EATON VANCE MUTUAL FUNDS TRUST, 485APOS, 1999-02-26

EATON VANCE MUTUAL FUNDS TRUST
485APOS, 1999-02-26

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<PAGE>

As filed with the Securities and Exchange Commission on February 26, 1999
1933 Act File No. 02-90946
1940 Act File No. 811-4015
- --------------------------------------------------------------------------------
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933 x
POST-EFFECTIVE AMENDMENT NO. 49 x
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940 x
AMENDMENT NO. 52 x

EATON VANCE MUTUAL FUNDS 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 pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[x] on May 3, 1999 pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2)

If appropriate, check the following box:
[ ] this post effective amendment designates a new efective date for a
previously filed post-effective amendment.

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

LOGO
Investing
for the
21st
Century(R)

EATON VANCE
GOVERNMENT OBLIGATIONS
FUND

A mutual fund seeking high current return

Prospectus Dated
May 1, 1999

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR DETERMINED WHETHER THIS PROSPECTUS IS TRUTHFUL OR COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
Information in this prospectus
Page Page
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fund Summary 2 Sales Charges 7
Investment Objective & Principal Policies and Risks 4 Redeeming Shares 8
Management and Organization 5 Shareholder Account Features 8
Valuing Shares 6 Tax Information 10
Purchasing Shares 6 Financial Highlights 11
- -----------------------------------------------------------------------------------------------
</TABLE>
This prospectus contains important information about the Fund and the services
available to shareholders. Please save it for reference.
<PAGE>

FUND SUMMARY

INVESTMENT OBJECTIVE AND PRINCIPAL STRATEGIES. The Fund's investment objective
is to provide a high current return. The Fund invests primarily in
mortgage-backed securities ("MBS") issued, backed or otherwise guaranteed by the
U.S. Government or its agencies or instrumentalities. The Fund also invests in
U.S. Government obligations, including Treasury bills and notes, and obligations
issued or guaranteed by the U.S. Government or its agencies or
instrumentalities. The Fund's shares are not guaranteed by the U.S. Government.
The portfolio manager also uses active management techniques, such as
securities lending, and may borrow from banks for investment purposes.

The Fund currently invests its assets in a separate registered investment
company with the same objective and policies as the Fund.

PRINCIPAL RISK FACTORS. The value of Fund shares may be adversely affected by
fluctuations in interest rates and the prepayment of the mortgage loans
underlying the MBS held by the Fund. Mortgage loans are most likely to be
prepaid in a declining interest rate environment. The portfolio manager
attempts to minimize prepayment risk by acquiring MBS with underlying mortgage
loans that have had stable refinancing rates. The value of Fund shares can also
be adversely affected by the existence of premiums on the price of MBS it
desires to acquire. Payment of this premium reduces the Fund's return.

The Fund engages in active management strategies which involve risks. Although
used primarily to hedge risk, derivative transactions (such as futures contracts
and options thereon, options and short sales-against-the-box) and mortgage
dollar rolls subject the Fund to increased risk of principal loss. Borrowing
for investment purposes will exaggerate any increase or decrease in value of
Fund shares. By lending its securities, the Fund could incur delays in
recovery or loss if the borrower of the securities fails.

The Fund is not a complete investment program and you may lose money by
investing in the Fund. An investment in the Fund is not a deposit in a bank and
is not insured or guaranteed by the Federal Deposit Insurance Corporation or any
other government agency.

PERFORMANCE INFORMATION. The following bar chart and table provide information
about the Fund's performance, including a comparison of the Fund's performance
to the performance of a broad-based, unmanaged market index of
intermediate-maturity, U.S. government bonds. Although past performance is no
guarantee of future results, this performance information demonstrates the risk
that the value of your investment will change from year-to-year. The following
returns are for Class A shares for each calendar year through December 31, 1998
and do not reflect a sales charge. If the sales charge was reflected, the
returns would be lower.

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
</TABLE>

The Fund's highest quarterly total return was______ % for the quarter ended
___________________, 199_, and its lowest quarterly return was _____% for the
quarter ended _____________________, 199_. The year-to-date total return
through the end of the most recent calendar quarter (December 31, 1998 to March
31, 1999) was ______%.

<TABLE>
<CAPTION>
One Five
Average Annual Total Return as of December 31, 1998 Year Years Ten Years
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A Shares
Class B Shares
Class C Shares
Lehman Brothers Intermediate Government Bond Index
</TABLE>

These returns reflect the maximum sales charge for Class A (4.75%) and any
applicable CDSC for Class B and Class C. The Class B and Class C performance
shown above for the period prior to November 1, 1993, is the performance of
Class A shares, adjusted for the sales charge that applies to Class B or Class C
shares (but not adjusted for any other differences in the expenses of the
classes). The Lehman Brothers Intermediate Government Bond Index is a
broad-based, unmanaged market index of intermediate-maturity, U.S. government
bonds. Investors cannot invest directly in an Index.

2
<PAGE>

FUND FEES AND EXPENSES. These tables describe the fees and expenses that you
may pay if you buy and hold shares.

<TABLE>
<CAPTION>
Shareholder Fees
(fees paid directly from your investment Class A Class B Class C
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (as a percentage of offering price) 4.75% None None

Maximum Deferred Sales Charge (as a percentage of the
lower of net asset value at time of purchase or time
of redemption) None 5.00% 1.00%

Sales Charge Imposed on Reinvested Distributions None None None

Exchange Fee None None None
</TABLE>
<TABLE>
<CAPTION>
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets) Class A Class B Class C
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Management Fees 0.00% 0.00% 0.00%

Distribution and Service (12b-1) Fees* 0.00% 0.00% 0.00%

Other Expenses** 0.00% 0.00% 0.00%
----- ----- -----
Total Annual Fund Operating Expenses 0.00% 0.00% 0.00%
</TABLE>

* Long-term shareholders of Class B and Class C shares may pay more than the
economic equivalent of the front-end sales charge permitted by the National
Association of Securities Dealers, Inc.

** Other Expenses for Class A shares includes a service fee of 0.00%.

EXAMPLE. This Example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The Example assumes
that you invest $10,000 in the Fund for the time periods indicated and then
redeem all of your shares at the end of those periods. The Example also assumes
that your investment has a 5% return each year and that the operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:

<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A shares $0 $0 $0 $0
Class B shares $0 $0 $0 $0
Class C shares $0 $0 $0 $0
</TABLE>

You would pay the following expenses if you did not redeem your shares:

<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A shares $0 $0 $0 $0
Class B shares $0 $0 $0 $0
Class C shares $0 $0 $0 $0
</TABLE>
3
<PAGE>

INVESTMENT OBJECTIVE & PRINCIPAL POLICIES AND RISKS

The Fund's investment objective is to provide a high current return. The Fund
currently seeks to meet its objective by investing in Government Obligations
Portfolio (the "Portfolio"), a separate open-end investment company that has the
same objective and policies as the Fund. Although the Fund's objective and
policies may be changed by the Trustees without shareholder approval, the
Trustees intend to submit any material change in the objective to shareholders
for approval.

MORTGAGE-BACKED AND U.S. GOVERNMENT SECURITIES. The Portfolio invests primarily
in mortgage-backed securities ("MBS") that are either issued by the U.S.
Government (or one of its agencies or instrumentalities) or privately issued but
collateralized by mortgages that are insured, guaranteed or otherwise backed by
the U.S. Government, its agencies or instrumentalities. MBS represent
participation interests in pools of adjustable and fixed-rate mortgage loans.
Unlike conventional debt obligations, MBS 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 MBS 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 MBS, notwithstanding any direct or
indirect governmental or agency guarantee. Because faster than expected
prepayments must usually be invested in lower yielding securities, MBS are less
effective than conventional bonds in "locking in" a specified interest rate. To
mitigate prepayment risk, the portfolio manager considers the selection of MBS
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 MBS. 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. The Portfolio may also invest in classes of
collateralized mortgage obligations ("CMOs") and various other MBS. In choosing
among CMO classes, the investment adviser will evaluate the total income
potential of each class and other factors.

The Portfolio also invests in U.S. Government securities, including U.S.
Treasury obligations, which differ in their interest rates, maturities and times
of issuance, and obligations issued or guaranteed by U.S. Government agencies or
instrumentalities ("agency obligations"). Agency obligations may be guaranteed
by the U.S. Government or they may be backed by the right of the issuer to
borrow from the U.S. Treasury, the discretionary authority of the U.S.
Government to purchase the obligations, or 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.
Because the U.S. Government generally is not obligated to provide support to its
instrumentalities, the Portfolio will invest in obligations issued by
instrumentalities only if the investment adviser determines that the credit risk
with respect to such obligations is minimal.

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.

ACTIVE MANAGEMENT TECHNIQUES. The Portfolio may purchase or sell derivative
instruments (which derive their value from another instrument, security, index
or currency) to enhance return, to hedge against fluctuations in securities
prices, interest rates or currency exchange rates, to change the duration of
obligations held by the Portfolio, or as a substitute for the purchase or sale
of securities or currencies. Transactions in derivative instruments may include
the purchase or sale of futures contracts on securities, indices, other
financial instruments or currencies; options on futures contracts; and
exchange-traded and over-the-counter options on securities, indices or
currencies. Transactions in derivative instruments involve a risk of loss due
to unanticipated adverse changes in prices, interest rates, indices, 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 initial investment
therein. In addition, the Portfolio may lose the entire premium paid for
purchased options that expire before they can be profitably exercised. 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.

4
<PAGE>

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, or all or a portion of the interest on
investment of the collateral, if any. 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. 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.

The Portfolio at times may enter into mortgage dollar rolls in which the
Portfolio sells MBS 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
foregoes principal and interest paid on the MBS. The Portfolio may also enter
into contracts to purchase securities at a fixed price in the future. These
"forward commitments" involve a risk of loss if the security purchased declines
before the settlement date. The Portfolio at times may also sell a security
short if it continues to own at least an equal amount of that security (or
certain other securities). No more than 20% of the Portfolio's assets will be
subject to short sales at any one time.

The Portfolio may borrow from banks to increase its investments. Such
borrowings will be unsecured. The Portfolio may borrow 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). 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.

In making investment decisions, the portfolio manager relies of the investment
adviser's research staff and its experience in the MBS market. The portfolio
manager focuses on the expected principal payments on an MBS as well as current
and anticipated market conditions when purchasing and selling MBS. The
portfolio manager may temporarily invest in cash and cash equivalents pending
the making of other investments or as a reserve to service redemptions and
repurchases of its shares. While so invested, the Portfolio may not achieve its
investment objective. 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.

Like most mutual funds, the Fund and 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 Fund 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 Fund and the Portfolio or shareholders. The Year 2000
concern may also adversely impact issuers of securities held by the Portfolio.

MANAGEMENT AND ORGANIZATION

MANAGEMENT. The Portfolio's investment adviser is Boston Management and Research
("BMR"), a subsidiary of Eaton Vance Management, 24 Federal Street, Boston,
Massachusetts 02110. Eaton Vance has been managing assets since 1924 and
managing mutual funds since 1931. Eaton Vance and its subsidiaries currently
manage over $32 billion on behalf of mutual funds, institutional clients and
individuals.

The investment adviser manages the investments of the Portfolio and provides
related office facilities and personnel. Under its investment advisory
agreement with the Portfolio, BMR receives a monthly advisory fee of 0.625%
(equivalent to 0.75% 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 and the fee is computed as follows:

5
<PAGE>

<TABLE>
<CAPTION>
Annual Fee Rate
Average Daily Net Assets for the Month (for each level)
- -----------------------------------------------------------
<S> <C>
$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%
</TABLE>

As at December 31, 1998, the Portfolio had net assets of
$000,000,000. For the fiscal year ended December 31,
1998, the Portfolio paid BMR advisory fees equivalent to
0.00% of its average daily net assets.

Susan Schiff is the portfolio manager of the Portfolio (since it commenced
operations). She has been an employee of Eaton Vance for more than 5 years, and
is a Vice President of Eaton Vance and BMR.

The investment adviser and the Fund and Portfolio have adopted Codes of Ethics
governing personal securities transactions. Under the Codes, Eaton Vance
employees may purchase and sell securities (including securities held by the
Portfolio) subject to certain pre-clearance and reporting requirements and other
procedures.

Eaton Vance serves as administrator of the Fund, providing the Fund with
administrative services and related office facilities. Eaton Vance does not
currently receive a fee for serving as administrator.

ORGANIZATION. The Fund is a series of Eaton Vance Mutual Funds Trust, a
Massachusetts business trust. The Fund does not hold annual shareholder
meetings, but may hold special meetings for matters that require shareholder
approval (like electing or removing trustees, approving management contracts or
changing investment policies that may only be changed with shareholder
approval). Because the Fund invests in the Portfolio, it may be asked to vote
on certain Portfolio matters (like changes in certain Portfolio investment
restrictions). When necessary, the Fund will hold a meeting of its shareholders
to consider the Portfolio matter and then vote its interest in the Portfolio in
proportion to the votes cast by its shareholders. The Fund can withdraw from the
Portfolio at any time.

VALUING SHARES

The Fund values its shares once each day only when the New York Stock Exchange
is open for trading (typically Monday through Friday), as of the close of
regular trading on the Exchange (normally 4:00 p.m. eastern time). The price of
Fund shares is their net asset value, which is derived from Portfolio holdings.
Mortgage-backed "pass-through" securities are valued through the use of a
matrix pricing system which takes into account closing bond valuations, yield
differentials, anticipated prepayments and interest rates.

When purchasing or redeeming Fund shares, your investment dealer must
communicate your order to the principal underwriter by a specific time each day
in order for the purchase price or redemption price to be based on that day's
net asset value per share. It is the investment dealer's responsibility to
transmit orders promptly. The Fund may accept purchase and redemption orders as
of the time of their receipt by certain investment dealers (or their designated
intermediaries).

PURCHASING SHARES

You may purchase Fund shares through your investment dealer or by mailing the
account application form included in this prospectus to the transfer agent (see
back cover for address). Your initial investment must be at least $1,000. The
price of Class A shares is the net asset value plus a sales charge. The price
of Class B and Class C shares is the net asset value; however, you may be
subject to a sales charge (called a "contingent deferred sales charge" or
"CDSC") if you redeem Class B shares within six years of purchase or Class C
shares within one year of purchase. The sales charges are described below.
Your investment dealer can help you decide which class of shares suits your
investment needs.

You may purchase Fund shares for cash or in exchange for securities. Please
call 1-800-225-6265 for information about exchanging securities for Fund shares.
If you purchase shares through an investment dealer (which includes brokers,
dealers and other financial institutions), that dealer may charge you a fee for
executing the purchase for you. The Fund may suspend the sale of its shares at
any time and any purchase order may be refused.

After your initial investment, additional investments of $50 or more may be made
at any time by sending a check payable to the order of the Fund or the transfer
agent directly to the transfer agent (see back cover for address). Please
include your name and account number and the name of the Fund and Class with
each investment.

6
<PAGE>

You may also make automatic investments of $50 or more each month or each
quarter from your bank account. You can establish bank automated investing on
the account application or by calling 1-800-262-1122. The minimum initial
investment amount and Fund policy of redeeming accounts with low account
balances are waived for bank automated investing accounts.

SALES CHARGES

FRONT-END SALES CHARGE. Class A shares are offered at net asset value per share
plus a sales charge that is determined by the amount of your investment. The
current sales charge schedule is:

<TABLE>
<CAPTION>
Sales Charge Sales Charge Dealer Commission
as Percentage of as Percentage of Net as a 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

* No sales charge is payable at the time of purchase on investments of $1
million or more. A CDSC of 1.00% will be imposed on such investments (as
described below) in the event of redemptions within 12 months of purchase.
</TABLE>

The principal underwriter will pay a commission to investment dealers on sales
of $1 million or more as follows: 1.00% on amounts of $1 million or more but
less than $3 million; plus 0.50% on amounts over $3 million but less than $5
million; plus 0.25% on amounts over $5 million. Purchases of $1 million or more
will be aggregated over a 12-month period for purposes of determining the
commission. The principal underwriter may also pay commissions of up to 1.00%
on sales of Class A shares to certain tax-deferred retirement plans.

CONTINGENT DEFERRED SALES CHARGE. Each Class of shares is subject to a CDSC on
certain redemptions. If Class A shares are purchased at net asset value
because the purchase amount is $1 million or more, they are subject to a 1.00%
CDSC if redeemed within 12 months of purchase. Class C shares are subject to a
1.00% CDSC if redeemed within 12 months of purchase. Class B shares are subject
to the following CDSC schedule:

<TABLE>
<CAPTION>
Year of Redemption After Purchase CDSC
- ------------------------------------------------
<S> <C> <C>
First or Second 5% The CDSC is based on the lower of the net asset value at
Third 4% the time of purchase or the time of redemption. Shares
Fourth 3% acquired through the reinvestment of distributions are
Fifth 2% exempt from the CDSC. Redemptions are made first from
Sixth 1% shares that are not subject to a CDSC.
Seventh or following 0%
</TABLE>

REDUCING OR ELIMINATING SALES CHARGES. Front-end sales charges may be reduced
under the right of accumulation or under a statement of intention. Under the
right of accumulation, sales charges are reduced if the current market value of
your current holdings (shares at current offering price), plus your new
purchases, reach $25,000 or more. Class A shares of other Eaton Vance funds
owned by you can be included as part of your current holdings for this purpose.
Under a statement of intention, purchases of $25,000 or more made over a
13-month period are eligible for reduced sales charges. The principal
underwriter may hold 5% of the dollar amount to be purchased in escrow in the
form of shares registered in your name until the statement is satisfied or the
13-month period expires. See the account application for details.

Class A shares are offered at net asset value through certain wrap fee programs
and other programs sponsored by investment dealers that charge fees for their
services. Ask your investment dealer for details. Certain persons associated
with Eaton Vance, other advisers to Eaton Vance funds, the transfer agent, the
custodian and investment dealers may purchase shares at net asset value.

7
<PAGE>

Class B and Class C CDSCs are waived for redemptions pursuant to a Withdrawal
Plan (see "Shareholder Account Features") and in connection with certain
redemptions from tax-sheltered retirement plans. Call 1-800-225-6265 for
details. The Class B CDSC is also waived following the death of all beneficial
owners of shares, but only if the redemption is requested within one year after
death (a death certificate and other applicable documents may be required).

If you redeem shares, you may reinvest at net asset value any portion or all of
the redemption proceeds in the same class of shares of the Fund (or, for Class A
shares, in Class A shares of any other Eaton Vance fund), provided that the
reinvestment occurs within 60 days of the redemption, and the privilege has not
been used more than once in the prior 12 months. Your account will be credited
with any CDSC paid in connection with the redemption. Reinvestment requests
must be in writing. If you reinvest, you will be sold shares at the next
determined net asset value following receipt of your request.

DISTRIBUTION AND SERVICE FEES. Class B and Class C shares have adopted a plan
under Rule 12b-1 that allows the Fund to pay distribution fees for the sale and
distribution of shares (so-called "12b-1 fees"). Class B and Class C shares pay
distribution fees of .75% of average daily net assets annually. Because these
fees are paid from Fund assets on an ongoing basis, they will increase your cost
over time and may cost you more than paying other types of sales charges. All
classes pay service fees for personal and/or account services not exceeding .25%
of average daily net assets annually. Class A and Class B only pay service fees
on shares that have been outstanding for 12 months.

REDEEMING SHARES

You can redeem shares in any of the following ways:

By Mail Send your request to the transfer agent along with any
certificates and stock powers. The request must be
signed exactly as your account is registered and
signature guaranteed. You can obtain a signature
guarantee at certain banks, savings and loan
institutions, credit unions, securities dealers,
securities exchanges, clearing agencies and registered
securities associations. You may be asked to provide
additional documents if your shares are registered in
the name of a corporation, partnership or fiduciary.

By Telephone You can redeem up to $50,000 b y calling the transfer
agent at 1-800-262-1122 on Monday through Friday, 9:00
a.m. to 4:00 p.m. (eastern time). Proceeds of a
telephone redemption can be mailed only to the account
address. Shares held by corporations, trusts or certain
other entities, or subject to fiduciary arrangements,
cannot be redeemed by telephone.
Through an
Investment
Dealer Your investment dealer is responsible for
transmitting the order promptly. A dealer may charge a
fee for this service.

If you redeem shares, your redemption price will be based on the net asset value
per share next computed after the redemption request is received. Your
redemption proceeds will be paid in cash within seven days, reduced by the
amount of any applicable CDSC and any federal income tax required to be
withheld. Payments will be sent by mail unless you complete the Bank Wire
Redemptions section of the account application.

If you recently purchased shares, the proceeds of a redemption will not be sent
until the purchase check (including a certified or cashier's check) has cleared.
If the purchase check has not cleared, redemption proceeds may be delayed up to
15 days from the purchase date. If your account value falls below $750 (other
than due to market decline), you may be asked to either add to your account or
redeem it within 60 days. If you take no action, your account will be redeemed
and the proceeds sent to you.

While redemption proceeds are normally paid in cash, redemptions may be paid by
distributing marketable securities. If you receive securities, you could incur
brokerage or other charges in converting the securities to cash.

SHAREHOLDER ACCOUNT FEATURES

Once you purchase shares, the transfer agent establishes a Lifetime Investing
Account for you. Share certificates are issued only on request.

8
<PAGE>

DISTRIBUTIONS. You may have your Fund distributions paid in one of the
following ways:

* Full Reinvest Option Dividends and capital gains are reinvested in
additional shares. This option will be assigned if
you do not specify an option.

*Partial Reinvest Option Dividends are paid in cash and capital gains are
reinvested in additional shares.

*Cash Option Dividends and capital gains are paid in cash.

*Exchange Option Dividends and/or capital gains are reinvested in
additional shares of another Eaton Vance fund
chosen by you. Before selecting this option, you
must obtain a prospectus of the other fund and
consider its objectives and policies carefully.

INFORMATION FROM THE FUND. From time to time, you may be mailed the following:

* Annual and Semi-Annual Reports, containing performance information and
financial statements.

* Periodic account statements, showing recent activity and total share
balance.

* Form 1099 and tax information needed to prepare your income tax returns.

* Proxy materials, in the event a shareholder vote is required.

* Special notices about significant events affecting your Fund.

WITHDRAWAL PLAN. You may redeem shares on a regular monthly or quarterly basis
by establishing a systematic withdrawal plan. For Class B and Class C shares,
your withdrawals will not be subject to a CDSC if they do not in the aggregate
exceed 12% annually of the account balance at the time the plan is established.
A minimum account size of $5,000 is required to establish a systematic
withdrawal plan. Because purchases of Class A shares are subject to a sales
charge, you should not make withdrawals from your account while you are making
purchases.

TAX-SHELTERED RETIREMENT PLANS. Class A and and Class C shares are available
for purchase in connection with certain tax-sheltered retirement plans. Call
1-800-225-6265 for information. Distributions will be invested in additional
shares for all tax-sheltered retirement plans.

EXCHANGE PRIVILEGE. You may exchange your Fund shares for shares of the same
class of another Eaton Vance fund. Exchanges are generally made at net asset
value. If you have held Class A shares for less than six months, an additional
sales charge may apply if you exchange. If your shares are subject to a CDSC,
the CDSC will continue to apply to your new shares at the same CDSC rate. For
purposes of the CDSC, your shares will continue to age from the date of your
original purchase.

Before exchanging, you should read the prospectus of the new fund carefully. If
you wish to exchange shares, you may write to the transfer agent (address on
back cover) or call 1-800-262-1122. Periodic automatic exchanges are also
available. The exchange privilege may be changed or discontinued at any time.
You will receive 60 days' notice of any material change to the privilege. This
privilege may not be used for "market timing". If an account (or group of
accounts) makes more than two round-trip exchanges within 12 months, it will be
deemed to be market timing. The exchange privilege may be terminated for market
timing accounts.

TELEPHONE TRANSACTIONS. You can redeem or exchange shares by telephone as
described in this prospectus. The transfer agent and the principal underwriter
have procedures in place to authenticate telephone instructions (such as
verifying personal account information). As long as the transfer agent and
principal underwriter follow these procedures, they will not be responsible for
unauthorized telephone transactions and you bear the risk of possible loss
resulting from telephone transactions. You may decline the telephone redemption
option on the account application. Telephone instructions are tape recorded.

"STREET NAME" ACCOUNTS. If your shares are held in a "street name" account at
an investment dealer, that dealer (and not the Fund or its transfer agent) will
perform all recordkeeping, transaction processing and distribution payments.
Because the Fund will have no record of your transactions, you should contact
your investment dealer to purchase, redeem or exchange shares, to make changes
in your account, or to obtain account information. The transfer of shares in a
"street name" account to an account with another investment dealer or to an
account directly with the Fund involves special procedures and you will be
required to obtain historical information about your shares prior to the
transfer. Before establishing a "street name" account with an investment
dealer, you should determine whether that dealer allows reinvestment of
distributions in "street name" accounts.

9
<PAGE>

ACCOUNT QUESTIONS. If you have any questions about your account or the services
available, please call Eaton Vance Shareholder Services at 1-800-225-6265, or
write to the transfer agent (see back cover for address).

TAX INFORMATION

The Fund declares dividends daily. The Fund ordinarily pays distributions each
month for Class A shares on the last day, for Class B shares on the fifteenth
day and for Class C shares on the twenty-second day. If the payment date is not
a business day, the payment will be made on the business day thereafter. Your
account will be credited with dividends beginning on the business day after the
day when the funds used to purchase your Fund shares are collected by the
transfer agent. Distributions of income and net short-term capital gains will
be taxable as ordinary income. Distributions of any long-term capital gains are
taxable as long-term gains.

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

10
<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights are intended to help you understand the Fund's
financial performance for the past five years. Certain information in the table
reflects the financial results for a single Fund share. The total returns in the
table represent the rate an investor would have earned (or lost) on an
investment in the Fund (assuming reinvestment of all distributions and not
taking into account a sales charge). This information has been audited by
__________________, independent accountants. The report of____________________
and the Fund's financial statements are incorporated herein by reference and
included in the annual report, which is available on request. The Fund began
offering three classes of shares on January 1, 1998. Prior to that date, the
Fund offered only Class A shares and Class B and C existed as separate funds.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------
1998 1997 1996 1995 1994
------------------------------------------------------------------------
CLASS A CLASS B CLASS C CLASS A CLASS A CLASS A CLASS A
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value - Beginning of year $ 10.680 $ 11.020 $ 10.420 $ 11.480
-------- -------- -------- --------
Income (loss) from operations
Net investment income $ 0.799 $ 0.810 $ 0.807 $ 0.805
Net realized and unrealized gain (loss) on investments (0.051) (0.340) 0.603 (1.029)
------ ------ ------ -------- -------- -------- ---------
Total income (loss) from operations $ 0.748 $ 0.470 $ 1.410 $ (0.224)
------ ------ ------ -------- -------- -------- --------
Less distributions
From net investment income $ (0.801) $ (0.810) $ (0.810) $ (0.805)
In excess of net investment income(3) -- -- -- (0.031)
From tax return of capital (0.007) -- -- --

Total distributions $ (0.808) $ (0.810) $ (0.810) $ (0.836)
------ ------ ------ -------- -------- -------- --------
Net asset value - End of year $ 10.620 $ 10.680 $ 11.020 $ 10.420
------ ------ ------ -------- -------- -------- --------
Total return(1) 7.26% 4.52% 13.97% (2.03)%

Ratios/Supplemental Data
Net assets, end of year (000's omitted) $276,781 $302,963 $359,738 $386,186
Ratios (as a percentage of average daily net assets):
Expenses(2) 1.24% 1.16% 1.16% 1.17%
Net investment income(2) 7.57% 7.59% 7.53% 7.70%
Portfolio turnover of the Portfolio 20% 11% 19% 35%
</TABLE>

(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 ex-dividend date. Total return is not computed on an
annualized basis.

(2) Includes the Fund's share of the Portfolio's allocated expenses.

(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.

11
<PAGE>

LOGO
Investing
for the
21st
Century(R)

More Information
- --------------------------------------------------------------------------------

About the Fund: More information is available in the statement of
additional information. The statement of additional information is
incorporated by reference into this prospectus. Additional
information about the Portfolio's investments is available in the
annual and semi-annual reports to shareholders. In the annual
report, you will find a discussion of the market conditions and
investment strategies that significantly affected the Fund's
performance during the past year. You may obtain free copies of the
statement of additional information and the shareholder reports by
contacting:

Eaton Vance Distributors, Inc.
24 Federal Street
Boston, MA 02110
1-800-225-6265
website: www.eatonvance.com

You will find and may copy information about the Fund at the
Securities and Exchange Commission's public reference room in
Washington, DC (call 1-800-SEC-0330 for information); on the SEC's
Internet site (http://www.sec.gov); or upon payment of copying fees
by writing to the SEC's public reference room in Washington, DC
20549-6009.

About Shareholder Accounts: You can obtain more information from
Eaton Vance Share- holder Services (1-800-225-6265). If you own
shares and would like to add to, redeem or change your account,
please write or call the transfer agent:
- --------------------------------------------------------------------------------

First Data Investor Services Group
P.O. Box 5123
Westborough, MA 01581-5123
1-800-262-1122

SEC File No. 811-4015 GOP
<PAGE>

{LOGO} Investing
EATON VANCE for the
Mutual Funds 21st
Century (R)

Eaton Vance Cash Management Fund
Eaton Vance Liquid Assets Fund
Eaton Vance Money Market Fund
Diversified money market mutual funds

Eaton Vance Tax Free Reserves
A diversified tax-exempt money market mutual fund

Prospectus Dated
MAY 1, 1999

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR DETERMINED WHETHER THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

Information in this prospectus
Page Page
- --------------------------------------------------------------------------------
Fund Summaries 2 Sales Charges 7
Investment Objectives & Redeeming Shares 8
Principal Policies and Risks 5 Shareholder Account
Management and Organization 6 Features 9
Valuing Shares 7 Tax Information 10
Purchasing Shares 7 Financial Highlights 11
- --------------------------------------------------------------------------------

This prospectus contains important information about the Funds and the services
available to shareholders. Please save it for reference.

<PAGE>
FUND SUMMARIES

Eaton Vance Cash Management Fund *Eaton Vance Liquid Assets Fund
*Eaton Vance Money Market Fund

Investment Objective and Principal Strategies. Each Fund's investment objective
is to provide as high a rate of income as may be consistent with preservation of
capital and maintenance of liquidity.

The Funds currently invest their assets in a separate diversified registered
investment company with the same objective and policies. Permissible investments
include various types of high quality, U.S. dollar denominated money market
instruments of domestic and foreign issuers, such as securities issued or
guaranteed by the U. S. government or its agencies and instrumentalities, and
high-grade, short-term obligations issued by banks and corporations.

Principal Risk Factors. Each Fund's yield will change as the short-term
securities in its portfolio mature and the proceeds are reinvested in securities
with different interest rates.

In addition, certain events could reduce a Fund's income level and/or share
price, such as: a sharp rise in prevailing short-term interest rates; adverse
developments in the banking industry, which issues or guarantees many money
market securities; economic, political or other developments affecting foreign
issuers of money market securities; changes in the credit quality of issuers;
and default by a counterparty in a portfolio transaction.

An investment in a Fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although each Fund seeks
to preserve the value of an investment at $1.00 per share, it is possible to
lose money by investing in a Fund.

Performance Information. The following bar charts provide information about a
Fund's performance. Although past performance is no guarantee of future results,
this performance information demonstrates the risk that the value of your
investment will change. The following returns are for each calendar year through
December 31, 1998 and do not reflect sales charges. If the sales charge was
reflected, the returns would be lower.

Cash Management Fund
Annual Total Returns

% % % % % % % % % %
- --------------------------------------------------------------------------------
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

The Fund's highest quarterly total return was ____% for the quarter ended
_________, 19__, and its lowest quarterly return was _____% for the quarter
ended ________, 19___. The year-to-date total return through the end of the most
recent calendar quarter (December 31, 1998 to March 31, 1999) was ____%. The
Fund's annualized and current effective yields for the seven-day period ended
December 31, 1998 were % and %, respectively.

Liquid Assets Fund
Annual Total Returns

% % % % % % % % % %
- --------------------------------------------------------------------------------
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

Money Market Fund
Annual Total Returns

% % %
1996 1997 1998

2
<PAGE>
Fund Fees and Expenses. These tables describe the fees and expenses that you may
pay if you buy and hold shares.

Shareholder Fees Liquid Money
(fees paid directly Assets Market
from your investment) Cash Fund Fund Fund
- --------------------------------------------------------------------------------
Maximum Sales Charge
(as a percentage of
offering price) None None None

Maximum Deferred Sales
Charge (as a percentage
of the lower of net
asset value at time of
purchase or time of
redemption) None 5.00% 5.00%

Sales Charge Imposed on
Reinvested Distributions None None None

Exchange Fee None None None

Annual Fund Operating
Expenses (expenses that Liquid Money
are deducted from Fund Assets Market
assets) Cash Fund Fund Fund
- --------------------------------------------------------------------------------
Management Fees 0.00% 0.00% 0.00%

Distribution and Service
(12b-1) Fees** None 0.00% 0.00%

Other Expenses 0.00% 0.00% 0.00%
----- ----- -----
Total Operating Expenses 0.00% 0.00% 0.00%

**Long-term shareholders of Money Market Fund shares may pay more than the
economic equivalent of the front-end sales charge permitted by the National
Association of Securities Dealers, Inc.

Example. This Example is intended to help you compare the cost of investing in a
Fund with the cost of investing in other mutual funds. The Example assumes that
you invest $10,000 in a Fund for the time periods indicated and then redeem all
of your shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the operating expenses remain the
same. Although your actual costs may be higher or lower, based on these
assumptions your costs would be:

1 Year 3 Years 5 Years 10 Years
- -------------------------------------------------------------------------------
Cash Fund
Liquid Assets Fund $ $ $ $
Money Market Fund $ $ $ $

You would pay the following expenses if you did not redeem your shares:

1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
Cash Fund $ $ $ $
Liquid Assets Fund $ $ $ $
Money Market Fund $ $ $ $

3
<PAGE>
Eaton Vance Tax Free Reserves

Investment Objective and Principal Strategies. The Fund's investment objective
is to provide a means whereby investors may earn as high a rate of income exempt
from regular federal income tax as may be consisitent with the preservation of
capital and maintenance of liquidity.

The Fund seeks to acheive 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.

Principal Risk Factors. The Fund's yield will change as the short-term
securities it holds mature and the proceeds are reinvested in securities with
different interest rates.

In addition, certain events could reduce income or share price, such as: a sharp
rise in prevailing short-term interest rates; adverse developments affecting
municipal issuers, including tax, legislative or political initiatives; changes
in the credit quality of issuers or the providers of credit support; and default
by a counterparty to portfolio transactions.

An investment in the Fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the Fund seeks to
preserve the value of an investment at $1.00 per share, it is possible to lose
money by investing in the Fund.

Performance Information. The following bar chart and table provide information
about the Fund's performance. Although past performance is no guarantee of
future results, this performance information demonstrates the risk that the
value of your investment will change. The following returns are for each
calendar year through December 31, 1998.

Annual Total Returns
Tax Free Reserves

% % % % % % % % % %
- --------------------------------------------------------------------------------
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

Fund Fees and Expenses. These tables describe the fees and expenses that you may
pay if you buy and hold shares.

Shareholder Fees Tax Free
(fees paid directly from your investment) Reserves
- --------------------------------------------------------------------------------
Maximum Sales Charge (as a percentage of offering price) None

Maximum Deferred Sales Charge (as a percentage of the
lower of net asset value at time of purchase or time
of redemption) None

Sales Charge Imposed on Reinvested Distributions None

Exchange Fee None

Annual Fund Operating Expenses Tax Free
(expenses that are deducted from Fund assets) Reserves
- --------------------------------------------------------------------------------
Management Fees 0.00%

Distribution and Service (12b-1) Fees 0.00%

Other Expenses 0.00%
-----
Total Operating Expenses 0.00%

<PAGE>
Example. This Example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The Example assumes
that you invest $10,000 in the Fund for the time periods indicated and then
redeem all of your shares at the end of those periods. The Example also assumes
that your investment has a 5% return each year and that the operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:

1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
Tax Free Reserves $ $ $ $

You would pay the following expenses if you did not redeem your shares:

1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
Tax Free Reserves $ $ $ $

4
<PAGE>
INVESTMENT OBJECTIVE & PRINCIPAL POLICIES AND RISKS

Cash Management Fund, Liquid Assets Fund and Money Market Fund. Each Fund's
investment objective is to provide as high a rate of income as may be consistent
with preservation of capital and maintenance of liquidity. Each Fund currently
seeks to meet its investment objective by investing in Cash Management
Portfolio, a separate open-end investment company that has the same objective
and policies. Each Fund's investment objective and policies may be changed by
the Trustees without shareholder approval; as a matter of policy, however, 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 Portfolio invests in high quality, U.S. dollar-denominated money market
instruments of domestic and foreign issuers, including U.S. Government
securities and prime commercial paper. When appropriate, the portfolio may also
invest in high-grade short-term obligations other than prime commercial paper as
well as certificates of deposit, bankers' acceptances and other short-term
securities issued by domestic or foreign banks or their subsidiaries or
branches. 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 unfavorable political and economic
developments, possible withholding taxes, seizure of foreign deposits, interest
limitations or other governmental restrictions which might affect payment of
principal and 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. 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. The Fund's investment objective is 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 Fund's investment objective and policies may be changed by the
Trustees without shareholder approval; as a matter of policy, however, the
Trustees would not materially change the investment objective of a Fund without
shareholder approval. The 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 Fund seeks to achieve its objective by investing in a diversified portfolio
of high quality obligations, including bonds, notes and commercial paper, issued
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 form 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.

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 a shareholder
vote, the Fund may not purchase any securities which would cause more than 25%
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, 1998, the Fund had % of its net assets invested in
such obligations. Distributions to corporate investors of certain interest
income may also be subject to the AMT.

Common Investment Practices. 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 investment adviser to be of comparable quality.
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.

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

5
<PAGE>
money market conditions and trends. The Portfolio and Tax Free Reserves may also
invest to take advantage of what their investment 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.

The Portfolio and Tax Free Reserves may purchase securities on a when-issued
basis and for future delivery by means of "forward commitments". The Portfolio
may enter into repurchase agreements. These transactions must be fully
collateralized at all times, but involve some risk if the counterparty should
default on its obligations or if the Portfolio is delayed or prevented from
recovering the collateral. 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.

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 and the Portfolio or shareholders. The Year 2000
concern may also adversely impact issuers of securities held by a Fund or the
Portfolio.

MANAGEMENT AND ORGANIZATION

Management. The Portfolio's investment adviser is Boston Management and Research
("BMR"), a subsidiary of Eaton Vance Management, 24 Federal Street, Boston,
Massachusetts 02110. Eaton Vance has been managing assets since 1924 and
managing mutual funds since 1931. Eaton Vance and its subsidiaries currently
manage over $33 billion on behalf of mutual funds, institutional clients and
individuals.

BMR manages the investments of the Portfolio and provides related office
facilities and personnel. Under its investment advisory agreement with Cash
Management Portfolio, BMR receives a monthly advisory fee of 1/24 of 1%
(equivalent to 0.50% annually) of the average daily net assets of Cash
Management Portfolio. For the fiscal year ended December 31, 1998, the Cash
Management Portfolio paid BMR advisory fees equivalent to ____% of its average
daily net assets.

Eaton Vance manages the investments of Tax Free Reserves and provides related
office facilities and personnel. Under its investment advisory agreement with
the Trust on behalf of Tax Free Reserves, Eaton Vance receives a monthly
advisory fee of 1/24 of 1% (equivalent to 0.50% annually) of the average daily
net assets of Cash Management Portfolio. For the fiscal year ended December 31,
1998, the Tax Free Reserves paid BMR advisory fees equivalent to .50% of its
average daily net assets.

Michael B. Terry is the portfolio manager of the Cash Management Portfolio
(since it commenced operations). He also manages other Eaton Vance portfolios,
has been an employee of Eaton Vance for more than 5 years and is a Vice
President of Eaton Vance and BMR.

William H. Ahern, Jr. is the portfolio manager of Tax Free Reserves (since
1989). He also manages other Eaton Vance protfolios, has been an employee of
Eaton Vance for more than 5 years and is a Vice President of Eaton Vance and
BMR.

The investment advisers and Tax Free Reserves and the Portfolio have adopted
Codes of Ethics governing personal securities transactions. Under the Codes,
Eaton Vance employees may purchase and sell securities (including securities
held by Tax Free Reserves and the Portfolio) subject to certain pre-clearance
and reporting requirements and other procedures.

Eaton Vance serves as administrator of the Cash Liquid Assets and Maney Market
Funds, providing the Funds with administrative services and related office
facilities. Eaton Vance does not currently receive a fee for serving as
administrator.

Organization. Each Fund is a series of Eaton Vance Mutual Funds Trust, a
Massachusetts business trust. The Portfolio and Tax Free Reserves will not hold
annual shareholder meetings, but may hold special meetings for matters that
require shareholder approval (like electing or removing trustees, approving
management contracts or changing investment policies that may only be changed
with shareholder approval). Because the Cash, Liquid Assets and Money Market
Funds invest in the Portfolio, it may be asked to vote on certain Portfolio
matters (like changes in certain Portfolio investment restrictions). When
necessary, the Cash, Liquid Assets and Money Market Funds will hold a meeting of
shareholders to consider the Portfolio matter and then vote their interest in
the Portfolio in proportion to the votes cast by its shareholders. The Cash,
Liquid Assets and Money Market Funds can withdraw from the Portfolio at any
time.

Because the Funds use this combined prospectus, a Fund could be held liable for
a misstatement or omission made about another Fund. The Trust's Trustees
considered this in approving the use of a combined prospectus.

6
<PAGE>
VALUING SHARES

Each Fund values its shares once each day only when the New York Stock Exchange
is open for trading (typically Monday through Friday), as of the close of
regular trading on the Exchange (normally 4:00 p.m. eastern time). The price of
Fund shares is their net asset value, which for the Cash, Liquid Assets and
Money Market Funds is derived from Portfolio holdings. The investments of the
Portfolio and 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.

When purchasing or redeeming Fund shares, your investment dealer must
communicate your order to the principal underwriter by a specific time each day
in order for the purchase price or the redemption price to be based on that
day's net asset value per share. It is the investment dealer's responsibility to
transmit orders promptly. Each Fund may accept purchase and redemption orders as
of the time of their receipt by certain investment dealers (or their designated
intermediaries).

PURCHASING SHARES

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.

Your initial investment must be at least $1,000. After your initial investment,
additional investments of $50 or more may be made at any time.

You may purchase Fund shares through your investment dealer (which includes
brokers, dealers and other financial institutions) who may charge you a fee for
executing the purchase for you or by requesting your bank to transmit
immediately available funds (Federal Funds) by wire to the address set forth
below. The Fund may suspend the sale of its shares at any time and any purchase
order may be refused.

To make an initial investment by wire, you must first telephone the Fund Order
Department at 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. Additional investments may be made at any time through the
same wire procedure. The Fund Order Department must be advised by telephone of
each transmission. Wire funds 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]

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.

SALES CHARGE

Contingent Deferred Sales Charge. Each Fund is subject to a CDSC on certain
redemptions. Shares of the Cash Fund and Tax Free Reserves 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

7
<PAGE>
purchase, unless such redemption is in connection with another exchange for
shares subject to such a charge. Liquid Assets and Money Market Fund shares are
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 or following 0%

The CDSC is 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 from the CDSC. Redemptions are made first from shares
that are not subject to a CDSC.

THE CDSC IS waived for redemptions pursuant to a Withdrawal Plan (see
"Shareholder Account Features") and in connection with certain redemptions from
tax-sheltered retirement plans. Call 1-800-225-6265 for details. The CDSC is
also waived following the death of all beneficial owners of shares, but only if
the redemption is requested within one year after death (a death certificate and
other applicable documents may be required).

Distribution and Service Fees. The Money Market and Liquid Assets Funds have
each adopted a plan under Rule 12b-1 that allows the Fund to pay distribution
fees for the sale and distribution of shares (so-called "12b-1 fees"). Money
Market Fund shares pay distribution fees of .75% of average daily net assets
annually. Liquid Assets Fund shares pay a service fee of .25% of average daily
net assets annually. Because these fees are paid from Fund assets on an ongoing
basis, they will increase your cost over time and may cost you more than paying
other types of sales charges. The Money Market Fund pays service fees for
personal and/or account services not exceeding .15% of average daily net assets
annually. Both Funds only pay service fees on shares that have been outstanding
for 12 months.

REDEEMING SHARES

You can redeem shares in any of the following ways:

By Mail Send your request to the transfer agent along with any
certificates and stock powers. The request must be signed
exactly as your account is registered and signature
guaranteed. You can obtain a signature guarantee at certain
banks, savings and loan institutions, credit unions,
securities dealers, securities exchanges, clearing agencies
and registered securities associations. You may be asked to
provide additional documents if your shares are registered
in the name of a corporation, partnership or fiduciary.

By Wire If you have given complete written authorization in advance
you may request that redemption proceeds of $1,000 or more
be wired directly to your bank account. The bank designated
may be any bank in the United States. The request may be
made by letter or telephone to the Fund Order Department at
800-225-6265 (extension 3). You may be required to pay costs
of such transaction; however, no costs are currently
charged. The Fund may suspend or terminate the expedited
payment procedure upon at least 30 days notice.

By Telephone You can redeem up to $50,000 b y calling the transfer agent
at 1-800-262-1122 on Monday through Friday, 9:00 a.m. to
4:00 p.m. (eastern time). Proceeds of a telephone redemption
can be mailed only to the account address. Shares held by
corporations, trusts or certain other entities, or subject
to fiduciary arrangements, cannot be redeemed by telephone.

By Check If you hold shares of the Cash Fund and Tax Free Reserves,
you may redeem shares by check. You may obtain the proper
forms from Boston Safe Deposit and Trust Company. The checks
may be made payable by you to the order of any person in any
amount of $500 or more.

Through an
Investment
Dealer Your investment dealer is responsible for transmitting the
order promptly. A dealer may charge a fee for this service.

8
<PAGE>
If you redeem shares, your redemption price will be based on the net asset value
per share next computed after the redemption request is received. Your
redemption proceeds will be paid in cash within seven days, reduced by the
amount of any applicable CDSC and any federal income tax required to be
withheld. Payments will be sent by mail unless you complete the Bank Wire
Redemptions section of the account application.

SHAREHOLDER ACCOUNT FEATURES

Distributions. You may have your Fund distributions paid in one of the following
ways:

* Full
Reinvest
Option Dividends and capital gains are reinvested in additional
shares. This option will be assigned if you do not specify
an option.
* Cash Option Dividends and capital gains are paid in cash.

Information from the Funds. From time to time, you may be mailed the following:

* Annual and Semi-Annual Reports, containing performance information and
financial statements.
* Periodic account statements, showing recent activity and total share
balance.
* Form 1099 and tax information needed to prepare your income tax returns.
* Proxy materials, in the event a shareholder vote is required.
* Special notices about significant events affecting your Fund.

Tax-Sheltered Retirement Plans. CASH AND MONEY MARKET FUND shares are available
for purchase in connection with certain tax-sheltered retirement plans. Call
1-800-225-6265 for information. Distributions will be invested in additional
shares for all tax-sheltered retirement plans.

Exchange Privilege. You may exchange your Cash Fund and Tax Free Reserves shares
for Class A shares of another Eaton Vance fund. You may exchange your Liquid
Assets and Money Market Fund shares for Class B shares of another Eaton Vance
fund. Exchanges are generally made at net asset value. If your Liquid Assets or
Money Market Fund shares were acquired in exchange for Class C shares of another
Eaton Vance Fund, such shares may be exchanged only for shares of one or more of
such funds. If your shares are subject to a CDSC, the CDSC will continue to
apply to your new shares at the same CDSC rate. For purposes of the CDSC, your
shares will continue to age from the date of your original purchase.

Telephone Transactions. The transfer agent and the principal underwriter have
procedures in place to authenticate telephone instructions (such as verifying
personal account information). As long as the transfer agent and principal
underwriter follow these procedures, they will not be responsible for
unauthorized telephone transactions and you bear the risk of possible loss
resulting from telephone transactions. Telephone instructions are tape recorded.
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.

"Street Name" Accounts. If your shares are held in a "street name" account at an
investment dealer, that dealer (and not the Fund or its transfer agent) will
perform all recordkeeping, transaction processing and distribution payments.
Because the Fund will have no record of your transactions, you should contact
your investment dealer to purchase, redeem or exchange shares, to make changes
in your account, or to obtain account information. The transfer of shares in a
"street name" account to an account with another investment dealer or to an
account directly with the Fund involves special procedures and you will be
required to obtain historical information about your shares prior to the

9
<PAGE>
transfer. Before establishing a "street name" account with an investment dealer,
you should determine whether that dealer allows reinvestment of distributions in
"street name" accounts.

Withdrawal Plan. You may redeem Cash Fund and Tax Free Reserves shares on a
regular quarterly basis by establishing a systematic withdrawal plan. Withdrawal
amounts for Liquid Assets and Money Market Fund shareholders may also be made on
a regular quarterly basis, provided the aggregate amount of the withdrawal does
not exceed 12% annually (such amount will not be subject to a CDSC). A minimum
account size of $5,000 is required to establish a systematic withdrawal plan.

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, you should obtain a prospectus of the
other Eaton Vance fund and consider its objectives and policies carefully.

Account Questions. If you have any questions about your account or the services
available, please call Eaton Vance Shareholder Services at 1-800-225-6265, or
write to the transfer agent (see back cover for address).

TAX INFORMATION

Each Fund declares dividends daily and pays distributions each month. Long-term
capital gains, if any, will be distributed at least annually. Distributions from
Cash, Liquid Assets and Money Market Fund (and taxable distributions from Tax
Free Reserves, if any) of any taxable income and net short-term capital gains
will be taxable as ordinary income. Distributions of any long-term capital gains
are taxable as such.

Distributions designated by Tax Free Reserves as "exempt-interest dividends",
whether paid in cash or reinvested in additional shares, ordinarily will
constitute tax-exempt income to you. Distributions of interest on certain
municipal obligations are a tax preference item under the AMT provisions
applicable to individuals and corporations.

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

10
<PAGE>
FINANCIAL HIGHLIGHTS

The financial highlights are intended to help you understand a Fund's financial
performance for the past five years. Certain information in the tables reflects
the financial results for a single Fund share. The total returns in the tables
represent the rate an investor would have earned (or lost) on an investment in
the Fund (assuming reinvestment of all distributions and not taking into account
a sales charge). This information has been audited by, _________________________
independent accountants. The report of ____________________________ and each
Fund's financial statements are incorporated herein by reference and included in
the annual report, which is available on request.

<TABLE>
<CAPTION>
CASH MANAGEMENT FUND
--------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------------------
1998 1997 1996 1995 1994
--------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value - $ 1.00 $ 1.00 $ 1.00 $ 1.00
Beginning of year
- -------------------------------------------------------------------------------
Income (loss) from
operations
Net investment income $ 0.0478 $ 0.0470 $ 0.0522 $ 0.0345
- -------------------------------------------------------------------------------
Less distributions

From net investment $(0.0478) $(0.0470) $(0.0522) $(0.0345)
income
- -------------------------------------------------------------------------------
Net asset value - End of
year $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- --------

- -------------------------------------------------------------------------------
Total return (1) 4.89% 4.82% 5.35% 3.49%
- -------------------------------------------------------------------------------
Ratios/Supplemental
Data
- -------------------------------------------------------------------------------
Net assets, end of year
(000's omitted) $146,743 $151,691 $155,251 $111,622
Ratios (as a percentage
of average daily net
assets):
Expenses (2) 0.78% 0.74% 0.74% 0.84%
Net investment income 4.79% 4.70% 5.22% 3.40%
</TABLE>

(See footnotes on last page.)

11
<PAGE>
<TABLE>
<CAPTION>
LIQUID ASSETS FUND
--------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------------------
1998 1997 1996 1995 1994
--------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value - $ 1.00 $ 1.00 $ 1.00 $ 1.00
Beginning of year
- -------------------------------------------------------------------------------
Income (loss) from
operations
Net investment income $ 0.0420 $ 0.0432 $ 0.0505 $ 0.0328
- -------------------------------------------------------------------------------
Less distributions

From net investment $(0.0420) $(0.0432) $(0.0505) $(0.0328)
income
- -------------------------------------------------------------------------------
Net asset value - End of
year $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- --------

- -------------------------------------------------------------------------------
Total return (1) 4.29% 4.41% 5.16% 3.29%
- -------------------------------------------------------------------------------
Ratios/Supplemental
Data
- -------------------------------------------------------------------------------
Net assets, end of year
(000's omitted) $ 13,001 $ 19,910 $ 34,026 $118,599
Ratios (as a percentage
of average daily net
assets):
Expenses (2) 1.35% 1.13% 0.91% 0.94%
Net investment income 4.21% 4.31% 5.11% 3.55%
</TABLE>

(See footnotes on last page.)

12
<PAGE>
<TABLE>
<CAPTION>
MONEY MARKET FUND
----------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------
1998 1997 1996 1995
----------------------------------------
<S> <C> <C> <C> <C>
Net asset value - Beginning of year $ 1.00 $ 1.00 $ 1.00
- -------------------------------------------------------------------------------
Income (loss) 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
Ratios (as a percentage of average
daily net assets):
Expenses (2) 1.73% 1.73% 1.68%+
Net investment income 3.83% 3.70% 4.19%+
</TABLE>

+ The operating expenses of the Fund may 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 as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Ratios (as a percentage of average daily net
assets):
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
</TABLE>

(See footnotes on last page.)

13
<PAGE>
<TABLE>
<CAPTION>
TAX FREE RESERVES
--------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------------------
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net asset value - $ 1.00 $ 1.00 $ 1.00 $ 1.00
Beginning of year
- -------------------------------------------------------------------------------
Income (loss) from
operations
Net investment income $ 0.0312 $ 0.0303 $ 0.0347 $ 0.0235
- -------------------------------------------------------------------------------
Total Income from $ 0.0312 $ 0.0303 $ 0.0347 $ ).0235
operations
- -------------------------------------------------------------------------------
Less distributions

From net investment $(0.0312) $(0.0303) $(0.0347) $ 0.0235)
income
- -------------------------------------------------------------------------------
Total distributions (0.0312) $(0.0303) $(0.0347) $(0.0235)

- -------------------------------------------------------------------------------
Net asset value - End of
year $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- --------

- -------------------------------------------------------------------------------
Total return (1) 3.16% 3.08% 3.53% 2.36%
- -------------------------------------------------------------------------------
Ratios/Supplemental
Data +
- -------------------------------------------------------------------------------
Net assets, end of year
(000's omitted) $ 33,960 $ 23,355 $ 23,912 $ 29,021
Ratios (as a percentage
of average daily net
assets):
Net operating
expenses (2) 0.52% 0.33% 0.34% 0.47%
Net operating expenses
after custodian fee
reduction (2) 0.46% 0.27% -- --
Interest Expense 0.01% 0.02% 0.05% 0.07%
Net investment income 3.12% 3.04% 3.47% 2.27%
</TABLE>
+ The operating expenses of the Fund may reflect 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:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Ratios (as a percentage of
average daily net assets):

Operating expenses (2) 0.67% 0.69% 0.73% 0.87%
Operating expenses after
custodian fee
reduction (2) 0.61% 0.63% -- --
Net investment income 2.96% 2.66% 3.02% 1.88%
Net investment income per $ 0.0296 $ 0.0266 $ 0.0303 $ 0.0189
share
- -----------------------------------------------------------------------------------------------
Leverage Analysis

- -----------------------------------------------------------------------------------------------
Amount of debt outstanding at
end of period $ -- $-- $ 1,266,000 $ 6,117,000
Average daily balance of debt
oustanding during period 134,611 116,757 279,586 440,145
Average weekly balance of
shares outstanding during
period 64,279,572 61,730,866 51,107,215 40,463,382
Average amount of debt per
share during period $ 0.002 $ 0.002 $ 0.005 $ 0.011
</TABLE>

<PAGE>

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

+ Annualized.

(1) Total return is calculated assuming a purchase of 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 Fund
were invested 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.

14
<PAGE>
{LOGO} Investing
EATON VANCE for the
Mutual Funds 21st
Century (R)

MORE INFORMATION
- --------------------------------------------------------------------------------

About the Funds: More information is available in the statement of
additional information. The statement of additional information is
incorporated by reference into this prospectus. Additional information
about each Fund's investments is available in the annual and semi-annual
reports to shareholders. In the annual report, you will find a discussion
of the market conditions and investment strategies that significantly
affected each Fund's performance during the past year. You may obtain free
copies of the statement of additional information and the shareholder
reports by contacting:

EATON VANCE DISTRIBUTORS, INC.
24 FEDERAL STREET
BOSTON, MA 02110
1-800-225-6265
website: www.eatonvance.com

You will find and may copy information about each Fund at the Securities
and Exchange Commission's public reference room in Washington, DC (call
1-800-SEC-0330 for information); on the SEC's Internet site
(http://www.sec.gov); or upon payment of copying fees by writing to the
SEC's public reference room in Washington, DC 20549-6009.

About Shareholder Accounts: You can obtain more information from Eaton
Vance Share- holder Services (1-800-225-6265). If you own shares and would
like to add to, redeem or change your account, please write or call the
transfer agent:
- --------------------------------------------------------------------------------

FIRST DATA INVESTOR SERVICES GROUP
P.O. BOX 5123
WESTBOROUGH, MA 01581-5123
1-800-262-1122

SEC File No. 811-4015 MMFP
<PAGE>

{LOGO} Mutual Funds
EATON VANCE for People
Who Pay
Taxes(R)

Eaton Vance
Municipal Bond
Fund

A mutual fund seeking income exempt from both federal income tax and the
alternative minimum tax

Prospectus Dated
May 1, 1999

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR DETERMINED WHETHER THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

Information in this prospectus
Page Page
- --------------------------------------------------------------------------------
Fund Summaries 2 Sales Charges 6
Investment Objective & Principal Redeeming Shares 7
Policies and Risks 4 Shareholder Account
Management and Organization 5 Features 8
Valuing Shares 5 Tax Information 9
Purchasing Shares 5 Financial Highlights 10
- --------------------------------------------------------------------------------

This prospectus contains important information about the Fund and the services
available to shareholders. Please save it for reference.

<PAGE>
FUND SUMMARY

Investment Objective and Principal Strategies. The Fund's investment objective
is to provide current income exempt from regular federal income tax. The Fund
primarily invests in investment grade municipal obligations, but also invests in
lower rated obligations. The portfolio manager will purchase and sell securities
to maintain a competitive yield and to enhance return based upon the relative
value of the securities in the marketplace. The portfolio manager may also trade
securities to minimize taxable capital gains to shareholders. The Fund will not
invest in an obligation if the interest on that obligation is subject to the
AMT.

Principal Risk Factors. The value of Fund shares may change when interest rates
change. When interest rates rise, the value of Fund shares typically will
decline. The Fund's yield will also fluctuate over time.

The Fund invests a portion of its assets in obligations of below investment
grade quality (so-called "junk bonds"). Lower quality obligations generally
offer higher yields than higher quality obligations, but they are subject to
greater risks. Lower quality obligations are more sensitive to adverse changes
in the financial condition of the issuer or in general market conditions (or
both) and Fund shares may fluctuate more in value than shares of a fund
investing solely in high quality obligations.

The Fund may concentrate in certain types of municipal obligations (such as
housing bonds, hospital bonds or utility bonds), so Fund shares could be
affected by events that adversely affect a particular sector. The Fund may
purchase derivative instruments (such as inverse floaters and futures contracts)
and bonds that do not require periodic interest payments.

Performance Information. The following bar chart and table provide information
about the Fund's performance, including a comparison of the Fund's performance
to the performance of a national index of municipal obligations. Although past
performance is no guarantee of future results, this performance information
demonstrates the risk that the value of your investment will change. The
following returns are for Class I shares for each calendar year through December
31, 1998 and do not reflect a sales charge.

10.6% 6.9% 13.4% 8.9% 13.5% -7.2% 17.4% 4.7% 14.1% %
- --------------------------------------------------------------------------------
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

The Fund's highest quarterly total return was _______% for the quarter ended
__________________, and its lowest quarterly return was ___________% for the
quarter ended _____________. For the 30 days ended December 31, 1998, the SEC
yield and SEC tax-equivalent yield (assuming a federal tax rate of 31%) for
Class I shares were _____________% and ______________%, respectively, for Class
A shares were ____________% and ______________%, respectively, and for Class B
shares were _________% and __________%, respectively. For current yield
information call 1-800-225-6265. The year-to-date total return through the end
of the most recent calendar quarter (December 31, 1998 to March 31, 1999) was
_______________%.

<TABLE>
One Five Ten
Average Annual Total Return as of December 31, 1998 Year Years Years
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A shares 0.0% 0.0% 0.0%
Class B shares 0.0% 0.0% 0.0%
Class I shares 0.0% 0.0% 0.0%
Lehman Brothers Municipal Bond Index 0.0% 0.0% 0.0%
</TABLE>

These returns reflect the maximum sales charge for Class A (4.75%) and any
applicable CDSC for Class B. The Class A and Class B performance shown above for
the period prior to January 6, 1998 and January 14, 1998, respectively, is the
performance of Class I shares, adjusted for the sales charge that applies to
Class A or Class B shares (but not adjusted for any other differences in the
expenses of the classes). The Lehman Brothers Municipal Bond Index is a
broad-based, unmanaged market index of municipal bonds. Investors cannot invest
directly in an Index.

2
<PAGE>
Fund Fees and Expenses. These tables describe the fees and expenses that you may
pay if you buy and hold shares.

Shareholder Fees
(fees paid directly
from your investment) Class A Class B Class I
- --------------------------------------------------------------------------------
Maximum Sales Charge
(as a percentage of
offering price) 4.75% None None

Maximum Deferred Sales
Charge (as a percentage
of the lower of net asset
value at time of purchase or
time of redemption) None 5.00% None

Sales Charge Imposed on
Reinvested Distributions None None None

Exchange Fee None None None

Annual Fund Operating
Expenses (expenses that
are deducted from Fund
assets) Class A Class B Class I
- --------------------------------------------------------------------------------
Management Fees 0.00% 0.00% 0.00%

Distribution and Service
(12b-1) Fees* 0.00% 0.00% 0.00%

Other Expenses** 0.00% 0.00% 0.00%
----- ----- -----
Total Operating Expenses 0.00% 0.00% 0.00%

**Long-term shareholders of Class B shares may pay more than the economic
equivalent of the front-end sales charge permitted by the National Association
of Securities Dealers, Inc. Class B shares began paying service fee during the
quarter ended March 31, 1999.

* Class A shares began paying a service fee during the quarter ending March
31,1999.

Example. This Example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The Example assumes
that you invest $10,000 in the Fund for the time periods indicated and then
redeem all of your shares at the end of those periods. The Example also assumes
that your investment has a 5% return each year and that the operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:

1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
Class A shares $ 0 $ 0 $ 0 $ 0
Class B shares $ 0 $ 0 $ 0 $ 0
Class I shares $ 0 $ 0 $ 0 $ 0

You would pay the following expenses if you did not redeem your shares:

1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------

Class A shares $ 0 $ 0 $ 0 $ 0
Class B shares $ 0 $ 0 $ 0 $ 0
Class I shares $ 0 $ 0 $ 0 $ 0

3
<PAGE>
INVESTMENT OBJECTIVE & PRINCIPAL POLICIES AND RISKS

The investment objective of the Fund is to provide current income exempt from
regular federal income tax. During periods of normal market conditions, the Fund
will have at least 80% of its net assets invested in obligations (including
notes and tax-exempt commercial paper) issued by or on behalf of states,
territories and possessions of the United States and the District of Columbia
and their political subdivisions, agencies or instrumentalities, the interest on
which is exempt from regular federal income tax. This is a fundamental policy of
the Fund which only may be changed with shareholder approval. The Fund's
investment objective and other policies may be changed by the Trustees without
shareholder approval.

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 municipal obligations is (in the opinion of the issuer's counsel)
exempt from regular federal income tax. Interest income from certain types of
municipal obligations may be subject to the federal alternative minimum tax (the
"AMT") for individuals. The Fund will not invest in an obligation if the
interest on that obligation is subject to the AMT.

At least 65% of net assets will normally be invested in municipal obligations
rated at least investment grade at the time of investment (which are those rated
Baa or higher by Moody's Investors Service, Inc. ("Moody's"), or BBB or higher
by either Standard & Poor's Ratings Group ("S&P") or Fitch IBCA ("Fitch")) or,
if unrated, are determined by the investment adviser to be of at least
investment grade quality. The balance of net assets may be invested in municipal
obligations rated or considered to be below investment grade and in unrated
municipal obligations considered to be of comparable quality by the investment
adviser. As of December 31, 1998, XX.X% of the Fund's net assets were invested
in obligations rated below investment grade. Lower rated obligations have
speculative characteristics and are more volatile than higher rated obligations.
Also, changes in economic conditions or other circumstances are more likely to
reduce the capacity of issuers of lower-rated obligations to make principal and
interest payments. It may also be more difficult to value certain lower rated
obligations because of the inability (or perceived inability) of the issuer to
make interest and principal payments.

The Fund may invest 25% or more of its total assets in municipal obligations of
the same type (such as leases, housing finance, public housing, municipal
utilities, hospital and health facilities or industrial development). This may
make the Fund more susceptible to adverse economic, political or regulatory
occurrences affecting a particular category of issuer.

The net asset value will change in response to changes in prevailing interest
rates and changes in the value of securities held. The value of securities held
will be affected by the credit quality of the issuer of the obligation, and
general economic and business conditions that affect the specific economic
sector of the issuer. Changes by rating agencies in the rating assigned to an
obligation may also affect the value of an obligation. The amount of information
available about the financial condition of issuers of municipal obligations
generally is not as extensive as that available for publicly-traded
corporations.

The Fund may purchase derivative instruments, which derive their value from
another instrument, security or index. For example, the Fund may invest in
municipal securities whose interest rates bear an inverse relationship to the
interest rate on another security or the value of an index ("inverse floaters").
Although they are volatile and may expose the Fund to leverage risk, inverse
floaters typically offer the potential for yields exceeding the yields available
on fixed rate bonds with comparable credit quality and maturity. The Fund may
also purchase and sell various kinds of financial futures contracts and options
thereon to hedge against changes in interest rates or as a substitute for the
purchase of portfolio securities. The use of derivative instruments for both
hedging and investment purposes involves a risk of loss or depreciation due to a
variety of factors including counterparty risk, unexpected market, interest rate
or securities price movements, and tax and regulatory constraints.

The Fund may invest in zero coupon bonds, which do not require the issuer to
make periodic interest payments. The values of these bonds are subject to
greater fluctuation in response to changes in market interest rates than bonds
which pay interest currently.

During unusual market conditions, the Fund may temporarily invest up to 50% of
its assets in cash or cash equivalents. Interest income from temporary
investments may be taxable. The Fund may also temporarily borrow at any time up
to 5% of the value of its total assets to satisfy redemption requests or settle
securities transactions.

The investment adviser's process for selecting securities for purchase and sale
is research intensive and emphasizes the creditworthiness of the issuer or other
person obligated to repay the obligation. The investment adviser seeks to invest
in obligations that it believes will retain their value in varying interest rate
climates.

Like most mutual funds, the Fund relys 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

4
<PAGE>
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
shareholders. The Year 2000 concern may also adversely impact issuers of
obligations held by the Fund.

MANAGEMENT AND ORGANIZATION

Management. The Fund's investment adviser is Eaton Vance Management ("Eaton
Vance"), 24 Federal Street, Boston, Massachusetts 02110. Eaton Vance has been
managing assets since 1924 and managing mutual funds since 1931. Eaton Vance and
its subsidiaries currently manage over $33 billion on behalf of mutual funds,
institutional clients and individuals.

The investment adviser manages the investments of the Fund and provides related
office facilities and personnel. Under its investment advisory agreement with
the Fund, Eaton Vance receives a monthly advisory fee equal to the aggregate of
a daily asset based fee and a daily income based fee. The fees are applied on
the basis of the following categories.

<TABLE>
Annual Daily
Category Daily Net Assets Asset Rate Income Rate
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
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%
</TABLE>

As at December 31, 1998, the Fund had net assets of $0. For the fiscal year
ended December 31, 1998, the Fund paid Eaton Vance advisory fees equivalent to
0.00% of the Fund's average net assets for such year.

Thomas J. Fetter is the portfolio manager of the Fund (since 1986). He also
manages other Eaton Vance portfolios, has been an employee of Eaton Vance for
more than 5 years, and is a Vice President of Eaton Vance.

The investment adviser and the Fund have adopted Codes of Ethics governing
personal securities transactions. Under the Codes, Eaton Vance employees may
purchase and sell securities (including securities held by the Fund) subject to
certain pre-clearance and reporting requirements and other procedures.

Organization. The Fund is a series of Eaton Vance Mutual Funds Trust, a
Massachusetts business trust. The Fund does not hold annual shareholder
meetings, but may hold special meetings for matters that require shareholder
approval (like electing or removing trustees, approving management contracts or
changing investment policies that may only be changed with shareholder
approval).

VALUING SHARES

The Fund values its shares once each day only when the New York Stock Exchange
is open for trading (typically Monday through Friday), as of the close of
regular trading on the Exchange (normally 4:00 p.m. eastern time). The price of
Fund shares is their net asset value, which is derived from Fund holdings.
Municipal obligations will normally be valued on the basis of valuations
furnished by a pricing service.

When purchasing or redeeming Fund shares, your investment dealer must
communicate your order to the principal underwriter by a specific time each day
in order for the purchase price or the redemption price to be based on that
day's net asset value per share. It is the investment dealer's responsibility to
transmit orders promptly. The Fund may accept purchase and redemption orders as
of the time of their receipt by certain investment dealers (or their designated
intermediaries).

PURCHASING SHARES

You may purchase Class A and Class B shares through your investment dealer or by
mailing the account application form included in this prospectus to the transfer
agent (see back cover for address). Your initial investment must be at least
$1,000. The price of Class A shares is the net asset value plus a sales charge.
The price of Class B shares is the net asset value; however, you may be subject
to a sales charge (called a "contingent deferred sales charge" or "CDSC") if you

5
<PAGE>
redeem Class B shares within six years of purchase. The sales charges are
described below. Your investment dealer can help you decide which class of
shares suits your investment needs.

Class I shares are offered at net asset value to investment advisers, financial
planners or other intermediaries who charge a fee for their services (and their
clients); 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 net asset value per share plus the sales charge applicable to the same
purchase of Class A shares.

You may purchase Fund shares for cash or in exchange for securities. Please call
1-800-225-6265 for information about exchanging securities for Fund shares. If
you purchase shares through an investment dealer (which includes brokers,
dealers and other financial institutions), that dealer may charge you a fee for
executing the purchase for you. The Fund may suspend the sale of its shares at
any time and any purchase order may be refused.

SALES CHARGES

Front-End Sales Charge. Class A shares are offered at net asset value per share
plus a sales charge that is determined by the amount of your investment. The
current sales charge schedule is:

<TABLE>
Sales Charge Sales Charge Dealer Commission
as Percentage of as Percentage of Net as a 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%
$50,000 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* 1.00%
</TABLE>

Contingent Deferred Sales Charge. Class A and Class B shares are subject to a
CDSC on certain redemptions. If Class A shares are purchased at net asset value
because the purchase amount is $1 million or more, they are subject to a 1.00%
CDSC if redeemed within 24 months of purchase. Class B shares are subject to the
following CDSC schedule:

Reducing or Eliminating Sales Charges. Front-end sales charges may be reduced
under the right of accumulation or under a statement of intention. Under the
right of accumulation, sales charges are reduced if the current market value of
your current holdings (shares at current offering price), plus your new
purchases, reach $25,000 or more. Class A shares of other Eaton Vance funds
owned by you can be included as part of your current holdings for this purpose.
Under a statement of intention, purchases of $25,000 or more made over a
13-month period are eligible for reduced sales charges.

6
<PAGE>
The principal underwriter may hold 5% of the dollar amount to be purchased in
escrow in the form of shares registered in your name until the statement is
satisfied or the 13-month period expires. See the account application for
details.

The Class B CDSCs are waived for redemptions pursuant to a Withdrawal Plan (see
"Shareholder Account Features"). The Class B CDSC is also waived following the
death of all beneficial owners of shares, but only if the redemption is
requested within one year after death (a death certificate and other applicable
documents may be required).

If you redeem shares, you may reinvest, with credit for any CDSC's paid on the
redeemed shares, any portion or all of the redemption proceeds in the same class
of shares of the Fund (or, for Class A shares, in Class A shares of any other
Eaton Vance fund), provided that the reinvestment occurs within 60 days of the
redemption, and the privilege has not been used more than once in the prior 12
months. Your account will be credited with any CDSC paid in connection with the
redemption. Reinvestment requests must be in writing. If you reinvest, you will
be sold shares at the next determined net asset value following receipt of your
request.

Distribution and Service Fees. Class B shares have adopted a plan under Rule
12b-1 that allows the Fund to pay distribution fees for the sale and
distribution of shares (so-called "12b-1 fees"). Class B shares pay distribution
fees of .75% of average daily net assets annually. Because these fees are paid
from Fund assets on an ongoing basis, they will increase your cost over time and
may cost you more than paying other types of sales charges. Both A and B classes
pay service fees for personal and/or account services not exceeding .25% of
average daily net assets annually. Class A and Class B only pay service fees on
shares that have been outstanding for 12 months.

REDEEMING SHARES

You can redeem shares in any of the following ways:

By Mail Send your request to the transfer agent along with any
certificates and stock powers. The request must be signed
exactly as your account is registered and signature
guaranteed. You can obtain a signature guarantee at certain
banks, savings and loan institutions, credit unions,
securities dealers, securities exchanges, clearing agencies
and registered securities associations. You may be asked to
provide additional documents if your shares are registered
in the name of a corporation, partnership or fiduciary.

By Telephone You can redeem up to $50,000 b y calling the transfer agent
at 1-800-262-1122 on Monday through Friday, 9:00 a.m. to
4:00 p.m. (eastern time). Proceeds of a telephone redemption
can be mailed only to the account address. Shares held by
corporations, trusts or certain other entities, or subject
to fiduciary arrangements, cannot be redeemed by telephone.

By Check You may obtain forms to establish checkwriting privileges
for your account by calling 1-800-225-6265 (extension 7601).
Checks may be drawn on your account in any amount of $500 or
more. You will be required to complete signature cards and
will be subject to cerain rules in connection with this
privilege. There is no charge for this service.

If you redeem shares, your redemption price will be based on the net asset value
per share next computed after the redemption request is received. Your
redemption proceeds will be paid in cash within seven days, reduced by the
amount of any federal income tax required to be withheld. Payments will be sent
by mail unless you complete the Bank Wire Redemptions section of the account
application.

If you recently purchased shares, the proceeds of a redemption will not be sent
until the check (including a certified or cashier's check) has cleared. If the
purchase check has not cleared, redemption proceeds may be delayed up to 15 days
from the purchase date. If your account value falls below $750 other than due to
market decline, you may be asked to either add to your account or redeem it
within 60 days. If you take no action, your account will be redeemed and the
proceeds sent to you.

7
<PAGE>
While redemption proceeds are normally paid in cash, redemptions may be paid by
distributing marketable securities. If you receive securities, you could incur
brokerage or other charges in converting the securities to cash.

SHAREHOLDER ACCOUNT FEATURES

Once you purchase shares, the transfer agent establishes a Lifetime Investing
Account for you. Share certificates are issued only on request.

Distributions. You may have your Fund distributions paid in one of the following
ways:

* Full Reinvest
Option Dividends and capital gains are reinvested in additional
shares. This option will be assigned if you do not specify
an option.
* Partial
Reinvest
Option Dividends are paid in cash and capital gains are reinvested
in additional shares.
* Cash
Option Dividends and capital gains are paid in cash.
* Exchange
Option Dividends and/or capital gains are reinvested in additional
shares of another Eaton Vance fund chosen by you. Before
selecting this option, you must obtain a prospectus of the
other fund and consider its objectives and policies
carefully.

Information from the Fund. From time to time, you may be mailed the following:

Withdrawal Plan. You may redeem shares on a regular monthly or quarterly basis
by establishing a systematic withdrawal plan. For Class B shares, your
withdrawals will not be subject to a CDSC if they do not in the aggregate exceed
12% annually of the account balance at the time the plan is established. A
minimum account size of $5,000 is required to establish a systematic withdrawal
plan. Because purchases of Class A shares are subject to an initial sales
charge, you should not make withdrawals from your account while you are making
purchases.

Exchange Privilege. You may exchange your Class A and Class B shares for shares
of the same class of another Eaton Vance fund. Class I shares may also be
exchanged for Class A shares of another Eaton Vance fund. Exchanges are
generally made at net asset value. If you have held Class A shares for less than
six months, an additional sales charge may apply if you exchange. If your shares
are subject to a CDSC, the CDSC will continue to apply to your new shares at the
same CDSC rate. For purposes of the CDSC, your shares will continue to age from
the date of your original purchase.

Telephone Transactions. You can redeem or exchange shares by telephone as
described in this prospectus. The transfer agent and the principal underwriter
have procedures in place to authenticate telephone instructions (such as
verifying personal account information). As long as the transfer agent and
principal underwriter follow these procedures, they will not be responsible for
unauthorized telephone transactions and you bear the risk of possible loss
resulting from telephone transactions. You may decline the telephone redemption
option on the account application. Telephone instructions are tape recorded.

8
<PAGE>
transfer. Before establishing a "street name" account with an investment dealer,
you should determine whether that dealer allows reinvestment of distributions in
"street name" accounts.

TAX INFORMATION

The Fund declares dividends daily. The Fund ordinarily pays distributions each
month for Class A and Class I shares on the last day and, for Class B shares on
the fifteenth day. If the payment date is not a business day, the payment will
be made on the business day thereafter. Your account will be credited with
dividends beginning on the business day after the day when the funds used to
purchase your Fund shares are collected by the transfer agent. For tax purposes
the entire distribution, whether paid in cash or reinvested in additional
shares, ordinarily will constitute tax-exempt income to you.

Distributions of any taxable income and net short-term capital gains will be
taxable as ordinary income. Distributions of any long-term capital gains are
taxable as such.

Shareholders, particularly corporations and those subject to state alternative
minimum tax, should consult with their advisers concerning the applicability of
state, local and other taxes to an investment.

9
<PAGE>
FINANCIAL HIGHLIGHTS

The financial highlights are intended to help you understand the Fund's
financial performance for the past five years. Certain information in the table
reflects the financial results for a single Fund share. The total returns in the
table represent the rate an investor would have earned (or lost) on an
investment in the Fund (assuming reinvestment of all distributions and not
taking into account a sales charge). This information has been audited by
_____________________, independent accountants. The report of
_______________________ and the Fund's financial statements are incorporated
herein by reference and included in the annual report, which is available on
request. The Fund began offering three classes of shares on January 1, 1998.
Prior to that date, the Fund offered only Class I shares.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------
1998 1997 1996 1995 1994
--------------------------------------------------------------------
CLASS A CLASS B CLASS I CLASS I CLASS I CLASS I CLASS I
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value -
Beginning of year $10.070 $10.210 $ 9.260 $ 9.950
------- ------- ------- -------
Income (loss) from
operations
Net investment
income $ 0.584 $ 0.605 $ 0.604 $ 0.611
Net realized and
unrealized gain
(loss) 0.785 (0.143) 0.962 (1.369)
------- ------- ------- -------
Total income (loss)
from operations $ 1.369 $ 0.462 $ 1.566 $(0.758)
------- ------- ------- -------
Less distributions
From net investment
income $(0.584) $(0.594) $(0.604) $(0.611)
In excess of net
investment income (0.015) (0.008) (0.012) (0.001)
Total distributions $(0.599) $(0.602) $(0.616) $(0.612)
------- ------- ------- -------
Net asset value -
End of year $10.840 $10.070 $10.210 $ 9.260
======= ======= ======= =======
Total return
(1) 14.13% 4.78% 17.40% (7.27)%
Ratios/Supplemental
Data
Net assets, end of
year (000's omitted) $92,375 $88,184 $96,410 $90,802
Ratios (as a
percentage of
average daily net
assets):
Expenses (2) 0.81% 0.78% 0.76% 0.80%
Expenses after
custodian fee
reduction
(2) 0.77% 0.74% -- --
Net investment
income 5.69% 6.12% 6.16% 6.26%
Portfolio Turnover 34% 30% 58% 58%
</TABLE>

(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 not computed on
an annualized basis.

(2) 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, as well as the
Portfolio, to increase its expense ratio by the effect of any expense
offset arrangements with its service providers. The expense ratios for the
prior period has not been adjusted to reflect this change.

10
<PAGE>
{LOGO} Mutual Funds
EATON VANCE for People
Who Pay
Taxes (R)

MORE INFORMATION
- --------------------------------------------------------------------------------

About the Fund: More information is available in the statement of
additional information. The statement of additional information is
incorporated by reference into this prospectus. Additional information
about the Fund's investments is available in the annual and semi-annual
reports to shareholders. In the annual report, you will find a discussion
of the market conditions and investment strategies that significantly
affected the Fund's performance during the past year. You may obtain free
copies of the statement of additional information and the shareholder
reports by contacting:

Eaton Vance Distributors, Inc.
24 Federal Street
Boston, MA 02110
1-800-225-6265
website: www.eatonvance.com

You will find and may copy information about the Fund at the Securities and
Exchange Commission's public reference room in Washington, DC (call
1-800-SEC-0330 for information); on the SEC's Internet site
(http://www.sec.gov); or upon payment of copying fees by writing to the
SEC's public reference room in Washington, DC 20549-6009.

About Shareholder Accounts: You can obtain more information from Eaton
Vance Share- holder Services (1-800-225-6265). If you own shares and would
like to add to, redeem or change your account, please write or call the
transfer agent:
- --------------------------------------------------------------------------------

First Data Investor Services Group
P.O. Box 5123
Westborough, MA 01581-5123
1-800-262-1122

SEC File No. 811-4015 MBP
<PAGE>

PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION

STATEMENT OF
ADDITIONAL INFORMATION
May 1, 1999

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

This Statement of Additional Information ("SAI") provides general
information about the Fund and the Portfolio. The Fund is a series of Eaton
Vance Mutual Funds Trust. Capitalized terms used in this SAI and not otherwise
defined have the meanings given them in the Fund's Prospectus. This SAI
contains additional information about:

Page
Strategies and Risks ................................................ 1
Investment Restrictions ............................................. 8
Management and Organization ......................................... 9
Investment Advisory and Administrative Services ..................... 13
Other Service Providers ............................................. 14
Purchasing and Redeeming Shares ..................................... 14
Sales Charges ....................................................... 16
Performance ......................................................... 20
Taxes ............................................................... 21
Portfolio Security Transactions ..................................... 23
Financial Statements ................................................ 25
Appendicies:
A: Class A Fees, Performance and Ownership ...................... a-1
B: Class B Fees, Performance and Ownership ...................... b-1
C: Class C Fees, Performance and Ownership ...................... c-1

THIS 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, 1999, AS SUPPLEMENTED FROM TIME TO TIME, WHICH IS INCORPORATED HEREIN BY
REFERENCE. THIS SAI SHOULD BE READ IN CONJUNCTION WITH THE PROSPECTUS, WHICH
MAY BE OBTAINED BY CALLING 1-800-225-6265.

<PAGE>

STRATEGIES AND RISKS

MORTGAGE-BACKED SECURITIES
The Portfolio's investments in mortgage-backed securities may include
conventional mortgage pass-through securities, stripped mortgage-backed
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.

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.

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. In order to limit the
risk inherent in this type of security, it is the current policy of the
Portfolio not to purchase any such security if after such purchase (i) more
than 5% of its net assets (taken at market value) would be invested in
securities denominated in foreign currencies or (ii) more than 2% of its net
assets (taken at market value) would be invested in securities denominated in
any one foreign currency.

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. 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. 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 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. Because 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 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 Investment Company Act of 1940 (the "1940 Act") requires the Portfolio
to maintain continuous asset coverage of not less than 300% with respect to
any bank borrowings. This allows the Portfolio to borrow an amount (when taken
together with any borrowings for temporary extraordinary or emergency purposes
as described in the prospectus) 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.

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, 1998, the Portfolio had an outstanding loan
balance of $ . The average daily loan balance for the fiscal year
ended December 31, 1998, under the Credit Agreement (and predecessor contract)
was $ and the average daily interest rate was %.

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. The Portfolio will maintain cash, U.S. Government
securities or liquid debt obligations in a segregated account until any
forward commitment that it enters is settled.

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 Securities and Exchange Commission ("SEC"), 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.

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.

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."

OTC derivative instruments involve a heightened risk that the issuer or
counterparty will fail to perform its contractual obligations. The staff of
the SEC 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.

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.

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 SEC 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.

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.

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.

TEMPORARY INVESTMENTS
The Portfolio may invest temporarily in cash or cash equivalents. Cash
equivalents are highly liquid, short-term securities such as commercial paper,
certificates of deposit, short-term notes and short-term U.S Government
obligations.

DIVERSIFIED STATUS
The Portfolio is a "diversified" investment company under the 1940 Act.
This means that with respect to 75% of its total assets (1) the Portfolio may
not invest more than 5% of its total assets in the securities of a single
issuer (except U.S. Government obligations) and (2) the Portfolio may not own
more than 10% of the outstanding voting securities of a single issuer which
generally is inapplicable because debt obligations are not voting securities.

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, 1997 and 1998, the portfolio
turnover rates of the Portfolio were 20% and %, 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
outstanding shares are present or represented at the meeting or (b) more than
50% of the outstanding 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 investment policies
which may be changed by the Trustees with respect to the Fund without
shareholder approval or with respect to the Portfolio without approval by the
Fund or its other investors. 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; or

(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. If the Fund or Portfolio invests in Rule
144A Securities, the level of portfolio illiquidity may be increased to the
extent that eligible buyers become uninterested in purchasing such securities.

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.

MANAGEMENT AND ORGANIZATION

FUND MANAGEMENT. The Trustees of the Trust are responsible for the overall
management and supervision of the Trust's affairs. 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. Those
Trustees who are "interested persons" of the Trust or the Portfolio, as
defined in the 1940 Act are indicated by an asterisk(*).

JESSICA M. BIBLIOWICZ (39), Trustee
President and Chief Operating Officer of John A. Levin & Co. (a registered
investment advisor) (since July, 1997) and a Director of Baker, Fentress &
Company which owns John A. Levin & Co. (since July, 1997). Formerly
Executive Vice President of Smith Barney Mutual Funds (from July, 1994 to
June, 1997). Elected Trustee October 30, 1998. Trustee of various investment
companies managed by Eaton Vance or BMR since October 30, 1998.
Address: One Rockefeller Plaza, New York, New York 10020

DONALD R. DWIGHT (68), Trustee
President of Dwight Partners, Inc. (a corporate relations and communications
company). Trustee of various investment companies managed by Eaton Vance or
BMR.
Address: Clover Mill Lane, Lyme, New Hampshire 03768

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

SAMUEL L. HAYES, III (64), Trustee
Jacob H. Schiff Professor of Investment Banking Emeritus, Harvard University
Graduate School of Business Administration. Trustee of the Kobrick - Cedant
Investment Trust (mutual funds). Trustee of various investment companies
managed by Eaton Vance or BMR.
Address: 345 Nahatan Road, Westwood, Massachusetts 02090

NORTON H. REAMER (63), 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). Trustee
of various investment companies managed by Eaton Vance or BMR.
Address: One International Place, Boston, Massachusetts 02110

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

JOHN L. THORNDIKE (72), Trustee
Formerly Director of Fiduciary Company Incorporated. Trustee of various
investment companies managed by Eaton Vance or BMR.
Address: 175 Federal Street, Boston, Massachusetts 02110

JACK L. TREYNOR (69), Trustee
Investment Adviser and Consultant. Trustee of various investment companies
managed by Eaton Vance or BMR.
Address: 504 Via Almar, Palos Verdes Estates, California 90274

WILLIAM H. AHERN, JR. (39), Vice President of the Trust
Vice President of BMR and Eaton Vance. Officer of various investment companies
managed by Eaton Vance or BMR.

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

ROBERT B. MACINTOSH (42), Vice President of the Trust
Vice President of BMR and Eaton Vance. Officer of various investment companies
managed by Eaton Vance or BMR.

MARK VENEZIA (49), Vice President of the Portfolio
Vice President of BMR and Eaton Vance. Officer of various investment companies
managed by Eaton Vance or BMR.

SUSAN SCHIFF (38), Vice President of the Portfolio
Vice President of BMR and Eaton Vance. Officer of various investment companies
managed by Eaton Vance or BMR.

MICHAEL B. TERRY (56), Vice President of the Trust
Vice President of BMR and Eaton Vance. Officer of various investment companies
managed by Eaton Vance or BMR.

JAMES L. O'CONNOR (54), Treasurer
Vice President of BMR and Eaton Vance. Officer of various investment companies
managed by Eaton Vance or BMR.

ALAN R. DYNNER (58), Secretary
Vice President and Chief Legal Officer of BMR, Eaton Vance, EVC and EV since
November 1, 1996. Previously, he 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.

JANET E. SANDERS (63), Assistant Treasurer and Assistant Secretary
Vice President of BMR and Eaton Vance. Officer of various investment companies
managed by Eaton Vance or BMR.

A. JOHN MURPHY (36), Assistant Secretary
Vice President of BMR and Eaton Vance. Officer of various investment companies
managed by Eaton Vance or BMR.

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

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 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, 1998, 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
- ---- ------------- -------------- ------------

Jessica M. Bibliowicz(9) $ $ $
Donald R. Dwight ........ (3) (6)
Samuel L. Hayes, III .... (4) (7)
Norton H. Reamer ........
Lynn A Stout(9) .........
John L. Thorndike ....... (5) (8)
Jack L. Treynor .........

(1) As of May 1, 1999, the Eaton Vance fund complex consists of registered
investment companies or series thereof.
(2) The Trust consisted of 11 Funds as of December 31, 1998.
(3) Includes $ of deferred compensation.
(4) Includes $ of deferred compensation.
(5) Includes $ of deferred compensation.
(6) Includes $ of deferred compensation.
(7) Includes $ of deferred compensation.
(8) Includes $ of deferred compensation.
(9) Ms. Bibliowicz and Ms. Stout were elected Trustees on October 30, 1998.

ORGANIZATION. The Fund is a series of the Trust, which is organized under
Massachusetts law as a business trust and is operated as an open-end
management investment company. The Trust changed its name from Eaton Vance
Government Obligations Trust on July 10, 1995. The Fund (formerly EV
Traditional Government Obligations Fund) established 3 classes of shares on
January 1, 1998 -- Class A shares, Class B shares (formerly EV Marathon
Government Obligations Fund), Class C shares (formerly EV Classic Government
Obligations Fund) of Eaton Vance Government Obligations Fund. Information
herein prior to such date is for the Fund before it became a multiple-class
fund.

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. Each class represents an interest in the Fund, but is subject to
different expenses, rights and privileges. The Trustees have the authority
under the Declaration of Trust to create additional classes of shares with
differing rights and privileges. When issued and outstanding, shares are fully
paid and nonassessable by the Trust. 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 offers 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.

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

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 of 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 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.

The Declaration of Trust further provides that the Trustees will not be
liable for errors of judgment or mistakes of fact or law; but nothing in the
Declaration of Trust protects a Trustee against any liability to which he
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of his
office.

Under 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.

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
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 of the Portfolio
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 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 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.

Whenever the Fund as an investor in a 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.

INVESTMENT ADVISORY AND ADMINISTRATIVE SERVICES

INVESTMENT ADVISORY SERVICES. 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.

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 of December 31,
1998, the Portfolio had net assets of $ . For the fiscal years ended
December 31, 1998, 1997 and 1996, the Portfolio paid BMR advisory fees of
$ , $3,305,992 and $3,603,385, 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.

ADMINISTRATIVE SERVICES. 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 Trust, 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.

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

EXPENSES. The Fund and Portfolio are each responsible for all expenses not
expressly stated to be payable by another party (such as the investment
adviser under the Investment Advisory Agreement, Eaton Vance under the
Administrative Services Agreement or the principal underwriter under the
Distribution Agreement). In the case of expenses incurred by the Trust, the
Fund is responsible for its pro rata share of those expenses. The only
expenses of the Fund allocated to a particular class are those incurred under
the Distribution or Service Plan applicable to that class and the fee paid to
the principal underwriter for handling share repurchases.

OTHER SERVICE PROVIDERS

PRINCIPAL UNDERWRITER. Eaton Vance Distributors, Inc. ("EVD"), 24 Federal
Street, Boston, MA 02110, is the Fund's principal underwriter. The principal
underwriter acts as principal in selling shares under a Distribution Agreement
with the Trust. The expenses of printing copies of prospectuses used to offer
shares 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 as it applies to Class A shares 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 Distribution Agreement as it applies to Class
B and Class C shares 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 shares of the
relevant class or on six months' notice by the principal underwriter and is
automatically terminated upon assignment. The principal underwriter
distributes 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 investment dealers discounts from the applicable public offering price
which are alike for all investment dealers. See "Sales Charges." EVD is a
wholly-owned subsidiary of EVC. M. Hawkes is a Vice President and Director and
Messrs. Dynner and O'Connor are Vice Presidents of EVD.

CUSTODIAN. Investors Bank & Trust Company ("IBT"), 200 Clarendon Street,
Boston, MA 02116, serves as custodian to the Fund and Portfolio. IBT has the
custody of all cash and securities representing the Fund's interest in the
Portfolio, has custody of 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 SEC. EVC and its affiliates
and their officers and employees from time to time have transactions with
various banks, including 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.

INDEPENDENT ACCOUNTANTS. PricewaterhouseCoopers LLP, 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 SEC.

TRANSFER AGENT. First Data Investor Services Group, P.O. Box 5123,
Westborough, MA 01581-5123, serves as transfer and dividend disbursing agent
for the Fund.

PURCHASING AND REDEEMING SHARES

CaLCULATION OF NET ASSET VALUE. The net asset value of the Portfolio is
computed by IBT (as agent and custodian for the Portfolio) by subtracting the
liabilities of the Portfolio from the value of its total assets. 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.

Each investor in the Portfolio, including the Fund, may add to or reduce
its investment in the Portfolio on each day the New York Stock Exchange (the
"Exchange") is open for trading ("Portfolio Business Day") as of the close of
regular trading on the Exchange (the "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.

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.

ADDITIONAL INFORMATION ABOUT PURCHASES. Fund shares are continuously offered
through investment dealers which have entered agreements with the principal
underwriter. The public offering price is the net asset value next computed
after receipt of the order, plus, in the case of Class A shares, a variable
percentage (sales charge) depending upon the amount of purchase as indicated
by the sales charge table set forth in the prospectus. The sales charge is
divided between the principal underwriter and the investment dealer. The
sales charge 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. See
"Sales Charges".

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 the net asset value of Class B and Class 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 investment dealer, together with a
completed and signed Letter of Transmittal in approved form (available from
investment dealers). 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.

SUSPENSION OF SALES. The Trust may, in its absolute discretion, suspend,
discontinue or limit the offering of one or more of its classes of 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 Class B and Class C Distribution 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.

ADDITIONAL INFORMATION ABOUT REDEMPTIONS. 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 SEC, or during any emergency as determined by the SEC 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 SEC for the
protection of investors.

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.

SYSTEMATIC WITHDRAWAL PLAN. The transfer agent will send to the shareholder
regular monthly or quarterly payments of any permitted amount designated by
the shareholder based upon the value of the shares held. The checks will be
drawn from share redemptions and hence, 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.

SALES CHARGES

DEALER COMMISSIONS. The principal underwriter may, from time to time, at its
own expense, provide additional incentives to investment dealers 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 investment dealers 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 investment dealers. The principal underwriter
may allow, upon notice to all investment dealers 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
investment dealers may be deemed to be underwriters as that term is defined in
the Securities Act of 1933.

SALES CHARGE WAIVERS. 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 investment dealers and
bank employees who refer customers to registered representatives of invetment
dealers; to officers and employees of IBT and the transfer agent; and to such
persons' spouses, parents, siblings and children 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". 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 investment advisory, agency, custodial or trust account managed
or administered by Eaton Vance or by any parent, subsidiary or other affiliate
of Eaton Vance. Class A shares are offered at net asset value to the foregoing
persons and in the foregoing situations because either (i) there is no sales
effort involved in the sale of shares or (ii) the investor is paying a fee
(other than the sales charge) to the investment dealer involved in the sale.

The CDSC applicable to Class B shares will be waived in connection with
minimum required distributions from tax-sheltered retirement plans by applying
the rate required to be withdrawn under the applicable rules and regulations
of the Internal Revenue Service to the balance of Class B shares in your
account.

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 of another
Eaton Vance fund 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. Any investor considering signing a Statement of Intention should
read it carefully.

RIGHT OF ACCUMULATION. 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. The sales charge on the shares being purchased will then be at the
rate applicable to the aggregate. 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 investment dealer must provide
the principal underwriter (in the case of a purchase made through an
investment dealer) 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.

TAX-SHELTERED RETIREMENT PLANS: Class A and Class C shares 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, dividends and distributions will be automatically reinvested in
additional shares.

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 "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 Class A Plan provides that the Class A may make service fee
payments for personal services and/or the maintenance of shareholder accounts
to the principal underwriter, investment dealers 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 investment dealers 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. For the service fees paid by Class A shares, see Appendix A.

The Trust has also adopted compensation-type Distribution Plans (the
"Class B and Class C Plans") pursuant to Rule 12b-1 under the 1940 Act for the
Fund's Class B and Class C shares. The Class B and Class C Plans are designed
to permit an investor to purchase shares through an investment dealer without
incurring an initial sales charge and at the same time permit the principal
underwriter to compensate investment dealers in connection therewith. The
Class B and Class C 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 shares. On each sale of shares (excluding reinvestment of
distributions), the Fund will pay the principal underwriter amounts
representing (i) sales commissions equal to 5% for Class B shares and 6.25%
for Class C shares 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. To pay these amounts, each Class 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
investment dealers on the sale of shares and for interest expenses. For sales
of Class B shares, the principal underwriter uses its own funds to pay sales
commissions (except on exchange transactions and reinvestments) to investment
dealers at the time of sale equal to 4% of the purchase price of the Class B
shares sold by such dealers. For Class C shares, the principal underwriter
currently expects to pay to an investment dealer (a) sales commissions (except
on exchange transactions and reinvestments) at the time of sale equal to .75%
of the purchase price of the shares sold by such dealer, and (b) monthly sales
commissions approximately equivalent to 1/12 of .75% of the value of shares
sold by such dealer 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 investment dealers at the time of sale. CDSCs paid to the principal
underwriter will be used to reduce amounts owed to it. The Class B and Class C
Plans provide that the Fund 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. Because payments to the principal underwriter under the
Class B and Class C Plans are limited, uncovered distribution charges (sales
commissions paid by the principal underwriter plus interest, less the above
fees and CDSCs received by it) may exist indefinitely. For the sales
commissions and CDSCs paid on (and uncovered distribution charges of) Class B
and Class C shares, see Appendix B and Appendix C, respectively.

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 Class B and Class C 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 investment dealers), 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 Class B and Class C Plans.

The Class B and Class C Plans also authorize each Class to make payments
of service fees to the principal underwriter, investment dealers and other
persons in amounts not exceeding .25% of its average daily net assets for
personal services, and/or the maintenance of shareholder accounts. 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. For Class C,
investment dealers currently receive (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 dealer, and (b) monthly
service fees approximately equivalent to 1/12 of .25% of the value of Class C
shares sold by such dealer 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 investment dealers at the time of sale. For the service fees
paid by Class B and Class C shares, see Appendix B and Appendix C,
respectively.

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 at
the time of sale, it is anticipated that the Eaton Vance organization will
profit by reason of the operation of the Class B and Class C 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
Class B and Class C Plans if at any point in time the aggregate amounts
theretofore received by the principal underwriter pursuant to the Class B or
Class C Plan and from CDSCs have exceeded the total expenses theretofore
incurred by such organization in distributing shares. 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 Class A and Class B and Class C Plans continue in effect from year to
year 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 "Plan Trustees") and (ii) all of the
Trustees then in office. Each Plan may be terminated at any time by vote of a
majority of the Plan Trustees or by a vote of a majority of the outstanding
voting securities of the applicable Class. Each 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 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 a Plan
is in effect, the selection and nomination of the noninterested Trustees shall
be committed to the discretion of such Trustees. The Class A, Class B and
Class C Plans were initially approved by the Trustees, including the Plan
Trustees, on June 23, 1997.

The Trustees of the Trust believe that each Plan will be a significant
factor in the expected growth of each Fund's assets, and will result in
increased investment flexibility and advantages which have benefitted and will
continue to benefit the Fund and its shareholders. Payments for sales
commissions and distribution fees made to the principal underwriter under the
Class B and Class C Plans will compensate the principal underwriter for its
services and expenses in distributing those classes of shares. Service fee
payments made to the principal underwriter and investment dealers provide
incentives to provide continuing personal services to investors and the
maintenance of shareholder accounts. By providing incentives to the principal
underwriter and investment dealers, each 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 each
Plan will benefit the Fund and its shareholders.

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. The
Fund may also publish 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.
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 a Fund pursuant to a
standardized formula by dividing the 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 upon certain
redemptions at the rates set forth under "Sales Charges" in the prospectus.
Yield calculations assume the current maximum initial sales charge for Class A
shares set forth under "Sales Charges" 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. In addition, evaluations of the
Fund's performance, ratings, or rankings of mutual funds (which include the
Fund) made by independent sources 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 material furnished to present and prospective investors.

Information used in advertisements and in materials furnished to present
or prospective shareholders may include statistics, data and performance
studies prepared by independent organizations reflecting the investment
performance or return achieved by various classes and types of investments
(e.g., common stocks, small company stocks, long-term corporate bonds, long-
term government bonds, intermediate-term government bonds, U.S. Treasury
bills) over various periods of time. This information may be used to
illustrate the benefits of long-term investments in common stocks. Information
about the portfolio allocation, portfolio turnover and holdings of the
Portfolio may be included in advertisements and other material furnished to
present and prospective shareholders.

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.

Information used in advertisements and in materials provided to present
and prospective shareholders may include descriptions of Eaton Vance and other
Fund and Portfolio service providers, their investment styles, other
investment products, personnel and Fund distribution channels.

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.

Information in advertisements and materials furnished to present and
prospective investors may include profiles of different types of investors
(i.e., investors with different goals and assets) and different investment
strategies for meeting specific financial goals. Such information may provide
hypothetical illustrations which include: results of various investment
strategies; performance of an investment in the Fund over various time
periods; and results of diversifying assets among several investments with
varying performance. Information in advertisements and materials furnished to
present and prospective investors may also include quotations (including
editorial comments) and statistics concerning investing in securities, as well
as investing in particular types of securities and the performance of such
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, 1998. 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.

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.

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.

PORTFOLIO SECURITY TRANSACTIONS

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

BMR places the security transactions of the Portfolio and of all other
accounts managed by it for execution with many broker-dealer firms. BMR uses
its best efforts to obtain execution of portfolio transactions at prices which
are advantageous to the Portfolio and at reasonably competitive spreads or
(when a disclosed commision 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 full range and quality of
the broker-dealer's services, the value of the brokerage and research services
provided, the responsiveness of the broker-dealer to BMR, the size and type of
the transaction, the general execution and operational capabilities of the
broker-dealer, the nature and character of the market for the security, the
confidentiality, speed and certainty of effective execution required for the
transaction, the reputation, reliability, experience and financial condition
of the broker-dealer, the value and quality of services rendered by the
broker-dealer in 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 cutomarily 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, commissions exceeding those which
another firm might charge may be paid to broker-dealers who were selected to
execute transactions on behalf of the Portfolio and BMR's other clients in
part for providing brokerage and research services to BMR.

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 a 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 commission should be related to such services. Brokerage and research
services may include advice as to the value of securities, the advisability of
investing in, purchasing, or selling securities, and the availability of
securities or purchasers or sellers of securities; furnishing analyses and
reports concerning issuers, industries, securities, economic factors and
trends, portfolio strategy and the performance of accounts; effecting
securities transactions and performing functions incidental thereto (such as
clearance and settlement); and the "Research Services" referred to in the next
paragraph.

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

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

Subject to the requirement that BMR shall use its best efforts to seek and
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 participate in a transaction that is
allocated among other accounts. If an aggregate 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.

For the fiscal years ended December 31, 1996, 1997 and 1998, the Portfolio
paid no brokerage commissions on portfolio security transactions.

<PAGE>
FINANCIAL STATEMENTS

The audited financial statements of and the independent auditors' reports
for the Fund and the Portfolio, 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. Consistent with applicable law,
duplicate mailings of shareholder reports and certain other Fund information
to shareholders residing at the same address may be eliminated.

<PAGE>

APPENDIX A

CLASS A FEES, PERFORMANCE AND OWNERSHIP

SERVICE FEES
For the fiscal year ended December 31, 1998, Class A made service fee
payments under the Service Plan aggregating $ , of which $ was
paid to investment dealers 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, 1998, 1997 and 1996, were $ ,
$394,859 and $302,288, respectively, of which $ , $4,226 and $0,
respectively was received by the principal underwriter. For the fiscal years
ended December 31, 1998, 1997 and 1996, investment dealers received $ ,
$390,633 and $302,288, respectively, from the total sales charges.

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. For the fiscal year ended December 31,
1998, Class A paid the principal underwriter $ for repurchase
transactions handled by it.

PERFORMANCE INFORMATION

The table below indicates the cumulative and average 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 no guarantee 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

<TABLE>
<CAPTION>
TOTAL RETURN TOTAL RETURN
EXCLUDING MAXIMUM INCLUDING MAXIMUM
VALUE OF VALUE OF SALES CHARGE SALES CHARGE
INVESTMENT INVESTMENT INITIAL INVESTMENT --------------------------- ---------------------------
PERIOD DATE INVESTMENT ON 12/31/98 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- -------------------------- ------------- ----------- ------------- ------------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
10 Years ended
12/31/98 12/31/88 $ $ % % % %
5 Years Ended
12/31/98 12/31/93 $ $ % % % %
1 Year Ended
12/31/98 12/31/97 $ $ % % % %
</TABLE>

For the 30-day period ended December 31, 1998, the SEC yield for Class A
shares was %.

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

As of February 1, 1999, 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 February 1, 1999, Merrill Lynch, Pierce, Fenner & Smith,
Inc., Jacksonville, FL was the record owner of approximately 15.3% of the
outstanding Class A 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. 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 FEES, PERFORMANCE AND OWNERSHIP

DISTRIBUTION AND SERVICE FEES
During the fiscal year ended December 31, 1998, the principal underwriter
paid to investment dealers sales commissions of $ on sales of Class B
shares. During the same period, the Fund made distribution payments to the
principal underwriter under the Distribution Plan aggregating $ and the
principal underwriter received approximately $ in CDSCs imposed on early
redeeming shareholders. These distribution payments and CDSC payments reduced
uncovered distribution charges under the Plan. As at December 31, 1998, the
outstanding uncovered distribution charges of the principal underwriter
calculated under the Plan amounted to approximately $ (which amount
was equivalent to % of the Fund's net assets on such day). During the
fiscal year ended December 31, 1998, Class B made service fee payments to the
principal underwriter and investment dealers aggregating $ , of which
$ was paid to investment dealers and the balance of which was retained
by the principal underwriter.

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. For the fiscal year ended December 31,
1998, Class B paid the Principal Underwriter $ for repurchase
transactions handled by it.

PERFORMANCE INFORMATION

The table below indicates the cumulative and average annual total return
on a hypothetical investment of $1,000 in Class B shares for the periods shown
in the table. 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 B 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 no guarantee 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

<TABLE>
<CAPTION>
VALUE OF VALUE OF
INVESTMENT INVESTMENT
BEFORE AFTER TOTAL RETURN BEFORE TOTAL RETURN AFTER
DEDUCTING DEDUCTING DEDUCTING THE CDSC DEDUCTING THE CDSC
INVESTMENT INVESTMENT AMOUNT OF THE CDSC THE CDSC -------------------------- --------------------------
PERIOD DATE INVESTMENT ON 12/31/98 ON 12/31/98 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- -------------- ------------ ----------- --------------- --------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
10 Years Ended
12/31/98 12/31/88 $1,000 $ $ % % %
5 Years Ended
12/31/98 12/31/93 $1,000 $ $ % % % %
1 Year Ended
12/31/98 12/31/97 $1,000 $ $ % % % %
</TABLE>

For the 30 day period ended December 31, 1998, the SEC yield for Class B
shares was %.

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

As at February 1, 1999, 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 February 1, 1999, Merrill Lynch, Pierce, Fenner & Smith,
Inc., Jacksonville, FL was the record owner of approximately 15.5% 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. 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 FEES, PERFORMANCE AND OWNERSHIP

DISTRIBUTION AND SERVICE FEES
During the fiscal year ended December 31, 1998, the principal underwriter
paid to investment dealers sales commissions of $ on sales of Class C
shares. During the same period, the Fund made distribution payments to the
principal underwriter under the Distribution Plan aggregating $ and the
principal underwriter received approximately $ in CDSCs imposed on early
redeeming shareholders. These distribution payments and CDSC payments reduced
uncovered distribution charges under the Plan. As at December 31, 1998, the
outstanding uncovered distribution charges of the principal underwriter
calculated under the Plan amounted to approximately $ (which amount
was equivalent to % of the Fund's net assets on such day). During the
fiscal year ended December 31, 1998, Class C made service fee payments to the
principal underwriter and investment dealers aggregating $ of which
$ was paid to investment dealers and the balance of which was retained
by the principal underwriter.

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. For the fiscal year ended December 31,
1998, Class C paid the principal underwriter $ for repurchase
transactions handled by it.

PERFORMANCE INFORMATION

The table below indicates the cumulative and average annual total return
on a hypothetical investment of $1,000 in Class C shares for the periods shown
in the table. 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 C 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 C total return would be different. Past
performance is no guarantee 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

<TABLE>
<CAPTION>
VALUE OF VALUE OF
INVESTMENT INVESTMENT
BEFORE AFTER TOTAL RETURN BEFORE TOTAL RETURN AFTER
DEDUCTING DEDUCTING DEDUCTING THE CDSC DEDUCTING THE CDSC
INVESTMENT INVESTMENT AMOUNT OF THE CDSC THE CDSC -------------------------- --------------------------
PERIOD DATE INVESTMENT ON 12/31/98 ON 12/31/98 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- -------------- ------------ ----------- --------------- --------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
10 Years Ended
12/31/98 12/31/88 $1,000 $ $ % % % %
5 Years Ended
12/31/98 12/31/93 $1,000 $ $ % % % %
1 Year Ended
12/31/98 12/31/97 $1,000 $ $ % % % %
</TABLE>

For the 30 day period ended December 31, 1998, the SEC yield for Class C
shares was %.

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

As of February 1, 1999, 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 of February 1, 1999, Merrill Lynch, Pierce, Fenner & Smith,
Inc., Jacksonville, FL 32246 was the record owner of approximately 28.9% of
the outstanding Class C shares which were held on behalf of its customers who
are 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 C shares as of such date.
<PAGE>

PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION

STATEMENT OF
ADDITIONAL INFORMATION
May 1, 1999

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 ("SAI") provides information about
the Funds listed above and Cash Management Portfolio (the "Portfolio"). Each
Fund is a series of Eaton Vance Mutual Funds Trust. Capitalized terms used in
this SAI and not otherwise defined have the meanings given to them in the
prospectus. This SAI contains additional information about:

Page
Strategies and Risks ........................................... 2
Investment Restrictions ........................................ 6
Management and Organization .................................... 7
Investment Advisory and Administrative Services ................ 11
Other Service Providers ........................................ 12
Purchasing and Redeeming Shares ................................ 13
Distribution Plan .............................................. 13
Calculation of Yield Quotations ................................ 15
Taxes .......................................................... 16
Portfolio Security Transactions ................................ 17
Financial Statements ........................................... 19

Appendices:
A: Fund Specific Information ................................... a-1
B: Ratings ..................................................... b-1

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

THIS SAI IS NOT A PROSPECTUS AND IS AUTHORIZED FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS ONLY IF PRECEDED OR ACCOMPANIED BY THE FUNDS' PROSPECTUS
DATED MAY 1, 1999, AS SUPPLEMENTED FROM TIME TO TIME, WHICH IS INCORPORATED
HEREIN BY REFERENCE. THIS SAI SHOULD BE READ IN CONJUNCTION WITH THE PROSPECTUS,
WHICH MAY BE OBTAINED BY CALLING 1-800-225-6265.

<PAGE>

STRATEGIES AND RISKS

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.

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.

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. Each Fund or the Portfolio will not:

(a) 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;
(b) 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;
(c) 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. If a Fund invests in Rule 144A
Securities, the level of portfolio illiquidity may be increased to the
extent that eligible buyers become uninterested in purchasing such
securities. 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.

MANAGEMENT AND ORGANIZATION

FUND MANAGEMENT. The Trustees of the Trust are responsible for the overall
management and supervision of the Trust's affairs. 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. Those
Trustees who are "interested persons" of the Trust or the Portfolio, as defined
in the 1940 Act, are indicated by an asterisk(*).

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

JESSICA M. BIBLIOWICZ (39), Trustee
President and Chief Operating Officer of John A. Levin & Co. (a registered
investment advisor) (since July 1997) and a Director of Baker, Fentress &
Company which owns John A. Levin & Co. (since July 1997). Formerly Executive
Vice President of Smith Barney Mutual Funds (from July 1994 to June 1997).
Formerly Elected Trustee October 30, 1998. Trustee of various investment
companies managed by Eaton Vance or BMR since October 30, 1998.
Address: One Rockefeller Plaza, New York, NY 10020

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

SAMUEL L. HAYES, III (64), Trustee
Jacob H. Schiff Professor of Investment Banking Emeritus, Harvard University
Graduate School of Business Administration. Trustee of the Kobrick-Cendant
Investment Trust (mutual funds). Trustee of various investment companies
managed by Eaton Vance or BMR.
Address: 345 Nahatan Road, Westwood, Massachusetts 02090

NORTON H. REAMER (63), 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). Trustee of
various investment companies managed by Eaton Vance or BMR.
Address: One International Place, Boston, Massachusetts 02110

JACK L. TREYNOR (69), Trustee
Investment Adviser and Consultant. Trustee of various investment companies
managed by Eaton Vance or BMR.
Address: 504 Via Almar, Palos Verdes Estates, California 90274

WILLIAM H. AHERN, JR. (39), Vice President
Assistant Vice President of BMR and Eaton Vance. Officer of various investment
companies managed by Eaton Vance or BMR.

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

ROBERT B. MACINTOSH (42), Vice President
Vice President of Eaton Vance and BMR. Officer of various investment companies
managed by Eaton Vance or BMR.

MICHAEL B. TERRY (56), Vice President
Vice President of BMR and Eaton Vance. Officer of various investment companies
managed by Eaton Vance or BMR.

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

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

JANET E. SANDERS (63), Assistant Treasurer and Assistant Secretary
Vice President of Eaton Vance and BMR. Officer of various investment companies
managed by Eaton Vance or BMR.

A. JOHN MURPHY (36), Assistant Secretary
Vice President of BMR and Eaton Vance. Officer of various investment companies
managed by Eaton Vance or BMR.

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

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, 1998, 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):

<TABLE>
<CAPTION>
SOURCE OF JESSICA M. DONALD R. SAMUEL L. NORTON H. LYNN A. JOHN L. JACK L.
COMPENSATION BIBLIOWICZ(6) DWIGHT HAYES, III REAMER STOUT(6) THORNDIKE TREYNOR
--------- ------- ------ ------- ------ ------ ------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Trust(2) $ -- $ $ $ $ -- $ $
Portfolio -- --
Trust and Fund
Complex $ 33,000 $160,000(3) $170,000(4) $160,000 $ 33,333 $160,000(5) $170,000
- ----------
(1) As of May 1, 1999, the Eaton Vance complex consists of 153 registered investment companies or series thereof.
(2) The Trust consisted of 12 Funds as of December 31, 1998.
(3) Includes $60,000 of deferred compensation.
(4) Includes $41,563 of deferred compensation.
(5) Includes $119,091 of deferred compensation.
(6) Ms. Bibliowicz and Ms. Stout were elected as Trustees on October 30, 1998 and will receive compensation approximating the other
Trustees after November 1, 1998.
</TABLE>

ORGANIZATION. Each Fund is a series of the Trust, which is organized under
Massachusetts law, and is operated as an open-end management investment company.
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). The Trustees of the
Trust have the authority under the Declaration of Trust to create additional
classes of shares with differing rights and privileges. When issued and
outstanding, shares are fully paid and nonassessable by the Trust. Shareholders
are entitled to one vote for each full share held. Fractional shares may be
voted proportionately. Shares of a 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 a 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 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 offers 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 a Fund.

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.

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
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 of the Portfolio 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 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.

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. 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.

Each 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.

INVESTMENT ADVISORY AND ADMINISTRATIVE SERVICES

INVESTMENT ADVISORY SERVICES. 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 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.

For a description of the compensation that the Portfolio pays BMR under the
Investment Advisory Agreement, see the prospectus. As at December 31, 1998, the
Portfolio had net assets of $ . For the fiscal years ended December 31, 1998,
1997 and 1996, the Portfolio paid BMR advisory fees of $ , $724,890 and
$939,313, respectively (equivalent to 0.50% 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.

For a description of the compensation that Tax Free Reserves pays Eaton
Vance under the Investment Advisory Agreement, see the prospectus. As at
December 31, 1998, Tax Free Reserves had net assets of $ . For the fiscal years
ended December 31, 1998, 1997 and 1996, Eaton Vance would have earned, absent a
fee reduction, advisory fees of $ , $320,793 and $308,030, 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, 1998, 1997 and 1996 in the amount of
$ , $99,776 and $226,940, 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.

ADMINISTRATIVE SERVICES. 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 Fund's affairs, subject to the supervision of the Trustees of the Trust, and
shall furnish for the use of the Funds office space and all necessary office
facilities, equipment and personnel for administering the affairs of each Funds.

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

EXPENSES. Each Fund is responsible for all expenses not expressly stated to be
payable by another party (such as the investment adviser under the Investment
Advisory Agreement or the principal underwriter under the Distribution
Agreement). In the case of expenses incurred by the Trust, each Fund is
responsible for its pro rata share of those expenses. The only expenses of a
Fund allocated to a particular class are those incurred under the Distribution
or Service Plan applicable to that class and those resulting from the fee paid
to the principal underwriter for repurchase transactions.

OTHER SERVICE PROVIDERS

PRINCIPAL UNDERWRITER. Eaton Vance Distributors, Inc. ("EVD"), 24 Federal
Street, Boston, MA 02110, is the Funds' principal underwriter. The principal
underwriter acts as principal in selling shares under a Distribution Agreement
with the Trust. The expenses of printing copies of prospectuses used to offer
shares 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 a Fund and its shares under
federal and state securities laws are borne by that 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 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 investment dealers discounts from the applicable
public offering price which are alike for all investment dealers. EVD is a
wholly-owned subsidiary of EVC. Mr. Hawkes is a Vice President and Director and
Messrs. Dynner and O'Connor are Vice Presidents of EVD.

CUSTODIAN. Investors Bank & Trust Company ("IBT"), 200 Clarendon Street, Boston,
MA 02116, serves as custodian to the Funds 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 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 SEC. EVC and its affiliates and their
officers and employees from time to time have transactions with various banks,
including 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 a Fund and such banks.

INDEPENDENT ACCOUNTANTS. PricewaterhouseCoopers LLP, 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 SEC.

TRANSFER AGENT. First Data Investor Services Group, P.O. Box 5123,
Westborough, MA 01581-5123, serves as transfer and dividend disbursing agent
for the Funds.

PURCHASING AND REDEEMING SHARES

CALCULATION OF NET ASSET VALUE. The net asset value of each Fund and the
Portfolio is computed by IBT (as agent and custodian for the Funds and the
Portfolio) in the manner described in the prospectus. The Funds and the
Portfolio will be closed for business and will not price their respective 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. 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 and certain procedures esablished 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.

CHECKWRITING. Shareholders of Cash Fund and Tax Free Reserves with
uncertificated shares may redeem shares by check. 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.

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.

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.

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.

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,
analytical, statistical and quotation services, data, information and other
services, products and materials which assist such advisers in the performance
of their investment responsibilities ("Research Services") from broker-dealer
firms which execute portfolio transactions for the clients of such advisers and
from third parties with which such broker-dealers have arrangements. Consistent
with this practice, 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, political, business
and market information, industry and company reviews, evaluations of securities
and portfolio strategies and transactions, proxy voting data and analysis
services, technical analysis of various aspects of the securities markets 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 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.

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

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, 1998, 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, 1998, 1997 and 1996 Tax Free Reserves and the Portfolio paid
no brokerage commissions on portfolio security transactions.

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. Consistent with
applicable law, duplicate mailings of shareholder reports and certain other Fund
information to shareholders residing at the same address may be eliminated.

<PAGE>

APPENDIX A: FUND SPECIFIC INFORMATION

FEES AND EXPENSES

DISTRIBUTION PLAN -- LIQUID ASSETS FUND

During the fiscal year ended December 31, 1998, the Principal Underwriter
received approximately $ _______ in CDSCs imposed on early redeeming
shareholders. These CDSC payments reduced uncovered distribution charges under
the Plan. As at December 31, 1998, the outstanding uncovered distribution
charges of the Principal Underwriter calculated under the Plan amounted to
approximately $ ________ (which amount was equivalent to _____% of the Fund's
net assets on such day). For the fiscal year ended December 31, 1998, the Fund
made service fee payments under the Plan aggregating $ _________, of which $
________ was paid to investment dealers and the balance of which was retained by
the Principal Underwriter.

ADMINISTRATOR -- MONEY MARKET FUND

As stated under "Investment Advisory and Administrative Services" in this
SAI, the Administrator currently receives no compensation for providing
administrative services to the Fund. For the fiscal years ended December 31,
1998, 1997 and 1996, $ ______, $22,883 and $8,579, 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, 1998, the Principal Underwriter
paid to investment dealers sales commissions of $ ______ 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 $ ________ and the Principal
Underwriter received approximately $ ________ in CDSCs imposed on early
redeeming shareholders. These sales commissions and CDSC payments reduced
uncovered distribution charges under the Plan. As at December 31, 1998, the
outstanding uncovered distribution charges of the Principal Underwriter
calculated under the Plan amounted to approximately $ ________ (which amount was
equivalent to _______% of the Fund's net assets on such day). For the fiscal
year ended December 31, 1998, the Fund made service fee payments under the Plan
aggregating $ _______, of which $ ________ was paid to investment dealers 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, 1998, the
Fund paid the Principal Underwriter $ ______ 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, 1998 were % and %, respectively.

LIQUID ASSETS FUND. The Fund's annualized current and effective yields for the
seven-day period ended December 31, 1998 were % and %, respectively.

MONEY MARKET FUND. The Fund's annualized and current effective yields for the
seven-day period ended December 31, 1998 were % and %, respectively.

TAX FREE RESERVES. The Fund's annualized current and effective yields for the
seven-day period ended December 31, 1998 were % and %, respectively.
The taxable-equivalent current and effective yields for that same period were
% and % (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 February 1, 1999, 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 February 1, 1999, 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. 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 February 1, 1999, 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 February 1, 1999, Merrill Lynch, Pierce, Fenner & Smith,
Inc., Jacksonville, FL was the record owner of approximately 10.8% 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 11.3% 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 February 1, 1999, 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 February 1, 1999, 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 February 1, 1999, Saturn & Co., a nominee of Investors Bank &
Trust Company, was the record owner of approximately 62.8% 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 (16.3%) and Peter S. Cahill TTEE
Peter S. Cahill Revocable Trust U/A DTD 8/4/94, c/o The Newport Group, Heathrow,
FL (5.1%). 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>

PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION

STATEMENT OF
ADDITIONAL INFORMATION
May 1, 1999
EATON VANCE MUNICIPAL BOND FUND

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

This Statement of Additional Information ("SAI") provides general
information about the Fund. The Fund is a series of Eaton Vance Mutual Funds
Trust. Capitalized terms used in this SAI and not otherwise defined have the
meanings given to them in the prospectus. This SAI contains additional
information about:

Page
Strategies and Risks ........................................... 2
Investment Restrictions ........................................ 7
Management and Organization .................................... 8
Investment Advisory and Administrative Services ................ 11
Other Service Providers ........................................ 13
Purchasing and Redeeming Shares ................................ 14
Sales Charges .................................................. 15
Performance .................................................... 18
Taxes .......................................................... 19
Portfolio Security Transactions ................................ 21
Financial Statements ........................................... 23

Appendices:
A: Class A Fees, Performance and Ownership ..................... a-1
B: Class B Fees, Performance and Ownership ..................... b-1
C: Class I Fees, Performance and Ownership ..................... c-1
D: Tax Equivalent Yield Table .................................. d-1
E: Ratings ..................................................... e-1

THIS 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,
1999, AS SUPPLEMENTED FROM TIME TO TIME, WHICH IS INCORPORATED HEREIN BY
REFERENCE. THIS SAI SHOULD BE READ IN CONJUNCTION WITH THE PROSPECTUS, WHICH MAY
BE OBTAINED BY CALLING 1-800-225-6265.

<PAGE>

STRATEGIES AND RISKS

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.

ISSUER CONCENTRATION. The Fund will invest at least 65% of total assets in
municipal obligations and 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.

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

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

Certain municipal lease obligations 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 Trust, 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. While municipal obligations rated investment grade or below and
comparable unrated municipal 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.

Municipal obligations held by the Fund 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 the Fund's
investment policies. The Fund may retain in its portfolio an obligation whose
rating drops after its acquisition, including defaulted obligations, if such
retention is considered desirable by the investment adviser; provided, however,
that holdings of obligations rated below Baa or BBB will be less than 35% of net
assets. In the event the rating of an obligation held by the Fund is downgraded,
causing the Fund to exceed this limitation, 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 the Fund's credit quality
limitations. In the case of a defaulted obligation, the Fund may incur
additional expense seeking recovery of its investment. See "Portfolio of
Investments" in the "Financial Statements" incorporated by reference into this
SAI with respect to any defaulted obligations held by the Fund.

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 the Fund invests in lower rated or unrated municipal obligations, the
achievement of the Fund's goals is more dependent on the investment adviser's
ability than would be the case if the Fund were investing in municipal
obligations in the higher rating categories. 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.

PORTFOLIO TURNOVER. 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.

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 may also purchase instruments that give the Fund the option to purchase a
municipal obligation when and if issued.

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

ILLIQUID OBLIGATIONS. At times, a substantial portion of the Fund's 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, the
Fund could find it more difficult to sell such securities when the investment
adviser believes it advisable to do so or may be able to sell such securities
only at prices lower than if such securities were more widely held. Under such
circumstances, it may also be more difficult to determine the fair value of such
securities for purposes of computing the Fund's net asset value.

The secondary market for some municipal obligations issued within a state
(including issues which are privately placed with the Fund) is less liquid than
that for taxable debt obligations or other more widely traded municipal
obligations. The Fund will not invest in illiquid securities if more than 15% of
its net assets would be invested in securities that are not readily marketable.
No established resale market exists for certain of the municipal obligations in
which the Fund may invest. The market for obligations rated below investment
grade is also likely to be less liquid than the market for higher rated
obligations. As a result, the Fund 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.

SECURITIES LENDING. The Fund may seek to increase its income by lending
portfolio securities to broker-dealers or other institutional borrowers.
Distributions by the Fund of any income realized by the Fund from securities
loans will be taxable. If the management of the Fund decides to make securities
loans, it is intended that the value of the securities loaned would not exceed
30% of the Fund's total assets. Securities lending involves risks of delay in
recovery or even loss of rights on the securities loaned if the borrower fails
financially. 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
Securities and Exchange Commission ("SEC") 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.

TEMPORARY INVESTMENTS. Under unusual market conditions, the Fund may invest
temporarily in cash or cash equivalents. Cash equivalents are highly liquid,
short-term securities such as commercial paper, certificates of deposit,
short-term notes and short-term U.S. Government 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
outstanding shares are present or represented at the meeting, or (ii) more than
50% of the outstanding 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. 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; or

(b) 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. If the Fund invests in Rule 144A
securities, the level of portfolio illiquidity may be increased to the
extent that eligible buyers became uninterested in purchasing such
securities.

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. Where applicable and notwithstanding
the foregoing, under normal market conditions the Fund must take actions
necessary to comply with the policy of investing at least 65% of total assets in
municipal obligations and not investing more than 15% of net assets in illiquid
securities. Moreover, the Fund must always be in compliance with the borrowing
policies set forth above.

MANAGEMENT AND ORGANIZATION

FUND MANAGEMENT. The Trustees of the Trust are responsible for the
overall management and supervision of the Trust's affairs. 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. Those Trustees who are
"interested persons" of the Trust, as defined in the 1940 Act, are indicated by
an asterisk(*).

JESSICA M. BIBLIOWICZ (39), Trustee
President and Chief Operating Officer of John A. Levin & Co. (a registered
investment advisor) (since July 1997) and a Director of Baker, Fentress &
Company which owns John A. Levin & Co. (since July 1997). Formerly Executive
Vice President of Smith Barney Mutual Funds (from July 1994 to June 1997).
Elected Trustee October 30, 1998. Trustee of various investment companies
managed by Eaton Vance or BMR since October 30, 1998.
Address: One Rockefeller Plaza, New York, NY 10020

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

SAMUEL L. HAYES, III (64), Trustee
Jacob H. Schiff Professor of Investment Banking, Emeritus, Harvard University
Graduate School of Business Administration. Trustee of the Kobrick-Cendant
Investment Trust (mutual funds). Trustee of various investment companies
managed by Eaton Vance or BMR.
Address: 345 Nahatan Road, Westwood, Massachusetts 02090

NORTON H. REAMER (63), 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). Trustee of
various investment companies managed by Eaton Vance or BMR.
Address: One International Place, Boston, Massachusetts 02110

JOHN L. THORNDIKE (72), Trustee
Former Director of Fiduciary Company Incorporated. Trustee of various
investment companies managed by Eaton Vance or BMR.
Address: 175 Federal Street, Boston, Massachusetts 02110

JACK L. TREYNOR (69), Trustee
Investment Adviser and Consultant. Trustee of various investment companies
managed by Eaton Vance or BMR.
Address: 504 Via Almar, Palos Verdes Estates, California 90274

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

ROBERT B. MacINTOSH (42), Vice President
Vice President of Eaton Vance and BMR. Officer of various investment companies
managed by Eaton Vance or BMR.

WILLIAM H. AHERN, JR. (39), Vice President
Vice President of BMR and Eaton Vance. Officer of various investment companies
managed by Eaton Vance or BMR.

MICHAEL B. TERRY (56), Vice President
Vice President of BMR and Eaton Vance. Officer of various investment companies
managed by Eaton Vance or BMR.

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

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

JANET E. SANDERS (63), Assistant Treasurer and Assistant Secretary
Vice President of Eaton Vance and BMR. Officer of various investment companies
managed by Eaton Vance or BMR.

A. JOHN MURPHY (36), Assistant Secretary
Vice President of BMR and Eaton Vance. Officer of various investment companies
managed by Eaton Vance or BMR.

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

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, 1998, 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)

<TABLE>
<CAPTION>
AGGREGATE TOTAL COMPENSATION
COMPENSATION FROM TRUST AND
NAME FROM TRUST(2) AND FUND COMPLEX
- ---- ------------- ----------------
<S> <C> <C>
Jessica Bibliowicz(9) ............................ -- --
Donald R. Dwight ................................. $ (3) $ (6)
Samuel L. Hayes, III ............................. (4) (7)
Norton H. Reamer .................................
Lynn A. Stout(9) ................................. -- --
John L. Thorndike ................................ (5) (8)
Jack L. Treynor ..................................
</TABLE>
- ----------
(1) As of May 1, 1999, the Eaton Vance fund complex consists of 152 registered
investment companies or series thereof.
(2) The Trust consisted of 12 Funds as of December 31, 1998.
(3) Includes $ of deferred compensation.
(4) Includes $ of deferred compensation.
(5) Includes $ of deferred compensation.
(6) Includes $ of deferred compensation.
(7) Includes $ of deferred compensation.
(8) Includes $ of deferred compensation.
(9) Ms. Bibliowicz and Ms. Stout were elected Trustees on October 30, 1998 and
will receive compensation approximating the other Trustees after November 1,
1998.

ORGANIZATION. On January 1, 1998, the Fund was reorganized as a series of the
Trust, which is organized under Massachusetts law as a business trust and is
operated as an open-end management investment company. 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 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. Each class
represents an interest in the Fund, but is subject to different expenses, rights
and privileges. The Trustees have the authority under the Declaration of Trust
to create additional classes of shares with differing rights and privileges.
When issued and outstanding, shares are fully paid and nonassessable by the
Trust. 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.

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 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.

INVESTMENT ADVISORY SERVICES

INVESTMENT ADVISORY SERVICES. The Trust has engaged Eaton Vance to act
as investment adviser to the Fund. As investment adviser to the Fund, Eaton
Vance manages the Fund's investments, subject to the supervision of the Board of
Trustees of the Trust. Eaton Vance is also responsible for effecting all
security transactions on behalf of the Fund, including the allocation of
principal transactions and portfolio brokerage and the negotiation of
commissions.

Eaton Vance furnishes to the Fund investment research, advice and
assistance, administrative services, office space, equipment and clerical
personnel, and investment advisory, statistical and research facilities, and has
arranged for certain members of the Eaton Vance organization to serve without
salary as officers or Trustees of the Trust. 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 its 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, proceedings and claims and any legal obligation of
the Trust to indemnify its officers and Trustees with respect thereto, to the
extent not covered by insurance.

For a description of the compensation that the Fund pays Eaton Vance see the
prospectus. As of December 31, 1998, the Fund had net assets of $ . For the
fiscal years ended December 31, 1998, 1997 and 1996, Eaton Vance earned advisory
fees of $ , $441,330 and $460,753, respectively.

The Investment Advisory Agreement continues in effect from year to year so
long as such continuance is approved at least annually (i) by the vote of a
majority of the noninterested Trustees of the Trust 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 days' written notice by the Board of Trustees of either
party or by vote of the majority of the outstanding voting securities of the
Fund, and 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 Eaton Vance 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.

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

Eaton Vance offers single-state tax-free portfolios in more states than any
other sponsor of mutual funds. There are 40 long-term state portfolios, 5
national portfolios and 9 limited maturity portfolios, which serve as investment
vehicles for over 53 mutual funds with varying pricing options. A staff of 26
(including portfolio managers and 11 credit specialists) is responsible for the
day-to-day management of over 3,500 issues in 54 mutual fund portfolios. Assets
managed by the municipal investment group are currently over $8 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.

The following persons manage one or more of the Eaton Vance municipal
portfolios. For the identity of the Portfolio's portfolio manager, see the
prospectus.

William H. Ahern, Jr. is a Vice President of Eaton Vance and BMR. Mr.
Ahern graduated from Boston College in 1981 with a B.A. in Economics, and
received his M.B.A. degree in Finance from Babson College in 1987. Mr. Ahern
is a member of the Boston Security Analysts Society.

Timothy T. Browse is a Vice President of Eaton Vance and BMR. Mr. Browse
graduated from St. Lawrence University in 1981 and received his M.B.A. degree
from Boston University in 1990.

Cynthia J. Clemson is a Vice President of Eaton Vance and BMR. Ms. Clemson
graduated from Mount Holyoke College with a B.A. in 1985 and received her
M.B.A., cum laude, from Boston University in 1990. She is a member of the
Boston Municipal Analysts Forum, the Boston Security Analyst Society and the
Financial Analysts Federation.

Thomas J. Fetter is a Vice President of Eaton Vance and BMR, and Director
of Municipal Investments. Mr. Fetter graduated with a degree in Business
Administration from Kent State University. He is a Chartered Financial Analyst
and member of the Boston Security Analysts Society. He is also a member of the
Boston Municipal Analysts Forum.

Robert B. MacIntosh is a Vice President of Eaton Vance and BMR, and the
portfolio manager of single-state, tax-exempt funds in six states: Hawaii,
Louisiana, Massachusetts, Minnesota, New Jersey and North Carolina. He also
serves as economic spokesman for the Eaton Vance organization.

Thomas M. Metzold is a Vice President of Eaton Vance and BMR. He is a
Chartered Financial Analyst and a member of the Boston Security Analysts
Society, the Association for Investment Management & Research, the Boston
Municipal Analysts Forum, and the National Federation of Municipal Analysts.

EXPENSES. The Fund is responsible for all expenses not expressly stated to be
payable by another party (such as the investment adviser under the Investment
Advisory Agreement or the principal underwriter under the Distribution
Agreement). In the case of expenses incurred by the Trust, the Fund is
responsible for its pro rata share of those expenses. The only expenses of the
Fund allocated to a particular class are those incurred under the Distribution
or Service Plan applicable to that class and those resulting from the fee paid
to the principal underwriter for repurchase transactions.

OTHER SERVICE PROVIDERS

PRINCIPAL UNDERWRITER. Eaton Vance Distributors, Inc. ("EVD"), 24
Federal Street, Boston, MA 02110, is the Fund's principal underwriter. The
principal underwriter acts as principal in selling shares under a Distribution
Agreement with the Trust. The expenses of printing copies of prospectuses used
to offer shares 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 as it applies to Class A and Class I shares 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 Distribution Agreement as it
applies to Class B shares 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 shares of the class or on
six months' notice by the principal underwriter, and is automatically terminated
upon assignment. The principal underwriter distributes 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 investment dealers discounts
from the applicable public offering price which are alike for all investment
dealers. See "Sales Charges." EVD is a wholly-owned subsidiary of EVC. Mr.
Hawkes is a Vice President and Director and Messrs. Dynner and O'Connor are Vice
Presidents of EVD.

CUSTODIAN. Investors Bank & Trust Company ("IBT"), 200 Clarendon Street, Boston,
MA 02116, serves as custodian to the Fund. IBT has the custody of all cash and
securities of the Fund, maintains the general ledger of the Fund 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 SEC. EVC
and its affiliates and their officers and employees from time to time have
transactions with various banks, including 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 banks.

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

TRANSFER AGENT. First Data Investor Services Group, P.O. Box 5123,
Westborough, MA 01581-5123, serves as transfer and dividend disbursing agent
for the Fund.

PURCHASING AND REDEEMING SHARES

CALCULATION OF NET ASSET VALUE. The net asset value of the Fund is computed by
IBT (as agent and custodian for the Fund) by subtracting the liabilities of the
Fund from the value of its total assets. 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 transation prices for most
municipal obligations held by the Fund, and such obligations, including those
purchased on a when-issued basis, will normally be valued on the basis of
valuations furnished by a pricing service. The pricing service uses information
with respect to transactions in bonds, quotations from bond dealers, market
transactions in comparable securities, various relationships between securities,
and yield to maturity in determining value. Taxable obligations for which price
quotations are readily available normally will be valued at the mean between the
latest available bid and asked prices. Open futures positions on debt securities
are valued at the most recent settlement prices, unless such price does not
reflect the fair value of the contract, in which case the positions will be
valued by or at the direction of the Trustees of the Trust. Other assets are
valued at fair 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.

ADDITIONAL INFORMATION ABOUT PURCHASES. Fund shares are continuously offered
through investment dealers which have entered agreements with the principal
underwriter. The public offering price is the net asset value next computed
after receipt of the order, plus, in the case of Class A shares, a variable
percentage (sales charge) depending upon the amount of purchase as indicated by
the sales charge table set forth in the prospectus. The sales charge is divided
between the principal underwriter and the investment dealer. The sales charge
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 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. See "Sales Charges".

SUSPENSION OF SALES. The Trust may, in its absolute discretion, suspend,
discontinue or limit the offering of one or more of its classes of 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 Class B 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 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.

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 minumum 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 and Class I or net asset value of Class B 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 investment dealer, together with a completed and signed Letter of
Transmittal in approved form (available from investment dealers). 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.

ADDITIONAL INFORMATION ABOUT REDEMPTIONS. 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
SEC, or during any emergency as determined by the SEC 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 SEC for the protection of
investors.

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 Fund'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 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.

SYSTEMATIC WITHDRAWAL PLAN. The transfer agent will send to the shareholder
regular monthly or quarterly payments of any permitted amount designated by the
shareholder based upon the value of the shares held. The checks will be drawn
from share redemptions and hence, 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.

SALES CHARGES

DEALER COMMISSIONS. The principal underwriter may, from time to time, at its own
expense, provide additional incentives to investment dealers 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 investment dealers 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 investment dealers. The principal underwriter
may allow, upon notice to all investment dealers 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
investment dealers may be deemed to be underwriters as that term is defined in
the Securities Act of 1933.

SALES CHARGE WAIVERS. 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 investment dealers and
bank employees who refer customers to registered representatives of invetment
dealers; to officers and employees of IBT and the transfer agent; and to such
persons' spouses, parents, siblings and children 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". 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 investment advisory, agency, custodial or trust
account managed or administered by Eaton Vance or by any parent, subsidiary or
other affiliate of Eaton Vance. Class A shares are offered at net asset value to
the foregoing persons and in the foregoing situations because either (i) there
is no sales effort involved in the sale of shares or (ii) the investor is paying
a fee (other than the sales charge) to the investment dealer involved in the
sale.

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 of another
Eaton Vance fund 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. Any
investor considering signing a Statement of Intention should read it carefully.

RIGHT OF ACCUMULATION. 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. The sales charge on
the shares being purchased will then be at the rate applicable to the aggregate.
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
investment dealer must provide the principal underwriter (in the case of a
purchase made through an investment dealer) 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.

The Trust has also adopted a compensation-type Distribution Plan ("Class B
Plan") pursuant to Rule 12b-1 under the 1940 Act for the Fund's Class B shares.
The Class B Plan is designed to permit an investor to purchase shares through an
investment dealer without incurring an initial sales charge and at the same time
permit the principal underwriter to compensate investment dealers in connection
therewith. The Class B 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. To pay these amounts, 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 investment dealers on the sale of shares and for interest
expenses. The principal underwriter uses its own funds to pay sales commissions
(except on exchange transactions and reinvestments) to investment dealers at the
time of sale equal to 4% of the purchase price of the shares sold by such
dealers. CDSCs paid to the principal underwriter will be used to reduce amounts
owed to it. The Class B Plan provides that the Fund 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. Because payments to the principal
underwriter under the Plan are limited, uncovered distribution charges (sales
commissions paid by the principal underwriter plus interest, less the above fees
and CDSCs received by it) may exist indefinitely. For the sales commissions and
CDSCs paid on (and uncovered distribution charges of) Class B shares, see
Appendix B.

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 Class B Plan 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
investment dealers), 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
Class B Plan.

The Class B Plan also authorizes the Class to make payments of service fees
to the principal underwriter, investment dealers and other persons in amounts
not exceeding .25% of its average daily net assets for personal services, and/or
the maintenance of shareholder accounts. 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. For the service fees paid by Class B
shares, see Appendix B.

Currently, payments of sales commissions and distribution fees and of
service fees may equal 1% of the 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 at the
time of sale, it is anticipated that the Eaton Vance organization will profit by
reason of the operation of the Class B 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 Class B Plan if at any
point in time the aggregate amounts theretofore received by the principal
underwriter pursuant to the Class B Plan and from CDSCs have exceeded the total
expenses theretofore incurred by such organization in distributing shares. 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 Class A and Class B Plans continue in effect from year to year 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 "Plan Trustees") and (ii) all of the Trustees then in office. Each
Plan may be terminated at any time by vote of a majority of the Plan Trustees or
by a vote of a majority of the outstanding voting securities of the applicable
Class. Each 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 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 a Plan is in effect, the selection and nomination of the
noninterested Trustees shall be committed to the discretion of such Trustees.
The Class A and Class B Plans were approved by the Trustees, including the Plan
Trustees, on October 17, 1997.

The Trustees of the Trust believe that each Plan will be a significant
factor in the expected growth of each Fund's assets, and will result in
increased investment flexibility and advantages which have benefitted and will
continue to benefit the Fund and its shareholders. Payments for sales
commissions and distribution fees made to the principal underwriter under the
Class B Plan will compensate the principal underwriter for its services and
expenses in distributing those classes of shares. Service fee payments made to
the principal underwriter and investment dealers provide incentives to provide
continuing personal services to investors and the maintenance of shareholder
accounts. By providing incentives to the principal underwriter and investment
dealers, each 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 each Plan will benefit the Fund
and its shareholders.

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. Total returns may also be
calculated based on a purchase at net asset value and at varying sales charge
levels. 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
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 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 "Sales Charges" in the prospectus. Yield calculations assume the current
maximum initial sales charge for Class A shares set forth under "Sales Charges"
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.

The Fund may also publish 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. The Fund's performance may
differ from that of other investors in the Portfolio, including other investment
companies.

The Trust (or principal underwriter) may provide investors with information
on municipal bond investing, which may include comparative performance
information, evaluations of Fund performance, charts and/or illustrations
prepared by independent sources (such as Lipper Analytical Services Inc.,
CDA/Wiesenberger, Morningstar, Inc., The Bond Buyer, the Federal Reserve Board
or The Wall Street Journal). The Trust may also refer in investor publications
to Tax Freedom Day, as computed by the Tax Foundation, Washington, DC 20005, to
help illustrate the value of tax free investing, as well as other tax-related
information. Information, charts and illustrations showing the effects of
inflation and taxes (including their effects on the dollar and the return on
various investments) and compounding earnings may also be included in
advertisements and materials furnished to present and prospective investors.

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.

Comparative information about the yield 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 mutual fund 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.

Information used in advertisements and in materials provided to present and
prospective shareholders may include descriptions of Eaton Vance and other Fund
service providers, their investment styles, other investment products, personnal
and Fund distribution channels.

-- 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. The Fund so qualified for its fiscal
year ended December 31, 1998.

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.

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 full range and quality of the executing firm's services, the
value of brokerage and research services, the value of the brokerage and
research services provided, the responsiveness of the firm to Eaton Vance, the
size and type of the transaction, the nature and character of the market for the
security, the confidentiality, speed and certainty of effective execution
required for the transaction, the general execution and operational capabilities
of the executing firm, the reputation, reliability, experience and financial
condition of the firm, the value and quality of the services rendered by the
firm in this and other transactions, and the reasonableness of the spread or
commission, if any. Municipal obligations, including state obligations,
purchased and sold by the 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, and dealers in
fixed-price offerings, the cost of which may include undisclosed fees and
concessions to the underwriters. On occasion it may be necessary or appropriate
to purchase or sell a security through a broker on an agency basis, in which
case the 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, analytical, statistical and quotation services, data, information and
other services, products and materials which assist such advisers in the
performance of their investment responsibilities ("Research Services") from
broker-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, business and market information, industry and company reviews,
evaluations of securities and portfolio strategies and transactions, proxy
voting data and analysis services, technical analysis of various aspects of the
securities markets, 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 portfolio security transactions 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.

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

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.

Municipal 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.

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. Consistent with applicable law, duplicate mailings
of shareholder reports and certain other Fund information to shareholders
residing at the same address may be eliminated.

<PAGE>

APPENDIX A
CLASS A FEES, PERFORMANCE AND OWNERSHIP

SERVICE FEES
For the fiscal year ended December 31, 1998, Class A made service fee
payments under the Service Plan aggregating $ , of which $ was paid to
investment dealers and the balance of which was retained by the principal
underwriter.

PRINCIPAL UNDERWRITER
The total sales charges paid in connection with the sales of Class A shares
during the fiscal year ended December 31, 1998 was $ , of which $ was received
by the principal underwriter. For the fiscal year ended December 31, 1998,
investment dealers received $ from the total sales charges.

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. For the fiscal year ended December 31, 1998, Class
A paid the principal underwriter $ for repurchase transactions handled by it.

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.

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 12/31/98 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ----------------------- ---------- ---------- ----------- ------------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
10 Years Ended 12/31/98 12/31/88 $ $ % % % %
5 Years Ended 12/31/98 12/31/93 $ $ % % % %
1 Year Ended 12/31/98 12/31/97 $ $ % % % %
- ----------
</TABLE>

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

As at February 1, 1999, 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 February 1, 1999, Merrill Lynch, Pierce, Fenner & Smith, Inc.,
Jacksonville, FL, and Donaldson Lufkin Jenrette Securities Corporation, Jersey
City, NJ were the record owners of approximately 37.7% and 7.1%, 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 FEES, PERFORMANCE AND OWNERSHIP

DISTRIBUTION PLAN
During the fiscal year ended December 31, 1998, the principal underwriter
paid to investment dealers sales commissions of $ on sales of Class B shares.
During the same period, the Fund made distribution payments to the principal
underwriter under the Distribution Plan aggregating $ and the principal
underwriter received approximately $ in CDSCs imposed on early redeeming
shareholders. These distribution payments and CDSC payments reduced uncovered
distribution charges under the Plan. As at December 31, 1998, the outstanding
uncovered distribution charges of the principal underwriter calculated under the
Plan amounted to approximately $ (which amount was equivalent to % of Class B
net assets on such day). During the fiscal year ended December 31, 1998, Class B
made service fee payments to the principal underwriter and investment dealers
aggregating $ of which $ was paid to investment dealers and the balance of which
was retained by the principal underwriter.

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. For the fiscal year ended December 31, 1998, Class
B paid the principal underwriter $ for repurchase transactions handled by it.

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 12/31/98 ON 12/31/98 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ------------ ---------- ---------- ---------- ----------- ----------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
10 Years
Ended
12/31/98 12/31/88 $ $ $ % % % %
5 Years
Ended
12/31/98 12/31/93 $ $ $ % % % %
1 Year
Ended
12/31/98 12/31/97 $ $ $ % % % %
- ----------
</TABLE>

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

As at February 1, 1999, 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 February 1, 1999, Merrill Lynch, Pierce, Fenner & Smith, Inc.,
Jacksonville, FL 32246 was the record owner of approximately 19.9% 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. 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 FEES, PERFORMANCE AND OWNERSHIP

PRINCIPAL UNDERWRITER
The total sales charges for sales of Class I shares during the fiscal years
ended December 31, 1998, 1997 and 1996 were $ , $111,456 and $44,913,
respectively, of which $ and $3,205 and $135, respectively, was received by the
Principal Underwriter. For the fiscal years ended December 31, 1998, 1997 and
1996, Authorized Firms received approximately $ , $108,251 and $44,778,
respectively, from the total sales charges.

For the fiscal year ended December 31, 1998, the Fund paid the Principal
Underwriter $ 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, 1998 and 1997, 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.

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 12/31/98 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ---------------------------------- ------------ ------------- ------------- ----------- ----------- ------------ -----------
<C> <C> <C> <C> <C> <C> <C> <C>
10 Years Ended 12/31/98 12/31/88 $ $ % % % %
5 Years Ended 12/31/98 12/31/93 $ $ % % % %
1 Year Ended 12/31/98 12/31/97 $ $ % % % %
</TABLE>

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

As of February 1, 1999, 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. As of February 1, 1999, Mars & Co., Boston, MA 02117 was the record owner
of approximately 5.9% 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 1999.

<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 $ 25,750 Up to $ 42,050 15.00% 4.71% 5.29% 5.88% 6.47% 7.06% 7.65% 8.24%
$ 25,751-$ 62,450 $ 42,051-$104,050 28.00 5.56 6.25 6.94 7.64 8.33 9.03 9.72
$ 62,451-$130,250 $104,051-$158,550 31.00 5.80 6.52 7.25 7.97 8.70 9.42 10.14
$130,251-$283,150 $158,551-$283,150 36.00 6.25 7.03 7.81 8.59 9.38 10.16 10.94
Over $283,150 Over $283,150 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 $126,600. 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 $126,600 and joint filers with
adjusted gross income in excess of $189,950. 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 through 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 S&P. Capacity to pay
interest and repay principal is extremely strong.

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

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

BBB: Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally 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 S&P believes that such payments
will be made during such grace period. The D rating also will be used upon the
filing of a bankruptcy petition if debt service payments are jeopardized.

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

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 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

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

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

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

Note rating symbols are as follows:

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

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

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

FITCH IBCA

INVESTMENT GRADE BOND RATINGS

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

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

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

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

HIGH YIELD BOND RATINGS

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

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

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

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

INVESTMENT GRADE SHORT-TERM RATINGS

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

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

F-1: Very 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: Bonds which are 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 bonds.

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

ITEM 23. EXHIBITS

(a)(1) Amended and Restated Declaration of Trust of Eaton Vance Mutual
Funds Trust dated August 17, 1993, filed as Exhibit (1)(a) to
Post-Effective Amendment No. 23 and incorporated herein by
reference.

(2) Amendment dated July 10, 1995 to the Declaration of Trust filed
as Exhibit (1)(b) to Post-Effective Amendment No. 23 and
incorporated herein by reference.

(3) Amendment dated June 23, 1997 to the Declaration of Trust filed
as Exhibit (1)(c) to Post-Effective Amendment No. 38 and
incorporated herein by reference.

(4) Amendment and Restatement of Establishment and Designation of
Shares dated February 22, 1999 filed herewith.

(b)(1) By-Laws as amended November 3, 1986 filed as Exhibit (2)(a) to
Post-Effective Amendment No. 23 and incorporated herein by
reference.

(2) Amendment to By-Laws of Eaton Vance Mutual Funds Trust dated
December 13, 1993 filed as Exhibit (2)(b) to Post-Effective
Amendment No. 23 and incorporated herein by reference.

(d)(1) 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.

(2) 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.

(3) Investment Advisory Agreement with Eaton Vance Management for
Eaton Vance Tax-Managed Emerging Growth Fund dated September 16,
1997 filed as Exhibit (5)(c) to Post-Effective Amendment No. 37
and incorporated herein by reference.

(4) Investment Advisory Agreement with Eaton Vance Management for
Eaton Vance Municipal Bond Fund dated October 17, 1997 filed as
Exhibit (5)(d) to Post-Effective Amendment No. 37 and
incorporated herein by reference.

(5) 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.

(e)(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
(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

C-1
<PAGE>
(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
(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
(6)(a)(7) to Post-Effective Amendment No. 34 and incorporated
herein by reference.

(5) Distribution Agreement between Eaton Vance Mutual Funds Trust (on
behalf of certain of its series), and Eaton Vance Distributors,
Inc. effective 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) Selling Group Agreement between Eaton Vance Distributors, Inc.
and Authorized Dealers filed as Exhibit (6)(b) to the
Post-Effective Amendment No. 61 to the Registration Statement of
Eaton Vance Growth Trust (File Nos. 2-22019, 811-1241) and
incorporated herein by reference.

(f) 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).

(g)(1) 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.

(2) 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.

(3) Amendment to Master Custodian Agreement with Investors Bank &
Trust Company dated December 21, 1998 filed as Exhibit (g)(3) to
the Registration Statement of Eaton Vance Municipals Trust (File
Nos. 33-572, 811-4409)(Accession No. 0000950156-99-000050) and
incorporated herein by reference.

(h)(1)(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.

(b) Amendment to Schedule A dated June 23, 1997 to the Amended
Administrative Services Agreement dated July 31, 1995 filed as
Exhibit (9)(a)(1) to Post-Effective Amendment No. 38 and
incorporated herein by reference.

C-2
<PAGE>
(2) 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.

(i) Opinion of Internal Counsel filed as Exhibit No. (i) to
Post-Effective Amendment No. 47 and incorporated herein by
reference.

(j) Not applicable.

(k) Not applicable

(l) Not applicable

(m)(1)(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.

(b) 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 (15)(b)(1) to Post-Effective Amendment
No. 34 and incorporated herein by reference.

(2)(a) 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.

(b) 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 (15)(g)(1) to Post-Effective Amendment No. 34
and incorporated herein by reference.

(3)(a) 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.

(b) 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 (15)(h)(1) to Post-Effective Amendment No. 34
and incorporated herein by reference.

(4)(a) 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.

(b) 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.

(5)(a) 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.

(b) 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.

C-3
<PAGE>
(6)(a) 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.

(b) 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.

(n) Not applicable

(o)(1)(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.

(b) 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.

(p)(1) 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.

(a) Power of Attorney for Eaton Vance Mutual Funds Trust dated
November 16, 1998 filed as Exhibit (p)(1) to Post-Effective
Amendment No. 47 and incorporated herein by reference.

(2) 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.

(a) Power of Attorney for Government Obligations Portfolio dated
November 16, 1998 filed as Exhibit (p)(2)(a) to Post-Effective
Amendment No. 48 and incorporated herein by reference.

(3) Power of Attorney for High Income Portfolio dated February 14,
1997 filed as Exhibit No. (17)(c) to Post-Effective Amendment No.
36 and incorporated herein by reference.

(a) Power of Attorney for High Income Portfolio dated November 16,
1998 filed as Exhibit (p)(3) to Post-Effective Amendment No. 47
and incorporated herein by reference.

(4) Power of Attorney for Strategic Income Portfolio dated April 22,
1997 filed as Exhibit No. (17)(d) to Post-Effective Amendment No.
36 and incorporated herein by reference.

(a) Power of Attorney for Strategic Income Portfolio dated November
16, 1998 filed as Exhibit (p)(4) to Post-Effective Amendment No.
47 and incorporated herein by reference.

(5) 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.

(a) Power of Attorney for Cash Management Portfolio dated November
16, 1998 filed as Exhibit (p)(5)(a) to Post-Effective Amendment
No. 48 and incorporated herein by reference.

(6) Power of Attorney for Tax-Managed Growth Portfolio dated February
20, 1998 filed as Exhibit No. (17)(f) to Post-Effective Amendment
No. 41 and incorporated herein by reference.

(a) Power of Attorney for Tax-Managed Growth Portfolio dated November
16, 1998 filed as Exhibit (p)(6) to Post-Effective Amendment No.
47 and incorporated herein by reference.

C-4
<PAGE>
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL

Not applicable

ITEM 25. INDEMNIFICATION

Article IV of the Registrant'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 loss incurred by reason of negligent errors
and omissions committed in their capacities as such.

The distribution agreements of the Registrant also provide for reciprocal
indemnity of the principal underwriter, on the one hand, and the Trustees and
officers, on the other.

ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER

Reference is made to: (i) the information set forth under the caption
"Management and Organization" in the Statement of Additional Information; (ii)
the Eaton Vance Corp. 10-K filed under the Securities Exchange Act of 1934 (File
No. 1-8100); and (iii) the Form ADV of Eaton Vance Management (File No.
801-15930) and Boston Management and Research (File No. 801-43127) filed with
the Commission, all of which are incorporated herein by reference.

ITEM 27. 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 Advisers Senior Eaton Vance Municipals Trust II
Floating-Rate Fund Eaton Vance Mutual Funds Trust
Eaton Vance Growth Trust Eaton Vance Prime Rate Reserves
Eaton Vance Income Fund of Boston Eaton Vance Special Investment Trust
Eaton Vance Investment Trust EV Classic Senior Floating-Rate Fund
Eaton Vance Municipals Trust

(b)
<TABLE>
<CAPTION>
<S> <C> <C>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address* with Principal Underwiter with Registrant
-----------------

Albert F. Barbaro Vice President None
Chris Berg Vice President None
Kate B. Bradshaw Vice President None
Mark Carlson Vice President None
Daniel C. Cataldo Vice President None
Raymond Cox Vice President None
Peter Crowley Vice President None
Mark P. Doman Vice President None
Alan R. Dynner Vice President Secretary
Richard A. 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
James B. Hawkes Vice President and Director President and Trustee
Perry D. Hooker Vice President None
Brian Jacobs Senior Vice President None

C-5
<PAGE>
Thomas P. Luka Vice President None
John Macejka Vice President None
Stephen Marks Vice President None
Joseph T. McMenamin Vice President None
Morgan C. Mohrman Senior Vice President None
James A. Naughton Vice President None
Joseph Nelson Vice President None
Mark D. Nelson Vice President None
Linda D. Newkirk Vice President None
James L. O'Connor Vice President Treasurer
Andrew Ogren Vice President None
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
Frances Rogell Vice President None
Jay S. Rosoff Vice President None
Benjamin A. Rowland, Vice President, None
Jr. Treasurer and Director
Stephen M. Rudman Vice President None
Kevin Schrader Vice President None
George V.F. Schwab, Jr. Vice President None
Teresa A. Sheehan Vice President None
William M. Steul Vice President and Director None
Cornelius J. Sullivan Senior Vice President None
Peter Sykes Vice President None
David M. Thill Vice President None
John M. Trotsky Vice President None
Jerry Vainisi Vice President None
Chris Volf Vice President None
Wharton P. Whitaker President and Director None
Sue Wilder Vice President None
</TABLE>

- ------------------------------------------
* Address is 24 Federal Street, Boston, MA 02110

ITEM 28. 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 01581-5120,
with the exception of certain corporate documents and portfolio trading
documents which are in the possession and custody, Eaton Vance Management, 24
Federal Street, Boston, MA 02110. 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 and Boston
Management and Research.

ITEM 29. MANAGEMENT SERVICES

Not applicable

ITEM 30. UNDERTAKINGS

Not applicable

C-6
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, and the
Investment Company Act of 1940, the Registrant has duly caused this 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 February 23, 1999.

EATON VANCE MUTUAL FUNDS TRUST

By: /s/ JAMES B. HAWKES
------------------------------------
James B. Hawkes, President

Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statement has been signed below by
the following persons in the capacities on February 23, 1999.

Signature Title
- --------- -----

/s/ James B. Hawkes President (Chief Executive Officer) and
- ----------------------------- Trustee
James B. Hawkes

/s/ James L. O'Connor Treasurer (Principal Financial and
- ----------------------------- Accounting Officer)
James L. O'Connor

Jessica M. Bibliowicz* Trustee
- -----------------------------
Jessica M. Bibliowicz

Donald R. Dwight* Trustee
- -----------------------------
Donald R. Dwight

Samuel L. Hayes, III* Trustee
- -----------------------------
Samuel L. Hayes, III

Norton H. Reamer* Trustee
- -----------------------------
Norton H. Reamer

Lynn A. Stout* Trustee
- -----------------------------
Lynn A. Stout

John L. Thorndike* Trustee
- -----------------------------
John L. Thorndike

Jack L. Treynor* Trustee
- -----------------------------
Jack L. Treynor

*By: /s/ Alan R. Dynner
---------------------------------------
Alan R. Dynner (As attorney-in-fact)

C-7
<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.
02-90946) to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Boston and the Commonwealth of Massachusetts on
February 23, 1999.

CASH MANAGEMENT PORTFOLIO

By: /s/ JAMES B. HAWKES
-------------------------------------
James B. Hawkes, President

This Amendment to the Registration Statement on Form N-1A of Eaton Vance
Mutual Funds Trust (File No. 02-90946) has been signed below by the following
persons in their capacities on February 23, 1999.

Signature Title
- --------- -----

/s/ James B. Hawkes President (Chief Executive Officer) and
- ----------------------------- Trustee
James B. Hawkes

/s/ James L. O'Connor Treasurer (Principal Financial and
- ----------------------------- Accounting Officer)
James L. O'Connor

Jessica M. Bibliowicz* Trustee
- -----------------------------
Jessica M. Bibliowicz

Donald R. Dwight* Trustee
- -----------------------------
Donald R. Dwight

Samuel L. Hayes, III* Trustee
- -----------------------------
Samuel L. Hayes, III

Norton H. Reamer* Trustee
- -----------------------------
Norton H. Reamer

Lynn A Stout* Trustee
- -----------------------------
Lynn A Stout

John L. Thorndike* Trustee
- -----------------------------
John L. Thorndike

Jack L. Treynor* Trustee
- -----------------------------
Jack L. Treynor

*By: /s/ Alan R. Dynner
---------------------------------------
Alan R. Dynner (As attorney-in-fact)

C-8
<PAGE>
SIGNATURES

Governmant Obligations Portfolio has duly caused this Amendment to the
Registration Statement on Form N-1A of Eaton Vance Mutual Funds Trust (File No.
02-90946) to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Boston and the Commonwealth of Massachusetts on
February 23, 1999.

GOVERNMENT OBLIGATIONS PORTFOLIO

By: /s/ JAMES B. HAWKES
---------------------------------------
James B. Hawkes, President

Signature Title
- --------- -----

/s/ James B. Hawkes President (Chief Executive Officer) and
- ----------------------------- Trustee
James B. Hawkes

/s/ James L. O'Connor Treasurer (Principal Financial and
- ----------------------------- Accounting Officer)
James L. O'Connor

Jessica Bibliowicz* Trustee
- -----------------------------
Jessica Bibliowicz

Donald R. Dwight* Trustee
- -----------------------------
Donald R. Dwight

Samuel L. Hayes, III* Trustee
- -----------------------------
Samuel L. Hayes, III

Norton H. Reamer* Trustee
- -----------------------------
Norton H. Reamer

Lynn A Stout* Trustee
- -----------------------------
Lynn A Stout

John L. Thorndike* Trustee
- -----------------------------
John L. Thorndike

Jack L. Treynor* Trustee
- -----------------------------
Jack L. Treynor

*By: /s/ Alan R. Dynner
---------------------------------------
Alan R. Dynner (As attorney-in-fact)

C-9
<PAGE>
EXHIBIT INDEX

The following exhibits are filed as part of this amendment to the
Registration Statement pursuant to Rule 483 of Regulation C.

Exhibit No. Description
- ----------- -----------

(a)(4) Amendment and Restatement of Establishment and Designation
of Series of Shares dated February 22, 1999

C-10

<PAGE>

Exhibit (a)(4)

EATON VANCE MUTUAL FUNDS TRUST

Amendment and Restatement
of
Establishment and Designation of Series of Shares
of Beneficial Interest, Without Par Value

(as amended and restated February 22, 1999)

WHEREAS, the Trustees of Eaton Vance Mutual Funds Trust, a Massachusetts
business trust (the "Trust"), have previously designated separate series (or
"Funds"); and

WHEREAS, the Trustees now desire to establish an additional class of one
series (i.e. Eaton Vance Tax-Managed Growth Fund) pursuant to Section 5.1 of
Article V of the Trust's Amended and Restated Declaration of Trust dated August
17, 1993 (as further Amended) (the "Declaration of Trust");

NOW, THEREFORE, the undersigned, being at least a majority of the duly
elected and qualified Trustees presently in office of the Trust, hereby divide
the shares of beneficial interest of the Trust into fifteen separate series
("Funds"), each Fund to have the following special and relative rights:

1. The Funds shall be designated as follows:

Eaton Vance Government Obligations Fund
Eaton Vance High Income Fund
Eaton Vance Strategic Income Fund
Eaton Vance Tax-Managed Growth Fund
Eaton Vance Cash Management Fund
Eaton Vance Liquid Assets Fund
Eaton Vance Money Market Fund
Eaton Vance Municipal Bond Fund
Eaton Vance Tax Free Reserves
Eaton Vance Tax-Managed Emerging Growth Fund
Eaton Vance Tax-Managed International Growth Fund
Eaton Vance Insured Tax-Managed Growth Fund
Eaton Vance Insured Tax-Managed Emerging Growth Fund
Eaton Vance Insured Tax-Managed International Growth Fund
Eaton Vance Insured High Income Fund

2. Each Fund shall be authorized to invest in cash, securities, instruments
and other property as from time to time described in the Trust's then currently
effective registration statements under the Securities Act of 1933 and the
Investment Company Act of 1940. Each share of beneficial interest of each Fund
("share") shall be redeemable, shall be entitled to one vote (or fraction
thereof in respect of a fractional share) on matters on which shares of that
Fund shall be entitled to vote and shall represent a pro rata beneficial
interest in the assets allocated to that Fund, all as provided in the
Declaration of Trust. The proceeds of sales of shares of each Fund, together
with any income and gain thereon, less any diminution or expenses thereof, shall
irrevocably belong to such Fund, unless otherwise required by law. Each share of
a Fund shall be entitled to receive its pro rata share of net assets of that
Fund upon liquidation of that Fund.

<PAGE>
3. Shareholders of each Fund shall vote separately as a class to the extent
provided in Rule 18f-2, as from time to time in effect, under the Investment
Company Act of 1940.

4. The assets and liabilities of the Trust shall be allocated among the
above-referenced Funds as set forth in Section 5.5 of Article V of the
Declaration of Trust, except as provided below:

(a) Costs incurred by each Fund in connection with its organization and
start-up, including Federal and state registration and qualification fees and
expenses of the initial public offering of such Fund's shares, shall (if
applicable) be borne by such Fund.

(b) Reimbursement required under any expense limitation applicable to the
Trust shall be allocated among those Funds whose expense ratios exceed such
limitation on the basis of the relative expense ratios of such Funds.

(c) The liabilities, expenses, costs, charges and reserves of the Trust
(other than the management and investment advisory fees or the organizational
expenses paid by the Trust) which are not readily identifiable as belonging to
any particular Fund shall be allocated among the Funds on an equitable basis as
determined by the Trustees.

5. The Trustees (including any successor Trustees) shall have the right at
any time and from time to time to reallocate assets and expenses or to change
the designation of any Fund now or hereafter created, or to otherwise change the
special and relative rights of any such Fund, and to terminate any Fund or add
additional Funds as provided in the Declaration of Trust.

6. Any Fund may merge or consolidate with any other corporation,
association, trust or other organization or may sell, lease or exchange all or
substantially all of its property, including its good will, upon such terms and
conditions and for such consideration when and as authorized by the Trustees;
and any such merger, consolidation, sale, lease or exchange shall be deemed for
all purposes to have been accomplished under and pursuant to the statutes of the
Commonwealth of Massachusetts. The Trustees may also at any time sell and
convert into money all the assets of any Fund. Upon making provision for the
payment of all outstanding obligations, taxes and other liabilities, accrued or
contingent, of such Fund, the Trustees shall distribute the remaining assets of
such Fund ratably among the holders of the outstanding shares. Upon completion
of the distribution of the remaining proceeds or the remaining assets as
provided in this paragraph 6, the Fund shall terminate and the Trustees shall be
discharged of any and all further liabilities and duties hereunder with respect
to such Fund and the right, title and interest of all parties with respect to
such Fund shall be canceled and discharged.

7. The Declaration of Trust authorizes the Trustees to divide each Fund and
any other series of shares into two or more classes and to fix and determine the
relative rights and preferences as between, and all provisions applicable to,
each of the different classes so established and designated by the Trustees. The
following Funds (Eaton Vance Government Obligations Fund, Eaton Vance High
Income Fund, Eaton Vance Strategic Income Fund, Eaton Vance Municipal Bond Fund,
Eaton Vance Tax-Managed Emerging Growth Fund and Eaton Vance Tax-Managed
International Growth Fund) shall have classes of shares established and
designated as Class A, Class B, Class C and Class I shares, and the Trustees may
designate additional classes in the future. Eaton Vance Tax-Managed Growth Fund
shall have classes of shares established and designated as Class A, Class B and

2
<PAGE>
Class C, Class I and Class S shares and the Trustees may designate additional
classes in the future. In addition, the following Funds (Eaton Vance Insured
Tax-Managed Growth Fund, Eaton Vance Insured Tax-Managed Emerging Growth Fund,
Eaton Vance Insured Tax-Managed International Growth Fund and Eaton Vance
Insured High Income Fund) shall have classes of shares established and
designated as Class A and Class B shares, and the Trustees may designate
additional classes in the future. For purposes of allocating liabilities among
classes, each class of that Fund shall be treated in the same manner as a
separate series.

Dated: February 22, 1999

/s/ Jessica M. Bibliowicz /s/ Norton H. Reamer
- ---------------------------------- --------------------------------
Jessica M. Bibliowicz Norton H. Reamer

/s/ Donald R. Dwight /s/ Lynn A. Stout
- ---------------------------------- --------------------------------
Donald R. Dwight Lynn A. Stout

/s/ James B. Hawkes /s/ John L. Thorndike
- ---------------------------------- --------------------------------
James B. Hawkes John L. Thorndike

/s/ Samuel L. Hayes, III /s/ Jack L. Treynor
- ---------------------------------- --------------------------------
Samuel L. Hayes, III Jack L. Treynor