SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential,
For Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
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Eaton Vance Municipal Bond Fund L.P.
(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i) (1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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EATON VANCE MUNICIPAL BOND FUND L.P.
24 FEDERAL STREET, BOSTON, MASSACHUSETTS 02110
OCTOBER 22, 1997
Dear Shareholders:
On Friday, December 12, 1997, a Special Meeting of Partners of Eaton Vance
Municipal Bond Fund L.P. (the "Fund") will be held to vote on two important
proposals. Adoption of these proposals, which the Fund's Director General
Partners have approved and believe are in the best interests of the Fund and its
partners, requires approval of the Fund's partners. As a partner, you are
entitled to cast one vote for each share that you own.
VOTING ONLY TAKES A FEW MINUTES - PLEASE RESPOND PROMPTLY.
YOUR VOTE IS IMPORTANT, NO MATTER HOW MANY SHARES YOU OWN. If the required
votes are not received by December 12, 1997, it will be necessary to send
further mailings to secure them. This is a costly process and is paid for by the
Fund. Therefore, you, as a partner, ultimately pay for the expenses of a delayed
vote. Please sign and return your proxy promptly to avoid this unnecessary
expense.
The Meeting is called to consider two proposals. The first proposal is to
change the Fund from a partnership to a series of a Massachusetts business
trust. The series will have the same investment objective and policies as the
Fund. The proposed reorganization is intended to simplify the Fund's
administrative operations and to relieve Partners of some of the accounting
complexities associated with a partnership. This change in structure is also
prompted by changes in federal tax laws applicable to partnerships.
The second proposal is to amend certain fundamental investment restrictions
to conform them to current regulatory requirements.
The matters to be presented to the Meeting are described in detail in the
enclosed proxy statement. THE DIRECTOR GENERAL PARTNERS BELIEVE THAT BOTH
PROPOSALS ARE IN THE BEST INTERESTS OF THE FUND AND ITS PARTNERS.
Thomas J. Fetter,
President
THIS IS A VERY IMPORTANT MEETING. IF YOU DO NOT PLAN
TO ATTEND IN PERSON, PLEASE SIGN, DATE AND RETURN THE
ENCLOSED PROXY CARD TODAY.
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EATON VANCE MUNICIPAL BOND FUND L.P.
24 FEDERAL STREET, BOSTON, MASSACHUSETTS 02110
NOTICE OF SPECIAL MEETING OF PARTNERS
TO BE HELD DECEMBER 12, 1997
A Special Meeting of the Partners of Eaton Vance Municipal Bond Fund L.P.
(the "Fund") will be held at the principal office of the Fund, 24 Federal
Street, Boston, Massachusetts, on December 12, 1997, at 1:00 P.M. (Boston time),
for the following purposes:
1. To consider and act upon a proposal to approve an Agreement and Plan
of Reorganization pursuant to which the Fund will be reorganized from
a California limited partnership to a series of a Massachusetts
business trust; and
2. To consider and act upon a proposal to eliminate, reclassify and/or
amend certain of the Fund's fundamental investment policies (as set
forth in Exhibit B to the accompanying Proxy Statement).
These proposals are discussed in greater detail in the following pages. The
Fund will also consider and act upon any matters incidental to the foregoing
purposes or any of them, and any other matters which may properly come before
said meeting or any adjourned session thereof.
This meeting is called by the Director General Partners pursuant to the
Amended and Restated Agreement of Limited Partnership of the Fund. The Director
General Partners have fixed the close of business on October 17, 1997, as the
record date for the determination of the partners of the Fund entitled to notice
of and to vote at the meeting and any adjournments thereof.
October 22, 1997
Alan R. Dynner,
Secretary
IMPORTANT -- PARTNERS CAN HELP THE DIRECTOR GENERAL PARTNERS AVOID THE
NECESSITY AND ADDITIONAL EXPENSE TO THE FUND OF FURTHER SOLICITATIONS TO INSURE
A QUORUM BY PROMPTLY RETURNING THE ENCLOSED PROXY. THE ENCLOSED ADDRESSED
ENVELOPE REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES AND IS INTENDED FOR
YOUR CONVENIENCE.
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EATON VANCE MUNICIPAL BOND FUND L.P.
24 FEDERAL STREET BOSTON, MASSACHUSETTS 02110
October 22, 1997
PROXY STATEMENT
FOR A SPECIAL MEETING OF PARTNERS
A proxy is enclosed with the foregoing Notice of a Special Meeting of the
Partners of Eaton Vance Municipal Bond Fund L.P. (the "Fund"), to be held on
December 12, 1997, for the benefit of partners who do not expect to be present
at the meeting. This proxy is solicited on behalf of the Director General
Partners of the Fund, and is revocable by the person giving it prior to exercise
by a signed writing filed with the Fund's transfer agent, First Data Investor
Services Group, P.O. Box 5123, Westborough, MA 01581-5123, or by executing and
delivering a later dated proxy. Each partner may specify the manner in which he
desires his proxy to be voted upon the matters referred to in the proxy; in the
absence of such specification, his proxy will authorize the persons named as
attorneys, or any of them, to vote in favor of each such matter. This proxy
material is being initially mailed to partners (hereinafter referred to as
"shareholders") on or about October 22, 1997.
The Director General Partners have fixed the close of business on October
17, 1997 as the record date for the determination of the shareholders entitled
to notice of and to vote at the meeting and any adjournments thereof.
Shareholders at the close of business on the record date will be entitled to one
vote for each share held. As of October 17, 1997, the number of shares of
partnership interest of the Fund outstanding was . As of October 17, 1997, the
following persons owned 5% or more of the outstanding partnership interests of
the Fund: ___________. To the knowledge of the Fund, no other person owns (of
record or beneficially) more than 5% of its outstanding shares. The Director
General Partners and Officers of the Fund, as a group, own less than 1% of the
outstanding shares of the Fund as of such date.
The Director General Partners know of no matter other than those mentioned
in Proposals 1 and 2 of the Notice which will be presented at the meeting. If
any other matter is properly presented at the meeting, it is the intention of
the persons named as attorneys in the enclosed proxy to vote the proxies in
accordance with their judgment in regard to such matter.
PROPOSAL 1. TO APPROVE AN AGREEMENT AND
PLAN OF REORGANIZATION
The Fund was formed as a California limited partnership in 1977 in order to
take advantage of certain tax benefits available under then existing federal tax
laws. As the result of changes to partnership tax law contained in the Taxpayer
Relief Act of 1997 which was signed into law on August 5, 1997, these tax
benefits will not continue after December 31, 1997. Because of the change to
partnership tax treatment and because the limited partnership form involves
complex accounting and other procedures for shareholders and the Fund, the
Director General Partners have determined that reorganization of the Fund as a
series of a Massachusetts business trust would be beneficial to the Fund
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and its shareholders. The Director General Partners believe that the
reorganization would relieve many of the difficulties associated with
organization as a limited partnership, and would simplify both the Fund's
administration and the personal accounting required of the shareholders of the
Fund.
As part of the review of the merits of reorganization, the Fund has been
advised by Brown & Wood, special tax counsel to the Fund, concerning the tax
consequences of reorganizing the Fund as a series of a Massachusetts business
trust. In sum, it is the advice of special tax counsel that the shareholders of
the Fund will not realize gain or loss upon consummation of the reorganization,
will have a tax basis in their shares after the reorganization equal to the tax
basis in their Fund shares prior to the reorganization (reduced by the
liabilities assumed by the successor in the reorganization), and will have a
holding period for the shares received in the reorganization that will include
the Fund's holding period for those shares. See "Tax Consequences of the
Reorganization" below. Having considered the foregoing, the Director General
Partners of the Fund have approved a plan whereby all of the assets, liabilities
and operations of the Fund would be assumed and carried on by Eaton Vance
Municipal Bond Fund (the "Successor Fund"), a series of Eaton Vance Mutual Funds
Trust (the "Trust"), a Massachusetts business trust organized in 1984. It is
anticipated that the reorganization, if approved by shareholders, will take
place at the close of business on December 31, 1997.
The purpose of the reorganization is to effect a change in the form of
organization of the Fund. The net asset value of shares of the Fund will be
unaffected by the reorganization. If the changes to the Fund's investment
restrictions (as described in Proposal 2) are approved, the investment
restrictions of the Successor Fund will be changed similarly; if Proposal 2 is
not approved, such restrictions will not be changed. Aside from differences
related to its form of organization, the Successor Fund generally will be
operated in the same manner as the Fund except that the Successor Fund will
offer three classes of shares. See "Series and Classes of Shares of the Trust"
below.
THE PROPOSED REORGANIZATION
REASONS FOR THE REORGANIZATION. The Director General Partners of the Fund
have concluded that it is desirable to convert the Fund into a series of a
Massachusetts business trust because of the changes to partnership tax treatment
and in order to simplify the operations and procedures of the Fund. The
reorganization will also increase administrative efficiencies in the operation
of the Fund and reduce operating expenses by achieving certain economies of
scale. Specifically, it is anticipated that the Fund will incur slightly lower
registration and legal expenses if it is reorganized as a series of the Trust.
The Director General Partners also believe that the reorganization will
reduce some of the difficulties experienced by the shareholders of the Fund in
accounting for their investments and preparing tax returns. The tax accounting
required of an owner of shares of a series of a Massachusetts business trust
that qualifies as a regulated investment company under the Internal Revenue Code
of 1986, as amended (the "Code"), such as the Successor Fund, is more simple
than the accounting involved in owning shares of a limited partnership. Since
income and gains earned by the Successor Fund generally would be taxable to
shareholders only when paid to them as a dividend or designated to them as
long-term capital gain (as described below) (instead of when earned, as with the
Fund), a shareholder in the Successor Fund could determine the amount of income
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from the Successor Fund he or she must report for tax purposes by referring
to the account statements provided whenever a dividend is paid or long-term gain
is so designated. Tax information is provided in a Form 1099, which Form is
mailed to shareholders annually. (If the reorganization is consummated, the
Successor Fund will distribute Form 1099 to shareholders in 1999 for the 1998
tax year.) By contrast, present shareholders of the Fund cannot determine the
amount of taxable income and gains allocated to them that must be reported until
a Form K-1 is provided by the Fund after the end of the year. Accounting for
gains and losses realized upon the sale of shares would also be simplified. A
shareholder's tax basis in shares of the Fund reflects each shareholder's
portion of the Fund's income, gains or losses and distributions and therefore
changes according to the Fund's portfolio transactions and distributions.
Currently, such basis can be determined by the shareholder only after receipt of
Form K-1, and must be adjusted annually. (If the reorganization is consummated,
the Fund will issue a final Form K-1 to shareholders in March 1998.)
The Director General Partners have considered the possibility of organizing
a trust under the laws of other states, including certain states which, by
statute, provide limited liability to trust shareholders. The Director General
Partners feel, however, that it is in the best interest of shareholders for the
Fund to adopt a Massachusetts domicile, largely because the laws of
Massachusetts regarding business trusts are the most developed of any state and
any potential for shareholder liability is remote (see "Certain Comparative
Information About the Fund and the Successor Fund" below). It is expected that
some minor additional savings to the Fund may also be realized through
administrative efficiencies if all Eaton Vance funds are organized in the same
manner. Most Eaton Vance funds are already organized as Massachusetts business
trusts or series thereof.
SUMMARY OF THE AGREEMENT AND PLAN OF REORGANIZATION. The following
discussion summarizes the important terms of the Agreement and Plan of
Reorganization (the "Plan") dated October 17, 1997 between the Fund and the
Trust. This summary is qualified in its entirety by reference to the Plan
itself, which is included as Exhibit A to this Proxy Statement.
To accomplish the reorganization, the Fund will transfer all of its assets
and liabilities to the Successor Fund in exchange for a number of shares of
beneficial interest of the Successor Fund equal to the number of shares of
partnership interest of the Fund then outstanding. Immediately thereafter the
Fund will distribute these shares of the Successor Fund to its shareholders in
complete liquidation of the partnership. The number of full and fractional
shares owned by each shareholder, and each share's net asset value, will not be
changed by this transaction. Instead of owning shares of the Fund, each
shareholder will own an equivalent number of shares of the Successor Fund. A
favorable vote on this proposal will authorize the Fund, as sole shareholder of
the Successor Fund, to approve an investment advisory agreement between the
Trust on behalf of the Successor Fund and the Fund's investment adviser, Eaton
Vance Management ("EVM"), which will be substantially identical to the advisory
agreement in effect for the Fund, to ratify the selection of Deloitte & Touche
LLP, the Fund's present auditors, as auditors of the Successor Fund and to adopt
the Fund's other existing contractual arrangements for the Successor Fund.
To provide against unforeseen events, the Plan may be terminated or amended
at any time prior to the closing of the reorganization by action of the Director
General Partners of the Fund or the Trustees of the Trust. No amendment may be
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made, however, which materially and adversely affects the interests of the
shareholders of the Fund. The Fund and the Trust may at any time waive
compliance with any of the covenants and conditions contained in the Plan,
provided that such waiver does not materially and adversely affect the interests
of the shareholders of the Fund.
CONTINUATION OF SHAREHOLDER ACCOUNTS; SHARE CERTIFICATES. The Trust will
establish shareholder accounts on the books of the Successor Fund for each
shareholder of the Fund. As a Massachusetts business trust, the Trust is not
required and does not expect to issue certificates evidencing ownership of the
Successor Fund shares. Shareholders of the Fund to whom certificates have been
issued will not be required to surrender their certificates in connection with
the reorganization. Such certificates will be deemed to be for shares of the
Successor Fund. Holders of outstanding Fund certificates would continue to be
required to surrender their certificates in order to redeem shares of the
Successor Fund.
EXPENSES. All of the expenses relating to the proposed reorganization will
be borne by the Fund and, if the reorganization is consummated, will be assumed
by the Successor Fund. It is expected that such expense will approximate
$15,000.
TAX CONSEQUENCES OF THE REORGANIZATION. It is a condition to the
consummation of the reorganization that the Fund and the Trust receive on or
before the closing date an opinion from Brown & Wood concerning the federal
income tax consequences of the reorganization. This opinion will provide, among
other things, that no gain or loss will be recognized for federal income tax
purposes by the Fund or its shareholders upon (1) the transfer of all of the
Fund's assets to the Successor Fund in exchange solely for shares of the
Successor Fund and the assumption by the Successor Fund of the Fund's
liabilities or (2) the distribution by the Fund of the shares of the Successor
Fund, in liquidation of the Fund, to the shareholders in exchange for their Fund
shares. The opinion will further state, among other things, that (i) the federal
tax basis of the shares of the Successor Fund to be received by shareholders of
the Fund will equal the federal tax basis of their Fund shares prior to the
reorganization, reduced by the liabilities assumed by the Successor Fund in the
reorganization and (ii) each shareholder's federal tax holding period for his or
her Successor Fund shares will include the Fund's holding period for those
shares. The reduction in basis which will occur as a result of the Successor
Fund's assumption of the Fund's liabilities is the same as the reduction which
would occur if the Fund were to pay the liabilities itself.
There are no adverse tax consequences of the reorganization for the Fund in
California or Massachusetts. While the Director General Partners are not aware
of any other adverse state or local tax consequences of the proposed
reorganization, they have not made any investigation as to such consequences and
shareholders may wish to consult their own tax advisers with respect to such
matters.
TAX STATUS OF THE FUND AND THE SUCCESSOR FUND. The Successor Fund intends
to qualify as a regulated investment company ("RIC") under Subchapter M of the
Code. If the Successor Fund so qualifies, it will be governed by different
federal tax requirements from those applicable to the Fund as a limited
partnership. The Fund, as a limited partnership, is not required to pay taxes at
the partnership level. Instead, each shareholder reports his or her allocable
share of the Fund's income, gains, losses and expenses for tax purposes each
year, and pays taxes on his or her share of Fund income and net realized gains.
Expenses of the Fund are generally considered "miscellaneous itemized
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deductions" under the Code, and that portion of such expenses allocated to a
shareholder may be deducted by a shareholder who is an individual, estate or
trust only to the extent that such expenses exceed two percent of adjusted gross
income. The Successor Fund, on the other hand, will be a separate tax-paying
entity (except as described below) which will be required to distribute to
shareholders, at least annually, 90% of its investment company taxable income
and 90% of its net income from tax-exempt securities, if any, and may distribute
or retain (as described below) its net capital gain. "Net capital gain" is the
excess, if any, of the Successor Fund's net long-term capital gain over its net
short-term capital loss, and "investment company taxable income" includes all
taxable income and gains, other than net capital gain, after reduction by
deductible expenses. Expenses of the Successor Fund will reduce its taxable and
tax-exempt income, and the taxable and tax-exempt income distributed to
shareholders without subjecting Successor Fund shareholders to the two percent
of adjusted gross income threshold mentioned above that applies to miscellaneous
itemized deductions. The income and gains of the Successor Fund generally will
not be taxable to its shareholders until distributed to them and will be taxable
to the Successor Fund itself if it does not meet the requirements of Subchapter
M, which include income qualification, diversification, distribution and other
requirements.
By meeting the conditions of Subchapter M, the Successor Fund would be
relieved from federal income tax liability for income and gains distributed to
shareholders, but would be subject to federal corporate income tax on any
taxable income and gains not distributed to its shareholders. The Successor Fund
would be subject to federal corporate income tax and Massachusetts income tax on
all its net income and net gains if it failed to qualify under Subchapter M. The
Successor Fund could also be subject to a 4% nondeductible federal excise tax if
it failed to meet certain other distribution requirements each calendar year.
However, because the federal excise tax requires distribution of taxable income,
the tax generally will not apply to the Successor Fund which (like the Fund)
will invest in municipal obligations and distribute tax-exempt income to its
shareholders. It is expected that the Successor Fund will be able to meet the
conditions for qualification under Subchapter M and will not be subject to
federal or Massachusetts income tax on its investment company taxable income.
The requirements of Subchapter M are not expected to affect the Successor Fund's
investment operations in any material manner.
DISTRIBUTIONS FROM THE SUCCESSOR FUND. The Fund has normally declared and
paid cash distributions approximately equal to its net income monthly. For tax
purposes, these distributions are not taxable to shareholders (who are taxed on
their proportionate share of Fund income and gains allocated to them by the Fund
for each taxable year), but instead reduce shareholder's tax basis in his or her
Fund shares. The Fund did not normally distribute its realized net capital
gains.
As a qualified regulated investment company under Subchapter M, the
Successor Fund will distribute for each taxable year substantially all of its
tax-exempt income, its investment company taxable income (including net realized
short-term capital gain, if any, in excess of net long-term capital loss) and
substantially all of its net capital gain. Recent legislation creates additional
categories of capital gains taxable at different rates. Although the legislation
does not explain how gain in these categories will be taxed to shareholders of
RICs, it authorizes regulations applying the new categories of gain and the new
rates to sales of securities by RICs. In the absence of guidance, there is some
uncertainty as to the manner in which the categories of gain and related rates
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will be passed through to shareholders in capital gain dividends.
Distributions of income by the Successor Fund will be declared daily and paid
monthly while distributions of net capital gain, if any, will be made annually
(normally in December). Distributions from the Successor Fund generally will be
taxable when received (whether or not they are reinvested in additional shares
of the Successor Fund), and ordinarily will not affect a shareholder's tax basis
in shares already owned. Under a special rule applicable to regulated investment
companies, however, certain distributions actually paid in January might be
treated as if they were received on the prior December 31st. Shortly after the
end of each calendar year, the Trust will send each shareholder a report on Form
1099 showing the amount and character of distributions paid by the Successor
Fund to him or her during the year.
In general, all of the Successor Fund's distributions will be treated as
tax-exempt income to its shareholders, except for the portion attributable to
its realized net capital gain, which the Successor Fund will designate and
shareholders will treat as long-term capital gain, and any portion that
represents a return of capital. It is anticipated that Internal Revenue Service
guidance permitting categories of gain and related rates to be passed through to
shareholders would also require the Successor Fund to designate the amounts of
various categories of capital gain income included in capital gain dividends in
a written notice sent to shareholders. A return of capital would first reduce a
shareholder's basis in shares of the Successor Fund and then, after such basis
is reduced to zero, would generally give rise to capital gains. However, the
Successor Fund does not anticipate that it would usually pay return of capital
distributions. The Successor Fund's losses (if any) and expenses, unlike those
of the Fund, will not pass through to shareholders, who consequently will not
take them into account on their own tax returns. Instead, such losses and
expenses will be taken into account by the Successor Fund in determining the
amount of its distributions (any such capital losses could also be carried
forward to offset future capital gain distributions).
REDEMPTIONS OF SHARES. Currently, a Fund shareholder generally recognizes a
capital gain to the extent that the cash received upon redemption of Fund shares
exceeds his or her tax basis in all the Fund shares held before the redemption.
If the cash redemption proceeds do not exceed the shareholder's aggregate tax
basis in all Fund shares, his or her basis in any unredeemed Fund shares is
reduced by the amount of cash received or a loss may be recognized if such a
redemption liquidated the shareholder's entire Fund interest but the cash
proceeds were less than the shareholder's predistribution basis. A shareholder's
tax basis in Fund shares, however, cannot be determined by the shareholder until
the shareholder receives the report of Fund operations on Form K-1 that is
provided annually and makes the appropriate annual basis adjustments. For the
tax year in which liquidation of the Fund occurs, the Fund will issue a final
Form K-1 to each of the Successor Fund shareholders.
The tax treatment of redemptions of Successor Fund shares is generally less
complex than the tax treatment of redemptions of Fund shares, although it
differs in many technical aspects. When a shareholder redeems, he or she will
recognize a taxable gain or loss at the time of the distribution, in contrast to
the treatment of a shareholder in the Fund described above.
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CERTAIN COMPARATIVE INFORMATION ABOUT THE FUND AND THE SUCCESSOR FUND
Because the Successor Fund is a series of a Massachusetts business trust,
its operations are governed by the Trust's Declaration of Trust and by-laws
(rather than by the Fund's Amended and Restated Agreement of Limited Partnership
(the "Partnership Agreement")) and by the provisions of Massachusetts law for
business trusts rather than by those under California law for limited
partnerships. The operations of the Trust (and the Successor Fund) will continue
to be subject to the provisions of the Investment Company Act of 1940 (the "1940
Act"), and the rules and regulations of the Securities and Exchange Commission
(the "SEC") thereunder. Although it is impractical to note all the differences
between the characteristics of a California limited partnership and the
characteristics of a Massachusetts business trust, the following is a summary of
the more significant differences.
STRUCTURE OF THE TRUST. The Trust has been established under Massachusetts
law as a trust with transferable shares of beneficial interest - commonly known
as a "a Massachusetts business trust" - pursuant to a Declaration of Trust dated
May 7, 1984. Pursuant to the Declaration of Trust, as amended, Eaton Vance
Municipal Bond Fund is established and designated as a series of the Trust. See
"Series and Classes of Shares of the Trust" below. Following the reorganization,
the Successor Fund will assume and carry on the operations of the Fund.
TRUSTEES AND OFFICERS OF THE TRUST. Subject to the provisions of the
Declaration of Trust, the business of the Trust will be managed by its Trustees,
who have all powers necessary or convenient to carry out that responsibility.
The responsibilities, powers and duties of the Trustees will be substantially
the same as those of the Director General Partners. Five of the seven Trustees
of the Trust currently serve as Director General Partners of the Fund. M. Dozier
Gardner, Vice Chairman of Eaton Vance Management ("EVM"), and James B. Hawkes,
President and Chief Executive Officer of EVM, also serve as Trustees of the
Trust. Landon T. Clay, Director General Partner and Chairman of the Fund, holds
no position with the Trust. Under the Partnership Agreement, the Director
General Partners must be elected by shareholders of the Fund. Trustees of the
Trust may be appointed by the existing Trustees of the Trust without shareholder
approval under certain circumstances. Certain present officers of the Fund also
serve as officers of the Trust and will perform the same functions following the
reorganization as they now perform on behalf of the Fund, except that Thomas J.
Fetter (President and portfolio manager of the Fund) will be a Vice President of
the Trust.
The Advisor General Partner of the Fund, EVM, will hold no position with
the Successor Fund other than that of investment adviser and shareholder. As its
principal duty as Advisor General Partner, EVM has agreed to hold at all times
at least 1% of the outstanding shares of the Fund in order to meet a federal
income tax requirement related to the Fund's classification as a partnership.
There is no legal requirement that EVM or any other person maintain an interest
in the Successor Fund.
SERIES AND CLASSES OF SHARES OF THE TRUST. The Trust's Declaration of Trust
permits the Trustees to create and issue an unlimited number of series of shares
of the Trust, and to create and issue an unlimited number of full or fractional
shares of one or more classes of shares within each series. After the
reorganization, the Trust will have twelve operating series. Each share of each
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series or class of the Trust represents an equal proportionate interest with
each other share in that series or class, none having priority or preference
over another. Each series is a separate entity for tax purposes, eligible to
qualify as a separate regulated investment company.
Immediately after the completion of the reorganization, the shares of the
Successor Fund will be divided into three classes of shares. The existing shares
of the Successor Fund will be designated "Class I" shares. Class I shares of the
Successor Fund will be subject to the same fees and expenses as those of the
Fund. Class I shares will be offered to the existing shareholders of the Fund as
of December 31, 1997, clients, employees and affiliates of EVM, and certain
institutional investors. Two additional classes of shares of the Successor Fund
will be offered subject to higher fees and expenses than those of Class I.
Additional classes of shares could be offered by the Successor Fund in the
future.
SHAREHOLDER AND TRUSTEE LIABILITY. One area of difference between the two
forms of organization is the potential liability of shareholders. Generally,
limited partners are not personally liable for obligations of a partnership
unless they take part in the control of the business of the partnership. Under
the terms of the Partnership Agreement, although the limited partners of the
Fund do not have the right to take part in the control of the Fund's business,
they may exercise the right to vote on matters requiring approval of
shareholders under the 1940 Act and on certain other matters, including
amendments to the Partnership Agreement. The California Uniform Limited
Partnership Act (the "California Act") provides that the exercise by a limited
partner of the right to vote upon matters affecting the basic structure of the
partnership, including among others, the election or removal of general
partners, the amendment of the partnership agreement, and the sale of all of the
assets of the partnership does not constitute taking part in the control of the
partnership's business. The California Act, however, does not specifically
authorize certain of the voting rights which the Partnership Agreement gives to
limited partners, including the right to vote on the approval of an investment
advisory contract and the right vote on the approval of the independent
accountants. The Fund has been advised by California counsel that although no
absolute assurance can be given, the existence or exercise of the voting rights
provided in the Partnership Agreement does not subject the limited partners to
liability as general partners. It is possible, however, that because of the
existence or exercise of such rights the limited partners might be found to be
subject to such liability by the courts of another state.
The contribution of a limited partner may also be subject to the risks of
the business of the Fund and the claims of the Fund's creditors if all or any
portion of the contribution of a limited partner is returned to the limited
partner, upon redemption of his or her shares or otherwise. Specifically the
limited partner will remain liable to the Fund in an amount (not in excess of
the amount of the limited partner's returned contribution, plus interest) which
is equal to the limited partner's proportionate share of the amount necessary in
order to discharge any liability of the Fund to creditors who extended credit or
whose claims arose before the return of the limited partners contribution, but
only to the extent that the assets of the Fund are not sufficient to discharge
any such liabilities.
Although shareholders of a Massachusetts business trust may, under certain
circumstances, be held personally liable for the obligations of the Trust, the
Declaration of Trust contains an express disclaimer of shareholder liability for
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acts or obligations of the Trust. Notice of such disclaimer is generally
contained in each agreement, obligation, or instrument entered into or executed
by the Trust or the Trustees. The Declaration of Trust provides for
indemnification out of the Trust property of any shareholder held personally
liable for the obligations of the Trust. The Declaration of Trust also provides
that the Trust will, upon request, assume the defense of any claim made against
any shareholder for any act or obligation of the Trust and satisfy and judgment
thereon. Thus, the risk of a shareholder incurring financial loss beyond the
shareholder's investment because of shareholder liability is limited to
circumstances in which the Trust itself would be unable to meet its obligations.
In light of the nature of the Trust's business and the nature of its assets, the
Director General Partners believe that the possibility of the Trust's
liabilities exceeding its assets, and therefore the risk of personal liability
to a shareholder of the Trust, is remote.
The Declaration of Trust further provides that the Trustees will not be
liable for errors of judgment or mistakes of fact or law, but nothing in the
Declaration of Trust protects a Trustee against any liability to which he would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of his
office.
Under the Partnership Agreement each partner of the Fund has the right to
inspect the Fund's books and records. The Trust's Declaration of Trust does not
expressly provide for the examination of the books and records of the Successor
Fund by shareholders.
VOTING RIGHTS. Meetings of the Fund's shareholders may be called by a
majority vote of the Director General Partners or by shareholders holding not
less than 10% of the outstanding shares of the Fund. At such meetings,
shareholders of the Fund have the right to vote on (i) removal or election of a
Director General Partner, (ii) the sale of all or substantially all of the
assets of the Fund, (iii) any proposed advisory contract or distribution plan,
(iv) the termination of the employment of the Fund's independent accountants or
the ratification or rejection of the selection of such accountants, (v) certain
material amendments to the Partnership Agreement and (vi) termination of the
Fund.
Successor Fund shareholders have certain rights, as set forth in the
Trust's By-laws, to call meetings for any purpose, including for the purpose of
voting on the removal of one or more Trustees. The Trust's Declaration of Trust
gives Successor Fund shareholders the power to vote on (i) the termination of
the Trust or any series or class thereof, except that the Trustees may terminate
the Trust or any series or class thereof without shareholder authorization upon
a determination that its continuation is not in the best interest of the Trust,
such series or class or the shareholders; and (ii) any amendment of the
Declaration of Trust, except that amendments to designate or establish any
series or class of shares, to change the name of the Trust or any series, to
make such other changes as do not have a materially adverse effect on the
financial interests of shareholders or to conform the Declaration of Trust to
the requirements of applicable federal or state laws or regulations or the
requirements of the Code, do not require authorization by shareholder vote. The
sale of all or substantially all of the assets of a series of the Trust does not
require shareholder approval.
Because the Successor Fund, like the Fund, will operate as a diversified
series of an open-end investment company registered with the SEC under the 1940
Act, shareholders of the Successor Fund will have the power to vote at special
meetings with respect to, among other things, changes in fundamental investment
policies and limitations of the Successor Fund; changes to the Successor Fund's
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advisory contract; approval of a distribution plan; ratification of the
selection by the Trustees of the auditors for the Successor Fund; and such
additional matters relating to the Trust or the Successor Fund as may be
required by the 1940 Act, as well as on the items listed above. If, at any time,
less than a majority of the Trustees holding office has been elected by
shareholders, the Trustees then in office will promptly call a meeting of
shareholders of the Trust for the purpose of electing a Board of Trustees.
VOTE REQUIRED TO APPROVE PROPOSAL 1
Approval of this Proposal requires the affirmative vote of a majority of
the outstanding shares of the Fund. The Director General Partners have
considered the above factors and have determined that the reorganization is in
the best interest of the shareholders of the Fund. THE DIRECTOR GENERAL PARTNERS
RECOMMEND YOU VOTE IN FAVOR OF THE AGREEMENT AND PLAN OF REORGANIZATION.
PROPOSAL 2. TO APPROVE THE ELIMINATION,
RECLASSIFICATION AND AMENDMENT OF
CERTAIN FUNDAMENTAL INVESTMENT POLICIES
The 1940 Act requires a registered investment company like the Fund to have
certain specific investment policies which can be changed only by a shareholder
vote. Investment companies may also elect to designate other policies which may
be changed only by a shareholder vote. Both types of policies are often referred
to as "fundamental" policies. (In this Proxy Statement, the word "restriction"
is sometimes used to describe a policy.) Some fundamental policies have been
adopted in the past by the Fund to reflect certain regulatory, business or
industry conditions which are no longer in effect. In particular, the National
Securities Markets Improvement Act of 1996 permits investment companies to
eliminate investment restrictions formerly imposed by state securities ("Blue
Sky") regulations. Accordingly, the Director General Partners authorized a
review of the Fund's fundamental policies to simplify and modernize those
policies which are required to be fundamental and to eliminate as fundamental
any policies which are not required to be fundamental under the positions of the
staff of the SEC in interpreting the 1940 Act, in which case, depending on the
circumstances, the policy would be reclassified as a nonfundamental policy in
the same or a modified form, or eliminated. Nonfundamental policies can be
changed by the Director General Partners without shareholder approval. Similar
revisions to fundamental restrictions have been approved by other funds advised
or administered by EVM and the uniformity of such restrictions will serve to
facilitate EVM's compliance efforts.
This Proposal seeks shareholder approval of changes which are intended to
accomplish the foregoing goals. The proposed changes to the fundamental policies
are discussed in detail below. Please refer to the changes to the policies as
set forth in Exhibit B. By reducing to a minimum those policies which can be
changed only by shareholder vote, the Fund would be able to avoid the costs and
delay associated with a shareholder meeting and the Directors General Partners
believe that the ability of the Fund's investment adviser, EVM, to manage the
Fund's portfolio in a changing regulatory or investment environment will be
enhanced. Accordingly, investment management opportunities will be increased.
The numerical references to the Fund's investment restrictions correspond to the
numbered paragraphs in Exhibit B. If this Proposal is approved, the restrictions
would be reordered.
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<PAGE>
The proposed changes will not affect current management of the Fund's
portfolio. Moreover, the changes would be made regardless of whether Proposal 1
in this Proxy Statement is approved.
ELIMINATION OF CERTAIN RESTRICTIONS
The Director General Partners propose to delete Restrictions (3), (10),
(12), (13) and (15) because such restrictions are not required to be investment
restrictions under the 1940 Act and/or the practices referred to therein are
otherwise governed by the 1940 Act.
Restriction (3) concerning pledging the assets of the Fund is being deleted
because pledging restrictions were formerly only required by "Blue Sky" law.
Restriction (10) concerning joint trading is circumscribed by the 1940
Act's provisions on joint transactions.
Restriction (12) concerning investment in other investment companies
prohibits the Fund from investing in securities of other investment companies.
Investment in other investment companies is regulated by the 1940 Act (as
amended in October 1996) and the current restriction does not contain all of the
provisions in the 1940 Act regarding such investments.
Restriction (13) concerning investment in unseasoned issuers was formerly
only required by "Blue Sky" laws.
Restriction (15) concerns concentration and investing in repurchase
agreements. Because the Fund has a fundamental policy of investing 80% of its
total assets in Municipal Bonds, the portion of this restriction relating to
concentration is unnecessary. As it relates to repurchase agreements, the
restriction is more restrictive than necessary under the existing SEC position
concerning such investments. As proposed to be revised, new non-fundamental
Restriction (14) will provide that the Fund may not invest more than 15% of its
net assets in illiquid securities including repurchase agreements maturing in
more than 7 days.
AMENDMENT AND RECLASSIFICATION OF CERTAIN RESTRICTIONS
The Director General Partners also propose that Restrictions (5), (11), and
(14) be amended and reclassified as non-fundamental policies (which could be
thereafter changed or eliminated by Director General Partner vote). Each of
these restrictions is required under federal law, but is not required to be a
fundamental policy of the Fund.
Restriction (5) prohibits the Fund from making short sales unless the short
sale is "against-the-box" (meaning that the Fund could sell a borrowed security
provided it owns an equal amount of the same security or securities convertible
into that security). As amended, this restriction would be clarified and would
permit short selling against-the-box provided that not more than 25% of the
Fund's net assets is held as collateral for such sales at any one time.
Restriction (11) prohibits investment in an issuer if a Director General Partner
or officer of the Fund or director or officer of the Fund's adviser
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<PAGE>
owns 1/2 of 1% or more of an issuer and such ownership together with the
ownership interests of other directors, Director General Partners or officers,
exceeds 5% of the issuer. As amended, this restriction would be conformed to the
uniform policy used by most other funds in the Eaton Vance complex. Restriction
(14) limits investment in restricted securities to not more than 5% of total
assets. As amended, this restriction will be consistent with regulatory changes
which permit the Fund to investment not more than 15% of its net assets in
securities that are not readily marketable (e.g., restricted securities that are
not eligible for resale under Rule 144A of the Securities Act of 1933) and
repurchase agreements maturing in more than seven days. As revised, this
restriction may result in increased exposure to such investments. Because of the
absence of any public trading market for these investments it may take longer to
liquidate these positions at fair value than would be the case for publicly
traded securities.
As a result of this proposed reclassification of certain investment
restrictions as nonfundamental, a future change in any of these restrictions
could be effected by the Director General Partners without shareholder approval
if the Director General Partners determined that such change is appropriate and
desirable. Except for the changes described above, the Director General Partners
have no present intention of amending or eliminating the foregoing restrictions.
The Director General Partners believe, however, that this reclassification of
restrictions will permit the Fund to respond more rapidly to future changes in
the Fund's competitive and regulatory environment.
AMENDMENT OF CERTAIN RESTRICTIONS
The Director General Partners also propose the amendment of six fundamental
policies.
Restriction (1) concerning diversification of the securities acquired by
the Fund will be amended to conform to the 1940 Act diversification
requirements, which apply with respect to 75% of the Fund's assets (rather than
100% of assets as under the current policy). Restriction (2) concerning
borrowing has been revised to permit borrowing and the issuance of senior
securities consistent with the 1940 Act. The positions of staff of the SEC on
borrowings and senior securities have evolved in recent years with the
development of new investment strategies, such as futures transactions. The Fund
would like the ability to consider use of new investment techniques consistent
with the 1940 Act as interpretations of the 1940 Act are further developed.
Restriction (4) concerning purchase of securities on margin, Restriction
(6) concerning underwriting securities, Restriction (7) concerning investment in
real estate and Restriction (9) concerning loans have been revised for clarity
and to be consistent with other funds advised by EVM.
VOTE REQUIRED TO APPROVE PROPOSAL 2
Approval of the Proposal requires the affirmative vote of a majority of the
outstanding voting securities of the Fund, which term as used in this Proxy
Statement means the vote of the lesser of (a) more than 50% of the outstanding
shares of the Fund, or (b) 67% of the shares of the Fund present at the meeting
if the holders of more than 50% of the outstanding shares of the Fund are
present or represented by proxy at the meeting. The Director General Partners
have considered various factors and believe that this Proposal is in the best
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<PAGE>
interests of the Fund's shareholders. If the Proposal is not approved, the
Fund's present fundamental restrictions will remain in effect and a shareholder
vote would be required before the Fund could engage in activities prohibited by
a fundamental restriction. THE DIRECTOR GENERAL PARTNERS RECOMMEND THAT THE
SHAREHOLDERS VOTE IN FAVOR OF THE ELIMINATION, RECLASSIFICATION AND AMENDMENT OF
THE FUND'S INVESTMENT RESTRICTIONS AS DESCRIBED ABOVE.
NOTICE TO BANKS AND BROKER/DEALERS
The Fund has previously solicited all Nominee and Broker/Dealer accounts as
to the number of additional proxy statements required to supply owners of
shares. Should additional proxy material be required for beneficial owners,
please forward such requests to: First Data Investor Services Group, Eaton Vance
Group of Funds, Proxy Department, P.O. Box 9122, Hingham, MA 02043-9717.
ADDITIONAL INFORMATION
After the reorganization is consummated, shareholders of the Successor Fund
wishing to submit proposals for inclusion in a proxy statement for a subsequent
shareholders' meeting should send their written proposals to: Secretary, Eaton
Vance Mutual Funds Trust, 24 Federal Street, Boston, MA 02110. Proposals must be
received in advance of a proxy solicitation to be included and the mere
submission of a proposal does not guarantee inclusion in the proxy statement
because compliance with certain federal securities law rules must also exist.
The expense of preparing, printing and mailing this Proxy Statement and
enclosures and the cost of soliciting proxies will be borne by the Fund. Proxies
will be solicited by mail and may be solicited in person or by telephone,
telegraph or facsimile by officers of the Fund, by personnel of its investment
adviser, EVM, by its transfer agent, First Data Investor Services Group, by
broker-dealer firms or by a professional solicitation organization. The expenses
connected with the solicitation of these proxies and with any further proxies
which may be solicited by the Fund's officers, by EVM's personnel, by its
transfer agent, by broker-dealer firms or by a professional solicitation
organization, in person, by telephone, by telegraph or by facsimile will be
borne by the Fund. A written proxy may be delivered to the Fund or its transfer
agent prior to the meeting by facsimile machine, graphic communication equipment
or similar electronic transmission. The Fund will reimburse banks, broker-dealer
firms, and other persons holding shares registered in their names or in the
names of their nominees, for their expenses incurred in sending proxy material
to and obtaining proxies from the beneficial owners of such shares.
All proxy cards solicited by the Director General Partners that are signed
and received by the Secretary prior to the meeting, and which are not revoked,
will be voted at the meeting. Shares represented by such proxies will be voted
in accordance with the instructions thereon. If no specification is made on the
proxy card with respect to a proposal, it will be voted for the proposal.
Abstentions noted on proxy cards will be tallied accordingly, and not as
affirmative votes. Broker non-votes (i.e., shares held by brokers or nominees as
to which (i) instructions have not been received from the beneficial owners or
the persons entitled to vote and (ii) the broker or nominee does not have
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<PAGE>
discretionary voting power with respect to a Proposal) will not be counted as
shares that are present and entitled to vote for purposes of determining the
presence of a quorum. In addition, broker non-votes will not be entitled to vote
on such Proposal and will not be included in the tally of the number of votes
cast in favor of, against or abstained from such Proposal.
In the event that sufficient votes in favor of any Proposal set forth in
the Notice of this meeting are not received by December 12, 1997, the persons
named as attorneys in the enclosed proxy may propose one or more adjournments of
the meeting to permit further solicitation of proxies with respect to such
Proposal. A shareholder vote may be taken on one or more of the proposals in
this Proxy Statement prior to such adjournment if sufficient votes have been
received and it is otherwise appropriate. Any adjournment will require the
affirmative vote of the holders of a majority of the shares present in person or
by proxy and entitled to vote at the session of the meeting to be adjourned. The
persons named as attorneys in the enclosed proxy will vote in favor of such
adjournment those proxies which they are entitled to vote in favor of the
Proposal for which further solicitation of proxies is to be made. They will vote
against any such adjournment those proxies required to be voted against such
Proposal. Broker non-votes will not be entitled to vote on any such adjournment
and will not be counted for such purpose. Abstentions voted on proxy cards will
be tallied accordingly, and not as affirmative votes, with respect to the vote
on any such adjournment. The costs of any such additional solicitation and of
any adjourned session will be borne by the Fund.
A copy of the Fund's most recent annual report to shareholders may be
obtained without charge by contacting the Fund at 24 Federal Street, Boston, MA
02110 (800-225-6265).
EATON VANCE MUNICIPAL BOND FUND L.P.
October 22, 1997
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EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made this
17th day of October, 1997, between Eaton Vance Municipal Bond Fund L.P. (the
"Fund") a limited partnership organized and existing under the Uniform Limited
Partnership Act of California, and Eaton Vance Mutual Funds Trust, a
Massachusetts business trust (the "Trust") on behalf of Eaton Vance Municipal
Bond Fund, a series thereof (the "Successor Fund"), each with principal offices
at 24 Federal Street, Boston, Massachusetts 02110.
1. Plan of Reorganization and Liquidation
a. The Fund shall assign, sell, convey, transfer and deliver to the
Successor Fund at the closing provided for in Section 2 (hereinafter called the
"Closing") all of its then existing assets of every kind and nature. In
consideration therefor, the Trust, on behalf of the Successor Fund, agrees that
at the Closing (i) the Successor Fund shall assume all of the Fund's obligations
and liabilities then existing, whether absolute, accrued, contingent or
otherwise, including without limitation all unpaid fees and expenses of the Fund
in connection with the transactions contemplated hereby and (ii) the Trust shall
issue and deliver to the Fund a number of full and fractional shares of
beneficial interest of the Successor Fund (the "Successor Fund Shares"), which
is equal to the number of full and fractional shares of common stock of the Fund
then outstanding.
b. Upon consummation of the transactions described in paragraph (a) of this
Section 1, the Fund shall distribute in complete liquidation and termination to
its partners of record, in accordance with the Amended and Restated Agreement of
Limited Partnership of the Fund, as of the Closing Date the Successor Fund
Shares received by the Fund. Such distribution shall be accomplished by the
establishment of an account on the share record books of the Successor Fund in
the name of each partner of the Fund representing a number of full and
fractional Successor Fund Shares equal to the number of shares of the Fund owned
of record by the partner at the Closing Date.
c. As promptly as practicable after the liquidation of the Fund as
aforesaid, the legal existence of the Fund shall be terminated.
2. Closing and Closing Date. The Closing shall occur at 4:00 p.m. on
December 31, 1997 or at such later time and date as the parties may mutually
agree (the "Closing Date").
3. Conditions Precedent. The obligations of the Fund, the Trust and the
Successor Fund to effect the transactions contemplated hereunder (the
"Reorganization") shall be subject to the satisfaction of each of the following
conditions:
a. All such filings shall have been made with, and all such authorizations
and orders shall have been received from, the Securities and Exchange Commission
(the "SEC") and state securities commissions as may be necessary to permit the
parties to carry out the transactions contemplated by this Agreement.
b. Each party shall have received an opinion of counsel substantially to
the effect that for federal income tax purposes: (1) no gain or loss will be
recognized by the Fund upon the transfer of all of its assets to the Successor
<PAGE>
Fund solely in exchange for the Successor Fund Shares and the assumption by
the Successor Fund of the liabilities of the Fund and the distribution by the
Fund of such Successor Fund Shares to the partners of the Fund; (2) no gain or
loss will be recognized by the Successor Fund upon the receipt of all of the
assets of the Fund in exchange solely for Successor Fund Shares and the
assumption by the Successor Fund of the liabilities of the Fund; (3) the tax
basis of the Successor Fund in assets received from the Fund will be the same as
the tax basis of such assets in the hands of the Fund immediately prior to the
transfer of such assets to the Successor Fund; (4) the Successor Fund's tax
holding period for the assets acquired from the Fund will include, in each
instance, the Fund's tax holding period for those assets; (5) no gain or loss
will be recognized by the Fund's partners upon the exchange of their shares of
the Fund solely for Successor Fund Shares as part of the reorganization; (6) the
tax basis of the Successor Fund Shares received by the Fund's partners in the
transaction will be, for each partner, the same as the tax basis of the shares
of the Fund exchanged therefor (reduced by the amount of the liabilities assumed
by the Successor Fund in the transaction); and (7) the tax holding period of the
Successor Fund Shares received by the Fund's partners will include, for each
partner, the Fund's tax holding period for such shares, provided that assets
contributed by the Fund to the Successor Fund were held as capital assets in the
hands of the Fund on the date of the exchange. The opinion may cover any
additional matters deemed material by such counsel;
c. This Agreement and the Reorganization shall have been adopted and
approved by the affirmative vote of the holders of a majority of the shares of
the Fund outstanding and entitled to vote. All shares of the Fund present and
entitled to vote will be voted together as a single class.
d. The Trust, on behalf of the Successor Fund, shall have entered into an
investment advisory contract with Eaton Vance Management, a Transfer Agency
Agreement with First Data Investor Services Group and a Custodian Agreement with
Investors Bank & Trust Company. Each such agreement shall be in each case
substantially identical in form and substance to those respective agreements in
effect at the Closing Date between the Fund and said other parties. Each such
agreement shall have been approved by the Board of Trustees of the Trust and, to
the extent required by law, by a majority of the Trustees of the Trust who are
not "interested persons" of the Trust as defined in the Investment Company Act
of 1940.
e. The Board of Trustees of the Trust, including a majority of those
Trustees of the Trust who are not "interested persons" of the Trust as defined
in the Investment Company Act of 1940, shall have selected as auditors for the
Successor Fund such auditors as shall have been selected and ratified for the
Fund.
At any time prior to the Closing, any of the foregoing conditions except
3(c) may be waived by the Director General Partners of the Fund or the Trustees
of the Trust if, in their judgment, such waiver will not have a material adverse
effect on the interests of the partners of the Fund.
4. Amendment. This Agreement may be amended at any time by action of the
Director General Partners of the Fund and the Trustees of the Trust,
notwithstanding approval thereof by the partners of the Fund, provided that no
amendment shall have a material adverse effect on the interests of the partners
of the Fund.
5. Termination. The Director General Partners of the Fund or the Trustees
of the Trust may terminate this Agreement and abandon the Reorganization,
notwithstanding approval thereof by the partners of the Fund, at any time prior
to the Closing, if circumstances should develop that, in their judgment, make
proceeding with the Reorganization inadvisable.
6. Limitation of Liability of the Trustees and Shareholders. Copies of the
Declaration of Trust of the Trust, as it may be amended from time to time, are
<PAGE>
on file with the Secretary of the Commonwealth of Massachusetts, and notice
is hereby given of the limitation of shareholder liability as set forth in such
instrument. The obligations assumed by the Trust on behalf of the Successor Fund
pursuant to this Agreement shall be limited in all cases to the Successor Fund
and its assets. None of the other series of the Trust shall be liable for any
obligations assumed by the Successor Fund hereunder. No party named herein shall
seek satisfaction or any obligation hereunder from the shareholders or any
shareholder of the Trust or the Successor Fund. No party named herein shall seek
satisfaction or any obligation from the Trustees of the Trust or any individual
Trustee.
7. Certificates. Certificates which have been issued to partners will not
be required to be surrendered in connection with the reorganization. Such
certificates will be deemed to be for shares of the Successor Fund.
This Agreement shall be executed in any number of counterparts each of
which shall be deemed to be an original, but all of such counterparts together
shall constitute only one instrument.
IN WITNESS WHEREOF, the parties have hereunto caused this Agreement to be
executed and delivered by their duly authorized officers as of the day and year
first above written.
EATON VANCE MUNICIPAL BOND FUND L.P.
Attest:
By:_____________________________ By:______________________________
Assistant Secretary President
EATON VANCE MUTUAL FUNDS TRUST
on behalf of Eaton Vance Municipal Bond Fund
Attest:
By:_____________________________ By:______________________________
Assistant Secretary Vice President
<PAGE>
EXHIBIT B
INVESTMENT RESTRICTIONS
[Proposed Additions in Italics and Proposed Deletions in Brackets]
As a matter of fundamental investment policy, the Fund may not:
(1) With respect to 75% of its total assets, [purchase the securities
(except securities issued or guaranteed by the United States Government or any
of its agencies or instrumentalities) of any issuer if as a result of such
purchase] invest more than 5% of its total assets (taken at current value)
[would be invested] in the securities of [such] any one issuer, or invest in
more than 10% of the outstanding voting securities of any one issuer, except
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities; [having the same security provisions (without regard to
priority of lien). For the purpose of this limitation, (i) project notes of
local housing authorities or other obligations secured or backed by agreements
between the local issuing authorities and the United States Government or any of
its agencies or instrumentalities shall be considered securities guaranteed by
the United States Government or its agency or instrumentality, (ii) each
government entity, i.e., state, county municipality, each subdivision, agency or
instrumentality thereof and each multi-state agency of which each state is a
member, is considered a separate issuer, (iii) the Fund shall be entitled to
purchase municipal bonds of an issuer without considering as being subject to
this limitation the securities of the same issuer held in its portfolio which
are to be refunded by such municipal bonds so purchased, and (iv) the
determination of the "issuer" of a municipal bond which is not a general
obligation bond will be made by the Fund's investment adviser on the basis of
the characteristics of the obligation and other relevant factors, the most
significant of which is the source of funds committed to meeting interest and
principal payments of such Bond];
(2) Borrow money or issue senior securities, except as permitted by the
1940 Act [(a) from a bank as a temporary measure for extraordinary or emergency
purposes or to facilitate the orderly disposition of portfolio investments to
accommodate redemption requests or (b) by entering into reverse repurchase
agreements, provided that the Fund's combined borrowings under (a) and (b) do
not exceed an amount equal to one-third of the current value of its total assets
(including the amount borrowed) less liabilities (not including the amount
borrowed) at the time the borrowing is made. Any such borrowings may be secured
or unsecured. The Fund is also authorized to borrow from banks an additional 5%
of its total assets for temporary or emergency purposes such as clearances of
portfolio transactions and dividend payments. The Fund may issue securities
(including senior securities) appropriate to evidence the indebtedness,
including reverse repurchase agreements, which the Fund is permitted to incur];
(3) [Pledge its assets, except that the Fund may pledge not more than
one-third of its total assets (taken at current value) to secure borrowings made
in accordance with investment limitation (2) above. For the purpose of this
limitation the deposit of cash, cash equivalents, portfolio securities or other
assets in a segregated account with the Fund's custodian, subcustodian or
transfer agent in connection with any of the Fund's investment transactions is
not considered to be a pledge of assets;]
<PAGE>
(4) Purchase securities on margin (but the Fund may obtain such short-term
credits as may be necessary for the clearance of purchases and sales of
securities). The deposit or payment by the Fund of initial or maintenance margin
in connection with futures contacts or related options transactions is not
considered the purchase of a security on margin;
(5)* Make short sales of securities or maintain a short position, unless at
all times when a short sale position is open [the Fund either] it owns an equal
amount of such securities or [owns] securities convertible into or exchangeable,
without payment of any further consideration, for securities of the same issue
as, and equal in amount to, the securities sold short and unless not more than
25% of the Fund's net assets (taken at current value) is held as collateral for
such sales at any one time;
(6) Underwrite or participate in the marketing of securities of others
[issued by other persons], except insofar as it may technically be deemed to be
an underwriter in selling a portfolio security under circumstances which may
require the registration of the same under the Securities Act of 1933 [in
selling or disposing of a portfolio security];
(7) Purchase or sell real estate [in the ordinary course of its business],
although [the Fund] it may purchase and sell securities which are secured by
real estate [or interests therein, securities for which real estate or interests
therein provide a source for payment of principal and interest] and securities
of companies which invest or deal in real estate [or interests therein; the Fund
reserves the freedom of action to hold, manage (or engage other persons to
manage), deal with in any manner, and sell or otherwise dispose of any real
estate or interests therein directly or indirectly acquired by the Fund as a
result of the ownership of securities];
(8) Purchase or sell physical commodities or contracts for the purchase or
sale of physical commodities;
(9) Make loans to any person [other persons], except by (a) the acquisition
of [municipal bonds, money market instruments,] debt instruments [securities and
other obligations in which the Fund is authorized to invest in accordance with
its investment objective and policies] and making portfolio investments, (b)
entering into repurchase agreements, and (c) lending [its] portfolio securities;
(10) [Participate on a joint or a joint and several basis in any trading
account in securities;]
(11)* Purchase or retain [the] in its portfolio any securities [of any]
issued by an issuer [other than the securities of the Fund, if those Director
General Partners of the Fund, or those officers and directors of the Fund's] any
of whose officers, directors, trustees or security holders is an officer or
Director General Partner of the Fund or is a member, officer, director or
trustee of any investment adviser of the Fund, if after the purchase of the
securities of such issuer by the Fund one or more of such persons owns [who
individually own] beneficially more than 1/2 of 1% of the outstanding shares or
securities or both ( all taken at market value) of such issuer, and such persons
owning more than 1/2 of 1% of such shares or securities, together own
beneficially more than 5% of such [outstanding] shares or securities or both
(all taken at market value);
(12) [Purchase securities issued by any other open-end investment company
or trust, except as they may be acquired as a part of a merger, consolidation or
requisition of assets;]
(13) [Invest more than 5% of its total assets (taken at current value) in
industrial revenue bonds where the payment of principal and interest thereon is
<PAGE>
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];
(14)* Invest more than [5%] 15% of its [total] net assets[(taken at market
value)] in [securities with legal or contractual restrictions on resale (except
for repurchase agreements)] investments which are not readily marketable,
including restricted securities and repurchase agreements maturing in more than
seven days. Restricted securities for the purpose of this limitation do not
include securities eligible for resale pursuant to Rule 144A under the
Securities Act of 1933 and commercial paper issued pursuant to Section 4(2) of
said Act that the Director General Partners of the Fund, or their delegate,
determine to be liquid; or
(15) [With respect to portfolio investments other than Municipal Bonds, the
Fund will not purchase securities (other than securities issued or guaranteed by
the United States Government or any of its agencies or instrumentalities) if, as
a result of such purchase, 25% or more of the Fund's total assets would be
invested in any one industry, nor enter into a repurchase agreement if, as a
result thereof, more than 10% of its total assets would be subject to repurchase
agreements maturing in more than seven days.]
- ----------------
* This restriction would become nonfundamental if Proposal 2 is approved. Any
reference to the Director General Partners of the Fund would be changed to
the Trustees of the Trust if Proposal 1 is approved.
<PAGE>
EATON VANCE MUNICIPAL THIS PROXY IS SOLICITED
BOND FUND L.P. ON BEHALF OF THE DIRECTOR
GENERAL PARTNERS
KNOW ALL MEN BY THESE PRESENTS: That the undersigned, revoking previous proxies
for such shares, hereby appoints Thomas J. Fetter, Alan R. Dynner and Eric G.
Woodbury, or any of them, attorneys of the undersigned with full power of
substitution, to vote all shares of Eaton Vance Municipal Bond Fund L.P. (the
"Fund") which the undersigned is entitled to vote at the Special Meeting of
Partners to be held on December 12, 1997 at the principal office of the Fund, 24
Federal Street, Boston, Massachusetts 02110, commencing at 1:00 P.M. (Boston
time), and at any and all adjournments thereof. Receipt of the Notice of and
Proxy Statement for said Meeting is acknowledged.
The shares represented by this proxy will be voted on the following matters as
specified on the reverse side by the undersigned. If no specification is made,
this proxy will be voted in favor of all such matters. Note:
This proxy must be returned in order for your shares to be voted.
THE DIRECTOR GENERAL PARTNERS
RECOMMEND A VOTE IN FAVOR OF
ALL MATTERS
-----------------------------------
-----------------------------------
Please sign exactly as your
name or names appear at left.
Dated:
----------------------------
<PAGE>
1. To approve the Agreement
and Plan of Reorganization
set forth as Exhibit A to
the Proxy Statement. FOR AGAINST ABSTAIN 1.
2. To approve the revision of certain fundamental investment restrictions
as set forth in Exhibit B to the Proxy Statement as follows:
2A. Amend the restriction
concerning investing in
any one issuer. FOR AGAINST ABSTAIN 2A.
2B. Amend the restriction
concerning borrowing. FOR AGAINST ABSTAIN 2B.
2C. Eliminate the restriction
concerning pledging. FOR AGAINST ABSTAIN 2C.
2D. Amend the
restriction concerning
purchases on margin. FOR AGAINST ABSTAIN 2D.
2E. Reclassify and amend the
restriction concerning short
sales. FOR AGAINST ABSTAIN 2E.
2F. Amend the restriction
concerning underwriting
securities. FOR AGAINST ABSTAIN 2F.
2G. Amend the restriction
concerning real estate. FOR AGAINST ABSTAIN 2G.
2H. Amend the restriction
concerning lending. FOR AGAINST ABSTAIN 2H.
2I. Eliminate the restriction
concerning joint trading. FOR AGAINST ABSTAIN 2I.
<PAGE>
2J. Amend and reclassify the
restriction concerning investing
in securities held by affiliates. FOR AGAINST ABSTAIN 2J.
2K. Eliminate the restriction
concerning investing in investment
companies. FOR AGAINST ABSTAIN 2K.
2L. Eliminate the restriction
concerning unseasoned issuers. FOR AGAINST ABSTAIN 2L.
2M. Reclassify and amend the
restriction concerning
investing in restricted
securities. FOR AGAINST ABSTAIN 2M.
2N. Eliminate the restriction
concerning concentration. FOR AGAINST ABSTAIN 2N.
AS TO ANY OTHER MATTER UPON WHICH THE LIMITED PARTNERS ARE PERMITTED TO VOTE,
SAID ATTORNEYS SHALL VOTE IN ACCORDANCE WITH THEIR JUDGMENT.
