EATON VANCE MUNICIPALS TRUST II, 485BPOS, 1999-05-26

EATON VANCE MUNICIPALS TRUST II
485BPOS, 1999-05-26

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As filed with the Securities and Exchange Commission on May 26, 1999
1933 Act File No. 33-71320
1940 Act File No. 811-8134
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933 [X]
POST-EFFECTIVE AMENDMENT NO. 13 [X]
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 14 [X]

EATON VANCE MUNICIPALS TRUST II
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(Exact Name of Registrant as Specified in Charter)

THE EATON VANCE BUILDING
255 STATE STREET, BOSTON, MASSACHUSETTS 02109
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(Address of Principal Executive Offices)

(617) 482-8260
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(registrant's telephone number)

ALAN R. DYNNER
THE EATON VANCE BUILDING, 255 STATE STREET, BOSTON, MASSACHUSETTS 02109
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(Name and Address of Agent for Service)

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

[ ] immediately upon filing pursuant to paragraph (b)

[X] on June 1, 1999 pursuant to paragraph (b)

[ ] 60 days after filing pursuant to paragraph (a)(1)

[ ] on (date) pursuant to paragraph (a)(1)

[ ] 75 days after filing pursuant to paragraph (a)(2)

[ ] on (date) pursuant to paragraph (a)(2)

If appropriate, check the following box:

[ ] this post effective amendment designates a new effective date for a
previously filed post-effective amendment.

Florida Insured Municipals Portfolio, Hawaii Municipals Portfolio, Kansas
Municipals Portfolio and High Yield Municipals Portfolio have also executed this
Registration Statement.
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{LOGO} Mutual Funds
EATON VANCE for People
Mutual Funds Who Pay
Taxes

Eaton Vance Florida Insured Municipals Fund
Eaton Vance Hawaii Municipals Fund
Eaton Vance Kansas Municipals Fund

Mutual funds providing tax-exempt income

Prospectus Dated
June 1, 1999

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

Information in this prospectus
Page Page
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Fund Summaries 2 Sales Charges 9
Investment Objectives & Principal Redeeming Shares 11
Policies and Risks 6 Shareholder Account
Management and Organization 7 Features 11
Valuing Shares 8 Tax Information 12
Purchasing Shares 9 Financial Highlights 14
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This prospectus contains important information about the Funds and the services
available to shareholders. Please save it for reference.

<PAGE>

FUND SUMMARIES

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

Investment Objectives and Principal Strategies

The purpose of each Fund is to provide current income exempt from regular
federal income tax and from particular state income or other taxes. The Hawaii
Fund and Kansas Funds primarily invest in investment grade municipal obligations
but may also invest in lower rated obligations. The Florida Insured Fund
primarily invests in high grade municipal obligations which are insured as to
the timely payment of principal and interest. Each Fund will normally invest in
municipal obligations with maturities of ten years or more. Each Fund may
purchase derivative instruments (such as inverse floaters and futures contracts)
and bonds that do not require the periodic payment of interest. A portion of the
Fund's distributions generally will be subject to alternative minimum tax.

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

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

Principal Risk Factors

Each Fund is non-diversified, which means that it may invest a larger portion of
its assets in the obligations of a limited number of issuers than a diversified
fund. Because a significant portion of assets is invested in obligations of
issuers located in a single state, the Fund is sensitive to factors affecting
that state, such as changes in the economy, decreases in tax collection or the
tax base, legislation which limits taxes and changes in issuer credit ratings.

Because lower quality obligations are more sensitive to the financial soundness
of their issuers than higher quality obligations, Hawaii Fund and Kansas Fund
shares may fluctuate more in value than shares of a fund investing solely in
high quality obligations. The credit ratings assigned a state's general
obligations (if any) by Standard & Poor's Ratings Group ("S&P"), Moody's
Investors Service, Inc. ("Moody's") and Fitch IBCA ("Fitch") are contained in
the Fund-specific summaries that follow this page.

Each Fund may concentrate in certain types of municipal obligations (such as
industrial development bonds, housing bonds, hospital bonds or utility bonds),
so Fund shares could be affected by events that adversely affect a particular
sector. The use of deriviatives is subject to certain limitations and may expose
the Fund to increased risk of principal loss. Inverse floaters are volatile and
involve leverage risk.

No Fund is a complete investment program and you may lose money by investing in
a Fund. An investment in a Fund is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.

2
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EATON VANCE FLORIDA INSURED MUNICIPALS FUND

The Florida Insured Fund's investment objective is to provide current income
exempt from regular federal income taxes in the form of an investment exempt
from Florida intangibles tax. The Fund currently invests its assets in the
Florida Insured Municipals Portfolio (the "Florida Insured Portfolio"). Florida
general obligations currently are rated Aa2, AA+ and AA by Moody's, S&P and
Fitch, respectively.

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

17.53% 1.36% 8.79% 5.29%
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1995 1996 1997 1998

The Fund's highest quarterly total return was 8.26% for the quarter ended March
31, 1995, and its lowest quarterly return was -3.11% for the quarter ended March
31, 1996. The year-to-date total return through the end of the most recent
calendar quarter (January 1, 1999 to March 31, 1999) was 1.13%. For the 30 days
ended January 31, 1999, the SEC yield and SEC tax-equivalent yield for Class A
shares (assuming a combined state and federal tax rate of 34.11%) were 4.12% and
4.85%, respectively, and for Class B shares (assuming a combined state and
federal tax rate of 34.63%) were 3.53% and 5.67%, respectively. For current
yield information call 1-800-225-6265.

Average Annual Total Return One Life of
as of December 31, 1998 Year Fund
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Class A Shares 1.09% 7.29%
Class B Shares 0.29% 7.13%
Lehman Brothers Municipal Bond Index 6.48% 7.84%

These returns reflect the maximum sales charge for Class A (4.75%) and any
applicable CDSC for Class B. Life of Fund returns are calculated from March 31,
1994. The Lehman Brothers Municipal Bond Index is an unmanaged index of
municipal bonds. Investors cannot invest directly in an Index. (Source: Lipper
Inc.)

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

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

Annual Fund Operating Expenses
(expenses that are deducted from Fund assets) Class A Class B
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Management Fees* 0.19% 0.19%
Distribution and Service (12b-1) Fees** 0.00% 0.91%
Other Expenses*** 0.39% 0.27%
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Total Annual Fund Operating Expenses 0.58% 1.37%

* Management Fees paid by the Fund were reduced to 0.07% by the investment
adviser.
** Long-term holders of Class B shares may pay more than the economic
equivalent of the front-end sales charge permitted by the National
Association of Securities Dealers, Inc.
*** Other Expenses for Class A includes a service fee of 0.12%.

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

1 Year 3 Years 5 Years 10 Years
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Class A shares $ 531 $ 652 $ 783 $ 1,166
Class B shares $ 639 $ 834 $ 950 $ 1,646

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

1 Year 3 Years 5 Years 10 Years
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Class A shares $ 531 $ 652 $ 783 $ 1,166
Class B shares $ 139 $ 434 $ 750 $ 1,646

3
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EATON VANCE HAWAII MUNICIPALS FUND

The Hawaii Fund's investment objective is to provide current income exempt from
regular federal income taxes and Hawaii state individual income taxes. The Fund
currently invests its assets in the Hawaii Municipals Portfolio (the "Hawaii
Portfolio"). Hawaii general obligations currently are rated A1 by Moody's and A+
by S&P and Fitch, respectively.

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

17.40% 3.15% 8.11% 5.00%
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1995 1996 1997 1998

The Fund's highest quarterly total return was 8.12% for the quarter ended March
31, 1995, and its lowest quarterly return was -3.38% for the quarter ended
December 31, 1994. The year-to-date total return through the end of the most
recent calendar quarter (January 1, 1999 to March 31, 1999) was 1.16%. For the
30 days ended January 31, 1999, the SEC yield and SEC tax-equivalent yield
(assuming a combined state and federal tax rate of 37.90%) for Class A shares
were 4.37% and 7.04%, respectively, and for Class B shares were 3.87% and 6.23%,
respectively. For current yield information call 1-800-225-6265.

Average Annual Total Returns One Life of
as of December 31, 1998 Year Fund
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Class A Shares 1.02% 5.16%
Class B Shares 0.00% 5.74%
Lehman Brothers Municipal Bond Index 6.48% 7.84%

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

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

Annual Fund Operating Expenses
(expenses that are deducted from Fund assets) Class A Class B
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Management Fees* 0.16% 0.16%
Distribution and Service (12b-1) Fees** 0.00% 0.91%
Other Expenses*** 0.53% 0.35%
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Total Annual Fund Operating Expenses 0.69% 1.42%

* For the fiscal year ended January 31, 1999, the investment adviser waived
the entire amount of the Management Fee.
** Long-term holders of Class B shares may pay more than the economic
equivalent of the front-end sales charge permitted by the National
Association of Securities Dealers, Inc.
*** Other Expenses for Class A includes a service fee of 0.18%.

1 Year 3 Years 5 Years 10 Years
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Class A shares $ 542 $ 685 $ 841 $ 1,293
Class B shares $ 645 $ 849 $ 976 $ 1,702

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

1 Year 3 Years 5 Years 10 Years
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Class A shares $ 542 $ 685 $ 841 $ 1,293
Class B shares $ 145 $ 449 $ 776 $ 1,702

4
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EATON VANCE KANSAS MUNICIPALS FUND

The Kansas Fund's investment objective is to provide current income exempt from
regular federal income taxes and Kansas state personal income taxes. The Fund
currently invests in the Kansas Municipals Portfolio (the "Kansas Portfolio").
Kansas currently has no long-term debt outstanding; therefore, there is no
rating for Kansas general obligation bonds. Certain certificates of
participation issued by the State of Kansas are rated A by Moody's and A+ by
S&P.

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

16.51% 3.29% 8.03% 4.46%
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1995 1996 1997 1998

The Fund's highest quarterly total return was 7.89% for the quarter ended March
31, 1995, and its lowest quarterly return was -2.47% for the quarter ended
December 31, 1994. The year-to-date total return through the end of the most
recent calendar quarter (January 1, 1999 to March 31, 1999) was 1.05%. For the
30 days ended January 31, 1999, the SEC yield and SEC tax-equivalent yield
(assuming a combined state and federal tax rate of 37.52%) for Class A shares
were 4.24% and 6.79%, respectively, and for Class B shares were 3.67% and 5.87%,
respectively. For current yield information call 1-800-225-6265.

Average Annual Total Returns One Life of
as of December 31, 1998 Year Fund
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Class A Shares 0.36% 5.64%
Class B Shares -0.51% 6.14%
Lehman Brothers Municipal Bond Index 6.48% 7.84%

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

Annual Fund Operating Expenses (expenses
that are deducted from Fund assets) Class A Class B
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Management Fees* 0.15% 0.15%
Distribution and Service (12b-1) Fees** 0.00% 0.92%
Other Expenses*** 0.64% 0.51%
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Total Annual Fund Operating Expenses 0.79% 1.58%

* For the fiscal year ended January 31, 1999, the investment adviser waived
the entire amount of the Management Fee.
** Long-term holders of Class B shares may pay more than the economic
equivalent of the front-end sales charge permitted by the National
Association of Securities Dealers, Inc.
***Other Expenses for Class A includes a service fee of 0.13%.

1 Year 3 Years 5 Years 10 Years
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Class A shares $ 552 $ 715 $ 893 $ 1,406
Class B shares $ 661 $ 899 $ 1,060 $ 1,878

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

1 Year 3 Years 5 Years 10 Years
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Class A shares $ 552 $ 715 $ 893 $ 1,406
Class B shares $ 161 $ 499 $ 860 $ 1,878

5
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INVESTMENT OBJECTIVES & PRINCIPAL POLICIES AND RISKS

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

At least 75% of the Hawaii Portfolio's and the Kansas Portfolio's net assets
will normally be invested in municipal obligations rated at least investment
grade at the time of investment (which are those rated Baa or higher by Moody's,
or BBB or higher by either S&P or Fitch) or, if unrated, determined by the
investment adviser to be of at least investment grade quality. The balance of
the Hawaii Portfolio's and the Kansas Portfolio's net assets may be invested in
municipal obligations rated below investment grade and in unrated municipal
obligations considered to be of comparable quality by the investment adviser.
Municipal obligations rated Baa or BBB or below (so-called "junk bonds") have
speculative characteristics. Also, changes in economic conditions or other
circumstances are more likely to reduce the capacity of issuers of lower-rated
obligations to make principal and interest payments. Lower rated obligations
also may be subject to greater price volatility than higher rated obligations.
Neither Portfolio will invest more than 10% of its net assets in obligations
rated below B by Moody's, S&P or Fitch.

At least 80% of the Florida Insured Portfolio's net assets will normally be
invested in obligations rated in the highest rating category at the time of
investment (which is Aaa by Moody's or AAA by S&P or Fitch) or, if unrated,
determined to be of comparable quality by the investment adviser. The balance of
the Florida Insured Portfolio's net assets may be invested in obligations rated
below Aaa or AAA (but not lower than BBB or Baa) and comparable unrated
obligations. At least 80% of the Florida Insured Portfolio's net assets will be
invested in obligations that are insured as to principal and interest payments
by insurers having a claims-paying ability rated Aaa by Moody's or AAA by S&P or
Fitch. This insurance does not protect the market value of such obligations or
the net asset value of the Florida Insured Portfolio or the Florida Insured
Fund. The value of an obligation will be affected by the credit standing of its
insurer.

Municipal obligations include bonds, notes and commercial paper issued by a
municipality for a wide variety of both public and private purposes. The
interest on municipal obligations is (in the opinion of the issuer's counsel)
exempt from regular federal income tax. Interest income from certain types of
municipal obligations generally will be subject to the federal alternative
minimum tax (the "AMT") for individuals. Distributions to corporate investors
may also be subject to the AMT. The Funds may not be suitable for investors
subject to the AMT.

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

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

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

The net asset value will change in response to changes in prevailing interest
rates and changes in the value of securities held. The value of securities held
will be affected by the credit quality of the issuer of the obligation, and
general economic and business conditions that affect the specific economic
sector of the issuer. Changes by rating agencies in the rating assigned to an
obligation may also affect the value of an obligation. The amount of information
available about the financial condition of issuers of municipal obligations
generally is not as extensive as that available for publicly-traded
corporations.

6
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Each Portfolio may purchase derivative instruments, which derive their value
from another instrument, security or index. For example, a Portfolio may invest
in municipal securities whose interest rates bear an inverse relationship to the
interest rate on another security or the value of an index ("inverse floaters").
Although they are volatile and may expose a Portfolio to leverage risk, inverse
floaters typically offer the potential for yields exceeding the yields available
on fixed-rate bonds with comparable credit quality and maturity. Each Portfolio
may also purchase and sell various kinds of financial futures contracts and
options thereon to hedge against changes in interest rates or as a substitute
for the purchase of portfolio securities. The use of derivative instruments for
both hedging and investment purposes involves a risk of loss or depreciation due
to a variety of factors including counterparty risk, unexpected market, interest
rate or securities price movements, and tax and regulatory constraints.
Derivative hedging transactions may not be effective because of imperfect
correlations and other factors.

Each Portfolio may invest in zero coupon bonds, which do not require the issuer
to make periodic interest payments. The values of these bonds are subject to
greater fluctuation in response to changes in market interest rates than bonds
which pay interest currently.

The limited liquidity of certain securities in which the Portfolio may invest
could affect their market prices, thereby adversely affecting net asset value
and the ability to pay income. The amount of publicly available information
about certain municipal obligations may be limited and the investment
performance of the Portfolio more dependent on the portfolio manager's analysis
than if this were not the case.

Each Portfolio may borrow amounts up to one-third of the value of its total
assets (including borrowings), but it will not borrow more than 5% of the value
of its total assets except to satisfy redemption requests or for other temporary
purposes. Such borrowings would result in increased expense to a Fund and, while
they are outstanding, would magnify increases or decreases in the value of Fund
shares. No Portfolio will purchase additional investment securities while
outstanding borrowings exceed 5% of the value of its total assets. During
unusual market conditions, each Portfolio may temporarily invest up to 50% of
its assets in cash or cash equivalents. Interest income from temporary
investments may be taxable.

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

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

MANAGEMENT AND ORGANIZATION

Management. Each Portfolio's investment adviser is Boston Management and
Research ("BMR"), a subsidiary of Eaton Vance Management ("Eaton Vance"), The
Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109. Eaton Vance
has been managing assets since 1924 and managing mutual funds since 1931. Eaton
Vance and its subsidiaries currently manage over $37 billion on behalf of mutual
funds, institutional clients and individuals.

7
<PAGE>
The investment adviser manages the investments of each Portfolio and provides
related office facilities and personnel. Under its investment advisory agreement
with each Portfolio, BMR receives a monthly advisory fee equal to the aggregate
of a daily asset based fee and a daily income based fee. The fees are applied on
the basis of the following categories.

Annual Daily
Category Daily Net Assets Asset Rate Income Rate
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1 up to $20 million 0.100% 1.00%
2 $20 million but less than $40 million 0.200% 2.00%
3 $40 million but less than $500 million 0.300% 3.00%
4 $500 million but less than $1 billion 0.275% 2.75%
5 $1 billion but less than $1.5 billion 0.250% 2.50%
6 $1.5 billion but less than $2 billion 0.225% 2.25%
7 $2 billion but less than $3 billion 0.200% 2.00%
8 $3 billion and over 0.175% 1.75%

For the fiscal year ended January 31, 1999, each Portfolio paid advisory fees
equivalent to the percentage of average daily net assets stated below.

Net Assets on
Portfolio January 31, 1999 Advisory Fee
- --------------------------------------------------------------------------------
Florida Insured (1) $28,139,616 0.07%
Hawaii (2) $20,389,548 0.00%
Kansas (3) $12,881,278 0.00%

(1) A portion of the Florida Insured Portfolio's expenses were allocated to
BMR. Absent a fee reduction, the Florida Insured Portfolio would have paid
the investment adviser advisory fees equivalent to 0.19%.
(2) A portion of the Hawaii Portfolio's expenses were allocated to BMR. Absent
a fee reduction, the Hawaii Portfolio would have paid the investment
adviser advisory fees equivalent to 0.16%.
(3) A portion of the Kansas Portfolio's expenses were allocated to BMR. Absent
a fee reduction, the Kansas Portfolio would have paid the investment
adviser advisory fees equivalent to 0.15%.

Cynthia J. Clemson is the portfolio manager of the Florida Insured Portfolio
(since November 2, 1998). Robert B. MacIntosh is the portfolio manager of the
Hawaii Portfolio (since it commenced operations). Timothy T. Browse is the
portfolio manager of the Kansas Portfolio (since November 24, 1997). Each
portfolio manager also manages other Eaton Vance portfolios, has been an Eaton
Vance portfolio manager for more than 5 years, and is a Vice President of Eaton
Vance and BMR.

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

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

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

Because the Funds use this combined prospectus, a Fund could be held liable for
a misstatement or omission made about another Fund. The Trust's Trustees
considered this in approving the use of a combined prospectus.

VALUING SHARES

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

8
<PAGE>
When purchasing or redeeming Fund shares, your investment dealer must
communicate your order to the principal underwriter by a specific time each day
in order for the purchase price or the redemption price to be based on that
day's net asset value per share. It is the investment dealer's responsibility to
transmit orders promptly. Each Fund may accept purchase and redemption orders as
of the time of their receipt by certain investment dealers (or their designated
intermediaries).

PURCHASING SHARES

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

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

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

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

SALES CHARGES

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

<TABLE>
Sales Charge Sales Charge Dealer Commission
as Percentage of as Percentage of Net as a Percentage of
Amount of Purchase Offering Price Amount Invested Offering Price
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Less than $25,000 4.75% 4.99% 4.50%
$25,000 but less than $100,000 4.50% 4.71% 4.25%
$100,000 but less than $250,000 3.75% 3.90% 3.50%
$250,000 but less than $500,000 3.00% 3.09% 2.75%
$500,000 but less than $1,000,000 2.00% 2.04% 2.00%
$1,000,000 or more 0.00* 0.00* 1.00%
</TABLE>
* No sales charge is payable at the time of purchase on investments of $1
million or more. A CDSC of 1.00% will be imposed on such investments (as
described below) in the event of redemptions within 24 months of purchase.

9
<PAGE>

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

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

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

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

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

Class A shares are offered at net asset value to clients of financial
intermediaries who charge a fee for their services; accounts affiliated with
those financial intermediaries; investment clients of Eaton Vance; certain
persons affiliated with Eaton Vance; and certain Eaton Vance and fund service
providers. Ask your investment dealer for details.

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

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

Distribution and Service Fees. Class B shares have adopted a plan under Rule
12b-1 that allows the Fund to pay distribution fees for the sale and
distribution of shares (so-called "12b-1 fees"). Class B shares pay distribution
fees of 0.75% of average daily net assets annually. Because these fees are paid
from Fund assets on an ongoing basis, they will increase your cost over time and
may cost you more than paying other types of sales charges. Both classes pay
service fees for personal and/or account services not exceeding .20% of average
daily net assets annually. Class A and Class B only pay service fees on shares
that have been outstanding for 12 months.

10
<PAGE>
REDEEMING SHARES

You can redeem shares in any of the following ways:

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

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

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

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

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

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

SHAREHOLDER ACCOUNT FEATURES

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

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

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

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

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

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

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

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

11
<PAGE>
Withdrawal Plan. You may redeem shares on a regular monthly or quarterly basis
by establishing a systematic withdrawal plan. Withdrawals will not be subject to
any applicable CDSC if they do not in the aggregate exceed 12% annually of the
account balance at the time the plan is established. A minimum account size of
$5,000 is required to establish a systematic withdrawal plan. Because purchases
of Class A shares are subject to an initial sales charge, you should not make
withdrawals from your account while you are making purchases.

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

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

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

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

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

TAX INFORMATION

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

Distributions of any taxable income and net short-term capital gains will be
taxable as ordinary income. Distributions of any long-term capital gains are
taxable as such. Distributions of interest on certain municipal obligations are
a tax preference item under the AMT provisions applicable to individuals and
corporations. A redemption of Fund shares, including an exchange for shares of
another fund, is a taxable transaction.

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

Florida Taxes. The Florida Department of Revenue has ruled that shares of a
Florida fund owned by a Florida resident will be exempt from the Florida
intangible personal property tax so long as the fund's portfolio includes on
January 1 of each year only assets, such as Florida tax-exempt securities and
United States Government securities, that are exempt from the Florida intangible
personal property tax. The Florida Portfolio will normally invest in tax-exempt
obligations of Florida, the United States, the U.S. Territories or political
subdivisions of the United States or Florida so Florida Insured Fund shares
should, under normal circumstances, be exempt from the Florida intangibles tax.
12
<PAGE>
Hawaii Taxes. In the opinion of McCorriston Miho Miller Mukai, special Hawaii
tax counsel to the Hawaii Fund, distributions paid by the Hawaii Fund will
generally be exempt from Hawaii income tax to the extent that they are derived
from interest on obligations of the State of Hawaii or any of its political
subdivisions or authorities or obligations issued by certain other government
authorities (for example, U.S. territories). Distributions derived from the
Hawaii Fund's other investment income and short-term capital gains will be
subject to Hawaii income tax as ordinary income and distributions from net
realized long-term capital gains will be subject to Hawaii income tax as capital
gains.

Capital gains or losses realized from a redemption, sale or exchange of shares
of the Hawaii Fund by a Hawaii resident will be taken into account for Hawaii
individual income tax purposes.

Kansas Taxes. In the opinion of special Kansas tax counsel, Shook, Hardy & Bacon
L.L.P., individuals, trusts, estates and corporations will not be subject to the
Kansas income tax on the portion of exempt-interest dividends derived from
interest on obligations of Kansas and its political subdivisions issued after
December 31, 1987, and interest on obligations issued before January 1, 1988
where the laws of the State of Kansas authorizing the issuance of such
obligations specifically exempt the interest on such obligations from income tax
under the laws of the State of Kansas. All remaining dividends (except for
dividends, if any, derived from debt obligations issued by the governments of
Puerto Rico, the U.S. Virgin Islands and Guam and which are exempt from federal
and state income taxes pursuant to federal law), including dividends derived
from capital gains, will be includable in the Kansas taxable income of
individuals, trusts, estates and corporations. Distributions treated as
long-term capital gains for federal income tax purposes will generally receive
the same characterization under Kansas law. Capital gains or losses realized
from a redemption, sale or exchange of shares of the Kansas Fund by a Kansas
taxpayer will be taken into account for Kansas income tax purposes.

The above exemptions do not apply to the privilege tax imposed on banks, banking
associations, trust companies, savings and loan associations, and insurance
companies, or the franchise tax imposed on corporations. Banks, banking
associations, trust companies, savings and loan associations, insurance
companies and corporations are urged to consult their own tax advisors regarding
the effects of theses taxes before investing in the Kansas Fund.

The Kansas Fund has been advised by the Kansas Department of Revenue that
dividends derived from shares of the Kansas Fund are not subject to the local
intangibles tax imposed by counties, cities and townships pursuant to existing
Kansas law.

13
<PAGE>
FINANCIAL HIGHLIGHTS

The financial highlights are intended to help you understand a Fund's financial
performance for the past five years. Certain information in the tables reflects
the financial results for a single Fund share. The total returns in the tables
represent the rate an investor would have earned (or lost) on an investment in
the Fund (assuming reinvestment of all distributions and not taking into account
a sales charge). This information has been audited by Deloitte & Touche LLP,
independent accountants. The report of Deloitte & Touche LLP and each Fund's
financial statements are incorporated herein by reference and included in the
annual report, which is available on request. Each Fund began offering two
classes of shares on February 1, 1998. Prior to that date, each Fund offered
only Class B shares and Class A existed as a separate fund.

<TABLE>

<CAPTION>
FLORIDA INSURED FUND
-----------------------------------------------------------------
YEAR ENDED JANUARY 31,
-----------------------------------------------------------------
1999 1998 1997 1996 1995*
-----------------------------------------------------------------
CLASS A CLASS B CLASS B CLASS B CLASS B CLASS B
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value - Beginning of year $11.370 $11.230 $10.710 $11.090 $10.260 $10.000
Income (loss) from operations
Net investment income $ 0.569 $ 0.467 $ 0.488 $ 0.499 $ 0.512 $ 0.456
Net realized and unrealized gain (loss) 0.153 0.170 0.511 (0.385) 0.832 0.304
Total income from operations $ 0.722 $ 0.637 $ 0.999 $ 0.114 $ 1.344 $ 0.760
Less distributions
From net investment income $(0.552) $(0.467) $(0.479) $(0.494) $(0.512) $(0.456)
In excess of net investment income -- -- -- -- (0.002) (0.044)
Total distributions $(0.552) $(0.467) $(0.479) $(0.494) $(0.514) $(0.500)
Net asset value - End of year $11.540 $11.400 $11.230 $10.710 $11.090 $10.260
Total return (1) 6.52% 5.82% 9.57% 1.14% 13.39% 7.10%
Ratios/Supplemental Data+
Net assets, end of year (000's omitted) $ 5,905 $22,901 $21,973 $21,717 $18,391 $11,596
Ratios (as a percentage of average daily net assets):
Net expenses (2)(3) 0.46% 1.25% 1.23% 1.21% 1.10% 0.75%+
Net expenses after custodian fee reduction (2) 0.39% 1.18% 1.16% 1.12% 1.00% --
Net investment income 4.86% 4.15% 4.50% 4.67% 4.76% 4.79%+
Portfolio turnover of the Portfolio 9% 9% 34% 36% 32% 33%
</TABLE>

+ The operating expenses of the Fund reflect a reduction of the investment
adviser fee, an allocation of expenses to the adviser or administrator, or
both. Had such action not been taken, the ratios and investment income per
share would have been as follows:
<TABLE>
Ratios (as a percentage of average daily net assets):
<S> <C> <C> <C> <C> <C> <C>
Expenses (2)(3) 0.58% 1.37% 1.65% 1.51% 1.49% 1.62%+
Expenses after custodian fee reduction (2) 0.51% 1.30% 1.58% 1.42% 1.39% --
Net investment income 4.74% 4.03% 4.08% 4.37% 4.37% 3.92%+
Net investment income per share $0.555 $0.453 $0.443 $0.467 $0.470 $0.374
</TABLE>

(See footnotes on last page.)

14
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
HAWAII FUND
-------------------------------------------------------------------
YEAR ENDED JANUARY 31,
-------------------------------------------------------------------
1999 1998 1997 1996 1995*
-------------------------------------------------------------------
CLASS A CLASS B CLASS B CLASS B CLASS B CLASS B
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value -
Beginning of year $ 9.930 $10.130 $ 9.730 $ 9.980 $ 9.150 $10.000
Income (loss) from
operations
Net investment
income $ 0.534 $ 0.431 $ 0.441 $ 0.466 $ 0.484 $ 0.434
Net realized and
unrealized gain
(loss) 0.078 0.090 0.418 (0.241) 0.835 (0.805)
Total income (loss)
from operations $ 0.612 $ 0.521 $ 0.859 $ 0.225 $ 1.319 $(0.371)
Less distributions
From net investment
income $(0.492) $(0.431) $(0.441) $(0.466) $(0.484) $(0.434)
In excess of net
investment income -- (0.020) (0.018) (0.009) (0.005) (0.045)
Total distributions $(0.492) $(0.451) $(0.459) $(0.475) $(0.489) $(0.479)
Net asset value -
End of year $10.050 $10.200 $10.130 $ 9.730 $ 9.980 $ 9.150
Total return (1) 6.34% 5.29% 9.08% 2.40% 14.74% (4.01)%
Ratios/Supplemental
Data+
Net assets, end of
year (000's omitted) $ 259 $19,848 $19,401 $15,552 $15,126 $12,601
Ratios (as a
percentage of
average daily net
assets):
Net expenses
(2)(3) 0.45% 1.18% 1.27% 1.20% 1.05% 0.87%+
Net expenses after
custodian fee
reduction (2) 0.41% 1.14% 1.24% 1.15% 0.98% --
Net investment
income 5.35% 4.27% 4.47% 4.81% 5.03% 5.03%+
Portfolio turnover
of the Portfolio 29% 29% 27% 21% 19% 66%
</TABLE>
+ The operating expenses of the Fund reflect a reduction of the investment
adviser fee, an allocation of expenses to the adviser or administrator, or
both. Had such action not been taken, the ratios and investment income per
share would have been as follows:
<TABLE>
Ratios (as a percentage of average daily net assets):
<S> <C> <C> <C> <C> <C> <C>
Expenses (2)(3) 0.69% 1.42% 1.70% 1.61% 1.53% 1.41%+
Expenses after custodian fee reduction /(2)/ 0.65% 1.38% 1.67% 1.56% 1.46% --
Net investment income 5.11% 4.03% 4.04% 4.40% 4.51% 4.49%+
Net investment income per share $0.510 $0.407 $0.399 $0.426 $0.434 $0.387
</TABLE>

(See footnotes on last page.)

15
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
KANSAS FUND
-------------------------------------------------------------------
YEAR ENDED JANUARY 31,
-------------------------------------------------------------------
1999 1998 1997 1996 1995*
-------------------------------------------------------------------
CLASS A CLASS B CLASS B CLASS B CLASS B CLASS B
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value -
Beginning of year $10.460 $10.380 $10.080 $10.320 $ 9.560 $10.000
Income (loss) from
operations
Net investment
income $ 0.505 $ 0.429 $ 0.458 $ 0.479 $ 0.481 $ 0.435
Net realized and
unrealized gain
(loss) 0.082 0.071 0.414 (0.238) 0.761 (0.393)
Total income from
operations $ 0.587 $ 0.500 $ 0.872 $ 0.241 $ 1.242 $ 0.042
Less distributions
From net investment
income $(0.505) $(0.429) $(0.462) $(0.473) $(0.481) $(0.435)
In excess of net
investment income (0.012) (0.021) --** -- (0.001) (0.047)
From net realized
gain (0.060) (0.060) (0.110) (0.008) -- --
Total distributions $(0.577) $(0.510) $(0.572) $(0.481) $(0.482) $(0.482)
Net asset value -
End of year $10.470 $10.370 $10.380 $10.080 $10.320 $ 9.560
Total return (1) 5.77% 4.96% 8.87% 2.46% 13.26% 0.16%
Ratios/Supplemental
Data+
Net assets, end of
year (000's omitted) $ 1,561 $11,223 $10,050 $10,492 $10,782 $ 7,753
Ratios (as a
percentage of
average daily net
assets):
Net expenses
(2)(3) 0.49% 1.28% 1.38% 1.25% 1.20% 0.75%+
Net expenses after
custodian fee
reduction (2) 0.43% 1.22% 1.33% 1.15% 1.08% --
Net investment
income 4.83% 4.14% 4.48% 4.77% 4.79% 4.81%+
Portfolio turnover
of the Portfolio 33% 33% 17% 49% 21% 12%
</TABLE>
+ The operating expenses of the Fund reflect a reduction of the investment
adviser fee, an allocation of expenses to the adviser or administrator, or
both. Had such action not been taken, the ratios and investment income per
share would have been as follows:
<TABLE>
Ratios (as a percentage of average daily net assets):
<S> <C> <C> <C> <C> <C> <C>
Expenses (2)(3) 0.79% 1.58% 1.90% 1.68% 1.59% 1.60%+
Expenses after custodian fee reduction (2) 0.73% 1.52% 1.85% 1.58% 1.47% --
Net investment income 4.53% 3.84% 3.96% 4.34% 4.40% 3.96%+
Net investment income per share $0.474 $0.398 $0.405 $0.436 $0.442 $0.397
</TABLE>

* For the period from the start of business, March 2, 1994, to January 31,
1995.
** Distributions in excess of net investment income are less than $0.001 per
share.
+ Annualized.
(1) Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Distributions, if any, are assumed to be reinvested at the
net asset value on the payable date. Total return is not computed on an
annualized basis.
(2) Includes each Fund's share of its corresponding Portfolio's allocated
expenses.
(3) The expense ratios for the year ended January 31, 1996 and periods
thereafter have been adjusted to reflect a change in reporting
requirements. The new reporting guidelines require each Fund, as well as
its corresponding Portfolio, to increase its expense ratio by the effect of
any expense offset arrangements with its service providers. The expense
ratios for the period ended January 31, 1995 have not been adjusted to
reflect this change.

16
<PAGE>

{LOGO} Mutual Funds
EATON VANCE for People
Mutual Funds Who Pay
Taxes

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

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

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

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

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

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

SEC File No. 811-8134 TFC6/1P

<PAGE>

LOGO
Mutual Funds
for People
Who Pay
Taxes

EATON VANCE
HIGH YIELD MUNICIPALS
FUND

A mutual fund seeking high current income exempt from federal income tax

Prospectus Dated
June 1, 1999

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

Information in this prospectus
Page Page
- --------------------------------------------------------------------------------
Fund Summary 2 Sales Charges 7
Investment Objective & Principal Policies Redeeming Shares 8
and Risks 4 Shareholder Account
Management and Organization 5 Features 8
Valuing Shares 6 Tax Information 9
Purchasing Shares 6 Financial Highlights 10
- -------------------------------------------------------------------------------

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

<PAGE>

FUND SUMMARY

INVESTMENT OBJECTIVE AND PRINCIPAL STRATEGIES. The Fund's investment objective
is to provide high current income exempt from regular federal income tax. The
Fund primarily invests in high yielding, below investment grade municipal
obligations with maturities of ten years or more. The portfolio manager will
purchase and sell securities to maintain a competitive yield and to enhance
return based upon the relative value of the securities in the marketplace. The
portfolio manager may also trade securities to minimize taxable capital gains to
shareholders.

The Fund may concentrate in certain types of municipal obligations (such as
industrial development bonds, housing bonds, hospital bonds or utility bonds),
so Fund shares could be affected by events that adversely affect a particular
sector. The Fund may purchase derivative instruments (such as inverse floaters
and futures contracts) and bonds that do not require periodic interest payments.
A portion of the Fund's distributions generally will be subject to alternative
minimum tax.

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

PRINCIPAL RISK FACTORS. The Fund primarily invests in obligations of below
investment grade quality (so-called "junk bonds"). Obligations rated below
investment grade generally offer higher yields than higher quality obligations,
but they are subject to greater risks. Lower quality obligations are considered
to be of poor standing and predominantly speculative. In addition, these
obligations are more sensitive to adverse changes in the financial condition of
the issuer or in general market conditions (or both) and Fund shares may
fluctuate more in value than shares of a fund investing solely in higher quality
obligations.

Obligations with maturities of ten years or more may offer higher yields than
obligations with shorter maturities, but they are subject to greater
fluctuations in value when interest rates change. When interest rates rise, the
value of Fund shares typically will decline. The Fund's yield will also
fluctuate over time. Because the Fund's objective is to provide high current
income, the portfolio manager will invest with an emphasis on income and not on
stability of net asset value.

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

<PAGE>

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

6.10% 13.17% 3.99%
1996 1997 1998

The Fund's highest quarterly total return was 5.54% for the quarter ended
December 31, 1995, and its lowest quarterly total return was -2.06% for the
quarter ended March 31, 1996. The year-to-date total return through the end of
the most recent calendar quarter (January 1, 1999 to March 31, 1999) was 0.69%.
For the 30 days ended January 31, 1999, the SEC yield and SEC tax-equivalent
yield (assuming a federal tax rate of 31%) for Class A shares were 5.45% and
7.90%, respectively, for Class B shares were 4.90% and 7.19%, respectively, and
for Class C shares were 4.88% and 7.07%, respectively. For current yield
information call 1-800-225-6265.

<TABLE>
<CAPTION>
One Life of
Average Annual Total Return as of December 31, 1998 Year Fund
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Class A shares -0.16% 8.50%
Class B shares -0.95% 8.47%
Class C shares 3.04% 9.52%
Lehman Brothers Municipal Bond Index 6.48% 7.49%
</TABLE>

These returns reflect the maximum sales charge for Class A (4.75%) and any
applicable CDSC for Class B and Class C. The Class C performance shown above for
the period prior to June 18, 1997 is the performance of Class B shares, adjusted
for the sales charge that applies to Class C shares (but not adjusted for any
other differences in the expenses of the classes). Class A and Class B commenced
operations on August 7, 1995. Life of Fund returns are calculated from August
31, 1995. The Lehman Brothers Municipal Bond Index is a broad-based, unmanaged
market index of municipal bonds. Investors cannot invest directly in an index.
(Source for Lehman Brothers Municipal Bond Index returns: Lipper, Inc.)

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

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

Annual Fund Operating Expenses
(expenses that are deducted from Fund assets) Class A Class B Class C
- --------------------------------------------------------------------------------
Management Fees 0.58% 0.58% 0.58%
Distribution and Service (12b-1) Fees* 0.00% 0.92% 0.99%
Other Expenses** 0.37% 0.22% 0.22%
----- ----- -----
Total Annual Fund Operating Expenses 0.95% 1.72% 1.79%

* Long-term shareholders of Class B and Class C shares may pay more than the
economic equivalent of the front-end sales charge permitted by the National
Association of Securities Dealers, Inc.

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

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

1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
Class A shares $567 $763 $ 976 $ 1,586
Class B shares $675 $942 $ 1,133 $ 2,030
Class C shares $282 $563 $ 970 $ 2,105

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

1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
Class A shares $567 $763 $976 $ 1,586
Class B shares $175 $542 $933 $ 2,030
Class C shares $182 $563 $970 $ 2,105

<PAGE>

INVESTMENT OBJECTIVE & PRINCIPAL POLICIES AND RISKS

The investment objective of the Fund is to provide high current income exempt
from regular federal income tax. The Fund seeks to achieve its objective by
investing primarily (i.e., at least 80% of its net assets during periods of
normal market conditions) in debt obligations issued by or on behalf of states,
territories and possessions of the United States, and the District of Columbia
and their political subdivisions, agencies or instrumentalities, the interest on
which is exempt from regular federal income tax. This is a fundamental policy of
the Fund which only may be changed with shareholder approval. The Fund's
investment objective and other policies may be changed by the Trustees without
shareholder approval. The Fund currently seeks to meet its investment objective
by investing in High Yield Municipals Portfolio (the "Portfolio"), a separate
open-end management company that has the same objective and policies as the
Fund.

At least 65% of the Portfolio's total assets will normally be invested in
municipal obligations rated below investment grade at the time of investment
(which are those rated Ba or lower by Moody's Investors Service, Inc.
("Moody's"), or BB or lower by either Standard & Poor's Ratings Group ("S&P") or
Fitch IBCA ("Fitch")) or, if unrated, determined by the investment adviser to be
of comparable quality. As of January 31, 1999, 72.9% of the Portfolio's total
assets were invested in obligations rated below investment grade. Lower rated
obligations have speculative characteristics and are more volatile than higher
rated obligations. Also, changes in economic conditions or other circumstances
are more likely to reduce the capacity of issuers of lower-rated obligations to
make principal and interest payments. It may also be more difficult to value
certain lower rated obligations because of the inability (or perceived
inability) of the issuer to make interest and principal payments. The Portfolio
may also invest a portion of its assets in municipal obligations that are not
paying current income in anticipation of possible future income. The Portfolio
may invest in securities in any rating category, including those in default.

Municipal obligations include bonds, notes and commercial paper issued by a
municipality for a wide variety of both public and private purposes. The
interest on municipal obligations is (in the opinion of the issuer's counsel)
exempt from regular federal income tax. Interest income from certain types of
municipal obligations generally will be subject to the federal alternative
minimum tax (the "AMT") for individuals. Distributions to corporate investors
may also be subject to the AMT. The Fund may not be suitable for investors
subject to the AMT.

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

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

The Portfolio may purchase derivative instruments, which derive their value from
another instrument, security or index. For example, the Portfolio may invest in
municipal securities whose interest rates bear an inverse relationship to the
interest rate on another security or the value of an index ("inverse floaters").
Although they are volatile and may expose the Portfolio to leverage risk,
inverse floaters typically offer the potential for yields exceeding the yields
available on fixed rate bonds with comparable credit quality and maturity. The
Portfolio may also purchase and sell various kinds of financial futures
contracts and options thereon to hedge against changes in interest rates or as a
substitute for the purchase of portfolio securities. The use of derivative
instruments for both hedging and investment purposes involves a risk of loss or
depreciation due to a variety of factors including counterparty risk, unexpected
market, interest rate or securities price movements, and tax and regulatory
constraints. Derivative hedging transactions may not be effective because of
imperfect correlations and other factors.

The Portfolio may invest in zero coupon bonds, which do not require the issuer
to make periodic interest payments. The values of these bonds are subject to
greater fluctuation in response to changes in market interest rates than bonds
which pay interest currently.

4
<PAGE>

municipal obligations may be limited and the investment performance of the
Portfolio more dependent on the portfolio manager's analysis than if this were
not the case.

The Portfolio may borrow amounts up to one-third of the value of its total
assets (including borrowings), but it will not borrow more than 5% of the value
of its total assets except to satisfy redemption requests or for other temporary
purposes. Such borrowings would result in increased expense to the Fund and,
while they are outstanding, would magnify increases or decreases in the value of
Fund shares. The Portfolio will not purchase additional investment securities
while outstanding borrowings exceed 5% of the value of its total assets. During
unusual market conditions, the Portfolio may temporarily invest up to 100% of
its assets in cash or cash equivalents. Interest income from temporary
investments may be taxable.

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

MANAGEMENT AND ORGANIZATION

MANAGEMENT. The Portfolio's investment adviser is Boston Management and Research
("BMR"), a subsidiary of Eaton Vance Management ("Eaton Vance"), The Eaton Vance
Building, 255 State Street, Boston, Massachusetts 02109. Eaton Vance has been
managing assets since 1924 and managing mutual funds since 1931. Eaton Vance and
its subsidiaries currently manage over $37 billion on behalf of mutual funds,
institutional clients and individuals.

The investment adviser manages the investments of the Portfolio and provides
related office facilities and personnel. Under its investment advisory agreement
with the Portfolio, BMR receives a monthly advisory fee equal to the aggregate
of a daily asset based fee and a daily income based fee. The fees are applied on
the basis of the following categories.

Annual Daily
Category Daily Net Assets Asset Rate Income Rate
- --------------------------------------------------------------------------------
1 up to $500 million 0.350% 3.50%
2 $500 million but less than $1 billion 0.325% 3.25%
3 $1 billion but less than $1.5 billion 0.300% 3.00%
4 $1.5 billion but less than $2 billion 0.275% 2.75%
5 $2 billion but less than $3 billion 0.250% 2.50%
6 $3 billion and over 0.225% 2.25%

As at January 31, 1999, the Portfolio had net assets of $390,908,964. For the
fiscal year ended January 31, 1999, the Portfolio paid BMR advisory fees
equivalent to 0.58% of the Portfolio's average net assets for such year.

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

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

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

5
<PAGE>

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

VALUING SHARES

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

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

PURCHASING SHARES

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

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

6
<PAGE>

SALES CHARGES

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

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

* No sales charge is payable at the time of purchase on investments of $1
million or more. A CDSC of 1.00% will be imposed on such investments (as
described below) in the event of redemptions within 24 months of purchase.
</TABLE>

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

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

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

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

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

DISTRIBUTION AND SERVICE FEES. Class B and Class C shares have adopted a plan
under Rule 12b-1 that allows the Fund to pay distribution fees for the sale and
distribution of shares (so-called "12b-1 fees"). Class B and Class C shares pay
distribution fees of 0.75% of average daily net assets annually. Because these
fees are paid from Fund assets on an ongoing

<PAGE>

basis, they will increase your cost over time and may cost you more than paying
other types of sales charges. Class A, Class B and Class C pay service fees for
personal and/or account services not exceeding 0.25% of average daily net assets
annually. Class A and Class B only pay service fees on shares that have been
outstanding for 12 months.

REDEEMING SHARES

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

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

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

SHAREHOLDER ACCOUNT FEATURES

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

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

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

<PAGE>

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

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

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

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

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

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

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

<PAGE>

TAX INFORMATION

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

<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights are intended to help you understand the Fund's
financial performance for the past five years. Certain information in the table
reflects the financial results for a single Fund share. The total returns in the
table represent the rate an investor would have earned (or lost) on an
investment in the Fund (assuming reinvestment of all distributions and not
taking into account a sales charge). This information has been audited by
Deloitte & Touche LLP, independent accountants. The report of Deloitte & Touche
LLP and the Fund's financial statements are incorporated herein by reference and
included in the annual report, which is available on request. The Fund began
offering three classes of shares on February 1, 1998. Prior to that date, the
Fund offered only Class B shares, and Class A and Class C existed as separate
funds.

<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31,
-----------------------------------------------------------------
1999(1) 1998 1997 1996*
-----------------------------------------------------------------
CLASS A CLASS B CLASS C CLASS B CLASS B CLASS B
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value -
Beginning of year $ 11.570 $ 11.520 $10.680 $ 10.620 10.650 $10.000
-------- -------- ------- -------- -------- -------
Income from
operations
Net investment
income $ 0.647 $ 0.554 $ 0.506 $ 0.594 $ 0.626 $ 0.299
Net realized and
unrealized gain
(loss) (0.176) (0.167) (0.169) 0.916 (0.026) 0.657
-------- -------- ------- -------- -------- -------
Total income from
operations $ 0.471 $ 0.387 $ 0.337 $ 1.510 $ 0.600 $ 0.956
-------- -------- ------- -------- -------- -------
Less
distributions:
From net investment
income $ (0.647) $ (0.554) $(0.506) $ (0.594) $ (0.626) $(0.299)
In excess of net
investment income (0.014) (0.023) (0.021) (0.016) (0.003) (0.007)
From net realized
gain -- -- -- -- (0.001) --
-------- -------- ------- -------- -------- -------
Total
distributions $ (0.661) $ (0.577) $(0.527) $ (0.610) $ (0.630) $(0.306)
-------- -------- ------- -------- -------- -------
Net asset value -
End of year $ 11.380 $ 11.330 $10.490 $ 11.520 $ 10.620 $10.650
======== ======== ======= ======== ======== =======
Total return(2) 4.16% 3.44% 3.22% 14.67% 5.90% 9.40%
Ratios/Supplemental
Data+:
Net assets, end of
year (000's omitted) $128,347 $237,497 $24,576 $191,706 $123,024 $43,520
Ratios (as a percentage of
average daily net assets):
Expenses(3) 0.95% 1.72% 1.79% 1.76% 1.36% 0.88%+
Expenses after custodian fee
reduction(3) 0.94% 1.71% 1.78% 1.74% 1.32% 0.88%+
Net investment
income 5.60% 4.83% 4.73% 5.36% 5.91% 5.86%+
Portfolio Turnover
of the Portfolio 25% 25% 25% 8% 41% 32%
</TABLE>

Ratios (as a percentage of average daily net assets):
Expense(3) 1.73% 1.77%+
Expenses after custodian fee reductio(3) 1.69% 1.77%+
Net investment income 5.54% 4.97%+
Net investment income per share $0.587 $0.254

* For the period from the start of business, August 7, 1995, to January 31,
1996.

+ Computed on an annualized basis.

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

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

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

<PAGE>

LOGO
Mutual Funds
for People
Who Pay
Taxes

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

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

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

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

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

FIRST DATA INVESTOR SERVICES GROUP
P.O. BOX 512
WESTBOROUGH, MA 01581-5123
1-800-262-1122

SEC File No. 811-8134 HYP

<PAGE>

PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION

STATEMENT OF
ADDITIONAL INFORMATION
June 1, 1999

EATON VANCE FLORIDA INSURED MUNICIPALS FUND
EATON VANCE HAWAII MUNICIPALS FUND
EATON VANCE KANSAS MUNICIPALS FUND

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

This Statement of Additional Information ("SAI") provides general
information about the Funds listed above and their corresponding Portfolios.
Each Fund is a series of Eaton Vance Municipals Trust II. Capitalized terms used
in this SAI and not otherwise defined have the meanings given to them in the
prospectus. This SAI contains additional information about:

Page
Strategies and Risks .......................................... 1
Investment Restrictions ....................................... 7
Management and Organization ................................... 8
Investment Advisory and Administrative Services ............... 12
Other Service Providers ....................................... 13
Purchasing and Redeeming Shares ............................... 14
Sales Charges ................................................. 16
Performance ................................................... 18
Taxes ......................................................... 20
Portfolio Security Transactions ............................... 22
Financial Statements .......................................... 24

Appendices:
A: Class A Fees, Performance and Ownership .................... a-1
B: Class B Fees, Performance and Ownership .................... b-1
C: State Specific Information ................................. c-1
D: Tax Equivalent Yield Tables ................................ d-1
E: Description of Securities Ratings .......................... e-1
F: Insurance .................................................. f-1

Although each Fund offers only its shares of beneficial interest, it is
possible that a Fund (or Class) might become liable for a misstatement or
omission in this SAI regarding another Fund (or Class) because the Funds use
this combined SAI. The Trustees of the Trust have considered this factor in
approving the use of a combined SAI.

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

<PAGE>

STRATEGIES AND RISKS
MUNICIPAL OBLIGATIONS. Municipal obligations are issued to obtain funds for
various public and private purposes. Municipal obligations include bonds as well
as tax-exempt commercial paper, project notes and municipal notes such as tax,
revenue and bond anticipation notes of short maturity, generally less than three
years. While most municipal bonds pay a fixed rate of interest semi-annually in
cash, there are exceptions. Some bonds pay no periodic cash interest, but rather
make a single payment at maturity representing both principal and interest.
Bonds may be issued or subsequently offered with interest coupons materially
greater or less than those then prevailing, with price adjustments reflecting
such deviation.

In general, there are three categories of municipal obligations the interest
on which is exempt from federal income tax and is not a tax preference item for
purposes of the AMT: (i) certain "public purpose" obligations (whenever issued),
which include obligations issued directly by state and local governments or
their agencies to fulfill essential governmental functions; (ii) certain
obligations issued before August 8, 1986 for the benefit of non-governmental
persons or entities; and (iii) certain "private activity bonds" issued after
August 7, 1986 which include "qualified Section 501(c)(3) bonds" or refundings
of certain obligations included in the second category. Interest on certain
"private activity bonds" issued after August 7, 1986 is exempt from regular
federal income tax, but such interest (including a distribution by a Fund
derived from such interest) is treated as a tax preference item which could
subject the recipient to or increase the recipient's liability for the AMT. For
corporate shareholders, a Fund's distributions derived from interest on all
municipal obligations (whenever issued) is included in "adjusted current
earnings" for purposes of the AMT as applied to corporations (to the extent not
already included in alternative minimum taxable income as income attributable to
private activity bonds). In assessing the federal income tax treatment of
interest on any municipal obligation, the Portfolios will generally rely on an
opinion of the issuer's counsel (when available) and will not undertake any
independent verification of the basis for the opinion.

The two principal classifications of municipal bonds are "general
obligation" and "revenue" bonds. Issuers of general obligation bonds include
states, counties, cities, towns and regional districts. The proceeds of these
obligations are used to fund a wide range of public projects including the
construction or improvement of schools, highways and roads, water and sewer
systems and a variety of other public purposes. The basic security of general
obligation bonds is the issuer's pledge of its faith, credit, and taxing power
for the payment of principal and interest. The taxes that can be levied for the
payment of debt service may be limited or unlimited as to rate and amount.

Revenue bonds are generally secured by the net revenues derived from a
particular facility or group of facilities or, in some cases, from the proceeds
of a special excise or other specific revenue source. Revenue bonds have been
issued to fund a wide variety of capital projects including: electric, gas,
water, sewer and solid waste disposal systems; highways, bridges and tunnels;
port, airport and parking facilities; transportation systems; housing
facilities, colleges and universities and hospitals. Although the principal
security behind these bonds varies widely, many provide additional security in
the form of a debt service reserve fund whose monies may be used to make
principal and interest payments on the issuer's obligations. Housing finance
authorities have a wide range of security including partially or fully insured,
rent subsidized and/or collateralized mortgages, and/or the net revenues from
housing or other public projects. In addition to a debt service reserve fund,
some authorities provide further security in the form of a state's ability
(without legal obligation) to make up deficiencies in the debt service reserve
fund. Lease rental revenue bonds issued by a state or local authority for
capital projects are normally secured by annual lease rental payments from the
state or locality to the authority sufficient to cover debt service on the
authority's obligations. Such payments are usually subject to annual
appropriations by the state or locality. Industrial development and pollution
control bonds, although nominally issued by municipal authorities, are in most
cases revenue bonds and are generally not secured by the taxing power of the
municipality, but are usually secured by the revenues derived by the authority
from payments of the industrial user or users. Each Portfolio may on occasion
acquire revenue bonds which carry warrants or similar rights covering equity
securities. Such warrants or rights may be held indefinitely, but if exercised,
the Portfolio anticipates that it would, under normal circumstances, dispose of
any equity securities so acquired within a reasonable period of time.

The obligations of any person or entity to pay the principal of and interest
on a municipal obligation are subject to the provisions of bankruptcy,
insolvency and other laws affecting the rights and remedies of creditors, such
as the Federal Bankruptcy Act, and laws, if any, which may be enacted by
Congress or state legislatures extending the time for payment of principal or
interest, or both, or imposing other constraints upon enforcement of such
obligations. There is also the possibility that as a result of litigation or
other conditions the power or ability of any person or entity to pay when due
principal of and interest on a municipal obligation may be materially affected.
There have been recent instances of defaults and bankruptcies involving
municipal obligations which were not foreseen by the financial and investment
communities. Each Portfolio will take whatever action it considers appropriate
in the event of anticipated financial difficulties, default or bankruptcy of
either the issuer of any municipal obligation or of the underlying source of
funds for debt service. Such action may include retaining the services of
various persons or firms (including affiliates of the investment adviser) to
evaluate or protect any real estate, facilities or other assets securing any
such obligation or acquired by a Portfolio as a result of any such event, and a
Portfolio may also manage (or engage other persons to manage) or otherwise deal
with any real estate, facilities or other assets so acquired. The Portfolio
anticipates that real estate consulting and management services may be required
with respect to properties securing various municipal obligations in its
portfolio or subsequently acquired by the Portfolio. The Portfolio will incur
additional expenditures in taking protective action with respect to portfolio
obligations in default and assets securing such obligations.

The yields on municipal obligations will be dependent on a variety of
factors, including purposes of issue and source of funds for repayment, general
money market conditions, general conditions of the municipal bond market, size
of a particular offering, maturity of the obligation and rating of the issue.
The ratings of Moody's, S&P and Fitch represent their opinions as to the quality
of the municipal obligations which they undertake to rate. It should be
emphasized, however, that ratings are based on judgment and are not absolute
standards of quality. Consequently, municipal obligations with the same
maturity, coupon and rating may have different yields while obligations of the
same maturity and coupon with different ratings may have the same yield. In
addition, the market price of municipal obligations will normally fluctuate with
changes in interest rates, and therefore the net asset value of the Portfolio
will be affected by such changes.

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

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

Hospital bond ratings are often based on feasibility studies which contain
projections of expenses, revenues and occupancy levels. Among the influences
affecting a hospital's gross receipts and net income available to service its
debt are demand for hospital services, the ability of the hospital to provide
the services required, management capabilities, economic developments in the
service area, efforts by insurers and government agencies to limit rates and
expenses, confidence in the hospital, service area economic developments,
competition, availability and expense of malpractice insurance, Medicaid and
Medicare funding and possible federal legislation limiting the rates of increase
of hospital charges.

Electric utilities face problems in financing large construction programs in
an inflationary period, cost increases and delay occasioned by safety and
environmental considerations (particularly with respect to nuclear facilities),
difficulty in obtaining fuel at reasonable prices, and in achieving timely and
adequate rate relief from regulatory commissions, effects of energy conservation
and limitations on the capacity of the capital market to absorb utility debt.

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

INSURED OBLIGATIONS. Insured municipal obligations held by the Florida Insured
Portfolio ("Florida obligations") will be insured as to their scheduled payment
of principal and interest under (i) an insurance policy obtained by the issuer
or underwriter of the Florida obligation at the time of its original issuance
("Issue Insurance"), (ii) an insurance policy obtained by the Florida Insured
Portfolio or a third party subsequent to the Florida obligation's original
issuance ("Secondary Market Insurance") or (iii) a municipal insurance policy
purchased by the Florida Insured Portfolio ("Mutual Fund Insurance"). Each type
of insurance insures the timely payment of interest and principal of the Florida
obligation but does not protect the market value of such obligation or the net
asset value of the Florida Insured Portfolio or the Florida Insured Fund.

Issue Insurance is generally purchased by the issuer or underwriter of the
Florida obligation and is noncancellable and effective as long as the securities
are unpaid and the insurer remains in business. Secondary Market Insurance
allows the Florida Insured Portfolio or a third party to pay a single premium to
insure a Florida obligation as to principal and interest until maturity and to
transfer the insurance benefit with the underlying security. Secondary Market
Insurance premiums do not result in an expense to the Florida Insured Portfolio,
but are added to the cost basis of the Florida obligation so insured. Mutual
Fund Insurance may be purchased from insurance companies that guarantee the
timely payment of interest and principal when due on certain Florida obligations
that are designated by the insurer as eligible for such insurance. Mutual Fund
Insurance may terminate upon the Florida Insured Portfolio's sale of the
obligation or it may be extended to enhance the marketability of the obligation.
To extend a policy, the Florida Insured Portfolio will pay a single,
predetermined premium payable from the proceeds of the sale of that obligation.
It is expected that the Florida Insured Portfolio will extend a policy only if,
in the opinion of the Investment Adviser, the net proceeds from the sale of the
obligation, as insured, would exceed the proceeds from the sale of that
obligation without insurance. The price of Florida obligations insured by Mutual
Fund Insurance is expected to be more volatile than the price of Florida
obligations insured by Issue or Secondary Market Insurance. To the extent the
Florida Insured Portfolio's obligations are insured by Mutual Fund Insurance,
the value of the Florida Insured Fund's investment in the Florida Insured
Portfolio, and the price of the Florida Insured Fund's shares, will be more
volatile than if such obligations were otherwise insured.

With respect to the 80% of its net assets which will be insured, the
obligations held by the Florida Insured Portfolio will be insured by insurers
having a claims-paying ability rated Aaa by Moody's or AAA by S&P or Fitch. See
the Appendix F for a brief description of the claims-paying ability ratings.
Florida Insured Portfolio will invest at least 65% of its total assets in
insured obligations.

The Florida Insured Portfolio anticipates that under normal conditions all
or substantially all of its Florida obligations will be subject to Issue
Insurance or Secondary Market Insurance. If the Florida Insured Portfolio
purchases Mutual Fund Insurance, premiums are paid by the Florida Insured
Portfolio. These premiums are based on the credit quality and principal amount
of the Florida obligation to be insured. If the issuer, underwriter, or other
third party purchases the insurance for the obligation, the value of such
insurance is generally reflected in a higher market value or purchase price for
the obligation. While insurance is intended to reduce financial risk, the cost
of such insurance (from higher purchase prices of securities or the payment of
insurance premiums) will result in lower yields on the Florida obligations so
insured.

The Florida Insured Portfolio may also invest in municipal obligations that
are secured by an escrow or trust account which contains securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities, that are
backed by the full faith and credit of the United States, and sufficient, in
combination with available trustee-held funds, in amount to ensure the payment
of interest on and principal of the secured obligation ("collateralized
obligations"). Collateralized obligations generally are regarded as having the
credit characteristics of the underlying U.S. Government, agency or
instrumentality securities. These obligations will not be subject to Issue
Insurance, Secondary Market Insurance or Mutual Fund Insurance, but will be
considered to be insured obligations for purposes of the Florida Insured
Portfolio's policy of investing at least 80% of its net assets in insured
obligations (but such obligations will not constitute more than 15% of the
insured portion of the Florida Insured Portfolio).

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. The
Hawaii and Kansas Portfolios may also purchase municipal bonds that are
additionally secured by insurance, bank credit agreements, or escrow accounts.

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

Certain municipal lease obligations owned by each Portfolio may be deemed
illiquid for the purpose of the Portfolio's 15% limitation on investments in
illiquid securities, unless determined by the investment adviser, pursuant to
guidelines adopted by the Trustees of a Portfolio, to be liquid securities for
the purpose of such limitation. In determining the liquidity of municipal lease
obligations, the investment adviser will consider a variety of factors
including: (1) the willingness of dealers to bid for the security; (2) the
number of dealers willing to purchase or sell the obligation and the number of
other potential buyers; (3) the frequency of trades and quotes for the
obligation; and (4) the nature of the marketplace trades. In addition, the
investment adviser will consider factors unique to particular lease obligations
affecting the marketability thereof. These include the general creditworthiness
of the municipality, the importance of the property covered by the lease to the
municipality, and the likelihood that the marketability of the obligation will
be maintained throughout the time the obligation is held by a Portfolio. In the
event a Portfolio acquires an unrated municipal lease obligation, the investment
adviser will be responsible for determining the credit quality of such
obligation on an on-going basis, including an assessment of the likelihood that
the lease may or may not be cancelled.

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

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

Municipal obligations held by a Portfolio which are rated below investment
grade but which, subsequent to the assignment of such rating, are backed by
escrow accounts containing U.S. Government obligations may be determined by the
investment adviser to be of investment grade quality for purposes of the
Portfolio's investment policies. A Portfolio may retain in its portfolio an
obligation whose rating drops after its acquisition, including defaulted
obligations, if such retention is considered desirable by the investment
adviser; provided, however, that holdings of obligations rated below the limits
set forth in the prospectus. In the event the rating of an obligation held by a
Portfolio is downgraded, causing the Portfolio to exceed a prospectus
limitation, the investment adviser will (in an orderly fashion within a
reasonable period of time) dispose of such obligations as it deems necessary in
order to comply with the Portfolio's credit quality limitations. In the case of
a defaulted obligation, a Portfolio may incur additional expense seeking
recovery of its investment. See "Portfolio of Investments" in the "Financial
Statements" incorporated by reference into this SAI with respect to any
defaulted obligations held by a Portfolio.

The investment adviser seeks to minimize the risks of investing in below
investment grade securities through professional investment analysis and
attention to current developments in interest rates and economic conditions.
When a Portfolio invests in lower rated or unrated municipal obligations, the
achievement of the Portfolio's goals is more dependent on the investment
adviser's ability than would be the case if the Portfolio were investing in
municipal obligations in the higher rating categories. In evaluating the credit
quality of a particular issue, whether rated or unrated, the investment adviser
will normally take into consideration, among other things, the financial
resources of the issuer (or, as appropriate, of the underlying source of funds
for debt service), its sensitivity to economic conditions and trends, any
operating history of and the community support for the facility financed by the
issue, the ability of the issuer's management and regulatory matters. The
investment adviser will attempt to reduce the risks of investing in the lowest
investment grade, below investment grade and comparable unrated obligations
through active portfolio management, credit analysis and attention to current
developments and trends in the economy and the financial markets.

WHEN-ISSUED SECURITIES. New issues of municipal obligations are sometimes
offered on a "when-issued" basis, that is, delivery and payment for the
securities normally take place within a specified number of days after the date
of a Portfolio's commitment and are subject to certain conditions such as the
issuance of satisfactory legal opinions. Each Portfolio may also purchase
securities on a when-issued basis pursuant to refunding contracts in connection
with the refinancing of an issuer's outstanding indebtedness. Refunding
contracts generally require the issuer to sell and a Portfolio to buy such
securities on a settlement date that could be several months or several years in
the future. Each Portfolio may also purchase instruments that give the Portfolio
the option to purchase a municipal obligation when and if issued.

Each Portfolio will make commitments to purchase when-issued securities only
with the intention of actually acquiring the securities, but may sell such
securities before the settlement date if it is deemed advisable as a matter of
investment strategy. The payment obligation and the interest rate that will be
received on the securities are fixed at the time a Portfolio enters into the
purchase commitment. When a Portfolio commits to purchase a security on a
when-issued basis it records the transaction and reflects the value of the
security in determining its net asset value. Securities purchased on a
when-issued basis and the securities held by a Portfolio are subject to changes
in value based upon the perception of the creditworthiness of the issuer and
changes in the level of interest rates (i.e. appreciation when interest rates
decline and depreciation when interest rates rise). Therefore, to the extent
that a Portfolio remains substantially fully invested at the same time that it
has purchased securities on a when-issued basis, there will be greater
fluctuations in the Portfolio's net asset value than if it solely set aside cash
to pay for when-issued securities.

REDEMPTION, DEMAND AND PUT FEATURES AND PUT OPTIONS. Issuers of municipal
obligations reserve the right to call (redeem) the bond. If an issuer redeems
securities held by the Portfolio during a time of declining interest rates, the
Portfolio may not be able to reinvest the proceeds in securities providing the
same investment return as the securities redeemed. Also, some bonds may have
"put" or "demand" features that allow early redemption by the bondholder. Longer
term fixed-rate bonds may give the holder a right to request redemption at
certain times (often annually after the lapse of an intermediate term). These
bonds are more defensive than conventional long term bonds (protecting to some
degree against a rise in interest rates) while providing greater opportunity
than comparable intermediate term bonds, because the Portfolio may retain the
bond if interest rates decline.

LIQUIDITY AND PROTECTIVE PUT OPTIONS. Each Portfolio may enter into a separate
agreement with the seller of the security or some other person granting the
Portfolio the right to put the security to the seller thereof or the other
person at an agreed upon price. Each Portfolio intends to limit this type of
transaction to institutions (such as banks or securities dealers) which the
investment adviser believes present minimal credit risks and would engage in
this type of transaction to facilitate portfolio liquidity or (if the seller so
agrees) to hedge against rising interest rates. There is no assurance that this
kind of put option will be available to a Portfolio or that selling institutions
will be willing to permit a Portfolio to exercise a put to hedge against rising
interest rates. A Portfolio does not expect to assign any value to any separate
put option which may be acquired to facilitate portfolio liquidity, inasmuch as
the value (if any) of the put will be reflected in the value assigned to the
associated security; any put acquired for hedging purposes would be valued in
good faith under methods or procedures established by the Trustees of the
Portfolio after consideration of all relevant factors, including its expiration
date, the price volatility of the associated security, the difference between
the market price of the associated security and the exercise price of the put,
the creditworthiness of the issuer of the put and the market prices of
comparable put options. Interest income generated by certain bonds having put or
demand features may be taxable.

ILLIQUID OBLIGATIONS. At times, a substantial portion of the Portfolio's assets
may be invested in securities as to which the Portfolio, by itself or together
with other accounts managed by the investment adviser and its affiliates, holds
a major portion or all of such securities. Under adverse market or economic
conditions or in the event of adverse changes in the financial condition of the
issuer, the Portfolio could find it more difficult to sell such securities when
the investment adviser believes it advisable to do so or may be able to sell
such securities only at prices lower than if such securities were more widely
held. Under such circumstances, it may also be more difficult to determine the
fair value of such securities for purposes of computing the Portfolio's net
asset value.

The secondary market for some municipal obligations issued within a state
(including issues which are privately placed with a Portfolio) is less liquid
than that for taxable debt obligations or other more widely traded municipal
obligations. No Portfolio will invest in illiquid securities if more than 15% of
its net assets would be invested in securities that are not readily marketable.
No established resale market exists for certain of the municipal obligations in
which a Portfolio may invest. The market for obligations rated below investment
grade is also likely to be less liquid than the market for higher rated
obligations. As a result, a Portfolio may be unable to dispose of these
municipal obligations at times when it would otherwise wish to do so at the
prices at which they are valued.

SECURITIES LENDING. Each Portfolio may seek to increase its income by lending
portfolio securities to broker-dealers or other institutional borrowers.
Distributions by a Fund of any income realized by a Portfolio from securities
loans will be taxable. If the management of a Portfolio decides to make
securities loans, it is intended that the value of the securities loaned would
not exceed 30% of a Portfolio's total assets. Securities lending involves risks
of delay in recovery or even loss of rights in the securities loaned if the
borrower of the securities fails financially. Each Portfolio has no present
intention of engaging in securities lending.

FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. A change in the level of
interest rates may affect the value of the securities held by a Portfolio (or of
securities that a Portfolio expects to purchase). To hedge against changes in
rates or as a substitute for the purchase of securities, a Portfolio may enter
into (i) futures contracts for the purchase or sale of debt securities and (ii)
futures contracts on securities indices. All futures contracts entered into by a
Portfolio are traded on exchanges or boards of trade that are licensed and
regulated by the Commodity Futures Trading Commission ("CFTC") and must be
executed through a futures commission merchant or brokerage firm which is a
member of the relevant exchange. The Portfolio may purchase and write call and
put options on futures contracts which are traded on a United States or foreign
exchange or board of trade. The Portfolio will be required, in connection with
transactions in futures contracts and the writing of options on futures, to make
margin deposits, which will be held by the Portfolio's custodian for the benefit
of the futures commission merchant through whom the Portfolio engages in such
futures and options transactions.

Some futures contracts and options thereon may become illiquid under adverse
market conditions. In addition, during periods of market volatility, a commodity
exchange may suspend or limit transactions in an exchange-traded instrument,
which may make the instrument temporarily illiquid and difficult to price.
Commodity exchanges may also establish daily limits on the amount that the price
of a futures contract or futures option can vary from the previous day's
settlement price. Once the daily limit is reached, no trades may be made that
day at a price beyond the limit. This may prevent the Portfolio from closing out
positions and limiting its losses.

Each Portfolio will engage in futures and related options transactions for
bona fide hedging purposes or non-hedging purposes as defined in or permitted by
CFTC regulations. The Portfolio will determine that the price fluctuations in
the futures contracts and options on futures used for hedging purposes are
substantially related to price fluctuations in securities held by the Portfolio
or which it expects to purchase. Each Portfolio will engage in transactions in
futures and related options contracts only to the extent such transactions are
consistent with the requirements of the Code for maintaining qualification of a
Fund as a regulated investment company for federal income tax purposes.

ASSET COVERAGE REQUIREMENTS. Transactions involving when-issued securities or
futures contracts and options (other than options that a Portfolio has
purchased) expose a Portfolio to an obligation to another party. A Portfolio
will not enter into any such transactions unless it owns either (1) an
offsetting ("covered") position in securities or other options or futures
contracts, or (2) cash or liquid securities (such as readily marketable
obligations and money market instruments) with a value sufficient at all times
to cover its potential obligations not covered as provided in (1) above. Each
Portfolio will comply with Securities and Exchange Commission ("SEC") guidelines
regarding cover for these instruments and, if the guidelines so require, set
aside cash or liquid securities in a segregated account maintained by its
custodian in the prescribed amount. The securities in the segregated account
will be marked to market daily.

Assets used as cover or held in a segregated account maintained by the
custodian cannot be sold while the position requiring coverage or segregation is
outstanding unless they are replaced with other appropriate assets. As a result,
the commitment of a large portion of a Portfolio's assets to segregated accounts
or to cover could impede portfolio management or a Portfolio's ability to meet
redemption requests or other current obligations.

PORTFOLIO TURNOVER. Each Portfolio may sell (and later purchase) securities in
anticipation of a market decline (a rise in interest rates) or purchase (and
later sell) securities in anticipation of a market rise (a decline in interest
rates). In addition, a security may be sold and another purchased at
approximately the same time to take advantage of what a Portfolio believes to be
a temporary disparity in the normal yield relationship between the two
securities. Yield disparities may occur for reasons not directly related to the
investment quality of particular issues or the general movement of interest
rates, such as changes in the overall demand for or supply of various types of
municipal obligations or changes in the investment objectives of investors. Such
trading may be expected to increase the portfolio turnover rate, which may
increase capital gains and the expenses incurred in connection with such
trading. A Portfolio cannot accurately predict its portfolio turnover rate, but
it is anticipated that the annual portfolio turnover rate will generally not
exceed 100% (excluding turnover of securities having a maturity of one year or
less). A 100% annual turnover rate could occur, for example, if all the
securities held by a Portfolio were replaced once in a period of one year. A
high turnover rate (100% or more) necessarily involves greater expenses to the
Portfolio.

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

INVESTMENT RESTRICTIONS

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

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

(2) Purchase securities on margin (but the Fund may obtain such short-term
credits as may be necessary for the clearance of purchases and sales of
securities). The deposit or payment by the Fund of initial or maintenance margin
in connection with futures contracts or related options transactions is not
considered the purchase of a security on margin;

(3) Underwrite or participate in the marketing of securities of others,
except insofar as it may technically be deemed to be an underwriter in selling a
portfolio security under circumstances which may require the registration of the
same under the Securities Act of 1933;

(4) Purchase or sell real estate, although it may purchase and sell
securities which are secured by real estate and securities of companies which
invest or deal in real estate;

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

(6) Make loans to any person except by (a) the acquisition of debt
instruments and making portfolio investments, (b) entering into repurchase
agreements and (c) lending portfolio securities.

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

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

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

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

(b) invest more than 15% of its net assets in investments which are not
readily marketable, including restricted securities and repurchase
agreements maturing in more than seven days. Restricted securities for
the purposes of this limitation do not include securities eligible for
resale pursuant to Rule 144A under the Securities Act of 1933 and
commercial paper issued pursuant to Section 4(2) of said Act that the
Board of Trustees of the Trust or the Portfolio, or its delegate,
determines to be liquid. Any such determination by a delegate will be
made pursuant to procedures adopted by the Board. If the Fund or
Portfolio invests in Rule 144A securities, the level of portfolio
illiquidity may be increased to the extent that eligible buyers become
uninterested in purchasing such securities.

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

For purposes of a Portfolio's investment restrictions, the determination of
the "issuer" of a municipal obligation which is not a general obligation bond
will be made by the investment adviser on the basis of the characteristics of
the obligation and other relevant factors, the most significant of which is the
source of funds committed to meeting interest and principal payments of such
obligations.

Whenever an investment policy or investment restriction set forth in the
Prospectus or this SAI states a maximum percentage of assets that may be
invested in any security or other asset, or describes a policy regarding quality
standards, such percentage limitation or standard shall be determined
immediately after and as a result of the Fund's or the Portfolio's acquisition
of such security or asset. Accordingly, any later increase or decrease resulting
from a change in values, assets or other circumstances, or any subsequent rating
change made by a rating service, will not compel the Fund or the Portfolio, as
the case may be, to dispose of such security or other asset. Where applicable
and notwithstanding the foregoing, under normal market conditions a Fund and a
Portfolio must take actions necessary to comply with the policy of investing at
least 65% of total assets in a particular state. Moreover, each Fund and
Portfolio must always be in compliance with the limitation on investing in
illiquid securities and the borrowing policies set forth above.

MANAGEMENT AND ORGANIZATION
FUND MANAGEMENT. The Trustees of the Trust are responsible for the overall
management and supervision of the Trust's affairs. The Trustees and officers of
the Trust and the Portfolios are listed below. Except as indicated, each
individual has held the office shown or other offices in the same company for
the last five years. Unless otherwise noted, the business address of each
Trustee and officer is The Eaton Vance Building, 255 State Street, Boston,
Massachusetts 02109. Those Trustees who are "interested persons" of the Trust or
a Portfolio, as defined in the 1940 Act, are indicated by an asterisk(*).

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

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

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

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

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

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

JOHN L. THORNDIKE (72), Trustee
Formerly Director of Fiduciary Company Incorporated. Trustee of various
investment companies managed by Eaton Vance or BMR. Mr. Thorndike will be
retiring from the Board of Trustees in July, 1999.
Address: 175 Federal Street, Boston, Massachusetts 02110

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

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

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

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

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

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

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

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

In addition, Timothy T. Browse (39), Vice President of Eaton Vance and
BMR, is a Vice President of the Kansas Portfolio. Cynthia J. Clemson (36),
Vice President of Eaton Vance and BMR, is a Vice President of the Florida
Insured Portfolio. Ms. Clemson and Mr. Browse are officers of various
investment companies managed by Eaton Vance or BMR.

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

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

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

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

The fees and expenses of the noninterested Trustees of the Trust and the
Portfolios are paid by the Funds (and the other series of the Trust) and the
Portfolios, respectively. (The Trustees of the Trust and the Portfolios who are
members of the Eaton Vance organization receive no compensation from the Trust
or the Portfolios). During the fiscal year ended January 31, 1999, the
noninterested Trustees of the Trust and the Portfolio earned the following
compensation in their capacities as Trustees of the Trust and the Portfolio and
for the year ended December 31, 1998, earned the following compensation in their
capacities as Trustees of the funds in the Eaton Vance fund complex(1):

<TABLE>
<CAPTION>
JESSICA M. DONALD R. SAMUEL L. NORTON H. LYNN A. JOHN L. JACK L.
SOURCE OF COMPENSATION BIBLIOWICZ(9) DWIGHT(3) HAYES, III(4) REAMER STOUT(9) THORNDIKE(5) TREYNOR
- ---------------------- ------------- --------- ------------- ------ -------- ------------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Trust(2) $ 27 $ 876 $ 867 $ 830 $ 212 $ 844 $ 944
Florida Insured Portfolio 9 210 210 196 96 201 224
Hawaii Portfolio 9 38 38 36 10 37 41
Kansas Portfolio 9 38 38 36 10 37 41
Trust and Fund Complex 33,334 160,000(6) 170,000(7) 160,000 32,842 160,000(8) 170,000
- ----------
(1) As of June 1, 1999, the Eaton Vance complex consists of 155 registered investment companies or series thereof.
(2) The Trust consisted of 9 Funds as of January 31, 1999.
(3) Mr. Dwight received deferred compensation from each Portfolio as follows: Florida Insured - $107; Hawaii - $20 and Kansas - $20.
(4) Mr. Hayes received deferred compensation from each Portfolio as follows: Florida Insured - $41; Hawaii - $12 and Kansas - $12.
(5) Mr. Thorndike received deferred compensation from each Portfolio as follows: Florida Insured - $198; Hawaii - $36 and
Kansas - $36.
(6) Includes $60,000 of deferred compensation.
(7) Includes $41,563 of deferred compensation.
(8) Includes $107,925 of deferred compensation.
(9) Ms. Bibliowicz and Ms. Stout were elected Trustees on October 30, 1998.
</TABLE>

ORGANIZATION. Each Fund is a series of the Trust, which is organized under
Massachusetts law as a business trust and is operated as an open-end management
investment company. Each Fund changed its name from Eaton Vance [state name] Tax
Free Fund to EV Marathon [state name] Tax Free Fund to EV Marathon [state name]
Municipals Fund on February 1, 1996. Each Fund was reorganized into multiple
classes and changed its name to Eaton Vance [state name] Municipals Fund on
February 1, 1998. The operations of the Class B reflect the operations of a Fund
prior to February 1, 1998. Class A is a successor to the operations of separate
series of the Trust.

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

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

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

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

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

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

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

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

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

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

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

A Fund may withdraw (completely redeem) all its assets from its
corresponding Portfolio at any time if the Board of Trustees of the Trust
determines that it is in the best interest of that Fund to do so. In the event a
Fund withdraws all of its assets from its corresponding Portfolio, or the Board
of Trustees of the Trust determines that the investment objective of such
Portfolio is no longer consistent with the investment objective of the Fund, the
Trustees would consider what action might be taken, including investing the
assets of such Fund in another pooled investment entity or retaining an
investment adviser to manage the Fund's assets in accordance with its investment
objective. A Fund's investment performance may be affected by a withdrawal of
all its assets (or the assets of another investor in the Portfolio) from its
corresponding Portfolio.

INVESTMENT ADVISORY AND ADMINISTRATIVE SERVICES INVESTMENT
ADVISORY SERVICES. BMR manages the investments and affairs of each Portfolio
subject to the supervision of the Portfolio's Board of Trustees. BMR furnishes
to the Portfolios investment research, advice and supervision, furnishes an
investment program and determines what securities will be purchased, held or
sold by the Portfolio and what portion, if any, of the Portfolio's assets will
be held uninvested. Each Investment Advisory Agreement requires BMR to pay the
salaries and fees of all officers and Trustees of the Portfolio who are members
of the BMR organization and all personnel of BMR performing services relating to
research and investment activities.

For a description of the compensation that each Portfolio pays BMR, see the
prospectus. The following table sets forth the net assets of each Portfolio and
the advisory fees earned during the three fiscal years ended January 31, 1999.

<TABLE>
<CAPTION>
ADVISORY FEE FOR FISCAL YEARS ENDED
NET ASSETS -----------------------------------------
PORTFOLIO AT 1/31/99 JANUARY 31, 1999 JANUARY 31, 1998 JANUARY 31, 1997
- --------- ---------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Florida Insured(1) $28,139,616 $48,856 $42,792 $41,276
Hawaii(2) 20,389,548 30,797 28,115 24,762
Kansas(3) 12,881,278 18,618 17,995 18,746
- ----------
(1) To enhance the net income of the Florida Insured Portfolio, BMR made a reduction of its advisory fee in the amount of
$28,821, for the fiscal year ended January 31, 1999 and in the full amount of its advisory fee for the fiscal years ended
January 31, 1998 and 1997 and for each such year, BMR was allocated a portion of expenses related to the operation of the
Portfolio in the amount of $3,403, $56,285 and $28,072, respectively.
(2) To enhance the net income of the Hawaii Portfolio, BMR made a reduction in the full amount of its advisory fee for the
fiscal years ended January 31, 1999, 1998 and 1997 and for each such year, BMR was allocated a portion of expenses related
to the operation of the Portfolio in the amount of $17,604, $50,117 and $35,083, respectively.
(3) To enhance the net income of the Kansas Portfolio, BMR made a reduction in the full amount of its advisory fee for the
fiscal years ended January 31, 1999, 1998 and 1997 and for each such year, BMR was allocated a portion of expenses related
to the operation of the Portfolio in the amount of $17,654, $42,013 and $28,114, respectively.
</TABLE>

Each Investment Advisory Agreement with BMR continues in effect from year to
year so long as such continuance is approved at least annually (i) by the vote
of a majority of the noninterested Trustees of the Portfolio cast in person at a
meeting specifically called for the purpose of voting on such approval and (ii)
by the Board of Trustees of the Portfolio or by vote of a majority of the
outstanding voting securities of the Portfolio. Each Agreement may be terminated
at any time without penalty on sixty (60) days' written notice by the Board of
Trustees of either party, or by vote of the majority of the outstanding voting
securities of the Portfolio, and the Agreement will terminate automatically in
the event of its assignment. Each Agreement provides that BMR may render
services to others. Each Agreement also provides that BMR shall not be liable
for any loss incurred in connection with the performance of its duties, or
action taken or omitted under that Agreement, in the absence of willful
misfeasance, bad faith, gross negligence in the performance of its duties or by
reason of its reckless disregard of its obligations and duties thereunder, or
for any losses sustained in the acquisition, holding or disposition of any
security or other investment.

ADMINISTRATIVE SERVICES. As indicated in the prospectus, Eaton Vance serves as
administrator of each Fund, but currently receives no compensation for providing
administrative services to the Fund. Under its Administrative Services Agreement
with the Trust, Eaton Vance has been engaged to administer the Funds' affairs,
subject to the supervision of the Trustees of the Trust, and shall furnish for
the use of the Funds' office space and all necessary office facilities,
equipment and personnel for administering the affairs of the Funds.

The following table shows, for the fiscal year ended January 31, 1997, each
Fund's operating expenses that were allocated to the administrator:

FUND JANUARY 31, 1997
- ---- ----------------
Florida Insured ......................................... $ -0-
Hawaii .................................................. 4,103
Kansas .................................................. 3,985

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

EXPENSES. Each Fund and Portfolio is responsible for all expenses not expressly
stated to be payable by another party (such as the investment adviser under the
Investment Advisory Agreement, Eaton Vance under the Administrative Services
Agreement or the principal underwriter under the Distribution Agreement). In the
case of expenses incurred by the Trust, each Fund is responsible for its pro
rata share of those expenses. The only expenses of a Fund allocated to a
particular class are those incurred under the Distribution or Service Plan
applicable to that class and those resulting from the fee paid to the principal
underwriter for handling repurchase transactions.

OTHER SERVICE PROVIDERS

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

CUSTODIAN. Investors Bank & Trust Company ("IBT"), 200 Clarendon Street, Boston,
MA 02116, serves as custodian to the Funds and Portfolios. IBT has the custody
of all cash and securities representing a Fund's interest in a Portfolio, has
custody of each Portfolio's assets, maintains the general ledger of each
Portfolio and each Fund and computes the daily net asset value of interests in
each Portfolio and the net asset value of shares of the Fund. In such capacity
it attends to details in connection with the sale, exchange, substitution,
transfer or other dealings with the Portfolios' investments, receives and
disburses all funds and performs various other ministerial duties upon receipt
of proper instructions from the Trust and the Portfolios. IBT also provides
services in connection with the preparation of shareholder reports and the
electronic filing of such reports with the SEC. EVC and its affiliates and their
officers and employees from time to time have transactions with various banks,
including IBT. It is Eaton Vance's opinion that the terms and conditions of such
transactions were not and will not be influenced by existing or potential
custodial or other relationships between the Fund or the Portfolio and such
banks.

INDEPENDENT ACCOUNTANTS. Deloitte & Touche LLP, 125 Summer Street, Boston,
Massachusetts, are the independent accountants of the Funds and the Portfolios,
providing audit services, tax return preparation, and assistance and
consultation with respect to the preparation of filings with the SEC.

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

PURCHASING AND REDEEMING SHARES
CALCULATION OF NET ASSET VALUE. The net asset value of each Portfolio is
computed by IBT (as agent and custodian for the Portfolio) by subtracting the
liabilities of the Portfolio from the value of its total assets. Inasmuch as the
market for municipal obligations is a dealer market with no central trading
location or continuous quotation system, it is not feasible to obtain last
transaction prices for most municipal obligations held by the Portfolio, and
such obligations, including those purchased on a when-issued basis, will
normally be valued on the basis of valuations furnished by a pricing service.
The pricing services uses information with respect to transactions in bonds,
quotations from bond dealers, market transactions in comparable securities,
various relationships between securities, and yield to maturity in determining
value. Taxable obligations for which price quotations are readily available
normally will be valued at the mean between the latest available bid and asked
prices. Open futures positions on debt securities are valued at the most recent
settlement prices, unless such price does not reflect the fair value of the
contract, in which case the positions will be valued by or at the direction of
the Trustees of the Portfolio. Other assets are valued at fair value using
methods determined in good faith by or at the direction of the Trustees of the
Portfolio. The Funds and the Portfolios will be closed for business and will not
price their respective shares or interests on the following business holidays:
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.

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

ADDITIONAL INFORMATION ABOUT PURCHASES. Fund shares are continuously offered
through investment dealers which have entered agreements with the principal
underwriter. The public offering price is the net asset value next computed
after receipt of the order, plus, in the case of Class A shares, a variable
percentage (sales charge) depending upon the amount of purchase as indicated by
the sales charge table set forth in the prospectus. The sales charge is divided
between the principal underwriter and the investment dealer. The sales charge
table is applicable to purchases of a Fund alone or in combination with
purchases of certain other funds offered by the principal underwriter, made at a
single time by (i) an individual, or an individual, his spouse and their
children under the age of twenty-one, purchasing shares for his or their own
account, and (ii) a trustee or other fiduciary purchasing shares for a single
trust estate or a single fiduciary account. The table is also presently
applicable to (1) purchases of Class A shares pursuant to a written Statement of
Intention; or (2) purchases of Class A shares pursuant to the Right of
Accumulation and declared as such at the time of purchase. See "Sales Charges".

SUSPENSION OF SALES. The Trust may, in its absolute discretion, suspend,
discontinue or limit the offering of one or more of its classes of shares at any
time. In determining whether any such action should be taken, the Trust's
management intends to consider all relevant factors, including (without
limitation) the size of a Fund or class, the investment climate and market
conditions, the volume of sales and redemptions of shares, and in the case of
Class B shares, the amount of uncovered distribution charges of the principal
underwriter. The Class B Distribution Plan may continue in effect and payments
may be made under the Plan following any such suspension, discontinuance or
limitation of the offering of shares; however, there is no contractual
obligation to continue any Plan for any particular period of time. Suspension of
the offering of shares would not, of course, affect a shareholder's ability to
redeem shares.

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

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

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

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

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

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

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

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

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

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

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

The Trust has also adopted a compensation-type Distribution Plan ("Class B
Plan") pursuant to Rule 12b-1 under the 1940 Act for each Fund's Class B shares.
The Plan is designed to permit an investor to purchase shares through an
investment dealer without incurring an initial sales charge and at the same time
permit the principal underwriter to compensate investment dealers in connection
therewith. The Class B Plan provides that each Fund will pay sales commissions
and distribution fees to the principal underwriter only after and as a result of
the sale of Class B shares of the Fund. On each sale of Fund shares (excluding
reinvestment of distributions) each Fund will pay the principal underwriter
amounts representing (i) sales commissions equal to 5% of the amount received by
the Fund for each Class B share sold and (ii) distribution fees calculated by
applying the rate of 1% over the prime rate then reported in The Wall Street
Journal to the outstanding balance of uncovered distribution charges (as
described below) of the principal underwriter. To pay these amounts, each Class
B pays the principal underwriter a fee, accrued daily and paid monthly, at an
annual rate not exceeding .75% of its average daily net assets to finance the
distribution of its shares. Such fees compensate the principal underwriter for
sales commissions paid by it to investment dealers on the sale of Class B shares
and for interest expenses. The principal underwriter uses its own funds to pay
sales commissions (except on exchange transactions and reinvestments) to
investment dealers at the time of sale equal to 4% of the purchase price of the
Class B shares sold by such dealers. CDSCs paid to the principal underwriter
will be used to reduce amounts owed to it. The Class B Plan provides that the
Fund will make no payments to the principal underwriter in respect of any day on
which there are no outstanding uncovered distribution charges of the principal
underwriter. CDSCs and accrued amounts will be paid by the Trust to the
principal underwriter whenever there exist uncovered distribution charges.
Because payments to the principal underwriter under the Class B Plan are
limited, uncovered distribution charges (sales commissions paid by the principal
underwriter plus interest, less the above fees and CDSCs received by it) may
exist indefinitely. For the sales commissions and CDSCs paid on (and uncovered
distribution charges of) Class B shares, see Appendix B.

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

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

The Class B Plan also authorizes each Class B to make payments of service
fees to the principal underwriter, investment dealers and other persons in
amounts not exceeding .25% of its average daily net assets for personal
services, and/or the maintenance of shareholder accounts. The Trustees of the
Trust have initially implemented this provision of the Class B Plan by
authorizing each Class B to make quarterly service fee payments to the principal
underwriter and investment dealers in amounts not expected to exceed .20% of the
average daily net assets for any fiscal year which is based on the value of
Class B shares sold by such persons and remaining outstanding for at least 12
months. This fee is paid quarterly in arrears based on the value of Class B
shares sold by such persons and remaining outstanding for at least twelve
months. For the service fees paid by Class B shares, see Appendix B.

Currently, payments of sales commissions and distribution fees and of
service fees may equal 1% of a Class's average daily net assets per annum. The
Trust believes that the combined rate of all these payments may be higher than
the rate of payments made under distribution plans adopted by other investment
companies pursuant to Rule 12b-1. Although the principal underwriter will use
its own funds (which may be borrowed from banks) to pay sales commissions at the
time of sale, it is anticipated that the Eaton Vance organization will profit by
reason of the operation of the Plan through an increase in the Fund's assets
(thereby increasing the advisory fee payable to BMR by the Portfolio) resulting
from sale of shares and through the amounts paid to the principal underwriter,
including CDSCs, pursuant to the Plan. The Eaton Vance organization may be
considered to have realized a profit under the Plan if at any point in time the
aggregate amounts theretofore received by the principal underwriter pursuant to
the Plan and from CDSCs have exceeded the total expenses theretofore incurred by
such organization in distributing Class B shares of the Fund. Total expenses for
this purpose will include an allocable portion of the overhead costs of such
organization and its branch offices, which costs will include without limitation
leasing expense, depreciation of building and equipment, utilities,
communication and postage expense, compensation and benefits of personnel,
travel and promotional expense, stationery and supplies, literature and sales
aids, interest expense, data processing fees, consulting and temporary help
costs, insurance, taxes other than income taxes, legal and auditing expense and
other miscellaneous overhead items. Overhead is calculated and allocated for
such purpose by the Eaton Vance organization in a manner deemed equitable to the
Trust.

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

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

PERFORMANCE

Average annual total return is determined separately for each Class of a
Fund by multiplying a hypothetical initial purchase order of $1,000 by the
average annual compound rate of return (including capital appreciation/
depreciation, and distributions paid and reinvested) for the stated period and
annualizing the result. The calculation assumes (i) that all distributions are
reinvested at net asset value on the reinvestment dates during the period, (ii)
the deduction of the maximum sales charge from the initial $1,000 purchase order
for Class A shares, (iii) a complete redemption of the investment and, (iv) the
deduction of any CDSC at the end of the period. The Fund may also publish total
return figures for each class based on reduced sales charges or at net asset
value. These returns would be lower if the full sales charge was imposed. For
further information concerning the total return of the Classes of a Fund, see
Appendix A and Appendix B.

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

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

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

Information about portfolio allocation and holdings of a Portfolio at a
particular date (including ratings assigned by independent ratings services such
as Moody's, S&P and Fitch) may be included in advertisements and other material
furnished to present and prospective shareholders. Such information may be
stated as a percentage of the Portfolio's bond holdings on such date.

Comparative information about the yield of a Fund and about average rates of
return on certificates of deposit, bank money market deposit accounts, money
market mutual funds and other short-term investments may also be included in
advertisements, supplemental sales literature or communications of the Fund.
Such information may also compare the taxable equivalent yield (or value) of the
Fund to the after-tax yield (or value) of such other investment vehicles. Such
information may be in the form of hypothetical illustrations. A bank certificate
of deposit, unlike the mutual fund shares, pays a fixed rate of interest and
entitles the depositor to receive the face amount of the certificate of deposit
at maturity. A bank money market deposit account is a form of savings account
which pays a variable rate of interest. Unlike the Fund's shares, bank
certificates of deposit and bank money market deposit accounts are insured by
the Federal Deposit Insurance Corporation. A money market mutual fund is
designed to maintain a constant value of $1.00 per share and, thus, a money
market fund's shares are subject to less price fluctuation than the Fund's
shares.

The average rates of return of money market mutual funds, certificates of
deposit and bank money market deposit accounts referred to in advertisements,
supplemental sales literature or communications of the Fund will be based on
rates published by the Federal Reserve Bank, Donoghues Money Fund Averages,
RateGram or The Wall Street Journal.

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

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

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

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

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

TAXES

Each series of the Trust is treated as a separate entity for federal income
tax purposes. Each Fund has elected to be treated and intends to qualify each
year, as a regulated investment company ("RIC") under the Code. Accordingly,
each Fund intends to satisfy certain requirements relating to sources of its
income and diversification of its assets and to distribute substantially all of
its ordinary income (including tax-exempt income) and net income (after
reduction by any available capital loss carryforwards) in accordance with the
timing requirements imposed by the Code, so as to maintain its RIC status and to
avoid paying any federal income or excise tax. Each Fund so qualified for its
fiscal year ended January 31, 1999. Because each Fund invests its assets in a
Portfolio, the Portfolio normally must satisfy the applicable source of income
and diversification requirements in order for the Fund to also satisfy these
requirements. Each Portfolio will allocate at least annually among its
investors, including a Fund, each investor's distributive share of the
Portfolio's net taxable (if any) and tax-exempt investment income, net realized
capital gains, and any other items of income, gain, loss, deduction or credit.
For purposes of applying the requirements of the Code regarding qualification as
a RIC, each Fund (i) will be deemed to own its proportionate share of each of
the assets of the corresponding Portfolio and (ii) will be entitled to the gross
income of that Portfolio attributable to such share.

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

A Portfolio's investment in zero coupon and certain other securities will
cause it to realize income prior to the receipt of cash payments with respect to
these securities. Such income will be allocated daily to interests in the
Portfolio and, in order to enable the relevant Fund to distribute its
proportionate share of this income and avoid a tax payable by the Fund, the
Portfolio may be required to liquidate securities that it might otherwise have
continued to hold in order to generate cash that the Fund may withdraw from the
Portfolio to make distributions to Fund shareholders.

Investments in lower-rated or unrated securities may present special tax
issues for a Portfolio (and, hence, for the relevant Fund) to the extent that
the issuers of these securities default on their obligations pertaining thereto.
The Code is not entirely clear regarding the federal income tax consequences of
a Portfolio's taking certain positions in connection with ownership of such
distressed securities. For example, the Code is unclear regarding: (i) when a
Portfolio may cease to accrue interest, original issue discount, or market
discount; (ii) when and to what extent deductions may be taken for bad debts or
worthless securities; (iii) how payments received on obligations in default
should be allocated between principal and income; and (iv) whether exchanges of
debt obligations in a workout context are taxable.

Distributions by a Fund of net tax-exempt interest income that are properly
designated as "exempt-interest dividends" may be treated by shareholders as
interest excludable from gross income under Section 103(a) of the Code. In order
for a Fund to be entitled to pay the tax-exempt interest income allocated to it
by its corresponding Portfolio as exempt-interest dividends to its shareholders,
the Fund must and intends to satisfy certain requirements, including the
requirement that, at the close of each quarter of its taxable year, at least 50%
of the value of its total assets consists of obligations the interest on which
is exempt from regular federal income tax under Code Section 103(a). For
purposes of applying this 50% requirement, the Fund will be deemed to own its
proportionate share of each of the assets of the Portfolio, and the Portfolio
currently intends to invest its assets in a manner such that the Fund can meet
this 50% requirement. Interest on certain municipal obligations is treated as a
tax preference item for purposes of the AMT. Shareholders of each Fund are
required to report tax-exempt interest on their federal income tax returns.

Any recognized gain or income attributable to market discount on long-term
tax-exempt municipal obligations (i.e., obligations with a term of more than one
year) purchased after April 30, 1993 other than, in general, at their original
issue, is taxable as ordinary income. A long-term debt obligation is generally
treated as acquired at a market discount if purchased after its original issue
at a price less than (i) the stated principal amount payable at maturity, in the
case of an obligation that does not have original issue discount or (ii) in the
case of an obligation that does have original issue discount, the sum of the
issue price and any original issue discount that accrued before the obligation
was purchased, subject to a de minimis exclusion.

From time to time proposals have been introduced before Congress for the
purpose of restricting or eliminating the federal income tax exemption for
interest on certain types of municipal obligations, and it can be expected that
similar proposals may be introduced in the future. Under federal tax legislation
enacted in 1986, the federal income tax exemption for interest on certain
municipal obligations was eliminated or restricted. As a result of such
legislation, the availability of municipal obligations for investment by a
Portfolio and the value of the securities held by it may be affected.

In the course of managing its investments, a Portfolio may realize some
short-term and long-term capital gains (and/or losses) as a result of market
transactions, including sales of portfolio securities and rights to when-issued
securities and options and futures transactions. A Portfolio may also realize
taxable income from certain short-term taxable obligations, securities loans, a
portion of discount with respect to certain stripped municipal obligations or
their stripped coupons, and certain realized gains or income attributable to
accrued market discount. Any distributions by a Fund of its share of such
capital gains (after reduction by any capital loss carryforwards) or taxable
income would be taxable to shareholders of the Fund. However, it is expected
that such amounts, if any, would normally be insubstantial in relation to the
tax exempt interest earned by the corresponding Portfolio and allocated to the
Fund. Certain distributions of a Fund, if declared in October, November or
December and paid the following January, may be taxed to shareholders as if
received on December 31 of the year in which they are declared.

A Portfolio's transactions in options and futures contracts will be subject
to special tax rules that may affect the amount, timing and character of Fund
distributions to shareholders. For example, certain positions held by a
Portfolio on the last business day of each taxable year will be "marked to
market" (i.e., treated as if closed out on such day), and any resulting gain or
loss will generally be treated as 60% long-term and 40% short-term capital gain
or loss. Certain positions held by a Portfolio that substantially diminish the
Portfolio's risk of loss with respect to other positions in its portfolio may
constitute "straddles," which are subject to tax rules that may cause deferral
of Portfolio losses, adjustments in the holding periods of Portfolio securities,
and conversion of short-term capital losses into long-term capital losses. A
Portfolio may have to limit its activities in options and futures contracts in
order to enable the relevant Fund to maintain its RIC status.

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

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

Amounts paid by a Fund to individuals and certain other shareholders who
have not provided the Fund with their correct taxpayer identification number
("TIN") and certain certifications required by the Internal Revenue Service (the
"IRS") as well as shareholders with respect to whom the Fund has received
certain information from the IRS or a broker, may be subject to "backup"
withholding of federal income tax arising from the Fund's taxable dividends and
other distributions as well as the proceeds of redemption transactions
(including repurchases and exchanges), at a rate of 31%. An individual's TIN is
generally his or her social security number.

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

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

PORTFOLIO SECURITY TRANSACTIONS

Decisions concerning the execution of portfolio security transactions,
including the selection of the market and the executing firm, are made by BMR.
BMR is also responsible for the execution of transactions for all other accounts
managed by it. BMR places the portfolio security transactions of each Portfolio
and of all other accounts managed by it for execution with many firms. BMR uses
its best efforts to obtain execution of portfolio security transactions at
prices which are advantageous to each Portfolio and at reasonably competitive
spreads or (when a disclosed commission is being charged) at reasonably
competitive commission rates. In seeking such execution, BMR will use its best
judgment in evaluating the terms of a transaction, and will give consideration
to various relevant factors, including without limitation the full range and
quality of the executing firm's services, the value of the brokerage and
research services provided, the responsiveness of the firm to BMR, the size and
type of the transaction, the nature and character of the market for the
security, the confidentiality, speed and certainty of effective execution
required for the transaction, the general execution and operational capabilities
of the executing firm, the reputation, reliability, experience and financial
condition of the firm, the value and quality of the services rendered by the
firm in this and other transactions, and the reasonableness of the spread or
commission, if any. Municipal obligations, including state obligations,
purchased and sold by the Portfolios are generally traded in the
over-the-counter market on a net basis (i.e., without commission) through
broker-dealers and banks acting for their own account rather than as brokers, or
otherwise involve transactions directly with the issuer of such obligations.
Such firms attempt to profit from such transactions by buying at the bid price
and selling at the higher asked price of the market for such obligations, and
the difference between the bid and asked price is customarily referred to as the
spread. The Portfolios may also purchase municipal obligations from
underwriters, and dealers in fixed-price offerings, the cost of which may
include undisclosed fees and concessions to the underwriters. On occasion it may
be necessary or appropriate to purchase or sell a security through a broker on
an agency basis, in which case the Portfolio will incur a brokerage commission.
Although spreads or commissions on portfolio security transactions will, in the
judgment of BMR, be reasonable in relation to the value of the services
provided, spreads or commissions exceeding those which another firm might charge
may be paid to firms who were selected to execute transactions on behalf of the
Portfolios and BMR's other clients for providing brokerage and research services
to BMR.

The following table shows brokerage commissions paid by each Portfolio for
each of the fiscal years ended January 31, 1999, 1998 and 1997:

PORTFOLIO JANUARY 31, 1999 JANUARY 31, 1998 JANUARY 31, 1997
- --------- ---------------- ---------------- ----------------
Florida Insured ... $593 $3,470 $ -0-
Hawaii ............ 411 -0- -0-
Kansas ............ 448 419 -0-

All of such portfolio security transactions were directed to firms which
provided some research services to BMR or its affiliates (although many of such
firms may have been selected in any particular transaction primarily because of
their execution capabilities), and the amounts of such transactions for the
fiscal years ended January 31, 1999 and 1998 were as follows: Florida Insured --
$12,503,164 and $64,633,828; Hawaii -- $8,925,000 and $0 and Kansas --
$9,100,687 and $8,444,473.

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

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

The Portfolios and BMR may also receive Research Services from underwriters
and dealers in fixed-price offerings, which Research Services are reviewed and
evaluated by BMR in connection with its investment responsibilities. The
investment companies sponsored by BMR or Eaton Vance may allocate trades in such
offerings to acquire information relating to the performance, fees and expenses
of such companies and other mutual funds, which information is used by the
Trustees of such companies to fulfill their responsibility to oversee the
quality of the services provided by various entities, including BMR, to such
companies. Such companies may also pay cash for such information.

Subject to the requirement that BMR shall use its best efforts to seek and
execute portfolio security transactions at advantageous prices and at reasonably
competitive spreads or commission rates, BMR is authorized to consider as a
factor in the selection of any broker-dealer firm with whom portfolio orders may
be placed the fact that such firm has sold or is selling shares of the Fund or
of other investment companies sponsored by BMR or Eaton Vance. This policy is
not inconsistent with a rule of the NASD which rule provides that no firm which
is a member of the NASD shall favor or disfavor the distribution of shares of
any particular investment company or group of investment companies on the basis
of brokerage commissions received or expected by such firm from any source.

Municipal obligations considered as investments for the Portfolios may also
be appropriate for other investment accounts managed by BMR or its affiliates.
Whenever decisions are made to buy or sell securities by a Portfolio and one or
more of such other accounts simultaneously, BMR will allocate the security
transactions (including "hot" issues) in a manner which it believes to be
equitable under the circumstances. As a result of such allocations, there may be
instances where a Portfolio will not participate in a transaction that is
allocated among other accounts. If an aggregated order cannot be filled
completely, allocations will generally be made on a pro rata basis. An order may
not be allocated on a pro rata basis where, for example: (i) consideration is
given to portfolio managers who have been instrumental in developing or
negotiating a particular investment; (ii) consideration is given to an account
with specialized investment policies that coincide with the particulars of a
specific investment; (iii) pro rata allocation would result in odd-lot or de
minimis amounts being allocated to a portfolio or other client; or (iv) where
BMR reasonably determines that departure from a pro rata allocation is
advisable. While these aggregation and allocation policies could have a
detrimental effect on the price or amount of the securities available to the
Portfolio from time to time, it is the opinion of the Trustees of the Trust and
the Portfolios that the benefits from the BMR organization outweigh any
disadvantage that may arise from exposure to simultaneous transactions.

FINANCIAL STATEMENTS

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

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

Eaton Vance Florida Insured Municipals Fund
Florida Insured Municipals Portfolio
Eaton Vance Hawaii Municipals Fund
Hawaii Municipals Portfolio
Eaton Vance Kansas Municipals Fund
Kansas Municipals Portfolio
(Accession No. 0000950109-99-001282)

<PAGE>

APPENDIX A

CLASS A FEES, PERFORMANCE AND OWNERSHIP

SERVICE FEES
For the fiscal year ended January 31, 1999, the following table shows (1)
the amount of service fees on Class A shares paid under the Service Plan, and
(2) the amount of such service fees paid to investment dealers. The service fees
paid by the Funds that were not paid to investment dealers were retained by the
principal underwriter.

SERVICE FEES TO
CLASS A SERVICE FEES INVESTMENT DEALERS
- ------- ------------ ------------------
Florida Insured ........................ $ 4,117 $ 4,086
Hawaii ................................. 585 585
Kansas ................................. 1,835 1,819

PRINCIPAL UNDERWRITER
For the fiscal year ended January 31, 1999, the following sales charges were
paid in connection with sales of Class A shares:

TOTAL SALES SALES CHARGES TO SALES CHARGES TO
CLASS A CHARGES INVESTMENT DEALERS PRINCIPAL UNDERWRITER
- ------- ------- ------------------ ---------------------
Florida Insured ..... $ 88,505 $ 85,066 $3,439
Hawaii .............. 2,892 2,750 142
Kansas .............. 22,317 21,067 1,250

The Trust has authorized the principal underwriter to act as its agent in
repurchasing shares at the rate of $2.50 for each repurchase transaction handled
by the principal underwriter. For the fiscal year ended January 31, 1999, Class
A paid the principal underwriter for repurchase transactions handled by it $2.50
for each such transaction which aggregated as follows: Florida Insured -- $35;
Hawaii -- $95 and Kansas -- $35.

PERFORMANCE INFORMATION

The tables below indicate the cumulative and average annual total return on
a hypothetical investment in shares of $1,000. Total return for the period prior
to February 1, 1998 reflects the total return of the predecessor to Class A.
Total return prior to the predecessor fund's commencement of operations reflects
the total return of Class B, adjusted to reflect the Class A sales charge. The
Class B total return has not been adjusted reflect certain other expenses (such
as distribution and/or service fees). If such adjustments were made the Class A
total return would be different. The "Value of Initial Investment" reflects the
deduction of the maximum sales charge of 4.75%. Past performance is not
indicative of future results. Investment return and principal value will
fluctuate; shares, when redeemed, may be worth more or less than their original
cost. Information presented with two asterisks (**) includes the effect of
subsidizing expenses. Returns would have been lower without subsidies.

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

TOTAL RETURN TOTAL RETURN
EXCLUDING MAXIMUM INCLUDING MAXIMUM
VALUE OF VALUE OF SALES CHARGE SALES CHARGE
INVESTMENT INVESTMENT INITIAL INVESTMENT ---------------------------- ---------------------------
PERIOD* DATE INVESTMENT ON 1/31/99 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- -------------------------- ------------- -------------- ------------- ------------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Life of Fund** 3/2/94 $952.38 $1,413.11 48.38% 8.35% 41.31% 7.28%
1 Year Ended 1/31/99** 1/31/98 $952.26 $1,014.37 6.52% 6.52% 1.44% 1.44%
- ------------
*Predecessor Fund commenced operations March 3, 1994.
</TABLE>

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

TOTAL RETURN TOTAL RETURN
EXCLUDING MAXIMUM INCLUDING MAXIMUM
VALUE OF VALUE OF SALES CHARGE SALES CHARGE
INVESTMENT INVESTMENT INITIAL INVESTMENT ---------------------------- ---------------------------
PERIOD* DATE INVESTMENT ON 1/31/99 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- -------------------------- ------------- -------------- ------------- ------------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Life of Fund** 3/2/94 $952.42 $1,227.29 28.86% 5.29% 22.73% 4.25%
1 Year Ended 1/31/99** 1/31/98 $952.06 $1,012.46 6.34% 6.34% 1.25% 1.25%
- ------------
*Predecessor Fund commenced operations March 3, 1994.
</TABLE>

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

TOTAL RETURN TOTAL RETURN
EXCLUDING MAXIMUM INCLUDING MAXIMUM
VALUE OF VALUE OF SALES CHARGE SALES CHARGE
INVESTMENT INVESTMENT INITIAL INVESTMENT ---------------------------- ---------------------------
PERIOD* DATE INVESTMENT ON 1/31/99 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- -------------------------- ------------- -------------- ------------- ------------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Life of Fund** 3/2/94 $952.38 $1,282.20 34.63% 6.23% 28.22% 5.18%
1 Year Ended 1/31/99** 1/31/98 $952.64 $1,007.69 5.77% 5.77% 0.77% 0.77%
- ------------
*Predecessor Fund commenced operations March 3, 1994.
</TABLE>

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

As at April 30, 1999, the Trustees and officers of the Trust, as a group,
owned in the aggregate less than 1% of the outstanding shares of each Class A
and of each Fund. In addition, as of the same date, the following record owners
held the amounts of Class A shares indicated below, which were held either (i)
individually or (ii) on behalf of customers who are the beneficial owners of
such shares and as to which they have voting power under certain limited
circumstances:

<TABLE>
<S> <C> <C> <C>
FLORIDA INSURED FUND - Merrill Lynch, Pierce, Fenner & Smith, Inc. Jacksonville, FL 26.9%
Advest Inc. Hartford, CT 9.2%
James L. Elliott Living Trust Charlevoix, MI 8.5%
Virginia Berg-Rheintgen Tierra Verde, Fl 8.1%
HAWAII FUND - Prudential Securities FBO
Shizuko Machida Rev. Liv. Trust Hilo, HI 18.1%
PaineWebber FBO Randall & Elizabeth Yee Pukalani, HI 9.2%
PaineWebber FBO Donna Ueki Kahului, HI 9.0%
Maxine Martinie Kailua, HI 8.7%
Steven Yasuo Nagata Trust Kaneohe, HI 8.1%
PaineWebber FBO Gayle & Riki Nakamoto Aiea, HI 7.7%
Kosei Yamane Trust Honolulu, HI 6.5%
PaineWebber FBO
Jean Nakamoto Rev. Liv. Trust Kahului, HI 6.4%
KANSAS FUND - Fahnestock Co. Inc. New York, NY 23.7%
Eugene A. White Trust McPherson, KS 5.8%
Lee & Inez Hoyt Longton, KS 5.0%
</TABLE>

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

<PAGE>

APPENDIX B

CLASS B FEES, PERFORMANCE AND OWNERSHIP

DISTRIBUTION AND SERVICE FEES
For the fiscal year ended January 31, 1999, the following table shows, (1)
sales commissions paid by the principal underwriter to investment dealers on
sales of Class B shares, (2) distribution payments to the principal underwriter
under the Distribution Plan, (3) CDSC payments to the principal underwriter, (4)
uncovered distribution charges under the Plan, (5) service fees on Class B
shares, and (6) the amount of service fees on Class B shares paid to investment
dealers. The service fees paid by the Funds that were not paid to investment
dealers were retained by the principal underwriter. Distribution payments and
CDSC payments reduce uncovered distribution charges under the Plan.

<TABLE>
<CAPTION>
DISTRIBUTION CDSC SERVICE
PAYMENTS TO PAYMENTS TO AMOUNT OF UNCOVERED FEES TO
SALES THE PRINCIPAL THE PRINCIPAL DISTRIBUTION CHARGES SERVICE INVESTMENT
CLASS B COMMISSIONS UNDERWRITER UNDERWRITER (AS A % OF NET ASSETS) FEES DEALERS
- ------- ----------- ----------- ----------- ---------------------- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Florida Insured ... $127,317 $ 164,729 $ 43,000 $ 688,000 (2.4%) $ 35,560 $ 35,229
Hawaii ............ 78,582 144,679 55,000 682,000 (3.4%) 31,372 31,079
Kansas ............ 62,831 78,822 15,000 371,000 (2.9%) 17,985 17,817
</TABLE>

The Trust has authorized the principal underwriter to act as its agent in
repurchasing shares at the rate of $2.50 for each repurchase transaction handled
by the principal underwriter. For the fiscal year ended January 31, 1999, Class
B paid the principal underwriter for repurchase transactions handled by it $2.50
for each such transaction which aggregated as follows: Florida Insured --
$172.50; Hawaii -- $290 and Kansas -- $92.50.

PERFORMANCE INFORMATION

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

<PAGE>

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

VALUE OF VALUE OF
INVESTMENT INVESTMENT TOTAL RETURN BEFORE TOTAL RETURN AFTER
BEFORE AFTER DEDUCTING DEDUCTING
DEDUCTING THE DEDUCTING THE THE MAXIMUM CDSC THE MAXIMUM CDSC
INVESTMENT INVESTMENT AMOUNT OF MAXIMUM CDSC MAXIMUM CDSC -------------------------- --------------------------
PERIOD* DATE INVESTMENT ON 1/31/99 ON 1/31/99 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- -------------- ------------ ----------- --------------- --------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Life of Fund** 3/2/94 $1,000 $1,424.16 $1,404.16 42.42% 7.45% 40.42% 7.14%
1 Year Ended
1/31/99** 1/31/98 $1,000 $1,058.18 $1,008.18 5.82% 5.82% 0.82% 0.82%
- ------------
*Investment operations began on March 2, 1994.

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

VALUE OF
INVESTMENT VALUE OF TOTAL RETURN BEFORE TOTAL RETURN AFTER
BEFORE INVESTMENT AFTER DEDUCTING DEDUCTING
DEDUCTING THE DEDUCTING THE THE MAXIMUM CDSC THE MAXIMUM CDSC
INVESTMENT INVESTMENT AMOUNT OF MAXIMUM CDSC MAXIMUM CDSC -------------------------- --------------------------
PERIOD* DATE INVESTMENT ON 1/31/99 ON 1/31/99 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- -------------- ----------- ----------- --------------- ---------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Life of Fund** 3/2/94 $1,000 $1,295.18 $1,275.18 29.52% 5.40% 27.52% 5.06%
1 Year Ended
1/31/99** 1/31/98 $1,000 $1,052.91 $1,002.91 5.29% 5.29% 0.29% 0.29%
- ------------
*Investment operations began on March 2, 1994.

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

VALUE OF
INVESTMENT VALUE OF TOTAL RETURN BEFORE TOTAL RETURN AFTER
BEFORE INVESTMENT AFTER DEDUCTING DEDUCTING
DEDUCTING THE DEDUCTING THE THE MAXIMUM CDSC THE MAXIMUM CDSC
INVESTMENT INVESTMENT AMOUNT OF MAXIMUM CDSC MAXIMUM CDSC -------------------------- --------------------------
PERIOD* DATE INVESTMENT ON 1/31/99 ON 1/31/99 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ------------- ----------- ----------- --------------- ----------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Life of Fund** 3/2/94 $1,000 $1,328.22 $1,308.22 32.82% 5.94% 30.82% 5.61%
1 Year Ended
1/31/99** 1/31/98 $1,000 $1,049.57 $ 999.62 4.96% 4.96% -0.04% -0.04%
- ------------
*Investment operations began on March 2, 1994.
</TABLE>

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

As at April 30, 1999, the Trustees and officers of the Trust, as a group,
owned in the aggregate less than 1% of the outstanding shares of each Class B
and of each Fund. In addition, as of the same date, the following record owners
held the amounts of Class B shares indicated below, which were held on behalf of
their customers who are the beneficial owners of such shares and as to which
they have voting power under certain limited circumstances:

<TABLE>
<S> <C> <C> <C>
FLORIDA INSURED FUND - Merrill Lynch, Pierce, Fenner & Smith, Inc. Jacksonville, FL 14.4%
HAWAII FUND - Merrill Lynch, Pierce, Fenner & Smith, Inc. Jacksonville, FL 5.7%
Prudential Securities, Inc. FBO
Yuk Ping Fong Rev. Liv. Trust Honolulu, HI 5.4%
Prudential Securities, Inc. FBO
Erica & Sidney Hsiao Trust Honolulu, HI 5.0%
KANSAS FUND - Merrill Lynch, Pierce, Fenner & Smith, Inc. Jacksonville, FL 9.5%

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

<PAGE>
APPENDIX C: STATE SPECIFIC INFORMATION

RISKS OF CONCENTRATION

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

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

FLORIDA INSURED

In recent years, Florida has emerged as one of the world's fastest growing
markets, experiencing an explosion of international growth as a major economic
hub of the southeastern United States. With a gross state product of $368.9
billion, if the State of Florida were a sovereign nation, it would rank as the
world's 16th largest market economy and 5th in the Americas. Florida is a state
characterized by rapid population growth and substantial capital needs which are
being funded through frequent debt issuance and pay-as-you-go financing.
Florida's economy is characterized by a large service sector, a dependence on
the tourism and construction industries, and a large retirement population. The
management of rapid growth has been the major challenge facing state and local
governments. While attracting many senior citizens, Florida also offers a
favorable business environment and growing employment opportunities that have
continued to generate working-age population immigration. As this growth
continues, particularly within the retirement population, the demand for both
public and private services will increase, which may strain the service sector's
capacity and impede the State's budget balancing efforts.

Florida has a proportionally greater number of persons of retirement age; a
factor that makes Florida's property and transfer payment taxes a relatively
more important source of State funding. Because transfer payments are typically
less sensitive to the business cycle than employment income, they may act as a
stabilizing force in weak economic periods.

Taking advantage of a number of favorable factors -- a strong national
economy, a waning fear of crime among visitors, and improved local marketing --
the State has increased the number of tourists. For fiscal year 1997-98, the
number of tourists visiting Florida was 48.7 million, a 10.0% increase over
fiscal year 1996-97. For fiscal year 1998-99 expected tourist arrivals are
projected at 49.9 million, a 2.4% increase over fiscal year 1997-98. For fiscal
year 1999-2000, expected tourist arrivals are projected at 51.5 million, a 3.2%
increase over fiscal year 1998-99.

There has been a decline in Florida's dependency on highly cyclical
construction and construction-related manufacturing sectors. For example, in
1985, construction employment, as a share of total non-farm employment, was
7.5%. From 1990 through 1995, the share edged downward to an average of 5.1%.
While the share for 1999 is expected to slightly increase to 5.5%, the trend is
expected to resume a downward slope and drop below the 5% level by 2002, as
Florida's economy continues to diversify.

The ability of the State and its local units of government to satisfy its
debt obligations may be affected by numerous factors which impact on the
economic vitality of the State in general and the particular region of the State
in which the issuer of the debt obligations is located. South Florida is
particularly susceptible to international trade and currency imbalances and to
economic dislocations in Central and South America, due to its geographical
location and its involvement with foreign trade, tourism and investment capital.
North and Central Florida are impacted by problems in the agricultural sector,
particularly with regard to the citrus and sugar industries. Short-term adverse
economic conditions may be created in these areas, and in the State as a whole,
due to crop failures, severe weather conditions or other agriculture-related
problems. The State economy also has historically been dependent on the tourism
and construction industries and is, therefore, sensitive to trends in those
sectors.

HAWAII

Hawaii continues to struggle to recover from its prolonged economic
doldrums. Its economy did continue its modest recovery through 1998. Tourism has
shown a slight decline in visitor arrivals and in total visitor days, and daily
spending and average length of stay are down in certain segments of the market,
including the eastbound sector and particularly among Japanese visitors. The job
count decreased moderately in 1998, and the construction industry continued to
lag. A decline in Japanese and overall eastbound market segment hurt, as Asian
economies continued to suffer, but was offset in part by an increase in
westbound visitors. Eastbound visitor counts declined slightly in 1998,
approximately 1%, but the westbound visitor count increased approximately 2%.
Average daily spending per visitor declined for eastbound visitors but increased
for westbound visitors, while average length of stay increased slightly.

Somewhat remarkably, given the economic recession and stagnation in the
first half of the decade, Hawaii real personal income, adjusted for inflation,
has evidenced sustained growth during the period. From mid-1991 through
mid-1995, Hawaii real personal income grew at a 1.4% compound annual rate. Real
personal income continued to grow at a relatively slow pace of 2.0% during 1998
and similar growth is expected in 1999.

Because Hawaii's emerging economic recovery is slow at best and somewhat
ambiguous, employment indicators have yet to register much improvement during
1997. Statewide unemployment in 1997 was 6.4% and is expected to remain above 5%
in 1998 and 1999.

Beginning in 1992, Hawaii's construction industry settled into a cyclical
trough in 1995 from which it has yet to rebound. Contracting receipts increased
slightly in 1996 to just under $3.2 billion, the largest total of the decade,
but declined to approximately $2.8 billion in 1997 and further to $2.7 billion
in 1998.

Among the bright spots in Hawaii's emerging economic recovery, Hawaiian
agriculture, long dominated by sugar and pineapple production, continues its
transition from plantation dominated production to diversified agriculture.
Throughout the State, expanding diversified agriculture acreage is absorbing
some of the freed up sugar land as sugar continues to contract. Sugar cane sales
decreased approximately 15% in 1996 over the previous year, and essentially has
been flat since. Pineapple sales however increased 10% in 1996 and approximately
8% in 1997. Hawaiian agriculture is now an increasingly diverse mix of specialty
crop and livestock products, both for export and import substitution, and of
medium- and large-scale orchard producers of crops such as coffee, macadamia
nuts and cocoa. Increasingly, the future of diversified agriculture -- and
aquaculture -- is being defined at the frontiers of biotechnology, attracting
from the world's largest seed companies and others around the world.

Hawaii's county governments (the only units of local government in the
State) may issue government obligation bonds. The counties, however, have
preferred not to finance capital investment with debt. As a result, relatively
minimal amounts are charged to the county general obligation debt limit, which
restricts local government indebtedness to not more than 15% of net assessed
value of real property.

KANSAS

Traditionally a farm-based economy, recent growth in the trade, services and
manufacturing sectors has decreased Kansas' strong dependence on agriculture. At
present, the Kansas economy has four major economic sectors (wholesale and
retail trade, manufacturing, services, and government) which employ from 16 to
25 percent of the labor force. Agriculture employed an estimated 3.3 percent of
the work force in 1998.

Primary sources of state revenue are a 4.9% sales tax, a corporate income
tax between 4% and 7.35% and an individual income tax between 3.5% and 6.45%. In
1998, the sales tax constituted 34% of taxes collected. The largest percentage
of expenditures from all state funds are in the areas of education and research
(public schools, state universities, state board of education) and human
resources (assistance programs). General property taxes generate a large portion
of local tax revenue. Local sales and use taxes have provided an increased
amount of revenue, from $30 million in 1980 to $754.2 million in 1998, as voters
in more cities and counties have elected to impose the tax or to raise the tax
rate to the maximum permitted by state law.

The State's 1998 General Fund showed total revenues of $4 billion against
total expenditures of $4 billion. In 1990, the Kansas legislature approved House
Bill 2867 which established ending balances as a mechanism to hold state
expenditure growth to the level of revenue growth. House Bill 2867 requires that
in each fiscal year certain funds be transferred from the state General Fund to
the newly created cash operating reserve fund. The reserve fund is designed to
be available in the event that revenues in the General Fund are insufficient to
meet budgeted expenditures. House Bill 2867 also provides that state General
Fund balances in addition to the cash operating reserve fund must be one percent
of expenditures in fiscal year 1993, two percent of expenditures in fiscal year
1994 and 2.5 percent in 1995 and each fiscal year thereafter.

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

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

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

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

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

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

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

<PAGE>

APPENDIX D: TAX EQUIVALENT YIELD TABLES

The tables below give the approximate yield a taxable security must earn at
various income brackets to produce after-tax yields equivalent to those of tax
exempt bonds yielding from 4% to 7% under the regular federal income tax and
applicable state and local taxes at tax rates applicable for 1999.

Note: The federal income tax portion of the indicated combined income tax
brackets in the tables does not take into account the effect of a reduction in
the deductibility of itemized deductions (including applicable state and local
taxes) for taxpayers with adjusted gross income in excess of $126,600. The tax
brackets also do not show the effects of phaseout of personal exemptions for
single filers with adjusted gross income in excess of $126,600 and joint filers
with adjusted gross income in excess of $189,950. The effective tax brackets and
equivalent taxable yields of such taxpayers will be higher than those indicated
in the tables.

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

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

<TABLE>
<CAPTION>
FLORIDA INSURED

OR THE TAXABLE INCOME YOU ARE IN
IF THE TAXABLE INCOME ON ON THIS FEDERAL IN YOUR BRACKET, A TAX-FREE YIELD OF
YOUR SINGLE RETURN IS* YOUR JOINT RETURN IS* BRACKET 4% 4.5% 5% 5.5% 6% 6.5% 7%
- --------------------------- ---------------------- ------------- ---------------------------------------------------------------
EQUALS THAT OF A TAXABLE INVESTMENT YIELDING
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>

Up to $25,750 Up to $43,050 15.00% 4.71% 5.29% 5.88% 6.47% 7.06% 7.65% 8.24%
$ 25,751-$ 62,450 $ 43,051-$104,050 28.00 5.56 6.25 6.94 7.64 8.33 9.03 9.72
$ 62,451-$130,250 $104,051-$158,550 31.00 5.80 6.52 7.25 7.97 8.70 9.42 10.14
$130,251-$283,150 $158,551-$283,150 36.00 6.25 7.03 7.81 8.59 9.38 10.16 10.94
Over $283,150 Over $283,150 39.60 6.62 7.45 8.28 9.11 9.93 10.76 11.59

<CAPTION>
OR THE TAXABLE INCOME
IF THE TAXABLE INCOME ON ON
YOUR SINGLE RETURN IS* YOUR JOINT RETURN IS* 4% 4.5% 5% 5.5% 6% 6.5% 7%
- ------------------------ ---------------------- -----------------------------------------------------------------
TAX EQUIVALENT YIELD REFLECTING EXEMPTION FROM INTANGIBLES TAX:**
<S> <C> <C> <C> <C> <C> <C> <C> <C>

Up to $25,750 Up to $43,050 4.95% 5.54% 6.13% 6.71% 7.30% 7.89% 8.48%
$ 25,751-$ 62,450 $ 43,051-$104,050 5.85 6.54 7.23 7.93 8.62 9.31 10.01
$ 62,451-$130,250 $104,051-$158,550 6.10 6.83 7.55 8.27 9.00 9.72 10.44
$130,251-$283,150 $158,551-$283,150 6.58 7.36 8.14 8.92 9.70 10.48 11.26
Over $283,150 Over $283,150 6.97 7.80 8.62 9.45 10.28 11.10 11.93

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

<CAPTION>
HAWAII

A FEDERAL AND HAWAII STATE
COMBINED TAX EXEMPT YIELD OF:
SINGLE RETURN JOINT RETURN FEDERAL AND 4% 4.5% 5% 5.5% 6% 6.5% 7%
- --------------------- ------------------- HI STATE ------------------------------------------------------------------------
(TAXABLE INCOME*) TAX BRACKET+ IS EQUIVALENT TO A FULLY TAXABLE YIELD OF:
- ------------------------------------------ ------------ ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>

Up to $25,750 Up to $43,050 21.97% 5.13% 5.77% 6.41% 7.05% 7.69% 8.33% 8.97%
$ 25,751-$ 62,450 $ 43,051-$104,050 34.30 6.09 6.85 7.61 8.37 9.13 9.89 10.65
$ 62,451-$130,250 $104,051-$158,550 37.04 6.35 7.15 7.94 8.74 9.53 10.32 11.12
$130,251-$283,150 $158,551-$283,150 41.60 6.85 7.71 8.56 9.42 10.27 11.13 11.99
Over $283,150 Over $283,150 44.89 7.26 8.16 9.07 9.98 10.89 11.79 12.70

* Net amount subject to the federal and Hawaii individual income tax after deductions and exemptions.

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

<CAPTION>
KANSAS

A FEDERAL AND KANSAS STATE
COMBINED TAX EXEMPT YIELD OF:
SINGLE RETURN JOINT RETURN FEDERAL AND 4% 4.5% 5% 5.5% 6% 6.5% 7%
- --------------------- ------------------- HI STATE ------------------------------------------------------------------------
(TAXABLE INCOME*) TAX BRACKET+ IS EQUIVALENT TO A FULLY TAXABLE YIELD OF:
- ------------------------------------------ ------------ ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Up to $25,750 Up to $43,050 22.86% 5.19% 5.83% 6.48% 7.13% 7.78% 8.43% 9.07%
$ 25,751-$ 62,450 $ 43,051-$104,050 34.80 6.14 6.90 7.67 8.44 9.20 9.97 10.74
$ 62,451-$130,250 $104,051-$158,550 37.52 6.40 7.20 8.00 8.80 9.60 10.40 11.20
$130,251-$283,150 $158,551-$283,150 42.05 6.90 7.77 8.63 9.49 10.35 11.22 12.08
Over $283,150 Over $283,150 45.31 7.31 8.23 9.14 10.06 10.97 11.88 12.80

* Net amount subject to federal and Kansas personal income tax after deductions and exemptions.
+ The combined tax rates are calculated using the highest State income tax rate for each federal income bracket shown and a
local tax of 3% on the income from intangibles. An investor with taxable income below the highest dollar amount in the lowest
bracket and/or residing in a county, city or township imposing a lower intangibles tax rate may have a lower combined tax rate
and taxable equivalent yield than shown above. The applicable federal tax rates within the brackets set forth above are 15%,
28%, 31%, 36% and 39.6% over the same ranges of income.

</TABLE>

<PAGE>

APPENDIX E: DESCRIPTION OF SECURITIES RATINGS+

MOODY'S INVESTORS SERVICE, INC.

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

Aa: Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long term risk appear somewhat larger than the Aaa securities.

A: Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.

Baa: Bonds which are rated Baa are considered as medium-grade obligations (i.e.,
they are neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

Ba: Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during other good and bad times over the future. Uncertainty of position
characterizes bonds in this class.

B: Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

Caa: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal
or interest.

Ca: Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked
shortcomings.

C: Bonds which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.

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

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

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

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

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

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

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

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

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

MUNICIPAL SHORT-TERM OBLIGATIONS
RATINGS: Moody's ratings for state and municipal short-term obligations will be
designated Moody's Investment Grade or (MIG). Such rating recognizes the
differences between short term credit risk and long term risk. Factors effecting
the liquidity of the borrower and short term cyclical elements are critical in
short term ratings, while other factors of major importance in bond risk, long
term secular trends for example, may be less important over the short run.

A short term rating may also be assigned on an issue having a demand feature,
variable rate demand obligation (VRDO). Such ratings will be designated as
VMIG1, SG or if the demand feature is not rated, NR. A short term rating on
issues with demand features are differentiated by the use of the VMIG1 symbol to
reflect such characteristics as payment upon periodic demand rather than fixed
maturity dates and payment relying on external liquidity. Additionally,
investors should be alert to the fact that the source of payment may be limited
to the external liquidity with no or limited legal recourse to the issuer in the
event the demand is not met.

STANDARD & POOR'S RATINGS GROUP

INVESTMENT GRADE

AAA: Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.

AA: Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the highest rated issues only in small degree.

A: Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.

BBB: Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibit adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay interest and repay principal for debt in this
category than in higher rated categories.

SPECULATIVE GRADE
Debt rated BB, B, CCC, CC, and C is regarded as having predominantly speculative
characteristics with respect to capacity to pay interest and repay principal. BB
indicates the least degree of speculation and C the highest. While such debt
will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major exposures to adverse conditions.

BB: Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating.

B: Debt rated B has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB or BB-
rating.

CCC: Debt rated CCC has a currently identifiable vulnerability to default, and
is dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
B or B- rating.

CC: The rating CC is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC debt rating.

C: The rating C is typically applied to debt subordinated to senior debt which
is assigned an actual or implied CCC- debt rating. The C rating may be used to
cover a situation where a bankruptcy petition has been filed, but debt service
payments are continued.

C1: The rating C1 is reserved for income bonds on which no interest is being
paid.

D: Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The D rating also will be used upon the
filing of a bankruptcy petition if debt service payments are jeopardized.

PLUS (+) OR MINUS (-): The ratings from AA to CCC may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.

P: The letter "P" indicates that the rating is provisional. A provisional rating
assumes the successful completion of the project being financed by the debt
being rated and indicates that payment of debt service requirements is largely
or entirely dependent upon the successful and timely completion of the project.
This rating, however, while addressing credit quality subsequent to completion
of the project, makes no comment on the likelihood of, or the risk of default
upon failure of such completion. The investor should exercise his own judgment
with respect to such likelihood and risk.

L: The letter "L" indicates that the rating pertains to the principal amount of
those bonds to the extent that the underlying deposit collateral is insured by
the Federal Deposit Insurance Corp. and interest is adequately collateralized.
In the case of certificates of deposit, the letter "L" indicates that the
deposit, combined with other deposits being held in the same right and capacity,
will be honored for principal and accrued pre-default interest up to the federal
insurance limits within 30 days after closing of the insured institution or, in
the event that the deposit is assumed by a successor insured institution, upon
maturity.

NR: Indicates that no rating has been requested, that there is insufficient
information on which to base a rating, or that S&P does not rate a particular
type of obligation as a matter of policy.

MUNICIPAL NOTES
S&P note ratings reflect the liquidity concerns and market access risks unique
to notes. Notes due in 3 years or less will likely receive a note rating. Notes
maturing beyond 3 years will most likely receive a long-term debt rating. The
following criteria will be used in making that assessment:

-- Amortization schedule (the larger the final maturity relative to other
maturities the more likely it will be treated as a note).

-- Sources of payment (the more dependent the issue is on the market for its
refinancing, the more likely it will be treated as a note).

Note rating symbols are as follows:

SP-1: Strong capacity to pay principal and interest. Those issues determined
to possess very strong characteristics will be given a plus(+) designation.

SP-2: Satisfactory capacity to pay principal and interest, with some
vulnerability to adverse financial and economic changes over the term of the
notes.

SP-3: Speculative capacity to pay principal and interest.

FITCH IBCA

INVESTMENT GRADE BOND RATINGS

AAA: Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.

AA: Bonds considered to be investment grade and of very high credit quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated "AAA". Because bonds rated in the "AAA" and
"AA" categories are not significantly vulnerable to foreseeable future
developments, short-term debt of these issuers is generally rated "F-1+".

A: Bonds considered to be investment grade and of high credit quality. The
obligors ability to pay interest and repay principal is considered to be strong,
but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.

BBB: Bonds considered to be investment grade and of satisfactory credit quality.
The obligor's ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however, are
more likely to have adverse impact on these bonds, and therefore, impair timely
payment. The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings.

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

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

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

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

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

DDD, DD, AND D: Bonds are in default on interest and/or principal payments. Such
bonds are extremely speculative and should be valued on the basis of their
ultimate recovery value in liquidation or reorganization of the obligor. "DDD"
represents the highest potential for recovery on these bonds, and "D" represents
the lowest potential for recovery.

PLUS (+) OR MINUS (-): The ratings from AA to C may be modified by the addition
of a plus or minus sign to indicate the relative position of a credit within the
rating category.

NR: Indicates that Fitch does not rate the specific issue.

CONDITIONAL: A conditional rating is premised on the successful completion of
a project or the occurrence of a specific event.

INVESTMENT GRADE SHORT-TERM RATINGS
Fitch's short-term ratings apply to debt obligations that are payable on demand
or have original maturities of generally up to three years, including commercial
paper, certificates of deposit, medium-term notes, and municipal and investment
notes.

F-1+: Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.

F-1: Very Stong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
"F-1+".

F-2: Good Credit Quality. Issues carrying this rating have a satisfactory
degree of assurance for timely payment, but the margin of safety is not as
great as the "F-1+" and "F-1" categories.

F-3: Fair Credit Quality. Issues carrying this rating have characteristics
suggesting that the degree of assurance for timely payment is adequate, however,
near-term adverse change could cause these securities to be rated below
investment grade.

* * * * * * * *

NOTES: Bonds which are unrated expose the investor to risks with respect to
capacity to pay interest or repay principal which are similar to the risks of
lower-rated speculative bonds. Each Portfolio is dependent on the investment
adviser's judgment, analysis and experience in the evaluation of such bonds.

Investors should note that the assignment of a rating to a bond by a
rating service may not reflect the effect of recent developments on the issuer's
ability to make interest and principal payments.

<PAGE>

DESCRIPTION OF THE INSURANCE CLAIMS-PAYING
ABILITY RATINGS OF
STANDARD & POOR'S CORPORATION AND
MOODY'S INVESTORS SERVICE, INC.

An S&P insurance claims-paying ability rating is an assessment of an
operating insurance company's financial capacity to meet obligations under an
insurance policy in accordance with the terms. An insurer with an insurance
claims-paying ability of AAA has the highest rating assigned by S&P. Capacity to
honor insurance contracts is adjudged by S&P to be extremely strong and highly
likely to remain so over a long period of time. A Moody's insurance
claims-paying ability rating is an opinion of the ability of an insurance
company to repay punctually senior policyholder obligations and claims. An
insurer with an insurance claims-paying ability rating of Aaa is adjudged by
Moody's to be of the best quality. In the opinion of Moody's, the policy
obligations of an insurance company with an insurance claims-paying ability
rating of Aaa carry the smallest degree of credit risk and, while the financial
strength of these companies is likely to change, such changes as can be
visualized are most unlikely to impair the company's fundamentally strong
position.

An insurance claims-paying ability rating by S&P's or Moody's does not
constitute an opinion on any specific contract in that such an opinion can only
be rendered upon the review of the specific insurance contract. Furthermore, an
insurance claims-paying ability rating does not take in account deductibles,
surrender or cancellation penalties or the timeliness of payment; nor does it
address the ability of a company to meet nonpolicy obligations (i.e., debt
contracts).

The assignment of ratings by S&P or Moody's to debt issues that are fully or
partially supported by insurance policies, contracts, or guarantees is a
separate process from the determination of claims-paying ability ratings. The
likelihood of a timely flow of funds from the insurer to the trustee for the
bondholders is a key element in the rating determination of such debt issues.

<PAGE>

APPENDIX F: INSURANCE

The following information relates to the Florida Insured Fund and
supplements the information contained under "Additional Information about
Investment Policies -- Insurance."

In General. Insured obligations held by the Portfolio will be insured as to
their scheduled payment of principal and interest under (i) an insurance policy
obtained by the issuer or underwriter of the obligation at the time of its
original issuance ("Issue Insurance"), (ii) an insurance policy obtained by the
Portfolio or a third party subsequent to the obligation's original issuance
("Secondary Market Insurance") or (iii) a municipal insurance policy purchased
by the Portfolio ("Mutual Fund Insurance"). The Portfolio anticipates that all
or substantially all of its insured obligations will be subject to Issue
Insurance or Secondary Market Insurance. Although the insurance feature reduces
certain financial risks, the premiums for Mutual Fund Insurance (which, if
purchased by the Portfolio, are paid from the Portfolio's assets) and the higher
market price paid for obligations covered by Issue Insurance or Secondary Market
Insurance reduce the Portfolio's current yield.

Insurance will cover the timely payment of interest and principal on
obligations and will be obtained from insurers with a claims-paying ability
rated Aaa by Moody's or AAA by S&P or Fitch. Obligations insured by any insurer
with such a claims-paying ability rating will generally carry the same rating or
credit risk as the insurer. See the Appendix in Part I for a brief description
of Moody's, Fitch's and S&P's claims-paying ability ratings. Such insurers must
guarantee the timely payment of all principal and interest on obligations as
they become due. Such insurance may, however, provide that in the event of
non-payment of interest or principal when due with respect to an insured
obligation, the insurer is not obligated to make such payment until a specified
time period has lapsed (which may be 30 days or more after it has been notified
by the Portfolio that such non-payment has occurred). For these purposes, a
payment of principal is due only at final maturity of the obligation and not at
the time any earlier sinking fund payment is due. While the insurance will
guarantee the timely payment of principal and interest, it does not guarantee
the market value of the obligations or the net asset value of the Portfolio or
the Fund.

Obligations are generally eligible to be insured under Mutual Fund Insurance
if, at the time of purchase by the Portfolio, they are identified separately or
by category in qualitative guidelines furnished by the mutual fund insurer and
are in compliance with the aggregate limitations on amounts set forth in such
guidelines. Premium variations are based, in part, on the rating of the
obligations being insured at the time the Portfolio purchases the obligations.
The insurer may prospectively withdraw particular obligations from the
classifications of securities eligible for insurance or change the aggregate
amount limitation of each issue or category of eligible obligations. The insurer
must, however, continue to insure the full amount of the obligations previously
acquired which the insurer has indicated are eligible for insurance, so long as
they continue to be held by the Portfolio. The qualitative guidelines and
aggregate amount limitations established by the insurer from time to time will
not necessarily be the same as those the Portfolio would use to govern selection
of obligations for the Portfolio. Therefore, from time to time such guidelines
and limitations may affect investment decisions in the event the Portfolio's
securities are insured by Mutual Fund Insurance.

For Mutual Fund Insurance that terminates upon the sale of the insured
security, the insurance does not have any effect on the resale value of such
security. Therefore, the Portfolio will generally retain any insured obligations
which are in default or, in the judgment of the Investment Adviser, are in
significant risk of default and place a value on the insurance. This value will
be equal to the difference between the market value of the defaulted insured
obligations and the market value of similar obligations which are not in
default. As a result, the Investment Adviser may be unable to manage the
securities held by the Portfolio to the extent the Portfolio holds defaulted
insured obligations, which will limit its ability in certain circumstances to
purchase other obligations. While a defaulted insured obligation is held by the
Portfolio, the Portfolio will continue to pay the insurance premium thereon but
will also collect interest payments from the insurer and retain the right to
collect the full amount of principal from the insurer when the insured
obligation becomes due. The Portfolio expects that the market value of a
defaulted insured obligation covered by Issue Insurance or Secondary Market
Insurance will generally be greater than the market value of an otherwise
comparable defaulted obligation covered by Mutual Fund Insurance.

The Portfolio may also invest in obligations that are secured by an escrow
or trust account which contains securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities, that are backed by the full faith
and credit of the United States, and sufficient in amount to ensure the payment
of interest on and principal of the secured Florida obligation ("collateralized
obligations"). Collateralized obligations generally are regarded as having the
credit characteristics of the underlying U.S. Government, agency or
instrumentality securities. These obligations will not be subject to Issue
Insurance, Secondary Market Insurance or Mutual Fund Insurance, but will be
considered to be insured obligations for purposes of the Portfolio's policy of
investing at least 80% of its net assets in insured obligations (but such
obligations shall not constitute more than 15% of the insured portion of the
Portfolio).

Principal Insurers. Currently, Municipal Bond Investors Assurance Corporation
("MBIA"), Financial Guaranty Insurance Company ( "FGIC" ), AMBAC Indemnity
Corporation ("AMBAC"), and Financial Security Assurance Corp., together with its
affiliated insurance companies--Financial Security Assurance International Inc.
and Financial Security Assurance of Oklahoma, Inc. (collectively, "FSA" ), are
considered to have a high claims-paying ability and, therefore, are eligible
insurers for the Portfolio's obligations. Additional insurers may be added
without further notification. The following information concerning these
eligible insurers is based upon information provided by such insurers or
information filed with certain state insurance regulators. Neither the Portfolio
nor the Trust has independently verified such information and make no
representations as to the accuracy and adequacy of such information or as to the
absence of material adverse changes subsequent to the date thereof.

MBIA is a monoline financial guaranty insurance company created from an
unincorporated association (the Municipal Bond Insurance Association), through
which its members wrote municipal bond insurance on a several and joint-basis
through 1986. On January 5, 1990, MBIA acquired all of the outstanding stock of
Bond Investors Group, Inc., the parent of Bond Investors Guaranty Insurance
Company ("BIG"), which has subsequently changed its name to MBIA Insurance Corp.
of Illinois. Through a reinsurance agreement, BIG ceded all of its net insured
risks, as well as its related unearned premium and contingency reserves, to
MBIA. MBIA issues municipal bond insurance policies guarantying the timely
payment of principal and interest on new municipal bond issues and leasing
obligations of municipal entities, secondary market insurance of such
instruments and insurance on such instruments held in unit investment trusts and
mutual funds. As of December 31, 1998, MBIA had total assets of approximately
$11.8 billion and qualified statutory capital of approximately $3.7 billion.
MBIA has a claims-paying ability rating of "AAA" by S&P and "Aaa" by Moody's.

Financial Guaranty Insurance Corporation, a wholly owned subsidiary of FGIC
Corporation, which is a wholly owned subsidiary of General Electric Capital
Corporation, is an insurer of municipal securities, including new issues,
securities held in unit investment trusts and mutual funds, and those traded on
secondary markets. The investors in FGIC Corporation are not obligated to pay
the debts of or claims against FGIC. As of December 31, 1998, FGIC had total
assets of approximately $3 billion and qualified statutory capital of
approximately $1.9 billion. FGIC has a claims-paying ability rating of "AAA" by
S&P and Fitch, and "Aaa" by Moody's.

AMBAC, a wholly owned subsidiary of AMBAC Inc., is a monoline insurance
company whose policies guaranty the payment of principal and interest on
municipal obligations issues. As of December 31, 1997, AMBAC had assets of
approximately $11.2 billion and qualified statutory capital of approximately
$1.9 billion. AMBAC has a claims-paying ability rating of "AAA" by S&P and "Aaa"
by Moody's.

FSA purchased Capital Guaranty Insurance Company including its book of
business and reserves effective December 20, 1995. FSA is a monoline insurer
whose policies guaranty the timely payment of principal and interest on new
issue and secondary market issue municipal securities transactions, among other
financial obligations. As of December 31, 1998, FSA had total assets of
approximately $2.4 billion and qualified statutory capital of approximately $1
billion. FSA has a claims-paying ability rating of "AAA" by S&P and "Aaa" by
Moody's.

<PAGE>
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION

STATEMENT OF
ADDITIONAL INFORMATION
June 1, 1999

EATON VANCE HIGH YIELD MUNICIPALS FUND
The Eaton Vance Building
255 State Street
Boston, Massachusetts 02109
(800) 225-6265

This Statement of Additional Information ("SAI") provides general
information about the Fund and Portfolio. The Fund is a series of Eaton Vance
Municipals Trust II. Capitalized terms used in this SAI and not otherwise
defined have the meanings given them in the prospectus. This SAI contains
additional information about:

Page
Strategies and Risks ........................................... 1
Investment Restrictions ........................................ 6
Management and Organization .................................... 7
Investment Advisory and Administrative Services ................ 11
Other Service Providers ........................................ 12
Purchasing and Redeeming Shares ................................ 12
Sales Charges .................................................. 14
Performance .................................................... 17
Taxes .......................................................... 18
Portfolio Security Transactions ................................ 21
Financial Statements ........................................... 22

Appendices:
A: Class A Fees, Performance and Ownership ..................... a-1
B: Class B Fees, Performance and Ownership ..................... b-1
C: Class C Fees, Performance and Ownership ..................... c-1
D: Asset Composition Information ............................... d-1
E: Tax Equivalent Yield Table .................................. e-1
F: Description of Municipal Obligation Ratings ................. f-1

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

STRATEGIES AND RISKS

MUNICIPAL OBLIGATIONS. Municipal obligations are issued to obtain funds for
various public and private purposes. Municipal obligations include bonds as well
as tax-exempt commercial paper, project notes and municipal notes such as tax,
revenue and bond anticipation notes of short maturity, generally less than three
years. While most municipal bonds pay a fixed rate of interest semi-annually in
cash, there are exceptions. Some bonds pay no periodic cash interest, but rather
make a single payment at maturity representing both principal and interest.
Bonds may be issued or subsequently offered with interest coupons materially
greater or less than those then prevailing, with price adjustments reflecting
such deviation.

In general, there are three categories of municipal obligations, the
interest on which is exempt from federal income tax and is not a tax preference
item for purposes of the AMT: (i) certain "public purpose" obligations (whenever
issued), which include obligations issued directly by state and local
governments or their agencies to fulfill essential governmental functions; (ii)
certain obligations issued before August 8, 1986 for the benefit of
non-governmental persons or entities; and (iii) certain "private activity bonds"
issued after August 7, 1986, which include "qualified Section 501(c)(3) bonds"
or refundings of certain obligations included in the second category. Interest
on certain "private activity bonds" issued after August 7, 1986 is exempt from
regular federal income tax, but such interest (including a distribution by the
Fund derived from such interest) is treated as a tax preference item which could
subject the recipient to or increase the recipient's liability for the AMT. For
corporate shareholders, the Fund's distributions derived from interest on all
municipal obligations (whenever issued) is included in "adjusted current
earnings" for purposes of the AMT as applied to corporations (to the extent not
already included in alternative minimum taxable income as income attributable to
private activity bonds). In assessing the federal income tax treatment of
interest on any municipal obligation, the Portfolio will generally rely on an
opinion of the issuer's counsel (when available) and will not undertake any
independent verification of the basis for the opinion.

Revenue bonds are generally secured by the net revenues derived from a
particular facility or group of facilities or, in some cases, from the proceeds
of a special excise or other specific revenue source. Revenue bonds have been
issued to fund a wide variety of capital projects including: electric, gas,
water, sewer and solid waste disposal systems; highways, bridges and tunnels;
port, airport and parking facilities; transportation systems; housing
facilities, colleges and universities and hospitals. Although the principal
security behind these bonds varies widely, many provide additional security in
the form of a debt service reserve fund whose monies may be used to make
principal and interest payments on the issuer's obligations. Housing finance
authorities have a wide range of security including partially or fully insured,
rent subsidized and/or collateralized mortgages, and/or the net revenues from
housing or other public projects. In addition to a debt service reserve fund,
some authorities provide further security in the form of a state's ability
(without legal obligation) to make up deficiencies in the debt service reserve
fund. Lease rental revenue bonds issued by a state or local authority for
capital projects are normally secured by annual lease rental payments from the
state or locality to the authority sufficient to cover debt service on the
authority's obligations. Such payments are usually subject to annual
appropriations by the state or locality. Industrial development and pollution
control bonds, although nominally issued by municipal authorities, are in most
cases revenue bonds and are generally not secured by the taxing power of the
municipality, but are usually secured by the revenues derived by the authority
from payments of the industrial user or users. The Portfolio may on occasion
acquire revenue bonds which carry warrants or similar rights covering equity
securities. Such warrants or rights may be held indefinitely, but if exercised,
the Portfolio anticipates that it would, under normal circumstances, dispose of
any equity securities so acquired within a reasonable period of time.

The obligations of any person or entity to pay the principal of and interest
on a municipal obligation are subject to the provisions of bankruptcy,
insolvency and other laws affecting the rights and remedies of creditors, such
as the Federal Bankruptcy Act, and laws, if any, which may be enacted by
Congress or state legislatures extending the time for payment of principal or
interest, or both, or imposing other constraints upon enforcement of such
obligations. There is also the possibility that as a result of litigation or
other conditions the power or ability of any person or entity to pay when due
principal of and interest on a municipal obligation may be materially affected.
There have been recent instances of defaults and bankruptcies involving
municipal obligations which were not foreseen by the financial and investment
communities. The Portfolio will take whatever action it considers appropriate in
the event of anticipated financial difficulties, default or bankruptcy of either
the issuer of any municipal obligation or of the underlying source of funds for
debt service. Such action may include retaining the services of various persons
or firms (including affiliates of the investment adviser to evaluate or protect
any real estate, facilities or other assets securing any such obligation or
acquired by the Portfolio as a result of any such event, and the Portfolio may
also manage (or engage other persons to manage) or otherwise deal with any real
estate, facilities or other assets so acquired. The Portfolio anticipates that
real estate consulting and management services may be required with respect to
properties securing various municipal obligations in its portfolio or
subsequently acquired by the Portfolio. The Portfolio will incur additional
expenditures in taking protective action with respect to portfolio obligations
in default and assets securing such obligations.

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

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

Certain municipal lease obligations owned by the Portfolio may be deemed
illiquid for the purpose of the Portfolio's 15% limitation on investments in
illiquid securities, unless determined by the investment adviser, pursuant to
guidelines adopted by the Trustees of the Portfolio, to be liquid securities for
the purpose of such limitation. In determining the liquidity of municipal lease
obligations, the investment adviser will consider a variety of factors
including: (1) the willingness of dealers to bid for the security; (2) the
number of dealers willing to purchase or sell the obligation and the number of
other potential buyers; (3) the frequency of trades and quotes for the
obligation; and (4) the nature of the marketplace trades. In addition, the
investment adviser will consider factors unique to particular lease obligations
affecting the marketability thereof. These include the general creditworthiness
of the municipality, the importance of the property covered by the lease to the
municipality, and the likelihood that the marketability of the obligation will
be maintained throughout the time the obligation is held by the Portfolio. In
the event the Portfolio acquires an unrated municipal lease obligation, the
investment adviser will be responsible for determining the credit quality of
such obligation on an on-going basis, including an assessment of the likelihood
that the lease may or may not be cancelled.

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

CREDIT QUALITY. 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.

The inability (or perceived inability) of issuers to make timely payment of
interest and principal would likely make the values of securities held by the
Fund more volatile and could limit the Portfolio's ability to sell its
securities at prices approximating the values the Portfolio has placed on such
securities. In the absence of a liquid trading market for securities held by it,
the Portfolio may be unable at times to establish the fair market value of such
securities. The rating assigned to a security by a rating agency does not
reflect an assessment of the volatility of the security's market value or of the
liquidity of an investment in the security. Credit ratings are based largely on
the issuer's historical financial condition and the rating agency's investment
analysis at the time of rating, and the rating assigned to any particular
security is not necessarily a reflection of the issuer's current financial
condition. Credit quality in the high yield, high risk municipal bond market can
change from time to time, and recently issued credit ratings may not fully
reflect the actual risks posed by a particular high yield security. See
"Portfolio of Investments" in the "Financial Statements" incorporated by
reference into this SAI with respect to any defaulted obligations held by the
Portfolio.

The investment adviser seeks to minimize the risks of investing in below
investment grade securities through professional investment analysis and
attention to current developments in interest rates and economic conditions.
When the Portfolio invests in lower rated or unrated municipal obligations, the
achievement of the Portfolio's goals is more dependent on the investment
adviser's ability than would be the case if the Portfolio were investing in
municipal obligations in the higher rating categories. In evaluating the credit
quality of a particular issue, whether rated or unrated, the investment adviser
will normally take into consideration, among other things, the financial
resources of the issuer (or, as appropriate, of the underlying source of funds
for debt service), its sensitivity to economic conditions and trends, any
operating history of and the community support for the facility financed by the
issue, the ability of the issuer's management and regulatory matters. The
investment adviser will attempt to reduce the risks of investing in the lowest
investment grade, below investment grade and comparable unrated obligations
through active portfolio management, credit analysis and attention to current
developments and trends in the economy and the financial markets.

WHEN-ISSUED SECURITIES. New issues of municipal obligations are sometimes
offered on a "when-issued" basis, that is, delivery and payment for the
securities normally take place within a specified number of days after the date
of the Portfolio's commitment and are subject to certain conditions such as the
issuance of satisfactory legal opinions. The Portfolio may also purchase
securities on a when-issued basis pursuant to refunding contracts in connection
with the refinancing of an issuer's outstanding indebtedness. Refunding
contracts generally require the issuer to sell and the Portfolio to buy such
securities on a settlement date that could be several months or several years in
the future. The Portfolio may also purchase instruments that give the Fund the
option to purchase a municipal obligation when and if issued.

The Portfolio will make commitments to purchase when-issued securities only
with the intention of actually acquiring the securities, but may sell such
securities before the settlement date if it is deemed advisable as a matter of
investment strategy. The payment obligation and the interest rate that will be
received on the securities are fixed at the time the Portfolio enters into the
purchase commitment. When the Portfolio commits to purchase a security on a
when-issued basis it records the transaction and reflects the value of the
security in determining its net asset value. Securities purchased on a
when-issued basis and the securities held by the Portfolio are subject to
changes in value based upon the perception of the creditworthiness of the issuer
and changes in the level of interest rates (i.e. appreciation when interest
rates decline and depreciation when interest rates rise). Therefore, to the
extent that the Portfolio remains substantially fully invested at the same time
that it has purchased securities on a when-issued basis, there will be greater
fluctuations in the Portfolio's net asset value than if it solely set aside cash
to pay for when-issued securities.

LIQUIDITY AND PROTECTIVE PUT OPTIONS. The Portfolio may also enter into a
separate agreement with the seller of the security or some other person granting
the Portfolio the right to put the security to the seller thereof or the other
person at an agreed upon price. The Portfolio intends to limit this type of
transaction to institutions (such as banks or securities dealers) which the
investment adviser believes present minimal credit risks and would engage in
this type of transaction to facilitate portfolio liquidity or (if the seller so
agrees) to hedge against rising interest rates. There is no assurance that this
kind of put option will be available to the Portfolio or that selling
institutions will be willing to permit the Portfolio to exercise a put to hedge
against rising interest rates. The Portfolio does not expect to assign any value
to any separate put option which may be acquired to facilitate portfolio
liquidity, inasmuch as the value (if any) of the put will be reflected in the
value assigned to the associated security; any put acquired for hedging purposes
would be valued in good faith under methods or procedures established by the
Trustees of the Portfolio after consideration of all relevant factors, including
its expiration date, the price volatility of the associated security, the
difference between the market price of the associated security and the exercise
price of the put, the creditworthiness of the issuer of the put and the market
prices of comparable put options. Interest income generated by certain bonds
having put or demand features may be taxable.

The secondary market for some municipal obligations issued within a state
(including issues which are privately placed with the Portfolio) is less liquid
than that for taxable debt obligations or other more widely traded municipal
obligations. The Portfolio will not invest in illiquid securities if more than
15% of its net assets would be invested in securities that are not readily
marketable. No established resale market exists for certain of the municipal
obligations in which the Portfolio may invest. The market for obligations rated
below investment grade is also likely to be less liquid than the market for
higher rated obligations. As a result, the Portfolio may be unable to dispose of
these municipal obligations at times when it would otherwise wish to do so at
the prices at which they are valued.

SECURITIES LENDING. The Portfolio may seek to increase its income by lending
portfolio securities to broker-dealers or other institutional borrowers.
Distributions by the Fund of any income realized by the Portfolio from
securities loans will be taxable. If the management of the Portfolio decides to
make securities loans, it is intended that the value of the securities loaned
would not exceed 30% of the Portfolio's total assets. Securities lending
involves risks of delay in recovery or even loss of rights on the securities
loaned if the borrower fails financially. The Portfolio has no present intention
of engaging in securities lending.

FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. A change in the level of
interest rates may affect the value of the securities held by the Portfolio (or
of securities that the Portfolio expects to purchase). To hedge against changes
in rates or as a sustitute for the purchase of securities, the Portfolio may
enter into (i) futures contracts for the purchase or sale of debt securities and
(ii) futures contracts on securities indices. All futures contracts entered into
by the Portfolio are traded on exchanges or boards of trade that are licensed
and regulated by the Commodity Futures Trading Commission ("CFTC") and must be
executed through a futures commission merchant or brokerage firm which is a
member of the relevant exchange. The Portfolio may purchase and write call and
put options on futures contracts which are traded on a United States or foreign
exchange or board of trade. The Portfolio will be required, in connection with
transactions in futures contracts and the writing of options on futures, to make
margin deposits, which will be held by the Portfolio's custodian for the benefit
of the futures commission merchant through whom the Portfolio engages in such
futures and options transactions.

The Portfolio will engage in futures and related options transactions only
for bona fide hedging purposes or non-hedging purposes as defined in or
permitted by CFTC regulations. The Portfolio will determine that the price
fluctuations in the futures contracts and options on futures used for hedging
purposes are substantially related to price fluctuations in securities held by
the Portfolio or which it expects to purchase. The Portfolio will engage in
transactions in futures and related options contracts only to the extent such
transactions are consistent with the requirements of the Code for maintaining
qualification of the Fund as a regulated investment company for federal income
tax purposes.

ASSET COVERAGE REQUIREMENTS. Transactions involving when-issued securities or
futures contracts and options (other than options that the Portfolio has
purchased) expose the Portfolio to an obligation to another party. The Portfolio
will not enter into any such transactions unless it owns either (1) an
offsetting ("covered") position in securities or other options or futures
contracts, or (2) cash or liquid securities (such as readily marketable
obligations and money market instruments) with a value sufficient at all times
to cover its potential obligations not covered as provided in (1) above. The
Portfolio will comply with Securities and Exchange Commission ("SEC") guidelines
regarding cover for these instruments and, if the guidelines so require, set
aside cash or liquid securities in a segregated account maintained by its
custodian in the prescribed amount. The securities in the segregated account
will be marked to market daily.

Assets used as cover or held in a segregated account maintained by the
custodian cannot be sold while the position requiring coverage or segregation is
outstanding unless they are replaced with other appropriate assets. As a result,
the commitment of a large portion of the Portfolio's assets to segregated
accounts or to cover could impede portfolio management or the Portfolio's
ability to meet redemption requests or other current obligations.

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

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

PORTFOLIO TURNOVER. The Portfolio may sell (and later purchase) securities in
anticipation of a market decline (a rise in interest rates) or purchase (and
later sell) securities in anticipation of a market rise (a decline in interest
rates). In addition, a security may be sold and another purchased at
approximately the same time to take advantage of what the Portfolio believes to
be a temporary disparity in the normal yield relationship between the two
securities. Yield disparities may occur for reasons not directly related to the
investment quality of particular issues or the general movement of interest
rates, such as changes in the overall demand for or supply of various types of
municipal obligations or changes in the investment objectives of investors. Such
trading may be expected to increase the portfolio turnover rate, which may
increase capital gains and the expenses incurred in connection with such
trading. The Portfolio cannot accurately predict its portfolio turnover rate,
but it is anticipated that its annual portfolio turnover rate will generally not
exceed 100% (excluding turnover of securities having a maturity of one year or
less). A 100% annual turnover rate could occur, for example, if all the
securities held by the Portfolio were replaced once in a period of one year. A
high turnover rate (100% or more) necessarily involves greater expenses to the
Portfolio.

INVESTMENT RESTRICTIONS

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

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

(4) Purchase or sell real estate, although it may purchase and sell
securities which are secured by real estate and securities of companies which
invest or deal in real estate;

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

(6) Make loans to any person except by (a) the acquisition of debt
instruments and making portfolio investments, (b) entering into repurchase
agreements and (c) lending portfolio securities.

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

The Fund and the Portfolio have each adopted the following investment
policies which may be changed by the Trustees with respect to the Fund without
shareholder approval or with respect to the Portfolio without approval of the
Fund or its other investors. The Fund and the Portfolio will not:

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

(b) invest more than 15% of its net assets in investments which are not
readily marketable, including restricted securities and repurchase agreements
maturing in more than seven days. Restricted securities for the purposes of this
limitation do not include securities eligible for resale pursuant to Rule 144A
under the Securities Act of 1933 and commercial paper issued pursuant to Section
4(2) of said Act that the Board of Trustees of the Trust or the Portfolio, or
its delegate, determines to be liquid. Any such determination by a delegate will
be made pursuant to procedures adopted by the Board. If the Fund or Portfolio
invest in Rule 144A securities, the level of portfolio illiquidity may be
increased to the extent that eligible buyers become uninterested in purchasing
such securities.

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

For purposes of the Portfolio's investment restrictions, the determination
of the "issuer" of a municipal obligation which is not a general obligation bond
will be made by the investment adviser on the basis of the characteristics of
the obligation and other relevant factors, the most significant of which is the
source of funds committed to meeting interest and principal payments of such
obligations.

Whenever an investment policy or investment restriction set forth in the
prospectus or this SAI states a maximum percentage of assets that may be
invested in any security or other asset, or describes a policy regarding quality
standards, such percentage limitation or standard shall be determined
immediately after and as a result of the Fund's or the Portfolio's acquisition
of such security or asset. Accordingly, any later increase or decrease resulting
from a change in values, assets or other circumstances, or any subsequent rating
change made by a rating service, will not compel the Fund or the Portfolio, as
the case may be, to dispose of such security or other asset. Where applicable
and notwithstanding the foregoing, under normal market conditions the Fund and
the Portfolio must take actions necessary to comply with the policy of investing
at least 65% of total assets in below investment grade municipal obligations.
Moreover, the Fund and Portfolio must always be in compliance with the
limitation on investing in illiquid securities and the borrowing policies set
forth above.

MANAGEMENT AND ORGANIZATION

FUND MANAGEMENT. The Trustees of the Trust are responsible for the overall
management and supervision of the Trust's affairs. The Trustees and officers of
the Trust and the Portfolio are listed below. Except as indicated, each
individual has held the office shown or other offices in the same company for
the last five years. Unless otherwise noted, the business address of each
Trustee and officer is The Eaton Vance Building, 255 State Street, Boston,
Massachusetts 02109. Those Trustees who are "interested persons" of the Trust or
the Portfolio, as defined in the 1940 Act, are indicated by an asterisk(*).

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

SAMUEL L. HAYES, III (64), Trustee
Jacob H. Schiff Professor of Investment Banking Emeritus, Harvard University
Graduate School of Business Administration. Trustee of Kobrick-Cendant
Investment Trust (mutual funds). Trustee of various investment companies
managed by Eaton Vance or BMR.
Address: 345 Nahatan Road, Westwood, Massachusetts 02090

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

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

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

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

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

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

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

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

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

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

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

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

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

The fees and expenses of the noninterested Trustees of the Trust and the
Portfolio are paid by the Fund (and the other series of the Trust) and the
Portfolio, respectively. (The Trustees of the Trust and the Portfolio who are
members of the Eaton Vance organization receive no compensation from the Trust
or the Portfolio.) During the fiscal year ended January 31, 1999, the
noninterested Trustees of the Trust and the Portfolio earned the following
compensation in their capacities as Trustees from the Trust and the Portfolio,
and for the year ended December 31, 1998, earned the following compensation in
their capacities as Trustees of the funds in the Eaton Vance fund complex(1):

<TABLE>
<CAPTION>
JESSICA M. DONALD R. SAMUEL L. NORTON H. LYNN A. JOHN L. JACK L.
SOURCE OF COMPENSATION BIBLIOWICZ(9) DWIGHT HAYES, III REAMER STOUT(9) THORNDIKE TREYNOR
- ---------------------- ------------- ------ ---------- ------ -------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Trust(2) ................. $ 27 $ 876 $ 867 $ 830 $ 212 $ 844 $ 944
High Yield Municipals
Portfolio .............. 1,041 4,284(3) 4,488(4) 4,244 1,118 4,328(5) 4,719
Trust and Fund Complex ... 33,334 160,000(6) 170,000(7) 160,000 32,842 160,000(8) 170,000
- ----------
(1) As of June 1, 1999, the Eaton Vance Fund complex consists of 155 registered investment companies or series thereof.
(2) The Trust consisted of 4 Funds as of January 31, 1999.
(3) Includes $2,224 of deferred compensation.
(4) Includes $1,386 of deferred compensation.
(5) Includes $4,292 of deferred compensation.
(6) Includes $60,000 of deferred compensation.
(7) Includes $41,563 of deferred compensation.
(8) Includes $119,091 of deferred compensation.
(9) Ms. Bibliowicz and Ms. Stout were elected as Trustees on October 30, 1998.
</TABLE>

ORGANIZATION. The Fund is a series of the Trust, which is organized under
Massachusetts law as a business trust and is operated as an open-end management
investment company. The Fund was reorganized into multiple classes and changed
its name to Eaton Vance High Yield Municipals Fund on February 1, 1998. The
operations of Class B reflect the operations of the Fund prior to February 1,
1998. Class A and Class C are successors to the operations of separate series of
the Trust.

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

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

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

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

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

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

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

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

The Portfolio's Declaration of Trust provides that the Fund and other
entities permitted to invest in the Portfolio (e.g., other U.S. and foreign
investment companies, and common and commingled trust funds) will each be liable
for all obligations of the Portfolio. However, the risk of 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
Fund nor its shareholders will be adversely affected by reason of the Fund
investing in the Portfolio.

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

The Fund may withdraw (completely redeem) all its assets from the Portfolio
at any time if the Board of Trustees of the Trust determines that it is in the
best interest of the Fund to do so. In the event the Fund withdraws all of its
assets from the Portfolio, or the Board of Trustees of the Trust determines that
the investment objective of such Portfolio is no longer consistent with the
investment objective of the Fund, the Trustees would consider what action might
be taken, including investing the assets of the Fund in another pooled
investment entity or retaining an investment adviser to manage the Fund's assets
in accordance with its investment objective. The Fund's investment performance
may be affected by a withdrawal of all its assets (or the assets of another
investor in the Portfolio) from the Portfolio.

INVESTMENT ADVISORY AND ADMINISTRATIVE SERVICES

INVESTMENT ADVISORY SERVICES. BMR manages the investments and affairs of the
Portfolio subject to the supervision of the Portfolio's Board of Trustees. BMR
furnishes to the Portfolio investment research, advice and supervision,
furnishes an investment program and determines what securities will be
purchased, held or sold by the Portfolio and what portion, if any, of the
Portfolio's assets will be held uninvested. The Investment Advisory Agreement
requires BMR to pay the salaries and fees of all officers and Trustees of the
Portfolio who are members of the BMR organization and all personnel of BMR
performing services relating to research and investment activities.

For a description of the compensation that the Portfolio pays BMR, see the
prospectus. As of January 31, 1999, the Portfolio had net assets of
$390,908,964. For the fiscal year ended January 31, 1999, the Portfolio paid
advisory fees of $2,048,637 (equivalent to 0.58% of the Portfolio's average
daily net assets). For the fiscal year ended January 31, 1998, the Portfolio
paid advisory fees of $1,403,747 (equivalent to 0.60% of the Portfolio's average
daily net assets). For the fiscal year ended January 31, 1997, absent a fee
reduction, the Portfolio would have paid BMR advisory fees of $772,713
(equivalent to 0.60% of the Portfolio's average daily net assets). To enhance
the net income of the Portfolio, BMR made a reduction of its advisory fee in the
amount of $478,420 during such period.

The Investment Advisory Agreement with BMR continues in effect from year to
year so long as such continuance is approved at least annually (i) by the vote
of a majority of the noninterested Trustees of the Portfolio cast in person at a
meeting specifically called for the purpose of voting on such approval and (ii)
by the Board of Trustees of the Portfolio or by vote of a majority of the
outstanding voting securities of the Portfolio. The Agreement may be terminated
at any time without penalty on sixty (60) days' written notice by the Board of
Trustees of either party, or by vote of the majority of the outstanding voting
securities of the Portfolio, and the Agreement will terminate automatically in
the event of its assignment. The Agreement provides that BMR may render services
to others. The Agreement also provides that BMR shall not be liable for any loss
incurred in connection with the performance of its duties, or action taken or
omitted under that Agreement, in the absence of willful misfeasance, bad faith,
gross negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties thereunder, or for any losses sustained
in the acquisition, holding or disposition of any security or other investment.

ADMINISTRATIVE SERVICES. As indicated in the prospectus, Eaton Vance serves as
administrator of the Fund, but currently receives no compensation for providing
administrative services to the Fund. Under its Administrative Services Agreement
with the Fund, Eaton Vance has been engaged to administer the Fund's affairs,
subject to the supervision of the Trustees of the Trust, and shall furnish for
the use of the Fund office space and all necessary office facilities, equipment
and personnel for administering the affairs of the Fund.

EXPENSES. The Fund and Portfolio are responsible for all expenses not expressly
stated to be payable by another party (such as the investment adviser under the
Investment Advisory Agreement, Eaton Vance under the Administrative Services
Agreement or the principal underwriter under the Distribution Agreement). In the
case of expenses incurred by the Trust, the Fund is responsible for its pro rata
share of those expenses. The only expenses of the Fund allocated to a particular
class are those incurred under the Distribution or Service Plan applicable to
that class and those resulting from the fee paid to the principal underwriter
for repurchase transactions.

OTHER SERVICE PROVIDERS

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

CUSTODIAN. Investors Bank & Trust Company ("IBT"), 200 Clarendon Street, Boston,
MA 02116, serves as custodian to the Fund and the Portfolio. IBT has the custody
of all cash and securities representing the Fund's interest in the Portfolio,
has custody of all the Portfolio's assets, maintains the general ledger of the
Portoflio and the Fund and computes the daily net asset value of interests in
the Portfolio and the net asset value of shares of the Fund. In such capacity it
attends to details in connection with the sale, exchange, substitution, transfer
or other dealings with the Portfolio's investments, receives and disburses all
funds and performs various other ministerial duties upon receipt of proper
instructions from the Trust and the Portfolio. IBT also provides services in
connection with the preparation of shareholder reports and the electronic filing
of such reports with the SEC. EVC and its affiliates and their officers and
employees from time to time have transactions with various banks, including IBT.
It is Eaton Vance's opinion that the terms and conditions of such transactions
were not and will not be influenced by existing or potential custodial or other
relationships between the Fund or the Portfolio and such banks.

INDEPENDENT ACCOUNTANTS. Deloitte & Touche LLP, 125 Summer Street, Boston,
Massachusetts 02110, are the independent accountants of the Fund and the
Portfolio, providing audit services, tax return preparation, and assistance and
consultation with respect to the preparation of filings with the SEC.

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

PURCHASING AND REDEEMING SHARES

CALCULATION OF NET ASSET VALUE. The net asset value of the Portfolio is computed
by IBT (as agent and custodian for the Portfolio) by subtracting the liabilities
of the Portfolio from the value of its total assets. Inasmuch as the market for
municipal obligations is a dealer market with no central trading location or
continuous quotation system, it is not feasible to obtain last transation prices
for most municipal obligations held by the Portfolio, and such obligations,
including those purchased on a when-issued basis, will normally be valued on the
basis of valuations furnished by a pricing service. The pricing service uses
information with respect to transactions in bonds, quotations from bond dealers,
market transactions in comparable securities, various relationships between
securities, and yield to maturity in determining value. Taxable obligations for
which price quotations are readily available normally will be valued at the mean
between the latest available bid and asked prices. Open futures positions on
debt securities are valued at the most recent settlement prices, unless such
price does not reflect the fair value of the contract, in which case the
positions will be valued by or at the direction of the Trustees of the
Portfolio. Other assets are valued at fair value using methods determined in
good faith by or at the direction of the Trustees of the Portfolio. The Fund and
the Portfolio will be closed for business and will not price their respective
shares or interests on the following business holidays: New Year's Day, Martin
Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day.

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

ADDITIONAL INFORMATION ABOUT PURCHASES. Fund shares are continuously offered
through investment dealers which have entered agreements with the principal
underwriter. The public offering price is the net asset value next computed
after receipt of the order, plus, in the case of Class A shares, a variable
percentage (sales charge) depending upon the amount of purchase as indicated by
the sales charge table set forth in the prospectus. The sales charge is divided
between the principal underwriter and the investment dealer. The sales charge
table is applicable to purchases of the Fund alone or in combination with
purchases of certain other funds offered by the principal underwriter, made at a
single time by (i) an individual, or an individual, his spouse and their
children under the age of twenty-one, purchasing shares for his or their own
account, and (ii) a trustee or other fiduciary purchasing shares for a single
trust estate or a single fiduciary account. The table is also presently
applicable to (1) purchases of Class A shares pursuant to a written Statement of
Intention; or (2) purchases of Class A shares pursuant to the Right of
Accumulation and declared as such at the time of purchase. See "Sales Charges".

SUSPENSION OF SALES. The Trust may, in its absolute discretion, suspend,
discontinue or limit the offering of one or more of its classes of shares at any
time. In determining whether any such action should be taken, the Trust's
management intends to consider all relevant factors, including (without
limitation) the size of the Fund or class, the investment climate and market
conditions, the volume of sales and redemptions of shares, and in the case of
Class B and Class C shares, the amount of uncovered distribution charges of the
principal underwriter. The Class B and Class C Distribution Plans may continue
in effect and payments may be made under the Plans following any such
suspension, discontinuance or limitation of the offering of shares; however,
there is no contractual obligation to continue any Plans for any particular
period of time. Suspension of the offering of shares would not, of course,
affect a shareholder's ability to redeem shares.

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

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

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

SALES CHARGES

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

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

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

The Trust has also adopted compensation-type Distribution Plans ("Class B
and Class C Plans") pursuant to Rule 12b-1 under the 1940 Act for the Fund's
Class B and Class C shares. The Class B and Class C Plans are designed to permit
an investor to purchase shares through an investment dealer without incurring an
initial sales charge and at the same time permit the principal underwriter to
compensate investment dealers in connection therewith. The Class B and Class C
Plans provide that the Fund will pay sales commissions and distribution fees to
the principal underwriter only after and as a result of the sale of Class B
shares of the Fund. On each sale of Fund shares (excluding reinvestment of
distributions), the Fund will pay the principal underwriter amounts representing
(i) sales commissions equal to 5% for Class B shares and 6.25% for Class C
shares of the amount received by the Fund for each share sold and (ii)
distribution fees calculated by applying the rate of 1% over the prime rate then
reported in The Wall Street Journal to the outstanding balance of uncovered
distribution charges (as described below) of the principal underwriter. To pay
these amounts, each Class pays the principal underwriter a fee, accrued daily
and paid monthly, at an annual rate not exceeding .75% of its average daily net
assets to finance the distribution of its shares. Such fees compensate the
principal underwriter for sales commissions paid by it to investment dealers on
the sale of shares and for interest expenses. For sales of Class B shares, the
principal underwriter uses its own funds to pay sales commissions (except on
exchange transactions and reinvestments) to investment dealers at the time of
sale equal to 4% of the purchase price of the Class B shares sold by such
dealers. For Class C shares, the principal underwriter currently expects to pay
to an investment dealer (a) sales commissions (except on exchange transactions
and reinvestments) at the time of sale equal to .75% of the purchase price of
the shares sold by such dealer, and (b) monthly sales commissions approximately
equivalent to 1/12 of .75% of the value of shares sold by such dealer and
remaining outstanding for at least one year. During the first year after a
purchase of Class C shares, the principal underwriter will retain the sales
commission as reimbursement for the sales commissions paid to investment dealers
at the time of sale. CDSCs paid to the principal underwriter will be used to
reduce amounts owed to it. The Class B and Class C Plans provide that the Fund
will make no payments to the principal underwriter in respect of any day on
which there are no outstanding uncovered distribution charges of the principal
underwriter. CDSCs and accrued amounts will be paid by the Trust to the
principal underwriter whenever there exist uncovered distribution charges.
Because payments to the principal underwriter under the Class B and Class C
Plans are limited, uncovered distribution charges (sales commissions paid by the
principal underwriter plus interest, less the above fees and CDSCs received by
it) may exist indefinitely. For the sales commissions and CDSCs paid on (and
uncovered distribution charges of) Class B and Class C shares, see Appendix B
and Appendix C, respectively.

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

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

Currently, payments of sales commissions and distribution fees and of
service fees may equal 1% of a Class's average daily net assets per annum. The
Trust believes that the combined rate of all these payments may be higher than
the rate of payments made under distribution plans adopted by other investment
companies pursuant to Rule 12b-1. Although the principal underwriter will use
its own funds (which may be borrowed from banks) to pay sales commissions at the
time of sale, it is anticipated that the Eaton Vance organization will profit by
reason of the operation of the Class B and Class C Plans through an increase in
the Fund's assets (thereby increasing the advisory fee payable to BMR by the
Portfolio) resulting from sale of shares and through the amounts paid to the
principal underwriter, including CDSCs, pursuant to the Plans. The Eaton Vance
organization may be considered to have realized a profit under the Class B and
Class C Plans if at any point in time the aggregate amounts theretofore received
by the principal underwriter pursuant to the Class B and Class C Plans and from
CDSCs have exceeded the total expenses theretofore incurred by such organization
in distributing shares. Total expenses for this purpose will include an
allocable portion of the overhead costs of such organization and its branch
offices, which costs will include without limitation leasing expense,
depreciation of building and equipment, utilities, communication and postage
expense, compensation and benefits of personnel, travel and promotional expense,
stationery and supplies, literature and sales aids, interest expense, data
processing fees, consulting and temporary help costs, insurance, taxes other
than income taxes, legal and auditing expense and other miscellaneous overhead
items. Overhead is calculated and allocated for such purpose by the Eaton Vance
organization in a manner deemed equitable to the Trust.

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

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

PERFORMANCE

Average annual total return is determined separately for each Class of the
Fund by multiplying a hypothetical initial purchase order of $1,000 by the
average annual compound rate of return (including capital appreciation/
depreciation, and distributions paid and reinvested) for the stated period and
annualizing the result. The calculation assumes (i) that all distributions are
reinvested at net asset value on the reinvestment dates during the period, (ii)
the deduction of the maximum sales charge from the initial $1,000 purchase order
for Class A shares, (iii) a complete redemption of the investment and, (iv) the
deduction of any CDSC at the end of the period. The Fund may also publish total
return figures for each class based on reduced sales charges or at net asset
value. These returns would be lower if the full sales charge was imposed. For
information concerning the total return of the Classes of the Fund, see Appendix
A, Appendix B and Appendix C.

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

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

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

Information about portfolio allocation and holdings of the Portfolio at a
particular date (including ratings assigned by independent ratings services such
as Moody's, S&P and Fitch) may be included in advertisements and other material
furnished to present and prospective shareholders. Such information may be
stated as a percentage of the Portfolio's bond holdings on such date.

Comparative information about the yield of the Fund and about average rates
of return on certificates of deposit, bank money market deposit accounts, money
market mutual funds and other short-term investments may also be included in
advertisements, supplemental sales literature or communications of the Fund.
Such information may also compare the taxable equivalent yield (or value) of the
Fund to the after-tax yield (or value) of such other investment vehicles. Such
information may be in the form of hypothetical illustrations. A bank certificate
of deposit, unlike the mutual fund's shares, pays a fixed rate of interest and
entitles the depositor to receive the face amount of the certificate of deposit
at maturity. A bank money market deposit account is a form of savings account
which pays a variable rate of interest. Unlike the Fund's shares, bank
certificates of deposit and bank money market deposit accounts are insured by
the Federal Deposit Insurance Corporation. A money market mutual fund is
designed to maintain a constant value of $1.00 per share and, thus, a money
market fund's shares are subject to less price fluctuation than the Fund's
shares.

TAXES

Each series of the Trust is treated as a separate entity for federal income
tax purposes. The Fund has elected to be treated and intends to qualify each
year, as a regulated investment company ("RIC") under the Code. Accordingly, the
Fund intends to satisfy certain requirements relating to sources of its income
and diversification of its assets and to distribute substantially all of its net
income (including tax-exempt income) and net short-term and long-term capital
gains (after reduction by any available capital loss carryforwards) in
accordance with the timing requirements imposed by the Code, so as to maintain
its RIC status and to avoid paying any federal income or excise tax. The Fund so
qualified for its fiscal year ended January 31, 1999. Because the Fund invests
its assets in the Portfolio, the Portfolio normally must satisfy the applicable
source of income and diversification requirements in order for the Fund to also
satisfy these requirements. The Portfolio will allocate at least annually among
its investors, including the Fund, each investor's distributive share of the
Portfolio's net taxable (if any) and tax-exempt investment income, net realized
capital gains, and any other items of income, gain, loss, deduction or credit.
For purposes of applying the requirements of the Code regarding qualification as
a RIC, the Fund (i) will be deemed to own its proportionate share of each of the
assets of the Portfolio and (ii) will be entitled to the gross income of the
Portfolio attributable to such share.

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

The Portfolio's investment in securities acquired at market discount may, or
in zero coupon and certain other securities generally will, cause it to realize
income prior to the receipt of cash payments with respect to these securities.
Such income will be allocated daily to interests in the Portfolio, and in order
to enable the Fund to distribute its proportionate share of this income and
avoid a tax payable by the Fund, the Portfolio may be required to liquidate
portfolio securities that it might otherwise have continued to hold in order to
generate cash that the Fund may withdraw from the Portfolio for subsequent
distribution to Fund shareholders.

Investments in lower-rated or unrated securities may present special tax
issues for the Portfolio (and hence for the Fund) to the extent that the issuers
of these securities default on their obligations pertaining thereto. The Code is
not entirely clear regarding the federal income tax consequences of the
Portfolio's taking certain positions in connection with ownership of such
distressed securities. For example, the Code is unclear regarding: (i) when the
Portfolio may cease to accrue interest, original issue discount, or market
discount; (ii) when and to what extent deductions may be taken for bad debts or
worthless securities; (iii) how payments received on obligations in default
should be allocated between principal and income; and (iv) whether exchanges of
debt obligations in a workout context are taxable.

Distributions by the Fund of net tax-exempt interest income that are
properly designated as "exempt-interest dividends" may be treated by
shareholders as interest excludable from gross income under Section 103(a) of
the Code. In order for the Fund to be entitled to pay the tax-exempt interest
income allocated to it by the Portfolio as exempt-interest dividends to its
shareholders, the Fund must and intends to satisfy certain requirements,
including the requirement that, at the close of each quarter of its taxable
year, at least 50% of the value of its total assets consists of obligations, the
interest on which is exempt from regular federal income tax under Code Section
103(a). For purposes of applying this 50% requirement, the Fund will be deemed
to own its proportionate share of each of the assets of the Portfolio, and the
Portfolio currently intends to invest its assets in a manner such that the Fund
can meet this 50% requirement. Interest on certain municipal obligations is
treated as a tax preference item for purposes of the AMT. Shareholders of the
Fund are required to report tax-exempt interest on their federal income tax
returns.

From time to time proposals have been introduced before Congress for the
purpose of restricting or eliminating the federal income tax exemption for
interest on certain types of municipal obligations, and it can be expected that
similar proposals may be introduced in the future. Under federal tax legislation
enacted in 1986, the federal income tax exemption for interest on certain
municipal obligations was eliminated or restricted. As a result of such
legislation, the availability of municipal obligations for investment by the
Portfolio and the value of the securities held by it may be affected.

In the course of managing its investments, the Portfolio may realize some
short-term and long-term capital gains (and/or losses) as a result of market
transactions, including sales of portfolio securities and rights to when-issued
securities and options and futures transactions. The Portfolio may also realize
taxable income from certain short-term taxable obligations, securities loans, a
portion of discount with respect to certain stripped municipal obligations or
their stripped coupons and certain realized gains or income attributable to
accrued market discount. Any distributions by the Fund of its share of such
capital gains (after reduction by any capital loss carryforwards) or taxable
income would be taxable to shareholders of the Fund. However, it is expected
that such amounts, if any, would normally be insubstantial in relation to the
tax exempt interest earned by the Portfolio and allocated to the Fund. Certain
distributions if declared in October, November or December and paid the
following January may be taxed to shareholders as if received on December 31 of
the year in which they are declared.

The Portfolio's transactions in options and futures contracts will be
subject to special tax rules that may affect the amount, timing and character of
Fund distributions to shareholders. For example, certain positions held by the
Portfolio on the last business day of each taxable year will be marked to market
(i.e., treated as if closed out on such day), and any resulting gain or loss
will generally be treated as 60% long-term and 40% short-term capital gain or
loss. Certain positions held by the Portfolio that substantially diminish the
Portfolio's risk of loss with respect to other positions in its portfolio may
constitute "straddles," which are subject to tax rules that may cause deferral
of Portfolio losses, adjustments in the holding period of Portfolio securities
and conversion of short-term into long-term capital losses. The Portfolio may
have to limit its activities in options and futures contracts in order to enable
the Fund to maintain its RIC status.

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

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

Amounts paid by the Fund to individuals and certain other shareholders who
have not provided the Fund with their correct taxpayer identification number
("TIN") and certain certifications required by the Internal Revenue Service (the
"IRS"), as well as shareholders with respect to whom the Fund has received
notification from the IRS or a broker, may be subject to "backup" withholding of
federal income tax from the Fund's taxable dividends and distributions as well
as the proceeds of redemption transactions (including repurchases and
exchanges), at a rate of 31%. An individual's TIN is generally his or her social
security number.

STATE AND LOCAL TAXES

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

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

PORTFOLIO SECURITY TRANSACTIONS

Decisions concerning the execution of portfolio security transactions,
including the selection of the market and the executing firm, are made by BMR.
BMR is also responsible for the execution of transactions for all other accounts
managed by it. BMR places the portfolio security transactions of the Portfolio
and of all other accounts managed by it for execution with many firms. BMR uses
its best efforts to obtain execution of portfolio security transactions at
prices which are advantageous to the Portfolio and at reasonably competitive
spreads or (when a disclosed commission is being charged) at reasonably
competitive commission rates. In seeking such execution, BMR will use its best
judgment in evaluating the terms of a transaction, and will give consideration
to various relevant factors, including without limitation the full range and
quality of the executing firm's services, the value of the brokerage and
research services provided, the responsiveness of the firm to BMR, the size and
type of the transaction, the nature and character of the market for the
security, the confidentiality, speed and certainty of effective execution
required for the transaction, the general execution and operational capabilities
of the executing firm, the reputation, reliability, experience and financial
condition of the firm, the value and quality of the services rendered by the
firm in this and other transactions, and the reasonableness of the spread or
commission, if any. Municipal obligations, including state obligations,
purchased and sold by the Portfolio are generally traded in the over-the-counter
market on a net basis (i.e., without commission) through broker-dealers and
banks acting for their own account rather than as brokers, or otherwise involve
transactions directly with the issuer of such obligations. Such firms attempt to
profit from such transactions by buying at the bid price and selling at the
higher asked price of the market for such obligations, and the difference
between the bid and asked price is customarily referred to as the spread. The
Portfolio may also purchase municipal obligations from underwriters, and dealers
in fixed-price offerings, the cost of which may include undisclosed fees and
concessions to the underwriters. On occasion it may be necessary or appropriate
to purchase or sell a security through a broker on an agency basis, in which
case the Portfolio will incur a brokerage commission. Although spreads or
commissions on portfolio security transactions will, in the judgment of BMR, be
reasonable in relation to the value of the services provided, spreads or
commissions exceeding those which another firm might charge may be paid to firms
who were selected to execute transactions on behalf of the Portfolio and BMR's
other clients for providing brokerage and research services to BMR.

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

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

The Portfolio and BMR may also receive Research Services from underwriters
and dealers in fixed-price offerings, which Research Services are reviewed and
evaluated by BMR in connection with its investment responsibilities. The
investment companies sponsored by BMR or Eaton Vance may allocate trades in such
offerings to acquire information relating to the performance, fees and expenses
of such companies and other mutual funds, which information is used by the
Trustees of such companies to fulfill their responsibility to oversee the
quality of the services provided by various entities, including BMR, to such
companies. Such companies may also pay cash for such information.

Municipal obligations considered as investments for the Portfolio may also
be appropriate for other investment accounts managed by BMR or its affiliates.
Whenever decisions are made to buy or sell securities by the Portfolio and one
or more of such other accounts simultaneously, BMR will allocate the security
transactions (including "hot" issues) in a manner which it believes to be
equitable under the circumstances. As a result of such allocations, there may be
instances where the Portfolio will not participate in a transaction that is
allocated among other accounts. If an aggregated order cannot be filled
completely, allocations will generally be made on a pro rata basis. An order may
not be allocated on a pro rata basis where, for example: (i) consideration is
given to portfolio managers who have been instrumental in developing or
negotiating a particular investment; (ii) consideration is given to an account
with specialized investment policies that coincide with the particulars of a
specific investment; (iii) pro rata allocation would result in odd-lot or de
minimis amounts being allocated to a portfolio or other client; or (iv) where
BMR reasonably determines that departure from a pro rata allocation is
advisable. While these aggregation and allocation policies could have a
detrimental effect on the price or amount of the securities available to the
Portfolio from time to time, it is the opinion of the Trustees of the Trust and
the Portfolio that the benefits from the BMR organization outweigh any
disadvantage that may arise from exposure to simultaneous transactions. For the
fiscal years ended January 31, 1999, 1998 and 1997, the Portfolio paid brokerage
commissions of $10,300, $14,679 and $5,860, respectively, on portfolio
transactions aggregating $216,846,321, $301,149,626 and $94,993,525,
respectively to firms which provided some research services to BMR or its
affiliates (although many of such firms may have been selected in any particular
transaction primarily because of their execution capabilities).

FINANCIAL STATEMENTS

The audited financial statements of, and the report of independent
accountants for, the Fund and the Portfolio appear in the Fund's most recent
annual report to shareholders which is incorporated by reference into this SAI.
A copy of the Fund's annual report accompanies this SAI.

Registrant incorporates by reference the audited financial information for
the Fund and the Portfolio for the fiscal year ended January 31, 1999, as
previously filed electronically with the Commission (Accession No.
0000950109-99-001281).

<PAGE>

APPENDIX A

CLASS A FEES, PERFORMANCE AND OWNERSHIP

SERVICE FEES

For the fiscal year ended January 31, 1999, Class A made service fee
payments under the Plan aggregating $162,292, of which $153,137 was paid to
investment dealers and the balance of which was retained by the principal
underwriter.

PRINCIPAL UNDERWRITER

The total sales charges paid in connection with the sales of Class A shares
during the fiscal year ended January 31, 1999 was $1,180,497, of which $67,298
was received by the principal underwriter. For the fiscal year ended January 31,
1999, investment dealers received $1,113,199 from the total sales charges.

The Trust has authorized the principal underwriter to act as its agent in
repurchasing shares at the rate of $2.50 for each repurchase transaction handled
by the principal underwriter. For the fiscal year ended January 31, 1999, Class
A paid the principal underwriter $1,205.00 for repurchase transactions handled
by it.

PERFORMANCE INFORMATION

The table below indicates the cumulative and average annual total return on
a hypothetical investment of $1,000 in Class A shares for the periods shown in
the table. Total return for the period prior to February 1, 1998 reflects the
total return of the predecessor to Class A. The "Value of Initial Investment"
reflects the deduction of the maximum sales charge of 4.75%. Past performance is
not indicative of future results. Investment return and principal value will
fluctuate; shares, when redeemed, may be worth more or less than their original
cost. Information provided with two asterisks (**) includes the effect
subsidizing expenses. Return would have been lower without subsidies.

<TABLE>
<CAPTION>
TOTAL RETURN EXCLUDING TOTAL RETURN INCLUDING
MAXIMUM SALES CHARGE MAXIMUM SALES CHARGE
VALUE OF VALUE OF
INVESTMENT INVESTMENT INITIAL INVESTMENT ------------------------------ ------------------------------
PERIOD* DATE INVESTMENT ON 1/31/99 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ----------------- --------------- --------------- -------------- -------------- -------------- -------------- --------------

<S> <C> <C> <C> <C> <C> <C> <C>
Life of the Fund** 8/7/95 $952.38 $1,348.34 41.57% 10.47% 34.83% 8.94%
1 Year Ended
1/31/99 1/31/98 $952.27 $ 991.86 4.16% 4.16% -0.81% -0.81%
- ------------

*Predecessor Fund commenced operations on August 7, 1995.
</TABLE>

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

As at May 1, 1999, the Trustees and officers of the Trust, as a group, owned
in the aggregate less than 1% of the outstanding Class A shares of the Fund. As
at May 1, 1999, Merrill Lynch, Pierce, Fenner & Smith, Inc., Jacksonville, FL
was the record owner of approximately 13.4% of the outstanding Class A shares,
which it held on behalf of its customers who are the beneficial owners of such
shares, and as to which it had voting power under certain limited circumstances.
To the knowledge of the Trust, no other person owned of record or beneficially
5% or more of the Fund's outstanding Class A shares as of such date.

<PAGE>

APPENDIX B: CLASS B SHARES

FEES AND EXPENSES
DISTRIBUTION PLAN

During the fiscal year ended January 31, 1999, the principal underwriter
paid to investment dealers sales commissions of $2,597,893 on sales of Class B
shares. During the same period, the Fund made distribution payments to the
principal underwriter under the Distribution Plan aggregating $1,629,956 and the
principal underwriter received approximately $589,000 in CDSCs imposed on early
redeeming shareholders. These distribution payments and CDSC payments reduced
uncovered distribution charges under the Plan. As at January 31, 1999, the
outstanding uncovered distribution charges of the principal underwriter
calculated under the Plan amounted to approximately $9,309,000 (which amount was
equivalent to approximately 3.9% of the net assets attributable to Class B on
such day). During the fiscal year ended January 31, 1999, Class B made service
fee payments aggregating $353,135 of which $351,552 was paid to investment
dealers and the balance of which was retained by the principal underwriter.

PRINCIPAL UNDERWRITER

The Trust has authorized the principal underwriter to act as its agent in
repurchasing shares at the rate of $2.50 for each repurchase transaction handled
by the principal underwriter. For the fiscal year ended January 31, 1999, Class
B paid the principal underwriter $1,885.00 for repurchase transactions handled
by it.

PERFORMANCE INFORMATION

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

<TABLE>
<CAPTION>
VALUE OF VALUE OF
INVESTMENT INVESTMENT
BEFORE AFTER TOTAL RETURN BEFORE TOTAL RETURN AFTER
DEDUCTING DEDUCTING DEDUCTING THE CDSC DEDUCTING THE CDSC
INVESTMENT INVESTMENT AMOUNT OF THE CDSC ON THE CDSC ON ---------------------- ----------------------
PERIOD DATE INVESTMENT 1/31/99 1/31/99 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- ----------------- --------- ---------- ----------- ----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>

Life of the Fund** 8/7/95 $1,000 $1,374.09 $1,344.09 37.41% 9.53% 34.41% 8.84%
1 Year Ended
1/31/99 1/31/98 $1,000 $1,034.35 $ 985.17 3.44% 3.44% -1.48% -1.48%

</TABLE>

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

As at May 1, 1999, the Trustees and officers of the Trust, as a group, owned
in the aggregate less than 1% of the outstanding Class B shares of the Fund. As
of May 1, 1999, Merrill Lynch, Pierce, Fenner & Smith, Inc., Jacksonville, FL
was the record owner of approximately 23.7% of the outstanding Class B shares,
which were held on behalf of its customers who are the beneficial owners of such
shares, and as to which it had voting power under certain limited circumstances.
To the knowledge of the Trust, no other person owned of record or beneficially
5% or more of the Fund's outstanding Class B shares as of such date.

<PAGE>

APPENDIX C

CLASS C FEES, PERFORMANCE AND OWNERSHIP

DISTRIBUTION AND SERVICE FEES

During the fiscal year ended January 31, 1999, the principal underwriter
paid to investment dealers sales commissions of $38,840 on sales of Class C
shares. During the same period, the Fund made distribution payments to the
principal underwriter under the Distribution Plan aggregating $124,961 and the
principal underwriter received approximately $15,000 in CDSCs imposed on early
redeeming shareholders. These distribution payments and CDSC payments reduced
uncovered distribution charges under the Plan. As at January 31, 1999, the
outstanding uncovered distribution charges of the principal underwriter
calculated under the Plan amounted to approximately $1,437,000 (which amount was
equivalent to 5.8% of the net assets attributable to Class C on such day).
During the fiscal year ended January 31, 1999, Class C made service fee payments
aggregating $41,074 of which $10,898 was paid to investment dealers and the
balance of which was retained by the principal underwriter.

PRINCIPAL UNDERWRITER

The Trust has authorized the principal underwriter to act as its agent in
repurchasing shares at the rate of $2.50 for each repurchase transaction handled
by the principal underwriter. For the fiscal year ended January 31, 1999, Class
C paid the principal underwriter $210.00 for repurchase transactions handled by
it.

PERFORMANCE INFORMATION

The table below indicates the cumulative and average annual total return on
a hypothetical investment of $1,000 in Class C shares for the periods shown in
the table. Total return for the period prior to February 1, 1998 reflects the
total return of the predecessor to Class C. Total return prior to the
Predecessor Fund's commencement of operations reflects the total return of Class
B, adjusted to reflect the Class C sales charge. The Class B total return has
not been adjusted to reflect certain other expenses (such as distribution and/or
service fees). If such adjustments were made the Class C total return would be
different. Past performance is not indicative of future results. Investment
return and principal value will fluctuate; shares, when redeemed, may be worth
more or less than their original cost. Information presented with two asterisks
(**) includes the effect of subsidizing expenses.
Return would have been lower without subsidies.

VALUE OF VALUE OF TOTAL RETURN BEFORE TOTAL RETURN AFTER
INVESTMENT INVESTMENT DEDUCTING THE CDSC DEDUCTING THE CDSC
INVESTMENT INVESTMENT AMOUNT OF BEFORE DEDUCTING THE AFTER DEDUCTING THE ---------------------- ----------------------
PERIOD* DATE INVESTMENT CDSC ON 1/31/99 CDSC ON 1/31/99 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
------- ---- ---------- --------------- --------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>

Life of the
Fund** 8/7/95 $1,000 $1,370.73 $1,370.73 37.07% 9.46% 37.07% 9.46%
1 Year
Ended
1/31/99 1/31/98 $1,000 $1,032.23 $1,022.41 3.22% 3.22% 2.24% 2.24%

- ------------
*Predecessor Fund commenced operations on June 18, 1997.
</TABLE>

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

As at May 1, 1999, the Trustees and officers of the Trust, as a group, owned
in the aggregate less than 1% of the outstanding Class C shares of the Fund. As
at May 1, 1999, Merrill Lynch, Pierce, Fenner & Smith, Inc., Jacksonville, FL
was the record owner of approximately 16.1% of the outstanding Class C shares,
which it held on behalf of its customers who are the beneficial owners of such
shares, and as to which they had voting power under certain limited
circumstances. To the knowledge of the Trust, no other person owned of record or
beneficially 5% or more of the Fund's outstanding Class C shares as of such
date.

<PAGE>

APPENDIX D

HIGH YIELD MUNICIPALS PORTFOLIO

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

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

PERCENT OF PERCENT OF
NET ASSETS NET ASSETS
- -----------------------------------------------------------------------------
Aaa 7.56% AAA 9.52%
Aa 0.58 AA- 0.26
Aa2 2.27 A+ 0.58%
Aa3 0.26 A 0.99
A1 0.99 A- 0.71
Baa 0.67 BBB 0.82
Ba1 0.56 BBB- 2.78
Baa3 1.58 BB 1.23
Ba2 0.61 BB- 2.25
Ba3 3.19 B+ 1.94
B1 1.07 B 1.34
B2 1.02 Unrated 77.52
B3 1.58 -----
Unrated 77.98 100.00%
-----
100.00%

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

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

<PAGE>

APPENDIX E:

TAX EQUIVALENT YIELD TABLE

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

<TABLE>
<CAPTION>
MARGINAL
SINGLE RETURN JOINT RETURN INCOME TAX-EXEMPT YIELD
- --------------------- ------------------- TAX --------------------------------------------------------------------------
(TAXABLE INCOME)* BRACKET 4% 4.5% 5% 5.5% 6% 6.5% 7%
- ------------------------------------------ ----------- --------------------------------------------------------------------------
Equivalent Taxable Yield
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Up to $ 25,750 Up to $ 43,050 15.00% 4.71% 5.29% 5.88% 6.47% 7.06% 7.65% 8.24%
$ 25,751-$ 62,450 $ 43,051-$104,050 28.00 5.56 6.25 6.94 7.64 8.33 9.03 9.72
$ 62,451-$130,250 $104,051-$158,550 31.00 5.80 6.52 7.25 7.97 8.70 9.42 10.14
$130,251-$283,150 $158,551-$283,150 36.00 6.25 7.03 7.81 8.59 9.38 10.16 10.94
Over $283,150 Over $283,150 39.60 6.62 7.45 8.28 9.11 9.93 10.76 11.59
- ------------------------------------------ ----------- --------------------------------------------------------------------------

*Net amount subject to federal personal income tax after deductions and exemptions.
</TABLE>

Note: The above indicated federal income tax brackets do not take into account
the effect of a reduction in the deductibility of itemized deductions for
taxpayers with adjusted gross income in excess of $126,600. The tax brackets
also do not show the effects of phase out of personal exemptions for single
filers with adjusted gross incomes in excess of $126,600 and joint filers with
adjusted gross income in excess of $189,950. The effective tax brackets and
equivalent taxable yields of such taxpayers will be higher than those indicated
above.

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

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

APPENDIX F: RATINGS

DESCRIPTION OF MUNICIPAL OBLIGATION RATINGS+

MOODY'S INVESTORS SERVICE, INC.

MUNICIPAL BONDS

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

Caa: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal
or interest.

Ca: Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked
shortcomings.

C: Bonds which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.

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

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

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

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

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

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

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

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

MUNICIPAL SHORT-TERM OBLIGATIONS

Ratings: Moody's ratings for state and municipal short-term obligations will be
designated Moody's Investment Grade or (MIG). Such rating recognizes the
differences between short term credit risk and long term risk. Factors effecting
the liquidity of the borrower and short term cyclical elements are critical in
short term ratings, while other factors of major importance in bond risk, long
term secular trends for example, may be less important over the short run.

STANDARD & POOR'S RATINGS GROUP
INVESTMENT GRADE

AAA: Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.

AA: Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the highest rated issues only in small degree.

CC: The rating CC is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC debt rating.

C1: The Rating C1 is reserved for income bonds on which no interest is being
paid.

Plus (+) or Minus (-): The ratings from AA to CCC may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.

Provisional Ratings: The letter "p" indicates that the rating is provisional. A
provisional rating assumes the successful completion of the project being
financed by the debt being rated and indicates that payment of debt service
requirements is largely or entirely dependent upon the successful and timely
completion of the project. This rating, however, while addressing credit quality
subsequent to completion of the project, makes no comment on the likelihood of,
or the risk of default upon failure of such completion. The investor should
exercise his own judgment with respect to such likelihood and risk.

NR: NR indicates no rating has been requested, that there is insufficient
information on which to base a rating, or that S&P does not rate a particular
type of obligation as a matter of policy.

-- Amortization schedule (the larger the final maturity relative to other
maturities the more likely it will be treated as a note).

-- Sources of payment (the more dependent the issue is on the market for its
refinancing, the more likely it will be treated as a note).

Note rating symbols are as follows:

SP-1: Strong capacity to pay principal and interest. Those issues determined
to possess very strong characteristics will be given a plus(+) designation.

SP-2: Satisfactory capacity to pay principal and interest, with some
vulnerability to adverse financial and economic changes over the term of the
notes.

SP-3: Speculative capacity to pay principal and interest.

FITCH IBCA
INVESTMENT GRADE BOND RATINGS

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

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

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

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

DDD, DD, and D: Bonds are in default on interest and/or principal payments. Such
bonds are extremely speculative and should be valued on the basis of their
ultimate recovery value in liquidation or reorganization of the obligor. "DDD"
represents the highest potential for recovery on these bonds, and "D" represents
the lowest potential for recovery.

Plus (+) or Minus (-): The ratings from AA to C may be modified by the addition
of a plus or minus sign to indicate the relative position of a credit within the
rating category.

NR: Indicates that Fitch does not rate the specific issue.

Conditional: A conditional rating is premised on the successful completion of
a project or the occurrence of a specific event.

F-1+: Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.

F-1: Very Stong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
"F-1+".

F-2: Good Credit Quality. Issues carrying this rating have a satisfactory
degree of assurance for timely payment, but the margin of safety is not as
great as the "F-1+" and "F-1" categories.

* * * * * * * *

Notes: Bonds which are unrated expose the investor to risks with respect to
capacity to pay interest or repay principal which are similar to the risks of
lower-rated speculative bonds. The Portfolio is dependent on the Investment
Adviser's judgment, analysis and experience in the evaluation of such bonds.

Investors should note that the assignment of a rating to a bond by a
rating service may not reflect the effect of recent developments on the issuer's
ability to make interest and principal payments.

<PAGE>

PART C - OTHER INFORMATION

ITEM 23. EXHIBITS

(a)(1) Declaration of Trust of Eaton Vance Municipals Trust II dated
October 25, 1993, filed as Exhibit (1)(a) to Post-Effective
Amendment No. 4 and incorporated herein by reference.

(2) Amendment dated June 23, 1997 to the Declaration of Trust filed as
Exhibit (1)(b) to Post-Effective Amendment No. 10 and incorporated
herein by reference.

(3) Amendment and Restatement of Establishment and Designation of Series
of Shares dated March 24, 1997 filed as Exhibit (1)(b) to
Post-Effective Amendment No. 7 and incorporated herein by reference.

(4) Establishment and Designation of Classes of Shares of Beneficial
Interest, without Par Value, dated October 18, 1996 filed as Exhibit
(1)(c) to Post-Effective Amendment No. 7 and incorporated herein by
reference.

(b)(1) By-Laws dated October 25, 1993 filed as Exhibit (2)(a) to
Post-Effective Amendment No. 4 and incorporated herein by reference.

(2) Amendment to By-Laws of Eaton Vance Municipals Trust II dated
December 13, 1993 filed as Exhibit (2)(b) to Post-Effective
Amendment No. 4 and incorporated herein by reference.

(d) Not applicable

(e)(1) Distribution Agreement between Eaton Vance Municipals Trust II and
Eaton Vance Distributors, Inc. effective June 23, 1997 with attached
Schedule A effective June 23, 1997 filed as Exhibit (6)(a) to
Post-Effective Amendment No. 10 and incorporated herein by
reference.

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

(f) The Securities and Exchange Commission has granted the Registrant an
exemptive order that permits the Registrant to enter into deferred
compensation arrangements with its independent Trustees. See in the
Matter of Capital Exchange Fund, Inc., Release No. IC-20671
(November 1, 1994).

(g)(1) Custodian Agreement with Investors Bank & Trust Company dated
February 25, 1994 filed as Exhibit (8)(a) to Post-Effective
Amendment No. 4 and incorporated herein by reference.

(2) Amendment to Custodian Agreement with Investors Bank & Trust Company
dated October 23, 1995 filed as Exhibit (8)(b) to Post-Effective
Amendment No. 4 and incorporated herein by reference.

C-1
<PAGE>

(3) Amendment to Master Custodian Agreement with Investors Bank & Trust
Company dated December 21, 1998 filed as Exhibit (g)(3) to the
Registration Statement of Eaton Vance Municipals Trust (File Nos.
33-572, 811-4409) (Accession No. 0000950156-99-000050) and
incorporated herein by reference.

(h)(1)(a) Amended Administrative Services Agreement between Eaton Vance
Municipals Trust II (on behalf of each of its series) and Eaton
Vance Management with attached schedules (including Amended Schedule
A dated March 27, 1997) filed as Exhibit (9)(b) to Post-Effective
Amendment No. 4 and incorporated herein by reference.

(b) Amendment to Schedule A dated June 23, 1997 to the Amended
Administrative Services Agreement dated June 19, 1995 filed as
Exhibit (9)(b) to Post-Effective Amendment No. 10 and incorporated
herein by reference.

(2) Transfer Agency Agreement dated January 1, 1998 filed as Exhibit
(k)(b) to the Registration Statement on Form N-2 of Eaton Vance
Advisers Senior Floating-Rate Fund (File Nos. 333-46853, 811-08671)
(Accession No. 0000950156-98-000172) and incorporated herein by
reference.

(i)(1) Opinion of Internal Counsel filed as Exhibit (i)(1) to
Post-Effective Amendment No. 12 and incorporated herein by
reference.

(2) Consent of Counsel dated May 24, 1999 filed herewith.

(j)(1) Consent of Independent Auditors for Eaton Vance Florida Insured
Municipals Fund, Eaton Vance Hawaii Municipals Fund and Eaton Vance
Kansas Municipals Fund filed herewith.

(2) Consent of Independent Auditors for Eaton Vance High Yield
Municipals Fund filed herewith.

(k) Not applicable

(l) Not applicable

(m)(1) Eaton Vance Municipals Trust II Class A Service Plan adopted June
23, 1997 with attached Schedule A effective June 23, 1997 filed as
Exhibit (15)(a) to Post-Effective Amendment No. 10 and incorporated
herein by reference.

(2) Eaton Vance Municipals Trust II Class B Distribution Plan adopted
June 23, 1997 with attached Schedule A effective June 23, 1997 filed
as Exhibit (15)(b) to Post-Effective Amendment No. 10 and
incorporated herein by reference.

(3) Eaton Vance Municipals Trust II Class C Distribution Plan adopted
June 23, 1997 with attached Schedule A effective June 23, 1997 filed
as Exhibit (15)(c) to Post-Effective Amendment No. 10 and
incorporated herein by reference.

(n)(1) Financial Data Schedule for the fiscal year ended January 31, 1999
for Eaton Vance Florida Insured Municipals Fund-Class A filed
herewith.

(2) Financial Data Schedule for the fiscal year ended January 31, 1999
for Eaton Vance Florida Insured Municipals Fund-Class B filed
herewith.

C-2
<PAGE>

(3) Financial Data Schedule for the fiscal year ended January 31, 1999
for Eaton Vance Hawaii Municipals Fund-Class A filed herewith.

(4) Financial Data Schedule for the fiscal year ended January 31, 1999
for Eaton Vance Hawaii Municipals Fund-Class B filed herewith.

(5) Financial Data Schedule for the fiscal year ended January 31, 1999
for Eaton Vance Kansas Municipals Fund-Class A filed herewith.

(6) Financial Data Schedule for the fiscal year ended January 31, 1999
for Eaton Vance Kansas Municipals Fund-Class B filed herewith.

(7) Financial Data Schedule for the fiscal year ended January 31, 1999
for Eaton Vance High Yield Municipals Fund-Class A filed herewith.

(8) Financial Data Schedule for the fiscal year ended January 31, 1999
for Eaton Vance High Yield Municipals Fund-Class B filed herewith.

(9) Financial Data Schedule for the fiscal year ended January 31, 1999
for Eaton Vance High Yield Municipals Fund-Class C filed herewith.

(10) Financial Data Schedule for the fiscal year ended January 31, 1999
for Florida Insured Municipals Portfolio filed herewith.

(11) Financial Data Schedule for the fiscal year ended January 31, 1999
for Hawaii Municipals Portfolio filed herewith.

(12) Financial Data Schedule for the fiscal year ended January 31, 1999
for Kansas Municipals Portfolio filed herewith.

(13) Financial Data Schedule for the fiscal year ended January 31, 1999
for High Yield Municipals Portfolio filed herewith.

(o) Multiple Class Plan for Eaton Vance Funds dated June 23, 1997 filed
as Exhibit (18) to Post-Effective Amendment No. 10 and incorporated
herein by reference.

(p)(1) Power of Attorney for Eaton Vance Municipals Trust II dated April
22, 1997 filed as Exhibit (17)(a) to Post-Effective Amendment No. 8
and incorporated herein by reference.

(a) Power of Attorney for Eaton Vance Municipals Trust II dated November
16, 1998 filed as Exhibit (p)(1)(a) to Post-Effective Amendment No.
12 and incorporated herein by reference.

(2) Power of Attorney for Florida Insured Municipals Portfolio, Hawaii
Municipals Portfolio, Kansas Municipals Portfolio and High Yield
Municipals Portfolio dated April 22, 1997 filed as Exhibit (17)(b)
to Post-Effective Amendment No. 8 and incorporated herein by
reference.

(a) Power of Attorney for Florida Insured Municipals Portfolio, Hawaii
Municipals Portfolio, Kansas Municipals Portfolio and High Yield
Municipals Portfolio dated November 16, 1998 filed as Exhibit (p)(2)
(a) to Post-Effective Amendment No. 12 and incorporated herein by
reference.

C-3
<PAGE>

ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL

Not applicable

ITEM 25. INDEMNIFICATION

Article IV of the Registrant's Amended and Restated Declaration of Trust
permits Trustee and officer indemnification by By-law, contract and vote.
Article XI of the By-Laws contains indemnification provisions. Registrant's
Trustees and officers are insured under a standard mutual fund errors and
omissions insurance policy covering loss incurred by reason of negligent errors
and omissions committed in their capacities as such.

The distribution agreements of the Registrant also provide for reciprocal
indemnity of the principal underwriter, on the one hand, and the Trustees and
officers, on the other.

ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER

Reference is made to: (i) the information set forth under the caption
"Management and Organization" in the Statement of Additional Information; (ii)
the Eaton Vance Corp. 10-K filed under the Securities Exchange Act of 1934 (File
No. 1-8100); and (iii) the Form ADV of Eaton Vance (File No. 801-15930) and BMR
(File No. 801-43127) filed with the Commission, all of which are incorporated
herein by reference.

ITEM 27. PRINCIPAL UNDERWRITERS

(a) Registrant's principal underwriter, Eaton Vance Distributors, Inc., a
wholly-owned subsidiary of Eaton Vance Management, is the principal
underwriter for each of the investment companies named below:
<TABLE>
<CAPTION>
<S> <C>
Eaton Vance Advisers Senior Floating-Rate Fund Eaton Vance Municipals Trust II
Eaton Vance Growth Trust Eaton Vance Mutual Funds Trust
Eaton Vance Income Fund of Boston Eaton Vance Prime Rate Reserves
Eaton Vance Institutional Senior Floating-Rate Fund Eaton Vance Special Investment Trust
Eaton Vance Investment Trust EV Classic Senior Floating-Rate Fund
Eaton Vance Municipals Trust

</TABLE>

(b)
<TABLE>
<CAPTION>
<S> <C> <C>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address* with Principal Underwriter with Registrant
----------------- -------------------------- ---------------

Albert F. Barbaro Vice President None
Chris Berg Vice President None
Kate B. Bradshaw Vice President None
Mark Carlson Vice President None
Daniel C. Cataldo Vice President None
Raymond Cox Vice President None
Peter Crowley Vice President None
Mark P. Doman Vice President None
Alan R. Dynner Vice President Secretary
Richard A. Finelli Vice President None
Kelly Flynn Vice President None
James Foley Vice President None
Michael A. Foster Vice President None
William M. Gillen Senior Vice President None
Hugh S. Gilmartin Vice President None
James B. Hawkes Vice President and Director Vice President and Trustee
Perry D. Hooker Vice President None
Brian Jacobs Senior Vice President None

C-4
<PAGE>

Thomas P. Luka Vice President None
John Macejka Vice President None
Stephen Marks Vice President None
Joseph T. McMenamin Vice President None
Morgan C. Mohrman Senior Vice President None
James A. Naughton Vice President None
Joseph Nelson Vice President None
Mark D. Nelson Vice President None
Linda D. Newkirk Vice President None
James L. O'Connor Vice President Treasurer
Andrew Ogren Vice President None
Thomas Otis Secretary and Clerk None
George D. Owen, II Vice President None
Enrique M. Pineda Vice President None
F. Anthony Robinson Vice President None
Frances Rogell Vice President None
Jay S. Rosoff Vice President None
Benjamin A. Rowland,Jr. Vice President, Treasurer and Director None
Stephen M. Rudman Vice President None
Kevin Schrader Vice President None
George V.F. Schwab,Jr. Vice President None
Teresa A. Sheehan Vice President None
William M. Steul Vice President and Director None
Cornelius J. Sullivan Senior Vice President None
Peter Sykes Vice President None
David M. Thill Vice President None
John M. Trotsky Vice President None
Jerry Vainisi Vice President None
Chris Volf Vice President None
Wharton P. Whitaker President and Director None
Sue Wilder Vice President None
</TABLE>

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

ITEM 28. LOCATION OF ACCOUNTS AND RECORDS

All applicable accounts, books and documents required to be maintained by
the Registrant by Section 31(a) of the Investment Company Act of 1940 and the
Rules promulgated thereunder are in the possession and custody of the
Registrant's custodian, Investors Bank & Trust Company, 200 Clarendon Street,
16th Floor, Mail Code ADM27, Boston, MA 02116, and its transfer agent, First
Data Investor Services Group, 4400 Computer Drive, Westborough, MA 01581-5120,
with the exception of certain corporate documents and portfolio trading
documents which are in the possession and custody, Eaton Vance Management, The
Eaton Vance Building, 255 State Street, Boston, MA 02109. Registrant is informed
that all applicable accounts, books and documents required to be maintained by
registered investment advisers are in the custody and possession of Eaton Vance
Management and Boston Management and Research.

ITEM 29. MANAGEMENT SERVICES

Not applicable

ITEM 30. UNDERTAKINGS

Not applicable

C-5
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Amendment to the Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Amendment to its Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized in the City of Boston, and the
Commonwealth of Massachusetts, on May 21, 1999.

EATON VANCE MUNICIPALS TRUST II

By: /s/ THOMAS J. FETTER
-------------------------------------
Thomas J. Fetter, President

Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statement has been signed below by
the following persons in their capacities and on May 21, 1999.
<TABLE>
<CAPTION>
<S> <C>
SIGNATURE TITLE
--------- -----

/s/ Thomas J. Fetter President (Chief Executive Officer)
- -----------------------
Thomas J. Fetter

/s/ James L. O'Connor Treasurer (Principal Financial and Accounting Officer)
- -----------------------
James L. O'Connor

Jessica M. Bibliowicz*
- ----------------------- Trustee
Jessica M. Bibliowicz

Donald R. Dwight*
- ----------------------- Trustee
Donald R. Dwight

/s/ James B. Hawkes
- ----------------------- Vice President and Trustee
James B. Hawkes

Samuel L. Hayes, III*
- ----------------------- Trustee
Samuel L. Hayes

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

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

John L. Thorndike*
- ----------------------- Trustee
John L. Thorndike

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

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

C-6
<PAGE>

SIGNATURES

Florida Insured Municipals Portfolio has duly caused this Amendment to the
Registration Statement on Form N-1A of Eaton Vance Municipals Trust II (File No.
33-71320) to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Boston and the Commonwealth of Massachusetts on May
21, 1999.

FLORIDA INSURED MUNICIPALS PORTFOLIO

By: /s/ THOMAS J. FETTER
--------------------------------------
Thomas J. Fetter, President

This Amendment to the Registration Statement on Form N-1A of Eaton Vance
Municipals Trust II (File No. 33-71320) has been signed below by the following
persons in their capacities and on May 21, 1999.

<TABLE>
<CAPTION>
<S> <C>
SIGNATURE TITLE
--------- -----