<DOCUMENT>
<TYPE>N-2
<SEQUENCE>1
<FILENAME>formn_2.txt
<TEXT>
    As filed with the Securities and Exchange Commission on November 14, 2005
                                              1933 Act File No. 333-
                                              1940 Act File No. 811-21832

                    U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM N-2

                             REGISTRATION STATEMENT
                      UNDER THE SECURITIES ACT OF 1933       |X|
                          PRE-EFFECTIVE AMENDMENT NO.        | |

                           POST-EFFECTIVE AMENDMENT NO.      | |


                                     AND/OR

                        REGISTRATION STATEMENT UNDER THE
                       INVESTMENT COMPANY ACT OF 1940        |X|
                                   AMENDMENT NO.             | |
                        (CHECK APPROPRIATE BOX OR BOXES)

            EATON VANCE TAX-MANAGED PREMIUM AND DIVIDEND INCOME FUND
            --------------------------------------------------------
               (EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)

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

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (617) 482-8260
       -----------------------------------------------------------------

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

                          COPIES OF COMMUNICATIONS TO:

                              MARK P. GOSHKO, ESQ.
                  KIRKPATRICK & Lockhart Nicholson Graham LLP
                                75 STATE STREET
                          BOSTON, MASSACHUSETTS 02109

     APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: As soon as practicable after
the effective date of this Registration Statement.

     If any of the securities being registered on this form are to be offered on
a delayed or continuous basis in reliance on Rule 415 under the Securities Act
of 1933, other than securities offered in connection with a dividend
reinvestment plan, check the following box. | |

     It is proposed that this filing will become effective (check appropriate
box):
         | | when declared effective pursuant to Section 8(c)

<PAGE>


        CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
<TABLE>
<CAPTION>
==========================================================================================================
                                                PROPOSED          PROPOSED
                               AMOUNT BEING      MAXIMUM           MAXIMUM            AMOUNT OF
                                REGISTERED      OFFERING          AGGREGATE        REGISTRATION FEES
TITLE OF SECURITIES BEING         (1)          PRICE PER UNIT    OFFERING PRICE        (1)(2)
REGISTERED                                         (1)              (1)
----------------------------------------------------------------------------------------------------------
<S>                              <C>             <C>             <C>                   <C>

Common Shares of Beneficial
Interest, $0.01 par value        50,000          $20.00          $1,000,000            $117.70
==========================================================================================================
(1)  Estimated solely for purposes of calculating the registration fee, pursuant to Rule 457(o) under the
     Securities Act of 1933.
(2)  Includes Shares that may be offered to the Underwriters pursuant to an option to cover over-allotments.
</TABLE>

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


     THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATES AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.


<PAGE>

THE  INFORMATION IN THIS  PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.  WE MAY
NOT SELL  THESE  SECURITIES  UNTIL THE  REGISTRATION  STATEMENT  FILED  WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO  SELL  THESE  SECURITIES  AND IT IS NOT  SOLICITING  AN  OFFER  TO BUY  THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED


PRELIMINARY PROSPECTUS         SUBJECT TO COMPLETION           NOVEMBER 14, 2005
--------------------------------------------------------------------------------
(EATON VANCE LOGO)       [       ]SHARES
EATON VANCE TAX-MANAGED PREMIUM AND DIVIDEND INCOME FUND
COMMON SHARES
--------------------------------------------------------------------------------

INVESTMENT OBJECTIVES.  Eaton Vance Tax-Managed Premium and Dividend Income Fund
(the "Fund") is a newly organized, diversified, closed-end management investment
company.  The Fund's primary  investment  objective is to provide current income
and gains, with a secondary objective of capital  appreciation.  In pursuing its
investment  objectives,  the Fund will evaluate  returns on an after-tax  basis,
seeking to minimize and defer shareholder federal income taxes.

PORTFOLIO  MANAGEMENT  STRATEGIES.  Under normal market  conditions,  the Fund's
investment  program will consist primarily of owning a diversified  portfolio of
common stocks.  The Fund will seek to earn high levels of tax-advantaged  income
and gains by (1)  emphasizing  investments  in stocks  that pay  dividends  that
qualify for favorable  federal  income tax  treatment and (2) writing  (selling)
stock index call  options with  respect to a  substantial  portion of its common
stock  investments.  Call options on broad-based stock indices generally qualify
for treatment as "section 1256  contracts" on which capital gains and losses are
generally  treated as 60%  long-term and 40%  short-term,  regardless of holding
period.

INVESTMENT ADVISER AND SUB-ADVISER. The Fund's investment adviser is Eaton Vance
Management  ("Eaton Vance" or the "Adviser").  As of July 31, 2005,  Eaton Vance
and its  subsidiaries  managed  approximately  $106  billion on behalf of funds,
institutional clients and individuals,  including approximately $64.6 billion in
equity assets.  Eaton Vance has engaged Rampart Investment  Management  Company,
Inc.  ("Rampart" or the  "Sub-Adviser")  as a sub-adviser of the Fund.  Rampart,
founded  in  1983,   specializes   in  options   management   and   trading  for
institutional,  high net worth and investment  company clients.  Rampart managed
approximately  $4.48 billion in assets as of July 31, 2005.  Eaton Vance will be
responsible for managing the Fund's overall investment program,  structuring and
managing the Fund's common stock portfolio,  including  tax-loss  harvesting and
other tax-management  techniques,  providing research support to the Sub-Adviser
and supervising the performance of the Sub-Adviser.  Rampart will be responsible
for providing advice on and execution of the Fund's options strategy.

PORTFOLIO  CONTENTS.  Under normal  market  conditions,  the Fund will invest at
least 80% of its total assets in a diversified  portfolio of common stocks.  The
Fund will invest primarily in common stocks of U.S.  issuers,  but may invest up
to 35% of its  assets  in  common  stocks  of  foreign  issuers.  The Fund  will
emphasize  investments  in stocks that pay  dividends  that  qualify for federal
income taxation at rates applicable to long-term  capital gains, and may seek to
enhance the level of  tax-advantaged  dividend income it receives by engaging in
dividend capture trading. In a dividend capture trade, the Fund sells a stock on
or shortly  after the  stock's  ex-dividend  date and uses the sale  proceeds to
purchase one or more other stocks that are expected to pay dividends  before the
next dividend payment on the stock being sold.  Through this practice,  the Fund
may receive more  dividend  payments  over a given time period than if it held a
single stock. By complying with applicable holding period and other requirements
while engaging in dividend  capture  trading,  the Fund may enhance the level of
tax-advantaged  dividend income it receives. The use of dividend capture trading
strategies  will  expose the Fund to  increased  trading  costs and  potentially
higher short-term gain or loss.

The Fund intends to write call  options on  broad-based  stock  indices that the
Adviser  believes  collectively  approximate the  characteristics  of its common
stock  portfolio  and that  present  attractive  opportunities  to earn  options
premiums.  The Fund  intends  initially  to write  call  options  on the S&P 500
Composite  Stock Price  Index(R) and the  NASDAQ-100  Index(R).  Over time,  the
indices on which the Fund writes call options may vary as a result of changes in
the  availability  and liquidity of various listed index options,  the Adviser's
evaluation of equity market  conditions  and other  factors.  Writing index call
options  involves a tradeoff  between the option  premiums  received and reduced
participation  in  potential  future  stock  price  appreciation.   Due  to  tax
considerations, the Fund intends to limit the overlap between its stock holdings
(and any  subset  thereof)  and each index on which it has  outstanding  options
positions to less than 70% on an ongoing  basis.  The Fund's stock  holdings may
include  stocks not  included in the  indices on which it writes  call  options.
(continued on inside front cover)

BECAUSE  THE FUND IS NEWLY  ORGANIZED,  ITS  COMMON  SHARES  HAVE NO  HISTORY OF
TRADING.

INVESTING IN SHARES INVOLVES CERTAIN RISKS. SEE "INVESTMENT OBJECTIVES,
POLICIES AND RISKS" BEGINNING ON PAGE [ ]. NEITHER THE SECURITIES AND
EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR
DISAPPROVED OF THESE SECURITIES OR DETERMINED THIS PROSPECTUS IS TRUTHFUL
OR COMPLETE. ANY REPRESENTATION CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
                                                           Price to public    Sales load (1)      Proceeds to Fund
<S>                                                         <C>                 <C>                     <C>
------------------------------------------------------------------------------------------------------------------
Per share                                                   $20.00              $0.90                  $19.10
------------------------------------------------------------------------------------------------------------------
Total                                                          $                  $                    $
Total assuming full exercise of the over-allotment option      $                  $                    $
------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  Eaton  Vance  (not the Fund) may pay  certain  additional  compensation  to
     qualifying  Underwriters.  See  "Underwriting."  Eaton Vance (not the Fund)
     will pay [ ] services  provided  pursuant to an  agreement  between [ ] and
     Eaton Vance. See

<PAGE>

     "Underwriting."  The total  compensation  received by the Underwriters will
     not  exceed  9.0% of the  aggregate  initial  offering  price of the common
     shares offered hereby.

In addition to the sales load, the Fund will pay offering expenses of up to $[ ]
per share,  estimated to total $ , which will reduce the  "Proceeds to the Fund"
(above).  Eaton Vance or an affiliate  has agreed to pay the amount by which the
aggregate of all of the Fund's offering costs (other than sales loads) exceed $[
] per  share.  Eaton  Vance or an  affiliate  has agreed to  reimburse  all Fund
organizational costs.

                              [             ]

                                       2

<PAGE>

(continued from previous page)
THE FUND SEEKS TO  GENERATE  CURRENT  EARNINGS  FROM  OPTION  PREMIUMS  AND FROM
DIVIDENDS ON STOCKS HELD. The Fund intends to employ a variety of tax-management
techniques and strategies as described  herein,  seeking in part to minimize the
Fund's ordinary income (other than qualified  dividend  income) and net realized
short-term  capital gains in excess of net realized long-term capital losses. To
the extent  that the Fund's  ordinary  income  (other  than  qualified  dividend
income) and net realized  short-term  gains over net realized  long-term  losses
exceed Fund expenses, dividends with respect to such amounts when paid to Common
Shareholders will be taxable as ordinary income.

EXCHANGE  LISTING.  The Fund has applied for listing of its common shares on the
New  York  Stock  Exchange  under  the  symbol  " ."  Because  the Fund is newly
organized,  its common shares have no history of public  trading.  The shares of
closed-end  management  investment companies frequently trade at a discount from
their net asset value. The returns earned by holders of the Fund's Common Shares
("Common  Shareholders")  who purchase  their  shares in this  offering and sell
their shares below net asset value will be reduced.

Eaton Vance believes that the Fund may be appropriate  for investors  seeking an
investment  vehicle that combines  regular  distributions  and the potential for
capital  appreciation.  The Fund may be  particularly  well suited for taxpaying
investors who can benefit from the  minimization  and deferral of federal income
taxes that the Fund seeks to provide.

The Fund's net asset value and  distribution  rate will vary and may be affected
by numerous factors,  including changes in stock prices, option premiums, market
interest rates,  dividend rates and other factors. An investment in the Fund may
not be appropriate  for all investors.  There is no assurance that the Fund will
achieve its investment objectives.

This  prospectus  sets  forth  concisely  information  you  should  know  before
investing in the shares of the Fund.  Please read and retain this prospectus for
future  reference.  A Statement of Additional  Information dated [ 2005 has been
filed with the  Securities and Exchange  Commission and can be obtained  without
charge by calling  1-800-225-6265 or by writing to the Fund. A table of contents
to the  Statement  of  Additional  Information  is  located  at page [ ] of this
prospectus.  This prospectus  incorporates by reference the entire  Statement of
Additional  Information.  The Statement of Additional  Information  is available
along  with  shareholder  reports  and  other  Fund-related  materials:  at  the
Securities Exchange  Commission's public reference room in Washington,  DC (call
1-202-942-8090 for information on the operation of the reference room); from the
EDGAR  database  on  the   Securities   Exchange   Commission's   internet  site
(http://www.sec.gov);  upon payment of copying fees by writing to the Securities
Exchange Commission's public reference section, Washington, DC 20549-0102; or by
electronic  mail at  publicinfo@sec.gov.  The Fund's  address is The Eaton Vance
Building, 255 State Street, Boston, Massachusetts 02109 and its telephone number
is  1-800-225-6265.

The  Fund's  shares do not  represent  a deposit or  obligation  of, and are not
guaranteed or endorsed by, any bank or other insured depository institution, and
are not federally  insured by the Federal  Deposit  Insurance  Corporation,  the
Federal Reserve Board or any other government agency.

The Fund is not sponsored,  endorsed,  sold or promoted by any index sponsor. No
index sponsor has passed on the legality or  suitability  of, or the accuracy or
adequacy of descriptions and disclosures  relating to the Fund. No index sponsor
has made any  representation  or  warranty,  express or  implied,  to the Common
Shareholders of the Fund or any member of the public  regarding the advisability
of investing in securities generally or in the Fund particularly, or the ability
of the respective indices to track general stock market performance. The indices
are determined, composed and calculated by the respective index sponsors without
regard  to the Fund or its use of the  indices  for  option  writing.  The index
sponsors  have no  obligation  to  take  the  needs  of the  Fund or its  Common
Shareholders  into  consideration  in determining,  composing or calculating the
indices.  No  index  sponsor  is  responsible  for  or has  participated  in the
determination of the timing of, price of, or number of Common Shares of the Fund
to be  issued.  No  index  sponsor  has any  liability  in  connection  with the
management, administration, marketing or trading of the Fund.

THE  INDEX  SPONSORS  DO  NOT  GUARANTEE  THE  ACCURACY   AND/OR   UNINTERRUPTED
CALCULATION OF THE INDICES OR ANY DATA INCLUDED THEREIN. THE INDEX SPONSORS MAKE
NO WARRANTY,  EXPRESS OR IMPLIED,  AS TO RESULTS TO BE OBTAINED BY THE FUND, THE
COMMON SHAREHOLDERS OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE INDICES IN
THE FUND'S  OPTIONS  WRITING  PROGRAM.  IN  PUBLISHING  THE  INDICES,  THE INDEX
SPONSORS  MAKE NO EXPRESS OR IMPLIED  WARRANTIES,  AND  EXPRESSLY  DISCLAIM  ALL
WARRANTIES OF  MERCHANTABILITY  OR FITNESS FOR A PARTICULAR  PURPOSE OR USE WITH
RESPECT TO THE INDICES OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE
FOREGOING,  IN NO EVENT SHALL AN INDEX  SPONSOR HAVE ANY  LIABILITY FOR ANY LOST
PROFITS OR SPECIAL,  INCIDENTAL,  PUNITIVE,  INDIRECT OR CONSEQUENTIAL  DAMAGES,
EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.

                                       3

<PAGE>



TABLE OF CONTENTS

                                                                            PAGE
Prospectus Summary........................................................
Summary of Fund Expenses..................................................
The Fund..................................................................
Use of Proceeds...........................................................
Investment Objectives and Policies........................................
Risk Factors..............................................................
Management of the Fund....................................................
Distributions.............................................................
Federal Income Tax Matters................................................
Dividend Reinvestment Plan................................................
Description of Capital Structure..........................................
Underwriting..............................................................
Custodian and Transfer Agent..............................................
Legal Opinions............................................................
Reports to Shareholders...................................................
Independent Registered Public Accounting Firm.............................
Additional Information....................................................
Table of Contents for the Statement of Additional Information.............
The Fund's Privacy Policy.................................................

You should rely only on the  information  contained or incorporated by reference
in this prospectus.  The Fund has not, and the underwriters have not, authorized
any other person to provide you with different  information.  If anyone provides
you with different or inconsistent  information,  you should not rely on it. The
Fund is not,  and the  underwriters  are not,  making  an  offer  to sell  these
securities in any  jurisdiction  where the offer or sale is not  permitted.  The
Fund will promptly notify shareholders of any material change to this prospectus
during the period the Fund is  required to deliver  the  prospectus.  The Fund's
business,  financial  condition and prospects may have changed since the date of
this prospectus.

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

                                       4

<PAGE>

                               PROSPECTUS SUMMARY
PROSPECTUS SUMMARY

THE FUND

Eaton Vance Tax-Managed Premium and Dividend Income Fund (the "Fund") is a newly
organized, diversified, closed-end management investment company. The Fund seeks
to provide  current  income and gains,  with a  secondary  objective  of capital
appreciation.  Investments are based on Eaton Vance Management's  ("Eaton Vance"
or the "Adviser") and Rampart Investment  Management Company,  Inc.'s ("Rampart"
or the "Sub-Adviser")  internal research and proprietary modeling techniques and
software.  An investment in the Fund may not be  appropriate  for all investors.
There is no assurance that the Fund will achieve its investment objectives.

THE OFFERING

The Fund is offering [ ] common  shares of beneficial  interest,  par value $.01
per share, through a group of underwriters (the "Underwriters") led by [ ], [ ],
[ ] and [ ]. The  common  shares  of  beneficial  interest  are  called  "Common
Shares." The Underwriters have been granted an option by the Fund to purchase up
to an  additional  [ ] Common  Shares  solely  to cover  orders in excess of [ ]
Common Shares. The initial public offering price is $20.00 per Common Share. The
minimum  purchase  in  this  offering  is  100  Common  Shares   ($2,000).   See
"Underwriting."  Eaton Vance or an  affiliate  has agreed to (i)  reimburse  all
organizational  costs of the Fund and (ii) pay all  offering  costs  (other than
sales load) that exceed $.04 per Common Share.

INVESTMENT OBJECTIVES AND POLICIES

The Fund's primary investment  objective is to provide current income and gains,
with a secondary objective of capital  appreciation.  In pursuing its investment
objectives,  the Fund will evaluate  returns on an after-tax  basis,  seeking to
minimize and defer shareholder  federal income taxes.  There can be no assurance
that the Fund will achieve its investment objectives.

Under  normal  market  conditions,  the Fund's  investment  program will consist
primarily of owning a diversified portfolio of common stocks. The Fund will seek
to earn  high  levels of  tax-advantaged  income  and  gains by (1)  emphasizing
investments  in stocks that pay  dividends  that qualify for  favorable  federal
income tax  treatment  and (2) writing  (selling)  stock index call options with
respect to a substantial portion of its common stocks investments.  Call options
on broad-based  stock indices  generally  qualify for treatment as "section 1256
contracts"  on which  capital  gains and  losses  are  generally  treated as 60%
long-term and 40% short-term, regardless of holding period.

Under normal market  conditions,  the Fund will invest at least 80% of its total
assets in a  diversified  portfolio of common  stocks.  The Fund will  emphasize
investments  in stocks  that pay  dividends  that  qualify  for  federal  income
taxation at rates applicable to long-term capital gains, and may seek to enhance
the level of tax-advantaged  dividend income it receives by engaging in dividend
capture  trading.  In a  dividend  capture  trade,  the Fund sells a stock on or
shortly  after  the  stock's  ex-dividend  date and uses  the sale  proceeds  to
purchase one or more other stocks that are expected to pay dividends  before the
next dividend payment on the stock being sold.  Through this practice,  the Fund
may receive more  dividend  payments  over a given time period than if it held a
single stock. By complying with applicable holding period and other requirements
while engaging in dividend  capture  trading,  the Fund may enhance the level of
tax-advantaged  dividend income it receives. The use of dividend capture trading
strategies  will  expose the Fund to  increased  trading  costs and  potentially
higher short-term gain or loss.

The Fund will invest  primarily in common stocks of U.S.  issuers.  The Fund may
invest up to 35% of its total assets in securities of foreign issuers, including
securities evidenced by American Depositary Receipts ("ADRs"), Global Depositary
Receipts ("GDRs") and European Depositary Receipts ("EDRs"). The Fund may invest
up to 5% of its total assets in securities of emerging market issuers.  The Fund
expects  that its assets  will  normally  be  invested  across a broad  range of
industries and market sectors.  The Fund may not invest 25% or more of its total
assets  in the  securities  of  issuers  in any  single  industry  or  group  of
industries.  The  Fund  may  invest  a  portion  of  its  assets  in  stocks  of
mid-capitalization companies. Eaton Vance generally considers mid-capitalization
companies to be those companies having market  capitalizations  within the range
of  capitalizations  for the S&P MidCap 400 Index (the "S&P MidCap 400").  As of
September  30, 2005,  the median market  capitalization  of companies in the S&P
MidCap 400 was approximately $[ ] billion.

The Fund intends to write call  options on  broad-based  stock  indices that the
Adviser  believes  collectively  approximate the  characteristics  of its common
stock  portfolio  and that  present  attractive  opportunities  to earn  options
premiums.  The Fund  intends  initially  to write  call  options  on the S&P 500
Composite  Stock Price  Index(R) and the  NASDAQ-100  Index(R).  Over time,  the
indices on which the Fund writes call options may vary as a result of changes in
the  availability  and liquidity of various listed index options,  the Adviser's
evaluation of equity market  conditions  and other  factors.  Writing index call
options  involves a tradeoff  between the option  premiums  received and reduced
participation  in  potential  future  stock  price  appreciation.   Due  to  tax
considerations, the Fund intends to limit the overlap between its stock holdings

                                       5

<PAGE>

(and any  subset  thereof)  and each index on which it has  outstanding  options
positions to less than 70% on an ongoing  basis.  The Fund's stock  holdings may
include stocks not included in the indices on which it writes call options.

The Fund generally  intends to sell index call options that are  exchange-listed
and  "European  style,"  meaning that the options may be  exercised  only on the
expiration  date of the option.  Index options differ from options on individual
securities  in that index  options (i) typically are settled in cash rather than
by delivery of  securities  and (ii) reflect  price  fluctuations  in a group of
securities or segments of the securities  market rather than price  fluctuations
in a single security.

As the seller of index call options,  the Fund will receive cash (the  premiums)
from option  purchasers.  The purchaser of an index call option has the right to
any  appreciation  in the value of the applicable  index over a fixed price (the
exercise  price) as of a  specified  date in the future  (the  option  valuation
date).  Generally,  the Fund  intends  to sell call  options  that are  slightly
"out-of-the-money"  (i.e.,  the exercise price  generally will be slightly above
the current level of the applicable index when the option is sold). The Fund may
also sell index  options that are more  substantially  "out-of-the-money."  Such
options that are more substantially "out-of-the-money" provide greater potential
for the Fund to realize  capital  appreciation,  but generally would pay a lower
premium  than options that are  slightly  "out-of-the-money."  In writing  index
options, the Fund will, in effect, sell the potential  appreciation in the value
of the  applicable  index above the  exercise  price in exchange  for the option
premium  received.  If, at expiration,  an index call option sold by the Fund is
exercised, the Fund will pay the purchaser the difference between the cash value
of the applicable index and the exercise price of the option.  The premium,  the
exercise price and the market value of the  applicable  index will determine the
gain or loss realized by the Fund as the seller of the index call option.

The Fund's policy that, under normal market conditions,  it will invest at least
80% of its  total  assets  in a  diversified  portfolio  of  common  stocks is a
non-fundamental  policy that may be changed by the Fund's Board of Trustees (the
"Board") without Common Shareholder approval following the provision of 60 days'
prior written notice to Common Shareholders.

In  implementing  the Fund's  investment  strategy,  the Adviser and Sub-Adviser
intend to employ a variety of techniques and strategies designed to minimize and
defer the federal income taxes incurred by shareholders in connection with their
investment in the Fund as described below.

The S&P 500 is an  unmanaged  index of 500 stocks  maintained  and  published by
Standard  &  Poor's  that  is   market-capitalization   weighted  and  generally
representative  of the performance of larger stocks traded in the United States.
The NASDAQ-100 is an unmanaged index maintained by the Nasdaq Stock Market, Inc.
(with its  affiliates,  "Nasdaq") that includes 100 of the largest  domestic and
international  non- financial  companies  listed on the Nasdaq based upon market
capitalization.  The  NASDAQ-100  reflects  companies  across  a range  of major
industry groups,  including computer hardware and software,  telecommunications,
retail/wholesale trade and biotechnology.  It is not possible to invest directly
in the  NASDAQ-100.  Compared to the S&P 500, the NASDAQ-100 has a substantially
higher weighting in technology oriented industries.

The Fund is not sponsored,  endorsed,  sold or promoted by any index sponsor. No
index sponsor has passed on the legality or  suitability  of, or the accuracy or
adequacy of descriptions and disclosures  relating to the Fund. No index sponsor
has made any  representation  or  warranty,  express or  implied,  to the Common
Shareholders of the Fund or any member of the public  regarding the advisability
of investing in securities generally or in the Fund particularly, or the ability
of the respective indices to track general stock market performance. The indices
are determined, composed and calculated by the respective index sponsors without
regard  to the Fund or its use of the  indices  for  option  writing.  The index
sponsors  have no  obligation  to  take  the  needs  of the  Fund or its  Common
Shareholders  into  consideration  in determining,  composing or calculating the
indices.  No  index  sponsor  is  responsible  for  or has  participated  in the
determination of the timing of, price of, or number of Common Shares of the Fund
to be  issued.  No  index  sponsor  has any  liability  in  connection  with the
management, administration, marketing or trading of the Fund.

THE  INDEX  SPONSORS  DO  NOT  GUARANTEE  THE  ACCURACY   AND/OR   UNINTERRUPTED
CALCULATION OF THE INDICES OR ANY DATA INCLUDED THEREIN. THE INDEX SPONSORS MAKE
NO WARRANTY,  EXPRESS OR IMPLIED,  AS TO RESULTS TO BE OBTAINED BY THE FUND, THE
COMMON SHAREHOLDERS OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE INDICES IN
THE FUND'S  OPTIONS  WRITING  PROGRAM.  IN  PUBLISHING  THE  INDICES,  THE INDEX
SPONSORS  MAKE NO EXPRESS OR IMPLIED  WARRANTIES,  AND  EXPRESSLY  DISCLAIM  ALL
WARRANTIES OF  MERCHANTABILITY  OR FITNESS FOR A PARTICULAR  PURPOSE OR USE WITH
RESPECT TO THE INDICES OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE
FOREGOING,  IN NO EVENT SHALL AN INDEX  SPONSOR HAVE ANY  LIABILITY FOR ANY LOST
PROFITS OR SPECIAL,  INCIDENTAL,  PUNITIVE,  INDIRECT OR CONSEQUENTIAL  DAMAGES,
EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.

INVESTMENT SELECTION STRATEGIES

Eaton Vance will be  responsible  for  managing  the Fund's  overall  investment
program,  structuring and managing the Fund's common stock portfolio,  including
tax-loss harvesting and other tax-management techniques,  providing consultation
to the  Sub-Adviser and  supervising  the  performance of the  Sub-Adviser.  The

                                       6

<PAGE>

Fund's  investments  will be actively  managed,  and securities may be bought or
sold on a daily basis.  Rampart will be responsible for providing  advice on and
execution of the Fund's options strategy.

A team of Eaton Vance  investment  professionals  is responsible for the overall
management of the Fund's investments, including decisions about asset allocation
and securities  selection.  The portfolio managers utilize information  provided
by, and the  expertise  of, the Adviser's  research  staff in making  investment
decisions.  Investment  decisions are made primarily on the basis of fundamental
research,  which  involves  consideration  of the various  company-specific  and
general  business,  economic  and  market  factors  that  influence  the  future
performance of individual  companies and equity investments therein. The Adviser
will also consider a variety of other factors in  constructing  and  maintaining
the Fund's  stock  portfolio,  including,  but not  limited to,  stock  dividend
yields,  overlap  between the Fund's stock  holdings and the indices on which it
has  outstanding   options   positions,   realization  of  tax  loss  harvesting
opportunities and other tax management considerations.

The Adviser  believes that a strategy of owning a portfolio of common stocks and
selling covered call options (a "buy-write  strategy") with respect to a portion
thereof  can  provide  current  income  and gains and  attractive  risk-adjusted
returns. The Fund will sell only "covered" call options. An index call option is
considered covered if the Fund maintains with its custodian assets determined to
be liquid (in accordance with procedures  established by the Board) in an amount
equal to the contract  value of the index.  An index call option also is covered
if the  Fund  holds a call on the  same  index as the  call  written  where  the
exercise  price of the call held is (i) equal to or less than the exercise price
of the  call  written,  or (ii)  greater  than  the  exercise  price of the call
written,  provided the difference is maintained by the Fund in segregated assets
determined  to be liquid  (in  accordance  with  procedures  established  by the
Board).  Compared to selling  call  options on  individual  stocks,  the Adviser
believes   that  selling   index  call  options  can  achieve   better  tax  and
transactional  efficiency  because  listed  options  on  broad-based  securities
indices generally  qualify as "section 1256 contracts"  subject to favorable tax
treatment  and because the markets for index  options are  generally  deeper and
more liquid than options on individual stocks.

Eaton Vance  further  believes  that a strategy of owning a portfolio  of common
stocks,  in conjunction with writing index call options should generally provide
returns that are superior to owning the same stocks  without an associated  call
option  writing  program  under three  different  stock  market  scenarios:  (1)
down-trending  equity markets;  (2) flat market  conditions;  and (3) moderately
rising equity markets.  In the Adviser's  opinion,  only in more strongly rising
equity   markets  would  the  buy-write   strategy   generally  be  expected  to
underperform the stock-only portfolio. For these purposes, the Adviser considers
more  strongly  rising equity  market  conditions to exist  whenever the current
annual  rate of return for U.S.  common  stocks (as  represented  by the S&P 500
and/or the NASDAQ-100) exceeds the long-term  historical average of stock market
returns.  The Adviser  considers  moderately  rising equity market conditions to
exist whenever current annual returns on U.S. common stocks are positive, but do
not exceed the long-term historical average of stock market returns.

To avoid being subject to the "straddle rules" under federal income tax law, the
Fund  intends to limit the overlap  between its stock  holdings  (and any subset
thereof) and each index on which it has  outstanding  options  positions to less
than 70% on an ongoing basis. Under the "straddle rules," "offsetting  positions
with respect to personal property" generally are considered to be straddles.  In
general,  investment  positions  will be  offsetting  if there is a  substantial
diminution  in the risk of loss from  holding one  position by reason of holding
one or more other  positions.  The Fund  expects  that the index call options it
writes  will not be  considered  straddles  because its stock  holdings  will be
sufficiently  dissimilar from the components of the indices on which it has open
call options  positions under  applicable  guidance  established by the Internal
Revenue Service (the "IRS"). Under certain circumstances,  however, the Fund may
enter into options transactions or certain other investments that may constitute
positions in a straddle.

The Fund's index option  strategy is designed to produce  current cash flow from
options  premiums and to moderate the  volatility  of the Fund's  returns.  This
index option strategy is of a hedging  nature,  and is not designed to speculate
on equity market performance.  The Adviser believes that the Fund's index option
strategy will moderate the volatility of the Fund's  returns  because the option
premiums  received will help to mitigate the impact of downward price  movements
in the stocks held by the Fund, while the Fund's  obligations  under index calls
written will effectively limit the Fund's ability to participate in upward price
movements in portfolio stocks beyond certain levels.

The Fund expects normally to sell index call options on a substantial portion of
its common  stock  investments.  The Adviser  does not intend to sell index call
options  representing  amounts greater than the value of the Fund's common stock
portfolio (i.e., take a "naked" position). The Adviser generally intends to sell
index call options that are  exchange-listed  and "European style," meaning that
the  options  may  only be  exercised  on the  expiration  date  of the  option.
Exchange-traded index options are typically settled in cash and provide that the
holder of the option has the right to  receive an amount of cash  determined  by
the excess of the exercise-settlement value of the index over the exercise price
of the option.  The  exercise-settlement  value is  calculated  based on opening
sales prices of the component index stocks on the option  valuation date,  which
is the last  business day before the  expiration  date.  Generally,  the Adviser
intends to sell index call options that are slightly "out-of-the-money," meaning
that option exercise  prices  generally will be slightly above the current level
of the index at the time the options are  written.  The Fund may also sell index
options that are more  substantially  "out-of-the-money."  Such options that are
more substantially  "out-of-the-money" provide greater potential for the Fund to
realize capital  appreciation on its portfolio  stocks but generally would pay a
lower  premium than options  that are slightly  "out-of-the-money."  The Adviser

                                       7
<PAGE>

expects  initially to follow a primary  options  strategy of selling  index call
options with a remaining maturity of between  approximately one and three months
and  maintaining  its short call options  positions  until  approximately  their
option  valuation date, at which time  replacement  call option positions with a
remaining maturity within this range are written.

In implementing the Fund's investment strategy,  the Adviser intends to employ a
variety of techniques and strategies  designed to minimize and defer the federal
income taxes incurred by Common Shareholders in connection with their investment
in the Fund.  These  include:  (1) investing in stocks that pay  dividends  that
qualify for federal  income  taxation at rates  applicable to long-term  capital
gains and complying with the holding period and other requirements for favorable
tax  treatment;  (2) selling  index call options  that qualify for  treatment as
"section  1256  contracts"  as defined in the Code,  on which  capital gains and
losses are generally treated as 60% long-term and 40% short-term,  regardless of
holding period;  (3) limiting the overlap between the Fund's stock holdings (and
any subset thereof) and each index on which it has outstanding options positions
to less than 70% on an ongoing basis so that the Fund's stock holdings and index
call  options  are not  subject  to the  "straddle  rules;"  (4)  engaging  in a
systematic  program  of  tax-loss  harvesting  in the  Fund's  stock  portfolio,
periodically  selling stock positions that have  depreciated in value to realize
capital  losses that can be used to offset  capital gains  realized by the Fund;
and (5) managing the sale of appreciated  stock  positions so as to minimize the
Fund's net realized short-term capital gains in excess of net realized long-term
capital losses. When an appreciated security is sold, the Fund intends to select
for sale the share lots resulting in the most favorable tax treatment, generally
those with holding  periods  sufficient to qualify for  long-term  capital gains
treatment that have the highest cost basis.

As described above, the Fund intends to emphasize investments in stocks that pay
dividends  that  qualify for federal  income  taxation  at rates  applicable  to
long-term  capital  gains.  Under  federal  income tax law enacted in 2003,  the
qualified  dividend  income of individuals and other  noncorporate  taxpayers is
taxed at long-term  capital gain tax rates if certain  holding  period and other
requirements   are  met.   Qualified   dividends  are  dividends  from  domestic
corporations and dividends from foreign corporations that meet certain specified
criteria.  The Fund  generally can pass the tax treatment of qualified  dividend
income it  receives  through  to Common  Shareholders.  For the Fund to  receive
tax-advantaged  treatment of its qualified  dividend income,  the Fund must hold
stock paying qualified dividends for more than 60 days during the 121-day period
beginning 60 days before the  ex-dividend  date (or more than 90 days during the
associated  181-day  period,  in the  case  of  certain  preferred  stocks).  In
addition,  the Fund cannot be obligated to make related payments  (pursuant to a
short sale or  otherwise)  with respect to  positions  in any  security  that is
substantially  similar or related  property with respect to such stock.  Similar
provisions apply to each Common  Shareholder's  investment in the Fund. In order
for qualified  dividend  income paid by the Fund to a Common  Shareholder  to be
taxable at long-term  capital gains rates, the Common  Shareholder must hold his
or her Fund shares for more than 60 days during the 121-day  period  surrounding
the ex-  dividend  date.  The  provisions  of the Code  applicable  to qualified
dividend  income are effective  through  2008.  Thereafter,  qualified  dividend
income  will  be  subject  to  tax  at  ordinary  income  rates  unless  further
legislative action is taken. The Fund's investment program and the tax treatment
of Fund  distributions  may be affected by IRS  interpretations  of the Code and
future changes in tax laws and regulations, including changes resulting from the
"sunset" provisions  described above that would have the effect of repealing the
favorable  treatment of qualified  dividend income and reimposing the higher tax
rates applicable to ordinary income in 2009 unless further legislative action is
taken.

The Fund may seek to  enhance  the level of  tax-advantaged  dividend  income it
receives by engaging in dividend capture  trading.  In a dividend capture trade,
the Fund sells a stock on or shortly after the stock's ex-dividend date and uses
the sale  proceeds to purchase one or more other stocks that are expected to pay
dividends before the next dividend payment on the stock being sold. Through this
practice,  the Fund may receive more dividend  payments over a given time period
than if it held a single stock.  In order for dividends  received by the Fund to
qualify  for  favorable  tax  treatment,  the Fund must  comply with the holding
period and other requirements set forth in the preceding paragraph. By complying
with applicable holding period and other requirements while engaging in dividend
capture  trading,  the Fund may be able to enhance  the level of  tax-advantaged
dividend  income it receives  because it will  receive  more  dividend  payments
qualifying for favorable treatment during the same time period than if it simply
held its portfolio stocks.  The use of dividend capture trading  strategies will
expose the Fund to increased  trading costs and  potentially  higher  short-term
gain or loss.

Options on  broad-based  equity  indices  that  trade on a  national  securities
exchange registered with the Securities and Exchange Commission (the "SEC") or a
domestic board of trade designated as a contract market by the Commodity Futures
Trading Commission  generally qualify for treatment as "section 1256 contracts."
Options on broad-based  equity indices that trade on other exchanges,  boards of
trade or markets  designated by the U.S.  Secretary of Treasury also qualify for
treatment as "section 1256 contracts." Because only a small number of exchanges,
boards  and  markets  outside  the  U.S.  have to date  received  the  necessary
designation,  most  foreign-traded  stock index options do not currently qualify
for  treatment as "section 1256  contracts."  To the extent that the Fund writes
options on indices based upon foreign stocks, the Fund generally intends to sell
options on broad-based  foreign  country and/or  regional stock indices that are
listed for trading in the United States or which  otherwise  qualify as "section
1256  contracts."  Options on foreign indices that are listed for trading in the
United States or which  otherwise  qualify as "section 1256 contracts" may trade
in substantially lower volumes and with substantially wider bid-ask spreads than
other  options  contracts  on the same or  similar  indices  that trade on other
markets  outside  the United  States.  To  implement  its options  program  most
effectively,  the Fund may sell index  options  that do not  qualify as "section
1256  contracts."  Gain or loss on index options not qualifying as "section 1256
contracts"  would be  realized  upon  disposition,  lapse or  settlement  of the
positions, and would be treated as short-term gain or loss.

                                       8

<PAGE>

The  foregoing  policies  relating to  investments  in common stocks and options
writing are the Fund's primary investment  policies.  In addition to its primary
investment  policies,  the Fund may invest to a limited extent in other types of
securities  and engage in certain  other  investment  practices.  In addition to
writing index call options,  the Fund may write call options on up to 20% of the
value of its total assets on futures contracts based upon broad-based securities
indices.  The Fund's use of such options on index futures would be substantially
similar to its use of options  directly on indices.  The Fund may also invest up
to 20% of its total assets in derivative  instruments acquired for hedging, risk
management and investment  purposes (to gain exposure to securities,  securities
markets,  markets  indices  and/or  currencies  consistent  with its  investment
objectives  and  policies),  provided  that no more than 10% of the Fund's total
assets may be invested in such derivative  instruments  acquired for non-hedging
purposes.  To seek to protect against price declines in securities holdings with
large  accumulated  gains, the Fund may use various hedging  techniques (such as
the  purchase  and sale of futures  contracts  on stocks and stock  indices  and
options thereon,  equity swaps, covered short sales, forward sales of stocks and
the  purchase  and sale of forward  currency  exchange  contracts  and  currency
futures). By using these techniques rather than selling appreciated  securities,
the Fund can, within certain limitations,  reduce its exposure to price declines
in the securities without realizing  substantial capital gains under current tax
law.  Derivative  instruments may also be used by the Fund to enhance returns or
as a substitute  for the purchase or sale of  securities.  As a general  matter,
dividends  received on hedged  stock  positions  are  characterized  as ordinary
income and are not eligible for favorable tax treatment.  Dividends  received on
securities with respect to which the Fund is obligated to make related  payments
(pursuant to short sales or otherwise) will be treated as fully taxable ordinary
income (i.e., income other than tax-advantaged  dividends).  In addition, use of
derivatives  may give rise to  short-term  capital  gains and other  income that
would not qualify for favorable tax treatment.  See  "Investment  objectives and
polices."

LISTING

The Fund has  applied  for  listing of its  Common  Shares on the New York Stock
Exchange under the symbol "[ ]."

INVESTMENT ADVISER, ADMINISTRATOR AND SUB-ADVISER

Eaton Vance,  a wholly  owned  subsidiary  of Eaton Vance  Corp.,  is the Fund's
investment adviser and administrator.  The Adviser and its subsidiaries  managed
approximately  $106  billion  on  behalf  of funds,  institutional  clients  and
individuals as of July 31, 2005, including approximately $64.6 billion in equity
assets.  Thirty-three of the funds managed by Eaton Vance are closed-end  funds.
Eaton Vance has also engaged Rampart as a sub-adviser. Rampart, founded in 1983,
specializes in options management and trading for institutional,  high net worth
and investment company clients.  Rampart managed  approximately $4.48 billion in
assets as of July 31,  2005.  Eaton Vance will be  responsible  for managing the
Fund's overall  investment  program,  structuring and managing the Fund's common
stock  portfolio,   including  tax-loss  harvesting  and  other   tax-management
techniques,  providing  research  support to the Sub-Adviser and supervising the
performance of the Sub-Adviser. Rampart will be responsible for providing advice
on and execution of the Fund's options strategy. See "Management of the Fund."

DISTRIBUTIONS

Commencing with the Fund's first distribution,  the Fund intends to make regular
quarterly  distributions  to Common  Shareholders  sourced  from the Fund's cash
available for distribution.  "Cash available for  distribution"  will consist of
the Fund's net option  premiums,  net  realized  and  unrealized  gains on stock
investments,  and dividends and interest income, after payment of Fund expenses.
The Fund's  distribution  rate may be adjusted from time to time.  The Board may
modify this  distribution  policy at any time without  obtaining the approval of
Common  Shareholders.  The  initial  distribution  is  expected  to be  declared
approximately 75 days and paid approximately 90 to 120 days after the completion
of this offering, depending on market conditions.

The Fund's annual  distributions  will likely differ from annual net  investment
income.  The  investment  income of the Fund will  consist of all  dividend  and
interest  income  accrued on  portfolio  investments,  short-term  capital  gain
(including  short-term  gains  on  option  positions  and  gains  on the sale of
portfolio  investments held for one year or less) in excess of long-term capital
loss and income from  certain  hedging  transactions,  less all  expenses of the
Fund.  Expenses  of the Fund will be accrued  each day.  To the extent  that the
Fund's  net  investment   income  for  any  year  exceeds  the  total  quarterly
distributions paid during the year, the Fund will make a special distribution at
or near year-end of such excess amount as may be required. Over time, all of the
Fund's investment company taxable income will be distributed.

At least annually, the Fund intends to distribute any net capital gain (which is
the excess of net long-term  capital gain over net short-term  capital loss) or,
alternatively, to retain all or a portion of the year's net capital gain and pay
federal  income tax on the retained  gain.  As provided  under  federal tax law,
Common  Shareholders  of record as of the end of the  Fund's  taxable  year will
include  their  attributable  share of the retained gain in their income for the
year as a long-term capital gain, and will be entitled to a tax credit or refund
for the tax deemed paid on their behalf by the Fund. The Fund may treat the cash
value of tax credit and refund amounts in connection with retained capital gains
as a substitute for equivalent cash distributions.

If the Fund's total quarterly distributions in any year exceed the amount of its
net investment  income for the year, any such excess would be characterized as a
return of capital for federal  income tax purposes to the extent not  designated
as a capital gain dividend.  Distributions in any year may include a substantial
return of  capital  component.  Under the  Investment  Company  Act of 1940,  as
amended  (the "1940  Act"),  for any  distribution  that  includes  amounts from

                                       9

<PAGE>

sources  other  than  net  income,  the  Fund  is  required  to  provide  Common
Shareholders a written statement  regarding the components of such distribution.
Such a statement  will be provided at the time of any  distribution  believed to
include any such amounts.

To permit the Fund to maintain  more stable  distributions,  distribution  rates
will be based on projected annual cash available from distribution. As a result,
the  distributions  paid by the Fund for any  particular  quarter may be more or
less than the amount of cash  available  for  distribution  from that  quarterly
period. In certain circumstances,  the Fund may be required to sell a portion of
its investment  portfolio to fund  distributions.  Distributions will reduce the
Common Shares' net asset value.

The Fund has  applied  for an order  from  the  Securities  Exchange  Commission
granting  it an  exemption  from  Section  19(b) of the 1940 Act and Rule  19b-1
thereunder to permit the Fund to include realized  long-term  capital gains as a
part of its regular  distributions to Common  Shareholders  more frequently than
would  otherwise be permitted by the 1940 Act (generally once per taxable year).
In the event that such an exemptive  order is obtained,  the Fund will  consider
increasing the frequency of its regular distributions from quarterly to monthly.
There is no assurance that the  Securities  Exchange  Commission  will grant the
Fund's request for such exemptive  order.  The staff of the Securities  Exchange
Commission  has  indicated  that it has  suspended  the  processing of exemptive
applications  requesting the type of relief referenced above,  pending review by
the staff of the  results of an  industry-wide  Securities  Exchange  Commission
inspection   focusing  on  the  dividend  practices  of  closed-end   investment
companies.  There can be no  assurance as to when that review might be completed
or whether,  following that review, the staff would process such applications or
grant  such  relief.  As a result of this  development,  the Fund has no current
expectation that it will be in a position to include  long-term capital gains in
Fund  distributions  more  frequently than is permitted under the 1940 Act, thus
leaving the Fund with the possibility of variability in distributions (and their
tax attributes) as discussed above.

Common  Shareholders  may elect  automatically  to reinvest some or all of their
distributions in additional Common Shares under the Fund's dividend reinvestment
plan. See "Distributions" and "Dividend Reinvestment Plan."

DIVIDEND REINVESTMENT PLAN

The Fund has established a dividend  reinvestment  plan (the "Plan").  Under the
Plan, a Common  Shareholder  may elect to have all  distributions  automatically
reinvested  in additional  Common Shares either  purchased in the open market or
newly issued by the Fund if the Common  Shares are trading at or above their net
asset  value.  Common  Shareholders  may  elect  to  participate  in the Plan by
completing the dividend  reinvestment plan application form. Common Shareholders
who do not elect to  participate in the Plan will receive all  distributions  in
cash paid by check  mailed  directly  to them by PFPC Inc.,  as  dividend-paying
agent.  Common  Shareholders  who intend to hold their Common  Shares  through a
broker or nominee should contact such broker or nominee to determine  whether or
how they may participate in the Plan. See "Dividend Reinvestment Plan."

CLOSED-END STRUCTURE

Closed-end  funds  differ  from  traditional,   open-end  management  investment
companies  (commonly  referred  to as  mutual  funds) in that  closed-end  funds
generally  list their  shares for trading on a  securities  exchange  and do not
redeem  their shares at the option of the  shareholder.  By  comparison,  mutual
funds issue  securities  that are redeemable at net asset value at the option of
the shareholder and typically engage in a continuous offering of their shares.

Shares of closed-end  funds  frequently trade at a discount from their net asset
value. In recognition of this  possibility and that any such discount may not be
in the interest of Common  Shareholders,  the Fund's Board, in consultation with
Eaton Vance,  from time to time may review  possible  actions to reduce any such
discount.  The Board might consider open market repurchases or tender offers for
Common Shares at net asset value.  There can be no assurance that the Board will
decide to undertake any of these actions or that,  if  undertaken,  such actions
would  result in the Common  Shares  trading at a price equal to or close to net
asset value per Common Share.  The Board might also  consider the  conversion of
the Fund to an open-end  mutual  fund.  The Board  believes,  however,  that the
closed-end  structure is desirable,  given the Fund's investment  objectives and
policies.  Investors should assume,  therefore,  that it is highly unlikely that
the Board would vote to convert the Fund to an open-end investment company.

SPECIAL RISK CONSIDERATIONS

NO OPERATING HISTORY
The Fund is a newly organized, diversified closed-end investment company with no
history of  operations  and is designed  for  long-term  investors  and not as a
trading vehicle.

INVESTMENT AND MARKET RISK
An  investment in Common  Shares is subject to  investment  risk,  including the
possible loss of the entire principal  amount invested.  An investment in Common
Shares  represents an indirect  investment in the securities  owned by the Fund,
which are generally traded on a securities  exchange or in the  over-the-counter
markets. The value of these securities, like other market investments,  may move
up or down,  sometimes  rapidly and  unpredictably.  Because  the Fund  normally
intends to sell stock index call options on a substantial  portion of its common
stock  investments,   the  Fund's  appreciation  potential  from  equity  market
performance will be limited. The Common Shares at any point in time may be worth

                                       10

<PAGE>

less  than  the  original  investment,   even  after  taking  into  account  any
reinvestment of distributions.

ISSUER RISK
The value of  securities  held by the Fund may  decline  for a number of reasons
that directly relate to the issuer,  such as management  performance,  financial
leverage and reduced demand for the issuer's goods and services.

EQUITY RISK
Under normal market  conditions,  the Fund will invest at least 80% of its total
assets in a diversified portfolio of common stocks.  Therefore, a principal risk
of investing in the Fund is equity risk.  Equity risk is the risk that the value
of securities  held by the Fund will  fluctuate or fall due to general market or
economic conditions,  perceptions  regarding the industries in which the issuers
of securities held by the Fund participate, and the particular circumstances and
performance of particular  companies whose  securities the Fund holds.  Although
common  stocks  have   historically   generated   higher  average  returns  than
fixed-income  securities over the long term, common stocks also have experienced
significantly  more  volatility  in  returns.  An  adverse  event,  such  as  an
unfavorable  earnings report,  may depress the value of equity  securities of an
issuer  held by the  Fund;  the  price  of  common  stock  of an  issuer  may be
particularly  sensitive to general  movements in the stock market;  or a drop in
the stock market may depress the price of most or all of the common  stocks held
by the Fund. In addition,  common stock of an issuer in the Fund's portfolio may
decline  in price if the  issuer  fails to make  anticipated  dividend  payments
because,  among other reasons,  the issuer of the security experiences a decline
in its  financial  condition.  Common  stocks in which the Fund will  invest are
structurally  subordinated to preferred stocks, bonds and other debt instruments
in a company's capital structure,  in terms of priority to corporate income, and
therefore will be subject to greater dividend risk than preferred stocks or debt
instruments  of such issuers.  Finally,  common stock prices may be sensitive to
rising  interest  rates,  as the  costs  of  capital  rise and  borrowing  costs
increase.

RISKS OF INVESTING IN MID-CAP COMPANIES
The Fund may make investments in stocks of companies whose market capitalization
is considered  middle sized or "mid-cap."  Mid-cap  companies often are newer or
less established companies than larger capitalization companies.  Investments in
mid-cap  companies carry  additional  risks because  earnings of these companies
tend to be less  predictable;  they often have limited  product lines,  markets,
distribution  channels  or  financial  resources;  and  the  management  of such
companies may be dependent upon one or a few key people. The market movements of
equity  securities  of mid-cap  companies may be more abrupt or erratic than the
market movements of equity securities of larger,  more established  companies or
the stock market in general. Historically, mid-cap companies have sometimes gone
through extended periods when they did not perform as well as larger  companies.
In addition,  equity securities of mid-cap  companies  generally are less liquid
than those of larger  companies.  This  means  that the Fund could have  greater
difficulty  selling  such  securities  at the time and price that the Fund would
like.

RISK OF SELLING INDEX CALL OPTIONS
Under normal market conditions, a substantial portion of the Fund's common stock
investments  will be subject to written index call options.  The purchaser of an
index call  option has the right to any  appreciation  in the value of the index
over the  exercise  price of the call  option  as of the  valuation  date of the
option. Because their exercise is settled in cash, sellers of index call options
such as the Fund  cannot  provide  in  advance  for their  potential  settlement
obligations by acquiring and holding the underlying securities. The Fund intends
to  mitigate  the  risks  of  its  options  activities  by  writing  options  on
broad-based stock indices that the Adviser believes collectively approximate the
characteristics  of the  Fund's  common  stock  portfolio.  The Fund  will  not,
however,  hold stocks that fully  replicates the indices on which it writes call
options.  Due to tax  considerations,  the Fund  intends  to limit  the  overlap
between its stock  holdings (and any subset  thereof) and each index on which it
has  outstanding  options  positions to less than 70% on an ongoing  basis.  The
Fund's stock  holdings  may also  include  stocks not included in the indices on
which it writes  call  options.  Consequently,  the Fund bears the risk that the
performance of its stock portfolio will vary from the performance of the indices
on which it writes call options. For example, the Fund will suffer a loss if the
S&P 500  appreciates  substantially  above  the  exercise  price of S&P 500 call
options  written  by the  Fund  while  the  securities  held by the  Fund in the
aggregate  fail to  appreciate  as much or  decline  in value of the life of the
written  option.  Index  options  written  by the Fund will be priced on a daily
basis.  Their  value  will be  affected  primarily  by  changes in the price and
dividend rates of the underlying common stocks in such index,  changes in actual
or perceived  volatility  of such index and the  remaining  time to the options'
expiration.  The trading  price of index call  options  will also be affected by
liquidity considerations and the balance of purchase and sale orders.

A decision as to whether,  when and how to use options  involves the exercise of
skill and judgment,  and even a well-conceived and well-executed options program
may be adversely affected by market behavior or unexpected events. As the writer
of index call  options,  the Fund will  forgo,  during the  option's  life,  the
opportunity to profit from increases in the value of the applicable  index above
the sum of the  option  premium  received  and the  exercise  price  of the call
option, but retains the risk of loss, minus the option premium received,  should
the value of the applicable index decline. When a call option is exercised,  the
Fund will be required to deliver an amount of cash  determined  by the excess of
the value of the  applicable  index at contract  termination  over the  exercise
price of the option.  Thus,  the exercise of index call options sold by the Fund
may  require  the  Fund  to  sell  portfolio  securities  to  generate  cash  at
inopportune times or for unattractive prices.

                                       11

<PAGE>

To the extent that the Fund writes options on indices based upon foreign stocks,
the Fund generally intends to sell options on broad-based foreign country and/or
regional  stock  indices  that are  listed  for  trading  in the  U.S.  or which
otherwise  qualify as "section 1256 contracts."  Options on foreign indices that
are listed for trading in the U.S. or which  otherwise  qualify as "section 1256
contracts" may trade in substantially lower volumes and with substantially wider
bid-ask spreads than other options contracts on the same or similar indices that
trade on other markets  outside the U.S. To implement  its options  program most
effectively,  the Fund may sell index  options  that do not  qualify as "section
1256  contracts."  Gain or loss on index options not qualifying as "section 1256
contracts"  would be  realized  upon  disposition,  lapse or  settlement  of the
positions and would be treated as short-term gain or loss.

The trading  price of options may be  adversely  affected if the market for such
options becomes less liquid or smaller.  The Fund may close out a call option by
buying the option instead of letting it expire or be exercised.  There can be no
assurance  that a liquid  market  will  exist when the Fund seeks to close out a
call option  position by buying the option.  Reasons for the absence of a liquid
secondary  market  on an  exchange  include  the  following:  (i)  there  may be
insufficient  trading  interest in certain  options;  (ii)  restrictions  may be
imposed by an exchange on opening  transactions or closing transactions or both;
(iii)  trading  halts,  suspensions  or other  restrictions  may be imposed with
respect to particular  classes or series of options;  (iv) unusual or unforeseen
circumstances may interrupt normal operations on an exchange; (v) the facilities
of an exchange or the Options  Clearing  Corporation  (the "OCC") may not at all
times  be  adequate  to  handle  current  trading  volume;  or (vi)  one or more
exchanges  could,  for  economic or other  reasons,  decide or be  compelled  to
discontinue the trading of options (or a particular  class or series of options)
at some future date. If trading were discontinued,  the secondary market on that
exchange (or in that class or series of options) would cease to exist.  However,
outstanding options on that exchange that had been issued by the OCC as a result
of trades on that exchange would  continue to be exercisable in accordance  with
their terms.

The hours of trading  for  options  may not  conform to the hours  during  which
common  stocks  held by the Fund are  traded.  To the  extent  that the  options
markets  close  before the markets for  securities,  significant  price and rate
movements can take place in the  securities  markets that would not be reflected
concurrently  in the options  markets.  index call  options are marked to market
daily and their value is affected by changes in the value and dividend  rates of
the securities  represented in the underlying index,  changes in interest rates,
changes in the actual or perceived  volatility of the  associated  index and the
remaining time to the options' expiration,  as well as trading conditions in the
options market.

TAX RISK
Reference  is made to "Federal  Income Tax Matters"  for an  explanation  of the
federal income tax  consequences  and attendant  risks of investing in the Fund.
Although the Fund seeks to minimize and defer the federal  income taxes incurred
by Common  Shareholders in connection with their  investment in the Fund,  there
can be no assurance that it will be successful in this regard. The tax treatment
and  characterization  of the Fund's  distributions  may change over time due to
changes in the Fund's mix of  investment  returns and changes in the federal tax
laws, regulations and administrative and judicial interpretations. Distributions
paid on the  Common  Shares  may be  characterized  variously  as  non-qualified
dividends  (taxable at ordinary income rates),  qualified  dividends and capital
gains  dividends  (each  taxable at long-term  capital gains rates) or return of
capital (not currently taxable). The ultimate tax characterization of the Fund's
distributions  made in a calendar year may not finally be determined until after
the end of that calendar year.  Distributions  to a Common  Shareholder that are
return of capital  will be tax free to the  amount of the  Common  Shareholder's
current tax basis in his or her Common  Shares,  with any  distribution  amounts
exceeding  such basis treated as capital gain on a deemed sale of Common Shares.
Common  Shareholders  are required to reduce their tax basis in Common Shares by
the  amount  of  tax-free  return of  capital  distributions  received,  thereby
increasing the amount of capital gain (or decreasing the amount of capital loss)
to be recognized  upon a later  disposition of the Common  Shares.  In order for
Fund  distributions  of  qualified  dividend  income to be taxable at  favorable
long-term capital gains rates, a Common Shareholder must meet certain prescribed
holding period and other  requirements with respect to his or her Common Shares.
If positions held by the Fund were treated as "straddles" for federal income tax
purposes,  dividends on such positions would not constitute  qualified  dividend
income subject to favorable income tax treatment. Gain or loss on positions in a
straddle  are  subject  to  special  (and  generally  disadvantageous)  rules as
described under "Distributions -- Federal Income Tax Matters."

DISTRIBUTION RISK
The quarterly  distributions Common Shareholders will receive from the Fund will
be sourced from the Fund's net option  premiums,  net  realized  and  unrealized
gains on stock investments,  and dividends and interest income, after payment of
Fund expenses.  The Fund's cash available for  distribution may vary widely over
the short- and long-term.  If stock market  volatility  declines or stock prices
decline,  the level of premiums  from writing index call options and the amounts
available for  distribution  from options activity will likely decrease as well.
Payments to close  written  call  options  will  reduce  amounts  available  for
distribution  from call option  premiums  received.  Net realized and unrealized
gains on the  Fund's  stock  investments  will be  determined  primarily  by the
direction  and  movement of the U.S.  stock  market (and the  particular  stocks
held).  Dividends  on  common  stocks  are not  fixed  but are  declared  at the
discretion of the issuer's  board of directors.  There can be no assurance  that
quarterly  distributions  paid by the Fund to the  Common  Shareholders  will be
maintained at initial levels or increase over time.

FOREIGN SECURITY RISK

                                       12

<PAGE>

The value of foreign  securities  is  affected  by changes  in  currency  rates,
foreign tax laws  (including  withholding  tax),  government  policies  (in this
country or abroad), relations between nations and trading, settlement, custodial
and other operational risks. In addition, the costs of investing abroad (such as
foreign brokerage costs, custodial expenses and other fees) are generally higher
than in the United States,  and foreign  securities  markets may be less liquid,
more volatile and less subject to governmental  supervision  than markets in the
United States.  Foreign  investments also could be affected by other factors not
present in the United States, including expropriation of assets, armed conflict,
confiscatory taxation,  lack of uniform accounting and auditing standards,  less
publicly available financial and other information and potential difficulties in
enforcing  contractual  obligations or repatriating  capital invested in foreign
countries. As an alternative to holding foreign-traded  securities, the Fund may
invest in dollar-denominated  securities of foreign companies that trade on U.S.
exchanges or in the U.S. over-the-counter market (including depositary receipts,
which evidence ownership in underlying foreign  securities).  Since the Fund may
invest in securities  denominated  or quoted in  currencies  other than the U.S.
dollar,  the Fund may be affected by changes in foreign currency  exchange rates
(and exchange control regulations) which affect the value of investments held by
the  Fund  and the  accrued  income  and  appreciation  or  depreciation  of the
investments in U.S. dollars. Changes in foreign currency exchange rates relative
to the U.S.  dollar  will  affect the U.S.  dollar  value of the  Fund's  assets
denominated in that currency and the Fund's return on such assets as well as any
temporary  uninvested  reserves  in bank  deposits  in  foreign  currencies.  In
addition,  the Fund will incur  costs in  connection  with  conversions  between
various currencies.

Because foreign  companies are not subject to uniform  accounting,  auditing and
financial reporting  standards,  practices and requirements  comparable to those
applicable  to U.S.  companies,  there  may be less  or less  reliable  publicly
available  information  about a foreign  company than about a domestic  company.
Volume and liquidity in most foreign  markets are less than in the United States
and securities of some foreign  companies are less liquid and more volatile than
securities of comparable  U.S.  companies.  There is generally  less  government
supervision and regulation of securities  exchanges,  broker-dealers  and listed
companies than in the United States.  Mail service between the United States and
foreign  countries may be slower or less reliable than within the United States,
thus increasing the risk of delayed  settlements of portfolio  transactions for,
or loss of certificates of, portfolio securities.  Payment for securities before
delivery  may  be  required.  In  addition,  with  respect  to  certain  foreign
countries,  there is the possibility of expropriation or confiscatory  taxation,
political or social instability, or diplomatic developments,  which could affect
investments  in those  countries.  Moreover,  individual  foreign  economies may
differ favorably or unfavorably from the U.S. economy in such respects as growth
of gross national product,  rate of inflation,  capital  reinvestment,  resource
self-sufficiency  and balance of payments position.  Foreign securities markets,
while  growing in volume and  sophistication,  are generally not as developed as
those in the United States, and securities of some foreign issuers (particularly
those located in developing countries) may be less liquid and more volatile than
securities  of  comparable  U.S.  companies.  The risks of  foreign  investments
described  above  apply to an even  greater  extent to  investments  in emerging
markets.

EMERGING MARKET SECURITY RISK
The Fund may  invest  up to 5% of its  total  assets in  securities  of  issuers
located in emerging markets.  The risks of foreign  investments  described above
apply  to an even  greater  extent  to  investments  in  emerging  markets.  The
securities markets of emerging countries are generally smaller,  less developed,
less liquid,  and more volatile than the securities markets of the United States
and developed  foreign  markets.  Disclosure  and  regulatory  standards in many
respects are less  stringent  than in the United  States and  developed  foreign
markets.  There  also  may be a lower  level of  monitoring  and  regulation  of
securities  markets in emerging market countries and the activities of investors
in such  markets and  enforcement  of existing  regulations  has been  extremely
limited.  Many emerging  countries  have  experienced  substantial,  and in some
periods  extremely high, rates of inflation for many years.  Inflation and rapid
fluctuations  in inflation rates have had and may continue to have very negative
effects on the economies and securities  markets of certain emerging  countries.
Economies in emerging markets generally are heavily dependent upon international
trade and,  accordingly,  have been and may continue to be affected adversely by
trade barriers,  exchange  controls,  managed  adjustments in relative  currency
values, and other protectionist  measures imposed or negotiated by the countries
with which they trade.  The economies of these  countries also have been and may
continue to be adversely  affected by economic  conditions  in the  countries in
which they trade.  The economies of countries with emerging  markets may also be
predominantly  based on only a few  industries  or  dependent  on revenues  from
particular commodities. In addition, custodial services and other costs relating
to investment in foreign markets may be more expensive in emerging  markets than
in many  developed  foreign  markets,  which could reduce the Fund's income from
such securities.

In  many  cases,   governments  of  emerging   countries  continue  to  exercise
significant control over their economies, and government actions relative to the
economy,  as well as  economic  developments  generally,  may  affect the Fund's
investments in those countries.  In addition,  there is a heightened possibility
of expropriation or confiscatory  taxation,  imposition of withholding  taxes on
interest payments,  or other similar  developments that could affect investments
in those  countries.  There can be no assurance that adverse  political  changes
will not cause the Fund to suffer a loss of any or all of its investments.

INTEREST RATE RISK
The  premiums  from  writing  index  call  options  and  amounts  available  for
distribution from the Fund's options activity may decrease in declining interest
rate environments.  The value of the Fund's common stock investments may also be
influenced by changes in interest  rates.  Higher  yielding stocks and stocks of
issuers whose businesses are substantially affected by changes in interest rates
may be particularly sensitive to interest rate risk.

                                       14

<PAGE>

DERIVATIVES RISK
In  addition to writing  index call  options,  the risks of which are  described
above,  the Fund may  invest up to 20% of its total  assets in other  derivative
investments  acquired for hedging,  risk  management  and  investment  purposes.
Derivative  transactions  including options on securities and securities indices
and other  transactions in which the Fund may engage (such as futures  contracts
and options  thereon,  swaps and short  sales) may subject the Fund to increased
risk of principal loss due to unexpected  movements in stock prices,  changes in
stock volatility levels and interest rates, and imperfect  correlations  between
the Fund's  securities  holdings and indices upon which derivative  transactions
are  based.  The Fund also will be subject  to credit  risk with  respect to the
counterparties to any over-the-counter derivatives contracts entered into by the
Fund.  If a  counterparty  becomes  bankrupt or  otherwise  fails to perform its
obligations under a derivative contract due to financial difficulties,  the Fund
may experience significant delays in obtaining any recovery under the derivative
contract in a bankruptcy or other reorganization proceeding. The Fund may obtain
only a limited  recovery or no recovery in such  circumstances.  Derivatives may
disproportionately  increase losses and have a potentially large negative impact
on the Fund's performance.

LIQUIDITY RISK
The Fund may invest up to 15% of its total assets in securities  for which there
is no readily available trading market or which are otherwise illiquid. The Fund
may not be able readily to dispose of such securities at prices that approximate
those at which the Fund  could  sell such  securities  if they were more  widely
traded  and,  as a result of such  illiquidity,  the Fund may have to sell other
investments  or engage in borrowing  transactions  if necessary to raise cash to
meet its obligations. In addition, the limited liquidity could affect the market
price of the securities, thereby adversely affecting the Fund's net asset value,
and at times may make the disposition of securities impracticable.

INFLATION RISK
Inflation  risk is the risk that the  purchasing  power of assets or income from
investments will be worth less in the future as inflation decreases the value of
money.  As  inflation  increases,  the  real  value  of the  Common  Shares  and
distributions thereon can decline.

MARKET PRICE OF COMMON SHARES
The  shares of  closed-end  management  investment  companies  often  trade at a
discount  from their net asset value,  and the Fund's Common Shares may likewise
trade at a discount  from net asset value.  The net asset value per Common Share
will be reduced  immediately  following  this offering by the sales load and the
amount of offering  expenses  paid by the Fund.  The trading price of the Fund's
Common  Shares  may be less than the  public  offering  price.  The risk will be
greater for investors who sell their Common Shares in a relatively  short period
after completion of the public offering.

FINANCIAL LEVERAGE RISK
Although the Fund has no current  intention to do so, the Fund is authorized and
reserves the flexibility to utilize  leverage  through the issuance of preferred
shares  and/or  borrowings,  including the issuance of debt  securities.  In the
event that the Fund  determines  in the future to utilize  investment  leverage,
there can be no assurance  that such a leveraging  strategy  will be  successful
during any period in which it is  employed.  Leverage  creates  risks for Common
Shareholders,  including the likelihood of greater volatility of net asset value
and  market  price of the  Common  Shares  and the  risk  that  fluctuations  in
distribution  rates on any preferred  shares or  fluctuations in borrowing costs
may affect the return to Common Shareholders.  To the extent the returns derived
from securities  purchased with proceeds received from leverage exceeds the cost
of leverage,  the Fund's  distributions  may be greater than if leverage had not
been used.  Conversely,  if the returns from the securities  purchased with such
proceeds is not sufficient to cover the cost of leverage,  the amount  available
for  distribution to Common  Shareholders  will be less than if leverage had not
been  used.  In the  latter  case,  Eaton  Vance,  in  its  best  judgment,  may
nevertheless  determine  to maintain the Fund's  leveraged  position if it deems
such action to be  appropriate.  The costs of an offering  of  preferred  shares
and/or  a  borrowing   program  would  be  borne  by  Common   Shareholders  and
consequently  would  result  in a  reduction  of the net  asset  value of Common
Shares. In addition, the fee paid to Eaton Vance will be calculated on the basis
of the Fund's average daily gross assets,  including  proceeds from the issuance
of preferred shares and/or  borrowings,  so the fee will be higher when leverage
is  utilized.  In this  regard,  holders  of  preferred  shares  do not bear the
investment  advisory fee. Rather,  Common  Shareholders  bear the portion of the
investment  advisory fee  attributable to the assets purchased with the proceeds
of the preferred shares offering.

MANAGEMENT RISK
The Fund is  subject  to  management  risk  because  it is an  actively  managed
portfolio. Eaton Vance, Rampart and the individual portfolio managers invest the
assets  of the  Fund  as  they  deem  appropriate  in  implementing  the  Fund's
investment  strategy.  Accordingly,  the  success of the Fund  depends  upon the
investment  skills and  analytical  abilities  of Eaton  Vance,  Rampart and the
individual  portfolio  managers to develop  and  actively  implement  investment
strategies that achieve the Fund's investment objectives.  There is no assurance
that  Eaton  Vance,  Rampart  and  the  individual  portfolio  managers  will be
successful  in  developing  and  implementing  the Fund's  investment  strategy.
Subjective  decisions made by Eaton Vance,  Rampart and the individual portfolio
managers may cause the Fund to incur losses or to miss profit  opportunities  on
which it could otherwise have capitalized.

MARKET DISRUPTION

                                       14

<PAGE>

The  terrorist  attacks  in the  United  States  on  September  11,  2001  had a
disruptive effect on the securities markets. These terrorist attacks and related
events,  including the war in Iraq, its aftermath,  and continuing occupation of
Iraq by  coalition  forces,  have  raised  short-term  market  risk and may have
adverse  long-term  effects on U.S. and world  economies and markets.  A similar
disruption  of the financial  markets could impact  trading in common stocks and
stock options, interest rates, credit risk, inflation and other factors relating
to the Common  Shares.  The Fund cannot predict the effects of similar events in
the future on the U.S. economy and securities markets.

ANTI-TAKEOVER PROVISIONS
The Fund's  Agreement and  Declaration of Trust includes  provisions  that could
limit the ability of other persons or entities to acquire control of the Fund or
to change the  composition  of its Board.  These  provisions  may deprive Common
Shareholders of  opportunities to sell their Common Shares at a premium over the
then  current  market  price  of the  Common  Shares.  See  "Risk  Factors"  and
"Description of Capital Structure -- Anti-Takeover Provisions in the Declaration
of Trust."

                                       15

<PAGE>

SUMMARY OF FUND EXPENSES

The purpose of the table below is to help you  understand  all fees and expenses
that you, as a Common Shareholder, would bear directly or indirectly.

Shareholder transaction expenses
  Sales load paid by you (as a percentage of offering price).................. %
  Expenses borne by Common Shareholders.................................... %(1)
  Dividend reinvestment plan fees....................................... None(2)



                                                                 PERCENTAGE OF
                                                                 NET ASSETS
                                                                 ATTRIBUTABLE TO
                                                                 COMMON SHARES
ANNUAL EXPENSES                                                  ---------------
  Management fees........................................................... .[%
  Other expenses............................................................%(3)
  Total annual expenses..................................................... %

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

(1)  Eaton Vance or an  affiliate  has agreed to  reimburse  all  organizational
     costs and pay all offering costs (other than sales loads) that exceed $0.04
     per Common Share (0.20% of the offering price).

(2)  You will be charged a $5.00 service charge and pay brokerage charges if you
     direct  the plan  agent  to sell  your  Common  Shares  held in a  dividend
     reinvestment account.

(3)  Estimated expenses based on the current fiscal year.

The expenses  shown in the table are based on  estimated  amounts for the Fund's
first  year  of  operations  and  assume  that  the  Fund  issues  approximately
[12,500,000]  Common  Shares.  If the Fund issues  fewer  Common  Shares,  these
expenses  generally would  increase.  See "Management of the Fund" and "Dividend
Reinvestment Plan."

EXAMPLE

The following  Example  illustrates  the expenses that you would pay on a $1,000
investment  in Common  Shares  (including  the sales  load of $45 and  estimated
offering expenses of this offering of $2), assuming (i) total annual expenses of
1.20% of net assets attributable to Common Shares and (ii) a 5% annual return*:

 1 YEAR                 3 YEARS               5 YEARS               10 YEARS
--------               ---------             ---------              --------
 $]                     $]                    $                      $

THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES. ACTUAL
EXPENSES MAY BE HIGHER OR LOWER.

------------
*   The example assumes that the estimated Other expenses set forth in the
    Annual Expenses table are accurate, and that all dividends and distributions
    are reinvested at net asset value. Actual expenses may be greater or less
    than those assumed. Moreover, the Fund's actual rate of return may be
    greater or less than the hypothetical 5% return shown in the example.

                                       16

<PAGE>

THE FUND

Eaton Vance Tax-Managed Premium and Dividend Income Fund (the "Fund") is a newly
organized,  diversified,  closed-end  management  investment  company registered
under the  Investment  Company  Act of 1940,  as amended  (the "1940 Act" or the
"Investment  Company Act").  The Fund was organized as a Massachusetts  business
trust on October [ ], 2005  pursuant to a Declaration  of Trust  governed by the
laws of The  Commonwealth of  Massachusetts  and has no operating  history.  The
Fund's  principal  office is  located  at The Eaton  Vance  Building,  255 State
Street, Boston, Massachusetts 02109, and its telephone number is 1-800-225-6265.

This  prospectus  relates to the initial  public  offering of the Fund's  common
shares of  beneficial  interest,  $0.01 par value  (the  "Common  Shares").  See
"Underwriting."

USE OF PROCEEDS

The net proceeds of this  offering of Common Shares will be  approximately  $[ ]
(or $[ ] assuming exercise of the Underwriters'  overallotment  option in full),
which,  after payment of the estimated  offering  expenses,  will be invested in
accordance  with  the  Fund's  investment  objectives  and  policies  as soon as
practicable,  but, in no event,  assuming normal market  conditions,  later than
three months after the receipt thereof.  Pending such  investment,  the proceeds
may be invested in high-quality,  short-term debt  securities,  cash and/or cash
equivalents.  Eaton  Vance or an  affiliate  has  agreed  to (i)  reimburse  all
organizational  costs of the Fund  and (ii) pay all  offering  costs of the Fund
(other than sales load) that exceed $.04 per Common Share.

INVESTMENT OBJECTIVES, POLICIES AND RISKs

INVESTMENT OBJECTIVES

The Fund's primary investment  objective is to provide current income and gains,
with a secondary objective of capital  appreciation.  In pursuing its investment
objectives,  the Fund will evaluate  returns on an after-tax  basis,  seeking to
minimize and defer shareholder  federal income taxes.  There can be no assurance
that the Fund will achieve its investment objectives.

Under  normal  market  conditions,  the Fund's  investment  program will consist
primarily of owning a diversified portfolio of common stocks. The Fund will seek
to earn  high  levels of  tax-advantaged  income  and  gains by (1)  emphasizing
investments  in stocks that pay  dividends  that qualify for  favorable  federal
income tax  treatment  and (2) writing  (selling)  stock index call options with
respect to a substantial  portion of its common stock investments.  Call options
on broad-based  stock indices  generally  qualify for treatment as "section 1256
contracts"  on which  capital  gains and  losses  are  generally  treated as 60%
long-term and 40% short-term, regardless of holding period.

PRIMARY INVESTMENT POLICIES

GENERAL COMPOSITION OF THE FUND
Under normal market  conditions,  the Fund will invest at least 80% of its total
assets in a  diversified  portfolio of common  stocks.  The Fund will  emphasize
investments  in stocks  that pay  dividends  that  qualify  for  federal  income
taxation at rates applicable to long-term capital gains, and may seek to enhance
the level of tax-advantaged  dividend income it receives by engaging in dividend
capture  trading.  In a  dividend  capture  trade,  the Fund sells a stock on or
shortly  after  the  stock's  ex-dividend  date and uses  the sale  proceeds  to
purchase one or more other stocks that are expected to pay dividends  before the
next dividend payment on the stock being sold.  Through this practice,  the Fund
may receive more  dividend  payments  over a given time period than if it held a
single stock. By complying with applicable holding period and other requirements
while engaging in dividend  capture  trading,  the Fund may enhance the level of
tax-advantaged  dividend income it receives. The use of dividend capture trading
strategies  will  expose the Fund to  increased  trading  costs and  potentially
higher short-term gain or loss.

The Fund will invest  primarily in common stocks of U.S.  issuers.  The Fund may
invest up to 35% of its total assets in securities of foreign issuers, including
securities evidenced by American Depositary Receipts ("ADRs"), Global Depositary
Receipts ("GDRs") and European Depositary Receipts ("EDRs"). The Fund may invest
up to 5% of its total assets in securities of emerging market issuers.  The Fund
expects  that its assets  will  normally  be  invested  across a broad  range of
industries and market sectors.  The Fund may not invest 25% or more of its total
assets  in the  securities  of  issuers  in any  single  industry  or  group  of
industries.  The  Fund  may  invest  a  portion  of  its  assets  in  stocks  of
mid-capitalization companies. Eaton Vance generally considers mid-capitalization
companies to be those companies having market  capitalizations  within the range
of  capitalizations  for the S&P MidCap 400 Index (the "S&P MidCap 400").  As of

                                       17

<PAGE>

September  30, 2005,  the median market  capitalization  of companies in the S&P
MidCap 400 was approximately $[ ] billion.

The Fund intends to write call  options on  broad-based  stock  indices that the
Adviser  believes  collectively  approximate the  characteristics  of its common
stock  portfolio  and that  present  attractive  opportunities  to earn  options
premiums.  The Fund  intends  initially  to write  call  options  on the S&P 500
Composite  Stock Price  Index(R) and the  NASDAQ-100  Index(R).  Over time,  the
indices on which the Fund writes call options may vary as a result of changes in
the  availability  and liquidity of various listed index options,  the Adviser's
evaluation of equity market  conditions  and other  factors.  Writing index call
options  involves a tradeoff  between the option  premiums  received and reduced
participation  in  potential  future  stock  price  appreciation.   Due  to  tax
considerations, the Fund intends to limit the overlap between its stock holdings
(and any  subset  thereof)  and each index on which it has  outstanding  options
positions to less than 70% on an ongoing  basis.  The Fund's stock  holdings may
include stocks not included in the indices on which it writes call options.

The  Fund  generally   intends  to  sell  stock  index  call  options  that  are
exchange-listed  and "European style," meaning that the options may be exercised
only on the expiration date of the option.  Index options differ from options on
individual  securities  in that index  options (i) typically are settled in cash
rather than by delivery of securities and (ii) reflect price  fluctuations  in a
group of  securities  or segments  of the  securities  market  rather than price
fluctuations in a single security.

As the seller of index call options,  the Fund will receive cash (the  premiums)
from option  purchasers.  The purchaser of an index call option has the right to
any  appreciation  in the value of the applicable  index over a fixed price (the
exercise  price) as of a  specified  date in the future  (the  option  valuation
date).  Generally,  the Fund  intends  to sell call  options  that are  slightly
"out-of-the-money"  (i.e.,  the exercise price  generally will be slightly above
the current level of the applicable index when the option is sold). The Fund may
also sell index  options that are more  substantially  "out-of-the-money."  Such
options that are more substantially "out-of-the-money" provide greater potential
for the Fund to realize  capital  appreciation,  but generally would pay a lower
premium  than options that are  slightly  "out-of-the-money."  In writing  index
options, the Fund will, in effect, sell the potential  appreciation in the value
of the  applicable  index above the  exercise  price in exchange  for the option
premium  received.  If, at expiration,  an index call option sold by the Fund is
exercised, the Fund will pay the purchaser the difference between the cash value
of the applicable index and the exercise price of the option.  The premium,  the
exercise price and the market value of the  applicable  index will determine the
gain or loss realized by the Fund as the seller of the index call option.

The Fund expects to maintain high  turnover in index call options,  based on the
Adviser's  intent to sell index call  options  on a  substantial  portion of its
stock investments and the Fund's initial expectation to roll forward its options
positions  approximately every one to three months. For its stock holdings,  the
Fund's annual portfolio  turnover rate is expected to exceed that of the indices
on which the Fund writes call  options  due to turnover in  connection  with the
Fund's active stock selection,  tax loss harvesting,  dividend capture and other
strategies.  On an overall  basis,  the Fund's  annual  turnover rate may exceed
100%. A high turnover rate (100% or more)  necessarily  involves greater trading
costs to the Fund.

The Fund's policy that, under normal market conditions,  it will invest at least
80% of its  total  assets  in a  diversified  portfolio  of  common  stocks is a
non-fundamental  policy that may be changed by the Fund's Board of Trustees (the
"Board") without Common Shareholder approval following the provision of 60 days'
prior written notice to Common Shareholders.

In  implementing  the Fund's  investment  strategy,  the Adviser and Sub-Adviser
intend to employ a variety of techniques and strategies designed to minimize and
defer the federal income taxes incurred by shareholders in connection with their
investment in the Fund as described below.

The S&P 500 is an  unmanaged  index of 500 stocks  maintained  and  published by
Standard  &  Poor's  that  is   market-capitalization   weighted  and  generally
representative  of the performance of larger stocks traded in the United States.
The NASDAQ-100 is an unmanaged index maintained by the Nasdaq Stock Market, Inc.
(with its  affiliates,  "Nasdaq") that includes 100 of the largest  domestic and
international  non- financial  companies  listed on the Nasdaq based upon market
capitalization.  The  NASDAQ-100  reflects  companies  across  a range  of major
industry groups,  including computer hardware and software,  telecommunications,
retail/wholesale trade and biotechnology.  It is not possible to invest directly
in the  NASDAQ-100.  Compared to the S&P 500, the NASDAQ-100 has a substantially
higher weighting in technology oriented industries.

The Fund is not sponsored,  endorsed,  sold or promoted by any index sponsor. No
index sponsor has passed on the legality or  suitability  of, or the accuracy or
adequacy of descriptions and disclosures  relating to the Fund. No index sponsor
has made any  representation  or  warranty,  express or  implied,  to the Common
Shareholders of the Fund or any member of the public  regarding the advisability
of investing in securities generally or in the Fund particularly, or the ability
of the respective indices to track general stock market performance. The indices
are determined, composed and calculated by the respective index sponsors without
regard  to the Fund or its use of the  indices  for  option  writing.  The index
sponsors  have no  obligation  to  take  the  needs  of the  Fund or its  Common
Shareholders  into  consideration  in determining,  composing or calculating the
indices.  No  index  sponsor  is  responsible  for  or has  participated  in the

                                       18

<PAGE>

determination of the timing of, price of, or number of Common Shares of the Fund
to be  issued.  No  index  sponsor  has any  liability  in  connection  with the
management, administration, marketing or trading of the Fund.

THE  INDEX  SPONSORS  DO  NOT  GUARANTEE  THE  ACCURACY   AND/OR   UNINTERRUPTED
CALCULATION OF THE INDICES OR ANY DATA INCLUDED THEREIN. THE INDEX SPONSORS MAKE
NO WARRANTY,  EXPRESS OR IMPLIED,  AS TO RESULTS TO BE OBTAINED BY THE FUND, THE
COMMON SHAREHOLDERS OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE INDICES IN
THE FUND'S  OPTIONS  WRITING  PROGRAM.  IN  PUBLISHING  THE  INDICES,  THE INDEX
SPONSORS  MAKE NO EXPRESS OR IMPLIED  WARRANTIES,  AND  EXPRESSLY  DISCLAIM  ALL
WARRANTIES OF  MERCHANTABILITY  OR FITNESS FOR A PARTICULAR  PURPOSE OR USE WITH
RESPECT TO THE INDICES OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE
FOREGOING,  IN NO EVENT SHALL AN INDEX  SPONSOR HAVE ANY  LIABILITY FOR ANY LOST
PROFITS OR SPECIAL,  INCIDENTAL,  PUNITIVE,  INDIRECT OR CONSEQUENTIAL  DAMAGES,
EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.

INVESTMENT STRATEGY
Eaton Vance will be  responsible  for  managing  the Fund's  overall  investment
program,  structuring and managing the Fund's common stock portfolio,  including
tax-loss harvesting and other tax-management techniques,  providing consultation
to the  Sub-Adviser and  supervising  the  performance of the  Sub-Adviser.  The
Fund's  investments  will be actively  managed,  and securities may be bought or
sold on a daily basis.  Rampart will be responsible for providing  advice on and
execution of the Fund's options strategy. See "Management of the Fund."

A team of Eaton Vance  investment  professionals  is responsible for the overall
management of the Fund's investments, including decisions about asset allocation
and securities  selection.  The portfolio managers utilize information  provided
by, and the  expertise  of, the Adviser's  research  staff in making  investment
decisions.  Investment  decisions are made primarily on the basis of fundamental
research,  which  involves  consideration  of the various  company-specific  and
general  business,  economic  and  market  factors  that  influence  the  future
performance of individual  companies and equity investments therein. The Adviser
will also consider a variety of other factors in  constructing  and  maintaining
the Fund's  stock  portfolio,  including,  but not  limited to,  stock  dividend
yields,  overlap  between the Fund's stock  holdings and the indices on which it
has  outstanding   options   positions,   realization  of  tax  loss  harvesting
opportunities and other tax management considerations.

The Adviser  believes that a strategy of owning a portfolio of common stocks and
selling covered call options (a "buy-write  strategy") with respect to a portion
thereof  can  provide  current  income  and gains and  attractive  risk-adjusted
returns.  Compared to selling call  options on  individual  stocks,  the Adviser
believes   that  selling   index  call  options  can  achieve   better  tax  and
transactional  efficiency  because  listed  options  on  broad-based  securities
indices generally qualify as "section 1256 contracts" as defined in the Internal
Revenue  Code of 1985,  as  amended  (the  "Code"),  subject  to  favorable  tax
treatment  and because the markets for index  options are  generally  deeper and
more liquid than options on individual stocks.

Eaton Vance  further  believes  that a strategy of owning a portfolio  of common
stocks,  in conjunction with writing index call options should generally provide
returns that are superior to owning the same stocks  without an associated  call
option  writing  program  under three  different  stock  market  scenarios:  (1)
down-trending  equity markets;  (2) flat market  conditions;  and (3) moderately
rising equity markets.  In the Adviser's  opinion,  only in more strongly rising
equity   markets  would  the  buy-write   strategy   generally  be  expected  to
underperform the stock-only portfolio. For these purposes, the Adviser considers
more  strongly  rising equity  market  conditions to exist  whenever the current
annual  rate of return for U.S.  common  stocks (as  represented  by the S&P 500
and/or the NASDAQ-100) exceeds the long-term  historical average of stock market
returns.  The Adviser  considers  moderately  rising equity market conditions to
exist whenever current annual returns on U.S. common stocks are positive, but do
not exceed the long-term historical average of stock market returns.

To avoid being subject to the "straddle rules" under federal income tax law, the
Fund  intends to limit the overlap  between its stock  holdings  (and any subset
thereof) and each index on which it has  outstanding  options  positions to less
than 70% on an ongoing basis. Under the "straddle rules," "offsetting  positions
with respect to personal property" generally are considered to be straddles.  In
general,  investment  positions  will be  offsetting  if there is a  substantial
diminution  in the risk of loss from  holding one  position by reason of holding
one or more other  positions.  The Fund  expects  that the index call options it
writes  will not be  considered  straddles  because its stock  holdings  will be
sufficiently  dissimilar from the components of the indices on which it has open
call options  positions under  applicable  guidance  established by the Internal
Revenue Service (the "IRS"). Under certain circumstances,  however, the Fund may
enter into options transactions or certain other investments that may constitute
positions in a straddle.

The Fund's index option  strategy is designed to produce  current cash flow from
option premiums and to moderate the volatility of the Fund's returns. This index
option  strategy is of a hedging  nature,  and is not  designed to  speculate on
equity  market  performance.  The Adviser  believes that the Fund's index option
strategy will moderate the volatility of the Fund's  returns  because the option
premiums  received will help to mitigate the impact of downward price  movements
in the stocks held by the Fund, while the Fund's  obligations  under index calls
written will effectively limit the Fund's ability to participate in upward price
movements in portfolio  stocks  beyond  certain  levels.  The Adviser  initially
expects to follow a primary options  strategy of selling index call options with
a  remaining  maturity  of  between  approximately  one  and  three  months  and

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<PAGE>

maintaining  its  short  call  options  positions  until   approximately   their
expiration  date,  at  which  time  replacement  call  option  positions  with a
remaining maturity within this range are written.

The Fund expects normally to sell index call options on a substantial portion of
its common  stock  investments.  The Adviser  does not intend to sell index call
options  representing  amounts greater than the value of the Fund's common stock
portfolio (i.e., take a "naked" position). The Adviser generally intends to sell
index call options that are  exchange-listed  and "European style," meaning that
the  options  may  only be  exercised  on the  expiration  date  of the  option.
Exchange-traded index options are typically settled in cash and provide that the
holder of the option has the right to  receive an amount of cash  determined  by
the excess of the exercise-settlement value of the index over the exercise price
of the option.  The  exercise-settlement  value is  calculated  based on opening
sales prices of the component index stocks on the option  valuation date,  which
is the last  business day before the  expiration  date.  Generally,  the Adviser
intends to sell index call options that are slightly "out-of-the-money," meaning
that option exercise  prices  generally will be slightly above the current level
of the index at the time the options are  written.  The Fund may also sell index
options that are more  substantially  "out-of-the-money."  Such options that are
more substantially  "out-of-the-money" provide greater potential for the Fund to
realize capital  appreciation on its portfolio  stocks but generally would pay a
lower  premium than options  that are slightly  "out-of-the-money."  The Adviser
expects  initially to follow a primary  options  strategy of selling  index call
options with a remaining maturity of between  approximately one and three months
and  maintaining  its short call options  positions  until  approximately  their
option  valuation date, at which time  replacement  call option positions with a
remaining maturity within this range are written.

The  foregoing  policies  relating to  investments  in common stocks and options
writing are the Fund's primary investment  policies.  In addition to its primary
investment  policies,  the Fund may invest to a limited extent in other types of
securities  and engage in certain  other  investment  practices.  In addition to
writing index call options,  the Fund may write call options on up to 20% of the
value of its total assets on futures contracts based upon broad-based securities
indices.  The Fund's use of such options on index futures would be substantially
similar to its use of options  directly on indices.  The Fund may also invest up
to 20% of its total assets in derivative  instruments acquired for hedging, risk
management and investment  purposes (to gain exposure to securities,  securities
markets,  markets  indices  and/or  currencies  consistent  with its  investment
objectives  and  policies),  provided  that no more than 10% of the Fund's total
assets may be invested in such derivative  instruments  acquired for non-hedging
purposes.  To seek to protect against price declines in securities holdings with
large  accumulated  gains, the Fund may use various hedging  techniques (such as
the  purchase  and sale of futures  contracts  on stocks and stock  indices  and
options thereon,  equity swaps, covered short sales, forward sales of stocks and
the  purchase  and sale of forward  currency  exchange  contracts  and  currency
futures). By using these techniques rather than selling appreciated  securities,
the Fund can, within certain limitations,  reduce its exposure to price declines
in the securities without realizing  substantial capital gains under current tax
law.  Derivative  instruments may also be used by the Fund to enhance returns or
as a substitute for the purchase or sale of securities.

TAX-MANAGED  INVESTING
Taxes are a major influence on the net after-tax  returns that investors receive
on their taxable investments.  There are five potential sources of returns for a
Common Shareholder:  (1) appreciation or depreciation in the value of the Common
Shares;  (2)  distributions of qualified  dividend income;  (3) distributions of
other investment  income and net short-term  capital gains; (4) distributions of
long-term  capital gains (and long-term capital gains retained by the Fund); and
(5)  distributions of return of capital.  These different  sources of investment
returns  are  subject  to  widely   varying   federal   income  tax   treatment.
Distributions of other investment income (i.e.,  non-qualified  dividend income)
and net realized  short-term  gains are taxed currently as ordinary  income,  at
rates  as  high as 35%.  Distributions  of  qualified  dividend  income  and net
realized long-term gains (whether distributed or retained by the Fund) are taxed
currently at rates up to 15% for individuals and other  noncorporate  taxpayers.
Generally,  return from unrealized appreciation and depreciation in the value of
Common  Shares and  distributions  characterized  as return of  capital  are not
taxable until the Common Shareholder sells his or her Common Shares.  Upon sale,
a capital gain or loss equal to the difference  between the net proceeds of such
sale and the Common Shareholder's  adjusted tax basis is realized.  Capital gain
is  considered  long-term  and is taxed at rates up to 15% for  individuals  and
other  noncorporate  taxpayers  if the  Common  Shareholder  has held his or her
shares more than one year. Otherwise,  capital gain is considered short-term and
is  taxed  at  rates  up to 35%.  The  after-tax  returns  achieved  by a Common
Shareholder  will be  substantially  influenced by the mix of different types of
returns subject to varying federal income tax treatment.

In implementing the Fund's investment strategy,  the Adviser intends to employ a
variety of techniques and strategies  designed to minimize and defer the federal
income taxes incurred by Common Shareholders in connection with their investment
in the Fund.  These  include:  (1) investing in stocks that pay  dividends  that
qualify for federal  income  taxation at rates  applicable to long-term  capital
gains and complying with the holding period and other requirements for favorable
tax  treatment;  (2) selling  index call options  that qualify for  treatment as
"section  1256  contracts"  as defined in the Code,  on which  capital gains and
losses are generally treated as 60% long-term and 40% short-term,  regardless of
holding period;  (3) limiting the overlap between the Fund's stock holdings (and
any subset thereof) and each index on which it has outstanding options positions
to less than 70% on an ongoing basis so that the Fund's stock holdings and index
call  options  are not  subject  to the  "straddle  rules;"  (4)  engaging  in a
systematic  program  of  tax-loss  harvesting  in the  Fund's  stock  portfolio,
periodically  selling stock positions that have  depreciated in value to realize
capital  losses that can be used to offset  capital gains  realized by the Fund;
and (5) managing the sale of appreciated  stock  positions so as to minimize the

                                       20

<PAGE>

Fund's net realized short-term capital gains in excess of net realized long-term
capital losses. When an appreciated security is sold, the Fund intends to select
for sale the share lots resulting in the most favorable tax treatment, generally
those with holding  periods  sufficient to qualify for  long-term  capital gains
treatment that have the highest cost basis.

The Fund  intends to emphasize  investments  in stocks that pay  dividends  that
qualify for federal  income  taxation at rates  applicable to long-term  capital
gains.  Under federal  income tax law enacted in 2003,  the  qualified  dividend
income of  individuals  and other  noncorporate  taxpayers is taxed at long-term
capital gain tax rates if certain holding period and other requirements are met.
Qualified dividends are dividends from domestic  corporations and dividends from
foreign  corporations that meet certain specified  criteria.  The Fund generally
can pass the tax treatment of qualified  dividend income it receives  through to
Common  Shareholders.  For the Fund to receive  tax-advantaged  treatment of its
qualified dividend income,  the Fund must hold stock paying qualified  dividends
for more than 60 days during the  121-day  period  beginning  60 days before the
ex-dividend date (or more than 90 days during the associated  181-day period, in
the case of certain preferred stocks). In addition, the Fund cannot be obligated
to make related payments (pursuant to a short sale or otherwise) with respect to
positions in any security that is substantially similar or related property with
respect to such stock.  Similar  provisions  apply to each Common  Shareholder's
investment in the Fund. In order for qualified  dividend income paid by the Fund
to a Common  Shareholder  to be taxable at long-term  capital  gains rates,  the
Common Shareholder must hold his or her Fund shares for more than 60 days during
the 121-day period surrounding the ex- dividend date. The provisions of the Code
applicable to qualified dividend income are effective through 2008.  Thereafter,
qualified dividend income will be subject to tax at ordinary income rates unless
further  legislative  action is taken. The Fund's investment program and the tax
treatment of Fund  distributions may be affected by IRS  interpretations  of the
Code and future changes in tax laws and regulations, including changes resulting
from the  "sunset"  provisions  described  above  that  would have the effect of
repealing the favorable  treatment of qualified  dividend  income and reimposing
the  higher tax rates  applicable  to  ordinary  income in 2009  unless  further
legislative action is taken.

The Fund may seek to  enhance  the level of  tax-advantaged  dividend  income it
receives by engaging in dividend capture  trading.  In a dividend capture trade,
the Fund sells a stock on or shortly after the stock's ex-dividend date and uses
the sale  proceeds to purchase one or more other stocks that are expected to pay
dividends before the next dividend payment on the stock being sold. Through this
practice,  the Fund may receive more dividend  payments over a given time period
than if it held a single stock.  In order for dividends  received by the Fund to
qualify  for  favorable  tax  treatment,  the Fund must  comply with the holding
period and other requirements set forth in the preceding paragraph. By complying
with applicable holding period and other requirements while engaging in dividend
capture  trading,  the Fund may be able to enhance  the level of  tax-advantaged
dividend  income it receives  because it will  receive  more  dividend  payments
qualifying for favorable treatment during the same time period than if it simply
held its portfolio stocks.  The use of dividend capture trading  strategies will
expose the Fund to increased  trading costs and  potentially  higher  short-term
gain or loss.

Options on  broad-based  equity  indices  that  trade on a  national  securities
exchange registered with the Securities and Exchange Commission (the "SEC") or a
domestic board of trade designated as a contract market by the Commodity Futures
Trading Commission  generally qualify for treatment as "section 1256 contracts."
Options on broad-based  equity indices that trade on other exchanges,  boards of
trade or markets  designated by the U.S.  Secretary of Treasury also qualify for
treatment as "section 1256 contracts." Because only a small number of exchanges,
boards  and  markets  outside  the  U.S.  have to date  received  the  necessary
designation,  most  foreign-traded  stock index options do not currently qualify
for  treatment as "section 1256  contracts."  To the extent that the Fund writes
options on indices based upon foreign stocks, the Fund generally intends to sell
options on broad-based  foreign  country and/or  regional stock indices that are
listed for trading in the United States or which  otherwise  qualify as "section
1256  contracts."  Options on foreign indices that are listed for trading in the
United States or which  otherwise  qualify as "section 1256 contracts" may trade
in substantially lower volumes and with substantially wider bid-ask spreads than
other  options  contracts  on the same or  similar  indices  that trade on other
markets  outside  the United  States.  To  implement  its options  program  most
effectively,  the Fund may sell index  options  that do not  qualify as "section
1256  contracts."  Gain or loss on index options not qualifying as "section 1256
contracts"  would be  realized  upon  disposition,  lapse or  settlement  of the
positions, and would be treated as short-term gain or loss.

To seek to protect  against  price  declines in  securities  holdings with large
accumulated gains, the Fund may use various hedging techniques (such as the sale
of futures  contracts on stocks and stock  indices and options  thereon,  equity
swaps,  covered  short  sales,  and  forward  sales of  stocks).  By using these
techniques  rather than selling  appreciated  securities,  the Fund can,  within
certain  limitations,  reduce its exposure to price  declines in the  securities
without realizing  substantial  capital gains under current tax law.  Derivative
instruments  may also be used by the Fund to enhance  returns or as a substitute
for the purchase or sale of securities.  As a general matter, dividends received
on hedged  stock  positions  are  characterized  as ordinary  income and are not
eligible for  favorable tax  treatment.  Dividends  received on securities  with
respect to which the Fund is  obligated to make  related  payments  (pursuant to
short  sales or  otherwise)  will be treated as fully  taxable  ordinary  income
(i.e., income other than tax-advantaged qualified dividend income). In addition,
use of  derivatives  may give rise to short-term  capital gains and other income
that would not qualify for  favorable  tax  treatment.  As indicated  above,  in
addition  to writing  index call  options,  the Fund may invest up to 20% of its
total assets in derivative instruments acquired for hedging, risk management and
investment purposes (to gain exposure to securities, securities markets, markets
indices  and/or  currencies   consistent  with  its  investment  objectives  and
policies),  provided  that no more than 10% of the  Fund's  total  assets may be
invested in such derivative instruments acquired for non-hedging purposes.

                                       21

<PAGE>

COMMON STOCKS
Under normal market  conditions,  the Fund will invest at least 80% of its total
assets in a diversified  portfolio of common stocks.  Common stock represents an
equity ownership  interest in the issuing  corporation.  Holders of common stock
generally  have voting  rights in the issuer and are entitled to receive  common
stock  dividends  when,  as  and  if  declared  by the  corporation's  board  of
directors.  Common stock normally occupies the most subordinated  position in an
issuer's capital structure.  Returns on common stock investments  consist of any
dividends  received plus the amount of appreciation or depreciation in the value
of the stock.

Although common stocks have  historically  generated higher average returns than
fixed-income  securities over the long term and  particularly  during periods of
high or rising  concerns about  inflation,  common stocks also have  experienced
significantly  more  volatility in returns and may not maintain their real value
during inflationary  periods. An adverse event, such as an unfavorable  earnings
report,  may depress the value of a  particular  common  stock held by the Fund.
Also,  the prices of common  stocks are  sensitive  to general  movements in the
stock  market  and a drop in the stock  market may  depress  the price of common
stocks to which the Fund has  exposure.  Common stock prices  fluctuate for many
reasons,  including changes in investors' perceptions of the financial condition
of an issuer or the general  condition of the  relevant  stock  market,  or when
political or economic  events  affecting the issuer occur.  In addition,  common
stock prices may be sensitive to rising  interest  rates as the costs of capital
rise and borrowing costs increase.

FOREIGN SECURITIES
The Fund may invest up to 35% of its total assets in  securities  of  non-United
States issuers,  including up to 5% of its total assets in securities of issuers
located in  emerging  markets.  The value of foreign  securities  is affected by
changes  in  currency  rates,  foreign  tax laws  (including  withholding  tax),
government  policies (in this country or abroad),  relations between nations and
trading,  settlement,  custodial and other operational  risks. In addition,  the
costs of investing  abroad are generally  higher than in the United States,  and
foreign securities markets may be less liquid, more volatile and less subject to
governmental  supervision than markets in the United States. Foreign investments
also could be  affected  by other  factors  not  present  in the United  States,
including expropriation,  armed conflict, confiscatory taxation, lack of uniform
accounting and auditing  standards,  less publicly available financial and other
information and potential difficulties in enforcing contractual obligations.  As
an  alternative  to holding  foreign-traded  securities,  the Fund may invest in
dollar-denominated  securities of foreign companies that trade on U.S. exchanges
or in the U.S.  over-the-counter  market (including  depositary receipts,  which
evidence  ownership in underlying foreign  securities).  Dividends received with
respect to stock of a foreign  corporation  may qualify for the reduced rates of
federal income  taxation  applicable to qualified  dividend  income only if such
corporation satisfies the requirements to be a "qualified foreign corporation."

The Fund may invest in ADRs, EDRs and GDRs,  which are  certificates  evidencing
ownership  of shares of  foreign  issuers  and are  alternatives  to  purchasing
directly  the  underlying  foreign  securities  in their  national  markets  and
currencies. However, they continue to be subject to many of the risks associated
with  investing  directly in foreign  securities.  These risks  include  foreign
exchange  risk as well as the  political  and economic  risks of the  underlying
issuer's  country.  ADRs,  EDRs  and  GDRs  may  be  sponsored  or  unsponsored.
Unsponsored  receipts are established  without the  participation of the issuer.
Unsponsored receipts may involve higher expenses, may not pass through voting or
other shareholder rights, and may be less liquid than sponsored receipts.

INDEX OPTIONS GENERALLY
The Fund will pursue its  objectives in part by selling index writing  (selling)
stock index call  options with  respect to a  substantial  portion of its common
stock  investments.  The Fund  generally  intends to sell index options that are
exchange-listed  and "European style," meaning that the options may be exercised
only on the expiration date of the option.  Index options differ from options on
individual  securities  in that index  options (i) typically are settled in cash
rather than by delivery of  securities  (meaning the exercise of an index option
does not involve the actual  purchase or sale of  securities)  and (ii)  reflect
price fluctuations in a group of securities or segments of the securities market
rather than price fluctuations in a single security.

U.S.  listed options  contracts are originated and  standardized  by the Options
Clearing Corporation (the "OCC"). Currently,  United States listed index options
are available on approximately 89 indexes, with new listings added periodically.
In the United States, the Fund generally intends to sell index call options that
are issued, guaranteed and cleared by the OCC. The Fund may also sell index call
options in the U.S.  and outside the U.S.  that are not  issued,  guaranteed  or
cleared by the OCC. The Adviser believes that there exists sufficient  liquidity
in the index options markets to fulfill the Fund's requirements to implement its
strategy.

SELLING INDEX CALL OPTIONS
The Fund's index option  strategy is designed to produce  current cash flow from
options  premiums and to moderate the  volatility  of the Fund's  returns.  This
index option strategy is of a hedging  nature,  and is not designed to speculate
on equity market performance.

As the seller of index call  options,  the Fund will receive cash (the  premium)
from the purchasers  thereof.  The purchaser of an index option has the right to
any  appreciation  in the value of the applicable  index over a fixed price (the
exercise  price) as of a  specified  date in the future  (the  option  valuation
date). Generally,  the Fund intends to sell index call options that are slightly
"out-of-the-money"  (i.e.,  the exercise price  generally will be slightly above
the current level of the applicable index when the option is sold). The Fund may

                                       22

<PAGE>

also sell index  options that are more  substantially  "out-of-the-money."  Such
options that are more substantially "out-of-the-money" provide greater potential
for the  Fund to  realize  capital  appreciation  on its  portfolio  stocks  but
generally   would  pay  a  lower   premium   than   options  that  are  slightly
"out-of-the-money." The Fund will, in effect, sell the potential appreciation in
the value of the  applicable  index above the exercise price in exchange for the
option premium  received.  If, at  expiration,  an index call option sold by the
Fund is exercised,  the Fund will pay the purchaser the  difference  between the
cash value of the  applicable  index and the exercise  price of the option.  The
premium,  the exercise price and the market value of the  applicable  index will
determine  the gain or loss realized by the Fund as the seller of the index call
option.

Prior to  expiration,  the Fund  may  close an  option  position  by  making  an
offsetting market purchase of identical option contracts (same type,  underlying
index,  exercise price and  expiration).  The cost of closing  transactions  and
payments in settlement of exercised  options will reduce the net option premiums
available for distribution to Common  Shareholders by the Fund. The reduction in
net option premiums due to a rise in stock prices should generally be offset, at
least in part,  by  appreciation  in the value of common  stocks held and by the
opportunity  to realize  higher premium income from selling new index options at
higher exercise prices.

In certain extraordinary market circumstances,  to limit the risk of loss on the
Fund's index option strategy,  the Fund may enter into "spread"  transactions by
purchasing  index call options with higher  exercise  prices than those of index
call options written.  The Fund will only engage in such transactions when Eaton
Vance and Rampart believe that certain  extraordinary  events  temporarily  have
depressed equity prices and substantial  short-term  appreciation of such prices
is expected.  By engaging in spread  transactions in such circumstances the Fund
will  reduce the  limitation  imposed  on its  ability  to  participate  in such
recovering equity markets that exist if the Fund only writes index call options.
The  premiums  paid to purchase  such call options are expected to be lower than
the premiums  earned from the call  options  written at lower  exercise  prices.
However,  the  payment of these  premiums  will  reduce  amounts  available  for
distribution from the Fund's option activity.

The Fund  will  sell  only  "covered"  call  options.  An index  call  option is
considered covered if the Fund maintains with its custodian assets determined to
be liquid (in accordance with procedures  established by the Board) in an amount
equal to the contract  value of the index.  An index call option also is covered
if the  Fund  holds a call on the  same  index as the  call  written  where  the
exercise  price of the call held is (i) equal to or less than the exercise price
of the  call  written,  or (ii)  greater  than  the  exercise  price of the call
written,  provided the difference is maintained by the Fund in segregated assets
determined  to be liquid  (in  accordance  with  procedures  established  by the
Board).

If an option written by the Fund expires  unexercised,  the Fund realizes on the
expiration date a capital gain equal to the premium  received by the Fund at the
time the option was written. If an option written by the Fund is exercised,  the
Fund realizes on the expiration  date a capital gain if the cash payment made by
the Fund upon exercise is less than the premium received from writing the option
and a capital loss if the cash  payment made is more than the premium  received.
If a written option is repurchased,  the Fund realizes upon the closing purchase
transaction a capital gain if the cost of  repurchasing  the option is less than
the premium  received  from writing the option and a capital loss if the cost of
repurchasing the option is more than the premium received.

For written index options that qualify as "section 1256  contracts,"  the Fund's
gains and losses  thereon  generally  will be treated as 60%  long-term  and 40%
short-term capital gain or loss, regardless of holding period. In addition,  the
Fund  generally  will be required to "mark to market"  (i.e.,  treat as sold for
fair market value) each  outstanding  index option position at the close of each
taxable  year (and on October 31 of each year for  excise tax  purposes)  and to
adjust the amount of gain or loss  subsequently  realized to reflect the marking
to  market.  Gain or loss on index  options  not  qualifying  as  "section  1256
contracts"  would  be  realized  upon  disposition,  lapse  or  exercise  of the
positions and would be treated as short-term gain or loss.

The principal  factors  affecting the market value of an option contract include
supply and demand in the options  market,  interest  rates,  the current  market
price of the  underlying  index in relation to the exercise price of the option,
the actual or perceived volatility associated with the underlying index, and the
time  remaining  until the expiration  date. The premium  received for an option
written by the Fund is recorded as an asset of the Fund and its obligation under
the option contract as an equivalent liability.  The Fund then adjusts over time
the  liability  as the  market  value of the option  changes.  The value of each
written option will be marked to market daily and valued at the closing price on
the  exchange  on which it is traded  or, if not  traded  on an  exchange  or no
closing price is available, at the mean between the last bid and asked prices or
otherwise at fair value as determined by the Board of the Fund.

The  transaction  costs of buying  and  selling  options  consist  primarily  of
commissions (which are imposed in opening,  closing and exercise  transactions),
but may also include margin and interest costs in particular  transactions.  The
impact of transaction  costs on the  profitability of a transaction may often be
greater  for  options  transactions  than  for  transactions  in the  underlying
securities  because these costs are often greater in relation to option premiums
than in relation to the prices of underlying  securities.  Transaction costs may
be especially  significant in option strategies  calling for multiple  purchases
and sales of options  over short  periods of time or  concurrently.  Transaction
costs  associated with the Fund's options strategy will vary depending on market
circumstances and other factors.

                                       23

<PAGE>

There are three items needed to identify a particular index option contract: (1)
the expiration month, (2) the exercise (or strike) price and (3) the type (i.e.,
call or put).  For  example,  a January  2005 1200  strike  S&P 500 call  option
provides the option holder the right to receive $100  multiplied by the positive
difference between the January option  exercise-settlement  value of the S&P 500
(determine  on January 20, 2005 based on opening  sales prices of the  component
index stocks on that date) and 1200. A call option whose exercise price is above
the current price of the  underlying  index is called  "out-of-the-money"  and a
call option whose  exercise  price is below the current price of the  underlying
index is called "in-the-money."

The following is a conceptual example of the returns that may be achieved from a
buy-write  investment  strategy  that  consists of holding a portfolio of stocks
whose  performance  matches the S&P 500 and selling S&P 500 call  options on the
full value of the stock  position.  This example is not meant to  represent  the
performance of actual option contracts or the Fund. In particular,  it should be
noted that the  example is based upon  writing  call  options on a single  index
while  holding a  portfolio  of  securities  precisely  matching  the index.  In
implementing its options  strategy,  the Fund will may write options on a number
of different  representative  indices,  will not hold stocks precisely  matching
these  indices,  and will  write  options  on only a portion of the value of its
portfolio of common stocks.

A holder of a portfolio of common stocks writes (sells) January 2005 1200 strike
S&P 500 call  options on December  17, 2004 when the S&P 500 is at 1198.63.  The
options  writer  receives  $14.41  (1.20%) per option  written.  Assume that the
portfolio of stocks held by the options  writer  matches the  performance of the
S&P 500 over the period until the January  exercise-settlement  value of the S&P
500 is determined on January 20, 2005.

In the example, the return over the period until option expiration earned by the
holder of a portfolio  of stocks whose  performance  matches the S&P 500 and who
writes S&P 500 index call  options on the full value of the  portfolio  position
and maintains the options position until  expiration will be as follows:  (1) if
the S&P 500 declines 1.20%, the option will expire worthless and the holder will
have a net return of zero (option premium offsets loss in stock portfolio);  (2)
if the S&P 500 is flat,  the option will again expire  worthless  and the holder
will  have a net  return  of  1.20%  (option  premium  plus  no  gain or loss on
portfolio); (3) if the S&P 500 rises 0.11%, the option will again expire with no
value and the holder will have a net return of 1.31% (option  premium plus 0.11%
portfolio  return);  and (4) if the index rises more than 0.11%, the exercise of
the option would limit portfolio gain to 0.11% and total net return to 1.31%. If
the index value at exercise exceeds the exercise price,  returns over the period
from the position are capped at 1.31%. On an annualized basis, before accounting
for the costs of the  options  transactions,  in this  example  option  premiums
increase returns by approximately 12.9% in down, flat and moderately up markets;
annualized returns in this example for the buy-write strategy, before accounting
for the costs of the options transactions,  are capped at approximately 14.1% in
a strong up market. It should be noted that the Fund will seek to offset the 40%
of  short-term  gains  realized  on writing  options on  indices  qualifying  as
"section  1256  contracts"  against  losses and  expenses  on the  Fund's  stock
portfolio.

As  demonstrated  in the  example,  writing  index  call  options  can lower the
variability  of potential  return  outcomes and can enhance  returns in three of
four market  performance  scenarios (down, flat or moderately up). Only when the
level of the index at option expiration  exceeds the sum of the premium received
and the option  exercise  price  would the  buy-write  strategy  be  expected to
provide lower returns than the stock portfolio-only  alternative.  The amount of
downside  protection  afforded by the  buy-write  strategy in  declining  market
scenarios is limited,  however, to the amount of option premium received.  If an
index  declines  by an amount  greater  than the  option  premium,  a  buy-write
strategy  consisting  of owning all of the stocks in the index and writing index
options on the value  thereof  would  generate an  investment  loss.  The Fund's
returns from implementing a buy-write  strategy using index options will also be
substantially  affected by the performance of the Fund's stock portfolio  versus
the indices on which it writes call options. The returns on the Fund's portfolio
are  unlikely  to be the same as the  returns on the  indices on which it writes
options.

ADDITIONAL INVESTMENT PRACTICES

In addition to its primary  investment  strategies as described  above, the Fund
may engage in the following investment practices.

TEMPORARY  INVESTMENTS
During  unusual  market  circumstances,   the  Fund  may  temporarily  invest  a
substantial portion of its assets in cash or cash equivalents.  Cash equivalents
are  highly  liquid,  short-term  securities  such  as  commercial  paper,  time
deposits,   certificates  of  deposit,  short-term  notes  and  short-term  U.S.
government  obligations.  In  moving  to  a  substantial  temporary  investments
position and in transitioning from such a position back into conformity with the
Fund's normal  investment  policies,  the Fund may incur  transaction costs that
would not be incurred if the Fund had remained fully invested in accordance with
such  normal  policies.  The  transition  to and  from a  substantial  temporary
investments  position  may also result in the Fund having to sell common  stocks
and/or close out options  positions  and then later  purchase  common stocks and
open new options positions in circumstances that might not otherwise be optimal.
The  Fund's  investment  in such  temporary  investments  under  unusual  market

                                       24

<PAGE>

circumstances may not be in furtherance of the Fund's investment objectives.

WHEN-ISSUED  SECURITIES AND FORWARD COMMITMENTS
Securities  may be purchased on a "forward  commitment" or  "when-issued"  basis
(meaning securities are purchased or sold with payment and delivery taking place
in the future) in order to secure what is considered to be an advantageous price
and yield at the time of entering into the transaction. However, the return on a
comparable security when the transaction is consummated may vary from the return
on the  security  at  the  time  that  the  forward  commitment  or  when-issued
transaction  was made.  From the time of  entering  into the  transaction  until
delivery  and payment is made at a later date,  the  transacted  securities  are
subject  to  market   fluctuations.   In  forward   commitment  or   when-issued
transactions,  if the seller or buyer,  as the case may be, fails to  consummate
the transaction,  the counterparty may miss the opportunity of obtaining a price
or yield  considered  to be  advantageous.  Forward  commitment  or  when-issued
transactions  may occur a month or more  before  delivery  is due.  However,  no
payment or delivery  is made until  payment is received or delivery is made from
the  other  party to the  transaction.  The Fund does not  intend to enter  into
forward  commitment or  when-issued  transactions  for the purpose of investment
leverage.

ILLIQUID SECURITIES
The Fund may invest up to 15% of its total assets in securities  for which there
is no readily available trading market or that are otherwise illiquid.  Illiquid
securities  include  securities  legally  restricted  as  to  resale,   such  as
commercial  paper issued pursuant to Section 4(2) of the Securities Act of 1933,
as amended, and securities eligible for resale pursuant to Rule 144A thereunder.
Section 4(2) and Rule 144A securities may, however,  be treated as liquid by the
Adviser pursuant to procedures adopted by the Board, which require consideration
of factors  such as trading  activity,  availability  of market  quotations  and
number of dealers willing to purchase the security.  If the Fund 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.

It may be difficult to sell illiquid  securities at a price  representing  their
fair  value  until  such time as such  securities  may be sold  publicly.  Where
registration is required, a considerable period may elapse between a decision by
the Fund to sell the securities and the time when it would be permitted to sell.
Thus, the Fund may not be able to obtain as favorable a price as that prevailing
at the time of the  decision  to sell.  The  Fund  may also  acquire  securities
through private placements under which it may agree to contractual  restrictions
on the resale of such securities.  Such restrictions might prevent their sale at
a time when such sale would otherwise be desirable.

OTHER DERIVATIVE INSTRUMENTS
In addition to the intended strategy of selling index call options, the Fund may
invest up to 20% of its total assets in other derivative  instruments (which are
instruments that derive their value from another instrument,  security or index)
acquired for hedging,  risk management and investment purposes (to gain exposure
to securities,  securities markets, markets indices and/or currencies consistent
with its investment objectives and policies),  provided that no more than 10% of
the Fund's  total  assets may be invested  in such  derivative  instruments  for
non-hedging  purposes.  These  strategies  may be  executed  through  the use of
derivative  contracts in the United States or abroad.  In the course of pursuing
these investment strategies, the Fund may purchase and sell derivative contracts
based on equity and  fixed-income  indices and other  instruments,  purchase and
sell futures contracts and options thereon,  and enter into various transactions
such as swaps,  caps,  floors or  collars.  In  addition,  derivatives  may also
include  new  techniques,  instruments  or  strategies  that  are  permitted  as
regulatory  changes  occur.  Derivative  instruments  may be used by the Fund to
enhance returns or as a substitute for the purchase or sale of securities.

SWAPS
Swap  contracts  may be  purchased  or sold to  hedge  against  fluctuations  in
securities prices, interest rates or market conditions,  to mitigate non-payment
or  default  risk or to gain  exposure  to  particular  securities,  baskets  of
securities, indices or currencies. In a standard "swap" transaction, two parties
agree to exchange the returns (or differentials in rates of return) on different
currencies,  securities,  baskets of currencies or securities,  indices or other
instruments,  which returns are calculated with respect to a "notional  amount,"
i.e.,   the  designated   referenced   amount  of  exposure  to  the  underlying
instruments.  The Fund will enter into swaps only on a net basis,  i.e., the two
payment  streams are netted out, with the Fund receiving or paying,  as the case
may be,  only the net amount of the two  payments.  If the other party to a swap
defaults,  the Fund's risk of loss  consists of the net amount of payments  that
the Fund is contractually  entitled to receive. The net amount of the excess, if
any, of the Fund's  obligations  over its  entitlements  will be maintained in a
segregated  account  by the Fund's  custodian.  The Fund will not enter into any
swap unless the  claims-paying  ability of the other party thereto is considered
to be investment grade by the Adviser.  If there is a default by the other party
to such a transaction,  the Fund will have contractual  remedies pursuant to the
agreements related to the transaction.  Swaps are traded in the over-the-counter
market.  The use of swaps  is a  highly  specialized  activity,  which  involves
investment  techniques and risks  different from those  associated with ordinary
portfolio securities transactions.  If the Adviser is incorrect in its forecasts
of market values,  interest rates and other applicable factors, the total return
performance of the Fund would be unfavorably affected.

                                       25

<PAGE>

TOTAL RETURN SWAPS
Total return swaps are  contracts in which one party agrees to make  payments of
the total  return from the  designated  underlying  asset(s),  which may include
securities,  baskets of securities,  or securities  indices during the specified
period,  in return for payments equal to a fixed or floating rate of interest or
the total return from other designated underlying asset(s).

INTEREST RATE SWAPS
Interest rate swaps involve the exchange by the Fund with another party of their
respective  commitments to pay or receive  interest  (e.g., an exchange of fixed
rate payments for floating rate payments).

FUTURES AND OPTIONS ON FUTURES
The Fund may purchase and sell various kinds of financial  futures contracts and
options  thereon to seek to hedge  against  changes in stock  prices or interest
rates,  for other  risk  management  purposes  or to gain  exposure  to  certain
securities,  indices and currencies.  Futures  contracts may be based on various
securities indices and securities.  Such transactions  involve a risk of loss or
depreciation due to adverse changes in securities  prices,  which may exceed the
Fund's  initial  investment in these  contracts.  The Fund will only purchase or
sell futures  contracts or related  options in compliance  with the rules of the
Commodity Futures Trading  Commission.  These transactions  involve  transaction
costs.  Sales of futures  contracts  and  related  options  generally  result in
realization of short-term or long-term  capital gain depending on the period for
which the investment is held. To the extent that any futures contract or options
on futures  contract  held by the Fund is a "section  1256  contract"  under the
Code, the contract will be  marked-to-market  annually and any gain or loss will
be treated as 60% long-term and 40% short-term, regardless of the holding period
for such contract.

SHORT SALES
The Fund may sell a  security  short if it owns at least an equal  amount of the
security sold short or another security convertible or exchangeable for an equal
amount of the security sold short  without  payment of further  compensation  (a
short sale against-the-box).  In a short sale against-the-box,  the short seller
is exposed to the risk of being  forced to deliver  stock that it holds to close
the position if the borrowed stock is called in by the lender, which would cause
gain or loss to be recognized on the delivered  stock. The Fund expects normally
to close its short sales against-the-box by delivering newly acquired stock.

Short sales against-the-box can be a tax-efficient alternative to the sale of an
appreciated  securities position. The ability to use short sales against-the-box
as a tax-efficient  management technique with respect to holdings of appreciated
securities  is limited to  circumstances  in which the  hedging  transaction  is
closed out not later than thirty days after the end of the Fund's  taxable  year
in  which  the  transaction  was  initiated,   and  the  underlying  appreciated
securities  position is held unhedged for at least the next sixty days after the
hedging  transaction is closed. Not meeting these requirements would trigger the
recognition of gain on the underlying  appreciated securities position under the
federal tax laws applicable to constructive sales.

SECURITIES LENDING
The  Fund  may  seek  to  earn  income  by  lending   portfolio   securities  to
broker-dealers  or other  institutional  borrowers.  As with other extensions of
credit,  there  are  risks of delay in  recovery  or even  loss of rights in the
securities  loaned if the borrower of the securities  fails  financially.  Loans
will be made only to organizations whose credit quality or claims paying ability
is  considered  by the  Adviser  to be at least  investment  grade  and when the
expected  returns,  net  of  administrative  expenses  and  any  finders'  fees,
justifies  the attendant  risk.  Securities  loans  currently are required to be
secured  continuously  by collateral in cash,  cash  equivalents  (such as money
market  instruments)  or  other  liquid  securities  held by the  custodian  and
maintained  in an amount at least  equal to the market  value of the  securities
loaned. The financial condition of the borrower will be monitored by the Adviser
on an ongoing basis.

BORROWINGS
The  Fund  may  borrow  money  to the  extent  permitted  under  the 1940 Act as
interpreted,  modified or otherwise permitted by the regulatory authority having
jurisdiction.  Although it does not  currently  intend to do so, the Fund may in
the future from time to time borrow money to add leverage to the portfolio.  The
Fund may also  borrow  money for  temporary  administrative  purposes or to meet
temporary cash needs.

REVERSE REPURCHASE AGREEMENTS
The  Fund  may  enter  into  reverse  repurchase  agreements.  Under  a  reverse
repurchase  agreement,  the Fund temporarily transfers possession of a portfolio
instrument  to another  party,  such as a bank or  broker-dealer,  in return for
cash.  At the same time,  the Fund agrees to  repurchase  the  instrument  at an
agreed  upon time  (normally  within  seven days) and price,  which  reflects an
interest  payment.  The Fund may enter into such  agreements  when it is able to
invest the cash acquired at a rate higher than the cost of the agreement,  which
would increase earned income.  Income realized on reverse repurchase  agreements
is taxable as ordinary income.

When the Fund enters into a reverse  repurchase  agreement,  any fluctuations in
the market value of either the  securities  transferred  to another party or the
securities  in which the proceeds may be invested  would affect the market value
of the Fund's assets. As a result,  such transactions may increase  fluctuations
in  the  market  value  of  the  Fund's  assets.  There  is a  risk  that  large
fluctuations  in the market  value of the Fund's  assets  could affect net asset

                                       26
<PAGE>

value  and the  market  price  of  Common  Shares.  Because  reverse  repurchase
agreements may be considered to be the practical  equivalent of borrowing funds,
they  constitute a form of leverage and may be subject to leverage  risks.  Such
agreements  will be treated as subject to investment  restrictions  as mentioned
above  under  "Borrowings."  If the Fund  reinvests  the  proceeds  of a reverse
repurchase  agreement at a rate lower than the cost of the  agreement,  entering
into the agreement will lower the Fund's cash available for distribution.

PORTFOLIO TURNOVER
The Fund  will buy and  sell  securities  to seek to  accomplish  it  investment
objectives. Portfolio turnover generally involves expense to the Fund, including
brokerage  commissions and other transaction costs on the sale of securities and
reinvestment in other securities.  The Fund expects to maintain high turnover in
index call options,  based on the Adviser's intent to sell index call options on
a  substantial   portion  of  its  stock  investments  and  the  Fund's  initial
expectation  to roll forward its options  positions  approximately  every one to
three months. For its stock holdings,  the Fund's annual portfolio turnover rate
is expected to exceed that of the indices on which the Fund writes call  options
due to turnover in connection with the Fund's active stock  selection,  tax loss
harvesting,  dividend  capture and other  strategies.  On an overall basis,  the
Fund's annual turnover rate may exceed 100%. A high turnover rate (100% or more)
necessarily involves greater trading costs to the Fund.

RISK CONSIDERATIONS

NO OPERATING HISTORY
The Fund is a newly organized, diversified closed-end investment company with no
history of  operations  and is designed  for  long-term  investors  and not as a
trading vehicle.

INVESTMENT AND MARKET RISK
An  investment in Common  Shares is subject to  investment  risk,  including the
possible loss of the entire principal  amount invested.  An investment in Common
Shares  represents an indirect  investment in the securities  owned by the Fund,
which are generally traded on a securities  exchange or in the  over-the-counter
markets. The value of these securities, like other market investments,  may move
up or down,  sometimes  rapidly and  unpredictably.  Because the Fund intends to
sell index call options on a continuous basis on substantially the full value of
its common stock holdings,  the Fund's appreciation potential from equity market
performance will be limited. The Common Shares at any point in time may be worth
less  than  the  original  investment,   even  after  taking  into  account  any
reinvestment of distributions.

ISSUER RISK
The value of  securities  held by the Fund may  decline  for a number of reasons
that directly relate to the issuer,  such as management  performance,  financial
leverage and reduced demand for the issuer's goods and services.

EQUITY RISK
Under normal  market  conditions,  the Fund will invest its managed  assets in a
diversified portfolio of common stocks. Therefore, a principal risk of investing
in the Fund is equity risk. Equity risk is the risk that the value of securities
held by the Fund  will  fall  due to  general  market  or  economic  conditions,
perceptions  regarding the industries in which the issuers of securities held by
the Fund  participate,  and the  particular  circumstances  and  performance  of
particular  companies  whose  securities the Fund holds.  Although common stocks
have historically generated higher average returns than fixed-income  securities
over the long term,  common  stocks  also have  experienced  significantly  more
volatility in returns. An adverse event, such as an unfavorable earnings report,
may depress the value of equity  securities  of an issuer held by the Fund;  the
price of common  stock of an issuer  may be  particularly  sensitive  to general
movements  in the stock  market;  or a drop in the stock  market may depress the
price of most or all of the common stocks held by the Fund. In addition,  common
stock of an issuer in the Fund's  portfolio  may  decline in price if the issuer
fails to make anticipated  dividend payments because,  among other reasons,  the
issuer of the security experiences a decline in its financial condition.  Common
stocks in which the Fund will invest are structurally  subordinated to preferred
stocks,  bonds and other debt instruments in a company's capital  structure,  in
terms of priority to corporate income,  and therefore will be subject to greater
dividend  risk  than  preferred  stocks  or debt  instruments  of such  issuers.
Finally,  common stock prices may be sensitive to rising  interest rates, as the
costs of capital rise and borrowing costs increase.

RISKS OF INVESTING IN MID-CAP COMPANIES
The Fund may make investments in stocks of companies whose market capitalization
is considered  middle sized or "mid-cap."  Mid-cap  companies often are newer or
less  established  companies  than  larger  companies.  Investments  in  mid-cap
companies carry  additional risks because earnings of these companies tend to be
less predictable;  they often have limited product lines, markets,  distribution
channels or financial  resources;  and the  management of such  companies may be
dependent  upon  one  or a few  key  people.  The  market  movements  of  equity
securities  of mid-cap  companies  may be more abrupt or erratic than the market
movements of equity  securities  of larger,  more  established  companies or the
stock market in general.  Historically,  mid-cap  companies  have sometimes gone

                                       27

<PAGE>

through extended periods when they did not perform as well as larger  companies.
In addition,  equity securities of mid-cap  companies  generally are less liquid
than those of larger  companies.  This  means  that the Fund could have  greater
difficulty  selling  such  securities  at the time and price that the Fund would
like.

RISKS OF SELLING INDEX CALL OPTIONS
Under normal market conditions, a substantial portion of the Fund's common stock
investments  will be subject to written index call options.  The purchaser of an
index call  option has the right to any  appreciation  in the value of the index
over the  exercise  price of the call  option  as of the  valuation  date of the
option. Because their exercise is settled in cash, sellers of index call options
such as the Fund  cannot  provide  in  advance  for their  potential  settlement
obligations by acquiring and holding the underlying securities. The Fund intends
to  mitigate  the  risks of its  written  index  call  positions  by  holding  a
diversified  portfolio  of stocks  similar  to those of the  indices on which it
writes  call  options.  However,  the Fund does not intend to acquire and hold a
portfolio  of exactly  the same  stocks as the  indices on which it writes  call
options.  Due to tax  considerations,  the Fund  intends  to limit  the  overlap
between its stock  holdings (and any subset  thereof) and each index on which it
has  outstanding  options  positions to less than 70% on an ongoing  basis.  The
Fund's stock holdings may include stocks not included in the indices on which it
writes  call  options.  Consequently,  the Fund  also  bears  the risk  that the
performance of the Fund's stock  portfolio will vary from the performance of the
indices on which it writes call  options.  For  example,  the Fund will suffer a
loss if the S&P 500  appreciates  substantially  above the exercise price of S&P
500 call options  written by the Fund while the  securities  held by the Fund in
the aggregate  fail to appreciate as much or decline in value of the life of the
written  option.  Index  options  written  by the Fund will be priced on a daily
basis.  Their  value  will be  affected  primarily  by  changes in the price and
dividend rates of the underlying common stocks in such index,  changes in actual
or perceived  volatility  of such index and the  remaining  time to the options'
expiration.  The trading  price of index call  options  will also be affected by
liquidity considerations and the balance of purchase and sale orders.

A decision as to whether,  when and how to use options  involves the exercise of
skill and judgment,  and even a well-conceived and well-executed options program
may be adversely affected by market behavior or unexpected events. As the writer
of index call  options,  the Fund will  forgo,  during the  option's  life,  the
opportunity to profit from increases in the value of the applicable  index above
the sum of the  option  premium  received  and the  exercise  price  of the call
option, but retains the risk of loss, minus the option premium received,  should
the value of the applicable index decline. When a call option is exercised,  the
Fund will be required to deliver an amount of cash  determined  by the excess of
the value of the  applicable  index at contract  termination  over the  exercise
price of the option.  Thus,  the exercise of index call options sold by the Fund
may  require  the  Fund  to  sell  portfolio  securities  to  generate  cash  at
inopportune times or for unattractive prices.

To the extent that the Fund writes options on indices based upon foreign stocks,
the Fund generally intends to sell options on broad-based foreign country and/or
regional  stock  indices  that are  listed  for  trading  in the  U.S.  or which
otherwise  qualify as "section 1256 contracts."  Options on foreign indices that
are listed for trading in the U.S. or which  otherwise  qualify as "section 1256
contracts" may trade in substantially lower volumes and with substantially wider
bid-ask spreads than other options contracts on the same or similar indices that
trade on other markets  outside the U.S. To implement  its options  program most
effectively,  the Fund may sell index  options  that do not  qualify as "section
1256  contracts."  Gain or loss on index options not qualifying as "section 1256
contracts"  would be  realized  upon  disposition,  lapse or  settlement  of the
positions and would be treated as short-term gain or loss.

The trading  price of options may be  adversely  affected if the market for such
options becomes less liquid or smaller.  The Fund may close out a call option by
buying the option instead of letting it expire or be exercised.  There can be no
assurance  that a liquid  market  will  exist when the Fund seeks to close out a
call option  position by buying the option.  Reasons for the absence of a liquid
secondary  market  on an  exchange  include  the  following:  (i)  there  may be
insufficient  trading  interest in certain  options;  (ii)  restrictions  may be
imposed by an exchange on opening  transactions or closing transactions or both;
(iii)  trading  halts,  suspensions  or other  restrictions  may be imposed with
respect to particular  classes or series of options;  (iv) unusual or unforeseen
circumstances may interrupt normal operations on an exchange; (v) the facilities
of an exchange or the Options  Clearing  Corporation  (the "OCC") may not at all
times  be  adequate  to  handle  current  trading  volume;  or (vi)  one or more
exchanges  could,  for  economic or other  reasons,  decide or be  compelled  to
discontinue the trading of options (or a particular  class or series of options)
at some future date. If trading were discontinued,  the secondary market on that
exchange (or in that class or series of options) would cease to exist.  However,
outstanding options on that exchange that had been issued by the OCC as a result
of trades on that exchange would  continue to be exercisable in accordance  with
their terms.

The hours of trading  for  options  may not  conform to the hours  during  which
common  stocks  held by the Fund are  traded.  To the  extent  that the  options
markets  close  before the markets for  securities,  significant  price and rate
movements can take place in the  securities  markets that would not be reflected
concurrently  in the options  markets.  index call  options are marked to market
daily and their value is affected by changes in the value and dividend  rates of
the securities  represented in the underlying index,  changes in interest rates,
changes in the actual or perceived  volatility of the  associated  index and the
remaining time to the options' expiration,  as well as trading conditions in the
options market.

TAX RISK
Reference  is made to "Federal  Income Tax Matters"  for an  explanation  of the
federal income tax  consequences  and attendant  risks of investing in the Fund.
Although the Fund seeks to minimize and defer the federal  income taxes incurred
by Common  Shareholders in connection with their  investment in the Fund,  there
can be no assurance that it will be successful in this regard. The tax treatment
and  characterization  of the Fund's  distributions  may change over time due to
changes in the Fund's mix of  investment  returns and changes in the federal tax
laws, regulations and administrative and judicial interpretations. Distributions
paid on the  Common  Shares  may be  characterized  variously  as  non-qualified
dividends  (taxable at ordinary income rates),  qualified  dividends and capital
gains  dividends  (each  taxable at long-term  capital gains rates) or return of
capital (not currently taxable). The ultimate tax characterization of the Fund's
distributions  made in a calendar year may not finally be determined until after
the end of that calendar year.  Distributions  to a Common  Shareholder that are
return of capital  will be tax free to the  amount of the  Common  Shareholder's
current tax basis in his or her Common  Shares,  with any  distribution  amounts
exceeding  such basis treated as capital gain on a deemed sale of Common Shares.
Common  Shareholders  are required to reduce their tax basis in Common Shares by
the  amount  of  tax-free  return of  capital  distributions  received,  thereby
increasing the amount of capital gain (or decreasing the amount of capital loss)
to be recognized  upon a later  disposition of the Common  Shares.  In order for
Fund  distributions  of  qualified  dividend  income to be taxable at  favorable
long-term capital gains rates, a Common Shareholder must meet certain prescribed
holding period and other  requirements with respect to his or her Common Shares.
If positions held by the Fund were treated as "straddles" for federal income tax
purposes,  dividends on such positions would not constitute  qualified  dividend
income subject to favorable income tax treatment. Gain or loss on positions in a
straddle  are  subject  to  special  (and  generally  disadvantageous)  rules as
described under "Federal Income Tax Matters."

DISTRIBUTION RISK
The quarterly  distributions Common Shareholders will receive from the Fund will
be sourced from the Fund's net option  premiums,  net  realized  and  unrealized
gains on stock investments,  and dividends and interest income, after payment of
Fund expenses.  The Fund's cash available for  distribution may vary widely over
the short- and long-term.  If stock market volatility  declines and,  therefore,
stock prices decline,  the level of premiums from writing index call options and
the  amounts  available  for  distribution  from  options  activity  will likely
decrease as well.  Payments to close  written call  options will reduce  amounts
available for distribution from call option premiums received.  Net realized and
unrealized gains on the Fund's stock investments will be determined primarily by
the direction and movement of the U.S. stock market (and the  particular  stocks
held).  Dividends  on  common  stocks  are not  fixed  but are  declared  at the
discretion of the issuer's  board of directors.  There can be no assurance  that
quarterly  distributions  paid by the Fund to the  Common  Shareholders  will be
maintained at initial levels or increase over time.

FOREIGN SECURITY RISK
The value of foreign  securities  is  affected  by changes  in  currency  rates,
foreign tax laws  (including  withholding  tax),  government  policies  (in this
country or abroad), relations between nations and trading, settlement, custodial
and other operational risks. In addition, the costs of investing abroad (such as
foreign brokerage costs, custodial expenses and other fees) are generally higher
than in the United States,  and foreign  securities  markets may be less liquid,
more volatile and less subject to governmental  supervision  than markets in the
United States.  Foreign  investments also could be affected by other factors not
present in the United States, including expropriation of assets, armed conflict,
confiscatory taxation,  lack of uniform accounting and auditing standards,  less
publicly available financial and other information and potential difficulties in
enforcing  contractual  obligations or repatriating  capital invested in foreign
countries. As an alternative to holding foreign-traded  securities, the Fund may
invest in dollar-denominated  securities of foreign companies that trade on U.S.
exchanges or in the U.S. over-the-counter market (including depositary receipts,
which evidence ownership in underlying foreign  securities).  Since the Fund may
invest in securities  denominated  or quoted in  currencies  other than the U.S.
dollar,  the Fund will be affected by changes in foreign currency exchange rates
(and exchange control regulations) which affect the value of investments held by
the  Fund  and the  accrued  income  and  appreciation  or  depreciation  of the
investments in U.S. dollars. Changes in foreign currency exchange rates relative
to the U.S.  dollar  will  affect the U.S.  dollar  value of the  Fund's  assets
denominated in that currency and the Fund's return on such assets as well as any
temporary  uninvested  reserves  in bank  deposits  in  foreign  currencies.  In
addition,  the Fund will incur  costs in  connection  with  conversions  between
various currencies.  Foreign securities may not be eligible for the reduced rate
of taxation applicable to qualified dividend income.

Because foreign  companies are not subject to uniform  accounting,  auditing and
financial reporting  standards,  practices and requirements  comparable to those
applicable to U.S. companies,  there may be less publicly available  information
about a foreign company than about a domestic  company.  Volume and liquidity in
most foreign  markets are less than in the United States and  securities of some
foreign  companies  are  less  liquid  and  more  volatile  than  securities  of
comparable U.S.  companies.  There is generally less government  supervision and
regulation of securities exchanges,  broker-dealers and listed companies than in
the United States.  Mail service between the United States and foreign countries
may be slower or less reliable than within the United  States,  thus  increasing
the risk of  delayed  settlements  of  portfolio  transactions  for,  or loss of
certificates of, portfolio  securities.  Payment for securities  before delivery
may be required. In addition,  with respect to certain foreign countries,  there
is the  possibility of  expropriation  or  confiscatory  taxation,  political or
social instability,  or diplomatic developments,  which could affect investments
in those countries.  Moreover, individual foreign economies may differ favorably

                                       29

<PAGE>

or  unfavorably  from the U.S.  economy  in such  respects  as  growth  of gross
national   product,   rate  of   inflation,   capital   reinvestment,   resource
self-sufficiency  and balance of payments position.  Foreign securities markets,
while  growing in volume and  sophistication,  are generally not as developed as
those in the United States, and securities of some foreign issuers (particularly
those located in developing countries) may be less liquid and more volatile than
securities of comparable U.S. companies.

EMERGING MARKET SECURITY RISK
The Fund may  invest  up to 5% of its  total  assets in  securities  of  issuers
located in emerging markets.  The risks of foreign  investments  described above
apply  to an even  greater  extent  to  investments  in  emerging  markets.  The
securities markets of emerging countries are generally smaller,  less developed,
less liquid,  and more volatile than the securities markets of the United States
and developed  foreign  markets.  Disclosure  and  regulatory  standards in many
respects are less  stringent  than in the United  States and  developed  foreign
markets.  There  also  may be a lower  level of  monitoring  and  regulation  of
securities  markets in emerging market countries and the activities of investors
in such  markets and  enforcement  of existing  regulations  has been  extremely
limited.  Many emerging  countries  have  experienced  substantial,  and in some
periods  extremely high, rates of inflation for many years.  Inflation and rapid
fluctuations  in inflation rates have had and may continue to have very negative
effects on the economies and securities  markets of certain emerging  countries.
Economies in emerging markets generally are heavily dependent upon international
trade and,  accordingly,  have been and may continue to be affected adversely by
trade barriers,  exchange  controls,  managed  adjustments in relative  currency
values, and other protectionist  measures imposed or negotiated by the countries
with which they trade.  The economies of these  countries also have been and may
continue to be adversely  affected by economic  conditions  in the  countries in
which they trade.  The economies of countries with emerging  markets may also be
predominantly  based on only a few  industries  or  dependent  on revenues  from
particular commodities. In addition, custodial services and other costs relating
to investment in foreign markets may be more expensive in emerging  markets than
in many  developed  foreign  markets,  which could reduce the Fund's income from
such securities.

In many cases, governments of emerging countries continue to exercise
significant control over their economies, and government actions relative to the
economy, as well as economic developments generally, may affect the Fund's
investments in those countries. In addition, there is a heightened possibility
of expropriation or confiscatory taxation, imposition of withholding taxes on
interest payments, or other similar developments that could affect investments
in those countries. There can be no assurance that adverse political changes
will not cause the Fund to suffer a loss of any or all of its investments.

INTEREST RATE RISK
The  premiums  from  writing  index  call  options  and  amounts  available  for
distribution from the Fund's options activity may decrease in declining interest
rate environments.  The value of the Fund's common stock investments may also be
influenced by changes in interest  rates.  Higher  yielding stocks and stocks of
issuers whose businesses are substantially affected by changes in interest rates
may be particularly sensitive to interest rate risk.

DERIVATIVES RISK
In  addition to writing  index call  options,  the risks of which are  described
above,  the Fund may  invest up to 20% of its total  assets in other  derivative
investments  acquired for hedging,  risk  management  and  investment  purposes.
Derivative  transactions  including options on securities and securities indices
and other  transactions in which the Fund may engage (such as futures  contracts
and options  thereon,  swaps and short  sales) may subject the Fund to increased
risk of principal loss due to unexpected  movements in stock prices,  changes in
stock volatility levels and interest rates, and imperfect  correlations  between
the Fund's  securities  holdings and indices upon which derivative  transactions
are  based.  The Fund also will be subject  to credit  risk with  respect to the
counterparties to any over-the-counter derivatives contracts entered into by the
Fund.  If a  counterparty  becomes  bankrupt or  otherwise  fails to perform its
obligations under a derivative contract due to financial difficulties,  the Fund
may experience significant delays in obtaining any recovery under the derivative
contract in a bankruptcy or other reorganization proceeding. The Fund may obtain
only a limited  recovery or no recovery in such  circumstances.  Derivatives may
disproportionately  increase losses and have a potentially large negative impact
on the Funds' performance.

LIQUIDITY RISK
The Fund may invest up to 15% of its total assets in securities  for which there
is no readily available trading market or which are otherwise illiquid. The Fund
may not be able readily to dispose of such securities at prices that approximate
those at which the Fund  could  sell such  securities  if they were more  widely
traded  and,  as a result of such  illiquidity,  the Fund may have to sell other
investments  or engage in borrowing  transactions  if necessary to raise cash to
meet its obligations. In addition, the limited liquidity could affect the market
price of the securities, thereby adversely affecting the Fund's net asset value,
and at times may make the disposition of securities infeasible.

INFLATION RISK

                                       30

<PAGE>

Inflation risk is the risk that the purchasing power of assets or income from
investment will be worth less in the future as inflation decreases the value of
money. As inflation increases, the real value of the Common Shares and
distributions thereon can decline.

MARKET PRICE OF COMMON SHARES
The  shares of  closed-end  management  investment  companies  often  trade at a
discount  from their net asset value,  and the Fund's Common Shares may likewise
trade at a discount  from net asset value.  The net asset value per Common Share
will be reduced  immediately  following  this offering by the sales load and the
amount of offering  expenses  paid by the Fund.  The trading price of the Fund's
Common  Shares  may be less than the  public  offering  price.  The risk will be
greater for investors who sell their Common Shares in a relatively  short period
after completion of the public offering.

FINANCIAL LEVERAGE RISK
Although the Fund has no current  intention to do so, the Fund is authorized and
reserves the flexibility to utilize  leverage  through the issuance of preferred
shares  and/or  borrowings,  including the issuance of debt  securities.  In the
event that the Fund  determines  in the future to utilize  investment  leverage,
there can be no assurance  that such a leveraging  strategy  will be  successful
during any period in which it is  employed.  Leverage  creates  risks for Common
Shareholders,  including the likelihood of greater volatility of net asset value
and  market  price of the  Common  Shares  and the  risk  that  fluctuations  in
distribution  rates on any preferred  shares or  fluctuations in borrowing costs
may affect the return to Common Shareholders.  To the extent the returns derived
from securities  purchased with proceeds received from leverage exceeds the cost
of leverage,  the Fund's  distributions  may be greater than if leverage had not
been used.  Conversely,  if the returns from the securities  purchased with such
proceeds is not sufficient to cover the cost of leverage,  the amount  available
for  distribution to Common  Shareholders  will be less than if leverage had not
been  used.  In the  latter  case,  Eaton  Vance,  in  its  best  judgment,  may
nevertheless  determine  to maintain the Fund's  leveraged  position if it deems
such action to be  appropriate.  The costs of an offering  of  preferred  shares
and/or  a  borrowing   program  would  be  borne  by  Common   Shareholders  and
consequently  would  result  in a  reduction  of the net  asset  value of Common
Shares. In addition, the fee paid to Eaton Vance will be calculated on the basis
of the Fund's average daily gross assets,  including  proceeds from the issuance
of preferred shares and/or  borrowings,  so the fee will be higher when leverage
is  utilized.  In this  regard,  holders  of  preferred  shares  do not bear the
investment  advisory fee. Rather,  Common  Shareholders  bear the portion of the
investment  advisory fee  attributable to the assets purchased with the proceeds
of the preferred shares offering.

MANAGEMENT RISK
The Fund is  subject  to  management  risk  because  it is an  actively  managed
portfolio. Eaton Vance, Rampart and the individual portfolio managers invest the
assets  of the  Fund  as  they  deem  appropriate  in  implementing  the  Fund's
investment  strategy.  Accordingly,  the  success of the Fund  depends  upon the
investment  skills and  analytical  abilities  of Eaton  Vance,  Rampart and the
individual  portfolio  managers to develop  and  actively  implement  investment
strategies that achieve the Fund's investment objectives.  There is no assurance
that  Eaton  Vance,  Rampart  and  the  individual  portfolio  managers  will be
successful  in  developing  and  implementing  the Fund's  investment  strategy.
Subjective  decisions made by Eaton Vance,  Rampart and the individual portfolio
managers may cause the Fund to incur losses or to miss profit  opportunities  on
which it could otherwise have capitalized.

MARKET DISRUPTION
The  terrorist  attacks  in the  United  States  on  September  11,  2001  had a
disruptive effect on the securities markets. These terrorist attacks and related
events,  including the war in Iraq, its aftermath,  and continuing occupation of
Iraq by  coalition  forces,  have  raised  short-term  market  risk and may have
adverse  long-term  effects on U.S. and world  economies and markets.  A similar
disruption  of the financial  markets could impact  trading in common stocks and
stock options, interest rates, credit risk, inflation and other factors relating
to the Common  Shares.  The Fund cannot predict the effects of similar events in
the future on the U.S. economy and securities markets.

ANTI-TAKEOVER PROVISIONS
The Fund's  Agreement and  Declaration of Trust includes  provisions  that could
limit the ability of other persons or entities to acquire control of the Fund or
to change the  composition  of its Board.  These  provisions  may deprive Common
Shareholders of  opportunities to sell their Common Shares at a premium over the
then current  market price of the Common  Shares.  See  "Description  of Capital
Structure -- Anti-Takeover Provisions in the Declaration of Trust."

MANAGEMENT OF THE FUND

BOARD OF TRUSTEES

                                       31

<PAGE>

The  management  of the  Fund,  including  general  supervision  of  the  duties
performed by the Adviser under the Advisory Agreement (as defined below) and the
Sub-Adviser  under  the  Sub-Advisory  Agreement  (as  defined  below),  is  the
responsibility  of the  Fund's  Board  under  the  laws of The  Commonwealth  of
Massachusetts and the 1940 Act.

THE ADVISER

Eaton Vance acts as the Fund's investment  adviser under an Investment  Advisory
Agreement (the "Advisory Agreement").  The Adviser's principal office is located
at The Eaton Vance Building,  255 State Street,  Boston, MA 02109.  Eaton Vance,
its  affiliates  and   predecessor   companies  have  been  managing  assets  of
individuals  and  institutions  since 1924 and of  investment  funds since 1931.
Eaton Vance (or its affiliates)  currently  serves as the investment  adviser to
investment funds and various individual and institutional  clients with combined
assets  under  management  of  approximately  $106  billion as of July 31, 2005,
including approximately $64.6 billion in equity assets. Eaton Vance is a direct,
wholly-owned  subsidiary of Eaton Vance Corp., a publicly-held  holding company,
which through its  subsidiaries and affiliates  engages  primarily in investment
management, administration and marketing activities.

Under  the  general  supervision  of the  Fund's  Board,  Eaton  Vance  will  be
responsible for managing the Fund's overall investment program,  structuring and
managing the Fund's common stock portfolio,  including  tax-loss  harvesting and
other tax-management  techniques,  providing research support to the Sub-Adviser
and supervising the performance of the Sub-Adviser. As described below under the
caption "The Sub-Adviser,"  Rampart will responsible for providing advice on and
execution of the Fund's options  strategy.  The Adviser will furnish to the Fund
investment advice and office  facilities,  equipment and personnel for servicing
the  investments  of the Fund.  The Adviser  will  compensate  all  Trustees and
officers  of the Fund who are  members  of the  Adviser's  organization  and who
render  investment  services  to the Fund,  and will also  compensate  all other
Adviser  personnel who provide research and investment  services to the Fund. In
return for these services,  facilities and payments,  the Fund has agreed to pay
the Adviser as  compensation  under the Advisory  Agreement an annual fee in the
amount of [ ]% of the average  daily gross  assets of the Fund.  For purposes of
the Advisory Agreement and the Sub-Advisory Agreement,  gross assets of the Fund
means total assets of the Fund,  including any form of investment  leverage that
the Fund may in the future  determine  to utilize,  minus all  accrued  expenses
incurred in the normal course of operations,  but not excluding any  liabilities
or obligations  attributable to any future investment  leverage obtained through
(i) indebtedness of any type (including, without limitation, borrowing through a
credit facility/commercial paper program or the issuance debt securities),  (ii)
the issuance of preferred shares or other similar preference  securities,  (iii)
the reinvestment of collateral received for securities loaned in accordance with
the Fund's  investment  objectives  and  policies  and/or (iv) any other  means.
During any future periods in which the Fund is using leverage,  the fees paid to
Eaton Vance for investment advisory services will be higher than if the Fund did
not use leverage  because the fees paid will be  calculated  on the basis of the
Fund's  gross  assets,  including  proceeds  from  any  borrowings  and from the
issuance of preferred shares.

Walter  A. Row and other  Eaton  Vance  investment  professionals  comprise  the
investment team responsible for managing the Fund's overall investment  program,
structuring  and  managing  the Fund's  common stock  portfolio,  providing  the
Sub-Adviser  with  research  support  and  supervising  the  performance  of the
Sub-Adviser.  Mr. Row is the portfolio  manager  responsible  for the day-to-day
management  of  Eaton  Vance's  responsibilities  with  respect  to  the  Fund's
investment portfolio.

Mr. Row is a Vice President and the Director of Equity  Research at Eaton Vance.
He is a member of Eaton Vance's Equity  Strategy  Committee,  manages five other
Eaton Vance registered  closed-end  investment  companies that utilize buy-write
strategies and has been an equity  analyst and member of Eaton's  Vance's equity
research team since 1996.

THE SUB-ADVISER

Eaton Vance has engaged Rampart to serve as a sub-adviser to the Fund to provide
advice on and  execution of the Fund's  options  strategy.  Rampart's  principal
office is located  at One  International  Place,  Boston,  Massachusetts  02110.
Founded in 1983,  Rampart provides  customized  investment  management  services
within  its core  competency  in options  program  management  to a spectrum  of
institutional,  high net worth and investment  company clients.  Rampart managed
approximately $4.48 billion in assets as of July 31, 2005.

Ronald  M.  Egalka is the  portfolio  manager  at  Rampart  responsible  for the
development and  implementation of the options strategy utilized in managing the
Fund.

Mr.  Egalka is  President  and CEO of Rampart.  He is also  President of Rampart
Securities,  Inc., an affiliate of Rampart and a NASD member broker/dealer.  Mr.
Egalka oversees the development and implementation of investment  strategies and
tactics  for  Rampart.  Mr.  Egalka  is  responsible  for  the  development  and
implementation  of the  options  strategies  utilized by three other Eaton Vance
closed-end investment companies.

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<PAGE>

Under the terms of the  Sub-Advisory  Agreement (the  "Sub-Advisory  Agreement")
between Eaton Vance and Rampart, Eaton Vance (and not the Fund) will pay Rampart
a fee at an annual rate equal to [ ]% of the average  daily gross  assets of the
Fund.  Pursuant  to the  terms of the  Advisory  Agreement,  Eaton  Vance,  upon
approval by the Board, may terminate the Sub-Advisory  Agreement and Eaton Vance
may assume full  responsibility for the services provided by Rampart without the
need for approval by shareholders of the Fund.

The Fund, the Adviser and the Sub-Adviser  have adopted codes of ethics relating
to personal securities transactions (the "Codes of Ethics"). The Codes of Ethics
permit  Adviser and  Sub-Adviser  personnel to invest in  securities  (including
securities  that may be purchased  or held by the Fund) for their own  accounts,
subject  to  certain   pre-clearance,   reporting  and  other  restrictions  and
procedures contained in such Codes of Ethics.

ADDITIONAL INFORMATION REGARDING PORTFOLIO MANAGERS

The Statement of Additional  Information  provides additional  information about
the portfolio  managers'  compensation,  other accounts managed by the portfolio
managers, and the portfolio managers' ownership of securities in the Fund.

THE ADMINISTRATOR

Eaton  Vance  serves  as  administrator  of the  Fund.  Under an  Administration
Agreement  with  the  Fund  (the  "Administration  Agreement"),  Eaton  Vance is
responsible  for  managing  the  business  affairs  of the Fund,  subject to the
supervision of the Fund's Board. Eaton Vance will furnish to the Fund all office
facilities,  equipment and personnel for  administering the affairs of the Fund.
Eaton Vance's  administrative  services include  recordkeeping,  preparation and
filing of documents  required to comply with federal and state  securities laws,
supervising the activities of the Fund's custodian and transfer agent, providing
assistance in connection with the Board and  shareholders'  meetings,  providing
service  in  connection  with any  repurchase  offers  and other  administrative
services  necessary  to  conduct  the Fund's  business.  Eaton  Vance  currently
receives no compensation for providing  administrative  services to the Fund. In
addition  to the  management  fee,  the Fund pays all costs and  expenses of its
operation,  including  compensation of its Trustees (other than those affiliated
with the Adviser), custodial expenses, dividend disbursing expenses, legal fees,
expenses of  independent  auditors,  expenses of preparing  Fund  documents  and
reports to governmental agencies, and taxes and filing or other fees, if any.

DISTRIBUTIONS

Commencing with the Fund's first distribution,  the Fund intends to make regular
quarterly  distributions  to Common  Shareholders  sourced  from the Fund's cash
available for distribution.  "Cash available for  distribution"  will consist of
the Fund's net option  premiums,  net  realized  and  unrealized  gains on stock
investments,  and dividends and interest income, after payment of Fund expenses.
The Fund's  distribution  rate may be adjusted from time to time.  The Board may
modify this  distribution  policy at any time without  obtaining the approval of
Common  Shareholders.  The  initial  distribution  is  expected  to be  declared
approximately 75 days and paid approximately 90 to 120 days after the completion
of this offering, depending on market conditions.

The Fund's annual  distributions  will likely differ from annual net  investment
income.  The  investment  income of the Fund will  consist of all  dividend  and
interest  income  accrued on  portfolio  investments,  short-term  capital  gain
(including  short-term  gains  on  option  positions  and  gains  on the sale of
portfolio  investments held for one year or less) in excess of long-term capital
loss and income from  certain  hedging  transactions,  less all  expenses of the
Fund.  Expenses  of the Fund will be accrued  each day.  To the extent that that
Fund's  net  investment   income  for  any  year  exceeds  the  total  quarterly
distributions paid during the year, the Fund will make a special distribution at
or near year-end of such excess amount as may be required. Over time, all of the
Fund's investment company taxable income will be distributed.

At least annually, the Fund intends to distribute any net capital gain (which is
the excess of net long-term  capital gain over net short-term  capital loss) or,
alternatively, to retain all or a portion of the year's net capital gain and pay
federal  income tax on the retained  gain.  As provided  under  federal tax law,
Common  Shareholders  of record as of the end of the  Fund's  taxable  year will
include  their  attributable  share of the retained gain in their income for the
year as a long-term capital gain, and will be entitled to a tax credit or refund
for the tax paid on their behalf by the Fund.  The Fund may treat the cash value
of tax credit and refund amounts in connection with retained  capital gains as a
substitute for equivalent cash distributions.

If, for any calendar  year, as discussed  above,  the total  distributions  made
exceed the Fund's net  investment  taxable  income and net  capital  gains,  the
excess  generally will be treated as a tax-free return of capital to each Common
Shareholder  (up to the amount of the Common  Shareholder's  basis in his or her
Common Shares) and thereafter as gain from the sale of Common Shares. The amount
treated as a tax-free  return of capital  will  reduce the Common  Shareholder's
adjusted  basis  in his or her  Common  Shares,  thereby  increasing  his or her

                                       33

<PAGE>

potential gain or reducing his or her potential  loss on the subsequent  sale of
his or her Common  Shares.  Distributions  in any year may include a substantial
return of  capital  component.  Under the 1940 Act,  for any  distribution  that
includes  amounts  from sources  other than net income,  the Fund is required to
provide Common Shareholders a written statement regarding the components of such
distribution.  Such a statement will be provided at the time of any distribution
believed to include any such amounts.

To permit the Fund to maintain  more stable  distributions,  distribution  rates
will be based on projected annual cash available for distribution.  As a result,
the  distributions  paid by the Fund for any  particular  quarter may be more or
less than the  amount of cash  available  for  distribution  for that  quarterly
period. In certain circumstances,  the Fund may be required to sell a portion of
its investment  portfolio to fund  distributions.  Distributions will reduce the
Common Shares' net asset value.

Common  Shareholders  may elect  automatically  to reinvest some or all of their
distributions in additional Common Shares under the Fund's dividend reinvestment
plan. See "Dividend Reinvestment Plan."

The Fund has  applied  for an order  from  the  Securities  Exchange  Commission
granting  it an  exemption  from  Section  19(b) of the 1940 Act and Rule  19b-1
thereunder to permit the Fund to include realized  long-term  capital gains as a
part of its regular  distributions to Common  Shareholders  more frequently than
would  otherwise be permitted by the 1940 Act (generally once per taxable year).
In the event that such an exemptive  order is obtained,  the Fund will  consider
increasing  the frequency of its regular  distributions  to Common  Shareholders
from  quarterly to monthly.  The Fund does not intend to designate more than the
permitted  number  of  capital  gain  distributions  until it  receives  such an
exemptive order. The staff of the Securities  Exchange  Commission has indicated
that it has suspended the  processing of exemptive  applications  requesting the
type of relief referenced  above,  pending review by the staff of the results of
an  industry-wide  Securities  Exchange  Commission  inspection  focusing on the
dividend practices of closed-end investment companies. There can be no assurance
as to when that review might be completed or whether, following that review, the
staff would process such  applications or grant such relief. As a result of this
development,  the Fund has no current  expectation that it will be in a position
to include long-term capital gains in Fund distributions more frequently than is
permitted  under the 1940 Act,  thus  leaving the Fund with the  possibility  of
variability in  distributions  (and their tax  attributes)  as discussed  above.
Failure to receive  exemptive  relief  would  increase  the  likelihood  that in
certain  taxable  years the Fund would retain all or a portion of the year's net
capital gain and pay tax on the retained  gain as described  above.  The Adviser
does not believe that retaining  capital gains and paying tax thereon would have
a material adverse affect on the Fund or the Common Shareholders.

FEDERAL INCOME TAX MATTERS

The following discussion of federal income tax matters is based on the advice of
Kirkpatrick  & Lockhart  Nicholson  Graham  LLP,  counsel to the Fund.  The Fund
intends  to  elect  to be  treated  and to  qualify  each  year  as a  regulated
investment  company  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  and net
short-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 regulated  investment  company  status and to avoid paying
federal  income or excise tax thereon.  To the extent it qualifies for treatment
as a regulated investment company and satisfies the above-mentioned distribution
requirements,  the Fund will not be subject to federal income tax on income paid
to its shareholders in the form of dividends or capital gains distributions.

At least annually, the Fund intends to distribute any net capital gain (which is
the excess of net long-term  capital gain over net short-term  capital loss) or,
alternatively, to retain all or a portion of the year's net capital gain and pay
federal  income tax on the retained  gain.  As provided  under  federal tax law,
Common  Shareholders  of record as of the end of the  Fund's  taxable  year will
include  their  attributable  share of the retained gain in their income for the
year as  long-term  capital  gain  (regardless  of holding  period in the Common
Shares),  and will be  entitled  to a tax  credit or refund  for the tax paid on
their behalf by the Fund. Common Shareholders of record for the retained capital
gain will also be entitled to increase their tax basis in their Common Shares by
65 percent of the allocated gain.  Distributions  of the Fund's net capital gain
("capital gain  distributions"),  if any, are taxable to Common  Shareholders as
long-term capital gain, regardless of their holding period in the Common Shares.
Distributions  of the Fund's net  realized  short-term  gains will be taxable as
ordinary income.

If, for any  calendar  year,  the Fund's total  distributions  exceed the Fund's
current and  accumulated  earnings and profits,  the excess will be treated as a
tax-free  return of capital to each Common  Shareholder (up to the amount of the
Common  Shareholder's  basis in his or her Common Shares) and thereafter as gain
from the sale of Common Shares (assuming the Common Shares are held as a capital
asset).  The  amount  treated as a tax-free  return of capital  will  reduce the
Common  Shareholder's  adjusted  basis  in  his or her  Common  Shares,  thereby
increasing  his or her potential  gain or reducing his or her potential  loss on
the subsequent sale or other disposition of his or her Common Shares.  See below
for a summary of the maximum tax rates  applicable  to  long-term  capital  gain
(including  capital gain  distributions).  A  corporation  that owns Fund shares
generally will not be entitled to the dividends  received deduction with respect

                                       34

<PAGE>

to all (or any prescribed  percentage) of the distributions it receives from the
Fund. Fund  distributions  that are  attributable  to qualified  dividend income
received by the Fund from certain domestic corporations may be designated by the
Fund as being eligible for the dividends received deduction.

If the Fund does not qualify as a RIC for any taxable year,  the Fund's  taxable
income will be subject to corporate  income taxes,  and all  distributions  from
earnings and profits, including distributions of net capital gain (if any), will
be taxable to the shareholder as ordinary income.  Such distributions  generally
would be eligible (i) to be treated as qualified  dividend income in the case of
individual  and  other  noncorporate  shareholders  and (ii)  for the  dividends
received deduction ("DRD") in the case of corporate  shareholders.  In addition,
in order to  requalify  for  taxation  as a RIC,  the  Fund may be  required  to
recognize unrealized gains, pay substantial taxes and interest, and make certain
distributions.

Certain of the Fund's  investment  practices  are subject to special and complex
federal  income  tax  provisions  that may,  among  other  things,  (i)  convert
dividends  that  would  otherwise  constitute  qualified  dividend  income  into
ordinary  income,  (ii) treat dividends that would otherwise be eligible for the
corporate  dividends received deduction as ineligible for such treatment,  (iii)
disallow,  suspend  or  otherwise  limit  the  allowance  of  certain  losses or
deductions,  (iv) convert long-term capital gain into short-term capital gain or
ordinary  income,  (v) convert an ordinary loss or deduction into a capital loss
(the  deductibility of which is more limited),  (vi) cause the Fund to recognize
income or gain without a corresponding  receipt of cash,  (vii) adversely affect
the time as to when a purchase or sale of stock or securities is deemed to occur
and (viii)  adversely alter the  characterization  of certain complex  financial
transactions.  While it may not always be  successful in doing so, the Fund will
seek to avoid  or  minimize  any  adverse  tax  consequences  of its  investment
practices.

For the Fund's index call options that qualify as "section 1256 contracts," Code
Section  1256  generally  will  require any gain or loss arising from the lapse,
closing out or exercise of such positions to be treated as 60% long-term and 40%
short-term  capital  gain or  loss.  In  addition,  the Fund  generally  will be
required to "mark to market"  (i.e.,  treat as sold for fair market  value) each
outstanding  index  option  position at the close of each  taxable  year (and on
October 31 of each year for excise tax  purposes).  If a "section 1256 contract"
held by the Fund at the end of a taxable year is sold in the following year, the
amount of any gain or loss realized on such sale will be adjusted to reflect the
gain or loss previously  taken into account under the "mark to market" rules. In
addition to most index call options,  "section 1256  contracts"  include certain
other options contracts,  certain regulated futures contracts, and certain other
financial contracts.

The Fund's index call options  that do not qualify as "section  1256  contracts"
generally  will be treated as equity  options  governed  by Code  Section  1234.
Pursuant to Code Section  1234, if a written  option  expires  unexercised,  the
premium received is short-term capital gain to the Fund. If the Fund enters into
a closing  transaction,  the difference between the amount paid to close out its
position and the premium  received for writing the option is short-term  capital
gain or loss.  If a call option  written by the Fund that is not a "section 1256
contract" is cash settled, any resulting gain or loss will be short-term.

The Code contains special rules that apply to "straddles,"  defined generally as
the holding of  "offsetting  positions  with respect to personal  property." For
example,  the straddle  rules  normally apply when a taxpayer holds stock and an
offsetting option with respect to such stock or substantially identical stock or
securities.  In general,  investment  positions will be offsetting if there is a
substantial  diminution  in the risk of loss from holding one position by reason
of holding one or more other  positions.  The Fund  expects  that the index call
options it writes will not be considered  straddles for this purpose because the
Fund's  portfolio  of common  stocks will be  sufficiently  dissimilar  from the
components of the indices on which it has  outstanding  options  positions under
applicable  guidance  established  by  the  IRS.  Under  certain  circumstances,
however,  the  Fund  may  enter  into  options  transactions  or  certain  other
investments  that  may  constitute  positions  in a  straddle.  If two  or  more
positions  constitute  a  straddle,  recognition  of a  realized  loss  from one
position  must  generally be deferred to the extent of  unrecognized  gain in an
offsetting position. In addition,  long-term capital gain may be recharacterized
as short-term  capital gain,  or  short-term  capital loss as long-term  capital
loss. Interest and other carrying charges allocable to personal property that is
part of a straddle are not currently deductible but must instead be capitalized.
Similarly,  "wash sale" rules  apply to prevent the  recognition  of loss by the
Fund from the  disposition  of stock or  securities at a loss in a case in which
identical  or  substantially  identical  stock or  securities  (or an  option to
acquire such property) is or has been acquired within a prescribed period.

The Code  allows a taxpayer to elect to offset  gains and losses from  positions
that are part of a "mixed straddle." A "mixed straddle" is any straddle in which
one or more but not all positions are "section 1256  contracts.  The Fund may be
eligible to elect to establish one or more mixed  straddle  accounts for certain
of its mixed  straddle  trading  positions.  The mixed  straddle  account  rules
require a daily  "marking to market" of all open  positions in the account and a
daily netting of gains and losses from all positions in the account.  At the end
of a taxable  year,  the  annual  net gains or  losses  from the mixed  straddle
account are recognized for tax purposes. The net capital gain or loss is treated
as 60% long-term and 40% short-term  capital gain or loss if attributable to the
"section 1256 contract"  positions,  or all  short-term  capital gain or loss if
attributable to the non-section 1256 contract positions.

                                       35

<PAGE>

The Fund may recognize gain (but not loss) from a  constructive  sale of certain
"appreciated  financial  positions"  if  the  Fund  enters  into a  short  sale,
offsetting  notional principal  contract,  or forward contract  transaction with
respect  to  the  appreciated  position  or  substantially  identical  property.
Appreciated  financial  positions  subject to this  constructive  sale treatment
include interests  (including  options and forward contracts and short sales) in
stock and certain other instruments.  Constructive sale treatment does not apply
if the transaction is closed out not later than thirty days after the end of the
taxable  year in  which  the  transaction  was  initiated,  and  the  underlying
appreciated  securities  position is held  unhedged  for at least the next sixty
days after the hedging transaction is closed.

Gain or loss from a short sale of property is  generally  considered  as capital
gain or loss to the extent the property used to close the short sale constitutes
a capital asset in the Fund's hands.  Except with respect to certain  situations
where the property used to close a short sale has a long-term  holding period on
the date the short sale is entered  into,  gains on short  sales  generally  are
short-term  capital gains. A loss on a short sale will be treated as a long-term
capital  loss  if,  on the  date of the  short  sale,  "substantially  identical
property"  has  been  held by the Fund for more  than  one  year.  In  addition,
entering  into a short sale may result in  suspension  of the holding  period of
"substantially identical property" held by the Fund.

Gain or loss on a short sale will  generally not be realized  until such time as
the short sale is closed.  However,  as  described  above in the  discussion  of
constructive  sales,  if the Fund holds a short sale  position  with  respect to
securities that have appreciated in value, and it then acquires property that is
the same as or  substantially  identical  to the property  sold short,  the Fund
generally  will  recognize  gain on the date it acquires such property as if the
short sale were closed on such date with such property.  Similarly,  if the Fund
holds an  appreciated  financial  position with respect to  securities  and then
enters  into a short sale with  respect to the same or  substantially  identical
property, the Fund generally will recognize gain as if the appreciated financial
position were sold at its fair market value on the date it enters into the short
sale. The subsequent holding period for any appreciated  financial position that
is  subject to these  constructive  sale  rules  will be  determined  as if such
position were acquired on the date of the constructive sale.

Under the "Jobs and Growth Tax Relief Reconciliation Act of 2003" (the "2003 Tax
Act"), certain dividend  distributions paid by the Fund (whether paid in cash or
reinvested in  additional  Common  Shares) to individual  taxpayers are taxed at
rates  applicable to net long-term  capital gains (15%, or 5% for individuals in
the 10% or 15% tax brackets). This tax treatment applies only if certain holding
period and other  requirements  are satisfied by the Common  Shareholder and the
dividends are  attributable  to qualified  dividend  income received by the Fund
itself. For this purpose,  "qualified  dividend income" means dividends received
by  the  Fund  from  United   States   corporations   and   "qualified   foreign
corporations," provided that the Fund satisfies certain holding period and other
requirements in respect of the stock of such corporations.

Subject to certain exceptions,  a "qualified foreign corporation" is any foreign
corporation that is either (i) incorporated in a possession of the United States
(the  "possessions  test"),  or (ii)  eligible for  benefits of a  comprehensive
income tax treaty with the United  States  that the  Secretary  of the  Treasury
determines is satisfactory  for these purposes and which includes an exchange of
information  program  (the  "treaty  test").  The  Secretary of the Treasury has
currently  identified  tax  treaties  between  the  United  States  and 52 other
countries  that  satisfy  the treaty  test.  Subject to the same  exceptions,  a
foreign  corporation  that does not satisfy either the  possessions  test or the
treaty test will still be  considered a  "qualified  foreign  corporation"  with
respect to any dividend  paid by such  corporation  if the stock with respect to
which such  dividend is paid is readily  tradable on an  established  securities
market in the United States. The Treasury Department has issued a notice stating
that common or ordinary stock, or an ADR in respect of such stock, is considered
"readily  tradable" if it is listed on a national  securities  exchange  that is
registered  under section 6 of the Securities  Exchange Act of 1934, as amended,
or on the NASDAQ Stock Market.  Foreign  corporations  that are passive  foreign
investment companies will not be "qualified foreign corporations."

In order for qualified  dividends paid by the Fund to a Common Shareholder to be
taxable at long-term  capital gains rates, the Common  Shareholder must hold his
or her Common Shares for more than 60 days during the 121-day period surrounding
the ex-dividend  date. For the Fund to receive  tax-advantaged  dividend income,
the Fund must hold stock paying qualified  dividend income for more than 60 days
during the 121-day period beginning 60 days before the ex-dividend date (or more
than 90 days  during  the  associated  181-day  period,  in the case of  certain
preferred  stocks).  In  addition,  the Fund cannot be obligated to make related
payments  (pursuant to a short sale or  otherwise)  with respect to positions in
any security that is  substantially  similar or related property with respect to
such stock. Gains on option positions treated as short-term and other short-term
gains,  interest  income and  non-qualified  dividends  are not eligible for the
lower tax rate.  The special rules  relating to the taxation of ordinary  income
dividends paid by the Fund  generally  apply to taxable years  beginning  before
January 1, 2009. Thereafter,  the Fund's distributions that are characterized as
dividends,  other than  capital  gain  distributions,  will be fully  taxable at
ordinary income tax rates unless further  Congressional  action is taken.  There
can be no assurance as to what portion of the Fund's dividend distributions will
qualify for favorable  treatment  under the 2003 Tax Act. The Fund's  investment
program  and the tax  treatment  of Fund  distributions  may be  affected by IRS
interpretations  of the Code and  future  changes  in tax laws and  regulations,
including  changes resulting from the "sunset"  provisions  described above that
would have the effect of repealing the favorable treatment of qualified dividend

                                       36

<PAGE>

income and reimposing the higher tax rates applicable to ordinary income in 2009
unless further legislative action is taken.

The Fund will  inform  Common  Shareholders  of the source and tax status of all
distributions promptly after the close of each calendar year.

Selling Common  Shareholders will generally  recognize gain or loss in an amount
equal to the difference between the Common  Shareholder's  adjusted tax basis in
the Common Shares sold and the sale proceeds. If the Common Shares are held as a
capital asset,  the gain or loss will be a capital gain or loss. The maximum tax
rate  applicable  to net  capital  gains  recognized  by  individuals  and other
non-corporate  taxpayers is (i) the same as the maximum ordinary income tax rate
for gains recognized on the sale of capital assets held for one year or less, or
(ii) 15% for gains  recognized on the sale of capital  assets held for more than
one year (as well as any capital gain  distributions) (5% for individuals in the
10% or 15% tax  brackets).  Any loss on a disposition  of Common Shares held for
six months or less will be treated as a long-term  capital loss to the extent of
any capital gain distributions received with respect to those Common Shares. For
purposes of  determining  whether Common Shares have been held for six months or
less,  the holding  period is suspended for any periods  during which the Common
Shareholder's  risk of loss is  diminished  as a result of  holding  one or more
other positions in substantially similar or related property, or through certain
options or short sales. Any loss realized on a sale or exchange of Common Shares
will be  disallowed  to the extent  those  Common  Shares are  replaced by other
Common Shares within a period of 61 days  beginning 30 days before and ending 30
days after the date of  disposition  of the Common Shares  (whether  through the
reinvestment of  distributions  or otherwise).  In that event,  the basis of the
replacement Common Shares will be adjusted to reflect the disallowed loss.

An investor should be aware that, if Common Shares are purchased  shortly before
the  record  date  for  any  taxable  distribution  (including  a  capital  gain
distribution),  the  purchase  price  likely  will  reflect  the  value  of  the
distribution and the investor then would receive a taxable  distribution that is
likely to reduce the trading value of such Common Shares, in effect resulting in
a taxable return of some of the purchase price. Taxable distributions to certain
individuals and certain other non-corporate Common Shareholders, including those
who have not provided  their correct  taxpayer  identification  number and other
required  certifications,   may  be  subject  to  "backup"  federal  income  tax
withholding at the fourth lowest rate of tax  applicable to a single  individual
(in 2005, 28%).

An  investor  should  also be aware that the  benefits  of the  reduced tax rate
applicable  to long-term  capital  gains and  qualified  dividend  income may be
impacted  by  the  application  of the  alternative  minimum  tax to  individual
shareholders.

The  foregoing  briefly  summarizes  some of the  important  federal  income tax
consequences to Common Shareholders of investing in Common Shares,  reflects the
federal tax law as of the date of this prospectus,  and does not address special
tax rules  applicable  to certain  types of  investors,  such as  corporate  and
foreign  investors.  Unless  otherwise  noted,  this discussion  assumes that an
investor  is a U.S.  person and holds  Common  Shares as a capital  asset.  This
discussion  is based  upon  current  provisions  of the  Code,  the  regulations
promulgated thereunder, and judicial and administrative ruling authorities,  all
of which are subject to change or differing interpretations by the courts or the
IRS retroactively or prospectively.  Investors should consult their tax advisors
regarding  other  federal,  state  or  local  tax  considerations  that  may  be
applicable in their  particular  circumstances,  as well as any proposed tax law
changes.

DIVIDEND REINVESTMENT PLAN

Pursuant  to the  Fund's  dividend  reinvestment  plan  (the  "Plan"),  a Common
Shareholder  may  elect  to  have  all  distributions  (including  capital  gain
distributions)  automatically  reinvested in Common Shares.  Common Shareholders
may elect to  participate  in the Plan by completing  the dividend  reinvestment
plan application form.

PFPC Inc.  (the "Plan  Agent")  serves as agent for the Common  Shareholders  in
administering the Plan. Common  Shareholders who elect not to participate in the
Plan will receive all Fund  distributions  in cash paid by check mailed directly
to the Common  Shareholder of record (or if the Common Shares are held in street
or other nominee name,  then to the nominee) by PFPC Inc., as disbursing  agent.
Participation  in the Plan is  completely  voluntary  and may be  terminated  or
resumed at any time  without  penalty by written  notice if received by the Plan
Agent prior to any distribution record date.

Common Shares will be acquired by the Plan Agent or an independent broker-dealer
for the  participants'  accounts,  depending  upon the  circumstances  described
below,  either (i)  through  receipt of  additional  previously  authorized  but
unissued  Common Shares from the Fund ("newly issued Common  Shares") or (ii) by
purchase  of  outstanding  Common  Shares  on  the  open  market   ("open-market
purchases") on the New York Stock Exchange or elsewhere. If, on the payment date
for the  distribution,  the net asset value per Common Share is equal to or less
than the market  price per Common  Share plus  estimated  brokerage  commissions
(such  condition being referred to herein as "market  premium"),  the Plan Agent
will invest the  distribution  amount in newly issued Common Shares on behalf of
the  participants.  The number of newly issued  Common  Shares to be credited to
each  participant's  account will be determined by dividing the dollar amount of
the  distribution by the net asset value per Common Share on the date the Common
Shares are issued,  provided  that the maximum  discount  from the then  current
market  price per Common  Share on the date of issuance may not exceed 5%. If on
the  distribution  payment  date the net asset value per Common Share is greater
than the market value plus estimated brokerage commissions (such condition being

                                       37

<PAGE>

referred  to herein as  "market  discount"),  the Plan  Agent  will  invest  the
distribution  amount in Common Shares acquired on behalf of the  participants in
open-market purchases.

In the event of a market  discount on the  distribution  payment date,  the Plan
Agent will have up to 30 days after the distribution  payment date to invest the
distribution  amount in Common Shares  acquired in  open-market  purchases.  If,
before the Plan Agent has completed its open-market purchases,  the market price
of a Common Share exceeds the net asset value per Common Share,  the average per
Common  Share  purchase  price paid by the Plan Agent could exceed the net asset
value of the Fund's Common Shares,  resulting in the acquisition of fewer Common
Shares than if the  distribution  had been paid in newly issued Common Shares on
the  distribution  payment date.  Therefore,  the Plan provides that if the Plan
Agent is unable to invest the full distribution amount in open-market  purchases
during the purchase  period or if the market discount shifts to a market premium
during  the  purchase  period,  the Plan Agent  will  cease  making  open-market
purchases and will invest the uninvested  portion of the distribution  amount in
newly issued Common Shares.

The Plan Agent  maintains  all  Common  Shareholders'  accounts  in the Plan and
furnishes  written  confirmation of all transactions in the accounts,  including
information needed by Common Shareholders for tax records.  Common Shares in the
account of each Plan participant will be held by the Plan Agent on behalf of the
Plan participant,  and each Common Shareholder's proxy will include those Common
Shares  purchased or received  pursuant to the Plan. The Plan Agent will forward
all proxy  solicitation  materials to  participants  and vote proxies for Common
Shares held  pursuant to the Plan in  accordance  with the  instructions  of the
participants.  In the case of  Common  Shareholders  such as banks,  brokers  or
nominees that hold Common Shares for others who are the beneficial  owners,  the
Plan Agent will  administer the Plan on the basis of the number of Common Shares
certified from time to time by the record Common Shareholder's name and held for
the account of beneficial owners who participate in the Plan.

There will be no brokerage charges with respect to Common Shares issued directly
by the Fund as a result of  distributions  payable either in Common Shares or in
cash.  However,  each Plan  participant  will pay a pro rata share of  brokerage
commissions  incurred with respect to the Plan Agent's open-market  purchases in
connection with the reinvestment of distributions.

Common Shareholders participating in the Plan may receive benefits not available
to Common  Shareholders not participating in the Plan. If the market price (plus
commissions)  of the  Fund's  Common  Shares is above  their  net  asset  value,
participants  in the Plan will receive  Common Shares of the Fund purchased at a
discount  to market  price and  having a current  value  that  exceeds  the cash
distributions  they would have otherwise received on their Common Shares. If the
market price (plus  commissions)  of the Fund's Common Shares is below their net
asset value, Plan participants will receive Common Shares with a net asset value
that exceeds the cash  distributions they would have otherwise received on their
Common Shares.  There may, however,  be insufficient  Common Shares available in
the market at prices  below net asset value to satisfy the Plan's  requirements,
in which case the Plan Agent will acquire  newly  issued  Common  Shares.  Also,
since the Fund does not redeem its Common Shares,  the price on resale of Common
Shares may be more or less than their net asset value.

Experience under the Plan may indicate that changes are desirable.  Accordingly,
upon 30 days' notice to Plan participants,  the Fund reserves the right to amend
or terminate the Plan. A Plan participant will be charged a $5.00 service charge
and pay  brokerage  charges  whenever  he or she  directs the Plan Agent to sell
Common Shares held in a distribution reinvestment account.

All  correspondence  concerning the Plan should be directed to the Plan Agent at
PFPC Inc.,  P.O. Box 43027,  Providence,  Rhode Island  02940-3027.  Please call
1-800-331-1710  between the hours of 9:00 a.m. and 5:00 p.m. Eastern Time if you
have questions regarding the Plan.

DESCRIPTION OF CAPITAL STRUCTURE

The Fund is an  unincorporated  business trust established under the laws of The
Commonwealth of Massachusetts by an Agreement and Declaration of Trust dated and
filed with the Secretary of The Commonwealth on March 30, 2005 (the "Declaration
of Trust").  The  Declaration  of Trust  provides  that the Board may  authorize
separate classes of shares of beneficial  interest.  The Board has authorized an
unlimited  number of Common Shares.  The Fund intends to hold annual meetings of
Common  Shareholders in compliance  with the  requirements of the New York Stock
Exchange.

                                       38

<PAGE>

COMMON SHARES

The  Declaration of Trust permits the Fund to issue an unlimited  number of full
and fractional common shares of beneficial  interest,  $.01 par value per share.
Each Common Share  represents an equal  proportionate  interest in the assets of
the Fund with each other Common Share in the Fund. Holders of Common Shares will
be  entitled  to the payment of  distributions  when,  as and if declared by the
Board.  The 1940 Act or the  terms  of any  future  borrowings  or  issuance  of
preferred shares may limit the payment of distributions to the holders of Common
Shares.  Each whole  Common Share shall be entitled to one vote as to matters on
which it is entitled to vote pursuant to the terms of the  Declaration  of Trust
on file with the Securities Exchange  Commission.  Upon liquidation of the Fund,
after paying or adequately  providing for the payment of all  liabilities of the
Fund and the liquidation  preference  with respect to any outstanding  preferred
shares, and upon receipt of such releases,  indemnities and refunding agreements
as they deem  necessary  for their  protection,  the  Board may  distribute  the
remaining  assets of the Fund  among  the  holders  of the  Common  Shares.  The
Declaration  of Trust provides that Common  Shareholders  are not liable for any
liabilities  of the Fund,  and requires  inclusion of a clause to that effect in
agreements  entered  into by the Fund  and,  in  coordination  with  the  Fund's
By-laws,   indemnifies   shareholders  against  any  such  liability.   Although
shareholders of an unincorporated business trust established under Massachusetts
law may, in certain limited  circumstances,  be held  personally  liable for the
obligations  of the  business  trust as though they were general  partners,  the
provisions  of the Fund's  Declaration  of Trust and  By-laws  described  in the
foregoing sentence make the likelihood of such personal liability remote.

The Fund has no current  intention to issue preferred shares or to borrow money.
However,  if at some future time there are any  borrowings  or preferred  shares
outstanding,  the Fund may not be permitted to declare any cash  distribution on
its  Common  Shares,  unless at the time of such  declaration,  (i) all  accrued
distributions  on preferred  shares or accrued  interest on borrowings have been
paid and (ii) the value of the Fund's total assets  (determined  after deducting
the amount of such  distribution),  less all liabilities and indebtedness of the
Fund not  represented  by senior  securities,  is at least 300% of the aggregate
amount of such  securities  representing  indebtedness  and at least 200% of the
aggregate  amount of  securities  representing  indebtedness  plus the aggregate
liquidation  value of the  outstanding  preferred  shares.  In  addition  to the
requirements  of the 1940 Act,  the Fund may be  required  to comply  with other
asset  coverage  requirements  as a condition of the Fund  obtaining a rating of
preferred  shares from a  nationally  recognized  statistical  rating  agency (a
"Rating  Agency").  These  requirements  may include an asset coverage test more
stringent than under the 1940 Act. This limitation on the Fund's ability to make
distributions  on its Common  Shares could in certain  circumstances  impair the
ability of the Fund to maintain  its  qualification  for taxation as a regulated
investment  company for  federal  income tax  purposes.  If the Fund were in the
future to issue preferred shares or borrow money, it would intend,  however,  to
the extent possible to purchase or redeem preferred shares or reduce  borrowings
from time to time to maintain  compliance with such asset coverage  requirements
and may pay  special  distributions  to the holders of the  preferred  shares in
certain  circumstances in connection with any potential impairment of the Fund's
status as a regulated  investment  company.  See "Federal  Income Tax  Matters."
Depending on the timing of any such  redemption  or  repayment,  the Fund may be
required  to pay a premium in  addition  to the  liquidation  preference  of the
preferred shares to the holders thereof.

The Fund has no present intention of offering  additional Common Shares,  except
as described herein. Other offerings of its Common Shares, if made, will require
approval of the Board.  Any additional  offering will not be sold at a price per
Common Share below the then current net asset value  (exclusive of  underwriting
discounts and  commissions)  except in  connection  with an offering to existing
Common  Shareholders or with the consent of a majority of the Fund's outstanding
Common Shares. The Common Shares have no preemptive rights.

The Fund  generally  will not issue Common  Share  certificates.  However,  upon
written request to the Fund's transfer agent, a share certificate will be issued
for any or all of the full  Common  Shares  credited to an  investor's  account.
Common Share  certificates  that have been issued to an investor may be returned
at any time.

REPURCHASE OF COMMON SHARES AND OTHER DISCOUNT METHODS

Because shares of closed-end management investment companies frequently trade at
a discount to their net asset values, the Board has determined that from time to
time it may be in the  interest  of  Common  Shareholders  for the  Fund to take
corrective  actions to reduce trading discounts in the Common Shares. The Board,
in consultation  with Eaton Vance, will review at least annually the possibility
of open market  repurchases  and/or tender offers for the Common Shares and will
consider  such factors as the market price of the Common  Shares,  the net asset
value of the Common Shares,  the liquidity of the assets of the Fund, the effect
on the Fund's expenses, whether such transactions would impair the Fund's status
as a  regulated  investment  company  or  result in a  failure  to  comply  with
applicable asset coverage  requirements,  general  economic  conditions and such
other events or conditions that may have a material effect on the Fund's ability
to consummate such transactions. There are no assurances that the Board will, in
fact,  decide to undertake either of these actions or, if undertaken,  that such
actions  will  result  in the  Common  Shares  trading  at a price  equal  to or
approximating  their net asset  value.  The Board,  in  consultation  with Eaton
Vance,  may from time to time review other  possible  actions to reduce  trading
discounts in the Common Shares.

                                       39


<PAGE>

PREFERRED SHARES

The Fund has no current  intention  of issuing any shares  other than the Common
Shares.  However,  the  Declaration  of  Trust  authorizes  the  issuance  of an
unlimited  number of shares of beneficial  interest with preference  rights (the
"preferred  shares") in one or more  series,  with rights as  determined  by the
Board, by action of the Board without the approval of the Common Shareholders.

Under the  requirements  of the 1940 Act, the Fund must,  immediately  after the
issuance of any  preferred  shares,  have an "asset  coverage" of at least 200%.
Asset  coverage means the ratio which the value of the total assets of the Fund,
less all liabilities and indebtedness  not represented by senior  securities (as
defined in the 1940 Act),  bears to the  aggregate  amount of senior  securities
representing  indebtedness  of the Fund, if any, plus the aggregate  liquidation
preference  of the  preferred  shares.  If the Fund seeks a rating for preferred
shares,  asset coverage  requirements in addition to those set forth in the 1940
Act may be imposed.  The  liquidation  value of any  preferred  shares  would be
expected  to equal  their  aggregate  original  purchase  price plus  redemption
premium, if any, together with any accrued and unpaid distributions  thereon (on
a  cumulative  basis),  whether  or not  earned  or  declared.  The terms of any
preferred shares, including their distribution rate, voting rights,  liquidation
preference and redemption  provisions,  will be determined by the Board (subject
to applicable law and the Fund's Declaration of Trust) if and when it authorizes
preferred  shares.  The Fund may issue  preferred  shares  that  provide for the
periodic  redetermination of the distribution rate at relatively short intervals
through  an  auction  or  remarketing  procedure,  although  the  terms  of such
preferred shares may also enable the Fund to lengthen such intervals.  At times,
the  distribution  rate as redetermined on any preferred shares could exceed the
Fund's  return after  expenses on the  investment of proceeds from the preferred
shares and the Fund's leveraged  capital  structure would result in a lower rate
of return to Common Shareholders than if the Fund were not so structured.

In the event of any voluntary or involuntary liquidation, dissolution or winding
up of the Fund,  the terms of any  preferred  shares may  entitle the holders of
preferred shares to receive a preferential liquidating distribution (expected to
equal the original  purchase price per share plus  redemption  premium,  if any,
together  with accrued and unpaid  dividends,  whether or not earned or declared
and on a cumulative  basis) before any  distribution of assets is made to Common
Shareholders.  After payment of the full amount of the liquidating  distribution
to which they are entitled,  the preferred shareholders would not be entitled to
any further  participation in any distribution of assets by the Fund. Holders of
preferred  shares,  voting  as a class,  would be  entitled  to elect two of the
Fund's Trustees,  if any preferred shares are issued.  Under the 1940 Act, if at
any time dividends on the preferred  shares are unpaid in an amount equal to two
full years' dividends thereon, the holders of all outstanding  preferred shares,
voting as a class,  will be  entitled to elect a majority of the Board until all
dividends in default  have been paid or declared  and set apart for payment.  In
addition,  if required by a Rating Agency rating the preferred  shares or if the
Board  determines  it to be in the best  interests  of the Common  Shareholders,
issuance of the preferred shares may result in more restrictive  provisions than
required  under the 1940 Act. In this regard,  holders of preferred  shares may,
for  example,  be entitled  to elect a majority of the Fund's  Board if only one
dividend on the preferred shares is in arrears.

In the event of any future issuance of preferred  shares,  the Fund likely would
seek a credit rating for such  preferred  shares from a Rating  Agency.  In such
event,  as long as preferred  shares are  outstanding,  the  composition  of its
portfolio will reflect  guidelines  established by such Rating Agency.  Based on
previous  guidelines  established by Rating Agencies for the securities of other
issuers,  the Fund anticipates that the guidelines with respect to any preferred
shares  would  establish  a set of tests  for  portfolio  composition  and asset
coverage  that  supplement  (and in some  cases are more  restrictive  than) the
applicable  requirements  under the 1940 Act. Although no assurance can be given
as to the nature or extent of the  guidelines  that may be imposed in connection
with obtaining a rating of any preferred shares,  the Fund anticipates that such
guidelines would include asset coverage  requirements  that are more restrictive
than those under the 1940 Act, restrictions on certain portfolio investments and
investment practices and certain mandatory redemption  requirements  relating to
any preferred  shares.  No assurance can be given that the  guidelines  actually
imposed with respect to any preferred shares by a Rating Agency would be more or
less restrictive than those described in this prospectus.

CREDIT FACILITY/COMMERCIAL PAPER PROGRAM

The Fund has no current  intention  to borrow money for the purpose of obtaining
investment  leverage.  If,  in the  future,  the Fund  determines  to  engage in
investment  leverage  using  borrowings,  the Fund  may  enter  into  definitive
agreements with respect to a credit  facility/commercial  paper program or other
borrowing  program,  pursuant  to which the Fund would  expect to be entitled to
borrow up to a specified amount. Any such borrowings would constitute  financial
leverage. Borrowings under such a facility/commercial paper program would not be
expected to be convertible  into any other  securities of the Fund.  Outstanding
amounts would be expected to be  prepayable by the Fund prior to final  maturity
without  significant  penalty,  and no  sinking  fund  or  mandatory  retirement
provisions would be expected to apply.  Outstanding  amounts would be payable at
maturity or such  earlier  times as required by the  agreement.  The Fund may be
required to prepay  outstanding  amounts under the  facility/program  or incur a
penalty  rate of interest in the event of the  occurrence  of certain  events of

                                       40

<PAGE>

default.  The Fund  would  be  expected  to  indemnify  the  lenders  under  the
facility/program  against  liabilities  they may  incur in  connection  with the
facility/program.

In  addition,  the Fund  expects  that any such  credit  facility/program  would
contain  covenants  that,  among  other  things,  likely  would limit the Fund's
ability to pay  distributions in certain  circumstances,  incur additional debt,
change its fundamental  investment policies and engage in certain  transactions,
including mergers and  consolidations,  and may require asset coverage ratios in
addition to those  required by the 1940 Act.  The Fund may be required to pledge
its  assets  and to  maintain  a portion  of its  assets  in cash or  high-grade
securities as a reserve against interest or principal payments and expenses. The
Fund expects that any credit  facility/program  would have  customary  covenant,
negative  covenant and default  provisions.  There can be no assurance  that the
Fund will enter into an agreement  for a credit  facility/  program on terms and
conditions  representative of the foregoing,  or that additional  material terms
will not apply. In addition,  if entered into, any such credit  facility/program
may in the future be replaced  or  refinanced  by one or more credit  facilities
having  substantially  different terms or by the issuance of preferred shares or
debt securities.

EFFECTS OF POSSIBLE FUTURE LEVERAGE

As discussed above, the Fund has no current  intention to issue preferred shares
or to borrow  money for the purpose of  obtaining  investment  leverage.  In the
event that the Fund  determines  in the future to utilize  investment  leverage,
there can be no assurance  that such a leveraging  strategy  would be successful
during any period in which it is  employed.  Leverage  creates  risks for Common
Shareholders,  including the likelihood of greater volatility of net asset value
and  market  price of the  Common  Shares  and the  risk  that  fluctuations  in
distribution  rates on any preferred  shares or  fluctuations in borrowing costs
may  affect  the  return to Common  Shareholders.  To the  extent  that  amounts
available for distribution  derived from securities  purchased with the proceeds
of leverage exceed the cost of such leverage,  the Fund's distributions would be
greater than if leverage had not been used. Conversely, if the amounts available
for distribution  derived from securities  purchased with leverage  proceeds are
not  sufficient  to  cover  the  cost  of  leverage,   distributions  to  Common
Shareholders  would be less than if  leverage  had not been used.  In the latter
case, Eaton Vance, in its best judgment,  may nevertheless determine to maintain
the Fund's  leveraged  position if it deems such action to be  appropriate.  The
costs of an offering of preferred  shares  and/or a borrowing  program  would be
borne by Common Shareholders and consequently would result in a reduction of the
net asset value of Common Shares. See "Risk Factors -- Financial Leverage Risk."

In addition,  the fee paid to Eaton Vance will be calculated on the basis of the
Fund's  average  daily gross  assets,  including  proceeds  from the issuance of
preferred shares and/or  borrowings,  so the fees would be higher if leverage is
utilized.  In this  regard,  holders  of  preferred  shares  would  not bear the
investment  advisory fee. Rather,  Common Shareholders would bear the portion of
the  investment  advisory  fee  attributable  to the assets  purchased  with the
proceeds  of the  preferred  shares  offering.  See "Risk  Factors --  Financial
Leverage Risk."

ANTI-TAKEOVER PROVISIONS IN THE DECLARATION OF TRUST

The  Declaration  of Trust  includes  provisions  that  could have the effect of
limiting the ability of other entities or persons to acquire control of the Fund
or to change the composition of its Board and could have the effect of depriving
Common  Shareholders  of an opportunity to sell their Common Shares at a premium
over  prevailing  market  prices by  discouraging  a third party from seeking to
obtain control of the Fund. These provisions may have the effect of discouraging
attempts to acquire control of the Fund, which attempts could have the effect of
increasing the expenses of the Fund and interfering with the normal operation of
the Fund.  The Board is divided into three  classes,  with the term of one class
expiring at each annual meeting of  shareholders.  At each annual  meeting,  one
class of Trustees is elected to a three-year  term.  This provision  could delay
for up to two years the replacement of a majority of the Board. A Trustee may be
removed  from  office  only for  cause by a  written  instrument  signed  by the
remaining  Trustees  or by a vote of the holders of at least  two-thirds  of the
class of shares of the Fund that  elected  such Trustee and are entitled to vote
on the matter.

In addition, the Declaration of Trust requires the favorable vote of the holders
of at least 75% of the outstanding shares of each class of the Fund, voting as a
class, then entitled to vote to approve, adopt or authorize certain transactions
with 5%-or-greater holders of a class of shares and their associates, unless the
Board shall by resolution have approved a memorandum of understanding  with such
holders,  in which case  normal  voting  requirements  would be in  effect.  For
purposes of these  provisions,  a  5%-or-greater  holder of a class of shares (a
"Principal   Shareholder")  refers  to  any  person  who,  whether  directly  or
indirectly  and whether alone or together with its  affiliates  and  associates,
beneficially  owns  5% or  more  of  the  outstanding  shares  of any  class  of
beneficial  interest  of the Fund.  The  transactions  subject to these  special
approval  requirements  are: (i) the merger or  consolidation of the Fund or any
subsidiary of the Fund with or into any Principal Shareholder; (ii) the issuance
of any securities of the Fund to any Principal  Shareholder for cash;  (iii) the
sale, lease or exchange of all or any substantial part of the assets of the Fund
to any Principal  Shareholder  (except  assets  having an aggregate  fair market
value of less than  $1,000,000,  aggregating for the purpose of such computation
all assets  sold,  leased or  exchanged  in any  series of similar  transactions
within a twelve-month  period);  or (iv) the sale, lease or exchange to the Fund
or any subsidiary thereof, in exchange for securities of the Fund, of any assets
of any Principal  Shareholder  (except  assets  having an aggregate  fair market

                                       41

<PAGE>

value of less than $1,000,000,  aggregating for the purposes of such computation
all assets  sold,  leased or  exchanged  in any  series of similar  transactions
within a twelve-month period).

The Board has determined  that  provisions with respect to the Board and the 75%
voting requirements  described above, which voting requirements are greater than
the minimum  requirements  under  Massachusetts  law or the 1940 Act, are in the
best interest of Common Shareholders generally.  Reference should be made to the
Declaration  of Trust on file with the  Securities  Exchange  Commission for the
full text of these provisions.

CONVERSION TO OPEN-END FUND

The Fund may be converted to an open-end  management  investment  company at any
time if  approved  by the lesser of (i)  two-thirds  or more of the Fund's  then
outstanding  Common Shares and preferred shares (if any), each voting separately
as a class,  or (ii) more than 50% of the then  outstanding  Common  Shares  and
preferred  shares (if any),  voting  separately as a class if such conversion is
recommended  by at least 75% of the Trustees then in office.  If approved in the
foregoing manner, conversion of the Fund could not occur until 90 days after the
shareholders'  meeting  at which such  conversion  was  approved  and would also
require at least 30 days' prior notice to all  shareholders.  Conversion  of the
Fund to an  open-end  management  investment  company  also  would  require  the
redemption of any outstanding  preferred  shares and could require the repayment
of borrowings,  which would eliminate any future leveraged  capital structure of
the Fund with  respect to the Common  Shares.  In the event of  conversion,  the
Common  Shares would cease to be listed on the New York Stock  Exchange or other
national  securities  exchange or market  system.  The Board  believes  that the
closed-end  structure is desirable,  given the Fund's investment  objectives and
policies. Investors should assume, therefore, that it is unlikely that the Board
would vote to convert the Fund to an  open-end  management  investment  company.
Shareholders  of an  open-end  management  investment  company  may  require the
company to redeem their shares at any time (except in certain  circumstances  as
authorized  by or under  the 1940  Act) at their  net  asset  value,  less  such
redemption charge, if any, as might be in effect at the time of a redemption. If
the Fund were to convert to an open-end investment company,  the Fund expects it
would pay all such  redemption  requests in cash,  but would likely  reserve the
right to pay redemption requests in a combination of cash or securities. If such
partial payment in securities were made,  investors may incur brokerage costs in
converting  such  securities to cash. If the Fund were  converted to an open-end
fund,  it is likely that new Common Shares would be sold at net asset value plus
a sales load.

                                       42

<PAGE>

UNDERWRITING

The  underwriters  named below (the  "Underwriters"),  acting  through  [_____],
[_____],  [_____],  [_____], [_____] and [_____] , as lead managers and [_____],
[_____],  [_____], and [_____], as their representatives (together with the lead
managers,  the  "Representatives"),  have severally agreed, subject to the terms
and  conditions of the  Underwriting  Agreement  with the Fund,  Eaton Vance and
Rampart (the "Underwriting Agreement"),  to purchase from the Fund the number of
Common Shares set forth opposite their  respective  names.  The Underwriters are
committed  to purchase and pay for all of such Common  Shares  (other than those
covered by the over-allotment option described below) if any are purchased.


                                                                  NUMBER OF
UNDERWRITERS                                                    COMMON SHARES
--------------------------------------------------------------------------------

[                   ]-----------------------------------------------------------











                                                                ----------------
Total...........................................................================

The Fund has granted to the Underwriters an option, exercisable for 45 days from
the date of this  Prospectus,  to purchase up to an additional [ ] Common Shares
to  cover   over-allotments,   if  any,  at  the  initial  offering  price.  The
Underwriters  may  exercise  such  option  solely for the  purpose  of  covering
underwriting  over-allotments  incurred in the sale of the Common Shares offered
hereby.  To the extent that the Underwriters  exercise this option,  each of the
Underwriters  will have a firm  commitment,  subject to certain  conditions,  to
purchase  an  additional   number  of  Common  Shares   proportionate   to  such
Underwriter's initial commitment.

The Fund has agreed to pay a  commission  to the  Underwriters  in the amount of
$0.90 per Common Share (4.50% of the public  offering  price per Common  Share).
The Representatives have advised the Fund that the Underwriters may pay up to $[
] per Common Share from such commission to selected  dealers who sell the Common
Shares and that such dealers may reallow a  concession  of up to $[ ] per Common
Share to  certain  other  dealers  who sell  Common  Shares.  Eaton  Vance or an
affiliate has agreed to (i) reimburse all organizational  costs and (ii) pay all
offering costs of the Fund (other than sales loads) that exceed $0.04 per Common
Share.  Investors  must pay for any Common  Shares  purchased  on or before [ ],
2005.

Prior to this offering, there has been no public market for the Common Shares or
any other  securities  of the Fund.  Consequently,  the  offering  price for the
Common   Shares  was   determined  by   negotiation   among  the  Fund  and  the
Representatives.  There can be no  assurance,  however,  that the price at which
Common Shares sell after this offering will not be lower than the price at which
they are sold by the Underwriters or that an active trading market in the Common
Shares will develop and continue  after this  offering.  The minimum  investment
requirement is 100 Common Shares ($2,000).

The Fund,  Eaton Vance and Rampart  have each  agreed to  indemnify  the several
Underwriters  for  or to  contribute  to  the  losses  arising  out  of  certain
liabilities, including liabilities under the Securities Act of 1933, as amended.

The Fund has agreed  not to offer,  sell or  register  with the  Securities  and
Exchange  Commission any additional  equity  securities of the Fund,  other than
issuances of Common Shares, including pursuant to the Fund's Plan, and issuances
in  connection  with  any  preferred  shares,   each  as  contemplated  in  this
Prospectus,  for a  period  of 180  days  after  the  date  of the  Underwriting
Agreement without the prior written consent of the Representatives.

The  Representatives  have informed the Fund that the Underwriters do not intend
to  confirm  sales  to any  accounts  over  which  they  exercise  discretionary
authority.

In connection with this offering,  the Underwriters may purchase and sell Common
Shares in the open market.  These  transactions may include  over-allotment  and
stabilizing  transactions  and  purchases  to cover  syndicate  short  positions
created in connection with this offering.  Stabilizing  transactions  consist of
certain bids or purchases  for the purpose of  preventing or retarding a decline
in the market price of the Common Shares and syndicate short  positions  involve

                                       43

<PAGE>

the sale by the  Underwriters of a greater number of Common Shares than they are
required to purchase from the Fund in this offering.  The Underwriters  also may
impose a penalty bid, whereby selling  concessions  allowed to syndicate members
or other  broker-dealers  in respect of the Common  Shares sold in this offering
for their  account may be reclaimed by the  syndicate if such Common  Shares are
repurchased  by the syndicate in  stabilizing  or covering  transactions.  These
activities may stabilize,  maintain or otherwise  affect the market price of the
Common Shares,  which may be higher than the price that might otherwise  prevail
in the open market; and these activities,  if commenced,  may be discontinued at
any time  without  notice.  These  transactions  may be effected on the New York
Stock Exchange or otherwise.

The Fund anticipates that the Representatives and certain other Underwriters may
from time to time act as brokers or dealers in connection  with the execution of
its  portfolio  transactions  after  they have  ceased to be  Underwriters  and,
subject  to  certain  restrictions,  may  act as such  brokers  while  they  are
Underwriters.

In connection with the offering, certain of the Underwriters or selected dealers
may distribute prospectuses electronically.

ADDITIONAL COMPENSATION

Eaton Vance (and not the Fund) has agreed pursuant to an additional compensation
agreement (the "Additional Compensation Agreement") to pay to certain qualifying
Underwriters  who meet  specified  sales  targets  ("Qualifying  Underwriters"),
quarterly in arrears,  an annual fee of up to 0.15% of the Fund's  average daily
gross assets attributable to Common Shares sold by such Qualifying  Underwriters
(including  a  proportionate  share of assets that may in the future be acquired
using leverage). Such sales targets may be waived or lowered with respect to any
Underwriter  in the sole  discretion  of Eaton Vance.  These fee  payments  will
remain  in  effect  only so long as the  Advisory  Agreement  remains  in effect
between the Fund and Eaton Vance or any  successor  in interest or  affiliate of
Eaton  Vance,  as and to the  extent  that such  Advisory  Agreement  is renewed
periodically  in  accordance  with  the  1940  Act.  The  sum of the  additional
compensation payable to the Qualifying  Underwriters will not exceed [ ]% of the
aggregate  initial  offering price of the Common Shares offered hereby. [ ] will
receive  additional  compensation  which will not  exceed [ ]% of the  aggregate
initial  offering  price of the Common Shares offered  hereby.  [ ] will receive
additional  compensation  which  will not exceed [ ]% of the  aggregate  initial
offering price of the Common Shares offered hereby. [ ], will receive additional
compensation  which will not exceed [ ]% of the aggregate initial offering price
of the Common Shares offered hereby.

Pursuant  to a  shareholder  servicing  agreement  (the  "Shareholder  Servicing
Agreement") between [ ] (the "Shareholder Servicing Agent") and Eaton Vance, the
Shareholder Servicing Agent will (i) at the request of and as specified by Eaton
Vance,  undertake to make available public information pertaining to the Fund on
an ongoing basis and to communicate to investors and  prospective  investors the
Fund's  features  and  benefits   (including   arranging  periodic  seminars  or
conference  calls for Eaton Vance to  communicate  to  investors,  responding to
questions  from current or  prospective  shareholders  and  contacting  specific
shareholders,  where  appropriate),  provided  that  services  shall not include
customary  market research  information  provided by the  Shareholder  Servicing
Agent or its registered broker-dealer affiliates in the ordinary course of their
business; (ii) at the request of and as specified by Eaton Vance, make available
to investors and prospective  investors market price, net asset value, yield and
other  information  regarding the Fund (provided that services shall not include
customary  market research  information  provided by the  Shareholder  Servicing
Agent or its registered broker-dealer affiliates in the ordinary course of their
business),  if  reasonably  obtainable,  for  the  purpose  of  maintaining  the
visibility of the Fund in the investor community;  (iii) at the request of Eaton
Vance or the Fund, provide certain economic research and statistical information
and reports,  if reasonably  obtainable,  to Eaton Vance or the Fund and consult
with  representatives  of Eaton Vance and/or the Board in connection  therewith,
which  information  and reports shall  include:  (a)  statistical  and financial
market  information  with  respect to the  Fund's  market  performance;  and (b)
comparative  information  regarding  the Fund and  other  closed-end  management
investment companies with respect to (1) the net asset value of their respective
shares,  (2) the  respective  market  performance  of the Fund  and  such  other
companies,  and (3) other  relevant  performance  indicators.  Except as legally
required,  such information and reports may not be quoted or referred to, orally
or in writing,  reproduced or  disseminated by the Fund or any of its affiliates
or any of their  agents,  without the prior written  consent of the  Shareholder
Servicing Agent,  which consent will not be unreasonably  withheld;  and (iv) at
the request of Eaton Vance or the Fund, provide  information to and consult with
Eaton Vance and/or the Board with respect to applicable  strategies  designed to
address  market value  discounts,  which may include share  repurchases,  tender
offers,  modifications to dividend policies or capital structure,  repositioning
or restructuring of the Fund,  conversion of the Fund to an open-end  investment
company,  liquidation or merger;  including providing information concerning the
use and impact of the above strategic alternatives by other market participants;
provided,  however, that under the terms of the Shareholder Servicing Agreement,
the  Shareholder  Servicing  Agent is not  obligated  to  render  any  opinions,
valuations  or  recommendations  of any  kind or to  perform  any  such  similar
services.  For these services,  Eaton Vance will pay the  Shareholder  Servicing
Agent a fee computed daily and payable  quarterly  equal, on an annual basis, to
0.10% of the Fund's average daily gross assets. The total of all of the payments
payable to the  Shareholder  Servicing  Agent  under the  Shareholder  Servicing
Agreement  will not exceed [ ]% of the aggregate  initial  offering price of the
Common  Shares  offered  hereby.  Under the terms of the  Shareholder  Servicing
Agreement,  the Shareholder  Servicing Agent is relieved from liability to Eaton
Vance,  or the  Fund  for  any  act or  omission  to  act in the  course  of its
performance  under the  Shareholder  Servicing  Agreement  in the absence of bad
faith,  gross  negligence or willful  misconduct on the part of the  Shareholder
Servicing  Agent. The Shareholder  Servicing  Agreement will continue so long as
the Advisory Agreement remains in effect between the Fund and the Adviser or any

                                       44

<PAGE>

successor in interest or  affiliate  of the  Adviser,  as and to the extent that
such Advisory Agreement is renewed periodically in accordance with the 1940 Act.

The total compensation received by the Underwriters will not exceed 9.00% of the
aggregate initial offering price of the Common Shares offered hereby.

SHAREHOLDER  SERVICING  AGENT,  CUSTODIAN AND TRANSFER AGENT
As described above under  "Underwriting," [ ] will provide shareholder  services
to the Fund pursuant to the Shareholder Servicing Agreement with Eaton Vance.

Investors  Bank  &  Trust  Company  ("IBT"),   200  Clarendon  Street,   Boston,
Massachusetts  02116 is the custodian of the Fund and will  maintain  custody of
the securities and cash of the Fund. IBT maintains the Fund's general ledger and
computes  net asset  value per share  daily.  IBT also  attends  to  details  in
connection with the sale,  exchange,  substitution,  transfer and other dealings
with the Fund's  investments  and receives  and  disburses  all funds.  IBT also
assists in preparation of shareholder  reports and the electronic filing of such
reports with the SEC.

PFPC Inc., P.O. Box 43027,  Providence,  Rhode Island 02940-3027 is the transfer
agent and dividend disbursing agent of the Fund.

LEGAL OPINIONS
Certain legal  matters in connection  with the Common Shares will be passed upon
for  the  Fund  by  Kirkpatrick  &  Lockhart   Nicholson   Graham  LLP,  Boston,
Massachusetts, and for the Underwriters by [ ].

REPORTS TO SHAREHOLDERS
The Fund will send to Common  Shareholders  unaudited  semi-annual  and  audited
annual reports, including a list of investments held.

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

[ ], Boston, Massachusetts are the independent registered public accounting firm
for the Fund and will audit the Fund's financial statements.

ADDITIONAL INFORMATION

The Prospectus and the Statement of Additional Information do not contain all of
the information set forth in the Registration  Statement that the Fund has filed
with the SEC. The complete  Registration  Statement may be obtained from the SEC
upon payment of the fee prescribed by its rules and  regulations.  The Statement
of  Additional  Information  can be obtained  without  charge by calling  1-800-
225-6265.

Statements  contained in this  Prospectus  as to the contents of any contract or
other documents referred to are not necessarily complete, and, in each instance,
reference  is made to the copy of such  contract or other  document  filed as an
exhibit to the  Registration  Statement of which this  Prospectus  forms a part,
each such statement being qualified in all respects by such reference.

                                       45

<PAGE>


          TABLE OF CONTENTS FOR THE STATEMENT OF ADDITIONAL INFORMATION


                                                                            PAGE
Additional Investment Information and Restrictions.........................
Trustees and Officers......................................................
Investment Advisory and Other Services.....................................
Determination of Net Asset Value...........................................
Portfolio Trading..........................................................
Taxes......................................................................
Other Information..........................................................
Independent Registered Public Accounting Firm..............................
Statement of Assets and Liabilities........................................
Notes to Financial Statements..............................................
Appendix A: Proxy Voting Policies and Procedures...........................   A-

                                       46

<PAGE>



                            THE FUND'S PRIVACY POLICY

     The Eaton  Vance  organization  is  committed  to ensuring  your  financial
privacy. Each of the financial  institutions  identified below has in effect the
following  policy  ("Privacy   Policy")  with  respect  to  nonpublic   personal
information about its customers:

o    Only such  information  received  from you,  through  application  forms or
     otherwise, and information about your Eaton Vance fund transactions will be
     collected.  This may  include  information  such as name,  address,  social
     security number, tax status, account balances and transactions.

o    None of such information  about you (or former customers) will be disclosed
     to  anyone,  except as  permitted  by law  (which  includes  disclosure  to
     employees  necessary  to service  your  account).  In the normal  course of
     servicing a  customer's  account,  Eaton Vance may share  information  with
     unaffiliated  third parties that perform various required  services such as
     transfer agents, custodians and broker/dealers.

o    Policies and  procedures  (including  physical,  electronic  and procedural
     safeguards)  are in place that are designed to protect the  confidentiality
     of such information.

o    We reserve the right to change our  Privacy  Policy at any time upon proper
     notification  to you.  Customers  may want to  review  our  Privacy  Policy
     periodically   for  changes  by  accessing   the  link  on  our   homepage:
     www.eatonvance.com.

     Our pledge of privacy  applies to the following  entities  within the Eaton
Vance  organization:  the Eaton Vance Family of Funds,  Eaton Vance  Management,
Eaton Vance Investment Counsel,  Boston Management and Research, and Eaton Vance
Distributors, Inc.

     In addition, our Privacy Policy only applies to those Eaton Vance customers
who are individuals and who have a direct  relationship with us. If a customer's
account  (i.e.,  fund  shares)  is held in the name of a  third-party  financial
adviser/broker-dealer,  it is likely that only such adviser's  privacy  policies
apply to the customer.  This notice  supersedes  all  previously  issued privacy
disclosures.

     For more  information  about  Eaton  Vance's  Privacy  Policy,  please call
1-800-262-1122.

                                       47

<PAGE>



                               (EATON VANCE LOGO)





<PAGE>


                                         SUBJECT TO COMPLETION November 14, 2005


STATEMENT OF ADDITIONAL INFORMATION
[        ], 2005

EATON VANCE TAX-MANAGED PREMIUM AND DIVIDEND INCOME FUND

THE EATON VANCE BUILDING
255 STATE STREET
BOSTON, MASSACHUSETTS 02109
(800) 225-6265

TABLE OF CONTENTS

                                                                           PAGE
Additional investment information and restrictions......................
Trustees and officers...................................................
Investment advisory and other services..................................
Determination of net asset value........................................
Portfolio trading.......................................................
Taxes...................................................................
Other information.......................................................
Independent registered public accounting firm...........................
Statement of assets and liabilities.....................................
Notes to financial statements...........................................
Appendix A: Proxy voting policies and procedures........................   A-

THIS  STATEMENT OF  ADDITIONAL  INFORMATION  ("SAI") IS NOT A PROSPECTUS  AND IS
AUTHORIZED  FOR  DISTRIBUTION  TO  PROSPECTIVE  INVESTORS  ONLY IF  PRECEDED  OR
ACCOMPANIED  BY THE PROSPECTUS OF EATON VANCE  TAX-MANAGED  PREMIUM AND DIVIDEND
INCOME FUND (THE "FUND")  DATED [ ], 2005 (THE  "PROSPECTUS"),  AS  SUPPLEMENTED
FROM TIME TO TIME, WHICH IS INCORPORATED HEREIN BY REFERENCE. THIS SAI SHOULD BE
READ IN  CONJUNCTION  WITH  SUCH  PROSPECTUS,  A COPY OF WHICH  MAY BE  OBTAINED
WITHOUT CHARGE BY CONTACTING YOUR FINANCIAL  INTERMEDIARY OR CALLING THE FUND AT
1-800-225-6265.

THE INFORMATION IN THIS STATEMENT OF ADDITIONAL  INFORMATION IS NOT COMPLETE AND
MAY BE  CHANGED.  THESE  SECURITIES  MAY  NOT BE  SOLD  UNTIL  THE  REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE  COMMISSION IS EFFECTIVE.  THIS
STATEMENT OF ADDITIONAL INFORMATION,  WHICH IS NOT A PROSPECTUS, IS NOT AN OFFER
TO SELL THESE  SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

<PAGE>

Capitalized  terms used in this SAI and not otherwise  defined have the meanings
given them in the Fund's Prospectus.

ADDITIONAL INVESTMENT INFORMATION AND RESTRICTIONS

Primary investment strategies are described in the Prospectus.  The following is
a description of the various investment policies that may be engaged in, whether
as a primary or secondary  strategy,  and a summary of certain  attendant risks.
Eaton Vance and the Sub-Adviser may not buy any of the following  instruments or
use any of the following  techniques unless they believe that doing so will help
to achieve the Fund's investment objectives.

EQUITY INVESTMENTS.  As described in the Prospectus,  the Fund invests primarily
in common stocks.

PREFERRED  STOCKS.  The Fund may invest in preferred stocks of both domestic and
foreign issuers. Under normal market conditions,  the Fund expects, with respect
to that portion of its total assets invested in preferred stocks, to invest only
in preferred  stocks of investment  grade quality as determined by S&P, Fitch or
Moody's or, if unrated,  determined to be of comparable  quality by Eaton Vance.
The  foregoing  credit  quality  policies  apply only at the time a security  is
purchased, and the Fund is not required to dispose of a security in the event of
a downgrade of an  assessment of credit  quality or the  withdrawal of a rating.
Preferred  stocks involve credit risk,  which is the risk that a preferred stock
will  decline in price,  or fail to pay  dividends  when  expected,  because the
issuer  experiences  a decline in its  financial  status.  In addition to credit
risk,  investment in preferred stocks involves certain other risks as more fully
described in the Prospectus.

DERIVATIVE  INSTRUMENTS.  In addition to the intended  strategy of selling index
call  options,  the Fund  may  invest  up to 20% of its  total  assets  in other
derivative  instruments  (which are  instruments  that  derive  their value from
another instrument, security or index) acquired for hedging, risk management and
investment purposes (to gain exposure to securities, securities markets, markets
indices and/or currencies  consistent with the Fund's investment  objectives and
policies), provided that no more than 10% of the Fund's total assets (other than
writing call options on futures contracts on securities  indices as described in
the  prospectus)  may be invested in such  derivative  instruments  acquired for
non-hedging  purposes.  These  strategies  may be  executed  through  the use of
derivative  contracts in the United States or abroad.  In the course of pursuing
these investment strategies, the Fund may purchase and sell derivative contracts
based  on  exchange-listed  and  equity  and  fixed-income   indices  and  other
instruments;  purchase and sell futures contracts and options thereon; and enter
into various  transactions such as swaps, caps, floors or collars.  In addition,
derivatives  may include new  techniques,  instruments  or  strategies  that are
permitted as regulatory changes occur. Derivative instruments may be used by the
Fund  to  enhance  returns  or as a  substitute  for  the  purchase  or  sale of
securities.  Transactions  in derivative  instruments  involve a risk of loss or
depreciation due to unanticipated adverse changes in securities prices, interest
rates,  indices or the other  financial  instruments'  prices;  the inability to
close out a position; default by the counterparty; imperfect correlation between
a position and the desired hedge; tax constraints on closing out positions;  and
portfolio management constraints on securities subject to such transactions. The
loss on derivative  instruments (other than purchased options) may substantially
exceed an investment in these instruments.  In addition, the entire premium paid
for  purchased  options  may be lost before  they can be  profitably  exercised.
Transaction  costs are  incurred in opening and  closing  positions.  Derivative
instruments may sometimes  increase or leverage  exposure to a particular market
risk, thereby increasing price volatility.  Over-the-counter  ("OTC") derivative
instruments,  equity swaps and forward sales of stocks  involve an enhanced risk
that  the  issuer  or   counterparty   will  fail  to  perform  its  contractual
obligations.  Some  derivative  instruments  are not readily  marketable  or may
become illiquid under adverse market conditions.  In addition, during periods of
market  volatility,  a commodity  exchange  may  suspend or limit  trading in an
exchange-traded  derivative instrument,  which may make the contract 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
closing  out of  positions  to limit  losses.  The  staff of the SEC  takes  the
position  that  certain  purchased  OTC  options,  and assets  used as cover for
certain  written  OTC  options,  are  illiquid.  The  ability to  terminate  OTC
derivative  instruments may depend on the cooperation of the  counterparties  to
such contracts.  For thinly traded  derivative  instruments,  the only source of
price quotations may be the selling dealer or counterparty. In addition, certain
provisions  of the Internal  Revenue Code of 1986, as amended (the "Code") limit
the use of derivative  instruments.  The Fund has claimed an exclusion  from the
definition of a Commodity Pool Operator ("CPO") under the Commodity Exchange Act
and therefore is not subject to  registration  or regulation as a CPO. There can
be no assurance that the use of derivative instruments will be advantageous.

Foreign  exchange traded futures  contracts and options thereon may be used only
if the Adviser  determines that trading on such foreign exchange does not entail
risks,  including credit and liquidity risks,  that are materially  greater than
the risks associated with trading on CFTC-regulated exchanges.

                                       2
<PAGE>

SHORT SALES

The Fund may sell a  security  short if it owns at least an equal  amount of the
security sold short or another security convertible or exchangeable for an equal
amount of the security sold short  without  payment of further  compensation  (a
short sale against-the-box).

Purchasing securities to close out the short position can itself cause the price
of the securities to rise further,  thereby exacerbating the loss. Short-selling
exposes the Fund to unlimited risk with respect to that security due to the lack
of an upper limit on the price to which an  instrument  can rise.  Although  the
Fund  reserves  the  right to  utilize  short  sales,  the  Adviser  is under no
obligation to utilize short sales at all.

SECURITIES LENDING

As described  in the  Prospectus,  the Fund may lend a portion of its  portfolio
securities to broker-dealers  or other  institutional  borrowers.  Loans will be
made only to  organizations  whose credit  quality or claims  paying  ability is
considered by the Adviser to be at least investment  grade. All securities loans
will be  collateralized on a continuous basis by cash, cash equivalents (such as
money market  instruments) or other liquid  securities held by the custodian and
maintained  in an amount at least  equal to the market  value of the  securities
loaned.  The Fund may  receive  loan  fees in  connection  with  loans  that are
collateralized  by  securities  or on loans of  securities  for  which  there is
special  demand.  The Fund may also seek to earn income on  securities  loans by
reinvesting  cash  collateral  in  securities  consistent  with  its  investment
objectives  and  policies,  seeking to invest at rates that are higher  than the
"rebate"  rate that it normally  will pay to the  borrower  with respect to such
cash  collateral.  Any  such  reinvestment  will be  subject  to the  investment
policies,  restrictions and risk considerations  described in the Prospectus and
in this SAI.

Securities  loans  may  result  in delays  in  recovering,  or a failure  of the
borrower to return, the loaned securities.  The defaulting  borrower  ordinarily
would be  liable  to the Fund for any  losses  resulting  from  such  delays  or
failures, and the collateral provided in connection with the loan normally would
also be available for that purpose.  Securities loans normally may be terminated
by either the Fund or the borrower at any time. Upon  termination and the return
of the loaned securities,  the Fund would be required to return the related cash
or  securities  collateral  to the  borrower and it may be required to liquidate
longer  term  portfolio  securities  in order to do so. To the extent  that such
securities have decreased in value, this may result in the Fund realizing a loss
at a time when it would not  otherwise  do so. The Fund also may incur losses if
it is unable to reinvest cash collateral at rates higher than applicable  rebate
rates paid to  borrowers  and  related  administrative  costs.  These  risks are
substantially the same as those incurred through investment leverage and will be
subject  to  the  investment  policies,  restrictions  and  risk  considerations
described in the Prospectus and in this SAI.

The Fund will receive amounts equivalent to any interest or other  distributions
paid on securities  while they are on loan, and the Fund will not be entitled to
exercise voting or other beneficial rights on loaned  securities.  The Fund will
exercise its right to terminate  loans and thereby regain these rights  whenever
the Adviser  considers  it to be in the Fund's  interest  to do so,  taking into
account the related loss of reinvestment income and other factors.

TEMPORARY INVESTMENTS

The Fund may invest  temporarily in cash or cash  equivalents.  Cash equivalents
are  highly  liquid,  short-term  securities  such  as  commercial  paper,  time
deposits,   certificates  of  deposit,  short-term  notes  and  short-term  U.S.
government obligations.

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 outstanding shares
of the Fund. As a matter of fundamental policy, the Fund may not:

(1) Borrow money,  except as permitted by the Investment Company Act of 1940, as
    amended  (the  "1940  Act").  The  1940  Act  currently  requires  that  any
    indebtedness  incurred  by a  closed-end  investment  company  have an asset
    coverage of at least 300%;

(2) Issue  senior  securities,  as  defined  in the  1940  Act,  other  than (a)
    preferred shares which  immediately  after issuance will have asset coverage
    of at least 200%, (b)  indebtedness  which  immediately  after issuance will
    have asset  coverage of at least 300%,  or (c) the  borrowings  permitted by

                                       3
<PAGE>

    investment  restriction  (1) above.  The 1940 Act currently  defines "senior
    security" as any bond,  debenture,  note or similar obligation or instrument
    constituting a security and evidencing indebtedness and any stock of a class
    having priority over any other class as to distribution of assets or payment
    of dividends.  Debt and equity securities issued by a closed-end  investment
    company  meeting the foregoing  asset coverage  provisions are excluded from
    the general 1940 Act prohibition on the issuance of senior securities;

(3) 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  purchase  of  investment  assets  with the  proceeds of a
    permitted  borrowing  or  securities  offering  will not be deemed to be the
    purchase of securities on margin;

(4) Underwrite  securities  issued by other  persons,  except  insofar as it may
    technically be deemed to be an underwriter under the Securities Act of 1933,
    as amended, in selling or disposing of a portfolio investment;

(5) Make  loans  to  other  persons,  except  by (a)  the  acquisition  of  loan
    interests,  debt  securities  and  other  obligations  in which  the Fund is
    authorized  to invest  in  accordance  with its  investment  objectives  and
    policies,  (b)  entering  into  repurchase  agreements  and (c)  lending its
    portfolio securities;

(6) Purchase or sell real estate,  although it may purchase and sell  securities
    which are  secured by  interests  in real estate and  securities  of issuers
    which invest or deal in real estate. The Fund reserves the freedom of action
    to hold and to sell real  estate  acquired as a result of the  ownership  of
    securities;

(7) Purchase or sell physical  commodities or contracts for the purchase or sale
    of  physical  commodities.  Physical  commodities  do  not  include  futures
    contracts  with  respect  to  securities,  securities  indices,  currencies,
    interest or other financial instruments;

(8) With  respect to 75% of its total  assets,  invest more than 5% of its total
    assets in the securities of a single issuer or purchase more than 10% of the
    outstanding voting securities of a single issuer,  except obligations issued
    or guaranteed by the U.S. government,  its agencies or instrumentalities and
    except securities of other investment companies; and

(9) Invest 25% or more of its total  assets in any single  industry  or group of
    industries   (other  than  securities  issued  or  guaranteed  by  the  U.S.
    government or its agencies or instrumentalities).

The Fund may borrow money as a temporary  measure for extraordinary or emergency
purposes,  including the payment of dividends  and the  settlement of securities
transactions  which  otherwise  might  require  untimely  dispositions  of  Fund
securities.  The 1940 Act  currently  requires  that the Fund  have  300%  asset
coverage with respect to all borrowings other than temporary borrowings.

For purposes of construing  restriction  (9), a large  economic or market sector
shall not be construed as a group of industries.

The Fund has adopted the following nonfundamental investment policy which may be
changed by the Board without approval of the Fund's shareholders. As a matter of
nonfundamental  policy,  the Fund  may not make  short  sales of  securities  or
maintain a short position, unless at all times when a short position is open the
Fund  either  owns an  equal  amount  of  such  securities  or  owns  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.

Upon the Board's approval, the Fund may invest more than 10% of its total assets
in one  or  more  other  management  investment  companies  (or  may  invest  in
affiliated  investment  companies)  to the extent  permitted by the 1940 Act and
rules thereunder.

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 assets 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  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 (or as determined by the Adviser if the security is not rated by
a rating  agency) will not compel the Fund to dispose of such  security or other
asset. Notwithstanding the foregoing, the Fund must always be in compliance with
the borrowing policies set forth above.

                                       4
<PAGE>

TRUSTEES AND OFFICERS

The  Trustees  of the  Fund  are  responsible  for the  overall  management  and
supervision  of the affairs of the Fund.  The  Trustees and officers of the Fund
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. The "noninterested
Trustees"  consist of those  Trustees  who are not  "interested  persons" of the
Fund, as that term is defined  under the 1940 Act. The business  address of each
Trustee and  officer is The Eaton  Vance  Building,  255 State  Street,  Boston,
Massachusetts  02109.  As used in this SAI,  "EVC"  refers to Eaton Vance Corp.,
"EV"  refers  to Eaton  Vance,  Inc.,  "BMR"  refers to  Boston  Management  and
Research,  and "EVD" refers to Eaton Vance  Distributors Inc. EVC and EV are the
corporate parent and trustee,  respectively, of Eaton Vance and BMR. Eaton Vance
has engaged  Rampart  Investment  Management  Company,  Inc.  ("Rampart"  or the
"Sub-Adviser")  to serve as  sub-adviser  to the Fund to  provide  advice on and
execution  of the  construction  of the  Fund's  equity  portfolio  and  options
strategy,  pursuant to an investment  sub-advisory  agreement (the "Sub-Advisory
Agreement") between the Adviser and Rampart.

<TABLE>

[INDEPENDENT TRUSTEE INFORMATION IN REQUIRED TABULAR FORMAT TO BE ADDED BY AMENDMENT UPON ELECTION OF FULL BOARD OF TRUSTEES]
<CAPTION>

                                                                                                 NUMBER OF
                                                                                               PORTFOLIOS IN
                                               TERM OF OFFICE                                  FUND COMPLEX             OTHER
        NAME AND                POSITION(S)      AND LENGTH         PRINCIPAL OCCUPATION(S)     OVERSEEN BY         DIRECTORSHIPS
      DATE OF BIRTH            WITH THE FUND     OF SERVICE         DURING PAST FIVE YEARS      TRUSTEE(1)              HELD
-----------------------------------------------------------------------------------------------------------------------------------
<S>                          <C>              <C>                <C>                                <C>      <C>
TRUSTEES                                                         Executive Vice President
Thomas E. Faust Jr.          Trustee and      Since 10/5/05      of Eaton Vance, BMR, EVC           158      Director of EVC
5/31/58                      Vice President   Three Years        and EV; Chief Investment
                                                                 Officer of Eaton Vance and
                                                                 BMR and Director of EVC.
                                                                 Chief Executive Officer of
                                                                 Belair Capital Fund LLC,
                                                                 Belcrest Capital Fund LLC,
                                                                 Belmar Capital Fund LLC;
                                                                 Belport Capital Fund LLC
                                                                 and Belrose Capital Fund
                                                                 LLC (private investment
                                                                 companies sponsored by
                                                                 Eaton Vance). Officer of
                                                                 62 registered investment
                                                                 companies managed by Eaton
                                                                 Vance or BMR.

Alan R. Dynner               Trustee and      Since 10/5/05      Vice President, Secretary
11/9/41                      Secretary                           and Chief Legal Counsel of
                                                                 BMR, Eaton Vance, EVD EV
                                                                 and EVC. Officer of 158
                                                                 registered investment
                                                                 companies managed by Eaton
                                                                 Vance or BMR.

----------
(1) INCLUDES BOTH MASTER AND FEEDER FUNDS IN MASTER-FEEDER STRUCTURE.
(2) CLASS I TRUSTEES WHOSE TERM EXPIRES IN 2006.
(3) CLASS II TRUSTEES WHOSE TERM  EXPIRES IN 2007.
(4) CLASS III  TRUSTEES  WHOSE  TERM  EXPIRES  IN 2008.
</TABLE>

                                             5
<PAGE>

<TABLE>
PRINCIPAL OFFICERS WHO ARE NOT TRUSTEES
<CAPTION>

                                                          TERM OF OFFICE
                                      POSITION(S)           AND LENGTH
  NAME AND DATE OF BIRTH             WITH THE FUND          OF SERVICE             PRINCIPAL OCCUPATIONS DURING PAST FIVE YEARS
------------------------------------------------------------------------------------------------------------------------------------
<S>                              <C>                     <C>               <C>
Duncan W. Richardson             President and           Since 10/5/05     Senior Vice  President and Chief Equity  Investment
10/26/57                         Chief Executive                           Officer of Eaton Vance and BMR. Officer of 49 registered
                                 Officer                                   investment companies managed by Eaton Vance or BMR.

James B. Hawkes                  Vice President          Since 10/5/05     Chairman, President and Chief Executive Officer of BMR,
11/9/41                                                                    Eaton Vance, EVC and EV; Director of EV; Vice President
                                                                           and Director of EVD. Trustee and/or officer of 158
                                                                           registered investment companies in the Eaton Vance Fund
                                                                           Complex. Mr. Hawkes is an interested person because of
                                                                           his positions with BMR, Eaton Vance, EVC and EV, which
                                                                           are affiliates of the Fund.

Barbara E. Campbell              Treasurer and           Since 10/5/05     Vice President of BMR  and  Eaton Vance.  Officer  of 195
6/19/57                          Principal                                 registered investment companies managed by Eaton Vance or
                                 Financial and                             BMR.
                                 Accounting Officer

Paul M. O'Neil                   Chief Compliance        Since 10/5/05     Vice President of  Eaton Vance  and BMR.  Officer  of 158
7/11/53                          Officer                                   registered investment companies managed by Eaton Vance or
                                                                           BMR.
</TABLE>

[The Board of Trustees of the Fund has several  standing  Committees,  including
the Governance Committee, the Audit Committee,  and the Special Committee.  Each
such Committee is comprised of only noninterested Trustees.]

[Messrs.  [ ], [ ], [ ], [ ] and [ ] are members of the Governance  Committee of
the Board of Trustees of the Fund. [ ] currently  serves as  chairperson  of the
Governance  Committee.  The purpose of the Governance  Committee is to consider,
evaluate and make  recommendations  to the Board of Trustees with respect to the
structure,  membership and operation of the Board of Trustees and the Committees
thereof,  including the nomination and selection of noninterested Trustees and a
Chairperson of the Board of Trustees and compensation of such persons.]

[The  Governance  Committee  will,  when a  vacancy  exists  or is  anticipated,
consider any nominee for noninterested  Trustee  recommended by a shareholder if
such  recommendation  is  submitted  in  writing  to the  Governance  Committee,
contains sufficient  background  information  concerning the candidate including
evidence  the  candidate  is  willing  to serve as a  noninterested  Trustee  if
selected for the position and is received in a sufficiently timely manner.]

[Messrs.  [ ]  (Chairman),  [ ],  [ ],  [ ] and [ ] are  members  of  the  Audit
Committee  of the Board of  Trustees  of the Fund.  The  Board of  Trustees  has
designated  Messrs.  [ ], [ ] and [ ], each a  noninterested  Trustee,  as audit
committee financial experts.  The Audit Committee's  purposes are to (i) oversee
the Fund's accounting and financial  reporting  processes,  its internal control
over  financial  reporting,  and, as  appropriate,  the  internal  control  over
financial   reporting  of  certain  service  providers;   (ii)  oversee  or,  as
appropriate,  assist Board  oversight of the quality and integrity of the Fund's
financial  statements and the independent audit thereof;  (iii) oversee,  or, as
appropriate,  assist Board  oversight of, the Fund's  compliance  with legal and
regulatory  requirements  that  relate to the Fund's  accounting  and  financial
reporting,  internal  control over financial  reporting and independent  audits;
(iv)  approve  prior  to  appointment  the  engagement  and,  when  appropriate,
replacement  of the  independent  registered  public  accounting  firm,  and, if
applicable,  nominate the independent  registered  public  accounting firm to be
proposed for  shareholder  ratification  in any proxy statement of the Fund; (v)
evaluate the  qualifications,  independence  and  performance of the independent
registered public accounting firm and the audit partner in charge of leading the
audit; and (vi) prepare,  as necessary,  audit committee reports consistent with
the  requirements  of Rule 306 of  Regulation  S-K for  inclusion  in the  proxy
statement of the Fund.]

[Messrs. [ ] (Chairman), [ ], [ ], [ ], [ ] and [ ] are currently members of the
Special  Committee  of the Board of  Trustees of the Fund.  The  purposes of the
Special  Committee  are to consider,  evaluate and make  recommendations  to the
Board of Trustees concerning the following matters: (i) contractual arrangements
with each  service  provider  to the  Fund,  including  advisory,  sub-advisory,
transfer  agency,  custodial  and fund  accounting,  distribution  services  and
administrative services; (ii) any and all other matters in which any of the Fund
service  providers  (including Eaton Vance or any affiliated entity thereof) has
an actual or potential  conflict of interest  with the interests of the Fund, or

                                        6
<PAGE>

investors  therein;  and (iii) any other  matter  appropriate  for review by the
non-interested Trustees, unless the matter is within the responsibilities of the
Audit Committee or the Governance Committee of the Fund.]

[As of the date of this SAI,  the  Governance  Committee  has met [ ], the Audit
Committee has met [ ] and the Special Committee has met [ ].]

[When  considering  approval of the Advisory  Agreement between the Fund and the
Adviser,  and the Sub-Advisory  Agreement  between the Adviser and Rampart,  the
Special Committee considered, among other things, the following:

>>       A  report  comparing  the  fees and  expenses  of the Fund and  certain
         profitability analyses prepared by Eaton Vance and Rampart;

>>       Information on the relevant peer group(s) of funds;

>>       The economic outlook and the general investment outlook in the relevant
         investment markets;

>>       Eaton  Vance's and Rampart's  results and  financial  condition and the
         overall organization of the Adviser and the Sub-Adviser;

>>       Arrangements regarding the distribution of Fund shares;

>>       The procedures used to determine the fair value of the Fund's assets;

>>       The  allocation of brokerage  and the benefits  received by the Adviser
         and the  Sub-Adviser as the result of brokerage  allocation,  including
         allocations to soft dollar brokerage and allocations to firms that sell
         Eaton Vance fund shares;

>>       Eaton  Vance's  management  of the  relationship  with  the  custodian,
         subcustodians and fund accountants;

>>       The resources devoted to Eaton Vance's compliance efforts undertaken on
         behalf of the funds it manages  and the record of  compliance  with the
         investment  policies  and  restrictions  and with  policies on personal
         securities transactions;

>>       Rampart's compliance efforts with respect to the accounts it manages;

>>       The quality, nature, cost and character of the administrative and other
         non-investment  management  services  provided  by Eaton  Vance and its
         affiliates and by Rampart;

>>       The terms of the Advisory Agreement and the Sub-Advisory Agreement, and
         the  reasonableness  and  appropriateness of the particular fee paid by
         the Fund for the services described therein;

>>       Operating expenses  (including  transfer agency expenses) to be paid to
         third parties; and

>>       Information   to  be  provided  to  investors,   including  the  Fund's
         shareholders.]

[In  evaluating  the Advisory  Agreement  between the Fund and Eaton Vance,  the
Sub-Advisory  Agreement  between the Adviser and Rampart,  the Special Committee
reviewed  material  furnished  by Eaton Vance and  Rampart at the initial  Board
meeting held on [ ], 2005,  including the above  referenced  considerations  and
information  relating  to the  education,  experience  and number of  investment
professionals  and other personnel who would provide services under the Advisory
Agreement and under the Sub-Advisory Agreement.  The Special Committee also took
into account the time and  attention to be devoted by senior  management  to the
Fund and the other funds in the complex.  The Special  Committee  evaluated  the
level  of skill  required  to  manage  the Fund  and  concluded  that the  human
resources  available at Eaton Vance were appropriate to fulfill  effectively the
duties  of the  Adviser  on  behalf  of the Fund.  The  Special  Committee  also
considered the business  reputation of the Adviser,  its financial resources and
professional  liability  insurance coverage and concluded that Eaton Vance would
be able to meet  any  reasonably  foreseeable  obligations  under  the  Advisory
Agreement.  The Special  Committee also  considered  the business  reputation of
Rampart,  Rampart's respective  investment strategies and its past experience in
implementing these strategies.]

[The Special Committee received information concerning the investment philosophy
and investment  process to be applied by Eaton Vance and Rampart in managing the
Fund. In this regard,  the Special  Committee  considered Eaton Vance's in-house
research  capabilities  as well as other  resources  available  to  Eaton  Vance
personnel, including research services that may be available to Eaton Vance as a
result of  securities  transactions  effected for the Fund and other  investment
advisory  clients.  The  Special  Committee  concluded  that Eaton  Vance's  and

                                       7
<PAGE>

Rampart's  investment  process,  research  capabilities and philosophy were well
suited to the Fund, given the Fund's investment objective and policies.]

[In addition to the factors mentioned above, the Special Committee also reviewed
the level of the  Adviser's  profits in respect of the  management  of the Eaton
Vance funds,  including the Fund.  The Special  Committee  considered  the other
profits  realized  by Eaton  Vance and its  affiliates  in  connection  with the
operation of the Fund. The Special  Committee also considered  profit margins of
Eaton Vance in comparison with available industry data. In addition, the Special
Committee  considered  the  fiduciary  duty assumed by the Adviser in connection
with  the  service  rendered  to the  Fund and the  business  reputation  of the
Adviser,  its  financial  resources  and its  professional  liability  insurance
coverage.  In evaluating the fees to be paid to Rampart,  the Special  Committee
considered and discussed fees paid to other  investment  sub-advisers in similar
circumstances, as well as fees charged by Rampart to its other clients.]

[The Special  Committee  did not consider any single  factor as  controlling  in
determining   whether  or  not  to  approve  the  Advisory   Agreement  and  the
Sub-Advisory  Agreement.  Nor are the items described herein all encompassing of
the matters  considered by the Special  Committee.  In assessing the information
provided by Eaton Vance,  Rampart and their  affiliates,  the Special  Committee
also took into consideration the benefits to shareholders of investing in a fund
that is part of a large  family  of funds  which  provides  a large  variety  of
shareholder services.]

[Based on its  consideration of all factors that it deemed material and assisted
by the advice of its independent  counsel,  the Special Committee concluded that
the approval of the Advisory Agreement and the Sub-Advisory Agreement, including
the fee structure  (described  herein) is in the interests of shareholders.  The
Special   Committee  also  considered  that  the  Adviser  would  enter  into  a
Structuring  Fee/Shareholder  Servicing  Agreement with [ ], whereby the Adviser
(and not the Fund) would pay [ ] to provide upon request certain market data and
reports to support shareholder services pursuant to the agreement.]

SHARE OWNERSHIP

The  following  table shows the dollar range of equity  securities  beneficially
owned by each  Trustee in the Fund and all Eaton  Vance  Funds  overseen  by the
Trustee as of December 31, 2004.

                                                AGGREGATE DOLLAR RANGE OF EQUITY
                          DOLLAR RANGE OF     SECURITIES OWNED IN ALL REGISTERED
                         EQUITY SECURITIES     FUNDS OVERSEEN BY TRUSTEE IN THE
NAME OF TRUSTEE          OWNED IN THE FUND          EATON VANCE FUND COMPLEX
--------------------------------------------------------------------------------
INTERESTED TRUSTEE

NON-INTERESTED TRUSTEES


----------

[As of December 31, 2004, no  non-interested  Trustee or any of their  immediate
family members owned  beneficially  or of record any class of securities of EVC,
EVD,  Rampart or any person  controlling,  controlled by or under common control
with EVC, EVD or Rampart.]

[During the calendar  years ended  December  31, 2003 and December 31, 2004,  no
non-interested Trustee (or their immediate family members) had:

1. Any direct or indirect  interest in Eaton  Vance,  EVC,  EVD,  Rampart or any
   person  controlling,  controlled by or under common  control with EVC, EVD or
   Rampart;

2. Any direct or  indirect  material  interest in any  transaction  or series of
   similar  transactions  with (i) the Fund; (ii) another fund managed by EVC or
   Rampart,  distributed by EVD or a person controlling,  controlled by or under
   common  control with EVC, EVD or Rampart;  (iii) EVC, EVD or Rampart;  (iv) a
   person  controlling,  controlled by or under common  control with EVC, EVD or
   Rampart; or (v) an officer of any of the above; or

3. Any direct or indirect  relationship  with (i) the Fund;  (ii)  another  fund
   managed  by EVC or  Rampart,  distributed  by  EVD or a  person  controlling,
   controlled  by or under common  control with EVC, EVD or Rampart;  (iii) EVC,
   EVD or Rampart;  (iv) a person  controlling,  controlled  by or under  common
   control with EVC, EVD or Rampart; or (v) an officer of any of the above.]

                                       8
<PAGE>

[During the  calendar  years ended  December  31, 2003 and  December 31, 2004 no
officer of EVC, EVD, Rampart or any person  controlling,  controlled by or under
common  control with EVC,  EVD or Rampart  served on the Board of Directors of a
company  where a  noninterested  Trustee  of the Fund or any of their  immediate
family members served as an officer.]

Trustees of the Fund who are not affiliated  with the 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 Fund 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
Fund's assets, liabilities,  and net income per share, and will not obligate the
Fund to retain  the  services  of any  Trustee or  obligate  the Fund to pay any
particular  level of  compensation  to the  Trustee.  The  Fund  does not have a
retirement plan for its Trustees.

The fees and  expenses  of the  Trustees  of the Fund are paid by the  Fund.  (A
Trustee of the Fund who is a member of the Eaton Vance organization  receives no
compensation  from the Fund.) For the Fund's  fiscal  year ending  December  31,
2005,  it is  anticipated  that the Trustees of the Fund will earn the following
compensation  in their  capacities as Trustees.  For the year ended December 31,
2004, the Trustees earned the  compensation  set forth below in their capacities
as Trustees from the funds in the Eaton Vance Fund Complex(1).

SOURCE OF
COMPENSATION
-----------------------------------------------------
Fund*....................................................
Fund Complex**...........................................

----------
  *  ESTIMATED
 **  [     ] and [     ] were elected on [      ], 2005 and they did not receive
     fees for the period.

(1)  AS OF [   ], 2005, THE EATON VANCE FUND COMPLEX CONSISTED OF [ ] REGISTERED
     INVESTMENT COMPANIES OR SERIES THEREOF.

(2)  INCLUDES $[    ] OF DEFERRED COMPENSATION.

(3)  INCLUDES $[    ] OF DEFERRED COMPENSATION.

PROXY VOTING  POLICY.  The Fund is subject to the Eaton Vance Funds Proxy Voting
Policy and  Procedures,  pursuant to which the  Trustees  have  delegated  proxy
voting  responsibility  to the Adviser and adopted the  Adviser's  Proxy  Voting
Policies and  Procedures  (the  "Policies")  which are attached as Appendix A to
this SAI. The Trustees will review the Fund's proxy voting  records from time to
time and will annually consider approving the Policies for the upcoming year. In
the event that a conflict of interest arises between the Fund's shareholders and
the Adviser or any of its  affiliates or any affiliate of the Fund,  the Adviser
will generally  refrain from voting the proxies related to the companies  giving
rise to such conflict  until it consults  with the Board of the Fund,  except as
contemplated under the Policies. The Board's Special Committee will instruct the
Adviser on the appropriate  course of action. The Fund's and the Adviser's Proxy
Voting Policies and Procedures are attached as Appendix A to this SAI.

Information  on how the Fund voted  proxies  relating  to  portfolio  securities
during the 12 month  period  ended June 30, 2005 will be  available  (1) without
charge, upon request, by calling  1-800-262-1122,  and (2) on the Securities and
Exchange Commission's website at http://www.sec.gov.

INVESTMENT ADVISORY AND OTHER SERVICES

THE  INVESTMENT  ADVISER.  Eaton  Vance,  its  affiliates  and  its  predecessor
companies have been managing assets of individuals and  institutions  since 1924
and of  investment  companies  since  1931.  They  maintain  a  large  staff  of
experienced  fixed-income,  senior loan and equity  investment  professionals to
service the needs of their clients.  The equity group covers stocks ranging from
blue chip to emerging  growth  companies.  Eaton Vance and its affiliates act as
adviser to a family of mutual funds,  and individual  and various  institutional
accounts.   The   fixed-income   group   focuses   on  all   kinds  of   taxable
investment-grade  and high-yield  securities,  tax-exempt  investment-grade  and
high-yield  securities,  and U.S. government  securities.  The senior loan group
focuses on senior  floating rate loans,  unsecured loans and other floating rate
debt  securities  such as notes,  bonds and asset backed  securities,  including
corporations, hospitals, retirement plans, universities, foundations and trusts.

                                       9
<PAGE>

The Fund will be  responsible  for all of its costs and expenses  not  expressly
stated  to be  payable  by Eaton  Vance  under  the  Advisory  Agreement  or the
Administration  Agreement.  Such  costs  and  expenses  to be  borne by the Fund
include,  without  limitation:  custody and transfer  agency fees and  expenses,
including those incurred for determining net asset value and keeping  accounting
books and records; expenses of pricing and valuation services; the cost of share
certificates;  membership dues in investment company organizations;  expenses of
acquiring,  holding and disposing of securities and other investments;  fees and
expenses of registering  under the securities  laws, stock exchange listing fees
and  governmental  fees;  rating  agency fees and  preferred  share  remarketing
expenses;  expenses  of  reports to  shareholders,  proxy  statements  and other
expenses of shareholders'  meetings;  insurance  premiums;  printing and mailing
expenses;  interest,  taxes and corporate fees;  legal and accounting  expenses;
compensation and expenses of Trustees not affiliated with Eaton Vance;  expenses
of conducting repurchase offers for the purpose of repurchasing Fund shares; and
investment  advisory and  administration  fees. The Fund will also bear expenses
incurred in connection  with any litigation in which the Fund is a party and any
legal obligation to indemnify its officers and Trustees with respect thereto, to
the extent not covered by insurance.

Pursuant to an investment  advisory  agreement between the Adviser and the Fund,
the Fund has  agreed to pay an  investment  advisory  fee,  payable on a monthly
basis, at an annual rate of [ ]% of the average daily gross mean total assets of
the Fund,  including  any form of  investment  leverage that the Fund may in the
future determine to utilize, minus all expenses incurred in the normal course of
operations, but not excluding any liabilities or obligations attributable to any
future  investment  leverage  obtained  through  (i)  indebtedness  of any  type
(including without  limitation,  borrowing through a credit  facility/commercial
paper  program  or the  issuance  of debt  securities),  (ii)  the  issuance  of
preferred shares or other similar preference securities,  (iii) the reinvestment
of  collateral  received for  securities  loaned in  accordance  with the Fund's
investment objectives and policies and/or (iv) any other means.

The  Advisory  Agreement  with the  Adviser  continues  in effect for an initial
period of two years until [ ], 200[ ], and from year to year  thereafter so long
as such  continuance is approved at least annually (i) by the vote of a majority
of the  noninterested  Trustees of the Fund or of the  Adviser,  such vote being
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 Fund or by vote of a
majority  of the  outstanding  shares of the  Fund.  The  Fund's  Administration
Agreement  continues in effect from year to year so long as such  continuance is
approved at least  annually  by the vote of a majority  of the Fund's  Trustees.
Each agreement may be terminated at any time without penalty on sixty (60) days'
written notice by the Trustees of the Fund or Eaton Vance, as applicable,  or by
vote of the majority of the outstanding  shares of the Fund. Each agreement will
terminate automatically in the event of its assignment.  Each agreement provides
that,  in the absence of willful  misfeasance,  bad faith,  gross  negligence or
reckless  disregard  of its  obligations  or  duties  to  the  Fund  under  such
agreements  on the part of Eaton  Vance,  Eaton Vance shall not be liable to the
Fund for any loss incurred, to the extent not covered by insurance.

The  Advisory  Agreement  provides  that  Eaton  Vance  may  engage  one or more
investment  sub-advisers to assist with some or all aspects of the management of
the Fund's investments  subject to such approvals as are required under the 1940
Act.  Pursuant  to these  provisions,  Eaton  Vance has  engaged  Rampart,  as a
sub-adviser  to provide  assistance  with the  development,  implementation  and
execution of the Fund's options strategy.  The Advisory  Agreement provides that
Eaton Vance may terminate any sub-advisory  agreement  entered into and directly
assume any functions performed by the sub-adviser, upon approval of the Board of
Trustees, without the need for approval of the shareholders of the Fund.

Eaton Vance is a business trust organized under  Massachusetts law. EV serves as
trustee of Eaton Vance.  Eaton Vance and EV are  subsidiaries of EVC, a Maryland
corporation and  publicly-held  holding  company.  Through its  subsidiaries and
affiliates EVC engages primarily in investment  management,  administration  and
marketing  activities.  The  Directors  of EVC are James B.  Hawkes,  John G. L.
Cabot, Thomas E. Faust Jr., Leo I. Higdon, Jr., Vincent M. O'Reilly, Winthrop H.
Smith,  Jr. and Ralph Z. Sorenson.  All shares of the outstanding  Voting Common
Stock of EVC are deposited in a voting trust,  the voting  trustees of which are
Messrs. Hawkes, Faust, Jeffrey P. Beale, Alan R. Dynner, Thomas J. Fetter, Scott
H. Page, Duncan W. Richardson, William M. Steul, Payson F. Swaffield, Michael W.
Weilheimer  and Wharton P.  Whitaker  (all of whom are officers of Eaton Vance).
The  voting  trustees  have  unrestricted  voting  rights  for the  election  of
Directors of EVC. All of the outstanding voting trust receipts issued under said
voting trust are owned by certain of the officers of BMR and Eaton Vance who are
also  officers,  or officers and  Directors  of EVC and EV. As  indicated  under
"Trustees and officers",  all of the officers of the Fund (as well as Mr. Hawkes
who is also a Trustee) hold positions in the Eaton Vance organization.

EVC and its  affiliates and their officers and employees from time to time enter
into  transactions  with various  banks,  including  the  custodian of the Fund,
Investors  Bank & Trust Company  ("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 and such
banks.

                                       10
<PAGE>

THE SUB-ADVISER.  Rampart acts as the Fund's investment sub-adviser and provides
advice and  assistance  in pursuing the Fund's  options  strategy  pursuant to a
sub-advisory  agreement  between  the Adviser  and  Rampart  (the  "Sub-Advisory
Agreement").  Rampart, a Massachusetts  corporation,  was founded in 1983 by its
current owners Ronald M. Egalka and David R. Fraley.  The  Sub-Adviser  provides
customized investment management services within a core competency in options to
a spectrum of institutional  clients.  Since its inception,  the Sub-Adviser has
continuously  expanded its computer  modeling and  analytical  capabilities  and
created tools to capitalize on opportunities  in the capital markets.  Rampart's
principal office is located at One International  Place, Boston, MA 02110. As of
[ ], 2005 Rampart had approximately $[ ] billion of assets under management.

Under the terms of its  Sub-Advisory  Agreement,  Rampart  provides  advice  and
assistance  with the  development,  implementation  and  execution of the Fund's
options  strategy,  all subject to the  supervision  and direction of the Fund's
Board of Trustees and the Adviser.  For services  rendered by Rampart  under the
Sub-Advisory  Agreement,  Eaton Vance pays Rampart a fee, payable monthly, in an
annual amount equal to [ ]% of the average daily gross assets of the Fund.

The  Sub-Advisory  Agreement with Rampart  continues  until [ ], 200[ ] and from
year to year thereafter if approved annually (i) by the Fund's Board of Trustees
or by the holders of a majority of its outstanding voting securities and (ii) by
a majority of the Trustees who are not  "interested  persons" (as defined in the
1940 Act) of any party to the Sub-Advisory  Agreement, by vote cast in person at
a meeting  called for the purpose of voting on such approval.  The  Sub-Advisory
Agreement  terminates  automatically  on its  assignment  and may be  terminated
without  penalty on 60 days written  notice at the option of either the Adviser,
by the Fund's  Board of Trustees  or by a vote of a majority  (as defined in the
1940 Act) of the Fund's  outstanding  shares or by Rampart upon 3 months notice.
As discussed above,  Eaton Vance may terminate the  Sub-Advisory  Agreement with
Rampart and directly assume  responsibility for the services provided by Rampart
upon  approval  by the Board of Trustees  without  the need for  approval of the
shareholders of the Fund.

The Sub-Advisory  Agreement with Rampart provides that in the absence of willful
misfeasance,   bad  faith,  gross  negligence  or  reckless  disregard  for  its
obligations  and  duties  thereunder,  Rampart  is not  liable  for any error or
judgment or mistake of law or for any loss suffered by the Fund.

[PORTFOLIO  MANAGERS.  The  portfolio  managers of the Fund are Walter A. Row of
Eaton Vance and Ronald M.  Egalka of Rampart.  Each  portfolio  manager  manages
other investment  companies and/or investment  accounts in addition to the Fund.
The  following  tables  show,  as of [ ],  2005,  the  number of  accounts  each
portfolio  manager managed in each of the listed categories and the total assets
in the accounts managed within each category. The table also shows the number of
accounts with respect to which the advisory fee is based on the  performance  of
the account,  if any, and the total assets in those  accounts.  [TO BE COMPLETED
UPON AMENDMENT]

                                       11
<PAGE>

<TABLE>
<CAPTION>
                                                                                                           NUMBER OF  TOTAL ASSETS
                                                                                                            ACCOUNTS   OF ACCOUNTS
                                                                              NUMBER                        PAYING A      PAYING A
                                                                                  OF   TOTAL ASSETS OF   PERFORMANCE   PERFORMANCE
                                                                            ACCOUNTS         ACCOUNTS*           FEE           FEE
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                    <C>                          <C>
WALTER A. ROW, III
Registered Investment Companies**.......................................                $                             $
Other Pooled Investment Vehicles........................................                $                             $
Other Accounts..........................................................                $                             $

RONALD M. EGALKA
Registered Investment Companies.........................................                $                             $
Other Pooled Investment Vehicles........................................                $                             $
Other Accounts..........................................................                $                             $
</TABLE>
----------
  *  IN MILLIONS OF DOLLARS.

**  FOR  REGISTERED  INVESTMENT  COMPANIES,  ASSETS  REPRESENT NET ASSETS OF ALL
    OPEN-END INVESTMENT COMPANIES AND GROSS ASSETS OF ALL CLOSED-END  INVESTMENT
    COMPANIES.

None of the portfolio  managers  beneficially owned shares of the Fund as of the
date of this SAI.]

[It is possible  that  conflicts  of interest may arise in  connection  with the
portfolio managers' management of the Fund's investments on the one hand and the
investments of other  accounts for which the Fund manager is responsible  for on
the other.  For example,  a portfolio  manager may have conflicts of interest in
allocating  management time,  resources and investment  opportunities  among the
Fund and other  accounts  he  advises.  In addition  due to  differences  in the
investment strategies or restrictions between the Fund and the other accounts, a
portfolio  manager may take action with respect to another  account that differs
from the action taken with respect to the Fund. In some cases,  another  account
managed by a portfolio  manager may compensate  the investment  adviser based on
the performance of the securities held by that account.  The existence of such a
performance  based fee may  create  additional  conflicts  of  interest  for the
portfolio manager in the allocation of management time, resources and investment
opportunities.  Whenever conflicts of interest arise, the portfolio manager will
endeavor to exercise his discretion in a manner that he believes is equitable to
all interested persons.]

[EATON  VANCE'S  COMPENSATION  STRUCTURE  AND METHOD TO DETERMINE  COMPENSATION.
Compensation  of  the  Adviser's   portfolio   managers  and  other   investment
professionals  has three primary  components:  (1) a base salary,  (2) an annual
cash  bonus and (3) annual  stock-based  compensation  consisting  of options to
purchase  shares of EVC's  nonvoting  common stock and/or  restricted  shares of
EVC's  nonvoting  common stock.  The  Adviser's  investment  professionals  also
receive  certain  retirement,  insurance  and other  benefits  that are  broadly
available  to  all  the  Adviser's  employees.  Compensation  of  the  Adviser's
investment professionals is reviewed primarily on an annual basis. Cash bonuses,
stock-based  compensation  awards and  adjustments  in base salary are typically
paid or put into effect at or shortly after the October 31st fiscal  year-end of
EVC.]

[The Adviser compensates its portfolio managers based primarily on the scale and
complexity of their portfolio  responsibilities and the total return performance
of managed  funds and accounts  versus  appropriate  peer groups or  benchmarks.
Performance  is normally based on periods ending on the September 30th preceding
fiscal year-end.  Fund performance is evaluated  primarily versus peer groups of
funds as determined by Lipper Inc.  and/or  Morningstar,  Inc. In evaluating the
performance of a fund and its manager,  primary  emphasis is normally  placed on
three-year performance,  with secondary consideration of performance over longer
and  shorter  periods.  For funds  that are  tax-managed  or  otherwise  have an
objective of after-tax returns,  performance is measured net of taxes. For other
funds,  performance  is  evaluated on a pre-tax  basis.  In addition to rankings
within peer groups of funds on the basis of absolute performance,  consideration
may also be given to  risk-adjusted  performance.  For funds with an  investment
objective other than total return (such as current income),  consideration  will
also be given to the fund's  success in achieving  its  objective.  For managers
responsible for multiple funds and accounts, investment performance is evaluated
on an aggregate  basis,  based on averages or weighted  averages  among  managed
funds and accounts. Funds and accounts that have performance-based advisory fees
are not accorded  disproportionate  weightings in measuring  aggregate portfolio
manager performance.]

[The compensation of portfolio managers with other job responsibilities (such as
heading an investment group or providing analytical support to other portfolios)
will  include  consideration  of the  scope  of  such  responsibilities  and the
managers' performance in meeting them.]

                                       12
<PAGE>

[The Adviser  seeks to compensate  portfolio  managers  commensurate  with their
responsibilities  and performance  and  competitive  with other firms within the
investment management industry.  The Adviser participates in investment-industry
compensation surveys and utilizes survey data as a factor in determining salary,
bonus and  stock-based  compensation  levels for  portfolio  managers  and other
investment  professionals.  Salaries,  bonuses and stock-based  compensation are
also  influenced  by the  operating  performance  of the  Adviser and its parent
company.  The overall annual cash bonus pool is based on a  substantially  fixed
percentage of pre-bonus  operating  income.  While the salaries of the Adviser's
portfolio  managers  are  comparatively  fixed,  cash  bonuses  and  stock-based
compensation may fluctuate  significantly from year to year, based on changes in
manager performance and other factors as described herein. For a high performing
portfolio  manager,  cash bonuses and stock-based  compensation  may represent a
substantial portion of total compensation.]

[RAMPART'S  COMPENSATION  STRUCTURE  AND METHOD TO DETERMINE  COMPENSATION.  The
identified Rampart portfolio manager is a founding shareholder. The compensation
of the  identified  portfolio  manager  has two primary  components:  (1) a base
salary,  and (2) an  annual  cash  bonus.  There  are also  certain  retirement,
insurance  and  other  benefits  that  are  broadly  available  to  all  Rampart
employees.   Compensation  of  Rampart  investment   professionals  is  reviewed
primarily on an annual basis.  Cash bonuses and  adjustments  in base salary are
typically  paid or put into  effect  at or  shortly  after  the  June 30  fiscal
year-end of Rampart.]

[METHOD  TO   DETERMINE   COMPENSATION.   Rampart   compensates   its   founding
shareholders/identified  portfolio  managers  based  primarily  on the scale and
complexity of their  responsibilities.  The performance of portfolio managers is
evaluated  primarily  based on success in  achieving  portfolio  objectives  for
managed funds and accounts.  Rampart seeks to compensate all portfolio  managers
commensurate with their  responsibilities and performance,  and competitive with
other firms within the investment management industry.  This is reflected in the
founding shareholders/identified portfolio managers' salaries.]

[Salaries  and  profit  participations  are  also  influenced  by the  operating
performance   of   Rampart.   While   the   salaries   of   Rampart's   founding
shareholders/identified  portfolio  managers  are  comparatively  fixed,  profit
participations  may fluctuate  substantially from year to year, based on changes
in financial performance.]

CODES OF ETHICS

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

The Codes of Ethics can be reviewed  and copied at the  Securities  and Exchange
Commission's  public reference room in Washington,  DC (call  1-202-942-8090 for
information  on the  operation  of the  public  reference  room);  on the  EDGAR
Database  on the  SEC's  Internet  site  (http://www.sec.gov);  or by  sending a
written  request  and  payment of  copying  fees to the SEC's  public  reference
section,   at   Washington,   DC   20549-0102,   or  by   electronic   mail   at
publicinfo@sec.gov.

INVESTMENT ADVISORY SERVICES

Under the general supervision of the Fund's Board of Trustees,  Eaton Vance will
carry out the  investment  and  reinvestment  of the  assets  of the Fund,  will
furnish  continuously  an  investment  program  with  respect to the Fund,  will
determine  which  securities  should be purchased,  sold or exchanged,  and will
implement such  determinations  and will supervise the overall activities of the
Sub-Adviser.  Eaton Vance will furnish to the Fund investment advice and provide
related  office  facilities  and personnel for servicing the  investments of the
Fund.  Eaton Vance will compensate all Trustees and officers of the Fund who are
members of the Eaton Vance  organization and who render  investment  services to
the Fund, and will also  compensate all other Eaton Vance  personnel who provide
research and investment services to the Fund.

ADMINISTRATIVE SERVICES

Under the Administration Agreement,  Eaton Vance is responsible for managing the
business affairs of the Fund,  subject to the supervision of the Fund's Board of
Trustees. Eaton Vance will furnish to the Fund all office facilities,  equipment
and  personnel  for  administering  the  affairs of the Fund.  Eaton  Vance will
compensate  all  Trustees  and officers of the Fund who are members of the Eaton
Vance organization and who render executive and  administrative  services to the
Fund,  and will also  compensate  all other  Eaton Vance  personnel  who perform
management   and   administrative   services   for  the  Fund.   Eaton   Vance's
administrative  services  include  recordkeeping,   preparation  and  filing  of
documents required to comply with federal and state securities laws, supervising
the activities of the Fund's custodian and transfer agent,  providing assistance
in connection with the Trustees' and shareholders' meetings,  providing services

                                       13
<PAGE>

in connection with repurchase offers, if any, and other administrative  services
necessary to conduct the Fund's business.

DETERMINATION OF NET ASSET VALUE

The net asset value per share of the Fund is determined no less  frequently than
daily, on each day that the New York Stock Exchange (the "Exchange") is open for
trading,  as of the close of regular trading on the Exchange (normally 4:00 p.m.
New York time).  The Fund's net asset value per share is  determined  by IBT, in
the manner  authorized by the Trustees of the Fund.  Net asset value is computed
by dividing the value of the Fund's total assets,  less its liabilities,  by the
number of shares outstanding.

The Trustees of the Fund have  established  the  following  procedures  for fair
valuation  of the Fund's  assets  under  normal  market  conditions.  Marketable
securities listed on foreign or U.S.  securities  exchanges generally are valued
at  closing  sale  prices or, if there were no sales,  at the mean  between  the
closing bid and asked prices  therefor on the exchange where such securities are
principally  traded  (unless an active  over-the-counter  market in an  exchange
listed  security better reflects  current market value).  Marketable  securities
listed in the NASDAQ  National  Market System are valued at the NASDAQ  official
closing price.  Unlisted or listed  securities for which closing sale prices are
not available are valued at the mean between the latest bid and asked prices. An
exchange-traded  option is valued on the valuation  day as the "Primary  Market"
quote reported by the Option Pricing  Authority  ("OPRA").  OPRA gathers options
quotations from the six major U.S.  Options  exchanges and reports the last sale
price from any  exchange  on which the  option is  listed.  If no such sales are
reported,  such  portion will be valued at the mean of the closing bid and asked
prices on the  valuation  day on the exchange on which the options are primarily
traded.  When the Fund  writes a call  option it records the premium as an asset
and  equivalent  liability  and  thereafter  adjusts the liability to the market
value of the option determined in accordance with the preceding sentence.

The Adviser and the valuation committee may implement new pricing  methodologies
or expand  mark-to-market  valuation of debt securities  whose market prices are
not readily available in the future,  which may result in a change in the Fund's
net asset  value per share.  The  Fund's net asset  value per share will also be
affected by fair value  pricing  decisions and by changes in the market for such
debt securities.  In determining the fair value of a debt security,  the Adviser
will consider  relevant  factors,  data,  and  information,  including:  (i) the
characteristics  of  and  fundamental  analytical  data  relating  to  the  debt
security,  including the cost, size,  current  interest rate,  period until next
interest rate reset,  maturity and base lending rate of the debt  security,  the
terms and  conditions of the debt security and any related  agreements,  and the
position of the debt security in the borrower's debt structure; (ii) the nature,
adequacy and value of the collateral,  including the Fund's rights, remedies and
interests  with respect to the  collateral;  (iii) the  creditworthiness  of the
borrower,  based  on  an  evaluation  of  its  financial  condition,   financial
statements and information about the borrower's  business,  cash flows,  capital
structure and future prospects;  (iv) information relating to the market for the
debt security,  including price  quotations for and trading in the debt security
and interests in similar debt securities and the market environment and investor
attitudes  towards the debt security and  interests in similar debt  securities;
(v) the experience,  reputation,  stability and financial condition of the agent
and any  intermediate  participants  in the  debt  security;  and  (vi)  general
economic and market  conditions  affecting the fair value of the debt  security.
The fair value of each debt  security is reviewed and approved by the  Adviser's
valuation committee and the Fund's Trustees.

Debt securities for which the over-the-counter  market is the primary market are
normally valued on the basis of prices furnished by one or more pricing services
at the mean between the latest  available bid and asked prices.  OTC options are
valued at prices  obtained  from a broker  (typically  the  counterparty  to the
options) on the valuation day.  Financial  futures contracts listed on commodity
exchanges and  exchange-traded  options are valued at closing settlement prices.
Short-term  obligations  having  remaining  maturities  of less than 60 days are
valued  at  amortized  cost,  which  approximates  value,  unless  the  Trustees
determine  that under  particular  circumstances  such method does not result in
fair  value.  As  authorized  by  the  Trustees,  debt  securities  (other  than
short-term  obligations) may be valued on the basis of valuations furnished by a
pricing service which determines  valuations based upon market  transactions for
normal,  institutional-size  trading units of such  securities.  Securities  for
which there is no such quotation or valuation and all other assets are valued at
fair  value as  determined  in good faith by or at the  direction  of the Fund's
Trustees  considering  relevant  factors,  data and  information,  including the
market value of freely  tradable  securities  of the same class in the principal
market on which such securities are normally traded.

All other  securities are valued at fair value as determined in good faith by or
at the direction of the Trustees.

The daily  valuation of foreign equity  securities held by the Fund generally is
determined  as of the close of trading on the  principal  exchange on which such
securities  trade.  Events  occurring  after the  close of  trading  on  foreign
exchanges may result in  adjustments  to the valuation of foreign  securities to

                                       14
<PAGE>

more  accurately  reflect their fair value as of the close of regular trading on
the Exchange.  The Fund may rely on an independent pricing service in making any
such  adjustment.  Foreign  securities  held by the Fund  will be valued in U.S.
dollars; such values will be computed by the custodian based on foreign currency
exchange rate quotations supplied by an independent quotation service.

PORTFOLIO TRADING

Decisions concerning the execution of portfolio security transactions, including
the selection of the market and the executing firm, are made by Eaton Vance, the
Fund's Adviser or Rampart as the Sub-Adviser. As used below, "Adviser" refers to
Eaton Vance and Rampart, as applicable.  The Adviser is also responsible for the
execution  of  transactions  for all other  accounts  managed by it. The Adviser
places the portfolio  security  transactions  for execution with many firms. The
Adviser  uses its  best  efforts  to  obtain  execution  of  portfolio  security
transactions  at prices  which are  advantageous  to the Fund and at  reasonably
competitive  spreads  or  (when a  disclosed  commission  is being  charged)  at
reasonably competitive commission rates. In seeking such execution,  the Adviser
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,  including  the
responsiveness of the firm to the Adviser, 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 other  transactions,
and the  reasonableness  of the spread or commission,  if any. In addition,  the
Advisers may consider the receipt of Proprietary  Research  Services (as defined
below),  provided it does not compromise the Adviser's  obligations to seek best
overall  execution of the Fund.  The Adviser may engage in  portfolio  brokerage
transaction  with a  broker-dealer  firm that sells  shares of Eaton Vance fund,
provided that such transactions are not directed to that firm as compensated for
the promotion or sale of such securities.

Transactions  on stock  exchanges  and other  agency  transactions  involve  the
payment of negotiated brokerage commissions. Such transactions will be conducted
in  conformity  with the rules under the 1940 Act. Such  commissions  vary among
different  broker-dealer  firms,  and  a  particular  broker-dealer  may  charge
different  commissions  according to such factors as the  difficulty and size of
the  transaction  and the  volume of  business  done  with  such  broker-dealer.
Transactions  in foreign  securities  often  involve  the  payment of  brokerage
commissions,  which may be higher  than  those in the  United  States.  There is
generally  no  stated  commission  in  the  case  of  securities  traded  in the
over-the-counter  markets,  but the price paid or received  usually  includes an
undisclosed  dealer markup or markdown.  In an  underwritten  offering the price
paid often  includes a disclosed  fixed  commission or discount  retained by the
underwriter or dealer.

Although spreads or commissions paid on portfolio security transactions will, in
the  judgment  of the  Adviser,  be  reasonable  in relation to the value of the
services provided,  commissions  exceeding those which another firm might charge
may be paid to  broker-dealers  who were  selected  to execute  transactions  on
behalf of the  Adviser's  clients in part for  providing  brokerage and research
services to the Adviser.

As  authorized  in Section  28(e) of the  Securities  Exchange  Act of 1934,  as
amended,  a broker or dealer who executes a portfolio  transaction  on behalf of
the Fund 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
the Adviser  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 on the basis of that particular  transaction or on the
basis of overall  responsibilities which the Adviser and its affiliates have for
accounts over which they exercise investment discretion.  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  affiliates of executing  broker-dealers.  Advisers  also commonly  receive
Research  Services  from  research  providers  that are not  affiliated  with an
executing  broker-dealer,  but which  have  entered  into  payment  arrangements
involving an executing broker-dealer ("Third Party Research Services").  Under a
typical Third Party Research Services payment arrangement, the research provider
agrees to provide  services to an Adviser in exchange for specified  payments to

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the research provider by a broker-dealer  that executes  portfolio  transactions
for clients of the Adviser.  The Adviser and the executing  broker-dealer  enter
into a related agreement specifying the amount of brokerage business the Adviser
will  direct  to the  executing  broker-dealer  to offset  payments  made by the
executing  broker-dealer  for Third  Party  Research  Services  received  by the
Adviser.  For  example,  the  Adviser  may  agree to direct  brokerage  business
generating  $45,000 in commissions on portfolio  transactions to a broker-dealer
firm as consideration for the executing broker-dealer making payments of $30,000
to a provider of Third Party Research Services.  The ratio of the commissions to
be paid to an executing  broker-dealer as consideration for Third Party Research
Services over the cost borne by the executing  broker-dealer  in connection with
providing such services to the Adviser is referred to herein as the "Third Party
Research Services Payment Ratio."

Consistent with the foregoing practices,  the Adviser receives Research Services
from  many  broker-dealer  firms  with  which  the  Adviser  places  the  Fund's
transactions  and from  third  parties  with  which  these  broker-dealers  have
arrangements.  The Fund and the Adviser may also receive Research  Services from
underwriters and dealers in fixed-price  offerings,  which Research Services are
reviewed  and  evaluated  by the  Adviser  in  connection  with  its  investment
responsibilities.

Research  Services  received by the  Advisers  include  such  matters as general
economic,  political,  business  and market  information,  industry  and company
reviews,  evaluations of securities and portfolio  strategies and  transactions,
proxy voting data and analysis  services,  technical analysis of various aspects
of the  securities  market,  recommendations  as to the  purchase  and  sale  of
securities  and other  portfolio  transactions,  financial,  industry  and trade
publications, news and information services, pricing and quotation equipment and
services,  and research  oriented  computer  hardware,  software,  databases and
services.  Any particular  Research Service obtained through a broker-dealer may
be used by the  Adviser 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 the  Adviser  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 Fund is not reduced  because the Adviser
receives such Research Services. The Adviser 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 the Adviser believes are useful
or of value to it in rendering investment advisory services to its clients.

In the event that the  Adviser  executes  Fund  securities  transactions  with a
broker-dealer  and the associated  commission is  consideration  for Third Party
Research  Services (as  described  above),  the Adviser has agreed to reduce the
advisory  fee payable by the Fund by an amount equal to the  commission  payment
associated with the transaction  divided by the applicable  Third Party Research
Services Payment Ratio.

Some  executing  broker-dealers  develop  and make  available  directly to their
brokerage  customers  proprietary  Research  Services   ("Proprietary   Research
Services").  As a general matter,  broker-dealers bundle the cost of Proprietary
Research Services with trade execution services rather than charging  separately
for each.  In such  circumstances,  the  independent  cost or other value of the
Proprietary Research Services cannot be determined. The advisory fee paid by the
Fund will not be reduced in connection with the receipt of Proprietary  Research
Services by the Adviser.

The investment companies sponsored by the Adviser or its affiliates may allocate
brokerage  commissions to acquire information relating to the performance,  fees
and expenses of such companies and other mutual funds, which information is used
by the Directors or Trustees of such  companies to fulfill their  responsibility
to oversee the quality of the services provided by various  entities,  including
the Adviser. Such companies may also pay cash for such information.

Securities  considered as investments  for the Fund may also be appropriate  for
other  investment  accounts  managed by the Adviser or its affiliates.  Whenever
decisions are made to buy or sell securities by the Fund and one or more of such
other   accounts   simultaneously,   the  Adviser  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 Fund 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 the
Adviser  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

                                       16
<PAGE>

Fund from time to time,  it is the opinion of the  Trustees of the Fund that the
benefits  from the Adviser's  organization  outweigh any  disadvantage  that may
arise from exposure to simultaneous transactions.

Taxes

The following discussion of federal income tax matters is based on the advice of
Kirkpatrick  & Lockhart  Nicholson  Graham  LLP,  counsel to the Fund.  The Fund
intends  to  elect  to be  treated  and to  qualify  each  year  as a  regulated
investment company ("RIC") under the Code.

Qualification as a RIC requires,  among other things,  that the Fund: (i) derive
in each  taxable  year at least 90% of its gross  income  from:  (a)  dividends,
interest,  payments with respect to certain securities loans, and gains from the
sale or other disposition of stock,  securities or foreign currencies,  or other
income  (including  but not  limited to gain from  options,  futures and forward
contracts)  derived  with  respect to its  business of  investing in such stock,
securities or foreign  currencies;  and (b) net income derived from interests in
certain publicly traded  partnerships  that are treated as partnerships for U.S.
federal  income tax purposes and that derive less than 90% of their gross income
for the  items  described  in (a)  above  (each  a  "Qualified  Publicly  Traded
Partnership");  and (ii)  diversify  its  holdings  so that,  at the end of each
quarter of each taxable year:  (a) at least 50% of the value of the Fund's total
assets is represented by (I) cash and cash items,  U.S.  government  securities,
the  securities  of  other  regulated   investment   companies  and  (II)  other
securities, with such other securities limited, in respect to any one issuer, to
an amount not greater  than 5% of the value of the Fund's  total  assets and not
more than 10% of the  outstanding  voting  securities of such issuer and (b) not
more  than 25% of the  value of the  Fund's  total  assets  is  invested  in the
securities  (other than U.S.  government  securities and the securities of other
regulated  investment  companies)  of (I) any one  issuer,  (II) any two or more
issuers that the Fund controls and that are determined to be engaged in the same
or similar trades or businesses or related trades or businesses or (III) any one
or more Qualified Publicly Traded Partnerships.

As a RIC, the Fund generally  will not be subject to U.S.  federal income tax on
its investment  company taxable income (as that term is defined in the Code, but
without  regard to the  deductions  for dividend paid) and net capital gain (the
excess of net long-term capital gain over net short-term  capital loss), if any,
that it distributes in each taxable year to its  shareholders,  provided that it
distributes  at least 90% of its  investment  company  taxable  income  for such
taxable  year.  The Fund intends to  distribute  to its  shareholders,  at least
annually,  substantially  all of its investment  company  taxable income and net
capital gain. In order to avoid incurring a nondeductible  4% federal excise tax
obligation,  the Code  requires that the Fund  distribute  (or be deemed to have
distributed)  by December 31 of each  calendar  year an amount at least equal to
the sum of (i) 98% of its ordinary income for such year, (ii) 98% of its capital
gain net income (which is the excess of its realized net long-term  capital gain
over its realized net short-term capital loss),  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 ordinary income and
capital gain net income from the prior year (as  previously  computed) that were
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 for federal income
tax purposes, the Fund should not be liable for any income,  corporate excise or
franchise tax in The Commonwealth of Massachusetts.

If the Fund does not qualify as a RIC for any taxable year,  the Fund's  taxable
income will be subject to corporate  income taxes,  and all  distributions  from
earnings and profits, including distributions of net capital gain (if any), will
be taxable to the shareholder as ordinary income.  Such distributions  generally
would be eligible (i) to be treated as qualified  dividend income in the case of
individual  and  other  noncorporate  shareholders  and (ii)  for the  dividends
received deduction ("DRD") in the case of corporate  shareholders.  In addition,
in order to  requalify  for  taxation  as a RIC,  the  Fund may be  required  to
recognize unrealized gains, pay substantial taxes and interest, and make certain
distributions.

For U.S.  federal  income  tax  purposes,  distributions  paid out of the Fund's
current  or  accumulated  earnings  and  profits  will,  except  in the  case of
distributions of qualified dividend income and capital gain dividends  described
below, be taxable as ordinary  dividend  income.  Under the "Jobs and Growth Tax
Relief Reconciliation Act of 2003" (the "Tax Act"), certain income distributions
paid by the Fund (whether paid in cash or reinvested in additional  Fund shares)
to individual  taxpayers are taxed at rates applicable to net long-term  capital
gains (15%,  or 5% for  individuals  in the 10% or 15% tax  brackets).  This tax
treatment  applies  only  if  certain  holding  period  requirements  and  other
requirements are satisfied by the shareholder and the dividends are attributable
to qualified  dividend  income  received by the Fund itself.  For this  purpose,
"qualified  dividend  income" means  dividends  received by the Fund from United
States corporations and "qualified foreign corporations," provided that the Fund
satisfies certain holding period and other  requirements in respect of the stock
of such  corporations.  These special rules relating to the taxation of ordinary
income  dividends paid by RICs generally  apply to taxable years beginning after
December 31, 2002 and beginning before January 1, 2009.  Thereafter,  the Fund's

                                       17
<PAGE>

dividends,  other than capital gain dividends, will be fully taxable at ordinary
income tax rates unless further  Congressional  action is taken. There can be no
assurance as to what portion of the Fund's dividend  distributions  will qualify
for favorable treatment under the Tax Act.

Shareholders  receiving any distribution from the Fund in the form of additional
shares pursuant to the dividend reinvestment plan will be treated as receiving a
taxable  distribution  in an amount equal to the fair market value of the shares
received, determined as of the reinvestment date.

Dividends  of  investment  company  taxable  income  designated  by the Fund and
received by corporate  shareholders  of the Fund will qualify for the DRD to the
extent of the amount of qualifying  dividends received by the Fund from domestic
corporations  for the taxable year. A dividend  received by the Fund will not be
treated as a qualifying  dividend (i) if the stock on which the dividend is paid
is considered to be "debt-financed"  (generally,  acquired with borrowed funds),
(ii) if the Fund fails to meet certain holding period requirements for the stock
on which the  dividend  is paid or (iii) to the extent that the Fund is under an
obligation (pursuant to a short sale or otherwise) to make related payments with
respect to positions in substantially similar or related property. Moreover, the
DRD may be disallowed or reduced if the corporate  shareholder  fails to satisfy
the  foregoing  requirements  with  respect  to its  shares  of the  Fund  or by
application of the Code.

Distributions of net capital gain, if any, designated as capital gains dividends
are taxable to a shareholder as long-term capital gains,  regardless of how long
the shareholder  has held Fund shares.  A distribution of an amount in excess of
the Fund's  current and  accumulated  earnings  and profits will be treated by a
shareholder  as a return of capital  which is applied  against  and  reduces the
shareholder's  basis in his or her shares.  To the extent that the amount of any
such  distribution  exceeds the  shareholder's  basis in his or her shares,  the
excess will be treated by the shareholder as gain from a sale or exchange of the
shares.  Distributions of gains from the sale of investments that the Fund owned
for one year or less will be taxable as ordinary income.

The Fund may elect to retain  its net  capital  gain or a  portion  thereof  for
investment and be taxed at corporate rates on the amount retained. In such case,
it may designate the retained amount as undistributed  capital gains in a notice
to its  shareholders  who will be treated as if each received a distribution  of
his pro rata share of such gain, with the result that each  shareholder will (i)
be  required  to report  his pro rata  share of such  gain on his tax  return as
long-term  capital gain,  (ii) receive a refundable  tax credit for his pro rata
share of tax paid by the Fund on the gain and (iii)  increase  the tax basis for
his shares by an amount equal to the deemed distribution less the tax credit.

Selling shareholders will generally recognize gain or loss in an amount equal to
the difference  between the shareholder's  adjusted tax basis in the shares sold
and the sale proceeds.  If the shares are held as a capital  asset,  the gain or
loss will be a capital  gain or loss.  The  maximum tax rate  applicable  to net
capital gains recognized by individuals and other non-corporate taxpayers is (i)
the same as the maximum  ordinary  income tax rate for gains  recognized  on the
sale of  capital  assets  held  for one  year or  less,  or (ii)  15% for  gains
recognized on the sale of capital assets held for more than one year (as well as
certain  capital gain  distributions)  (5% for individuals in the 10% or 15% tax
brackets).

Any loss realized upon the sale or exchange of Fund shares with a holding period
of six months or less will be treated as a long-term  capital loss to the extent
of any capital gain  distributions  received  with  respect to such  shares.  In
addition,  all or a portion of a loss realized on a sale or other disposition of
Fund  shares  may be  disallowed  under  "wash  sale"  rules to the  extent  the
shareholder  acquires  other  shares  of the  same  Fund  (whether  through  the
reinvestment of distributions or otherwise) within a period of 61 days beginning
30 days  before and ending 30 days after the date of  disposition  of the common
shares.  Any disallowed  loss will result in an adjustment to the  shareholder's
tax basis in some or all of the other shares acquired.

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

Dividends  and  distributions  on the  Fund's  shares are  generally  subject to
federal  income tax as  described  herein to the  extent  they do not exceed the
Fund's realized income and gains,  even though such dividends and  distributions
may economically  represent a return of a particular  shareholder's  investment.
Such  distributions are likely to occur in respect of shares purchased at a time
when the Fund's net asset value  reflects gains that are either  unrealized,  or
realized  but  not  distributed.  Such  realized  gains  may be  required  to be
distributed  even when the  Fund's  net asset  value  also  reflects  unrealized
losses.  Certain  distributions  declared  in  October,  November or December to
Shareholders  of record of such month and paid in the following  January will be
taxed to  shareholders  as if  received on December 31 of the year in which they

                                       18
<PAGE>

were declared. In addition,  certain other distributions made after the close of
a taxable year of the Fund may be "spilled back" and treated as paid by the Fund
(except for purposes of the  non-deductible  4% federal  excise tax) during such
taxable year. In such case, shareholders will be treated as having received such
dividends in the taxable year in which the distributions were actually made.

The  Fund  will  inform  shareholders  of  the  source  and  tax  status  of all
distributions promptly after the close of each calendar year.

The benefits of the reduced tax rates applicable to long-term  capital gains and
qualified  dividend income may be impacted by the application of the alternative
minimum tax to individual shareholders.

For the Fund's index call options  that qualify as section 1256  contracts  Code
Section  1256  generally  will  require any gain or loss arising from the lapse,
closing out or exercise of such positions to be treated as 60% long-term and 40%
short-term  capital  gain or  loss.  In  addition,  the Fund  generally  will be
required to "mark to market"  (I.E.,  treat as sold for fair market  value) each
outstanding  index option  position  which it holds at the close of each taxable
year (and on October 31 of each year for excise tax purposes). If a section 1256
contract  held by the Fund at the end of a taxable year is sold in the following
year,  the amount of any gain or loss  realized on such sale will be adjusted to
reflect  the gain or loss  previously  taken  into  account  under  the "mark to
market"  rules.  In addition to most index call options,  section 1256 contracts
include certain other options  contracts,  certain regulated futures  contracts,
and certain other financial contracts.

The Fund's index call options  that do not qualify as "section  1256  contracts"
generally  will be treated as equity  options  governed  by Code  Section  1234.
Pursuant to Code Section  1234, if a written  option  expires  unexercised,  the
premium received is short-term capital gain to the Fund. If the Fund enters into
a closing  transaction,  the difference between the amount paid to close out its
position and the premium  received for writing the option is short-term  capital
gain or loss.  If a call option  written by the Fund that is not a "section 1256
contract" is cash settled, any resulting gain or loss will be short-term.

The Code contains special rules that apply to "straddles,"  defined generally as
the holding of  "offsetting  positions  with respect to personal  property." For
example,  the straddle  rules  normally apply when a taxpayer holds stock and an
offsetting option with respect to such stock or substantially identical stock or
securities.  In general,  investment  positions will be offsetting if there is a
substantial  diminution  in the risk of loss from holding one position by reason
of holding one or more other  positions.  The Fund  expects  that the index call
options it writes will not be considered  straddles for this purpose because the
Fund's  portfolio  of common  stocks will be  sufficiently  dissimilar  from the
components of the indices on which it has  outstanding  options  positions under
applicable guidance established by the Internal Revenue Service (the "Service").
Under  certain   circumstances,   however,  the  Fund  may  enter  into  options
transactions  or certain other  investments  that may constitute  positions in a
straddle.  If two or more  positions  constitute  a straddle,  recognition  of a
realized  loss from one  position  must  generally  be deferred to the extent of
unrecognized gain in an offsetting position. In addition, long-term capital gain
may be recharacterized as short-term capital gain, or short-term capital loss as
long-term  capital  loss.  Interest  and other  carrying  charges  allocable  to
personal  property that is part of a straddle are not currently  deductible  but
must instead be capitalized.  Similarly,  "wash sale" rules apply to prevent the
recognition of loss by the Fund from the disposition of stock or securities at a
loss in a case in which identical or substantially identical stock or securities
(or an  option  to  acquire  such  property)  is or has been  acquired  within a
prescribed period.

The Code  allows a taxpayer to elect to offset  gains and losses from  positions
that are part of a "mixed straddle." A "mixed straddle" is any straddle in which
one or more but not all  positions are section 1256  contracts.  The Fund may be
eligible to elect to establish one or more mixed  straddle  accounts for certain
of its mixed  straddle  trading  positions.  The mixed  straddle  account  rules
require a daily  "marking to market" of all open  positions in the account and a
daily netting of gains and losses from all positions in the account.  At the end
of a taxable  year,  the  annual  net gains or  losses  from the mixed  straddle
account are recognized for tax purposes. The net capital gain or loss is treated
as 60% long-term and 40% short-term  capital gain or loss if attributable to the
section  1256  contract  positions,  or all  short-term  capital gain or loss if
attributable to the non-section 1256 contract positions.

The Fund may recognize gain (but not loss) from a  constructive  sale of certain
"appreciated  financial  positions"  if  the  Fund  enters  into a  short  sale,
offsetting  notional principal  contract,  or forward contract  transaction with
respect  to  the  appreciated  position  or  substantially  identical  property.
Appreciated  financial  positions  subject to this  constructive  sale treatment
include interests  (including  options and forward contracts and short sales) in
stock and certain other instruments.  Constructive sale treatment does not apply
if the transaction is closed out not later than thirty days after the end of the
taxable  year in  which  the  transaction  was  initiated,  and  the  underlying
appreciated  securities  position is held  unhedged  for at least the next sixty
days after the hedging transaction is closed.

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<PAGE>

Gain or loss from a short sale of property is  generally  considered  as capital
gain or loss to the extent the property used to close the short sale constitutes
a capital asset in the Fund's hands.  Except with respect to certain  situations
where the property used to close a short sale has a long-term  holding period on
the date the short sale is entered  into,  gains on short  sales  generally  are
short-term  capital gains. A loss on a short sale will be treated as a long-term
capital  loss  if,  on the  date of the  short  sale,  "substantially  identical
property"  has  been  held by the Fund for more  than  one  year.  In  addition,
entering  into a short sale may result in  suspension  of the holding  period of
"substantially identical property" held by the Fund.

Gain or loss on a short sale will  generally not be realized  until such time as
the short sale is closed.  However,  as  described  above in the  discussion  of
constructive  sales,  if the Fund holds a short sale  position  with  respect to
securities that have appreciated in value, and it then acquires property that is
the same as or  substantially  identical  to the property  sold short,  the Fund
generally  will  recognize  gain on the date it acquires such property as if the
short sale were closed on such date with such property.  Similarly,  if the Fund
holds an  appreciated  financial  position with respect to  securities  and then
enters  into a short sale with  respect to the same or  substantially  identical
property, the Fund generally will recognize gain as if the appreciated financial
position were sold at its fair market value on the date it enters into the short
sale. The subsequent holding period for any appreciated  financial position that
is  subject to these  constructive  sale  rules  will be  determined  as if such
position were acquired on the date of the constructive sale.

The Fund's  transactions  in futures  contracts  and options  will be subject to
special  provisions  of the Code  that,  among  other  things,  may  affect  the
character  of gains and losses  realized by the Fund (I.E.,  may affect  whether
gains or losses are  ordinary or  capital,  or  short-term  or  long-term),  may
accelerate  recognition  of income to the Fund and may defer Fund losses.  These
rules could, therefore, affect the character, amount and timing of distributions
to   shareholders.   These   provisions  also  (a)  will  require  the  Fund  to
mark-to-market certain types of the positions in its portfolio (I.E., treat them
as if they were  closed  out),  and (b) may cause the Fund to  recognize  income
without receiving cash with which to make  distributions in amounts necessary to
satisfy the 90% distribution requirement for qualifying to be taxed as a RIC and
the 98%  distribution  requirement  for  avoiding  excise  taxes.  The Fund will
monitor its transactions,  will make the appropriate tax elections and will make
the  appropriate  entries in its books and records  when it acquires any futures
contract,  option or hedged  investment in order to mitigate the effect of these
rules and prevent  disqualification  of the Fund from being taxed as a regulated
investment company.

Further,  certain of the Fund's investment  practices are subject to special and
complex federal income tax provisions that may, among other things,  (i) convert
dividends  that  would  otherwise  constitute  qualified  dividend  income  into
short-term  capital gain or ordinary  income taxed at the higher rate applicable
to ordinary  income,  (ii) treat  dividends that would otherwise be eligible for
the corporate  dividends  received  deduction as ineligible for such  treatment,
(iii)  disallow,  suspend or otherwise  limit the allowance of certain losses or
deductions,  (iv) convert long-term capital gain into short-term capital gain or
ordinary  income,  (v) convert an ordinary loss or deduction into a capital loss
(the  deductibility  of which is more  limited)  and cause the Fund to recognize
income or gain without a corresponding  receipt of cash;  (vi) adversely  affect
the time as to when a  purchase  or sale of stock or  securities  is  deemed  to
occur; (vii) adversely alter the  characterization  of certain complex financial
transactions; and (viii) produce income that will not qualify as good income for
purposes of the 90% annual gross income requirement described above.

Dividends  and interest  received,  and gains  realized,  by the Fund on foreign
securities  may be subject  to income,  withholding  or other  taxes  imposed by
foreign countries and U.S. possessions (collectively "foreign taxes") that would
reduce the return on its securities.  Tax conventions  between certain countries
and the United States,  however, may reduce or eliminate foreign taxes, and many
foreign countries do not impose taxes on capital gains in respect of investments
by foreign  investors.  Shareholders  will  generally not be entitled to claim a
credit or deduction with respect to foreign taxes paid by the Fund.

The Fund may  invest  in the stock of  "passive  foreign  investment  companies"
("PFICs").  A PFIC is any foreign corporation (with certain exceptions) that, in
general,  meets  either of the  following  tests:  (1) at least 75% of its gross
income is passive or (2) an  average of at least 50% of its assets  produce,  or
are held for the production of, passive income. Under certain circumstances, the
Fund  will  be  subject  to  federal  income  tax on a  portion  of any  "excess
distribution" received on the stock of a PFIC or of any gain from disposition of
that stock (collectively "PFIC income"), plus interest thereon, even if the Fund
distributes  the PFIC  income as a taxable  dividend  to its  shareholders.  The
balance of the PFIC income will be  included  in the Fund's  investment  company
taxable  income  and,  accordingly,  will not be  taxable to it to the extent it
distributes that income to its shareholders.

If the Fund  invests  in a PFIC and  elects  to treat  the PFIC as a  "qualified
electing  fund"  ("QEF"),  then  in  lieu  of the  foregoing  tax  and  interest
obligation,  the Fund will be  required  to include in income  each year its pro
rata share of the QEF's annual ordinary earnings and net capital  gain--which it
may have to  distribute  to  satisfy  the  distribution  requirement  and  avoid
imposition of the excise tax--even if the QEF does not distribute those earnings
and  gain to the  Fund.  In most  instances  it will be very  difficult,  if not
impossible, to make this election because of certain of its requirements.

                                       20
<PAGE>

The  Fund   may   elect  to  "mark   to   market"   its   stock  in  any   PFIC.
"Marking-to-market,"  in this context,  means  including in ordinary income each
taxable year the excess, if any, of the fair market value of a PFIC's stock over
the Fund's  adjusted  basis therein as of the end of that year.  Pursuant to the
election, the Fund also would be allowed to deduct (as an ordinary, not capital,
loss) the  excess,  if any,  of its  adjusted  basis in PFIC stock over the fair
market value thereof as of the taxable  year-end,  but only to the extent of any
net mark-to-market  gains (reduced by any prior deductions) with respect to that
stock  included  by the Fund for prior  taxable  years under the  election.  The
Fund's  adjusted  basis in each PFIC's  stock with  respect to which it has made
this  election  will be adjusted to reflect the amounts of income  included  and
deductions taken thereunder.

Under Section 988 of the Code,  gains or losses  attributable to fluctuations in
exchange  rates  between  the time the Fund  accrues  income or  receivables  or
expenses or other liabilities denominated in a foreign currency and the time the
Fund actually  collects such income or receivables or pays such  liabilities are
generally treated as ordinary income or loss.

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 Service as well as shareholders with
respect to whom the Fund has received certain  information from the Service 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 gross
proceeds of sales of shares,  at a rate of 28% for amounts paid during 2005.  An
individual's  TIN is  generally  his  or  her  social  security  number.  Backup
withholding  is not an  additional  tax. Any amounts  withheld  under the backup
withholding  rules  from  payments  made to a  shareholder  may be  refunded  or
credited  against  such  shareholder's  federal  income tax  liability,  if any,
provided that the required information is furnished to the Service.

The  foregoing  briefly  summarizes  some of the  important  federal  income tax
consequences to common shareholders of investing in common shares,  reflects the
federal tax law as of the date of this Statement of Additional Information,  and
does not address  special tax rules  applicable  to certain  types of investors,
such as corporate and foreign investors. Unless otherwise noted, this discussion
assumes that an investor is a U.S.  person and holds Common  Shares as a capital
asset.  This  discussion  is based  upon  present  provisions  of the Code,  the
regulations  promulgated  thereunder,  and  judicial and  administrative  ruling
authorities,  all of which are subject to change or differing interpretations by
the courts or the  Service  retroactively  or  prospectively.  Investors  should
consult  their  tax  advisors  regarding  other  federal,  state  or  local  tax
considerations that may be applicable to their particular circumstances, as well
as any proposed tax law changes.

OTHER INFORMATION

The Fund is an  organization  of the  type  commonly  known as a  "Massachusetts
business trust." Under  Massachusetts law,  shareholders of such a trust may, in
certain circumstances, be held personally liable as partners for the obligations
of the  trust.  The  Declaration  of Trust  contains  an express  disclaimer  of
shareholder liability in connection with Fund property or the acts,  obligations
or affairs  of the Fund.  The  Declaration  of Trust,  together  with the Fund's
By-laws,  also  provides  for  indemnification  out  of  Fund  property  of  any
shareholder  held  personally  liable for the claims and  liabilities to which a
shareholder  may  become  subject  by sole  reason  of  being or  having  been a
shareholder. Thus, the risk of a shareholder incurring financial loss on account
of shareholder liability is limited to circumstances in which the Fund itself is
unable to meet its  obligations.  The Fund has been  advised by its counsel that
the risk of any  shareholder  incurring any liability for the obligations of the
Fund is remote.

The  Declaration  of Trust  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 the Fund or its  shareholders
to which he or she 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 or her office. Voting rights are not cumulative, which means that
the holders of more than 50% of the shares  voting for the  election of Trustees
can elect 100% of the Trustees and, in such event,  the holders of the remaining
less than 50% of the shares  voting on the matter  will not be able to elect any
Trustees.

The  Declaration  of Trust  provides  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 Fund's custodian or
by votes cast at a meeting  called for that purpose.  The  Declaration  of Trust
further  provides that the Trustees of the Fund shall promptly call a meeting of
the  shareholders  for the  purpose of voting  upon a question of removal of any
such  Trustee  or  Trustees  when  requested  in  writing to do so by the record
holders of not less than 10% of the outstanding shares.

                                       21
<PAGE>

The Fund's  Prospectus  and this SAI do not contain all of the  information  set
forth in the  Registration  Statement  that the Fund has filed with the SEC. The
complete Registration Statement may be obtained from the SEC upon payment of the
fee prescribed by its Rules and Regulations.


INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

[              ] is the  independent registered public  accounting firm  for the

Fund, providing  audit  services,  tax return  preparation,  and  assistance and
consultation with respect to the preparation of filings with the SEC.


                                       22
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

                         [TO BE PROVIDED BY AMENDMENT]









                                       23
<PAGE>

Eaton Vance Tax-Managed Premium and Dividend Income Fund

STATEMENT OF ASSETS AND LIABILITIES
AS OF [              ], 2005

ASSETS
  Cash................................................................  $
  Offering costs......................................................
  Receivable from Adviser.............................................  _______
  Total assets........................................................  $
                                                                         =======
LIABILITIES
  Accrued offering costs..............................................  $
  Accrued organizational costs........................................  _______
  Total liabilities...................................................  $
                                                                         =======
  Net assets applicable to [       ] common shares of beneficial
  interest issued and outstanding.....................................  $
                                                                         =======
  NET ASSET VALUE AND OFFERING PRICE PER SHARE........................  $_______

STATEMENT OF OPERATIONS
PERIOD FROM [      ], 2005 (DATE OF ORGANIZATION) THROUGH [       ], 2005

INVESTMENT INCOME.....................................................  $     --
                                                                        --------
EXPENSES
  Organization costs..................................................  $
  Expense reimbursement...............................................  $_______
   Net expenses.......................................................  $     --
                                                                        --------
NET INVESTMENT INCOME.................................................  $     --
                                                                        ========

                       See notes to financial statements.




                                       24
<PAGE>

NOTES TO FINANCIAL STATEMENTS

NOTE 1:  ORGANIZATION

The Eaton Vance  Tax-Managed  Premium and Dividend  Income Fund (the "Fund") was
organized  as a  Massachusetts  business  trust on  October 5, 2005 and has been
inactive  since that date except for matters  relating to its  organization  and
registration as a diversified,  closed-end  management  investment company under
the Investment Company Act of 1940, as amended,  and the Securities Act of 1933,
as amended,  and the sale of [ ] common  shares to Eaton Vance  Management,  the
Fund's Investment Adviser.

Eaton  Vance  Management,   or  an  affiliate,   has  agreed  to  reimburse  all
organizational  costs,  estimated at approximately $[ ]. Eaton Vance Management,
or an affiliate,  directly provided certain organizational  services to the Fund
at no expense. The costs of such services are not material.

Eaton Vance  Management,  or an affiliate,  has agreed to pay all offering costs
(other than sales loads) that exceed $[ ] per common share.  The total estimated
fund  offering  costs are $[ ], of which the Fund would pay $[ ] and Eaton Vance
Management would pay $[ ] based on such estimate.

The Fund's primary investment  objective is to provide current income and gains,
with a secondary objective of capital  appreciation.  In pursuing its investment
objectives,  the Fund will evaluate  returns on an after-tax  basis,  seeking to
minimize  and defer  shareholder  federal  income  taxes.

NOTE 2:  ACCOUNTING POLICIES

The Fund's  financial  statements  are prepared in  accordance  with  accounting
principles  generally  accepted in the United  States of America  which  require
management to make estimates. Actual results may differ from those estimates.

The Fund's share of offering costs will be recorded  within paid in capital as a
reduction of the proceeds from the sale of common  shares upon the  commencement
of Fund  operations.  The  offering  costs  reflected  above  assume the sale of
[12,500,000] common shares.

NOTE 3:  INVESTMENT MANAGEMENT AGREEMENT

Pursuant to an investment  advisory  agreement between the Adviser and the Fund,
the Fund has  agreed to pay an  investment  advisory  fee,  payable on a monthly
basis, at an annual rate of [ ] % of the average daily gross assets of the Fund.
Gross assets of the Fund shall be calculated by deducting accrued liabilities of
the Fund not  including the amount of any preferred  shares  outstanding  or the
principal amount of any indebtedness for money borrowed.


Pursuant to a sub-advisory  agreement between the Adviser and Rampart Investment
Management  Company,  Inc.  ("Rampart"),   the  Adviser  has  agreed  to  pay  a
sub-advisory  fee to Rampart,  in an annual  amount equal to [ ]% of the average
daily gross assets of the Fund.

                                       25
<PAGE>

NOTE 4:  FEDERAL INCOME TAXES

The Fund intends to comply with the  requirements  of the Internal  Revenue Code
applicable  to  regulated  investment  companies  and to  distribute  all of its
taxable income, including any net realized gain on investments.









                                       26
<PAGE>

APPENDIX A

EATON VANCE FUNDS
PROXY VOTING POLICY AND PROCEDURES

I.  OVERVIEW

The Boards of Trustees  (the  "Boards")  of the Eaton Vance Funds (the  "Funds")
recognize  that it is their  fiduciary  responsibility  to actively  monitor the
Funds' operations.  The Boards have always placed paramount  importance on their
oversight of the  implementation  of the Funds'  investment  strategies  and the
overall  management  of  the  Funds'  investments.  A  critical  aspect  of  the
investment  management of the Funds continues to be the effective assessment and
voting of proxies relating to the Funds' portfolio securities.  While the Boards
will  continue  to  delegate  the  day-to-day  responsibilities  relating to the
management of the  proxy-voting  process to the relevant  investment  adviser or
sub-adviser, if applicable, of the Fund (or its underlying portfolio in the case
of a  master-feeder  arrangement),  the Boards have determined that it is in the
interests of the Funds'  shareholders to adopt these written proxy voting policy
and procedures (the "Policy"). For purposes of this Policy the term "Fund" shall
include a Fund's underlying portfolio in the case of a master-feeder arrangement
and the term "Adviser"  shall mean the adviser to a Fund or its sub-adviser if a
sub-advisory relationship exists.

II.  DELEGATION OF PROXY VOTING RESPONSIBILITIES

Pursuant to investment  advisory  agreements  between each Fund and its Adviser,
the Adviser has long been responsible for reviewing proxy statements relating to
Fund  investments  and, if the Adviser  deems it  appropriate  to do so, to vote
proxies  on behalf of the  Funds.  The  Boards  hereby  formally  delegate  this
responsibility to the Adviser,  except as otherwise described in this Policy. In
so doing,  the  Boards  hereby  adopt on  behalf  of each Fund the proxy  voting
policies  and  procedures  of the  Adviser(s)  to each Fund as the proxy  voting
policies and procedures of the Fund. The Boards  recognize that the Advisers may
from time to time amend their policies and procedures.  The Advisers will report
material  changes to the Boards in the manner set forth in Section IV below.  In
addition, the Boards will annually review and approve the Advisers' proxy voting
policies and procedures.

III.  DELEGATION OF PROXY VOTING DISCLOSURE RESPONSIBILITIES

The Securities  and Exchange  Commission  (the  "Commission")  recently  enacted
certain new reporting  requirements  for registered  investment  companies.  The
Commission's  new regulations  require that funds (other than those which invest
exclusively in non-voting  securities) make certain disclosures  regarding their
proxy voting  activities.  The most significant  disclosure  requirement for the
Funds is the duty  pursuant  to Rule  30b1-4  promulgated  under the  Investment
Company Act of 1940,  as amended  (the "1940  Act"),  to file Form N-PX no later
than August 31st of each year beginning in 2004. Under Form N-PX, each Fund will
be required to disclose,  among other  things,  information  concerning  proxies
relating to the Fund's  portfolio  investments,  whether or not the Fund (or its
Adviser)  voted the proxies  relating to securities  held by the Fund and how it
voted in the matter and whether it voted for or against management.

The Boards hereby  delegate to each Adviser the  responsibility  for  recording,
compiling and  transmitting  in a timely manner all data required to be filed on
Form N-PX to Eaton Vance Management,  which acts as administrator to each of the
Funds (the "Administrator"), for each Fund that such Adviser manages. The Boards
hereby delegate the  responsibility  to file Form N-PX on behalf of each Fund to
the Administrator.

IV.  CONFLICTS OF INTEREST

The Boards expect each Adviser, as a fiduciary to the Fund(s) it manages, to put
the interests of each Fund and its shareholders  above those of the Adviser.  In
the event that in connection with its proxy voting  responsibilities  a material
conflict of interest arises between a Fund's shareholders and the Fund's Adviser
or the  Administrator  (or any of their  affiliates) or any affiliated person of
the Fund  and the  Proxy  Administrator  intends  to vote the  proxy in a manner
inconsistent with guidelines  approved by the Board, the Adviser,  to the extent
it is aware or reasonably should have been aware of the material conflict,  will
refrain  from  voting any  proxies  related  to  companies  giving  rise to such
material conflict until it notifies and consults with the appropriate  Board(s),
or a committee or sub-committee of such Board, concerning the material conflict.

                                       27
<PAGE>

Once the Adviser notifies the relevant  Board(s),  committee or sub-committee of
the Board, of the material conflict,  the Board(s),  committee or sub-committee,
shall convene a meeting to review and consider all relevant materials related to
the proxies  involved.  In  considering  such  proxies,  the Adviser  shall make
available all materials  requested by the Board,  committee or sub-committee and
make  reasonably  available  appropriate  personnel  to discuss  the matter upon
request. The Board,  committee or sub-committee will instruct the Adviser on the
appropriate course of action. If the Board, committee or sub-committee is unable
to meet and the failure to vote a proxy would have a material  adverse impact on
the  Fund(s)  involved,  each  Adviser  will have the right to vote such  proxy,
provided that it discloses the existence of the material  conflict to the Board,
committee or sub-committee at its next meeting. Any determination  regarding the
voting of proxies of each Fund that is made by the  committee  or  sub-committee
shall be deemed to be a good faith determination regarding the voting of proxies
by the full Board.

V.  REPORTS

The  Administrator  shall  make  copies of each Form N-PX filed on behalf of the
Funds  available  for  the  Boards'  review  upon  the  Boards'   request.   The
Administrator  (with input from the Adviser for the relevant Fund(s)) shall also
provide any  reports  reasonably  requested  by the Boards  regarding  the proxy
voting records of the Funds.

Each Adviser shall annually report any material  changes to such Adviser's proxy
voting  policies  and  procedures  to the  relevant  Board(s)  and the  relevant
Board(s) will annually  review and approve the Adviser's  proxy voting  policies
and  procedures.  Each Adviser shall report any changes to such Adviser's  proxy
voting policies and procedures to the  Administrator  prior to implementing such
changes in order to enable  the  Administrator  to  effectively  coordinate  the
Funds' disclosure relating to such policies and procedures.

EATON VANCE MANAGEMENT
BOSTON MANAGEMENT AND RESEARCH
PROXY VOTING POLICIES AND PROCEDURES

I.  INTRODUCTION

Eaton  Vance  Management,   Boston  Management  and  Research  and  Eaton  Vance
Investment Counsel (each an "Adviser" and collectively the "Advisers") have each
adopted and implemented  policies and procedures that each Adviser  believes are
reasonably  designed  to ensure that  proxies are voted in the best  interest of
clients,  in accordance  with its fiduciary  duties and Rule 206(4)-6  under the
Investment Advisers Act of 1940, as amended. The Advisers' authority to vote the
proxies of their clients is established  by their advisory  contracts or similar
documentation,  such  as  the  Eaton  Vance  Funds  Proxy  Voting  Policies  and
Procedures.  These proxy  policies and  procedures  reflect the  Securities  and
Exchange   Commission   ("SEC")   requirements   governing   advisers   and  the
long-standing  fiduciary standards and  responsibilities  for ERISA accounts set
out in the Department of Labor Bulletin 94-2 C.F.R. 2509.94-2 (July 29, 1994).

II.  OVERVIEW

Each Adviser  manages its clients' assets with the overriding goal of seeking to
provide the greatest  possible return to such clients  consistent with governing
laws and the  investment  policies of each client.  In pursuing that goal,  each
Adviser  seeks to  exercise  its  clients'  rights  as  shareholders  of  voting
securities to support sound corporate  governance of the companies issuing those
securities  with the principle aim of  maintaining  or enhancing the  companies'
economic value.

The exercise of  shareholder  rights is generally done by casting votes by proxy
at shareholder  meetings on matters  submitted to shareholders for approval (for
example,  the election of directors or the approval of a company's  stock option
plans for directors, officers or employees). Each Adviser is adopting the formal
written guidelines described in detail below and will utilize such guidelines in
voting  proxies on behalf of its  clients.  These  guidelines  are  designed  to
promote  accountability of a company's  management and board of directors to its
shareholders   and  to  align  the  interests  of   management   with  those  of
shareholders.

In seeking to ensure a level of consistency  and rationality in the proxy voting
process,  the guidelines contained in these policies and procedures are designed
to address the manner in which certain  matters that arise  regularly in proxies
will  generally  be voted.  However,  each  Adviser  takes  the view that  these
guidelines  should not be used as  mechanical  instructions  for the exercise of
this  important  shareholder  right.  Except in the instance of routine  matters
related to  corporate  administrative  matters  which are not expected to have a

                                       28
<PAGE>

significant  economic  impact on the company or its  shareholders  (on which the
Advisers will  routinely  vote with  management),  the Advisers will review each
matter on a  case-by-case  basis and  reserve  the right to  deviate  from these
guidelines  when they  believe  the  situation  warrants  such a  deviation.  In
addition,  no set of guidelines can anticipate all situations that may arise. In
special cases, the Proxy Administrator (the person specifically charged with the
responsibility  to review and vote proxies on behalf of each Adviser's  clients)
may seek insight from the Adviser's  analysts,  portfolio  managers and/or Chief
Equity  Investment  Officer on how a particular  proxy  proposal will impact the
financial prospects of a company, and vote accordingly.  The guidelines are just
that:  guidelines  rather than hard and fast  rules,  simply  because  corporate
governance issues are so varied.

III.  PROXY VOTING GUIDELINES

The  following  guidelines  relate  to the  types  of  proposals  that  are most
frequently  presented  in  proxy  statements  to  shareholders.  Absent  unusual
circumstances, each Adviser will utilize these guidelines when voting proxies on
behalf of its clients.

A.  ELECTION OF BOARD OF DIRECTORS

The Advisers  believe that a Board of Directors should primarily be independent,
not have  significant  ties to  management  and  consist of members  who are all
elected  annually.  In addition,  the  Advisers  believe  that  important  Board
committees  (E.G.,  audit,  nominating and  compensation  committees)  should be
entirely independent. In general,

>>    The Advisers will support the election of directors that result in a Board
      made up of a majority of independent directors.

>>    The Advisers will support the election for independent  directors to serve
      on the audit,  compensation,  and/or  nominating  committees of a Board of
      Directors.

>>    The Advisers  will hold all directors  accountable  for the actions of the
      Board's committees.  For example,  the Advisers will consider  withholding
      votes for nominees who have recently  approved  compensation  arrangements
      that the  Advisers  deem  excessive or propose  equity-based  compensation
      plans that unduly dilute the ownership interests of shareholders.

>>    The Advisers will support efforts to declassify  existing Boards, and will
      vote against proposals by companies to adopt classified Board structures.

>>    The  Advisers  will  vote  against   proposals  for   cumulative   voting,
      confidential stockholder voting and the granting of pre-emptive rights.

B.  APPROVAL OF INDEPENDENT AUDITORS

The Advisers believe that the relationship  between the company and its auditors
should  be  limited  primarily  to  the  audit  engagement  and  closely  allied
audit-related and tax services,  although  non-audit services may be provided so
long as they are consistent with the requirements of the Sarbanes-Oxley Act and,
if required, have been approved by an independent audit committee.  The Advisers
will also consider the  reputation of the auditor and any problems that may have
arisen in the auditor's performance of services.

C.  EXECUTIVE COMPENSATION

The  Advisers  believe that  appropriately  designed  equity-based  compensation
plans, approved by shareholders,  can be an effective way to align the interests
of  shareholders  and the interests of  management,  employees,  and  directors.
However,   the  Advisers  are  opposed  to  plans  that   substantially   dilute
shareholders'   ownership   interests  in  the  company  or  have  objectionable
structural features.

>>    The  Advisers  will  generally  vote against  plans where total  potential
      dilution  (including all equity-based plans) seems likely to exceed 15% of
      shares outstanding over ten years and extends longer than ten years.

>>    The Advisers will generally vote against stock-based compensation plans if
      annual grants exceed 2% of shares outstanding.

These total and annual  dilution  thresholds are guidelines,  not ceilings,  and
when  assessing  a plan's  impact  on client  shareholdings  the  Advisers  will
consider other factors such as specific  industry  practices,  company and stock
performance and management credibility. The Proxy Administrator may consult with
the relevant  analyst(s) or portfolio  manager(s) or, if appropriate,  the Chief
Equity  Investment  Officer,  to determine  when or if it may be  appropriate to
exceed these guidelines.

                                       29
<PAGE>

>>    The  Advisers  will  typically  vote  against  plans  that have any of the
      following structural features:

      >>  Ability to re-price underwater options without shareholder approval.

      >>  The unrestricted ability to issue options with an exercise price below
          the stock's current market price.

      >>  Automatic share replenishment ("evergreen") feature.

>>    The Advisers are  supportive  of measures  intended to increase  long-term
      stock ownership by executives. These may include:

      >>  Requiring  senior  executives to hold a minimum amount of stock in the
          company (frequently expressed as a certain multiple of the executive's
          salary).

      >>  Using restricted stock grants instead of options.

      >>  Utilizing  phased vesting periods or vesting tied to company  specific
          milestones or stock performance.

>>    The Advisers will  generally  support the use of employee  stock  purchase
      plans to increase  company  stock  ownership by  employees,  provided that
      shares purchased under the plan are acquired for no less than 85% of their
      market value.

In assessing a company's  executive  compensation  plan, the Advisers will weigh
all  components  of the  plan.  For  example,  the  grant  of stock  options  to
executives of a company in a particular year may appear  excessive if that grant
goes above 2% of the shares outstanding of the company. However, such grants may
be   appropriate   if  the  senior   management  of  the  company  has  accepted
significantly  reduced  cash  compensation  for the year in lieu of  receiving a
greater number of options.

D.  CORPORATE STRUCTURE MATTERS/ANTI-TAKEOVER DEFENSES

As a general  matter,  the Advisers  will  normally  vote against  anti-takeover
measures and other  proposals  designed to limit the ability of  shareholders to
act on  possible  transactions  (except  in the  case of  closed-end  management
investment companies or other special circumstances).

E.  STATE OF INCORPORATION/OFFSHORE PRESENCE

Under ordinary  circumstances,  the Advisers will not interfere with a choice to
reincorporate or reorganize a company in a different jurisdiction, provided that
management's decision has been approved by the board of directors.  The Advisers
recognize  that there may be benefits to  reincorporation  (such as tax benefits
and more developed business laws in the jurisdiction of  reincorporation).  Each
proposal  to  reincorporate  in  offshore  tax  havens  will  be  reviewed  on a
case-by-case  basis to determine  whether such actions are in the best interests
of the shareholders of the company, including the Advisers' clients.

F.  ENVIRONMENTAL/SOCIAL POLICY ISSUES

The  Advisers  believe  that  "ordinary  business  matters"  are  primarily  the
responsibility  of  management  and should be approved  solely by the  company's
board of directors. The Advisers recognize that certain social and environmental
issues raised in shareholder proposals are the subject of vigorous public debate
and many are the subject of legal statutes or regulation by federal and/or state
agencies. The Advisers generally support management on these types of proposals,
although they may make exceptions  where they believe a proposal has substantial
economic  implications.  The  Advisers  expect that the  companies in which they
invest their clients' assets will act as responsible corporate citizens.

G. CIRCUMSTANCES UNDER WHICH THE ADVISERS WILL ABSTAIN FROM VOTING

The Advisers  will seek to vote all proxies for clients who have  delegated  the
responsibility   to  vote  such   proxies  to  the   Advisers.   Under   certain
circumstances,  the costs to their clients  associated  with voting such proxies
would far outweigh the benefit  derived from  exercising  the right to vote.  In
those  circumstances,  the Advisers will make a  case-by-case  determination  on
whether or not to vote such  proxies.  In the case of countries  which  required
so-called  "share  blocking,"  the Adviser may also  abstain  from  voting.  The
Advisers  will not seek to vote proxies on behalf of their  clients  unless they
have agreed to take on that responsibility on behalf of a client.  Finally,  the
Advisers  may be required  to abstain  from  voting on a  particular  proxy in a
situation  where a material  conflict exists between the Adviser and its client.
The policy for  resolution  of such  material  conflicts is  described  below in
Section V.

                                       30
<PAGE>

IV.  RECORDKEEPING

The Advisers will maintain  records  relating to the proxies they vote on behalf
of their clients in accordance with Section 204-2 of the Investment Advisers Act
of 1940, as amended. Those records will include:

>>    A copy of the Advisers' proxy voting policies and procedures;

>>    Proxy statements received regarding client securities (if such proxies are
      available  on the  SEC's  EDGAR  system  or a third  party  undertakes  to
      promptly provide a copy of such documents to the Advisers, the Advisers do
      not need to retain a separate copy of the proxy statement);

>>    A record of each vote cast;

>>    A copy of any document created by the Advisers that was material to making
      a decision  on how to vote a proxy for a client or that  memorializes  the
      basis for such a decision; and

>>    Each written  client  request for proxy voting  records and the  Advisers'
      written  response to any client request (whether written or oral) for such
      records.

All records described above will be maintained in an easily accessible place for
five years and will be  maintained  in the offices of the Advisers for two years
after they are created.

V.  IDENTIFICATION AND RESOLUTION OF CONFLICTS WITH CLIENTS

As fiduciaries to their clients,  each Adviser puts the interests of its clients
ahead of its own. In order to ensure that relevant personnel of the Advisers are
able to identify  potential  conflicts of  interest,  each Adviser will take the
following steps:

>>    Quarterly,  the Eaton Vance  Legal and  Compliance  Departments  will seek
      information  from the department  heads of each department of the Advisers
      and of  Eaton  Vance  Distributors,  Inc.  ("EVD")  (an  affiliate  of the
      Advisers and principal  underwriter  of certain  Eaton Vance Funds).  Each
      department head will be asked to provide a list of significant  clients or
      prospective clients of the Advisers or EVD. For example, a department head
      would report the fact that EVD was in discussions  with a corporate client
      considering management of the corporation's 401(k) plan assets.

>>    A  representative  of the Legal and Compliance  Departments will compile a
      list of the companies identified (the "Conflicted  Companies") and provide
      that list to the Proxy Administrator.

>>    The Proxy Administrator will compare the list of Conflicted Companies with
      the names of  companies  for which he or she  expects  to  receive  or has
      received proxy statements (the "Proxy Companies"). If a Conflicted Company
      is also a Proxy Company,  the Proxy Administrator will report that fact to
      the  Eaton  Vance  Chief  Legal  Officer  ("CLO")  and  the  Chief  Equity
      Investment Officer ("CEIO").

The CEIO and CLO will then determine if a material  conflict of interest  exists
between the relevant Adviser and its client.  If the CEIO or CLO determines that
a material  conflict exists,  he or she, or his or her designees,  will take the
following  steps to seek to resolve such material  conflict  prior to voting any
proxies relating to these Conflicted Companies.

>>    If the Proxy  Administrator  expects  to vote the proxy of the  Conflicted
      Company  strictly  according  to the  guidelines  contained in these Proxy
      Voting Policies and Procedures (the "Policies"), he or she will (i) inform
      the CLO and CEIO (or his or her  designees)  of that  fact,  (ii) vote the
      proxies and (iii) record the existence of the conflict and the  resolution
      of the matter.

>>    If the Proxy  Administrator  intends to vote in a manner inconsistent with
      the guidelines  contained herein or, if the issues raised by the proxy are
      not contemplated by these Policies, and the matters involved in such proxy
      could have a  material  economic  impact on the  client(s)  involved,  the
      Adviser will seek instruction on how the proxy should be voted from:

      >>  The client, in the case of an individual or corporate client;

      >>  In the case of a Fund its  board of  directors,  or any  committee  or
          sub-committee identified by the board; or

      >>  The adviser,  in situations where the Adviser acts as a sub-adviser to
          such adviser.

                                       31
<PAGE>

The Adviser will provide all reasonable  assistance to each party to enable such
party to make an informed decision.

If the client,  fund board or adviser, as the case may be, fails to instruct the
Adviser on how to vote the proxy, the Adviser will generally abstain from voting
in order to avoid the appearance of impropriety.  If however, the failure of the
Adviser to vote its  clients'  proxies  would have a material  adverse  economic
impact on the Advisers' clients'  securities holdings in the Conflicted Company,
the Adviser may vote such proxies in order to protect its clients' interests. In
either case, the Proxy  Administrator  will record the existence of the material
conflict and the resolution of the matter.






                                       32
<PAGE>


            EATON VANCE TAX-MANAGED PREMIUM AND DIVIDEND INCOME FUND

                       STATEMENT OF ADDITIONAL INFORMATION
                             [              ], 2005

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


                      INVESTMENT ADVISER AND ADMINISTRATOR
                             Eaton Vance Management
                                255 State Street
                                Boston, MA 02109

                                   SUB-ADVISER
                   Rampart Investment Management Company, Inc.
                             One International Place
                                Boston, MA 02110

                                    CUSTODIAN
                         Investors Bank & Trust Company
                              200 Clarendon Street
                                Boston, MA 02116

                                 TRANSFER AGENT
                                    PFPC Inc.
                                 P.O. Box 43027
                            Providence, RI 02940-3027

                  INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
                                [              ]







                                       33

<PAGE>
                                     PART C

                               OTHER INFORMATION

ITEM 25. FINANCIAL STATEMENTS AND EXHIBITS

(1)   FINANCIAL STATEMENTS:

      Included in Part A:
      Not applicable.

      Included in Part B:
      Independent Auditor's Report*
      Statement of Assets and Liabilities*
      Notes to Financial Statement*

----------------------------
*To be added by amendment.

(2)   EXHIBITS:

      (a)  (1) Agreement and Declaration of Trust dated October 5, 2005 filed
               herewith.

           (2) Amendment to Agreement and Declaration of Trust dated November 9,
               2005 filed herewith.

      (b)  (1) By-Laws filed herewith.

           (2) Amendment to By-Laws dated November 9, 2005 filed herewith.

      (c)  Not applicable.

      (d)  Form of Specimen Certificate for Common Shares of Beneficial Interest
           to be filed by amendment.

      (e)  Form of Dividend Reinvestment Plan to be filed by amendment.

      (f)  Not applicable.

      (g)  (1) Form of Investment Advisory Agreement dated ________, 2005, to be
               filed by amendment.

           (2) Form of Sub-Advisory Agreement with Rampart Investment Company,
               Inc. dated ____________, 2005, to be filed by amendment.

      (h)  (1) Form of Underwriting Agreement to be filed by amendment.

           (2) Form of Master Agreement Among Underwriters to be filed by
               amendment.

<PAGE>

           (3) Form of Master Selected Dealers Agreement to be filed by
               amendment.

      (i)  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).

      (j)  (1) Master Custodian Agreement with Investors Bank & Trust Company
               dated ______________, 2005 to be filed by amendment.

           (2) Extension Agreement dated August 31, 2005 to Master Custodian
               Agreement with Investors Bank & Trust Company filed as Exhibit
               (j)(2) to the Pre-Effective Amendment No. 2 of Eaton Vance
               Tax-Managed Global Buy-Write Opportunities Fund (File Nos.
               333-123961, 811-21745) filed with the Commission on September 26,
               2005 (Accession No. 0000950135-05-005528) and incorporated herein
               by reference.

           (3) Delegation Agreement dated December 11, 2000, with Investors Bank
               & Trust Company filed as Exhibit (j)(e) to the Eaton Vance Prime
               Rate Reserves N-2, Amendment No. 5 (File Nos. 333-32267,
               811-05808) filed April 3, 2002 (Accession No.
               0000940394-01-500126) and incorporated herein by reference.

      (k)  (1) Supplement to the Transfer Agency and Services Agreement dated
               ___________, 2005 to be filed by amendment.

           (2) Transfer Agency and Services Agreement as amended and restated on
               June 16, 2005 filed as Exhibit (k)(2) to the Pre-Effective
               Amendment No. 1 of Eaton Vance Tax-Managed Global Buy-Write
               Opportunities Fund (File Nos. 333-123961 and 811-21745) filed
               August 24, 2005 (Accession No. 0000950135-05-004937) and
               incorporated herein by reference.

           (3) Form of Administration Agreement dated _______________, 2005 to
               be filed by amendment.

           (4) Organizational and Expense Reimbursement Agreement to be filed by
               amendment.

      (l)  Opinion and Consent of Kirkpatrick & Lockhart Nicholson Graham LLP as
           to Registrant's Common Shares to be filed by amendment.

      (m)  Not applicable.

      (n)  Consent of Independent Registered Public Accounting Firm to be filed
           by amendment.

      (o)  Not applicable.

<PAGE>

      (p)  Letter Agreement with Eaton Vance Management to be filed by
           amendment.

      (q)  Not applicable.

      (r)  (1) Code of Ethics adopted by Eaton Vance Corp., Eaton Vance
               Management Boston Management and Research, Eaton Vance
               Distributors, Inc. and the Eaton Vance Funds effective September
               1, 2000, as revised February 1, 2005 filed as Exhibit (r)(1) to
               the Registration Statement on Form N-2 of Eaton Vance Global
               Enhanced Equity Income Fund (File Nos. 33-122540, 811-21711)
               filed February 4, 2005 (Accession No. 0000898432-05- 000098) and
               incorporated herein by reference.

           (2) Code of Ethics for Rampart Investment Management Company, Inc.
               effective September 1, 2004, as modified February 1, 2005, filed
               as Exhibit (r)(2) to Pre-Effective Amendment No. 2 of Eaton Vance
               Tax- Managed Global Buy-Write Opportunities Fund (File Nos.
               333-123961, 811-21745) filed September 26, 2005 (Accession No.
               0000950135-05- 005528) and incorporated herein by reference.

      (s)  Power of Attorney dated ____________, 2005 to be filed by amendment.

ITEM 26. MARKETING ARRANGEMENTS

      See Form of Underwriting Agreement to be filed by amendment.

ITEM 27. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

      The approximate expenses in connection with the offering are as follows:

Registration and Filing Fees                                $_________________
National Association of Securities Dealers, Inc. Fees
New York Stock Exchange Fees
Costs of Printing and Engraving
Accounting Fees and Expenses
Legal Fees and Expenses
                                                            ===============
Total                                                       $_________________

ITEM 28. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL

      None.

ITEM 29. NUMBER OF HOLDERS OF SECURITIES

      Set forth below is the number of record holders as of November 9, 2005,
of each class of securities of the Registrant:

Title of Class                                         Number of Record Holders
--------------                                         ------------------------

<PAGE>

Common Shares of Beneficial                                       0
interest, par value $0.01 per share

ITEM 30. INDEMNIFICATION

      The Registrant's By-Laws filed herewith contain, and the form of
Underwriting Agreement to be filed by amendment is expected to contain,
provisions limiting the liability, and providing for indemnification, of the
Trustees and officers under certain circumstances.

      Registrant's Trustees and officers are insured under a standard investment
company errors and omissions insurance policy covering loss incurred by reason
of negligent errors and omissions committed in their official capacities as
such. Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "Securities Act"), may be permitted to directors,
officers and controlling persons of the Registrant pursuant to the provisions
described in this Item 30, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is therefore
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

ITEM 31. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER

      Reference is made to: (i) the information set forth under the caption
"Investment advisory and other services" in the Statement of Additional
Information; (ii) the Eaton Vance Corp. 10-K filed under the Securities Exchange
Act of 1934 (File No. 001-8100); and (iii) the Form ADV of Eaton Vance
Management (File No. 801-15930) filed with the Commission, all of which are
incorporated herein by reference.

ITEM 32. 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, Boston, MA 02116, and its transfer agent, PFPC Inc., 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 of 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.

ITEM 33. MANAGEMENT SERVICES

<PAGE>

      Not applicable.

ITEM 34. UNDERTAKINGS

      1. The Registrant undertakes to suspend offering of Common Shares until
the prospectus is amended if (1) subsequent to the effective date of this
Registration Statement, the net asset value declines more than 10 percent from
its net asset value as of the effective date of this Registration Statement or
(2) the net asset value increases to an amount greater than its net proceeds as
stated in the prospectus.

      2. Not applicable.

      3. Not applicable.

      4. Not applicable.

      5. The Registrant undertakes that:

         a.  for the purpose of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in the form of
prospectus filed by the Registrant pursuant to 497(h) under the Securities Act
shall be deemed to be part of the Registration Statement as of the time it was
declared effective; and

         b.  for the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

      6. The Registrant undertakes to send by first class mail or other means
designed to ensure equally prompt delivery, within two business days of receipt
of an oral or written request, its Statement of Additional Information.

<PAGE>

                                     NOTICE

    A copy of the Agreement and Declaration of Trust of Eaton Vance Tax-Managed
Premium and Dividend Income Fund, as amended, is on file with the Secretary of
State of the Commonwealth of Massachusetts and notice is hereby given that this
instrument is executed on behalf of the Registrant by an officer of the
Registrant as an officer and not individually and that the obligations of or
arising out of this instrument are not binding upon any of the Trustees,
officers or shareholders individually, but are binding only upon the assets and
property of the Registrant.

<PAGE>

                                   SIGNATURES

    Pursuant to the requirements of the Securities Act of 1933, as amended and
the Investment Company Act of 1940, as amended the Registrant has duly caused
this 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 the 9th day of November 2005.



                                   EATON VANCE TAX-MANAGED PREMIUM AND
                                     DIVIDEND INCOME FUND


                                   By:  /s/ Duncan W. Richardson
                                        ------------------------
                                        Duncan W. Richardson
                                        President and Chief Executive Officer

    Pursuant to the requirements of the Securities Act of 1933, as amended this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

Signature                   Title                               Date
------------------------    -------------------------------     ---------------

/s/ Duncan W. Richardson    President and Chief Executive       November 9, 2005
------------------------    Officer
Duncan W. Richardson

/s/ Barbara E. Campbell     Treasurer and Principal Financial   November 9, 2005
-----------------------     and Accounting
Barbara E. Campbell

/s/ Alan R. Dynner          Trustee                             November 9, 2005
------------------
Alan R. Dynner

/s/ Thomas E. Faust Jr.     Trustee                             November 9, 2005
-----------------------
Thomas E. Faust Jr.

<PAGE>

                               INDEX TO EXHIBITS

(a)(1)   Agreement and Declaration of Trust dated October 5, 2005

(a)(2)   Amendment to Agreement and Declaration of Trust dated November 9, 2005

(b)(1)   By-Laws

(b)(2)   Amendment to By-Laws dated November 9, 2005



</TEXT>
</DOCUMENT>
