<PAGE>
EV TRADITIONAL GOVERNMENT OBLIGATIONS FUND
EATON VANCE MUNICIPAL BOND FUND L.P.
SUPPLEMENT TO PROSPECTUSES DATED MAY 1, 1994
Effective August 1, 1994, Eaton Vance Municipal Bond Fund L.P. does not
permit the exchange privilege to be used for "Market Timing" and may terminate
the exchange privilege for any shareholder account engaged in Market Timing
activity. Any shareholder account for which more than two round-trip exchanges
are made within any twelve month period will be deemed to be engaged in Market
Timing. Furthermore, a group of unrelated accounts for which exchanges are
entered contemporaneously by a financial intermediary will be considered to be
engaged in Market Timing.
THE FOLLOWING SENTENCE IS ADDED TO "HOW TO BUY SHARES OF THE FUND FOR CASH":
Fund shares may be sold at net asset value where the amount invested
represents redemption proceeds from a mutual fund unaffiliated with
Eaton Vance, if the redemption occurred no more than 60 days prior to
the purchase of Fund shares and the redeemed shares were subject to a
sales charge.
IN ADDITION, THE FOLLOWING CHANGES (1-5) APPLY TO FUND SHARES PURCHASED ON
OR AFTER MARCH 27, 1995:
1. THE SHAREHOLDER TRANSACTION EXPENSES TABLE UNDER "SHAREHOLDER AND FUND
EXPENSES" IS REPLACED BY THE FOLLOWING TABLE:
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 3.75%
Sales Charges Imposed on Reinvested Distributions None
Redemption Fees None
Fees to Exchange Shares None
Contingent Deferred Sales Charges Imposed on Redemptions None
Based on the Shareholder Transaction Expenses shown above and on the
total operating expenses shown in the relevant Prospectus, an investor would
pay expenses $10 less than the expenses for one year and three years shown
in the Example under "Shareholder and Fund Expenses".
2. FOR EV TRADITIONAL GOVERNMENT OBLIGATIONS FUND, THE $100,000 AMOUNTS IN
THE DESCRIPTIONS OF THE STATEMENT OF INTENTION AND THE RIGHT OF ACCUMULATION
UNDER "EATON VANCE SHAREHOLDER SERVICES" ARE REPLACED BY $50,000 AMOUNTS, AND
THE FIRST SENTENCE IN THE DESCRIPTION OF THE EXCHANGE PRIVILEGE UNDER "EATON
VANCE SHAREHOLDER SERVICES" IS REPLACED BY THE FOLLOWING SENTENCE:
Shares of the Fund may currently be exchanged for shares of any of the
following funds: Eaton Vance Cash Management Fund, Eaton Vance Income
Fund of Boston, Eaton Vance Municipal Bond Fund L.P., Eaton Vance Tax
Free Reserves and any fund in the Eaton Vance Traditional Group of Funds
on the basis of the net asset value per share of each fund at the time
of the exchange (plus, in the case of an exchange made within six months
of the date of purchase, an amount equal to the difference, if any,
between the sales charge previously paid on the shares being exchanged
and the sales charge payable on the shares being acquired).
<PAGE>
3. FOR EATON VANCE MUNICIPAL BOND FUND L.P., THE $100,000 AMOUNTS IN THE
DESCRIPTIONS OF THE STATEMENT OF INTENTION AND THE RIGHT OF ACCUMULATION UNDER
"SERVICES FOR HOLDERS OF SHARES" ARE REPLACED BY $50,000 AMOUNTS, AND THE FIRST
SENTENCE IN THE DESCRIPTION OF THE EXCHANGE PRIVILEGE UNDER "SERVICES FOR
HOLDERS OF SHARES" IS REPLACED BY THE FOLLOWING SENTENCE:
Shares of the Fund may currently be exchanged for shares of any of the
following funds: Eaton Vance Cash Management Fund, Eaton Vance Income
Fund of Boston, Eaton Vance Tax Free Reserves and any fund in the Eaton
Vance Traditional Group of Funds on the basis of the net asset value per
share of each fund at the time of the exchange (plus, in the case of an
exchange made within six months of the date of purchase, an amount equal
to the difference, if any, between the sales charge previously paid on
the shares being exchanged and the sales charge payable on the shares
being acquired).
4. THE SALES CHARGE TABLE UNDER "HOW TO BUY SHARES OF THE FUND FOR CASH" IS
REPLACED BY THE FOLLOWING TABLE:
The current sales charges and dealer commissions are:
<TABLE>
<CAPTION>
SALES CHARGE SALES CHARGE DEALER COMMISSION
AS PERCENTAGE OF AS PERCENTAGE OF AS PERCENTAGE OF
AMOUNT OF PURCHASE OFFERING PRICE AMOUNT INVESTED OFFERING PRICE
<S> <C> <C> <C>
Less than $50,000 3.75% 3.90% 4.00%
$50,000 but less than $100,000 2.75% 2.83% 3.00%
$100,000 but less than $250,000 2.25% 2.30% 2.50%
$250,000 but less than $500,000 1.75% 1.78% 2.00%
$500,000 but less than
$1,000,000 1.25% 1.27% 1.50%
$1,000,000 or more 0.00%<F1> 0.00%<F1> 0.25%<F2>
<FN>
<F1> Fund shares purchased before March 27, 1995, at net asset value with no
initial sales charge by virtue of the purchase having been in the amount of
$1 million or more may be subject to a contingent deferred sales charge
upon redemption.
<F2> The Principal Underwriter may pay Authorized Firms that initiate and are
responsible for purchases of $1 million or more a commission at an annual
rate of 0.25% of average daily net assets paid quarterly for one year.
</TABLE>
5. REFERENCES TO A CONTINGENT DEFERRED SALES CHARGE OR "CDSC" DO NOT APPLY
TO FUND SHARES PURCHASED ON OR AFTER MARCH 27, 1995.
March 27, 1995 T-5/1PS
<PAGE>
EATON VANCE MUNICIPAL BOND FUND L.P.
A MUTUAL FUND SEEKING TO PROVIDE CURRENT INCOME
EXEMPT FROM REGULAR FEDERAL INCOME TAX
This Prospectus is designed to provide you with information you should know
before investing. Please retain this document for future reference. Shares of
the Fund are not deposits or obligations of, or guaranteed or endorsed by, any
bank, and are not federally insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other government agency. Shares of
the Fund involve investment risks, including fluctuations in value and the
possible loss of some or all of the principal investment.
A Statement of Additional Information dated May 1, 1994, as supplemented
from time to time, for the Fund has been filed with the Securities and Exchange
Commission and is incorporated herein by reference. This Statement of Additional
Information is available without charge from the Fund's Principal Underwriter,
Eaton Vance Distributors, Inc., 24 Federal Street, Boston, MA 02110 (telephone
(800) 225-6265). The Fund's Investment Adviser is Eaton Vance Management at the
same address.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE PAGE
<S> <C> <S> <C>
Shareholder and Fund Expenses ..................... 2 The Fund's Investment Adviser is Eaton Vance ... 14
The Fund's Financial Highlights ................... 3 How the Fund Values its Shares ................. 16
The Fund's Investment Objective ................... 3 How to Buy Shares of the Fund for Cash ......... 17
How the Fund Invests Its Assets; Risks How to Acquire Fund Shares in Exchange for
Associated with High Yield Investing ............ 3 Securities ................................... 18
The Fund Has Authority to Hedge Against How to Redeem or Sell Shares ................... 19
Changes in Interest Rates ....................... 10 The Lifetime Investing Account ................. 22
Performance and Yield Information ................. 12 Services for Holders of Shares ................. 23
Limited Partnership Form .......................... 13 Allocations, Distributions and Taxes ........... 25
Reports to Holders of Shares ...................... 14 Appendix ....................................... 31
</TABLE>
- --------------------------------------------------------------------------------
PROSPECTUS DATED MAY 1, 1994
<PAGE>
SHAREHOLDER AND FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
SHAREHOLDER TRANSACTION EXPENSES
<S> <C>
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price) 4.75%
Sales Charges Imposed on Reinvested Distributions None
Redemption Fees None
Fees to Exchange Shares None
Contingent Deferred Sales Charges (on purchases over $1 million) Imposed on Redemptions 1.00%-0%
During the First Nineteen Months (as a percentage of redemption proceeds
exclusive of all reinvestments and capital appreciation in the account)<F1>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Investment Adviser Fee 0.50%
Other Expenses 0.22%
----
Total Operating Expenses 0.72%
====
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses (including initial maximum sales
charge) on a $1,000 investment, assuming (a) 5% annual return and (b)
redemption at the end of each time period: $55 $69 $86 $133
Note:
The purpose of the above table and Example is to assist investors in
understanding the various costs and expenses that investors in the Fund may
bear directly or indirectly. See "The Fund's Financial Highlights," "The
Fund's Investment Adviser is Eaton Vance" and "How to Buy Shares of the Fund."
The table and Example are based on the Fund's fiscal year ended December 31,
1993. The table and Example should not be considered a representation of past
or future expenses, and actual expenses may be greater or less than those
shown in the table and Example.
<FN>
<F1> If shares have been purchased at net asset value with no initial sales
charge by virtue of the purchase having been in the amount of $1 million or
more and are redeemed within 18 months after the end of the calendar month
in which the purchase was made, a contingent deferred sales charge of 1%
will be imposed on such redemption. See "How to Buy Shares of the Fund for
Cash", "How to Redeem or Sell Fund Shares" and "Eaton Vance Shareholder
Services".
</TABLE>
<PAGE>
THE FUND'S FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The following information should be read in conjunction with the financial
statements included in the Statement of Additional Information, all of which has
been so included in reliance upon the report of Deloitte & Touche, independent
certified public accountants, as experts in accounting and auditing.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------------------------------------------
1993<F1> 1992 1991 1990 1989 1988 1987 1986 1985 1984
------- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
beginning of year . $ 9.950 $ 9.750 $ 9.200 $ 9.250 $ 8.990 $ 8.590 $ 9.260 $ 8.420 $ 7.520 $ 7.520
-------- -------- ------- ------- ------- ------- ------- ------- ------- -------
INCOME FROM OPERATIONS:
Net investment
income ........ $ 0.614 $ 0.639 $ 0.638 $ 0.627 $ 0.632 $ 0.630 $ 0.655 $ 0.654 $ 0.678 $ 0.667
Net realized and
unrealized gain
(loss) on
investments ... 0.692 0.195 0.552 (0.017) 0.288 0.430 (0.665) 0.866 0.861 0.020
-------- -------- ------- ------- ------- ------- ------- ------- ------- -------
Total income
from
operations .. $ 1.306 $ 0.834 $ 1.190 $ 0.610 $ 0.920 $ 1.060 $ 0.000 $ 1.520 $ 1.539 $ 0.687
-------- -------- ------- ------- ------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
From net
investment
income $ (0.619) $ (0.634) $(0.638) $(0.627) $(0.660) $(0.660) $(0.660) $(0.680) $(0.639) $(0.687)
In excess of net
investment income (0.007) -- (0.002) (0.033) -- -- -- -- -- --
-------- -------- ------- ------- ------- ------- ------- ------- ------- -------
Total
distributions $ (0.626) $ (0.634) $(0.640) $(0.660) $(0.660) $(0.660) (0.660) $(0.680) $(0.639) $(0.687)
-------- -------- ------- ------- ------- ------- ------- ------- ------- -------
NET ASSET VALUE, end
of year ........... $ 10.630 $ 9.950 $ 9.750 $ 9.200 $ 9.250 $ 8.990 $ 8.590 $ 9.260 $ 8.420 $ 7.520
======== ======== ======= ======= ======= ======= ======= ======= ======= =======
TOTAL RETURN ...... 13.52% 8.91% 13.49% 6.97% 10.65% 12.83% -0.03% 18.70% 21.33% 9.74%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end
of year (000's $51,771
omitted) ...... $114,425 $103,208 $92,771 $80,907 $77,780 $63,385 $55,019 $32,026 $21,878
Ratio of expenses
to average net
assets ........ 0.72% 0.74% 0.76% 0.85% 0.92% 0.96% 0.82% 0.81% 0.88% 0.80%
Ratio of net
investment income
to average net
assets ........ 5.91% 6.50% 6.75% 6.94% 6.87% 7.20% 7.44% 7.54% 8.69% 9.54%
PORTFOLIO TURNOVER .. 86% 60% 105% 187% 188% 139% 103% 33% 48% 166%
<FN>
- -----------
<F1> Further information regarding the performance of the Fund is contained in
the Fund's annual report to shareholders which may be obtained without
charge by contacting the Fund's Principal Underwriter, Eaton Vance
Distributors, Inc.
</TABLE>
<PAGE>
THE FUND'S INVESTMENT OBJECTIVE
- ------------------------------------------------------------------------------
THE FUND'S INVESTMENT OBJECTIVE IS TO SEEK CURRENT INCOME EXEMPT FROM THE
REGULAR FEDERAL INCOME TAX.
THE INVESTMENT OBJECTIVE OF EATON VANCE MUNICIPAL BOND FUND L.P. (THE "FUND")
is to seek current income exempt from the regular Federal income tax. The Fund
is an open-end investment company which commenced its investment operations in
1977.
HOW THE FUND INVESTS ITS ASSETS;
RISKS ASSOCIATED WITH HIGH YIELD INVESTING
- ------------------------------------------------------------------------------
THE FUND NORMALLY INVESTS AT LEAST 80% OF ITS ASSETS IN MUNICIPAL OBLIGATIONS.
THE INVESTMENT OBJECTIVE OF THE FUND IS TO SEEK CURRENT INCOME EXEMPT FROM THE
REGULAR FEDERAL INCOME TAX. DURING PERIODS OF NORMAL MARKET CONDITIONS THE FUND
WILL HAVE AT LEAST 80% OF ITS NET ASSETS INVESTED IN OBLIGATIONS, INCLUDING
NOTES AND TAX-EXEMPT COMMERCIAL PAPER, ISSUED BY OR ON BEHALF OF STATES,
TERRITORIES AND POSSESSIONS OF THE UNITED STATES AND THE DISTRICT OF COLUMBIA
AND THEIR POLITICAL SUBDIVISIONS, AGENCIES AND INSTRUMENTALITIES, THE INTEREST
ON WHICH IS EXEMPT FROM THE REGULAR FEDERAL INCOME TAX ("MUNICIPAL BONDS"). The
investment objective and policy set forth in the preceding two sentences are
fundamental policies which may not be changed unless authorized by a vote of the
holders of the Fund's units of partnership interest ("Shares").
During periods of normal market conditions the Fund anticipates that its
assets will be invested primarily in (1) Municipal Bonds (other than tax-exempt
commercial paper) which are rated at the time of purchase within the three
highest grades assigned by Moody's Investors Service, Inc. ("Moody's") (Aaa, Aa,
or A, VMIG 1, VMIG 2 or VMIG 3 or, in the case of notes, MIG 1, MIG 2, or MIG 3)
or Standard & Poor's Corporation ("S&P") and Fitch Investors Service, Inc.
("Fitch") (AAA, AA or A), or which are guaranteed, backed or secured at the time
of purchase by the U.S. Government or any of its agencies or instrumentalities
or which are issued by issuers having at the time of purchase an issue of
outstanding Municipal Bonds rated within the three highest grades assigned by
Moody's or S&P or which have been discharged; or (2) tax-exempt commercial paper
which is rated at the time of purchase within the highest grade assigned by
Moody's (Prime-1) or S&P, (A-1), or which is guaranteed, backed or secured at
the time of purchase by the U.S. Government or any of its agencies or
instrumentalities or which is issued by an issuer having at the time of purchase
an issue of outstanding Municipal Bonds rated within the highest grade assigned
by either of the aforesaid rating services.
The Fund may also invest a portion of its assets in Municipal Bonds which
are either unrated or rated lower than the applicable grade referred to above,
and may hold temporary investments and other securities as described in the next
paragraph and cash. As a general proposition, the Fund does not intend to
purchase obligations which, at the time of acquisition, are rated lower than Baa
by Moody's or BBB by S&P or Fitch, although the Fund will, as indicated above,
purchase unrated obligations. Municipal obligations rated Baa by Moody's or BBB
by S&P or Fitch may have speculative characteristics, and changes in economic
conditions or other circumstances are more likely to lead to a weakened capacity
to make principal and interest payments than in the case of higher rated
obligations. The Fund may retain in its portfolio an obligation whose rating
drops below Baa or BBB after its acquisition by the Fund, if such retention is
considered desirable by the Fund's investment adviser, Eaton Vance Management
(the "Investment Adviser"). Unrated obligations are generally regarded as being
speculative and expose the investor to risks similar to those of lower rated
bonds.
The Fund from time to time may make temporary investments in obligations of
the U.S. Government, its agencies, or instrumentalities; other debt securities
rated within the three highest grades by the aforesaid rating services;
commercial paper rated in the highest grade by such rating services (Prime-1 or
A-1, respectively); certificates of deposit of domestic banks with assets of $1
billion or more; and repurchase agreements. Interest income from temporary
investments may be taxable to holders of Shares as ordinary income. See
"Allocations, Distributions and Taxes." The Fund may also acquire rights to
resell Municipal Bonds or any of the foregoing temporary investments at an
agreed upon price and at or within an agreed upon time. The Fund made
insubstantial taxable temporary investments during its last fiscal year, but
there is no assurance that it will continue to do so in the future.
The policies set forth in the preceding three paragraphs are nonfundamental
and may be changed without obtaining the approval of the holders of Shares.
Municipal Bonds are issued for a wide variety of both governmental and
private undertakings. In general, there are three categories of Municipal Bonds
the interest on which is exempt from all types of Federal income taxes
applicable to individuals: (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. A fourth
category of Municipal Bonds consisting of certain "private activity bonds"
issued after August 7, 1986 is exempt from the regular Federal income tax
applicable to individuals (and corporations), but the interest earned on such
obligations is treated as a tax preference item which could subject the
recipient to or increase his liability for the Federal alternative minimum tax.
The Fund will treat all obligations included in the foregoing four categories as
tax-exempt "Municipal Bonds" for the purpose of complying with the 80% test
described above. It should be noted that interest on all municipal obligations
(whenever issued) is included in "adjusted current earnings" for the purposes of
the alternative minimum tax applicable to corporations.
The Fund expects that it will not invest more than 25% of its total assets
in Municipal Bonds whose issuers are located in the same state or more than 25%
of its total assets in Municipal Bonds the security of which is derived from any
one of the following categories; hospitals and health facilities; turnpikes and
toll roads; ports and airports; or colleges and universities. The Fund may
invest more than 25% of its total assets in Municipal Bonds the security of
which is derived from any one or more other categories including without
limitation the following: public housing authorities; general obligations of
states and localities; lease rental obligations of state and local authorities;
obligations of state and local housing finance authorities; municipal utilities
systems; or industrial development and pollution control bonds. The policies set
forth in this paragraph are nonfundamental and may be changed without obtaining
the approval of the holders of Shares.
The Fund has adopted certain fundamental investment limitations which are
enumerated in detail in the Statement of Additional Information and which may
not be changed unless authorized by a vote of the holders of Shares. Among other
limitations, the Fund may not purchase the securities (except securities issued
or guaranteed by the U.S. Government or any of its agencies or
instrumentalities) of any issuer if as a result thereof more than 5% of its
total assets would be invested in the securities of such issuer having the same
security provisions (without regard to priority of lien); invest more than 5% of
its total assets in industrial revenue bonds where the payment of principal and
interest is the responsibility of a company (including predecessors) with less
than three years operating history unless such bonds are rated at the time of
purchase within the three highest grades assigned by a nationally recognized
rating service; or invest more than 5% of its total assets (taken at market
value) in securities with legal or contractual restrictions on resale (except
for repurchase agreements).
The Fund may invest in municipal leases and participations therein. These
are obligations in the form of a lease or installment purchase which is issued
by state and local governments to acquire equipment and facilities. 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. A trustee is usually responsible for
administering the terms of the participation and enforcing the participants'
rights in the underlying lease. Municipal leases frequently involve special
risks not normally associated with general obligation or revenue bonds. Leases
and installment purchase or conditional sale contracts (which normally provide
for title to the leased asset to pass eventually to the governmental issuer)
have evolved as a means for governmental issuers to acquire property and
equipment without meeting the constitutional and statutory requirements for the
issuance of debt. The debt-issuance limitations are deemed to be inapplicable
because of the inclusion in many leases or contracts of "non-appropriation"
clauses that provide that the governmental issuer has no obligation to make
future payments under the lease or contract unless money is appropriated for
such purpose by the appropriate legislative body on a yearly or other periodic
basis. Certain municipal lease obligations may be deemed illiquid for purposes
of the Fund's 10% limitation on investments in illiquid securities while other
municipal lease obligations owned by the Fund may be determined by the
Investment Adviser, pursuant to guidelines adopted by the Trustees, to be liquid
securities for the purpose of such limitation. In determining the liquidity of
municipal lease obligations, the Investment Adviser will consider a variety of
factors including: (1) the willingness of dealers to bid for the security; (2)
the number of dealers willing to purchase or sell the obligation and the number
of other potential buyers; (3) the frequency of trades and quotes for the
obligation; and (4) the nature of the marketplace trades. In addition, the
Investment Adviser will consider factors unique to particular lease obligations
affecting the marketability thereof. These include the general creditworthiness
of the municipality, the importance of the property covered by the lease to the
municipality, and the likelihood that the marketability of the obligation will
be maintained throughout the time the obligation is held by the Fund.
The Fund may invest in zero coupon bonds. Such bonds are debt obligations
which do not require the periodic payment of interest and are issued at a
significant discount from face value. The discount approximates the total amount
of interest the bonds will accrue and compound over the period until maturity at
a rate of interest reflecting the market rate of the security at the time of
issuance. Zero coupon bonds benefit the issuer by mitigating its need for cash
to meet debt service, but also require a higher rate of return to attract
investors who are willing to defer receipt of such cash. Such bonds experience
greater volatility in market value due to changes in interest rates than debt
obligations which provide for regular payments of interest. The Fund will accrue
income on such bonds for tax and accounting purposes, as required.
The Fund may invest in various types of derivative municipal securities
whose interest rates bear an inverse relationship to the interest rate on
another security or the value of an index ("inverse floaters"). 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 Fund when short-term interest rates rise, and
increase the interest paid to the Fund when short-term interest rates fall.
Inverse floaters have varying degrees of liquidity, and the market for these
securities is new and relatively 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 bonds when interest rates decline. Shifts in
the relationship between short-term and long-term interest rates may alter this
tendency, however. In return for this volatility, inverse floaters typically
offer the potential for yields exceeding the yields available on fixed rate
bonds with comparable credit quality 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 interest rates if exercised at an opportune time.
HIGH YIELD MUNICIPAL BONDS ENTAIL RELATIVELY GREATER INVESTMENT RISKS.
SOME MUNICIPAL BONDS OFFERING THE CURRENT INCOME SOUGHT BY THE FUND ARE IN
THE LOWEST INVESTMENT GRADE (BAA OR BBB) AND LOWER RATING CATEGORIES OR ARE
UNRATED. Such higher yielding obligations are subject to greater credit risks
than securities in higher rating categories, which risks include, without
limitation, the possibility of default by or bankruptcy of either the issuers of
such obligations or the underlying sources of funds for debt service of such
obligations. In this connection, there have been recent instances of such
defaults or bankruptcies which were not foreseen by the financial and investment
communities. The lowest investment grade and lower rated and unrated Municipal
Bonds in which the Fund will invest 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. The
value of such obligations may be more susceptible to real and perceived adverse
economic or industry conditions than is the case of higher quality bonds. The
Fund is dependent on the Investment Adviser's judgment, analysis and experience
in the evaluation of such obligations. The Fund had approximately 21.8% of its
assets invested in such obligations at December 31, 1993 (the end of its last
fiscal year), and approximately 23.8% of its assets invested in such obligations
at the date of this prospectus. See the Appendix to this prospectus on page 31
for asset composition information for the most recent fiscal year of the Fund.
In evaluating the credit quality of a particular issue, whether rated or
unrated, the Investment Adviser 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. The Investment Adviser will attempt to reduce the risks of
investing in the lowest investment grade or lower rated or unrated obligations
through active portfolio management, diversification, credit analysis and
attention to current developments and trends in the economy and the financial
markets. The Fund will also take such action as it considers appropriate in the
event of anticipated financial difficulties, default or bankruptcy of either the
issuer of any such obligation or of the underlying source of funds for debt
service. Such action may include retaining the services of various persons and
firms (including affiliates of the Investment Adviser) to evaluate or protect
any real estate, facilities or other assets securing any such obligation or
acquired by the Fund as a result of any such event. The Fund 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 Fund. The Fund will incur additional expenditures
in taking protective action with respect to portfolio obligations in default and
assets securing such obligations. The Fund may also purchase a variety of hybrid
and special types of municipal obligations. For example, some municipal bonds
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. Insured obligations held by the Fund
will be insured as to their scheduled payment of principal and interest under
either (i) an insurance policy obtained by the issuer or underwriter of the
obligation at the time of its original issuance or (ii) an insurance policy
obtained by the Fund or a third party subsequent to the obligation's original
issuance (which may not be reflected in the obligation's market value). Although
the insurance feature reduces certain financial risks, the premiums for
insurance and the higher market price paid for insured obligations may reduce
the Fund'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. Such
insurance may provide that in the event of non-payment of interest or principal
when due with respect to an insured obligation, the insurer is not obligated to
make such payment until a specified time period has lapsed (which may be 30 days
or more after it has been notified by the Fund that such non-payment has
occurred). The insurance does not guarantee the market value of the insured
obligations or the net asset value of the Fund. The Fund may also acquire other
securities issued in exchange for such obligations or issued in connection with
the debt restructuring or reorganization of the issuers, or where such
acquisition, in the judgment of the Investment Adviser, may enhance the value of
such obligations or would otherwise be consistent with the Fund's investment
policies.
High yield Municipal Bonds are frequently traded in markets where the number
of potential purchasers and sellers is limited. There is no established resale
market for certain of the municipal obligations in which the Fund invests. These
considerations may have the effect of restricting the availability of such
obligations for the Fund to purchase, may affect the choice of securities sold
to meet redemption requests and may have the effect of limiting the ability of
the Fund to sell or dispose of such securities. Because the secondary market for
high yield municipal obligations may be less liquid than for high quality
obligations, judgment may play a greater role in the valuation of certain high
yield Municipal Bonds in the Fund's portfolio at certain times. In addition,
adverse market or economic conditions could make it difficult at times for the
Fund to sell or dispose of certain high yield Municipal Bonds.
THE FUND'S NET ASSET VALUE AND YIELD WILL FLUCTUATE
THE NET ASSET VALUE OF THE FUND WILL CHANGE IN RESPONSE TO FLUCTUATIONS IN
PREVAILING INTEREST RATES AND CHANGES IN THE VALUE OF ITS PORTFOLIO SECURITIES.
When interest rates decline, the value of securities already held in the Fund's
portfolio can be expected to rise. Conversely, when interest rates rise, the
value of existing portfolio security holdings can be expected to decline.
Although the lowest investment grade and lower rated and unrated Municipal Bonds
in the Fund's portfolio may provide higher yields, they are subject to a greater
degree of market fluctuation and credit risk than high quality obligations.
Furthermore, the tax-exempt income provided by the Fund will fluctuate over
time. In addition, the Fund invests in municipal obligations structured as zero
coupon bonds and inverse floater obligations, which securities tend to be more
speculative and subject to greater fluctuations in value due to changes in
interest rates than other tax-exempt bonds.
It is expected that the Fund's portfolio will normally contain substantial
amounts of long-term Municipal Bonds with maturities of ten years or more,
because such long-term obligations generally produce higher income than
short-term obligations. Such long-term obligations are more susceptible to
market fluctuations resulting from changes in interest rates than shorter term
obligations. However, the average maturity of the Fund's portfolio may vary from
time to time depending on anticipated market conditions.
THE FUND MAY ENGAGE IN SHORT-TERM TRADING. Securities may be sold in
anticipation of a market decline (a rise in interest rates) or purchased in
anticipation of a market rise (a decline in interest rates) and later sold. In
addition, a security may be sold and another purchased at approximately the same
time to take advantage of what the Fund believes to be a temporary disparity in
the normal yield relationship between the two securities. Yield disparities may
occur for reasons not directly related to the investment quality of particular
issues or the general movement of interest rates, such as changes in the overall
demand for or supply of various types of Municipal Bonds or changes in the
investment objectives of investors. Such trading may be expected to increase the
Fund's portfolio turnover rate and the expenses incurred in connection with such
trading.
THE FUND MAY PURCHASE SECURITIES ON A "WHEN-ISSUED" BASIS, WHICH MEANS THAT
PAYMENT AND DELIVERY OCCUR ON A FUTURE SETTLEMENT DATE. The price and yield 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 Fund agreed to pay for them. The
Fund will not accrue income in respect of a when-issued security prior to its
stated delivery date. The Fund will maintain in a segregated account sufficient
assets to cover its purchase obligations so long as such obligations continue.
THE FUND MAY EARN ADDITIONAL INCOME BY LENDING PORTFOLIO SECURITIES TO CERTAIN
INSTITUTIONS.
The Fund may seek to increase its income by lending portfolio securities to
broker-dealers or other institutional borrowers. Under present regulatory
policies of the Securities and Exchange Commission, such loans are required to
be secured continuously by collateral in cash, cash equivalents or U.S.
Government securities held by the Fund's custodian and maintained on a current
basis at an amount at least equal to the market value of the securities loaned,
which will be marked to market daily. Cash equivalents include short- term
municipal obligations as well as taxable certificates of deposit, commercial
paper and other short-term money market instruments. The Fund would have the
right to call a loan and obtain the securities loaned at any time on up to five
business days' notice. During the existence of a loan, the Fund will continue to
receive the equivalent of the interest paid by the issuer on the securities
loaned and will also receive a fee, or all or a portion of the interest on
investment of the collateral, if any. However, the Fund may pay lending fees to
such borrowers. The Fund would not have the right to vote any securities having
voting rights during the existence of the loan, but would call the loan in
anticipation of an important vote to be taken among holders of the securities or
the giving or withholding of their consent on a material matter affecting the
investment. As with other extensions of credit there are risks of delay in
recovery or even loss of rights in the securities loaned if the borrower of the
securities fails financially. However, the loans will be made only to
organizations deemed by the Fund's management to be of good standing and when,
in the judgment of the Fund's management, the consideration which can be earned
from securities loans of this type justifies the attendant risk. Income realized
by the Fund from securities loans will be taxable. If the management of the Fund
decides to make securities loans, it is intended that the value of the
securities loaned would not exceed 30% of the Fund's total assets.
THE FUND HAS AUTHORITY TO HEDGE AGAINST CHANGES IN INTEREST RATES
- --------------------------------------------------------------------------------
FUTURES CONTRACTS AND OPTIONS OF FUTURES MAY BE USED TO MANAGE INTEREST RATE
RISK.
TO HEDGE AGAINST CHANGES IN INTEREST RATES, THE FUND HAS THE AUTHORITY TO
PURCHASE AND SELL VARIOUS KINDS OF FUTURES CONTRACTS, AND PURCHASE AND WRITE
CALL AND PUT OPTIONS ON ANY OF SUCH FUTURES CONTRACTS; IT MAY ALSO ENTER INTO
CLOSING PURCHASE AND SALE TRANSACTIONS WITH RESPECT TO ANY OF SUCH CONTRACTS AND
OPTIONS. The futures contracts may be based on various debt securities (such as
U.S. Government securities), securities indices and other financial instruments
and indices. The Fund would engage in futures and related options transactions
only for bona fide hedging or non-hedging purposes as defined in or permitted by
regulations of the Commodity Futures Trading Commission. The Fund will engage in
such transactions for non-hedging purposes only in order to enhance total return
by using a futures position as a lower cost substitute for a securities position
that the Fund is otherwise authorized to enter into.
The Fund may not purchase or sell futures contracts or purchase or sell
related options, except for closing purchase or sale transactions, if
immediately thereafter the sum of the amount of margin deposits on the Fund's
outstanding positions in futures and related options and the amount of premiums
paid for outstanding positions in options on futures would exceed 5% of the
market value of the Fund's net assets; provided, however, that at least 80% of
the Fund's net assets will be invested in Municipal Bonds. These transactions
involve brokerage costs, require margin deposits and, in the case of contracts
and options requiring the Fund to purchase securities, require the Fund to
segregate liquid high grade debt securities in an amount equal to the underlying
value of such contracts and options.
In addition, while transactions in futures contracts and options on futures
may reduce certain risks, such transactions themselves involve (1) liquidity
risk that contractual positions cannot be easily closed out in the event of
market changes, (2) correlation risk that changes in the value of hedging
positions may not match the market fluctuations intended to be hedged
(especially given that the only futures contracts currently available to hedge
municipal obligations are futures on various U.S. Government securities and on
municipal securities indices), (3) market risk that an incorrect prediction by
the Investment Adviser of interest rates may cause the Fund to perform less well
than if such positions had not been entered into, and (4) skills different from
those needed to select portfolio securities.
Income or gains realized on the Fund's transactions in futures and options
on futures generate taxable income. See "Allocations, Distributions and Taxes."
THE FUND MAY INVEST IN FLOATING OR VARIABLE RATE INSTRUMENTS, WHICH PROVIDE
FOR INTEREST RATE ADJUSTMENTS AT SPECIFIED INTERVALS. Rate adjustments on such
securities are usually set at the issuer's discretion, in which case the Fund
would normally have the right to resell the security to the issuer or its agent.
Alternatively, rate revisions may be determined in accordance with a prescribed
formula or other contractual procedure. The Fund may also acquire put options in
combination with the purchase of underlying securities or may separately acquire
put options that relate to securities held in the Fund's portfolio. Such put
options would give the Fund the right to require the issuer or some other person
to purchase the underlying security at an agreed upon price.
PERFORMANCE AND YIELD INFORMATION
- --------------------------------------------------------------------------------
FROM TIME TO TIME, THE FUND MAY ADVERTISE ITS YIELD AND/OR AVERAGE ANNUAL TOTAL
RETURN. The current yield for the Fund will be calculated by dividing the net
investment income per share during a recent 30 day period by the maximum
offering price per share of the Fund on the last day of the period and
annualizing the resulting figure. The Fund's average annual total return is
determined by multiplying a hypothetical initial purchase order of $1,000 by the
average annual compound rate of return (including capital appreciation/
depreciation, and dividends and distributions paid and reinvested) for the
stated period and annualizing the result. The calculation assumes that the
maximum sales charge is deducted from the initial $1,000 purchase order and that
all dividends and distributions are reinvested at net asset value on the
reinvestment dates during the period. The Fund may also publish annual and
cumulative total return figures from time to time.
The Fund may also furnish total return calculations based on investments at
various sales charge levels or at net asset value. Any performance data which is
based on the Fund's net asset value per share would be reduced if a sales charge
were taken into account.
The Fund may also publish its distribution rate and/or its effective
distribution rate. The Fund's distribution rate is computed by dividing the most
recent monthly distribution per share annualized, by the current maximum
offering price per share. The Fund's effective distribution rate is computed by
dividing the distribution rate by 12 and reinvesting the resulting amount for a
full year on a monthly basis. The effective distribution rate will be higher
than the distribution rate because of the compounding effect of the assumed
reinvestment. Investors should note that the Fund's yield is calculated using a
standardized formula the income component of which is computed from the yields
to maturity of all obligations in the Fund's portfolio based on prescribed
methods (with all purchases and sales of securities during such period included
in the income calculation on a settlement date basis), whereas the distribution
rate is based on the Fund's last monthly distribution which tends to be
relatively stable and may be more or less than the amount of net investment
income actually earned by the Fund during the month (see "Allocations,
Distributions and Taxes").
Investors should note that the investment results of the Fund will fluctuate
over time, and any presentation of the Fund's current yield or total return for
any prior period should not be considered as a representation of what an
investment may earn or what an investor's yield or total return may be in any
future period.
LIMITED PARTNERSHIP FORM
- --------------------------------------------------------------------------------
AS A LIMITED PARTNERSHIP, THE FUND OFFERS INVESTORS TAX ADVANTAGES WHICH ARE NOT
AVAILABLE IN OTHER MUNICIPAL BOND FUNDS.
THE FUND WAS FORMED AS A CALIFORNIA LIMITED PARTNERSHIP IN 1977 IN ORDER TO
PROVIDE FOR ITS PARTNERS VARIOUS TAX ADVANTAGES WHICH ARE NOT AVAILABLE TO
INVESTORS IN FUNDS ORGANIZED AS CORPORATIONS OR TRUSTS.
The Fund was organized in partnership form rather than in the form of a
corporation or business trust, because:
1. A partnership is not subject to Federal income tax, and therefore
does not have to comply with the restrictive provisions of Subchapter M of
the Internal Revenue Code of 1986 (the "Code") to avoid tax at the entity
level, as does an investment company in corporate or trust form. Under 1987
Federal tax legislation, the Fund will be treated as a partnership for
Federal tax purposes until December 31, 1997. After that date the Fund may
be taxed as a corporation for Federal tax purposes, and management will take
appropriate steps to avoid such tax, for example, by enabling the Fund to
qualify as a regulated investment company under Subchapter M of the Code.
See "Allocations, Distributions and Taxes."
2. Partnerships are not normally subject to state income taxes, and the
income of a partnership is considered to be the income of the partners both
in timing and in character.
3. The tax-exempt character of interest income which is exempt from
regular Federal income tax is retained when such income is allocated or
distributed to the holders of Shares of a partnership regardless of the
percentage of its assets that is comprised of Municipal Bonds.
4. A holder of Shares may deduct his allocable portion of Fund losses up
to his adjusted basis for his partnership interest in the Fund in computing
his Federal income tax liability without redeeming any Shares. It is
expected that such losses will not constitute "passive activity" losses
under the Code.
5. On redemption of Shares the holder may receive cash distributions
from the Fund in payment therefor without Federal income tax consequences so
long as such cash redemption proceeds do not exceed such holder's adjusted
basis of his partnership interest in the Fund.
The Fund is not required to hold annual meetings of the Partners, and does
not intend to do so. The Fund may, however, hold meetings of the Partners for
the purpose of electing new General Partners, approving a new investment
advisory contract or distribution plan and, at the request of Partners owning
10% or more of the Shares, considering the removal of any General Partner.
Partners of the Fund have the voting, approval, consent or similar rights
required under the Investment Company Act of 1940, as amended, for voting
security holders. Partners have one vote for each Share held by them. All new
General Partners are subject to election by the Partners in accordance with the
Amended and Restated Agreement of Limited Partnership of the Fund ("Partnership
Agreement").
The General Partners are divided into two classes: the Director General
Partners and the Advisor General Partner. Only individuals may act as Director
General Partners and all individual General Partners act as Director General
Partners. Except as otherwise provided under the terms of the Partnership
Agreement, the Director General Partners have complete and exclusive control
over the management, conduct and operation of the Fund's business. The Advisor
General Partner (currently Eaton Vance) as such is not permitted to participate
in the management of the Fund except when engaged as investment adviser of the
Fund.
A purchaser of Shares is subject to and is deemed to have granted and
executed a Power of Attorney in the form set forth in this prospectus and in the
Partnership Agreement. A purchaser, by the act of purchasing Shares of the Fund,
will be bound by the terms and provisions of the Partnership Agreement and Power
of Attorney even if he does not sign any of such documents. The Power of
Attorney may be used by the General Partners for various purposes, including
without limitation to amend the Partnership Agreement without the approval or
vote of the Limited Partners.
The Statement of Additional Information contains a copy of the Fund's
Partnership Agreement and a description of the rights and obligations of the
Partners under the Partnership Agreement and applicable law.
REPORTS TO HOLDERS OF SHARES
- --------------------------------------------------------------------------------
THE FUND WILL ISSUE TO THE HOLDERS OF SHARES SEMI-ANNUAL AND ANNUAL REPORTS
CONTAINING FINANCIAL STATEMENTS. Financial statements included in annual reports
are audited by the Fund's independent certified public accountants. Shortly
after the end of each year, the Fund will furnish all holders of Shares with
information which is necessary for preparing Federal and state income tax
returns.
THE FUND'S INVESTMENT ADVISER IS EATON VANCE
- --------------------------------------------------------------------------------
EATON VANCE, ACTING UNDER SUPERVISION OF THE DIRECTOR GENERAL PARTNERS, MANAGES
THE FUND'S INVESTMENTS AND AFFAIRS.
THE FUND ENGAGES EATON VANCE MANAGEMENT ("EATON VANCE") AS ITS INVESTMENT
ADVISER. EATON VANCE, ITS AFFILIATES AND ITS PREDECESSOR COMPANIES HAVE BEEN
MANAGING ASSETS OF INDIVIDUALS AND INSTITUTIONS SINCE 1924 AND MANAGING
INVESTMENT COMPANIES SINCE 1931.
Eaton Vance, acting under the general supervision of the Director General
Partners of the Fund, manages the Fund's investments and affairs. Under its
investment advisory contract with the Fund, Eaton Vance receives a monthly
advisory fee in an amount equal to the aggregate of
(a) a daily asset based fee computed by applying the annual asset rate
applicable to that portion of the total daily net assets in each Category as
indicated below, plus
(b) a daily income based fee computed by applying the daily income rate
applicable to that portion of the total daily gross income (which portion
shall bear the same relationship to the total gross income on such day as
that portion of the total daily net assets in the same Category bears to the
total net assets on such day) in each Category as indicated below:
Annual Daily
Category Daily Net Assets Asset Rate Income Rate
-------- ---------------- ---------- -----------
1 Up to $500 million ......................... 0.300% 3.00%
2 $500 million but less than $1 billion ...... 0.275% 2.75%
3 $1 billion but less than $1.5 billion ...... 0.250% 2.50%
4 $1.5 billion but less than $2 billion ...... 0.225% 2.25%
5 $2 billion but less than $3 billion ........ 0.200% 2.00%
6 $3 billion and over ........................ 0.175% 1.75%
On December 31, 1993 the Fund had net assets of $114,424,692. The Fund paid
Eaton Vance advisory fees of $547,783 (equivalent to 0.50% of the Fund's average
daily net assets) for the fiscal year ended December 31, 1993.
Eaton Vance also furnishes for the use of the Fund office space and all
necessary office facilities, equipment and personnel for servicing the
investments of the Fund. The Fund is responsible for the payment of all expenses
other than those expressly stated to be payable by Eaton Vance under the
investment advisory contract.
Municipal obligations are normally traded on a net basis through
broker-dealers and banks acting for their own account. Such firms attempt to
profit from such transactions by buying at the bid price and selling at the
higher asked price of the market, and the difference is customarily referred to
as the spread. In selecting firms which will execute Fund portfolio transactions
Eaton Vance judges their professional ability and quality of service and uses
its best efforts to obtain execution at prices which are advantageous to the
Fund and at reasonably competitive spreads. Subject to the foregoing, Eaton
Vance may consider sales of shares of the Fund or of other investment companies
sponsored by Eaton Vance as a factor in the selection of firms to execute
portfolio transactions.
Thomas J. Fetter has acted as the portfolio manager of the Fund since its
inception. He has been a Vice President of Eaton Vance since 1987 and became a
Vice President of BMR since its inception.
EATON VANCE OR ITS AFFILIATES ACT AS INVESTMENT ADVISER TO INVESTMENT COMPANIES
AND VARIOUS INDIVIDUAL AND INSTITUTIONAL CLIENTS WITH ASSETS UNDER MANAGEMENT OF
OVER $16 BILLION. Eaton Vance is a wholly-owned subsidiary of Eaton Vance Corp.,
a holding company. Eaton Vance Corp. through its subsidiaries and affiliates,
engages in investment management and marketing activities, fiduciary and banking
services, oil and gas operations, real estate investment, consulting and
management, and development of precious metals properties.
HOW THE FUND VALUES ITS SHARES
- --------------------------------------------------------------------------------
NET ASSET VALUE IS COMPUTED DAILY AT THE CLOSE OF THE EXCHANGE BY DIVIDING THE
VALUE OF THE FUND'S TOTAL ASSETS, LESS ITS LIABILITIES, BY THE NUMBER OF SHARES
OUTSTANDING
THE FUND VALUES ITS SHARES ONCE ON EACH DAY THE NEW YORK STOCK EXCHANGE (THE
"EXCHANGE") IS OPEN FOR TRADING, AS OF THE CLOSE OF REGULAR TRADING ON THE
EXCHANGE. The Fund's net asset value is determined by Investors Bank & Trust
Company ("IBT") (as agent for the Fund) as authorized by the Director General
Partners. Net asset value is computed by dividing the value of the Fund'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 in the Fund's portfolio and
such obligations, including those issued 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.
Other assets are valued at fair market value using methods determined in good
faith by the Director General Partners.
The net asset value so determined and the public offering prices based
thereon are effective for orders received by certain financial service firms
("Authorized Firms") prior to the price determination (which for this purpose
shall be deemed to have been made as of the close of regular trading on the
Exchange -- normally 4:00 p.m. New York time) and communicated by the Authorized
Firm to the Principal Underwriter prior to the close of the Principal
Underwriter's business day. See "How to Buy Shares of the Fund for Cash".
Authorized Firms include financial service firms with whom the Principal
Underwriter has agreements. It is the Authorized Firm's responsibility to
transmit orders promptly to the Principal Underwriter. Eaton Vance Corp. owns
77.3% of the outstanding stock of IBT, the Fund's custodian.
SHAREHOLDERS MAY DETERMINE THE VALUE OF THEIR INVESTMENT BY MULTIPLYING THE
NUMBER OF SHARES OWNED AS SHOWN ON THE LAST CONFIRMATION STATEMENT BY THE
CURRENT NET ASSET VALUE. SHAREHOLDERS WILL BE SENT CONFIRMATION STATEMENTS AT
LEAST QUARTERLY.
HOW TO BUY SHARES OF THE FUND FOR CASH
- --------------------------------------------------------------------------------
INVESTORS MAY PURCHASE SHARES OF THE FUND THROUGH AUTHORIZED FIRMS AT THE
EFFECTIVE PUBLIC OFFERING PRICE, which price is based on the effective net asset
value per Share plus the applicable sales charge. The Fund receives the net
asset value, while the sales charge is divided between the investor's financial
service firm and Eaton Vance Distributors, Inc. (the "Principal Underwriter" or
"EVD"), 24 Federal Street, Boston, MA 02110, a wholly-owned subsidiary of Eaton
Vance. If you don't have an Authorized Firm, Eaton Vance can refer you to one.
The sales charge may vary depending on the size of the purchase and the
number of shares of Eaton Vance funds the investor may already own, any
arrangement to purchase additional shares during a 13-month period or special
purchase programs. Complete details of how investors may purchase shares at
reduced sales charges under the Right of Accumulation, a Statement of Intention,
or various employee benefit plans are available from Authorized Firms or from
the Principal Underwriter.
The current sales charges are:
<TABLE>
<CAPTION>
Sales Charge Sales Charge Dealer Discount
as Percentage of as Percentage of as Percentage of
Amount of Investment Amount Invested Offering Price Offering Price
<C> <C> <C> <C>
Less than $100,000 .......................................... 4.99% 4.75% 4.00%
$100,000 but less than $250,000 ............................. 3.90 3.75 3.15
$250,000 but less than $500,000 ............................. 2.83 2.75 2.30
$500,000 but less than $1,000,000 ........................... 2.04 2.00 1.70
$1,000,000 or more .......................................... 0<F1> 0<F1> 0<F2>
<FN>
- ---------
<F1> No sales charge is payable at the time of purchase on investments of $1
million or more. A contingent deferred sales charge ("CDSC") of 1% will be
imposed on such investments, as described below, in the event of certain
redemption transactions within 18 months of purchase.
<F2> The Principal Underwriter may pay a commission to Authorized Firms who
initiate and are responsible for purchases of $1 million or more as
follows: 1.00% on sales up to $2 million, plus 0.80% on the next $1
million, 0.20% on the next $2 million and 0.08% on the excess over $5
million.
</TABLE>
However, the Principal Underwriter may allow, upon notice to all Authorized
Firms, discounts up to the full sales charge during the periods specified in the
notice. During periods when the discount includes the full sales charge, such
Firms may be deemed to be underwriters as that term is defined in the Securities
Act of 1933.
The Principal Underwriter may, from time to time, at its own expense,
provide additional incentives to financial service firms which employ registered
representatives who sell a minimum dollar amount of Shares and/or shares of
other funds distributed by the Principal Underwriter. In some instances, such
additional incentives may be offered only to certain financial service firms
whose representatives are expected to sell significant amounts of shares.
An initial investment in the Fund must be at least $1,000. Once an account
has been established the investor may send investments of $50 or more at any
time directly to the Fund's transfer agent as follows: The Shareholder Services
Group, Inc., BOS725, P.O. Box 1559, Boston, MA 02104. The $1,000 minimum initial
investment is waived for Bank Draft Investing accounts, which may be established
with an investment of $50 or more. See "Eaton Vance Shareholder Services" below.
Shares of the Fund may be sold at net asset value to current and retired
Directors and Trustees of Eaton Vance funds; to officers and employees and
clients of Eaton Vance and its affiliates; to registered representatives and
employees of Authorized Firms; and bank employees who refer customers to
registered representatives of Authorized Firms; and to such persons' spouses and
children under the age of 21 and their beneficial accounts. Shares may also be
issued at net asset value in connection with the merger of an investment company
with the Fund and to investors making an investment as part of a fixed fee
program whereby an entity unaffiliated with the Investment Adviser provides
multiple investment services, such as management, brokerage and custody.
The Fund may suspend the offering of Shares at any time and may refuse an
order for the purchase of Shares.
IF YOU DON'T HAVE AN AUTHORIZED FIRM, EATON VANCE CAN RECOMMEND ONE.
HOW TO ACQUIRE FUND SHARES IN EXCHANGE FOR SECURITIES
- --------------------------------------------------------------------------------
IN EXCHANGING SECURITIES FOR FUND SHARES, THE MINIMUM AMOUNT OF SECURITIES
ACCEPTABLE TO EATON VANCE IS $5,000. COMPLIANCE WITH CERTAIN OTHER CONDITIONS IS
ALSO REQUIRED TO MAKE AN EXCHANGE.
IBT, AS ESCROW AGENT, WILL RECEIVE SECURITIES ACCEPTABLE TO EATON VANCE, AS
INVESTMENT ADVISER, IN EXCHANGE FOR FUND SHARES AT THE APPLICABLE PUBLIC
OFFERING PRICE SHOWN UNDER THE HEADING "HOW TO BUY SHARES OF THE FUND FOR CASH"
IN THIS PROSPECTUS. The minimum value of securities or securities and cash
accepted for deposit is $5,000. Securities accepted will be sold by IBT as agent
for the account of their owner on the day of their receipt by IBT or as soon
thereafter as possible. The number of Fund shares to be issued in exchange for
securities will be the aggregate proceeds from the sale of such securities,
divided by the applicable public offering price per share on the day such
proceeds are received. EATON VANCE WILL ABSORB ANY TRANSACTION COSTS, SUCH AS
COMMISSIONS ON THE SALE OF THE SECURITIES.
Securities determined to be acceptable should be transferred via book entry
or physically delivered, in proper form for transfer, through an Authorized
Firm, together with a completed and signed Letter of Transmittal in approved
form (available from Authorized Firms), as follows:
In the case of book entry:
Deliver through Depository Trust Co.
Broker #2212
Investors Bank & Trust Company
For A/C Eaton Vance Municipal Bond Fund L.P.
In the case of physical delivery:
Investors Bank & Trust Company
Attention: Eaton Vance Municipal Bond Fund L.P.
Physical Securities Processing Settlement Area
89 South Street
Boston, MA 02111
Investors who are contemplating an exchange of securities for shares of the
Fund, or their representatives, are advised to contact Eaton Vance to determine
whether the securities are acceptable before forwarding such securities to IBT.
Eaton Vance reserves the right to reject any securities.
EXCHANGING SECURITIES FOR FUND SHARES MAY CREATE A TAXABLE GAIN OR LOSS. EACH
INVESTOR SHOULD CONSULT HIS TAX ADVISER WITH RESPECT TO THE PARTICULAR
FEDERAL, STATE AND LOCAL TAX CONSEQUENCES OF EXCHANGING SECURITIES FOR FUND
SHARES.
HOW TO REDEEM OR SELL SHARES
- --------------------------------------------------------------------------------
SHARES MAY BE REDEEMED BY WRITING A CHECK OR BY MAIL.
BY MAIL:
A PARTNER MAY REDEEM HIS SHARES BY DELIVERING TO THE SHAREHOLDER SERVICES GROUP,
INC., BOS725, P.O. BOX 1559, BOSTON, MASSACHUSETTS 02104, EITHER THE
CERTIFICATES, OR A STOCK POWER if no certificates have been issued, in good
order for transfer, with a separate written request for redemption.The
redemption price will be based on the net asset value next computed after such
delivery. Good order means that the certificates or stock powers must be
endorsed by the record owner(s) exactly as the Shares are registered and the
signature(s) must be guaranteed by a member of either the Securities Transfer
Association's STAMP program or the New York Stock Exchange's Medallion Signature
Program, or certain banks, savings and loan institutions, credit unions,
securities dealers, securities exchanges, clearing agencies and registered
securities associations as required by a regulation of the Securities and
Exchange Commission (the "Commission") acceptable to The Shareholder Services
Group, Inc. In addition, in some cases, good order may require the furnishing of
additional documents such as where shares are registered in the name of a
corporation, partnership or fiduciary.
Within seven days after receipt of a redemption request by The Shareholder
Services Group, Inc. in "good order", the Fund will make payment in cash for the
net asset value of the shares as of the date determined above, reduced by the
amount of any Federal income tax required to be withheld.
The right to redeem can be suspended and the payment of the redemption price
deferred when the Exchange is closed (other than for customary weekend and
holiday closings), during periods when trading on the Exchange is restricted as
determined by the Commission, or during any emergency as determined by the
Commission which makes it impracticable for the Fund to dispose of its
securities or value its assets, or during any other period permitted by order of
the Commission for the protection of investors.
To sell Shares at their net asset value through an Authorized Firm (a
repurchase), a Partner can place a repurchase order with the Firm, who may
charge a fee. Net asset value is calculated on the day the Firm places the order
with the Principal Underwriter, as the Fund's agent, if the Firm receives the
order prior to the close of regular trading on the Exchange and communicates it
to the Principal Underwriter on the same day before the Principal Underwriter
closes.
If Shares were recently purchased, the proceeds of a redemption or
repurchase will not be sent until the check (including certified or cashier's
check) received for the Shares purchased has cleared. Payment for shares
tendered for redemption or repurchase may result in a delay of more than seven
days when the purchase check has not yet cleared, but the delay (anticipated not
to exceed fifteen days, but possibly longer) will be no longer than required to
verify that the purchase check has cleared.
If shares have been purchased at net asset value with no initial sales
charge by virtue of the purchase having been in the amount of $1 million or more
and are redeemed within 18 months after the end of the calendar month in which
the purchase was made, a CDSC of 1% will be imposed on such redemption. The CDSC
will be retained by the Principal Underwriter.
The CDSC will be imposed on an amount equal to the lesser of the current
market value or the original purchase price of the shares redeemed. Accordingly,
no CDSC will be imposed on increases in account value above the initial purchase
price, including any dividends or distributions that have been reinvested in
additional shares.
In determining whether a CDSC is applicable to a redemption, the calculation
will be made in a manner that results in the lowest possible rate being charged.
Accordingly, it will be assumed that redemptions are made first from any shares
in the shareholder's account that are not subject to a CDSC.
The CDSC is waived for redemptions involving certain liquidation, merger or
acquisition transactions involving other investment companies. If a shareholder
reinvests redemption proceeds within the 30 day period and in accordance with
the conditions set forth under "Eaton Vance Shareholder Services -- Reinvestment
Privilege," the shareholder's account will be credited with the amount of any
CDSC paid on such redeemed shares.
The value of Shares redeemed or repurchased may be more or less than their
cost depending on the market value of the Fund's portfolio securities at the
time of redemption or repurchase. To the extent the cash proceeds of any
redemption or repurchase exceed the investor's adjusted basis of his partnership
interest in the Fund, he will generally realize a gain for Federal income tax
purposes. If, upon redemption or repurchase of all Shares (liquidation of the
entire partnership interest) in the account, the investor's adjusted basis of
his partnership interest exceeds the proceeds of such redemption or repurchase,
he will generally realize a loss for Federal income tax purposes.
BY WRITING A CHECK:
Partners holding Shares for which certificates have not been issued may
appoint Boston Safe Deposit and Trust Company ("Boston Safe") their agent and
may request on the Account Instruction form that Boston Safe provide them with
special forms of checks drawn on Boston Safe. These checks may be made payable
by the Partner to the order of any person in any amount of $500 or more. When a
check is presented to Boston Safe for payment, the number of full and fractional
Shares required to cover the amount of the check will be redeemed from the
Partner's account by Boston Safe as the Partner's agent. Through this procedure
the Partner will continue to be entitled to distributions paid on his Shares up
to the time the check is presented to Boston Safe for payment. If the amount of
the check is greater than the value of the Shares for which the Fund has
collected payment held in the Partner's account, the check will be returned and
the Partner may be subject to extra charges. To obviate such a return of the
check, the check should not be written for close to the full value of an
account.
The Partner will be required to execute signature cards and will be subject
to Boston Safe's rules and regulations governing such checking accounts. There
is no charge to Partners for this service. This service may be terminated or
suspended at any time by the Fund or Boston Safe.
THE LIFETIME INVESTING ACCOUNT
- --------------------------------------------------------------------------------
THE TRANSFER AGENT AUTOMATICALLY SETS UP AN ACCOUNT FOR YOU. EACH TIME A
TRANSACTION TAKES PLACE YOU WILL RECEIVE A STATEMENT SHOWING COMPLETE DETAILS OF
THE TRANSACTION AND THE ACCOUNT'S CURRENT BALANCE
AFTER AN INVESTOR MAKES AN INITIAL PURCHASE OF SHARES, THE FUND'S TRANSFER
AGENT, THE SHAREHOLDER SERVICES GROUP, INC., WILL SET UP A LIFETIME INVESTING
ACCOUNT FOR THE INVESTOR ON THE FUND'S RECORDS. This account is a complete
record of all transactions between the investor and the Fund which at all times
shows the balance of Shares owned. The Fund will not issue share certificates
except upon request.
Each time a transaction takes place in an investor's account, the investor
will receive a statement showing complete details of the transaction and the
current balance in the account. (Under certain investment plans, statements may
be sent only quarterly). The Lifetime Investing Account also permits an investor
to make additional investments by sending a check for $50 or more to The
Shareholder Services Group, Inc. Inquiries regarding an investor's account
should identify the investor's name and account number and be addressed in
writing to The Shareholder Services Group, Inc., BOS725, P.O. Box 1559, Boston,
MA 02104.
Any questions concerning a shareholder's account or services available may
also be directed by telephone to Eaton Vance Shareholder Services at 800-225-
6265, extension 2.
A beneficial owner of shares who holds his shares in a "street name" account
at an investment firm is reminded that all recordkeeping, transaction processing
and payments of distributions to his account will be done by the firm holding
the shares, and not by the Fund or its transfer agent. Year end forms required
for tax purposes also may be provided by that investment firm. The Fund will
have no record of transactions for a beneficial owner of shares while shares
held for him are in a "street name" account. Requests for any such information
regarding the shares or the account should be directed to that investment firm.
Transactions in a "street name" account will be reflected on the records of
the Fund only upon the instructions of the investment firm which is the record
owner of the shares. A beneficial owner of shares in a "street name" account
should contact his investment firm representative if he wants to purchase or
redeem shares or make other changes in his account. A transfer of a "street
name" account at one investment firm to a "street name" account at another firm
may require approval by the transferee firm. There are no fees charged by the
Fund for an account transfer, but transfer fees may be charged by the investment
firms.
Before establishing a "street name" account with an investment firm, or
transferring the account to another investment firm, an investor wishing to
reinvest distributions should determine whether the firm which will hold the
shares allows reinvestment of distributions in "street name" accounts.
UNDER A LIFETIME INVESTING ACCOUNT A SHAREHOLDER CAN MAKE ADDITIONAL
INVESTMENTS BY SENDING A CHECK FOR $50 OR MORE.
SERVICES FOR HOLDERS OF SHARES
- --------------------------------------------------------------------------------
FULL INFORMATION ON EACH OF THE SERVICES IS AVAILABLE FROM EATON VANCE
DISTRIBUTORS.
THE FOLLOWING SERVICES ARE VOLUNTARY, UNLESS OTHERWISE INDICATED, INVOLVE NO
EXTRA CHARGE, AND MAY BE CHANGED OR DISCONTINUED WITHOUT PENALTY AT ANY TIME.
Full information on each of the services described below and an application,
where required, is available from Authorized Firms or from the Principal
Underwriter. The cost of administering such services for the benefit of
shareholders who participate in them is borne by the Fund as an expense to all
shareholders.
INVEST-BY-MAIL -- FOR PERIODIC SHARE ACCUMULATION: Once the $1,000 minimum
investment has been made, checks of $50 or more payable to the order of the Fund
may be mailed directly to The Shareholder Services Group, Inc., BOS725, P.O. Box
1559, Boston, MA 02104 at any time -- whether or not distributions are
reinvested. The name of the Partner and his account number should accompany each
investment.
BANK DRAFT INVESTING -- FOR REGULAR SHARE ACCUMULATION: Cash investments of $50
or more made through the Partner's checking account via bank draft each month or
quarter. The $1,000 minimum initial investment is waived for Bank Draft
Investing accounts.
STATEMENT OF INTENTION: You are eligible for reduced sales charges on purchases
of $100,000 or more made over a 13-month period.
RIGHT OF ACCUMULATION: You can qualify for reduced sales charges when the
current market value of holdings (shares at current offering price), plus new
purchases, reach $100,000 or more. Shares of the Eaton Vance funds mentioned
below under "Exchange Privilege" may be combined under the Statement of
Intention and Right of Accumulation.
SERVICE FOR WITHDRAWAL: You can draw on your shareholdings systematically with
monthly or quarterly checks in the amount you specify. A minimum deposit of
$5,000 in Shares is required.
EXCHANGE PRIVILEGE: You may currently exchange Fund shares for shares of any of
the following funds at their respective net asset value per share: Eaton Vance
Cash Management Fund, Eaton Vance Growth Fund, Eaton Vance Income Fund of
Boston, Eaton Vance Special Equities Fund, Eaton Vance Stock Fund, Eaton Vance
Tax Free Reserves and any fund in the Eaton Vance Traditional Group of Funds.
Shares of certain other open-end funds for which Eaton Vance acts as adviser may
be similarly exchanged for Fund shares at their respective net asset values per
share, but subject to any restrictions or qualifications set forth in the
current prospectus of any such fund. The prospectus for each fund describes its
investment objectives and policies, and shareholders should obtain a prospectus
and consider these objectives and policies carefully before requesting an
exchange. An exchange must involve shares with a net asset value of $1,000 or
more. The exchange privilege may be changed or discontinued without penalty.
Shareholders will be given sixty (60) days notice prior to any termination or
material amendment of the exchange privilege. These offers are available only in
states where shares of the fund being acquired may be legally sold.
Shares of the Fund which are subject to a CDSC may be exchanged into any of
the above funds without incurring the CDSC. The shares acquired in an exchange
may be subject to a CDSC upon redemption. For purposes of computing the CDSC
payable upon redemption of shares acquired in an exchange, the holding period of
the original shares is added to the holding period of the shares acquired in the
exchange.
The Shareholder Services Group, Inc. makes exchanges at the next
determination of net asset value after receiving an exchange request in good
order (see "How to Redeem or Sell Shares"), and share certificates, if any. The
Shareholder Services Group, Inc. will require additional documentation if shares
are registered in the name of a corporation, partnership or fiduciary. Consult
The Shareholder Services Group, Inc. for additional information concerning the
exchange privilege. Applications and prospectuses of the other funds are
available from your financial service firm or from the Principal Underwriter.
Telephone exchanges are also accepted if the exchange involves shares on
deposit with The Shareholder Services Group, Inc. and the investor has not
disclaimed in writing the use of the privilege. To effect such exchanges, call
The Shareholder Services Group, Inc. at 800-262-1122 or, within Massachusetts,
617-573-9403, Monday through Friday, 9:00 a.m. to 4:00 p.m. (Eastern Standard
Time). All such telephone exchanges must be registered in the same name(s) and
with the same address as are registered with the fund from which the exchange is
being made. Neither the Fund, the Principal Underwriter nor The Shareholder
Services Group, Inc. will be responsible for the authenticity of exchange
instructions received by telephone provided that reasonable procedures to
confirm that instructions communicated are genuine have been followed. Telephone
instructions will be tape recorded. In times of drastic economic or market
changes, a telephone exchange may be difficult to implement.
An exchange may create a taxable gain or loss. The Fund or the Principal
Underwriter may alter or terminate the exchange privilege at any time without
notice.
REINVESTMENT PRIVILEGE: A Partner who has had his Shares repurchased or
redeemed may reinvest any portion or all of his repurchase or redemption
proceeds (plus that amount necessary to acquire a fractional Share to round off
his purchase to the nearest full Share) in Shares of the Fund, or, provided that
the shares repurchased or redeemed have been held for at least 30 days, in
shares of any of the other funds offered by the Principal Underwriter with an
initial sales charge at net asset value, provided that the reinvestment is
effected within 30 days after such repurchase or redemption. Shares are sold to
a reinvesting Partner at the net asset value next determined following timely
receipt of a written purchase order by the Principal Underwriter or by the fund
whose shares are to be purchased (or by such fund's transfer agent). A
reinvesting Partner may realize a gain or loss for Federal tax purposes as a
result of such repurchase or redemption, but to the extent that any Shares are
sold at a loss and the proceeds are reinvested in Shares of the Fund, some or
all of the loss may not be allowed as a deduction depending among other things,
upon the relationship between the number of Shares sold and the number of Shares
purchased by the reinvesting Partner. The privilege is also available to holders
of shares of the other funds offered with an initial sales charge by the
Principal Underwriter who wish to reinvest proceeds in Shares of the Fund. If a
Partner reinvests redemption proceeds within the 30 day period the Partner's
account will be credited with the amount of any CDSC paid on such redeemed
shares. A reinvesting Partner may realize a gain or loss for Federal tax
purposes as a result of such repurchase or redemption.
ALLOCATIONS, DISTRIBUTIONS AND TAXES
- --------------------------------------------------------------------------------
INCOME IS DISTRIBUTED MONTHLY.
ALLOCATIONS AND DISTRIBUTIONS
The Fund intends to make monthly distributions substantially equivalent to its
net investment income to the holders of Shares, pro rata on the record date for
each such distribution. Such distributions will be paid, unless otherwise
directed, in additional Shares. Normally, net realized short-term and long-term
capital gains, if any, will not be distributed. Undistributed income and gains
(as well as losses), whether realized or not, will be reflected in the Fund's
net asset value per Share. Because shareholders are Limited Partners of the
Fund, each shareholder will be allocated for tax purposes a proportionate share
(computed on a weighted monthly average basis) of each item of income, gain,
loss, deduction or credit realized by the Fund. Allocations are made in a manner
intended to comport with each holder's respective interest, as a Limited
Partner, in the Fund under the applicable U.S. Treasury regulations, although
there can be no assurance that the allocations made by the Fund will be
respected by the Internal Revenue Service and that additional income or gains
will not be reallocated to any particular shareholder. The Fund's method of
allocation may result in allocation of gains and losses to shareholders for tax
purposes which do not necessarily reflect actual gains or losses realized by the
Fund during such shareholders' period of investment in the Fund. For example,
discrepancies may be caused by the fact that gains or losses allocable to
particular shareholders may reflect appreciation or depreciation in the assets
of the Fund which occurred prior to such shareholders' purchase of their Shares
of the Fund.
TAXES
The Fund has received an opinion of counsel and rulings from the Internal
Revenue Service to the effect, among other things, that the Fund will be
classified as a partnership for Federal income tax purposes and that interest
income exempt from Federal income tax when received by the Fund will retain such
tax exempt status when allocated to Partners of the Fund. Such rulings are
conditioned on maintenance by the General Partners in the aggregate of a 1%
interest in the Fund at all times. As a partnership, the Fund is not an entity
subject to Federal income tax. This Federal income tax treatment will continue
to apply through December 31, 1997 at which time, in accordance with 1987
Federal tax legislation, the Fund will be taxed as a corporation. At that time,
the Director General Partners will take appropriate steps to avoid such tax, for
example by electing to have the Fund taxed under Subchapter M of the Code which,
upon satisfaction of certain conditions, eliminates tax at the corporate level
and permits qualifying corporations to pay dividends exempt from Federal income
taxation.
Interest earned by the Fund on Municipal Bonds is not taxable to the holders
of Shares for regular Federal income tax purposes. Interest income received by
the Fund from certain temporary investments (such as certificates of deposit,
commercial paper and obligations of the United States Government, its agencies
and instrumentalities) and net short-term capital gains realized by the Fund, if
any, will be taxable to holders of Shares as ordinary income and short-term
capital gains, respectively, and will not qualify for the 70% deduction for
dividends received by corporate Partners. Net long-term capital gains realized
by the Fund, if any, will be taxable to holders of Shares as long-term capital
gains regardless of the length of time an investor has held such Shares and will
also not qualify for the dividends received deduction for corporate Partners. An
allocable portion of net capital losses realized by the Fund may be deducted by
a holder of Shares to the extent that such losses do not exceed the holder's
adjusted basis for his shares. The Fund's activities involving options and
futures contracts will generate taxable gains or losses, and the Fund's
investment in stripped Municipal Bonds or coupons may generate some discount
that will be taxable as ordinary income. Securities lending by the Fund may also
produce taxable income. The Fund will report annually to the holders of Shares
their proportion of Fund gains realized by the Fund, if any, interest income
(including interest exempt from regular Federal income tax and the interest
exempt from the Federal alternative minimum tax), gains, losses, deductions and
credits.
The holder's adjusted basis for all Fund Shares in his account (his
partnership interest in the Fund) will be the aggregate prices paid therefor,
increased by the amounts of such holder's distributive share of items of income
(including interest income exempt from Federal income tax) and realized net gain
of the Fund, and reduced, but not below zero, by (i) the amounts of such
holder's distributive share of items of Fund loss, and (ii) the amount of any
cash distributions (including distributions of interest income exempt from
Federal income tax and cash distributions on redemption or repurchase of Shares)
received by such holder. Cash distributions in excess of a holder's adjusted
basis in his Shares immediately prior thereto generally will result in the
recognition of gain to such holder in the amount of such excess. For Federal
income tax consequences on a redemption or repurchase of Shares, see "How to
Redeem or Sell Shares."
A Partner's distributive share of tax-exempt interest is included as income
for purposes of determining the taxability of social security and railroad
retirement benefits.
Interest on indebtedness incurred by Partners to purchase or carry Shares of
the Fund will not be deductible for Federal income tax purposes. Further,
entities or persons who are "substantial users" (or persons related to
"substantial users") of facilities financed by industrial revenue bonds should
consult their tax advisers before purchasing Shares of the Fund.
Each holder of Shares who is an individual (or a trust or estate) is
required to take into account separately on his Federal income tax return his
pro rata share of any items of deduction of the Fund that are defined as
miscellaneous itemized deductions. Such amount will be deductible by such holder
only to the extent his total miscellaneous itemized deductions exceed 2% of
adjusted gross income.
Partnerships are not treated as separate taxable entities under most state
and local tax laws, and the income of a partnership is considered to be income
of the partners both in timing and in character. The exemption of interest
income for Federal income tax purposes does not necessarily result in exemption
under the income or tax laws of any state or local taxing authority. The laws of
the various states and local taxing authorities vary with respect to the
taxation of such interest income, as well as to the status of a partnership
interest under state and local tax laws, and each holder of Shares of the Fund
is advised to consult his own tax adviser. The Fund will report annually to the
holders of Shares the percentage of interest income received by the Fund during
the preceding year on Municipal Bonds, indicating on a state-by-state basis the
source of such income.
From time to time proposals have been introduced before Congress for the
purpose of restricting or eliminating the Federal income tax exemption for
interest on municipal obligations. Federal tax legislation enacted in 1986
caused interest on certain municipal obligations to be treated as a tax
preference item for individuals and corporations in computing their alternative
minimum tax liability and may affect the availability of municipal obligations
for investment by the Fund and the value of the Fund's portfolio.
The Partnership Agreement provides that the General Partners shall not be
liable to any holders of Shares or to any Limited Partner by reason of any
change in the Federal income tax laws as they apply to the Fund and the Limited
Partners, whether such change occurs through legislative, judicial or
administrative action, so long as the General Partners have acted in good faith
and in a manner reasonably believed to be in the best interests of the Limited
Partners.
This Fund is not a suitable investment for non-U.S. persons (including
nonresident aliens) because investment in the Fund may cause such investors to
be deemed to be engaged in a U.S. trade or business and to become fully subject
to U.S. tax on distributions and proceeds from the redemption of Shares.
See the Statement of Additional Information for further information
regarding tax matters. You should consult your tax adviser regarding specific
questions as to Federal, state and local taxes.
TAX EQUIVALENT YIELD TABLE
The table shows the approximate taxable bond yields which are equivalent to
tax-exempt bond yields from 5% to 8% under the regular Federal income tax laws
that apply to 1994. (Such yields may differ under the laws applicable to
subsequent years). Separate calculations, showing the applicable taxable income
brackets, are provided for investors who file joint returns and for those
investors who file individual returns.
<TABLE>
<CAPTION>
MARGINAL
SINGLE RETURN JOINT RETURN INCOME TAX-EXEMPT YIELD
- ------------------------- ---------------------- TAX 5% 5.5% 6% 6.5% 7% 7.5% 8%
-------------------------------------------------------------------
(TAXABLE INCOME)<F1> BRACKET EQUIVALENT TAXABLE YIELD
- ------------------------------------------------- ----------- -------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Up to $ 22,750 Up to $ 38,000 15.00% 5.88% 6.47% 7.06% 7.65% 8.24% 8.82% 9.41%
$ 22,751 - $ 55,100 $ 38,001 - $ 91,850 28.00 6.94 7.64 8.33 9.03 9.72 10.42 11.11
$ 55,101 - $115,000 $ 91,851 - $140,000 31.00 7.25 7.97 8.70 9.42 10.14 10.87 11.59
$115,001 - $250,000 $140,001 - $250,000 36.00 7.81 8.59 9.38 10.16 10.94 11.72 12.50
Over $250,000 Over $250,000 39.60 8.28 9.11 9.93 10.76 11.59 12.42 13.25
</TABLE>
Yields shown are for illustration purposes only and are not meant to represent
the Fund's actual yield.
[FN]
<F1> Net amount subject to the Federal personal income tax after deductions and
exemptions.
Note: The above-indicated Federal Income Tax Brackets do not take into account
the effect of a reduction in the deductibility of Itemized Deductions for
taxpayers with Adjusted Gross Income in excess of $111,800, nor the effects of
phaseout of personal exemptions for single and joint filers with Adjusted Gross
Income in excess of $111,800 and $167,700, respectively. The effective top
marginal Federal income tax brackets of taxpayers over ranges of income subject
to these reductions or phaseouts will be higher than indicated above.
While it is expected that a substantial portion of the interest income
distributed to the Fund's shareholders will be exempt from the regular Federal
income tax, portions of such distributions from time to time may be subject to
such tax. This table does not take into account state or local taxes, if any,
payable on Fund distributions. It should also be noted that the interest earned
on certain "private activity bonds" issued after August 7, 1986, while exempt
from the regular Federal income tax, is treated as a tax preference item which
could subject the recipient to the Federal alternative minimum tax. The
illustrations assume that the Federal alternative minimum tax is not applicable.
The information set forth above is as of the date of this Prospectus. Subsequent
tax law changes could result in prospective or retroactive changes in the tax
brackets, tax rates, and tax equivalent yields set forth above.
BACKUP WITHHOLDING
- --------------------------------------------------------------------------------
PROCEEDS OF VARIOUS DISTRIBUTIONS
It is required under Federal income tax laws that 31% of certain proceeds of
redemption requests received directly from shareholders and of redemptions under
any exchange privilege be withheld if (i) a correct and certified Taxpayer
Identification Number (TIN) is not provided for your account, (ii) you fail to
certify that you have not been notified by the IRS that you underreported
taxable interest or dividend payments or (iii) the Fund is notified by the IRS
(or a broker) that the TIN provided is incorrect or you are otherwise subject to
backup withholding. Amounts withheld and forwarded to the IRS can be credited as
a payment of tax when completing your Federal income tax return.
For most individual taxpayers, the TIN is the social security number. An
investor may furnish the Transfer Agent with such number and the required
certifications by completing and sending to the Transfer Agent either the Fund's
Account Application form at the back of this prospectus or IRS Form W-9.
Special rules apply for certain accounts. For example, for an account
established under the Uniform Gift to Minors Act, the TIN of the minor should be
furnished.
TO APPLY FOR A TIN
If you do not have a TIN or do not know your number, you may apply for one using
Form SS-5, "Application for a Social Security Card" or Form SS-4, "Application
for Employer Identification Number." These forms are available at local offices
of the Social Security Administration or the IRS. We will forward a
certification form to you which you should use to notify us of your number.
Withholding may apply to payments made to your account before we receive your
certified number.
EXEMPT RECIPIENTS
Exempt recipients should provide their TIN and underline 2(a) in the TIN section
of the application to avoid possible erroneous withholding. A partial listing of
exempt classes of investors follows: corporations, financial institutions, IRAs,
the U.S. Government, a State or possession of the U.S., a foreign government,
international organizations, and 501(a) exempt entities such as colleges,
churches and charitable organizations.
POWER OF ATTORNEY
- ------------------------------------------------------------------------------
The following provisions are adopted by each purchaser of Shares of the Fund,
irrespective of whether or not such purchaser has executed an account
application or any other document.
* Each purchaser of Shares of the Fund specifically accepts and agrees to be
bound by all of the terms and provisions of the Amended and Restated
Agreement of Limited Partnership of Eaton Vance Municipal Bond Fund L.P.
as from time to time amended or restated (the "Partnership Agreement"),
including without limitation the Power of Attorney set forth in Section X
thereof and printed below, and agrees to become a Limited Partner and to
be subject to all of the rights and obligations of a Limited Partner under
the Partnership Agreement.
* Each purchaser of Shares ("Limited Partner") hereby makes, constitutes and
appoints (i) each person who is or shall hereafter become a General
Partner of the Fund from time to time and (ii) any substitute which any
such General Partner may hereafter appoint to act in his place (who need
not be a Partner of the Fund), the true and lawful attorney of, and in the
name, place and stead of, said Limited Partner, with the power from time
to time to sign, execute, acknowledge, make, swear to, verify, deliver,
file, record, and/or publish:
(1) the Partnership Agreement and any Certificate of Limited Partnership
filed or recorded under the laws of the State of California or any other
jurisdiction;
(2) any amendment to the Partnership Agreement or any amendment to any
such Certificate of Limited Partnership or any other document required to
reflect any action of the Partners provided for in the Partnership
Agreement, whether or not such Limited Partner voted in favor of or
otherwise consented to such action; and
(3) any other instrument, certificate or document as may be required by
any regulatory agency, the laws of the United States, any state or any other
jurisdiction in which the Fund is doing or intends to do business or which
the Director General Partners deem advisable to file or record, provided
such instrument, certificate or document is consistent with the terms of the
Partnership Agreement as then in effect.
Each Limited Partner acknowledges and agrees that the terms of the
Partnership Agreement permit certain amendments of the Partnership Agreement to
be effected and certain other actions to be taken or omitted by or with respect
to the Fund, in each case either (a) with the approval of less than all the
limited partners, provided that the Partners holding a specified percentage of
Shares shall have voted in favor of or otherwise consented to such action, or
(b) without the approval of the Limited Partners. Such actions include, without
limitation, admission of new General Partners duly elected at meetings of the
Partners. If, as and when (i) an amendment of the Partnership Agreement is
proposed or an action is proposed to be taken or omitted by or with respect to
the Fund which requires, under the terms of the Partnership Agreement, the
approval of the Partners holding a specified percentage (but less than all) of
the Shares, (ii) the Partners holding the percentage of Shares specified in the
Partnership Agreement as being required for such amendment or action have
approved such amendment or action in the manner contemplated by the Partnership
Agreement, and (iii) a Limited Partner has failed or refused to approve such
amendment or action (hereinafter referred to as a non-consenting Limited
Partner), each non-consenting Limited Partner hereby consents to such amendment
or action and agrees that each special attorney specified above, with full power
of substitution, is hereby authorized and empowered to execute, acknowledge,
make, swear to, verify, deliver, record, file and/or publish, for and on behalf
of such non-consenting Limited Partner, and in his name, place and stead, any
and all instruments and documents which may be necessary or appropriate to
permit such amendment to be lawfully made or action lawfully taken or omitted.
Each Limited Partner is fully aware that he and each other Limited Partner have
granted this special power-of-attorney, and that all Partners will rely on the
effectiveness of such powers with a view to the orderly administration of the
Fund's affairs.
The foregoing grant of authority (i) is a Special Power-of-Attorney coupled
with an interest in favor of the General Partners, or substitute appointed to
act in place thereof, and as such shall be irrevocable and shall survive the
death or insanity (or, in the case of a Limited Partner that is a corporation,
association, partnership, joint venture, trust or other entity, shall survive
the merger, dissolution or other termination of the existence) of the Limited
Partner, (ii) may be exercised for the Limited Partner by a facsimile signature
of any General Partner of the Fund or substitute therefor or by listing all of
the Limited Partners, including such Limited Partner, or stating that all
Limited Partners, while not specifically named, are executing any instrument
with a single signature of any General Partner or substitute therefor acting as
attorney-in-fact for all of them, and (iii) shall survive the assignment or
redemption by the Limited Partner of the whole or any portion of his interest.
<PAGE>
APPENDIX
<TABLE>
EATON VANCE MUNICIPAL BOND FUND L.P.
ASSET COMPOSITION INFORMATION
For the Fiscal Year Ended December 31, 1993
<CAPTION>
MOODY'S/S&P PERCENT OF NET ASSETS
----------- ---------------------
<S> <C>
Aaa or AAA ................. 37.0 %
Aa or AA ................. 23.8 %
A ................. 18.1 %
Baa or BBB ................. 9.8 %
Ba or BB ................. -- %
Unrated ................. 12.0 %
Short-Term Obligations, Cash, Interest Receivable ................. (0.7)%
-----
Total ................. 100.0 %
</TABLE>
The chart above indicates the weighted average composition of the Fund's
portfolio for the fiscal year ended December 31, 1993, with the debt securities
rated by Moody's Investors Service, Inc. or Standard & Poor's Corporation
separated into the indicated categories. The weighted average indicated above
was calculated on a dollar weighted basis and was computed as at the end of each
month during the fiscal year. The chart does not necessarily indicate what the
composition of the Fund's portfolio will be in the current and subsequent fiscal
years.
For a detailed description of Moody's Investors Service, Inc. and Standard
& Poor's Corporation ratings of municipal bonds, see the Appendix to the
Fund's Statement of Additional Information.
<PAGE>
INVESTMENT ADVISER
Eaton Vance Management
24 Federal Street
Boston, MA 02110
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc.
24 Federal Street
Boston, MA 02110
(800) 225-6265
CUSTODIAN
Investors Bank & Trust Company
24 Federal Street
Boston, MA 02110
TRANSFER AGENT
The Shareholder Services Group, Inc.
BOS725
P.O. Box 1559
Boston, MA 02104
(800) 262-1122
INDEPENDENT ACCOUNTANTS
Deloitte & Touche
125 Summer Street
Boston, MA 02110
EATON VANCE
MUNICIPAL BOND FUND L.P.
24 FEDERAL STREET
BOSTON, MA 02110
MBP
EATON VANCE
MUNICIPAL BOND
FUND L.P.
PROSPECTUS
MAY 1, 1994
