicated federal income tax brackets do not take into account
the effect of a reduction in the deductibility of itemized deductions for
individual taxpayers with adjusted gross income in excess of $126,600. The tax
brackets also do not show the effects of phaseout of personal exemptions for
single filers with adjusted gross income in excess of $126,600 and joint filers
with adjusted gross income in excess of $189,950. The effective tax brackets and
equivalent taxable yields of those taxpayers will be higher than those indicated
above.

The combined tax brackets include a Michigan tax rate of 4.4%, Michigan
City income tax rate of 1% (which may vary by city) and assume that Michigan
state and local taxes are itemized deductions for federal income tax purposes.
Investors who do not itemize deductions on their federal income tax return will
have a higher combined bracket and higher taxable equivalent yield than those
indicated above. The applicable federal tax rates within the brackets are 15%,
28%, 31%, 36% and 39.6%, over the same ranges of income.

Yields shown are for illustration purposes only and are not meant to
represent the Trust's actual yield. No assurance can be given that the Trust
will achieve any specific tax-exempt yield. While it is expected that the Trust
will invest principally in obligations the interest from which is exempt from
the regular federal income tax and Michigan state and city income and single
business taxes, other income received by the Trust may be taxable. It should
also be noted that the interest earned on certain "private activity bonds",
while exempt from the regular federal income tax is treated as a tax preference
item which could subject the recipient to the AMT. The illustrations assume that
the AMT is not applicable and do not take into account any tax credits that may
be available.

The information set forth above is as of the date of this Statement of
Additional Information. Subsequent tax law changes could result in prospective
or retroactive changes in the tax brackets, tax rates, and tax-equivalent yields
set forth above. Investors should consult their tax adviser for additional
information.

B-24
<PAGE> 57

APPENDIX C

MICHIGAN AND U.S. TERRITORY INFORMATION

The following is a summary of certain selected information relating to the
economy and finances of the state of Michigan and the U.S. territories listed
below. It is not a discussion of any specific factors that may affect any
particular issuers of municipal securities. The information is not intended to
be comprehensive and does not include all of the economic and financial
information, such as certain information pertaining to budgets, receipts and
disbursements, about Michigan or such U.S. Territories that would ordinarily be
included in various public documents issued thereby, such as an official
statement prepared in connection with the issuance of general obligation bonds
of Michigan or such U.S. Territories. Such an official statement, together with
any updates or supplements thereto, generally may be obtained upon request to
the budget or equivalent office of Michigan or such U.S. Territories. The
information is derived from selected public documents of the type described
above and has not been independently verified by the Trust.

MICHIGAN

Under the state Constitution, the raising of taxes by the Legislature is
limited if doing so would cause the ratio of Total State Revenues (except
federal aid) to Personal Income of Michigan (as such terms are defined in the
state Constitution) to exceed certain limits. The only exceptions to this
revenue limit are a majority approval of a referendum question or a specific
emergency declared by a two-thirds vote of the Legislature. However, this limit
does not apply to taxes imposed for the payment of principal and interest on
bonds of the state, if the bonds are approved by voters and authorized by a vote
of two-thirds vote of each House of the Legislature. However, this limit does
not apply to taxes imposed for the payment of principal and interest on bonds of
the state, if the bonds are approved by voters and authorized by a vote of
two-thirds of the members of each House of the Legislature and certain school
district loans. Local units of government and local authorities are authorized
to issue bonds and other evidences of indebtedness in a variety of situations
without the approval of electors, but the ability of the obligor to levy taxes
for the payment of such obligations is subject to the foregoing limitations
unless the obligations were authorized before December 23, 1978 or approved by
the electors. The Constitution prohibits the state from reducing the proportion
of total state spending paid to all local units of government, taken as a group,
below that proportion in effect in the 1978-79 fiscal year. The state may not
mandate new or increased levels of services to be provided by local units
without making appropriations to cover any increased costs.

Under the state Constitution, the total amount of general ad valorem taxes
imposed on taxable property in any year cannot exceed certain millage
limitations specified by the Constitution, stature or charter. The Constitution
prohibits local units of government from levying any tax not authorized by law
or charter, or from increasing the rate of an existing tax above the rate
authorized by law or charter. The Constitution also contains millage reduction
provisions. Under such provisions, should the value of taxable property
(exclusive of new construction and improvements) increase at a percentage
greater than the percentage increase in the Consumer Price Index ("CPI"), the
maximum authorized tax rate would be reduced by a factor which would result in
the same maximum potential tax revenues to the local taxing unit as if the
valuation of taxable property (less new construction and improvements) had grown
only at the CPI rate instead of at the higher actual growth rate. Thus, if
taxable property values rise faster than consumer prices, the maximum authorized
tax rate would be increased at the CPI rate. Conversely, if taxable property
values rise slower than consumer prices, tax rates may be raised accordingly,
but never higher than the rate authorized on December 23, 1978, without elector
approval.

PUERTO RICO, THE U.S. VIRGIN ISLANDS AND GUAM

Puerto Rico. Puerto Rico has a diversified economy dominated by the
manufacturing and service sectors. The North American Free Trade Agreement
("NAFTA"), which became effective January 1, 1994, has led to loss of lower wage
jobs such as textiles, but economic growth in other areas, particularly the high
technology area has compensated for that loss.

B-25
<PAGE> 58

The Commonwealth of Puerto Rico differs from the states in its relationship
with the federal government. Most federal taxes, except those such as social
security taxes that are imposed by mutual consent, are not levied in Puerto
Rico. However, in conjunction with the 1993 U.S. budget plan, Section 936 of the
Code was amended and provided for two alternative limitations to the Section 936
credit. The first option limited the credit against such income to 40% of the
credit allowable under then current law, with a five-year phase-in period
starting at 60% of the allowable credit. The second option was a wage and
depreciation based credit. Additional amendments to Section 936 in 1996 imposed
caps on these credits, beginning in 1998 for the first option and beginning in
2002 for the second option. More importantly, the 1996 amendments eliminated
both options for taxable years beginning in 2006. The eventual elimination of
tax benefits to those U.S. companies with operations in Puerto Rico may lead to
slower growth in the future. There can be no assurance that this will not lead
to a weakened economy, a lower rating on Puerto Rico's debt or lower prices for
Puerto Rican bonds that may be held by the Portfolio in the long-term.

Puerto Ricans have periodically considered conversion to statehood and such
a vote is likely again in the future. The statehood proposal was again defeated
in December, 1998.

The U.S. Virgin Islands. The United States Virgin Islands (USVI) is
heavily reliant on the tourism industry, with roughly 43% of non-agricultural
employment in tourist-related trade and services. The tourism industry is
economically sensitive and would likely be adversely affected by a recession in
either the United States or Europe.

An important component of the USVI revenue base is the federal excise tax
on rum exports. Tax revenues rebated by the federal government to the USVI
provide the primary security of many outstanding USVI bonds. Since more than 90%
of the rum distilled in the USVI is distilled at one plant, any interruption in
its operations (as occurred after Hurricane Hugo in 1989) would adversely affect
these revenues. Consequently, there can be no assurance that rum exports to the
United States and the rebate of tax revenues to the USVI will continue at their
present levels. The preferential tariff treatment the USVI rum industry
currently enjoys could be reduced under NAFTA. Increased competition from
Mexican rum producers could reduce USVI rum imported to the U.S., decreasing
excise tax revenues generated. The USVI is periodically hit by hurricanes.
Several hurricanes have caused extensive damage, which has had a negative impact
on revenue collections. There is currently no rated, unenhanced Virgin Islands
debt outstanding (although there is unrated debt outstanding).

Guam. The U.S. military is a key component of Guam's economy. The federal
government directly comprises more than 10% of the employment base, with a
substantial component of the service sector to support these personnel. The
Naval Air Station, one of several U.S. military facilities on the island, has
been slated for closure by the Defense Base Closure and Realignment Committee;
however, the administration plans to use these facilities to expand the Island's
commercial airport. Guam is also heavily reliant on tourists, particularly the
Japanese. Guam's general obligation debt is rated BBB by S&P with a negative
outlook.

B-26
<PAGE> 59

EATON VANCE MICHIGAN MUNICIPAL INCOME TRUST

STATEMENT OF ADDITIONAL INFORMATION
JANUARY 26, 1999

- --------------------------------------------------------------------------------

INVESTMENT ADVISER AND ADMINISTRATOR
Eaton Vance Management
24 Federal Street
Boston, MA 02110

CUSTODIAN
Investors Bank & Trust Company
200 Clarendon Street
Boston, MA 02116

TRANSFER AGENT
First Data Investor Services Group
P.O. Box 5123
Westborough, MA 01581-5123
(800) 262-1122

INDEPENDENT ACCOUNTANTS
Deloitte & Touche LLP
125 Summer Street
Boston, MA 02110

CE-MIMITSAI