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EATON VANCE STRATEGIC INCOME FUND
Supplement to Statement of Additional Information
Dated March 1, 2000
1. The following is added to the "Strategies and Risks" section:
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.
2. The following replaces subparagraph (b) under "Investment Restrictions":
(b) 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.
May 1, 2000 SISAIS
