<PAGE>
EV TRADITIONAL FLORIDA LIMITED MATURITY TAX FREE FUND
EV TRADITIONAL NEW YORK LIMITED MATURITY TAX FREE FUND
EV TRADITIONAL NATIONAL LIMITED MATURITY TAX FREE FUND
SUPPLEMENT TO PROSPECTUSES DATED NOVEMBER 25, 1994
THE FOLLOWING SENTENCE IS ADDED TO "HOW TO BUY FUND SHARES":
Fund shares may be sold at net asset value where the amount invested
represents redemption proceeds from a mutual fund unaffiliated with
Eaton Vance, if the redemption occurred no more than 60 days prior to
the purchase of Fund shares and the redeemed shares were subject to a
sales charge.
IN ADDITION, THE FOLLOWING CHANGES (1-5) APPLY TO FUND SHARES PURCHASED ON
OR AFTER MARCH 27, 1995:
1. THE SHAREHOLDER TRANSACTION EXPENSES TABLE UNDER "SHAREHOLDER AND FUND
EXPENSES" IS REPLACED BY THE FOLLOWING TABLE:
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 2.50%
Sales Charges Imposed on Reinvested Distributions None
Redemption Fees None
Fees to Exchange Shares None
Contingent Deferred Sales Charges Imposed on Redemptions None
2. THE FIRST PARAGRAPH UNDER "THE EATON VANCE EXCHANGE PRIVILEGE" IS
REPLACED BY THE FOLLOWING PARAGRAPH:
Shares of a Fund may currently be exchanged for shares of any of the
following funds: Eaton Vance Cash Management Fund, Eaton Vance Income
Fund of Boston, Eaton Vance Municipal Bond Fund L.P., Eaton Vance Tax
Free Reserves and any fund in the Eaton Vance Traditional Group of Funds
on the basis of the net asset value per share of each fund at the time
of the exchange (plus, in the case of an exchange made within six months
of the date of purchase, an amount equal to the difference, if any,
between the sales charge previously paid on the shares being exchanged
and the sales charge payable on the shares being acquired). Such
exchange offers are available only in states where shares of the fund
being acquired may be legally sold.
3. THE SALES CHARGE AND DEALER COMMISSION TABLES UNDER "HOW TO BUY FUND
SHARES" ARE REPLACED BY THE FOLLOWING TABLE:
The current sales charges and dealer commissions are:
<TABLE>
<CAPTION>
SALES CHARGE SALES CHARGE DEALER COMMISSION
AS PERCENTAGE OF AS PERCENTAGE OF AS PERCENTAGE OF
AMOUNT OF PURCHASE OFFERING PRICE AMOUNT INVESTED OFFERING PRICE
<S> <C> <C> <C>
Less than $50,000 2.50% 2.56% 2.75%
$50,000 but less than $100,000 2.25% 2.30% 2.50%
$100,000 but less than $250,000 1.75% 1.78% 2.00%
$250,000 but less than $500,000 1.25% 1.27% 1.50%
$500,000 but less than
$1,000,000 0.75% 0.76% 1.00%
$1,000,000 or more 0.00%<F1> 0.00%<F1> 0.25%<F2>
<FN>
<F1> Fund shares purchased before March 27, 1995, at net asset value with no
initial sales charge by virtue of the purchase having been in the amount of
$1 million or more may be subject to a contingent deferred sales charge
upon redemption.
<F2> The Principal Underwriter may pay Authorized Firms that initiate and are
responsible for purchases of $1 million or more a commission at an annual
rate of 0.25% of average daily net assets paid quarterly for one year.
</TABLE>
4. IN THE DESCRIPTIONS OF THE STATEMENT OF INTENTION AND THE RIGHT OF
ACCUMULATION UNDER "EATON VANCE SHAREHOLDER SERVICES," THE $100,000 AMOUNTS
ARE REPLACED BY $50,000 AMOUNTS.
5. REFERENCES TO A CONTINGENT DEFERRED SALES CHARGE OR "CDSC" DO NOT APPLY
TO FUND SHARES PURCHASED ON OR AFTER MARCH 27, 1995.
March 27, 1995 T-LPS
<PAGE>
EV TRADITIONAL
LIMITED MATURITY TAX FREE FUNDS
EV TRADITIONAL FLORIDA LIMITED MATURITY TAX FREE FUND
EV TRADITIONAL NEW YORK LIMITED MATURITY TAX FREE FUND
THE EV TRADITIONAL LIMITED MATURITY TAX FREE FUNDS (THE "FUNDS") ARE MUTUAL
FUNDS SEEKING TO PROVIDE (1) A HIGH LEVEL OF CURRENT INCOME EXEMPT FROM REGULAR
FEDERAL INCOME TAX AND THEIR RESPECTIVE STATE TAXES DESCRIBED UNDER "THE FUNDS"
INVESTMENT OBJECTIVES" IN THIS PROSPECTUS AND (2) LIMITED PRINCIPAL FLUCTUATION.
EACH FUND INVESTS ITS ASSETS IN A CORRESPONDING NON-DIVERSIFIED OPEN-END
INVESTMENT COMPANY (A "PORTFOLIO") HAVING THE SAME INVESTMENT OBJECTIVE AS THE
FUND, RATHER THAN BY DIRECTLY INVESTING IN AND MANAGING ITS OWN PORTFOLIO OF
SECURITIES AS WITH HISTORICALLY STRUCTURED MUTUAL FUNDS. EACH FUND IS A SERIES
OF EATON VANCE INVESTMENT TRUST (THE "TRUST").
Shares of the Funds are not deposits or obligations of, or guaranteed or
endorsed by, any bank or other insured depository institution, and are not
federally insured by the Federal Deposit Insurance Corporation, the Federal
Reserve Board or any other government agency. Shares of the Funds involve
investment risks, including fluctuations in value and the possible loss of some
or all of the principal investment.
This combined Prospectus is designed to provide you with information you
should know before investing. Please retain this document for future reference.
A combined Statement of Additional Information dated November 25, 1994 for the
Funds, as supplemented from time to time, has been filed with the Securities and
Exchange Commission and is incorporated herein by reference. This Statement of
Additional Information is available without charge from the Funds' Principal
Underwriter, Eaton Vance Distributors, Inc., 24 Federal Street, Boston, MA 02110
(telephone (800) 225-6265). The Portfolios' investment adviser is Boston
Management and Research (the "Investment Adviser"), a wholly-owned subsidiary of
Eaton Vance Management, and Eaton Vance Management is the administrator (the
"Administrator") of the Funds. The offices of the Investment Adviser and the
Administrator are located at 24 Federal Street, Boston, MA 02110.
AS OF THE DATE OF THIS COMBINED PROSPECTUS, A FUND MAY NOT BE AVAILABLE FOR
PURCHASE IN CERTAIN STATES. PLEASE CONTACT THE PRINCIPAL UNDERWRITER OR YOUR
BROKER FOR FURTHER INFORMATION.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURI-
TIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROS-
PECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
PROSPECTUS DATED NOVEMBER 25, 1994
<PAGE>
TABLE OF CONTENTS
Shareholder and Fund Expenses ............................................. 3
The Funds' Financial Highlights ........................................... 5
The Funds' Investment Objectives .......................................... 6
How the Funds and the Portfolios Invest their Assets ...................... 6
Organization of the Funds and the Portfolios .............................. 11
Management of the Funds and the Portfolios ................................ 13
Service Plans ............................................................. 15
Valuing Fund Shares ....................................................... 16
How to Buy Fund Shares .................................................... 16
How to Redeem Fund Shares ................................................. 18
Reports to Shareholders ................................................... 20
The Lifetime Investing Account/Distribution Options ....................... 20
The Eaton Vance Exchange Privilege ........................................ 21
Eaton Vance Shareholder Services .......................................... 22
Distributions and Taxes ................................................... 23
Performance Information ................................................... 24
Statement of Intention and Escrow Agreement ............................... 25
Appendix -- State Specific Information .................................... 26
<PAGE>
SHAREHOLDER AND FUND EXPENSES(1)
- --------------------------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases (as a
percentage of offering price) 2.50%
Sales Charges Imposed on Reinvested Distributions None
Redemption Fees None
Fees to Exchange Shares None
Contingent Deferred Sales Charges (on purchases of $1
million or more) Imposed on Redemptions During the First
Eighteen Months (as a percentage of redemption proceeds
exclusive of all reinvestments and capital appreciation
in the account)(2) 1.00%
ANNUAL FUND AND ALLOCATED PORTFOLIO OPERATING EXPENSES
(as a percentage of average net assets)
Florida New York
Fund Fund
---- ----
Investment Adviser Fee(3) 0.45% 0.45%
Rule 12b-1 Fees (Service Plan) 0.00 0.00
Other Expenses 0.20 0.20
---- ----
Total Operating Expenses 0.65% 0.65%
==== ====
EXAMPLE
An investor would pay the following expenses (including initial maximum sales
charge) on a $1,000 investment, assuming (a) 5% annual return and (b) redemption
at the end of each time period:
Florida New York
Fund Fund
---- ----
1 Year ..................................... $31 $31
3 Years .................................... 47 47
Notes:
(1) The purpose of the above table and the Example is to summarize the
aggregate expenses of the Funds and the Portfolios and to assist investors
in understanding the various costs and expenses that investors in each Fund
will bear directly or indirectly. The Trustees of the Trust believe that
over time the aggregate per share expenses of a Fund and its corresponding
Portfolio should be approximately equal to the per share expenses which the
Fund would incur if the Trust retained the services of an investment
adviser and the assets of the Fund were invested directly in the type of
securities being held by its corresponding Portfolio. Since the Funds do
not yet have a sufficient operating history, the percentages indicated as
Annual Fund and Allocated Portfolio Operating Expenses and the amounts
included in the Example are based on the Funds' and the Portfolios'
projected fees and expenses for the current fiscal year ending March 31,
1995. The amounts in the Example for the three year period includes an
estimate of Service Plan fees equivalent to 0.05% of average net assets.
The table and Example should not be considered a representation of past or
future expenses and actual expenses may be greater or less than those
shown. For further information regarding the expenses of the Funds and the
Portfolios see "The Funds" Financial Highlights ", "Organization of the
Funds and the Portfolios", "Management of the Funds and the Portfolios",
"Service Plans" and "How to Redeem Fund Shares". Other investment companies
with different distribution arrangements and fees are investing in the
Portfolios and additional such companies may do so in the future. See
"Organization of the Funds and the Portfolios."
(2) If shares of a Fund are purchased at net asset value with no initial sales
charge by virtue of the purchase having been in the amount of $1 million or
more and are redeemed within 18 months after the end of the calendar month
in which the purchase was made, a contingent deferred sales charge of 1%
will be imposed on such redemption. See "How to Buy Fund Shares," "How to
Redeem Fund Shares" and "Eaton Vance Shareholder Services."
(3) Each Portfolio's monthly advisory fee has two components, a fee based on
daily net assets and a fee based on daily gross income, as set forth in the
fee schedule on page 14.
<PAGE>
THE FUNDS' FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The following information should be read in conjunction with the financial
statements included in the Statement of Additional Information. Further
information regarding the performance of a Fund will be contained in its annual
report to shareholders which may be obtained without charge by contacting the
Principal Underwriter, Eaton Vance Distributors, Inc.
- --------------------------------------------------------------------------------
FLORIDA NEW YORK
FUND* FUND*
------- -------
NET ASSET VALUE, beginning of period $ 10.000 $ 10.000
------- -------
INCOME FROM OPERATIONS:
Net investment income ......................... $ 0.104 $ 0.113
Net realized and unrealized loss on investments (0.001) (0.041)
------- -------
Total income from operations ................ $ 0.103 $ 0.072
------- -------
LESS DISTRIBUTIONS:
From net investment income .................... $ (0.104) $ (0.112)
In excess of net investment income ............ (0.009) --
------- -------
Total distributions ......................... $ (0.113) $ (0.112)
------- -------
NET ASSET VALUE, end of period .................. $ 9.990 $ 9.960
======= =======
TOTAL RETURN (1) ................................ 0.94% 0.72%
RATIOS/SUPPLEMENTAL DATA**:
Net assets, end of period (000 omitted) ....... $ 72 $ 72
Ratio of net expenses to average daily
net assets (2) .............................. 0.55%+ 0.41%+
Ratio investment income to average
daily net assets ............................ 4.32%+ 4.34%+
**For the period from its start of business to September 30, 1994, the operating
expenses of each Fund reflect a preliminary allocation of expenses to the
Administrator. Had such actions not been taken, net investment income (loss)
per share and the ratios would have been as follows:
NET INVESTMENT INCOME PER SHARE $ (0.500) $ (0.580)
======= =======
RATIOS (As a percentage of average daily net assets):
Expenses (2) 25.43%+ 27.24%+
Net investment loss (20.56%)+ (22.49%)+
* For the Florida Fund and the New York Fund, the Financial Highlights are for
the period from the start of business, July 5, 1994 and July 6, 1994,
respectively, to September 30, 1994.
+ Computed on an annualized basis.
(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. Dividends and distributions, if any, are assumed to be reinvested
at the net asset value on the payable date.
(2) Includes the Fund's share of its corresponding Portfolio's allocated
expenses.
<PAGE>
THE FUNDS' INVESTMENT OBJECTIVES
- --------------------------------------------------------------------------------
The investment objective of each Fund is set forth below. Each Fund seeks to
meet its investment objective by investing its assets in a separate
corresponding open-end management investment company (a "Portfolio") which
invests primarily in municipal obligations (as described below) having a dollar
weighted average duration of between three and nine years and which are rated at
least investment grade by a major rating agency or, if unrated, determined to be
of at least investment grade quality by the Investment Adviser. Each Portfolio
has the same investment objective as its corresponding Fund.
EV TRADITIONAL FLORIDA LIMITED MATURITY TAX FREE FUND (the "Florida Fund")
seeks to provide (1) a high level of current income exempt from regular Federal
income tax in the form of an investment exempt from Florida intangibles tax, and
(2) limited principal fluctuation. The Florida Fund seeks to meet its objective
by investing its assets in the Florida Limited Maturity Tax Free Portfolio (the
"Florida Portfolio").
EV TRADITIONAL NEW YORK LIMITED MATURITY TAX FREE FUND (the "New York Fund")
seeks to provide (1) a high level of current income exempt from regular Federal
income tax and New York State and New York City income taxes, and (2) limited
principal fluctuation. The New York Fund seeks to meet its objective by
investing its assets in the New York Limited Maturity Tax Free Portfolio (the
"New York Portfolio").
HOW THE FUNDS AND THE PORTFOLIOS INVEST THEIR ASSETS
- --------------------------------------------------------------------------------
EACH FUND SEEKS TO ACHIEVE ITS INVESTMENT OBJECTIVE BY INVESTING EITHER DIRECTLY
OR INDIRECTLY THROUGH ANOTHER OPEN-END MANAGEMENT INVESTMENT COMPANY PRIMARILY
(I.E., AT LEAST 80% OF ITS NET ASSETS DURING PERIODS OF NORMAL MARKET
CONDITIONS) IN DEBT OBLIGATIONS ISSUED BY OR ON BEHALF OF ITS CORRESPONDING
STATE AND ITS POLITICAL SUBDIVISIONS, AND THE GOVERNMENTS OF PUERTO RICO, THE
U.S. VIRGIN ISLANDS AND GUAM, THE INTEREST ON WHICH IS EXEMPT FROM REGULAR
FEDERAL INCOME TAX, IS NOT A TAX PREFERENCE ITEM UNDER THE FEDERAL ALTERNATIVE
MINIMUM TAX AND IS EXEMPT FROM THE STATE TAXES SET FORTH ABOVE. The foregoing
policy is a fundamental policy of each Fund and its corresponding Portfolio,
which may not be changed unless authorized by a vote of the Fund's shareholders
or that Portfolio's investors, as the case may be.
At least 80% of each Portfolio's net assets will normally be invested in
obligations rated at least investment grade (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 Investors Service, Inc.
("Fitch")) or, if unrated, determined by the Investment Adviser to be of at
least investment grade quality. Municipal obligations rated Baa or BBB may have
speculative characteristics. Also, changes in economic conditions or other
circumstances are more likely to lead to a weakened capacity to make principal
and interest payments than in the case of higher rated obligations. Each
Portfolio may invest up to 20% of its net assets in municipal obligations rated
below investment grade (but not lower than B by Moody's, S&P or Fitch) and
unrated municipal obligations considered to be of comparable quality by the
Investment Adviser. Securities rated below BBB or Baa are commonly known as
"junk bonds". See "Credit Quality - Risks." A Portfolio may retain an obligation
whose rating drops below B after its acquisition if such retention is considered
desirable by the Investment Adviser; provided, however, that no Portfolio's
holdings of obligations rated below investment grade will exceed 35% of its net
assets. For a description of municipal obligation ratings, see the Statement of
Additional Information.
In pursuing its investment objective, each Portfolio seeks to invest in a
portfolio having a dollar weighted average duration of between three and nine
years. Duration represents the dollar weighted average maturity of expected cash
flows (i.e., interest and principal payments) on one or more debt obligations,
discounted to their present values. The duration of an obligation is usually not
more than its stated maturity and is related to the degree of volatility in the
market value of the obligation. Maturity measures only the time until a bond or
other debt security provides its final payment; it does not take into account
the pattern of a security's payments over time. Duration takes both interest and
principal payments into account and, thus, in the Investment Adviser's opinion,
is a more accurate measure of a debt security's sensitivity to changes in
interest rates. In computing the duration of its portfolio, a Portfolio will
have to estimate the duration of debt obligations that are subject to prepayment
or redemption by the issuer, based on projected cash flows from such
obligations.
Each Portfolio may use various techniques to shorten or lengthen the dollar
weighted average duration of its portfolio, including the acquisition of debt
obligations at a premium or discount, and transactions in futures contracts and
options on futures. Subject to the requirement that its dollar weighted average
portfolio duration will not exceed nine years, a Portfolio may invest in
individual debt obligations of any maturity.
MUNICIPAL OBLIGATIONS. Municipal obligations include bonds, notes and commercial
paper issued by a municipality for a wide variety of both public and private
purposes. Public purpose municipal bonds include general obligation and revenue
bonds. General obligation bonds are backed by the taxing power of the issuing
municipality. Revenue bonds are backed by the revenues of a project or facility.
Municipal notes include bond anticipation, tax anticipation, revenue
anticipation, and construction loan notes. Bond, tax and revenue anticipation
notes are short-term obligations that will be retired with the proceeds of an
anticipated bond issue, tax revenue or facility revenue, respectively.
Construction loan notes are short-term obligations that will be retired with the
proceeds of long-term mortgage financing. Under normal market conditions, a
Portfolio will invest at least 65% of its total assets in obligations issued by
its respective State or its political subdivisions.
Interest on certain "private activity bonds" issued after August 7, 1986 is
exempt from the regular Federal income tax applicable to individuals (and
corporations), 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 Federal alternative
minimum tax. A Portfolio may not invest more than 20% of its net assets in these
obligations and obligations subject to regular Federal income tax and/or the
relevant State taxes. As at September 30, 1994, the Portfolios had invested in
private activity bonds as follows (as a percentage of net assets): Florida
Portfolio (0%); and New York Portfolio (0%). For corporate shareholders, each
Fund's distributions derived from interest on all municipal obligations
(whenever issued) is included in "adjusted current earnings" for purposes of the
Federal alternative minimum tax applicable to corporations.
The Omnibus Budget Reconciliation Act of 1993 changed the federal income tax
treatment of market discount on long-term tax-exempt municipal obligations
(i.e., obligations with a term of more than one year) purchased in the secondary
market after April 30, 1993 from taxable capital gain to taxable ordinary
income. A long-term debt obligation is generally treated as acquired at a market
discount if the secondary market purchase price is 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. Each Portfolio may
acquire municipal obligations at a market discount from time to time, and its
corresponding Fund's distributions will (when so required) include taxable
income reflecting the realization of such accrued discount by the Portfolio and
its allocation to the Fund.
CONCENTRATION. Each Portfolio will concentrate its investments in municipal
obligations issued by its respective State. Each Portfolio is, therefore, more
susceptible to factors adversely affecting issuers in one State than mutual
funds which do not concentrate in a specific State. Municipal obligations of
issuers in a single State may be adversely effected by economic developments and
by legislation and other governmental activities in that State. To the extent
that a Portfolio's assets are concentrated in municipal obligations of issuers
of a single State, that Portfolio may be subject to an increased risk of loss.
Each Portfolio may also invest in obligations issued by the governments of
Puerto Rico, the U.S. Virgin Islands and Guam (the "Territories"). See the
Appendix to this Prospectus for a description of economic and other factors
relating to the relevant States and the Territories.
In addition, each Portfolio may invest 25% or more of its assets in
municipal obligations of the same type, including, without limitation, the
following: general obligations of its respective State and its political
subdivisions; lease rental obligations of State and local authorities;
obligations of State and local housing finance authorities, municipal utilities
systems or public housing authorities; obligations for hospitals or life care
facilities; or industrial development or pollution control bonds issued for
electric utility systems, steel companies, paper companies or other purposes.
This may make a Portfolio more susceptible to adverse economic, political, or
regulatory occurrences affecting a particular category of issuer. For example,
health care-related issuers are susceptible to medicaid reimbursement policies
and national and state health care legislation. As a Portfolio's concentration
increases, so does the potential for fluctuation in the value of the
corresponding Fund's shares.
NON-DIVERSIFIED STATUS. Each Portfolio's classification under the Investment
Company Act of 1940 as a "non-diversified" investment company allows it to
invest, with respect to 50% of its assets, more than 5% of its assets in the
securities of any issuer. Because of the small number of municipal obligations
issued by a State, a Portfolio is likely to invest a greater percentage of its
assets in the securities of a single issuer than would a diversified fund.
Therefore, a Portfolio would be more susceptible to any single adverse economic
or political occurrence or development affecting issuers of the relevant State's
municipal obligations. A Portfolio will also be subject to an increased risk of
loss if the issuer is unable to make interest or principal payments or if the
market value of such securities declines. It is also possible that sufficient
suitable State municipal obligations will not be available for a Portfolio to
achieve its investment objective.
EACH FUND AND PORTFOLIO HAVE ADOPTED CERTAIN FUNDAMENTAL INVESTMENT RESTRICTIONS
WHICH ARE ENUMERATED IN DETAIL IN THE STATEMENT OF ADDITIONAL INFORMATION AND
WHICH MAY NOT BE CHANGED UNLESS AUTHORIZED BY A SHAREHOLDER VOTE AND AN INVESTOR
VOTE, RESPECTIVELY. EXCEPT FOR SUCH ENUMERATED RESTRICTIONS AND AS OTHERWISE
INDICATED IN THIS PROSPECTUS, THE INVESTMENT OBJECTIVE AND POLICIES OF EACH FUND
AND PORTFOLIO ARE NOT FUNDAMENTAL POLICIES AND ACCORDINGLY MAY BE CHANGED BY THE
TRUSTEES OF THE TRUST AND THE PORTFOLIO WITHOUT OBTAINING THE APPROVAL OF A
FUND'S SHAREHOLDERS OR INVESTORS IN THE CORRESPONDING PORTFOLIO, AS THE CASE MAY
BE. IF ANY CHANGES WERE MADE IN A FUND'S INVESTMENT OBJECTIVE, THE FUND MIGHT
HAVE INVESTMENT OBJECTIVES DIFFERENT FROM THE OBJECTIVE WHICH AN INVESTOR
CONSIDERED APPROPRIATE AT THE TIME THE INVESTOR BECAME A SHAREHOLDER IN THE
FUND.
MUNICIPAL LEASES. Each Portfolio may invest in municipal leases and
participations therein, which arrangements frequently involve special risks.
Leases and installment purchase or conditional sale contracts (which normally
provide for title to the leased asset to pass eventually to the governmental
issuer) have evolved as a means for governmental issuers to acquire property and
equipment without meeting the constitutional and statutory requirements for the
issuance of debt. State debt-issuance limitations are deemed to be inapplicable
to these arrangements because of the inclusion in many leases or contracts of
"non-appropriation" clauses that provide that the governmental issuer has no
obligation to make future payments under the lease or contract unless money is
appropriated for such purpose by the appropriate legislative body on a yearly or
other periodic basis. Such arrangements are, therefore, subject to the risk that
the governmental issuer will not appropriate funds for lease payments. In
addition, certain municipal lease obligations may be deemed illiquid for the
purpose of each Portfolio's 15% limitation on investments in illiquid
securities. 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 ongoing basis, including an assessment
of the likelihood that the lease may or may not be cancelled.
ZERO COUPON BONDS. Each Portfolio may invest in zero coupon bonds, which are
debt obligations that do not require the periodic payment of interest and are
issued at a significant discount from their face value. Such bonds experience
greater volatility in market value due to changes in interest rates than
municipal obligations that provide for regular payments of interest. A Portfolio
will accrue income on such bonds for tax and accounting purposes in accordance
with applicable law, the corresponding Fund's proportionate share of which
income is distributable to shareholders of that Fund. Because no cash is
received at the time such income is accrued, a Portfolio may be required to
liquidate other portfolio securities to generate cash that a Fund may withdraw
from the Portfolio to satisfy the Fund's distribution obligations.
CREDIT QUALITY -- RISKS. Many municipal obligations offering high current income
are in the lowest investment grade category (Baa or BBB), lower categories or
may be unrated. As indicated above, each Portfolio may invest in municipal
obligations rated below investment grade (but not lower than B by Moody's, S&P
or Fitch) and comparable unrated obligations. The lowest investment grade, lower
rated and comparable unrated municipal obligations in which a Portfolio may
invest will have speculative characteristics in varying degrees. While such
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. Each Portfolio may retain
defaulted obligations in its portfolio when such retention is considered
desirable by the Investment Adviser. In the case of a defaulted obligation, a
Portfolio may incur additional expense seeking recovery of its investment. For a
description of municipal obligation ratings, see the Statement of Additional
Information.
INSURED OBLIGATIONS. Each Portfolio may purchase municipal bonds that are
additionally secured by insurance, bank credit agreements, or escrow accounts.
The credit quality of companies which provide such credit enhancements will
affect the value of those securities. Although the insurance feature reduces
certain financial risks, the premiums for insurance and the higher market price
paid for insured obligations may reduce a Fund's current yield. Insurance
generally will be obtained from insurers with a claims-paying ability rated Aaa
by Moody's or AAA by S&P or Fitch. The insurance does not guarantee the market
value of the insured obligations or the net asset value of a Fund's shares.
MARKET CONDITIONS. The management of the Portfolios believes that, in general,
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 for large issues of municipal
obligations that trade in a national market. 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. These considerations may
restrict the availability of such obligations, may affect the choice of
securities sold to meet redemption requests and may limit a Portfolio's ability
to sell or dispose of such securities. Also, valuation of such obligations may
be more difficult.
NET ASSET VALUE FLUCTUATION. The net asset value of shares of a Fund will change
in response to fluctuations in prevailing interest rates and changes in the
value of the securities held by its corresponding Portfolio. When interest rates
decline, the value of securities held by a Portfolio can be expected to rise.
Conversely, when interest rates rise, the value of most portfolio security
holdings can be expected to decline. The degree of price volatility is related
to the duration of a portfolio security, with shorter duration securities
exhibiting less price volatility than longer duration securities with the same
changes in interest rates. Because each Portfolio intends to limit its average
portfolio duration to no more than nine years, the net asset value of its
corresponding Fund can be expected to be less sensitive to changes in interest
rates than a fund with a longer average portfolio duration. An investment in
shares of a Fund will not constitute a complete investment program.
SHORT-TERM TRADING. Each Portfolio may sell 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
portfolio turnover rate and the expenses incurred in connection with such
trading. Each Portfolio anticipates that its annual portfolio turnover rate will
generally not exceed 100% (excluding turnover of securities having a maturity of
one year or less).
WHEN-ISSUED SECURITIES. Each Portfolio may purchase securities 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. However, the market value of the securities
may fluctuate prior to delivery and upon delivery the securities may be worth
more or less than a Portfolio agreed to pay for them. A Portfolio will not
accrue income in respect of when-issued securities prior to the stated delivery
date of such securities. Each Portfolio will maintain in a segregated account
sufficient assets to cover its outstanding purchase obligations.
FUTURES AND OPTIONS TRANSACTIONS. To hedge against changes in interest rates,
each Portfolio may purchase and sell various kinds of futures contracts, and
purchase and write call and put options on futures contracts. Each Portfolio may
also enter into closing purchase and sale transactions with respect to such
contracts and options. The futures contracts may be based on various debt
securities (such as U.S. Government securities), securities indices and other
financial instruments and indices. Each Portfolio will engage in futures and
related options transactions for bona fide hedging or non-hedging purposes as
defined in or permitted by regulations of the Commodity Futures Trading
Commission. A Portfolio will engage in such transactions for non-hedging
purposes only in order to enhance total return by using a futures position as a
lower cost substitute for a securities position that the Portfolio is otherwise
authorized to enter into.
A Portfolio may not purchase or sell futures contracts or purchase or sell
related options, except for closing purchase or sale transactions, if
immediately thereafter the sum of the amount of margin deposits on the
Portfolio's outstanding positions in futures and related options and the amount
of premiums paid for outstanding positions in options on futures would exceed 5%
of the market value of the Portfolio's net assets. There are no other percentage
limitations on a Portfolio's transactions in futures contracts or options on
futures, except that at least 80% of the Portfolio's net assets will be invested
in municipal obligations as described above. These transactions involve
brokerage costs, require margin deposits and, in the case of futures contracts
and options requiring a Portfolio to purchase securities, require the Portfolio
to segregate liquid high grade debt securities in an amount equal to the
underlying value of such contracts and options. In addition, while transactions
in futures contracts and options on futures may reduce certain risks, such
transactions themselves involve (1) liquidity risk that contractual positions
cannot be easily closed out in the event of market changes, (2) correlation risk
that changes in the value of hedging positions may not match the market
fluctuations intended to be hedged (especially given that the only futures
contracts currently available to hedge municipal obligations are futures on
various U.S. Government securities and on municipal securities indices), (3)
market risk that an incorrect prediction by the Investment Adviser of interest
rates may cause a Portfolio to perform less well than if such positions had not
been entered into, and (4) skills different from those needed to select
portfolio securities. Distribution by a Fund from any net income or gains
realized on its corresponding Portfolio's transactions in futures and options on
futures will be taxable.
ORGANIZATION OF THE FUNDS AND THE PORTFOLIOS
- --------------------------------------------------------------------------------
EACH FUND IS A SERIES OF EATON VANCE INVESTMENT TRUST (THE "TRUST"), A BUSINESS
TRUST ESTABLISHED UNDER MASSACHUSETTS LAW PURSUANT TO A DECLARATION OF TRUST
DATED OCTOBER 23, 1985, AS AMENDED. THE TRUST IS A MUTUAL FUND -- AN OPEN-END
MANAGEMENT INVESTMENT COMPANY. The Trustees of the Trust are responsible for the
overall management and supervision of its affairs. The Trust may issue an
unlimited number of shares of beneficial interest (no par value per share) in
one or more series and because the Trust can offer separate series (such as the
Funds) it is known as a "series company." Each share represents an equal
proportionate beneficial interest in a Fund. When issued and outstanding, each
Fund's shares are fully paid and nonassessable by the Trust and redeemable as
described under "How to Redeem Fund Shares." Shareholders are entitled to one
vote for each full share held. Fractional shares may be voted proportionately.
Shares have no preemptive or conversion rights and are freely transferable. Upon
liquidation of a Fund, shareholders of that Fund are entitled to share pro rata
in the net assets available for distribution to shareholders.
EACH PORTFOLIO IS ORGANIZED AS A TRUST UNDER THE LAWS OF THE STATE OF NEW
YORK AND IS TREATED AS A PARTNERSHIP FOR FEDERAL TAX PURPOSES. The Portfolios,
as well as the Trust, intend to comply with all applicable Federal and state
securities laws. Each Portfolio's Declaration of Trust provides that its
corresponding Fund and other entities permitted to invest in that Portfolio
(e.g., other U.S. and foreign investment companies, and common and commingled
trust funds) will each be liable for all obligations of the Portfolio. However,
the risk of a Fund incurring financial loss on account of such liability is
limited to circumstances in which both inadequate insurance exists and the
Portfolio itself is unable to meet its obligations. Accordingly, the Trustees of
the Trust believe that neither the Funds nor their shareholders will be
adversely affected by reason of the Funds investing in the Portfolios.
SPECIAL INFORMATION ON THE FUND/PORTFOLIO INVESTMENT STRUCTURE. An investor in a
Fund should be aware that the Fund, unlike mutual funds which directly acquire
and manage their own portfolios of securities, seeks to achieve its investment
objective by investing its assets in an interest in its corresponding Portfolio,
which is a separate investment company with an identical investment objective.
Therefore, a Fund's interest in the securities owned by its corresponding
Portfolio is indirect. In addition to selling an interest to its corresponding
Fund, a Portfolio may sell interests to other affiliated and non-affiliated
mutual funds or institutional investors. Such investors will invest in a
Portfolio on the same terms and conditions and will pay a proportionate share of
the Portfolio's expenses. However, the other investors investing in a Portfolio
are not required to sell their shares at the same public offering price as the
corresponding Fund due to variations in sales commissions and other operating
expenses. Therefore, investors in a Fund should be aware that these differences
may result in differences in returns experienced by investors in the different
funds that invest in its corresponding Portfolio. Such differences in returns
are also present in other mutual fund structures, including funds that have
multiple classes of shares. For information regarding the investment objective,
policies and restrictions of the Portfolios, see "The Funds" Investment
Objectives" and "How the Funds and the Portfolios Invest their Assets". Further
information regarding investment practices may be found in the Statement of
Additional Information.
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 substantial growth in the assets of
the Portfolios, and affords the potential for economies of scale for each Fund,
at least when the assets of its corresponding Portfolio exceed $500 million.
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. The investment
objective and the nonfundamental investment policies of each Fund and Portfolio
may be changed by the Trustees of the Trust and the Portfolio without obtaining
the approval of the shareholders of that Fund or the investors in that
Portfolio. Any such change of an investment objective will be preceded by thirty
days advance written notice to the shareholders of the Fund or the investors in
the Portfolio, as the case may be. 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, such Trustees would
consider what action might be taken, including investing all 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 from
its corresponding Portfolio.
Information regarding other pooled investment entities or funds which invest
in a Portfolio may be obtained by contacting Eaton Vance Distributors, Inc. (the
"Principal Underwriter" or "EVD"), 24 Federal Street, Boston, MA 02110, (617)
482-8260. Smaller funds investing in a Portfolio may be adversely affected by
the actions of larger funds investing in the Portfolio. For example, if a large
fund withdraws from a Portfolio, the remaining funds may experience higher pro
rata operating expenses, thereby producing lower returns. Additionally, a
Portfolio may become less diverse, resulting in increased portfolio risk, and
experience decreasing economies of scale. However, this possibility exists as
well for historically structured mutual funds which have large or institutional
investors.
Until recently, the Administrator sponsored and advised historically
structured funds. Funds which invest all their assets in interests in a separate
investment company are a relatively new development in the mutualfund industry
and, therefore, the Funds may be subject to additional regulations than
historically structuredfunds.
Each Portfolio's Declaration of Trust provides that the Portfolio will
terminate 120 days after the complete withdrawal of a Fund or any other investor
in the Portfolio, unless either the remaining investors, by unanimous vote at a
meeting of such investors, or a majority of the Trustees of the Portfolio, by
written instrument consented to by all investors, agree to continue the business
of the Portfolio. This provision is consistent with treatment of the Portfolios
as partnerships for Federal income tax purposes. See "Distributions and Taxes"
for further information. 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
corresponding 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.
The Trustees of the Trust, including a majority of the noninterested
Trustees, have approved written procedures designed to identify and address any
potential conflicts of interest arising from the fact that the Trustees of the
Trust and the Trustees of each Portfolio are the same. Such procedures require
each Board to take action to resolve any conflict of interest between a Fund and
its corresponding Portfolio, and it is possible that the creation of separate
boards may be considered. For further information concerning the Trustees and
officers of the Trust and the Portfolios, see the Statement of Additional
Information.
Although each Fund offers only its own shares of beneficial interest, it is
possible that a Fund might become liable for a misstatement or omission in this
Prospectus regarding another Fund because the Funds use this combined
Prospectus. The Trustees of the Trust have considered this factor in approving
the use of a combined Prospectus.
MANAGEMENT OF THE FUNDS AND THE PORTFOLIOS
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EACH PORTFOLIO ENGAGES BOSTON MANAGEMENT AND RESEARCH ("BMR"), A WHOLLY-OWNED
SUBSIDIARY OF EATON VANCE MANAGEMENT ("EATON VANCE"), AS ITS INVESTMENT ADVISER.
EATON VANCE, ITS AFFILIATES AND ITS PREDECESSOR COMPANIES HAVE BEEN MANAGING
ASSETS OF INDIVIDUALS AND INSTITUTIONS SINCE 1924 AND MANAGING INVESTMENT
COMPANIES SINCE 1931.
Acting under the general supervision of the Board of Trustees of each
Portfolio, BMR manages each Portfolio's investments and affairs. Under its
investment advisory agreement with a Portfolio, BMR receives a monthly advisory
fee equal to the aggregate of
(a) a daily asset based fee computed by applying the annual asset rate
applicable to that portion of the total daily net assets in each
Category as indicated below, plus
(b) a daily income based fee computed by applying the daily income rate
applicable to that portion of the total daily gross income (which
portion shall bear the same relationship to the total daily gross income
on such day as that portion of the total daily net assets in the same
Category bears to the total daily net assets on such day) in each
Category as indicated below:
ANNUAL DAILY
CATEGORY DAILY NET ASSETS ASSET RATE INCOME RATE
- -------- ---------------- ---------- -----------
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%
Each Portfolio paid advisory fees for the six months ended September 30,
1994 equivalent to the following annualized percentage of average daily net
assets:
NET ASSETS
AS OF
PORTFOLIO SEPTEMBER 30, 1994 ADVISORY FEE
- --------- ------------------ ------------
Florida ..................... $184,800,149 0.45%
New York .................... 190,458,970 0.45%
BMR also furnishes for the use of each Portfolio office space and all
necessary office facilities, equipment and personnel for servicing the
investments of the Portfolios. Each Portfolio is responsible for the payment of
all expenses other than those expressly stated to be payable by BMR under its
investment advisory agreement.
Raymond E. Hender has acted as the portfolio manager of each Portfolio since
it commenced operations. He joined Eaton Vance and BMR as a Vice President in
1992. Previously, he was a Senior Vice President of Bank of New England
(1989-1992) and a Portfolio Manager of Fidelity Management & Research Company
(1977-1988).
Municipal obligations are normally traded on a net basis (without
commission) through broker-dealers and banks acting for their own account. Such
firms attempt to profit from such transactions by buying at the bid price and
selling at the higher asked price of the market, and the difference is
customarily referred to as the spread. In selecting firms which will execute
portfolio transactions, BMR judges their professional ability and quality of
service and uses its best efforts to obtain execution at prices which are
advantageous to the Portfolios and at reasonably competitive spreads. Subject to
the foregoing, BMR may consider sales of shares of the Funds or of other
investment companies sponsored by BMR or Eaton Vance as a factor in the
selection of firms to execute portfolio transactions.
BMR OR EATON VANCE ACTS AS INVESTMENT ADVISER TO INVESTMENT COMPANIES AND
VARIOUS INDIVIDUAL AND INSTITUTIONAL CLIENTS WITH ASSETS UNDER MANAGEMENT OF
APPROXIMATELY $15 BILLION. Eaton Vance is a wholly-owned subsidiary of Eaton
Vance Corp., a publicly held holding company. Eaton Vance Corp., through its
subsidiaries and affiliates, engages in investment management and marketing
activities, fiduciary and banking services, oil and gas operations, real estate
investment, consulting and management, and development of precious metals
properties.
The Trust has retained the services of Eaton Vance to act as Administrator
of the Funds. The Trust has not retained the services of an investment adviser
since the Trust seeks to achieve the investment objective of each Fund by
investing its assets in the corresponding Portfolio. As Administrator, Eaton
Vance provides the Funds with general office facilities and supervises the
overall administration of the Fund. For these services Eaton Vance currently
receives no compensation. The Trustees of the Trust may determine, in the
future, to compensate Eaton Vance for such services.
The Portfolios and the Funds, as the case may be, will each be responsible
for all respective costs and expenses not expressly stated to be payable by BMR
under the investment advisory agreement, by Eaton Vance under the administrative
services agreement, or by EVD under the distribution agreement. Such costs and
expenses to be borne by the Portfolios and the Funds, as the case may be,
include, without limitation; custody and transfer agency fees and expenses,
including those for determining net asset value and keeping accounting books and
records; expenses of pricing and valuation services; the cost of share
certificates; membership dues in investment company organizations; expenses of
acquiring, holding and disposing of securities and other investments; fees and
expenses of registering under the securities laws and the governmental fees;
expenses of reporting to shareholders and investors; proxy statements and other
expenses of shareholders' or investors' meetings; insurance premiums; printing
and mailing expenses; interest, taxes and corporate fees; legal and accounting
expenses; compensation and expenses of Trustees not affiliated with BMR or Eaton
Vance; and investment advisory fees, and, if any, administrative services fees.
The Portfolios and the Funds will also each bear expenses incurred in connection
with litigation in which the Portfolios or the Funds, as the case may be, is a
party and any legal obligation to indemnify its respective officers and Trustees
with respect thereto.
SERVICE PLANS
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In addition to advisory fees and other expenses, each Fund pays service fees
pursuant to a Service Plan (the "Plan") designed to meet the requirements of
Rule 12b-1 under the Investment Company Act of 1940 and the service fee
requirements of the revised sales charge rule of the National Association of
Securities Dealers, Inc. Each Fund's Plan is further described in the Statement
of Additional Information, and the following is a description of the salient
features of the Plans.
EACH FUND'S PLAN PROVIDES THAT THE FUND MAY MAKE SERVICE FEE PAYMENTS FOR
PERSONAL SERVICES AND/OR THE MAINTENANCE OF SHAREHOLDER ACCOUNTS TO THE
PRINCIPAL UNDERWRITER, AUTHORIZED FIRMS AND OTHER PERSONS IN AMOUNTS NOT
EXCEEDING .25% OF THE FUND'S AVERAGE DAILY NET ASSETS FOR ANY FISCAL YEAR. The
Trustees of the Trust have initially implemented each Fund's Plan by authorizing
the Fund to make service fee payments to the Principal Underwriter and
Authorized Firms in amounts not expected to exceed .15% of the Fund's average
daily net assets for any fiscal year which is based on the value of Fund shares
sold by such persons and remaining outstanding for at least twelve months.
However, each Fund's Plan authorizes the Trustees of the Trust on behalf of the
Fund to increase payments to the Principal Underwriter, Authorized Firms and
other persons from time to time without further action by shareholders of the
Fund, provided that the aggregate amount of payments made to such persons under
the Plan in any fiscal year of the Fund does not exceed .25% of the Fund's
average daily net assets. The Funds will commence accruing service fee payments
during the quarter ending September 30, 1995.
VALUING FUND SHARES
- --------------------------------------------------------------------------------
EACH FUND VALUES ITS SHARES ONCE ON EACH DAY THE NEW YORK STOCK EXCHANGE (THE
"EXCHANGE") IS OPEN FOR TRADING, as of the close of regular trading on the
Exchange (normally 4:00 p.m. New York time). Each Fund's net asset value per
share is determined by its custodian, Investors Bank & Trust Company ("IBT"),
(as agent for the Fund) in the manner authorized by the Trustees of the Trust.
Net asset value is computed by dividing the value of a Fund's total assets, less
its liabilities, by the number of shares outstanding. Because each Fund invests
substantially all of its assets in an interest in its corresponding Portfolio,
the Fund's net asset value will reflect the value of its interest in the
Portfolio (which, in turn, reflects the underlying value of the Portfolio's
assets and liabilities).
Financial service firms ("Authorized Firms") must communicate an investor's
order to the Principal Underwriter prior to the close of the Principal
Underwriter's business day to receive that day's net asset value per Fund share
and the public offering price based thereon. It is the Authorized Firms'
responsibility to transmit orders promptly to the Principal Underwriter, which
is a wholly-owned subsidiary of Eaton Vance.
Each Portfolio's net asset value is also determined as of the close of
regular trading on the Exchange by IBT (as custodian and agent for the
Portfolio) based on market or fair value in the manner authorized by the
Trustees of the Portfolio. Municipal obligations will normally be valued on the
basis of valuations furnished by a pricing service. For further information
regarding the valuation of the Portfolios' assets, see "Determination of
NetAsset Value" in the Statement of Additional Information. Eaton Vance Corp.
owns 77.3% of the outstanding stock of IBT, the Funds' and the Portfolios'
custodian.
SHAREHOLDERS MAY DETERMINE THE VALUE OF THEIR INVESTMENT BY MULTIPLYING THE
NUMBER OF FUND SHARES OWNED BY THE CURRENT NET ASSET VALUE.
HOW TO BUY FUND SHARES
- --------------------------------------------------------------------------------
SHARES OF A FUND MAY BE PURCHASED FOR CASH OR MAY BE ACQUIRED IN EXCHANGE FOR
SECURITIES. Investors may purchase shares of a Fund through Authorized Firms at
the effective public offering price, which price is based on the effective net
asset value per share plus the applicable sales charge. A Fund receives the net
asset value, while the sales charge is divided between the Authorized Firm and
the Principal Underwriter. The Principal Underwriter will furnish the names of
Authorized Firms to an investor upon request. A Fund may suspend the offering of
shares at any time and may refuse an order for the purchase of shares. Shares of
each Fund are offered for sale only in States where such shares may be legally
sold.
The sales charge may vary depending on the size of the purchase and the
number of shares of Eaton Vance funds the investor may already own, any
arrangement to purchase additional shares during a 13-month period or special
purchase programs. Complete details of how investors may purchase shares at
reduced sales charges under a Statement of Intention, Right of Accumulation, or
various employee benefit plans are available from Authorized Firms or the
Principal Underwriter.
The current sales charges are:
SALES CHARGE SALES CHARGE
AS PERCENTAGE OF AS PERCENTAGE OF
AMOUNT OF PURCHASE OFFERING PRICE AMOUNT INVESTED
Under $100,000 2.50% 2.56%
$100,000 but less than $250,000 2.00 2.04
$250,000 but less than $500,000 1.50 1.52
$500,000 but less than $1,000,000 1.25 1.27
$1,000,000 or more 0* 0*
*No sales charge is payable at the time of purchase on investments of $1 million
or more. A contingent deferred sales charge ("CDSC") of 1% will be imposed on
such investments, as described below, in the event of certain redemption
transactions within 18 months of purchase.
The current dealer commission is:
DEALER COMMISSION
AS PERCENTAGE OF
AMOUNT OF PURCHASE OFFERING PRICE
Under $100,000 .................................................. 2.75%
$100,000 but less than $250,000 ................................. 2.25
$250,000 but less than $500,000 ................................. 1.75
$500,000 but less than $1,000,000 ............................... 1.50
$1,000,000 or more .............................................. 0**
**The Principal Underwriter may pay a commission to Authorized Firms who
initiate and are responsible for purchases of $1 million or more as follows:
1.00% on sales up to $2 million, plus 0.80% on the next $1 million, 0.20% on
the next $2 million and 0.08% on the excess over $5 million.
The Principal Underwriter may at times allow discounts up to the full sales
charge. During periods when the discount includes the full sales charge, such
Firms may be deemed to be underwriters as that term is defined in the Securities
Act of 1933.
The Principal Underwriter may, from time to time, at its own expense,
provide additional incentives to Authorized Firms which employ registered
representatives who sell a minimum dollar amount of a Fund's shares and/or
shares of other funds distributed by the Principal Underwriter. In some
instances, such additional incentives may be offered only to certain Authorized
Firms whose representatives are expected to sell significant amounts of shares.
An initial investment in a Fund must be at least $1,000. Once an account has
been established the investor may send investments of $50 or more at any time
directly to the Funds' transfer agent as follows: The Shareholder Services
Group, Inc., BOS725, P.O. Box 1559, Boston, MA 02104. The $1,000 minimum initial
investment is waived for Bank Draft Investing accounts, which may be established
with an investment of $50 or more. See "Eaton Vance Shareholder Services".
Shares of a Fund may be sold at net asset value to current and retired
Directors and Trustees of Eaton Vance funds, including the Portfolios; to
officers and employees and clients of Eaton Vance and its affiliates; to
registered representatives and employees of Authorized Firms; bank employees who
refer customers to registered representatives of Authorized Firms; and to such
persons' spouses and children under the age of 21 and their beneficial accounts.
Shares may also be issued at net asset value in connection with the merger of an
investment company with a Fund and 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.
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 at the applicable public offering price as shown above. The minimum
value of securities or securities and cash accepted for deposit is $5,000.
Securities accepted will be sold by IBT as agent for the account of their owner
on the day of their receipt by IBT 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 per Fund share on the day such proceeds are received. EATON VANCE
WILL USE REASONABLE EFFORTS TO OBTAIN THE 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 Authorized
Firm, together with a completed and signed Letter of Transmittal in approved
form (available from Authorized Firms), as follows:
IN THE CASE OF BOOK ENTRY:
Deliver through Depository Trust Co.
Broker 2212
Investors Bank & Trust Company
For A/C EV Traditional [State name] Limited Maturity Tax Free Fund
IN THE CASE OF PHYSICAL DELIVERY:
Investors Bank & Trust Company
Attention: EV Traditional [State name] Limited Maturity Tax Free Fund
Physical Securities Processing Settlement Area
89 South Street
Boston, MA 02111
Investors who are contemplating an exchange of securities for shares of a
Fund, or their representatives, must contact Eaton Vance to determine whether
the securities are acceptable before forwarding such securities to IBT. Eaton
Vance reserves the right to reject any securities. Exchanging securities for
Fund 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 for Fund shares.
IF YOU DON'T HAVE AN AUTHORIZED FIRM, EATON VANCE CAN RECOMMEND ONE.
HOW TO REDEEM FUND SHARES
- --------------------------------------------------------------------------------
A SHAREHOLDER MAY REDEEM FUND SHARES BY DELIVERING TO THE SHAREHOLDER SERVICES
GROUP, INC., BOS725, P.O. BOX 1559, BOSTON, MASSACHUSETTS 02104, during its
business hours a written request for redemption in good order, plus any share
certificates with executed stock powers. The redemption price will be based on
the net asset value per share of the applicable Fund next computed after such
delivery. Good order means that all relevant documents must be endorsed by the
record owner(s) exactly as the shares are registered and the signature(s) must
be guaranteed by a member of either the Securities Transfer Association's STAMP
program or the New York Stock Exchange's Medallion Signature Program, or certain
banks, savings and loan institutions, credit unions, securities dealers,
securities exchanges, clearing agencies and registered securities associations
as required by a regulation of the Securities and Exchange Commission (the
"Commission") and acceptable to The Shareholder Services Group, Inc. In
addition, in some cases, good order may require the furnishing of additional
documents such as where shares are registered in the name of a corporation,
partnership or fiduciary.
Within seven days after receipt of a redemption request in good order by The
Shareholder Services Group, Inc., a Fund will make payment in cash for the net
asset value of the shares as of the date determined above and reduced by the
amount of any Federal income tax required to be withheld. Although each Fund
normally expects to make payment 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 by that Fund
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.
To sell shares at their net asset value through an Authorized Firm (a
repurchase), a shareholder can place a repurchase order with the Authorized
Firm, which may charge a fee. The value of such shares is based upon the net
asset value calculated after EVD, as the Funds' agent, receives the order. It is
the Authorized Firm's responsibility to transmit promptly repurchase orders to
EVD. Throughout this Prospectus, the word "redemption" is generally meant to
include a repurchase.
If shares were recently purchased, the proceeds of redemption (or
repurchase) will not be sent until the check (including a certified or cashier's
check) received for the shares purchased has cleared. Payment for shares
tendered for redemption may be delayed up to 15 days from the purchase date when
the purchase check has not yet cleared. Redemptions or repurchases may result in
a taxable gain or loss.
Due to the high cost of maintaining small accounts, each Fund reserves the
right to redeem accounts with balances of less than $1,000. Prior to such a
redemption, shareholders will be given 60 days written notice to make an
additional purchase. Thus, an investor making an initial investment of $1,000
would not be able to redeem shares without being subject to this policy.
However, no such redemption would be required if the cause of the low account
balance was a reduction in the net asset value of Fund shares.
If shares have been purchased at net asset value with no initial sales
charge by virtue of the purchase having been in the amount of $1 million or more
and are redeemed within 18 months after the end of the calendar month in which
the purchase was made, a CDSC of 1% will be imposed on such redemption. The CDSC
will be retained by the Principal Underwriter.
The CDSC will be imposed on an amount equal to the lesser of the current
market value or the original purchase price of the shares redeemed. Accordingly,
no CDSC will be imposed on increases in account value above the initial purchase
price, including any dividends or distributions that have been reinvested in
additional shares. In determining whether a CDSC is applicable to a redemption,
the calculation will be made in a manner that results in the lowest possible
rate being charged. It will be assumed that redemptions are made first from any
shares in the shareholder's account that are not subject to a CDSC.
The CDSC is waived for redemptions involving certain liquidation, merger or
acquisition transactions involving other investment companies. If a shareholder
reinvests redemption proceeds within the 30-day period and in accordance with
the conditions set forth under "Eaton Vance Shareholder Services -- Reinvestment
Privilege," the shareholder's account will be credited with the amount of any
CDSC paid on such redeemed shares.
REPORTS TO SHAREHOLDERS
- --------------------------------------------------------------------------------
EACH FUND WILL ISSUE TO ITS SHAREHOLDERS SEMI-ANNUAL AND ANNUAL REPORTS
CONTAINING FINANCIAL STATEMENTS. Financial statements included in annual reports
are audited by the Funds' independent certified public accountants. Shortly
after the end of each year, each Fund will furnish its shareholders with
information necessary for preparing Federal and State tax returns.
THE LIFETIME INVESTING ACCOUNT/DISTRIBUTION OPTIONS
- --------------------------------------------------------------------------------
AFTER AN INVESTOR MAKES AN INITIAL PURCHASE OF FUND SHARES, THE FUNDS' TRANSFER
AGENT, THE SHAREHOLDER SERVICES GROUP, INC., WILL SET UP A LIFETIME INVESTING
ACCOUNT FOR THE INVESTOR ON THE APPLICABLE FUND'S RECORDS. This account is a
complete record of all transactions between the investor and the Fund which at
all times shows the balance of shares owned. A Fund will not issue share
certificates except upon request.
At least quarterly, shareholders will receive a statement showing complete
details of any transaction and the current share balance in the account. THE
LIFETIME INVESTING ACCOUNT ALSO PERMITS A SHAREHOLDER TO MAKE ADDITIONAL
INVESTMENTS IN SHARES BY SENDING A CHECK FOR $50 OR MORE to The Shareholder
Services Group, Inc.
Any questions concerning a shareholder's account or services available may
be directed by telephone to EATON VANCE SHAREHOLDER SERVICES at 800-225-6265,
extension 2, or in writing to The Shareholder Services Group, Inc., BOS725, P.O.
Box 1559, Boston, MA, 02104 (please provide your name and account number).
THE FOLLOWING DISTRIBUTION OPTIONS WILL BE AVAILABLE TO ALL LIFETIME
INVESTING ACCOUNTS and may be changed as often as desired by written notice to
the Funds' dividend disbursing agent, The Shareholder Services Group, Inc.,
BOS725, P.O. Box 1559, Boston, MA 02104. The currently effective option will
appear on each confirmation statement.
Share Option -- Dividends and capital gains will be reinvested in additional
shares.
Income Option -- Dividends will be paid in cash, and capital gains will be
reinvested in additional shares.
Cash Option -- Dividends and capital gains will be paid in cash.
The Share Option will be assigned if no other option is specified.
Distributions, including those reinvested, will be reduced by any withholding
required under the Federal income tax laws.
If the Income Option or Cash Option has been selected, dividend and/or
capital gains distribution checks which are returned by the United States Postal
Service as not deliverable or which remain uncashed for six months or more will
be reinvested in the account in shares at the then current net asset value.
Furthermore, the distribution option on the account will be automatically
changed to the Share Option until such time as the shareholder selects a
different option.
DISTRIBUTION INVESTMENT OPTION. In addition to the distribution options set
forth above, dividends and/or capital gains may be invested in additional shares
of another Eaton Vance fund. Before selecting this option, a shareholder should
obtain a prospectus of the other Eaton Vance fund and consider its objectives
and policies carefully.
"STREET NAME" ACCOUNTS. If shares of a Fund are held in a "street name"
account with an Authorized Firm, all recordkeeping, transaction processing and
payments of distributions relating to the beneficial owner's account will be
performed by the Authorized Firm, and not by the Fund and its transfer agent.
Since the Fund will have no record of the beneficial owner's transactions, a
beneficial owner should contact the Authorized Firm to purchase, redeem or
exchange shares, to make changes in or give instructions concerning the account,
or to obtain information about the account. The transfer of shares in a "street
name" account to an account with another dealer or to an account directly with a
Fund involves special procedures and will require the beneficial owner to obtain
historical purchase information about the shares in the account from the
Authorized Firm. Before establishing a "street name" account with an investment
firm, or transferring the account to another investment firm, an investor
wishing to reinvest distributions should determine whether the firm which will
hold the shares allows reinvestment of distributions in "street name" accounts.
UNDER A LIFETIME INVESTING ACCOUNT A SHAREHOLDER CAN MAKE ADDITIONAL INVESTMENTS
IN SHARES OF A FUND BY SENDING A CHECK FOR $50 OR MORE.
THE EATON VANCE EXCHANGE PRIVILEGE
- --------------------------------------------------------------------------------
Shares of a Fund may currently be exchanged for shares of any of the following
funds: Eaton Vance Cash Management Fund, Eaton Vance Income Fund of Boston,
Eaton Vance Municipal Bond Fund L.P., Eaton Vance Tax Free Reserves and any fund
in the Eaton Vance Traditional Group of Funds on the basis of the net asset
value per share of each fund at the time of the exchange, provided that such
exchange offers are available only in States where shares of the fund being
acquired may be legally sold.
Each exchange must involve shares which have a net asset value of at least
$1,000. The exchange privilege may be changed or discontinued without penalty.
Shareholders will be given sixty (60) days notice prior to any termination or
material amendment of the exchange privilege. The Funds do not permit the
exchange privilege to be used for "Market Timing" and may terminate the exchange
privilege for any shareholder account engaged in Market Timing activity. Any
shareholder account for which more than two round-trip exchanges are made within
any twelve month period will be deemed to be engaged in Market Timing.
Furthermore, a group of unrelated accounts for which exchanges are entered
contemporaneously by a financial intermediary will be considered to be engaged
in Market Timing.
Shares of a Fund which are subject to a CDSC may be exchanged into any of
the above funds without incurring the CDSC. The shares acquired in an exchange
may be subject to a CDSC upon redemption. For purposes of computing the CDSC
payable upon redemption of shares acquired in an exchange, the holding period of
the original shares is added to the holding period of the shares acquired in the
exchange.
The Shareholder Services Group, Inc. makes exchanges at the next determined
net asset value after receiving an exchange request in good order (see "How to
Redeem Fund Shares"). Consult The Shareholder Services Group, Inc. for
additional information concerning the exchange privilege. Applications and
prospectuses of other funds are available from Authorized Firms or the Principal
Underwriter. The prospectus for each fund describes its investment objectives
and policies, and shareholders should obtain a prospectus and consider these
objectives and policies carefully before requesting an exchange.
Shares of certain other funds for which Eaton Vance acts as investment
adviser or administrator may be exchanged for Fund shares at their respective
net asset values per share, but subject to any restrictions or qualifications
set forth in the current prospectus of any such fund.
Telephone exchanges are accepted by The Shareholder Services Group, Inc.
provided the investor has not disclaimed in writing the use of the privilege. To
effect such exchanges, call The Shareholder Services Group, Inc. at 800-
262-1122 or, within Massachusetts, 617-573-9403, Monday through Friday, 9:00
a.m. to 4:00 p.m. (Eastern Standard Time). Shares acquired by telephone exchange
must be registered in the same name(s) and with the same address as the shares
being exchanged. Neither the Funds, the Principal Underwriter nor The
Shareholder Services Group, Inc. will be responsible for the authenticity of
exchange instructions received by telephone, provided that reasonable procedures
to confirm that instructions communicated are genuine have been followed.
Telephone instructions will be tape recorded. In times of drastic economic or
market changes, a telephone exchange may be difficult to implement. An exchange
may result in a taxable gain or loss.
EATON VANCE SHAREHOLDER SERVICES
- --------------------------------------------------------------------------------
THE FUNDS OFFER THE FOLLOWING SERVICES, WHICH ARE VOLUNTARY, INVOLVE NO EXTRA
CHARGE, AND MAY BE CHANGED OR DISCONTINUED WITHOUT PENALTY AT ANY TIME. Full
information on each of the services described below and an application, where
required, are available from Authorized Firms or the Principal Underwriter. The
cost of administering such services for the benefit of shareholders who
participate in them is borne by the applicable Fund as an expense to all
shareholders.
INVEST-BY-MAIL -- FOR PERIODIC SHARE ACCUMULATION: Once the $1,000 minimum
investment has been made, checks of $50 or more payable to the order of the Fund
being purchased may be mailed directly to The Shareholder Services Group, Inc.,
BOS725, P.O. Box 1559, Boston, MA 02104 at any time -- whether or not dividends
are reinvested. The name of the shareholder, the Fund and the account number
should accompany each investment.
BANK DRAFT INVESTING -- FOR REGULAR SHARE ACCUMULATION: Cash investments of $50
or more may be made through the shareholder's checking account via bank draft
each month or quarter. The $1,000 minimum initial investment and small account
redemption policy are waived for these accounts.
STATEMENT OF INTENTION: Purchases of $100,000 or more made over a 13-month
period are eligible for reduced sales charges. See "Statement of Intention and
Escrow Agreement."
RIGHT OF ACCUMULATION: Purchases may qualify for reduced sales charges when the
current market value of holdings (shares at current offering price), plus new
purchases, reaches $100,000 or more. Shares of the Eaton Vance funds mentioned
under "The Eaton Vance Exchange Privilege" may be combined under the Statement
of Intention and Right of Accumulation.
WITHDRAWAL PLAN: A shareholder may draw on shareholdings systematically with
monthly or quarterly checks in an amount specified by the shareholder. A minimum
deposit of $5,000 in shares is required.
REINVESTMENT PRIVILEGE: A SHAREHOLDER WHO HAS REPURCHASED OR REDEEMED SHARES MAY
REINVEST ANY PORTION OR ALL OF THE REPURCHASE OR REDEMPTION PROCEEDS (PLUS THAT
AMOUNT NECESSARY TO ACQUIRE A FRACTIONAL SHARE TO ROUND OFF THE PURCHASE TO THE
NEAREST FULL SHARE) IN SHARES OF A FUND, or, provided that the shares
repurchased or redeemed have been held for at least 30 days, in shares of any of
the other funds offered by the Principal Underwriter with an initial sales
charge at net asset value, provided that the reinvestment is effected within 30
days after such repurchase or redemption. Shares are sold to a reinvesting
shareholder at the next determined net asset value following timely receipt of a
written purchase order by the Principal Underwriter or by the fund whose shares
are to be purchased (or by such fund's Transfer Agent). The privilege is also
available to holders of shares of the other funds offered with an initial sales
charge by the Principal Underwriter who wish to reinvest such redemption or
repurchase proceeds in shares of a Fund. If a shareholder reinvests redemption
proceeds within the 30 day period the shareholder's account will be credited
with the amount of any CDSC paid on such redeemed shares. A reinvesting
shareholder may realize a gain or loss for Federal tax purposes as a result of
such repurchase or redemption. Special rules may apply to the computation of
gain or loss and to the deduction of loss on a repurchase or redemption followed
by a reinvestment. See "Distributions and Taxes". Shareholders should consult
their tax advisers concerning the tax consequences of reinvestments.
DISTRIBUTIONS AND TAXES
- --------------------------------------------------------------------------------
SUBSTANTIALLY ALL OF THE INVESTMENT INCOME ALLOCATED TO A FUND BY ITS
CORRESPONDING PORTFOLIO, LESS THE FUND'S DIRECT AND ALLOCATED EXPENSES, WILL BE
DECLARED DAILY AS A DISTRIBUTION TO FUND SHAREHOLDERS OF RECORD AT THE TIME OF
DECLARATION. Such distributions, whether taken in cash or reinvested in
additional shares, will ordinarily be paid on the last day of each month or the
next business day thereafter. Each Fund anticipates that for tax purposes the
entire distribution, whether taken in cash or reinvested in additional shares,
will constitute tax-exempt income to shareholders, except for the proportionate
part of the distribution that may be considered taxable income if the Fund has
taxable income during the calendar year. Shareholders reinvesting the monthly
distribution should continue to treat the amount of the entire distribution as
the tax cost basis of the additional shares acquired by reason of such
reinvestment. Daily distribution crediting will commence on the day that
collected funds for the purchase of Fund shares are available at the Transfer
Agent. Shareholders of a Fund will receive timely Federal income tax information
as to the tax-exempt or taxable status of all distributions made by the Fund
during the calendar year. A Fund's net realized capital gains, if any, consist
of the net realized capital gains allocated to the Fund by its corresponding
Portfolio for tax purposes, after taking into account any available capital loss
carryovers; a Fund's net realized capital gains, if any, will be distributed at
least once a year, usually in December.
Sales charges paid upon a purchase of Fund shares 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 shares of a
Fund or of another fund are subsequently acquired pursuant to a Fund's
reinvestment or exchange privilege. In addition, losses realized on a redemption
of Fund shares may be disallowed under certain "wash sale" rules if within a
period beginning 30 days before and ending 30 days after the date of redemption
other shares of a Fund are acquired. Any disregarded or disallowed amounts will
result in an adjustment to the shareholder's tax basis in some or all of any
other shares acquired.
In order to qualify as a regulated investment company under the Internal
Revenue Code (the "Code"), each Fund must satisfy certain requirements relating
to the sources of its income, the distribution of its income and the
diversification of its assets. In satisfying these requirements, each Fund will
treat itself as owning its proportionate share of each of its corresponding
Portfolio's assets and as entitled to the income of the Portfolio properly
attributable to such share.
AS A REGULATED INVESTMENT COMPANY UNDER THE CODE, EACH FUND DOES NOT PAY FEDERAL
INCOME OR EXCISE TAXES TO THE EXTENT THAT IT DISTRIBUTES TO SHAREHOLDERS ITS NET
INVESTMENT INCOME AND NET REALIZED CAPITAL GAINS IN ACCORDANCE WITH THE TIMING
REQUIREMENTS IMPOSED BY THE CODE. AS PARTNERSHIPS UNDER THE CODE, THE PORTFOLIOS
DO NOT PAY FEDERAL INCOME OR EXCISE TAXES.
Distributions of interest on certain municipal obligations constitute a tax
preference item under the alternative minimum tax provisions applicable to
individuals and corporations (see page 7). Distributions of taxable income
(including a portion of any original issue discount with respect to certain
stripped municipal obligations and stripped coupons and accretion of certain
market discount) and net short-term capital gains will be taxable to
shareholders as ordinary income. Distributions of long-term capital gains are
taxable to shareholders as such for Federal income tax purposes, regardless of
the length of time Fund shares have been owned by the shareholder. Distributions
are taxed in the manner described above whether paid in cash or reinvested in
additional shares of a Fund.
Tax-exempt distributions received from a Fund are includable in the tax base
for determining the taxability of social security and railroad retirement
benefits.
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 distribution 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 would likely be
interpreted to include private activity bonds issued to finance similar
facilities.
See the Appendix to this Prospectus for information concerning State taxes.
Shareholders should consult their own tax advisers with respect to the State,
local and foreign tax consequences of investing in a Fund.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
FROM TIME TO TIME, EACH FUND MAY ADVERTISE ITS YIELD AND/OR AVERAGE ANNUAL TOTAL
RETURN. The current yield for each Fund will be calculated by dividing the net
investment income per share during a recent 30 day period by the maximum
offering price per share of the Fund on the last day of the period and
annualizing the resulting figure. A taxable-equivalent yield is computed by
using the tax-exempt yield figure and dividing by 1 minus the tax rate. Each
Fund's average annual total return is determined by multiplying a hypothetical
initial purchase order of $1,000 by the average annual compounded rate of return
(including capital appreciation/depreciation, and dividends and distributions
paid and reinvested) for the stated period and annualizing the result. The
average annual total return calculation assumes the maximum sales charge is
deducted from the initial $1,000 purchase order and that all dividends are
reinvested at the net asset value on the reinvestment dates during the period.
The Funds may publish annual and cumulative total return figures from time to
time.
The Funds may also publish the distribution rate and/or the effective
distribution rate. Each Fund's distribution rate is computed by dividing the
most recent monthly distribution per share annualized, by the current maximum
offering price per share. Each Fund's effective distribution rate is computed by
dividing the distribution rate by the ratio used to annualize the most recent
monthly distribution and reinvesting the resulting amount for a full year on the
basis of such ratio. The effective distribution rate will be higher than the
distribution rate because of the compounding effect of the assumed reinvestment.
Investors should note that a Fund's yield is calculated using a standardized
formula the income component of which is computed from the yields to maturity of
all debt obligations held by the Portfolio based on prescribed methods (with all
purchases and sales of securities during such period included in the income
calculation on a settlement date basis), whereas the distribution rate is based
on a Fund's last monthly distribution which tends to be relatively stable and
may be more or less than the amount of net investment income and short-term
capital gain actually earned by the Fund during the month (see "Distributions
and Taxes").
Investors should note that the investment results of a Fund will fluctuate
over time, and any presentation of the Fund's current yield or total return for
any prior period should not be considered a representation of what an investment
may earn or what an investor's yield or total return may be in any future
period. If the expenses of a Fund or its corresponding Portfolio are paid by
Eaton Vance, the Fund's performance will be higher.
STATEMENT OF INTENTION AND ESCROW AGREEMENT
- --------------------------------------------------------------------------------
TERMS OF ESCROW. If the investor, on an application, makes a Statement of
Intention to invest a specified amount over a thirteen month period, then out of
the initial purchase (or subsequent purchases if necessary) 5% of the dollar
amount specified on the application shall be held in escrow by the escrow agent
in the form of shares (computed to the nearest full share at the public offering
price applicable to the initial purchase hereunder) registered in the investor's
name. All income dividends and capital gains distributions on escrowed shares
will be paid to the investor or to the investor's order.
When the minimum investment so specified is completed, the escrowed shares
will be delivered to the investor. If the investor has an accumulation account
the shares will remain on deposit under the account.
If total purchases under this Statement of Intention are less than the
amount specified, the investor will promptly remit to EVD any difference between
the sales charge on the amount specified and on the amount actually purchased.
If the investor does not within 20 days after written request by EVD or the
Authorized Firm pay such difference in sales charge, the escrow agent will
redeem an appropriate number of the escrowed shares in order to realize such
difference. Full shares remaining after any such redemption together with any
excess cash proceeds of the shares so redeemed will be delivered to the investor
or to the investor's order by the escrow agent.
In signing the application, the investor irrevocably constitutes and
appoints the escrow agent as attorney to surrender for redemption any or all
escrowed shares with full power of substitution in the premises.
PROVISION FOR RETROACTIVE PRICE ADJUSTMENT. If total purchases made under this
Statement are large enough to qualify for a lower sales charge than that
applicable to the amount specified, all transactions will be computed at the
expiration date of this Statement to give effect to the lower charge. Any
difference in sales charge will be refunded to the investor in cash, or applied
to the purchase of additional shares at the lower charge if specified by the
investor. This refund will be made by the Authorized Firm and by EVD. If at the
time of the recomputation a firm other than the original firm is placing the
orders, the adjustment will be made only on those shares purchased through the
firm then handling the account.
APPENDIX
STATE SPECIFIC INFORMATION
Because each Portfolio will normally invest at least 65% of its assets in
the obligations within its corresponding State, it is susceptible to factors
affecting that State. Each Portfolio may also invest up to 5% of its net assets
in obligations issued by the governments of Guam and the U.S. Virgin Islands and
up to 35% of its assets in obligations issued by the government of Puerto Rico.
Set forth below is certain economic and tax information concerning the States in
which the Portfolios invest, Puerto Rico, Guam and the U.S. Virgin Islands
(the"Territories"). The bond ratings of a State or Territory provided below are
current as of the date of this 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.
FLORIDA. Florida's financial operations are considerably different than most
other states because, under the State's constitution, there is no state income
tax. The lack of an 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. In April, 1993 the legislature passed the 1993-94
budget which did not contain the $630 million in new taxes proposed by Governor
Chiles to fund schools, jails and public welfare programs. Revenues are
projected to increase 8.4% and expenditures 12%. Unencumbered reserves are
projected to be $276 million, or 2.1% of expenditures for fiscal year 1994. A
$38.6 billion budget was passed for fiscal 1995. Unemployment in the State for
March 1994 was 7.3% compared to the national unemployment rate of 6.5%.
In 1993, the State constitution was amended to limit the annual growth in
the assessed valuation of residential property and which, over time, could
constrain the growth in property taxes, a major revenue source for local
governments. While no immediate ratings implications are expected, the amendment
could have a negative impact on the financial performance of local governments
over time and lead to ratings revisions which may have a negative impact on the
prices of affected bonds.
General obligations of Florida are rated Aa, AA and AA by Moody's, S&P and
Fitch, respectively. S&P presently regards the outlook for the State as stable.
FLORIDA TAXES. Based on an opinion of tax counsel, management believes that
shareholders of the Florida Fund that are subject to the Florida intangibles tax
will not be required to include the value of their Florida Fund shares in their
taxable intangible property if all of the Florida Portfolio's investments on the
annual assessment date are obligations that would be exempt from such tax if
held directly by such shareholders, such as Florida and U.S. Government
obligations ("Florida obligations"). A ruling confirming this tax treatment is
being requested from the Florida Department of Revenue. The Florida Portfolio
will normally attempt to invest substantially all of its assets in Florida
obligations, and it will ensure that all of its assets held on the annual
assessment date are exempt from the Florida intangibles tax. Accordingly, the
value of the Florida Fund shares held by a shareholder should under normal
circumstances be exempt from the Florida intangibles tax.
NEW YORK. New York is the second most populous state in the nation and has a
relatively high level of personal wealth. The State's economy is diverse with a
comparatively large share of the nation's finance, insurance, transportation,
communications and services employment, and a comparatively small share of the
nation's farming and mining activity. The State's general credit standing has
historically reflected its diverse and substantial economic base. However, the
loss of more than 350,000 jobs since early 1991, as well as chronic annual
fiscal deficits and increasing debt levels, have undermined this strength. In
fiscal year 1993, however, the State began the process of financial reform. New
York closed the 1993 fiscal year with a general fund operating surplus.
The fiscal stability of New York State is related, 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. To the extent State agencies and local governments
require State assistance to meet their financial obligations, the ability of the
State to meet its own obligations as they become due or to obtain additional
financing could be adversely affected.
Like the State, New York City has experienced financial difficulties in
recent years owing, in part, to lower than anticipated revenues. Because New
York City taxes comprise 40% of the State's tax base, the City's difficulties
adversely affect the State. Both the State and the City will be constrained in
addressing future fiscal problems by their high current level of taxes.
In June 1994, the Governor approved the 1994-1995 budget, which reduces
taxes by $476 million in the 1994-1995 fiscal year and by more than $1.6 billion
when fully implemented. A reduction in both State and City personal income taxes
scheduled to take effect in 1994 has been deferred for one year as a part of the
1994-1995 budget.
Constitutional challenges to State laws have limited the amount of taxes
which political subdivisions can impose on real property, which may have an
adverse effect on the ability of issuers to pay obligations supported by such
taxes. A variety of additional court actions have been brought against the State
and certain agencies and municipalities relating to financings, amount of real
estate tax, use of tax revenues and other matters which could adversely affect
the ability of the State or such agencies or municipalities to pay their
obligations.
New York's general obligations are rated A, A- and A+ by Moody's, S&P and
Fitch, respectively. S&P currently assesses the rating outlook for New York
obligations as "positive." New York City obligations are rated Baa1, A- and A-
by Moody's, S&P and Fitch, respectively.
NEW YORK TAXES. Based upon the advice of tax counsel, the management of the
New York Fund believes that under New York law dividends paid by the New York
Fund are exempt from New York State and New York City income tax for 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
obligations exempt from regular Federal income tax, and New York State and City
income taxes. Other distributions from the New York Fund, including
distributions derived from net short-term and long-term capital gains, are
generally not exempt from New York State or City personal income tax.
PUERTO RICO, GUAM, AND THE U.S. VIRGIN ISLANDS. Each Portfolio may also
invest in obligations of the governments of Puerto Rico, the U.S. Virgin Islands
and Guam. No Portfolio will invest more than 5% of its net assets in the
obligations of each of the Virgin Islands and Guam or invest more than 35% of
its net assets in the obligations of Puerto Rico. Currently, S&P rates Puerto
Rico general obligations debt A, while Moody's rates it Baa1; these ratings have
been in place since 1956 and 1976, respectively. Reliance on nonrecurring
revenues and economic weakness led S&P to change its outlook from stable to
negative. The Portfolio may be adversely affected by local political and
economic conditions and developments within Puerto Rico affecting the issuers of
such obligations. The economy of Puerto Rico is dominated by the manufacturing
and service sectors. Although the economy of Puerto Rico expanded significantly
from fiscal 1984 through fiscal 1990, the rate of this expansion slowed during
fiscal years 1991, 1992 and 1993. Growth in fiscal 1994 will depend on several
factors, including the state of the U.S. economy and the relative stability in
the price of oil, the exchange rate of the U.S. dollar and the cost of
borrowing. Although the Puerto Rico unemployment rate has declined substantially
since 1985, the seasonally adjusted unemployment rate for August, 1994 was
approximately 14.5%. The North American Free Trade Agreement (NAFTA), which
became effective January 1, 1994, could lead to the loss of Puerto Rico's lower
salaried or labor intensive jobs to Mexico.
<PAGE>
PORTFOLIO INVESTMENT ADVISER
Boston Management and Research
24 Federal Street
Boston, MA 02110
FUND ADMINISTRATOR
Eaton Vance Management
24 Federal Street
Boston, MA 02110
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc.
24 Federal Street
Boston, MA 02110
(800) 225-6265
CUSTODIAN
Investors Bank & Trust Company
24 Federal Street
Boston, MA 02110
TRANSFER AGENT
The Shareholder Services Group, Inc.
BOS725
P.O. Box 1559
Boston, MA 02104
(800) 262-1122
AUDITORS
Deloitte & Touche LLP
125 Summer Street
Boston, MA 02110
EV TRADITIONAL LIMITED MATURITY
TAX FREE FUNDS
24 FEDERAL STREET
BOSTON, MA 02110
T-LC11/25P1P
EV TRADITIONAL FLORIDA
LIMITED MATURITY TAX FREE FUND
EV TRADITIONAL
NEW YORK
LIMITED MATURITY
TAX FREE FUND
PROSPECTUS
NOVEMBER 25, 1994
