EATON VANCE MUNICIPALS TRUST, 485BPOS, 2000-01-26

EATON VANCE MUNICIPALS TRUST
485BPOS, 2000-01-26

Previous: BEAR STEARNS COMPANIES INC, 424B5, 2000-01-26

Next: BERRY PETROLEUM CO, SC 13G/A, 2000-01-26

<PAGE>

As filed with the Securities and Exchange Commission on January 26, 2000
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. 82 [X]
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 84 [X]

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

THE EATON VANCE BUILDING, 255 STATE STREET, BOSTON, MASSACHUSETTS 02109
-----------------------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

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

ALAN R. DYNNER
THE EATON VANCE BUILDING, 255 STATE STREET, BOSTON, MASSACHUSETTS 02109
-----------------------------------------------------------------------
(NAME AND ADDRESS OF AGENT FOR SERVICE)
<TABLE>
<CAPTION>

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

<S> <C>
[ ] immediately upon filing pursuant to paragraph (b) [ ] on (date) pursuant to paragraph (a)(1)
[X] on February 1, 2000 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)

If appropriate, check the following box:

[ ] This post effective amendment designates a new effective date for a previously filed post-effective amendment.
</TABLE>

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(R)

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, 2000

The Securities and Exchange Commission has not approved or disapproved these
securities or determined whether this prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.

<TABLE>
<CAPTION>
Information in this prospectus
Page Page
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fund Summaries 2 Sales Charges 16
Investment Objectives & Principal Policies and Risks 13 Redeeming Shares 17
Management and Organization 14 Shareholder Account Features 18
Valuing Shares 15 Tax Information 19
Purchasing Shares 15 Financial Highlights 22
- -----------------------------------------------------------------------------------------------------
</TABLE>

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 Municipals Fund. You will find more
specific information about each Fund in the pages that follow.

INVESTMENT OBJECTIVES AND PRINCIPAL STRATEGIES

The investment objective 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
(those rated BBB or Baa or higher), but may also invest in lower quality
obligations. Each Fund normally invests in municipal obligations with
maturities of ten years or more.

Each Fund may concentrate in certain types of municipal obligations (such as
industrial development bonds, housing bonds, hospital bonds or utility bonds),
so Fund shares could be affected by events that adversely affect a particular
sector. Each Fund may purchase derivative instruments (such as inverse floaters,
futures contracts and options thereon, and interest rate swaps), bonds that do
not make the regular payment of interest, bonds issued on a when-issued basis
and municipal leases. A portion of each Fund's distributions generally will be
subject to alternative minimum tax.

Each portfolio manager purchases and sells securities to maintain a competitive
yield and to enhance return based upon the relative value of the securities in
the marketplace. The portfolio managers may also trade securities to minimize
taxable capital gains to shareholders.

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

PRINCIPAL RISK FACTORS

Obligations with maturities of ten years or more may offer higher yields than
obligations with shorter maturities, but they are subject to greater
fluctuations in value when interest rates change. When interest rates rise or
when the supply of suitable bonds exceeds the market demand, the value of Fund
shares typically will decline. The Fund's yield will also fluctuate over time.
Each Fund invests a significant portion of assets in obligations of issuers
located in a single state and 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.

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

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

No Fund is a complete investment program and you may lose money by investing in
a Fund. 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.

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.
The Fund currently invests its assets in the California Municipals Portfolio
(the "California Portfolio"). California general obligations currently are rated
Aa3, AA- and AA- by Moody's, S&P and Fitch, respectively.

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 the risk that the value of your investment will change. The
following returns are for Class B shares for each calendar year through December
31, 1999 and do not reflect a sales charge. If the sales charge was reflected,
the returns would be lower.

The highest quarterly total return for Class B was 8.27% for the quarter ended
March 31, 1995, and the lowest quarterly return was -6.20% for the quarter ended
March 31, 1994. For the 30 days ended September 30, 1999, the SEC yield and SEC
tax-equivalent yield (assuming a combined state and federal tax rate of 37.42%)
for Class A shares were 4.99% and 7.97%, respectively, and for Class B shares
were 4.85% and 7.75%, respectively. For current yield information call
1-800-225-6265.

<TABLE>
<CAPTION>
One Five Ten
Average Annual Total Return as of December 31, 1999 Year Years Years
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A Shares -11.30% 5.61% 5.16%
Class B Shares -11.24% 5.44% 5.03%
Lehman Brothers Municipal Bond Index -2.06% 6.91% 6.89%
</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. (Source for Lehman Brothers Municipal Bond Index: Lipper
Inc.)

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. The Fund currently invests its assets in the Florida Municipals
Portfolio (the "Florida Portfolio"). 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 the risk that the value of your investment will change. The
following returns are for Class B shares for each calendar year through December
31, 1999 and do not reflect a sales charge. If the sales charge was reflected,
the returns would be lower.

The highest quarterly total return for Class B was 8.20% for the quarter ended
March 31, 1995, and the lowest quarterly return was -7.39% for the quarter ended
March 31, 1994. For the 30 days ended September 30, 1999, the SEC yield and SEC
tax-equivalent yield for Class A shares (assuming a combined state and federal
tax rate of 33.72%) were 5.08% and 7.66%, respectively, for Class B shares
(assuming a combined state and federal tax rate of 34.07%) were 4.49% and 6.81%,
respectively. For current yield information call 1-800-225-6265.

<TABLE>
<CAPTION>
One Five Life of
Average Annual Total Return as of December 31, 1999 Year Years Fund
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A Shares -10.15% 4.88% 5.71%
Class B Shares -10.82% 4.70% 5.75%
Lehman Brothers Municipal Bond Index -2.06% 6.91% 7.09%
</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. (Source for
Lehman Brothers Municipal Bond Index: Lipper Inc.)

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. The Fund currently invests its assets in the Massachusetts Municipals
Portfolio (the "Massachusetts Portfolio"). Massachusetts general obligations
currently are rated Aa3, AA- and AA- 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 the risk that the value of your investment will change.
The following returns are for Class B shares for each calendar year through
December 31, 1999 and do not reflect a sales charge. If the sales charge was
reflected, the returns would be lower.

The highest quarterly total return for Class B was 7.96% for the quarter ended
March 31, 1995, and the lowest quarterly return was -6.48% for the quarter ended
March 31, 1994. For the 30 days ended September 30, 1999, the SEC yield and SEC
tax-equivalent yield (assuming a combined state and federal tax rate of 35.11%)
for Class A shares were 4.88% and 7.52%, respectively, and for Class B shares
were 4.69% and 7.23%, respectively. For current yield information call
1-800-225-6265.

<TABLE>
<CAPTION>
One Five Life of
Average Annual Total Return as of December 31, 1999 Year Years Fund
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A Shares -10.33% 4.91% 5.05%
Class B Shares -11.29% 4.85% 5.24%
Lehman Brothers Municipal Bond Index -2.06% 6.91% 6.68%
</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 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. (Source for
Lehman Brothers Municipal Bond Index: Lipper Inc.)

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.
The Fund currently invests its assets in the Mississippi Municipals Portfolio
(the "Mississippi Portfolio"). Mississippi general obligations currently are
rated Aa3, AA and AA by Moody's, S&P and Fitch, respectively.

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 the risk that the value of your investment will change.
The following returns are for Class B shares for each calendar year through
December 31, 1999 and do not reflect a sales charge. If the sales charge was
reflected, the returns would be lower.

The highest quarterly total return for Class B was 8.63% for the quarter ended
March 31, 1995, and the lowest quarterly return was -8.38% for the quarter ended
March 31, 1994. For the 30 days ended September 30, 1999, the SEC yield and SEC
tax-equivalent yield (assuming a combined state and federal tax rate of 34.45%)
for Class A shares were 5.60% and 8.54%, respectively, and for Class B shares
were 4.66% and 7.11%, respectively. For current yield information call
1-800-225-6265.

<TABLE>
<CAPTION>
One Five Life of
Average Annual Total Return as of December 31, 1999 Year Years Fund
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A Shares -8.82% 5.30% 3.12%
Class B Shares -9.57% 5.48% 3.57%
Lehman Brothers Municipal Bond Index -2.06% 6.91% 5.18%
</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 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. (Source for
Lehman Brothers Municipal Bond Index: Lipper Inc.)

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. The Fund currently invests its assets in the New York Municipals
Portfolio (the "New York Portfolio"). New York's general obligations currently
are rated A2, A+ and A+ by Moody's, S&P and Fitch, respectively. New York
City's general obligations currently are rated A3, A- 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 the risk that the value of your investment will change. The
following returns are for Class B shares for each calendar year through December
31, 1999 and do not reflect a sales charge. If the sales charge was reflected,
the returns would be lower.

The highest quarterly total return for Class B was 8.16% for the quarter ended
March 31, 1995, and the lowest quarterly return was -7.16% for the quarter ended
March 31, 1994. For the 30 days ended September 30, 1999, the SEC yield and SEC
tax-equivalent yield (assuming a combined state and federal tax rate of 38.04%)
for Class A shares were 4.87% and 7.86%, respectively, and for Class B shares
were 4.66% and 7.52%, respectively. For current yield information call
1-800-225-6265.

<TABLE>
<CAPTION>
One Five Life of
Average Annual Total Return as of December 31, 1999 Year Years Fund
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A Shares -10.10% 5.36% 6.13%
Class B Shares -10.95% 5.18% 6.15%
Lehman Brothers Municipal Bond Index -2.06% 6.91% 7.09%
</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 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. (Source for
Lehman Brothers Municipal Bond Index: Lipper Inc.)

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. The Fund
currently invests its assets in the Ohio Municipals Portfolio (the "Ohio
Portfolio"). Ohio general obligations currently are rated Aa1, AA+ and AA+ by
Moody's, S&P and Fitch, respectively.

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 the risk that the value of your investment will change. The
following returns are for Class B shares for each calendar year through December
31, 1999 and do not reflect a sales charge. If the sales charge was reflected,
the returns would be lower.

The highest quarterly total return for Class B was 8.13% for the quarter ended
March 31, 1995, and the lowest quarterly return was -7.27% for the quarter ended
March 31, 1994. For the 30 days ended September 30, 1999, the SEC yield and SEC
tax-equivalent yield (assuming a combined state and federal tax rate of 35.32%)
for Class A shares were 5.12% and 7.92%, respectively, and for Class B shares
were 4.54% and 7.02%, respectively. For current yield information call
1-800-225-6265.

<TABLE>
<CAPTION>
One Five Life of
Average Annual Total Return as of December 31, 1999 Year Years Fund
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A Shares -9.80% 4.97% 4.99%
Class B Shares -10.70% 4.98% 5.32%
Lehman Brothers Municipal Bond Index -2.06% 6.91% 6.68%
</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 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. (Source for
Lehman Brothers Municipal Bond Index: Lipper Inc.)

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.
The Fund currently invests its assets in the Rhode Island Municipals Portfolio
(the "Rhode Island Portfolio"). Rhode Island general obligations currently are
rated Aa3, 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 the risk that the value of your investment will change.
The following returns are for Class B shares for each calendar year through
December 31, 1999 and do not reflect a sales charge. If the sales charge was
reflected, the returns would be lower.

The highest quarterly total return for Class B was 8.44% for the quarter ended
March 31, 1995, and the lowest quarterly return was -8.91% for the quarter ended
March 31, 1994. For the 30 days ended September 30, 1999, the SEC yield and SEC
tax-equivalent yield (assuming a combined state and federal tax rate of 36.67%)
for Class A shares were 5.07% and 8.01%, respectively, and for Class B shares
were 4.52% and 7.14%, respectively. For current yield information call
1-800-225-6265.

<TABLE>
<CAPTION>
One Five Life of
Average Annual Total Return as of December 31, 1999 Year Years Fund
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A Shares -10.66% 4.48% 2.58%
Class B Shares -11.39% 4.80% 3.10%
Lehman Brothers Municipal Bond Index -2.06% 6.91% 5.18%
</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 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. (Source for
Lehman Brothers Municipal Bond Index: Lipper Inc.)

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. The Fund currently invests its assets in the West Virginia Municipals
Portfolio (the "West Virginia Portfolio"). West Virginia general obligations
currently are rated Aa3, AA- and AA- by Moody's, S&P 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 the risk that the value of your investment will change.
The following returns are for Class B shares for each calendar year through
December 31, 1999 and do not reflect a sales charge. If the sales charge was
reflected, the returns would be lower.

The highest quarterly total return for Class B was 8.37% for the quarter ended
March 31, 1995, and the lowest quarterly return was -7.56% for the quarter ended
March 31, 1994. For the 30 days ended September 30, 1999, the SEC yield and SEC
tax-equivalent yield (assuming a combined state and federal tax rate of 35.49%)
for Class A shares were 5.54% and 8.59%, respectively, and for Class B shares
were 5.21% and 8.08%, respectively. For current yield information call
1-800-225-6265.

<TABLE>
<CAPTION>
One Five Life of
Average Annual Total Return as of December 31, 1999 Year Years Fund
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A Shares -10.10% 5.04% 2.92%
Class B Shares -10.83% 5.06% 3.31%
Lehman Brothers Municipal Bond Index -2.06% 6.91% 5.18%
</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 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. (Source for
Lehman Brothers Municipal Bond Index: Lipper Inc.)

10
<PAGE>

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

Shareholder Fees (fees paid directly from your investment)

<TABLE>
<CAPTION>
Class A Class B
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Maximum Sales Charge (Load) (as a percentage of offering price) 4.75% None

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

Maximum Sales Charge (Load) Imposed on Reinvested Distributions None None

Exchange Fee None None
</TABLE>

Annual Fund Operating Expenses (expenses that are deducted from Fund assets)

<TABLE>
<CAPTION>
Management Distribution and Other Total Annual Fund
Fees Service (12b-1) Fees* Expenses** Operating Expenses
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
California Fund Class A shares 0.48% 0.00% 0.45% 0.93%
Class B shares 0.48% 0.53% 0.19% 1.20%
- -----------------------------------------------------------------------------------------------------------------
Florida Fund Class A shares 0.45% 0.00% 0.38% 0.83%
Class B shares 0.45% 0.95% 0.18% 1.58%
- -----------------------------------------------------------------------------------------------------------------
Massachusetts Fund Class A shares 0.44% 0.00% 0.39% 0.83%
Class B shares 0.44% 0.95% 0.20% 1.59%
- -----------------------------------------------------------------------------------------------------------------
Mississippi Fund Class A shares 0.16% 0.00% 0.62% 0.78%
Class B shares 0.16% 0.95% 0.41% 1.52%
- -----------------------------------------------------------------------------------------------------------------
New York Fund Class A shares 0.45% 0.00% 0.39% 0.84%
Class B shares 0.45% 0.95% 0.19% 1.59%
- -----------------------------------------------------------------------------------------------------------------
Ohio Fund Class A shares 0.44% 0.00% 0.42% 0.86%
Class B shares 0.44% 0.95% 0.22% 1.61%
- -----------------------------------------------------------------------------------------------------------------
Rhode Island Fund Class A shares 0.25% 0.00% 0.49% 0.74%
Class B shares 0.25% 0.95% 0.30% 1.50%
- -----------------------------------------------------------------------------------------------------------------
West Virginia Fund Class A shares 0.21% 0.00% 0.58% 0.79%
Class B shares 0.21% 0.95% 0.38% 1.54%
</TABLE>

* 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.

** Other Expenses for Class A includes a service fee of 0.25% for the California
Fund and 0.20% for the other Funds.

11
<PAGE>

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

<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
California Fund Class A shares $565 $757 $ 965 $1,564
Class B shares $622 $781 $ 860 $1,455
- ------------------------------------------------------------------------------------------------------
Florida Fund Class A shares $556 $727 $ 914 $1,452
Class B shares $661 $899 $1,060 $1,878
- ------------------------------------------------------------------------------------------------------
Massachusetts Fund Class A shares $556 $727 $ 914 $1,452
Class B shares $662 $902 $1,066 $1,878
- ------------------------------------------------------------------------------------------------------
Mississippi Fund Class A shares $551 $712 $ 888 $1,395
Class B shares $665 $880 $1,029 $1,813
- ------------------------------------------------------------------------------------------------------
New York Fund Class A shares $557 $730 $ 919 $1,463
Class B shares $662 $902 $1,066 $1,889
- ------------------------------------------------------------------------------------------------------
Ohio Fund Class A shares $559 $736 $ 929 $1,485
Class B shares $664 $908 $1,076 $1,911
- ------------------------------------------------------------------------------------------------------
Rhode Island Fund Class A shares $547 $700 $ 867 $1,350
Class B shares $653 $874 $1,018 $1,791
- ------------------------------------------------------------------------------------------------------
West Virginia Fund Class A shares $552 $715 $ 893 $1,406
Class B shares $657 $886 $1,039 $1,835
</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> <C>
California Fund Class A shares $565 $757 $965 $1,564
Class B shares $122 $381 $660 $1,455
- ------------------------------------------------------------------------------------------------------
Florida Fund Class A shares $556 $727 $914 $1,452
Class B shares $161 $499 $860 $1,878
- ------------------------------------------------------------------------------------------------------
Massachusetts Fund Class A shares $556 $727 $914 $1,452
Class B shares $162 $502 $866 $1,889
- ------------------------------------------------------------------------------------------------------
Mississippi Fund Class A shares $551 $712 $888 $1,395
Class B shares $155 $480 $829 $1,813
- ------------------------------------------------------------------------------------------------------
New York Fund Class A shares $557 $730 $919 $1,463
Class B shares $162 $502 $866 $1,889
- ------------------------------------------------------------------------------------------------------
Ohio Fund Class A shares $559 $736 $929 $1,485
Class B shares $164 $508 $876 $1,911
- ------------------------------------------------------------------------------------------------------
Rhode Island Fund Class A shares $547 $700 $867 $1,350
Class B shares $153 $474 $818 $1,791
- ------------------------------------------------------------------------------------------------------
West Virginia Fund Class A shares $552 $715 $893 $1,406
Class B shares $157 $486 $839 $1,835
</TABLE>

12
<PAGE>

INVESTMENT OBJECTIVES & PRINCIPAL 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
certain 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.

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, determined by the investment adviser to be of at least investment grade
quality. The balance of net assets may be invested in municipal obligations
rated below investment grade and in unrated municipal obligations considered to
be of comparable quality by the investment adviser. Municipal obligations rated
Baa or BBB have speculative characteristics, while lower quality obligations are
predominantly speculative. Also, changes in economic conditions or other
circumstances are more likely to reduce the capacity of issuers of lower-rated
obligations to make principal and interest payments. Lower rated obligations
also may be subject to greater price volatility than higher rated obligations.
Each Portfolio will not invest more than 10% of its assets in obligations rated
below B by Moody's, S&P or Fitch, or unrated obligations considered to be of
comparable quality by the investment adviser.

Municipal obligations include bonds, notes and commercial paper issued by a
municipality for a wide variety of both public and private purposes. Municipal
obligations also include municipal leases and participations in municipal
leases. The obligation of the issuer to meet its obligations under such leases
is often subject to the appropriation by the appropriate legislative body, on an
annual or other basis, of funds for the payment of the obligations. Certain
municipal obligations may be purchased on a "when-issued" basis, which means
that payment and delivery occur on a future settlement date. The price and
yield of such securities are generally fixed on the date of commitment to
purchase. Many obligations permit the issuer at its option to "call", or
redeem, its securities. If an issuer calls securities during a time of
declining interest rates, it may not be possible to reinvest the proceeds in
securities providing the same investment return as the securities redeemed.

The 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 generally will 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.

Although each Portfolio may invest in securities of any maturity, it is expected
that a Portfolio will normally invest a substantial portion of its assets in
securities with maturities of ten years or more. The average maturity of a
Portfolio's holdings may vary (generally between 15 and 30 years) depending on
anticipated market conditions.

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 Baa1, 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 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.

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").

13
<PAGE>

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. In addition, a
Portfolio could purchase an instrument that has greater or lesser credit risk
than the municipal bonds underlying the instrument. 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. Each Portfolio may also enter interest rate
swaps. The use of derivative instruments for both hedging and investment
purposes involves a risk of loss or depreciation due to a variety of factors
including counterparty risk, unexpected market, interest rate or securities
price movements, and tax and regulatory constraints. Derivative hedging
transactions may not be effective because of imperfect correlations and other
factors.

Each Portfolio may invest in zero coupon bonds, which do not require the issuer
to make periodic interest payments. The values of these bonds are subject to
greater fluctuation in response to changes in market interest rates than bonds
which pay interest currently. Each Portfolio accrues income on these investments
and each Fund is required to distribute its share of Portfolio income each year.
Each Portfolio may be required to sell securities to obtain cash needed for
income distributions.

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

Each Portfolio may borrow amounts up to one-third of the value of its total
assets (including borrowings), but it will not borrow more than 5% of the value
of its total assets except to satisfy redemption requests or for other temporary
purposes. Such borrowings would result in increased expense to a Fund and,
while they are outstanding, would magnify increases or decreases in the value of
Fund shares. No Portfolio will purchase additional investment securities while
outstanding borrowings exceed 5% of the value of its total assets.

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

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

MANAGEMENT AND ORGANIZATION

Management. Each Portfolio's investment adviser is Boston Management and
Research ("BMR"), a subsidiary of Eaton Vance Management ("Eaton Vance"), with
offices at The Eaton Vance Building, 255 State Street, Boston, Massachusetts
02109. Eaton Vance has been managing assets since 1924 and managing mutual
funds since 1931. Eaton Vance and its subsidiaries currently manage over $41
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.
<PAGE>
<TABLE>
<CAPTION>
Annual Daily
Category Daily Net Assets Asset Rate Income Rate
- ----------------------------------------------------------------------------------------------------------
<S> <C> <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>
14
<PAGE>

For the fiscal year ended September 30, 1999, each Portfolio paid advisory fees
equivalent to the percentage of average daily net assets stated below.

Net Assets on
Portfolio September 30, 1999 Advisory Fee
- -------------------------------------------------------------------------------
California $270,200,198 0.48%
Florida $346,872,272 0.45%
Massachusetts $212,277,107 0.44%
Mississippi $ 17,936,839 0.16%
New York $402,118,111 0.45%
Ohio $216,464,027 0.44%
Rhode Island $ 41,731,697 0.25%
West Virginia $ 26,960,876 0.21%

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), the Rhode Island Portfolio (since November 24, 1997) and the West
Virginia Portfolio (since January 17, 2000). Each portfolio manager also
manages other Eaton Vance portfolios, has been an Eaton Vance portfolio manager
for more than 5 years, and is a Vice President of Eaton Vance and BMR.

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

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. Each Fund offers multiple classes of shares.
Each class represents a pro rata interest in the Fund, but is subject to
different expenses and rights. The 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 purchase
price of Fund shares is their net asset value (plus a sales charge for Class A
shares), which is derived from Portfolio holdings. Municipal obligations are
normally valued on the basis of valuations furnished by a pricing service.

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

PURCHASING SHARES

15
<PAGE>

Class B shares is the net asset value; however, you may be subject to a sales
charge (called a "contingent deferred sales charge" or "CDSC") if you redeem
Class B shares within six years of purchase. The sales charges are described
below. Your investment dealer can help you decide which class of shares suits
your investment needs.

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

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

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

SALES CHARGES

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

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

*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.
</TABLE>

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

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

The principal underwriter pays commissions to investment dealers on sales of
Class B shares (except exchange transactions and reinvestments). The sales
commission equals 4% of the purchase price of the shares.
<PAGE>

Reducing or Eliminating Sales Charges. Front-end sales charges on purchases of
Class A shares may be reduced under the right of accumulation or under a
statement of intention. Under the right of accumulation, the sales charges you
pay are reduced if the current market value of your current holdings (based on
the current offering price), plus your new purchases, total $25,000 or more.
Class A shares of the other Eaton Vance funds owned by you can be included as
part of your current holdings for this purpose. Under a statement of intention,
purchases of $25,000 or more made over a 13-month period are eligible for
reduced sales charges. Under a statement of intention, the principal underwriter
may hold 5% of the dollar amount to be purchased in escrow in the form of shares
registered in your name until you satisfy the statement or the 13-month period
expires.

16
<PAGE>
Class A shares are offered at net asset value to clients of financial
intermediaries who charge a fee for their services; accounts affiliated with
those financial intermediaries; investment and institutional clients of Eaton
Vance; certain persons affiliated with Eaton Vance; and certain Eaton Vance and
fund service providers. Ask your investment dealer for details. Class A shares
are also sold at net asset value if the amount invested represents redemption
proceeds from a mutual fund not affiliated with Eaton Vance, provided the
redemption occurred within 60 days of the Fund share purchase and the redeemed
shares were subject to a sales charge. Class A shares so acquired will be
subject to a 0.50% CDSC if they are redeemed within 12 months of purchase.
Investment dealers will be paid a commission on such sales of 0.50% of the
amount invested.

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

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

Distribution and Service Fees. Class B shares have in effect a plan under Rule
12b-1 that allows the Fund to pay distribution fees for the sale and
distribution of shares (so-called "12b-1 fees"). Class B shares pay distribution
fees of 0.75% of average daily net assets annually. Because these fees are paid
from Fund assets on an ongoing basis, they will increase your cost over time and
may cost you more than paying other types of sales charges. Both classes pay
service fees for personal and/or account services equal to 0.20% (0.25% for
California Class A and B) of average daily net assets annually. Although there
is no present intention to do so, each class could pay service fees of up to
0.25% annually upon Trustee approval.

Class B distribution fees are subject to termination when payments under the
Rule 12b-1 plans are sufficient to extinguish uncovered distribution charges.
As described more fully in the Statement of Additional Information, uncovered
distribution charges of a class are increased by a sales commission payable by
the class to the principal underwriter in connection with sales of shares of
that class and by an interest factor tied to the U.S. Prime Rate. Uncovered
distribution charges are reduced by the distribution fees paid by the class and
by CDSCs paid to the Fund by redeeming shareholders. The amount of the sales
commission payable by Class B to the principal underwriter in connection with
sales of Class B shares is significantly less than the maximum permitted by the
sales charge rule of the National Association of Securities Dealers, Inc.
Except in the case of the California Fund, to date Class B uncovered
distribution charges have not been fully covered. The California Fund Class B
does not pay distribution fees when charges are fully covered.

REDEEMING SHARES

You can redeem shares in any of the following ways:

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

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

17
<PAGE>

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

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

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

SHAREHOLDER ACCOUNT FEATURES

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

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

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

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

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

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

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

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

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

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

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

. Special notices about significant events affecting your Fund.

Withdrawal Plan. You may redeem shares on a regular monthly or quarterly basis
by establishing a systematic withdrawal plan. Withdrawals will not be subject to
any applicable CDSC if they are, in the aggregate, less than or equal to 12%
annually of the greater of either the initial account balance or the current
account balance. A minimum account size of $5,000 is required to establish a
systematic withdrawal plan. Because purchases of Class A shares are generally
subject to an initial sales charge, you should not make withdrawals from your
account while you are making purchases.

Exchange Privilege. You may exchange your Fund shares for shares of the same
class of another Eaton Vance fund. Exchanges are generally made at net asset
value. If you hold Class A shares for less than six months and exchange them
for shares subject to a higher sales charge, you will be charged the difference
between the two sales charges. If your shares are subject to a CDSC, the CDSC
will continue to apply to your new shares at the same CDSC rate. For purposes
of the CDSC, your shares will continue to age from the date of your original
purchase.

<PAGE>

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

18
<PAGE>

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

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

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

TAX INFORMATION

Each Fund declares dividends daily and ordinarily pays distributions monthly.
Different classes will distribute different dividend amounts. Your account will
be credited with dividends beginning on the business day after the day when the
funds used to purchase your Fund shares are collected by the transfer agent. For
tax purposes, the entire monthly distribution of the Fund's daily dividends
ordinarily will constitute tax-exempt income to you. Distributions of any net
realized gains will be made once each year (usually in December).

Distributions of any taxable income and net short-term capital gains will be
taxable as ordinary income. Distributions of any long-term capital gains are
taxable as long-term capital gains. Distributions of interest on certain
municipal obligations are a tax preference item under the AMT provisions
applicable to individuals and corporations, and all tax-exempt distributions may
affect a corporation's AMT liability. Each Fund's distributions will be
treated as described above for federal income tax purposes whether they are paid
in cash or reinvested in additional shares. A redemption of Fund shares,
including an exchange for shares of another fund, is a taxable transaction.

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

California Taxes. Under California law, dividends paid by the California Fund
and designated by it as tax-exempt are exempt from California personal 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 and 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. Relevant Florida statutes have recently been amended to exempt
from the Florida intangible personal property tax all shares of a Florida series
fund owned by a Florida resident if, on January 1 of each year, at least 90% of
the Fund's assets consist of the following exempt assets: (1) notes, bonds, and
other obligations issued by the State of Florida or its municipalities,
counties, and other taxing districts, or by the United States government, its
agencies, or Puerto Rico, Guam, U.S. Virgin Islands, or American Samoa; (2) any
interest as a partner in a partnership, either general or limited, other than
any interest as a limited partner in a limited partnership registered with the

19
<PAGE>

Securities and Exchange Commission pursuant to the Securities Act of 1933, as
amended; (3) notes and other obligations, except bonds, to the extent that such
notes and obligations are secured by mortgage, deed of trust, or other lien upon
real property situated outside the State of Florida; or (4) the assets of a
corporation registered under the Investment Company Act of 1940, as amended.
Otherwise, shareholders will be taxed on the entire value of their Florida Fund
shares, exclusive of any portion of the shares' value that is attributable to
U.S. governmental obligations, valued as of the close of business on December
31st of the previous calendar year. Since the Florida Portfolio will normally
invest tax-exempt obligations of Florida, the United States, or the
above-named U.S. territories or political subdivisions of the United States,
Florida Fund shares should, under normal circumstances, be exempt from the
Florida intangible personal property 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. However, to the extent certain
holding period requirements are satisfied with respect to portfolio investments,
distributions from net long-term capital gains attributable to the sale of these
investments may qualify for taxation at lower Massachusetts personal income tax
rates.

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 special 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 special tax counsel to the New York Fund,
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 tax counsel to the Ohio Fund, 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 shares will be included in the tax base
<PAGE>

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 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 United
States and its Territories ("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.

20
<PAGE>

West Virginia Taxes. In the opinion of special 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 Internal Revenue 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.

21
<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights are intended to help you understand a Fund's financial
performance for the past five years. Certain information in the tables reflects
the financial results for a single Fund share. The total returns in the tables
represent the rate an investor would have earned (or lost) on an investment in
the Fund (assuming reinvestment of all distributions and not taking into account
a sales charge). This information has been audited by Deloitte & Touche LLP,
independent accountants. The report of Deloitte & Touche LLP 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, each Fund offered
only Class B shares and Class A existed as a separate fund.

<TABLE>
<CAPTION>
CALIFORNIA FUND
---------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------------------------------------------------------

1999 1998(1) 1997 1996 1995
---------------------------------------------------------------------------------
CLASS A CLASS B CLASS A CLASS B CLASS B CLASS B CLASS B
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value - Beginning of year $11.340 $ 10.420 $10.900 $ 10.010 $ 9.540 $ 9.410 $ 9.290
------- -------- ------- -------- -------- -------- --------
Income (loss) from operations
Net investment income $ 0.544 $ 0.474 $ 0.556 $ 0.431 $ 0.451 $ 0.464 $ 0.475
Net realized and unrealized gain (loss) (1.007) (0.934) 0.468 0.428 0.477 0.135 0.253
------- -------- ------- -------- -------- -------- --------
Total income from operations $(0.463) $ (0.460) $ 1.024 $ 0.859 $ 0.928 $ 0.599 $ 0.728
------- -------- ------- -------- -------- -------- --------
Less distributions
From net investment income $(0.542) $ (0.448) $(0.564) $ (0.431) $ (0.451) $ (0.465) $ (0.475)
In excess of net investment income(4) (0.015) -- (0.020) (0.018) (0.007) (0.004) (0.016)
In excess of net realized gain(4) -- -- -- -- -- -- (0.117)
------- -------- ------- -------- -------- -------- --------
Total distributions $(0.557) $ (0.448) $(0.584) $ (0.449) $ (0.458) $ (0.469) $ (0.608)
------- -------- ------- -------- -------- -------- --------
Contingent Deferred Sales Charges $ -- $ 0.008 $ -- $ -- $ -- $ -- $ --
------- -------- ------- -------- -------- -------- --------
Net asset value - End of year $10.320 $ 9.520 $11.340 $ 10.420 $ 10.010 $ 9.540 $ 9.410
------- -------- ------- -------- -------- -------- --------
Total return(2) (4.25)% (4.50)% 9.65% 8.80% 9.98% 6.49% 8.30%
Ratios/Supplemental Data
Net assets, end of year (000's omitted) $16,675 $252,763 $ 9,740 $300,914 $321,157 $361,255 $401,742
Ratios (as a percentage of average daily net
assets):
Expenses(3) 0.78% 1.18% 0.79% 1.66% 1.69% 1.66% 1.65%
Expenses after custodian fee reduction(3) 0.76% 1.16% 0.77% 1.64% 1.68% 1.65% 1.64%
Net investment income 4.93% 4.70% 5.02% 4.25% 4.66% 4.87% 5.19%
Portfolio turnover of the Portfolio 28% 28% 16% 16% 12% 14% 58%
</TABLE>
(See footnotes on last page.)

22
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
FLORIDA FUND
---------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------------------------------------------------------
1999 1998(1) 1997 1996 1995
---------------------------------------------------------------------------------
CLASS A CLASS B CLASS A CLASS B CLASS B CLASS B CLASS B
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value - Beginning of year $11.150 $ 11.420 $10.640 $ 10.900 $ 10.780 $ 10.720 $ 10.270
------- -------- ------- -------- -------- -------- --------
Income (loss) from operations
Net investment income $ 0.549 $ 0.466 $ 0.528 $ 0.447 $ 0.488 $ 0.505 $ 0.514
Net realized and unrealized gain (loss) (0.979) (1.001) 0.532 0.546 0.136 0.067 0.469
------- -------- ------- -------- -------- -------- --------
Total income (loss) from operations $(0.430) $ (0.535) $ 1.060 $ 0.993 $ 0.624 $ 0.572 $ 0.983
------- -------- ------- -------- -------- -------- --------
Less distributions
From net investment income $(0.530) $ (0.455) $(0.528) $ (0.447) $ (0.488) $ (0.506) $ (0.514)
In excess of net investment income(4) -- -- (0.022) (0.026) (0.016) (0.006) (0.019)
------- -------- ------- -------- -------- -------- --------
Total distributions $(0.530) $ (0.455) $(0.550) $ (0.473) $ (0.504) $ (0.512) $ (0.533)
------- -------- ------- -------- -------- -------- --------
Net asset value - End of year $10.190 $ 10.430 $11.150 $ 11.420 $ 10.900 $ 10.780 $ 10.720
------- -------- ------- -------- -------- -------- --------
Total return(2) (4.02)% (4.84)% 10.20% 9.30% 5.89% 5.43% 9.90%
Ratios/Supplemental Data
Net assets, end of year (000's omitted) $12,818 $332,227 $11,764 $442,863 $504,057 $612,438 $701,565
Ratios (as a percentage of average daily net
assets):
Expenses(3) 0.75% 1.58% 0.73% 1.55% 1.57% 1.55% 1.54%
Expenses after custodian fee reduction(3) 0.70% 1.53% 0.69% 1.51% 1.53% 1.52% 1.51%
Net investment income 5.07% 4.23% 4.82% 4.01% 4.50% 4.67% 4.97%
Portfolio turnover of the Portfolio 40% 40% 25% 25% 54% 51% 61%
</TABLE>
(See footnotes on last page.)

23
<PAGE>

Financial Highlights (continued)
<TABLE>
<CAPTION>
MASSACHUSETTS FUND
---------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------------------------------------------------------
1999(1) 1998(1) 1997 1996 1995
---------------------------------------------------------------------------------
CLASS A CLASS B CLASS A CLASS B CLASS B CLASS B CLASS B
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value - Beginning of year $ 9.940 $ 11.070 $ 9.620 $ 10.690 $ 10.330 $ 10.270 $ 9.990
------- -------- ------- -------- -------- -------- --------
Income (loss) from operations
Net investment income $ 0.504 $ 0.470 $ 0.493 $ 0.468 $ 0.487 $ 0.491 $ 0.499
Net realized and unrealized gain (loss) (0.828) (0.945) 0.357 0.396 0.360 0.066 0.307
------- -------- ------- -------- -------- -------- --------
Total income (loss) from operations $(0.324) $ (0.475) $ 0.850 $ 0.864 $ 0.847 $ 0.557 $ 0.806
------- -------- ------- -------- -------- -------- --------
Less distributions
From net investment income $(0.505) $ (0.465) $(0.493) $ (0.468) $ (0.487) $ (0.492) $ (0.499)
In excess of net investment income(4) (0.001) -- (0.037) (0.016) -- (0.005) (0.027)
------- -------- ------- -------- -------- -------- --------
Total distributions $(0.506) $ (0.465) $(0.530) $ (0.484) $ (0.487) $ (0.497) $ (0.526)
------- -------- ------- -------- -------- -------- --------
Net asset value - End of year $ 9.110 $ 10.130 $ 9.940 $ 11.070 $ 10.690 $ 10.330 $ 10.270
------- -------- ------- -------- -------- -------- --------
Total return(2) (3.42)% (4.44)% 9.07% 8.28% 8.41% 5.53% 8.38%
Ratios/Supplemental Data
Net assets, end of year (000's omitted) $15,825 $185,540 $13,282 $225,371 $239,838 $267,398 $291,114
Ratios (as a percentage of average daily net
assets):
Expenses(3) 0.70% 1.57% 0.74% 1.60% 1.61% 1.59% 1.58%
Expenses after custodian fee reduction(3) 0.68% 1.55% 0.72% 1.58% 1.59% 1.58% 1.56%
Net investment income 5.23% 4.37% 5.04% 4.32% 4.70% 4.75% 5.00%
Portfolio turnover of the Portfolio 24% 24% 28% 28% 35% 51% 87%
</TABLE>
(See footnotes on last page.)

24
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
MISSISSIPPI FUND
------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
------------------------------------------------------------------------------
1999(1) 1998 1997 1996 1995
------------------------------------------------------------------------------
CLASS A CLASS B CLASS A CLASS B CLASS B CLASS B CLASS B
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value - Beginning of year $10.060 $10.300 $ 9.740 $ 9.970 $ 9.610 $ 9.480 $ 9.110
------- ------- ------- ------- ------- ------- -------
Income (loss) from operations
Net investment income $ 0.487 $ 0.417 $ 0.474 $ 0.419 $ 0.433 $ 0.451 $ 0.449
Net realized and unrealized gain (loss) (0.715) (0.741) 0.331 0.337 0.362 0.122 0.379
------- ------- ------- ------- ------- ------- -------
Total income (loss) from operations $(0.228) $(0.324) $ 0.805 $ 0.756 $ 0.795 $ 0.573 $ 0.828
------- ------- ------- ------- ------- ------- -------
Less distributions
From net investment income $(0.482) $(0.416) $(0.478) $(0.426) $(0.435) $(0.443) $(0.449)
In excess of net investment income(4) -- -- (0.007) -- -- -- (0.009)
------- ------- ------- ------- ------- ------- -------
Total distributions $(0.482) $(0.416) $(0.485) $(0.426) $(0.435) $(0.443) $(0.458)
------- ------- ------- ------- ------- ------- -------
Net asset value - End of year $ 9.350 $ 9.560 $10.060 $10.300 $ 9.970 $ 9.610 $ 9.480
------- ------- ------- ------- ------- ------- -------
Total return(2) (2.37)% (3.25)% 8.47% 7.75% 8.45% 6.17% 9.40%
Ratios/Supplemental Data+
Net assets, end of year (000's omitted) $ 1,455 $16,300 $ 1,932 $18,615 $20,924 $23,862 $26,756
Ratios (as a percentage of average daily
net assets):
Net expenses(3) 0.70% 1.51% 0.72% 1.50% 1.60% 1.44% 1.36%
Net expenses after custodian fee
reduction(3) 0.68% 1.49% 0.70% 1.48% 1.59% 1.41% 1.33%
Net investment income 4.97% 4.16% 4.77% 4.12% 4.39% 4.64% 4.89%
Portfolio turnover of the Portfolio 16% 16% 17% 17% 6% 12% 52%
</TABLE>

+ The operating expenses of the Mississippi 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:

<TABLE>
<CAPTION>
<S> <C> <C>
Ratios (as a percentage of average daily net assets):
Expenses(3) 1.55% 1.49%
Expenses after custodian fee reduction(3) 1.52% 1.46%
Net investment income 4.53% 4.76%
Net investment income per share $0.440 $0.437
</TABLE>
(See footnotes on last page.)

25
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
NEW YORK FUND
---------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------------------------------------------------------
1999(1) 1998(1) 1997 1996 1995
---------------------------------------------------------------------------------
CLASS A CLASS B CLASS A CLASS B CLASS B CLASS B CLASS B
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value - Beginning of year $10.920 $ 11.760 $10.510 $ 11.300 $ 10.930 $ 10.830 $ 10.450
------- -------- ------- -------- -------- -------- --------
Income (loss) from operations
Net investment income $ 0.532 $ 0.483 $ 0.538 $ 0.488 $ 0.506 $ 0.506 $ 0.523
Net realized and unrealized gain (loss) (0.907) (0.972) 0.446 0.478 0.375 0.116 0.406
------- -------- ------- -------- -------- -------- --------
Total income (loss) from operations $(0.375) $ (0.489) $ 0.984 $ 0.966 $ 0.881 $ 0.622 $ 0.929
------- -------- ------- -------- -------- -------- --------
Less distributions
From net investment income $(0.533) $ (0.480) $(0.538) $ (0.483) $ (0.506) $ (0.508) $ (0.523)
In excess of net investment income(4) (0.001) -- (0.013) -- (0.005) (0.014) (0.026)
From net realized gain (0.151) (0.151) (0.023) (0.023) -- -- --
------- -------- ------- -------- -------- -------- --------
Total distributions $(0.685) $ (0.631) $(0.574) $ (0.506) $ (0.511) $ (0.522) $ (0.549)
------- -------- ------- -------- -------- -------- --------
Net asset value - End of year $ 9.860 $ 10.640 $10.920 $ 11.760 $ 11.300 $ 10.930 $ 10.830
------- -------- ------- -------- -------- -------- --------
Total return(2) (3.63)% (4.35)% 9.62% 8.76% 8.23% 5.87% 9.23%
Ratios/Supplemental Data
Net assets, end of year (000's omitted) $12,683 $387,951 $11,720 $473,396 $517,393 $590,397 $640,605
Ratios (as a percentage of average daily net
assets):
Expenses(3) 0.77% 1.57% 0.77% 1.58% 1.63% 1.54% 1.55%
Expenses after custodian fee reduction(3) 0.76% 1.56% 0.75% 1.56% 1.63% 1.51% 1.51%
Net investment income 5.09% 4.27% 5.03% 4.26% 4.56% 4.64% 4.99%
Portfolio turnover of the Portfolio 41% 41% 55% 55% 44% 47% 55%
</TABLE>
(See footnotes on last page.)

26
<PAGE>

Financial Highlights (continued)

<TABLE>
<CAPTION>
OHIO FUND
---------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------------------------------------------------------
1999 1998 1997 1996 1995
---------------------------------------------------------------------------------
CLASS A CLASS B CLASS A CLASS B CLASS B CLASS B CLASS B
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value - Beginning of year $ 9.930 $ 11.210 $ 9.680 $ 10.930 $ 10.590 $ 10.510 $ 10.070
------- -------- ------- -------- -------- -------- --------
Income (loss) from operations
Net investment income $ 0.511 $ 0.490 $ 0.514 $ 0.495 $ 0.499 $ 0.494 $ 0.487
Net realized and unrealized gain (loss) (0.725) (0.832) 0.249 0.280 0.328 0.071 0.461
------- -------- ------- -------- -------- -------- --------
Total income (loss) from operations $(0.214) $ (0.342) $ 0.763 $ 0.775 $ 0.827 $ 0.565 $ 0.948
------- -------- ------- -------- -------- -------- --------
Less distributions
From net investment income $(0.513) $ (0.495) $(0.513) $ (0.495) $ (0.487) $ (0.485) $ (0.487)
In excess of net investment income(4) -- -- -- -- -- -- (0.021)
From net realized gain (0.083) (0.083) -- -- -- -- --
------- -------- ------- -------- -------- -------- --------
Total distributions $(0.596) $ (0.578) $(0.513) $ (0.495) $ (0.487) $ (0.485) $ (0.508)
------- -------- ------- -------- -------- -------- --------
Net asset value - End of year $ 9.120 $ 10.290 $ 9.930 $ 11.210 $ 10.930 $ 10.590 $ 10.510
------- -------- ------- -------- -------- -------- --------
Total return(2) (2.31)% (3.21)% 8.07% 7.24% 7.98% 5.48% 9.74%
Ratios/Supplemental Data
Net assets, end of year (000's omitted) $ 9,203 $206,401 $ 6,622 $247,367 $267,001 $289,829 $315,891
Ratios (as a percentage of average daily net
assets):
Expenses(3) 0.77% 1.61% 0.80% 1.62% 1.63% 1.63% 1.59%
Expenses after custodian fee reduction(3) 0.76% 1.60% 0.78% 1.60% 1.62% 1.61% 1.57%
Net investment income 5.32% 4.50% 5.25% 4.46% 4.65% 4.66% 4.80%
Portfolio turnover of the Portfolio 59% 59% 17% 17% 30% 35% 51%
</TABLE>
(See footnotes on last page.)

27
<PAGE>

Financial Highlights (continued)
<TABLE>
<CAPTION>
RHODE ISLAND FUND
------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
------------------------------------------------------------------------------
1999(1) 1998 1997 1996 1995
------------------------------------------------------------------------------
CLASS A CLASS B CLASS A CLASS B CLASS B CLASS B CLASS B
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value - Beginning of year $ 9.940 $10.170 $ 9.610 $ 9.840 $ 9.510 $ 9.400 $ 9.090
------- ------- ------- ------- ------- ------- -------
Income (loss) from operations
Net investment income $ 0.474 $ 0.409 $ 0.471 $ 0.422 $ 0.427 $ 0.440 $ 0.452
Net realized and unrealized gain (loss) (0.872) (0.894) 0.328 0.334 0.334 0.125 0.332
------- ------- ------- ------- ------- ------- -------
Total income (loss) from operations $(0.398) $(0.485) $ 0.799 $ 0.756 $ 0.761 $ 0.565 $ 0.784
------- ------- ------- ------- ------- ------- -------
Less distributions
From net investment income $(0.472) $(0.405) $(0.469) $(0.422) $(0.427) $(0.444) $(0.452)
In excess of net investment income(4) -- -- -- (0.004) (0.004) (0.011) (0.022)
------- ------- ------- ------- ------- ------- -------
Total distributions $(0.472) $(0.405) $(0.469) $(0.426) $(0.431) $(0.455) $(0.474)
------- ------- ------- ------- ------- ------- -------
Net asset value - End of year $ 9.070 $ 9.280 $ 9.940 $10.170 $ 9.840 $ 9.510 $ 9.400
------- ------- ------- ------- ------- ------- -------
Total return(2) (4.16)% (4.92)% 8.52% 7.87% 8.19% 6.14% 8.94%
Ratios/Supplemental Data+
Net assets, end of year (000's omitted) $ 3,290 $37,775 $ 2,200 $39,758 $38,234 $39,488 $39,864
Ratios (as a percentage of average daily
net assets):
Net expenses(3) 0.69% 1.49% 0.69% 1.46% 1.40% 1.35% 1.33%
Net expenses after custodian fee
reduction(3) 0.65% 1.45% 0.66% 1.43% 1.35% 1.32% 1.29%
Net investment income 4.94% 4.15% 4.83% 4.23% 4.43% 4.63% 4.92%
Portfolio turnover of the Portfolio 18% 18% 24% 24% 39% 25% 42%
</TABLE>

+ The operating expenses of the Rhode Island 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:

<TABLE>
<CAPTION>
<S> <C> <C> <C>
Ratios (as a percentage of average daily net assets):
Expenses(3) 1.52% 1.47% 1.46%
Expenses after custodian fee reduction(3) 1.47% 1.44% 1.42%
Net investment income 4.31% 4.51% 4.79%
Net investment income per share $0.415 $0.429 $0.440
</TABLE>
(See footnotes on last page.)

28
<PAGE>

Financial Highlights (continued)
<TABLE>
<CAPTION>
WEST VIRGINIA FUND
------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
------------------------------------------------------------------------------
1999(1) 1998 1997 1996 1995
------------------------------------------------------------------------------
CLASS A CLASS B CLASS A CLASS B CLASS B CLASS B CLASS B
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value - Beginning of year $10.120 $10.320 $ 9.790 $ 9.970 $ 9.620 $ 9.500 $ 9.130
------- ------- ------- ------- ------- ------- -------
Income (loss) from operations
Net investment income $ 0.476 $ 0.403 $ 0.504 $ 0.430 $ 0.419 $ 0.420 $ 0.436
Net realized and unrealized gain (loss) (0.821) (0.842) 0.325 0.336 0.351 0.147 0.393
------- ------- ------- ------- ------- ------- -------
Total income (loss) from operations $(0.345) $(0.439) $ 0.829 $ 0.766 $ 0.770 $ 0.567 $ 0.829
------- ------- ------- ------- ------- ------- -------
Less distributions
From net investment income $(0.476) $(0.402) $(0.499) $(0.416) $(0.419) $(0.427) $(0.436)
In excess of net investment income(4) (0.009) (0.009) -- -- (0.001) (0.020) (0.023)
------- ------- ------- ------- ------- ------- -------
Total distributions $(0.485) $(0.411) $(0.499) $(0.416) $(0.420) $(0.447) $(0.459)
------- ------- ------- ------- ------- ------- -------
Net asset value - End of year $ 9.290 $ 9.470 $10.120 $10.320 $ 9.970 $ 9.620 $ 9.500
------- ------- ------- ------- ------- ------- -------
Total return(2) (3.55)% (4.40)% 8.68% 7.84% 8.18% 6.02% 9.39%
Ratios/Supplemental Data+
Net assets, end of year (000's omitted) $ 1,866 $24,854 $ 1,839 $29,824 $31,524 $37,708 $39,569
Ratios (as a percentage of average daily
net assets):
Net expenses(3) 0.70% 1.53% 0.66% 1.48% 1.53% 1.55% 1.40%
Net expenses after custodian fee
reduction(3) 0.68% 1.51% 0.63% 1.45% 1.51% 1.51% 1.38%
Net investment income 4.84% 4.02% 5.06% 4.25% 4.31% 4.30% 4.74%
Portfolio turnover of the Portfolio 32% 32% 16% 16% 24% 43% 19%
</TABLE>

+ The operating expenses of the West Virginia 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:
<TABLE>
<CAPTION>
<S> <C>
Ratios (as a percentage of average daily net assets):
Expenses(3) 1.48%
Expenses after custodian fee reduction(3) 1.46%
Net investment income 4.66%
Net investment income per share $0.429
</TABLE>

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

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

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

(4) 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.

29
<PAGE>

[LOGO]
Mutual Funds
for People
Who Pay
Taxes(R)

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

About the Funds: More information is available in the statement of
additional information. The statement of additional information is
incorporated by reference into this prospectus. Additional
information about each 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.
The Eaton Vance Building
255 State Street
Boston, MA 02109
1-800-225-6265
website: www.eatonvance.com

You will find and may copy information about each Fund at the
Securities and Exchange Commission's public reference room in
Washington, DC (call 1-800-SEC-0330 for information on the operation
of the public reference room); 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 20549-0102 or
by electronic mail at [email protected].

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:
- --------------------------------------------------------------------------------

PFPC Global Fund Services
P.O. Box 5123
Westborough, MA 01581-5123
1-800-262-1122

The Funds' SEC File No. is 811-4409 TFC2/1P

<PAGE>

[LOGO]
Mutual Funds
for People
Who Pay
Taxes(R)

Eaton Vance
Massachusetts Municipals
Fund

Class I Shares

A mutual fund providing tax-exempt income

Prospectus Dated

February 1, 2000

<TABLE>
<CAPTION>
Information in this prospectus
Page Page
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fund Summary 2 Redeeming Shares 7
Investment Objective & Principal Policies and Risks 4 Shareholder Account Features 7
Management and Organization 5 Tax Information 8
Valuing Shares 6 Financial Highlights 9
Purchasing Shares 6
- --------------------------------------------------------------------------------------------------
</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 and
Massachusetts state personal income taxes. The Fund primarily invests in
investment grade municipal obligations (those rated BBB or Baa or higher), but
may also invest in lower quality obligations. The Fund normally invests in
municipal obligations with maturities of ten years or more.

The Fund may concentrate in certain types of municipal obligations (such as
industrial development bonds, housing bonds, hospital bonds or utility bonds),
so Fund shares could be affected by events that adversely affect a particular
sector. The Fund may purchase derivative instruments (such as inverse floaters,
futures contracts and options thereon, and interest rate swaps), bonds that do
not make the regular payment of interest, bonds issued on a when-issued basis
and municipal leases. A portion of the Fund's distributions generally will be
subject to alternative minimum tax.

The portfolio manager purchases and sells 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 currently invests its assets in Massachusetts Municipals Portfolio, a
separate registered investment company with the same investment objective and
policies as the Fund.

Principal Risk Factors. Obligations with maturities of ten years or more may
offer higher yields than obligations with shorter maturities, but they are
subject to greater fluctuations in value when interest rates change. When
interest rates rise or when the supply of suitable bonds exceeds the market
demand, the value of Fund shares typically will decline. The Fund's yield will
also fluctuate over time. The Fund invests a significant portion of assets in
obligations of issuers located in Massachusetts and 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.

Because obligations rated BBB or Baa and below (so-called "junk bonds") are more
sensitive to the financial soundness of their issuers than higher quality
obligations, Fund shares may fluctuate more in value than shares of a fund
investing solely in higher quality obligations. Obligations rated BBB or Baa
have speculative characteristics, while lower rated obligations are
predominantly speculative. Massachusetts general obligations currently are
rated Aa3, AA- and AA- by Moody's Investors Service, Inc. ("Moody's"), Standard
& Poor's Ratings Group ("S&P") and Fitch IBCA ("Fitch"), respectively.

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

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

2
<PAGE>

Performance Information. The following bar chart and table provide information
about the Fund's performance, including a comparison of the Fund's performance
to the performance of a national index of municipal bonds. Although past
performance is no guarantee of future results, this performance information
demonstrates the risk that the value of your investment will change. The
following returns are for each calendar year through December 31, 1999. The
performance for the period prior to June 17, 1993 is that of the 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).

8.12% 12.16% -8.30% 18.32% 2.85% 10.62% 6.09% -5.81%
1992 1993 1994 1995 1996 1997 1998 1999

The highest quarterly total return for Class I was 8.24% for the quarter ended
March 31, 1995, and the lowest quarterly return was --6.28% for the quarter
ended March 31, 1994. For the 30 days ended September 30, 1999, the SEC yield
and SEC tax-equivalent yield (assuming a combined state and federal tax rate of
35.11%) for Class I shares were 5.53% and 8.52%, respectively. For current
yield information call 1-800-225-6265.

<TABLE>
<CAPTION>
One Five Life of
Average Annual Total Return as of December 31, 1999 Year Years Fund
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Class I Shares -5.81% 6.11% 5.90%
Lehman Brothers Municipal Bond Index -2.06% 6.91% 6.68%
</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. (Source
for Lehman Brothers Municipal Bond Index: Lipper Inc.)

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

Shareholder Fees
(fees paid directly from your investment)
- -------------------------------------------------------------------------------

Maximum Sales Charge (Load) (as a percentage of offering None

Maximum Deferred Sales Charge (Load) None

Maximum Sales Charge (Load) Imposed on Reinvested Distributions None

Exchange Fee None

Annual Fund Operating
(expenses that are deducted from Fund assets)
- -------------------------------------------------------------------------------

Management Fees 0.44%

Other Expenses 0.20%
-----
Total Annual Fund Operating Expenses 0.64%

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

1 Year 3 Years 5 Years 10 Years
- -------------------------------------------------------------------------
$ 65 $ 205 $ 357 $ 798

3
<PAGE>

INVESTMENT OBJECTIVE & PRINCIPAL POLICIES AND RISKS

The investment objective of the Fund is to provide current income exempt from
regular federal income tax and Massachusetts state personal income 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 Massachusetts state personal income taxes. This is a fundamental policy of
the Fund which only may be changed with shareholder approval. The Fund's
investment objective and certain other policies may be changed by the Trustees
without shareholder approval. The Fund currently seeks to meet its investment
objective by investing in Massachusetts Municipals Portfolio (the "Portfolio"),
a separate open-end management company that has the same objective and policies
as the Fund.

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, determined by the investment adviser to be of at least investment grade
quality. The balance of net assets may be invested in municipal obligations
rated below investment grade and in unrated municipal obligations considered to
be of comparable quality by the investment adviser. Municipal obligations rated
Baa or BBB have speculative characteristics, while lower quality obligations are
predominantly speculative. Also, changes in economic conditions or other
circumstances are more likely to reduce the capacity of issuers of lower-rated
obligations to make principal and interest payments. Lower rated obligations
also may be subject to greater price volatility than higher rated obligations.
The Portfolio will not invest more than 10% of its assets in obligations rated
below B by Moody's, S&P or Fitch, or unrated obligations considered to be of
comparable quality by the investment adviser.

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 generally will 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.

Although the Portfolio may invest in securities of any maturity, it is expected
that the Portfolio will normally invest a substantial portion of its assets in
securities with maturities of ten years or more. The average maturity of the
Portfolio's holdings may vary (generally between 15 and 30 years) depending on
anticipated market conditions.

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 Baa1, 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 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.

4
<PAGE>

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. In
addition, the Portfolio could purchase an instrument that has greater or lesser
credit risk than the municipal bonds underlying the instrument. 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 Portfolio may also enter interest
rate swaps. The use of derivative instruments for both hedging and investment
purposes involves a risk of loss or depreciation due to a variety of factors
including counterparty risk, unexpected market, interest rate or securities
price movements, and tax and regulatory constraints. Derivative hedging
transactions may not be effective because of imperfect correlations and other
factors.

The Portfolio may invest in zero coupon bonds, which do not require the issuer
to make periodic interest payments. The values of these bonds are subject to
greater fluctuation in response to changes in market interest rates than bonds
which pay interest currently. The Portfolio accrues income on these investments
and the Fund is required to distribute its share of Portfolio income each year.
The Portfolio may be required to sell securities to obtain cash needed for
income distributions.

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

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

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

MANAGEMENT AND ORGANIZATION

Management. The Portfolio's investment adviser is Boston Management and Research
("BMR"), a subsidiary of Eaton Vance Management ("Eaton Vance"), with offices at
The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109. Eaton
Vance has been managing assets since 1924 and managing mutual funds since 1931.
Eaton Vance and its subsidiaries currently manage over $41 billion on behalf of
mutual funds, institutional clients and individuals.

<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>

On September 30, 1999, the Portfolio had net assets of $212,277,107. For the
fiscal year ended September 30, 1999, the Portfolio paid BMR advisory fees
equivalent to 0.44% of the Portfolio's average net assets for such year.

5
<PAGE>

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

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

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

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

VALUING SHARES

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

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

PURCHASING SHARES

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
of shares 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 and certain group
purchase plans.

6
<PAGE>

REDEEMING SHARES

You can redeem shares in any of the following ways:

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

By Check You may obtain forms to establish checkwriting
privileges for 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 certain
rules in connection with this privilege. There is no
charge for this service.

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

SHAREHOLDER ACCOUNT FEATURES

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

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

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

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

.Cash Option Dividends and capital gains are paid in cash.
<PAGE>

7
<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.

TAX INFORMATION

The Fund declares dividends daily and ordinarily pays distributions monthly.
Your account will be credited with dividends beginning on the business day
after the day when the funds used to purchase your Fund shares are collected by
the transfer agent. For tax purposes, the entire monthly distribution of the
Fund's daily dividends ordinarily will constitute tax-exempt income to you.
Distributions of any net realized gains will be made once each year (usually in
December).

Distributions of any taxable income and net short-term capital gains will be
taxable as ordinary income. Distributions of any long-term capital gains are
taxable as long-term capital gains. Distributions of interest on certain
municipal obligations are a tax preference item under the AMT provisions
applicable to individuals and corporations, and all tax-exempt distributions may
affect a corporation's AMT liability. The Fund's distributions will be treated
as described above for federal income tax purposes whether they are paid in cash
or reinvested in additional shares. A redemption of Fund shares, including an
exchange for shares of another fund, is a taxable transaction.

8
<PAGE>

FINANCIAL HIGHLIGHTS

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

<TABLE>
<CAPTION>
MASSACHUSETTS FUND

-------------------------------------------------------
YEAR ENDED SEPTEMBER 30,

-------------------------------------------------------
1999(1) 1998(1) 1997 1996 1995
-------------------------------------------------------
CLASS I CLASS I CLASS B CLASS B CLASS B
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value - Beginning of year $10.260 $ 9.890 $ 10.330 $ 10.270 $ 9.990
------- ------- -------- -------- --------
Income (loss) from operations
Net investment income $ 0.528 $ 0.527 $ 0.487 $ 0.491 $ 0.499
Net realized and unrealized gain (loss) (0.869) 0.373 0.360 0.066 0.307
------- ------- -------- -------- --------
Total income (loss) from operations $(0.341) $ 0.900 $ 0.847 $ 0.557 $ 0.806
------- ------- -------- -------- --------
Less distributions
From net investment income $(0.529) $(0.527) $ (0.487) $ (0.492) $ (0.499)
In excess of net investment income(4) -- (0.003) -- (0.005) (0.027)
------- ------- -------- -------- --------
Total distributions $(0.529) $(0.530) $ (0.487) $ (0.497) $ (0.526)
------- ------- -------- -------- --------
Net asset value - End of year $ 9.390 $10.260 $ 10.690 $ 10.330 $ 10.270
------- ------- -------- -------- --------
Total return(2) (3.53)% 9.34% 8.41% 5.53% 8.38%
Ratios/Supplemental Data
Net assets, end of year (000's omitted) $10,311 $11,439 $239,838 $267,398 $291,114
Ratios (as a percentage of average daily
net assets):
Expenses(3) 0.64% 0.66% 1.61% 1.59% 1.58%
Expenses after custodian fee
reduction(3) 0.62% 0.64% 1.59% 1.58% 1.56%
Net investment income 5.30% 5.24% 4.70% 4.75% 5.00%
Portfolio turnover of the Portfolio 24% 28% 35% 51% 87%
</TABLE>

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

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

(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.

9
<PAGE>

[LOGO]
Mutual Funds
for People
Who Pay
Taxes(R)

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

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

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

You will find and may copy information about the Fund at the
Securities and Exchange Commission's public reference room in
Washington, DC (call 1-800-SEC-0330 for information on the operation
of the public reference room); 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 20549-0102 or
by electronic mail at [email protected].

PFPC Global Fund Services
P.O. Box 5123
Westborough, MA 01581-5123
1-800-262-1122

The Fund's SEC File No. is 811-4409 MAMUNIP

<PAGE>

LOGO
Mutual Fund
for People
Who Pay
Taxes(R)

Eaton Vance
National Municipals
Fund

A mutual fund providing tax-exempt income

Prospectus Dated
February 1, 2000

The Securities and Exchange Commission has not approved or disapproved these
securities or determined whether this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.

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

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

FUND SUMMARY

INVESTMENT OBJECTIVE AND PRINCIPAL STRATEGIES

Eaton Vance National Municipals Fund's investment objective is to provide
current income exempt from regular federal income tax. The Fund primarily
invests in investment grade municipal obligations (those rated BBB or Baa or
higher), but may also invest in lower rated obligations. The Fund normally
invests in municipal obligations with maturities of ten years or more.

The Fund currently invests its assets in National Municipals Portfolio (the
"Portfolio"), a separate registered investment company with the same investment
objective and policies as the Fund.

PRINCIPAL RISK FACTORS

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

2
<PAGE>

PERFORMANCE INFORMATION. The following bar chart and table provide information
about the Fund's performance, including a comparison of the Fund's performance
to the performance of a national index of municipal obligations. Although past
performance is no guarantee of future results, this performance information
demonstrates the risk that the value of your investment will change. The
following returns are for Class B shares for each calendar year through December
31, 1999 and do not reflect a sales charge. If the sales charge was reflected,
the returns would be lower.

3.41% 11.78% 10.05% 14.61% -8.07% 19.80% 3.64% 12.90% 4.81% -8.50%
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

</TABLE>

The highest quarterly total return for Class B was 7.77% for the quarter ended
March 31, 1995, and the lowest quarterly return was -6.68% for the quarter ended
March 31, 1994. For the 30-days ended September 30, 1999, the yield and tax
equivalent yield (assuming a federal tax rate of 31%) for Class A shares were
5.78% and 8.38%, respectively, for Class B shares were 5.24% and 7.59%,
respectively, and for Class C shares were 5.24% and 7.59%, respectively. For
current yield information call 1-800-225-6265.

<TABLE>
<CAPTION>
One Five Ten
Average Annual Total Return as of December 31, 1999 Year Years Years
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A shares -12.10% 5.81% 6.02%
Class B shares -12.85% 5.78% 6.06%
Class C shares -9.30% 6.00% 5.87%
Lehman Brothers Municipal Bond Index -2.06% 6.91% 6.89%
</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 classes). Class B shares commenced operations
on December 19, 1985. The Lehman Brothers Municipal Bond Index is a broad-based,
unmanaged market index of municipal bonds. Investors cannot invest directly in
an Index. (Source for Lehman Brothers Municipal Bond Index: Lipper Inc.)

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

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

Annual Fund Operating Expenses
(expenses that are deducted from Fund assets) Class A Class B Class C
- --------------------------------------------------------------------------------
Management Fees 0.42% 0.42% 0.42%
Distribution and Service (12b-1) Fees* 0.00% 1.00% 1.00%
Other Expenses** 0.37% 0.12% 0.12%
------ ------ -------
Total Annual Fund Operating Expenses 0.79% 1.54% 1.54%

* Long-term shareholders of Class B and Class C shares may pay more than the
economic equivalent of the front-end sales charge permitted by the National
Association of Securities Dealers, Inc.
** Other Expenses for Class A includes a service fee of 0.25%.

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

1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
Class A shares $552 $715 $ 893 $1,406
Class B shares $657 $886 $ 1,039 $1,835
Class C shares $257 $486 $ 839 $1,835

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

1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
Class A shares $552 $715 $893 $1,406
Class B shares $157 $486 $839 $1,835
Class C shares $157 $486 $839 $1,835

3
<PAGE>

INVESTMENT OBJECTIVE & PRINCIPAL POLICIES AND RISKS

The investment objective of the Fund is to provide current income exempt from
regular federal income tax. 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 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 certain other policies may be changed by the Trustees without
shareholder approval. The Fund currently seeks to meet its investment objective
by investing in the Portfolio, a separate open-end management company that has
the same objective and policies as the Fund.

At least 65% of net assets will normally be invested in municipal obligations
rated at least investment grade at the time of investment (which are those rated
Baa or higher by Moody's Investors Service, Inc. ("Moody's"), or BBB or higher
by either Standard & Poor's Ratings Group ("S&P") or Fitch IBCA ("Fitch")) or,
if unrated, determined by the investment adviser to be of at least investment
grade quality. The balance of net assets may be invested in municipal
obligations rated below investment grade and in unrated municipal obligations
considered to be of comparable quality by the investment adviser. Municipal
obligations rated Baa or BBB have speculative characteristics, while lower
quality obligations are predominantly speculative. Also, changes in economic
conditions or other circumstances are more likely to reduce the capacity of
issuers of lower-rated obligations to make principal and interest payments.
Lower rated obligations also may be subject to greater price volatility than
higher rated obligations. The Portfolio will not invest 10% of its assets in
obligations rated below B by Moody's, S&P or Fitch, or unrated obligations
considered to be of comparable quality by the investment adviser.

Municipal obligations include bonds, notes and commercial paper issued by a
municipality for a wide variety of both public and private purposes. Municipal
obligations also include municipal leases and participations in municipal
leases. The obligation of the issuer to meet its obligations under such leases
is often subject to the appropriation by the appropriate legislative body, on an
annual or other basis, of funds for the payment of the obligations. Certain
municipal obligations may be purchased on a "when-issued" basis, which means
that payment and delivery occur on a future settlement date. The price and yield
of such securities are generally fixed on the date of commitment to purchase.
Many obligations permit the issuer at its option to "call", or redeem, its
securities. If an issuer calls securities during a time of declining interest
rates, it may not be possible to reinvest the proceeds in securities providing
the same investment return as the securities redeemed.

The 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 generally will 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.

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. In
addition, the Portfolio could purchase an instrument that has greater or lesser
credit risk than the municipal bonds underlying the instrument. 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 Portfolio may also enter interest
rate swaps. The use of derivative instruments for both hedging and investment
purposes involves a risk of loss or depreciation due to a variety of factors
including counterparty risk, unexpected market, interest rate or securities
price movements, and tax and regulatory constraints. Derivative hedging
transactions may not be effective because of imperfect correlations and other
factors.

4
<PAGE>

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

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

MANAGEMENT AND ORGANIZATION

MANAGEMENT. The Portfolio's investment adviser is Boston Management and Research
("BMR"), a subsidiary of Eaton Vance Management ("Eaton Vance"), with offices at
The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109. Eaton
Vance has been managing assets since 1924 and managing mutual funds since 1931.
Eaton Vance and its subsidiaries currently manage over $41 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>

On September 30, 1999, the Portfolio had net assets of $2,125,544,813. For the
fiscal year ended September 30, 1999, the Portfolio paid BMR advisory fees
equivalent to 0.42% of the Portfolio's average net assets for such year.

Thomas M. Metzold is the portfolio manager of the Portfolio (since December
1993). He also manages other Eaton Vance portfolios, has been an Eaton Vance
portfolio manager for more than 5 years, and is a Vice President of Eaton Vance
and BMR.

5
<PAGE>

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

VALUING SHARES

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

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

PURCHASING SHARES

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

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

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

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:

6
<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%
$25,000 but less than $100,000 4.50% 4.71% 4.25%
$100,000 but less than $250,000 3.75% 3.90% 3.50%
$250,000 but less than $500,000 3.00% 3.09% 2.75%
$500,000 but less than $1,000,000 2.00% 2.04% 2.00%
$1,000,000 or more 0.00* 0.00* 1.00%

* 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.
</TABLE>

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

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

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

The principal underwriter pays commissions to investment dealers on sales of
Class B and Class C shares (except exchange transactions and reinvestments). The
sales commission on Class B shares equals 4% of the purchase price of the
shares. The sales commission on Class C shares equals .75% of the purchase price
of the shares. After the first year, investment dealers also receive 0.75% of
the value of Class C shares in annual distribution fees.

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

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

7
<PAGE>

Any CDSC period applicable to the shares you acquire upon reinvestment will run
from the date of your original share purchase. Reinvestment requests must be in
writing. If you reinvest, you will be sold shares at the next determined net
asset value following receipt of your request.

DISTRIBUTION AND SERVICE FEES. Class B and Class C shares have in effect plans
under Rule 12b-1 that allow the Fund to pay distribution fees for the sale and
distribution of shares (so-called "12b-1 fees"). Class B and Class C shares pay
distribution fees of 0.75% of average daily net assets annually. Because these
fees are paid from Fund assets on an ongoing basis, they will increase your cost
over time and may cost you more than paying other types of sales charges. All
Classes pay service fees for personal and/or account services equal to .25% of
average daily net assets annually.

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

REDEEMING SHARES

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

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

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

SHAREHOLDER ACCOUNT FEATURES

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

8
<PAGE>

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

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

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

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

WITHDRAWAL PLAN. You may redeem shares on a regular monthly or quarterly basis
by establishing a systematic withdrawal plan. Withdrawals will not be subject to
any applicable CDSC if they are, in the aggregate, less than or equal to 12%
annually of the greater of either the initial account balance or the current
account balance. A minimum account size of $5,000 is required to establish a
systematic withdrawal plan. Because purchases of Class A shares are generally
subject to an initial sales charge, you should not make withdrawals from your
account while you are making purchases.

EXCHANGE PRIVILEGE. You may exchange your Fund shares for shares of the same
class of another Eaton Vance fund. Exchanges are generally made at net asset
value. If you hold Class A shares for less than six months and exchange them for
shares subject to a higher sales charge, you will be charged the difference
between the two sales charges. If your shares are subject to a CDSC, the CDSC
will continue to apply to your new shares at the same CDSC rate. For purposes of
the CDSC, your shares will continue to age from the date of your original
purchase. Class A shares may also be exchanged for the Fund's Institutional
Shares, subject to the terms for investing in those shares.

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

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

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

9
<PAGE>

TAX INFORMATION

The Fund declares dividends daily and ordinarily pays distributions monthly.
Different classes will distribute different dividend amounts. Your account will
be credited with dividends beginning on the business day after the day when the
funds used to purchase your Fund shares are collected by the transfer agent. For
tax purposes, the entire monthly distribution of the Fund's daily dividends
ordinarily will constitute federally tax-exempt income to you. Distribution of
any net realized gains will be made once each year (usually in December).

Distributions of any taxable income and net short-term capital gains will be
taxable as ordinary income. Distributions of any long-term capital gains are
taxable as long-term capital gains. Distributions of interest on certain
municipal obligations are a tax preference item under the AMT provisions
applicable to individuals and corporations, and all tax-exempt distributions may
affect a corporation's AMT liability. The Fund's distributions will be treated
as described above for federal income tax purposes whether they are paid in cash
or reinvested in additional shares. A redemption of Fund shares, including an
exchange for shares of another fund, is a taxable transaction.

10
<PAGE>

FINANCIAL HIGHLIGHTS

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

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
-----------------------------------------------------------------------------------------------------
1999 1998 1997 1996
-----------------------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS B CLASS B
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value -
Beginning of year $ 11.650 $ 10.870 $ 10.350 $ 11.260 $ 10.530 $ 10.010 $ 9.900 $ 9.800
-------- ---------- -------- -------- ---------- -------- ---------- ----------
Income (loss) from operations
Net investment
income $ 0.636 $ 0.508 $ 0.482 $ 0.644 $ 0.523 $ 0.493 $ 0.550 $ 0.557
Net realized and
unreal-
ized gain (loss) (1.209) (1.126) (1.073) 0.398 0.361 0.349 0.634 0.096
-------- ---------- -------- -------- ---------- -------- ---------- ----------
Total income (loss)
from operations $ (0.573) $ (0.618) $ (0.591) $ 1.042 $ 0.884 $ 0.842 $ 1.184 $ 0.653
-------- ---------- -------- -------- ---------- -------- ---------- ----------
Less distributions
From net investment
income $ (0.637) $ (0.508) $ (0.479) $ (0.652) $ (0.531) $ (0.502) $ (0.554) $ (0.553)
In excess of net
investment income -- (0.004) -- -- (0.013) -- -- --
-------- ---------- -------- -------- ---------- -------- ---------- ----------
Total distributions $ (0.637) $ (0.512) $ (0.479) $ (0.652) $ (0.544) $ (0.502) $ (0.554) $ (0.553)
-------- ---------- -------- -------- ---------- -------- ---------- ----------
Net asset value -
End of year $ 10.440 $ 9.740 $ 9.280 $ 11.650 $ 10.870 $ 10.350 $ 10.530 $ 9.900
======== ========== ======== ======== ========== ======== ========== ==========
Total return(1) (5.14)% (5.90)% (5.92)% 9.49% 8.60% 8.59% 12.33% 6.84%
Ratios/Supplemental Data
Net assets, end of
year (000's omitted) $211,206 $1,764,616 $140,182 $146,067 $2,071,078 $122,839 $2,040,626 $2,101,632
Ratios (as a percentage of average
daily net assets):
Expenses(2)(3) 0.71% 1.53% 1.54% 0.71% 1.53% 1.54% 1.60% 1.55%
Expenses after
custodian fee
reduction(2) 0.69% 1.51% 1.52% 0.69% 1.51% 1.52% 1.60% 1.54%
Net investment
income 5.67% 4.86% 4.84% 5.60% 4.87% 4.83% 5.45% 5.62%
Portfolio Turnover
of the Portfolio 60% 60% 60% 28% 28% 28% 17% 19%
<CAPTION>

1995
-------------
CLASS B
- -------------------------------------
<S> <C>
Net asset value -
Beginning of year $ 9.410
----------
Income (loss) from oper
Net investment $ 0.570
income
Net realized and
unreal- 0.395
ized gain (loss) ----------
Total income (loss)
from operations $ 0.965
----------
Less distributions
From net investment $ (0.570)
income
In excess of net
invest- (0.005)
ment income ----------
Total distributions $ (0.575)
----------
Net asset value -
End of year $ 9.800
==========
Total return(1) 10.60%
Ratios/Supplemental Date
Net assets, end of $2,191,240
year (000's omitted)
Ratios (as a percentage
daily net assets):
Expenses(2)(3) 1.53%
Expenses after 1.52%
custodian fee
reduction(2)
Net investment 6.00%
income
Portfolio Turnover 54%
of the Portfolio
</TABLE>

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

(2) 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 the
prior period has not been adjusted to reflect this change.

11
<PAGE>

LOGO
Mutual Funds
for People
Who Pay
Taxes(R)

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

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

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

You will find and may copy information about the Fund at the
Securities and Exchange Commission's public reference room in
Washington, DC (call 1-800-SEC-0330 for information on the operation
of the public reference room); 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 20549-0102 or by
electronic mail at [email protected].

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

PFPC Global Fund Services
P.O. BOX 5123
Westborough, MA 01581-5123
1-800-262-1122

The Fund's SEC File No. is 811-4409 HMP

<PAGE>

LOGO
Mutual Funds
for People
Who Pay
Taxes(R)

EATON VANCE
NATIONAL MUNICIPALS
FUND

Institutional Shares

A mutual fund providing tax-exempt income

Prospectus Dated
February 1, 2000

The Securities and Exchange Commission has not approved or disapproved these
securities or determined whether this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.

Information in this prospectus
Page Page
- -------------------------------------------------------------------------------
Fund Summary 2 Redeeming Shares 7
Investment Objective & Principal Policies Shareholder Account
and Risks 4 Features 7
Management and Organization 5 Tax Information 8
Valuing Shares 6 Financial Highlights 9
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 currently invests its assets in National Municipals Portfolio (the
"Portfolio"), a separate registered investment company with the same investment
objective and policies as the Fund.

Principal Risk Factors

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

2
<PAGE>

Performance Information. The following bar chart and table provide information
about the Fund's performance, including a comparison of the Fund's performance
to the performance of a national index of municipal bonds. Although past
performance is no guarantee of future results, this performance information
demonstrates the risk that the value of your investment will change. The
following returns are for each calendar year through December 31, 1999. The
performance for the period prior to July 1, 1999 (when Institutional Shares
commenced operations) is that of another class of shares of the Fund (the
"Retail Shares"), adjusted to eliminate the Retail Shares' sales charge (but not
adjusted for any other differences in the expenses of the two classes).

3.41% 11.78% 10.05% 14.61% -8.07% 19.80% 3.64% 12.90% 4.81% -7.77%
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
</TABLE>

The highest quarterly total return for Retail Shares was 7.77% for the quarter
ended March 31, 1995, and the lowest quarterly total return was -6.68% for the
quarter ended March 31, 1994. For the 30 days ended September 30, 1999, the SEC
yield and tax-equivalent yield (assuming a federal tax rate of 31%) for
Institutional Shares were 6.25% and 9.06%, respectively.

<TABLE>
<CAPTION>
One Five Ten
Average Annual Total Return as of December 31, 1999 Year Years Years
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Class I Shares -7.78% 6.27% 6.15%
Lehman Brothers Municipal Bond Index -2.06% 6.91% 6.89%
</TABLE>

The Lehman Brothers Municipal Bond Index is a broad-based, unmanaged index of
municipal bonds. Investors cannot invest directly in an Index. (Source for
Lehman Brothers Municipal Bond Index: Lipper Inc.)

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

<TABLE>
<CAPTION>
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
- ------------------------------------------------------------------------------------------
<S> <C>
Management Fees 0.42%
Other Expenses* 0.12%
-----
Total Annual Fund Operating Expenses 0.54%
</TABLE>

* Other Expenses is estimated.

1 Year 3 Years
- -------------------------------------------------------------------------------
Institutional Shares $55 $173

3
<PAGE>

INVESTMENT OBJECTIVE & PRINCIPAL POLICIES AND RISKS

Municipal obligations include bonds, notes and commercial paper issued by a
municipality for a wide variety of both public and private purposes. Municipal
obligations also include municipal leases and participations in municipal
leases. The obligation of the issuer to meet its obligations under such leases
is often subject to the appropriation by the appropriate legislative body, on an
annual or other basis, of funds for the payment of the obligations. Certain
municipal obligations may be purchased on a "when-issued" basis, which means
that payment and delivery occur on a future settlement date. The price and yield
of such securities are generally fixed on the date of commitment to purchase.
Many obligations permit the issuer at its option to "call", or redeem, its
securities. If an issuer calls securities during a time of declining interest
rates, it may not be possible to reinvest the proceeds in securities providing
the same investment return as the securities redeemed.

The 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 generally will 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.

4
<PAGE>

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

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

MANAGEMENT AND ORGANIZATION

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>
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>

5
<PAGE>

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

VALUING SHARES

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

PURCHASING SHARES

Institutional Shares are offered to clients of financial intermediaries who
charge an advisory, management, consulting or similar fee for their services;
accounts affiliated with those financial intermediaries; investment and
institutional clients of Eaton Vance and its affiliates; certain persons
affiliated with Eaton Vance; and certain Eaton Vance and fund service providers.
Your initial investment must be at least $250,000. Subsequent investments of any
amount may be made at any time. The investment minimum is waived for persons
affiliated with Eaton Vance and its service providers.

The Fund provides shareholders ease of investment by allowing same day wire
purchases. You may purchase Institutional Shares through your investment dealer
or by requesting your bank to transmit immediately available funds (Federal
Funds) by wire to the address set forth below. To make an initial investment by
wire, you must first telephone the Fund Order Department at 800-225-6265
(extension 7604) to advise of your action and to be assigned an account number.
Failure to call will delay the order. The account application form which
accompanies this prospectus must be promptly forwarded to the transfer agent.
Additional investments may be made at any time through the same wire procedure.
The Fund Order Department must be advised by telephone of each transmission.
Wire funds to:

Boston Safe Deposit & Trust Co.
ABA #811001234
Account #080411
Further Credit Eaton Vance National Municipals Fund - Institutional Shares -
Fund #401
A/C # [Insert your account number]

Purchase orders will be executed at the net asset value next determined after
their receipt by the Fund only if the Fund has received payment in cash or in
Federal Funds. If you purchase shares through an investment dealer, that dealer
may charge you a fee for executing the purchase for you.

From time to time the Fund may suspend the continuous offering of its shares.
During any such suspension, shareholders who reinvest their distributions in
additional shares will be permitted to continue such reinvestments, and the Fund
may permit tax-sheltered retirement plans which own shares to purchase
additional shares of the Fund. The Fund may also refuse any order for the
purchase of shares.

6
<PAGE>

REDEEMING SHARES

You can redeem shares in one of two ways:
By Wire

If you have given complete written authorization
in advance you may request that redemption
proceeds be wired directly to your bank account.
The bank designated may be any bank in the United
States. The redemption request may be made by
calling the Eaton Vance Fund Order Department
at 800-225-6265 (extension 7604) or by sending a
signature guaranteed letter of instruction to the
transfer agent (see back cover for address). You
may be required to pay the costs of redeeming by
wire; however, no costs are currently charged.
The Fund may suspend or terminate this expedited
payment procedure upon at least 30 days notice.

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

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

SHAREHOLDER ACCOUNT FEATURES

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

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

Exchange Privilege. You may exchange your Institutional Shares for other Eaton
Vance Institutional Shares. Exchanges are made at net asset value. Before
exchanging, you should read the prospectus of the new fund carefully. 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. The transfer agent and the principal underwriter have
procedures in place to authenticate telephone instructions (such as verifying
personal account information). As long as the transfer agent and principal
underwriter follow these procedures, they will not be responsible for
unauthorized telephone transactions and you bear the risk of possible loss
resulting from telephone transactions. You may decline the telephone redemption
option on the account application. Telephone instructions are tape recorded.

7
<PAGE>

TAX INFORMATION

Distributions of any taxable income and net short-term capital gains will be
taxable as ordinary income. Distributions of any long-term capital gains are
taxable as long-term capital gains. Distributions of interest on certain
municipal obligations are a tax preference item under the AMT provisions
applicable to individuals and corporations, and all tax-exempt distributions may
affect a corporation's AMT liability. The Fund's distributions will be treated
as described above for federal income tax purposes whether they are paid in cash
or reinvested in additional shares. A redemption of Fund shares, including an
exchange for shares of another fund, is a taxable transaction.

8
<PAGE>

FINANCIAL HIGHLIGHTS

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

Period Ended September 30, 1999(1)
--------------------------------------
Net asset value - Beginning of year $10.000
-------
Income (loss) from operations
Net investment income $ 0.149
Net realized and unrealized loss (0.390)
-------
Total income (loss) from operations $(0.241)
-------
Less distributions
From net investment income $(0.149)
-------
Total distributions $(0.149)
-------
Net asset value - End of year $ 9.610
-------
Total return(2) (2.44)%
Ratios/Supplemental Data:
Net assets, end of year (000's omitted) $ 468
Ratios (as percentage of average daily net assets):
Expenses(3) 0.55%(4)
Expenses after custodian fee reduction(3) 0.53%(4)
Net investment income 6.14%(4)
Portfolio turnover 60%

(1) For the period from the commencement of offering of Class I shares, July 1,
1999, to September 30, 1999.
(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 reinvested at the net
asset value on the reinvestment date. Total return is not computed on an
annualized basis.
(3) Includes the Fund's share of its corresponding Portfolio's allocated
expenses.
(4) Annualized.

9
<PAGE>

LOGO
Mutual Funds
for People
Who Pay
Taxes(R)

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

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

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

You will find and may copy information about the Fund at the
Securities and Exchange Commission's public reference room in
Washington, DC (call 1-800-SEC-0330 for information on the operation
of the public reference room); 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 20549-0102 or by
electronic mail at [email protected].

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

PFPC Global Fund Services
P.O. Box 5123
Westborough, MA 01581-5123
1-800-262-1122

The Fund's SEC File No. is 811-4409 IHMP

<PAGE>

PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION

STATEMENT OF
ADDITIONAL INFORMATION
February 1, 2000

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

The Eaton Vance Building
255 State Street
Boston, Massachusetts 02109
(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 ....................... 12
Other Service Providers ............................................... 13
Purchasing and Redeeming Shares ....................................... 13
Sales Charges ......................................................... 15
Performance ........................................................... 18
Taxes ................................................................. 20
Portfolio Security Transactions ....................................... 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: Tax Equivalent Yield Tables ........................................ e-1
F: 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 SAI IS NOT A PROSPECTUS AND IS AUTHORIZED FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS ONLY IF PRECEDED OR ACCOMPANIED BY THE FUNDS' PROSPECTUS
DATED FEBRUARY 1, 2000, AS SUPPLEMENTED FROM TIME TO TIME, WHICH IS
INCORPORATED HEREIN BY REFERENCE. THIS SAI SHOULD BE READ IN CONJUNCTION WITH
THE PROSPECTUS, WHICH MAY BE OBTAINED BY CALLING 1-800-225-6265.

<PAGE>

STRATEGIES AND RISKS

MUNICIPAL 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.

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

WHEN-ISSUED SECURITIES. New issues of municipal obligations are sometimes
offered on a "when-issued" basis, that is, delivery and payment for the
securities normally 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.

INTEREST RATE SWAPS. Interest rate swaps involve the exchange by a Portfolio
with another party of their respective commitments to pay or receive interest,
e.g., an exchange of fixed rate payments for floating rate payments. A
Portfolio will only enter into interest rate swaps on a net basis, i.e., the
two payment streams are netted out with the Portfolio receiving or paying, as
the case may be, only the net amount of the two payments. If the other party
to an interest rate swap defaults, the Portfolio's risk of loss consists of
the net amount of interest payments that the Portfolio is contractually
entitled to receive. The net amount of the excess, if any, of a Portfolio's
obligations over its entitlements will be maintained in a segregated account
by the Portfolio's custodian. No Portfolio will enter into any interest rate
swap unless the claims-paying ability of the other party thereto is considered
to be investment grade by the investment adviser. If there is a default by the
other party to such a transaction, a Portfolio will have contractual remedies
pursuant to the agreements related to the transaction.

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

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.

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

DIVERSIFIED STATUS. Each Portfolio is a "diversified" investment company
under the 1940 Act. This means that with respect to 75% of its total assets
(1) a 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) a
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).

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

PORTFOLIO TURNOVER. 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.

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. Any such determination by a delegate will be made pursuant to
procedures adopted by the Board. If the Fund or Portfolio invests in Rule
144A securities, the level of portfolio illiquidity may be increased to
the extent that eligible buyers become uninterested in purchasing such
securities.

No Fund or Portfolio will invest 25% or more of its total assets in the
securities of issuers in any one industry. For purposes of the foregoing
policy, securities of the U.S. Government, its agencies, or instrumentalities
are not considered to represent industries. Municipal obligations backed by
the credit of a governmental entity are also not considered to represent
industries. However, municipal obligations backed only by the assets and
revenues of non-governmental users may for this purpose be deemed to be issued
by such non-governmental users. The foregoing 25% limitation would apply to
these issuers. As discussed in the prospectus and this SAI, a Fund or
Portfolio may invest more than 25% of its total assets in certain economic
sectors, such as revenue bonds, housing, hospitals and other health care
facilities, and industrial development bonds. Each Fund and each Portfolio
reserve the right to invest more than 25% of total assets in each of these
sectors.

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 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 a Fund and a Portfolio must take actions necessary to comply with
the policy of investing at least 65% of total assets in a particular state.
Moreover, each Fund and Portfolio must always be in compliance with the
limitation on investing in illiquid investments and the borrowing policies set
forth above.

MANAGEMENT AND ORGANIZATION

FUND MANAGEMENT. The Trustees of the Trust are responsible for the overall
management and supervision of the Trust's affairs. The Trustees and officers
of the Trust 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 The Eaton Vance Building, 255 State Street, Boston,
Massachusetts 02109. 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 (40), Trustee*
President and Chief Executive Officer of National Financial Partners (a
financial services company (since April, 1999). President and Chief
Operating Officer of John A. Levin & Co. (a registered investment advisor)
(July, 1997 to April, 1999) and a Director of Baker, Fentress & Company
which owns John A. Levin & Co. (July, 1997 to April, 1999). Formerly
Executive Vice President of Smith Barney Mutual Funds (from July, 1994 to
June, 1997). Elected Trustee October 30, 1998. Trustee of various investment
companies managed by Eaton Vance or BMR since October 30, 1998.
Address: 1301 Avenue of the Americas, New York, New York 10019

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

JAMES B. HAWKES (58), 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 (64), Trustee
Jacob H. Schiff Professor of Investment Banking Emeritus, Harvard University
Graduate School of Business Administration. Trustee of the Kobrick
Investment Trust (mutual funds). Trustee of various investment companies
managed by Eaton Vance or BMR.
Address: 345 Nahatan Road, Westwood, Massachusetts 02090

NORTON H. REAMER (64), Trustee
Chairman of the Board and Chief Executive Officer, United Asset Management
Corporation (a holding company owning institutional investment management
firms); Chairman, President and Director, UAM Funds (mutual funds). Trustee
of various investment companies managed by Eaton Vance or BMR.
Address: One International Place, Boston, Massachusetts 02110

LYNN A. STOUT (42), Trustee
Professor of Law, Georgetown University Law Center. Elected Trustee October
30, 1998. Trustee of various investment companies managed by Eaton Vance or
BMR since October 30, 1998.
Address: 600 New Jersey Avenue, NW, Washington, DC 20001

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

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

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

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

ALAN R. DYNNER (59), Secretary
Vice President, Secretary and Chief Legal Officer of BMR, Eaton Vance and EVC.
Prior to joining Eaton Vance on November 1, 1996, he was a Partner of the
law firm of Kirkpatrick & Lockhart LLP, New York and Washington, D.C., and
was Executive Vice President of Neuberger & Berman Management, Inc., a
mutual fund management company. Officer of various investment companies
managed by Eaton Vance or BMR.

JANET E. SANDERS (64), Assistant Secretary
Vice President of BMR and Eaton Vance. Officer of various investment companies
managed by Eaton Vance or BMR.

A. JOHN MURPHY (37), Assistant Secretary
Vice President of BMR and Eaton Vance. Officer of various investment companies
managed by Eaton Vance or BMR.

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

In addition, Cynthia J. Clemson (36), Vice President of Eaton Vance and
BMR, is a Vice President of the California, Florida and Mississippi
Portfolios. Ms. Clemson is an officer of various investment companies managed
by Eaton Vance or BMR.

The Nominating Committee of the Board of Trustees of the Trust and each
Portfolio is comprised of the Trustees who are not "interested persons" as
that term is defined under the 1940 Act ("noninterested Trustees"). The
purpose of the Committee is to recommend to the Board nominees for the
position of noninterested Trustee and to assure that at least a majority of
the Board of Trustees is independent of Eaton Vance and its affiliates.

Messrs. Hayes (Chairman), Dwight and Reamer and Ms. Stout are members of
the Special Committee of the Board of Trustees of the Trust and of each
Portfolio. The purpose of the Special Committee is to consider, evaluate and
make recommendations to the full Board of Trustees concerning (i) all
contractual arrangements with service providers to the Funds and the
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.

Messrs. Treynor (Chairman) and Dwight are members of the Audit Committee
of the Board of Trustees of the Trust and of each 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 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, 1999,
the noninterested Trustees of the Trust and the Portfolios earned the
following compensation in their capacities as Trustees from the Trust and the
Portfolios, and for the year ended December 31, 1999, earned the following
compensation in their capacities as Trustees of the funds in the Eaton Vance
fund complex(1):

<TABLE>
<CAPTION>
JESSICA M. DONALD R. SAMUEL L. NORTON H. LYNN A. JACK L.
SOURCE OF COMPENSATION BIBLIOWICZ(8) DWIGHT(3) HAYES, III(4) REAMER STOUT(5)(8) TREYNOR
- ---------------------- ------------- --------- ------------- ------ ---------- -------

<S> <C> <C> <C> <C> <C> <C>
Trust(2) $ 7,119 $ 14,688 $ 14,623 $ 13,925 $ 7,518 $ 16,016
California Portfolio 1,656 3,691 3,903 3,678 1,787 4,088
Florida Portfolio 1,876 4,148 4,357 4,111 2,020 4,579
Massachusetts Portfolio 1,435 3,008 3,225 3,025 1,554 3,348
Mississippi Portfolio 18 38 38 36 19 41
New York Portfolio 1,876 4,375 4,580 4,330 2,020 4,828
Ohio Portfolio 1,435 3,235 3,448 3,245 1,554 3,597
Rhode Island Portfolio 184 381 379 361 194 409
West Virginia Portfolio 184 381 379 361 194 409
Trust and Fund Complex $160,000 $160,000(6) $170,000 $160,000 $160,000(7) $170,000
- ----------
(1) As of February 1, 2000, the Eaton Vance fund complex consists of 143 registered investment companies or series thereof.
(2) The Trust consisted of 29 Funds as of September 30, 1999.
(3) Mr. Dwight received deferred compensation from each Portfolio as follows: California -- $1,937 Florida -- $2,176; Massachusetts
-- $1,576; Mississippi -- $20; New York -- $2,297 Ohio -- $1,697; Rhode Island -- $200; and West Virginia -- $200.
(4) Mr. Hayes received deferred compensation from each Portfolio as follows: California -- $661; Florida -- $739; Massachusetts --
$506; Mississippi -- $7; New York -- $817; Ohio -- $583; Rhode Island -- $65; and West Virginia -- $65.
(5) Ms. Stout received deferred compensation from each portfolio as follows: California -- $364; Florida -- $407; Massachusetts --
$279; Mississippi -- $4; New York -- $407; Ohio -- $279; Rhode Island -- $36; and West Virginia -- $36.
(6) Includes $60,000 of deferred compensation.
(7) Includes $16,000 of deferred compensation.
(8) Ms. Bibliowicz and Ms. Stout were elected as Trustees on October 30, 1998.
</TABLE>

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 (for the Massachusetts Fund only) Class I are successors to
the operations of 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.

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, 1999.

<TABLE>
<CAPTION>
ADVISORY FEE FOR FISCAL YEARS ENDED
NET ASSETS ----------------------------------------------------------------
PORTFOLIO AT 9/30/99 SEPTEMBER 30, 1999 SEPTEMBER 30, 1998 SEPTEMBER 30, 1997
- --------- ---------- ------------------ ------------------ ------------------

<S> <C> <C> <C> <C>
California $270,200,198 $1,408,907 $1,499,946 $1,687,887
Florida 346,872,272 1,827,598 2,175,772 2,593,352
Massachusetts 212,277,107 1,029,634 1,089,133 1,203,548
Mississippi 17,936,839 31,879 34,333 44,507
New York 402,118,111 2,052,610 2,284,029 2,603,611
Ohio 216,464,027 1,056,733 1,174,214 1,272,425
Rhode Island(1) 41,731,697 108,206 98,372 96,316
West Virginia 26,960,876 63,145 69,657 86,026
- ----------
(1) To enhance the net income of the Rhode Island Portfolio, BMR made a reduction of its advisory fee for the fiscal year ended
September 30, 1997 in the amount $47,940.
</TABLE>

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 James B. Hawkes, John G.L. Cabot, Leo I. Higdon, Jr., John M. Nelson,
Vincent M. O'Reilly and Ralph Z. Sorenson. All of the issued and outstanding
shares of Eaton Vance are owned by EVC. All of the issued and outstanding shares
of BMR are owned by Eaton Vance. All shares of the outstanding Voting Common
Stock of EVC are deposited in a Voting Trust, the Voting Trustees of which are
Messrs. Hawkes, Jeffrey P. Beale, Alan R. Dynner, Thomas E. Faust, Jr., Thomas
J. Fetter, Scott H. Page, Duncan W. Richardson, William M. Steul, Payson F.
Swaffield, Michael W. Weilheimer, and Wharton P. Whitaker (all of whom are
officers of Eaton Vance). The Voting Trustees have unrestricted voting rights
for the election of Directors of EVC. All of the outstanding voting trust
receipts issued under said Voting Trust are owned by certain of the officers of
BMR and Eaton Vance who are also officers, or officers and Directors of EVC and
EV. As indicated under "Management and Organization", all of the officers of the
Trust (as well as Mr. Hawkes who is also a Trustee) hold positions in the Eaton
Vance organization.

EXPENSES. Each Fund 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 repurchase transactions.

OTHER SERVICE PROVIDERS

PRINCIPAL UNDERWRITER. Eaton Vance Distributors, Inc. ("EVD"), The Eaton Vance
Building, 255 State Street, Boston, MA 02109, is the Funds' principal
underwriter. The principal underwriter acts as principal in selling shares
under a Distribution Agreement with the Trust. The expenses of printing copies
of prospectuses used to offer shares and other selling literature and of
advertising are borne by the principal underwriter. The fees and expenses of
qualifying and registering and maintaining qualifications and registrations of
a Fund and its shares under federal and state securities laws are borne by
that Fund. The Distribution Agreement 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. Mr. Hawkes is a Vice
President and Director and Messrs. Dynner and O'Connor are Vice Presidents of
EVD.

CUSTODIAN. Investors Bank & Trust Company ("IBT"), 200 Clarendon Street,
Boston, MA 02116, serves as custodian to the Funds and 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, 200 Berkeley Street, Boston,
Massachusetts 02116, 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. PFPC Global Fund Services, 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 offered for sale only
in states where they are registered. 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".

SUSPENSION OF SALES. The Trust may, in its absolute discretion, suspend,
discontinue or limit the offering of one or more of its classes of shares at
any time. In determining whether any such action should be taken, the Trust's
management intends to consider all relevant factors, including (without
limitation) the size of 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.

ACQUIRING FUND SHARES IN EXCHANGE FOR SECURITIES. IBT, as escrow agent, will
receive securities acceptable to Eaton Vance, as administrator, in exchange
for Fund shares. The minimum value of securities (or securities and cash)
accepted for deposit is $5,000. Securities accepted will be sold on the day of
their receipt or as soon thereafter as possible. The number of Fund shares to
be issued in exchange for securities will be the aggregate proceeds from the
sale of such securities, divided by the applicable public offering price of
Class A shares or net asset value of Class B shares on the day such proceeds
are received. Eaton Vance will use reasonable efforts to obtain the then
current market price for such securities but does not guarantee the best
available price. Eaton Vance will absorb any transaction costs, such as
commissions, on the sale of the securities. Securities determined to be
acceptable should be transferred via book entry or physically delivered, in
proper form for transfer, through an investment dealer, together with a
completed and signed Letter of Transmittal in approved form (available from
investment dealers). Investors who are contemplating an exchange of securities
for shares, or their representatives, must contact Eaton Vance to determine
whether the securities are acceptable before forwarding such securities. Eaton
Vance reserves the right to reject any securities. Exchanging securities for
shares may create a taxable gain or loss. Each investor should consult his or
her tax adviser with respect to the particular federal, state and local tax
consequences of exchanging securities.

ADDITIONAL INFORMATION ABOUT REDEMPTIONS. The right to redeem shares of 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.

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

SYSTEMATIC WITHDRAWAL PLAN. The transfer agent will send to the shareholder
regular monthly or quarterly payments of any permitted amount designated by
the shareholder based upon the value of the shares held. The checks will be
drawn from share redemptions and hence, may require the recognition of taxable
gain or loss. Income dividends and capital gains distributions in connection
with withdrawal plan accounts will be credited at net asset value as of the
record date for each distribution. Continued withdrawals in excess of current
income will eventually use up principal, particularly in a period of declining
market prices. A shareholder may not have a withdrawal plan in effect at the
same time he or she has authorized Bank Automated Investing or is otherwise
making regular purchases of Fund shares. The shareholder, the transfer agent
or the principal underwriter will be able to terminate the withdrawal plan at
any time without penalty.

SALES CHARGES

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

SALES CHARGE WAIVERS. Class A shares and Class I 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 officers and employees of IBT and the transfer
agent; to persons associated with law firms, consulting firms and others
providing services to Eaton Vance and the Eaton Vance funds; and to such
persons' spouses, parents, siblings and children and their beneficial
accounts. Such shares may also be issued at net asset value (1) in connection
with the merger of an investment company (or series or class thereof) with a
Fund (or class thereof), (2) to investors making an investment as part of a
fixed fee program whereby an entity unaffiliated with the investment adviser
provides multiple investment services, such as management, brokerage and
custody, and (3) to investment advisors, financial planners or other
intermediaries who place trades for their own accounts or the accounts of
their clients and who charge a management, consulting or other fee for their
services; clients of such investment advisors, financial planners or other
intermediaries who place trades for their own accounts if the accounts are
linked to the master account of such investment advisor, financial planner or
other intermediary on the books and records of the broker or agent. Class A
shares may also be sold at net asset value to registered representatives and
employees of investment dealers and bank employees who refer customers to
registered representatives of investment dealers. Class A shares and Class I
shares may be sold at net asset value to any investment advisory, agency,
custodial or trust account managed or administered by Eaton Vance or by any
parent, subsidiary or other affiliate of Eaton Vance. Class A shares are
offered at net asset value to the foregoing persons and in the foregoing
situations because either (i) there is no sales effort involved in the sale of
shares or (ii) the investor is paying a fee (other than the sales charge) to
the investment dealer involved in the sale.

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

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

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

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

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

DISTRIBUTION AND SERVICE PLANS. The Trust has in effect a Service Plan (the
"Class A Plan") for 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 equal to .20% (.25% for the
California Class A) of its average daily net assets for any fiscal year which
is based on the value of Class A shares sold by such persons. 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 also has in effect 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 Class B Plan is designed to permit an investor to purchase shares
through an investment dealer without incurring an initial sales charge and at
the same time permit the principal underwriter to compensate investment
dealers in connection therewith. The Class B Plan provides that 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 Class B Plan by the Trust to the principal underwriter and
CDSCs theretofore paid or payable to the principal underwriter will be
subtracted from such distribution charges; if the result of such subtraction
is positive, a distribution fee (computed at 1% over the prime rate then
reported in The Wall Street Journal) will be computed on such amount and added
thereto, with the resulting sum constituting the amount of outstanding
uncovered distribution charges with respect to such day. The amount of
outstanding uncovered distribution charges of the principal underwriter
calculated on any day does not constitute a liability recorded on the
financial statements of the Fund.

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

The Class B Plan also authorizes 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 equal to .20% (.25%
for the California Class B) of the average daily net assets for any fiscal
year which is based on the value of Class B shares sold by such persons. This
fee is paid quarterly in arrears based on the value of Class B shares sold by
such persons. For the service fees paid by Class B shares, see Appendix B.

Currently, payments of sales commissions and distribution fees and of
service fees may equal 1% of 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 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 Class B
Plan if at any point in time the aggregate amounts theretofore received by the
principal underwriter pursuant to the Class B Plan and from CDSCs have
exceeded the total expenses theretofore incurred by such organization in
distributing 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 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 who
are "interested" persons of the Funds have an indirect financial interest in
the Plans because their employers (or affiliates thereof) receive distribution
and/or service fees under the Plans or agreements related thereto.

The Trustees of the Trust believe that each Plan will be a significant
factor in the expected growth of each Fund's assets, and will result in
increased investment flexibility and advantages which have benefitted and will
continue to benefit the Fund and its shareholders. Payments for sales
commissions and distribution fees made to the principal underwriter under the
Class B Plan will compensate the principal underwriter for its services and
expenses in distributing 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. Each
Fund may also publish total return figures for each Class based on reduced
sales charges or at net assset value. These returns would be lower if the full
sales charge was imposed. 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'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 Inc.,
Wiesenberger, Morningstar, Inc., The Bond Buyer, the Federal Reserve Board or
The Wall Street Journal). The Trust may also refer in investor publications to
Tax Freedom Day, as computed by the Tax Foundation, Washington, DC 20005, to
help illustrate the value of tax free investing, as well as other tax-related
information. Information, charts and illustrations showing the effects of
inflation and taxes (including their effects on the dollar and the return on
various investments) and compounding earnings may also be included in
advertisements and materials furnished to present and prospective investors.

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

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

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

Such information may also address different methods for saving money and
the results of such methods, as well as the benefits of investing in 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 net income (including tax-exempt income) and net
short-term and long-term capital gains (after reduction by any available
capital loss carryforwards) in accordance with the timing requirements imposed
by the Code, so as to maintain its RIC status and to avoid paying any federal
income or excise tax. Each Fund so qualified for its fiscal year ended
September 30, 1999. 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, 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.

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

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

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 of any
distributions treated as tax-exempt interest with respect to such shares and,
to the extent the loss exceeds the disallowed amount, will be treated as a
long-term capital loss to the extent of any distributions treated as long-term
capital gain with respect to such shares. In addition, all or a portion of a
loss realized on a redemption or other disposition of Fund shares may be
disallowed under "wash sale" rules to the extent the shareholder acquired
other shares of the same Fund (whether through the reinvestment of
distributions or otherwise) within the period beginning 30 days before the
redemption of the loss shares and ending 30 days after such date. Any
disallowed loss will result in an adjustment to the shareholder's tax basis in
some or all of the other shares acquired.

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

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, foreign
investors, insurance companies and financial institutions. Shareholders should
consult their own tax advisers with respect to special tax rules that may
apply in their particular situations, as well as the state, local, and, where
applicable, foreign tax consequences of investing in a Fund. See Appendix C
for state tax information for some states.

PORTFOLIO SECURITY TRANSACTIONS

Decisions concerning the execution of portfolio security transactions,
including the selection of the market and the executing firm, are made by BMR.
BMR is also responsible for the execution of transactions for all other
accounts managed by it. BMR places the portfolio security transactions of 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, 1999:

PORTFOLIO 9/30/99 9/30/98 9/30/97
--------- ------- ------- -------
California ............... $2,920 $16,377 $20,355
Florida .................. 4,617 -0- 91,541
Massachusetts ............ 4,995 5,759 14,636
Mississippi .............. 230 1,024 1,372
New York ................. 4,229 16,429 17,759
Ohio ..................... 1,438 4,462 -0-
Rhode Island ............. 973 1,956 1,654
West Virginia ............ 704 2,588 4,394

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, 1999 were as follows: California --
$61,144,301; Florida -- $93,395,317; Massachusetts -- $102,407,944;
Mississippi -- $4,622,166; New York -- $86,396,237; Ohio -- $29,477,193; Rhode
Island -- $19,902,278; and West Virginia -- $34,700,727.

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.

Registrant incorporates by reference the audited financial information for
the Funds and the Portfolios listed below for the fiscal year ended September
30, 1999, as previously filed electronically with the SEC:

<TABLE>
<S> <C>
Eaton Vance California Municipals Fund California Municipals Portfolio
Eaton Vance Florida Municipals Fund Florida Municipals Portfolio
Eaton Vance Massachusetts Municipals Fund Massachusetts Municipals Portfolio
Eaton Vance Mississippi Municipals Fund Mississippi Municipals Portfolio
Eaton Vance New York Municipals Fund New York Municipals Portfolio
Eaton Vance Ohio Municipals Fund Ohio Municipals Portfolio
Eaton Vance Rhode Island Municipals Fund Rhode Island Municipals Portfolio
Eaton Vance West Virginia Municipals Fund West Virginia Municipals Portfolio
(Accession No. 0000912057-99-08615)
</TABLE>

<PAGE>

APPENDIX A

CLASS A FEES, PERFORMANCE AND OWNERSHIP

SERVICE FEES
For the fiscal year ended September 30, 1999, the following table shows
(1) service fees paid under the Service Plan, and (2) service fees 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 ....................... $12,423 $11,131
Florida .......................... 18,255 17,147
Massachusetts .................... 9,159 9,030
Mississippi ...................... 2,220 2,220
New York ......................... 16,241 15,738
Ohio ............................. 9,362 9,265
Rhode Island ..................... 3,958 3,702
West Virginia .................... 2,892 2,892

PRINCIPAL UNDERWRITER
For the fiscal year ended September 30, 1999, the following sales charges
were paid in connection with sales of Class A shares:

TOTAL SALES SALES CHARGES TO SALES CHARGES TO
CLASS A CHARGES INVESTMENT DEALERS PRINCIPAL UNDERWRITER
- ------- ----------- ------------------ ---------------------
California ........ $193,391 $188,978 $4,413
Florida ........... 88,655 83,502 5,153
Massachusetts ..... 173,361 163,676 9,685
Mississippi ....... 6,230 5,879 351
New York .......... 182,137 172,376 9,761
Ohio .............. 96,672 92,710 3,962
Rhode Island ...... 52,047 48,866 3,181
West Virginia ..... 21,446 20,117 1,329

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,
1999, Class A paid the principal underwriter for repurchase transactions
handled by it $2.50 for each such transaction which aggregated as follows:
California -- $105; Florida -- $100; Massachusetts -- $205; Mississippi --
$15; New York -- $187.50; Ohio -- $62.50; Rhode Island -- $80 and West
Virginia -- $27.50.

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>
VALUE OF A $1,000 INVESTMENT -- CALIFORNIA

<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 9/30/99 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ----------------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
10 Years Ended
9/30/99** 9/30/88 $952.88 $1,748.37 83.48% 6.26% 74.84% 5.75%
5 Years Ended
9/30/99** 9/30/94 $952.56 $1,319.31 38.50% 6.73% 31.93% 5.70%
1 Year Ended
9/30/99 9/30/98 $952.14 $ 911.65 -4.25% -4.25% -8.84% -8.84%
- ------------
*Predecessor Fund commenced operations May 27, 1994.
</TABLE>

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

<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 9/30/99 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ----------------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Life of the Fund** 8/28/90 $952.75 $1,708.94 79.38% 6.64% 70.89% 6.07%
5 Years Ended
9/30/99** 9/30/94 $952.47 $1,267.08 33.03% 5.87% 26.71% 4.85%
1 Year Ended
9/30/99 9/30/98 $952.18 $ 913.93 -4.02% -4.02% -8.61% -8.61%
- ------------
*Predecessor Fund commenced operations April 5, 1994.
</TABLE>

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

<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 9/30/99 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ----------------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Life of the Fund** 4/18/91 $952.40 $1,566.85 64.50% 6.07% 56.68% 5.46%
5 Years Ended
9/30/99** 9/30/94 $952.38 $1,264.64 32.78% 5.83% 26.46% 4.81%
1 Year Ended
9/30/99 9/30/98 $952.10 $ 919.58 -3.42% -3.42% -8.04% -8.04%
- ------------
*Predecessor Fund commenced operations December 7, 1993.
</TABLE>

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

<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 9/30/99 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ----------------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Life of the Fund** 6/11/93 $952.76 $1,241.48 30.30% 4.28% 24.15% 3.49%
5 Years Ended
9/30/99** 9/30/94 $952.99 $1,282.66 34.59% 6.12% 28.27% 5.10%
1 Year Ended
9/30/99 9/30/98 $952.65 $ 930.04 -2.37% -2.37% -7.00% -7.00%
- ------------
*Predecessor Fund commenced operations December 7, 1993.
</TABLE>

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

<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 9/30/99 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ----------------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Life of the Fund** 8/30/90 $952.76 $1,778.50 86.66% 7.11% 77.85% 6.54%
5 Years Ended
9/30/99** 9/30/94 $952.29 $1,293.56 35.84% 6.32% 29.36% 5.28%
1 Year Ended
9/30/99 9/30/98 $952.88 $ 918.29 -3.63% -3.63% -8.17% -8.17%
- ------------
*Predecessor Fund commenced operations April 15, 1994.
</TABLE>

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

<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 9/30/99 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ----------------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Life of the Fund** 4/18/91 $952.38 $1,564.93 64.32% 6.05% 56.49% 5.44%
5 Years Ended
9/30/99** 9/30/94 $952.07 $1,273.74 33.78% 5.99% 27.37% 4.96%
1 Year Ended
9/30/99 9/30/98 $952.06 $ 930.09 -2.31% -2.31% -6.99% -6.99%
- ------------
*Predecessor Fund commenced operations December 7, 1993.
</TABLE>

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

<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 9/30/99 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ----------------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Life of the Fund** 6/11/93 $952.74 $1,205.78 26.57% 3.80% 20.58% 3.01%
5 Years Ended
9/30/99** 9/30/94 $952.84 $1,243.22 30.48% 5.46% 24.32% 4.45%
1 Year Ended
9/30/99 9/30/98 $952.10 $ 912.45 -4.16% -4.16% -8.76% -8.76%
- ------------
*Predecessor Fund commenced operations December 7, 1993.
</TABLE>

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

<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 9/30/99 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ----------------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Life of the Fund** 6/11/93 $952.83 $1,229.82 29.06% 4.13% 22.98% 3.33%
5 Years Ended
9/30/99** 9/30/94 $952.28 $1,268.44 33.20% 5.90% 26.84% 4.87%
1 Year Ended
9/30/99 9/30/98 $952.92 $ 919.07 -3.55% -3.55% -8.09% -8.09%
- ------------
*Predecessor Fund commenced operations December 13, 1993.
</TABLE>

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

As at December 31, 1999, 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 either (i) individually or (ii) 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>
CALIFORNIA FUND - Merrill Lynch, Pierce, Fenner & Smith, Inc. Jacksonville, FL 9.4%
Dean Witter New York, NY 7.1%
FLORIDA FUND - Merrill Lynch, Pierce, Fenner & Smith, Inc. Jacksonville, FL 5.2%
MASSACHUSETTS FUND - Merrill Lynch, Pierce, Fenner & Smith, Inc. Jacksonville, FL 13.8%
Greenfield Savings Bank Greenfield, MA 5.9%
MISSISSIPPI - Merrill Lynch, Pierce, Fenner & Smith, Inc. Jacksonville, FL 36.9%
Edward D. Jones & Co. Maryland Heights, MO 28.7%
OHIO - Merrill Lynch, Pierce, Fenner & Smith, Inc. Jacksonville, FL 20.0%
Donaldson Lufkin Jenrette Jersey City, NJ 5.5%
Fiserv Securities, Inc. Philadelphia, PA 5.2%
RHODE ISLAND - BISYS Brokerage Services Inc. Concord, CA 19.2%
Merrill Lynch, Pierce, Fenner & Smith, Inc. Jacksonville, FL 16.5%
Olde Discount Detroit, MI 10.6%
WEST VIRGINIA Donaldson Lufkin Jenrette Jersey City, NJ 12.5%
Salomon Smith Barney, Inc. New York, NY 10.3%
Alex Brown LLC Baltimore, MD 6.2%
</TABLE>

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:

<TABLE>
<S> <C> <C> <C>
CALIFORNIA - Spencer H. Kim & Mia H. Kim TTEES Woodland Hills, CA 6.5%
Spencer & Mia Kim Family Trust U/A
dtd 4/18/96
FLORIDA - James E. Simon TTEE, James E. Simon Rev Trust Gainesville, FL 12.5%
dtd 8/30/99
Roy Kopstein and Sadie Kopstein JT-TEN Philadelphia, PA 7.1%
Thomas P. Luka Windermere, FL 6.8%
James G. Hargrove Tequesta, FL 5.5%
MISSISSIPPI - M. Wayne Bush & Celeste F. Bush JTWROS Schlater, MS 7.6%
OHIO - Cathleen A. Conroy Aurora, OH 11.7%
Juanita B. Gallup Penney TTEE Toledo, OH 7.1%
Juanita B. Gallup Penney Trust
RHODE ISLAND - Henry V. Rosciti & Donna M. Rosciti N. Scituate, RI 6.8%
WEST VIRGINIA - Joseph M. Sanders, Jr. Bluefield, WV 5.7%
</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
For the fiscal year ended September 30, 1999, the following table shows
(1) sales commissions paid by the principal underwriter to investment dealers
on sales of Class B shares, (2) distribution fees to the principal underwriter
under the Distribution Plan, (3) CDSC payments to the principal underwriter,
(4) uncovered distribution charges under the Plan (dollar amount and as a
percentage of net assets attributable to Class B), (5) service fees paid under
the Distribution Plan, and (6) the service fees paid to investment dealers.
The service fees paid by the Funds that were not paid to investment dealers
were retained by the principal underwriter. Distribution payments and CDSC
payments reduce uncovered distribution charges under the Plan.

<TABLE>
<CAPTION>
DISTRIBUTION CDSCS UNCOVERED SERVICE
FEES PAID TO PAID TO DISTRIBUTION FEES TO
SALES THE PRINCIPAL THE PRINCIPAL CHARGES (AS A % SERVICE INVESTMENT
CLASS B COMMISSIONS UNDERWRITER UNDERWRITER OF CLASS NET ASSETS) FEES DEALERS
- ------- ----------- ----------- ----------- -------------------- ---- -------
<S> <C> <C> <C> <C> <C> <C>
California* ....... $512,184 $ 774,417 $ 41,123 $ -- $671,115 $660,678
Florida ........... 449,859 2,952,569 416,000 7,276,000 (2.2%) 785,124 775,976
Massachusetts ..... 434,922 1,573,730 181,000 4,312,000 (2.3%) 401,544 396,783
Mississippi ....... 64,719 136,703 30,000 652,000 (4.0%) 33,696 33,180
New York .......... 595,397 3,287,113 382,000 5,860,000 (1.5%) 843,439 839,114
Ohio .............. 342,202 1,729,063 192,000 4,307,000 (2.1%) 445,845 441,904
Rhode Island ...... 218,000 302,702 47,000 1,370,000 (3.6%) 74,583 74,090
West Virginia ..... 48,921 211,805 41,000 842,000 (3.4%) 53,819 53,407
- ------------
* On September 30, 1999, the California Fund had no outstanding uncovered distribution charges. At such times, any CDSCs are
paid to the Fund and no distribution fees are paid to the principal underwriter. For the fiscal year ended September 30,
1999, the Fund received CDSCs of $212,719.
</TABLE>

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,
1999, Class B paid the principal underwriter for repurchase transactions
handled by it $2.50 for each such transaction which aggregated as follows:
California -- $2,545; Florida -- $5,532; Massachusetts -- $2,530; Mississippi
- -- $307.50; New York -- $4,812.50; Ohio -- $2,535; Rhode Island -- $557.50;
and West Virginia -- $365.

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 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. Return would have
been lower without subsidies.

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

<CAPTION>
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 9/30/99 CDSC ON 9/30/99 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ---------------- ---------- ----------------- --------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
10 Years Ended
9/30/99 9/30/88 $1,726.75 $1,726.75 72.68% 5.61% 72.68% 5.61%
5 Years Ended
9/30/99 9/30/94 $1,317.88 $1,297.88 31.79% 5.68% 29.79% 5.35%
1 Year Ended
9/30/99 9/30/98 $ 955.03 $ 909.35 -4.50% -4.50% -9.06% -9.06%
</TABLE>

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

<CAPTION>
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 9/30/99 CDSC ON 9/30/99 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ---------------- ---------- ----------------- --------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Life of the
Fund** 8/28/90 $1,717.44 $1,717.44 71.74% 6.13% 71.74% 6.13%
5 Years Ended
9/30/99 9/30/94 $1,276.19 $1,256.19 27.62% 5.00% 25.62% 4.67%
1 Year Ended
9/30/99 9/30/98 $ 951.58 $ 905.91 -4.84% -4.84% -9.41% -9.41%
- ------------
* Investment operations began on August 28, 1990.
</TABLE>

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

<CAPTION>
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 9/30/99 CDSC ON 9/30/99 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ---------------- ---------- ----------------- --------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Life of the
Fund** 4/18/91 $1,594.07 $1,594.07 59.41% 5.67% 59.41% 5.67%
5 Years Ended
9/30/99 9/30/94 $1,282.83 $1,262.83 28.28% 5.11% 26.28% 4.78%
1 Year Ended
9/30/99 9/30/98 $ 955.56 $ 909.81 -4.44% -4.44% -9.02% -9.02%
- ------------
* Investment operations began on April 18, 1991.
</TABLE>

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

<CAPTION>
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 9/30/99 CDSC ON 9/30/99 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ---------------- ---------- ----------------- --------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Life of the
Fund** 6/11/93 $1,279.16 $1,279.16 27.92% 3.98% 27.92% 3.98%
5 Years Ended
9/30/99** 9/30/94 $1,313.13 $1,293.13 31.31% 5.60% 29.31% 5.28%
1 Year Ended
9/30/99 9/30/98 $ 967.48 $ 921.07 -3.25% -3.25% -7.89% -7.89%
- ------------
* Investment operations began on June 11, 1993.
</TABLE>

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

<CAPTION>
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 9/30/99 CDSC ON 9/30/99 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ---------------- ---------- ----------------- --------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Life of the
Fund** 8/30/90 $1,786.88 $1,786.88 78.69% 6.59% 78.69% 6.59%
5 Years Ended
9/30/99 9/30/94 $1,301.95 $1,281.95 30.20% 5.42% 28.20% 5.09%
1 Year Ended
9/30/99 9/30/98 $ 956.50 $ 911.26 -4.35% -4.35% -8.87% -8.87%
- ----------
* Investment operations began on August 30, 1990.
</TABLE>

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

<CAPTION>
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 9/30/99 CDSC ON 9/30/99 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ---------------- ---------- ----------------- --------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Life of the
Fund** 4/18/91 $1,612.48 $1,612.48 61.25% 5.82% 61.25% 5.82%
5 Years Ended
9/30/99 9/30/94 $1,297.47 $1,277.47 29.75% 5.35% 27.75% 5.02%
1 Year Ended
9/30/99 9/30/98 $ 967.86 $ 921.96 -3.21% -3.21% -7.80% -7.80%
- ----------
* Investment operations began on April 18, 1991.
</TABLE>

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

<CAPTION>
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 9/30/99 CDSC ON 9/30/99 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ---------------- ---------- ----------------- --------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Life of the
Fund** 6/11/93 $1,248.52 $1,248.52 24.85% 3.58% 24.85% 3.58%
5 Years Ended
9/30/99** 9/30/94 $1,283.09 $1,263.09 28.31% 5.11% 26.31% 4.78%
1 Year Ended
9/30/99 9/30/98 $ 950.79 $ 905.17 -4.92% -4.92% -9.48% -9.48%
- ----------
* Investment operations began on June 11, 1993.
</TABLE>

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

<CAPTION>
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 9/30/99 CDSC ON 9/30/99 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ---------------- ---------- ----------------- --------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Life of the
Fund** 6/11/93 $1,262.70 $1,262.70 26.27% 3.77% 26.27% 3.77%
5 Years Ended
9/30/99** 9/30/94 $1,293.51 $1,273.51 29.35% 5.28% 27.35% 4.95%
1 Year Ended
9/30/99 9/30/98 $ 956.04 $ 910.16 -4.40% -4.40% -8.98% -8.98%
- ----------
* Investment operations began on June 11, 1993.

</TABLE>

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

As at December 31, 1999, 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 December 31, 1999, 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 -- 11.8%; Florida -- 13.5%;
Massachusetts -- 8.4%; Mississippi -- 21.7%; New York -- 10.8%; Ohio -- 18.9%;
Rhode Island -- 16.7%; and West Virginia -- 9.0%. In addition, as of the same
date, BISYS Brokerage Services, Inc., Concord CA was the record owner of 21.9%
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. Information presented with two asterisks (**) includes the
effect of subsidizing expenses. Returns would have been lower without
subsidies.

<TABLE>
VALUE OF A $1,000 INVESTMENT

<CAPTION>
VALUE OF TOTAL RETURN
INVESTMENT INVESTMENT AMOUNT OF INVESTMENT ----------------------------
PERIOD DATE INVESTMENT ON 9/30/99 CUMULATIVE ANNUALIZED
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Life of the Fund** 4/18/91 $1,000 $1,677.87 67.79% 6.32%
5 Years Ended
9/30/99** 9/30/94 $1,000 $1,339.90 33.99% 6.03%
1 Year Ended
9/30/99 9/30/98 $1,000 $ 964.70 -3.53% -3.53%

</TABLE>

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

As at December 31, 1999 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 December 31, 1999, Mars &
Co., Boston, MA was the record owner of approximately 52.7%, of the
outstanding Class I shares which were held on behalf of its customers who are
the beneficial owners of such shares, and as to which they had voting power
under certain limited circumstances. In addition, as of the same date, M.
Dozier Gardner, Brookline, MA owned beneficially and of record 13.7% 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 1999-2000 Budget Act estimated General Fund revenues and transfers of
$63.0 billion, and contained expenditures totaling $63.7 billion. The 1999
Budget Act also contained expenditures of $16.1 billion from special funds and
$1.5 billion from bond funds. The Administration estimated the State's Special
Fund for Economic Uncertainties ("SFEU") would have a balance at June 30,
2000, of about $880 million. Not included in this amount was an additional
$300 million which (after the Governor's vetoes) was "set aside" to provide
funds for employee salary increases (to be negotiated in bargaining with
employee unions), and for litigation reserves. The 1999 Budget Act anticipates
normal cash flow borrowing during the fiscal year.

The principal features of the 1999 Budget Act include increased funding
for educational programs, health and human services and infrastructure
projects.

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 the
state 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.

In McBrearty v. City of Brawley, 59 Cal. App. 4(S)/ 1441, 69 Cal. Rptr. 2d
862 (Cal. Ct. App. 1997), the Court of Appeal held that the city of Brawley
must either hold an election or cease collection of utility taxes that were
not submitted to a vote. In 1991, the city of Brawley adopted an ordinance
imposing a utility tax on its residents and began collecting the tax without
first seeking voter approval. In 1996, the taxpayer petitioned for writ of
mandate contending that Proposition 62 required the city to submit its utility
tax on residents to vote of local electorate. The trial court issued a writ of
mandamus and the city appealed.

First, the Court of Appeal held that the taxpayer's cause of action
accrued for statute of limitation purposes at the time of the Guardino
decision rather than at the time when the city adopted the tax ordinance which
was July 1991. Second, the Court held that the voter approval requirement in
Proposition 62 was not an invalid mechanism under the state constitution for
the involvement of the electorate in the legislative process. Third, the Court
rejected the city's argument that Guardino should only be applied on a
prospective basis. Finally, the Court held Proposition 218 (see discussion
below) did not impliedly protect any local general taxes imposed prior to
January 1, 1995 against challenge.

Assembly Bill 1362 (Mazzoni), introduced February 28, 1997, which would
have made the Guardino decision inapplicable to any tax first imposed or
increased by an ordinance or resolution adopted before December 14, 1995 was
vetoed by the Governor on October 11, 1997. The California State Senate had
passed the Bill on September 8, 1997 and the California State Assembly had
passed the Bill on September 11, 1997. It is not clear whether the Bill, if
enacted, would have been 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.

Other. 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.

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).

The estimated collections of the General Revenue Fund were significantly
increased at the November 12 Florida Revenue Estimating conference. Largely on
the basis of higher sales tax collections, the revenue estimate for the
current fiscal year was raised by $363.7 million, to $18,592.1 million. For
the 2000-2001 fiscal year, the estimate was raised by $338.4 million, to
$19,454.7 million. This is a year-over-year increase of 4.6%. Other changes to
the estimate by major tax source included increases in the corporate income
tax and estate taxes. Higher revenues are being offset in part by higher
refund payments, in response to processing efficiencies implemented by the
Department of Revenue to expedite refund payments for overpayment of taxes.
The ending fiscal position for the current fiscal year was also increased as a
result of the closeout of fiscal year 1998-99. The closeout increased the
balance forward into the current fiscal year by $127.3 million, largely on the
basis of revenues for last year being higher than forecasted and the amount of
unused appropriations also being higher than projected. The ending balance in
the combined General Revenue and Working Capital Funds for this year is now
projected at $860.1 million. This represents a 4.8% reserve against a
potential shortfall in the revenue estimate. In additional to these reserves,
there is $907.1 million in the Budget Stabilization Fund.

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 October 1, 1999, the state's
total bond indebtedness was $2.149 billion. For the fiscal year ended June 30,
1998, the constitutional debt limit was approximately $6.681 billion and is
expected to be approximately $7.138 billion for the fiscal year ended June 30,
1999. The State's General Fund had an ending fund balance of $101.3 million
for fiscal year 1998 and the fiscal year 1999 budget projects an ending fund
balance of $100.3 million.

The following actions against the state, which have been reveiwed by the
Attorney General's office, are reported to be the only significant cases in
which the state is the defendant and wherein the state's financial resources
may be incurred, are summarized by reference to the names of the litigants:
(a) Jones v. State presents a demand by public school teachers that, upon
retirement, they may be given a cash payout for all accrued sick leave and
personal leave; (b) Evan Johnson & Sons Construction Co. v. State is a
construction dispute on a national guard armory (the state from time to time
has several of these types of cases pending); and (c) Mississippi Power
Company v. C.A. Marx, and Mississippi State Tax Commission presents a
challenge as to whether use taxes paid is a violation of the equal protection
clause of the United States Constitution. This constitutes the major and
significant litigation presently pending against the state. It should be noted
that there is other litigation pending against the state which could obligate
the state's financial resources. The examples of such litigation include, but
are not limited to, Title VII (employment discrimination) actions, contract
disputes and actions seeking injunctions against various state agencies.

NEW YORK

The state ended its 1998-1999 fiscal year balanced on a cash basis. The
reported General Fund cash balance was $892 million. This does not include
$2.31 billion that the state has deposited into its tax refund reserve to pay
for tax refunds in the 1999-2000 fiscal year. The state projects a General
Fund balanced on a cash basis for the 1999-2000 fiscal year with total General
Fund receipts projected in excess of $39 billion. In September 1999, the New
York State Comptroller issued a report which projected budget gaps in the
2000-2001 and 2001-2002 fiscal yars at $2.8 billion and $4.6 billion,
respetively, after excluding the unspecified operating efficiencies assumed in
the state's projections, and assuming higher spending for education and other
initiatives. The State Comptroller noted that the underlying structural
problem is even more apparent without the planned use of the projected
1999-2000 fiscal year surplus reflected in the tax reduction reserve, which
would result in the gaps growing to $3.4 billion in fiscal year 2000-2001 and
$5.8 billion in fiscal year 2001-2002. The State Comptroller also stated that
revenues could trend lower if the securities industry suffered a significant
downturn, and that a general economic recession is always a major budget risk.
The state in recent years has shown a consistent pattern of closing previously
projected budget gaps.

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

For the 1999 fiscal year, the City had an operating surplus, before
discretionary and other transfers, and achieves balanced operating results,
after discretionary and other transfers, in accordance with GAAP. The 1999
fiscal year is the nineteenth year that the City has achieved an operating
surplus, before discretionary and other transfers, and balanced operating
results, after discretionary and other transfers. The City's financial plan
projects a balanced budget for the 2000 fiscal year, with total revenues
projected in excess of $35 billion, and budget gaps of $1.8 billion, $1.9
billion and $1.8 billion for the 2001, 2002 and 2003 fiscal years,
respectively. Like the state of New York, New York City has shown a pattern of
consistently projecting and closing budget gaps. The City has outlined a gap-
closing program which anticipates additional City agency programs to reduce
expenditures or increase revenues and additional federal and state actions
such as intergovernmental aid to the City. 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 2000 through 2003 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 including its ability to issue short term notes to
finance its seasonal working capital needs. 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, the New York
City Transitional 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.

The financial condition of the state, City and other New York issuers may
be affected by many economic, social, political and international factors
which cannot be predicted with certainty. These factors include, but may not
be limited to, litigation, collective bargaining with governmental
employees,the ability of issuers to handle the "Year 2000" computer problem,
changes resulting from entitlement program reforms, the receipt of
intergovernmental aid, and the performance of the securities and financial
sector which is disproportionately more significant to the New York economy
than to the national economy. Factors particularly affecting New York City
also include its ability to meet its increasing infrastructure and other
capitalneeds in the face of rising debt service costs and limited volume
capacity under state law for incurring indebtedness; and costs it may incur to
achieve compliance with laws pertaining to protecting its water supply and the
disposal of its solid waste.

OHIO

The state of Ohio operates on the basis of a fiscal biennium for its
appropriations and expenditures. The state is precluded 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") derived
mainly for which personal income and sales-use taxes are the major source.
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.

The state's incurrence or assumption of debt without a vote of the people
is generally prohibited by current state constitutional provisions. The state
may incur debt, limited in amount of $750,000, to cover casual deficits or
failures in revenues or to meet expenses not otherwise provided for. The
Constitution expressly precludes the state from assuming the debts of any
local government or corporation. Legislation passed on December 9, 1999
authorizing the issuance of $300 million of general obligations pursuant to
the 1999 constitutional amendment (relating to education reform). Generally,
the creditworthiness of obligations of local Ohio issuers is unrelated to that
of obligations of the state of Ohio itself. The state has no responsibility to
make payments on those obligations.

Local school districts in Ohio receive a major portion (state-wide
aggregate approximately 47% in recent years) of their operating moneys from
state subsidies, but are dependent on local property taxes, and in 126
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 in 1997 concluded that aspects of the system are
unconstitutional, and ordered the state to provide for and fund a system
complying with the Ohio Constitution. After a further hearing, the trial court
has decided that steps taken to date by the state to enhance school funding
have not met the requirements of the Supreme Court decision. The state
appealed the Supreme Court, which has issued a stay, pending appeal, of the
implementation of the trial court's order. A small number of the state's 612
local school districts have in any year required special assistance to avoid
year-end deficits.

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 27 cities and villages; for 21 of them the fiscal situation
was resolved and the procedures terminated (one city is in preliminary "fiscal
watch" status). As of December 3, 1999, the school district "fiscal
emergency" provision was applied to ten 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 August, 1999,
DEPCO had outstanding debt totalling approximately $66.6 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.

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 and the loss is certified by the State Department
of Administration, 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. 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

The West Virginia Constitution prohibits the issuance of debt, except as
authorized by constitutional amendment ratified by the voters. For general
obligation bonds, debt limits are established in the constitutional amendment
authorizing the debt. For special obligation bonds and mortgages, debt limits
are established at the individual issuer level, either by a ceiling on the
amount of bonds authorized or the amount of funding for debt service.

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 1998 - 1999 fiscal year. A commission,
appointed by the Governor in July 1997, is presently studying the state's
entire tax structure, and has recommended certain revenue-neutral reforms.
Such reforms would require a constitutional amendment and implementing
legislation before taking effect.

The state maintains 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 September 30, 1999, the
estimated balance in the fund was $79 million. 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.

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. In fiscal year 1997-98, state agencies received
approximately $1.995 billion from federal sources. The state budget for fiscal
year 1998-99 reflects anticipated receipts of approximately $2.341 billion
from federal sources.

In the Year 2000 legislative session, the Legislature is expected to
address funding education reform, financial problems with the Public Employee
Insurance Agency and the potential loss of tax revenue resulting from a
federal court ruling limiting certain mining activities. The impact of these
problems (or attempts to resolve them) on the financial condition of West
Virginia cannot be determined at this time.

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
tourism, construction and the high technology areas have compensated for that
loss. Puerto Rico's economy has expanded in the 1990's in step with the U.S.
economy.

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.

Also in 1996, a new Section 30A was added to the Code. Section 30A permits
a "qualifying domestic corporation" that meets certain gross income tests to
claim a credit against the federal income tax imposed on taxable income
derived from sources outside the United States from the active conduct of a
trade or business in Puerto Rico or from the sale of substantially all the
assets used in such a business. Section 30A will be phased out by January 1,
2006. The Governor of Puerto Rico has proposed that Congress permanently
extend Section 30A until the Puerto Rican economy achieves certain economic
improvements. Similarly, President Clinton proposed permanent extension of the
Section 30A in both his 1998 and 1999 budgets. To date, however, no action has
been taken.

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. The government of Puerto Rico has enacted
its own tax incentive programs for both industrial and tourist activities.

Puerto Ricans have periodically considered conversion to statehood and
such a vote is likely again in the future. The statehood proposal was defeated
in December, 1998.

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. The last major hurricane to impact the
USVI was Hurricane Marilyn on September 15, 1995. 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. territory of Guam derives a substantial portion of its economic
base from Japanese tourism. With a reduced U.S. military presence on the
island, Guam has relied more heavily on tourism in the past few years. During
its 1997 fiscal year, the government was able to make noticeable progress on
its traditional budgetary problems operating with a balanced budget for that
fiscal year. However, during 1998, the Japanese recession combined with the
impact of typhoon Paka resulted in a budget deficit of $21 million. With
hotels alone accounting for 8.5% of Guam's employment and Japanese tourists
comprising 86% of total visitor arrivals, the Japanese recession and
depreciation of the yen versus the dollar earlier this year have had a
negative impact on the island's economy. Based on these factors, S&P
downgraded Guam's rating to BBB- from BBB with a negative outlook on May 26,
1999. There does seem to be some recent improvement in the Japanese economy.
However, Guam has not realized any economic benefit as visitor arrivals are
0.8% below 1998 levels for the second quarter ended June 30, 1999, driving
General Fund revenues down 3.1%.

<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% utilizing the regular 2000 federal
income and state and local tax rates (unless otherwise noted).

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 $128,950. The tax
brackets also do not show the effects of phaseout of personal exemptions for
single filers with adjusted gross income in excess of $128,950 and joint
filers with adjusted gross income in excess of $193,400. The effective tax
brackets and equivalent taxable yields of such taxpayers will be higher than
those indicated 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>
CALIFORNIA

A FEDERAL AND CALIFORNIA STATE
COMBINED TAX EXEMPT YIELD OF:
SINGLE RETURN JOINT RETURN 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 $ 26,250 Up to $ 43,850 20.10% 5.01% 5.63% 6.26% 6.88% 7.51% 8.14% 8.76%
$ 26,251 - $ 63,550 $ 43,851 - $105,950 34.70 6.13 6.89 7.66 8.42 9.19 9.95 10.72
$ 63,551 - $132,600 $105,951 - $161,450 37.42 6.39 7.19 7.99 8.79 9.59 10.39 11.19
$132,601 - $288,350 $161,451 - $288,350 41.95 6.89 7.75 8.61 9.47 10.34 11.20 12.06
Over $288,350 Over $288,350 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 1999. 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.
</TABLE>

<TABLE>
FLORIDA

<CAPTION>
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 $ 26,250 Up to $ 43,850 15.00% 4.71% 5.29% 5.88% 6.47% 7.06% 7.65% 8.24%
$ 26,251 - $ 63,550 $ 43,851 - $105,950 28.00 5.56 6.25 6.94 7.64 8.33 9.03 9.72
$ 63,551 - $132,600 $105,951 - $161,450 31.00 5.80 6.52 7.25 7.97 8.70 9.42 10.14
$132,601 - $288,350 $161,451 - $288,350 36.00 6.25 7.03 7.81 8.59 9.38 10.16 10.94
Over $288,350 Over $288,350 39.60 6.62 7.45 8.28 9.11 9.93 10.76 11.59

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:**
Up to $ 26,250 Up to $ 43,850 4.89% 5.48% 6.06% 6.65% 7.24% 7.83% 8.42%
$ 26,251 - $ 63,550 $ 43,851 - $105,950 5.77 6.47 7.16 7.85 8.55 9.24 9.94
$ 63,551 - $132,600 $105,951 - $161,450 6.02 6.75 7.47 8.19 8.92 9.64 10.37
$132,601 - $288,350 $161,451 - $288,350 6.49 7.27 8.05 8.83 9.62 10.40 11.18
Over $288,350 Over $288,350 6.88 7.71 8.53 9.36 10.19 11.02 11.84

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

** A Florida intangibles tax on personal property of $1.50 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 $15 annually in
intangibles taxes. If the investment yielded 5.5% annually or $550, the intangibles tax as a percentage of income would be
$15/$550 or 2.73%. 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 37.75%
[36% + (1 - .36) X 2.73%] 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.
</TABLE>

<TABLE>
MASSACHUSETTS

<CAPTION>
A FEDERAL AND MASSACHUSETTS STATE
COMBINED TAX EXEMPT YIELD OF:
SINGLE RETURN JOINT RETURN FEDERAL AN 4% 4.5% 5% 5.5% 6% 6.5% 7%
- ---------------------- ---------------------- MA 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 $ 26,250 Up to $ 43,850 19.97% 5.00% 5.62% 6.25% 6.87% 7.50% 8.12% 8.75%
$ 26,251 - $ 63,550 $ 43,851 - $105,950 32.21 5.90 6.64 7.38 8.11 8.85 9.59 10.33
$ 63,551 - $132,600 $105,951 - $161,450 35.04 6.16 6.93 7.70 8.47 9.24 10.01 10.78
$132,601 - $288,350 $161,451 - $288,350 39.74 6.64 7.47 8.30 9.13 9.96 10.79 11.62
Over $288,350 Over $288,350 43.13 7.03 7.91 8.79 9.67 10.55 11.43 12.31

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

+ The combined tax rates include a Massachusetts tax rate of 5.85% 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.
</TABLE>

<TABLE>
MISSISSIPPI

<CAPTION>
A FEDERAL AND MISSISSIPPI STATE
COMBINED TAX EXEMPT YIELD OF:
SINGLE RETURN JOINT RETURN FEDERAL AND 4% 4.5% 5% 5.5% 6% 6.5% 7%
- ------------------------- ---------------------- MS 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 $ 26,250 Up to $ 43,850 19.25% 4.95% 5.57% 6.19% 6.81% 7.43% 8.05% 8.67%
$ 26,251 - $ 63,550 $ 43,851 - $105,950 31.60 5.85 6.58 7.31 8.04 8.77 9.50 10.23
$ 63,551 - $132,600 $105,951 - $161,450 34.45 6.10 6.86 7.63 8.39 9.15 9.92 10.68
$132,601 - $288,350 $161,451 - $288,350 39.20 6.58 7.40 8.22 9.05 9.87 10.69 11.51
Over $288,350 Over $288,350 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%.
</TABLE>

<TABLE>
NEW YORK

<CAPTION>
COMBINED
FEDERAL,
SINGLE RETURN JOINT RETURN NY STATE A FEDERAL, NEW YORK STATE AND NEW YORK CITY TAX EXEMPT YIELD OF:
- ----------------------- --------------------- 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 $ 26,250 Up to $ 43,850 23.60% 5.24% 5.89% 6.54% 7.20% 7.85% 8.51% 9.16%
$ 26,251 - $ 63,550 $ 43,851 - $105,950 35.32 6.18 6.96 7.73 8.50 9.28 10.05 10.82
$ 63,551 - $132,600 $105,951 - $161,450 38.01 6.45 7.26 8.07 8.87 9.68 10.49 11.29
$132,601 - $288,350 $161,451 - $288,350 42.51 6.96 7.83 8.70 9.57 10.44 11.31 12.18
Over $288,350 Over $288,350 45.74 7.37 8.29 9.21 10.14 11.06 11.98 12.90

* 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. New York City tax rate is effective with year beginning in 1999.

+ 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
3.315%, 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.

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 2000 federal income tax and New York State
income tax laws.

</TABLE>

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 $ 26,250 Up to $ 43,850 20.82% 5.05% 5.68% 6.31% 6.95% 7.58% 8.21% 8.84%
$ 26,251 - $ 63,550 $ 43,851 - $105,950 32.93 5.96 6.71 7.46 8.20 8.95 9.69 10.44
$ 63,551 - $132,600 $105,951 - $161,450 35.73 6.22 7.00 7.78 8.56 9.34 10.11 10.89
$132,601 - $288,350 $161,451 - $288,350 40.38 6.71 7.55 8.39 9.23 10.06 10.90 11.74
Over $288,350 Over $288,350 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.
</TABLE>

<TABLE>

OHIO

<CAPTION>
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 $ 26,250 Up to $ 43,850 19.42% 4.96% 5.58% 6.21% 6.83% 7.45% 8.07% 8.69%
$ 26,251 - $ 63,550 $ 43,851 - $105,950 32.97 5.97 6.71 7.46 8.21 8.95 9.70 10.44
$ 63,551 - $132,600 $105,951 - $161,450 35.76 6.23 7.01 7.78 8.56 9.34 10.12 10.90
$132,601 - $288,350 $161,451 - $288,350 40.80 6.76 7.60 8.45 9.29 10.14 10.98 11.82
Over $288,350 Over $288,350 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. These rates are before annual tax roll-backs.

</TABLE>

<TABLE>
RHODE ISLAND

<CAPTION>
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 $ 26,250 Up to $ 43,850 18.32% 4.90% 5.51% 6.12% 6.73% 7.35% 7.96% 8.57%
$ 26,251 - $ 63,550 $ 43,851 - $105,950 33.24 5.99 6.74 7.49 8.24 8.99 9.74 10.49
$ 63,551 - $132,600 $105,951 - $161,450 36.56 6.31 7.09 7.88 8.67 9.46 10.25 11.03
$132,601 - $288,350 $161,451 - $288,350 41.99 6.90 7.76 8.62 9.48 10.34 11.21 12.07
Over $288,350 Over $288,350 45.82 7.38 8.31 9.23 10.15 11.07 12.00 12.93

* 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 26% (effective 1/1/00) 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.
</TABLE>

<TABLE>
WEST VIRGINIA

A FEDERAL AND WEST VIRGINIA STATE
COMBINED TAX EXEMPT YIELD OF:
SINGLE RETURN JOINT RETURN FEDERAL AND 4% 4.5% 5% 5.5% 6% 6.5% 7%
- ----------------------- --------------------- WV 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 $ 26,250 Up to $ 43,850 20.10% 5.01% 5.63% 6.26% 6.88% 7.51% 8.14% 8.76%
$ 26,251 - $ 63,550 $ 43,851 - $105,950 32.68 5.94 6.68 7.43 8.17 8.91 9.66 10.40
$ 63,551 - $132,600 $105,951 - $161,450 35.49 6.20 6.98 7.75 8.53 9.30 10.08 10.85
$132,601 - $288,350 $161,451 - $288,350 40.16 6.68 7.52 8.36 9.19 10.03 10.86 11.70
Over $288,350 Over $288,350 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.

- ------------
+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.

ABSENCE OF RATING: Where no rating has been assigned or where a rating has
been suspended or withdrawn, it may be for reasons unrelated to the quality of
the issue.

Should no rating be assigned, the reason may be one of the following:

1. An application for rating was not received or accepted.

2. The issue or issuer belongs to a group of securities or companies that
are not rated as a matter of policy.

3. There is a lack of essential data pertaining to the issue or issuer.

4. The issue was privately placed, in which case the rating is not
published in Moody's publications.

Suspension or withdrawal may occur if new and material circumstances arise,
the effects of which preclude satisfactory analysis; if there is no longer
available reasonable up-to-date data to permit a judgment to be formed; if a
bond is called for redemption; or for other reasons.

NOTE: Moody's applies numerical modifiers, 1, 2, and 3 in each generic rating
classification from Aa through B. The modifier 1 indicates that the security
ranks in the higher end of its generic rating category; the modifier 2
indicates a mid-range ranking; and the modifier 3 indicates that the issue
ranks in the lower end of its generic rating category.

MUNICIPAL SHORT-TERM OBLIGATIONS

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

STATEMENT OF
ADDITIONAL INFORMATION

February 1, 2000

EATON VANCE NATIONAL MUNICIPALS FUND

The Eaton Vance Building
255 State Street
Boston, Massachusetts 02109

(800) 225-6265

This Statement of Additional Information ("SAI") provides general
information about the Fund and the Portfolio. The Fund is a series of Eaton
Vance 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 ........................................... 13
Purchasing and Redeeming Shares ................................... 14
Sales Charges ..................................................... 15
Performance ....................................................... 19
Taxes ............................................................. 20
Portfolio Security Transactions ................................... 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
F: Asset Composition Information .................................. f-1

THIS IS NOT A PROSPECTUS AND IS AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE
INVESTORS ONLY IF PRECEDED OR ACCOMPANIED BY THE FUND'S PROSPECTUS DATED
FEBRUARY 1, 2000, AS SUPPLEMENTED FROM TIME TO TIME, WHICH IS INCORPORATED
HEREIN BY REFERENCE. THIS SAI SHOULD BE READ IN CONJUNCTION WITH THE PROSPECTUS,
WHICH MAY BE OBTAINED BY CALLING 1-800-225-6265.

<PAGE>

STRATEGIES AND RISKS

MUNICIPAL 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.

SECTOR 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 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.

Industrial development bonds ("IDBs") 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. 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.

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 the 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. The 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 the 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, the 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 the 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 the 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. The investment
adviser may also purchase structured derivative products with greater or lesser
credit risk than the underlying bonds. Such bonds may be rated investment grade,
as well as below investment grade. The asset composition of the Portfolio is set
forth in Appendix F and the municipal bond ratings are found in Appendix E.

WHEN-ISSUED SECURITIES. New issues of municipal obligations are sometimes
offered on a "when-issued" basis, that is, delivery and payment for the
securities normally 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.

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

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

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

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. Illiquid securities include securities legally
restricted as to resale, such as commercial paper issued pursuant to Section
4(2) of the Securities Act of 1933, as amended, and securities eligible for
resale pursuant to Rule 144A thereunder. Section 4(2) and Rule 144A securities
may, however, be teated as liquid by the investment adviser pursuant to
procedures adopted by the Trustees, which require consideration of factors such
as trading activity, availability of market quotations and number of dealers
willing to purchase the security. If the Portfolio invests in Rule 144A
securities, the level of portfolio illiquidity may be increased to the extent
that eligible buyers become uninterested in purchasing such securities. 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.

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. Securities lending
involves risks of delay in recovery or even loss of rights on the securities
loaned if the borrower fails financially. 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
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.

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

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

DIVERSIFIED STATUS. The Portfolio is a "diversified" investment company under
the 1940 Act. This means that with respect to 75% of its total assets (1) the
Portfolio may not invest more than 5% of its total assets in the securities of
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.

INVESTMENT RESTRICTIONS

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

(1) 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. Any
such determination by a delegate will be made pursuant to procedures adopted
by the Board. If the Fund or Portfolio invests in Rule 144A securities, the
level of portfolio illiquidity may be increased to the extent that eligible
buyers become uninterested in purchasing such securities;

(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.

Neither the Fund nor the Portfolio will invest 25% or more of its total
assets in any one industry. For purposes of the foregoing policy, securities of
the U.S. Government, its agencies, or instrumentalities are not considered to
represent industries. Municipal obligations backed by the credit of a
governmental entity are also not considered to represent industries. However,
municipal obligations backed only by the assets and revenues of non-governmental
users may for this purpose be deemed to be issued by such non-governmental
users. The foregoing 25% limitation would apply to these issuers. As discussed
in the prospectus and this SAI, the Fund or the Portfolio may invest more than
25% of its total assets in certain economic sectors, such as revenue bonds,
housing, hospitals and other health care facilities, and IDBs. The Fund and the
Portfolio reserve the right to invest more than 25% of total assets in each of
these sectors.

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 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 The Eaton Vance Building, 255 State Street, Boston,
Massachusetts 02109. Those Trustees who are "interested persons" of the Trust or
the Portfolio, as defined in the 1940 Act, are indicated by an asterisk(*).

JESSICA M. BIBLIOWICZ (39), Trustee*
President and Chief Executive Officer of National Financial Partners (a
financial services company) (since April 1999). President and Chief Operating
Officer of John A. Levin & Co. (a registered investment advisor) (July 1997 to
April 1999) and a Director of Baker, Fentress & Company which owns John A.
Levin & Co. (July 1997 to April 1999). Formerly Executive Vice President of
Smith Barney Mutual Funds (from July 1994 to June 1997). Elected Trustee
October 30, 1998. Trustee of various investment companies managed by Eaton
Vance or BMR since October 30, 1998.
Address: 1301 Avenue of the Americas, New York, NY 10019

JAMES B. HAWKES (58), 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 (64), Trustee
Jacob H. Schiff Professor of Investment Banking Emeritus, Harvard University
Graduate School of Business Administration. Trustee of the Kobrick Investment
Trust (mutual funds). Trustee of various investment companies managed by Eaton
Vance or BMR.
Address: 345 Nahatan Road, Westwood, Massachusetts 02090

NORTON H. REAMER (64), Trustee
Chairman of the Board and Chief Executive Officer, United Asset Management
Corporation (a holding company owning institutional investment management
firms); Chairman, President and Director, UAM Funds (mutual funds). Trustee of
various investment companies managed by Eaton Vance or BMR.
Address: One International Place, Boston, Massachusetts 02110

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

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

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

THOMAS M. METZOLD (41), Vice President of the Portfolio
Vice President of BMR and Eaton Vance. Officer of various investment companies
managed by Eaton Vance or BMR.

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

ALAN R. DYNNER (59), Secretary
Vice President, Secretary and Chief Legal Officer of BMR, Eaton Vance and EVC.
Prior to joining Eaton Vance on November 1, 1996, he was a Partner of the law
firm of Kirkpatrick & Lockhart LLP, New York and Washington, D.C., and was
Executive Vice President of Neuberger & Berman Management, Inc., a mutual fund
management company. Officer of various investment companies
managed by Eaton Vance or BMR.

JANET E. SANDERS (64), Assistant Secretary
Vice President of BMR and Eaton Vance. Officer of various investment companies
managed by Eaton Vance or BMR.

A. JOHN MURPHY (37), Assistant Secretary
Vice President of BMR and Eaton Vance. Officer of various investment companies
managed by Eaton Vance or BMR.

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

The Nominating Committee of the Board of Trustees of the Trust and each
Portfolio is comprised of the Trustees who are not "interested persons" as that
term is defined under the 1940 Act ("noninterested Trustees"). The purpose of
the Committee is to recommend to the Board nominees for the position of
noninterested Trustee and to assure that at least a majority of the Board of
Trustees is independent of Eaton Vance and its affiliates.

Messrs. Hayes (Chairman), Dwight and Reamer and Ms. Stout are members of the
Special Committee of the Board of Trustees of the Trust and of each 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.

Messrs. Treynor (Chairman) and Dwight are members of the Audit Committee of
the Board of Trustees of the Trust and of each 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, 1999, the
noninterested Trustees of the Trust and the Portfolio earned the following
compensation in their capacities as Trustees from the Trust and the Portfolio,
and for the year ended December 31, 1999, earned the following compensation in
their capacities as Trustees of the Funds in the Eaton Vance fund complex(1):

<TABLE>
<CAPTION>
AGGREGATE AGGREGATE TOTAL COMPENSATION
COMPENSATION COMPENSATION FROM TRUST AND
NAME FROM TRUST(2) FROM PORTFOLIO FUND COMPLEX
- ---- ------------- -------------- ------------
<S> <C> <C> <C>
Jessica M. Bibliowicz(8) ................................. $ 7,119 $3,054 $160,000
Donald R. Dwight .......................................... 14,688 6,583(3) 160,000(6)
Samuel L. Hayes, III ...................................... 14,623 6,782(4) 170,000
Norton H. Reamer .......................................... 13,925 6,419 160,000
Lynn A. Stout(8) ......................................... 7,518 3,263(5) 160,000(7)
Jack L. Treynor ........................................... 16,016 7,197 170,000

(1) As of February 1, 2000, the Eaton Vance fund complex consists of 143 registered investment companies or series thereof.
(2) The Trust consisted of 29 Funds as of September 30, 1999.
(3) Includes $3,454 of deferred compensation.
(4) Includes $1,154 of deferred compensation.
(5) Includes $635 of deferred compensation.
(6) Includes $60,000 of deferred compensation.
(7) Includes $16,000 of deferred compensation.
(8) Ms. Bibliowicz and Ms. Stout were elected as Trustees on October 30, 1998.
</TABLE>

ORGANIZATION. The Fund is a series of the Trust, which is organized under
Massachusetts law as a business trust and is operated as an open-end management
investment company. The 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. Class I shares (referred to as
"Institutional Shares") were established July 1, 1999, and are offered pursuant
to a separate prospectus and SAI.

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

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

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

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

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

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

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

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

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

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

Whenever the Fund as an investor in 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, 1999, the Portfolio had net assets of
$2,125,544,813. For the fiscal years ended September 30, 1999, 1998 and 1997,
the Portfolio paid BMR advisory fees of $9,604,930, $9,401,075 and $9,517,084,
respectively (equivalent to 0.42%, 0.42% 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 James B. Hawkes, Benjamin A. Rowland, Jr., John G.L.
Cabot, Leo I. Higdon, Jr., John M. Nelson, Vincent M. O'Reilly and Ralph Z.
Sorenson. All of the issued and outstanding shares of Eaton Vance are owned by
EVC. All of the issued and outstanding shares of BMR are owned by Eaton Vance.
All shares of the outstanding Voting Common Stock of EVC are deposited in a
Voting Trust, the Voting Trustees of which are Messrs. Hawkes and Rowland, Alan
R. Dynner, Thomas E. Faust, Jr., Thomas J. Fetter, Duncan W. Richardson, William
M. Steul, and Wharton P. Whitaker (all of whom are officers of Eaton Vance). The
Voting Trustees have unrestricted voting rights for the election of Directors of
EVC. All of the outstanding voting trust receipts issued under said Voting Trust
are owned by certain of the officers of BMR and Eaton Vance who are also
officers, or officers and Directors of EVC and EV. As indicated under
"Management and Organization", all of the officers of the Trust (as well as Mr.
Hawkes who is also a Trustee) hold positions in the Eaton Vance organization.

EXPENSES. The Fund and Portfolio are 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"), The Eaton Vance
Building, 255 State Street, Boston, MA 02109, is the Fund's principal
underwriter. The principal underwriter acts as principal in selling shares under
a Distribution Agreement with the Trust. The expenses of printing copies of
prospectuses used to offer shares and other selling literature and of
advertising are borne by the principal underwriter. The fees and expenses of
qualifying and registering and maintaining qualifications and registrations of
the Fund and its shares under federal and state securities laws are borne by the
Fund. The Distribution Agreement as it applies to Class A shares is renewable
annually by the Board of Trustees of the Trust (including a majority of the
noninterested Trustees), may be terminated on six months' notice by either party
and is automatically terminated upon assignment. The Distribution Agreement as
it applies to Class B and Class C shares is renewable annually by the Trust's
Board of Trustees (including a majority of the noninterested Trustees who have
no direct or indirect financial interest in the operation of the Distribution
Plan or the Distribution Agreement), may be terminated on sixty days' notice
either by such Trustees or by vote of a majority of the outstanding shares of
the relevant class or on six months' notice by the principal underwriter, and is
automatically terminated upon assignment. The principal underwriter distributes
shares on a "best efforts" basis under which it is required to take and pay for
only such shares as may be sold. The principal underwriter allows investment
dealers discounts from the applicable public offering price which are alike for
all investment dealers. See "Sales Charges." EVD is a wholly-owned subsidiary of
EVC. Mr. Hawkes is a Vice President and Director and Messrs. Dynner and O'Connor
are Vice Presidents of EVD.

CUSTODIAN. Investors Bank & Trust Company ("IBT"), 200 Clarendon Street, Boston,
MA 02116, serves as custodian to the Fund and 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, 200 Berkeley Street, Boston,
Massachusetts 02116, are the independent accountants of the Fund and the
Portfolio, providing audit services, tax return preparation, and assistance and
consultation with respect to the preparation of filings with the SEC.

TRANSFER AGENT. PFPC Global Fund Services, 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".

SUSPENSION OF SALES. The Trust may, in its absolute discretion, suspend,
discontinue or limit the offering of one or more of its classes of shares at any
time. In determining whether any such action should be taken, the Trust's
management intends to consider all relevant factors, including (without
limitation) the size of the Fund or class, the investment climate and market
conditions, the volume of sales and redemptions of shares, and in the case of
Class B and Class C shares, the amount of uncovered distribution charges of the
principal underwriter. The Class B and Class C Distribution Plans may continue
in effect and payments may be made under the Plans following any such
suspension, discontinuance or limitation of the offering of shares; however,
there is no contractual obligation to continue any 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.

ACQUIRING FUND SHARES IN EXCHANGE FOR SECURITIES. IBT, as escrow agent, will
receive securities acceptable to Eaton Vance, as administrator, in exchange for
Fund shares. The minumum value of securities (or securities and cash) accepted
for deposit is $5,000. Securities accepted will be sold on the day of their
receipt or as soon thereafter as possible. The number of Fund shares to be
issued in exchange for securities will be the aggregate proceeds from the sale
of such securities, divided by the applicable public offering price of Class A
shares or net asset value of Class B and Class C shares on the day such proceeds
are received. Eaton Vance will use reasonable efforts to obtain the then current
market price for such securities but does not guarantee the best available
price. Eaton Vance will absorb any transaction costs, such as commissions, on
the sale of the securities. Securities determined to be acceptable should be
transferred via book entry or physically delivered, in proper form for transfer,
through an investment dealer, together with a completed and signed Letter of
Transmittal in approved form (available from investment dealers). Investors who
are contemplating an exchange of securities for shares, or their
representatives, must contact Eaton Vance to determine whether the securities
are acceptable before forwarding such securities. Eaton Vance reserves the right
to reject any securities. Exchanging securities for shares may create a taxable
gain or loss. Each investor should consult his or her tax adviser with respect
to the particular federal, state and local tax consequences of exchanging
securities.

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

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

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

SYSTEMATIC WITHDRAWAL PLAN. The transfer agent will send to the shareholder
regular monthly or quarterly payments of any permitted amount designated by the
shareholder based upon the value of the shares held. The checks will be drawn
from share redemptions and hence, may require the recognition of taxable gain or
loss. Income dividends and capital gains distributions in connection with
withdrawal plan accounts will be credited at net asset value as of the record
date for each distribution. Continued withdrawals in excess of current income
will eventually use up principal, particularly in a period of declining market
prices. A shareholder may not have a withdrawal plan in effect at the same time
he or she has authorized Bank Automated Investing or is otherwise making regular
purchases of Fund shares. The shareholder, the transfer agent or the principal
underwriter will be able to terminate the withdrawal plan at any time without
penalty.

SALES CHARGES

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

SALES CHARGE WAIVERS. Class A shares and Class I shares may be sold at net asset
value to current and retired Directors and Trustees of Eaton Vance funds,
including the Portfolio; to clients and current and retired officers and
employees of Eaton Vance, its affiliates and other investment advisers of Eaton
Vance sponsored funds; to officers and employees of IBT and the transfer agent;
to persons associated with law firms, consulting firms and others providing
services to Eaton Vance and the Eaton Vance funds; and to such persons' spouses,
parents, siblings and children and their beneficial accounts. Such shares may
also be issued at net asset value (1) in connection with the merger of an
investment company (or series or class thereof) with the Fund (or class
thereof), (2) to investors making an investment as part of a fixed fee program
whereby an entity unaffiliated with the investment adviser provides multiple
investment services, such as management, brokerage and custody, and (3) to
investment advisors, financial planners or other intermediaries who place trades
for their own accounts or the accounts of their clients and who charge a
management, consulting or other fee for their services; clients of such
investment advisors, financial planners or other intermediaries who place trades
for their own accounts if the accounts are linked to the master account of such
investment advisor, financial planner or other intermediary on the books and
records of the broker or agent. Class A shares may also be sold at net asset
value to registered representatives and employees of investment dealers and bank
employees who refer customers to registered representatives of investment
dealers. Class A shares and Class I shares may be sold at net asset value to any
investment advisory, agency, custodial or trust account managed or administered
by Eaton Vance or by any parent, subsidiary or other affiliate of Eaton Vance.
Class A shares are offered at net asset value to the foregoing persons and in
the foregoing situations because either (i) there is no sales effort involved in
the sale of shares or (ii) the investor is paying a fee (other than the sales
charge) to the investment dealer involved in the sale.

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

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

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

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

DISTRIBUTION AND SERVICE PLANS. The Trust has in effect a Service Plan (the
"Class A Plan") for the Fund's Class A shares that is designed to meet the
service fee requirements of the sales charge rule of the National Association of
Securities Dealers, Inc. (the "NASD"). (Management believes service fee payments
are not distribution expenses governed by Rule 12b-1 under the 1940 Act, but has
chosen to have the Plan approved as if that Rule were applicable.) The Class A
Plan provides that the Class A may make service fee payments for personal
services and/or the maintenance of shareholder accounts to the principal
underwriter, investment dealers and other persons in amounts equal to .25% of
its average daily net assets for any fiscal year. For the service fees paid by
Class A shares, see Appendix A.

The Trust also has in effect 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 authorize each Class to make payments of
service fees to the principal underwriter, investment dealers and other persons
in amounts not exceeding .25% of its average daily net assets for personal
services, and/or the maintenance of shareholder accounts. This fee is paid
quarterly in arrears based on the value of Class B shares sold by such persons
and remaining outstanding for at least twelve months. For Class C, investment
dealers currently receive (a) a service fee (except on exchange transactions and
reinvestments) at the time of sale equal to .25% of the purchase price of the
Class C shares sold by such dealer, and (b) monthly service fees approximately
equivalent to 1/12 of .25% of the value of Class C shares sold by such dealer
and remaining outstanding for at least one year. During the first year after a
purchase of Class C shares, the principal underwriter will retain the service
fee as reimbursement for the service fee payment made to investment dealers at
the time of sale. For the service fees paid by Class B and Class C shares, see
Appendix B and Appendix C, respectively.

Currently, payments of sales commissions and distribution fees and of
service fees may equal 1% of a Class's average daily net assets per annum. The
Trust believes that the combined rate of all these payments may be higher than
the rate of payments made under distribution plans adopted by other investment
companies pursuant to Rule 12b-1. Although the principal underwriter will use
its own funds (which may be borrowed from banks) to pay sales commissions at the
time of sale, it is anticipated that the Eaton Vance organization will profit by
reason of the operation of the Class B and Class C Plans through an increase in
the Fund's assets (thereby increasing the advisory fee payable to BMR by the
Portfolio) resulting from sale of shares and through the amounts paid to the
principal underwriter, including CDSCs, pursuant to the Plans. The Eaton Vance
organization may be considered to have realized a profit under the Class B and
Class C Plans if at any point in time the aggregate amounts theretofore received
by the principal underwriter pursuant to the Class B 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 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 who are
"interested" persons of the Fund have an indirect financial interest in the
Plans because their employers (or affiliates thereof) receive distribution
and/or service fees under the Plans or agreements related thereto.

The Trustees of the Trust believe that each Plan will be a significant
factor in the expected growth of each Fund's assets, and will result in
increased investment flexibility and advantages which have benefitted and will
continue to benefit the Fund and its shareholders. Payments for sales
commissions and distribution fees made to the principal underwriter under the
Class B 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. A Fund may also publish total
return figures for each class based on reduced sales charges or net asset value.
These returns would be lower if the full sales charge was imposed. For
information concerning the total return of the Classes of the Fund, see Appendix
A, Appendix B and Appendix C.

Yield is computed separately for each Class of the Fund pursuant to a
standardized formula by dividing net investment income per share earned during a
recent thirty-day period by the maximum offering price (including the maximum
initial sales charge for Class A shares) per share on the last day of the period
and annualizing the resulting figure. Net investment income per share is
calculated from the yields to maturity of all debt obligations 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'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 Inc., Wiesenberger, Morningstar,
Inc., The Bond Buyer, the Federal Reserve Board or The Wall Street Journal). The
Trust may also refer in investor publications to Tax Freedom Day, as computed by
the Tax Foundation, Washington, DC 20005, to help illustrate the value of tax
free investing, as well as other tax-related information. Information, charts
and illustrations showing the effects of inflation and taxes (including their
effects on the dollar and the return on various investments) and compounding
earnings may also be included in advertisements and materials furnished to
present and prospective investors.

Information about 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.

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

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

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

TAXES

Each series of the Trust is treated as a separate entity for federal income
tax purposes. The Fund has elected to be treated and intends to qualify each
year as a regulated investment company ("RIC") under the Code. Accordingly, the
Fund intends to satisfy certain requirements relating to sources of its income
and diversification of its assets and to distribute substantially all of its net
income (including tax-exempt income) and net short-term and long-term capital
gains (after reduction by any available capital loss carryforwards) in
accordance with the timing requirements imposed by the Code, so as to maintain
its RIC status and avoid paying any federal income or excise tax. The Fund so
qualified for its fiscal year ended September 30, 1999. Because the Fund invests
its assets in the Portfolio, the Portfolio normally must satisfy the applicable
source of income and diversification requirements in order for the Fund to also
satisfy these requirements. The Portfolio will allocate at least annually among
its investors, including the Fund, 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 (i) at least 98% of its ordinary income (not including
tax-exempt income) for such year, (ii) at least 98% of its capital gain net
income (which is the excess of its realized capital gains over its realized
capital losses), generally computed on the basis of the one-year period ending
on October 31 of such year, after reduction by any available capital loss
carryforwards, and (iii) 100% of any income from the prior year (as previously
computed) that was not paid out during such year and on which the Fund paid no
federal income tax. Under current law, provided that the Fund qualifies as a RIC
and 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.

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

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

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 it 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 of any
distributions treated as tax-exempt interest with respect to such shares and, to
the extent the loss exceeds the disallowed amount, will be treated as a
long-term capital loss to the extent of any distributions treated as long-term
capital gain with respect to such shares. In addition, all or a portion of a
loss realized on a redemption or other disposition of Fund shares may be
disallowed under "wash sale" rules to the extent the shareholder acquired other
shares of the same Fund (whether through the reinvestment of distributions or
otherwise) within the period beginning 30 days before the redemption of the loss
shares and ending 30 days after such date. Any disallowed loss will result in an
adjustment to the shareholder's tax basis in some or all of the other shares
acquired.

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

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 (not including
tax-exempt interest) 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; or (iii) the shareholder fails to provide, or renew after
expiration, 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, subject to conditions or limitations in applicable state and local
laws, but taxable generally on income derived from obligations of other
jurisdictions. The Fund will report annually to shareholders, with respect to
net tax exempt income earned, the percentages representing the proportionate
ratio of such income earned in each state.

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

PORTFOLIO SECURITY TRANSACTIONS

Decisions concerning the execution of 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 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 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
security transactions to such firms to ensure the continued receipt of Research
Services which BMR believes are useful or of value to it in rendering investment
advisory services to its clients.

The Portfolio and BMR may also receive Research Services from underwriters
and dealers in fixed-price offerings, which Research Services are reviewed and
evaluated by BMR in connection with its investment responsibilities. The
investment companies sponsored by BMR or Eaton Vance may allocate 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, 1999, 1998 and 1997, the Portfolio paid
brokerage commissions of $84,037, $57,350 and $145,625, respectively, on
portfolio security transactions aggregating $1,758,372,470, $1,164,943,417 and
$2,781,589,000, 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.

Registrant incorporates by reference the audited financial information for
the Fund and the Portfolio for the fiscal year ended September 30, 1999
(Accession No. 0000912057-99-008759) as previously filed electronically with the
SEC.

<PAGE>

APPENDIX A

CLASS A FEES, PERFORMANCE AND OWNERSHIP

SERVICE FEES
For the fiscal year ended September 30, 1999, Class A made service fee
payments under the Plan aggregating $142,529, of which $140,929 was paid to
investment dealers and the balance of which was retained by the principal
underwriter.

PRINCIPAL UNDERWRITER
The total sales charges paid in connection with the sales of Class A shares
during the fiscal years ended September 30, 1999 and 1998 were $1,565,984 and
$1,310,614, respectively, of which $75,070 and $65,138, respectively, was
received by the principal underwriter. For the fiscal years ended September 30,
1999 and 1998, investment dealers received $1,490,914 and $1,245,476,
respectively, 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>
<CAPTION>
VALUE OF A $1,000 INVESTMENT

TOTAL RETURN TOTAL RETURN
EXCLUDING MAXIMUM INCLUDING MAXIMUM
VALUE OF VALUE OF SALES CHARGE SALES CHARGE
INVESTMENT INVESTMENT INITIAL INVESTMENT ---------------------------- ----------------------------
PERIOD* DATE INVESTMENT ON 9/30/99 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- -------------------------- ------------- -------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
10 Years Ended 9/30/99 9/30/89 $952.13 $1,884.82 97.96% 7.07% 88.48% 6.54%
5 Years Ended 9/30/99 9/30/94 $952.38 $1,346.68 41.40% 7.17% 34.67% 6.13%
1 Year Ended 9/30/99 9/30/98 $952.57 $ 903.62 -5.14% -5.14% -9.64% -9.64%

- ----------
*Predecessor Fund commenced operations April 5, 1994.
</TABLE>

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

As at January 1, 2000, the Trustees and officers of the Trust, as a group,
owned in the aggregate less than 1% of the outstanding Class A shares of the
Fund. As of January 1, 2000, Merrill Lynch, Pierce, Fenner & Smith, Inc.,
Jacksonville, FL 32246 was the record owner of approximately 11.7% 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, 1999, the principal underwriter
paid to investment dealers sales commissions of $5,648,325 on sales of Class B
shares. During the same period, the Fund made distribution payments to the
principal underwriter under the Distribution Plan aggregating $14,820,158 and
the principal underwriter received approximately $1,980,000 in CDSCs imposed on
early redeeming shareholders. These distribution payments and CDSC payments
reduced uncovered distribution charges under the Plan. As at September 30, 1999,
the outstanding uncovered distribution charges of the principal underwriter
calculated under the Plan amounted to approximately $6,408,000 (which amount was
equivalent to 0.4% of the net assets attributable to Class B on such day).
During the fiscal year ended September 30, 1999, Class B made service fee
payments to the principal underwriter and investment dealers aggregating
$4,361,668 of which $4,318,452 was paid to investment dealers and the balance of
which was retained by the principal underwriter.

PRINCIPAL UNDERWRITER

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.

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 9/30/99 9/30/99 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- -------------- ------------ ----------- --------------- --------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
10 Years Ended
9/30/99 9/30/89 $1,000 $1,897.18 $1,897.18 89.72% 6.61% 89.72% 6.61%
5 Years Ended
9/30/99 9/30/94 $1,000 $1,356.95 $1,336.95 35.70% 6.29% 33.70% 5.98%
1 Year Ended
9/30/99 9/30/98 $1,000 $ 941.03 $ 896.23 -5.90% -5.90% -10.38% -10.38%

</TABLE>

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

As at January 1, 2000, the Trustees and officers of the Trust, as a group,
owned in the aggregate less than 1% of the outstanding Class B shares of the
Fund. As of January 1, 2000, Merrill Lynch, Pierce, Fenner & Smith, Inc.,
Jacksonville, FL 32246 was the record owner of approximately 25.6% 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, 1999, the principal underwriter
paid to investment dealers sales commissions of $557,338 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 $1,065,200 and
the principal underwriter received approximately $80,000 in CDSCs imposed on
early redeeming shareholders. These distribution payments and CDSC payments
reduced uncovered distribution charges under the Plan. As at September 30, 1999,
the outstanding uncovered distribution charges of the principal underwriter
calculated under the Plan amounted to approximately $14,115,000 (which amount
was equivalent to 10.1% of the net assets attributable to Class C on such day).
During the fiscal year ended September 30, 1999, Class C made service fee
payments to the principal underwriter and investment dealers aggregating
$354,239 of which $185,648 was paid to investment dealers and the balance of
which was retained by the principal underwriter.

PRINCIPAL UNDERWRITER

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

VALUE OF VALUE OF
INVESTMENT INVESTMENT TOTAL RETURN BEFORE TOTAL RETURN AFTER
BEFORE AFTER DEDUCTING DEDUCTING
DEDUCTING DEDUCTING THE CDSC THE CDSC
INVESTMENT INVESTMENT AMOUNT OF THE CDSC THE CDSC -------------------------- --------------------------
PERIOD* DATE INVESTMENT ON 9/30/99 ON 9/30/99 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- -------------- ------------ ------------ --------------- -------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
10 Years Ended
9/30/99 9/30/89 $1,000 $1,861.46 $1,861.46 86.15% 6.41% 86.15% 6.41%
5 Years Ended
9/30/99 9/30/94 $1,000 $1,345.35 $1,345.35 34.54% 6.11% 34.54% 6.11%
1 Year Ended
9/30/99 9/30/98 $1,000 $ 940.83 $ 931.86 -5.92% -5.92% -6.81% -6.81%

- ------------
*Predecessor Fund commenced operations on December 3, 1993.
</TABLE>

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

As at January 1, 2000, the Trustees and officers of the Trust, as a group,
owned in the aggregate less than 1% of the outstanding Class C shares of the
Fund. As of January 1, 2000, Merrill Lynch, Pierce, Fenner & Smith, Inc.,
Jacksonville, FL 32246 was the record owner of approximately 32.4% 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 2000.

<TABLE>
<CAPTION>
MARGINAL
SINGLE RETURN JOINT RETURN INCOME TAX-EXEMPT YIELD
- --------------------- ------------------- TAX --------------------------------------------------------------------------
(TAXABLE INCOME)* BRACKET 4% 4.5% 5% 5.5% 6% 6.5% 7%
- ------------------------------------------ ----------- --------------------------------------------------------------------------
Equivalent Taxable Yield
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Up to $ 26,250 Up to $ 43,850 15.00% 4.71% 5.29% 5.88% 6.47% 7.06% 7.65% 8.24%
$ 26,251-$ 63,550 $ 43,851-$105,950 28.00 5.56 6.25 6.94 7.64 8.33 9.03 9.72
$ 63,551-$132,600 $105,951-$161,450 31.00 5.80 6.52 7.25 7.97 8.70 9.42 10.14
$132,601-$288,350 $161,451-$288,350 36.00 6.25 7.03 7.81 8.59 9.38 10.16 10.94
Over $288,350 Over $288,350 39.60 6.62 7.45 8.28 9.11 9.93 10.76 11.59
- ------------------------------------------ ----------- --------------------------------------------------------------------------
</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 $128,950. The tax brackets
also do not show the effects of phase out of personal exemptions for single
filers with adjusted gross incomes in excess of $128,950 and joint filers with
adjusted gross income in excess of $193,400. The effective tax brackets and
equivalent taxable yields of such taxpayers will be higher than those indicated
above.

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

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

APPENDIX E: RATINGS

DESCRIPTION OF SECURITIES RATINGS+

MOODY'S INVESTORS SERVICE, INC.

MUNICIPAL BONDS

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

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

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.

- --------------
+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.

Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgment to be formed; if a bond is
called for redemption; or for other reasons.

Note: Moody's applies numerical modifiers, 1, 2, and 3 in each generic rating
classification from Aa through B. The modifier 1 indicates that the security
ranks in the higher end of its generic rating category; the modifier 2 indicates
a mid-range ranking; and the modifier 3 indicates that the issue ranks in the
lower end of its generic rating category.

MUNICIPAL SHORT-TERM OBLIGATIONS

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

APPENDIX F

NATIONAL MUNICIPALS PORTFOLIO

ASSET COMPOSITION INFORMATION
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1999

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

PERCENT OF PERCENT OF
NET ASSETS NET ASSETS
- ------------------------------------------------------------------------------
Aaa 33.09% AAA 35.29%
Aa 0.44 AA+ 3.46
Aa1 0.91 AA 2.07
Aa2 3.55 AA- 2.53
Aa3 3.55 A+ 1.54
A1 1.90 A 0.08
A 1.34 A- 0.86
A2 0.04 BBB+ 1.03
A3 0.90 BBB 4.32
Baa1 3.96 BBB- 4.20
Baa 0.19 BB+ 3.66
Baa2 4.00 BB 0.58
Baa3 3.51 BB- 0.80
Ba1 0.38 B+ 0.09
Ba 0.00 B 0.82
Ba2 0.18 Unrated 38.67
Ba3 0.57 -----
B1 0.06 100.00%
B2 0.48
B3 0.17
Unrated 40.78
-----
100.00%

The chart above indicates the weighted average composition of the securities
held by the Portfolio for the fiscal year ended September 30, 1999, with the
debt securities rated by Moody's and S&P separated into the indicated
categories. The above was calulated on a dollar weighted basis and was computed
as at the end of each month during the fiscal year. The chart does not
necessarily indicate what the composition of the securities held by the
Portfolio will be in the current and subsequent fiscal years. Securities that
are rated by one rating agency may be "unrated" by the other.

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

<PAGE>

STATEMENT OF
ADDITIONAL INFORMATION

February 1, 2000

EATON VANCE NATIONAL MUNICIPALS FUND

INSTITUTIONAL SHARES

The Eaton Vance Building
255 State Street
Boston, Massachusetts 02109
(800) 225-6265

Page
Strategies and Risks ............................................... 1
Investment Restrictions ............................................ 6
Management and Organization ........................................ 8
Investment Advisory and Administrative Services .................... 12
Other Service Providers ............................................ 13
Purchasing and Redeeming Shares .................................... 14
Performance ........................................................ 16
Certain Holders of Fund Shares ..................................... 17
Taxes .............................................................. 17
Portfolio Security Transactions .................................... 20
Financial Statements ............................................... 22

Appendices:
A: Tax Equivalent Yield Table ...................................... a-1
B: Ratings ......................................................... b-1
C: Asset Composition Information ................................... c-1

THIS IS NOT A PROSPECTUS AND IS AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE
INVESTORS ONLY IF PRECEDED OR ACCOMPANIED BY THE FUND'S PROSPECTUS FOR ITS
INSTITUTIONAL SHARES DATED FEBRUARY 1, 2000, AS SUPPLEMENTED FROM TIME TO TIME,
WHICH IS INCORPORATED HEREIN BY REFERENCE. THIS SAI SHOULD BE READ IN
CONJUNCTION WITH THE PROSPECTUS, WHICH MAY BE OBTAINED BY CALLING
1-800-225-6265.