EATON VANCE MUTUAL FUNDS TRUST, 485BPOS, 1998-04-27

EATON VANCE MUTUAL FUNDS TRUST
485BPOS, 1998-04-27

Previous: MASCOTECH INC, DEF 14A, 1998-04-27

Next: GE INVESTMENT FUNDS INC, 485BPOS, 1998-04-27

<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 27, 1998

1933 ACT FILE NO. 2-90946
1940 ACT FILE NO. 811-4015

- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933 [X]

POST-EFFECTIVE AMENDMENT NO. 45 [X]

REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]

AMENDMENT NO. 48 [X]

EATON VANCE MUTUAL FUNDS TRUST
----------------------------------------------------
(FORMERLY EATON VANCE GOVERNMENT OBLIGATIONS TRUST)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)

24 FEDERAL STREET, BOSTON, MASSACHUSETTS 02110
----------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

617-482-8260
-------------------------------------
(REGISTRANT'S TELEPHONE NUMBER)

ALAN R. DYNNER
24 FEDERAL STREET, BOSTON, MASSACHUSETTS 02110
----------------------------------------------
(NAME AND ADDRESS OF AGENT FOR SERVICE)

It is proposed that this filing will become effective pursuant to Rule 485
(check appropriate box):

[ ] immediately upon filing [ ] on (date) pursuant to
pursuant to paragraph(b) paragraph (a)(1)
[X] on May 1, 1998 pursuant to paragraph (b) [ ] 75 days after filing pursuant
to paragraph (a)(2)
[ ] 60 days after filing pursuant to [ ] on (date) pursuant to
paragraph (a)(1) paragraph (a)(2).

If appropriate, check the following box:

[ ] this post effective amendment designates a new effective date for a
previously filed post-effective amendment.

TITLE OF SECURITIES BEING REGISTERED: Shares of Beneficial Interest

Cash Management Portfolio and Government Obligations Portfolio have also
executed this Registration Statement.

- -------------------------------------------------------------------------------
<PAGE>

This Amendment to the registration statement on Form N-1A consists of the
following documents and papers:

Cross Reference Sheet required by Rule 481(a) under the Securities Act of
1933

Part A-- The Combined Prospectus of:
Eaton Vance Cash Management Fund
Eaton Vance Liquid Assets Fund
Eaton Vance Money Market Fund
Eaton Vance Tax Free Reserves

The Prospectuses of:
Eaton Vance Government Obligations Fund
Eaton Vance Municipal Bond Fund

Part B-- The Combined Statement of Additional Information of:
Eaton Vance Cash Management Fund
Eaton Vance Liquid Assets Fund
Eaton Vance Money Market Fund
Eaton Vance Tax Free Reserves

The Statements of Additional Information of:
Eaton Vance Government Obligations Fund
Eaton Vance Municipal Bond Fund

Part C-- Other Information

Signatures

Exhibit Index Required by Rule 483(b) under the Securities Act of 1933

Exhibits

This Amendment is not intended to amend the Prospectus and Statement of
Additional Information of any series of the Registrant not identified above.

<PAGE>

EATON VANCE MUTUAL FUNDS TRUST
CROSS REFERENCE SHEET FOR

EATON VANCE CASH MANAGEMENT FUND
EATON VANCE LIQUID ASSETS FUND
EATON VANCE MONEY MARKET FUND
EATON VANCE TAX FREE RESERVES

ITEMS REQUIRED BY FORM N-1A

PART A

ITEM NO. ITEM CAPTION PROSPECTUS CAPTION
- ------ -------- -------------------------------
1. ............ Cover Page Cover Page
2. ............ Synopsis Shareholder and Fund Expenses
3. ............ Condensed Financial The Funds' Financial
Information Highlights; Yield
Information
4. ............ General Description of The Funds' Investment
Registrant Objectives; How the Funds
Invest their Assets;

Organization of the Funds and
the Portfolio
5. ............ Management of the Fund Management of the Funds and the
Portfolio
5A............. Management's Discussion of Not Applicable
Fund Performance
6. ............ Capital Stock and Other Organization of the Funds and
Securities the Portfolio; Reports to
Shareholders; The Lifetime
Investing Account/
Distribution Options;
Distributions and Taxes
7. ............ Purchase of Securities Valuing Shares; Distribution
Being Offered Plans; How to Buy Shares; The
Lifetime Investing Account/
Distribution Options; The
Eaton Vance Exchange
Privilege; Eaton Vance
Shareholder Services
8. ............ Redemption or Repurchase How to Redeem Shares
9. ............ Pending Legal Proceedings Not Applicable

PART B
STATEMENT OF ADDITIONAL
ITEM NO. ITEM CAPTION INFORMATION CAPTION
- ------ ------------ -------------------------------
10. ............ Cover Page Cover Page
11. ............ Table of Contents Table of Contents
12. ............ General Information and Other Information
History
13. ............ Investment Objectives and Additional Information about
Policies Investment Policies;
Investment Restrictions
14. ............ Management of the Fund Trustees and Officers
15. ............ Control Persons and Control Persons and Principal
Principal Holders of Holders of Securities
Securities
16. ............ Investment Advisory and Investment Adviser and
Other Services Administrator; Distribution
Plan (for Liquid Assets and
Money Market Funds only);
Custodian; Independent
Accountants
17. ............ Brokerage Allocation and Portfolio Security Transactions
Other Practices
18. ............ Capital Stock and Other Other Information
Securities
19. ............ Purchase, Redemption and Determination of Net Asset
Pricing of Securities Value; Principal Underwriter;
Being Offered Service for Withdrawal;
Distribution Plan (for Liquid
Assets and Money Market Funds
only)
20. ............ Tax Status Taxes
21. ............ Underwriters Principal Underwriter
22. ............ Calculation of Performance Calculation of Yield
Data Quotations; Yield Information
23. ............ Financial Statements Financial Statements

<PAGE>

EATON VANCE MUTUAL FUNDS TRUST
CROSS REFERENCE SHEET FOR
EATON VANCE GOVERNMENT OBLIGATIONS FUND
ITEMS REQUIRED BY FORM N-1A

PART A

ITEM NO. ITEM CAPTION PROSPECTUS CAPTION
- ------ ------------ -------------------------------
1. ............ Cover Page Cover Page
2. ............ Synopsis Shareholder and Fund Expenses
3. ............ Condensed Financial The Fund's Financial
Information Highlights; Performance
Information
4. ............ General Description of The Fund's Investment
Registrant Objective; Investment
Policies and Risks;
Organization of the Fund and
the Portfolio
5. ............ Management of the Fund Management of the Fund and the
Portfolio
5A............. Management's Discussion of Not Applicable
Fund Performance
6. ............ Capital Stock and Other Organization of the Fund and
Securities the Portfolio; Reports to
Shareholders; The Lifetime
Investing Account/
Distribution Options;
Distributions and Taxes
7. ............ Purchase of Securities Valuing Shares; Distribution
Being Offered and Service Plans; How to Buy
Shares; The Lifetime
Investing Account/
Distribution Options; The
Eaton Vance Exchange
Privilege; Eaton Vance
Shareholder Services
8. ............ Redemption or Repurchase How to Redeem Shares
9. ............ Pending Legal Proceedings Not Applicable

PART B
STATEMENT OF ADDITIONAL
ITEM NO. ITEM CAPTION INFORMATION CAPTION
- ------ ------------ -------------------------------
10. ............ Cover Page Cover Page
11. ............ Table of Contents Table of Contents
12. ............ General Information and Other Information
History
13. ............ Investment Objectives and Additional Information about
Policies Investment Policies;
Investment Restrictions
14. ............ Management of the Fund Trustees and Officers
15. ............ Control Persons and Control Persons and Principal
Principal Holders of Holders of Securities
Securities
16. ............ Investment Advisory and Investment Adviser and
Other Services Administrator; Service Plan -
Class A Shares; Distribution
Plans - Class B and Class C
Shares; Custodian;
Independent Accountants
17. ............ Brokerage Allocation and Portfolio Security Transactions
Other Practices
18. ............ Capital Stock and Other Other Information
Securities
19. ............ Purchase, Redemption and Determination of Net Asset
Pricing of Securities Value; Principal Underwriter;
Being Offered Services for Accumulation -
Class A Shares; Service for
Withdrawal; Service Plan -
Class A Shares; Distribution
Plans - Class B and Class C
Shares
20. ............ Tax Status Taxes
21. ............ Underwriters Principal Underwriter
22. ............ Calculation of Performance Investment Performance
Data
23. ............ Financial Statements Financial Statements

<PAGE>

EATON VANCE MUTUAL FUNDS TRUST
CROSS REFERENCE SHEET FOR
EATON VANCE MUNICIPAL BOND FUND
ITEMS REQUIRED BY FORM N-1A

PART A

ITEM NO. ITEM CAPTION PROSPECTUS CAPTION
- ------ ------------ -------------------------------
1. ............ Cover Page Cover Page
2. ............ Synopsis Shareholder and Fund Expenses
3. ............ Condensed Financial The Fund's Financial
Information Highlights; Performance
Information
4. ............ General Description of The Fund's Investment
Registrant Objective; Investment
Policies and Risks;
Organization of the Fund
5. ............ Management of the Fund Management of the Fund
5A............. Management's Discussion of Not Applicable
Fund Performance
6. ............ Capital Stock and Other Organization of the Fund;
Securities Reports to Shareholders; The
Lifetime Investing Account/
Distribution Options;
Distributions and Taxes
7. ............ Purchase of Securities Valuing Shares; Distribution
Being Offered and Service Plans; How to Buy
Shares; The Lifetime
Investing Account/
Distribution Options; The
Eaton Vance Exchange
Privilege; Eaton Vance
Shareholder Services
8. ............ Redemption or Repurchase How to Redeem Shares
9. ............ Pending Legal Proceedings Not Applicable

PART B
STATEMENT OF ADDITIONAL
ITEM NO. ITEM CAPTION INFORMATION CAPTION
- ------ ------------ -------------------------------
10. ............ Cover Page Cover Page
11. ............ Table of Contents Table of Contents
12. ............ General Information and Other Information
History
13. ............ Investment Objectives and Additional Information about
Policies Investment Policies;
Investment Restrictions
14. ............ Management of the Fund Trustees and Officers
15. ............ Control Persons and Control Persons and Principal
Principal Holders of Holders of Securities
Securities
16. ............ Investment Advisory and Investment Adviser; Service
Other Services Plan - Class A Shares;
Distribution Plan - Class B
Shares; Custodian;
Independent Certified Public
Accountants
17. ............ Brokerage Allocation and Portfolio Security Transactions
Other Practices
18. ............ Capital Stock and Other Other Information
Securities
19. ............ Purchase, Redemption and Determination of Net Asset
Pricing of Securities Value; Principal Underwriter;
Being Offered Services for Accumulation -
Class A Shares; Service for
Withdrawal; Service Plan -
Class A Shares; Distribution
Plan - Class B Shares
20. ............ Tax Status Taxes; Tax Equivalent Yield
Table
21. ............ Underwriters Principal Underwriter
22. ............ Calculation of Performance Investment Performance Data
23. ............ Financial Statements Financial Statements

<PAGE>

PART A
INFORMATION REQUIRED IN A PROSPECTUS

[GRAPHIC OMITTED] Investing
EATON VANCE for the
- ---------------- 21st
Mutual Funds Century

Eaton Vance Cash Management Fund
Eaton Vance Liquid Assets Fund
Eaton Vance Money Market Fund
Eaton Vance Tax Free Reserves

Eaton Vance Cash Management Fund ("Cash Fund"), Eaton Vance Liquid Assets Fund
("Liquid Assets Fund") and Eaton Vance Money Market Fund ("Money Market Fund")
are diversified money market funds seeking high income consistent with
preservation of capital and maintenance of liquidity. Eaton Vance Tax Free
Reserves ("Tax Free Reserves") is a diversified money market fund seeking high
income exempt from regular federal income tax consistent with preservation of
capital and maintenance of liquidity. The Cash, Liquid Assets and Money Market
Funds invest all of their assets in Cash Management Portfolio (the "Portfolio"),
a separate, diversified investment company with the same investment objective,
rather than investing in and managing their own portfolio of securities. Tax
Free Reserves invests directly in its own portfolio of money market instruments.
Each Fund is a series of Eaton Vance Mutual Funds Trust (the "Trust").

AN INVESTMENT IN A FUND IS NOT GUARANTEED OR FEDERALLY INSURED BY THE U.S.
GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD
OR ANY OTHER GOVERNMENT AGENCY. SHARES OF A FUND ARE NOT OBLIGATIONS OR DEPOSITS
OF, OR GUARANTEED OR ENDORSED BY, ANY BANK OR OTHER INSURED DEPOSITORY
INSTITUTION. THERE IS NO ASSURANCE THAT A FUND WILL BE ABLE TO MAINTAIN A STABLE
NET ASSET VALUE OF $1.00 PER SHARE. SHARES OF EACH FUND INVOLVE INVESTMENT
RISKS, INCLUDING FLUCTUATIONS IN VALUE AND THE POSSIBLE LOSS OF SOME OR ALL OF
THE PRINCIPAL INVESTMENT.

This combined Prospectus is designed to provide you with information you should
know before investing. Please retain this document for future reference. A
combined Statement of Additional Information dated May 1, 1998, as supplemented
from time to time, has been filed with the Securities and Exchange Commission
(the "Commission") and is incorporated herein by reference. This Statement of
Additional Information is available without charge from the Funds' principal
underwriter, Eaton Vance Distributors, Inc. (the "Principal Underwriter"), 24
Federal Street, Boston, MA 02110 (telephone (800) 225-6265). TAX FREE RESERVES
IS NOT AVAILABLE FOR PURCHASE IN ALL STATES. CONTACT THE PRINCIPAL UNDERWRITER
OR YOUR BROKER FOR INFORMATION.

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.

CONTENTS
<TABLE>
<CAPTION>
Page Page
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>

Shareholder and Fund Expenses 2 How to Buy Shares 12
The Funds' Financial Highlights 4 How to Redeem Shares 12
The Funds' Investment Objectives 7 Reports to Shareholders 14
How the Funds Invest their Assets 7 The Lifetime Investing Account/Distribution Options 14
Organization of the Funds and the Portfolio 9 The Eaton Vance Exchange Privilege 15
Management of the Funds and the Portfolio 10 Eaton Vance Shareholder Services 16
Distribution Plans 11 Distributions and Taxes 17
Valuing Shares 11 Yield Information 17
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Prospectus dated May 1, 1998

<PAGE>

SHAREHOLDER AND FUND EXPENSES
SHAREHOLDER TRANSACTION EXPENSES

<TABLE>
<CAPTION>
Cash Liquid Assets Money Market Tax Free
Fund Fund Fund Reserves
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales Charges Imposed on Purchases of Shares None None None None
Fees to Exchange Shares None None None None

Range of Declining Contingent Deferred Sales Charges
Imposed on Redemption during the First Seven Years
(as a percentage of redemption proceeds exclusive
of all reinvestments and capital appreciation in the
account) None 5.0% - 0% 5.0% - 0% None

<CAPTION>
Annual Fund (and Allocated Portfolio) Operating Expenses (as a percentage of average net assets)

Cash Liquid Assets Money Market Tax Free
Fund Fund Fund Reserves
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>

Investment Adviser Fee 0.50% 0.50% 0.50% 0.35%*
Rule 12b-1 Distribution (and/or Service) Fees -- 0.25 0.87 --
Interest Expense -- -- -- 0.01
Other Expense 0.28 0.60 0.36** 0.17
---- ---- ---- ----
Total Operating Expenses 0.78 1.35 1.73** 0.53*
==== ==== ==== ====

*After reduction by Investment Adviser.
**After expense reduction.

<CAPTION>
EXAMPLE

An investor would pay the following contingent deferred sales charge and expenses on a $1,000 investment, assuming
5% annual return and redemption at the end of each period:

1 Year N/A $ 64 $ 68 N/A
3 Years N/A 83 94 N/A
5 Years N/A 94 114 N/A
10 Years N/A 162 204 N/A

<CAPTION>
An investor would pay the following expenses on the same investment, assuming 5% annual return and no redemptions:

1 Year $ 8 $ 14 $ 18 $ 5
3 Years 25 43 54 17
5 Years 43 74 94 30
10 Years 97 162 204 66
</TABLE>

NOTES: The tables and Examples summarize the aggregate expenses of the Funds and
the Portfolio and are designed to help investors understand the costs and
expenses they will bear, directly or indirectly, by investing in the Funds.
Information for the Funds is based on their expenses for the most recent fiscal
year. Absent an expense allocation, Other Expenses and Total Operating Expenses
would have been 0.45% and 1.82%, respectively, for the Money Market Fund. Absent
a fee reduction, the Investment Adviser Fee and Total Operating Expenses would
have been 0.50% and 0.68%, respectively, for Tax Free Reserves.

THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. Federal
regulations require the Examples to assume a 5% annual return, but actual annual
return will vary. For further information regarding the expenses of both the
Funds and the Portfolio, see "The Funds" Financial Highlights", "Management of
the Funds and the Portfolio" and "How to Redeem Shares". A long-term shareholder
in the Money Market Fund may pay more than the economic equivalent of the
maximum front-end sales charge permitted by a rule of the National Association
of Securities Dealers, Inc. See "Distribution Plans".

In the case of the Liquid Assets and Money Market Funds, no contingent deferred
sales charge ("CDSC") is imposed on (a) shares purchased more than six years
prior to redemption, (b) shares acquired through the reinvestment of
distributions or (c) any appreciation in value of other shares in the account
(see "How to Redeem Shares"), and no such charge is imposed on exchanges of Fund
shares for shares of one or more other funds listed under "The Eaton Vance
Exchange Privilege".

The Cash, Liquid Assets, and Money Market Funds invest exclusively in the
Portfolio. Other investment companies with different distribution arrangements
and fees may invest in the Portfolio in the future. See "Organization of the
Funds and the Portfolio".

<PAGE>

THE FUNDS' FINANCIAL HIGHLIGHTS

The following information should be read in conjunction with the audited
financial statements that appear in each Fund's annual report to shareholders.
Each Fund's financial statements have been audited by Coopers & Lybrand L.L.P.,
independent accountants, as experts in accounting and auditing. The financial
statements and the report of independent accountants are incorporated by
reference into the Statement of Additional Information. Further information
regarding the performance of the Funds, is contained in their annual reports to
shareholders which may be obtained without charge by contacting the Principal
Underwriter.

Cash Fund
-----------------------------------------------------------------------------------------------------------
Year Ended December 31,
-----------------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991+ 1990+ 1989+ 1988+
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value,
beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Income from operations:
Net investment
income $ 0.0478 $ 0.0470 $ 0.0522 $ 0.0345 $ 0.0251 $ 0.0306 $ 0.0537 $ 0.0755 $ 0.0846 $ 0.0688
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Less distributions:
From net investment
income $(0.0478) $(0.0470) $(0.0522) $(0.0345) $(0.0251) $(0.0306) $(0.0537) $(0.0755) $(0.0846) $(0.0688)
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end
of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
Total Return(1) 4.89% 4.82% 5.35% 3.49% 2.54% 3.14% 5.51% 7.82% 8.87% 7.12%
Ratios/Supplemental Data:
Net assets, end of year
(000's omitted) $146,743 $151,691 $155,251 $111,622 $112,200 $161,986 $195,488 $250,658 $246,220 $174,842
Ratio of expenses
to average daily
net assets(2) 0.78% 0.74% 0.74% 0.84% 0.67% 0.76% 0.75% 0.71% 0.71% 0.72%
Ratio of net
investment income
to average daily
net assets 4.79% 4.70% 5.22% 3.40% 2.51% 3.09% 5.44% 7.54% 8.46% 6.92%
(See footnotes on page 6)

<CAPTION>
Money Market Fund
--------------------------------------------------------
Year Ended December 31,
--------------------------------------------------------
1997 1996 1995*
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of year $ 1.00 $ 1.00 $ 1.00
-------- -------- --------
Income from operations:
Net investment income $ 0.0381 $ 0.0370 $ 0.0312
-------- -------- --------
Less distributions:
From net investment income $(0.0381) $(0.0370) $(0.0312)
-------- -------- --------
Net asset value, end of year $ 1.00 $ 1.00 $ 1.00
Total Return(1) 3.88% 3.77% 3.17%
Ratios/Supplemental Data+:
Net assets, end of year (000's omitted) $ 23,809 $ 31,250 $ 12,951
Ratio of net expenses to average daily net assets(2) 1.73% 1.73% 1.68%++
Ratio of net investment income to average daily net assets 3.83% 3.70% 4.19%++

+For the following periods indicated, the operating expenses of the Fund reflect an allocation of expenses to the Administrator.
Had such action not been taken, the ratios and net investment income per share would have been:

Ratios: (As a percentage of average daily net assets)(2)
Expenses(2) 1.82% 1.76% 1.85%++
Net investment income 3.74% 3.66% 4.03%++
Net investment income per share $ 0.0372 $ 0.0367 $ 0.0300
======== ========= =========

(See footnotes on page 6)
</TABLE>

<PAGE>
THE FUNDS' FINANCIAL HIGHLIGHTS (continued)

<TABLE>
<CAPTION>
Tax Free Reserves
-----------------------------------------------------------------------------------------------------------
Year Ended December 31,
-----------------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991+ 1990+ 1989+ 1988+
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value,
beginning of year $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Income from
operations:
Net investment
income $ 0.0312 $ 0.0303 $ 0.0347 $ 0.0235 $ 0.0184 $ 0.0235 $ 0.0388 $ 0.0519 $ 0.0552 $ 0.0471
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total income from
operations $ 0.0312 $ 0.0303 $ 0.0347 $ 0.0235 $ 0.0184 $ 0.0235 $ 0.0388 $ 0.0519 $ 0.0552 $ 0.0471
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Less distributions:
From net investment
income $(0.0312) $(0.0303) $(0.0347) $(0.0235) $(0.0184) $(0.0235) $(0.0388) $(0.0519) $(0.0552) $(0.0471)
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total
distributions $(0.0312) $(0.0303) $(0.0347) $(0.0235) $(0.0184) $(0.0235) $(0.0388) $(0.0519) $(0.0552) $(0.0471)
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end
of year $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
Total Return(1) 3.16% 3.08% 3.53% 2.36% 1.86% 2.36% 3.92% 5.30% 5.67% 4.80%
Ratios/Supplemental
Data+:
Net assets, end of
year (000's
omitted) $ 33,960 $ 23,355 $ 23,912 $ 29,021 $ 60,247 $ 44,337 $ 47,140 $ 53,753 $ 26,745 $ 73,855
Ratio of interest
expense to
average daily net
assets 0.01% 0.02% 0.05% 0.07% 0.03% 0.06% 0.09% 0.05% 0.26% 0.08%
Ratio of other
expenses to
average daily net
assets(3) 0.52% 0.33% 0.34% 0.47% 0.62% 0.53% 0.49% 0.70% 0.82% 0.76%
Ratio of other
expenses to
average daily net
assets after
custodian fee
reduction(3) 0.46% 0.27% -- -- -- -- -- -- -- --
Ratio of net
investment income
to average daily
net assets 3.12% 3.04% 3.47% 2.27% 1.82% 2.34% 3.92% 5.19% 5.60% 4.70%

+For the periods indicated, the operating expenses of the Fund were reduced either by a reduction of the investment adviser fee,
an allocation of expenses to the Investment Adviser, or both. Had such actions not been taken, the ratios and net investment
income per share would have been as follows:
Ratios (As a
percentage of
average daily net
assets):
Other expenses(3) 0.67% 0.69% 0.73% 0.87% 0.82% 0.92% 0.91% 0.85% 0.85%
Other expenses
after custodian
fee reduction(3) 0.61% 0.63% -- -- -- -- -- -- --
Net investment
income 2.96% 2.66% 3.02% 1.88% 1.65% 2.01% 3.50% 5.04% 5.57%
Net investment income
per share $ 0.0296 $ 0.0266 $ 0.0303 $ 0.0189 $ 0.0167 $ 0.0201 $ 0.0346 $ 0.0501 $ 0.0548
======== ======== ======== ======== ======== ======== ======== ======== ========

<CAPTION>
Leverage Average Daily Average Weekly Average Amount
Analysis Amount of Balance of Balance of of Debt
Year ended Debt Outstanding Debt Outstanding Shares Outstanding Per Share
December 31, at End of Year During Year During Year During Year
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1988+ $ 166,000 $1,401,000 $72,897,174 $0.019
1989+ 82,000 1,825,000 52,596,221 0.035
1990+ -- 192,000 31,243,924 0.006
1991+ -- 379,000 31,686,707 0.012
1992 -- 367,000 38,904,763 0.009
1993 2,428,000 285,000 48,697,998 0.006
1994 6,117,000 440,145 40,463,382 0.011
1995 1,266,000 279,586 51,107,215 0.005
1996 -- 116,757 61,730,866 0.002
1997 -- 134,611 64,279,572 0.002

(See footnotes on page 6)
</TABLE>

<PAGE>

THE FUNDS' FINANCIAL HIGHLIGHTS (continued)

<TABLE>
<CAPTION>
Liquid Assets Fund
------------------------------------------------------
Year Ended December 31,
----------------------------------------------------
1997 1996 1995 1994 1993**
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Income from operations:
Net investment income $ 0.0420 $ 0.0432 $ 0.0505 $ 0.0328 $ 0.0113
Less distributions:
From net investment income $(0.0420) $(0.0432) $(0.0505) $(0.0328) $(0.0113)
-------- -------- -------- -------- --------
Net asset value, end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Return(1) 4.29% 4.41% 5.16% 3.29% 1.14%
Ratios/Supplemental Data+:
Net assets, end of year
(000's omitted) $13,001 $19,910 $34,026 $118,599 $10,566
Ratio of expenses to average
daily net assets(2) 1.35% 1.13% 0.91% 0.94% 1.49%
Ratio of net investment income
to average daily net assets 4.21% 4.31% 5.11% 3.55% 1.66%++

+For the periods indicated, the operating expenses of the Fund reflect an
allocation of expenses to the Administrator. Had such actions not been taken,
the ratios and net investment income per share would have been as follows:

Ratios: (As a percentage of average daily net assets)

Expenses(2) -- -- -- -- 1.80%++
Net investment income -- -- -- -- 1.35%++
Net investment income per share -- -- -- -- 0.0092

<CAPTION>
Liquid Assets Fund
----------------------------------------------------------------
Year Ended March 31,
---------------------------------------------------------------
1993+ 1992+ 1991+ 1990+ 1989+ 1988+
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- --------
Income from operations:
Net investment income $ 0.0217 $ 0.0415 $ 0.0621 $ 0.0726 $ 0.0632 $ 0.0477
Less distributions:
From net investment income $(0.0217) $(0.0415) $(0.0621) $(0.0726) $(0.0632) $(0.0477)
-------- -------- -------- -------- -------- --------
Net asset value, end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ========
Total Return(1) 2.35% 4.38% 6.50% 7.59% 6.37% 4.46%
Ratios/Supplemental Data+:
Net assets, end of year
(000's omitted) $18,553 $9,145 $19,996 $21,601 $10,705 $13,105
Ratio of expenses to average
daily net assets(2) 0.92% 1.23% 1.68% 2.08% 1.71% 1.42%
Ratio of net investment income
to average daily net assets 2.33% 4.30% 6.23% 7.20% 6.24% 5.82%
+For the periods indicated, the operating expenses of the Fund reflect an
allocation of expenses to the Administrator. Had such actions not been taken,
the ratios and net investment income per share would have been as follows:
Ratios: (As a percentage of average daily net assets)
Expenses(2) 1.42% 1.73% 2.19% 2.47% 2.43% 3.16%
Net investment income 1.85% 3.80% 5.72% 6.81% 5.52% 4.08%
Net investment income per share 0.0171 0.0372 0.0570 0.0687 0.0559 0.0374

* For the period from the start of business, April 5, 1995 to December 31, 1995.

** For the nine months ended December 31, 1993. The Liquid Assets Fund changed its fiscal year end
from March 31 to December 31, effective June 14, 1993.
+ Audited by the Funds' previous auditors.
++ Annualized.
(1) Total return is calculated assuming a purchase at the net asset value on the first day and a sale
at the net asset value on the last day of each period reported. Distributions, if any, are assumed to be
reinvested at the net asset value on the payable date. Total return is computed on a non-annualized basis.
(2) Includes the Money Market Fund's, Cash Fund's and Liquid Assets Fund's share of the Portfolio's allocated
expenses for the periods while the Funds were investing directly in the Portfolio.
(3) The expense ratios for the year ended December 31, 1996 and thereafter have been adjusted to reflect a change
in reporting requirements. The new reporting guidelines require Tax Free Reserves to increase its expense ratio
by the effect of any expense offset arrangements with its service providers. The expense ratios for each of the
prior years have not been adjusted to reflect this change.
</TABLE>

<PAGE>

THE FUNDS' INVESTMENT OBJECTIVES

THE INVESTMENT OBJECTIVE OF CASH MANAGEMENT FUND, LIQUID ASSETS FUND and MONEY
MARKET FUND is to provide as high a rate of income as may be consistent with
preservation of capital and maintenance of liquidity. The investment objective
of TAX FREE RESERVES is to provide a means whereby investors may earn as high a
rate of income exempt from regular federal income tax as may be consistent with
the preservation of capital and maintenance of liquidity. The investment
objective and policies of each Fund may be changed by the Trustees without a
vote of shareholders; as a matter of policy, the Trustees would not materially
change the investment objective of a Fund without shareholder approval. EACH
FUND SEEKS TO MAINTAIN A CONSTANT NET ASSET VALUE OF $1 PER SHARE, ALTHOUGH
THERE CAN BE NO ASSURANCE IT WILL BE ABLE TO DO SO.

The Cash Fund and Tax Free Reserves are offered to shareholders in exchange for
their Class A shares of the Eaton Vance Group of Funds. The Money Market Fund is
offered to shareholders in exchange for their Class B and Class C shares of the
Eaton Vance Group of Funds. (The Money Market Fund may not be a suitable
investment for investors who do not intend to use it as an exchange vehicle.)
The Liquid Assets Fund is currently closed to new investments, whether by
exchange or initial subscription.

The Funds cannot eliminate risk of loss or assure achievement of their
investment objectives. None of the Funds is a complete investment program, and
prospective investors should take into account their objectives and other
investments when considering the purchase of Fund shares.

Boston Management and Research ("BMR"), a wholly-owned subsidiary of Eaton Vance
Management ("Eaton Vance"), serves as investment adviser to the Portfolio. Eaton
Vance serves as investment adviser to Tax Free Reserves. BMR and Eaton Vance are
each sometimes referred to herein as an "Adviser" or collectively as the
"Advisers." Eaton Vance also acts as the administrator (the "Administrator") to
Cash, Liquid Assets and Money Market Funds. The offices of the Investment
Advisers and the Administrator are located at 24 Federal Street, Boston, MA
02110.

HOW THE FUNDS INVEST THEIR ASSETS

CASH FUND, LIQUID ASSETS FUND, AND MONEY MARKET FUND

Each of these Funds seeks its objective by investing all of its assets in the
Portfolio, which is itself an open-end investment company. The Portfolio invests
in the following types of high quality, U.S. dollar-denominated money market
instruments of domestic and foreign issuers:

o U.S. GOVERNMENT SECURITIES: marketable securities issued or guaranteed as to
principal or interest by the U.S. Government or by its agencies or
instrumentalities. Some of these securities are backed by the full faith and
credit of the U.S. Government; others are backed only by the credit of the
agency or instrumentality issuing the securities.

o PRIME COMMERCIAL PAPER: high-grade, short- term obligations issued by banks,
corporations, and other issuers.

o CORPORATE OBLIGATIONS: high-grade, short- term obligations other than prime
commercial paper.

o BANK CERTIFICATES OF DEPOSIT (CDS): negotiable certificates issued against
funds deposited in a commercial bank for a definite period of time and
earning a specified return.

o BANKERS' ACCEPTANCES: negotiable drafts or bills of exchange, which have
been "accepted" by a bank, means, in effect, that the bank has
unconditionally agreed to pay the face value of the instrument on maturity.

Investments are described further below under "All Funds -- Selection of
Investments." The Portfolio may invest without limit in securities of finance
companies or in securities of banks and thrift institutions (and their holding
companies) whenever yield differentials or money market conditions indicate that
such a concentration of the Portfolio's investments may be desirable.

The Portfolio may invest without limit in U.S. dollar-denominated obligations of
foreign issuers, including foreign banks. Such investments involve special
risks. These include future unfavorable political and economic developments,
possible withholding taxes, seizure of foreign deposits, interest limitations or
other governmental restrictions which might affect payment of principal or
interest. Additionally, there may be less public information available about
foreign banks and their branches. Foreign branches of foreign banks are not
regulated by U.S. banking authorities, and generally are not bound by
accounting, auditing and financial reporting standards comparable to U.S. banks.
Although the Adviser carefully considers these factors when making investments,
the Portfolio does not limit the amount of its assets which can be invested in
one type of instrument or in any foreign country.

TAX FREE RESERVES

Tax Free Reserves seeks to achieve its objective by investing in a diversified
portfolio of high quality obligations, including bonds, notes and commercial
paper, issued by or on behalf of states, territories and possessions of the
United States and their political subdivisions, agencies and instrumentalities,
and the District of Columbia, the interest from which is exempt from regular
federal income tax. The Fund may acquire stand-by commitments with respect to
portfolio securities and, with respect to 10% of net assets, may purchase shares
of unaffiliated investment companies with the same objective. Investments are
described further below under "All Funds -- Selection of Investments".

The Fund is designed for those institutional and individual investors who seek
to earn tax-free income and to avoid fluctuation in the value of their
investment while at the same time having the flexibility to liquidate and
withdraw funds at any time. By combining the assets of shareholders, the Fund
can provide yields normally available through investment in tax-free money
market instruments of large denominations, and can obtain the benefits of
diversification and liquidity through investment in the obligations of many
issuers with various maturities.

A portion of the dividends paid by the Fund may be subject to federal income
tax, and dividends may be subject to state and local taxes. As a matter of
fundamental policy which may not be changed unless authorized by shareholder
vote, the Fund may not purchase any securities which would cause more than 20%
of the value of its total assets to be invested in securities the interest on
which is not exempt from federal income tax.

Interest income from certain types of municipal obligations may be subject to
the federal alternative minimum tax (the "AMT"). On December 31, 1997, the Fund
had 2.9% of its net assets invested in such obligations. Distributions to
corporate investors of certain interest income may also be subject to the AMT.

ALL FUNDS -- SELECTION OF INVESTMENTS

The Portfolio and Tax Free Reserves will invest only in U.S. dollar-denominated
money market instruments meeting credit criteria which the Trustees believe
present minimal credit risk, and that are (i) short-term obligations rated in
one of the two highest short-term ratings categories by at least two nationally
recognized rating services (or, if only one rating service has rated the
security, by that service), or (ii) unrated securities determined by the Adviser
to be of comparable quality. For a description of the instruments and ratings
see Appendix B in the Statement of Additional Information. Each of the Portfolio
and Tax Free Reserves will maintain a dollar-weighted average maturity of 90
days or less and will not invest in securities with remaining maturities of more
than 397 days. The Portfolio and Tax Free Reserves may invest in variable or
floating-rate securities some of which provide for periodic recovery of
principal on demand. Under certain conditions, these securities may be deemed to
have remaining maturities equal to the time remaining until the next interest
adjustment date or the date on which principal can be recovered on demand. The
Portfolio will not invest more than 5% (determined at the time of investment) of
its total assets in securities rated in the second highest short-term rating
category or comparable unrated securities. Tax Free Reserves has a similar 5%
limit on investments in certain municipal obligations which rely on the credit
of a corporate entity. Neither the Portfolio nor Tax Free Reserves will purchase
securities of any issuer if, immediately thereafter, more than 5% of its total
assets would be invested in securities of that issuer. The Portfolio and Tax
Free Reserves follow investment and valuation policies designed to maintain a
stable net asset value of $1 per Fund share, although there is no assurance that
these policies will be successful.

Considerations of liquidity and preservation of capital mean that the Portfolio
or Tax Free Reserves may not necessarily invest in money market instruments
paying the highest available yield at a particular time. Consistent with their
investment objectives, the Portfolio and Tax Free Reserves will attempt to
maximize yields by portfolio trading and by buying and selling portfolio
investments in anticipation of or in response to changing economic and money
market conditions and trends. The Portfolio and Tax Free Reserves may also
invest to take advantage of what their Advisers believe to be temporary
disparities in yields of different segments of the money market or among
particular instruments within the same segment of the market. These policies, as
well as the relatively short maturities of obligations purchased by the
Portfolio and Tax Free Reserves, may result in frequent changes in their
portfolios. The Portfolio and Tax Free Reserves will not usually pay brokerage
commissions in connection with the purchase or sale of portfolio securities.

OTHER PRACTICES. The Portfolio and Tax Free Reserves may lend their portfolio
securities to broker-dealers and may enter into repurchase agreements. These
transactions must be fully collateralized at all times, but involve some risk to
the lender if the other party should default on its obligations or if the lender
is delayed or prevented from recovering the collateral. The Portfolio and Tax
Free Reserves may also purchase securities on a when-issued basis and for future
delivery by means of "forward commitments". A segregated account will be
maintained to cover such purchase obligations. In addition, the Portfolio may
temporarily borrow up to 5% of the value of its total assets to satisfy
redemption requests or settle securities transactions.

An investment in a Fund is subject to interest rate risk and credit risks of the
issuers of the money market instruments. EACH FUND'S INCOME WILL FLUCTUATE AND
NET ASSET VALUE UNDER CERTAIN CIRCUMSTANCES COULD CHANGE. If any changes were
made in a Fund's investment objective, the Fund may no longer be appropriate to
certain investors. Investments and restrictions thereon are further described in
the Statement of Additional Information.

ORGANIZATION OF THE FUNDS AND THE PORTFOLIO

EACH FUND IS A DIVERSIFIED SERIES OF EATON VANCE MUTUAL FUNDS TRUST, A BUSINESS
TRUST ESTABLISHED UNDER MASSACHUSETTS LAW PURSUANT TO A DECLARATION OF TRUST
DATED MAY 7, 1984 AS AMENDED. The Trustees of the Trust are responsible for the
overall management and supervision of its affairs. The Trust may issue an
unlimited number of shares of beneficial interest (no par value per share) in
one or more series (such as the Funds). Each share represents an equal
proportionate beneficial interest in a Fund. When issued and outstanding, the
shares are fully paid and nonassessable by the Trust and redeemable as described
under "How to Redeem Shares". There are no annual meetings of shareholders, but
special meetings may be held as required by law to elect or remove Trustees and
consider certain other matters. Shareholders are entitled to one vote for each
full share held. Fractional shares may be voted proportionately. Shares have no
preemptive or conversion rights and are freely transferable. In the event of the
liquidation of a Fund, shareholders are entitled to share pro rata in the net
assets of that Fund available for distribution to shareholders.

The Trustees of the Trust have considered the advantages and disadvantages of
investing the assets of the Cash, Liquid Assets and Money Market Funds in the
Portfolio, as well as the advantages and disadvantages of the two-tier format.
The Trustees believe that the structure may offer opportunities for growth in
the assets of the Portfolio, may afford the potential for economies of scale for
each Fund and may over time result in lower expenses for a Fund.

THE PORTFOLIO IS ORGANIZED AS A TRUST UNDER THE LAWS OF THE STATE OF NEW YORK
AND INTENDS TO BE TREATED AS A PARTNERSHIP FOR FEDERAL TAX PURPOSES. In addition
to selling an interest to a Fund, the Portfolio may sell interests to other
affiliated and non-affiliated mutual funds or institutional investors. Such
investors will invest in the Portfolio on the same terms and conditions and will
pay a proportionate share of the Portfolio's expenses. However, the other
investors investing in the Portfolio are not required to sell their shares at
the same public offering price as a Fund due to variations in sales commissions
and other operating expenses. Therefore, these differences may result in
differences in returns experienced by investors in the various funds that invest
in the Portfolio. Information regarding other pooled investment entities or
funds which invest in the Portfolio may be obtained by contacting the Principal
Underwriter, 24 Federal Street, Boston, MA 02110 (617) 482-8260.

Whenever a Fund as an investor in the Portfolio is requested to vote on matters
pertaining to the Portfolio (other than the termination of the Portfolio's
business, which may be determined by the Trustees of the Portfolio without
investor approval), the Fund will hold a meeting of Fund shareholders and will
vote its interest in the Portfolio for or against such matters proportionately
to the instructions to vote for or against such matters received from Fund
shareholders. A Fund shall vote shares for which it receives no voting
instructions in the same proportion as the shares for which it receives voting
instructions. Other investors in the Portfolio may alone or collectively acquire
sufficient voting interests in the Portfolio to control matters relating to the
operation of the Portfolio, which may require the Fund to withdraw its
investment in the Portfolio or take other appropriate action. Any such
withdrawal could result in a distribution "in kind" of portfolio securities (as
opposed to a cash distribution from the Portfolio). If securities are
distributed, a Fund could incur brokerage, tax or other charges in converting
the securities to cash. In addition, the distribution in kind may result in a
less diversified portfolio of investments or adversely affect the liquidity of
the Fund. Notwithstanding the above, there are other means for meeting
shareholder redemption requests, such as borrowing.

A Fund may withdraw (completely redeem) all its assets from the Portfolio at any
time if the Board of Trustees of the Trust determines that it is in the best
interest of the Fund to do so. In the event a Fund withdraws all of its assets
from the Portfolio, or the Board of Trustees of the Trust determines that the
investment objective of the Portfolio is no longer consistent with the
investment objective of the Fund, the Trustees would consider what action might
be taken, including investing the assets of the Fund in another pooled
investment entity or retaining an investment adviser to manage the Fund's assets
in accordance with its investment objective. A Fund's investment performance may
be affected by a withdrawal of all its assets (or the assets of another investor
in the Portfolio) from the Portfolio.

Tax Free Reserves' investment policies include a fundamental investment
provision to permit the Fund to invest its assets in an open-end management
investment company having substantially the same investment policies and
restrictions as the Fund. The Board of Trustees may implement the new investment
policy at any time additional funds investing in the other investment company
become available. This structure is commonly referred to as "master-feeder."

Although each Fund offers only its own shares of beneficial interest, it is
possible that a Fund might become liable for a misstatement or omission in this
Prospectus regarding another Fund because the Funds use this combined
Prospectus. The Trustees of the Trust have considered this factor in approving
the use of a combined Prospectus.

MANAGEMENT OF THE FUNDS AND THE PORTFOLIO

THE PORTFOLIO ENGAGES BMR, AS ITS INVESTMENT ADVISER. TAX FREE RESERVES ENGAGES
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. BMR OR EATON VANCE ACTS
AS INVESTMENT ADVISER TO INVESTMENT COMPANIES AND VARIOUS INDIVIDUAL AND
INSTITUTIONAL CLIENTS WITH ASSETS UNDER MANAGEMENT OF APPROXIMATELY $25 BILLION.
Eaton Vance is a wholly-owned subsidiary of Eaton Vance Corp., a publicly-held
holding company which through its subsidiaries and affiliates, engages primarily
in investment management, administration and marketing activities. The Principal
Underwriter is a wholly-owned subsidiary of Eaton Vance.

Acting under the general supervision of the Board of Trustees of the Portfolio,
BMR manages the Portfolio's investments and affairs. BMR also furnishes for the
use of the Portfolio office space and all necessary office facilities, equipment
and personnel for servicing the investments of the Portfolio. Under its
investment advisory agreement with the Portfolio, BMR receives a monthly
advisory fee of 1/24 of 1% (equivalent to 0.50% annually) of the average daily
net assets of the Portfolio. For the fiscal year ended December 31, 1997, the
Portfolio paid BMR advisory fees equivalent to 0.50% of the Portfolio's average
daily net assets for such year.

Eaton Vance, acting under the general supervision of the Trustees of the Trust,
manages Tax Free Reserves' investments and affairs. Eaton Vance also furnishes
for the use of Tax Free Reserves office space and all necessary office
facilities, equipment and personnel for servicing the investments of the Fund.
Under its investment advisory agreement with Tax Free Reserves, Eaton Vance
receives a monthly advisory fee of 1/24 of 1% (equivalent to 0.50% annually) of
average monthly net assets of the Fund. For the fiscal year ended December 31,
1997, the Fund paid Eaton Vance advisory fees equivalent to 0.35% of the Fund's
average daily net assets for such year. Absent a fee reduction, the Fund would
have paid Eaton Vance advisory fees equivalent to 0.50% of average daily net
assets.

Michael B. Terry has acted as the portfolio manager of the Portfolio since it
commenced operations. Mr. Terry manages other Eaton Vance funds and is a Vice
President of Eaton Vance and BMR.

William H. Ahern, Jr. has acted as the portfolio manager of Tax Free Reserves
since 1989. Mr. Ahern manages other Eaton Vance portfolios and is a Vice
President of Eaton Vance and of BMR.

Money market instruments are often acquired directly from the issuers thereof or
otherwise are normally traded on a net basis (without commission) 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 portfolio transactions, BMR
and Eaton Vance judge such executing firms' professional ability and quality of
service and use their best efforts to obtain execution at prices which are
advantageous and at reasonably competitive spreads. Subject to the foregoing,
BMR and Eaton Vance may consider sales of shares of the Funds or of other
investment companies sponsored by BMR or Eaton Vance as a factor in the
selection of firms to execute portfolio transactions. The Funds, the Portfolio
and BMR have adopted Codes of Ethics relating to personal securities
transactions. The Codes permit Eaton Vance personnel to invest in securities
(including securities that may be purchased or held by the Portfolio or Tax Free
Reserves) for their own accounts, subject to certain pre-clearance, reporting
and other restrictions and procedures contained in such Codes.

The Trust has retained the services of Eaton Vance to act as Administrator of
the Cash, Liquid Assets and Money Market Funds. The Trust has not retained the
services of an investment adviser for these Funds since the Trust seeks to
achieve the investment objective of each such Fund by investing its assets in
the Portfolio. As Administrator, Eaton Vance provides each such Fund with
general office facilities and supervises the overall administration of the
Funds. For these services, Eaton Vance currently receives no compensation. The
Trustees of the Trust may determine, in the future, to compensate Eaton Vance
for such services.

Like most mutual funds, the Funds and the Portfolio rely on computers in
conducting daily business and processing information. There is a concern that on
January 1, 2000 some computer programs will be unable to recognize the new year
and as a consequence computer malfunctions will occur. Eaton Vance is taking
steps that it believes are reasonably designed to address this potential problem
and to obtain satisfactory assurance from other service providers to the Funds
and the Portfolio that they are also taking steps to address the issue. There
can, however, be no assurance that these steps will be sufficient to avoid any
adverse impact on the Funds, the Portfolio or the shareholders.

The Funds and the Portfolio, as the case may be, will each be responsible for
all of its respective costs and expenses not expressly stated to be payable by
an Adviser under an investment advisory agreement, by Eaton Vance under its
administrative services agreements, or by the Principal Underwriter under the
distribution agreements.

DISTRIBUTION PLANS

The Eaton Vance Money Market Fund has adopted a compensation-type Distribution
Plan ("Plan") pursuant to Rule 12b-1 under the Investment Company Act of 1940
("1940 Act"). UNDER THE PLAN, THE FUND PAYS THE PRINCIPAL UNDERWRITER A FEE,
ACCRUED DAILY AND PAID MONTHLY, AT AN ANNUAL RATE NOT EXCEEDING .75% OF ITS
AVERAGE DAILY NET ASSETS TO FINANCE THE DISTRIBUTION OF FUND SHARES. The Plan
provides that the Fund may use such fees to compensate the Principal Underwriter
for sales commissions paid by it to financial services firms ("Authorized
Firms") on the sale of Fund shares and for interest expenses. The Principal
Underwriter uses its own funds to pay sales commissions (except on exchange
transactions and reinvestments) to Authorized Firms at the time of sale equal to
4% of the purchase price of the shares sold by such Firms. CDSCs paid to the
Principal Underwriter will be used to reduce amounts owed to it. With respect to
Money Market Fund shares acquired as a result of an exchange from the Class C
shares of one or more funds in the Eaton Vance Group of Funds, the Principal
Underwriter currently expects to pay monthly sales commissions to an Authorized
Firm approximately equivalent to 1/12 of .75% of the value of such shares sold
by such Firm and remaining outstanding for at least one year from the date of
original purchase of the Class C shares. Because payments to the Principal
Underwriter by the Fund are limited, uncovered distribution charges (sales
commissions due the Principal Underwriter plus interest, less the above fees and
CDSCs received by it) may exist indefinitely. During the fiscal year ended
December 31, 1997, the Money Market Fund paid or accrued sales commissions
equivalent to .75% of the Fund's average daily net assets. As of December 31,
1997, uncovered distribution charges amounted to approximately $3,974,000
(equivalent to 16.7% of the Fund's net assets on such day).

THE PLAN ALSO AUTHORIZES THE MONEY MARKET FUND TO MAKE PAYMENTS OF SERVICE FEES
TO THE PRINCIPAL UNDERWRITER, AUTHORIZED FIRMS AND OTHER PERSONS IN AMOUNTS NOT
EXCEEDING .25% OF THE MONEY MARKET FUND'S AVERAGE DAILY NET ASSETS FOR EACH
FISCAL YEAR. The Trustees of the Trust have authorized the Money Market Fund to
make quarterly service fee payments of .15% of the Fund's average daily net
assets for each fiscal year based on the value of Fund shares sold by such
persons and remaining outstanding for at least twelve months (including in such
holding period the prior holding of any Class C shares exchanged for Fund
shares). The Trustees may increase these payments at any time. Service fee
payments are made for personal services and/or the maintenance of shareholder
accounts. For the fiscal year ended December 31, 1997, the Fund paid or accrued
service fees under the Plan equivalent to .12% of the Fund's average daily net
assets for such year.

EATON VANCE LIQUID ASSETS FUND has also adopted a Distribution Plan pursuant to
Rule 12b-1 under the 1940 Act. The Liquid Assets Plan authorizes payments of
service fees to the Principal Underwriter, Authorized Firms and other persons of
.25% of the Fund's average daily net assets each year. The Trustees have
authorized the Fund to pay service fees of up to .25% per annum of the Fund's
average daily net assets based on the value of Fund shares sold and remaining
outstanding for at least one year. For the fiscal year ended December 31, 1997,
the Fund made payments under the Plan to the Principal Underwriter and
Authorized Firms equivalent to .25% of the Fund's average daily net assets.

With respect to all Funds, the Principal Underwriter may, from time to time, at
its own expense, provide additional incentives to Authorized Firms which employ
registered representatives who sell a Fund's shares and/or shares of other funds
distributed by the Principal Underwriter. In some instances, such additional
incentives may be offered only to certain Authorized Firms whose representatives
sell or are expected to sell significant amounts of shares. In addition, the
Principal Underwriter may from time to time increase or decrease the sales
commissions payable to Authorized Firms.

A Fund may, in its absolute discretion, suspend, discontinue or limit the
offering of its shares at any time. In determining whether any such action
should be taken, a Fund's management intends to consider all relevant factors,
including (without limitation) the size of the Fund, the investment climate and
market conditions, the volume of sales and redemptions of Fund shares and (if
applicable) the amount of uncovered distribution charges of the Principal
Underwriter. A distribution plan may continue in effect and payments may be made
under the plan following any such suspension, discontinuance or limitation of
the offering of Fund shares; however, the Fund is not contractually obligated to
continue the plan for any particular period of time. Suspension of the offering
of Fund shares would not, of course, affect a shareholder's ability to redeem
shares.

VALUING SHARES

EACH FUND VALUES ITS SHARES ONCE ON EACH DAY THE NEW YORK STOCK EXCHANGE (THE
"EXCHANGE") IS OPEN FOR TRADING, as of the close of regular trading on the
Exchange (normally 4:00 p.m. New York time). Each Fund's net asset value per
share is determined by the Trust's custodian, Investors Bank & Trust Company
("IBT"), (as agent for the Trust) in the manner authorized by the Trustees of
the Trust. Net asset value per share is computed by dividing the value of a
Fund's total assets, less its liabilities, by the number of shares outstanding.
The net asset value of each of the Cash, Liquid Assets and Money Market Funds
will reflect the value of its interest in the Portfolio (which, in turn,
reflects the underlying value of the Portfolio's assets and liabilities). The
Portfolio's net asset value is also determined as of the close of regular
trading on the Exchange by IBT (as custodian and agent for the Portfolio) in the
manner authorized by the Trustees of the Portfolio. Net asset value is computed
by subtracting the liabilities of the Portfolio from the value of its total
assets.

The investments of the Portfolio and of the Funds are valued at amortized cost
according to a Commission rule. The Portfolio and the Funds will not normally
have unrealized gains or losses so long as they value their investments by the
amortized cost method.

HOW TO BUY SHARES

SHARES OF A FUND MAY BE PURCHASED THROUGH AUTHORIZED FIRMS AT THE NET ASSET
VALUE PER SHARE OF THE FUND NEXT DETERMINED AFTER AN ORDER IS EFFECTIVE. An
Authorized Firm may charge its customers a fee in connection with transactions
executed by that Firm. Any Fund may suspend the offering of shares at any time
and may refuse an order for the purchase of shares. As of the date of this
Prospectus, shares of Liquid Assets Fund are not being offered.

An initial investment must be at least $1,000. Once an account has been
established the investor may send investments of $50 or more at any time. The
$1,000 minimum initial investment is waived for Bank Automated Investing
accounts, which may be established with an investment of $50 or more. See "Eaton
Vance Shareholder Services".

BY MAIL: The Account Application form which accompanies this Prospectus should
be completed, signed and mailed with a check, Federal Reserve Draft, or other
negotiable bank draft, drawn on a U.S. bank and payable in U.S. dollars, to the
order of the relevant Fund and mailed to the Trust's Transfer Agent (the
"Transfer Agent") as follows: First Data Investor Services Group, P.O. Box 5123,
Westborough, MA 01581-5123. Additional purchases may be made at any time through
the same mail procedure. (Please provide the shareholder name and account
number.)

BY WIRE: Investors may purchase shares by requesting their bank to transmit
immediately available funds (Federal Funds) by wire to:

ABA #011001438
Federal Reserve Bank of Boston
A/C Investors Bank & Trust Company
Further Credit Eaton Vance [name of] Fund
A/C # [Insert your account number -- see below]

Upon making an initial investment by wire, you must first telephone the Order
Department of the Funds 800-225-6265 (extension 3) to advise of your action and
to be assigned an account number. Failure to call will delay the order. The
Account Application form which accompanies this Prospectus must be promptly
forwarded to the Transfer Agent, at the above address. Additional investments
may be made at any time through the same wire procedure. The Funds' Order
Department must be advised by telephone of each transmission.

Transactions in money market instruments normally require immediate settlement
in federal funds. The Funds intend at all times to be as fully invested as is
feasible in order to maximize earnings. Accordingly, purchase orders will be
executed at the net asset value next determined after their receipt by a Fund
only if the Fund has received payment in cash or in Federal Funds. If remitted
in other than the foregoing manner, such as by money order or personal check,
purchase orders will be executed as of the close of business on the second
Boston business day after receipt. Information on how to procure a Federal
Reserve Draft or to transmit federal funds by wire is available at banks. A bank
may charge for these services.

In connection with employee benefit or other continuous group purchase plans,
the Cash and Money Market Funds may accept initial investments of less than
$1,000 on the part of an individual participant. In the event a shareholder who
is a participant of such a plan terminates participation in the plan, his or her
shares will be transferred to a regular individual account. However, such
account will be subject to the right of redemption by the Fund as described
below under "How to Redeem Shares."

HOW TO REDEEM SHARES

A SHAREHOLDER MAY REDEEM A FUND'S SHARES IN SEVERAL WAYS. The redemption price
will be based on the net asset value per Fund share next computed after a
redemption request is received in the proper form as described below. Within
seven days after receipt of a redemption request in good order by the Transfer
Agent, the relevant 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
applicable CDSCs (described below) and any federal income tax required to be
withheld.

REDEMPTION BY MAIL: Shares may be redeemed by delivering to the Transfer Agent,
First Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123,
during its business hours a written request for redemption in good order, plus
any share certificates with executed stock powers. Good order means that all
relevant documents must be endorsed by the record owner(s) exactly as the shares
are registered and the signature(s) must be guaranteed by a member of either the
Securities Transfer Association's STAMP program or the New York Stock Exchange's
Medallion Signature Program, or certain banks, savings and loan institutions,
credit unions, securities dealers, securities exchanges, clearing agencies and
registered securities associations as required by a Commission regulation and
acceptable to the Transfer Agent. In addition, in some cases, good order may
require the furnishing of additional documents such as where shares are
registered in the name of a corporation, partnership or fiduciary.

REDEMPTION BY TELEPHONE: Shares may be redeemed by telephone provided the
investor has not disclaimed in writing the use of the privilege. Such
redemptions can be effected by calling the Transfer Agent at 800-262-1122,
Monday through Friday, 9:00 a.m. to 4:00 p.m. (Eastern Standard Time). The
proceeds of a telephone redemption may be no greater than the maximum amount
established by the Principal Underwriter (currently $50,000) and may be mailed
only to the account address of record. Shares held by corporations, trusts or
certain other entities, or subject to fiduciary arrangements, may not be
redeemed by telephone. Neither the Trust, the Principal Underwriter nor the
Transfer Agent will be responsible for the authenticity of redemption
instructions received by telephone, provided that reasonable procedures to
confirm that instructions communicated by telephone are genuine have been
followed. Telephone instructions will be tape recorded. In times of drastic
economic or market changes, a telephone redemption may be difficult to
implement.

CHECKWRITING: Shareholders of Cash Fund and Tax Free Reserves with
uncertificated shares may redeem shares by check. Boston Safe Deposit and Trust
Company ("Boston Safe") will provide such shareholders with special forms of
checks drawn on Boston Safe. These checks may be made payable by the shareholder
to the order of any person in any amount of $500 or more. A shareholder will
continue to be entitled to distributions paid on shares until the check is
presented to Boston Safe for payment. If the amount of the check is greater than
the value of the shares held in the shareholder's account for which the Fund has
collected payment, the check will be returned and the shareholder may be subject
to extra charges. The shareholder 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 shareholders for this service. This
service may be terminated or suspended at any time by a Fund or Boston Safe.

WIRE TRANSFER TO A BANK ACCOUNT: Shareholders with uncertificated shares (for
which the Fund has collected payment) who have given complete written
authorization in advance may request that redemption proceeds of $1,000 or more
be wired directly to their bank account. The bank designated may be any bank in
the United States. The request may be made by letter or telephone to the
Transfer Agent at 800-262-1122. However, shareholders holding certificates for
shares in a Fund must return such certificates in properly endorsed form
requesting redemption prior to being eligible to have redemption proceeds wired
directly to their bank account.

Redemption proceeds, less any applicable CDSC and the amount of any federal
income tax required to be withheld, will be wired on the next business day
following receipt of the redemption request. The shareholder will be required to
pay any costs of such transaction. Each Fund may suspend or terminate this wire
transfer procedure.

REDEMPTION THROUGH AN AUTHORIZED FIRM: To sell shares at their net asset value
through an Authorized Firm (a repurchase), a shareholder can place a repurchase
order with the Authorized Firm, which may charge a fee. The value of those
shares is based upon the net asset value calculated after the order is deemed to
be received by the Trust or the Principal Underwriter, as the Trust's agent. It
is the Authorized Firm's responsibility to transmit promptly repurchase orders
to the Principal Underwriter. Throughout this Prospectus, the word "redemption"
is generally meant to include a repurchase.

While normally payments will be made in cash for redeemed shares, the Trust,
subject to compliance with applicable regulations, has reserved the right to pay
the redemption price of shares of the Fund, either totally or partially, by a
distribution in kind of readily marketable securities (which for some Funds
would be withdrawn by it from the Portfolio). The securities so distributed
would be valued pursuant to the Portfolio's or Tax Free Reserves' valuation
procedures. If a shareholder received a distribution in kind, the shareholder
could incur brokerage or other charges in converting the securities to cash.

If shares were recently purchased, the proceeds of a redemption will not be sent
until the check (including a certified or cashier's check) received for the
shares purchased has cleared. Payment for shares tendered for redemption may be
delayed up to 15 days from the purchase date when the purchase check has not yet
cleared. If the net asset value of Fund shares is not maintained at $1.00 per
share or if a CDSC (described below) is imposed on the redemption, a redemption
may result in a taxable gain or loss.

Due to the high cost of maintaining small accounts, the Trust reserves the right
to redeem accounts with balances of less than $750. Prior to such a redemption,
shareholders will be given 60 days' written notice to make an additional
purchase. However, no such redemption would be required by the Trust if the
cause of the low account balance was a reduction in the net asset value of Fund
shares. No CDSC will be imposed with respect to such involuntary redemptions.

CONTINGENT DEFERRED SALES CHARGE -- CASH FUND AND TAX FREE RESERVES. Shares of
the Fund acquired in an exchange for Class A shares of an Eaton Vance Fund
subject to a CDSC will be subject to the CDSC applicable to the exchanged shares
at the time of their purchase, unless such redemption is in connection with
another exchange for shares subject to such a charge.

CONTINGENT DEFERRED SALES CHARGE -- LIQUID ASSETS AND MONEY MARKET FUNDS. Shares
redeemed within the first six years of their purchase (except shares acquired
through the reinvestment of distributions) generally will be subject to a CDSC.
This CDSC is imposed on any redemption the amount of which exceeds the aggregate
value at the time of redemption of (a) all shares in the account purchased more
than six years prior to the redemption, (b) all shares in the account acquired
through reinvestment of distributions, and (c) the increase, if any, in the
value of all other shares in the account (namely those purchased within the six
years preceding the redemption) over the purchase price of such shares.
Redemptions are processed in a manner to maximize the amount of redemption
proceeds which will not be subject to a CDSC. That is, each redemption will be
assumed to have been made first from the exempt amounts referred to in clauses
(a), (b) and (c) above, and second through liquidation of those shares in the
account referred to in clause (c) on a first-in-first-out basis. Any CDSC which
is required to be imposed on share redemptions will be made in accordance with
the following schedule:

Year of Redemption
After Purchase CDSC
- -----------------------------------------------------------------------
First or Second 5%
Third 4%
Fourth 3%
Fifth 2%
Sixth 1%
Seventh and following 0%

In calculating the CDSC upon the redemption of Liquid Assets or Money Market
Fund shares acquired in an exchange for Class B or Class C shares of an Eaton
Vance Fund (see "The Eaton Vance Exchange Privilege" below), the CDSC schedule
applicable to the shares at the time of purchase will apply and the purchase of
Fund shares acquired in the exchange is deemed to have occurred at the time of
the original purchase of the exchanged shares. See "The Eaton Vance Exchange
Privilege" for the CDSC schedules applicable to Fund shares acquired in an
exchange.

No CDSC will be imposed on any Fund's shares which have been sold to Eaton Vance
or its affiliates, or to their respective employees or clients. The CDSC will
also be waived for shares redeemed (1) pursuant to a Withdrawal Plan (see "Eaton
Vance Shareholder Services"), (2) as part of a required distribution from a
tax-sheltered retirement plan or (3) following the death of all beneficial
owners of such shares, provided the redemption is requested within one year of
death (a death certificate and other applicable documents may be required). In
addition, shares acquired as a result of a merger or liquidation of another
Eaton Vance sponsored fund will have a CDSC imposed at the same rate as would
have been imposed in the prior fund.

REPORTS TO SHAREHOLDERS

EACH FUND WILL ISSUE TO ITS SHAREHOLDERS SEMI-ANNUAL AND ANNUAL REPORTS
CONTAINING FINANCIAL STATEMENTS. Financial statements included in annual reports
are audited by the independent accountants. Shortly after the end of each
calendar year, shareholders will be furnished with information necessary for
preparing federal and state tax returns. Consistent with applicable law,
duplicate mailings of shareholder reports and certain other Fund information to
shareholders residing at the same address may be eliminated.

THE LIFETIME INVESTING ACCOUNT/DISTRIBUTION OPTIONS

AFTER AN INVESTOR MAKES AN INITIAL PURCHASE OF SHARES, THE TRANSFER AGENT WILL
SET UP A LIFETIME INVESTING ACCOUNT FOR THE INVESTOR ON THE TRUST'S RECORDS.
This account is a complete record of all transactions which at all times shows
the balance of shares owned. All shares are held in non-certificate form by the
Trust's Transfer Agent for the account of the shareholder, and the Fund will not
issue share certificates.

At least quarterly, shareholders will receive a statement showing complete
details of any transaction and the current balance in the account. THE LIFETIME
INVESTING ACCOUNT ALSO PERMITS A SHAREHOLDER TO MAKE ADDITIONAL INVESTMENTS IN
SHARES BY SENDING A CHECK FOR $50 OR MORE to the Transfer Agent.

Any questions concerning a shareholder's account or services available may be
directed by telephone to EATON VANCE SHAREHOLDER SERVICES at 800-225-6265
extension 2, or in writing to the Transfer Agent, First Data Investor Services
Group, P.O. Box 5123, Westborough, MA 01581-5123 (please provide the name of the
shareholder, the Fund and the account number).

THE FOLLOWING DISTRIBUTION OPTIONS WILL BE AVAILABLE TO ALL LIFETIME INVESTING
ACCOUNTS and may be changed as often as desired by written notice to the Funds'
dividend disbursing agent, First Data Investor Services Group, P.O. Box 5123,
Westborough, MA 01581-5123. The currently effective option will appear on each
account statement.

SHARE OPTION -- All distributions will be reinvested in additional shares.

CASH OPTION -- All distributions will be paid in cash.

The SHARE OPTION will be assigned if no other option is specified.
Distributions, including those reinvested, will be reduced by any withholding
required under federal income tax laws.

If shareholder communications are returned by the United States Postal Service
or other delivery service as not deliverable, the distribution option on the
account will be automatically changed to the SHARE OPTION until such time as the
shareholder selects a different option. No interest will accrue on amounts
represented by uncashed distribution or redemption checks.

DISTRIBUTION INVESTMENT OPTION. In addition to the distribution options set
forth above, distributions may be invested in additional shares of another Eaton
Vance fund. Before selecting this option, a shareholder should obtain a
prospectus of the other Eaton Vance fund and consider its objectives and
policies carefully.

"STREET NAME" ACCOUNTS. If shares of a Fund are held in a "street name" account
with an Authorized Firm, all recordkeeping, transaction processing and payments
of distributions relating to the beneficial owner's account will be performed by
the Authorized Firm, and not by the Fund and its Transfer Agent. Since the Fund
will have no record of the beneficial owner's transactions, a beneficial owner
should contact the Authorized Firm to purchase, redeem or exchange shares, to
make changes in or give instructions concerning the account, or to obtain
information about the account. The transfer of shares in a "street name" account
to an account with another Authorized Firm or to an account directly with the
Fund involves special procedures and will require the beneficial owner to obtain
historical purchase information about the shares in the account from the
Authorized Firm. Before establishing a "street name" account with an Authorized
Firm, or transferring the account to another Authorized Firm, an investor
wishing to reinvest distributions should determine whether the Authorized Firm
which will hold the shares allows reinvestment of distributions in "street name"
accounts.

THE EATON VANCE EXCHANGE PRIVILEGE

Shares of CASH FUND and TAX FREE RESERVES currently may be exchanged for Class A
shares of any fund in the Eaton Vance Group of Funds, Eaton Vance Income Fund of
Boston and Eaton Vance Short-Term Treasury Fund. Shares of Cash Fund or Tax Free
Reserves acquired under the exchange privilege which have not previously been
subject to payment of a sales charge may be exchanged for shares of a fund with
a sales charge only upon payment of the appropriate charge. These offers are
available only in states where shares of the fund being acquired may legally be
sold.

LIQUID ASSETS and MONEY MARKET FUND shares currently may be exchanged for Class
B shares of one or more funds in the Eaton Vance Group of Funds which are
subject to a CDSC. Such shares may also be exchanged for Eaton Vance Prime Rate
Reserves, which are subject to an early withdrawal charge. If Fund shares were
acquired in exchange for Class C shares of one or more funds in the Eaton Vance
Group of Funds or EV Classic Senior Floating-Rate Fund, such shares may be
exchanged only for shares of one or more of such funds. Exchanges are made on
the basis of the net asset value per share of each fund at the time of the
exchange. Exchange offers are available only in states where shares of the fund
being acquired may be legally sold.

Each exchange must involve shares which have a net asset value of at least
$1,000. The exchange privilege may be changed or discontinued without penalty.
Shareholders will be given sixty (60) days' notice prior to any termination or
material amendment of the exchange privilege. The Trust 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 Transfer Agent makes exchanges at the next determined net asset value after
receiving an exchange request in good order (see "How to Redeem Shares"). The
Transfer Agent may require additional documentation if shares are registered in
the name of a corporation, partnership or fiduciary. Applications and
prospectuses of the other funds are available from Authorized Firms or the
Principal Underwriter. The prospectus for each fund describes its investment
objectives and policies and shareholders should obtain a prospectus and consider
these objectives and policies carefully before requesting an exchange.

No CDSC is imposed on exchanges. For purposes of calculating the CDSC upon
redemption of Fund shares acquired in an exchange, the purchase of shares
acquired in one or more exchanges is deemed to have occurred at the time of the
original purchase of the exchanged shares. Cash Fund or Tax Free Reserves shares
acquired in an exchange for Class A shares of an Eaton Vance Fund subject to a
CDSC will remain subject to such charge as in effect at the time the exchanged
shares were purchased. Liquid Assets and Money Market Fund shares acquired as
the result of an exchange from Class B shares of an Eaton Vance Fund will be
subject to the CDSC schedule set forth under "How to Redeem Shares" above,
except Fund shares acquired as the result of an exchange from Class B shares of
Eaton Vance Strategic Income Fund, Eaton Vance Prime Rate Reserves or Class B
shares of any Eaton Vance Limited Maturity Municipals Fund will be subject to a
declining charge of 3.0%-0%. Fund shares acquired as the result of an exchange
from Class C shares of an Eaton Vance Fund or EV Classic Senior Floating-Rate
Fund will be subject to a CDSC of 1% in the event of redemption within one year
from the date of their original purchase.

Class B and Class C shares of the Eaton Vance Funds, Eaton Vance Prime Rate
Reserves or EV Classic Senior Floating-Rate Fund may be exchanged for Money
Market Fund shares on the basis of the net asset value per share of each fund at
the time of the exchange, but subject to any restrictions or qualifications set
forth in the current prospectus of any such fund.

Telephone exchanges are accepted by the Transfer Agent, provided the investor
has not disclaimed in writing the use of the privilege. To effect such
exchanges, call the Transfer Agent at 800-262-1122, Monday through Friday, 9:00
a.m. to 4:00 p.m. (Eastern Standard Time). Shares acquired by telephone exchange
must be registered in the same name(s) and with the same address as the shares
being exchanged. Neither the Trust, the Principal Underwriter nor the Transfer
Agent 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. As long as the net asset value of Fund shares is
maintained at $1.00 per share, an exchange will not result in a taxable gain or
loss.

EATON VANCE SHAREHOLDER SERVICES

THE TRUST OFFERS THE FOLLOWING SERVICES, WHICH ARE VOLUNTARY, INVOLVE NO EXTRA
CHARGE, AND MAY BE CHANGED OR DISCONTINUED WITHOUT PENALTY AT ANY TIME. Full
information on each of the services described below and an application, where
required, are available from Authorized Firms or the Principal Underwriter. The
cost of administering such services for the benefit of shareholders who
participate in them is borne by the Funds 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
being purchased may be mailed directly to the Transfer Agent, First Data
Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123 at any time
- -- whether or not distributions are reinvested. The name of the shareholder, the
Fund and the account number should accompany each investment.

BANK AUTOMATED INVESTING -- FOR REGULAR SHARE ACCUMULATION: Cash investments of
$50 or more may be made automatically each month or quarter from a shareholder's
bank account. The $1,000 minimum initial investment and small account redemption
policy are waived for these accounts.

WITHDRAWAL PLAN: A shareholder may draw on Cash Fund or Tax Free Reserves
shareholdings systematically with monthly or quarterly checks in any amount.
Monthly or quarterly withdrawals of Liquid Assets and Money Market Fund
shareholdings may also be made, provided the aggregate amount of the withdrawals
does not exceed annually 12% of the account balance at the time the plan was
established (such amount will not be subject to a CDSC). See "How to Redeem
Shares". A minimum deposit of $5,000 in shares is required.

REINVESTMENT PRIVILEGE: A shareholder who has redeemed shares may reinvest, with
credit for any CDSCs paid on the redeemed shares, any portion or all of the
redemption proceeds (plus that amount necessary to acquire a fractional share to
round off the purchase to the nearest full share) in shares of a Fund, provided
that the reinvestment is effected within 60 days after such redemption and the
privilege has not been used more than once in the prior 12 months. Shares are
sold to a reinvesting shareholder at the next determined net asset value
following timely receipt of a written purchase order by the Principal
Underwriter or by the Trust (or by the Trust's Transfer Agent). To the extent
that any shares are sold at a loss and the proceeds are reinvested in shares (or
other shares are acquired) within the period beginning 30 days before and ending
30 days after the date of redemption, some or all of the loss generally will not
be allowed as a tax deduction. Shareholders should consult their tax advisers
concerning the tax consequences of reinvestments.

TAX-SHELTERED RETIREMENT PLANS: Shares of the Cash and Money Market Funds are
available for purchase in connection with certain tax-sheltered retirement
plans. Detailed information concerning these plans, including certain exceptions
to minimum investment requirements, and copies of the plans are available from
the Principal Underwriter. This information should be read carefully and
consultation with an attorney or tax adviser may be advisable. The information
sets forth the service fee charged for retirement plans and describes the
federal income tax consequences of establishing a plan. Participant accounting
services (including trust fund reconciliation services) will be offered only
through third party recordkeepers and not by the Principal Underwriter. Under
all plans, distributions will be automatically reinvested in additional shares.

DISTRIBUTIONS AND TAXES

EACH FUND DECLARES DIVIDENDS DAILY AND PAYS DIVIDENDS MONTHLY FROM ITS NET
INVESTMENT INCOME. Long-term capital gains, if any, will be distributed at least
annually.

Each Fund intends to qualify as a regulated investment company under the
Internal Revenue Code of 1986, as amended (the "Code"), and to satisfy all
requirements necessary to be relieved of federal taxes on income and gains it
distributes to shareholders. As a partnership for federal tax purposes, the
Portfolio does not pay federal taxes.

All distributions from Cash, Liquid Assets and Money Market Fund (and taxable
distributions from Tax Free Reserves, if any) are taxable to shareholders as
ordinary income, except that distributions of net long-term capital gains, if
any, are taxable to shareholders as such regardless of the length of time the
shareholder has held the shares.

Distributions designated by Tax Free Reserves as "exempt-interest dividends" may
be excluded from shareholders' gross income for federal income tax purposes.
Exempt interest dividends are includable in the tax base for shareholders who
receive social security or railroad retirement benefits and may affect the
taxability of such benefits. In addition, exempt interest dividends generally
constitute a tax preference item under the federal alternative minimum tax
provisions and may be taxable for state and local tax purposes. Other
distributions from Tax Free Reserves may be taxable to shareholders as ordinary
income or long-term capital gains. Distributions of income from repurchase
agreements, original issue discount and certain market discount will be taxable
to shareholders as ordinary income.

Distributions will be taxable as described whether received in cash or as
additional shares through reinvestment in a Fund. Shareholders should consult
their tax advisers about the effect of Fund distributions on their particular
tax status and any state or local taxes that may apply.

YIELD INFORMATION

FROM TIME TO TIME A FUND MAY ADVERTISE ITS "YIELD" AND "EFFECTIVE YIELD." Both
yield figures are based on historical earnings and are not intended to indicate
future performance. The "yield" of a Fund refers to the income generated by an
investment in the Fund over a seven-day period (which period will be stated in
the advertisement). This income is then "annualized." That is, the amount of
income generated by the investment during that week is assumed to be generated
each week over a 52-week period and is shown as a percentage of the investment.
The "effective yield" is calculated similarly but, when annualized, the income
earned by an investment in the Fund is assumed to be reinvested. The "effective
yield" will be slightly higher than the "yield" because of the compounding
effect of this assumed reinvestment. A taxable-equivalent yield is computed by
using the tax-exempt yield figure and dividing by 1 minus the tax rate.
<PAGE>

[graphic omitted] Investing
EATON VANCE for the
- ---------------- 21st
Mutual Funds Century

- ------------------------------------------------------------------------------
EATON VANCE CASH MANAGEMENT FUND
EATON VANCE LIQUID ASSETS FUND
EATON VANCE MONEY MARKET FUND
EATON VANCE TAX FREE RESERVES

PROSPECTUS
MAY 1, 1998

- ------------------------------------------------------------------------------
INVESTMENT ADVISERS AND ADMINISTRATOR
Boston Management and Research, 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, 200 Clarendon Street, Boston, MA 02116

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

INDEPENDENT ACCOUNTANTS
Coopers & Lybrand, L.L.P., One Post Office Square, Boston, MA 02109

MMFP
<PAGE>

PART A
INFORMATION REQUIRED IN A PROSPECTUS

- ------------------
[Logo] Investing
for the
EATON VANCE 21st
================== Century
Mutual Funds
- ------------------
Eaton Vance
Government Obligations Fund

EATON VANCE GOVERNMENT OBLIGATIONS FUND (THE "FUND") IS A MUTUAL FUND SEEKING
A HIGH CURRENT RETURN, BY INVESTING IN SECURITIES ISSUED, GUARANTEED OR
OTHERWISE BACKED BY THE U.S. GOVERNMENT AND ENGAGING IN ACTIVE MANAGEMENT
STRATEGIES. THE FUND INVESTS ITS ASSETS IN GOVERNMENT OBLIGATIONS PORTFOLIO
(THE "PORTFOLIO"), A DIVERSIFIED OPEN-END INVESTMENT COMPANY HAVING THE SAME
INVESTMENT OBJECTIVE AS THE FUND, RATHER THAN BY DIRECTLY INVESTING IN AND
MANAGING ITS OWN PORTFOLIO OF SECURITIES. THE FUND IS A SERIES OF EATON VANCE
MUTUAL FUNDS TRUST (THE "TRUST").

SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK OR OTHER INSURED DEPOSITORY INSTITUTION, AND ARE NOT
FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY. SHARES OF THE FUND INVOLVE
INVESTMENT RISKS, INCLUDING FLUCTUATIONS IN VALUE AND THE POSSIBLE LOSS OF
SOME OR ALL OF THE PRINCIPAL INVESTMENT.

This Prospectus is designed to provide you with information you should know
before investing. Please retain this document for future reference. A
Statement of Additional Information dated May 1, 1998 for the Fund, as
supplemented from time to time, has been filed with the Securities and
Exchange Commission (the "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.
(the "Principal Underwriter"), 24 Federal Street, Boston, MA 02110 (telephone
(800) 225-6265). The Portfolio's investment adviser is Boston Management and
Research (the "Investment Adviser"), a wholly-owned subsidiary of Eaton Vance
Management, and Eaton Vance Management is the administrator (the
"Administrator") of the Fund. The offices of the Investment Adviser and the
Administrator are located at 24 Federal Street, Boston, MA 02110.

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>
CONTENTS
<CAPTION>
Page Page
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <S> <C>

Shareholder and Fund Expenses 2 How to Buy Shares 11
The Fund's Financial Highlights 3 How to Redeem Shares 12
The Fund's Investment Objective 4 Reports to Shareholders 14
Investment Policies and Risks 4 The Lifetime Investing Account/Distribution Options 14
Organization of the Fund and the Portfolio 7 The Eaton Vance Exchange Privilege 15
Management of the Fund and the Portfolio 8 Eaton Vance Shareholder Services 15
Distribution and Service Plans 9 Distributions and Taxes 16
Valuing Shares 10 Performance Information 17
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
Prospectus dated May 1, 1998

<PAGE>

SHAREHOLDER AND FUND EXPENSES
SHAREHOLDER TRANSACTION EXPENSES
Class A Class B Class C
Shares Shares Shares
- --------------------------------------------------------------------------------
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 4.75% None None
Sales Charges Imposed on Reinvested Distributions None None None
Fees to Exchange Shares None None None
Maximum Contingent Deferred Sales Charge None 5.00% 1.00%

ANNUAL FUND AND ALLOCATED PORTFOLIO OPERATING EXPENSES (as a
percentage of average daily net assets)

Class A Class B Class C
Shares Shares Shares
- --------------------------------------------------------------------------------
Investment Adviser Fee 0.75% 0.75% 0.75%
Rule 12b-1 Distribution and/or Service Fees 0.25 0.96 1.00
Other Expenses 0.24 0.24 0.24
----- ----- -----
Total Operating Expenses 1.24 1.95 1.99
==== ==== ====

EXAMPLE
An investor would pay the following expenses and, in the case of Class
A shares, maximum initial sales charge or, in the case of Class B and
Class C shares, the applicable contingent deferred sales charge on a
$1,000 investment, assuming (a) 5% annual return and (b) redemption at
the end of each period:

Class A Class B Class C
Shares Shares Shares
- --------------------------------------------------------------------------------
1 Year $ 60 $ 70 $ 30
3 Years 85 101 62
5 Years 112 125 107
10 Years 190 227 232

An investor would pay the following expenses on the same investment,
assuming (a) 5% annual return and (b) no redemptions:

Class A Class B Class C
Shares Shares Shares
- --------------------------------------------------------------------------------
1 Year $ 60 $ 20 $ 20
3 Years 85 61 62
5 Years 112 105 107
10 Years 190 227 232

NOTES: The table and Example summarize the aggregate expenses of the Portfolio
and each Class of shares of the Fund and are designed to help investors
understand the costs and expenses they will bear, directly or indirectly, by
investing in the Fund. Information for Class A shares is based on its expenses
for the most recent fiscal year. Information for Class B and Class C shares is
estimated based upon the most recent fiscal year of its predecessor fund
adjusted for the multiple-class structure.

The Fund offers three classes of shares. Class A shares are sold subject to a
sales charge imposed at the time of purchase. No sales charge is payable at
the time of purchase on investments in Class A shares of $1 million or more.
However, a contingent deferred sales charge ("CDSC") of 1% will be imposed on
such investments in the event of certain redemptions within 12 months of
purchase. Class B shares are sold subject to a declining CDSC (5% maximum) if
redeemed within six years of purchase and Class C shares are sold subject to a
1% CDSC if redeemed within one year of purchase. The CDSC does not apply in
certain circumstances. See "How to Buy Shares" and "How to Redeem Shares".

THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. Federal
regulations require the Example to assume a 5% annual return but actual return
will vary. Long-term holders of Class B and Class C shares may pay more than
the economic equivalent of the maximum front-end sales charge permitted by a
rule of the National Association of Securities Dealers, Inc. For further
information regarding the expenses of the Fund and the Portfolio see "The
Fund's Financial Highlights", "Management of the Fund and the Portfolio",
"Distribution and Service Plans" and "How to Redeem Shares".

The Fund invests exclusively in the Portfolio. Other investors with different
distribution arrangements and fees may invest in the Portfolio in the future.
See "Organization of the Fund and the Portfolio".

<PAGE>

THE FUND'S FINANCIAL HIGHLIGHTS
The following information should be read in conjunction with the audited
financial statements that appear in the Fund's annual report to shareholders.
The Fund's financial statements have been audited by Coopers & Lybrand L.L.P.,
independent accountants, as experts in accounting and auditing. The financial
statements and the independent accountants' report are incorporated by
reference into the Statement of Additional Information. Further information
regarding the performance of the Fund is contained in its annual report to
shareholders which may be obtained without charge by contacting the Principal
Underwriter. The financial information for each of the periods presented in
the Fund's Financial Highlights are for the Fund prior to reclassification of
its shares as Class A shares on January 1, 1998. Information for Class B and
Class C shares is not presented because these classes did not exist prior to
January 1, 1998. The Financial Highlights for Class B and Class C shares will
differ from the Financial Highlights for Class A shares due to the different
fees imposed on Class B and Class C shares.
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of year $10.680 $11.020 $10.420 $11.480 $11.380 $11.800 $11.3700 $11.5200 $11.2300 $11.5400
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Income (loss) from operations:
Net investment income $ 0.799 $ 0.810 $ 0.807 $ 0.805 $ 0.919 $ 0.975 $1.1005 $1.1085 $1.1280 $1.1260
Net realized and
unrealized gain (loss)
on investments (0.051) (0.340) 0.603 (1.029) 0.106 (0.388) 0.4395 (0.1485) 0.2745 (0.2960)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total income (loss) from
operations $ 0.748 $ 0.470 $ 1.410 $(0.224) $ 1.025 $ 0.587 $1.5400 $0.9600 $1.4025 $0.8300
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Less distributions:
From net investment income $(0.801) $(0.810) $(0.810) $(0.805) $(0.919) $(1.007) $(1.1100) $(1.1100) $(0.1125) $(1.1400)
In excess of net
investment income(3) -- -- -- (0.031) (0.006) -- -- -- -- --
From tax return of capital (0.007) -- -- -- -- -- -- -- -- --
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total distributions $(0.808) $(0.810) $(0.810) $(0.836) $(0.925) $(1.007) $(1.1100) $(1.1100) $(1.1125) $(1.1400)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net asset value, end of year $10.620 $10.680 $11.020 $10.420 $11.480 $11.380 $11.8000 $11.3700 $11.5200 $11.2300
======= ======= ======= ======= ======= ======= ======== ======== ======== ========
Total Return(1) 7.26% 4.52% 13.97% (2.03)% 9.26% 5.29% 14.42% 8.97% 13.21% 7.46%
Ratios/Supplemental Data:
Net Assets, end of year
(000 omitted) $276,781 $302,963 $359,738 $386,186 $503,150 $468,960 $352,480 $279,747 $296,405 $321,584
Ratio of expenses to
average daily net assets 1.24% 1.16%* 1.16%* 1.17%* 1.12%* 1.10% 1.18% 1.22% 1.22% 1.19%
Ratio of net investment
income to average daily
net assets 7.57% 7.59% 7.53% 7.70% 7.86% 8.52% 9.61% 9.86% 10.02% 9.82%
Portfolio Turnover of the
Fund(2) -- -- -- -- 52% 26% 25% 22% 25% 42%
Portfolio Turnover of the
Portfolio(2) 20% 11% 19% 35% 42% -- -- -- -- --

* Includes the Fund's share of the Portfolio's allocated expenses.
(1) Total return is calculated assuming a purchase at the net asset value on the first day and a sale at the net asset value on the
last day of each period reported. Distributions, if any, are assumed to be reinvested at the net asset value on the reinvestment
date. Total return is computed on a non-annualized basis.
(2) Portfolio Turnover of the Fund represents the rate of portfolio activity for the period while the Fund was making investments
directly in securities. The Fund began investing in the Portfolio on October 28, 1993.
(3) The Fund has followed the Statement of Position (SOP) 93-2: Determination, Disclosure and Financial Statement Presentation of
Income, Capital Gain, and Return of Capital Distribution by Investment Companies. The SOP requires that differences in the
recognition or classification of income between the financial statements and tax earnings and profits that result in temporary
over-distributions for financial statement purposes, are classified as distributions in excess of net investment income or
accumulated net realized gains.

</TABLE>
<PAGE>

THE FUND'S INVESTMENT OBJECTIVE
THE FUND'S INVESTMENT OBJECTIVE IS TO REALIZE A HIGH CURRENT RETURN. The Fund
currently seeks to meet its investment objective by investing its assets in
the Government Obligations Portfolio (the "Portfolio"), a separate registered
investment company which has the same investment objective and policies as the
Fund. The Fund's and the Portfolio's investment objectives are nonfundamental
and may be changed when authorized by a vote of the Trustees of the Trust or
the Portfolio, respectively, without obtaining the approval of the Fund's
shareholders or the investors in the Portfolio, as the case may be. The
Trustees of the Trust have no present intention to change the Fund's objective
and intend to submit any proposed material change in the investment objective
to shareholders in advance for their approval.

INVESTMENT POLICIES AND RISKS
IN SEEKING HIGH CURRENT RETURN, THE PORTFOLIO INVESTS IN SECURITIES ISSUED,
GUARANTEED OR OTHERWISE BACKED BY THE U.S. GOVERNMENT, INCLUDING MORTGAGE-
BACKED SECURITIES OF FEDERAL AGENCIES AND FEDERALLY CHARTERED CORPORATIONS,
AND ENGAGES IN ACTIVE MANAGEMENT STRATEGIES, INCLUDING FUTURES TRANSACTIONS
AND RELATED TECHNIQUES PRIMARILY FOR HEDGING PURPOSES. The Portfolio's
management believes that a high current return may be derived from yields on
U.S. Government securities, including market discount accrued on obligations
purchased below their stated redemption value.

U.S. GOVERNMENT SECURITIES. U.S. Government securities include (1) U.S.
Treasury obligations, which differ in their interest rates, maturities and
times of issuance: U.S. Treasury bills (maturities of one year or less), U.S.
Treasury notes (maturities of one to ten years) and U.S. Treasury bonds
(generally maturities of greater than ten years) and (2) obligations issued or
guaranteed by U.S. Government agencies and instrumentalities which are
supported by any of the following: (a) the full faith and credit of the U.S.
Treasury, (b) the right of the issuer to borrow an amount limited to a
specific line of credit from the U.S. Treasury, (c) discretionary authority of
the U.S. Government to purchase certain obligations of the U.S. Government
agency or instrumentality or (d) the credit of the agency or instrumentality.
The Portfolio may also invest in any other security or agreement
collateralized or otherwise secured by U.S. Government securities. Agencies
and instrumentalities of the U.S. Government include but are not limited to:
Federal Land Banks, Federal Financing Banks, Banks for Cooperatives, Federal
Intermediate Credit Banks, Farm Credit Banks, Federal Home Loan Banks, Federal
Home Loan Mortgage Corporation ("FHLMC"), Federal National Mortgage
Association ("FNMA"), Government National Mortgage Association ("GNMA"),
Student Loan Marketing Association, United States Postal Service, Small
Business Administration, Tennessee Valley Authority and any other enterprise
established or sponsored by the U.S. Government. Because the U.S. Government
generally is not obligated to provide support to its instrumentalities, the
Portfolio will invest in obligations issued by these instrumentalities only if
the Investment Adviser determines that the credit risk with respect to such
obligations is minimal.

MORTGAGE-BACKED SECURITIES. The Portfolio may invest in mortgage-backed
securities that are either issued by the U.S. Government or one of its
agencies or instrumentalities or, if privately issued, collateralized by
mortgages that are insured, guaranteed or otherwise backed by the U.S.
Government, its agencies or instrumentalities. Mortgage-backed securities
represent participation interests in pools of adjustable and fixed-rate
mortgage loans. Unlike conventional debt obligations, mortgage-backed
securities provide monthly payments derived from the monthly interest and
principal payments (including any prepayments) made by the individual
borrowers on the pooled mortgage loans. The mortgage loans underlying
mortgage-backed securities are generally subject to a greater rate of
principal prepayments in a declining interest rate environment and to a lesser
rate of principal prepayments in an increasing interest rate environment.
Under certain interest and prepayment rate scenarios, the Portfolio may fail
to recover the full amount of its investment in mortgage-backed securities,
notwithstanding any direct or indirect governmental or agency guarantee.
Because faster than expected prepayments must usually be invested in lower
yielding securities, mortgage-backed securities are less effective than
conventional bonds in "locking in" a specified interest rate. To mitigate
prepayment risk, the Investment Adviser considers the selection of mortgage-
backed securities that as a group have a history of more stable prepayment
rates relative to interest rate fluctuations. In a rising interest rate
environment, a declining prepayment rate will extend the average life of many
mortgage-backed securities. This possibility is often referred to as extension
risk. Extending the average life of a mortgage-backed security increases the
risk of depreciation due to future increases in market interest rates. As of
December 31, 1997, the Portfolio had approximately 38.5% of its net assets
invested in FNMA Mortgage-Backed Certificates, approximately 33.4% of its net
assets invested in Participation Certificates of FHLMC and approximately 9.8%
of its net assets invested in GNMA Certificates. FNMA guarantees the timely
payment of principal and interest of its Certificates, FHLMC guarantees the
timely payment of interest and ultimate collection of the principal of its
Participation Certificates, and GNMA Certificates are guaranteed by the full
faith and credit of the U.S. Government.

The Portfolio may also invest in classes of collateralized mortgage
obligations ("CMOs") and various other mortgage-backed securities. Senior CMO
classes will typically have priority over residual CMO classes as to the
receipt of principal and/or interest payments on the underlying mortgages. In
choosing among CMO classes, the Investment Adviser will evaluate the total
income potential of each class and other factors. If such obligations or
securities are privately issued they will currently be considered by the
Investment Adviser as possible investments for the Portfolio only when the
mortgage collateral is insured, guaranteed or otherwise backed by the U.S.
Government or one or more of its agencies or instrumentalities. As of December
31, 1997, the Portfolio had approximately 0.9% of its net assets invested in
CMOs (including one which was privately issued).

The Portfolio may invest in securities that fluctuate in value with an index.
Such securities generally will either be issued by the U.S. Government or one
of its agencies or instrumentalities or, if privately issued, collateralized
by mortgages that are insured, guaranteed or otherwise backed by the U.S.
Government, its agencies or instrumentalities. The interest rate or, in some
cases, the principal payable at the maturity of an indexed security may change
positively or inversely in relation to one or more interest rates, financial
indices, securities prices or other financial indicators ("reference prices").
An indexed security may be leveraged to the extent that the magnitude of any
change in the interest rate or principal payable on an indexed security is a
multiple of the change in the reference price. Thus, indexed securities may
decline in value due to adverse market changes in reference prices. As of
December 31, 1997, the Portfolio held no such securities. Because mortgage-
backed and indexed securities derive their value from another instrument,
security or index, they are considered derivative debt securities, and are
subject to different combinations of prepayment, extension, interest rate and/
or other market risks.

The Portfolio may enter into contracts to purchase securities for a fixed
price at a future date beyond the customary settlement time if the Portfolio
holds and maintains until the settlement date in a segregated account cash,
U.S. Government securities and liquid debt obligations in an amount sufficient
to meet the purchase price, or if the Portfolio enters into offsetting
contracts for the forward sale of other securities it owns. Such contracts are
customarily referred to as "forward commitments" and involve a risk of loss if
the value of the security to be purchased declines prior to the settlement
date.

The principal of and/or interest on certain U.S. Government securities which
may be purchased by the Portfolio could be (a) payable in foreign currencies
rather than U.S. dollars or (b) increased or diminished as a result of changes
in the value of the U.S. dollar relative to the value of foreign currencies.
The value of such portfolio securities denominated in foreign currencies may
be affected favorably or unfavorably by changes in the exchange rate between
foreign currencies and the U.S. dollar.

The Portfolio may from time to time have temporary investments in short-term
debt obligations (including certificates of deposit, bankers' acceptances and
commercial paper) pending the making of other investments or as a reserve to
service redemptions and repurchases of its shares.

ACTIVE MANAGEMENT STRATEGIES
The Portfolio may engage in several active management strategies to enhance
income and reduce investment risk. Each strategy requires the Investment
Adviser to consider special factors. In addition, the Portfolio may
temporarily borrow up to 5% of the value of its total assets to satisfy
redemption requests or settle securities transactions.

SECURITIES LENDING. The Portfolio may seek to increase its income by lending
portfolio securities to broker-dealers or other institutional borrowers.
During the existence of a loan, the Portfolio 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 Portfolio may pay lending fees to such
borrowers. As with other extensions of credit, there are risks of delay in
recovery or even loss of rights in the securities loaned if the borrower of
the securities fails financially. However, the loans will be made only to
organizations deemed by the Portfolio's management to be of good standing and
when, in the judgment of the Portfolio's management, the consideration which
can be earned from securities loans of this type, net of administrative
expenses and any finders fees, justifies the attendant risk. The financial
condition of the borrower will be monitored by the Investment Adviser on an
ongoing basis. The value of the securities loaned will not exceed 30% of the
Portfolio's total assets. During the year ended December 31, 1997, the
Portfolio typically had outstanding approximately $60 million in
collateralized loans with terms of 7 days.

FUTURES CONTRACTS AND OTHER DERIVATIVE INSTRUMENTS. The Portfolio may purchase
or sell derivative instruments (which are instruments that derive their value
from another instrument, security, index or currency) to hedge against
fluctuations in interest rates, securities prices or currency exchange rates,
to change the duration of the Portfolio's fixed income portfolio, as a
substitute for the purchase or sale of securities or currency, or to enhance
return. The Portfolio's transactions in derivative instruments may include the
purchase or sale of futures contracts on securities, (such as U.S. Government
securities), indices, other financial instruments (such as certificates of
deposit, Eurodollar time deposits, and economic indices) or currencies;
options on futures contracts; exchange-traded and over-the-counter ("OTC")
options on securities; indices or currencies; and forward contracts to
purchase or sell currencies. All of the Portfolio's transactions in derivative
instruments involve a risk of loss or depreciation due to: unanticipated
adverse changes in interest rates, securities prices or currency exchange
rates; the inability to close out a position; default by the counterparty;
imperfect correlation between a position and the desired hedge; tax
constraints on closing out positions; and portfolio management constraints on
securities subject to such transactions. The loss on derivative instruments
(other than purchased options) may substantially exceed the Portfolio's
initial investment in these instruments. In addition, the Portfolio may lose
the entire premium paid for purchased options that expire before they can be
profitably exercised by the Portfolio. The Portfolio incurs transaction costs
in opening and closing positions in derivative instruments. There can be no
assurance that the Investment Adviser's use of derivative instruments will be
advantageous to the Portfolio.

The Portfolio's success in using derivative instruments to hedge portfolio
assets depends on the degree of price correlation between the derivative
instrument and the hedged asset. Imperfect correlation may be caused by
several factors, including temporary price disparities among the trading
markets for the derivative instrument, the assets underlying the derivative
instrument and the Portfolio's assets. OTC derivative instruments involve a
heightened risk that the issuer or counterparty will fail to perform its
contractual obligations. The staff of the Commission takes the position that
purchased OTC options, assets used as cover for written OTC options, and
certain other derivative instruments (and securities) are subject to the
Portfolio's 15% limit on illiquid investments. The Portfolio's ability to
terminate OTC derivative instruments may depend on the cooperation of the
counterparties to such instruments. For thinly traded derivative securities
and contracts, the only source of price quotations may be the selling dealer
or counterparty.

SHORT SALES AGAINST-THE-BOX. The Portfolio may sell a security short if it
owns at least an equal amount of the security sold short or another security
convertible or exchangeable for an equal amount of the security sold short
without payment of further compensation (a short sale against-the-box). A
short sale against-the-box requires that the short seller absorb certain costs
so long as the position is open. In a short sale against-the-box, the short
seller is exposed to the risk of being forced to deliver appreciated stock to
close the position if the borrowed stock is called in, causing a taxable gain
to be recognized. No more than 20% of the Portfolio's assets will be subject
to short sales at any one time.

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 Portfolio 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 fixed-income securities or changes in the
investment objectives of investors.

MORTGAGE ROLLS. The Portfolio may enter into mortgage "dollar rolls" in which
the Portfolio sells mortgage-backed securities for delivery in the current
month and simultaneously contracts to repurchase substantially similar (same
type, coupon and maturity) securities on a specified future date. During the
roll period, the Portfolio forgoes principal and interest paid on the
mortgage-backed securities. The Portfolio is compensated by the difference
between the current sales price and the lower forward price for the future
purchase (often referred to as the "drop") as well as by the interest earned
on the cash proceeds of the initial sale. A "covered roll" is a specific type
of dollar roll for which there is an offsetting cash position or a cash
equivalent security position which matures on or before the forward settlement
date of the dollar roll transaction. The Portfolio will only enter into
covered rolls. Covered rolls are not treated as a borrowing or other senior
security and will be excluded from the calculation of the Portfolio's
borrowings and other senior securities.

LEVERAGE THROUGH BORROWING. The Portfolio may borrow from banks to increase
its portfolio holdings of debt securities on which call options may be written
and to acquire U.S. Treasury bills which may be deposited with the Portfolio's
custodian or a broker-dealer in connection with various Portfolio investments.
Such borrowings will be unsecured. The Investment Company Act of 1940 (the
"1940 Act") requires the Portfolio to maintain continuous asset coverage of
not less than 300% with respect to such borrowings. This allows the Portfolio
to borrow for such purposes an amount (when taken together with any borrowings
for temporary extraordinary or emergency purposes as described below) equal to
as much as 50% of the value of its net assets (not including such borrowings).
If such asset coverage should decline to less than 300% due to market
fluctuations or other reasons, the Portfolio may be required to sell some of
its portfolio holdings within three days in order to reduce the Portfolio's
debt and restore the 300% asset coverage, even though it may be
disadvantageous from an investment standpoint to sell securities at that time.
Leveraging will exaggerate any increase or decrease in the net asset value of
the securities held by Portfolio, and in that respect may be considered a
speculative practice. Money borrowed for leveraging will be subject to
interest costs which may or may not exceed the option premiums and interest
received from the securities purchased. The Portfolio may also be required to
maintain minimum average balances in connection with such borrowings or to pay
a commitment or other fee to maintain a line of credit; either of these
requirements would increase the cost of borrowing over the stated interest
rate. The Portfolio may also temporarily borrow up to 5% of the value of its
total assets to satisfy redemption requests or settle securities transactions.

REPURCHASE AGREEMENTS. The Portfolio may enter into repurchase agreements with
respect to U.S. Government securities. Under a repurchase agreement, the
seller agrees to repurchase such securities at the Portfolio's cost plus
interest within a specified time (normally one day). While repurchase
agreements involve certain risks not associated with direct investments in
U.S. Government securities, the Portfolio follows procedures designed to
moderate such risks. These procedures include effecting repurchase
transactions only with large, well-capitalized banks. In addition, the
Portfolio's repurchase agreements will provide that the value of the
collateral underlying the repurchase agreements will always be at least equal
to the repurchase price, including any accrued interest earned on the
repurchase agreement. In the event of a default or bankruptcy by a selling
bank, the Portfolio will seek to liquidate such collateral. However, the
exercise of the Portfolio's right to liquidate such collateral would involve
certain costs or delays and, to the extent that proceeds from any sale upon a
default of the obligation to repurchase are less than the repurchase price,
the Portfolio could suffer a loss.

ADDITIONAL INVESTMENT INFORMATION
The Portfolio expects that various new types of investments, hedging
techniques and management strategies will be developed and made available to
institutional investors in the future. The Investment Adviser will consider
making such investments or adopting such techniques or strategies if it
determines that they are consistent with the Portfolio's investment objective
and policies. Of course, the total mix of the Portfolio's investments can
change daily.

FLUCTUATIONS IN VALUE. Because interest yields on U.S. Government and other
securities and opportunities to realize additional income and net gains from
active management strategies will vary from time to time because of general
economic and market conditions and many other factors, the Fund's current
return will fluctuate, and there can be no assurance that the Fund's objective
will be achieved. As a result of their high credit quality and market
liquidity, U.S. Government securities generally provide a lower current return
than obligations of other issuers. As with other debt securities, the value of
U.S. Government securities changes as interest rates fluctuate. Fluctuations
in the value of securities held by the Portfolio will not affect interest
income on existing portfolio securities but will be reflected in the Fund's
net asset value. Thus, a decrease in interest rates will generally result in
an increase in the value of Fund shares. Conversely, during periods of rising
interest rates, the value of Fund shares will generally decline. The magnitude
of these fluctuations will generally be greater at times when the Portfolio's
average maturity is longer. In addition, as set forth above, the derivative
securities the Portfolio may hold may magnify those risks and pose additional
risks. Active management techniques, if successful, may only partly offset
these risks. Shares of the Fund are not government guaranteed.

INVESTMENT RESTRICTIONS. The Fund and the Portfolio have adopted certain
fundamental investment restrictions which are enumerated in detail in the
Statement of Additional Information and which may not be changed unless
authorized by a shareholder vote and an interestholder vote, respectively.
These restrictions are designed to reduce investment risk. Except for such
enumerated restrictions and as otherwise indicated in the Prospectus, the
investment objective and policies of the Fund and the Portfolio are not
fundamental policies, and accordingly may be changed by the Trustees of the
Trust and the Portfolio without obtaining the approval of the Fund's
shareholders or the interestholders in the Portfolio, as the case may be.

ORGANIZATION OF THE FUND AND THE PORTFOLIO
THE FUND IS A DIVERSIFIED SERIES OF EATON VANCE MUTUAL FUNDS TRUST, A BUSINESS
TRUST ESTABLISHED UNDER MASSACHUSETTS LAW PURSUANT TO A DECLARATION OF TRUST
DATED MAY 7, 1984, AS AMENDED. The Trustees of the Trust are responsible for
the overall management and supervision of its affairs. The Trust may issue an
unlimited number of shares of beneficial interest (no par value per share) in
one or more series (such as the Fund). The Trustees of the Trust have divided
the shares of the Fund into multiple classes, including Class A, Class B and
Class C shares. Each class represents an interest in the Fund, but is subject
to different expenses, rights and privileges. See "Distribution and Service
Plans" and "How to Buy Shares". The Trustees have the authority under the
Declaration of Trust to create additional classes of shares with differing
rights and privileges. As a result of a reorganization with separate series of
the Trust, the Fund commenced offering Class A, B and C shares on January 1,
1998.

When issued and outstanding, the shares are fully paid and nonassessable by
the Trust and redeemable as described under "How to Redeem Shares". There are
no annual meetings of shareholders, but special meetings may be held as
required by law to elect or remove Trustees and consider certain other
matters. Shareholders are entitled to one vote for each full share held.
Fractional shares may be voted proportionately. Shares of the Fund will be
voted together except that only shareholders of a particular class may vote on
matters affecting only that class. Shares have no preemptive or conversion
rights and are freely transferable. In the event of the liquidation of the
Fund, shareholders of each class are entitled to share pro rata in the net
assets attributable to that class available for distribution to shareholders.

The Trustees of the Trust have considered the advantages and disadvantages of
investing the assets of the Fund in the Portfolio, as well as the advantages
and disadvantages of the two-tier format. The Trustees believe that the
structure may offer opportunities for growth in the assets of the Portfolio,
may afford the potential for economies of scale for the Fund and may over time
result in lower expenses for the Fund.

THE PORTFOLIO IS ORGANIZED AS A TRUST UNDER THE LAWS OF THE STATE OF NEW YORK
AND INTENDS TO BE TREATED AS A PARTNERSHIP FOR FEDERAL TAX PURPOSES. In
addition to selling an interest to the Fund, the Portfolio may sell interests
to other affiliated and non-affiliated mutual funds or institutional
investors. Such investors will invest in the Portfolio on the same terms and
conditions and will pay a proportionate share of the Portfolio's expenses.
However, the other investors investing in the Portfolio are not required to
sell their shares at the same public offering price as the Fund or class due
to variations in sales commissions and other operating expenses. Therefore,
these differences may result in differences in returns experienced by
investors in the various funds that invest in the Portfolio. Information
regarding other pooled investment entities or funds which invest in the
Portfolio may be obtained by contacting the Principal Underwriter, 24 Federal
Street, Boston, MA 02110 (617) 482-8260.

Whenever the Fund as an investor in the Portfolio is requested to vote on
matters pertaining to the Portfolio (other than the termination of the
Portfolio's business, which may be determined by the Trustees of the Portfolio
without investor approval), the Fund will hold a meeting of Fund shareholders
and will vote its interest in the Portfolio for or against such matters
proportionately to the instructions to vote for or against such matters
received from Fund shareholders. The Fund shall vote shares for which it
receives no voting instructions in the same proportion as the shares for which
it receives voting instructions. Other investors in the Portfolio may alone or
collectively acquire sufficient voting interests in the Portfolio to control
matters relating to the operation of the Portfolio, which may require the Fund
to withdraw its investment in the Portfolio or take other appropriate action.
Any such withdrawal could result in a distribution "in kind" of portfolio
securities (as opposed to a cash distribution from the Portfolio). If
securities are distributed, the Fund could incur brokerage, tax or other
charges in converting the securities to cash. In addition, the distribution in
kind may result in a less diversified portfolio of investments or adversely
affect the liquidity of the Fund. Notwithstanding the above, there are other
means for meeting shareholder redemption requests, such as borrowing.

The Fund may withdraw (completely redeem) all its assets from the Portfolio at
any time if the Board of Trustees of the Trust determines that it is in the
best interest of the Fund to do so. In the event the Fund withdraws all of its
assets from the Portfolio, or the Board of Trustees of the Trust determines
that the investment objective of the Portfolio is no longer consistent with
the investment objective of the Fund, the Trustees would consider what action
might be taken, including investing the assets of the Fund in another pooled
investment entity or retaining an investment adviser to manage the Fund's
assets in accordance with its investment objective. The Fund's investment
performance may be affected by a withdrawal of all its assets (or the assets
of another investor in the Portfolio) from the Portfolio.

MANAGEMENT OF THE FUND AND THE PORTFOLIO
THE PORTFOLIO ENGAGES BOSTON MANAGEMENT AND RESEARCH ("BMR"), A WHOLLY-OWNED
SUBSIDIARY OF 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.

Acting under the general supervision of the Board of Trustees of the
Portfolio, BMR manages the Portfolio's investments and affairs. BMR also
furnishes for the use of the Portfolio office space and all necessary office
facilities, equipment and personnel for servicing the investments of the
Portfolio. Under its investment advisory agreement with the Portfolio, BMR
receives a monthly advisory fee of .0625% (equivalent to .75% annually) of the
average daily net assets of the Portfolio up to $500 million. On net assets of
$500 million and over the annual fee is reduced as follows:

Annualized Fee
Rate
Average Daily Net Assets for the Month (For Each Level)
- -------------------------------------------------------------------------------
$500 million but less than $1 billion 0.6875%
$1 billion but less than $1.5 billion 0.6250%
$1.5 billion but less than $2 billion 0.5625%
$2 billion but less than $3 billion 0.5000%
$3 billion and over 0.4375%

As at December 31, 1997, the Portfolio had net assets of $433,106,994. For the
fiscal year ended December 31, 1997, the Portfolio paid BMR advisory fees
equivalent to 0.75% of the Portfolio's average daily net assets for such year.

BMR OR EATON VANCE ACTS AS INVESTMENT ADVISER TO INVESTMENT COMPANIES AND
VARIOUS INDIVIDUAL AND INSTITUTIONAL CLIENTS WITH ASSETS UNDER MANAGEMENT OF
APPROXIMATELY $25 BILLION. Eaton Vance is a wholly-owned subsidiary of Eaton
Vance Corp., a publicly-held holding company which through its subsidiaries
and affiliates engages primarily in investment management, administration and
marketing activities. The Principal Underwriter is a wholly-owned subsidiary
of Eaton Vance.

Susan Schiff has acted as the portfolio manager of the Portfolio since it
commenced operations. She is a Vice President of Eaton Vance and BMR.

BMR places the portfolio transactions of the Portfolio with many broker-dealer
firms and uses its best efforts to obtain execution of such transactions at
prices which are advantageous to the Portfolio. Subject to the foregoing, BMR
may consider sales of shares of the Fund or of other investment companies
sponsored by BMR or Eaton Vance as a factor in the selection of broker-dealer
firms to execute portfolio transactions. The Trust, the Portfolio and BMR have
adopted Codes of Ethics relating to personal securities transactions. The
Codes permit Eaton Vance personnel to invest in securities (including
securities that may be purchased or held by the Portfolio) for their own
accounts, subject to certain pre-clearance, reporting and other restrictions
and procedures contained in such Codes.

The Trust has retained the services of Eaton Vance to act as Administrator of
the Fund. The Trust has not retained the services of an investment adviser
since the Trust seeks to achieve the investment objective of the Fund by
investing its assets in the Portfolio. As Administrator, Eaton Vance provides
the Fund with general office facilities and supervises the overall
administration of the Fund. For these services, Eaton Vance currently receives
no compensation. The Trustees of the Trust may determine, in the future, to
compensate Eaton Vance for such services.

Like most mutual funds, the Fund and the Portfolio rely on computers in
conducting daily business and processing information. There is a concern that
on January 1, 2000 some computer programs will be unable to recognize the new
year and as a consequence computer malfunctions will occur. The Administrator
is taking steps that it believes are reasonably designed to address this
potential problem and to obtain satisfactory assurance from other service
providers to the Fund and Portfolio that they are also taking steps to address
the issue. There can, however, be no assurance that these steps will be
sufficient to avoid any adverse impact on the Fund, the Portfolio or
shareholders.

The Portfolio and the Fund, as the case may be, will each be responsible for
all respective costs and expenses not expressly stated to be payable by BMR
under the investment advisory agreement, by Eaton Vance under the
administrative services agreement, or by the Principal Underwriter under the
distribution agreement.

DISTRIBUTION AND SERVICE PLANS
The Trust has adopted a Service Plan (the "Class A Plan") for the Fund's Class
A shares that is designed to meet the service fee requirements of the sales
charge rule of the National Association of Securities Dealers, Inc. THE CLASS
A PLAN PROVIDES THAT CLASS A MAY MAKE SERVICE FEE PAYMENTS FOR PERSONAL
SERVICES AND/OR THE MAINTENANCE OF SHAREHOLDER ACCOUNTS TO THE PRINCIPAL
UNDERWRITER, FINANCIAL SERVICE FIRMS ("AUTHORIZED FIRMS") AND OTHER PERSONS IN
AMOUNTS NOT EXCEEDING .25% OF ITS AVERAGE DAILY NET ASSETS FOR ANY FISCAL
YEAR. The Trustees of the Trust have initially implemented the Class A Plan by
authorizing Class A to make quarterly service fee payments to the Principal
Underwriter and Authorized Firms in amounts not expected to exceed .25% of its
average daily net assets for any fiscal year which is based on the value of
Class A shares sold by such persons and remaining outstanding for at least
twelve months. During the fiscal year ended December 31, 1997, Class A shares
paid or accrued service fees under the Plan equivalent to .25% of average
daily net assets for such year.

The Trust has also adopted compensation-type Distribution Plans ("Class B
Plan" and "Class C Plan") pursuant to Rule 12b-1 under the 1940 Act for the
Fund's Class B and Class C shares. Each Plan is designed to permit an investor
to purchase shares through an Authorized Firm without incurring an initial
sales charge and at the same time permit the Principal Underwriter to
compensate Authorized Firms in connection therewith. UNDER SUCH PLANS, CLASS B
AND CLASS C EACH PAYS THE PRINCIPAL UNDERWRITER A FEE, ACCRUED DAILY AND PAID
MONTHLY, AT AN ANNUAL RATE NOT EXCEEDING .75% OF ITS AVERAGE DAILY NET ASSETS
TO FINANCE THE DISTRIBUTION OF ITS SHARES. Such fees compensate the Principal
Underwriter for sales commissions paid by it to Authorized Firms on the sale
of Class B and Class C shares and for interest expenses. Under the Class B
Plan, the Principal Underwriter uses its own funds to pay sales commissions
(except on exchange transactions and reinvestments) to Authorized Firms at the
time of sale equal to 4% of the purchase price of the Class B shares sold by
such Firms. Under the Class C Plan, the Principal Underwriter currently
expects to pay to an Authorized Firm (a) sales commissions (except on exchange
transactions and reinvestments) at the time of sale equal to .75% of the
purchase price of Class C shares sold by such Firm, and (b) monthly sales
commissions approximately equivalent to 1/12 of .75% of the value of Class C
shares sold by such Firm and remaining outstanding for at least one year.
During the first year after a purchase of Class C shares, the Principal
Underwriter will retain the sales commission as reimbursement for the sales
commissions paid to Authorized Firms at the time of sale. CDSCs paid to the
Principal Underwriter will be used to reduce amounts owed to it. Because
payments to the Principal Underwriter under the two Plans are limited,
uncovered distribution charges (sales commissions due the Principal
Underwriter plus interest, less the above fees and CDSCs received by it) may
exist indefinitely.

THE CLASS B AND CLASS C PLANS ALSO AUTHORIZE EACH CLASS TO MAKE PAYMENTS OF
SERVICE FEES TO THE PRINCIPAL UNDERWRITER, AUTHORIZED FIRMS AND OTHER PERSONS
IN AMOUNTS NOT EXCEEDING .25% OF ITS AVERAGE DAILY NET ASSETS FOR PERSONAL
SERVICES, AND/OR THE MAINTENANCE OF SHAREHOLDER ACCOUNTS. Under the Class B
Plan, this fee is paid quarterly in arrears based on the value of Class B
shares sold by such persons and remaining outstanding for at least twelve
months. Under the Class C Plan, the Principal Underwriter currently expects to
pay to an Authorized Firm (a) a service fee (except on exchange transactions
and reinvestments) at the time of sale equal to .25% of the purchase price of
the Class C shares sold by such Firm, and (b) monthly service fees
approximately equivalent to 1/12 of .25% of the value of Class C shares sold
by such Firm and remaining outstanding for at least one year. During the first
year after a purchase of Class C shares, the Principal Underwriter will retain
the service fee as reimbursement for the service fee payment made to
Authorized Firms at the time of sale.

The Principal Underwriter may, from time to time, at its own expense, provide
additional incentives to Authorized Firms which employ registered
representatives who sell Fund shares and/or shares of other funds distributed
by the Principal Underwriter. In some instances, such additional incentives
may be offered only to certain Authorized Firms whose representatives sell or
are expected to sell significant amounts of shares. In addition, the Principal
Underwriter may from time to time increase or decrease the sales commissions
payable to Authorized Firms. The Principal Underwriter may at times allow
discounts on the sale of Class A shares up to the full sales charge. During
periods when the discount includes the full sales charge, Authorized Firms may
be deemed to be underwriters as that term is defined in the Securities Act of
1933.

The Trust may, in its absolute discretion, suspend, discontinue or limit the
offering of one or more of its classes of its shares at any time. In
determining whether any such action should be taken, the Trust's management
intends to consider all relevant factors, including (without limitation) the
size of the Fund or class, the investment climate and market conditions, the
volume of sales and redemptions of shares, and, in the case of Class B and
Class C shares, the amount of uncovered distribution charges of the Principal
Underwriter. The Plans may continue in effect and payments may be made under
the Plans following any such suspension, discontinuance or limitation of the
offering of shares; however, there is no contractual obligation to continue
any Plan for any particular period of time. Suspension of the offering of
shares would not, of course, affect a shareholder's ability to redeem shares.

VALUING SHARES
THE FUND VALUES ITS SHARES ONCE EACH DAY THE NEW YORK STOCK EXCHANGE (THE
"EXCHANGE") IS OPEN FOR TRADING, as of the close of regular trading on the
Exchange (normally 4:00 p.m. New York time). Each Class's net asset value per
share is determined by the Trust's custodian, Investors Bank & Trust Company
("IBT"), (as agent for the Trust) in the manner authorized by the Trustees of
the Trust. The net asset value of each Class is computed by dividing the value
of that Class's pro rata share of the Fund's total assets, less its
liabilities, by the number of shares of that Class outstanding. Because the
Fund invests its assets in an interest in the Portfolio, each Class's net
asset value will reflect the value of the Fund's interest in the Portfolio
(which in turn, reflects the underlying value of the Portfolio's assets and
liabilities).

Authorized Firms must communicate an investor's order to the Principal
Underwriter by a specific time each day to receive that day's public offering
price per share. It is the Authorized Firms' responsibility to transmit orders
promptly to the Principal Underwriter. The Fund has approved the acceptance of
purchase and redemption orders as of the time of their receipt by certain
Authorized Firms (or their designated intermediaries).

The Portfolio's net asset value is also determined as of the close of regular
trading on the Exchange by IBT (as custodian and agent for the Portfolio) in
the manner authorized by the Trustees of the Portfolio. Net asset value is
computed by subtracting the liabilities of the Portfolio from the value of its
total assets. Mortgage-backed "pass-through" securities are valued through use
of an independent matrix pricing system applied by the Investment Adviser
which takes into account closing bond valuations, yield differentials,
anticipated prepayments and interest rates provided by dealers.

SHAREHOLDERS MAY DETERMINE THE VALUE OF THEIR INVESTMENT BY MULTIPLYING THE
NUMBER OF SHARES OWNED BY THE CURRENT NET ASSET VALUE PER SHARE.

HOW TO BUY SHARES
SHARES OF THE FUND MAY BE PURCHASED FOR CASH OR MAY BE ACQUIRED IN EXCHANGE
FOR ACCEPTABLE SECURITIES. Class A shares are purchased at the effective
public offering price, which price is based on the effective net asset value
per share plus the applicable sales charge. The sales charge is divided
between the Authorized Firm and the Principal Underwriter. Class B and Class C
shares are purchased at the net asset value per share next determined after an
order is effective. An Authorized Firm may charge its customers a fee in
connection with transactions executed by that Firm. The Trust may suspend the
offering of shares at any time and may refuse an order for the purchase of
shares.

An initial investment 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 Trust's transfer agent (the "Transfer Agent") as follows:
First Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123.
The $1,000 minimum initial investment is waived for Bank Automated Investing
accounts, which may be established with an investment of $50 or more. See
"Eaton Vance Shareholder Services".

In connection with employee benefit or other continuous group purchase plans,
the Trust may accept initial investments of less than $1,000 on the part of an
individual participant. In the event a shareholder who is a participant of
such a plan terminates participation in the plan, his or her shares will be
transferred to a regular individual account. However, such account will be
subject to the right of redemption by the Trust as described below under "How
to Redeem Shares".

CLASS A SHARES. The sales charge may vary depending on the size of the
purchase and the number of Class A shares of Eaton Vance funds the investor
may already own, any arrangement to purchase additional shares during a 13-
month period or special purchase programs. Complete details of how investors
may purchase shares at reduced sales charges under a Statement of Intention or
Right of Accumulation are available from Authorized Firms or the Principal
Underwriter.

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 $25,000 4.75% 4.99% 4.50%
$25,000 but less than $100,000 4.50 4.71 4.25
$100,000 but less than $250,000 3.75 3.90 3.50
$250,000 but less than $500,000 3.00 3.09 2.75
$500,000 but less than $1,000,000 2.00 2.04 2.00
$1,000,000 or more 0.00* 0.00* See Below**
</TABLE>

*No sales charge is payable at the time of purchase on investments of
$1 million or more. A CDSC of 1% will be imposed on such investments
in the event of certain redemptions within 12 months of purchase.
**A commission on sales of $1 million or more will be paid as follows:
1.00% on amounts of $1 million or more but less than $3 million;
plus 0.50% on amounts from $3 million but less than $5 million; plus
0.25% on amounts of $5 million or more. Purchases of $1 million or
more will be aggregated over a 12-month period for purposes of
determining the commission to be paid.

Class A shares may be sold at net asset value to current and retired Directors
and Trustees of Eaton Vance funds, including the Portfolio; to clients and
current and retired officers and employees of Eaton Vance, its affiliates and
other investment advisers of Eaton Vance sponsored funds; to registered
representatives and employees of Authorized Firms and bank employees who refer
customers to registered representatives of Authorized Firms; to officers and
employees of IBT and the Transfer Agent; and to such persons' spouses and
children under the age of 21 and their beneficial accounts. Class A shares may
also be issued at net asset value (1) in connection with the merger of an
investment company or series thereof with the Fund, (2) 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, and (3) to investment advisors, financial
planners or other intermediaries who place trades for their own accounts or
the accounts of their clients and who charge a management, consulting or other
fee for their services; clients of such investment advisors, financial
planners or other intermediaries who place trades for their own accounts if
the accounts are linked to the master account of such investment advisor,
financial planner or other intermediary on the books and records of the broker
or agent; and retirement and deferred compensation plans and trusts used to
fund those plans, including, but not limited to, those defined in Section
401(a), 403(b) or 457 of the Internal Revenue Code of 1986, as amended (the
"Code") and "rabbi trusts". The Trust's Principal Underwriter may pay
commissions to Authorized Firms who initiate and are responsible for purchases
of Class A shares of the Fund by Eligible Plans of up to 1.00% of the amount
invested in such shares.

ACQUIRING FUND SHARES IN EXCHANGE FOR SECURITIES. IBT, as escrow agent, will
receive securities acceptable to Eaton Vance, as Administrator, in exchange
for Fund shares. The minimum value of securities (or securities and cash)
accepted for deposit is $5,000. Securities accepted will be sold on the day of
their receipt or as soon thereafter as possible. The number of Fund shares to
be issued in exchange for securities will be the aggregate proceeds from the
sale of such securities, divided by the applicable public offering price of
Class A shares or net asset value of Class B and C shares on the day such
proceeds are received. Eaton Vance will use reasonable efforts to obtain the
then current market price for such securities, but does not guarantee the best
available price. 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:

<TABLE>

<S> <C>
IN THE CASE OF BOOK ENTRY: IN THE CASE OF PHYSICAL DELIVERY:
Deliver through Depository Trust Co. Investors Bank & Trust Company
Broker #2212 Attention: Eaton Vance Government Obligations Fund
Investors Bank & Trust Company (state Class)
For A/C Eaton Vance Government Obligations Fund Physical Securities Processing Settlement Area
(state Class) 200 Clarendon Street
Boston, MA 02116
</TABLE>

Investors who are contemplating an exchange of securities for shares, or their
representatives, must contact Eaton Vance to determine whether the securities
are acceptable before forwarding such securities. Eaton Vance reserves the
right to reject any securities. Exchanging securities for shares may create a
taxable gain or loss. Each investor should consult his or her tax adviser with
respect to the particular federal, state and local tax consequences of
exchanging securities.

IF YOU DON'T HAVE AN AUTHORIZED FIRM, EATON VANCE CAN RECOMMEND ONE.

HOW TO REDEEM SHARES
A SHAREHOLDER MAY REDEEM FUND SHARES IN ONE OF THREE WAYS -- BY MAIL, BY
TELEPHONE OR THROUGH AN AUTHORIZED FIRM. The redemption price will be based on
the net asset value per share next computed after a redemption request is
received in the proper form as described below. Within seven days after
receipt of a redemption request in good order by the Transfer Agent, the Trust
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 applicable CDSC (described
below) and any federal income tax required to be withheld.

REDEMPTION BY MAIL: Shares may be redeemed by delivering to the Transfer
Agent, First Data Investor Services Group, P.O. Box 5123, Westborough, MA
01581-5123, during its business hours a written request for redemption in good
order, plus any share certificates with executed stock powers. Good order
means that all relevant documents must be endorsed by the record owner(s)
exactly as the shares are registered and the signature(s) must be guaranteed
by a member of either the Securities Transfer Association's STAMP program or
the New York Stock Exchange's Medallion Signature Program, or certain banks,
savings and loan institutions, credit unions, securities dealers, securities
exchanges, clearing agencies and registered securities associations as
required by a Commission regulation and acceptable to the Transfer Agent. In
addition, in some cases, good order may require the furnishing of additional
documents such as where shares are registered in the name of a corporation,
partnership or fiduciary.

REDEMPTION THROUGH AN AUTHORIZED FIRM: To sell shares at their net asset
value through an Authorized Firm (a repurchase), a shareholder can place a
repurchase order with the Authorized Firm, which may charge a fee. The value
of such shares is based upon the net asset value calculated after the order is
deemed to be received by the Trust or the Principal Underwriter, as the
Trust's agent. It is the Authorized Firm's responsibility to transmit promptly
repurchase orders to the Principal Underwriter. Throughout this Prospectus,
the word "redemption" is generally meant to include a repurchase.

While normally payments will be made in cash for redeemed shares, the Trust,
subject to compliance with applicable regulations, has reserved the right to
pay the redemption price of shares of the Fund, either totally or partially,
by a distribution in kind of readily marketable securities withdrawn from the
Portfolio. The securities so distributed would be valued pursuant to the
Portfolio's valuation procedures. If a shareholder received a distribution in
kind, the shareholder could incur brokerage or other charges in converting the
securities to cash.

If shares were recently purchased, the proceeds of a redemption will not be
sent until the check (including a certified or cashier's check) received for
the shares purchased has cleared. Payment for shares tendered for redemption
may be delayed up to 15 days from the purchase date when the purchase check
has not yet cleared. Redemptions may result in a taxable gain or loss.

Due to the high cost of maintaining small accounts, the Trust reserves the
right to redeem accounts with balances of less than $750. Prior to such a
redemption, shareholders will be given 60 days' written notice to make an
additional purchase. However, no such redemption would be required by the
Trust if the cause of the low account balance was a reduction in the net asset
value of shares. No CDSC will be imposed with respect to such involuntary
redemptions.

CONTINGENT DEFERRED SALES CHARGE. Each class of shares is subject to a CDSC on
certain redemptions. The CDSC is calculated based on the lower of the net
asset value at the time of purchase or the time of redemption. Shares acquired
through the reinvestment of distributions are exempt. Redemptions are made
first from shares in the account which are not subject to a CDSC.

In calculating a CDSC upon the redemption of shares acquired in an exchange,
the shares are deemed to have been acquired at the time of the original
purchase of the exchanged shares and, in the case of Class B shares, the CDSC
schedule applicable to the exchanged shares will apply to the acquired shares.
No CDSC is imposed on shares sold to Eaton Vance or its affiliates, or to
their respective employees or clients. Shares acquired as the result of a
merger or liquidation of another Eaton Vance sponsored fund generally will be
subject to the same CDSC rate imposed by the prior fund.

CLASS A SHARES. If Class A shares are purchased at net asset value because
the purchase amount is $1 million or more, they will be subject to a 1% CDSC
if redeemed within 12 months of purchase.

CLASS B SHARES. Class B shares will be subject to the following CDSC
schedule:

Year of Redemption
After Purchase CDSC
- -------------------------------------------------------------------------------
First or Second 5%
Third 4%
Fourth 3%
Fifth 2%
Sixth 1%
Seventh and following 0%

The Class B CDSC is waived for redemptions (1) pursuant to a Withdrawal Plan
(see "Eaton Vance Shareholder Services"), (2) as part of a required minimum
distribution from a tax-sheltered retirement plan, or (3) following the death
of all beneficial owners of shares, provided the redemption is requested
within one year of death (a death certificate and other applicable documents
may be required).

CLASS C SHARES. Class C Shares will be subject to a 1% CDSC if redeemed
within 12 months of purchase. The Class C CDSC is waived for redemptions (1)
pursuant to a Withdrawal Plan (see "Eaton Vance Shareholder Services"), (2) as
part of a distrubution from a retirement plan qualified under Section 401,
403(b) or 457 of the Code, or (3) as part of a required minimum distribution
from other tax-sheltered retirement plans.

REPORTS TO SHAREHOLDERS
THE FUND WILL ISSUE TO ITS SHAREHOLDERS SEMI-ANNUAL AND ANNUAL REPORTS
CONTAINING FINANCIAL STATEMENTS. Financial statements included in annual
reports are audited by the Fund's independent accountants. Shortly after the
end of each calendar year, shareholders will be furnished with information
necessary for preparing federal and state tax returns. Consistent with
applicable law, duplicate mailings of shareholder reports and certain other
Fund information to shareholders residing at the same address may be
eliminated.

THE LIFETIME INVESTING ACCOUNT/DISTRIBUTION OPTIONS
AFTER AN INVESTOR MAKES AN INITIAL PURCHASE OF SHARES, THE TRANSFER AGENT WILL
SET UP A LIFETIME INVESTING ACCOUNT FOR THE INVESTOR ON THE TRUST'S RECORDS.
This account is a complete record of all transactions which at all times shows
the balance of shares owned. The Trust will not issue share certificates
except upon request.

At least quarterly, shareholders will receive a statement showing complete
details of any transaction and the current balance in the account. THE
LIFETIME INVESTING ACCOUNT ALSO PERMITS A SHAREHOLDER TO MAKE ADDITIONAL
INVESTMENTS IN SHARES BY SENDING A CHECK FOR $50 OR MORE to the Transfer
Agent.

Any questions concerning a shareholder's account or services available may be
directed by telephone to EATON VANCE SHAREHOLDER SERVICES at 800-225-6265,
extension 2, or in writing to the Transfer Agent, First Data Investor Services
Group, P.O. Box 5123, Westborough, MA 01581-5123 (please provide the name of
the shareholder, the Fund and Class and the account number).

THE FOLLOWING DISTRIBUTION OPTIONS WILL BE AVAILABLE TO ALL LIFETIME INVESTING
ACCOUNTS and may be changed as often as desired by written notice to the
Trust's dividend disbursing agent, First Data Investor Services Group, P.O.
Box 5123, Westborough, MA 01581-5123. The currently effective option will
appear on each account statement.

SHARE OPTION -- Dividends and capital gains will be reinvested in additional
shares.

INCOME OPTION -- Dividends will be paid in cash and capital gains will be
reinvested in additional shares.

CASH OPTION -- Dividends and capital gains will be paid in cash.

The SHARE OPTION will be assigned if no other option is specified.
Distributions, including those reinvested, will be reduced by any withholding
required under federal income tax laws.

If shareholder communications are returned by the United States Postal Service
or other delivery service as not deliverable, the distribution option on the
account will be automatically changed to the SHARE OPTION until such time as
the shareholder selects a different option. No interest will accrue on amounts
represented by uncashed distribution or redemption checks.

DISTRIBUTION INVESTMENT OPTION. In addition to the distribution options set
forth above, dividends and/or capital gains may be invested in additional
shares of another Eaton Vance fund. Before selecting this option, a
shareholder should obtain a prospectus of the other Eaton Vance fund and
consider its objectives and policies carefully.

"STREET NAME" ACCOUNTS. If shares are held in a "street name" account with an
Authorized Firm, all recordkeeping, transaction processing and payments of
distributions relating to the beneficial owner's account will be performed by
the Authorized Firm, and not by the Trust and its Transfer Agent. Since the
Trust will have no record of the beneficial owner's transactions, a beneficial
owner should contact the Authorized Firm to purchase, redeem or exchange
shares, to make changes in or give instructions concerning the account, or to
obtain information about the account. The transfer of shares in a "street
name" account to an account with another Authorized Firm or to an account
directly with the Trust involves special procedures and will require the
beneficial owner to obtain historical purchase information about the shares in
the account from the Authorized Firm. Before establishing a "street name"
account with an Authorized Firm, or transferring the account to another
Authorized Firm, an investor wishing to reinvest distributions should
determine whether the Authorized Firm which will hold the shares allows
reinvestment of distributions in "street name" accounts.

THE EATON VANCE EXCHANGE PRIVILEGE
Shares of the Fund currently may be exchanged for shares of the same class of
one or more other funds in the Eaton Vance Group of Funds. Class A shares may
also be exchanged for shares of Eaton Vance Cash Management Fund, Eaton Vance
Income Fund of Boston, and Eaton Vance Tax Free Reserves. Class B shares may
also be exchanged for shares of Eaton Vance Prime Rate Reserves, which are
subject to an early withdrawal charge, shares of Eaton Vance Money Market
Fund, which are subject to a CDSC, and shares of a money market fund sponsored
by an Authorized Firm and approved by the Principal Underwriter (an
"Authorized Firm fund"). Class C shares may also be exchanged for shares of
Eaton Vance Money Market Fund and EV Classic Senior Floating-Rate Fund. Any
such exchange will be made on the basis of the net asset value per share of
each fund/class at the time of the exchange (plus, in the case of an exchange
made within six months of the date of purchase of Class A shares subject to an
initial sales charge, an amount equal to the difference, if any, between the
sales charge previously paid on the shares being exchanged and the sales
charge payable on the shares being acquired). Exchange offers are available
only in states where shares of the fund being acquired may be legally sold.
Exchanges are subject to any restrictions or qualifications set forth in the
current prospectus of any such fund.

Each exchange must involve shares which have a net asset value of at least
$1,000. The exchange privilege may be changed or discontinued without penalty.
Shareholders will be given sixty (60) days' notice prior to any termination or
material amendment of the exchange privilege. The Trust 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 Transfer Agent makes exchanges at the next determined net asset value
after receiving an exchange request in good order (see "How to Redeem
Shares"). Consult the Transfer Agent for additional information concerning the
exchange privilege. Applications and prospectuses of other funds are available
from Authorized Firms or the Principal Underwriter. The prospectus for each
fund describes its investment objectives and policies, and shareholders should
obtain a prospectus and consider these objectives and policies carefully
before requesting an exchange.

No CDSC is imposed on exchanges. For purposes of calculating the CDSC upon the
redemption of shares acquired in an exchange, the CDSC schedule applicable to
the shares at the time of purchase will apply and the purchase of shares
acquired in one or more exchanges is deemed to have occurred at the time of
the original purchase of the exchanged shares, except that time during which
shares are held in an Authorized Firm fund will not be credited toward
completion of the CDSC period. For the CDSC schedule applicable to Class B
shares (except Prime Rate Reserves and Class B shares of the Limited Maturity
Funds), see "How to Redeem Shares". The CDSC or early withdrawal charge
schedule applicable to Prime Rate Reserves and Class B shares of the Limited
Maturity Funds is 3%, 2.5%, 2% or 1% in the event of a redemption occurring in
the first, second, third or fourth year, respectively, after the original
share purchase.

Telephone exchanges are accepted by the Transfer Agent provided that the
investor has not disclaimed in writing the use of the privilege. To effect
such exchanges, call the Transfer Agent at 800-262-1122, Monday through
Friday, 9:00 a.m. to 4:00 p.m. (Eastern Standard Time). Shares acquired by
telephone exchange must be registered in the same name(s) and with the same
address as the shares being exchanged. Neither the Trust, the Principal
Underwriter nor the Transfer Agent 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 result in a taxable gain or loss.

EATON VANCE SHAREHOLDER SERVICES
THE TRUST OFFERS THE FOLLOWING SERVICES, WHICH ARE VOLUNTARY, INVOLVE NO EXTRA
CHARGE, AND MAY BE CHANGED OR DISCONTINUED WITHOUT PENALTY AT ANY TIME. Full
information on each of the services described below and an application, where
required, are available from Authorized Firms or the Principal Underwriter.
The cost of administering such services for the benefit of shareholders who
participate in them is borne by the applicable 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 and specifying the Class being purchased may be mailed directly to the
Transfer Agent, First Data Investor Services Group, P.O. Box 5123,
Westborough, MA 01581-5123 at any time -- whether or not distributions are
reinvested. The name of the shareholder, the Fund and Class and the account
number should accompany each investment.

BANK AUTOMATED INVESTING -- FOR REGULAR SHARE ACCUMULATION: Cash investments
of $50 or more may be made automatically each month or quarter from the
shareholder's bank account. The $1,000 minimum initial investment and small
account redemption policy are waived for these accounts.

STATEMENT OF INTENTION: Purchases of $25,000 or more of Class A shares made
over a 13-month period are eligible for reduced sales charges under a
Statement of Intention. 5% of the dollar amount to be purchased will be held
in escrow in the form of shares registered in the investor's name until the
Statement is satisfied or the thirteen-month period expires. See the Account
Application for details.

RIGHT OF ACCUMULATION: Purchases may qualify for reduced sales charges on
Class A shares when the current market value of holdings (shares at current
offering price), plus new purchases, reaches $25,000 or more. Class A shares
of the Eaton Vance funds listed under "The Eaton Vance Exchange Privilege" may
be combined under the Statement of Intention and Right of Accumulation.

WITHDRAWAL PLAN: A shareholder may draw on shareholdings systematically with
monthly or quarterly checks. For Class B and Class C shares, any such
withdrawals may not in the aggregate exceed 12% annually of the account
balance at the time the plan is established. Such amount will not be subject
to the Class B or Class C CDSC. See "How to Redeem Shares". A minimum deposit
of $5,000 in shares is required. The maintenance of a withdrawal plan
concurrently with purchases of additional Class A shares would be
disadvantageous because of the sales charge included in such purchases.

REINVESTMENT PRIVILEGE: A shareholder who has redeemed shares may reinvest,
with credit for any CDSCs paid on the redeemed shares, any portion or all of
the redemption proceeds (plus that amount necessary to acquire a fractional
share to round off the purchase to the nearest full share) in the same shares
(or for Class A shares in Class A shares of any other Eaton Vance fund),
provided that the reinvestment is effected within 60 days after such
redemption and the privilege has not been used more than once in the prior 12
months. Shares are sold to a reinvesting shareholder at the next determined
net asset value following timely receipt of a written purchase order by the
Principal Underwriter or by the Trust (or by the Trust's Transfer Agent). To
the extent that any shares are sold at a loss and the proceeds are reinvested
in shares (or other shares are acquired) within the period beginning 30 days
before and ending 30 days after the date of redemption, some or all of the
loss generally will not be allowed as a tax deduction. Shareholders should
consult their tax advisers concerning the tax consequences of reinvestments.

TAX-SHELTERED RETIREMENT PLANS: Class A and Class C shares of the Fund are
available for purchase in connection with certain tax-sheltered retirement
plans. Detailed information concerning these plans, including certain
exceptions to minimum investment requirements, and copies of the plans are
available from the Principal Underwriter. This information should be read
carefully and consultation with an attorney or tax adviser may be advisable.
The information sets forth the service fee charged for retirement plans and
describes the federal income tax consequences of establishing a plan.
Participant accounting services (including trust fund reconciliation services)
will be offered only through third party recordkeepers and not by the
Principal Underwriter. Under all plans, distributions will be automatically
reinvested in additional shares.

DISTRIBUTIONS AND TAXES
SUBSTANTIALLY ALL OF THE INVESTMENT INCOME ALLOCATED TO THE FUND BY THE
PORTFOLIO, LESS THE FUND'S DIRECT AND ALLOCATED EXPENSES AND CLASS-SPECIFIC
EXPENSES, WILL BE DECLARED DAILY AS A DISTRIBUTION TO SHAREHOLDERS OF RECORD
AT THE TIME OF THE DECLARATION AND WILL GENERALLY BE TAXABLE TO SHAREHOLDERS
AS ORDINARY INCOME, WHETHER TAKEN IN CASH OR REINVESTED IN ADDITIONAL SHARES.
Distributions on Class A and Class B shares, whether taken in cash or
reinvested in additional shares, will ordinarily be paid on the fifteenth day
of each month or the next business day thereafter. Distributions on Class C
shares will ordinarily be paid on the twenty-second day of each month or the
next business day thereafter. Daily distribution crediting will commence on
the business day after collected funds for the purchase of Fund shares are
available at the Transfer Agent. Distributions from net short-term capital
gains and certain net foreign exchange gains are taxable to shareholders as
ordinary income, and distributions from net long-term capital gains designated
as such by the Fund are taxable to shareholders as long-term capital gains,
whether received in cash or reinvested in additional shares of the Fund and
regardless of the length of time Fund shares have been owned by the
shareholders. Gains or losses attributable to transactions by the Portfolio in
options on securities, certain currency forward contracts, futures contracts
and options on futures may be treated as 40% short-term and 60% long-term
capital gains or losses or, in the case of certain of such transactions
relating to foreign currencies, as ordinary income or loss for federal income
tax purposes. The Portfolio may have to limit its activities in these
transactions in order to enable the Fund to maintain its qualification as a
regulated investment company.

The amount of the Fund's distributions will vary from time to time depending
on general economic and market conditions, the composition of the Portfolio's
investments, its current investment strategies and the operating expenses of
the Fund and the Portfolio. While distributions will vary from time to time in
response to the factors referred to above, the Fund's management will attempt
to pursue a policy of maintaining a relatively stable monthly distribution
payment to its shareholders. The distributions paid by the Fund during any
particular period may be more or less than the amount of net investment income
and net short-term capital gain actually earned by the Portfolio and allocated
to the Fund during such period. The Portfolio has elected mixed straddle
accounting under the Code for one or more designated classes of activities
involving mixed straddles.

The Portfolio is required to accrue original issue discount on zero coupon and
certain other securities and has elected to accrue market discount on debt
obligations which are purchased at a market discount. While enhancing the
Fund's current return, such accrual will also accelerate the Fund's
recognition of interest income, distributions of which will be taxable as
ordinary income. Furthermore, because the Fund seeks to stabilize monthly
distribution payments and the Portfolio has elected mixed straddle accounting
under the Code, it is possible that a portion of the Fund's aggregate
distributions during any year will be treated as a return of capital for tax
purposes, rather than taxable distributions of dividends or capital gains. The
Fund will inform the shareholders after the end of each year what portion, if
any, of such distributions constitutes a return of capital for tax purposes.

Sales charges paid upon a purchase of Class A shares cannot be taken into
account for purposes of determining gain or loss on a redemption or exchange
of the shares before the 91st day after their purchase to the extent a sales
charge is reduced or eliminated in a subsequent acquision of shares of the
Fund or of another fund pursuant to the Fund's reinvestment or exchange
privilege. In addition, losses realized on a redemption of Class A shares may
be disallowed under certain "wash sale" rules if within a period beginning 30
days before and ending 30 days after the date of redemption other shares of
the Fund are acquired. Any disregarded amounts will result in an adjustment to
the shareholder's tax basis in some or all of any other shares acquired.

Shareholders will receive annually tax information notices and Forms 1099 to
assist in the preparation of their federal and state tax returns for the prior
calendar year's distributions, proceeds from the redemption or exchange of
Fund shares, and federal income tax (if any) withheld by the Fund's Transfer
Agent.

The Fund intends to qualify as a regulated investment company under the Code,
and to satisfy all requirements necessary to avoid paying federal income taxes
on the part of its investment company taxable income (consisting generally of
net investment income and net short-term capital gain) that it distributes to
shareholders. In satisfying these requirements, the Fund will treat itself as
owning its proportionate share of each of the Portfolio's assets and as
entitled to the income of the Portfolio properly attributable to such share.

As a regulated investment company under the Code, the Fund does not pay
federal income or excise taxes to the extent that it distributes to
shareholders substantially all of its ordinary income and capital gain net
income in accordance with the timing requirements imposed by the Code. As a
partnership under the Code, the Portfolio does not pay federal income or
excise taxes.

Shareholders should consult their tax advisers concerning the applicability of
state, local or other taxes to an investment in the Fund.

PERFORMANCE INFORMATION
FROM TIME TO TIME, YIELD AND/OR AVERAGE ANNUAL TOTAL RETURN MAY BE ADVERTISED.
Current yield is calculated separately for each Class by dividing the net
investment income per share earned during a recent 30-day period by the
maximum offering price per share or the net asset value on the last day of the
period and annualizing the resulting figure. Average annual total return is
determined separately for each Class by computing the average annual
percentage change in value of $1,000 invested at the maximum public offering
price (including maximum sales charge for Class A; net asset value for Class B
and Class C) for specified periods, assuming reinvestment of all
distributions. Total return may be quoted for the period prior to commencement
of operations which would reflect the Class's total return (or that of its
predecessor) adjusted to reflect any applicable sales charge. The average
annual total return calculation assumes a complete redemption of the
investment and the deduction of any applicable CDSC at the end of the period.
The Fund may also publish annual and cumulative total return figures from time
to time.

The Fund may also publish total return calculations for each Class which do
not take into account any sales charge. Any performance figure which does not
take into account a sales charge would be reduced to the extent such charge is
imposed. The Fund's performance may be compared in publications to the
performance of various indices and investments for which reliable data is
available, and to averages, performance rankings, or other information
prepared by recognized mutual fund statistical services.

Investors should note that investment results will fluctuate over time, and
any presentation of yield or total return for any prior period should not be
considered as a representation of what an investment may earn or what the
yield or total return may be in any future period.

The following chart reflects the annual investment returns of Class A shares
the Fund for one-year periods ending December 31 and does not take into
account any sales charge which investors may bear. The performance of the
predecessor funds of Class B and Class C was lower.
[Graphic Omitted]

5 YEAR AVERAGE ANNUAL TOTAL RETURN -- 8.13%
10 YEAR AVERAGE ANNUAL TOTAL RETURN -- 6.46%

1988 ........................................................... 7.46%
1989 ........................................................... 13.21%
1990 ........................................................... 8.97%
1991 ........................................................... 14.42%
1992 ........................................................... 5.29%
1993 ........................................................... 9.26%
1994 ........................................................... (2.03%)
1995 ........................................................... 13.97%
1996 ........................................................... 4.52%
1997 ........................................................... 7.26%

<PAGE>

- ------------------
[Logo] Investing
for the
EATON VANCE 21st
================== Century
Mutual Funds
- ------------------

Eaton Vance
Government Obligations Fund

Prospectus
May 1, 1998

- --------------------------------------------------------------------------------
Investment Adviser of Government Obligations Portfolio
Boston Management and Research, 24 Federal Street, Boston, MA 02110

Administrator of Eaton Vance Government Obligations Fund
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, 200 Clarendon Street, Boston, MA 02116

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

Independent Accountants
Coopers & Lybrand L.L.P., One Post Office Square, Boston, MA 02109

GOP

<PAGE>

PART A
INFORMATION REQUIRED IN A PROSPECTUS

[GRAPHIC OMITTED] Investing
EATON VANCE for the
- ----------------- 21st
Mutual Funds Century

Eaton Vance
Municipal Bond Fund

EATON VANCE MUNICIPAL BOND FUND (THE "FUND") IS A MUTUAL FUND SEEKING TO PROVIDE
CURRENT INCOME EXEMPT FROM REGULAR FEDERAL INCOME TAX. THE FUND IS A SERIES OF
EATON VANCE MUTUAL FUNDS TRUST (THE "TRUST").

SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK OR OTHER INSURED DEPOSITORY INSTITUTION, AND ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD
OR ANY OTHER GOVERNMENT AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS,
INCLUDING FLUCTUATIONS IN VALUE AND THE POSSIBLE LOSS OF SOME OR ALL OF THE
PRINCIPAL INVESTMENT.

This Prospectus is designed to provide you with information you should know
before investing. Please retain this document for future reference. A Statement
of Additional Information dated May 1, 1998 for the Fund, as supplemented from
time to time, has been filed with the Securities and Exchange Commission (the
"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. (the "Principal Underwriter"), 24
Federal Street, Boston, MA 02110 (telephone (800) 225-6265). The Fund's
investment adviser is Eaton Vance Management (the "Investment Adviser"), which
is located at the same address.

CONTENTS

Shareholder and Fund Expenses 2 How to Redeem Shares 10
The Fund's Financial Highlights 3 Reports to Shareholders 12
The Fund's Investment Objective 4 The Lifetime Investing Account/Distribution Options 12
Investment Policies and Risks 4 The Eaton Vance Exchange Privilege 13
Organization of the Fund 7 Eaton Vance Shareholder Services 14
Management of the Fund 7 Distributions and Taxes 14
Distribution and Service Plans 8 Performance Information 15
Valuing Shares 9 Appendix 17
How to Buy Shares 9
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>

Prospectus dated May 1, 1998

<PAGE>

SHAREHOLDER AND FUND EXPENSES
SHAREHOLDER TRANSACTION EXPENSES

<TABLE>
<CAPTION>
Class A Class B Class I
Shares Shares Shares
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases

(as a percentage of offering price) 4.75% None None
Sales Charges Imposed on Reinvested Distributions None None None
Fees to Exchange Shares None None None
Maximum Contingent Deferred Sales Charge None 5.00% None

Annual Fund Operating Expenses (as a percentage of average daily net assets)
<CAPTION>
Class A Class B Class I
Shares Shares Shares

- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment Adviser Fee 0.49% 0.49% 0.49%
Rule 12b-1 Distribution and/or Service Fees* 0.00 0.75 0.00
Other Expenses 0.32 0.32 0.32
--- --- ---
Total Operating Expenses 0.81 1.56 0.81
--- --- ---
--- --- ---
* Payment of the Class A and Class B service fees will commence in 1999. See Note below.

EXAMPLE

An investor would pay the following expenses and, in the case of Class A shares, maximum initial sales charge or, in
the case of Class B shares, the applicable contingent deferred sales charge on a $1,000 investment, assuming
(a) 5% annual return and (b) redemption at the end of each period:

<CAPTION>
Class A Class B Class I
Shares Shares Shares
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 Year $ 55 $ 66 $ 8
3 Years 72 89 26
5 Years 90 105 45
10 Years 143 186 100

An investor would pay the following expenses on the same investment, assuming (a) 5% annual return and (b) no redemptions:

<CAPTION>
Class A Class B Class I
Shares Shares Shares
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 Year $ 55 $ 16 $ 8
3 Years 72 49 26
5 Years 90 85 45
10 Years 143 186 100
</TABLE>

NOTES: The table and Example summarize the aggregate expenses of each Class of
shares of the Fund and are designed to help investors understand the costs and
expenses they will bear, directly or indirectly, by investing in the Fund.
Information for Class I shares is based on its expenses for the most recent
fiscal year. Information for Class A and Class B is estimated for the current
fiscal year.

The Fund offers three classes of shares. Class A shares are sold subject to a
sales charge imposed at the time of purchase. No sales charge is payable at the
time of purchase on investments in Class A shares of $1 million or more.
However, a contingent deferred sales charge ("CDSC") of 0.50% will be imposed on
such investments in the event of certain redemptions within 12 months of
purchase. Class B shares are sold subject to a declining CDSC (5% maximum) if
redeemed within six years of purchase. The CDSC does not apply in certain
circumstances. Class I shares are sold at net asset value to certain financial
intermediaries and Eaton Vance affiliates. Class I shares are also available to
shareholders who owned shares on December 31, 1997, subject to a sales charge at
the time of purchase (4.75% maximum). See "How to Buy Shares" and "How to Redeem
Shares."

THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES, AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. Federal
regulations require the Example to assume a 5% annual return, but actual annual
return will vary. Long-term holders of Class B shares may pay more than the
economic equivalent of the maximum front-end sales charge permitted by a rule of
the National Association of Securities Dealers, Inc. For further information
regarding the expenses of the Fund see "The Fund's Financial Highlights,"
"Management of the Fund," "Distribution and Service Plans" and "How to Redeem
Shares."

For Class A and Class B shares sold by Authorized Firms and remaining
outstanding for at least one year, the Fund will pay service fees not exceeding
.25% per annum of its average daily net assets. The Fund expects to begin making
service fee payments during the quarter ending March 31, 1999. After such date,
Total Operating Expenses will be higher. See "Distribution and Service Plans."

<PAGE>

THE FUND'S FINANCIAL HIGHLIGHTS

The following information should be read in conjunction with the audited
financial statements that appear in the Fund's annual report to shareholders.
The Fund's financial statements have been audited by Deloitte & Touche LLP,
independent certified public accountants, as experts in accounting and auditing.
The financial statements and independent auditors' report are incorporated by
reference into the Statement of Additional Information. Further information
regarding the performance of the Fund is contained in its annual report to
shareholders which may be obtained without charge by contacting the Principal
Underwriter. The financial information for each of the periods presented in the
Fund's Financial Highlights are for the Fund prior to reclassification of its
shares as Class I shares on January 1, 1998. Information for Class A and Class B
shares is not presented because these classes did not exist prior to January 1,
1998. The Financial Highlights for Class A and Class B shares will differ from
the Financial Highlights for Class I shares due to the different fees imposed on
Class A and Class B shares.

<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $10.070 $10.210 $ 9.260 $10.630 $ 9.950 $ 9.750 $ 9.200 $ 9.250 $ 8.990 $ 8.590
------- ------- ------- ------- -------- -------- ------- ------- ------- -------
Income from operations:
Net investment income $ 0.584 $ 0.605 $ 0.604 $ 0.611 $ 0.614 $ 0.639 $ 0.638 $ 0.627 $ 0.632 $ 0.630
Net realized and
unrealized gain
(loss) on
investments 0.785 (0.143) 0.962 (1.369) 0.692 0.195 0.552 (0.017) 0.288 0.430
------- ------- ------- ------- -------- -------- ------- ------- ------- -------
Total income
(loss) from
operations $ 1.369 $ 0.462 $ 1.566 $(0.758) $ 1.306 $ 0.834 $ 1.190 $ 0.610 $ 0.920 $ 1.060
------- ------- ------- ------- -------- -------- ------- ------- ------- -------
Less distributions:
From net investment $(0.584) $(0.594) $(0.604) $(0.611) $ (0.619) $ (0.634) $(0.638) $(0.627) $(0.660) $(0.660)
income
In excess of net
investment income(2) (0.015) (0.008) (0.012) (0.001) (0.007) -- (0.002) (0.033) -- --
------- ------- ------- ------- -------- -------- ------- ------- ------- -------
Total
distributions $(0.599) $(0.602) $(0.616) $(0.612) $ (0.626) $ (0.634) $(0.640) $(0.660) $(0.660) $(0.660)
------- ------- ------- ------- -------- -------- ------- ------- ------- -------
Net asset value, end
of year $10.840 $10.070 $10.210 $ 9.260 $ 10.630 $ 9.950 $ 9.750 $ 9.200 $ 9.250 $ 8.990
======= ======= ======= ======= ======== ======== ======= ======= ======= =======
Total Return(1) 14.13% 4.78% 17.40% (7.27)% 13.52% 8.91% 13.49% 6.97% 10.65% 12.83%
Ratios/Supplemental Data:
Net assets, end of
year (000's omitted) $92,375 $88,184 $96,410 $90,802 $114,425 $103,208 $92,771 $80,907 $77,780 $63,385
Ratio of expenses to
average daily net
assets(3) 0.81% 0.78% 0.76% 0.80% 0.72% 0.74% 0.76% 0.85% 0.92% 0.96%
Ratio of expenses to
average daily net
assets after
custodian fee
reduction 0.77% 0.74% -- -- -- -- -- -- -- --
Ratio of net
investment income
to average daily
net assets 5.69% 6.12% 6.16% 6.26% 5.91% 6.50% 6.75% 6.94% 6.87% 7.20%
Portfolio Turnover 34% 30% 58% 58% 86% 60% 105% 187% 188% 139%

(1) Total investment return is calculated assuming a purchase at the net asset value on the first day and a sale at the net asset
value on the last day of each period reported. Distributions, if any, are assumed to be reinvested at the net asset value on
the payable date. Total return is computed on a non-annualized basis.
(2) During the year ended September 30, 1993, the Fund adopted Statement of Position (SOP) 93-2: Determination, Disclosure and
Financial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies. The
SOP requires that differences in the recognition or classification of income between the financial statements and tax
earnings and profits that result in temporary over-distributions for financial statement purposes, are classified as
distributions in excess of net investment income or accumulated net realized gains.
(3) The expense ratios for the year ended December 31, 1995 and periods thereafter have been adjusted to reflect a change in
reporting requirements. The new reporting guidelines require the Fund to increase its expense ratio by the effect of any
expense offset arrangements with its service providers. The expense ratios for each of the periods ended on or before December
31, 1994 have not been adjusted to reflect this change.
</TABLE>

<PAGE>

THE FUND'S INVESTMENT OBJECTIVE

THE FUND'S INVESTMENT OBJECTIVE IS TO SEEK CURRENT INCOME EXEMPT FROM REGULAR
FEDERAL INCOME TAX. The Fund is a diversified series of Eaton Vance Mutual Funds
Trust (the "Trust").

INVESTMENT POLICIES AND RISKS

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 OBLIGATIONS"). The foregoing
policy is a fundamental policy which may not be changed unless authorized by a
vote of the shareholders of the Fund.

The Fund normally will invest at least 65% of its net assets in (1) municipal
obligations (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), Standard & Poor's Ratings Group ("S&P")
(AAA, AA, or A) or Fitch/IBCA ("Fitch") (AAA, AA or A), 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 obligations rated within the three
highest grades assigned by Moody's, S&P, or Fitch; 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), 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 obligations rated within the highest
grade assigned by any of the aforesaid rating services. For a description of
municipal obligation ratings, see the Statement of Additional Information.

The Fund may invest up to 35% of its net assets in municipal obligations which
are rated investment grade (BBB by Moody's or Baa by S&P or Fitch) or below
investment grade or, if unrated, are determined to be of comparable quality by
the Investment Adviser. Municipal obligations rated BBB or Baa 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. Municipal
obligations rated below investment grade are commonly known as "junk bonds." See
"Additional Risk Considerations."

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 shareholders as ordinary income. See
"Distributions and Taxes." The Fund may also acquire rights to resell municipal
obligations or any of the foregoing temporary investments at an agreed upon
price and at or within an agreed upon time.

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

Interest on certain types of municipal obligations may be subject to the
alternative minimum tax (the "AMT"). The Fund will not invest in an obligation
if the interest on that obligation is subject to the AMT.

CONCENTRATION. 25% or more of total assets may be invested in municipal
obligations of the same state or in municipal obligations of the same type,
including, without limitation, the following: lease rental obligations of state
and local authorities; obligations dependent on annual appropriations by a
state's legislature for payment; obligations of state and local housing finance
authorities, municipal utilities systems or public housing authorities;
obligations of hospitals or life care facilities; or industrial development or
pollution control bonds issued for electric utility systems, steel companies,
paper companies or other purposes. This may result in greater susceptibility to
adverse economic, political, or regulatory occurrences affecting a particular
category of issuer. For example, health care-related issuers are susceptible to
medicaid reimbursement policies, and national and state health care legislation.
In addition, municipal obligations that rely on an annual appropriation of funds
by a state's legislature for payment are subject to the risk that the
legislature will not appropriate the necessary amounts or take other action
needed to permit the issuer of such obligations to make required payments. As
concentration increases, so does the potential for fluctuation in the value of
Fund shares.

OTHER INVESTMENT PRACTICES

The Fund may engage in the following investment practices, some of which may be
considered to involve "derivative" instruments because they derive their value
from another instrument, security or index. In addition, the Fund may
temporarily borrow up to 5% of the value of its total assets to satisfy
redemption requests or settle securities transactions.

WHEN-ISSUED SECURITIES. Municipal obligations may be purchased on a "when-
issued" basis, which means that payment and delivery occur on a future
settlement date. The price and yield of such securities are generally fixed on
the date of commitment to purchase. However, the market value of the securities
may fluctuate prior to delivery and upon delivery the securities may be worth
more or less than the agreed upon purchase price. Instruments may also be
purchased that provide the option to purchase a municipal obligation when and if
issued.

INVERSE FLOATERS. Inverse floaters are municipal securities whose interest rates
bear an inverse relationship to the interest rate on another security or the
value of an index ("inverse floaters"). An investment in inverse floaters may
involve greater risk than an investment in a fixed rate bond. Because changes in
the interest rate on the other security or index inversely affect the residual
interest paid on the inverse floater, the value of an inverse floater is
generally more volatile than that of a fixed rate bond. Inverse floaters have
interest rate adjustment formulas which generally reduce or, in the extreme,
eliminate the interest paid to the holder of the inverse floater when short-term
interest rates rise, and increase the interest paid to such holder 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
rate bonds when interest rates decline. Shifts in long-term interest rates may,
however, alter this tendency. Although volatile, inverse floaters typically
offer the potential for yields exceeding the yields available on fixed rate
bonds with comparable credit quality and maturity. These securities usually
permit the investor to convert the floating rate to a fixed rate (normally
adjusted downward), and this optional conversion feature may provide a partial
hedge against rising rates if exercised at an opportune time. Inverse floaters
are leveraged because they provide two or more dollars of bond market exposure
for every dollar invested.

FUTURES TRANSACTIONS. Various kinds of financial futures contracts and options
thereon may be purchased and sold to hedge against changes in interest rates or
as the substitute for the purchase of securities. Futures contracts may be based
on various debt securities (such as U.S. Government securities and municipal
obligations) and securities indices (such as the Municipal Bond Index traded on
the Chicago Board of Trade). Such transactions involve a risk of loss or
depreciation due to unanticipated adverse changes in securities prices, which
may exceed the initial investment in these contracts. Futures contracts or
related options may not be purchased or sold, except for closing purchase or
sale transactions, if immediately thereafter the sum of the amount of margin
deposits and premiums paid on outstanding positions would exceed 5% of the
market value of net assets. These transactions involve transaction costs. Under
regulations of the Commodity Futures Trading Commission the use of futures for
non-hedging purposes is limited. There can be no assurance that the Investment
Adviser's use of futures will be advantageous. Distributions of any gains
realized on transactions in futures and options on futures will be taxable.

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

ADDITIONAL RISK CONSIDERATIONS

Many municipal obligations offering current income are rated investment grade or
below (Baa or BBB or lower), or are unrated. As indicated above, some municipal
obligations may be rated below investment grade (but not lower than B by
Moody's, S&P or Fitch) and comparable unrated obligations. Municipal obligations
rated investment grade or below and comparable unrated municipal obligations
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. Lower rated and comparable unrated municipal obligations
are subject to the risk of an issuer's inability to meet principal and interest
payments on the obligations (credit risk) and may also be subject to greater
price volatility due to such factors as interest rate sensitivity, market
perception of the creditworthiness of the issuer and general market liquidity
(market risk). Lower rated or unrated municipal obligations are also more likely
to react to real or perceived developments affecting market and credit risk than
are more highly rated obligations, which react primarily to movements in the
general level of interest rates. The Investment Adviser seeks to minimize the
risks of investing in below investment grade securities through professional
investment analysis and attention to current developments in interest rates and
economic conditions. When investing in lower rated or unrated municipal
obligations, the achievement of investment goals is more dependent on the
Investment Adviser's ability than would be the case if municipal obligations in
the higher rating categories were acquired.

Municipal obligations which are rated below investment grade but which,
subsequent to the assignment of such rating, are backed by escrow accounts
containing U.S. Government obligations may be determined by the Investment
Adviser to be of investment grade quality for purposes of meeting investment
policies. In the event the rating of an obligation is downgraded, causing the
Fund to exceed the 35% limit on investment in investment grade, below investment
grade and comparable unrated obligations, the Investment Adviser will (in an
orderly fashion within a reasonable period of time) dispose of such obligations
as it deems necessary in order to comply with such limit. In the case of a
defaulted obligation, additional expense may be incurred seeking recovery.

See the Appendix to this Prospectus for asset composition for the fiscal year
ended December 31, 1997.

The net asset value of shares will change in response to fluctuations in
prevailing interest rates and changes in the value of the securities held. When
interest rates decline, the value of securities can be expected to rise.
Conversely, when interest rates rise, the value of most portfolio security
holdings can be expected to decline. Changes in the credit quality of the
issuers of municipal obligations held will affect the principal value of (and
possibly the income earned on) such obligations. In addition, the values of such
securities are affected by changes in general economic conditions and business
conditions affecting the specific industries of their issuers. Changes by
recognized rating services in their ratings of a security and in the ability of
the issuer to make payments of principal and interest may also affect the value
of investments. The amount of information about the financial condition of an
issuer of municipal obligations may not be as extensive as that made available
by corporations whose securities are publicly traded. An investment in Fund
shares will not constitute a complete investment program.

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

The secondary market for some municipal obligations (including privately placed
issues) is less liquid than that for taxable debt obligations or other more
widely traded municipal obligations. Illiquid securities will not be acquired if
more than 15% of net assets would be invested in securities that are not readily
marketable. No established resale market exists for certain municipal
obligations. The market for obligations rated below investment grade is also
likely to be less liquid than the market for higher rated obligations. As a
result, the Investment Adviser may be unable to dispose of these municipal
obligations at times when it would otherwise wish to do so at the prices at
which they are valued.

Certain securities may permit the issuer at its option to "call", or redeem, its
securities. If an issuer calls securities during a time of declining interest
rates, it may not be possible to reinvest the proceeds in securities providing
the same investment return as the securities redeemed.

Municipal obligations include so-called "zero-coupon" bonds, whose values are
subject to greater fluctuation in response to changes in market interest rates
than bonds which pay interest currently. Zero-coupon bonds are issued at a
significant discount from face value and pay interest only at maturity rather
than at intervals during the life of the security. Income from zero-coupon bonds
must be accrued currently in cash, and the income must be distributed each
taxable year. To generate the cash needed to make these income distributions,
other investments may have to be sold.

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

Certain fundamental investment restrictions which are enumerated in detail in
the Statement of Additional Information may not be changed unless authorized by
a shareholder vote and an investor vote, respectively. Except for such
enumerated restrictions and as otherwise indicated in this Prospectus, the
investment objective and policies are not fundamental policies and accordingly
may be changed by the Trustees without obtaining the approval of shareholders.

ORGANIZATION OF THE FUND

THE FUND IS A DIVERSIFIED SERIES OF EATON VANCE MUTUAL FUNDS TRUST (THE
"TRUST"), A BUSINESS TRUST ESTABLISHED UNDER MASSACHUSETTS LAW PURSUANT TO A
DECLARATION OF TRUST DATED MAY 7, 1984, AS AMENDED. The Trustees of the Trust
are responsible for the overall management and supervision of its affairs. The
Trust may issue an unlimited number of shares of beneficial interest (no par
value per share) in one or more series (such as the Fund). The Trustees of the
Trust have divided the shares of the Fund into multiple classes, including Class
A, Class B, and Class I shares. Each class represents an interest in the Fund,
but is subject to different expenses, rights and privileges. See "Distribution
and Service Plans" and "How to Buy Shares." The Fund commenced offering classes
of shares on January 1, 1998.

When issued and outstanding, the shares are fully paid and nonassessable by the
Trust and redeemable as described under "How to Redeem Shares." There are no
annual meetings of shareholders, but special meetings may be held as required by
law to elect Trustees and consider certain other matters. Shareholders are
entitled to one vote for each full share held. Fractional shares may be voted
proportionately. Shares of the Fund will be voted together except that only
shareholders of a particular class may vote on matters affecting only that
class. Shares have no preemptive or conversion rights and are freely
transferable. In the event of the liquidation of the Fund, shareholders of each
class are entitled to share pro rata in the net assets attributable to the class
available for distribution to shareholders.

MANAGEMENT OF THE FUND

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.

Acting under the general supervision of the Board of Trustees of the Trust,
Eaton Vance manages the Fund's investments and affairs. 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.
Under its investment advisory agreement 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%

As at December 31, 1997, the Fund had net assets of $92,375,383. For the fiscal
year ended December 31, 1997, the Fund paid Eaton Vance advisory fees equivalent
to 0.49% of the Fund's average daily net assets for such year.

EATON VANCE OR ITS AFFILIATES ACT AS INVESTMENT ADVISER TO INVESTMENT COMPANIES
AND VARIOUS INDIVIDUAL AND INSTITUTIONAL CLIENTS WITH ASSETS UNDER MANAGEMENT OF
APPROXIMATELY $25 BILLION. Eaton Vance is a wholly-owned subsidiary of Eaton
Vance Corp., a publicly-held holding company which through its subsidiaries and
affiliates engages primarily in investment management, administration and
marketing activities. The Principal Underwriter is a wholly-owned subsidiary of
Eaton Vance.

Thomas J. Fetter has acted as the portfolio manager of the Fund since 1986.
Mr. Fetter is a Vice President of Eaton Vance and manages other Eaton Vance
portfolios.

Municipal obligations are normally traded on a net basis (without commission)
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 or Boston Management and Research
("BMR") as a factor in the selection of firms to execute portfolio transactions.
The Trust, the Fund and the Investment Adviser have adopted Codes of Ethics
relating to personal securities transactions. The Codes permit Eaton Vance
personnel to invest in securities (including securities that may be purchased or
held by the Fund) for their own accounts, subject to certain pre-clearance,
reporting and other restrictions and procedures contained in such Codes.

Like most mutual funds, the Fund relies on computers in conducting daily
business and processing information. There is a concern that on January 1, 2000
some computer programs will be unable to recognize the new year and as a
consequence computer malfunctions will occur. Eaton Vance is taking steps that
it believes are reasonably designed to address this potential problem and to
obtain satisfactory assurance from other service providers to the Fund that they
are also taking steps to address the issue. There can, however, be no assurance
that these steps will be sufficient to avoid any adverse impact on the Fund or
its shareholders.

DISTRIBUTION AND SERVICE PLANS

The Trust has adopted a Service Plan (the "Class A Plan") for the Fund's Class A
shares that is designed to meet the service fee requirements of the sales charge
rule of the National Association of Securities Dealers, Inc. THE CLASS A PLAN
PROVIDES THAT CLASS A MAY MAKE SERVICE FEE PAYMENTS FOR PERSONAL SERVICES AND/OR
THE MAINTENANCE OF SHAREHOLDER ACCOUNTS TO THE PRINCIPAL UNDERWRITER, FINANCIAL
SERVICE FIRMS ("AUTHORIZED FIRMS") AND OTHER PERSONS IN AMOUNTS NOT EXCEEDING
.25% OF ITS AVERAGE DAILY NET ASSETS FOR ANY FISCAL YEAR. The Trustees of the
Trust have initially implemented the Class A Plan by authorizing Class A to make
quarterly service fee payments to the Principal Underwriter and Authorized Firms
in amounts not expected to exceed .25% of its average daily net assets for any
fiscal year based on the value of Class A shares sold by such persons and
remaining outstanding for at least twelve months. The Fund expects to begin
making service fee payments during the quarter ending March 31, 1999.

The Trust has also adopted a compensation-type Distribution Plan ("Class B
Plan") pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the
"1940 Act") for the Fund's Class B shares. The Plan is designed to permit an
investor to purchase shares through an Authorized Firm without incurring an
initial sales charge and at the same time permit the Principal Underwriter to
compensate Authorized Firms in connection therewith. UNDER SUCH PLAN, CLASS B
PAYS THE PRINCIPAL UNDERWRITER A FEE, ACCRUED DAILY AND PAID MONTHLY, AT AN
ANNUAL RATE NOT EXCEEDING .75% OF ITS AVERAGE DAILY NET ASSETS TO FINANCE THE
DISTRIBUTION OF ITS SHARES. Such fees compensate the Principal Underwriter for
sales commissions paid by it to Authorized Firms on the sale of Class B shares
and for interest expenses. The Principal Underwriter uses its own funds to pay
sales commissions (except on exchange transactions and reinvestments) to
Authorized Firms at the time of sale equal to 4% of the purchase price of the
Class B shares sold by such Firms. CDSCs paid to the Principal Underwriter will
be used to reduce amounts owed to it. Because payments to the Principal
Underwriter under the Class B Plan are limited, uncovered distribution charges
(sales commissions due the Principal Underwriter plus interest, less the above
fees and CDSCs received by it) may exist indefinitely.

THE CLASS B PLAN ALSO AUTHORIZES EACH CLASS B TO MAKE PAYMENTS OF SERVICE FEES
TO THE PRINCIPAL UNDERWRITER, AUTHORIZED FIRMS AND OTHER PERSONS IN AMOUNTS NOT
EXCEEDING .25% OF ITS AVERAGE DAILY NET ASSETS FOR PERSONAL SERVICES, AND/ OR
THE MAINTENANCE OF SHAREHOLDER ACCOUNTS. Under the Class B Plan, this fee is
paid quarterly in arrears based on the value of Class B shares sold by such
persons and remaining outstanding for at least twelve months. Class B expects to
begin accruing for its service fees during the quarter ending March 31, 1999.

The Principal Underwriter may, from time to time, at its own expense, provide
additional incentives to Authorized Firms which employ registered
representatives who sell Fund shares and/or shares of other funds distributed by
the Principal Underwriter. In some instances, such additional incentives may be
offered only to certain Authorized Firms whose representatives sell or are
expected to sell significant amounts of shares. In addition, the Principal
Underwriter may from time to time increase or decrease the sales commissions
payable to Authorized Firms. The Principal Underwriter may at times allow
discounts on sales of Class A and Class I shares of up to the full sales charge.
During periods when the discount includes the full sales charge, Authorized
Firms may be deemed to be underwriters as that term is defined in the Securities
Act of 1933.

The Trust may, in its absolute discretion, suspend, discontinue or limit the
offering of one or more of its classes of its shares at any time. In determining
whether any such action should be taken, the Trust's management intends to
consider all relevant factors, including (without limitation) the size of the
Fund or class, the investment climate and market conditions, the volume of sales
and redemptions of shares, and, in the case of Class B shares, the amount of
uncovered distribution charges of the Principal Underwriter. The Plans may
continue in effect and payments may be made under the Plans following any such
suspension, discontinuance or limitation of the offering of shares; however,
there is no contractual obligation to continue any Plan for any particular
period of time. Suspension of the offering of shares would not, of course,
affect a shareholder's ability to redeem shares.

VALUING SHARES

THE FUND VALUES ITS SHARES ONCE EACH DAY THE NEW YORK STOCK EXCHANGE (THE
"EXCHANGE") IS OPEN FOR TRADING, as of the close of regular trading on the
Exchange (normally 4:00 p.m., New York time). Each Class's net asset value per
share is determined by the Trust's custodian, Investors Bank & Trust Company
("IBT") (as agent for the Trust) in the manner authorized by the Trustees of the
Trust. The net asset value of each Class is computed by dividing the value of
that Class's pro rata share of the Fund's total assets, less its liabilities, by
the number of shares of that Class outstanding. Municipal Bonds will normally be
valued on the basis of valuations furnished by a pricing service.

SHAREHOLDERS MAY DETERMINE THE VALUE OF THEIR INVESTMENT BY MULTIPLYING THE
NUMBER OF SHARES OWNED BY THE CURRENT NET ASSET VALUE PER SHARE.

HOW TO BUY SHARES

FUND SHARES MAY BE PURCHASED FOR CASH OR MAY BE ACQUIRED IN EXCHANGE FOR
SECURITIES. An initial investment 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 Trust's transfer agent (the "Transfer Agent") as follows: First
Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123. The
minimum initial investment amount is waived for Bank Automated Investing
accounts, which may be established with an investment of $50 or more. See "Eaton
Vance Shareholder Services".

Fund shares can be purchased through an Authorized Firm or by mail. An
Authorized Firm may charge its customers a fee in connection with transactions
executed by that Firm. The Trust may suspend the offering of shares at any time
and may refuse an order for the purchase of shares.

CLASS A SHARES. Class A shares are purchased at the effective public offering
price, which price is based on the effective net asset value per share plus the
applicable sales charge. The sales charge is divided between the Authorized Firm
and the Principal Underwriter. The sales charge may vary depending on the size
of the purchase and the number of Class A shares of Eaton Vance funds the
investor may already own, any arrangement to purchase additional shares during a
13- month period or the existence of special purchase programs. Complete details
of how investors may purchase shares at reduced sales charges under a Statement
of Intention or Right of Accumulation are available from Authorized Firms or the
Principal Underwriter and are summarized in the Account Application.

The current sales charges and dealer commissions are:

Dealer
Sales Charge Sales Charge Commission
as Percentage as Percentage as Percentage
Amount of Purchase of Offering of Amount of Offering
Price Invested Price
- ------------------------------------------------------------------------------
Less than $25,000 4.75% 4.99% 4.50%
$25,000 but less than $100,000 4.50 4.71 4.25
$100,000 but less than $250,000 3.75 3.90 3.50
$250,000 but less than $500,000 3.00 3.09 2.75
$500,000 but less than $1,000,000 2.00 2.04 2.00
$1,000,000 or more 0.00* 0.00* 0.50

*No sales charge is payable at the time of purchase on investments of $1 million
or more if the redemption occurred no more than 60 days' prior to the purchase
of Fund shares and the redeemed shares were potentially subject to a sales
charge. A CDSC of 0.50% will be imposed on such investments (as described
below) in the event of certain redemptions within 12 months of purchase.

Class A shares may be sold at net asset value to current and retired Directors
and Trustees of Eaton Vance funds; to clients and current and retired officers
and employees of Eaton Vance, its affiliates and other investment advisers of
Eaton Vance sponsored funds; to registered representatives and employees of
Authorized Firms and bank employees who refer customers to registered
representatives of Authorized Firms; to officers and employees of IBT and the
Transfer Agent; and to such persons' spouses and children under the age of 21
and their beneficial accounts. Class A shares may also be issued at net asset
value (1) in connection with the merger of an investment company or series
thereof with the Fund, (2) 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, and (3)
to investment advisors, financial planners or other intermediaries who place
trades for their own accounts or the accounts of their clients and who charge a
management, consulting or other fee for their services; clients of such
investment advisors, financial planners or other intermediaries who place trades
for their own accounts if the accounts are linked to the master account of such
investment advisor, financial planner or other intermediary on the books and
records of the broker or agent; and retirement and deferred compensation plans
and trusts used to fund those plans, including, but not limited to, those
defined in Section 401(a), 403(b) or 457 of the Internal Revenue Code of 1986,
as amended (the "Code") and "rabbi trusts."

CLASS B SHARES. Class B shares are purchased at the net asset value per share
next determined after an order is effective. Redemptions of Class B shares
within the first six years after purchase are subject to a CDSC as described
under "How to Redeem Shares."

CLASS I SHARES. Class I shares are offered at net asset value to investment
advisors, financial planners or other intermediaries who place trades for their
own accounts or the accounts of their clients and who charge a management,
consulting or other fee for their services; and clients of such investment
advisors, financial planners or other intermediaries who place trades for their
own accounts if the accounts are linked to the master account of such investment
advisor, financial planner or other intermediary on the books and records of the
broker or agent; and employees, affiliates and investment clients of Eaton
Vance.

Class I shares are also offered to shareholders who owned shares on December 31,
1997 at the effective net asset value per share plus a sales charge, which is
equal to the same sales charge applicable to the same purchase of Class A
shares.

ACQUIRING FUND SHARES IN EXCHANGE FOR SECURITIES. IBT, as escrow agent, will
receive securities acceptable to Eaton Vance, as Investment Adviser, in exchange
for Fund shares. The minimum value of securities (or securities and cash)
accepted for deposit is $5,000. Securities accepted will be sold on the day of
their receipt or as soon thereafter as possible. The number of Fund shares to be
issued in exchange for securities will be the aggregate proceeds from the sale
of such securities, divided by the applicable offering price on the day such
proceeds are received. Eaton Vance will use reasonable efforts to obtain the
then current market price for such securities, but does not guarantee the best
available price. Eaton Vance will absorb any transaction costs, such as
commissions, on the sale of the securities.

<TABLE>
<CAPTION>
IN THE CASE OF BOOK ENTRY: IN THE CASE OF PHYSICAL DELIVERY:
<S> <C>
Deliver through Depository Trust Co. Investors Bank & Trust Company
Broker #2212 Attention: Eaton Vance Municipal Bond Fund (state
Investors Bank & Trust Company Class)
For A/C Eaton Vance Municipal Bond Fund (state Class) Physical Securities Processing Settlement Area
200 Clarendon Street
Boston, MA 02116
</TABLE>

Investors who are contemplating an exchange of securities for shares, or their
representatives, must contact Eaton Vance to determine whether the securities
are acceptable before forwarding such securities. Eaton Vance reserves the right
to reject any securities. Exchanging securities for shares may create a taxable
gain or loss. Each investor should consult his or her tax adviser with respect
to the particular federal, state and local tax consequences of exchanging
securities.

IF YOU DON'T HAVE AN AUTHORIZED FIRM, EATON VANCE CAN RECOMMEND ONE.

HOW TO REDEEM SHARES

A SHAREHOLDER MAY REDEEM SHARES IN ONE OF FOUR WAYS -- BY MAIL, BY TELEPHONE,
THROUGH AN AUTHORIZED FIRM OR BY CHECK. The redemption price will be based on
the net asset value per share next computed after a redemption request is
received in the proper form as described below. Within seven days after receipt
of a redemption request in good order by the Transfer Agent, the Trust 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 applicable CDSC (described below) and any
federal income tax required to be withheld.

REDEMPTION BY MAIL. Shares may be redeemed by delivering to the Transfer Agent,
First Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123,
during its business hours a written request for redemption in good order, plus
any share certificates with executed stock powers. Good order means that all
relevant documents must be endorsed by the record owner(s) exactly as the shares
are registered and the signature(s) must be guaranteed by a member of either the
Securities Transfer Association's STAMP program or the New York Stock Exchange's
Medallion Signature Program, or certain banks, savings and loan institutions,
credit unions, securities dealers, securities exchanges, clearing agencies and
registered securities associations as required by a Commission regulation and
acceptable to the Transfer Agent. In addition, in some cases, good order may
require the furnishing of additional documents such as where shares are
registered in the name of a corporation, partnership or fiduciary.

REDEMPTION BY TELEPHONE. Shares may be redeemed by telephone provided the
investor has not disclaimed in writing the use of the privilege. Such
redemptions can be effected by calling the Transfer Agent at 800-262-1122,
Monday through Friday, 9:00 a.m. to 4:00 p.m. (Eastern Standard Time). The
proceeds of a telephone redemption may be no greater than the maximum amount
established by the Principal Underwriter (currently $50,000) and may be mailed
only to the account address of record. Shares held by corporations, trusts or
certain other entities, or subject to fiduciary arrangements, may not be
redeemed by telephone. Neither the Trust, the Principal Underwriter nor the
Transfer Agent will be responsible for the authenticity of redemption
instructions received by telephone, provided that reasonable procedures to
confirm that instructions communicated by telephone are genuine have been
followed. Telephone instructions will be tape recorded. In times of drastic
economic or market changes, a telephone redemption may be difficult to
implement.

REDEMPTION THROUGH AN AUTHORIZED FIRM. To sell shares at their net asset value
through an Authorized Firm (a repurchase), a shareholder can place a repurchase
order with the Authorized Firm, which may charge a fee. The value of such shares
is based upon the net asset value calculated after the order is deemed to be
received by the Trust or the Principal Underwriter, as the Trust's agent. It is
the Authorized Firm's responsibility to transmit promptly repurchase orders to
the Principal Underwriter. Throughout this Prospectus, the word "redemption" is
generally meant to include a repurchase.

REDEMPTIONS BY CHECK. Class A shareholders holding shares for which certificates
have not been issued may make redemptions by check by completing an Account
Instruction form (available by calling 800-225-6265 (extension 7601)) and
appointing Boston Safe Deposit and Trust Company ("Boston Safe") their agent.
Boston Safe will provide such shareholders electing this option with checks
drawn on Boston Safe. These checks may be made payable by the shareholder 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 shareholder's account by
Boston Safe as the shareholder's agent. Through this procedure the shareholder
will continue to be entitled to distributions paid on 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 shareholder's account, the check will be returned and the
shareholder 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 shareholder 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 shareholders for this service. This service may be
terminated or suspended at any time by the Fund or Boston Safe. Shareholders of
the Fund on December 31, 1997 may also make redemptions by check.

While normally payments will be made in cash for redeemed shares, the Trust,
subject to compliance with applicable regulations, has reserved the right to pay
the redemption price of shares of the Fund, either totally or partially, by a
distribution in kind of readily marketable securities withdrawn from the Fund's
portfolio. The securities so distributed would be valued pursuant to the Trust's
valuation procedures. If a shareholder received a distribution in kind, the
shareholder could incur brokerage or other charges in converting the securities
to cash.

Due to the high cost of maintaining small accounts, the Trust reserves the right
to redeem accounts with balances of less than $750. Prior to such a redemption,
shareholders will be given 60 days' written notice to make an additional
purchase. However, no such redemption would be required if the cause of the low
account balance was a reduction in the net asset value of shares. No CDSC will
be imposed with respect to such involuntary redemptions.

CONTINGENT DEFERRED SALES CHARGE. Each class of shares is subject to a CDSC on
certain redemptions. The CDSC is calculated based on the lower of the net asset
value at the time of purchase or the time of redemption. Shares acquired through
the reinvestment of distributions are exempt. Redemptions are made first from
shares in the account which are not subject to a CDSC.

In calculating a CDSC upon the redemption of shares acquired in an exchange, the
shares are deemed to have been acquired at the time of the original purchase of
the exchanged shares and, in the case of Class B shares, the CDSC schedule
applicable to the exchanged shares will apply to the acquired shares. No CDSC is
imposed on shares sold to Eaton Vance or its affiliates, or to their respective
employees or clients. Shares acquired as the result of a merger or liquidation
of another Eaton Vance sponsored fund generally will be subject to the same CDSC
rate imposed by the prior fund.

CLASS A SHARES. If Class A shares are purchased at net asset value because the
purchase amount is $1 million or more, they will be subject to a .50% CDSC if
redeemed within 12 months of purchase.

CLASS B SHARES. Class B shares will be subject to the following CDSC schedule:

Year of Redemption
After Purchase CDSC
- -------------------------------------------------------------------------------

First or Second 5%
Third 4%
Fourth 3%
Fifth 2%
Sixth 1%
Seventh and following 0%

The Class B CDSC is waived for redemptions (1) pursuant to a Withdrawal Plan
(see "Eaton Vance Shareholder Services")or (2) following the death of all
beneficial owners of shares, provided the redemption is requested within one
year of death (a death certificate and other applicable documents may be
required).

REPORTS TO SHAREHOLDERS

THE FUND WILL ISSUE TO ITS SHAREHOLDERS, SEMI-ANNUAL AND ANNUAL REPORTS
CONTAINING FINANCIAL STATEMENTS. Financial statements included in annual reports
are audited by the independent accountants. Shortly after the end of each
calendar year, shareholders will be furnished with information necessary for
preparing federal and state tax returns. Consistent with applicable law,
duplicate mailings of shareholder reports and certain other Fund information to
shareholders residing at the same address may be eliminated.

THE LIFETIME INVESTING ACCOUNT/DISTRIBUTION OPTIONS

AFTER AN INVESTOR MAKES AN INITIAL PURCHASE OF SHARES, THE TRANSFER AGENT WILL
SET UP A LIFETIME INVESTING ACCOUNT FOR THE INVESTOR ON THE TRUST'S RECORDS.
This account is a complete record of all transactions which at all times shows
the balance of shares owned. The Trust will not issue share certificates except
upon request.

At least quarterly, the shareholder will receive a statement showing complete
details of any transaction and the current share balance in the account. THE
LIFETIME INVESTING ACCOUNT ALSO PERMITS A SHAREHOLDER TO MAKE ADDITIONAL
INVESTMENTS IN SHARES BY SENDING A CHECK FOR $50 OR MORE TO THE TRANSFER AGENT.

Any questions concerning a shareholder's account or services available may be
directed by telephone to EATON VANCE SHAREHOLDER SERVICES at 800-225-6265,
extension 2, or in writing to the Transfer Agent, First Data Investors Services
Group, P.O. Box 5123, Westborough, MA 01581-5123 (please provide the name of the
shareholder, the Fund and Class and the account number).

THE FOLLOWING DISTRIBUTION OPTIONS WILL BE AVAILABLE TO ALL LIFETIME INVESTING
ACCOUNTS and may be changed as often as desired by written notice to the Trust's
dividend disbursing agent, First Data Investor Services Group, P.O. Box 5123,
Westborough, MA 01581-5123. The currently effective option will appear on each
account statement.

SHARE OPTION -- Dividends and capital gains will be reinvested in additional
shares.

INCOME OPTION -- Dividends will be paid in cash and capital gains will be
reinvested in additional shares.

CASH OPTION -- Dividends and capital gains will be paid in cash.

The SHARE OPTION will be assigned if no other option is specified.
Distributions, including those reinvested, will be reduced by any withholding
required under the federal income tax laws.

DISTRIBUTION INVESTMENT OPTION. In addition to the distribution options set
forth above, dividends and/or capital gains may be invested in additional shares
of another Eaton Vance fund. Before selecting this option, a shareholder should
obtain a prospectus of the other Eaton Vance fund and consider its objectives
and policies carefully.

"STREET NAME" ACCOUNTS. If shares are held in a "street name" account with an
Authorized Firm, all recordkeeping, transaction processing and payments of
distributions relating to the beneficial owner's account will be performed by
the Authorized Firm, and not by the Trust and its Transfer Agent. Since the
Trust will have no record of the beneficial owner's transactions, a beneficial
owner should contact the Authorized Firm to purchase, redeem or exchange shares,
to make changes in or give instructions concerning the account, or to obtain
information about the account. The transfer of shares in a "street name" account
to an account with another Authorized Firm or to an account directly with the
Trust involves special procedures and will require the beneficial owner to
obtain historical purchase information about the shares in the account from the
Authorized Firm. Before establishing a "street name" account with an Authorized
Firm, or transferring the account to another Authorized Firm, an investor
wishing to reinvest distributions should determine whether the Authorized Firm
which will hold the shares allows reinvestment of distributions in "street name"
accounts.

THE EATON VANCE EXCHANGE PRIVILEGE

Shares of the Fund currently may be exchanged for shares of the same class of
one or more other funds in the Eaton Vance Group of Funds. Class A and Class I
shares may also be exchanged for shares of Eaton Vance Cash Management Fund,
Eaton Vance Income Fund of Boston and Eaton Vance Tax Free Reserves. Class B
shares may also be exchanged for shares of Eaton Vance Prime Rate Reserves,
which are subject to an early withdrawal charge, shares of Eaton Vance Money
Market Fund, which are subject to a CDSC, and shares of a money market fund
sponsored by an Authorized Firm and approved by the Principal Underwriter (an
"Authorized Firm fund"). Any such exchange will be made on the basis of the net
asset value per share of each fund/class at the time of the exchange (plus, in
the case of an exchange made within six months of the date of purchase of Class
A shares subject to an initial sales charge, an amount equal to the difference,
if any, between the sales charge previously paid on the shares being exchanged
and the sales charge payable on the shares being acquired). In the event the
fund to be acquired does not offer Class I shares, Class I shares of the Fund
may be exchanged for Class A shares of the fund to be acquired. Exchange offers
are available only in states where shares of the fund being acquired may be
legally sold. Exchanges are subject to any restrictions or qualifications set
forth in the current prospectus of any such fund.

Each exchange must meet the minimum investment amount required by the Fund to be
acquired. The exchange privilege may be changed or discontinued without penalty.
Shareholders will be given sixty (60) days' notice prior to any termination or
material amendment of the exchange privilege. The Trust 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 Transfer Agent makes exchanges at the next determined net asset value after
receiving an exchange request in good order (see "How to Redeem Shares").
Consult the Transfer Agent for additional information concerning the exchange
privilege. Applications and prospectuses of other funds are available from
Authorized Firms or the Principal Underwriter. The prospectus for each fund
describes its investment objectives and policies, and shareholders should obtain
a prospectus and consider these objectives and policies carefully before
requesting an exchange.

No CDSC is imposed on exchanges. For purposes of calculating the CDSC upon
redemption of shares acquired in an exchange, the CDSC schedule applicable to
the shares at the time of purchase will apply and the purchase of shares
acquired in one or more exchanges is deemed to have occurred at the time of the
original purchase of the exchanged shares, except that time during which shares
are held in an Authorized Firm fund will not be credited toward completion of
the CDSC period. For the CDSC schedule applicable to Class B shares (except
Prime Rate Reserves and Class B shares of the Limited Maturity Funds), see "How
to Redeem Shares". The CDSC or early withdrawal charge schedule applicable to
Prime Rate Reserves and Class B shares of the Limited Maturity Funds is 3%,
2.5%, 2% or 1% in the event of a redemption occurring in the first, second,
third or fourth year, respectively, after the original share purchase.

EATON VANCE SHAREHOLDER SERVICES

INVEST-BY-MAIL -- FOR PERIODIC SHARE ACCUMULATION. Once the minimum investment
has been made, checks of $50 or more payable to the order of the Fund and
specifying the Class being purchased may be mailed directly to the Transfer
Agent, First Data Investor Services Group, P.O. Box 5123, Westborough, MA
01581-5123 at any time -- whether or not distributions are reinvested. The name
of the shareholder, the Fund and Class and the account number should accompany
each investment.

BANK AUTOMATED INVESTING -- FOR REGULAR SHARE ACCUMULATION. Cash investments of
$50 or more may be made automatically each month or quarter from a shareholder's
bank account. The $1,000 minimum initial investment and small account redemption
policy are waived for these accounts.

STATEMENT OF INTENTION. Purchases of $25,000 or more of Class A shares made over
a 13-month period are eligible for reduced sales charges under a Statement of
Intention. 5% of the dollar amount to be purchased will be held in escrow in the
form of shares registered in the investor's name until the Statement is
satisfied or the thirteen-month period expires. See the Account Application for
details.

RIGHT OF ACCUMULATION. Purchases may qualify for reduced sales charges on Class
A shares when the current market value of holdings (shares at current offering
price), plus new purchases, reaches $25,000 or more. Class A shares of the Eaton
Vance funds listed under "The Eaton Vance Exchange Privilege" may be combined
under the Statement of Intention and Right of Accumulation.

WITHDRAWAL PLAN. A shareholder may draw on shareholdings systematically with
monthly or quarterly checks. For Class B shares, any such withdrawals may not in
the aggregate exceed 12% annually of the account balance at the time the plan is
established. Such amount will not be subject to the Class B CDSC. See "How to
Redeem Shares". A minimum deposit of $5,000 in shares is required. The
maintenance of a withdrawal plan concurrently with purchases of additional Class
A shares would be disadvantageous because of the sales charge included in such
purchases.

REINVESTMENT PRIVILEGE. A shareholder who has redeemed shares may reinvest, with
credit for any CDSCs paid on the redeemed shares, any portion or all of the
redemption proceeds (plus that amount necessary to acquire a fractional share to
round off the purchase to the nearest full share) in the same shares (or for
Class A shares in Class A shares of any other Eaton Vance fund), provided that
the reinvestment is effected within 60 days after such redemption and the
privilege has not been used more than once in the prior 12 months. Shares are
sold to a reinvesting shareholder at the next determined net asset value
following timely receipt of a written purchase order by the Principal
Underwriter or by the Trust (or by the Trust's Transfer Agent). To the extent
that any shares are sold at a loss and the proceeds are reinvested in shares (or
other shares are acquired) within the period beginning 30 days before and ending
30 days after the date of redemption, some or all of the loss generally will not
be allowed as a tax deduction. Shareholders should consult their tax advisers
concerning the tax consequences of reinvestments.

DISTRIBUTIONS AND TAXES

SUBSTANTIALLY ALL OF THE INVESTMENT INCOME ALLOCATED TO THE FUND BY THE
PORTFOLIO, LESS THE FUND'S DIRECT AND ALLOCATED EXPENSES AND CLASS-SPECIFIC
EXPENSES, WILL BE DECLARED DAILY AS A DISTRIBUTION TO SHAREHOLDERS OF RECORD AT
THE TIME OF DECLARATION. Distributions on Class A and Class I shares, whether
taken in cash or reinvested in additional shares, will ordinarily be paid on the
last day of each month or the next business day thereafter. Distributions on
Class B shares will ordinarily be paid on the fifteenth day of each month or the
next business day thereafter. The Fund anticipates that for tax purposes, the
entire distribution, whether paid in cash or reinvested in additional shares,
will constitute tax-exempt income to shareholders, except for the proportionate
part of the distribution that may be considered taxable income if the Fund has
taxable income during the calendar year. Shareholders reinvesting the monthly
distribution should treat the amount of the entire distribution as the tax cost
basis of the additional shares acquired by reason of such reinvestment. Daily
distribution crediting will commence on the business day after collected funds
for the purchase of shares are available at the Transfer Agent. Shareholders
will receive timely federal income tax information as to the tax-exempt or
taxable status of all distributions made by the Fund during the calendar year.
The Fund's net realized capital gains, if any, consist of the net realized
capital gains, after taking into account any available capital loss carryovers;
the Fund's net realized capital gains, if any, will be distributed at least once
a year, usually in December.

The Fund intends to qualify as a regulated investment company under the Code and
to satisfy all requirements necessary to avoid paying federal income taxes on
the part of its investment company taxable income (consisting generally of
taxable net investment income and net short-term capital gain) and net capital
gain that it distributes to shareholders.

As a regulated investment company under the Code, the Fund does not pay federal
income or excise taxes to the extent that it distributes to shareholders
substantially all of its ordinary income and capital gain net income in
accordance with the timing requirements imposed by the Code.

Distributions of taxable income (including a portion of any original issue
discount with respect to certain stripped municipal obligations and stripped
coupons and accretion of certain market discount) and net short-term capital
gains will be taxable to shareholders as ordinary income. Distributions of
long-term capital gains are taxable to shareholders as such for federal income
tax purposes, regardless of the length of time shares have been owned by the
shareholder. If shares are purchased shortly before the record date of such a
distribution, the shareholder will pay the full price for the shares and then
receive some portion of the price back as a taxable distribution. Distributions
are taxed in the manner described above whether paid in cash or reinvested in
additional shares. Tax-exempt distributions received from the Fund are
includable in the tax base for determining the taxability of social security and
railroad retirement benefits.

The Code provides that interest on indebtedness incurred or continued by a
shareholder to purchase or carry shares is not deductible to the extent it is
deemed related to the Fund's distributions of tax-exempt interest dividends to
the shareholder. Further, entities or persons who are "substantial users" (or
persons related to "substantial users") of facilities financed by industrial
development or private activity bonds should consult their tax advisers before
purchasing shares. "Substantial user" is defined in applicable Treasury
regulations to include a "non-exempt person" who regularly uses in trade or
business a part of a facility financed from the proceeds of industrial
development bonds and would likely be interpreted to include private activity
bonds issued to finance similar facilities.

Shareholders should consult with their tax advisers concerning the applicability
of state, local and other taxes to an investment.

PERFORMANCE INFORMATION

FROM TIME TO TIME, YIELD AND/OR AVERAGE ANNUAL TOTAL RETURN MAY BE ADVERTISED.
Current yield is calculated separately for each Class by dividing the net
investment income per share earned during a recent 30-day period by the maximum
offering price per share or net asset value on the last day of the period and
annualizing the resulting figure. A taxable-equivalent yield is computed by
using the tax-exempt yield figure and dividing by 1 minus the tax rate. Average
annual total return is determined separately for each Class by computing the
average annual percentage change in value of $1,000 invested at the maximum
public offering price (including maximum sales charge for Class A and Class I;
net asset value for Class B) for specified periods, assuming reinvestment of all
distributions. Total return may be quoted for the period prior to commencement
of operations, which would reflect the Class's total return (or that of its
predecessor) adjusted to reflect any applicable sales charge. The average annual
total return calculation assumes a complete redemption of the investment and the
deduction of any applicable CDSC at the end of the period. The Fund may also
publish annual and cumulative total return figures from time to time.

The Fund may also furnish total return figures for each Class which do not take
into account any sales charge. Any performance figure which does not take into
account a sales charge would be reduced to the extent such charge is imposed.
The Fund's performance may be compared in publications to the performance of
various indices and investments for which reliable data is available, and to
averages, performance rankings, or other information prepared by recognized
mutual fund statistical services.

Investors should note that the investment results will fluctuate over time, and
any presentation of yield or total return for any prior period should not be
considered as a representation of what an investment may earn or what the yield
or total return may be in any future period.

The following chart reflects the annual investment returns of Class I of the
Fund for one-year periods ending December 31 and does not take into account any
sales charge which investors may bear. The performance of Class A and Class B
would be lower.

5 YEAR AVERAGE ANNUAL TOTAL RETURN -- 8.13%
10 YEAR AVERAGE ANNUAL TOTAL RETURN -- 9.33%

12.83% 10.65% 6.97% 13.49% 8.91% 13.52% (7.27)% 17.40% 4.78% 14.13%
- -----------------------------------------------------------------------------
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
<PAGE>

APPENDIX

EATON VANCE MUNICIPAL BOND FUND

ASSET COMPOSITION INFORMATION
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997

Percent of
Moody's/S&P Net Assets
- -------------------------------------------------------------------------------

Aaa or AAA 38.0%
Aa or AA 8.6%
A 8.1%
Baa or BBB 11.6%
Ba or BB 1.2%
Unrated 32.5%
Short-Term Obligations, Cash, Interest Receivable --
-----
Total 100.0%

The chart above indicates the weighted average composition of the Fund's
portfolio for the fiscal year ended December 31, 1997, with the debt securities
rated by Moody's or S&P 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 and S&P's ratings of municipal bonds, see
the Appendix to the Statement of Additional Information.

<PAGE>

[GRAPHIC OMITTED] Investing
EATON VANCE for the
- ----------------- 21st
Mutual Funds Century

- ------------------------------------------------------------------------------
EATON VANCE
MUNICIPAL BOND FUND

PROSPECTUS
MAY 1, 1998

- ------------------------------------------------------------------------------
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, 200 Clarendon Street, Boston, MA 02116

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

AUDITORS
Deloitte & Touche LLP, 125 Summer Street, Boston, MA 02110

MBP
<PAGE>

PART B

INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION

STATEMENT OF
ADDITIONAL INFORMATION
May 1, 1998

EATON VANCE CASH MANAGEMENT FUND
EATON VANCE LIQUID ASSETS FUND
EATON VANCE MONEY MARKET FUND
EATON VANCE TAX FREE RESERVES

24 Federal Street
Boston, Massachusetts 02110
(800) 225-6265

This Statement of Additional Information provides information about the
Funds listed above and Cash Management Portfolio (the "Portfolio"). This
Statement of Additional Information is sometimes referred to herein as the
"SAI".

TABLE OF CONTENTS Page

Additional Information about Investment Policies ..................... 2
Investment Restrictions .............................................. 6
Trustees and Officers ................................................ 7
Investment Adviser and Administrator ................................. 9
Custodian ............................................................ 11
Service for Withdrawal ............................................... 12
Determination of Net Asset Value ..................................... 12
Calculation of Yield Quotations ...................................... 12
Taxes ................................................................ 13
Principal Underwriter ................................................ 14
Distribution Plan .................................................... 14
Portfolio Security Transactions ...................................... 16
Other Information .................................................... 18
Independent Accountants .............................................. 19
Financial Statements ................................................. 19
Appendix A: Fund Specific Information ................................ a-1
Appendix B: Ratings .................................................. b-1

THIS COMBINED STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR
ACCOMPANIED BY THE FUNDS' PROSPECTUS DATED MAY 1, 1998, AS SUPPLEMENTED FROM
TIME TO TIME, WHICH IS INCORPORATED HEREIN BY REFERENCE. THIS COMBINED STATEMENT
OF ADDITIONAL INFORMATION SHOULD BE READ IN CONJUNCTION WITH SUCH PROSPECTUS, A
COPY OF WHICH MAY BE OBTAINED WITHOUT CHARGE BY CONTACTING EATON VANCE
DISTRIBUTORS, INC. (THE "PRINCIPAL UNDERWRITER") (SEE BACK COVER FOR ADDRESS AND
PHONE NUMBER).
<PAGE>

This SAI provides information about the Funds and the Portfolio. Capitalized
terms used in this SAI and not otherwise defined have the meanings given them in
the Prospectus. Cash Fund, Liquid Assets Fund and Money Market Fund are subject
to the same investment policies as those of the Portfolio, and currently seek to
achieve their objectives by investing in the Portfolio.

ADDITIONAL INFORMATION ABOUT INVESTMENT POLICIES

THE FOLLOWING INFORMATION APPLIES TO THE PORTFOLIO:

MONEY MARKET INSTRUMENTS. The Portfolio will invest only in those U.S. dollar
denominated money market securities and corporate obligations determined by the
Trustees of the Portfolio to present minimal credit risks and which are at the
time of acquisition rated by the requisite number of nationally recognized
statistical rating organizations in one of the two highest applicable rating
categories or, in the case of an instrument not so rated, of comparable quality
as determined by the Trustees. At such time or times as the Trustees deem
appropriate and in the best interests of the Portfolio, assets of the Portfolio
may be invested in certificates of deposit of federally insured banks and/or
U.S. Government and agency obligations. The Portfolio intends to limit its
investments to money market instruments maturing in 397 calendar days or less
and to maintain a dollar-weighted average maturity of not more than 90 days. In
addition, Rule 2a-7 promulgated under the 1940 Act provides that the Portfolio
(so long as it uses the amortized cost method of valuing its securities or holds
itself out to investors as a money market fund) may not acquire a Second Tier
Security (as defined in the Rule) if, immediately after such acquisition: (a)
more than 5% of its total assets (taken at amortized cost) would be invested in
securities which, when acquired by the Portfolio (either initially or upon any
subsequent rollover) were Second Tier Securities; or (b) more than the greater
of 1% of its total assets (taken at amortized cost) or $1,000,000 would be
invested in securities issued by a single issuer which, when acquired by the
Portfolio (either initially or upon any subsequent rollover) were Second Tier
Securities.

The Portfolio may invest in U.S. Government money market obligations, which
are debt securities issued or guaranteed by the U.S. Treasury, including bills,
certificates of indebtedness, notes and bonds, or by an agency or
instrumentality of the U.S. Government established under the authority of an act
of Congress. Not all U.S. Government obligations are backed by the full faith
and credit of the United States. For example, securities issued by the Federal
Farm Credit Bank or by the Federal National Mortgage Association are supported
by the agency's right to borrow money from the U.S. Treasury under certain
circumstances. Securities issued by the Tennessee Valley Authority are supported
only by the credit of the agency. There is no guarantee that the U.S. Government
will support these types of securities, and therefore they involve more risk
than "full faith and credit" government obligations.

Certificates of deposit are certificates issued against funds deposited in a
commercial bank, are for a definite period of time, earn a specified rate of
return, and are normally negotiable. Bankers' acceptances are short-term credit
instruments used to finance the import, export, transfer or storage of goods.
They are termed "accepted" when a bank guarantees their payment at maturity.

OBLIGATIONS OF U.S. AND FOREIGN BANKS. Investments by the Portfolio may be
made in U.S. dollar-denominated time deposits, certificates of deposit and
bankers' acceptances of U.S. banks and their branches located outside of the
U.S., of U.S. branches of foreign banks, and foreign branches of foreign
banks. The Portfolio may also invest in U.S. dollar-denominated securities
issued or guaranteed by other domestic or foreign issuers, including domestic
and foreign corporations or other business organizations, foreign governments
and foreign government agencies or instrumentalities, and domestic and foreign
financial institutions, including but not limited to savings and loan
institutions, insurance companies, mortgage bankers and real estate investment
trusts, as well as banks.

The obligations of foreign branches of U.S. banks may be general obligations
of the parent bank in addition to the issuing branch, or may be limited by the
terms of a specific obligation and by governmental regulation. Payment of
interest and principal upon these obligations may also be affected by
governmental action in the country of domicile of the branch (generally referred
to as sovereign risk). In addition, evidences of ownership of portfolio
securities may be held outside of the U.S. and the Portfolio may be subject to
the risks associated with the holding of such property overseas. Various
provisions of federal law governing the establishment and operation of domestic
branches do not apply to foreign branches of domestic banks.

The obligations of U.S. branches of foreign banks may be general obligations
of the parent bank in addition to the issuing branch, or may be limited by the
terms of a specific obligation and by federal and state regulation as well as by
governmental action in the country in which the foreign bank has its head
office.

The obligations of foreign issuers also involve certain additional risks,
including the risks of adverse political, social and economic developments, the
imposition of withholding taxes on interest income, seizure or nationalization
of foreign deposits, exchange controls, and the adoption of foreign governmental
restrictions which might adversely affect the payment of principal and interest
on such obligations. Foreign issuers may be subject to less governmental
regulation and supervision than U.S. issuers. Foreign issuers also generally are
not bound by uniform accounting, auditing and financial reporting requirements
comparable to those applicable to domestic issuers.

In connection with its investments in bank obligations and instruments
secured thereby, the Portfolio will invest in certificates of deposit and
bankers' acceptances if they are obligations of a domestic bank or a savings and
loan association having total assets of $1,000,000,000 or more.

REPURCHASE AGREEMENTS. Repurchase agreements are transactions in which the
Portfolio purchases a security and simultaneously commits to resell that
security to the seller at an agreed upon price on an agreed upon date within a
number of days (usually not more than seven) from the date of purchase. The
resale price reflects the purchase price plus an agreed upon market rate of
interest which is unrelated to the coupon rate or maturity of the purchased
security. A repurchase agreement involves the obligation of the seller to pay
the agreed upon price, which obligation is in effect secured by the value (at
least equal to the amount of the agreed upon resale price and marked to market
daily) of the underlying security. The Portfolio may enter into a repurchase
agreement with respect to any security in which the Portfolio is authorized to
invest even though the underlying security matures in more than 397 calendar
days. While it does not presently appear possible to eliminate all risks from
these transactions (particularly the possibility of a decline in the market
value of the underlying securities, as well as delay and costs to the Portfolio
in connection with bankruptcy proceedings), it is the policy of the Portfolio to
enter into repurchase agreements only with those member banks of the Federal
Reserve System and primary dealers in U.S. Government securities whose
creditworthiness has been reviewed and found satisfactory by the Adviser.

REVERSE REPURCHASE AGREEMENTS. The Portfolio may also enter into reverse
repurchase agreements. Under a reverse repurchase agreement, the Portfolio
temporarily transfers possession of a portfolio instrument to another party,
such as a bank or broker-dealer, in return for cash. At the same time, the
Portfolio agrees to repurchase the instrument at an agreed upon time (normally
within seven days) and price, which reflects an interest payment. The Portfolio
expects that it will enter into reverse repurchase agreements when it is able to
invest the cash so acquired at a rate higher than the cost of the agreement,
which would increase the income earned by the Portfolio. The Portfolio could
also enter into reverse repurchase agreements as a means of raising cash to
satisfy redemption requests without the necessity of selling portfolio
instruments.

When the Portfolio enters into a reverse repurchase agreement, any
fluctuations in the market value of either the securities transferred to another
party or the securities in which the proceeds may be invested would affect the
market value of the Portfolio's assets. As a result, such transactions may
increase fluctuations in the market value of the Portfolio's assets (although
not affecting the amortized cost value of its assets used in determining the
Fund's net asset value per share). While there is a risk that large fluctuations
in the market value of the Portfolio's assets could affect the Fund's net asset
value per share, this risk is not significantly increased by entering into
reverse repurchase agreements, in the opinion of the Adviser. Because reverse
repurchase agreements may be considered to be the practical equivalent of
borrowing funds, they constitute a form of leverage. If the Portfolio reinvests
the proceeds of a reverse repurchase agreement at a rate lower than the cost of
the agreement, entering into the agreement will lower the Portfolio's yield.

LENDING OF PORTFOLIO SECURITIES. The Portfolio may seek to increase its income
by lending portfolio securities. Under present regulatory policies, including
those of the Board of Governors of the Federal Reserve System, and the
Commission, such loans may be made to member firms on the Exchange, and would be
required to be secured continuously by collateral in cash or cash equivalents
maintained on a current basis at an amount equal to the market value of the
securities loaned. The Portfolio would have the right to call a loan and obtain
the securities loaned at any time on five days' notice. During the existence of
a loan, the Portfolio would continue to receive the equivalent of the interest
or dividends paid by the issuer on the securities loaned and would also receive
the interest on investment of the collateral. The Portfolio would not, however,
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 of 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
collateral should the borrower of the securities fail financially. However, the
loans would be made only to firms deemed by the Portfolio's management to be of
good standing, and when, in the judgment of the Portfolio's management, the
consideration which can be earned currently from securities loans of this type
justifies the attendant risk. Securities lending involves administration
expenses, including finders' fees. If the management of the Portfolio determines
to make securities loans, it is not intended that the value of the securities
loaned would exceed 30% of the Portfolio's total assets, or that the payments
received on such loans, including amounts received during the existence of a
loan on account of interest and dividends on the securities loaned, would exceed
in the aggregate 10% of the Portfolio's annual gross income (without offset for
realized capital gains) unless counsel for the Portfolio determines that such
amounts are qualifying income under federal income tax provisions applicable to
regulated investment companies.

ASSET COVERAGE REQUIREMENTS. Transactions involving reverse repurchase
agreements expose the Portfolio to an obligation to another party. The Portfolio
will not enter into any such transactions unless it owns cash or liquid
securities with a value sufficient at all times to cover its potential
obligations. The Portfolio will comply with the regulations and policies
promulgated by the Commission regarding asset coverage for these instruments
and, if the guidelines so require, set aside cash or liquid securities in a
segregated account with its custodian in the prescribed amount. The securities
in the segregated account will be marked to market daily.

Assets held in a segregated account cannot be sold while the position
requiring segregation is outstanding unless they are replaced with other
appropriate assets. As a result, the commitment of a large portion of the
Portfolio's assets to segregated accounts could impede portfolio management or
the Portfolio's ability to meet redemption requests or other current
obligations.

OTHER INVESTMENT POLICIES. Although the Portfolio usually intends to hold
securities purchased until maturity, at which time they will be redeemable at
their full principal value plus accrued interest, it may, at times, engage in
short-term trading to attempt to take advantage of yield variations in the
short-term market. The Portfolio may also sell portfolio securities prior to
maturity based on a revised evaluation of the creditworthiness of the issuer or
to meet redemptions of Fund shares. In the event there are unusually heavy
redemption requests due to changes in interest rates or otherwise, the Portfolio
may have to sell a portion of its investment portfolio at a time when it may be
disadvantageous to do so. However, the Portfolio believes that its ability to
borrow funds to accommodate redemption requests may mitigate in part the
necessity for such portfolio sales during these periods.

TAX FREE RESERVES' ASSETS WILL CONSIST PRINCIPALLY OF THE FOLLOWING:

(1) Floating or variable rate tax-exempt 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. Interest income
generated by certain securities on which the Fund holds a put option may not
qualify as tax-exempt interest.

(2) Tax-exempt notes which are rated at the time of purchase within the
highest grade assigned by Moody's Investors Service, Inc. ("Moody's") (MIG-1),
or within the highest grade assigned by Standard & Poor's Ratings Group ("S&P")
(SP-1), or within the highest grade assigned by Fitch/IBCA ("Fitch") (FIN-1).
Tax and/or revenue anticipation notes (TANs, RANs, TRANs) are generally issued
to finance seasonal working capital needs in anticipation of various taxes or
revenues, and payable from these specific future revenues. Additionally, most
TANs, RANs and TRANs are general obligations of the issuing entity. Bond
anticipation notes (BANs) are issued to provide interim financing until
long-term financing can be arranged. In most cases, the long-term bonds, then
provide the funds to pay off the BANs. Additionally, most BAN's may be general
obligations of the issuing entity. Construction loan notes (CLNs) are issued
primarily by housing agencies to provide interim construction financing. After
completion, most projects receive permanent financing through the Federal
National Mortgage Association (FNMA) or the Government National Mortgage
Association (GNMA); others are financed by the issuance of long-term bonds. In
either case, the permanent financing provides the "take-out" for the holder of
the notes. Federal grant anticipation notes (FANs, GANs) are issued to provide
interim financing, most often for water and sewer projects, in anticipation of
matching federal grants. Additionally, most FAN's and GAN's may be general
obligations of the issuing entity. Temporary notes (TNs) are short-term general
obligations issued for various purposes.

(3) Project notes, which are instruments sold by the Department of Housing
and Urban Development but issued by a state or local housing agency, and secured
by the full faith and credit of the United States. Due to changes in the federal
income tax law enacted in the Deficit Reduction Act of 1984, project notes
issued on or after June 19, 1984 must satisfy several new requirements to
maintain their tax-exempt status.

(4) Tax-exempt bonds which are rated at the time of purchase within the two
highest grades assigned by Moody's (Aaa or Aa) or S&P (AAA or AA) or Fitch (AAA
or AA). Tax-exempt bonds generally have original maturities of longer than one
year. They are usually classified as either general obligations or revenue
bonds. Revenue bonds are secured by the revenues derived from a particular
facility or class of facilities or from some other specific revenue source or in
the case of industrial development bonds, by the earnings of the private
enterprise whose facility is being financed. Some tax-exempt bonds are
additionally secured by insurance, bank credit agreements, or escrow accounts.

(5) Tax-exempt commercial paper rated in the highest grade by such rating
services (Prime-1 or A-1 or F-1+, respectively). Tax-exempt commercial paper
consists of unsecured obligations of state or local governments or
instrumentalities which are payable from available funds of the issuer. These
obligations are often backed by a bank letter of credit or supported by a tender
agreement permitting the holder to resell the obligation to the issuer's agent.
Maturities range from one day to 270 days.

(6) Cash.

For a description of the ratings listed above, see Appendix B.

The Fund anticipates being at all times as fully invested as possible in
tax-exempt bonds and notes; however, there may be occasions when, as a result of
maturities of portfolio securities or sales of Fund shares or in order to meet
anticipated redemption requests, or the unavailability of suitable tax-exempt
investments, the Fund may hold cash which is not earning income or invest in
taxable short-term obligations including U.S. Government obligations,
interest-bearing obligations of banks (such as certificates of deposit and
bankers' acceptances), repurchase agreements (described above), and commercial
paper.

With respect to 10% of its net assets, the Fund may also purchase shares of
unaffiliated investment companies consistent with the restrictions of the 1940
Act, as amended. Such investments are subject to adverse developments affecting
the mutual fund industry. In addition, investors indirectly pay the fees of two
investment company service providers.

Some tax-exempt securities may be purchased on a "when-issued" basis. If so,
the Fund generally will not pay for the securities or start earning interest on
them until the securities are received, which may take as long as 45 days. In
order to invest its assets immediately, while awaiting delivery of securities
purchased on a when-issued basis, the Fund will normally attempt to invest in
high-grade short-term debt securities that offer same-day settlement and
earnings. The commitment to purchase a security for which payment is not made at
that time may be deemed a separate security. The value of the when- issued
securities on the delivery date may be less than their cost, effecting an
immediate loss to the Fund. Thus, the purchase of securities on a when- issued
basis may be considered an aggressive investment practice involving some risk.
The Fund does not intend to make such commitments for speculative purposes, but
only to accomplish the goal of the Fund, i.e., to invest in tax-exempt
securities. When the Fund commits to purchase a security on a when- issued
basis, the Fund will always have cash or liquid securities sufficient to cover
its commitments. If the Fund determines it is necessary to sell the when-issued
security before delivery, any gain or loss will not be tax-exempt. The Fund has
no specific limit on the amount of securities which may be purchased on a
when-issued basis.

The Fund may acquire "stand-by commitments" with respect to portfolio
obligations. Under a stand-by commitment, the Fund obligates a broker, dealer or
bank to repurchase, at the Fund's option, specified securities at a specified
price. The Fund will acquire stand-by commitments solely to facilitate portfolio
liquidity and does not intend to exercise its rights thereunder for trading
purposes.

The Fund may purchase securities at a price which would result in a yield to
maturity lower than that generally offered by the seller at the time of purchase
when the Fund can simultaneously acquire the right to sell the securities back
to the issuer or its agent at an agreed-upon price at any time during a
specified period or on a certain date. Such a right is generally known as a
"put."

INVESTMENT RESTRICTIONS

The Portfolio has adopted the following investment restrictions that cannot
be changed without the approval of a majority of its outstanding voting
securities, which as used in this SAI means the lesser of (a) 67% of the
outstanding voting securities of the Portfolio present or represented by proxy
at a meeting if the holders of more than 50% of the outstanding voting
securities of the Portfolio are present or represented at the meeting or (b)
more than 50% of the outstanding voting securities of the Portfolio. The term
"voting securities" as used in this paragraph has the same meaning as in the
1940 Act. Whenever the Trust is requested to vote on a change in the fundamental
investment restrictions of the Portfolio, the Trust will hold a meeting of Fund
shareholders and will cast its vote as instructed by the shareholders.
Accordingly, the Portfolio may not:

(1) With respect to 75% of its total assets, invest more than 5% of its
total assets taken at current market value in the securities of any one issuer
or purchase more than 10% of the outstanding voting securities of any one issuer
other than obligations issued or guaranteed by the U.S. Government or any of its
agencies or instrumentalities and except securities of other investment
companies;

(2) Purchase securities on margin (but the Portfolio may obtain such
short-term credits as may be necessary for the clearance of purchases and sales
of securities);

(3) Borrow money or issue senior securities, except as permitted by the
Investment Company Act of 1940;

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

(5) Purchase any security if, as a result of such purchase, more than 25% of
the Portfolio's total assets (taken at current value) would be invested in the
securities of issuers having their principal business activities in the same
industry; provided that there is no limitation with respect to (a) investments
by the Portfolio in certificates of deposit, bankers' acceptances or time
deposits of banking and thrift institutions or (b) obligations issued or
guaranteed by the U.S. Government or any of its agencies or instrumentalities;
and provided further that banking and thrift institutions and their holding
companies as a group, finance companies as a group and utility companies as a
group will not be considered single industries;

(6) Buy or sell real estate, although it may purchase and sell securities
which are secured by real estate and securities of companies which invest or
deal in real estate, physical commodities, or commodity contracts relating to
physical commodities unless acquired as a result of ownership of securities;

(7) Make loans to other persons, except by (a) the acquisition of money
market instruments, debt securities and other obligations in which the Portfolio
is authorized to invest in accordance with its investment objective and
policies, (b) entering into repurchase agreements and (c) lending its portfolio
securities.

Each of Cash Fund, Liquid Assets Fund and Money Market Fund have adopted the
same fundamental investment restrictions, except that the 5% restriction in
restriction (1) does not apply to or limit the Liquid Assets or Money Market
Funds' investment in certificates of deposit, bankers' acceptances or time
deposits of banking and thrift institutions. A Fund's investment restrictions
cannot be changed without the approval of the holders of a majority of its
outstanding voting securities.

Tax Free Reserves has the same fundamental investment policies as the
Portfolio, except restrictions (1) and (5) are replaced with the following: The
Fund may not

(1) With respect to 75% of its total assets, invest more than 5% of the
value of its total assets in the securities of any one issuer, except for
obligations issued or guaranteed by the U.S. Government or its agencies or
instrumentalities and except securities of other investment companies;

(5) Purchase any securities which would cause more than 25% of the value of
its total assets at the time of such purchase to be invested in the securities
of issuers having their principal business activities in the same industry,
provided that there is no limitation in respect to investments in tax-exempt
notes or bonds or other obligations issued or guaranteed by the U.S. Government
or its agencies or instrumentalities, or in certificates of deposit or bankers'
acceptances; or

(8) Purchase any securities which would cause more than 20% of the value of
its total assets at the time of such purchase to be invested in securities the
interest on which is not exempt from federal income tax.

For diversification purposes, the issuer of a tax-exempt security is deemed
to be the entity (public or private) ultimately responsible for the payment of
principal and interest on the security.

Notwithstanding the investment policies and restrictions of the Funds, each
Fund may invest its assets in an open-end management investment company with
substantially the same investment objective, policies and restrictions.

The Funds and the Portfolio each have adopted the following investment
policies which may be changed by the Trustees of the Trust with respect to a
Fund without approval by that Fund's shareholders or with respect to the
Portfolio by the Trustees of the Portfolio without approval of the relevant
Funds and its other investors. As a matter of nonfundamental policy, neither a
Fund nor the Portfolio may: (a) purchase or retain securities of any issuer if
5% of the issuer's securities are owned by those officers and Trustees of the
Trust or the Portfolio or the investment adviser of the Trust or the Portfolio
who own individually more than 1/2 of 1% of the issuer's securities; (b) make
short sales except where, because of ownership of other securities it has the
right to obtain securities equivalent in kind and amount to those sold; (c)
write or purchase or sell any put or call options or combinations thereof,
except that Tax Free Reserves may acquire rights to resell tax-exempt securities
at an agreed upon price and at or within an agreed upon time; (d) invest more
than 10% of net assets in investments which are not readily marketable,
including restricted securities and repurchase agreements maturing in more than
seven days. Restricted securities for the purposes of this limitation do not
include securities eligible for resale pursuant to Rule 144A of the Securities
Act of 1933 and commercial paper issued pursuant to Section 4(2) of said Act
that Board of the Trustees of the Trust or the Portfolio, or its delegate,
determine to be liquid, based upon the trading markets for the specific
security. In addition, the Portfolio does not intend to purchase securities for
investment while temporary borrowings, which include reverse repurchase
agreements, in excess of 5% of its total assets are outstanding.

TRUSTEES AND OFFICERS

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

TRUSTEES OF THE TRUST AND THE PORTFOLIO

M. DOZIER GARDNER (64), President and Trustee*
Vice Chairman of BMR, Eaton Vance, EVC and EV, and a Director of EVC and EV.
Director, Trustee and officer of various investment companies managed by Eaton
Vance or BMR.

JAMES B. HAWKES (56), Vice President and Trustee*
Chairman, President and Chief Executive Officer of BMR, Eaton Vance, EVC and EV,
and a Director of EVC and EV. Director, Trustee and officer of various
investment companies managed by Eaton Vance or BMR.

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

SAMUEL L. HAYES, III (63), Trustee
Jacob H. Schiff, Professor of Investment Banking, Harvard University, Graduate
School of Business Administration. Trustee, Kubrick Funds (mutual funds).
Director or Trustee of various investment companies managed by Eaton Vance
or BMR.
Address: Harvard University, Graduate School of Business Administration,
Soldiers Field Road, Boston, Massachusetts 02163

NORTON H. REAMER (62), Trustee
Chairman of the Board and Chief Executive Officer, United Asset Management
Corporation (a holding company owning institutional investment management
firms); Chairman, President and Director, UAM Funds (mutual funds). Director
or Trustee of various investment companies managed by Eaton Vance or BMR.
Address: One International Place, Boston, Massachusetts 02110

JOHN L. THORNDIKE (71), Trustee
Former Director of Fiduciary Company Incorporated. Director or Trustee of
various investment companies manged by Eaton Vance or BMR.
Address: 175 Federal Street, Boston, Massachusetts 02110

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

OFFICERS OF THE TRUST AND THE PORTFOLIO

WILLIAM H. AHERN, JR. (38), Vice President of the Trust
Vice President of Eaton Vance and BMR. Officer of various investment companies
managed by Eaton Vance or BMR. Mr. Ahern was elected Vice President of the
Trust on June 19, 1995.

THOMAS J. FETTER (54), Vice President of the Trust
Vice President of BMR, Eaton Vance and EV. Officer of various investment
companies managed by Eaton Vance or BMR. Mr. Fetter was elected Vice
President on October 17, 1997.

ROBERT B. MACINTOSH (41), Vice President of the Trust
Vice President of BMR, Eaton Vance and EV. Officer of various investment
companies managed by Eaton Vance or BMR. Mr. Macintosh was elected Vice
President of the Trust on February 20, 1998.

MICHAEL B. TERRY (55), Vice President
Vice President of BMR, Eaton Vance and EV. Officer of various investment
companies managed by Eaton Vance or BMR.

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

ALAN R. DYNNER (57), Secretary
Vice President and Chief Legal Officer of BMR, Eaton Vance, EVC and EV since
November 1, 1996. Previously, Mr. Dynner was a Partner of the law firm of
Kirkpartrick & Lockhart LLP, New York and Washington, D.C., and was Executive
Vice President of Neuberger & Berman Management, Inc., a mutual fund
management company. Officer of various investment companies managed by Eaton
Vance or BMR. Mr. Dynner was elected Secretary on June 23, 1997.

JANET E. SANDERS (62), Assistant Treasurer and Assistant Secretary
Vice President of BMR, Eaton Vance and EV. Officer of various investment
companies managed by Eaton Vance or BMR.

A. JOHN MURPHY (35), Assistant Secretary
Assistant Vice President of BMR, Eaton Vance and EV since March 1, 1994;
employee of Eaton Vance since March 1993. Officer of various investment
companies managed by Eaton Vance or BMR. Mr. Murphy was elected Assistant
Secretary of the Trust and the Portfolio on March 27, 1995.

ERIC G. WOODBURY (40), Assistant Secretary
Vice President of Eaton Vance since February 1993. Officer of various
investment companies managed by Eaton Vance or BMR. Mr. Woodbury was elected
Assistant Secretary of the Trust and the Portfolio on June 19, 1995.

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

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

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

Trustees of the Trust (with respect to Tax Free Reserves' allocable portion
of their compensation received from the Trust) and the Portfolio who are not
affiliated with the Advisers may elect to defer receipt of all or a percentage
of their annual fees in accordance with the terms of a Trustees Deferred
Compensation Plan (the "Trustees" Plan"). Under the Trustees' Plan, an eligible
Trustee may elect to have his deferred fees invested in the shares of one or
more funds in the Eaton Vance Family of Funds, and the amount paid to the
Trustees under the Trustees' Plan will be determined based upon the performance
of such investments. Deferral of Trustees' fees in accordance with the Trustees'
Plan will have a negligible effect on Tax Free Reserves or the Portfolio's
assets, liabilities, and net income per share, and will not obligate Tax Free
Reserves or the Portfolio to retain the services of any Trustee or obligate Tax
Free Reserves or the Portfolio to pay any particular level of compensation to
the Trustee. Neither the Trust nor the Portfolio has a retirement plan for its
Trustees.

The fees and expenses of the noninterested Trustees of the Trust and of the
Portfolio are paid by the Funds (and the other series of the Trust) and the
Portfolio, respectively. (The Trustees of the Trust and the Portfolio who are
members of the Eaton Vance organization receive no compensation from the Trust
or the Portfolio.) During the fiscal year ended December 31, 1997, the
noninterested Trustees of the Trust and the Portfolio earned the following
compensation, in their capacities as Trustees from the Trust, the Portfolio and
the funds in the Eaton Vance fund complex(1):

AGGREGATE AGGREGATE TOTAL COMPENSATION
COMPENSATION COMPENSATION FROM TRUST AND
NAME FROM TRUST(2) FROM PORTFOLIO FUND COMPLEX
---- ------------- -------------- -------------------
Donald R. Dwight $6,323 $1,121 $145,000(3)
Samuel L. Hayes, III 6,487 1,483 155,000(4)
Norton H. Reamer 6,166 1,316 145,000
John L. Thorndike 6,348 1,346 145,000(5)
Jack L. Treynor 6,725 1,375 150,000
- ----------
(1) As of May 1, 1998, the Eaton Vance fund complex consists of 143 registered
investment companies or series thereof.
(2) The Trust consisted of 13 Funds as of January 1, 1998.
(3) Includes $45,000 of deferred compensation.
(4) Includes $38,750 of deferred compensation.
(5) Includes $107,925 of deferred compensation.

INVESTMENT ADVISER AND ADMINISTRATOR

The Trust on behalf of Tax Free Reserves engages Eaton Vance as its
investment adviser and the Portfolio engages BMR as investment adviser pursuant
to separate investment advisory agreements. BMR or Eaton Vance acts as
investment adviser to investment companies and various individual and
institutional clients with combined assets under management of approximately $25
billion.

Eaton Vance, its affiliates and its predecessor companies have been managing
assets of individuals and institutions since 1924 and managing investment
companies since 1931. They maintain a large staff of experienced fixed-income
and equity investment professionals to service the needs of their clients. The
fixed-income division focuses on all kinds of taxable investment- grade and
high-yield securities, tax-exempt investment-grade and high-yield securities,
and U.S. Government securities. The equity division covers stocks ranging from
blue chip to emerging growth companies.

Eaton Vance and its affiliates act as adviser to a family of mutual funds,
and individual and various institutional accounts, including corporations,
hospitals, retirement plans, universities, foundations and trusts. Eaton Vance
mutual funds feature international equities, domestic equities, tax-free
municipal bonds, and U.S. government and corporate bonds. Lloyd George
Management has advised Eaton Vance's international equity funds since 1992.
Founded in 1991, Lloyd George is headquartered in Hong Kong with offices in
London and Mumbai, India. It has established itself as a leader in investment
management in Asian equities and other global markets. Lloyd George features an
experienced team of investment professionals that began working together in the
mid-1980s. Lloyd George analysts cover East Asia, the India subcontinent, Russia
and Eastern Europe, Latin America, Australia and New Zealand from offices in
Hong Kong, London and Mumbai. Together Eaton Vance and Lloyd George manage over
$26 billion in assets. Eaton Vance mutual funds are distributed by the Principal
Underwriter both within the United States and offshore.

BMR manages the investments and affairs of the Portfolio subject to the
supervision of the Portfolio's Board of Trustees. BMR furnishes to the Portfolio
investment research, advice and supervision, furnishes an investment program and
determines what securities will be purchased, held or sold by the Portfolio and
what portion, if any, of the Portfolio's assets will be held uninvested. The
Investment Advisory Agreement requires BMR to pay the salaries and fees of all
officers and Trustees of the Portfolio who are members of the BMR organization
and all personnel of BMR performing services relating to research and investment
activities. The Portfolio is responsible for all expenses not expressly stated
to be payable by BMR under the Investment Advisory Agreement, including, without
implied limitation, (i) expenses of maintaining the Portfolio and continuing its
existence, (ii) registration of the Portfolio under the 1940 Act, (iii)
commissions, fees and other expenses connected with the acquisition, holding and
disposition of securities and other investments, (iv) auditing, accounting and
legal expenses, (v) taxes and interest, (vi) governmental fees, (vii) expenses
of issue, sale and redemption of interests in the Portfolio, (viii) expenses of
registering and qualifying the Portfolio and interests in the Portfolio under
federal and state securities laws and of preparing and printing registration
statements or other offering statements or memoranda for such purposes and for
distributing the same to investors, and fees and expenses of registering and
maintaining registrations of the Portfolio and of the Portfolio's placement
agent as broker-dealer or agent under state securities laws, (ix) expenses of
reports and notices to investors and of meetings of investors and proxy
solicitations therefor, (x) expenses of reports to governmental officers and
commissions, (xi) insurance expenses, (xii) association membership dues, (xiii)
fees, expenses and disbursements of custodians and subcustodians for all
services to the Portfolio (including without limitation safekeeping of funds,
securities and other investments, keeping of books, accounts and records, and
determination of net asset values, book capital account balances and tax capital
account balances), (xiv) fees, expenses and disbursements of transfer agents,
dividend disbursing agents, investor servicing agents and registrars for all
services to the Portfolio, (xv) expenses for servicing the accounts of
investors, (xvi) any direct charges to investors approved by the Trustees of the
Portfolio, (xvii) compensation and expenses of Trustees of the Portfolio who are
not members of BMR's organization, and (xviii) such non-recurring items as may
arise, including expenses incurred in connection with litigation, proceedings
and claims and any legal obligation of the Portfolio to indemnify its Trustees,
officers and investors with respect thereto to the extent not covered by
insurance.

As at December 31, 1997, the Portfolio had net assets of $183,740,203. For
the fiscal years ended December 31, 1997, 1996 and 1995, the Portfolio paid BMR
advisory fees of $724,890, $939,313 and $965,361, respectively (equivalent to
0.50% (annualized) of the Portfolio's average daily net assets for each fiscal
year).

Eaton Vance manages the investments and affairs of Tax Free Reserves,
subject to the supervision of the Trust's Board of Trustees. Eaton Vance
furnishes for the use of Tax Free Reserves office space and all necessary office
facilities, equipment and personnel for servicing the investments of the Fund,
and compensates all officers and Trustees of the Trust who are members of the
Eaton Vance organization and all personnel of Eaton Vance performing services
relating to research and investment activities.

As at December 31, 1997, Tax Free Reserves had net assets of $33,959,868.
For the fiscal years ended December 31, 1997, 1996 and 1995, Eaton Vance would
have earned, absent a fee reduction, advisory fees of $320,793, $308,030 and
$255,933, respectively. To enhance the net income of Tax Free Reserves, Eaton
Vance made a reduction of its fee for the fiscal years ended December 31, 1997,
1996 and 1995 in the amount of $99,776, $226,940 and $200,851, respectively.

Each Investment Advisory Agreement continues in effect from year to year for
so long as such continuance is approved at least annually (i) by the vote of a
majority of the noninterested Trustees of the Portfolio or the Trust (as the
case may be) cast in person at a meeting specifically called for the purpose of
voting on such approval and (ii) by the Board of Trustees of the Portfolio or
the Trust or by vote of a majority of the outstanding voting securities of the
Portfolio or Tax Free Reserves. Each Agreement may be terminated at any time
without penalty on sixty (60) days' written notice by the Board of Trustees of
either party, or by vote of the majority of the outstanding voting securities of
the Portfolio or Tax Free Reserves (as the case may be), and each Agreement will
terminate automatically in the event of its assignment. Each Agreement provides
that an Adviser may render services to others. Each Agreement also provides that
an Adviser shall not be liable for any loss incurred in connection with the
performance of its duties, or action taken or omitted under that Agreement, in
the absence of willful misfeasance, bad faith, gross negligence in the
performance of its duties or by reason of its reckless disregard of its
obligations and duties thereunder, or for any losses sustained in the
acquisition, holding or disposition of any security or other investment.

As indicated in the Prospectus, Eaton Vance serves as administrator of the
Cash, Liquid Assets and Money Market Funds, but currently receives no
compensation for providing administrative services to the Funds. Under its
agreement with the Trust, Eaton Vance has been engaged to administer the Trust's
affairs, subject to the supervision of the Trustees of the Trust, and shall
furnish for the use of the Trust office space and all necessary office
facilities, equipment and personnel for administering the affairs of such Funds.

Each Fund pays all of its own expenses including, without limitation, (i)
expenses of maintaining the Fund and continuing its existence, (ii) its pro rata
share of the Trust's registration under the 1940 Act, (iii) commissions, fees
and other expenses connected with the purchase or sale of securities and other
investments, (iv) auditing, accounting and legal expenses, (v) taxes and
interest, (vi) governmental fees, (vii) expenses of issue, sale, repurchase and
redemption of shares, (viii) expenses of registering and qualifying the Fund and
its shares under federal and state securities laws and of preparing and printing
prospectuses for such purposes and for distributing the same to shareholders and
investors, (ix) expenses of reports and notices to shareholders and of meetings
of shareholders and proxy solicitations therefor, (x) expenses of reports to
governmental officers and commissions, (xi) insurance expenses, (xii)
association membership dues, (xiii) fees, expenses and disbursements of
custodians and subcustodians for all services to the Fund (including without
limitation safekeeping of funds, securities and other investments, keeping of
books and accounts and determination of net asset values), (xiv) fees, expenses
and disbursements of transfer agents, dividend disbursing agents, shareholder
servicing agents and registrars for all services to the Fund, (xv) expenses for
servicing shareholder accounts, (xvi) any direct charges to shareholders
approved by the Trustees of the Trust, (xvii) compensation and expenses of
Trustees of the Trust who are not members of the Eaton Vance organization, and
(xviii) such non-recurring items as may arise, including expenses incurred in
connection with litigation, proceedings and claims and any legal obligation of
the Trust to indemnify its Trustees and officers with respect thereto, to the
extent not covered by insurance.

BMR is a wholly-owned subsidiary of Eaton Vance. Eaton Vance and EV are
both wholly-owned subsidiaries of EVC. BMR and Eaton Vance are both
Massachusetts business trusts, and EV is the trustee of BMR and Eaton Vance.
The Directors of EV are M. Dozier Gardner, James B. Hawkes and Benjamin A.
Rowland, Jr. The Directors of EVC consist of the same persons and John G. L.
Cabot, John M. Nelson, Vincent M. O'Reilly and Ralph Z. Sorenson. Mr. Hawkes
is chairman, president and chief executive officer and Mr. Gardner is vice
chairman of EVC, BMR, Eaton Vance and EV. All of the issued and outstanding
shares of Eaton Vance and EV are owned by EVC. All of the issued and
outstanding shares of BMR are owned by Eaton Vance. All shares of the
outstanding Voting Common Stock of EVC are deposited in a Voting Trust, the
Voting Trustees of which are Messrs. Gardner, Hawkes and Rowland and Alan R.
Dynner, Thomas E. Faust, Jr., William M. Steul and Wharton P. Whitaker. The
Voting Trustees have unrestricted voting rights for the election of Directors
of EVC. All of the outstanding voting trust receipts issued under said Voting
Trust are owned by certain of the officers of BMR and Eaton Vance who are also
officers or officers and Directors of EVC and EV. As of March 31, 1998,
Messrs. Gardner and Hawkes each owned 24% of such voting trust receipts,
Messrs. Rowland and Faust owned 15% and 13%, respectively, and Messrs. Dynner,
Steul and Whitaker each owned 8%. Messrs. Gardner, Hawkes and Dynner are
officers or Trustees of the Trust and/or the Portfolio and are members of the
EVC, BMR, Eaton Vance and EV organizations. Messers. Ahern, Fetter, MacIntosh,
Murphy, O'Connor, Terry and Woodbury and Ms. Sanders are officers or Trustees
of the Trust and/or the Portfolio and are also members of the BMR, Eaton Vance
and EV organizations.

Eaton Vance owns all the stock of Northeast Properties, Inc., which is
engaged in real estate investment. EVC owns all of the stock of Fulcrum
Management, Inc. and MinVen, Inc., which are engaged in precious metal mining
venture investment and management. EVC also owns approximately 21% of the Class
A shares of Lloyd George Management (B.V.I.) Limited, a registered investment
adviser. EVC, BMR, Eaton Vance and EV may also enter into other businesses.

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

CUSTODIAN

IBT acts as custodian for the Trust and the Portfolio. IBT has the custody
of all cash and securities of Tax Free Reserves, maintains the Fund's general
ledger and computes the daily net asset value of shares of Tax Free Reserves.
IBT has the custody of all cash and securities representing Cash, Liquid Assets
and Money Market Funds' interest in the Portfolio, has custody of all the
Portfolio's assets, maintains the general ledger of the Portfolio and the Funds,
and computes the daily net asset value of interests in the Portfolio and the net
asset value of shares of the Funds. In such capacity it attends to details in
connection with the sale, exchange, substitution, transfer or other dealings
with the Tax Free Reserves' and the Portfolio's investments, receives and
disburses all funds and performs various other ministerial duties upon receipt
of proper instructions from the Trust and the Portfolio. IBT also provides
services in connection with the preparation of shareholder reports and the
electronic filing of such reports with the Commission, for which it receives a
separate fee.

SERVICE FOR WITHDRAWAL

The Transfer Agent will send to the shareholder regular monthly or quarterly
payments of any permitted amount designated by the shareholder (see "Eaton Vance
Shareholder Services -- Withdrawal Plan" in the Prospectus) based upon the value
of the shares held. The checks will be drawn from share redemptions and hence,
although they are a return of principal, may require the recognition of taxable
gain or loss. Income dividends and capital gains distributions in connection
with withdrawal accounts will be credited at net asset value as of the record
date for each distribution. Continued withdrawals in excess of current income
will eventually use up principal, particularly in a period of declining market
prices. A shareholder may not have a withdrawal plan in effect at the same time
he or she has authorized Bank Automated Investing or is otherwise making regular
purchases of Fund shares. The shareholder, the Transfer Agent or the Principal
Underwriter will be able to terminate the withdrawal plan at any time without
penalty.

DETERMINATION OF NET ASSET VALUE

Each Fund and the Portfolio will be closed for business and will not price
their respective shares or interests on the following business holidays: New
Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The
valuation of the instruments held by Tax Free Reserves and the Portfolio at
amortized cost is permitted in accordance with Rule 2a-7 under the 1940 Act (the
"Rule") and certain procedures established by the Trustees of the Trust and the
Portfolio thereunder.

The amortized cost of an instrument is determined by valuing it at cost
originally and thereafter accreting any discount or amortizing any premium from
its face value at a constant rate until maturity, regardless of the effect of
fluctuating interest rates on the market value of the instrument. Although the
amortized cost method provides certainty in valuation, it may result at times in
determinations of value that are higher or lower than the price that would be
received if the instruments were sold. Consequently, changes in the market value
of instruments held during periods of rising or falling interest rates will not
be reflected either in the computation of net asset value or in the daily
computation of net investment income.

The procedures of the Funds and the Portfolio are designed to facilitate, to
the extent reasonably possible, the maintenance of each Fund's price per share,
as computed for the purpose of distribution and redemption of shares, at $1.00.
These procedures include review of holdings by the Trustees, at such intervals
as they may deem appropriate, to determine whether the net asset value
calculated by using readily available market quotations deviates from the
valuation based on amortized cost, and, if so, whether such deviation may result
in material dilution or is otherwise unfair to existing interest holders. In the
event the Trustees determine that such a deviation exists, they will take such
corrective action as they consider to be necessary or appropriate, which action
could include the sale of instruments held prior to maturity (to realize capital
gains or losses); the shortening of average portfolio maturity; withholding
dividends; redemption of shares in kind; or establishing a net asset value per
share by using readily available market quotations.

CALCULATION OF YIELD QUOTATIONS

From time to time, a Fund quotes a current yield based on a specific seven
calendar day period which is calculated by first dividing the net change in the
value of an account having a balance of one share at the beginning of the period
by the value of the account at such time to determine the seven day base period
return, and then multiplying such return by 365/7 with the resulting yield
figure carried to at least the nearest hundredth of one percent. The net change
in account value is determined by the value of additional shares purchased with
dividends declared on the original share and dividends declared on both the
original share and any such additional shares, but does not include any realized
gains or losses from the sales of securities or any unrealized appreciation or
depreciation on portfolio securities. In addition to the current yield, a Fund
also quotes an effective yield based on a specific seven day period, carried to
at least the nearest hundredth of one percent, computed by determining the net
change, exclusive of capital changes, in the value of a hypothetical preexisting
account having a balance of one share at the beginning of the period, and
dividing the difference by the value of the account at the beginning of the base
period to obtain the base period return, and then compounding the base period
return by adding 1, raising the sum to a power equal to 365 divided by 7, and
subtracting 1 from the result, according to the following formula: Effective
yield = [(Base period return +1)365/7]-1. For Tax Free Reserves a
taxable-equivalent yield is computed by using the tax-exempt yield figure and
dividing by 1 minus the tax rate.

For information concerning the current and effective yield of a Fund, see
Appendix A.

TAXES

Each series of the Trust is treated as a separate entity for federal income
tax purposes. In order to qualify each year as a regulated investment company
("RIC") under the Code, each Fund intends to satisfy certain requirements
relating to sources of income, diversification of assets, and distribution of
income and gains. So long as each Fund qualifies as a RIC for tax purposes, it
will not be subject to federal income tax on income and gains paid to
shareholders in the form of dividends. In the unlikely event that a Fund fails
to so qualify, it would be subject to federal income tax at corporate rates and
all distributions from earnings and profits would be taxable to shareholders as
ordinary income. In order to requalify for taxation as a RIC, a Fund might be
required to recognize unrealized gains, pay substantial taxes and interest, and
make certain distributions.

Because Cash, Liquid Assets and Money Market Funds invest substantially all
of their assets in the Portfolio, the Portfolio also intends to satisfy the
source of income and diversification requirements under the Code. The Portfolio
will allocate at least annually to each investor its distributive share of the
Portfolio's net investment income, net realized capital gains and any other
items of income, gain, loss, deduction or credit. The Portfolio will make
allocations to a Fund and will make moneys available for withdrawal at times and
in amounts sufficient to enable the Fund to satisfy the distribution
requirements under the Code.

If a Fund fails to distribute substantially all of its ordinary income and
capital gain net income on a current basis, plus any retained amounts from the
preceding year, the Fund will be subject to a 4% federal excise tax on the
undistributed amounts. The Fund may treat distributions paid in January but
declared in October, November or December of the preceding year as paid by the
Fund on December 31 of that preceding year. As a result, shareholders must
report such distributions on their federal income tax returns for the preceding
year.

The Portfolio may be subject to foreign withholding taxes with respect to
investments in certain foreign securities. The Fund will not be eligible to pass
through to shareholders their proportionate share of foreign taxes paid by the
Portfolio and allocated to the Fund. However, such taxes may be deducted from
the Fund's net investment income.

If a shareholder sells, redeems or otherwise disposes of Fund shares at a
loss within six months of purchase, such loss will be treated as long-term
capital loss to the extent of any long-term capital gain dividends received. In
addition, all or a portion of any loss realized in the event of a sale,
redemption or other disposition of Fund shares will be disallowed if the
shareholder purchases other Fund shares within 30 days of the disposition
(before or after).

The Fund may be required by federal law to withhold and remit to the U.S.
Treasury 31% of the dividends and other distributions paid to any individual
shareholder who fails to furnish the Fund with a correct taxpayer identification
number (generally the individual's social security number), who has
underreported dividends or interest income, or who fails to certify to the Fund
that he or she is not subject to such withholding. The Fund is also generally
required to withhold on certain distributions made to non-resident aliens and
foreign entities.

Tax Free Reserves investment in securities issued at a discount and certain
other obligations will require the Tax Free Reserves to accrue and distribute
income not yet received. In order to generate cash sufficient to make the
required distributions, the Fund may sell securities that it would otherwise
have continued to hold.

Tax Free Reserves will be qualified to pay exempt-interest dividends so long
as, at the end of each quarter of the taxable year, at least 50% of the assets
consists of obligations the interest on which is exempt from federal income tax.
That portion of any indebtedness incurred or continued by a shareholder in order
to purchase or carry shares in the Fund which corresponds to the portion of
total Fund distributions (excluding capital gains dividends) that are exempt
interest dividends is not deductible by the shareholder. Exempt interest
dividends attributable to interest received on certain "private activity bonds"
or industrial development bonds will not be tax exempt to any shareholders who
are "substantial users" (or persons related to "substantial users") of the
facilities financed by such bonds.

Part or all of any interest on indebtedness incurred or continued by a
shareholder to purchase or carry shares of Tax Free Reserves is not deductible
for federal income tax purposes. Further, entities or persons who are
"substantial users" (or persons related to "substantial users") of facilities
financed by certain private activity obligations and industrial development
bonds should consult their tax advisers before purchasing shares of Tax Free
Reserves. "Substantial user" is generally a "non-exempt person" who regularly
uses in a trade or business a part of a facility financed from the proceeds of
industrial development bonds or private activity obligations.

The foregoing discussion does not address the special tax rules applicable
to certain classes of investors, such as retirement plans, tax-exempt entities,
insurance companies and financial institutions. Shareholders should consult
their own tax advisers with respect to special tax rules that may apply in their
particular situations, as well as the state, local and, when applicable, foreign
tax consequences of investing in a Fund.

PRINCIPAL UNDERWRITER

Under its Distribution Agreements with the Trust, the Principal Underwriter
acts as principal in selling shares of the Funds. The expenses of printing
copies of prospectuses used to offer shares to Authorized Firms or investors and
other selling literature and of advertising is borne by the Principal
Underwriter. The fees and expenses of qualifying and registering and maintaining
qualifications and registrations of the Funds and their shares under federal and
state securities laws are borne by the Funds. Each Distribution Agreement is
renewable annually by the Trust's Board of Trustees (including a majority of the
noninterested Trustees), may be terminated on sixty days' (six months' in the
case of Cash Fund and Tax Free Reserves) notice either by such Trustees or by
vote of a majority of the outstanding voting securities of the Fund or on six
months' notice by the Principal Underwriter and is automatically terminated upon
assignment. The Principal Underwriter distributes Fund shares on a "best
efforts" basis under which it is required to take and pay for only such shares
as may be sold.

The Principal Underwriter believes that an investment professional can
provide valuable services to you to help you reach your investment goals.
Meeting investment goals requires time, objectivity and investment savvy. Before
making an investment recommendation, a representative can help you carefully
consider your short- and long-term financial goals, your tolerance for
investment risk, your investment time frame, and other investments you may
already own. Your professional investment representatives are knowledgeable
about financial markets, as well as the wide range of investment opportunities
available. A representative can provide you with tailored financial advice and
help you decide when to buy, sell or persevere with your investments.

DISTRIBUTION PLAN

LIQUID ASSETS FUND. The Distribution Plan (the "Plan") is described in the
Prospectus and is designed to meet the requirements of Rule 12b-1 under the 1940
Act and the NASD Rule.

On June 14, 1993, the Fund revised the Plan to provide that all CDSCs will
be paid to the Fund whenever there exist no outstanding uncovered distribution
charges of the Principal Underwriter with the Principal Underwriter being
entitled to receive all CDSCs paid or payable with respect to any day on which
there exist outstanding uncovered distribution charges.

The amount of uncovered distribution charges of the Principal Underwriter is
computed daily. Briefly, such charges are equivalent to all unpaid sales
commissions and distribution fees to which the Principal Underwriter would be
entitled under the original plan less all CDSCs theretofore paid to the
Principal Underwriter. The amount of uncovered distribution charges of the
Principal Underwriter at any particular time depends upon various changing
factors, including the level and timing of sales of Fund shares, the nature of
such sales (i.e., whether they result from exchange transactions or from cash
sales through Authorized Firms), the level and timing of redemptions of Fund
shares upon which a CDSC will be imposed, the level and timing of redemptions of
Fund shares upon which no CDSC will be imposed (including redemptions involving
exchanges of Fund shares pursuant to the exchange privilege which result in a
reduction of uncovered distribution charges) and changes in the level of the net
assets of the Fund.

The Plan continues in effect from year to year for so long as such
continuance is approved at least annually by the vote of both a majority of (i)
the noninterested Trustees of the Trust who have no direct or indirect financial
interest in the operation of the Plan or any agreements related to the Plan (the
"Rule 12b-1 Trustees") and (ii) all of the Trustees then in office. The Plan
requires quarterly Trustee review of a written report of the amount expended
under the Plan and the purposes for which such expenditures were made. The Plan
may not be amended to increase materially the payments described therein without
approval of the shareholders of the Fund and the Trustees. So long as the Plan
is in effect, the selection and nomination of noninterested Trustees shall be
committed to such Trustees. The Trustees have determined that in their judgment
there is a reasonable likelihood that the Plan will benefit the Fund and its
shareholders.

MONEY MARKET FUND. The Plan is designed to meet the requirements of Rule
12b-1 under the 1940 Act and the sales charge rule of the NASD. The purpose of
the Plan is to compensate the Principal Underwriter for its distribution
services and facilities provided to the Fund.

The Plan provides that the Fund will pay sales commissions and distribution
fees to the Principal Underwriter only after and as a result of the sale of
shares of the Fund. On each sale of Fund shares (excluding reinvestment of
distributions) the Fund will pay the Principal Underwriter amounts representing
(i) sales commissions equal to 6.25% of the amount received by the Fund for each
share sold and (ii) distribution fees calculated by applying the rate of 1% over
the prime rate then reported in the Wall Street Journal to the outstanding
balance of uncovered distribution charges (as described below) of the Principal
Underwriter.

The Plan provides that the Fund will receive all CDSCs and will make no
payments to the Principal Underwriter in respect of any day on which there are
no outstanding uncovered distribution charges of the Principal Underwriter.
CDSCs and accrued amounts will be paid by the Fund to the Principal Underwriter
whenever there exist uncovered distribution charges.

In calculating daily the amount of uncovered distribution charges,
distribution charges will include the aggregate amount of sales commissions and
distribution fees theretofore paid plus the aggregate amount of sales
commissions and distribution fees which the Principal Underwriter is entitled to
be paid under the Plan since its inception. Payments theretofore paid or payable
under the Plan by the Fund to the Principal Underwriter and CDSCs theretofore
paid or payable to the Principal Underwriter will be subtracted from such
distribution charges; if the result of such subtraction is positive, a
distribution fee (computed at 1% over the prime rate then reported in The Wall
Street Journal) will be computed on such amount and added thereto, with the
resulting sum constituting the amount of outstanding uncovered distribution
charges with respect to such day. The amount of outstanding uncovered
distribution charges of the Principal Underwriter calculated on any day does not
constitute a liability recorded on the financial statements of the Fund.

The amount of uncovered distribution charges of the Principal Underwriter at
any particular time depends upon various changing factors, including the level
and timing of sales of Fund shares, the nature of such sales (i.e., whether they
result from exchange transactions, reinvestments or from cash sales through
Authorized Firms), the level and timing of redemptions of Fund shares upon which
a CDSC will be imposed, the level and timing of redemptions of Fund shares upon
which no CDSC will be imposed (including redemptions involving exchanges of Fund
shares pursuant to the exchange privilege which result in a reduction of
uncovered distribution charges), changes in the level of the net assets of the
Fund, and changes in the interest rate used in the calculation of the
distribution fee under the Plan.

Currently, payments of sales commissions and distribution fees and of
service fees may equal .90% of the Fund's average daily net assets per annum.
The Fund believes that the combined rate of all these payments may be higher
than the rate of payments made under distribution plans adopted by other
investment companies pursuant to Rule 12b-1. Although the Prinicpal Underwriter
will use its own funds (which may be borrowed from banks) to pay sales
commissions at the time of sale, it is anticipated that the Eaton Vance
organization will profit by reason of the operation of the Plan through an
increase in the Fund's assets (thereby increasing the advisory fee payable to
BMR by the Portfolio) resulting from sales of Fund shares and through the
amounts paid to the Principal Underwriter, including CDSCs, pursuant to the
Plan. The Eaton Vance organization may be considered to have realized a profit
under the Plan if at any point in time the aggregate amounts theretofore
received by the Principal Underwriter pursuant to the Plan and from CDSCs have
exceeded the total expenses theretofore incurred by such organization in
distributing shares of the Fund. Total expenses for this purpose will include an
allocable portion of the overhead costs of such organization and its branch
offices, which costs will include without limitation leasing expense,
depreciation of building and equipment, utilities, communication and postage
expense, compensation and benefits of personnel, travel and promotional expense,
stationery and supplies, literature and sales aids, interest expense, data
processing fees, consulting and temporary help costs, insurance, taxes other
than income taxes, legal and auditing expense and other miscellaneous overhead
items. Overhead is calculated and allocated for such purpose by the Eaton Vance
organization in a manner deemed equitable to the Fund.

The Plan continues in effect from year to year for so long as such
continuance is approved at least annually by the vote of both a majority of (i)
the noninterested Trustees of the Trust who have no direct or indirect financial
interest in the operation of the Plan or any agreements related to the Plan (the
"Rule 12b-1 Trustees") and (ii) all of the Trustees then in office, and the
Distribution Agreement contains a similar provision. The Plan and Distribution
Agreement may be terminated at any time by vote of a majority of the Rule 12b-1
Trustees, or by a vote of a majority of the outstanding voting securities of the
Fund. The Plan, requires quarterly Trustee review of a written report of the
amount expended under the Plan and the purposes for which such expenditures were
made. The Plan may not be amended to increase materially the payments described
therein without approval of the shareholders of the Fund and the Trustees. So
long as the Plan is in effect, the selection and nomination of the noninterested
Trustees shall be committed to the discretion of such Trustees. The Plan was
approved by the Trustees, including the Rule 12b-1 Trustees, on June 19, 1995.

The Trustees of the Trust believe that the Plan will be a significant factor
in the expected growth of the Fund's assets, and will result in increased
investment flexibility and advantages which have benefited and will continue to
benefit the Fund and its shareholders. Payments for sales commissions and
distribution fees made to the Principal Underwriter under the Plan will
compensate the Principal Underwriter for its services and expenses in
distributing shares of the Fund. Service fee payments made to the Principal
Underwriter and Authorized Firms under the Plan provide incentives to provide
continuing personal services to investors and the maintenance of shareholder
accounts. By providing incentives to the Principal Underwriter and Authorized
Firms, the Plan is expected to result in the maintenance of, and possible future
growth in, the assets of the Fund. Based on the foregoing and other relevant
factors, the Trustees of the Trust have determined that in their judgment there
is a reasonable likelihood that the Plan will benefit the Fund and its
shareholders.

PORTFOLIO SECURITY TRANSACTIONS

Decisions concerning the execution of portfolio security transactions,
including the selection of the market and the executing dealer firm, are made by
an Adviser. An Adviser is also responsible for the execution of transactions for
all other accounts managed by it.

The Advisers place the portfolio security transactions of Tax Free Reserves
and the Portfolio and of certain other accounts managed by them for execution
with many dealer firms. Each Adviser uses its best efforts to obtain execution
of portfolio security transactions at prices which are advantageous and at
reasonably competitive spreads or (when a disclosed commission is being charged)
at reasonably competitive commission rates. In seeking such execution, an
Adviser will use its best judgment in evaluating the terms of a transaction, and
will give consideration to various relevant factors, including without
limitation the size and type of the transaction, the nature and character of the
market for the security, the confidentiality, speed and certainty of effective
execution required for the transaction, the general execution and operational
capabilities of the executing firm, the reputation, reliability, experience and
financial condition of the firm, the value and quality of the services rendered
by the firm in this and other transactions, and the reasonableness of the
commission or spread, if any. Money market instruments are generally traded in
the over-the-counter market on a net basis (i.e., without commission) through
dealers and banks acting for their own accounts rather than as brokers and such
instruments may also be acquired directly from the issuers. Tax Free Reserves
may also purchase municipal obligations from underwriters, the cost of which may
include undisclosed fees and concessions to the underwriters. While it is
anticipated that Tax Free Reserves or the Portfolio will not pay significant
brokerage commissions in connection with such portfolio security transactions,
on occasion it may be necessary or appropriate to purchase or sell a security
through a broker on an agency basis, in which case a brokerage commission will
be incurred. Although spreads or commissions paid on portfolio security
transactions will, in the judgment of the relevant Adviser, be reasonable in
relation to the value of the services provided, spreads or commissions exceeding
those which another firm might charge may be paid to firms who were selected to
execute transactions on behalf of Tax Free Reserves or the Portfolio and an
Adviser's other clients for providing brokerage and research services to the
Adviser.

As authorized in Section 28(e) of the Securities Exchange Act of 1934, a
broker or dealer who executes a portfolio transaction may receive a commission
which is in excess of the amount of commission another broker or dealer would
have charged for effecting that transaction if the relevant Adviser determines
in good faith that such compensation was reasonable in relation to the value of
the brokerage and research services provided. This determination may be made on
the basis of either that particular transaction or on the basis of overall
responsibilities which the Adviser and its affiliates have for accounts over
which they exercise investment discretion. In making any such determination, the
Adviser will not attempt to place a specific dollar value on the brokerage and
research services provided or to determine what portion of the compensation
should be related to such services. Brokerage and research services may include
advice as to the value of securities, the advisability of investing in,
purchasing, or selling securities, and the availability of securities or
purchasers or sellers of securities; furnishing analyses and reports concerning
issuers, industries, securities, economic factors and trends, portfolio strategy
and the performance of accounts; effecting securities transactions and
performing functions incidental thereto (such as clearance and settlement); and
the "Research Services" referred to in the next paragraph.

It is a common practice of the investment advisory industry for the advisers
of investment companies, institutions and other investors to receive research,
statistical and quotation services, data, information and other services,
products and materials which assist such advisers in the performance of their
investment responsibilities ("Research Services") from broker-dealer firms which
execute portfolio transactions for the clients of such advisers and from third
parties with which such broker-dealers have arrangements. Consistent with this
practice, each Adviser receives Research Services from many broker-dealer firms
with which that Adviser places portfolio transactions and from third parties
with which these broker-dealers have arrangements. These Research Services
include such matters as general economic and market reviews, industry and
company reviews, evaluations of securities and portfolio strategies and
transactions, recommendations as to the purchase and sale of securities and
other portfolio transactions, financial, industry and trade publications, news
and information services, pricing and quotation equipment and services, and
research oriented computer hardware, software, data bases and services. Any
particular Research Service obtained through a broker-dealer may be used by an
Adviser in connection with client accounts other than those accounts which pay
commissions to such broker-dealer. Any such Research Service may be broadly
useful and of value to an Adviser in rendering investment advisory services to
all or a significant portion of its clients, or may be relevant and useful for
the management of only one client's account or of a few clients' accounts, or
may be useful for the management of merely a segment of certain clients'
accounts, regardless of whether any such account or accounts paid commissions to
the broker-dealer through which such Research Service was obtained. The advisory
fee paid by Tax Free Reserves or the Portfolio is not reduced because its
Adviser receives such Research Services. An Adviser evaluates the nature and
quality of the various Research Services obtained through broker-dealer firms
and attempts to allocate sufficient commissions to such firms to ensure the
continued receipt of Research Services which the Adviser believes are useful or
of value to it in rendering investment advisory services to its clients.

Subject to the requirement that an Adviser shall use its best efforts to
seek to execute portfolio security transactions at advantageous prices and at
reasonably competitive spreads or commission rates, an Adviser is authorized to
consider as a factor in the selection of any broker-dealer firm with whom
portfolio orders may be placed the fact that such firm has sold or is selling
shares of the Funds or of other investment companies sponsored by Eaton Vance.
This policy is not inconsistent with a rule of the National Association of
Securities Dealers, Inc. (the "NASD"), which rule provides that no firm which is
a member of the NASD shall favor or disfavor the distribution of shares of any
particular investment company or group of investment companies on the basis of
brokerage commissions received or expected by such firm from any source.

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

During the fiscal year ended December 31, 1997, the purchases and sales of
portfolio investments were with the issuer or with major dealers in money market
instruments acting as principal. The cost of securities purchased from
underwriters includes a disclosed, fixed underwriting commission or concession,
and the prices for which securities are purchased from and sold to dealers
usually include an undisclosed dealer mark-up or mark-down. For the fiscal years
ended December 31, 1997, 1996 and 1995 Tax Free Reserves and the Portfolio paid
no brokerage commissions on portfolio security transactions.

OTHER INFORMATION

The Trust changed its name from Eaton Vance Government Obligations Trust on
July 10, 1995. Eaton Vance, pursuant to its agreement with the Trust, controls
the use of the words "Eaton Vance" in the Fund's name and may use the words
"Eaton Vance" or "EV" in other connections and for other purposes. Each Fund
became a series of the Trust on September 1, 1995; previously Cash Fund and Tax
Free Reserves were separate investment companies.

As permitted by Massachusetts law, there will normally be no meeting of
shareholders for the purpose of electing Trustees unless and until such time as
less than a majority of the Trustees of the Trust holding office have been
elected by shareholders. In such an event the Trustees then in office will call
a shareholders' meeting for the election of Trustees. Except for the foregoing
circumstances and unless removed by action of the shareholders in accordance
with the Trust's By-laws, the Trustees shall continue to hold and may appoint
successor Trustees.

The Trust's Declaration of Trust may be amended by the Trustees when
authorized by vote of a majority of the outstanding voting securities of the
Trust, the financial interests of which are affected by the amendment. The
Trustees may also amend the Declaration of Trust without the vote or consent of
shareholders to change the name of the Trust or any series or to make such other
changes (such as reclassifying series or classes of shares or restructuring the
Trust) as do not have a materially adverse effect on the financial interests of
shareholders or if they deem it necessary to conform it to applicable federal or
state laws or regulations. The Trust's By-laws provide that the Trust will
indemnify its Trustees and officers against liabilities and expenses incurred in
connection with any litigation or proceeding in which they may be involved
because of their offices with the Trust. However, no indemnification will be
provided to any Trustee or officer for any liability to the Trust or its
shareholders by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office. The
Trust or any series or class thereof may be terminated by: (1) the affirmative
vote of the holders of not less than two-thirds of the shares outstanding and
entitled to vote at any meeting of shareholders of the Trust or the appropriate
series or class thereof, or by an instrument or instruments in writing without a
meeting, consented to by the holders of two-thirds of the shares of the Trust or
a series or class thereof, provided, however, that, if such termination is
recommended by the Trustees, the vote of a majority of the outstanding voting
securities of the Trust or a series or class thereof entitled to vote thereon
shall be sufficient authorization; or (2) by means of an instrument in writing
signed by a majority of the Trustees, to be followed by a written notice to
shareholders stating that a majority of the Trustees has determined that the
continuation of the Trust or a series or a class thereof is not in the best
interest of the Trust, such series or class or of their respective shareholders.

Under Massachusetts law, if certain conditions prevail, shareholders of a
Massachusetts business trust (such as the Trust) could be deemed to have
personal liability for the obligations of the Trust. Numerous investment
companies registered under the 1940 Act have been formed as Massachusetts
business trusts, and management is not aware of an instance where such liability
has been imposed. The Trust's Declaration of Trust contains an express
disclaimer of liability on the part of the Fund shareholders and the Trust's
By-laws provide that the Trust shall assume the defense on behalf of any Fund
shareholders. (The Declaration of Trust also contains provisions limiting the
liability of a series or class to that series or class). Moreover, the Trust's
By-laws also provide for indemnification out of the property of the Fund of any
shareholder held personally liable solely by reason of being or having been a
shareholder for all loss or expense arising from such liability. The assets of
the Fund are readily marketable and will ordinarily substantially exceed its
liabilities. In light of the nature of the Fund's business and the nature of its
assets, management believes that the possibility of the Fund's liability
exceeding its assets, and therefore the shareholder's risk of personal
liability, is remote.

In accordance with the Declaration of Trust of the Portfolio, there will
normally be no meetings of the investors for the purpose of electing Trustees
unless and until such time as less than a majority of the Trustees holding
office have been elected by investors. In such an event the Trustees of the
Portfolio then in office will call an investors' meeting for the election of
Trustees. Except for the foregoing circumstances and unless removed by action of
the investors in accordance with the Portfolio's Declaration of Trust, the
Trustees shall continue to hold office and may appoint successor Trustees.

The Declaration of Trust of the Portfolio provides that no person shall
serve as a Trustee if investors holding two-thirds of the outstanding interests
have removed him from that office either by a written declaration filed with the
Portfolio's custodian or by votes cast at a meeting called for that purpose. The
Declaration of Trust further provides that under certain circumstances the
investors may call a meeting to remove a Trustee and that the Portfolio is
required to provide assistance in communicating with investors about such a
meeting.

The Portfolio's Declaration of Trust provides that the Portfolio will
terminate 120 days after the complete withdrawal of the Fund or any other
investor in the Portfolio, unless either the remaining investors, by unanimous
vote at a meeting of such investors, or a majority of the Trustees of the
Portfolio, by written instrument consented to by all investors, agree to
continue the business of the Portfolio. This provision is consistent with
treatment of the Portfolio as a partnership for federal income tax purposes.

The Portfolio's Declaration of Trust provides that the Cash, Liquid Assets
and Money Market Funds and other entities permitted to invest in the Portfolio
(e.g., other U.S. and foreign investment companies, and common and commingled
trust funds) will each be liable for all obligations of the Portfolio. However,
the risk of a Fund incurring financial loss on account of such liability is
limited to circumstances in which both inadequate insurance exists and the
Portfolio itself is unable to meet its obligations. Accordingly, the Trustees of
the Trust believe that neither the Funds nor their shareholders will be
adversely affected by reason of the Funds investing in the Portfolio.

In connection with telephone redemptions and exchanges, the Trust, the
Principal Underwriter and the TransferAgent generally will verify personal
account information in order to determine that instructions communicated are
genuine.

The right to redeem shares of a Fund can be suspended and the payment of the
redemption price deferred when the Exchange is closed (other than for customary
weekend and holiday closings), during periods when trading on the Exchange is
restricted as determined by the Commission, or during any emergency as
determined by the Commission which makes it impracticable for the Portfolio 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.

INDEPENDENT ACCOUNTANTS

Coopers and Lybrand L.L.P., One Post Office Square, Boston, Massachusetts,
are the independent accountants of the Funds and the Portfolio, providing audit
services, tax return preparation, and assistance and consultation with respect
to the preparation of filings with the Commission.

FINANCIAL STATEMENTS

The audited financial statements of, and the report of independent
accountants for, the Funds and the Portfolio appear in each Fund's most recent
annual report to shareholders, which are incorporated by reference into this
SAI. A copy of each Fund's annual report accompanies this SAI.

Registrant incorporates by reference the audited financial information for
the Funds and the Portfolio listed below for the fiscal year ended December 31,
1997, as previously filed electronically with the Commission:

Eaton Vance Cash Management Fund
Eaton Vance Liquid Assets Fund
Eaton Vance Money Market Fund
Cash Management Portfolio
(Accession No. 0000950109-98-001732)

Eaton Vance Tax Free Reserves
(Accession No. 0000950109-98-001479)

<PAGE>

APPENDIX A: FUND SPECIFIC INFORMATION

FEES AND EXPENSES

DISTRIBUTION PLAN -- LIQUID ASSETS FUND

During the fiscal year ended December 31, 1997, the Principal Underwriter
received approximately $49,000 in CDSCs imposed on early redeeming shareholders.
These CDSC payments reduced uncovered distribution charges under the Plan. As at
December 31, 1997, the outstanding uncovered distribution charges of the
Principal Underwriter calculated under the Plan amounted to approximately
$2,186,000 (which amount was equivalent to 16.8% of the Fund's net assets on
such day). For the fiscal year ended December 31, 1997, the Fund made service
fee payments under the Plan aggregating $43,140, of which $41,811 was paid to
Authorized Firms and the balance of which was retained by the Principal
Underwriter.

ADMINISTRATOR -- MONEY MARKET FUND

As stated under "Investment Adviser and Administrator" in this SAI, the
Administrator currently receives no compensation for providing administrative
services to the Fund. For the fiscal years ended December 31, 1997 and 1996 and
for the period from the start of business, April 5, 1995, to December 31, 1995,
$22,883, $8,579 and $17,405, respectively, of expenses related to the operation
of the Fund were allocated to the Administrator.

DISTRIBUTION PLAN -- MONEY MARKET FUND

During the fiscal year ended December 31, 1997, the Principal Underwriter
paid to Authorized Firms sales commissions of $253,510 on sales of shares of the
Fund. During the same period, the Fund made sales commission payments under the
Plan to the Principal Underwriter aggregating $209,055 and the Principal
Underwriter received approximately $257,000 in CDSCs imposed on early redeeming
shareholders. These sales commissions and CDSC payments reduced Uncovered
Distribution Charges under the Plan. As at December 31, 1997, the outstanding
uncovered distribution charges of the Principal Underwriter calculated under the
Plan amounted to approximately $3,974,000 (which amount was equivalent to 16.7%
of the Fund's net assets on such day). For the fiscal year ended December 31,
1997, the Fund made service fee payments under the Plan aggregating $28,939, of
which $28,754 was paid to Authorized Firms and the balance of which was paid to
the Principal Underwriter.

PRINCIPAL UNDERWRITER -- MONEY MARKET FUND

The Fund has authorized the Principal Underwriter to act as its agent in
repurchasing shares at the rate of $2.50 for each repurchase transaction handled
by the Principal Underwriter. For the fiscal year ended December 31, 1997, the
Fund paid the Principal Underwriter $932.50 for repurchase transactions handled
by the Principal Underwriter.

SALES INCENTIVES -- TAX FREE RESERVES. Eaton Vance, the Fund's Adviser, makes
quarterly distribution assistance payments to selected broker/dealer firms or
institutions who were instrumental in the acquisition of shareholders for the
Fund, or who performed services with respect to shareholder accounts. Payments
by Eaton Vance are made with respect to accounts aggregating at least $1,000,000
in size only and determined and paid in arrears by applying a rate of up to 2/10
of 1% per annum on the aggregate average net asset value of the excess over
$1,000,000 in such accounts during the preceding quarter. The exact rate per
annum used in calculating such payments, the minimum aggregate net asset value
required for eligibility for such payments, and the factors in selecting the
broker/dealer firms or institutions to whom they will be made will be determined
from time to time by Eaton Vance. Such payments are made by Eaton Vance and not
the Fund, and do not constitute a distribution plan subject to Rule 12b-1 under
the 1940 Act.

YIELD INFORMATION

CASH FUND. The Fund's annualized current and effective yields for the
seven-day period ended December 31, 1997 were 5.01% and 5.13%, respectively.

LIQUID ASSETS FUND. The Fund's annualized current and effective yields for the
seven-day period ended December 31, 1997 were 4.40% and 4.50%, respectively.

MONEY MARKET FUND. The Fund's annualized and current effective yields for the
seven-day period ended December 31, 1997 were 4.00% and 4.08%, respectively.

TAX FREE RESERVES. The Fund's annualized current and effective yields for the
seven-day period ended December 31, 1997 were 3.26% and 3.31%, respectively. The
taxable-equivalent current and effective yields for that same period were 4.72%
and 4.84% (assuming a tax rate of 31%). Yields will fluctuate from time to time
and are not necessarily representative of future results. A shareholder should
remember that yield is a function of the type and quality of the instruments in
the Fund's portfolio.

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

CASH FUND. As of March 31, 1998, the Trustees and officers of the Trust,
as a group, owned in the aggregate less than 1% of the outstanding shares of the
Fund. As of March 31, 1998, Saturn & Co., a nominee of Investors Bank & Trust
Company, was the record owner of approximately 29.5% of the outstanding shares
of the Fund, which it held on behalf of its custody and trust clients. In
addition, as of the same date, BHC Securities, Inc., Philadelphia, PA was the
record owner of approximately 14.9% of the outstanding shares of the Fund, which
it held on behalf of its customers who are the beneficial owners of such shares,
and as to which it had voting power under certain limited circumstances. To the
knowledge of the Trust, no other person owned of record or beneficially 5% or
more of the Fund's outstanding shares as of such date.

LIQUID ASSETS FUND. As of March 31, 1998, the Trustees and officers of the
Trust, as a group, owned in the aggregate less than 1% of the outstanding shares
of the Fund. As of March 31, 1998, Merrill Lynch, Pierce, Fenner & Smith, Inc.,
Jacksonville, FL was the record owner of approximately 11.1% of the outstanding
shares of the Fund, which it held on behalf of its customers who are the
beneficial owners of such shares, and as to which it had voting power under
certain limited circumstances. In addition, as of the same date, Inbae Yoon &
Kyung Joo Yoon JTWROS, Phoenix, MD, owned beneficially and of record 8.4% of
shares of the Fund. To the knowledge of the Trust, no other person owned of
record or beneficially 5% or more of the Fund's outstanding shares as of such
date.

MONEY MARKET FUND. As of March 31, 1998, the Trustees and officers of the Trust,
as a group, owned in the aggregate less than 1% of the outstanding shares of the
Fund. To the knowledge of the Trust, no person owned of record or beneficially
5% of more of the Fund's outstanding shares as of such date.

TAX FREE RESERVES. As at March 31, 1998, the Trustees and officers of the Fund,
as a group, owned in the aggregate less than 1% of the outstanding shares of the
Fund. As of March 31, 1998, Saturn & Co., a nominee of Investors Bank & Trust
Company, was the record owner of approximately 41.1% of the outstanding shares
of the Fund, which it held on behalf of its custody and trust clients. In
addition, as of the same date, the following shareholders held of record the
percentage of outstanding shares of the Fund indicated after their names: James
Campisi, c/o The Newport Group, Heathrow, FL (25.7%) and Peter S. Cahill TTEE
Peter S. Cahill Revocable Trust U/A DTD 8/4/94, c/o The Newport Group, Heathrow,
FL (16.0%). To the knowledge of the Trust, no other person owned of record or
beneficially 5% or more of the Fund's outstanding shares as of such date.

<PAGE>

APPENDIX B: RATINGS

MOODY'S INVESTORS SERVICE, INC.
DESCRIPTION OF RATINGS OF CORPORATE DEBT

MOODY'S SHORT-TERM DEBT RATINGS

Moody's short-term debt ratings are opinions of the ability of issuers to
repay punctually senior debt obligations which have an original maturity not
exceeding one year. Obligations relying upon support mechanisms such as
letters-of-credit and bonds of indemnity are excluded unless explicitly rated.

Moody's employs three designations, all judged to be investment grade, to
indicate the relative repayment ability of issuers. The two highest designations
are as follows:

PRIME-1 -- Issuers (or supporting institutions) rated Prime-1 or (P-1) have
a superior ability for repayment of senior short-term debt obligations. P-1
repayment ability will often be evidenced by many of the following
characteristics:
o Leading market positions in well- established industries.
o High rates of return on funds employed.
o Conservative capitalization structure with moderate reliance on debt and
ample asset protection.
o Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.
o Well-established access to a range of financial markets and assured
sources of alternate liquidity.

PRIME-2 -- Issuers (or supporting institutions) rated Prime-2 or (P-2) have
a strong ability for repayment of senior short-term obligations. This will
normally be evidenced by many of the characteristics cited above, but to a
lesser degree. Earnings trends and coverage ratios, while sound, may be more
subject to variation. Capitalization characteristics, while still appropriate,
may be more affected by external conditions. Ample alternate liquidity is
maintained.

MOODY'S BOND RATINGS (INCLUDING TAX-EXEMPT BONDS)

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

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

MOODY'S RATINGS OF TAX-EXEMPT NOTES

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

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

STANDARD & POOR'S RATINGS GROUP
DESCRIPTION OF RATINGS OF CORPORATE DEBT

S&P'S COMMERCIAL PAPER RATLNGS

A Standard & Poor's Commercial Paper Rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more than
365 days.

Ratings are graded into several categories, ranging from "A-1" for the
highest quality obligations to "D" for the lowest. The two highest rating
categories are as follows:

"A-1" This highest category indicates that the degree of safety regarding
timely payment is strong. Those issues determined to Possess extremely strong
safety characteristics are denoted with a plus sign ( + ) designation.

"A-2" Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated "A-1".

S&P'S CORPORATE DEBT RATINGS (INCLUDING TAX-EXEMPT BONDS)

AAA -- Debt rated "AAA" has the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely strong.

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

NOTE RATING SYMBOLS ARE AS FOLLOWS:

SP-1: Very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics will be given a
plus sign (+) designation.

DUFF & PHELPS CREDIT RATING CO.
DESCRIPTION OF RATINGS OF CORPORATE DEBT

DUFF & PHELPS COMMERCLAL PAPER RATLNGS

Duff & Phelps' commercial paper ratings are consistent with the short-term
rating criteria utilized by money market participants. The ratings, in effect,
apply to all obligations with maturities (when issued) or under one year.

The distinguishing feature of Duff & Phelps' commercial paper ratings is the
refinement of the traditional "1" category. The majority of commercial paper
issuers carry the highest short-term rating yet significant quality differences
within that tier do exist. As a consequence, Duff & Phelps has incorporated
gradations of "1+ " (one plus) and "1-" (one minus), to assist investors in
recognizing those differences. The Duff 2 and Duff 3 categories have not been
similarly refined but could be at some later date.

CATEGORY 1: TOP GRADE

DUFF 1+ -- Highest certainty of timely payment. Short-term liquidity,
including internal operating factors and/or ready access to alternative sources
of funds, is clearly outstanding, and safety is just below risk-free U.S.
Treasury short-term obligations.

DUFF 1 -- Very high certainty of timely payment. Liquidity factors are
excellent and supported by good fundamental protection factors. Risk factors are
minor.

DUFF 1- -- High certainty of timely payment. Liquidity factors are strong
and supported by good fundamental protection factors. Risk factors are very
small.

CATEGORY 2: GOOD GRADE

DUFF 2--Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing internal funds needs may enlarge total
financing requirements, access to capital markets is good. Risk factors are
small.

DUFF & PHELPS' BOND RATINGS

AAA -- Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.

AA+ AA AA -- High credit quality. Protection factors are strong. Risk is
modest but may vary slightly from time to time because of economic conditions.

FITCH/IBCA
DESCRIPTION OF RATINGS OF CORPORATE DEBT

FITCH'S SHORT-TERM DEBT RATINGS

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

The short-term rating places greater emphasis than a long-term rating on the
existence of liquidity necessary to meet the issuer's obligations in a timely
manner.

Fitch short-term ratings are as follows:

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

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

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

FITCH'S INVESTMENT GRADE BOND RATINGS

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

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

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

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

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

TAX-EXEMPT INVESTMENT NOTE RATINGS

The ratings on tax-exempt notes, with maturities generally up to three
years, reflect Fitch's current appraisal of the degree of assurance of timely
payment, whatever the source.

FIN-1: Notes regarded as having the strongest degree of assurance for timely
payment.

Plus (+): Plus signs may be used in the "FIN-1" category to indicate
relative standing. The note ratings will usually correspond with bond ratings,
although certain security enhancements or market access may mean that notes will
not track bonds.

DEMAND BOND OR NOTE RATINGS

Certain demand securities empower the holder at his option to require the
issuer, usually through a remarketing agent, to repurchase the security upon
notice at par with accrued interest. This is also referred to as a put option.
The ratings of the demand provision may be changed or withdrawn at any time if,
in Fitch's judgment, changing circumstances warrant such action. Fitch demand
provision ratings carry the same symbols and related definitions as its
short-term ratings.

<PAGE>

[graphic omitted] Investing
EATON VANCE for the
- ---------------- 21st
Mutual Funds Century

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

EATON VANCE CASH MANAGEMENT FUND
EATON VANCE LIQUID ASSETS FUND
EATON VANCE MONEY MARKET FUND
EATON VANCE TAX FREE RESERVES

STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 1998

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

INVESTMENT ADVISERS AND ADMINISTRATOR
Boston Management and Research, 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, 200 Clarendon Street, Boston, MA 02116

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

INDEPENDENT ACCOUNTANTS
Coopers & Lybrand, L.L.P., One Post Office Square, Boston, MA 02109
MMFSAI
<PAGE>

PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION

STATEMENT OF
ADDITIONAL INFORMATION
May 1, 1998

EATON VANCE GOVERNMENT OBLIGATIONS FUND
24 Federal Street
Boston, Massachusetts 02110
(800) 225-6265

This Statement of Additional Information provides general information
about Eaton Vance Government Obligations Fund (the "Fund") and Government
Obligations Portfolio (the "Portfolio"). This Statement of Additional
Information is sometimes referred to herein as the "SAI".

TABLE OF CONTENTS Page
Additional Information about Investment Policies .......................... 1
Investment Restrictions ................................................... 6
Trustees and Officers ..................................................... 7
Investment Adviser and Administrator ...................................... 9
Custodian ................................................................. 11
Service for Accumulation -- Class A Shares ................................ 12
Service for Withdrawal .................................................... 12
Determination of Net Asset Value .......................................... 12
Investment Performance .................................................... 13
Taxes ..................................................................... 14
Principal Underwriter ..................................................... 16
Service Plan -- Class A Shares ............................................ 17
Distribution Plans -- Class B and Class C Shares .......................... 18
Portfolio Security Transactions ........................................... 19
Other Information ......................................................... 21
Independent Accountants ................................................... 22
Financial Statements ...................................................... 22
Appendix A: Class A Shares ................................................ a-1
Appendix B: Class B Shares ................................................ b-1
Appendix C: Class C Shares ................................................ c-1

THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR
ACCOMPANIED BY THE FUND'S PROSPECTUS DATED MAY 1, 1998, AS SUPPLEMENTED FROM
TIME TO TIME, WHICH IS INCORPORATED HEREIN BY REFERENCE. THIS STATEMENT OF
ADDITIONAL INFORMATION SHOULD BE READ IN CONJUNCTION WITH SUCH PROSPECTUS, A
COPY OF WHICH MAY BE OBTAINED WITHOUT CHARGE BY CONTACTING EATON VANCE
DISTRIBUTORS, INC. (THE "PRINCIPAL UNDERWRITER") (SEE BACK COVER FOR ADDRESS
AND PHONE NUMBER).

<PAGE>

This SAI provides information about the Fund and the Portfolio.
Capitalized terms used in this SAI and not otherwise defined have the meanings
given them in the Prospectus. The Fund is subject to the same investment
policies as those of the Portfolio. The Fund currently seeks to achieve its
objective by investing in the Portfolio.

ADDITIONAL INFORMATION ABOUT INVESTMENT POLICIES

MORTGAGE-BACKED SECURITIES
The Portfolio's investments in mortgage-backed securities may include
conventional mortgage pass-through securities, SMBS and certain classes of
multiple class CMOs (as described below). Examples of SMBS include interest
only and principal only securities. The CMO classes in which the Portfolio may
invest include sequential and parallel pay CMOs, including planned
amortization class and target amortization class securities. The Portfolio may
also invest in the floating rate mortgage-backed securities listed under
"Indexed Securities".

GNMA Certificates are mortgage-backed securities representing part
ownership of a pool of mortgage loans. These loans -- issued by lenders such
as mortgage bankers, commercial banks and savings and loan associations -- are
either insured by the Federal Housing Administration or guaranteed by the
Veterans Administration. A "pool" or group or such mortgages is assembled and,
after being approved by GNMA, is offered to investors through securities
dealers. Once such pool is approved by GNMA, the timely payment of interest
and principal on the Certificates issued representing such pool is guaranteed
by the full faith and credit of the U.S. Government. As mortgage-backed
securities, GNMA Certificates differ from bonds in that the principal is paid
back by the borrower over the length of the loan rather than returned in a
lump sum at maturity. GNMA Certificates are called "pass-through" securities
because a pro rata share of both regular interest and principal payments, as
well as unscheduled early prepayments, on the underlying mortgage pool is
passed through monthly to the holder of the Certificate (i.e., the Portfolio).
As indicated below, since the unscheduled prepayment rate of the underlying
mortgage pool covered by a "pass-through" security cannot be predicted with
accuracy, the average life of a particular issue of GNMA Certificates cannot
be accurately predicted. The Portfolio may purchase GNMA Certificates and
various other mortgage-backed securities on a when-issued basis subject to
certain limitations and requirements.

The Federal Home Loan Mortgage Corporation ("FHLMC"), a corporate
instrumentality of the U.S. Government created by Congress for the purposes of
increasing the availability of mortgage credit for residential housing, issues
participation certificates ("PCs") representing undivided interests in FHLMC's
mortgage portfolio. While FHLMC guarantees the timely payment of interest and
ultimate collection of the principal of its PCs, its PCs are not backed by the
full faith and credit of the U.S. Government. FHLMC PCs differ from GNMA
Certificates in that the mortgages underlying the PCs are mostly
"conventional" mortgages rather than mortgages insured or guaranteed by a
federal agency or instrumentality. However, in several other respects, such as
the monthly pass-through of interest and principal (including unscheduled
prepayments) and the unpredictability of future unscheduled prepayments on the
underlying mortgage pools, FHLMC PCs are similar to GNMA Certificates.

The Federal National Mortgage Association ("FNMA"), a federally chartered
corporation owned entirely by private stockholders, purchases both
conventional and federally insured or guaranteed residential mortgages from
various entities, including savings and loan associations, savings banks,
commercial banks, credit unions and mortgage bankers, and packages pools of
such mortgages in the form of pass-through securities generally called FNMA
Mortgage-Backed Certificates, which are guaranteed as to timely payment of
principal and interest by FNMA but are not backed by the full faith and credit
of the U.S. Government. Like GNMA Certificates and FHLMC PCs, these pass-
through securities are subject to the unpredictability of unscheduled
prepayments on the underlying mortgage pools.

While it is not possible to accurately predict the life of a particular
issue of a mortgage-backed "pass-through" security held by the Portfolio, the
actual life of any such security is likely to be substantially less than the
average maturity of the mortgage pool underlying the security. This is because
unscheduled early prepayments of principal on the security owned by the
Portfolio will result from the prepayment, refinancing or foreclosure of the
underlying mortgage loans in the mortgage pool. The Portfolio, when the
monthly payments (which may include unscheduled prepayments) on such a
security are passed through to it, may be able to reinvest them only at a
lower rate of interest. Because of the regular scheduled payments of principal
and the early unscheduled prepayments of principal, the mortgage-backed "pass-
through" security is less effective than other types of obligations as a means
of "locking-in" attractive long-term interest rates. As a result, this type of
security may have less potential for capital appreciation during periods of
declining interest rates than other U.S. Government securities of comparable
maturities, although many issues of mortgage-backed "pass-through" securities
may have a comparable risk of decline in market value during periods of rising
interest rates. If such a security has been purchased by the Portfolio at a
premium above its par value, both a scheduled payment of principal and an
unscheduled prepayment of principal, which would be made at par, will
accelerate the realization of a loss equal to that portion of the premium
applicable to the payment or prepayment and will reduce the Fund's total
return. If such a security has been purchased by the Portfolio at a discount
from its par value, both a scheduled payment of principal and an unscheduled
prepayment of principal will increase current and total returns and will
accelerate the recognition of income, which, when distributed to Fund
shareholders, will be taxable as ordinary income. The Portfolio intends to
acquire the majority of its holdings of mortgage-backed "pass-through"
securities at a discount from par value.

COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS")
CMOs are debt securities issued by the FHLMC and by financial institutions
and other mortgage lenders which are generally fully collateralized by a pool
of mortgages held under an indenture. The key feature of the CMO structure is
the prioritization of the cash flows from a pool of mortgages among the
several classes of CMO holders, thereby creating a series of obligations with
varying rates and maturities appealing to a wide range of investors. CMOs
generally are secured by an assignment to a trustee under the indenture
pursuant to which the bonds are issued of collateral consisting of a pool of
mortgages. Payments with respect to the underlying mortgages generally are
made to the trustee under the indenture. Payments of principal and interest on
the underlying mortgages are not passed through to the holders of the CMOs as
such (that is, the character of payments of principal and interest is not
passed through and therefore payments to holders of CMOs attributable to
interest paid and principal repaid on the underlying mortgages do not
necessarily constitute income and return of capital, respectively, to such
holders), but such payments are dedicated to payment of interest on and
repayment of principal of the CMOs. CMOs are issued in two or more classes or
series with varying maturities and stated rates of interest determined by the
issuer. Because the interest and principal payments on the underlying
mortgages are not passed through to holders of CMOs, CMOs of varying
maturities may be secured by the same pool of mortgages, the payments on which
are used to pay interest to each class and to retire successive maturities in
sequence. CMOs are designed to be retired as the underlying mortgages are
repaid. In the event of sufficient early prepayments on such mortgages, the
class or series of CMO first to mature generally will be retired prior to
maturity. Therefore, although in most cases the issuer of CMOs will not supply
additional collateral in the event of such prepayments, there will be
sufficient collateral to secure CMOs that remain outstanding. Currently, the
Investment Adviser will consider privately issued CMOs or other mortgage-
backed securities as possible investments for the Portfolio only when the
mortgage collateral is insured, guaranteed or otherwise backed by the U.S.
Government or one or more of its agencies or instrumentalities (e.g., insured
by the Federal Housing Administration or Farmers Home Administration or
guaranteed by the Administrator of Veterans Affairs or consisting in whole or
in part of U.S. Government securities).

STRIPPED MORTGAGE-BACKED SECURITIES ("SMBS")
The Portfolio may invest in SMBS, which are derivative multiclass mortgage
securities. The Portfolio may only invest in SMBS issued or guaranteed by the
U.S. Government, its agencies or instrumentalities. SMBS are usually
structured with two classes that receive different proportions of the interest
and principal distributions from a pool of mortgages. A common type of SMBS
will have one class receiving all of the interest from the mortgages, while
the other class will receive all of the principal. However, in some instances,
one class will receive some of the interest and most of the principal while
the other class will receive most of the interest and the remainder of the
principal. If the underlying mortgages experience greater than anticipated
prepayments of principal, the Portfolio may fail to fully recoup its initial
investment in these securities. Although the market for such securities is
increasingly liquid, certain SMBS may not be readily marketable and will be
considered illiquid for purposes of the Portfolio's limitation on investments
in illiquid securities. The determination of whether a particular SMBS is
liquid will be made by the Investment Adviser under guidelines and standards
established by the Trustees of the Portfolio. The market value of the class
consisting entirely of principal payments generally is unusually volatile in
response to changes in interest rates. The yields on a class of SMBS that
receives all or most of the interest from mortgages are generally higher than
prevailing market yields on other mortgage-backed securities because their
cash flow patterns are more volatile and there is a greater risk that the
initial investment will not be fully recouped. The Investment Adviser will
seek to manage these risks (and potential benefits) by investing in a variety
of such securities and by using certain hedging techniques.

INDEXED SECURITIES
The indexed securities purchased by the Portfolio may include interest
only ("IO") and principal only ("PO") securities, floating rate securities
linked to the Cost of Funds Index ("COFI floaters"), other "lagging rate"
floating rate securities, floating rate securities that are subject to a
maximum interest rate ("capped floaters"), leveraged floating rate securities
("super floaters"), leveraged inverse floating rate securities ("inverse
floaters"), dual index floaters, range floaters, index amortizing notes and
various currency indexed notes.

RISKS OF CERTAIN MORTGAGE-BACKED AND INDEXED SECURITIES
The risk of early prepayments is the primary risk associated with mortgage
IOs, super floaters and other leveraged floating rate mortgage-backed
securities. The primary risks associated with COFI floaters, other "lagging
rate" floaters, capped floaters, inverse floaters, POs and leveraged inverse
IOs are the potential extension of average life and/or depreciation due to
rising interest rates. Although not mortgage-backed securities, index
amortizing notes and other callable securities are subject to extension risk
resulting from the issuer's failure to exercise its option to call or redeem
the notes before their stated maturity date. The residual classes of CMOs are
subject to both prepayment and extension risk.

Other types of floating rate derivative debt securities present more
complex types of interest rate risks. For example, range floaters are subject
to the risk that the coupon will be reduced to below market rates if a
designated interest rate floats outside of a specified interest rate band or
collar. Dual index or yield curve floaters are subject to depreciation in the
event of an unfavorable change in the spread between two designated interest
rates. The market values of currency-linked securities may be very volatile
and may decline during periods of unstable currency exchange rates.

LEVERAGE THROUGH BORROWING
The Portfolio and the other investment companies advised by the Investment
Adviser or Eaton Vance Management participate in a Line of Credit Agreement
(the "Credit Agreement") with a group of six banks (the "Lenders"). Citibank,
N.A. serves as the administrative agent. The Lenders have agreed to make
advances ("Advances"), the aggregate amount of which to all borrowers cannot
exceed $100,000,000. The Portfolio has determined that its borrowings under
the Credit Agreement will not exceed, at any one time outstanding, the lesser
of (a) 1/3 of the current market value of the net assets of the Portfolio or
(b) $7,500,000 (the "Amount Available to the Portfolio"). The Portfolio is
obligated to pay to each Lender, in addition to interest on the Advances made
to it, a quarterly fee of .10% on each Lender's unused commitment. The
Portfolio expects to use the proceeds of the Advances primarily for leveraging
purposes. As at December 31, 1997, the Portfolio had no outstanding balance.
The average daily loan balance for the fiscal year ended December 31, 1997,
under the Credit Agreement (and predecessor contract) was $2,661,326 and the
average daily interest rate was 6.3%.

The Portfolio, like many other investment companies, may also borrow money
for temporary extraordinary or emergency purposes. Such borrowings may not
exceed 5% of the value of the Portfolio's total assets at the time of
borrowing. The Portfolio may pledge up to 10% of the lesser of cost or value
of its total assets to secure such borrowings.

WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS
The Portfolio may purchase and sell securities on a "forward commitment"
or "when-issued" basis. Forward commitment or when-issued transactions arise
when securities are purchased or sold by the Portfolio with payment and
delivery taking place in the future in order to secure what is considered to
be an advantageous price and yield to the Portfolio at the time of entering
into the transaction. However, the yield on a comparable security when the
transaction is consummated may vary from the yield on the security at the time
that the forward commitment or when-issued transaction was made. From the time
of entering into the transaction until delivery and payment is made at a later
date, the securities that are the subject of the transaction are subject to
market fluctuations. When the Portfolio engages in forward commitment or when-
issued transactions, the Portfolio relies on the seller or buyer, as the case
may be, to consummate the sale. Failure to do so may result in the Portfolio
missing the opportunity of obtaining a price or yield considered to be
advantageous. Forward commitment or when-issued transactions may be expected
to occur a month or more before delivery is due. However, no payment or
delivery is made by the Portfolio until it receives payment or delivery from
the other party to the transaction. To the extent the Portfolio engages in
forward commitment or when-issued transactions, it will do so for the purpose
of acquiring or disposing of securities held by the Portfolio consistent with
the Portfolio's investment objective and policies and not for the purpose of
investment leverage.

LENDING PORTFOLIO SECURITIES
The Portfolio may seek to increase its income by lending portfolio
securities to broker-dealers or other institutional borrowers. Under present
regulatory policies of the Commission, such loans are required to be secured
continuously by collateral in cash, cash equivalents or U.S. Government
securities held by the Portfolio's custodian and maintained on a current basis
at an amount at least equal to the market value of the securities loaned,
which will be marked to market daily. Cash equivalents include certificates of
deposit, commercial paper and other short-term money market instruments. The
Portfolio would have the right to call a loan and obtain the securities loaned
at any time on up to five business days' notice. The Portfolio would not have
the right to vote any securities having voting rights during the existence of
a loan, but 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 by the Investment Adviser to be of good standing and
when the consideration which can be earned from securities loans of this type,
net of administrative expenses and any finder's fees, justifies the attendant
risk. The financial condition of the borrower will be monitored by the
Investment Adviser on an ongoing basis. If the Investment Adviser determines
to make securities loans, it is not intended that the value of the securities
loaned would exceed 30% of the Portfolio's total assets.

WRITING AND PURCHASING CALL AND PUT OPTIONS
The Portfolio may write covered put and call options on U.S. Government
securities. The Portfolio does not intend to write a covered option on U.S.
Government securities if after such transaction more than 25% of its net
assets, as measured by the aggregate value of such securities underlying all
covered calls and puts written by the Portfolio, would be subject to such
options. The Portfolio will only write a put option on a security which it
intends to ultimately acquire for its investment portfolio. The Portfolio does
not intend to purchase an option on any U.S. Government security if after such
transaction more than 5% of its net assets, as measured by the aggregate of
all premiums paid for all options held by the Portfolio, would be so invested.

Securities dealers make over-the-counter ("OTC") markets in options on
certain "pass-through" mortgage-backed securities, such as GNMA Certificates,
FHLMC PCs and FNMA Mortgage-Backed Certificates. These dealers buy and sell
call and put options on such securities, and the Portfolio may enter into
option transactions with such dealers. Since the remaining principal balance
of a "pass-through" mortgage-backed security declines each month as a result
of regular scheduled payments and early unscheduled prepayments of principal,
the Portfolio, as a writer of a call option holding such a security as "cover"
to satisfy its delivery obligation in the event of exercise, may find that the
security it holds no longer has a sufficient remaining principal balance for
this purpose. Should this occur, the Portfolio will purchase additional
securities in order to maintain its "cover."

FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS
Futures Contracts. The Portfolio may enter into futures contracts traded
on an exchange regulated by the Commodity Futures Trading Commission ("CFTC")
and on foreign exchanges, but, with respect to foreign exchange-traded futures
contracts, only if the Investment Adviser determines that trading on each such
foreign exchange does not subject the Portfolio to risks, including credit and
liquidity risks, that are materially greater than the risks associated with
trading on CFTC-regulated exchanges.

Hedging Strategies. In order to hedge its current or anticipated portfolio
positions, the Portfolio may use futures contracts on securities held in its
Portfolio or on securities with characteristics similar to those of the
securities held by the Portfolio. If, in the opinion of the Investment
Adviser, there is a sufficient degree of correlation between price trends for
the securities held by the Portfolio and futures contracts based on other
financial instruments, securities indices or other indices, the Portfolio may
also enter into such futures contracts as part of its hedging strategy.
Although under some circumstances prices of securities held by the Portfolio
may be more or less volatile than prices of such futures contracts, the
Investment Adviser will attempt to estimate the extent of this difference in
volatility based on historical patterns and to compensate for it by having the
Portfolio enter into a greater or lesser number of futures contracts or by
attempting to achieve only a partial hedge against price changes affecting the
securities held by the Portfolio.

Options on Futures Contracts. The Portfolio may purchase and write call
and put options on futures contracts which are traded on a United States
exchange or board of trade or any foreign exchange on which the Portfolio is
permitted to trade futures contracts. The Portfolio will not purchase or write
options on futures contracts unless, in the opinion of the Investment Adviser,
the market for such options has developed sufficiently that the risks
associated with such options transactions are not greater than the risks
associated with futures transactions.

Some derivative securities are not readily marketable or may become
illiquid under adverse market conditions. In addition, during periods of
market volatility, a commodity exchange may suspend or limit in an exchange-
traded derivative instrument, which may make the instrument temporarily
illiquid and difficult to price. Commodity exchanges may also establish daily
limits on the amount that the price of a futures contract or futures option
can vary from the previous day's settlement price. Once the daily limit is
reached, no trades may be made that day at a price beyond the limit. This may
prevent the Portfolio from closing out positions and limiting its losses.

LIMITATIONS ON THE USE OF FUTURES CONTRACTS AND CERTAIN OPTIONS
The Portfolio will engage in futures and related options transactions for
bona fide hedging or non-hedging purposes as defined in or permitted by the
regulations of the Commodity Futures Trading Commission ("CFTC"). In general,
the Portfolio will determine that the price fluctuations in the futures
contracts and options on futures used for hedging purposes are substantially
related to price fluctuations in securities held by the Portfolio or that it
expects to purchase. When it is economically advantageous for the Portfolio to
do so, a long futures (or options) position may be terminated (or an option
may expire) without the corresponding purchase of securities. The Portfolio
will engage in transactions in futures contracts and related options only to
the extent such transactions are consistent with the requirements of the Code
for maintaining the qualification of the Fund as a regulated investment
company for federal income tax purposes (see "Taxes").

To the extent that the Portfolio enters into futures contracts, options on
futures contracts and options on foreign currencies traded on an exchange
regulated by the CFTC, in each case that are not for bona fide hedging
purposes (as defined by the CFTC), the aggregate initial margin and premiums
required to establish these positions (excluding the amount by which options
are "in-the-money") may not exceed 5% of the liquidation value of the
Portfolio's portfolio, after taking into account unrealized profits and
unrealized losses on any contracts the Portfolio has entered into.

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
Forward contracts are individually negotiated and privately traded by
currency traders and their customers. A forward contract involves an
obligation to purchase or sell a specific currency (or basket of currencies)
for an agreed price at a future date, which may be any fixed number of days
from the date of the contract. The Portfolio may engage in cross-hedging by
using forward contracts in one currency (or basket of currencies) to hedge
against fluctuations in the value of securities denominated in a different
currency if the Investment Adviser determines that there is an established
historical pattern of correlation between the two currencies (or the basket of
currencies and the underlying currency). Use of a different foreign currency
magnifies the Portfolio's exposure to foreign currency exchange rate
fluctuations.

The precise projection of short-term currency market movements is not
possible and short-term hedging provides a means of fixing the dollar value of
only a portion of the Portfolio's foreign assets. The Portfolio will not enter
into forward contracts or maintain a net exposure to such contracts where the
consummation of the contracts would obligate the Portfolio to deliver an
amount of foreign currency in excess of the value of the securities held by
the Portfolio or other assets denominated in that currency.

ASSET COVERAGE FOR DERIVATIVE INSTRUMENTS
Transactions using when-issued securities, forward committments, forward
contracts and futures contracts and options thereon (other than options that
the Portfolio has purchased) expose the Portfolio to an obligation to another
party. The Portfolio will not enter into any such transactions unless it owns
either (1) an offsetting ("covered") position in securities, currencies, or
other options, futures contracts or forward contracts, or (2) cash or liquid
securities (such as readily marketable obligations and money market
instruments) with a value sufficient at all times to cover its potential
obligations not covered as provided in (1) above. The Portfolio will comply
with Commission guidelines regarding cover for these instruments and, if the
guidelines so require, set aside cash or liquid securities in a segregated
account with its custodian in the prescribed amount. The securities in the
segregated account will be marked to market daily.

Assets used as cover or held in a segregated account maintained by the
custodian cannot be sold while the position requiring coverage or segregation
is outstanding, unless they are replaced with other appropriate assets. As a
result, the commitment of a large portion of the Portfolio's assets to cover
or segregated accounts could impede portfolio management or the Portfolio's
ability to meet redemption requests or other current obligations.

PORTFOLIO TURNOVER
If the Portfolio writes a substantial number of call options and the
market prices of the underlying securities appreciate, or if the Portfolio
writes a substantial number of put options and the market prices of the
underlying securities depreciate, there may be a very substantial turnover of
securities held by the Portfolio. Although it is not anticipated that the
annual portfolio turnover rate will exceed 200% under such circumstance,
portfolio turnover may be greater than 200% but is not expected to exceed
300%. A 200% turnover rate could occur if all of the securities held by the
Portfolio were sold and either repurchased or replaced twice within one year.
High portfolio turnover involves correspondingly greater brokerage commissions
and other transaction costs, which will be borne directly by the Portfolio. It
may also result in the realization of capital gains. The Portfolio pays
brokerage commissions in connection with futures transactions and the writing
of options and effecting of closing purchase or sale transactions, as well as
for purchases and sales of portfolio securities. See "Portfolio Security
Transactions" for a discussion of the Portfolio's brokerage practices.

For the fiscal years ended December 31, 1996 and 1997, the portfolio
turnover rates of the Portfolio were 11% and 20%, respectively.

INVESTMENT RESTRICTIONS

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

(1) With respect to 75% of its total assets, invest more than 5% of its
total assets in the securities of a single issuer or purchase more than 10% of
the outstanding voting securities of a single issuer, except obligations
issued or guaranteed by the U.S. Government, its agencies or instrumentalities
and except securities of other investment companies; or invest more than 25%
of its total assets in any single industry (other than securities issued or
guaranteed by the U.S. Government or its agencies or instrumentalities);

(2) Borrow money or issue senior securities except as permitted by the
1940 Act;

(3) 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 contracts or related options transactions is
not considered the purchase of a security on margin;

(4) Underwrite or participate in the marketing of securities of others,
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;

(5) Purchase or sell real estate, although it may purchase and sell
securities which are secured by real estate and securities of companies which
invest or deal in real estate;

(6) Purchase or sell physical commodities or contracts for the purchase or
sale of physical commodities;

(7) Make loans to any person except by (a) the acquisition of debt
instruments and making portfolio investments, (b) entering into repurchase
agreements and (c) lending portfolio securities; or

(8) Buy investment securities from or sell them to any of its officers or
Trustees of the Trust, the investment adviser or its underwriter, as
principal; however, any such person or concerns may be employed as a broker
upon customary terms.

Notwithstanding the investment policies and restrictions of the Fund, the
Fund may invest its assets in an open-end management investment company with
substantially the same investment objective, policies and restrictions as the
Fund.

The Portfolio has adopted substantially the same fundamental investment
restrictions as the foregoing investment restrictions adopted by the Fund;
such restrictions cannot be changed without the approval of a "majority of the
outstanding voting securities" of the Portfolio.

The Fund and the Portfolio have adopted the following nonfundamental
investment policies which may be changed by the Trust with respect to the Fund
without approval by the Fund's shareholders or with respect to the Portfolio
without the approval of the Fund or its other investors. As a matter of
nonfundamental policy, the Fund and the Portfolio will not: (a) purchase put
or call options on U.S. Government securities if after such purchase more than
5% of its net assets, as measured by the aggregate of the premiums paid for
such options held by the Fund or the Portfolio, would be so invested; (b)
purchase any put options, long futures contracts, or call options on a futures
contract if at the date of such purchase realized net losses from such
transactions during the fiscal year to date exceed 5% of its average net
assets during such period; (c) make short sales of securities or maintain a
short position, unless at all times when a short position is open it owns an
equal amount of such securities or securities convertible into or
exchangeable, without payment of any further consideration, for securities of
the same issue as, and equal in amount to, the securities sold short, and
unless not more than 25% of its net assets (taken at current value) is held as
collateral for such sales at any one time; (d) invest more than 15% of net
assets in investments which are not readily marketable, including restricted
securities and repurchase agreements maturing in more than seven days.
Restricted securities for the purposes of this limitation do not include
securities elegible for resale pursuant to Rule 144A of the Securities Act of
1933 and commercial paper issued pursuant to Section 4(2) of said Act that the
Board of Trustees of the Trust or the Portfolio, or their delegate, determines
to be liquid, based upon the trading markets for the specific security; or (e)
purchase or retain in its portfolio any securities issued by an issuer any of
whose officers, directors, trustees or security holders is an officer or
Trustee of the Trust or the Portfolio or is a member, officer, director or
trustee of any investment adviser of the Trust or the Portfolio, if after the
purchase of the securities of such issuer by the Fund or the Portfolio one or
more of such persons owns beneficially more than 1/2 of 1% of the shares or
securities or both (all taken at market value) of such issuer and such persons
owning more than 1/2 of 1% of such shares or securities together own
beneficially more than 5% of such shares or securities or both (all taken at
market value).

Whenever an investment policy or investment restriction set forth in the
Prospectus or this SAI states a maximum percentage of assets that may be
invested in any securitiy or other asset, such percentage limitation shall be
determined immediately after and as a result of the Fund's or the Portfolio's
acquisition of such security or asset. Accordingly, any later increase or
decrease resulting from a change in values, assets or other circumstances,
will not compel the Fund or the Portfolio, as the case may be, to dispose of
such security or other asset. Notwithstanding the foregoing, the Fund and the
Portfolio must always be in compliance with the borrowing policies set forth
above and may not invest more than 15% of net assets in illiquid securities.

TRUSTEES AND OFFICERS

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

TRUSTEES OF THE TRUST AND THE PORTFOLIO

M. DOZIER GARDNER (64), President and Trustee*
Vice Chairman of BMR, Eaton Vance, EVC and EV, and a Director of EVC and EV.
Director or Trustee and officer of various investment companies managed by
Eaton Vance or BMR.

JAMES B. HAWKES (56), Vice President and Trustee*
Chairman, President and Chief Executive Officer of BMR, Eaton Vance, EVC and
EV, and a Director of EVC and EV. Director or Trustee and officer of various
investment companies managed by Eaton Vance or BMR.

SAMUEL L. HAYES, III (63), Trustee
Jacob H. Schiff Professor of Investment Banking, Harvard University, Graduate
School of Business Administration. Trustee, Kubrick Funds (mutual funds).
Director or Trustee of various investment companies managed by Eaton Vance
or BMR.
Address: Harvard University, Graduate School of Business Administration,
Soldiers Field Road, Boston, Massachusetts 02163

JOHN L. THORNDIKE (71), Trustee
Formerly Director of Fiduciary Company Incorporated. Director or Trustee of
various investment companies managed by Eaton Vance or BMR.
Address: 175 Federal Street, Boston, Massachusetts 02110

OFFICERS OF THE TRUST AND THE PORTFOLIO

SUSAN SCHIFF (37), Vice President of the Portfolio
Vice President of BMR, Eaton Vance and EV. Officer of various investment
companies managed by Eaton Vance or BMR.

MICHAEL B. TERRY (55), Vice President of the Trust
Vice President of BMR, Eaton Vance and EV. Officer of various investment
companies managed by Eaton Vance or BMR.

MARK S. VENEZIA (48), Vice President of the Portfolio
Vice President of BMR, Eaton Vance and EV. Officer of various investment
companies managed by Eaton Vance or BMR.

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

ALAN R. DYNNER (57), Secretary
Vice President and Chief Legal Officer of BMR, Eaton Vance, EVC and EV since
November 1, 1996. Previously, Mr. Dynner was a Partner of the law firm of
Kirkpartrick & Lockhart LLP, New York and Washington, D.C., and was
Executive Vice President of Neuberger & Berman Management, Inc., a mutual
fund management company. Officer of various investment companies managed by
Eaton Vance or BMR. Mr. Dynner was elected Secretary on June 23, 1997.

JANET E. SANDERS (62), Assistant Treasurer and Assistant Secretary
Vice President of BMR, Eaton Vance and EV. Officer of various investment
companies managed by Eaton Vance or BMR.

ERIC G. WOODBURY (40), Assistant Secretary
Vice President of BMR and Eaton Vance since February 1993. Officer of various
investment companies managed by Eaton Vance or BMR. Mr. Woodbury was elected
Assistant Secretary on June 19, 1995.

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

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

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

Trustees of the Portfolio who are not affiliated with the Investment
Adviser may elect to defer receipt of all or a percentage of their annual fees
in accordance with the terms of a Trustees Deferred Compensation Plan (the
"Trustees" Plan"). Under the Trustees' Plan, an eligible Trustee may elect to
have his deferred fees invested by the Portfolio in the shares of one or more
funds in the Eaton Vance Family of Funds, and the amount paid to the Trustees
under the Trustees' Plan will be determined based upon the performance of such
investments. Deferral of Trustees' fees in accordance with the Trustees' Plan
will have a negligible effect on the Portfolio's assets, liabilities, and net
income per share, and will not obligate the Portfolio to retain the services
of any Trustee or obligate the Portfolio to pay any particular level of
compensation to the Trustee. Neither the Trust nor the Portfolio has a
retirement plan for its Trustees.

The fees and expenses of the noninterested Trustees of the Trust and of
the Portfolio are paid by the Fund (and the other series of the Trust) and the
Portfolio, respectively. (The Trustees of the Trust and the Portfolio who are
members of the Eaton Vance organization receive no compensation from the Trust
or the Portfolio.) During the fiscal year ended December 31, 1997, the
noninterested Trustees of the Trust and the Portfolio earned the following
compensation in their capacities as Trustees from the Trust, the Portfolio and
the funds in the Eaton Vance fund complex(1):

AGGREGATE AGGREGATE TOTAL COMPENSATION
COMPENSATION COMPENSATION FROM TRUST AND
NAME FROM TRUST(2) FROM PORTFOLIO FUND COMPLEX
- ---- ------------- -------------- ------------------
Donald R. Dwight ............ $6,323 $3,785(3) $145,000(6)
Samuel L. Hayes, III ........ 6,487 3,932(4) 155,000(7)
Norton H. Reamer ............ 6,166 3,704 145,000
John L. Thorndike ........... 6,348 3,841(5) 145,000(8)
Jack L. Treynor ............. 6,725 3,841 150,000

- ------------
(1) As of May 1, 1998, the Eaton Vance complex consists of 143 registered
investment companies or series thereof.
(2) The Trust consisted of 13 Funds as of January 1, 1998.
(3) Includes $1,674 of deferred compensation.
(4) Includes $1,353 of deferred compensation.
(5) Includes $3,844 of deferred compensation.
(6) Includes $45,000 of deferred compensation.
(7) Includes $38,750 of deferred compensation.
(8) Includes $107,925 of deferred compensation.

INVESTMENT ADVISER AND ADMINISTRATOR

The Portfolio engages BMR as its investment adviser pursuant to an
Investment Advisory Agreement. BMR or Eaton Vance acts as investment adviser
to investment companies and various individual and institutional clients with
combined assets under management of approximately $25 billion.

Eaton Vance, its affiliates and its predecessor companies have been
managing assets of individuals and institutions since 1924 and managing
investment companies since 1931. They maintain a large staff of experienced
fixed-income and equity investment professionals to service the needs of their
clients. The fixed-income division focuses on all kinds of taxable investment-
grade and high-yield securities, tax-exempt investment-grade and high-yield
securities, and U.S. Government securities. The equity division covers stocks
ranging from blue chip to emerging growth companies.

Eaton Vance and its affiliates act as adviser to a family of mutual funds,
and individual and various institutional accounts, including corporations,
hospitals, retirement plans, universities, foundations and trusts. Eaton Vance
mutual funds feature international equities, domestic equities, tax-free
municipal bonds, and U.S. government and corporate bonds. Lloyd George
Management has advised Eaton Vance's international equity funds since 1992.
Founded in 1991, Lloyd George is headquartered in Hong Kong with offices in
London and Mumbai, India. It has established itself as a leader in investment
management in Asian equities and other global markets. Lloyd George features
an experienced team of investment professionals that began working together in
the mid-1980s. Lloyd George analysts cover East Asia, the India subcontinent,
Russia and Eastern Europe, Latin America, Australia and New Zealand from
offices in Hong Kong, London and Mumbai. Together Eaton Vance and Lloyd George
manage over $23 billion in assets. Eaton Vance mutual funds are distributed by
the Principal Underwriter both within the United States and offshore.

The Principal Underwriter believes that an investment professional can
provide valuable services to you to help you reach your investment goals.
Meeting investment goals requires time, objectivity and investment savvy.
Before making an investment recommendation, a representative can help you
carefully consider your short- and long-term financial goals, your tolerance
for investment risk, your investment time frame, and other investments you may
already own. Your professional investment representatives are knowledgeable
about financial markets, as well as the wide range of investment opportunities
available. A representative can help you decide when to buy, sell or persevere
with your investments. A professional investment representative can provide
you with tailored financial advice.

BMR manages the investments and affairs of the Portfolio subject to the
supervision of the Portfolio's Board of Trustees. BMR furnishes to the
Portfolio investment research, advice and supervision, furnishes an investment
program and determines what securities will be purchased, held or sold by the
Portfolio and what portion, if any, of the Portfolio's assets will be held
uninvested. The Investment Advisory Agreement requires BMR to pay the salaries
and fees of all officers and Trustees of the Portfolio who are members of the
BMR organization and all personnel of BMR performing services relating to
research and investment activities. The Portfolio is responsible for all
expenses not expressly stated to be payable by BMR under the Investment
Advisory Agreement, including, without implied limitation, (i) expenses of
maintaining the Portfolio and continuing its existence, (ii) registration of
the Portfolio under the 1940 Act, (iii) commissions, fees and other expenses
connected with the acquisition, holding and disposition of securities and
other investments, (iv) auditing, accounting and legal expenses, (v) taxes and
interest, (vi) governmental fees, (vii) expenses of issue, sale and redemption
of interests in the Portfolio, (viii) expenses of registering and qualifying
the Portfolio and interests in the Portfolio under federal and state
securities laws and of preparing and printing registration statements or other
offering statements or memoranda for such purposes and for distributing the
same to investors, and fees and expenses of registering and maintaining
registrations of the Portfolio and of the Portfolio's placement agent as
broker-dealer or agent under state securities laws, (ix) expenses of reports
and notices to investors and of meetings of investors and proxy solicitations
therefor, (x) expenses of reports to governmental officers and commissions,
(xi) insurance expenses, (xii) association membership dues, (xiii) fees,
expenses and disbursements of custodians and subcustodians for all services to
the Portfolio (including without limitation safekeeping of funds, securities
and other investments, keeping of books, accounts and records, and
determination of net asset values, book capital account balances and tax
capital account balances), (xiv) fees, expenses and disbursements of transfer
agents, dividend disbursing agents, investor servicing agents and registrars
for all services to the Portfolio, (xv) expenses for servicing the accounts of
investors, (xvi) any direct charges to investors approved by the Trustees of
the Portfolio, (xvii) compensation and expenses of Trustees of the Portfolio
who are not members of BMR's organization, and (xviii) such non-recurring
items as may arise, including expenses incurred in connection with litigation,
proceedings and claims and any legal obligation of the Portfolio to indemnify
its Trustees, officers and investors with respect thereto, to the extent not
covered by insurance.

On March 28, 1994, the Trustees of the Portfolio voted to accept a waiver
of BMR's compensation by instituting the breakpoints set forth in the
Prospectus (effective as of April 1, 1994) in the advisory fee rate then
provided for in the Investment Advisory Agreement. Prior to April 1, 1994, the
Investment Advisory Agreement provided for a monthly advisory fee of .0625%
(equivalent to .75% annually) of the average daily net assets of the
Portfolio.

For a description of the compensation that the Portfolio pays BMR under
the Investment Advisory Agreement, see the Prospectus. As at December 31,
1997, the Portfolio had net assets of $433,106,994. For the fiscal years ended
December 31, 1997, 1996 and 1995, the Portfolio paid BMR advisory fees of
$3,305,992, $3,603,385 and $3,928,237, respectively, (equivalent to 0.75% of
the Portfolio's average daily net assets for each fiscal year).

The Investment Advisory Agreement with BMR continues in effect from year
to year for so long as such continuance is approved at least annually (i) by
the vote of a majority of the noninterested Trustees of the Portfolio cast in
person at a meeting specifically called for the purpose of voting on such
approval and (ii) by the Board of Trustees of the Portfolio or by vote of a
majority of the outstanding voting securities of the Portfolio. The Agreement
may be terminated at any time without penalty on sixty days' written notice by
the Board of Trustees of either party, or by vote of the majority of the
outstanding voting securities of the Portfolio, and the Agreement will
terminate automatically in the event of its assignment. The Agreement provides
that BMR may render services to others. The Agreement also provides that BMR
shall not be liable for any loss incurred in connection with the performance
of its duties, or action taken or omitted under that Agreement, in the absence
of willful misfeasance, bad faith, gross negligence in the performance of its
duties or by reason of its reckless disregard of its obligations and duties
thereunder, or for any losses sustained in the acquisition, holding or
disposition of any security or other investment.

As indicated in the Prospectus, Eaton Vance serves as Administrator of the
Fund, but currently receives no compensation for providing administrative
services to the Fund. Under its Administrative Services Agreement with the
Fund, Eaton Vance has been engaged to administer the Fund's affairs, subject
to the supervision of the Trustees of the Trust, and shall furnish for the use
of the Fund office space and all necessary office facilities, equipment and
personnel for administering the affairs of the Fund.

The Fund pays all of its own expenses including, without limitation, (i)
expenses of maintaining the Fund and continuing its existence, (ii) its pro
rata share of the Trust's registration under the 1940 Act, (iii) commissions,
fees and other expenses connected with the purchase or sale of securities and
other investments, (iv) auditing, accounting and legal expenses, (v) taxes and
interest, (vi) governmental fees, (vii) expenses of issue, sale, repurchase
and redemption of shares, (viii) expenses of registering and qualifying the
Fund and its shares under federal and state securities laws and of preparing
and printing prospectuses for such purposes and for distributing the same to
shareholders and investors, and fees and expenses of registering and
maintaining registrations of the Fund and of the Fund's principal underwriter,
if any, as broker-dealer or agent under state securities laws, (ix) expenses
of reports and notices to shareholders and of meetings of shareholders and
proxy solicitations therefor, (x) expenses of reports to governmental officers
and commissions, (xi) insurance expenses, (xii) association membership dues,
(xiii) fees, expenses and disbursements of custodians and subcustodians for
all services to the Fund (including without limitation safekeeping of funds,
securities and other investments, keeping of books and accounts and
determination of net asset values), (xiv) fees, expenses and disbursements of
transfer agents, dividend disbursing agents, shareholder servicing agents and
registrars for all services to the Fund, (xv) expenses for servicing
shareholder accounts, (xvi) any direct charges to shareholders approved by the
Trustees of the Trust, (xvii) compensation and expenses of Trustees of the
Trust who are not members of the Eaton Vance organization, and (xviii) such
non-recurring items as may arise, including expenses incurred in connection
with litigation, proceedings and claims and any legal obligation of the Trust
to indemnify its Trustees and officers with respect thereto, to the extent not
covered by insurance.

BMR is a wholly-owned subsidiary of Eaton Vance. Eaton Vance and EV are
both wholly-owned subsidiaries of EVC. BMR and Eaton Vance are both
Massachusetts business trusts, and EV is the trustee of BMR and Eaton Vance.
The Directors of EV are M. Dozier Gardner, James B. Hawkes and Benjamin A.
Rowland, Jr. The Directors of EVC consist of the same persons and John G. L.
Cabot, John M. Nelson, Vincent M. O'Reilly and Ralph Z. Sorenson. Mr. Hawkes
is chairman, president and chief executive officer and Mr. Gardner is vice
chairman of EVC, BMR, Eaton Vance and EV. All of the issued and outstanding
shares of Eaton Vance and EV are owned by EVC. All of the issued and
outstanding shares of BMR are owned by Eaton Vance. All shares of the
outstanding Voting Common Stock of EVC are deposited in a Voting Trust, the
Voting Trustees of which are Messrs. Gardner, Hawkes and Rowland and Alan R.
Dynner, Thomas E. Faust, Jr., William M. Steul and Wharton P. Whitaker. The
Voting Trustees have unrestricted voting rights for the election of Directors
of EVC. All of the outstanding voting trust receipts issued under said Voting
Trust are owned by certain of the officers of BMR and Eaton Vance who are also
officers or officers and Directors of EVC and EV. As of March 31, 1998,
Messrs. Gardner and Hawkes each owned 24% of such voting trust receipts,
Messrs. Rowland and Faust owned 15% and 13%, respectively, and Messrs. Dynner,
Steul and Whitaker each owned 8%. Messrs. Gardner, Hawkes and Dynner are
officers or Trustees of the Trust and/or the Portfolio and are members of the
EVC, BMR, Eaton Vance and EV organizations. Messers. Ahern, Fetter, MacIntosh,
Murphy, O'Connor, Terry and Woodbury and Ms. Sanders and Ms. Schiff are
officers or Trustees of the Trust and/or the Portfolio and are also members of
the BMR, Eaton Vance and EV organizations.

Eaton Vance owns all the stock of Northeast Properties, Inc., which is
engaged in real estate investment. EVC owns all of the stock of Fulcrum
Management, Inc. and MinVen, Inc., which are engaged in precious metal mining
venture investment and management. EVC also owns approximately 21% of the
Class A shares of Lloyd George Management (B.V.I.) Limited, a registered
investment adviser. EVC, BMR, Eaton Vance and EV may also enter into other
businesses.

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

CUSTODIAN

IBT acts as custodian for the Trust and the Portfolio. IBT has the custody
of all cash and securities representing the Fund's interest in the Portfolio,
has custody of all the Portfolio's assets, maintains the general ledger of the
Portfolio and the Fund and computes the daily net asset value of interests in
the Portfolio and the net asset value of shares of the Fund. In such capacity,
it attends to details in connection with the sale, exchange, substitution,
transfer or other dealings with the Portfolio's investments, receives and
disburses all funds and performs various other ministerial duties upon receipt
of proper instructions from the Trust and the Portfolio. IBT also provides
services in connection with the preparation of shareholder reports and the
electronic filing of such reports with the Commission for which it receives a
separate fee.

SERVICES FOR ACCUMULATION -- CLASS A SHARES

The following services are voluntary, involve no extra charge, other than
the sales charge included in the offering price, and may be changed or
discontinued without penalty at any time.

Intended Quantity Investment -- Statement of Intention. If it is
anticipated that $25,000 or more of Class A shares and shares of other funds
exchangeable for Class A shares and listed under "The Eaton Vance Exchange
Privilege" in the Prospectus will be purchased within a 13-month period, a
Statement of Intention should be signed so that shares may be obtained at the
same reduced sales charge as though the total quantity were invested in one
lump sum. Shares held under Right of Accumulation (see below) as of the date
of the Statement will be included toward the completion of the Statement. The
Statement authorizes the Transfer Agent to hold in escrow sufficient shares
(5% of the dollar amount specified in the Statement) which can be redeemed to
make up any difference in sales charge on the amount intended to be invested
and the amount actually invested. Execution of a Statement does not obligate
the shareholder to purchase or the Fund to sell the full amount indicated in
the Statement, and should the amount actually purchased during the 13-month
period be more or less than that indicated on the Statement, price adjustments
will be made. For sales charges and other information on quantity purchases,
see "How to Buy Shares" in the Prospectus. Any investor considering signing a
Statement of Intention should read it carefully.

Right of Accumulation -- Cumulative Quantity Discount. The applicable
sales charge level for the purchase of Class A shares is calculated by taking
the dollar amount of the current purchase and adding it to the value
(calculated at the maximum current offering price) of the Class A shares the
shareholder owns in his or her account(s) in the Fund and shares of other
funds exchangeable for Class A shares and listed under "The Eaton Vance
Exchange Privilege" in the Prospectus. The sales charge on the shares being
purchased will then be at the rate applicable to the aggregate. For sales
charges on quantity purchases, see "How to Buy Shares" in the Prospectus.
Shares purchased (i) by an individual, his or her spouse and their children
under the age of twenty-one, and (ii) by a trustee, guardian or other
fiduciary of a single trust estate or a single fiduciary account, will be
combined for the purpose of determining whether a purchase will qualify for
the Right of Accumulation and if qualifying, the applicable sales charge
level.

For any such discount to be made available, at the time of purchase a
purchaser or his or her Authorized Firm must provide the Principal Underwriter
(in the case of a purchase made through an Authorized Firm) or the Transfer
Agent (in the case of an investment made by mail) with sufficient information
to permit verification that the purchase order qualifies for the accumulation
privilege. Confirmation of the order is subject to such verification. The
Right of Accumulation privilege may be amended or terminated at any time as to
purchases occurring thereafter.

SERVICE FOR WITHDRAWAL

The Transfer Agent will send to the shareholder regular monthly or
quarterly payments of any permitted amount designated by the shareholder (see
"Eaton Vance Shareholder Services -- Withdrawal Plan" in the Prospectus) based
upon the value of the shares held. The checks will be drawn from share
redemptions and hence, although they are a return of principal, may require
the recognition of taxable gain or loss. Income dividends and capital gains
distributions in connection with withdrawal accounts will be credited at net
asset value as of the record date for each distribution. Continued withdrawals
in excess of current income will eventually use up principal, particularly in
a period of declining market prices. A shareholder may not have a withdrawal
plan in effect at the same time he or she has authorized Bank Automated
Investing or is otherwise making regular purchases of Fund shares. The
shareholder, the Transfer Agent or the Principal Underwriter will be able to
terminate the withdrawal plan at any time without penalty.

DETERMINATION OF NET ASSET VALUE

The Fund and the Portfolio will be closed for business and will not price
their respective shares or interests on the following business holidays: New
Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.

Except as described below, debt securities for which the over-the-counter
market is the primary market are normally valued at the mean between the
latest available bid and asked prices. OTC options are valued at the mean
between the bid and asked prices provided by dealers. Financial futures
contracts listed on commodity exchanges and exchange-traded options are valued
at closing settlement prices. Short-term obligations having remaining
maturities of less than 60 days are valued at amortized cost, which
approximates value, unless the Trustees determine that under particular
circumstances such method does not result in fair value. As authorized by the
Trustees, debt securities (other than short-term obligations) may be valued on
the basis of valuations furnished by a pricing service which determines
valuations based upon market transactions for normal, institutional-size
trading units of such securities. Mortgage-backed "pass-through" securities
are valued through use of an independent matrix pricing system applied by the
Investment Adviser which takes into account closing bond valuations, yield
differentials, anticipated prepayments and interest rates provided by dealers.
Securities for which there is no such quotation or valuation and all other
assets are valued at fair value as determined in good faith by or at the
direction of the Trustees of the Portfolio.

Each investor in the Portfolio, including the Fund, may add to or reduce
its investment in the Portfolio on each day the Exchange is open for trading
("Portfolio Business Day") as of the close of regular trading on the Exchange
(the "Portfolio Valuation Time"). The value of each investor's interest in the
Portfolio will be determined by multiplying the net asset value of the
Portfolio by the percentage, determined on the prior Portfolio Business Day,
which represented that investor's share of the aggregate interests in the
Portfolio on such prior day. Any additions or withdrawals for the current
Portfolio Business Day will then be recorded. Each investor's percentage of
the aggregate interest in the Portfolio will then be recomputed as a
percentage equal to a fraction (i) the numerator of which is the value of such
investor's investment in the Portfolio as of the Portfolio Valuation Time on
the prior Portfolio Business Day plus or minus, as the case may be, the amount
of any additions to or withdrawals from the investor's investment in the
Portfolio on the current Portfolio Business Day and (ii) the denominator of
which is the aggregate net asset value of the Portfolio as of the Portfolio
Valuation Time on the prior Portfolio Business Day plus or minus, as the case
may be, the amount of the net additions to or withdrawals from the aggregate
investment in the Portfolio on the current Portfolio Business Day by all
investors in the Portfolio. The percentage so determined will then be applied
to determine the value of the investor's interest in the Portfolio for the
current Portfolio Business Day.

INVESTMENT PERFORMANCE

Average annual total return is determined separately for each Class of the
Fund by multiplying a hypothetical initial purchase order of $1,000 by the
average annual compound rate of return (including capital appreciation/
depreciation, and distributions paid and reinvested) for the stated period and
annualizing the result. The calculation assumes (i) that all distributions are
reinvested at net asset value on the reinvestment dates during the period,
(ii) the deduction of the maximum sales charge from the initial $1,000
purchase order for Class A shares, (iii) a complete redemption of the
investment and (iv) the deduction of any CDSC at the end of the period. For
further information concerning the total return of the Classes of the Fund,
see Appendix A, Appendix B and Appendix C.

Yield is computed separately for each Class of the Fund pursuant to a
standardized formula by dividing net investment income per share earned during
a recent thirty-day period by the maximum offering price (including the
maximum initial sales charge for Class A shares) per share on the last day of
the period and annualizing the resulting figure. Net investment income per
share is calculated from the yields to maturity of all debt obligations held
by the Portfolio based on prescribed methods, reduced by accrued Fund and
Class expenses for the period with the resulting number being divided by the
average daily number of Class shares outstanding and entitled to receive
distributions during the period. This yield figure does not reflect the
deduction of any CDSCs which (if applicable) are imposed on certain
redemptions at the rate set forth under "How to Redeem Shares" in the
Prospectus. Yield calculations assume the current maximum initial sales charge
for Class A shares set forth under "How to Buy Shares" in the Prospectus.
(Actual yield may be affected by variations in sales charges on investments.)
For the yield of the Classes of the Fund, see Appendix A, Appendix B and
Appendix C.

The Fund's total return may be compared to relevant indices, such as the
Consumer Price Index and various domestic securities indices. The Fund's total
return and comparisons with these indices may be used in advertisements and in
information furnished to present or prospective shareholders. The Fund's
performance may differ from that of other investors in the Portfolio,
including any other investment companies.

Evaluations of the Fund's performance or rankings of mutual funds (which
include the Fund) may be made by independent sources (e.g. Lipper Analytical
Services, Inc., CDA/Wiesenberger and Morningstar, Inc.) and may be used in
advertisements and in information furnished to present or prospective
shareholders. Information, charts and illustrations showing the effect of
compounding interest or relating to inflation and taxes (including their
effects on the dollar and the return on stocks and other investment vehicles)
may also be included in advertisements and materials furnished to present and
prospective investors.

From time to time, information about the portfolio allocation, portfolio
turnover and holdings of the Portfolio may be included in advertisements and
other material furnished to present and prospective shareholders. Such
information, for example, may include the Portfolio's diversification by asset
type, including mortgage-backed securities with varying maturities and
interest rates.

For example, the Portfolio's diversification by asset type as of March 31,
1998 was:

PORTFOLIO ASSET ALLOCATION PERCENT OF INVESTMENTS
- -------------------------- ----------------------
Mortgage-Backed Securities
Low Coupons: 4-9% 60.0%
High Coupons: 11-16% 24.9%
Other 0.3%
U.S. Treasuries and Cash 14.9%
----
TOTAL 100%

Information used in advertisements and materials furnished to present and
prospective investors may include statements or illustrations relating to the
appropriateness of certain types of securities and/or mutual funds to meet
specific financial goals. Such information may address:

-- cost associated with aging parents;
-- funding a college education (including its actual and estimated cost);
-- health care expenses (including actual and projected expenses);
-- long-term disabilities (including the availability of, and coverage
provided by, disability insurance); and
-- retirement (including the availability of social security benefits, the
tax treatment of such benefits and statistics and other information
relating to maintaining a particular standard of living and outliving
existing assets).

Such information may also address different methods for saving money and
the results of such methods, as well as the benefits of investing in mortgage
or government securities.

The Trust or Principal Underwriter may provide information about Eaton
Vance, its affiliates and other investment advisers to the funds in the Eaton
Vance Family of Funds in sales material or advertisements provided to
investors or prospective investors. Such material or advertisements may also
provide information on the use of investment professionals by such investors.

TAXES

Each series of the Trust is treated as a separate entity for federal
income tax purposes. The Fund has elected to be treated, has qualified and
intends to continue to qualify each year as a regulated investment company
("RIC") under the Code. Accordingly, the Fund intends to satisfy certain
requirements relating to sources of its income and diversification of its
assets and to distribute substantially all of its ordinary income and net
income in accordance with the timing requirements imposed by the Code, so as
to maintain its RIC status and avoid paying any federal income or excise tax.
The Fund so qualified for its taxable year ended December 31, 1997. Because
the Fund invests its assets in the Portfolio, the Portfolio normally must
satisfy the applicable source of income and diversification requirements in
order for the Fund to also satisfy these requirements. The Portfolio will
allocate at least annually among its investors, including the Fund, each
investors distributive share of the Portfolio's net investment income, net
realized capital gains, and any other items of income, gain, loss, deduction
or credit. The Portfolio will make allocations to the Fund in a manner
intended to comply with the Code and applicable regulations and will make
moneys available for withdrawal at appropriate times and in sufficient amounts
to enable the Fund to satisfy the tax distribution requirements that apply to
the Fund and that must be satisfied in order to avoid federal income and/or
excise tax on the Fund. For purposes of applying the requirements of the Code
regarding qualification as a RIC, the Fund (i) will be deemed to own its
proportionate share of each of the assets of the Portfolio and (ii) will be
entitled to the gross income of the Portfolio attributable to such share.

In order to avoid incurring a federal excise tax obligation, the Code
requires that the Fund distribute (or be deemed to have distributed) by
December 31 of each calendar year at least 98% of its ordinary income (not
including tax-exempt income) for such year, at least 98% of the capital gain
net income (which is the excess of its realized capital gains over its
realized capital losses), generally computed on the basis of the one-year
period ending on October 31 of such year, after reduction by (i) any available
capital loss carryforwards and (ii) 100% of any income and capital gains from
the prior year (as previously computed) that was not paid out during such year
and on which the Fund paid no federal income tax. Under current law, provided
that the Fund qualifies as a RIC and the Portfolio is treated as a partnership
for Massachusetts and federal tax purposes, neither the Fund nor the Portfolio
should be liable for any income, corporate excise or franchise tax in the
Commonwealth of Massachusetts.

The Portfolio's transactions in foreign currency, foreign currency
denominated debt securities, payables and receivables denominated in a foreign
currency, options and futures on foreign currency and forward foreign currency
exchange contracts are subject to special tax rules that may convert capital
gain or loss into ordinary income or loss and may affect the amount, timing
and character of the Portfolio's income or loss and hence of allocations and/
or distributions to the Fund's shareholders.

Positions held by the Portfolio which consist of one or more debt
securities and one or more listed options or futures contracts which
substantially diminish the risk of loss of the Portfolio with respect to such
debt securities will be treated as "mixed straddles" for federal income tax
purposes. Such straddles are ordinarily subject to the provisions of Section
1092 of the Code, the operation of which can result in deferral of losses,
adjustments in the holding periods of the Portfolio's debt securities and
conversion of short-term capital losses into long-term capital losses. The
operation of these rules can be mitigated or eliminated by means of various
elections which are available to the Portfolio for federal income tax
purposes.

To eliminate the application of these rules, the Portfolio has elected
mixed straddle accounting for one or more designated classes of activities
involving mixed straddles. Under this method of accounting, figures are
derived for aggregate short-term and long-term capital gains and losses
associated with all positions in a mixed straddle account on a daily basis.
Specifically, gains and losses are computed for all positions disposed of on a
given day, and all outstanding positions on such day are marked to market
(subject to subsequent adjustments to reflect the gain or loss realized
thereby). Gains and losses from all positions in debt securities in the
account are netted, as are gains and losses from all positions in options and
futures. If the two resulting figures both represent net gains or net losses,
the net gain or loss attributable to the debt securities is treated as short-
term capital gain or loss, and the net gain or loss attributable to the
options and futures contracts is treated as 60% long-term and 40% short-term
capital gain or loss. Alternatively, if the resulting figures represent a net
gain and a net loss, the two figures are further netted to arrive at a single
figure for the day. This figure is treated as 60% long-term and 40% short-term
capital gain or loss unless it reflects the fact that the net gain or loss
from the debt securities outweighed the net gain or loss from the options and
futures, in which case this figure is treated as short-term capital gain or
loss.

On the last business day of the taxable year the annual account net gain
or loss for each mixed straddle account is determined by netting the daily net
gains or losses for each business day during the taxable year. (The annual
account net gain or loss is adjusted to take into account any interest and
carrying charges incurred in connection with positions in the account which
were required to be capitalized.) Annual account net gains or losses are then
netted for all mixed straddle accounts to yield the total annual account net
gain or loss. This figure is subject to an overall limitation such that no
more than 50% of it will be treated as long-term capital gain and no more than
40% of it will be treated as short-term capital loss.

The Portfolio may make other tax elections with respect to mixed straddles
which do not properly belong in any of its mixed straddle accounts.

In the absence of a mixed straddle election, futures or currency forward
contracts entered into by the Portfolio and listed nonequity options written
or purchased by the Portfolio (including options on debt securities, options
on futures contracts, options on securities indexes and options on broad-based
stock indexes, but possibly excluding certain foreign currency-related
options, futures or forward contracts) will be governed by Section 1256 of the
Code. Absent a tax election to the contrary, gain or loss attributable to the
lapse, exercise or closing out of any such position will be treated as 60%
long-term and 40% short-term capital gain or loss, and on the last trading day
of the Portfolio's taxable year all outstanding Section 1256 positions will be
marked to market (i.e., treated as if such positions were closed out at their
closing price on such day), and any resulting gain or loss will be recognized
as 60% long-term and 40% short-term capital gain or loss. Under certain
circumstances, entry into a futures contract to sell a security or the
purchase of a put option with respect to a security may constitute a short
sale for federal income tax purposes, causing an adjustment in the holding
period of the underlying security or a substantially identical security held
by the Portfolio.

The Portfolio will monitor its transactions in options, futures contracts
and forward contracts in order to enable the Fund to maintain its
qualification as a RIC for federal income tax purposes.

The Portfolio's investment in securities acquired at a market discount, or
zero coupon and certain other securities with original issue discount will
cause it to realize income prior to the receipt of cash payments with respect
to these securities. Such income will be allocated daily to interests in the
Portfolio and, in order to enable the Fund to distribute its proportionate
share of this income and avoid a tax payable by the Fund, the Portfolio may be
required to liquidate portfolio securities that it might otherwise have
continued to hold in order to generate cash that the Fund may withdraw from
the Portfolio for subsequent distribution to Fund shareholders.

Redemptions (including exchanges) of Fund shares are taxable transactions.
Any loss realized upon the redemption or exchange of shares of the Fund with a
tax holding period of 6 months or less will be treated as a long-term capital
loss to the extent of any distribution of net long-term capital gains with
respect to such shares. All or a portion of a loss realized upon a taxable
disposition of Fund shares may be disallowed under "wash sale" rules if other
Fund shares are purchased (whether through reinvestment of dividends or
otherwise) within a period beginning 30 days before and ending 30 days after
the disposition. Any disallowed loss will result in an adjustment to the
shareholder's tax basis in some or all of the other shares acquired.

Distributions by the Fund may reduce the net asset value of the Fund's
shares. Should a distribution reduce the net asset value below a shareholder's
cost basis, such distribution would be taxable to the shareholder even though,
from an investment standpoint, it may constitute a return of a portion of the
purchase price. Therefore, investors should consider the tax implications of
buying shares immediately before a distribution. Certain distributions
declared in October, November or December and paid the following January will
be taxed to shareholders as if received on December 31 of the year in which
they are declared.

Distributions of the Fund will not qualify for the dividends received
deduction available to certain corporations under the Code. A state income
(and possibly local income and/or intangible property) tax exemption is
generally available to the extent the Fund's distributions are derived from
interest on (or, in the case of intangibles taxes, the value of its assets is
attributable to) certain U.S. Government obligations, provided in some states
that certain thresholds for holdings of such obligations and/or reporting
requirements are satisfied. The Fund will inform shareholders of the
proportion of its distributions which are derived from interest on such
obligations. Shareholders are urged to consult their tax advisers regarding
the proper treatment of such portion of their distributions for state and
local income tax purposes.

Special tax rules apply to Individual Retirement Accounts ("IRAs") and to
other retirement plans, and persons investing through such plans should
consult their tax advisers for more information. The deductibility of
contributions to IRAs may be restricted or eliminated for particular
shareholders.

Amounts paid by the Fund to individuals and certain other shareholders who
have not provided the Fund with their correct taxpayer identification number
("TIN") and certain certifications required by the Internal Revenue Service
(the "IRS"), as well as shareholders with respect to whom the Fund has
received certain information from the IRS or a broker, may be subject to
"backup" withholding of federal income tax arising from the Fund's taxable
dividends and other distributions as well as the proceeds of redemption
transactions (including repurchases and exchanges) at a rate of 31%. An
individual's TIN is generally his or her social security number.

PRINCIPAL UNDERWRITER

The Trust has authorized the Principal Underwriter to act as its agent in
repurchasing shares at the rate of $2.50 for each repurchase transaction
handled by the Principal Underwriter. The Principal Underwriter estimates that
the expenses incurred by it in acting as repurchase agent for the Trust will
exceed the amounts paid therefor. For the amount paid by the Trust to the
Principal Underwriter for acting as repurchase agent, see Appendix A.

CLASS A SHARES. Class A shares of the Fund may be continuously purchased
at the public offering price through Authorized Firms which have agreements
with the Principal Underwriter. The Trust reserves the right to suspend or
limit the offering of its shares to the public at any time. The public
offering price is the net asset value next computed after receipt of the
order, plus, where applicable, a variable percentage (sales charge) depending
upon the amount of purchase as indicated by the sales charge table set forth
in the Prospectus (see "How to Buy Shares"). Such table is applicable to
purchases of a Fund alone or in combination with purchases of certain other
funds offered by the Principal Underwriter, made at a single time by (i) an
individual, or an individual, his spouse and their children under the age of
twenty-one, purchasing shares for his or their own account, and (ii) a trustee
or other fiduciary purchasing shares for a single trust estate or a single
fiduciary account. The table is also presently applicable to (1) purchases of
Class A shares pursuant to a written Statement of Intention; or (2) purchases
of Class A shares pursuant to the Right of Accumulation and declared as such
at the time of purchase.

Subject to the applicable provisions of the 1940 Act, the Trust may issue
Class A shares at net asset value in the event that an investment company
(whether a regulated or private investment company or a personal holding
company) is merged or consolidated with or acquired by the Class. Normally no
sales charges will be paid in connection with an exchange of Class A shares
for the assets of such investment company. Class A shares may be sold at net
asset value to any officer, director, trustee, general partner or employee of
the Trust, the Portfolio or any investment company for which Eaton Vance or
BMR acts as investment adviser, any investment advisory, agency, custodial or
trust account managed or administered by Eaton Vance or by any parent,
subsidiary or other affiliate of Eaton Vance, or any officer, director or
employee of any parent, subsidiary or other affiliate of Eaton Vance. The
terms "officer," "director," "trustee," "general partner" or "employee" as
used in this paragraph include any such person's spouse and minor children,
and also retired officers, directors, trustees, general partners and employees
and their spouses and minor children. Class A shares may also be sold at net
asset value to registered representatives and employees of Authorized Firms
and to the spouses and children under the age of 21 and beneficial accounts of
such persons.

The Principal Underwriter acts as principal in selling Class A shares
under a Distribution Agreement with the Trust. The expenses of printing copies
of prospectuses used to offer shares to Authorized Firms or investors and
other selling literature and of advertising are borne by the Principal
Underwriter. The fees and expenses of qualifying and registering and
maintaining qualifications and registrations of the Fund and its Class A
shares under federal and state securities laws are borne by the Fund. The
Distribution Agreement is renewable annually by the Board of Trustees of the
Trust (including a majority of the noninterested Trustees), may be terminated
on six months' notice by either party and is automatically terminated upon
assignment. The Principal Underwriter distributes Class A shares on a "best
efforts" basis under which it is required to take and pay for only such shares
as may be sold. The Principal Underwriter allows Authorized Firms discounts
from the applicable public offering price which are alike for all Authorized
Firms. The Principal Underwriter may allow, upon notice to all Authorized
Firms with whom it has agreements, discounts up to the full sales charge
during the periods specified in the notice. During periods when the discount
includes the full sales charge, such Authorized Firms may be deemed to be
underwriters as that term is defined in the Securities Act of 1933. For the
amount of sales charges for sales of Class A shares paid to the Principal
Underwriter (and Authorized Firms), see Appendix A.

CLASS B AND CLASS C SHARES. Under the Distribution Agreement, the
Principal Underwriter acts as principal in selling Class B and Class C shares.
The expenses of printing copies of prospectuses used to offer shares to
Authorized Firms or investors and other selling literature and of advertising
is borne by the Principal Underwriter. The fees and expenses of qualifying and
registering and maintaining qualifications and registrations of the Fund and
its Class B and Class C shares under federal and state securities laws are
borne by the Fund. In addition, each Class B and Class C makes payments to the
Principal Underwriter pursuant to their Distribution Plans as described in the
Prospectus; the provisions of the plan relating to such payments are included
in the Distribution Agreement. The Distribution Agreement is renewable
annually by the Trust's Board of Trustees (including a majority of the
noninterested Trustees who have no direct or indirect financial interest in
the operation of the Distribution Plans or the Distribution Agreement), may be
terminated on sixty days' notice either by such Trustees or by vote of a
majority of the outstanding Class B and Class C shares or on six months'
notice by the Principal Underwriter and is automatically terminated upon
assignment. The Principal Underwriter distributes Class B and Class C shares
on a "best efforts" basis under which it is required to take and pay for only
such shares as may be sold.

SERVICE PLAN -- CLASS A SHARES

The Trust on behalf of its Class A shares has adopted a Service Plan (the
"Plan") designed to meet the service fee requirements of the sales charge rule
of the National Association of Securities Dealers, Inc. (the "NASD").
(Management believes service fee payments are not distribution expenses
governed by Rule 12b-1 under the 1940 Act, but has chosen to have the Plan
approved as if that Rule were applicable.) The following supplements the
discussion of the Plan contained in the Prospectus.

The Plan remains in effect from year to year provided such continuance is
approved by a vote of both a majority of (i) the noninterested Trustees who
have no direct or indirect financial interest in the operation of the Plan or
any agreements related to it (the "Plan Trustees") and (ii) all of the
Trustees then in office, cast in person at a meeting (or meetings) called for
the purpose of voting on this Plan. The Plan may be terminated any time by
vote of the Plan Trustees or by a vote of a majority of the outstanding Class
A shares of the Fund. The Plan was approved by the Trustees including the Plan
Trustees on June 23, 1997.

The Plan requires quarterly Trustee review of a written report of the
amount expended under the Plan and the purposes for which such expenditures
were made. The Plan may not be amended to increase materially the payments
described herein without approval of the affected shareholders of Class A
shares, and the Trustees. So long as the Plan is in effect, the selection and
nomination of the noninterested Trustees shall be committed to the discretion
of such Trustees. The Trustees have determined that in their judgment there is
a reasonable likelihood that the Plan will benefit the Fund and its Class A
shareholders. For the service fees paid under the Plan, see Appendix A.

DISTRIBUTION PLANS -- CLASS B AND CLASS C SHARES

The Trust has adopted Distribution Plans (the "Plans") on behalf of its
Class B and Class C shares designed to meet the requirements of Rule 12b-1
under the 1940 Act and the sales charge rule of the NASD. The purpose of the
Plans is to compensate the Principal Underwriter for its distribution services
and facilities provided with respect to Class B and Class C shares.

The Plans provide that the Fund will pay sales commissions and
distribution fees to the Principal Underwriter only after and as a result of
the sale of Class B or Class C shares of the Fund. On each sale of Fund shares
(excluding reinvestment of distributions) the Fund will pay the Principal
Underwriter amounts representing (i) sales commissions equal to 5% of Class B
sales and 6.25% of Class C sales of the amount received by the Fund for each
share sold and (ii) distribution fees calculated by applying the rate of 1%
over the prime rate then reported in The Wall Street Journal to the
outstanding balance of uncovered distribution charges (as described below) of
the Principal Underwriter.

The amount payable to the Principal Underwriter pursuant to the Plans as
sales commissions and distribution fees with respect to each day will be
accrued on such day as a liability of the respective Class and will
accordingly reduce the net assets of the Class upon such accrual, all in
accordance with generally accepted accounting principles. The amount payable
on each day is limited to 1/365 of .75% of the net assets of the Class on
such day. The level of net assets changes each day and depends upon the amount
of sales and redemptions of shares, the changes in the value of the
investments held by the Portfolio, the expenses of the Class, the Fund and the
Portfolio accrued and allocated to the Fund and Class on such day, income on
portfolio investments of the Portfolio accrued and allocated to the Fund on
such day, and any dividends and distributions declared on Fund shares. The
Trust does not accrue possible future payments as a liability of a Class or
reduce a Class's current net assets in respect of unknown amounts which may
become payable under the Plans in the future because the standards for accrual
of such a liability under accounting principles have not been satisfied.

The Plans provide that the Fund will receive all CDSCs and will make no
payments to the Principal Underwriter in respect of any day on which there are
no outstanding uncovered distribution charges of the Principal Underwriter.
CDSCs and accrued amounts will be paid by the Trust to the Principal
Underwriter whenever there exist uncovered distribution charges.

In calculating daily the amount of uncovered distribution charges,
distribution charges will include the aggregate amount of sales commissions
and distribution fees theretofore paid plus the aggregate amount of sales
commissions and distribution fees which the Principal Underwriter is entitled
to be paid under the Plans since their inception. Payments theretofore paid or
payable under the Plans by the Trust to the Principal Underwriter and CDSCs
theretofore paid or payable to the Principal Underwriter will be subtracted
from such distribution charges; if the result of such subtraction is positive,
a distribution fee (computed at 1% over the prime rate then reported in The
Wall Street Journal) will be computed on such amount and added thereto, with
the resulting sum constituting the amount of outstanding uncovered
distribution charges with respect to such day. The amount of outstanding
uncovered distribution charges of the Principal Underwriter calculated on any
day does not constitute a liability recorded on the financial statements of
the Fund.

The amount of uncovered distribution charges of the Principal Underwriter
at any particular time depends upon various changing factors, including the
level and timing of sales of shares, the nature of such sales (i.e., whether
they result from exchange transactions, reinvestments or from cash sales
through Authorized Firms), the level and timing of redemptions of shares upon
which a CDSC will be imposed, the level and timing of redemptions of shares
upon which no CDSC will be imposed (including redemptions of shares pursuant
to the exchange privilege which result in a reduction of uncovered
distribution charges), changes in the level of the net assets of the Class,
and changes in the interest rate used in the calculation of the distribution
fee under the Plans. Periods with a high level of sales of Class shares
accompanied by a low level of early redemptions of Class shares resulting in
the imposition of CDSCs will tend to increase the time during which there will
exist uncovered distribution charges of the Principal Underwriter.

Currently, payments of sales commissions and distribution fees and of
service fees may equal 1% of a Class's average daily net assets per annum. The
Trust believes that the combined rate of all these payments may be higher than
the rate of payments made under distribution plans adopted by other investment
companies pursuant to Rule 12b-1. Although the Principal Underwriter will use
its own funds (which may be borrowed from banks) to pay sales commissions and
service fees for Class C sales and sales commissions for Class B sales at the
time of sale, it is anticipated that the Eaton Vance organization will profit
by reason of the operation of the Plans through an increase in the Fund's
assets (thereby increasing the advisory fee payable to BMR by the Portfolio)
resulting from sale of shares and through the amounts paid to the Principal
Underwriter, including CDSCs, pursuant to the Plans. The Eaton Vance
organization may be considered to have realized a profit under the Plans if at
any point in time the aggregate amounts theretofore received by the Principal
Underwriter pursuant to the Plans and from CDSCs have exceeded the total
expenses theretofore incurred by such organization in distributing Class B and
Class C shares of the Fund. Total expenses for this purpose will include an
allocable portion of the overhead costs of such organization and its branch
offices, which costs will include without limitation leasing expense,
depreciation of building and equipment, utilities, communication and postage
expense, compensation and benefits of personnel, travel and promotional
expense, stationery and supplies, literature and sales aids, interest expense,
data processing fees, consulting and temporary help costs, insurance, taxes
other than income taxes, legal and auditing expense and other miscellaneous
overhead items. Overhead is calculated and allocated for such purpose by the
Eaton Vance organization in a manner deemed equitable to the Trust.

The Plans continue in effect from year to year for so long as such
continuance is approved at least annually by the vote of both a majority of
(i) the noninterested Trustees of the Trust who have no direct or indirect
financial interest in the operation of the Plan or any agreements related to
the Plan (the "Rule 12b-1 Trustees") and (ii) all of the Trustees then in
office, and the Distribution Agreement contains a similar provision. The Plans
and Distribution Agreement may be terminated at any time by vote of a majority
of the Rule 12b-1 Trustees or by a vote of a majority of the outstanding
voting securities of the applicable Class. The Plans require quarterly Trustee
review of a written report of the amount expended under the Plans and the
purposes for which such expenditures were made. The Plans may not be amended
to increase materially the payments described therein without approval of the
shareholders of the affected Class and the Trustees. So long as the Plans are
in effect, the selection and nomination of the noninterested Trustees shall be
committed to the discretion of such Trustees. Each Plan was approved by the
Trustees, including the Rule 12b-1 Trustees, on June 23, 1997.

The Trustees of the Trust believe that the Plans will be a significant
factor in the expected growth of the Fund's assets, and will result in
increased investment flexibility and advantages which have benefitted and will
continue to benefit the Fund and its Class B and Class C shareholders.
Payments for sales commissions and distribution fees made to the Principal
Underwriter under the Plans will compensate the Principal Underwriter for its
services and expenses in distributing Class B and Class C shares of the Fund.
Service fee payments made to the Principal Underwriter and Authorized Firms
under the Plans provide incentives to provide continuing personal services to
investors and the maintenance of shareholder accounts. By providing
incentives to the Principal Underwriter and Authorized Firms, the Plans are
expected to result in the maintenance of, and possible future growth in, the
assets of the Fund. Based on the foregoing and other relevant factors, the
Trustees of the Trust have determined that in their judgment there is a
reasonable likelihood that the Plans will benefit the Fund and its Class B and
Class C shareholders.

PORTFOLIO SECURITY TRANSACTIONS

Decisions concerning the execution of portfolio security transactions,
including the selection of the market and the executing firm, are made by BMR.
BMR is also responsible for the execution of transactions for all other
accounts managed by it.

BMR places the portfolio security transactions of the Portfolio and of all
other accounts managed by it for execution with many firms. BMR uses its best
efforts to obtain execution of portfolio security transactions at prices which
are advantageous to the Portfolio and at reasonably competitive spreads or
(when a disclosed commission is being charged) at reasonably competitive
commission rates. In seeking such execution, BMR will use its best judgment in
evaluating the terms of a transaction, and will give consideration to various
relevant factors, including without limitation the size and type of the
transaction, the nature and character of the market for the security, the
confidentiality, speed and certainty of effective execution required for the
transaction, the general execution and operational capabilities of the
executing firm, the reputation, reliability, experience and financial
condition of the firm, the value and quality of the services rendered by the
firm in this and other transactions, and the reasonableness of the commission
or spread, if any. The debt securities and obligations purchased and sold by
the Portfolio are generally traded in the domestic over-the-counter markets on
a net basis (i.e. without commission) through broker-dealers and banks acting
for their own accounts rather than as brokers, or otherwise involve
transactions with the issuer of such obligations. Such firms attempt to profit
from such transactions by buying at the bid price and selling at the higher
asked price of the market for such obligations, and the difference between the
bid and asked price is customarily referred to as the spread. The Portfolio
may also purchase such obligations from domestic underwriters, the cost of
which may include undisclosed fees and concessions to the underwriters.
Although spreads or commissions paid on portfolio security transactions will,
in the judgment of BMR, be reasonable in relation to the value of the services
provided, spreads or commissions exceeding those which another firm might
charge may be paid to firms who were selected to execute transactions on
behalf of the Portfolio and BMR's other clients for providing brokerage and
research services to BMR. For the fiscal years ended December 31, 1995, 1996
and 1997, the Portfolio paid no brokerage commissions on portfolio security
transactions.

As authorized in Section 28(e) of the Securities Exchange Act of 1934, a
broker or dealer who executes a portfolio transaction on behalf of the
Portfolio may receive a commission which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if BMR determines in good faith that such compensation was
reasonable in relation to the value of the brokerage and research services
provided. This determination may be made on the basis of either that
particular transaction or on the basis of overall responsibilities which BMR
and its affiliates have for accounts over which they exercise investment
discretion. In making any such determination, BMR will not attempt to place a
specific dollar value on the brokerage and research services provided or to
determine what portion of the compensation should be related to such services.
Brokerage and research services may include advice as to the value of
securities, the advisability of investing in, purchasing, or selling
securities, and the availability of securities or purchasers or sellers of
securities; furnishing analyses and reports concerning issuers, industries,
securities, economic factors and trends, portfolio strategy and the
performance of accounts; effecting securities transactions and performing
functions incidental thereto (such as clearance and settlement); and the
"Research Services" referred to in the next paragraph.

It is a common practice of the investment advisory industry for the
advisers of investment companies, institutions and other investors to receive
research, statistical and quotation services, data, information and other
services, products and materials which assist such advisers in the performance
of their investment responsibilities ("Research Services") from broker-dealer
firms which execute portfolio transactions for the clients of such advisers
and from third parties with which such broker-dealers have arrangements.
Consistent with this practice, BMR receives Research Services from many
broker-dealer firms with which BMR places the Portfolio transactions and from
third parties with which these broker-dealers have arrangements. These
Research Services include such matters as general economic and market reviews,
industry and company reviews, evaluations of securities and portfolio
strategies and transactions, recommendations as to the purchase and sale of
securities and other portfolio transactions, financial, industry and trade
publications, news and information services, pricing and quotation equipment
and services, and research oriented computer hardware, software, data bases
and services. Any particular Research Service obtained through a broker-dealer
may be used by BMR in connection with client accounts other than those
accounts which pay commissions to such broker-dealer. Any such Research
Service may be broadly useful and of value to BMR in rendering investment
advisory services to all or a significant portion of its clients, or may be
relevant and useful for the management of only one client's account or of a
few clients' accounts, or may be useful for the management of merely a segment
of certain clients' accounts, regardless of whether any such account or
accounts paid commissions to the broker-dealer through which such Research
Service was obtained. The advisory fee paid by the Portfolio is not reduced
because BMR receives such Research Services. BMR evaluates the nature and
quality of the various Research Services obtained through broker-dealer firms
and attempts to allocate sufficient commissions to such firms to ensure the
continued receipt of Research Services which BMR believes are useful or of
value to it in rendering investment advisory services to its clients.

Subject to the requirement that BMR shall use its best efforts to seek to
execute portfolio security transactions at advantageous prices and at
reasonably competitive spreads or commission rates, BMR is authorized to
consider as a factor in the selection of any broker-dealer firm with whom
portfolio orders may be placed the fact that such firm has sold or is selling
shares of the Fund or of other investment companies sponsored by BMR or Eaton
Vance. This policy is not inconsistent with a rule of the NASD, which rule
provides that no firm which is a member of the NASD shall favor or disfavor
the distribution of shares of any particular investment company or group of
investment companies on the basis of brokerage commissions received or
expected by such firm from any source.

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

OTHER INFORMATION

The Trust changed its name from Eaton Vance Government Obligations Trust
on July 10, 1995. Eaton Vance, pursuant to its agreement with the Trust,
controls the use of the words "Eaton Vance" and "EV" in the Fund's name and
may use the words "Eaton Vance" or "EV" in other connections and for other
purposes. The Fund established multiple classes of shares on January 1, 1998.
The operations of Class A reflect the operations of the Fund prior to such
date. Class B and Class C are successors to the operations of separate series
of the Trust.

As permitted by Massachusetts law, there will normally be no meetings of
shareholders for the purpose of electing Trustees unless and until such time
as less than a majority of the Trustees of the Trust holding office have been
elected by shareholders. In such an event the Trustees then in office will
call a shareholders' meeting for the election of Trustees. Except for the
foregoing circumstances and unless removed by action of the shareholders in
accordance with the Trust's by-laws, the Trustees shall continue to hold
office and may appoint successor Trustees.

The Trust's Declaration of Trust may be amended by the Trustees when
authorized by vote of a majority of the outstanding voting securities of the
Trust, the financial interests of which are affected by the amendment. The
Trustees may also amend the Declaration of Trust without the vote or consent
of shareholders to change the name of the Trust or any series or to make such
other changes (such as reclassifying series or classes of shares or
restructuring the Trust) as do not have a materially adverse effect on the
financial interests of shareholders or if they deem it necessary to conform it
to applicable federal or state laws or regulations. The Trust's By-laws
provide that the Trust will indemnify its Trustees and officers against
liabilities and expenses incurred in connection with any litigation or
proceeding in which they may be involved because of their offices with the
Trust. However, no indemnification will be provided to any Trustee or officer
for any liability to the Trust or its shareholders by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office. The Trust or any series or class
thereof may be terminated by: (1) the affirmative vote of the holders of not
less than two-thirds of the shares outstanding and entitled to vote at any
meeting of shareholders of the Trust or the appropriate series or class
thereof, or by an instrument or instruments in writing without a meeting,
consented to by the holders of two-thirds of the shares of the Trust or a
series or class thereof, provided, however, that, if such termination is
recommended by the Trustees, the vote of a majority of the outstanding voting
securities of the Trust or a series or class thereof entitled to vote thereon
shall be sufficient authorization; or (2) by means of an instrument in writing
signed by a majority of the Trustees, to be followed by a written notice to
shareholders stating that a majority of the Trustees has determined that the
continuation of the Trust or a series or a class thereof is not in the best
interest of the Trust, such series or class or of their respective
shareholders.

Under Massachusetts law, if certain conditions prevail, shareholders of a
Massachusetts business trust (such as the Trust) could be deemed to have
personal liability for the obligations of the Trust. Numerous investment
companies registered under the 1940 Act have been formed as Massachusetts
business trusts, and management is not aware of an instance where such
liability has been imposed. The Trust's Declaration of Trust contains an
express disclaimer of liability on the part of the Fund shareholders and the
Trust's By-laws provide that the Trust shall assume the defense on behalf of
any Fund shareholders. (The Declaration also contains provisions limiting the
liability of a series or class to that series or class). Moreover, the Trust's
By-laws also provide for indemnification out of the property of the Fund of
any shareholder held personally liable solely by reason of being or having
been a shareholder for all loss or expense arising from such liability. The
assets of the Fund are readily marketable and will ordinarily substantially
exceed its liabilities. In light of the nature of the Fund's business and the
nature of its assets, management believes that the possibility of the Fund's
liability exceeding its assets, and therefore the shareholder's risk of
personal liability, is extremely remote.

In accordance with the Declaration of Trust of the Portfolio, there will
normally be no meetings of the investors for the purpose of electing Trustees
unless and until such time as less than a majority of the Trustees holding
office have been elected by investors. In such an event the Trustees of the
Portfolio then in office will call an investors' meeting for the election of
Trustees. Except for the foregoing circumstances and unless removed by action
of the investors in accordance with the Portfolio's Declaration of Trust, the
Trustees shall continue to hold office and may appoint successor Trustees.

The Declaration of Trust of the Portfolio provides that no person shall
serve as a Trustee if investors holding two-thirds of the outstanding interest
have removed him from that office either by a written declaration filed with
the Portfolio's Chairman or by votes cast at a meeting called for that
purpose. The Declaration of Trust further provides that under certain
circumstances the investors may call a meeting to remove a Trustee and that
the Portfolio is required to provide assistance in communicating with
investors about such a meeting.

The Portfolio's Declaration of Trust provides that the Fund and other
entities permitted to invest in the Portfolio (e.g., other U.S. and foreign
investment companies, and common and commingled trust funds) will each be
liable for all obligations of the Portfolio. However, the risk of the Fund
incurring financial loss on account of such liability is limited to
circumstances in which both inadequate insurance exists and the Portfolio
itself is unable to meet its obligations. Accordingly, the Trustees of the
Trust believe that neither the Fund nor its shareholders will be adversely
affected by reason of the Fund investing in the Portfolio.

In connection with telephone redemptions and exchanges, the Trust, the
Principal Underwriter and the Transfer Agent generally will verify personal
account information in order to determine that instructions communicated are
genuine.

The right to redeem shares of the Fund can be suspended and the payment of
the redemption price deferred when the Exchange is closed (other than for
customary weekend and holiday closings), during periods when trading on the
Exchange is restricted as determined by the Commission, or during any
emergency as determined by the Commission which makes it impracticable for the
Portfolio 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.

INDEPENDENT ACCOUNTANTS

Coopers & Lybrand L.L.P., One Post Office Square, Boston, Massachusetts
are the independent accountants of the Fund and the Portfolio, providing audit
services, tax return preparation, and assistance and consultation with respect
to the preparation of filings with the Commission.

FINANCIAL STATEMENTS

The audited financial statements of, and the independent accountants'
report for, the Fund and the Portfolio appear in the Fund's most recent annual
report to shareholders and are incorporated by reference into this SAI. A copy
of the Fund's annual report accompanies this SAI.

Registrant incorporates by reference the audited financial information for
the EV Traditional Government Obligations Fund and Government Obligations
Portfolio for the fiscal year ended December 31, 1997 as previously filed
with the Commission (Accession No. 0000950109-98-001696).

<PAGE>

APPENDIX A: CLASS A SHARES

FEES AND EXPENSES
SERVICE PLAN
During the fiscal year ended December 31, 1997, the Fund made service fee
payments under the Plan to the Principal Underwriter aggregating $677,132, of
which $632,560 was paid to Authorized Firms and the balance of which was
retained by the Principal Underwriter.

PRINCIPAL UNDERWRITER
The total sales charges paid in connection with sales of Class A shares
during the fiscal years ended December 31, 1997, 1996 and 1995, were $394,859,
$302,288 and $216,170, respectively, of which $4,226, $0 and $10,288,
respectively was received by the Principal Underwriter. For the fiscal years
ended December 31, 1997, 1996 and 1995, Authorized Firms received $390,633,
$302,288 and $205,882, respectively, from the total sales charges.

For the fiscal year ended December 31, 1997, the Fund paid the Principal
Underwriter $5,897.50 for repurchase transactions handled by the Principal
Underwriter.

PERFORMANCE INFORMATION

The table below indicates the cumulative and average annual total return
on a hypothetical investment of $1,000 in Class A shares for the periods shown
in the table. The "Value of Initial Investment" reflects the deduction of the
maximum sales charge of 4.75%. Past performance is not indicative of future
results. Investment return and principal value will fluctuate; shares, when
redeemed, may be worth more or less than their original cost.

VALUE OF A $1,000 INVESTMENT

TOTAL RETURN EXCLUDING TOTAL RETURN INCLUDING
VALUE OF VALUE OF MAXIMUM SALES CHARGE MAXIMUM SALES CHARGE
INVESTMENT INITIAL INVESTMENT --------------------------- ---------------------------
INVESTMENT PERIOD DATE INVESTMENT ON 12/31/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ----------------------- ---------- ---------- ----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
10 Years Ended 12/31/97 12/31/87 $952.14 $2,079.63 118.43% 8.13% 107.96% 7.60%
5 Years Ended 12/31/97 12/31/92 $952.30 $1,302.36 36.76% 6.46% 30.24% 5.43%
1 Year Ended 12/31/97 12/31/96 $952.72 $1,021.85 7.26% 7.26% 2.18% 2.18%
</TABLE>

For the 30-day period ended December 31, 1997, the yield of the Fund was
5.08%.

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

As at March 31, 1998, the Trustees and officers of the Trust, as a group,
owned in the aggregate less than 1% of the outstanding Class A shares of the
Fund. As at March 31, 1998, Merrill Lynch, Pierce, Fenner & Smith, Inc.,
Jacksonville, FL was the record owner of approximately 17.0% of the
outstanding Class A shares, which it held on behalf of its customers who are
the beneficial owners of such shares, and as to which it had voting power
under certain limited circumstances. As of the same date, Eaton Vance owned
beneficially and of record 6.8% of the outstanding Class A shares of the Fund.
To the knowledge of the Trust, no other person owned of record or beneficially
5% or more of the Fund's outstanding Class A shares as of such date.

<PAGE>

APPENDIX B: CLASS B SHARES

PERFORMANCE INFORMATION

The table below indicates the cumulative and average annual total return
on a hypothetical investment in shares of $1,000. Total return for the period
prior to January 1, 1998 reflects the total return of the predecessor to Class
B. Total return prior to October 28, 1993 reflects the total return of Class
A, adjusted to reflect the Class B sales charge. The Class A total return has
not been adjusted to reflect certain other expenses (such as distribution and/
or service fees). If such adjustments were made, the Class B total return
would be different. Past performance is not indicative of future results.
Investment return and principal value will fluctuate; shares, when redeemed,
may be worth more or less than their original cost.

VALUE OF A $1,000 INVESTMENT

VALUE OF
INVESTMENT VALUE OF
BEFORE INVESTMENT TOTAL RETURN BEFORE TOTAL RETURN AFTER
DEDUCTING AFTER DEDUCTING DEDUCTING THE CDSC DEDUCTING THE CDSC
INVESTMENT INVESTMENT AMOUNT OF THE CDSC ON THE CDSC ON ------------------------ -------------------------
PERIOD DATE INVESTMENT 12/31/97 12/31/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ----------- ---------- ---------- ------------- --------------- ---------- --------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
10 Years
Ended
12/31/97 12/31/87 $1,000 $2,122.83 $2,122.83 112.28% 7.82% 112.28% 7.82%
5 Years
Ended
12/31/97 12/31/92 $1,000 $1,329.13 $1,310.63 32.91% 5.86% 31.06% 5.56%
1 Year
Ended
12/31/97 12/31/96 $1,000 $1,065.89 $1,016.16 6.59% 6.59% 1.62% 1.62%
</TABLE>

For the thirty-day period ended December 31, 1997, the yield of the Fund
was 4.57%.

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

As at March 31, 1998, the Trustees and officers of the Trust, as a group,
owned in the aggregate less than 1% of the outstanding Class B shares of the
Fund. As at March 31, 1998, Merrill Lynch, Pierce, Fenner & Smith, Inc.,
Jacksonville, FL was the record owner of approximately 16.5% of the
outstanding Class B shares, which it held on behalf of its customers who are
the beneficial owners of such shares, and as to which it had voting power
under certain limited circumstances. To the knowledge of the Trust, no other
person owned of record or beneficially 5% or more of the Fund's outstanding
Class B shares as of such date.

<PAGE>

APPENDIX C: CLASS C SHARES

PERFORMANCE INFORMATION

The table below indicates the cumulative and average annual total return
on a hypothetical investment in shares of $1,000. Total return for the period
prior to January 1, 1998 reflects the total return of the predecessor to Class
C. Total return prior to October 28, 1993 reflects the total return of Class
A, adjusted to reflect the Class C sales charge. The Class A total return has
not been adjused to reflect certain other expenses (such as distribution and/
or service fees). If such adjustments were made, the Class C total return
would be different. Past performance is not indicative of future results.
Investment return and principal value will fluctuate; shares, when redeemed,
may be worth more or less than their original cost.

VALUE OF A $1,000 INVESTMENT

VALUE OF VALUE OF
INVESTMENT INVESTMENT
BEFORE AFTER TOTAL RETURN TOTAL RETURN
DEDUCTING DEDUCTING BEFORE DEDUCTING THE CDSC AFTER DEDUCTING THE CDSC
INVESTMENT INVESTMENT AMOUNT OF THE CDSC THE CDSC --------------------------- ------------------------
PERIOD DATE INVESTMENT ON 12/31/97 ON 12/31/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- --------------- ---------- ---------- ----------- ------------ ------------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
10 Years Ended
12/31/97 12/31/87 $1,000 $2,097.95 $2,097.95 109.80% 7.69% 109.80% 7.69%
5 Years Ended
12/31/97 12/31/92 $1,000 $1,313.61 $1,313.61 31.36% 5.61% 31.36% 5.61%
1 Year Ended
12/31/97 12/31/96 $1,000 $1,061.99 $1,052.06 6.20% 6.20% 5.21% 5.21%
</TABLE>

For the thirty-day period ended December 31, 1997, the yield of the Fund
was 4.20%.

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

As at March 31, 1998, the Trustees and officers of the Trust, as a group,
owned in the aggregate less than 1% of the outstanding Class C shares of the
Fund. As at March 31, 1998, Merrill Lynch, Pierce, Fenner & Smith, Inc.,
Jacksonville, FL and NFSC, Tallahassee FL, were the record owners of
approximately 30.1% and 14.4%, respectively, of the outstanding Class C
shares, which were held on behalf of their customers who are the beneficial
owners of such shares, and as to which they had voting power under certain
limited circumstances. To the knowledge of the Trust, no other person owned of
record or beneficially 5% or more of the Fund's outstanding Class C shares as
of such date.

<PAGE>

- ------------------
[Logo] Investing
for the
EATON VANCE 21st
================== Century
Mutual Funds
- ------------------

---------------------------------------------------------------------------
Eaton Vance
Government Obligations Fund

Statement of Additional Information
May 1, 1998

Administrator of Eaton Vance Government Obligations Fund
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, 200 Clarendon Street, Boston, MA 02116

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

Independent Accountants
Coopers & Lybrand L.L.P., One Post Office Square, Boston, MA 02109

GOSAI
<PAGE>

PART B

INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION

STATEMENT OF
ADDITIONAL INFORMATION
May 1, 1998

EATON VANCE MUNICIPAL BOND FUND

24 Federal Street
Boston, Massachusetts 02110
(800) 225-6265

This Statement of Additional Information provides information about Eaton
Vance Municipal Bond Fund (the "Fund"). This Statement of Additional
Information is sometimes referred to herein as the "SAI."

TABLE OF CONTENTS
Page

Additional Information about Investment Policies ..................... 2
Investment Restrictions .............................................. 7
Trustees and Officers ................................................ 8
Investment Adviser ................................................... 10
Custodian ............................................................ 12
Services for Accumulation -- Class A Shares .......................... 12
Service for Withdrawal ............................................... 13
Determination of Net Asset Value ..................................... 13
Investment Performance ............................................... 13
Taxes ................................................................ 14
Principal Underwriter ................................................ 16
Service Plan -- Class A Shares ....................................... 17
Distribution Plan -- Class B Shares .................................. 18
Portfolio Security Transactions ...................................... 19
Other Information .................................................... 21
Independent Certified Public Accountants ............................. 22
Financial Statements ................................................. 22
Appendix A: Class A Shares ........................................... a-1
Appendix B: Class B Shares ........................................... b-1
Appendix C: Class I Shares ........................................... c-1
Appendix D: Tax Equivalent Yield Table ............................... d-1
Appendix E: Ratings .................................................. e-1

THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR
ACCOMPANIED BY THE FUND'S PROSPECTUS DATED MAY 1, 1998, AS SUPPLEMENTED FROM
TIME TO TIME, WHICH IS INCORPORATED HEREIN BY REFERENCE. THIS SAI SHOULD BE READ
IN CONJUNCTION WITH SUCH PROSPECTUS, A COPY OF WHICH MAY BE OBTAINED WITHOUT
CHARGE BY CONTACTING EATON VANCE DISTRIBUTORS, INC. (THE "PRINCIPAL
UNDERWRITER") (SEE BACK COVER FOR ADDRESS AND PHONE NUMBER).

<PAGE>

This SAI provides information about the Fund. Capitalized terms used in this
SAI and not otherwise defined have the meanings given to them in the Prospectus.

ADDITIONAL INFORMATION ABOUT INVESTMENT POLICIES

MUNICIPAL BONDS

Municipal Bonds are issued to obtain funds for various public and private
purposes. Such obligations include bonds as well as tax-exempt commercial paper,
project notes and municipal notes such as tax, revenue and bond anticipation
notes of short maturity, generally less than three years. In general, there are
three categories of municipal obligations, the interest of 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. In assessing the federal income tax treatment of interest on
any Municipal Bond, the Fund will generally rely on an opinion of counsel (when
available) obtained by the issuer and will not undertake any independent
verification of the basis for the opinion. The two principal classifications of
municipal bonds are "general obligation" and "revenue" bonds.

Interest on certain "private activity bonds" issued after August 7, 1986 is
exempt from regular federal income tax but such interest (including a
distribution by the Fund derived from such interest) is treated as a tax
preference item which could subject the recipient to or increase the recipient's
liability for the AMT. For corporate shareholders, the Fund's distributions
derived from interest on all municipal obligations (whenever issued) is included
in "adjusted current earnings" for purposes of the AMT as applied to
corporations (to the extent not already included in alternative minimum taxable
income as income attributable to private activity bonds).

Any recognized gain or income attributable to market discount on long-term
tax-exempt municipal obligations (i.e., obligations with a term of more than one
year) purchased in the secondary market after April 30, 1993 other than, in
general, at their original issue is taxable as ordinary income. A long-term debt
obligation is generally treated as acquired at a market discount if purchased at
its original issue at a price less than (i) the stated principal amount payable
at maturity, in the case of an obligation that does not have original issue
discount or (ii) in the case of an obligation that does have original issue
discount, the sum of the issue price and any original issue discount that
accrued before the obligation was purchased, subject to a de minimis exclusion.

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

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

Industrial development and pollution control bonds, although nominally
issued by municipal authorities, are in most cases revenue bonds and are
generally not secured by the taxing power of the municipality, but are usually
secured by the revenues derived by the authority from payments by the industrial
user or users.

The Fund may on occasion acquire revenue bonds which carry warrants or
similar rights covering equity securities. Such warrants or rights may be held
indefinitely, but if exercised, the Fund anticipates that it would, under normal
circumstances, dispose of any equity securities so acquired within a reasonable
period of time.

While most Municipal Bonds pay a fixed rate of interest semi-annually in
cash, there are exceptions. Some bonds pay no periodic cash interest, but rather
make a single payment at maturity representing both principal and interest.
Bonds may be issued or subsequently offered with interest coupons materially
greater or less than those then prevailing, with price adjustments reflecting
such deviation.

The obligations of any person or entity to pay the principal of and interest
on a municipal obligation, are subject to the provisions of bankruptcy,
insolvency and other laws affecting the rights and remedies of creditors, such
as the Federal Bankruptcy Act, and laws, if any, which may be enacted by
Congress or state legislatures extending the time for payment of principal or
interest, or both, or imposing other constraints upon enforcement of such
obligations. There is also the possibility that as a result of litigation or
other conditions the power or ability of any one or more issuers to pay when due
principal of and interest on its or their Municipal Bonds may be materially
affected. There have been recent instances of defaults and bankruptcies
involving municipal obligations which were not foreseen by the financial and
investment communities. The Fund will also take whatever action as it considers
appropriate in the event of anticipated financial difficulties, default or
bankruptcy of either the issuer of any municipal obligation or of the underlying
source of funds for debt service. Such action may include retaining the services
of various persons 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 and the
Fund may also manage (or engage other persons to manage) or otherwise deal with
any real estate, facilities or other assets so acquired. The Fund anticipates
that real estate consulting and management services may be required with respect
to properties securing various Municipal Bonds 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 yields on Municipal Bonds are dependent on a variety of factors,
including purpose of issue and source of funds for repayment, general money
market conditions, general conditions of the Municipal Bond market, size of a
particular offering, the maturity of the obligation and rating of the issue. The
ratings of Moody's, S&P and Fitch represent their opinions as to the quality of
the Municipal Bonds which they undertake to rate. It should be emphasized,
however, that ratings are general and are not absolute standards of quality.
Consequently, Municipal Bonds with the same maturity, coupon and rating may have
different yields while Bonds of the same maturity and coupon with different
ratings may have the same yield. In addition, the market price of Municipal
Bonds will normally fluctuate with changes in interest rates, and therefore the
net asset value of the Fund's shares will be affected by such changes.

RISKS OF CONCENTRATION

The Fund may invest 25% or more of its total assets in municipal obligations
whose issuers are located in the same state or in municipal obligations of the
same type. There could be economic, business or political developments which
might affect all municipal obligations of a similar type. In particular,
investments in the industrial revenue bonds might involve (without limitation)
the following risks.

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

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

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

MUNICIPAL LEASES

The Fund may invest in municipal leases and participations therein, which
arrangements frequently involve special risks. Municipal leases are obligations
in the form of a lease or installment purchase arrangement which is issued by
state or local governments to acquire equipment and facilities. Interest income
from such obligations is generally exempt from local and state taxes in the
state of issuance. "Participations" in such leases are undivided interests in a
portion of the total obligation. Participations entitle their holders to receive
a pro rata share of all payments under the lease. A trustee is usually
responsible for administering the terms of the participation and enforcing the
participants' rights in the underlying lease. Leases and installment purchase or
conditional sale contracts (which normally provide for title to the leased
assets 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. State
debt-issuance limitations are deemed to be inapplicable to these arrangements
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. Such arrangements are, therefore, subject to the risk that the
governmental issuer will not appropriate funds for lease payments.

Certain municipal lease obligations owned by the Fund may be deemed illiquid
for the purpose of the Fund's 15% limitation on investments in illiquid
securities, unless determined by the Investment Adviser, pursuant to guidelines
adopted by the Trustees of the Fund, 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. In the
event the Fund acquires an unrated municipal lease obligation, the Investment
Adviser will be responsible for determining the credit quality of such
obligation on an on-going basis, including an assessment of the likelihood that
the lease may or may not be cancelled.

ZERO COUPON BONDS

Zero coupon 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.

INSURANCE

Insured municipal obligations held by the Fund (if any) 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. In either event, 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 required to make such
payment until a specified time has lapsed (which may be 30 days or more after
notice).

CREDIT QUALITY

The Fund is dependent on the Investment Adviser's judgment, analysis and
experience in evaluating the quality of Municipal Bonds. 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, below investment grade and comparable unrated obligations
through active portfolio management, credit analysis and attention to current
developments and trends in the economy and the financial markets.

SHORT-TERM TRADING

The Fund may sell (and later purchase) securities in anticipation of a
market decline (a rise in interest rates) or purchase (and later sell)
securities in anticipation of a market rise (a decline in interest rates). 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 obligations or changes in the
investment objectives of investors. Such trading may be expected to increase the
portfolio turnover rate, which may increase capital gains and the expenses
incurred in connection with such trading. The Fund cannot accurately predict its
portfolio turnover rate, but it is anticipated that the annual portfolio
turnover rate will generally not exceed 100% (excluding turnover of securities
having a maturity of one year or less). A 100% annual turnover rate could occur,
for example, if all the securities held by the Fund were replaced once in a
period of one year. A high turnover rate (100% or more) necessarily involves
greater expenses to the Fund. The Fund engages in portfolio trading (including
short-term trading) if it believes that a transaction including all costs will
help in achieving its investment objective. For the fiscal years ended December
31, 1997 and 1996, the portfolio turnover rates of the Fund were 34% and 30%,
respectively.

WHEN-ISSUED SECURITIES

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

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

VARIABLE RATE OBLIGATIONS

The Fund may purchase variable rate obligations. Variable rate instruments
provide for adjustments in the interest rate at specified intervals (weekly,
monthly, semi-annually, etc.). The revised rates are usually set at the issuer's
discretion in which case the investor normally enjoys the right to "put" the
security back to the issuer or his agent. Rate revisions may alternatively be
determined by formula or in some other contractual fashion. Variable rate
obligations normally provide that the holder can demand payment of the
obligation on short notice at par with accrued interest and which are frequently
secured by letters of credit or other support arrangements provided by banks. To
the extent that such letters of credit or other arrangements constitute an
unconditional guarantee of the issuer's obligations, a bank may be treated as
the issuer of a security for the purposes of complying with the diversification
requirements set forth in Section 5(b) of the 1940 Act and Rule 5b-2 thereunder.
The Fund would anticipate using these bonds as cash equivalents pending longer
term investment of its funds.

REDEMPTION, DEMAND AND PUT FEATURES

Most municipal bonds have a fixed final maturity date. However, it is
commonplace for the issuer to reserve the right to call the bond earlier. Also,
some bonds may have "put" or "demand" features that allow early redemption by
the bondholder. Longer term fixed-rate bonds may give the holder a right to
request redemption at certain times (often annually after the lapse of an
intermediate term). These bonds are more defensive than conventional long term
bonds (protecting to some degree against a rise in interest rates) while
providing greater opportunity than comparable intermediate term bonds, because
the Fund may retain the bond if interest rates decline. By acquiring these kinds
of obligations the Fund obtains the contractual right to require the issuer of
the security or some other person (other than a broker or dealer) to purchase
the security at an agreed upon price, which right is contained in the obligation
itself rather than in a separate agreement with the seller or some other person.
Because this right is assignable with the security, which is readily marketable
and valued in the customary manner, the Fund will not assign any separate value
to such right.

LIQUIDITY AND PROTECTIVE PUT OPTIONS

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

SECURITIES LENDING

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 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. Distributions by the Fund of any income
realized 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
no present intention of engaging in securities lending.

FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS

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

Some futures contracts and options thereon may become illiquid under adverse
market conditions. In addition, during periods of market volatility, a commodity
exchange may suspend or limit transactions in an exchange-traded instrument,
which may make the instrument temporarily illiquid and difficult to price.
Commodity exchanges may also establish daily limits on the amount that the price
of a futures contract or futures option can vary from the previous day's
settlement price. Once the daily limit is reached, no trades may be made that
day at a price beyond the limit. This may prevent the Fund from closing out
positions and limiting its losses.

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

ASSET COVERAGE REQUIREMENTS

Transactions involving when-issued securities or futures contracts and
options (other than options that the Fund has purchased) expose the Fund to an
obligation to another party. The Fund will not enter into any such transactions
unless it owns either (1) an offsetting ("covered") position in securities or
other options or futures contracts or (2) cash or liquid securities (such as
readily marketable obligations and money market instruments) with a value
sufficient at all times to cover its potential obligations not covered as
provided in (1) above. The Fund will comply with Commission guidelines regarding
cover for these instruments and, if the guidelines so require, set aside cash or
liquid securities in a segregated account with its custodian in the prescribed
amount. The securities in the segregated account will be marked to market daily.

Assets used as cover or held in a segregated account with the Fund's
custodian cannot be sold while the position requiring coverage or segregation is
outstanding unless they are replaced with other appropriate assets. As a result,
the commitment of a large portion of the Fund's assets to segregated accounts or
to cover could impede portfolio management or the Fund's ability to meet
redemption requests or other current obligations.

INVESTMENT RESTRICTIONS

The following investment restrictions of the Fund are designated as
fundamental policies and as such cannot be changed without the approval of the
holders of a majority of the Fund's outstanding voting securities, which as used
in this SAI means the lesser of (i) 67% of the shares of the Fund present or
represented by proxy at a meeting if the holders of more than 50% of the shares
are present or represented at the meeting, or (ii) more than 50% of the shares
of the Fund. Accordingly, the Fund may not:

(1) With respect to 75% of its total assets, invest more than 5% of its
total assets (taken at current value) in the securities of any one issuer,
or invest in more than 10% of the outstanding voting securities of any one
issuer, except obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities;

(2) Borrow money or issue senior securities, except as permitted by the
1940 Act;

(3) 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 contracts or related options
transactions is not considered the purchase of a security on margin;

(4) Underwrite or participate in the marketing of securities of others,
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;

(5) Purchase or sell real estate, although it may purchase and sell
securities which are secured by real estate and securities of companies
which invest or deal in real estate;

(6) Purchase or sell physical commodities or contracts for the purchase
or sale of physical commodities; or

(7) Make loans to any person, except by (a) the acquisition of debt
instruments and making portfolio investments, (b) entering into repurchase
agreements, and (c) lending portfolio securities.

The Fund has adopted the following investment policies which may be changed
without shareholder approval. As a matter of nonfundamental policy, the Fund
will not: (a) make short sales of securities or maintain a short position,
unless at all times when a short sale position is open it owns an equal amount
of such securities or securities convertible into or exchangeable, without
payment of any further consideration, for securities of the same issue as, and
equal in amount to, the securities sold short 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; (b) purchase or retain in its portfolio any securities
issued by an issuer any of whose officers, directors, trustees or security
holders is an officer or Trustee of the Trust 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
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 shares or securities or both (all taken at market value); or (c) invest
more than 15% of its total net assets in investments which are not readily
marketable, including restricted securities and repurchase agreements maturing
in more than seven days. Restricted securities for the 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 Trustees of the Trust, or their delegate, determine to
be liquid.

The purchase of Municipal Bonds and temporary investments by the Fund in
accordance with its investment objective, policies and limitations, which may
include the purchase of non-publicly issued debt securities, shall be deemed to
be permissible loan transactions.

For the purpose of the Fund's investment restrictions, the identification of
the "issuer" of a Municipal Bond which is not a general obligation bond is 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.

Whenever an investment policy or investment restriction set forth in the
Prospectus or this SAI states a maximum percentage of assets that may be
invested in any security or other asset, or describes a policy regarding quality
standards, such percentage limitation or standard shall be determined
immediately after and as a result of the Fund's acquisition of such security or
asset. Accordingly, any later increase or decrease resulting from a change in
values, assets or other circumstances, other than a subsequent rating change
below investment grade made by a rating service, will not compel the Fund to
dispose of such security or other asset. Notwithstanding the foregoing, the Fund
must always be in compliance with the borrowing policies set forth above and may
not hold more than 15% of net assets in illiquid securities.

TRUSTEES AND OFFICERS

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

TRUSTEES OF THE TRUST

JAMES B. HAWKES (56), Vice President and Trustee*
Chairman, President and Chief Executive Officer of Eaton Vance, BMR, EVC and EV,
and a Director of EVC and EV. Director or Trustee and officer of various
investment companies managed by Eaton Vance or BMR.

SAMUEL L. HAYES, III (63), Trustee
Jacob H. Schiff Professor of Investment Banking, Harvard University Graduate
School of Business Administration. Trustee of the Kubrick Funds (mutual
funds). Director or Trustee of various investment companies managed by Eaton
Vance or BMR.
Address: Harvard University Graduate School of Business Administration,
Soldiers Field Road, Boston, Massachusetts 02163

NORTON H. REAMER (62), Trustee
Chairman of the Board and Chief Executive Officer, United Asset Management
Corporation (a holding company owning institutional investment management
firms). Chairman, President and Director, UAM Funds (mutual funds). Director
or Trustee of various investment companies managed by Eaton Vance or BMR.
Address: One International Place, Boston, Massachusetts 02110

JOHN L. THORNDIKE (71), Trustee
Former Director of Fiduciary Company Incorporated. Director or Trustee of
various investment companies managed by Eaton Vance or BMR.
Address: 175 Federal Street, Boston, Massachusetts 02110

OFFICERS OF THE TRUST

THOMAS J. FETTER (54), Vice President
Vice President of Eaton Vance, BMR and EV. Officer of various investment
companies managed by Eaton Vance or BMR. Mr. Fetter was elected Vice
President of the Trust on October 17, 1997.

WILLIAM H. AHERN, JR. (38), Vice President
Vice President of BMR and Eaton Vance. Officer of various investment companies
managed by Eaton Vance or BMR. Mr. Ahern was elected Vice President of the
Trust on June 19, 1995.

MICHAEL B. TERRY (55), Vice President
Vice President of BMR, Eaton Vance and EV. Officer of various investment
companies managed by Eaton Vance or BMR.

JAMES L. O'CONNOR (53), Treasurer
Vice President of Eaton Vance, BMR and EV. Officer of various investment
companies in the Eaton Vance group of funds.

ALAN R. DYNNER (57), Secretary
Vice President and Chief Legal Officer of Eaton Vance, BMR, EVC and EV since
November 1, 1996. Previously, he was a Partner of the law firm of Kirkpatrick
& Lockhart LLP, New York and Washington, D.C., and was Executive Vice
President of Neuberger & Berman Management, Inc., a mutual fund management
company. Officer of various investment companies managed by Eaton Vance or
BMR. Mr. Dynner was elected Secretary of the Trust on June 23, 1997.

JANET E. SANDERS (62), Assistant Treasurer and Assistant Secretary
Vice President of Eaton Vance, BMR and EV. Officer of various investment
companies managed by Eaton Vance or BMR.

A. JOHN MURPHY (35), Assistant Secretary
Assistant Vice President of BMR, Eaton Vance and EV since March 1, 1994;
employee of Eaton Vance since March 1993. State Regulations Supervisor, The
Boston Company (1991-1993). Officer of various investment companies managed by
Eaton Vance or BMR. Mr. Murphy was elected Assistant Secretary of the Trust on
March 27, 1995.

ERIC G. WOODBURY (40), Assistant Secretary
Vice President of Eaton Vance since February 1993; formerly associate attorney
at Dechert, Price & Rhoads. Officer of various investment companies managed by
Eaton Vance or BMR. Mr. Woodbury was elected Assistant Secretary of the Trust
on June 19, 1995.

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

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

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

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

The fees and expenses of the noninterested Trustees of the Trust are paid by
the Fund (and the other series of the Trust). (The Trustees of the Trust who are
members of the Eaton Vance organization receive no compensation from the Trust.)
During the fiscal year ended December 31, 1997, the noninterested Trustees of
the Trust earned the following compensation in their capacities as Trustees from
the Trust and funds in the Eaton Vance fund complex:(1)

AGGREGATE TOTAL COMPENSATION
COMPENSATION FROM TRUST AND
NAME FROM TRUST(2) AND FUND COMPLEX

Donald R. Dwight ........... $6,323(3) $145,000(6)
Samuel L. Hayes, III ....... 6,487(4) 155,000(7)
Norton H. Reamer ........... 6,166 145,000
John L. Thorndike .......... 6,348(5) 145,000(8)
Jack L. Treynor ............ 6,725 150,000
- ----------
(1) As of May 1, 1998, the Eaton Vance fund complex consists of 143 registered
investment companies or series thereof.
(2) The Trust consisted of 13 Funds as of January 1, 1998.
(3) Includes $496 of deferred compensation.
(4) Includes $510 of deferred compensation.
(5) Includes $1,347 of deferred compensation.
(6) Includes $45,000 of deferred compensation.
(7) Includes $38,750 of deferred compensation.
(8) Includes $107,925 of deferred compensation.

INVESTMENT ADVISER

The Fund engages Eaton Vance as its investment adviser pursuant to an
Investment Advisory Agreement. Eaton Vance or its affiliates act as investment
adviser to investment companies and various individual and institutional clients
with combined assets under management of approximately $25 billion.

The Principal Underwriter believes that an investment professional can
provide valuable services to you to help you reach your investment goals.
Meeting investment goals requires time, objectivity and investment savvy. Before
making an investment recommendation, a representative can help you carefully
consider your short- and long-term financial goals, your tolerance for
investment risk, your investment time frame, and other investments you may
already own. Your professional investment representatives are knowledgeable
about financial markets, as well as the wide range of investment opportunities
available. A representative can help you decide when to buy, sell or persevere
with your investments.

Eaton Vance offers single-state tax-free portfolios in more states than any
other sponsor of mutual funds. A staff of 28 (including 6 portfolio managers and
9 credit specialists) is responsible for the day-to-day management of over 3,500
issues in 46 mutual fund portfolios. Assets managed by the municipal investment
group are currently over $7.6 billion. The investment philosophy of the
municipal investment group is to: seek value by avoiding unnecessary credit
risk; build portfolios one security at a time; and take a long-term approach to
managing market risk. Over the long-term, the group seeks to maximize tax-free
income by keeping portfolios fully invested (rather than trying to "time the
market" for short-term results) and reduce potential capital losses due to poor
credit quality. Diligent and continuing research and analysis are a critical
component of the municipal investment group's investment philosophy and
long-term strategy.

Eaton Vance manages the investments and affairs of the Fund, subject to the
supervision of the Board of Trustees of the Trust. Eaton Vance furnishes to the
Fund, investment advice and assistance, administrative services, office space
and equipment and clerical personnel for servicing the investments of the Fund
and compensates all officers and Trustees of the Trust who are members of the
Eaton Vance organization and all personnel of Eaton Vance performing services
relating to research and investment activities. The Fund is responsible for all
expenses not expressly stated to be payable by Eaton Vance under the Investment
Advisory Agreement, including without limitation, the fees and expenses of its
custodian and transfer agent, including those incurred for determining the
Fund's net asset value and keeping its books; the cost of share certificates;
membership dues in investment company organizations; brokerage commissions and
fees; fees and expenses of registering shares; expenses of reports to
shareholders, proxy statements, and other expenses of shareholders' meetings;
insurance premiums; printing and mailing expenses; interest; taxes and corporate
fees; legal and accounting expenses; and compensation and expenses of Trustees
not affiliated with Eaton Vance. The Fund will also bear expenses incurred in
connection with litigation which the Fund is a party and any legal obligation
the Trust may have to indemnify its Trustees with respect thereto, to the extent
not covered by insurance.

For a description of the compensation Eaton Vance receives under the
Investment Advisory Agreement, see the Prospectus. As at December 31, 1997, the
Fund had net assets of $92,375,383. For the fiscal years ended December 31,
1997, 1996 and 1995, the Fund paid Eaton Vance advisory fees of $441,330,
$460,753 and $480,694, respectively.

The Investment Advisory Agreement with Eaton Vance continues in effect from
year to year for so long as such continuance is approved at least annually (i)
by the vote of a majority of the noninterested Trustees of the Trust cast in
person at a meeting specifically called for the purpose of voting on such
approval and (ii) by the Board of Trustees of the Trust or by vote of a majority
of the outstanding voting securities of the Fund. The Agreement may be
terminated at any time without penalty on sixty (60) days' written notice by the
Board of Trustees of either party or by vote of a majority of the outstanding
voting securities of the Fund, and the Agreement will terminate automatically in
the event of its assignment. The Agreement provides that Eaton Vance may render
services to others. The Agreement also provides that, in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of obligations or
duties under the Agreement on the part of Eaton Vance, Eaton Vance shall not be
liable to the Fund or to any partner of the Fund for any act or omission in the
course of or connected with rendering services or for any losses sustained in
the purchase, holding or sale of any investment, provided that Eaton Vance acted
in good faith and in a manner that it reasonably believed to be in the best
interest of the Fund.

Eaton Vance and EV are both wholly-owned subsidiaries of EVC. BMR is a
wholly-owned subsidiary of Eaton Vance. Eaton Vance and BMR are both
Massachusetts business trusts, and EV is the trustee of Eaton Vance and BMR.
The Directors of EV are M. Dozier Gardner, James B. Hawkes and Benjamin A.
Rowland, Jr. The Directors of EVC consist of the same persons and John G. L.
Cabot, John M. Nelson, Vincent M. O'Reilly and Ralph Z. Sorenson. Mr. Hawkes
is chairman, president and chief executive officer and Mr. Gardner is vice
chairman of EVC, Eaton Vance, BMR and EV. All of the issued and outstanding
shares of Eaton Vance and EV are owned by EVC. All of the issued and
outstanding shares of BMR are owned by Eaton Vance. All shares of the
outstanding Voting Common Stock of EVC are deposited in a Voting Trust the
Voting Trustees of which are Messrs. Gardner, Hawkes and Rowland and Alan R.
Dynner, Thomas E. Faust, Jr., William M. Steul and Wharton P. Whitaker. The
Voting Trustees have unrestricted voting rights for the election of Directors
of EVC. All of the voting trust receipts issued under said Voting Trust are
owned by certain of the officers of Eaton Vance and BMR who are also officers
or officers and Directors of EVC and EV. As of April 30, 1998, Messrs. Gardner
and Hawkes each owned 24% of such voting trust receipts, Messrs. Rowland and
Faust owned 15% and 13%, respectively, and Messrs. Dynner, Steul and Whitaker
owned 8%. Messrs. Dynner, Gardner and Hawkes, who are officers or Trustees of
the Trust, are members of the EVC, Eaton Vance, BMR and EV organizations.
Messrs. Ahern, Fetter, Murphy, O'Connor, Terry and Woodbury, and Ms. Sanders
are officers of the Trust and are also members of the Eaton Vance, BMR and EV
organizations.

Eaton Vance owns all the stock of Northeast Properties, Inc. which is
engaged in real estate investment. EVC owns all the stock of Fulcrum Management,
Inc. and MinVen, Inc., which are engaged in precious metal mining venture
investment and management. EVC owns approximately 21% of the Class A shares of
Lloyd George Management (B.V.I.) Limited, a registered investment adviser. EVC,
Eaton Vance, BMR and EV may also enter into other businesses.

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

CUSTODIAN

IBT acts as custodian for the Fund. IBT has the custody of all cash and
securities of the Fund, maintains the Fund's general ledger and computes the
daily net asset value of shares of the Fund. In such capacity it attends to
details in connection with the sale, exchange, substitution, transfer or other
dealings with the Fund's investments, receives and disburses all funds and
performs various other ministerial duties upon receipt of proper instructions
from the Trust. IBT also provides services in connection with the preparation of
shareholder reports and the electronic filing of such reports with the
Commission.

SERVICES FOR ACCUMULATION -- CLASS A SHARES

The following services are voluntary, involve no extra charge, other than
the sales charge included in the offering price, and may be changed or
discontinued without penalty at any time.

INTENDED QUANTITY INVESTMENT --STATEMENT OF INTENTION. If it is anticipated that
$25,000 or more of Class A shares and shares of the other continuously offered
open-end funds listed under "The Eaton Vance Exchange Privilege" in the
Prospectus will be purchased within a 13-month period, a Statement of Intention
should be signed so that shares may be obtained at the same reduced sales charge
as though the total quantity were invested in one lump sum. Shares held under
Right of Accumulation (see below) as of the date of the Statement will be
included toward the completion of the Statement. The Statement authorizes the
Transfer Agent to hold in escrow sufficient shares (5% of the dollar amount
specified in the Statement) which can be redeemed to make up any difference in
sales charge on the amount intended to be invested and the amount actually
invested. Execution of a Statement does not obligate the Partner to purchase or
the Fund to sell the full amount indicated in the Statement, and should the
amount actually purchased during the 13-month period be more or less than that
indicated on the Statement, price adjustments will be made. For sales charges
and other information on quantity purchases, see "How to Buy Shares" in the
Prospectus. Any investor considering signing a Statement of Intention should
read it carefully.

RIGHT OF ACCUMULATION -- CUMULATIVE QUANTITY DISCOUNT. The applicable sales
charge level for the purchase of Class A shares is calculated by taking the
dollar amount of the current purchase and adding it to the value (calculated at
the maximum current offering price) of the shares the shareholders own in his or
her account(s) in the Fund and shares of other funds exchangeable for Class A
shares and listed under "The Eaton Vance Exchange Privilege" in the Prospectus.
The sales charge on the shares being purchased will then be at the rate
applicable to the aggregate. For sales charges on quantity purchases, see "How
to Buy Shares" in the Prospectus. Shares purchased (i) by an individual, his or
her spouse and their children under the age of twenty-one, and (ii) by a
trustee, guardian or other fiduciary of a single trust estate or a single
fiduciary account, will be combined for the purpose of determining whether a
purchase will qualify for the Right of Accumulation and if qualifying, the
applicable sales charge levels.

For any such discount to be made available, at the time of purchase a
purchaser or an Authorized Firm must provide the Principal Underwriter (in the
case of a purchase made through an Authorized Firm) or the Transfer Agent (in
the case of an investment made by mail) with sufficient information to permit
verification that the purchase order qualifies for the accumulation privilege.
Confirmation of the order is subject to such verification. The Right of
Accumulation privilege may be amended or terminated at any time as to purchases
occurring thereafter.

SERVICE FOR WITHDRAWAL

The Transfer Agent will send to the shareholder regular monthly or quarterly
payments of any permitted amount designated by the shareholder (see "Eaton Vance
Shareholder Services -- Withdrawal Plan" in the Prospectus) based upon the value
of the shares held. The checks will be drawn from share redemptions and hence,
although they are a return of principal, may require the recognition of taxable
gain or loss. Income dividends and capital gains distributions in connection
with withdrawal plan accounts will be credited at net asset value as of the
record date for each distribution. Continued withdrawals in excess of current
income will eventually use up principal, particularly in a period of declining
market prices. A shareholder may not have a withdrawal plan in effect at the
same time he or she has authorized Bank Automated Investing or is otherwise
making regular purchases of Fund shares. The shareholder, the Transfer Agent or
the Principal Underwriter will be able to terminate the withdrawal plan at any
time without penalty.

DETERMINATION OF NET ASSET VALUE

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. Open futures positions on debt securities are valued at the
most recent settlement prices, unless such price does not reflect the fair value
of the contract, in which case the positions will be valued by or at the
direction of the Trustees of the Trust. Other assets are valued at fair market
value using methods determined in good faith by or at the direction of the
Trustees of the Trust. The Fund will be closed for business and will not price
its shares on the following business holidays: New Year's Day, Martin Luther
King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day.

INVESTMENT PERFORMANCE

Average annual total return is determined separately for each Class of the
Fund by multiplying a hypothetical initial purchase order of $1,000 by the
average annual compound rate of return (including capital appreciation/
depreciation, and distributions paid and reinvested) for the stated period and
annualizing the result. The calculation assumes (i) that all distributions are
reinvested at net asset value on the reinvestment dates during the period, (ii)
the deduction of the maximum sales charge from the initial $1,000 purchase
order, (iii) a complete redemption of the investment and, (iv) the deduction of
any CDSC at the end of the period. For information concerning the total return
of the Classes of the Fund, see Appendix A, Appendix B and Appendix C.

Yield is computed separately for each Class of the Fund pursuant to a
standardized formula by dividing net investment income per share earned during a
recent thirty-day period by the maximum offering price (including the maximum
sales charge for Class A and Class I shares) per share on the last day of the
period and annualizing the resulting figure. Net investment income per share is
calculated from the yields to maturity of all debt obligations in the Fund's
portfolio based on the prescribed methods, reduced by accrued Fund and Class
expenses for the period, with the resulting number being divided by the average
daily number of Class shares outstanding and entitled to receive distributions
during the period. This yield figure does not reflect the deduction of any CDSCs
which (if applicable) are imposed on certain redemptions at the rates set forth
under "How to Redeem Shares" in the Prospectus. Yield calculations assume the
current maximum initial sales charge for Class A and Class I shares set forth
under "How to Buy Shares" in the Prospectus. (Actual yield may be affected by
variations in sales charges on investments.) A taxable-equivalent yield is
computed by dividing the tax-exempt yield by 1 minus a stated rate. For the
yield and taxable-equivalent yield of the Classes of the Fund, see Appendix A,
Appendix B and Appendix C.

The Fund's total return may be compared to relevant indices, such as the
Consumer Price Index, the Bond Buyer 25 Revenue Bond Index and the Lehman
Brothers Municipal Bond Index, which may be used in advertisements and in
information furnished to present or prospective shareholders.

Information about the Fund's portfolio allocation and holdings at a
particular date (including ratings assigned by independent ratings services such
as Moody's, S&P and Fitch) may be included in advertisements and other material
furnished to present and prospective shareholders. Such information may be
stated as a percentage of the Fund's bond holdings on such date. Information,
charts and illustrations relating to inflation and the effects of inflation on
the dollar may also be included in advertisements and other material furnished
to present or prospective shareholders.

Comparative information about the yield or distribution rate of the Fund and
about average rates of return on certificates of deposit, bank money market
deposit accounts, money market mutual funds and other short-term investments may
also be included in advertisements, supplemental sales literature or
communications of the Fund. Such information may also compare the taxable
equivalent yield (or value) of the Fund to the after-tax yield (or value) of
such other investment vehicles. A bank certificate of deposit, unlike the Fund's
shares, pays a fixed rate of interest and entitles the depositor to receive the
face amount of the certificate of deposit at maturity. A bank money market
deposit account is a form of savings account which pays a variable rate of
interest. Unlike the Fund's shares, bank certificates of deposit and bank money
market deposit accounts are insured by the Federal Deposit Insurance
Corporation. A money market mutual fund is designed to maintain a constant value
of $1.00 per share and, thus, a money market fund's shares are subject to less
price fluctuation than the Fund's shares.

The average rates of return of money market mutual funds, certificates of
deposit and bank money market deposit accounts referred to in advertisements,
supplemental sales literature or communications of the Fund will be based on
rates published by the Federal Reserve Bank, Donoghue's Money Fund Averages,
RateGram or The Wall Street Journal.

-- cost associated with aging parents;
-- funding a college education (including its actual and estimated
cost);
-- health care expenses (including actual and projected expenses); --
long-term disabilities (including the availability of, and coverage
provided by, disability insurance); and
-- retirement (including the availability of social security benefits,
the tax treatment of such benefits and statistics and other
information relating to maintaining a particular standard of living
and outliving existing assets).

Such information may also address different methods for saving money and the
results of such methods, as well as the benefits of investing in municipal bond
funds. Such information may describe the following advantages of investing in a
municipal bond mutual fund versus individual municipal bonds: regular monthly
income; free reinvestment of distributions; potential for increased income; bond
diversification; liquidity; low-cost easy access; and active management and in
depth credit analysis by investment professionals. In addition, by investing in
a municipal bond fund instead of individual bonds, an investor can avoid dealing
with the complexities of the municipal bond market, while benefitting from the
market access and lower transactions costs enjoyed by municipal bond funds.

The Trust (or Principal Underwriter) may provide information about Eaton
Vance, its affiliates and other investment advisers to the funds in the Eaton
Vance Family of Funds in sales material or advertisements provided to investors
or prospective investors. Such material or advertisements may also provide
information on the use of investment professionals by such investors.

TAXES

Each series of the Trust is treated as a separate entity for federal income
tax purposes. The Fund has elected to be treated and intends to qualify each
year as a regulated investment company ("RIC") under the Code. Accordingly, the
Fund intends to satisfy certain requirements relating to sources of its income
and diversification of its assets and to distribute substantially all of its
ordinary income (including tax-exempt income) and net income (after reduction by
any available capital loss carryforwards) in accordance with the timing
requirements imposed by the Code, so as to maintain its RIC status and avoid
paying any federal income or excise tax.

In order to avoid incurring a federal excise tax obligation, the Code
requires that the Fund distribute (or be deemed to have distributed) by December
31 of each calendar year at least 98% of its ordinary income (not including
tax-exempt income) for such year, at least 98% of its capital gain net income
(which is the excess of its realized capital gains over its realized capital
losses), generally computed on the basis of the one-year period ending on
October 31 of such year, after reduction by (i) any available capital loss
carryforwards, and (ii) 100% of any income from the prior year (as previously
computed) that was not paid out during such year and on which the Fund paid no
federal income tax. Under current law, provided that the Fund qualifies as a RIC
for federal income tax purposes, the Fund should not be liable for any income,
corporate excise or franchise tax in the Commonwealth of Massachusetts.

The Fund's investment in zero coupon and certain other securities will cause
it to realize income prior to the receipt of cash payments with respect to these
securities. Such income will be allocated daily and in order to enable the Fund
to distribute its proportionate share of this income and avoid a tax payable by
it, the Fund may be required to liquidate portfolio securities that it might
otherwise have continued to hold in order to generate cash for subsequent
distribution to Fund shareholders.

Investments in lower-rated or unrated securities may present special tax
issues for the Fund to the extent that the issuers of these securities default
on their obligations pertaining thereto. The Code is not entirely clear
regarding the federal income tax consequences of the Fund's taking certain
positions in connection with ownership of such distressed securities. For
example, the Code is unclear regarding: (i) when the Fund may cease to accrue
interest, original issue discount, or market discount; (ii) when and to what
extent deductions may be taken for bad debts or worthless securities; (iii) how
payments received on obligations in default should be allocated between
principal and income; and (iv) whether exchanges of debt obligations in a
workout context are taxable.

Distributions by the Fund of net tax-exempt interest income that are
properly designated as "exempt-interest dividends" may be treated by
shareholders as interest excludable from gross income under Section 103(a) of
the Code. In order for the Fund to be entitled to pay tax-exempt interest income
as exempt-interest dividends to its shareholders, the Fund must and intends to
satisfy certain requirements, including the requirement that, at the close of
each quarter of its taxable year, at least 50% of the value of its total assets
consists of obligations, the interest on which is exempt from regular federal
income tax under Code Section 103(a). Shareholders of the Fund are required to
report tax-exempt interest on their federal income tax returns.

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 certain types of municipal obligations, and it can be expected that
similar proposals may be introduced in the future. Under federal tax legislation
enacted in 1986, the federal income tax exemption for interest on certain
municipal obligations was eliminated or restricted. As a result of such
legislation, the availability of municipal obligations for investment by the
Fund and the value of the securities held by the Fund may be affected.

In the course of managing its investments, the Fund may realize some
short-term and long-term capital gains (and/or losses) as a result of market
transactions, including sales of portfolio securities and rights to when- issued
securities and options and futures transactions. The Fund may also realize
taxable income from certain short-term taxable obligations, securities loans, a
portion of discount with respect to certain stripped municipal obligations or
their stripped coupons and certain realized gains or income attributable to
accrued market discount. Any distributions by the Fund of its share of such
capital gains (after reduction by any capital loss carryforwards) or taxable
income would be taxable to shareholders of the Fund. However, it is expected
that such amounts, if any, would normally be insubstantial in relation to the
tax exempt interest earned by the Fund. Certain distributions if declared in
October, November or December and paid the following January may be taxed to
shareholders as if received on December 31 of the year in which they are
declared.

The Fund's transactions in options and futures contracts will be subject to
special tax rules that may affect the amount, timing and character of Fund
distributions to shareholders. For example, certain positions held by the Fund
on the last business day of each taxable year will be marked to market (i.e.,
treated as if closed out on such day), and any resulting gain or loss will
generally be treated as 60% long-term and 40% short-term capital gain or loss.
Certain positions held by the Fund that substantially diminish the Fund's risk
of loss with respect to other positions in its portfolio may constitute
"straddles," which are subject to tax rules that may cause deferral of Fund
losses, adjustments in the holding period of portfolio securities and conversion
of short-term into long-term capital losses. The Fund may have to limit its
activities in options and futures contracts in order to enable it to maintain
its RIC status.

Any loss realized upon the sale or exchange of shares of the Fund with a tax
holding period of 6 months or less will be disallowed to the extent the
shareholder has received tax-exempt interest with respect to such shares and, to
the extent the loss exceeds the disallowed amount, will be treated as a
long-term capital loss to the extent of any distribution treated as net
long-term capital gains with respect to such shares. In addition, a loss
realized on a redemption or other disposition of Fund shares may be disallowed
to the extent the shareholder acquired other Fund shares (whether through the
reinvestment of distributions or otherwise) within the period beginning 30 days
before the redemption of the loss shares and ending 30 days after such date.

Amounts paid by the Fund to individuals and certain other shareholders who
have not provided the Fund with their correct taxpayer identification number
("TIN") and certain certifications required by the Internal Revenue Service (the
"IRS"), as well as shareholders with respect to whom the Fund has received
certain information from the IRS or a broker, may be subject to "backup"
withholding of federal income tax arising from the Fund's taxable dividends and
other distributions as well as the proceeds of redemption transactions
(including repurchases and exchanges), at a rate of 31%. An individual's TIN is
generally his or her social security number.

Non-resident alien individuals, foreign corporations and certain other
foreign entities generally will be subject to a U.S. withholding tax at a rate
of 30% on the Fund's distributions from its ordinary income and the excess of
its net short-term capital gain over its net long-term capital loss, unless the
tax is reduced or eliminated by an applicable tax convention. Distributions from
the excess of the Fund's net long-term capital gain over its net short-term
capital loss received by such shareholders and any gain from the sale or other
disposition of shares of the Fund generally will not be subject to U.S. federal
income taxation, provided that non-resident alien status has been certified by
the shareholder. Different U.S. tax consequences may result if: (i) the
shareholder is engaged in a trade or business in the United States; (ii) the
shareholder is present in the United States for a sufficient period of time
during a taxable year to be treated as a U.S. resident, (generally 180 days or
more); or (iii) the shareholder fails to provide any required certifications
regarding its status as a non-resident alien investor. Foreign shareholders
should consult their tax advisers regarding the U.S. and foreign tax
consequences of an investment in the Fund.

The foregoing discussion does not address the special tax rules applicable
to certain classes of investors, such as tax-exempt entities, insurance
companies and financial institutions. Shareholders should consult their own tax
advisers with respect to special tax rules that may apply in their particular
situations, as well as the state, local, and, where applicable, foreign tax
consequences of investing in the Fund.

STATE AND LOCAL TAXES

The exemption of interest income for federal income tax purposes does not
necessarily result in exemption under the income or other tax laws of any state
or local taxing authority. Shareholders of the Fund may be exempt from state and
local taxes on distributions of tax-exempt interest income derived from
obligations of the state and/or municipalities of the state in which they are
resident, but taxable generally on income derived from obligations of other
jurisdictions. The Fund will report annually to shareholders, with respect to
net tax exempt income earned, the percentages representing the proportionate
ratio of such income earned in each state.

Shareholders should consult their own tax advisers with respect to the
state, local and foreign tax consequences of investing in the Fund.

PRINCIPAL UNDERWRITER

The Trust has authorized the Principal Underwriter to act as its agent in
repurchasing shares at the rate of $2.50 for each repurchase transaction handled
by the Principal Underwriter. The Principal Underwriter estimates that the
expenses incurred by it in acting as repurchase agent for the Trust will exceed
the amounts paid therefor. For the amount paid by the Trust to the Principal
Underwriter for acting as repurchase agent, see Appendix C.

CLASS A AND CLASS I SHARES. Class A and Class I shares of the Fund may be
continuously purchased at the public offering price through Authorized Firms
which have agreements with the Principal Underwriter. The Trust reserves the
right to suspend or limit the offering of its shares to the public at any time.
The public offering price is the net asset value next computed after receipt of
the order, plus, where applicable, a variable percentage (sales charge)
depending upon the amount of purchase as indicated by the sales charge table set
forth in the Prospectus (see "How to Buy Shares"). Such table is applicable to
purchases of the Fund alone or in combination with purchases of certain other
funds offered by the Principal Underwriter, made at a single time by (i) an
individual, or an individual, his or her spouse and their children under the age
of twenty-one, purchasing shares for his or their own account, and (ii) a
trustee or other fiduciary purchasing shares for a single trust estate or a
single fiduciary account. The table is also presently applicable to (1)
purchases of Class A shares pursuant to a written Statement of Intention; or (2)
purchases of Class A shares pursuant to the Right of Accumulation and declared
as such at the time of purchase.

Subject to the applicable provisions of the 1940 Act, the Trust may issue
Class A and Class I shares at net asset value in the event that an investment
company (whether a regulated or private investment company or a personal holding
company) is merged or consolidated with or acquired by the Class. Normally no
sales charges will be paid in connection with an exchange of Class A or Class I
shares for the assets of such investment company. Class A and Class I shares may
be sold at net asset value to any officer, director, trustee, general partner or
employee of the Trust or any investment company for which Eaton Vance or BMR
acts as investment adviser, any investment advisory, agency, custodial or trust
account managed or administered by Eaton Vance or by any parent, subsidiary or
other affiliate of Eaton Vance, or any officer, director or employee of any
parent, subsidiary or other affiliate of Eaton Vance. The terms "officer,"
"director," "trustee," "general partner" or "employee" as used in this paragraph
include any such person's spouse and minor children, and also retired officers,
directors, trustees, general partners and employees and their spouses and minor
children. Class A and Class I shares of the Fund may also be sold at net asset
value to registered representatives and employees of Authorized Firms and to the
spouses and children under the age of 21 and beneficial accounts of such
persons.

The Principal Underwriter acts as principal in selling Class A and Class I
shares under a Distribution Agreement with the Trust. The expenses of printing
copies of prospectuses used to offer shares to Authorized Firms or investors and
other selling literature and of advertising are borne by the Principal
Underwriter. The fees and expenses of qualifying and registering and maintaining
qualifications and registrations of the Fund and its shares under federal and
state securities laws are borne by the Fund. The Distribution Agreement is
renewable annually by the Board of Trustees of the Trust (including a majority
of the noninterested Trustees) may be terminated on six months' notice by either
party and is automatically terminated upon assignment. The Principal Underwriter
distributes Class A and Class I shares on a "best efforts" basis under which it
is required to take and pay for only such shares as may be sold. The Principal
Underwriter allows Authorized Firms discounts from the applicable public
offering price which are alike for all Authorized Firms. The Principal
Underwriter may allow, upon notice to all Authorized Firms with whom it has
agreements, discounts up to the full sales charge during the periods specified
in the notice. During periods when the discount includes the full sales charge,
such Authorized Firms may be deemed to be underwriters as that term is defined
in the Securities Act of 1933.

CLASS B SHARES. Under the Distribution Agreement, the Principal Underwriter
acts as principal in selling Class B shares. The expenses of printing copies of
prospectuses used to offer shares to Authorized Firms or investors and other
selling literature and of advertising is borne by the Principal Underwriter. The
fees and expenses of qualifying and registering and maintaining qualifications
and registrations of the Fund and its shares under federal and state securities
laws are borne by the Fund. In addition, Class B makes payments to the Principal
Underwriter pursuant to its Distribution Plan as described in the Prospectus;
the provisions of the plan relating to such payments are included in the
Distribution Agreement. The Distribution Agreement is renewable annually by the
Trust's Board of Trustees (including a majority of the noninterested Trustees
who have no direct or indirect financial interest in the operation of the
Distribution Plan or the Distribution Agreement), may be terminated on sixty
days' notice either by such Trustees or by vote of a majority of the outstanding
Class B shares or on six months' notice by the Principal Underwriter and is
automatically terminated upon assignment. The Principal Underwriter distributes
Class B shares on a "best efforts" basis under which it is required to take and
pay for only such shares as may be sold.

SERVICE PLAN -- CLASS A SHARES

The Trust on behalf of its Class A shares has adopted a Service Plan (the
"Plan") designed to meet the service fee requirements of the sales charge rule
of the National Association of Securities Dealers, Inc. (the "NASD").
(Management believes service fee payments are not distribution expenses governed
by Rule 12b-1 under the 1940 Act, but has chosen to have the Plan approved as if
that Rule were applicable.) The following supplements the discussion of the Plan
contained in the Prospectus.

The Plan continues in effect from year to year, for so long as such
continuance is approved by a vote of both a majority of (i) the noninterested
Trustees who have no direct or indirect financial interest in the operation of
the Plan or any agreements related to it (the "Plan Trustees") and (ii) all of
the Trustees then in office, cast in person at a meeting (or meetings) called
for the purpose of voting on this Plan. The Plan may be terminated any time by
vote of the Plan Trustees or by a vote of a majority of the outstanding Class A
shares of the Fund. The Plan was approved by the Trustees, including the Plan
Trustees, on October 17, 1997.

The Plan requires quarterly Trustee review of a written report of the amount
expended under the Plan and the purposes for which such expenditures were made.
The Plan may not be amended to increase materially the payments described herein
without approval of the affected shareholders of Class A shares and the
Trustees. So long as the Plan is in effect, the selection and nomination of the
noninterested Trustees shall be committed to the discretion of such Trustees.
The Trustees have determined that in their judgment there is a reasonable
likelihood that the Plan will benefit the Fund and its Class A shareholders. The
Fund expects to begin making service fee payments during the quarter ending
March 31, 1999.

DISTRIBUTION PLAN -- CLASS B SHARES

The Trust has adopted a Distribution Plan (the "Plan") on behalf of its
Class B shares designed to meet the requirements of Rule 12b-1 under the 1940
Act and the sales charge rule of the NASD. The purpose of the Plan is to
compensate the Principal Underwriter for its distribution services and
facilities provided with respect to Class B shares.

The Plan provides that the Fund will pay sales commissions and distribution
fees to the Principal Underwriter only after and as a result of the sale of
Class B shares of the Fund. On each sale of Fund shares (excluding reinvestment
of distributions) the Fund will pay the Principal Underwriter amounts
representing (i) sales commissions equal to 5% of the amount received by the
Fund for each share sold and (ii) distribution fees calculated by applying the
rate of 1% over the prime rate then reported in The Wall Street Journal to the
outstanding balance of uncovered distribution charges (as described below) of
the Principal Underwriter.

The amount payable to the Principal Underwriter pursuant to the Plans as
sales commissions and distribution fees with respect to each day will be accrued
on such day as a liability of the respective Class and will accordingly reduce
the net assets of the Class upon such accrual, all in accordance with generally
accepted accounting principles. The amount payable on each day is limited to
1/365 of .75% of the net assets of the Class on such day. The level of net
assets changes each day and depends upon the amount of sales and redemptions of
shares, the changes in the value of the investments held by the Fund, the
expenses of the Class and the Fund accrued and allocated to the Fund and Class
on such day, income on portfolio investments accrued and allocated to the Fund
on such day, and any dividends and distributions declared on Fund shares. The
Trust does not accrue possible future payments as a liability of a Class or
reduce current net assets in respect of unknown amounts which may become payable
under the Plan in the future because the standards for accrual of such a
liability under accounting principles have not been satisfied.

The Plan provides that the Class will receive all CDSCs and will make no
payments to the Principal Underwriter in respect of any day on which there are
no outstanding uncovered distribution charges of the Principal Underwriter.
CDSCs and accrued amounts will be paid by the Trust to the Principal Underwriter
whenever there exist uncovered distribution charges.

In calculating daily the amount of uncovered distribution charges,
distribution charges will include the aggregate amount of sales commissions and
distribution fees theretofore paid plus the aggregate amount of sales
commissions and distribution fees which the Principal Underwriter is entitled to
be paid under the Plans since their inception. Payments theretofore paid or
payable under the Plans by the Trust to the Principal Underwriter and CDSCs
theretofore paid or payable to the Principal Underwriter will be subtracted from
such distribution charges; if the result of such subtraction is positive, a
distribution fee (computed at 1% over the prime rate then reported in The Wall
Street Journal) will be computed on such amount and added thereto, with the
resulting sum constituting the amount of outstanding uncovered distribution
charges with respect to such day. The amount of outstanding uncovered
distribution charges of the Principal Underwriter calculated on any day does not
constitute a liability recorded on the financial statements of the Fund.

The amount of uncovered distribution charges of the Principal Underwriter at
any particular time depends upon various changing factors, including the level
and timing of sales of shares, the nature of such sales (i.e., whether they
result from exchange transactions, reinvestments or from cash sales through
Authorized Firms), the level and timing of redemptions of shares upon which a
CDSC will be imposed, the level and timing of redemptions of shares upon which
no CDSC will be imposed (including redemptions of shares pursuant to the
exchange privilege which result in a reduction of uncovered distribution
charges), changes in the level of the net assets of the Class, and changes in
the interest rate used in the calculation of the distribution fee under the
Plans. Periods with a high level of sales of Class shares accompanied by a low
level of early redemptions of Class shares resulting in the imposition of CDSCs
will tend to increase the time during which there will exist uncovered
distribution charges of the Principal Underwriter.

Currently, payments of sales commissions and distribution fees and of
service fees may equal 1% of average daily net assets per annum. The Trust
believes that the combined rate of all these payments may be higher than the
rate of payments made under distribution plans adopted by other investment
companies pursuant to Rule 12b-1. Although the Principal Underwriter will use
its own funds (which may be borrowed from banks) to pay sales commissions at the
time of sale, it is anticipated that the Eaton Vance organization will profit by
reason of the operation of the Plan through an increase in the Fund's assets
(thereby increasing the advisory fee payable to Eaton Vance by the Fund)
resulting from sale of shares and through the amounts paid to the Principal
Underwriter, including CDSCs, pursuant to the Plan. The Eaton Vance organization
may be considered to have realized a profit under the Plan if at any point in
time the aggregate amounts theretofore received by the Principal Underwriter
pursuant to the Plan and from CDSCs have exceeded the total expenses theretofore
incurred by such organization in distributing Class B shares of the Fund. Total
expenses for this purpose will include an allocable portion of the overhead
costs of such organization and its branch offices, which costs will include
without limitation leasing expense, depreciation of building and equipment,
utilities, communication and postage expense, compensation and benefits of
personnel, travel and promotional expense, stationery and supplies, literature
and sales aids, interest expense, data processing fees, consulting and temporary
help costs, insurance, taxes other than income taxes, legal and auditing expense
and other miscellaneous overhead items. Overhead is calculated and allocated for
such purpose by the Eaton Vance organization in a manner deemed equitable to the
Trust.

The Plan continues in effect from year to year for so long as such
continuance is approved at least annually by the vote of both a majority of (i)
the noninterested Trustees of the Trust who have no direct or indirect financial
interest in the operation of the Plan or any agreements related to the Plan (the
"Rule 12b-1 Trustees") and (ii) all of the Trustees then in office, and the
Distribution Agreement contains a similar provision. The Plan and Distribution
Agreement may be terminated at any time by vote of a majority of the Rule 12b-1
Trustees or by a vote of a majority of the outstanding voting securities of the
applicable Class. The Plan requires quarterly Trustee review of a written report
of the amount expended under the Plan and the purposes for which such
expenditures were made. The Plan may not be amended to increase materially the
payments described therein without approval of the shareholders of the affected
Class and the Trustees. So long as the Plan is in effect, the selection and
nomination of the noninterested Trustees shall be committed to the discretion of
such Trustees. The Plan was approved by the Trustees, including the Rule 12b-1
Trustees, on October 17, 1997.

The Trustees of the Trust believe that the Plan will be a significant factor
in the expected growth of the Fund's assets, and will result in increased
investment flexibility and advantages which have benefitted and will continue to
benefit the Fund and its Class B shareholders. Payments for sales commissions
and distribution fees made to the Principal Underwriter under the Plan will
compensate the Principal Underwriter for its services and expenses in
distributing Class B shares of the Fund. Service fee payments made to the
Principal Underwriter and Authorized Firms under the Plan provide incentives to
provide continuing personal services to investors and the maintenance of
shareholder accounts. By providing incentives to the Principal Underwriter and
Authorized Firms, the Plan is expected to result in the maintenance of, and
possible future growth in, the assets of the Fund. Based on the foregoing and
other relevant factors, the Trustees of the Trust have determined that in their
judgment there is a reasonable likelihood that the Plan will benefit the Fund
and its Class B shareholders.

PORTFOLIO SECURITY TRANSACTIONS

Decisions concerning the execution of Fund portfolio security transactions,
including the selection of the market and the executing firm, are made by Eaton
Vance. Eaton Vance is also responsible for the execution of transactions for all
other accounts managed by it.

Eaton Vance places the portfolio security transactions of the Fund and of
all other accounts managed by it for execution with many firms. Eaton Vance uses
its best efforts to obtain execution of portfolio security transactions at
prices which are advantageous to the Fund and at reasonably competitive spreads
or (when a disclosed commission is being charged) at reasonably competitive
commission rates. In seeking such execution, Eaton Vance will use its best
judgment in evaluating the terms of a transaction, and will give consideration
to various relevant factors, including without limitation the size and type of
the transaction, the nature and character of the market for the security, the
confidentiality, speed and certainty of effective execution required for the
transaction, the general execution and operational capabilities of the executing
firm, the reputation, reliability, experience and financial condition of the
firm, the value and quality of the services rendered by the firm in this and
other transactions, and the reasonableness of the spread or commission, if any.
Municipal obligations purchased and sold by the Fund are generally traded in the
over-the-counter market on a net basis (i.e., without commission) through
broker-dealers and banks acting for their own account rather than as brokers, or
otherwise involve transactions directly with the issuer of such obligations.
Such firms attempt to profit from such transactions by buying at the bid price
and selling at the higher asked price of the market for such obligations, and
the difference between the bid and asked price is customarily referred to as the
spread. The Fund may also purchase municipal obligations from underwriters, the
cost of which may include undisclosed fees and concessions to the underwriters.
While it is anticipated that the Fund will not pay significant brokerage
commissions in connection with such portfolio security transactions, on occasion
it may be necessary or appropriate to purchase or sell a security through a
broker on an agency basis, in which case the Fund will incur a brokerage
commission. Although spreads or commissions on portfolio security transactions
will, in the judgment of Eaton Vance, be reasonable in relation to the value of
the services provided, spreads or commissions exceeding those which another firm
might charge may be paid to firms who were selected to execute transactions on
behalf of the Fund and Eaton Vance's other clients for providing brokerage and
research services to Eaton Vance.

As authorized in Section 28(e) of the Securities Exchange Act of 1934, a
broker or dealer who executes a portfolio transaction on behalf of the Fund may
receive a commission which is in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction if Eaton
Vance determines in good faith that such compensation was reasonable in relation
to the value of the brokerage and research services provided. This determination
may be made on the basis of either that particular transaction or on the basis
of overall responsibilities which Eaton Vance and its affiliates have for
accounts over which they exercise investment discretion. In making any such
determination, Eaton Vance will not attempt to place a specific dollar value on
the brokerage and research services provided or to determine what portion of the
commission should be related to such services. Brokerage and research services
may include advice as to the value of securities, the advisability of investing
in, purchasing, or selling securities, and the availability of securities or
purchasers or sellers of securities; furnishing analyses and reports concerning
issuers, industries, securities, economic factors and trends, portfolio strategy
and the performance of accounts; and effecting securities transactions and
performing functions incidental thereto (such as clearance and settlement); and
the "Research Services" referred to in the next paragraph.

It is a common practice of the investment advisory industry and of the
advisers of investment companies, institutions and other investors to receive
research, statistical and quotation services, data, information and other
services, products and materials which assist such advisers in the performance
of their investment responsibilities ("Research Services") from broker-dealers
which execute portfolio transactions for the clients of such advisers and from
third parties with which such broker-dealers have arrangements. Consistent with
this practice, Eaton Vance receives Research Services from many broker-dealer
firms with which Eaton Vance places the Fund's portfolio transactions and from
third parties with which these broker-dealers have arrangements. These Research
Services, include such matters as general economic and market reviews, industry
and company reviews, evaluations of securities and portfolio strategies and
transactions and recommendations as to the purchase and sale of securities and
other portfolio transactions, financial, industry and trade publications, news
and information services, pricing and quotation equipment and services, and
research oriented computer hardware, software, data bases and services. Any
particular Research Service obtained through a broker-dealer may be used by
Eaton Vance in connection with client accounts other than those accounts which
pay commissions to such broker-dealer. Any such Research Service may be broadly
useful and of value to Eaton Vance in rendering investment advisory services to
all or a significant portion of its clients, or may be relevant and useful for
the management of only one client's account or of a few clients' accounts, or
may be useful for the management of merely a segment of certain clients'
accounts, regardless of whether any such account or accounts paid commissions to
the broker-dealer through which such Research Service was obtained. The advisory
fee paid by the Fund is not reduced because Eaton Vance receives such Research
Services. Eaton Vance evaluates the nature and quality of the various Research
Services obtained through broker-dealer firms and attempts to allocate
sufficient commissions to such firms to ensure the continued receipt of Research
Services which Eaton Vance believes are useful or of value to it in rendering
investment advisory services to its clients.

Subject to the requirement that Eaton Vance shall use its best efforts to
seek to execute Fund portfolio security transactions at advantageous prices and
at reasonably competitive commission rates or spreads, Eaton Vance is authorized
to consider as a factor in the selection of any broker-dealer firm with whom
Fund portfolio orders may be placed the fact that such firm has sold or is
selling Shares of the Fund or of other investment companies sponsored by Eaton
Vance. This policy is not inconsistent with a rule of the National Association
of Securities Dealers, Inc. (the "NASD"), which rule provides that no firm which
is a member of the NASD shall favor or disfavor the distribution of shares of
any particular investment company or group of investment companies on the basis
of brokerage commissions received or expected by such firm from any source.

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

OTHER INFORMATION

On January 1, 1998, the Fund was reorganized as a series of the Trust. Prior
thereto, the Fund was a California Limited Partnership known as Eaton Vance
Municipal Bond Fund L.P. The Fund commenced offering classes of shares on
January 1, 1998, so information herein prior to such date is for the Fund before
it became a multiple-class fund. The Trust is organized as a business trust
under the laws of the Commonwealth of Massachusetts under a Declaration of Trust
dated May 7, 1984, as amended. On July 10, 1995, the Trust changed its name from
Eaton Vance Government Obligations Trust to Eaton Vance Mutual Funds Trust.
Eaton Vance, pursuant to its agreement with the Trust, controls the use of the
words "Eaton Vance" and "EV" in the Fund's name and may use the words "Eaton
Vance" or "EV" in other connections and for other purposes.

As permitted by Massachusetts law, there will normally be no meetings of
shareholders for the purpose of electing Trustees unless and until such time as
less than a majority of the Trustees of the Trust holding office have been
elected by shareholders. In such an event the Trustees then in office will call
a shareholder's meeting for the election of Trustees. Except for the foregoing
circumstances and unless removed by action of the shareholders in accordance
with the Trust's By-laws, the Trustees shall continue to hold office and may
appoint successor Trustees.

The Declaration of Trust may be amended by the Trustees when authorized by
vote of a majority of the outstanding voting securities of the Trust, the
financial interests of which are affected by the amendment. The Trustees may
also amend the Declaration of Trust without the vote or consent of shareholders
to change the name of the Trust or any series or to make such other changes
(such as reclassifying series or classes of shares or restructuring the Trust)
as do not have a materially adverse effect on the financial interests of
shareholders or if they deem it necessary to conform it to applicable federal or
state laws or regulations. The Trust's By-laws provide that the Trust will
indemnify its Trustees and officers against liabilities and expenses incurred in
connection with any litigation or proceeding in which they may be involved
because of their offices with the Trust. However, no indemnification will be
provided to any Trustee or officer for any liability to the Trust or its
shareholders by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office. The
Trust or any series or class thereof may be terminated by: (1) the affirmative
vote of the holders of not less than two-thirds of the shares outstanding and
entitled to vote at any meeting of shareholders of the Trust or the appropriate
series or class thereof, or by an instrument or instruments in writing without a
meeting, consented to by the holders of two-thirds of the shares of the Trust or
a series or class thereof, provided, however, that, if such termination is
recommended by the Trustees, the vote of a majority of the outstanding voting
securities of the Trust or a series or class thereof entitled to vote thereon
shall be sufficient authorization; or (2) by means of an instrument in writing
signed by a majority of the Trustees, to be followed by a written notice to
shareholders stating that a majority of the Trustees has determined that the
continuation of the Trust or a series or a class thereof is not in the best
interest of the Trust, such series or class or of their respective shareholders.

Under Massachusetts law, if certain conditions prevail, shareholders of a
Massachusetts business trust (such as the Trust) could be deemed to have
personal liability for the obligations of the Trust. Numerous investment
companies registered under the 1940 Act have been formed as Massachusetts
business trusts, and management is not aware of an instance where such liability
has been imposed. The Trust's Declaration of Trust contains an express
disclaimer of liability on the part of the Fund shareholders and the Trust's
By-laws provide that the Trust shall assume the defense on behalf of any Fund
shareholders. (The Declaration also contains provisions limiting the liability
of a series or class to that series or class.) Moreover, the Trust's By-laws
also provide for indemnification out of the property of the Fund of any
shareholder held personally liable solely by reason of being or having been a
shareholder for all loss or expense arising from such liability. The assets of
the Fund are readily marketable and will ordinarily substantially exceed its
liabilities. In light of the nature of the Fund's business and the nature of its
assets, management believes that the possibility of the Fund's liability
exceeding its assets, and therefore the shareholder's risk of personal
liability, is extremely remote.

In connection with telephone redemptions and exchanges, the Trust, the
Principal Underwriter and the Transfer Agent will verify personal account
information in order to determine that instructions communicated are genuine.

The right to redeem shares of the Fund can be suspended and the payment of
the redemption price deferred when the Exchange is closed (other than for
customary weekend and holiday closings), during periods when trading on the
Exchange is restricted as determined by the 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.

INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Deloitte & Touche, LLP, 125 Summer Street, Boston, Massachusetts 02110 are
the independent certified public accountants for the Fund, providing audit
services, tax return preparation and assistance and consultation with respect to
the preparation of filings with the Commission.

FINANCIAL STATEMENTS

The audited financial statements of, and the independent auditors' report
for, the Fund appear in the Fund's most recent annual report to shareholders,
which is incorporated by reference into this SAI. A copy of the Fund's annual
report accompanies this SAI.

Registrant incorporates by reference the audited financial information for
Eaton Vance Municipal Bond Fund for the fiscal year ended December 31, 1997, as
previously filed electronically with the Commission (Accession No.
0000950109-98-002580).

<PAGE>
APPENDIX A: CLASS A SHARES

PERFORMANCE INFORMATION

The table below indicates the cumulative and average annual total return on
a hypothetical investment of $1,000. Total return for Class A prior to January
1, 1998 reflects the total return of Class I shares. Class I total return has
not been adjusted to reflect certain expenses (such as service fees). If such
adjustments were made, the performance would be lower. The "Value of Initial
Investment" reflects the deduction of the maximum sales charge of 4.75%. Past
performance is not indicative of future results. Investment return and principal
value will fluctuate; shares, when redeemed, may be worth more or less than
their original cost.

<TABLE>
<CAPTION>
VALUE OF A $1,000 INVESTMENT

TOTAL RETURN TOTAL RETURN
EXCLUDING MAXIMUM INCLUDING MAXIMUM
VALUE OF VALUE OF SALES CHARGE SALES CHARGE
INVESTMENT INVESTMENT INITIAL INVESTMENT --------------------------- ---------------------------
PERIOD DATE INVESTMENT ON 12/31/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- -------------------------- ------------- -------------- -------------- ------------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
10 Years Ended 12/31/97 12/31/87 $952.33 $2,323.71 144.01% 9.33% 132.37% 8.80%
5 Years Ended 12/31/97 12/31/92 $952.16 $1,407.42 47.82% 8.13% 40.74% 7.07%
1 Year Ended 12/31/97 12/31/96 $952.69 $1,087.25 14.13% 14.13% 8.72% 8.72%
- ----------
</TABLE>

See the Tax Equivalent Yield Table in Appendix D to this SAI for information
concerning applicable tax rates and income brackets.

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

As at March 31, 1998, the Trustees and officers of the Trust, as a group,
owned in the aggregate less than 1% of the outstanding Class A shares of the
Fund. As of March 31, 1998, Merrill Lynch, Pierce, Fenner & Smith, Inc.,
Jacksonville, FL, Donaldson Lufkin Jenrette Securities Corporation, Jersey City,
NJ, PaineWebber, Highland Beach, FL, and Prudential Securities, St. George, UT
were the record owners of approximately 26.2%, 16.2%, 27.7% and 9.5%,
respectively, of the outstanding Class A shares, which were held on behalf of
their customers who are the beneficial owners of such shares, and as to which
they had voting power under certain limited circumstances. To the knowledge of
the Trust, no other person owned of record or beneficially 5% or more of the
Fund's outstanding Class A shares as of such date.

<PAGE>

APPENDIX B: CLASS B SHARES

PERFORMANCE INFORMATION

The table below indicates the cumulative and average annual total return on
a hypothetical investment of $1,000. Total return for Class B prior to January
1, 1998 reflects the total return of Class I shares, adjusted to reflect any
applicable sales charge. Class I total return has not been adjusted to reflect
certain other expenses (such as distribution and service fees). If such
adjustments were made, the performance would be lower. Past performance is not
indicative of future results. Investment return and principal value will
fluctuate; shares, when redeemed, may be worth more or less than their original
cost.

<TABLE>
<CAPTION>
VALUE OF A $1,000 INVESTMENT

VALUE OF VALUE OF
INVESTMENT INVESTMENT TOTAL RETURN BEFORE TOTAL RETURN AFTER
BEFORE AFTER DEDUCTING DEDUCTING
DEDUCTING DEDUCTING THE CDSC THE CDSC
INVESTMENT INVESTMENT AMOUNT OF THE CDSC THE CDSC -------------------------- --------------------------
PERIOD DATE INVESTMENT ON 12/31/97 ON 12/31/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- -------------- ------------ ----------- --------------- --------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
10 Years Ended
12/31/97 12/31/87 $1,000 $2,440.46 $2,440.46 144.01% 9.33% 144.01% 9.33%
5 Years Ended
12/31/97 12/31/92 $1,000 $1,478.21 $1,458.71 47.82% 8.13% 45.82% 7.84%
1 Year Ended
12/31/97 12/31/96 $1,000 $1,141.27 $1,091.27 14.13% 14.13% 9.13% 9.13%
- ----------
</TABLE>

See the Tax Equivalent Yield Table in Appendix D to this SAI for information
concerning applicable tax rates and income brackets.

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

As at March 31, 1998, the Trustees and officers of the Trust, as a group,
owned in the aggregate less than 1% of the outstanding Class B shares of the
Fund. As of March 31, 1998, Merrill Lynch, Pierce, Fenner & Smith, Inc.,
Jacksonville, FL 32246 was the record owner of approximately 26.1% of the
outstanding Class B shares, which were held on behalf of its customers who are
the beneficial owners of such shares, and as to which it had voting power under
certain limited circumstances. In addition, as of the same date, the following
shareholders owned of record the percentage of outstanding Class B shares
indicated after their name: Ernestine Boone, TTEE, Wilfred & Ernestine Boone
Trust, Homosassa, FL (21.8%); Dain Rauscher FBO Plath Family Trust, Reno, NV
(5.7%) and Ernst & Co., New York, NY (5.3%). To the knowledge of the Trust, no
other person owned of record or beneficially 5% or more of the Fund's
outstanding Class B shares as of such date.

<PAGE>

APPENDIX C: CLASS I SHARES

FEES AND EXPENSES

PRINCIPAL UNDERWRITER

The total sales charges for sales of Class I shares during the fiscal years
ended December 31, 1997, 1996 and 1995 were $111,456, $44,913 and $83,694,
respectively, of which $3,205, $135 and $5,565, respectively, was received by
the Principal Underwriter. For the fiscal years ended December 31, 1997, 1996
and 1995, Authorized Firms received approximately $108,251, $44,778 and $78,129,
respectively, from the total sales charges.

For the fiscal year ended December 31, 1997, the Fund paid the Principal
Underwriter $490.00 for repurchase transactions handled by the Principal
Underwriter (being $2.50 for each repurchase transaction handled by the
Principal Underwriter).

BROKERAGE COMMISSIONS

During the fiscal years ended December 31, 1997 and 1995, the Fund paid no
brokerage commissions on portfolio transactions. During the fiscal year ended
December 31, 1996, the Fund paid brokerage commissions of $29,650 on portfolio
securities transactions of $271,621,661 to firms which provide some research
services to Eaton Vance or its affiliates (although many of such firms may have
been selected in any particular transaction primarily because of their execution
capabilities).

PERFORMANCE INFORMATION

The table below indicates the cumulative and average annual total return on
a hypothetical investment of $1,000 in a predecessor fund reorganized January 1,
1998 into Class I shares. The "Value of Initial Investment" reflects the
deduction of the maximum sales charge of 4.75%. Past performance is not
indicative of future results. Investment return and principal value will
fluctuate; shares, when redeemed, may be worth more or less than their original
cost.

<TABLE>
<CAPTION>
VALUE OF A $1,000 INVESTMENT

For the thirty-day period ended December 31, 1997, the yield of Class I
shares was 4.84%. The yield required of a taxable security that would produce an
after-tax yield equivalent to 4.84% would be 7.56%, assuming a federal tax rate
of 31%.

See the Tax Equivalent Yield Table in Appendix D to this SAI for information
concerning applicable tax rates and income brackets.

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

As of March 31, 1998, the Trustees and officers of the Trust, as a group,
owned in the aggregate less than 1% of the outstanding Class I shares of the
Fund. To the knowledge of the Trust, no person owned of record or beneficially
5% or more of the Fund's outstanding Class I shares as of such date.

<PAGE>

APPENDIX D: TAX EQUIVALENT YIELD TABLE

The table below gives the approximate yield a taxable security must earn at
various income brackets to produce after-tax yields to those of tax-exempt bonds
yielding from 4% to 7% under the regular federal income tax laws and tax rates
applicable to 1998.

<TABLE>
<CAPTION>
MARGINAL
SINGLE RETURN JOINT RETURN INCOME TAX-EXEMPT YIELD
- --------------------- ------------------- TAX --------------------------------------------------------------------------
(TAXABLE INCOME)* BRACKET 4% 4.5% 5% 5.5% 6% 6.5% 7%
- ------------------------------------------ ----------- --------------------------------------------------------------------------
Equivalent Taxable Yield
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Up to $ 25,350 Up to $ 42,350 15.00% 4.71% 5.29% 5.88% 6.47% 7.06% 7.65% 8.24%
$ 25,351-$ 61,400 $ 42,351-$102,300 28.00 5.56 6.25 6.94 7.64 8.33 9.03 9.72
$ 61,401-$128,100 $102,301-$155,950 31.00 5.80 6.52 7.25 7.97 8.70 9.42 10.14
$128,101-$278,450 $155,951-$278,450 36.00 6.25 7.03 7.81 8.59 9.38 10.16 10.94
Over $278,450 Over $278,450 39.60 6.62 7.45 8.28 9.11 9.93 10.76 11.59
- ------------------------------------------ ----------- --------------------------------------------------------------------------

*Net amount subject to federal personal income tax after deductions and exemptions.
</TABLE>

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 $124,500. The tax brackets
also do not show the effects of phase out of personal exemptions for single
filers with adjusted gross incomes in excess of $124,500 and joint filers with
adjusted gross income in excess of $186,800. The effective tax brackets and
equivalent taxable yields of such taxpayers will be higher than those indicated
above.

Yields shown are for illustration purposes only and are not meant to represent
the Fund's actual yield. No assurance can be given that the Fund will achieve
any specific tax exempt yield. While it is expected that the Portfolio will
invest principally in obligations, the interest from which is exempt from the
regular federal income tax, other income received by the Portfolio and allocated
to the Fund may be taxable. The 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 and do not take into account any tax credits that may be available.

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

<PAGE>

APPENDIX E: RATINGS

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

MUNICIPAL BONDS

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

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

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

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

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

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

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

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

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

ABSENCE OF RATING: Where no rating has been assigned or where a rating has
been suspended or withdrawn, it may be for reasons unrelated to the quality of
the issue.

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

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

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

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

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

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

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

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

MUNICIPAL SHORT-TERM OBLIGATIONS

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

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

STANDARD & POOR'S RATING GROUP

INVESTMENT GRADE

AAA: Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.

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

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

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

SPECULATIVE GRADE

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

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

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

CCC: Debt rated CCC has a currently identifiable vulnerability to default, and
is dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal.

The CCC rating category is also used for debt subordinated to senior debt that
is assigned an actual or implied B or B- rating.

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

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

C1: The rating C1 is reserved for income bonds on which no interest is being
paid.

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

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

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

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

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

MUNICIPAL NOTES

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

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

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

Note rating symbols are as follows:

SP-1: Very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics will be
given a plus(+) designation;

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

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

FITCH/IBCA

INVESTMENT GRADE BOND RATINGS

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

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

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

BBB: Bonds considered to be investment grade and of satisfactory credit quality.
The obligor's ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however, are
more likely to have adverse impact on these bonds, and therefore, impair timely
payment.

HIGH YIELD BOND RATINGS

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

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

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

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

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

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

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

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

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

INVESTMENT GRADE SHORT-TERM RATINGS

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

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

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

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

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

* * * * * * * *

NOTES: Debt which is unrated exposes the investor to risks with respect to
capacity to pay interest or repay principal which are similar to the risks of
lower-rated speculative bonds. The Fund is dependent on the Investment Adviser's
judgment, analysis and experience in the evaluation of such debt.

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

<PAGE>

[GRAPHIC OMITTED] Investing
EATON VANCE for the
- ----------------- 21st
Mutual Funds Century

- -------------------------------------------------------------------------------
EATON VANCE
MUNICIPAL BOND FUND

STATEMENT OF ADDITIONAL INFORMATION

MAY 1, 1998

- -------------------------------------------------------------------------------
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, 200 Clarendon Street, Boston, MA 02116

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

AUDITORS
Deloitte & Touche LLP, 125 Summer Street, Boston, MA 02110

MBSAI
<PAGE>

PART C

OTHER INFORMATION

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS

(a) FINANCIAL STATEMENTS

INCLUDED IN PART A:
FOR THE FUNDS LISTED BELOW ARE "FINANCIAL HIGHLIGHTS" FROM THE DATE
INDICATED TO THE FISCAL YEAR ENDED DECEMBER 31, 1997:
Eaton Vance Cash Management Fund (from January 1, 1987)
Eaton Vance Liquid Assets Fund (from the start of business
May 28, 1987)
Eaton Vance Money Market Fund (from start of business April
5, 1995)
Eaton Vance Tax Free Reserves (from January 1, 1987)
*Eaton Vance Government Obligations Fund (from January 1,
1987)
Eaton Vance Municipal Bond Fund (from January 1, 1988)

INCORPORATED BY REFERENCE INTO PART B ARE THE FINANCIAL STATEMENTS
CONTAINED IN THE ANNUAL REPORTS FOR THE FOLLOWING FUNDS, EACH
DATED DECEMBER 31, 1997 (WHICH WERE PREVIOUSLY FILED
ELECTRONICALLY PURSUANT TO SECTION 30(b)(2) OF THE INVESTMENT
COMPANY ACT OF 1940):
Eaton Vance Cash Management Fund
Eaton Vance Liquid Assets Fund
Eaton Vance Money Market Fund
(Accession No. 0000950109-98-001732)
Eaton Vance Tax Free Reserves
(Accession No. 0000950109-98-001479)
Eaton Vance Government Obligations Fund
(Accession No. 0000950109-98-001696)
Eaton Vance Municipal Bond Fund
(Accession No. 0000950109-98-002580)

The financial statements contained in each Fund's Annual Report
include:
Portfolio of Investments (for Eaton Vance Municipal Bond
Fund and Eaton Vance Tax Free Reserves only)
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
Financial Highlights
Notes to Financial Statements
Report of Independent Accountants
Independent Auditors' Report (Eaton Vance Municipal Bond
Fund only)

ALSO INCORPORATED BY REFERENCE INTO PART B ARE THE FOLLOWING
FINANCIAL STATEMENTS OF CASH MANAGEMENT PORTFOLIO AND GOVERNMENT
OBLIGATIONS PORTFOLIO, WHICH ARE CONTAINED IN THE ANNUAL REPORTS
DATED DECEMBER 31, 1997 FOR THE CORRESPONDING FUNDS:
Portfolio of Investments
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
Supplementary Data
Notes to Financial Statements
Report of Independent Accountants

*Previously known as EV Traditional Government Obligations Fund

(b) EXHIBITS:

(1)(a) Amended and Restated Declaration of Trust dated August 17,
1993 filed as Exhibit (1)(a) to Post-Effective Amendment No.
23 and incorporated herein by reference.

(b) Amendment to Declaration of Trust dated July 10, 1995 filed as
Exhibit (1)(b) to Post- Effective Amendment No. 23 and
incorporated herein by reference.

(c) Amendment to Declaration of Trust dated June 23, 1997 filed as
Exhibit (1)(c) to Post- Effective Amendment No. 38 and
incorporated herein by reference.

(d) Amendment and Restatement of Establishment and Designation of
Series of Shares dated January 6, 1998 filed as Exhibit (1)(d)
to Post-Effective Amendment No. 41 and incorporated herein by
reference.

(2)(a) By-Laws (As Amended November 3, 1986) filed as Exhibit (2)(a)
to Post-Effective Amendment No. 23 and incorporated herein by
reference.

(b) Amendment to By-Laws dated December 13, 1993 filed as Exhibit
(2)(b) to Post-Effective Amendment No. 23 and incorporated
herein by reference.

(3) Not applicable

(4) Not applicable

(5)(a) Investment Advisory Agreement with Eaton Vance Management for
Eaton Vance Short-Term Treasury Fund dated February 4, 1991
filed as Exhibit (5)(a) to Post-Effective Amendment No. 23 and
incorporated herein by reference.

(b) Investment Advisory Agreement with Eaton Vance Management for
Eaton Vance Tax Free Reserves dated August 15, 1995 filed as
Exhibit (5)(b) to Post-Effective Amendment No. 25 and
incorporated herein by reference.

(c) Investment Advisory Agreement with Eaton Vance Management for
Eaton Vance Tax-Managed Emerging Growth Fund dated September
16, 1997 filed as Exhibit No. (5)(c) to Post- Effective
Amendment No. 37 and incorporated herein by reference.

(d) Investment Advisory Agreement with Eaton Vance Management for
Eaton Vance Municipal Bond Fund dated October 17, 1997 filed
as Exhibit No. (5)(d) to Post-Effective Amendment No. 37 and
incorporated herein by reference.

(e) Investment Advisory Agreement with Eaton Vance Management for
Eaton Vance Tax-Managed International Growth Fund dated March
4, 1998 filed as Exhibit (5)(e) to Post-Effective Amendment
No. 42 and incorporated herein by reference.

(6)(a)(1) Distribution Agreement between Eaton Vance Mutual Funds
Trust, on behalf of Eaton Vance Cash Management Fund, and
Eaton Vance Distributors, Inc. effective November 1, 1996
filed as Exhibit No. (6)(a)(4) to Post-Effective Amendment No.
34 and incorporated herein by reference.

(2) Distribution Agreement between Eaton Vance Mutual Funds Trust,
on behalf of Eaton Vance Liquid Assets Fund, and Eaton Vance
Distributors, Inc. effective November 1, 1996 filed as Exhibit
No. (6)(a)(5) to Post-Effective Amendment No. 34 and
incorporated herein by reference.

(3) Distribution Agreement between Eaton Vance Mutual Funds Trust,
on behalf of Eaton Vance Money Market Fund, and Eaton Vance
Distributors, Inc. effective November 1, 1996 filed as Exhibit
No. (6)(a)(6) to Post-Effective Amendment No. 34 and
incorporated herein by reference.

(4) Distribution Agreement between Eaton Vance Mutual Funds Trust,
on behalf of Eaton Vance Tax Free Reserves, and Eaton Vance
Distributors, Inc. effective November 1, 1996 filed as Exhibit
No. (6)(a)(7) to Post-Effective Amendment No. 34 and
incorporated herein by reference.

(5) Distribution Agreement between Eaton Vance Mutual Funds Trust
and Eaton Vance Distributors, Inc. dated June 23, 1997 with
attached Schedules filed as Exhibit (6)(a)(8) to
Post-Effective Amendment No. 38 and incorporated herein by
reference.
(i) Amendment to Distribution Agreement dated October 17,
1997 filed as Exhibit (6)(a)(9) to Post-Effective
Amendment No. 38 and incorporated herein by reference.
(ii) Schedule A-2 to Distribution Agreement dated March 4,
1998, filed as Exhibit (6)(a)(5) (ii) to Post-Effective
Amendment No. 42 and incorporated herein by reference.

(6)(b) Selling Group Agreement between Eaton Vance Distributors, Inc.
and Authorized Dealers filed as Exhibit (6)(b) to the
Registration Statement of Eaton Vance Growth Trust Post-
Effective Amendment No. 61 and incorporated herein by
reference.

(7) The Securities and Exchange Commission has granted the
Registrant an exemptive order that permits the Registrant to
enter into deferred compensation arrangements with its
independent Trustees. See in the Matter of Capital Exchange
Fund, Inc., Release No. IC-20671 (November 1, 1994).

(8)(a) Custodian Agreement with Investors Bank & Trust Company dated
October 15, 1992 filed as Exhibit (8) to Post-Effective
Amendment No. 23 and incorporated herein by reference.

(b) Amendment to Custodian Agreement with Investors Bank & Trust
Company dated October 23, 1995 filed as Exhibit (8)(b) to
Post-Effective Amendment No. 27 and incorporated herein by
reference.

(9)(a) Amended Administrative Services Agreement between Eaton Vance
Mutual Funds Trust (on behalf of certain of its series) and
Eaton Vance Management dated July 31, 1995, with attached
schedules (including Amended Schedule A dated May 7, 1996)
filed as Exhibit (9)(a) to Post-Effective Amendment No. 24 and
incorporated herein by reference.

(1) Amendment to Schedule A dated June 23, 1997 to the Amended
Administrative Services Agreement filed as Exhibit (9)(a)(1)
to Post-Effective Amendment No. 38 and incorporated herein by
reference.

(2) Schedule A-1 to the Amended Administrative Services
Agreement dated March 4, 1998, filed as Exhibit (9)(a)(2) to
Post-Effective Amendment No. 42 and incorporated herein by
reference.

(b) Transfer Agency Agreement dated January 1, 1998 filed as
Exhibit (k)(b) to the Registration Statement on Form N-2 of
Eaton Vance Advisers Senior Floating-Rate Fund (File Nos.
333-46853, 811-08671) (Accession No. 0000950156-98-000172) and
incorporated herein by reference.

(10) Opinion of Internal Counsel filed as Exhibit (10) to
Post-Effective Amendment No. 41 and incorporated herein by
reference.

(11)(a) Consent of Independent Accountants for Eaton Vance
Government Obligations Fund filed herewith.
(11)(b) Consent of Independent Accountants for Eaton Vance Cash
Management Fund, Eaton Vance Liquid Assets Fund and Eaton
Vance Money Market Fund filed herewith.

(11)(c) Consent of Independent Accountants for Eaton Vance Tax Free
Reserves filed herewith.
(11)(d) Independent Auditors' consent for Eaton Vance Municipal Bond
Fund filed herewith.
(12) Not applicable

(13) Not applicable

(14)(a) Vance, Sanders Profit Sharing Retirement Plan for
Self-Employed Persons with Adoption Agreement and instructions
filed as Exhibit No. 14(1) to Post-Effective Amendment #22 on
Form N-1 under the Securities Act of 1933 (File No. 2-28471)
and incorporated herein by reference.

(b) Eaton & Howard, Vance Sanders Defined Contribution Prototype
Plan and Trust with Adoption Agreements (1) Basic
Profit-Sharing Retirement Plan, (2) Basic Money Purchase
Pension Plan, (3) Thrift Plan Qualifying as Profit Sharing
Plan, (4) Thrift Plan Qualifying as Money Purchase Plan, (5)
Integrated Profit Sharing Retirement Plan, (6) Integrated
Money Purchase Pension Plan filed as Exhibit 14(2) to
Post-Effective Amendment No. 22 on Form N-1 under the
Securities Act of 1933 (File No. 2-28471) and incorporated
herein by reference.

(c) Individual Retirement Custodial Account (Form 5305-A) and
Investment Instruction Form filed as Exhibit 14(3) to
Post-Effective Amendment No. 22 on Form N-1 under the
Securities Act of 1933 (File No. 2-28471) and incorporated
herein by reference.

(d) Eaton & Howard, Vance Sanders Variable Pension Prototype Plan
and Trust with Adoption Agreement filed as Exhibit 14(b) to
Post-Effective Amendment No. 22 on Form N-1 under the
Securities Act of 1933 (File No. 2-28471) and incorporated
herein by reference.

(15)(a) Distribution Plan pursuant to Rule 12b-1 under the
Investment Company Act of 1940 for Eaton Vance Short-Term
Treasury Fund dated February 4, 1991 as Amended and Restated
February 25, 1991 filed as Exhibit (15)(b) to Post-Effective
Amendment No. 23 and incorporated herein by reference.

(1) Amendment to Distribution Plan for Eaton Vance Mutual Funds
Trust on behalf of Eaton Vance Short-Term Treasury Fund
adopted June 24, 1996 filed as Exhibit No. (15)(b)(1) to
Post-Effective Amendment No. 34 and incorporated herein by
reference.

(b) Distribution Plan for Eaton Vance Liquid Assets Fund pursuant
to Rule 12b-1 under the Investment Company Act of 1940 dated
June 19, 1995 filed as Exhibit (15)(g) to Post- Effective
Amendment No. 25 and incorporated herein by reference.

(1) Amendment to Distribution Plan for Eaton Vance Mutual Funds
Trust on behalf of Eaton Vance Liquid Assets Fund adopted June
24, 1996 filed as Exhibit No. (15)(g)(1) to Post- Effective
Amendment No. 34 and incorporated herein by reference.

(c) Distribution Plan for Eaton Vance Money Market Fund pursuant
to Rule 12b-1 under the Investment Company Act of 1940 dated
June 19, 1995 filed as Exhibit (15)(h) to Post- Effective
Amendment No. 25 and incorporated herein by reference.

(1) Amendment to Distribution Plan for Eaton Vance Mutual Funds
Trust on behalf of Eaton Vance Money Market Fund adopted June
24, 1996 filed as Exhibit No. (15)(h)(1) to Post- Effective
Amendment No. 34 and incorporated herein by reference.

(d) Eaton Vance Mutual Funds Trust Class A Service Plan adopted
June 23, 1997 with attached Schedules filed as Exhibit (15)(i)
to Post-Effective Amendment No. 38 and incorporated herein by
reference.

(1) Schedule A-2 to Class A Service Plan dated March 4, 1998,
filed as Exhibit (15)(d)(1) to Post-Effective Amendment No. 42
and incorporated herein by reference.

(e) Eaton Vance Mutual Funds Trust Class B Distribution Plan
adopted June 23, 1997 with attached Schedules filed as Exhibit
(15)(j) to Post-Effective Amendment No. 38 and incorporated
herein by reference.

(1) Schedule A-2 to Class B Distribution Plan dated March 4, 1998,
filed as Exhibit (15)(e) (1) to Post-Effective Amendment No.
42 and incorporated herein by reference.

(f) Eaton Vance Mutual Funds Trust Class C Distribution Plan
adopted June 23, 1997 with attached Schedules filed as Exhibit
(15)(k) to Post-Effective Amendment No. 38 and incorporated
herein by reference.

(1) Schedule A-2 to Class C Distribution Plan dated March 4, 1998,
filed as Exhibit (15)(f) (1) to Post-Effective Amendment No.
42 and incorporated herein by reference.

(16) Schedules for Computation of Performance Quotations filed
herewith.

(17)(a) Power of Attorney for Eaton Vance Mutual Funds Trust dated
June 23, 1997, filed as Exhibit No. (17)(a) to Post-Effective
Amendment No. 35 and incorporated herein by reference.

(b) Power of Attorney for Government Obligations Portfolio dated
April 22, 1997 filed as Exhibit (17)(b) to Post-Effective
Amendment No. 36 and incorporated herein by reference.

(c) Power of Attorney for High Income Portfolio dated February 14,
1997 filed as Exhibit (17)(c) to Post-Effective Amendment No.
36 and incorporated herein by reference.

(d) Power of Attorney for Strategic Income Portfolio dated April
22, 1997 filed as Exhibit (17)(d) to Post-Effective Amendment
No. 36 and incorporated herein by reference.

(e) Power of Attorney for Cash Management Portfolio dated April
22, 1997 filed as Exhibit (17)(e) to Post-Effective Amendment
No. 36 and incorporated herein by reference.

(f) Power of Attorney for Tax-Managed Growth Portfolio dated
February 20, 1998 filed as Exhibit (17)(f) to Post-Effective
Amendment No. 41 and incorporated herein by reference.

(18)(a) Multiple Class Plan for Eaton Vance Funds dated June 23, 1997
filed as Exhibit (18) to Post-Effective Amendment No. 37 and
incorporated herein by reference.

(1) Schedule A-4 to Multiple Class Plan dated January 6, 1998
filed as Exhibit (18)(a)(1) to Post-Effective Amendment No. 42
and incorporated herein by reference.

ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT

Not applicable

ITEM 26. NUMBER OF HOLDERS OF SECURITIES

<TABLE>
<CAPTION>
(1) (2)
TITLE OF CLASS NUMBER OF RECORD HOLDERS
Shares of beneficial interest without par value as of March 31, 1998
<S> <C>
Eaton Vance Cash Management Fund 2,385
Eaton Vance Liquid Assets Fund 370
Eaton Vance Money Market Fund 893
Eaton Vance Short-Term Treasury Fund 60
Eaton Vance Tax Free Reserves 173

<CAPTION>
CLASS A CLASS B CLASS C CLASS I
------- ------- ------- -------
<S> <C> <C> <C>
Eaton Vance Government Obligations Fund 8,243 3,273 3,210 --
Eaton Vance High Income Fund -- 16,447 768 --
Eaton Vance Municipal Bond Fund 47 31 -- 1,776
Eaton Vance Strategic Income Fund 16 5,321 433 --
Eaton Vance Tax-Managed Growth Fund 12,583 32,309 10,139 --
Eaton Vance Tax-Managed Emerging Growth Fund 808 1,433 434 --
</TABLE>

ITEM 27. INDEMNIFICATION

Article IV of the Trust's Amended and Restated Declaration of Trust permits
Trustee and officer indemnification by By-law, contract and vote. Article XI of
the By-laws contains indemnification provisions. Registrant's Trustees and
officers are insured under a standard mutual fund errors and omissions insurance
policy covering insured by reason of negligent errors and omissions committed in
their capacities as such.

The distribution agreements of the Trust also provide for reciprocal
indemnity of the Principal Underwriter, on the one hand, and the Trustees and
officers, on the other.

ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER

Reference is made to the information set forth under the captions
"Investment Adviser and Administrator" or "Investment Adviser" in the Statements
of Additional Information which information is incorporated herein by reference.

ITEM 29. PRINCIPAL UNDERWRITERS

(a) Registrant's principal underwriter, Eaton Vance Distributors, Inc., a
wholly-owned subsidiary of Eaton Vance Management, is the principal
underwriter for each of the investment companies named below:

Eaton Vance Growth Trust Eaton Vance Mutual Funds Trust
Eaton Vance Income Fund of Boston Eaton Vance Prime Rate Reserves
Eaton Vance Investment Trust Eaton Vance Special Investment Trust
Eaton Vance Municipals Trust EV Classic Senior Floating-Rate Fund
Eaton Vance Municipals Trust II

(b)

(1) (2) (3)
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICE
BUSINESS ADDRESS* WITH PRINCIPAL UNDERWRITER WITH REGISTRANT
- ------------------ -------------------------- ---------------------
James B. Hawkes Vice President and Director Vice President
and Trustee
William M. Steul Vice President and Director None
Wharton P. Whitaker President and Director None
Albert F. Barbaro Vice President None
Chris Berg Vice President None
Kate Bradshaw Vice President None
David B. Carle Vice President None
Daniel C. Cataldo Vice President None
Raymond Cox Vice President None
Mark P. Doman Vice President None
Alan R. Dynner Vice President Secretary
Richard Finelli Vice President None
Kelly Flynn Vice President None
James Foley Vice President None
Michael A. Foster Vice President None
William M. Gillen Senior Vice President None
Hugh S. Gilmartin Vice President None
Perry D. Hooker Vice President None
Brian Jacobs Senior Vice President None
Thomas P. Luka Vice President None
John Macejka Vice President None
Stephen Marks Vice President None
Timothy D. McCarthy Vice President None
Joseph T. McMenamin Vice President None
Morgan C. Mohrman Senior Vice President None
James A. Naughton Vice President None
Mark D. Nelson Vice President None
Linda D. Newkirk Vice President None
James L. O'Connor Vice President Treasurer
Thomas Otis Secretary and Clerk None
George D. Owen, II Vice President None
Enrique M. Pineda Vice President None
F. Anthony Robinson Vice President None
Jay S. Rosoff Vice President None
Benjamin A. Rowland, Jr. Vice President, Treasurer None
and Director
Stephen M. Rudman Vice President None
John P. Rynne Vice President Assistant Secretary
Kevin Schrader Vice President None
George V.F. Schwab, Jr. Vice President None
Teresa A. Sheehan Vice President None
David C. Sturgis Vice President None
Cornelius J. Sullivan Senior Vice President None
David M. Thill Vice President None
John M. Trotsky Vice President None
Chris Volf Vice President None
Sue Wilder Vice President None
- ----------
*Address is 24 Federal Street, Boston, MA 02110

ITEM 30. LOCATION OF ACCOUNTS AND RECORDS

All applicable accounts, books and documents required to be maintained by
the Registrant by Section 31(a) of the Investment Company Act of 1940 and the
Rules promulgated thereunder are in the possession and custody of the
Registrant's custodian, Investors Bank & Trust Company, 200 Clarendon Street,
16th Floor, Mail Code ADM27, Boston, MA 02116 and its transfer agent, First Data
Investor Services Group, 4400 Computer Drive, Westborough, MA 01581, with the
exception of certain corporate documents and portfolio trading documents which
are in the possession and custody of Eaton Vance Management, 24 Federal Street,
Boston, MA 02110. Certain corporate documents of the High Income Portfolio are
also maintained by IBT Trust Company (Cayman), Ltd., The Bank of Nova Scotia
Building, P.O. Box 501, George Town, Grand Cayman, Cayman Islands, British West
Indies, and certain investor accounts and High Income Portfolio's and the
Registrant's accounting records are held by IBT Fund Services (Canada) Inc., 1
First Canadian Place, Kingstreet West, Suite 2800, P.O. Box 231, Toronto,
Ontario, Canada M5X 1C8. Registrant is informed that all applicable accounts,
books and documents required to be maintained by registered investment advisers
are in the custody and possession of Eaton Vance Management.

ITEM 31. MANAGEMENT SERVICES

Not applicable

ITEM 32. UNDERTAKINGS

The Registrant undertakes to file a Post-Effective Amendment on behalf of
Eaton Vance Tax-Managed International Growth Fund, using financial statements
which need not be certified, within four to six months from the effective date
of Post-Effective Amendment No. 39.

The Registrant undertakes to furnish to each person to whom a prospectus is
delivered a copy of the latest annual report to shareholders, upon request and
without charge.
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Amendment to the Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Post-Effective Amendment to its Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Boston, and the Commonwealth of Massachusetts, on the 27th day of April, 1998.

EATON VANCE MUTUAL FUNDS TRUST

By: /s/ M. DOZIER GARDNER
-------------------------------------
M. DOZIER GARDNER, President

Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.

SIGNATURE TITLE DATE
--------- ----- ----

President, Principal
Executive Officer and
/s/ M. DOZIER GARDNER Trustee April 27, 1998
- -------------------------
M. DOZIER GARDNER

Treasurer and Principal
Financial and Accounting
/s/ JAMES L. O'CONNOR Officer April 27, 1998
- -------------------------
JAMES L. O'CONNOR

/s/ JAMES B. HAWKES Vice President and Trustee April 27, 1998
- -------------------------
JAMES B. HAWKES

DONALD R. DWIGHT* Trustee April 27, 1998
- -------------------------
DONALD R. DWIGHT

SAMUEL L. HAYES, III* Trustee April 27, 1998
- -------------------------
SAMUEL L. HAYES, III

NORTON H. REAMER* Trustee April 27, 1998
- -------------------------
NORTON H. REAMER

JOHN L. THORNDIKE* Trustee April 27, 1998
- -------------------------
JOHN L. THORNDIKE

JACK L. TREYNOR* Trustee April 27, 1998
- -------------------------
JACK L. TREYNOR

*By: /s/ ALAN R. DYNNER
---------------------
ALAN R. DYNNER
As Attorney-in-fact

<PAGE>

SIGNATURES

Cash Management Portfolio has duly caused this Amendment to the Registration
Statement on Form N-1A of Eaton Vance Mutual Funds Trust (File No. 2-90946) to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Boston, and the Commonwealth of Massachusetts, on the 27th day of April,
1998.

CASH MANAGEMENT PORTFOLIO

By: /s/ M. DOZIER GARDNER
-------------------------------------
M. DOZIER GARDNER, President

Pursuant to the Requirements of the Securities Act of 1933, this Post-
Effective Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.

SIGNATURE TITLE DATE
--------- ----- ----
Trustee, President and
Principal Executive
/s/ M. DOZIER GARDNER Officer April 27, 1998
- ----------------------------
M. DOZIER GARDNER

Treasurer and Principal
Financial and Accounting
/s/ JAMES L. O'CONNOR Officer April 27, 1998
- ----------------------------
JAMES L. O'CONNOR

/s/ JAMES B. HAWKES Trustee April 27, 1998
- ----------------------------
JAMES B. HAWKES

DONALD R. DWIGHT* Trustee April 27, 1998
- ----------------------------
DONALD R. DWIGHT

SAMUEL L. HAYES, III* Trustee April 27, 1998
- ----------------------------
SAMUEL L. HAYES, III

NORTON H. REAMER* Trustee April 27, 1998
- ----------------------------
NORTON H. REAMER

JOHN L. THORNDIKE* Trustee April 27, 1998
- ----------------------------
JOHN L. THORNDIKE

JACK L. TREYNOR* Trustee April 27, 1998
- ----------------------------
JACK L. TREYNOR

*By: /s/ ALAN R. DYNNER
------------------------
ALAN R. DYNNER
As Attorney-in-fact

<PAGE>

SIGNATURES

Government Obligations Portfolio has duly caused this Amendment to the
Registration Statement on Form N-1A of Eaton Vance Mutual Funds Trust (File No.
2-90946) to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Boston and Commonwealth of Massachusetts on the 27th
day of April, 1998.

GOVERNMENT OBLIGATIONS PORTFOLIO

By /s/ M. DOZIER GARDNER
-----------------------------------
M. DOZIER GARDNER, President

SIGNATURE TITLE DATE
--------- ----- ----
President, Principal
/s/ M. DOZIER GARDNER Executive Officer April 27, 1998
- ---------------------------- and Trustee
M. DOZIER GARDNER

Treasurer and Principal
Financial and Accounting
/s/ JAMES L. O'CONNOR Officer and Trustee April 27, 1998
- ----------------------------
JAMES L. O'CONNOR

Vice President and
/s/ JAMES B. HAWKES Trustee April 27, 1998
- ----------------------------
JAMES B. HAWKES

DONALD R. DWIGHT* Trustee April 27, 1998
- ----------------------------
DONALD R. DWIGHT

SAMUEL L. HAYES, III* Trustee April 27, 1998
- ----------------------------
SAMUEL L. HAYES, III

NORTON H. REAMER* Trustee April 27, 1998
- ----------------------------
NORTON H. REAMER

JOHN L. THORNDIKE* Trustee April 27, 1998
- ----------------------------
JOHN L. THORNDIKE

JACK L. TREYNOR* Trustee April 27, 1998
- ----------------------------
JACK L. TREYNOR

*By: /s/ ALAN R. DYNNER
- ----------------------------
ALAN R. DYNNER
As Attorney-in-fact

<PAGE>

EXHIBIT INDEX

PAGE IN SEQUENTIAL
EXHIBIT NO. DESCRIPTION NUMBERING SYSTEM

(11)(a) Consent of Independent Accountants for
Eaton Vance Government Obligations Fund.
(11)(b) Consent of Independent Accountants for
Eaton Vance Cash Management Fund, Eaton
Vance Liquid Assets Fund and Eaton Vance
Money Market Fund.
(11)(c) Consent of Independent Accountants for
Eaton Vance Tax Free Reserves.
(11)(d) Independent Auditors' consent for Eaton
Vance Municipal Bond Fund.
(16) Schedules for Computation of Performance
Quotations.

<PAGE>
EXHIBIT (11)(a)

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the use in this Post-Effective Amendment No. 45 to the
Registration Statement of Eaton Vance Mutual Funds Trust (1933 Act File No.
2-90946) on behalf of Eaton Vance Government Obligations Fund of our report
dated February 6, 1998, relating to Eaton Vance Government Obligations Fund
(formerly EV Traditional Government Obligations Fund), and of our report dated
February 6, 1998, relating to Government Obligations Portfolio, which reports
are included in the Annual Report to Shareholders for the year ended December
31, 1997 which is incorporated by reference in the Statement of Additional
Information, which is part of such Registration Statement.

We also consent to the reference to our Firm under the heading "The Fund's
Financial Highlights" in the Prospectus and under the caption "Independent
Accountants" in the Statement of Additional Information of the Registration
Statement.

/s/ COOPERS & LYBRAND L.L.P.
---------------------------------------
COOPERS & LYBRAND L.L.P.

April 24, 1998
Boston, Massachusetts

<PAGE>
EXHIBIT (11)(b)

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the use in this Post-Effective Amendment No. 45 to the
Registration Statement of Eaton Vance Mutual Funds Trust (1933 Act File No.
2-90946) on behalf of Eaton Vance Cash Management Fund, Eaton Vance Liquid
Assets Fund and Eaton Vance Money Market Fund of our report dated February 6,
1998 relating to such Funds, and of our report dated February 6, 1998 relating
to Cash Management Portfolio, which reports are included in the Annual Report to
Shareholders for the year ended December 31, 1997 which is incorporated by
reference in the Statement of Additional Information, which is part of such
Registration Statement.

/s/ COOPERS & LYBRAND L.L.P.
--------------------------------------
COOPERS & LYBRAND L.L.P.

April 24, 1998
Boston, Massachusetts

<PAGE>
EXHIBIT (11)(c)

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the use in this Post-Effective Amendment No. 45 to the
Registration Statement of Eaton Vance Mutual Funds Trust (1933 Act File No.
2-90946) on behalf of Eaton Vance Tax Free Reserves of our report dated February
6, 1998 relating to such Fund, which report is included in the Annual Report to
Shareholders for the year ended December 31, 1997 and incorporated by reference
in the Statement of Additional Information, which is part of such Registration
Statement.

/s/ COOPERS & LYBRAND L.L.P.
--------------------------------------
COOPERS & LYBRAND L.L.P.

April 24, 1998
Boston, Massachusetts

<PAGE>
EXHIBIT 11(D)

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Post-Effective Amendment No. 45 to the
Registration Statement of Eaton Vance Mutual Funds Trust (1933 Act File No.
2-90946) on behalf of Eaton Vance Municipal Bond Fund of our report dated
February 6, 1998 relating to Eaton Vance Municipal Bond Fund (formerly Eaton
Vance Municipal Bond Fund L.P.), which report is included in the Annual Report
to Shareholders for the year ended December 31, 1997 which is incorporated by
reference in the Statement of Additional Information, which is part of such
Registration Statement.

We also consent to the reference to our Firm under the heading "The Fund's
Financial Highlights" in the Prospectus and under the caption "Independent
Certified Public Accountants" in the Statement of Additional Information of the
Registration Statement.

/s/ DELOITTE & TOUCHE LLP
--------------------------------------
DELOITTE & TOUCHE LLP

April 24, 1998
Boston, Massachusetts

<PAGE>

Exhibit 16

EATON VANCE CASH MANAGEMENT FUND
Quotation of Yield

For the seven day period ending December 31, 1997

The value of an account with a beginning balance of one share equal to $1.00
grew to $1.000960329. The difference of $0.000960329 is the Base Period Return.
Dividing the Base Period Return by the beginning value of $1.00 and multiplying
by (365/7) gives a yield of 5.01%.

Adding 1 to the Base Period Return and taking this to the power of (365/7) and
subtracting 1 gives an effective yield of 5.13%.

<PAGE>
EATON VANCE LIQUID ASSETS TRUST
Quotation of Yield

For the seven day period ending December 31, 1997

The value of an account with a beginning balance of one share equal to $1.00
grew to $1.000844339. The difference of $0.000844339 is the Base Period Return.
Dividing the Base Period Return by the beginning value of $1.00 and multiplying
by (365/7) gives a yield of 4.40%.

Adding 1 to the Base Period Return and taking this to the power of (365/7) and
subtracting 1 gives an effective yield of 4.50%.
<PAGE>
EATON VANCE MONEY MARKET FUND
Quotation of Yield

For the seven day period ending December 31, 1997

The value of an account with a beginning balance of one share equal to $1.00
grew to $1.000767126. The difference of $0.000767126 is the Base Period Return.
Dividing the Base Period Return by the beginning value of $1.00 and multiplying
by (365/7) gives a yield of 4.00%.

Adding 1 to the Base Period Return and taking this to the power of (365/7) and
subtracting 1 gives an effective yield of 4.08%.
<PAGE>
EATON VANCE TAX FREE RESERVES
Quotation of Yield

For the seven day period ending December 31, 1997

The value of an account with a beginning balance of one share equal to $1.00
grew to $1.000624666. The difference of $0.000624666 is the Base Period Return.
Dividing the Base Period Return by the beginning value of $1.00 and multiplying
by (365/7) gives a yield of 3.26%.

Adding 1 to the Base Period Return and taking this to the power of (365/7) and
subtracting 1 gives an effective yield of 3.31%.

Taking the current yield of 3.26% and dividing by 1 minus the tax rate (assuming
a tax rate of 31%) gives a taxable equivalent current yield of 4.72% (3.26%/.69)

Dividing the taxable equivalent yield by (365/7), adding 1, taking this to the
power of (365/7) and subtracting 1 gives a taxable equivalent effective yield of
4.84%
<PAGE>

<TABLE>
INVESTMENT PERFORMANCE -- EATON VANCE GOVERNMENT OBLIGATIONS FUND - CLASS A SHARES

VALUE OF A $1,000 INVESTMENT

VALUE OF VALUE OF TOTAL RETURN TOTAL RETURN
INVESTMENT INVESTMENT INITIAL INVESTMENT EXCLUDING SALES CHARGE INCLUDING SALES CHARGE
PERIOD DATE INVESTMENT* ON 12/31/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ------ ---------- ----------- ----------- ---------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>

10 YEARS ENDED
12/31/97 12/31/87 $952.14 $2,079.63 118.43% 8.13% 107.96% 7.60%

5 YEARS ENDED
12/31/97 12/31/92 $952.30 $1,302.36 36.76% 6.46% 30.24% 5.43%

1 YEAR ENDED
12/31/97 12/31/96 $952.72 $1,021.85 7.26% 7.26% 2.18% 2.18%

Average annual total return is calculated using the following formula:

n
P(1+T) = ERV

where P = an initial investment of $1,000 **
T = average annual total return
n = number of years
ERV = ending redeemable value of $1,000 initial investment at the end of the period

Cumulative total return is calculated using the following formula:

T = ( ERV / P ) - 1

where T = cumulative total return including the maximum sales charge
ERV = ending redeemable value of $1,000 initial investment at the end of the period
P = an initial investment of $1,000 ***

* Initial investment less the current maximum sales charge of 4.75%.

** The average annual total return including the sales charge is calculated based on an initial investment of $1,000 less the
maximum initial sales charge of 4.75%.

*** The cumulative total return including the sales charge is calculated based on an initial investment of $1,000 less
maximum initial sales charge of 4.75%.
</TABLE>
<PAGE>

<TABLE>
INVESTMENT PERFORMANCE -- EATON VANCE GOVERNMENT OBLIGATIONS FUND - CLASS B SHARES

The table below indicates the total return (capital changes plus reinvestment of all distributions) on a hypothetical investment of
$1,000 in the Fund covering the 1, 5, and 10 year periods ended December 31, 1997. Total return for the period prior to the
Fund's commencement of operations is for the Portfolio (or its predecessor) adjusted for the Fund's sales charge.

VALUE OF A $1,000 INVESTMENT

VALUE OF VALUE OF
INVESTMENT INVESTMENT TOTAL RETURN TOTAL RETURN
INVESTMENT INVESTMENT BEFORE CDSC AFTER CDSC BEFORE DEDUCTING CDSC AFTER DEDUCTING CDSC
PERIOD DATE ON 12/31/97 ON 12/31/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ------ ---- ----------- ----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>

10 YEARS ENDED
12/31/97 12/31/87 $2,122.83 $2,122.83 112.28% 7.82% 112.28% 7.82%

5 YEARS ENDED
12/31/97 12/31/92 $1,329.13 $1,310.63 32.91% 5.86% 31.06% 5.56%

1 YEAR ENDED
12/31/97 12/31/96 $1,065.89 $1,016.16 6.59% 6.59% 1.62% 1.62%

Average annual total return is calculated using the following formula:

n
P(1+T) = ERV

where P = an initial investment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of $1,000 initial investment at the end of the period after
deducting the CDSC *

Cumulative total return is calculated using the following formula:

T = ( ERV / P ) - 1

where T = cumulative total return including the maximum sales charge
ERV = ending redeemable value of $1,000 initial investment at the end of the period after
deducting the CDSC **
P = an initial investment of $1,000

* The average annual total return not including the CDSC is calculated based on the ending investment value
before deducting the CDSC.

** The cumulative total return not including the CDSC is calculated based on the ending investment value before
deducting the CDSC.
</TABLE>
<PAGE>
<TABLE>
INVESTMENT PERFORMANCE -- EATON VANCE GOVERNMENT OBLIGATIONS FUND - CLASS C SHARES

VALUE OF A $1,000 INVESTMENT

10 YEARS ENDED
12/31/97 12/31/87 $2,097.95 $2,097.95 109.80% 7.69% 109.80% 7.69%

5 YEARS ENDED
12/31/97 12/31/92 $1,313.61 $1,313.61 31.36% 5.61% 31.36% 5.61%

1 YEAR ENDED
12/31/97 12/31/96 $1,061.99 $1,052.06 6.20% 6.20% 5.21% 5.21%

Average annual total return is calculated using the following formula:

n
P(1+T) = ERV

Cumulative total return is calculated using the following formula:

T = ( ERV / P ) - 1

* The average annual total return not including the CDSC is calculated based on the ending investment value
before deducting the CDSC.

** The cumulative total return not including the CDSC is calculated based on the ending investment value before
deducting the CDSC.
</TABLE>
<PAGE>

Exhibit 16

EV TRADITIONAL GOVERNMENT OBLIGATIONS FUND
30-DAY YIELD CALCULATIONS

For the 30 days ended 12/31/97

Interest Income Earned: $1,691,271
Plus Dividend Income Earned:
----------
Equal Gross Income: $1,691,271

Minus Expenses: $463,567
----------
Equal Net Investment Income: $1,227,704

Divided by Average daily number of shares
outstanding that were entitled
to receive dividends: 26,336,957
----------
Equal Net Investment Income Earned Per Share: $0.0466

Net Asset Value Per Share 12/31/97 $11.12

30 Day Yield*: 5.08%

* Yield is calculated on a bond equivalent rate as follows:
6
2[(($0.0316/$9.11)+1)-1]
<PAGE>

Exhibit 16

EV MARATHON GOVERNMENT OBLIGATIONS FUND
30-DAY YIELD CALCULATIONS

For the 30 days ended 12/31/97

Interest Income Earned: $733,122
Plus Dividend Income Earned:
--------
Equal Gross Income: $733,122

Minus Expenses: $277,454
--------
Equal Net Investment Income: $455,668

Divided by Average daily number of shares
outstanding that were entitled
to receive dividends: 13,261,959
----------
Equal Net Investment Income Earned Per Share: $0.0344

Net Asset Value Per Share 12/31/97 $9.12

30 Day Yield*: 4.57%

* Yield is calculated on a bond equivalent rate as follows:
6
2[(($0.0316/$9.11)+1)-1]
<PAGE>

Exhibit 16

EV CLASSIC GOVERNMENT OBLIGATIONS FUND
30-DAY YIELD CALCULATIONS

For the 30 days ended 12/31/97

Interest Income Earned: $220,956
Plus Dividend Income Earned:
--------
Equal Gross Income: $220,956

Minus Expenses: $94,569
--------
Equal Net Investment Income: $126,387

Divided by Average daily number of shares
outstanding that were entitled
to receive dividends: 3,998,004
---------
Equal Net Investment Income Earned Per Share: $0.0316

Net Asset Value Per Share 12/31/97 $9.11

30 Day Yield*: 4.20%

* Yield is calculated on a bond equivalent rate as follows:
6
2[(($0.0316/$9.11)+1)-1]
<PAGE>

<TABLE>
INVESTMENT PERFORMANCE -- EATON VANCE MUNICIPAL BOND FUND - CLASS I SHARES

VALUE OF A $1,000 INVESTMENT

VALUE OF VALUE OF TOTAL RETURN TOTAL RETURN
INVESTMENT INVESTMENT INITIAL INVESTMENT EXCLUDING SALES CHARGE INCLUDING SALES CHARGE
PERIOD DATE INVESTMENT* ON 12/31/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ------ ---- ----------- ----------- ---------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>

10 YEARS ENDED
12/31/97 12/31/87 $952.33 $2,323.71 144.01% 9.33% 132.37% 8.80%

5 YEARS ENDED
12/31/97 12/31/92 $952.16 $1,407.42 47.82% 8.13% 40.74% 7.07%

1 YEAR ENDED
12/31/97 12/31/96 $952.69 $1,087.25 14.13% 14.13% 8.72% 8.72%

Average annual total return is calculated using the following formula:

n
P(1+T) = ERV

where P = an initial investment of $1,000 **
T = average annual total return
n = number of years
ERV = ending redeemable value of $1,000 initial investment at the end of the period

Cumulative total return is calculated using the following formula:

T = ( ERV / P ) - 1

where T = cumulative total return including the maximum sales charge
ERV = ending redeemable value of $1,000 initial investment at the end of the period
P = an initial investment of $1,000 ***

* Initial investment less the current maximum sales charge of 4.75%.

** The average annual total return including the sales charge is calculated based on an initial investment of $1,000 less the
maximum initial sales charge of 4.75%.

*** The cumulative total return including the sales charge is calculated based on an initial investment of $1,000 less
maximum initial sales charge of 4.75%.
</TABLE>
<PAGE>

EATON VANCE MUNICIPAL BOND FUND - CLASS I
30-DAY AND TAX EQUIVALENT YIELD CALCULATIONS

For the 30 days ended 12/31/97:

Interest Income Earned: $430,863
Plus Dividend Income Earned:
--------
Equal Gross Income: $430,863

Minus Expenses: $57,160
--------
Equal Net Investment Income: $373,703

Divided by Average daily number of shares
outstanding that were entitled
to receive dividends: 8,636,966
---------
Equal Net Investment Income Earned Per Share: $0.0433

Net Asset Value Per Share 12/31/97: $10.84

30 Day Yield*: 4.84%

Divided by One minus the Tax Rate of 36%: 0.64
--------
Equal Tax Equivalent Yield **:
7.56% 36.00%

* Yield is calculated on a bond equivalent rate as follows:
6
2[((0.0433/$10.84)+1)-1]

** Assuming a tax rate of 36%

<ARTICLE> 6
<CIK> 0000745463
<NAME> EATON VANCE MUTUAL FUNDS TRUST
<SERIES>
<NUMBER> 1
<NAME> EV Traditional Government Obligations Fund
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 258,917
<INVESTMENTS-AT-VALUE> 278,014
<RECEIVABLES> 162
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 278,176
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,395
<TOTAL-LIABILITIES> 1,395
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 313,942
<SHARES-COMMON-STOCK> 26,073
<SHARES-COMMON-PRIOR> 28,380
<ACCUMULATED-NII-CURRENT> (917)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (55,341)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 19,097
<NET-ASSETS> 276,781
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 23,151
<EXPENSES-NET> 1,177
<NET-INVESTMENT-INCOME> 21,974
<REALIZED-GAINS-CURRENT> (4,427)
<APPREC-INCREASE-CURRENT> 2,763
<NET-CHANGE-FROM-OPS> 20,310
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (21,945)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (174)
<NUMBER-OF-SHARES-SOLD> 8,050
<NUMBER-OF-SHARES-REDEEMED> (11,298)
<SHARES-REINVESTED> 941
<NET-CHANGE-IN-ASSETS> (26,182)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,177
<AVERAGE-NET-ASSETS> 290,151
<PER-SHARE-NAV-BEGIN> 10.680
<PER-SHARE-NII> 0.799
<PER-SHARE-GAIN-APPREC> (0.051)
<PER-SHARE-DIVIDEND> (0.801)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> (0.007)
<PER-SHARE-NAV-END> 10.620
<EXPENSE-RATIO> 1.24
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<CIK> 0000745463
<NAME> EATON VANCE MUTUAL FUNDS TRUST
<SERIES>
<NUMBER> 9
<NAME> Eaton Vance Tax Free Reservers
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 33,989
<INVESTMENTS-AT-VALUE> 33,989
<RECEIVABLES> 506
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 28
<TOTAL-ASSETS> 34,523
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 563
<TOTAL-LIABILITIES> 563
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 33,978
<SHARES-COMMON-STOCK> 33,978
<SHARES-COMMON-PRIOR> 23,371
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (18)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 33,960
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,306
<OTHER-INCOME> 0
<EXPENSES-NET> 301
<NET-INVESTMENT-INCOME> 2,005
<REALIZED-GAINS-CURRENT> (2)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 2,003
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2,005)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 181,218
<NUMBER-OF-SHARES-REDEEMED> (171,789)
<SHARES-REINVESTED> 1,178
<NET-CHANGE-IN-ASSETS> 10,605
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 442
<AVERAGE-NET-ASSETS> 64,261
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.312
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> (0.312)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.53
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 6
<NAME> EATON VANCE MUTUAL FUNDS TRUST
<SERIES>
<NUMBER> 10
<NAME> Eaton Vance Cash Management Fund
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 146,829
<INVESTMENTS-AT-VALUE> 146,829
<RECEIVABLES> 1,206
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 148,035
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,292
<TOTAL-LIABILITIES> 1,292
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 146,743
<SHARES-COMMON-STOCK> 146,743
<SHARES-COMMON-PRIOR> 151,691
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 146,743
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 5,002
<EXPENSES-NET> 185
<NET-INVESTMENT-INCOME> 4,817
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 4,817
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (4,817)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 553,471
<NUMBER-OF-SHARES-REDEEMED> (561,345)
<SHARES-REINVESTED> 2,926
<NET-CHANGE-IN-ASSETS> (4,948)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 185
<AVERAGE-NET-ASSETS> 100,642
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.048
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> (0.048)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.78
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<CIK> 0000745463
<NAME> EATON VANCE MUTUAL FUNDS TRUST
<SERIES>
<NUMBER> 11
<NAME> Eaton Vance Liquid Assets Fund
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 13,148
<INVESTMENTS-AT-VALUE> 13,148
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 13,148
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,292
<TOTAL-LIABILITIES> 1,292
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 13,000
<SHARES-COMMON-STOCK> 13,000
<SHARES-COMMON-PRIOR> 19,910
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 13,000
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 801
<EXPENSES-NET> 122
<NET-INVESTMENT-INCOME> 679
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 679
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (679)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 138
<NUMBER-OF-SHARES-REDEEMED> (7,442)
<SHARES-REINVESTED> 394
<NET-CHANGE-IN-ASSETS> (6,910)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 122
<AVERAGE-NET-ASSETS> 16,154
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> (0.047)
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.047
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.74
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<CIK> 0000745463
<NAME> EATON VANCE MUTUAL FUNDS TRUST
<SERIES>
<NUMBER> 12
<NAME> Eaton Vance Money Market Fund
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 23,762
<INVESTMENTS-AT-VALUE> 23,762
<RECEIVABLES> 152
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 16
<TOTAL-ASSETS> 23,930
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 122
<TOTAL-LIABILITIES> 122
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 23,808
<SHARES-COMMON-STOCK> 23,808
<SHARES-COMMON-PRIOR> 31,249
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 23,808
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 1,382
<EXPENSES-NET> 317
<NET-INVESTMENT-INCOME> 1,065
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 1,065
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,065)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 224,832
<NUMBER-OF-SHARES-REDEEMED> (232,920)
<SHARES-REINVESTED> 647
<NET-CHANGE-IN-ASSETS> (7,441)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 340
<AVERAGE-NET-ASSETS> 27,852
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.038
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> (0.038)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 1.73
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 6
<CIK> 0000919971
<NAME>EV CASH MANAGEMENT PORTFOLIO
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 183746
<INVESTMENTS-AT-VALUE> 183746
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 24
<TOTAL-ASSETS> 183770
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 30
<TOTAL-LIABILITIES> 30
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 183740
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 183740
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 8048
<OTHER-INCOME> 0
<EXPENSES-NET> 862
<NET-INVESTMENT-INCOME> 7186
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> (15106)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (7920)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 725
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 862
<AVERAGE-NET-ASSETS> 144994
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 0.00
<EXPENSE-RATIO> 0.59
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 6
<CIK> 0000912747
<NAME> EV GOVERNMENT OBLIGATIONS PORTFOLIO
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 473171
<INVESTMENTS-AT-VALUE> 494038
<RECEIVABLES> 6998
<ASSETS-OTHER> 73
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 501109
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 68002
<TOTAL-LIABILITIES> 68002
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 412607
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 20500
<NET-ASSETS> 433107
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 38682
<OTHER-INCOME> 0
<EXPENSES-NET> 3657
<NET-INVESTMENT-INCOME> 35025
<REALIZED-GAINS-CURRENT> (6845)
<APPREC-INCREASE-CURRENT> 4415
<NET-CHANGE-FROM-OPS> 32595
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (22416)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3306
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3657
<AVERAGE-NET-ASSETS> 440796
<PER-SHARE-NAV-BEGIN> 0.000
<PER-SHARE-NII> 0.000
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.000
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 0.000
<EXPENSE-RATIO> 0.83
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 6
<CIK> 0000225977
<NAME> EATON VANCE MUNICIPAL BOND FUND L.P.
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 81379
<INVESTMENTS-AT-VALUE> 93379
<RECEIVABLES> 3054
<ASSETS-OTHER> 1
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 96434
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4059
<TOTAL-LIABILITIES> 4059
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 70809
<SHARES-COMMON-STOCK> 8521
<SHARES-COMMON-PRIOR> 8696
<ACCUMULATED-NII-CURRENT> (203)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 9819
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 11951
<NET-ASSETS> 92375
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 5771
<OTHER-INCOME> 0
<EXPENSES-NET> 686
<NET-INVESTMENT-INCOME> 5085
<REALIZED-GAINS-CURRENT> 2037
<APPREC-INCREASE-CURRENT> 4742
<NET-CHANGE-FROM-OPS> 11864
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (5085)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (125)
<NUMBER-OF-SHARES-SOLD> 812
<NUMBER-OF-SHARES-REDEEMED> (1310)
<SHARES-REINVESTED> 264
<NET-CHANGE-IN-ASSETS> 4192
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 441
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 725
<AVERAGE-NET-ASSETS> 89423
<PER-SHARE-NAV-BEGIN> 10.07
<PER-SHARE-NII> 0.584
<PER-SHARE-GAIN-APPREC> 0.785
<PER-SHARE-DIVIDEND> (0.584)
<PER-SHARE-DISTRIBUTIONS> (0.015)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.84
<EXPENSE-RATIO> 0.81
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>