EATON VANCE MUNICIPALS TRUST, 485APOS, 1998-12-03

EATON VANCE MUNICIPALS TRUST
485APOS, 1998-12-03

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<PAGE>

As filed with the Securities and Exchange Commission on December 3, 1998
1933 Act File No. 33-572
1940 Act File No. 811-4409
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933 [ X ]
POST-EFFECTIVE AMENDMENT NO. 76 [ X ]
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940 [ X ]
AMENDMENT NO. 78 [ X ]

EATON VANCE MUNICIPALS TRUST
----------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED INCHARTER)

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

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

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

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

<TABLE>
<S> <C>
[ ] immediately upon filing pursuant to paragraph (b) [X] on February 1, 1999 pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (b) [ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] 60 days after filing pursuant to paragraph (a)(1) [ ] on (date) pursuant to paragraph (a)(2)
</TABLE>

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

California Municipals Portfolio, Florida Municipals Portfolio,
Massachusetts Municipals Portfolio, Mississippi Municipals Portfolio, National
Municipals Portfolio, New York Municipals Portfolio, Ohio Municipals Portfolio,
Rhode Island Municipals Portfolio and West Virginia Municipals Portfolio have
also executed this Registration Statement.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

<PAGE>

LOGO
Mutual Funds
for People
Who Pay
Taxes

Eaton Vance California Municipals Fund
Eaton Vance Florida Municipals Fund
Eaton Vance Massachusetts Municipals Fund
Eaton Vance Mississippi Municipals Fund
Eaton Vance New York Municipals Fund
Eaton Vance Ohio Municipals Fund
Eaton Vance Rhode Island Municipals Fund
Eaton Vance West Virginia Municipals Fund

Mutual funds providing tax-exempt income

Prospectus Dated
February 1, 1999

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS 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 13
Investment Objectives, Policies and Risks 11 Redeeming Shares 15
Management and Organization 12 Shareholder Account Features 15
Valuing Shares 13 Tax Information 16
Purchasing Shares 13 Financial Highlights 19
- -------------------------------------------------------------------------------
This prospectus contains important information about the Funds and the services
available to shareholders. Please save it for reference.
<PAGE>

FUND SUMMARIES
This section summarizes the investment objectives, and principal strategies and
risks of investing in an Eaton Vance Municipal Fund. You will find more
specific information about each Fund in the pages that follow.

INVESTMENT OBJECTIVES AND PRINCIPAL STRATEGIES
The purpose of each Fund is to provide current income exempt from regular
federal income tax and from particular state or local income or other taxes.
Each Fund primarily invests in investment grade municipal obligations. The
portfolio manager will purchase and sell securities to maintain a competitive
yield and to enhance return based upon the relative value of the securities in
the marketplace. The portfolio manager may also trade securities to minimize
taxable capital gains to shareholders.

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.

Each Fund is non-diversified, which means that it may invest a larger portion of
its assets in the obligations of a limited number of issuers than a diversified
fund. Because a significant portion of assets is invested in obligations of
issuers located in a single state, the Fund is sensitive to factors affecting
that state, such as changes in the economy, decreases in tax collection or the
tax base, legislation which limits taxes and changes in issuer credit ratings.
In addition, each Fund may invest up to 25% of its assets in obligations of
below investment grade quality (so-called "junk bonds"). Because lower quality
obligations 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 high quality obligations. The credit ratings
assigned a state's general obligations (if any) by Standard & Poor's Ratings
Group ("S&P"), Moody's Investors Service, Inc. ("Moody's") and Fitch/IBCA
("Fitch") are contained in the Fund-specific summaries that follow this page.

Each Fund may concentrate in certain types of municipal obligations (such as
housing bonds, hospital bonds or utility bonds), so Fund shares could be
affected by events that adversely affect a particular sector. No Fund is a
complete investment program and you may lose money by investing. An investment
in a 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.

FEES OF EACH FUND
This table describes the fees that you may pay if you buy and hold Fund shares.
The operating expenses incurred by each Fund during its last fiscal year are
set forth on the pages that follow.

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

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

Sales Charge Imposed on Reinvested Distributions None None

Exchange Fee None None
</TABLE>

Each Fund offers Class A and Class B shares. Class A shares are sold subject to
a sales charge imposed at the time of purchase. Class B shares are sold subject
to a declining contingent deferred sales charge ("CDSC") (5.00% maximum) if
redeemed within six years of purchase. Long-term holders of Class B shares may
pay more than the economic equivalent of the front-end sales charge permitted by
the National Association of Securities Dealers, Inc.

2
<PAGE>

Eaton Vance California Municipals Fund

The California Fund's investment objective is to provide current income exempt
from regular federal income taxes and California state personal income taxes.
California general obligations currently are rated A1 by Moody's and A+ by S&P.

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

<TABLE>
<CAPTION>
Annual Total Returns
Class B shares
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>

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

The Fund's highest quarterly total return was ___% for the quarter ended
__________, 199_, and its lowest quarterly return was ___% for the quarter ended
_________, 199_. The total return through the end of the most recent calendar
quarter (January 1, 1998 to December 31, 1998) was __%. For the 30-days ended
September 30, 1998, the yield and tax equivalent yield (assuming a combined
state and federal tax rate of 37.42%) for Class A shares were 4.12% and 6.58%,
respectively, and for Class B shares were 3.41% and 5.45%, respectively. For
current yield information call 1-800-225-6265.

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

These returns reflect the maximum sales charge for Class A (4.75%) and any
applicable CDSC for Class B. The Class A performance shown above for the period
prior to May 27, 1994 is the performance of Class B shares, adjusted for the
sales charge that applies to Class A shares (but not adjusted for any other
differences in the expenses of the two classes). The Lehman Brothers Municipal
Bond Index is an unmanaged index of municipal bonds. Investors cannot invest
directly in an Index.

CALIFORNIA 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
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Maximum Sales Charge (as a percentage of offering price) 4.75% None

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

Sales Charge Imposed on Reinvested Distributions None None

Exchange Fee None None

<CAPTION>
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets) Class A Class B
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Management Fees 0.48% 0.48%

Distribution and Service (12b-1) Fees 0.00% 0.99%

Other Expenses* 0.31% 0.19%
----- -----
Total Operating Expenses 0.79% 1.66%
</TABLE>

* Other Expenses for Class A shares includes a service fee of 0.12%.

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

<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A shares $ 552 $ 715 $ 893 $ 1,406
Class B shares $ 669 $ 923 $ 1,102 $ 1,965
</TABLE>

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

3
<PAGE>

Eaton Vance Florida Municipals Fund

The Florida Fund's investment objective is to provide current income exempt from
regular federal income taxes in the form of an investment exempt from Florida
intangibles tax. Florida general obligations currently are rated AA2, AA+ and AA
by Moody's, S&P and Fitch, respectively.

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

<TABLE>
<CAPTION>
Annual Total Returns
Class B shares

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

The Fund's highest quarterly total return was ___% for the quarter ended
__________, 199_, and its lowest quarterly return was ___% for the quarter ended
_________, 199_. The total return through the end of the most recent calendar
quarter (January 1, 1998 to December 31, 1998) was __%. For the 30-days ended
September 30, 1998, the yield and tax equivalent yield (assuming a combined
state and federal tax rate of 34.38%) for Class A shares were 4.38% and 6.63%,
respectively, and for Class B shares were 3.78% and 5.76%, respectively. For
current yield information call 1-800-225-6265.

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

These returns reflect the maximum sales charge for Class A (4.75%) and any
applicable CDSC for Class B. The Class A performance shown above for the period
prior to April 5, 1994 is the performance of Class B shares, adjusted for the
sales charge that applies to Class A shares (but not adjusted for any other
differences in the expenses of the two classes). Class B shares commenced
operations on August 28, 1990. Life of Fund returns are calculated from August
31, 1990. The Lehman Brothers Municipal Bond Index is an unmanaged index of
municipal bonds. Investors cannot invest directly in an Index.

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

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

Sales Charge Imposed on Reinvested Distributions None None

Exchange Fee None None

Distribution and Service (12b-1) Fees 0.00% 0.95%

Other Expenses* 0.28% 0.15%
----- -----
Total Operating Expenses 0.73% 1.55%
</TABLE>

* Other Expenses for Class A shares includes a service fee of 0.13%.

<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A shares $ 546 $ 697 $ 862 $ 1,338
Class B shares $ 658 $ 890 $ 1,045 $ 1,845
</TABLE>

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

<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A shares $ 546 $ 697 $ 862 $ 1,338
Class B shares $ 158 $ 490 $ 845 $ 1,845
</TABLE>
4

<PAGE>

Eaton Vance Massachusetts Municipals Fund

The Massachusetts Fund's investment objective is to provide current income
exempt from regular federal income taxes and Massachusetts state personal income
taxes. Massachusetts general obligations currently are rated A1, A+ and A+ by
Moody's, S&P and Fitch, respectively.

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

<TABLE>
<CAPTION>
Annual Total Returns
Class B shares

1992 1993 1994 1995 1996 1997 1998
</TABLE>

The Fund's highest quarterly total return was ___% for the quarter ended
__________, 199_, and its lowest quarterly return was ___% for the quarter ended
_________, 199_. The total return through the end of the most recent calendar
quarter (January 1, 1998 to December 31, 1998) was __%. For the 30-days ended
September 30, 1998, the yield and tax equivalent yield (assuming a combined
state and federal tax rate of 39.28%) for Class A shares were 4.38% and 7.21%,
respectively, and for Class B shares were 3.71% and 6.11%, respectively. For
current yield information call 1-800-225-6265.

These returns reflect the maximum sales charge for Class A (4.75%) and any
applicable CDSC for Class B. The Class A performance shown above for the period
prior to December 7, 1993 is the performance of Class B shares, adjusted for the
sales charge that applies to Class A shares (but not adjusted for any other
differences in the expenses of the two classes). Class B shares commenced
operations on April 18, 1991. Life of Fund returns are calculated from April 30,
1991. The Lehman Brothers Municipal Bond Index is an unmanaged index of
municipal bonds. Investors cannot invest directly in an Index.

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

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

Sales Charge Imposed on Reinvested Distributions None None

Exchange Fee None None

Distribution and Service (12b-1) Fees 0.00% 0.94%

Other Expenses* 0.30% 0.22%
----- -----
Total Operating Expenses 0.74% 1.60%
</TABLE>

* Other Expenses for Class A shares includes a service fee of 0.08%.

<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A shares $ 547 $ 700 $ 867 $ 1,350
Class B shares $ 663 $ 905 $ 1,071 $ 1,900
</TABLE>

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

<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A shares $ 547 $ 700 $ 867 $ 1,350
Class B shares $ 163 $ 505 $ 871 $ 1,900
</TABLE>
5

<PAGE>

Eaton Vance Mississippi Municipals Fund

The Mississippi Fund's investment objective is to provide current income exempt
from regular federal income taxes and Mississippi state personal income taxes.
Mississippi general obligations currently are rated AA by both S&P and Fitch.

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

<TABLE>
<CAPTION>
Annual Total Returns
Class B shares

1994 1995 1996 1997 1998
</TABLE>

The Fund's highest quarterly total return was ___% for the quarter ended
__________, 199_, and its lowest quarterly return was ___% for the quarter ended
_________, 199_. The total return through the end of the most recent calendar
quarter (January 1, 1998 to December 31, 1998) was __%. For the 30-days ended
September 30, 1998, the yield and tax equivalent yield (assuming a combined
state and federal tax rate of 34.45%) for Class A shares were 4.30% and 6.56%,
respectively, and for Class B shares were 3.77% and 5.75%, respectively. For
current yield information call 1-800-225-6265.

These returns reflect the maximum sales charge for Class A (4.75%) and any
applicable CDSC for Class B. The Class A performance shown above for the period
prior to December 7, 1993 is the performance of Class B shares, adjusted for the
sales charge that applies to Class A shares (but not adjusted for any other
differences in the expenses of the two classes). Class B shares commenced
operations on June 11, 1993. Life of Fund returns are calculated from June 30,
1993. The Lehman Brothers Municipal Bond Index is an unmanaged index of
municipal bonds. Investors cannot invest directly in an Index.

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

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

Sales Charge Imposed on Reinvested Distributions None None

Exchange Fee None None

Distribution and Service (12b-1) Fees 0.00% 0.93%

Other Expenses* 0.56% 0.41%
----- -----
Total Operating Expenses 0.72% 1.50%
</TABLE>

* Other Expenses for Class A shares includes a service fee of 0.15%.

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

<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A shares $ 545 $ 694 $ 857 $ 1,327
Class B shares $ 653 $ 874 $ 1,018 $ 1,791
</TABLE>

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

<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A shares $ 545 $ 694 $ 857 $ 1,327
Class B shares $ 153 $ 474 $ 818 $ 1,791
</TABLE>
6

<PAGE>

Eaton Vance New York Municipals Fund

The New York Fund's investment objective is to provide current income exempt
from regular federal income taxes and New York state and New York City personal
income taxes. New York's general obligation bonds currently are rated A2, A and
A+ by Moody's, S&P and Fitch, respectively. S&P updated New York's bonds from
A- in August 1997. New York City's general obligation bonds currently are rated
A3, BBB+ and A- by Moody's, S&P and Fitch, respectively.

Performance Information. The following bar chart and table provide information
about the New York Fund's performance, including a comparison of the Fund's
performance to the performance of a national index of municipal bonds. Although
past performance is no guarantee of future results, this performance information
demonstrates that the value of your investment will change from year-to-year.
The following returns are for Class B shares for each calendar year through
December 31, 1998 and do not reflect a sales charge. If the sales charge was
reflected, the returns would be lower.

<TABLE>
<CAPTION>
Annual Total Returns
Class B shares

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

The Fund's highest quarterly total return was ___% for the quarter ended
__________, 199_, and its lowest quarterly return was ___% for the quarter ended
_________, 199_. The total return through the end of the most recent calendar
quarter (January 1, 1998 to December 31, 1998) was __%. For the 30-days ended
September 30, 1998, the yield and tax equivalent yield (assuming a combined
state and federal tax rate of 38.80%) for Class A shares were 4.19% and 6.85%,
respectively, and for Class B shares were 3.58% and 5.85%, respectively. For
current yield information call 1-800-225-6265.

These returns reflect the maximum sales charge for Class A (4.75%) and any
applicable CDSC for Class B. The Class A performance shown above for the period
prior to April 15, 1994 is the performance of Class B shares, adjusted for the
sales charge that applies to Class A shares (but not adjusted for any other
differences in the expenses of the two classes). Class B shares commenced
operations on August 30, 1990. Life of Fund returns are calculated from August
31, 1990. The Lehman Brothers Municipal Bond Index is an unmanaged index of
municipal bonds. Investors cannot invest directly in an Index.

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

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

Sales Charge Imposed on Reinvested Distributions None None

Exchange Fee None None

Distribution and Service (12b-1) Fees 0.00% 0.94%

Other Expenses* 0.32% 0.19%
----- -----
Total Operating Expenses 0.77% 1.58%
</TABLE>

* Other Expenses for Class A shares includes a service fee of 0.13%.

<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A shares $ 550 $ 709 $ 883 $ 1,384
Class B shares $ 661 $ 899 $ 1,060 $ 1,878
</TABLE>

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

<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A shares $ 550 $ 709 $ 883 $ 1,384
Class B shares $ 161 $ 499 $ 860 $ 1,878
</TABLE>
7

<PAGE>

Eaton Vance Ohio Municipals Fund

The Ohio Fund's investment objective is to provide current income exempt from
regular federal income taxes and Ohio state personal income taxes. Ohio general
obligations currently are rated AA+, Aa1 and AA+ by S&P, Moody's and Fitch,
respectively (except that highway obligations are rated Aaa by S&P).

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

<TABLE>
<CAPTION>
Annual Total Returns
Class B shares
<S> <C> <C> <C> <C> <C> <C>

1992 1993 1994 1995 1996 1997 1998
</TABLE>

The Fund's highest quarterly total return was ___% for the quarter ended
__________, 199_, and its lowest quarterly return was ___% for the quarter ended
_________, 199_. The total return through the end of the most recent calendar
quarter (January 1, 1998 to December 31, 1998) was __%. For the 30-days ended
September 30, 1998, the yield and tax equivalent yield (assuming a combined
state and federal tax rate of 35.76%) for Class A shares were 4.11% and 6.40%,
respectively, and for Class B shares were 3.58% and 5.57%, respectively. For
current yield information call 1-800-225-6265.

These returns reflect the maximum sales charge for Class A (4.75%) and any
applicable CDSC for Class B. The Class A performance shown above for the period
prior to December 7, 1993 is the performance of Class B shares, adjusted for the
sales charge that applies to Class A shares (but not adjusted for any other
differences in the expenses of the two classes). Class B shares commenced
operations on April 18, 1991. Life of Fund returns are calculated from April
30, 1991. The Lehman Brothers Municipal Bond Index is an unmanaged index of
municipal bonds. Investors cannot invest directly in an Index.

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

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

Sales Charge Imposed on Reinvested Distributions None None

Exchange Fee None None

Distribution and Service (12b-1) Fees 0.00% 0.95%

Other Expenses* 0.35% 0.22%
----- -----
Total Operating Expenses 0.80% 1.62%
</TABLE>

* Other Expenses for Class A shares includes a service fee of 0.13%.

<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A shares $ 553 $ 718 $ 898 $ 1,418
Class B shares $ 665 $ 911 $ 1,081 $ 1,922
</TABLE>

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

<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A shares $ 553 $ 718 $ 898 $ 1,418
Class B shares $ 165 $ 511 $ 881 $ 1,922
</TABLE>
8

<PAGE>

Eaton Vance Rhode Island Municipals Fund

The Rhode Island Fund's investment objective is to provide current income exempt
from regular federal income taxes and Rhode Island state personal income taxes.
Rhode Island general obligations currently are rated A-1, AA- and AA- by
Moody's, S&P and Fitch, respectively.

Performance Information. The following bar chart and table provide information
about the Rhode Island Fund's performance, including a comparison of the Fund's
performance to the performance of a national index of municipal bonds.
Although past performance is no guarantee of future results, this performance
information demonstrates that the value of your investment will change from
year-to-year. The following returns are for Class B shares for each calendar
year through December 31, 1998 and do not reflect a sales charge. If the sales
charge was reflected, the returns would be lower.

<TABLE>
<CAPTION>
Annual Total Returns
Class B shares

1994 1995 1996 1997 1998
</TABLE>

The Fund's highest quarterly total return was ___% for the quarter ended
__________, 199_, and its lowest quarterly return was ___% for the quarter ended
_________, 199_. The total return through the end of the most recent calendar
quarter (January 1, 1998 to December 31, 1998) was __%. For the 30-days ended
September 30, 1998, the yield and tax equivalent yield (assuming a combined
state and federal tax rate of 36.78%) for Class A shares were 4.33% and 6.85%,
respectively, and for Class B shares were 3.73% and 5.90%, respectively. For
current yield information call 1-800-225-6265.

These returns reflect the maximum sales charge for Class A (4.75%) and any
applicable CDSC for Class B. The Class A performance shown above for the period
prior to December 7, 1993 is the performance of Class B shares, adjusted for the
sales charge that applies to Class A shares (but not adjusted for any other
differences in the expenses of the two classes). Class B shares commenced
operations on June 11, 1993. Life of Fund returns are calculated from June 30,
1993. The Lehman Brothers Municipal Bond Index is an unmanaged index of
municipal bonds. Investors cannot invest directly in an Index.

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

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

Sales Charge Imposed on Reinvested Distributions None None

Exchange Fee None None

Distribution and Service (12b-1) Fees 0.00% 0.94%

Other Expenses* 0.45% 0.28%
----- -----
Total Operating Expenses 0.69% 1.46%
</TABLE>

* Other Expenses for Class A shares includes a service fee of 0.17%.

<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A shares $ 542 $ 685 $ 841 $ 1,293
Class B shares $ 649 $ 862 $ 997 $ 1,746
</TABLE>

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

<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A shares $ 542 $ 685 $ 841 $ 1,293
Class B shares $ 149 $ 462 $ 797 $ 1,746
</TABLE>
9

<PAGE>

Eaton Vance West Virginia Municipals Fund

The West Virginia Fund's investment objective is to provide current income
exempt from regular federal income taxes and West Virginia state personal income
taxes. West Virginia general obligations currently are rated AA, A1 and AA- by
S&P, Moody's and Fitch, respectively.

Performance Information. The following bar chart and table provide information
about the West Virginia Fund's performance, including a comparison of the Fund's
performance to the performance of a national index of municipal bonds.
Although past performance is no guarantee of future results, this performance
information demonstrates that the value of your investment will change from
year-to-year. The following returns are for Class B shares for each calendar
year through December 31, 1998 and do not reflect a sales charge. If the sales
charge was reflected, the returns would be lower.

<TABLE>
<CAPTION>
Annual Total Returns
Class B shares

1994 1995 1996 1997 1998
</TABLE>

The Fund's highest quarterly total return was ___% for the quarter ended
__________, 199_, and its lowest quarterly return was ___% for the quarter ended
_________, 199_. The total return through the end of the most recent calendar
quarter (January 1, 1998 to December 31, 1998) was __%. For the 30-days ended
September 30, 1998, the yield and tax equivalent yield (assuming a combined
state and federal tax rate of 35.49%) for Class A shares were 4.06% and 6.29%,
respectively, and for Class B shares were 3.45% and 5.35%, respectively. For
current yield information call 1-800-225-6265.

These returns reflect the maximum sales charge for Class A (4.75%) and any
applicable CDSC for Class B. The Class A performance shown above for the period
prior to December 13, 1993 is the performance of Class B shares, adjusted for
the sales charge that applies to Class A shares (but not adjusted for any other
differences in the expenses of the two classes). Class B shares commenced
operations on June 11, 1993. Life of Fund returns are calculated from June 30,
1993. The Lehman Brothers Municipal Bond Index is an unmanaged index of
municipal bonds. Investors cannot invest directly in an Index.

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

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

Sales Charge Imposed on Reinvested Distributions None None

Exchange Fee None None

Distribution and Service (12b-1) Fees 0.00% 0.95%

Other Expenses* 0.45% 0.32%
----- -----
Total Operating Expenses 0.66% 1.48%
</TABLE>

* Other Expenses for Class A shares includes a service fee of 0.13%.

<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A shares $ 539 $ 676 $ 825 $ 1,258
Class B shares $ 651 $ 868 $ 1,008 $ 1,768
</TABLE>

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

<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A shares $ 539 $ 676 $ 825 $ 1,258
Class B shares $ 151 $ 468 $ 808 $ 1,768
</TABLE>
10

<PAGE>

INVESTMENT OBJECTIVES, POLICIES AND RISKS
The investment objective of each Fund is to provide current income exempt from
regular federal income tax and particular state or local income or other taxes.
Each Fund seeks to achieve its objective by investing primarily (i.e., at least
80% of its net assets during periods of normal market conditions) in municipal
obligations, the interest on which is exempt from regular federal income tax and
from the state taxes which, in accordance with the Fund's investment objective,
the Fund seeks to avoid. This is a fundamental policy of each Fund which only
may be changed with shareholder approval. Each Fund's investment objective and
other policies may be changed by the Trustees without shareholder approval.
Each Fund currently seeks to meet its investment objective by investing in a
separate open-end management company (a "Portfolio") that has the same objective
and policies as the Fund.

Municipal obligations include bonds, notes and commercial paper issued by a
municipality for a wide variety of both public and private purposes. The
interest on municipal obligations is (in the opinion of the issuer's counsel)
exempt from regular federal income tax. Interest income from certain types of
municipal obligations may be subject to the federal alternative minimum tax (the
"AMT") for individuals. Distributions to corporate investors may also be
subject to the AMT. THE FUNDS MAY NOT BE SUITABLE FOR INVESTORS SUBJECT TO THE
AMT.

At least 75% 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, or BBB or higher by either S&P or 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 (but not lower than B by Moody's, S&P
or Fitch) and in unrated municipal obligations considered to be of comparable
quality by the investment adviser. Municipal obligations rated Baa or BBB or
below have speculative characteristics. 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.

Under normal conditions, each Portfolio invests at least 65% of its total assets
in obligations issued by its respective state or its political subdivisions,
agencies, authorities and instrumentalities. Municipal obligations of issuers
in a single state may be adversely affected by economic developments (including
insolvency of an issuer) and by legislation and other governmental activities in
that state. Each Portfolio may also invest in municipal obligations issued by
the governments of Puerto Rico, the U.S. Virgin Islands and Guam. Moody's
currently rates Puerto Rico general obligations Baa, while S&P rates them A.

Each Portfolio may invest 25% or more of its total assets in municipal
obligations of the same type (such as those involving leases, housing finance,
public housing, municipal utilities, hospital and health facilities or
industrial development). This may make a Portfolio 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. Lower rated obligations
may be subject to greater price volatility than higher rated obligations. The
amount of information available about the financial condition of issuers of
municipal obligations generally is not as extensive as that available for
publicly-traded corporations.

Each Portfolio may purchase derivative instruments, which derive their value
from another instrument, security or index. For example, a Portfolio 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 Portfolio 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. Each Portfolio
may also purchase and sell various kinds of financial futures contracts and
options thereon to hedge against changes in interest rates or as a substitute
for the purchase of portfolio securities. The use of derivative instruments for
both hedging and investment purposes involves a risk of loss or depreciation due
to a variety of factors including counterparty risk, unexpected market, interest
rate or securities price movements, and tax and regulatory constraints.

Each Portfolio may invest in zero coupon bonds, which do not pay income
currently. The values of these bonds are subject to greater fluctuation in
response to changes in market interest rates than bonds which pay interest
currently. Each Portfolio may also temporarily borrow up to 5% of the value of
its total assets to satisfy redemption requests or settle securities
transactions.
11
<PAGE>

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

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

MANAGEMENT AND ORGANIZATION
Management. Each Portfolio's investment adviser is Boston Management and
Research ("BMR"), a subsidiary of Eaton Vance Management, 24 Federal Street,
Boston, Massachusetts 02110. Eaton Vance has been managing assets since 1924
and managing mutual funds since 1931. Eaton Vance and its subsidiaries
currently manage over $28 billion on behalf of mutual funds, institutional
clients and individuals.

The investment adviser manages the investments of each Portfolio and provides
related office facilities and personnel. Under its investment advisory
agreement with each Portfolio, BMR 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. Categories (1) and (2) below
do not apply to the California Portfolio and Category (3) is for daily net
assets of the California Portfolio of up to $500 million.
<TABLE>
<CAPTION>
Annual Daily
Category Daily Net Assets Asset Rate Income Rate
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 up to $20 million 0.100% 1.00%
2 $20 million but less than $40 million 0.200% 2.00%
3 $40 million but less than $500 million 0.300% 3.00%
4 $500 million but less than $1 billion 0.275% 2.75%
5 $1 billion but less than $1.5 billion 0.250% 2.50%
6 $1.5 billion but less than $2 billion 0.225% 2.25%
7 $2 billion but less than $3 billion 0.200% 2.00%
8 $3 billion and over 0.175% 1.75%
</TABLE>

For the fiscal year ended September 30, 1998, each Portfolio paid advisory fees
equivalent to the percentage of average daily net assets stated below.
<TABLE>
<CAPTION>
Net Assets on
Portfolio September 30, 1998 Advisory Fee
- -----------------------------------------------------------------------------
<S> <C> <C>
California $ %
Florida %
Massachusetts %
Mississippi %
New York %
Ohio %
Rhode Island %
West Virginia %
</TABLE>

Timothy T. Browse is the portfolio manager of the West Virginia Portfolio (since
it commenced operations). Cynthia J. Clemson is the portfolio manager of the
Florida Portfolio (since November 2, 1998), the Mississippi Portfolio (since it
commenced operations) and the California Portfolio (since February 1, 1996).
Thomas J. Fetter is the portfolio manager of the Ohio Portfolio (since it
commenced operations) and the New York Portfolio (since November 24, 1997).
Robert B. MacIntosh is the portfolio manager of the Massachusetts Portfolio
(since it commenced operations) and the Rhode Island Portfolio (since November
24, 1997). Each portfolio manager also manages other Eaton Vance portfolios,
has been an employee of Eaton Vance for at least 5 years, and is a Vice
President of Eaton Vance and BMR.

12
<PAGE>

Eaton Vance serves as administrator of each Fund, providing the Fund 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 Municipals Trust, a
Massachusetts business trust. The Funds do 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 a Fund invests in a Portfolio, it may be asked to vote on
certain Portfolio matters (like changes in certain Portfolio investment
restrictions). When necessary, a 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. A Fund can withdraw from a
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.

VALUING SHARES
Each Fund values its shares once each day only when the New York Stock Exchange
is open for trading (typically Monday through Friday), as of the close of
regular trading on the Exchange (normally 4:00 p.m. eastern time). The price of
Fund shares is their net asset value, which is derived from Portfolio holdings.
Municipal obligations will normally be valued on the basis of valuations
furnished by a pricing service. Your investment dealer must communicate your
order to the principal underwriter by a specific time each day to receive that
day's public offering price 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
You may purchase Fund shares through your investment dealer or by mailing the
account application form included in this prospectus to the transfer agent (see
back cover for address). Your initial investment must be at least $1,000. The
price of Class A shares is the net asset value plus a sales charge. The price
of Class B 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
your 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 better suits your investment needs.

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

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

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

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

13
<PAGE>

<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%
$50,000 but less than $100,000 4.50% 4.71% 4.25%
$100,000 but less than $250,000 3.75% 3.90% 3.50%
$250,000 but less than $500,000 3.00% 3.09% 2.75%
$500,000 but less than $1,000,000 2.00% 2.04% 2.00%
$1,000,000 or more 0.00* 0.00* 1.00%
</TABLE>

* 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.

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

<TABLE>
<CAPTION>
Year of Redemption After Purchase CDSC
- --------------------------------------------------
<S> <C>
First or Second 5%
Third 4%
Fourth 3%
Fifth 2%
Sixth 1%
Seventh or following 0%
</TABLE>

The CDSC is based on the lower of the net asset value at the time of purchase
or the time of redemption. Shares acquired through the reinvestment of
distributions are exempt. Redemptions are made first from shares which are not
subject to a CDSC.

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

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

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

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

DISTRIBUTION AND SERVICE FEES. Class B shares have adopted a plan under Rule
12b-1 that allows the Fund to pay distribution fees for the sale and

14
<PAGE>
distribution of shares (so-called "12b-1 fees"). Class B shares pay
distribution expenses of .75% of average daily net assets annually. Because
these fees are paid from Fund assets on an ongoing basis, they will increase
your cost over time and may cost you more than paying other types of sales
charges. Both classes pay service fees for personal and/or account services not
exceeding .20% of average daily net assets annually. Service fees are paid on
Class A and Class B shares only after they have been outstanding for twelve
months.

REDEEMING SHARES
You can redeem shares in any of the following ways:

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

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

Through an Your investment dealer is responsible for
Investment transmitting the order promptly. A dealer may
Dealer 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 check (including a certified or cashier's check) has cleared. If the
purchase check has not cleared, redemption proceeds may be delayed up to 15 days
from the purchase date. If your account value falls below $750 other than due
to market decline, you may be asked to either add to your account or redeem it
within 60 days. If you take no action, your account will be redeemed and the
proceeds sent to you.

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

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

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.

15
<PAGE>

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 draw on share holdings systematically with monthly or
quarterly checks. For Class B shares, your withdrawals will not be subject to a
CDSC if they do not in the aggregate exceed 12% annually of the account balance
at the time the plan is established. A minimum account size of $5,000 is
required. Because purchases of Class A shares are subject to a sales charge, you
should not make withdrawals from your account while you are making purchases.

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

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

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

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

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

Distributions of any taxable income and net short-term capital gains will be
taxable as ordinary income. Distributions of any long-term capital gains are
taxable as such. Distributions of interest on certain municipal obligations are
a tax preference item under the AMT provisions applicable to individuals and
corporations.

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. Additional information about
state taxes is provided below.

CALIFORNIA TAXES. California law provides that dividends paid by the California
Fund and designated by it as tax-exempt are exempt from California personal

16
<PAGE>

income tax on individuals who reside in California to the extent such dividends
are derived from interest payments on municipal obligations exempt from
California State personal income taxes, provided that at least 50% of the assets
of the California Portfolio at the close of each quarter of its taxable year are
invested in obligations the interest on which is exempt under either federal or
California law from taxation by the State of California. Distributions of
short-term capital gains are treated as ordinary income, and distributions of
long-term capital gains are treated as long-term capital gains taxable at
ordinary income rates under the California personal income tax.

FLORIDA TAXES. The Florida Department of Revenue has ruled that shares of a
Florida series fund owned by a Florida resident will be exempt from the Florida
Intangible Personal Property Tax so long as the fund's portfolio includes on
January 1 of each year only assets, such as Florida tax-exempt securities and
United States Government securities, that are exempt from the Florida Intangible
Personal Property Tax. The Florida Portfolio will normally invest in tax-exempt
obligations of Florida, the United States, the Territories or political
subdivisions of the United States or Florida so Florida Fund shares should,
under normal circumstances, be exempt from the Florida intangibles tax.

MASSACHUSETTS TAXES. Based on a letter ruling from the Department of Revenue of
The Commonwealth of Massachusetts received by the Massachusetts Portfolio, the
Massachusetts Fund's interest distributions attributable to Massachusetts
Obligations (debt obligations issued by The Commonwealth of Massachusetts or its
political subdivisions, including agencies or instrumentalities thereof),
Possessions Obligations (the Governments of Puerto Rico, Guam, or the United
States Virgin Islands) or United States Obligations can be excluded from
Massachusetts gross income for individuals, estates and trusts that are subject
to Massachusetts taxation. Distributions properly designated as capital gain
dividends and attributable to gains realized on the sale of certain
Massachusetts tax-exempt obligations issued pursuant to statutes that
specifically exempt such gains from Massachusetts taxation will also be exempt
from Massachusetts personal income tax. Other distributions from the
Massachusetts Fund that are included in a shareholder's Federal gross income,
including distributions derived from net long-term capital gains not described
in the preceding sentence and net short-term capital gains, are generally not
exempt from Massachusetts personal income tax.

For purposes of determining the Massachusetts excise tax on corporations subject
to Massachusetts taxation, distributions from the Massachusetts Fund will be
included in net income, and in the case of intangible property corporations,
shares of the Massachusetts Fund will be included in net worth.

MISSISSIPPI TAXES. Under existing Mississippi law, interest received by a
Mississippi resident individual upon the obligations of the State of Mississippi
or political subdivisions thereof ("Mississippi obligations") is exempt from
Mississippi income tax. In 1993, the Mississippi State Tax Commission issued a
ruling stating that a Mississippi resident taxpayer's pro rata portion of
interest dividends distributed by the Mississippi Fund will be non-taxable to
the extent that such pro rata portion represents interest received by the
Mississippi Fund, either directly or through the Mississippi Portfolio, from
Mississippi tax-exempt obligations, which would be exempt for Mississippi income
tax purposes if such tax-exempt obligations were directly held by the taxpayer.
In the opinion of Butler, Snow, O'Mara, Stevens & Cannada, PLLC, special
Mississippi tax counsel to the Mississippi Fund, a Mississippi resident
individual's pro rata portion of interest dividends distributed by the
Mississippi Fund will be exempt from Mississippi income tax to the extent that
such pro rata portion (i) is excluded from gross income under the Code and (ii)
represents interest the Mississippi Fund receives, either directly or through
the Mississippi Portfolio, from investments in Mississippi tax-exempt
obligations.

NEW YORK TAXES. In the opinion of Brown & Wood LLP, under New York law,
dividends paid by the New York Fund are exempt from New York State and New York
City personal income tax applicable to individuals who reside in New York to the
extent such dividends are excluded from gross income for federal income tax
purposes and are derived from interest payments on tax-exempt obligations issued
by or on behalf of New York State and its political subdivisions and agencies,
and the governments of Puerto Rico, the U.S. Virgin Islands and Guam. Other
distributions from the New York Fund, including distributions derived from
taxable ordinary income and net short-term and long-term capital gains, are
generally not exempt from New York State or City personal income tax.

OHIO TAXES. In the opinion of special Ohio tax counsel to the Ohio Fund,
Squire, Sanders & Dempsey L.L.P., under Ohio law individuals who are otherwise
subject to the Ohio personal income tax will not be subject to such tax on
dividends paid by the Ohio Fund to the extent such dividends are properly
attributable to interest on obligations issued by or on behalf of the State of
Ohio or its political subdivisions, or the agencies or instrumentalities thereof
("Ohio obligations"). Dividends paid by the Ohio Fund also will be excluded from
the net income base of the Ohio corporation franchise tax to the extent such
dividends are excluded from gross income for federal income tax purposes or are
properly attributable to interest on Ohio obligations. However, the Ohio Fund's

17
<PAGE>

shares will be included in the tax base for purposes of computing the Ohio
corporation franchise tax on the net worth basis. These conclusions regarding
Ohio taxation are based on the assumption that the Ohio Fund will continue to
qualify as a regulated investment company under the Code and that at all times
at least 50% of the value of the total assets of the Ohio Fund will consist of
Ohio obligations or similar obligations of other states or their subdivisions
determined, to the extent the Ohio Fund invests in the Ohio Portfolio, by
treating the Ohio Fund as owning its proportionate share of the assets owned by
the Ohio Portfolio.

RHODE ISLAND TAXES. The Rhode Island Fund obtained an opinion from Hinckley,
Allen & Snyder, special tax counsel to the Rhode Island Fund, that under Rhode
Island law, dividends paid by the Rhode Island Fund are exempt from Rhode Island
state income tax for individuals who reside in Rhode Island to the extent such
dividends are excluded from gross income for federal income tax purposes and are
derived from interest payments on obligations of Rhode Island, its political
subdivisions, the Territories or the United States ("Rhode Island Obligations").
Other distributions from the Rhode Island Fund, including distributions from
capital gains, are generally not exempt from Rhode Island state personal income
tax.

WEST VIRGINIA TAXES. In the opinion of Bowles, Rice, McDavid, Graff & Love,
special West Virginia tax counsel to the West Virginia Fund, under existing West
Virginia law, in 1991 the West Virginia Department of Tax and Revenue issued
Technical Assistance Advisory 91-002 which was declared to be of precedential
value. This Technical Assistance Advisory addresses liability for West Virginia
personal income tax on interest and dividend income received by investors in
regulated investment companies. Accordingly, under existing law, as long as the
West Virginia Fund qualifies as a separate "regulated investment company" under
the Code, that portion of exempt-interest dividends that represents interest
income received by the West Virginia Fund from obligations of the United States
and its possessions and interest or dividend income received by the West
Virginia Fund on obligations or securities of any authority commission or
instrumentality of the United States or of the State of West Virginia, which is
exempt from West Virginia State income tax by federal or West Virginia law, is
exempt from West Virginia Personal Income Tax. This exemption does not apply to
any portion of interest income on obligations of any state other than West
Virginia, regardless of any exemption provided under federal law. In the event
the West Virginia Fund fails to qualify as a separate "regulated investment
company", the foregoing exemption may be unavailable or substantially limited.

The Technical Assistance Advisory contains a more specific, although
nonexclusive, list of obligations and authorities which are exempt from
taxation. The Technical Assistance Advisory also confirms that interest on
indebtedness incurred (directly or indirectly) by a shareholder of the West
Virginia Fund to purchase or carry shares of the West Virginia Fund will not be
deductible for West Virginia income purposes.

18
<PAGE>

FINANCIAL HIGHLIGHTS
The financial highlights tables 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 the Fund (assuming reinvestment of all distributions and not
taking into account a sales charge). This information has been audited by
___________________, independent accountants. The report of
____________________ and each Fund's financial statements are incorporated
herein by reference and included in the annual report, which is available on
request. Each Fund began offering two classes of shares on October 1, 1997.
Prior to that date, the Fund offered only Class B shares.

<TABLE>
<CAPTION>
CALIFORNIA FUND
------------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30, March 31,
------------------------------------------------------------------------------------
1998++ 1997 1996 1995 1994* 1994
------------------------------------------------------------------------------------
CLASS A CLASS B CLASS B CLASS B CLASS B CLASS B CLASS B

- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value - Beginning of year $ 9.540 $ 9.410 $ 9.290 $ 9.560 $ 10.200
-------- -------- -------- -------- --------
Income (loss) from operations
Net investment income $ 0.451 $ 0.464 $ 0.475 $ 0.240 $ 0.480
Net realized and unrealized gain (loss) 0.477 0.135 0.253 (0.234) (0.395)
-------- -------- -------- -------- --------
Total income from operations $ 0.928 $ 0.599 $ 0.728 $ 0.006 $ 0.085
-------- -------- -------- -------- --------
Less distributions
From net investment income $ (0.451) $ (0.465) $ (0.475) $ (0.240) $ (0.480)
In excess of net investment income(5) (0.007) (0.004) (0.016) (0.036) (0.092)
From net realized gain -- -- -- -- (0.153)
In excess of net realized gain(5) -- -- (0.117) -- --
-------- -------- -------- -------- --------
Total distributions $ (0.458) $ (0.469) $ (0.608) $ (0.276) $ (0.725)
-------- -------- -------- -------- --------
Net asset value - End of year $ 10.010 $ 9.540 $ 9.410 $ 9.290 $ 9.560
-------- -------- -------- -------- --------
Total return(1) 9.98% 6.49% 8.30% 0.06% 0.55%
Ratios/Supplemental Data
Net assets, end of year (000's omitted) $321,157 $361,255 $401,742 $439,591 $463,414
Ratios (as a percentage of average daily
net assets):
Expenses(2)(3) 1.69% 1.66% 1.65% 1.63%+ 1.67%
Expenses after custodian fee reduction(2) 1.68% 1.65% 1.64% -- --
Net investment income 4.66% 4.87% 5.19% 5.06%+ 4.64%
Portfolio turnover of the Fund(4) -- -- -- -- 5%

Portfolio turnover of the Portfolio(4) 12% 14% 58% 40% 91%

(See footnotes on last page.)
</TABLE>
19

<PAGE>

FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
FLORIDA FUND
-------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
-------------------------------------------------------------------------
1998++ 1997 1996 1995 1994
-------------------------------------------------------------------------
CLASS A CLASS B CLASS B CLASS B CLASS B CLASS B
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value - Beginning of year $ 10.780 $ 10.720 $ 10.270 $ 11.700
-------- -------- -------- --------
Income (loss) from operations
Net investment income $ 0.488 $ 0.505 $ 0.514 $ 0.514
Net realized and unrealized gain (loss) 0.136 0.067 0.469 (1.228)
-------- -------- -------- --------
Total income (loss) from operations $ 0.624 $ 0.572 $ 0.983 $ (0.714)
-------- -------- -------- --------
Less distributions
From net investment income $ (0.488) $ (0.506) $ (0.514) $ (0.514)
In excess of net investment income(5) (0.016) (0.006) (0.019) (0.082)
From net realized gain -- -- -- --
In excess of net realized gain(5) -- -- -- (0.120)
-------- -------- -------- --------
Total distributions $ (0.504) $ (0.512) $ (0.533) $ (0.716)
-------- -------- -------- --------
Net asset value - End of year $ 10.900 $ 10.780 $ 10.720 $ 10.270
-------- -------- -------- --------
Total return(1) 5.89% 5.43% 9.90% (6.34)%
Ratios/Supplemental Data
Net assets, end of year (000's omitted) $504,057 $612,438 $701,565 $760,867
Ratios (as a percentage of average
daily net assets):
Expenses (2)(3) 1.57% 1.55% 1.54% 1.44%
Expenses after custodian fee
reduction(2) 1.53% 1.52% 1.51% --
Net investment income 4.50% 4.67% 4.97% 4.70%
Portfolio turnover of the Portfolio 54% 51% 61% 57%

(See footnotes on last page.)
</TABLE>
20

<PAGE>

FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
MASSACHUSETTS FUND
-------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
-------------------------------------------------------------------------
1998++ 1997 1996 1995 1994
-------------------------------------------------------------------------
CLASS A CLASS B CLASS B CLASS B CLASS B CLASS B
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value - Beginning of year $ 10.330 $ 10.270 $ 9.990 $ 11.250
-------- -------- -------- --------
Income (loss) from operations
Net investment income $ 0.487 $ 0.491 $ 0.499 $ 0.505
Net realized and unrealized gain (loss) 0.360 0.066 0.307 (1.108)
-------- -------- -------- --------
Total income (loss) from operations $ 0.847 $ 0.557 $ 0.806 $ (0.603)
-------- -------- -------- --------
Less distributions
From net investment income $ (0.487) $ (0.492) $ (0.499) $ (0.505)
In excess of net investment income(5) -- (0.005) (0.027) (0.087)
From net realized gain -- -- -- --
In excess of net realized gain(5) -- -- -- (0.065)
-------- -------- -------- --------
Total distributions $ (0.487) $ (0.497) $ (0.526) $ (0.657)
-------- -------- -------- --------
Net asset value - End of year $ 10.690 $ 10.330 $ 10.270 $ 9.990
-------- -------- -------- --------
Total return(1) 8.41% 5.53% 8.38% (5.57)%
Ratios/Supplemental Data
Net assets, end of year (000's omitted) $239,838 $267,398 $291,114 $295,011
Ratios (as a percentage of average
daily net assets):
Expenses(2)(3) 1.61% 1.59% 1.58% 1.50%
Expenses after custodian fee
reduction(2) 1.59% 1.58% 1.56% --
Net investment income 4.70% 4.75% 5.00% 4.75%
Portfolio turnover of the Portfolio 35% 51% 87% 53%

(See footnotes on last page.)
</TABLE>
21

<PAGE>

FINANCIAL HIGHLIGHTS (continued)

<TABLE>
<CAPTION>
MISSISSIPPI FUND
---------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------------------------------------------
1998 1997 1996 1995 1994
---------------------------------------------------------------------
CLASS A CLASS B CLASS B CLASS B CLASS B CLASS B
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value - Beginning of year $ 9.610 $ 9.480 $ 9.110 $10.260
------- ------- ------- -------
Income (loss) from operations
Net investment income $ 0.433 $ 0.451 $ 0.449 $ 0.453
Net realized and unrealized gain (loss) 0.362 0.122 0.379 (1.072)
------- ------- ------- -------
Total income (loss) from operations $ 0.795 $ 0.573 $ 0.828 $(0.619)
------- ------- ------- -------
Less distributions
From net investment income $(0.435) $(0.443) $(0.449) $(0.453)
In excess of net investment income(5) -- -- (0.009) (0.071)

In excess of net realized gain(5) -- -- -- (0.007)
------- ------- ------- -------
Total distributions $(0.435) $(0.443) $(0.458) $(0.531)
------- ------- ------- -------
Net asset value - End of year $ 9.970 $ 9.610 $ 9.480 $ 9.110
------- ------- ------- -------
Total return(1) 8.45% 6.17% 9.40% (6.20)%
Ratios/Supplemental Data+
Net assets, end of year (000's omitted) $20,924 $23,862 $26,756 $26,771
Ratios (as a percentage of average
daily net assets):
Net expenses(2)(3) 1.60% 1.44% 1.36% 0.99%
Net expenses after custodian fee
reduction(2) 1.59% 1.41% 1.33% --
Net investment income 4.39% 4.64% 4.89% 4.63%
Portfolio turnover of the Portfolio 6% 12% 52% 38%

+ The operating expenses of the Fund reflect a reduction of the investment
adviser fee, an allocation of expenses to the adviser or administrator, or
both. Had such action not been taken, the ratios and investment income per
share would have been as follows:

Ratios (as a percentage of average daily net assets):
Expenses(2)(3) 1.55% 1.49% 1.45%
Expenses after custodian fee reduction(2) 1.52% 1.46% --
Net investment income 4.53% 4.76% 4.17%
Net investment income per share $0.440 $0.437 $0.407

(See footnotes on last page.)
</TABLE>
22

<PAGE>

FINANCIAL HIGHLIGHTS (continued)

<TABLE>
<CAPTION>
NEW YORK FUND
-------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
-------------------------------------------------------------------------
1998++ 1997 1996 1995 1994
-------------------------------------------------------------------------
CLASS A CLASS B CLASS B CLASS B CLASS B CLASS B
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value - Beginning of year $ 10.930 $ 10.830 $ 10.450 $ 11.880
-------- -------- -------- --------
Income (loss) from operations
Net investment income $ 0.506 $ 0.506 $ 0.523 $ 0.528
Net realized and unrealized gain (loss) 0.375 0.116 0.406 (1.165)
-------- -------- -------- --------
Total income (loss) from operations $ 0.881 $ 0.622 $ 0.929 $ (0.637)
-------- -------- -------- --------
Less distributions
From net investment income $ (0.506) $ (0.508) $ (0.523) $ (0.528)
In excess of net investment income(5) (0.005) (0.014) (0.026) (0.089)
From net realized gain -- -- -- --
In excess of net realized gain(5) -- -- -- (0.176)
-------- -------- -------- --------
Total distributions $ (0.511) $ (0.522) $ (0.549) $ (0.793)
-------- -------- -------- --------
Net asset value - End of year $ 11.300 $ 10.930 $ 10.830 $ 10.450
-------- -------- -------- --------
Total return(1) 8.23% 5.87% 9.23% (5.62)%
Ratios/Supplemental Data
Net assets, end of year (000's omitted) $517,393 $590,397 $640,605 $648,325
Ratios (as a percentage of average
daily net assets):
Expenses(2)(3) 1.63% 1.54% 1.55% 1.46%
Expenses after custodian fee
reduction(2) 1.63% 1.51% 1.51% --
Net investment income 4.56% 4.64% 4.99% 4.72%
Portfolio turnover of the Portfolio 44% 47% 55% 47%

(See footnotes on last page.)
</TABLE>
23

<PAGE>

FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
OHIO FUND
-------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
-------------------------------------------------------------------------
1998++ 1997 1996 1995 1994
-------------------------------------------------------------------------
CLASS A CLASS B CLASS B CLASS B CLASS B CLASS B
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value - Beginning of year $ 10.590 $ 10.510 $ 10.070 $ 11.300
-------- -------- -------- --------
Income (loss) from operations
Net investment income $ 0.499 $ 0.494 $ 0.487 $ 0.494
Net realized and unrealized gain (loss) 0.328 0.071 0.461 (1.081)
-------- -------- -------- --------
Total income (loss) from operations $ 0.827 $ 0.565 $ 0.948 $ (0.587)
-------- -------- -------- --------
Less distributions
From net investment income $ (0.487) $ (0.485) $ (0.487) $ (0.494)
In excess of net investment income(5) -- -- (0.021) (0.084)
From net realized gain -- -- -- --
In excess of net realized gain(5) -- -- -- (0.065)
-------- -------- -------- --------
Total distributions $ (0.487) $ (0.485) $ (0.508) $ (0.643)
-------- -------- -------- --------
Net asset value - End of year $ 10.930 $ 10.590 $ 10.510 $ 10.070
-------- -------- -------- --------
Total return(1) 7.98% 5.48% 9.74% (5.39)%
Ratios/Supplemental Data
Net assets, end of year (000's omitted) $267,001 $289,829 $315,891 $321,578
Ratios (as a percentage of average
daily net assets):
Expenses(2)(3) 1.63% 1.63% 1.59% 1.50%
Expenses after custodian fee
reduction(2) 1.62% 1.61% 1.57% --
Net investment income 4.65% 4.66% 4.80% 4.62%
Portfolio turnover of the Portfolio 30% 35% 51% 31%

(See footnotes on last page.)
</TABLE>
24

<PAGE>

FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
RHODE ISLAND FUND
---------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------------------------------------------
1998 1997 1996 1995 1994
---------------------------------------------------------------------
CLASS A CLASS B CLASS B CLASS B CLASS B CLASS B
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value - Beginning of year $ 9.510 $ 9.400 $ 9.090 $10.330
------- ------- ------- -------
Income (loss) from operations
Net investment income $ 0.427 $ 0.440 $ 0.452 $ 0.454
Net realized and unrealized gain (loss) 0.334 0.125 0.332 (1.146)
------- ------- ------- -------
Total income (loss) from operations $ 0.761 $ 0.565 $ 0.784 $(0.692)
------- ------- ------- -------
Less distributions
From net investment income $(0.427) $(0.444) $(0.452) $(0.454)
In excess of net investment income(5) (0.004) (0.011) (0.022) (0.078)
------- ------- ------- -------
From net realized gains -- -- -- --

In excess of net realized gain(5) -- -- -- (0.016)
------- ------- ------- -------
Total distributions $(0.431) $(0.455) $(0.474) $(0.548)
------- ------- ------- -------
Net asset value - End of year $ 9.840 $ 9.510 $ 9.400 $ 9.090
------- ------- ------- -------
Total return(1) 8.19% 6.14% 8.94% (6.91)%
Ratios/Supplemental Data+
Net assets, end of year (000's omitted) $38,234 $39,488 $39,864 $34,261
Ratios (as a percentage of average
daily net assets):
Net expenses(2)(3) 1.40% 1.35% 1.33% 1.02%
Net expenses after custodian fee
reduction(2) 1.35% 1.32% 1.29% --
Net investment income 4.43% 4.63% 4.92% 4.65%
Portfolio turnover of the Portfolio 39% 25% 42% 42%

Ratios (as a percentage of average daily net assets):
Expenses(2)(3) 1.52% 1.47% 1.46% 1.38%
Expenses after custodian fee reduction(2) 1.47% 1.44% 1.42% --
Net investment income 4.31% 4.51% 4.79% 4.29%
Net investment income per share $0.415 $0.429 $0.440 $0.418

(See footnotes on last page.)
</TABLE>
25

<PAGE>

FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
WEST VIRGINIA FUND
---------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------------------------------------------
1998 1997 1996 1995 1994
---------------------------------------------------------------------
CLASS A CLASS B CLASS B CLASS B CLASS B CLASS B
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value - Beginning of year $ 9.620 $ 9.500 $ 9.130 $10.220
------- ------- ------- -------
Income (loss) from operations
Net investment income $ 0.419 $ 0.420 $ 0.436 $ 0.450
Net realized and unrealized gain (loss) 0.351 0.147 0.393 (1.011)
------- ------- ------- -------
Total income (loss) from operations $ 0.770 $ 0.567 $ 0.829 $(0.561)
------- ------- ------- -------
Less distributions
From net investment income $(0.419) $(0.427) $(0.436) $(0.450)
In excess of net investment income(5) (0.001) (0.020) (0.023) (0.069)
------- ------- ------- -------
In excess of net realized gain(5) -- -- -- (0.010)
------- ------- ------- -------
Total distributions $(0.420) $(0.447) $(0.459) $(0.529)
------- ------- ------- -------
Net asset value - End of year $ 9.970 $ 9.620 $ 9.500 $ 9.130
------- ------- ------- -------
Total return(1) 8.18% 6.02% 9.39% (5.66)%
Ratios/Supplemental Data+
Net assets, end of year (000's omitted) $31,524 $37,708 $39,569 $38,476
Ratios (as a percentage of average
daily net assets):
Net expenses(2)(3) 1.53% 1.55% 1.40% 0.95%
Net expenses after custodian fee
reduction(2) 1.51% 1.51% 1.38% --
Net investment income 4.31% 4.30% 4.74% 4.62%
Portfolio turnover of the Portfolio 24% 43% 19% 39%

Ratios (as a percentage of average daily net assets):
Expenses(2)(3) 1.48% 1.32%
Expenses after custodian fee reduction(2) 1.46% --
Net investment income 4.66% 4.25%
Net investment income per share $0.429 $0.414
</TABLE>

* For the six months ended September, 1994. The California Fund changed its
fiscal year end from March 31 to September 30, effective September 30,
1994.

+ Annualized.

++ Net investment income per share was computed using average shares
outstanding.

(1) Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Distributions, if any, are assumed to be reinvested at the
net asset value on the payable date. Total return is not computed on an
annualized basis.

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

(3) The expense ratios for the year ended September 30, 1995 and periods
thereafter have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require the Fund, as well as its
corresponding Portfolio, to increase its expense ratio by the effect of any
expense offset arrangements with its service providers. The expense ratios
for each of the prior periods have not been adjusted to reflect this
change.

(4) Portfolio Turnover of the Fund represents the rate of portfolio activity
for the period while the Fund was making investments directly in
securities. The Fund began investing in the Portfolio on May 3, 1993.

(5) The Funds have followed the Statement of Position (SOP) 93-2:
Determination, Disclosure and Financial Statement Presentation of Income,
Capital Gain, and Return of Capital Distribution by Investment Companies.
The SOP requires that differences in the recognition or classification of
income between the financial statements and tax earnings and profits that
result in temporary over-distributions for financial statement purposes,
are classified as distributions in excess of net investment income or
accumulated net realized gains.

<PAGE>

LOGO
Mutual Funds
for People
Who Pay
Taxes

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 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 each Fund's
performance during the past year. You may obtain free copies of the
statement of additional information and the shareholder reports by
contacting:
Eaton Vance Distributors, Inc.
24 Federal Street
Boston, MA 02110
1-800-225-6265
website: www.eatonvance.com

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

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

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

SEC File No. 811-4409 TFC2/1P

<PAGE>

LOGO
Mutual Funds
for People
Who Pay
Taxes

Eaton Vance
Massachusetts
Municipals
Fund

Class I Shares
A mutual fund for investors seeking tax-exempt income

Prospectus Dated
February 1, 1999

Information in this prospectus
Page Page
- --------------------------------------------------------------------------------
Fund Summary 2 Redeeming Shares 6

Investment Objective, Policies and Risks 4 Shareholder Account Features 6

Management and Organization 5 Tax Information 7

Valuing Shares 5 Financial Highlights 8

Purchasing Shares 6

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

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 and Massachusetts state personal income taxes. The Fund
primarily invests in investment grade municipal obligations. The portfolio
manager will purchase and sell securities to maintain a competitive yield and to
enhance return based upon the relative value of the securities in the
marketplace. The portfolio manager may also trade securities to minimize taxable
capital gains to shareholders.

PRINCIPAL RISK FACTORS

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

The Fund is non-diversified, which means that it may invest a larger portion of
its assets in the obligations of a limited number of issuers than a diversified
fund. Because a significant portion of assets is invested in obligations of
issuers located in Massachusetts, the Fund is sensitive to factors affecting
that state, such as changes in the economy, decreases in tax collection or the
tax base, legislation which limits taxes and changes in issuer credit ratings.
The Fund may invest up to 25% of its asset in obligations of below investment
grade quality (so-called "junk bonds"). Because lower quality obligations 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 high quality obligations. Massachusetts general obligations
currently are rated A1, A+ and A+ by Moody's Investors Service, Inc.
("Moody's"), Standard & Poor's Ratings Group ("S&P") and Fitch Investors
Service, Inc. ("Fitch"), respectively.

The Fund may concentrate in certain types of municipal obligations (such as
housing bonds, hospital bonds or utility bonds), so Fund shares could be
affected by events that adversely affect a particular sector. The Fund is not a
complete investment program and you may lose money by investing. An investment
in the Fund is not a deposit in a bank and is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency.

PERFORMANCE INFORMATION

The following bar chart and table provide information about the Fund's
performance, including a comparision of the Fund's performance to the
performance of a national index of municipal bonds. Although past performance
is no guarantee of future results, this performance information demonstrates
that the value of your investment will change from year-to-year. The following
returns are for Class I shares for each calendar year through December 31, 1998.

1994 1995 1996 1997 1998

The Fund's highest quarterly total return was ___% for the quarter ended
__________, 199_, and its lowest quarterly return was ___% for the quarter ended
_________, 199_. The total return through the end of the most recent calendar
quarter (January 1, 1998 to December 31, 1998) was __%. For the 30-days ended
September 30, 1998, the yield and tax equivalent yield (assuming a combined
state and federal tax rate of 39.28%) for Class I shares were 4.65% and 7.66%,
respectively. For current yield information call 1-800-225-6265.

<TABLE>
<CAPTION>
One Five Life of
Average Annual Total Return as of December 31, 1998 Year Years Fund
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Class I Shares
Lehman Brothers Municipal Bond Index
</TABLE>

Class I shares commenced operations on June 17, 1993. The performance shown
above for the period prior to that date is the performance of Class B shares of
the Fund, adjusted to eliminate the Class B sales charge (but not adjusted for
any other differences in the expenses of the two classes). Class B shares
commenced operations on April 18, 1991. Life of Fund returns are calculated
from April 30, 1991. The Lehman Brothers Municipal Bond Index is an unmanaged
index of municipal bonds. Investors cannot invest directly in an Index.

2
<PAGE>

FEES AND EXPENSES OF THE FUND

These tables describe the fees and expenses that you may pay if you buy and hold
Class I shares.

<TABLE>
<CAPTION>
Shareholder Fees Annual Fund Operating Expenses
(fees paid directly from your investment) (expenses that are deducted from Fund assets)
- ------------------------------------------------------------------ ----------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (as a percentage of offering price) None Management Fees 0.44%

Maximum Deferred Sales Charge None Other Expenses 0.22%
-----
Sales Charge Imposed on Reinvested Distributions None Total Operating Expenses 0.66%

Exchange Fee None
</TABLE>

Class I shares are offered to employees of Eaton Vance Corp. and its affiliates,
clients of Eaton Vance and certain institutional investors.

EXAMPLE

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

<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 67 $ 211 $ 368 $ 822
</TABLE>

3
<PAGE>

INVESTMENT OBJECTIVE, POLICIES AND RISKS

The investment objective of the Fund is to provide current income exempt from
regular federal income tax and particular state or local income or other taxes.
The Fund seeks to achieve its objective by investing primarily (i.e., at least
80% of its net assets during periods of normal market conditions) in municipal
obligations, the interest on which is exempt from regular federal income tax and
from the state taxes which, in accordance with the Fund's investment objective,
the Fund seeks to avoid. This is a fundamental policy of the Fund which only
may be changed with shareholder approval. The Fund's investment objective and
other policies may be changed by the Trustees without shareholder approval.
The Fund currently seeks to meet its investment objective by investing in a
separate open-end management company (the "Portfolio") that has the same
objective and policies as the Fund.

Municipal obligations include bonds, notes and commercial paper issued by a
municipality for a wide variety of both public and private purposes. The
interest on municipal obligations is (in the opinion of the issuer's counsel)
exempt from regular federal income tax. Interest income from certain types of
municipal obligations may be subject to the federal alternative minimum tax (the
"AMT") for individuals. Distributions to corporate investors may also be
subject to the AMT. THE FUND MAY NOT BE SUITABLE FOR INVESTORS SUBJECT TO THE
AMT.

Under normal conditions, the Portfolio invests at least 65% of its total assets
in obligations issued by Massachusetts or its political subdivisions, agencies,
authorities and instrumentalities. Municipal obligations of issuers in a single
state may be adversely affected by economic developments (including insolvency
of an issuer) and by legislation and other governmental activities in that
state. The Portfolio may also invest in municipal obligations issued by the
governments of Puerto Rico, the U.S. Virgin Islands and Guam. Moody's currently
rates Puerto Rico general obligations Baa, while S&P rates them A.

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

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

The Portfolio may invest in zero coupon bonds, which do not pay income
currently. 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 Portfolio may also temporarily borrow up to 5% of the value of
its total assets to satisfy redemption requests or settle securities
transactions.

4
<PAGE>

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

MANAGEMENT AND ORGANIZATION

MANAGEMENT. The Portfolio's investment adviser is Boston Management and Research
("BMR"), a subsidiary of Eaton Vance Management, 24 Federal Street, Boston,
Massachusetts 02110. Eaton Vance has been managing assets since 1924 and
managing mutual funds since 1931. Eaton Vance and its subsidiaries currently
manage over $28 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 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 $20 million 0.100% 1.00%
2 $20 million but less than $40 million 0.200% 2.00%
3 $40 million but less than $500 million 0.300% 3.00%
4 $500 million but less than $1 billion 0.275% 2.75%
5 $1 billion but less than $1.5 billion 0.250% 2.50%
6 $1.5 billion but less than $2 billion 0.225% 2.25%
7 $2 billion but less than $3 billion 0.200% 2.00%
8 $3 billion and over 0.175% 1.75%
</TABLE>

As at September 30, 1998, the Portfolio had net assets of $XXX,XXX,XXX. For the
fiscal year ended September 30, 1998, the Portfolio paid BMR advisory fees
equivalent to X.XX% of the Portfolio's average net assets for such year.

Robert B. MacIntosh is the portfolio manager of the Portfolio (since it
commenced operations). He also manages other Eaton Vance portfolios, has been
an employee of Eaton Vance for at least 5 years, and is a Vice President of
Eaton Vance and BMR.

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

VALUING SHARES

The Fund values its shares once each day only when the New York Stock Exchange
is open for trading (typically Monday through Friday), as of the close of
regular trading on the Exchange (normally 4:00 p.m. eastern time). The price of
Fund shares is their net asset value, which is derived from Portfolio holdings.
Municipal obligations will normally be valued on the basis of valuations
furnished by a pricing service. Your investment dealer must communicate your
order to the principal underwriter by a specific time each day to receive that
day's public offering price 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).

5
<PAGE>

PURCHASING SHARES

Class I shares are offered to employees and clients of Eaton Vance and certain
institutional investors. You may purchase Class I shares for cash or in
exchange for securities. Your initial investment must be at least $1,000. The
price of Fund shares is the net asset value. Please call 1-800-225-6265 for
information about exchanging securities for Fund shares. To make an investment
by wire, you must call 1-800-225-6265 (extension 3) for wiring instructions.
The Fund may suspend the sale of its shares at any time and any purchase order
may be refused.

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

REDEEMING SHARES

You can redeem shares in any of the following ways:

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

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

SHAREHOLDER ACCOUNT FEATURES

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

6
<PAGE>

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

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

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

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

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.

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

TAX INFORMATION

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

7
<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights tables are intended to help you understand the Fund's
financial performance for the past five years. Certain information in the table
reflects the financial results for a single Fund share. The total returns in
the table represent the rate an investor would have earned (or lost) on an
investment in the Fund (assuming reinvestment of all distributions and not
taking into account a sales charge). This information has been audited by
_____________________, independent accountants. The report of _________________
and the Fund's financial statements are incorporated herein by reference and
included in the annual report, which is available on request. The Fund began
offering three classes of shares on October 1, 1997. Prior to that date, the
Fund offered only Class B shares.

<TABLE>
<CAPTION>
MASSACHUSETTS FUND
-------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
-------------------------------------------------------
1998++ 1997 1996 1995 1994
-------------------------------------------------------
CLASS I CLASS B CLASS B CLASS B CLASS B
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value - Beginning of year $ 10.330 $ 10.270 $ 9.990 $ 11.250
-------- -------- -------- --------
Income (loss) from operations
Net investment income $ 0.487 $ 0.491 $ 0.499 $ 0.505
Net realized and unrealized gain (loss) 0.360 0.066 0.307 (1.108)
-------- -------- -------- --------
Total income (loss) from operations $ 0.847 $ 0.557 $ 0.806 $ (0.603)
-------- -------- -------- --------
Less distributions
From net investment income $ (0.487) $ (0.492) $ (0.499) $ (0.505)
In excess of net investment income(4) -- (0.005) (0.027) (0.087)
From net realized gain -- -- -- --
In excess of net realized gain(4) -- -- -- (0.065)
-------- -------- -------- --------
Total distributions $ (0.487) $ (0.497) $ (0.526) $ (0.657)
-------- -------- -------- --------
Net asset value - End of year $ 10.690 $ 10.330 $ 10.270 $ 9.990
-------- -------- -------- --------
Total return(1) 8.41% 5.53% 8.38% (5.57)%
Ratios/Supplemental Data
Net assets, end of year (000's omitted) $239,838 $267,398 $291,114 $295,011
Ratios (as a percentage of average
daily net assets):
Expenses(2)(3) 1.61% 1.59% 1.58% 1.50%
Expenses after custodian fee reduction(2) 1.59% 1.58% 1.56% --
Net investment income 4.70% 4.75% 5.00% 4.75%
Portfolio turnover of the Portfolio 35% 51% 87% 53%
</TABLE>

+ Net investment income per share was computed using average shares
outstanding.

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

(3) The expense ratios for the year ended September 30, 1995 and periods
thereafter have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require the Fund, as well as the
Portfolio, to increase its expense ratio by the effect of any expense
offset arrangements with its service providers. The expense ratios for each
of the prior periods have not been adjusted to reflect this change.

(4) The Fund has followed the Statement of Position (SOP) 93-2: Determination,
Disclosure and Financial Statement Presentation of Income, Capital Gain,
and Return of Capital Distribution by Investment Companies. The SOP
requires that differences in the recognition or classification of income
between the financial statements and tax earnings and profits that result
in temporary over-distributions for financial statement purposes, are
classified as distributions in excess of net investment income or
accumulated net realized gains.

8
<PAGE>

LOGO
Mutual Funds
for People
Who Pay
Taxes

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

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

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

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

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

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

SEC File No. 811-4409 MAMUNIP

<PAGE>

LOGO
Mutual Funds
for People
Who Pay
Taxes

EATON VANCE
NATIONAL MUNICIPALS
FUND

A MUTUAL FUND FOR INVESTORS SEEKING CURRENT INCOME EXEMPT FROM REGULAR
FEDERAL INCOME TAX

PROSPECTUS DATED
FEBRUARY 1, 1999

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED
WHETHER THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
INFORMATION IN THIS PROSPECTUS
Page Page
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Fund Summary 2 Sales Charges 6
Investment Objective, Policies and Redeeming Shares 7
Risks 4 Shareholder Account
Management and Organization 5 Features 7
Valuing Shares 5 Tax Information 8
Purchasing Shares 5 Financial Highlights 10

- -------------------------------------------------------------------------------
</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 current income exempt from regular
federal income tax. The Fund primarily invests in investment grade municipal
obligations. The portfolio manager will purchase and sell securities to maintain
a competitive yield and to enhance return based upon the relative value of the
securities in the marketplace. The portfolio manager may also trade securities
to minimize taxable capital gains to shareholders.

The Fund may invest up to 35% of its asset in obligations of below investment
grade quality (so-called "junk bonds"). Because lower quality obligations 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 high quality obligations.

The Fund may concentrate in certain types of municipal obligations (such as
housing bonds, hospital bonds or utility bonds), so Fund shares could be
affected by events that adversely affect a particular sector. No Fund is a
complete investment program and you may lose money by investing. 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.

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

<TABLE>
<CAPTION>
Shareholder Fees (fees paid directly from your investment) Class A Class B Class C
Shares Shares Shares
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Maximum Sales Charge (as a percentage of offering price) 4.75% None None
Maximum Deferred Sales Charge (as percentage of the lower
of net asset value at time of purchase or time of
redemption) None 5.00% 1.00%
Sales Charge Imposed on Reinvested Distributions None None None
Exchange Fee None None None
</TABLE>

The Fund offers Class A, Class B and Class C shares. Class A shares are sold
subject to a sales charge imposed at the time of purchase. Class B shares are
sold subject to a declining contingent deferred sales charge ("CDSC") (5.00%
maximum) if redeemed within six years of purchase. Class C shares are sold
subject to a 1.00% CDSC if redeemed within 24 months of purchase. Long-term
holders of Class B and Class C shares may pay more than the economic equivalent
of the front-end sales charge permitted by the National Association of
Securities Dealers, Inc.

<TABLE>
<CAPTION>
Annual Fund Operating Expenses (expenses that are deducted from Fund assets) Class A Class B Class C
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Management Fees
Distribution and Service (12b-1) Fees
Other Expenses*
Total Operating Expenses

*Other Expenses for Class A shares includes a service fee of ____%.
</TABLE>

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
Class B shares
Class C shares

2
<PAGE>

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

1 Year 3 Years 5 Years 10 Years
- -------------------------------------------------------------------------------
Class A shares
Class B shares
Class C shares

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 that the
value of your investment will change from year-to-year. The following returns
are for Class B shares of each calendar year through December 31, 1998 and do
not reflect a sales charge. If the sales charge was reflected, the returns would
be lower.

<TABLE>
<CAPTION>
Annual Total Returns
Class B shares
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>

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

The Fund's highest total return for a quarter was ___% for the quarter ended
__________, 199_, and its lowest return for a quarter was ___% for the quarter
ended _________, 199_. The total return through the end of the most recent
calendar quarter (January 1, 1998 to December 31, 1998) was __%. For the 30-days
ended September 30, 1998, the yield and tax equivalent yield (assuming a federal
tax rate of ___%) for Class A shares were ___% and ___%, respectively, for Class
B shares were ___% and ___%, respectively, and for Class C shares were ___% and
___%, respectively. For current yield information call 1-800-225-6265.

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

These returns reflect the maximum sales charge for Class A (4.75%) and any
applicable CDSC for Class B and Class C. The Class A and Class C performance
shown above for the period prior to April 5, 1994 and December 3, 1993,
respectively, is the performance of Class B shares, adjusted for the sales
charge that applies to Class A or Class C shares (but not adjusted for any other
differences in the expenses of the two classes). The Lehman Brothers Municipal
Bond Index is a broad-based, unmanaged market index of municipal bonds.
Investors cannot invest directly in an Index.

3
<PAGE>

INVESTMENT OBJECTIVE, POLICIES AND RISKS
The investment objective of the Fund is to provide current income exempt from
regular federal income tax. The Fund seeks to achieve its objective by investing
primarily (i.e., at least 80% of its net assets during periods of normal market
conditions) in debt obligations 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 currently seeks to
meet its investment objective by investing in a separate open-end management
company (the "Portfolio") that has the same objective and policies as the Fund.
The investment objective of the Fund and the Portfolio are fundamental, and may
not be changed unless authorized by a shareholder vote.

Municipal obligations include bonds, notes and commercial paper issued by a
municipality for a wide variety of both public and private purposes. The
interest on municipal obligations is (in the opinion of the issuer's counsel)
exempt from regular federal income tax. Interest income from certain types of
municipal obligations may be subject to the federal alternative minimum tax (the
"AMT") for individuals. Distributions to corporate investors may also be subject
to the AMT. THE FUND MAY NOT BE SUITABLE FOR INVESTORS SUBJECT TO THE AMT.

At least 65% of net assets will normally be invested in municipal obligations
rated at least investment grade at the time of investment (which are those rated
Baa or higher by Moody's, or BBB or higher by either S&P or 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 (but not lower than B by Moody's, S&P
or Fitch) and in unrated municipal obligations considered to be of comparable
quality by the investment adviser. Municipal obligations rated Baa or BBB or
below have speculative characteristics. 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. As of September
30, 1998, 28.5% of the Portfolio's net assets was invested in obligations rated
below investment grade.

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

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

4
<PAGE>

MANAGEMENT AND ORGANIZATION
MANAGEMENT. The Portfolio's investment adviser is Boston Management and Research
("BMR"), a subsidiary of Eaton Vance Management, 24 Federal Street, Boston,
Massachusetts 02110. Eaton Vance has been managing assets since 1924 and
managing mutual funds since 1931. Eaton Vance and its subsidiaries currently
manage over $28 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 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>

As at September 30, 1998, the Portfolio had net assets of $ . For the fiscal
year ended September 30, 1998, the Portfolio paid BMR advisory fees equivalent
to % of the Portfolio's average net assets for such year.

Thomas M. Metzold is the portfolio manager of the Portfolio. He also manages
other Eaton Vance portfolios, has been an employee of Eaton Vance for at least 5
years, and is a Vice President of Eaton Vance and BMR.

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

VALUING SHARES
The Fund values its shares once each day only when the New York Stock Exchange
is open for trading (typically Monday through Friday), as of the close of
regular trading on the Exchange (normally 4:00 p.m. eastern time). The price of
Fund shares is their net asset value, which is derived from Portfolio holdings.
Municipal obligations will normally be valued on the basis of valuations
furnished by a pricing service. Your investment dealer must communicate your
order to the principal underwriter by a specific time each day to receive that
day's public offering price per share. It is the investment dealer's
responsibility to transmit orders promptly. The Fund may accept purchase and
redemption orders as of the time of their receipt by certain investment dealers
(or their designated intermediaries).

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

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

5
<PAGE>

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

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

<TABLE>
<CAPTION>
Sales Charge Sales Charge Dealer Commission
as Percentage of as Percentage of Net as a Percentage of
Amount of Purchase Offering Price Amount Invested Offering Price
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $25,000 4.75% 4.99% 4.50%
$50,000 but less than $100,000 4.50% 4.71% 4.25%
$100,000 but less than $250,000 3.75% 3.90% 3.50%
$250,000 but less than $500,000 3.00% 3.09% 2.75%
$500,000 but less than $1,000,000 2.00% 2.04% 2.00%
$1,000,000 or more 0.00* 0.00* 1.00%
</TABLE>

CONTINGENT DEFERRED SALES CHARGE. Each Class of shares is subject to a CDSC on
certain redemptions. If Class A shares are purchased at net asset value because
the purchase amount is $1 million or more, they are subject to a 1.00% CDSC if
redeemed within 12 months of purchase. Class C shares are subject to a 1.00%
CDSC if redeemed within 24 months of purchase. Class B shares are subject to the
following CDSC schedule:

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

6
<PAGE>

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

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

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

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

By Telephone You can redeem up to $50,000 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, or subject to fiduciary
arrangements, cannot be redeemed by telephone.

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

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

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

7
<PAGE>

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

.FULL REINVEST OPTION Dividends and capital gains are reinvested in
additional shares. THIS OPTION WILL BE ASSIGNED IF
YOU DO NOT SPECIFY AN OPTION.

.PARTIAL REINVEST OPTION Dividends are paid in cash and capital gains are
reinvested in additional shares.

.CASH OPTION Dividends and capital gains are paid in cash.

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

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

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

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

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

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

.Special notices about significant events affecting your Fund.

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

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

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

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

TAX INFORMATION
The Fund declares dividends daily. The Fund ordinarily pays distributions each
month for Class A shares on the last day, for Class B shares on the fifteenth
day and for Class C shares on the twenty-second day. If the payment date is not
a business day, the payment will be made on the business day thereafter. Your

8
<PAGE>

account will be credited with dividends beginning on the business day after the
day when the funds used to purchase your Fund shares are collected by the
transfer agent. For tax purposes the entire distribution, whether paid in cash
or reinvested in additional shares, ordinarily will constitute tax-exempt income
to you.

9
<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights tables are intended to help you understand the Fund's
financial performance for the past five years. Certain information in the table
reflects the financial results for a single Fund share. The total returns in the
table represent the rate an investor would have earned (or lost) on an
investment in the Fund (assuming reinvestment of all distributions and not
taking into account a sales charge). This information has been audited by
_____________________, independent accountants. The report of _________________
and the Fund's financial statements are incorporated herein by reference and
included in the annual report, which is available on request. The Fund began
offering three classes of shares on October 1, 1997. Prior to that date, the
Fund offered only Class B.

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------------------------------------------------------------
1998 1997 1996 1995 1994
--------------------------------------------------------------------------------
CLASS A CLASS B CLASS C CLASS B CLASS B CLASS B CLASS B
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE - BEGINNING OF YEAR $ $ $ $ 9.900 $ 9.800 $ 9.410 $ 10.570
---------- ---------- ---------- ----------
Income (loss) from operations
Net investment income $ $ $ $ 0.550 $ 0.557 $ 0.570 $ 0.556
Net realized and unrealized gain (loss) 0.634 0.096 0.395 (1.043)
---------- ---------- ---------- ----------
TOTAL INCOME (LOSS) FROM OPERATIONS $ $ $ $ 1.184 $ 0.653 $ 0.965 $ (0.487)
---------- ---------- ---------- ----------
Less distributions
From net investment income $ $ $ $ (0.554) $ (0.553) $ (0.570) $ (0.556)
In excess of net investment income(1) -- -- (0.005) (0.077)
In excess of net realized gain(1) -- -- -- (0.040)
---------- ---------- ---------- ----------
TOTAL DISTRIBUTIONS $ $ $ $ (0.554) $ (0.553) $ (0.575) $ (0.673)
---------- ---------- ---------- ----------
NET ASSET VALUE - END OF YEAR $ $ $ $ 10.530 $ 9.900 $ 9.800 $ 9.410
========== ========== ========== ==========
TOTAL RETURN (2) % % % 12.33% 6.84% 10.60% (4.82)%
Ratios/Supplemental Data
Net assets, end of year (000's omitted) $ $ $ $2,040,626 $2,101,632 $2,191,240 $2,171,901
Ratios (as a percentage of average daily net
assets):
Expenses(3)(4) % % % 1.60% 1.55% 1.53% 1.51%
Expenses after custodian fee reduction (3) % % % 1.60% 1.54% 1.52% --
Net investment income % % % 5.45% 5.62% 6.00% 5.54%
Portfolio Turnover of the Portfolio % % % 17% 19% 54% 40%
</TABLE>

(1) Distributions from paid-in capital for the years ended September 30, 1987
through 1992 have been restated to conform with the treatment permitted
under current financial reporting standards. During the year ended
September 30, 1993, the Fund adopted Statement of Position (SOP) 93-2:
Determination, Disclosure and Financial Statement Presentation of Income,
Capital Gain, and Return of Capital Distributions by Investment Companies.
The SOP requires that differences in the recognition or classification of
income between the financial statements and tax earnings and profits that
result in temporary over-distributions for financial statement purposes,
are classified as distributions in excess of net investment income or
accumulated net realized gains.

(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 payable date. Total return is not computed on an
annualized basis.

(3) Includes the Fund's share of the Portfolio's allocated expenses subsequent
to February 1, 1993.

(4) The expense ratios for the year ended September 30, 1995 and periods
thereafter, have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require the Fund, as well as the
Portfolio, to increase its expense ratio by the effect of any expense
offset arrangements with its service providers. The expense ratios for the
prior periods have not been adjusted to reflect this change.

10
<PAGE>

LOGO
Mutual Funds
for People
Who Pay
Taxes

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

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

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

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

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

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

SEC File No. 811-4409 HMP

<PAGE>

PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION

STATEMENT OF
ADDITIONAL INFORMATION
February 1, 1999

EATON VANCE CALIFORNIA MUNICIPALS FUND
EATON VANCE FLORIDA MUNICIPALS FUND
EATON VANCE MASSACHUSETTS MUNICIPALS FUND
EATON VANCE MISSISSIPPI MUNICIPALS FUND
EATON VANCE NEW YORK MUNICIPALS FUND
EATON VANCE OHIO MUNICIPALS FUND
EATON VANCE RHODE ISLAND MUNICIPALS FUND
EATON VANCE WEST VIRGINIA MUNICIPALS FUND

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

This Statement of Additional Information ("SAI") provides general
information about the Funds listed above and their corresponding Portfolios.
Each Fund is a series of Eaton Vance Municipals 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 ...................................... 1
Investment Restrictions ................................... 6
Management and Organization ............................... 7
Investment Advisory and Administrative Services ........... 11
Other Service Providers ................................... 14
Purchasing and Redeeming Shares ........................... 14
Sales Charges ............................................. 16
Performance ............................................... 19
Taxes ..................................................... 20
Portfolio Trading ......................................... 22
Financial Statements ...................................... 24
Appendices:
A: Class A Fees, Performance and Ownership ................ a-1
B: Class B Fees, Performance and Ownership ................ b-1
C: Class I Performance and Ownership ...................... c-1
D: State Specific Information ............................. d-1
E: Yield Tables ........................................... e-1
F: Description of Municipal Obligation Ratings ............ f-1

Although each Fund offers only its shares of beneficial interest, it is
possible that a Fund (or Class) might become liable for a misstatement or
omission in this SAI regarding another Fund (or Class) 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' PROSPECTUS DATED
FEBRUARY 1, 1999, AS SUPPLEMENTED FROM TIME TO TIME, WHICH IS INCORPORATED
HEREIN BY REFERENCE. THIS SAI SHOULD BE READ IN CONJUNCTION WITH THE PROSPECTUS,
WHICH MAY BE OBTAINED BY CALLING 1-800-225-6265.

<PAGE>

STRATEGIES AND RISKS

MUNICIPAL OBLIGATIONS. Municipal obligations are issued to obtain funds for
various public and private purposes. Municipal 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
on which is exempt from federal income tax and is not a tax preference item for
purposes of the AMT: (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. Interest on certain
"private activity bonds" issued after August 7, 1986 is exempt from regular
federal income tax, but such interest (including a distribution by a Fund
derived from such interest) is treated as a tax preference item which could
subject the recipient to or increase the recipient's liability for the AMT. For
corporate shareholders, a Fund's distributions derived from interest on all
municipal obligations (whenever issued) is included in "adjusted current
earnings" for purposes of the AMT as applied to corporations (to the extent not
already included in alternative minimum taxable income as income attributable to
private activity bonds). In assessing the federal income tax treatment of
interest on any municipal obligation, the Portfolios 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.

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 bonds 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 of the industrial user or users. Each Portfolio 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 Portfolio 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 obligation 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. Each Portfolio 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 or 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 a Portfolio as a result of any such event, and a
Portfolio may also manage (or engage other persons to manage) or otherwise deal
with any real estate, facilities or other assets so acquired. The Portfolio
anticipates that real estate consulting and management services may be required
with respect to properties securing various municipal obligations in its
portfolio or subsequently acquired by the Portfolio. The Portfolio will incur
additional expenditures in taking protective action with respect to portfolio
obligations in default and assets securing such obligations.

The yields on municipal obligations will be dependent on a variety of
factors, including purposes of issue and source of funds for repayment, general
money market conditions, general conditions of the municipal bond market, size
of a particular offering, 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 obligations 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 obligations with the same
maturity, coupon and rating may have different yields while obligations of the
same maturity and coupon with different ratings may have the same yield. In
addition, the market price of such obligations will normally fluctuate with
changes in interest rates, and therefore the net asset value of a Portfolio will
be affected by such changes.

STATE-SPECIFIC CONCENTRATION. For a discussion of the risks associated with
investing in municipal obligations of a particular state's issuers, see "Risks
of Concentration" in Appendix D. Each Portfolio may also invest a total of up to
35% of its net assets in the obligations of Puerto Rico, the U.S. Virgin Islands
and Guam. Accordingly, the Portfolio may be adversely affected by local
political and economic conditions and developments within Puerto Rico, the U.S.
Virgin Islands and Guam affecting the issuers of such obligations. Information
about some of these conditions and developments is included in Appendix D.

ISSUER CONCENTRATION. Each Portfolio may invest 25% or more of its total assets
in municipal obligations of the same type. There could be economic, business or
political developments which might affect all municipal obligations of the same
type. In particular, investments in 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, effects of energy conservation
and limitations on the capacity of the capital market to absorb utility debt.

Industrial development bonds are normally secured only by the revenues from
the project and not by state or local government tax payments, they are subject
to a wide variety of risks, many of which relate to the nature of the specific
project. Generally, IDBs are sensitive to the risk of a slowdown in the economy.

MUNICIPAL LEASES. Each Portfolio may invest in municipal leases and
participations therein, which arrangements frequently involve special risks.
Municipal leases are obligations in the form of a lease or installment purchase
arrangement which is issued by state or local governments to acquire equipment
and facilities. Interest income from such obligations is generally exempt from
local and state taxes in the state of issuance. "Participations" in such leases
are undivided interests in a portion of the total obligation. Participations
entitle their holders to receive a pro rata share of all payments under the
lease. The obligation of the issuer to meet its obligations under such leases is
often subject to the appropriation by the appropriate legislative body, on an
annual or other basis, of funds for the payment of the obligations. Investments
in municipal leases are thus subject to the risk that the legislative body will
not make the necessary appropriation and the issuer will not otherwise be
willing or able to meet its obligation.

Certain municipal lease obligations owned by each Portfolio may be deemed
illiquid for the purpose of the Portfolio's 15% limitation on investments in
illiquid securities, unless determined by the investment adviser, pursuant to
guidelines adopted by the Trustees of a Portfolio, 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 a Portfolio. In the
event a Portfolio acquires an unrated municipal lease obligation, the investment
adviser will be responsible for determining the credit quality of such
obligation on an on-going basis, including an assessment of the likelihood that
the lease may or may not be cancelled.

ZERO COUPON BONDS. Zero coupon bonds are debt obligations which do not require
the periodic payment of interest and are issued at a significant discount from
face value. The discount approximates the total amount of interest the bonds
will accrue and compound over the period until maturity at a rate of interest
reflecting the market rate of the security at the time of issuance. Each
Portfolio is required to accrue income from zero-coupon bonds on a current
basis, even though it does not receive that income currently in cash and each
Fund is required to distribute its share of the Portfolio's income for each
taxable year. Thus, a Portfolio may have to sell other investments to obtain
cash needed to make income distributions.

CREDIT QUALITY. While municipal obligations rated investment grade or below and
comparable unrated municipal obligations may have some quality and protective
characteristics, these characteristics can be expected to be offset or
outweighed by uncertainties or major risk exposures to adverse conditions. Lower
rated and comparable unrated municipal obligations are subject to the risk of an
issuer's inability to meet principal and interest payments on the obligations
(credit risk) and may also be subject to greater price volatility due to such
factors as interest rate sensitivity, market perception of the creditworthiness
of the issuer and general market liquidity (market risk). Lower rated or unrated
municipal obligations are also more likely to react to real or perceived
developments affecting market and credit risk than are more highly rated
obligations, which react primarily to movements in the general level of interest
rates.

Municipal obligations held by a Portfolio 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
Portfolio's investment policies. A Portfolio may retain in its portfolio an
obligation whose rating drops below B 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 a Portfolio is downgraded, causing the Portfolio 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 Portfolio's credit quality limitations. In the case of
a defaulted obligation, a Portfolio 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 a Portfolio.

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 a Portfolio invests in lower rated or unrated municipal obligations, the
achievement of the Portfolio's goals is more dependent on the investment
adviser's ability than would be the case if the Portfolio 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.

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 take place within a specified number of days after the date
of a Portfolio's commitment and are subject to certain conditions such as the
issuance of satisfactory legal opinions. Each Portfolio 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 a Portfolio to buy such
securities on a settlement date that could be several months or several years in
the future. Each Portfolio may also purchase instruments that give the Portfolio
the option to purchase a municipal obligation when and if issued.

Each Portfolio 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 a Portfolio enters into the
purchase commitment. When a Portfolio 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 a Portfolio 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 a Portfolio 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 Portfolio's net asset value than if it solely set aside cash
to pay for when-issued securities.

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 Portfolio during a time of declining interest rates, the
Portfolio 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 Portfolio may retain the
bond if interest rates decline.

LIQUIDITY AND PROTECTIVE PUT OPTIONS. Each Portfolio may enter into a separate
agreement with the seller of the security or some other person granting the
Portfolio the right to put the security to the seller thereof or the other
person at an agreed upon price. Each Portfolio intends to limit this type of
transaction to institutions (such as banks or securities dealers) which the
investment adviser believes present minimal 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 a Portfolio or that selling institutions
will be willing to permit a Portfolio to exercise a put to hedge against rising
interest rates. A Portfolio 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 the Trustees of the
Portfolio 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 Portfolio's assets
may be invested in securities as to which the Portfolio, 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 Portfolio 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 Portfolio's net
asset value.

The secondary market for some municipal obligations issued within a state
(including issues which are privately placed with a Portfolio) is less liquid
than that for taxable debt obligations or other more widely traded municipal
obligations. No Portfolio will 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 a Portfolio 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, a Portfolio may be unable to dispose of these
municipal obligations at times when it would otherwise wish to do so at the
prices at which they are valued.

SECURITIES LENDING. Each Portfolio may seek to increase its income by lending
portfolio securities to broker-dealers or other institutional borrowers.
Distributions by a Fund of any income realized by a Portfolio from securities
loans will be taxable. If the management of a Portfolio decides to make
securities loans, it is intended that the value of the securities loaned would
not exceed 30% of a Portfolio'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. Each Portfolio 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 a Portfolio (or of
securities that a Portfolio expects to purchase). To hedge against changes in
rates or as a substitute for the purchase of securities, a Portfolio 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 a
Portfolio 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 Portfolio may purchase and write call and
put options on futures contracts which are traded on a United States exchange or
board of trade. The Portfolio 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 Portfolio's custodian for the benefit of the
futures commission merchant through whom the Portfolio 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 Portfolio from closing out
positions and limiting its losses.

Each Portfolio will engage in futures and related options transactions for
bona fide hedging purposes or non-hedging purposes as defined in or permitted by
CFTC regulations. 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 which it expects to purchase. Each Portfolio 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 a
Fund as a regulated investment company for federal income tax purposes (see
"Taxes").

ASSET COVERAGE REQUIREMENTS. Transactions involving when-issued securities or
futures contracts and options (other than options that the Portfolio has
purchased) expose the Portfolio to an obligation to another party. A Portfolio
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. Each
Portfolio will comply with Securities and Exchange Commission ("SEC") guidelines
regarding cover for these instruments and, if the guidelines so require, set
aside cash or liquid securities in a segregated account with its custodian in
the prescribed amount. The securities in the segregated account will be marked
to market daily.

Assets used as cover or held in a segregated account 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 a Portfolio's assets to segregated accounts
or to cover could impede portfolio management or a Portfolio's ability to meet
redemption requests or other current obligations.

PORTFOLIO TURNOVER. Each Portfolio 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 a 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
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. A Portfolio 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 a Portfolio were replaced once in a period of one year. A
high turnover rate (100% or more) necessarily involves greater expenses to the
Portfolio. Each Portfolio engages in portfolio trading (including short-term
trading) if it believes that a transaction including all costs will help in
achieving its investment objective.

INVESTMENT RESTRICTIONS

The following investment restrictions of each Fund are designated as
fundamental policies and as such cannot be changed without the approval of the
holders of a majority of a Fund's outstanding voting securities, which as used
in this SAI means the lesser of (a) 67% of the shares of a 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 a Fund. Accordingly, each Fund may not:

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

(2) 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;

(3) 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;

(4) Purchase or sell real estate (including limited partnership
interests in real estate but excluding readily marketable interests in real
estate investment trusts or readily marketable securities of companies which
invest or deal in real estate or securities which are secured by real
estate);

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

(6) 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.

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

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

The Funds and the Portfolios have adopted the following investment policies
which may be changed by the Trustees with respect to a Fund without approval by
that Fund's shareholders or with respect to the Portfolio without approval of a
Fund or its other investors. Each Fund and each Portfolio will not:

(a) engage in options, futures or forward transactions if more than 5%
of its net assets, as measured by the aggregate of the premiums paid by the
Fund or the Portfolio, would be so invested;

(b) make short sales of securities or maintain a short position, unless
at all times when a short position is open it owns an equal amount of such
securities or securities convertible into or exchangeable, without payment
of any further consideration, for securities of the same issue as, and equal
in amount to, the securities sold short and unless not more than 25% of the
Fund's net assets (taken at current value) is held as collateral for such
sales at any one time; or

(c) invest more than 15% of its 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 under 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 its delegate, determines to be liquid. The
Fund and the Portfolio have no current intention of investing in 144A
securities.

For purposes of a Portfolio's investment restrictions, the determination of
the "issuer" of a municipal obligation which is not a general obligation bond
will be made by the Portfolio'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 obligations.

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 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, or any subsequent rating
change below investment grade made by a rating service, will not compel the Fund
or the Portfolio, as the case may be, to dispose of such security or other
asset. Where applicable and notwithstanding the foregoing, under normal market
conditions the Fund and the Portfolio must take actions necessary to comply with
the policy of investing at least 65% of total assets in a particular state and
not investing more than 15% of net assets in illiquid securities. Moreover, the
Fund and Portfolio must always be in compliance with the borrowing policies set
forth above.

MANAGEMENT AND ORGANIZATION

FUND MANAGEMENT. The Trustees of the Trust are responsible for the overall
management and supervision of the Trust's affairs. The Trustees and officers of
the Trust and the Portfolios are listed below. Except as indicated, each
individual has held the office shown or other offices in the same company for
the last five years. Unless otherwise noted, the business address of each
Trustee and officer is 24 Federal Street, Boston, Massachusetts 02110. Those
Trustees who are "interested persons" of the Trust or a Portfolio, as defined in
the 1940 Act, are indicated by an asterisk(*).

JESSICA M. BIBLIOWICZ (38), Trustee
President and Chief Operating Officer of John A. Levin & Co. (a registered
investment advisor) (since July, 1997) and a Director of Baker, Fentress &
Company which owns John A. Levin & Co. (since July, 1997). Executive Vice
President of Smith Barney Mutual Funds (from July, 1994 to June, 1997).
Elected Trustee October 30, 1998. Trustee of various investment companies
managed by Eaton Vance or BMR since October 30, 1998.
Address: One Rockefeller Plaza, New York, New York 10020

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

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

SAMUEL L. HAYES, III (63), Trustee
Jacob H. Schiff Professor of Investment Banking Emeritus, Harvard University
Graduate School of Business Administration. Trustee of the Kobrick - Cendant
Investment Trust (mutual funds). Trustee of various investment companies
managed by Eaton Vance or BMR.
Address: 345 Nahatan Road, Westwood, Massachusetts 02090

NORTON H. REAMER (63), Trustee
Chairman of the Board and Chief Executive Officer, United Asset Management
Corporation (a holding company owning institutional investment management
firms); Chairman, President and Director, UAM Funds (mutual funds). Trustee of
various investment companies managed by Eaton Vance or BMR.
Address: One International Place, Boston, Massachusetts 02110

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

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

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

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

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

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

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

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

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

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

In addition, Timothy T. Browse (39), Vice President of Eaton Vance and
BMR, is a Vice President of the West Virginia Portfolio. Cynthia J. Clemson
(35), Vice President of Eaton Vance and BMR, is a Vice President of the
California and Mississippi Portfolios. Ms. Clemson and Mr. Browse are officers
of various investment companies managed by Eaton Vance or BMR.

Messrs. Hayes (Chairman), Reamer and Thorndike are members of the Special
Committee of the Board of Trustees of the Trust and of the Portfolios. 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 Portfolios, 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 Portfolios or investors therein.

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

Messrs. Treynor (Chairman) and Dwight are members of the Audit Committee of
the Board of Trustees of the Trust and of the Portfolios. 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 Portfolios.

Trustees of the Portfolios 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 a 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 Portfolios' assets, liabilities, and net
income per share, and will not obligate a Portfolio to retain the services of
any Trustee or obligate a Portfolio to pay any particular level of compensation
to the Trustee. Neither the Portfolios nor the Trust has a retirement plan for
its Trustees.

The fees and expenses of the noninterested Trustees of the Trust and of the
Portfolios are paid by the Funds (and the other series of the Trust) and the
Portfolios, respectively. (The Trustees of the Trust and the Portfolios who are
members of the Eaton Vance organization receive no compensation from the Trust
or the Portfolios). During the fiscal year ended September 30, 1998, the
noninterested Trustees of the Trust and the Portfolio received the following
compensation in their capacities as Trustees from the Trust, the Portfolio and
the funds in the Eaton Vance fund complex(1):

<TABLE>
<CAPTION>
SAMUEL L. JOHN L.
JESSICA M. DONALD R. HAYES, III NORTON H. LYNN A. THORNDIKE JACK L.
SOURCE OF COMPENSATION BIBLIOWICZ(9) DWIGHT(3) (4) REAMER STOUT(9) (5) TREYNOR

<S> <C> <C> <C> <C> <C> <C> <C>
Trust(2) $ -- $ 14,811 $ 14,340 $ 13,789 $ -- $ 14,296 $ 15,808
California Portfolio -- 3,607 3,802 3,580 -- 3,669 3,973
Florida Portfolio -- 4,272 4,443 4,191 -- 4,310 4,677
Massachusetts Portfolio -- 2,934 3,146 2,945 -- 3,018 3,247
Mississippi Portfolio -- 37 36 35 -- 36 40
New York Portfolio -- 4,499 4,666 4,411 -- 4,531 4,926
Ohio Portfolio -- 3,161 3,369 3,164 -- 3,239 3,497
Rhode Island Portfolio -- 372 360 346 -- 359 397
West Virginia Portfolio -- 372 360 346 -- 359 397
Trust and Fund Complex $ -- $156,250(6) $166,250(7) $156,250 $ -- $156,250(8) $165,000
</TABLE>

- ----------
(1) As of February 1, 1999, the Eaton Vance fund complex consists of registered
investment companies or series thereof.
(2) The Trust consisted of 29 Funds as of September 30, 1998.
(3) Mr. Dwight received deferred compensation from each Portfolio as follows:
California -- $1,812 Florida -- $2,130; Massachusetts -- $1,467;
Mississippi -- $19; New York -- $2,261 Ohio -- $1,588; Rhode Island --
$187; and West Virginia -- $187.
(4) Mr. Hayes received deferred compensation from each Portfolio as follows:
California -- $1,300; Florida -- $1,518; Massachusetts -- $1,075;
Mississippi -- $12; New York -- $1,596; Ohio -- $1,152; Rhode Island --
$123; and West Virginia -- $123.
(5) Mr. Thorndike received deferred compensation from each Portfolio as
follows: California -- $3,662; Florida -- $4,301; Massachusetts -- $3,011;
Mississippi -- $36; New York -- $4,522; Ohio -- $3,232; Rhode Island --
$358; and West Virginia -- $358.
(6) Includes $56,250 of deferred compensation.
(7) Includes $41,563 of deferred compensation.
(8) Includes $115,790 of deferred compensation.
(9) Ms. Bibliowicz and Ms. Stout were elected as Trustees on October 30, 1998
and will receive compensation approximating the other Trustees after
November 1, 1998.

ORGANIZATION. Each 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. Each Fund changed its name from Eaton Vance [state name] Tax
Free Fund to EV Marathon [state name] Tax Free Fund on December 21, 1993 for the
Mississippi, Rhode Island and West Virginia Funds and on February 1, 1994 for
the California, Florida, Massachusetts, New York and Ohio Funds, and then to EV
Marathon [state name] Municipals Fund on December 8, 1995. Each Fund was
reorganized into multiple classes and changed its name to Eaton Vance [state
name] Municipals Fund on October 1, 1997. The operations of the Class B reflect
the operations of a Fund prior to October 1, 1997. Class A and Class I are
successors to the operations of a separate series of the Trust.

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 divided the shares of each Fund into multiple classes. Each class
represents an interest in a 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 a Fund will be voted
together except that only shareholders of a particular class may vote on matters
affecting only that class. Shares have no preemptive or conversion rights and
are freely transferable. In the event of the liquidation of a Fund, shareholders
of each class are entitled to share pro rata in the net assets attributable to
that class available for distribution to shareholders.

The Trustees of the Trust have considered the advantages and disadvantages
of investing the assets of each Fund in its corresponding 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
Portfolios, may afford the potential for economies of scale for each Fund and
may over time result in lower expenses for a Fund.

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

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

The Trust's Declaration of Trust may be amended by the Trustees when
authorized by vote of a majority of the outstanding voting securities of the
Trust, the financial interests of which are affected by the amendment. The
Trustees may also amend the Declaration of Trust without the vote or consent of
shareholders to change the name of the Trust or any series or to make such other
changes (such as reclassifying series of classes of shares or restructuring the
Trust) as do not have a materially adverse effect on the financial interests of
shareholders or if they deem it necessary to conform it to applicable federal or
state laws or regulations. The Trust or any series or class thereof may be
terminated by: (1) the affirmative vote of the holders of not less than
two-thirds of the shares outstanding and entitled to vote at any meeting of
shareholders of the Trust or the appropriate series or class thereof, or by an
instrument or instruments in writing without a meeting, consented to by the
holders of two-thirds of the shares of the Trust or a series or class thereof,
provided, however, that, if such termination is recommended by the Trustees, the
vote of a majority of the outstanding voting securities of the Trust or a series
or class thereof entitled to vote thereon shall be sufficient authorization; or
(2) by means of an instrument in writing signed by a majority of the Trustees,
to be followed by a written notice to shareholders stating that a majority of
the Trustees has determined that the continuation of the Trust or a series or a
class thereof is not in the best interest of the Trust, such series or class or
of their respective shareholders.

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

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

Each 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 each 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 each 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.

Each Portfolio's Declaration of Trust provides that a 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.

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

Whenever a 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. A Fund shall vote shares for which it receives no voting
instructions in the same proportion as the shares for which it receives voting
instructions. Other investors in a Portfolio may alone or collectively acquire
sufficient voting interests in the Portfolio to control matters relating to the
operation of the Portfolio, which may require the Fund to withdraw its
investment in the Portfolio or take other appropriate action. Any such
withdrawal could result in a distribution "in kind" of portfolio securities (as
opposed to a cash distribution from the Portfolio). If securities are
distributed, a Fund could incur brokerage, tax or other charges in converting
the securities to cash. In addition, the distribution in kind may result in a
less diversified portfolio of investments or adversely affect the liquidity of a
Fund. Notwithstanding the above, there are other means for meeting shareholder
redemption requests, such as borrowing.

A Fund may withdraw (completely redeem) all its assets from its
corresponding Portfolio at any time if the Board of Trustees of the Trust
determines that it is in the best interest of that Fund to do so. In the event a
Fund withdraws all of its assets from its corresponding Portfolio, or the Board
of Trustees of the Trust determines that the investment objective of such
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 such 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 its
corresponding Portfolio.

INVESTMENT ADVISORY AND ADMINISTRATIVE SERVICES

INVESTMENT ADVISORY SERVICES. BMR manages the investments and affairs of each
Portfolio subject to the supervision of the Portfolio's Board of Trustees. BMR
furnishes to the Portfolios 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. Each 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 each Portfolio pays BMR, see the
prospectus. The following table sets forth the net assets of each Portfolio and
the advisory fees earned during the three fiscal years ended September 30, 1998.

<TABLE>
<CAPTION>
ADVISORY FEE FOR FISCAL YEARS ENDED
NET ASSETS ----------------------------------------------------------------
PORTFOLIO AT 9/30/98 SEPTEMBER 30, 1998 SEPTEMBER 30, 1997 SEPTEMBER 30, 1996

<S> <C> <C> <C> <C>
California $ $1,687,887 $1,942,811
Florida 2,593,352 3,123,150
Massachusetts 1,203,548 1,343,099
Mississippi(1) 44,507 55,976
New York 2,603,611 2,932,032
Ohio 1,272,425 1,404,951
Rhode Island(2) 96,316 108,803
West Virginia 86,026 95,361
</TABLE>
- ----------
(1) To enhance the net income of the Mississippi Portfolio, BMR made a reduction
of its advisory fee for the fiscal year ended September 30, 1996 in the
amount of $27,990.
(2) To enhance the net income of the Rhode Island Portfolio, BMR made a
reduction of its advisory fee for the fiscal years ended September 30, 1997
and 1996 in the amount $47,940 and $53,561, respectively.

Each Investment Advisory Agreement with BMR 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 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. 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, and the Agreement will terminate automatically in
the event of its assignment. Each Agreement provides that BMR may render
services to others. Each 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 each 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 Funds' 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 the Funds.

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

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

Eaton Vance and its affiliates act as adviser to a family of mutual funds,
and individual and various institutional accounts, including corporations,
hospitals, retirement plans, universities, foundations and trusts. Eaton Vance
mutual funds feature international equities, domestic equities, tax-free
municipal bonds, and U.S. government and corporate bonds. Lloyd George
Management has advised Eaton Vance's international equity funds since 1992.
Founded in 1991, Lloyd George is headquartered in Hong Kong with offices in
London and Mumbai, India. It has established itself as a leader in investment
management in Asian equities and other global markets. Lloyd George features an
experienced team of investment professionals that began working together in the
mid-1980s. Lloyd George analysts cover East Asia, the India subcontinent, Russia
and Eastern Europe, Latin America, Australia and New Zealand from offices in
Hong Kong, London and Mumbai. Together Eaton Vance and Lloyd George manage over
$28 billion in assets. Eaton Vance mutual funds are distributed by the principal
underwriter both within the United States and offshore.

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

Eaton Vance offers single-state tax-free portfolios in more states than any
other sponsor of mutual funds. There are 32 long-term state portfolios, 4
national portfolios and 9 limited maturity portfolios, which serve as investment
vehicles for over 44 mutual funds with varying pricing options. A staff of 26
(including 5 portfolio managers and 11 credit specialists) is responsible for
the day-to-day management of over 3,500 issues in 45 mutual fund portfolios.
Assets managed by the municipal investment group are currently over $7.6
billion. The investment philosophy of the municipal investment group is to: seek
value by avoiding unnecessary credit risk; build portfolios one security at a
time; and take a long-term approach to managing market risk. Over the long-term,
the group seeks to maximize tax-free income by keeping portfolios fully invested
(rather than trying to "time the market" for short-term results) and reduce
potential capital losses due to poor credit quality. Diligent and continuing
research and analysis are a critical component of the municipal investment
group's investment philosophy and long-term strategy.

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

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

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

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

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

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

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

EXPENSES. Each Fund and Portfolio is 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, 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 the fee paid to the principal underwriter for
handling share repurchases.

OTHER SERVICE PROVIDERS

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

CUSTODIAN. Investors Bank & Trust Company ("IBT"), 200 Clarendon Street, Boston,
MA 02116, serves as custodian to the Funds and Portfolios. IBT has the custody
of all cash and securities representing a Fund's interest in a Portfolio, has
custody of each Portfolio's assets, maintains the general ledger of each
Portfolio and each Fund and computes the daily net asset value of interests in
each 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 Portfolios' investments, receives and
disburses all funds and performs various other ministerial duties upon receipt
of proper instructions from the Trust and the Portfolios. 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. Deloitte & Touche LLP, 125 Summer Street, Boston,
Massachusetts, are the independent accountants of the Funds and the Portfolios,
providing audit services, tax return preparation, and assistance and
consultation with respect to the preparation of filings with the SEC.

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

PURCHASING AND REDEEMING SHARES

CALCULATION OF NET ASSET VALUE. The net asset value of each 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. 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 Portfolio, 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 Portfolio. Other assets are valued at fair value using
methods determined in good faith by or at the direction of the Trustees of the
Portfolio. The Funds and the Portfolios will be closed for business and will not
price their respective shares or interests on the following business holidays:
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.

Each investor in a Portfolio, including a 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".

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 a 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 a Fund, either totally or partially, by a
distribution in kind of readily marketable securities withdrawn from its
corresponding 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.

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 a 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.

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, although they are a return of principal, may
require the recognition of taxable gain or loss. Income dividends and capital
gains distributions in connection with withdrawal plan accounts will be credited
at net asset value as of the record date for each distribution. Continued
withdrawals in excess of current income will eventually use up principal,
particularly in a period of declining market prices. A shareholder may not have
a withdrawal plan in effect at the same time he or she has authorized Bank
Automated Investing or is otherwise making regular purchases of Fund shares. The
shareholder, the transfer agent or the principal underwriter will be able to
terminate the withdrawal plan at any time without penalty.

SALES CHARGES

The principal underwriter may, from time to time, at its own expense, provide
additional incentives to investment dealers which employ registered
representatives who sell Fund shares and/or shares of other funds distributed by
the principal underwriter. In some instances, such additional incentives may be
offered only to certain investment dealers whose representatives sell or are
expected to sell significant amounts of shares. In addition, the principal
underwriter may from time to time increase or decrease the sales commissions
payable to investment dealers. The principal underwriter may allow, upon notice
to all investment dealers with whom it has agreements, discounts up to the full
sales charge during the periods specified in the notice. During periods when the
discount includes the full sales charge, such investment dealers may be deemed
to be underwriters as that term is defined in the Securities Act of 1933.

SALES CHARGE WAIVERS. Class A shares may be sold at net asset value to current
and retired Directors and Trustees of Eaton Vance funds, including the
Portfolios; to clients and current and retired officers and employees of Eaton
Vance, its affiliates and other investment advisers of Eaton Vance sponsored
funds; to registered representatives and employees of investment dealers and
bank employees who refer customers to registered representatives of invetment
dealers; to officers and employees of IBT and the transfer agent; and to such
persons' spouses, parents, siblings and children and their beneficial accounts.
Class A shares may also be issued at net asset value (1) in connection with the
merger of an investment company or series thereof with a Fund, (2) to investors
making an investment as part of a fixed fee program whereby an entity
unaffiliated with the investment adviser provides multiple investment services,
such as management, brokerage and custody, and (3) to investment advisors,
financial planners or other intermediaries who place trades for their own
accounts or the accounts of their clients and who charge a management,
consulting or other fee for their services; clients of such investment advisors,
financial planners or other intermediaries who place trades for their own
accounts if the accounts are linked to the master account of such investment
advisor, financial planner or other intermediary on the books and records of the
broker or agent; and retirement and deferred compensation plans and trusts used
to fund those plans, including, but not limited to, those defined in Section
401(a), 403(b) or 457 of the Internal Revenue Code of 1986, as amended (the
"Code") and "rabbi trusts". Subject to the applicable provisions of the 1940
Act, the Trust may issue Class A shares at net asset value in the event that an
investment company (whether a regulated or private investment company or a
personal holding company) is merged or consolidated with or acquired by the
Class. Normally no sales charges will be paid in connection with an exchange of
Class A shares for the assets of such investment company. Class A shares may be
sold at net asset value to any investment advisory, agency, custodial or trust
account managed or administered by Eaton Vance or by any parent, subsidiary or
other affiliate of Eaton Vance. Class A shares are offered at net asset value to
the foregoing persons and in the foregoing situations because either (i) there
is no sales effort involved in the sale of shares or (ii) the investor is paying
a fee (other than the sales charge) to the investment dealer involved in the
sale.

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

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

RIGHT OF ACCUMULATION. The applicable sales charge level for the purchase of
Class A shares is calculated by taking the dollar amount of the current purchase
and adding it to the value (calculated at the maximum current offering price) of
the Class A shares the shareholder owns in his or her account(s) in the Fund,
and shares of other funds exchangeable for Class A shares. The sales charge on
the shares being purchased will then be at the rate applicable to the aggregate.
Shares purchased (i) by an individual, his or her spouse and their children
under the age of twenty-one, and (ii) by a trustee, guardian or other fiduciary
of a single trust estate or a single fiduciary account, will be combined for the
purpose of determining whether a purchase will qualify for the Right of
Accumulation and if qualifying, the applicable sales charge level. For any such
discount to be made available, at the time of purchase a purchaser or his or her
investment dealer must provide the principal underwriter (in the case of a
purchase made through an investment dealer) or the transfer agent (in the case
of an investment made by mail) with sufficient information to permit
verification that the purchase order qualifies for the accumulation privilege.
Confirmation of the order is subject to such verification. The Right of
Accumulation privilege may be amended or terminated at any time as to purchases
occurring thereafter.

DISTRIBUTION AND SERVICE PLANS. The Trust has adopted a Service Plan (the "Class
A Plan") for each 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 each Class A may make service fee payments for personal services
and/or the maintenance of shareholder accounts to the principal underwriter,
investment dealers and other persons in amounts not exceeding .25% of its
average daily net assets for any fiscal year. The Trustees of the Trust have
initially implemented the Class A Plan by authorizing Class A to make quarterly
service fee payments to the principal underwriter and investment dealers in
amounts not expected to exceed .20% of its average daily net assets for any
fiscal year which is based on the value of Class A shares sold by such persons
and remaining outstanding for at least twelve months. However, the Class A Plan
authorizes the Trustees of the Trust to increase payments without action by
Class A shareholders of any Fund, provided that the aggregate amount of payments
made in any fiscal year does not exceed .25% of average daily net assets. For
the service fees paid by Class A shares, see Appendix A.

The Trust has also adopted a compensation-type Distribution Plan ("Class B
Plan") pursuant to Rule 12b-1 under the 1940 Act for each Fund's Class B shares.
The 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 each Fund will pay sales commissions
and distribution fees to the principal underwriter only after and as a result of
the sale of Class B shares of the Fund. On each sale of Fund shares (excluding
reinvestment of distributions) each Fund will pay the principal underwriter
amounts representing (i) sales commissions equal to 5% of the amount received by
the Fund for each Class B 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
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 Class B shares
and for interest expenses. The principal underwriter uses its own funds to pay
sales commissions (except on exchange transactions and reinvestments) to
investment dealers at the time of sale equal to 4% of the purchase price of the
Class B 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 Class B 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 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
Plan.

The Class B Plan also authorizes each Class B 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 of the Class B Plan by
authorizing each Class B to make quarterly service fee payments to the principal
underwriter and investment dealers in amounts not expected to exceed .20% of the
average daily net assets for any fiscal year which is based on the value of
Class B shares sold by such persons and remaining outstanding for at least 12
months. This fee is paid quarterly in arrears based on the value of Class B
shares sold by such persons and remaining outstanding for at least twelve
months. For the service fees paid by Class B shares, see Appendix B.

Currently, payments of sales commissions and distribution fees and of
service fees may equal 1% of 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 Plan 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 Plan. The Eaton Vance organization may be
considered to have realized a profit under the Plan if at any point in time the
aggregate amounts theretofore received by the principal underwriter pursuant to
the Plan and from CDSCs have exceeded the total expenses theretofore incurred by
such organization in distributing Class B shares of the Fund. Total expenses for
this purpose will include an allocable portion of the overhead costs of such
organization and its branch offices, which costs will include without limitation
leasing expense, depreciation of building and equipment, utilities,
communication and postage expense, compensation and benefits of personnel,
travel and promotional expense, stationery and supplies, literature and sales
aids, interest expense, data processing fees, consulting and temporary help
costs, insurance, taxes other than income taxes, legal and auditing expense and
other miscellaneous overhead items. Overhead is calculated and allocated for
such purpose by the Eaton Vance organization in a manner deemed equitable to the
Trust.

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

The Trustees of the Trust believe that each Plan will be a significant
factor in the expected growth of each Fund's assets, and will result in
increased investment flexibility and advantages which have benefitted and will
continue to benefit the Fund and its shareholders. Payments for sales
commissions and distribution fees made to the principal underwriter under the
Class B Plan will compensate the principal underwriter for its services and
expenses in distributing Class B shares of the Fund. Service fee payments made
to the principal underwriter and 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 a
Fund by multiplying a hypothetical initial purchase order of $1,000 by the
average annual compound rate of return (including capital appreciation/
depreciation, and distributions paid and reinvested) for the stated period and
annualizing the result. The calculation assumes (i) that all distributions are
reinvested at net asset value on the reinvestment dates during the period, (ii)
the deduction of the maximum sales charge from the initial $1,000 purchase order
for Class A shares, (iii) a complete redemption of the investment and, (iv) the
deduction of any CDSC at the end of the period. For further information
concerning the total return of the Classes of a Fund, see Appendix A, Appendix B
and Appendix C.

Yield is computed separately for each Class of a Fund pursuant to a
standardized formula by dividing the net investment income per share earned
during a recent thirty-day period by the maximum offering price (including the
maximum initial sales charge for Class A shares) per share on the last day of
the period and annualizing the resulting figure. Net investment income per share
is calculated from the yields to maturity of all debt obligations held by the
Portfolio based on prescribed methods, reduced by accrued Fund and Class
expenses for the period with the resulting number being divided by the average
daily number of Class shares outstanding and entitled to receive distributions
during the period. This yield figure does not reflect the deduction of any CDSCs
which (if applicable) are imposed upon certain redemptions at the rates set
forth under "Sales Charges" in the prospectus. Yield calculations assume the
current maximum initial sales charge for Class A shares set forth under "Sales
Charges" in the prospectus. (Actual yield may be affected by variations in sales
charges on investments). A taxable-equivalent yield is computed by using the
tax-exempt yield and dividing by 1 minus a stated rate.

Each Fund may also publish total return figures for each Class which do not
take into account any sales charge. Any performance figure which does not take
into account a sales charge would be reduced to the extent such charge is
imposed. Each Fund's performance may be compared in publications to the
performance of various indices and investments for which reliable data is
available, and to averages, performance rankings or ratings, or other
information prepared by recognized mutual fund statistical services. A Fund's
performance may differ from that of other investors in its corresponding
Portfolio, including other investment companies.

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

Information about portfolio allocation and holdings of a Portfolio 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 Portfolio's bond holdings on such date.

Comparative information about the yield of a 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 tax 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, Donoghues Money Fund Averages,
RateGram or The Wall Street Journal.

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. Each Fund has elected to be treated and intends to qualify each
year, as a regulated investment company ("RIC") under the Code. Accordingly,
each Fund intends to satisfy certain requirements relating to sources of its
income and diversification of its assets and to distribute substantially all of
its ordinary income (including tax-exempt income) and net income (after
reduction by any available capital loss carryforwards) in accordance with the
timing requirements imposed by the Code, so as to maintain its RIC status and to
avoid paying any federal income or excise tax. Each Fund so qualified for its
fiscal year ended September 30, 1998. Because each Fund invests its assets in a
Portfolio, the Portfolio normally must satisfy the applicable source of income
and diversification requirements in order for the Fund to also satisfy these
requirements. Each Portfolio will allocate at least annually among its
investors, including a Fund, each investor's distributive share of the
Portfolio's net taxable (if any) and tax-exempt investment income, net realized
capital gains, and any other items of income, gain, loss, deduction or credit.
For purposes of applying the requirements of the Code regarding qualification as
a RIC, each Fund (i) will be deemed to own its proportionate share of each of
the assets of the corresponding Portfolio and (ii) will be entitled to the gross
income of that Portfolio attributable to such share.

In order to avoid incurring a federal excise tax obligation, the Code
requires that each Fund distribute (or be deemed to have distributed) by
December 31 of each calendar year at least 98% of its ordinary income (not
including tax-exempt income) for such year, at least 98% of its capital gain net
income (which is the excess of its realized capital gains over its realized
capital losses), generally computed on the basis of the one-year period ending
on October 31 of such year, after reduction by (i) any available capital loss
carryforwards and (ii) 100% of any income from the prior year (as previously
computed) that was not paid out during such year and on which the Fund paid no
federal income tax. Under current law, provided that a Fund qualifies as a RIC
and a 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.

A Portfolio'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 to interests in the
Portfolio and, in order to enable the relevant Fund to distribute its
proportionate share of this income and avoid a tax payable by the Fund, the
Portfolio may be required to liquidate securities that it might otherwise have
continued to hold in order to generate cash that the Fund may withdraw from the
Portfolio to make distributions to Fund shareholders.

Investments in lower-rated or unrated securities may present special tax
issues for a Portfolio (and, hence, for the relevant 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
a Portfolio's taking certain positions in connection with ownership of such
distressed securities. For example, the Code is unclear regarding: (i) when a
Portfolio 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 a 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 a Fund to be entitled to pay the tax-exempt interest income allocated to it
by its corresponding Portfolio 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). For
purposes of applying this 50% requirement, the Fund will be deemed to own its
proportionate share of each of the assets of the Portfolio, and the Portfolio
currently intends to invest its assets in a manner such that the Fund can meet
this 50% requirement. Interest on certain municipal obligations is treated as a
tax preference item for purposes of the AMT. Shareholders of each Fund are
required to report tax-exempt interest on their federal income tax returns.

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 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 after 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.

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 a
Portfolio and the value of the securities held by it may be affected.

In the course of managing its investments, a Portfolio 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. A Portfolio 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 a 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 corresponding Portfolio and allocated to the
Fund. Certain distributions of a Fund, 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.

A Portfolio's transactions in options and futures contracts will be subject
to special tax rules that may affect the amount, timing and character of Fund
distributions to shareholders. For example, certain positions held by a
Portfolio 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 a Portfolio that substantially diminish the
Portfolio'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 Portfolio losses, adjustments in the holding periods of Portfolio securities,
and conversion of short-term capital losses into long-term capital losses. A
Portfolio may have to limit its activities in options and futures contracts in
order to enable the relevant Fund to maintain its RIC status.

Any loss realized upon the sale or exchange of shares of a Fund with a tax
holding period of 6 months or less will be disallowed to the extent the
shareholder has received tax-exempt interest with respect to such shares and, to
the extent the loss exceeds the disallowed amount, will be treated as a
long-term capital loss to the extent of any distribution treated as net
long-term capital gains with respect to such shares. In addition, a loss
realized on a redemption or other disposition of Fund shares may be disallowed
to the extent the shareholder acquired other Fund shares (whether through the
reinvestment of distributions or otherwise) within the period beginning 30 days
before the redemption of the loss shares and ending 30 days after such date.

Amounts paid by a 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 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 a Fund. See Appendix C for state tax information
for some states.

PORTFOLIO TRADING

Decisions concerning the execution of portfolio security transactions,
including the selection of the market and the executing firm, are made by BMR.
BMR is also responsible for the execution of transactions for all other accounts
managed by it. BMR places the portfolio security transactions of each Portfolio
and of all other accounts managed by it for execution with many firms. BMR uses
its best efforts to obtain execution of portfolio security transactions at
prices which are advantageous to each Portfolio and at reasonably competitive
spreads or (when a disclosed commission is being charged) at reasonably
competitive commission rates. In seeking such execution, BMR will use its best
judgment in evaluating the terms of a transaction, and will give consideration
to various relevant factors, including without limitation the full range and
quality of the executing firm's services, the value of the brokerage and
research services provided, the responsiveness of the firm to BMR, 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 Portfolios 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 Portfolios 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 Portfolio will incur a brokerage commission.
Although spreads or commissions on portfolio security transactions will, in the
judgment of BMR, be reasonable in relation to the value of the services
provided, spreads or commissions exceeding those which another firm might charge
may be paid to firms who were selected to execute transactions on behalf of the
Portfolios and BMR's other clients for providing brokerage and research services
to BMR.

The following table shows brokerage commission paid by each Portfolio during
the three fiscal years ended September 30, 1998:

PORTFOLIO 9/30/98 9/30/97 9/30/96

California ............ $20,355 $ 5,115
Florida ............... 91,541 21,746
Massachusetts ......... 14,636 37,917
Mississippi ........... 1,372 4,552
New York .............. 17,759 94,192
Ohio .................. -0- -0-
Rhode Island .......... 1,654 8,186
West Virginia ......... 4,394 10,423

All of such portfolio security transactions were directed 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), and the amounts of such transactions for the
fiscal year ended September 30, 1998 were as follows: California -- $ ; Florida
- -- $ ; Massachusetts -- $ ; Mississippi -- $ ; New York -- $ ; Rhode Island -- $
; and West Virginia -- $ .

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 either on the basis of that particular transaction or on the basis
of overall responsibilities which BMR and its affiliates have for accounts over
which they exercise investment discretion. In making any such determination, BMR
will not attempt to place a specific dollar value on the brokerage and research
services provided or to determine what portion of the commission should be
related to such services. Brokerage and research services may include advice as
to the value of securities, the advisability of investing in, purchasing, or
selling securities, and the availability of securities or purchasers or sellers
of securities; furnishing analyses and reports concerning issuers, industries,
securities, economic factors and trends, portfolio strategy and the performance
of accounts; effecting securities transactions and performing functions
incidental thereto (such as clearance and settlement); and the "Research
Services" referred to in the next paragraph.

It is a common practice of the investment advisory industry and of the
advisers of investment companies, institutions and other investors to receive
research, analytical, statistical and quotation services, data, information and
other services, products and materials which assist such advisers in the
performance of their investment responsibilities ("Research Services") from
broker-dealer firms which execute portfolio transactions for the clients of such
advisers and from third parties with which such broker-dealers have
arrangements. Consistent with this practice, BMR receives Research Services from
many broker-dealer firms with which BMR places the Portfolios' transactions and
from third parties with which these broker-dealers have arrangements. These
Research Services include such matters as general economic, political, business
and market information, industry and company reviews, evaluations of securities
and portfolio strategies and transactions, proxy voting data and analysis
services, technical analysis of various aspects of the securities markets,
recommendations as to the purchase and sale of securities and other portfolio
transactions, financial, industry and trade publications, news and information
services, pricing and quotation equipment and services, and research oriented
computer hardware, software, data bases and services. Any particular Research
Service obtained through a broker-dealer may be used by BMR in connection with
client accounts other than those accounts which pay commissions to such
broker-dealer. Any such Research Service may be broadly useful and of value to
BMR in rendering investment advisory services to all or a significant portion of
its clients, or may be relevant and useful for the management of only one
client's account or of a few clients' accounts, or may be useful for the
management of merely a segment of certain clients' accounts, regardless of
whether any such account or accounts paid commissions to the broker-dealer
through which such Research Service was obtained. The advisory fee paid by each
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 Portfolios 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 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 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 Funds 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.

Municipal obligations considered as investments for the Portfolios may also
be appropriate for other investment accounts managed by BMR or its affiliates.
Whenever decisions are made to buy or sell securities by a 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 a 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
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 Portfolios that the benefits from the BMR organization outweigh any
disadvantage that may arise from exposure to simultaneous transactions.

FINANCIAL STATEMENTS

The audited financial statements of and the independent auditors' reports
for the Funds and the Portfolios, appear in the Funds' most recent annual report
to shareholders and are incorporated by reference into this SAI. A copy of the
Funds' annual report accompanies this SAI. Consistent with applicable law,
duplicate mailings of shareholder reports and certain other Fund information to
shareholders residing at the same address may be eliminated.
<PAGE>

APPENDIX A

CLASS A FEES, PERFORMANCE AND OWNERSHIP

SERVICE FEES
For the fiscal year ended September 30, 1998, the following table shows (1)
amount of service fees on Class A shares paid under the Plan, and (2) amount of
service fees on Class A shares paid to investment dealers. The service fees paid
by the Funds that were not paid to investment dealers were retained by the
principal underwriter.

SERVICE FEES TO
CLASS A SERVICE FEES INVESTMENT DEALERS

California ......................... $ $
Florida ............................
Massachusetts ......................
Mississippi ........................
New York ...........................
Ohio ...............................
Rhode Island .......................
West Virginia ......................

PRINCIPAL UNDERWRITER
The total sales charges paid in connection with sales of Class A shares
during the fiscal year ended September 30, 1998 follow:

TOTAL SALES SALES CHARGES TO SALES CHARGES TO
CLASS A CHARGES INVESTMENT DEALERS PRINCIPAL UNDERWRITER

California ......... $ $ $
Florida ............
Massachusetts ......
Mississippi ........
New York ...........
Ohio ...............
Rhode Island .......
West Virginia ......

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 September 30, 1998,
Class A paid the principal underwriter for repurchase transactions handled by it
$2.50 for each such transaction which aggregated as follows: California -- $ ;
Florida -- $ ; Massachusetts -- $ ; Mississippi -- $ ; New York -- $ ; Ohio -- $
; Rhode Island -- $ and West Virginia -- $ .

PERFORMANCE INFORMATION

The tables below indicate the cumulative and average annual total return on
a hypothetical investment in shares of $1,000. Total return for the period prior
to October 1, 1997 reflects the total return of a predecessor to Class A. Total
return prior to the Predecessor Fund's commencement of operations reflects the
total return of Class B, adjusted to reflect the Class A sales charge. The Class
B total return has not been adjusted to reflect certain other expenses (such as
distribution and/or service fees). If such adjustments were made, the Class A
total return would be different. 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. Information
presented with two asterisks (**) includes the effect of subsidizing expenses.
Returns would have been lower without subsidies.

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

TOTAL RETURN TOTAL RETURN
EXCLUDING MAXIMUM INCLUDING MAXIMUM
VALUE OF VALUE OF SALES CHARGE SALES CHARGE
INVESTMENT INVESTMENT INITIAL INVESTMENT --------------------------- ----------------------------
PERIOD* DATE INVESTMENT ON 9/30/98 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ------------------------- ------------- -------------- ------------- ------------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
10 Years Ended
9/30/98** 9/30/88 $ $ % % % %
5 Years Ended
9/30/98** 9/30/93 $ $ % % % %
1 Year Ended
9/30/98** 9/30/97 $ $ % % % %
- ------------
*Predecessor Fund commenced operations May 27, 1994.

<CAPTION>
VALUE OF A $1,000 INVESTMENT -- FLORIDA

TOTAL RETURN TOTAL RETURN
EXCLUDING MAXIMUM INCLUDING MAXIMUM
VALUE OF VALUE OF SALES CHARGE SALES CHARGE
INVESTMENT INVESTMENT INITIAL INVESTMENT --------------------------- ----------------------------
PERIOD* DATE INVESTMENT ON 9/30/98 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ------------------------- ------------- -------------- ------------- ------------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Life of the Fund** 8/28/90 $ $ % % % %
5 Years Ended
9/30/98** 9/30/93 $ $ % % % %
1 Year Ended
9/30/98** 9/30/97 $ $ % % % %
- ------------
*Predecessor Fund commenced operations April 5, 1994.

<CAPTION>
VALUE OF A $1,000 INVESTMENT -- MASSACHUSETTS

TOTAL RETURN TOTAL RETURN
EXCLUDING MAXIMUM INCLUDING MAXIMUM
VALUE OF VALUE OF SALES CHARGE SALES CHARGE
INVESTMENT INVESTMENT INITIAL INVESTMENT --------------------------- ----------------------------
PERIOD* DATE INVESTMENT ON 9/30/98 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ------------------------- ------------- -------------- ------------- ------------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Life of the Fund** 4/18/91 $ $ % % % %
5 Years Ended
9/30/98** 9/30/93 $ $ % % % %
1 Year Ended
9/30/98** 9/30/97 $ $ % % % %
- ------------
*Predecessor Fund commenced operations December 7, 1993.

<CAPTION>
VALUE OF A $1,000 INVESTMENT -- MISSISSIPPI

TOTAL RETURN TOTAL RETURN
EXCLUDING MAXIMUM INCLUDING MAXIMUM
VALUE OF VALUE OF SALES CHARGE SALES CHARGE
INVESTMENT INVESTMENT INITIAL INVESTMENT --------------------------- ----------------------------
PERIOD* DATE INVESTMENT ON 9/30/98 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ------------------------- ------------- -------------- ------------- ------------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Life of the Fund** 6/11/93 $ $ % % % %
1 Year Ended
9/30/98** 9/30/97 $ $ % % % %
- ------------
*Predecessor Fund commenced operations December 7, 1993.

<CAPTION>
VALUE OF A $1,000 INVESTMENT -- NEW YORK

TOTAL RETURN TOTAL RETURN
EXCLUDING MAXIMUM INCLUDING MAXIMUM
VALUE OF VALUE OF SALES CHARGE SALES CHARGE
INVESTMENT INVESTMENT INITIAL INVESTMENT --------------------------- ----------------------------
PERIOD* DATE INVESTMENT ON 9/30/98 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ------------------------- ------------- -------------- ------------- ------------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Life of the Fund 8/30/90 $ $ % % % %
5 Years Ended
9/30/98 9/30/93 $ $ % % % %
1 Year Ended
9/30/98 9/30/97 $ $ % % % %
- ------------
*Predecessor Fund commenced operations April 15, 1994.

<CAPTION>
VALUE OF A $1,000 INVESTMENT -- OHIO

TOTAL RETURN TOTAL RETURN
EXCLUDING MAXIMUM INCLUDING MAXIMUM
VALUE OF VALUE OF SALES CHARGE SALES CHARGE
INVESTMENT INVESTMENT INITIAL INVESTMENT --------------------------- ----------------------------
PERIOD* DATE INVESTMENT ON 9/30/98 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ------------------------- ------------- -------------- ------------- ------------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Life of the Fund** 4/18/91 $ $ % % % %
5 Years Ended
9/30/98 9/30/93 $ $ % % % %
1 Year Ended
9/30/98 9/30/97 $ $ % % % %
- ------------
*Predecessor Fund commenced operations December 7, 1993.

<CAPTION>
VALUE OF A $1,000 INVESTMENT -- RHODE ISLAND

TOTAL RETURN TOTAL RETURN
EXCLUDING MAXIMUM INCLUDING MAXIMUM
VALUE OF VALUE OF SALES CHARGE SALES CHARGE
INVESTMENT INVESTMENT INITIAL INVESTMENT --------------------------- ----------------------------
PERIOD* DATE INVESTMENT ON 9/30/98 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ------------------------- ------------- -------------- ------------- ------------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Life of the Fund** 6/11/93 $ $ % % % %
1 Year Ended
9/30/98** 9/30/97 $ $ % % % %
- ------------
*Predecessor Fund commenced operations December 7, 1993.

<CAPTION>
VALUE OF A $1,000 INVESTMENT -- WEST VIRGINIA

TOTAL RETURN TOTAL RETURN
EXCLUDING MAXIMUM INCLUDING MAXIMUM
VALUE OF VALUE OF SALES CHARGE SALES CHARGE
INVESTMENT INVESTMENT INITIAL INVESTMENT --------------------------- ----------------------------
PERIOD* DATE INVESTMENT ON 9/30/98 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ------------------------- ------------- -------------- ------------- ------------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Life of the Fund** 6/11/93 $ $ % % % %
1 Year Ended
9/30/98** 9/30/97 $ $ % % % %
- ------------
*Predecessor Fund commenced operations December 13, 1993.
</TABLE>

<PAGE>

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

As at November 2, 1998, the Trustees and officers of the Trust, as a group,
owned in the aggregate less than 1% of the outstanding shares of each Class A
and of each Fund. In addition, as of the same date, the following record owners
held the amounts of Class A shares indicated below, which were held on behalf of
their customers who are the beneficial owners of such shares, and as to which
they have voting power under certain limited circumstances:

<TABLE>
<S> <C> <C> <C>
FLORIDA FUND - Merrill Lynch, Pierce, Fenner & Smith, Inc. Jacksonville, FL 8.6%
MASSACHUSETTS FUND - Greenfield Savings Bank Greenfield, MA 5.5%
Merrill Lynch, Pierce, Fenner & Smith, Inc. Jacksonville, FL 13.5%
MISSISSIPPI - Merrill Lynch, Pierce, Fenner & Smith, Inc. Jacksonville, FL 28.8%
Edward D. Jones & Co. Maryland Heights, MO 21.3%
NEW YORK - Merrill Lynch, Pierce, Fenner & Smith, Inc. Jacksonville, FL 7.8%
US Clearing Corp. New York, NY 5.6%
OHIO - Merrill Lynch, Pierce, Fenner & Smith, Inc. Jacksonville, FL 10.3%
BHC Securities, Inc. Philadelphia, PA 10.8%
RHODE ISLAND - Merrill Lynch, Pierce, Fenner & Smith, Inc. Jacksonville, FL 27.4%
Corelink Financial Inc. Concord, CA 16.1%
WEST VIRGINIA - Smith Barney Inc. New York, NY 9.3%
Dean Witter New York, NY 6.4%
Wheat First Securities, Inc. Wardensville, WV 6.3%
Wheat First Securities, Inc. Charleston, WV 5.7%
Prudential Securities Inc. Charleston, WV 5.4%

In addition, as of the same date, the following shareholders owned of record, the percentages of each Fund's
Class A shares indicated after their name:

CALIFORNIA - Rosemary Lokey Raitt TTEE Pacific Palisades, CA 5.2%
Rosemary Lokey Raitt Liv Trust
FLORIDA - James Hargrove Deerfield, IL 9.2%
Lambert H. Mott III Stuart, FL 6.8%
Judith H. Mott
MASSACHUSETTS - Robert Glass Northampton, MA 17.1%
MISSISSIPPI - M. Wayne Bush & Celeste F. Bush JTWROS Schlater, MS 5.9%
Southern Beverage Company, Inc. Richland, MS 25.9%
OHIO - Scott Deperro Willoughby HL, OH 14.1%
Juanita B. Gallup Penney TTEE Toledo, OH 8.4%
Juanita B. Gallup Penney Trust
Jack W. Martz Cincinnati, OH 7.8%
Betty J. Adair TTEE Mansfield, OH 7.4%
FBO Adair Family Tr.
RHODE ISLAND - Hugo Iannucci Sr. & Etta Iannone JTTEN East Greenwich, RI 7.8%
WEST VIRGINIA - Joseph M. Sanders, Jr. Bluefield, WV 6.4%
Hazlett Burt & Watson, Inc. FBO Marjorie Wheeling, WV 5.5%
Spustack
</TABLE>

To the knowledge of the Trust, no other person owned of record or
beneficially 5% or more of any Fund's outstanding Class A shares as of such
date.

<PAGE>

APPENDIX B

CLASS B FEES, PERFORMANCE AND OWNERSHIP

DISTRIBUTION AND SERVICE FEES

The following table shows, for the fiscal year ended September 30, 1998, (1)
sales commissions paid by the principal underwriter to investment dealers on
sales of Class B shares, (2) distribution payments to the principal underwriter
under the Distribution Plan, (3) CDSC payments to the principal underwriter, (4)
service fees on Class B shares, and (5) the amount of service fees on Class B
shares paid to investment dealers. The service fees paid by the Funds that were
not paid to investment dealers were retained by the principal underwriter.

<TABLE>
<CAPTION>
DISTRIBUTION CDSC SERVICE
PAYMENTS TO PAYMENTS TO FEES TO
SALES THE PRINCIPAL THE PRINCIPAL SERVICE INVESTMENT
CLASS B COMMISSIONS UNDERWRITER UNDERWRITER FEES DEALERS

<S> <C> <C> <C> <C> <C>
California .................... $ $ $ $ $
Florida .......................
Massachusetts .................
Mississippi ...................
New York ......................
Ohio ..........................
Rhode Island ..................
West Virginia .................
</TABLE>

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 September 30, 1998,
Class B paid the principal underwriter for repurchase transactions handled by it
$2.50 for each such transaction which aggregated as follows: California -- $ ;
Florida -- $ ; Massachusetts -- $ ; Mississippi -- $ ; New York -- $ ; Ohio -- $
; Rhode Island -- $ ; and West Virginia -- $ .

PERFORMANCE INFORMATION

The tables below indicate the cumulative and average annual total return on
a hypothetical investment of $1,000 in Class B shares for the periods shown in
each table. Past performance is not indicative of future results. Investment
return and principal value will fluctuate; shares, when redeemed, may be worth
more or less than their original cost. Information presented with two asterisks
(**) includes the effect of subsidizing expenses. Return would have been lower
without subsidies.

VALUE OF A $1,000 INVESTMENT -- CALIFORNIA

VALUE OF VALUE OF TOTAL RETURN BEFORE TOTAL RETURN AFTER
INVESTMENT INVESTMENT DEDUCTING DEDUCTING
BEFORE DEDUCTING AFTER DEDUCTING THE MAXIMUM CDSC THE MAXIMUM CDSC
INVESTMENT INVESTMENT THE MAXIMUM THE MAXIMUM -------------------------- --------------------------
PERIOD* DATE CDSC ON 9/30/98 CDSC ON 9/30/98 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- --------------------- -------------- ----------------- ---------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
10 Years Ended
9/30/98 9/30/88 $ $ % % % %
5 Years
Ended
9/30/98 9/30/93 $ $ % % % %
1 Year Ended
9/30/98 9/30/97 $ $ % % % %

<CAPTION>
VALUE OF A $1,000 INVESTMENT -- FLORIDA

VALUE OF VALUE OF TOTAL RETURN BEFORE TOTAL RETURN AFTER
INVESTMENT INVESTMENT DEDUCTING DEDUCTING
BEFORE DEDUCTING AFTER DEDUCTING THE MAXIMUM CDSC THE MAXIMUM CDSC
INVESTMENT INVESTMENT THE MAXIMUM THE MAXIMUM -------------------------- --------------------------
PERIOD* DATE CDSC ON 9/30/98 CDSC ON 9/30/98 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- --------------------- -------------- ----------------- ---------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Life of the
Fund 8/28/90 $ $ % % % %
5 Years
Ended
9/30/98 9/30/93 $ $ % % % %
1 Year Ended
9/30/98 9/30/97 $ $ % % % %
- ------------
* Investment operations began on August 28, 1990.

<CAPTION>
VALUE OF A $1,000 INVESTMENT -- MASSACHUSETTS

VALUE OF VALUE OF TOTAL RETURN BEFORE TOTAL RETURN AFTER
INVESTMENT INVESTMENT DEDUCTING DEDUCTING
BEFORE DEDUCTING AFTER DEDUCTING THE MAXIMUM CDSC THE MAXIMUM CDSC
INVESTMENT INVESTMENT THE MAXIMUM THE MAXIMUM -------------------------- --------------------------
PERIOD* DATE CDSC ON 9/30/98 CDSC ON 9/30/98 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- --------------------- -------------- ----------------- ---------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Life of the
Fund 4/18/91 $ $ % % % %
5 Years
Ended
9/30/98 9/30/93 $ $ % % % %
1 Year Ended
9/30/98 9/30/97 $ $ % % % %
- ------------
* Investment operations began on April 18, 1991.

<CAPTION>
VALUE OF A $1,000 INVESTMENT -- MISSISSIPPI

VALUE OF VALUE OF TOTAL RETURN BEFORE TOTAL RETURN AFTER
INVESTMENT INVESTMENT DEDUCTING DEDUCTING
BEFORE DEDUCTING AFTER DEDUCTING THE MAXIMUM CDSC THE MAXIMUM CDSC
INVESTMENT INVESTMENT THE MAXIMUM THE MAXIMUM -------------------------- --------------------------
PERIOD* DATE CDSC ON 9/30/98 CDSC ON 9/30/98 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- --------------------- -------------- ----------------- ---------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Life of the
Fund** 6/11/93 $ $ % % % %
1 Year Ended
9/30/98** 9/30/97 $ $ % % % %
- ------------
* Investment operations began on June 11, 1993.

<CAPTION>
VALUE OF A $1,000 INVESTMENT -- NEW YORK

VALUE OF VALUE OF TOTAL RETURN BEFORE TOTAL RETURN AFTER
INVESTMENT INVESTMENT DEDUCTING DEDUCTING
BEFORE DEDUCTING AFTER DEDUCTING THE MAXIMUM CDSC THE MAXIMUM CDSC
INVESTMENT INVESTMENT THE MAXIMUM THE MAXIMUM -------------------------- --------------------------
PERIOD* DATE CDSC ON 9/30/98 CDSC ON 9/30/98 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- --------------------- -------------- ----------------- ---------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Life of the
Fund 8/30/90 $ $ % % % %
5 Years
Ended
9/30/98 9/30/93 $ $ % % % %
1 Year Ended
9/30/98 9/30/97 $ $ % % % %
- ----------
* Investment operations began on August 30, 1990.

<CAPTION>
VALUE OF A $1,000 INVESTMENT -- OHIO

VALUE OF VALUE OF TOTAL RETURN BEFORE TOTAL RETURN AFTER
INVESTMENT INVESTMENT DEDUCTING DEDUCTING
BEFORE DEDUCTING AFTER DEDUCTING THE MAXIMUM CDSC THE MAXIMUM CDSC
INVESTMENT INVESTMENT THE MAXIMUM THE MAXIMUM -------------------------- --------------------------
PERIOD* DATE CDSC ON 9/30/98 CDSC ON 9/30/98 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- --------------------- -------------- ----------------- ---------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Life of the
Fund 4/18/91 $ $ % % % %
5 Years
Ended
9/30/98 9/30/93 $ $ % % % %
1 Year Ended
9/30/98 9/30/97 $ $ % % % %
- ----------
* Investment operations began on April 18, 1991.

<CAPTION>
VALUE OF A $1,000 INVESTMENT -- RHODE ISLAND

VALUE OF VALUE OF TOTAL RETURN BEFORE TOTAL RETURN AFTER
INVESTMENT INVESTMENT DEDUCTING DEDUCTING
BEFORE DEDUCTING AFTER DEDUCTING THE MAXIMUM CDSC THE MAXIMUM CDSC
INVESTMENT INVESTMENT THE MAXIMUM THE MAXIMUM -------------------------- --------------------------
PERIOD* DATE CDSC ON 9/30/98 CDSC ON 9/30/98 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- --------------------- -------------- ----------------- ---------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Life of the
Fund** 6/11/93 $ $ % % % %
1 Year Ended
9/30/98** 9/30/97 $ $ % % % %
- ----------
* Investment operations began on June 11, 1993.

<CAPTION>
VALUE OF A $1,000 INVESTMENT -- WEST VIRGINIA

VALUE OF VALUE OF TOTAL RETURN BEFORE TOTAL RETURN AFTER
INVESTMENT INVESTMENT DEDUCTING DEDUCTING
BEFORE DEDUCTING AFTER DEDUCTING THE MAXIMUM CDSC THE MAXIMUM CDSC
INVESTMENT INVESTMENT THE MAXIMUM THE MAXIMUM -------------------------- --------------------------
PERIOD* DATE CDSC ON 9/30/98 CDSC ON 9/30/98 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- --------------------- -------------- ----------------- ---------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Life of the
Fund** 6/11/93 $ $ % % % %
1 Year Ended
9/30/98 9/30/97 $ $ % % % %
- ------------
* Investment operations began on June 11, 1993.
</TABLE>

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

As at November 2, 1998, the Trustees and officers of the Trust, as a group,
owned in the aggregate less than 1% of the outstanding shares of each Class B
and of each Fund. As of November 2, 1998, Merrill Lynch, Pierce, Fenner & Smith,
Inc., Jacksonville, FL was the record owner of the following amounts of the
Class B shares, which are 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: California -- 12.2%; Florida -- 14.4%; Massachusetts -- 8.1%;
Mississippi -- 27.2%; New York -- 11.6%; Ohio -- 20.5%; Rhode Island -- 20.3%;
and West Virginia -- 12.0%. In addition, as of the same date, Corelink Financial
Inc., Concord, CA was the record owner of 14.7% of the Rhode Island Class B
shares, which are 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 any Fund's outstanding Class B shares as of such
date.

<PAGE>

APPENDIX C

CLASS I PERFORMANCE AND OWNERSHIP

The Trustees of the Trust have determined that Class I shares of the
Massachusetts Fund shall only be available to employees of Eaton Vance Corp.
(and its affiliates, including subsidiaries), clients of Eaton Vance Corp. (and
its affiliates, including subsidiaries) and certain institutional investors. The
Massachusetts Fund and/or the principal underwriter reserve the right to permit
purchases by other than affiliates, subsidiaries or clients of Eaton Vance Corp.

PERFORMANCE INFORMATION

The table below indicates the cumulative and average annual total return on
a hypothetical investment in shares of $1,000. Total return for the period prior
to October 1, 1997 reflect the total return of return of the predecessor to
Class I. Total return prior to June 17, 1993 reflects the total return of Class
B adjusted to reflect the fact that Class I does not impose a sales charge. The
Class B total return has not been adjusted to reflect certain other expenses
(such as distribution and/or service fees). If such adjustments were made the
Class I total return would be different. Past performance is no guarantee of
future results. Investment return and principal value will fluctuate and shares,
when redeemed, may be worth more or less than their original cost.

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

VALUE OF TOTAL RETURN
INVESTMENT INVESTMENT AMOUNT OF INVESTMENT ----------------------------------
PERIOD DATE INVESTMENT ON 9/30/98 CUMULATIVE ANNUALIZED
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Life of the Fund 4/18/91 $1,000 $ % %
5 Years Ended
9/30/98 9/30/93 $1,000 $ % %
1 Year Ended
9/30/98 9/30/97 $1,000 $ % %
</TABLE>

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

As at November 2, 1998 the Trustees and officers of the Trust, as a group,
owned in the aggregate less than 1% of the outstanding shares of the Class I
shares and of the Massachusetts Fund. As of November 2, 1998, Mars & Co.,
Boston, MA and Jupiter & Co., Boston, MA were the record owners of approximately
43.8% and 7.4%, respectively, of the outstanding Class I shares which were held
on behalf of their customers who are the beneficial owners of such shares, and
as to which they had voting power under certain limited circumstances. In
addition, as of the same date, M. Dozier Gardner, Brookline, MA owned
beneficially and of record 11.2% of the outstanding Class I shares of the
Massachusetts Fund. To the knowledge of the Trust, no other person owned of
record or beneficially 5% or more of the Massachusetts Fund's outstanding Class
I shares as of such date.
<PAGE>

APPENDIX D: STATE SPECIFIC INFORMATION

RISKS OF CONCENTRATION

The following information as to certain state specific considerations is
given to investors in view of a Portfolio's policy of concentrating its
investments in particular state issuers. Such information supplements the
information in the prospectus. It is derived from sources that are generally
available to investors and is believed to be accurate. Such information
constitutes only a brief summary, does not purport to be a complete description
and is based on information from official statements relating to securities
offerings of issuers of each particular state. Neither the Trust nor the
Portfolios have independently verified this information.

The bond ratings provided in the prospectus are current as of the date of
the prospectus and are based on economic conditions which may not continue;
moreover, there can be no assurance that particular bond issues may not be
adversely affected by changes in economic, political or other conditions. Unless
stated otherwise, the ratings indicated are for obligations of the state. A
state's political subdivisions may have different ratings which are unrelated to
the ratings assigned to state obligations.

CALIFORNIA

The state's budgetary fortunes are subject to unforeseeable events. In
December, 1994, for example, Orange County, California and its Investment Pool
filed for bankruptcy. A plan of adjustment has been approved by the court and
became effective under which all non-municipal creditors are to be paid in full.
However, the ultimate financial impact on the County and the state cannot be
predicted with any certainty. In addition, constant fluctuations in other
factors affecting the state -- including health and welfare caseloads, property
tax receipts, federal funding and extraordinary expenditures related to natural
disasters -- will undoubtedly create new budget challenges.

Furthermore, certain California constitutional amendments, legislative
measures, executive orders, administrative regulations and voter initiatives
could produce the adverse effects on the California economy. Among these are
measures that have established tax, spending or appropriations limits and
prohibited the imposition of certain new taxes, authorized the transfers of tax
liabilities and reallocations of tax receipts among governmental entities and
provided for minimum levels of funding.

Finally, certain bonds in the California Portfolio may be subject to
provisions of California law that could adversely affect payments on those bonds
or limit the remedies available to bondholders. Among these are bonds of health
care institutions which are subject to the strict rules and limits regarding
reimbursement payments of California's Medi-Cal Program for health care services
to welfare beneficiaries, and bonds secured by liens on real property.

In addition, the California Supreme Court has recently accepted for review a
case challenging lease revenue financing of the type represented by bonds in the
California Portfolio.

In May 1996, a taxpayer action was filed against the City of San Diego ("San
Diego") and the San Diego Convention Center Expansion Authority (the
"Authority") challenging the validity of a lease revenue financing involving a
lease (the "San Diego Lease") having features similar to the leases commonly
used in California lease-based financings such as certificates of participation
(the "Rider Case"). The Rider Case plaintiffs alleged that voter approval is
required for the San Diego Lease (a) since the lease constituted indebtedness
prohibited by Article XVI, Section 18 of the California Constitution without a
two-thirds vote of the electorate, and (b) since San Diego was prohibited under
its charter from issuing bonds without a two-thirds vote of the electorate, and
the power of the Authority, a joint powers' authority, one of the members of
which is San Diego, to issue bonds is no greater than the power of San Diego. In
response to San Diego's motion for summary judgment, the trial court rejected
the plaintiffs' arguments and ruled that the San Diego Lease was
constitutionally valid and that the Authority's related lease revenue bonds did
not require voter approval. The plaintiffs appealed the matter to the Court of
Appeals for the Fourth District, which affirmed the validity of the San Diego
Lease and of the lease revenue bond financing arrangements. The plaintiffs then
filed a petition for review with the California State Supreme Court, and, on
April 2, 1997, the Court granted the plaintiff's petition for review. No
decision from the Supreme Court is expected prior to the Court's 1998 calendar
year.

Proposition 13. Certain of the Debt Obligations may be obligations of
issuers who rely in whole or in part on ad valorem real property taxes as a
source of revenue. On June 6, 1978, California voters approved an amendment to
the California Constitution known as Proposition 13, which added Article XIIIA
to the California Constitution. The effect of Article XIIIA was to limit ad
valorem taxes on real property and to restrict the ability of taxing entities to
increase real property tax revenues.

Section 1 of Article XIIIA, as amended, limits the maximum ad valorem tax on
real property to 1% of full cash value to be collected by the counties and
apportioned according to law. The 1% limitation does not apply to ad valorem
taxes or special assessments to pay the interest and redemption charges on any
bonded indebtedness for the acquisition or improvement of real property approved
by two-thirds of the votes cast by the voters voting on the proposition. Section
2 of Article XIIIA defines "full cash value" to mean "the County Assessor's
valuation of real property as shown on the 1975/76 tax bill under "full cash
value" or, thereafter, the appraised value of real property when purchased,
newly constructed, or a change in ownership has occurred after the 1975
assessment." The full cash value may be adjusted annually to reflect inflation
at a rate not to exceed 2% per year, or reduction in the consumer price index or
comparable local data, or reduced in the event of declining property value
caused by damage, destruction or other factors.

Legislation enacted by the California Legislature to implement Article XIIIA
provides that notwithstanding any other law, local agencies may not levy any ad
valorem property tax except to pay debt service on indebtedness approved by the
voters prior to July 1, 1978, and that each county will levy the maximum tax
permitted by Article XIIIA.

Proposition 9. On November 6, 1979, an initiative known as "Proposition 9"
or the "Gann Initiative" was approved by the California voters, which added
Article XIIIB to the California Constitution. Under Article XIIIB, State and
local governmental entities have an annual "appropriations limit" and are not
allowed to spend certain moneys called "appropriations subject to limitation" in
an amount higher than the "appropriations limit." Article XIIIB does not affect
the appropriation of moneys which are excluded from the definition of
"appropriations subject to limitation," including debt service on indebtedness
existing or authorized as of January 1, 1979, or bonded indebtedness
subsequently approved by the voters. In general terms, the "appropriations
limit" is required to be based on certain 1978/79 expenditures, and is to be
adjusted annually to reflect changes in consumer prices, population, and certain
services provided by these entities. Article XIIIB also provides that if these
entities' revenues in any year exceed the amounts permitted to be spent, the
excess is to be returned by revising tax rates or fee schedules over the
subsequent two years.

Proposition 98. On November 8, 1988, voters of the state approved
Proposition 98, a combined initiative constitutional amendment and statute
called the "Classroom Instructional Improvement and Accountability Act."
Proposition 98 changed State funding of public education below the university
level and the operation of the State Appropriations Limit, primarily by
guaranteeing K-14 schools a minimum share of General Fund revenues. Under
Proposition 98 (modified by Proposition 111 as discussed below), K-14 schools
are guaranteed the greater of (a) in general, a fixed percent of General Fund
revenues ("Test 1"), (b) the amount appropriated to K-14 schools in the prior
year, adjusted for changes in the cost of living (measured as in Article XIII B
by reference to State per capita personal income) and enrollment ("Test 2"), or
(c) a third test, which would replace Test 2 in any year when the percentage
growth in per capita General Fund revenues from the prior year plus one half of
one percent is less than the percentage growth in State per capita personal
income ("Test 3"). Under Test 3, schools would receive the amount appropriated
in the prior year adjusted for changes in enrollment and per capita General Fund
revenues, plus an additional small adjustment factor. If Test 3 is used in any
year, the difference between Test 3 and Test 2 would become a "credit" to
schools which would be the basis of payments in future years when per capita
General Fund revenue growth exceeds per capita personal income growth.

Proposition 98 permits the Legislature -- by two-thirds vote of both houses,
with the Governor's concurrence -- to suspend the K-14 schools' minimum funding
formula for a one-year period. Proposition 98 also contains provisions
transferring certain State tax revenues in excess of the Article XIII B limit to
K-14 schools.

Proposition 111. On June 30, 1989, the California Legislature enacted Senate
Constitutional Amendment 1, a proposed modification of the California
Constitution to alter the spending limit and the education funding provisions of
Proposition 98. Senate Constitutional Amendment 1 -- on the June 5, 1990 ballot
as Proposition 111 -- was approved by the voters and took effect on July 1,
1990. Among a number of important provisions, Proposition 111 recalculated
spending limits for the state and for local governments, allowed greater annual
increases in the limits, allowed the averaging of two years' tax revenues before
requiring action regarding excess tax revenues, reduced the amount of the
funding guarantee in recession years for school districts and community college
districts (but with a floor of 40.9 percent of state general fund tax revenues),
removed the provision of Proposition 98 which included excess moneys transferred
to school districts and community college districts in the base calculation for
the next year, limited the amount of state tax revenue over the limit which
would be transferred to school districts and community college districts, and
exempted increased gasoline taxes and truck weight fees from the state
appropriations limit. Additionally, Proposition 111 exempted from the state
appropriations limit funding for capital outlays.

Proposition 62. On November 4, 1986, California voters approved an
initiative statute known as Proposition 62. This initiative provided the
following:

1. Requires that any tax for general governmental purposes imposed by local
governments be approved by resolution or ordinance adopted by a two-thirds vote
of the governmental entity's legislative body and by a majority vote of the
electorate of the governmental entity;

2. Requires that any special tax (defined as taxes levied for other than
general governmental purposes) imposed by a local governmental entity be
approved by a two-thirds vote of the voters within that jurisdiction;

3. Restricts the use of revenues from a special tax to the purposes or for
the service for which the special tax was imposed;

4. Prohibits the imposition of ad valorem taxes on real property by local
governmental entities except as permitted by Article XIIIA;

5. Prohibits the imposition of transaction taxes and sales taxes on the sale
of real property by local governments;

6. Requires that any tax imposed by a local government on or after August 1,
1985 be ratified by a majority vote of the electorate within two years of the
adoption of the initiative;

7. Requires that, in the event a local government fails to comply with the
provisions of this measure, a reduction in the amount of property tax revenue
allocated to such local government occurs in an amount equal to the revenues
received by such entity attributable to the tax levied in violation of the
initiative; and

8. Permits these provisions to be amended exclusively by the voters of
California.

In September 1988, the California Court of Appeal in City of Westminster v.
County of Orange, 204 Cal.App. 3d 623, 215 Cal.Rptr. 511 (Cal.Ct.App. 1988),
held that Proposition 62 is unconstitutional to the extent that it requires a
general tax by a general law city, enacted on or after August 1, 1985 and prior
to the effective date of Proposition 62, to be subject to approval by a majority
of voters. The Court held that the California Constitution prohibits the
imposition of a requirement that local tax measures be submitted to the
electorate by either referendum or initiative. It is impossible to predict the
impact of this decision on charter cities, on special taxes or on new taxes
imposed after the effective date of Proposition 62. The California Court of
Appeal in City of Woodlake v. Logan, (1991) 230 Cal.App.3d 1058, subsequently
held that Proposition 62's popular vote requirements for future local taxes also
provided for an unconstitutional referenda. The California Supreme Court
declined to review both the City of Westminster and the City of Woodlake
decisions.

In Santa Clara Local Transportation Authority v. Guardino, (Sept. 28, 1995)
11 Cal.4th 220, reh'g denied, modified (Dec. 14, 1995) 12 Cal.4th 344e, the
California Supreme Court upheld the constitutionality of Proposition 62's
popular vote requirements for future taxes, and specifically disapproved of the
City of Woodlake decision as erroneous. The Court did not determine the
correctness of the City of Westminster decision, because that case appeared
distinguishable, was not relied on by the parties in Guardino, and involved
taxes not likely to still be at issue. It is impossible to predict the impact of
the Supreme Court's decision on charter cities or on taxes imposed in reliance
on the City of Woodlake case.

Senate Bill 1590 (O'Connell), introduced February 16, 1996, would make the
Guardino decision inapplicable to any tax first imposed or increased by an
ordinance or resolution adopted before December 14, 1995. The California Senate
passed the Bill on May 16, 1996 and it is currently pending in the California
State Assembly. It is not clear whether the Bill, if enacted, would be
constitutional as a non-voted amendment to Proposition 62 or as a non-voted
change to Proposition 62's operative date.

Proposition 218. On November 5, 1996, the voters of the state approved
Proposition 218, a constitutional initiative, entitled the "Right to Vote on
Taxes Act" ("Proposition 218"). Proposition 218 adds Articles XIII C and XIII D
to the California Constitution and contains a number of interrelated provisions
affecting the ability of local governments to levy and collect both existing and
future taxes, assessments, fees and charges. Proposition 218 became effective on
November 6, 1996. The Sponsors are unable to predict whether and to what extent
Proposition 218 may be held to be constitutional or how its terms will be
interpreted and applied by the courts. However, if upheld, Proposition 218 could
substantially restrict certain local governments' ability to raise future
revenues and could subject certain existing sources of revenue to reduction or
repeal, and increase local government costs to hold elections, calculate fees
and assessments, notify the public and defend local government fees and
assessments in court.

Article XIII C of Proposition 218 requires majority voter approval for the
imposition, extension or increase of general taxes and two-thirds voter approval
for the imposition, extension or increase of special taxes, including special
taxes deposited into a local government's general fund. Proposition 218 also
provides that any general tax imposed, extended or increased without voter
approval by any local government on or after January 1, 1995 and prior to
November 6, 1996 shall continue to be imposed only if approved by a majority
vote in an election held within two years of November 6, 1996.

Article XIII C of Proposition 218 also expressly extends the initiative
power to give voters the power to reduce or repeal local taxes, assessments,
fees and charges, regardless of the date such taxes, assessments, fees or
charges were imposed. This extension of the initiative power to some extent
constitutionalizes the March 6, 1995 state Supreme Court decision in Rossi v.
Brown, which upheld an initiative that repealed a local tax and held that the
state constitution does not preclude the repeal, including the prospective
repeal, of a tax ordinance by an initiative, as contrasted with the state
constitutional prohibition on referendum powers regarding statutes and
ordinances which impose a tax. Generally, the initiative process enables
California voters to enact legislation upon obtaining requisite voter approval
at a general election. Proposition 218 extends the authority stated in Rossi v.
Brown by expanding the initiative power to include reducing or repealing
assessments, fees and charges, which had previously been considered
administrative rather than legislative matters and therefore beyond the
initiative power.

The initiative power granted under Article XIII C of Proposition 218, by its
terms, applies to all local taxes, assessments, fees and charges and is not
limited to local taxes, assessments, fees and charges that are property related.

Article XIII D of Proposition 218 adds several new requirements making it
generally more difficult for local agencies to levy and maintain "assessments"
for municipal services and programs. "Assessment" is defined to mean any levy or
charge upon real property for a special benefit conferred upon the real
property.

Article XIII D of Proposition 218 also adds several provisions affecting
"fees" and "charges" which are defined as "any levy other than an ad valorem
tax, a special tax, or an assessment, imposed by a local government upon a
parcel or upon a person as an incident of property ownership, including a user
fee or charge for a property related service." All new and, after June 30, 1997,
existing property related fees and charges must conform to requirements
prohibiting, among other things, fees and charges which (i) generate revenues
exceeding the funds required to provide the property related service, (ii) are
used for any purpose other than those for which the fees and charges are
imposed, (iii) are for a service not actually used by, or immediately available
to, the owner of the property in question, or (iv) are used for general
governmental services, including police, fire or library services, where the
service is available to the public at large in substantially the same manner as
it is to property owners. Further, before any property related fee or charge may
be imposed or increased, written notice must be given to the record owner of
each parcel of land affected by such fee or charges. The local government must
then hold a hearing upon the proposed imposition or increase of such property
based fee, and if written protests against the proposal are presented by a
majority of the owners of the identified parcels, the local government may not
impose or increase the fee or charge. Moreover, except for fees or charges for
sewer, water and refuse collection services, no property related fee or charge
may be imposed or increased without majority approval by the property owners
subject to the fee or charge or, at the option of the local agency, two-thirds
voter approval by the electorate residing in the affected area.

Proposition 87. On November 8, 1988, California voters approved Proposition
87. Proposition 87 amended Article XVI, Section 16, of the California
Constitution by authorizing the California Legislature to prohibit redevelopment
agencies from receiving any of the property tax revenue raised by increased
property tax rates levied to repay bonded indebtedness of local governments
which is approved by voters on or after January 1, 1989.

FLORIDA

Florida's constitution prohibits the levy, under the authority of the state,
of an individual income tax upon the income of natural persons who are residents
or citizens of Florida in excess of amounts which may be credited against or
deducted from any similar tax levied by the United States or any other state.
Accordingly, a constitutional amendment would be necessary to impose a state
individual income tax in excess of the foregoing constitutional limitations. The
lack of an individual income tax exposes total state tax collections to
considerably more volatility than would otherwise be the case and, in the event
of an economic downswing, could effect the state's ability to pay principal and
interest in a timely manner.

The Florida Constitution and Statutes mandate that the state budget as a
whole, and each separate fund within the state budget, be kept in balance from
currently available revenues each State fiscal year (July 1 - June 30). Pursuant
to a constitutional amendment which was ratified by the voters on November 8,
1994, the rate of growth in state revenues in a given fiscal year is limited to
no more than the average annual growth rate in Florida personal income over the
previous five years (revenues collected in excess of the limitation are
generally deposited into the Budget Stabilization Fund). For fiscal year 1997-98
the estimated total funds available to the state are reported to be $42 billion.

The following data is provided by the Florida Consensus Estimating
Conference. For fiscal year 1997-98, the estimated General Revenue Fund and
Working Capital Fund is $17.78 billion. The projected year end balance of the
combined General Revenue Fund and Working Capital Fund is $669.9 million.
Including the $686 million balance currently in the Budget Stabilization Fund,
total reserves are projected to stand at $1.35 billion. For fiscal year 1998-99,
the estimated General Revenue Fund and Working Capital Fund is $18.39 billion, a
3.4 percent increase over fiscal year 1997-98. The fiscal year 1998-99 budget
incorporates a 4.4% increase in revenues over fiscal year 1997-98. For fiscal
year 1996-97, the Florida and United States unemployment rates were 5.0% and
5.2%, respectively. For fiscal year 1997-98, the estimated Florida and United
States unemployment rates are both 4.7%. For fiscal year 1998-99, the estimated
Florida and United States unemployment rates are 5.0% and 5.1%, respectively.

In 1993, the state constitution was amended to limit the annual growth in
the assessed valuation of residential property. This amendment may, over time,
constrain the growth in property taxes, a major revenue source for local
governments.

South Florida is particularly susceptible to international trade and
currency imbalances and to economic dislocations in Central and South America,
due to its geographical location and its involvement with foreign trade, tourism
and investment capital. North and Central Florida are impacted by problems in
the agricultural sector, particularly with regard to the citrus and sugar
industries. Short-term adverse economic conditions may be created in these
areas, and in the state as a whole, due to crop failures, severe weather
conditions or other agriculture-related problems. The state economy also has
historically been dependent on the tourism and construction industries and is,
therefore, sensitive to trends in those sectors. Hurricanes are a significant
threat to continuing economic activity.

MASSACHUSETTS

Effective July 1, 1990, limitations were placed on the amount of direct
bonds the state could have outstanding in a fiscal year, and the amount of the
total appropriation in any fiscal year that may be expended for debt service on
general obligation debt of the state (other than certain debt incurred to pay
the fiscal 1990 deficit and certain Medicaid reimbursement payments for prior
years) was limited to 10%. In addition, the power of Massachusetts cities and
towns and certain tax-supported districts and public agencies to raise revenue
from property taxes to support their operations, including the payment of debt
service, is limited by "Proposition 2 1/2". Property taxes are virtually the
only source of tax revenues available to cities and towns to meet local costs.

Major infrastructure projects will continue over the next decade. A
reduction in the federal contributions could increase pressure on the state and
result in increased indebtedness.

The fiscal viability of the state's authorities and municipalities is
inextricably linked to that of the state. The state guarantees the debt of
several authorities, most notably the Massachusetts Bay Transportation Authority
and the University of Massachusetts Building Authority. Their ratings are based
on this guarantee and can be expected to move in tandem. Several other
authorities are funded in part or in whole by the state and their debt ratings
may be adversely affected by a negative change in those of the state. Economic
slowdown or increased capital spending pressures could result in local aid
reductions.

MISSISSIPPI

All state indebtedness must be authorized by legislation governing the
specific programs or projects to be financed. Such debt may include short- and
long-term indebtedness, self-supporting general obligation bonds, highway bonds
and other types of indebtedness. As of June 30, 1996, the state's total bond
indebtedness was $1.25 billion. For the fiscal year ended June 30, 1996, the
constitutional debt limit was approximately $6.0 billion. The General Fund had
an ending fund balance of $93.5 million for fiscal year 1997.

An action against the state regarding the conditions in its penal
institutions, which has been reviewed by the Attorney General's office, is
reported to be the only significant case in which the state is the defendant and
wherein the state's financial resources may be materially adversely affected.

NEW YORK

The state ended its 1997-1998 fiscal year balanced on a cash basis. The
projected General Fund surplus is approximately $2.04 billion which results from
revenue growth and lower than expected entitlement spending. The state projects
a General Fund balanced on a cash basis for the 1998-1999 fiscal year and
potential budget gaps for the 1999-2000 and 2000-2001 fiscal years.

The fiscal stability of New York state relates, at least in part, to the
fiscal stability of its localities and authorities. Various state agencies,
authorities and localities have issued large amounts of bonds and notes either
guaranteed or supported by the state. In some cases, the state has had to
provide special assistance in recent years to enable such agencies, authorities
and localities to meet their financial obligations and, in some cases, to
prevent or cure defaults. The extent to which state agencies and local
governments require state assistance to meet their financial obligations, may
adversely affect the ability of the state to meet its own obligations as they
become due or to obtain additional financing

New York City currently projects revenues and expenditures for the 1999
fiscal year balanced in accordance with GAAP and budget gaps of $1.5 billion,
$2.1 billion and $1.6 billion for its 2000, 2001 and 2002 fiscal years,
respectively. The City's gap-closing plans for the 2000 through 2002 fiscal
years include additional agency programs to reduce expenditures or increase
revenues, savings from privatization initiatives, asset sales, additional
federal and state aid, additional entitlement cost containment initiatives, and
the availability of funds from the City's General Reserve. There can be no
assurance that additional gap-closing measures, such as tax increases or
reductions in City services, will not be required, the implementation of which
could adversely affect the City's economic base, and there is no assurance that
such measures will enable the City to achieve a balanced budget, as required by
state law, for any of the 1999 through 2002 fiscal years.

Implementation of the City's four-year annual financial plan is also
dependent upon the City's ability to market its securities successfully in the
public credit markets. The fiscal health of New York City, which is the largest
issuer of municipal bonds in the country and a leading international commercial
center, exerts a significant influence upon the fiscal health and bond values of
issues throughout the state. Bond values of the Municipal Assistance
Corporation, the state of New York, the New York Local Government Assistance
Corporation, the New York State Dormitory Authority, the New York City Municipal
Water Finance Authority and The Metropolitan Transportation Authority would be
particularly affected by serious financial difficulties encountered by New York
City. The Portfolio could be expected to hold bonds issued by many, if not all
of these issuers, at any given time.

OHIO

The state of Ohio operates on the basis of a fiscal biennium for its
appropriations and expenditures. The state is effectively prohibited by law from
ending a fiscal year or a biennium in a deficit position. The Governor has the
power to order state agencies to operate within the state's means. The state
carries out most of its operations through the General Revenue Fund ("GRF")
which receives general state revenues not otherwise dedicated. GRF revenues are
derived mainly from personal income and sales taxes and corporate franchise
taxes. State GRF figures generally show a pattern related to national economic
conditions, evident in growth and depletion of its GRF ending fund balances,
with the June 30 (end of fiscal year) GRF fund balance reduced during less
favorable national economic periods and increased during more favorable economic
periods.

Local school districts in Ohio receive a major portion (state-wide aggregate
approximately 44% in recent years) of their operating moneys from state
subsidiaries, but are dependent on local property taxes, and in 119 districts
from voter-authorized income taxes, for significant portions of their budgets.
Litigation, similar to that in other states, has been pending questioning the
constitutionality of Ohio's system of school funding. The Ohio Supreme Court has
recently concluded that aspects of the system (including basic operating
assistance and the loan program referred to below) are unconstitutional, and
ordered the state to provide for and fund a system complying with the Ohio
Constitution, staying its order for a year (to March 1998) to permit time for
responsive corrective actions. A small number of the state's 612 local school
districts have in any year required special assistance to avoid year-end
deficits. A program has provided for school district cash need borrowing
directly from commercial lenders, with diversion of state subsidy distributions
to repayment if needed. Recent borrowings under this program totalled $113.2
million for 12 districts in 1997 (including $90 million to one for restructuring
its prior loans).

For those few municipalities and school districts that on occasion have
faced significant financial problems, there are statutory procedures for a joint
state/local commission to monitor the fiscal affairs and for development of a
financial plan to eliminate deficits and cure any defaults. (Similar procedures
have recently been extended to counties and townships.) Since inception for
municipalities in 1979, these "fiscal emergency" procedures have been applied to
24 cities and villages; for 18 of them the fiscal situation was resolved and the
procedures terminated (one village is in preliminary "fiscal watch" status). As
of December 8, 1997, the 1996 school district "fiscal emergency" provision had
been applied to five districts, and nine were on preliminary "fiscal watch"
status.

RHODE ISLAND

In January, 1991, the collapse of the Rhode Island Share and Deposit
Indemnity Corporation precipitated the closure of 45 financial institutions with
a total deposit liability of approximately $1.7 billion. In response, the state
created the Rhode Island Depositors Economic Protection Corporation, a public
corporation, ("DEPCO"), to assist in the resolution of the resulting banking
crisis. By the end of 1992, substantially all of the frozen deposits had been
repaid or otherwise made available to depositors through the reopening, sale or
liquidation of the closed institutions. As of June, 1994, DEPCO had outstanding
debt totalling approximately $494.2 million, the proceeds of which were used to
facilitate the sale of certain institutions and the payout of frozen deposits.
Receipts from.6% of the state's sales and use tax rate are dedicated to a
special revenue fund to be used for repayment of the special obligation bonds.
Over the next 20 years, DEPCO is also obligated to pay former depositors
approximately $54 million.

Below the level of state government, Rhode Island is divided into 39 cities
and towns which exercise the functions of local general government. As provided
in the state Constitution, municipalities have the right of self government in
all local matters by adopting a "home rule" charter. Every city or town,
however, has the power to levy, assess and collect taxes, or borrow money, only
as specifically authorized by the General Assembly. Legislation enacted in 1985
limits tax levy or rate increases by municipalities to an increase no greater
than 5 1/2% over the previous year. However tax levy or rate increases of
greater than 5 1/2% are permitted in the event that debt service costs on
present and future general obligation debt increase at a rate greater than 5
1/2%. This limitation may also be exceeded in the event of loss of non-property
tax revenue, or when an emergency situation arises and is certified by the state
Auditor General. In addition, state statutes require every city and town to
adopt a balanced budget for each fiscal year. Local governments rely principally
upon general real and tangible personal property taxes and automobile excise
taxes for provision of revenue.

The largest category of state aid to cities and towns involves assistance
programs for school operations and school buildings. Communities are guaranteed
a minimum reimbursement of 9% of eligible expenditures. In addition to school
aid, the state provides a general revenue sharing program for local governments
which is intended for direct property tax relief and incorporates a distribution
formula based upon relative population, tax effort and personal income of each
municipality. In addition, the state provides municipal aid programs which
include reimbursement to local governments for their cost of carrying out
certain state mandates.

WEST VIRGINIA

In 1994, the state established a rainy day reserve fund into which 50% of
annual surplus general fund revenues will be deposited until the reserve fund
balance reaches 5% of general fund appropriations. At June 30, 1995, the
estimated balance in the fund was $63.7 million or 2.8% of appropriations. The
state has upgraded its financial management and reporting practices through its
conversion to GAAP-based accounting. The state also adopted policies to amortize
large unfunded accrued liabilities in its workers' compensation and teachers
retirement funds over 40 years.

Based on a 1990 task force report indicating potential fiscal problems for
the state, the state took a number of actions designed to eliminate the
projected deficit, including revenue enhancement measures, such as changes to
the Consumer Sales and Service tax, and reductions in state spending. A General
Fund operating surplus of $37.7 million brought the ending fiscal year 1996 fund
balance to $284.9 million. The unreserved fund balance was $47.8 million.

The Business and Occupation Tax, the Personal Income Tax, the Consumer Sales
and Service Tax, the Minerals Severance Tax, the Corporate Net Income Tax and
the Business Franchise Tax together provided nearly 90% of the revenue for the
General Revenue Fund in the fiscal year ended June 30, 1996. The amounts
collected pursuant to the business registration, cigarette, insurance,
telecommunications, inheritance, other taxes, liquor profits and racing fees
constitute the remainder of the General Revenue Fund.

The federal programs administered in West Virginia are a substantial part of
the operation of state government. Historically, federal grants have either been
part of an ongoing program, limited to a specific project or structured to
institute immediate state action. In all cases, they become due either
temporarily or permanently and are a significant feature of state services and
the budget process.

PUERTO RICO, THE U.S. VIRGIN ISLANDS AND GUAM

PUERTO RICO. Puerto Rico has a diversified economy dominated by the
manufacturing and service sectors. The North American Free Trade Agreement
("NAFTA"), which became effective January 1, 1994, has led to loss of lower wage
jobs such as textiles, but economic growth in other areas, particularly the high
technology area has compensated for that loss.

The Commonwealth of Puerto Rico differs from the states in its relationship
with the federal government. Most federal taxes, except those such as social
security taxes that are imposed by mutual consent, are not levied in Puerto
Rico. However, in conjunction with the 1993 U.S. budget plan, Section 936 of the
Code was amended and provided for two alternative limitations to the Section 936
credit. The first option limited the credit against such income to 40% of the
credit allowable under then current law, with a five year phase-in period
starting at 60% of the allowable credit. The second option was a wage and
depreciation based credit. Additional amendments to Section 936 in 1996 imposed
caps on these credits, beginning in 1998 for the first option and beginning in
2002 for the second option. More importantly, the 1996 amendments eliminated
both options for taxable years beginning in 2006. The eventual elimination of
tax benefits to those U.S. companies with operations in Puerto Rico may lead to
slower growth in the future. There can be no assurance that this will not lead
to a weakened economy, a lower rating on Puerto Rico's debt or lower prices for
Puerto Rican bonds that may be held by the Portfolio in the long-term.

Puerto Ricans have periodically considered conversion to statehood and such
a vote is likely again in the future.

THE U.S. VIRGIN ISLANDS. The United States Virgin Islands (USVI) is heavily
reliant on the tourism industry, with roughly 43% of non-agricultural employment
in tourist-related trade and services. The tourism industry is economically
sensitive and would likely be adversely affected by a recession in either the
United States or Europe.

An important component of the USVI revenue base is the federal excise tax on
rum exports. Tax revenues rebated by the federal government to the USVI provide
the primary security of many outstanding USVI bonds. Since more than 90% of the
rum distilled in the USVI is distilled at one plant, any interruption in its
operations (as occurred after Hurricane Hugo in 1989) would adversely affect
these revenues. Consequently, there can be no assurance that rum exports to the
United States and the rebate of tax revenues to the USVI will continue at their
present levels. The preferential tariff treatment the USVI rum industry
currently enjoys could be reduced under NAFTA. Increased competition from
Mexican rum producers could reduce USVI rum imported to the U.S., decreasing
excise tax revenues generated. The USVI is periodically hit by hurricanes.
Several hurricanes have caused extensive damage, which has had a negative impact
on revenue collections. There is currently no rated, unenhanced Virgin Islands
debt outstanding (although there is unrated debt outstanding).

GUAM. The U.S. military is a key component of Guam's economy. The federal
government directly comprises more than 10% of the employment base, with a
substantial component of the service sector to support these personnel. The
Naval Air Station, one of several U.S. military facilities on the island, has
been slated for closure by the Defense Base Closure and Realignment Committee;
however, the administration plans to use these facilities to expand the Island's
commercial airport. Guam is also heavily reliant on tourists, particularly the
Japanese. Guam's general obligation debt is rated BBB by S&P with a negative
outlook.
<PAGE>

APPENDIX E: TAX EQUIVALENT YIELD TABLES

The tables below give the approximate yield a taxable security must earn at
various income brackets to produce after-tax yields equivalent to those of tax
exempt bonds yielding from 4% to 7% under the regular federal income tax and
applicable state and local tax rates applicable for 1998.

Note: The federal income tax portion of the indicated combined income tax
brackets in the tables does not take into account the effect of a reduction in
the deductibility of itemized deductions (including applicable state and local
taxes) for taxpayers with adjusted gross income in excess of $124,500. The tax
brackets also do not show the effects of phaseout of personal exemptions for
single filers with adjusted gross income in excess of $124,500 and joint filers
with adjusted gross income in excess of $186,800. The effective tax brackets and
equivalent taxable yields of such taxpayers will be higher than those indicated
in the tables.

Yields shown are for illustration purposes only and are not meant to represent a
Fund's actual yield. No assurance can be given that any specific tax exempt
yield will be achieved. While it is expected that each Portfolio will invest
principally in obligations, the interest from which is exempt from the regular
federal income tax and applicable state and local taxes described in the
prospectus, other income received by a Portfolio and allocated to a Fund may be
taxable. The tables do not take into account state or local taxes, if any,
payable on Fund distributions except for those described in the footnote to the
tables. Also, 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 AMT.
The illustrations assume that the AMT is not applicable and do not take into
account any tax credits that may be available.

The information set forth herein 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.

<TABLE>
<CAPTION>
CALIFORNIA

A FEDERAL AND CALIFORNIA STATE
SINGLE RETURN JOINT RETURN COMBINED TAX EXEMPT YIELD OF:
FEDERAL AND 4% 4.5% 5% 5.5% 6% 6.5% 7%
- ------------------------- ---------------------- CA STATE --------------------------------------------------------------
(TAXABLE INCOME*) TAX BRACKET+ IS EQUIVALENT TO A FULLY TAXABLE YIELD OF:
- ------------------------------------------------- --------------- --------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Up to $ 25,350 Up to $ 42,350 20.10% 5.01% 5.63% 6.26% 6.88% 7.51% 8.14% 8.76%
$ 25,351 - $ 61,400 $ 42,351 - $102,300 34.70 6.13 6.89 7.66 8.42 9.19 9.95 10.72
$ 61,401 - $128,100 $102,301 - $155,950 37.42 6.39 7.19 7.99 8.79 9.59 10.39 11.19
$128,101 - $278,450 $155,951 - $278,450 41.95 6.89 7.75 8.61 9.47 10.34 11.20 12.06
Over $278,450 Over $278,450 45.22 7.30 8.21 9.13 10.04 10.95 11.87 12.78

* Net amount subject to federal and California personal income tax after deductions and exemptions.
+ The table is based on California State income tax laws and tax rates applicable for 1997. The combined tax brackets are
calculated using the highest California State rate within the bracket. Taxpayers with taxable income within each bracket may
have a lower combined tax bracket and taxable equivalent yield than indicated above. The combined tax brackets assume that
California taxes are itemized deductions for federal income tax purposes. Investors who do not itemize deductions on their
federal income tax return will have a higher combined tax bracket and taxable equivalent yield than those indicated above. The
applicable federal tax rates within the brackets set forth above are 15%, 28%, 31%, 36% and 39.6% over the same ranges of
income.

<CAPTION>
FLORIDA

YOU ARE IN
THIS
IF THE TAXABLE INCOME ON OR THE TAXABLE INCOME ON FEDERAL IN YOUR BRACKET, A TAX-FREE YIELD OF
YOUR SINGLE RETURN IS* YOUR JOINT RETURN IS* BRACKET 4% 4.5% 5% 5.5% 6% 6.5% 7%
- ------------------------------ -------------------------- ----------- ----------------------------------------------------------
EQUALS THAT OF A TAXABLE INVESTMENT YIELDING
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Up to $ 25,350 Up to $ 42,350 15.00% 4.71% 5.29% 5.88% 6.47% 7.06% 7.65% 8.24%
$ 25,351 - $ 61,400 $ 42,351 - $102,300 28.00 5.56 6.25 6.94 7.64 8.33 9.03 9.72
$ 61,401 - $128,100 $102,301 - $155,950 31.00 5.80 6.52 7.25 7.97 8.70 9.42 10.14
$128,101 - $278,450 $155,951 - $278,450 36.00 6.25 7.03 7.81 8.59 9.38 10.16 10.94
Over $278,450 Over $278,450 39.60 6.62 7.45 8.28 9.11 9.93 10.76 11.59

<CAPTION>
IF THE TAXABLE INCOME ON OR THE TAXABLE INCOME ON
YOUR SINGLE RETURN IS* YOUR JOINT RETURN IS* 4% 4.5% 5% 5.5% 6% 6.5% 7%
- ------------------------------ -------------------------- ------------------------------------------------------------
TAX EQUIVALENT YIELD REFLECTING EXEMPTION FROM INTANGIBLES
TAX:**
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Up to $ 25,350 Up to $ 42,350 4.95% 5.54% 6.13% 6.71% 7.30% 7.89% 8.48%
$ 25,351 - $ 61,400 $ 42,351 - $102,300 5.85 6.54 7.23 7.93 8.62 9.31 10.01
$ 61,401 - $128,100 $102,301 - $155,950 6.10 6.83 7.55 8.27 9.00 9.72 10.44
$128,101 - $278,450 $155,951 - $278,450 6.58 7.36 8.14 8.92 9.70 10.48 11.26
Over $278,450 Over $278,450 6.97 7.80 8.62 9.45 10.28 11.10 11.93

* Net amount subject to federal personal income tax after deductions and exemptions.
** A Florida intangibles tax on personal property of $2.00 per $1,000 is generally imposed after exemptions on the value of
stocks, bonds, other evidences of indebtedness and mutual fund shares. An example of the effect of the Florida intangibles tax
on the tax brackets of Florida taxpayers is as follows. A $10,000 investment subject to the tax would require payment of $20
annually in intangibles taxes. If the investment yielded 5.5% annually or $550, the intangibles tax as a percentage of income
would be $20/$550 or 3.64%. If a taxpayer were in the 36% federal income tax bracket, assuming the intangibles taxes were
deducted as an itemized deduction on the federal return, the taxpayer would be on a combined federal and Florida state tax
bracket of 38.33% [36% + (1 - .36) X 3.64%] with respect to such investment. A Florida taxpayer whose intangible personal
property is exempt or partially exempt from tax due to the availability of exemptions will have a lower taxable equivalent
yield than indicated above.

<CAPTION>
MASSACHUSETTS

COMBINED A FEDERAL AND MASSACHUSETTS STATE
FEDERAL AND TAX EXEMPT YIELD OF:
SINGLE RETURN JOINT RETURN MA STATE 4% 4.5% 5% 5.5% 6% 6.5% 7%
- ----------------------- --------------------- --------------------------------------------------------------------
(TAXABLE INCOME)* TAX BRACKET+ IS EQUIVALENT TO A FULLY TAXABLE YIELD OF:
- ---------------------------------------------- ------------- --------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Up to $ 25,350 Up to $ 42,350 25.20% 5.35% 6.02% 6.68% 7.35% 8.02% 8.69% 9.36%
$ 25,351-$ 61,400 $ 42,351-$102,300 36.64 6.31 7.10 7.89 8.68 9.47 10.26 11.05
$ 61,401-$128,100 $102,301-$155,950 39.28 6.59 7.41 8.23 9.06 9.88 10.70 11.53
$128,101-$278,450 $155,951-$278,450 43.68 7.10 7.99 8.88 9.77 10.65 11.54 12.43
Over $278,450 Over $278,450 46.85 7.53 8.47 9.41 10.35 11.29 12.23 13.17

* Net amount subject to federal and Massachusetts personal income tax after deductions and exemptions.

+ The combined tax rates include a Massachusetts tax rate of 12% applicable to taxable bond interest and dividends, and assume
that Massachusetts taxes are itemized deductions for federal income tax purposes. Investors who do not itemize deductions on
their federal income tax return will have a higher combined bracket and higher taxable equivalent yield than those indicated
above. The applicable federal tax rates within the brackets are 15%, 28%, 31%, 36%, and 39.6%, over the same ranges of income.

<CAPTION>
MISSISSIPPI

COMBINED A FEDERAL AND MISSISSIPPI STATE
FEDERAL AND TAX EXEMPT YIELD OF:
SINGLE RETURN JOINT RETURN MS STATE 4% 4.5% 5% 5.5% 6% 6.5% 7%
- ----------------------- -------------------- ----------------------------------------------------------------------
(TAXABLE INCOME)* TAX BRACKET+ IS EQUIVALENT TO A FULLY TAXABLE YIELD OF:
- --------------------------------------------- ------------ ----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Up to $ 25,350 Up to $ 42,350 19.25% 4.95% 5.57% 6.19% 6.81% 7.43% 8.05% 8.67%
$ 25,351-$ 61,400 $ 42,351-$102,300 31.60 5.85 6.58 7.31 8.04 8.77 9.50 10.23
$ 61,401-$128,100 $102,301-$155,950 34.45 6.10 6.86 7.63 8.39 9.15 9.92 10.68
$128,101-$278,450 $155,951-$278,450 39.20 6.58 7.40 8.22 9.05 9.87 10.69 11.51
Over $278,450 Over $278,450 42.62 6.97 7.84 8.71 9.59 10.46 11.33 12.20

* Net amount subject to federal and Mississippi personal income tax after deductions and exemptions.
+ The first combined tax bracket is calculated using the highest Mississippi tax rate within the bracket. Taxpayers with taxable
income within this bracket may have a lower combined bracket and taxable equivalent yield than indicated above. The combined
tax brackets assume that Mississippi taxes are itemized deductions for federal income tax purposes. Investors who do not
itemize deductions on their federal income tax return will have a higher combined bracket and higher taxable equivalent yield
than those indicated above. The applicable federal tax rates within the brackets are 15%, 28%, 31%, 36% and 39.6%, over the
same ranges of income. The assumed Mississippi State income tax rate is 5%.

<CAPTION>
NEW YORK

COMBINED
SINGLE RETURN JOINT RETURN FEDERAL, A FEDERAL, NEW YORK STATE AND NEW YORK CITY TAX EXEMPT YIELD OF:
NY STATE
- ----------------------- --------------------- AND NY CITY --------------------------------------------------------------------
(TAXABLE INCOME*) TAX BRACKET+ 4% 4.5% 5% 5.5% 6% 6.5% 7%
- ---------------------------------------------- ------------- --------------------------------------------------------------------
IS EQUIVALENT TO A FULLY TAXABLE YIELD OF:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Up to $ 25,350 Up to $ 42,350 24.55% 5.30% 5.96% 6.63% 7.29% 7.95% 8.62% 9.28%
$ 25,351 - $ 61,400 $ 42,351 - $102,300 36.14 6.26 7.05 7.83 8.61 9.40 10.18 10.96
$ 61,401 - $128,100 $102,301 - $155,950 38.80 6.54 7.35 8.17 8.99 9.80 10.62 11.44
$128,101 - $278,450 $155,951 - $278,450 43.24 7.05 7.93 8.81 9.69 10.57 11.45 12.33
Over $278,450 Over $278,450 46.43 7.47 8.40 9.33 10.27 11.20 12.13 13.07

* Net amount subject to federal, New York State and New York City personal income tax (including New York City personal income
tax surcharges) after deductions and exemptions.

+ The first combined tax bracket is calculated using the highest State rate (6.85%) and the highest City rate (including
surcharges) within the bracket. Taxpayers with taxable income below the highest dollar amount in the first bracket may have a
lower combined tax bracket and taxable equivalent yield than indicated above. The applicable State and City rates are at their
maximum (6.85% and 4.457%, respectively) throughout all other brackets. The applicable federal tax rates within each of these
combined tax brackets are 15%, 28%, 31%, 36%, and 39.6% over the same ranges of income.
</TABLE>

The table below gives the approximate yield a taxable security must earn at
various income brackets to produce after-tax yields equivalent to those of tax
exempt bonds yielding from 4% to 7% under the regular federal income tax and New
York State income tax laws in effect for 1998.

<TABLE>
<CAPTION>
COMBINED
SINGLE RETURN JOINT RETURN FEDERAL AND A FEDERAL AND NEW YORK STATE TAX EXEMPT YIELD OF:
- ----------------------- --------------------- NY STATE --------------------------------------------------------------------
(TAXABLE INCOME*) TAX BRACKET+ 4% 4.5% 5% 5.5% 6% 6.5% 7%
- ---------------------------------------------- ------------- --------------------------------------------------------------------
IS EQUIVALENT TO A FULLY TAXABLE YIELD OF:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Up to $ 25,350 Up to $ 42,350 20.82% 5.05% 5.68% 6.31% 6.95% 7.58% 8.21% 8.84%
$ 25,351 - $ 61,400 $ 42,351 - $102,300 32.93 5.96 6.71 7.46 8.20 8.95 9.69 10.44
$ 61,401 - $128,100 $102,301 - $155,950 35.73 6.22 7.00 7.78 8.56 9.34 10.11 10.89
$128,101 - $278,450 $155,951 - $278,450 40.38 6.71 7.55 8.39 9.23 10.06 10.90 11.74
Over $278,450 Over $278,450 43.74 7.11 8.00 8.89 9.78 10.66 11.55 12.44

* Net amount subject to federal and New York State and personal income tax after deductions and exemptions.
+ The first combined tax bracket is calculated using the highest New York State rate (6.85%) within the bracket. Taxpayers with
taxable income below the highest dollar amount in the first bracket may have a lower combined tax bracket and taxable
equivalent yield than indicated above. The applicable State rate is the maximum rate, 6.85%, throughout all other brackets.
The applicable federal tax rates within each of these combined brackets are 15%, 28%, 31%, 36%, and 39.6% over the same ranges
of income.

<CAPTION>
OHIO

COMBINED
SINGLE RETURN JOINT RETURN FEDERAL AND A FEDERAL AND OHIO STATE TAX EXEMPT YIELD OF:
- ----------------------- --------------------- OHIO STATE --------------------------------------------------------------------
(TAXABLE INCOME*) TAX BRACKET+ 4% 4.5% 5% 5.5% 6% 6.5% 7%
- ---------------------------------------------- ------------- --------------------------------------------------------------------
IS EQUIVALENT TO A FULLY TAXABLE YIELD OF:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Up to $ 25,350 Up to $ 42,350 19.42% 4.96% 5.58% 6.21% 6.83% 7.45% 8.07% 8.69%
$ 25,351 - $ 61,400 $ 42,351 - $102,300 32.28 5.91 6.64 7.38 8.12 8.86 9.60 10.34
$ 61,401 - $128,100 $102,301 - $155,950 35.76 6.23 7.01 7.78 8.56 9.34 10.12 10.90
$128,101 - $278,450 $155,951 - $278,450 40.80 6.76 7.60 8.45 9.29 10.14 10.98 11.82
Over $278,450 Over $278,450 44.13 7.16 8.05 8.95 9.84 10.74 11.63 12.53

* Net amount subject to federal and Ohio personal income tax after deductions and exemptions.

+ The combined tax brackets are calculated using the highest Ohio State rate within the bracket. The combined tax brackets
assume that Ohio taxes are itemized deductions for federal income tax purposes . Investors who do not itemize deductions on
their federal income tax return will have a higher combined bracket and higher taxable equivalent yield than those indicated
above. The applicable federal tax rates within each of these combined brackets are 15%, 28%, 31%, 36% and 39.6% over the same
ranges of income.

<CAPTION>
RHODE ISLAND

A FEDERAL AND RHODE ISLAND STATE
COMBINED TAX EXEMPT YIELD OF:
SINGLE RETURN JOINT RETURN FEDERAL AND 4% 4.5% 5% 5.5% 6% 6.5% 7%
- ---------------------- -------------------- RI STATE --------------------------------------------------------------------
(TAXABLE INCOME*) TAX BRACKET+ IS EQUIVALENT TO A FULLY TAXABLE YIELD OF:
- -------------------------------------------- ------------- --------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Up to $ 25,350 Up to $ 42,350 18.44% 4.90% 5.52% 6.13% 6.74% 7.36% 7.97% 8.58%
$ 25,351 - $ 61,400 $ 42,351 - $102,300 33.44 6.01 6.76 7.51 8.26 9.01 9.77 10.53
$ 61,401 - $128,100 $102,301 - $155,950 36.78 6.33 7.12 7.91 8.70 9.49 10.28 11.07
$128,101 - $278,450 $155,951 - $278,450 42.22 6.92 7.79 8.65 9.52 10.38 11.25 12.12
Over $278,450 Over $278,450 46.06 7.42 8.34 9.27 10.20 11.12 12.05 12.98

* Net amount subject to federal and Rhode Island personal income tax after deductions and exemptions.
+ The combined tax rates assume a Rhode Island rate of 27% of federal income tax liability and that Rhode Island taxes are
itemized deductions for federal income tax purposes. Investors who do not itemize deductions on their federal income tax
return will have a higher combined bracket and higher taxable equivalent yield than those indicated above. The applicable
federal tax rates within the brackets are 15%, 28%, 31%, 36% and 39.6%, over the same ranges of income.

<CAPTION>
WEST VIRGINIA

COMBINED A FEDERAL AND WEST VIRGINIA STATE
SINGLE RETURN JOINT RETURN FEDERAL AND TAX EXEMPT YIELD OF:
- ----------------------- --------------------- WV STATE 4% 4.5% 5% 5.5% 6% 6.5% 7%
--------------------------------------------------------------------
(TAXABLE INCOME*) TAX BRACKET+ IS EQUIVALENT TO A FULLY TAXABLE YIELD OF:
- ---------------------------------------------- ------------- --------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Up to $ 25,350 Up to $ 42,350 20.10% 5.01% 5.63% 6.26% 6.88% 7.51% 8.14% 8.76%
$ 25,351 - $ 61,400 $ 42,351 - $102,300 32.68 5.94 6.68 7.43 8.17 8.91 9.66 10.40
$ 61,401 - $128,100 $102,301 - $155,950 35.49 6.20 6.98 7.75 8.53 9.30 10.08 10.85
$128,101 - $278,450 $155,951 - $278,450 40.16 6.68 7.52 8.36 9.19 10.03 10.86 11.70
Over $278,450 Over $278,450 43.53 7.08 7.97 8.85 9.74 10.62 11.51 12.40

* Net amount subject to federal and West Virginia personal income tax after deductions and exemptions.
+ The combined tax rate for the lowest federal income brackets is calculated using the highest West Virginia tax rate within the
bracket. Taxpayers with taxable income within this bracket may have a lower combined bracket and taxable equivalent yield than
indicated above. The combined tax rates assume that West Virginia taxes are itemized deductions for federal income tax
purposes. Investors who do not itemize deductions on their federal income tax return will have a higher combined bracket and
higher taxable equivalent yield than those indicated above. The state rate is at its maximum (6.5%) throughout all other
brackets. The applicable federal tax rates within the brackets are 15%, 28%, 31%, 36%, and 39.6%, over the same ranges of
income.
</TABLE>

<PAGE>

APPENDIX F: 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 fluctuation 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 the 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 in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.

- ------------
+The ratings indicated herein are believed to be the most recent ratings
available at the date of this 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 a Portfolio's
fiscal year end.

MUNICIPAL SHORT-TERM OBLIGATIONS

RATINGS: Moody's ratings for state and municipal short-term obligations will be
designated Moody's Investment Grade or (MIG). Such rating recognizes the
differences between short term credit risk and long term risk. Factors effecting
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
VMIG1, 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 VMIG1 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

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 exhibit 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
which 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.

P: 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 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

BB: Bonds are considered speculative. The obligor's ability to pay interest and
repay principal may be affected over time by adverse economic changes. However,
business and financial alternatives can be identified that could assist the
obligor in satisfying its debt service requirements.

B: Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.

CCC: Bonds have certain identifiable characteristics which, if not remedied,
may lead to default. The ability to meet obligations requires an advantageous
business and economic environment.

CC: Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.

C: Bonds are in imminent default in payment of interest or principal.

DDD, DD, AND D: Bonds are in 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 could cause these securities to be rated below
investment grade.

* * * * * * * *

NOTES: Bonds which are unrated expose 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. Each Portfolio 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.

<PAGE>

PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION

STATEMENT OF
ADDITIONAL INFORMATION
February 1, 1999

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

This Statement of Additional Information ("SAI") provides general
information about the Fund and the Portfolio. The Fund is a series of Eaton
Vance Municipals 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 .................................................. 1
Investment Restrictions ............................................... 6
Management and Organization ........................................... 8
Investment Advisory and Administrative Services ....................... 12
Other Service Providers ............................................... 14
Purchasing and Redeeming Shares ....................................... 15
Sales Charges ......................................................... 16
Performance ........................................................... 19
Taxes ................................................................. 21
Portfolio Trading ..................................................... 23
Financial Statements .................................................. 25

Appendices:
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
D: Tax Equivalent Yield Table ......................................... d-1
E: Ratings ............................................................ e-1

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

<PAGE>

STRATEGIES AND RISKS

MUNICIPAL OBLIGATIONS. Municipal obligations are issued to obtain funds for
various public and private purposes. Municipal 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 federal income tax and is not a tax
preference item for purposes of the AMT: (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 before August 7, 1986, which include
"qualified Section 501(c)(3) bonds" or refundings of certain obligations
included in the second category. Interest on certain "private activity bonds"
issued after August 7, 1986 is exempt from regular federal income tax, but
such interest (including a distribution by the Fund derived from such
interest) is treated as a tax preference item which could subject the
recipient to or increase the recipient's liability for the AMT. For corporate
shareholders, the Fund's distributions derived from interest on all municipal
obligations (whenever issued) is included in "adjusted current earnings" for
purposes of the AMT as applied to corporations (to the extent not already
included in alternative minimum taxable income as income attributable to
private activity bonds). In assessing the federal income tax treatment of
interest on any municipal obligation, the Portfolio 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.

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 bonds
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 of the industrial user
or users. The Portfolio 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 Portfolio 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 obligation 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 Portfolio 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 or 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 Portfolio as a
result of any such event, and the Portfolio may also manage (or engage other
persons to manage) or otherwise deal with any real estate, facilities or other
assets so acquired. The Portfolio anticipates that real estate consulting and
management services may be required with respect to properties securing
various municipal obligations in its portfolio or subsequently acquired by the
Portfolio. The Portfolio will incur additional expenditures in taking
protective action with respect to portfolio obligations in default and assets
securing such obligations.

The yields on municipal obligations are dependent on a variety of factors,
including purposes of issue and source of funds for repayment, general money
market conditions, general conditions of the municipal bond market, size of a
particular offering, 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 obligations 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 obligations with the same
maturity, coupon and rating may have different yields while obligations of the
same maturity and coupon with different ratings may have the same yield. In
addition, the market price of municipal obligations will normally fluctuate
with changes in interest rates, and therefore the net asset value of the
Portfolio will be affected by such changes.

ISSUER CONCENTRATION. The Portfolio may invest 25% or more of its total assets
in municipal obligations of the same type. There could be economic, business
or political developments which might affect all municipal obligations of the
same type. In particular, investments in industrial revenue bonds might
involve (without limitation) the following risks.

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 Portfolio may invest in municipal leases and
participations therein, which arrangements frequently involve special risks.
Municipal leases are obligations in the form of a lease or installment
purchase arrangement which is issued by state or local governments to acquire
equipment and facilities. Interest income from such obligations is generally
exempt from local and state taxes in the state of issuance. "Participations"
in such leases are undivided interests in a portion of the total obligation.
Participations entitle their holders to receive a pro rata share of all
payments under the lease. The obligation of the issuer to meet its obligations
under such leases is often subject to the appropriation by the appropriate
legislative body, on an annual or other basis, of funds for the payment of the
obligations. Investments in municipal leases are thus subject to the risk that
the legislative body will not make the necessary appropriation and the issuer
will not otherwise be willing or able to meet its obligation.

Certain municipal lease obligations owned by the Portfolio may be deemed
illiquid for the purpose of the Portfolio's 15% limitation on investments in
illiquid securities, unless determined by the investment adviser, pursuant to
guidelines adopted by the Trustees of the Portfolio, 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 Portfolio. In the event the Portfolio acquires an unrated municipal
lease obligation, the investment adviser will be responsible for determining
the credit quality of such obligation on an on-going basis, including an
assessment of the likelihood that the lease may or may not be cancelled.

ZERO COUPON BONDS. Zero coupon bonds are debt obligations which do not require
the periodic payment of interest and are issued at a significant discount from
face value. The discount approximates the total amount of interest the bonds
will accrue and compound over the period until maturity at a rate of interest
reflecting the market rate of the security at the time of issuance. The
Portfolio is required to accrue income from zero-coupon bonds on a current
basis, even though it does not receive that income currently in cash and the
Fund is required to distribute its share of the Portfolio's income for each
taxable year. Thus, the Portfolio may have to sell other investments to obtain
cash needed to make income distributions.

CREDIT QUALITY. While municipal obligations rated investment grade or below
and comparable unrated municipal obligations may have some quality and
protective characteristics, these characteristics can be expected to be offset
or outweighed by uncertainties or major risk exposures to adverse conditions.
Lower rated and comparable unrated municipal obligations are subject to the
risk of an issuer's inability to meet principal and interest payments on the
obligations (credit risk) and may also be subject to greater price volatility
due to such factors as interest rate sensitivity, market perception of the
creditworthiness of the issuer and general market liquidity (market risk).
Lower rated or unrated municipal obligations are also more likely to react to
real or perceived developments affecting market and credit risk than are more
highly rated obligations, which react primarily to movements in the general
level of interest rates.

Municipal obligations held by a Portfolio 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
Portfolio's investment policies. A Portfolio may retain in its portfolio an
obligation whose rating drops below B 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 a Portfolio is downgraded, causing the Portfolio 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 Portfolio's credit quality limitations.
In the case of a defaulted obligation, a Portfolio 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 a Portfolio.

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 a Portfolio invests in lower rated or unrated municipal obligations, the
achievement of the Portfolio's goals is more dependent on the investment
adviser's ability than would be the case if the Portfolio 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.

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 take place within a specified number of days after the
date of the Portfolio's commitment and are subject to certain conditions such
as the issuance of satisfactory legal opinions. The Portfolio 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 Portfolio to
buy such securities on a settlement date that could be several months or
several years in the future. The Portfolio may also purchase instruments that
give the Portfolio the option to purchase a municipal obligation when and if
issued.

The Portfolio 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 Portfolio
enters into the purchase commitment. When the Portfolio 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 Portfolio 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 Portfolio 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 Portfolio's net asset value than if it solely
set aside cash to pay for when-issued securities.

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 Portfolio during a time of declining interest rates,
the Portfolio 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 Portfolio may
retain the bond if interest rates decline.

LIQUIDITY AND PROTECTIVE PUT OPTIONS. The Portfolio may enter into a separate
agreement with the seller of the security or some other person granting the
Portfolio the right to put the security to the seller thereof or the other
person at an agreed upon price. The Portfolio intends to limit this type of
transaction to institutions (such as banks or securities dealers) which the
investment adviser believes present minimal 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 Portfolio or that selling
institutions will be willing to permit the Portfolio to exercise a put to
hedge against rising interest rates. The Portfolio 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 the Trustees of the Portfolio 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 Portfolio's
assets may be invested in securities as to which the Portfolio, 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 Portfolio 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 Portfolio's net asset value.

The secondary market for some municipal obligations issued within a state
(including issues which are privately placed with a Portfolio) is less liquid
than that for taxable debt obligations or other more widely traded municipal
obligations. No Portfolio will 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 a Portfolio 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, a Portfolio may be unable to dispose of
these municipal obligations at times when it would otherwise wish to do so at
the prices at which they are valued.

SECURITIES LENDING. The Portfolio 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 Portfolio from
securities loans will be taxable. If the management of the Portfolio decides
to make securities loans, it is intended that the value of the securities
loaned would not exceed 30% of the Portfolio's total assets. The Portfolio 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 Portfolio
(or of securities that the Portfolio expects to purchase). To hedge against
changes in rates or as a substitute for the purchase of securities, the
Portfolio 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 Portfolio 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 Portfolio
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 Portfolio
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 Portfolio's custodian for the benefit of the futures commission merchant
through whom the Portfolio 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
Portfolio from closing out positions and limiting its losses.

The Portfolio will engage in futures and related options transactions for
bona fide hedging purposes or non-hedging purposes as defined in or permitted
by CFTC regulations. 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 which it expects to purchase. The Portfolio will engage in
transactions in futures and related options contracts only to the extent such
transactions are consistent with the requirements of the Code for maintaining
qualification of the Fund as a regulated investment company for federal income
tax purposes (see "Taxes").

ASSET COVERAGE REQUIREMENTS. Transactions involving when-issued securities or
futures contracts and options (other than options that the 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 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 Portfolio 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 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
segregated accounts or to cover could impede portfolio management or the
Portfolio's ability to meet redemption requests or other current obligations.

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

PORTFOLIO TURNOVER. The Portfolio 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 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 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 Portfolio 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 Portfolio were replaced once in a
period of one year. A high turnover rate (100% or more) necessarily involves
greater expenses to the Portfolio. The Portfolio engages in portfolio trading
(including short-term trading) if it believes that a transaction including all
costs will help in achieving its investment objective.

INVESTMENT RESTRICTIONS

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

(1) Purchase any security (other than U.S. Government securities) if
such purchase, at the time thereof, would cause more than 5% of the total
assets of the Fund (taken at market value) to be invested in the
securities of a single issuer; provided, however, that the Fund may invest
all or part of its investable assets in an open-end management investment
company with substantially the same investment objective, policies and
restrictions as the Fund;

(2) 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;

(3) Make short sales of securities or maintain a short position,
unless at all times when a short position is open the Fund 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. (The Fund will make
such sales only for the purpose of deferring realization of gain or loss
for federal income tax purposes);

(4) Purchase securities of any issuer if such purchase, at the time
thereof, would cause more than 10% of the total outstanding voting
securities of such issuer to be held by the Fund; provided, however, that
the Fund may invest all or part of its investable assets in an open-end
management investment company with substantially the same investment
objective, policies and restrictions as the Fund;

(5) Purchase securities issued by any other open-end investment
company or investment trust; provided, however, that the Fund may invest
all or part of its investable assets in an open-end management investment
company with substantially the same investment objective, policies and
restrictions as the Fund;

(6) Purchase or retain in its portfolio any securities issued by an
issuer any of whose officers, directors, trustees or security holders is
an officer or Trustee of the Trust or is a member, officer, director or
trustee of any investment adviser of the Fund, if after the purchase of
the securities of such issuer by the Fund one or more of such persons owns
beneficially more than 1/2 of 1% of the shares or securities or both (all
taken at market value) of such issuer and such persons owning more than
1/2 of 1% of such shares or securities together own beneficially more than
5% of such shares or securities or both (all taken at market value);

(7) 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, or
participate on a joint or a joint and several basis in any trading account
in securities;

(8) Lend any of its funds or other assets to any person, directly or
indirectly, except (i) through repurchase agreements and (ii) through the
loan of a portfolio security. (The purchase of a portion of an issue of
debt obligations, whether or not the purchase is made on the original
issuance, is not considered the making of a loan);

(9) Borrow money or pledge its assets in excess of 1/3 of the value
of its net assets (excluding the amount borrowed) and then only if such
borrowing is incurred as a temporary measure for extraordinary or
emergency purposes or to facilitate the orderly sale of portfolio
securities to accommodate redemption requests; or issue securities other
than its shares of beneficial interest, except as appropriate to evidence
indebtedness, including reverse repurchase agreements, which the Fund is
permitted to incur. The Fund will not purchase securities while
outstanding temporary bank borrowings exceed 5% of its total assets;
provided, however, that the Fund may increase its interest in an open-end
management investment company with substantially the same investment
objective, policies and restrictions as the Fund while such borrowings are
outstanding. The deposit of cash, cash equivalents and liquid debt
securities in a segregated account with the custodian and/or with a broker
in connection with futures contracts or related options transactions and
the purchase of securities on a "when-issued" basis is not deemed to be a
pledge;

(10) Invest for the purpose of exercising control or management of
other companies; provided, however, that the Fund may invest all or part
of its investable assets in an open-end management investment company with
substantially the same investment objective, policies and restrictions as
the Fund;

(11) 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;

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

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

(14) Purchase oil, gas or other mineral leases or purchase partnership
interests in oil, gas or other mineral exploration or development
programs.

Notwithstanding the investment policies and restrictions of the Fund, the
Fund may invest all of its investable 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 approval
by the Fund's shareholders or with respect to the Portfolio without approval
of the Fund or its other investors. The Fund and the Portfolio will not:

(a) 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 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 the Board of Trustees of
the Trust or the Portfolio, or its delegate, determine to be liquid;
provided, however, that the Fund may invest without limitation in the
Portfolio or in another investment company with substantially the same
investment objective;

(b) engage in options, futures or forward transactions if more than 5%
of its net assets, as measured by the aggregate of the premiums paid by
the Fund or the Portfolio, would be so invested. The Fund and the
Portfolio may purchase put options on municipal obligations only if after
such purchase not more than 5% of its net assets, as measured by the
aggregate of the premiums paid for such options held by it would be so
invested; or

(c) 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. Neither the Fund nor the Portfolio
intend to invest in reverse repurchase agreements during the current
fiscal year.

For purposes of the Portfolio's investment restrictions, the determination
of the "issuer" of a municipal obligation which is not a general obligation
bond will be made by the 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 obligation.

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 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, or any
subsequent rating change below investment grade made by a rating service, will
not compel the Fund or the Portfolio, as the case may be, to dispose of such
security or other asset. Where applicable and notwithstanding the foregoing,
under normal market conditions the Fund and the Portfolio must take actions
necessary to comply with the policy of not investing more than 15% of net
assets in illiquid securities. Moreover, the Fund and Portfolio must always be
in compliance with the borrowing policies set forth above.

MANAGEMENT AND ORGANIZATION

FUND MANAGEMENT. The Trustees of the Trust are responsible for the overall
management and supervision of the Trust's affairs. The Trustees and officers
of the Trust and the Portfolio are listed below. Except as indicated, each
individual has held the office shown or other offices in the same company for
the last five years. Unless otherwise noted, the business address of each
Trustee and officer is 24 Federal Street, Boston, Massachusetts 02110. Those
Trustees who are "interested persons" of the Trust or the Portfolio, as
defined in the 1940 Act, are indicated by an asterisk(*).

JESSICA M. BIBLIOWICZ (38), Trustee
President and Chief Operating Officer of John A. Levin & Co. (a registered
investment advisor) (since July 1997) and a Director of Baker, Fentress &
Company which owns John A. Levin & Co. (since July 1997). Executive Vice
President of Smith Barney Mutual Funds (from July 1994 to June 1997).
Elected Trustee October 30, 1998. Trustee of various investment companies
managed by Eaton Vance or BMR since October 30, 1998.
Address: One Rockefeller Plaza, New York, NY 10020

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

SAMUEL L. HAYES, III (63), Trustee
Jacob H. Schiff Professor of Investment Banking Emeritus, Harvard University
Graduate School of Business Administration. Trustee of the Kobrick-Cendant
Investment Trust (mutual funds). Trustee of various investment companies
managed by Eaton Vance or BMR.
Address: 345 Nahatan Road, Westwood, Massachusetts 02090

NORTON H. REAMER (63), Trustee
Chairman of the Board and Chief Executive Officer, United Asset Management
Corporation (a holding company owning institutional investment management
firms); Chairman, President and Director, UAM Funds (mutual funds). Trustee
of various investment companies managed by Eaton Vance or BMR.
Address: One International Place, Boston, Massachusetts 02110

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

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

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

THOMAS M. METZOLD (40), 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 (53), Treasurer
Vice President of BMR and Eaton Vance. Officer of various investment companies
managed by Eaton Vance or BMR.

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

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

A. JOHN MURPHY (36), Assistant Secretary
Vice President of BMR and Eaton Vance since March 1, 1994. Officer of various
investment companies managed by Eaton Vance or BMR.

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

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

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

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

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

The fees and expenses of the noninterested Trustees of the Trust and the
Portfolio are paid by the Fund (and the other series of the Trust) and the
Portfolio, respectively. (The Trustees of the Trust and of the Portfolio who
are members of the Eaton Vance organization receive no compensation from the
Trust or the Portfolio.) During the fiscal year ended September 30, 1998, the
noninterested Trustees of the Trust and the Portfolio earned the following
compensation in their capacities as Trustees from the Trust, the Portfolio and
the 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) ................................. $ $ $
Donald R. Dwight .......................................... (3) (6)
Samuel L. Hayes, III ...................................... (4) (7)
Norton H. Reamer ..........................................
Lynn A. Stout(9) .........................................
John L. Thorndike ......................................... (5) (8)
Jack L. Treynor ...........................................
</TABLE>

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

ORGANIZATION. The Fund is a series of the Trust, which is organized under
Massachusetts law and is operated as an open-end management investment
company. The Fund changed its name from Eaton Vance National Tax Free Fund to
EV Marathon National Tax Free Fund on February 1, 1994 and to EV Marathon
National Municipals Fund on December 1, 1994. The Fund was reorganized into
multiple classes and changed its name to Eaton Vance National Municipals Fund
on October 1, 1997. The operations of the Class B reflect the operations of
the Fund prior to October 1, 1997. Class A and Class C are successors to the
operations of a separate series of the Trust.

The Trust may issue an unlimited number of shares of beneficial interest
(no par value per share) in one or more series (such as the Fund). The
Trustees of the Trust have divided the shares of the Fund into multiple
classes. Each class represents an interest in the Fund, but is subject to
different expenses, rights and privileges. The Trustees have the authority
under the Declaration of Trust to create additional classes of shares with
differing rights and privileges. When issued and outstanding, shares are fully
paid and nonassessable by the Trust. Shareholders are entitled to one vote for
each full share held. Fractional shares may be voted proportionately. Shares
of the Fund will be voted together except that only shareholders of a
particular class may vote on matters affecting only that class. Shares have no
preemptive or conversion rights and are freely transferable. In the event of
the liquidation of the Fund, shareholders of each class are entitled to share
pro rata in the net assets attributable to that class available for
distribution to shareholders.

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

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

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

The Trust's Declaration of Trust may be amended by the Trustees when
authorized by vote of a majority of the outstanding voting securities of the
Trust, the financial interests of which are affected by the amendment. The
Trustees may also amend the Declaration of Trust without the vote or consent
of shareholders to change the name of the Trust or any series or to make such
other changes (such as reclassifying series of classes of shares or
restructuring the Trust) as do not have a materially adverse effect on the
financial interests of shareholders or if they deem it necessary to conform it
to applicable federal or state laws or regulations. The Trust or any series or
class thereof may be terminated by: (1) the affirmative vote of the holders of
not less than two-thirds of the shares outstanding and entitled to vote at any
meeting of shareholders of the Trust or the appropriate series or class
thereof, or by an instrument or instruments in writing without a meeting,
consented to by the holders of two-thirds of the shares of the Trust or a
series or class thereof, provided, however, that, if such termination is
recommended by the Trustees, the vote of a majority of the outstanding voting
securities of the Trust or a series or class thereof entitled to vote thereon
shall be sufficient authorization; or (2) by means of an instrument in writing
signed by a majority of the Trustees, to be followed by a written notice to
shareholders stating that a majority of the Trustees has determined that the
continuation of the Trust or a series or a class thereof is not in the best
interest of the Trust, such series or class or of their respective
shareholders.

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

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

The Portfolio is organized as a trust under the laws of the state of New
York and intends to be treated as a partnership for federal tax purposes. In
accordance with the Declaration of Trust of the Portfolio, there will normally
be no meetings of the investors for the purpose of electing Trustees unless
and until such time as less than a majority of the Trustees of the Portfolio
holding office have been elected by investors. In such an event the Trustees
of the Portfolio then in office will call an investors' meeting for the
election of Trustees. Except for the foregoing circumstances and unless
removed by action of the investors in accordance with the Portfolio's
Declaration of Trust, the Trustees shall continue to hold office and may
appoint successor Trustees.

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

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

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

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

The Fund may withdraw (completely redeem) all its assets from the
Portfolio at any time if the Board of Trustees of the Trust determines that it
is in the best interest of the Fund to do so. In the event the Fund withdraws
all of its assets from the Portfolio, or the Board of Trustees of the Trust
determines that the investment objective of such 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.

For a description of the compensation that the Portfolio pays BMR, see the
prospectus. As at September 30, 1998, the Portfolio had net assets of
$ . For the fiscal years ended September 30, 1998, 1997 and 1996,
the Portfolio paid BMR advisory fees of $ , $9,517,084 and $9,942,568,
respectively (equivalent to 0. %, 0.44% and 0.44%, respectively, of the
Portfolio's average net assets for each such period).

The Investment Advisory Agreement with BMR 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 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 (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, 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 Fund, Eaton Vance has been engaged to administer
the Fund's affairs, subject to the supervision of the Trustees of the Trust,
and shall furnish for the use of the Fund office space and all necessary
office facilities, equipment and personnel for administering the affairs of
the Fund.

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 M. Dozier Gardner, James B. Hawkes, Benjamin A. Rowland,
Jr., John G.L. Cabot, John M. Nelson, Vincent M. O'Reilly and Ralph Z.
Sorenson. All of the issued and outstanding shares of Eaton Vance are owned by
EVC. All of the issued and outstanding shares of BMR are owned by Eaton Vance.
All shares of the outstanding Voting Common Stock of EVC are deposited in a
Voting Trust, the Voting Trustees of which are Messrs. Gardner, Hawkes and
Rowland, Alan R. Dynner, Thomas E. Faust, Jr., William M. Steul, and Wharton
P. Whitaker. The Voting Trustees have unrestricted voting rights for the
election of Directors of EVC. All of the outstanding voting trust receipts
issued under said Voting Trust are owned by certain of the officers of BMR and
Eaton Vance who are also officers, or officers and Directors of EVC and EV. As
indicated under "Management and Organization", all of the officers of the
Trust (as well as Mr. Hawkes who is also a Trustee) hold positions in the
Eaton Vance organization.

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

Eaton Vance and its affiliates act as adviser to a family of mutual funds,
and individual and various institutional accounts, including corporations,
hospitals, retirement plans, universities, foundations and trusts. Eaton Vance
mutual funds feature international equities, domestic equities, tax-free
municipal bonds, and U.S. government and corporate bonds. Lloyd George
Management has advised Eaton Vance's international equity funds since 1992.
Founded in 1991, Lloyd George is headquartered in Hong Kong with offices in
London and Mumbai, India. It has established itself as a leader in investment
management in Asian equities and other global markets. Lloyd George features
an experienced team of investment professionals that began working together in
the mid-1980s. Lloyd George analysts cover East Asia, the India subcontinent,
Russia and Eastern Europe, Latin America, Australia and New Zealand from
offices in Hong Kong, London and Mumbai. Together Eaton Vance and Lloyd George
manage over $28 billion in assets. Eaton Vance mutual funds are distributed by
the principal underwriter both within the United States and offshore.

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

Eaton Vance offers single-state tax-free portfolios in more states than
any other sponsor of mutual funds. There are 32 long-term state portfolios, 4
national portfolios and 9 limited maturity portfolios, which serve as
investment vehicles for over 44 mutual funds with varying pricing options. A
staff of 26 (including portfolio managers and 11 credit specialists) is
responsible for the day-to-day management of over 3,500 issues in 45 mutual
fund portfolios. Assets managed by the municipal investment group are
currently over $7.6 billion. The investment philosophy of the municipal
investment group is to: seek value by avoiding unnecessary credit risk; build
portfolios one security at a time; and take a long-term approach to managing
market risk. Over the long-term, the group seeks to maximize tax-free income
by keeping portfolios fully invested (rather than trying to "time the market"
for short-term results) and reduce potential capital losses due to poor credit
quality. Diligent and continuing research and analysis are a critical
component of the municipal investment group's investment philosophy and long-
term strategy.

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

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

EXPENSES. The Fund and Portfolio are 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 those resulting
from the fee paid to the principal underwriter for repurchase transactions.

OTHER SERVICE PROVIDERS

PRINCIPAL UNDERWRITER. Eaton Vance Distributors, Inc. ("EVD"), 24 Federal
Street, Boston, MA 02110, is the Fund's principal underwriter. The principal
underwriter acts as principal in selling shares under a Distribution Agreement
with the Trust. The expenses of printing copies of prospectuses used to offer
shares and other selling literature and of advertising are borne by the
principal underwriter. The fees and expenses of qualifying and registering and
maintaining qualifications and registrations of the Fund and its shares under
federal and state securities laws are borne by the Fund. The Distribution
Agreement as it applies to Class A 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 the Portfolio. IBT has
the custody of all cash and securities representing the Fund's interest in the
Portfolio, has custody of all the Portfolio's assets, maintains the general
ledger of the Portoflio 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. Deloitte & Touche LLP, 125 Summer Street, Boston,
Massachusetts, are the independent accountants of the Fund and the Portfolio,
providing audit services, tax return preparation, and assistance and
consultation with respect to the preparation of filings with the SEC.

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

PURCHASING AND REDEEMING SHARES

CALCULATION OF NET ASSET VALUE. The net asset value of the Portfolio is
computed by IBT (as agent and custodian for the Portfolio) by subtracting the
liabilities of the Portfolio from the value of its total assets. 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 Portfolio,
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 Portfolio. Other assets are valued at fair
value using methods determined in good faith by or at the direction of the
Trustees of the Portfolio. The Fund and the Portfolio will be closed for
business and will not price their respective shares or interests on the
following business holidays: New Year's Day, Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.

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

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".

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.

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 Plans for any particular period of
time. Suspension of the offering of shares would not, of course, affect a
shareholder's ability to redeem shares.

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, although they are a return of
principal, may require the recognition of taxable gain or loss. Income
dividends and capital gains distributions in connection with withdrawal plan
accounts will be credited at net asset value as of the record date for each
distribution. Continued withdrawals in excess of current income will
eventually use up principal, particularly in a period of declining market
prices. A shareholder may not have a withdrawal plan in effect at the same
time he or she has authorized Bank Automated Investing or is otherwise making
regular purchases of Fund shares. The shareholder, the transfer agent or the
principal underwriter will be able to terminate the withdrawal plan at any
time without penalty.

SALES CHARGES

DEALER COMMISSIONS. Upon the sale of Class A shares, investment dealers will
be paid the following dealer commission:

DEALER COMMISSION
AS PERCENTAGE OF
AMOUNT OF PURCHASE OFFERING PRICE
- ------------------ --------------
Less than $25,000 4.50%
$25,000 but less than $100,000 4.25
$100,000 but less than $250,000 3.50
$250,000 but less than $500,000 2.75
$500,000 but less than $1,000,000 2.00
$1,000,000 or more 1.00

The principal underwriter may, from time to time, at its own expense,
provide additional incentives to investment dealers which employ registered
representatives who sell Fund shares and/or shares of other funds distributed
by the principal underwriter. In some instances, such additional incentives
may be offered only to certain investment dealers whose representatives sell
or are expected to sell significant amounts of shares. In addition, the
principal underwriter may from time to time increase or decrease the sales
commissions payable to investment dealers. The principal underwriter may
allow, upon notice to all investment dealers with whom it has agreements,
discounts up to the full sales charge during the periods specified in the
notice. During periods when the discount includes the full sales charge, such
investment dealers may be deemed to be underwriters as that term is defined in
the Securities Act of 1933.

SALES CHARGE WAIVERS. Class A shares may be sold at net asset value to current
and retired Directors and Trustees of Eaton Vance funds, including the
Portfolio; to clients and current and retired officers and employees of Eaton
Vance, its affiliates and other investment advisers of Eaton Vance sponsored
funds; to registered representatives and employees of investment dealers and
bank employees who refer customers to registered representatives of invetment
dealers; to officers and employees of IBT and the transfer agent; and to such
persons' spouses, parents, siblings and children and their beneficial
accounts. Class A shares may also be issued at net asset value (1) in
connection with the merger of an investment company or series thereof with the
Fund, (2) to investors making an investment as part of a fixed fee program
whereby an entity unaffiliated with the investment adviser provides multiple
investment services, such as management, brokerage and custody, and (3) to
investment advisors, financial planners or other intermediaries who place
trades for their own accounts or the accounts of their clients and who charge
a management, consulting or other fee for their services; clients of such
investment advisors, financial planners or other intermediaries who place
trades for their own accounts if the accounts are linked to the master account
of such investment advisor, financial planner or other intermediary on the
books and records of the broker or agent; and retirement and deferred
compensation plans and trusts used to fund those plans, including, but not
limited to, those defined in Section 401(a), 403(b) or 457 of the Internal
Revenue Code of 1986, as amended (the "Code") and "rabbi trusts". Subject to
the applicable provisions of the 1940 Act, the Trust may issue Class A shares
at net asset value in the event that an investment company (whether a
regulated or private investment company or a personal holding company) is
merged or consolidated with or acquired by the Class. Normally no sales
charges will be paid in connection with an exchange of Class A shares for the
assets of such investment company. Class A shares may be sold at net asset
value to any investment advisory, agency, custodial or trust account managed
or administered by Eaton Vance or by any parent, subsidiary or other affiliate
of Eaton Vance. Class A shares are offered at net asset value to the foregoing
persons and in the foregoing situations because either (i) there is no sales
effort involved in the sale of shares or (ii) the investor is paying a fee
(other than the sales charge) to the investment dealer involved in the sale.

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

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

RIGHT OF ACCUMULATION. The applicable sales charge level for the purchase of
Class A shares is calculated by taking the dollar amount of the current
purchase and adding it to the value (calculated at the maximum current
offering price) of the Class A shares the shareholder owns in his or her
account(s) in the Fund, and shares of other funds exchangeable for Class A
shares. The sales charge on the shares being purchased will then be at the
rate applicable to the aggregate. Shares purchased (i) by an individual, his
or her spouse and their children under the age of twenty-one, and (ii) by a
trustee, guardian or other fiduciary of a single trust estate or a single
fiduciary account, will be combined for the purpose of determining whether a
purchase will qualify for the Right of Accumulation and if qualifying, the
applicable sales charge level. For any such discount to be made available, at
the time of purchase a purchaser or his or her investment dealer must provide
the principal underwriter (in the case of a purchase made through an
investment dealer) or the transfer agent (in the case of an investment made by
mail) with sufficient information to permit verification that the purchase
order qualifies for the accumulation privilege. Confirmation of the order is
subject to such verification. The Right of Accumulation privilege may be
amended or terminated at any time as to purchases occurring thereafter.

DISTRIBUTION AND SERVICE PLANS. The Trust has adopted a Service Plan (the
"Class A Plan") for the Fund's Class A shares that is designed to meet the
service fee requirements of the sales charge rule of the National Association
of Securities Dealers, Inc. (the "NASD"). (Management believes service fee
payments are not distribution expenses governed by Rule 12b-1 under the 1940
Act, but has chosen to have the Plan approved as if that Rule were
applicable.) The Class A Plan provides that the Class A may make service fee
payments for personal services and/or the maintenance of shareholder accounts
to the principal underwriter, investment dealers and other persons in amounts
not exceeding .25% of its average daily net assets for any fiscal year. The
Trustees of the Trust have initially implemented the Class A Plan by
authorizing Class A to make quarterly service fee payments to the principal
underwriter and investment dealers in amounts not expected to exceed .20% of
its average daily net assets for any fiscal year which is based on the value
of Class A shares sold by such persons and remaining outstanding for at least
twelve months. However, the Class A Plan authorizes the Trustees of the Trust
to increase payments without action by Class A shareholders of the Fund,
provided that the aggregate amount of payments made in any fiscal year does
not exceed .25% of average daily net assets. For the service fees paid by
Class A shares, see Appendix A.

The Trust has also adopted compensation-type Distribution Plans ("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 Class B shares of the Fund. On each sale of Fund shares (excluding
reinvestment of distributions), the Fund will pay the principal underwriter
amounts representing (i) sales commissions equal to 5% for Class B shares and
6.25% for Class C shares of the amount received by the Fund for each share
sold and (ii) distribution fees calculated by applying the rate of 1% over the
prime rate then reported in The Wall Street Journal to the outstanding balance
of uncovered distribution charges (as described below) of the principal
underwriter. To pay these amounts, each Class pays the principal underwriter a
fee, accrued daily and paid monthly, at an annual rate not exceeding .75% of
its average daily net assets to finance the distribution of its shares. Such
fees compensate the principal underwriter for sales commissions paid by it to
investment dealers on the sale of shares and for interest expenses. For sales
of Class B shares, the principal underwriter uses its own funds to pay sales
commissions (except on exchange transactions and reinvestments) to investment
dealers at the time of sale equal to 4% of the purchase price of the Class B
shares sold by such dealers. For Class C shares, the principal underwriter
currently expects to pay to an investment dealer (a) sales commissions (except
on exchange transactions and reinvestments) at the time of sale equal to .75%
of the purchase price of the shares sold by such dealer, and (b) monthly sales
commissions approximately equivalent to 1/12 of .75% of the value of shares
sold by such dealer and remaining outstanding for at least one year. During
the first year after a purchase of Class C shares, the principal underwriter
will retain the sales commission as reimbursement for the sales commissions
paid to investment dealers at the time of sale. CDSCs paid to the principal
underwriter will be used to reduce amounts owed to it. The Class B and Class C
Plans provide that the Fund will make no payments to the principal underwriter
in respect of any day on which there are no outstanding uncovered distribution
charges of the principal underwriter. CDSCs and accrued amounts will be paid
by the Trust to the principal underwriter whenever there exist uncovered
distribution charges. Because payments to the principal underwriter under the
Class B and Class C Plans are limited, uncovered distribution charges (sales
commissions paid by the principal underwriter plus interest, less the above
fees and CDSCs received by it) may exist indefinitely. For the sales
commissions and CDSCs paid on (and uncovered distribution charges of) Class B
and Class C shares, see Appendix B and Appendix C, respectively.

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

The amount of uncovered distribution charges of the principal underwriter
at any particular time depends upon various changing factors, including the
level and timing of sales of shares, the nature of such sales (i.e., whether
they result from exchange transactions, reinvestments or from cash sales
through investment dealers), the level and timing of redemptions of shares
upon which a CDSC will be imposed, the level and timing of redemptions of
shares upon which no CDSC will be imposed (including redemptions of shares
pursuant to the exchange privilege which result in a reduction of uncovered
distribution charges), changes in the level of the net assets of the Class,
and changes in the interest rate used in the calculation of the distribution
fee under the Class B and Class C Plans.

The Class B and Class C Plans also authorizes 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. The
Trustees of the Trust have initially implemented this provision of the Class B
Plan by authorizing each Class B to make quarterly service fee payments to the
principal underwriter and investment dealers in amounts not expected to exceed
.20% of the average daily net assets for any fiscal year which is based on the
value of Class B shares sold by such persons and remaining outstanding for at
least 12 months. This fee is paid quarterly in arrears based on the value of
Class B shares sold by such persons and remaining outstanding for at least
twelve months. For Class C, investment dealers currently receive (a) a service
fee (except on exchange transactions and reinvestments) at the time of sale
equal to .25% of the purchase price of the Class C shares sold by such dealer,
and (b) monthly service fees approximately equivalent to 1/12 of .25% of the
value of Class C shares sold by such dealer and remaining outstanding for at
least one year. During the first year after a purchase of Class C shares, the
principal underwriter will retain the service fee as reimbursement for the
service fee payment made to investment dealers at the time of sale. For the
service fees paid by Class B and Class C shares, see Appendix B and Appendix
C, respectively.

Currently, payments of sales commissions and distribution fees and of
service fees may equal 1% of a Class's average daily net assets per annum. The
Trust believes that the combined rate of all these payments may be higher than
the rate of payments made under distribution plans adopted by other investment
companies pursuant to Rule 12b-1. Although the principal underwriter will use
its own funds (which may be borrowed from banks) to pay sales commissions at
the time of sale, it is anticipated that the Eaton Vance organization will
profit by reason of the operation of the Class B and Class C Plans through an
increase in the Fund's assets (thereby increasing the advisory fee payable to
BMR by the Portfolio) resulting from sale of shares and through the amounts
paid to the principal underwriter, including CDSCs, pursuant to the Plans. The
Eaton Vance organization may be considered to have realized a profit under the
Class B and Class C Plans if at any point in time the aggregate amounts
theretofore received by the principal underwriter pursuant to the Class B and
Class C Plans 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, Class B and Class C Plans continue in effect from year to
year so long as such continuance is approved at least annually by the vote of
both a majority of (i) the noninterested Trustees of the Trust who have no
direct or indirect financial interest in the operation of the Plan or any
agreements related to the Plan (the "Plan Trustees") and (ii) all of the
Trustees then in office. Each Plan may be terminated at any time by vote of a
majority of the Plan Trustees or by a vote of a majority of the outstanding
voting securities of the applicable Class. Each Plan requires quarterly
Trustee review of a written report of the amount expended under the Plan and
the purposes for which such expenditures were made. The Plans may not be
amended to increase materially the payments described therein without approval
of the shareholders of the affected Class and the Trustees. So long as a Plan
is in effect, the selection and nomination of the noninterested Trustees shall
be committed to the discretion of such Trustees. The Class A, Class B and
Class C Plans were approved by the Trustees, including the Plan Trustees, on
June 23, 1997.

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

PERFORMANCE

Average annual total return is determined separately for each Class of the
Fund by multiplying a hypothetical initial purchase order of $1,000 by the
average annual compound rate of return (including capital appreciation/
depreciation, and distributions paid and reinvested) for the stated period and
annualizing the result. The calculation assumes (i) that all distributions are
reinvested at net asset value on the reinvestment dates during the period,
(ii) the deduction of the maximum sales charge from the initial $1,000
purchase order for Class A shares, (iii) a complete redemption of the
investment and, (iv) the deduction of any CDSC at the end of the period. 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 held
by the Portfolio based on prescribed methods, reduced by accrued Fund and
Class expenses for the period with the resulting number being divided by the
average daily number of Class shares outstanding and entitled to receive
distributions during the period. This yield figure does not reflect the
deduction of any CDSCs which (if applicable) are imposed on certain
redemptions at the rates set forth under "Sales Charges" in the prospectus.
Yield calculations assume the current maximum initial sales charge for Class A
shares set forth under "Sales Charges" in the prospectus. (Actual yield may be
affected by variations in sales charges on investments.) A taxable-equivalent
yield is computed by dividing the tax-exempt yield by 1 minus a stated rate.

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

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

Information about portfolio allocation and holdings of the Portfolio 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 Portfolio'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 the 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.

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

Such information may also address different methods for saving money and
the results of such methods, as well as the benefits of investing in municipal
bond funds. Such information may describe the following advantages of
investing in a municipal bond mutual fund versus individual municipal bonds:
regular monthly income; free reinvestment of distributions; potential for
increased income; bond diversification; liquidity; low-cost easy access; and
active management and in depth credit analysis by investment professionals. In
addition, by investing in a municipal bond fund instead of individual bonds,
an investor can avoid dealing with the complexities of the municipal bond
market, while benefitting from the market access and lower transactions costs
enjoyed by municipal bond funds.

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

TAXES

Each series of the Trust is treated as a separate entity for federal
income tax purposes. The Fund has elected to be treated and intends to qualify
each year as a regulated investment company ("RIC") under the Code.
Accordingly, the Fund intends to satisfy certain requirements relating to
sources of its income and diversification of its assets and to distribute
substantially all of its ordinary income (including tax-exempt income) and net
income (after reduction by any available capital loss carryforwards) in
accordance with the timing requirements imposed by the Code, so as to maintain
its RIC status and avoid paying any federal income or excise tax. The Fund so
qualified for its fiscal year ended September 30, 1998. Because the Fund
invests its assets in the Portfolio, the Portfolio normally must satisfy the
applicable source of income and diversification requirements in order for the
Fund to also satisfy these requirements. The Portfolio will allocate at least
annually among its investors, including the Fund, each investor's distributive
share of the Portfolio's net taxable (if any) and tax-exempt investment
income, net realized capital gains, and any other items of income, gain, loss,
deduction or credit. For purposes of applying the requirements of the Code
regarding qualification as a RIC, the Fund (i) will be deemed to own its
proportionate share of each of the assets of the Portfolio and (ii) will be
entitled to the gross income of the Portfolio attributable to such share.

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

The Portfolio'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 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.

Investments in lower-rated or unrated securities may present special tax
issues for the Portfolio (and hence 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 Portfolio's taking certain positions in connection with ownership of
such distressed securities. For example, the Code is unclear regarding: (i)
when the Portfolio 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 the tax-exempt interest
income allocated to it by the Portfolio 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). For purposes of applying this 50% requirement, the Fund will
be deemed to own its proportionate share of each of the assets of the
Portfolio, and the Portfolio currently intends to invest its assets in a
manner such that the Fund can meet this 50% requirement. Interest on certain
municipal obligations is treated as a tax preference item for purposes of the
AMT. Shareholders of the Fund are required to report tax-exempt interest on
their federal income tax returns.

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 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 after 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.

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 Portfolio and the value of the securities held by the Portfolio may be
affected.

In the course of managing its investments, the Portfolio 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 Portfolio 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 Portfolio
and allocated to 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 Portfolio's transactions in options and futures contracts will be
subject to special tax rules that may affect the amount, timing and character
of Fund distributions to shareholders. For example, certain positions held by
the Portfolio 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 Portfolio that substantially
diminish the Portfolio'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 Portfolio losses, adjustments in the holding period of
Portfolio securities and conversion of short-term into long-term capital
losses. The Portfolio may have to limit its activities in options and futures
contracts in order to enable the Fund to maintain its RIC status.

Any loss realized upon the sale or exchange of shares of the Fund with a
tax holding period of 6 months or less will be disallowed to the extent the
shareholder has received tax-exempt interest with respect to such shares and,
to the extent the loss exceeds the disallowed amount, will be treated as a
long-term capital loss to the extent of any distribution treated as net long-
term capital gains with respect to such shares. In addition, a loss realized
on a redemption or other disposition of Fund shares may be disallowed to the
extent the shareholder acquired other Fund shares (whether through the
reinvestment of distributions or otherwise) within the period beginning 30
days before the redemption of the loss shares and ending 30 days after such
date.

Amounts paid by the Fund to individuals and certain other shareholders who
have not provided the Fund with their correct taxpayer identification number
("TIN") and certain certifications required by the Internal Revenue Service
(the "IRS"), as well as shareholders with respect to whom the Fund has
received notification from the IRS or a broker, may be subject to "backup"
withholding of federal income tax 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.

Non-resident alien individuals, foreign corporations and certain other
foreign entities generally will be subject to a U.S. withholding tax at a rate
of 30% on the Fund's distributions from its ordinary income and the excess of
its net short-term capital gain over its net long-term capital loss, unless
the tax is reduced or eliminated by an applicable tax convention.
Distributions from the excess of the Fund's net long-term capital gain over
its net short-term capital loss received by such shareholders and any gain
from the sale or other disposition of shares of the Fund generally will not be
subject to U.S. federal income taxation, provided that non-resident alien
status has been certified by the shareholder. Different U.S. tax consequences
may result if: (i) the shareholder is engaged in a trade or business in the
United States; (ii) the shareholder is present in the United States for a
sufficient period of time during a taxable year to be treated as a U.S.
resident, (generally 180 days or more); or (iii) the shareholder fails to
provide any required certifications regarding its status as a non-resident
alien investor. Foreign shareholders should consult their tax advisers
regarding the U.S. and foreign tax consequences of an investment in the Fund.

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

STATE AND LOCAL TAXES
The exemption of interest income for federal income tax purposes does not
necessarily result in exemption under the income or other tax laws of any
state or local taxing authority. Shareholders of the Fund may be exempt from
state and local taxes on distributions of tax-exempt interest income derived
from obligations of the state and/or municipalities of the state in which they
are resident, but taxable generally on income derived from obligations of
other jurisdictions. The Fund will report annually to shareholders, with
respect to net tax exempt income earned, the percentages representing the
proportionate ratio of such income earned in each state.

Shareholders should consult their own tax advisers with respect to the
state, local and foreign tax consequences of investing in the Fund.

PORTFOLIO TRADING

Decisions concerning the execution of Portfolio security transactions,
including the selection of the market and the executing firm, are made by BMR.
BMR is also responsible for the execution of transactions for all other
accounts managed by it. BMR places the portfolio security transactions of the
Portfolio and of all other accounts managed by it for execution with many
firms. BMR uses its best efforts to obtain execution of portfolio security
transactions at prices which are advantageous to the Portfolio and at
reasonably competitive spreads or (when a disclosed commission is being
charged) at reasonably competitive commission rates. In seeking such
execution, BMR will use its best judgment in evaluating the terms of a
transaction, and will give consideration to various relevant factors,
including without limitation the full range and quality of the executing
firm's services, the value of the brokerage and research services provided,
the responsiveness of the firm to BMR, 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 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 Portfolio
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 Portfolio 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
Portfolio will incur a brokerage commission. Although spreads or commissions
on portfolio security transactions will, in the judgment of BMR, be reasonable
in relation to the value of the services provided, spreads or commissions
exceeding those which another firm might charge may be paid to firms who were
selected to execute transactions on behalf of the Portfolio and BMR's other
clients for providing brokerage and research services to BMR.

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

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

Municipal obligations 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 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 invesment policies that coincide with the particulars of a
specific investment; (iii) pro rata allocation would result in odd-lot or de
minimis amounts being allocated to a portfolio or other client; or (iv) where
BMR reasonably determines that departure from a pro rata allocation is
advisable. While these aggregation and allocation policies could have a
detrimental effect on the price or amount of the securities available to the
Portfolio from time to time, it is the opinion of the Trustees of the Trust
and the Portfolio that the benefits from the BMR organization outweigh any
disadvantage that may arise from exposure to simultaneous transactions. For
the fiscal years ended September 30, 1998, 1997 and 1996, the Portfolio paid
brokerage commissions of $ , $145,625 and $123,200, respectively, on
portfolio security transactions aggregating $ , $2,781,589,000 and
$1,545,011,045, respectively, 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).

FINANCIAL STATEMENTS

The audited financial statements of and independent auditors' reports for
the Fund and the Portfolio, appear in the Fund's most recent annual report to
shareholders and are incorporated by reference into this SAI. A copy of the
Fund's annual report accompanies this SAI. Consistent with applicable law,
duplicate mailings of shareholder reports and certain other Fund information
to shareholders residing at the same address may be eliminated.

<PAGE>

APPENDIX A

CLASS A FEES, PERFORMANCE AND OWNERSHIP

SERVICE FEES
For the fiscal year ended September 30, 1998, Class A made service fee
payments under the Plan aggregating $ , of which $ was paid to
investment dealers and the balance of which was retained by the principal
underwriter.

PRINCIPAL UNDERWRITER
The total sales charges paid in connection with the sales of Class A
shares during the fiscal year ended September 30, 1998 was $ , of
which $ was received by the principal underwriter. For the fiscal year
ended September 30, 1998, investment dealers received $ from the total
sales charges.

PERFORMANCE INFORMATION

The table below indicates the cumulative and average total return on a
hypothetical investment in shares of $1,000. Total return for the period prior
to October 1, 1997 reflects the total return of the predecessor to Class A.
Total return prior to April 5, 1994 reflects the total return of Class B,
adjusted to reflect the Class A sales charge. The Class B total return has not
been adjusted to reflect certain other expenses (such as distribution and/or
service fees). If such adjustments were made, the Class A total return would
be different. The "Value of Initial Investment" reflects the deduction of the
maximum sales charge of 4.75%. Past performance is not indicative of future
results. Investment return and principal value will fluctuate; shares, when
redeemed, may be worth more or less than their original cost.

<TABLE>
VALUE OF A $1,000 INVESTMENT

<CAPTION>
TOTAL RETURN TOTAL RETURN
EXCLUDING MAXIMUM INCLUDING MAXIMUM
VALUE OF VALUE OF SALES CHARGE SALES CHARGE
INVESTMENT INVESTMENT INITIAL INVESTMENT ------------------------- -------------------------
PERIOD* DATE INVESTMENT ON 9/30/98 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ------------------------ --------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
10 Years Ended
9/30/98 9/30/88 $ $ % % % %
5 Years Ended
9/30/98 9/30/93 $ $ % % % %
1 Year Ended
9/30/98 9/30/97 $ $ % % % %
</TABLE>

- ----------
*Predecessor Fund commenced operations April 5, 1994.

For the thirty-day period ended September 30, 1998, the yield of Class A
shares was %. The yield required of a taxable security that would produce
an after-tax yield equivalent to % would be %, assuming a federal rate
of 31%.

See the Tax Equivalent Yield Table in Appendix D to this SAI for
information concerning applicable tax rates and income brackets.

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

As at November 2, 1998, the Trustees and officers of the Trust, as a
group, owned in the aggregate less than 1% of the outstanding Class A shares
of the Fund. As of November 2, 1998, Merrill Lynch, Pierce, Fenner & Smith,
Inc., Jacksonville, FL 32246 was the record owner of approximately 17.3% of
the outstanding Class A shares, which were held on behalf of its customers who
are the beneficial owners of such shares, and as to which it had voting power
under certain limited circumstances. To the knowledge of the Trust, no other
person owned of record or beneficially 5% or more of the Fund's outstanding
Class A shares as of such date.

<PAGE>

APPENDIX B

CLASS B FEES, PERFORMANCE AND OWNERSHIP

DISTRIBUTION PLAN
During the fiscal year ended September 30, 1998, the principal underwriter
paid to investment dealers sales commissions of $ on sales of Class B
shares. During the same period, the Fund made distribution payments to the
principal underwriter under the Distribution Plan aggregating $ and
the principal underwriter received approximately $ in CDSCs imposed
on early redeeming shareholders. During the fiscal year ended September 30,
1998, Class B made service fee payments to the principal underwriter and
investment dealers aggregating $ of which $ was paid to
investment dealers and the balance of which was retained by the principal
underwriter.

PRINCIPAL UNDERWRITER
The Trust has authorized the principal underwriter to act as its agent in
repurchasing shares at the rate of $2.50 for each repurchase transaction
handled by the principal underwriter. For the fiscal year ended September 30,
1998, Class B paid the principal underwriter $ for repurchase
transactions handled by it.

PERFORMANCE INFORMATION

The table below indicates the cumulative and average total return on a
hypothetical investment of $1,000 in Class B shares for the periods shown in
the table. Past performance is not indicative of future results. Investment
return and principal value will fluctuate; shares, when redeemed, may be worth
more or less than their original cost.

<TABLE>
<CAPTION>
VALUE OF VALUE OF
INVEST- INVEST-
MENT BEFORE MENT AFTER TOTAL RETURN BEFORE TOTAL RETURN AFTER
DEDUCTING THE DEDUCTING THE DEDUCTING THE CDSC DEDUCTING THE CDSC
INVESTMENT INVESTMENT AMOUNT OF CDSC ON CDSC ON ------------------------- -------------------------
PERIOD DATE INVESTMENT 9/30/98 9/30/98 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ------------- ---------- ---------- ------------ ------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
10 Years
Ended
9/30/98 9/30/88 $1,000 $ $ % % % %
5 Years
Ended
9/30/98 9/30/93 $1,000 $ $ % % % %
1 Year
Ended
9/30/98 9/30/97 $1,000 $ $ % % % %
</TABLE>

For the thirty-day period ended September 30, 1998, the yield of Class B
shares was %. The yield required of a taxable security that would produce
an after-tax yield equivalent to % would be %, assuming a federal tax
rate of 31%.

See the Tax Equivalent Yield Table in Appendix D to this SAI for
information concerning applicable tax rates and income brackets.

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

As at November 2, 1998, the Trustees and officers of the Trust, as a
group, owned in the aggregate less than 1% of the outstanding Class B shares
of the Fund. As of November 2, 1998, Merrill Lynch, Pierce, Fenner & Smith,
Inc., Jacksonville, FL 32246 was the record owner of approximately 27.3% of
the outstanding Class B shares, which were held on behalf of its customers who
are the beneficial owners of such shares, and as to which it had voting power
under certain limited circumstances. To the knowledge of the Trust, no other
person owned of record or beneficially 5% or more of the Fund's outstanding
Class B shares as of such date.

<PAGE>

APPENDIX C

CLASS C FEES, PERFORMANCE AND OWNERSHIP

DISTRIBUTION AND SERVICE FEES
During the fiscal year ended September 30, 1998, the principal underwriter
paid to investment dealers sales commissions of $ on sales of shares
of Class C shares. During the same period, the Fund made distribution payments
to the principal underwriter under the Distribution Plan aggregating $
and the principal underwriter received approximately $ in CDSCs
imposed on early redeeming shareholders. During the fiscal year ended
September 30, 1998, Class C made service fee payments to the principal
underwriter and investment dealers aggregating $ of which $
was paid to investment dealers and the balance of which was retained by the
principal underwriter.

PRINCIPAL UNDERWRITER
The Trust has authorized the principal underwriter to act as its agent in
repurchasing shares at the rate of $2.50 for each repurchase transaction
handled by the principal underwriter. For the fiscal year ended September 30,
1998, Class C paid the principal underwriter $ for repurchase
transactions handled by it.

PERFORMANCE INFORMATION

The table below indicates the cumulative and average annual total return
on a hypothetical investment in shares of $1,000. Total return for the period
prior to October 1, 1997 reflects the total return of the predecessor to Class
C. Total return prior to December 3, 1993 reflects the total return of Class
B, adjusted to reflect the Class C sales charge. The Class B total return has
not been adjusted to reflect certain other expenses (such as distribution and/
or service fees). If such adjustments were made, the Class C total return
would be different. Past performance is not indicative of future results.
Investment return and principal value will fluctuate; shares, when redeemed,
may be worth more or less than their original cost.

<TABLE>
VALUE OF A $1,000 INVESTMENT

<CAPTION>
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 9/30/98 ON 9/30/98 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- -------------- ---------- ---------- ---------- ----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
10 Years
Ended
9/30/98 9/30/88 $1,000 $ $ % % % %
5 Years
Ended
9/30/98 9/30/93 $1,000 $ $ % % % %
1 Year
Ended
9/30/98 9/30/97 $1,000 $ $ % % % %
</TABLE>

- ------------
*Predecessor Fund commenced operations on December 3, 1993.

For the thirty-day period ended September 30, 1998, the yield of Class C
shares was %. The yield required of a taxable security that would produce
an after-tax yield equivalent to % would be %, assuming a federal rate
of 31%.

See the Tax Equivalent Yield Table in Appendix D to this SAI for
information concerning applicable tax rates and income brackets.

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

As at November 2, 1998, the Trustees and officers of the Trust, as a
group, owned in the aggregate less than 1% of the outstanding Class C shares
of the Fund. As of November 2, 1998, Merrill Lynch, Pierce, Fenner & Smith,
Inc., Jacksonville, FL 32246 was the record owner of approximately 37.3% of
the outstanding Class C 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 C shares as of such date.

<PAGE>

APPENDIX D: TAX EQUIVALENT YIELD TABLE

The table below gives the approximate yield a taxable security must earn
at various income brackets to produce after-tax yields to those of tax-exempt
bonds yielding from 4% to 7% under the regular federal income tax laws and tax
rates applicable to 1999.

<TABLE>
<CAPTION>
MARGINAL
SINGLE RETURN JOINT RETURN INCOME TAX-EXEMPT YIELD
- ----------------- ------------------- TAX -------------------------------------------------------------------------
(TAXABLE INCOME)* BRACKET 4% 4.5% 5% 5.5% 6% 6.5% 7%
- -------------------------------------- ----------- -------------------------------------------------------------------------
Equivalent Taxable Yield
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Up to $ 25,350 Up to $ 42,350 15.00% 4.71% 5.29% 5.88% 6.47% 7.06% 7.65% 8.24%
$ 25,351-$ 61,400 $ 42,351-$102,300 28.00 5.56 6.25 6.94 7.64 8.33 9.03 9.72
$ 61,401-$128,100 $102,301-$155,950 31.00 5.80 6.52 7.25 7.97 8.70 9.42 10.14
$128,101-$278,450 $155,951-$278,450 36.00 6.25 7.03 7.81 8.59 9.38 10.16 10.94
Over $278,450 Over $278,450 39.60 6.62 7.45 8.28 9.11 9.93 10.76 11.59
- -------------------------------------- ----------- -------------------------------------------------------------------------
</TABLE>

*Net amount subject to federal personal income tax after deductions and
exemptions.

Note: The above indicated federal income tax brackets do not take into
account the effect of a reduction in the deductibility of itemized deductions
for taxpayers with adjusted gross income in excess of $124,500. The tax
brackets also do not show the effects of phase out of personal exemptions for
single filers with adjusted gross incomes in excess of $124,500 and joint
filers with adjusted gross income in excess of $186,800. The effective tax
brackets and equivalent taxable yields of such taxpayers will be higher than
those indicated above.

Yields shown are for illustration purposes only and are not meant to represent
the Fund's actual yield. No assurance can be given that the Fund will achieve
any specific tax exempt yield. While it is expected that the Portfolio will
invest principally in obligations, the interest from which is exempt from the
regular federal income tax, other income received by the Portfolio and
allocated to the Fund may be taxable. The table does not take into account
state or local taxes, if any, payable on Fund distributions. It should also be
noted that the interest earned on certain "private activity bonds" issued
after August 7, 1986, while exempt from the regular federal income tax, is
treated as a tax preference item which could subject the recipient to the
federal alternative minimum tax. The illustrations assume that the federal
alternative minimum tax is not applicable and do not take into account any tax
credits that may be available.

The information set forth above is as of the date of this SAI. Subsequent tax
law changes could result in prospective or retroactive changes in the tax
brackets, tax rates, and tax equivalent yields set forth above. Investors
should consult their tax adviser for additional information.

<PAGE>

APPENDIX E: RATINGS

DESCRIPTION OF SECURITIES RATINGS+

MOODY'S INVESTORS SERVICE, INC.

MUNICIPAL BONDS

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

Aa: Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation 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 the 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.

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.

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

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 in its corporate bond rating system. 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
effecting 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
VMIG1, 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 VMIG1 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
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.

BBB: Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibit 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
which is assigned an actual or implied CCC debt rating.

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 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 could cause these securities to be rated
below investment grade.

* * * * * * * *

Notes: Bonds which are unrated expose 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 Portfolio 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.

<PAGE>

PART C - OTHER INFORMATION
ITEM 23. EXHIBITS

(a)(1) Amended and Restated Declaration of Trust of Eaton Vance
Municipals Trust dated January 11, 1993, filed as Exhibit (1)(a)
to Post-Effective Amendment No. 55 and incorporated herein by
reference.

(2) Amendment dated June 23, 1997 to the Declaration of Trust filed
as Exhibit (1)(b) to Post-Effective Amendment No. 67 and
incorporated herein by reference.

(3) Establishment and Designation of Classes of Shares of Beneficial
Interest, without Par Value, dated November 18, 1996 filed as
Exhibit (1)(c) to Post-Effective Amendment No. 62 and
incorporated herein by reference.

(b)(1) By-Laws as amended October 21, 1987 filed as Exhibit (2)(a) to
Post-Effective Amendment No. 55 and incorporated herein by
reference.

(2) Amendment to By-Laws of Eaton Vance Municipals Trust dated
December 13, 1993 filed as Exhibit (2)(b) to Post-Effective
Amendment No. 55 and incorporated herein by reference.

(d) Not applicable

(e)(1) Distribution Agreement between Eaton Vance Municipals Trust and
Eaton Vance Distributors, Inc. effective June 23, 1997 with
attached Schedule A effective June 23, 1997 filed as Exhibit
(6)(a)(7) to Post-Effective Amendment No. 67 and incorporated
herein by reference.

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

(f) The Securities and Exchange Commission has granted the Registrant
an exemptive order that permits the Registrant to enter into
deferred compensation arrangements with its independent Trustees.
See in the Matter of Capital Exchange Fund, Inc., Release No.
IC-20671 (November 1, 1994).

(g)(1) Custodian Agreement with Investors Bank & Trust Company dated
October 15, 1992 filed as Exhibit (8) to Post-Effective Amendment
No. 55 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. 57 and incorporated herein by
reference.

(h)(1)(a) Amended Administrative Services Agreement between Eaton Vance
Municipals Trust (on behalf of each of its series) and Eaton
Vance Management with attached schedules (including Amended
Schedule A dated September 29, 1995) filed as Exhibit (9)(a) to
Post-Effective Amendment No. 55 and incorporated herein by
reference.

C-1
<PAGE>

(b) Amendment to Schedule A dated June 23, 1997 to the Amended
Administrative Services Agreement dated June 19, 1995 filed as
Exhibit (9)(a)(2) to Post-Effective Amendment No. 67 and
incorporated herein by reference.

(2) Transfer Agency Agreement dated January 1, 1998 filed as Exhibit
(k)(b) to the Registration Statement on Form N-2 of Eaton Vance
Advisers Senior Floating-Rate Fund (File Nos. 333-46853,
811-08671) (Accession No. 0000950156-98-000172) and incorporated
herein by reference.

(i) Opinion of Internal Counsel filed as Exhibit (i) to
Post-Effective Amendment No. 73 and incorporated herein by
reference.

(j) Not applicable

(k) Not applicable

(l) Not applicable

(m)(1) Eaton Vance Municipals Trust Class A Service Plan adopted June
23, 1997 with attached Schedule A effective June 23, 1997 filed
as Exhibit (15)(g) to Post-Effective Amendment No. 67 and
incorporated herein by reference.

(2) Eaton Vance Municipals Trust Class B Distribution Plan adopted
June 23, 1997 with attached Schedule A effective June 23, 1997
filed as Exhibit (15)(b) to Post-Effective Amendment No. 69 and
incorporated herein by reference.

(3) Eaton Vance Municipals Trust Class C Distribution Plan adopted
June 23, 1997 with attached Schedule A effective June 23, 1997
filed as Exhibit (15)(c) to Post-Effective Amendment No. 69 and
incorporated herein by reference.

(n) Not applicable

(o) Multiple Class Plan for Eaton Vance Funds dated June 23, 1997
filed as Exhibit (18) to Post-Effective Amendment No. 67 and
incorporated herein by reference.

(p)(1) Power of Attorney for Eaton Vance Municipals Trust dated April
22, 1997 filed as Exhibit (17)(a) to Post-Effective Amendment No.
65 and incorporated herein by reference.

(2) Power of Attorney for Eaton Vance Municipals Trust dated November
16, 1998 filed as Exhibit (p)(2) to Post-Effective Amendment No.
75 and incorporated herein by reference.

(3) Power of Attorney for Alabama Municipals Portfolio, Arizona
Municipals Portfolio, Arkansas Municipals Portfolio, California
Municipals Portfolio, Colorado Municipals Portfolio, Connecticut
Municipals Portfolio, Florida Municipals Portfolio, Georgia
Municipals Portfolio, Kentucky Municipals Portfolio, Louisiana
Municipals Portfolio, Maryland Municipals Portfolio,
Massachusetts Municipals Portfolio, Michigan Municipals
Portfolio, Minnesota Municipals Portfolio, Mississippi Municipals
Portfolio, Missouri Municipals Portfolio, National Municipals
Portfolio, New Jersey Municipals Portfolio, New York Municipals
Portfolio, North Carolina Municipals Portfolio, Ohio Municipals
Portfolio, Oregon Municipals Portfolio, Pennsylvania Municipals

C-2
<PAGE>

Portfolio, Rhode Island Municipals Portfolio, South Carolina
Municipals Portfolio, Tennessee Municipals Portfolio, Texas
Municipals Portfolio, Virginia Municipals Portfolio and West
Virginia Municipals Portfolio dated April 22, 1997 filed as
Exhibit (17)(b) to Post-Effective Amendment No. 65 and
incorporated herein by reference.

(4) Power of Attorney for Alabama Municipals Portfolio, Arizona
Municipals Portfolio, Arkansas Municipals Portfolio, California
Municipals Portfolio, Colorado Municipals Portfolio, Connecticut
Municipals Portfolio, Florida Municipals Portfolio, Georgia
Municipals Portfolio, Kentucky Municipals Portfolio, Louisiana
Municipals Portfolio, Maryland Municipals Portfolio,
Massachusetts Municipals Portfolio, Michigan Municipals
Portfolio, Minnesota Municipals Portfolio, Mississippi Municipals
Portfolio, Missouri Municipals Portfolio, National Municipals
Portfolio, New Jersey Municipals Portfolio, New York Municipals
Portfolio, North Carolina Municipals Portfolio, Ohio Municipals
Portfolio, Oregon Municipals Portfolio, Pennsylvania Municipals
Portfolio, Rhode Island Municipals Portfolio, South Carolina
Municipals Portfolio, Tennessee Municipals Portfolio, Texas
Municipals Portfolio, Virginia Municipals Portfolio and West
Virginia Municipals Portfolio dated November 16, 1998 filed as
Exhibit (p)(4) to Post-Effective Amendment No. 75 and
incorporated herein by reference.

ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL

Not applicable

ITEM 25. INDEMNIFICATION

Article IV of the Registrant's Amended and Restated Declaration of Trust
permits Trustee and officer indemnification by By-law, contract and vote.
Article XI of the By-Laws contains indemnification provisions. Registrant's
Trustees and officers are insured under a standard mutual fund errors and
omissions insurance policy covering loss incurred by reason of negligent errors
and omissions committed in their capacities as such.

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

ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER

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

ITEM 27. PRINCIPAL UNDERWRITERS

(a) Registrant's principal underwriter, Eaton Vance Distributors,
Inc., a wholly-owned subsidiary of Eaton Vance Management, is the
principal underwriter for each of the investment companies named
below:
<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 Investment Trust Eaton Vance Special Investment Trust
Eaton Vance Municipals Trust EV Classic Senior Floating-Rate Fund
</TABLE>

C-3
<PAGE>

(b)
<TABLE>
<CAPTION>
<S> <C> <C>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address* with Principal Underwiter with Registrant
----------------- ------------------------- ---------------
Albert F. Barbaro Vice President None
Chris Berg Vice President None
Kate B. Bradshaw Vice President None
David B. Carle Vice President None
Mark Carlson Vice President None
Daniel C. Cataldo Vice President None
Raymond Cox Vice President None
Peter Crowley Vice President None
Mark P. Doman Vice President None
Alan R. Dynner Vice President Secretary
Richard A. Finelli Vice President None
Kelly Flynn Vice President None
James Foley Vice President None
Michael A. Foster Vice President None
William M. Gillen Senior Vice President None
Hugh S. Gilmartin Vice President None
James B. Hawkes Vice President and Director Vice President and Trustee
Perry D. Hooker Vice President None
Brian Jacobs Senior Vice President None
Thomas P. Luka Vice President None
John Macejka Vice President None
Stephen Marks Vice President None
Joseph T. McMenamin Vice President None
Morgan C. Mohrman Senior Vice President None
James A. Naughton Vice President None
Joseph Nelson Vice President None
Mark D. Nelson Vice President None
Linda D. Newkirk Vice President None
James L. O'Connor Vice President Treasurer
Andrew Ogren Vice President None
Thomas Otis Secretary and Clerk None
George D. Owen, II Vice President None
Enrique M. Pineda Vice President None
F. Anthony Robinson Vice President None
Frances Rogell Vice President None
Jay S. Rosoff Vice President None
Benjamin A. Rowland, Jr. Vice President, Treasurer and Director None
Stephen M. Rudman Vice President None
John P. Rynne Vice President None
Kevin Schrader Vice President None
George V.F. Schwab, Jr. Vice President None
Teresa A. Sheehan Vice President None
William M. Steul Vice President and Director None
Cornelius J. Sullivan Senior Vice President None
Peter Sykes Vice President None
David M. Thill Vice President None
John M. Trotsky Vice President None
Jerry Vainisi Vice President None
Chris Volf Vice President None
Wharton P. Whitaker President and Director None
Sue Wilder Vice President None
</TABLE>
- ------------------------------------------
*Address is 24 Federal Street, Boston, MA 02110

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<PAGE>

ITEM 28. LOCATION OF ACCOUNTS AND RECORDS

All applicable accounts, books and documents required to be maintained by
the Registrant by Section 31(a) of the Investment Company Act of 1940 and the
Rules promulgated thereunder are in the possession and custody of the
Registrant's custodian, Investors Bank & Trust Company, 200 Clarendon Street,
16th Floor, Mail Code ADM27, Boston, MA 02116, and its transfer agent, First
Data Investor Services Group, 4400 Computer Drive, Westborough, MA 01581-5120,
with the exception of certain corporate documents and portfolio trading
documents which are in the possession and custody, Eaton Vance Management, 24
Federal Street, Boston, MA 02110. Registrant is informed that all applicable
accounts, books and documents required to be maintained by registered investment
advisers are in the custody and possession of Eaton Vance Management and Boston
Management and Research.

ITEM 29. MANAGEMENT SERVICES

Not applicable

ITEM 30. UNDERTAKINGS

Not applicable

C-5
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, and the
Investment Company Act of 1940, the Registrant has duly caused this Amendment to
its Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized in the City of Boston, and the Commonwealth of
Massachusetts, on November 30, 1998.

EATON VANCE MUNICIPALS TRUST

By: /s/ THOMAS J. FETTER
--------------------------------------
Thomas J. Fetter, 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 November 30, 1998.

SIGNATURE TITLE
--------- -----

/s/ Thomas J. Fetter
- ----------------------- President (Chief Executive Officer)
Thomas J. Fetter

/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

/s/ James B. Hawkes
- ------------------------ Trustee
James B. Hawkes

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

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

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

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

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

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

C-6
<PAGE>

SIGNATURES

California Municipals Portfolio has duly caused this Amendment to the
Registration Statement on Form N-1A of Eaton Vance Municipals Trust (File No.
33-572) to be signed on its behalf by the undersigned, thereunto duly authorized
in the City of Boston and the Commonwealth of Massachusetts on November 30,
1998.

CALIFORNIA MUNICIPALS PORTFOLIO

By: /s/ THOMAS J. FETTER
---------------------------------------
Thomas J. Fetter, President

This Amendment to the Registration Statement on Form N-1A of Eaton Vance
Municipals Trust (File No. 33-572) has been signed below by the following
persons in the capacities on November 30, 1998.