EATON VANCE MUTUAL FUNDS TRUST, 485BPOS, 2000-04-26

EATON VANCE MUTUAL FUNDS TRUST
485BPOS, 2000-04-26

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<PAGE>

As filed with the Securities and Exchange Commission on April 26, 2000
1933 Act File No. 02-90946
1940 Act File No. 811-4015
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933 [X]
POST-EFFECTIVE AMENDMENT NO. 58 [X]
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 61 [X]

EATON VANCE MUTUAL FUNDS TRUST
------------------------------
(Exact Name of Registrant as Specified in Charter)

THe Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109
-----------------------------------------------------------------------
(Address of Principal Executive Offices)

(617) 482-8260
--------------
(Registrant's Telephone Number)

ALAN R. DYNNER
--------------
The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109
-----------------------------------------------------------------------
(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)
[X] on May 1, 2000 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) 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 effective date for a
previously filed post-effective amendment.

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

LOGO
Investing
for the
21st
Century(R)

EATON VANCE CASH MANAGEMENT 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, 2000

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 8
Investment Objectives & Principal Redeeming Shares 9
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 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-quality, 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 the
Funds' 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, 1999 and do not reflect sales charges. If the sales charge was
reflected, the returns would be lower. The total returns for the Money Market
Fund for the period prior to April 5, 1995 reflect the performance of Cash
Management Fund. These returns have not been adjusted for differences in
expenses between the two funds.

CASH MANAGEMENT FUND

7.28% 5.51% 3.14% 2.54% 3.49% 5.35% 4.82% 4.89% 4.78% 4.47%
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
</TABLE>

The Fund's highest quarterly total return was 1.93% for the quarter ended June
30, 1990, and its lowest quarterly return was 0.58% for the quarter ended March
31, 1994. The Fund's annualized and current effective yields for the seven-day
period ended December 31, 1999 were 5.12% and 5.25%, respectively. For current
yeild information call 1-800-225-6265.

MONEY MARKET FUND

The Fund's highest quarterly total return was 1.93% for the quarter ended June
30, 1990, and its lowest quarterly return was 0.58% for the quarter ended March
31, 1994. The Fund's annualized and current effective yields for the seven-day
period ended December 31, 1999 were 4.23% and 4.32%, respectively. For current
yeild information call 1-800-225-6265.

<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) Cash Fund Money Market Fund
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Maximum Sales Charge (Load) None None
Maximum Deferred Sales Charge (Load)(as a percentage
of the lower of net asset value at time of purchase or time
of redemption) None 5.00%
Sales Charge Imposed on Reinvested Distributions None None
Exchange Fee None None
</TABLE>

Annual Fund Operating Expenses
(expenses that are deducted from Fund assets) Cash Fund Money Market Fund
- --------------------------------------------------------------------------------
Management Fees 0.50% 0.50%
Distribution and Service (12b-1) Fees None 0.83%
Other Expenses 0.29% 0.38%
---- ----
Total Annual Fund Operating Expenses 0.79% 1.71%

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 $ 81 $252 $ 439 $ 978
Money Market Fund $674 $939 $1,128 $2,019

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

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

Cash Fund $ 81 $252 $439 $ 978
Money Market Fund $174 $539 $928 $2,019

<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, 1999.

The Fund's highest quarterly total return was 1.34% for the quarter ended
December 31, 1990, and its lowest quarterly return was 0.45% for the quarter
ended March 31, 1994. The Fund's annualized and current effective yields for the
seven-day period ended December 31, 1999 were 3.76% and 3.83%, respectively. The
taxable-equivalent current and effective yields for the seven-day period ended
December 31, 1999 were 6.23% and 6.42%, respectively (assuming a federal tax
rate of 39.6%). For current yield information call 1-800-225-6265.

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) Tax Free Reserves
- --------------------------------------------------------------------------------
Maximum Sales Charge (Load) None
Maximum Deferred Sales Charge (Load) None
Sales Charge Imposed on Reinvested Distributions None
Exchange Fee None

Annual Fund Operating Expenses
(expenses that are deducted from Fund assets) Tax Free Reserves
- ------------------------------------------------------------------------------
Management Fees 0.50%
Distribution and Service (12b-1) Fees None
Other Expenses 0.26%
----
Total Annual Fund Operating Expenses* 0.76%

* During the fiscal year ended December 31, 1999, Management Fees were 0.20%
and Total Annual Fund Operating Expenses were 0.46% due to a fee waiver by
the investment adviser. This fee waiver could be terminated at any time.

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 $78 $243 $422 $942

<PAGE>

INVESTMENT OBJECTIVES & PRINCIPAL POLICIES AND RISKS

Cash Management 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 (the
"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
$1.00 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 to provide a means whereby
investors may earn as high a rate of income exempt from regular federal income
tax as may be consistent with the preservation of capital and maintenance of
liquidity. The 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 the Fund
without shareholder approval. The Fund seeks to maintain a constant net asset
value of $1.00 per share, although there can be no assurance it will be able to
do so.

The Fund seeks to achieve its objective by investing at least 85% of its assets
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 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 20%
of the value of its total assets to be invested in securities the interest on
which is not exempt from federal income tax. Interest income from certain types
of municipal obligations may be subject to the federal alternative minimum tax
(the "AMT"). On December 31, 1999, the Fund had 15.8% 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
money

<PAGE>

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.

MANAGEMENT AND ORGANIZATION

Management. The Portfolio's investment adviser is Boston Management and Research
("BMR"), a subsidiary of Eaton Vance Management ("Eaton Vance"), with offices at
The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109. Eaton
Vance has been managing assets since 1924 and managing mutual funds since 1931.
Eaton Vance and its subsidiaries currently manage over $43 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, 1999, the Cash
Management Portfolio paid BMR advisory fees equivalent to 0.50% 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 for 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 Tax Free
Reserves. For the fiscal year ended December 31, 1999, absent a fee reduction in
the amount of 0.30%, Tax Free Reserves would have paid Eaton Vance advisory fees
equivalent to 0.50% 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 Eaton Vance portfolio manager 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
1993). He also manages other Eaton Vance portfolios, has been an Eaton Vance
portfolio manager 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 and Money 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 and Money Market Funds invest in
the Portfolio, they may be asked to vote on certain Portfolio matters (like
changes in certain Portfolio investment restrictions). When necessary, the Cash
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 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.

<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 purchase
price of Fund shares is their net asset value, which for the Cash 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.)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.

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 and certain group
purchase plans.

<PAGE>

SALES CHARGES

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
purchase, unless such redemption is in connection with another exchange for
shares subject to such a charge. 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
at 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 principal underwriter pays commissions to investment dealers on sales of
Money Market Fund shares (except exchange transactions and reinvestments). The
principal underwriter compensates investment dealers who sell Fund shares at a
rate of 1.00% of the purchase price of the shares, consisting of 0.85% of sales
commission and 0.15% of service fee (for the first year's service). After the
first year, investment dealers also receive 0.75% of the value of Fund shares in
annual distribution fees.

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 Fund has 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 0.75% 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. The
Money Market Fund pays service fees for personal and/or account services not
exceeding 0.15% of average daily net assets annually. The Money Market Fund only
pays service fees to investment dealers on shares that have been outstanding for
12 months. Although there is no present intention to do so, the Money Market
Fund could pay service fees of up to 0.25% annually upon trustee approval.

<PAGE>

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 the 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 by 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 and shares that are
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 your order promptly. An
investment 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.

SHAREHOLDER ACCOUNT FEATURES

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

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

<PAGE>

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. These exchanges are made at the
public offering price (which generally includes the sales charge applicable to
Class A shares). You may exchange your Money Market Fund shares for Class B
shares of another Eaton Vance fund. These exchanges are generally made at net
asset value. If your Money Market Fund shares were acquired in exchange for
Class C shares of another Eaton Vance Fund, such shares may be exchanged only
for Class C shares 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.

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 (exchanged from one fund to
another and back again) within 12 months, it will be deemed to be market timing.
The exchange privilege may be terminated for market timing accounts. 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.

Telephone and Electronic Transactions. You can redeem or exchange shares by
telephone as described in this prospectus. In addition, certain transactions may
be conducted through the internet. The transfer agent and the principal
underwriter have procedures in place to authenticate telephone and electronic
instructions (such as using security codes or verifying personal account
information). As long as the transfer agent and principal underwriter follow
reasonable procedures, they will not be responsible for unauthorized telephone
or electronic transactions and you bear the risk of possible loss resulting from
these transactions. 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. You will not be able to
utilize a number of shareholder features, such as telephone transactions,
directly with the Fund. 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.

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 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. Monthly
distributions from the Cash and Money Market Funds (and taxable distributions
from Tax Free Reserves, if any) of any net short-term capital gains will be
taxable as ordinary income. Distributions of any long-term capital gains are
taxable as such (generally at a 20% rate for noncorporate shareholders).

Distributions designated by Tax Free Reserves as "exempt-interest dividends",
whether paid in cash or reinvested in additional shares, ordinarily will
constitute federal 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.

<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 reflect
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 a
Fund (assuming reinvestment of all distributions and not taking into account a
sales charge). This information has been audited by PricewaterhouseCoopers LLP,
independent accountants. The report of PricewaterhouseCoopers LLP 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,
----------------------------------------------------------------
1999 1998 1997 1996 1995
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value -
Beginning of year $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
---------- --------- ---------- ---------- ----------
Income from
operations
Net investment
income $ 0.044 $ 0.047 $ 0.048 $ 0.047 $ 0.052
Less distributions
From net investment
income $ (0.044) $(0.047) $ (0.048) $ (0.047) $ (0.052)
---------- --------- ---------- ---------- ----------
Net asset value -
End of year $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
---------- --------- ---------- ---------- ----------
Total return(1) 4.47% 4.78% 4.89% 4.82% 5.35%
Ratios/Supplemental
Data
Net assets, end of
year (000's omitted) $131,233 $96,244 $146,743 $151,691 $155,251
Ratios (as a
percentage of
average daily net
assets):
Expenses(2) 0.79% 0.85% 0.78% 0.74% 0.74%
Net investment
income 4.43% 4.69% 4.79% 4.70% 5.22%
</TABLE>

<TABLE>
<CAPTION>
MONEY MARKET FUND
----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1999 1998 1997 1996 1995*
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value -
Beginning of year $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
---------- --------- ---------- ---------- ----------
Income from
operations
Net investment
income $ 0.034 $ 0.037 $ 0.038 $ 0.037 $ 0.031
Less distributions
From net investment
income $ (0.034) $(0.037) $ (0.038) $ (0.037) $ (0.031)
---------- --------- ---------- ---------- ----------
Net asset value -
End of year $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
---------- --------- ---------- ---------- ----------
Total return(1) 3.50% 3.75% 3.88% 3.77% 3.17%
Ratios/Supplemental
Data
Net assets, end of
year (000's omitted) $97,408 $34,292 $23,809 $31,250 $12,951
Ratios (as a
percentage of
average daily net
assets):
Expenses(2) 1.71% 1.82% 1.73% 1.73% 1.68%+
Net investment
income 3.55% 3.70% 3.83% 3.70% 4.19%+
</TABLE>

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

Ratios (as a percentage of average daily net assets):
Expenses (2) 1.71% 1.86% 1.82% 1.76% 1.85%+
Net investment income 3.55% 3.66% 3.74% 3.66% 4.03%+
Net investment income per share $0.034 $0.037 $0.037 $0.037 $0.030

(See footnotes on last page.)

<PAGE>

FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
TAX FREE RESERVES
----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1999 1998 1997 1996 1995
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value -
Beginning of year $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
---------- --------- ---------- ---------- ----------
Income from
operations
Net investment
income $ 0.029 $ 0.031 $ 0.031 $ 0.030 $ 0.035
Less distributions
From net investment
income $ (0.029) $(0.031) $ (0.031) $ (0.030) $ (0.035)
---------- --------- ---------- ---------- ----------
Net asset value -
End of year $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
---------- --------- ---------- ---------- ----------
Total return(1) 2.89% 3.09% 3.16% 3.08% 3.53%
Ratios/Supplemental
Data
Net assets, end of
year (000's omitted) $40,456 $47,272 $33,960 $23,355 $23,912
Ratios (as a
percentage of
average daily net
assets):
Expenses(2) 0.46% 0.48% 0.52% 0.33% 0.34%
Expenses after custodian
fee reduction(3) 0.38% 0.40% 1.46% 0.27% --
Interest Expense --(4) 0.01% 0.01% 0.02% 0.05%
Net investment
income 2.83% 3.04% 3.12% 3.04% 3.47%

+ 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:

Ratios (as a percentage of average daily net assets):
Net Operating Expenses(3) 0.76% 0.76% 0.67% 0.69% 0.73%
Expenses after custodian
fee reduction(3) 0.68% 0.68% 0.61% 0.63% ---
Net investment income 2.53% 2.76% 2.96% 2.66% 3.02%
Net investment income
per share $0.026 $0.028 $0.030 $0.027 $0.030
</TABLE>

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

+ Annualized.

(1) Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Distributions, if any, are assumed to be reinvested at the
net asset value on the reinvestment date. Total return is computed on a
non-annualized basis.

(2) Includes the Money Market Fund's and Cash Management Fund's share of the
Portfolio's allocated expenses.

(3) The expense ratios for the year ended December 31, 1996 and periods
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 the year ended December
31, 1995 have not been adjusted to reflect this change.

(4) Represents less than 0.01%.

<PAGE>

LOGO
Investing
for the
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.
The Eaton Vance Building
255 State Street
Boston, MA 02109
1-800-225-6265
website: www.eatonvance.com

You will find and may copy information about each Fund
(including the statement of additional information and
shareholder reports): at the Securities and Exchange
Commission's public reference room in Washington, DC (call
1-202-942-8090 for information on the operation of the
public reference room); on the EDGAR Database on the SEC's
Internet site (http:// www.sec.gov); or, upon payment of
copying fees, by writing to the SEC's public reference
section, Washington, DC 20549-0102, or by electronic mail at
[email protected].

About Shareholder Accounts: You can obtain more information
from Eaton Vance Shareholder 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:

- --------------------------------------------------------------------------------
PFPC, Inc.
P.O. BOX 9653
PROVIDENCE, RI 02904-9653
1-800-262-1122

The Funds' SEC File No. is 811-4015. MMFP

<PAGE>

LOGO
Mutual Funds
for People
Who Pay
Taxes(R)

EATON VANCE
MUNICIPAL BOND
FUND

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

Prospectus Dated
May 1, 2000

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 Summary 2 Sales Charges 6
Investment Objective & Principal Policies Redeeming Shares 8
and Risks 4 Shareholder Account
Management and Organization 5 Features 9
Valuing Shares 6 Tax Information 10
Purchasing Shares 6 Financial Highlights 11
- -------------------------------------------------------------------------------

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 (those rated BBB or
Baa or higher), but also invests in lower rated obligations.The Fund may
concentrate in certain types of municipal obligations (such as industrial
development bonds, 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, futures
contracts and options thereon, and interest rate swaps), bonds that do not make
the regular payment of interest, bonds issued on a when-issued basis and
municipal leases.

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 federal
alternative minimum tax.

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.

Because obligations rated BBB or Baa and below (so-called "junk bonds") are more
sensitive to the financial soundness of their issuers than higher quality
obligations, Fund shares may fluctuate more in value than shares of a fund
investing solely in higher quality obligations. Obligations rated BBB or Baa
have speculative characteristics, while lower rated obligations are
predominantly speculative.

The Fund's use of derivatives is subject to certain limitations and may expose
the Fund to increased risk of principal loss due to imperfect correlation,
failure of the counterparty and unexpected price or interest rate movements.
Inverse floaters are volatile and involve leverage risk. Bonds that do not make
regular interest payments may experience greater volatility in response to
interest rate changes. When-issued securities are subject to the risk that when
delivered to the Fund they will be worth less than the price the Fund agreed to
pay for them. Municipal leases often require a legislative appropriation of
funds for payment. If the necessary appropriation is not made, the issuer of the
lease may not be able to meet its obligations.

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.

<PAGE>

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, 1999 and do not reflect a sales charge.

The highest quarterly total return for Class I was 7.44% for the quarter ended
March 31, 1995, and the lowest quarterly return was -6.74% for the quarter ended
March 31, 1994. For the 30 days ended December 31, 1999, the SEC yield and SEC
tax-equivalent yield (assuming a federal tax rate of 39.6%) for Class I shares
were 6.01% and 9.95%, respectively, for Class A shares were 5.67% and 9.39%,
respectively, and for Class B shares were 5.20% and 8.61%, respectively. For
current yield information call 1-800-225-6265.

<TABLE>
<CAPTION>
One Five Ten
Average Annual Total Return as of December 31, 1999 Year Years Years
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A shares -13.20% 5.39% 6.11%
Class B shares -13.82% 5.73% 6.44%
Class I shares -8.69% 6.48% 6.66%
Lehman Brothers Municipal Bond Index -2.06% 6.91% 6.89%
</TABLE>

These returns reflect the maximum sales charge for Class A and Class I (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 sales charge
but not adjusted for the higher expenses of Class A and B. If such an adjustment
were made, the Class A and B performance wuld be lower. The Lehman Brothers
Municipal Bond Index is a broad-based, unmanaged market index of municipal
bonds. Investors cannot invest directly in an Index. (Source: Lipper Inc.)

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 I
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load)(as a percentage of offering price) 4.75% None None
Maximum Deferred Sales Charge (Load)(as a percentage of the
lower of net asset value at time of purchase or time of redemption) None 5.00% None
Maximum Sales Charge (Load)Imposed on Reinvested Distributions None None None
Exchange Fee None None None
</TABLE>

Annual Fund Operating Expenses
(expenses that are deducted from Fund assets) Class A Class B Class I
- --------------------------------------------------------------------------------
Management Fees 0.48% 0.48% 0.48%
Distribution and Service (12b-1) Fees 0.00% 1.00% 0.00%
Other Expenses* 0.44% 0.20% 0.21%
---- ---- ----
Total Annual Fund Operating Expenses 0.92% 1.68% 0.69%

* Other Expenses for Class A includes a service fee of 0.25%.

1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
Class A shares $564 $754 $ 960 $1,553
Class B shares $671 $930 $1,113 $1,987
Class I shares $ 70 $221 $ 384 $ 859

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

1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
Class A shares $564 $754 $960 $1,553
Class B shares $171 $530 $913 $1,987
Class I shares $ 70 $221 $384 $ 859

<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 certain other policies may be changed by the Trustees
without shareholder approval.

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 below investment grade and in unrated municipal obligations
considered to be of comparable quality by the investment adviser. As of December
31, 1999, 27.2% of the Fund's net assets were invested in obligations rated
below investment grade. Municipal obligations rated Baa or BBB or below
(so-called "junk bonds") have speculative characteristics, while lower quality
obligations are predominately speculative. 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 in securities in any rating category, including those in
default.

Municipal obligations include bonds, notes and commercial paper issued by a
municipality for a wide variety of both public and private purposes. Municipal
obligations also include municipal leases and participations in municipal
leases. The obligation of the issuer to meet its obligations under such leases
is often subject to the appropriation by the appropriate legislative body, on an
annual or other basis, of funds for the payment of the obligations. The interest
on municipal obligations is (in the opinion of the issuer's counsel) exempt from
regular federal income tax. The Fund will not invest in an obligation if the
interest on that obligation is subject to the federal alternative minimum tax.

Certain municipal obligations may be purchased on a "when-issued" basis, which
means that payment and delivery occur on a future settlement date. The price and
yield of such securities are generally fixed on the date of commitment to
purchase. Many obligations permit the issuer at its option to "call", or redeem,
its securities. If an issuer calls securities during a time of declining
interest rates, it may not be possible to reinvest the proceeds in securities
providing the same investment return as the securities redeemed.

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 a 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 Fund may purchase derivative instruments, which derive their value from
another instrument, security or index. For example, a 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 a 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 Fund may also enter interest rate swaps
and could purchase an instrument that has greater or lesser credit risk than the
municipal bonds underlying the instrument. 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.
Derivative hedging transactions may not be effective because of imperfect
correlations and other factors.

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. The Fund accrues income on these investments and
is required to distribute that income each year. The Fund may be required to
sell securities to obtain cash needed for income distributions.

<PAGE>

The limited liquidity of certain securities in which the Fund may invest
(including those eligible for resale under Rule 144A of the Securities Act of
1933) could affect their market prices, thereby adversely affecting net asset
value and the ability to pay income. The amount of publicly available
information about certain municipal obligations may be limited and the
investment performance of a Fund more dependent on the portfolio manager's
analysis than if this were not the case.

The Fund may borrow amounts up to one-third of the value of its total assets
(including borrowings), but it will not borrow more than 5% of the value of its
total assets except to satisfy redemption requests or for other temporary
purposes. Such borrowings would result in increased expense to the Fund and,
while they are outstanding, would magnify increases or decreases in the value of
Fund shares. The Fund will not purchase additional investment securities while
outstanding borrowings exceed 5% of the value of its total assets.

During unusual market conditions, the Fund may temporarily invest up to 50% of
its total assets in cash or cash equivalents, which is not consistent with the
Fund's investment objective. While temporarily invested, the Fund may not
achieve its objective, and interest income from temporary investments may be
taxable. While at times the Fund may use alternative investment strategies in an
effort to limit its losses, it may choose not to do so.

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.

MANAGEMENT AND ORGANIZATION

Management. The Fund's investment adviser is Eaton Vance Management ("Eaton
Vance"), with offices at The Eaton Vance Building, 255 State Street, Boston,
Massachusetts 02109. Eaton Vance has been managing assets since 1924 and
managing mutual funds since 1931. Eaton Vance and its subsidiaries currently
manage over $43 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>
<CAPTION>
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>

On December 31, 1999, the Fund had net assets of $157,102,561. For the fiscal
year ended December 31, 1999, the Fund paid Eaton Vance advisory fees equivalent
to 0.48% 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 Eaton Vance portfolio manager
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 offers multiple classes of shares. Each
class represents a pro rata interest in the Fund, but is subject to different
expenses and rights. 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).

<PAGE>

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 purchase
price of Fund shares is their net asset value (plus a sales charge for Class A),
which is derived from Fund holdings. Municipal obligations are normally 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 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 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 clients of financial
intermediaries who charge an advisory, management, consulting or similar fee for
their services; accounts affiliated with those financial intermediaries;
investment clients of Eaton Vance; and certain persons affiliated with Eaton
Vance and certain Eaton Vance service providers. 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.
Your initial investment must be at least $1,000. Subsequent investments of $50
or more or more may be made at any time. The investment minimum is waived for
persons affiliated with Eaton Vance and its service providers.

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 of
shares with each investment.

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* 1.00%

</TABLE>

* 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 24 months of purchase.

<PAGE>

Contingent Deferred Sales Charge. Class A and Class B shares are subject to a
CDSC on certain redemptions. Class A shares purchased at net asset value in
amounts of $1 million or more are subject to a 1.00% CDSC if redeemed within 24
months of purchase. Class B 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 principal underwriter pays commissions to investment dealers on sales of
Class B shares (except exchange transactions and reinvestments). The sales
commission equals 4% of the purchase price of the shares.

Reducing or Eliminating Sales Charges. Front-end sales charges on purchases of
Class A shares may be reduced under the right of accumulation or under a
statement of intention. Under the right of accumulation, the sales charges you
pay are reduced if the current market value of your current holdings (based on
the current offering price), plus your new purchases, total $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. Under a statement of intention, 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 you satisfy the statement or the 13-month period
expires.

Class A shares are offered at net asset value to clients of financial
intermediaries who charge a fee for their services; accounts affiliated with
those financial intermediaries; investment and institutional clients of Eaton
Vance; certain persons affiliated with Eaton Vance; and certain Eaton Vance and
fund service providers. Ask your investment dealer for details. Class A shares
are also sold at net asset value if the amount invested represents redemption
proceeds from a mutual fund not affiliated with Eaton Vance, provided the
redemption occurred within 60 days of the Fund share purchase and the redeemed
shares were subject to a sales charge. Class A shares so acquired will be
subject to a 0.50% CDSC if they are redeemed within 12 months of purchase.
Investment dealers will be paid a commission on such sales equal to 0.50% of the
amount invested.

CDSCs are waived for certain 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, all or any portion 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. Any applicable CDSC period will begin anew for shares acquired by
reinvestment. 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 in effect 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 0.75% 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. Class B pays service
fees for personal and/ or account services equal to 0.25% of average daily net
assets annually. After the sale of shares, the principal underwriter receives
service fees for one year and thereafter investment dealers receive them based
on the value of shares sold by such dealers.

Class B distribution fees are subject to termination when payments under the
Rule 12b-1 plan are sufficient to extinguish uncovered distribution charges. As
described more fully in the Statement of Additional Information, uncovered
distribution charges of a Class are increased by sales commissions payable by
the Class to the principal underwriter in connection with sales of shares of
that Class and by an interest factor tied to the U.S. Prime Rate. Uncovered
distribution charges are reduced by the distribution fees paid by the Class and
by CDSCs paid to the Fund by redeeming shareholders.

<PAGE>

The amount of the sales commissions payable by Class B to the principal
underwriter in connection with sales of Class B shares is significantly less
than the maximum permitted by the sales charge rule of the National Association
of Securities Dealers, Inc. To date, Class B uncovered distribution charges have
not been fully covered.

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 and shares that are subject to
fiduciary arrangements cannot be redeemed by telephone.

By Check You may obtain forms to establish checkwriting
privileges for Class A and Class I shares 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 certain 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.

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.

<PAGE>

SHAREHOLDER ACCOUNT FEATURES

Once you purchase shares, the transfer agent establishes a Lifetime Investing
Account(R) 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:

.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. Withdrawals will not be subject to
any applicable CDSC if they are, in the aggregate, less than or equal to 12%
annually of the greater of either the initial account balance or the current
account balance. A minimum account size of $5,000 is required to establish a
systematic withdrawal plan. Because purchases of Class A shares are generally
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 hold Class A shares for less than six
months and exchange them for shares subject to a higher sales charge, you will
be charged the difference between the two sales charges. 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, 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 (exchanged from one fund to another and back
again) within 12 months, it will be deemed to be market timing. The exchange
privilege may be terminated for market timing accounts.

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

<PAGE>

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 and ordinarily pays distributions monthly.
Different classes will distribute different dividend amounts. 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 monthly distribution, of the Fund's daily dividends
ordinarily will constitute federally tax-exempt income to you, whether paid in
cash or reinvested in additional shares. Distribution of any net realized gains
will be distributed once each year (usually in December).

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 long-term capital gains. The Fund's distributions will be treated as
described above for federal income tax purposes whether they are paid in cash or
reinvested in additional shares. A redemption of Fund shares, including an
exchange for shares of another fund, is a taxable transaction.

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.

<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
Deloitte & Touche LLP, independent accountants. The report of Deloitte & Touche
LLP 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,
------------------------------------------------------------------------------------------------------------
1999 1998(1) 1997
----------------------------------------------------------------------------------------------------
CLASS A CLASS B CLASS I CLASS A(2) CLASS B(3) CLASS I CLASS I
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value -
Beginning of year $9.970 $9.880 $10.870 $10.000 $10.000 $10.840 $10.070
Income (loss) from ----- ----- ------ ------ ------ ------
operations
Net investment
income $0.505 $0.431 $0.553 $0.502 $0.416 $0.574 $0.584
Net realized and
unrealized gain
(loss) (1.357) (1.343) (1.464) 0.099 0.006 0.141 0.785
----- ----- ----- ----- ----- ----- -----
Total income (loss)
from operations $(0.852) $(0.912) $(0.911) $0.601 $0.422 $0.715 $1.369
------ ------ ------ ----- ----- ----- -----
Less distributions
From net investment
income $(0.504) $(0.430) $(0.554) $(0.522) $(0.433) $(0.576) $(0.584)
In excess of net
investment income (0.008) (0.002) (0.009) --- --- --- (0.015)
From net realized
gain -- -- -- (0.061) (0.051) (0.109) ---
In excess of net
realized gain (0.016) (0.016) (0.016) (0.048) (0.058) --- ---
- ------ ------ ----- ----- ------ ------ -------
Total distributions $(0.528) $(0.448) $(0.579) $(0.631) $(0.542) $(0.685) $(0.599
----- ------ ----- ----- ------ ----- -----
Net asset value -
End of year $8.590 $8.520 $9.380 $9.970 $9.880 $10.870 $10.840
===== ===== ====== ===== ===== ====== ======
Total return(4) (8.85)% (9.51)% (8.69)% 6.07% 4.03% 6.75% 14.13%
Ratios/Supplemental
Data
Net assets, end of
year (000's omitted) $49,427 $22,738 $84,938 $32,352 $10,008 $105,824 $92,375
Ratios (as a
percentage of
average daily net
assets):
Expenses 0.71% 1.47% 0.69% 0.65% 1.39% 0.70% 0.81%
Expenses after
custodian fee
reduction 0.69% 1.45% 0.67% 0.60% 1.34% 0.65% 0.77%
Net investment
income 5.31% 4.61% 5.38% 5.07% 4.33% 5.25% 5.69%
Portfolio Turnover 80% 80% 80% 38% 38% 38% 34%
<CAPTION>

1996 1995
--------------------
CLASS I CLASS I
- --------------------------------------------
<S> <C> <C>
Net asset value -
Beginning of year $10.210 $9.260
------- -------
Income (loss) from
operations
Net investment $0.605 $0.604
income
Net realized and
unrealized gain (0.143) 0.926
(loss) ------- -----
Total income (loss)
from operations $0.462 $1.566
------- -------
Less distributions
From net investment $(0.594) $(0.604)
income
In excess of net (0.008) (0.012)
investment income
From net realized -- --
gain
In excess of net
realized gain -- --
------- -------
Total distributions $(0.602) $(0.616)
------- -------
Net asset value -
End of year $10.070 $10.210
======= =======
Total return(4) 4.78% 17.40%
Ratios/Supplemental
Data
Net assets, end of $88,184 $96,410
year (000's omitted)
Ratios (as a
percentage of
average daily net
assets):
Expenses 0.78% 0.76%
Expenses after 0.74% --
custodian fee
reduction
Net investment 6.12% 6.16%
income
Portfolio Turnover 30% 58%
</TABLE>

(1) Net investment income per share was computed using average shares
outstanding.

(2) For the period from the commencement of offering of Class A shares, Janaury
6, 1998, to December 31, 1998.

(3) For the period from the commencement of offering of Class B shares, Janaury
14, 1998, to December 31, 1998.

(4) 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.

<PAGE>

LOGO
Mutual Funds
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.
The Eaton Vance Building
255 State Street
Boston, MA 02109
1-800-225-6265
website: www.eatonvance.com

You will find and may copy information about the Fund (including
the statement of additional information and shareholder reports):
at the Securities and Exchange Commission's public reference room
in Washington, DC (call 1-202-942-8090 for information on the
operation of the public reference room); on the EDGAR Database on
the SEC's Internet site (http:// www.sec.gov); or, upon payment
of copying fees, by writing to the SEC's public reference
section, Washington, DC 20549-0102, or by electronic mail at
[email protected].

About Shareholder Accounts: You can obtain more information from
Eaton Vance Shareholder 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:

PFPC, Inc.
P.O. BOX 9653
PROVIDENCE, RI 02904-9653
1-800-262-1122
- --------------------------------------------------------------------------------

The Fund's SEC File No. is 811-4015 MBP

<PAGE>

LOGO
Investing for the 21st Century(R)

Eaton Vance Government Obligations Fund

A diversified fund seeking high current return

Prospectus Dated

May 1, 2000

<TABLE>
<CAPTION>
Information in this prospectus
Page Page
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Fund Summary 2 Sales Charges 7
Investment Objective & Principal Policies Redeeming Shares
and Risks 4 8
Management and Organization 5 Shareholder Account
Features 9
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
derivatives, securities lending, short sales and forward commitments) and may
borrow from banks for investment purposes. The Fund may also enter into mortgage
dollar roll transactions.

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 a history of stable refinancing rates relative to interest
rate fluctuations. The value of Fund shares can also be adversely affected by
the existence of premiums on the price of MBS it desires to acquire.

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) and mortgage dollar rolls subject
the Fund to increased risk of principal loss. Borrowing for investment purposes
is a speculative practice and may exaggerate any increase or decrease in the
value of Fund shares. By lending its securities, the Fund could incur delays
in recovery or loss if the borrower of the securities fails.

<PAGE>

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. The following returns are for
Class A shares for each calendar year through December 31, 1999 and do not
reflect a sales charge. If the sales charge was reflected, the returns would be
lower.

8.97% 14.42% 5.29% 9.26% -2.03% 13.97% 4.52% 7.26% 5.56% 0.56%
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

The highest quarterly total return for Class A was 4.92% for the quarter ended
December 31, 1991, and the lowest quarterly return was -1.85% for the quarter
ended March 31, 1994.

<TABLE>
<CAPTION>
One Five Ten
Average Annual Total Return as of December 31, 1999 Year Years Years
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A Shares -4.23% 5.25% 6.15%
Class B Shares -4.87% 5.22% 6.20%
Class C Shares -1.13% 5.38% 6.09%
Lehman Brothers Intermediate Government Bond Index 0.49% 6.93% 7.10%
</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. (Source for Lehman Brothers
Intermediate Government Bond Index returns: Lipper Inc.)

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 Class A Class B Class C
investment)
- -------------------------------------------------------------------------------
Maximum Sales Charge (Load) (as a
percentage of offering price) 4.75% None None
Maximum Deferred Sales Charge (Load)
(as a percentage of the lower of net
asset value at time of purchase or
redemption) None 5.00% 1.00%
Maximum Sales Charge (Load)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 C
- ------------------------------------------------------------------------------
Management Fees 0.75% 0.75% 0.75%
Distribution and Service (12b-1) Fees 0.00% 1.00% 1.00%
Other Expenses* 0.50% 0.25% 0.25%
---- ---- ----
Total Annual Fund Operating Expenses 1.25% 2.00% 2.00%

* Other Expenses for Class A includes a service fee of 0.25%.

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 $ 596 $ 853 $ 1,129 $ 1,915
Class B shares $ 703 $ 1,027 $ 1,278 $ 2,327
Class C shares $ 303 $ 627 $ 1,078 $ 2,327

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

1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
Class A shares $ 596 $ 853 $ 1,129 $ 1,915
Class B shares $ 203 $ 627 $ 1,078 $ 2,327
Class C shares $ 203 $ 627 $ 1,078 $ 2,327

<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, or 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.
Under normal circumstances, the Portfolio will invest at least 65% of its total
assets in securities issued, backed or otherwise guaranteed by the U.S.
Government, or its agencies or instrumentalities.

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 and interest rate swaps. 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
in value before the settlement date. The Portfolio at times may also engage in
short sales of securities. No more than 25% 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 ("leveraging").
Such borrowings will be unsecured. The Portfolio may borrow an amount (when
taken together with any borrowings for temporary purposes) 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 the Portfolio, and in that respect may be considered a
speculative practice. In addition, the costs associated with borrowing may
exceed the return on investments acquired with borrowed funds.

In making investment decisions, the portfolio manager relies on 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, which is
not consistent with the Fund's investment objective, 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. While at times the Portfolio may use alternative investment
strategies in an effort to limit losses, it may choose not to do so.

MANAGEMENT AND ORGANIZATION

MANAGEMENT. The Portfolio's investment adviser is Boston Management and Research
("BMR"), a subsidiary of Eaton Vance Management ("Eaton Vance"), with offices at
The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109. Eaton
Vance has been managing assets since 1924 and managing mutual funds since 1931.
Eaton Vance and its subsidiaries currently manage over $43 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 0.0625%
(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:

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

As at December 31, 1999, the Portfolio had net assets of $345,199,948. For the
fiscal year ended December 31, 1999, the Portfolio paid BMR advisory fees
equivalent to 0.75% of its average daily net assets.

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

<PAGE>

The investment adviser and the Fund 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 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 offers multiple classes of shares. Each
Class represents a pro rata interest in the Fund, but is subject to different
expenses and rights. 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 purchase
price of Fund shares is their net asset value (plus a sales charge for Class A
shares), 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 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 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 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.

<PAGE>

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 totaling $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. Class A shares purchased at net asset value in amounts of
$1 million or more 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:

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

The principal underwriter pays commissions to investment dealers on sales of
Class B and Class C shares (except exchange transactions and reinvestments).
The sales commission on Class B shares equals 4% of the purchase price of the
shares. The principal underwriter compensates investment dealers who sell Class
C shares at a rate of 1.00% of the purchase price of the shares, consisting of
0.75% of sales commission and 0.25% of service fee (for the first year's
service). After the first year, investment dealers also receive 0.75% of the
value of Class C shares in annual distribution fees.

REDUCING OR ELIMINATING SALES CHARGES. Front-end sales charges on purchases of
Class A shares may be reduced under the right of accumulation or under a
statement of intention. Under the right of accumulation, the sales charges you
pay are reduced if the current market value of your current holdings (based on
the current offering price), plus your new purchases, total $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. Under a statement of intention, 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 you satisfy the statement or the
13-month period expires.

7
<PAGE>

affiliated with Eaton Vance, provided the redemption occurred within 60 days of
the Fund share purchase and the redeemed shares were subject to a sales charge.
Class A shares so acquired will be subject to a 0.50% CDSC if they are redeemed
within 12 months of purchase. Investment dealers will be paid a commission on
such sales equal to 0.50% of the amount invested.

CDSCs are waived for certain redemptions pursuant to a Withdrawal Plan (see
"Shareholder Account Features") and, for Class B and Class C shares, 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 all or any portion 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. Under these circumstances your
account will be credited with any CDSC paid in connection with the redemption.
Any CDSC period applicable to the shares you acquire upon reinvestment will run
from the date of your original share purchase. 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 in effect plans
under Rule 12b-1 that allow 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 0.75% 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 equal to 0.25% of
average daily net assets annually. After the sale of shares, the principal
underwriter receives service fees for one year and thereafter investment dealers
receive them based on the value of shares sold by such dealers.

Class B and Class C distribution fees are subject to termination when payments
under the Rule 12b-1 plans are sufficient to extinguish uncovered distribution
charges. As described more fully in the Statement of Additional Information,
uncovered distribution charges of a Class are increased by sales commissions
payable by the Class to the principal underwriter in connection with sales of
shares of that Class and by an interest factor tied to the U.S. Prime Rate.
Uncovered distribution charges are reduced by the distribution fees paid by the
Class and by CDSCs paid to the Fund by redeeming shareholders. The amount of
the sales commissions payable by Class B to the principal underwriter in
connection with sales of Class B shares is significantly less than the maximum
permitted by the sales charge rule of the National Association of Securities
Dealers, Inc. To date, neither Class B nor Class C uncovered distribution
charges have been fully covered.

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 and shares that are subject to fiduciary
arrangements cannot be redeemed by telephone.

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

<PAGE>

SHAREHOLDER ACCOUNT FEATURES

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

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

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. Withdrawals will not be subject to
any applicable CDSC if they are, in the aggregate, less than or equal to 12%
annually of the greater of either the initial account balance or the current
account balance. A minimum account size of $5,000 is required to establish a
systematic withdrawal plan. Because purchases of Class A shares are generally
subject to an initial 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 hold Class A shares for less than six months and exchange them
for shares subject to a higher sales charge, you will be charged the difference
between the two sales charges. 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 AND ELECTRONIC TRANSACTIONS. You can redeem or exchange shares by
telephone as described in this prospectus. In addition, certain transactions
may be conducted through the Internet. The transfer agent and the principal
underwriter have procedures in place to authenticate telephone and electronic
instructions (such as using security codes or verifying personal account
information). As long as the transfer agent and principal underwriter follow
reasonable procedures, they will not be responsible for unathorized telephone

9
<PAGE>

or electronic transactions and you bear the risk of possible loss resulting from
these 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. You will not be able to
utilize a number of shareholder features, such as telephone transactions,
directly with the Fund. 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.

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 and ordinarily pays distributions monthly.
Different Classes will distribute different dividend amounts. 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.The Fund expects that its distributions will consist primarily
of ordinary income. The Fund's distributions will be taxable as described above
whether they are paid in cash or reinvested in additional shares. A redemption
of Fund shares, including an exchange for shares of another fund, is a taxable
transaction. Investors who purchase shares shortly before the record date of a
capital gain distribution will pay the full price for the shares and then
receive some portion of the price back as a taxable distribution.

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

<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
PricewaterhouseCoopers LLP, independent accountants. The report of
PricewaterhouseCoopers LLP 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 Class
C existed as separate funds.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,

---------------------------------------------------------------------------------------------------
1999 1998 1997 1996
----------------------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS A
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value -
Beginning of year $ 10.400 $ 8.950 $ 8.960 $ 10.620 $ 9.140 $ 9.130 $ 10.680 $ 11.020
-------- -------- ------- -------- -------- ------- -------- --------
Income (loss) from
operations
Net investment income 0.745(1) $ 0.576(1) $0.576(1) $ 0.783(1) $ 0.602(1) $0.607(1) $ 0.799 $ 0.810
Net realized and
unrealized gain(loss) (0.689) (0.594) (0.594) (0.215) (0.182) (0.172) (0.051) (0.340)
-------- -------- ------- -------- -------- ------- -------- --------
Total income (loss)
from operations $ 0.056 $ (0.018) $(0.018) $ 0.568 $ 0.420 $ 0.435 $ 0.748 $ 0.470
-------- -------- ------- -------- -------- ------- -------- --------
Less distributions
From net investment
income $ (0.743) $ (0.569) $(0.569) $ (0.781) $ (0.603) $(0.599) $ (0.801) $ (0.810)
From tax return of
capital (0.013) (0.013) (0.013) (0.007) (0.007) (0.006) (0.007) --
-------- -------- ------- -------- -------- ------- -------- --------
Total distributions $ (0.756) $ (0.582) $(0.582) $ (0.788) $ (0.610) $(0.605) $ (0.808) $ (0.810)
-------- -------- ------- -------- -------- ------- -------- --------
Net asset value -
End of year $ 9.700 $ 8.350 $ 8.360 $ 10.400 $ 8.950 $ 8.960 $ 10.620 $ 10.680
-------- -------- ------- -------- -------- ------- -------- --------
Total return (2) 0.56% (0.20)% (0.20)% 5.56% 4.76% 4.92% 7.26% 4.52%
Ratios/Supplemental Data
Net assets, end of
year (000's omitted) $195,162 $116,913 $30,833 $251,727 $132,013 $34,719 $276,781 $302,963

Ratios (as a percentage of
average daily net assets)(4):
Operating expenses(3) 1.23% 1.98% 1.98% 1.25% 2.00% 2.00% 1.24% 1.16%
Interest expenses(3) 0.02% 0.02% 0.02% 0.07% 0.07% 0.07% -- --
Net investment income 7.43% 6.68% 6.67% 7.46% 6.66% 6.71% 7.57% 7.59%
Portfolio turnover
of the Portfolio 18% 18% 18% 48% 48% 48% 20% 11%
<CAPTION>

1995
-----------
CLASS A
- ----------------------------------------------------
<S> <C>
Net asset value - Beginning of year $ 10.420
--------
Income (loss) from operations
Net investment income $ 0.807
Net realized and unrealized gain (loss) 0.603
---------
Total income (loss)from operations $ 1.410
--------
Less distributions
From net investment income $ (0.810)
From tax return of capital --
--------
Total distributions $ (0.810)
---------
Net asset value - End of year $ 11.020
---------
Total return(2) 13.97%

Ratios/Supplemental Data
Net assets, end of year (000's omitted) $359,738
Ratios (as a percentage of average daily
net assets)(4):
Operating expenses(3) 1.16%
Interest expenses (3) --
Net investment income 7.53%
Portfolio turnover of the Portfolio 19%
</TABLE>

(1) Net investment income per share was computed using average shares
outstanding.

(2) 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.

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

(4)Certain prior year ratios have been restated to conform to the current
year presentations.

<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.
The Eaton Vance Building
255 State Street
Boston, MA 02109
1-800-225-6265
website: www.eatonvance.com

You will find and may copy information about the Fund (including the
statement of additional information and shareholder reports): at the
Securities and Exchange Commission's public reference room in
Washington, DC (call 1-202-942-8090 for information on the operation
of the public reference room); on the EDGAR Database on the SEC's
Internet site (http:// www.sec.gov); or, upon payment of copying
fees, by writing to the SEC's public reference section, Washington,
DC 20549-0102, or by electronic mail at [email protected].

ABOUT SHAREHOLDER ACCOUNTS: You can obtain more information from
Eaton Vance Shareholder 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:

PFPC, Inc.
P.O. BOX 9653
PROVIDENCE, RI 02904-9653
1-800-262-1122

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

The Fund's SEC File No. is 811-4015 GOP

<PAGE>

STATEMENT OF
ADDITIONAL INFORMATION
May 1, 2000

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

The Eaton Vance Building
255 State Street
Boston, Massachusetts 02109
(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 ............................................... 14
Calculation of Yield Quotations ................................. 15
Taxes ........................................................... 15
Portfolio Security Transactions ................................. 16
Financial Statements ............................................ 18

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 IS NOT A PROSPECTUS AND IS AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE
INVESTORS ONLY IF PRECEDED OR ACCOMPANIED BY THE FUNDS' COMBINED PROSPECTUS
DATED MAY 1, 2000, 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.

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.

COMMON INVESTMENT POLICIES

WHEN-ISSUED SECURITIES. Some tax-exempt securities may be purchased on a
"when-issued" basis. If so, the Portfolio or 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
Portfolio or 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. Thus, the purchase of
securities on a when-issued basis may be considered an aggressive investment
practice involving some risk. When the Portfolio or Fund commits to purchase a
security on a when-issued basis, the Portfolio or 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 Portfolio or Fund have 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 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 Money Market Fund's 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. For purposes of each
Restriction (5) above, "more than 25%" means "25% or more" of total assets.

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. Any such determination
by a delegate will be made pursuant to procedures adopted by the Board. If
the Portfolio or 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 The Eaton Vance Building, 255 State Street, Boston,
Massachusetts 02109. 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 (58), 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 (40), Trustee*
President and Chief Executive Officer of National Financial Partners (a
financial services company) (since April 1999). President and Chief
Operating Officer of John A. Levin & Co. (a registered investment advisor)
(July 1997 to April 1999) and a Director of Baker, Fentress & Company which
owns John A. Levin & Co. (July 1997 to April 1999). 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: 1301 Avenue of the Americas, New York, NY 10019

DONALD R. DWIGHT (69), Trustee
President of Dwight Partners, Inc. (a corporate relations and communications
company). Trustee/Director of the Royce Funds (mutual funds). Trustee of
various investment companies managed by Eaton Vance or BMR.
Address: Clover Mill Lane, Lyme, New Hampshire 03768

SAMUEL L. HAYES, III (65), Trustee
Jacob H. Schiff Professor of Investment Banking Emeritus, Harvard University
Graduate School of Business Administration. Trustee of the Kobrick
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 (64), 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 (42), 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

JACK L. TREYNOR (70), 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. (40), 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 (56), Vice President of the Trust
Vice President of BMR, Eaton Vance and EV. Officer of various investment
companies managed by Eaton Vance or BMR.

ARMIN J. LANG (35), Vice President of the Trust
Vice President of Eaton Vance and BMR since March, 1998. Previously he was a
Vice President at Standish, Ayer & Wood.

MICHAEL R. MACH (52), Vice President of the Trust
Vice President of Eaton Vance and BMR since December 15, 1999. Previously, he
was a Managing Director and Senior Analyst for Robertson Stephens
(1998-1999); Managing Director and Senior Analyst for Piper Jaffray
(1996-1998); and Senior Vice President and Senior Analyst for Putnam
Investments (1989-1996). Officer of various investment companies managed by
Eaton Vance or BMR.

ROBERT B. MACINTOSH (43), Vice President of the Trust
Vice President of Eaton Vance and BMR. Officer of various investment companies
managed by Eaton Vance or BMR.

MICHAEL B. TERRY (57), Vice President of the Portfolio
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 Eaton Vance and BMR. Officer of various investment companies
managed by Eaton Vance or BMR.

ALAN R. DYNNER (59), Secretary
Vice President, Secretary and Chief Legal Officer of Eaton Vance, BMR, EVC and
EV. Prior to joining Eaton Vance on November 1, 1996, 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 (64), 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 (37), Assistant Secretary
Vice President of BMR and Eaton Vance. Officer of various investment companies
managed by Eaton Vance or BMR.

ERIC G. WOODBURY (42), Assistant Secretary
Vice President of BMR and Eaton Vance. Officer of various investment companies
managed by Eaton Vance or BMR.

The Nominating Committee of the Board of Trustees of the Trust and the
Portfolio is comprised of the Trustees who are not "interested persons" as
that term is defined under the 1940 Act ("noninterested Trustees"). 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. Hayes (Chairman), Dwight and Reamer and Ms. Stout 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.

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, 1999, 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):

<S> <C> <C> <C> <C> <C> <C>
Trust(2) $ 8,968 $ 8,508 $ 9,043 $ 8,575 $ 8,420 $ 9,365
Portfolio 1,982 2,034 2,243 1,935 2,086 2,025

Trust and Fund
Complex $160,000 $160,000(3) $170,000 $160,000 $160,000(4) $170,000
- ----------
(1) As of May 1, 2000, the Eaton Vance complex consists of 145 registered investment companies or series thereof.
(2) The Trust consisted of 16 Funds as of January 1, 2000.
(3) Includes $60,000 of deferred compensation.
(4) Includes $16,000 of deferred compensation.
</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 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.

The Trustees of the Trust have considered the advantages and disadvantages
of investing the assets of the Cash 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 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.

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 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,
1999, the Portfolio had net assets of $232,957,869. For the fiscal years ended
December 31, 1999, 1998 and 1997, the Portfolio paid BMR advisory fees of
$803,098, $689,334 and $724,890, 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, 1999, Tax Free Reserves had net assets of $40,455,737. For the
fiscal years ended December 31, 1999, 1998 and 1997, Eaton Vance would have
earned, absent a fee reduction, advisory fees of $240,365, $274,297 and
$320,793, 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,
1999, 1998 and 1997 in the amount of $144,202, $154,048 and $99,776,
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 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
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, John G.L. Cabot, Leo I.
Higdon, Jr., 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, Jeffrey P. Beale, Alan R.
Dynner, Thomas E. Faust, Jr., Thomas J. Fetter, Scott H. Page, Duncan W.
Richardson, William M. Steul, Payson F. Swaffield, Michael W. Weilheimer and
Wharton P. Whitaker (all of whom are officers of Eaton Vance). 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"), The Eaton
Vance Building, 255 State Street, Boston, MA 02109, 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 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, 160 Federal Street,
Boston, MA 02110, 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. PFPC, Inc., 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 banking 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.

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

ADDITIONAL INFORMATION ABOUT REDEMPTIONS. The right to redeem shares of a
Fund can be suspended and the payment of the redemption price deferred when
the Exchange is closed (other than for customary weekend and holiday
closings), during periods when trading on the Exchange is restricted as
determined by the SEC, or during any emergency as determined by the SEC which
makes it impracticable for the Portfolio or Tax Free Reserves Fund to dispose
of its securities or value its assets, or during any other period permitted by
order of the SEC for protection of investors.

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.

DISTRIBUTION PLAN

The Money Market Fund has a Distribution Plan (the "Plan") described in
the prospectus and designed to meet the requirements of Rule 12b-1 under the
1940 Act and a rule of the National Association of Securities Dealers, Inc.
(the "NASD"). The purpose of the Plan is to compensate the principal
underwriter for its distribution services and facilities provided to the Fund.

Under the Plan, 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 (interest) to which the principal
underwriter would be entitled 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, reinvestments or
from cash sales through investment dealers), 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 (1% over the
Prime Rate reported in the Wall Street Journal) under the Plan.

The Plan also authorizes the Fund 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. The Trustees of the Trust have
initially implemented this provision by authorizing the Fund to make quarterly
service fee payments to the principal underwriter and investment dealers in
amounts not expected to exceed .15% of the average daily net assets for any
fiscal year. This fee is paid quarterly in arrears based on the value of Fund
shares sold by such persons.

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 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 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 Trust.

The Plan continues in effect from year to year for so long as such
continuance is approved at least annually by the vote of both a majority of
(i) the noninterested Trustees of the Trust who have no direct or indirect
financial interest in the operation of the Plan or any agreements related to
the Plan (the "Rule 12b-1 Trustees") and (ii) all of the Trustees then in
office, and the Distribution Agreement contains a similar provision. The Plan
and Distribution Agreement may be terminated at any time by vote of a majority
of the Rule 12b-1 Trustees, or by a vote of a majority of the outstanding
voting securities of the 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 who are
"interested" persons of the Fund have an indirect financial interest in the
Plans because their employees (or affiliates thereof) receive distribution
and/or service fees under the Plans or agreements related thereto.

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 investment dealers 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 investment dealers, 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.

The principal underwriter may, from time to time, at its own expense,
provide additional incentives to investment dealers which employ registered
representatives who sell the 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 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 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, the 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. The 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.

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.

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, foreign investors, 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, 1999, 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, 1999, 1998 and 1997 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.

Registrant incorporates by reference the audited financial information for
the Funds and the Portfolio listed below for the fiscal year ended December
31, 1999, as previously filed electronically with the Commission:

Eaton Vance Cash Management Fund
Eaton Vance Money Market Fund
Cash Management Portfolio
(Accession No. 0000912057-00-009483)

Eaton Vance Tax Free Reserves
(Accession No. 0000912057-00-008905)

<PAGE>
APPENDIX A: FUND SPECIFIC INFORMATION

FEES AND EXPENSES

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,
1999, 1998 and 1997, $677, $11,429 and $22,883, 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, 1999, the principal underwriter
paid to investment dealers sales commissions of $514,900, 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 $327,509 and the
principal underwriter received approximately $426,000 in CDSCs imposed on
early redeeming shareholders. These sales commissions and CDSC payments
reduced uncovered distribution charges under the Plan. As at December 31,
1999, the outstanding uncovered distribution charges of the principal
underwriter calculated under the Plan amounted to approximately $7,011,000
(which amount was equivalent to 7.2% of the Fund's net assets on such day).
For the fiscal year ended December 31, 1999, the Fund made service fee
payments under the Plan aggregating $33,563, of which $33,004 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,
1999, the Fund paid the principal underwriter $2,105 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.

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

CASH FUND. As of March 31, 2000, the Trustees and officers of the
Trust, as a group, owned in the aggregate less than 1% of the outstanding
shares of the Fund. As of March 31, 2000, Saturn & Co., a nominee of Investors
Bank & Trust Company, was the record owner of approximately 33.8% of the
outstanding shares of the Fund, which it held on behalf of its custody and
trust clients. Beneficial owners of 25% or more of Fund shares are presumed to
be in control for purposes of voting on certain matters submitted to
shareholders. To the knowledge of the Trust, no other person owned of record
or beneficially 5% or more of the Fund's outstanding shares as of such date.

MONEY MARKET FUND. As of March 31, 2000, 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 of March 31, 2000, the Trustees and officers of the
Trust, as a group, owned in the aggregate less than 1% of the outstanding
shares of the Fund. As of March 31, 2000, Saturn & Co., a nominee of Investors
Bank & Trust Company, was the record owner of approximately 68.3% 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 shareholder
held of record the percentage of outstanding shares of the Fund indicated
after its names: Newport Group, Heathrow, FL (7.0%). Beneficial owners of 25%
of more of Fund shares are presumed to be in control for purposes of voting on
certain matters submitted to shareholders. 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.
<PAGE>
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>
STATEMENT OF
ADDITIONAL INFORMATION

May 1, 2000

EATON VANCE MUNICIPAL BOND FUND

The Eaton Vance Building
255 State Street

Boston, Massachusetts 02109
(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 ...................... 9
Investment Advisory Services ..................... 12
Other Service Providers .......................... 13

Purchasing and Redeeming Shares .................. 13

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

F: Asset Composition Information ................. f-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, 2000, 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.
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.

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 the issuer's counsel (when available) 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. 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.

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.

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

The obligations of any person or entity to pay the principal of and
interest on a municipal obligation, are subject to the provisions of
bankruptcy, insolvency and other laws affecting the rights and remedies of
creditors, such as the Federal Bankruptcy Act, and laws, if any, which may be
enacted by Congress or state legislatures extending the time for payment of
principal or interest, or both, or imposing other constraints upon enforcement
of such obligations. There is also the possibility that as a result of
litigation or other conditions the power or ability of any person or entity to
pay when due principal of and interest on a municipal bond 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 take whatever action it considers
appropriate in the event of anticipated financial difficulties, default or
bankruptcy of either the issuer of any municipal obligation or of the
underlying source of funds for debt service. Such action may include retaining
the services of various persons 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 based on judgment 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.

STATE AND SECTOR CONCENTRATION. The Fund may invest 25% or more of its total
assets in municipal obligations whose issuers are located in the same state or
in municipal obligations of the same type. Municipal bonds of issuers in a
single state may be adversley affected by economic developments (including
insolvency of an issuer) and by legislation and other governmental activities
in that state. 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
increase of hospital charges.

Electric utilities face problems in financing large construction programs
in an inflationary period, cost increases and delay occasioned by safety and
environmental considerations (particularly with respect to nuclear
facilities), difficulty in obtaining fuel at reasonable prices and in
achieving timely and adequate rate relief from regulatory commissions, 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.

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 in the lower investment
grade category 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. The
investment adviser may also purchase structured derivative products with
greater or lesser credit risk than the underlying bonds. Such bonds may be
rated investment grade, as well as below investment grade. For a description
of municipal bond ratings, see Appendix E.

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.

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 or demand features may be taxable.

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. Illiquid securities also include those legally restricted as to resale,
and securities eligible for resale pursuant to Rule 144A thereunder. Rule 144A
securities may be treated as liquid securities if the investment adviser
determines that such treatment is warranted. Even if determined to be liquid,
holdings of these securities may increase the level of Fund illiquidity if
eligible buyers became uninterested in purchasing them.

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.

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.

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.

INTEREST RATE SWAPS. Interest rate swaps involve the exchange by the Fund
with another party of their respective commitments to pay or receive interest,
e.g., an exchange of fixed rate payments for floating rate payments. The Fund
will only enter into interest rate swaps on a net basis, i.e., the two payment
streams are netted out with the Fund receiving or paying, as the case may be,
only the net amount of the two payments. If the other party to an interest
rate swap defaults, the Fund's risk of loss consists of the net amount of
interest payments that the Fund is contractually entitled to receive. The net
amount of the excess, if any, of the Fund's obligations over its entitlements
will be maintained in a segregated account by the Fund's custodian. The Fund
will not enter into any interest rate swap unless the claims-paying ability of
the other party thereto is considered to be investment grade by the investment
radviser. If there is a default by the other party to such a transaction, the
Fund will have contractual remedies pursuant to the agreements related to the
transaction.

ASSET COVERAGE REQUIREMENTS. Transactions involving when-issued securities,
futures contracts and options (other than options that the Fund has
purchased), or interest rate swaps may 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
maintained by 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.

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.

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. Any such determination
by a delegate will be made pursuant to procedures adopted by the Board.

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.

The Fund will not invest 25% or more of its total assets in any one
industry. For purposes of the foregoing policy, securities of the U.S.
Government, its agencies, or instrumentalities are not considered to represent
industries. Municipal obligations backed by the credit of a governmental
entity are also not considered to represent industries. However, municipal
obligations backed only by the assets and revenues of non-governmental users
may for this purpose be deemed to be issued by such non-governmental users.
The foregoing 25% limitation would apply to these issuers. As discussed in the
prospectus and this SAI, the Fund may invest more than 25% of its total assets
in certain economic sectors, such as revenue bonds, housing, hospitals and
other health care facilities, and IDBs. The Fund reserves the right to invest
more than 25% of total assets in each of these sectors.

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 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. Moreover, the Fund must always be in compliance with the
limitation on investing in illiquid securities and 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 The
Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109. Those
Trustees who are "interested persons" of the Trust, as defined in the 1940 Act,
are indicated by an asterisk(*).

JESSICA M. BIBLIOWICZ (40), Trustee*
President and Chief Executive Officer of National Financial Partners (a
financial services company) (since April 1999). President and Chief
Operating Officer of John A. Levin & Co. (a registered investment adviser)
(July 1997 to April 1999) and a Director of Baker, Fentress & Company which
owns John A. Levin & Co. (July 1997 to April 1999). 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: 1301 Avenue of the Americas, New York, NY 10019

JAMES B. HAWKES (58), 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 (65), Trustee
Jacob H. Schiff Professor of Investment Banking, Emeritus, Harvard University
Graduate School of Business Administration. Trustee of the Kobrick
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 (64), 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 (70), 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. (40), 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 (56), Vice President
Vice President of Eaton Vance, and BMR. Officer of various investment
companies managed by Eaton Vance or BMR.

ARMIN J. LANG (35), Vice President of the Trust
Vice President of Eaton Vance and BMR since March, 1998. Previously he was a
Vice President at Standish, Ayer & Wood.

ROBERT B. MACINTOSH (44), Vice President
Vice President of Eaton Vance and BMR. Officer of various investment companies
managed by Eaton Vance or BMR.

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

ALAN R. DYNNER (59), Secretary
Vice President and Chief Legal Officer of Eaton Vance, BMR, EVC and EV. Prior
to joining Eaton Vance on November 1, 1996, 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 (64), 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 (37), Assistant Secretary
Vice President of BMR and Eaton Vance. Officer of various investment companies
managed by Eaton Vance or BMR.

ERIC G. WOODBURY (42), Assistant Secretary
Vice President of Eaton Vance and BMR. Officer of various investment companies
managed by Eaton Vance or BMR.

The Nominating Committee of the Board of Trustees of the Trust is
comprised of the Trustees who are not "interested persons" as that term is
defined under the 1940 Act ("noninterested Trustees"). 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. Hayes (Chairman), Dwight and Reamer and Ms. Stout are members of
the Special Committee of the Board of Trustees of the Trust. The purpose of
the Special Committee is to consider, evaluate and make recommendations to the
full Board of Trustees concerning (i) all contractual arrangements with
service providers to the 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.

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, 1999, the noninterested
Trustees of the Trust earned the following compensation in their capacities as
Trustees from the Trust and the funds in the Eaton Vance fund complex:(1)

<TABLE>
<CAPTION>
SOURCE OF JESSICA M. DONALD R. SAMUEL L. NORTON H. LYNN A. JACK L.
COMPENSATION BIBLIOWICZ DWIGHT HAYES, III REAMER STOUT TREYNOR
------------ ---------- --------- ---------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Trust(2) ................ $ 8,968 $ 8,508 $ 9,043 $ 8,575 $ 8,420 $ 9,365
Trust and Fund Complex .. 160,000 160,000(3) 170,000 160,000 160,000(4) 170,000

- ----------
(1) As of May 1, 2000, the Eaton Vance fund complex consists of 145 registered investment companies or series thereof.
(2) The Trust consisted of 16 Funds as of January 1, 2000.
(3) Includes $60,000 of deferred compensation.
(4) Includes $16,000 of deferred compensation.
</TABLE>

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 Trust 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, 1999, the Fund had net assets of
$157,102,561. For the fiscal years ended December 31, 1999, 1998 and 1997,
Eaton Vance earned advisory fees of $808,782, $567,054 and $441,330,
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, John G.L. Cabot, Leo I. Higdon, Jr., 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 Jeffrey P. Beale, Alan R. Dynner, Thomas E. Faust, Jr.,
Thomas J. Fetter, Scott H. Page, Duncan W. Richardson, William M. Steul,
Payson F. Swaffield, Michael W. Weilheimer and Wharton P. Whitaker (all of
whom are officers of Eaton Vance). 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 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"), The Eaton Vance
Building, 255 State Street, Boston, MA 02109, 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, 200 Berkeley Street, Boston,
MA, 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. PFPC, Inc., 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.

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 and Class I 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 officers and employees of IBT and the transfer
agent; to persons associated with law firms, consulting firms and others
providing services to Eaton Vance and the Eaton Vance funds; and to such
persons' spouses, parents, siblings and children and their beneficial
accounts. Such shares may also be issued at net asset value (1) in connection
with the merger of an investment company (or series or class thereof) with the
Fund (or class thereof), (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. Class A
shares may also be sold at net asset value to registered representatives and
employees of investment dealers and bank employees who refer customers to
registered representatives of investment dealers. Class A and Class I 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. All sales charge waivers, including
CDSCs, are prospective only.

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, the Statement of
Intention section of the account application should be completed 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. If you make a Statement of Intention
the transfer agent is authorized 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. A Statement of Intention does not obligate the
shareholder to purchase or the Fund to sell the full amount indicated in the
Statement.

If the amount actually purchased during the 13-month period is less than
that indicated in the Statement, the shareholder will be requested to pay the
difference between the sales charge applicable to the shares purchased and the
sales charge paid under the Statement of Intention. If the payment is not
received in 20 days, the appropriate number of escrowed shares will be
redeemed in order to realize such difference. If the total purchases during
the 13-month period are large enough to qualify for a lower sales charge than
that applicable to the amount specified in the Statement, all transactions
will be computed at the expiration date of the Statement to give effect to the
lower sales charge. Any difference will be refunded to the shareholder in cash
or applied to the purchase of additional shares, as specified by the
shareholder. This refund will be made by the investment dealer and the
principal underwriter. If at the time of the recomputation, the investment
dealer for the account has changed, the adjustment will be made only on those
shares purchased through the current investment dealer for the account.

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.

EXCHANGE PRIVILEGE. In addition to exchanges into the same class of another
Eaton Vance fund, Class B shares may be exchanged for shares of a money market
fund sponsored by an investment dealer and approved by the principal
underwriter (an "investment dealer fund"). For purposes of calculating the
CDSC applicable to investment dealer fund shares acquired in an exchange, the
CDSC schedule applicable to the exchanged shares will apply and the purchase
of investment dealer fund shares is deemed to have occurred at the time of the
original purchase of the exchanged shares, except that the time during which a
shareholder holds such investment dealer fund shares will not be credited
toward completion of the CDSC period.

DISTRIBUTION AND SERVICE PLANS. The Trust has in effect 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. For
the service fees paid by Class A shares, see Appendix A.

The Trust also has in effect 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 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% 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. 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 initially
approved by the Trustees, including the Plan Trustees, on October 17, 1997.
The Trustees of the Trust who are "interested" persons of the Fund have an
indirect financial interest in the Plans because their employers (or
affiliates thereof) receive distribution and/or service fees under the Plans
or agreements related thereto.

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. The
Fund may also publish total return figures for each class based on reduced
sales charges or at net asset value. These returns would be lower if the full
sales charge was imposed. 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'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 and ratings, 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, Inc.,
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. Such information may be in the form of hypothetical
illustrations. 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.

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 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 net income (including tax-exempt income) and net
short-term and long-term capital gains (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, 1999. If the Fund does not qualify for taxation as a RIC for any taxable
year, the Fund's income will be subject to corporate income taxes, and all
distributions from earnings and profits, including distributions of net
capital gain (if any), will be taxable to shareholders as ordinary income. In
addition, in order to requalify for taxation as a RIC, the Fund may be
required to recognize unrealized gains, pay substantial taxes and interest,
and make certain distributions.

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 (i) at least 98% of its ordinary income (not
including tax-exempt income) for such year, (ii) 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 any available
capital loss carryforwards, and (iii) 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.

Tax-exempt distributions received from the Fund are taken into account in
determining, and may increase, the portion of social security and certain
railroad retirement benefits that may be subject to federal income tax.

Interest on indebtedness incurred or continued by a shaeholder to purchase
or carry shares of the Fund is not deductible to the extent it is deemed
related to the Fund's distributions of tax-exempt interest. Further, entities
or persons who are "substantial users" (or persons related to "substantial
users") of facilities financed by industrial development or private activity
bonds should consult their tax advisers before purchasing shares of the Fund.
"Substantial user" is defined in applicable Treasury regulations to include a
"non-exempt person" who regularly uses in trade or business a part of a
facility financed from the proceeds of industrial development bonds, and the
same definition should apply in the case of private activity bonds.

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 other 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 of any
distributions treated as 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 distributions treated as long-term
capital gain with respect to such shares. In addition, all or a portion of a
loss realized on a redemption or other disposition of Fund shares may be
disallowed under "wash sale" rules to the extent the shareholder acquired
other shares of the same Fund (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. Any
disallowed loss will result in an adjustment to the shareholder's tax basis in
some or all of the other shares acquired.

Sales charges paid upon a purchase of Class A shares of the Fund cannot be
taken into account for purposes of determing gain or loss on a redemption or
exchange of the shares before the 91st day after their purchase to the extent
a sales charge is reduced or eliminated in a subsequent acquisition of shares
of the Fund (or of another fund) pursuant to the reinvestment or exchange
privilege. Any disregarded amounts will result in an adjustement to the
shareholder's tax basis in some or all of any other shares acquired.

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 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.

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, subject to conditions of limitations in applicable state and
local laws, 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.

During the fiscal year ended December 31, 1999, the Fund paid no brokerage
commissions on portfolio transactions. During the fiscal years ended December
31, 1998 and 1997, the Fund paid brokerage commissions of $6,084 and $29,650,
respectively, on portfolio security transactions of $125,531,629 and
$271,621,661, respectively, 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).

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.

Registrant incorporates by reference the audited financial information for
the Fund for the fiscal year ended December 31, 1999, as previously filed
electronically with the SEC (Accession No. 0000912057-00-008908).

<PAGE>

APPENDIX A
CLASS A FEES, PERFORMANCE AND OWNERSHIP

SERVICE FEES

For the fiscal year ended December 31, 1999, Class A made service fee
payments under the Service Plan aggregating $15,964, of which $15,231 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 years ended December 31, 1999 and 1998 were $653,758
and $499,626, respectively, of which $30,543 and $30,195, respectively, were
received by the principal underwriter. For the fiscal years ended December 31,
1999 and 1998, investment dealers received $623,215 and $496,431,
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,
1999, Class A paid the principal underwriter $290 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 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.

<TABLE>
<CAPTION>
VALUE OF A $1,000 INVESTMENT

TOTAL RETURN TOTAL RETURN
EXCLUDING MAXIMUM INCLUDING MAXIMUM
VALUE OF VALUE OF SALES CHARGE SALES CHARGE
INVESTMENT INVESTMENT INITIAL INVESTMENT ---------------------------- ---------------------------
PERIOD DATE INVESTMENT ON 12/31/99 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ---------------------- -------------- --------------- --------------- ------------- ------------- -------------- ---------
10 Years Ended
<S> <C> <C> <C> <C> <C> <C> <C>
12/31/99 12/31/89 $952.44 $1,809.65 90.01% 6.63% 80.96% 6.11%
5 Years Ended
12/31/99 12/31/94 $952.40 $1,300.17 36.52% 6.42% 30.02% 5.39%
1 Year Ended
12/31/99 12/31/98 $952.24 $ 867.99 -8.85% -8.85% -13.20% -13.20%
</TABLE>

- ----------

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

As at March 31, 2000, the Trustees and officers of the Trust, as a group,
owned in the aggregate less than 1% of the outstanding Class A shares of the
Fund. As of March 31, 2000, Merrill Lynch, Pierce, Fenner & Smith, Inc.,
Jacksonville, FL, was the record owner of approximately 19.5%, 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 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, 1999, the principal underwriter
paid to investment dealers sales commissions of $642,027 on sales of Class B
shares. During the same period, the Fund made payments under the Distribution
Plan to the principal underwriter aggregating $144,840 and the principal
underwriter received approximately $30,000 in CDSCs imposed on early redeeming
shareholders. These distribution payments and CDSC payments reduced uncovered
distribution charges under the Plan. As at December 31, 1999, the outstanding
uncovered distribution charges of the principal underwriter calculated under
the Plan amounted to approximately $1,102,000 (which amount was equivalent to
4.8% of the net assets attributable to Class B on such date). During the
fiscal year ended December 31, 1999, Class B made service fee payments to the
principal underwriter and investment dealers aggregating $5,542, of which
$5,193 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,
1999, Class B paid the principal underwriter $177.50 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 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.

<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 12/31/99 ON 12/31/99 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ---------------- ------------ ----------- --------------- --------------- ------------ ------------ ------------ ----------
10 Years
Ended
<S> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/99 12/31/89 $1,000 $1,866.90 $1,866.90 86.69% 6.44% 86.69% 6.44%
5 Years
Ended
12/31/99 12/31/94 $1,000 $1,341.32 $1,321.32 34.13% 6.05% 32.13% 5.73%
1 Year
Ended
12/31/99 12/31/98 $1,000 $ 904.90 $ 861.78 -9.51% -9.51% -13.82% -13.82%
</TABLE>

- ----------

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

As at March 31, 2000, the Trustees and officers of the Trust, as a group,
owned in the aggregate less than 1% of the outstanding Class B shares of the
Fund. As of March 31, 2000, Merrill Lynch, Pierce, Fenner & Smith, Inc.,
Jacksonville, FL 32246 was the record owner of approximately 20.1% of the
outstanding Class B shares, which were held on behalf of its customers who are
the beneficial owners of such shares, and as to which it had voting power
under certain limited circumstances. 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, 1999, 1998 and 1997 were $52,896, $119,786 and
$111,456, respectively, of which $0, $0 and $3,205, respectively, was received
by the Principal Underwriter. For the fiscal years ended December 31, 1999,
1998 and 1997, investment dealers received approximately $52,896, $119,786 and
$108,251, respectively, from the total sales charges.

For the fiscal year ended December 31, 1999, the Fund paid the Principal
Underwriter $1,035 for repurchase transactions handled by the Principal
Underwriter (being $2.50 for each repurchase transaction handled by the
Principal Underwriter).

PERFORMANCE INFORMATION

The table below indicates the cumulative and average annual total return
on a hypothetical investment of $1,000. Total return for the period prior to
January 1, 1998 is for a predecessor fund to Class I shares. 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.

<TABLE>
<CAPTION>
VALUE OF A $1,000 INVESTMENT

TOTAL RETURN EXCLUDING TOTAL RETURN INCLUDING
VALUE OF VALUE OF SALES CHARGE SALES CHARGE
INVESTMENT INVESTMENT INITIAL INVESTMENT ------------------------------ ------------------------------
PERIOD DATE INVESTMENT ON 12/31/99 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ------------- -------------- --------------- --------------- -------------- -------------- -------------- ------------
10 Years
Ended
<S> <C> <C> <C> <C> <C> <C> <C>
12/31/99 12/31/89 $952.44 $1,905.14 90.51% 6.66% 90.51% 6.66%
5 Years
Ended
12/31/99 12/31/94 $952.40 $1,368.86 36.89% 6.48% 36.89% 6.48%
1 Year
Ended
12/31/99 12/31/98 $952.24 $ 913.13 -8.69% -8.69% -8.69% -8.69%
</TABLE>

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

As of March 30, 2000, 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 March 30, 2000, Mars & Co., Boston, MA 02117 was the record owner
of approximately 5.5% 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 2000.

<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 $ 26,250 Up to $ 43,850 15.00% 4.71% 5.29% 5.88% 6.47% 7.06% 7.65% 8.24%
$ 26,251-$ 63,550 $ 43,851-$105,950 28.00 5.56 6.25 6.94 7.64 8.33 9.03 9.72
$ 63,551-$132,600 $105,951-$161,450 31.00 5.80 6.52 7.25 7.97 8.70 9.42 10.14
$132,601-$288,350 $161,451-$288,350 36.00 6.25 7.03 7.81 8.59 9.38 10.16 10.94
Over $288,350 Over $288,350 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 $128,950. 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 $128,950 and joint filers with
adjusted gross income in excess of $193,400. 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.

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.

- ----------

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

APPENDIX F

EATON VANCE MUNICIPAL BOND FUND

ASSET COMPOSITION INFORMATION
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

RATINGS OF MUNICIPAL BONDS BY MOODY'S RATINGS OF MUNICIPAL BONDS BY S&P

<S> <C> <C> <C>
PERCENT OF PERCENT OF
NET ASSETS NET ASSETS
- -----------------------------------------------------------------------------------------------------
Aaa 29.41% AAA 25.83%
- ------------------------------------------------ -------------------------------------------
Aa1 2.76 AA+ 2.50
- ------------------------------------------------ -------------------------------------------
Aa2 4.18 AA 5.00
- ------------------------------------------------ -------------------------------------------
Aa3 2.13 AA- 6.66
- ------------------------------------------------ -------------------------------------------
A1 4.39 A 8.49
- ------------------------------------------------ -------------------------------------------
A2 2.81 A- 2.60
- ------------------------------------------------ -------------------------------------------
A3 7.88 BBB+ 2.15
- ------------------------------------------------ -------------------------------------------
Baa1 1.97 BBB 2.84
- ------------------------------------------------ -------------------------------------------
Baa2 1.05 BBB- 1.71
- ------------------------------------------------ -------------------------------------------
Baa3 0.53 Unrated 42.22
- ------------------------------------------------ -------------------------------------------
Ba1 0.91 -------
- ------------------------------------------------ -------------------------------------------
Ca 0.25 100.00%
- ------------------------------------------------
Unrated 41.73
- ------------------------------------------------
100.00%
</TABLE>

The chart above indicates the weighted average composition of the
securities held by the Fund for the fiscal year ended December 31, 1999, with
the debt securities rated by Moody's and S&P separated into the indicated
categories. The above was calulated on a dollar weighted basis and was
computed as at the end of each month during the fiscal year. The chart does
not necessarily indicate what the composition of the securities held by the
Fund will be in the current and subsequent fiscal years. Securities that are
rated by one rating agency may be "unrated" by the other.

For a description of Moody's and S&P's securities ratings, see Appendix E
to this SAI.

<PAGE>

PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION

STATEMENT OF
ADDITIONAL INFORMATION
May 1, 2000

EATON VANCE GOVERNMENT OBLIGATIONS FUND
The Eaton Vance Building
255 State Street
Boston, Massachusetts 02109
(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 ................................... 15
Sales Charges ..................................................... 17
Performance ....................................................... 20
Taxes ............................................................. 22
Portfolio Security Transactions ................................... 24
Financial Statements .............................................. 26
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 SAI 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, 2000, 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".

Government National Mortgage Association ("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 final maturities of the mortgage loans 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. 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
returns and will accelerate the recognition of income, which, when distributed
to Fund shareholders, will be taxable as ordinary income.

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, FHLMC,
FNMA, 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.

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 banks (the "Lenders"). Citibank, N.A.
serves as the administrative agent. The Portfolio is obligated to pay to each
Lender, in addition to interest on advances made to it under the Credit
Agreement, 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. The Portfolio may also borrow money for temporary purposes. As at
December 31, 1999, the Portfolio had an outstanding loan balance of $800,000.
The average daily loan balance for the fiscal year ended December 31, 1999,
under the Credit Agreement (and predecessor contract) was $959,701 and the
average daily interest rate was 8.22%.

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 loaned if the
borrower fails financially. However, the loans will be made only to
organizations deemed 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 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 certain 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 trading 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.

SHORT SALES. The Portfolio may seek to hedge investments or realize additional
gains through short sales. Short sales are transactions in which the Portfolio
sells a security it does not own in anticipation of a decline in the market
value of that security. To complete such a transaction, the Portfolio must
borrow the security to make delivery to the buyer. The Portfolio is then
obligated to replace the security borrowed by purchasing it at the market
price at the time of replacement. The price at such time may be more or less
than the price at which the security was sold by the Portfolio. Until the
security is replaced, the Portfolio is required to repay the lender any
dividends or interest which accrue during the period of the loan. To borrow
the security, the Portfolio also may be required to pay a premium, which would
increase the cost of the security sold. The net proceeds of the short sale
will be retained by the broker, to the extent necessary to meet margin
requirements, until the short position is closed out. The Portfolio also will
incur transaction costs in effecting short sales. The Portfolio will incur a
loss as a result of a short sale if the price of the security increases
between the date of the short sale and the date on which the Portfolio
replaces the borrowed security. The Portfolio will realize a gain if the price
of the security declines in price between those dates. The amount of any gain
will be decreased, and the amount of any loss increased, by the amount of the
premium, dividends or interest the Portfolio may be required to pay, if any,
in connection with a short sale.

The Portfolio may also engage in short sales "against-the-box". Such
transactions occur when the Portfolio sells a security short and 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. 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. Tax rules regarding constructive sales of
appreciated financial positions may also require the recognition of gains
prior to the closing out of short sales against the box and other risk-
reduction transactions. No more than 25% of the Portfolio's assets will be
subject to short sales (including short sales against-the-box) at any one
time.

ASSET COVERAGE REQUIREMENTS. Transactions using when-issued securities, short
sales, 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-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.

INTEREST RATE SWAPS. The Portfolio will enter into interest rate swaps only on
a net basis, i.e., the two payment streams are netted out, with the Portfolio
receiving or paying, as the case may be, only the net amount of the two
payments. Inasmuch as these transactions are entered into for good faith
hedging purposes and because a segregated account will be used, the Portfolio
will not treat them as being subject to the Portfolio's borrowing
restrictions. The net amount of the excess, if any, of the Portfolio's
obligations over its entitlements with respect to each interest rate swap will
be accrued on a daily basis and an amount of cash or liquid securities having
an aggregate net asset value at least equal to the accrued excess will be
maintained in a segregated account by the Portfolio's custodian. The Portfolio
will not enter into any interest rate swap unless the credit quality of the
unsecured senior debt or the claims-paying ability of the other party thereto
is considered to be investment grade by BMR. If there is a default by the
other party to such a transaction, the Portfolio will have contractual
remedies pursuant to the agreements related to the transaction. The swap
market has grown substantially in recent years with a large number of banks
and investment banking firms acting both as principals and as agents utilizing
standardized swap documentation. As a result, the swap market has become
relatively liquid in comparison with the markets for other similar instruments
which are traded in the interbank market.

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.

PORTFOLIO TURNOVER. The Portfolio can not accurately predict its portfolio
turnover rate, but it is anticipated that the annual 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 Portfolio were replaced in a period of one
year. A high turnover rate (such as 100% or more) necessarily involves greater
expenses to the Portfolio and may result in the realization of substantial net
short-term capital gains.

For the fiscal years ended December 31, 1999 and 1998, the portfolio
turnover rates of the Portfolio were 18% and 48%, 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.

For purposes of Restriction (1) above, less than 25% of total assets will
be concentrated in any one industry. For purposes of determining industry
classifications, the investment adviser considers an issuer to be in a
particular industry if a third party has designated the issuer to be in that
industry, unless the investment adviser is aware of circumstances that make
the third party's classification inappropriate. In such a case, the investment
adviser will assign an industry classification to the issuer.

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 (i) 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, or (ii) it holds in a segregated account
cash or other liquid securities (as permitted under the 1940 Act) in an amount
equal to the current market value of 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. Any such determination
by a delegate will be made pursuant to procedures adopted by the Board. 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 limitation on investing in
illiquid securities and the borrowing policies set forth above.

MANAGEMENT AND ORGANIZATION

JESSICA M. BIBLIOWICZ (40), Trustee*
President and Chief Executive Officer of National Financial Partners (a
financial services company) (since April, 1999). President and Chief
Operating Officer of John A. Levin & Co. (a registered investment advisor)
(July, 1997 to April, 1999) and a Director of Baker, Fentress & Company
which owns John A. Levin & Co. (July, 1997 to April, 1999). 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: 1301 Avenue of the Americas, New York, NY 10019

JAMES B. HAWKES (58), 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.

JACK L. TREYNOR (70), 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. (40), Vice President of the Trust
Vice President of Eaton Vance and BMR. Officer of various investment companies
managed by Eaton Vance or BMR.

THOMAS J. FETTER (56), Vice President of the Trust
Vice President of Eaton Vance and BMR. Officer of various investment companies
managed by Eaton Vance or BMR.

ARMIN J. LANG (35), Vice President of the Trust
Vice President of Eaton Vance and BMR since March, 1998. Previously he was a
Vice President at Standish, Ayer & Wood.

ROBERT B. MACINTOSH (43), Vice President of the Trust
Vice President of Eaton Vance and BMR. Officer of various investment companies
managed by Eaton Vance or BMR.

EDWARD E. SMILEY, JR. (55), Vice President of the Trust
Vice President of Eaton Vance and BMR since November, 1996. Previously he was
a Senior Vice President at Nationsbank. Officer of various investment
companies managed by Eaton Vance or BMR.

MARK VENEZIA (50), Vice President of the Portfolio
Vice President of Eaton Vance and BMR. Officer of various investment companies
managed by Eaton Vance or BMR.

SUSAN SCHIFF (39), Vice President of the Portfolio
Vice President of Eaton Vance and BMR. Officer of various investment companies
managed by Eaton Vance or BMR.

JAMES L. O'CONNOR (55), Treasurer
Vice President of Eaton Vance and BMR. Officer of various investment companies
managed by Eaton Vance or BMR.

ALAN R. DYNNER (59), Secretary
Vice President, Secretary and Chief Legal Officer of Eaton Vance, BMR and EVC.
Prior to joining Eaton Vance on November 1, 1996, 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 (64), 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 (37), Assistant Secretary
Vice President of Eaton Vance and BMR. Officer of various investment companies
managed by Eaton Vance or BMR.

ERIC G. WOODBURY (42), Assistant Secretary
Vice President of Eaton Vance and BMR. Officer of various investment companies
managed by Eaton Vance or BMR.

The Nominating Committee of the Board of Trustees of the Trust and the
Portfolio is comprised of Trustees who are not "interested persons" as that
term is defined under the 1940 Act ("noninterested Trustees"). 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. Hayes (Chairman), Dwight and Reamer and Ms. Stout 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.

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, 1999, the
noninterested Trustees of the Trust and the Portfolio earned the following
compensation in their capacities as Trustees from the Trust, and the
Portfolio, and the funds in the Eaton Vance fund complex(1):

<TABLE>
<CAPTION>
AGGREGATE AGGREGATE TOTAL COMPENSATION
COMPENSATION COMPENSATION FROM TRUST AND
NAME FROM TRUST(2) FROM PORTFOLIO FUND COMPLEX
- ---- ------------- -------------- ------------------
<S> <C> <C> <C>
Jessica M. Bibliowicz(9) ......................... $8,968 $4,299 $160,000
Donald R. Dwight ................................. 8,508 3,917 160,000
Samuel L. Hayes, III ............................. 9,043 4,208 170,000
Norton H. Reamer ................................. 8,575 4,002 160,000
Lynn A Stout(9) ............................... 8,420 4,445(3) 160,000(4)
Jack L. Treynor ............................... 9,365 4,401(5) 170,000(6)

(1) As of May 1, 2000, the Eaton Vance fund complex consists of 145 registered investment companies or series
thereof.
(2) The Trust consisted of 12 Funds as of December 31, 1999.
(3) Includes $2,072 of deferred compensation.
(4) Includes $604 of deferred compensation.
(5) Includes $60,000 of deferred compensation.
(6) Includes $16,000 of deferred compensation.
</TABLE>

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) and 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 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'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.

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 as
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 0.75% 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,
1999, the Portfolio had net assets of $345,199,948. For the fiscal years ended
December 31, 1999, 1998 and 1997, the Portfolio paid BMR advisory fees of
$2,923,359, $3,257,584 and $3,305,992, 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, John G.L. Cabot, Leo I. Higdon, Jr.,
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, Jeffrey P. Beale, Alan R. Dynner,
Thomas E. Faust, Jr., Thomas J. Fetter, Scott H. Page, Duncan W. Richardson,
William M. Steul, Payson F. Swaffield, Michael W. Weilheimer, and Wharton P.
Whitaker (all of whom are officers of Eaton Vance). 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 repurchase transactions.

OTHER SERVICE PROVIDERS

PRINCIPAL UNDERWRITER. Eaton Vance Distributors, Inc. ("EVD"), The Eaton Vance
Building, 255 State Street, Boston, MA 02109, 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. 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 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, 160 Federal Street,
Boston, MA 02110, 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. PFPC, Inc., P.O. Box 9653, Providence, RI 02904-9653, 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.

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

Each investor in the Portfolio, including the Fund, may add to or reduce
its investment in the Portfolio on each day the 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.

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".

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

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.

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.

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.

SALES CHARGES

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 officers and employees of IBT and the transfer agent; to persons
associated with law firms, consulting firms and others providing services to
Eaton Vance and the Eaton Vance Funds; and to such persons' spouses, parents,
siblings and children and their beneficial accounts. Such shares may also be
issued at net asset value (1) in connection with the merger of an investment
company (or series or class thereof) with the Fund (or class thereof), (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. Class A shares may also be sold at
net asset value to registered representatives and employees of investment
dealers and bank employees who refer customers to registered representatives
of investment dealers; and to retirement and deferred compensation plans and
trusts used to fund those plans, including, but not limited to, those defined
in Section 401(a), 403(b) or 457 of the Internal Revenue Code of 1986, as
amended (the "Code") and "rabbi trusts". Class 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. All CDSC waivers are prospective only.

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, the Statement of
Intention section of the account application should be completed 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. If you make a Statement of Intention,
the transfer agent is authorized 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. A Statement of Intention does not obligate the
shareholder to purchase or the Fund to sell the full amount indicated in the
Statement.

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.

The Trust also has in effect 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 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. 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. 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 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 who are "interested" persons of the Fund have an indirect financial
interest in the Plans because their employers (or affiliates thereof) receive
distribution and/or service fees under the Plans or agreements related
thereto.

The Trustees of the Trust believe that each Plan will be a significant
factor in the expected growth of the Fund's assets, and will result in
increased investment flexibility and advantages which have benefitted and will
continue to benefit the Fund and its 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 based on reduced
sales charges or at net asset value. These returns would be lower if the full
sales charge was 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 the 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.

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.

- 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 net income and net short-
term and long-term capital gains 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, 1999. 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 investor's 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 (i) at least 98% of its ordinary income (not
including tax-exempt income) for such year, (ii) 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 any available
capital loss carryforwards and (iii) 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 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. Absent an election,
foreign currency forward contracts that are subject to the mark-to-market
rules of Section 1256 (and if a different election is made, foreign currency
options or futures contracts governed by Section 1256) will result in ordinary
income or loss rather than receiving the 60%/40% treatment described above.
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 either requring the recognition of
gain under certain constructive sale rules or 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
may, or in zero coupon and certain other securities with original issue
discount generally 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.

Sales charges paid upon a purchase of shares of the Fund cannot be taken
into account for purposes of determining gain or loss on a redemption or
exchange of the shares before the 91st day after their purchase to the extent
a sales charge is reduced or eliminated in a subsequent acquisition of shares
of the Fund or of another fund pursuant to the Fund's reinvestment or exchange
privilege. Any disregarded amounts will result in an adjustment to the
shareholder's tax basis in some or all of any other shares acquired.

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 property 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. 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.

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.

The foregoing discussion does not address the special tax rules applicable
to certain classes of investors, such as IRAs and other retirement plans, tax-
exempt entities, foreign investors, insurance companies, financial
institutions and nonresident aliens or foreign entities. Shareholders should
consult their own tax advisers with respect to these or other 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.

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 customarily referred to as the
spread. The Portfolio may also purchase such obligations from domestic
underwriters, the cost of which may include undisclosed fees and concessions
to the underwriters. Although spreads or commissions paid on portfolio
security transactions will, in the judgment of BMR, be reasonable in relation
to the value of the services provided, 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 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, 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 and recommendations as to
the purchase and sale of securities and other portfolio transactions, proxy
voting data and analysis services, technical analysis of various aspects of
the securities markets, 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 year ended December 31, 1999, the Portfolio paid brokerage
commissions of $13,743 on portfolio security transactions aggregating
$258,677,064, to firms which provided some research services to BMR or its
affiliates (although many of such firms may have been selected in any
particular transaction primarily because of their execution capabilities). For
the fiscal years ended December 31, 1998 and 1997, the Portfolio paid no
brokerage commissions on portfolio security transactions.

FINANCIAL STATEMENTS

The audited financial statements of and the independent accountants'
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.

Registrant incorporates by reference the audited financial information for
the Fund and the Portfolio for the fiscal year ended December 31, 1999, as
previously filed electronically with the SEC (Accession No.
0000912057-00-009673).

<PAGE>

APPENDIX A

CLASS A FEES, PERFORMANCE AND OWNERSHIP

SERVICE FEES
During the fiscal year ended December 31, 1999, Class A made service fee
payments under the Plan aggregating $513,017, of which $469,369 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, 1999, 1998 and 1997, were $489,793,
$522,743, and $394,859, respectively, of which $18,738, $29,867 and $4,226,
respectively was received by the principal underwriter. For the fiscal years
ended December 31, 1999, 1998 and 1997, investment dealers received $471,055,
$492,876 and $390,633, respectively, from the total sales charges.

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.

<TABLE>
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 12/31/99 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ------------------------------ ---------- ---------- ----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
10 Years ended
12/31/99 12/31/89 $952.85 $1,815.68 90.57% 6.66% 81.57% 6.15%
5 Years Ended
12/31/99 12/31/94 $952.47 $1,291.64 35.62% 6.28% 29.16% 5.25%
1 Year Ended
12/31/99 12/31/98 $952.38 $ 957.68 0.56% 0.56% -4.23% -4.23%
</TABLE>

For the 30-day period ended December 31, 1999, the SEC yield for Class A
shares was 5.73%.

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

As of March 31, 2000, the Trustees and officers of the Trust, as a group,
owned in the aggregate less than 1% of the outstanding Class A shares of the
Fund. As of March 31, 2000, Merrill Lynch, Pierce, Fenner & Smith, Inc.,
Jacksonville, FL was the record owner of approximately 14.6% of the
outstanding Class A shares, which it held on behalf of its customers who are
the beneficial owners of such shares, and as to which they had voting power
under certain limited circumstances. As of the same date, Eaton Vance
Distributors, Inc. was the record owner of 5.0% of the Class A shares of the
Fund. To the knowledge of the Trust, no other person owned of record or
beneficially 5% or more of the Fund's outstanding Class A shares as of such
date.

<PAGE>

APPENDIX B

CLASS B FEES, PERFORMANCE AND OWNERSHIP

DISTRIBUTION AND SERVICE FEES
During the fiscal year ended December 31, 1999, the principal underwriter
paid to investment dealers sales commissions of $622,704 on sales of Class B
shares. During the same period, the Fund paid distribution fees to the
principal underwriter under the Distribution Plan aggregating $947,366 and the
principal underwriter received approximately $488,000 in CDSCs imposed on
early redeeming shareholders. These distribution payments and CDSC payments
reduced uncovered distribution charges under the Plan. As at December 31,
1999, the outstanding uncovered distribution charges of the principal
underwriter calculated under the Plan amounted to approximately $4,464,000
(which amount was equivalent to approximately 3.8% of the net assets
attributable to Class B on such day). During the fiscal year ended December
31, 1999, Class B made service fee payments to the principal underwriter and
investment dealers aggregating $253,218, of which $251,481 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,
1999, Class B paid the Principal Underwriter $4,042.50 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 A total return has not been adjusted to reflect
certain other expenses (such as distribution and/or service fees). If such
adjustments were made the Class B total return would be different. Past
performance is 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.

<TABLE>

VALUE OF A $1,000 INVESTMENT

<CAPTION>
VALUE OF VALUE OF
INVESTMENT INVESTMENT
BEFORE AFTER TOTAL RETURN BEFORE DEDUCTING TOTAL RETURN AFTER DEDUCTING
DEDUCTING DEDUCTING THE CDSC THE CDSC
INVESTMENT INVESTMENT THE CDSC THE CDSC ------------------------------ -----------------------------
PERIOD DATE ON 12/31/99 ON 12/31/99 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ------------- ---------- ----------- ----------- ---------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
10 Years
Ended
12/31/99 12/31/89 $1,824.12 $1,824.12 82.41% 6.20% 82.41% 6.20%
5 Years
Ended
12/31/99 12/31/94 $1,308.09 $1,289.51 30.81% 5.52% 28.95% 5.22%
1 Year
Ended
12/31/99 12/31/98 $ 997.98 $ 951.33 -0.20% -0.20% -4.87% -4.87%
</TABLE>

For the 30 day period ended December 31, 1999, the SEC yield for Class B
shares was 5.25%.

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

As at March 31, 2000, the Trustees and officers of the Trust, as a group,
owned in the aggregate less than 1% of the outstanding Class B shares of the
Fund. As of March 31, 2000, Merrill Lynch, Pierce, Fenner & Smith, Inc.,
Jacksonville, FL was the record owner of approximately 13.4% of the
outstanding Class B shares, which it held on behalf of its customers who are
the beneficial owners of such shares, and as to which it had voting power
under certain limited circumstances. To the knowledge of the Trust, no other
person owned of record or beneficially 5% or more of the Fund's outstanding
Class B shares as of such date.

<PAGE>

APPENDIX C

CLASS C FEES, PERFORMANCE AND OWNERSHIP

DISTRIBUTION AND SERVICE FEES
During the fiscal year ended December 31, 1999, the principal underwriter
paid to investment dealers sales commissions of $234,956 on sales of Class C
shares. During the same period, the Fund paid distribution fees to the
principal underwriter under the Distribution Plan aggregating $248,506 and the
principal underwriter received approximately $10,000 in CDSCs imposed on early
redeeming shareholders. These distribution payments and CDSC payments reduced
uncovered distribution charges under the Plan. As at December 31, 1999, the
outstanding uncovered distribution charges of the principal underwriter
calculated under the Plan amounted to approximately $10,851,000 (which amount
was equivalent to approximately 35.2% of the net assets attributable to Class
C on such day). During the fiscal year ended December 31, 1999, Class C made
service fee payments to the principal underwriter and investment dealers
aggregating $82,689 of which $58,602 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,
1999, Class C paid the principal underwriter $937.50 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 A total return has not been adjusted to reflect
certain other expenses (such as distribution and/or service fees). If such
adjustments were made, the Class 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.

<TABLE>
VALUE OF A $1,000 INVESTMENT

<CAPTION>
VALUE OF VALUE OF
INVESTMENT INVESTMENT
BEFORE AFTER TOTAL RETURN BEFORE DEDUCTING TOTAL RETURN AFTER DEDUCTING
DEDUCTING DEDUCTING THE CDSC THE CDSC
INVESTMENT INVESTMENT THE CDSC THE CDSC ------------------------------- ----------------------------
PERIOD* DATE ON 12/31/99 ON 12/31/99 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ------------- ---------- ----------- ----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
10 Years
Ended
12/31/99 12/31/89 $1,805.68 $1,805.68 80.57% 6.09% 80.57% 6.09%
5 Years
Ended
12/31/99 12/31/94 $1,299.74 $1,299.74 29.97% 5.38% 29.97% 5.38%
1 Year
Ended
12/31/99
12/31/98 $ 998.03 $ 988.70 -0.20% -0.20% -1.13% -1.13%
</TABLE>

For the 30 day period ended December 31, 1999, the SEC yield for Class C
shares was 5.24%.

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

As of March 31, 2000, 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 March 31, 2000, Merrill Lynch, Pierce, Fenner & Smith, Inc.,
Jacksonville, FL 32246 was the record owner of approximately 21.3% of the
outstanding Class C shares which it 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 C - OTHER INFORMATION

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 filed July 14, 1995 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 filed
October 30, 1997 and incorporated herein by reference.

(4) Amendment and Restatement of Establishment and Designation of
Series of Shares to be filed by amendment.

(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 Tax Free Reserves dated August 15, 1995 filed as
Exhibit (5)(b) to Post-Effective Amendment No. 25 filed August
17, 1995 and incorporated herein by reference.

(2) 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
filed October 17, 1997 and incorporated herein by reference.

(3) 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.

(4) 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
filed March 30, 1998 and incorporated herein by reference.

(5) Investment Advisory Agreement with Eaton Vance Management for
Eaton Vance Tax-Managed Value Fund dated August 16, 1999 filed as
Exhibit (d)(5) to Post-Effective Amendment No. 54 filed August
26, 1999 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 filed April 21, 1997
and incorporated herein by reference.

C-1
<PAGE>

(2) Distribution Agreement Between Eaton Vance Mutual Funds Trust, on
behalf of Eaton Vance Liquid Assets Fund, and Eaton Vance
Distributors, Inc. effective November 1, 1996 filed as Exhibit
(6)(a)(5) to Post-Effective Amendment No. 34 and incorporated
herein by reference.

(3) Distribution Agreement between Eaton Vance Mutual Funds Trust, on
behalf of Eaton Vance Money Market Fund, and Eaton Vance
Distributors, Inc. effective November 1, 1996 filed as Exhibit
(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 (A, A-1 and
A-2) 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) Schedules A-3, A-4 and A-5 to Distribution Agreement filed as
Exhibit (e)(5)(ii) to Poet-Effective Amendment No. 54 and
incorporated herein by reference.

(iii) Schedule A-6 to Distribution Agreement to be filed by amendment.

(6) Selling Group Agreement between Eaton Vance Distributors, Inc.
and Authorized Dealers filed as Exhibit (6)(b) to the
Post-Effective Amendment No. 61 filed December 28, 1995 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 filed February 27, 1996 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) filed
January 25, 1999 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 filed August 16, 1995
and incorporated herein by reference.

C-2
<PAGE>

(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.

(2)(a) Administrative Services Agreement between Eaton Vance Mutual
Funds Trust (on behalf of certain of its series) and Eaton Vance
Management dated August 16, 1999 with attached Schedule A dated
August 16, 1999 filed as Exhibit (h)(2) to Post-Effective
Amendment No. 54 and incorporated herein by reference.

(b) Schedule A-1 to Administrative Services Agreement to be filed by
amendment.

(3) 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) filed February
25, 1998 and incorporated herein by reference.

(i)(1) Opinion of Internal Counsel dated August 25, 1999 filed as
Exhibit (i)(1) to Post-Effective Amendment No. 54 and
incorporated herein by reference.

(2) Consent of Counsel filed herewith.

(j)(1) Consent of Independent Accountants for Eaton Vance Government
Obligations Fund filed herewith.

(2) Consent of Independent Accountants for Eaton Vance Cash
Management Fund and Eaton Vance Money Market Fund filed herewith.

(3) Independent Auditors' Consent for Eaton Vance Municipal Bond Fund
filed herewith.

(4) Consent of Independent Accountants for Eaton Vance Tax Free
Reserves filed herewith.

(k) Not applicable

(l) Not applicable

(m)(1)(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.

(2)(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.

C-3
<PAGE>

(3)(a) Eaton Vance Mutual Funds Trust Class A Service Plan adopted June
23, 1997 with attached Schedules (A, A-1 and A-2) filed as
Exhibit (15)(i) to Post-Effective Amendment No. 38 and
incorporated herein by reference.

(b) Schedules A-3, A-4 and A-5 to Class A Service Plan filed as
Exhibit (m)(3)(b) to Post-Effective Amendment No. 54 and
incorporated herein by reference.

(d) Eaton Vance Mutual Funds Trust Class S Service Plan adopted
February 22, 1999 filed as Exhibit (m)(3)(c) to Post-Effective
Amendment No. 53 filed July 28, 1999 and incorporated herein by
reference.

(4)(a) Eaton Vance Mutual Funds Trust Class B Distribution Plan adopted
June 23, 1997 with attached Schedules (A, A-1 and A-2) filed as
Exhibit (15)(j) to Post-Effective Amendment No. 38 and
incorporated herein by reference.

(b) Schedules A-3, A-4 and A-5 to Class B Distribution Plan filed as
Exhibit (m)(4)(b) to Post-Effective Amendment No. 54 and
incorporated herein by reference.

(5)(a) Eaton Vance Mutual Funds Trust Class C Distribution Plan adopted
June 23, 1997 with attached Schedules (A and A-1) filed as
Exhibit (15)(k) to Post-Effective Amendment No. 38 and
incorporated herein by reference.

(b) Schedules A-2, A-3, A-4 and A-5 to Class C Distribution Plan
filed as Exhibit (m)(5)(b) to Post-Effective Amendment No. 54 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.

(c) Amendment to Multiple Class Plan for Eaton Vance Mutual Funds
Trust dated February 22, 1999 filed as Exhibit (o)(1)(c) to
Post-Effective Amendment No. 53 and incorporated herein by
reference.

(d) Schedule A-6 to Multiple Class Plan dated August 16, 1999 filed
as Exhibit (o)(d) to Post-Effective Amendment No. 54 and
incorporated herein by reference.

(e) Schedule A-7 to Multiple Class Plan to be filed by amendment.

(p) Code of Ethics adopted by the Eaton Vance Group of Funds
effective May 1, 1981, as amended February 21, 1995 filed as
Exhibit (r) to the Registration Statement on Form N-2 of EV
Classic Senior Floating-Rate Fund (File Nos. 333-32262,
811-07945) (Accession No. 0000950156-00-000169) filed March 13,
2000 and incorporated herein by reference.

C-4
<PAGE>

(q)(1)(a) Power of Attorney for Eaton Vance Mutual Funds Trust dated June
23, 1997 filed as Exhibit No. (17)(a) to Post-Effective Amendment
No. 35 filed July 3, 1997 and incorporated herein by reference.

(b) Power of Attorney for Eaton Vance Mutual Funds Trust dated
November 16, 1998 filed as Exhibit (p)(1) to Post-Effective
Amendment No. 47 filed December 30, 1998 and incorporated herein
by reference.

(2)(a) Power of Attorney for Government Obligations Portfolio dated
April 22, 1997 filed as Exhibit (17)(b) to Post-Effective
Amendment No. 36 filed July 25, 1997 and incorporated herein by
reference.

(b) Power of Attorney for Government Obligations Portfolio dated
November 16, 1998 filed as Exhibit (p)(2)(a) to Post-Effective
Amendment No. 48 filed February 25, 1999 and incorporated herein
by reference.

(3)(a) 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.

(b) 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)(a) 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.

(b) 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)(a) 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.

(b) 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)(a) Power of Attorney for Tax-Managed Growth Portfolio dated February
20, 1998 filed as Exhibit No. (17)(f) to Post-Effective Amendment
No. 41 filed February 26, 1998 and incorporated herein by
reference.

(b) 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.

(7) Power of Attorney for Capital Appreciation Portfolio dated
February 28, 2000 filed as Exhibit (p)(7) to Post-Effective
Amendment No. 56 filed February 28, 2000 and incorporated herein
by reference.

ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL

Not applicable

C-5
<PAGE>

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:
<TABLE>
<CAPTION>
<S> <C>
Eaton Vance Advisers Senior Floating-Rate Fund Eaton Vance Municipals Trust II
Eaton Vance Growth Trust Eaton Vance Mutual Funds Trust
Eaton Vance Income Fund of Boston Eaton Vance Prime Rate Reserves
Eaton Vance Institutional Senior Floating-Rate Fund Eaton Vance Special Investment Trust
Eaton Vance Investment Trust EV Classic Senior Floating-Rate Fund
Eaton Vance Municipals Trust

</TABLE>

(b)
<TABLE>
<CAPTION>
<S> <C> <C>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address* with Principal Underwriter with Registrant
-----------------
Albert F. Barbaro Vice President None
Ira Baron Vice President None
Chris Berg Vice President None
Kate B. Bradshaw Vice President None
Mark Carlson Vice President None
Daniel C. Cataldo Vice President and Treasurer None
Raymond Cox Vice President None
Peter Crowley Vice President None
Anthony DeVille Vice President None
Ellen Duffy Vice President None
Alan R. Dynner Vice President, Secretary and Clerk 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
Kara Lawler Vice President None
Thomas P. Luka Vice President None
John Macejka Vice President None

C-6

<PAGE>

Geoff Marshall 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
George D. Owen, II Vice President None
Margaret Pier 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
Stephen M. Rudman Vice President None
Kevin Schrader 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
John Vaughan Vice President None
Chris Volf Vice President None
Debra Wekstein Vice President None
Wharton P. Whitaker President and Director None
Sue Wilder Vice President None
</TABLE>

- ------------------------------------------
* Address is The Eaton Vance Building, 255 State Street, Boston, MA 02109

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, PFPC,
Inc., 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 of the administrator and investment adviser. 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

The Registrant undertakes to include the information required by Item 5 of
Form N-1A in its annual reports to shareholders under Rule 30d-1.

C-7
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Amendment to the Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this 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 April 24, 2000.

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 April 24, 2000.
<TABLE>
<CAPTION>
<S> <C>
SIGNATURE TITLE
--------- -----

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

/s/ James L. O'Connor
- --------------------- Treasurer (and 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

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

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

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

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

C-8
<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 April
24, 2000.

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 April 24, 2000.

<TABLE>
<CAPTION>
<S> <C>
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

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

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

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

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

C-9
<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 April
24, 2000.

GOVERNMENT OBLIGATIONS 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 April 24, 2000.

<TABLE>
<CAPTION>
<S> <C>
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

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

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

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

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

C-10
<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
- ----------- -----------

(i)(2) Consent of Counsel dated April 25, 2000.

(j)(1) Consent of Independent Accountants for Eaton Vance Government
Obligations Fund.

(2) Consent of Independent Accountants for Eaton Vance Cash
Management Fund and Eaton Vance Money Market Fund.

(3) Independent Auditors' Consent for Eaton Vance Municipal Bond
Fund.

(4) Consent of Independent Accountants for Eaton Vance Tax Free
Reserves.

<PAGE>

EXHIBIT (i)(2)

CONSENT OF COUNSEL

I consent to the incorporation by reference in this Post-Effective
Amendment No. 58 to the Registration Statement of Eaton Vance Mutual Funds Trust
(1933 Act File No. 02-90946) of my opinion dated August 25, 1999, which was
filed as Exhibit (i) to Post-Effective Amendment No. 54.

/s/ Eric G. Woodbury
Eric G. Woodbury, Esq
April 25, 2000
Boston, Massachusetts

<PAGE>

EXHIBIT (j)(1)

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in this Post-Effective
Amendment No. 58 to the Registration Statement on Form N-1A of our report dated
February 9, 2000, relating to the financial statements and financial highlights
of the Eaton Vance Government Obligations Fund (the "Fund") and of our report
dated February 9, 2000, relating to the financial statements and supplementary
data of the Government Obligations Portfolio, which appear in the December 31,
1999 Annual Report to Shareholders of the Fund, which are also incorporated by
reference into the Registration Statement. We also consent to the references to
us under the headings "Financial Highlights" and "Other Service Providers" in
such Registration Statement.

/s/ PricewaterhouseCoopers LLP
PRICEWATERHOUSECOOPERS LLP
Boston, Massachusetts
April 24, 2000

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EXHIBIT (j)(2)

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in this Post-Effective
Amendment No. 58 to the Registration Statement on Form N-1A of our report dated
January 31, 2000, relating to the financial statements and financial highlights
of Eaton Vance Cash Management Fund and Eaton Vance Money Market Fund (the
"Funds") and of our report dated January 31, 2000, relating to the financial
statements and supplementary data of the Cash Management Portfolio, which appear
in the December 31, 1999 Annual Report to Shareholders of the Funds, which are
also incorporated by reference into the Registration Statement. We also consent
to the references to us under the headings "Financial Highlights" and "Other
Service Providers" in such Registration Statement.

/s/ PricewaterhouseCoopers LLP
PRICEWATERHOUSECOOPERS LLP
Boston, Massachusetts
April 24, 2000

<PAGE>

EXHIBIT (j)(3)

INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in this Post-Effective
Amendment No. 58 to the Registration Statement (1933 Act File No. 2-90946) on
Form N-1A of Eaton Vance Mutual Funds Trust of our report dated February 11,
2000 of Eaton Vance Municipal Bond Fund included in the December 31, 1999 Annual
Report to Shareholders.

We also consent to the references to our Firm under the headings "Financial
Highlights" in the Prospectus and "Other Service Providers" in the Statement of
Additional Information.

/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP

April 24, 2000
Boston, Massachusetts

<PAGE>

EXHIBIT (j)(4)

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in this Post-Effective
Amendment No. 58 to the Registration Statement on Form N-1A of our report dated
January 31, 2000, relating to the financial statements and financial highlights
of the Eaton Vance Tax Free Reserves (the "Fund") which appears in the December
31, 1999 Annual Report to Shareholders of the Fund, which are also incorporated
by reference into the Registration Statement. We also consent to the references
to us under the headings "Financial Highlights" and "Other Service Providers" in
such Registration Statement.

/s/ PricewaterhouseCoopers LLP
PRICEWATERHOUSECOOPERS LLP
Boston, Massachusetts
April 24, 2000